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Monday Market Madness – Tax Loopholes and Wage Slavery go Hand in Hand

It hasn't even been signed yet.

That hasn't stopped the S&P futures from testing 2,700 (/ES) and Dow (/YM) from testing 2,4850 this morning as the new GOP tax bill seems to be "in the bag" and the House Speaker, Paul Ryan, is now promising us an "average" $2,059 tax break for a "typical" family of four making $73,000/year.  If you take them at their word (and when has Congress ever lied to you?), then 100M housholds will save $200Bn a year yet, somehow, Corporations save another $200Bn AND the new tax cuts BOOST Federal Revenues because those companies will turn right around and put that money into building new factories and hiring millions of workers, which will boost total reciepts.  What can possibly go wrong?

Nothing, according to the Index Futures, which are blasting higher about 0.5% this morning and that's lagging Europe, which is up over 1% – which seems kind of odd as the whole purpose of these tax cuts is supposedly to make us more competitive with Europs so wouldn't our gain be a detriment to them?  Well, best not to think about logical things like that when we're trying to enjoy the rally, right?  

Image result for gop tax loopholesCertainly, we don't want to read the actual bill, because it is one scary document!  "The more you read, the more you go, 'Holy crap, what’s this?’” Greg Jenner, a former top tax official in George W. Bush’s Treasury Department, told Politico last week. “We will be dealing with unintended consequences for months to come because the bill is moving too fast.”  

On Friday,  a group of 13 tax law professors and lawyers, many of whom have been vocal opponents of the Republican plan, published a 34-page paper offering a taste of what those unintended consequences might be. You know how people have been joking about incorporating themselves ever since these tax bills started kicking around? That’s almost certainly going to be a thing. Investors may be able to shelter their investment profits by stuffing them into C-Corporations, which are in line for a low, 20 percent tax rate. 

Many individuals could save on their income taxes by gaming proposed tax breaks for passthrough businesses—firms like partnerships and LLCs that aren’t subject to the corporate rate. Baseball players will probably start separate companies to collect all of their endorsement and licensing royalties while saving on taxes. A law firm could split itself into multiple pieces in order to minimize its associates’ IRS bills. Here’s how that last scheme would work, according to Slate:

Law firm associates, LLC. Under the Senate bill, there is potentially a major problem as drafted: Employees may be able to benefit from the pass-through provision by forming a pass-through of which they are an owner. To achieve the tax savings, no longer be an employee (who cannot benefit from the provision); instead be an owner (who can benefit from the provision).

For example, law firm associates (and other employees of the firm) should no longer be mere associates. They should instead be partners in Associates, LLC—a separate partnership paid to provide services to the original firm. Their “profit share”—in lieu of salary—from Associates, LLC would then be given the special low pass-through rate. There are restrictions on lawyers—since they provide a personal service, which is disfavored in the bill—from benefiting from the special pass-through rate, but those restrictions would not apply to these associates.

So long as the associate (or really partner in Associates, LLC) makes less than $500,000 in taxable income (for a married couple) or $250,000 (for a single individual), they would be fully eligible. And that covers a lot of law firm associates, not to mention many other people who are now employees—but who may not be for long.

Far from making accountants and tax lawyers obsolete with this "simplified tax bill" – the GOP is creating a bonanza next year as everyone in America (who matters) will be rushing off to form Corporations or Partnerships to push ther income into that 20% Corportate Tax Rate.  As noted on the chart above, people in the Top 1% households, who make an average of $1.26M/yr ($465,52 is the bottom of the 1%) will save about half of their $440,000 average tax bill.  Paul Ryan's $2,059 deduciton example for housholds making a "typical" $73,000 actually already puts them in the Top 20% while the Top 10% begins at $133,445 and averages $295,845 and the Top 5% make $214,462 or higher and average $350,870. 

Image result for gop tax loopholesIt's the cut-offs that matter more than the average because the Top 1% pull the average up for each group far more than the acutal number of people earning anything like that in the category so MOST people in the 20-10% range make about $60-$90,000 but those are ALL of the people the GOP cares about above the line where they begin f'ing people over to get their money – otherwise known as the bottom 80%, 250M Americans who make less than $60,000 per household. 

Those people are totally and completely screwed as they save no money in taxes and get hundreds of Billions of Dollars in benefits cut to pay for the tax cuts for their betters.  The more loopholes there are now, the more benefits will have to be cut down the road to balance the budget.  The typical base benefit cuts to those families is over $2,000/year and, over the course of their lives, it will simply put those families $80,000 more in the hole than they are now ($139,500 debt avg) which, of course, enslaves them to their creditors, which is step 1 to reversing the Emancipation Proclamation, which is really the GOP end game.

