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Funtime Friday – Earnings Season Starts Today

It's my favorite time(s) of year!

JPMorgan (JPM), Citigroup (C) and Wells Fargo (WFC) kick off earnings season this morning but it's a very low bar set for the banks as they have all cut their profit forecasts in the last few weeks so expectations are low – especially as the 2nd quarter is usually weak for trading.  Overall, the sector (XLF) is up 10% since early June and now we'll see if it's justified or not. Q1 results, which came out in late March, sent the sector off a cliff but they've climbed back since on the same fairy-dust that's powering the rest of the bubble.

Bank Notes:

  • Related imageJPM missed, WFC missed and C beat but C reduced their loan-loss reserves from $12.3Bn to $12Bn, something banks can do "because they feel like it" and that effectively popped their bottom line by $300M.  C's outstanding loans was up 2%, to $645Bn so the reduction in reserves is C telling us that they don't feel more than 1.86% of those loans will default while the industry standard is 2-2.5% or $12.9Bn – $16.1Bn so, effectively, C is goosing their bottom line by $900M-$4.1Bn by simply pretending their loans (student loans, sub-prime auto loans, retail store loans) are the safest in history!  
  • JPM dropped their loan-loss reserves to $1.22Bn from $1.4Bn, adding $178M to their "earnings" and, if that seems a little thin to you, consider that they did, in fact, write down $1.2Bn in loan defaults in Q2 and that covers just 0.56% of their portfolio, down from 0.79% in Q1.   
  • At least WFC is honest about it, saying "Net income increased $315 million, or 15 percent, from second quarter 2016, primarily due to the tax benefit in second quarter 2017 and lower loan loss provision" but, then again, it's kind of hard not to mention a $450M decrease in your loan loss reserves!  For those of you keeping score, that is  % of their earnings.  WFC now has $11.073Bn provided for on $957.42Bn in loans or 1.15% – that'd double JPM's joke of a reserve but half of Citi's.

Don't forget that if ANY of these banks fail – they will take the entire US economy with them but hey, that's no reason to regulate them.  At least they could standardize their reporting formats so we can compare them side by side, right?

We're certainly back to shorting the Index Futures at:

  • Dow (/YM) at 21,500

  • S&P 500 (/ES) at 2,445

  • Nasdaq (/NQ) at  5,800

  • Russell (/TF) at 1,425

Weekends are tricky to short into so very tight stops above the line.  As a rule of thumb, if any 2 indexes are over, we stop out, regarless of whether or not ours is still below.  I can't see anyone in their right mind having a meeting this morning and leaving it all on the table into next week's earnings.  I strongly expect a sell-off at some point today.

Image result for economists cartoonThe data is also disappointing this morning with CPI flat, which is a 100% miss by leading economorons, who were looking for 0.1% gains.  Core CPI was also 0.1% and that was only a 50% miss against expirations so put the champaign on ice for the right-wing philosopers – that's as close as they've gotten all year!  

I should have realized it in Econ 101, where the class was taught by a TA who was a complete idiot whose only claim to fame was that he had memorized every crackpot theory from the book he was "teaching" us.  He didn't have an original thought in his head but he felt that every situation could be solved by quoting one of the masters.  This would be like doctors learning medicine only by studying old operations or lawyers working each case exactly like an old one that seemed to fit the situation at hand.  

Anyway, the short story is they are idiots – don't take them seriously.  Meanwhile, Retail Sales were down 0.2% in June and of course that doesn't surprise you because you can read the paper and observe the World around you but, for Economists – it was a 300% miss from their +0.1% expected.  Ex gas and autos, they missed by 0.5%, expecting a 0.4% gain against an actual 0.1% drop.  How could they POSSIBLY think Retail Sales were up in June?  HOW???

Image result for economics voodooAnd these are LEADING economists that are polled by Bloomberg and the Wall Street Journal and our Government and multi-billion Dollar decisions are based on their projections every day.  No wonder we are so screwed up!  They can miss and miss and misss again and still they are consulted for the next projection – it's amazing!  The problem is that economics is really just a philosophy – it's not math but people keep asking economists math questions like – were retail sales up or down.  This stumps them every time…

And yes, we picked XRT long yesterday (and M for our Members this morning), but that's because we thought, even with another miss in June, that July and August will have easy comps and XRT has already over-reacted to the decline in sales.  Anyway, it pooped $1 already – so don't complain!  

I'll be back from vacation on Monday, well-rested and ready to play those earnings.

Have a great weekend,

- Phil

 


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  1. Image result for bastille day

    It's Bastille Day and Trump is in Paris. Maybe he'll get some historical perspective on what happens when inequality rises to high levels. 


  2. Short /CL and /RB @ 46.62 & 1.5430, respectively 


  3. Thoughts?


  4. Too big to fail is too big to exist! Why would anyone not see this? We allow this to go on even when it's obvious that at some time in the future it will not end well. We have allowed the corporations to buy our politicians and in return have stacked the deck for themselves. Audit the FED! Why not expose to the light of day what this private bank is doing? Insanity reigns and we worry about walls and a few terrorists.


