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$450M Thursday – A Least It’s a Nice Frame

Image result for Salvator Mundi.$450,000,000!  

That's a lot of money to spend on a painting and yet another justification for my daughter to go to art school!  It just goes to show you how rich the rich are gettin as the previous record for a painting at auction was $300M for Kooning's "Interchange" 2 years ago and this painting was previously purchased in 2013 for "only" $127.5M – how's that for inflation?  So, on this trajectory, we're only a few years away from the first Billion-Dollar painting – just in time for Madeline to graduate with her art degree!  

The buyer is mystery but look for a guy with a 26" space on his wall – that's probably him.  That's right, this is a pretty small painting but it is cool that it was painted by DaVinci 500 years ago though how they prove that, I can't say.  There was a VanGough that went for "only" $81.3M that I liked better – and it's more in my price range.

This is an indicator of how drastic income inequality is becomming in the US.  There was a roomful of people yesterday, bidding hundreds of Millions of Dollars on a painting while their pet Congresspeople are screaming to the cameras that these art lovers need massive tax breaks in order to "create jobs".  In order to give the art lovers these tax breaks, we have to give up our nacent universal health insurance, we have to cut Medicare, cut Student Loan Funding and cut Farm Subsides – all while taking on $1,500,000,000,000 in additional debt (minimum), which is enough money to buy 3,000 more paintings!  

Going long Sothebey's (BID) might be the best way to play along at home because all this money we, The People are scrificing is going to just 3M of our fellow citizens in the Top 1% and this chart is old as they now control 50% of the wealth in this country – and guess where they took the other 10% from?

wealth3

That extra blob of green on the chart is what was cut off from the top of the top 90% and it belongs to the Top 97, 98 and 99th percentiles and yes, a person in the Top 1% has 10 stacks all to themselves vs 1/4 stack for even someone who is just barely in the Top 10% ($165,000 annnual income).  But now they have 25% more wealth than they had in 2013 – that's adding more than the entire Middle Class has – or HAD – as this money didn't grow on trees.  In fact, growth isn't an isssue as this is a percentage of total wealth so adding 10% was essentially the Top 1% accumulating ALL of the GDP growth of the past 4 years.  

Where will the next 10% come from?  Well it's coming from the new Trump Tax Plan, which will cause the largest transfer of wealth from the Bottom 99% to the Top 1% in history.  $450Bn is being cut from Medicare, $1Tn is being cut from Medicare and $1.5Tn in debt is being taken on by the Bottom 99% to transfer $3Tn in tax cuts to the Top 1%.  That is how, in addition to continuing to gather up all of the economic growth, the Top 1% will move from owning 50% of the Wealth in America to 60% and 70% (if, God forbid, Trump is re-elected) by 2027. 

Then what?  At some point, they can only turn on each other – just like Royal Families have done for thousands of years -after they have drained their peasants dry.  On a Global Basis, the Top 1% passed the 50% mark last year.  Fortunately, we still have Bernie to speak truth to power (for now): 

This is the rise of the very monarchy our Founding Fathers fought against and, for 240 years, we had a pretty good run fending them off from rising in the US but now THEY'RE BACK and richer than ever and they are consolidating their wealth and power and taking over our political system and rewriting laws to favor themselves and we are just letting it happen – that's the thing I never expected.  I thought we'd put up some kind of fight…

Image result for big business povertyAt least there is some hope on the International Front.  IMF President, Christine LaGarde said: "Business as usual for the elite isn't a cost free option – failure to tackle inequality will set the fight against poverty back decades. The poor are hurt twice by rising inequality – they get a smaller share of the economic pie and because extreme inequality hurts growth, there is less pie to be shared around."

Lady Lynn Forester de Rothschild, Chief Executive Officer of E.L. Rothschild and Chairman of the Coalition for Inclusive Capitalism, who spoke at a joint Oxfam-University of Oxford event on inequality last year, called on business leaders meeting in Davos to play their part in tackling extreme inequality.  She said:

"Oxfam's report is just the latest evidence that inequality has reached shocking extremes, and continues to grow. It is time for the global leaders of modern capitalism, in addition to our politicians, to work to change the system to make it more inclusive, more equitable and more sustainable

"Extreme inequality isn't just a moral wrong. It undermines economic growth and it threatens the private sector's bottom line.  All those gathering at Davos who want a stable and prosperous world should make tackling inequality a top priority."Oxfam made headlines at Davos last year with the revelation that the 85 richest people on the planet have the same wealth as the poorest 50 per cent (3.5 billion people). That figure is now 80 – a dramatic fall from 388 people in 2010. The wealth of the richest 80 doubled in cash terms between 2009-14.

The international agency is calling on governments to adopt a seven point plan to tackle inequality:

  • Clamp down on tax dodging by corporations and rich individuals
  • Invest in universal, free public services such as health and education
  • Share the tax burden fairly, shifting taxation from labour and consumption towards    capital and wealth
  • Introduce minimum wages and move towards a living wage for all workers
  • Introduce equal pay legislation and promote economic policies to give women a fair deal
  • Ensure adequate safety-nets for the poorest, including a minimum income guarantee
  • Agree a global goal to tackle inequality.

Instead of working towards these noble goals, America elected a President who is the 544th richest person in the World and clearly aspires, like his pal Putin, to use his political office to become even richer.  We are going the WRONG way people – and it's a very dangerous path we will not easily be able to come back from and, if this tax plan passes, you will be giving so much weath and power to Trump and his Billionaire buddies – that this country may never recover from the damage.  

