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Flip Flop Friday – Dollar Rallies Briefly on Trump Statement

What a wild ride the Dollar is having!  

Technically, so far, it's just a weak bounce off the (hopefully) floor at 88 but it's been a week of wild trading in US Dollars as first Treasury Secretary Steve Mnuchin talks the Dollar down (see "Record High Wednesday – Diving Dollar Boosts Equity Markets") and then his boss, Trump, completely negates what he says and promises a stronger Dollar. 

You can see the very quick reaction we got yesterday but then traders remembered it was Donald Trump who promised a stronger Dollar – and it began to sell off again.  Meanwhile, we're long on the Dollar (/DX) here as we think the Fed will indicate they are on a path to tighten further while Draghi and Abe continue to prevaricate.  That's what currency values are all about – your currency relative to someone elses.  The Dollar index itself is measured against a basket of other major currencies – there's no absolute value to the Dollar at all (kind of like BitCoin!).  

We'll see what happens this morning as Trump is giving his Davos speech (8am, EST) and the theme is "America is Open For Business" touting our resurgent economy and, of course, low taxes and lack of regulations.  In fact, just this morning, Trump named BPs lawyer and noted climate foe, Jeffery Clark to head up the DOJ's Environmental Unit and, as the linked article has to note – "No, this is not a headline from The Onion").  At least Clark has experience (though it's in destroying the environment, not protecting it). 

To show how serious he is about trade, Trump's appointment for Deputy Chief of US Trade, G. Payne Griffin, just graduated American University in 2014 with a Bachelors Degree in Economics but, don't worry folks – he was an Eagle Scout, so things should be great.  Hopefully he'll work out better than 24 year-old Drug Czar, Taylor Weyeneth, who just had to resign because he lied on his resume. 

Speaking of the envrionment (enjoy it while it lasts!), Weather.com put together a fantastic article on climate change called "50 States, 50 Stories" which should be read by everyone in America (don't worry, it's has lots of pictures).  It's not all depressing – some of the stories are about what people are doing to fix the environment but it's a nice, deep dive into the issue around the country.

Meanwhile, the President can talk up our economy all he wants to but those pesky facts are still out there.  This morning we just got the Q4 GDP report and it missed by 13% at 2.6% vs 3% expected and that means Trump is certainly missing his 3% GDP claim for the year.  In fact, the average for Trump's first year in office is now 2.52%, so I guess he can still round it up to 3%.  It's certainly not good that GDP has fallen off almost 20% from Q3's high of 3.2% – that's contrary to the economic narrative for sure and really not too supportive of record high markets.  

That means our index shorts (see yesterday's Morning Report) are back on in the Futures and we do have S&P (/ES) 2,850 this morning and Nasdaq (/NQ) 7,000 along with Dow (26,425) and Russell (/TF) 1,610 but, as with yesterday, we favor shorting the S&P and the Nasdaq as they cross below with very tight stops over the lines.  The once-again weak Dollar is supporting the indexes for now but it's not likely to last (China and Japan won't put up with it past this level).  

We're not shy about going back to the well and this is just another one of those ways the rich get richer in ways the poor don't even have access to (Futures accounts).  We discussed our hedges earlier in the week and I would strongly suggest not going into the weekend without any as it may occur to some people that a declining GDP might not support a 12.5% rise in the S&P since the beginning of Q4.

Keep in mind that Q4's GDP was actually BOOSTED by the euphoria over the tax cuts and consumers went out and borrowed their asses off in Q4, raising debt levels to record highs.  Now they are sitting down with their accountants and finding out just how little they are saving in taxes (unless they are in the Top 1%, in which case things are fantastic).  Q4 spending was also boosted by $500Bn worth of huricane repairs and Trump can't warm the Earth fast enough to repeat that stimulus in Q1.  

Image result for us consumer debt 2017Consumer spending jumped 3.8% in Q4, the most in 4 years but again, a lot of it was durable goods – replacing storm-damaged items and the consumers did that on credit-cards, which means they'll have less money to spend in 2018.  PCE Inflation hit 2.8%, and the Core Inflation is at the Fed's 2% target with record low unemployment so, despite the disappointing performance – the Fed has no reason not to go ahead and tighten as planned.

With household debt topping $13Tn (65% of our GDP), we're past the point that collapsed the economy in 2008 with roughly the same Mortgage Debt ($10Tn) and most notably a massive $1Tn increase in Student Loan Debt as college costs have spiraled completely out of control.  Bernie was going to make it free but Trump has let it ride with the average cost of a 4-year college in the US now over $25,000 per year – just the tuition!  

Consumers with a lot of debt and rising interest tend to cut back on spending at some point, so we'll have to take some of these Q4 earnings reports with a grain of salt as far as extrapolating too far into the future that this stimulated spending will continue.  

Have a great weekend, 

- Phil

 


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  1. Good Morning!



  2. I guess Mueller must be on to something big that Trump already tried to fire him! Denied by Trump but even Fox News confirmed it. Can't be fake news then! There is just so much incompetence at every level, it might be better to actually shut down the government.


  3. How propagandist beat science – they did it for the tobacco industry and now it's in favor of the energy companies:

    https://www.technologyreview.com/s/610012/the-tricks-propagandists-use-to-beat-science/

    This is a well-known problem, and the solution is clear: bigger, more highly powered studies. “Given some fixed financial resources, funding bodies should allocate those resources to a few very high-powered studies,” argue Weatherall and co, who go on to suggest that scientists should be given incentives for producing that kind of work. “For instance, scientists should be granted more credit for statistically stronger results—even in cases where they happen to be null.”

    That would make it more difficult for propagandists to find spurious results they can use to distort views.

    But given how powerful selective sharing seems to be, the question now is, who is likely to make effective use of Weatherall and co’s conclusions first: propagandists or scientists/policy makers?


  4. A correction could lead to a recession:

    http://thereformedbroker.com/2018/01/24/stock-market-reversals-can-cause-recessions-too/

    Everyone knew the dot com stocks were overvalued or trading based on nonsense metrics, and we knew it for a long time. But not many people had considered that the companies would run out of money and go out of business. Concerns about valuation turned into concerns about survival, which was a different story. Willoughby’s article changed the whole conversation and, overnight, it was like someone had flipped a light switch on and we all woke up at once, blinking, rubbing our eyes…and selling with both hands.

    What makes this apropos to today is the idea that, while there is no recession in sight economically, a stock market reversal could certainly cause one. After all, it was the early 2000 reversal in growth stocks that caused the recession then. So much capital expenditure and consumer spending was being fueled by equity gains that when the gains went away so did all the demand in the real world. It wasn’t the first time that speculative market activity spilled over into the economy with disastrous consequences, and it won’t be the last time.


  5. After-tax incomes adjusted for inflation climbed at a 1.1 percent annual rate; the saving rate decreased to 2.6 percent


  6. Good Morning…

    HMNY related. Hopefully, this will pass

    Investors eye MoviePass-AMC development

    Premarket volume on Helios and Matheson Analytics (NASDAQ:HMNY) is over 103K shares as investors continue to trade vigorously on MoviePass news.

