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Monday Market Movement – With No Government, What Will Move Us?

Government shutdown! 

No one really cares.  It sounds like something, but it's nothing.  The government was shut down for 2 weeks in 2013 and hardly anyone noticed and, frankly, this Government has been dysfunctional for pretty much all of 2017, so it's not like we're going to miss it.  Meanwhile, our President is tweeting from the twilight zone where Global Warming is "good weather" and millions of women marching against him all over the country is a "celebration" of his policies.  You can't make this stuff up.  No, really, you can't, because a sane person couldn't imagine having that reaction to what is actually happening.  

chartMeanwhile, the last time the markets were this bullish was 1987 and we begain that year with a rally from S&P 250 to S&P 335 in August and then back to 200 (-40%) in October – so a hell of a fun ride that time!  More recently though, we were also very enthusiastic in 2015 and there we topped out, also in August, at 2,200 on the S&P and we only fell to 1,850 (-16%) into 2016 so maybe this rally can last into the summer but, if it does, it will be the most overbought, overconfident market ever measured – much healthier to have a small correction now. 

We added some portfolio hedges into the Government shut-down weekend but, so far, there's no indication that the markets care and we assume there will be a relief rally once Congress comes to an agreement so, if anything, we may go higher from here.  Earnings, so far, have not been bad so no particular reason for a pullback but, this week, 20% of the S&P 500 (100) Companies will report and then we'll have a pretty good picture of what's happening in various sectors.

Not only is there not much data scheduled to be released this week but it might not be released at all if the Government contines to be shut down. Currently on the schedule are reports from the Chicago, Richmond and Kansas City Feds along with some housing data but nothing major until we get our GDP and Durable Good Reports on Friday.  All of this is up in the air, however, as there are no people around to release the reports:

While things may SEEM to be going well and while the spin on the markets is still positive – it struck me this weekend that US banks are reporting a 20% jump in Credit Card losses for 2017 – usually a sign of deteriorating Consumer Health.  “People are using their cards to get from pay cheque to pay cheque,” said Charles Peabody, managing director at the Washington-based investment group Compass Point. “There’s an underlying deterioration in the ability of the consumer to keep up with their debt service burden.”  Citigroup (C), JP Morgan (JPM), Bank of America (BAC) and Wells Fargo (WFC) took a $12.5Bn hit with 7.5% of credit cards now over 30 days past due.

Image result for wealth inequality oxfamThis makes sense because the "recovery," such as it is, has almost exclusively benefitted the Top 1%, who captured 82% of the wealth gains in 2017 while the Bottom 53% got NOTHING at all.  In 2018, we're going to not tax the gains made by the Top 1% to prevent them from accidentally sharing that wealth with the Bottom 99% – I'm sure that's a great idea that will all work out great.  

In particular, Oxfam criticised President Trump, who is attending the World Economic Forum, for creating “a cabinet of billionaires” and implementing tax legislation that she said rewarded the super-rich, not ordinary Americans.  The annual report by Oxfam found that the number of billionaires rose at a rate of one every two days between March 2016 and March 2017, while in the United States the three richest people own the same wealth as the poorest half of the population.

The economic model is not working at all,” Oxfam report co-author, Iñigo Macías Aymar, told the Thomson Reuters Foundation. “The way this wealth is being distributed we are really worried, it’s being concentrated in fewer hands.”  Oxfam called for all workers to receive a minimum living wage, the elimination of the gender pay gap and tougher rules to crackdown on tax avoidance.

We're not going to be able to have a stable growth economy if all the benefits accrue to the top so we're remaining cautios on earnings and, as I noted, we added a couple of hedges to our Short-Term Portfolio on Friday, which were also published in our Top Trade Alerts. 

From a Futures perspective, we're watching Dow (/YM) 26,000, S&P (/ES) 2,810,  Nasdaq (/NQ) 6,850 and Russell (/TF) 1,600 and, as usual, we short the last one to cross under with very tight stops if ANY of the indexes get back over their line so risking very small losses against nice potential gains.

Other than that, it's more of a "watch and wait" kind of day.  

 


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  1. Good Morning.


  2. Tax cuts will have basically little impact on business spending:



  3. WYNN – Up sharply.  Had been rolling up and out short puts.  The last one I had expired on Friday.  Wish I'd rolled them out earlier, but thought the stock was getting too pricey.


  4. Wow !

    ~CELG is buying JUNO for $9 bln, a 28% premium (90% premium before reports of a potential deal broke);


  5. Phil – FAZ

    You mentioned a FAZ BCS 10/11 about a week ago with bank earnings coming up

    Adjust or kill??

    Thanks


  6. Sorry – here is the trade

     

    Buy 20 FAZ Feb $10 calls for $1.10

    Sell 20 FAZ Feb $11 calls for 0.45 

    This no-margin spread nets 0.65 on the $1 spread that's 100% in the money to start so anything but a bullish reaction to bank earnings should give us an 0.35 (53.8%) gain at February expirations (16th).  The outlay on this trade is $1,300 and it pays back $2,000 if all goes well and we don't lose money until FAZ is below $10.65.  You don't need to make complicated or risky trades to make fantastic returns with options spreads and this one doesn't even require any margin!  We will add it to our Options Opportunity Portfolio (OOP) and see how it goes.


