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Wednesday’s Worrying Time Bomb – Global Debt Past $200Tn

How much does prosperity cost?  

In 2008, the global GDP was $62.86 TRILLION and now, 6 years later, it's $75.59Tn – up $12.73Tn (20%).  To some extent, that's to be expected, as we also added 600M more people (10%) to the World's population (I know, scary) – so there's half the growth accounted for right there but the other $6.4Tn a year was growth

I'm sorry if it doesn't feel like growth to you because that means you must be poor because we in the top 1% and especially those of us in the top 0.01% have had a FABULOUS 6 years since the crash.  While earnings actually fell 1.7% for the bottom 80%, equities held by the top 20% (and especially the top 1%) have jumped from $6Tn to $25Tn in the US alone – that's a gain of $19Tn for us!  Of course, those stock gains come, in part, because we're paying our workers less and making more money so – thanks little guys – we couldn't have done it without you (but we're sure going to try!).  

As you can see from the chart above, we all borrowed $57Tn to get those 6 years of $6.4Tn gains, which is only $38.4Tn so I'll grant you it's not the most efficient way to force an economy higher but hey, we're all in this together, right?  Well, by we I mean you, of course as WE (in the top 1%) have been able to refinance our debt at incredibly low rates so it's mostly YOU who are struggling and in debt that are financing our incredible gains in wealth and, on behalf of the entire top 1%, I just want to say to you – don't forget your next payment is due on the 15th.  cheeky

Hey, remember that time Bush was President and we passed the, ROFL!, "Consumer Protection Act of 2005" and we made Credit Card debt non-dischargable in Bankruptcy?  We did it for Student Loans too because we (the Banksters) knew that we had lent you WAY too much money and we wanted to make sure we got it back.  

Sure, it was sold to you by the Bush administration as a way to stop the "Welfare Cheats," but now it makes sure YOU pay YOUR mounting bills and your kids pay their student loans, FOREVER.  After all, if you don't pay your bills then I make less money on the money I lent you and I don't like making less money – you wouldn't want me to suffer, would you?  That's why Bankruptcy "protections" were bad and had to be eliminated.  Thanks Bush!  

What I find really amazing is the way people are ready to vote for it all again.  I guess there were no lessons learned the last time Bush and Company screwed you over (kind of like the time his father screwed you over with the S&L Crisis) so let's vote GOP again so we can pass some more laws that keep you under our thumb for another generation or two.  Remember – it's not technically slavery if we pay you – the fact that you come out of school in debt and spend your life in debt and HAVE to work until you die is all just good Capitalism!  

You don't mind going another $57Tn into debt for us do you?  Just go out there and have another 600M babies we can sell stuff to and everything will be OK.  In fact, we'll pass some laws to make sure you keep having those babies because LORD KNOWS we need more consumers, right?  If you want to know the whole game plan, here's a fantastic report by Paul Mylchreest of ADM on how the Central Banksters have done nothing but buy a bit of time before the next major crisis:

As noted by ADM, there have been signs that time horizons were shortening for the past few months, notably in the Financial Engineering on the part of publically traded companies who have been borrowing at record levels to buy back their own stocks and paying out dividends while cutting back on long-term capital spending which, historically, is what we do need to stimulate to truly grow our way out of a Recession.  

Evidence of this was all too apparent in China this morning (yes, we are short FXI) as their GDP made a 6-year low – and even that (7%) was probably faked to hit the Government's target.  In fact, Q/Q GDP Growth was just 1.3% vs 1.4% expected and 4x 1.3% does not get you to 7%.  

As you can see from this chart, Fixed Asset Investments in China are falling off the cliff that is at the bottom of the previous cliff they already fell off and what do you think happens when 1.2M children born between 2008 and 2024 begin to enter the workforce only to find no companies have invested in anything for them to do?  

Well, it's good news for the top 1% (what isn't) as flooding the labor markets with new workers when we aren't expanding the places where they might work of buying equipment for them to work on means more workers competing for fewer jobs and down go the labor costs once again.  Isn't Capitalism wonderful?  

Don't worry – it's not time to kill the poor, yet – we're still waiting on more data.  The ECB is having a press conference this morning and, for the moment, they think more QE (more Government borrowing to boost the economy) is appropriate BUT, since there is no concrete expansion of the current program, the markets have pulled back off their highs.  

We're still in "wait and see" mode on earnings, mainly in cash (see yesterday's Live Webinar Replay for a review of our positions) and watching how the early earnings reports play out.  Before INTC's earnings, in yesterday's Live Member Chat Room, I did put up this trade idea:

With INTC, as we have our LTP and STP, since we would like to own INTC, we can sell 5 of the 2017 $28 puts for $2.80 and that's free money as we REALLY want to own INTC for $28.  Meanwhile, since we just got $1,400 in the LTP, we can risk $2,800 in the STP and the July $30/33 bull call spread is just $1.55, so we can buy 10 of those as a bullish bet and see how it goes.

 If INTC goes up, we have a double win, if INTC goes down, we'll sell 5 or 10 of the 2017 $25 puts in the LTP and roll the short $28s lower and all we will have done is transfer some cash from the STP to the LTP.

That should go well this morning as INTC is up 3% pre-market at $32.50 and we're right on track for a potential $2,850 gain on our net $150 cash outlay (1,900%) if INTC is at our $33 target into July.  Not bad for a day's work for the top 1%, right?  

 


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  1. Phil – You had some interesting comments about the estate tax yesterday and how wealth will accumulate in few hands without it. I recall that in the past you had used the Monopoly example and I use it often with my friends. If you were to play Monopoly with your family and at the end of the game you kept all the money you made and started the next game with that amount of money, how much fun would the games be? After a couple of games, someone would have 99% of the money and the others would be left to pay rent everywhere and one trip to the hospital would send them to bankruptcy. Only a Chance card could save them… I never realized how realistic that game could be!


  2. Oil Lines

    R3 – 55.95
    R2 – 54.87
    R1 – 54.22
    PP – 53.14
    S1 – 52.49
    S2 – 51.41
    S3 – 50.76


  3. ALU went flying yesterday with that NOK rumor but enthusiasm seems to be down today! I recall when we had ALU in the portfolios for $1… The good old days when value was cheap!


  4. Good Morning everyone!

    The webinar recording actually worked for a change! The replay is available on our YouTube channel here:

    http://youtu.be/LI6v3gFGU14

     

    And downloadable direct from webex here: http://bit.ly/041415Replay


  5. Good morning!  

    ECB off to a good start this morning:

    The European Central Bank had to very briefly adjourn the start of its regular monthly press conference after a protester attacked its president Mario Draghi.

    A protester from the Blockupy movement jumped up from the front row and on to his desk shouting: "End the ECB dictatorship."

    She covered Mr Draghi in confetti before being escorted out by Mr Draghi's bodyguards. He was unharmed.


  6. PFE

    ~~Pfizer Breast-Cancer Study Meets Primary Endpoint.


  7. Glitterbomb! 

     

    Good Morning.


  8. Phil, why do you say that CLK is too risky to trade ?  Wouldn't the fact that near term contracts need to be rolled out put more pressure on CLK vis-a-vis CLM ?


  9. STJ Estate tax 'reform' is total scam.  Net private 'wealth' is 5 x GNP. (US $15 Trill x 5 = $75 Trill).  Figure a generation is 25 years.  Then wealth equal to 20% of GNP changes hands each year:  (1/25 x 5 = 1/5 or 20%).  In US that is about $3 Trillion.  But estate tax receipts are only $30 Billion (1%).

