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Which Way Wednesday – How Durable Is the Economy?

Image result for economic uncertaintyWell, this is what we've been waiting for.

8:30 brings us the Durable Goods report and we keep shorting the Russell (/TF) Futures, unsuccessfully so far, in anticipation of a sell-off.  Now we're favoring the S&P (/ES) shorts, as they are right on the 2,500 line – so it's easy to just set a stop above and short below to limit your losses.  We're still using the $52 line to shore Oil (/CL) but taking quick profits when the dips reverse and, of course, tight stops above with a re-short at $52.50.  That's what you have to do to play bearish in this market – quick in and out plays.

Why play bearish at all?   Well, we're playing short-term bearish because the bulk of our portfolio allocations are in long-term bullish positions.  That's the case in both our Options Opportunity Portfolio and our Long-Term Portfolio, which has gained another $51,816 (3.2%) since our 9/15 Review.  That portfolio is 100% bullish and is now at $1,658,699 from our $500,000 start on 11/26/13 (up 231.7%) and we strive to lock in those gains by spending roughly 1/3 of the gains on short positions – like our Russell and Nasdaq hedges.  

Of course, then we hedge the Short-Term Portfolio with additional longs and we tend not to lose the whole 1/3 we allocate to our shorts – it's just that we're willing to because we'd rather lock in 66% of our gains than go for broke – and end up that way when the market corrects (if it ever does).  You might think we are not maximizing our gains but, of course, with a 58% average return, we're able to be far more aggressively bullish in our LTP than we would ever consider being if we didn't have our buffer hedges in the STP.

Unfortunately, we end up talking about our short-term shorts a lot more often than our long-term longs – that's just the nature of having daily reports.  Our Long-Term positions rarely change but we're constantly tinkering with the shorts.  It tends to give outsiders the impression we're market bears when, in fact, the Short-Term Portfolio only has 8 total positions while the Long-Term Portfolio has 62!  Yesterday, we shared our Nasdaq Portfolio in the Morning Report and those are picks we made live on the air in April and May at the Nasdaq and those are up another 1% since yesterday, at 23.5% – and they even include a QQQ hedge – so we're betting against ourselves and still making 23.5% in less than 6 months!  

Image result for investing funHedging makes investing fun.  We don't sweat over all of our positions, we can take days off – even weeks – and not worry about what's happening in the markets.  After training our Members to hedge long-term portfolios for the past 4 years, as of March we're not even going to work Mondays anymore.  After all, we didn't become traders so we could be stuck at a desk for the rest of our lives, did we? 

If you are not having fun, you are doing it wrong and we're going to discuss that in today's Live Trading Webinar – which will be open to the public (1pm, EST) on what may be the last day of the great market rally.  Well, maybe not the last day as the Fed has scheduled uber-dove Neel Kashkari to speak at 9:15, mitigating the damage of a poor GDP report.  

Tomorrw we have the GDP at 8:30 and that too is likely to be revised down.  The Atlanta Fed, in their GDPNow forecast, have taken their GDP forecast all the way down to 2.2%, just over half of where it was on August 1st, when they began making forecasts for Q3.  That's why we call them "Economorons" – these people do not have a clue and all you are going to do is frustrate yourself if you insist on taking this whole game seriously – much like trying to win at a casino.

That's why we teach our Members not to play that game at all.  We teach our Members to "Be the House – NOT the Gambler" – a very simple concept where we make most of our money selling risk premium to other traders – who all like to think they know what a stock is going to do.  While we like to anchor our trades with value stocks (again, see yesterday's Report), we never assume they are going to go up and up.  Our simple strategy is to find stocks that are not likely to go down and then set up trades that pay us when they only go down a little, or if they are flat, or if they go up.  

Only when they go down a lot do we lose money but, since we mainly stick to stocks that we'd love to buy more of if they get cheaper – that's rarely a problem and that's where our allocations strategies kick in (see our Strategy Section for more details).  In fact, in the video, which is from late 2011, Transocean (RIG) was an example at $44.  We got called away but, even if we had stayed in it and let the stock go to the current $10.24, we were collecting $1.60 a month selling premium – and that was 72 months ago!  That's how you can win with stocks the vast majority of the time – let other people PAY YOU to take risks!

For example, AT&T (T) is a perennial favorite of ours, ranging between $25 and $40(ish) for the past decade and now $38.72, so the high end of the range.  They pay a lovely $1.96 (5.13%) while you wait but they are at the top of their range and we're not too interested in getting in now.  HOWEVER, we would certainly like to own them for $30 so we can initiate a position by promising to buy T for $33 by selling the 2020 $33 puts for $2.75.  That nets us in for $30.25 if it's assigned to us and, if not, we just keep the $2.75 ($275 per contract) for stock we never have to buy.

The ordinary margin on the sale is $2.46 so it's a margin-efficient play that returns over 100% on margin in just over two years.  About 1/3 of our Long-Term Portfolio plays involve short-put sales like that:  Stocks that we're happy to promise to buy in exchange for CASH!!! – IF they get cheaper.

GE is cheap, down at $24.93, which is a market cap of $215Bn for a company that earned $9.5Bn last year and should do about $10Bn this year.  While not a massive bargain at 20 times earnings, they are not likely to go much lower and the stock pays an 0.96 dividend (4%) while you wait.  We jumped the gun early on GE and bought in at $27.40 back in June but, because we were BEING THE HOUSE – we're actually right on track in the LTP:

As you can see, though we bought the stock for $27.40, we felt it was still likely to head lower and we sold the 2019 $25 calls for $3.75 and the 2019 $28 puts for $3.10 (net $24.90 entry) so our target was firmly at $25+.  The sales took $6.85 off our net cost so our basis was ($27.40-$6.85) $20.55 and, if we are called away over $25 in Jan, 2019, we will have a $4.45 (21.6%) profit AND we'll collect 6 dividend payments of $1.44 for another 7% profit.  That's 28.6% profit in 18 months on a stock that goes DOWN from where we bought it.  

If GE is below $28, we get assigned the stock again at $28 and re-initialize the process with another set of short puts and calls.  Our main goal in this one is simply to collect a nice, safe dividend with cash that would otherwise be sitting on the sidelines collecting less than 1%.  If you have $1M in cash collecting 1% ($10,000) and you put $250,000 of it into something that pays you 18%, like the above trade, you collect $7,500 from your 75% CASH!!! (have I mentioned how much I love CASH!!! lately?) position and another $45,000 from your stock and that's $52,500 – 5.25 TIMES more money in your pocket and all you do is risk owning a blue chip stock that pays a 4% dividend trading at 20x earnings.  THAT is how you can BE THE HOUSE!  

We sold calls to a guy who thought GE would go up and we sold puts to a guy who thought GE would go down and we don't give a crap what it does – as long as it pays our dividend – something GE has not failed to do in the past 100 years.