  7. Is it my imagination or is the market going straight up again?


  8. Did those dummies in D.C. reach a deal or something? 


  9. Godzilla attacks Toyko; markets hold gains.


  10. Nasdaq through the roof again


  11. Good morning!

    Holy crapl, the indexes are taking off yet again.  This is just a joke now.  

    Senate Plans Vote on Spending Bill Without Clear Support From Democrats

    Lawmakers on Monday entered the third day of the government shutdown planning a noon vote in the Senate to break the impasse, in an effort to prevent it from hardening into a prolonged standoff that would become increasingly difficult to resolve. 37 minutes ago

     

    Fortunately, no false signals – it just blew right over our lines. 

    Tax Cuts/StJ – More profits then?

    WYNN/Albo – That's adding insult to injury.  They made $4.77/share but adjusted for one-time costs to $1.40 and $1.36 was expected so just a bit over the line. Revenues $1.69Bn vs $1.54Bn expected.    Full-year income, however is $747M and the stock has doubled since Jan, 2017 and now $20Bn at $190 so 26x earnings is pressing it a bit.  They made $700M in 2014 and the stock topped out at $250 and fell to $75 the next year, so a wild ride is possible in any case.  

    Their profits, of course, come when they aren't building and just collecting, which is what they are doing this year.  This year they start on Boston, spending $1.5Bn and, unlike Macau or even Vegas, this is a big union job in the same place the Big Dig costs tripled during construction so, long-term, I think they'll take a hit at some point but could take a while to play out.

    CELG/Albo – I didn't pick them this year because I thought they didn't have enough in the pipeline.  This is their fix. 

    FAZ/Jeff – Our net on that one was 0.65 and the Feb $10s are now 0.55 and I'd like to see another week of bank earnings before declaring it an emergency.  The March $10s are 0.60 so a low-cost roll there and wait for the Short Febs to expire and then sell March $11s (now 0.25) for 0.20 cuts our net to 0.55 and buys us a month so something like that in our future but hopefully more favorable on the short calls.

    DC/Jeff – Not even a deal and we're popping – typical Monday nonsense.  /TF is my favorite short at the 1,600 line.


  12. KODK – Sold more Jul 5 puts for a buck.

    I'm probably wrong, but thinking GE might have  put in a bottom today at 15.80.


  13. Picked up a quick $400 on 4 short /TF.  Not looking for big money on the short side in this market!  

    GE/Albo – I hope so, getting crazy.  

    Speaking of bottoms, F is holding $12 so we may have to bite the bullet and start buying those.


  14. Anyone know why CMG is down today?


  15. F – you mentioned that the 2020 options weren't out, so you'd wait, but now that they are is there a reason other than a continued fall that you are waiting?  Also, just as an example, if you were selling the $12 calls and puts, 2019 is a combined $2.11 while 2020 is only $3.24, so would it not make sense to sell the 2019's and then the 2020's next January and collect what may be an additional $.98 in premium?

    I'm looking at the same cover for my GSK shares.  It's been a dividend cash machine for me and my basis is down below $30 now, with the 2019 $38 calls and puts at $5.00 while the 2020 $38 calls and puts only at $7.50, so I'm trying to understand the reasoning for a longer play?  Is it to make sure to capture an additional year of the 5% dividend? Thanks for your viewpoint, many times this doesn't seem to be the case and the 2020's are an equivalent, if not greater premium.


  16. Wednesday webinar day this week as normal?



  17. Above informational can be found here.

    Told ya on JUNO and CELG.  Many moons ago.  When KITE was scooped by GILD, the next logical was JUNO, as they were already in bed with CELG.  Now, BLCM needs to show some hope, and they will be next.  ARNA is also looking very very interesting, as I noted a week or so ago.  No promises, but the pipeline is solid in areas where JNJ and CELG already bought for $30B and $10B.


  18. Pharm

    Where does Go from here?

    Clovis Oncology, Inc. (CLVS) with Juno and kite out

     Thanks


  19. StJL – Congrats on those Philly Cheese Steaks who made things RUFF over the weekend for the Stone Skol Stunners. Thrice a dog as the line opened at NE -7 and on a pile of early Eagle money, has already gone down to -5, a dead number. 

    You'll be happy to know, since they were the only team to put a dent in my profits last week and this week, I am now a believer.  After seeing the litany of dirty laundry which has got their opponents into this game, I am so confident, that I bought that little doggy in the window at a bargain +7.  Arf-Arf, Ruff-Ruff, Bow-wow-wow-yippie-yo-yippie-yeah and Out.


  20. DonT understand why democrats are caving in. They have gained nothing except a bunch of non-enforceable promises.


  21. denlundy--maybe they own nasdaq futures?


  22. Hey Rexx, if you are around, I could not find an official trade for M in the LTP so please let me know when we did that.

    Other than M, LTP should be correctly updated as such:

    And now we have an STP:

    And the OOP:


  23. Wow, Nas (/NQ) 6,900.  COMP is 7,400 – remember when we though crossing 5,000 was a big deal?  That was less than two years ago!  

    Government opening back up – that's the rally fuel.

    CMG/Jet – That's strange.  Seems like they are raising prices but that usually boosts a stock.  Oh well, we have 4 short $310s in the LTP so we needed a break.

    F/Rperi – No, now I don't want to wait but haven't decided on a trade yet.  You know last week I wrote that 6-year plan for making dividend stocks free?  Well, if we buy F for $12.05 and sell 2020 $10 calls for $2.40 and 2020 $12 puts for $1.85 that's net $7.80 and then we collect $1.20 in dividends for net $6.60 and we either get called away with a 50% gain at $10+ or we're assigned another set at $12 and average $9.30 so that's the general plan. 

