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Will We Hold It Wednesday – Fed Minutes Edition

And here we are, yet again.

2,399.50 was the top for the S&P Futures (/ES) yesterday at noon so it's game on for our shorts as well as Russell (/TF) 1,380 and both are still hanging around those levels this morning.  As I said yesterday (and the 4 Tuesdays before that), we'll keep shorting at the top until it stops working.  Seems like a sensible plan, right?  

We're even more excited about our China Ultra-Shorts (FXP), which we've been tracking since April 3rd and currently, in our Options Opportunity Portfolio, we have 10 June $24 calls we paid $2 ($2,000) for on 5/15 after netting a $650 loss on our original spread so we're in for net $2,650 but FINALLY someone besides me has noticed how out of control China's debt situation is becoming as Moody's hits the Middle Kingdom with its first credit rating cut since 1989, saying that the outlook for the country’s financial strength will worsen, with debt rising and economic growth slowing.

"The downgrade reflects Moody's expectation that China's financial strength will erode somewhat over the coming years, with economy-wide debt continuing to rise as potential growth slows. While ongoing progress on reforms is likely to transform the economy and financial system over time, it is not likely to prevent a further material rise in economy-wide debt, and the consequent increase in contingent liabilities for the government.

"More broadly, we forecast that economy-wide debt of the government, households and non-financial corporates will continue to rise, from 256% of GDP at the end of last year according to the Institute of International Finance. This is consistent with the gradual approach to deleveraging being taken by the Chinese authorities and will happen because economic activity is largely financed by debt in the absence of a sizeable equity market and sufficiently large surpluses in the corporate and government sectors. While such debt levels are not uncommon in highly-rated countries, they tend to be seen in countries which have much higher per capita incomes, deeper financial markets and stronger institutions than China's, features which enhance debt-servicing capacity and reduce the risk of contagion in the event of a negative shock."

Isn't that exactly what I've been telling you?  What amazes me is how long it takes for these ratings agencies to catch on.  Hell, they still think Japan is solvent – but that's a trade for another day…

China’s debt problems stem from the global financial crisis, which began in 2008. In response, China unleashed a huge spending spree that led to a flurry of construction: highways, airports, property developments and more. To fuel that spending, local officials and state-run companies borrowed heavily. Even after the worst of the financial crisis passed, China continued to rely on such borrowing to fuel growth.  Today, borrowed money in China no longer packs the same economic punch. Thanks to an aging work force, smaller productivity gains and the sheer math of diminishing returns, China must borrow more and more to achieve similar levels of growth. China’s debt has been increasing lately by an amount equal to about 15 percent of the country’s output each year, to keep the economy growing between 6.5 and 7 percent.

Image result for china debt crisisIf you have to go 15% in debt to grow 7% – you are going to go broke eventually!  China's banking sector is already rated Baa3, 6 notches lower than Government debt but, because Government debt had been rated at Aa3 (best) and because the Government bailout of the banks was assumed, the banks were able to borrow closer to A1.  Now that China is dropped to A1 and especially because of the issues Moody's is raising, the borrowing costs for their banks may increase substantially.  

Meanwhile, at the same time, the MSCI seems likely to again reject China's inclusion in the Emerging Market Indexes.  "There’s still a lot of issues to resolve in a short period of time,” MSCI Chief Executive Officer Henry Fernandez said in an interview on Bloomberg TV. “We’re making a lot of progress on all fronts but it doesn’t mean we’ll get there."  100 stocks trading in China are currently suspended – that's 5% of their market – that's a big red flag according to MSCI.

Only 169 mainland China-listed companies will be considered for inclusion, down from 448 under a previous proposal, and all will be large-cap shares currently accessible to foreign investors through the connect links with Hong Kong.  That's why the Hang Seng has managed to hold up so far, despite the Shanghai Composite dropping 9% in the last two months but, if MSCI rejects those 169 as well (June 20th decision) - look out below!  

Image result for trump budget liesSpeaking of out of control Governments who's numbers you can't trust – Trump's Draconian Budget turns out to to be so fundamentally flawed on the math side that even the Republican Budget Committee can't support it.  Former Treasury secretary, Larry Summers, did a very nice job of eviscerating the proposal in the Washington Post, saying:

"The administration asserts that it will propose revenue neutral tax cuts with the revenue neutrality coming in part because the tax cuts stimulate growth! This is an elementary double count.  You can’t use the growth benefits of tax cuts once to justify an optimistic baseline and then again to claim that the tax cuts do not cost revenue. At least you cannot do so in a world of logic.

"The Trump team prides itself on its business background.  This error is akin to buying a company assuming that you can make investments that will raise profits, but then, in calculating the increased profits, counting the higher revenue while failing to account for the fact that the investments would actually cost some money to make. The revenue generated by the investments might exceed their cost (though the same is almost never true of tax cuts), but that doesn’t change the fact that the investment has a cost that must be included in the accounting.

