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Thrilling Thursday – Nasdaq Makes New Highs, Ethereum Flash Crashes

Wow, what a ride!  

The #2 Crypto-currency, Ethereum had a bit of a flash crash yesterday, trading as low as 0.10 from the high of the day at $317 as a single seller tried to sell $30M worth in what is really an illiquid market.  Even after the first wave reversed, a second wave took the currency down to $130 on even heavier volume than the first, forcing the main exchange, Coinbase, to go offline.    

Even though the "Status ICO" (selling program called an "Initial Coin Offering") is over, there are still a huge number of transactions clogging up the network and the only way to get transactions in is to pay huge fees (which most of the exchanges probably don't want to do). Until it clears out, people are going to be missing ENS auctions, unable to withdraw from many wallets and exchanges, etc.  As noted by Emansipater, one of Reddit's crypto experts:

"Badly designed ICOs, plus selfish and foolish miners = major delays and maybe even substantial losses for everyone else." Judging by the ensuing flash crash, this was an accurate assessment.

Inexperienced traders on amateur exchanges – what could possibly go wrong?  

That's what I like about the Dollar – it hardly ever goes off-line, freezing my assets while it's value goes up and down 99% in a day.  Have I mentioned how much I like CASH!!! lately?  We certainly have tons of CASH!!! in our 4 Member Portfolios and, as noted in this weekend's Portfolio Review, we're very well-balanced but still tilted a little bit bearish as we simply can't endorse the insane valuations that are driving indexes, especially the Nasdaq, to record highs.  

I was on Money Talk last night and we discussed the trade ideas from yesterday's morning Report and I called a bottom on Oil (/CL), which was trading at about $42.50 last night after testing $42 during yesterday's carnage.  That's well below our $44.50 entry but we're sticking it out (down $2,000 per contract) and hoping oil recovers a bit into the holiday weekend.  

Gasoline (/RB) is a bit more encouraging, already racing back to $1.435 (up $630 per contract) after hitting $1.395 on yesterday's lows.  $1.42 is our long spot on /RB with tight stops below so it's game on again this morning, as it is with Oil (/CL) at $42.50 – if you are brave.  We still like Coffee (/KC) at $1.22 but it doesn't like us and Natural Gas (/NGV7) went from $2.95 to $3 (up $500 per contract) yesterday and now it's back at $2.95 so why not take it again?

Index-wise, we are forcing ourselves to find bullish trades because the Nasdaq 100 (/NQ) is back over our 5,780 resistance and now we'll see if they can get over 5,800 and we're off to the races for our next major up-leg to 6,000 (3.8%) and the way to play that is to go long on the Russell (/TF) over the 1,400 line with tight stops below but only if the Nasdaq is over 5,780 and it will need to hold it all day today for us not to start shorting at that same line (/NQ 5,780).  

In yesterday's Live Trading Webinar, we decided to go long on the Biotech Ultra-ETF (LABU) with a nice $4,500 spread that will net us $15,000 (up 255%) by December if LABU hits $70.  As you can see, we're well on our way already as it really took off into the close!  

Biotechs have been strangely underperforming the rally and we need a defensively bullish play in our Short-Term Portfolio to offset the hedges so LABU is perfect for that purpose – especially with it's very high option prices (which is what sold us on using them as a trading vehicle).  We did very well with our LABU trade last year and we're not ashamed to go back to the well a second time.  

Image result for this is madness animated gifIf you want a real bull market, look no further than China's Non-Performing Loans, which have tripled since 2014 but now the price of the loans themselves (not the interest, the paper) has gone up 30% as confidence that the Government will "fix" the bad debts and that bubbly real estate will keep the borrowers from going underwater, driving would-be lenders to pay an average of 0.50 on the Dollar (or Yuan, in this case) – up 66% from 0.30 last year.  According to Bloomberg, there are even bids at par – for NON-PERFORMING LOANS!  

Sure, why not?  What could possibly go wrong?  The end stage of bubble markets is a gross misallocation of capital which, ultimately, starves more productive segments of the economy from obtaining capital but this can go on for quite a while because, mechanically, the banks who made the bad loans are able to dump them to 2nd-tier investors at high prices, allowing the banks to recover and, having learned nothing at all from their previous bad actions – continue to lend at ridiculous prices to under-qualified investors.  Since the new lenders are just beginning their cycle, it pushes back the collapse for 6 months to a year but also magnifies the effect when it finally does all hit the fan. 

Meanwhile, let's enjoy the ride and see how far it takes us!  

 


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  1. Good BusinessTalk interview.


  2. Will be watching now to see if 5780 is a base on NAS rather then a top.


  3. Good Morning.


  4. Sell /CL@42.95 (now short)



  5. Good morning everyone!

    This week's webinar replay is now up!

    https://youtu.be/v1B5J_VCQkU


  6. They should close these tax loopholes but probably won't:

    https://arstechnica.com/science/2017/06/with-help-of-coal-tax-credits-mylan-had-a-negative-294-percent-tax-rate-in-2016/

    Since 2011, the company has purchased 99-percent stakes in five US companies that process coal to make it cleaner burning. Mylan then sells the coal at a tax-deductible loss and earns tax credits, intended to incentivize cleaner energy production. Over the last six years, the drug maker has earned hundreds of millions in tax credits that have lowered its already very low tax rate and raised its overall bottom line.

    According to Reuters, the credits helped Mylan lower its tax rate to just over four percent in 2014 and to 7.4 percent in 2015. Also that year, the company underwent a tax inversion, moving its headquarters from the US to the Netherlands, to further slash its tax rate. In 2016, the company had a $358 million tax benefit, giving it an effective tax rate of negative 294 percent.

    It's just incentives for companies to worry more about financial engineering than the actual product!


  7. Subsidies for the little people are the evils of big government but subsidies to rich people is capitalism:

    https://www.washingtonpost.com/investigations/trump-seeks-sharp-cuts-to-housing-aid-except-for-program-that-brings-him-millions/2017/06/20/bf1fb2b8-5531-11e7-ba90-f5875b7d1876_story.html?utm_term=.53fc23650685

    President Trump’s budget calls for sharply reducing funding for programs that shelter the poor and combat homelessness — with a notable exception: It leaves intact a type of federal housing subsidy that is paid directly to private landlords.

    One of those landlords is Trump himself, who earns millions of dollars each year as a part-owner of Starrett City, the nation’s largest subsidized housing complex. Trump’s 4 percent stake in the Brooklyn complex earned him at least $5 million between January of last year and April 15, according to his recent financial disclosure.

    And that Brooklyn complex was one of his father's investment and part of his inheritance. Not one of his own investments which explains why it's profitable I guess. It's just sick!


  8. In the not so distant future they will have to close airports in the Southwest the entire summer:

    http://jalopnik.com/phoenix-cancels-more-than-40-flights-because-its-too-ho-1796271450

    Today, Phoenix is forecast to hit a toasty 120 degrees Fahrenheit, hot enough to force the city’s Sky Harbor International Airport to cancel some 43 flights.

    I hope some of the people stranded are climate change deniers!


  9. SJL. Airport closure How silly you are sometimes. Have some perspective. These are a few Canadian aircraft that have  a lower temperature range. Long airplane retrofitters in Dubai. 


  10. Latch – Sure, keep thinking that:

    For larger jets, this 120 degree temperature is something their big engines can handle—they can safely take off at up to 126 degrees.

    It's only 6 degrees more until bigger planes have problems! We'll be there soon…


  11. And BTW, it will make things more inconvenient eventually – I was once in a Detroit to Tokyo flight and we had to stop in Anchorage to refuel because it was so hot in Detroit that they could not take off with a full load! That added another couple of hours to the flight… 


  12. Phil – /KC  

    It's hurting me and my avg is 1.24 on 2.  What do you got?


  13. Phil – Would you still sell NASDAQ at these levels? If so what would you recommend as target to take profit?


  14. Go GILD!!!!


  15. Good Morning

    got out even on /cl but still have /RB need 1.445


  16. Good morning!  

    Thanks Den. 

    Oil/Burr – I don't see it, the need for OPEC to keep prices up is too great.  It does boil down to having faith in the manipulators but I have to go with my gut here.  

