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Monday Market Movement – Options Expiration Week Begins

.SPX WEEKLYIt's still May, you know.  

Last Monday I said it was time to sell in May and we've had a fantastic week to sell into with new suckers pouring in at the top of the market every day.  Maybe we're the suckers for going back to "cashy and cautious" into the last two weeks of the month but it's what happens after Friday (options expiration day) that we're concerned about and there's no sense in waiting for the market to turn down if we're looking to take profits.  

As noted by Dave Fry, we're still looking very strong on the weekly charts – especially if you ignore that sharp dip in volume that you probably shouldn't ignore.  Clearly the market is overbought, but it can stay overbought for quite some time so we may be missing the next 2.5% gain by "chickening out" with "just" a 20% gain since November but, if the bulls are right and this is just the beginning of a Mega-Rally – we have a few more years of upside to partake in.  

Seth Masters, of Bernstein Global, says we're right on track for Dow 20,000 and I guess we are, as it was 12,900 last July and now over 15,000 for a 16% gain in less than a year and that means we could hit 20,000 by the end of the decade.  In other news, my daughter is now 5 foot tall at 11 years old and that means I'll be shopping for a 10 foot tall wedding dress and probably size 14 shoes.  Thank goodness for charts or we'd never be able to plan properly…

I have no doubt the Dow will hit 20,000 once inflation kicks in but, so far, we're not seeing signs of it running away that fast.  As to reaching 20,000 on merit (profits adjusted for inflation) – probably not this decade.  Extrapolation is a dangerous thing.  We have 310M people in this country and, at the peak, about 160M of them were working and now 150M of them are working and, in 2009, about 135M of them were working.  Not to get into the quality of work/income disparity stuff again, look at this simple chart of Retail Sales:

Essentially, in 2009, Retail Sales were 10% lower than they were in 2008, when 160M people were working.  Let's call 2008 100 and 2009 90.  In 2010, sales were up 5%, to 94.5 and in 2011 they were up 7% more, to 101 and in 2012 we were up another 4%, to 105.  Do we then extrapolate growing to 110, 115 and 120 over the next 3 years?  

While it may seem "logical" just like my theoretical 10-foot daughter, we're not taking into account the upper limit of growth, which would be getting back to 160M people employed.  All we have in Retail Sales is a return to (almost) full employment plus inflation.  Once we hit full employment, then we only have inflation to pump up our numbers.  As Henry Ford notice in 1905 – if you don't give your workers enough money to buy a car – where will your customers come from?  While the top 10% are raking it in on this market rally, we still have over 10M people without jobs at all and 130M people who make the same or less than they did 5 years ago.  How high can retail sales go then?  

Of course the economy has many moving parts and we benefit from growth in other countries but it's not that different in Europe or Japan or China – yet these projections that the market is about to go up another 20%, 30%, 50% – continue to get air time, without anyone seriously questioning the underlying mathematical logic.  

I know why – I'll be on TV tomorrow (BNN 2:30) and I'll have about 5 minutes and they are going to want to talk about my picks from January and maybe they'll ask my opinion on this or that but I don't have time to do a presentation on why we're overestimating future market performance – it simply doesn't play well on TV and most people won't understand it, even if I have the proverbial "twenty seven 8×10 color glossy pictures with circles and arrows and a paragraph on the back of each one explaining what each one was."

We're more than happy to partake in the madness, of course.  We reviewed our 5 Inflation Fighting Trade Ideas on Friday and on Wednesday we went over our 5 Trade Ideas that Made 1,816% in 21 days (now 1,908% as of Friday's close) and that's all well and good but we're not talking about fun money trades – we're talking about our main portfolios, where we aren't going to be very happy riding out a 20% correction (if it ever comes).  

So, once again, better to miss out on the next 2.5% of the rally and get back on once we clear our "Must Hold" levels – as that will give us very clear indications of where to get out if things turn south.  Meanwhile, we're still waiting for the Dow or the NYSE or the Russell to show us they've got the muscle to get over their marks and both the Dow and the NYSE have yet to top their -5% lines – which is why it took us so long to put up our new Big Chart levels – in my heart, I'm still not buying it…

Speaking of Retail Sales – April came in up 0.1%, which is not very exciting but -0.3% was expected so it's a beat, even though ex-auto is -0.1% and the Auto companies have been back to giving anyone with a pulse a new car on easy credit.  Auto sales were up 8% and, interestingly, gasoline sales were down 1.1% as Americans continue to trade in less fuel-efficient cars for better ones.  That's a new paradigm – the more cars Americans buy, the less gas they use – we talked about that last week and now, here's the data.  Gasoline is still more than it was in the fall ($2.75-$2.80) but down from March's $3.10 average at $2.85.  

Electronics were down 0.7%, Health and Personal Care down 0.5%, General Merchandise was down 3.4% with Department Stores down a whopping 5.5% but don't worry, people only read the headlines and that sector will go up this morning anyway.  Building Material is up 2.4% and Furniture is up 3.6%, Food is up 2.4%, Dining Out 3.9%, Clothing 2.9% and Sport and Hobby is up 5.6% so it looks like people are buying houses and splurging on personal items overall – a good sign for a recovering economy but, as you can see, we had very easy comps from last year.  

Last April, we began a market slide that took us from 1,422 to 1,266 (-11%) in early June and THEN we rallied back all summer.  That's what's been giving us such easy comps this year but again, you're not going to hear that on TV because it doesn't fit neatly into a sound-byte and of course, it's over the 140-character Twitter limit – which is the upper range restriction on American thought these days.  Speaking of American thought – I'm not going to comment on it but there was a great Op-Ed in the NYTimes this weekend commenting on the sad state of political discourse in this country due to an incredibly uninformed electorate.  

Tomorrow we get the Small Business Optimism Index at 7:30 and the Fed's Household Debt Report at 11 – that should give us more color on the status of the American Consumer.  Wednesday we have PPI, Empire State Manufacturing, Industrial Production and Capacity Utilization that ties it back to our manufacturing base and Thursday we get Housing Starts, Building Permits and the Philly Fed followed on Friday by U of Michigan Consumer Confidence and Leading Economic Indicators.  

Lot's of Fed speak as well with Plosser (big hawk) at 2pm tomorrow and again at 3:45am on Thursday followed by Rosengren (big dove) at 7:45, Fisher (super hawk) at 9, Raskin (dove) at 12:30 and Williams (super dove) at 2:30.  Kocherlakota (hawk) wraps it up Friday at 1:45 am so a pretty balanced week of Fed speak but, with Plosser getting the field to himself first – plenty of room to spook the market tomorrow.  Plosser helped send the S&P down 30 points at the open on April 16th with his early morning talk in Beijing titled "Reconsidering Exit" so look out below if he repeats that theme tomorrow!

Meanwhile, the party ain't over until it's over.  The Bank of Israel cut their rate 0.25% this morning, to 1.5% and their markets are jamming up 7.6% in response because everyone loves MORE FREE MONEY!  Our friends at TSLA are up 2.3% this morning despite the fact that 75% of their float turned over last week but now Pacific Crest is joining me in warning latecomers that we may have run our course at this point:

 

“To date, Tesla’s strong performance has been a function of its impressive factory ramp and marketing plan, but also two years of pent-up demand and the sale of lucrative ZEV [zero-emission-vehicle] credits.

“Going forward, the company needs to ramp to 25% gross margins from 5% (excluding ZEV credits) and demonstrate sustainable demand. This can be done, but we do not think the current valuation adequately reflects execution risk.”

 

Not adequately reflecting risks – I think that sums up our overall market picture quite nicely.  

Be careful out there.  


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  1. stjeanluc

    Oil Lines

    R3 – 99.87
    R2 – 98.05
    R1 – 97.01
    PP – 95.19
    S1 – 94.15
    S2 – 92.33
    S3 – 91.29

    Friday's high and low – 96.23 / 93.37

  2. Investwizard

    Good morning, TSLA 81.7 pre-market. Gonna hit 85 today? It seems they are trying to scare bears, but maybe not.

  3. albo

    TSLA – Who says trees don't grow to the sky ?

  4. jerconn

    Phil – can we have a USO trade?

  5. yodi

    Looks like the TSLA car has wings now going for 82 premarket

  6. Investwizard

    STJ, thanks for replying to my question regarding economic calender yesterday!

  7. yodi

    TLSA possible they forgot to put breaks on these electric motors

  8. Investwizard

    TSLA is redlining its engine and it might explode soon lol

  9. 1020

    Good Morning!

  10. Maya1

    Phil
    good morning!
    I would appreciate your opinion on the following:
    My investment advisor put us in a AAPL May 435/425 bear call spread for a net credit of $1.70 just after AAPL reported earnings in April. The premise of course being that the stock would go nowhere.
    well, last Thurs, the account was assigned the short $425 calls (10contracts). He recommended closing out the trade on Friday by selling the long $435's and buying the short shares that were assigned- for a loss of $8000
    The $425 calls are $28 and the $435's are $19 before open today.
    What would you with the trade. I understand the entire trade is done, but assuming you we're rolling today, what would you do?
    thanks!

  11. mjjwo9b

    AGNC:  Looking interesting

  12. stjeanluc

  13. jabobeast

    FU NFLX!!!

  14. mrmocha

    Wombat - I did some reading on NFLX over the weekend, the conventional wisdom seems to be that it's going to melt up to 250 fairly quickly to blow out all the shorts.  So you'd better put a plan if place for that circumstance; my options are fairly limited since this one trade has used all of my margin.  I'm getting nuked.

  15. stjeanluc

    We have a NFLX problem….

  16. yodi

    MOMO weekly sold this morning on opening May13 PCLN 740p @ 2.10 and 730p @ 1.10
    Obviously las weeks puts run worhtless.

  17. stjeanluc

    I have been reading the wrong months… Not awake yet!

  18. Burrben

    I'm not sure who is smoking the Hopeium on TSLA…us or them….

  19. jabobeast

    FU GDX!!!

  20. wombat

    Phil / mocha / StJ // NFLX 
    Yes, gentleman, we have a problem.
    The May13 $210's are not coming in – Phil – next moves ?

  21. yodi

    STJ
    You should look at my NFLX short put plays 5/10 sold May13 200p @ .66 now .23 205p sold for 1.27 now .41

  22. wombat

    Phil // NFLX
    Heres my position – I think it's reflective of a few other folks as well
    -15 short May13 $210 ($14)
    -10 short July13 $195 ($22)
    +15 Spet13 $205/225 Bull Call Spead ($10 net )
    -10 Jan15 $140 Puts ($18.20 )

     

     

  23. phil

    Good morning! 

    Couldn't get the open back to flat so we'll have to see how it plays out. 

    Dollar 83.28 is still high so not going to help the markets until it's back below 83.  Oil $95.37, gold $1,431, silver did pop to $23.76 despite gold down.  Copper flat at $3.35, nat gas $3.945, gasoline dropping to $2.82 despite oil holding up.  

