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Monday Morning: Markets Up, Democracy Down

Our Democracy has been corrupted.

I mentioned in weekend Member Chat that, on Politically Incorrect, Bill Maher had made an excellent point 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 100 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.

StJeanLuc pointed out this weekend that Slate had an article where they ran the numbers on the recent gun bill, which was almost a complete split between Democratic and Republican Senators and, as it turns out, the 54 Senators who backed the Manchin-Toomey bill represented 198.4 Million people while the Senators who successfully blocked the bill with 46 Senate votes represented just 114.9M people.  

Even in the House of Representatives, where the will of the people is supposed to rule, Democratic Reps got 54.3M votes while Republicans got 53.8M votes yet the GOP's severe gerrymandering of districts gave them a tremendous edge in the outcome – 234 to 201 Congressmen – more than enough to thwart the will of the President and the majority of the American people for another 2 years.  

I think, if we are going to do anything about this the Democrats have to first get angry about this and, to get angry about it they need to be aware about it so this is my first mission – to make sure people are talking about this into the next election cycle.  Even if you are a Conservative – if you truly care about the Constitution's INTENT and not just the way it's interpreted, you should be outraged by this perversion of Democracy.  This is how dictators take power, often through a democratic process that the pervert to their own means.  Are we all just going to sit by and let this happen?  

Normally, I'd be done ranting by now and moving on to the markets but – screw the markets – I have something even worse to rant about.  The Koch Brothers are now looking into buying the Tribune Company, owners of the Los Angeles Times, Chicago Tribune, Baltimore Sun, Hartford Courant and the Orlando Sentinel "to make sure that [the liberatarian] voice is heard."  As noted by Business Insider:

Buying the papers is expected to cost only about $625 million, which would be a rounding error for the gigantic Koch Industries, which generates a staggering $115 billion of revenue per year.

The focus of the Koch's recent Aspen seminar, Chozick reports, was to put together a 10-year plan for achieving a goal of lower taxes and less regulation.

The seminar produced a three-point plan:

  • educating grass-roots activists
  • influencing politics, and…
  • media

The acquisition of the Tribune papers would obviously go a ways toward supporting the latter tactic.

While Conservatives may applaud this tactic, it's essentially the same one Hitler employed in 1933  when his first act as Chancellor (not a position of power – it was given to appease him and his radical right group BY the Conservatives, who thought they could control him and use his voting block) was to create a Ministry for Public Enlightenment and Propaganda.  This ministry was lead by Joseph Goebbels whose "cynical understanding of mass psychology" made him a formidable figure. The aim of the ministry was to control and censor all the sources of mass media and use them to work for the Nazis. In this way the Nazis eradicated freedom of speech on a wide scale legally.

I'm sure if Hitler had $60Bn like the Kochs, he would have just bought the newspapers too – it's faster and cleaner and you get to use the same writers and just put in a few editors to get them under control.  

The Nazi party was not the Conservative Party of Germany, they were a radically right organization that "fell under" the Conservative umbrella because they sure weren't going to be accepted by the left and the Conservatives found them "useful" because they were able to give them control of Parliament, even though most people in the Conservative party found their tactics and platforms over the top and distasteful.  Sound familiar?  

I am not saying right-wing extremism is Nazism, I am simply pointing out how, at a time in recent history, similar tactics were used in a similar situation and it's not just the Democrats I am warning about this but the Conservative Centrists who already don't recognize their own party and are already ashamed by the kind of people who are being elected to "represent" them.  This situation is getting worse, not better, and the thought of the Koch brothers making a putsch on the press is simply frightening.  

NOW we can talk about the markets:  

It's going to be an exciting week with tons of earnings and our Members were already prepared for bad earnings by CAT and a miss on the Chicago Fed Activity Index this morning (-.23) because, er, we know how to read economic data and both of those were extemely obvious.  

Stock World WeeklyWhat's not obvious is how housing data will go this week and, at 10 am, we get Existing Home Sales, which will give us a good view of things and, as noted in the full Economic Calendar in Stock World Weekly (thanks StJ), we have Home Prices, Home Sales, Durable Goods, more Fed Data and, on Friday, we get the Q1 GDP report along with Personal Consumption and Consumer Confidence.  

CAT earnings are bumming out the Futures, which were up nicely and, of course, nothing really matters but AAPL earnings tomorrow night but it's earningspalooza this week with this huge list of participants including:


The Dollar is very strong, just testing 83 this morning and that's keeping a lid on equities and commodities but I still don't believe the Yen is ready to go over 100 as that's going to require the Euro to fail $1.30 to the Dollar and that starts the Swiss back buying Euros to keep themselves weaker so the printing presses will be cranking this week and the market manipulation will continue and we'll just have to stay flexible as we re-test our range, once again. 

Be careful out there!  

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  1. Bill Gross takes a lot of heat on the site but I agree on about everything he says in this article:

  2. Oil Lines

    R3 – 90.18
    R2 – 89.62
    R1 – 88.94
    PP – 88.38
    S1 – 87.70
    S2 – 87.14
    S3 – 86.46

    Friday's high and low – 89.06 / 87.82

  3. Senate / Phil – And in 2014 they could have a majority in the Senate and the House with a minority of voters. And run the place even though Obama got 5 millions more vote in a "national" election. It's maddening… Like Salman Rushdie said on Bill Maher – no other democracy allows the minority to rule! Only dictatorship. 

  4. Good Morning!

  5. Barrick Gold was downgraded at Deutsche Bank to hold from buy. $22.50 price target. Earnings will likely fall, along with the underlying price of gold, Deutsche Bank said.

  6. where were these clowns before??
     Barrick Gold Corp : Barclays cuts price target to $24 from $42; rating equal weight * Yamana Gold Inc : Barclays cuts price target to $17 from $22; rating overweight * Agnico Eagle Mines Ltd : Barclays cuts price target to $39 from $51; rating equal weight * Newmont Mining Corp : Barclays cuts price target to $45 from $56; rating overweight * Eldorado Gold Corp : Barclays cuts price target to $9 from $13; rating equal weight * Kinross Gold Corp : Barclays cuts price target to $7 from $11; rating equal weight * Goldcorp Inc : Barclays cuts price target to $40 from $50; rating overweight * Iamgold Corp : Barclays cuts price target to $6 from $11; rating equal weight

  7. Phil – I'm as angry as you are about those anti-american koch brothers. I call them anti-americans because they don't give a rats a** about any of their fellow americans, just themselves.
    I'd like to know where the Gates, Buffets and many of the other uber-wealthy Americans are, when it's obvious that our media outlets are one of the few places that help keep a level playing field…..

  8. Barclay / Jabo – Don't you love these guys who wait until the stock has been cut in half to downgrade them… My question would be – "How come their customers are not suing them?" 

  9. PSW Investment Conference at Harrah's Resort in Atlantic City April 27-29 – Next Monday we will be trading the markets live with Phil. We have 13 attendees and 12 are signed up for dinner with Phil on Sat evening at the Old Homestead Steakhouse at the Borgata.  Then we will try to take down Phil at the poker table lol.  should be a fun night to kick off the conference.  Sunday we are planning a group dinner with Phil at Carmine's.  it's not too late to sign up and rooms are still available.  email me with any questions. 

  10. ABX / Jabo – In any case, it doesn't matter this morning as gold is up $30 so that will lift all the miners no matter what Barclay says! And besides, how can you be neutral when you price target is 50% higher than the market price? Idiots…

  11. Dawnr – Yodi's wife will be there in AC so you will have company if you join us :)

  12. As per my comment on Sunday's  future weekly plays I have sold AMZN 2x weekly 240 p for 3.00 and 2x 230p for 1.38

  13. I saw my first Tesla on the road driving by me the other day.  Very cool looking and when I went on the website, the interior technology is miles ahead of everyone else.

  14. Rustle/ TSLA: Funny you bring that up. I saw a Fiskar (first one) the other day- pretty slick looking.

  15. GOOG I STO the play last Thursday Apr4 1x 730p for 6.10 and the 1x 720 for 4.20 obviously not more interesting today and we let it expire on Friday. We will set up a new play by the end of the week.
    AAPL looking good this morning but as I said we will wait for their report tomorrow. Any once guess>

  16. Newt/Fiskar
    I hope in 3 years from now that NJ has as many charging stations as LA does.  I would love to buy a Tesla or Fiskar.  Amazing cars.  God knows where this company would be if each state started putting even two charging stations at every rest stop on the main highway.  That being said, it TSLA gets over 50, it could be a good short opportunity.

  17. Phil/DMND – Good Morning. We're in DMND Jan 2014 15 Calls (uncovered, at net 3.37) with the stock losing the 14 level. Should we hang on a bit? ..or just cut it. Thanks.

  18. NFLX I as well entered Last Thursday STO 1x Apr4 140 for 4.05p and the 130p for 2.09 as well has improved by nearly 50% and we will wait for declaration to enter a new play.

  19. Rustle: the infrastructure or lack of is the main thing holding me back from getting one. I have a nice BCS and short put on TSLA- Jan15 30/42 with Jan15 $23 putter.

  20. stjean—Gold could be at 1500 and these miners can't keep their early gains (for the time being)..
    ABX is less than 75c from its all-time low…
    Have you ever see the movie Falling Down?  ;-)

  21. Homes report tanking the market.

  22. GTHP…..starting to move.  They are shipping their device in the EU.  Now we need the FDA to get off its derriere.

  23. HOV down to 4..78

  24. Weekly plays / Yodi – I have been experimenting for a month now with similar plays (paper trading for now), selling puts and/or calls with a 10 delta. You are a bit more aggressive on some plays from what I can tell and sell only puts which might be the way to go but makes roll sometimes expensive. I can tell you that over the last 3 weeks this has been very dangerous with a stock like AAPL. IMHO you need to be willing to roll early – way before you get overrun and are down 70%. My plan was to sell the options with a 10 delta and roll when they get to be above 20 (that was the advice from the condor book guy). If you don't wait as long, you don't necessarily need to sell 2x the original, especially if you also sell the calls and roll them down at the same time. You don't necessarily need to rush to roll, see how the day plays but if you are not careful, you $1.50 option is quickly worth $4.50 and rolls get difficult the same week. I was thinking about talking about that strategy at AC which is why I was testing it.

  25. Markets going down but AAPL up 1.5%… Go figure!

  26. And NFLX up 4.5%…. Earnings tonight!

  27. NFLX Earnings preview:

    Consensus estimate – $0.18 (up 38% since last quarter)
    Whisper number – $0.25
    Average move – 13.4%
    Priced into options – 15.5%

  28. Good morning!

    I feel better now that I got that out of my system.  Sorry but I can't just sit back and watch this stuff happen.  Just the fact that the Kochs say they are buying 5 our our country's largest newspapers "to makes sure their voice is heard" is a complete perversion of what used to be the RESPONSIBILITY of owning a newspaper was – to present the fair and balanced truth to the readers.  I know Hearst and Pulitzer trashed that concept 100 years ago but still, for the most part I think people tried – until Murdoch anyway.  Letting him get away with his crap paves the way for people like the Kochs to make statements like that with almost no one standing up and saying "WTF?"   Well, I'm sorry but I have to…

    I stopped writing regularly for SA because they began censoring my posts.  Who knows who controls them now?  It's getting kind of crazy out there in the media – look at how ZeroHedge did a 180 and is now full of Conservative posts.  Doesn't that creep you out?  

    expandAnyway, the really big story of the week is one we talked about yesterday – the Barrons cover of Dow 16,000.  Often it's the case that that's a real sign of a top when magazines start getting irrationally exuberant about a rally but we're at 14,577 so we're talking a not-unrealistic 10% and that does fit with our long-term expectations given QE3 and the BOJ action.  The biggest external factor to affect us is what happens in Europe and China, of course and news there is pretty bad – but that's why we're "only" at 14,577 and not over 15,000 already.  

    While I was doing the write-ups this weekend on inflation trades, I did a lot of macro reading and I think China is being held down artificially as their Government WANTS commodities to calm down (because higher food prices cause demands for higher wages when 50% of family spending is food in China) and that's not going to last forever and then Europe is REALLY getting fed up with this austerity BS and if that turns around – even if the ECB simply appeases it's members with a Trillion here or there – boom – that's another huge market booster.  In fact, even if they ease off on Austerity measures, that would take a 5% haircut off the table to the EU's $18Tn GDP ($900Bn).  

    So still tons of room to run on the markets and AAPL, all by itself, can pop 50 points on Wednesday and that's 12% which would pop the Nasdaq 2.5% NOT including the gains naturally put on by AAPL suppliers etc.  A $100 gain in AAPL (25%) is a 5% gain in the Nas and a 1% bump for the S&P as well (AAPL about 3.5% of S&P).  That CAN happen but, of course, AAPL could also fall to $350 (but $300 would be shocking) and that can cost us 2.5% on the Nas and the rest of the indexes would likely follow.  

    So I'm happy with our still slightly-bearish stance going into AAPL earnings and I will be thrilled to have to capitulate on the short side and set up to benefit from the ensuing rally if things go well.  As StJ notes (and as I've now been saying for 2 weeks) – the easiest thing to do is just cash out at the top and wait to see what happens – especially if you're not very good at rebalancing your portfolio on the fly.  

    Dollar over 83, of course, is a big negative for stocks and commodities.  

    At the open: Dow +0.1% to 14563. S&P +0.16% to 1558. Nasdaq +0.32% to 3216.

    Treasurys: 30-year +0.17%. 10-yr +0.11%. 5-yr +0.08%.

    Commodities: Crude +0.45% to $88.67. Gold +2.28% to $1427.45.

    Currencies: Euro -0.25% vs. dollar. Yen +0.01%. Pound -0.05%.

    10:00 AM On the hour: Dow -0.15%. 10-yr +0.14%. Euro -0.16% vs. dollar. Crude +0.26% to $88.5. Gold +1.93% to $1422.55.

    Market preview: U.S. stock futures track European shares higher as American equities look to recover from the worst week of the year last week, with the S&P Mini +0.3%. Hopes of political stability in Italy are helping to boost sentiment following the re-election of Giorgio Napolitano as president. Back home, Caterpillar is +0.6%despite a fairly poor earnings report – the market already priced in the weak results after the stock dropped 5.4% last week. Later: Existing Home Sales

    Mar. Chicago Fed National Activity Index: -0.23 vs. +0.44 prior. 

    MISS:  Mar. Existing Home Sales4.92M vs. consensus 5.03M, 4.95M previous (revised)

    Rail Traffic Continues To Trend Lower. (graph)

    The U.S. economy will become 3% larger in July as the government becomes one of the first to use a new international standard for GDP accounting. Among other things, statisticians will now take into account R&D investment, which will add just over 2%, and creative works, which will add another 0.5%. The government will backdate the changes to 1929, so there are unlikely to be changes in trends or cycles.

    Economic Woes Abroad Bode Ill for the U.STroubles overseas are threatening the U.S. recovery for the fourth year in a row. This time it's weakening economies abroad, rather than tumbling financial markets, signaling turbulence ahead

    Report Shows More New Yorkers Are Near Poverty

    IMF Chief Lagarde: Worries About Currency Valuations on the Rise.

    This Is The Eurozone's Growth Plan, And It's Pathetic.

    Milan shares are +2.2% and 10-year bond yields are -9 bps at 4.13% after Italian parliamentarians voted to re-elect 87-year-old Giorgio Napolitano as President. Speculation exists that Napolitano only agreed to take on the role again on the condition that a coalition government will at last be formed. However, a new election can't be ruled out following the resignation of the leader of the center-left Democratic Party after its candidates for president were rejected.

