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Will We Hold It Wednesday – Russell 975 is Bust

SPY 5 MINUTEWheeeee, what fun!

As you can see from Dave Fry's SPY chart, we got our usual Tuesday pop but then a rare Tuesday drop into the close and, this morning, the Futures are taking us right back to that 165 line – as if yesterday never happened.  

Note the flash-crash line at about 2:50 that tested support and found there were no actual buyers – just a bunch of TradeBots moving shares back and forth to keep up appearances.  While we are trying to get ourselves in a more bullish frame of mind, the Russell is not helping us as it repeatedly fails to hold it's 1,000 line, which is the Must Hold line on our Big Chart.  

Without the Russell, we remain 3 of 5 bearish at our Must Hold lines and, as I noted yesterday, we WANT to be bullish – really we do – but the indexes are simply not giving us enough reasons to believe just yet.  

Not that we're bearish – that would be market suicide at the moment.  Call us agnostic and proud of it.  As you can see from the Big Chart below, we MAY be consolidating for a proper breakout at some of our significant lines or we may be about to fail 975 on the Russell and 15,200 on the Dow and 1,640 on the S&P and, below that, we'll be testing some levels you don't want to be testing if you are trying to stay bullish.  

Keep in mind my call for this month was to get to cash at the top here.  The proverbial "Sell in May" play.  IF the market is still up next week – THEN we can put some of that sideline cash back to use.  I'm not alone, either.  A survey by US Trust polled people worth $3M or more and a whopping 88% feel financially secure and 70% feel confident about their security in the future.  

HOWEVER, 56% have a "substantial" amount of cash with only 16% planning to invest that cash in the next couple of months and only 40% planning to invest over the next two years.  That's something like $6Tn sitting on the sidelines!

So we're not fooling all of the people, some of the time yet and the market's going to have to pull that off to get to Goldman's 2,100 target for the S&P.  We only have to fool some of the people some of the time to re-test 2007 highs 6 years later – that much is obvious.  It's whether or not we can get OVER those levels and then OVER the inflation-adjusted levels (the Dollar alone is down 20% over that period) to confirm a proper market rally, as opposed to the Federal Fluff we have now.  

Let's not underestimate the value of fluff, though.  Even among the top 1% polled by US Trust, 52% of non-retirees said the value of their primary residence is important to funding their retirement.  That's for people who have at least $3M – imagine how important it is to the bottom 99%!  That's why we're not going to be counting this market out until we have to – the Fed has 110M reason (families with houses) to inflate our way out of the mess we're in and what is the stock market but a forward-pricing mechanism?  

TLT WEEKLYEven this morning, the Dollar is taking a 0.5% dive to save the markets from falling past their own 0.5% line in the Futures.  We had a poor 2-year note auction at 1pm yesterday and you can see the reaction the market got from that.  TLT plunged from 117 to below 114, down past the 2.5% Rule for the session and all the way to 113.67 at the morning open before recovering back to 114.5 as of 8:30.  

We don't think the Fed is done propping things up just yet and we draw the line at 115 on TLT – despite it being crossed yesterday.  We took advantage and sold the June $115 puts for $1.75 for a net $113.25 entry and we added the June $112/115 bull call spread (5 of each) in our virtual Short-Term Portfolio but I did note we should probably give up if TLT can't hold $114.50, which they haven't after hours but that's not what counts, so we'll have to see.  

Oil was a bit high so we shorted that using SCO again.  Due to the holiday, inventories are pushed back until tomorrow morning but, as I noted in Member Chat this morning, there's about 600M barrels on order for the front 3 months AND there's already 246M on order for December delivery and you KNOW that's never going to happen so BIG TROUBLE for the NYMEX pumpers at some point – we just want to be there when it happens!  

ICSC-Goldman Sachs' Retail Sales Index fell 0.9 percent in the last week with the year-on-year rate down 0.3 2.8%. The report says retailers in general didn't get much boost from the week's Memorial Day lead-in and that sales were considerably softer at discounters and wholesale clubs.  But, in what highlights the unevenness in demand, sales did show strength at department stores as well as at apparel and electronics retailers – and that's where the money is.  Redbook Chain Store sales confirm the malls are still hopping, with a 2.7% gain for the year.  This backs up yesterday's topic on the changing nature of global demand as the top 10% still buy their toys and hit the stores for Summer fashions while the bottom 90% serve Ramen Noodles as a side dish for their holiday barbeque to save money.  

Mortgage Applications dropped ANOTHER 8.8% this week as rates creeped higher.  That's after already plunging 9.8% last week (which is on the chart but today's drop isn't) and that makes a 5-year low and an off the charts low for May, when mortgage activity is usually peaking.  I know, Fundamentals are just so passe – that's why I'm hoping a chart of this HORRIFIC data point will get your attention!  

So, you see that arrow from last week – just draw another one the same size in the same direction and that's where we are this week, about 2 lines BELOW the bottom of this chart.  Have I mentioned how much I like cash lately?  

We did find a long play we liked on KORS in yesterday's Member Chat, my trade logic on that one was

KORS/QC – Luxury has been doing well and KORS is pretty flat so worth an upside toss with the weekly $60 puts at $2.40 and you can cover that with the July $57.50/52.50 bear put spread at $1.35 for a net $1.05 credit so the entry on KORS is net $58.95 with a downside stop at $57.50 that protects you for the next 10% (ish) down.  So risk $1.45 vs reward of $1.05 plus whatever value remain on the bear put spread if KORS closes over $60 (now $61.74)

That one is looking very good as KORS crushed earnings and should be up about 2% this mornings, making the short puts pretty much worthless already.  In that same comment to our Members, I noted our plan to get longer on TSLA and this morning we'll be getting longer with the 2015 $100/130 bull call spreads at $10 in our Income Portfolio (although we plan to take the money and run on 1/2 of our $85 calls so not too bullish here ($113).  Those pay 3:1 if TSLA makes it to $130 in 18 months but, at the rate it's been going lately, maybe the weekend…  TSLA may be the first stock that gets to space faster than it's CEO!

SFD is up 25% pre-market on news it will be bought by China's Shuanghui International.  NOW Fox News has something they can really freak out about.  Smithfield Foods is the World's largest producer of of pork and employs 46,000 people with headquarters in Smithfield, VA, within easy eavesdropping distance of Washington, DC!  Funny story, actually, as SFD had been on a massive acquisition spree, being called by the USDA "absurdly big" and a danger to the US food supply if anything were to happen to the company.  Well, no worries now, it's China's problem – isn't it?  

131710 600 Air Air cartoons


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  1. stjeanluc

    Oil Lines

    R3 – 98.35
    R2 – 97.13
    R1 – 95.97
    PP – 94.75
    S1 – 93.59
    S2 – 92.37
    S3 – 91.21

    Yesterday's high and low – 95.92 / 93.54

  2. stjeanluc

    I posted a recap of our TSLA Income Portfolio position last night and Phil added the plan for today:

    Strategy for TSLA should now be:

    1. Putting a stop on 20 of the 2015 $85 calls at $37.50, will raise to $40 at $42.50 and etc after that ($2.50 trailing stop).

    2. As soon as those execute we buy 20 2015 $100/130 bull call spreads at $9.  If those spreads go to $10, we buy 20 of them regardless (without waiting for stop on $85s).  

    3. We collected $54,450 from the short puts and can collect $54,000 more if we fill them out (against the short calls) but $54,450 let's us spend $9 on 30 $110/130 bull call spreads and $5 rolling 60 short $80 calls to $90 calls or $5 rolling 60 short $115 calls to $135 calls, which would widen the spread/protection on our existing 40 spreads by $80,000. 

    It looks like TSLA will open around 112 this morning so part 2 might execute quickly. Adding the longs should reduce the margin requirements.

  3. stockdoc9999

    A survey by US Trust polled people worth $3M or more and a whopping 88% feel financially secure and 70% feel confident about their security in the future. "


    '$3 Million plus' put those people in the top 2-3% of all Americans. The only surprise is that only 88% feel secure now and less than that as our so-called leaders play dice with our financial futures. 

  4. stjeanluc

    That's the top 1% plan:

    http://www.motherjones.com/kevin-drum/2013/05/how-rich-got-richer-global-comparisons-edition

    Dylan Matthews highlights a fascinating little chart today. Roughly speaking, it plots two things for 18 different countries: (a) how much the rich have gotten richer over the past 50 years, and (b) how much tax rates on the rich have gone down during the same period. Guess what? It turns out that in countries where the rich got the richest, they also enjoyed the biggest tax cuts.

     It's not just that low taxes produce harder-working rich people, or that richer rich people produce the political power to cut taxes. It's broader than that. Essentially, when an entire country gets persuaded that what's good for the rich is good for everyone, that creates support for a wide range of policies that benefit the rich. Low tax rates are one of them, but I suspect you could draw a chart like this for a number of other public policies as well (unionization rates, financial deregulation, etc.).

    In the United States, the conservative movement has been astonishingly successful at persuading the public that "free market" policies which benefit the rich will trickle down to everyone. In Germany, not so much. As a result, public policies in the U.S. benefit the rich, and the rich also get ever richer. In Germany, they don't.

  5. Investwizard

    Good morning! Just came back from a mini vacation in Atlanta, GA. Feels good to get back to the market.

  6. yodi

    Cat today might be the right day to sell the Aug 82.5 putter of the Aug back ratio!!!

  7. newt

    TSLA: Can anyone clarify this—- and can collect $54,000 more if we fill them out (against the short calls)- my guess? it means sell more puts against short 115 calls.

  8. 1020

    Good Morning!

  9. millcreek

    phil,
    need some help re tsla
    sold 10x jan5 70's for 7 had to buy back at 14 and rolled to 10x jan4 90's for 15.
    bgt 5 85-115s for net 8.
    sold 4x jan 5 60 puts for 12.
    couldnt roll to 75 yesterday didnt get hit at 19.
    so net. sht 10 jan 4 90…………long 5 85-115 bcs jan5 and short jan 5 4x 60 puts
    your thoughts with this mornings open tks…..

  10. 1020

    Phil – Nice to see a little "sickness" this morning….Thanks!  :)

  11. denlundy

    More on understanding major energy shift that is occurring:
    Tuesday, May 28, 5:33 PM ET  From Seeking Alpha
    Oil production in Texas’ Eagle Ford shale formation rose 77% Y/Y in March, yielding more than 529K bbl/day and posting a record. The number could still go higher; February output was revised to 511K bbl/day from the preliminary report of 471K. EOG Resources (EOG) is the largest Eagle Ford leaseholder, with 639K net acres, followed by Chesapeake (CHK) and Apache (APA).

  12. 1020

    Phil/mortgage apps   Yeah, but have you noticed lumber futures?  (/LBS on TOS)
    http://futures.quote.com/quotes/quote.aspx?qmdirect=1&symbol=%2fLBS

  13. Phil

    TSLA move for Income Portfolio is to cash 20 of the $85 calls (now $42) and we will use that money to buy 20 of the $100/130 bull call spreads (now $9) and we'll keep a stop on the $115 calls, now $31 at $35 but, hopefully, they drop a bit more first.  

  14. 1020

    Lumber – My point is that lumber futures have been headed south since March…..

  15. stjeanluc

    Phil – As I mentioned before, these short TLT puts are not really margin efficient in this portfolio. The TLT trade uses over 12K of margin. 

  16. shadowfax

    Trendline support from yesterday is IWM 97.85, resistance 99.15 for all that care.

  17. shadowfax

    1020 lumber
    Lumber shows where residential building is at. Home sales look good in San Fransisco but when was the last year they built a new home?

  18. qcmike

    Shadowfax
     
    I have a portable TV that may be of interest to you send me a email qcmike@hotmail.com
    And I will send a photo if you are interested.

  19. jabobeast

    FU NLY!!!

  20. Phil

    Good morning, by the way.  

    This is a mechanical act on TSLA – we ALWAYS sell into the initial excitement and we're getting paid $42 for the $85 calls, which are part of a $30 spread so we're paid 40% more than our max on the spread – that's GOOD!  That then leaves us naked on 20 of our $115 short calls so we spend $7 to cover them with a $100/130 bull call spread and, if we have to, we'll either stop out the naked $115s or maybe cover them again if we get a good dip.  Keep in mind we just sold 30 puts yesterday so we already took a bullish step.  

    TSLA pulling back already so you can see how nice that's working.  

  21. yodi

    Phil one thing I do not get on the latest TSLA play why would you sell the Jan15 85c long and exposing the 115 nacked
    changing for a higher bull play even that I think they are running on a flat tire now!!!

  22. deano

    TOS is having issues with having expired Jun options today – watch out for that!

  23. Burrben

    AGNC 25.35

  24. Phil

    RUT 990, 988 was the low for the morning. 

    Dollar 83.73, over 84 is going to be trouble.

    Oil just tested and failed $95.  /CL is a short there, as usual.  

    Secure/Stock – People with $3M+ tend to feel pretty secure.  Generally, they can expect to generate $250,000 a year in retirement.  It's usually the ones who don't feel they can cut back that aren't feeling good about their position and, of course, the top 1% has done very, very well the past few years so many of those people are in much better shape now than they were 5 years ago so another reason to feel good.  

    Elasticity/StJ – And we're supposed to be a Democracy.  What a joke.  

    Welcome back Invest!  

    CAT/Yodi – Good call, they're testing the 50 dma at $85.

    TSLA/Newt – Yes, we got $54,000 for the first set and they only 1/2 covered the short calls so, if we fully cover the short calls with short puts, creating a short strangle, then we drop another $54K in our pocket to play with (as we're not adding margin risk since we're already short the calls).  