    The reason I'd rather have the extra $1 (10%) now is because rule #1 is DON'T LOSE MONEY and there's no reason to take a risk when our goal is to grind down the basis on a dozen stocks.  Some will win, some will lose and we want to lose as little as possible – that's what matters, not maximizing premiums every year because the stock can go just as badly against you in one year as 2 so you can risk it with less protection or get more protection up front and we're choosing (after many years of experience) to play it cautiously in our initial positions.

    Also, you're selling the $12s and we're selling the $10s because, again, more conservative and there's not enough premium in the 2019 $10s and we'd likely get called away whereas the 2020 $10s have 0.45 in premium so, if they call us away to collect an 0.15 dividend, they are doing us a favor.

    Essentially it's a matter of playing cautiously because a market crash (I know, what's that) can put a dozen of your positions in trouble at the same time and taking 50% more cash up front may make a big difference if things do hit the fan.

    Webinar/Rperi – Yep.

    Wealth/Pharm – That's interesting.  

    Football/Naybob – This playoff season was easy to call.  

    Submitted on 2018/01/15 at 2:49 pm

    Congrats to Eagles fans though not a very impressive win.  One wonders what the point is when the Patriots are only going to kick your ass eventually…  

    Dems/Den – They didn't have much leverage.  The Reps were going to change the floor rules again to push a vote so saving face and they do have a concession to arbitrate DACA, which was the sticking point.  They got that small win and come out looking reasonable.  

    LOL Jabob!  


  24. Well, I had to short /NQ At 6900.


  25. CLVS….they need more than one of the Phase 3s to hit.  

    ICPT needs some good news.


  26. I would also consider BLUE in the mix with CELG and Sanofi ponying up $$.


  27. Pharm-got nothing from BCLM. Did you mean BLCM Bellicum Pharm? Thanks


  28. Thanks Phil!


  29. I did not know that no matter how long you hold a short position it counts as short term gains once closed.  


  30. Pharm

      Do you think Cellectis S.A. (CLLS) will be acquired ?

    Thanks


  31. Football / Phil – Eagles have been underdogs the entire time and yesterday looked pretty impressive, much more than the Patriots actually against a supposedly better defense. Maybe it's our year especially if the Patriots don't cheat like last time against the Eagles.


  32. Thanks Naybob! Was actually a pretty good game. I was telling my family around lunch time that that I thought that the Vikes looked a better team, but I qualified that statement by saying that all it took was for one player to have the game of their life and Foles sure looked like he did….


  33. Short-term selling/Tangled – Lot's of crazy stuff.  You should look into setting up a family trust or at least electing trader status so you can net out your gains (and other advantages under the new laws).

    IRS Short Selling Rules Can Be A Taxing Matter – Forbes

    Do not buy this hotel!

    • The Hard Rock Hotel in Las Vegas is on the sales block, according to Las Vegas Review-Journal.
    • Sources say Hard Rock owner Brookfield Asset Management (NYSE:BAM) is in talks with Richard Branson's Virgin Hotels and other buyers about the well-known off-Strip property.
    • Branson's empire doesn't include a Vegas hotel or casino yet.
    • Related ETF: BJK

    It's so far away from the others they can't draw people.  If they lose the Hard Rock name that at least brings in a certain core crowd, this thing will just be a money sink.

    • European Union will follow South Korea and China on cryptocurrency regulation to prevent money laundering, terrorism financing on virtual currency platforms and also plans to set limits on cryptocurrency trading.
    • The countries plan to release the analysis at the G20 meeting in March.
    • Source: Investing.com
    • According to Ernst & Young which researched nearly 400 initial coin offerings, more than 10% of funds raised through ICOs have been either lost or stolen.
    • Maybe more interesting to bubble watchers – the whole thing may have popped months ago. The report says volume has been slowing since late last year, with only 25% of ICOs hitting their fundraising target in November vs. 90% that did so in June.
    • E&Y's Paul Brody: "We were shocked by the quality of some of the white papers, we see clear coding errors and we see conflicts of interest between the companies issuing tokens and the community of token holders.”
    • Bitcoin late last week nearly tumbled below $9K before bouncing to nearly $13K at one point over the weekend. It's back down to about $10.6K this morning. Ethereum, Litecoin, and nearly the entire alt universe are also sharply lower.
    • In news, Nordea Bank has imposed a ban on cryptocurrency trading for its 30K+ employees, effective Feb. 28, noting the "unregulated nature" of the market.
    • Also of interest is an essay on Bitcoin by Nassim Taleb: "It fulfills the needs of the complex system, not because it is a cryptocurrency, but precisely because it has no owner, no authority that can decide on its fate."