Speaking of which, the Koch Brothers just made a move to take over Time, Inc – yet another media outlet bought by Conservative Billionaires.  Move along… nothing to see here…

 


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  1. CEOs not motivated by tax cuts to invest more:

    http://www.motherjones.com/kevin-drum/2017/11/ceos-tax-cuts-wont-prompt-them-to-invest-more/#

    The CEOs, of course, have no particular reason to lie about this. They’re already hoarding cash and could easily boost investment right now—but only if they thought it would earn them a good return. A lower tax rate won’t change that, so there’s no special reason to think they’ll invest more. The rate cut will mostly be used for stock buybacks, increased dividends, and higher salaries for executives.

    This tax cut is just a big joke now. Just as unpopular as the Obamacare "replacement" plan! 


  2. Turnaround stock of the year – RH !


  3. Good Morning.


  4. Phil/MCK

    Will you analyze this stock for me?  Is there an option play with this one?

    Thanks


  5. Good morning, All!

    The webinar replay is up!

    https://youtu.be/v34-Co_wyUU


  6. Phil/WMT

    What are you thinking for those 2018 Jan $77.5 short calls in the Butterfly Port. now that earnings are out.  Looks like the take on WMT earnings was positive (so far). Of course, now they employ the Amazon model:  increase sales and forget about profit.


  7. Good morning!  

    At least China is encouraging people to read with the World's coolest library:

    Meanwhile, in US cultural news:

    The Trump administration is set to overturn an Obama-era ban on bringing back into the U.S. hunting trophies of elephants killed in Zimbabwe and Zambia.

    Trump's crazy court picks are going to have lasting effects on America.  

    Tax Policy Center on Trump Tax Plan:

    His proposal would cut taxes at all income levels, although the largest benefits, in dollar and percentage terms, would go to the highest-income households. Federal revenues would fall by $6.2 trillion over the first decade before accounting for added interest costs. Including interest costs, the federal debt would rise by $7.2 trillion over the first decade and by $20.9 trillion by 2036.

    So we will be over $40Tn in debt in 20 years?  REALLY Conservative, REALLY?  3% interest on $40Tn is $1.2Tn a year in interest payments.  5% is $2Tn yr.  This is the World we're going to leave for our Children?  REALLY???

    This should be good for /NG inventories today:

    Big Chart – So what will happen first, will the RUT and NYSE take back their 50 dmas or will the S&P cross under.  /TF opening at 1,471 and needs 1,478 otherwise these are just bounces – so be careful.

    RH/Albo – Yes, nice comeback.

    Submitted on 2016/12/09 at 10:38 am

    RH/Rick – I liked them when they were $30 years ago and I guess I should like them again at $33 but they are only making $1.25 per share for a p/e of 26.4 so really only priced right for that kind of business (and that's giving them some slack in this over-valued market).  They are getting killed today after BEATING for Q3 but guided Q4 down severelyand it's being extrapolated to DOOM FOREVER.   

    Image result for extrapolation hobby

    However, it's a good call on a stock I certainly wouldn't mind scaling into so, in the LTP, we can put a flag down and sell 10 of the 2019 $25 puts for $6 to put $6,000 in our pockets while we wait to see where these guys settle down.  If they go lower (I very much doubt below $25), then we can add a bull call spread ($25/35, currently $5) but no rush at all.

    "RH pointed to the delayed arrival of source books pushing revenue into 1Q17, disappointing Holiday Collection sales, and aggressive seasonal clearance as impacting 3Q16. FY16 earnings are expected to be impacted by SKU rationalization, customer accommodations, and deferred membership revenue," Barclays analyst Matthew McClintock said in a note.

    "Longer term, we continue to watch RH opportunistically in the hope that operational controls at the chain will improve, allowing the company to release the power of its superior omni-channel model and merchandising acumen," the firm wrote in an analyst note.

    But in the near term, Oppenheimer sees risks to sales and earnings forecasts and advises clients to stay on the sidelines "at least for now."

    Essentially, people don't buy management's excuses but I do as they've certainly done a good job of doubling the business since 2013 and now we can buy it for the same price as it was then.

    RH/Jabob – All kinds of crazy legal stuff going on over there.  Real mess.  Just BS, but will take a while to work through.

    Restoration Hardware falls after Buckingham turns negative

    • Buckingham Research lowers Restoration Hardware (NYSE:RH) to an Underweight rating after having the retailer slotted at Neutral.
    • "Choppy recovery ahead raises liquidity concerns," reads a tweet from Buckingham on the ratings action.
    • The investment firm slides its price target on RH down to $22.
    • Shares of Restoration Hardware are down 4.56% premarket to $25.12.

    Submitted on 2017/05/05 at 11:35 am

    RH/Jabob – Anything that caters to rich people is golden.  

    Submitted on 2017/06/02 at 7:20 am

    RH/Albo – Getting interesting again. 

    Submitted on 2017/09/07 at 10:19 am

    RH/Learner – Home improvements for the Top 1% – that was easy money! 

    Submitted on 2017/10/02 at 11:15 am

    RH/Baron – The recent, violent moves (75% up, 40% down, 60% up) is what's creating the crazy put pricing.  If they can move that much in 4 months, what will happen in 16 months?  Anything is possible so both puts and calls have crazy pricing.  They are good for $3/share in earnings so anything below $30 is kind of silly and you can sell the 2019 $30 puts for $3.50 to net in for $26.50 – that's the way I'd go to start a position or raise cash.

    MCK/Lala – Next.

    WMT/DC – Huge pop on them.  We'll just have to DD on the longs and roll the short calls along but no hurry.  

    Wow, /TF with a super-pop to 1,477 but rejected there.  