And I'm not saying the GOP is racist.  They don't care if you are black or white – what matters is whether you are rich or poor and you either own people and businesses (which are legally people) or you are owned by them – THAT is the World this tax bill is making for us.  As noted by Politicus:

Republicans completely support wage slavery and returning to pre-New Deal workers’  rights they have spent the past four years promoting by opposing every initiative aimed at relieving the suffering of low-wage Americans whether it is opposing unemployment benefits, workplace protections, blocking a minimum wage increase, destroying unions, or any one of the myriad other barbaric attacks on poverty-wage working families. However, they have advanced the interests of the rich whom have increased their wealth incredibly and it has come at the expense of low-wage employees and the middle class Republicans regard as chattel for their plutocratic paymasters.

Image result for gop wage slaveryThe term wage slavery is often used to criticize economic exploitation defined as workers lacking bargaining power with employers that amounts to quasi-voluntary slavery where survival is totally and immediately dependent on poverty wages.  When you create a class of people who will never have enough money to retire and must work every day of their lives in order to survive (because there is no Social Safety Net to protect them and offer them choices), then you have created SLAVES for yourself, the slave-owner. 

And, just like old-time slave-owners used to quote the scriptures to justify their dominion over their slaves, modern slave owners worship Capitalism to justify their mistreatment of the lower classes because, whether your God is Jesus or Adam Smith – it's all in their plan that you should have plenty while others have nothing and, simply because they have nothing – it is therefore natural that they serve your needs.  In 1763, the French journalist Simon Linguet published an influential description of wage slavery:

The slave was precious to his master because of the money he had cost him … They were worth at least as much as they could be sold for in the market … It is the impossibility of living by any other means that compels our farm labourers to till the soil whose fruits they will not eat and our masons to construct buildings in which they will not live … It is want that compels them to go down on their knees to the rich man in order to get from him permission to enrich him … what effective gain has the suppression of slavery brought him?  He is free, you say. Ah! That is his misfortune … These men … have the most terrible, the most imperious of masters, that is, need. … They must therefore find someone to hire them, or die of hunger. Is that to be free?

Image result for emancipation proclamation wage slaveryThe abolitionist and former slave Frederick Douglass initially declared, "now I am my own master", upon taking a paying job.  But later in life, he concluded to the contrary, "experience demonstrates that there may be a slavery of wages only a little less galling and crushing in its effects than chattel slavery, and that this slavery of wages must go down with the other". 

Douglass went on to speak about these conditions as arising from the unequal bargaining power between the ownership/capitalist class and the non-ownership/laborer class within a compulsory monetary market. "No more crafty and effective devise for defrauding the southern laborers could be adopted than the one that substitutes orders upon shopkeepers for currency in payment of wages. It has the merit of a show of honesty, while it puts the laborer completely at the mercy of the land-owner and the shopkeeper."

I know it's a heavy topic for a Monday.  I meant to publish this on the weekend but I was busy gearing up for a consumption orgy with my high net-worth family but, as I have daughters, I found myself with a lot of free time in the Mall and I spoke to people who worked at the stores and asked them what they thought of the stock market (they could care less) and the Trump Tax Plan (they think it will save them) and it put me on this introspective path.  Of course the poor will always hold out hope and, sadly, their hope is currently that Donald Trump and the GOP will fix their lives.  Boy are they in for a surprise!  

Getting back to the markets (because if we don't stay on the ball and make money, we might end up on the wrong side of that cut-off line!), the market is already on vacation this week, with very little date coming through and next week is a complete joke so it's likely we drift into the end of the year up at these record highs.  Neel Kashkari is the only Fed speaker all week but we do get a final number on Q3 GDP, which was last notched at 3.3% and is expected to hold steady.  November Durable Goods are expected to bounce back from -1.2% in October – bad sign if they don't.

Be careful out there!  


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  1. Markets are unstoppable and of course the beneficiaries of the tax cuts are the only people in the markets anyway so going up some more I am sure!


  2. These are the policies of a theocracy, not a modern democracy:

    http://talkingpointsmemo.com/livewire/trump-ban-cdc-forbidden-words-science-diversity-transgender

    The Trump administration has prohibited the Centers for Disease Control and Prevention (CDC) from using words like “science-based,” “diversity,” and “transgender” in their official documents for next year’s budget, according to the Washington Post.

    Senior CDC budget leader Alison Kelly met with the agency’s policy analysts on Thursday to announce the order. Other forbidden words include “vulnerable,” “entitlement,” “fetus,” and “evidence-based.”

    One day, the human race will suffer an extinction event because these clowns don't believe the science…


  3. If the economy will take off like they predict with the tax cuts, no need to worry about social security then:

    http://www.motherjones.com/kevin-drum/2017/12/social-security-will-be-solvent-for-the-rest-of-the-century/

    As we all know, the official OMB/Treasury estimate of future economic growth is 2.9 percent, which means the trust fund will be flush with cash far into the future. This means everyone can stand down and leave Social Security alone. In fact, it’s doing so well that Congress might want to think about raising benefits. Hooray!