    • It was another week at the top for top box-office draw Dwayne Johnson and Jumanji: Welcome to the Jungle, which outgrossed another two openings to lead for the third straight week.
    • With $20M in its fifth week of release, the film becomes one of Sony's (SNE +1.2%) best-performing releases ever. It's grossed $317M domestically, passing Skyfall and making it Sony's No. 5 performer on that all-time chart. And it's drawn a worldwide total of $767.8M.
    • It topped the $16.5M grossed by war film 12 Strong (TWX +0.2%), and $15.3M from fellow newcomer (and Federal Reserve theft movie!) Den of Thieves (STX). It's also the first film not to open atop the box office to go on to top $300M (thanks to a release against Star Wars: The Last Jedi).
    • A pair of Fox releases (FOX +1.9%FOXA +1.8%) rounded out the top five: The Post at No. 4 with $12.15M, and The Greatest Showman with $11M (hitting $113.5M cumulative).
    • Alphabet’s (GOOGGOOGL) YouTube Live streaming service has reached 300K subscribers, according to CNBC sources.
    • Hulu’s live service has about 450K paying subscribers, not including recent promo customers. Hulu is co-owned by Comcast (NASDAQ:CMCSA), Disney (NYSE:DIS), Fox (FOXFOXA) and Time Warner (NYSE:TWX). 
    • Older services DirecTV Now (NYSE:T) hit 1M subscribers last month and Dish Sling (NASDAQ:DISH) has over 2M subscribers, according to comScore data. 
    • BTIG analyst Rich Greenfield says the value proposition for the newer streaming services isn’t outstanding compared to video on demand.
    • YouTube Live costs $35/month, but regular YouTube is free. Hulu’s Live TV costs $39.99/month while its Hulu Plus service is $8/month and “can get you all the programming you want for more than $30 less,” says Greenfield, with the notable exception of live sports.  
    • Reuters tankan poll revealed confidence among Japanese manufacturers at 35 reflecting corporate optimism driven by nearly two years of uninterrupted economic expansion, buoyant stock market, Stability in currencies, global demand for electronics and cars, and capital expenditure.
    • Steel/nonferrous metals, chemicals, and metal production machinery manufacturers lifted the index to 11-year high.
    • Source: Investing.com
    • D.C. may have outlawed drive-by appraisals (known as broker price opinions, or BPOs) for traditional mortgages, but Wall Street – which plunged into single-family homeownership following the real estate crash – use of the practice has only grown.
    • BPOs now value the collateral in more than $20B of paper sold by landlords like Invitation Homes (NYSE:INVH), according to the WSJ. The BPOs nowadays, are likely not to even include drive-bys. Instead, the process is outsourced overseas, where – for a few dollars – workers come up with a price using Google Earth and/or real-estate websites.
    • The practice is drawing some concern from the SEC, which wonders whether big property landlords are pushing for higher valuations. Realtors, of course, say the quality of BPOs is dropping as quickly as the price (as little as $25 per house now).
    • "We're never taking BPOs at face value," says Kroll Bond Rating's Daniel Tegen, where BPOs are typically trimmed by about 10%.
    • Interested parties include landlords like American Homes 4 Rent (NYSE:AMH) and Reven Housing (OTCQB:RVEN), and also Radian Group (NYSE:RDN), whose Green River subsidiary is player in BPOs.
    • The IMF revised up its forecast for global economic growth in 2018 and 2019 to 3.9% as U.S. tax cuts are expected to boost investment in the world's largest economy and help its main trading partners.
    • IMF revised its forecast upwards for many countries incl. U.S., Japan, Germany Italy and Netherlands.
    • Source: Investing.com
    • Abercrombie & Fitch (ANF +8.5%) updates on Q4 results.
    • The retailer expects to report comparable sales to be up at a high-single digit rate vs. prior outlook for a low-single digit gain.
    • Total sales are seen to be up at a low-teens rate.
    • A&F anticipates gross profit to be in-line with its prior outlook for ~58.3% of sales.
    • CEO update: "We are pleased by our performance across all brands and channels during the holiday season, with continued strength at Hollister, and the Abercrombie brand on track to deliver positive comparable sales for the quarter. Our customers remain at the center of all we do, and that singular focus has continued to drive both our brands forward."
    • The company is due to report full results on March 7.
    • Bunge (BG +2.7%) adds to Friday's last-minute surge that followed a report that Archer Daniels Midland (ADM +1.9%sought merger talks with the company, potentially setting up a bidding war with Glencore (OTCPK:GLCNFOTCPK:GLNCY).
    • Stephens analyst Farha Aslam was surprised by news of the potential deal, since BG’s product portfolio is far more commodity-oriented vs. the value-added strategy that ADM has been articulating, but a deal could create significant synergies.
    • Credit Suisse's Robert Moskow thinks a deal would make sense strategically for ADM, as it would create significant scale in South American, European and Asian markets, and eliminate excess capacity in regions where margins have come down; he suspects ADM may be trying to get BG at the negotiating table before the standstill agreement with Glencore expires in February.
    • Citi's David Driscoll believes BG would be valued at $85-$100/share, but a deal would be less attractive if ADM is unable to hold onto BG’s North American and European crushing assets in a deal due to regulatory challenges.
