When will the madness end?
In the great, great movie, Groundhog Day, Bill Murray wakes up every day and, to his dismay, finds it's the same day as yesterday. No matter what he does, he is trapped in a loop, living the same day over and over again. This is how I feel when I wake up and read President Trump's latest tweets – I cannot believe this guy is really the President of the United States of America – certainly not the one they taught us about in history class. Well, since 1863, anyway…
Since yesterday, Donald J Trump has threatened UC Berkeley with cutting off federal funds, put Iran "ON NOTICE" and gotten into an argument with the President of Australia over immigrants – just another day in Trupmerica. Not surprisingly, the markets are down again but gold is doing very well and oil got a pop with all the war talk with Iran and, of course, Exxon's (XOM) Rex Tillerson being sworn in as Secretary of State – just a heartbeat away from the Presidency (it would be Pence, but he has no heart).
Imagine if Rex Tillerson becomes President? America will become exactly what we've been accused of being for all these years – since we first started toppling Governments in Iran and putting in our puppets so many years ago. Ah, good times!
America is indeed an oil company with an army and Trump's Secretary of State, the man who negotiates our trade and makes all those sensitive deals around the World, has worked for Exxon since 1975 and ran the company since 2006, when oil ran up to $140 a barrel and gasoline was approaching $5/gallon, which is $210 a barrel – but that's a different story of greed and corruption.
Well, since I mentioned it – consider the fact that a barrel of oil now costs $54 and a gallon of gasoline (there's 42 gallons per barrel) costs $1.57, which is $65.94 so the mark-up from oil to gas is 22% but, more importantly, it's $11.94 – that's the cost of refining the oil into gasoline. When the price of oil goes up, the cost of the refining process doesn't go up so why is it that refiners (like XOM) needed 50% markups when oil was already outrageously priced – why did they gouge US consumers for $70 a barrel to refine gasoline when clearly they are now doing it at a huge profit for $11.94 – 82% less?
So please forward this to what few remaining Democrats we have left as this math is so simple even they should be able to prosecute the oil companies for price gouging when Trump/Tillerson declare war on whoever and jack the price of oil back up. At the moment though, we're short oil, now $54 (/CL) because Tillerson hasn't actually done anything yet and there are WAY too many open contracts at the NYMEX in the ongoing monthly scam:
I explained how oil trading is basically a huge scam back on Jan 17th and, at the time, there were "only" 197,589 fake, Fake, FAKE 1,000-barrel contracts open in February and, as we predicted, only 14,000 remained open when the contracts actually closed (21st) – all the rest were shoved into longer months – to fake demand for the next cycle.
April picked up 46M barrels, May 46Mb, June 19Mb – that's 111Mb in just those 3 months and now the cycle repeats itself but the next 3 months already have 20% more fake orders than they had last month and it gets harder and harder to cover it up. There won't be a lot of pressure to unwind for another two weeks, as the March contract ends on the 21st but that's just 14 trading days to get rid of 550M barrels of oil – hard to do while also maintaining prices over $52.50.
It's going to be a rough ride though as the Trump Administration has been talking down the Dollar (now 99.30), which has now lost 4% of its buying power since December, when oil was at $54. The weaker Dollar is a confiscation of wealth from ALL Americans, but we rich people are able to hedge by buying things like gold – which is up $100 (8.8%) or silver, which is up $1.70 (11%) – both of which were featured as top trade ideas in our December 25th "Secret Santa's Inflation Hedges" – because we knew exactly where this kind of policy idiocy would lead us.
For example, our ABX trade idea was:
- Sell 10 ABX 2019 $13 puts for $2.63 ($2,630)
- Buy 20 ABX 2018 $12 calls for $4.10 ($8,200)
- Sell 20 ABX 2018 $17 calls for $1.95 ($3,900)
That's net $1,760 on the potential $10,000 trade and, though it's only been a month, the puts have fallen to $1.49 and the $12 calls are $7.10 and the $17 calls are $3.85 for net $5,010 already – that's a profit of $3,250 (184%) for our Members – isn't that nice!
And where did all this money come from? Well it came from that 4% drop in the Dollar as we confiscate EVERYONE's wealth by devaluing the currency and then redistribute it back to the people who have the money to play with stocks, options and Futures (ie, the Top 10%). Isn't that fantastic? You can't complain that it's not fair because "anyone" can play the market and make these bets and "everyone" has money in the markets through IRAs or 401Ks – you just have to be SMART, like Trump, and make the good bets on the policies Trump puts in play…
You can still make another $4,990 (99.6%) playing that same trade we've been in for a month (aren't you glad you saved $3/day by not subscribing?) and all ABX has to do is not go lower and you double your money. But, from scratch, we still like ABX though it may correct a bit and I would now play:
- Sell 10 ABX 2019 $15 puts for $2.33 ($2,330)
- Buy 20 ABX 2019 $15 calls for $5.90 ($11,800)
- Sell 20 ABX 2019 $20 calls for $4 ($8,000)
In this case, we're back to laying out $1,470 in cash and we have the same $10,000 upside but we're giving ourselves an extra year to get to $20. If all goes well, the profit potential is an $8,530 gain on cash – up 580% in less than two years should be able to keep you ahead of inflation.
This stuff isn't hard folks – we READ the news, THINK about how the news will affect the markets and then INVEST accordingly. Our reliance on FACTS can be very confusing to Trump supporters, but even they get the hang of it after a while. 8)
Yesterday, in the Morning Report we made a few calls – some good and some bad so let's take a look:
- MU long – up 2.65%
- QCOM long – down 0.5%
- JBL long – up 1%
- TEVA long – up 3.7%
- Oil short at $53.50 – up $500, now down $500
- Natural gas long at $3.15 – up $400, now down $200
- Dow Futures short at 19,850, now 19,765 – up $425
- S&P Futures short at 2,280, now 2,270 – up $500
- Nasdaq Futures short at 5,150, now 5,140 – up $200
- Russell Futures short at 1,370, now 1,360 – up $500
The difference between being 9 for 10 rather than 7 for 10 is taking those quick profits off the table. Believe me, it's far better to take small profits and win 90% of the time than wait for bigger profits and blow 20% of your victories. We did a bit of Futures trading in our Live Trading Webinar and we maintained our shorts on Oil (now $54.03) and Gasoline (now $1.572) and, of course, we love our long on Natural Gas as it pays off like a broken slot machine.
Be careful out there.