    I'm not saying take it all, since what did all those Juniors ever do. (That's for Phil to say). But take something.

    The "social security crisis" is similar.  Reagan's cap (only first $125k of income pays social security tax) has robbed social security of billions.  And now they want to cut benefits, raise age.  Republicans do the same thing over and over – cut taxes, wait for things to fall apart, declare a 'crisis'.


  10. Confetti now constitutes an "attack"…


  11. We are on the same page Rexx…


  12. Albo I think what Phil is saying is that if it flies up and you need to wait out the drop, you may end up having to take delivery of the physical oil or get out before you are ready. I for one have no room in my garage foe 1000 barrels of oil.

    Estate tax- I love when the Republicans call it the "Death Tax" so it will sound scary to people who will never ever have to worry about it, but it sounds like they will have to pay a tax to die!


  13. Thanks, Craig.  I get that point.  What about the roll putting pressure on the near month ? 


  14. They unloaded a lot yesterday and have probably done the same this morning without a huge drop, so the pressure seems to be much less than anticipated. I still think we may see a drop with the inventory report as that could be worse than expected, but if it is even a smidge better, they will run it up quickly.


  15. Love those burritos ! ! !

    ~Chipotle Mexican Grill Inc. (NYSE: CMG) was started as Outperform with a $775 target price (versus a $667.85 close) at Cowen.


  16. I am worried about the API report of a fairly heavy draw in gasoline which if it is also in the EIA report could be a driver to send oil up. Having said that, I do think it will disappoint and head down again at 10:30, but that is just a gamblers gut feeling, not based on anything substantial.


  17. CMG- I just don't get this. The food is fairly mediocre and not really cheap. But I am not a fan of Mexican food so I am probably biased. We have one near us and it seems to be fairly busy, but always has empty tables and short lines, so we must be too white bread in this area.


  18. ADRO biotech going public…and has a $1B market cap and $500M in cash.  That is a lot of beans for a Phase 1/2 company…..


  19. Phil/NFLX

    Aww, Phil!


  20. I can't get enough of this:

    Embedded image permalink

    Estate Taxes/StJ – It's such an insidious way to take over the World.  The reason we got rid of kings and queens was exactly that accumulation of family wealth that impoverished the kingdom so one family could live a lavish lifestyle.  Of course there are toadies and hangers on that manage to do well by helping the top families keep the masses in line – not really too different than the system we've got today…

    ALU/StJ – Not that long ago.  We had it in the Income Portfolio last year.  It was a table-banger from Vegas in 2012 at about $1.

    Submitted on 2013/06/17 at 7:41 am

    ALU/RJ – Long time coming on them.  Still a great buy/write with the stock at $1.90 and the 2015 $2 puts and calls at $1.30 for net .60/1.30.  We should add back 3,000 of those in the Income Portfolio.

    Oil/Albo – /CLK5 is expiring next week but TOS says only one day to trade for some reason so I sure as hell don't want to be caught up in them.  Also, contrary to logic, the "selling" of /CLK5 to buy /CLM5 as a roll doesn't have the affect you'd think because NYMEX allows you to roll your contract by simply paying the net spread at any given time – you don't have to find a real buyer or seller – they just re-date your contract.  Why?  Because the whole thing is a farce and the farce wouldn't work (and NYMEX wouldn't get massive fees) if they had to ACTUALLY find real buyers and sellers for the 6Bn barrels worth of contracts they churn each month (on the 20M barrels that actually get delivered).  

    Estate Tax/Rex – I think half over $100M is fair.  Of course I also favor a wealth cap for individuals at $1Bn in the first place.  As StJ notes, once you let someone get too much of the money – the game is no longer winnable by anyone else.  The fact that there are about 1,650 people with over $1Bn fools people into thinking it's not "one" person with all the money but it is one person for each 4.2M other people – that's a lot more unfair than one banker in Monopoly and 4 or 5 regular players.  

    The problem is that we see, at most 1,000 people in an average day and really only about 100 (assuming we're out and about in a small town) who are more than part of the scenery.  That means when we hear there are 1,650 Billionaires in the World, that registers as "a lot" and gives us the impression that there are many opportunities to become wealthy.  The reality is, most of that wealth is already inherited and if we change the laws to pass that money along without tax, then much more of it will be inherited and there will be less chances for new people to break into the club.

    Less chances to join 1,650 Billionaires means less chances to be one of the World's 12M Millionaires (1 in 583) and we have less income mobility and more wealth disparity – which is exactly what is happening already.  

    Confetti/Mkuc – Thank goodness that's all it was.  

    CMG/Albo – $4.1Bn in sales, $445M in profit last year and their Market Cap is $48.5Bn.  Sounds like a p/e of 100 to me but projections are earnings bump to $17.24 per share this year so "just" a p/e of $39.73 if that comes true.  Hey, it's still a huge bargain compared to TSLA, AMZN, NFLX…

    CMG/Craigs – I flat out don't like them.  We have good Mexican in NY/NJ and that is certainly not it.  

    NFLX/Maya – ???


  21. Phil

    Just trying to have a little excitement fun and messing around with 0.0 something % of my money to 'gamble a little'.

    Yes, I know…but it would feel good to make a quick $3500. And if the betting money was paid for, all the better….thus the question

    However, I understand..you have to run a serious site…so, thanks for the alternative.

    I will just wait for earnings and THEN bet


  22. Thanks for the explanation Phil.


  23. Phil//TF

    Where are you now with your TF shorts? 


  24. FXI/PHIL May 48 puts at .61 now are you still willing to double down here?


  25. What I was hoping for a was a clever idea to just make $1300 by July 24 to pay for my gambling fun…


  26. PHIL

    FYI.  The July TZA $9 calls are at $1.10. 


  27. FXI….better deal is to roll up and then DD to the May $49s.


  28. Oil / Phil – The reason is that options on /CLK5 expire tomorrow from what I can tell. There is always a delay between option expiration and contract expiration it seems. If I recall correctly, TOS switches to a new front month when the options expire.


  29. Oil

    You are correct ST j


  30. Oil with a small 1.3Mb build.  Gasoline down 2.1Mb and Distillates up 2Mb so net build not super-bullish but oil flying up to $56.24 on /CLM5 and just under $55 on /CLK5 and, as I said yesterday, they are making their goal of closing the gap (now $1.25).  

    • EIA Petroleum Inventories:
    • Crude +1.3M barrels vs. +4.1M consensus, +10.9M last week.
    • Gasoline -2.1M barrels vs. -0.02M consensus, +0.8M last week.
    • Distillates +2M barrels vs. +0.9M consensus, -0.3M last week.
    • Futures +2.72% to $54.74.

  31. oil going to 60?


  32. CMG – The short lines are usually due to the speed to make the food.  They have it so dumbed down that they roll through a long line of customers in a few minutes (at least that's what I've seen at the several locations in my area).  Drawbacks from my perspective is that the food is always luke warm.  Always. They should install microwaves at the soda station. 

    That had nothing to do with them as an investments, just my opinion…


  33. Phil what is your call on oil from here? 


  34. Phil, The only way to get this small a build in inventory in oil is if we are IMPORTING less oil than before and using our internally drilled oil for our consumption…..Ofcourse, I could be totally off base with all this manipulation?


  35. RUT BOUNCING OFF YTD HIGH.  Do we get a pull back?


  36. It's a Magic Market™ !


  37. Closed my VXX position for a 28% gain for the year – not bad but not great. It's a little ATM machine. I hope they keep that ETF forever. 

