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Monday Market Musings – Making Money on Misery

$5,418! 

Those same 2 gasoline (/RBV7) contracts we initiated in Wednesday's Live Trading Webinar (which I reminded you of in Friday morning's PSW Report) made another $700 per contract over the weekend and we stopped out with over $5,400 gains at the $1.60 line as Hurricane Harvey seems to have peaked out and Gasoline Futures hit our +5% on the money.  That's a big YOU'RE WELCOME to get our week started but our hearts go out to the people of Texas, who are suffering from the after effects of the storm we used to make money on.

If NOT betting gasoline would go up when a hurricane hits the Gulf Coast refineries, then I would have felt bad about the bet but this was one of those essentially sure things you really can't pass up if you want to call yourself a trader.  As it stands, about 22% of Gulf Refining Capacity is off-line and that's 1Mb/d our of 5 that's going to get drawn out of inventories for the duration because the rest of US refining has been operating near capacity and can't make up that kind of shortfall – unless they curtail exports, which is possible.

Even if the damage near the refineries is controlled quickly, widespread damage throughout the area will make it hard for refinery workers to get to work — the Shell plant, for instance, has more than 3,000 workers and contractors.  As you can see from this handy map, Valero (VLO) is losing 416,000 barrels a day in two hard-hit refineries and Marathon (MRO) will be down 546,000 barrels and, with 1-45 closed, it's likely to be a good week at least before they are full on-line again, probably 2 weeks. 

Of course, news is not all bad for VLO, who we're long on, as the refiners are benefitting from a widening crack spread – the cost between the barrels of oil they buy and the price of the refined products they can sell when they "crack" the barrel open.  We got aggressively long on VLO in our Aug 18th Butterfly Portfolio Review and we didn't know about Harvey at the time but we did know we expected a stronger than usual hurricane season and, as you can see from this chart, the crack spreads were beginning to rise, so I said to our Members:

VLO – We got a nice pullback to lets buy back the 15 short Jan $67.50 calls at $3.10 ($4,650) AND the 20 short 2019 $75 calls at $3.05 ($6,100) and we'll sell 10 Jan $60 puts for $3 ($3,000).  Lower oil prices tend to be good for the refiner at first as gas prices take longer to fall (so their spread increases) and Q3 sales are looking strong per inventories. 

As we were buying back short calls we had already sold (for a profit), we were left with just 20 long 2019 $60 calls at $7.44 ($14,880) and already on Friday they had blasted up to $10.35 ($20,700) for a gain of $5,820 (39%) and that's not even including all the money we made selling short puts and calls over the past year we've been in this trade (11/18/16).  Our Butterfly Portfolio uses our "Secret to Making Consistent 20-40% Annual Returns" system and is on track for yet another 40% year in 2017

Image result for harvey refineries shut downWe'll be watching the storm path closely to gauge the overall impact on energy prices and energy stocks but, as you can see, the storm missed almost all of the deepwater wells as well as the natural gas production and is projected to turn (and weaken) before impacting shale production (shipping was little affected) so oil (/CL) prices have not matched the excitement but we do like it long (/CLV7) into the upcoming holiday weekend off the now $47.35 line with a low of $47.25 this morning.  

In Tuesday morning's PSW Report, we picked a long on the Oil ETF (USO) using the Sept $9 calls, which were 0.72 at the time and were only up 10% at 0.80 as of Friday's close and yes, I know a 10% gain in 3 days sounds exciting to people who don't subscribe to our newsletter but it's not a big deal for an option and, if you're lucky, it might pull back a bit on "disappointment" that more oil production hasn't been taken off-line but our premise was jacking up prices for the holidays – and that hasn't been cancelled.  

Meanwhile, this has been a catastrophic storm and it's coming back to bite the Texas Republicans, who voted not to help New Jesey when it was hit by Sandy in 2012 – even voting down emergency funding for hurricane victims.  Texas Senator and total dick, Ted Cruz was called out by Christie during the election for what he said at the time:

"Emergency relief for the families who are suffering from this natural disaster should not be used as a Christmas tree for billions in unrelated spending," Cruz said in a statement at the time. "The United States Senate should not be in the business of exploiting victims of natural disasters to fund pork projects that further expand our debt."

The Republicans blocked additiona funding for FEMA and, even worse, failed to fund the National Flood Insurance Program, which leaves it with just $5.8Bn to cover what is estimated to be at least $40Bn in damage claims from the current storm.  The only way to get aid now would be a bi-partisan Government bail-out – good luck with that!  Congress doesn't even come back from vacation until Sept 5th, that's going to run into at least two weeks of agonizing delays for the victims – even if Congress acts right away (LOL).  

Sell-offs in private insurance companies are likely to be an over-reaction as flood insurance is a separate policy, mostly covered by the Government but, if the Republican Congress doesn't do a 180 and re-fund the program, then Texas homeowners will be in for quite a shock if private insurance companies begin to assess their insurance needs based on the actual risk if living in a place where this happens:

Of course, the Government should not stand between you and your insurance provider, right?  Keep electing heartless representatives who don't care about people and, one day, you may realize you ARE people.  Of course, we know how well these Republicans flip-flop when something finally affects them and the Democrats aren't likely to hurt people, even Texans, out of spite so hopefully something will be worked out.   

Meanwhile, this will be a good test of the Keynesian notion that even a broken window is good for the economy, as it puts people to work fixing things up.  Home Depot (HD) and Lowes (LOW) generally get a nice pop in business following damaging storms and LOW had a recent pullback to $72.50 from $85 so $17.50 is 20% which means we expect a weak bounce of at least $3.50 to $76 and likely a strong bounce to $79.50 thanks to the storm.  The LOW Oct $75 calls are $1.70 and would pay at least $4.50 at $79.50 for a $2.80 (164%) potential gain.  

See why we're not so excited by USO making us "just" 10% in a week?

Oddly enough, we get the Dallas Fed Report this week and their projections will all be shot to Hell thanks to the hurricane (and there may be more).  It will also affect GDP, which reports Wednesday morning and we have a lot of confidence reports that will also not take into account this major event.  Texas is a large part of our nation's economy, Houston in particular, and this will cause waves of chaos for months to come.     

The Futures are back to our shorting lines (see last week's posts for charts levels) in the same pre-market pattern we discussed last week and, suprise surprise, here we are again!  

 


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  1. Good morning….   GILD making its move today morning.

    DJ Gilead to Buy Kite Pharma for Roughly $11 Billion — Update GILD  KITE 

     


  2. From the weekend:

    OK, maybe FTR is leveling off. Long term I just bought 25 2019 10 call and sold 25 2019 13 puts. Now I want to buy 2500 shares for the 0.60 per share dividend (5% for one quarter) – ex dividend 9/14. Suggestions?  Will this payout looming, I'd like to think that the stock will rise over the next two weeks. Is there logic in selling an out of the money Sept15 put now then buy it back and sell  an out of the money call on Sept 13?



