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Trade of the Year Tuesday – Our Top Pick for 2018 is:

Our Trade of the Year is here!  

Each year, we put together an options spread that has the best chance of returning 300-500% on CASH!!! over the next 24 months.  The chart on the right is from my appearance on Money Talk, where I often announce our Trade of the Year but I wasn't on until Dec 14th and we made our pick around Thanksgiving so that 2015 Trade of the Year was:

  • Buy 20 AAPL 2017 $90 calls at $26.50 ($53,000) 
  • Sell 20 AAPL 2017 $120 calls at $13 ($26,000)
  • Sell 20 AAPL 2018 $85 puts for $9.50 ($19,000) 

The net cash outlay of that trade was $8,000 plus the margin for promising to buy 2,000 shares of Apple (AAPL) at $85, which would be $170,000.  Of course, AAPL was well above the target and the trade returned $60,000 for a $52,000 (650%) return on cash – not bad for two year's work!  

While Apple is still a staple of our portfolios, it didn't make the cut in 2016 when we went with the Natural Gas ETF (UNG) and our trade idea for them was:

  • Buy 100 UNG Jan $5 calls for $2.65 ($26,500)
  • Sell 100 UNG Jan $10 calls for 0.65 ($6,500) 
  • Sell 50 UNG 2018 $8 puts for $2.10 ($10,500)

That works out to a net cost of $9,500 and pays $50,000 if UNG is above $10 in January and stays above $8 into Jan 2018.  Worst case is you end up owning 5,000 shares of UNG at net $8.95 ($44,750), which is about $2.40 on /NG contracts.  Best case is you make a $40,500 profit on a $9,500 cash bet, which is 426% back on your cash!

That was only a one-year trade, which expired in Jan of 2017 but we cashed out in December as UNG hit $9.73 and we didn't want to risk the holidays with our win already in the bag.  UNG is now back at $6, where we started liking them but we're not as keen on UNG as we were – though we still like the October Futures (/UNGV8) at $2.95 with a goal of at least $3.40 between now and then, which will pay $4,500 per contract if we get it right.  See the original post or interview for our premise on Natural Gas.

This year, our 2017 Trade of the Year idea was for Wheaton Precious Metals (WPM), who were called Silver Wheaton (SLW) at the beginning of the year.  The stock didn't split, they just changed the symbol.  Our trade idea for this year was this one, which required a net cash outlay of just $2,000 and, with WPM at $21.18, is on track to return over $15,000 for a $13,000 (650%) gain in just one year.  

In our Member Tracking Portfolios, we already cashed WPM in when they were over $22 in April and we got back in again when they pulled back to $18.50 later that month - so we're double dipping this year but it's not going to be a triple-dip – as we expect Dollar strength to depress commodities somewhat next year.  Instead, we have narrowed our 2018 Trade of the Year candidates down to a final 6:

  • Macy's (M) – M was our 2nd choice because our top choice for the 2019 Trade of the Year was Limited Brands (LB) and, fortunately, we played them back in early September and added them to our Money Talk Portfolio, which we use to track our televised picks.  As you can see below, LB really took off and is already up almost 40% – so that's no longer good for a Trade of the Year though congrats to all who played them!  I like Macy's as an alternate becasue they are down for similarly silly reasons and they have a tremendous amount of real estate valued locked up – including their $4Bn flagship store at Herald Square – an entire city block in the center of Manhattan.  

  • Chesapeak Energy (CHK) – This is another way to play Natural Gas and they do seem cheap but I've not been able to get comfortable with what they have left after selling off a ton of assets.  They are, at $3.81, a $3.4Bn company that made $300M in the past 12 months and, in theory, this is only the beginning of a turnaround.  Still, they can't pull better numbers with higher oil prices and that makes me nervous – especially since I don't think oil will hold over $50 next year and you shouldn't be nervous at all about a Trade of the Year, right? 

  • Cleveland-Cliffs (CLF) – People have lost faith in them as Team Trump has failed to come up with the promised Infrastructure Spending Bill and there's certainly no sign of it in the current budget and no room for it with the Tax Cuts – if they go through.  Still, Trump does love protectionism and we expect tariffs on imported steel to boost CLF next year – assuming our economy doesn't collapse and people stop building.  Still, more like a speculative stock than a guaranteed winner.  

 

  • Chipotle (CMG) – While tempting down here – there's not enough certainty that there won't be another food scare though we are already playing them long in our Long-Term Portfolio since the premiums are so great.  They'll make $10/share this year and that's not terrible for a $275 stock but what I really like about them is they made $15/share in 2015 – before all this nonsense and, if they can get back work – they have more stores now and better controls – they can blast through $15 and that would make them stupidly cheap fast.  So I do like them but can I be sure they do all that in the next 12-24 months?  No.  

  • Hanesbrands (HBI) – Who doesn't love underwear?  Well, maybe not love it but we all wear it and here we're talking about Hanes, Champion, Maidenform, Playtex, LEggs, Wonderbra – staple brands you can find all around the World.  Hanes doesn't care if Amazon (AMZN) sells their stuff or if it's at a retail store and, despite all the hullabaloo, AMZN still has less than 2% of the US Apparel market – and it's certainly not because no one has heard of them!  