    We are looking toppy again and I would rather not get greedy! I am sure we'll get a good spike soon to re-enter with the 2017 options this time which will give me more time to be right…. again!


  38. stjean:

    I like that trade.  Please keep us informed when you do it again.


  39. Im tempted to short CL at $55 as that seems to have been strong resistance in the previous few months, but I think im gonna hold off, was burned shorting earlier today. 


  40. STJ – Well done.  28% isn't anything to sneeze at.


  41. Gambling/Maya – Well, as long as you know it's gambling, that's fine but it's still a stupid bet because you are the sucker paying all the premium.  Does it feel just as good to lose a quick $3,500 because that spread will be worth zero if NFLX doesn't open over $475?  

    You're welcome, Albo.  

    Oil companies holding up the markets again.  RIG up nicely again.  

    /TF/Jeff – I've got two short and won about $1,000 but you just reminded me to DD (1,270) so thanks.  

    FXI/Eddie – Doesn't make much sense for them to be green today, does it?  I'm in doubt so let's add 20 more (1/2) FXI May $48 puts to the STP.  That will bring our average on 60 contracts down to 0.80.

    $1,300/Maya – Well my July trade is reasonable, but only if you REALLY want to own NLFX if it turns out they don't live up to all of their 154 p/e.  As I said – I sure don't.  NFLX is just like TWX was back in the late 90s and early 00's – it was the new way to watch TV and everyone was subscribing and they were going to make money forever.  Now they are about 1/3 of where they were and that is after being down 90% at one point.  I can see the Future for NFLX and it's a p/e of 25 if they are lucky at about $100-150 but when, I have no idea.  Reality exists – it's just hard to find sometimes.  Meanwhile, I'd rather not invest in a pipe dream. 

    Lots and lots and lots of people traded TWX between $150-250 for a couple of years.  Some of them were really smart guys and there were so many reasons to believe that a $250 investment would double over time.  I used to tell people that Cable TV would become a commodity as would web services but that seemed crazy because they had a "moat" and were first to market, etc.  Same stories all the time, only the players change.  As Shakespeare noted, there are only 7 basic plots in literature and I think that goes for market stories as well – you just need to learn to recognize them.  

    TZA/DC – That sucks but nothing to be done about it other than wish we had lightened up when we had a chance.  Certainly we're not going to DD on 150 calls but we may decide to roll them if the rally persists. 

    FXI/Pharm – That's why I was torn.  I think if I'm going to roll, I'd sell the $47.50s (0.50) and go to the June $50s ($1.95) for net 0.85.

    Oil/StJ – Thanks, I didn't think they expired this far ahead of the NYMEX.  Will be chaos if people get caught with them tomorrow.  

    $60/Rustle – Wasn't that our target?  

    Oil/Craigs – They still have the rollover overhang but also they still have a week so we'll just have to see if today's action let them roll more than 30Mb.  I'm still short at net $55.22 (painfully) and waiting to see where things settle out before adding any more.  

    Importing/Jasu – We'll have to see when the full 1pm report comes out – the summary doesn't tell us much.  We often see wild swings into contract rollovers.  Sometimes up and down 5% on consecutive days.  Today's move is just 2.72% at $56.36.  Brent is only up 2.2% and mostly dragged up by us so I think we'll see a 0.50 pullback by the day's end.  

    LOL Scott, we will defend your trademark.  

    VXX/StJ – Good job.  Back to $21.75 (VIX 13.12) is almost time to get bullish again.  I wish there was something to trade with no premium on those.  

    /CL/CRS – I'd really switch to /CLM5, you may be forced to own /CLK5 when they close the contracts.  


  42. I'm going to try a very wide NFLX strangle for earnings.  Selling the June 350/570 strangle for $9.99.  Just one contract. We'll see if it is wide enough!!


  43. Phil/UCO,

    I have 5 July UCO 5 Call @ 1.95 and 5 July UCO 7 Calls @ 2.25. I was thinking of selling 10 July 9 Calls to lock in some profit. Or get rid of 7 Calls and sell 5 July 9 Calls. or maybe sell July 10 Calls?

    I want to take some profit off but stay in this as I believe there is potential for Oil to go higher during the summer driving. It is so important to just not stare at your profits (which you get once on a while) but to realise it and also improve your position.

    thanks as always.

    Regards


  44. Short 1 CLM at 56.88.  Close stop.


  45. Cat Jun back ratio 2/4 82.5/87.7 for cost of .90 and sell 2x Jun 80 put for 1.70


  46. CLM – Out for now.  That was quick.


  47. they are squeezing oil up big today, I would think they would be dumping a ton of contracts into this, be stupid not too.  Wondering where it closes.


  48. From the EIA: "U.S. crude oil imports averaged over 7.1 million barrels per day last week, down by 1.1 million barrels per day from the previous week."  That's 7.7Mb taken off the market by slowing imports – nothing to do with actual supply and demand – pure manipulation.  1.3Mb also went to the SPR and commercial storage is up to 483.7Mb.  Also important: "Total commercial petroleum inventories increased by 7.2 million barrels last week."

    Doesn't matter though, /CLM5 just hit $57 and /CLK5 $55.81 (still closing the gap, which is all that matters).  

    UCO/Pat – The $5s are $4 and the $7s are $2.35 so I'd cash the $5s and do the spread on the rest as you can sell the $9s for $1.30 so it's locking a profit off the table with a bit more upside.  100% is plenty on 1/2 your trade, isn't it?  

    CAT/Yodi – Good call.  I meant to add those to the LTP and forgot.  

    Too late now, gotta hope they go back on sale.  

    Quick stop/Albo – Very wise, kind of a short squeeze now – gotta let it burn out.  

    Dumping/Rustle – Who says they are not dumping?  Plenty of fresh bag-holders pouring in for now.  


  49. MCP – Up 75 % today.  Not in it, are you Scottmi ?


  50. Albo

    All from a supply deal they made with Siemens.

    http://money.cnn.com/news/newsfeeds/articles/globenewswire/10128853.htm


  51. Thanks, Dclark, still looks dicey to me.


  52. Phil – nice call on INTC. Let’s hope for the USO May 18 puts to work out as well and a chance to reload on oil after a pull back.


  53. JPM Butterfly Phil.

    Would you consider rolling to the $62.5 call and $62.5 Put now that JPM has gone back to the highs or would you stick at the $60 Call in anticipation of a pullback? Thanks.


  54. Phil, I know you like TF short at 1270. Now that it has broken above what is your game plan?


  55. MCP/Albo – That was one we discussed way back in Dec:

    Submitted on 2014/12/09 at 12:37 pm

    MCP/Scott – I keep telling people rare earths are not rare, they are just a pain in the ass to get.  Essentially you own them at net $2 so play it like that.  You can quit and take a $1.17 loss or you can DD at 0.84 (avg goes to $1.42) and sell the 2017 $1 calls for 0.45 and then your net is down to 0.97 and you hope to get even (though of course you can roll again as time goes on).  If you picked up 0.22 more for the 2016 $2.50 puts, that's good and you can now spend it to get to the 2017 $2 puts ($1.60) and your net goes to $1.50 on 1x and then adding 1x more (buying the stock) at 0.84 gives you 2x at avg $1.17 and you can sell just 1x of the short $1 calls for 0.45 and still drop your net to 0.97 overall.  If you don't want to do that – then you don't REALLY want to be in the stock, so why not just take the $1.17 loss and walk away (or you could take that loss and sell the 2017 $1 puts for 0.75, which is an interesting play on it's own).  