    European Central Bank Executive Board member Joerg Asmussen speaking in Washington. "We cannot repair unsound budgets. We cannot clean up struggling banks. We cannot solve deep-rooted problems in the structure of Europe's economies," he said. "Once-and-for-all solutions" are an "illusion," Asmussen said.

    Bundesbank President Jens Weidmann said at a press briefing in Washington it may take "a decade rather than a year" before the euro region will have overcome the consequences of its crisis. De-leveraging will lead to "low growth rates," Weidmann said.

    Germany Says ‘Liability Cascade’ Must Prevail in Bank RescuesPlans in the euro area to allow the direct recapitalization of failing banks must stick to a hierarchy of responsibility that starts with the banks’ shareholders, the German Finance Ministry said. In its report for April, the ministry said a “liability cascade” must prevail in any attempt to save a bank, allowing the European Stability Mechanism to allocate resources on its main job of averting state insolvencies

    German Finance Minister Wolfgang Schaeuble said the Cyrpus rescue should be used as a template for any further euro-bloc bailouts and that it's necessary for bank deposit holders to make a contribution when banks have to be saved. If banks have to be saved in the future, their owners, creditors and savers would have to make a contribution, Schaeuble said. This is needed to get the moral hazard problem under control, he said. Schaeuble defended Eurogroup president Jeroen Dijsselbloem who made similar comments, saying criticism of Dijsselbloem was not justtified and didn't come from "me".

    Dijsselbloem: EU Bank Resolution Agency May Need TreatyThe European Union may need to enact treaty changes to create a new institution to shut down failing banks, Dutch Finance Minister Jeroen Dijsselbloem said.

    French people are increasingly gloomy about their country's future, a poll showed, with the number of pessimists rising from last month. 70% said they are pessimistic about the future of French society, an increase of 2 percentage points from March. People questioned cited rising unemployment and decreasing purchasing power as biggest concerns, according to the poll

    French President Francois Hollande's approval rating fell six points to 25% in April, an Ifop institute poll showed.

    Japan's turbo-charged monetary easing received further international acceptance over the weekend, with the country allowed into pan-Pacific free-trade talks. A day earlier, the G-20 continued to buy into Japan's arguments that its monetary policy is designed to lift the economy out of deflation, not to weaken the yen to gain an unfair advantage. Increasing international trade is Prime Minister Shinzo Abe's "third arrow" in his strategy to revive Japan's economy.

    Japan's Aso Calls Recovery 'Few Years' Away

    China’s Stocks Drop as Insurers Retreat After Sichuan Earthquake.

    People's Bank of China Governor Zhou Xiaochuan has played down his country's disappointing Q1 growth of 7.7%, indicating that the slower expansion is the price for overhauling the economy. "China's undergoing economic restructuring, which sometimes is not in lockstep with growth," Zhou said. "We need to sacrifice short-term growth for the purposes of reforms and structural adjustments." - Sounds very logical to me

    PBOC's Zhou Says Slower Growth Needed as China Restructures. China's central bank governor says first quarter gdp growth "normal". Zhou said growth must be sacrificed to make structural adjustmentsChina will continue to implement prudent monetary and proactive fiscal policies to promote economic growth and keep prices stable, he said.

    Hong Kong Home Prices to Decline as Much as 25%, Bernstein SaysHong Kong home prices will fall as much as 25 percent after the government stepped up measures to curb an asset bubble and as banks raised mortgage rates, according to Sanford C. Bernstein H.K. Ltd.

    BMW's Rolls Royce Sees Slowing Sales Growth in China, CEO Says. "Business isn't any longer as explosive as it was the years before, but we're still optimistic here with the market," Rolls-Royce Motor Cars CEO Torsten Mueller-Oetvoes said in an interview. The comments come as new Communist Party Chief Xi Jinping pushes for a campaign to rein in lavish spending.

    Bearish ETF Bets Soar to 6-Year High on China Economy. Bets on declines in the largest Chinese etf are surging to the highest level since 2007 on concern a slowdown in the world's second-largest economy will stifle company earnings. Short interest on the iShares FTSE China 25 Index Fund climbed to 48.6 million shares, or 3.2% of the total outstanding at the end of March, the most since June 2007, data compiled by Bloomberg show.

    Consumer Loans Surge Across Asia. Banks From Around the World Target Middle Class With Financing for Autos, Home Appliances. Lenders from around the world are fueling a boom in short-term loans across Asia, helping push debt to record levels as a burgeoning middle class strives for a better lifestyle and banks look to diversify away from the slow-growing West.

    Another day, another new record closing high for Philippine equities (EPHE) as the index in Manila jumps 2.4% to 7,120.48. In other Southeast Asian markets, Thailand's SET index rises nearly 1%and settles comfortably above the psychologically important 1,500 level — the Thai market (THD) was buoyed once again by strong earnings from the financial sector. (Previously: Thai banks boost reserves amid bubble worries

    The Senate is expected to this week vote on a bill that would allow states to force Internet retailers to collect sales tax. The Senate has already voted 75-24 in favor of a non-binding resolution that backs the idea, helped by increasing support from GOP governors who like the thought of billions of dollars in more revenue. Amazon (AMZN) is in favor of the legislation, although eBay (EBAY) opposes it, saying it will add extra burdens to small businesses. 

    Oil prices have been weakened by oversupply of 1.5 million barrels a day, citing Mohammad Ali Khatibi, Iran's governor to OPEC.

    Baker Hughes (BHI) is downgraded to Sell to Argus Research which cites the heightened probability the company will have to take write-offs on its receivables. Counterbalancing are strong earnings from HAL this morning, not to mention, BHI's beat from last week.

    Halliburton Company (HAL): Q1 adj. EPS of $0.67 beats by $0.10. Revenue of $6.97B (+1.5% Y/Y) beats by $80M. (PR)  More on Halliburton (HAL) Q1 earnings: North American margins improved about 400 bps sequentially; company expects margins to continue to expand throughout the rest of the year. "We believe we may see modest pricing increases as customers adopt new technology to improve well production." Shares +4.8% premarket. (PR) 

    Facing a heavy debt load and slumping gold prices, Barrick Gold (ABX) has reportedly put three Western Australian mines on the block and hired BofA and UBS to advise. The mines produced 452K ounces of gold last year at a cash cost $768/oz. Shares +3% premarket.

    JPMorgan suggests big changes in CFTC futures positions were behind the sell-off in gold. There are three [available] high frequency flow indicators (CFTC futures positions, gold ETFs, and gold coin sales in the U.S) the bank says. "There has not [historically] been a strong correlation between ETF flows and gold prices," while "sales of American Eagle gold coins … have actually risen sharply over the past two weeks." That leaves CFTC managed money futures positions, data for which was only available through April 9 at the time JPM opined on the issue.

    Hedge Fund Gold Wagers Defy Worst Slump in 33 Years: Commodities. Hedge funds increased bets on gold rallying after prices plunged the most in 33 years, underscoring billionaire John Paulson’s view that bullion will rebound.

    massive wave of Asian buying of precious metals is emptying dealer shelves across the region. "I haven't seen this (kind of) gold rush for over 20 years," says the head of the HK Gold & Silver Exchange, adding that old-timers haven't seen anything like this for 50 years. GLD +2%SLV +1.4%.

    Goldman gets bullish on copper albeit at a lower price point. After a 13% YTD decline the selloff is "overdone," according to the investment bank which cut its three-, six-, and 12-month estimates to $7,500, $8,000, and $7,000 per metric ton respectively. Although some demand concerns are warranted given the cooling of China's economy, "underlying cyclical growth is likely stronger than the headline figures suggest." (Previously: a bear market in copper)

    General Motors (GM) says it will add four new plants in China over the next three years in order to bring production capacity up to an impressive 5M vehicles a year. A cost breakdown wasn't disclosed by the automaker. (Previous: GM at the Shangai Auto Show)

    Early indications are that the furlough by the FAA of employees – including air traffic controllers - isn't causing significant delays and flight cancellations. In the background, airline trade groups are keeping up the pressure on the FAA with a new lawsuit aimed at curtailing the furloughs. (flight tracking stats) 

    Airline stocks (FAA) start the day lower as media reports onflight delays dampen the mood of investors. Though delays are being reported, a low level of cancellations could indicate issues with furloughs won't take a large chuck of profits from carriers. Decliners: US Airways (LCC-1.5%, JetBlue (JBLU-1.4%, Delta Airlines (

  29. Phil

    Boeing Co (BA) has started installing the new battery system for the 787 in five All Nippon Airways Dreamliners, which should allow them to restart flying in about a week. However, commercial passenger flights probably won't begin until June, as ANA intends to make 100-200 test flights first. The installations come after the FAA approved the 787's modified battery system on Friday.

    JPMorgan downgrades General Electric (GE -0.8%) to Neutral from Overweight. The "safety stock" pitch "is increasingly hard to defend," notes analyst Stephen Tusa, who laments on the company call that predicting results for GE based on the macro environment is difficult due to the "mind boggling" number of moving parts at play. Tusa also asked Jeff Immelt about weakness in oil and gas on the call, and now says he no longer values GE Industrial at a premium. The stock is "dead money near term," Tusa notes. (transcript) 

    Philips (PHG): Q1 net profit -11.5% to €161M, missing consensus of €153M; sales -1% to €5.26B and vs €5.41B, with the drop due to negative currency effects and portfolio changes. Healthcare comparable sales -1% as orders for Healthcare in North America slump by double digits, hurt by U.S. healthcare reforms making hospital CEOs more cautious. Philips reiterates that it expects a slow H1. Shares -3.1% in Amsterdam. (PR) 

    Caterpillar Inc. (CAT): Q1 EPS of $1.31 misses by $0.07. Revenue of $13.2B (-17% Y/Y) beats by $600M. Shares +0.7%premarket. (PR)

    More on Caterpillar's (CAT) Q1: Sluggishness in the company's Resource Industries segment dragged down overall results. The year-over-year comparison comes in weak as dealers cut inventory dramatically despite the upcoming spring and summer crop seasonsThe global giant lowers its outlook for 2013 to $57B to $61B in sales and $7.00 per share in profits – from a prior estimate of $60B to $68B in revenue and EPS of $7.00-$9.00. Shares are getting a bit of a lift by word Caterpillar will fire up a stock repurchase program for the first time since 2008, up 1.0% premarket. (PR)

    This Robot Was Involved In Apprehension of Boston Bombing Suspect. (pic)

    Swiss industrial group ABB (ABB) has agreed to acquire Power-One (PWER) for $1.03B, with the offer of $6.35 a share representing a 57% premium to the latter's close on Friday. ABB is buying Power-One, the world's second-largest maker of inverters for allowing solar power to be fed into electricity grids, despite over-capacity and slumping demand in the solar industry – ABB expects growth in emerging markets and Japan to help revive the sector. (PR)

    J.C. Penney Hangs By A Thread

    Elan (ELNhas rebuffed Royalty Pharma's reduced $11.25-a-share takeover offer, saying the bid "grossly undervalues" the Irish pharmaceuticals company. Royalty cut its bid last week from $12 following a $1B stock buyback by Elan, the results of which suggest that the company's investors support the view that Royalty's bid is too low – 73% of shares excluding those Johnson & Johnson were not tendered in the pre-announced price range of $11.25-$13.00. (PR)

    Six Flags (SIX): Q1 EPS of -$1.23 beats by $0.43. Revenue of $88M (+32% Y/Y) beats by $19.8M. (PR)  Six Flags (SIXbeat estimates as the company benefited from a calendar shift which saw more schools schedule spring breaks in March than April a year ago. Sector watch: The company – along with sector peers Cedar Fair (FUN) and SeaWorld (SEAS) – continues to see the initiative of upselling guests early on seasonal passes pay off.

    Speaking of evil newspeople:  News Corp. (NWSNWSA) says it reached a $139M settlement with shareholders over the actions of the board of directors in relation to the much-publicized phone hacking scandal and acquisition of Shine Group. 

    CLSA gives VMware (VMW) a 2-notch downgrade to Underperform just a day before the virtualization giant delivers its Q1 report; the firm's PT has been lowered to $75 from $101. Between VMware's light guidance and soft results from OracleSAPRed Hat, and IBM, expectations have fallen some. UBS offered a more upbeat take last week. Microsoft delivered strong results for its Server & Tools unit last week, but also claimed its Hyper-V virtualization platform was gaining share.

    Netflix (NFLX) is due to report Q1 earnings after the bell, withanalysts expecting that the company swung to an EPS profit of $0.18 from a loss per share of $0.08 a year earlier as revenue jumped 17% to $1.02B. The results will be the first after the company released its first major original series, "House of Cards," and it's expected to report strong subscriber growth. 

    Good and bad news for Facebook Home. The good: Home has seen over 500K installs in the Google Play store, since launching on April 12. The bad: feedback from widget-deprived users continues to be ugly (previous), with Home's average rating having slipped to a mere 2.2/5 stars. Facebook (FB) had 192.8M Android monthly users as of Nov. '12, and almost certainly has over 200M now. 

    Microsoft (MSFT+1.6% after David Faber reports ValueAct Capital has taken a $2B stake (0.8%) in the company. Shares are now up 5% since Mister Softee delivered mixed FQ3 results Thursday afternoon.

    LG Display (LPL): Q1 net profit 3.49B won ($3.1M) vs loss of 129B won a year earlier and vs consensus of 76B won. Sales +10% to 6.8T won. Operating profit -74% on quarter to 151B won, hurt by falling seasonal demand and weaker sales to Apple (AAPL), which accounts for a large part of LG's sales and is due to report its results tomorrow. Analyst Pak Yuak reckons that LG's panel sales for iPadsrose 192% on year but that iPhone-screen sales dropped 33%.

    More on Apple: BGC's Colin Gillis is going contrarian,upgrading shares to Buy and setting a $500 PT (somewhat modest, compared with the PTs of other bulls) ahead of tomorrow's FQ2 report. "Jump in the fire, as any Apple good news, could boost up the stock," haikus Gillis, who has kept a guarded stance on Apple for some time. Separately, boutique shop Avondale has upgraded Apple to Outperform and set a $600 PT; the firm predicts a return to growth (10%-15%) and stabilizing gross margins in FY14. 

    The iPhone 5S launch has been pushed back to August-September from July, likely due to "volume production issues," says Citi's Glen Yeung, echoing last week's Jefferies note. Yeung, who downgraded Apple to Neutral on Dec. 16, is also worried iPad Mini demand is weakening, given "flattening production" (Digitimes reported something similar last week), and (like others) doesn't expect a larger iPhone to arrive this year. AAPL +0.3%, shaking off Yeung's note and supplier LG Display's soft Q1 report.

    Apple Earnings Preview: Playing The Analyst Game 


  30. Wow, look at that Russell fall!  Now you know why TZA is my favorite hedge!  Testing the 900 line but 897 in the Futures already.  Dollar rejected at 83 (82.91) means we can play the RUT bullish off 900 in Futures (/TF) but super-tight stops and only a gamble that we get a bounce back to -1%.  

    Unfortunately, not really even worth a TNA play as it's too tight.  


  31. Stj
    Weeklies Yes they are a bit more aggressive but have to be watched on a more daily basis. I feel the importance is you sell them in steps down (puts) I do no like to experiment with naked calls as they really can run up. We will see how it goes. For me these stocks are all MOMO stks with high premium and have to be treated like that. I have mentioned in my comments on Sunday that people entering this play should start off only with paper trading. DONT be a Hero!
    Looking forward to meet all of you end of the week!!!