  5. Hi ho Silver!!!!


  6. Good Morning.


  7. Out of /CL and /RB @ 46.06 & 1.5296.  Very nice way to start the weekend, now a quick walk on the beach before I begin my studies for the day.  


  8. Happy Bastille Day!  I'm not French, but the Wife and Kids are….. :)


  9. Is it a drinking holiday? Can I stick to Kentucky bourben? If that's ok, here's to you France!


  10. Every French holiday is a drinking holiday…


  11. LOL. I am not drinking anything but coffee, but it sounded cool…


  12. mkuc—EVERYONE 


  13. NEEDS TO DRINK COFFEE!!!!


  14. Oh no, none for you, you get too excited. Well, if FTR is up I guess we can handle it… :)


  15. I have avoided the coffee trade but do my part as a consumer


  16. Having fun Phil? Was 97 here yesterday, broke the record by 3!


  17. Good morning!  

    Banks getting hammered, down 2.5%.  I guess I'm not the only one who thought those earnings were not good.

    Europe is turning ugly at 2:30.

    Nikkei too – I guess we are just waiting for the rest to drop.

    Trump/StJ – More likely he'll go home with more ideas on how to keep a lid on the peasants. 

    Oil and Gas/Joseph – You are a braver man than I am.

    Too big/Mkucs – They should have broken them up when they had the chance.   Of course oil is much weaker than it looks as it's being supported by a weak Dollar at the moment (poor retail sales, low wages = low demand for Dollars).

    Good job taking quick profits. 

    France/StJ – Saw a good French placemat that said "A meal without wine is… breakfast." 

    97/Mkucs – Yeah, it's not bothering us as we're used to it but people can't handle heat here.  A lot of places don't even have air conditioning – so primitive!  

    Emma Sharples, a spokeswoman at the Met Office, said: “Heatwave is a funny term – we don’t really have a definition of it in the UK – but none of us can deny it has been a prolonged period of hot weather, and night-time temperatures have been quite unusually high, which can also be the cause of potential health problems, as well as a lot of restless nights.”

    Public Health England has issued an amber heat alert until Wednesday, one tier below level four, which marks a national emergency.

    The hottest day of the year could also still be to come, with predictions that the south of England could have temperatures of 34C on Wednesday and Thursday.


  18. http://www.commonwealthfund.org/interactives/2017/july/mirror-mirror/

    Top of the class for UK healthcare!  This is as close to a national religion that we have in the UK so I am very proud and grateful to live somewhere where healthcare is such a priority.  Honestly, you guys, you should try this socialised medicine.  It is awesome!


  19. Phil would you short Oil again ? seems to be trading at 46.77


  20. Try 50.55 Celsius on the way to Prescott Arizona….. :)


  21. Breakfast / Phil – I guess that leaves beer, cognac and calvados! I remember one of my friends grand-father having coffee with 120 proof calvados for breakfast! 


  22. Muck – "We have allowed the corporations to buy our politicians and in return have stacked the deck for themselves…. Insanity reigns and we worry about walls and a few terrorists."

    As for the real terrorists, they are our whores on the hill and in the judiciary at the federal, state, county and city level, and can usually be found on the back nine or the 19th hole and Out.


  23. Phil – "taught by a TA who was a complete idiot whose only claim to fame was that he had memorized every crackpot theory from the book he was "teaching" us.  He didn't have an original thought in his head"

    You speak of a multitude of econo-morons classically schooled in false doctrine and whom regurgitate their parrot food.  I suspect the FOMC know exactly what they are doing and play dumb like a fox. Yet, despite 300 PHD's, heavily funded with the best of the best in statistical analysis, the FED has NEVER predicted an economic downturn in advance. What are the odds of that? Holy False Statistician Batman!

    Just think about the bond float (QE) and the affect central bank buying has had on price and yield (NIRP, ZIRP). Add another layer on this turdcake…  the diversion and perversion of capital – misallocation due to disintermediation (QE, IOER, ZIRP, NIRP). This witches brew creates liquidity preferences which reward non GDP investment vs real GDP investment.  There is something more than natural in this.

    Had normal price discovery and liquidity preference been in effect, and had lending by the banks not been discouraged, would that money be sequestered in a massive bond, equity and RE bubble? Or would it be actually working towards economic production or GDP?  No need for an econo moron, because a child can answer that one.

    When true price discovery is obscured, one can count on this… What would normally be an accurate econometric or market signal, has been corrupted, so its bad data. We all know what happens to control when field data is not accurate, GIGO viz. like the monkey revising projections, how in the hell do you steer the ship with blinders on? 

    You can't guide or control anything in this world with faulty instrumentation readings. In this case, we can blame falsity: in economic doctrine, econometrics and MSM happy daze narrative designed to "anchor the expectations" of the unsuspecting electorate and populace, and Out.