    LOL!


  4. Good Morning… number of upgrades today… Teva, Twitter.   


  5. Good Morning.


  6. learner--teva was upgraded today? who?


  7. Jabob, 

    Teva Pharmaceutical Industries (NYSE:TEVA) upgraded to Outperform with a $21 (13% upside) price target by I.B.I.

    Dont know who is IBI..but I will take it.


  8. Thanks learner!


  9. So with McCain out all they need is one republican senator to vote no… they must be getting paid handsomely! It is Christmas in congress. What else is new? I've said before, this won't change until it all falls apart, and it will. SAD.


  10. The last bear has left. Who's gonna sell? 


  11. Good morning!  

    I'm shorting /ES at 2,700, of course – tight stops over but, then again, this is one of my favorite paintings:

    Related image

    I now have 4 short /ES at 2,682.75 avg.  Fortunately, NGV8 and /KC popped today – so I'm having a nice time regardless – up about $12K on the day on those two, so Christmas is paid for.  

    As you can see from the chart, I'm out of /NG and will get back in if $2.75 holds up while $123 is a good spot to take the /KC money and run for now.  You know I don't trust rallies that are based on Dollar weakness:

    Basically, holders of Dollars see these tax cuts as weakening the economy, increasing our Debt and devaluing the Dollar, so the Dollar is trading down, which then pushes the market higher which signals Americans that it's a good thing.  

    Big Chart – BIGGER!!!

    Theocracy/StJ – This is getting to be like living in the Twilight Zone. 

    Soc Sec/StJ – They will once again push to flip the trust fund into the markets.  That's the exit plan for the Top 1% – leave the widows and orphans holding the bag. 

    One Republican/Mkucs – Well Pence breaks a tie, so 3 need to vote no.  This is why they won't let Doug Jones take office as he would flip Strange's vote.  Don't forget, the rule used to be they needed 60 votes and they can barely hold 50 – this is essentially a revolution against our constitutional democracy – and no one cares…

    As to who will sell?  No one would sell if it's going to cost them 33% more in taxes now than if they wait two weeks.  This rally is an absence of sellers.  


  12. Phil – Nice on NG and KC !

    That sound you hear is the premium being sucked out of my PCLN short puts.


  13. Phil/GNC

    I have a bunch of shares at about $6.60 with variously timed $5 puts and calls.  I was thinking about adding and selling $2.50 puts and calls now that it is under $5.  Your thoughts?


  14. As seen on Twitter:

    "Small businesses will have the lowest taxes since 1931" … Ivanka Trump discusses impact of tax reform

    1931 was not really a great year… Don't these people know history?


  15. McCain is headed to Arizona, will miss the vote. 52 repubs, that makes 51… so still need 2 to vote no? I thought it was 2 last time… isn't it 52-48? I know they just need 50, Pence is a lock. Still possible, but would take great courage to go against the party.  


  16. FWIW – CTL is up 30% off the bottom it put in 3 weeks ago.


  17. albo… check out VRX..make you feel even better. 


  18. @mkucstars1

    Bill is going to pass, they even got Corker on board by adding a last minute real estate pass through provision that benefits him greatly since he has a lot of real estate holdings.  Everyone can be bought it seems. 


  19. No way they would have left McCain leave unless they had the votes! Some of them got paid with funny money. Look at Susan Collins – does she really believe that they will follow through with their promises. What a sucker!


  20. Learner – VRX has had a big move also.  Congratulations to you.  Unfortunately, I've sold everything there but my short puts. 

    I'm still heavily invested in CTL, and finally have a profit in the position.  Looking forward to getting more of those big dividends.  Even after this move, it still yields more than 12 %.


  21. So Phil, will PSW Investments, LLC be looking into that pass through tax thing?


  22. Nice one albo, I missed CTL. 


  23. PHil,

    Did you average down on /NG? Last I saw you were in at $2.82. I missed that double down call so I’m still holding on to a loss. /KC working at least


  24. Woops, a penny too early on both my exits.  Oh well.  

    GNC/Baron – Not sure what you are saying.  If you already sold $5 puts and calls and now you sell more $2.50 puts and calls, are you over-selling?  I'm not sure what you gain since your goal on the trade was $5 and they are at $4.82 yet you feel the need to adjust the trade?  If you adjust every trade that's 18 cents below goal – that must take up a huge amount of your time and money (and make your broker very happy as he's rolling in your fees).  I know this sounds like crazy talk but how about waiting until 2/14, when they have earnings, and seeing what their 2017 ended up like and hearing what they forecast for 2018 before throwing more money (or risk) at the position?  