    TSLA/Mill – Generally you sold 10 Jan $90s for $8 then, if I understand your roll.  You have those covered with 5 2015 $85/115 bull call spreads at $8, so you have 10 x $11 of upside protection there.   You sold 4 of the Jan $60 puts for $12, now $10.50 and you can still pick up $7.50 more by rolling them to the $18 $75 puts and $12 + $7.50 is $19.50 but only 4 so about $8 protection per short call.  That means, the short Jan $90 calls are in trouble at around $90 + net $8 you sold them for + $11 on the bull spread + $8 on the short puts = $117 BUT, you need to consider that the Jan $90 calls can be rolled to the 2015 $110s evenly ($28) and then you are good until $138 so, unless you REALLY believe TSLA will be over $138 in 2015, there's no need to do anything and, if you do believe they will be – you can cover with a few $100/130 bull call spreads at $9 and then you have another $21 of upside cushion.  

    Sickness/1020 – It's that kind of morning! 

    Shale/Den – You should hear the lobbyists freaking out about getting pipeline permissions.  Our inventories are overflowing and they can't get the excess out of the country – it's a disaster for the industry if this keeps going. 

    Lumber/1020 – Wow, I did not see that.  Wow:

    Chart Image

    Talk about a solid confirmation! 

    TLT/StJ – Sure but it only uses it for a week and we're not doing anything else with it.  

    TSLA/Yodi – Because, as I said last week, the stock is not WORTH $90 and if it goes to $115 and some idiot is willing to pay me $42 for $85 calls – I should sell them before he changes his mind.  Also as I said last week – if it were up to me, I'd sell 500 or 5,000 naked Jan $90 calls and just go on vacation until then.  I don't need to look at the squiggly lines every day to know what a stock is really worth. 

    Oops, indexes rolling over.  They all must have TSLA in them..

    AAPL bucking the trend but not enough to hold things up.  

  25. taihuichi

    Phil, I am long alot of F at below $11.  Think it still has room to run.  Is there good protection here while still getting some upside?  Thanks.

  26. shadowfax

    qcmike sent a message after seeing your post early AM Went out, did you get it?
    BTW IWM trendline support dropping to 97.50 resistance 99 now for all that care. Heavy selling in first minute.

  27. 1020

    Phil – $220 on the /LBS weekly looks like an area of solid support….
     
    …Looks like a good time for a room addition or building a home!   :)

  28. Turning1

    BRKB
     
    On the BRKB June $100 Short Calls, did I miss any adjustments on those? 
    THX

  29. yodi

    GOOG not having a good day today coming closer to my Jul 870 callers!

  30. shadowfax

    LUMBER or firewood
    Only tree cutting around here is for firewood, so many trying to make some money the price is about half of a few years ago. Tells a double story, plus a friend says demand is so low that you can drive up to the trees marked for cutting, not the burnt stufff either.

  31. Burrben

    SHLD has a nice pattern.  A little more toe in the water?

  32. newt

    Phil: Thanks.

  33. Imho

    Phil, how do you know the Russell will go down to 975 before the market opens?  Are you using charts?

  34. yodi

    TLSA two flat tires now

  35. deano

    CLF taking it on the chin today

  36. yodi

    Phil your last remark to me on TLSA was to strong!!!!(8

  37. cdtbud

    TSLA – IB saying it now has a short sale restrictions.

  38. Burrben

    Maybe?
    SHLD. Thoughts on the Sept 45-55 call spread for 4.70? Max value $10.  Nice chart on SHLD

  39. millcreek

    phil……………….tks….rolled to 75s and with this decline i will monitor….
     
    yodi,………..keep working those flat tires……….

  40. Phil

    F/Taih – Don't be greedy.  You can sell the 2015 $15 calls for $2.25 and that gives you 15% downside protection or you can sell the $12 calls for $4.10 and the $12 puts for .95 and that's $5.05 for a net of $17.05 and, of course, you can roll the calls when 2016 or 2017 come out.  Of course, if you don't want to commit to more F at $12 – then that answers your question and you should be thrilled to take some off the table at $15.55.   As F just pays a .40 dividend, you could also cash out at $15.55 and go artificial, with the 2015 $12/17 bull call spread at $2.60, selling $15 puts $2.15 for net .45 on the $5 spread that's $3.50 in the money to start.  Your worst case is you are back in 1x at net $15.45 (same price) but then you have $4.55 of upside at $17+ with less cash/margin on the table and, of course, the short puts are rollable. 

    Lumber/1020 – I don't play things I don't follow and, of course, I wouldn't play just because the squiggly lines look a certain way – there has to be some fundamental reason to think demand is coming back.  Looks like a falling knife to me anyway but maybe if they stop around there and form a base, you might want to be brave.  Just keep in mind that Futures can rip your face off and I don't get a lot of lumber headlines warning me of changes during the average trading day. 

    BRK.B/Turning – I'm expecting them to pull back with the S&P.  If not – Rawhide Strategy!

    SHLD/Burr – One toe is as much as I'm willing to lose on them.  The company itself sucks, I'm just putting myself in Lambert's position (and removing my conscience) and coming up with a logical scenario to maximize my take and that means spooking shareholders out, buying back more stock and finding and excuse to break up this American icon and sell it off for parts.  If I were that evil and manipulative, I'd have a reporter or two in my pocket to write articles like this"

    Is Sears Just Doomed?

    A Sears Turnaround: Is Time Running Out?at Bloomberg

    Sears Faces Liquidity Crunch as Cash Burn Increasesat Bloomberg 

    At Sears, Tech Focus Hasn't Helpedat The Wall Street Journal

    Once I have public perception changed that Sears is doomed, despite my best efforts, I set myself up to look like a hero by salvaging what I can out of the business:

    Richard Sears' Catalog Revolutionized How We Shopat Investor's Business Daily

    Edward Lampert's Baby: Is A REIT Around The Corner?at Seeking Alpha

    That way, I have the Government and the people's blessing to do what I want with the company.   If I "only" lay off 200,000 of 300,000 employees – I come out a hero.  Of course, no one could really be that amoral and manipulative – just my supposition from back when he first bought the company that's held up so far.  If you want a price target on the low side, try $44.36 – that's the last time Eddie bought more shares personally (back in March).  

    You're welcome Newt. 

    975/Imho – Notice on the Big Chart above that 975 is about where we pulled back last week.  If we fail that, then we begin making what I call an "M" pattern and we look for the right leg of the "M" to form back to old supports, which could be 950 (see a daily chart) or all the way down to 900.  A 10% pullback in the market would not really be all that bearish at this point and a 5% pullback (to 950) that consolidates and reverses there would actually be very bullish.  So, to that extent, I'm looking at a chart but it's really just the 5% Rule, which we discuss in detail in the Strategy Section in comments under the linked article on scaling in.  

    CLF/Deano – China growth taken down a peg:

    The IMF has cut its economic outlook for China, predicting that GDP growth will be 7.75% this year and next vs prior forecasts of 8% and 8.2% respectively. Given that China's leadership has already indicated that it would be comfortable with long-term growth of 7%, the government might not be too concerned with the IMF's projections.

    Strong/Yodi – In a good way, I assume? 

    You're welcome Mill. 

  41. Phil

  42. Phil

    10 Related Factors, Issues and Concerns Regarding Yield Increases

    10 Related Factors, Issues and Concerns Regarding Yield Increases

    1) Large bond portfolios (think PIMCO, DoubleLine, etc). are getting out of the way in advance of Fed tapering. You can debate if they are early or not, but it is what it is.

    2) Watch the impact this has on credit driven purchases: House (especially) but also Autos and CapEx.

    3) The pop in home prices is more a function of constrained supply than excess demand. With by some estimates 43% of mortgaged properties either having low, none or negative equity, a big source of traditional buyers (and therefor sellers who put inventory into the RRE market) are missing

    4) Given the big run in equities so far this year — up 16% before Q2 even ends — we should expect to see some corrective action. This suggests backfilling, shallow selloffs, lack of forward motion as gains get digested.

    5) Is this the end of the cyclical bull that started in March 2009? Its too soon to tell. We continue to give the rally the benefit of the doubt, but we watch the internals for signs of significant breakdowns.

    6) Eventually, higher yields are a competitor for stocks. (That’s not what the case is at 2% 10 year treasuries). However, upticks in borrowing costs will also affect corporate profitability — and that will impact not only earnings but the psychology underlying P/E multiple expansion.

    7) Please use some context: Yields have moved up from the absurdly low level of 1.5% to 2% after a 30 year moved down from 17%. Some people will scream that “yields have skyrocketed 25%” (but these are the same folks who have been yelling POMO! POMO! POMO! for 146%). Its just as silly to claim that yields have retraced only 50 bips of the 1400 basis point move.

    8) A better context is to note that yields have backed up 1/2 percent from the lows, and that will affect economic activity, earnings, and psychology in ways we may not fully recognize yet.

    9) Yields go up for 3 reasons: a) Fed tightening, b) higher inflation, c) increased demand for capital.

    10) That last point might be the most overlooked: Increased demand for capital. If that is what underlies this move upwards, than it would be a a positive sign for the economy and equities, and (surprisingly) not a negative one. We simply do not know which yet.

    More on this later . . .

  43. Phil

    Wheee on oil – $93.40 and falling.  

  44. mecho

    cdtbud – TSLA
     
    Was just about to post the same thing.  IB says TSLA has short sale restriction in effect until EOD May 30.

  45. 1020

    Phil/lumber   I'm not interested in trading, I'm interested in building….  :)

  46. 1020

    Looks like my favorite Bond director of my favorite Bond (SkyFall) may be coming back…..
    http://movies.msn.com/movies/article.aspx?news=810103

  47. yodi

    Strong Obviously I think you frightened the buyers!!

  48. palotay

    TOS – Anyone else notice that your basis in written options in June all of a sudden is zero?

  49. scottmi

    Ex-Boeing CEO Condit's home becomes event location
    http://www.bizjournals.com/seattle/blog/2013/05/ex-boeing-chief-phil-condit-opens-fall.html

  50. rustle123

    1020/Bond
     
    Out of all the Bond movies, "Skyfall" was your favorite?  Really?  No Bond girls, no Bond weapons, no pithy lines.  Doesn't hold a candle to "Goldfinger" or some of the other Connery Bond movies in my opinion.

  51. scottmi

    TSLA i just love how it can pop 30% in a day and no circuit breakers, but drop back to the middle of the previous day's range and CIRCUIT BREAKER kicks in!

  52. 1020

    For the one who bought FNMA at today's high (5.23)….. down nearly 60%…
    http://www.youtube.com/watch?feature=player_embedded&v=AXr13IU1Jg8

  53. yodi

    Palotay,
    TOS it was noticed this morning you will have lots of negatives and high margins, somehing is of tune.

  54. scottmi

    FNMA/1020 – what, no circuit breaker for Fannie?

  55. 1020

    rustle123 – I enjoy them all, especially with Connery (I like most of his films)
     
    SkyFall had it all – Script, Actors, Directing and with music by Thomas Newman (The SkyFall soundtrack is excellent to trade to) and more background on Bond than ever before….besides, I think Naomie Harris makes a fine Eve Moneypenny… :)

  56. 1020

    scottmi/FNMA  Could it be due to the fact it trades on the Pink Sheets?  I'm not sure.

  57. jasu1

    Phil, I have WFR basis 7.51 from way back when…..It just seems to have broken even….Sell or do you have a trade where we can harvest some premium via puts and calls. Thanks in advance for your recommendation…
    Also, /NKD at 13890….buy here or we are still in sell mode. Thanks again

  58. jasu1

    Oh!! 2000 shares on WFR

  59. 1020

    WoW – Now FNMA is up nearly 50% from it's low….

  60. 1020

    FNMA – Just today, Down 60% and now up 50%…..

  61. jabobeast

    FU CLF!!!!

  62. 1020

    FNMA – I'd guess the thing to do would be to "follow the Corker"…..
    http://www.housingwire.com/news/2013/05/28/sen-corker-builds-upon-gse-reform

  63. yshenhar

    Phil – I sold AGNC Jan 25 put @ $2.50, now $3.50, combined with shares at $30.82 and sell of Sept 32 Calls @$1.12 . The puts are rollable to the Jan15 23's for a credit so I'm not too concerned, but wanted to ask if I can somehow take advantage of this drop to improve the position.
    Thanks.

  64. Phil

    Building/1020 – Ah, then I think that's an excellent place to step in. 

    TSLA back over $105.  Our next logical move is to roll the 40 short $115 calls in the Income Portfolio to 40 $135s for $5 – not a penny more!  That costs $20K but we sold that in short puts and it reduces our margin and widens the spread on the 20 $85/115 spreads by $20 so $40K more to make if TSLA hits $135.  

    Bond/1020 – That's good news.  

    TSLA/Yodi – Not good enough.  I should put up that environmental impact chart again.  When TSLA hit $100, they dropped word (not on Twitter) that they were boosting the number of charging stations again.  Not only is that old news but, if they find it necessary to put 100 along the highways by 2015 – doesn't that mean that there's currently an issue they need to address but haven't yet?  

    At an opening of a supercharger station in Los Angeles in September, Musk said Tesla’s goal was “giving Model S the ability to drive almost anywhere for free on pure sunlight.” The company said a 30-minute charge provides 150 miles of range.

    Owners repower their cars for free at the stations, using electricity produced by solar panels installed and maintained by SolarCity Corp., where Musk is also the chairman and largest investor.