Image result for underwear market share

  • Don't even get me started on how ridiculously over-hyped Amazon is – that's another conversation but it's why we've been buying the beaten-down retailers on the ridiculous overreaction that's taken that sector down this year.  Anyway, HBI is super-solid with $6Bn in sales and $600M in profits and you can buy the whole company for $7Bn ($19.67) AND they pay a 2.6% (0.60) dividend while you wait.  What's not to love?  Well, I guess they are now our top contender…

  • General Electric (GE) – GE is a late addition because I simply couldn't ignore it at $18.12.  With $124Bn in sales and $9.5Bn in profits and about $40Bn in CASH overseas – it almost seems silly not to buy them for $157Bn, which is just 16.5 times earnings, 40% below the trading range of the S&P 500.  They also pay a nice, 2.25% dividend (0.48) and that's after a cut that won't likely last.  Still, this is a huge company in the middle of a long, slow turnaround so, like Chipotle, I can't be sure enough of the timing to make it our Stock of the Year, though it's certainly going to be in all of our portfolios.  

That's it then – Hanes (HBI) wins!  I think they are good for $25 at least by Jan 2020 but we don't need a huge gain to make money with a Hanes spread.  We can sell the 2020 $18 puts for $2.50 and that gives us a net $15.50 entry and then we'll figure out a reasonable bull call spread to pair it with in our Live Chat Room later.  Hanes may not be the sexiest company – but the returns will be!  

 


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  1. Good Morning.


  2. Good morning!  

    I forgot about ALK, they were in the running too.

    That's one I'd like to add to the LTP as well.  

    HBI is down a bit and I'll be putting up an official trade on them shortly.  

    Indexes up pre-market but I'm still inclined to short – same levels as yesterday. 


  3. Oops, note above it's ALK, not ALKS!  Refresh screen if you see ALKS…


  4. New York Times ask question whether any of the republican senators will stand by their principles and object to the budget proposal. Seems a little bit absurd to mix principles and Congressman in the same sentence. We can only hope that between Corker, Flake, Collins, Langford, Johnson, Young, Daniels and McCain that the bill gets stymied and improvements are inserted.  


  5. Gentlemen, lets talk about HBI and underwear.  Personally, I am a fan of Saxx underwear, which are pricey, but feel like you are wearing nothing at all, likes Haines for women.  Pricey, but if lucky can find a few pairs  odd lot on web for about $15 each.  My son has over 20 pairs of various underwear, but cannot find more than 3 at a time, but with these, you only need a few pairs because you will wash them rather than wear something else.


  6. ?Ahh….let's not…. ;)


  7. 1020/HBI

    A commando guy!


  8. November Consumer Confidence 129.5 vs 124.0 Briefing.com consensus; October 125.9

    How high can consumer confidence go?  Anyone know the scale.  Here in Mesa AZ, in this particular school district, they are buying homes in two weeks or less for close to asking prices.  I even bought one last week.  I want to be giddy too.


  9. Barron/Housing

     

    It's the same in Denver.  There has been as many as 30 offers on the same house.  I bought in 2010 and starting selling last year.


  10. Phil/FTR

    Why the seemingly big difference in the adjustments between the LTP and the OOP?


  11. Tax Bill/Den – Amazing how we have to pray there are just two righteous men in the GOP Senate and we're certainly not sure there are…

    /SI with a big dive back to $16.80 where, of course, I like it long over that line.  

    Nice move in the Dollar to 93.11 – congrats to the longs on that one (+$600)!  

    Saxx/Baron – Watch Cops – anytime middle Americans are in their underwear (and, sadly, it's a lot) – it's Hanes tidy whities…  cheeky

    Image result for cops underwear

    Commando/Baron – Definitely a concerning trend with global warming.

    Giddy/Baron – 140s waqs the all-time high.  Didn't end well.

    Image result for consumer confidence all time high

    FTR/Baron – Because the OOP is much smaller but still an aggressive move there:

    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.

    vs. LTP:

    FTR – Can't not DD here.  Let's buy 6,000 more at $6.95 ($41,700) and sell 50 of the 2020 $8 calls for $1.10 ($5,500) so we're 1/2 covered with an average cost of $9.56 (and possibly assigned 4,000 more at $10 on the puts side).  If all goes well though, we'll collect $2.16 in dividends so, by the time we get to 2020, our net will be down to $7.40 and then we'll roll the short calls and all will be well (hopefully). 

    .  


  12. Phil/FTR

    So basically the LTP adjustment was more aggressive than the OOP adjustment, simply because it has more firepower to  adjust further if necessary?


  13. Latch / cruise:

    Even when I was a regular sailor in the Med (Barcelona-Mallorca and the islands) the cruise was in a sail cruiser , it was not a race (I´m 63) lol, it was a repositioning on Windsurf ship a 200 pax  ship with sails but with 3 restaurants, Sauna, Gym, etc.  2 weeks sailing at 10 knots in the old style

    https://www.windstarcruises.com/yachts/wind-surf/overview/


  14. FTR /Phil 

    While I think FTR has been in a oversell process, do you recommend it now as a new position to start in? at this levels looks as bottom.


  15. Phil/Baron – no need for global warming concerns with my favorite ballroom jeans and chones, way better than going commando and Out.


  16. OK, we have  it from my wife, who looks great in everything, including her underwear, that she buys Haines, both in the store and on-line.


  17. VLO Hi Phil, I need some help with a VLO butterfly position.  I am long 10 of the the 2019 $55 Puts and $75 Calls, currently showing a combined $750 profit. I have sold quite a few calls and puts successfully but the last round got away from me and I have 10 of the short Jan 18 72.5 puts, now $.37 and got assigned 10 of the 72.5 calls and am now short 1000 shares.  Not  sure whether to just close the whole thing out or just the short stock and keep selling puts and calls. Your advice please.


  18. FTR/Baron – Not much more aggressive, mostly just bigger in proportion to the bigger portfolio.  The LTP has over $1M in cash sitting around doing nothing, FTR's dividend is a huge add for as long as it lasts.  