  3. Be ready for some volatility:

    http://talkingpointsmemo.com/dc/trump-mcconnell-september-from-hell

    Because Congress ate up so much of the year with a failed push to repeal the Affordable Care Act, they have an extremely narrow time frame left to pass a budget, raise the debt ceiling, reauthorize the Children’s Health Insurance Program and the Flood Insurance Program and appropriate funding to stabilize Obamacare’s marketplaces. This would be a challenge even with full support from the White House, but it becomes nearly impossible with a president whose spasms of rage, loose grasp of policy, and itchy Twitter finger threaten to derail the delicate deal-making process.

    Here comes the September from hell.

    So much to do, so little time to do it even in the best of circumstances!


  4. AMZN scaring grocers?

    https://www.theatlantic.com/business/archive/2017/08/whole-foods-amazon-prices/538002/

    Well, one answer is that it’s not Whole Foods that’s instilling the fear, but Amazon. “Perhaps [investors] think that Amazon's deep financial pockets will free Whole Foods from financial constraints, and a sudden ability to expand,” says Howard Smith, a professor of economics at Oxford University. Grocery chains’ worry is that Amazon could afford to furnish prices low enough to squeeze competitors with less cash—and with investors who want quicker payoffs than Jeff Bezos does—out of the market. It is this possibility that has critics of the acquisition worried that Amazon has attained a level of market power that is anticompetitive.

    Not betting against AMZN as it has been a sucker's bet for a while but they keep on adding businesses that are not very profitable. 


  5. And  South of TX is talcum dry!, McAllen. Port, Isabel. Padre Is. etc!


  6. Storm/Phil-this is just the beginning of the season so we should get another storm and opportunity to go long energy (especially with the impact of global warming).  Doesn't bode well for the people or the Republicans if they are running out of money for these disasters already.


  7. Good morning..

    F/Phil – effect on car makers and or KAR to be expected with all those underwater vehicles? How much and how far out would that be seen?

    Latch – you ok down there?


  8. FTR/Phil  I am down about 5K on 150 short Jan 18 $1.50 puts (pre split). Are these things very liquid? My b/e should be at $16.50 ($1.50 -.40 * 15) so not terrible, but would this be a good time to roll to something in Jan 19? Thanks.


  9. Bought a couple UGA 23 calls last week for my son. Quick 25% profit on those. Thanks Phil. 


  10. Stockbern  - not sure how close you are to the 'action' down there. hope you and yours are all good.


  11. FEMA / Phil – Didn't want to bring it up, but these GOP guys also wanted to have spending cuts to match the Sandy package. I wonder how they will feel about that today… Idiots.


  12. Scottmi,   thanks for the thought, luckily I'm far away up near Dallas


  13. PBF/Phil    a refinery without operations in Texas though they have one in New Orleans and 4 others elsewhere


  14. FU TEVA!!!!!


  15. Phil, you still in /CLV7, or did you walk away?….either OIL boys chasing out all the PSW bullish crowd, or I am all wet behind the ears! Please explain, thanks as always.


  16.    HFC   another refiner without Texas operations


  17. KITE, JUNO, BLCM    mentioned them last week, when the market was dropping hints


  18. wish they would have bought TEVA instead.

    geez--another 26 year low today.

    What a POS!


  19. Scott – Yes thanks all okay .  We have a small rise in elevation in the middle of town, so the flooding bayous don't reach us.  Many friends have completely flooded homes and my brother let his flooded neighbors – Briarforest- use his house as he left on Friday to my parents in Georgetown.  Had club friends pump out boat bilges yesterday and saved several small boats from sinking.  The worst for me is a small leak in the roof.  Feeling very lucky.  Will be donating money and time over the next weeks to get us all back to normal. Times like these are when we know how exceptional we are or not. 


  20. ?FU Texas republicants….. Too Soon?…. :)


  21. Hang in there Latch!


  22. Good morning!  

    Image may contain: meme and text

    A bit of a sell-off already with /TF the laggard at 1,382.50 and I'm short 6 at 1,380 avg.

    /NG popping already for our first win of the week:

    GILD/Learner – People are liking that move, up 2.5% on an acquisition is a good sign.

    FTR/JMD – Despite months of FU's, FTR is doing just what we thought it would do in our worst case – bottoming out at $12 (0.80) where we added our 3rd round and now we have a nice, large, PATIENT position in the LTP and OOP.  I have NO thoughts about what it will do day to day, week to week, hour to hour…

    Made the scene
    Week to week
    Day to day
    Hour to hour
    The gate is straight
    Deep and wide

    But can you still recall

    The time we cried
    Break on through to the other side

    Big Chart – S&P can't get back over that 50 dma – that's very technically damaging.  Nas doing the triangle squeezy thingy between the 50 and 20 dmas – whichever way that resolves will tell the tale.  RUT and NYSE both need to pop (and hold it) for us to be encouraged.  NYSE only 11,815 – it's up less points (6) than the RUT (7) though NYSE is 10x bigger.

    Congress/StJ – Will be a total disaster.  That's why I can't stop shorting those futures!  

    AMZN/StJ – So the premise is that AMZN will engage in illegal pricing activity to drive competitors out of business until they have a clear field to raise prices?  Gosh, didn't we used to have regulators whose entire job was to stop that sort of thing?  

    Hope all is well Advill, Latch and others in TX.  Don't worry, you are surrounded by Republicans and they are known to do whatever it takes to help people in need…  cryingcryingcrying

    Storms/Seer – As I noted this weekend, this was on the H storm, Rita and Sandy were 5 and 6 more storms up the ladder from here, Katrina 3 away.  

    F/Scott – Well to some extent you have to figure it's a pop for auto sales in TX as a lot of wet cars won't be worth fixing.  Damage is way better than age as old cars get sold to someone else and there's only one buyer while a dead car means all the buyers need new cars.  I like F down here ($10.75) anyway.  

    FTR/Jet – Not very liquid but if you don't ask, they'll never fill.  15 x $1.50 is like a Million dollars so that's bad.  Oh way, it's $22.50, not as bad as a Million….  If you sold them for 15 x 0.40 is $6 so yes, $16.50 is nothing to worry about, unless you do own 150 but it sound like you actually own 15 if you are only down $5K.  Anyway, if you sell the 2019 $13 puts for $5.50 while you try to buy back the Jan $1.50 puts for 0.65 (a fair price of $9.75) you would be buying back half your loss by paying up front and worst case is doubling down at net $7.50. 

    UGA/Jeff – Good job!  

    Yay, now /TF curving down – back to 2 short with a 1,382 net base.

    PBF/Stock – Good call, already blasting up 5% today.  We need to remember that for next time.  

    You can still sell PBF March $20 puts for $1.60 – I think that's a good deal.

    HFC also up 5% but I don't like their numbers.  

    TEVA/Jabob – Asleep at the wheel while GILD is making acquisitions.  

    /CL/Jasu – I'm still 2 long and will DD at $47, my premise is for this week and I never bet against the manipulators on a holiday. 


  23. Wow, /CL just blasted lower.  I added 2 more at $46.75 but a bit nervous now.  


  24. So now my avg on /CL is $47.15 and I'll be thrilled to get back to 2 if we pop to even.  That's the way you work the Futures, your main goal if you average in is to reduce the basis – NOT to end up with a larger position.  