8:30 Update:  Durable Goods came in in-line at 0.2%, down from last month's 0.8% (revised up from 0.5%) but in-line with expectations, so no real damage to the markets from that report and the indexes are up about 0.25%.  The headline is 1.7% due to strong aircraft orders but last month at was down 6.8% due to weak orders – and the market ignored it.  Today it will be an excuse for the bulls to push for a rally.  

I can't even understand how GDP consensus is still at 3% – the hurricane alone should have knocked out half a point.  Maybe I'm wrong and maybe the economy is much stronger than we think it is but I was down at the Nasdaq yesterday for my interview and, on the short walk back to my hotel, I saw dozens of empty store-fronts, some with cracked and broken windows – indicating they'd been empty for a very long time.  That's in the middle of Manhattan – the retail center of the universe!  And no, it doesn't mean Amazon (AMZN) is taking all the business.  

Image resultAmazon, for all it's over-hyped glory, sold just $135Bn worth of stuff last year – WORLD-WIDE, out of $5.3 TRILLION in total US Retail Sales alone.  That's just 2.5% of sales vs 10% for WalMart (WMT) and about the same as Costco (COST).  Amazon is one of the shorts in our STP – we decided $1,050 was ridiculous and put our foot down back in July.  

Anyway, this is not about Amazon, this is about empty retail space all over the county and that's not due to Amazon gaining $29Bn (0.5%) in sales last year (out of $175Bn gained by all Retail) - that's just a case of reporters and analysts who can't do math, or use logic or check facts…  There's something deeper going on and it's the erosion of the Middle Class, which is something that's hard to see in the numbers because MORE yachts are being sold, MORE jewelry is being boughtMORE $100/bottle wines are being drunk and that adds to Retail Sales, even as the day-to day purchases of ordinary Americans trails off.  

The measurements of this economy do not account for the massive income disparity that is eroding the broader market and this is how you can become completely unprepared for a collapse.  The rich get richer and the rest get poorer but MOST of the economy functions on taking care of the broader population and those empty storefronts are trying to tell us the population is in trouble while your "trusted" news outlets try to convince you it's only because Amazon is a super-stock and is taking over the planet. 

Image result for retail store closing 2017

Nothing to worry about here…

 


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  1. FU Russell!


  2. Good morning, All!

    It's webinar day! 1pm (eastern)

    http://philstockworld.enterthemeeting.com/m/HEMBY7YX


  3. well said SJL — this is painful


  4. Good Morning.


  5. Getting face ripped off on /TF and /CL shorts….who's with me


  6. Me too, but honestly this happens at the end of every quarter.  So I'm inclined to hold on another week.


  7. Good morning!

    The narrative on the rally is all about tax cuts.  Cutting Corporate Taxes to 20% is supposed to add perhaps 30% to earnings, which makes everything a bargain.  Can't argue with that logic.  The long-term damage it does to the economy or the country doesn't matter – as long as they get away with it now.  Sadly, they only effectively pay 13% now – so I'm not sure what they expect to accomplish in reality.

    This is a proper new high for the Russell and now it's a squeeze.  I'm 10 short at 1,454 avg but reluctant to go to 20 – just happy to get my money back as we test 1,470:

    /TF & /CL/Japar – I'm with you!  

    Currently 5 short /CL at 51.71 avg.  Gotta take advantage of every quick dip the way this is going.  EIA at 10:30 should be fun.

    EOQ/JJ – Good point.   When are we going to learn to just wait?  


  8. Taxes / Phil – If they push forward with the idea of removing the state and local taxes deduction that will mean tax hikes for the most affluent states and therefore, less spending. Don't companies sell to these people?

    And by the way, if they do do away with these deductions, I don't want to hear another mention of double taxation with the estate tax because we'll get double taxation on income so the GOP argument will be meaningless. Doesn't mean that they will stop pushing it though!


  9. been liking my comeback div play FGP lately.


  10. EIA Report:

    • EIA Petroleum Inventories: Crude -1.8M barrels vs. +3.4M consensus, +4.6M last week.
    • Gasoline +1.1M barrels vs. -0.9M consensus, -2.1M last week.
    • Distillates -0.8M barrels vs. -2.2M consensus, -5.7M last week.
    • Futures +0.25% to $52.01.

    That's through 9/22 so the hurricane effect is over – not a good report for them.  

    Reuters reporter is following up on the missing 5Mb here's his article for Reuters "First Oil" Outlook (private news):

    First Oil: WTI Up, Brent Down Ahead Of U.S. Oil Data; Tankertrackers Group Point To 'Missing' Imported Barrels – MIDTRD

    27-Sep-2017 14:05

    10:01 AM EDT, 09/27/2017 (MT Newswires) — U.S. crude futures rose Wednesday on speculation that government data could show a surprise inventory drawdown versus builds forecast by analysts, although a tanker tracking group hinted at the possibility of a stockpile surge from unaccounted imports.

    Futures of Brent, the global benchmark for oil, meanwhile, dipped for a second session in a row although market bulls remained confident of taking out their long-eyed target of $60 per barrel.

    Analysts polled by Reuters expect the U.S. Energy Information Administration (EIA) to cite a crude oil build of 3.4 million barrels for the week ended Sept. 22 in data at 10:30 a.m. ET.

    Trade group American Petroleum Institute (API), however, said after Tuesday's market settlement that its sampling of weekly U.S. crude stocks showed a draw of 761,000 barrels for last week as refiners boosted output. If true, that would mean a dramatic rebound for the U.S. refining industry, which lost about 25% of its capacity just earlier this month from flooding caused by Hurricane Harvey's strike on Texas and the U.S. Gulf of Mexico.

    Adding to uncertainty were suggestions by tankertrackers.com, an independent crude tanker monitoring service, that imports into the Gulf registered by the EIA for the previous week to Sept 15 were unusually low despite the shipping channel being fully functional after the hurricane. Privately, some analysts and traders say about 5 million barrels of imports may be 'missing' from EIA data since the hurricane.

    The EIA has reported a weekly inflow of less than 2 million barrels per day (bpd) into the U.S. Gulf, or PADD3 region, since the week ended Sept 1. Before Hurricane Harvey made landfall in Texas on Aug. 26, PADD3 imports used to average 3 million bpd or around that.

    'Given the volume of traffic we saw, we were shocked to see such a low number in the latest report,' the team at tankertrackers.com said in an email to First Oil Chat, referring to the weekly report for Sept .15.

    'We believe that shortage of staffing by US Border Customs and/or Coast Guard (in combination with the Jones Act temporary waiver) has skewed the PADD3 crude oil import figures,' it added.

    The Jones Act prohibits the transportation of cargo between points in the U.S., either directly or via a foreign port, or for any part of the transportation, in any vessel other than a vessel that has a coastwise endorsement (e.g. a vessel that is built in and owned by persons who are citizens of the United States).

    U.S. crude's West Texas Intermediate (WTI) futures contract was up $0.16, or 0.3%, at $52.04 a barrel by 9:47 a.m. ET.