  8. MCK/Lala – The drug space is a little iffy with even Trump saying there is too much profit-taking by the middle men (like McKesson) plus the opioid issues hang over them as well.  Actually, they are only dropping about $2Bn to the bottom line but that's on $200Bn in sales so margins aren't really that good.  At $29Bn for the company has a p/e of about 15 but buybacks ($2.8Bn in past 12 months) seem to have popped earnings to $12/share.  Still, the thin margins scare me as there are several ways their business can be disrupted (including AMZN getting in the mix) so I can see why they sold off.

    I don't think I'd play them.  The 2020 $125 puts are $13.50 but they fell $30 since July and those are only $15 out of the money with a -$25(ish) break-even.  My issue is that, if they did fall below $130, it would likely be due to one of the above issues hitting them and then I don't REALLY want to own them, even at net $111.50.  On top of that, because of all the potential headwinds, I don't have a great reason to grab a bull call spread though, if you are a believer, the 2020 $140 ($22)/$160 ($13) bull call spread is just $9 and will make $11 at $160 so, IF they turn up, you should be in good shape for 100%+ gains and, if they turn down, you can likely pull it before you are more than 30% down.  


  9. Phil/MCK

    Thanks for the analysis.


  10. Hi Phil.  Caught the end of the call yesterday.  Was Square discussed beforehand?  Also, any thoughts on YY?  Very strong lately. Looking at the Jan19 100/130 BCS and selling the 70 puts. Thanks.


  11. a painting of some random long-haired socialist hippie can fetch $450M, and people call crypto beanie babies? FFS…


  12. Phil, re. your comments on rolling out of trouble on WMT short callers, I found this gem of a post (of course one amongst many!) from way back. 

    ++++

    Phil
    November 4th, 2008 at 10:31 am | Permalink | Tweet thisIgnore this user

    Covers RMM – Just keep the standard stop out on the covers,  From whatever the lowest level they get to, you should buy back 1/4 if they gain 20% and 1/4 if they gain 40% and then roll the remaining 1/2 to 2x a higher strike.  So if you have the SKF $120 caller at $10.35, you should have a stop to buy back 1/4 at $12 and the next 1/4 at $14 at which point you would roll the $120s up to 2x whatever strike is at $7.   As to the longs, same story, you should be partially uncovering if we keep heading up. 

    ++++

    Would you still say this is a good rule of thumb to apply on managing short callers?


  13. Phil/ TF – what do you think of short at 1489. Has been rejected there previously. 


  14. You're welcome Lala.  

    SQ/Taihu – Short story is that, if you compare them to MA or V, you are overpaying and you have to realize that SQ is only the transaction site, they don't operate the much more profitable loansharking business that give MA and V such high valuations.  It's like AMZN though, they don't make any money and people are buying into the hype so the stock may go up – but it's not for me.

    YY/Taihu – I'm sure they are doing fine work in Building B-1 on the North Block of Wanda Plaza but aside from the fact I know nothing about this company or what they actually do – the financials are only annual, no quarters, but they say this $7Bn company is only making $200M in Yahoo and maybe that's just the ADS and something else I'm looking at (Stockopedia) shows $10Bn in sales and $2Bn in profit and that might explain the chart but I don't know enough about them to know what story is real.

    I THINK what is happening is there is some confusion between the ADS and the Chinese Company.  This article says they make far less than either:

    Shares of Chinese social media company YY (NASDAQ: YY

    ) soared 25% on Wednesday after it reported third-quarter earnings that smashed analysts' expectations. The live-streaming platform operator's revenue rose 48% annually to $464.8 million, which topped estimates by $42 million.

     

    Non-GAAP net income rose 47% to $96.1 million, or $1.59 per ADS, which beat expectations by $0.14. per ADS. Its GAAP net income rose 59% to $95.6 million

    If they are making $1.59 per $113 share, then people are paying 71x earnings on this and it's a great short but I have no idea what's going on and this is why I stay away from Chinese companies.  

    Image result for towelie no idea what's going on animated gif

    Crypto/BDC – But it's all the same thing.  People with Billions of Dollars love to diversify their holdings and they hear this crypto thing is big so they tell their guy to buy $1M worth and stick it in the virtual vault and the prices keep climbing higher.  There only can be 21M Bitcoins in the World and there are 70M people in the Top 1% so even if all of them just want one Bitcoin, they can't have it and no self-respecting Billionaire will accept 1/3 of a coin so, just like hippie art, they chase the price up way past any logic.  

    Stops/Winston – Oh absolutely, people should always play that way.  Mechanically, I simply don't have time to make those calls on all our positions but that is the best way to deal with short calls or puts that go in the money, thanks for the reminder.

    Covers RMM – Just keep the standard stop out on the covers,  From whatever the lowest level they get to, you should buy back 1/4 if they gain 20% and 1/4 if they gain 40% and then roll the remaining 1/2 to 2x a higher strike.  So if you have the SKF $120 caller at $10.35, you should have a stop to buy back 1/4 at $12 and the next 1/4 at $14 at which point you would roll the $120s up to 2x whatever strike is at $7.   As to the longs, same story, you should be partially uncovering if we keep heading up. 

    /TF/Ravi – Only if they fail to hold 1,485, then I would play below the line with tight stops above.  You want to see /NQ failing 6,330 and /YM failing 23,400 and /ES failing 2,585 (still not there).


  15. Phil- thx


  16. GOOGL/Phil

    Good morning and thanks for your work on the site.

    I know you are not a big fan of ALPHABET. Having said that, they are the dominant player in search, ads, and perhaps they may be able to monetize U-tube effectively at some point.

    They seem to be growing earnings 20% and are not too, too expensive.

    They failed $1060 more than once, including after their last earnings. So, at $1046,they are near the top of the range.

    Do you see any play on them?