"This is a mistake no serious business person would make. It appears to be the most egregious accounting error in a presidential budget in the nearly 40 years I have been tracking them."

At the same time as Team Trumps BS projections are being trashed, Asher Edelman went on CNBC yesterday and spilled the beans on the Plunge Protection Team, which President Trump has been abusing to keep the market maxed out at all costs (literally) – leaving us much more vulnerable than usual to a systemic shock.  Here's Asher explaining the situation:

On the whole, there are far too many cats getting out of the bag for us to believe this runaway market can go any higher and, as Edelman notes, it's very possible that the only reason the markets haven't already corrected is because we have a President who is trying to shore up his reputation by propping up the stock markets but that's the kind of trick that can only fool all of the people some of the time and, once they wake up and see through your facade - what do you do then?  

Sadly the answer is probably "start a war with North Korea."  

We have a Live Trading Webinar at 1pm, EST and we'll react live to those Fed minutes as well as the detailed release of the EIA Petroleum Status Report.   Oil is at $51.28 now and we're already long the Oil ETF (USO) but we'll be looking for an opportunity to go long Oil Futures (/CL) and Gasoline Futures (/RB) into the holiday weekend as well.  

 


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  1. Budget / Phil – You have to like the way they present that budget:

    http://www.postandcourier.com/opinion/commentary/budget-to-balance-the-books/article_1ce0ddca-3f28-11e7-91a6-4f2ccd34229d.html

    For years, we’ve focused on how we can help Americans receive taxpayer-funded assistance. Under President Trump’s leadership, we’re now looking at how we can respect both those who require assistance and the taxpayers who fund that support. For the first time in a long time, we’re putting taxpayers first.

    Taking money from someone without an intention to pay it back is not debt. It is theft. This budget makes it clear that we will reverse this larceny.

    So if you get tax refunds for 10 years because you lost $1B of mostly OPM it's great business. But if you are born disabled and collect a check each month, you are a thief! There is a special place in hell for these people I am sure!


  2. And not only do they double count revenues, they also play with stats to paint a bad situation:

    http://www.motherjones.com/kevin-drum/2017/05/budget-crankery-geeks-nonresidential-fixed-investment-version

    Due to high taxes, high regulations, and poor economic policies, real private nonresidential fixed investment has grown by only 1.3 percent each year (on a fourth quarter-over-fourth quarter basis) since 2007, compared to 4.9 percent annually before the recession.

    Yikes! That sucks. Is it true? I admit that I can't quite replicate their numbers, but let's call it close enough for government work. It's pretty nearly correct.

    Of course, it only works if you start precisely at 2007 so that you include the big drop from the recession. Here's what it looks like over the longer term:

    I suppose it says something disturbing about me that I find this kind of technocratic lying with statistics more interesting than a thousand words about how the cuts to food stamps will hurt the poor. Then again, if you made it this far, it probably says something disturbing about you, too. In any case, I figure this is my comparative advantage. Everyone is writing about food stamps, but who else will point out the obscure but telling lies like this?


  3. Good morning everyone! 

    It's webinar day! Join us at 1pm (Eastern) here:

    http://philstockworld.enterthemeeting.com/m/Q4XKCQY7


  4. Good Morning.


  5. Blue-sky thinking on Tesla from Baird

    May 24, 2017 7:53 AM ET|About: Tesla Motors (TSLA)|By: Clark Schultz, SA News Editor 

    Tesla (NASDAQ:TSLA) is still a top pick at Baird as the firm remains convinced the Model 3 launch will be an inflection point for the stock.

    Analyst Ben Kallo's blue sky valuation on Tesla is $566 (85% upside potential), based off a model of 1M units (3,S,X) sold in 2020 at an average selling price of ~$52K.

    "While tech companies focus on developing autonomous driving or battery technology, and traditional automobile companies are beginning to invest in electrification, we think TSLA has a unique expertise across all of three of these businesses," writes Kallo.

    Baird recommends buying shares before the Model 3 launch.

    TSLA +0.70% premarket to $305.99.


  6. FU BAIRD!!!!!!


  7. Phil, I looked at your comment about going long oil into the weekend and am curious what your entry price might be that you will be looking for? Do you think the EIA will give us a surprise move down in price that will be an opportunity? Or, did we just get that opportunity in the last hour when the price dropped from 51.50ish down to 51.20ish? Would you have taken a long poke at 51.20 or are you looking for a lower price some time today?


  8. Phil – picking up any KC at 129.1?


  9. and yeah FU BAIRD!


  10. Indexes moving up.


  11. /ES Short @ 2397   /ES busted 2400….  OUCH   And, I am heading to airport for a 19 hour flight back to USA.   Not good.  =(


  12. Joseph, have a good trip and safe traveling!!


  13. Good morning!

    Wow, investing is really changing fast.  PSW Investments is working on this as well, we want to be experts in helping companies raise money on these crowd-funding platforms.  Check this out – they already got $2.5M.  And boy, you have to really dig to even find the terms – I wonder how many people invest in this thing without even knowing what they are getting?  Turns out they have 145M shares already issued and they are charging $1.52 for new shares (and the founders are selling you 2M shares so they can cash in $3M) so it's about a $200M valuation.