  24. Real terrorists/Nat  Amen Brother!  :)


  25. 1020 – You near Prescott Chino Valley? I got peeps there.


  26. Oh crap, I misquoted, it should read:  there is something in this more than natural. My apologies to the Bard.


  27. scottmi…that was kind of scary ;-)


  28. ?Nat – no, near San Diego. We were checking out Embry-Riddle…..My Son wants to be your next Pilot…. :)


  29. ?Without question…. ;)


  30. No, really….Dam laptop….. :)


  31. UK/Malsg – So the top tax rate is 40% but there's no local taxes and property taxes are negligible – is that correct?  Seems to be a good amount of loopholes for investors anyway.  Low property taxes and free healthcare is a pretty good trade off from the 5% you save in the US.  

    Oil/Pat – It's up with the markets (and the down Dollar) at the moment.  I'd stay away today.  Maybe /RB at $1.56 but balls of steel to hold that over the weekend.

    Fed/Naybob – True, they have no interest in accurate forecasting.  

    Sentiment down too but why should that matter?

    Reuters/UofM Consumer Sentiment

    • July Consumer Sentiment93.1 vs. 95.1 expected and 95.1 prior.
    • Current economic conditions 113.2 vs. 112.5 prior.
    • Index of consumer expectations 80.2 vs. 83.9 prior.

    business inventories


  32. Have a safe trip home, Phil!


  33. Little doubt this is gonna pull back but not today I gurss


  34. Phil, Top tax is 45% for income over $170k (ish) but by and large most people are in the 22% to 42% (we have something called National Insurance which is basically a quirky income tax that harks back to when we introduced the state pension) and capital gains is flat at 20% with special 10% for entrepreneurs with 28% charged for gains on real estate.  All gains on your family home are free of tax.  Local taxes are paid for fire service, local authority services like rubbish collection and this is based on the 1996 value of your house so its very outdated.

    We obviously have VAT at 20% on consumer goods and we have a real estate tax on sales of land (0.5 to 3%) which recently got increased for landlords and people buying second homes.  London drops a lot of cash on the Treasury with those taxes but it makes our housing market Illiquid as people cannot afford the extra tax out of their net earnings on top of high house prices.

    We are a highly taxed country but our corporation tax rates are 20% and having an NHS means you can easily move jobs, become a freelancer or have kids without worrying about going bankrupt or waiting six months for your insurance to kick in.  My household has received tens of thousands in care over the years (operations, emergency healthcare for bumps and falls and loads of minor visits to the GP) and its always been top notch.   Most private hospitals in the UK will send you to an NHS emergency room if anything goes wrong as they might have a swanky coffee maker but if your heart stops they are useless.

    It is not perfect but on Monday I went to my GP with a minor issue and by Thursday I was in the local hospital (walking distance form my house) with a consultant and was treated there and then.  All free and no paperwork.

    Hope this helps.


  35. Malsg – This sounds so horrible compared to our US healthcare :-)


  36. I'm ready for it, just don't trust our corrupt government to manage it.


  37. Go FTR! I never doubted you…


  38. Is it time to short RB yet? :)


  39. Thanks 1020.

    CNBC/Scott – Propaganda arm of the top 1%

    Pullback/Mkucs – Patience.

    Taxes/Maslg – Thanks for overview, guess I'll be getting into home flipping and of course, entrepeneurship.  I was comparing house taxes for Londoners with what we pay in NJ and you guys pay about 1/5th – I'd be happy to pay 3% of my 1996 value!  The VAT, to me, is just what stuff costs.  I didn't find prices too much higher at the grocery store or for street food but electronics and clothing are a bit steep.  

    ROFL Mkucs! 

    Frustrated Jamie Dimon explodes against "stupid sh--" in U.S. government

    • Jamie Dimon erupted in frustration over D.C. gridlock during JPMorgan Chase's (JPM-1.5%) earnings conference call this morning.
    • "It's almost an embarrassment being an American citizen traveling around the world and listening to the stupid shit we have to deal with in this country," Dimon said.
    • The U.S. has become "one of the most bureaucratic, confusing, litigious societies on the planet… It's hurting the average American that we don't have these right policies," referring to a lack of pro-growth legislation that Dimon says could help to boost an otherwise sluggish economy.
    • "Since the Great Recession, which is now eight years old, we've been growing at 1.5%-2% percent in spite of stupidity and political gridlock… it would be much stronger growth had we made intelligent decisions and were there not gridlock."