    Thanks


  17. Phil/Billionaires – well then they need to buy GreenCoins instead right?? 


  18. Working on the OOP at the moment…

    You're welcome Ravi. 

    GOOGL/Maya – I love GOOGL, they just never get cheap enough to interest me.  Still, they "only" make $20Bn and you are paying $722Bn for them at $1,048 so it's certainly nothing I'd want to go long on but shorting them is terrifying – they just beat expectations by 15% on the last report, which was doubly impressive as last year they benefited from election spending.  I agree it's likely they test the 50 dma around $1,000 at some point but options are pretty expensive and a bear spread won't give you a quick pay-off.  March $1,080 calls are a very silly $42 and you could sell those but it's very easy to lose 50% on a pop.  The good news is they decay $10/month if GOOGL is flat and even better if down. 

    If you want to be more "conservative", you can back up the short March $1,080s at $42 with the 2020 $970 ($200)/1,040 ($164) bull call spread at $36 so if the short $1,080s expire worthless, your gain is the remaining value on the spread + $6 or, if GOOGL goes up, you have $76 of upside protection while you roll them along. 

    That's a fun trade, let's do 3 in the STP.

    GreenCoin/BDC – That's the plan.  Another big volume day for GRE – someone is accumulating.  

    Norway/Jabob – Smart move.  I've been thinking that the FACT is that solar is now cheaper than oil and yes, there's a battery problem to solve and solar has to be deployed and nightime storage issues and cloudy days (like every day in India now) but, over time, solutions will come along and oil will become worthless – other than industrial uses.  That's a ticking time-bomb on all those assets – huge write-downs in a decade or so – same thing that recently happened to coal. 


  19. I am looking at a new armchair trade on HRB. Stock is reasonable priced with a PE of 13.9 and paying a div. of 3.75 P.A. Buy the stock 25.59 and sell the April 18 25/26 strangle for 4.60 Your combined monthly return will be 3.84 %


  20. Phil GOOG just sold the Dec cherry call 1070 for 10.10 and I pressing my thumbs it will hold. March 1080 call I feel you walking on thin ice. But still not bad with the Jan 2020 BCS


  21. Looks like Al Franken is toast.


  22. Phil - Salvator Mundi (Savior of the World) – I got one word for whoever paid $450M for that painting. Chump.  Aside from the price, here are one , two and three big reasons why. Time for my IV and Out.


  23. Republicans would love to get rid of Franken. He is a real thorn in their side. 


  24. Up volume mauling down volume but overall volume is pretty light. If this was a true breakout I would expect much heavier volume.


  25. Phil – is someone tapping your phone? I think they heard us laying out the green coin plan and hit the buy buy buy button!


  26. BDC – Franken-stein-esque - Here is her story, what the senate wants to do, and his response.


  27. Nattering the Forces of Nature (and by that I mean the Flying Spaghetti Monster of course) seem to be aligning the stars for a female President in 2020. Very likely Kamala Harris or Gillibrand as the front runners. Women break for the Dem and this harassment-exposure and assault/violence movement is, IMO, really just beginning. It probably goes without saying that whatever grotesque GOP swamp-thing that emerges from whatever-the-hell is going on right now with them will have about 1 in 300M change of getting elected and winning the powerball on the same day. 


  28. Options Opportunity Portfolio Review (OOP):  $333,835 is up just $1,236 for the month, so clearly we were a bit too bearish but, on the other hand, we've done a fantastic job of locking our positions in neutral into the holidays.  We're up 233.8% in just over 2 years (we started on 08/08/15 with $100,000) – our primary mission here is to make sure we don't blow it!  

    Now that we've gotten ourselves to neutral, however, it's a bit like a Jenga game and I hate to make a move for fear of upsetting the balance.  Also, since I don't know if we're topping out of breaking out – I'd rather not do much into the holiday weekend next week but we will be making a few necessary adjustments.

    Fortunately, using our Be the House – NOT the Gambler strategy, time is firmly on our side and, as long as our position are "on-track" to our goals – then the premiums we sold WILL erode and more money will drop into our laps.  That's a nice, passive strategy to pursue and it works in almost any market – even this crazy one.  As I noted last month, I moved my kids' 529 College Funds to CASH!!! because, unlike this portfolio, I didn't have a good way to hedge them.  The OOP has 42% cash at $142,020 and our positions are well-hedged – let's keep them that way! 

    • NLY – Not worried, we'd love to own 1,000 shares for net $9.25.
    • WHR – New and good for a new trade.  There shouldn't be two of them though, have to delete one.  
    • TZA – Although we are $2.68 in the money, the net of the spread is less than $2 but it's a good hedge at net $15,240 with a $40,000 potential at $16, which is not that far away.  So, as a hedge, there's a $24,760 upside potential here.  I had originally called for selling April $18 calls for $1 but we couldn't get that price at the time, so we sold $16s instead.  I wish we did have the $18s. 
    • F – We're in for the dividends and on track.  Good for a new trade.
    • AAPL – Fortunately, we're only 1/3 covered but the Nov $145 calls we sold for $11.70 are now $26.35 ($52,700) so we'll roll them to 30 short Jan $155 calls at $18 ($54,000) for a small net credit and we'll roll our 60 2019 $140 calls at $38.50 ($231,000) to 70 of the 2020 $160 calls at $32 ($224,000) for another credit and we'll buy back our 20 short 2019 $130 puts at $4 ($8,000) and wait for a dip to sell 2020 puts but let's say the $140 puts are now $10 and the $150 puts are $13.50 so we'd like to sell 20 of the 2020 $140 puts for $14 or better.  So we're net a bit bearish here but we can roll the 2019 $170 calls ($20) to the 2020 $190 calls ($19.50) if AAPL pops $175 but I think it pulls back first and saves us some money.