    Bitcoin holding $19,000.

    1931/StJ – LOL!  That's because you read Poor People's History Books.  The Trumps read Rich People's History Books where the heroic real estate barons were able to use their cash to take full advantage of the depression and foreclose on millions of homes for ten cents on the Dollar and then, when the government began making it easy to borrow money to buy homes after the war the Rich people started (to sell arms while they waited for real estate to move up) they ran up the housing prices and sold the homes back to the poor people for 10x profit but, because they owned the bank and collected the interest, they collected 250% of the homes prices over 30 years – until the 70s, when it was time to crash the markets again so they could buy the homes back for 0.10/$1 (while starting another war).

    Oh, another good trick was buying tons of "worthless" land around the country and then getting the Government to make road and infrastructure projects that would skyrocket the value of their land.  That's the real history of this country and people like the Trumps learn those lessons.

    Taxes/Mkucs – Well now it's 51/48 so one switched vote is 50/49 and either that's a win or Pence breaks the tie (not sure what that rule is) but imagine the chaos if it's voted down?  

    ESPN's President resigned.  That's interesting. 

     

    VRX is popping.  

    PSWI/Tangled – Of course, we'll do whatever we can to maximize the benefit.   Great for the hedge fund too.

    /NG/Japar – Yes, that was ages ago.

    Submitted on 2017/12/06 at 3:33 pm

    /NG/Jasu – Same 2 longs about even.    I just don't watch them like you guys do.  I generally let things play out for days or weeks unless they make money quickly, in which case I'm happy and take the money. 

    Futures/Ravi – I have 2 long /NGV8, still $2.87 and one long /CL with no conviction at all at $56 and 3 long /SI at $16.02 that expect at least $16.20 for and 6 long /KC at $127.675 that I'll probably stop out at $125 but hopefully cash 4 of at $130.

    Submitted on 2017/12/07 at 10:03 am

    /NGV8 diviing to $2.80!   That's a DD for me so 4 at $2.84 now.

    Submitted on 2017/12/07 at 10:18 am

    UNG/Den – GMTA!  If you want to play UNG here ($5.55) instead of /NGV8 at $2.80, I'd go this way:

    • Buy 50 UNG 2020 $4 calls for $2.05 ($10,250)
    • Sell 50 UNG 2019 $5 calls for $1.25 ($6,250)
    • Sell 25 UNG 2020 $5 puts for 0.70 ($3,500) 

    That's net $500 on the $5,000 spread but you have a year to roll the short calls so hopefully a $10,000 spread if all goes well (the 2020 $6 cals are $1) and worst case is owning 2,500 UNG at $5 + $500 ($13,000).   If we had a portfolio, I'd put this in it!  

    Submitted on 2017/12/12 at 2:47 pm

    /NG/Jasu – Really awful today but strong Dollar is a good excuse and dragged wdown by big fall in oil.

    Submitted on 2017/12/14 at 7:37 am

    I like /NG at $2.66 but it doesn't like me!

    Submitted on 2017/12/15 at 1:29 pm

    /NG/Grass – Well I'm back to 6 @ $2.78 after reducing to 4 on the move up and I'm happy to go to 10 (/NGV8) as it's a long-term hold but I'd have be to adding around $2.60 at this point to make it interesting (as in reduces my net below $2.70).   /NGV8 is running about 0.07 over /NG.

    As I often have to remind people – if you're not going to buy things when they are low – when are you going to buy them?  

    Back on Dec 6th, /NG hit what I thought was a bottom at $2.90 but then it fell to $2.78 so I doulbed down and then it came up a bit and I lightened up and then down again so I added more and, as noted above, I maxed out when it hit the $2.60 line, as planned.  

    At every stage in adding contracts, you need to be VERY CLEAR about what you will be doing next if it goes up or down 2.5%, 5% and 10% and, if you are not going to be comfortable adding to or riding out the 10% move against you – then you should be stopping out at 2.5%, not doubling down.  The whole range of the /NG move was about 10% lower than our entry and now it's back above the -5% line ($2.75) which SHOULD be your break-even point if you were sticking with it and, at this point, you either take it off the table or you lighten back up to a number you are going to be HAPPY to double down if it drops another 10% on you.  

    If you scale in without scaling out, you will go broke.  If you scale in where a -10% move will force you to stop out with a loss – you will go broke.  If the loss is more than you can laugh about losing – you will go broke!  Keep that in mind!


  25. Oops, forgot to add the shorter-term /NG chart:


  26. If tax bill passes, I will be paying next years property tax this year.  Don't want to waste that deduction.  Sucks to be in NJ.