    Remember the flu?  Global airline stocks trade weak in European markets after concerns about a new virus intensify. The novel coronavirus infection has killed over 34 people and can be transmitted between humans, according to the World Health Organization. On watch: Delta Air Lines (DAL), United Continental (UAL), China Eastern Airlines (CEA), China Southern Airlines (ZNH), Copa Holdings (CPA), Gol Linhas (GOL), Latam Airlines (LFL), Air France-KLM (AFLYY.PK), Deutsche Lufthansa (DLAKY.PK) 

    The collapse of Yum Brands' (YUM) market share in China isn't solely tied to the avian bird flu crisis, according to industry analysts. The KFC chain hasn't adapted its menu to consumer tastes in China successfully or tapped into "aspiration" diners. 

    At the open: Dow -0.24% to 15082. S&P -0.2% to 1630. Nasdaq -0.15% to 3432.

    Treasurys: 30-year -0.3%. 10-yr -0.08%. 5-yr -0.02%.

    Commodities: Crude -0.89% to $95.19. Gold -0.34% to $1431.65.

    Currencies: Euro -0.1% vs. dollar. Yen +0.11%. Pound +0.08%.

    Market preview: Stock futures pare losses after April retail sales rose slightly, beating expectations. Futures had been weighed by Friday's WSJ story suggesting the Fed is beginning to map out its QE exit, although the timing is uncertain. The yen weakens to new multiyear lows vs. the dollar as the G-7 gives Japan's loose money policies the green light over the weekend. Still ahead: business inventories.

    The rumored Hilsenrath "tapering" story - originally expected to come out late Thursday - instead came out after yesterday's market close. It's mostly a summary of what's already known – that Fed officials plan to reduce asset purchases in steps, the timing of which is still being debated. The article leans heavily on Richard Fisher and Charles Plosser, two well-known hawks (and non-voters on the FOMC this year) who would have already tightened if it was up to them. A number of Fed speakers – including Bernanke – are set to speak next week.

    "They say unemployment rate, but they really mean" the S&P 500 (SPY), says David Rosenberg, referring of course, to the esteemed members of the FOMC. "After all, to get the wealth effect to work on spending, you have to generate the wealth," he continues. As for the sustainability of the rally in both equities and fixed income, Rosenberg is having déjà vu: "Distortions caused by negative real interest rates, the mis-pricing of risk and promotion of leverage sounds a lot like the previous cycle … enjoy it while you can." (Also: NYSE margin debt signals return of leverage) 

    Apr. Retail Sales+0.1% vs. -0.3% expected, -0.05% prior (revised). Ex-auto -0.1% in-line with expectations.  More on retail sales: Building material and garden equipment sales (HDLOW) were again, up 1.5% M/M and 4.1% Y/Y, while department store sales (SHLDKSSMJWNJCP) trailed expectations. Grocery store sales (KRSVUSWY) slipped during April compared to March but were 2% than a year ago on pricing gains.

    The ECB's Ignazio Visco revives the discussion of negative deposit rates after Ewald Nowotny sought to dismiss the notion as largely out of the realm of near-term possibilities earlier this month. Visco tells CNBC that the ECB is "technically prepared" to institute the policy and goes so far as to say that in his opinion, "the economy is now capable of taking it on board." In the wake of the ECB's most recent policy meeting, Mario Draghi said he has an "open mind" to the policy, a statement which sent the euro (FXE) tumbling.

    Some tough love for France from Eurogroup President Jeroen Dijsselbloem: "They've now been given two more years to reach their deficit goals [so they have] to push forward their reforms." The country, which missed its 2012 deficit target (4.5%) by 0.3%, is under pressure to institute structural reforms sufficient to bring its budget deficit in line with the EU-mandated 3% by 2015, even as President Francois Hollande's popularity has fallen to an all-time low. "I'm sure the French government is committed to those reforms," Dijsselbloem noted after Saturday's informal G7 gathering.

    Italy is no longer "master of its own destiny," says George Soros, referring to what he believes is the country's perpetual dependence on coordinated action from its EU partners and the ECB. Speaking to an audience in northern Italy, Soros predicted the respite Italy has seen in terms of borrowing costs (ITLY) and spreads to German bunds "will not last long [as] the situation is far from being in balance." Last week, Italy auctioned 12-month bills at a euro-erarecord low yield

    Financial representatives of the G7 countries came away from an informal two-day gathering hosted by Britain's George Osborne satisfied that Japan's extraordinary monetary policy maneuvers are targeted at vanquishing deflation not exchange rate targeting. Although German finance minister Wolfgang Schäuble did mention "the relatively high levels of liquidity" present in the market (the obligatory German nod to conservative monetary policy), U.S. Treasury officials said the "conversation [with Japan] was good." Osborne also noted that when it comes to fiscal policy, "there are more areas of agreement between [the G7] than is commonly assumed."

    The yen (FXYcontinues its slide , falling to a new four-and-a-half year low against the dollar, helping the Nikkei (NKY) post another triple-digit gain on the session, rising 1.2% to 14782, its highest level since January 2008. The weak yen comes on the heels of the G7's reportedly amicable meeting over the weekend, at which officials were generally supportive of the BOJ's policies and reiterated that Japan's goal is to fight deflation not engage in the targeting of exchange rates.

    Chinese industrial output growth printed at 9.3% in April, up from a seven-month low of 8.9% in March but still a whisker below economists' expectations of 9.4%. Investors were watching the data closely for signs of weakness after last week's trade data aroused suspicion for being too good to be true. Traders also got a read on the Chinese consumer as the National Bureau of Statistics said retail sales in the country grew 12.8% last month, matching forecasts. Despite the news, consumer discretionary stocks fell. Ultimately, investors once again come away with mixed feelings regarding the state of the Chinese economy.

    With new property curbs taking effect, China's home sales transaction value fell 13% in April. The fall, however, is from a very high level as the same metric though the first 4 months of 2013 is up 65% from a year ago. Shanghai (FXICAFfell 0.2% overnight. The China Real Estate ETF (TAO+37.5% Y/Y.

    MORE FREE MONEY!!!  Alarmed by the quick appreciation of the shekel and noting the wave of central bank easing worldwide, the Bank of Israel doesn't wait for its next policy meeting to cut its benchmark rate 25 basis points to 1.5%. The bank also announces it plans to sell shekels to offset any appreciation likely to come about from the beginning of natural gas production at the Tamar field. The Israel stock ETF (EIS)+7.6% YTD.

    MORE FREE MONEY!!!  Vietnamese stocks (VNMrise 0.6% after the country's central bank said Friday it would cut three policy rates by 100bps amid inflation which, at 6.61% in April, was a little more than a fourth of what it was less than two years ago. Elsewhere in the region, Malaysian stocks (EWMadd 0.88% to last week's 4.6% rally, Thai equities (THDslip 0.3% after the country's finance minister fails to mention interest rates in a meeting with the central bank's policy-making committee, and stocks in Singapore (EWSgive back 1% of last week's gains amid profit-taking.

     

    Chart of the Day

    Priced in gold, the median single-family home is down 74% from its 2001 peak. But since making new 32 year lows last year, the gold-metered single-family home price has just broken above its eight-year, downward sloping trend channel. (Chart of the Day) 

    Money managers yanked $1.27B out of gold and precious metals last week, bringing the year-to-date drawdown to $20.8B. The largest gold ETF (GLD) is down 13.8% YTD. It largest shareholder, John Paulson, remains bullish on gold; his Gold Fund is down almost 50% this year.

    India's appetite for (now cheaper) gold (GLD) drives the country's trade deficit 70% wider in April as precious metals imports more than double Y/Y. The deficit came in at $17.8B last month, up from $10.31B in March as higher import taxes on gold fail to arrest voracious demand from the world's biggest consumer. The country's trade secretary calls the figures "surprising." 

    Silver Wheaton (SLW -2.9%) opens lower after its Q1 earnings fell to $0.38/share from $0.42, though revenue improved. Says it remains on track to meet its 2013 production forecast of 33.5M silver equivalent oz., up 13% Y/Y. Amends its dividend policy, declaring a Q2 dividend of $0.12/share after paying $0.14 last quarter. 

    For the first time in more than a decade, the Big Three automakers (GMFFIATY.PK) claimed a majority of the category winners in a prestigious vehicle quality survey. The increase in quality by the trio dovetails nicely with a pickup in demand for U.S. models that has Japanese automakers scrambling (TMHMCNSANY.OB) to respond.

    Nomura is out with a series of 

  24. phil


    Nomura is out with a series of price target hikes for gaming stocks on the back of a new report on Macau which "compares the supply demand outlook today … with that of Las Vegas in 1990-2005." Price target rundown: Wynn Resorts (WYNN) to $155 from $147, Penn National (PENN) to $66 from $60, MGM to $16 from $13.50, Boyd (BYD) to $9 from $7, and Las Vegas Sands (LVS) to $67 from $62.
     

    Western Union (WU) is getting the Barron's bounce after being profiled by the publication as a stock that could shoot into the twenties and stay there as the company's business accelerates this year. WU +3.3% premarket to $16.51.

    Vivus (VVUSrises 2.6% premarket after sending a "business update" letter to shareholders outlining its progress on expanding access to its obesity drug Qsymia. The company reiterates some of the points made on the CC saying it is in discussions with Big Pharma regarding increasing the product's reach and notes the drug will be available at certified pharmacies by mid-July. Ultimately, VVUS says that with a combination of expanded access and reimbursement, Qsymia can be "a top-selling drug." (PR

    Plenty of companies are taking aim at Cisco's (CSCO) Nexus data center switch business. 1) H-P (HPQ) has updated its networking lineup to include a "virtual router" running on commodity hardware, to offload tasks handled by server virtualization software (Cisco also supports this), and to embrace software-defined networking. 2) Startup Arista has launched a high-density switch that (aided by FNSR optics) can handle 96 100G or 1152 10G ports in an 8-slot chassis. 3) Huawei has launched 16-slot switches that can handle 192 10G ports, and can be clustered. 4) Facebook's Open Compute Project is now working on a data center switch meant to handle virtually any software. Cisco is hoping to return fire via its Insieme unit (III). 

    A special committee of the DELL board pens a letter to Carl Icahn asking for details on his potential new offer, particularly how he intends to finance it. It's a question, says Dan Primack, Icahn is in no position to answer. Shares -0.4% premarket.

    The U.S. movie box office had a vibrant weekend to make up just a bit for the soft start to 2013. Disney's (DISIron Man 3scored another $72.5M to record the fourth best second weekend for a film ever, while counter-programmed The Great Gatsby took in $51.1M for Warner Bros. (TWX) on strong female demand.