    MoviePass walked out the Sundance Film Festival as an indie movie buyer, but Deadline is reporting that some AMC theaters in large cities aren't accepting MoviePass anymore in what could turn into a major development if confirmed.

    AMC Entertainment (NYSE:AMC) hasn't been a wholehearted supporter of MoviePass from the start.

    HMNY is down 3.7% in the premarket session to $8.60.


  7. Nice move in GILD.

    ~~ GILD -Gilead Sciences upgraded to Buy from Hold at Jefferies


  8. Sold more Jul $5 KODK puts for a possible $3.90 entry.


  9. FU NASDAQ!!!!!!!


  10. Good morning!  

    I think the problem with Trump's speech is he essentially said "Come to America and Spend Your Money", which is what a hotel guy says to tourists but that's not how TRADE works.  Countries make trade deals that benefit them as well, not just America and for Trump to insist trade deals are "fair" only when the money balances is ridiculous when our country is double the size of China and 10x bigger than most others so "fair" trade with any given country would mean we buy 1/10th per capita of their products than they buy from us – that doesn't make sense for them and also – how do you force people not to buy Toyotas?  This is why quotas and tariffs were abandoned in the Global Economy – they're unrealistic.  

    I'm not talking about price-fixing, IP or dumping, of course – but those are things we have trade deals like NAFTA and TPP to enforce to keep an even playing field but Trump is only interested in setting rules that make sure his team wins and all that's doing is chasing people into China's open arms.

    Meuller/StJ – That firing thing was from the summer, when Mueller first came on.  Trump wanted to fire him because he couldn't control him and wanted to replace him with a guy who passed the loyalty test that Comey failed.  I'll be now he's wishing he had fired Mueller because the investigation seems to be spiraling in around him as more and more of his inner circle cut deals.  

    "You must pursue this investigation of Watergate even if it leads to the president. I'm innocent. You've got to believe I'm innocent. If you don't, take my job." -  Richard M. Nixon

    "The political lesson of Watergate is this: Never again must America allow an arrogant, elite guard of political adolescents to by-pass the regular party organization and dictate the terms of a national election." - Gerald R. Ford

    "An attempt is already underway to revise history – to leave the impression that the former president had nothing to do with Watergate. But there is no doubt about his obstruction of justice after the Watergate break-in."  - John J. Sirica

    Studies/StJ – That's unrealistic as most studies are done quickly and cheaply out of curiosity and are never intended to be definitive.  If I do a study and use the students at my University, I know it's not a representative sample but it's one I can afford and then I write a paper showing something interesting I noticed and it's published for peer review in the hopes someone with real money comes along and does a better study.  The problem is, business people don't understand scientists, they think in terms of definitive studies and "winning" by being more right but most scientists are just curious and looking to test their theories (and get a little recognition if they're right).  

    Reversal/StJ – I don't see the same conditions in this bubble.  This is simply overvaluing companies who are, in general, performing well and making profits – just not the kind of profits to justify a p/e of 26 on the S&P 500 so a correction (if we ever get one) should be mild compared to the other crashes and I don't think it will cause a cascading failure.  

    Savings/Den – That's not a good gap.  People are spending more than 2x what they are gaining in wages – irrational exuberance.  

    HMNY/Learner – I'm not even sure that's real news.  How do they not accept Movie Pass?  It isn't an actual pass, it's an App and you pay Movie Pass and, when you want to see a movie, they buy you a ticket.  Now AMC might not give Movie Pass a discount, but I don't see how they can stop them from buying tickets.  Ah, here's the actual story:

    MoviePass and the AMC Theatres chain have never exactly enjoyed a rosy relationship, and the latest step in their conflict came today, as MoviePass pulled support from some of the chain’s most high-profile locations. Deadline reports that the service is no longer supporting ticket purchases at theaters like the AMC Empire 25 in New York, Universal City Walk near Los Angeles, and the AMC Loews Boston Common.

    “As of today, you’ll find a small handful of theaters are no longer available on our platform,” MoviePass CEO Mitch Lowe said in a statement. “Our number one goal as a company is to provide an accessible price-point for people to enjoy films the way they’re meant to be seen: on the big screen. Many exhibitors have been receptive to this mission, and we’re excited to keep working with theater chains that are closely aligned with our customer service values.” The statement goes on to clarify that the list of participating theaters is subject to change, and MoviePass customers should consult the mobile app for updates to that list.

    AMC and MoviePass have been publicly at odds since the subscription service drastically cut its monthly subscription price in August 2017. (The company previously relied on a tiered model that scaled monthly pricing from $15 to $50 based on region, much like movie ticket prices can vary from one locale to another.) AMC responded by threatening to drop out of MoviePass’ deal, and potentially even file a lawsuit. The chain’s logic has been straightforward, however: mass adoption of a subscription service like MoviePass could effectively change the perceived value of movies, resulting in a situation where theatrical exhibitors wouldn’t be able to charge enough to keep their own businesses afloat.

    “AMC also believes that promising essentially unlimited first-run movie content at a price below $10 per month over time will not provide sufficient revenue to operate quality theaters, nor will it produce enough income to provide filmmakers with sufficient incentive to make great new movies,” the company said in August.

     

    Some of our guests say MoviePass may be blocking the use of their service at a handful of AMC locations. AMC has not restricted MoviePass acceptance at our theatres, nor have we heard from MoviePass about this. MoviePass customers should contact MoviePass for clarification.

    Woops, market moving back up for, of course, no particular reason.

    GILD/Albo – I was hoping they'd come back down.  

    Nasdaq/Jabob – Are you kidding, I'm salivating at another chance to short 7,000.


  11. GE looks like fire sale are they going for BKT ? under 16 from somewhat 30???


  12. INTC going the other way, up 9% on earnings.  Adding about 35 Dow points. 


  13. ~~  TRVG -trivago breaks out to three month high.  


  14. amzn almost over 400

    nflx approaching 300

    tsla 340

    wtf???

    will this ever reverse to the mean?


  15. Studies / Phil – You make the point of the article, propagandists are favorite to win… Of course it doesn't hurt that we have anti-science party in power!


  16. Donald Trump booed at Davos after attacking 'nasty, mean, fake' press

    Trump touts his job creation numbers at Davos. Here are the actual figures: 2011: +2.09 million 2012: +2.14 million 2013: +2.30 million 2014: +2.99 million 2015: +2.71 million 2016: +2.24 million 2017: +2.05 million 2017 was the *worst* since 2010 Source:

    While Donald Trump and the "masters of the universe" assemble in , the 6 richest people own as much wealth as the bottom half of the world's population – 3.7 billion people. We need a global economy that works for all, not just multi-national corporations and the very rich.

    GE/Yodi – You would think they are going out of business the way they are trading.  

    0.48 dividend is now 3%!  

    Mean/Jabob – Eventually but, as usual, patience is the key.  


  17. Phil I have seen something like this with GM that is why I never buy that stock again. First they go BKT and than they open up under the same name and screw all the old investors. So are they going the same way?