    • AAXN – On track.
    • ABX – Can't pass up this opportunity.  Let's buy back the 20 2019 $20 calls at 0.55 ($1,100) and roll our 20 2019 $13 calls at $2.45 ($4,900) to 40 of the 2020 $13 calls at $3.20 ($12,800) and hopefully they pop back to $15+ where we can sell the $20 calls for $1.70+  (now $1.15).  If not, we'll sell lower covers and roll down.  The 10 short 2019 $15 puts at $2.37 ($2,370) and there's no point rolling them since the target is find.  
    • ATI – Great timing on the pullback so let's buy back those short Nov $20 calls ($1.80) and sell 10 2020 $17.50 puts for $2.75 ($2,750).  

    • CDE – We pressed ABX so no need to press them too.  We should go ahead and buy back the 2019 $10 calls (0.70) and roll our 15 2019 $5 calls at $2.70 ($5,400) to 25 of the 2020 $7 calls at $2 ($5,000).  That puts us in great position to sell calls when it spikes back up. 
    • CHK – Our long-term premise on Natural Gas is taking a long-time to play out.  Still, I do like them so good for a new trade.  
    • CLF – Got cheap again as Trump fumbled the ball on Tariffs and Infrastructure.  Maybe next year.  While it's low, we should roll the 2019 $4 calls ($2.75) to the 2020 $4 calls ($3) and I won't pay 0.60 to buy back the 2019 $10s but let's make it 30 of the 2020 $4 calls (10 more) and we'll see how it goes.  

    • CSCO – They blasted higher and we're all in the money now.  Net $4K on the spread that will pay $7K if CSCO holds up for 12 months.
    • DBA – Working for a change.  
    • FNSR – Was a small entry in June and now down at $20, where we wanted more.  Let's roll the 15 2019 $18 calls at $4.70 ($7,050) to 20 of the 2020 $15 calls at $7 ($14,000) and sell 10 of the 2020 $25 calls for $3.70 ($3,700) and we'll buy back the 10 short 2019 $30 calls at $1.25 ($1,250) so net $4,500 spent to buy a year with +$3 in strike and add 5 longs.  As we were about break-even before, the new position is net $4,500 + about $2K originally spent.  
    • FTR – This is a tough one as we're miles down but they are going to pay an 0.60 dividend on Dec $14th and that's 10% of the stock price so it's silly not to double down and buy 2,000 more shares for $6.73 ($13,460) and we'll sell 20 of the 2020 $5 calls for $1.90 ($3,800) so that plus the $1,200 we collect on this quarter's dividend means our 2,000 new shares are costing net $8,460 or $4.23/share.  That being the case, we may as well sell 20 of the 2020 $4 puts for $2 ($4,000) and roll the 20 short 2019 $10 puts ($6) to 40 short 2020 $4 puts (60 total).   That drops our net on the new 2,000 shares to $2.23 and we make 100% if called away at $5 and, if they keep paying a $2.40 annual dividend (doubt it) that would be like collecting 27% per quarter in dividends.  
    • GE – Another one that's too cheap not to take advantage of.  We can roll our 20 2019 $18 calls at $2.05 ($4,100) to 40 of the 2020 $15 calls at $4.75 ($19,000) and sell 20 of the 2020 $22 calls for $1.70 ($3,400) so it's net $11,500 to double down and drop $3 in strike and add a year.  We can also roll the 10 short 2019 $25 puts at $7.10 ($7,100) to 20 short 2020 $20 puts at $3.70 ($7,400) for a small credit. 

    • GOGO – Starting to come back.  Good for a new trade. 
    • IMAX – Hopefully Justice League will do well and then Star Wars – looking good for Q4.
    • JO – Another slow, frustrating trade but I still like it. 
    • LB – Nice bounce back today, hopefully they'll pop over $50 but, at $45, I will want to cover.

    • M – Good for a new trade.
    • MO – On track
    • SCO - I still like SCO long but our timing was off, so this is a new trade at this point.  We're stuck with the 10 short Nov $35 puts, now $5.70 ($5,700) and we will roll those along to 15 short April $30 puts at $4.60 ($6,900) for a $1,200 credit.  Then we can take 30 of the April $27 ($4.85)/$35 ($2.20) bull call spreads for $2.65 ($7,950) and, if all goes well, we'll get back $27,000 less the $6,950 loss we're carrying through and the net $6,750 of new spending is still a $13,300 profit – despite getting badly burned in the first round.  Fingers crossed and, of course I like this as a new trade – because it is a new trade!  
    • SPWR – On track.
    • SQQQ – Why are the short March $30s gaining while the long March $23s are dropping?  That's strange.   Anyway, let's roll our 50 March $23 calls at $2.10 ($10,500) to 60 June $20 ($4)/28 ($2.10) bull call spreads at $1.90 (11,400).  

    • SVU – Way too cheap down here but there are no 2020s so we're just going to double down on the 2019 $13 calls at $5 (20 more for $10,000) and wait for a bounce to sell some calls
    • SVXY – At leas the short put sales are working.  Let's buy back the short Dec $80 puts ($1.85) and wait for a dip to sell some more.  
    • TEVA – Another one that is stupidly cheap.  Let's roll our 10 2019 $15 calls at $2 ($2,000) to 20 of the 2020 $12.50 ($3.90)/$20 ($2) bull call spreads at net $1.90 ($3,800) and we'll roll our 10 short 2019 $25 puts at $12.60 ($12,600) to 20 short 2020 $15 puts at $5.10 ($10,200).