    FTR/Advill – It's risky with a potential for BK but, if not, it will be a massive winner that makes it worth the risk.  Next earnings should be 1st week of March – we'll see then.

    Jeans/Naybob – What will they think of next?

    Told you so Baron.  You know I love investing in default items.  

    VLO/Jet – We're tilted bearish in the Butterfly Portfolio with 15 short March $72.50 calls we sold for $7.  I'm expecting things to calm down after OPEC – even if they do extend cuts.  It's going to be tricky to play with next earnings at the end of Jan.  Gasoline is up almost 20% since Oct but so is oil so not likely to be a better crack spread and demand isn't exciting so I'm willing to stay short but, if that's not how you intended to play (aggressively short) then take the money and run – there will always be something more sensible we can trade.  

    • Copper prices are lower for a second straight day, with concern about the outlook for metals demand from China hitting mining stocks, including RIO -1.1%BHP -0.9%SCCO -0.9%FCX-0.5%.
    • Comex copper for March delivery fell 1.6% to $3.10/lb., and has retreated from last month’s three-year highs amid doubts that consumption from China, the world’s largest consumer of base metals, will continue to support high prices.
    • China's government warned last week of a possible bubble in stock markets and initiated measures to reduce financial market risks, resulting in "interest rates in China rising further, which also appears to be seen as a warning signal of tighter liquidity,” Commerzbank analysts say.
    • But demand from China generally has been strong this year and copper’s supply-demand fundamentals look solid good going into 2018, says INTL FCStone strategist Edward Meir, who does not see a major move lower.
    • Windstream Holdings (NASDAQ:WIN) has slipped 2.5% today after the latest updates on its long-running effort to waive default provisions in bonds tied to its spin-off of Uniti Group (UNIT-2.4%).
    • The latest is a new offer to exchange 7.5% senior notes due 2023 for new 6 3/8% senior notes due 2023, expiring Dec. 26. There's $120.3M outstanding of those existing notes, and early exchange consideration is $1,075 for each $1,000 in principal.
    • It's also offering to exchange 7.75% senior notes due 2021 and 7.5% senior notes due 2022 for new 8.75% senior notes due 2024, in an offer that also expires Dec. 26.
    • New consent solicitations have been launched regarding the 2021 and 2022 notes, with a consent payment of $2.50 per $1,000 principal if consents become operative by a Dec. 4 deadline. It didn't receive requisite consents in its previous solicitation.
    • Previously: In new filing, Aurelius challenges Windstream debt exchange (Nov. 22 2017)
    • Scotiabank (BNS -2.4%) has been on a nice run higher since the spring, so investors are using the occasion of the rare earnings miss as an excuse to lighten up.
    • Alongside earnings, the lender announced a $2.9B bid for BBVA's (NYSE:BBVA) 68% stake in its Chilean unit, BBVA Chile. Chile's Said family owns 31% of BBVA Chile and has a right of first refusal on any buyout. Should it choose not to exercise, BBVA will sell to Scotiabank.
    • The deal would double Scotia's market share in Chile to about 14%.
    • Turning back to earnings, the miss can be laid at the feet of weak capital markets action, where profits fell 15% to $391M. CIBC's Robert Sedran: "We had been anticipating a weak close to the capital markets year for the group and, at least so far, that is what we have gotten."
    • Bank of Montreal (BMO -0.3%), RBC (RY -1.1%), CIBC (CM -0.8%), TD Bank (TD -0.4%)
    • Previously: Bank of Nova Scotia misses by C$0.01, misses on revenue (Nov. 28)