    Ahhh, that's the game!  He's using TSLA to pump up SCTY's sales but 100 stations isn't very much business for SCTY (probably less panels than 100 homes).  Also, he needs to buy 100 lots of land for parking etc. so, even if just $200,000 per lot, that's $20M, which is 2x what they made last Q.  And what happens at night or when it's raining?  If he has to power the stations as well that's another $10M and then will he pay for the power?  What happens if other car companies want to have charging stations – do they each have their own incompatible sections of highway rest stops?  Will 3rd parties make adaptors that let Leaf owners use TSLA chargers?  Who would police this?  What if a 3rd party adaptor causes a charging station to blow?  Who maintains them?  Even if all that is done perfectly:  You're driving in the pouring rain and your car is out of electricity – it's hot so the computer has shut down the AC to save fuel (yes, it does that) and you are sweating like a bastard.  Then you get to a highway rest stop and you see the sign for the charging station but it's way back in the lot and you have to get out in the pouring rain to charge it and your car can't move for 30 mins so you either sit in the car or you trudge the long wet walk to the restaurants.  Will you be a happy TSLA customer?  Have you never been almost out of gas or caught in the rain in a regular car?  This will happen thousands of times a year once these cars gain traction…  Right now, 20,000 people, mostly in CA have them – that's not an accurate sample.  

    TOS/Palotay – They put up a warning today.  It's a glitch.  

    Condit/Scott – Must be nice to have the space. 

    Bond/Rustle – I think you do have to give it to Goldfinger but I liked Diamonds are Forever a lot and Casino Royal was very good.  I also like Pierce Brosnan in the one with the boat and the news guy but the nuclear sub one was good too for him.

    Circuit Breakers/Scott – Good point.  Just another example of the one-way push to this market.  

    FNMA/1020 – What a ride!  169M shares traded vs 39M on a normal day.  

    WFR/Jasu – I still like them long-term but what's the point if they dip to $1.44 and you don't buy more?  If you felt constrained then, then of course sell at least half now so, next time they are at $3.50, BUY 1x MORE and, next time they are at $1.50, BUY 2x MORE!!!!  Meanwhile, you can take your 1/2 x and sell the 2015 $5.50 puts and calls for $4.70 and that nets your remainder to $7.30 (you make .20 on the half you sell) less $4.70 is $2.60/4.05 and now you are committed to going 2x at a lower price and you make a lovely $2.90 (111%) at $5.50 or higher while freeing up half your cash for other mischief. 

    AGNC/Yshen – Good call as it was a spike down (so far), hopefully blowing off the last of the non-believers.  ALL should now look at this stock as it's a great long-term hold.  Your position seems fine to me as is as your $25 buy/write is net $27.20/26.10 and the stock is now $26.26 and still paying the $1.25 quarterly dividend.  I'd buy back the Sept $32 calls (now .25) and leave it naked for now.  The 2015 $25 calls are $2.20 so just make sure you get $1.50 or more for those if they don't hold $25.50 but, otherwise, I'd wait and hopefully sell the $28s for $2.50 or more (now $1.30).  It is, of course, also a good time to buy more stock or just sell some more puts –  you can sell some 2015 $20 puts for $3.20 and, if you don't want to buy more for net $16.80 – what the heck are you doing in the stock in the first place?  

  65. Phil

    Everyone loves TSLA but YRCW is up 180% in 3 months!  Had a similar rise to TSLA and then fell from $25 to $18 (28% but 40% of the run from $8).  

  66. 1020

    Goldfinger – THIS is by far, the best Bond title song….Hit It Shirley!
    http://www.youtube.com/watch?v=EnseiOJ2jGQ

  67. rustle123

    Phil/Bond
     
    Goldfinger and Diamonds are Forever are my two faves also.  Also like the early Roger Moore one, Live and Let Die and The Man With the Golden Gun and the opening scene to The Spy Who Loved Me is one of the best.
     
    As far as TSLA, I went to the dealership in Garden State Plaza and they told me the news of the supercharger plan which I wasn't impressed with when I heard.  One, yes it's 2015, not anytime soon and it's up to 100 from 9 now and that includes Canada so how many are you really going to put in each state and how many cars will be able to use them?  You might have to drive 30 miles or 50 miles to get to one, then wait a little over an hour to charge your car and by the time you get back home, you have 30 or 50 miles less on your charge.  It also right now takes 9 hours on a 240 outlet to charge your car which is not great if you were driving around a bunch during the day and then had to use the car a few hours later.
     
    The other thing I mentioned to the dealer (in the empty showroom) was what happens when the government credit goes away and they are taxed.  He even said they were nervous about that.  That will add over $250 to a lease payment per month.  Major difference.

  68. newt

    TSLA: just got a call from Options Xpress regarding my short calls (Jun 85's) b/c TSLA "it is a very difficult stock to borrow and maintaining the short position would also be very difficult."  They would difficulty finding the shares to borrow/ cover my shorts is exercised.  They wanted me to know that it is a risky position and that if they can't find the shares they will have me "buy in" at what ever price is the open at that day.
    I have several platforms and this is the first and only call of this nature I have rec'd- so Why?
    "SEC is focusing on short selling so OptionsXpress is being pro-active."
    Anyone else getting notifications like this??????

  69. shadowfax

    1020
    Building ask these questions;
    1 Will I build or hire a contractor?
    2 What market is the construction? Demand Prices?
    3 How long will I hold the place?
    4 Own land?
    If building to resell it better be in San Fransisco, DC, or another supply shortage market. Must other places the cost of building is considerably higher than resale value, buy existing.

  70. Phil

    Goldfinger/1020 – No this is the best Bond song.  

    TSLA/Rustle – The bottom line is, in the end it's a car and it has to sell on it's own merits against other cars.  While it's "cool" to have an electric car, I've yet to meet anyone who is using it as the sole family car.  It's a niche car but the same 20,000 people who plunk down $75,000 for a car are happy to call their broker and buy $10,000 worth of stock and, PRESTO!, 2M shares of stock get bought at $100.  When there's only 114M shares and 1/3 is held by the owner and 2/3 by VCs, Funds and other insiders, that only leaves about 2M shares trading on the open market.  If they sell 200,000 cars (10x) by tripling the line at the current plant (60K) and adding 2x more production (assuming it fits inside the current plant and they don't have to buy a whole new one) and if they hire 29,000 skilled auto workers and get them all up to speed on a radical new design and maintain quality, avoid recalls and maintain their margins and then improve them to drop 10% to the bottom line by the end of 2014 (no F'ing way!) – that's 200,000 x $60,000 x 10% = $1.2Bn in profit less whatever it cost them to build and train.  That's what has to happen for them to get to a p/e of 10.  Currently the p/e is actually 105 and Ford's p/e is 10 but they only drop 4% to the bottom line, which would be a disaster for TSLA.  So does GM, and they have a p/e of 11 so, when TSLA fans say "this time it's different" – it had better be REALLY different!  

    Speaking of overvalued nonsense, NFLX back to acting like a studio after being a .com again this morning.  

    Short-selling/Newt – That's pretty strange.  That probably helps explain the morning spike if people went for that.  Keep in mind it's much cheaper to buy $100/130 bull call spreads for $8 than to capitulate on short calls.  Sounds more like the shorts are piling back in up here.  

  71. scottmi

    Bond/phil – it used to be live and let die for me, but this one took over…
    http://www.youtube.com/watch?v=suXkdsftsVU

  72. newt

    Shorts/ Phil: Thanks- I was going to roll these (Jun13 85's) along to jan14 $90's for a credit- they are part of a strangle with the Jan15 $75 we sold yesterday- so no more margin cost…
    Would you say- hold the shorts and ride it out or roll now?

  73. edro00

    Newt -
    I got assigned -400 shares and Fidelity just when ahead and bought them for me to close the position – no notification.

  74. 1020

    Shadow – Spec building can be a dangerous game unless you know your market.
    If you do understand your market, your location and cost of land in that market are most important. Tread lightly when deciding to build yourself or hiring a contractor.
     Your floorplan and even your elevation will be the most important elements when designing the home. Considering the eventual re-sale is very important when planning…..
    http://pinterest.com/jbaethge/residential-home-elevations/

  75. cturb

    Along with any Sean Connery bond movie, casino royale is my favorite. 

  76. zeroxzero

    Phil:  Great Tesla disaster fantasy.  Sounds right to me.  Early adopters always suffer, I've found.  Glad they're doing it, glad I don't have one.  I sold one TSLA put last week and am ahead $400 now, which more or less compensates for the 1 put I bought two weeks ago and bailed on.
     
    More seriously:  when do rates back up?  Is that strictly a "Bernanke" question, or is there room for an actual market dynamic to operate [i.e., risk].  Do the Euro/Yen levels matter?  Seems like lots of money coming into the U.S. [the Euro was over 1.45 in mid-2011, the Yen at 76 in the same time frame, now 102-4.  Does a rising dollar and forex inflows keep rates lower longer?

  77. millcreek

    phil,
    great rant on the tsla and scty connection.  you should think about using it in a column or something…….brought almost as much fun as tsla being down 7..

  78. 1020

    Phil – Sir Paul did a great job, but Shirley has the better stage appeal…. ;)

  79. zeroxzero

    1020 – I'm no real estate guy [but I'm about to build a U.S. house.  I assume elevation means "house height,", not altitude?  I wouldn't ask if my house lot wasn't located at 5,600 ft.

  80. newt

    TSLA/ edro: how bad is that?  I am rolling. I don't like the idea of them being able to dictate my strategies like that.

  81. shadowfax

    1020
    I have only one intension, sell my house and land, all of it. You said you were considering building and low lumber prices alone say don't do it. Maybe if your budget is $5,000,000 and up!

  82. cslanson2

    Phil,
    Actually, the Tesla we purchased is my wife's only car and her daily driver. She loves that car and is thrilled that never again will she have to go to a gas station. The charging unit in our garage charges at a rate of 62 miles per hour and she doesn't see herself ever going to a charging station.  For the once a year that she would take a long road trip she has a two word answer "HERTZ" & "AVIS".
    On the subject of valuation, I also shared your view that the valuation currently is absurd and yet, yesterday morning at the open, I closed my quite large short Caller positions.  Given Mr. Musk who I see as a cross between Richard Branson & Steve Jobs, and our financial markets today, I am now convinced you and I may become quite a bit older before or when this stock reverts to the mean. I think it is possible this becomes a MoMo stock like AMZN, NFLX, LNKD, CMG, GMCR & OPEN.  If nothing else, it may become difficult to value like VMW, SODA & CRM.
    After watching NFLX run to $300, down to $50 and now tripling in five months I'm of the opinion that "value" doesn't mean all that much in this market.

  83. 1020

    Agreed Shadow – Low lumber prices won't save your bacon if building in Stockton…. :)
    http://en.wikipedia.org/wiki/Stockton,_California

  84. scottmi

    France – aka William's Problem #3

  85. samz3700

    Phil – what do you make of the early selling followed by a slow crawl back that seems to be showing up?

  86. Phil

    Server was down for a bit but back now. 

    Oh, ps on TSLA – the downside to telling people you're on track to make 200,000 cars by 2015 when you're making 25,000 cars in 2013 is that people start to expect to see evidence that you are, in fact, on track to increase your production by 300% over the next 12 months (the first 100,000) and then another 100% for the next 12 months.  That means if TSLA isn't cranking out 10,000 cars per month one year from now – they are then going to be "hopelessly behind" – like AAPL…

    11:15 AM Stocks tumble to session lows in late-morning trade, the DJIA (DIA -1%) off 168 points. Gravity continues to take hold of the previously-leading defensive sectors as their dividends are starting to face competition from Treasurys – Healthcare (XLV -1.7%), Utilities (XLU -1.9%), Consumer staples (XLP -1.8%). Residing in tech, but favored for its high dividend, Verizon (VZ -2.9%) is off about 5% from its gap open yesterday.

    1:04 PM The Treasury sells $35B in five-year notes at 1.045%. Bid-to-cover ratio of 2.79, vs. a recent average of 2.84; indirect bidders take 44%, vs. a recent 41.6%. Direct bidders take 23.3%, vs. a recent 15.1%

    2:00 PM On the hour: Dow -0.59%. 10-yr +0.12%. Euro +0.61% vs. dollar. Crude -1.58% to $93.51. Gold +0.87% to $1391.75

    Treasurys are no longer a sell, says Goldman, closing out its (highly profitable) short in the 10-year note this morning. (via Doug Kass). Higher earlier, the 10-year yield is now 1 bp lower on the session at 2.15%. TLT +0.7% premarket, TBT -0.9%.

    The OECD has cut its global economic growth outlook to 3.1% for this year and 4% for 2014 from prior forecasts of 3.4% and 4.2% respectively. In its twice-yearly Economic Outlook, the organization predicted that the U.S. will improve and Japan will rebound, while the recession-hit eurozone will fall further behindThe OECD also warned that the withdrawal of QE by central banks could cause spikes in bond yields and harm the world economy. 

    The IMF has cut its economic outlook for China, predicting that GDP growth will be 7.75% this year and next vs prior forecasts of 8% and 8.2% respectively. Given that China's leadership has already indicated that it would be comfortable with long-term growth of 7%the government might not be too concerned with the IMF's projections.

    The Fed is "very attuned" to QE's unintended consequences, says Boston Fed chief Eric Rosengren. The dovish FOMC voter says it would be premature to begin tapering asset purchases now, but a "modest" cut could make sense after a few more months of decent economic data.

    Fed Tightening Points In History Examined – What Happened?

    There will be no negative equity in the U.S. housing market within 18-24 months, predicts Ed Yardeni, extrapolating today's news – Case-Shiller up 10.9%, Bill Ackman and Ken Griffin buying up fancy properties, the return of CA's flippers, bidding wars in NYC – into the future. If he's right, it could explain the resilience of Citigroup (C+1.1%) (still with heavy exposure to maybe not-so-toxic assets through Citi Holdings), and Bank of America (BAC +1%) amid today's big decline.