    The front-month contract in Brent was down $0.16, or 0.3%, at $58.27 a barrel.

    Despite Wednesday's mixed prices, crude futures are on track to a gain of 20% or more for the third quarter--their best quarter since 2004--after the Organization of the Petroleum Exporting Countries (OPEC) said last week that a three-year long glut in world crude supplies appeared to be ending.

    Since the start of 2017, the 14-member OPEC had joined Russia, the world's No. 1 crude producer, to cumulatively cut 1.8 million bpd in supply through March 2018. While OPEC had fallen short of the target earlier, the group says it has delivered sharper-than-expected cuts lately, leading to a 116%-compliance with export reduction quotas in August. OPEC and Russia will meet again in Vienna at the end of November to discuss the possibility of extending production cuts and inviting other non-member oil producers to contribute to more reduction.

    (First Oil reports are produced by MT Newswires' global team of oil reporters. This story is also disseminated in real time to energy industry professionals via the First Oil Chat service on the ICE Instant Message application.)

    Good job by CRS getting the ball rolling on that one!  


  11. Taxes/StJ – It's so convoluted you can't tell what they are doing.  That's by design, of course.  I think this is the pretend "acceptable" version that will suddenly be changed as it moves to the floor to grossly favor the rich.  

    FGP/BDC – Coming off the bottom nicely:


  12. Phil – "The measurements of this economy do not account for the massive income disparity that is eroding the broader market and this is how you can become completely unprepared for a collapse."

    Astute, cogent and prescient I might add and Out.


  13. Phil – Lemony Snicket's – Last week, we shredded Citron's report in Left And Citron: The Boy Who Cried Wolf?   

    Today, we exhumed the corpses in both Left and Pera's closets, performed a forensic autopsy and connected the dots in Left, Lawyers, Grizzlies And Money, Oh My!










  14. Tax cut fever: Republican supply-side theory is hogwash




  15. Comment content omitted because it is too long.


    • via WSJ
    • The overhaul would slash the corporate tax rate to 20% from 35%, and make the top rate for pass-through businesses (where income gets taxed on personal tax returns) 25%.
    • For personal taxes, the current 7-bracket structure would be slimmed to three or four (12%, 25%, 35%, with a possible fourth higher rate on the biggest earners). Lower income taxpayers would also get a break from a doubling in the standard deduction to $12K ($24K for married couples).
    • Also included is a repeal in the estate tax, and a one-time tax on repatriated overseas earnings.
    • Developing …
    • Due to concerns about agricultural research spending and government policy trends, the U.S. for the first time has dropped from the top spot in a global ranking of how well countries can feed their own people
    • Ireland is now the most "food-secure" nation, improving its affordability, availability and quality, according to the sixth annual Global Food Security Index.
    • Moody's and S&P Global have downgraded Hartford further into junk status, citing an increased likelihood of default as early as November.
    • It comes a day after the city's bond insurers said they were open to debt restructuring.
    • Hartford has roughly $530M of outstanding debt, much of which is insured by Assured Guaranty (NYSE:AGO) and Build America Mutual Assurance Company.

    • The last time this sort of goldilocks combination of perky asset prices and strong macro climate prevailed was in 2006, and that didn't end well, say Joachim Fels and Andrew Balls in Pimco's latest outlook.
    • They're not forecasting another imminent financial crisis, but it could be the time to focus on capital preservation and finding investments away from the current crowded trades.

    Pending home sales drop more than expected

    • MBA Mortgage Applications
    • Composite Index: -0.5% vs. +9.9% last week.
    • Purchase Index: +3.0% vs. +11.0%.
    • Refinance Index: -4.0% vs. +9.0%
    • 30 year mortgage rate  of 4.11% vs. 4.04%.
    • "This summer’s terribly low supply levels have officially drained all of the housing market’s momentum over the past year," says the National Association of Realtors after its index of pending home sales dropped for the fifth time in six months. At 106.3, the gauge is at its weakest level since January 2016.
    • Also noting the effect of Hurricanes Harvey and Irma, the group trimmed its full-year sales forecast to 5.44M homes vs. 5.52M expected at the start of the year. 2016 sales were 5.45M.
    • NAR Chief Economist Larry Yun also takes note of the fast rise in home prices as having outpaced incomes.
    • Some good news: Any sales postponed thanks to the hurricanes will show up in 2018. The NAR sees home sales rising 6.9% next year.
    • Full report
    • A Dallas jury awarded a widow and family up to $8B in punitive damages over JPMorgan's (NYSE:JPM) mishandling the estate of a former American Airlines executive.
    • Actual damages awarded were less than $5M, meaning the punitive damages are likely to be scaled back.
    • At issue is Max Hopper, who passed in 2010 with assets of more than $19M, but no will. JPMorgan was hired to administer the divvying of up of assets among family members. Trouble ensued, claims the family.
    • "The nation’s largest bank horribly mistreated me and this verdict provides protection to others from being mistreated by banks that think they’re too powerful to be held accountable," says Jo Hopper.

    Australia will not impose export curbs on east coast LNG producers

    • Australia will hold back from imposing curbs on exports of liquefied natural gas after producers agreed to put more gas into the domestic market to ease energy shortages on the east coast, Prime Minister Turnbull says.
    • The agreement follows six months of government pressure on LNG producers, led by Royal Dutch Shell (RDS.ARDS.B), ConocoPhillips (NYSE:COP), Origin Energy (OTCPK:OGFGF) and Santos (OTCPK:STOSF), who have been blamed for sapping the local market of gas and driving up prices.
    • Turnbull says the companies promised to fill a supply shortage estimated by the Australian Energy Market Operator at up to 107 petajoules in 2018 and 102 petajoules in 2019.
    • Australia, the world's no. 2 exporter of LNG, has suffered from blackouts in recent years when energy demand soared and generators were unable to find enough gas to maintain electricity supply.

    SunPower cut to sell rating at Morgan Stanley regardless of trade ruling

    • SunPower (SPWR +2.3%) is higher despite receiving a downgrade to Underweight from Equal Weight with a $6 price target at Morgan Stanley, which says it is cautious on the shares even without a negative trade ruling.
    • Stanley foresees overcapacity in the solar sector worsening through 2019, with module production capacity exceeding demand by ~35% in 2018-19 and likely leading to lower solar panel prices and thin margins.
    • SPWR also would be hurt by any penalties imposed by the U.S. government in the ongoing Section 201 trade case, Stanley says, as a majority of its revenues are generated in the U.S. and its panels are manufactured overseas.
    • Any tariffs imposed by Pres. Trump in the Section 201 case could cause SPWR's EBITDA to drop $80M-$100M in both 2018 and 2019, the firm says.

    General Electric: Numbers Game 

    Is Tesla Model 3 In Production Yet? 