    • Source: Bloomberg First Word
    • AT&T (T +0.4%) and Equinix (EQIX +0.1%) are expanding the AT&T network into Equinix's International Business Exchange data centers.
    • AT&T's Network on Demand stretches switched Ethernet service extends to allow customers to quickly spin up enterprise-level service offerings in just days, and upgrade network/bandwidth in minutes as needed.
    • More than 90% of AT&T Business customers are using some form of cloud computing, the company says.
    • AT&T's Switched Ethernet Service with Network on Demand is now available at IBX data centers in Atlanta, Chicago, Dallas, Los Angeles, Miami, Silicon Valley and more.
    • Wynn Resorts (NASDAQ:WYNNreports a 30% jump in Q4 revenue to $1.69B. The big gain was tied largely to the $248M brought in from Wynn Palace during the quarter.
    • The casino operator saw adjusted property EBITDA increase 41% to $480.2M, with Wynn Macau tallying $186M and Wynn Palace $190M.
    • Revenue from Las Vegas operations fell 1.6% to $377M and adjusted EBITDA was down 9% to $104M on some early quarter traffic weakness tied to the mass shooting event.
    • Wynn ended the quarter with $3.13B in cash and total debt of $9.63B.
    • Shares of Wynn are up 4.11% in premarket trading to $187.03 (52-week high).
    • The conference call with Steve Wynn and gang is scheduled for 12:00 p.m. ET.
    • Previously: Bullish call on Macau from CICC (Jan. 22)
    • Atlantic Equities downgrades Apple (NASDAQ:AAPL) from Overweight to Neutral with a reaffirmed $190 (6.5% upside on Friday's close.)
    • Analyst James Cordwell cites weaker than expected sales for the March quarter with the firm’s revenue estimates now below consensus for Q2 to Q4. 
    • The firm sees “signs that an iPhone demand is starting to soften, limited visibility into the potential for future iPhone cycles and emerging challenges to the smartphone’s dominance at the centre of consumer technology, we believe the stock’s multiple will compress, limiting upside potential.”  
    • The analyst action marks the second Apple downgrade in a week.
    • Apple shares are down 0.6% premarket.   
    • Previously: Longbow downgrades Apple on lower iPhone forecast (Jan. 17)
    • Chinese investment banking firm CICC expects Macau gaming revenue to rise 25% in Q1 off of strength from new properties and junket operations.
    • CICC expects Sands China (OTCPK:SCHYYOTCPK:SCHYFLVS) to take significant market share during the year and sees a strong year for Wynn Macau (OTCPK:WYNMFOTCPK:WYNMYWYNN) as well. Galaxy Entertainment (OTCPK:GXYEF) is also rated at Buy.
    • In Hong Kong earlier today, Wynn Macau shot up 3.18% and Sands China was up 4.13%. Galaxy Entertainment broke 3.21% higher and MGM China (OTCPK:MCHVFOTCPK:MCHVYMGM) finished up 1.44% as it rode the sector rally.
    • Teva Pharmaceutical Industries (NYSE:TEVA) slips 3% premarket on increased volume in response to its announcement that a Phase 3 clinical trial assessing subcutaneously administered reslizumab failed to achieve the primary endpoint of reducing the frequency of clinical asthma exacerbations in patients with uncontrolled asthma and elevated (>300/mcL) blood eosinophils.
    • Phase 3 claim-support study evaluating subcutaneously reslizumab in patients with oral corticosteroid (OCS)-dependent asthma also failed to meet its primary endpoint of reducing the daily OCS dose.
    • The company says it continues to see a treatment effect with the intravenous formulation, branded as CINQAIR in the U.S. and CINQAERO in Europe.
    • Update: Investors appear to be shrugging off any perceived negativity with the news. Shares are only down a fraction so far in the session.
    • With the initial launch, select Ameritrade (NASDAQ:AMTD) customers will be able to trade certain ETFs anytime between Sunday at 8PM ET and Friday at 8PM ET.
    • The brokerage notes 70% of its clients use its research capabilities outside of regular trading hours, and it's aiming to fill the gap between "research and action."
    • The move is also a nod to the company's growing Asia-based clients who might like to trade U.S. markets during their daytimes.
    • Source: Press Release
    • U.S. Steel (NYSE:X+1.6% premarket after Citigroup upgrades shares to Neutral from Sell with a $43 price target, raised from $22, as the firm predicts another leg higher for the steel group even after recent gains.
    • Citi cites the multi-year cycle of above-average utilization and profitability driven by continued supply-side discipline in flat steel and recovery in non-residential construction in long steel.
    • Citi sees steel prices rallying through $700/ton in Q1 before pulling back due to lower raw materials costs in China; the firm does not expect more than a short-term boost from Section 232 action.
    • Steel Dynamics (NASDAQ:STLD), Nucor (NYSE:NUE) and Commercial Metals (NYSE:CMC) are Citi's top picks in the group, and it anticipates further industry consolidation, with STLD the most likely buyer.
    • The sixth round of NAFTA negotiations kicked off yesterday in Montreal, with many observers believing these could be make-or-break talks.
    • President Trump called the trade agreement a "bad joke" in a tweet last week and the goal of Canadian and Mexican officials now seems to be shifting toward making sure there's enough progress that the U.S. administration won't pull the plug on negotiations.
    • The talks began with energy, investment, financial services, agriculture and other issues on the agenda.