    This is what Silicon Valley has to put up with now as start-ups are no longer willing to give up control or even much equity since they can go straight to the suckers while still in napkin phase.  It's a brave new world out there – and we can make a fortune in it!  cool

    Big Chart – Back to bullish for now.  

    Hell/StJ – Too good for them. 

    Baird/Jabob – Wow!  We'll see what sticks.

    Oil/Craigs – I don't know what price, that's why I'm looking!   I'd like to see $51 but $50.50 would make me more comfortable.  Depends on inventories.  Might get away from us or might give us a better price.  Since API was bullish, I'm thinking it's going to be hard for EIA to be an upside surprise.  

    /KC/Latch – Yep, 3 at $129.80 avg at the moment.

    /ES/Joseph – I just got in as they tested 2,400.  Happy with my entry.  


  14. teva pos


  15. Phil / PFE approaching 32…. I'm hoping for it hitting 30 ish…  any thoughts on this?


  16. Safe Travel / Newt – Krob Koon Kup 

    /ES / Phil – Thank you kindly.  I'll keep a sharp eye on it until wheels up @ 1AM ICT (2PM EST).  


  17. Large caps are propping the market up.



  18. Since Jonas seems to have left TSLA's camp temporarily, Musk must've given his boy Kallo a call who's always good for an insane reason to match his insane projection.  Will help keep this above 300 for week as shorts are squeezed a little today.


  19. FU FTR!!!!


  20. tgt getting cheaper too… geez


  21. "Bitcoin up 100% in under 2 months. Shanghai down almost 10% same timeframe, compared to most global stocks up. Probably not a coincidence!" tweeted famed investor Jeff Gundlach.

    The theory is the Chinese search for safe investments outside the country when asset prices fall. The yuan's weakness in the last two years has also contributed to capital flight."

    Gundlach eats his parrot food and dittos what I've been Nattering for months, and others disagreed with, and gets a friggin headline – amazing.  Up 100%, with 98% in bitcoin transaction volume being Chinese and vaporizing since January, no shirt Shitlock and Out.


  22. Latch – Lefevre – Note favorite books on this profile here.  Bucket shops and margin, required reading indeed.


  23. PFE/Batman – I certainly like them down there ($30) and $32 not terrible for a put sale but patience pays off.  2019 $30 puts can be sold for $2.20 now and the $32 puts are $3.25 so the best you're likely to do is get another $1 so I'd keep an eye on those for the initial sale – the spreads don't vary much as the delta of the $30/35 spread, for example, is just 0.29 so +/1 0.50 on a $2 move.  

    Large Pharm/StJ – China too.   As to Trump, nope, he never said that.

    Speaking of gross inequality, Existing Home Sales are down but really for the Bottom 80%, the Top 20% are still having a blast:

    Unfortunately, for people who care about AMERICA and not just their own wallets – most homes in this country are under $250,000.  5.57M homes means the average person is only moving once every 20 years – you know that's a bad statistic and definitely a sign of an unhealthy economy.   

    • April Existing Home Sales-2.3% to 5.57M vs. consensus 5.65M, 5.71M previous.
    • "Last month's dip in closings was somewhat expected given that there was such a strong sales increase in March at 4.2 percent, and new and existing inventory is not keeping up with the fast pace homes are coming off the market," says NAR Chief Economist Lawrence Yun.

    Uh oh:

    Now, state legislatures, most led by Republicans, are advancing bills they say are intended to support free speech. The laws include measures to suspend troublemakers, remove free-speech zones that limit protests to small areas on campus and cut off money to schools that don’t protect the First Amendment.

     

    “There’s been censorship of free speech on campuses around the country,” said Jesse Kreme, a Republican state representative in Wisconsin who is sponsoring a bill there. “We should have a free marketplace of ideas; people shouldn’t be shouted down for expressing themselves.”

    That's cutting off money based on a vague concept of free speech as determined by GOP lawmakers.  

    Washington Post columnist who writes about Saudi Arabia is on Saudi payroll. https://www.mediamatters.org/blog/2017/05/2 I thought this only happened at Fox.

    Racist fans are freaking out at the diversity of the new "Star Trek" series

    Trump tells Duterte of two U.S. nuclear subs in Korean waters: NYT – Reuters – http://www.streeteye.com/t/9j9V

    What Ten Million Simulations Tell Us about President Trump's Chances of Achieving 3% Economic Growth

    Trump administration's growth disparity dwarfs those by previous administrations

    Oil inventories in-line with API and no real reaction to it despite OPEC releasing 9-month extension statement too (timed together for maximum impact):

    • EIA Petroleum Inventories: Crude -4.4M barrels vs. -2.4M consensus, -1.8M last week.
    • Gasoline -0.8M barrels vs. -1.2M consensus, -0.4M last week.
    • Distillates -0.5M vs. -0.7M consensus, -1.9M last week.
    • Futures +0.08% to $51.5.