  27. Here is a fun penny stock: Cannabis Wheaton (CBWTF). It actually seems like a cool way to play the likely legalization of pot in Canada. Not recommending it, but I bought a bit today.

    https://finance.yahoo.com/news/cannabis-wheaton-pioneers-cannabis-streams-130000963.html


  28. Coffee Weekly Report: Are We Bottoming Out?

     https://seekingalpha.com/article/4132483-coffee-weekly-report-bottoming


  29. Looking to get ES at 2699 with Stop at 2704


  30. NAK – spasm today due to option deal on Pebble project.  end result, down a bit.


  31. Property Taxes/Rustle – Can you do that?  That's great.

    CBWTF/Jet – Well some of them will be winners.  I like that idea better than investing in growers but these guys can run into trouble too as prices come down.  

    /KC/QC – Well NOW they catch up to us….  blush

    Oil and /RB tumbling as Dollar bounces – that's why I was quick to take that /NG and /KC money.

    Same old buy line at 93 on /DX.

    NAK/Scott – $2 is pretty good though.  As long as the channel holds, they are in good shape.

    Northern Dynasty Enters into Framework Agreement with First Quantum Minerals

    VANCOUVERDec. 18, 2017 /PRNewswire/ - Northern Dynasty Minerals Ltd. (TSX: NDM; NYSE MKT: NAK) ("Northern Dynasty" or the "Company") announced today that it has entered into a framework agreement with First Quantum Minerals Ltd. ("First Quantum") (FM.TO) which contemplates that an affiliate of First Quantum will subsequently execute an option agreement with Northern Dynasty. The option agreement contemplates an option payment of US$150 million staged over four years which option will entitle First Quantum to acquire the right to earn a 50% interest in the Pebble Limited Partnership (the "Pebble Partnership") for US$1.35 billion.  The option period may be extended for up to 2 years by First Quantum making payments to be agreed upon which amounts will be offset against the $1.35 billion additional investment amount. Within five business days of the execution of the framework agreement, First Quantum will make an early option payment of US$37.5 million ("Early Option Price Installment") to Northern Dynasty.  The Early Option Price Installment will be applied solely for the purpose of progressing the permitting of the Pebble Project. 

    So it sounds better than it is as it's an OPTION to buy 50% for $1.35Bn but, up-front, they only have tp pony up $37.5M but that's what NAK needs to keep paying the lawyers, which is the company's entire business for now.  NAK's current market cap it $612M at $2 so this deal values them at $2.7Bn (and that's discounted) if they get their permits so figure good for 5x if they ever get approved with Trump's EPA the only roadblock to letting them exploit the environment for profit.  I like those odds!  


  32. By the way, in the past 3 years, NAK has burned $50M in cash, this deal pays them $37.5M/yr for 4 years so very little chance of BK (unless they get a definitive no).  


  33. NAK PDF Presentation to give you an idea of where they are.  

    Rare photo of a shark stepping on a Lego.

    Regulators take positions on distributed ledger technologies


  34. Phil/GNC

    Understood.  I hadn't really looked at it carefully.. So I had some room and added a few puts.  Kind of funny that below $5 my Jan 2019 puts and calls pay me .40 to take the stock.


  35. OSTK – conservative calendar: buy Jan2019 70 call, sell Jan2018 70 call at $13.25.


  36. NAK/Phil. What about a 2020 1.5/3 BCS if you could get it for $.30? 


  37. qc--why isn't TEVA on that list???? ;-)


  38. TEVA/Jabo well for one thing, they aren't a biotech.


  39. property taxes/Phil

    Yes, confirmed with tax collector in my town and bank.  He told me that many people in my town are doing exactly that.


  40. UAL – tempted to short them again here, as long as stays below 66.50. tempted…


  41. quit being so nitpicky jelutuck!


  42. Phil – Pass-through – ALL of the people the GOP cares about above the line where they begin f'ing people over to get their money – otherwise known as the bottom 80%, 250M Americans who make less than $60,000 per household. 

    87% of households with business income currently max out at the 25% bracket or lower. 88% of the tax savings would accrue to the top 1%. The top one-tenth of 1% would receive 43% of the tax cut.


  43. Phil – Pass-over – "whether your God is Jesus or Adam Smith – it's all in their plan that you should have plenty while others have nothing and, simply because they have nothing – it is therefore natural that they serve your needs. "

    No problem, Walmart and McDonald's are coming out with LLC pass-through kits for their employees, so they too can take advantage of the new lower tax rate.  Now wake up and keep shoveling that shit BOY!


  44. StJL – Past-life -  "These are the policies of a theocracy, not a modern democracy"

    What else do you expect from those who know better? Always use the superstitious voodoo bullshit on the idiots that believe in that crap.  For fear of what might happen after death, that pack of self inflicted vulnerability will never raise a finger.  Only a determined group of atheists, with much throat slitting, will be able to straighten things out. As the Albigensian Abbot said… "Caedite eos. Novit enim Dominus qui sunt eius."  viz.  Kill em all, let their fucking god sort it out later.  Sorting and Out.