    Big Chart – Will be huge if the Nas busts over that 45% line at 5,800 – may as well start betting on the next 5% leg higher.  /TF still my favorite index long, just getting over 1,400. 

    Taxes/StJ – I don't really have a problem with the incentives they used.  The function was performed and coal was cleaned up and clean coal was made available cheaply and a rich company paid for it.  It's not so much avoiding taxes as choosing to spend them on something else.  It's possible the incentives go a bit too far – there's no price discovery in those, the Government picks an arbitrary price and it works or it doesn't – that's what should be addressed (and the inversion thing, of course).  

    And of course MYL was worried about their product – didn't they try to double their prices before mean old Democrats got mad at them?  

    That Trump think is sickening but so is everything going on in Washington.  

    Retrofitters/Latch – Good pivot!  Long air conditioners too, which leads to more global warming.  Long power companies that use cheap natural gas to produce electricity that powers the air conditioners.  

    /KCU7/Burr – I have 4 long at $1.27 but I haven't added any more yet though I will at $1.20 as just one more drops us to $1.25+ on 5 and the 2nd below $1.25 on 6 – that's kind of exciting to own.  

    If I wasn't still down on oil, I'd be thrilled with /KC getting cheaper.  

    /RB/Savi – If you DD at $1.425 you average $1.435 and you keep a stop below $1.425 on the 2nd batch at least, so your net on the original won't change much if it fails but you have a much better chance of getting even. 


  17. Thanks Phil


  18. Does the NatGas come out @ 10.30 or 11?  


  19. Burrb  10;30


  20. FU TSLA!!!!


  21. Anyone know why /KC rolled to Sept, but TOS and IB show 27 days left in the /KCN7 contract and have it trading @ 1.1820.  Only had 253 on volume compared to 12.7K volume on /KCU7…  But why roll it so early?


  22. Burr/KC- the first notice period for physical delivery was June 20th. The brokers that don't support physical delivery will auto liquidate at the first notice for physical delivery so that they don't face an issue if the delivery happens for whatever reason.

    Hence the volume on the July is close to zero and most if not all moved to Sep.


  23. Phil/Oil  Uhmmmmm…..Gartman went bullish oil today.


  24. Yesterday afternoon I bought some UWT to play a bounce in oil.  Sold 1/3 up 6%.  Stop on balance at entry.


  25. Pharmaceutical and biotech stocks strong for 4th straight day.  VRX up 7% today.


  26. Ravi  _  But why doesn't /CL or /RB work like that.  They don't have such long windows when they are trading after 1st notice.  


  27. CBI – Looks like it may be moving on a semi positive note form CSI 

    Target Price dropped from 34 to 21 ( outperform rating from neutral)

    Key Data Points Ahead: Outside of the change in CEO, we see several near-term catalysts for the stock. (1) Capital Services Sale: this is still expected to close by the end of Q2'17 and would be viewed as a positive. (2) Westinghouse: we view this as a neutral to positive event (if the case goes back to the Chancery Court a positive; if it gets pushed to an new Independent Auditor a neutral; and if it settles, we assume a positive as both parties will have to come to realistic agreement). (3) Earnings: there is risk of incremental charges on problem projects and likely a negative.

    ? Lowering Estimates & Price Target. We reduce our FY'17-19 EPS to $3.50, $4.05, and $4.05, respectively. We revisit CBI's valuation using a SOTP and lower our price target to $21. 


  28. Not much move in /NG on inventories (other than the flash crash):

    I wish I was that quick on the buy button.  

    AMZN back over $1,000.

    /KC/Burr – N7 expired and that is why you don't mess around with front months anywhere near expiration. I hope you didn't have an open one or you will be getting a very large shipment of coffee next month!  

    Gartman/Hanj – Have you noticed he's gone totally random lately.  I think he'll say whatever people want him to say, as long as he pays attention.

    Speaking of what people want you to say, they cancelled my China interview after my pre-interview made it very clear I consider the real estate market there to be a dangerous bubble.  That's why you can't trust the media – you are not getting balanced views (US or China) because the publishers/stations have already decided who's opinions you get to hear and most shows script in advance.  That's why I like Jill's show, she doesn't like a lot of prep – she just wants to have actual market conversations and her problem is most guests are used to being prepared and getting questions in advance – so they are uncomfortable without the script!  

    UWT/Albo – That was a well-timed play.  

    Now THAT is how you catch a falling knife!  


  29. Burr- all commodities with physical delivery has something like this similar to KC. Check the below link.

    http://www.interactivebrokers.com/en/p.php?f=deliveryExerciseActions&ib_entity=llc


  30. great Albo—missed that UWT play



  31. Just the chicken's way to play /CL. ;-)


  32. Presidential Approval Detailed Tables, June 2017





  33. The Everything Bubble



  34. How Screwed Is Your Job?



  35. VRX - Now up 12 %.  Covered some.  Wish the VIX were higher.


  36. Saudi Aramco IPO is exercise in reverse valuation


  37. COST – whew – any thoughts on when this will reverse?  




  38. Secret CIA assessment says Russia was trying to help Trump win White House


  39. Fuuuu…   /KC is almost as bad as CBI!!!!!  Now below 1.20.  WTF.




  40. Run for the Hills.  I just got a report from Stansberry Research via Zero Hedge that claims that over half of the big players in Silicon Valley have plans in place to protect themselves from the impending complete collapse of the US government.  One has already relocated his family to Singapore while another has an estate purchased in New Zealand ready to go.  Some have built heavily armed bunkers in the desert.  This will happen in the next couple years.  My question, being a Canadian, is  " Will this chatroom remain open during this calamity and chaos?"  I value all your opinions but I insist on Nattering weighing in. Thanks in advance



  41. White House Tries to Get G.O.P. to Water Down Russia Sanctions Bill



  42. Never mind my last post.  Did some research and looks like a scam.  Geez who can you trust on the internet anymore?


  43. What's up with SPWR? Nice pop today


  44. CDNjay 

     

    You are correct on Stansberry Research 


  45. KApella/SPWR  All solars up on Trump's comment to build the wall with solar.


  46. CDNjay – fake news ;)


  47. BLCM, JUNO, KITE   all up


  48. Han/SPWR  

    Up 13% on that comment? Maybe a fade? Can buy the 8P expiring next week for 6 ticks :)


  49. Phil – "VICE/Naybob – Someone is going to have to sit down and explain that to me."

    Vice went from print media (books) to digital media (music, TV channels) to TV Production to News. Viceland – TV Channel; Vice and Vice News – HBO (Bill Maher Executive Producer).  

    Vice investors include: WPP, the world’s largest advertising group 8% = $450m. Rupert Murdoch’s 21st Century Fox 5% = $300m — while James Murdoch, the company’s chief executive, sits on the Vice board. Walt Disney recently paid $400m to double its stake 10%; while A&E Networks, a television group it owns with Hearst, invested in and launched Viceland, Vice’s cable channel. 

    Vice is valued at almost $2bn more than Tribune Media fetched when the owner of 42 US television stations was sold recently to Sinclair Broadcast. It is more than double the market value of the New York Times, four times what the Financial Times cost Nikkei when the Japanese company acquired it two years ago and more than 22 times what Jeff Bezos, the Amazon founder, paid for the Washington Post in 2013.

    Big names, big money, lofty valuations, a lot of this… and Out.


  50. Phil – "The end stage of bubble markets is a gross misallocation of capital which, ultimately, starves more productive segments of the economy from obtaining capital"

    The deleterious effect you astutely point out, is begat by monetary policy with QE, IOER, ZIRP and NIRP. All of which blows asset bubbles while causing economic contraction and stagflation.


  51. Learner – "COST – whew – any thoughts on when this will reverse?"

    Perhaps support at $157? or Pre Trump rally at $142? Or when the economy shows some signs of life?


  52. CBI/Batman – $3.50 per $14 share is their worst case?  I guess I'll stick with them then!  

    COST/Learner – That's why we held firm on our short calls in the Butterfly Portfolio – this is about the right price now – the run-up was a bit silly.