    FULL STATEMENT: and non-OPEC committee recommends 9-month cuts extension https://www.bloomberg.com/news/articles/


  24. Phil / PFE – I'll keep watch on this one…  once it hits a pe of under 13 or so it starts get interesting…


  25. Phil – regarding stock Twits, your high standards and being beyond reproach.  Said subject, disclosure of positions and relationships, and a hypothetical photo of you, were worthy Nattering today.  Aye mate, we like the cut of your jib.  Wink, smile emoji and Out.


  26. morning. crypto bubbling up to $90B today. Interesting thing about Ethereum: it's listed at $215 aggregate but coinbase only offering 189 on the sell side, and looking at the different markets it's as high as 258 in Korea. Not sure why they love ethereum so much but that's +20% over global market average…

    I guess the mainstream media (i.e. "Moody's") caught up with what we already know about china. Chinese capital flight + Greedy Hedge fund playing musical chairs = Mega Cyrpto Bubble; and it all pops soon and it'll be ugly.


  27. IMAX is a 12 RSI.  Severely oversold in short term.


  28. FTR/Jabob – Maybe we will get our chance to DD at 0.80!  

    Dubai hopes to have a human-free police station by 2030

    That will be followed by a human-free society by 2040.  

    Robo-advisers square off against Wall Street in the battle for rich people

    Trump’s clean energy budget cuts would ‘devastate’ an emerging economic sector

    A definitive breakdown of the gloomy state on Wall Street

    Sears just won more time to pay its debt

    Former campaign manager Corey Lewandowski may be back to help manage Trump's crisis team. It won't help

    Trump's staff is working hard to make sure the president is busy on his trip — so he's not tweeting

    Magellan Uber 'one of the stupidest businesses in history' with 99% chance of bankruptcy in a decade

    Higher yields could trigger new debt concerns, ECB says

    Draghi says there’s no reason to deviate from guidance https://www.bloomberg.com/news/articles/ via

    Image result for this is madness sparta animated gif

    Thanks Naybob but, on the whole, I prefer to stay off the radar in those matters. 

    IMAX/Rustle – Time to go back in the OOP.  We have 5 short Dec $29 puts we sold for $2, now $4.  I think we'll add a bull call spread.  Same in the LTP.


  29. Phil – TF . up to 1385… time to get out? or is it just an attempt.  ES can't get over 2400…


  30. Phil--if FTR drops to 80c I have a feeling nobody will want to be doubling up down there because of the bankruptcy risk…but you never know..


  31. IMAX – Anyone have any thoughts on the presentation on JP Morgan conference?


  32. /TF/Latch – I've been adding.  I have 6 short now at 1,382.38.  As long as /ES is under 2,400, I'm not worried about the RUT spiking.  

    FTR/Jabob – How many different companies have we said that about at some point?  

    In the OOP, back on 4/28, our plan for IMAX was:

    We like IMAX because they drop off when the box office slows, which has nothing at all to do with the company, which is adding more and more screens every day. It was one of our original OOP stock picks but then we got called away and I was very upset in Oct that I missed $28 and then failed to buy at $30 so now I don't want to be greedy.

    • In the OOP, let's sell 5 IMAX Dec $29 puts for $2 ($1,000) and see how they go before adding a bull call spread.
    • In the LTP, let's sell 15 IMAX Dec $29 puts for $2 ($3,000) and see how they go before adding a bull call spread.

    In both cases, they are amounts we would be happy to double down if we get a better price (ie. IMAX goes lower).

    Well, IMAX did go lower and I do still like them because Q2 will have revenues from Fate of the Furious (4th biggest IMAX opening ever), Guardians of the Galaxy, which has only this week finally been succeeded by Aleins, which is another hit and next comes Pirates, Transformers and Wonder Woman – both likely hits as well.  On top of that, IMAX is adding a VR segment that gives them additional growth opportunities.  Analysts are expecting $105M for Q2 revenues but Furious alone was good for about $30M and $105M is 15% more than last year – even if that's all they do.  

    So, in short, it's time to execute a larger play:

    OOP:

    • Sell 5 (more) IMAX Dec $29 puts for $4.30 ($2,150)
    • Buy 10 IMAX Dec $23 calls for $4 ($4,000) 
    • Sell 10 IMAX Dec $28 calls for $1.40 ($1,400)

    That's net $450 on the new $5,000 spread with $4,550 (1,011%) upside potential.  Our worst case is owning 1,000 shares of IMAX (including our original 5 short puts) for net $27.10.

    LTP:

    • Sell 10 (more) IMAX Dec $29 puts for $4.30 ($4,300)
    • Buy 20 IMAX Dec $23 calls for $4 ($8,000) 
    • Sell 20 IMAX Dec $28 calls for $1.40 ($2,800)

    That's net $900 on the $10,000 spread with $9,100 (1,011%) upside potential.  Our worst case is owning 1,000 shares of IMAX (including our original 5 short puts) for net $27.10.