    • Charging North Carolina consumers the full multibillion-dollar cost of cleaning up coal ash dumps is comparable to tire stores charging customers an extra fee to dispose of an old set of wheels, a Duke Energy (DUK +0.3%) executive reportedly said yesterday at the start of hearings into whether the North Carolina Utilities Commission will allow the company to raise power rates by an average 9.5%.
    • DUK is simply passing along clean-up costs that regulators have dictated, and it should not have to ding shareholders for a chunk of the $2.6B bill as consumer advocates want, Duke Energy Progress president David Fountain said.
    • But a lawyer representing companies that are heavy electricity users said Fountain's comparison breaks down because DUK wants to charge customers now for a problem that has built up over generations: "The tire company is not going to accumulate 40, 60, 100 years worth of tires before they do something about recycling it."
    • The hearing comes after DUK and the regulator last week struck a partial deal reducing the company's requested rate increase from an average of nearly 15%
    • Goldman Sachs reiterates its Buy rating on Amazon (NASDAQ:AMZN) and raises the price target from $1,300 to $1,450.
    • Analyst Heath Terry cites the re:Invent conference that runs through this week and comes with an increasing number of product announcements each year.
    • Terry attributes the company’s competitive moat to rapid innovation, developer penetration, and AWS “product breadth.” 
    • New cloud client: Amazon Web Services signs Time Warner’s Turner unit as a customer. 
    • Financial terms not disclosed but Turner will migrate “decades of content” and much of its computing operations to Amazon’s cloud platform. 
    • The new customer can help Amazon keep its top spot in the cloud computing market. AWS held a 32% share in Q3, according to Canalys data. Microsoft’s Azure took a 14% share, and Google Cloud had a 6% share. 
    • Holiday sales: Amazon provides some vague metrics for its device sales between Black Friday and Cyber Monday. 
    • The Echo Dot and Amazon Fire TV Stick with Alexa were the best-selling products from any manufacturer across all categories on the site. 
    • Fire TV Sticks sold 2.7x as many units as last year’s holiday weekend.  
    • Amazon has a lot riding on the holiday quarter this year as last year’s report failed to meet revenue estimates.    
    • Previously: Amazon Web Services announces VMware Cloud expansion (Nov. 28)
    • Previously: Textron: Amazon is a potential customer (Nov. 28)
    • Redbook Chain Store Sales: +4.8% Y/Y vs. +4.1% last week.
    • Month-to-date sales are up 3.5% through November 25.
    • Crude oil prices continue to drift lower, extending yesterday's losses, as the market had expected this week's OPEC meeting to extend production limits by another 6-9 months, but this is now less certain; WTI -0.7% at $57.70/bbl, Brent -0.6% at $63.44/bbl.
    • Crude has climbed more than 40% since June and is near the highest level since 2015, but Goldman Sachs warns prices could fall if the outcome of the OPEC meeting fails to meet expectations.
    • “We believe that the outcome of this meeting is much more uncertain than usual,” Goldman writes. “We view risks to oil prices as skewed to the downside this week as we believe that current prices, time spreads and positioning already reflect a high probability of a nine-month extension."
    • According to Wood Mackenzie: "If the production cut agreement ends in March 2018, our forecast shows there would be a projected 2.4M bbl/day Y/Y increase in world oil supply for 2018."
    • Buffalo Wild Wings (NASDAQ:BWLD) announces that it will merge with privately-owned Arby's Restaurant Group.
    • The agreement between the two restaurant companies calls for Arby's to acquire Buffalo Wild Wings for $157 per share in cash in a transaction valued at approximately $2.9B.
    • "We are excited about this merger and confident Arby’s represents an excellent partner for Buffalo Wild Wings," says CEO Sally Smith.
    • The transaction is expected to close during Q1 of 2018.
    • Arby’s is majority owned by affiliates of Roark Capital Group. Certain funds advised by Marcato Capital Management have entered into an agreement to vote in favor of the transaction.
    • BWLD +5.123% premarket to $153.90.
    • Source: Press Release
    • In the latest report released by Adobe, Cyber Monday hit record revenues of $6.59B, making it the largest U.S. online sales day ever.
    • In comparison, Black Friday and Thanksgiving Day brought in $5.03B and $2.87B in revenue respectively.
    • The internet holiday shopping season has so far (Nov. 1-27) driven a total of $50B, a 16.8% increase, and Adobe predicts it will be the first-ever season to break $100B in online sales.
    • SpaceX (Private:SPACE) has raised another $100M as part of its latest funding round, according to new regulatory documents, valuing the startup at $21.5B.
    • Led by Elon Musk, SpaceX has been ramping up its rocket launches, including its reusable booster technology, and has dreams of providing high-speed internet satellites and an "interplanetary transport system" to Mars.

  19. Baron – Not dissing Hanes as they are worthy, the Duluth were a "suggested" gift.  Nice, no pinch with a tender "like it's not there" feel. But expensive, and there are many lower priced alternatives out there OTC.  From those commercials, perhaps Duluth should spend less on marketing wank, pun intended. 

    In any event, when it comes to all things ballroom, I specify to the MRS, (which is a conferred degree and title that many work on actively), what containment garments to get me, as due to their junk's design, women can and do wear floss. Time for my IV adjustment, Out.  


  20. OK, having given it some thought, I would like to play our 2018 Trade of the Year OFFICIALLY as such:

    In the OOP let's:

    • Sell 15 HBI 2020 $20 puts for $3.50 ($5,250) 
    • Buy 25 HBI 2020 $18 calls for $4 ($10,000) 
    • Sell 25 HBI 2020 $23 calls for $2 ($5,000) 

    That's a net credit of $250 and, if all goes well and we're over $23 in 2020, we'll collect $12,500 more so $12,750 profit potential is 5,100% (it's tricky with credits).  

    In the LTP, we're going to simply do double that much so:

    • Sell 30 HBI 2020 $20 puts for $3.50 ($10,500) 
    • Buy 50 HBI 2020 $18 calls for $4 ($20,000) 
    • Sell 50 HBI 2020 $23 calls for $2 ($10,000) 

    That one gives us a bigger net credit ($500) and a payoff of another $25,000 if all goes well and, with HBI already at $19.75, we're only looking for 8% a year to make our 5,100% – now that's leverage!  

    Also from the morning post – we already have M but, as a new trade, I like:

    • Sell 15 M 2020 $20 puts for $4.65 ($6,975)
    • Buy 30 M 2020 $18 calls for $5.75 ($17,250) 
    • Sell 30 M 2020 $25 calls for $3.12 ($9,360) 

    That's net $915 on the $21,000 spread so upside potential is $20,085 (2,195%) if M can gain about 15% over 2 years.  Worst case is you own $30,000 worth of it at $20.46, which is still a buck below where it is now so figure the risk is stopping out with a $5,000 loss (400%) vs the reward of $20,000 and you are $7,500 in the money to start.  

    GE is the other one I strongly believe in and that's another one we own but no longer worth owning the stock with the cut dividend so a new play would be:

    • Sell 30 GE 2020 $20 puts for $3.60 ($10,800) 
    • Buy 40 GE 2020 $15 calls for $4.70 ($18,800)
    • Sell 40 GE 2020 $22 calls for $1.60 ($6,400) 

    Here we're netting in for $1,600 on the $28,000 spread and it's an aggressive put sale with GE at $18.35 at the moment – so be careful with that but my thought is GE is not a BK risk, so the downside risk of ownership is far less than most stocks.  


  21. i don't think you could get those prices on the hbi trade


  22. HBI/Jabob – Well not in the first 5 seconds with everyone rushing in – that's for sure!   At the moment, the last trades are $3.68 for the puts, so more than we wanted there.  The $18s are $4.00 and the $23s are $1.95 so those are off by 0.05 from our goal.  