    Money always comes from somewhere:  Broadcasters ABC, CBS, Fox, and NBC will settle for the lowest round of average rate hikes in three years during the "upfront" selling season, according to industry watchers. Though the expected increase in ad rates of 6% sounds fairly lush, annual rate increases were in the double digits only two years ago before the impact of streaming alternatives and a step up in cable programming was fully felt. Upfront ad rate forecast: CBS +6.5%, ABC (DIS) +6%, Fox (NWSNWSA) + 5.5%, NBC (CMCSA) +5%.

    With bad user reviews piling up, Facebook Home (FB) hasfallen out of App Annie's top-100 Google Play download lists for every covered market. Nonetheless, those who have downloaded Home are spending 25% more time using Facebook than before, giving Mark Zuckerberg & Co. a big incentive to right the ship. Updates will soon bring back two Android staples – an app dock and folder support – but there's no word on when a third (widgets) whose absence has sparked many complaints will arrive. Meanwhile, Home now supportsSamsung's Galaxy S4, and AT&T has cut the price of the HTC First to a subsidized $0.99. (previous)

    BlackBerry (BBRY+1.2% after Barron's provides a semi-favorable writeup about the potential of its BES 10 mobile device management (MDM) platform and network operations centers. The fact BlackBerry can pair its MDM software with a secure network could give it an edge, Barron's notes. However, it also points out MDM competition from startups (AirWatch, MobileIron) and bigger IT names (SAP, Citrix) is intense – Airwatch's chairman argues BES 10 is still "woefully behind" in supporting advanced iOS/Android management features such as FIPS 140 encryption.

    Amazon (AMZN -0.4%brings Amazon Coins to the Kindle Fire and says it will add $5 worth of free coins that can be spent on apps and games to the accounts of all Kindle Fire owners. The company appears to be pushing its virtual currency hard than ever,offering discounts to users who buy the e-coins in bulk. 


  25. stjeanluc

  26. yodi

    wombat
    NFLX If you did have the first two plays as puts you would be looking good but you did not specify!!!!

  27. yodi

    Looking to do the weekly AAPL caller play at 470 for 1.60 for starters quite some swing in DOW as well as AAPL

  28. phil

    TSLA madness!  82.48 was the high, now $81.55.  

    Rest of the market with a bit of a rational sell-off.  Oil back below our shorting line at $95, now $94.76 and we play for nickels and dimes ahead of inventories (/CL) so tight stops at each .25 when you're making money.  

    TSLA/Invest – Trying to scare bears?  Bears should be completely terrified by now.  8) 

    USO/Jerconn – Keep in mind it's a bit of an all or nothing play on holiday driving and we're not all that confident in the outcome anymore as vacation numbers seem to be strong.  SCO $37.50 seems to be the $95 line and you can pick up the June $35/38 bull call spread for $1.80 and that makes a lovely 67% if oil stays below $95 into June expiration.  

    Gas prices/Angel – Thanks.  Keep in mind that when gas was $1.10 per gallon, refineries ran profitably making .20 mark-ups, now the wholesale price of gas is $2.85 and the pump price is $3.54 – that's where much of the crime is taking place. 

    AAPL/Maya – Ouch!  You KNOW how much I hate trades like that – and a bearish play on AAPL to boot?!?  I'm sorry but you are lucky you only lost $8,000 and there's no fix to that I like as "rolling" would keep you short on AAPL and, at $450, I think that would still be a horrific mistake.  Best thing to do is get a new adviser – one that doesn't think an $8,000 risk against a $2,000 max reward is something to put his clients into – espeicially stocks that routinely move 10% in a month – that's a complete misuse of that kind of spread – even with the best of intentions.  

    AGNC/MJJ – Long-time favorite.  

    FAS Money – Much better.  

    FU NFLX is right today – son of a bitch!  

    TSLA $84 – good example today of how selling those short puts stops the bleeding while it sorts itself out. 

    NFLX/Wombat – Gotta see what happens, up from $208 on Thursday is a bit much (10% in 2 days).  $229 is 5% for the day so that should cap this move if nothing else does.  The bottom line is you sold NFLX short at net $224 in May and now it's $228 so down $4 on those short calls.  July is $217 and the spreads are up $15 and the puts are up $18 so really a matter of just buying more longs and rolling but I wouldn't do it today on this silly-looking spike unless there's news I don't know about.  

  29. wombat

    Yodi // NFLX
    Sorry mate – Phil knew the play.
    The first two are short callers //
    I just rolled the March210's to the June220's
    Hoping ( not an investment strategy ) this is an expiration phenomenon ?

  30. phil

    TSLA – Holy crap, now they are going nuts -= just spiked to $87 – squeezing the crap out of someone.  

  31. phil

    FAS Money – I say shut it down.  We should be thrilled to have gotten out of this one back near $8,000 as it went badly against us so I think let's buy back all the short puts and calls and see what happens the next couple of days as our longs are covered so no worries.  

  32. stjeanluc

    For those into QCOM, I have covered with the July 67.5. Pretty much set and forget. I want to give it some room to move up, but I think that it's stalling a bit. They report after the July expiration so no real danger of a surprise.

  33. yodi

    STJ GOOG Jun 850 and 835 callers on the 25k do not look very good now 881.05

  34. nicha

    stj – what's your play on QCOM?

  35. wombat

    Phil // Thanks
    Got your message just a hair late but I see your logic.
    I only rolled the 210's because we have 4 days and the volume looks scary. NFLX defies my logic sometimes – I hadn't heard any news or events so, I feel safer going a month out at a credit.
    I agree, not buying any more longs – too expensive – lets see where they are after expiration.

  36. wombat

    TSLA – Holy crap, now they are going nuts -= just spiked to $87 – squeezing the crap out of someone. 
    uhm. that someone would be me …
    god, it's monday right ?

  37. stjeanluc

    TSLA Income / Phil – As it stands, we are no left with short Jan 15 28 puts, a Jan 15 60/45 bear call spread and short Jan 15 70 calls. We wanted to sell the puts on Friday but that was nixed right away when they pulled back. You had also instructed t shut down the May 37 calls when we crossed 70 (not on a spike) and that happened on Thursday as well. Did I miss anything? Once again, TSLA has been mentioned over 100 times in 2 days so tough to keep up.

  38. stjeanluc

    QCOM / Nicha – Long the Jan 15 50 calls and now short the July 67.5 calls to cover.

  39. stjeanluc

    GOOG / Yodi – Painful indeed…

  40. 1020

    On CNBC - NFLX does not produce or own House of Cards? Apparently, all they did was buy the series for 3 years…..

  41. Opesbridge

    Phil/TSLA – 2015 $80 Puts (-10) -  I'm assuming that these are still a good sale when they reach $29 again, for those of us who didn't get them the first time.

  42. wombat

    1020 // NFLX
    That wasn't my understanding. I remember all the press about how much NFLX was spending on production and it was astronomical compared to their earnings.
    Did it say WHO they bought it from ?

  43. 1020

    Wombat – I caught the tail end of the interview. The analyst also stated, NFLX is in no way like HBO….I too, thought the series was their own.
     
    I don't believe they mentioned who NFLX bought it from.

  44. 1020

    Wombat, I believe this is the interview on NFLX  http://video.cnbc.com/gallery/?video=3000168054

  45. phil

    FAS Money – VIX sucks, by the way (12.75) so my thinking is, up or down, we can do better.  

    AAPL Money – Not much to be done there.  $450 calls hurting us a bit but I like the protection and, as we learned in the first 6 months, we would have done much better if we had stuck to the plan and kept selling premium, regardless of our day to day feelings about the stock.  

    $25KPA – OK, let's take a close look at this one:

    • QQQ – At $73 is not looking good for Friday on the short calls – need Plosser to save us but we sold them for $2.35 and now $3.09 but our longs are $3 in the money over max ($5) but only show a .40 profit (out of $4 possible) so we're really locking in our gains more than anything.  
    • IBM – Still on target. 
    • XOM – Failed $90 but we're playing those for the bad holiday driving that we're losing faith in.  
    • JNJ – Start playing taps for them.  
    • DIA – We're pretty short now so no need for a hedge but I'd like to keep it on through the weekend as we may drop after expiration day.  
    • AMZN – Also dead.  
    • MRK – Dying
    • TZA – $33.26 not completely blown but not good.  Same deal though, next week will tell. 
    • NFLX – Well, we did target $225 by Sept so we're just early.  Our $205/225 bull call spread is net $10.63 out of $20 so $9,000 to gain there at $225 and the July $195s have $1,500 in premium and the $210s have $2,000 in premium so doing nothing and flatlining at $225 would make us $13,500, which is all of our $25KP losses.  I suppose, logically, we can buy another 10 $205/225 bull call spreads for net $10.63 and that gives us another $9,000 of upside if NFLX doesn't go down and that buys us money to roll with.  Last Wednesday, the NFLX Sept spread was $6 so we stand to lose $4K if NFLX falls back to $208 but, of course, we'd make that back on the short July and May positions so that's the wise move for now – adding 10 more of the Sept bull call spreads.  

    $25KPA – Down $50K since last week. I knew we should have been happy to cash out down $35K!  

    • AAPL – Fine 
    • GOOG – Thing #1 that's killing us at $880. Of course we roll the Jan $835s to 2015 $920s and then we have a $70 x 17 upside on the longs for $119,000.  Meanwhile, the short June $850s are 8 x 30 or – $24,000 and that cuts our gain from $119,000 to $95,000 if GOOG holds up so I think we'll probably roll those to lock in our $95,000 gain.  This is the problem with looking at current balances – they don't account for the fact that if GOOG actually does hold $880, then you can easily roll your short calls up $10 or more every 3 months and you can roll the Jan short calls to a spread and it's actually a GOOD outcome – it's only the current set-up that looks bad.  You can't make decisions based on how things look in the short-term if you are going to trade options aggressively.  
    • IBM – FIne 
    • XOM – Risky
    • JNJ – Dead 
    • AMZN – Dead
    • FB – $26.92 is dead center. 
    • CREE – $61.04 is way high but July $57.50s are $5.20 so less than $1 to roll callers up $2.50 or we can roll 5 to 7 for nothing out of pocket (but a bit more risk).  As I write this, I'd rather take the risk than give them $1 out of fear CREE holds $60.  
    • ABX – If the market keeps going up, gold will catch up.  If not, then we'll be happy about our other shorts. 
    • MRK – Dead.
    • TZA – Next week. 
    • SQQQ – Also next week.  
    • NFLX – Same as above, adding 10 more longs bull call spreads.  
    • DECK – On track
    • LVS – On track
    • SCO – On track.  

    So, lots of paper losses but nothing we can't work out of by the end of the year.  If anything – we need some more bullish plays for balance so we'll keep a lookout for good opportunities.  

  46. albo

    CNBC with a segment on how the wealthy are more likely to get audited.  DUH ! ! ! 
    As Willie Sutton said that's where the money is.