    We will also pick IMAX as a straight stock pick ($25.50) for TradeExchange.  


  33. Phil, why r u short /TF @ 1380 rather than /ES @ 2399?  Faster moves?


  34. /TF Phil > What just happened? Appreciate your integrity on Twit, but consider yourself lucky that you do not live in the Middle Ages – You would be burnt as a Sorcerer. Excellent calls as usual :)


  35. Chinese Debt…..Ok its big, but in a diagram posted a few weeks ago it showed that it was only $1400 per capita.  All they need to do is nationalize the Apple factory for a few weeks. Every two phones they sell would clear an individuals debt. Problem solved


  36. Why/Burr – I was short both and /TF went over my line and /ES was still under so I closed /ES and doubled down on /TF – that's all but yes, generally /TF is my favorite short. 

    What/Aquila – Gravity.  As I noted, the move seemed silly with /ES still under 2,400 so it made sense to stick with it and scale in.  Too bad I missed 1,376 but very happy to be back to 2 short and in the money at about 1,385 avg.  

    /RB and /CL coming down nicely now.   I like /RB if they get back OVER $1.65 with very tight stops below and /CL I like at $51 but also tight stops as I still hope for lower.

    There's no conviction here – we're simply playing for the likelihood of manipulation and the likelihood of the OPEC extension announcement tomorrow. 

    China/CDN – It's $25Tn, more like $2,000 each but 90% of those 1.3Bn people don't see $2,000 in a year and the other 10% sure aren't chipping in from their pile…


  37. I've worked my avg on /ES up to 2398.5 on 3 short. I think I'll sit tight here. Will buy one back on any small dip and hold the other 2. 


  38. That's the key, always remember to reduce back – don't forget why you added in the first place.  


  39. Got 2 short ES 2398.25 + 2 KC long 129.3 + 1 short TF 1378.  Also hoping for FU TSLA to break 307 once and for all.


  40. GE – man, who said what at the industrial conference?



  41. FU KC!


  42. bitcoin 2422 wow


  43. KC at a new low


  44. Is the RUT gonna drag us down or are the rest holding the RUT up? 


  45. we are out of RUT now.. watching Dow for a signal


  46. GT/Phil – leading indicator of market crash ahead or good BTFD entry point?


  47. GT/ scott     not sure if bought or sold, but someone just traded 4000 2019 $30 puts


  48. CSCO/Phil – did they have Chambers speak again at last CC? Is IoT premise still sound..making this a spot to sell puts for an entry? 


  49. GT/stock – one order, traded at the lower end of the spread at 3.60 so… a nice sale I would guess. certainly someone(s) is on the other side, too.


  50. FU AMZN!!!!!


  51. Closed out /ES @ 2396.50 on a quick dip.  1st time I was happy for a flight delay.  


  52. SGYP – Any new info on this?  When are monthly sales updated?


  53. GILD – vix so low, stock so low.. maybe buy some long calls. And I usually can't just buy without making a diagonal, so looking at buying Jan2019 62.50 and covering with November 70s for 6.98, or buy Jan2019 65 and sell the Nov 72.50s.  Would rather sell (more) puts when vix is higher.  Would exit the spreads if GILD loses 62.50. Probably close for win when reaches ~40% of max return if comes early via overshoot (over 70). In the case of the 62.5/70 diagonals, that would be $170 return on $698 spread ~ 24% return before November. I like the date spread on the expiration date of shorts being ~30% or less of the duration for the long side.


  54. China – interesting bullish commentary in this interview hosted by the usually bearish Meb Faber:  http://mebfaber.com/2017/04/26/episode-49-steve-sjuggerud-not-peak-bull-market-looks-like/


  55. Future – optimistic discussion on technologies and future, despite massive job dislocations coming up. I want my kids to listen to this: http://mebfaber.com/2017/04/12/episode-47-ric-edelman-47-occupations-america-will-gone-within-15-years/

    (yes, I caught a few podcasts over the weekend/traveling)


  56. Good job Joseph – makes for a less stressful flight



  57. Robocalls/tangled – if that comes to pass, it just might make me throw my phone (at a congressman).


  58. Asher Edelman – LOL! the interview gets cutoff just as he is going to start speaking!…and now the zerohedge page has been taken down. Hmm.


  59. Edelman PPT interview - interesting. Zerohedge does some translation of the page after it is up and the new link doesn't work (in my browser). It is still there, and here is the one that does: http://www.zerohedge.com/news/2017-05-23/asher-edelman-says-i-have-no-doubt-ppt-behind-market-rally


  60. Well we decided to be long /RB at $1.64.

    /KC added more at $128.50, 4 longs at $129 now. 

    GT/Scott – Likely selling off with the sector.  They only went back to mid-channel so not a particular bargain – just not stupidly priced anymore. 