    U.S. slaps tariffs on Bombardier jets, ruling in favor of Boeing

    • The U.S. Commerce Department moves to impose tariffs of as much as 219% on Bombardier's (OTCQX:BDRAFOTCQX:BDRBF) CSeries jetliners, ruling in favor of Boeing's (NYSE:BA) complaint that claimed its Canadian rival has been receiving unfair government subsidies.
    • Bombardier has sold aircraft to U.S. carriers for decades, but Boeing’s complaint followed a multibillion-dollar deal struck between Bombardier and Delta Air Lines for 75 CSeries jets.
    • The Trump administration had not taken an official position on the matter, but Canadian and British leaders have publicly argued against imposing tariffs.
    • The exact amount of any new duties may not be finalized until early next year, and Canada could pursue a case against the U.S. at the World Trade Organization.

     

    • Bombardier's (OTCQX:BDRAFOTCQX:BDRBF) EUR-denominated bonds due in 2021 have declined the most in more than two years after the U.S. imposed import duties of 219% on the company’s C-series plane.
    • Shares of Alten (OTC:ABLGF), Trelleborg (OTCPK:TBABF), Safran (OTCPK:SAFRY) and Zodiac Aerospace (OTCPK:ZODFY) may be active following the ruling by the U.S. Commerce Department.
    • The U.K. government is warning that Boeing's (NYSE:BA) trade dispute with Bombardier "could jeopardize" its defense contracts.

      The tariff imposed by the U.S. on Bombardier's CSeries jet is an "attack" on Quebec and Canada, the province's Premier Philippe Couillard declared.
    • Bombardier statement: "The magnitude of the proposed duty is absurd and divorced from the reality about the financing of multibillion-dollar aircraft programs."
    • Update: A Boeing spokesman said the planemaker remained committed to Britain after U.K. Defense Secretary Michael Fallon warned Boeing it could lose out on defense contracts.
    • The Krebs on Security blog reports that a breach at Sonic (NASDAQ:SONC) may have led to a "fire sale" of millions of stolen credit card and debit cards.
    • Krebs posted a frightening screenshot of the proposed sale on the underground market of 5M credit/debit accounts advertised as 100% fresh. Perhaps even more alarming, financial institutions have reported a wave of fraudulent financial transactions tied to Sonic.
    • SONC -1.4% premarket to $24.25.

    Winning retail sector picks from Credit Suisse

    • The Credit Suisse team covering retail is winnowing its list of Amazon-resistant sector picks.
    • Outperform ratings are maintained on Party City (PRTY +0.4%), Floor & Decor (FND -3%) and Michael's (MIK +2.5%) on the firm's view that the brands can be controlled directly by management through private labels, instead of selling the products of other companies.
    • Credit Suisse also thinks that product or service differentiation is critical in the post-Amazon world. Best Buy (BBY +2.6%) stands out in that regard.
    • Other retail picks from CS include AutoZone (AZO +0.2%), O'Reilly Automotive (ORLY +0.8%), Home Depot (HD -0.1%) and Lowe's (LOW +0.1%).
    • Nike (NYSE:NKE) reports flat sale growth in FQ1 on a constant currency and reported basis.
    • Revenue by brand (ex-currency): Nike +2% to $8.6B, Converse -16% to $483M.
    • North America footwear sales fell 3% during the quarter, while North America apparel sales were down 1%.
    • Sales in for the Greater China business were up 12% on a constant currency basis.
    • Gross margin -180 bps Y/Y to 43.7% vs. 44.6% consensus, chiefly due to unfavorable F/X rates.
    • SG&A expenses were down 1% Y/Y to $2.9B.
    • "Looking ahead to the rest of fiscal 2018, we will ignite NIKE’s next horizon of global growth through the strength of our brand, the power of our innovative products and the most personal, digitally-connected experiences in our industry," says CEO Mark Parker.
    • A reminder that Nike no longer issues futures orders guidance, once a staple of Nike earnings reports.
    • Previously: Nike beats by $0.09, misses on revenue (Sept. 26)
    • NKE +0.45% AH to $53.85.

    • JAKKS Pacific (NASDAQ:JAKK) is on watch after the company signed a global master toy deal with Disney covering Pixar's Incredibles 2.
    • The company will manufacture, market and distribute action figures and accessories tied to the franchise.
    • Shares of JAKKS are indicated higher in premarket action.
    • Source: Press Release
    • RH (NYSE:RH) discloses that Chairman and CEO Gary Friedman picked up 13,959 shares at an average price of $71.64 per share.
    • Friedman acquired the shares yesterday. He now holds 2.235M shares.
    • SEC Form 4
    • Shares of RH fell 3.16% yesterday, but jumped 1.57% in after-hours trading after the insider buying was reported.
    • Wal-Mart (NYSE:WMT) announces that 120 new baby items and 100 renovated baby products will be part of a relaunch of the company's Parent's Choice brand.
    • The retail giant says premium diapers and new bedding products are part of the relaunch.
    • The move from Bentonville arrives after Babies "R" Us owner Toys "R" Us filed bankruptcy, although most stores are still open. Another baby products seller, Gymoboree, filed bankruptcy earlier this year.
    • Source: Press Release