  18. Who’s betting on AMZN 1400 and /NQ 7000 pins today? It will be just a coincidence, I’m sure..

    /RB is doing it’s Friday thing, what a license to print money, except that once every four weeks the trick fails and I lose what I made the last two weeks. So I win three weeks a month, lose what I made on two of them, still a net gain!


  19. Wow! Phil really gets scientists. Thanks!


  20. WYNN

    Wynn Resorts seeing notable weakness amid WSJ story regarding sexual misconduct allegations against Steve Wynn.  


  21. Rumor that CRM is buying TWTR.

    INTC is lifting the whole Nas and 1/2 the Dow's gains and S&P too since it's a $230Bn company and the logic is that the chip flaw won't be a big impact on them and that's fine but why up 10% over the previous high just because the tragedy was averted?  

    Must be time for IBM if this is how things are going:

    GE/Yodi – Nothing like GM.  They made $10Bn last year and are making about $6Bn this year during a restructuring and you can buy the whole company for $139Bn so 20x current, low p/e.  If you think the 125 year-old company has suddenly forgotten how to run a business and won't make money down the road (more money), then sure, $16 is about right but, to me, it's a firm bottom to make a long-term entry on a stock I can leave to my kids.

    AMZN/MrM – Someone gave them an $1,800 target.

    Of course, that's what they do in the late stage of a rally, they upgrade market-moving stocks to drive more sheep in at the top.

    Science/Snow – If only it paid well I might have gone that way.  My step-father was a polymer chemist.  

    WYNN/Albo – Oh man, really?  Poor guy.  When people are over 70, they should get a pass…


  22. WYNN / Phil – I hope they nail (bad pun?) Steve Wynn! Can't stand the guy although in his defense he made money with casinos which is probably a hard thing to do because a stable genius like Trump could not do it. That Wynn guy must be really, really smart…


  23. Phil -  ...Draghi and Abe continue to prevaricate.  That's what currency values are all about – your currency relative to someone elses.  The Dollar index itself is measured against a basket of other major currencies – there's no absolute value to the Dollar at all (kind of like BitCoin!). 

    Get your moment of Zen on… Prevaricate indeed, and Abe shall not tighten, the underpinning for low global rates and dollar carry trades cannot appreciate too much, if it does all hell will brake loose. Since the majority of global transactions and financial instruments are denominated in dollars, when the dollar declines, so does the value of those instruments and ASSETS tied to the dollar.

    Why is oil going up when demand is declining with supply and production burgeoning? For commodities transacted in dollars, this leads to a price escalation which has nothing to do with supply or demand of the underlying asset.   Since the dollars being exchanged for the asset are worth less, we want and need more dollars for our asset. For all assets, including equities, the above partially applies subject to price elasticity, substitution and fungibility of the asset class.

    But here's the rub… this is not an exhibition of strength or a good type of growth, quite the contrary. The resulting escalation of prices is not based in organic economic growth. No new business, methods or technology, no increase in production, usage of raw materials, labor or real increases in revenues or profits.

    China and all parties will claim a rebound based on an increase in imports and exports, GDP, consumer spending, credit, debt, etc. Sure prices go up, there is an increase in dollar volume,  wages remain stagnant or decline, with less buying power, viz. wage and savings erosion. 

    The little mice squeak louder and churn the treadmill faster, as the vice squeezes their nuts. There is a name for this deleterious effect, stagflation. Now let's all chant, M-I-C-K-E-Y things are getting better all the time M-O-U-S-E. Annette Spoonajello and Out.


  24. Phil – Dollar "Value" – and I don't mean a fast food Value Menu.

    Both dollar indexes anchored to 1973 = 100. Why 1973? Google Bretton Woods.

    Trade Weighted US Dollar – Major Currencies – includes the Euro Area, Canada, Japan, United Kingdom, Switzerland, Australia, and Sweden. 

    Real Trade Weighted Dollar – Broad – in addition to all the above, includes Mexico, China, Taiwan, Korea, Singapore, Hong Kong, Malaysia, Brazil, Thailand, Philippines, Indonesia, India, Israel, Saudi Arabia, Russia, Argentina, Venezuela, Chile and Colombia.


  25. Sorry bout that 2nd link: Real Trade Weighted Dollar – Broad 


  26. WYNN/StJ – I always thought he was a nice guy.  Almost blind too.  Actually, now that I'm reading the allegations – they do sound pretty bad and he did have a messy divorce with his wife so maybe it is all true.  Either way, it's costing shareholders about $1.5Bn today!  See, this is why the company pays to cover it up – the alternative is much worse damage to the shares…

    Stagflation/Nabob – I have long predicted that will be the end game to all this QE nonsense.  Mostly I can't believe how long it has held off.  And I don't thing you're allowed to say "broad" anymore…  wink

    Wow, another leg up – come on 7,000!  


  27. Dow almost 26,500, 2,858 on /ES, 6,982 on /NQ and 1,604 on /TF.  

    /RB sailed up to $1.94 – happy weekend America! 

    America is SO great!  


  28. RB/Phil – today's chart looks like the left side of one of Chris Kimble's Eiffel Tower drawings, I bet you can't wait to short again!



  29. UKIP, farcical yet triumphant


  30. ~~
     

    WYNN

     

    Wynn Resorts: Steve Wynn emails statement to the media calling allegations in WSJ story 'preposterous' .


  31. Bought some WYNN at 181. 

    Risking about 2 points.


  32. WYNN – Stops up to entry on this 3 point bounce.


  33. Dozens of People Recount Pattern of Sexual Misconduct by Las Vegas Mogul Steve Wynn




  34. Sold 1/2.  Up 4.  Stop at 183.


  35. Out of remainder.  Up 5. 

    Whew !



  36. Albo – "Bought some WYNN at 181"

    So did his wife Elaine. In 2000, when Wynn sold Mirage/Bellagio, Kerkorian stipulated a no compete clause in the sale. Wynn could not open or own another casino for 10 years or 2010.  That's why Elaine was on all the paperwork for the Wynn and Encore. They divorced in 2010 and he remarried in 2011, invoke Gibbs rule 39 and 39A. Funny thing is, the RNC funding chairman used to be no friend of the Donald.


  37. Heaven has no rage like love to hatred turned. Nor hell a fury like a woman scorned.

    - William Congreve - The Mourning Bride

    With all that Wynn-ing, Steve should know the above, and as my late Uncle would say,  "Remember, you put yourself there!"


  38. Some nice guy Phil:

    ….Beyond this incident, dozens of people The Wall Street Journal interviewed who have worked at Mr. Wynn’s casinos told of behavior that cumulatively would amount to a decades-long pattern of sexual misconduct by Mr. Wynn….Some said that feeling was heightened at times by the presence in a confined office space of one or more of his German shepherds, trained to respond to commands in German.


  39. Phil – Savings/Den – That's not a good gap.  People are spending more than 2x what they are gaining in wages – irrational exuberance.  

    Anyone think its the days of wine and roses? Next time somebody says look at all the credit debt, house hold ratios look good, that's a confident consumer.  Ask what about wages and the savings rate? and how will that debt be serviced in a rising rate environment? 