    "Higher interest rates and a steeper yield curve are the first items on all insurance company CEO's Christmas lists," writes Scott Barlow in a piece titled, "How the U.S. Treasury market determines Manulife's (MFC +1.6%) stock price." It's eye on the Bloomberg, Credit Suisse ups price targets on MetLife (MET +2.3%), Hartford (HIG +1%), Aflac (AFL +1%), Ameriprise (AMP -0.3%), and Principal (PFG +1%). Others benefitting from a steeper curve: LNC and SLF.

    Fannie Mae (FNMA.OB -33.8%) and Freddie Mac (FMCC.OB -37.6%) both crumble – perhaps under their own ridiculous weight, or maybe given a push by SA's Dividend Monkey. He points out the two businesses – technically with intrinsic value of zero – were being valued (as of last night's close) at 40-60% of their 2007 market caps. The music's stopped – time to find a chair.

    Bruce Berkowitz has taken about a $500M stake in the preferred stock of Fannie Mae (FNMA.OB -23%) and Freddie Mac (FMCC.OB -23.2%) – please note the symbols here are for the common. "The time to restructure (Frannie) is upon us," he tells CNBC. "Taxpayer dollars … will be fully repaid … and equitable treatment of taxpaying shareholders, including community banks and insurance companies must be restored." The common stock has rebounded somewhat from an early plunge, and the preferred shares have turned higher.

    Once again realizing the futility of setting targets that are impossible to hit, the European Commission extends the 3% budget deficit deadline for multiple countries, bringing out the "extend and pretend" cat calls from the peanut gallery. "Spain has promised to be at 3% on my count for five years running now," notes a skeptical Steen Jakobsen, chief economist at Saxo Bank. The extreme reading, fromZH: "The theatrical spectacle of Europe's austerity is finally over." In more measured terms, courtesy of Nicholas Spiro: "The tide has turned decisively against the entire economic reform drive in the eurozone." 

    Investors pulled money out of real estate yesterday, with the iShares Dow Jones U.S. Real Estate ETF (IYR) losing 4% of its AUM. Notably garnering assets yesterday were the Consumer Staples SPDR (XLP), the MSCI Germany ETF (EWG), and the Dow Jones U.S. Tech ETF (IYW) – each adding nearly 4%. The dip-buyers were out on the MSCI Japan (EWJ) and Japan Hedged Equity (DXJ) funds – they added nearly 2% in AUM. 

    The selling continues in the mortgage REIT space (MORT-3.4%), with one of today's biggest losers Chimera Investment (CIM-3.8%) a curious one as its exposure is credit risk not rate risk. Other tumblers: Armour (ARR -6.4%), New York Mortgage (NYMT -6.5%), Javelin (JMI -6.1%), MFA Financial (MFA -3.4%). There's little bid for American Capital – (AGNC -4.1%), (MTGE -3.3%) – with one trader noting Gary Kain's focus on owning pre-pay protected paper is another bet not paying off as rates rise.

    Galbraith Investment Management issues a warning to investors of Whiting USA Trust (WHX -8.9%), believing the market continues to fail to recognize that WHX expects to make only eight more quarterly distributions and will terminate in August 2015 with no residual value. Galbraith believes WHX is overvalued and investors holding a long position will lose a substantial portion of their investment. 

    Russia’s thirst for modern rigs able to drill in shale oil deposits heralds a $9B bonanza for manufacturers including National Oilwell Varco (NOV), Bloomberg reports. More than half of the country's rigs are more than 20 years old, and many aren’t powerful or advanced enough for producers when they begin exploring Siberia’s shale rock, NOV's head of Russian operations says.

    As pipeline approvals face delays, ~700K bbl/day of new rail capacity - roughly the size of the Keystone XL pipeline – is expected to come on stream by 2015-16 to help haul Canadian crude to Gulf Coast markets, according to the Canadian Energy Research Institute. About 700K bbl/day of crude was transported by rail last year, and CERI expects the number to double.

    Total (TOT -0.3%) is charged by the SEC with violating the Foreign Corrupt Practices Act by paying $60M in bribes to intermediaries of an Iranian government official who then exercised influence to help it obtain contracts to develop oil and gas fields in Iran. TOT agrees to pay ~$398M to settle the SEC’s charges and a parallel criminal matter by the U.S. Justice Department. - Man, those guys at TOT should have watched this instructional video on bribery.  

    Ballard Power (BLDP +13.7%) continues its bull run after last night saying that it plans to extend its collaboration with Chinese partner Azure Hydrogen to include fuel-cell buses. Under an as yet non-binding MOU, Ballard will sign a manufacturing license agreement, and provide engineering services, fuel cell stacks and components to Azure, which will make a $1M up-front payment. (PR)

    European Union countries are shifting to biomass – the burning of wood pellets – instead of coal in order to meet stringent environmental goals, and much of the demand is likely to be met from the U.S. by companies such as Plum Creek (PCL), the country’s biggest private landowner and among the most effective tree-farming operations in the world.

    Equity skittishness amid the bond rout has put a bid back into gold, the metal gaining 1% and nearing $1,400/ounce again. In the meantime, Asian demand from April to June will hit a quarterly record and take up the slack from ETF sales, according to the World Gold Council. Indian gold imports are expected at 350-400 tons, up 200% Y/Y. GLD +0.8% premarket.

    Potash (POT) is reiterated with an Underperform rating at Cowen, which says delayed planting will create difficulties in H2 of this year. "As the planting window closes due to weather delays, so too does the nutrient application window," the firm says; as a result, fertilizer inventory likely will carry into the fall, cutting pricing and reducing 2H volumes.

    "Too many, too few, who cares? It's a strawberry problem," Joe Terranova said yesterday on CNBC, referencing Dole Food's (DOLE -3.8%Tuesday announcement regarding strawberry business losses, share buyback cancellations, and ship purchases. Today, Goldman lowers its price target on the shares to $10.50 (which would be an improvement from current levels) from $11, citing the news. The shares are off ~9% this week.

  87. samz3700

    The drops have been great if you are willing to unload your shorts into the initial dump – I keep hoping for 97.50 to really break on IWM but not luck so far.

  88. Phil


    Major ports in California 
    report
     a 3.5% YTD rise in container volume, a mark which could bode well for the trucking sector. While J.B Hunt Transportation (JBHT), Celadon Group(CGI), Marten Transport (MRTN) , Heartland Express (HTLD), Amerco (UHAL) could see a Q2 lift – Knight Transportation (KNX) and Swift Transportation (SWFT) are two companies to watch with their focus on delivering for big box retailers.

    Tesla Motors (TSLA -6.5%) trips up a circuit breaker as it falls quickly in morning trading. Over 14M TSLA shares have already traded hands today with the juicy Tesla news for the day still to come. It appears at least a few people are listening to SA contributor Ashraf Eassa who advised shareholders to take some profits off the table.

    Oh look, a real car company (p/e of 7, 6.7% net profits)!  Jaguar Land Rover reported a record annual profit of £1.67 billion, helping to offset the losses of its parent, Tata Motors (TTM). While Tata was falling 36%, Jaguar gross profits were up 11%, thanks to a 22% jump in worldwide sales, to almost 375,000 vehicles. 

    Though shares of Ford (F +2.6%) stand at 52-week highs, a growing number of investors think the market is valuating the company on the conservative side. They think the only thing holding back the stock is concern over the automaker's losses over Europe, but they note the protracted auto slump on the continent appears to have finally bottomed out. By the numbers, a forward P/E ratio of 6.5 and a yield of 2.55% make Ford a tempting buy.

    Tobacco stocks trade lower as higher Treasury yields are taking just a bit of the shine off the group as a good dividend income play. Decliners: Altra (MO-2.1%, Reynold American (RAI-2.2%, Lorillard (LO-2%; Vector Group (VGR-1.7%, Philip Morris (MO)-1.8%, British American Tobacco -2.3%. 

    Workers of the World, Unite! Coca-Cola (KO -2.6%) says a work stoppage in Venezuela could cost it 15% of sales for its local unit during May. The local bottler reports workers protesting for higher wages soldered shut the gates of a plant in Valenci.

    Heard during PepsiCo's (PEP -1.3%) presentation at the Bernstein Strategic Decisions Conference: 1) The firm's stated long-term goals include increasing operating margin by 30-50 bps per year and developing a wider footprint in emerging markets. 2) An interesting twist to generating higher margins will be the company's use of "flexible formulations" to lower the cost of ingredients. 3) CEO Indra Nooyi maintains her position that the company doesn't need a spinoff or transformational M&A to achieve growth goals. (webcast)

    The strong sales results from Michael Kors (KORS +1.5%) has the retailer increasing its planned pace of store growth in Europe and the Far East even as its shop-in-a-shop concept expands into more department stores in other parts of the globe. Analysts think the ability of the company to draw in consumers from different income demographics is helping the company record the smashing comparable store sales growth numbers.

    More on Movado's (MOVQ1: Operating income and revenue grow 18% and 6.1% respectively while margins fall 240 basis points as favorable currency impacts weren't enough to offset changes in the product mix. The company reiterates FY14 guidance of $1.80/share on sales of $570-575M (~12% top line growth), largely in line with consensus. Shares +7.56% premarket. (PR) 

    InterActiveCorp (IACI -2.5%) is trying to find a buyer forNewsweek, sources tell Variety. Given Barry Diller declared IAC's investment in Newsweek "a mistake" last month, the report isn't surprising. The big question is whether anyone will be interested in assuming the declining magazine's huge liabilities even if it's given away for free. Variety's sources claim Newsweek's subscriber base fell to just 470K in Q1, down from the 1.5M claimed before the magazine went digital-only in late 2012. IAC's Media unit, which includes its Newsweek Daily Beast JV, reported an $8.8M loss for Q1

    Activision's (ATVI -3%) Blizzard unit has "decided to push the reset button" on its next big multiplayer online game, VentureBeat reports. The still-unnamed title (its codename is Titan), in development for years, now isn't expected to launch until 2016 "at the earliest," and its developer team has been cut from 100 to 30. News of the delay comes shortly after Activision reported its World of Warcraft sub basefell by 1.3M in the March quarter to 8.3M. VentureBeat notes Blizzard "often cancels projects that have been in the works for years, if it believes that those games don’t meet its quality bar."

    Rackspace's (RAX -3.8%) 2013 woes continue afterCanaccord declares "downside risks remain" given heightened competition, aggressive pricing from rivals, and the "operating distraction" caused by Rackspace's transition to OpenStack. Shares-49% YTD after getting crushed earlier this month in the wake of a Q1 revenue miss. 

    AMD tries to counter the 2012 launch of Intel's (INTC) S1200 (Centerton) Atom low-power server CPU line by launching its Opteron X-Series (codenamed Kyoto) CPUs. Like the S1200 line, the X-Series is aimed at the small but fast-growing microserver market – AMD's first two chips respectively consume 9W and 11W. AMD boasts its CPUs sport 4 cores to Intel's 2, and are also differentiated by superior throughput and their inclusion of GPU cores. However, Intel's upcoming Avoton CPUs will deliver big performance gains over Centerton. There's also plenty of competition from ARM (ARMH) server CPUs – AMD is hatching plans for its own ARM chips. The company's SeaMicro microserver unit supports a variety of CPU platforms.

    Global server sales fell 5% Y/Y in Q1, says Gartner. That's a reversal from Q4's 5% growth, and evidence of both weak IT spending and a shift towards cheaper hardware. #1 IBM, whose hardware unit had an ugly Q1, saw its revenue share fall 250 bps Y/Y to 25.5%. #2 H-P (HPQ), hurt by crumbling Itanium server demand, saw its share fall 280 bps to 25%, and #5 Oracle (ORCL), hit hard by plunging UNIX server sales, saw a 130 bps drop to 4.6%. But #3 Dell's (DELL) share rose 310 bps to 18%, and Cisco (CSCO) cracked the unit share top-5 at 2.3%. The buying habits of Internet companies led non-top-5 vendors to make up 22% of sales, up 370 bps. Sales of x86 servers (mostly INTC-based) grew 1.8%, down from Q4's 6.6%. (IDC's Q4 data)

    Facebook Home (FB -1.9%) users have a "bi-modal" response to the platform, either loving it or hating it, says Sheryl Sandberg during an AllThingsD talk, defending Home in the face of a tough reception. Sandberg also claims the launch of graph search(rolled out to a limited number of users) is "going very well," and insists she isn't worried about the popularity of rival platforms such as Twitter and Tumblr. "We don't think it's a zero sum game." The remarks come on a day Facebook shares have fallen to levels last seen in November, in the absence of significant bad news. (live blog)

    Facebook's (FB -3%) buyout talks with Waze have fallen apart, sources tell AllThingsD. In-line with prior reports, the reluctance of the Waze team to move from Israel to Silicon Valley is said to be a culprit. The report comes a day after Tim Cook denied Apple ever made a bid for Waze, as had been rumored. Google (GOOGmay ormay not be interested … and in the event that it is, regulators might not be thrilled.

    Highlights from Netflix (NFLX +0.6%) CEO Reed Hastings' interview on CNBC: 1) The exec says an independent Hulu poses a bigger risk for the company than if it went to a large media concern. 2)House of Cards is filming now for Season 2, but there is no sure thing Arrested Development will get another shot due to the difficulty of lining up all the key actors. 3) Praise for Amazon's retail side, but Netflix is "way ahead" on original programming. 4) Hastings dodges a question on pricing. saying growth will help cover rising content costs. 5) On Icahn, shares of NFLX moving from the investor's entry points in the $60s to over $200 a share has created a "great" relationship. (video) 

    U.S. telcos are having a rough day. A general selloff in high-yield stocks could be a factor, but not all of the decliners pay huge dividends (if any). VZ -2.9%WIN -2.7%CTL -2.4%CBB -2.5%.CBEY -4.7%TWTC -2.1%TDS -2.6%SHEN -7.4%. Volatile Latin American carrier NII Holdings (NIHD -7.2%) is also selling off. 