  25. Phil

     CBI as a new trade

     2019 Jan 7.5/15 BCS with 15 puts sold

     What do you think?

      Thanks


  26. Phil – CL – any idea why it is crashing? Do we have too much oil now that is being accumulated and not being refined?


  27. Hcash appeared our of the ether today to the tune of $1.1B market cap. It's worth watching their short little movie, though their whitepaper provides a little more detail. There are now 12 currencies worth over $1B (really 10, since BTC and ETH each split into two).

    StJ since that report was released (April), crypto has gone from $27B listed in the report to $158B.


  28. aapl/phil, do you think AAPL will pop 162.5?


  29. StJ – Time for a "September you'll remember?"

    http://stockcharts.com/h-sc/ui?s=uvxy


  30. CBI/QC – I wouldn't be so aggressive.  If something does go wrong and they are still below $15 in 16 months – you probably don't REALLY want to own them.  I'd be mellow and just sell the 2019 $7.50 puts for $1.80 as that's half the commitment and then pick up the $7.50 ($5.10)/12.50 ($3.00) bull call spreads for $2.10 and then you have a net 0.30 cost and $4.70 upside at just $12.50.  MUCH less exposure and MUCH easier targets.

    • Chicago Bridge (NYSE:CBI) has been awarded contracts by four PetroChina (NYSE:PTR) refineries for the license, engineering design and proprietary equipment supply for an alkylation unit at each site.
    • The units will all use CB&I's CDAlky advanced sulfuric acid alkylation technology.

    /CL/Bulls – A lot of oil that should be going to the coast will be locked in, so people are freaking out about that.  To keep their wells going, those producers will have to sell oil at bargain prices to people who are prepared to take delivery – that or shut down production as commercial storage is still essentially full – so they can't make barrels that can't be sold for very long.  I think it's an overreaction that doesn't take into account the willingness of maybe 10% of the operators to cut production (good time to do maintenance).

    • While Hurricane Harvey sends gasoline futures prices soaring, U.S. crude oil -2.5% at $46.67 in volatile trading as diminished supply is more than offset by the hit to demand for crude by refinery shutdowns.
    • Brent crude’s premium to WTI widened to the largest in two years, trading more than $5 above the U.S. marker, although the global benchmark also has been pulled lower, now -1% at $51.86/bbl.
    • "The market expects that refineries will demand less oil as they take weeks, maybe longer, to come back on line,” said Phil Flynn, senior market analyst at Price Futures Group, in a note. “Brent crude on the other hand stayed stronger as the U.S. will demand product from Europe as well as some shut down of Libyan oil production over the weekend.”
    • “We’ll see higher pump prices, but… the crude oil price is likely to remain more steady,” AME Group economist Mark Pervan tells Bloomberg. “We’re certainly looking at a slightly different market dynamic than we did last time we had a big weather event like this. The U.S. oil production landscape has moved more onshore essentially, away from the Gulf of Mexico."
    • The U.S. government yesterday estimated nearly 380K bbl/day worth of crude production has been halted, equal to ~22% of current Gulf output, and Commerzbank analysts say 300K bbl/day of land-based production also may be closed.
    • About 25% of U.S. Gulf of Mexico oil production is offline due to Harvey, according to the U.S. Bureau of Safety and Environmental Enforcement.
    • Companies that have shuttered operations include, Valero (NYSE:VLO) Exxon (NYSE:XOM), ConcoPhillips (NYSE:COP), Noble (NYSE:NBL), Anadarko (NYSE:APC) and Shell RDS.ARDS.B.
    • Harvey slammed into Texas late Friday as a Category 4 hurricane, making it the strongest storm to hit the state since 1961, but was downgraded to a tropical storm on Saturday by the National Hurricane Center.

    • The Nymex benchmark gasoline contract for reformulated blendstock surges 7% before easing back to a 4% gain to $1.60/gal after Harvey knocked out ~15% of U.S. refinery capacity with the extent of the damage still unclear.
    • “It will probably be a couple of days before we get clarity on the duration of closures,” says Ric Spooner, chief markets strategist at CMC Markets, adding that near-term prices should remain volatile as investors focus on storm damage.
    • Traders and analysts say the first signs of a global impact was gasoline from Asia being diverted to the U.S.
    • Goldman Sachs analysts say gasoline and distillate product refining margins likely will rise further in the wake of Harvey, which is expected to dump ~50 in. of rain in parts of Texas throughout the week.
    • Using past hurricanes as a guide, Goldman estimates the storm would increase U.S. crude oil availability by ~1.4M bbl/day because of refinery shut-ins, but gasoline supplies would be cut by 615K-785K bbl/day and distillate supplies by 700K bbl/day.

    Hcash/BDC – Cool.  We need a PR firm for GreenCoin.  Notice the Japanes and Chinese subtitles.  Got their own domain and everything.  You should register Green.coin.

    • Dallas Fed Manufacturing Survey: +17.0 vs. +16.5 consensus and +16.8 prior.
    • Production: +20.3 vs. +22.8 prior.
    • Capacity Utilization: +12.2 vs. +18.1 prior.
    • New Orders: +14.3 vs. +16.1 prior
    • President Trump recently dismissed some of his senior staff as globalists and demanded that someone draw up a plan for tariffs that would affect China, according to a leaked account by Axios.
    • "China is laughing at us," he said at a trade meeting in the Oval Office. "I want tariffs. And I want someone to bring me some tariffs."

    Three miners die at Harmony Gold mine after earth tremor

    • Harmony Gold (NYSE:HMY) says a third miner has died at its Kusasalethu mine in South Africa and two more remain missing after they were trapped underground.
    • The five miners were trapped on Friday morning after a tremor caused sections of the gold mine to collapse.
    • The Kusasalethu mine, one of the world’s deepest, with gold extracted at depths below 3 km (1.8 miles), has been the site of labor violence and strikes in recent years.

    Sports books knock out records with Mayweather-McGregor fight

    • Several sports books are reporting that they recorded their biggest win ever after Floyd Mayweather's TKO of Conor McGregor paid off. Some smaller casinos went into the fight with loss exposure if McGregor pulled off the upset (especially in the early rounds).
    • Caesars Palace (NASDAQ:CZR) said it made $2M on the fight as 88% of the bets made on the last day came in on the Irishmen. MGM Resorts (NYSE:MGM) book director Jay Rood indicated a win in the neighborhood of $1M. William Hill (OTCPK:WIMHF) execs said the U.K. company also had a historic day as it went into the fight unbalanced with 93% of its tickets written on McGregor. Privately-owned CG Technologies said it made in the high six figures from the betting action.
    • Trend-watching: "In-game" betting was very popular at several sports books as gamblers bet in real time. The potential for in-game betting across major sports leagues is considered gigantic if online gambling rules are opened up.
    • Previously: Vegas bookmakers exposed to McGregor upset (Aug. 25)
    • Sprouts Farmers Market (NASDAQ:SFM) is down another 6.0% as the grocery stocks continues to get sold off by investors over concerns on Amazon lowering prices at Whole Foods.
    • Late last week, Jefferies came out in defense of the grocery sector, saying it didn't make sense to punish the stocks twice for the same reason.
    • Sprouts sold off in the days after the Amazon-Whole Foods decision was announced on the conclusion that organic food pricing from Seattle would get aggresssive.
    • Previously: Grocery sector reeling with Amazon hitting the ground running (Aug. 24)
    • A number of restaurants stocks are lower on the day as the impact of Hurricane Harvey is factored in for chains with high mix of outlets in and around Houston.
    • Notable decliners include Texas Roadhouse (TXRH -2%), Sonic (SONC -2.2%), Ruby Tuesday (RT -2%), El Pollo Loco (LOCO -1.5%), Del Taco (TACO -1.3%), Jack In The Box (JACK -2.2%) and Dave & Buster's Entertainment (PLAY -4.1%).