    Moment of Zen… all the ass clowns whose credit ratings just passed the seven year reset, are already back to their old bad habits, racking it up for another go round. All those zero rate balance transfer teasers have a term date. Reflect upon that for a moment. 

    POTUS says by 2020 we will be living in a country with full employment and an expanding economy.  Sounds great, I wonder which country he's talking about?  

    News of the Future: By the time POTUS is done, deficits balloon, rates and debt service increase, markets and the dollar collapse? Mexico and Canada both pay to build walls, to keep fleeing Americans out. As Dan Rowan said, that's news of the future, and I didn't promise you a rose garden, and Out.


  40. /RB hit $1.95, I don't mind that short over the weekend.  Good call Mr M.  

    /NQ hit 7,000.

    Nice playing Albo!  Too crazy for me.  

    Since the hotels all have his name on it – not good if his name is mud.  Might actually turn into an issue with the Boston casino they are building.

    Image result for wynn hotel roof logo

    Wynn/StJ – What, chicks love dogs!  cool

    • Wynn Resorts (WYNN -8.6%) posts a response to the WSJ article detailing sexual misconduct accusations from dozens of women against CEO Steve Wynn. Some of the allegations were referred to previously in a lawsuit filed by his wife Elaine Wynn.
    • Wynn statement (partial): "The recent allegations about Mr. Wynn reflect allegations made in court hearings by Mr. Wynn's ex-wife, Elaine Wynn, in her legal battle with him and the company. It is clear that Mr. Wynn's ex-wife has sought to use a negative public relations campaign to achieve what she has been unable to do in the courtroom: tarnish the reputation of Mr. Wynn in an attempt to pressure a revised divorce settlement from him."
    • Shares of Wynn Resorts traded as low as $180.18 earlier.
    • Previously: Steve Wynn hit with sexual misconduct report; shares dive more than 5% (Jan. 26)

    Which country/Naybob – LOL, very true, we'll all be out by then.  

    Drill baby, drill:

    • The total U.S. rig count increased by 11 to 947 following last week's decrease of 3, according to the latest weekly survey from Baker Hughes.
    • The gains came in the oil rig count, which jumped by 12 to 757, while gas rigs fell by 1 to 188; two rigs are classified as miscellaneous.
    • Helios and Matheson Analytics (HMNY -3.1%) CEO Ted Farnsworth issues a statement on the decision to pull MoviePass out of 10 AMC Theaters (NYSE:AMC).
    • "When HMNY acquired the majority stake in MoviePass, we made the strategic decision to reduce monthly subscription fees to $9.95 a month to get movie fans back into the theaters. As we've grown our subscriber base, we've seen a dramatic increase in movie theater attendance among our subscribers, which proves to us that MoviePass is working to revitalize a declining industry. Other theater companies have seen this attendance resurgence and have approached MoviePass to collaborate. Since the get-go, AMC has not been interested in collaborating with MoviePass – a move that is not in the interest of our subscribers and AMC theater-goers."
    • "We know that we currently represent approximately 62% of AMC's operating income, assuming that AMC is flat year over year. This equates to $34.4 million of gross profits to AMC in the upcoming quarter. On an annualized run rate basis, that's over $135 million to AMC's gross profits – which doesn't include concession sales from MoviePass subscribers. In publicly disclosed 2017 financial documents, AMC claimed each customer spends $4.88 on concessions each visit – meaning MoviePass subscribers could bring an additional $17.1 million in AMC concession revenues for Q1 of 2018, which on an annual run rate means $68.4 million more — an annualized run rate going forward of over $203.4 million revenue from MoviePass subscribers."
    • MoviePass CEO Mitch Lowe is also weighing in, saying the list of theaters the company works with is subject to change as it looks for a "mutually-beneficial" relationship with exhibitors.
    • General Electric (GE -1%) shares slide again after J.P. Morgan's Stephen Tusa says there are still "more questions than answers" following the company's Q4 results and disclosure of an SEC investigation.
    • "We don't know how a value investor or ratings agency analyst can have confidence in the ultimate value of assets here, most notably what's hung up on the industrial balance sheet, which will get a harder look by any potential buyer as the portfolio begins to come apart," writes Tusa, who rates GE at Underweight with a $16 price target.
    • Tusa views GE'a annual guidance as "a stretch," and continues to see a "levered industrial company with weak levels of [free cash flow]… with a side dish of levered finco, with a management team in the tough position, working to prevent a 'hard landing' in which bond investors start to worry about liquidity."

  41. Wow, that was crazy fast money on /RB.  It's like the fact that I shorted it made them re-think the whole thing…

    I guess it was just pumped way up into the 2:35 close.

    Quick $500 is good for me!


  42. GE

    EARNINGS MAY NOT HAVE BOTTOMED!

    What was a conglomerate, has become a notch potch.

    I could be persuaded to buy around $12-13….I base that not on current PE, but more so on a slow turnaround, if at all.


  43. Phil/ALK

    GREAT CALL!


  44. will these markets ever go down? WTF!!!!!


  45. @ Maya, GE – I am with you there.   

    Somehow feels there will be a better opportunity/lower price ahead with GE.  

    I will start selling puts at $12-$13 and leg into a BCS then.   

    Next 6 months – 1 year might be volatile.


  46. For once, Citron is actually praising a stock – glad its Twitter! 

    Citron on Twitter train amid deal chatter; shares up 9.3%

    Already up strong on the day, Twitter (NYSE:TWTR) shares are up 9.3% and re-nearing a 52-week high hit two weeks ago with deal rumors circulating, and noted short seller Citron Research issuing praise.

    Unsupported chatter about a potential buyout by Salesforce.com (CRM +1.3%) is fueling some of the buying, Bloomberg notes. Call volume on TWTR is outpacing put volume by a factor of eight today.

    Meanwhile, Citron says it gets a lot of emails about what it might be buying in this market. "Have been long $TWTR and agree with Hedgeye and Greenlight that 2018 is the year for $TWTR," the firm tweets.

    "Target $35 Think Tencent buys," Citron continues. "Now go bash Citron on $TWTR." A $35 target implies another 44% upside from today's sharply higher price.


  47. GE / Lerner / Also – Reading the different posts….. I tend to agree on this one with you guys.  While I think the market is mis-pricing this, history has taught me that on these it's best to wait for a clear turning point when you either see negative news dwindle or look for some clear support.  At this point it could be the SEC probe goes in a positive manner, or it could be they start to see traction on their key initiatives which the CEO sounded like a complete novice on the earnings call.  They had a slide on key initiatives, and eluded to them during an answer, but then didn't want to talk about it cause it hasn't been rolled out.   Just kind of silly,  I'm not convinced we are done with executive departures, or more bad news.  A few months ago I thought 15 would be a good floor and sold some puts.   I exited them right at announce ( just lucky) made a small amount.   Now I'm sort of waiting….  if this gets to 15 or 14 and the negative news dissipates I'm in on this.  For now i'll wait.


  48. Wow, we are blasting higher into the close.  

    GE/All – This is one of those times I bang the table on a stock and everyone argues against me and then, a year later – people ask why I didn't say something about GE 50% ago.  