  47. Gingbaum

    Hi Phil,
    I am just wondering if AGNC might be a good entry point today.  Do you know what the reason for such the tank from $33 to $29 in May?

    Thanks

  48. 1020

    IRS, Bengazi – GET BACK ON TOPIC SANTELLI!
     
    Oh, Now he says these two items will change OBAMACARE…Huh? 

  49. Opesbridge

    GOOG/Phil – Question on the short-call-roll-to-spread thingy: Are you rolling the current losses to a new spread in terms of just taking the $37 we are down on the calls and purchasing a spread which will erase this loss (plus a little more)? Or, are you planning to purchase a spread for the same $37 with a double (or better) profit potential.

  50. 1020

    Albo/audit  I seriously don't understand how this makes big news….Of Course the IRS will look closer at any 'tax exemption' requested returns, along with the usual returns of traders, real estate agents, casino workers, contractors…..

  51. angelcur

    LOTS of talk from china premier about "curbing overcapacity"…"lower growth acceptable"…i wonder how long oil will ignore that.

  52. Peter D

    Virtual Short Strangle Portfolio,
    The RUT May 975 callers are just OTM, so we may want to move it up a little bit more to the 980 strikes:
    - Buy to close 15 RUT May 975 calls for $5.85, sell to open 25 RUT May 980 calls for $3.65
    If the market continues to go up, then the next move is to either the next Weekly or June callers

  53. angelcur

    PHIL GAS PRICES..all the screaming for keystone..just a faster exit for exports..very little benefit for the consumer here the amorality is so effusive..i see oil in the 60s maybe lower if the chinese continue to talk expectations down

  54. phil

    TSLA/Income Portfolio, StJ – Sounds about right.  Same deal as NFLX on the whole, we'll just have to add another long spread if we're worried but no urgency at the moment as all our positions are long.  I'm tempted to cash in the 2015 $60s now as they've hit over $30 so that's $50 off the table from our original $50s and the short $60s are only $24 in the money so a winner even if TSLA holds $85.  Did we not roll up the short puts?  I think we should at least offer to buy them back for $2.50 as we'd like the slot back.  

    NFLX/1020 – They are just turning themselves into a TV studio.  They are the same size as TWX and collect the same $10 a month from subscribers as TWX and buy content like TWX but TWX has a p/e of 18 making $3Bn on $28Bn in sales and own many of their own shows while NFLX has a p/e of 557 making $17M on $3.6Bn in sales and has no real assets.  It's totally insane but so were the dot com valuations in the 90s and they lasted quite a while in some cases.  

    House of Cards is an American political drama series developed and produced by Beau Willimon. It is an adaptation of a previous BBC miniseries of the same name which is based on the novel by Michael Dobbs. The entire first season premiered on February 1, 2013, on the streaming service Netflix.[2] A second season of 13 episodes is currently in production.[2][3]

    In 2012, Willimon developed House of Cards, the American adaption of the BBC series of the same name, for Netflix. It was produced by Media Rights CapitalDavid Fincher, and Kevin Spacey, and stars Spacey,

    TSLA/Opes – Absolutely.  Of course, see above on NFLX – these can be very painful for quite a lot of time but, ultimately, can be very rewarding.  

    Very true Albo.  

    AGNC/Ging – I like NLY better (and CIM too) but AGNC is good at $29.11 with a 16% dividend ($5) although I prefer to just sell the 2015 $28s for $5.40 and be done with it.  Even in an IRA, your net on the trade is $22.60 and that makes the $5 11% a year without all that messy owning the stock (unless you get it for 22% off the current price). 

    Bengazi/1020 – Sure, it's all connected, you know

    GOOG/Opes – See above, no need to do anything until we close in on June and GOOG is still this high.  If they go over $900, we can buy more longs but that's about it.  

    China/Angel – They've been ignoring it for over a year, why stop now?  

  55. newt

    NFLX/25K:  is the BCS a good position to start now? I am short the May $210 calls currently?

  56. scottmi

    TSLA – since this is all fantasy anyway, let's just go to $100 today and set that as a new floor. I mean, why the hell not?

  57. stjeanluc

    TSLA / Phil – I believe we wanted to sell new puts on Friday but they came back so we canned the move.

  58. jabobeast

    WTF miners????
    maybe they need wheaties or spinach?
     
    FU GDX!!!

  59. stjeanluc

    It might time to pull the plug on bitcoin and put that hardware to some serious use:

    http://qz.com/84056/the-bitcoin-network-is-now-more-powerful-than-the-top-500-supercomputers-combined/

     

    Add up the combined computing power of the 500 fastest supercomputers in the world—that’s billions upon billions of dollars worth of hardware—and stack it up against to the raw processing power of every computer currently producing the alternative currency bitcoin, and what do you get?

    The network of computers “mining” bitcoin is more powerful—eight times more powerful, in fact.

    And that’s not all: The bitcoin network also qualifies as the world’s first exascale computer, meaning it’s capable of a quintillion floating point calculations per second. Some people argue that exascale computing will make possible everything from predicting the effects of climate change to producing energy with fusion. Supercomputers aren’t expected to achieve that speed until sometime around 2020.

    However, bitcoin mining is distributed among the multitude of machines that devote computing power to the network, helping to solve cryptographic puzzles every 10 minutes, for which they are sometimes rewarded with new bitcoins. And the bitcoin network has become so specialized that much of it cannot be used for any other purpose. So what bitcoin has wrought is the world’s fastest supercomputer that can only be used to mine bitcoin.

    Add this to the $150,000 a day bitcoin miners are collectively spending on electricity to produce about half a million dollars worth of bitcoin, and the scale of the computing resources currently devoted to producing the virtual currency really comes into perspective.

    It makes no sense now.. There are some real problems to be solved! Of course, some could be said about the computing power behind HFT as well.

  60. randers1

    Elon Musk must have the Midas touch. Check out SCTY, up 22% today BEFORE earnings this pm…

  61. randers1

     
    Maybe bitcoin is a consortium to occupy bandwidth and computing power.

  62. deano

    Adding the RAX Jan '15 30/40 call spread to sold puts, for $5.50. This makes it net .40 on the $10 spread. Selling 1/2 the Jun 42.5's makes it a net credit, and hopefully a fruitful tree. 

  63. albo

    randers1 – That's incredible.  There must have been some hedge funds targeting Elon Musk's companies.  I think the shorts are right on both SCTY & TSLA, but big short positions can and do get squeezed.

  64. Pharmboy

    House of Cards…all over this market.  I am sitting on the sidelines, patiently waiting for the big bad wolf to blow the house down.

  65. ariveraA

    bitcoin/ How sure are we that this is not just another gigantic botnet software?  Anonymous "creators" with "labor intensive" algorithms hacking everywhere, I mean mining?  First time I heard it, I thought bitcoin was a joke. I'm still very amused that someone would consider it money… 

  66. Pharmboy

    Double since March 28 on TSLA.  That IS market efficiency, er, capitalism.  Kudos Dr. Ben.  I am impressed.

  67. albo

    Pharm – I'm still playing mostly from the long side but with one foot out the door and a hand on the door knob.

  68. albo

    Financials look strong today with XLF at the highest since Sept 2008.

  69. stjeanluc

    RAX / Deano – Looks like $40 might be a good base now!

  70. phil

    The faster-than-expected retail sales report has Morgan Stanley and JPMorgan lifting their Q2 GDP growth estimates. JPM's Mike Feroli: "The risks to our previous projection of 1.5% real GDP growth in Q2 are unbalanced, and we are revising our estimate up to 2%." Morgan Stanley ups its forecast to 1.5% from 1.2%.

    Keystone/Angel – What a scam that thing is.  Just designed to suck oil out of Cushing so they have room to roll more barrels every month.  

    Oil tanker trade is growing at its fastest pace in 10 years as the U.S. production boom is forcing exporters, who used to ship oil to U.S. markets, to find new customers on different trade routes, FTreports. A 10% jump in the number of oil-ton miles comes even as the volume of oil traded has flatlined, good news for tanker companiessuch as Frontline (FRO +8.6%) and Overseas Shipholding (OSGIQ.PK +3.3%).

    NFLX/Scott – Sure, if you have the short calls, you're just setting up to roll them along against the spread. 

    TSLA/Scott – These stocks are very 1999 with these kind of runs – logic just right out the window. 

    TSLA/StJ – Yes, even worse today.  Still, we can get $10 for the short $50s and that's net $40 which is what we do think they are worth so better to at least have a place to sell to.  

    Wow, oil came flying back off $94.50.  $95.60 now.  

    BitCoin/StJ – An that's now, when BitCoins are relatively easy to mine, they get about 10x harder to mine after 10% more are mined.  

    Musk/Randers – Right now, anything he breathes on is considered hot property. 

    SolarCity (SCTY +18.6%) is skyrocketing ahead of today's Q1 report – does someone know something? – and many other solar peers are also doing pretty well (TAN +4.5%). SOL +9.8%CSIQ+11.6%WFR +8%LDK +9.3%JASO +5.4%SPWR +4.8%FSLR+4.5%GTAT +5.2%JKS +7.9%. Short interests for many industry names remain sky-high: SolarCity had 16.6% of its float shorted as of April 30. SunPower was at 29.9%, First Solar 33.4%, and GT Advanced 34.8%.

    RAX/Deano – Sounds good.  People need more space to mine Bitcoins, apparently.  

    Bitcoin/Arivera – It's actually holding up quite well – settling around $100.  Things are worth what people believe they are worth, be they Bitcoins or gold coins. 

  71. newt

    Phil: Thanks.

  72. phil

    10 SCTY Oct $30/35 bull call spread at $2.50, selling 5 June $40 calls for $5 in $25KPA.  

  73. Pharmboy

    HUGE P-bar down to open bottom print.  Here we go!

  74. zeroxzero

    Traveling, out of it, quick look around, "madness of crowds."  I try not to call tops or bottom, but I felt it was morally wrong not to initiate a short position in TSLA at $85.  But I'm not touching NFLX  – Americans are easily amused.

  75. Pharmboy

    zero – u mean Americans are easily confused……and stupid.  Or both.

  76. yodi

    deano
    RAX I like the stock but I would go with the 32.5/42.5 as well there is more open interest as the stk is thinnly traded.

  77. yodi

    Extreemly hard to roll GOOG this morning Have changed already 10x no takers

  78. deano

    Yodi – good observation, but too late for me. Others may wish to consider though,

  79. albo

    Three of the four top biggest point gainers today are NFLX, TSLA & SCTY.  Not what I would call quality leadership.

  80. wombat

    phil // TSLA
    i'm holding my calendar bear spread and my longs are May13 $90 – up 210%
    I thought that since they're  way up I should roll them out to continue protecting my Sept spread 
    but i can't find anything to roll to even/credit ? 
    Advice ?