    Just got out of /KCH8 at $1.30 – that's always a good spot to take the profits.

    Dollar also done at 93.05.


  23. Have been setting up to take some tax losses today on some of my positions I'm long .  Most notably, CTL, which seems to making a low here.  Bought more stock and will sell my higher priced stock on December 29th.  Still believe that the almost 16% dividend is secure, and once the market realizes that, the stock will sell for a much higher price. But have been very wrong so far.  Just think the market is missing how much LVLT brings to the table.

    BTW,  This is the last day to employ that strategy since the 30th & 31st of Dec are on a weekend !


  24. Trump tweets no deal possible with dems so Schumer and Pelosi cancel afternoon meeting, There are a lot of critical issues that must be addressed before year end. No progress will negatively impact market …………………..eventually.


  25. Albo/CTL

    Nice candle on CTL today.  I sold the $14 call and $13 put so if it stays here, I take $2 off my average and put me at $13 even.  So your call still working for me, thanks.


  26. Nat Nay,

    Duluth does big marketing and is considered a top brand for that sort of thing, but I stand my review that SAXX are particularly ingenious and comfortable.


  27. ~~Senator Mark Warner on the proposed tax bill.

    A BAD DEAL FOR TAXPAYERS

    Dear Friend,

    After months of secret, closed-door meetings, the Senate will vote this week on the massive Republican tax bill. While I have been deeply disappointed with the partisan, backroom process that led to this point, what matters now is the legislation itself. Here is where I stand on it.

    The Republican bill is first and foremost a massive tax cut for corporations and the wealthiest Americans. While it contains a temporary tax cut for some middle-class families, nearly a quarter of middle-class Americans will see their tax bills go up immediately. By 2027, the legislation raises taxes on everyone making under $75,000 per year. 

    For me, raising taxes on the middle class is a deal-breaker. And if that wasn’t bad enough, the bill will raise your insurance premiums by intentionally destabilizing the healthcare market. Worst of all? Congressional Republicans are planning to pay for it with $2.2 trillion in borrowed money.

    The bill will also have serious unintended consequences for Virginia. The version which passed the House of Representatives this month was a direct hit to investment in Virginia’s infrastructure. That's because the House bill eliminated a key tax provision used to attract private investment for infrastructure projects on I-95, I-495, and across Virginia. This would cause infrastructure costs to skyrocket across the Commonwealth, potentially delaying much-needed projects.

    One of the most problematic provisions of the GOP tax bill is its elimination of the deduction for state and local taxes. Virginians deduct their state and local taxes more than residents of higher-taxed states like California and New York. This isn’t a red state vs. blue state issue. It’s a middle-class issue, and for the thousands of Virginians who deduct their state and local taxes, this is an anti-middle class bill.

    I’ll be the first to say it: we must reform our broken tax code in a bipartisan way. But cutting taxes for businesses and the wealthy on the backs of middle-class families, using trillions in borrowed money and sabotaging the healthcare market along the way, is a bad deal for taxpayers. I hope my Republican colleagues will abandon this fatally flawed, partisan legislation and come to the table on a truly bipartisan tax deal that puts the middle class first.


  28. And judging by this market, Jesus must be coming, and certainly he will tell us what to trade.


  29. Frankly, Jesus must come, because what I see going on makes me want to cry.


  30. Here we go, NKorea fired another missle test


  31. Phil/GNC

    Trade of the year? at 5.49

    Regards


  32. Crypto musings

    Seems like eventually every crypto currency that relies on ever increasing cpu power to function will have to be outlawed. Even if the entire world was using 100% renewable energy is seems bitcoin would still require ever increasing power to function.  And, the longer we wait the more mom and pops will have invested in them.   Plus, is there any current crypto currency that survives mainstream quantum computers?


  33. CTL/Albo – Good luck with them.  Getting treated like FTR. 

    No progress/Den – You would think, right? 

    Jesus/Baron – Could there be any doubt?

    Image result for jesus bitcoin

    GNC/Pat – Too shakey for Trade of the Year but I do like them down here.  

    You can sell 20 GNC 2020 $5 puts for $2.70 ($5,400) and leave it as that as your net entry is $2.30 and you're making over 100% for not owning GNC.  If you want to be more aggressive, the $5/7.50 bull call spread is $1 so you could buy 50 of those and still have a $400 credit on the $12,500 spread.  Along the way, you can sell 5 Jan $5 calls for $1.10 and it might not seem like much but it's $550 for 52 days and you have 780 days to sell so 15 x $550 is $8,250 you can collect while you wait to see if you make another $12,500.  Obviously, there's a high chance you'll have to do a 2x roll at some point – but then you'd still be only 20% covered and another 2x roll is 40% covered – so I fee good about selling 5 $5 calls that are 1/2 in the money.  

    If all goes well, you can squeeze $20,000 out of nothing in just two years!  

    Quantum/Tangled – That will be interesting but, in theory, a quantum computer can solve for all the remaining coins instantaneously.  Of course, that would solve your power problem if a Quantum Computer were keeping track.  


  34. LB  Phil I have 1000 long stock in an IRA with 4 short Jan 19  37.5 calls and 4 short 45 calls. Not much premium left in the 37.5s, would you recommend rolling to the 45s or even higher? Not sure what to do when a covered call rockets higher too quickly.