    Hey, that is a fun IRA play – selling the MCP 2017 $1 puts for 0.75.  You can't lose more than 0.25 and that's all the net margin they can get you for and you make 3x (0.75) if they manage not to go BK.  

    Of course, the reason the puts are 0.75 is because the odds of them surviving are just 1 in 4 at this point…

    Good to see how these things play out after the fact.

    Wow, oil finally stopped going up.  Now we'll see where it settles.  I need a retrace to $56 on /CLM5 or I'll have to keep holding.  

    INTC/Pfhel – Thanks but, as I noted in chat early this morning – they didn't deserve it.  Not sure what USO May $18 puts are though, did you mean the short April $18 calls in the STP?  Those are now $1.58 and we have the May $15s, which are now $4.65 with USO at $19.57 so no premium left there.  The May $18.50s are $1.55, so we can move to a vertical but no particular hurry.  

    JPM/Butterfly DM – Gotta grin and bear is for now.  We'll see more bank earnings soon and we sold the $60 puts and calls for $3.50 so we're only losing whatever over $63.50 – not a catastrophe and it does look like we're at the top of the channel.  

    /TF/Traded – I don't have a plan yet, the RUT is up 0.7% with the other indexes up more like 0.3% so we'll have to see what sticks.   The oil rally is throwing a lot of things off – even BTU is up.


  56. Dr. Yang/ Albo, Phil, STJ

    The April 16 deadline is for part of the money she needs.  The amount she's received so far covers her April 16 expenses, but she needs more within 30 days and the remainder within 60.

    The gist of her case is that she treats everybody and the patient that is causing her all these troubles (for whom she still wishes the best) was a drug addict who ended up doing something really bad after being treated by Dr. Yang's NP.  The treatment is STILL recommended by the army but despite this treatment taking place years earlier (2010), she is being held to new treatment requirements which were implemented in 2013.  The outcome would be funny in how ridiculous it is if it weren't so tragic.


  57. And thank you guys for helping!!!


  58. Dr Yang/JPH – Glad to hear it's still worth pursuing.  I would suggest removing that deadline date from the post so people don't get confused and think their donation would be pointless.  

    Oops,, turns out oil was just pausing at $57, not even a weak retracement and now 4.2% at $57.15 ($55.80 on /CLK5).  


  59. MCP/albo – of course I am! It's a clobbered resource stock with no future… :mad:


  60. Oil moves really not that complicated:


  61. Phil – took some May 18 puts for 0.50 discussed in the webinar.  Any suggestions on how to improve the position with this run up? Or should I just pull the plug. 


  62. INTC/Phil – ok, before earnings you had conviction the stock is worth more. Today we learn they really just faked it. So are you staying with original plan? 


  63. Time for a breather.



  64. PHIL

     "Also, contrary to logic, the "selling" of /CLK5 to buy /CLM5 as a roll doesn't have the affect you'd think because NYMEX allows you to roll your contract by simply paying the net spread at any given time – you don't have to find a real buyer or seller – they just re-date your contract."

    Phil, as you know I'm very much a novice when it comes to trading futures.  I'm puzzling over the statement that you made that when it comes near expiration of one month, these contracts when rolled don't aren't physically traded, but merely move to the next month via what amounts to a book entry.  Am I understanding you correctly ?   Thanks.  


  65. All the shorts are being squeezed today. That knot around the neck getting pulled real tight.


  66. USO/Pfehl – Oh I see, that was to short oil off that spike (the one we're $2 above now)?  Well, they hurt a lot less than the futures do, now 0.35 from 0.50 yesterday is down 30%.  As I said before, I'm still in the short /CLM5s but it doesn't make sense to DD the May contracts to net 0.425, does it?  

    INTC/Scott – Reality doesn't matter much in this market so I think we leave it on and see as long as the overall markets are staying happy.  

    CCJ/DC – Interesting after that bad Japan news.

    Book entry/Albo – Yep, that's how it goes.  

    /CLK5 now $55.93, up 4.95% for the day.  /CLM5 at $57.18, up $4.21% for the day.  Now the Dollar is helping with a dive back to 98.50 and that's boosting everything. 


  67. INTC

    Let's not forget that even though intel isn't growing, it's still an absolutely huge, vital corporation that is a money making machine with a healthy dividend!


  68. Zoom zoom.


  69. Phil if rolling oil contracts is no more than a book entry why would the contract overhang you talk every month, matter in the least? If it is so easy why would it pressure prices down which it clearly hasn't done this month.


  70. INTC / Phil – All this is a consequence of the free money that is available to corporations. They all engage in financial engineering now. Look, how many shares did AAPL repurchase over the last 2 years! And they borrow money to do it when they have billions in the bank because it's cheaper to borrow than to pay taxes to bring the money back. If interest rates were at 10% or more, they might think twice about that. And it's not just AAPL, many companies repurchase shares, distribute dividends, etc.. with the cheap money that is offered to them. So you can boost your EPS by 10% by removing 10% of the shares and at the same time boost the stock price. Everybody is happy until….


  71. Stanley Druckenmiller…on debt being issued, since we are on the topic…..

    The other sign I would say is in corporate behavior, just behavior itself. So, let’s look at the current earnings of corporate America. Last year they earned $1.1 trillion; 1.4 trillion in depreciation. Now, that’s about $2.5 trillion in operating cash flow. They spent 1.7 trillion on business and capital equipment and another 700 billion on dividends. So, virtually all of their operating cash flow has gone to business spending and dividends, which is okay. I’m onboard with that. 

    “But then they increase their debt 600 billion. How did that happen if they didn’t have negative cash flow? Because they went out and bought $567 billion worth of stock back with debt, by issuing debt. So, what’s happening is their book value is staying virtually the same, bu their debt is going like this. From 1987 when Greenspan took over for Volcker, our economy went from 150 percent debt to GDP to 390 percent as we had these easy money policies moving people more and more out the risk curve. Interestingly, in the financial crisis that went down from about 390 to 365. But now because of corporate behavior, government behavior, and everything else, those ratios are starting to go back up again. 

    “Look, if you think we can have zero interest rates forever, maybe it won’t matter, but in my view one of two things is going to happen with all that debt. A, if interest rates go up, they’re screwed and, B, if the economy is as bad as all the bears say it is, which I don’t believe, some industries will get into trouble where they can’t even cover the debt at this level.

    “And just one example might be 18 percent of the high-yield debt issued in the last year is energy. And I don’t mean to offend any Texans in the room, but if you ever met anybody from Texas, those guys know how to gamble, and if you let them stick a hole in the ground with your money, they’re going to do it. So, I don’t exactly know what’s going to happen. I don’t know when it’s going to happen. I just have the same horrific sense I had back in ’04. And by the way, it lasted another two years. So, you don’t need to run out and sell whatever tonight.” 


  72. My point exactly Pharm!


  73. Craigs, that was I WAS WONDERING.


  74. pardon the caps.  mis-key.


  75. STJ – I know.  We have been harping on it for a few years, as has Charles Hughs Smith and Biderman on inflated earnings and buybacks.   Gold popping as well back to 1200.  Time to load up on the longs again.  June 123 Calls…..


  76. Phil  The way this market is behaving we could get a complete reversal of todays market action tomorrow.


  77. Oil doing what we all eventually expected. Nice to see UCO over 9. Very nice indeed


  78. I loaded up on MCP 2017 calls awhile back …. Kind of funny considering the stock price was so low but I guess I'm a sucker for premium. It's either a recovery and profit or total loss play. Days like today are nice to see.