    Calamity and Chaos/CDN – I'm about to take a trip that will field test our European fall-back operations.  Not too worried about the US collapsing and I doubt many in SV are either though it's always prudent for people of means to hedge a little bit outside their country.   

    SPWR/Kapella – I hate to say this like it's a real thing but Trump said he's going to make THE WALL solar and all the solar companies are rallying based on the math of paneling a 2,000-mile wall.  Idiotic, of course, but reality isn't much of a thing in this market.  

    “We’re thinking of something that’s unique, we’re talking about the southern border. Lots of sun, lots of heat,” Trump said. “We’re thinking about building the wall as a solar wall, so it creates energy, and pays for itself. And this way Mexico will have to pay much less money, and that’s good. Is that good?”

    Image result for trump solar wall

    Trump is stealing from the Elon Musk school of bullshitting napkin ideas as if they are a done deal.

    I don't think Trump knows, this was originally a joke on Facebook:

    Image result for trump solar wall

    Image result for trump solar wall

    I hope everyone has their escape plan prepared!  

    VICE/Naybob – I know what they are, it's the valuation that's silly.  Desperate old media types in search of something that appeals to younger people is what it's about.


  53. Go GILD!!

    COST – I have a $165 put sale at $2.81 – can hold till July 21 and see where this settles. Can always take the shares and sell calls on it until break-even. 


  54. Phil/ KC- any news causing price crash?


  55. Wall-  If Mexico refuses to pay for a wall they said they'd never pay for, how does that play out in court? Or if it isn't a legal issue, how does Donald collect without sending troops in to seize Mexican assets?  I thought Canada was a goofball republic but the USA is comedy central.  Please my American friends, stop this insanity


  56. If anyone fancies a pick me up after the fun filled Oil trade week.  

     

    Following the fire in London which killed over 78 people due to the building be wrapped in highly combustible foam tiles (official UK eradication of poor people policy) the local council has purchased 68 flats in a luxury apartment block up the road in which they will house many of the survivors.

     

    Reading the comments in the press of horrified rich people about a the impending plunge in their house prices and the horror of having to see people who do not work in Banking or worse, clean Bank's officers has a certain satisfaction.  Onward to the revolution!


  57. FU JO!!!!!

    FU TSLA!!!!

    FU AMZN!!!!


  58. KC now at 117!!!


  59. 116!


  60. Ravi -KC- any news causing price crash?  Guess I picked the wrong week to stop drinking coffee.

    Canadian Blue Jay – "Run for the Hills… My question, being a Canadian, is  " Will this chatroom remain open during this calamity and chaos?"  I value all your opinions but I insist on Nattering weighing in. Thanks in advance"

    Hello Labatt Blues,  won't you turn your radio down, respect the seven second delay we use. So you say there's a race of men in the trees? You're for tough legislation, Thanks for calling, I wait all night for calls like these… 

    As opposed to the pernicious global plague of stupidity and what is speeding towards our sun, this "impending" collapse is really quite benign.  Far more dangerous, you see them on the grass at lunch hour, soaking up the vertical rays.  They're landing on the Jersey beaches, look out Phil. They're mixing with the population, a virus wearing pumps and pearls and Out.


  61. Holy ship. I'm down 6k


  62. Well breaking 1.6 was it for me.  I'm out. Never trading it again. 


  63. How Will Costco Compete With Amazon-Whole Foods?

    Font size: A | A | A

     

    10:17 AM ET 6/22/17 | TREFIS

    Amazon’s acquisition of Whole Foods is likely to disrupt the grocery industry. Investors believe that Amazon will emerge as a strong competitor to players such as Wal-Mart, Target and Costco(NYSE:COST), eating into their market shares and changing the grocery industry dynamics. While most players have invested significantly in e-commerce initiatives, Costco remains a laggard. The company is focused on initiatives to attract customers to its stores, given its membership-based model which encourages customers to buy in bulk. Costcos customers buy more when they come to its stores compared to its online channel. The companys membership renewal rates are high and its focus on organic produce and value shopping is aimed at attracting younger customers.Costcos model works on thin margins and large volumes, and thereforethe company is not keen on selling smaller quantities online. Costco has been able to grow its revenues and comparable sales with this model without a strong focus one-commerce. In Q3 2017, the company exceeded analysts estimates with revenue growth of 8% year on year and a 5% increase in comparable sales. Costco is the most efficient retailer in the U.S. and generates significantly higher revenues per square foot compared to most of its peers. Costco is likely to generate revenue of more than $1500 per square foot in 2017, while the comparative number for Wal-Mart is less than one thirdof this number.

     

    .

    Thus far, the lack of an effective integrated (online and offline) retail strategy has not impacted Costco, and its loyal customers continue tovisit its stores for their bulk purchases. However, after the acquisition of Whole Foods, if Amazon can offer a comparable serviceto its Prime customers and leverages Whole Foods expertise in organic produce, Costco could run into some trouble.Amazons experiments with grocery (AmazonGo) appear to be aimed towards providing convenience to customers who prefer to pick up a few items from a store quickly and easily. It is not clear whether the company will also look into the bulk orders segment to drive revenues. However, the company can easily leverage its loyal base of Prime Members to replicate the Costco model. In the past, Amazon tried to lure its Prime customers by launching a Visa credit card which gave additional discounts for purchases on its platform, and allowed customers to earn discounts in restaurants and gas stations. This card was similar to Costcos new Visa card which provided similar discounts, but at a lower rate. This move indicates that with its deep pockets, Amazon can easily build a competitive edge over Costco.

    Currently there is a significant overlap between Costcos memberships and Amazon Prime Members. A Morgan Stanley survey based on 2,700 people revealed that45% of Costco members also had a Prime membership. Both companies have loyal user bases, and Costco did have an edge in the grocery segment, but Amazons acquisition of Whole Foods changes this equation. With its focus on customer service, its loyal customer base, and competitive prices, Amazon may cause some problems for Costco going forward.


  64. And Steely Dan shows me the way and brings comfort.  Thanks Natt


  65. KC – really painful , no idea it could be so volatile   Was down $6k then switched and followed it done, gingerly.. only down $5k now … crap!!!!!  I will be looking at it tomorrow,, seems like more pain tomorrow for the longs.    Should have listened to Nat, but was not sure he was saying.. SELL!


  66. Nat/  Donald Fagan – great musician, provacative satire on the folly of Americana

    Show Biz Kids 


  67. Hi Phil, Are you (or anyone) following DDR? Lots of insider buying but DDR keeps dropping. (DDR Corp. is a publicly traded real estate investment trust that owns and manages value-oriented, open-air retail shopping centers, or "power centers" in the United States mainland and Puerto Rico.)


  68. Latch – "Should have listened to Nat, but was not sure he was saying.. SELL!"

    You could not be sure, because Hobson gave no trading advice. Only speculated as to possible support levels, and passed along intel re: short positions and triggers, which could have been utilized along with other data in making an informed trading decision.  This comes to mind and Out.


  69. I'm looking at the USO July 8 calls on TOS, the delta is 2142. I'm confused. Can someone explain how I'm supposed to convert that into a ratio to related to the underlying call? Is it .2142 per dollar by chance? 


  70. Phil – RB/CL – would you consider this a weak bounce and more pain to come?


  71. Gee Nat, sure 'no' how to make a guy feel good….. besides not washing my dick, I mean.  :)


  72. Bulls Phil said in his morning post that he thinks oil should go higher over the next week.  There will definitely be drops along the way as we just saw


  73. Wow, /KC getting crushed into the close.  

    Can the 5% Rule save us and, if so, can we get more than a weak bounce?

    News/Ravi – I don't see any.  Neither do the pro traders:

    22 Jun 2017

     

    The coffee markets aside from the clearing of the books on the part of the trade and industry of their prompt July contract positions within the New York market ahead of first notice day for the contract, were in receipt of nothing in the way of news or excitement yesterday. But with the continued speculative pressure upon this market that has seen the arbitrage between the New York and London markets narrow to its lowest value for over forty-two months, being perhaps the other notable factor for the day.