  89. Phil


    Amazon (
    AMZN) roundup: 1) Looking to counter Netflix's original programming push, Amazon says it will produce 5 of the 14 original shows it agreed to pilots for. The shows include political comedy Alpha House (features John Goodman), startup comedy Betas, and kids robot show Annebots. The first season of Alpha House (13 episodes counting the pilot) will air in November. 2) Amazon is creating a sign-in service for 3rd-party sites/apps/games. The goal is to both keep users logged in to Amazon, and to gain valuable activity data that can be used to push/personalize products and content. But Facebook and Google have major head-starts here.

    Struggling with e-mail overload? Google (GOOG -1.3%) is hoping a big Gmail overhaul will address the problem. The update, which will gradually roll out to both PC and mobile users, splits the traditional inbox into 5 categories – Primary, Social, Updates, Promotions, and Forums. Messages can be moved between categories, and e-mails from a particular sender can be set to appear in a particular category. Gmail was estimated by comScore to have nearly 300M monthly users last fall, and is still gaining share. However, Microsoft and Yahoo both recently overhauled their e-mail offerings in an attempt to keep pace.

    Three lunchtime reads:
    1) Upside of low employment is longer life
    2) Volcker plans to restore faith in government
    3) Switzerland frees banks to settle U.S. tax evasion cases
     


  90. Burrben

    SCO
    The 34/37 spread we did is now mid 2.38.  I got in at 1.88 avg price, so that looks like a 26.5% return.  From what I understand we take profits at 20% right?
    I put a order out there to close it.

  91. qcmike

    Shadowfax
     No did not receive e mail
     qcmike@hotmail.com
     

  92. shadowfax

    Tulsa Model S
    Consumer Reports give it a 99 out of 100 beating every luxery car. Even storage is good when you include the front "frunk" and fold the 3rd row child rear facing seats. They got 180 miles in cold weather to 225 miles on a charge. That takes 12 hours at 24 volts. Seems the battery is so big forget 120 volt charging. Only car outdoing it is the Nissan Leaf with short runs, small space, and low price(half price).

  93. shadowfax

    samz
    I have a bunch of sell signals and TLT is rising. I am short IWM also.

  94. Winston

    Phil/BCS; the other way round
    Here on PSW, the spread of choice is the ABW with a long dated long BCS financed with a long dated short put. For the last couple of years it has been hard to go wrong applying that strategy on the majority of banner stocks talked about here. I came to thinking that maybe it is about time that we entertained the opposite strategy – buying a long dated Bear Put Spread financed by a higher strike long dated short call. Yes, the rally could have legs, and yes we could get lots of practice in adjusting the short calls, but it could be worth considering. Your thoughts?

  95. shadowfax

    samz The stop clear went by it may go down shortly or the bots did it to screw us.

  96. scottmi

    TSLA – hell, why not $150 tomorrow? perhaps announce YHOO is going to provide the resale guaranty.

  97. shadowfax

    IWM has been bouncing off downslopping resistance since 2 PM. Nobody is trading except the BOTS. I think the FED is actually doing the trade show because they scared everyone. Going to cost a bunch to go green today!

  98. Burrben

    Some ideas;
    Anyone like this trade on SHLD?  Sell the Jan15 35P for $5, and buy the Sept 45/55 bull call for 4.70. 0.30c credit.  Spread $5 ITM
     
    To capture upside in the AAPL Dev Conf, buy the June 14th 450-455 Bull Call for 2.10, sell the Jul 19 390Put for 2.25 for a net credit.

  99. rustle123

    looks like end of the day short covering on TSLA again.

  100. Phil

    Another way/Scott – That's a good one but too many good memories from McCartney for me to switch.  

    TSLA/Newt – I'd give them a day to see if a down trend is developing as long as you are willing to accept the consequences of another jack-up like this morning.  Or, when in doubt, roll half!  

    TSLA/Edro – That's very nice of them as long as you can sell more calls.  They eat the premium and fees for you.  

    Rates/ZZ – That's an even better (worse) disaster scenario as you have all these holders of low-rate bonds and, if inflation kicks in, no one is going to want to hold 2% paper as it devalues at 10x the move in rates above your rate.  So it's never a gradual thing and look at all the paper that's out there.  Once private holders start competing with the government to get rid of low-rate paper the Fed will be overwhelmed and not able to keep up with supply and then rates go up (as the Government still needs to borrow $50Bn a month plus corporations will begin to scramble to issue cheap paper while they still can) and that will drive rates higher and that will panic more people to sell their cheap paper and all those redemptions floods the market with money and drives down the Dollar and that makes rates go up more because the bonds are priced in Dollars and have to offer more interest to compensate for a falling currency (what's happening to Japan now) and more redemptions and more devaluations until you are Greece.  Except there's no ECB to bail us out so the Fed just has to print and print and print and that drives the dollar further down and rates up even higher.   That's what will happen – when is the much harder question but it won't be something that takes us by surprise – the dam will break and the flood will last for years.  

    Thanks Mill but I don't like to seem like I'm bashing something I have an interest in – I hate it when people do that.  

    Value/CSL – Good point but TSLA is a manufacturer of a product more so than the others and thus, subject to a bit more discipline in valuation (theoretically).  They are being treated like they can scale like a web company and it looks like you can when you go from 5,000 to 25,000 cars in a year but they won't be at 125,000 next year and they won't be at 500,000 the year after that but that's what they're being priced for.  I agree, they can go up from here – that's why we reluctantly hedge but all of the stocks you mentioned have had 50% drops off big runs – TSLA simply hasn't had their yet.  

    France/Scot – You wonder what keeps it all together? 

    Crawl/Samz – BTFD has been a winning strategy since November, going to be a hard habit to break.  Oil $92.85 says economy getting worse (gasoline $2.79 now too). 

    SCO/STP, Burr – Well we take profits if we feel they will be taken back, in this spread we CAN make much more if we catch the collapse on post-holiday inventories, which is what we expected so I'm inclined to wait and see what tomorrow's report brings us.   We're not closing everything with a 20% gain (or how will we ever make a 100% gain?), we're early in the scale with 5 contracts here.

    VIX 14.80 – someone is nervous.  

    Bear spreads/Winston – The problem with that is there's no limit to the upside.  Of course there is logically but the nice thing about selling puts is you have a definite floor somewhere and you end up owning something of substance in the "worst case".  Selling calls is going short and you own nothing and have no lasting benefit.  Also, it's very confusing to bet the other way like that for discussion purposes – I mix up calls and puts often enough as it is.  I would be very happy to discuss and help you with a strategy like that as it's interesting and educational but, as a tracked portfolio, it would be a nightmare – especially for newer members.  Much easier to go bullish on TZA, etc. if you want to make a bearish stand.  

    3:00 PM On the hour: Dow -0.65%. 10-yr +0.23%. Euro +0.62% vs. dollar. Crude -2.13% to $92.99. Gold +0.91% to $1392.25. 

    USA Today Has A Huge Front Page Story About The Bull Market And All The Wealth That's Getting Created.

    Consumer confidence index is a contrarian indicator.

    Treasury yields go up a bit (FT Alphaville)

    Rosengren Says Significant Fed Accommodation Still Needed. Federal Reserve Bank of Boston President Eric Rosengren said the Fed should press on with record stimulus to speed economic growth, reduce 7.5 percent unemployment and boost inflation running below 2 percent. “While we have seen some improvement in labor market conditions, significant accommodation remains appropriate at this time,” Rosengren said today in remarks prepared for a speech in Minneapolis. “Core inflation remains at the very low end of recent experience, and the unemployment rate is close to the cyclical peaks of the past two recessions.”

    QE: Because Nobody’s Got Any Better Ideas (It’s Not That Simple)

    Volcker warns on limits of U.S. Fed's easy money.

    Inflation, deflation and QE (Coppola Comment)

    Record Cash Sent to Balanced Funds (Bloomberg)

    The Casino At The End Of The UniverseIn the end it is almost always leverage that touches off the rush to the exit door and I would say that the financial markets are now levered past what we have ever known before.

    European Stocks Fall on Concern Fed Will Pare Stimulus. European stocks fell, after the Stoxx Europe 600 Index rallied the most in a month, on concern that the U.S. Federal Reserve will reduce debt purchases as the world’s biggest economy strengthens. PSA Peugeot Citroen declined 4.2 percent following a French newspaper report that Europe’s second-biggest automaker may sell new shares to raise cash. Evraz Plc fell to a record low after Stoxx Ltd. said it will remove the commodity producer from its benchmark Stoxx 600 next month. Hennes & Mauritz AB dropped 2.5 percent as Goldman Sachs Group Inc. recommended investors sell the shares. The Stoxx 600 retreated 1.9 percent to 302.5 at the close of trading.

    EU Extends Deficit Deadlines For Most European Countries, Admits Structural Adjustment Failure, Kills Austerity. Translation: the theatrical spectacle of Europe's austerity, which never really took place, is finally over.

    European Credit Contraction Accelerates, Spanish Loan Creation Craters. (graphs)

    High street feels squeeze as sales fall. Britain's high street was dealt a blow on Wednesday as a poll revealed that retail sales this month sank at their fastest pace in more than a year.

    German Unemployment Increased Four Times Forecast in May. German unemployment rose more than four times as much as economists estimated in May as the euro area’s sovereign debt crisis and a long winter took their toll on Europe’s largest economy. The number of people out of work climbed a seasonally adjusted 21,000 to 2.96 million, the Nuremberg-based Federal Labor Agency said today. That’s the fourth straight monthly gain. Economists predicted an increase of 5,000, according to the median of 35 estimates in a Bloomberg News survey.

    ECB Warns Financial Weakness Could Break Best Lull in Two Years. The European Central Bank said weakness in the euro-area economy and the fragility of the region’s banks risk ending what it describes as the calmest period in financial markets since 2011. “The main message is that financial stability has improved since the last issue,” ECB Vice President Vitor Constancio said today in Frankfurt as he presented the ECB’s twice-yearly Financial Stability Review. “But the situation remains fragile. The year 2012 was not good at all for banks.” “Particularly vulnerable are banks that are confronted with a significant deterioration of asset quality with high and rising non-performing loan levels,” the ECB said in the report. “Continued and prompt progress in proactively tackling bank balance sheet problems is required.”

    “Can Japan Export Its Way to Recovery?” (Econbrowser)

    Japan’s Bond Market Wants BOJ to Purchase More Short-Term (Bloomberg)

    Brazil economic growth disappoints again.

    Brazil will not tolerate high inflation -Finmin Mantega.

    FDIC: Banks Net Income in 1Q Hits All-Time High of $40.3 Billion.

    OPEC Axes Production Monitoring Committee. OPEC has decided to ax a key committee that monitored its members' compliance with oil production targets and made recommendations on output policy, people familiar with the matter told The Wall Street Journal Wednesday.

    Mora County, N.M., a rural area where residents depend on wells for their water, is the first county in the U.S. to pass an ordinance banning fracking. More than a dozen cities in the eastern U.S. have passed such ordinances, and the movement is spreading west: Culver City, Calif., home to the largest U.S. urban oil field, is drafting anti-fracking regulations, and other cities are preparing ballot initiatives to outlaw the technique.

    Lumber Futures Fall Most in 17 Months as Output Rebounds. Lumber futures fell the most in 17 months on speculation that North American mills from Texas to Alberta are boosting output

    Copper Declines on German Jobs Data, IMF's China ForecastCopper futures fell for the third time in four sessions after German unemployment rose more than expected and the International Monetary Fund cut its forecast for economic growth in China, the world’s top metal consumer

    Small and mid-cap regulated utilities with high dividend yields are trading slightly lower as investors rotate positions on rising treasury yieldsCNL -1.7%EE -2.1%GXP -1.7%PNW -2.4%POR-2.5%SCG -1.9%NVE -2.8%WEC -2.5%WR -2.6%AWK -1.7%.

    What to like about natural/organic grocery stocks: A robust earnings report (III) from The Fresh Market (TFM +7.1%) after a few troubling quarters has analysts buzzing again - not only about the specialty retailer but also peers Whole Foods Market (WFM) and Natural Grocers by Vitamin Cottage (NGVC -0.4%). The sector doesn't face the e-commerce or fashion risk of other specialty retailers and secular trends remain favorable. With market penetration still relatively low, sales could stay strong as an improving economy helps the group take some market share from traditional grocery chains.

    Heard during Home Depot's (HD -0.3%) presentation at the Bernstein Strategic Decisions Conference: 1) CEO Frank Blake stays with the theme the housing market is recovering as he points to pricing as a powerful catalyst for Home Depot, but he also warns that the availability of credit could be hampering upside. 2) The retailer still has an eye on the negative equity situation for U.S. homeowners and is optimistic, but isn't making too much out of the latest Case-Schiller reading on home prices. 3) Customer service is a larger focus with more appliances being sold. Overall, 60% of employee time should be customer-facing, according to Blake. (webcast)

    Don’t Believe New Housing Bubble Hype (Developments)

    Flippers Ride Housing Wave–Again (Developments)

    Meanwhile, Big Investors Quietly Slip Out The Back Door On Housing.

    Rising Mortgage Rates, Home Prices a Lethal Brew.