  32. Phil/sorry   No worries – Let me cheer you up with a koch feel-good story….
    Yeah, that should do it….. :(

  33. Weeklies / Yodi – Also, AMZN reports on Thursday so you need to watch this one closely!

  34. Once again, IBM to the rescue of the world:

    Modern solar collectors can concentrate only so much energy for safety's sake: too much in one place and they risk cooking themselves. An IBM-led group is working on a new collector dish that could avoid that damage while taking a big step forward in solar power efficiency. The hundreds of photovoltaic chips gathering energy at the center will be cooled by the same sort of microchannel water cooling that kept Aquasar from frying, letting each chip safely concentrate 2,000 times the solar energy it would normally face. The collector also promises to do more with sunlight once it's trapped: since the microchannels should absorb more than half of the waste heat, their hot water byproduct can either be filtered into drinkable water or converted into air conditioning.

    Not worried about the latest  cell phone design….

  35. StJ // AAPL 
    Thanks for the thoughts – logical. My short puts were down 50% so I decided to add a few more, that's all. 
    Phil // AAPL
    Please explain this "AAPL is the same thing, you say you have $350s at $42 so you OWN AAPL at net $392 and now it's $390.  Do you think this calls for drastic action? "

    Now I'm concerned that my whole mode of thinking about this is wrong. When I sell a short put, in my mind I am PUT the shares at the strike ( minus the premium that I have collected ) So, with the above example, my net for the shares would be $350 – $42 = $308 – not $392. Am i thinking about this incorrectly ??
    ( I remember the house story – yes, it's investment. I live here, I get it. )  My question was if AAPL only makes a 35% margin and the world catches on fire, and my break even is $308. What is best practice for rolling the short puts down. For example, do you look at the volatility, the delta, the % loss, etc ) 

    One of the reasons I was comfortable over reaching on these, was the lowest analyst I've seen is at the $350 mark. If I have a profitable cushion to $308 before I would start to lose money, I am in no hurry to take any action and see what earnings brings.

    I would imagine this is different for every stock, but lets just take AAPL for teaching.
    RE: the watch. not so sure about this play ( but then again I thought the iPad was going to flop ;> ) Do you remember a few years ago when there were a few 'watch cases' that held Nano's as a watch ? They just sort of fizzled. I'm wondering if a watch is something that holds too much individuality / history for it to be commoditized en masse. Also wondering what it could provide with such a small form factor. I do like the communicator idea. Or the great transporter / materializer in Picards office – ' Early Grey – hot '

  36. Gross/Rustle – He takes a lot of heat because he only times these "helpful" statements to benefit his own positions.  It's market manipulation on a Global Macro scale.  It's not that he's not right, it's that he's a sleazebag – like Greenspan with his Yoda-like statements that were timed to benefit his buddies.  Note that it's a coordinated attack:

    EL-ERIAN: It's Official — The World Needs To Worry About The Damage Caused By QE.

    I mean, really, did they "just" figure this out of could they perhaps have mentioned it BEFORE they sold off all their high-rate EU bonds for massive profits?  Now that Greenspan's on the PIMPCO payroll, he's suddenly pro tax increases.

    Senate/StJ – I'll be heading to Europe this summer and I'll be coming home with a lot of realtor's business cards. 

    ABX/Jabob – Well they got off to a good start but then they heard you cursing them out and lost hope.  

    Media/1020 – We're losing it.  I can see it happening all around me.  It's insane what people can get away with under the guise of "Democracy" and "Capitalism" but, if you complain about it, you must be a "Marxist" or "Socialist," both of which have been programmed to be bad words in America so you can barely even have an intelligent discussion on the topic in a public forum.  Communism, Socialism and Capitalism were, at one time, 3 valid ways to organize societies.  Now, two of the 3 systems have been villainized and we are now presented with the Democratic "choice" between extreme or regular Capitalism and, as noted above, the extreme flavor is being pushed with extreme prejudice…

    Atlantic City Conference/Terra – I can't believe it's this weekend already!  Do we have a reservation for poker somewhere?  In Vegas last time we had a nice single-player tournament game and that's fun as it limits losses and, if we get a private table, we can have a more friendly game, which is more fun for beginner players.  

    Tesla/Rustle – Garden State Plaza has a Tesla store – you should go take a look.

    FAS Money – No worries

    AAPL Money – Make or break tomorrow, let's take out the $40 calls for .33 as the $3,300 isn't going to break us and it makes it easier to take a profit on the calls. 

    $25KPM – Well-balanced. 

    $25KPA – Same deal on SQQQ

    GOOG calming down.  Couldn't close the deal at $800.  

    DMND/Opes – I thought we got out of them?  I would say it's wasting space but now they're too low to sell, I think.  They are trying a new strategy, raising prices which, of course, hurts sales but they are going for better margins and that's spooked a lot of people out of the stock – especially after JCP's epic fail.  However, the Jan $15s are now $1.45 and you can sell the June $14s for .75 and the Jan $17s for .75 and that's more than you ge for cashing out so – why not turn it into a spread and, if by some miracle they move back over $15, THEN you can DD on the Jan $15s because, even at $2, you would drop your average to $1.93 on the $2 spread with no cover on half the calls.  If they don't move over $15, then you've dropped the 1x basis by $1.50 to $1.87 on the $2 spread and still plenty of time to sell more calls. 

    Wheeee – RUT coming back, 905 on main index and 902 on Futures – that's all we wanted so tight stops if they fail those lines.  

  37. Phil // Calls
    I've also wanted to ask something for some time now.
    When you're either short puts, or OTM on a spread, you often mention not worrying or adjusting because ' you have 22 months to correct' or something to that effect. Give it time – patience, etc.
    So, to put it into a question – is there a relationship between time to expiration and assignment or is truly just random ?
    For example, is it less likely that since I've sold LEAPS ( Jan15 ) whatever, that they would not be assigned any more readily than a contract expiring in 6 months ( assuming all else is equal )

  38. Healthy 50M at 11am – too bad it was mostly negative…

    NFLX/StJ – With the morning pop, I'd say selling calls is probably a winner.  

    5 NFLX weekly $185 calls can be sold for $7 ($3,500) against 4 July $180/195 bull call spreads at $5.50 ($2,200) for a $1,300 credit.  Let's do one of those in both $25KPs.  

  39. Yodi // STO
    What is your position on NFLX ?
    What a strange run-up the last few days. Also, what does STO mean ? Sell to Open ?

  40. Phil // Spread Break
    Sorry – for some reason – lots of questions today.
    You mentioned taking out the callers on the 25K above. In the same vien //
    In the ICP I have the May $370/ 410 BLCS. Would it be prudent to take the profits on the short calls and let 370's run into earnings ?
    ( liked the NFLX call – very slick )

  41. Phil/DMND – Thanks for the adjustment suggestions. In terms of selling short term calls against the spread (2 x .75, to drop the basis down 1.50), is the reason not to go out to the Jan $10 puts for .75 (for net 9.25 entry), or the 2015 $8 puts for .75 (for net $7.25 entry) is because of the fundamental outlook?

  42. Political diversity/Phil – It just astonishes me. Contrast the US "political freedom" with South Korea. I was over there last fall and winter during the presidential campaign season, and got to watch the TV debates. The candidates who appeared in the debates were selected by how well they did in the preliminary polling, so there were the two people from the major parties and a third, a very bright young woman who is a communist. She holds some positions that to me seem at odds with her obvious strong intellect, but there she was right up there with the other candidates, as a reasonably viable contender. This in a country that has a credible "communist" threat right next door.

  43. Phil / Poker –  I will look into poker reservation at Borgata  :) 

  44. April 22nd, 2013 at 9:48 am | Permalink | Tweet this Ignore this user
    NFLX I as well entered Last Thursday STO 1x Apr4 140 for 4.05p and the 130p for 2.09 as well has improved by nearly 50% and we will wait for declaration to enter a new play.
    Just showing my play from 9.48 IT WAS ENTERED LAST THURSDAY!!! STO sell to open or  BTC buy to close or STC sell to close

  45. 25KPA/ Phil: Can you clarify the SQQQ adjustment?

  46. Phil// C
    I have a large Citi stock position in my retirement account at an average cost of $25. I am planning on holding the position long term. Can you recommend an Option play with them for my retirement account?

  47. NFLX / Phil – I guess we are hoping (not an investment strategy) that they can't break $200 then… I has held nicely so far and the options are indicating as much but they flew up 40% last time! That's one scary mofo stock…

  48. Wombat: Id like to take a stab at this just to put my thoughts on paper (accountability) to see if Im learning….. assignment can be due to putter / callers premium left vs. strike price, and dividend value vs. premium left. And i recall it going to a clearing house? and assigned at random.

  49. Looks like the manufacturing process is a bit rough on FoxConn – quite amazing if true.


    China Business is reporting that Apple has returned up to a mind-boggling 8 million iPhones to Foxconn because of quality issues.

    It's not clear which model of iPhone didn't come up to scratch, but China Business suggests that between five and eight million handsets were returned "due to appearance of substandard or dysfunctional problems." The total value of the loss to Foxconn could be up to $1.6 billion—if the numbers are accurate.

  50. stjeanluc
    Still have a Long play on NFLX and took a stab at the 195 Apr4 for 4.50 feel a bit saver there! They normally all cool of after the run up see GOOG down 8$ Still the weekly paper trade on GOOG looks good!

  51. Please note CAT up after the original drop now 80.91

  52. Buried in my charts here this morning need to get out of the weeds.
    IWM-FYI trying to keep some pretty strong support with Feb lows, 100day MA and undecided on the 20Weekly EMA at 89.87.  Technically supportive of a short term bullish play but IMO has to breach daily 20ema or it is just a bounce

  53. CAT / Yodi – I had 83.50 as a Fib retracement, but $80 is a good confluence zone. And they still see $7 of earnings for the year so 11.5x earnings is not expensive (unless you are AAPL). On the other hand, they earned $9.5 last year!

  54. I guess that Baron's article was good only for a couple of hours on the miners…
    WTF ABX?

  55. Yodi // Thanks
    Newt // Yes, but a little confusing. A short call or a short put can be assigned technically if it's 'in the money' ( ITM ) at any time. So if your strike on something is $30 – if the equity hits $29.99, you CAN be assigned. 
    Th einteresting thing is you have a built in 'cushion' becasue you get to keep the premium you collected from selling ( if you're assigned ) thus, taking you cost basis down to STRIKE – PREMIUM = BREAKEVEN. That being said, logically, there is a 'profit zone' until you get to that 'break-even' point.
    Example = if your strike was $30 and you got paid $5 to sell those $30's, you're break-even would be $25. But what if the stock went under $30 to $27 and you were assigned. You would be put the shares at $30 but with the premium you've collected, you be making a profit of $2.50.
    Does that make sense ? So my q to Phil was, in his experience, when positions go ITM, is there a 'rule' that he follows or looks at that tells him to roll AND is there a difference to the clearing house between contract that expire next week as opposed to 3 years from now in terms of being assigned.

  56. Wouldn't be surprised to see AAPL rally into earnings.  Then it's buckle your seat belts !   Might move big either way.  Continue to believe a bad quarter could be offset by a big dividend announcement.  Will be very interesting.

  57. albo // AAPL
    my gut tells me that 'they' will push it just far enough to wash out the $400's ( i believe their trading somewhere in the 40's ), so $360 would be my worst case if Cooke sits on his hands and the hedge boys come piling in.

  58. stj
    CAT yes holding positions on both CAT and DE Cat looks to be at a good base now. Had to roll my May 85 long to Jan 14 80 and sell the Jan14 85 and 75p for good measure.

  59. No 1020, that did not help…  

    IBM/StJ – At least someone in this country is keeping their eye on the big picture.  

    AAPL/Wombat – I thought you had the $350 calls for $42, not the short puts.  Same conclusion though, you own AAPL at $308, what's the worry at $398?  IF AAPL misses, THEN we will look at strikes and prices and possibilities but I really don't see the sense in spending page after page of text contemplating what-ifs that may never come.  There's not too much you can do with a 2015 short put if there's no 2016, is there?  The bottom line is – if you wouldn't be THRILLED to own AAPL for net $308 and hold it for several years at that price – then those puts were not too smart to sell in the first place.  

    You say you are comfortable with $308 because the lowest estimate you read was $350 but what kind of premise is that to own a stock?  You need to develop your own way of valuing things.  If I told you I was paying $5M for a Superbowl Ad for Philstockworld, you'd KNOW I was being an idiot, right?  What if I told you that a couple of guys said it was a good deal?  Would that change your mind?  What if I had some squiggly lines that pointed to the "value" of a Superbowl ad going up and some statistic that some magazine sold 100,000 subscriptions after running and ad and if I did that I'd get my money back?  No, it would not change your opinion because you KNOW what an ad is worth to a business like mine, right?  

    Well, you  need to LEARN how to evaluate stocks in a way that YOU are comfortable with and not rely on what other people tell you – especially random analysts who you probably have never heard of but simply write an article and tag it "AAPL" as if that gives them credibility.  If YOU are not sure of the value of a stock – YOU should not buy it – that's the very simple answer and it applies to homes, cars, actual apples, pants, shirts, jewelry… why would it not apply to stocks? 

    Assignment/Wombat – The real relationship is that, when your caller/putter has no premium left and is in the money, then you have a strong possibility of being assigned – much more so with short puts than being called away by short calls since the short putter forces you to give them your money in exchange for stock they can't sell at their strike price while a short caller would have to choose to pay you their money for your stock, rather than just wait for you to pay them not to take it away from you.   The reason you feel it's less likely to get assigned when you sell leaps is simply because there is more premium in the leaps you sell, which makes it less attractive for a person to assign you.  

    AAPL/Wombat – We have that in the Income Portfolio?  That doesn't make any sense…  I find it very hard to believe I made that call as it's not long-term, it's not conservative and there's no possibility of turning it into an income play.  It is in our $25KPM and we did buy back the $410s already and doubled down on the $370s when they were much cheaper.  Now it would be silly to take a chance as the May $410s are back to $12.  In fact, as our original entry was net $26.40 and we bought back the $410s for a $6 profit to net $29.40 on the naked $370s and then we doubled down at $28.50 (now $34), it's more likely we'll want to cover back up at $15+ on the $410s and put us in 2x the $40 spread for net $13.50 into earnings.  That's how you work a trade!  

    DMND/Opes – IF DMND does drop below $10 – do you want it?  That's the crux of selling short puts – you have to REALLY want to make that stock a long-term position in an income-producing portfolio with the expectation of decades of steady returns.  Can we possibly feel that way about DMND?  If you aren't 99.9% positive a company isn't going to go BK over the next 5 years, then it's never a good idea to sell puts – other than as a momentum trade.  

    Speaking of momentum, NFLX going nuts – testing $175 now.  

    Diversity/Snow – We have been trained in the US to believe the Democrats and Republicans are offering us opposite choices but they are really the Coke and Pepsi of Capitalism compared to the rest of the World's choices.  I guess that's good if you've been brain-washed into believing that nothing but Capitalism works (and anyone here can raise their hand if they don't believe it's been "proven" that Communism is a failure).  As I've mentioned before – we don't try any alternatives and, in fact, we don't even discuss alternatives anymore as Economics in schools simply teaches Austrian vs Keynsian Capitalism and good luck finding a Philosophy major these days (which used to be mandated in Government studies).  Of course, how can students ever decide to become Philosophy majors if they've never even been exposed to it in the public schools – even if they didn't mind being "unemployable" with a Philosophy degree.  God help us if we paid people to think…

    Poker/Terra – Thanks. 