    FDA to clarify comprehensive policy for stem cell therapies, goes after "bad actors"

    • In a statement, FDA Commissioner Scott Gottlieb, M.D., says the agency will be advancing a comprehensive policy framework in the coming months aimed at clarifying the "rules of the road" for developers of stem cell and regenerative medicine therapies so the regulatory process will be more efficient and less costly.
    • He adds that the regulator will be increasing oversight and enforcement in order to rein in the "bad actors" that are endangering patients with unproven treatments.
    • For example, it issued warning letter to a Florida site called US Stem Cell Clinic and its Chief Scientific Officer for marketing unapproved stem cell products and for "significant deviations" from good manufacturing practices. A recent on-site inspection found that the clinic was processing body fat into stem cells derived from the body fat and administering the product (intravenously and directly into the spinal cord) to patients with Parkinson's disease, amyotrophic lateral sclerosis, heart disease and other conditions. None of the products have been reviewed or approved by the FDA. The clinic has 15 days to respond with its plan to address the issues.
    • Selected tickers: (NASDAQ:BLRX) (NASDAQ:BCLI) (NASDAQ:APOP) (OTCQB:RCAR) (NYSEMKT:CUR) (NASDAQ:VTGN) (NASDAQ:BSTG) (NYSEMKT:ONVO) (NASDAQ:ATHX) (NYSE:MNK) (NYSEMKT:AST) (NASDAQ:HSGX) (NASDAQ:CYTX) (NYSE:AGN) (OTCPK:BAYRY) (NASDAQ:CLBS)

    U.S box office sleeps through the weekend

    • The U.S. box office recorded its worst weekend performance in years as the Conor McGregor-Floyd Mayweather boxing match dominated the entertainment industry. Hurricane Harvey also impacted several major markets in Texas.
    • The estimated box tally of $65M is the lowest for the same weekend in 16 years and is down 45% Y/Y.
    • Movie theaters won't see another major new release until It debuts on September 8 after studios decided to skip past the Labor Day weekend.

    Fusion Telecom up 70% on cloud combo with Birch

    • Fusion Telecommunications (NASDAQ:FSNN) is up 70% after announcing that it will buy the cloud and business services unit of Birch Communications in an all-stock deal to create one of North America's biggest cloud service providers.
    • The combined company will be worth about $950M including debt; Fusion started the day with a market cap of $27.6M. The new firm will have more than 150,000 business customers, 30 data centers, 31,000 fiber route miles and metro fiber assets in 11 major markets.
    • The combination is also expected to have pro forma annual revenue of $575M, with more than $150M in pro forma annual EBITDA. Net debt is expected to be less than 4x EBITDA.
    • Privately held Birch will get about 73M common shares of Fusion valued at $3.85/share, a 200% premium compared to Friday. Fusion shareholders will own 25% of the combination while Birch shareholders will own 75%.

    Amazon roundup: Morgan Stanley comments, Echo at Whole Foods

    • Morgan Stanley reiterates its Overweight rating for (NASDAQ:AMZN) with a $1,150 price target, per CNBC.  
    • Analyst Brian Norwalk says Amazon’s ability to “consistently operate at razor thin margins” should extend to Whole Foods and that lowering the prices, which has started already, should lead to Whole Foods’ share gains.
    • Norwalk thinks Amazon can increase its Prime membership numbers by 8% annually for the next three years, which would amount to about 14M subscribers. 
    • In related news, Amazon celebrates its Whole Foods acquisition by displaying Echo devices for sale in stores. 
    • The Echo’s Alexa voice assistant might soon appear in a smart speaker from Sonos, which has higher priced products typically focused more on audio quality than smart features. 
    • An FCC filing seems to show that Soros has plans for a smart speaker and rumors swirl that the speaker will feature at least Alexa likely in an attempt to better compete with Apple’s forthcoming HomePod, which will carry a premium price tag and have an audio focus more similar to Sonos than the Echo Dot. 
    • Amazon shares are up 0.43%.       
    • Previously: Apple plans 4K Apple TV to regain market share (Aug. 25)
    • Dow Jones cites sources reiterating earlier rumors that Apple’s (NASDAQ:AAPL) launch event will occur on September 12.
    • Announced products will likely include the iPhone 7S / 7S Plus and the premium, OLED-screened iPhone 8, which might have supply limitations at first and could have a nearly $1K price tag. 
    • Other products could include the Apple Watch Series 3 with cellular connectivity and a 4K-enabled Apple TV. 
    • Apple shares are up 0.98%.  
    • Previously: NYT says iPhone 8 will cost $999 (Aug. 24)

  31. LL still pushing higher. Perhaps Harvey rebuilding.


  32. NVS is on the right path here – focusing on inflammation (especially chronic versus acute), as a pathology for heart disease and CAD, as opposed to cholesterol. The latter plays an important role, but only statistically, and it must be asked why so many people with high LDL cholesterol never experience atherosclerosis and CAD symptoms, while people with low cholesterol die from heart disease all the time? Inquiring minds want to know!


  33. Phil – CL – Are you adding more to average down?


  34. UVXY / BDC – That would be very nice! A big spike of VIX to 25-30 would a great opportunity to sell calls and also puts in my watchlist.


  35. AMZN/WFM- so if I were a Whole Fools Market customer and saw WFM cutting prices would I begin to ponder that I had been getting ripped off all those loyal years? Just wondering :)


  36. LL/BDC – Water is not good for wooden floors – lots of replacements. 

    NVS/BDC – Should be a nice winner if the theory proves out (and if they can fix it, of course).

    /CL/Bulls – 2 more at $46.25 averages me 6 at $46.85 but selling is relentless and this is expensive!  Can't sell oil if your customers are closed but this too shall pass – eventually.

    • Shares of oil refinery companies are rallying after Hurricane Harvey forced Houston-area refiners to shut downVLO +1.8%MPC +1.1%PSX +0.6%ANDV +3.7%PBF +8.5%HFC+7.7%CVI +3.4%CLMT +1.9%.
    • Meanwhile, oil and gas producers, drillers, equipment and service companies are all trading lower on weak oil prices.
    • "With some of the major refineries closing down in Houston, we're seeing fireworks in gasoline prices, a move which is being reflected in refinery stocks," says Peter Cardillo, chief market economist at First Standard Financial.
    • "We're looking at a mini-gasoline spike at the prospect of millions of barrels a day of U.S. refining capacity lost for at least a period of days," says Tom Kloza, global head of energy analysis at the Oil Price Information Service.