    Analyst weigh in on JPM's downward guidance for net interest income

    • JPMorgan Chase (JPM -1.2%) earned $26.5B over the past 12 months, the most ever by any major U.S. bank, but its decision to guide lower its full-year outlook for net interest income is a factor weighing on the stock.
    • Buckingham Research's James Mitchell: “NII was below forecast, with JPM guiding to NII growth this year of +$4B vs. +$4.5B previously. This likely reflects the impact of a flattening yield curve and lower NII in trading. So while NII growth is still quite positive, the lower guide is an incremental negative.”
    • Instinet's Steven Chubak: “While 2Q results are encouraging, we expect shares to come under some pressure… The company guided to lower NII for FY’17 as well as weaker core loan growth (+8% Y/Y, vs. prior guidance of +10%), suggesting 2H NII forecasts may be too high."
    • Keefe Bruyette & Woods' Brian Kleinhanzl: “JPM lowered the full-year NII increase [and net interest margins] came in below our expectation and declined from 1Q17… However, loan growth came in better than our expectations and management’s guidance on credit is better than our forecast.”
    • Q2 earnings

    Casino stocks slide on junket operator warning

    • Macau gaming stocks are under pressure following reports of junket liquidity issues in Macau and potentially strict regulations in Japan casinos: MLCO -3.1%WYNN -2.8%LVS -1.7%MGM -0.9%.
    • A large junket operator in Macau reportedly has warned about liquidity risk in the face of continued anti-money laundering initiatives by regulators.
    • The junket operator advised its customers to withdraw funds out of "underground" bank accounts, according to Daiwa analyst Jamie Soo.
    • A top prosecutor in Macau has been found guilty of corruption, as the Chinese government continues a crackdown in the gambling district.
    • Also, Bloomberg reports that Japan is considering strict regulations for potential casino projects expected in the coming years

    Wal-Mart +1.6% as Goldman upgrades, adds to Conviction Buy List

    • Wal-Mart (NYSE:WMT+1.6% premarket after Goldman Sachs upgrades shares to Buyfrom Neutral with an $84 price target, up from $78, and adds to its Conviction List, saying WMT is "as well positioned as any mass market retailer" to cope with increasing demands of e-commerce and technology spending, and weather Amazon’s growth.
    • "We see merits in WMT's front-loaded investment, scale, capacity for additional investment, small-market focus, and current impressive inventory discipline," the firm writes.
    • Other positives include WMT’s "excellent working capital management," bottoming of food inflation, improved return on capital, and relative price/earnings ratio is below the multi-year mean.

    RH announces completion of $700M share repurchase program

    • RH (RH -6.9%) completed its $700M share repurchase program, purchasing 12.37M shares during Q2.
    • Combined with the $300M repurchase of 7.85M shares completed in the Q1, the Company has purchased 20.22M shares representing approximately one-half (49.6%) of the shares outstanding at the beginning of the first quarter of 2017.
    • The Company reaffirms its Q2 guidance of revenue in the range of $595M to $610M and adjusted net income in the range of $13M to $15M.
    • Post reduction in the number of shares outstanding Q2 adjusted diluted EPS is expected to be in the range of $0.43 to $0.50, assuming a weighted average diluted share count of ~30M.
    • Press Release

    Leerink's Porges says Incyte good target for Gilead

    • Apparently with a bit of time on his hands, Leerink's Geoffrey Porges ponders attractive takeover candidates for Gilead Sciences (GILD +0.3%), considering its declining growth and $10B cash hoard.
    • A while back, he speculated that Vertex Pharmaceuticals would be a good target, but nothing came of it. Now, he says it should take out Incyte (INCY +0.9%), citing its attractive pipeline and potential synergies with Gilead's existing roster of products. He adds that, assuming a reasonable acquisition premium, a deal would dilute earnings through next year but would be accretive thereafter. He claims that long-term earnings synergies could be 20% or higher.

    Wells bearish on Valeant, sees 49% downside risk

    • In an investor note, Wells Fargo's David Maris says the FDA approval of J&J's TREMFYA (guselkumab) for plaque psoriasis yesterday bodes ill for Valeant Pharmaceuticals (VRX +0.9%), which is set to launch its own psoriasis med, Siliq (brodalumab) in the next few months.
    • Maris believes peak sales for Siliq will only reach ~$250M due to the crowd of competitors in the space: Lilly's Taltz (ixekizumab), AbbVie's HUMIRA (adalimumab), Novartis' COSENTYX (secukinumab), and now TREMFYA.
    • He rates the stock Underperform with a $9 (49% downside risk) price target.
    • Source: Bloomberg

    Susquehanna: Applied Opto results a good omen for Corning

    • Susquehanna has reiterated its positive take on Corning (GLW +0.3%), noting that a healthy pre-announcement of earnings numbers from Applied Optoelectronics (NASDAQ:AAOIbodes well for the fiber supplier.
    • Applied Opto is again on the move today, up 7.3%.
    • The AAOI announcement indicates "continued strength in GLW's optical communications biz unit,” writes analyst Mehdi Hosseini, "specifically, AAOI's top line revenue has a 79% correlation to GLW's carrier sub-segment (2013-current)."
    • AAOI said its revenue would come in at $117.3M, beating earlier forecasts for $106M-$112M.
    • Corning may pursue M&A as well to hit its 2020 revenue goals, Hosseini says, with an eye toward "opportunities with product sets that are complementary to GLW's current offerings, as a means of enabling the company to sell a service versus just miles of fiber.
    • "Whereas fiber used to be laid for long haul, now we see an increasing number of short/dense deployments (even just meters in length)," Hosseini says.