  45. Phil – FOMC Hike – Lost in the details… 

    As opposed to October 2017, in January 2018, the maturity rollover limit on Treasury securities increases from 6B to 12B, and Agency MBS increases from 4B to 8B. 

    Translated: All amounts DOUBLED, those under are NOT rolled over, and must be retired or liquidated.

    In addition, these details were added:

    The Committee also directs the Desk to engage in dollar roll and coupon swap transactions as necessary to facilitate settlement of the Federal Reserve's agency mortgage-backed securities transactions.

    Translated: Sounds like agency MBS might need a hand with dollar roll and coupon swaps due to liquidity issues and pricing.

    In a related action, the Board of Governors of the Federal Reserve System voted unanimously to approve a 1/4 percentage point increase in the primary credit rate to 2.00 percent, effective December 14, 2017

    Translated: The primary rate charged to the commercial banks, also increased 25bps. Squeeze NIM much. The FRB's offer 3 discount window programs to depository institutions: primary credit, secondary credit, and seasonal credit, each with its own interest rate


  46. GNC/Baron – I try to save adjustment firepower for stocks that NEED adjusting.  

    OSTK/Scott – Be careful, they are up on BitCoin hype.  

    Biotech/QC – That's interesting but I hate it when we get to the phase of the rally where they try to justify valuations by saying everything is a "takeover candidate".   

    NAK/Jet – Limits the gains.  Not a bad risk/reward spread though.  

    Taxes/Rustle – Thanks, great idea.

    88%/Naybob – I know, it's all games with numbers but, somehow, the Dems aren't able to explain this to people. 

    • via Ryan Vlastelica at Marketwatch
    • If the DJIA (NYSEARCA:DIA) manages to finish in the green today – and it's currently higher by 0.6% - it would mark the 70th record high this year, topping the 69 records broken in 1995.
    • It's a testament to the one-way nature of large-cap stocks this year that roughly 1 in every 3.5 trading days produced a new record. Checking the S&P 500, it's been positive every month (on a total return basis) for 13 consecutive months (through November) – that's also a record.
    • Looking global, if stocks put in a positive December, it will be the first year ever without one monthly decline.
    • There's another strong read on U.S. holiday retail sales to digest. Jefferies says department store and specialty retail chains are tracking solidly ahead of Q4 expectations. The firm lines up price target boosts on seven separate retail names in response to its mall data analysis.
    • Jefferies PT hikes: American Eagle Outfitters (AEO +4.7%) to $22 from $20, Abercrombie & Fitch (ANF +6.2%) to $17 from $14, Boot Barn (BOOT +6.8%) to $20 from $13, Gap (GPS+2.6%) to $45 from $41, Michael Kors (KORS +1.6%) to $75 from $62, Kohl’s(KSS +3.1%) to $58 from $48, Urban Outfitters (URBN +4.8%) to $40 from $34.
    • Sources: CNBC and Bloomberg
    • via a first-day Model 3 reservation owner
    • That this is coming from an eager fan of the Model 3 is of particular note …
    • "Some of the exterior panels weren't as perfectly aligned as I'd like them to be … More than acceptable in my opinion … I did have to slam the driver’s door a little harder than I would like to in order for it to fully close though."
    • "I was a little underwhelmed with how the large center screen controls everything … Needing to look to my right for every bit of information, as well as to activate accessories while driving, just doesn’t seem all that safe."
    • "The view out of the rear window of the car really is not that good. I realized this when I couldn’t tell if there was a car behind me or not when stopped at a traffic light at night."
    • TSLA -0.5%
    • The EU’s top court will rule Wednesday on whether Uber (Private:UBER) is an app or a taxi company.
    • If the court rules that Uber should count as a taxi, operations won’t change overnight. But local authorities will then have the authority to apply the same taxi regulations to Uber. 
    • A Court of Justice of the European Union advisor said in May that Uber should be considered a transportation provider. While that opinion isn’t binding, the court often follows the advice.    
    • Previously: Cambridge renews Uber's license (Dec. 18)
    • JPMorgan raises Amazon’s (NASDAQ:AMZN) price target to $1,375.
    • Analyst Doug Anmuth cites Amazon’s dominance as an e-tailer and estimates that Amazon Web Services holds about 75% of the U.S. public cloud market. 
    • Anmuth also raised Facebook’s (NASDAQ:FB) price target to $225 and Priceline’s (NASDAQ:PCLN) to $2,050.   
    • Amazon shares are up 1%
    • Facebook shares are up 0.2%
    • Priceline shares are up 1.3%.   
    • Previously: Twitter +5% after JPMorgan upgrade (Dec. 18)
    • BHP Billiton (BHP +1.6%), Rio Tinto (RIO +1.7%), Vale (VALE +3.1%) and Fortescue Metals (OTCQX:FSUMF +1.4%) are all higher after iron ore futures surged 5.5%, the most in a month, on the Dalian Commodity Exchange, while the benchmark price for spot ore delivered to Qingdao jumped 3.7% to $74.15/dry ton, the highest since September.
    • “Tighter supply of some material has bolstered prices in the short term,” says Chinese brokerage Shanghai Cifco Futures, as China's environmental cleanup tightens the supply of higher-grade material that is less polluting and allows steelmakers to maximize production.
    • Also higher: X +4.1%MT +3.1%WOR +2.4%AKS +2.3%STLD +2.1%CLF +1.9%NUE+1.7%RS +1.7%
    • Just more than 55 years after Warren Buffett purchased his first shares (2K) of Berkshire Hathaway (NYSE:BRK.A) for $7.50 each, the stock moments ago topped $300K. That roughly 4,000,000% increase is a move even Bitcoin #hodlers would be impressed with.
    • Prior to starting giving away chunks of his holdings to charity in 2006, Buffett's stake in Berkshire had topped 30%. Today he owns about 17%, worth roughly $85B.
    • Maybe most interesting about the current state of Buffett/Berkshire … Some bull market geniuses of today are wondering if the The Oracle has lost his touch. The last time we heard that sort of talk was just prior to the spectacular bursting of the Internet/telco bubble in 2000.
    • The National Association of Home Builders' index jumped a whopping five points to 74 this month vs. expectations for just a one point gain to 70.
    • The subindex of current conditions added four points to 81, and one for future sales rose three points to 79. The buyer traffic gauge rose eight points to 58 – the highest level in 20 years.
    • Full report
    • The news suggests homebuilders are looking past any restrictions on the mortgage interest deduction in the new tax bill, and instead focused on tax cuts and eased regulatory relief. The NAHB this weekend said it was in full support of the coming reform.
    • The red-hot homebuilding stocks stay that way. ITB +1.1%, Toll Brothers (TOL +0.5%), Lennar (LEN +1.2%), Pulte (PHM +0.7%). D.R. Horton (DHI +1.4%)
    • ETFs: XHBITBPKBNAILHOMLCLAW
    • Previously: Housing Market Index Reports Rising Confidence Going Into the Year End (Dec. 18)