    Mobile now makes up 15% of Web traffic, up from 10% a year ago, notes Mary Meeker in her latest Internet Trends Report. Also mentioned: China (BIDUSINASOHUYOKU) has 564M Web users (42% penetration), with 75% accessing the Web from their phones (71% use PCs); India's penetration is still only at 11% (137M users); mobile now makes up 12% of U.S. media viewing time (it's 22% in China) and 3% of ad spend, up from 10% and 1% before; YouTube's (GOOG) per-minute video uploads are up 5x since '09; 60% of Facebook (FB) users log in daily, and the site receives 350M daily photo uploads; global smartphone penetration is still only at 21%. (Meeker in 2012)

    Office 365 Home Premium subs have passed 1M a little over 100 days after the productivity suite launched, claims Microsoft (MSFT). The launch of Home Premium, which goes for $100/year and gives up to 5 PCs access to both local and cloud versions of Office 2013, has been closely watched, given it represents Microsoft's strongest effort to get consumers to embrace Office subscriptions. Microsoft recently boasted Office 365 (also covers business subscriptions), aimed at staving off Google Apps and other low-cost cloud alternatives, is on a $1B/year run rate.

    Fewer Americans Identify as Economic Conservatives in 2013 (Gallup)

    United States lags Europe on paid vacation time (Washington Post)

  101. Phil

    SHLD/Burr – Sounds good to me.  AAPL is so crazy, that's a dangerous bet.  I like it but dangerous. 

    TSLA/Rustle – Well, now we're being told people are being forced to buy it – that's an interesting development but how far can that go?  

  102. 1020

    Zero – Only 5,600 ft.?  If you were looking for a Colorado high, did you check out this town?
    http://en.wikipedia.org/wiki/Cripple_Creek,_Colorado
    A great "elevation"
    http://www.gostrongwood.com/strongwoodhomesnowridge.html

  103. 1020

    Woops!  I mean't this elevation….
    http://www.gostrongwood.com/home.html

  104. newt

    TSLA/ Phil: Thanks. I went ahead on the roll- I hated this AM.  You have had some really good tutelage the last few days, (yodi, Rustle, edro and I).
     
    PS:
    …if it goes to $115 and some idiot is willing to pay me $42 for $85 calls – I should sell them before he changes his mind.
     
    I love it when you talk dirty.

  105. shadowfax

    zeroxzero
    If you want elevation my house is 7,000 feet but I did live in Evergreen CO at the hih end of a dead end, 9,100 in 1975. Moved out because they didn't plow the road that far. Had 2 friends visit from Mass and stayed sick for a week. Went sking without them every day because I took the week off, Leslie stayed home with them, she was from Boston, 1 block from bomb #2 that BDC missed.

  106. shadowfax

    1020
    I remember Cripple Creek!

  107. shadowfax

    Any one know how to clean BOT shit?

  108. stockbern

    zeroxzero    I'm part time in Colorado.  E-mail me if you have any questions     hoberns@yahoo.com

  109. Phil

    You're welcome Newt.  Keep that in mind for tomorrow – just in case.  

    GOOG quietly sneaking down below $870.  

    Wow, bell already.  Volume crap at 90M on bell, maybe they throw another 30M in at close.  

  110. shadowfax

    Bailing out after the bell. Holding short tonight.

  111. zeroxzero

    1020/Shadow:  Only 5,600 ft, you say?  And Shadow's at 7,000?  You wimps --  I'm going to have to teach you both to inhale.  My only U.S. house puts me gasping next to my fireplace at 8,600 ft.  I have an oxygen concentrator to help me sleep for the first week.  I'm moving downvalley in heading for CO.  Did I mention the neighborhood moose and cougars? 

  112. zeroxzero

    Thanks, Stockbern, I'll take you up on that.

  113. Pharmboy

    TSLA is the new AAPL in chat.

  114. nicha

    Pharm/SGEN – I am in June 40 class at .75 now .15 and short 35 puts at .60. Not worried abt the puts but what to do abt the calls?

  115. samz3700

    Zeroxzero -
    Spent New Year's in Fairplay CO – town center 9,953 and we were uphill from town so 10,000+ 
    From NYC – we did drive over the pass to ski everyday but cannot say I was much use after 5 PM.

  116. albo

    Phil – One more negative to add to your story about having to charge your TSLA, and it's raining, and the air conditioner has kicked off.  You arrive at the charging station and lo and behold because Musk has been so successful selling these cars, there is a 45 minute wait before you can hook up to the charging station.  So you go into the bar to bide your time, get drunk. You then set out and get a DUI.  You get thrown in jail and physically attacked.  They break your right arm and your nose.  You get out of jail the next morning, but you've missed the wedding you were traveling to.  Not a pretty picture, but you have the consolation of knowing that you didn't have to stop and get gas, and most importantly, you're helping the country go green.

  117. zeroxzero

    samz3700 – I spend the summers up there, you adjust pretty quickly, and we hike up to 11,500, the highest local peak.  But it does take a week of fairly sleepless nights to do so, as the altitude elevates your heart rate, hence the 02 concentrator.  I'm not that social, and it's over 90% Forest Service land up there, so I enjoy the isolation.  Because it's a watershed, no dogs are allowed up canyon either, so there are wild animals grazing all around you.  Nice antidote to city life.
     
    Albo – Was that hypothetical?

  118. zeroxzero

    And for the bizarre headline of the evening:  Larry King defects to Kremlin-funded news network.    http://www.thetimes.co.uk/tto/arts/tv-radio/article3777712.ece

  119. Pharmboy

    Nicha.  Those are dead, and should have been a credit, no?  They are dead…but i would hope for a hail mary!  (This is a forward looking statement and 'hope' is not a valid investment strategy.)

  120. Pharmboy

    Wood……houses……real estate…..And I am at sea level.  Well, a smidge higher, but close enough.  The weather spectacular all year long!

  121. randers1

    Almost perfect symmetry for DJIA, Do you ever get the feeling we
    are being played?
     
    Yesterday + 106.29 (+.69%)
    Today        - 106.59 (-.69%)
     

  122. Pharmboy

    randers….like a fiddle.

  123. roberthjrfl

    Phil,
    A question about your comments concerning the inevitable interest rate explosion to ZZ at 3:30p.    Obviously, this is tied to / similar to / is inflation.  What do you think the best way to work this scenario is?  Maybe like a Jan 2015 TLT  BCS 125/130 for $0.93?  When rates start exploding I would guess this could easily end up completely in the money.  I would love to hear your thoughts.  Another question, when rates start exploding up, will that "tank the market?"  IE do rates and the market historically move inversely?  TIA.

  124. jerseyside

    Phil - great summary of how the disaster scenario unfolds with interest rates spiraling higher (your 3:30pm comment).  Probably too early to ask this question, but what's the preferred strategy for coping with that?  Puts on TLT or UUP; long commodities; or dare I say it, long (gasp!) TBT? If our dollars are being severely devalued, we're going to need a way to make a lot of them.  Or am I missing the big picture, and we'll have much bigger problems than what to trade?

  125. jerseyside

    That's what I get for not refreshing the page for 30 minutes before submitting my post: question already asked.

  126. zeroxzero

    Pharm:  Cali boy.  Sounds like Del Mar.

  127. Burrben

    I want to play oil tonight!

  128. zeroxzero

    Burrben:  Would you like to play Bernanke?  I have been, it's easy!!  http://projects.wsj.com/games/thefederator/?mg=inert-wsj

  129. Pharmboy

    Just a bit outside Zero…Carlsbad is rad.  I hit my golf balls down on 1020!  LOL!  Although 1020 can walk to the beach.  I need to run!

  130. stjeanluc

    NASDAQ won't give up…

  131. kinkistyle

    TSLA: Forbes published an article alleging the TSLA Model S carbon footprint to be comparable to that of a Honda Civic based on a JPM analyst report:
    http://in.finance.yahoo.com/news/teslas-carbon-footprint-no-better-183047337.html
     
    It looks like it got taken down by Forbes for some reason.  Maybe TSLA cried foul about it.
     
    'One of Cembalest's colleagues at J.P. Morgan believes that Tesla’s long-range plan is to provide proof of concept at the luxury end of the market, and then eventually commoditize the concept at lower prices. If that’s what happens, and if the electricity “ifs” shown above take place, then Tesla would merit the attention it's getting for current annual production of 20,000 units on a base of 15 million U.S. cars sold each year. Otherwise, Cembalest writes, "what we may be witnessing is simply a green revolution where green represents the buying power of the Tesla’s wealthy driver rather than a substantial environmental benefit. The broader point is that the oft-promised rose garden of substantially lower environmental footprints from electric vehicles may be decades away from blooming, at least in the US."'
    "

  132. deano

    As Phil has been saying for some time there will be consequences:
    Volcker Cautions Federal Reserve May ‘Fall Short’

  133. Phil

    Nikkei right at 14,000 but not looking healthy enough to play up.  Yen at 101.20.

    Oil $93.15 is improved from close.  No one panicking into gold – $1,391.  

    Getting High – We skied Keystone with the kids all day and then headed UP to the Fondue place at 12,000 feet for dinner.  There was beer there was food and there was dancing and Maddie is lactose intolerant so cheese and chocolate fondue and high altitudes and dancing caused her eyes to roll up in her head and she passed out.  We had a total fit, of course and they had to take her down the mountain on a stretcher and we got an oxygenator that night and I stayed up all night to make sure her mask stayed on, but our condo was on the mountain at about 8,000 feet and it wasn't helping enough in the morning so I had to drive her to Denver (still 5,000 feet) the next day and she was still lethargic but they fixed her up at the fantastic Children's Hospital they have there.  So be warned – those high altitude places can be dangerous…

    TSLA/Albo – Sounds like one of those commercials for cable or whatever it's for.  That is a good point about charging stations being full.  How many chargers per station?  It's fine when there's only 20,000 cars in the whole country and you have 100 charging stations (200 cars per station) but what happens when there's 2M cars?  Will they build 10,000 charging stations to keep up the ratio?  Valero only has 1,880 stations in the whole country (about the same for TSO, HES, Sunoco, XOM, CVX) but, then again, they don't take an hour to fill up each tank.  That's an interesting logistical problem I haven't seen TSLA address. 

    Larry King/ZZ – I'm shocked (that he's still alive).  

    Dow/Randers – That's pretty strange.  

    Interest/Robert, Jersey – TBT is the Devil but shorting TLT is probably going to be a good play.  UUP could go either way but I think we may be a long way from those bets paying off with the Fed, BOJ and soon ECB running full throttle on money printing.  When the time comes, TLT will fail 110 and then 100 and then there will still be time to bet (it was often in the low 80s early in this century until 2007) and, of course, the market will go UP with inflation so any mindless DIA bull spread should do the trick as well.  

    As it is now, you can pick up the DIA $170/190 bull call spread for $2,80 and offset it with BA $60 puts (or whatever you REALLY want to buy if the market crashes) at $2 and that's net .80 on the $20 spread that pays off if the Dow is at 19,000 in Jan 2015 – up 24% in 18 months.  Just a simple example but you get the idea – if you're willing to buy $60,000 worth of BA then you sell 10 puts for $2,000 and buy the spread for another $800 and you get $20,000  back if the Dow keeps going up.  That will keep you ahead of anything but hyper-inflation!

    Big Chart – NYSE with the bad signal now.  Gotta watch the S&P, they tested 1,640 on the button and Nas holding the line right at 3,465.  Check out Dow and RUT's rejection patterns – obviously being traded by machines with the same coding.  

    PCLN/Jabob – I hate it when companies borrow money to buy back their own stock.  AAPL is just sitting on cash and literally doesn't need it (because they make another Billion every week) and doesn't see anyone they want to acquire so it makes sense for them to buy themselves when they are so undervalued but PCLN is not cheap and they already have $1Bn in debt and this is a stupid thing for them to do as they are likely buying at the top.

    Forbes/Kinki – They are only a day behind us (I had that chart in last night's chat).  8)

    Volker/Deano – I think he's pissed that Bernanke is being hailed as a genius for doing exactly the same shit Volker had to rescue us from last time.  

    Cool sounding conference Rpme.  Remind me next year and I'd love to go!  

  134. Phil

    At the close: Dow -0.69% to 15303. S&P -0.71% to 1648. Nasdaq -0.48% to 3472.

    Treasurys: 30-year +0.79%. 10-yr +0.3%. 5-yr +0.1%.

    Commodities: Crude -1.89% to $93.22. Gold +1.05% to $1394.25.

    Currencies: Euro +0.66% vs. dollar. Yen -1.16%. Pound -0.61%.

    Market recap: Stocks ended off their lows but still finished in the red, wiping out yesterday's gains, as investors grow more nervous about when the Fed might cut back stimulus. Losses in shares offering high dividends, such as consumer staples, utilities and telecoms, weighed. Treasurys rebounded a bit from yesterday's selloff but 10-year yields remained above 2.1%. Gold gained, supported by a weaker dollar.

    Like watching a slow-motion train wreck:  Depositors pulled €3.2B from Cypriot banks and €2.8B from Greek banks last month in the wake of Cyprus' bungled bailout. Critically, the figure for Cyprus does not include the haircuts imposed on deposits as part of the rescue effort. Elsewhere, Spanish deposits fell 1.5% to a seven-month low and customers in Slovenia yanked nearly 2% of their cash amid worries about the stability of the country's financial sector.

    Deutsche Bank’s Six ’13 Rally Busters (Fox)

    Low interest rates have helped MLPs raise capital at a reasonable cost, enabling returns well above their cost of capital and supporting cash distribution growth, but Simmons analysts say investor interest should remain strong even as rates rise – though due diligence will be more important than ever. Darren Schuringa says it's crucial to measure an MLP’s coverage ratio rather than the actual money it pays out.