    SQQQ/$25KP, AAPL Money, Newt – We're taking out the short May $40 calls (now .32) as we've already made a nice profit and, by having just the naked long $35s (now .95), if they spike up to something interesting, we can easily cash them out.  If not, then we risk losing $3,200 more than we would have lost if AAPL flies higher.  Don't forget, the whole point was to guard against an AAPL drop – and that's in 2 days – if at all.  

    C/Turning – Very nice.  I'd sell 1/2 the stock for $44.82 and pocket that and add the BAC play from the weekend and then I'd take some of the huge amount of money you still have left and buy 1/2x (same as shares you have left) of the C 2015 $45/60 bull call spread for $5 and sell 2x of the June $45 calls for $1.72 and now you pocket back $3.44 of the $5 you spent on the spread and, if you get away with that twice, you can ditch the stock and just leave the free spread or start buying more stock with your rolling profits until you're back to 1x of the stock and 1/2x of the spread and then you can keep selling 1x of the calls for income with no worries of it getting away from you. 

    Wow on the RUT – 907 on the Futures and we finally stop out – not too shabby!  Meanwhile, could be a bit of a toppy signal overall for this little rally.  Dow added just 15M in next 90 mins since that impressive 50M in first 90.  

    NFLX/StJ – As we learned last time, if they do pop on earnings, that just makes them a better short.  How many times did I say I was pissed I missed shorting NFLX?  Not this time. 

    Dividends/Newt – Good point, something else to consider on those kind of stocks.  

    AAPL/StJ – Well there's something that can cause a delay! 

    CAT/Yodi – Funny how people are willing to forgive them but not the commodities CAT equipment is used to produce.  

    IWM/Dawn – They are certainly giving that $90 line a good workout.  Don't forget there's a rebalancing at the end of the month that distorts the squigglies. 

  60. Guy Adami says he wouldn't touch gold.  Here's TMF on it:


    According to the former assistant secretary of the Treasury under President Reagan, Dr. Paul Craig Roberts, the price collapse was an orchestrated attack on gold and silver coordinated by the Federal Reserve. The assault saw prices plunge an unprecedented 10% in one day at one point.  SPDR Gold Shares(NYSEMKT: GLD  ) is now 12% lower from where it started April, while the iShares Silver Trust (NYSEMKT: SLV  ) is down 18%. 

    For the tinfoil hat brigade, the collapse, coming as it did just days after President Obama met with the heads of Goldman Sachs,JPMorgan Chase, and Bank of America, was enough of a nexus to indicate that this was a response to the threats posed by gold (and even Bitcoin) to the Federal Reserve system.

    Bullion dealers are reporting they're seeing individual purchases every bit as strong as occurred back in 2008. My bullion and coin dealer, JM Bullion, has upwards of a three-week delay in shipping American Silver Eagles, yet dealers everywhere are finding it increasingly difficult to get supply. Buyers from India to China are also racing to scoop up gold, with the China Gold Association reporting retail sales tripling in the country between April 15 and April 16, while Hong Kong and Macau have reported volume surges of as much as 150%.

    Perhaps the global banksters are coordinating an attack on precious metals to protect their position, as the conspiracy theorists suggest, but if so, it seems their plan is backfiring, as they've instead created a tsunami of demand for physical gold and silver.

  61. Phil,
    From the old income portfolio:   I’m sitting on BBY May13 $17 short calls, now $6.45, traded for $1.82.  I’m thinking of a 2X roll to cover the difference to Jan14 $25 calls.  The other alternative is to take the loss now (or a 1 for 1 roll) and maybe sell additional calls against the BCS I have.  Interested in what you think of BBY at this point, since it is not in the new IncPort.
    Similar question for TSLA where I have June $43 short calls that I already rolled once from $42.  TSLA seems to be running away, almost $50 now.  Here to I‘d like to know you’re view on the price behavior.  That will help me decide what to do next.

  62. hemas03
    BBY instead of DD have you ever looked at selling some puts against the shortfall of the roll of the caller??

  63. Nice, I just did the paper trade for the nflx weekly call & July bullish call spread idea. Let's see what it would happen. 

  64. Phil talking about CAT taking up like lightning 2.40 from this morning!!! Made a good roll this morning while it was still down.

  65. Shhh…..SGEN is breaking out.  $40 is next.

  66. As for the plant epigentics….shows how well organisms can overcome things (pesticides, drugs, etc) very quickly (aka, viruses – HIV).  If the organism has a short(er) life, then the quicker it can overcome the treatments and then propagate, and come back with a vengeance. 

  67. BBY/Hemas –  You have some kind of long spread and, if it was a 1/2 sale, then of course a 2x roll but I'd roll more conservatively ($23s at $3.80) as you're covering a huge gain and that's like being called away at net $26.80, up more than 10% from where it is now.  If not a 1/2 sale, keep in mind you only need to roll the net loss, not the whole thing.  I lost interest in BBY as $20-$25 is about the right price for them so no longer exciting to me and too jumpy to be a good income producer (as you can see from the calls you are stuck with).  TSLA is ahead of itself at $50 and I'd wait for earnings before taking action – they are priced for no problems, that would be rare for an auto-maker.  

    CAT/Yodi – That $80 line is right where we like them – too bad it didn't stick for more than 10 minutes…

    Submitted on 2013/03/15 at 3:39 pm

    CAT/Flkass – Are you new?   Well, I don't remember talking to you so WELCOME!  You got in just under the wire as we're closing Membership this weekend.  So, CAT – tempting around $85 and very tempting at $80 but now $88 and we're cautious into the weekend in the very least (maybe into 1st week of April) so I'd wait.  The VIX is so low (11.50) that it's not like we're getting great prices on short puts.  Feel free to remind me next week as I do love CAT and would like to add them to the Income Portfolio – IF they go on sale.

    Back to the present – there is no reason I can think of not to sell 5 2015 CAT $75 puts for $9.20 ($4,600) in the Income Portfolio.  Would we like to buy 500 shares of CAT for net $66 (now $82.40) – SURE!  

  68. Reminds me of last year where we kept hanging around 1360, bouncing up to 1400 once in a while….but eventually down we went.

  69. And before I forget, last night's episode of GoT – best so far this season!

  70. Phil: Thanks. I missed the SQQQ in the Appl port…. staying away from that port. Even though I traded the brass in for steel.

  71. I got my Litecoin mining rig up and running this weekend. Mining is hugely technical and a great deal of learning was involved.

  72. SGEN / Pharm – It's a beast… I wish they had 2015 options though! Or maybe they'll be bought out before that.

  73. stjeanluc – Danerys made a huge power play getting that 8000 man army on the cheap.  that was awesome.  

  74. No spoilers Terra… But it was pretty cool!

  75. yeah sorry about that.  but it was still kinda vague.  

  76. Phil // Diatribe
    Thanks – If you're charging by the word, I'm feelin pretty special.

    >> Value – Actually the irony here is that I listen to you and the list in terms of value.  I've read my share of corporate valuation books but they just make my head hurt. I've read sooo much about AAPL valuation I could vomit. I have also absorbed everything thats come across the list. I'm not throwing darts but point taken. I just thought the list of analysts valuations that came out over the weekend was interesting – it doesnt change my conviction on AAPL
    But it would seem no matter what I think it's worth, the system will have its way in the short term. I'm just trying to protect myself, 'casue I got ahead of myself on the 'one play' and need to hedge my risk - 

    >> Learning – that's why I ask. 

    >> Assignment – that was an awesome explanation and belongs in the book. NO ONE HAS EVER EXPLAINED THAT BEFORE IN ANY BOOK IVE READ. 
    >> AAPL $370/410 – my bad. It was a 25K play and I totally missed the other two steps. Sometimes when something sounds interesting out of another port I'll give it a go. Particularly this one because you had mentioned it was a good teaching tool – I guess I just missed the follow-up. There's still a $5 profit on the $470's, so I'll cash those and watch for a recover if they head back up.
    >> Hedging,  BTW the AAPL weekly puts are pretty reasonable if everyone isn't already full of SQQQ

  77. stjean/GoT
    You said that last week! I have not watched one yet (piling up on my dvr).  Looking forward to watching them when I get the time.

  78. Would love to see NFLX beat by a few cents and get a few more subscribers and jump another 100 points.  Can play it short with open calls for another 2 months then.  Like a broken slot machine.  Nothing like playing a stock at that point trading at 1000x p/e.

  79. Now that's QE:

    Although this new policy is undoubtedly ambitious in scale, it is no different in substance from what we have seen before. Since 2000, the Bank of Japan has raised the monetary base more than twofold through a series of seemingly endless quantitative easing packages. Despite policymakers’ relentless attempts to kick-start activity, as our chart shows, these purchases have had no meaningful impact on broader measures of money, on the price level, nor indeed on GDP. The hope must now be that the pace will make a difference. We are far from convinced.

  80. Phil/Yodi,
    appreciate your comments on BBY and TSLA.

  81. GoT/StJ – I loved watching the last scene of the previous episode in super slo-mo.  The look on the North Lord's face as he decided to teach Jamie a lesson was great – as was the dialog leading up to it.  I haven't seen yesterday's yet and have a meeting in the city today so won't until late tonight or tomorrow, I guess.  Meanwhile, the new show on DaVinci seems promising.  2 episodes so far and they've both had good moments.  Too many shows I can't watch with the kids, though…

    HOV back below $5, where they get interesting.  Here's why:

    NVR (NVR -8.1%- gets hammered today as its Q1 misseson all fronts. Net earnings soared 28% Y/Y however, as the builder reported improved sales and a slight uptick in margins. New orders improved 11%, while closings increased 18%. Average new order prices rose 9.5%, and average closing prices increased 8.5%. The cancellation rate was up at 13.2% from 10.3% a year earlier but down from 15.3% in Q4. 

    Homebuilders slip today on weaker than anticipated earnings out of NVR and a miss on Existing Home Sales numbers for March: [(XHB -0.6%, [HOV]] -1.6%MTH -0.6%RYL -1.3%TOL-1.4%TPH -0.4%DHI -0.2%KBH -0.2%LEN -1.2%SPF -1%. Home improvement superstore operators also feel the pinch: (HD-0.4% and (LOW -1.2%.

    11:47 AM The FTSE sports the slightest of hangovers, losing 0.1% (EWU -0.1%) as the rest of Europe (FEZ +0.5%) moves higher following Friday's post-close credit rating downgrade of the U.K. The news is a snoozer in the Gilt market, the 10-year yield falling 2 bps to 1.65%. Cable (FXB +0.2%) had given up some ground Friday afternoon, but gained it back today.

    "When the cover of a major financial magazine features a cartoon of a bull leaping through the air on a pogo stick, it's probably about time to cash in the chips," writes John Hussman, commenting on Saturday's Barron's cover. Ryan Detrick notes the Barron's big money poll was decidedly more bearish 6 months and 1,000 Dow (DIA) points ago. 

    Bill Gross channels Paul Krugman? "You've got to spend money," says the Bond King, arguing Europe and the U.K. have erredby pursuing fiscal austerity. "Bond investors want growth much like equity investors," he says. If austerity leads to recession, credit spreads will widen whether or not a country is able to print its own money. As of the end of March, Gross' BOND ETF had one-third of its assets in Treasurys, the highest level since July. 

    The Fundamentals of Market Tops (The Aleph Blog)

    Here Comes the Next Hot Emerging Market: the U.S. (WSJ)

    Both France and Spain missed their 2012 budget deficit targets according to Eurostat, news which probably won't surprise followers of the eurozone debt crisis. Spain missed its original target (6.3%) by a rather large margin (0.8%) while France missed its 4.5% goal by 0.3%. Both countries are well short of the EU-mandated 3% target and will need more time to bring their finances in line as austerity becomes less popular seemingly by the day.

    Moody's upgrades its outlook for the equity REIT industry to Stable. The sector is "well positioned to handle the fragile economic outlook and the potential for rising interest rates," the ratings agency says, in a new report. Moody's Senior VP notes that REITs have "access to multiple capital sources … at historically low rates that have lengthened their debt maturity profiles," boosted earnings, and increased fixed charge coverage ratios. 

    Wall Street betting billions on single-family homes in distressed markets (Washington Post)

    Wells Fargo (WFC) moves to add capacity in its mortgage origination operations, breaking ground on a 265K square foot expansion to its mortgage headquarters in Iowa. Wells – which has a 30% share of the lending market – is notably expanding as competitors like JPMorgan pull back and the MBA predicts a sizable lending slowdown this year.

    New regulations here and across the pond will eliminate $17B of trading revenue from the global banks, says Deutsche Bank – about 9% of total sales last year. The costs will be onerous enough, says Deutsche, as to maybe force the departure from FICC (bonds, commodities, currencies) trading of any firm with less than 6% market share. At risk: HBCRBSCSMSSCGLY.PKUBS has already exited. 

    As predicted by my daughter last year: Fracking comes to China (CNNMoney)

    Florida filed a lawsuit Saturday against BP and Halliburton (HAL) over the 2010 Gulf of Mexico oil spill; Mississippi sued on Friday, joining Alabama and Louisiana, which are part of a federal trial in New Orleans against BP and its contractors. The suit, among other things, faults BP for not changing the batteries on the rig’s blowout preventer, and accuses HAL of installing faulty cement barriers.

    Shares of gold miners are mixed after Deutsche Bank's Jorge Beristain cuts price targets for several North American gold producers, warning that some may need to raise capital by selling new stock. Newmont Mining (NEM +0.2%) is cut to Sell from Hold with a $24 price target (from $40), while Barrick (ABX -1.7%) and Kinross (KGC +2.5%) are reduced to Hold from Buy (III). 

    Encouraged by the efforts of gold miners to be more transparent about costs, Andrew Bary of Barron’s over the weekendmakes the case for owning beaten gold-mining stocks. The more accurate – i.e., higher – cost estimates aren’t just about trying to be more shareholder-friendly, they're about trying to avoid shakedowns by revenue-hungry emerging market governments.

    Budget approval is granted for $80M to advance development of a significant gold deposit in southwest Alaska. The Pebble Project — which now has contributions totaling $680M including $500M from Anglo American (AAUKF.PK) — is a critical piece of the puzzle for Northern Dynasty (NAK +0.8%) whose 50% interest in the deposit is the company's principal asset.

    Goldman Sachs cuts its forecast for copper prices this year, citing rising global stocks and mounting worries regarding China's growth outlook, but says the selloff in Freeport McMoRan (FCX -0.4%looks overdone. The firm maintains its Buy rating for FCX but lowers its 2013 and 2014 EPS estimates to $3.35 from $4.53 and to $3 from $3.20, respectively.

    Copper Plunges To 18-Month Low– FCX Tumbles With It (ChartWatchers)

    USG (USG +2%-) gets a boost today after Credit Suisseups the shares to Neutral on valuation and raises its price target from $22 to $27. The firm says recent checks of the wallboard market indicate that price increases appear to be sticking with no significant impact to sales volume, although distributors who deal more with commercial/non-residential markets have yet to see meaningful volume improvement. It's anticipating stronger trends as the year progresses, with wallboard pricing of +20% in FY13 and +8% in FY14.