    Have a great weekend,

    - Phil


  49. Phil / GE – LOL –   I just noticed I had an open order that I had forgotten about and it executed …. so I accidentally sold some Jan '20 puts at 3.65 today…..  Will help me keep an eye on it I guess….  


  50. GE – Phil, you are right to make it one of your 'back up the truck' stocks. There's insanity on the upside and the downside – we should focus on the downside list. Maybe the time for value stocks is not far away.


  51. GE = Jan '20  $18 puts that is


  52. By the way, I remember at our Vegas Show in Nov 2008 I got into an argument with people because I was banging the table on INTC at $14 and yes, it went lower but it was friggin' Intel!  There were some tech guys arguing it was over for them – changing markets and all that.   We saw Baker Hughes trading at ridiculously low levels for more than a year and people got impatient and bailed and IBM also from last year.   

    Stocks go out of favor and companies have to retool and change direction and it's an expensive, painful process and most traders don't have the patience to stick with them but – as I say many times – if you're not going to buy when a stock is low – when will you buy?  

    GE is down to $139Bn and had $122Bn in sales last year and made a profit of $9.5Bn, which was about $1 per share. 

    Financial Summary
    Year End 31st Dec 2011 2012 2013 2014 2015 2016 TTM 2017E 2018E CAGR / Avg
    Revenue $m 146,542 146,684 113,244 117,184 117,385 123,692 123,780 124,800 124,941 -3.3%
    Operating Profit $m 20,821 18,192 9,949 11,348 9,348 10,265 8,166     -13.2%
    Net Profit $m 14,151 13,641 13,058 15,233 -6,126 8,831 7,524 9,586 8,543 -9.0%
    EPS Reported $ 1.23 1.38 0.73 0.92 0.14 1.00 0.86     -4.1%
    EPS Normalised $ 1.23 1.38 0.73 0.92 0.25 1.25 1.13 1.10 0.99 +0.4%
    EPS Growth % +6.9 +12.3 -46.9 +25.9 -72.9 +401.1 -9.5 -12.4 -9.62  
    PE Ratio x           12.9 14.3 14.7 16.3  
    PEG x           n/a n/a n/a 1.69
    Profitability

    In 2018, they are projecting $1Bn less profit on similar sales as they restructure the company so they can get back to building for the next 20 years in the divisions they thing will do best:  Health Care, Aerospace and Energy.  I guess you can go with the narrative that these career GE people are all crazy and don't know how to run a company and don't understand the market and aren't capable of turning it around.  

    I just choose a different perspective in which, for the OOP, we picked up the initial spread for net $700 and we bought back 20 of the short 2020 $25 calls for 0.75 ($1,500) and we paid $1.40 to roll the 2020 $18 calls to the $15 calls ($2,800) so we're now in 20 2020 $15/20 bull call spreads with 10 short $20 puts for net $5,000 on the $10,000 spread.  

    We're obligated to own 1,000 shares of GE at $20 and now they are $16 so we're down $4,000 more if they expire now less $2,000 for the $15s so net $7,000 down at $16.  If GE goes higher, we'll sell 2020 calls for $2 ($4,000) and drop our net to $4,000 (the 2020 $20s are $1.60 at the moment), which would be $17 per share.  If GE goes lower, let's say $10:

    • We roll our 10 2020 $20 puts, which are now $5 ($5,000) to 20 of the 2020 (or maybe 2021) $15 puts, which are now $2 ($4,000) and eat $1,000 and increase our potential for ownership to 2,000 shares at $15 ($30,000).
    • We roll our 20 2020 $15 calls, now $3.60 ($7,200) to the 2020/21 $10 calls, now $7 for hopefully $2.50 ($5,000) and we sell 20 of something for $2, probably the $15s to cover and that would then cost us net another $1,000.

    So, if GE falls to $10, for $2,000 more we will end up in 20 of the 2020 $10/15 bull call spreads with 20 short 2020 $15 puts for net $7,000 on the $10,000 spread and a break-even of $13.50.  

    This is why I'm willing to put my foot down on a stock like GE.  Maybe it's early but I very much doubt they go BK and, as long as they don't go BK, this is only 2 years from now and our basis is down from $19 to $13.50 (at double the commitment) and we know we can roll the puts to 2022 and roll the long calls and sell more short calls and, one day, if GE ever does stop falling – we'll own a lot of it at a very low price.  


  53. I can hardly wait for John Hussman's commentary which he should post late Sunday – I think he may be lost for words and analysis on how totally disconnected the business related to stocks has become to the price related to stocks. The current market is like a giant billboard for Buy & Hold – or as some wags are calling it, FOMO (Fear of Missing Out). The only question is how long before 'they' decide that all the retail investors are fully invested in the market, and then hey presto the oxygen is sucked out of the market. Ray Dalio's commentary noted this week (which I thought was rather cavalier). I haven't heard what Buffet has to say on the current dynamics of the market, but one would think this price action is more typical to the end of a bull cycle. 


  54. In this current market, the idea of selling short calls to cover or buy some caution against stock or spreads is DEAD! Too many stocks are advancing too far, too fast to be handled by the classic ABW with partial short covers once the short calls of a spread go ITM. The sweetness of any cherry calls turned sour a long time ago (too many examples to mention). It's horses for course, and recognizing what are the appropriate strategies for the prevailing market conditions is paramount. While I find it disappointing when Phil cashes out portfolios, because I really want to learn how he adjusts not only winning but losing positions – he was absolutely right to do that back in December. A period of reflection to take stock of how previous plans have worked and what adjustments to ideas and implementation are needed is paramount. The litmus test of the collective wisdom on this board can only be measured when we have been through periods of both strong upward and strong downward momentum. 


  55. Don't expect Buffett to be the voice of reason, he has hundreds of Billions of Dollars in the market and he's not likely to spook people out of it.  Plus Berkshire's p/e is now about 28 at $326,000/share – CRAZY! 

    There were both around 240 in May and Berkshire has outgained the S&P by 20% since!

    Short calls/Winston – Hence the lack of them in our portfolios at the moment but the short puts we sold to cover our hedges are working fantastically in the STP!  

    Meanwhile, I cashed out mainly because it was getting too expensive to protect the portfolios from the pullback that never came and my main reflection, in the STP, was to set up the bear put spreads offset by short puts – so we don't bleed cash on our hedges.  As to the longs – no short calls (other than bull call legs) because this market is too crazy. 

    Even in this market though, there are bargains to be had – like GE or F but, unfortunately, when you try to pick the only stocks that haven't gone up 10% this year – you get a lot of blowback!  cool


  56. tPhil/AAPL

    If you get a chance to look this weekend, I have (after various rolls over time, and selling covered calls etc), the following spread:40  Jan 130’s at $33.79 and short $150’s at $19.59. (Now $45.35/30.35)

    So, spent $14 to make $20…

    Do you see any way to improve this, perhaps AFTER they report earnings next week as we know more on

     

    their last quarter performance?