  16. Related image
    • The FDA grants 510(k) clearance for Hologic's (HOLX -0.7%) Cynosure's body contouring laser, SculpSure, for the treatment of submental fat (double chin), the sixth approved body treatment area.
    • SculpSure in a non-invasive 25-minute treatment that uses a laser to raise the temperature of body fat to precisely disrupt and destroy fat cells under the skin.
    Image result for tommy chong animated gif
    • Thinly traded nano cap Therapix Biosciences (NASDAQ:TRPX) is up 11% premarket on modestly higher volume in response to its announcement of positive preclinical results on Mild Cognitive Impairment (MCI) candidate THX-ULD01, its ultra-low dose tetrahydrocannabinol (THC) drug.
    • In a study conducted in Israel, old mice treated with THX-ULD01 showed significant reversals in age-related cognitive impairment. The benefit from one injection of 0.002 mg/kg of THC lasted for at least seven weeks.
    • The company is developing the drug for sublingual or nasal administration.
    • The data will be presented at the International Association for Cannabinoid Medicines 9th Conference on Cannabinoids in Medicine in Cologne, Germany later this week.
    • Ubiquiti Networks (NASDAQ:UBNT) shares declined during today's investor day presentation to finish 2.9% lower, as CEO/Chairman Robert Pera faced questions about the company's governance and on recent claims from short-sellers.
    • Why doesn't the company have an official chief financial officer? "Maybe I should have just called [Kevin Radigan] CFO so everybody would shut up,” Pera said about his chief accounting officer. “CAO, CFO, whatever you want to call it, he’s in charge of the finances, he signs the books."
    • Buybacks of a depressed stock at "fractions of a dollar" are good for the company and helps a "long-term goal of increasing EPS," he says.
    • The stock had hit an all-time high after earnings Aug. 3 and built on that over the next few weeks, but shares slid a week ago after a Citron Research short report calling the company a fraud.
    • Citron (an SA contributor) this morning posted a series of questions for the investor day, saying "This story is far from over and probably just getting started." Among those: Questions about the slow growth of cash balances, and "Accepting that the company has a misunderstood business model, do you plan on breaking out products and segments so the Street can have more clarity into your business and understand where the margins are being generated?"
    • Speaking to some of company's structural changes, Pera said today “The inventory centers were a step in the right direction … I don’t think our operations in general have been very good.”
    • Micron Technology (NASDAQ:MU) shares are up 2% aftermarket following Q4 beats on strong NAND and DRAM performance and guidance that exceeds consensus estimates.
    • Q1 guidance: $6.1B to $6.5B (consensus:$6.06B); gross margin, 50% to 54%; operating expenses, $575M to $625M; operating income, $2.65B to $2.85B; EPS, $2.09 to $2.23 (consensus: $1.85). 
    • Unit sales: Compute & Networking, $2.85B (+128% Y/Y); Mobile, $1.18B (+ 76%); Storage, $1.3B (+72%); Embedded, $827M (+61%). 
    • DRAM sales volumes were up 5% on the year and average selling prices were up 8%. DRAM represented 66% of total Micron revenue in Q4 with Server DRAM making up the highest percentage at 30%. The company expects DRAM industry supply bit growth of 20% in both CY17 and CY18 due to moderate undersupplies. 
    • NAND revenue presented 30% of total sales with sales volumes up 3% and ASPs up 5%. SSD, Mobile, and Automotive, Industrial, and Other tied at 20% shares of the NAND sales. Micron expects NAND sales to grow in the high 30% range in CY17 and nearly 50% growth in CY18 due to constricted supplies and booming demand. 
    • Financials: Gross margin was 51% compared to 18.6% in last year’s quarter.  Operating income was $2.5B and operating expenses totaled $610M. SG&A spending was up 25% to $193M while R&D spending rose 9% to $447M. Micron ended the quarter with $5.4B in cash and equivalents.   
    • Press release / Earnings slides    
    • Previously: Micron Technology beats by $0.18, beats on revenue (Sept. 26)

    • Analysts adjust price targets after Micron Technology’s (NASDAQ:MU) Q4 beats yesterday.
    • Wells Fargo raises its Micron price target by $5 to $45 and maintains an Outperform rating.
    • Analyst David Wong introduces an FY19 GAAP EPS estimate of $5.60. The figure is below the FY18 estimate but Wong says that if the “positive memory pricing environment continues” the firm could raise that FY19 estimate
    • Baird raises its price target from $48 to $52 and maintains an Outperform rating.
    • Analyst Tristan Gerra believes in the supply-demand trends for Micron in FY18 are sustainable especially for DRAM.
    • Finally Susquehanna raises its Micron price target by $4 to $54 and maintains a Positive rating.
    • Micron shares are up 5.53% premarket.
    • Update: Bloomberg Intelligence analyst Anand Srinivasan calls the demand for memory a "utopia" scenario particularly in DRAM, which could drive Micron's sales and margins through next year.
    • Twitter (TWTR -2.3%) — fighting a tough battle with Facebook (FB +0.8%) for hearts and minds of social-media users — is tweaking another part of its interface that some considered a handicap in that fight, by stretching its venerable 140-character tweet limit.
    • The company is expanding tweets to 280 characters, double the original size, starting with a subset of users.
    • Twitter had hinted at the change before, and it's the latest in a series of mild interface tweaks that come even as company critics urge stronger changes amid criticism of violent and harassing content on the platform.
    • But the 140-character limit (itself a vestige of early phone texting limits) had come to signify a hurdle in drawing users from competing platforms who weren't used to hitting a wall in putting their thoughts online.
    • After hours: TWTR +1.6%.
    • ABC's World News Tonight (DIS -0.8%) has closed out the outgoing TV season hanging on to its No. 1 slot among evening newscasts, finishing first for the first time in 21 years.
    • The program, anchored now by David Muir, averaged 8.25M viewers, ahead of 8.17M for NBC Nightly News (NASDAQ:CMCSA) and 6.56M for the CBS Evening News (CBS -3.1%).
    • The last time ABC finished in first for the season, it was anchored by Peter Jennings. CBS is in transition with interim anchor Anthony Mason.
    • While evening newscasts aren't growing anymore, they are still in a flagship daypart reaching a collective 23M viewers per weeknight.
    • NBC, meanwhile, lauded its victory in the 25-54 age demographic.

    • NBC (CMCSA -0.3%) closed out summer with another prime-time ratings win on the back of its seasonal hit America's Got Talent, though the return of fall TV likely means a return to form for usual September-to-May leader CBS (CBS -3.5%).
    • The Peacock network drew 7.8M viewers in prime time, ahead of 6.2M for CBS, 4.2M for ABC (DIS -0.9%) and 2.7M for Fox (FOX -0.7%FOXA -0.6%). Just behind them were Univision (Pending:UVN) with 1.6M and Telemundo with 1.4M on average.
    • On cable, meanwhile, ESPN (NYSE:DIS) rode sports to top usual leader Fox News, with 2.48M prime-time viewers on average to Fox News' 2.08M, MSNBC's (NASDAQ:CMCSA) 1.62M, USA Network's (CMCSA) 1.5M and HGTV's (SNI -0.2%) 1.24M.
    • With the dust settling a bit on football figures (if not the NFL controversy itself), pro football ratings are down 11% Y/Y, Nielsen says: 15.77M viewers on average for the first three weeks of the season, vs. 17.63M last year.
    • In individual programs, NBC logged the top two with 17.48M viewers for its broadcast of the Oakland-Washington game and 15.64M for its Wednesday broadcast of America's Got Talent;No. 3 was 60 Minutes for CBS with 14.83M; No. 4 was the Tuesday broadcast of AGT with 14.7M; and No. 5 was NBC's Sunday Night NFL Pre-Kick with 13.78M.
    • Previously: DirecTV allowing NFL refunds around player protests (Sep. 26 2017)
    • Previously: Football ratings inconclusive after Trump's boycott call (Sep. 25 2017)

    Amazon gets new Street high price target

    • Wells Fargo Securities raises its Amazon (NASDAQ:AMZN) price target to a new Street high of $1,400.
    • Analyst Ken Sena sees Amazon as one of the best-positioned companies to apply AI across new and multiple verticals.   
    • "We see this lead in data, coupled with the company's edge in compute efficiency, as increasingly feeding insights into supply chain, for its retail, video, and other efforts, and through AWS, for its partners," writes Sena. 
    • Sena cites revenue potential in the cloud computing market that’s expected to exceed $200B by 2020. Amazon holds a 46% market share with AWS. Apparel, groceries, and OTC medications offer another potential $130B market. 
    • Amazon shares are up 1.12% to $949.08.    
    • Previously: YouTube goes dark on Echo Show (Sept. 27)