    • TGT – Sold off a bit on earnings but still on track for our spread, though it's red for now.  The reality is we paid net $2,440 for it and it's $6,000 in the money – the rest is just premium we're waiting to expire.  
    • TWTR – Been holding $20 most of the month.  Well over our targets so looking good to be called away in Jan.  
    • UNG – On track but we will have to roll those Jan puts next month.
    • WPM – On track.
    • WSM – On track and good for a new trade.  
    • XRT – On track and perking up.  Good for a new trade as it's net $2,900 and pays $5,000 at $42 in Jan for a quick $2,100 (72%) gain.  

    So we put a bit more money to work and that's what our hedges are for – to protect our CASH!!! when it's out working on positions.  We're hitting record highs on the Nasdaq today, so it doesn't look like a great hedge but that's not the point, the point is to let time eat into all the premium we sold and, each month, we'll add a bit more to our CASH!!! pile.  


  29. Wow, these index moves are out of control!  

    HRB/Yodi – I like them, they are on our list.  Still, if I were going to buy the stock at $25.65, I'm in it for the 0.96 dividend and I can sell the 2020 $23 calls for $5.30 and the 2020 $20 puts for $2.90 and that nets you in for $17.45 and makes the dividend 5.5% while you wait to see if you get called away with an additional $5.55 (32%) profit.  All in all, you are recovering 39.5% of the purchase price in two years and the worst case is you are assigned more at $20 to average $17.765.  That's a good one to put in the LTP, let's start with 1,000 shares and 10 of the short puts and calls.

    GOOGL/Yodi – Well earnings are after expiration so not a bad bet but I like the extra $30 cushion and the hedge. 

    Franken/BDC – If Franken is toast, why is Donald still President?  There's about 20 women here who came forward against Trump but they got steamrolled into the election.   The double standard people seem able to hold is amazing.

    Art/Naybob – I'm always happy with reproductions myself.

    Breakout/Den – The House passed the tax bill!  Why wouldn't that rocket the markets?   The vote was 227-205.  That's every Democrat and 13 Republicans voting against it.  If they lose 3 Republicans in the Senate, it won't pass. 

    GRE/BDC – And still going up – let them bug…

    Franken/Naybob – Good response statement.  





  30. How Companies Are Pushing Ahead on Climate-Change Targets




  31. Phil - /SI is doing a Triangle Squeezie Thingy ™ on the daily chart that is about a week from resolution, could be interesting soon.




  32. Silver/MrM – It will be a shame if it pops higher.  I'm hoping the stronger Dollar will keep it down to give us another cheap entry.  

    I'm liking /ES for the short if 2,585 fails (tight stops above).  

    Tech leads rebounding averages

    • The most minor of slumps in the stock market has ended for the moment, with the Nasdaq – led by a 6% post-earnings gain in Cisco and 1.5% advances for Apple and Google - up 1.5%.
    • The S&P 500 is up 0.9%, and the Dow – led by a 9% post-earnings moonshot for Wal-Mart – is also ahead 0.9%.
    • The only sector not participating today is energy, as oil continues to pull back. The XLE is off 0.4%.
    • Like Christmas shopping and college basketball, these things are starting to come earlier and earlier.
    • Top Trade #1 is no surprise given the bank for years has been the largest economy bull on Wall Street – go short long-dated Treasurys.
    • Top Trade #2 – Get long the euro/yen cross for continued rotation around a flat dollar.
    • Among the other ideas, at a few are built around Goldman's bullishness on emerging markets, where economic growth should have room to accelerate in 2018.
    • Full list at ZeroHedge
    • That didn't last long. Bitcoin made plenty of headlines over the weekend, plunging into the mid-$5Ks from a high of more than $7.5K days earlier.
    • As of Thursday afternoon, that's been erased and more. The crypto has been rallying all week and today is higher by 8% to $7,750.
    • In other news, CME Group expects to begin testing bitcoin futures trading on Monday, and still sees actual trading beginning before year-end. TradeStation (OTCPK:MNXBY) announces its intention to let customers trade the new futures contracts.
    • Exxon Mobil (XOM -1.3%) opens lower and could be headed for a fifth straight loss, as RBC Capital cuts its stock price target to $85 price $90 on concerns over the potential for future share buybacks.
    • RBC says while XOM's dividend yield vs. the market appears attractive relative to history, this notion fails to recognize that share buybacks have been a core part of the stock's historical investment case, and the firm sees limited scope for the company to raise the share buyback program materially going forward, with surplus cash likely to be utilized in asset acquisitions.
    • XOM's cash generation has improved over the past year but performance has not been synonymous with a sector leading valuation, the firm says, and while cash generation should continue to improve, it may lag key peer Royal Dutch Shell out to 2020.
    • "On an all-in basis, we see Exxon trading in line with the market, and thus materially less attractive than in prior years," says RBC, which rates XOM at Sector Perform.
    • Environmentalists are asking why the public was not told about a chemical spill last month into a Lake Michigan tributary that U.S. Steel (X +0.1%) asked Indiana regulators to keep confidential, AP reports.
    • Documents released by the University of Chicago's Abrams Environmental Law Clinic show that U.S. Steel's plant in Portage, Ind., released 56.7 lbs. of cancer causing chromium on Oct. 25 after a wastewater treatment system malfunction, nearly double the amount the plant is permitted to release of the chemical over 24 hours.
    • The same U.S. Steel plant released nearly 300 lbs. of hexavalent chromium in April because of a pipe failure, causing the closure of nearby Indiana Dunes National Lakeshore beaches and a drinking water intake for some communities in the area.
    • Moody's has downgraded General Electric's (GE +0.2%) long-term ratings to A2 from A1, and expects them to remain there over the next several years.
    • "The downgrades reflect the severe deterioration in the financial performance of GE's Power segment that will last through at least 2019. Along with the challenges in the Oil & Gas business posed by continued weakness in the global oil field services industry and the downturn in the North American market for freight locomotives, GE has to contend with weak earnings and cash flows in several segments that represent in aggregate about 50% of expected revenues in 2017."
    • Packaged food stocks are having a huge day after J.M. Smucker (SJM +9.9%) blew past earnings estimates and Wal-Mart's number hinted at strong underlying retail demand.
    • Gainers include Campbell Soup (CPB +4%), B&G Foods (BGS +4.2%), McCormick & Company (MKC +3.2%), Snyder's-Lance (LNCE +3.1%), Flower Foods (FLO +3.3%), Treehouse Foods (THS +2.2%), J&J Snack Foods (JJSF +2.7%), General Mills (GIS +2.2%), Amplify Snack Brands (BETR +5.3%), Hain Celestial (HAIN +4.8%), Post Holdings (POST +2.3%), Pinnacle Foods (PF +2.1%) and Hostess Brands (TWNK +1.9%).
    • Many of the food names are tracking back from losses piled up earlier in the week after Whole Foods dropped prices.
    • Previously: J.M. Smucker higher on earnings beat (Nov. 16)
    • Previously: Wal-Mart races to all-time high (Nov. 16)
    • Related ETF: PBJ.