  34. Pharm, I'm into SGYP quite a bit at a much higher price: hold, DD, or bail?


  35. OK, finally catching up on some weekend questions:

    Gates/Pat – I don't know enough about them to speculate on an IPO, which is not something I like to partake in.  They are a pretty big company with a nice niche though, seems like a good long-term hold.

    I like that table, BDC:

    Hey bloomberg

    TD/Yodi – IB seems to be the usual second choice but I imagine Europe must have some reliable brokers?

    NOK/Grasshopper – They have a big patent issue with Blackberry and it's a rough business environment for the telcos and NOK lost $183M last Q so I think I'd stick with someone who at least makes money if I were going to go that way.  Generally I look for stocks that are actually making money (1/20th market cap annually or better) that also seem like they are growing by about 10% a year or better and not too much debt or other issues and then, of course, I look at the rest of the sector and try to make sure the one I like is better than the others.  Oh yes, and then they have to have good options available and the stock needs to be on sale (low in a channel).

    SVXY/DHall – We settled on it last year trying to play the VIX, while SVXY puts never pay off, the short puts always expire worthless, giving us free protection in case the market ever does sell off.  SPXL or SDS or SPY are all just ways of playing the S&P and we are playing DIA instead. 

    CMG/Dhall – I only mentioned the Butterfly portfolio, that was not a trade for the butterfly portfolio but the CMG Den was discussing had similar qualities, which is why I mentioned it.  We haven't done any butterfly trades yet because the VIX is low and the market is high – bad combination – especially into earnings.  


  36. Grocery/Phil – interesting article. thanks. That picture of full grocery store shelves is -beautiful-.  The modern cornucopia.


  37. Meanwhile Oil hit $64 and pulled back but /RB hitting $1.885 and looking to make new highs.

    Indexes calming down just a bit. 

    Silver back below $17 despite Dollar still weak.  Very tough to call so best not to play.  

    /KC tops out yet again at $123. 


  38. /NQ short worked out for me. I’m out now and back to focusing on some /ES shorts that I left over the weekend. Working my Avg up there. 


  39. Phil – Football/Naybob – This playoff season was easy to call.

    Oh yeah, sure thing there.  Against the number… the best of the best was 9-1, but of course he sucked on the other 256 games at 49%, whereas I went 57% which literally kicked the crap out of everyone else.  FYI, only FIVE out of all 51 experts were above 6-4 and ONLY 24 were 5-5 or above ATS.

    Proving that even a blind squirrel occasionally finds a nut and Out.


  40. StJL – Maybe it's our year especially if the Patriots don't cheat like last time against the Eagles… that all it took was for one player to have the game of their life and Foles sure looked like he did.

    Indeed, given the situation he may have had the best game of his career. If the officials do not cheat, the Eagles should win.  We will be Nattering on how they DID cheat to get the Patriots in over the Jags, later in the week.  NFL = WCW or WWE or WWF, what a fucking joke.  If your going to FIX games, at least you should not be so OBVIOUS.  Shout out to BDC,  I get Salmonella just thinking about it. Eight Men Out.


  41. You really have some obscure references Naybob…. But I've got my black sock on though! Take your shoes off and reconnect the IV.


  42. Good playing Jeff – take the quick money and run.  

    57%/Naybob – Well, I made one call and got it right (so far) so 100% through the playoffs and, if NE wins the bowl, I guess I'll be the champ.  cheeky  Of course, NE barely beat Pitt a month ago so who knows?

    • MoviePass is front and center at the Sundance Film Festival after announcing its goal to acquirefilms on a 50-50 basis with distributors. Helios & Matheson (HMNY +2.5%) CEO Ted Farnsworth says the strategy makes perfect sense and already generating interest.
    • Farnsworth at Sundance: "Everybody here wants to do a theatrical release because that’s what drives value for your film in the ancillary market, and that’s what we’re offering. We met with a major film distributor the other day, they were looking to acquire two movies at Sundance and after we announced MoviePass Ventures they were looking to acquire three."
    • Related stocks: IMAXAMCRGCRDIMCSCNK.
    • Previously: MoviePass launches film investment subsidiary (Jan. 19)
    • Lightbridge (LTBR +92.5%) shares skyrocket to a two-year high after saying it received a notice of allowance for patenting its metallic nuclear fuel assembly design.
    • LTBR says the decision by the U.S. patent office extends its patent portfolio coverage to its entire design for metallic fuel assemblies for Western-type pressurized water reactors, which comprise two-thirds of operating power plants worldwide.
    • LTBR also says it is finalizing a joint venture with nuclear components and reactor services company Framatome to commercialize metallic fuel for nuclear plants around the world.
    • Shares of Eastman Kodak (NYSE:KODK) are up 13% as they stay in a three-day uptrend.
    • While much of the trading around Kodak has been inspired by the company's blockchain pivot, for those looking at actual financials the stock landed on a list tabulated by MarketWatch of high-debt companies unlikely to see a big benefit from tax reform.
    • Previously: Kodak cools off, what next? (Jan. 11)
    • Previously: Overstock.com and Kodak to link up in blockchain world (Jan. 17)

  43. Looks like Gogo is about to get better in-flight internet service:

    https://arstechnica.com/cars/2018/01/an-end-to-in-flight-wi-fi-misery-is-at-hand-with-gogos-2ku/

    These connect to one of 180 Ku satellites in orbit from which Gogo leases bandwidth. "We'd much rather lease and build a network of focused capacity where aircraft fly, than carry a bunch of unused capacity over desolate oceans," Boynton told me. As for speeds, they're greatly increased: "between 40 and 100Mbps, depending on the satellite," he explained.[...]

    All told, Gogo Air says it has about 2000 commitments on the books worldwide. Sadly for your scribe, none of those have been on any of the American Airlines aircraft I've had the pleasure of spending time on recently.


  44. FYI – Recently saw two films which were highly inspirational, The Shape of Water – once again, del Toro hits it out of the park with Michael Shannon showing the dark side of the American and Russian cold war.  

    And Breathe – Serkis nails it.  On both counts our Spanish friends should take pride. Highly recommended for discerning viewers and Out.