    Caterpillar (CAT) CEO Doug Oberhelman puts a brave face on things following the company's disappointing earnings and outlook , saying that "this is the first year in three years where we've seen a relative degree of stability around the world," while there are stories in China that are "still pretty good." Oberhelman has a "little bit more confidence going forward" than he's had for a couple of years.

    Caterpillar (CAT +2.8%) is enjoying a bit of a relief rally followings its Q1 earnings, although Wells Fargo analyst Andrew Casey doesn't think it's sustainable. While Caterpillar is well positioned well for a pickup of developing market growth, "we do not have good visibility on the mining equipment cycle duration," Casey says. "Consequently, we continue to apply somewhat muted multiples to future earnings expectations."

    FuelCell Energy (FCEL +4.1%-) moves higher again today, continuing its climb after upping Q2 guidance last Thursday. Adding a bit of clout to the announcement was the disclosure on Friday that a number of insiders bought shares , including its Chairman and one of its Directors who each bought 200K and 100K shares, respectively.

    Adding to GE's (GE -2.4%woes today is an earlier announcement that its GE Healthcare unit has initiated a nationwide voluntary field corrective action of its Giraffe Incubator with a Servo Control Oxygen System and Giraffe OmniBed, saying that when the systems are powered "on", any manual settings entered by the clinician for the oxygen set point or radiant heater set point may be overwritten. GE says that as of yet, no related customer complaints or patient injuries have been reported.

    "The decline of the order intake was very disappointing," says analyst Jos Versteeg referring to weakness in Philips' (PHG) healthcare unit which the company says should still experience 3-4% growth for the full year (Q1 results). When asked on the call how confident the company is about delivering on that prediction, CEO Frans van Houten says "more traction in Northern Europe" and "increased orders on the government side" in the U.S. make him absolutely confident in the healthcare unit's "resiliency" in the eurozone and positioning in the U.S. once "the dust settles" on healthcare reform. (transcript) 

  82. It smells like teen spending, according to data from a Piper Jaffray survey. Improvements in both current fashion spending by teenagers and an intention to spend more in the future cuts across income levels and genders. If the spending upturn pans out, it's good news for the sector. Teen-focused: Aeropostale (
    ARO -2.8%), Rue 21 (RUE -2.1%), Zumiez (ZUMZ -1.8%), Wet Seal (WTSLA -2.6%), Vera Bradley (VRA -0.9%), Body Central (BODY -1.5%), Buckle (BKE-1.7%), American Eagle Outfitter (AEO -0.2%), Abercrombie & Fitch (ANF -1.2%), Express (EXPR -1.8%).  (full Piper Jaffray report)

    Coach (COH -0.9%) could see some more pressure from Michael Kors (KORS -2.3%) as the retailer introduces more luggage and accessories aimed at Coach's target buyer. The development could create another obstacle in Coach's quest to grow sales in North America. On tap: Coach's FQ3 earnings will be released tomorrow with comparable-store sales and direct-to-consumer sales in focus.

    Chiquita Brands (CQB +9.7%) rises after a positive mention in Barron's over the weekend. "The stock is up 40% since management" embarked on a dramatic restructuring last year and there's "more upside ahead," says David Englander who also expects operating margins on packaged salads to hit 7-8% over the next two years (from -0.4% last year) EBITDA should nearly triple. Similarly, SA contributor George Putnam says February's refinancing effort should "give the company breathing room to carry out its restructuring plans."

    Spending on food for cats and dogs continues to surprisewith industry sales threatening to topple the $20B mark this year. While many sectors are feeling the effect of consumer pulling back on spending, pet food companies have been able to keep their pricing power strong. Pet picks: Procter & Gamble (PG -0.3%), Colgate Palmolive (CAG -0.1%), Nestle (NSGRY.PK), Fresh Del Monte (FDP+0.2%).

    Mayoral candidate Christine Quinn will unveil legislation today in New York City to raise the minimum age to buy tobacco products from 18 years to 21 years. The Big Apple already has one of the most extensive set of smoking restrictions of major cities. Sector watch: Reynolds American (RAI -0.4%), Altria (MO +0.2%), and Lorillard (LO -0.3%) have seen buybacks and e-cigarettes sales help keep profitability levels up amid declining levels of cigarette smoking, but the increased promotional stance of the group worries analysts.

    Tobacco companies (LORAIMO) are dealt a blow after the Supreme Court rejects a first amendment challenge from the group to a 2009 law that restricts how they can market cigarette products. The high court left in place a ruling by the 6th U.S. Circuit Court of Appeals. 

    Biogen (BIIB +4.8%) rises after ICI analyst Mark Schoenebaum says the company's Tecfidera multiple sclerosis drug seems to be "crushing" its competitors. Following just a week on the market, Tecfidera's sales have achieved the same level that Novartis' (NVS) Gilenya reached after three months. However, Schoenebaum warns that it's still too early to make any definitive conclusions about Tecfidera. 

    Acadia Pharmaceuticals (ACAD +8.1%) spikes higher this morning, breaking out of a technical range on no specific news. The stock has been considerably volatile over the past month, having risen over 700% since November of last year on the back of strong results from its Parkinson's drug Pimavanserin.

    Gaming revenue is tracking 13% to 15% higher Y/Y in Macau, according to estimates from Wells Fargo. The projection falls in line with numbers from other investment firms and is another indication that the avian bird flu situation in China isn't cutting into Macau traffic dramatically.

    The local operator of Tokyo Disney Resort is set to post record profits of $804M for the fiscal year ending March 31. Though Disney (DIS +0.1%) doesn't own a stake in the venture, it generates a healthy amount of licensing fees off the theme park. What to watch: The popularity of the company's franchise characters in Asia are increasingly important with Shanghai Disney slated to open in 2015 to high expectations.

     Marvell (MRVL +3.6%) rallies after announcing a solution for remotely controllable LED bulbs that includes a new AC/DC controller/wireless microcontroller SoC (it can work with either theZigBee protocol,  or a combo of ZigBee and Wi-Fi). Marvell, which has been aggressively pushing into the LED controller/driver chip space, claims its solution uses half as many chips as alternatives. The announcement comes a week after Marvell announced Samsung will use one of its LED driver ICs in a new line of bulbs. Cirrus Logic (CRUSalso has lofty ambitions in this space. (Marvell/Sharp demo)

    An upgrade to Neutral from B. Riley helps Netflix (NFLX+3.1%) rally ahead of today's Q1 report; the firm cites the 17% drop seen in shares over the last month as a reason for changing its stance. It's worth noting B. Riley cut Netflix to Sell on July 25, 2012, as shares got crushed thanks to poor Q3 guidance. Netflix closed that day at $60.28, 64% below its current price. (earlier) 

    Goldman sees Facebook (FB +1%) delivering Q1 mobile ad sales of $382M, well above a consensus the firm pegs at $320M-$330M. The forecast is giving a modest lift to shares, which have been pressured by ad concerns raised by others (III). Facebook, which posted mobile revenue of ~$365M in seasonally strong Q4 and has been aggressively rolling out new ad formats (as well as tweaking existing ones), posts its Q1 report on May 1. Also: The Des Moines Register reports Facebook plans to build a $1.5B Iowa data center; server flash supplier Fusion-io (FIO +1.1%) must be pleased. (eMarketer) 

    Yahoo (YHOO +0.9%) rolls out a new flagship iPhone app, replete with summarization tech provided by much-hyped/criticized acquisition Summly. Aside from providing mobile-friendly summaries of Yahoo News articles, the app provides revamped search capabilities and (echoing Yahoo's new home page) relies on both PC and mobile browsing activity to deliver a personalized news stream. The app arrives a week after Yahoo launched new iOS Mail and Weather apps.

    Google (GOOG -0.3%) roundup: 1) Code from a test page suggests Google Now will soon be added to the company's minimalist home page. Now, which relies on a user's location, personal data, and preferences to push useful/time-sensitive info, has been well-received on Android. An iOS version is said to be awaiting Apple's approval. 2) Eric Schmidt defends Google's U.K. tax payments in the face of growing public/government scrutiny, insisting Google fully complies with British law. 3) Germany's data protection agency has fined Google a whopping €145K for illegally recording data via its Street View cars.

     "Does Steve Ballmer have another reason to watch his back?," tweets Paul R. LaMonica in response to a report activist fund ValueAct has taken a $2B stake in Microsoft (MSFT +3.4%). He isn't alone in thinking ValueAct, which invests in companies it thinks are "fundamentally undervalued" and could benefit from a change in direction, might push for the removal of Microsoft's much-criticized CEO, who reportedly doesn't want to leave until the 2017-2018 timeframe. But the fact Ballmer still seems to be supported by Bill Gates could make it tough to oust him. There's also speculation ValueAct could join calls to break up Microsoft. 

    A teaser image for a Wednesday Nokia (NOK +3.7%) event promising "something new" strongly suggests a new QWERTY phone is on tap. Many think the phone is a new Asha model, particularly given the event has been announced online with very short notice. Nokia's Asha sales fell 46% Q/Q in seasonally weak Q1, as the touchscreen feature phone line battles in emerging markets with Android hardware that's steadily getting cheaper.

    Apple (AAPL +1.6%) roundup: 1) Take this one with a big spoonful of salt: "Some Wall Street sources close to some Apple executives" tell Forbes contributor Gene Marcial some at the company are looking for a replacement for Tim Cook. 2) CIRP estimates the iPhone 5 made up 53% of Q1 U.S. iPhone sales, up slightly from Q4's 50%. Meanwhile, citing Verizon's Q1 iPhone mix, BMO (Outperform) now sees Apple's latest iPhone accounting for 55% of Sep. quarter iPhone sales, down from a prior 70%.  3) A Foxconn worker speaking to China Business claims Apple returned 5M-8M iPhones "due to appearance of substandard or dysfunctional problems." (Citi) (BGC/Avondale)

  83. VIX/Jrom -
    (this is a reply to a question from last week – sorry for the late response, but it was a good question and I thought the info might still be worthwhile)
    VIX expiration is usually the Wednesday before equity options expire, but not always.  According to the CBOE VIX specification, they expire "The Wednesday that is thirty days prior to the third Friday of the calendar month immediately following the expiring month."  Reminds me of Capt. Kirk explaining the rules of Fizzbin.
    I recommend this expiration calendar, which shows not only VIX and equity expiration dates, but the dates that the 2016 LEAPS will be available.  To the right of the calendar, there's a link to a PDF version and the 2014 expiration calendar.
    Finally, to see the VIX settlement value, check the quote for VRO a little while after the market opens on expiration day.

  84. BTW, just wanted to say hello all – I'm a new basic Member, but I was "lurking" for awhile as a report member in order to read the posts to get a feel for the site. I'm impressed not just with the educational potential here, but by the supportive community you've all created.
    I spent a long time becoming an expert at LOSING money trading options, but I got bored with that and thought it might be fun to try the other side.  PSW looks like the perfect place to do this.
    So, to all of you who made money selling me premium – you're welcome!  But now you're going to have to find another sucker ;)


  85. Da Vinci / Phil – I saw the first episode and it does look interesting but I am worried it's not going to catch with the average viewer.

  86. VIX/Jrom
    (this is a reply to a question from last week – sorry for the late response, but I thought it was a good question and the info might still be worthwhile)
    VIX expiration is usually the Wednesday before equity options expire, but not always.  According to the CBOE VIX specification , they expire "The Wednesday that is thirty days prior to the third Friday of the calendar month immediately following the expiring month."  Reminds me of Capt. Kirk explaining the rules of Fizzbin.
    I recommend this expiration calendar, which shows not only VIX and equity expiration dates, but the dates that the 2016 LEAPS will be available.  To the right of the calendar, there's a link to a PDF version and the 2014 calendar.
    Finally, to get the VIX settlement value, check the quote for VRO a little while after the market opens on expiration day.
    (sorry if this is a duplicate post — I posted it before my other comment but that one showed up and this one didn't, and I've been having intermittent connectivity problems, so I thought it might have gotten lost)

  87. Mining/BDC – I'll be very interested to hear how that goes.  

    AAPL/Wombat – Exactly.  As Benamin Graham says: "In the short-term the market is a voting machine, in the long-term, a weighing one."  You can drive yourself crazy listening to people's opinions, you need to invest in stocks that YOU understand and are comfortable with owning for the long-term.  What I was trying to say is it very much matters what you think a stock is worth – that's why, in the last Income Portfolio, we dumped some positions and doubled down on others early and and that led to massive gains.  You have to have convictions to trade for the long-term and it's the exact opposite of trading for the short-term, where you can't fight the tide of sentiment but, if you are a long-term buyer, you buy for the long-term and, if a storm drives the prices down but your premise is still sound, you buy some more while it's on sale.  If you don't HAVE a premise to hang your hat on – how can you ever take advantage of the sales?  

    BOJ/StJ – Crazy.  

    /NKD just tagged 13,700 – that's always a good spot to short with tight stops over.  

    No problem Hemas.

    Welcome Jersey (my home state)!   Sorry to lose a sucker but happy to add a new voice to our community.  It really is a very good idea to go back and read the last month of posts and comments – you'll feel right up to speed if you do but, if you've done that as Voyeur first (which is kind of what it's designed for), then you're way ahead of the game. 

    DaVinci/StJ – Maybe not but cable channels are usually good about giving things a chance.  Apparently 8 are already scheduled so you can't say they're not giving it a good chance.  It's a great premise as DaVinci invented so many things – you can base each episode on one invention and run the show for 20 years…  I also know they build a massive town-stage in Wales – like they did for Boardwalk Empire – so that's a pretty major commitment.  

    LOL Rustle. 

  88. Pharm — do you still have your QQQ weeklies?  Looks good…

  89. Good reading:


    Britain's public debt was 260pc of GDP in 1816 at the end of near perma-wars: Seven Years War, American War of Independence, and the Napoleonic Wars. This was whittled down to 24pc over the next century by the magical compound effects of economic growth.

    The debt reached 220pc in 1945, the price for defeating fascism. This was certainly a drag on the post-War recovery, but it did not stop debt falling to 36pc by the mid-1990s.

    Interestingly, the UK debt the rose after the First World War, from 129pc to 158pc by the end of the 1920s, because the government pursued an extreme austerity and deflation strategy to restore Britain to the Gold Standard at pre-war parity. It was self-defeating on its own terms.

    America's debt was 120pc of GDP in 1945. That too plummeted.

    It is obvious that the effects of high public debt depend entirely on the circumstances. A hegemonic world power can get away with a great deal.

    A country with its own currency and monetary policy has huge scope to mitigate the effects, as we are seeing in the US, Japan, and the UK today. It matters enormously whether you have a fixed exchange rate, and whether you borrow in you own currency.

    Most of the big crises of the last half century – the Latin American debt crisis in the 1980s, the East Asian crises in the 1990s – is because countries borrowed in dollars, and were left high and dry when their currencies collapsed.

    The EMU crisis is a variant of this. The Club Med bloc borrowed in D-marks (ie the euro). They are now trapped with "foreign" currency debts that are asphyxiating them. They face a Morton's Choice of debt-deflation (deadly), or exit from the euro with a debt restructuring (less deadly).

  90. Welcome Jersey – boy r u in for a ride ; >
    FYI CAT not filling @ $9.20, already down at $9
    Phil  // Benji
    ya, always loved that quote. 

  91. Phil/C
    Unfortunately, our 401K with Fidelity doesnt allow us to do BCS. Is there another way I can do the "C" trade your suggested without the spread?