    WSJ details 3D sensor delays for iPhone X

    • The Wall Street Journal has more details about the 3D sensor issues causing last-minute delays in Apple’s (NASDAQ:AAPL) iPhone X production.
    • The issues trace back to correlated parts nicknamed Romeo and Juliet that form a part of the facial recognition system that’s based on 3D sensor technology. 
    • Romeo has a dot projector that beams 30K infrared dots across the user’s face while Juliet has the infrared camera to read the pattern Romeo creates. 
    • Romeo modules have taken more time to assemble than Juliet, which has created a supply imbalance that could push the initial availability of the iPhone X even lower than previously expected due to OLED manufacturing delays. 
    • The phones can’t ship without Romeo and Juliet because the iPhone X already lacks Touch ID because of problems integrating the fingerprint sensor into the OLED panel.       
    • Previously: Sensor production issues for iPhone X; analyst expects X to boost profit margins(Sept. 26)
    • Apple’s (NASDAQ:AAPL) 64GB iPhone 8 contains $247.51 worth of materials with a cost of $699 compared to $237.94 in materials for the 32GB iPhone 7 and a $649 price tag, according to HIS data.  
    • The iPhone 8 Plus has $288.08 in components with a $799 price compared to the iPhone 7 Plus’ $270.88 in parts and $769 price.
    • The price increases help with Apple’s profits especially with the forthcoming premium iPhone X model, which can drive up margins on the product mix. Analysts expect gross margins across all Apple businesses to reach 38% in the upcoming quarters. 
    • On the subject of iPhone components, China’s telecom authority confirms that the iPhone X will have 3GB of RAM and a 2,716mAh battery, which is physically larger than the one in the iPhone 8 Plus. 
    • Rounding out the news, Apple TV appears on Amazon.com for the first time in two years after a long battle between the tech giants. The e-commerce site shows a listing for the 64GB Apple TV 4K but with a two-week ship time.  
    • Previously: Sensor production issues for iPhone X; analyst expects X to boost profit margins(Sept. 26)

  17. Phil – Great Auric GIF – "You expect me to talk?" and trouncing "Bond, James Bond" for the #1 all-time Bond quote: "No, Mr. Bond, I expect you to die".


  18. Phil,

    Any expection of where /CL and /TF will dip to do we can get out?


  19. Phil – Did anyone notice the RUT surging at the expense of the NDX?


  20.  

     

     

    Teva is close to selling the European Oncology Division – $ 1 billion

    According to a report in Bloomberg, the Cerberus Capital investment fund is in advanced negotiations with Teva over the acquisition of the division – an agreement may be signed as early as next month

    Dror Reich


  21. Looks like they are working on fixing the news feed.  

    UBNT/Naybob – What a ride!  Great job pointing out the BS last week.  

    Phil – Swap – UBNT – "Either Robert Pera is the best CEO in networking equipment, or Ubiquiti is committing FRAUD,” Left wrote.  Left also called into question what Ubiquiti describes as its “evangelical community” of users, who allow the company to reduce advertising and customer service costs. According to Left, these claims are exactly the type of “secret sauce” claims that are typical of corporate frauds. “While we do believe that at six or seven years ago Ubiquiti may have had an engaged WISP community, the story is now as implausible as the rest of the bull— UBNT tells Wall Street,

    Just like in Hong Kong, caught issuing fraudulent and misleading statements, I hope Left and Citron get banned from trading in the US for five years, are ordered to repay any trading profits and pay legal fees. 

    In the past I've mentioned UBNT on PSW here and here. I've deployed and utilized UBNT products, their sales are what they are, because of the product and support, best of class, nothing more, nothing less.

    "So where does UBNT sit in Cramer's eyes? He acknowledges not having done enough research to discredit or support Ubiquiti… In response to Left's claims, UBNT CEO Robert Pera had this to say, "I just put my head down and let the products and numbers speak for themselves. My apologies to those affected by these clowns."

    And that sums it up as propagandist Left makes money shorting companies, so why would anyone distrust his line of BS or motive for trashing the stock? DUH! As for Cramer,  a sycophantic ass clown, knowing not his musculus sphincter ani internus from a golf hole cup liner, and whom I would not allow to wash my car and Out.

    phil Submitted on 2017/09/19 at 5:48 am

    UBNT/Naybob – I haven't looked into the fraud issues.  If they are not cooking the books, they may be reasonable at $50.  Apparently Pera still owns 70% of the company – how pissed must he be that these guys just cost him $1Bn?  The good news is, if you are a believer, that the 2019 $50 puts are $11.90 for a net $38.10 entry, that's another 24% off from here.  You can pair it with the 2019 $40 ($16.50)/$55 ($9) bull call spread at $7.50 and you still have a $4.40 credit on the $15 spread with $19.40 (440%) upside.  I don't know enough facts to play it but that's how I'd play it if I thought this was unjust.

    That's how we make the big bucks in the market folks – learn to ignore the BS and find the facts!

    Bond/Naybob – So many to choose from.

    James Bond - second best government operative out there (right behind Jack Bauer)

    Be polite, be courteous, show professionalism, and have a plan to kill everyone in the room.

    Vesper Lynd: “It doesn’t bother you? Killing all those people?”

    Bond: “Well, I wouldn’t be very good at my job if it did.”

    /CL & /TF/Japar – Looking hopeless.  /CL just popped back over $52 and /TF hanging at 1,465.  Oil may take another week to calm down, maybe 2.  /TF to some extent depends on /ES getting over 2,500 and holding it and /NQ getting back to 6,000 – neither of which I think will happen but who knows – this market goes up on any excuse.  

    Brent is even down almost 1% but /CL is still going up

    /ES is flat, /TF is up.  

    TEVA/Jabob – What's going to be left?


  22. Trump will be announcing tax cuts later – that's keeping spirits up.  Of course you would think it would send Euro stocks lower – as they end up having to compete against US companies that have a tax advantage – but no – there's no logic here.


  23. Pharm, TRPX????


  24. who rained on CMG's parade??


  25. TEVA--isn't this exactly what they said they needed to do?

    I would hope that there is a lot left, right? 

    Aren't these supposedly non core assets?


  26. Lunar – "who rained on CMG's parade??"

    These macho burrito guys, CMG went -38% from 500 to 310, while these guys went +33% from 12 to 16. Phil knows what I think of CMG, "not worth the IPO price of $44" and their promotions.


  27. FU TF


  28. CMG/Lunar – No news that I can see.  Hopefully not consolidating for a move down.

    $500 to $300 means even a weak bounce should bet them to $340 and no real recovery until $380.  Failing $320 is pathetic.

    TEVA/Jabob – Yes but I never like to see future profits sold off if it can be avoided.  Obviously, they have a ton of different things and they are simply paring down – not really different than when we cash out positions in the LTP, not because we don't like them, but because we want to lighten up, knowing that the CASH!!! will enable us to buy more fun things later.

    CMG/Naybob – So $611M TACO is destroying $9Bn CMG?  That leaves about $6Bn in market cap unaccounted for…

    /TF/Pat – Amen!  