  35. Yep, with a quantum computer you could cheaply use the then completely un-secure bitcoins.   Problem solved.


  36. Dow 23,700 – Hardly worth mentioning in this insanity.  

    LB/Jet – The stock is $51.18 and you have 8 short calls around Jan $40 and those are about $11.50 so call that the avg ($9,200) against $51,180 worth of stock.  You probably can't have naked calls so I'd cash the stock and get 20 of the 2020 $45 calls for $13 ($26,000) and sell 10 of the $57.50 calls for $8 ($8,000) so that's net $33,180 in pocket and you have 10 2020 $45/57.50 bull call spreads and 10 long 2020 $45 calls covered by 8 short Jan $40(ish) calls, which can be rolled to 10 short May $45 calls at $9 ($9,000) for about $2,500 and either they one day expire worthless or you keep paying $2.50 to roll them up $5 each quarter until they are higher than your long calls – at which point there would be nothing to worry about.  

    Wheee on /TF – Patience pays off finally.  


  37. The missile seems to have fallen into the sea - all is well(ish).  


  38. Party on!  

    ?


  39. BMO: "47% of [Canadian] mortgages are due to reset within 1 year, 31% from 1-to-3 years, "

    Literally the second the ink is dry on the tax cut, deficit hawks will emerge from their hibernation, where they have had nary a word of criticism about increasing the deficit by $1.5 trillion, to demand that SS & Medicare be slashed b/c the deficit has mysteriously increased.

    Andrew Left of Citron to appear on CNBC Halftime Report Tomorrow to explain the bubble surrounding and why will trade back below $40 This is not just a bubble, this is just plain ridiculous.

    The Navajo Code Talker response to is easily decoded.


  40. Why Eric Trump's 'Pocahontas' tweet is very dumb, as explained by a tribal leader

    How Macy's became one of the last true department stores in America

    We checked out a Victoria's Secret store in NYC to see why the brand is struggling

    Democrats back out of White House negotiations after President Trump insults them on Twitter

    EPA trots out climate-denying coal baron to argue why Obama’s climate rule should be repealed

    Chicago bakery loses 800 workers after immigration raid

     

     hour ago

    North Korea has fired a ballistic missile in its first provocation since Trump labeled the country a state sponsor of terrorism, Yonhap reports

    /TF blasting right back to new highs – amazing!  Other indexes are following.  


  41. Really what they should do is drag out the tax reform as long as possible and keep paying Rocket Man to fire missiles into the sea (cause anything that doesn't hit someone is a reason to celebrate) and this market could go up forever.  This time is  different, isn't it?


  42. Ok!!, going with  GE  and HBI  in LTP mode, hope this will support the next 24 months market.


  43. /NG – Up big ! 

    Nary a mention.  Times have changed.


  44. Albo/NG

    Yes it is, and thank you.

    Does this look like bears throwing in the towel?


  45. ~~It is being reported that both Sen Corker and Sen Johnson voted in favor of the bill at Senate Budget Committee vote today;


  46. Look at AAPL and AMZN, not strong.


  47. MOMO goes "oh no"


  48. Phil/tax- is the tax vote a done deal in the senate? TF moves are assuming it is done?


  49. Wow, this rally is nuts.  Dow over 23,800 now.  /TF testing 1,540.  

    Different/Baron – This is different, it just never stops.  

    24 months/Advill – At this pace, we'll hit goals by Jan!  

    Taxes/Ravi – Well you have Powell saying he's not changing a thing and Trump claims to have everyone in line (and when has he ever lied to you?) so the markets are rolling higher on the FREE MONEY express.  Thank goodness there are never any consequences…


    • There aren't any too big to fail banks anymore, said Jay Powell at his Fed chair confirmation hearing today. Probed by Sen. Warren on whether post-crisis regulations need to be further strengthened, Powell replied that they're "tough enough."
    • That Powell was going to be of a de-regulatory bent isn't news, but bank investors seem to appreciate the direct talk to the Massachusetts Senator.
    • The KBEKRE, and XLF are each up nearly 2%.
    • Bank of America (BAC +2.7%), JPMorgan (JPM +2.7%), Citigroup (C +2.2%), Wells Fargo (WFC +2%), Regions (RF +2.3%), Zions (ZION +2.7%), U.S. Bancorp (USB +1.8%), SunTrust (STI +2.7%), PNC Financial (PNC +1.7%)

    CNBC: U.S. launches anti-dumping case vs. Chinese aluminum producers

    • Aluminum names jump on a CNBC report that the U.S. is launching an anti-dumping case against Chinese aluminum producers covering imports of common alloy aluminum sheet: CENX+6.3%ARNC +2.7%AA +2.2%ACH +1.4%CSTM +0.9%KALU +0.8%.
    • The investigations are "self-initiated" under the authority granted to the Secretary of Commerce under the Tariff Act of 1930, according to the report, which also says the last self-initiated anti-dumping duty investigation occurred in 1985 on semiconductors from Japan.
    • Sec. Ross says Chinese producers are selling aluminum sheet in the U.S. at prices that are less than fair value and that the Chinese government is providing unfair subsidies to producers of aluminum sheet, and the cases are not part of the pending Section 232 investigation into aluminum.
    • ETFs: JJUFOIL
    • DHL discloses that it preordered 10 Tesla (NASDAQ:TSLA) Semi vehicles in order to evaluate the potential for electric trucks with shuttle runs and same-delivery runs.
    • While DHL laid out $5K per truck to take down the reservation, final pricing and vehicle specs haven't been determined yet.
    • DHL is owned by German giant Deutsche Post (OTCPK:DPSTFOTCPK:DPSGY).
    • Apple (AAPL -0.7%) is preparing to test autonomous vehicles at an old Fiat Chrysler (NYSE:FCAU) testing ground in the Arizona desert near Phoenix, sources tip Jalopnik. The company is said to be recruiting engineers and technicians to the site.
    • Interestingly, Waymo and Uber (Private:UBER) are already running self-driving tests in the Phoenix region.
    • As part of its newly-forming autonomous/EV car strategy, Apple published a paper last week in the scientific journal arXiv (read here .pdf) on software approaches to LIDAR.
    • Outside of the tech sector, the development on the software side of the autonomous business is of close interest to manufacturers such as Ford (NYSE:F), General Motors (NYSE:GM) and Tesla (NASDAQ:TSLA).