  92. Phil – thanks!  I posted an answer to someone's question before posting my intro, but the answer didn't show up even though the intro did.  I tried re-posting since I'm having occasional connectivity problems today, but still no go.  The answer had links in it — do such posts get held up while the links are checked?  I didn't get an error, just a page refresh.

  93. Pharm, your May2 QQQ's more than a double now, from .19 to .40… nice work!

  94. New shorter term option play on THOR a stock which was in Sep 10 37 and is still 35.70
    BCS buy the Oct13 32c @ 5.20 sell the Oct13 36c @ 2.83 sell Oct13 32p @ 1.35 all x 3
    Cost 390.00 with a max return of 795.00 at stock price of 36$
    Lower protection to 33.35
    Margin PM +- 380.00
    Looks like a sleeper to me with little work.

  95. AAPL over $400… Is it expensive at these levels?   :-)

  96. CAT/Wombat – I see sales at $9.10 and $9.15 up until 2:30 with a low at the last sale of $8.95.  I hope 1% isn't your make or break line for a $9.20 position.  

    Bull spread/turning – Whuck?  Get a new broker, dude.  I'd still cash half and diversify.  They had a good run, don't pay a dividend for you to hold them and don't have very good calls to sell against $45 stock that fell $6 in 3 days just a week ago.  They're simply not paying you well enough to accept that risk.  Can you do something better with $45 than sit in C and hope it goes to $50 (10%) before it falls to $40 (the 50 dma)?  I would think so…  Also, in 401K, there's no tax issue for getting out with a profit – that's your key advantage but only if you use it to your advantage.  

    Think about it, you have, for example, $45,000 tied up in 1,000 shares of C and all you can do is sell Jan $45 calls for $4.30 for 10% downside protection but also a 10% upside limit.  What's the point of holding the stock?  You can't do better, but you can do worse – that sums up the position.  You could, on the other hand, sell the 2015 $40 puts for $4.80 and that's the same 10% (but over 2 years) yet now you are protected down to $35.20 for free and you get your 10% up front and even if your broker charges you the full $35.20 – you still have $10 to put into the BAC play or something like it.  

    It's one thing if you started out and said, "sure, I'll put $25,000 on C as I think it's cheap" and, congratulations, now it's $45 and you were a genius.  But would that genius have said "sure I'll put $45,000 on C as I think it's cheap"?  If not, then follow our 2 step path to profit program:  Step 1:  Take the Money  Step 2:  Run.  See, very simple…

    Answer/Jersey – I'll check.  If the links looked spammy, they might have gotten held for moderation.  Just let me know if that happens and one of the moderators (colored boxes) can check for you.  It's a dynamic filter that "learns" so maybe if it gets to know you there will be less problems.  

    AAPL $400/StJ – Actually, I think we should cover the $25KPM at $15+ on the $410s – just to be responsible gamblers in our responsible portfolio.

  97. Jersyside
    Kinda a test. My only comment until now blocked, then lost. Not very important.

  98. Fixed Jersey.  I think multiple links is a red flag and maybe sounds a bit like a sales pitch (not your fault but we get hundreds of spam every day that is legitimately caught).  

    Blocked/Shadow – That's not the spam bot, you're just on "The List"…  8)  

  99. 25KPM / Phil – What expiration – May? They are still only $13.70.

  100. Did Ballmer get fired? MSFT up 4% – that's better than AAPL for cryin' out loud .

  101. Phil/AAPL – Regarding the cover statement with the $410 calls: Is this a half-cover of our longs *if* the May $410 Calls reach 15 bucks? Thanks.

  102. Scott-JJC-I think you asked me to take a look at this.  Besides the Copper fundamentals that Phil explains here for your consideration, on a pure technical review the chart a bit iffy.  Sitting near its 50% historical FIB retracement, just broke the 2011 lows (not clear yet if just a $.30 overshoot) with 2010 $36.60 next support region.  On daily chart I see no signs of positive divergence.  On 60m still very week (CCI can not even get to the 0 line) and has not yet breached 60m 20ema. 
    SQQQ-approaching kill zone $32.28-31.83.  Needs to hold this or it is gonna make a new low as it did hit technical resistance on Thursday (I mentioned this I believe Fri morning).  If price goes deep in the zone instead of a bounce then more likely to hit the new lows so I am going to be cautious on this one. For me, I want to see if QQQ fills its gap and if it fails making a new high (last week 69.79)  to time my entry in SQQQ (especially with all the tech earnings reporting uncertainty today/tomorrow). hope that helps

  103. Phil-thanks for reminder on rebalancing!

  104. QQQs….yes, still in them.  I have mainly May1 71 Cs for 6-7c, and 70.5 Calls for 9c.  I am now out of all the others.

  105. Actually there might some fire under Ballmer's ass now with these guys putting $2B. Only 1% of the float, but ready to be activists if needed. Might not be a bad time to get in MSFT!

  106. PHil
    I was going to blame the net, sun spots, or too many Jersey guys. It was YOU!

  107. Will tomorrow show some direction or will AAPL control all markets?

  108. MSFT moving up finally and at six month high.  collecting 3% dividend while we wait.

  109. CCJ/dawn – welcome back.. it was CCJ i asked about as they dipped into the 'kill zone' and have bounced back up. now sure if coming out of the kill zone means a turn?

  110. AAPL/StJ – Yes, the May ones – assuming they pop.  If not, we have all day tomorrow. 

    MSFT/StJ – MSFT, like NFLX, AMZN and even CAT have discovered, unlike AAPL, that the WORST thing you can do is actually sell a lot of stuff and make a lot of money.  If you do that – then you don't have any POTENTIAL to do better.  It's all about the potential.  AMZN lost money last Q and HOPES to make $1.47 this year and they are trading at 200 times what they HOPE they will earn if all goes well.  Why?  Because things can't get much worse and they MIGHT get better.  AAPL, on the other hand, foolishly MADE $13Bn last Q and is on track to make $43.66 per share this year so they trade for 9 times earnings.  

    Also, don't have cash – you want to have massive amounts of debt.  Investors hate cash.  MSFT used to have a lot of cash but they gave it away to their investors and then spent the rest on stuff nobody wanted to buy.  AAPL has $135Bn of cash but AMZN is smart too and OWES $19Bn in AP and another $5Bn in debt against $11Bn in cash and investments.  See, that's SMART because it MIGHT get better and then it would be a positive while all AAPL can do is add more cash and the law of large numbers says that adding another $10Bn this quarter is only adding 7.5% to their pile – who wants to invest in something like that?  

    Clearly, from their market action – the answer is: pretty much no one.

    Cover/Opes – On the $25KPM $370/410 spread it would be a full cover to lower the basis to $13.50(ish) which is a very nice return on $13.50 ($26.50) if we are right and not too tragic if we are wrong.  Why would you be messing around with short-term AAPL trades in the first place?  On the actual longs, the idea was that the SQQQs would cover a tragedy (hopefully). 

    You're welcome Dawn and I sincerely hope SQQQ does not make new highs! 

    That's right Shadow – like I have time to review comments…

    Tomorrow/Shadow – AAPL earnings after bell.  Probably an up and down kind of day (like today) until we get that resolved. 

    OK, that was fun folks – gotta go to meeting in NYC so – Later! 

  111. WOW, that AH volume spike is huge.  Nothing like supporting the panty straps!

  112. Margin Debt used to buy equities….GULP.

  113. NFLX crushed on earnings and revenues are not bad either. And they added 3 millions streaming subscribers in the US and abroad.

  114. NFLX – did anyone put on an earnings play for NFLX?

  115. NFLX…..Well, $300 is in the cards now, as $200 is OH resistance.  Thar she blows!

  116. NFLX / Scott - I did the play Phil recommended above, but it breaks even at 195 and loses money above that so may need to do some adjusting tomorrow…

  117. NFLX zoomed up to $205 – a little uncomfortable for our spread as we only collect $6,000 on the longs plus the $1,300 credit and, at $205, we'd owe $10,000 back but we only sold the weeklies so we'll see what the rolls look like tomorrow (assuming they hold $200, which they may not).  

  118. Remember on NFLX, last earnings, first day was big move and had a huge move over the nest two days after that.  Have to give time for shorts to cover.

  119. As an experiment, I paper traded a strangle on NFLX using deltas as a guide and you could sell a 130/230 weekly strangle for $1300 against $3000 of PM margin. Should be good tomorrow but margin has expanded greatly with this move up… It's a repeat of last time – up over $30 AH.

  120. That NFLX move is re-stickulous.  Fundamentals, BS. 

  121. Phil- Do you follow ZION? Would love to hear your thoughts on their earnings release today. I remember a year ago ZION used to track the market perfectly and we used it here as one of the markers .Thanks.

  122. Phil – thanks!  Got it.
    Wombat – thank you – never a dull moment…
    Shadow – agreed, not a big deal — just wanted to understand why one post worked and the other didn't.
    Speaking of which, after all that, I botched the paste of the links — not just one, but all three.  There's nothing like tripping over a chair as you walk to the podium.  I'm sure you can all figure it out, but here's the correct link to the expiration calendar, since that was the most useful part of the post.
    And now I'll shut up…

  123. scott—ooohhhh man, I spent lots of time trying to convince myself I could like that chart!  Ok, will look at CCJ.  A bounce out of zone is a good thing unless a dead cat bounce…will come back to you

  124. Phil
    After monitoring everyone except colors I need another crystal ball for tomorrow. Which way will it go? Down, up, down, etc., or Up, down, up, etc. SIMPLE!

  125. I guess if your arguments are refuted you can always attack the messenger or spread out lies:


    What I think is happening is that austerians have put themselves in a box. They threw themselves – and their personal reputations – completely behind the various elements of anti-Keynesian doctrine: expansionary austerity, critical debt thresholds, and so on. And as Wolfgang Munchau says, the terrible thing was that their policy ideas were actually implemented, with disastrous results; on top of which their intellectual heroes have turned out to have feet of clay, or maybe Silly Putty.

    As I see it, the sheer enormity of their error makes it impossible for them to respond to criticism in any reasonable way. They have to lash out any way they can, whether it’s ad hominem attacks on the critics or bitter complaints about bad manners.

    And by such pettiness the world is governed.

  126. StJ / Did the income port get updated this weekend?  

  127. Again with the fundamentals Pharm… 

  128. Income Portfolio / Burrben – Nope… Wanted to start the week less depressed! I'll get to it during the week.

  129. Jerseyside
    Don't take my lead on face plants. It takes way to long to get right, I'm working on it!

  130. Phil
    // NFLX
     - unbelievable, once this hits tomorrow I assume we roll the APR4 185 calls up and out ? and let the BLCS ride ? P/E is what now, 1200 ?
    // CAT
    I think ,almost unconsciously what I do now, is try to get your posted price or net. If I don't, I just switch it over GTC and I would say more than 60% of the time I'll get it within the week. If it's a spread, I"ll take the higher call, and then wait for the short to come around to fill the spread. Works more often than not.

  131. Pharm- Do you follow NAVB? Thanks

  132. Nflx/ I did paper trade the idea. I'd like to know how the adjustment is going to construct in tomorrow. 

  133. NFLX at $214 now…  They could be at $220 tomorrow morning the way it's going. Not an easy one to short.

  134. to all, 
    today for the first time when i try to go to psw using my desktop with firefox and avast….i get malware warning. over and over…
    using my chromebook no problem…any thoughts or anyone ever have the issue…tks

  135. scottmi/NFLX earnings play…..funny you should ask.  Last week  I bought a few NFLX 170 this- weekly calls, expecting a pre earnings run-up.  Well, looks like that came to pass, and more.  I sold them today for a good gain,  but I did not hold any of these through earnings.  (I thought about it…..all afternoon….but I've seen some  earnings plays evaporate pretty quickly in my time, so I got out)     Yes, I've been gone.  This time I didn't even lurk these pages.  Just  been hanging out on an island off the coast of West Florida, fishing, swimming, chasing bikini-clad beauties and trying to keep 'hydrated'.   My Irish skin is burned to a crisp.   But I'm rested, relaxed and maybe ready to work on something besides sand castles.  Or maybe I'll just apply some more sunblock and go back to the beach! 

  136. Or tonight…. now $220! Painful.

  137. Good to hear from you lflan! And good to see that you are enjoying life outside the markets. There is really a lot more to life.

  138. Yup, Nflx is up almost 30% today. wow!

  139. Scott/CCJ-Not sure what your time frame is so here is a technical analysis you can fit into your own time frame…
    indeed it did bounce off the swing kill zone where there was a fresh rally-base-rally on the daily chart.  Other positive is the CCI daily shows positive divergence (CCI made a higher low while price was still making new lows).  On 60m price also did break the 60m downtrend line (20ema).
    Today price hit 38.2% fib on a weak bounce that also left the 60m cci overbought.  There was also a supply level there.  The key for me is if price can hold a higher low around 17.75-17.60 (a 60m rally base rally). Valid uptrend price should not breach the last pivot low 17.52.  If does, likely price will find another low.  If it can continue to bounce the next kill zone is 19.34-19.60 which will be close to where daily 20ema will be upon arrival.  I expect a bull/bear battle there as the bears will want to short at this technical level that matches up with the kill zone. 
    What else I watch is that the daily CCI is getting stronger.  Right now it is showing positive divergence, as discussed, but it is still weak.  I was taught on mean reversion trades (like this one as it is in a downtrend) do not assume the trend will change until it proves itself.  Thus target prices planned at continuation of downtrend resistance levels.
    Note volume was not exceptionally strong. something I want to see to tell me buyers are there…
    Finally, on its next move up if it does not make a higher high I get out.  Tight stop because if it breaks the must hold level I mentioned it may retest $16.41 again.
    Probably TMI.  Hope helps.

  140. Veda-ZION—I look at this guy's recap everyday (mainly for VXX) but noticed ZION (mid page)…What's the chance of that!  Wonder if Phil has a different take.  FWIW

  141. Jersey- thx, yeah found that out the hard way as they were part of my hedges but didn't pay out bc didn't close at end wed so didn't make any $$. Anyways, going to do my best to come for Saturday and Sunday. 

  142. Cramer is usually an idiot, but he does point out to something that I look at more than P/E – it the PEG ratio. Not taking into account earning growth is the biggest mistake that people are making. For example, which company is more attractive:

    Company 1 – P/E is 8 and earning growth rate is 2%
    Company 2 – P/E is 25 and earning growth rate is 30%

    The first one looks cheap but the second one is actually more attractive because of growth. 

    I pointed to that on my blog back in 2011 under Earning Growth:

    I actually have to go back to re-create screens based on that article now!

  143. From Josh Brown:

  144. Pharm, I had to study the chart as their is lots of very technical terms, but shazam, its accurate!

  145. TSLA – I gotta chime in.  As with a Bentley or a Yugo, all cars are worth $0.00 in the end.  Cool yah!  But, that chart looks like SLV before it crashed.  Be careful out there!

  146. stj Did you see my put trade of last Thursday on NFLX . Incredible!!! My little two cents do nothing on NFLX tomorrow and let the heat cool off for two days. I think by the end of the week we looking better on the weekly trade I entered the 195 but still 20$ off as I said today these are MOMO stocks go up and down like a flair so do ignore this tomorrow.

  147. AMZN went up on sympathy to NFLX by 3.23 and even Phil I see is asking for AAPL now 440!!!! Hope you can still buy it for that price!