    The question is whether it's 3 days, 5 days or more.  3 days and we bounce back fast, more than 5 and things can get worse than this.

    • Analysts say Harvey’s timing is good for insurers and insurance customers in one sense: Personal and commercial insurers have record levels of capital, thus the storm is unlikely to cause extensive damage to the industry’s financial strength.
    • It would take $100B or more of losses in a 12-month period to cause distress within the insurance industry, analysts estimate; Hurricane Katrina in 2005, the costliest hurricane in U.S. history, caused nearly $50B in insured losses in 2016 dollars, according to Wells Fargo.
    • While the industry is strong overall, companies with large Texas operations could suffer short-term hits; the top homeowners insurers in Texas are State Farm, Allstate (ALL -1.3%) and Farmers, while the top personal auto insurers in the state are State Farm, Berkshire Hathaway's (BRK.ABRK.B) Geico and Allstate.
    • The worst damage from the storm is expected to be caused by flooding, which is not typically covered by homeowners insurance; flood damage usually is backed by the National Flood Insurance Program.
    • FBR analysts expect Harvey will generate moderate catastrophe losses for property and casualty insurers.
    • Other relevant tickers include: AIG -0.6%HIG -1.7%MET -0.6%NGHC -2.3%PGR -2.7%SNC -0.6%TRV -2.9%.

  37. protection accumulation: 1 x AMZN Jan19 500 put for 3.50


  38. Oil sure looks like a buying opportunity, selloff not upsetting other markets. I bought some Sept 29 USO calls for the bounce…

    Watching XLF sell off, if tech starts to slide S&P could be a good short here.

    Just my 2c, I defer to the master :)


  39. UVXY options seems to best played as spreads – Oct 40/55 BCS is 1.75 and could yield 15, or 8.5X


  40. seer--is there more bad news on TEVA today?

    WTF--15.75?


  41. Phil,  Any long term opportunities looking compelling on the insurers… I know they are all down 2% or so, so not a major sell off but any good put selling candidate? Chubb, AIG, TRV ?   thanks


  42. An odd trend in wheat country: not much wheat



  43. Phil

     Are the long call to  Dec or March  ?

     Thanks

     

    IMAX– Going to call a bottom here.  March is out so we can roll our 25 Dec $29 puts ($10.20) that we sold for $3 (ish) to the March $26 puts at $7.50 so we'll spend the $3 but pick up $4 of position on the roll.  The Dec $28 calls can die on the vine and we'll roll our 20 Dec $23 long calls (0.50 = $1,000) to 30 Dec $17 ($3.30)/$22 ($1.20) bull call spreads at $2.10 ($6,300).  The spread pays $15,000 if all goes well and we'll be pretty much even at $22.  




  44. E-Book Revenues Continue To Decline





  45. Maine blueberry crop falls with disease, lack of pollination



  46. Phil/BDC/UXVY

    Have you entered the spread? Looks good.

    "~~UVXY options seems to best played as spreads – Oct 40/55 BCS is 1.75 and could yield 15, or 8.5X"

    thanks and Regards


  47. Qc Mike

    IMAX- the spread is for March 2018





  48. Maya1 

     

    Thanks


  49. Pat – yes but only 1 contract on that spread. Light protection for now — UVXY is a hideous POS in terms of decay which hyper-magnifies the importance of timing (though by using the BCS mechanism it dampens this a bit). I'll probably be in some position like this month over month until a large market correction occurs and I can be wrong for 2 years and still at least break even on it.


  50. I want to see UVXY at 150-200 at the peak. Then StJ will sell calls but I'm not authorized for that so I'll just buy puts outright, maybe LEAP puts, like the 50's which might be trading for 10 at that time, and turn these into 45, but open to ideas like buying put spreads where I can capture some premium?


  51. WFM/Pstas – That's nothing, they got in trouble for ripping us off on the weight of things they were charging us for already.  I was just in Whole Foods on Sat so I'll let you know next week if I actually notice a price difference.  

    /RB coming back down, storm easing quickly.  Will that be good for oil?

    TEVA/Jabob – Coming off this Q, people are endlessly shocked by analysts that bring up their financials:

      2017-06-30 2017-03-31 2016-12-31 2016-09-30 2016-06-30
    Relevant Numbers (Quarterly)          
    Revenues (mil) 5986.84 5807.88 6486.51 5662.71 5103.78
    Revenue Growth (%YOY) 17.3 20.64 32.55 17.53 4.61
    Earnings (mil) -6285.86 665.38 -972.18 419.38 257.32
    Earnings Growth (%YOY) -2542.85 4.53 -293.93 307.35 -51.55
    Net Margin (%) -104.99 11.46 -14.99 7.41 5.04
    EPS -6.24 0.59 -1.02 0.36 0.2
    Return on Equity (%) -19.48 1.69 -2.88 1.03 0.61
    Return on Assets (%) -28.36 2.9 -4.06 2.14 1.82

     

    So if you believe they lost $6.2Bn selling $5.9Bn worth of stuff – GET THE HELL OUT.  Asking every single day why it's down won't make it go up.  They will have to prove themselves, over MULTIPLE quarters – and that will take more than a day….

    Insurers/Learner – Not a huge sell-off so nothing I was excited about seeing correct and, generally, they are all pretty high in the channel – so not attractive.   AIG and TRV are the big laggards and AIG is always tricky so I would just sell TRV 2019 $110 puts for $5.35 to take advantage of the dip if you want to pick up some cash in the sector.  They were $4 on Friday.

    IMAX/QC – Should be March.  Better hurry, they may leave FU territory despite bad box office numbers this weekend.

    By the way, my kids and I looked for a movie to go see on Sat and there was NOTHING.  I've rarely seen such a terrible bunch of movies in the theaters.  And nothing next week too – they don't even have any good films scheduled – so strange. I think it's because too many kids spend their summers vegging out with NFLX so the movie people stopped trying to draw the audience out until they are back at school – there's lots of good stuff scheduled in the fall.  

    I mean, really, try finding an August movie you want to see with the family:

    The Dark Tower - Friday, August 4 

    Detroit - Friday, August 4 

    Kidnap - Friday, August 4 

    Wind River - Friday, August 4

    Annabelle: Creation - Friday, August 11 

    The Glass Castle - Friday, August 11 

    Good Time - Friday, August 11 

    Ingrid Goes West - Friday, August 11 

    The Nut Job 2 - Friday, August 11 

    The Only Living Boy In New York - Friday, August 11 

    The Trip to Spain - Friday, August 11

    The Hitman's Bodyguard - Friday, August 18 

    Logan Lucky - Friday, August 18 

    Lemon - Friday, August 18 

    Patti Cake$ - Friday, August 18

    All Saints - Friday, August 25 

    Birth of the Dragon - Friday, August 25 

    Crown Heights - Friday, August 25 

    Leap! - Friday, August 25 

    Tulip Fever - Friday, August 25

    Although I must say, we just watched "Bling" on TV, which I thought would be idiotic but it turned out to be a decent cartoon.

    UVXY/Pat – Been burned too many times to play that one.  