  79. Rolling/Craigs – Because they still have to roll them and some need to be sold rather than pay $1.25 (2.5% of the contract) to roll to another month – that can get pretty expensive if you do it all year.  So some people try to sell but most roll and hope they get their price next month.  On days like this, they are probably pretty optimistic.  

    Engineering/StJ – Right, good short-term but long-term there's no business plan to it.  

    Oil thrashing into the NYMEX close, they are going to peg as high as they can into 2:35.  

    Debt/Pharm – And it's all built on a total illusion that rates will stay low forever.  Of course we can be 400% of GDP in debt vs 150% when borrowing costs dropped from 6% to 2% – it's the same interest payment.  But what happens when rates go up and that X payment goes to 1.5x and 2x?  That's going to send quite a shock through the system. 

    Reversal/Den – Maybe but I doubt it.  The free money train rambles on.  

    Beige Book, by the way – not too interesting.  Here's a good WSJ summary.  

    • A few bits about wage pressures and that's the main reason the Fed would decide to tighten.  
    • 8 of 12 districts growing at moderate pace is exact same as March.  
    • Weather mentioned 71 times as an excuse for any downturn.  
    • Lots of oil patch layoffs (100,000 per article this morning).

  80. I figured out an exit for USO in the $25KP:  First we have to buy 10 July $20s for $1.35 (because we can't have uncovered calls) and then we can sell our 10 April $17 calls ($2.75) and we'll see how the short $19 calls (.77) hold up and roll them if we have to (the May $20s are 0.77).  


  81. In the STP, we'll do a similar move on our 50 USO May $15s (now $4.82) and cash those in favor of the same July $20s ($1.35) and we'll see where the short April $18s end up (now $2.75).  


  82. In the LTP, we have 50 long USO 2017 $18s so let's sell 25 May $19s for $1.30.  

    LTP now up 49% ($745,000), which is fantastic since we have so little invested.  

    STP gave it back though, down to 88.5% at $188,500.  Still $933,500 is up from $913,765 on Monday, so we're not positioned too badly and we'd be doing way better if we had gotten rid of the damned TZAs!  


  83. Business plan / Phil – They do have a business plan. Big payout to shareholders now and when things get tough, beg the government for help and threaten to take down the system. It has worked well so far (and remarkably well since 2007), why change? 


  84. Changing the rules to benefit only 0.2% of the population:

    http://thehill.com/policy/finance/238862-both-parties-fired-up-over-vote-on-estate-tax-repeal

    Under current law, the Joint Committee on Taxation estimates that 5,400 estates will have to deal with the tax over the next several years, out of the well over 2 million deaths that occur annually.

    That’s because individuals with estates valued at less than $5.43 million this year, and married couples with estates worth less than $10.86 million, are exempt. The 2013 “fiscal cliff” deal set the current parameters, which also include a 40 percent rate and linking the exemption parameters to inflation. 

    And there is that little calculation problem – cutting revenues that you counted on for balancing the budget – in this case $270B!

    The White House also noted that the House GOP’s recently passed budget relied on revenues from the estate tax, and that the Republican proposal would also save heirs from capital gains taxes on their relative’s assets.


  85. Phil USO still holding the Jan16 18 call long question is selling May 19 call I feel is a bit close to the firing line USO now 19.65 does not leave you with a lot of premium???


  86. Someone needs to work on paragraph syntax:

    Or maybe it's also John W. Booth birthday!


  87. USO/Yodi – Yes but I don't see $60 being sustained for two months so I'd rather sell more coverage than less.  

    Nice little pullback into the close but oil holding $57  ($57.22) is a powerful 4.28% on the day.  Dollar 98.53 and we'll see how the globe turns tomorrow.  

    LOL StJ – I think they mean what it says…  Lincoln was a Republican the way Roosevelt was a Republican – not really at all – at least not in the modern right wing-nut sense of the word.  


  88. A bit of selling into the close but, overall, another day of bullish progress though the Dollar drop matched the 0.4% index pop for the most part and volume, once again was not there.  


  89. NFLX….Flying high!  P/E going higher and higher and …..


  90. Looks like maya has some fun money tomorrow!  Congrats


  91. MUst be short covering on NFLX-missed earnings est big time. 5 m shares short.


  92. FU NFLX!!!!

     

    ;-)


  93. From Bloomberg, Apr 15, 2015, 4:15:54 PM

     

    Netflix Inc. said its video-streaming service topped 62 million subscribers worldwide in the first quarter, as original shows such as “House of Cards” drew new viewers globally. The shares soared.

    To read the entire article, go to http://bloom.bg/1b3Zmvt

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  94. NFLX – That was the way we thought they could "beat", those very low subscriber expectations.  Sure if they spend a ton of money to boost subs, they can beat on subs.   Profits don't matter, of course, as with AMZN – they'll come one day.  


  95. NFLX up 12%. Average move is 13%. Last move up, they also had a nice follow through. Like I said yesterday, we could on the other side of $600 soon.


  96. From Bloomberg, Apr 15, 2015, 4:02:34 PM

      A block of cells stands at Nagasaki Prison in Isahaya, Nagasaki Prefecture, Japan, on Thursday, March 12, 2015. Photographer: Kiyoshi Ota/Bloomberg *** HOLD FOR STORY BY KANOKO MATSUYAMA ***

    Most prisons spend a lot of time and effort keeping inmates from escaping. In Japan, the greater challenge is convincing convicts to leave.

    To read the entire article, go to http://bloom.bg/1FTB6Jv

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  97. From Bloomberg, Apr 15, 2015, 4:00:03 PM

      An employee counts a stack of multiple denomination Swiss franc bank notes in this arranged photograph inside a currency exchange store in London, U.K., on Friday, Jan. 16, 2015. Banks and currency traders are tallying the fallout after the Swiss National Bank’s unexpected decision to jettison its cap on the franc sent the currency up as much as 41 percent against the euro. Photographer: Chris Ratcliffe/Bloomberg

    About 2 billion adults worldwide are “unbanked,” down from 2.5 billion in 2011, the World Bank says in a new report based on a survey of about 150,000 people in more than 140 countries. Unbanked people are frozen out of the financial system and must deal strictly in cash: no deposits, no checks, no mortgages, no ATMs. The World Bank report—released on April 15, conducted in conjunction with Gallup World Poll, and paid for by the Bill & Melinda Gates Foundation—has some surprises: 

    To read the entire article, go to http://bloom.bg/1b3X9jE

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  98. From Bloomberg, Apr 15, 2015, 4:00:00 PM

    U.S. Treasury Secretary Jacob J. Lew urged Greece and its international creditors to reach an agreement on steps that need to be taken to avoid the nation’s exit from the euro and any resulting crisis.

    To read the entire article, go to http://bloom.bg/1b3XC5B

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  99. From Bloomberg, Apr 15, 2015, 3:29:17 PM

    U.S. monetary authorities ought to consider making the central bank’s big balance sheet a permanent fixture, said former Federal Reserve Chairman Ben Bernanke.

    To read the entire article, go to http://bloom.bg/1FLCh8k

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  100. From Bloomberg, Apr 15, 2015, 3:28:55 PM

    Google co-founders Larry Page, left, and Sergey Brin are seen at their company’s headquarters on Jan. 15, 2004, in Mountain View, Calif. Photographer: Ben Margot/AP

    Google Inc. founders Larry Page and Sergey Brin are struggling to maintain upward momentum this year, as company shares have declined from their 2015 high on March 5. The fall comes as the European Union escalates a four-year-old probe that accuses the company of abusing its search engine dominance.