    Some green creeps into the mortgage REIT sector (MORT) after a panicky morning. Sector giants AGNC and NLY post small gains, while hybrid Invesco (IVR +2.8%) and agency adjustable-rate player Hatteras (HTS +3.1%) have moved strongly higher. Not only did insiders step in to buy plunging Armour Residential today, but they were also buyers (III) of sister-company Javelin Mortgage (JMI -2.3%) which got hit with a downgrade to Hold at Citigroup. At the morning's low of $14.69, the stock was trading at a 20% discount to March 31 book value.

    ProShares sets 7 splits and 8 reverse splits on 15 of its leveraged and inverse funds. Getting reverse splits: UVXY 1:10, VIXY1:5, KOLD 1:4, DUG 1:4, FINZ 1:4, TTT 1:4, SJF 1:4, EFU 1:4. Straight splits (all 2 for 1): UGEUPROUMDDUWCRXLUCC,URTY. The splits will be available to shareholders of record as of June 5, payable on June 7, and trade at the new price on June 10.

    BAML analysts lower their expectations for Brent crude prices on weakening demand in China and Europe, rising supplies and higher inventories – "a cocktail for lower prices." But demand this summer should rise, prompting the firm to suggest a list of six "stocks for the summer" to own: APCOXYMROPXDDVNCHK. 

    In Dubai, the number of Abandoned Luxury Cars lying around is kind of a Problem (Messy Nessy Chic)

    Moody's cuts Alcoa's (AAsenior unsecured debt ratings to Ba1 from Baa3, and assigns a Ba1 Corporate Family Rating and a Ba1-PD Probability of Default Rating. At the same time, its withdraws the company's Prime-3 commercial paper rating and assigns a Speculative Grade Liquidity Rating of SGL-1. The agency cites continuing headwinds pressuring fundamentals in the aluminum industry and aluminum prices for the downgrade. 

    Alcoa (AA) responds to Moody's downgrade, saying that it believes the cut to be more of a reflection of overall macroeconomic conditions and the volatility of metal prices, rather than a true statement of the financial and operating strength of AA. The company notes that its balance sheet and liquidity position are both strong, with limited near-term bond maturities. Shares -1% AH.

    Concerns about cyclicality spark an investor exodus from Cliffs Natural Resources (CLF -5.8%), whose performance is heavily influenced by macroeconomic changes. Today, the OECD cut its global growth forecastBHP says it's not expanding its mining operations, and of course uncertainty lingers over how long the Fed will continue its stimulus measures.

    Buffet calls a bottom on utility sector!  NV Energy (NVE+22.4% AH after agreeing to be acquired by Berkshire Hathaway (BRK.ABRK.B) subsidiary MidAmerican Energy for $23.75/share, a 23.2% premium to today's closing price. Upon completion of the deal, MidAmerican will have assets of ~$66B and its regulated electric and gas utilities will serve 8.4M customers.

    Tesla Motors (TSLA) confirms it will hold a conference call on Thursday at 1:30PM ET to make an announcement about the Tesla Supercharger Network. Speculation about the announcement has been swirling for weeks after CEO Elon Musk teased Twitter followers about the news then later delayed the announcement.

    Trouble in duopoly land: EADS (EADSF.PK) CEO Tom Enders delivers a stinging retort to Boeing (BA) CEO Jim McNerney's contention that Airbus doesn't "have the appetite to do a ground-up airplane." The A350 doesn't "have rivets from Wal-Mart like the ones our competitors had," Enders quipped, before saying that the A350 is "a real aircraft." Airbus is stepping up the rhetoric after striking a more conciliatory tone during the Dreamliner's grounding. 

    S&P's Scott Kessler goes contrarian on Facebook (FB-3.4%), upgrading shares to Buy in response to their May swoon. Kessler touts Facebook's "strong market position, mobile momentum, significant growth, and considerable balance-sheet flexibility." Meanwhile, Facebook is borrowing a line from Twitter and giving major public figures the chance to create Verified Pages.  Hashtags, another Twitter staple, are reportedly on tap. (earlier: III) 

    Apple (AAPL) roundup: 1) The WSJ reports Apple is shifting hardware orders from Foxconn to Pegatron, and plans to make Pegatron "the primary assembler" of its low-cost iPhone. Apple's reasons: risk diversification after last year's manufacturing issues, and pricing. 2) Apple is reportedly looking to tap Samsung to supply thin LCD glass for iPhones, iPads, and MacBooks. 3) Inside Apple author Adam Lashinsky wasn't impressed with Tim Cook's AllThingsD talk. "It is a strange sight to see the CEO of Apple, a company known for its brilliance and vision, decline over and over to discuss just about anything in any detail." 4) One detail shared by Cook: Apple has made 9 acquisitions in FY13. Only 2 - Particle and WiFiSlam - have been disclosed.

    Why Apple Makes Only One iPhone, and Doesn’t Want to Make a Phablet (Video) (All Things D)

    Apple’s First Computer Was A Better Investment Than Apple Stock  (priceonomics

    The ‘cult of capitalism’ and U.S. moral decline (MarketWatch)

    How Congress Quietly Overhauled Its Insider-Trading Law (npr)

  135. jerseyside

    Interest/ thanks, Phil! DIA vs BA sounds like a great way to play it. Will keep an eye on TLT, also.  Now if we could just get that correction…

  136. zeroxzero

    Pharm:  I spent 5 years in LJ Shores, and another 1/4 mile away on Soledad, great time, great neighborhoods all. Don't miss I-5, though.  Them zonies showing up yet?

  137. cslanson2

    Phil,
    TSLA – I think perhaps the point being overlooked when calculating the number of required charging stations and the relative inconvenience is the dubious comparison to gas stations.  As a practical matter, 100% of the public driving liquid fuel vehicles will require a regular visit to a gas station but 99% of the people using Teslas and other electric cars are going to "fill up" at home and NEVER go to a charging station.  There may well be some valid arguments about the viability of electric cars but the charging station one is a "red herring".

  138. yodi

    slanson2
    TSLA charging stations. You guys going a bit far with the extreem. First question how many people driving 300Km with this car on a daily basis. Say you doing 100 or even 150 per day get home and plug in. I can see people using stations only if they get the juce for free and than still who wants to sit in the car for 1/2 hour. There will be other solutions as time goes by. If the price come down electric cars will be the best deal on the market at present.

  139. Phil

    Good morning!

    Nikkei fell 5% today but now one seems to care.  Down to 13,625 in the Futures, which I guess were weaker than I thought at 14,000.  Yen fell (stronger) all the way to 100.46 and that's the whole story there so it does make sense that the rest of the World is just ignoring the silly Japanese markets, which are only up when their currency is down.  

    The rest of Asia was pretty flat and Europe opened low but is now flat and our Futures are down just a bit but held up by the Dollar, which dropped about half a point overnight to 83.40.

    Oil back below $92.50 as API shows a shocking  4.4Mb build in oil and a 1.94Mb build in gasoline.  This is even worse than I expected and miles off the net draw the analysts were expecting.  

    Gasoline is also falling, now $2.773 and that's going to be shortable (/RB) below the $2.78 line as long as oil is below $92.50 and the Dollar is above 83.25 (now 83.35).

    If, on the other hand, the Dollar keeps going down, then oil can be played long (/CL) over that $92.50 line for a bounce into the NYMEX open but, if our inventory report confirms a build – look out below!

  140. Phil

    You're welcome Jersey. 

    Red herring/CSL – Well, it's a bit tongue in cheek to pick on TSLA over charging stations – it's only going to be an issue for adventurous people who enjoy pushing the limits of the technology on long trips.  Still, it will happen to a lot of people once there are 1M of those things on the road.  Everything happens to a lot of people once you have a million of them – monkeys at typewriters produce Shakespeare, or so I'm told….  Of course, TSLA wouldn't be so focused on charging stations if it weren't an issue that's holding back their sales/acceptance so I certainly wouldn't completely dismiss it either.  

    I don't drive my car much, as I'm home during the week and I'm pretty conscious of where I buy gas as I like to support our local station, as we live in a small town, so I make an effort to only get gas by my house and only fill up away from home when I need to.  I think the last time I needed gas away from home was our Atlantic City conference last month and before that it was around Kennedy airport when I went on my boat trip in March – but only because I had forgotten to fill up at home as Kennedy isn't all that far.  So, while I'm not a typical driver, I still need to "charge" away from home once a month.  

    Even if a conscientious Tesla driver cut that back to once a quarter, once there are 250,0000 of those things on the road, that's still at least 1M road charges a year.  At 100 charging stations (planned by 2015), that's 10,000 visits per station per year or 27 per station per day.  That would be the dead minimum usage so you can't have one charger and two would be risky and 3 would usually be fine but, hopefully, they have 4 terminals per station.  So, if the charging stations have 8 terminals per station, then I would be inclined to believe Musk truly believes in his car's future as I'd certainly error on the side of excess when I go to the effort of building those locations.  If there are only 4 – then you know he's lying about putting 500,000 cars on the road this decade.  

    By the way, yes I could take Tina's car instead but it is HER car and she certainly isn't happy if I take it to the airport and drop it off for a week and she'd be really pissed if the reason was my electric toy car that cost $80,000 can't be left at the airport as it would have no charge when I got home and now she has to drive it around and charge it up every day (not a chore she's accepted adding to her list).  My Dad used to buy new cars all the time and sometimes my Mom liked them but she hated his 'Vette and used to get really pissed when he needed her car for space and stuck her driving the vette so I think it's pretty typical behavior.  

    Electric/Yodi – I'd feel a lot better if Musk put some energy in promoting standardization of charging stations so that all manufacturers were putting charging stations all over the country.  Imagine if your car only took XOM or CVX and you had to look only for the stations that were compatible with your car?  That would be ridiculously inconvenient.  And I know people tend to be loyal to a gas brand but it's the same thing as I'm saying above – once a month or once a quarter, the average driver will simply end up in a situation where they NEED to fill up elsewhere – you can't turn that experience into a hassle or you will never gain market traction.  

    Dollar rejected at 83.50.  Penny profit on Gas ($420) and oil right at $92.50 so a good spot to flip long with very tight stops if the Dollar goes over or oil goes under, of course.  

  141. 1020

    Good Morning Phil!

  142. Burrben

    I wish that the VW CEO would tweet about the 44mpg the Passat TDI get's everytime Musk tweets,  for example Tweet that it has a range of 795mi, 3 times the range of a TSLA.
    I really want Musk to get a pie in the face from that crazy pie face thrower!

  143. 1020

    Yeah – The TDI is nice, and you can buy a small condo in Vegas with the difference.  :)
     
    I'll look closer at the Tesla when in the future, they'll be built at half the cost. You can save a bundle when you're the last to arrive at the party….

  144. 1020

    Market moving – Will today be 'Fahgettaboudit Thursday'?

  145. 1020

    ….I know, save it for Friday….

  146. 1020

    ….Thespian Thursday?…

  147. 1020

    Phil – What are your thoughts on China's purchase of Smithfield Foods (SFD)?

  148. qcmike

    Good  Morning

  149. Phil

    Quick quarter profit on oil ($250) should be taken with Dollar over 83.50!

    Thursday's economic calendar:

    8:30 Initial Jobless Claims

    8:30 GDP Q1

    8:30 Corporate Profits

    9:45 Bloomberg Consumer Comfort Index

    10:00 Pending Home Sales

    10:30 EIA Natural Gas Inventory

    11:00 EIA Petroleum Status

    1:00 PM Results of $29B, 7-Year Note Auction

    4:30 PM Money Supply

    4:30 PM Fed Balance Sheet

    2:56 AM late sell-off in an already weak market causes the Nikkei (EWJ) to close -5.2%, taking the index's losses since the volatility began late last week to over 14%. Fears about the end of the Fed's QE program and the market undergoing a correction are cited as reasons for the turbulence, as well as the falling dollar-yen (FXY) (-0.6%), although equity-currency relationship seems to have become reciprocal. Elsewhere in Asia, Hong Kong -0.4%, China -0.1%, India-0.1%.

    4:04 AM European shares mostly rise and travel in the opposite direction to those in Japan as bargain hunters enter the fray, and, as Interactive Investors' Mike McCudden says, sift "through yesterdays wreckage." While the market continues to be nervous about the Fed's QE intentions, McCudden reckons that any winding down is still some way off. EU Stoxx 50 +0.3%, London +0.2%, Paris +0.5%, Frankfurt-0.1%, Milan +0.5%, Madrid +0.3%.

    6:00 AM Overseas: Japan -5.2%. Hong Kong -0.3%. China -0.3%. India +0.23%. London +0.1%. Paris +0.3%. Frankfurt +0.2%.

    6:59 AM S&P 500 (SPY) futures +0.2% and Nasdaq 100 (QQQ)+0.1% erase overnight losses following another plunge (5.15%) in the Nikkei. Europe shrugs it off as well, the Stoxx 50 (FEZ+ 0.8%, led by a 1% gain in Italy

    7:00 AM On the hour: S&P +0.24%. 10-yr -0.14%. Euro +0.33% vs. dollar. Crude -0.32% to $92.84. Gold +0.66% to $1400.95.

    What on earth's going on in world markets, asks Joe Weisenthal? With falling bond prices over the last month or so accompanied by rising stocks and a strengthening dollar, Paul Krugman reckons "it looks like a story about macroeconomic optimism," although he doesn't mention Japan. SocGen's Kit Juckes says the re-calibration of Treasury yields is leading to dollar strength, commodity weakness, "and a much bumpier June/August period for risk assets." As Wiesenthal says, "nothing is quite satisfying."