  52.  Phil – Texas Senator and total dick, Ted Cruz… Keep electing heartless representatives who don't care about people and, one day, you may realize you ARE people.

    The sheeple keep putting their faith in and electing the ball-less and spiritless into office.  What else can one expect from those emasculated and amputated spirits, who have no idea what honor, or to be a real man, or the motto of this country is?  There's a vulgar word for them,  C*NTS!

    Our soul is NON NEGOTIABLE and Out.


  53. UVXY / BDC – I am not a fan of this bet honestly although technically of the VIX goes to 25, we could see 120 on UVXY but I would not bet on that though. Every time we had a spike it disappeared in 2 days! Timing is really the key here as opposed to selling the premium. 

    I guess you could pay for it by selling some OTM LEAP SVXY puts that you can roll if needed but most likely will be fine eventually if you are willing to endure the short term pain. This way, the bet is free…


  54. Logan Lucky – two thumbs up, esp for Ocean's 11 fans.


  55. The Jan 19 SVXY 20 puts are $2.35 so that pays for one of the UVXY BCS and that puts has a 93% chance of expiring worthless (based on deltas which is a rough guideline)…. 


  56. phil, any suggestions for a short position on TSLA, in case reality does catch up by next earnings.


  57. Gold & silver stocks up strong today.  Long ABX, IAG,  & SBGL.  Also long some HL as silver play.


  58. My AG is looking pretty too, in at 6.20 spike low last week, 7.03 now… hi ho silver!


  59. Mkucstars – I have a neighbor whose license plate is " HI HO AG"

    He's a little weird.8-)


  60. LOL, we are all weird to someone :)   I really like the potential for silver here and watched the company (AG) get hit from a 40 day strike that messed up last quarters numbers… I smell a double coming.


  61. Muck – "AG - LOL, we are all weird to someone :)   "

    2.70 to 18.10 last year. I hope there's a two bagger comin your way… and aren't we all?


  62. Movies are weak. 'Ingrid goes West funny', though a bit dark.  Dunkik is good.  NAYR ETAVIRP GNIVAS


  63. CBI – was there any news at 2pm? Did they manage to sell their technology division? up 11%… now $12+


  64. VIX/StJ – Yes, never seems to last:

    Logan/JMD – Never heard of it but trailer looks interesting.

    TSLA/Lunar – I wish they were higher, I liked them short around $360.  As it stands ($344), I'd go with the March $380 ($59)/$320 ($28.50) bear puts spread at $30.50 and that's starting off in the money and pays a double if all goes well.  I don't even think I'd sell a call unless they go up but I'd keep an eye on the short Jan $380 calls, that are already $19 and the $350s are $30 so you need a $30 pop to pay for the whole spread (if you still have the balls to sell them while it's popping 10%) but I'd be pleased to get $25+.

    Gold and silver crushing it today:

    People are nervous about something.  All my morning miner picks are doing well.

    Oil coming back.

    Dunkirk/Rexx – That's the only one I saw.  Didn't love it.  

    CBI/Learner – Well they got that contract (see above).  Just them doing their thing, which is why we like them.  Sadly, you have to wade through a see of "FU" naysayers to get to great values like these.  It's very hard to hold on while others are capitulating but, if you understand a stock and know why you are investing and you REALLY want to be a long-term owner – there are values like this all over the place.  


  65. I bought a big tv for a reason… I can wait for Dunkirk for $1 at redbox. Never much of a movie guy, but people don't have money for things that they know will soon be much cheaper. Oh yeah, I'm a cheapskate too :)


  66. Great weekend, won both tournaments at my Saturday home game (poker) and got a last minute invite to the Redskins game on Sunday… weather was awesome!


  67. muck you don't even need to be a cheapskate per se – we bought a vizio LVC 55" TV form costco for $750 and it came with a tablet as the "remote," and all of that was last year, probably all down to $500 now… Great television, no need for anything bigger/better, just need to add a $150 soundbar/woofer combo because a 1/2" thick TV has no room for good speakers!


  68. Muck/BDC – Buy a Nvidia shield for $199 or shield pro for $299, load kodi and you have a great media player and should you decide to partake, lots of great content from HBO, Netflix, current movies etc.  It's a top of the line Android TV box and game console.  Caught up on Game of Thrones this way. Great google voice interaction in the remote.


  69. Nervous. Funny how Gold and Silver beat the VIX for real sentiment 


  70. Latch – may be time for JNUG!


  71. Big TV/Mkucs – Ever since we got our giant TV, we don't go out to the movies anywhere near as often.  It certainly paid for itself a few times over as 4 people at the movies ends up being at least $100 these days with popcorn and soda.

    Trump doing a press conference with Finland.  I guess he doesn't get a lot of visits so he does a press conference for everyone who shows up.  

    Finnish President does a better job of addressing Harvey catastrophe than Trump did.  

    • ~280K Texas customers still are without power, according to four of the state's investor-owned utilities, as continued high winds, rain and flooding prevent the companies from restoring power in some of the hardest hit areas.
    • CenterPoint Energy (NYSE:CNP) reported more than 100K outages earlier today but the total had dropped to ~91K shortly after 1 p.m.
    • American Electric Power's (NYSE:AEP) Texas coverage area south of Houston had 150K without electricity as of 11 a.m., down from a peak of 220K outages on Saturday afternoon.
    • Entergy (NYSE:ETR) said 29K customers were without power in areas north of Houston and warned of additional outages if Harvey again moves inland as anticipated.
    • Houston, Beaumont and Victoria are expected to see continued periods of torrential rain through Tuesday, before Harvey begins to move north on Wednesday and out of the flood zone by Thursday.
    • Saudi Arabia and Russia are pushing to extend their deal to limit crude oil production for another three months, which would leave the deal between OPEC and non-OPEC producers in place through the end of June, WSJ reports.
    • Saudi Arabian energy minister Khalid al-Falih is said to have discussed the proposal with Russian counterpart Alexander Novak  in July at a meeting in St. Petersburg about compliance with the production cap.
    • The two ministers have been lobbying for support from other countries since the St. Petersburg meeting, according to the report.
    • Valero Energy (VLO +1.1%says its Corpus Christi and Three Rivers refineries are working with business partners and port operations to "determine the availability of necessary transportation and logistics infrastructure to resume refinery operations."
    • VLO says its Gulf Coast refineries not in the Corpus Christi area continue to operate.
    • VLO shut down its Corpus Christi and Three Rivers refineries on Thursday as Harvey approached the Texas coast.
    • Oil exploration and production companies including Chesapeake Energy (CHK -3.8%), Range Resources (RRC -3.3%) and Anadarko Petroleum (APC -2.9%) are underperforming other energy stocks as lower crude demand after Hurricane Harvey – both from refineries that were forced to close and a lower use of transportation amid flooding – likely will keep crude prices constrained, Bloomberg analyst Vincent Piazza says.
    • The risk is especially high for companies with exposure to flooding near the Eagle Ford shale, including CHK, Apache (APA -2%), EOG Resources (EOG -1.5%), Sanchez Energy (SN -3.8%) and ConocoPhillips (COP -1.4%), Piazza says.
    • Edward Jones analyst Brian Youngberg says companies such as APA and APC with more exposure to Texan oil basins will feel the lingering impact from Harvey the most, as they will have fewer outlets for their oil.
    • CHK earlier dropped as much as 5.3% to its lowest intraday reading since May 2016.
    • Source: Bloomberg First Word
    • Trucking stocks are higher as investors sees some short-demand arising from the aftermath of Hurricane Harvey.
    • USA Truck (USAK +6.6%), Celadon (CGI +8.1%), YRC Worldwide (YRCW +5.4%), Schneider National (SNDR +3.4%) and ArcBesr (ARCB +4%) are among the gainers.
    • The sector is building off some gains piled up last week after a positive read on pricing.
    • Previously: Trucking stocks ride higher (Aug. 25)