    How about cash out with the $60,000 and buy the Jan $150/180 spread for $15 to make another $60,000i nstead of the upside of $20K with the current spread? Yeas, it’s riskier and that’s why I would wait till after earnings.


  57. Phil/GE

    No disrespect as I value your analysis and your r3commendations.

    But GE, just doesn’t FEEL like it’s done going down…that’s all. 

    If you keep beating the drum however, I will pay more attention.


  58. AAPL/Maya – Boring evening at home so plenty of time!   A bull call spread pretty much is what it is and there's no magic way to improve it.   The net is now $15 out of $20 and I know that's disappointing but it will make the 50% you signed up for if you are patient.  

    You COULD cash 10 of the Jan $130s for $45.50 ($45,500) and buy 20 of the 2020 $160 ($32)/$200 ($16) bull call spreads for $32,000 and roll 10 short Jan $150s at $30.30 ($30,300) to 10 short April $160s at $15.30 ($15,300) and sell 10 2020 $150 puts for $12.50 ($12,500).

    That would put $11,000 in your pocket and now you will roll the short $150s along until they expire worthless (or if AAPL ever dips) and you are 2x covered with a new spread that can make you another $60,000 if AAPL keeps going up.  The Jan $180s are $14 and the 2020 $200s are $16 so, unless AAPL pops over 20%, you are in the clear and, after that, you have $60,000 against whatever you have to pay back the short caller plus, of course, the $21,000 you make off the original spread. 

    Or, you can just sit back and be happy to make $28,000 if AAPL simply holds $150, without messing around (and note that $12,500 can be added by the short put sale regardless).  

    As to GE – I don't want to shove it down people's throats but I always find it compelling when blue chips go on sale like this.  Even F and GM turned around – is GE worse?  


  59. IBM recap from 2016's Blue Chip Hell:

    phil 

    IBM/Albo – Can't argue with that.  Still my leading candidate for Stock of the Year - 2016.  

    At the moment, the IBM play would be:

    • Sell 20 IBM 2017 $125 puts at $8 ($16,000) 
    • Buy 20 IBM 2018 $125 calls for $21 ($42,000) 
    • Sell 20 IBM 2018 $150 calls for $11.75 ($23,500)

    That spread would be net $2,500 with the obligation to own 2,000 shares of IBM at net $126.25 ($252,500) so $126,250 in ordinary margin with the potential upside of $47,500 at $150, which is up just $8.50 (6%) from where IBM is at the moment.  Per ToS, the net margin on 20 short 2017 $125 puts is just $25,000, so this is super-efficient, as long as IBM behaves itself – especially considering the margin obligation goes away next Jan if IBM just holds $125 (down 11%).  

    Of course, if IBM goes lower, the short puts can be rolled (the 2018 $115 puts are $9.20) but it's not the kind of trade you want to be in if you don't want IBM to be a nice chunk of your portfolio at that price.  

    In our LTP, we already have 10 short 2018 $105 puts we sold for $7.22 on 9/24 and we bought 10 $135/160 bull call spreads for $10 so net $2.78 on our $30 spreads and that combination is still doable as well for the same net.  The disadvantage is you need to make $10 more to get the same return and you carry the short puts for another year – which is not a concern in our Long-Term Portfolio as we REALLY would LOVE to own 1,000 shares of IBM for net $107.78 for the very long term. 

    The idea of our Trade of the Year is it's the trade I feel is most likely to return 500% on cash in the next 12 months.   Even though we don't realize the full $50,000 until Jan 2018, we only need to be on track to make $15-20,000 in 2017, and that's far more than 5x our $2,500 cash input.  

    Submitted on 2015/11/09 at 3:43 pm

    IBM/Sibe – Hey, IBM is my Stock of the Year for 2016 – you don't have to convince me.  

    Submitted on 2015/11/09 at 11:07 am

    IBM/Stock – Getting hit as people worry on their impact on Berkshire.  

    Berkshire Says Unrealized IBM Loss Hits $2 Billion, Affirms Bet

    IBM/StJ – A long turnaround but already a couple of years in.  I think by Summer we'll see a real pick-up in revenues and then earnings are R&D cycles lower.  

    Submitted on 2015/11/06 at 11:52 am

    WMT & IBM/Yodi – Over the long haul, they are also great stocks to hold onto.  When WMT is now is where they should be.  Where they were ($80+) was silly.  IBM also got ahead of itself but now right where they should be ($140).  We've just been in a silly, over-priced rally for so long that we've fooled ourselves into thinking that stocks should have been back at their all-time highs – even though those all-time highs were clearly BS in 2007 and the whole market collapsed 50% and stayed there as things unraveled.   Now we're back at the all-time highs and nothing to do but wait for the next unraveling. 

    Submitted on 2016/01/08 at 11:11 am

    IBM/Sun – It will go down with the market but a solid stock long-term.  The reason I moved off IBM is I don't think anything will change this year so there's no catalyst.  Next year is when things should begin to change significantly enough for people to catch on. 

    Submitted on 2016/01/20 at 10:00 am

    IBM/Burr – They are forecasting $14.50 for 2016 – I'll pay $120 for that. 

    Submitted on 2016/01/20 at 11:32 am

    IBM/Sun – I don't expect much from them this year and better safe than sorry.  Still, I wouldn't own the stock, I'd sell the 2018 $110 calls for $13.25 and buy the 2018 $110 ($18.75)/130 ($9.25) bull call spread for $9.50 but maybe you can't in an IRA. 

    The dividend is $5.20 so, if you sell the 2018 $120 calls for $13.50 you drop your net to $120ish and then you get $10.40 in dividends while you wait to see where you have to roll to in 2020.  If you had sold the Jan $100s and they were expiring today at $23.50, you would have a choice of cashing out at $100 or spending $10 to roll the short calls to the 2018 $120s and then you get two more years of dividends and another $20 of upside – not terrible for a restricted account.  

    Submitted on 2016/01/21 at 7:12 am

    IBM near $122 post-earnings; new video acquisition reportedly planned

    • Three months ago, IBM (IBM -4.6%) fell towards $140 after providing a 2015 EPS guidance cut to go with mixed Q3 results. Today, shares are almost $20 lower as markets react to the light 2016 guidance – EPS of "at least" $13.50, free cash flow of ~$11B-$12B vs. 2015's $13.1B – issued with Big Blue's slight Q4 beat. The S&P is down 0.5%, and the Nasdaq up 0.5%.
    • Plenty of analyst have (unsurprisingly) cut their targets, but none have downgraded. Aside from forex pressures (expected to hurt 2016 EPS by over $1 as hedges roll off), plenty of concerns have been voiced about IBM's software ops, which were responsible for 46% of the company's 2015 segment op. profit ($9.1B out of $19.7B) and have been hurt by weak deal activity among top-250 clients.
    • Jefferies' James Kisner (Underperform, $110 target) argues IBM still faces a tough transition as on-premise software and IT services demand continues to be pressured by SaaS/cloud adoption. He also estimates Q4 EPS would've been $4.54 (below a $4.81 consensus) if not for a lower tax rate, and states services signings of $16.7B fell short of a $19.1B consensus.
    • RBC's Amit Daryanani (Neutral, $135 target): "Based on tepid EPS/[free cash flow] guide and continued software declines, and System-Z entering the end of the mainframe cycle, we continue to stand on the sidelines." Drexel Hamilton's Brian White (Buy, $160 target) remains bullish, calling EPS guidance conservative and talking up IBM's 4.1% dividend yield.
    • Separately, Fortune reports IBM is in advanced talks to buy Ustream, a provider of live video streaming, transcoding, and delivery services for businesses, for $130M in cash + possible earn-out/retention payments. The report follows IBM's December acquisition of cloud video infrastructure service provider Clearleap, which the company plans to integrate with its existing cloud offerings.
    • Fortune notes IBM and Ustream are already partners, with Ustream's offerings already integrated with IBM's Bluemix cloud app development platform. The startup's customers include Sony and NASA.
    • Prior IBM coverageearnings call transcript