    Uber competitor getting $2B investment in Asian market

    • Uber (Private:UBER) rival GrabTaxi might receive up to $2B in funding partly from SoftBank, according to The Wall Street Journal.
    • The funding could push Grab, which operates in seven countries, to a valuation over $5B. 
    • SoftBank would fund the investment alongside ride-hailing company Didi, which bought Uber’s China unit last year with a promised $1B investment. 
    • Investment firm Temasek Holdings says the ride-hailing market in Southeast Asia could reach $13.1B by 2025. 
    • Grab currently stands at a better position to grab that market than Uber since the former has a better track record of working within the regulatory framework of local taxi laws. 
    • Uber faces a load of challenges including a nearly vacant C-suite, sexual harassment investigations, regulatory hurdles, and an ongoing legal battle with Alphabet. 
    • Previously: Uber, Yandex combine forces in Russia (July 14)

    House Democrat wants antitrust panel on Amazon's acquisition of Whole Foods

    • A top Democrat on the House antitrust panel wants a hearing regarding Amazon’s (NASDAQ:AMZN) planned acquisition of Whole Foods (NASDAQ:WFM), according to Reuters.
    • U.S. Representative David Cicilline of the House of Representatives Judiciary Committee writes to the subcommittee chairman, “Amazon’s proposed purchase of Whole Foods could impact neighborhood grocery stores and hardworking consumers across America. Congress has a responsibility to fully scrutinize this merger before it goes ahead.” 
    • Congress doesn’t need to approve the acquisition but strong concerns among the committee could steer the approval needed from antitrust enforcers like the FTC.

  40. Malsg – Medical Care in Europe – I'll vouch. A friend of ours broke her wrist and damaged the tendons, all outpatient, gesso cast, subsequent outpatient surgery to reattach the tendons, after Obama care paid they were left with a $27K bill. And our whores on the hill now want to retract that POS for something WORSE???

    My wife's recent bump on the noggin, scan and overnight would have cost $10's of thousands, lucky it happened in Europe. Not to mention Advill's Texas friend who was BK'ed by a broken arm with a $16K bill.  

    This shit is WAY out of MF control, we can't trust the government to run shit? And we can't trust the corporations with their free market urban myth, to not F us in the ass, without the courtesy of a god damn reach around? 

    Quite frankly, given the current state of things, somebody has to be brought into account to do their MFing job and cut the BS.  I would vote for the government to nationalize all health care and pharma, PERIOD.  

    F those free market corporate cannibals who eat their own and don't give a shit except the unholy bottom line. This is by the people and for the people, everything and everyone else including the shareholders and investors can go F themselves in the back row of the bus. 

    If we don't turn this shithole craptacular corporate F-orama clown bus to hell around soon, I am fearful of what is going to happen in the US, in our lifetime.  Now Daddy want's his BOURBON, and Out. 


  41. Wow, that is the most coherent rant ever by Nat!!!  As an outsider looking in, and so glad to be an outsider, great points though. 


  42. Reach around? I'd settle for some lube.


  43. FTR/ Phil… :) beats 12


  44. Not really, we might not get our DD.


  45. Make it a double, Nat… it's lunch time and they're not very filling


  46. Even DRYS is up today…


  47. Naybob – very descriptive – you are letting it all out :)


  48. National Health Care:  No doubt that I would prefer Cdn system to US system but it's not all sunshine and lollipops.  Shortage of specialists like neuro and orthopedic surgeons can leave you in agony, literally for years while you wait.  A friend of mine was told it would be close to 2 years before he can get needed back surgery.  The only way to get immediate help is if he becomes incontinent which would get him surgery in less than 48 hours.  People actually fake it with exlax.  That's a little sad. Still, the average person gets health care needs fulfilled in a reasonable time.  Canada could learn a little from UK system as well


  49. Guy – "Wow, that is the most coherent rant ever by Nat!!!  As an outsider looking in, and so glad to be an outsider, great points though. "

    Muck – "Reach around? I'd settle for some lube. Make it a double, Nat… it's lunch time and they're not very filling?"

    Bulls – "Naybob – very descriptive – you are letting it all out"

    I go that double and up you one… coherency and lube aside, now that I have had a shot of sour mash and taken a good long snort off the NO2 tank…. Upon logging into LinkedIN this AM I was confronted with a happy face smiling at me.  Wish your friend (fill in the blank with one of your dearest friends names) a Happy Birthday!  And I did…

    I am disgusted with all of this BS, so excuse me if I have a bone to pick with managed health care, ambulance chasers, insurance, pharma, corporate cannibals and our f-ing government.  All wrought with a bunch of useless pricks that can't get out of their own f-ing way and somehow never fail to line their pockets at the expense of everyone else.  The crap has to stop and people need to start treating other people, rather than like Dred Scott (the worst SCOTUS decision ever as it caused the Civil War), like people.  We are people, not property or chattel or cattle.