    Barnes & Noble spikes on WSJ report of go-private offer

    • Barnes & Noble (BKS +12.1%) spikes after The Wall Street Journal reports that Sandell Asset Management has made an offer to take the retailer private.
    • The deal is said to value B&N at more than $650M and above $9 per share.

    Tencent leads $400M round for Chinese robotics unicorn

    • Gogo (NASDAQ:GOGO) has climbed to a 6.4% gain this morning after word that airline Cathay Pacific has chosen it for connectivity on its wide-body fleet.
    • Cathay Pacific will install Gogo's 2Ku solution on its Airbus A330 and Boeing 777 craft across the Cathay Pacific and Cathay Dragon fleets.
    • Service is expected to go live by the middle of next year.
    • Mayor of London Sadiq Khan says Uber’s (Private:UBER) license appeal process could “go on for a number of years.”
    • The city’s transportation regulator, Transport for London, denied Uber a license renewal in September due to the ride-hailing company’s business practices. 
    • Uber can remain in operation during the appeal. The company had 40K drivers and about 3.5M customers in London as of September.  
    • Previously: Recode: Uber faces US class-action suit for driver sexual assault, violence (Nov. 14)

    • Manchester United (MANU +1.9%) trades higher despite setting full-year profit guidance below expectations. The company sees EBITDA of £175M to £185M vs. £185M consensus.
    • Quarterly results came in ahead of expectations. Operating expenses increased 17% in FQ1 to match the increase in revenue with Champions League football back in the mix this year. The signings of players Victor Lindelof, Romelu Lukaku and Nemanja Matic added to Manchester United's costs during the quarter.
    • Broadcasting revenue rose 31% to £38.1M due to the extra Champions League games.
    • Maxim Group expects MoviePass to have 1M paying subscribers by the end of the year as a $89.95 one-year offer stokes interest with consumers for the movie ticket service. MoviePass reported a subscriber tally of over 600K on October 24.
    • The investment firm has MoviePass owner Matheson Analytics (HMNY +5%) rated at Buy with a price target of $25. Shares of HMNY have ranged from $2.20 to $38.86 over the last 52 weeks.
    • Sources: Nasdaq.com and CNBC
    • Viacom (VIA -1.9%VIAB -4.4%) is lower after its Q4 profits fell short despite revenue gains aided in part by affiliate rate increases.
    • Operating income more than doubled to $705M on a headline basis, aided by asset sales; adjusted operating income was up 7% to $578M.
    • Adjusted net earnings from continuing operations attributable to Viacom rose 14%, to $310M. Media Networks gains were driven by worldwide advertising revenues and benefited from a 4-point favorable forex impact. Affiliate revenues were down 3% domestically as subscribers declined, partly offset by rate hikes; international affiliate fees rose 12%.
    • At the film studio, lower theatrical revenues (down 43% on a tough comp with last year's Star Trek Beyond) were more than made up by growth in licensing (up 30% to $423M).
    • Revenue by segment: Media Networks, $2.55B (up 3%); Filmed Entertainment, $789M (up 2%).
    • Cash balance was $1.39B at Sept. 30 (up $379M Y/Y); in 2017, cash from operations rose 22% to $1.67B and free cash flow rose 23% to $1.48B. Total debt outstanding as of Sept. 30 was $11.12B (down $2B since a de-leveraging plan was announced Feb. 9).
    • Press release
    • AT&T (T +2%) was full of strategy talk in its presentation at Morgan Stanley's Barcelona conference for Technology, Media and Telecom.
    • "We seem to be seeing more and more rational activity and more rational pricing," said Chief Financial Officer John Stephens, commenting on a wireless market roiled by price competition and aggressive promotions designed to steal customer growth among the U.S. big four.
    • He also said DirecTV Now has hit 900,000 subscribers in the not-quite-a-year since it launched, with half of those making up cord-cutters or "cord-nevers."
    • The company said it expected wireless service revenues to stabilize or grow near-term and that the majority of the installed base has gotten itself onto plans without data overages.
    • In wireless it pointed to four trends it expected to provide benefits: continuing expansion of its smartphone base; continued growth in prepaid subs and revenues; ongoing benefits from low postpaid churn; and opportunities in bundling wireless service with premium entertainment.
    • Stephens also pointed to expected additional Q4 pressure from natural disasters (the hurricanes and earthquake that hit its service areas this year). The company reiterated guidance for full-year earnings growing in mid-single digits, capex of around $22B and free cash flow at the "low end of the $18B range."
    • Time Warner (TWX +0.6%) shares have jumped back into the green on an ABA speech from top Justice Dept. antitrust official Makan Delrahim on his approach moving forward.
    • AT&T (NYSE:T) is at a session high, up 1.3%, as well.
    • Delrahim suggested behavioral remedies were a bad approach in antitrust, particularly for vertical integration (like AT&T's $85B buyout, though Delrahim didn't mention that deal specifically).
    • "Without getting into specifics, I can say that behavioral remedies have proven challenging to enforce today," Delrahim said. DOJ has found it "onerous to collect information or satisfy the exacting standards of proving contempt and seeking relief" for violating decrees.
    • It's difficult to monitor and enforce such granular commitments as nondiscrimination and information firewalls, he went on.
    • A GBH Insights analyst says Apple (NASDAQ:AAPL) will become the first $1T company within the next year as the iPhone X hits its supercycle.
    • Analyst Daniel Ives says Apple shares could reach from $210 to $230 in the coming year  
    • Ives’ thinks the three iPhone models this year will surpass peak iPhone 6 sales for a total of 258M units in the fiscal year ending in September. 
    • Ives sees Apple’s ASP rising from $643 in FY17 to $746 in FY18 due to the higher cost of the iPhone X. 
    • The analyst sees China sales improvements as another growth driver and estimates about 50M iPhone users in the country will need an update within about a year. 
    • Apple’s most recent earnings report included the first positive results in China in six quarters.  
    • Apple shares are up 1.15%.      
    • Previously: Wells Fargo initiates Apple at Market Perform (Nov. 15)