    CSCO/Scott – LOL, another one that dips in a high channel and isn't really a bargain.

    You are the kind of guy (and there were lots of those guys) who, in 2008, when the market was down 10%, took all their cash and bought everything in sight because it was "such a great discount".  I'm not saying CSCO isn't a good stock but put it on a watch list along with 20 other stocks you think are cheap now and the 5 that get cheaper – THOSE are the ones you want to buy (assuming nothing changes otherwise).

    GILD/Scott – It's a patience play (years), not good to join in if you are already thinking of stopping out. 

    Robocalls/Tangled – WTF is wrong with those people?  Do they just look for ways to reduce all qualities of life?  

    Edelman/Scott – Big Brother is much closer than you think.


  61. Oh, that was /RBN7! 


  62. Phil,

    /TF and /ES up on dollar weakness or do you think it's going higher?


  63. Phil/UUP,

    What is your take on the UUP that we have? June 25 Calls

    thanks as always

    regards


  64. VIX is <10.  That did not take long.

    SGYP…gonna have to wait…just wait.


  65. GILD/Phil – thanks, good context (years, patience play).


  66. Dollar/Japar – Was a strong pop at the close for no real reason.  Wanted to make it look like Fed Minutes were taken well so I don't think they'll be follow-through but wouldn't bet against things either. 

    UUP/Pat – Disappointing so far but our Fed is the only one planning on raising rates – why would the Dollar stay down?

    VIX/Pharm – Wow!  

    You're welcome Scott.


  67. Also in the news:
    VW sues  Chrysler for patent infringement on emissions cheating software.


  68. Phil/SVXY,

    SVXY back to where it was when the put spread was initiated. Good to do it again?

    thanks as always

    Regards


  69. Phil,

    Are you out of /TF and /ES shorts? Or holding overnight?


  70. SVXY/Pat – I think it can work again, remind me tomorrow.  

    Shorts/Japar – Holding overnight unless I see a reason to change.


  71. Pharm. – SGYP. Are you playing it straight up or as options? If so which ?  Thanks 


  72. So… two of the largest autoloan lenders basically were signing off on loans without proving the person even had a JOB either roughly half the time or …


  73. DJI unveiled its tiny Spark drone on Wednesday, and it’s sort of the anti-drone for consumers.<p>It’s small enough to fit in your hand, launches and lands from there, can be controlled almost entirely with gestures, lets you take a selfie from just 10 feet away, has a whole collection of …


  74. EVART, Mich. — The creek behind Maryann Borden’s house was once “a lovely little stream that just babbled along and never changed for decades,” she says. Now it is perhaps 12 feet across — half what it was, she reckons — with grassy islands impeding what used to be an uninterrupted flow.<p>“What …


  75. 3 Stocks That Could Put Amazon.com’s Returns to Shame

    If you’re searching for stocks with jaw-dropping growth potential, these three names should be at the top of your list.<p><b>Amazon.com</b>’s (NASDAQ:AMZN) …


  76. <b>Seoul, South Korea (CNN) —</b> Unidentified objects which flew across the border from the North were probably propaganda balloons, South Korea’s military said Wednesday.<p>South Korean forces fired warning shots at the unidentified objects Tuesday after they were spotted flying from North Korea across the …


  77. It seems as if nothing can stop bitcoin from going higher. The cryptocurrency is up by 7%, or $157, on Wednesday at $2,416 a coin. It has gained in 26 of the past 29 sessions and has more than doubled in value over that time.<p>Wednesday’s gain comes after China was downgraded at Moody’s and a bitcoin …


  78. <i>CORRECTION: An investment of $1,000 in bitcoin in 2010 would be worth more than $38 million today, not $38 billion, as an earlier version of this column mistakenly stated.</i><p>$1,000 $2,000 or $3,000. Heck, it could be up to $10,000 by the end of the month, and carry on climbing from there. While most …


  79. What’s the most populous nation in the world? For years, the answer to that question was simple and rarely disputed: China. But this week an academic has sparked widespread discussion around the world by making a bold claim — that China’s official population estimates were wrong and in fact India …


  80. It was a good year for the hotel industry as occupancy levels hit record highs in 2016.<p>The big news of the year was Marriott’s mega acquisition of rival Starwood. The multi billion dollar deal gave Marriott a clear advantage on many key fronts. The result puts the Bethesda, MD hotel manager at the …


  81. Undermining the Federal Reserve received a major boost yesterday.<p>The harder truth depicted in <i>Thirteen Reasons</i> <i>Why</i> is that today’s high school …


  82. China’s revved up campaign to clean up its financial system couldn’t be coming at a worse time for the country’s banks.<p>The deleveraging drive is …


  83. Tesla is continuing to come under fire for injury rates at its flagship plant in Fremont, California, but the electric carmaker says factory conditions are improving.<p>Worksafe, a California-based worker advocacy group, released a report Wednesday showing that injury rates at the company’s Fremont …