    Back to my friend, (you knew we would) she was an employee and contractor for some large very profitable consulting firms. Despite her skills, my friends compensation was held down, double standard style earning less than male counterparts.  

    Hence, she could not afford the healthcare packages offered and put off having a colonoscopy till 52. After being diagnosed with stage 4 colon cancer, the last four years of her life were a living hell and she passed last September at the ripe OLD AGE of fucking FIFTY SIX. 

    So just one small problem with that Happy Birthday… it was for a GHOST in the machine. So I wrote, Happy birthday! Wish you were still with us my dear friend. Rest in peace. Now you know why I have a large burr up my arse and Out.


  50. I have a dream.  One day this market will actually sell off for even a day. It might not be this year or next year but one day it'll happen.


  51. Well guys, time for me to hit the road.  This is my real vacation, Friday afternoon until Sunday morning!  At least I'm already in London….

    Actually it's been great, did a ton of things AND didn't fall too far behind on work – that's a perfect vacation for me.

    Markets all up into the close – we'll see if they hold it but momentum means no point looking for weekend shorts and we'll see how things look on Monday (today's gain is our hedge now).

    Have a great weekend,

    - Phil


  52. Phil

    Any interest in this group (when you are back)

    alternative asset managers,

    The Carlyle Group CG

    Ares Management ARES

    Blackstone BX

    KKR & Co   KKR

     Thanks 


  53. CDNJay > Canada Health Care > Having some experience in both Canada and EHS, I can confirm that there both systems have drawbacks, but do manage to keep a good percentage of their patients alive. I got to know the Toronto Children's Hospital very well through my wife and young kid with a kidney problem. The care was excellent.Ontario has a crazy scheme to ferry patients via Lear jet to remote hospitals where there are beds available, which must be very expensive. Feedback from a "large" number of my friends  who landed up in hospital due to skiing or roller blading accidents, was generally favorable. Elective surgery does have long delays and the odd person bites the bullet and checks into a US Hospital instead of waiting. The challenge to Universal Health Care seems to be the creation of a two-tier system where there is basic life saving medicine and electives.

    Not sure why Americans are content to go back to a pre- ACA system and to be one medical emergency away from bankruptcy. Perhaps this is Darwinism at work – let the 30M die off and the remaining population will be stronger. I will let NAT solve that moral dilemma. 


  54. FU TEVA!!!!

    teased again!


  55. Aquila Nera – "I will let NAT solve that moral dilemma."

    Frank Booth might say: Kill em all, let their god sort it out later.

    Agent Cooper might say: Everybody should enjoy a piece of this delicious huckleberry pie, with a damn fine cup of hot Jo.

    There is no moral dilemma, like not being considered a piece of chattel under Dred Scott, it's a basic human right.  Despite lives being in the balance, those in control can't seem to or don't want to, engage in managing the socio economic balancing act to get it right for the benefit of all the people.  Whadda ya gonna do? Good times?

    Again, somebody has to be brought into account to either: step up, man up, do their MFing job, cut the BS, take ownership and grow a pair or get the F out of the way.  A continuation of this and many other unacceptable, untenable and unsustainable atrocities will only earn those in power, the Frank Booth treatment and Out.


  56. QCMike/APO  I have been in a nice spread trade on APO for months.  Very strong company.


  57. Safe flight home Phil! The bad news is that Christie is still the governor…


  58. Naybob/ Health Care – the thing is Obama Care DID halve the rate of medical inflation (from 20% to 10%).  But they Rs now blame it for the other 10% which isn't really the ICOs or Obamacare. Its the pharms and the Drs and the private hospitals. (And of course they are always blaming all the upticks on …the freeloaders and Kenyans).

    Dems are terrible at messaging. Just terrible.


  59. hanjongin 

     

    APO

     

    Thanks


  60. T-Rexx – Naybob/ Health Care – the thing is Obama Care DID halve the rate of medical inflation (from 20% to 10%).  But they Rs now blame it for the other 10% which isn't really the ICOs or Obamacare. Its the pharms and the Drs and the private hospitals. (And of course they are always blaming all the upticks on …the freeloaders and Kenyans).

    Dems are terrible at messaging. Just terrible.

    Yeah I hear ya, never mind the Kenyans or Grays, Reptilians, Sessani,  Arcturians, Nordics or Yahyel. Those are the immigrant or ET card the Democraps and Retardicans will pull out of their ass when and if the shit hits the fan.  

    No insult to special populations, sometimes I wish they had control and this world, because it  would be so much better.  Innocents never have ill will or bite you in the ass. Please, kiss a young child, a pet or a special populations person tonight and Out. 


  61. I think about this all the time. This week one of my partners and I repaired a complex aortic aneurysm open (opened the abdomen and replaced the infrarenal aorta). The patient is a truck driver, weighs 350 pounds. He had aberrant renal anatomy and his kidney function isn't normal. 