    To read the entire article, go to http://bloom.bg/1JL3ZWU

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  101. Watch this video at http://bloom.bg/1E2eVAH

    Paulson: China’s Economy Is Running Out of Steam

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  102. From Bloomberg, Apr 15, 2015, 1:21:35 PM

      Clouds pass over the Swiss Alps near Davos, host site of the World Economic Forum (WEF) Annual Meeting 2011, in Davos, Switzerland, on Tuesday, Jan. 25, 2011. The Swiss franc’s ascent leaves ski resorts bracing themselves for the worst season in almost a decade as leaders gather in Davos for the World Economic Forum. Photographer: Andrew Harrer/Bloomberg

    Wealthy Americans are running out of ways to hide their money. The IRS has been relentless in prying open the secret Swiss bank account—dozens of Swiss banks are cooperating with the agency. Just last month, a settlement with the private bank BSI revealed bankers used coded language and nameless credit cards to help Americans avoid taxes.  Credit Suisse and UBS, Switzerland’s largest banks, have already paid fines for similar shenanigans.  

    To read the entire article, go to http://bloom.bg/1OC3ZLB

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  103. From Bloomberg, Apr 15, 2015, 11:44:15 AM

    China’s GDP growth came in on target in the first quarter. Slumping output in March, a slide into deflation and an expanding credit bubble underline the magnitude of the challenge the economy continues to face. We believe the weeks ahead will see the government intensifying efforts to support growth.

    To read the entire article, go to http://bloom.bg/1FKJCVO

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8

     

     


  104. From Bloomberg, Apr 15, 2015, 5:42:42 AM

     

    Russians get their opportunity to shower praise on President Vladimir Putin or to win a promise to solve their problems when he holds his annual televised call-in show.

    To read the entire article, go to http://bloom.bg/1FJuesR

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  105. Wow, some sea change at work here:

    http://talkingpointsmemo.com/livewire/james-webb-tea-partier-obamacare-hillary

    "Hello, YouTube. I'm kinda having a difficult decision," Webb lamented in the 3-minute video. "I don't know which party to vote for. … I don't know whether to go for a Republican or a Democrat — and I'm serious. Because I asked myself, I said, 'Which party has helped me out the most in the last, I don't know, 15 years? Twenty?' And it was the Repub-, err, Democrat Party. The Democrats."

    "I mean if it wasn't for Obama and that Obamacare, I would still be working," Webb continued. "With Obamacare, I got to retire at age 50. Because if it wasn't for Obamacare I would had to work till I was 65 and get on Medicare because health insurance is expensive."


  106. Some very good economic ideas:

    http://talkingpointsmemo.com/cafe/how-we-can-lower-corporate-taxes-for-the-right-reasons

    Of course, it makes too much sense so won't happen… But could be a good political platform.

    That’s why we propose a different kind of tax, one that rewards businesses that comply with broad guidelines in paying workers. Companies that:

    Pay top management on average no more than 50 times the pay of the median worker and that pay the median worker no more than two times the lowest worker.

    Keep workers’ overall pay commensurate with increases in profits.

    Pay workers with the same job title and experience similarly regardless of race or gender.

    Companies that followed the guidelines would pay much lower tax rates than the current rates. Companies that choose to direct their revenues toward CEO salaries and taking disproportionate profits would pay at a higher tax rate than they do at present.

    In effect, less equitable corporations would have higher taxes, more equitable corporations would have much lower ones. Profits would be directed and flow towards the equitable.

    Consider what would happen if non-complying companies paid a higher tax rate, say 45 percent, and complying companies paid a much lower rate, say 15 percent. If Walmart complied and lowered its tax rates to 15 percent, its reduced taxes would open up approximately $5.5 billion in revenues, allowing the world's largest publicly traded employer to raise the bottom pay of its non-management workers up to $13.50 per hour, a raise of 35 percent.

    As more companies complied, Walmart would get many more customers to boost their sales. More productive investments as well as more jobs would be created. Taxpayers would be paying much less for social assistance programs. A virtuous cycle would build and lift the entire economy.


  107. Phil    The reason I'm looking for a reversal is the money I see emptying out of TNA and SPX after every rally. Look at the on balance money charts for last few days. There has been heavy selling each of the last three days at the close.


  108. STJ

    I like that proposal: Here is another take that I wish some CEO's would adopt every few years:

    http://www.nbcnews.com/nightly-news/seattle-business-owner-raises-minimum-pay-70-000-n341546


  109. This guys is really pushing it to the limit… When I owned my one business my salary was less than 3 times the lowest paid employee and probably 2 times that average salary. That seemed fair to me then…


  110. STJ

    I agree with parts but sure as hell disagree with one.

    "Pay workers with the same job title and experience similarly regardless of race or gender."

     I absolutely kicked ass at my job last year and got a raise that was over double the average and a bonus that was 60% higher than average.  The ability to discriminate on wages allows a company to direct more money to those that are outperforming.  Similarly, as I'm expecting a counter-offer for the new job offer I've received, the company wouldn't be able to do so without facing a discrimination suit.

    I support the idea of pay equality but you gotta balance it with pay-for-performance and, while the system is subject to abuse now, it wouldn't be any less so with this change.

    Hasn't pay equality been largely linked to willingness to negotiate much more than actual discrimination?  Note: That statement is from memory and I did NOT look up any studies just now so, correct me if I'm wrong.


  111. ARIA- Pharm I have been riding this with great success since you posted a while back that you thought it was a buyout candidate. I will admit that I simply bought stock rather than options because I was lazy and didn't take time to figure out the right play. I got in at $7 and sold for a nice profit at $8.25 then bought back half when it dropped again to $8 and here it is at almost $9. So, my question is what now? Is this still a takeout candidate? Are they on the verge of something or will they once ahgain plummet back down if the market does? Of course I know you don't have the answers, but would welcome any insight you may be able to offer. Thanks for your help. I also am still holding ONTY so any news about them would be welcome too.


  112. Watching someone on Bloomberg talking about George C. Marshall and I am in awe. This man is perhaps the most unsung hero of our country, always 100% of the time putting the country's needs ahead of his own ambition. He is what we should all strive to be and a model for our leaders to follow. There is not a hint of scandal in his life, and he was revered, not just liked or admired, by his staff and pretty much everyone who ever worked with him. Not many like him around any more.


  113. Pay / JPH – I guess the experience part could be used as a differentiator. Besides, nothing wrong with performance bonuses. That works well. But I think that they more worried about gender discrimination for example. I still don't understand why women get paid less on average than men for the same job…


  114. There is nothing stopping this market – every single dip (so far) has been a buying opportunity. NYSE and Russell went from laggard to leaders.

    I wonder where we would be if oil had not dropped like it did since energy is hurting the averages. 


  115. Marshall / Craig – I agree, definitely one of the most underrated leaders of the 20th century! We sure could use him again today.


  116. Mitchell & Webb: Kill the Poor  https://www.youtube.com/watch?v=owI7DOeO_ygi


  117. Maya / NFLX – there ya go!


  118. Good morning, by the way! 

    /NKD had a nice dip back to 19,800 but already back to 19,900.  Dollar popped up from 98 to 98.61, which is flat to the close.  Shanghai gained 2% but Hang Seng opened down 130, then was up 150 and is now down 22 – lots of fun over there!  