  47. Took my /YM shorts off at 24,800 but letting /ES ride (4 short at 2,682.75).


  48. Property Taxes / Rustle – thanks for the tip –  my (IL) county treasurer's website had the links for prepaying taxes.


  49. These tax cuts have built incentives for global outsourcing:

    http://www.motherjones.com/kevin-drum/2017/12/the-republican-tax-bill-will-send-more-jobs-overseas/

    There are three reasons, according to nonpartisan tax experts. First, a corporation would pay that global minimum tax only on profits above a “routine” rate of return on the tangible assets — such as a factory — that it has overseas. So the more equipment a corporation has in other countries, the more tax-free income it can earn. The legislation thus offers corporations “a perverse incentive” to shift assembly lines abroad, says Steve Rosenthal of the Tax Policy Center.

    Second, the Senate bill sets the “routine” return at 10 percent — far more generous than would typically be the case….As a result, a U.S. corporation that builds a $100 million plant in another country and makes a foreign profit of $20 million would pay roughly $1 million in tax versus $4 million on the same profits if earned in the United States, says Rosenthal, who has been a tax lawyer for 25 years and drafted tax legislation as a staff member for the Joint Committee on Taxation.

    Finally, the minimum levy would be calculated on a global average rather than for individual countries where a corporation operates. So a U.S. multinational could lower its tax bill by shifting profits from U.S. locations to tax havens such as the Cayman Islands.

    Yes, middle class tax cuts all right – but no more jobs either!


  50. Prepaying property taxes:  Oops, looks like they got us:

     

    The Tax Bill Is Finalized: Who's Happy, And Who's Not? – Forbes

    https://www.forbes.com/…/the-tax-bill-is-finalized-whos-happy-a…

     

    Traduzir esta página

    2 dias atrás - WASHINGTON, DC - DECEMBER 15: House Ways and Means Chairman Kevin Brady (R-TX) discusses progress on the tax reform bill with reporters at the U.S. Capitol on December 15, 2017 ….. The final bill eliminates this opportunity, however, by explicitly denying the ability to prepay 2018 taxes in 2017.


  51. They really are doing all they can to screw the middle class these guys! But taking investment losses early is OK I guess. How about we change the rules that you can sell investments at a loss in the same year!


