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phil
February 12th, 2016 at 9:36 am

YANG/Enfil – Ouch!  That's a dangerous bet but I suppose you know that now.  Are you sure they expire today?  TOS says 7 days.  Nonetheless, the $148s are $26 in the money and the March $175s are $26 and I think, as long as we don't turn around and collapse today (and Nikkei holds 15,100), that it's enough cushion to risk the weekend.  



Despite the above article, the reason I'm bullish on Japan (and not doom and gloomish on China) is because their government(s) have to do SOMETHING to boost the economy.  Now, that something will probably not be enough and, ultimately, I'll probably end up being much more gung-ho short on the Global markets (ours too) than I was last year once we retest the highs on another round of stimulus UNLESS it's infrastructure stimulus – which is what I've been asking for all along.  Either way though, I think we have one more good run in us before it all falls apart.  

Happy Friday!  

Big Chart – Fugly! 

Oil Contracts/Jabob – Looks like they ditched a healthy 66,000 yesterday.  At that pace they'll get it done no problem but they'll need a new OPEC rumor every day and, eventually, it won't work well enough to get buyers to step in.  Still, there's record shorts on the NYMEX (and energy stocks) so pretty easy to squeeze them, my bias is still to bet long off support lines (0.50s).  

Click for Chart	Current Session								Prior Day		Opt's
	Open	High	Low	Last	Time	Set	Chg	Vol	Set	Op Int
Mar'16	27.30	28.14	26.95	27.87	09:04 Feb 12	–	1.66	147652	26.21	258587	Call Put
Apr'16	30.05	30.64	29.78	30.53	09:04 Feb 12	–	1.70	70333	28.83	449501	Call Put
May'16	31.97	32.48	31.71	32.40	09:04 Feb 12	–	1.64	27808	30.76	230648	Call Put
Jun'16	33.35	33.91	33.14	33.75	09:04 Feb 12	–	1.54	17077	32.21	172574	Call Put
Jul'16	34.46	34.95	34.18	34.58	09:04 Feb 12	–	1.30	6202	33.28	79221	Call Put
Aug'16	35.12	35.80	35.07	35.49	09:04 Feb 12	–	1.38	3422	34.11	54097	Call Put

And no, I use this one.  

Thanks Rperi!   Even worse, I just got featured in Forbes and those poor bastards will be shocked if they come here and read this stuff.  

Speaking of oil – on the way to $28!  









No reason for us not to rally on "good" retail sales.  That popped the Dollar (need them to buy stuff) and saved /NKD.  Keep in mind that INCLUDES declining gasoline sales – the economy does fix itself if you are PATIENT!

Retail Sales stay in positive territory

• January Retail Sales:+0.2% M/M vs. +0.2% expected, +0.2% prior (revised).
• Core Retail Sales +0.1% M/M vs. +0.1% expected, +0.1% prior (revised).
• Retail Sales less autos and gas +0.4% vs. +0.3% expected, +0.1% prior.



Oh look, compared to Jan 2014 or 2015 this is AMAZING but the MSM is still on the doom and gloom narrative and is glossing over this number.



Highlights


• Total retail sales increased 0.2% in January (Briefing.com consensus +0.2%) while sales, excluding autos, increased 0.1% (Briefing.com consensus 0.0%).
• The January gains were logged on top of an upwardly revised 0.2% increase (from -0.1%) for total sales in December and a 0.1% increase for sales, excluding autos, which were previously reported to be down 0.1%. – And not a F'ing word in the MSM, conspiracy much?

Key Factors


• As expected, gasoline station sales were a notable drag, declining 3.1% after a 0.5% decline in December.
• The weakness in gasoline stations sales was offset, however, by a 0.6% jump in motor vehicle sales and gains in many other areas like building materials (+0.6%), general merchandise stores (+0.8%), nonstore retailers (+1.6%), and electronics and appliance stores (+0.1%).
• The only other retail areas experiencing sales declines in January were furniture and home furnishing stores (-0.5%), sporting goods, hobby, book, and music stores (-2.1%), department stores (-0.8%), and food services and drinking places (-0.5%). Those declines, it should be noted, followed on the heels of decent-sized sales gains in December.
• Core retail sales, which exclude auto, gasoline station, and building material sales, were up 0.4% in January after being flat in December. This will factor favorably in the goods component for personal consumption expenditures in the first quarter GDP report.