  81. yodi

    deano
    RAX yes closed without delay

  82. scottmi

    LULU… ready to fall?

  83. albo

    STJ – Like you, I'm in 2015 QCOM leaps.  Joining you in covering some of my position as the stock approaches the 50 dMA.

  84. phil

    Moral stand/ZZ – I'm with you on that one.  

    Midday top 10 gainers: PNTR +65%TGX +36%SCTY+33%CNIT +28%SUTR +20%

    UNIS +19%ALIM +19%LEDS+19%NOAH +17%HTCH +17%

    Midday top 10 losers: GNVC -34%ATEA -18%SBLK -18%.RCON -15%EOX -8%DRWI -8%

    PLG -8%MRIN -8%JOSB -7%.CIMT -7%.

    Ben Bernanke will likely retire early next year, says CYS Investments (CYS -1.6%), presenting at JMP, with no one emerging to supplant Janet Yellen as next Fed chief. Bernanke is an open book, they say, but while Yellen is thought to be quite dovish, she may prove to be more of a pendulum. Importantly, 2 hawks are rotating onto the FOMC voting role next year – not necessarily changing policy, but certain to create "more noise." 

    IPOs Set to Raise Most Cash Since CrisisU.S. Firms Have Raised $16.8 Billion in 2013, on Pace for Best Year Since 2007

    "The Only Thing We Have To Fear Is The Lack Of Fear Itself". (graphs)

    John Hussman On Profit Margins And Un-"Reasonable Valuations".

    INVESTMENT CUBISM: Here's The Awesome Presentation Jeff Gundlach Gave To The Exclusive Sohn Conference.

    Euro Recession Seen Persisting to Longest in Bloc’s EraEuro-area data this week will probably reveal economic scars of the sovereign debt crisis confirming that the region is now suffering the longest recession since the single currency’s creation. Gross domestic product in the 17-nation economy fell 0.1 percent in the first three months of 2013, a sixth straight quarterly decline, according to the median of 39 economists’ forecasts in a Bloomberg News survey. That would exceed the 15-month long contraction in 2008-2009 during the financial crisis.

    France Suffers ‘Adjustment Fatigue’ on Austerity, Moscovici Says. France’s Finance Minister Pierre Moscovici said that his country is suffering “adjustment fatigue” as he reiterated his government’s push for policies to spur growth and fight unemployment. “Our people, they feel that there is something of an adjustment fatigue, and they want jobs, jobs, jobs,” he said yesterday in an interview with Bloomberg Television at the Group of Seven meeting of finance chiefs in Aylesbury, near London. “It doesn’t mean that now we can be relaxed — we cannot be relaxed. But it means we must think structural reforms. We must first of all reduce structural deficit and at the same time we preserve the capacity of France to grow and to create jobs.”

    Will Italy Waste ECB Breathing Space?

    Soros: Italy Market Calm Will Be Short-Lived. The market recovery which has brought Italy's borrowing costs down over recent months is unlikely to be sustained for long, while the fundamental problems facing the euro zone remain, investor George Soros said in comments published on Sunday.

    Spanish prelate fears 'mutual hatred' over euro crisisThe Catholic Primate of Spain has called for a profound shift in Europe's debt crisis policy to avert social collapse, warning that soaring unemployment in Spain and across southern Europe has become "very dangerous"

    Tombini Says Brazil Will Do What It Takes to Slow InflationBrazil’s central bank President Alexandre Tombini said policy makers will do what’s needed to slow inflation that has been above the mid-point of the target range since he took office. The bank’s board, led by Tombini, voted 6-to-2 last month to increase the benchmark Selic rate to 7.50 percent after holding it at a record-low 7.25 percent since October. The first increase since July 2011 came after annual inflation accelerated beyond the 6.5 percent upper limit of the bank’s target range in March. President Dilma Rousseff is facing growing pressure to slow inflation that is threatening Brazil’s economic recovery as higher prices sap domestic demand.

    China's Data Manipulation In One Chart, And Why The Real Data Implies Weakest GDP Growth In Over 20 Years. (graph)

    Chinese Consumers Rapidly Shift From Luxury To Thrift. (graph)

    Shaken, not stirred. The breadth of the latest global slowdown is disconcerting. Global growth sank below 2.5% in the second half of 2012. A small rebound at the start of 2013 appears to have faded. First-quarter GDP reports disappointed in America and China. Unemployment in Europe ticks relentlessly upwards. And in April an important index of global economic activity sank to its lowest level since last October, suggesting that the world economy is barely managing to grow (see chart).

    The FAA says it will continue funding air traffic controllers until at least September 30 with the Reducing Flight Delays Act of 2013 passed by Congress giving it the leeway to hold off furloughs until at least the end of the government's fiscal year.

    The mortgage REITs are lit up bright red (MORT -1.9%), again led by American Capital Agency (AGNC -3.5%) and American Capital Mortgage (MTGE -3%), with Annaly (NLY -3.1%) not far behind. Yes, the 10-year Treasury yield is a 3 bps higher, but there's also rare action in Fed Funds futures, now pricing in a whopping 50 bps in rate hikes by this time 2016. AGNC presents at the JMP Conference at 2 ET.

    JPMorgan (JPM) could fall 10% should Jamie Dimon follow through on a veiled threat and exit the bank if he is stripped of the chairman's role, says Mike Mayo, wondering who's standing in the wings to replace him. A fiery Ken Langone pronounces himself "terrified" at the thought of a Jamie Dimon-less JPMorgan.

    WTI Drops a Third Day as OPEC Boosts Output to Five-Month High. West Texas Intermediate crude fell for a third day, the longest run of declines in four weeks, as OPEC boosted output to the highest level in five months.WTI futures slid as much as 0.9 percent in New York, and London-traded Brent decreased for a second day.

    Coking Coal Contracts Seen Slipping to Record Low, Survey ShowsBHP Billiton Ltd. (BHP), the world’s biggest exporter of steelmaking coal, may face a drop in contract prices to a record low in the third quarter amid rising supply and weaker Asian demand. 

    Glencore (GLCNF.PKabandons plans for a new coal shipping facility in Queensland state, a move that reflects sustained weakness in Australia's once-booming coal export industry. The proposed Balaclava Island export terminal, which was designed to ship 35M metric tons/year, would have opened up a new route for coal exports from the resource-rich Bowen and Surat basins to buyers in Asia. 

    Mosaic (MOS -2.8%) says it is deferring a project to add 2M metric tons/year of potash production capacity due to unfavorable market conditions. Also, MOS expects its recurring dividend per share to grow in-line with earnings, and says it favors repurchases over dividends to deploy surplus cash. It expects to meet updated liquidity and leverage targets within the next 12-24 months. (slide show)

    Score another huge win for Big Business:  The U.S. Supreme Court rules in favor of Monsanto (MON-0.5%) in a patent infringement case involving a farmer who essentially made copies of MON's Roundup resistant soybeans by obtaining some from a grain elevator and using them to replant his crop. The court's decision was unanimous.

    Boeing (BA +0.9%) lifts higher as Sterne Agee ups its price on the shares to $120 from $100. The firm says that with the Dreamliner fiasco largely behind them, its free cash flow could top $18B over the next three years. The stock has typically traded at a 10-12 multiple to free cash flow, so with book-to-bill for the commercial aircraft sector staying above 1 at least through next year it sees the stock moving "towards the peak in the cycle."

    Valuation call, what's that – do they still do those?  In a valuation call, Deutsche Bank downgrades AutoZone (AZO -1.6%) to Hold from Buy. After rising more than 15% YTD, the shares are getting ahead of analyst Mike Baker's $410 price target, not to mention outpacing both the broad market and the S&P retail index. DB's target is based on 13x FY14 EPS estimates, which the bank says is a reasonable assumption based on historical precedent (AZO typically trades at 12.5-13x). 

    More Chinese companies are popping up in Detroit as they prepare for the eventuality of a major Chinese auto manufacturer selling cars in the U.S. For the most part, the firms are flying under the radar, but the numbers are starting to swell. The Detroit Chinese Business Association now has over 100 Chinese-owned businesses in its membership with the largest percentage geared toward supplying the automobile industry. It's a trend to watch for auto suppliers (AXLARMHALVBWACLCDANFDMLGNTXJCI,MGATENTRWWBC) used to having a home field advantage with the Big Three automakers.

  85. phil


    McDonald's (
    MCD +0.2%) could slip lower as itsunderperforms analyst estimates in Q2, according to Hedgeye. The firm thinks the Street has revenue projections for McDonald's set too high as it notes misses for April same-store sales for Europe and APMEA will be hard to make up in May and April with sales momentum languishing. (long-term MCD sales charts)

    In spite of receiving two upgrades – Barclays has lifted shares to Overweight, and Morgan Stanley to Equalweight – Corning (GLW +1.2%) is up just moderately. MS cites stabilizing LCD glass prices as a reason for its sentiment change. Jim Cramer is also talking up Corning. "[Corning] did a better-than-expected quarter no one seemed to pick up on. The Gorilla Glass market is finally working for them." One could argue the market has been working for a while.

    Annie, print your gun:  A bullish Canaccord report is helping 3D Systems (DDD+7.5%) shoot higher. In spite of the dilution caused by its stock offering, the firm thinks 3D can beat estimates thanks to strong printer and services revenue, and believes multiple expansion is in the cards as the company commercializes Bespoke Innovations' 3D-printed carpal tunnel braces in 2H. Canaccord's PT has been lifted to $50 from $45. Meanwhile, Stratasys (SSYS +2.1%) is now trekking higher following its Q1 report. On its earnings call, the company mentioned it's still "looking to grow through strategic acquisitions," and that it believes it can maintain its Q1 gross margin for the rest of the year

    ExOne(XONE) Focusing On Industrial 3D Printing Applications.

    FBR has upgraded Cisco (CSCO +0.3%) to Market Perform ahead of Wednesday's FQ3 report. Less than 2 months after downgrading Cisco and Juniper (JNPR -0.5%) on a belief software-defined networking (SDN) will drastically lower switch/router demand, the firm says talks suggest SDN overlay solutions - CiscoJuniper, and VMware (VMW) are pushing them – are gaining traction relative to products requiring big hardware changes, and that this should limit near-term sales pressure. Though rivals doubtlessly disagree, Cisco has been arguing its SDN solution can offer superior intelligence, thanks to its integration with Cisco hardware. (switch competition)

    Digital River (DRIV +12%) surges on news four different insiders - CEO David Dobson (30K shares), CFO Stefan Schulz (1K), General Counsel Kevin Crudden (9K), and director Thomas Madison (9K) bought shares last week; the average purchase price was $14.90. Shares of the e-commerce/online download software firm have traded in a fairly narrow range since last summer. (FQ4 beat)

    Aereo says under a new pricing plan subscribers can pay$8 per month for unlimited streaming of local broadcast programming and up to 20 hours of remote DVR storage. For an additional $4 per month, users can receive up to 60 hours of storage. The counter-attack: CBS (CBS +0.3%) is busy with legal maneuvers while ABC (DIS +0.1%) says it will launch an iOS app this week that allows residents in New York and Philadelphia to watch local stations live on their iPhones or iPads.