    Asian Stocks Rebound to 2008 High as Material Shares Lead GainsAsian stocks rose, with the regional benchmark rebounding to it highest since May 2008, as materials companies and energy producers led gains. The MSCI Asia Pacific Index added 0.7 percent to 153.70 as of 11:08 a.m. in Tokyo.

    China Just Made It Easier to Bet Against Its Priciest StocksBetting against China’s most expensive stocks just got a whole lot easier. Futures on the small-cap CSI 500 Index started trading on Thursday, giving investors a cheaper way to wager on declines in shares valued at more than twice the level of the benchmark Shanghai Composite Index. The CSI 500 has surged 47 percent this year, versus a 26 percent gain for the Shanghai measure. ?

    Why China's Credit Growth Is So Frightening

    Faltering Growth Forces China to Rely on Traditional Tools to Prod Economy. Economists question whether infrastructure spending and easier credit will be enough.

    China's True Economic Growth Rate: 1.6%

    BMW China Dealers Press Auto Maker for More Financial SupportDistributors call on German auto maker to lower sales targets, provide new price incentives. In a fresh rift between BMW AG and its distributors in China, a group of dealers said it would miss sales targets this year unless it gets better financial terms from the German luxury car maker.

    China's private jet market hits turbulence from graft crackdownGrowth slows as corruption crackdown deters buyers from ordering luxury items.

     

    Global property bubble fears mount as prices and yields spikeFears of a renewed global property bubble are rising as prices and yields hit records last seen before the financial crisis, according to new data. The pricing of real estate around the world had become “increasingly aggressive”, research company MSCI said. This is particularly the case in the US, where investors’ returns from rental income are now lower than before 2008, when a crash in massively overleveraged property triggered an international banking slump.

    Japan's huge debt pile just got scarierJapanese government debt will soar to 400pc of GDP within 30 years unless policymakers implement vital reforms, OECD warns.

    Thursday's economic calendar

    Earnings AM: ADSBLKBXCFCFSFCSFRCGSGWWHOMBKEYPBCTPM

    PPGPVTB,SHWSONTSMTZOOUNHWBS

    Earnings PM:  AMDASBAXPCCKCECYTEGPMATNOWSLB

     

    Oilpocalypse Wow – Stocks Pop, Dollar Drops As Crude Hits 5-Month Highs

    The Four Chartsmen Of The Recession

    Rubin sees ‘realistic possibility’ there are bubbles in U.S. markets. There is the possibility that there are already asset bubbles in U.S. financial markets, said former Treasury Secretary Robert Rubin on Wednesday. “I don’t have a personal view on whether we now have [market] excesses or not. But it certainly is a realistic possibility when you look at the U.S. stock market, which is near all-time highs, when you look at covenant-light and now non-covenant lending, [and] a vast increase in fixed-income [exchange-traded funds],” Rubin said at a seminar on the sidelines of the International Monetary Fund/World Bank spring meetings.

    The Fed’s Faulty 1937 Excuse by Christian Broda and Stanley DruckenmillerCentral bankers aren’t likely to observe financial excesses until it’s too late. Policy makers and financial pundits insist that the risk of the Federal Reserve raising rates too early exceeds that of moving too late. The Fed appears to agree. In recent years, the Fed has repeatedly moved its goal posts, seemingly to avoid raising the federal-funds rate from near zero. But is the prevailing consensus correct if emergency…

    The Fed Never Learns – Another Inventory Dump Is Brewing

    Fed confident in smooth U.S. rate hike despite questions -PotterThe Federal Reserve is confident it can smoothly lift interest rates when the time comes, though it stands ready to make adjustments on the fly given uncertainty about how investors could react, the Fed official responsible for market operations said on Wednesday.

    World faces 'perfect default storm' when Fed hikes rates – Deutsche BankRising US interest rates could trigger a wave of corporate defaults, interrupting more than a decade of calm in global bond markets.

    Oil’s Rally Seen Reversing Amid Biggest U.S. Glut Since 1930s. Oil’s surge to the highest level of the year may be short-lived as the highest supply in 85 years cushions against a drop in production. West Texas Intermediate crude jumped 5.8 percent Wednesday after the Energy Information Administration said inventories rose at the slowest pace since January. Stockpiles have increased for 14 weeks to the highest level since 1930.

    The Collapse Of The Petrodollar: Oil Exporters Are Dumping US Assets At A Record Pace

    Rio bond risk rises with BHP(BHP) as iron glut called dumb alarms S&PForecasts for the steelmaking material are being slashed amid a ramp up in supply. Bond risk for Rio Tinto Group and BHP Billiton rose the most among Australia’s major investment- grade borrowers amid criticism of their decision to ship more iron ore into a declining global market. Credit-default swaps on Rio Tinto have risen 14 basis points over the past year to 101, while BHP contracts have climbed 10 basis points to 73, the two worst performers in the 25-member iTraxx Australia index, based on CMA data. The miners, along with junk-rated Australian peer Fortescue Metals Group Ltd., were among eight global producers that Standard & Poor’s said this week may have their debt ratings cut.

    Judge Rules GM Can Keep Its Bankruptcy ShieldRuling could allow the auto maker to block billions of dollars in legal claims over defective ignition switches.

    Panera(PNRA) shares rally 11% after the company announces a huge stock buyback plan

    Etsy prices its IPO at $16 per share, making it worth $1.78 billion

    Medicare Overpays as Hospital Prices RiseSoaring bills for sickest patients can throw payment formula out of whack.

    • SanDisk (NASDAQ:SNDK) has guided on its Q1 CC (webcast) for Q2 revenue of $1.15B-$1.225B and 2015 revenue of $5.4B-$5.7B, below consensus estimates of $1.45B and $6.15B and year-ago levels of $1.63B and $6.63B. Some of the weakness was priced in following SanDisk's March 26 Q1 warning.
    • The NAND flash giant also forecasts gross margin (non-GAAP) will drop to 37%-40% in Q2 from Q1's 43%, which itself is down from Q4's 45% and Q1 2014's 51%. Soft prices and a mix shift away from enterprise sales are taking a toll. GM is expected to rise to 40%-43% in 2H15.
    • SanDisk plans to cut 5% of its non-factory headcount. Its enterprise product teams are being merged, as are its mobile and client SSD teams. In addition, client SSD product chief Kevin Conley has been promoted to CTO.
    • Issues contributing to the Q1/Q2 weakness: 1) Qualification delays for an embedded/client SSD design. 2) The phasing out of a client SSD program for a major client (Apple?). 3) Weak PCIe flash (read: Fusion-io) demand thanks to a demand shift towards enterprise SATA SSDs, where SanDisk's share is lower. 4) A shift within enterprise SATA towards 2TB drives; SanDisk will have one out later this year.
    • Shares have dropped to $66.89 AH. The 52-week low is $63.00
    • Q1 resultsPR

    SanDisk(SNDK) forecasts first full-year revenue decline in three years. SanDisk Corp forecast a steeper-than-expected fall in full-year revenue and said it plans to cut jobs to reduce costs, as the data storage products maker struggles to meet demand for its flash-based memory products. The forecast of a revenue decline, which will be its first after two years, came after the company reported its first fall in quarterly revenue, also in two years. Shares of SanDisk, which makes products for cloud computing and datacenters as well as for smartphones and other mobile devices, fell 6 percent in extended trading.