    The big question for the present and one that is very much on the lips of the arabica coffee producers in general, is when might it be that the New York market could be seen to be oversold by the short sold speculative sector of the market, which might trigger a profit taking liquidation of some of their short positions and with buy stops being triggered, a possible sharp upside correction in value. Albeit that to a degree, the selloff within the New York market is being influenced by and is somewhat in line with the generally soft nature of the overall macro commodity index in general.

    DDR/Ilene – A shopping center REIT is not in favor in this market but perhaps the owners believe in it.   To me it looks like a $3Bn market cap on a company with  $1Bn in revenues and $60M in profits for a p/e of 50 and even if they double that, they'd still be expensive for a REIT.  Scary debt, poor cash flow and only $66M in the bank to service $5Bn in debt after burning $45M last Q and $926M last year.  At least it's slowing down but – no thanks!  

    /CL pulling back too into the close.  Dollar back up to 97.34.  

    USO/Jeff – I'm not surer what you are looking at there.  The Delta on the July $8s is 0.86 so they move 86% of each Dollar USO moves (only in theory).  It's not bad, they have a very small premium at 0.89 with USO at $8.82 (0.07 premium).

    /CL/Bulls – Sadly, it looks like a weak bounce.  

    10% Down from $52 would be $46.80 and we can see how that failed on the bounce so, as I said yesterday, that could mean we're in the process of following through to a 20% correction, which would be $41.60 though at that point we'd have to defer to the main line on oil ($50) and look at the zone between $40 and $50 and that would make $42 the weak bounce line so – either way, $41.60 has to hold or we'll be seeing a drop to at least $40 and probably, as I said yesterday, $38 – because we'd overshoot 20% of the $10 drop, at least.  

    That being said, I still don't see it happening.  OPEC is already circling the wagons.


  74. So these guys are nuts to be buying DDR! 


  75. Ilene,  DDR is ground zero for the suburban " drive to and buy" shopping center.  Its way too early to determine how that sector will shake out. Some will survive and some won't but you can count on one thing for sure…there are going to be a lot retail of vacancies and associated pain along the way.


  76. DDR    most of the insider buying is from the Otto family, wealthy from other investments as well as real estate.


  77. Thanks, Phil and Stockbern – perhaps these buyers either are being delusion or have so much money they don't care. Is this somewhat like Sears (where there's insider buying on the way to bankruptcy)? 


  78. speaking of Nasdaq

    QQQ a spread today sold 30,000 July $136 puts and bought 23,000 August $143 calls


  79. Coffee- My theory……..Coffee is a stimulant that keeps us awake.  Donald Trump is a world wide phenomenon as a joke so everyone wants to go to sleep until he is gone so I don't expect a bounce up until the mid terms where we may see a bounce.


  80. This seems like a well reasoned take on CBI:

    I rolled my long calls down to the $10's, and am in it for the long haul.

    https://seekingalpha.com/article/4082822-chicago-bridge-iron-huge-risky-mess-think


  81. What a pump job!! When "they" decide to pull the rug out, it will NOT be pretty. We are in the heart of vacation territory on the South Shore of Lake Superior and it is dead; no cars on roads coming, or going. Usually things pick up with people going to the Apostle Islands and Bayfield, but there is no traffic at all. My bookings at the rental lake house are very thin. The only time you see four wheelers are a few on weekends going on trails and roads. Big change from even last year. So many closed stores and shops all over. My guess is we are already in a recession, big time. Very few even at the campground which is cheap, comparatively speaking. I am trying to unload investments in  RE and leave the country. This is truly getting frightening.


  82. recession/pirate

    That's because everyone is saving up to buy a TSLA


  83. From my observation at the food bank I much doubt that. So sad to see people who have worked hard their whole lives come in once a month for what is essentially a weeks worth of food. But they are so grateful for even a little help.


  84. TSLA/ I don't know what its like in the US but up here you don't need money to buy a car, just make monthly payments for 8 years and you are homefree.  No sweat


  85. Bayfield/pirate   One of my favorite vacations back in the 90's.  Stayed at the Rittenhouse Inn.  I remember shop keepers didn't even lock their front doors at night.  I had my first taste of whitefish livers there.  When I got back to Texas, I ordered another batch along with several lbs. of smoked whitefish.


  86. Walker has cut all the programs that supply funds to these non profits so many of us are bringing in essentials like sugar to replenish what can't be bought by the programs because they don't have the funds. It's basically the churches that provide help for the program and individual contributions. So many are widows and widowers who lose that SS $ when a spouse dies.


  87. By the way, notice on the above chart that, from $40, oil went to $54, which was a 40% overshoot of the move back to $50.  It's not about the 25% move from $40, it's about the $10 drop from $50, which is the "right" price for oil in the summer (lower in the fall).  

    If we were really on our way to $60, then the 20% overshoot to $56 wouldn't have been resistance but, since it was, it signaled that the $50-55 range was dominant and, once that failed, the $50-45 range and now that that's failed. it's the $50-40 range we're watching and that means weak bounce is $42 and strong is $44 and, if we have rejections at $44, then $42 is likely and, if we fail $42 and get rejected there – then we are consolidating for a move back to $40.

    Notice the buy program off $42 is the same as the buy program off $43 and that failed miserably as did the buy program off $44 and the one off $45 and the time-frames seem to be condensing as well.  

    So, technically, oil is F'd and Fundamentally, oil is F'd and it's only the supposition that, like last August, OPEC will begin making noise to jack up the market – that I has me playing it long because, as I noted yesterday, that Aramco deal is worth $2Tn in the hands of a Government that does manipulate oil and just replaced their Prince and the day after the new guy steps in, already OPEC is back to talking up oil so – I'm still inclined to give them some time to do their magic.

    DDR/Ilene – Well, Lukas is the CEO and he bought $500,000 and Otto bought $5M on 6/2 with the stock at $8.80 so 600,000 shares but on June 24th of last year, Otto bought $16M worth at $16.05 (1M shares) and, had you used that logic as your sole reason to buy shares then, you would now be out $8M with him and he is dollar-cost averaging his shares – not sure why you are so motivated?   Otto owns about $100M worth of DDR stock so spending $5M and pushing paid analysts to pump it up to all the people who follow insider trading is a good play because, for some reason, a lot of people blindly follow insiders as if they know something when, statistically, it's a very poor indicator of future performance.  Also, Otto is worth $6Bn and has a massive shopping center empire in Europe, this is simply dipping his toe in the market in the US. 

    Vacancies/Stock – Good point.  SHLD just filed for BK protection in Canada as they close a bunch of stores, thousands of stores are planned for closing in the US and that will free up BILLION of feet of retail space – how can that possibly be good for people who sell retail space for a living?  

    SHLD/Ilene – Sears is a strange case as Lampert is stripping the assets away and making money by transferring the good stuff to SRG, which he "offered" to SHLD shareholders for $15/share when he formed it but there were few takers, now $42 and worth $2.3Bn so $1.3Bn in profit for Eddie at the expense of all the other SHLD shareholders and he is in no way done as SRG will strip away evey SHLD asset of value and leave Eddie with a debt free vehicle.

    There's a guy called Varga in the show Fargo, who takes over a parking lot REIT in order to use it to leverage money to build up all his other enterprises.  He destroys the REIT and the people who own it while siphoning off all the assets to his own companies.  That's kind of like what Eddie does to SHLD.  

    I've seen so many successful guys flush their life's work down the tubes after listening to sharks like that. 

    Good theory CDN.  

    Ballsy spread Stock, good luck!  

    Good CBI review Palotay.  If it were all positive, then we wouldn't be able to buy it so cheap!  

    Recession/Pirate – I don't know if it's a recession but a very painful rotation that is going to hammer certain parts of the country as well as people in the Bottom 80%, who will be in their own sort of Hell while the Top 20% party like it's 1929.  Eventually, the problems of the Bottom 80% become everyone's problems but, until then, we get to have fun.  Keeping one hand firmly on the exit door at all times is a good way to ensure survival.  

    Whitefish/Stock – A staple of NY delis – especially bagel stores.  


  88. pirateinvestor 

    They opened a whole foods in Woodbury Minn.  you call shop there when you are in town.


  89. Stock-yes the whitefish and trout are outstanding. Even the smoked salmon is delicious. Did u get to try the Tetzner's ice cream? Outstanding-local dairy with no garbage fillers in it.