    The case was complex, took us 12 hours with no breaks, both of us were tired of course, our backs hurting, dehydrated etc. we'll get paid about $1200 for that work plus the care he needs for the next 90 days or so. 

    I think we provide way more value than we're being recognized for, and of course we do well financially. But we also invested in ourselves to be trained, there was cost to do that both financially and personally. We love our work and that ultimately is what we are there for. But, it is harder and harder to understand how we're being valued, and how much value society thinks we add. I think there's a disconnect and I'm pretty certain that if it gets much worse I'll have to consider leaving medicine. That will be a sad day for me. 

    http://www.kevinmd.com/blog/2017/07/think-doctors-make-much-money-think-2.html?utm_content=bufferc306b&utm_medium=social&utm_source=facebook.com&utm_campaign=buffer


  62. These are good observations Jeffdoc and I do think that the work of many people around is not valued properly either. There are many examples of that. But in a $15T economy, the money is going somewhere and maybe it is time to examine the relationship between compensation and value to society again.


  63. Jeffdoc- how is your compensation determined now? Who or what determines what you get paid for each procedure? 


  64. Jeffdoc – Thought provoking. Contemplating a Disconnect and a moment of Zen?  - Tikkun olam? Altruism? Glory? Money? Self gratification? Perhaps parts of all?

    This question goes for any profession or avocation… How can a Doctor who does not care for himself, or meet his own personal needs, effectively care for others? The survival instinct, self preservation, or self interest takes precedence. 

    When faced with adversity, all living things have three choices, do nothing, stagnate and terminate; migrate, move on to more conducive environs and die another day; or mutate, change, adapt and survive.  We are known for the latter, and our mutability which facilitates such.

    We can change mood, appearance, our entire lives to suit the situation confronting us. If everything were constantly hunky dory, the resulting stasis would have the talking monkeys which infest this blue green rock like a virus, more resembling a talking zucchini or eggplant.  Man is quicksilver, more chameleon like, than the chameleon, determined to survive, no matter what the cost to others, or to himself.

    The responsibility to change, improve, and repair what surrounds us is powerful. Each person has a hand in working towards the betterment of his or her own existence as well as the lives of others and future generations.

    Our survival can take many forms, and the forms in which one finds their humanity, can be many.  We must take ownership of our world and for our actions and inaction, for it is only we, and not any God, who can save this world. Interesting reading on Doctors and the "selfishness" of altruism. Give without remembering, receive without forgetting and Out.


  65. Anyone long oil over the long haul, might want to read this… A massive contraction in ED (eurodollars, petro dollars), budgets, spending, GDP and potential SWF investment followed by three years of painful adjustment.  

    Following the balance of payments (monetary flows) demonstrates that most exporters break-even budgets have managed to adjust, but there are still some major short falls. The 2013 chart we had seen and almost used here. One must observe the difference between the 2013 and 2016 charts carefully, then read between the lines and Out. 


  66. Naybob – Is a massive contraction a symptom of possible ED problems :-)


  67. Phil

    Taking a look at GE. Do you think the pension plan being underfunded by $31B is a material issue? Lots of hand ringing in the press. Immelt bought back like $50B in GE stock that did nothing but go down during his stewardship. Looks like funding the pension would have been a better move. Of course, Mr. Immelt's timing did always have a Dennis Gartman quality to it. He exited the financial business at the bottom and entered the energy business at the top!


  68. The eagle has landed- its good to be home!

     Quick observation however, roads in the  England and France are generally in very good repair and I realized as we drove home how crumbly our infrastructure does look by comparison. You can really see where that  $4 Trillion Dollar repair number comes from.   It's a hidden part of our deficit that just makes life a little worse for everyone in small ways.

      And, of course, the lack of public transportation here is kind of ridiculous. You really get struck by the difference in car size in the US, no wonder we are the world's number one consumer of gasoline despite having 200 million less people than Europe and almost 1,000,000,000 less than China or India.

     In almost every decent sized town in the UK some construction project is going on with big buildings being built. On the drive back from Newark, we did not see a single crane and this is the most densely populated state in the US.   

     Lack of infrastructure, lack of healthcare, lack of a safety net, lack of public transportation… leads to a lack of opportunity for people to get a start on life.   That's why there are so many more independent businesses in Europe, people have a chance to become entrepreneurs. What's going on in this country is not capitalism, it's protectionism for the already rich to prevent others from competing on a level playing field.


  69. Wow Phil – spend 2 weeks in Europe and you come back a changed man :-)


  70. Sushi anyone?

    https://www.yahoo.com/news/fukushima-apos-nuclear-waste-dumped-183144282.html

    Takashi Kawamura, chairman of Tokyo Electric Power Company (TEPCO), told foreign media that nearly 777,000 tons of water tainted with tritium, a byproduct of the nuclear process that is notoriously difficult to filter out of water, will be dumped into the Pacific Ocean as part of a multibillion-dollar recovery effort following the Fukushima nuclear disaster in 2011. That year, an earthquake and tsunami struck Japan, killing over 15,000 people and leading to a series of meltdowns at the TEPCO-owned Fukushima No. 1, or Daiichi, nuclear power plant, causing it to spew radiation that has plagued the region ever since. While much progress has been made to clean the area, the company has only just resolved the debate over what to do with the water that was used to cool the plant's damaged reactors, causing it to become tainted with tritium.