  29. Might have to bail on these TF shorts pretty soon.  At this rate we'll be over 1500 by the end of the week.


  30. Phil – "CMG/Naybob – So $611M TACO is destroying $9Bn CMG?  That leaves about $6Bn in market cap unaccounted for…"

    Of course not, I kid El Presidente… and yes TACO has been a whipsaw roller coaster ride from day one going from 9.50 to 17 to 8.30 to 15 to 11.50 to 16. Roll with me amigo, Levy bought the whole enchilada in 2015 for only $500M, went public and the market cap is 615M, shares outstanding 38M, public 32M.

    The #3 Mexican fast food company has 310 (56% corporate owned) out of 554 stores in only 16 states.  Expansion futures for the other 34 states and international?  Below, remember only MCD is bigger than YUM (KFC, #2 Taco Bell, Pizza Hut).

    2016 Revenue Taco Bell 9.35B; Chipotle 3.9B; Del Taco 738M = small but rising, nice multiples

    2016 Avg sales per Unit CMG 1.86M; Taco Bell 1.5M; Del Taco 1.35M = very respectable, the MRS would not say, nobody wants to see that..

    Recent price performance: CMG $800 to $310; Yum 48 to 73; Del Taco 9.50 to 16 = a bargain? TBD

    In the day, after a late night of New York Ice Teas and cat herding, when I was too lazy or didn't want to risk the drive to Pedro for the real deal, I always liked to stop at Naugles (now part of Del Taco on the secret menu). Nothing like a dirty white boy taco in a cup with fries and a macho beef burrito.  Those self admitted chingaderas downed with a cool cerveza and Tylenol PM, what me hangover?

    As for the pretenders at CMG, how can you ditch chorizo for sub standard queso sauce?  $800 or $300 a share, given the numbers above, I don't get it, sorry I'm just a blue collar manTop 50 US Fast Food Restaurants 2017, enjoy playin with the big chart. Un taco picante y cerveza mas fria por favor. En donde esta la playa? and Out.


  31. Doing the math for the giant tax cut – basically a tax hike for the middle class:

    http://www.businessinsider.com/trump-tax-plan-doubled-standard-deduction-2017-9

    Here's how that math works. Let's say you are single with no dependents, and you have a moderate income. Currently, you get to take the standard deduction ($6,350) and one personal exemption ($4,050). If you are 65 or older, you also get to take an additional standard deduction ($1,250). That adds to $10,400, or $11,650 if you're a senior citizen.

    The Republican plan would replace all these provisions with a single deduction of $12,000 ($24,000 for married couples.) That's a 15% increase — except for seniors, who get a 3% increase.

    And then your first dollar of taxable income would be subjected to a 12% tax rate, instead of the current 10%. But don't worry, the framework says "additional tax relief," as yet unspecified, will emerge for you during the committee process.

    These guys will have some 'splaining to do!


  32. Phil,

    Are you still in your /TF shorts?


  33. Phil – Upon further review – from the Panera/CMG and liquidity risk point of view.

    Levy paid $500M for TACO $468M revenue; 22M net; 160M debt; 0.43 debt/equity; 1.35M spu; $16 sh

    JAB paid $7B for Panera: $2.8B revenue; 153M net; 483M debt; 1.7 debt/equity; 2.7M spu; $315 share

    CMG was $800 est 2017: $4.3B revenue; 167M net; 2.1B debt; 1.44 debt/equity; 1.86Mspu; $315 share 

    Don't get me wrong, the MRS loves Panera, and I approve of this message. As for CMG, those off book leases are long term non cancelable obligations, thus they are debt.  However… looking at what's in your wallet….

    Free cash flow: CMG 167M; Panera 189M; Taco 16M

    Cash on hand:  CMG 570M; Panera 153M; Taco 5M

    Now we know why Levy paid what he did, and the debt service or liquidity risk involved at $10 – $16 a share.  I'd venture to say, aside from El Presidente, there are some PSW members with more than that, just sayin and Out.


  34. Well, I'm up to 16 short /TF now at 1,465.8 avg and I can only pray we don't pop 1,500 without a pullback.  As I said in the Webinar, there's justification to the move with the tax break (and Trump is about to speak) but we're up 130 points, getting close to 10%, without a proper pullback.  Even if we're generous and call 1,400 the base, 5% is still just 1,470 and 1,484 is a 20% overshoot of that run and 1,498 would be a huge 40% overshoot without a pullback of any kind.  

    /TF/JJ – So friggin' painful!  

    /ES 2,508 is moving too.  

    TACO/Naybob – Nothing wrong with them, nice business but it's not what's hurting CMG.  Their wounds are self-inflicted.  

    Tax cut/StJ – I knew it would screw the average American.  What I'm wondering though is whether the benefits to small business is legitimate.  

    /TF/Japar – Painfully so, yes.  


  35. Looks like home mortgage interest and charities are still deductions, which favor the Top 1% and, most incredibly – they have eliminated the inheritance tax.  If they accomplish just that one thing – it will make their donors very happy (and create a noble class in the US that we'll never get rid of).  


  36. Phil – "TACO/Naybob – Nothing wrong with them, nice business but it's not what's hurting CMG.  Their wounds are self-inflicted."

    Indeed, check your moderation queue, there is a post waiting.



  37. Taxes / Phil – And they eliminate the AMT. I am sure a huge bonus for the middle class! Will people fall for that? </sarcasm>


  38. Phil / F ( FORD) – any thoughts not he company's ceiling in the next 6 to 12 months?


  39. Dathan – thank you for my ROFLMAO of the day. Your a twisted one, but it takes one to know one and Out.


  40. FU Aviram!!!!

    ;-)


  41. Time to look for a new MO play for some who do not have a foot in this play. For starters I would look to sell a put to even discount the stock further.Jan 2019 62.5 put pays 6.00!


  42. Getting a little pullback off Trump's speech as people realize this is no done deal but a wish list.

    TACO/Naybob – Well it's early innings.  It could catch on but look how many years it's taking In and Out to make it across the country.  Yes, I know they say they don't feel like it but, really?  It's tough to go from regional to national and there's a lot of value in those that make the transition without imploding.

    F/Batman – Missing letters?  As a general comment, I like F any time they get close to $10 but I don't think they're worth $15.  In fact, our LTP play was buying them for $12 and selling 2019 $10 calls for $1.70 and $12 puts for $2.40 to net $7.90 with the 25% profit at $10 (over $12) plus the 0.60 dividend.  Like GE, it's a nice, conservative thing to do with cash.

    MO/Yodi – I'd wait for 2020 to come out but you can sell the 2019 $60 puts for $4.85 while you wait.  The $60 ($7.55)/70 ($3.25) bull call spread at $4.30 makes it an 0.55 credit on the $10 spread that's starting out $4 in the money but I'd wait for 2020 to see how they look.

    Trump asking ALL Americans to demand tax reform from their Congressman.  It's so easy when you don't care about facts or the truth, isn't it? 