     

    • "The Time to Own Is Now," reads the headline of a note from Morgan Stanley's Ravi Shanker reiterating an Overweight rating and $68 target on Mobileye (NYSE:MBLY). "MBLY has been our top supplier pick in [North America] since the IPO thanks to its best-in-any-class growth story which includes 50%+ revenue CAGR through 2020, 75%+ gross margins, 50%+ revenue to FCF conversion, no gross debt, high barriers to entry and high visibility."
    • He sees three 2015 catalysts: 1) Growing confidence in strong driver-assistance (ADAS) penetration, following announcements by Nissan/Toyota to make ADAS standard in some markets and to offer it as a low-cost option on other models (other OEMs are expected to follow suit). 2) A decision by Volkswagen regarding its ADAS strategy; the automaker is expected to "adopt an Audi-like approach using mono vision," which would benefit Mobileye long-term. 3) Rising 2015 estimates, aided by new programs, the shekel's decline, and continued margin expansion.
    • Meanwhile, Deutsche's Rod Lache is out with a note declaring sales of active safety technologies such as forward crash avoidance/mitigation (FCAM) systems will be better than previously expected, thanks to both strong growth and high ASPs.
    • Lache sees both U.S. efforts to promote active safety and automaker competition helping penetration rise to 40%+ in 2020 and nearly 70% in 2025 vs. less than 7% in 2014. He forecasts Mobileye (target hiked by $2 to $55) will respectively post 2018 and 2020 EPS of $1.47 and $2.68.
    • Goldman upgraded Mobileye last month. Short interest was a steep 24.4M as of March 31.

     

    • On a Q1 earnings interview, Netflix (NASDAQ:NFLX) execs pointed to international growth to justify the market's (priced-in) expectations of 60M-90M subscribers.
    • "For most global Internet firms, the U.S. is 20%-35% of usage and revenue; we're not anywhere close to that yet but we're continuing to invest in international," CEO Reed Hastings said. U.S. membership of 41.4M makes up two-thirds of Netflix's current total subscribers.
    • On margin outperformance (U.S. contribution margin was 31.7% vs. a forecast 30.1%) : Aside from shifting marketing dollars to international, part of it is how Netflix allocates content costs by geography. "By going faster internationally … it's gonna provide some relief to those global originals and global projects we do have that are allocated to the U.S.," CFO David Wells says. "Our target remains the same: 40% in 2020."
    • On leverage of original content: "What we're seeing is that dollars invested in our original programming are more efficient in that for every dollar spent, we get more bang for the buck in terms of hours viewed. and hours viewed leads to higher retention, more word of mouth, and more brand halo," says Chief Content Officer Ted Sarandos.
    • On the question of sports, Netflix still isn't interested: "I don't know that on-demand sports is markedly better than live sports," explains Sarandos. "The Internet TV proposition is more powerful for consumers" even if someone else, perhaps a combination of leagues, picks up the live sports part of Internet distribution, Hastings says.
    • NFLX now +11.5% after hours.
    • Previously: Netflix jumps 12.7% on strong subscription growth (Apr. 15 2015)
    • Previously: Netflix beats by $0.08, revenue in-line (Apr. 15 2015)

    NFLX(NFLX) Goes Full Amazon: Burns Record Amount Of Cash But Stock Surges On Jump In International Subscribers -  The Amazon model of burning countless amounts of cash in hopes of one day reaching profitability has fully arrived at Netflix, which moments ago reported earnings of $0.38 missing consensus expectations of $0.63 wildly on soaring expenses, and yet the stock is soaring.  Of course, in keeping with the New Paranormal tradition, NFLX did decide to double its bottom line EPS using pro forma addbacks, and for some incomprehensible reason added back FX impact to its bottom line


  119. Here comes the Dollar, looking to test 99 again as the Euro drops back to 1.064 from 1.075 yesterday.

    Webb/StJ – I wonder how many Republicans will have an epiphany next year?  

    According to a new poll taken by the Commonwealth Fund, people enrolled in ObamaCare are satisfied. And yes, that includes Republicans:

    Overall, 73 percent of people who bought health plans and 87 percent of those who signed up for Medicaid said they were somewhat or very satisfied with their new health insurance. Seventy-four percent of newly insured Republicans liked their plans. Even 77 percent of people who had insurance before — including members of the much-publicized group whose plans got canceled last year — were happy with their new coverage. [Commonwealth Fund]

    So for all the Hitler analogies and claims that ObamaCare causes cancer, the people enrolled in the program — even Republicans — are mostly happy about it.

    LOL on Corporate Guidlines – you'd need 75% of the House and Senate to be Democrats with a Democratic President and you'd still have to kill all the lobbyists first.  Also, as JPH notes, there are certainly flaws with going too equal.  

    Reversal/Den – From the news above, I don't see anything that justifies bullishness.  To me, the market is charging headlong into the brick wall of rate hikes – it's just a question of when.  

    Speaking of rates, -0.25% on 2-year notes in Europe is forcing more money into the markets because, if you want to stay in cash, they are essentially going to take 0.5% of it as a penalty over two years.  Investors have to weigh that certainty vs the risk of being in a market that has gained an average of 20% a year for the last 5 years.  

    It's possible that "in in the open and out at the close" is how reluctant investors are dealing with the market. 

    Marshall/Craigs – Who, the Marshall Plan Marshall?  He's long dead.  Great man though.

    I was very careful to send Mr. Roosevelt every few days a statement of our casualties. I tried to keep before him all the time the casualty results because you get hardened to these things and you have to be very careful to keep them always in the forefront of your mind. George C. Marshall

    Compare that to the crap we have now:

    If you look at casualties, you find countries that had much higher loss rates per capita than the US. Denmark comes to mind, the United Kingdom, they have suffered heavy losses at various points, the Germans as well. - David Petraeus

    Big Chart – There's a lyric for this chart:

    Ride the snake, ride the snake
    To the lake, the ancient lake, baby
    The snake is long, 7 miles
    Ride the snake; he's old and his skin is cold – Morrison


  120. That's interesting as Putin is speaking now about how Russian wages have outpaced productivity and "that needs to change" – sounds like a Capitalist to me!  


  121. President 's annual phone-in, taking public questions – watch


  122. Phil that was my point about Marshall. Long dead and by most long forgotten, but he is a man we should be celebrating for the type pf honesty and candor you pointed out. he wasn't afraid to tell the truth to his bosses or the public no matter the consequences and he never sought the limelight or publicity as his peers Eisenhower, Patton, and even Bradley did because he was not looking for praise, just the satisfaction of doing the right thing all the time! We should be celebrating him and the type of person he was. Instead we put guys like Petraeus in charge so they can have affairs and write books later.


  123. Oh, You mean folks like Bill and Hillary? 


  124. pstas- I will admit Bill does not suit me as a human being, but you can't argue with his results as a leader. Hillary I don't comment on, because I don' believe much of what is written about her and I do think she is a dedicated public servant, but she does fail the test of limelight seeking. Again, hard to know what is true and what is not, but she too could be a great leader. Certainly better than any alternatives and much more dedicated to helping people instead of a few billionaires.


  125. more importantly bad numbers for jobs and housing but the markets barely move. I guess this is good news because it may delay interest rate hikes? 

    /CL- hung in with 10 contracts short overnight and jackpot! Added to my SI longs and NKD shorts and a good start to my day!


  126. I should mention that I barely slept while holding 10 contracts last night, so pardon any incoherence today. The last year has told me that a 5% up day is almost always followed by a downward move before heading up or down again, so my real worry was that Yemen would explode or Russia would do something crazy, etc.