  45. Trump slams Democrats as third day of government shutdown begins


  46. BPT/Phil – what do you think of a buy/write on these guys? 17% or so dividend, .. buy shares, sell sept $20 puts and calls and net in for ~14.25 per share.  If over 20 in September, you net out around 40% gain (60% annualized) plus whatever dividends kick in. Hopefully a very boring play.












  47. Finishing at the highs, 26,200+ on the Dow, 6,926 on /NQ, 1,609 on /TF, 2,836 on /ES - Madness!  

    Groceries/Scott – That AMZN thing going to put a few million people out of work.

    BPT/Scott – They just get royalties and distribute them so not very exciting but look at the recent volatility – makes for dangerous short options selling.  

     Seems like a good buy down here, I'd just sell the Sept $20 puts for $4.25 and be done with it as you get a nice downside hedge to $15.75 and $4 is about the dividend if you bought the stock for $22.85.


  48. FU NFLX!!!!

    CRAZY!


  49. You weren't shorting it, were you?


  50. only a tiny short (Jan 300 calls)


  51. but i keep hoping the nasdaq will come down.. 

    seems impossible


  52. Phil Macy's – my bad – on January 7 in your Watch list comment – you were quoting from an older note [you had said it was buy around 20]


  53. CLLS – need to look at them.

    SGYP….sorry MrM….I think it is time to bail.  I lost a small sum on them as well.


  54. Good morning!

    Dow up almost 100 already, this market is simply nuts.  

    Here's the crazy news of the day:

    Elon Musk’s Pay Tied To $600 Billion Increase In Market Cap

    TM is worth $200Bn so TSLA is looking to be worth more than all the auto companies combined.  Of course, he might not be so crazy as I'm expecting hyper-inflation to kick in at some point in the next decade and that would hit all of his targets – even if the company doesn't actually do relatively better.

    • A Tesla Model S (NASDAQ:TSLA) reportedly on "Autopilot" smashed into the back of a fire truck attending a freeway accident on Monday.
    • While the car was said to be traveling at 65 mph before the crash, it was unclear to what extent the car may have slowed before striking the emergency vehicle.
    • The feature is "intended for use only with a fully attentive driver," according to Tesla officials.

    NFLX/Jabob – Well I hope it's this Jan as that seems safe but next Jan?  

    M/Rexx – Good, as long as we're on the same page.

    Bank of Japan keeps policy steady

    • Keeping monetary settings unchanged overnight, Japan's central bank said it would maintain its massive stimulus program, lagging behind global peers in normalizing policy.
    • The BOJ also announced that "inflation expectations have moved sideways recently," versus a previous assessment that they were weakening, though risks to prices remain "skewed to the downside."
    • The crackdown on cryptos in South Korea is picking up.
    • South Korea will ban the use of anonymous bank accounts in cryptocurrency trading from Jan. 30, bringing the country closer into line with financial rules in other markets.
    • South Korea is believed to be the world's third-biggest market for crypto trades, meaning decisions made in Seoul can result in large, sudden price swings.
    • Bitcoin -2.9% $10,455

    The bitcoin bubble now dwarfs tulips and dot-com stocks, Goldman(GS) warns

    This troubling stat should put crypto investors on high alert

    • Bill Ackman is cutting almost a fifth of his staff and looking to lower his public profile as he seeks to turn around Pershing Square (OTCPK:PSHZF) after three straight years of losses, sources told Reuters.
    • He'll also spend more time investing and stop being the firm's No. 1 marketer.
    • Previously one of Wall Street's most vocal investors, Ackman recently suffered big losses on Valeant Pharmaceuticals (NYSE:VRX) and Herbalife (NYSE:HLF) and lost a proxy fight with Automatic Data Processing (NASDAQ:ADP).

    First Solar, Whirlpool pop on Trump tariff news

    • First Solar (NASDAQ:FSLR+6.2% after-hours following the Trump administration's approval of tariffs as high as 30% on imported solar panels, a bit lower than the 35% recommended last year by the U.S. International Trade Commission; FSLR is seen gaining from the move as costs for competing foreign panels rise.
    • The solar tariffs would last for four years and decline in increments of 5% from 30% at the start to 15% in the final year; the first 2.5 GW of imported solar cells will be exempt from the tariff.
    • Whirlpool (NYSE:WHRalso is higher+4% as new tariffs on imported washing machines start at 20% and are imposed over three years, starting at 20% for the first 1.2M units of imported finished washers and 50% of all subsequent imports on year one.
    • Other potentially relevant tickers include SPWRCSIQJKSCAFDSOLRUNVSLRJASOYGETERPSEDGENPH
    • ETFs: TANKWT
    • U.S. trading partners are starting to respond to the Trump administration's decision to slap steep tariffs on imports of solar panels and washing machines.
    • China called them "an abuse," South Korea will file a complaint with the WTO, while Mexico saidit would use all legal means at its disposal to ensure the U.S. meets its international obligations.
    • Stocks are also reacting to the trade battle ahead of the market open: ASYS +4.6%CSIQ-0.4%DQ -6.8%ENPH +4.6%FSLR +5.4% JASO -2.1%JKS -2.9%RGSE +46.1%RUN+6%SEDG +3.3%SOL +0.7%SKYS +2.5%SPWR -1.4%SUNW +29.5 TSLA +0.9%VSLR+8.5%WHR +3.2%.
    • ETFs: TAN +2.9%KWTGEX

    Big Global Oil Projects Are Starting to Get Off the GroundThe global oil industry’s backlog of big drilling projects is starting to shrink as prices improve. From production vessels tapping Brazil’s deep-water reserves to pipes connecting rigs to underwater wells in China, the number of ventures delayed since the oil crash that finally got approval to get off the ground totaled 18 last year, according to a report by consultant Rystad Energy. That compares with only five in 2016 and two in 2015. That’s a start, but there are still 104 delayed oil and gas projects waiting for investment approval, according to Rystad.