    Roku dips as short firm Citron terms it 'total joke'

    • Roku (NASDAQ:ROKU) — minting stock gains of late, up 140% since Nov. 8 earnings -- has turned 2.8% lower as influential short seller Citron Research puts the company in the crosshairs of its latest thesis.
    • "Time to pop some real bubbles. ROKU, total joke," the firm tweets out. "Citron trusts Mark Mahaney at $28 price target and that is IF they can hold comp back.
    • "Today's Needham research is irresponsible. Unless $ROKU finds a way to stream a BTC — this stock is MUCH LOWER … caveat emptor."
    • Mahaney's $28 price target is against today's price of $45.16. Meanwhile, Needham set a Street-high price target of $50, saying Netflix is the best comp but that Roku is "materially cheaper" with less risk.
    • Citron says its Andrew Left will be on CNBC's Halftime Report tomorrow to discuss the Roku position.
    • YouTube  (GOOGGOOGL) deleted 150K videos featuring children that had inappropriate sexual comments, according to Variety.
    • The company disabled comments in more than 625K videos and suspended several hundred accounts that made inappropriate comments.
    • Advertisers including HP and candy companies Cadbury and Mars suspended their YouTube campaigns after a Times of London report showed ads appearing next to the videos.
    • Another ad exodus happened this past spring when ads appeared next to videos with extremist content.
    • Previously: Advertisers leaving YouTube due to ad placements (Nov. 24)
    • JPMorgan’s top AI picks include Facebook (FB), Oracle (ORCL +0.3%), and Palo Alto Networks (PANW -1%).
    • The firm has a $225 price target on Facebook and says, “Mark Zuckerberg considers AI to be one of the company’s 10-year bets.” 
    • Facebook can use computer vision tech to organize and classify content.
    • The firm has a $55 price target on Oracle and notes that the company now uses AI to automate the administration of its Oracle Database 18c, which makes it an autonomous database. 
    • Palo Alto Networks has a $182 price target and uses machine learning in Traps, its endpoint protection solution.   
    • Workday (WDAY -0.3%) is another pick with a $120 price target due to its use of predictive analytics. 
    • Twilio (TWLO +1.7%) gets a $40 price target thanks to the general availability of its speech recognition capabilities.   
    • A Rosenblatt analyst estimates that Apple (NASDAQ:AAPL) sold 6M iPhone X units during Black Friday, according to StreetInsider.
    • Analyst Jun Zhang believes the production rate for the iPhone X increased to 3M units per week and could reach 4M per week next month. 
    • The firm raises its December quarter iPhone X shipment estimates from between 27M and 28M units to 30M units. 
    • Zhang expects seasonality to follow the inventory build, which would cause softness in March. Estimates for the March quarter drop from 45M to 40M, but 3M of that difference moved to December. 
    • Firm reiterates Buy rating and $180 price target. 
    • Apple shares are down 1.1%.  
    • Previously: Apple SVP Srouji sells over $1.8M of shares (Nov. 28)

  50. Phil,

    Are you short /TF?


  51. Rally/Phil – nuts is right, and with old-school confirmation (transports) too.


  52. Yes, 4 short at 1,524.58 at the moment.  Was hoping for a pullback after the bell – not sure if I want to risk it overnight.  

    Senate budget committee advanced the Tax Bill and that is why we had such a rally but that's just procedural stuff though Corker seems to be saying he's on board.  

    Imagine the rally if it actually passes!  


  53. Phil,

     How do you know how much time to give /TF to  go down after hours? 



  54. /TF/Japar - I don’t “know” – still watching….   8 now at 1,530 avg, costing $40/point to be wrong but I figure stopping out at 1,540 is an $800 loss while, as a hedge, it could pay thousands to the downside.  I only need a small pullback to get. Back to 4 short even and then I start the cycle again – hopefully getting a big winner before getting a big loser but, either way – it’s a hedge against longs to lock in short-term gains.  



  55. Republicans Clear Major Hurdle as Tax Bill Advances




  56. Powell says he favors loosening some bank regulations




  57. Supreme Court wrestles with whistleblower protection issue


  58. China’s Micro-Lending Mess


  59. Good morning!  

    Markets still heading higher.  Europe is up 1%, trying to catch up with us so we're up now, trying to catch up to Europe – and so it goes until the music stops and we're a chair short – then the fun begins! 

    Related image

    • Stocks surged to new record highs, fueled by developments in D.C., including the Senate Budget Committee's approval of the Republican tax reform bill, which effectively sends the bill to the full Senate for a vote.
    • Jerome Powell's Fed Chair confirmation hearing offered support for the broader market; his comments were mostly in line with current Fed policy but he said rules implemented since the financial crisis are "tough enough" and that regulatory constraints on smaller banks should be reduced.
    • Investors in the financial sector (+2.6%) liked what they heard, sparking heavyweights such as JPMorgan Chase, BofA, Wells Fargo and Citigroup to 3%-4% gains.
    • The industrial (+1.5%) and telecom services (+2.2%) groups also outpaced the broader market, but the tech sector struggled to a gain of just 0.2%.
    • Today's rally was interrupted briefly by reports that North Korea launched a ballistic missile into Japan's exclusive economic zone, but stocks quickly recovered.
    • U.S. Treasury prices fell, pushing the yield on the benchmark 10-year note up 2 bps to 2.34% and the two-year yield a basis point higher to 1.75%.
    • U.S. crude oil settled -0.2% at $57.99/bbl.