    Netflix (NFLX +3.9%will add a selection of exclusive titles from Disney, Marvel, and Dreamworks to its service in the U.K. and Ireland over the next few months. The addition of the fresh content is aimed primarily at family audiences.

    UBS upgrades T-Mobile USA (TMUS +3.7%) to Buy and hikes its PT to $24, arguing the #4 U.S. carrier is near an inflection point and should see growing postpaid net adds (after many quarters of losses). T-Mobile, which just began selling the iPhone, lost 199K postpaid subs in Q1, prior to its merger with MetroPCS (which has also been losing subs).

    Nokia (NOK +4.5%) catches a 2-notch upgrade to Buy from Denmark's Danske Bank, and responds accordingly. The firm cites growing optimism about Nokia's debt-raising and turnaround abilities, and the improving performance of Nokia Siemens. Meanwhile, a teaser ad for an upcoming Lumia phone shows a device with an aluminum body and large lens. Is it the Catwalk phone, or a Lumia with a 41MP PureView sensor? Either way, odds are it'll be unveiled at tomorrow's London event. 

    Barnes & Noble (BKS -9.9%) spikes lower after Insider Monkey reports that a source inside Microsoft indicates nothing is imminent from the company on a plan to buy Nook Media

    Google (GOOG -0.3%) roundup: 1) Still working hard to get consumers to engage with Google+ (and thus share data), Google is now offering mobile content recommendation widgets to sites that have integrated Google+'s +1 button. 2) Reuters observes major brands are still giving Google+ only a fraction of the attention they give to Facebook, in spite of Google's big monthly user claims. 3) Google will reportedly introduce a mobile gaming network at Google I/O (starts on Wednesday). Called Google Play Games, it bears a strong resemblance to Apple's Game Center.

    Everything We Expect Google(GOOG) To Announce At Its Biggest Event Of The Year Next Week.

    GOP Probes Deeper Into Benghazi ReviewLawmakers Seek to Question Accountability-Board Leaders, Saying Clinton's Handling of Attacks Wasn't Fully Explored. House Republicans on Monday plan to take another step in a widening Benghazi investigation, by asking leaders of an independent review board to agree to be questioned about their investigation of last year's attacks in Libya.

    Bloomberg 'Spy' Scandal Explained.

    Three lunchtime reads:

    1) Is the Fed afraid to regulate the big banks?

    2) Holding ourselves accountable 

    3) After Rana Plaza

  86. Pharmboy

    WCRX :)

  87. phil

    TSLA/Wombat – I would certainly take the money and run on those.  These are just silly numbers now and literally the entire float of stock has been sold (and bought) over the past 3 days.  If you assume those selling didn't jump back in and buy at higher prices – that means you now have a group of idiots holding TSLA at about $75-80 a share after buying shares from people who made 100% in 60 days.  These kind of things tend to end badly.  There are 2015 $85/115 bull call spreads at $7 for the $30 spread – that's a good way to cover short calls.  In fact, let's get 20 of those in the Income Portfolio and sell 10 of our 2015 $60s (I think we have 10) for $32 and now we have $18 in our pocket and two $30 spreads that make the same at $115 as the $60 calls would have. 

  88. phil

    In fact, in the $25KP, let's buy 5 of the TSLA 2015 $85/115 bull call spreads for $7 and sell 5 June $85 calls for $8.60 for a $1.60 credit – what a joke!  

  89. biodieselchris

    Man, I was THIS CLOSE to buying a slew of TSLA Jan14 calls a few months back.
     
    But I was a big fan of NFLX and SCTY, so as Bush said: Bring Em On!  :) :)
    Shoot!

  90. phil

    Good article on "IRS Scandal" and how it's really not a thing.  Not that that will stop Reps from freaking out, of course.  Once again I imagine what will happen when the NYTimes ceases to exist and I shudder…

    Chart

  91. biodieselchris

    I think we were discussing CORN the other day. Here's my plan: buy this thing in June of every year and get out by August. From now in to perpetuity, there will be some horrible summer event (floods, drought) where everyone rushes into this thing and then when the orgasm is over just don't be left holding it (decay/fees are huge).

  92. albo

    TSLA – Too obvious a short.  If people, like us,  keep re-shorting it, this could go on awhile.  Eventually the bubble will burst, but from what level ?

  93. scottmi

    TSLA/albo, phil - so how would some deep pockets play an obvious short? Sell May 85 puts, buy stock same time and sell june 85 calls?

  94. ksone88

    Phil –  52 week high, It appears that everything is at its 52H…except AAPL of course. Do you have any stats/chart showing stocks at 52H?

  95. shadowfax

    TLSA?
    Are there enough short shares or puts for even this small group? I have serious doubts.

  96. wombat

    Phil // TSLA
    Expensive cover. 
    "sell 10 of our 2015 $60s (I think we have 10) for $32 "
    I show these at $15

  97. phil

    Corn/BDC – There are whole funds that do those seasonal plays.  

    TSLA/Albo – Someone will smack them in the face with reality at some point.  Maybe tonight if SCTY disappoints.  

    TSLA/Scott – Obvious is a funny word.  I like my above play for $25KP as there's some cover.  The puts are too expensive to buy and selling completely naked calls has not worked so far.  They could go to $100 – they just shouldn't. 

    52-week highs/Ksone – I don't have that but Bespoke shows stocks above 50 dmas:

  98. phil

     

  99. phil

    TSLA/Shadow – That's the problem when a lot of people chase the same play.  Not something you want to play with if you don't plan to stick out a move against you.

    TSLA/Wombat – How can any $60 call be $15 with the stock at $86?  That's just ridiculous.  I don't know what system you are using but either you don't know how to read it or it's lying to you.

  100. phil

    Dow volume just 52M at 3:15 – kind of hard to take things seriously.  TSLA pushing 20M traded on the day and now over $87.  At $7 for a $30 spread, I'm happy to keep buying if they keep going higher…

    Most things on my screen are red but the exceptions are very notable like TSLA, NFLX, TM, WFR, BBRY – seems like money just needs somewhere to go and will fill any hole that opens up.  

    Now CNBC is torturing us with Kudlow in the afternoon – it's like they have a bet that they can drive away the last 90,000 viewers….

  101. phil

    Nice breakdown of Berkshire and their holdings.  

    Imagine what happens to Japan (and us) if rates go higher:

  102. mjjwo9b

    CNBC Viewers:  There are 10,800 viewers because that is how many Edward Jones Offices there are….

  103. phil

    With this level of market activity, they should introduce you to the guy you are trading with.  

  104. jabobeast

    FU PCLN!!!!
     
    wtf!

  105. vedanomics

    BDC- Share your trades on Corn. I was looking at CORN this morning purely out of interest as they have a 0.02 correlation with the S&P.

  106. angelcur

    SURPRISED THERE ISN'T MORE SHORT COVERING INTO "ALWAYS HIGHER TUESDAYS!"
    POETRY:
    THE WIND BLEW AND THE SHIT FLEW AND THUS SPAKE CRAMER

  107. angelcur

    MULTIPLE EXPLOSIONS AT VIRGINIA AIRGAS FACILITY

  108. scottmi

    Tuesdays/Angel – OMG! you mean TSLA is going up MORE tomorrow!? :-(

  109. Pharmboy

    THAT was a boring day.

  110. phil

    ARG/Angel – Funny as the stock isn't moving.   Good short if true. 

    Dow looks like 85M at the bell – big pop at the end but still very lame.  

    Not many earnings today but back to a bunch tomorrow. 

    The 25 most heavily shorted stocks (as a percent of float) in the S&P 1500 as of the end of April are up 6.75% in May, trouncing the S&P's 2.33% gain, according to Bespoke – and this doesn't include Tesla, up 57% with 40% of its float shorted, but not a S&P 1500 member. The top 5 heavily shorted: BTHQCORCSTRBRLI,SPPI. The rest in another post. 

    Defensive stocks such as utilities (XLU -0.4%), which have led this year’s market surge, are fading, and investors should consider cyclical sectors such as tech and energy for long-term value, BlackRock's Russ Koesterich recommends. The utilities sector is overpriced and probably has more room to fall, but investors starved for yields should look at dividend-paying companies from outside the U.S.

    "I think Netflix (NFLX +4.1%) could be this decade's Amazon," says Whitney Tilson in a Yahoo talk (video). Though Tilson admits to "trimming" his position during Netflix's run-up, he still considers it undervalued relative to other media providers – "They're trading at $400 per subscriber in a world of $1,000 per sub" – and argues its scale gives it a big edge – "Who else is going to spend $3 billion a year for streaming content?" Of course, many of the firms valued at $1,000/sub are getting a lot more than $8/month. Netflix investors seem to be betting the company's library and customer loyalty will allow it to raise prices over time. (U.K. deals)

  111. albo

    Nobody on God's green earth could believe that TSLA is worth $87 per share.  It doesn't matter.  Still think Elon Musk should announce a secondary offering.  Maybe he thinks he can raise additional capital at $100.  Unreal.

  112. stjeanluc

    As far as NFLX, TSLA and some others, I give you Josh's point that I posted last week already:

    value performance

    That was his – "if you learn nothing else" moment! So true today…. Lemmings, sheeps, you choose the analogy!

  113. phil

    TSLA up even more after hours.  SCTY down a bit.  

     

    SolarCity Corporation Earnings Cheat Sheet

    Revenue: Was the same at $29.98 million as the year-earlier quarter.

    Actual vs. Wall St. Expectations: SolarCity Corporation reported adjusted EPS loss of $0.31 per share. By that measure, the company missed the mean analyst estimate of $-0.26. It beat the average revenue estimate of $29.08 million.

    Quoting Management: “Extending its leadership as the nation’s premier clean energy provider, SolarCity not only grew its customer base 106% year-over-year to over 57,400 and increased its long-term contracted cash flows to $1.22 billion but also exceeded guidance of MW deployed of 41 MW with 46 MW in the first quarter of 2013,” said Lyndon Rive, CEO. “Through our unique, vertically-integrated platform of financing and installing solar systems, we offer customers a compelling value proposition of clean energy for lower than their local utility rate,” continued Mr. Rive. “And our growing economies of scale and falling cost of capitalare leading us to retain greater value for our shareholders.”

    Revenue increased 18.64% from $25.27 million in the previous quarter. EPS increased to $-0.31 in the quarter versus EPS of $-0.54 in the previous quarter.

    Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a loss of $0.26 to a loss $0.34. For the current year, the average estimate has moved down from a loss of $1.09 to a loss of $1.30 over the last ninety days.

    Stocks with improving earnings metrics are worthy of your extra attention. In fact, “E = Earnings Are Increasing Quarter-Over-Quarter” is a core component of our CHEAT SHEET investing framework for this very reason. Don’t waste another minute – click here and get our CHEAT SHEET stock picks now.

     

    Good article breaking down TSLA value but no one wants to hear it because it's logical…

  114. biodieselchris

    I'm in CORN (stock only) already, purchased maybe two weeks ago or so with a basis close to its current price.
     
    Will not hold longer than Oct at the latest, probably more like August or Sept, and might chase with options on pullback days here and there, but only a few for fun, nothing serious.

  115. biodieselchris

    TSLA — valuation on fundamentals? C'mon, seriously. This is a momo pure in simple. The same as NFLX (which is now in "fool me twice" type territory) and LNKD in and all the others. 
     
    These things can kill you trying to short them too soon (lessons I learned on TLT, PCLN, CMG and a few others to a painful end)… so don't go rushing into puts. I can see TSLA at 110 no problem.

  116. scottmi

    MoMo/BDC – amen to that. i remember GMCR going unreal in March 2011…and not turning around. that was a lesson.

  117. BertII

    MoMO /BDC I got crushed with PCLN2 years ago rolled for over a year finally had to give up

  118. 1020

    I've never been crushed by a MoMo stock; I've only been crushed by crappy companies….. :)

  119. biodieselchris

    and yes, I am considering TLT a momo stock because no one in their right ******* mind would pay 8% a year in currency devaluation to get 3% "guaranteed." Yes that's right folks, you are paying someone to guarantee that you lose money.
     
    At least with stocks you might lose money…

  120. phil

    From The New York Times:

    OP-ED CONTRIBUTORS: How Austerity Kills

    People do not inevitably get sick or die because the economy has faltered. Fiscal policy can be a matter of life or death.

    http://nyti.ms/16sMav9

  121. Jbur

    Tilson on NFLX: I've met Whitney at several Berkshire functions in the past and always thought he was a super guy and good at company valuation. In this instance, I have to say, he's just talking his book. 

  122. phil

    How a Bitcoin Transaction Actually Works
    http://gizmodo.com/how-a-bitcoin-transaction-actually-works-504922955

  123. phil

    Will Netflix Go to $65 or $325? Analysts Debate
    http://www.cnbc.com/id/100731947

  124. zeroxzero

    Well, I shorted Tesla at $87, 2,000 flying miles later I've officially joined the club of TSLA Short Position Whiners.  There must be cheaper ways of building camaraderie.  $110, huh?  Sure, why not.  You can fool some of the people some of the time — which is enough to make a living.

  125. mrmocha

    Pharm / Boring Day – dude, you need to join us on the Dark Side and short NFLX.  It's pretty hard to call a day where your porfolio drops $10K in 30 minutes "boring"…

  126. Investwizard

    Phil/ Futures~~Hi, if I want to short  /CL, /YG, /SI, /HG, /NG and /RB, in general, do we prefer to see /DX go up? Vice versa?

  127. microflux

    Phil tsla could go much. Higher if they announce a swappable metal air battery. 
    http://m.seekingalpha.com/article/1431451-tesla-s-5-part-trilogy-grand-finale-all-signs-point-to-battery-swapping-or-faster-charging?source=google_news

  128. phil

    Good morning!  

    Battery swapping?   That's my idea from wat back.  If they get that working, it's going to be an electric revolution.  

  129. phil

    Futures down a touch but nothing exciting.  

    Oil rejected off $95.50 and back to $95 line and we still like the short below that line with tight stops (/CL) but we're ahead of inventory and $95 should be bouncy so be careful – Dollar at 83.32 so up is down for oil.  Copper is down sharply (1.5%) to $3.308 with gold $1,437, silver $23.64, nat gas $3.92 and gasoline $2.826.  Still two weeks to the holiday so hope springs eternal for oil and gas but the contract rollover is now a week away so hopefully some good downward pressure is at hand.  

    Plosser did not say anything market-moving – same old, same old, for the most part

    At the close: Dow -0.17% to 15094. S&P +0.01% to 1634. Nasdaq +0.07% to 3439.

    Treasurys: 30-year -0.27%. 10-yr -0.11%. 5-yr -0.04%.

    Commodities: Crude -1.06% to $95.03. Gold -0.42% to $1430.55.

    Currencies: Euro -0.14% vs. dollar. Yen +0.24%. Pound +0.46%.

    Market recap: Stocks finished flat in lackluster trading, as stronger than expected retail sales were offset by disappointing news on China industrial production, which weighed industrial firms such as Alcoa and Joy Global. Investors also mulled the WSJ report that the Fed may be getting ready to scale back its bond-buying program. Treasurys fell, pushing 10-year yields to 1.931%; the dollar hit a four-year high vs. the yen above ¥102. 

    8:44 PM Japanese stocks move higher in early trading after a record finish for the S&P 500 overnight. The Nikkei Average gained 0.3% to 14,822, extending its gains after finishing at its highest level yesterday since December 2007. Big gainers include: Hino Motors (HINOY.PK+2.2%), Isuzu Motors (ISUZY.PK +1.7%) and Astellas Pharma (ALPMY.PK +3.9%).

    Tuesday's economic calendar:

    7:30 NFIB Small Business Optimism Index

    7:45 ICSC Retail Store Sales

    8:30 Import/Export Prices

    8:55 Redbook Chain Store Sales

    This Bull Market Has Gone A Mindboggling 177 Days Without A Notable Pullback.

    The End is Where We Start From (The Reformed Broker)

    HUSSMAN: Recklessness, Euphoria, And Superstition Have Been Rewarded Like Insight And Genius.

    Near-Record NYSE Margin Debt Leads to Caution  (Bloomberg)

    Investors borrow cash from portfolios at record pace (USAToday)

    Rosenberg: Why cash is your least safe bet (Financial Post)

    Searching for Signs of a Market Top (Barron’s)

    Keynes was, incredibly, right about the future. He was wrong about how we’d be spending it. (Wonkblog)

    U.S. jobs could return to pre-recession levels by 2014, according to some economists. The latest Wall Street Journal survey of economists, forecasters said they expect employers to add just under 180K jobs a month over the next 12 months, about the same pace as the past two years, but that should pick up as the economy continues to gather steam. For the full year, economists expect 2.4% growth – which is better than the past two years. 

    CNBC's Jim Cramer says he's witnessing something in the market he hasn't seen in all his 34 years of investing – something that tells him this bull market is more powerful than any we've ever experienced. First, investors aren't taking profits after good news, which is usually the norm. Second, stocks aren't re-tracing to fill in any gaps after popping on good news, they just keep going higher. Lastly, even on bad news, stocks are roaring even higher. This is a "surrealist moment," Cramer says. Managers who have been taught never to chase stocks are getting killed. This is bull is "crushing even the most skilled of matadors." (Video)

    U.S. automatic cuts send Pentagon contract awards down 52 percent (Washington Post)

    Grind of Euro Crisis Wears Down Support for Union, Poll Finds.

    Europeans must face up to prospect of massive debt restructuringEurope’s bourses have not done as well as others from renewed investor appetite for equities, but even the depression-hit eurozone periphery has seen big gains in share prices since the sovereign debt crisis began to abate last summer

    EU bank proposals 'risk domino sequence of failures’Proposed European Union rules governing how losses are imposed on creditors in a failed bank pose the risk of a “domino effect” threatening financial stability in Britain, George Osborne will warn on Tuesday

    Cameron Gives Way to Tory Rebels in Backing EU-Referendum BillBritish Prime Minister David Cameron ceded to the rebellion in his own Conservative Party, offering to support a bill authorizing a referendum by 2017 on the U.K.’s continued membership in the European Union. The prime minister’s visit to the U.S., where he has been talking about the conflict in Syria and his agenda for next month’s Group of Eight summit, has been overshadowed by a growing number of Conservative lawmakers saying they planned a Parliamentary vote against his legislative program to protest his failure to deliver such a bill. 

    Two Charts Show How Depressing And Gloomy Things Have Gotten In France.

    Spain sells €3.034B of 12-month T-bills at an average yield of just 0.994%, the lowest rate in more than three years as borrowing costs continue to fall on investors' apparently unshakable faith in the ECB's willingness to backstop Spanish and Italian sovereign debt. Yields on comparable notes hit 5% last June. Meanwhile, core inflation in Spain fell to 1.9% in April, below economists' projections and the lowest level in eight months, as the country's economy continues to stumble.

    Thanks largely to Prime Minister Shinzo Abe and BOJ Governor Haruhiko Kuroda, Nomura's (NMR) retail client assets hit a record $889B last month, a goal CEO Koji Nagai hadn't expected to hit for another two years. NMR saw an influx of some $64B in assets under management during April, the largest increase since record keeping began at the bank, as investors piled into stocks on the heels of Japan's extraordinary monetary policy initiatives. 

    Australia could see a recession in the next 18-24 months should a sharp fall in mining capex materialize, says Morgan Stanley. Other economists – including the RBA – hold out hope the retail sector and housing market will fill the void left by mining. The aussie (FXA) is off 7 big figures in a month as fx traders place their bets with the Morgan view. EWA is flat over the same period as the aussie's fall wipes out equity gains.

    China Stocks Fall Most in 3 Weeks on Economic, Property ConcernsChina’s stocks fell the most in three weeks on concern an economic slowdown is deepening and the government is introducing more restrictions on the property market to limit gains in housing prices. China Vanke Co., the largest developer, dropped the most in three weeks after the 21st Century Business Herald reported Beijing tightened rules for the pre-sale of homes. China Eastern Airlines Corp. slid to a one-month low after Credit Suisse Group AG said Chinese airline traffic growth slowed last month. ZTE Corp. slumped 4.4 percent after the Wall Street Journal reported the European Union will seek to start a probe into alleged unfair trade practices by the telecom company. The Shanghai Composite Index (SHCOMP) fell 1.6 percent to 2,206.52 at the 11:30 a.m. break, the most since April 23. The CSI 300 Index slid 2 percent to 2,480.

    Yuan’s ‘too big to fail’ dilemmaCommentary: China being cornered into currency liberalization.

    Thanks to U.S. shale oil, demand for OPEC crude will remain largely unchanged over the next five years the IEA says in its semi-annual report. "Output growth from North America dominates the medium-term growth profile," the agency notes. By 2018, U.S. output should reach 11.9M barrels per day, 20% of the projected total of 59.3M barrels per day of non-OPEC supply.