  52. Phil/ TZA/SQQQ

    Could you suggest a hedge using one or both these to cover for a drop in 2018. Thx


  53. Albi / Naybob – My mother's family is from the Albi region so probably some cathar blood running in my veins. They didn't kill them all I think!


  54. Phil// With the passage of the tax is all but certain, wouldn't you expect the dollar to drift lower due to higher deficits by the new tax plan and there by increase the price of Gold and the gold mining companies such as ABX, etc?  Thanks.


  55. Pstas – FWIW.  I just sold 20 GLUU Jun 4 puts for .65.

     

    https://seekingalpha.com/article/4132565-glu-mobile-taylor-swift-bonus


  56. Jobs/StJ – That's a ridiculous hole in the bill.

    Property Tax/Taihu – Funny how that one they made sure they closed.

    TZA/Ravi – One of the reasons I went to cash is I was sick of losing money on hedges.   You know I love my TZAs and they are down at $12 now:

    As a new trade I'd go for April $11 ($1.65)/$15 (0.60) bull call spreads at $1.05 – those are at the money so you can penny for penny as TZA move up, up to 36%, which would be a 12% dip in the RUT (1,761).   Last time we looked at this, I used TLSA as an offset and you can sell the April $390 calls for $13 so, if you sell 3 of those for $3,900, you can buy 50 of the spreads for $5,000 and you end up spending net $1,100 for $20,000 of upside protection.  

    Of course, you can also sell 5 IBM 2020 $125 puts for $8.30 ($4,150), if you want a less-volatile offset.  Those can be paired with 40 of the SQQQ March $19 ($2.20)/$23 ($1) bull call spreads at $1.20 ($4,800) for net $650 on the $16,000 spread and all the Nas has to do is drop about 8% for that one to be a winner.

    With both of those spreads, if you want to extend the insurance, the trick is to roll the long calls to longer months before they drop below $1, which is about the net you paid for the bull call spreads.  

    Dollar/Rookie – I wonder if, to some extent, the rise in BitCoin is a sort of signal that people are completely losing faith in all fiat currencies.  There has not been a great correlation between the Dollar and Gold lately but I do still like it (and the miners) into the future – for now.

    That's at 10% drop in the Dollar and not even a weak bounce so far.  

    Gold is up right about 10% over the same period – so still correlated but not at all exciting.

    GLUU/Albo – That's fun. 


  57. Phil et al:  Do you expect big profit-taking after the last day of 2017 trading/early New Year?


  58. GLUU- Albo, was just reading that article. Joining you in that trade. I like it . 


  59. Phil/Thx


  60. Profits/Taihu – Yes, I do think people start taking profits in Jan but not enough to make any big bets at this point.  This market is like an end-stage bubble and it can go up a lot before it gets realistic.

    Well, no big spike at the close but we spiked up at the open instead. 

    Nas was over 7,000 today – That's 40% over 5,000, which seemed crazy a year ago.  

    Hard to bet against that progression.  


  61. Phi/ALL/CBI

    CB&I and McDermott to merger in $6 bln deal; CB&I shareholders will be entitled to receive 2.47221 shares of McDermott common stock for each share of CB&I common stock owned   (17.92 +0.11)

    Up over $19 ah


  62. Now  back down to$18 and change


  63. CBI/Baron – That's a rip-off to the CBI shareholders.  MDR is up more than CBI as they are certainly getting the better end of this deal. 


  64. Tomorrow, we can probably still sell CBI 2020 puts.  The $15 puts are $4.60!  


  65. OK, should be a good discussion about what happens to one's contracts on a merger, ie our sold calls at 20/22.50


  66. Phil / CBI merger doesn't seem very clean, and it looks to undervalue CBI.  While i agree we need to position something within the infrastructure space this seems kinda of hokey with the reverse split in the mix. Can you explain how this will work?

     

    McDermott (NYSE:MDR) and CB&I (NYSE:CBIagree to merge in an all-stock deal with an enterprise value of ~$6B, creating a broad engineering, procurement, construction and installation company with ~$10B in combined revenues and a $14.5B backlog.

    According to the deal terms, MDR shareholders would own ~53% of the combined company and CBI shareholders would own the remainder while being entitled to receive ~2.47 MDR common shares for each CBI share owned, or 0.82407 shares if MDR effects a planned three-to-one reverse stock split prior to the deal closing.


  67. Former Pentagon UFO official: ‘We may not be alone’












  68. Could this country be any more divided than we are now? So CNN pulls out a ufo video from 2004 to announce we are not alone. Look! Over there! Squirrel! 


  69. Phil   CBI $15 puts are closed as unassigned at conclusion of merger?


  70. Or do they get converted to MDR options. I believe in a cash deal they would be closed but in this case the merger terms are an exchange of shares so the underlying shares of the option would get modified from 100 shares to 247.221 of MDR shares.