    • World oil demand could peak as soon as 2030, Bank of America Merrill Lynch analysts predict, as 40% of all car sales will be electric vehicles by then, thus reducing the need for oil as a fuel for transport.
    • “Electric vehicles will likely start to erode this last major bastion of oil demand growth in the early 2020s and cause global oil demand to peak by 2030,” BofA says in its report.
    • Even as strong global oil consumption helps to push crude prices higher, the rise of electric vehicles is seen as one of the biggest long-term threats to demand.

    Here’s how Wall Street’s favorite oil stocks have performed

    • U.S. exports of liquefied natural gas are much stronger this winter compared with a year ago, thanks to global demand and two more production trains in use at Cheniere Energy's (NYSEMKT:LNG) Sabine Pass terminal in Louisiana, Platts reports.
    • Feedgas volumes to Sabine Pass have nearly doubled compared with this time a year ago, averaging 2.9B cf/day and rising as high as 3.3B cf/day, which represents full utilization of the facility, according to the report, and 59 ships totaling 204B cf of LNG have left Sabine Pass since November, compared with 28 ships and 91B cf of LNG over the same time last year.
    • Platts forecasts an even stronger 2018, seeing U.S. LNG feedgas averaging 3.8B cf/day – assuming a February startup of Dominion Energy's (NYSE:D) Cove Point terminal in Maryland – representing nearly full utilization of U.S. export terminals.

    Puerto Rico to privatize power utility

    • Puerto Rico's Governor Ricardo Rossello intends to sell off the U.S. territory's troubled power utility to the private sector.
    • Less than 64% of homes and businesses are receiving power, according to the U.S. Department of Energy.
    • PREPA has yet to recover fully from the devastation wrought by Hurricane Maria, which in late September knocked out power to the entire island.

    Uber CEO: "Expect Flying Cars In 10 Years"

    Big Drugmakers Pay Big Prices for Promising BiotechsLofty premiums Celgene and Sanofi shelled out in Monday’s biotech deals show need for quick revenue.

    Biotech's $20 billion Merger Monday sparks hope for more deals. (videoRBC Capital Markets surveyed investors in December. Their top takeout picks: Clovis (CLVS – cancer), Sage (SAGE – neuroscience), Puma Biotechnology(PUMA – cancer), Bluebird (BLUE – rare diseases and cancer), and Anavex (AVXL – rare diseases).

    Bacardi drinks down Patron for $5.1B

    • Hoping to become the second largest spirits company in the U.S., Bacardi has confirmed a deal to buy high-end tequila maker Patron for $5.1B.
    • While the global market for alcoholic drinks shrunk by 1.3% in 2016, the tequila market grew 5.2%, according to alcoholic beverage research firm IWSR.
    • Diageo (NYSE:DEO) last year bought George Clooney's premium tequila brand Casamigos for up to $1B.
    • Previously: Bacardi expected to land Patrón (Jan. 22 2018)

    Duh!  Fox-Sky deal 'not in public interest'

    • 21st Century Fox's (NASDAQ:FOXA) £11.7B takeover of Sky (OTCQX:SKYAY) is not in the public interest and should only proceed subject to remedies, according to a provisional statement by the U.K. Competition and Markets Authority.
    • Concessions could include divesting Sky News or insulating the channel from Murdoch's influence.
    • The initial ruling also complicates a plan by Walt Disney (NYSE:DIS) to buy the majority of Murdoch's assets.

    IMF Raises Global GDP Outlook To Highest In 7 Years Thanks To Trump Tax Cuts


  55. Thank you Phil!   I am approaching my PSW anniversary and have logged close to 1500 hours.  I must confess, I did NOT know a single thing about Options, Futures, or Stocks when I joined PSW.  While I have many hours ahead of me, I am deeply thankful.  PSW gang included!

    Uh, I will take the Eagles in the Super Bowl and don't think I need the 5 points.  







  56. 1/20th annually – Would you confirm I am learning?  Using NOK (market cap 28B) as an example, the revenue would need to be 1.4B a year, growing 10% a year, and not much debt or other issues.  When you look at debt… is there a debt to asset ratio figure that I can use to qualify a company?   And, maybe this is a bit much to chat about, but is there bad/good debt? 

    Then… IF everything passes sniff test (sector, low in channel, stock options, et..), will you add it to the Watch List for me?  I'll be around until you retire.  So, I got plenty of time to find something.  Well, I hope that I have more time than money…  :-)    

    and, i told myself _NO more futures, it is time to learn "How to be the House".  The Poker Player in me could NOT resist  /RB short @1.8890 up and down all day, taking $176.40 and calling it a night.   I got a nice dip around 3-4 my time for Big Mac money and a Starbucks.  Geez… you can live in America just about anywhere you travel.    

    Goodnight Everyone…  GH

    PS… since, I am rambling…  if every member would click on the link, I know you have seen the video — Each click from different locations, will increase Phil's SEO hit rate.  It is a small way pay it forward for this Blog!