  84. Federal Reserve officials expected at their policy meeting this month that it would “soon be appropriate” to raise short-term interest rates, a signal the U.S. central bank could move in June at its next gathering.<p>The Fed also moved toward a consensus on a proposal to start gradually shrinking its …


  85. Europe’s sovereign debt crisis might seem like a distant memory as the eurozone economy enjoys a healthy growth spurt, but the European Central Bank fears that government finances in the currency area “remain fragile”.<p>A combination of economic growth and jubilation in markets over the election of …


  86. President Trump may be focused on saving coal miners, but solar continues to be the hot spot in today’s jobs market.<p>Solar employment expanded last year 17 times faster than the total US economy, according to an International Renewable Energy Agency report published on Wednesday.<p>Overall, more than …


  87. Out of RB at 165.89 from 164.02. $800. As per Phil. Now it will go to 1.7.  Have 3 ES at 2399. Want to believe it will come back down. Is hope a strategy?


  88. Big pop in the futures. I'm trying to see what the reason is. Anyone see a reason for the pop? 

    I had 2 short /ES avg 2397, added 2 more at 2109. Will buy those back on a dip and get my avg up. Tight stop above 2410 on the 2 new ones. 


  89. Has that ZH post already been taken down?


  90. No. It's still there. Scroll down.  Even gold went up at the same time. Someone is trying to goose the market up. Working so fsr


  91. Latch – I can’t see the post can you please paste it here ? 


  92. I'm still short 3 /ES @ 2394, now down 2.1K.  This time though I'm NOT stopping out and taking a loss.  F it.  Patience, obi won.  

    Here's the post.  It's pretty simple to find on your own.

    http://www.zerohedge.com/news/2017-05-24/fragile-markets-us-equity-futures-flash-smash-no-good-reason


  93. Hard to believe I am in this situation, for the nth time.  Phil said tight stops above 2400, but nooooo I had to play it different. Jeez 


  94. Latch, what's your position?


  95. Appears someone bought a lot of Yuan to weaken the dollar which caused the stock futures to rally. 

    http://www.zerohedge.com/news/2017-05-24/somethings-breaking-yuan-suddenly-spikes-2-month-highs


  96.  

    Investing.com – The Chinese yuan rose to near a two-year high on Thursday with USD/CNY down 0.20% to 6.8746 on reports state-owned banks sold dollars on the onshore market.

    The People's Bank of China set the yuan mid-point at 6.8695 against the dollar on Thursday, compared to the previous close of 6.8895, a day after Moody's downgraded the sovereign rating.

    The China Foreign Exchange Trade System sets the weighted average of prices given by market makers. The highest and lowest offers are excluded from the calculation. The central bank allows the dollar/yuan rate to move no more than 2% above or below the central parity rate.

    Market watchers see a yuan level of 7 against the dollar, USD/CNY, as a key touchstone for sentiment in the near term.

    Trump should name China as a currency manipulator 


  97. Anyone can get TradeExchange to try.  The invite is not needed.  You can find it in the android store or istore.   The one with the bull icon.


  98. Good morning! 

    I must have sensed a disturbance in the force as I woke up suddenly, looked at my IPad and went "WTF?"  

    WTF?  

    I see nothing other than the looming 3-day weekend where "THEY" want people to go to their barbecues talking to their friends about how great the market is and making them feel foolish for not getting in.  Dollar is down 0.33% at 96.83 – that's helping too.  

    Stocks Surge As VIX Crushed To 9-Handle Despite Fed Warning Of "Risks To Financial Stability"

    FOMC Minutes Signal Rate-Hike "Soon", Economic Weakness Probably "Transitory" But Need "Evidence"

    Fed Warns "Vulnerabilities" From Elevated Asset Valuations "Pose Risks To Financial Stability"

    Wall Street's Take On The Fed Minutes: June, Sept. In Play; BS Unwind May Come Sooner

    While the dollar and TSY yields both dropped to session lows shortly after the FOMC announcement hit as traders focused on the Fed disclosure that FOMC voters thought it prudent to await evidence an "economic slowdown is transitory" suggesting the committee still wanted to hike rates but was willing to wait for the certainty of data,  Goldman's disagreed and according to a just released assessment by Goldman's Jan Hatzius, the statement was more hawkish than perceived by the market.

    Also, China seems to have given Moody's a big FU and pushed their markets up 1% out of spite:

    China "National Team" Rescues Stocks As Downgrade Crushes Commodities

    /ES/Latch – I think hope is a valid strategy here but could get worse before it gets better.  I'm keeping my /RB longs as it balances out the /ES loss and I sure don't want to get more net bearish.  

    Dip/Jeff – What dip?  VIX down to 9.88 – there will never be a dip again. 

    This VIX chart is different levels but you get the idea. 