    Uber roundup: new CEO could get $200M, needs to divest competitor

    • Bloomberg reports that Expedia’s Dara Khosrowshahi could get at least $200M to leave for Uber’s (Private:UBER) CEO slot.
    • Khosrowshahi had $184.4M in unvested Expedia stock options as of Friday’s close and companies tend to grant replacement awards to execs that have to leave behind that equity before the term expires. 
    • Uber will also likely grant an annual salary and stock awards vested over several years, which could push the total price over $200M. 
    • Meanwhile, Recode reports that Khosrowshahi might have to divest shares in Convoy, a freight start-up competitor of UberFreight. 
    • Khosrowshahi contributed to Convoy’s $2.5M seed round. 
    • Earlier this summer, Uber’s board member Garrett Camp divested his Convoy shares.
    • Finally, CNBC reports that Uber’s U.S. operations have less diversity than Expedia. 
    • Expedia employed 51% women and 49% as of last June, while Uber has 32.9% women and 67.1% men.    
    • Previously: Expedia board member says CEO intends to leave for Uber (Aug. 28)

    Analysts still weighing effects of China Mobile optical tender

    • Uncertainty abounds as analysts try to parse the specific effects of last week's huge tender for optical components by China Mobile (CHL -0.2%).
    • The tender is part of a project said to build 50,000-70,000 40G/100G ports, though the early report lacked some details that could prove critical to individual makers.
    • Rosenblatt's Jun Zhang suggests analysts are misunderstanding an order that's for 42,000 "sets" of equipment rather than ports, and could be smaller than it appears.
    • Oclaro management says size and mix of the tender are still critical factors to judge its importance, according to B. Riley's Dave Kang. A key difference between this tender and some in late 2015 is that the previous tenders were asked to be shipped within four months whereas this one is four quarters — critical for capacity management, he writes.
    • Demand for the tender should be small in Q4 and ramp up, Zhang says, adding that Huawei's forecast excluding the China Mobile tender could provide an order recovery for suppliers (except Finisar (FNSR +0.1%) and Oclaro (OCLR -0.9%)).
    • "We also expect NeoPhotonics (NPTN -0.5%), Lumentum (LITE -0.2%) and driver suppliers to return to March quarter levels, and for Acacia’s (ACIA -1.3%) December quarter shipments to ZTE to grow 15-20% sequential after a large pickup in Q3," Zhang says.
    • The Hitman's Bodyguard (LGF.A -0.5%LGF.B -0.5%) prevailed again among film grosses over the weekend, but it lorded over the weakest North American total since 2001.
    • A confluence of events combined to dim attendance at the movies, including the devastation of a major hurricane hitting Texas and a massive pay-per-view prize fight. Overall, films earned just $49.6M.
    • How bad was it? Broadcasts of the Mayweather-McGregor fight shown at theaters (for tickets of around $40 a pop) were the third-biggest theatrical draw on Saturday, pulling $2.6M. That was good for eighth place for the weekend as a whole (still ahead of the debut of Birth of the Dragon).
    • Hitman's Bodyguard drew $10.1M to bring its two-week total to $39.6M and top Annabelle: Creation (TWX +0.2%), which remained in second with $7.35M, just ahead of newcomer Leap!(Weinstein) with $5M.
    • Next weekend may be more of the same, with the first Labor Day holiday in some time without a major wide release.
    • HBO (TWX +0.1%) flagship series Game of Thrones easily reached yet another ratings high and set network records with its seventh season finale Sunday.
    • The show drew 12.1M viewers as it aired, the most-watched episode in HBO history. That's up 36% over last year's season 6 finale, and up 13% from a previous linear viewership high from two weeks ago.
    • Counting night-of streams, the show drew 16.5M viewers. Delayed viewing will add millions more.
    • Overall, despite news dominated this year by episode leaks and security breaches, GoT season 7 has been very good to HBO, with ratings up 20% overall in total numbers as well as the key 18-49 demographic.
    • The finale was its longest ever, approaching a hour and a half after years of mostly hourlong episodes. A final season of just six episodes (likely also longer than average) is expected by many next year, though a lengthy shooting schedule makes it also possible that the final season is delayed further.

    • Microsoft (NASDAQ:MSFT) is working with 343 Industries to bring the next Halo game to the Windows Mixed Reality platform. No specifics provided.
    • The Halo announcement was slipped in with a broader unveiling of Microsoft’s near-term plans for its platform, which Microsoft hopes will help make any VR software available to any head-mounted display. 
    • In other news, the New York Post reports that the NYPD is replacing its 36K Windows phones with iPhones possibly due to Microsoft ending support for version 8.1 or due to the company’s generally declining smartphone market share.
    • Previously: Sony cuts prices on VR bundles; Microsoft announces SteamVR support (Aug. 28)

  72. I don't think Trump understands the concept that a Government shutdown (which he says is still on the table) would prevent the Government from taking care of the Texas clean-up. He said "those are two different things".  


  73. Phil do you know if the refineries are in areas where the storm is receding or are they in the area where it's supposed to come back and dump more rain? In other words are you looking for any more pops in price?


  74. WH press release:

    "This storm is terrific. Biggest storm ever. The fake news media is trying to say this storm isn't the biggest. Right folks? It's bigger, even bigger than my you-know-what. So bigly. And non-mental like that reporter. The storm is smart, but I'm smarter folks. Okay? I know about big storms. The rescuers, you see these guys, so stupid. They don't have a plan. I have a plan. A big, secret plan. You don't want the storm to know what your plan is. How stupid would that be? Obama was born in Kenya folks, they don't even have storms there. Not great big beautiful storms like we get."


  75. HBO has no ads and they care about ratings?


  76. North Korea fires missile "towards" Northern Japan… the BS there is far from over. I'm thinking MOAB gives Lil Kim a mighty bad headache. Soon.


  77. BDC/cholesterol – The lipid-heart disease thing just won't go away. What's ironic is that some of the big names in the field whom I knew, Henry Blackburn & Russ Luepker for example, were friends with Geoff Rose, who told them specifically what the problem was (https://academic.oup.com/ije/article/30/3/427/736897/Sick-individuals-and-sick-populations), and they didn't get it. I was friends with Ancel Keyes when he was in his late 80s, and he finally admitted he was wrong about the lipid hypothesis, but I don't think he ever said so in print.