  33. Well it looks like they have the Dec oil contracts down to 128,823, which is a lot gone since 171,511 this morning but the CME site says Monday (20th) is the last trading day so there's still quite a bit of pressure on /CLZ7.  Should be interesting.  


  34. Phil/ CL – does this open number mean the number of contracts for which people are taking physical delivery?


  35. Well, that’s what it implies but, in reality, almost all of those front month contract will be canceled by the end of Monday.


  36. Senate Judiciary presses Kushner in Russia investigation




  37. Russia will never break its dependence on oil




  38. Brexit: Netherlands told to prepare for a no-deal ‘chaos scenario’


  39. Euro junk bond yields are lower than treasuries….hum……


  40. California pot rules mark step toward 2018 legal sales







  41. US allies frustrated by Trump as they lobby hard to keep Iran deal







  42. Toyota to consider selling locally developed EVs in China





  43. Good morning! 

    Oil blasted higher overnight, $56.25 (/CLF8) now, /RB $1.73 so a good long over that line with tight stops below.  

    NYMEX still shows a big number in the front-month so I'm a bit skeptical but a scary short.

    Click for
    Chart
    Current Session Prior Day Opt's
    Open High Low Last Time Set Chg Vol Set Op Int
    Dec'17 55.25 56.10 55.18 56.10 06:45
    Nov 17


    -

    0.96 23747 55.14 94979 Call Put
    Jan'18 55.46 56.28 55.39 56.27 06:45
    Nov 17


    -

    0.92 174772 55.35 582082 Call Put
    Feb'18 55.60 56.36 55.51 56.36 06:45
    Nov 17


    -

    0.87 40227 55.49 193196 Call Put
    Mar'18 55.67 56.43 55.58 56.43 06:45
    Nov 17


    -

    0.83 24459 55.60 288268 Call Put
    Apr'18 55.68 56.45 55.64 56.45 06:45
    Nov 17


    -

    0.76 16163 55.69 127474 Call Put
    May'18 55.67 56.38 55.63 56.37 06:45
    Nov 17


    -

    0.70 7151 55.67 103389 Call Put
    Jun'18 55.51 56.24 55.44 56.22 06:45
    Nov 17


    -

    0.65 12639 55.57 233886 Call Put

    Hopefully it will jam up to $56.50ish and then we can short below that line (with tight stops above) or the same with $57 if they get so bold.  Haven't seen news to justify it yet.  Oh wait, maybe because Keystone is shut down because they spilled 210,000 gallons, destroying the environment exactly the way people said they would the first year it's running.  

    The good news is spills like this destroy the freshwater supply and that's great for water investing, which is something oil companies do a lot of.  One day water will be traded on the NYMEX for $1/gal+

    A reminder that Native people are forced AT GUNPOINT to allow oil pipelines thru treaty lands. Pipelines that WILL leak & destroy the local environment that ppl depend on for sustainability. This photo is from earlier THIS year:

    ???? from China's ???? ???? transportation sector will peak in 2030, and flatten thereafter:

     

    Oil Climbs on Hopes For OPEC Cut Extension" via FOX BIZ

     

    Oil climbs in electronic trade as ISDA rules that PDVSA and Venezuela defaulted on debts –

    For the week, however, crude oil was set for a 1.5% slump, while Brent has lost 2.6% since last Friday. The losses were driven by concerns over a surprise climb in U.S. stockpiles, a lower global demand forecast and an increase in U.S. domestic production to a record weekly level. Both contracts settled at their lowest levels since Nov. 2 on Thursday.

    “There is always the potential for an upside correction after a string of daily losses but the extent of today’s jump is surprising,” said Stephen Brennock, oil analyst at PVM Oil Associates, in emailed comments.

    “The only bullish development that stands out is a weaker dollar. The currency has slipped to a one-month low against a basket of its major peers due to doubts that the Trump administration will deliver on U.S. tax reform,” he added.