  71. Kidding aside Phil, when gas prices are over $5/gallon as they are in all of Europe, there are incentives to have better public transportation. And these prices generate a lot of tax revenues that can be used for infrastructure projects (not always the case though). In France, the big highways are public/private partnerships and are quite expensive to use. But that means that in general the roads are quite good.

    In the US I just don't understand why we can't raise a $0.50 gas tax to help pay for that infrastructure. That would be a 20% increase on current prices, but the average gas mileage is now more than 20% better than it was 20 years ago so that would even things out. And my bet would be that gas prices will go lower taking account inflation as demand goes down. They want to ban gas run cars in France by 2040 and other countries will join so there will be a glut of oil and gas by then. We'll use more electricity but generation will be more renewable by then as well. Peak oil indeed…

    And EV will get more convenient:

    https://www.engadget.com/2017/07/16/porsche-installs-first-super-fast-ev-chargers/

    For Porsche's upcoming Mission E, that would mean an 80 percent charge in 15 minutes. That's longer than a typical stop at the gas station, but short enough that you don't have to plan your EV trips around charging station visits.





  72. White House planning ‘Made in America’ week









  73. The Other 496 S&P Stocks



  74. StJL – Naybob – Is a massive contraction a symptom of possible ED problems.

    Indeed, a sudden loss of interest can trigger massive contractions, leading to premature withdrawal penalties and a lack of future growth potential.  Ask your doctor if QEZIRPIOER is right for you.


  75. Good morning – officially!  

    Kept forcing myself to sleep a bit more, trying to get adjusted back to East Coast time.  

    Nothing too eventful over the weekend, markets drifting along.  I expected early July to be dead into earnings – that's why I picked those two weeks to go away.  The variable was, if I was wrong, I wouldn't have been able to put in half days from the UK last week but that was already "hedged" as a possibility and my family was pleasantly surprised that I made all of our dinner engagements.  

    I hedged my luggage when I packed too, putting most of the weight into my carry-on, in case the kids underestimated their bags and incurred a $200 penalty for being overweight but they nailed it – so I'm a proud father.  I guess hedging is in my nature and that comes from being the son of a systems analyst – as my Dad would always be looking for potential flaws in things.  

    I remember when I was a kid, we were going through an automatic car wash, which was new at the time, and my Dad said "You know, if this stops working they're going to have a very difficult time getting all these cars out."  That was my Dad, but fortunately he used the same observational skills to point out the silly things in life, which made it all very fun.  I try to pass that on to my children as well but my Dad didn't have the disadvantage of having to compete with social media for their attention.

    Anyway, so hedging is in my nature and it's not because I'm pessimistic – it's just that a short-term loss can erase years of gains and it's statistically better to sacrifice 25-33% of your gains in order to lock them in, rather than take a chance that a major loss will undo all that hard work. 

    Obviously, with our overall performance, there's nothing to apologize for.  In fact, the LTP is up 228% at the moment at $1.6M and that's up $200,000 (14%) since our 6/18 review and, essentially, we haven't changed a single thing all month!  That's already blown past our goal for the year as it's 40% of our original $500,000 and the point is, not how fantastic our longs are but how STUPID it would be to just let these things ride and risk a 20% correction that would now knock $320,000 off our gains.

    Hedging is insurance and the mistake people make is they sometimes over-insure but, if you treat it as a BALANCING tool, you will be able to enjoy your vacations a lot more – including the 30-year one you take at the end! 

    Now, the funny thing is the STP is still at $323,000, also untouched and that's actually up $18,000 since June 18th because TSLA came back to Earth and made up for SQQQ and TZA losing more ground.  So we're going to take our TSLA profits and HEDGE MORE with SQQQ and TZA and we'll probably lose all that money too but who cares as long as our LTP is putting up these stellar gains?

    I know it sucks to have those big negatives in your portfolio but hedges are SUPPOSED to lose money when the rest of your portfolio is doing well and even our long-term positions are hedges with short-calls, etc. because, as I said, hedging is in my nature but BECAUSE we are well-hedged, I can feel comfortable with the reasonable leverage risks we do take in our options trading – especially short puts, because I KNOW I will be getting a fat load of cash from our STP to help pay for the stocks I'm "forced" to buy at a discount in my LTP.

    I took my vacation because we're about to start our hedge fund (Q4) and I don't anticipate having much time to take off while we get it rolling.  If any accredited investors are interested in starting with us, contact Greg (admin at phistockworld dot com) and he can get you on the list but we're also looking for people who want to invest along with PSW Investments and OWN part of the Fund Management Company, so instead of complaining about the fees – you can collect them!  

    That's BEING the House, baby!