  90. Thanks QC for that info-didn't know. Usually go to Cub when in your territory which is, of course SVU. They have super expanded their organic and GF supply.


  91. Phil- yes it may be we will all be forced to run for the hills to survive. I thought I saw the worst in 2008-2010, but this is definitely rock bottom for up here. Urban areas are different. Nyc is sure still booming and so is Mpls. Mall of America seems to be chugging along OK for now.


  92. here is another trade today that looks more reasonable

    GLD    10,000 Jan18 $115 puts sold to buy 10,000 $123 calls for .88 credit


  93. TSLA confirmed joint venture with a chinese company to open production facility there and avoid the 25% tariff.


  94. pirateinvestor 

    Cub same exit as whole foods on Radio Dr. near 94 


  95. actually conflicting reports on TSLA, thestreet.com reports a deal is done but earlier news said they are still exploring a deal and won't know details till year end.


  96. SPY volume at 3:00  25,846,035

    wouldn't take much to move market in either direction


  97. Don't worry, Phil, I'm not motivated – and don't have any DDR. (Debt scares me!)

    I was just curious about what's going on here.  


  98. Great summary on Sears:

    Lampert only put $400M of his own money into Sears – 10% of his net worth at the time.  His 40% of SRG is worth $1Bn.  He has loaned SHLD a lot of money against real estate assets worth far more than he loaned them and, if SHLD defaults, he gets the properties free and clear (they were otherwise unencumbered).  It's a textbook lesson in how to strip a company away from it's stockholders right under their noses.  

    •Lands' End: Sears spun off retailer Lands’ End in 2014, but Lampert's hedge fund owns 59% of the company. That stake was worth nearly $360 million as of Wednesday morning.

     

    •Real estate: Sears sold 235 store properties and its interest in another 31 properties to a newly formed real estate investment trust (REIT) called Seritage Growth Properties for $2.7 billion in 2015. The deal gave Seritage control of some of Sears’ best properties in a sale-leaseback transaction. Lampert’s ESL owns 43.5% of the limited partnership units of Seritage and 7.9% of the REIT’s voting power.

    The move was similar to transactions favored by investors in legacy retailers whose real estate is considered more valuable than their actual business.

    The problem is that "then you end up signing leases" and saddling the company with lease liabilities, said Neil Stern, senior partner at retail consulting firm McMillanDoolittle.

    Sears agreed to pay Seritage $134 million in annual base rent for the first year, with 2% annually increases beginning in the second year.

    •Real estate collateral: Entities affiliated with Lampert's hedge fund extended $500 million in credit to Sears in January, secured by at least 46 Sears properties and possibly more. That means that in the event of bankruptcy, the lender may be awarded the property rights, giving Lampert control of those store sites.

    •Additional secured financing: ESL lenders provided Sears up to $500 million through a secured letter of credit facility in December, from which Sears has already drawn $200 million. ESL lenders also hold $336 million in secured debt issued to Sears in April through a separate facility and term loan, as well as $300 million in a second lien term loan issued in September. Secured lenders are paid first in bankruptcy.

    •Sears Canada: Sears partially spun off its Canadian division in 2012, but Lampert's ESL owns about 45% of the company. That stake was worth nearly $80 million as of Wednesday morning.

    •Sears Hometown and Outlet Stores: Sears spun off the franchise in 2012, but ESL retains 57% ownership of the company. That stake was worth about $45 million as of Wednesday morning.

    Also, Sears Hometown and Outlet Stores still acquires “a significant amount of its merchandise” from its former parent company “at cost,” according to a filing.

    Sears Holdings also provides certain logistics, warehousing, human resources, information technology and transportation costs to Sears Hometown and Outlet Stores, which is invoiced weekly and also pays its former parent royalties on sales of certain brands.

    •Paid-off financing: Affiliates of ESL and another Sears investor, Fairholme, made a $400 million short-term loan to Sears in 2014 that has already been paid back in full.

    Corporate filings reveal that Lampert, who disclosed in a corporate filng that he owns all of ESL and makes all of its investment decisions, has made moves to protect his position.

    Image result for sears stock decline

    The mall by my house is cutting Sears up into a smaller space and putting other things in the store with them.  Probably that's going on in a lot of malls.  

    Walker/Pirate – Another kind of corporate criminal but this guy destroys a state in order to enrich his sponsors.  

    And I love the GOP crowing about winning in Georgia after spending $25M to hold a Congressional seat, most of that thanks to those fantastic Super PACs that the Supreme Court lets interfere in local elections now.  

    Ossoff out-raised Handel 5:1 from actual voters (like Bernie) but what difference does it make when those contributions are dwarfed by Koch-backed super-pacs?  Democracy for the highest bidder – keep one hand on those exits folks!  

    GLD/Stock – That's a huge amount of risk just to save $2.50 on the calls.  To me, if you can't afford $2.5M for the calls, you have no reason to make a bet this large in the first place!  I suppose if they'd be HAPPY to own 1M shares of GLD at $115 it's OK but again, if I have $115M to spend on GLD, why am I sweating the $2.5M?  

    TSLA/Rustle – Wow, they found another reason to say CHINA! today – amazing.  



  99. TSLA/wheeee  So TSLA is considering a streaming music service?  WOWOW!  I heard it will stream all the way to Mars and you will be able to power it with farts and tax credits.  Same as the cars.


  100. Maybe Otto should take some lessons from Lampert and make this situation work for him. smiley


  101. TSLA/hanjongin

    They are pulling out all the big guns before the secondary.


  102. Ethereum never went to "10 cents." That's just pure propaganda.

    but if someone did manage to buy it there they made 332.00/0.10 = 3320X in a day. Commendable! Nicely done.


  103. I sold my single TSLA Jan19 500 call yesterday. Tidy profit. Shoulda waited – oh well. The chart looks very positive from here. It looks like a runner.


  104. I have to hand it to TSLA, if they raise 2-3bn which is expected in the next raise, they have done it without much dilution this time.  Would dilute stock back to 360-365, big deal and it probably will go up because Musk will announce he's buying 25mm for himself.  Gives them plenty of cash to patch over their losses till the next raise.


  105. Oil/Hanj – One can only hope they are right!  

    Otto/Ilene – It already is, he keeps buying more on the way down, doing a quiet takeover and, when the rest of the investors give up, he'll take control and THEN pump a ton of money into the company from Germany.  The difference is, there's nothing really evil about what he's doing other than he could bring in the capital BEFORE his partners are all forced to sell out.

    0.10/BDC – Well I didn't check it, that's what the article said.  On the other hand, the market cap doesn't prove anything.  It may not be updated often enough to catch the move.  


  106. Regardless of the positive shifts, Dems still losing. "Close but no cigar" is how you remain nowhere near power, which is basically the banner of the Democratic Party currently.


  107. The Democratic Party right now is like the Mets.  They think they finally have all the pieces and on paper things look good.  Then the season starts and kablooey.


  108. perhaps, but I've stopped reading zerohedge because it is 99.8% pure propaganda bullshit and the comments are so bad as to be unreadable. Like I said, who bought a t a dime? The price is 338 right now. So they're a big winner. Why not congratulate the winner?


  109. @BDC

    I still don't understand why someone would sell his position at a dime.  Would you not think to piece it out.  Seems like whoever sold it even under 50, might've been the worst traders ever.  At a dime, what's even the point of selling it.


  110. yeah rustle, it's like, it never actually happened or something…


  111. @bdc

    Told you before I still don't understand the currencies that well so I won't trade them but after the other day, I have a strategy.  Will just have a standing order to buy at $1 so I get filled on the next crash.


  112. Phil- I still have the BHI Jan'19 55 puts sold for $6.9 when the GE merger was announced. With the merger closing hopefully in the next Quarter and from what I can tell the new Company value is a wide range of estimates what are your thoughts on continuing to hold this until the merger is complete and collecting the rest of the premium or is there a lot of risk now with the new Company value


  113. /KC COFFEE TIME AND HERE'S YOUR CUP O JOE!!!! Here is the climate change and low supply high demand pump for the last 48 hours. To no avail…

    Here is why /KC dumped out….   Forecasts of dry weather in Brazil, the world's biggest coffee and sugar grower, for at least the coming week are expected to allow farmers to speed up their harvests. OH, SHIT MORE SUPPLY??