    Submitted on 2016/01/29 at 11:23 am

    IBM/Batman – What a mess!  I'd just roll down to the 2018 $110 ($19.50)/$130 ($10) bull call spreads at $9.50 and I wouldn't change the $130 puts as they are all premium so let the premium wind down.  With 35 of those spreads that are mostly in the money, you can sell 10 April $125 calls for $3.75 ($3,750) to begin recouping money on your investment.  $3,750 is enough money to roll 6 of your 2018 $110s down to the $100s ($26) and I'm not saying to do that but, after 5 quarters of sales – that's how much cushion you will have (or you'll have collected $18,750) – either way, an improvement.   In 2017, I decided IBM had no catalyst – that's why we dropped it from Stock of the Year consideration but, by 2018, things should begin moving on the AI front and $140-150 at least but that's no reason not to be conservative with the spreads as Buffet's Rule #1 is "Don't Lose Money!"  

    IBM/Tangled – I don't see any reason to roll the $125 puts (same as I noted to Batman above) since you are on target and burning premium at $13.40 so $1 per month is on track.  As to the 2018s, the short $150 calls are $4.30 and, if you are only going to spend $4.30 on one thing – I'd rather roll the $125s ($11.80) to the $115s ($16.85) because that is $10 in the money and puts you in a better position to sell short calls though, if it were me – I'd do both and keep an eye on the $140 calls ($6.75) and just make sure you get at least $5.50 for them so you don't get behind but, hopefully, $10+ if things go well and then it's a free roll.

    Submitted on 2016/02/05 at 4:08 pm

    IBM/Batman – I was just telling the lady from BNN that we're rotating back to blue chips.  It's a healthy thing but painful for people who were chasing rainbows on the Nas or Biotech.  

    IBM/Tangled – Well, I think the day it gaps up at the open and finishes at about the high of the day is not the day to sell calls, right?  Sometimes, it's good not to try to guess everything and just sit and watch.  $140 was our bottom call on IBM and we're not even back there yet.  Back in Sept, we sold the 2018 $105 puts for $7.22 – that's where we put our foot down and then, in Jan, when IBM got worse, we bought the 2018 $120 calls in the LTP for $14.29, now $21 but my goal is $200 so at what point should I give up on that and start selling calls to cover.  It's up 50% in a month but that's only "on track" to my 2 YEAR GOAL of $80 per contract.  

    What has IBM done wrong that's made you change your mind?  Why is the target in jeopardy?  Is $140 too high?  IBM had record earnings and projects 2016 EPS of "at least" $13.50 to $15 per share for 2016 (they made $4.84 in Q4).  At a p/e of 10, that would be $135-$150 but we have 2018 calls and $13.50 at a multiple of 15 would be $202 so, if I'm rushing to cover at $132 – there must be something terribly wrong with the stock that I'm missing.  What is it that you see?  

    Submitted on 2016/02/19 at 7:53 am

    IBM/Tangled – My main point is you have to have a premise and that premise has to have a target and you are either on or off track and you adjust your target based on new information that comes in – NOT on what the squiggly lines look like!  

    If our target on IBM is $200 in Jan 2018 then we expect it to gain about $4 per month so if it's up $4, that's on track but if it's up $12 – THEN maybe we think it went a bit too fast and lock in the gains.  Now, you may think IBM is up $15 from $117 but I'm sure you know I will tell you it never should have been at $117 in the first place.  The 50 dma is $130 and we can count progress from there and the 200 dma is $145 so not much upside resistance until there and, at $4 per months, we should test $145 right around next earnings.  THEN we can cover!

    IBM/Tangled – I expect about $160-170 this year and $200 by Jan 2018.  As to entries, they are the prices I see at the moment unless otherwise noted.  Usually the last price paid but, if the bid/ask has moved, I pick a price I feel is reasonable (usually right between) to get in.  As a rule of thumb, I tend to offer 0.05 or 0.10 better on each leg and see which one fills first and then I worry about filling the rest after getting a good start.  

    IBM/Jeddah – At $146.50, the 2018 $105 calls are $42.50 with not much premium left.  I'd take that money off the table and buy the $135 ($20)/160 ($9) bull call spread for $11 – buy two if you are greedy but I love taking $31.50 off the table and still having $25 more coming if things go well with no risk to my $31.50.  If you go 2x, you can sell 1/2 the May $150s for $3.30 and then you've taken $23.80 off the table with a potential $50 pay-off at $160 – that's a lot more than you'd make at $160 from where you are now.

    Submitted on 2016/03/22 at 3:37 pm

    IBM/Coke – I can't give you a trade idea on IBM, especially short-term, as it's back near $150 and we only liked it BECAUSE it was $130.  LONG-term, I still like them but, at $150 in the short-term, it could go either way – especially as we're still expecting a general market pullback – one day.  


  60. What is trade of the year for 2018?


  61. Bad news for NAK.

    The Wall Street Journal.: EPA Chief Reverses Course On Pebble Mine in Alaska. http://google.com/newsstand/s/CBIwt-e4vTM


  62. Phil – Presidents and the Dollar, not on it that is…  A look at Presidential cycles tracked by dollar value vs the major currencies used to arb, transact or facilitate $ carry trades. Excepting Uncle Ron's 1st term, there are two distinct patterns:

    1. The dollar has declined in value since 1985. 

    2. Republican administrations preside over the majority of declines, with Democrats over the gains.  

    Fodder for coffee talk, discuss amongst yourselves, I'm verklempt.  From the Trade Weighted US Dollar – Major Currencies chart: 

    Reagan 1st term optimism, voodoo trickle down economics, financial dereg

    Jan 80 (95) – Mar 85 (146) Change: +50 = 1984 the peak of our civilization, its all downhill from there.