Needless to say, we'll be making some bullish portfolio adjustments!  

Winners and losers from the Retail Sales report

• Retail sales came in stronger than expected in January and were revised higher for the key month of December.
• A few standpoint categories for January included food services (+6% Y/Y), building material/garden equipment stores (+5%), and nonstore retailers (+9% Y/Y).
• A notable laggard in the retail sales print was the department stores category (KSS, JWN,M, JCP, SHLD). Sales were down 0.8% M/M and 3.8% Y/Y during January.
• Full Retail Sales report (.pdf)

Lower fuel prices lead to decline in import prices for straight second month

• Jan Import/Export Prices: Import prices -1.1% M/M vs. -1.4% consensus and -1.2% prior.
• Export prices –0.8% M/M vs. -0.6% consensus, -1.1% prior.

Deutsche Bank to buy back $5.4B in debt securities; shares +9%

• Deutsche Bank (NYSE:DB) +9% premarket after announcing an offer to buy back ~$5.4B of bonds in euros and dollars, confirming media reports from earlier this week.
• DB says it is tendering for the purchase of up to 3B of euro-denominated bonds from five separate series, and up to $2B of dollar-denominated bonds from eight series.
• DB says its strong liquidity position allows it to repurchase the securities without any corresponding change to its 2016 funding plan.

Eurozone GDP grows as expected in Q4

• The eurozone economy grew at a quarterly rate of 0.3% in the final three months of 2015, as resilience in Germany helped offset weaker-than-expected growth in countries including France and Italy.
• GDP growth was in line with expectations and matched the 0.3% expansion during the prior quarter, though divergences across the region highlight ongoing struggles.
• The latest health check comes ahead of the ECB's meeting in March, when it will decide whether a new round of economic stimulus is needed to safeguard the region.

 

Now here's a smart guy:  Time to back up the truck on Japan – Jim Mellon

• Renowed British investor Jim Mellon says Japan's stock market, down 22% YTD, is a bargain.
• Mellon told his 362K Twitter followers that he expects the Tokyo stock market to rebound, rewarding brave investors who buy now. "I suspect there is a 1000 point up-day just round the corner, so load up. Cheapest market."
• Source: Telegraph
• Related: Why Japan Went NIRP: No More Doubts About QQE, Japan's Negative Interest Rate Gamble

 

OPEC cooperation talk lifts crude from session lows

• Oil is rebounding from the lowest level in more than 12 years as speculation swirls over whether producers will act to bolster the market.
• "Prices are not appropriate, I won't say for the majority only, but for all producers," UAE Energy Minister Al Mazrouei declared, highlighting that suppliers won’t make cuts unless there is complete cooperation.
• Despite the move higher, crude is still poised for a second weekly drop due to brimming inventories and forecasts that prices will remain low until the second half of the year.
• Oil futures +4.8% to $27.46/bbl.
• Previously: Oil spikes on report of OPEC agreement (Feb. 11 2016)

Gold just hit an all time high, priced in oil barrels

• According to Deutsche Bank analyst Jim Reid, gold just broke through its previous record price relative to oil, set back in 1892.
• An ounce of gold will now set you back more than 40 barrels of oil.
• The cost of gold relative to oil prices is used by some investors as a signal of financial jitters; concerns about global growth typically drive oil prices lower and the gold price higher.
• Currently, gold futures are -0.7% to $1,239, while crude futures are +4.5% to $27.41.

Ford records 10% sales growth in Europe, led by SUVs

• Ford of Europe (NYSE:F) reports sales rose 10% to 96,900 units in January.
• SUV sales were strong during the month, led by the Kuga EcoSport, and Edge models. The automaker expects to grow SUV sales by 30% on the continent in 2016.
• Ford's market share in Europe improved 20 bps to 7.9%.

We're miles behind Europe so I still like longs using Dow 15,700, S&P 1,840, Nasdaq 3,990, Russell 960 and Nikkei 15,200 as our watch lines – just go long the laggard if 3 of 5 are over and stop out if 3 of 5 are under – very simple…