    Lets get technical… A move below key levels triggered chart-based long liquidations at 1.18… The move pressured the arabica premium over robusta, on a continuation chart, to 0.25c lb the smallest since 2008.  

    Traders also pointed to the $1.20/$1.25 September options put spread that they said saw around 4,000 lots trade prior the sharp move lower, which possibly led to long liquidation in futures as prices extended losses. 

    Speculative selling, against a backdrop of ample global supplies, have caused oil, sugar, coffee and cocoa markets to extend losses.  Still wonder why?

    Algorithms and correlations.  Oil dropped, sugar is used to make ethanol for fuel, and with cocoa, chocolate, economic news not so good, so everybody drops, herd mentality enforced by bots. Phil knows a little about that.  Smiley.

    Silver lining?  Chocolate and candy makers, along with coffee purveyors and refineries will have higher profits and Out.


  114. Rustle – "Told you before I still don't understand the currencies that well."

    Do not conflate Crypto with currencies, they are assets which can be converted into currency.


  115. Phil – "thousands of stores are planned for closing in the US and that will free up BILLION of feet of retail space"

    You think the banks in EU are a problem? Major US bank overexposure in CRE is going to be an MBS trainwreck.


  116. Thanks, Phil. 

    biodieselchris, re: "I've stopped reading zerohedge because it is 99.8% pure propaganda bullshit and the comments are so bad as to be unreadable."

    ZH has many different writers and I've been suspecting that at least a few are on the Russian payroll. (Some are ordinary bloggers, e.g., Kimble, Rubino – we used to even post there, way back.) Zero Hedge used to be a much better site. We've blocked the worst offenders posting under their own handles, but many post under "tyler durden." 

    To All – thoughts on ZH and what's happened to it?


  117. Ilene – beware the Durden's my pretty, they have an agenda.

    Pirati – "We are in the heart of vacation territory on the South Shore of Lake Superior and it is dead; no cars on roads coming, or going."

    This isn't a recession, and there never was a recovery. It's something far worse. Again, July 4th has been cancelled, no independence left, as it was given back voluntarily and Out.


  118. Economy--Well, I am in Yellowstone National Park and it is extremely busy.  Campgrounds and lodges are full, traffic is horrendous, many foreign visitors from Europe and Asia. No sign of any slowdown. 

    But in spite of the crowds, it is still beautiful here and it is not that hard to find solitude. For those that are curious, you can see my photographs from Grand Teton and Yellowstone on my Instagram feed:  @denis.p.leblanc


  119. Ilene – beware the Durden's my pretty, they have an agenda.


  120. Pirati – "We are in the heart of vacation territory on the South Shore of Lake Superior and it is dead; no cars on roads coming, or going."

    This isn't a recession, and there never was a recovery. It's something far worse. Again, July 4th has been cancelled, no independence left, as it was given back voluntarily and Out.


  121. ZH- I will look there from time to time when it is cited for an article via some other source but generally ignore ZH as their pieces tend toward hype. So, kind of like Drudge- some interesting info but can be entertaining none the less. 


  122. Phil,

    What are your open futures positions and basis?


  123. Ilene – ZH – while they still post things that are occasionally interesting, the agenda has turned me away. I still peruse them when I skim "Phil's Favorites," I rarely dig deeper anymore. Seems to have the Russian influence.


  124. ZH-also stopped reading it. Read headlines and usually I see BS so just gave up. Besides he was very nasty about Hilliary which was uncalled for. I can handle some nasty, but when it is just crude garbage with nothing substantive ie not fond of dumpf, but you don't need to get ugly. Everytime he opens his mouth I get another laugh of the day after great belly laughs from Phil and Nat.

    BTW thanks Phil and Nattering-I need all the levity I can get. As Jackie said in the "HOneymooners" your the greatest!


  125. And the articles on SHLD, absolutely amazing. Reminds me of dumpf.


  126. Best link of the week- Denis Leary – Asshole.  It's gonna make me laugh through the weekend

    thanks Nat


  127. second best link of the week .. Hobson


  128. BBBY  -9%   well what did you expect….its a retailer depending on people to buy sh*t


  129. ZH has been garbage for a long time. All you had to do was to read the comment sections to see who the target audience was. It ran from racist to homophobic and everything in between. They used to have some decent stuff way, way back but they turned into Drudge on steroids. At one point it was a bearish balance to all the bullish crap on TV but then it turned to propaganda. I have mentioned to Phil multiple times that we should not even link to them! I don't mind a different opinion, but one based on facts and one that stay civil.


  130. jelutuck – enjoy the eclipse!


  131. That will promote entrepreneurship:

    https://arstechnica.com/tech-policy/2017/06/trump-plans-to-dismantle-obama-era-startup-visa/

    A regulation from the Obama administration that would have allowed foreign-born entrepreneurs who raise investor cash to build their startups in the US won't be allowed to go into effect.

    The Department of Homeland Security will file an official notice to delay the International Entrepreneur Rule for eight months. The intention is to eliminate the rule entirely, according to sources briefed on the matter who spoke to The Wall Street Journal.

    Why do we keep shooting our own foot!


  132. rustle – crypto is crypto no matter what you call it. It's its own thing and any categorization otherwise is an approximation.

    Ive been calling this entire space calling a 100% risk of loss with a 10-100 X upside since 2011 (I was wrong, it was a 100-1000X), and I continue to assume the exact same thing now. There's this odd persistence that it should be something other than 100% risk of loss. Like when someone calls it a "currency," it's not a "currency" it's a decentralized digital asset. That's very odd to me on many levels, and certainly on the level of a board that has futures traders (100% risk of loss if you're call is wrong). It teaches me a lot about people though, when I'm expecting a certain level of understanding and I get the opposite. It's very strange though (to me).


  133. LOL Rustle – that hurts because I was a Mets fan when they sucked.   broken heartbroken heartbroken heart

    BHI/Calch – Well, it would have been nice if you had cashed out sooner but, as a new trade, the net $48.10 entry seems like a good play for the long-term – unless oil falls below $40, then I'd bail.

    CRE/Nabybob – Very possibly.  Seems to me though that the Fed has amply bailed them out – as long as housing doesn't fall at the same time – that they couldn't take.  

    ZH/Ilene – Just like SA, they have some really good writers and they have some paid pumpers and dumpers and penny stock promoters – only a bit better than randomly reading things on the web.  

    Yellowstone/Jel – I think that's because it's a bit more upscale as a wide-spread tourist attraction.  The top 20% (1.5Bn people) are doing very well, fantastic compared to 8 years ago so they are on vacation and partying and there's plenty of them to fill Disney and Yellowstone and every other place people with money like to go but the ordinary places, the local resorts that depend on local people to spend some extra cash – they have the same problem local malls are having.  

    Killington had a great gourmet restaurant called Hemmingways but Killington is an ordinary resort where NY and Boston people go to ski if they can't afford to go out West and it died in the recession as did many of the more expensive spots but, in Vail, all the cheap places died out because the people who ski there weren't interested and the middle-class people from Denver avoided Vail due to the high prices.  You can see the same thing at various shore towns, depending on where they draw their visitors from. 

    Futures/Japar – 15 oil and 6 coffee, stopped out of the others.

    Thanks Pirate.  

    ZH/StJ – Ilene and I were just talking about that, she is going to change our system so we only publish the articles she approves, rather than taking their feed as we do now because the garbage does outweigh the good stuff these days.  

    Eclipse/BDC – You know we're having one on 8/21, right (Oregon will be the best spot)?  It's in the summer so people with kids need to do their own projects – nice, rare event we don't want to miss.  And, of course, AMZN is already cashing in!  

    BBBY missed!  Down 10%.


  134. Stocky, Pirati, Latch, all – Thank you for the kind words. If I make you laugh, bring a smile, perhaps piss you off and make you think – Job Done churning the pot and Out. 