  148. Investwizard
    Which paper trade did you do on NFLX if it is my one from last Thursday you do not have to do nothing just sit back and smell the roses!!!

  149. NFLX / Yodi – Nope, didn't see that trade… That's one bad stock on earnings though 2 times in a row. I can imagine what the options are going to be like next time! You had to sell a $100 strangle on a $200 stock to be safe! Unreal… Next time you'll need $200 on a $300 stock.

    Probably going to need $100 to cover AMZN this week as well! I don't know about AAPL, but the options are saying that there is only a 5% chance of getting to $350 or $455. They are actually pretty balance, usually there is a bias to the downside. Tomorrow should be fun!

  150. All the 50 DMA have been retaken except for the Russell. It was so much ahead of the other indices and it's been hit the hardest.

    But with all the earnings and potential news this week, that could change quickly!

  151. Some more Brad DeLong on austerity:

    A casual perusal of 20th-century economic history, let alone more rigorous econometric analysis, turns up multiyear periods in the UK and US following the second world war, and in Belgium, Italy, and Japan in the past 20 years, when public debt was greater than 90 per cent of GDP but nothing much happened. Either stagnation in economies led to slowly rising debt levels, as in Italy or Japan of late, or growth returned and debt levels declined, as in the UK and US in the 1950s. The latter two escaped the black hole of debt without an austerity rocket booster…. [S]low growth is at least as much the cause of high debt as high debt causes growth to slow – which if you stop to think about it, as some of us did before this week, makes more sense. The current UK economy is exhibit A for such a dynamic…. On the other hand, public debt is sometimes incurred by spending on constructive things with a positive return, such as infrastructure and education. So it is common sense that slow growth is always bad for debt accumulation, but not all debt accumulation is bad for growth. Thus, the causality runs more dependably from growth to debt than vice versa…. [...]

    It is a victory for common sense and good policy that the International Monetary Fund has publicly decided to reverse its past mistakes and come out clearly for sensible fiscal approaches – not least recognising the impact on growth of cutting the deficit and that reducing public debt is a task that should primarily occur once countries are out of recession…. Such moderation will not suit many of those who seized upon the event-horizon hypothesis – that result’s attraction was that it suggested a crisis was around the corner as a spur to consolidation. But let us celebrate rather than mourn what this re-evaluation of the evidence demonstrates, even though most already should have known it…. [I]t is not worth provoking a crisis to forestall a crisis that is unlikely to come…

  152. stj
    April 22nd, 2013 at 9:48 am | Permalink | Tweet this Ignore this user
    NFLX I as well entered Last Thursday STO 1x Apr4 140 for 4.05p and the 130p for 2.09 as well has improved by nearly 50% and we will wait for declaration to enter a new play.

  153. Phil / C
    Unfortunately, I have no choice as far as switching to another broker from Fidelity. I am stuck with them.
    Phil what do you think of this idea.
    Sell 50% of my C holdings which I paid $25, now $45.
    Sell 2015 $45 Call for $7.15
    Sell 2015 $50 Put for $9.70
    This will bring my basis $7.15/ $ 28.58
    529% profit if Call away at $45
    75% if put to me at $50, with a cost of $28.58 which $3.58 more than my basis now.
    Because of a 401K, Fidelity will hold the put cash of $50 – $9.70=  $40.30 per share which i will use from the sell of half of C at $45

  154. Pharm,  Flowchart is hilarious.

  155. These 2 articles from SA supports our premiss for Cree earning that will be announced in tomorrow (04-23). We will see….

  156. Pharm, couldn't stop laughing at the "flow chart."  Only thing is where do Bill Gross, Mohamed Elerian, and Nuriel Roubini fit in?  Seems to me they got a role to play as well, maybe as "fertilizer" to all the BS?

  157. Phil- A strangle that I plan to buy on AAPL is the OCT 2013 450 C and JUN 350 P. On optimistic June QTR guidance, the upside could be great. However, if they hit the low end of the June estimates range, we could see $330 post earnings and the June Puts would cover me. The canary in the AAPL coal mine is the forward estimates for the June QTR. There is maximum divergence in Analyst estimates  and the guidance tonight will narrow the estimates divergence over the next week or so and allow us to catch a bottom. There could be other stuff in tonights call such as new products or use of cash that can impact the reactions but nevertheless, the most important focus is on whether the news flowing in from AAPL suppliers is indeed true.
    Please critique the above trade. Always appreciate your thinking process. Thanks.

  158. Dawnr- Thanks for the link. I am in ZION puts, but I always buy two release away to allow me to make adjustments so we will see how it flows. 

  159. /CL / Phil – More than likely answered this before but…The June contract settlement date (calendar here) is 5/21 (Memorial day weekend).  What date do you NOT want to be trading those futures so you do not get stuck and assigned?

  160. Good morning!

    Lots of excitement in the Futures.  

    The Dollar flew up to 83.18 from 82.60 as the Euro ($1.298) and Pound ($1.52) collapsed and that and poor China Manufacturing numbers were bad enough to strengthen the Yen (98.60) as a flight to safety, which knocked the Nikkei down to 13,550.  

    Things are calming down now and the Dollar is back to 83.09 and our Futures are back to flat.

    11:08 PM China's flash HSBC PMI  for April slides to 50.5, missing expectations by a full point and against March's read of 51.6. "New export  orders contracted after a temporary rebound in March, suggesting external demand for China's exporters remain weak," says HSBC. "Weaker overall demand has also started to weigh on employment in the manufacturing sector." Shanghai (FXICAF) is off 1.5 in early trade. Hong Kong (EWH-0.9%.

    5:03 AM Flash German manufacturing PMI falls to 47.9 in April from 49 in March and vs consensus of 49; manufacturing output 47.9 vs 50 in March; services 49.2 vs 50.9 in March and consensus of 51; composite output 48.8 vs 50.6 in March. "The latest figures suggest any rebound in GDP" in Q1 "could be rather short-lived," says Markit, with demand weakening  amid concerns about the economic outlook for southern Europe." (PR)

    5:07 AM Flash France manufacturing PMI rises to 44.4 in April from 44 in March and vs consensus of 44.3; manufacturing output 44.2 vs 43.2 in March; services 44.1 vs 41.3 in March and consensus of 42; composite output 44.2 vs 41.9 in March. "Accelerated job shedding and an ongoing squeeze on output prices…highlight the pressures facing firms amid a tough economic backdrop," says Markit. (PR) - Below 50 is still contracting, though

    5:14 AM Flash eurozone manufacturing PMI slips to 46.5 from 46.8 in March and vs consensus of 46.8; manufacturing output 46.3 vs 46.7 in March; services 46.6 (in line) vs 46.4 in March; composite output unchanged at 46.5 (in line). "The survey is signalling a worrying weakness in the economy" at the start of Q2 says Markit. "The renewed decline in Germany will also raise fears that the region's largest growth engine has moved into reverse, thereby acting as a drag." (PR) 

    5:32 AM Shares in China lead Asian stocks lower after HSBC's PMI survey for the country falls more than expected. Japan -0.3%, Hong Kong -1.1%, China -2.6%, India -0.3% to 19107. 

    5:35 AM European equities climb following an improvement ineurozone-wide PMI data, with German shares just about brushing offpoor PMI readings for the country, although the euro falls vs the dollar. EU Stoxx 50 +0.8%, London +0.5%, Paris +1.2%, Frankfurt +0.1%, Milan +0.7%, Madrid +1%. Euro -0.7% at $1.2979. 

    Oil fell all the way to $87.80, now $88.38, gold never moved so good support here ($1,414), silver hit $22.60 and still near it, copper tested $3.08, nat gas was down to $4.25 anyway and gasoline is back to sad at $2.73 but that $2.72 line has been very supportive.  

    Apple, AAPL, Apple, AAPL, Apple, AAPL, Apple, AAPL…  there, now that's out of our system….

    Apple (AAPL) has won the latest round in the global IP wars, with the International Trade Commission ruling that the company did not breach a Motorola (GOOG) patent for a sensor to prevent a user's head from activating the touch screen. The patent was the last one left in a case that originally involved six patents. Two were terminated and and three were found not to have been violated. Had Apple lost the case, the ITC could have banned the import of iPhone 4 devices into the U.S

    Tuesday's economic calendar:

    7:45 ICSC Retail Store Sales

    8:55 Redbook Chain Store Sales

    9:00 PMI Manufacturing Index Flash

    9:00 FHFA House Price Index

    10:00 New Home Sales

    10:00 Richmond Fed Mfg.

    1:00 PM Results of $35B, 2-Year Note Auction

    Poor positioning by portfolio managers is suggesting a near-term market pullback may be on the way, says BMO's Brian Belski. Right now he says they're inundated with questions from portfolio managers who are "clearly under-performing the market." When that happens, you know that managers are straying from their discipline. "When they stray," Bielski warns, "bad things happen, the market rolls over, you do emotional things and sell stock."

    An Ominous Market Indicator Appears To Be Confirming The Dreaded Third Top. (graph)

    EU near austerity limit, says BarrosoEC president José Manuel Barroso warns public spending cuts alone will not solve European financial crisis.

    This economic funk won’t go away until the eurozone crisis is fixedPlease make me chaste, but not yet. This famous prayer by St Augustine has been the defining characteristic of the policy response in advanced countries to the economic crisis ever since it began nearly six years ago.

    Italian 10-year bond yields fall 11 bps to 3.98%, dropping below 4% for the first time since November 2010. The decline in yields comes as European stock markets rise amid an improvement in eurozone PMI data, although the picture is still grim. FTSE Mib+0.9%.

    The rally in Japanese equities is just getting started, Morgan Creek's Mark Yusko told a Grant's conference last week. Stocks there remain cheap by any number of metrics and, a bonus, companies have dealt with persistent deflation by relentlessly slashing costs – meaning strong profits on any incremental business. All that's needed is a little growth and "Abenomics" should cure that. DXJ +27.5% YTD.

    Jim Chanos isn't backing off, laying out his bearish case on China in a new presentation entitled, China: The Edifice Complex. The arguments aren't new to anyone who's been following along: Property bubble, diminishing returns on the capital investment boom, and massive corruption at both the government and corporate levels. Priced in? China A Shares (CAF) fell years ago and they haven't gotten up.

    Hong Kong home prices could fall up to 25%, according to Sanford Bernstein, after the government stepped up efforts to curb the bubbly market. In early returns, home prices fell 1.4% in the week ended April 14, the 4th consecutive decline and the biggest drop since 2010. Developer shares make up a nice portion of the EWH,+2.6% YTD.

    Chinese Investors Are Reportedly Having Big Money Trouble In North Korea.

    China April HSBC Flash PMI Eases, Points to Tepid Recovery. Growth in China's vast factory sector dipped in April as new export orders shrank, a preliminary survey of factory managers showed on Tuesday, suggesting the world's second-largest still faces formidable global headwinds into the second quarter. The flash HSBC Purchasing Managers' Index for April fell to 50.5 from 51.6 in March but was still stronger than February's reading of 50.4. A sub-index measuring new export orders fell to 48.6 in April from 50.5 in March, reflecting weaker global demand as the U.S. economic recovery remains fragile and the euro zone is mired in recession.

    Chinese Stocks Slump Most in Three Weeks as Manufacturing SlowsChina’s stocks fell, dragging the benchmark index down the most in three weeks, as a gauge of manufacturing in the nation this month trailed estimates. Anhui Conch Cement Co. slid 6.5 percent and Sany Heavy Industry Co. lost 3.2 percent, pacing declines by construction- related companies

    Yen Gains as China Manufacturing Growth Slows; Aussie, Kiwi DropThe yen rose versus all 16 major peers after a private report signaled a slowdown in Chinese manufacturing, underscoring concern the largest Asian economy is faltering and boosting demand for the safest assets.

    Fraga Says He’s Disturbed by Brazil’s Focus on Consumption. Arminio Fraga, Brazil’s former central bank president, is concerned by the government’s push to foster growth by encouraging consumers to spend more on credit. The speed of loan growth in Brazil merits “some monitoring,” Fraga, founder of Gavea Investimentos Ltda., said in remarks at an event organized by the Brazilian-American Chamber of Commerce in New York. Brazil is using state-owned banks aggressively to promote its goals, said Fraga, who was president of Brazil’s central bank from 1999 to 2002. “The excessive emphasis on consumption disturbs me,” Fraga, 55, said. “You’re borrowing a lot now, but time will come that people will have to pay. You need to do some things on the fiscal and monetary front and also pay attention, with a prudential mindset, keeping an eye on what these loan portfolios look like.” 

    More on Zions Bancorp (ZION) Q1 earnings: Net interest income declined to $418M from $430M in Q4 – net interest margin fell to 3.44% from 3.47%. Noninterest income rose to $121.1M from $54.2M thanks to a lower impairment on CDO securities than taken last quarter. Pleased by "somewhat better loan growth," management sees "renewed signs" of loan pricing pressure. (PR)

    As we approach the Spring home buying season don't look for any burst of supply, warns Lawrence Yun, chief economist for the National Association of Realtors. Home sales have been "stuck," he says, because there is just not much out there to buy. Home listing have increased slightly, but they're still far below average. And, with prices appreciating at a 10% clip in some areas, sellers aren't blinking yet. Home owners simply aren't likely to be in any hurry to list, Yun asserts, until conditions begin to stabilize. 

    Derivatives Bludgeoned by Debt Crisis Making Return: Euro Credit. Investors are reviving credit derivatives trades they used to boost returns before the financial crisis as unprecedented central bank liquidity drives down yields and default rates. 

    More on Rent-A-Center (RCII): Q1 misses on both a per share basis and revenue as total sales declined by 1% Y/Y, largely due to weaker sales of rent-to-own home merchandise in its core U.S segment, as well as the delayed issuance of federal income-tax refunds, rising fuel prices and higher payroll taxes. The company also guides lower for FY13, now expecting to earn between $2.95 to $3.10 with 3.5% to 5.5% in revenue growth, putting revenue in the range of $3.20B to $3.26B. In January, it had forecast $3.25 to $3.40 and 5% to 8%, respectively. Shares -6% AH.

    Copper, Oil Lead Commodity Decline as China Manufacturing SlowsCopper extended a third day of losses and crude oil dropped, leading declines in commodities, after data showed manufacturing growth was slowing in China, the world’s biggest user of metals and energy.

    Even as Halliburton (HAL +5.4%adds $1B to reserves tied to litigation involving the 2010 Deepwater Horizon rig explosion on top of the $300M it had already set aside, analysts are looking ahead to an eventual resolution. Barclays believes the progress outweighs additional potential settlement costs, Simmons sees higher expectations for the stock, and UBS likes the significant margin traction in North America and expects international growth to continue to outpace peers.

    Although Schlumberger's (SLB +2.1%) Q1 revenues came in light, Sterne Agee remains a believer in the stock, reiterating its Buy rating and $93 price target, noting that international margins beat expectations despite a usual seasonal slowdown. Rising international and deepwater activity coupled with a bottoming U.S. land market yield improves the firm's confidence in 2013-15 earnings growth.

    Peabody Energy (BTU -1.7%) sinks to its lowest price in four years as Stifel Nicolaus cuts its earnings estimates, citing lower coal prices and higher than expected costs. With 40% of planned 2014 production yet to be priced, BTU likely would benefit if a utility stockpile decline brings a recovery in thermal coal prices, the firm says, but Australia is a drag on results given continued slow demand for coal exports there.