    CTFC Probes Over 1 Million US Swap Contracts. A top U.S. financial regulator has launched a broad inquiry into the legitimacy of more than 1 million energy and metals transactions by the biggest traders in commodities markets over the past two years. The Commodity Futures Trading Commission has issued a "special call" asking Wall Street banks and other traders to provide documents that would prove recent derivatives transactions known as "exchanges of futures for swaps" were legal. Lawyers at the CFTC enforcement division are also scrutinizing the trades for possible violations. "They are looking at a huge amount of trading," an industry lawyer said

    Tata Steel Flags $1.6 Billion Writedown on Weak Europe DemandTata Steel Ltd. (TATA), India’s biggest producer, said it expects a $1.6 billion writedown in asset values because of a drop in steel demand in Europe. Demand in Europe has fallen by almost 8 percent in the year ended March 31, Mumbai-based Tata said yesterday in a statement. Weaker economic and market conditions in Europe are expected to continue in the near and medium-term, leading to a cut in expected cash flows and the valuation of the company’s European business, Tata said. 

    SolarCity (SCTY): Q1 EPS of -$0.41 misses by $0.15. Revenue of $30M (+21% Y/Y) beats by $900K. 46MW deployed (+12% Y/Y). Nominal contracted payments +10% Q/Q to $1.22B. Expects Q2 revenue of $16M-$18M, below $40.5M consensus. Reiterates guidance for 250MW in 2013 deployments. Now expects positive net cash flow in Q2. Shares -6.2% AH after rising 24.2% in regular trading. CC at 5PM ET (webcast). (PR)

    For those still keeping score, Tesla (TSLA) added another14.38% to last week's post-earnings bonanza , bringing the three-day total percentage change to +57%. Amusingly, the rally didn't let up AH either, as the stock tacked on an additional 2.51%, hitting $90 just before 8 p.m.

    Corn Crop Planting At Third Slowest Pace in Three DecadesLess than a third of the corn crop in key planting states is in the ground, the third lowest level for this time of year since 1980. The U.S. Department of Agriculture Monday reported that 28 percent of the expected corn crop has been planted, and in key farm belt states, like Iowa and Illinois, the levels are even lower.

    AMD (AMD +5.8%) is continuing this spring's take-no-prisoners rally/short-squeeze – shares are now up 83% from their April 18 low. This morning, the chipmaker announced a reference design (powered by its Opteron 6300 server CPUs) for Facebook's modular Open Compute server platform. AMD claims servers based on its design can drastically lower ownership costs for a PC virtualization deployment.

    Sporting 4 cores and the same GPU platform and manufacturing process as Ivy Bridge CPUs, there's little doubt Intel's (INTCBay Trail Atom CPUs (due in Q4) will deliver big performance gains over the current Clover Trail. ReadWrite's Mark Hachman wonders if Bay Trail will be too good, cannibalizing sales of Core CPUs with the help of a relatively resource-efficient Windows 8. Though more demanding users will want Haswell Core systems (esp. since Bay Trail lacks multithreading), will some mainstream users decide Bay Trail is good enough? Intel wants to eventually reach a ~$200 price point for Atom-based touchscreen Android laptops, and a ~$300 price point for Windows systems.

  130. phil


    Zynga (
    ZNGA +7.4%) closes sharply higher in the absence of major news. Enthusiasm about the performance of new mobile titlesDraw Something 2 and Running with Friends could be a factor – AppData's stats (III) indicate both games continue to fare well in App Store charts. Zynga's short interest has tripled since November, but is still well below where it stood a year ago.

    Daniel Loeb, whose Third Point has a 6.5% stake in Sony (SNE) worth some $1.1B, is pushing for a spinoff of the company's entertainment business including the film studio responsible for James Bond blockbuster "Skyfall" and the music label which houses big name artists such as Taylor Swift. (Andrew Ross Sorkin)

    Sharp (SHCAY.PK): FY13 net loss of ¥545.35B misses by ¥95.35B. Operating loss of ¥146.27B. Revenue of ¥2.48T. Outlook : FY14 net profit of ¥5B, operating profit of ¥80B, revenue of ¥2.7T.

    Verizon Wireless is making a fresh $7B cash distribution to owners Verizon (VZ) and Vodafone (VOD) – Verizon will get $3.85B, and Vodafone $3.15B. A $10B distribution was made in 2011, and an $8.5B distribution last November. CEO Lowell McAdam appeared to be hinting earlier this month Vodafone might not get a distribution this year, as Verizon Wireless focuses on paying down debt. VOD +0.5%AH. VZ +0.3%.

    Facebook (FB) roundup: 1) Calcalist reports Facebook's buyout talks with Waze have stalled over Waze's insistence on maintaining its Israeli R&D center and keeping all its employees in the country (translation). 2) Another executive departure: Larry Yu, Facebook's PR chief for the last 5 years, is leaving to join a startup. 3) It's not exactly House of Cards, but Facebook is ramping its investment in its Facebook Live original programming series; Live typically features celebrity interviews and instructional videos. 4) BGR reports AT&T is planning to discontinue the HTC First (the closest we've gotten to a Facebook phone) less than a month after its launch. The First's ho-hum specs could be a factor, but chances are Facebook Home's underwhelming debut is as well. 

    More Google (GOOG) news: 1) Google shifts to a unified storage model for Gmail, Google Drive, and Google+ Photos: users now have 15GB of free storage to share between them, and an additional 100GB can be had for $5/month. In practice, this means more free storage for most Drive users – the service previously offered 5GB – and represents an escalation of Google's efforts to compete with Dropbox and Microsoft's SkyDrive. 2) Android Authority reports a Google smartwatch is "set for release sometime soon," and that major updates to the Gmail apps will accompany (already leaked) Maps updates. (earlier)

    Apple (AAPL) roundup: 1) Jefferies' Peter Misek, fairly plugged in to supply chain movements, thinks June quarter iPad build plans have been raised to 20M-25M, and that iPhone build plans stand at 25M-30M. 2H build order pickups are forecast for both as new hardware launches. 2) Brian White's Apple Monitor (tracks supplier sales) also indicates stabilizing orders - April sales rose 1% M/M, slightly better than a -1% historical average (possibly good news for CRUS). 3) T-Mobile USA (TMUS) has raised the down payment for a 16GB iPhone 5 by $50 to $149, bringing the total 24-month cost to $630.

    Republicans want new Clinton testimony on Benghazi, float possibility of subpoenaCalls are growing for former Secretary of State Hillary Clinton to return to Capitol Hill — under subpoena, if necessary — to answer new questions that have surfaced about her role in the response to the Benghazi terror attack. “I believe she was disconnected and dispassionate about what was happening,” House Oversight and Government Reform Committee Chairman Darrell Issa told Fox News on Monday. During the interview, Issa kept the option of forcing Clinton to testify on the table.

     

    Twitter “Hate Map” of the U.S.

     

  131. stjeanluc

    This is starting to look like another consolidation zone – we go up or down from here!

  132. albo

    STJ – Obviously words of wisdom, "we go up or down from here !"   Just teasing.

  133. phil

    Up it is.  Futures up 50 points in last hour.  Not sure what it was…

    6:30 AM Overseas: Japan -0.2%. Hong Kong -0.3%. China -1.1%. India +0.2%. London -0.1%. Paris -0.5%. Frankfurt -0.2%.

    6:53 AM S&P 500 (SPY) futures are off 0.25% and Nasdaq 100 (QQQ) futures -0.3%, with Europe moderately lower midday – the Stoxx 50 (FEZ-0.5% - and Asia closing mixed to lower, the big action coming in Shanghai, -1.1%.

    An early look at the BAML May fund manager survey showshedge fund equity exposure (VTI) at the highest in 7 years, +45%. Commodity exposure (DBC) is a negative 29%. Cash is at 4.3%. Sectors: It's a record-low exposure to energy (XLE) at -17%. Japan (EWJDXJ) at +31% is the highest in 7 years. 

    NFIB Small Business Optimism Index: +2.6 pts. to 92.1, vs. consensus of 90.5, 89.5 prior.

    ZEW says its index of investor and analyst expectations crept up to 36.4 this month from 36.3 in April, missing economists' forecast of 40. The below-consensus reading was largely attributed to a generalized sense of anxiety regarding the economic situation in the eurozone as a whole, underscored by the ECB's recent rate cut. "The problem is that [Germany] seems to be the only big EU economy growing," notes a senior economist at Citigroup, quoted by Bloomberg. The DAX (EWG) is -0.19%. 

    China's Q2 GDP growth forecast is cut to 7.8% from 8% at JPMorgan, which also reduces its full-year estimate to 7.6% from 7.8%. There's no indication the government's policy stance will be shifted quickly to support near-term growth, says the bank. Slash rates? Can't do it, says a state economist, thanks to an already abundant pool of global liquidity. Shanghai (FXICAFfell 1.1%overnight.

    Commerzbank (CRZBY.PK) sets its capital raise, offering 556M shares at 4.5 euros each, a 55% discount to Monday's close. Excluding the value of subscription rights – set at 2.65 euros/share – it's inline with expectations for a 38% discount. With the money, the bank will repay Germany and Allianz, saving about 200M euros/year. Stock's off 1.8% in Frankfurt.

    Visa (V) offers to cap inter-bank credit card fees on cross-border and domestic transactions in Europe at 0.3% in an effort to appease the European Commission. Visa Europe says it will also reform its rules to help open up competition.

    The aluminum market (JJU) remains vastly oversupplied, even as the world’s top producer United Co. Rusal cuts Q1 output 4%to trim the hefty global surplus that’s helped push prices 10% down YTD. A push by China to bolster aluminum production in Xinjiang province is adding to excess domestic stocks, Rusal notes.

    Telsa Motors (TSLAgains 6.2% in premarket trading to reach $93.10 as its dizzying post-earnings victory lap continues. Morgan Stanley is out with what is largely a cautionary note before crunching the numbers for the "extreme" bull case. The firm says if Tesla achieves a 20% operating margin on 200K units per year, then a +$300 price target could be justified.

    EADS (EADSF.PK) says Q1 net profit nearly doubled to €241M as deliveries by Airbus (144 versus 131 in Q1 2012, 410 net orders) drove 16% revenue growth in commercial aircraft sales. Management also says it is confident that the company's 787 Dreamliner competitor, the A350, will make its first flight this summer. For the full year, the company sees "moderate" revenue growth and an operating profit of €3.5B. (Previously: A350 painted and flyable)

    Cree (CREE) is downgraded to Hold at Sterne Agee with price target lowered to $59. Shares -2.9% premarket.

    Shares of Sony (SNE) move up 4.4% premarket after Third Point pushes the company to consider a breakup to extract value. (Third Point letter to Sony)

  134. microflux

    Phil / tsla aluminum air battery could be very real 
    http://m.phys.org/news/2013-03-phinergy-aluminum-air-battery-capable-fueling.html

  135. microflux

    Phil / tsla so we are talking about a 25kg batt that will take you 1000km then you just swap pack

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