    • All 34 lenders subjected to the Fed stress tests exceeded the minimum projected capital and leverage ratios under the severely adverse scenario.
    • It's the third consecutive year there have been no banks failing.
    • The results of the CCAR – in which banks' buyback and dividend plans are evaluated – are set for release after the market close on Wednesday. Passing the stress test does not necessarily mean a lender will pass the CCAR as the PhDs at the Fed can approve or flunk a bank based on qualitative as well as quantitative grounds.
    • Among a couple of close calls, Morgan Stanley's (NYSE:MS) supplementary leverage ratio fell to as low as 3.8% under the severely adverse scenario – not too far from the 3% minimum. Ally Financial's (NYSE:ALLY) CET 1 ratio fell to as low as 6.5% vs. the 4.5% minimum.
    • Press release
    • Full report

    • From the earnings PR: "The Company did experience increased softness in transactions in stores, as well as higher net-direct-to-customer shipping expense, coupon expense, and advertising costs … It remains to be seen whether these challenges were more pronounced in, or unique to, the first quarter due to the smaller sales base in this period, and/or a later start to the summer selling period."
    • Comp sales fell about 2% Y/Y.
    • Conference call coming at 5 ET
    • Previously: Bed Bath & Beyond misses by $0.13, misses on revenue (June 22)
    • BBBY -9% after hours
    Can't blame AMZN for this one: Sonic -2.9% amid declining same-store sales
    • Sonic (NASDAQ:SONC) is off 2.9% after hours after revenue slipped 25% Y/Y and missed expectations amid a refocus on franchising in the company's Q3 earnings.
    • EPS was flat on a non-GAAP basis (at $0.43) but rose 42% on a GAAP basis, to $0.44.
    • Same-store sales fell 1.2% (down 1.1% at franchises, down 3.2% at company drive-ins).
    • But the results showed improvement in underlying sales and store profits, CEO Cliff Hudson says. "Despite continued sluggish traffic, we are working to improve same-store sales this summer and beyond, with new product news, targeted value and quality customer service."
    • Drive-in margins increased by 40 basis points.
    • For the full year, the company still expects EPS down 2-5% as same-store sales fall about 2.5% systemwide. It's forecasting capex of $46M-$48M and free cash flow of $55M-$60M.
    • Conference call to come at 5 p.m. ET.
    • Press Release
    • Investors have focused on disappointing guidance and pressured profit margins at Chipotle Mexican Grill (CMG +0.9%) since earlier this week, but SunTrust's team of analysts think some interesting news about CMG's catering business has been overlooked.
    • SunTrust notes CMG has brought catering delivery to ~40% of its stores, a big deal for the company since it believes catering represents a multi-year driver of same-store sales for CMG as consumer trust rebuilds.
    • CMG launched catering in early 2013 and hit a high of 1.3% of sales in 2014 but following its food safety issues, the firm estimates catering sales fell to below 1% in 2016.
    • For perspective, Goldman says catering comprised 16% of last year's sales at Zoe's Kitchen (ZOES +4%), 12% at Panera (PNRA) and 8% at Jack In The Box's (JACK -2.2%) Qdoba restaurants.
    • A new court filing sheds new light on self-driving car spin-off Waymo's (GOOGGOOGL) legal battle against Uber (Private:UBER) over an engineer’s trade secrets theft.
    • The filing states that Uber CEO Travis Kalanick knew early last year that former Google engineer Anthony Levandowski had discs containing files downloaded from Waymo.
    • Kalanick told Levandowski to destroy the discs because Uber didn’t want the information.
    • Waymo says the discussion and destruction strongly suggest that there was stolen information on the discs. 
    • Uber fired Levandowski for failing to cooperate with investigations into the potential theft. 
    • Previously: Alphabet wins legal decision in ongoing Uber battle (June 7)
    • ConocoPhillips (COP -0.4%) is resumed with a Neutral rating at Goldman Sachs, despite the "major positive" of its recent sale of Canadian oil sands assets to Cenovus Energy.
    • Goldman says COP has transformed its business more rapidly than expected, executing $16B in asset sales YTD, well ahead of the company's $5B-$8B target, but there are fewer catalysts in H2 to move shares higher, especially after recent relative strength in which the stock has been the best performer among U.S. oil majors and large-cap E&Ps.
    • The firm says it continues to favorably view COP's free cash flow inflection, disciplined approach to capital allocation and capital spending, and streamlining of its asset portfolio, but sees greater upside elsewhere via "long-term [free-cash-flow] generators among majors," including Canadian Natural Resources (CNQ +1.6%), Chevron (CVX) and Suncor Energy (SU+0.5%).
    • Sears Holdings (SHLD +7%) is preparing to close 20 more stores in the United States.
    • That's on top of 245 closings already announced, employees told Business Insider, and will bring the company's store count down to about 1,180.
    • The new closings come in a number of states and a few large cities, including Chicago; San Diego; Houston; Toledo, Ohio; and Albany, N.Y.
    • Earlier, Sears Canada (SRSC -19.9%) announced it would close a quarter of its stores (59 locations) as part of court-ordered restructuring.
    • Bloomberg reports the principal changes from Obamacare that Republicans' current version, the American Health Care Act, proposes:
    • Medicaid financing: federal reimbursement for Medicaid expenses currently based on a fixed percentage but would be limited to a per-enrollee cost based on 2016 average. States would be allowed to choose between two formulas for Medicaid funding. Starting in 2025, the Senate version would set a lower funding growth rate than the House version. Certain Medicaid enrollees exempted, including people with disabilities and children.
    • Obamacare allowance for states to expand Medicaid to individuals making as much as 138% of the federal poverty level would be phased out starting in 2020. Medicaid expansion funding would be phased out between 2021 and 2024.
    • Insurance subsidies: maintained through 2019, ceiling for some level of premium assistance would drop to 350% of federal poverty level from the current 400% starting in 2020.
    • Minimum level of benefits: instead of the ACA's 10 broad categories of coverage, states could opt out and apply for a waiver to define its own list of benefits for subsidized plans beginning 2020.
    • Pre-existing conditions: insurance companies would not be allowed to charge customers with such conditions more than healthy customers.
    • Age rating: Insurers would be able to charge the oldest customers five times as much as younger ones, up from 3:1 in Obamacare.
    • State Grants: $112B fund aimed at stabilizing their respective individual insurance markets or help low-income people buy coverage. $2B in 2018 for substance abuse treatment.
    • Amazon (NASDAQ:AMZN) will stream Thursday night NFL games to Prime customers in the upcoming season and now seeks advertisers for $2.8M packages, according to Reuters sources. Ads would appear during the games and on Amazon’s website.
    • Amazon paid the NFL $50M to stream the 10 games, taking over from Twitter’s prior live-streaming deal, and attracting big-name and lucrative advertisers could define such arrangements in the future. 
    • Twitter charged $2M to $8M for ad packs that included placements in game highlights. NBC and CBS typically charge between $550K and $590K for televised ads during games.
    • Facebook (NASDAQ:FB) unveils its new mission statement and a new suite of group admin tools at today’s first-ever Facebook Communities Summit.
    • “The full mission statement is: "give people the power to build community and bring the world closer together," says Mark Zuckerberg.
    • The mission statement focuses on building that community through the expansion and improvement of Facebook’s Groups.
    • Facebook will add new group admin tools including metric-driven Insights, membership request filters, post scheduling, and is now testing the ability to link groups.
    • Music industry sources say Tesla (TSLA +2.1%) has had talks with all major labels about licensing a proprietary music service which would come with all of its cars, report Peter Kafka and Johana Bhuiyan at Recode.
    • This naturally begs the question of why the automaker doesn't just bring on existing services like Spotify (Private:MUSIC), Pandora (NYSE:P), or Apple music (Tesla already has a ex-U.S. deal with Spotify).
    • "We believe it’s important to have an exceptional in-car experience so our customers can listen to the music they want from whatever source they choose,” a spokesperson tells Recode
    • Apple Pay (NASDAQ:AAPL) will soon have access to loyalty cards to more than 85 restaurants through the Punchh Restaurant Marketing Cloud.
    • Punchh customers include Quiznos, Pollo Loco, Smashburger, and Coffee Bean & Tea Leaf. 
    • Customers using Apple Pay at participating locations will see a loyalty card prompt while checking out. Using the card will accumulate points and create special offers for future visits. 
    • The new loyalty cards will roll out later this year and join Walgreens, which has had Pay-linked loyalty cards since 2015, and Kohl’s.    
    • Previously: Apple Pay adds 28 new domestic banks to partnerships (June 7)