    By the way, all, I arrived back in Korea a week ago for the fall semester here at DGIST. I'll be your reporter on the ground here again.


  78. Most Harvey flood victims uninsured, face big bills alone


  79. Shopping by voice on Amazon or Google device could cost you


  80. Straightforward Tesla Valuation





  81. Hurricane Harvey in Photographs





  82. Texas Governor Warns of a Long, Slow Recovery





  83. Why the rich love Burning Man


  84. Good morning! 

    Well I took the money and ran on my index shorts – that was a nice dip and I don't want to push my luck in this crazy market.  2,420 looked like it might hold and that lined up with 21,650, 5,780 and 1,370.  I still have 6 long /CL but only because I missed the move up to reduce.  I am about to add some long /RBV7s after that nice dip back to $1.57 too.

    /YG blasted up to $1,330 and /SI $17.666, VIX flying too.  

    /NKD had a huge reaction at first from missile

    Europe down 1.5% and no tweet from the President yet but, show of hands – who thinks he'll calm things down?

    North Korea Fires Missile Over Japan in 'Unprecedented' Act. (videoNorth Korea fired a ballistic missile over Japan on Tuesday, reigniting tensions after a war of words earlier this month between Pyongyang and U.S. President Donald Trump. The missile landed about 1,200 kilometers (745 miles) off Hokkaido in the Pacific Ocean, Chief Cabinet Secretary Yoshihide Suga told reporters, adding there were no reports of damage. Japan’s government said it didn’t try to shoot it down.

     

    Stocks Drop, Yen Jumps After Korea Missile Launch. Equities fell in Tokyo, Seoul and Sydney, Japan’s currency gained versus all major developed peers, and the Swiss franc advanced while the Australian dollar dropped in a classic risk-off move. Several missiles were launched from Pyongyang and Japan said at least one landed off the eastern coast of Hokkaido. Gasoline added to a rally as traders counted the toll from the storm that inundated refineries along the Texas coast. The Topix index dropped 0.7 percent as of 9:18 a.m. in Tokyo, while South Korea’s Kospi index declined 0.9 percent and the S&P/ASX 200 Index in Sydney lost 0.8 percent.

    • Dow futures tumble more than 100 points and shares of gold miners, already sporting broad gains during regular trading, pop higher after North Korea fired a ballistic missile that flew over northern Japan.
    • It was North Korea's 12th ballistic missile test so far this year, but a senior U.S. intelligence officials told NBC News that it was the first time a North Korean missile on a high-altitude trajectory passed over Japan.
    • U.S. and Japanese military forces today wrapped up joint exercises in Hokkaido, Japan's northernmost major island, and South Korean and U.S. forces are in the middle of their annual joint exercises.
    • Among gold miners: GFI +4.1%EXK +3.5%AUY +2.8%KGC +2.3%GOLD +1.9%IAG+1.6%GDX +1.3%HMY +1.1%GG +1.1%AG +1.1%ABX +1%, GLD +1%NG +0.9%GDX +0.7%NEM +0.7%GOLD +0.6%.

    • Confidence in Qatar's creditworthiness has taken another hit after Fitch downgraded the country's long-term issuer rating by one notch, to AA- from AA.
    • "In our view, the negotiating positions of Qatar and the boycotting countries remain far apart," analysts Krisjanis Krustins and Jan Friederich said in a statement.
    • The gulf nation is also on negative watch at S&P and Moody's.

    Our Political Central Bankers. Fed officials join the resistance against financial reform

    SEC warns about ICO scams

    • The SEC has issued a warning about potential internet coin offering scams and "pump and dump" schemes by public companies.
    • An ICO is similar to a stock IPO, but instead of buying shares in the company, investors are buying digital "tokens" used on cryptocurrency platforms.
    • Latest crackdown? Last month, the SEC signaled for the first time that securities laws may apply to the sale of new digital coins.
    • Shares of oil and gas producers focused on the Eagle Ford shale suffered a beating in today's trade as Hurricane Harvey hit the area.
    • "Given the enormous level of rainfall along the Texas Gulf coast the past 3-4 days, we expect most operators in this area will experience near-term field level and/or takeaway issues," says Capital One Securities analyst Phillips Johnston.
    • Carrizo Oil & Gas (NASDAQ:CRZO) plunged 6.5%, as drilling in the Eagle Ford accounts for 75% of its production, according to Capital One Securities.
    • Sanchez Energy (NYSE:SN), which drills exclusively in the Eagle Ford, and Wildhorse Resources (NYSE:WRD), which depends on the region for ~72% of its output, each fell 4.1%; EP Energy (NYSE:EPE), which gets about half of its production from the Eagle Ford, tumbled 7.3%.
    • Patterson-UTI Energy (NASDAQ:PTEN) CEO Andy Hendricks, whose company operates 21 rigs for drillers in the south Texas area, say some rigs are being put back to work as weather clears up between San Antonio and the coast.
    • September natural gas futures settled 1.1% higher at $2.925/MMBtu, as damage from Harvey is seen disrupting gas production in the Eagle Ford shale and the Gulf of Mexico.
    • The reduced output has pushed domestic output back below 71B cf/day, a bullish sign for the market, according to Robbie Fraser, commodity analyst at Schneider Electric, adding that the storm is capable of further pipeline disruptions that could trigger short-term price swings.
    • But the storm also has bearish implications for the market if demand for natural gas is weighed further, and power outages and closing of businesses could offset supply risks.
    • ~26% of natural gas production in the Gulf of Mexico yesterday was offline due to Harvey - "more than anticipated, and surprising,” says analyst Phil Flynn of Price Futures Group; this afternoon, 18% of natural gas production in the region, or 583.4M cf/day, is shut in.

    Harvey Disrupts More Than One Third of U.S. Chemical ProductionA third of U.S. chemical production has been disrupted by Tropical Storm Harvey, boosting prices and threatening shortages for basic industrial building blocks such as chlorine and ethylene. Producers such as Exxon Mobil Corp. and Occidental Chemical Corp. have shut plants and cut back operations in recent days along the flood-crippled Gulf Coast. Those disruptions have affected 37 percent of U.S. capacity for making chlorine and caustic soda, salt-derived chemicals used to make vinyl and PVC pipe, according to Bloomberg Intelligence.

    Devastating storm may actually boost US GDP and push inflation higher


  85. Refneries/Craigs – I don't see this as having a very prolonged effect – this is all about rumors and sentiment at the moment.  As noted above, I went long oil yesterday and now adding some /RBV7 over the $1.57 line – just gotta decide whether or not the moves are justified and play them when they aren't.  And yes, they haven't cancelled the holiday yet so I still expect a move up in oil and gas, which is why I'm playing them long. 

    HBO/BDC – I have no ads but I care about traffic.  You still like to get validation for your efforts, right?

    Korea/Snow – How are people reacting there to last night's madness?


  86. GMTA, I thought oil was a bit oversold at yesterdays lows, took on some cheap uso calls. Is there any effect on all the stored oil? Hope all those tanks are safe from the flooding.


  87. I have to admit I'm a bit heavy on market shorts, well beyond hedging my few longs. Might have to lighten up a bit, let's see how low we can go… :)