  161. Power-One's (
    PWER +56.8%deal with ABB includes a "no shop" agreement and $20M breakup fee, and is supported by P-E firm Silver Lake (Power-One's biggest shareholder), says Stifel, which doubts a higher bid will arrive. Stifel notes Power-One's power supplies and solar inverters complement ABB's power control/quality offerings, and argues "the traditional inverter industry is facing a shakeout," as price/margin pressure, competition, and technology changes take their toll. Inverter vendor Enphase Energy (ENPH+4.7%) is up in sympathy.

    U.S. takes $21 mln from Fisker as automaker misses paymentThe U.S. Department of Energy took $21 million from cash-strapped Fisker Automotive on April 11 that will go toward repaying nearly $200 million in loans extended to the automaker under a U.S. program to spur advanced vehicle development. "The department recouped the company's approximately $21 million reserve account — funds that came from the company's sales and investors, not our loan- and will apply those funds to the loan," DOE spokeswoman Aoife McCarthy said on Monday.

    Airlines Seek Permission To Keep Passengers Waiting On The Tarmac For More Than 3 Hours.

    Michelin Quarterly Sales Drop as Europe Recession WidensMichelin & Cie. (ML), Europe’s largest tiremaker, said first-quarter revenue fell 8.1 percent as a recession reducing car sales in its home region widened to hurt demand at bulldozer and military-plane manufacturers

    Containerboard stocks look strong after Pulp & Paper Weekreports that a $50 per ton price hike in the sector is taking hold. Gainers: Rock-Tenn Company (RKT +3.1%), International Paper (IP+3.3%), Graphic Packaging (GPK +2.5%), KapStone Paper (KS+2.4%), MeadWestvaco (MWV +1.7%).

    RBC raises its price target on Outperform-rated McDonald's (MCD -0.6%) to $107 from $98 citing a projected improvement in margins of 130 basis points going forward. When asked about the "third straight year" of declining margins by Goldman analyst Michael Kelter, CFO Peter Bensen said on the call that there were more important considerations given the lack of growth in the industry: "Would we love higher margins? Yes, but in this environment, guest count growth and market share growth are [what is] critical." (transcript)

    McDonald's(MCD) fined in Brazil for pushing Happy Meals to childrenA consumer protection agency in Brazil has taken aim at the Happy Meal, fining McDonald's Corp on Monday for targeting children with its advertising and toys. The Procon agency in the state of Sao Paulo fined the fast-food company 3.2 million reais ($1.6 million), adding fuel to a global debate about fast food and public health.

    Shares of Lululemon (LULU +6.7%) spike higher in a late day rush to touch $73 for the first time since January. A general consensus is building amongst analysts that the retailers has outlived the "too-sheer" pants issue without damaging its brand reputation.

    More on ARM Holdings (ARMHQ1: adjusted pretax profit+44% to £89.4M vs consensus of £77.6M. 2.6B ARM-based chips shipped, +35%; mobile chips +25%, embedded +50%, Mali graphics processors surge fivefold. ARM "made an encouraging start to 2013" and it projects FY revenues in line with market expectations, which are £675.8M. Shares +5.9% premarket. (PR)

    More on Texas Instruments: Q2 guidance is for revenue of $2.93B-$3.17B and EPS of $0.37-$0.45, in-line with a consensus of $3.04B and $0.38. 2013 R&D guidance is lowered to $1.5B from a prior $1.6B. Q1 analog sales -2% Y/Y (also -2% as Q4) and 58% of total, hurt by Silicon Valley Analog (formerly National Semi). Embedded processing +4% (+6% in Q4) and 19% of total, boosted by microcontroller sales. Other (inc. slumping/discontinued wireless ops) -24%. R&D spend -18% Y/Y (wireless restructuring), SG&A -1%. $679M in buybacks. CC at 5:30PM ET (webcast).TXN +1.3% AH. (PR)

    "Microsoft (MSFT +4%) can flourish in the hybrid cloud world," states ValueAct Capital founder Jeffrey Ubben at a investment conference, asserting the software giant's enterprise ops can perform well regardless of how PC sales fare. If Uben plans to use his firm's new $2B stake to make an activist push, he isn't showing his hand for now. Instead, he's comparing ValueAct's investment in Microsoft to its investment in Adobe, which (from all indications) is successfully migrating its customer base to cloud apps, and insisting his thesis will pan out over the next 3-5 years.

    Windows 8.1 (Blue) will indeed feature the return of the Start button in desktop mode, The Verge reports, backing up a ZDNet report suggesting likewise. But it won't feature the return of the Start menu - the button will merely allow users to click their way to Win. 8's (oft-criticized) start screen. The Verge also backs up ZDNet in stating Microsoft (MSFT +4.1%) will provide an option to boot directly into desktop mode. (ValueAct: III)

    A New Tax Could Send Shoppers Back to the MallYour Internet shopping addiction could soon face a new tax. The Senate appears ready to ease the restrictions on how states can charge sales tax. Under current federal law, online retailers only collect the tax when they have a physical presence—a store, warehouse or office—inside your state. In a new bill expected on Monday to clear a procedural Senate vote, all online sales would be subject to state sales taxes.

    The Senate yesterday voted 74-20 to limit debate on legislation that would force retailers to collect taxes for online sales, opening the way for a final vote on the measure, which could take place this week. The White House officially backed the bill for the first time, although its prospects in the House are uncertain even if its passes the Senate.

    Netflix (NFLX): Q1 EPS of $0.31 beats by $0.13. Revenue of $1.02B (+17% Y/Y) in-line. Shares +17% AH. (PR)  More on Netflix (NFLX): The company smashes estimates as it had no trouble adding to paid domestic and global subscriber totals. Netflix added 2.03M net domestic streaming subscribers in FQ1, compared to 2.05M last quarter and 1.7M a year ago. International subscribers came in at 1.02M, compared to 1.81M last quarter and 1.12M a year ago. DVD memberships dropped slightly to about 8M. The company issues FQ2 guidance of revenue of $665M-$673M and sees a jump in total members to 29.4M to 30.05M. NFLX+19.3% AH. (company letter .pdf)

    An interesting nugget from Reed Hastings' letter to shareholders is that a very low number of people signed up for a free month-long trial to the service just to watch House of Cards only to then quit after a round of binge viewing. According to the exec, only 8K left – compared to the millions who stayed. NFLX +25.5% AH.

    Netflix (NFLX) is rolling out an $11.99/month family plan for subs who want access to 4 streams at once (up from a current limit of 2). Also, Netflix says it will let a deal with Viacom (VIA) that covers Nickelodeon, BET, and MTV content expire in May, but is in talks to license "particular shows." Domestic streaming's contribution margin rose to 20.6% from Q4's 19.6% and Q1 2012's 14.3%, while domestic DVD's profit fell $15M Q/Q to $113M. International streaming had a $77M loss, down from Q4's $105M. Q2 sub add forecasts: 200K-850K for domestic streaming (down from Q1's 2.02M), 150-750K for international (down from Q1's 1.02M). (more) (shareholder letter)

    Brazil's sluggish economy starts to weigh on ecommerceBrazilian ecommerce executives used to laugh when asked about the stagnation of Latin America's biggest economy. Not anymore. With inflation eroding consumption in this nation of 194 million people, the economy is casting a shadow over a once-hyped market that recently attracted Amazon, Facebook, Twitter and Netflix.

    Google(GOOG) Could Be On The Brink Of Overhauling To Include A Lot More Information.

    A consumer launch for Google Glass (GOOG) is "probably a year-ish away," Eric Schmidt tells BBC Radio. For now, Glass is only available (at $1,500/unit) to select developers and winners of a recent contest. Regarding the growing privacy concerns caused by Glass' built-in camera (whose usage, unlike a smartphone's camera, isn't easy for third parties to detect), Schmidt admits Glass will require "some new social etiquette." "It's obviously not appropriate to wear these glasses in situations where recording is not correct."

  162. NFLX is extreme, to say the least but none of us would be complaining if AAPL does that this evening!  Last Q, they went from $100 to $145 the next morning and then up to $175 the next day and barely a pullback ($158) before grinding on to finally fail at $200.  That resistance seems to have been solved yesterday and now they're at $215 as of end of trading yesterday.  Realistically, they beat by .13 out of .18 expected, which is a lot but .29 is expected next Q and they didn't beat on Revenues, they beat because they cut costs (like many companies this Q) perhaps by failing to renew deals like their VIA contract (in news above) that "saves" them money by dropping content.  Anyone can save money by no longer producing a product – the trick is, do you still keep the customers?  

    Netflix added 2.03M net domestic streaming subscribers in FQ1, compared to 2.05M last quarter and 1.7M a year ago. International subscribers came in at 1.02M, compared to 1.81M last quarter and 1.12M a year ago

    Obviously, it's hard to bet against them now but $163 on Friday to $217 Tuesday morning is 33% on a .13 beat out of what was supposed to be a $1.33 year and, of course, I will point out that they were $200 and fell to $163 since last Q – but the big dip didn't come until people got nervous about earnings.  They are now not just priced for a single .13 beat but now every Q needs to crush (like AAPL) and next Q is supposed to be .29, so they'd better not have any major expenses.  Of course, that's likely why they are blowing off the VIA renewal – to keep those costs down.  

    Unfortunately, there are no July calls higher than $200, because no one in their right mind thought they'd be needed.  Sept goes up to silly prices though so we'll likely pick up a Sept bull spread and do a 2x roll on the short calls and maybe sell some puts if they're not too silly. 

    ZION/Vedan – We used to play them, back in the crash, as a recovery favorite when they were about $6 but they topped out at $30 and we lost interest after that.  I tend to follow leads that take me to certain banks and then I spend the time it takes to look at the books etc until I can understand them.  Unfortunately, almost 3 years later now, I would have to look into Zion all over again because I don't know how their current mix of business looks.  After 2010 we flipped to focus on JPM and then BAC last year and this year I was liking XLF as the Fed's gusher of money was pushing everyone but I haven't found a new horse yet (other than the weekend BAC play, but that's an old horse) – hopefully we'll get one in earnings season but, so far, nothing seems thrilling – including Zion at $23.60. 

    France up 2% on that better than the rest PMI.  

    Oh damn, CNBC talking about cicadas already.  I remember being in Florida once when the streets were covered in them – it was horrible, you just heard crunch, crunch, crunch as you drove….  Supposedly they taste like shrimp though…

    CCJ/Dawn, Scott – I hate to bring up something as droll as fundamentals, but it's all about Japan's 50 reactors that are off-line since last May.  That caused a massive supply glut and drove uranium down to 50-year lows as supply had been stepped up in anticipation of more plants being started, not 20% of the Worlds total being shut down.  Meanwhile, Japan is restarting/has restarted most of their plants and China is moving ahead with the construction of 31 more, which will give them more than Japan by a few.  Russia is building 11 and the only other massiv user is France, with 58 and, of course, their economic Future is uncertain still and power consumption is down with the economy.  So it's hard to say WHEN uranium will come back but China's construction pretty much guarantees it will come back.  Therefore – a nice play for the patient investor.  You can sell CCJ 2015 $17 puts for $3 and that's net $14 with just about $3 in margin so a nice, speculative way to enter a position.  

    Which Way/Shadow – That's Wednedsday.  Tuesdays are "Toppy" or "Terrible" – looks like we're going for toppy today. 

    NFLX/Wombat – StJ and Cramer make a good point on PEG.  NFLX not too overpriced if you believe they sustain the growth.  However, that's just extrapolating in a no-competition scenario when, in fact, they are getting more and more competitors every day.  I pay my cable company an extra $10 a month and we have all our premium channels on demand as well as the 4 major networks.  I have NFLX too but I wouldn't if I were looking to save money as my cable comes in HD and NFLX doesn't – and probably never will as it's already using about 30% of all the bandwidth in the US. 

    CAT/Wombat – Waiting is a good discipline but, 5% is my rule of thumb.  I'm not going to sweat a dime on a $5 option – especially if I have reason to believe the stock is oversold.  I'd say 75% of the time, if you are patient you get your price, so it never really makes sense to chase anything but, if you are early in a scale and very much want to own a stock for a net strike – those factors do matter.  

    Firefox/Mill – That's a new one.   I'll let Matt know.  

    Welcome back Lflan!  I've never been on that side of Florida (my Mom's in Boca and my Brother's in FtL) – glad you had fun. 

    ZION/Dawn – Well they had earnings – that's why there's more volume.  Nothing wrong with selling puts though but, as I said above, I have no particular reason to like ZION up here as I doubt they top $25.  

    Good chart, Pharm. 

    TSLA/Jfaw – They have yet to have their first recall but I am very impressed that there have been no major breakdowns as they ramp up productions.  I expected there would be stories of "stranded" owners or something by now.  I guess that's the good thing about a $50K price tag – when a rich person's car breaks down they just call someone and get it fixed, if a poor person is driving a TSLA that breaks down in the desert, their "ordeal" makes the front page of the Enquirer..  

    Congrats on NFLX Yodi. 

    Big Chart – Gotta blast through 920 on the RUT to keep things going – you don't want to see these lines acting as resistance – especially the ones that are below the 50 dmas.  NYSE did it's job very well and that 9,000 line should firm up as very strong support now.  Keep in mind though that NYSE and RUT are like twins so it's still the RUT that is outperforming (as the RUT is usually 1/10th of the NYSE) so the RUT isn't really so much "weak" now as it was "too strong" before.  Now we're getting more realistic and, if the RUT, NYSE and S&P can hang over the 12.5% lines – then maybe it's the Dow and the Nasdaq that have some catching up to do.  Hmm, how could that happen?  Maybe – AAPL!!! 

    Debt Growth/StJ – Zimbabwe is an extreme example but their GDP managed to grow while they ran through 1Tn% hyperinflation in 2008.  Not ideal but shows you how silly the austerity doom and gloomers are.  

    C/Turning – You can sell a naked put and a covered call but not in a bull call spread?  That's nuts.  Sure, your idea makes perfect sense as you're cashing half, setting yourself up to make another $16 (35%) on what's left and your worst case is you're back in 1x for what you originally were happy to pay.  Of course, what I don't like is the big margin hold but it's a nice way to milk C for more money if you're looking to stick with them.  

    Car bomb at French embassy in Tripoli.  

    Futures flying now – up half a point. 

    CREE/Invest – That might be fun to play but NFLX makes it kind of scary to short anyone.  If people are willing to believe a decent-sized, well-followed stock is 33% under-priced – who knows where the money will slosh into next?  

    By the way, that's what's going on here – there is a LOT of money on the sidelines still and people are chasing good stories.  Hopefully AAPL has one tonight.

    AAPL/Vedan – I like the October spread as you can cash out the winner and hope the loser recovers over time. I do hope you are throwing your money away on the put, though…

    Oil/Jfaw – You can only be assigned oil if you are in the contract on the last day. Frankly, it's not really a good idea to hold oil overnight – let alone into expirations.  Usually, your danger is to the upside if an incident happens but, as we saw from 9/11 – terrorism can actually kill the price of oil – especially if it's something big enough to ground airlines and grind commerce to a halt.  So, with Futures, your overnight exposure is INSANE on oil (and anything else for that matter).  As to Memorial Day – I'm  thinking that if they don't get indications of big demand that weekend, we may see the $80 line tested but, for longer-term bets like that, why not use USO?

  163. Phil/Cree – Thanks for sharing your thought. I closed the short position as NFLX made a scary example. I left the limited risk BCS to ride as Cree is up more than $1 in 15 minutes.