    Tax Plan Gains Steam After Trump ‘Lovefest’ With GOP Senators. (videoThe outlook for Republicans to deliver a U.S. tax overhaul by the end of the year brightened Tuesday after President Donald Trump addressed GOP Senate holdouts in a closed-door, lunchtime session. The GOP meeting was “somewhat of a lovefest,” Trump said later Tuesday, as he prepared to meet with Majority Leader Mitch McConnell and House Speaker Paul Ryan at the White House. “They want to see it happen.” 

    GOP tax plan can help boost economy already growing above trend: Goldman chief economist

    Stocks Hit Record Highs As Tax Hype Trumps Nuclear Doomsday Fears

    4 reasons the global bull market in stocks can persist for years

    • Just hours after breaking through the closely watched milestone of $10,000, bitcoin has tacked on more gains to trade at an all-time high of $10,842.
    • That represents a more than 10% jump from its price of around $9,830 just 24 hours ago.
    • Amid increased demand for cryptocurrencies, bitcoin has also surged more than 10-fold in value so far this year, posting the largest gain of all asset classes.

    • Despite the improved economic growth in the eurozone, the ECB is warning of concerns related to a sudden increase in volatility.
    • "Systemic stress indicators for the euro area have remained low over the past six months," the central bank said in a statement, adding that the risks of a "rapid repricing" and "large asset price correction" remain due to signs of increased risk-taking behavior.

    Japan Retail Sales Disappoint After Weak 3Q Consumption

    There Have Been 698 Earthquakes In California Within The Past 30 Days

    • Fed Chair Janet Yellen will update Congress today on her economic outlook, just two weeks before the central bank is widely expected to raise rates for the third time this year.
    • Topics may include why inflation has remained persistently below the Fed's target rate and how that will shape the future path of monetary policy.
    • It will likely be Yellen's last appearance before lawmakers as Jerome Powell is set to take over as leader early next year.
    • The American Petroleum Institute reportedly shows a build of 1.82M barrels of crude oil for the week ending Nov, 24 vs. last week's draw of 6.36M barrels.
    • Gasoline shows a draw of 1.53M barrels and distillates show a build of 2.69M barrels.
    • Nymex January crude futures recently traded at $57.68/bbl, below today's $57.99 settlement.

    Million-Barrel Oil Hedging Surge Signals Shale Boom Here to Stay. (videoOil explorers took advantage of a market rally to lock in prices for almost 1 million barrels a day’s worth of future output, signaling the shale boom’s staying power as OPEC ponders the extension of its supply curbs. New hedging contracts in the third quarter covered 897,000 barrels a day of annualized production, a 147 percent increase over the second quarter, according to an analysis of 33 companies released Tuesday by industry researcher Wood MacKenzie Ltd. It was the biggest jump in crude hedging volumes since Wood Mackenzie began tracking such activity two years ago.

    Goldman(GS) Sees Iron Ore Sinking Back to $50

    • Weighed down by legal troubles and regulatory scrutiny, UBER's adjusted loss widened to $743M in Q3, up 14% from the prior quarter.
    • Net revenue rose 14% to $2B and gross bookings increased 11.5% to $9.7B, on a sequential basis.
    • As a private company, Uber is not required to publicly report its financial results, but earlier this year it began offering a glimpse of its performance.
    • Recharging Tesla's (NASDAQ:TSLA) new electric semi truck will need the same energy required to power as many as 4,000 homesFinancial Times reports, citing a study from Aurora Energy Research, one of Europe's leading energy consultancies.
    • Aurora CEO John Feddersen says his firm estimates the power required for the megacharger to fill a battery in TSLA's new electric semi truck in as little as 30 minutes would total 1,600 KW, or the equivalent to providing 3K-4K "average" homes with energy – 10x as powerful as TSLA’s current network of “superchargers” for its electric cars.
    • “The fastest chargers today can support up to around 450 KW charging, so it’s not clear yet how Tesla will achieve their desired charging speeds,” according to Colin McKerracher, head of advanced transport at Bloomberg New Energy Finance.

    Why Battery Cost Could Put the Brakes on Electric Car Sales

    • Fitch Ratings downgrades General Electric (NYSE:GE) and its GE Capital finance arm to A+ from AA- and their short-term issuer default ratings to F1 from F1+, with a negative outlook.
    • Fitch cites "the deterioration in the company's operating and financial performance including a slower return to higher margins and stronger free cash flow than previously anticipated by Fitch. GE's performance is being affected by secular changes in the Power segment's gas turbine business that has reduced long term prospects for growth."
    • Earlier this month, Moody’s downgraded GE to A2 from A1 due to “severe deterioration” in the financial performance of the company’s power segment expected to last through at least 2019.

     

    • PG&E (PCG +1.6%) says it expects hundreds of millions of dollars in losses from October's northern California wildfires, including potentially millions in payouts for the restoration of service and losses related to 32 lawsuits filed so far against the company by wildfire victims and shareholders.
    • PG&E "estimates that it will incur costs in the range of $170M-$200M for service restoration and repairs to the company’s facilities, including an estimated $70M-$80M in capital expenditures, in connection with these fires,” not counting other costs including personal injury and wrongful death damages, according to an SEC filing.
    • Shares have shed 21% since the Sonoma and Napa county wildfires began in early October.