    No saviour in sight as world credit cycle rolls over. This may be as good as it gets for the world economy. The HSBC index for the global business cycle hit a three-year high around Easter, and has since rolled over

    "Wilful Blindness" And The 3 Bullish Arguments. (graphs)

    Stock Buyback Announcements Have Gone Parabolic. (graph)

    Mutual funds holding U.S. stocks recorded outflows on Fed fears-ICI

    Volcker Cautions Federal Reserve May ‘Fall Short’. Former Federal Reserve Chairman Paul Volcker said today the central bank will probably “fall short” by being asked to do too much. “It’s fashionable to talk about a dual mandate, that policy should somehow be directed toward two objectives, of price stability and full employment,” Volcker told the Economic Club of New York. “Fashionable or not, I find that mandate both operationally confusing and ultimately illusory.” “Asked to do too much, for instance to accommodate misguided fiscal policies, to deal with structural imbalances, to square continuously the hypothetical circles of stability, growth and full employment, then it will inevitably fall short,” Volcker said. Those efforts cause it to lose “sight of its basic responsibility for price stability, a matter that is within the range of its influence.” “The Federal Reserve, any central bank, should not be asked to do too much to undertake responsibilities that it cannot responsibly meet with its appropriately limited powers,” Volcker said. He said a central bank’s basic responsibility is for a “stable currency.” “Credibility is an enormous asset,” Volcker said. “Once earned, it must not be frittered away by yielding to the notion that a little inflation right now is a good a thing, a good thing to release animal spirits and to pep up investment.” “The implicit assumption behind that siren call must be that the inflation rate can be manipulated to reach economic objectives,” according to Volcker. “Up today, maybe a little more tomorrow and then pulled back on command. Good luck in that. All experience demonstrates that inflation, when fairly and deliberately started, is hard to control and reverse.”  

    Pimco’s Gross says ‘Bernanke has a lost a little control’.

    ECB Targeted as Blockupy Protesters Descend on Frankfurt. Frankfurt, Germany’s financial capital and the seat of the European Central Bank, is bracing for as many as 30,000 demonstrators to descend on the city for four days of protests against European leaders’ handling of the sovereign-debt crisis. Activists have set up camp on the outskirts of the trade fair grounds to the west of the city, awaiting the arrival of busloads of people from all over the country as well as from abroad, according to Blockupy, an international group that is organizing the blockades. The biggest action is planned for May 31, when the demonstrators plan to “visibly disturb the usual business of the ECB as well as other actors of the crisis regime,” Blockupy said in a statement on its website. 

    Is This Why Social Unrest In Europe Has Been Subdued (For Now)?

    EU Warns of Uncertainty If CFTC Won’t Delay Swaps Rule. The European Union is urging the U.S. to allow time for international talks before it imposes swaps rules on EU lenders, saying that the current timetable would lead to “huge legal and operational uncertainty.” The European Commission wrote to Gary Gensler, chairman of the U.S. Commodity Futures Trading Commission, urging him to extend a temporary exemption for overseas banks, which is due to expire on July 12, according to a copy of the letter obtained by Bloomberg News.

    Francois Hollande tells European Commission it can't 'dictate' to France. Francois Hollande has warned the European Commission not to “dictate” orders on how France should run its economy after the Brussels executive called for urgent eurozone reforms to avert a “social emergency”.  

    France must reform or the euro will die. Yes, there were sighs of relief on Wednesday as the European Commission stepped back from hitting eurozone countries with fines for their failure to meet targets to cut public spending. Behind the cover of easing up on austerity, the commission flexed new European Union powers to enforce economic reform and France is in its sights.

    Sean Corrigan: "Abenomics Is Riddled With Inconsistencies".

    South Korea's Hyun Says Japan's Economic Policies Fragile. South Korean Finance Minister Hyun Oh Seok described policies being promoted by Japanese Prime Minister Shinzo Abe as "a fragile sand castle," citing Hyun in a Q&A session at an OECD meeting in Paris. Hyun says quantitative easing without improvement in economic fundamentals doesn't support sustainable growth. Says Japan's easing brings adverse effects to region, including more exchange rate volatility.

    China's broadest measure of credit rose 58% to a record 6.16T yuan ($1T) in Q1, but that debt has become less effective: each $1 of credit added 17 cents to GDP, down from 29 cents last year and 83 cents in 2007. "Less efficient and more highly leveraged borrowers…(are) tying up credit that could be used to generate more growth," says former Treasury economist David Loevinger. The solution, as China's leaders are aware of, is to boost the more profitable private sector.

    Beijing to Take Measures to Limit Home Prices. China's Beijing will likely cap home prices on a "larger scale" in 2H.

    China Railway Corp. Wants Debts Waived. China Railway Corp. officials have been reaching out to the State Council and asking to have its liabilities waived, citing a person close to the company. The company has total liabilities of 2.84t yuan by the end of March, according to its bond prospectus.

    This is how QE/Stimulus ultimately fails – diminishing returns:   China Failure to Grow With $1 Trillion Credit Seen as Li WarningChina’s economy is proving less responsive to credit, escalating pressure on Premier Li Keqiang to strengthen the role of private enterprise.  Each $1 in credit firepower added the equivalent of 17 cents in GDP, down from 29 cents last year and 83 cents in 2007

    China Optimism Declines Among European Companies, Survey ShowsEuropean companies’ optimism for business prospects in China is declining amid slowing growth, rising labor costs, regulatory obstacles and intensified competition, a survey showed. Optimism for future revenue growth among 526 respondents dropped to a four-year low of 71 percent, while 62 percent lack confidence or aren’t sure the government has the resolve to introduce market-driven change. - Have I mentioned how much I like cash lately?

    Mexico Housing Bust Bruises Investors, Buyers

    Latin America Boom Starts to Fade. Slowdown in China, a Major Commodities Importer From the Region, Drags on Growth; Xi to Visit. 

    Brazil's central bank hiked rates overnight by an unexpectedly large 50 bps, the Selic now residing at 8%. The move comes even as growth came in at a meager 1.95% in Q1. Inflation, however, is accelerating and recently breached the upper band of the bank's 2.5%-6.5% target. The country is the only member of the G-20 currently in rate-hike mode. EWZ -6.3% YTD

    Sales of residential properties in foreclosure dropped 22% on year to 190,121 in Q1, providing further evidence of a recovery in the housing market. Such transactions accounted for 21% of all home sales, down from 25% a year earlier and a peak of 45% in Q1 2009, but still well above an average of less than 5% in 2005 and 2006. (PR)

    Net profit at U.S. banks increased almost 16% on year to a record $40.3B in Q1, helped by lower reduced litigation costs and accounting moves related to legal settlements. Net operating revenue rose slightly from recent quarters to $171B, while net interest margins fell to 3.27%, the lowest since Q4 2006. A problem the banks face is that their income could be squeezed if and when interest on short-term loans start to rise. (PR) - Keep in mind that, while this is great growth, XLF is already up 50% since last year!  

    Banks Behaving As If 'It' Never Happened.

    Lawmaker asks US Justice Dept to investigate JPMorgan(JPM) power trading. A U.S. Congressman on Wednesday called on the Department of Justice to investigate JPMorgan Chase & Co's power trading in Michigan, as the Federal Energy Regulatory Commission (FERC) considers whether to sanction the firm. 

    Central Banks' Central Bank Warns About Rehypothecation Threats.

    Currencies Cave to Commodity Dive. Aussie Dollar, Others Start to Tumble as Investors Bet on Sustained Price Declines for Raw Materials. Currencies of the world's biggest commodity exporters are plumbing fresh lows, the latest sign that investors are betting on a sustained decline in prices of oil, iron ore, copper and other raw materials.

    Buffett pays $5.6 bln for Vegas utility, bulks up in WestBerkshire's MidAmerican Energy Holdings Co said on Wednesday it will buy NV Energy for $23.75 per share, a 23 percent premium to NV's Wednesday closing price. NV Energy shares rose to $23.90 in after-hours trading on Wednesday.

    Joy Global (JOY): FQ2 EPS of $1.73 beats by $0.16. Revenue of $1.4B beats by $0.12B. (PR) 

    Rebar Trades Near Lowest in Eight Months on Overcapacity Concern.

    Rubber Slumps to Three-Week Low as Yen’s Rebound Reduces Appeal.

    Copper Users Squeezed as Glut Clogs Warehouse Lines: Commodities. At a time when copper stockpiles are rising to the highest in a decade, manufacturers are paying the biggest premiums for the metal in as much as seven years as financing deals lock up supply and extend lines at warehouses.

  150. Phil

    Japan has canceled an offer to buy U.S. grain after authorities found an unauthorized strain of genetically engineered wheat on a farm in Oregon, with South Korea, China and the Philippines monitoring the situation. The wheat was developed by Monsanto (MON) which could face a hefty compensation bill if the boycott spreads – Bayer CropScience had to pay $750M to crop growers in 2011 over contaminated rice. Wheat futures are -0.6%- But it's fine for US to eat? 

    China's Grab of US Hogs Stokes Interest on Hill. China's largest acquisition to date of a U.S. company, Smithfield Foods, raised eyebrows on Wednesday among market watchers who question China's interest in taking possession of one of America's largest food producers.

    Unusual trading on Smithfield(SFD) calls before deal raises eyebrows.

    Fiat (FIATY.PK) is reportedly in negotiations with major banks to borrow up to $10B that the Italian carmaker would use to acquire the 41.5% of Chrysler it doesn't own and refinance the two companies' debt at lower interest rates. The banks include Bank of America (BAC), Deutsche Bank (DB), Goldman Sachs (GS) (GS) and BNP Paribas (BNOBF.PK). Fiat's purchase of the holding is being held up by a legal dispute over the value of the stake.

    Tesla Motors (TSLA) will triple its Supercharger coverage area by the end of the next month, according to CEO Elon Musk. The exec sees the network covering most of the major metropolitan areas of the U.S. by the end of the year. TSLA -0.9% premarket. (Video:Musk's talk at D11) - LOL, this is the "BIG" announcement.  Very impressive except the baseline is 6 current and 12 more will be added.  

    Very key note on chargers (per our conversation above):  Six Supercharging locations are already up and running in California: at Gilroy, Harris Ranch, Tejon Ranch, Barstow, Folsom and Los Angeles. Most are installed at highway rest stops, with the idea that drivers can top-off the charge on their battery while they grab a bite to eat and use the restroom.  Harris Ranch, located halfway between Los Angeles and San Francisco near Interstate 5, has six superchargers and is one of the busiest locations.  "We usually have for or five cars charging all at once on the weekends," said Elias Vasquez, assistant manager of the gas (and charging) stations at Harris Ranch. "They park and charge and eat lunch." - That is miles more than our estimate!  

    Tesla(TSLA) Bulls Are Ignoring A Bunch Of Serious Issues

    Singapore Airlines (SINGY.PK) is reportedly set to order$17B in aircraft from Boeing (BA) and Airbus (EADSF.PK).

    Panasonic (PCRFY.OB) will slash 5K workers from its automotive and industrial systems business segment over the next three years, according to a top executive speaking at an analyst meeting. The company sees lower labor costs as one avenue to profitability

    More on Costco (COSTFQ3: net profit +19% to $459M. Comparable sales +5%, hurt by changes in gasoline prices and forex rates; U.S. +6%, International +4%. Operates 627 warehouses, including 571 in North America and Puerto Rico. Plans to open nine new warehouses by the end of the fiscal year. (PR)

    EMC increases the size of its buyback program to $6B (authorized over three years to December 2015) and says it plans to repurchase $3.5B worth of common stock by the end of FQ2 2014. The company also initiates a quarterly dividend of $0.10/share and says it plans to alter its capital structure to include more debt while still "maintaining a strong investment-grade profile." (PR)

    While service providers have been worrying about households ending their cable TV subscriptions, a bigger trend has been customers dropping wire-line Internet. With consumers being able to take advantage of faster cellular networks and the proliferation of WiFi, 1% of households ended their Internet subscription last year vs 0.4% for pay-TV.

    Man, they REALLY want to buy CLWR:  Dish (DISHraises its offer for Clearwire (CLWR) to $4.40/share in cash, easily trumping Sprint's (S) revised $3.40/share bid. Clearwire +21.6% AH to $4.23. The 4G carrier's minority shareholders are set to vote on Sprint's offer on Friday.

    Amazon(AMZN) moving ahead with five original TV series.

    LOL, now they have to have a "mini" phone!  Samsung (SSNLF.PKhas unveiled the Galaxy S4 mini, the smaller brother of the Galaxy S4 smartphone, which has already achieved sales of over 10M units just a month after being launched. The mini has a 4.3 inch screen – and so is still larger than the iPhone – and an 8 mega-pixel camera. There's no word yet on pricing or launch date.

    Motorola (GOOG) intends to introduce a new smartphone called the Moto X in October as it seeks to pull itself back into the top tier of mobile device makers. The handset will be made by Flextronics (FLEX) at a plant in Texas that will employ 2,000 people by August. The Moto X will incorporate two processors to conserve battery life, and include sensors to help it better understand the needs of the user.

    Google's(GOOG) Face Recognition Technology Can Figure Out Who You Are On Its Own.

    The Global Showdown Over Syria Has Reached A Pivotal Point.


  151. Phil

    SFD/1020 – I wrote about that yesterday but, in general, I actually do think it's a bad idea to allow your food supply to be controlled by foreign Governments.  It's been so long since we've had a proper war, we're simply not mentally prepared for that kind of threat but China is actively attacking us economically and, if you let them control our food – they have us by the balls and can squeeze any time they want.  They don't even have to make it obvious – just divert more pork to export and supplies in the US go down and US consumers pay more and Chinese consumers pay less and SFD makes more.  That's just good Capitalism baby!  

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