    Fragile Markets? US Equity Futures Flash-Smash… For No Good Reason

    The 5 Possible Outcomes Of The OPEC Meeting

    OPEC "In Terrible Bind" As Monitoring Committee Proposes Nine-Month Extension

    "Something's Breaking" – Yuan Suddenly Spikes To 2-Month Highs

    Angry China Slams Moodys For Using "Inappropriate Methodology"

    What Is Causing China's Yield Curves To Invert: UBS Answers

    The Trump Collapse Scapegoat Narrative Has Now Been Launched

    Paul Craig Roberts Warns "Truth Has Become Un-American"

    Six Terrifying Graphs That Summarize America's Public Pension Crisis

    Crispin Odey: "Why Do I Remain Stubbornly Bearish?"

    CBO: Obamacare Repeal Will Cut Deficit By $119 Billion, Leave 23 Million More Uninsured

    Can The US Economy Ever Get Back To 3% GDP Growth?

    Brazil Deploys Troops To Protect Government Buildings As Protesters Set Ministries On Fire

      Yuan/Pat – That seems to be the only explanation that fits the time-frame.  

    TradeExchange/Tangled – Really, I didn't know they opened it up already but they did say my test run is going bug-free so I guess they want to open it up a bit more.


    • The American Health Care Act approved by House Republicans would leave 23M more people uninsured while reducing the cumulative federal deficit by $119B in the next decade, according to the Congressional Budget Office.
    • The report, which doesn't differ significantly from the CBO's analysis of an earlier version of the House bill, is likely to roil current Senate talks to repeal and replace Obamacare.

    $521.73.  That's how much we are "saving" per person per year to kick 23M people off health care.  That's how much it costs to save the lives of those people and their children, 30,000 of whom will die each year because the top 20% (60M) wanted to pay $200/yr less taxes.  Think about that when you see those numbers over the next decade – for $200 you sent 30,000 fellow human beings to their deaths, completely unnecessary deaths that could have easily been prevented, right now – by simply letting you Congresspeople know you think this is unacceptable.  


  99. Hi Phil,
    Presently in Croatia and our present connection tot he net is not the greatest. I guess until 1 st July this will be similar until we are in Germany again.
    I followed the play on NFLX, which I would have never plaid on my own. Obviously we both thought the stock will never end climbing but well it has. I never have been playing naked calls in general. Resulting this play shows 1 7K loss and climbing.
    This is my present position and I wonder if you could see any more productive changes not to even through good money after bad. TIA
    NFLX NFLX170616C140 16-Jun-17 140 -3 CALL 14.45 17.875 -23.70% ($5,362.50)
    NFLX NFLX170616P140 16-Jun-17 140 -5 PUT 9.32 0.235 97.48% ($117.50)
    NFLX NFLX170616C145 16-Jun-17 145 -2 CALL 11.7 13.2 -12.82% ($2,640.00)
    NFLX NFLX170616P155 16-Jun-17 155 5 PUT 17.48 2.675 -84.70% $1,337.50


  100. Wow, OPEC ministers really disappointed people.  Oil plunged to $50 on a spike – $51.21 now with /RB at $1.65.  I guess people were expecting more aggressive action.

    Honey badger don't care. 

    NFLX/Yodi – Nothing goes down anymore.  So it looks like you have 5 June $155/140 bear put spreads and 5 short $140 and $145 June calls as well.   

    NFLX is ridiculously overpriced but no one seems to care.  Still, even on this 50% rally since Oct, they "only" gain $7/month so, as long as you can keep rolling the short calls ($6,775) credit – it doesn't much matter about the spread ($4,000ish debit).  The $155 put are $2.55, so down $3K there and I'd just focus on the short calls, which are about $8,300.  5 July $160 calls at $7.80 = $3,900 and I'd just start with that to get 1/2 back and see how it goes.  The Sept $170s are $6.75 but, if NFLX is still high in July, I'd probably go for the Jan $170 calls ($13) and the $130 puts ($6.20) to spread the risk.  


  101. Actually, since there's a 50/50 chance you'd have to sell the Jan puts anyway, you could sell 3 now for $1,860 more along with the July calls and then you have a chance for $5,760 back plus the short puts balance the margin.  If NFLX collapses, 2019 $95 puts are 5 so that could be a 2x roll on the puts.  


  102. NFLX: like any MOMO, chase on the way up in haste, repent at leisure on the gut wrenching collapse on the way down. Why would this market go down? – it seems that every piece of 'negative' news (real or imagined) has been discounted by the market. If you want to continue to play NFLX, perhaps consider layering on a much longer dated Bull Call Spread. At least then you have a profitable target to roll your shorter dated short calls against. The long puts were a pure gamble (buying premium?) which didn't work out. Forget it and move on. Unfortunately the clarion call to cashy and cautious is falling on deaf ears these days – except for yours truly (written through gritted teeth).


  103. Winston you got a good point there, I normally do not sell these type of calls.


  104. Phil. Hope you are out RB. Dropping fast


  105. /RBN7/Latch – Getting back in at $1.63 - it's still Thursday before the holiday.  Oil (/CL) $50 too!