    • Alongside declining budgets for security, theft and other inventory "shrink" at retailers rose to $48.9B in 2016 – up from $45.2B a year earlier - according to the National Retail Federation.
    • Shoplifting accounted for most of the losses, with the average incident cost rising to $798.48 from $377. That big boost is likely thanks to the increased threshold for felony crimes, with just larger thefts being reported.
    • Employee theft rose to $1,922.80 from $1,233.77.
    • "When a measure becomes a target, it ceases to be a good measure," wrote economist Charles Goodhart 40-some years ago. Horse racing bettor Robert Bacon called a similar notion The Principle of Ever-Changing Cycles."
    • Bottom line, says Leo Chen at Cumberland Advisors: When popular measures (such as the VIX) are easily available to all, they cease having any predictive value.
    • So by all means, follow the VIX as an excellent contemporaneous indicator of what's happening in the market. But selling (stocks) when VIX is low (as it is now), or buying when it's high, isn't going to yield any abnormal returns.
    • Money flow into drug makers has ramped up after the release of Republicans' draft healthcare bill and fears subside that there will be any significant headwinds to future price increases.
    • (VRX +12%)(ABBV +2.8%)(PFE +1.1%)(MRK +1%)(NVS +4.7%)(LLY +2.2%)(BMY +2.6%)(AGN +1.8%)(TEVA +4%)(AZN +1.8%)(GSK +1.6%)(AMGN +1.8%)(GILD +5.4%)(BIIB +1%)(VRTX +0.7%)
    • June Kansas City Fed Composite Index+11, vs. +8 consensus, +8 in May.
    • “Firms reported faster growth in June than earlier in the second quarter,” said Wilkerson. “The share of factories planning to add workers over the next six months also rose solidly."
    • via Peter Grant at the WSJ
    • “Imagine Amazon logistics meets Dropbox software,” says a co-founder of Clutter, one of a handful of startups using the latest technology to offer a better way for folks to store things.
    • As opposed to traditional self-storage – which offer up garages or the like for customers to fill as they please – these new players pick up and deliver, photograph what is stored, allow customers to view belongings online, and with a click order some or all to be returned.
    • Executives at Public Storage (NYSE:PSA), CubeSmart (NYSE:CUBE), and Extra Space Storage (NYSE:EXR) aren't worried, saying the costs of transport and handling will be too high to allow the new entrants to compete. “It sounds like a great product on paper,” says a Public Storage executive, who may or may not be looking for a new job in 10 years.
    • The founder of MakeSpace – now with 300 employees in four cities, and having just raised another $30M – isn't surprised. "[Public Storage is] a real estate business … What do they know about logistics?"
    • Others maybe in line for disruption: Life Storage (NYSE:LSI), National Storage (NYSE:NSA), Global Self Storage (NASDAQ:SELF).

    • May Leading Indicators: +0.3% to 127.0 in-line with consensus, +0.2% (revised) prior.
    • Coincident Index +0.1% to 115.3 vs. +0.3% prior.
    • Lagging Index +0.1% to 124.2 vs. +0.3% prior
    • Carnival (NYSE:CCL+0.8% premarket after posting better than expected Q2 earnings and revenues, and guiding Q3 earnings above consensus.
    • CCL says Q2 gross revenue yields, as measured by revenue per available lower berth day, rose 2.7% Y/Y; in constant currency, net revenue yields rose 5.1%, better than March guidance of a 2.5%-3.5% increase.
    • Gross cruise costs including fuel per ALBD rose 3.2%; in constant currency, net cruise costs excluding fuel per ALBD gained 1.5%, in-line with March guidance of a 1.5%-2.5% increase.
    • CCL issues upside guidance for Q3, seeing EPS of $2.16-$2.20 vs. $2.14 analyst consensus estimate.
    • For FY 2017, CCL sees EPS of $3.60-$3.70 vs. its prior outlook of $3.50-$3.70 and $3.71 consensus, with higher cumulative bookings for the next three quarters at prices that are well ahead of the prior year.

  135. Eclipse/BDC  Thanks! We will actually be in the Sawtooth Mountains near Stanley Idaho for the total eclipse in August. Grand Teton National Park, which is in the totality band is expected to be crazy, crazy that week. Anything that is bookable is already booked. All the campgrounds in Grand Teton are first-come, first-served, so it is going to be a zoo to get a campsite.

    Phil, the eclipse will be total for a wide band across the whole USA, so no better in Oregon than South Carolina.

    We bought our eclipse glasses on Amazon already!


  136. Phil & Ilene – a couple suggestions for Phil's Favorites: 1) Add any article that Phil links to to the favorites at the same time they are added to the member chat, so that all the suggested readings are in the same place. 2) You may want to allow members (with perhaps some screening or editing) to post articles to the same place (similar to what you tried a few years back with Flipboard Phil). I like to read back thru the favorites off hours & weekends, and would think a single stream for all the articles would be a plus. Thanks for considering.


  137. Another BS job from Trump:

    http://talkingpointsmemo.com/edblog/it-didnt-work-out

    Carrier did commit to retaining 1,069 employees at the Indiana plant for a decade. But those aren’t going to be manufacturing workers. Most of those are engineering and technical positions that were never slated to be laid off anyway. Meanwhile, the money Carrier received in the deal is being invested in automation. So rather than investing in new production and jobs, as Trump promised, the money is going into automation which means replacing humans with jobs with machines.

    I guess just like the 50,000 mining jobs!


  138. Hi Deano and all:

    Here's the section with the News items that Phil posts in the comments, these articles cross-post into the News almost instantly: http://www.philstockworld.com/news/. You'll find other news selections there too.  

    The mechanism used to curate the News articles does not work in the Phil's Favorites section. However, the Favorites contains selected articles as well, usually the full article (we need permission). The News section provides the first few sentences and you have to click on the link for the full article.

    Favorites: http://www.philstockworld.com/category/topic/phils-favorites/

    Re:  "I like to read back thru the favorites off hours & weekends, and would think a single stream for all the articles would be a plus. Thanks for considering."

    The problem with a single stream is that we have different mechanisms for Favorites and News sections and can't put both in the same section for technical reasons. I'd suggest looking at both, there will hardly ever be any overlap. Articles in both sections are vetted.

    On ZH, we're going to make a change to ensure that only the worthwhile articles appear. 

    Members can post in the Members' Corner section. At this time, it's necessary to send me what you want to post, send to "ilenecapsw@gmail.com". I'll look into making posting directly or more directly possible. 

    Thanks for the feedback! 

    Ilene 

    (I've added a picture of the tabs so you can see what to click on to get to the News and the Members' Corner.)


  139. Boeing factory where Trump delivered jobs speech to lay off 200 workers


  140. Governors wary of Medicaid cost shift in Senate health bill



  141. America’s Complex Relationship With Guns


  142. Modi’s India The World’s 4th Fastest Growing Economy


  143. Experts: US exiting climate pact may doom some small islands




  144. Traders test OPEC ‘whatever it takes’ resolve to defend oil price


  145. One chart explains Jeff Bezos’ sprawling empire



  146. A Sudden Burst for Biotech Stocks



  147. Japan’s manufacturing sector is slowing down



  148. Good morning!

    Indexes dropping off sharply with Europe after weak activity report and, of course, the oil sector is still selling off.  /SI with a nice pop this morning, back over $16.70, Gold $1,257, Oil still $42.80, /KCU7 $118.30.

    • A closely watched survey showing economic growth across the eurozone slipped back to 55.7 in June, from 56.8 the previous month, but the region still enjoyed its best quarter in more than six years.
    • The flash composite PMI index was still way above the 50 level that marks expansion.
    • "At the moment I'm not too worried about it," said Chris Williamson, chief business economist at IHS Markit.

    Not a whole lot of other news, shouldn't be much of a sell-off.