  43. I don't get how these proposed tax cuts aren't already priced in.  The RUT is up 20% since election based on tax cuts and deregulation.

    Living in NYC this proposed tax plan looks to jack up my overall tax bill without SALT deduction….along with 401k and other deductions.  I'm going to have to convert myself into an LLC.


  44. /RB – TOS rolled the contract from /RBV7 to /RBX7 afterhours tonight, if you had any trades that had not executed, ie stops, they will be cancelled.  /RBV7 has 2 trading days left.


  45. /RB – correction, only tomorrow left for trading !


  46. Phil / F ( Ford) – Yeah having problems typing with these new fingers;)  Probably should have been more detailed.

    Holding 7K Shares ( $11.8 )of ford and looking at selling some either short term callers and/or longer term.

    What do you think about the following:

    selling some Jan 18 $12 Calls for .5 ( maybe 20) 

    And also selling some longer term Calls  Jan 19 12 Calls for 1.0  ( maybe 20 ) 

    Also have some 10X  Mar 17 11 puts ( sold for .9) 


  47. Phil – RB – time to get long?


  48. Taxes/JJ – It's not even a real plan yet, just a stump speech promising a chicken in every pot.  Times has a good run-down.

    The plan would create a new 25 percent tax rate for “pass-through” businesses — sole proprietorships, partnerships and S corporations that currently pay taxes at the individual rate of their owners. Pass-throughs now make up about 95 percent of businesses in the country and the bulk of corporate tax revenue for the government.

    Most pass-throughs are small sole proprietorships currently paying less than a 25 percent marginal rate. But a few are quite large — 1.7 percent of pass-through businesses generate more than 40 percent of all pass-through income and are taxed at the top 39.6 percent rate. The plan would be a windfall for these high-earning pass-throughs.

    The plan also makes several other major changes to the corporate tax code, including allowing immediate expensing of assets for at least five years, scaling back deductibility for corporate interest expenses, moving to a territorial system and implementing a one-time repatriation tax on profits overseas.

    That and the inheritance tax – it's a home run for the Top 1% if they just get a couple of these things.  

    /RB/Edro – Yes, /RBX7 is safer and right on the $1.60 line is also a plus.  

    F/Batman – What are you really accomplishing selling the Jan $12 calls?  It's not really downside protection and it caps your upside – worst of both worlds.  The question is, what are you in the stock for?  The 0.60 dividend on 7,000 shares is $4,200 and selling 70 2019 $12s for $1 raises $7,000 and maybe $5,250 in dividends (5) for $12,250 and that drops to $5,250 at $11 and deteriorates from there.  

    I submit to you that cashing the stock and just selling 100 of the 2019 $12 puts for $1.55 nets you $15,500 at $12 and your break-even is down at $10.45 and you save $84,000 in cash against $12,500 in margin or less assuming you have PM.  So what is the stock for?  

    And yes, I know we have F in our portfolios but it's more to teach people how to deal with dividend stocks than it is to have F specifically in the portfolio.  So nothing wrong with your play but consider if it's worth the effort when you can simply promise to buy 10,000 F and collect $15,500 without all the fuss.  

    /RB/Bulls – Yes, I added on in the Webinar and flipping to /RBX7 at $1.605 avg on 2.   


  49. Taxes / Phil – I just don't see the deductions for state and local taxes go away. It would be political suicide for the GOP guys in districts that Clinton won in blue states. As far as the corporate tax is concerned, the idea was to lower the rate to 20% but eliminate the loopholes. But with these loopholes a lot of companies pay less than 15% anyway (or nothing at all). My guess is that they will lower the rate and keep the loopholes. Which means that somehow we'll have to make up for some lost revenues. And since the tax on the top 1% will be lower, it's everybody's guess where the money will come from. 


  50. Phil/cl

    Did you close your short?


  51. Inheritance Tax Rate is effectively less than 1%.  $20 Billion  in  revenue. https://taxfoundation.org/estate-tax-provides-less-one-percent-federal-revenue/

    If US Wealth is 500% of GDP then its about $80 Trillion.  Figure 1/25 (generation as 25 years) passes down each year.  So that's $4 Trillion. But revenue is only $20 Billion. Exclusions, perpetual trusts, etc.etc.

    Just another BS RW talking point. And  if they do claw back that $20 Billion, they'll invest in moving the family business to Thailand….


  52. F/Phil

    I have been away mostly for a few weeks/months…..reading your posts when I get a chance.

    I like the F 2019 put selling!!

    Thank you!


  53. One of Trump's tax proposals involves moving to a territorial tax system whereby only local in country income is taxed. Corporations currently reporting and sheltering income in foreign countries would have nothing to gain by moving the operation back to the U.S. as the income would be exempt.

    Is this correct or am I missing something?


  54. Good morning!  

    Oil blasted up to $52.86 on more Kurdistan news:

    Baghdad cranks up pressure on the Kurds following a controversial independence referendum, with a flight ban and a warning on oil exports — a vital source of income for Iraqi Kurdistan

    That will last until it suddenly goes away.  Probably best to switching to UCO.   Good for /RB longs, at least…

    Taxes/StJ – It looks like it's a $6Tn hole in the budget over 10 years at least – don't know what they plan to cut to pay for that. 

    /CL/Ravi – Sadly no, cost me $2,500.

    Inheritance tax/Rexx – No one pays it anyway.  You have to be a pretty poor estate planner to get stuck with that bill these days.  My theory is the reason it's so important to the Top 1% is that we're close to cloning and they plan on leaving everything to themselves, so of course they don't want to pay tax on that!  

    This isn't a joke, I know people who are into this stuff!  Frankly, I don't mind the idea of living on virtually but I'm super-dubious that it can be accomplished.   Still, you never know, maybe they figure out how to copy your brain and download it somewhere.  Of course, that may not be all there is to you being you – will be interesting to see what happens.

    You're welcome Maya.

    Territorial/Den – This thing does nothing to address our current problems.  It's all about slashing taxes and throwing the country another $10Tn in debt.  The whole plan is based on GDP projections at 3.5% growth when we can barely sustain 2% and it's not like we haven't tried tax cuts 5 times already – so we KNOW it's not going to lead to magical growth. 

    Arrrrgh!  


  55. When do we do something about the spending? Why are people ok with ever increasing debt? Insanity. We're going to cut taxes. Hey, doesn't that mean someone else will pay for it? Why does the public believe such crap? I got a postcard last month, hey, based on your income you should apply for reduced property taxes. I looked into it, have way too many assets to qualify, but they would give me food stamps… seriously. Heating assistance too. I showed very little income last year…  We need to starve this beast. It's out of control.


  56. Hi Phil/BBBY .. I sold the Jan2019 $35 put for $3.70. It is near $12.70 now. Down $9. I was considering rolling to 2xJan 2019 $25 puts to get my $9 back should it rise to just $25. I would appreciate your view of this. Thanks, DM