    Reagan 2nd term – Bush Sr, more financial dereg, pendulum swings from labor to capital

    Mar 85 (146) – May 95 (80) Change -65 = the great deficit decline

     

    Clinton – crazy financial dereg, bad foreign policy and Wall Street greed

    May 95 (80) – Feb 02 (112) Change +30 = 1st serial bubble forms and pops, high tech

    Shrub – "its the terrorists" neocon decline, derivatives gone wild, cheap eurodollar floods global markets

    Feb 02 (112) – Jan 08 (69) Change -40 = 2nd serial bubble (reflation) forms and pops, MBS, RE

    Obama – more dereg, WS insanity, eurodollar market contraction begets dollar melt up

    Jan 08 (69) – Jan 17 (97) Change +30 = 3rd serial bubble forms, everything and its mother

    Trump – populist and WS insanity, eurodollar market decay

    Jan 17 (97) – Jan 18 (87) Change -10 = bubble goes parabolic, this is just starting and Out.


  63. The truth, the whole truth and nothing but the truth…

    We are now counting on the repatriation of Trillions of overseas Dollars to boost the markets into 2018… the repatriated cash is not "new money" – it's already on their books and has already been earned – it's just being moved around.

    This Dollar weakness is out of control.  Hopefully that was a blow-off bottom but clearly the Administration thinks our monetary policy is a tool they can use to goose the markets.

    The problem with that is currently the indexes are not pricing in any losers at all – so the valuations are stretched across the board… way out of control and saying "it's not as bad as 1929 or 1999 really doesn't make it OK."   

    It's a joke to talk about the markets doing so well when you tank the currency by 20%. What the Dow's performance in euros for example. Or gold for that matter…

    This is the same kind of denial we had in the Financial press when Bush II was clearly destroying this country and its reputation yet the markets kept acting like all was well and there would never be any consequences.  

    "What about" refers to the Conservative mental Jiu Jitsu that immediately seeks to distract gullible voters by taking every obvious sin committed by Trump and his team and steering it to "what about" something [else]

    The truth is now a matter of opinion and we really are living in Orwellian times, which is joyous for those who accept the party dogma and a complete nightmare for those who like to think critically.

    This is what happens when you spend 40 years defunding education and creating an entire population that "thinks with their gut" rather than their brains.  

    What we have here is the Oligopolists consolidating their power… [they] learned their lesson from Nixon – you want to keep the lying, cheating bastard in power – you can't just replace him with anyone.  Trump is their guy and life has never been better for the 1% – they don't want justice – even for the sake of maintaining the facade of Democracy.

    Nattering…  You mean the facade of democracy like this?  Bravo Brother Phil, the root of all evil is ignorance. Sheep are easier to lead to slaughter.

     From a theoretical physicist:

    "Divorcing public policy from empirical reality endangers us all. What we need is evidence-based policy making, not policy-based evidence making."  – Lawrence Krauss


  64. Hola people! 

    Futures opening just as crazy high as they closed – ain't no stopping us now.  

    Trade of the Year/Maya – That's a good question because I wanted it to be LB but then LB took off too fast before Thanksgiving and, officially, I switched to HBI.  Both have pulled back a bit and I do like LB better and it was simply a positioning issue.  So the trade we have in the Money Talk Portfolio, when I was on in Sept, was our original LB trade and, since we reset the other portfolio in Dec (before the drop in Retail), we didn't have a chance to get back into either at low prices yet (though we are still hopeful earning will disappoint or the market simply corrects).  

    NAK/Maya – Ouch, that totally sucks! 

    Good quote Naybob.

    Speaking of the Money Talk Portfolio, I'm on the show Wednesday and I've got to write up a review:

    From a $50,000 start we're up 74% to $86,975 in our first year.  These are very much "set and forget" trades as we have never even made an adjustment and they represent trade ideas that were made on just two shows – one in January and one in September.  

    As with many of our Philstockworld trades, we use very little cash for our initial positions, saving that firepower for adjustments if a trade goes south but, when they don't – they can be money-gushers.  These trades, of course, follow our strategy of "Be the House – NOT the Gambler" in which we sell more premium than we buy, giving ourselves a tremendous edge every time we make a trade.  

    AAPL – This is a $30,000 spread that cost us $6,100 in cash to initiate and the margin required on the short puts is $8,541 but worth it as we had very little fear Apple would fail $140 so the risk was deemed low.  Currently, the spread is net $13,550, which is up $7,450 (122%) but we still have another $16,450 left to gain so, even as a new trade, this makes a very nice 12-month return from here.  

    IMAX – IMax has run into trouble recently but we sill love this one as a new trade at essentially the same price we paid for it.  Actually, it's up $175.  As an adjustment, however, we are going to roll the March $18 calls ($1.88) to the Sept $15 ($5.20)/20 ($2.20) bull call spread at $3 for + $1.12 ($2,240) and we'll buy back the short March $22 calls for 0.35 ($700) so $2,940 added to our original $1,250 outlay means we're in the now-wider $10,000 spread for net $4,190 and, if all goes well – we'll have a gain of $5,810 (138%) on the trade's 1-year anniversary if IMAX is over $20 so great for a new trade!  

    LB – Our Trade of the Year for 2018 is miles over track at net $21,050 which is up $17,650 (519%) from our initial cash outlay of $3,400 just 4 months ago!  The maximum payout for this trade, however is $30,000 so this trade, if LB stays over just $40, will pay another us $8,950.  I know it seems boring to "only" make another 50% in 12 months but it's a very safe 50% – and that's worth something, so I'm inclined to hold it as is.  

    WPM – This one was our Trade of the Year for 2017 and it's right on track for a full payout as well.  Our initial outlay was just $2,000 in cash and the short $17 puts are using just $2,563 in margin so a very margin-efficient trade as well.  At the moment, the spread is net $13,700 for a gain of $11,700 (585%) and the maximum value next January is $25,000 if WPM holds $22, which we feel is very likely.  So that's another $13,300 (113%) left to gain from here so no reason to throw this one away either.  

    So there's 4 trades that, even if taken as new, will return another $44,510 between now and next January so a very nice return – even for latecomers.  

    Since we've already made $36,975 in year one and we expect to make another $44,510 in year 2, it makes sense to hedge our positions – just in case the market does tank.  Since we know if it doesn't tank we'll make $44,510 (unless something specifically goes wrong with our picks), we can set some of those gains aside in a hedge.

    SQQQ is the ultra-short Nasdaq ETF that's a 3x inverse of QQQ.  So, if the Nasdaq drops 10%, SQQQ goes up 30% (in theory, it's not perfect).  I'm going to add the following trade as a hedge and WE EXPECT TO LOSE MONEY ON THIS ONE – it's like life insurance, you pay for it but you hope that, each year, it's a waste of money!  

    • Buy 40 SQQQ Sept $16 calls for $2.80 ($11,200)  
    • Sell 40 SQQQ Sept $23 calls for $1.20 ($4,800) 
    • Sell 5 ALK 2020 $60 puts for $8.20 ($4,100) 

    That's net $2,300 and $2,620 in margin (from the short puts) to protect our current $36,975 gains and our potential profits – not a large price to pay and, if the Nasdaq drops 10%, then SQQQ (now $16.25) should climb 30% to $21.12 and put the $16 calls $5.12 in the money for $20,480, so we'd be up $18,180 and the max pay-out on the spread is $28,000 so about $26,000 of downside protection – which is half of what we started with!

    ALK is a stock we feel is very underpriced but you can use any stock you'd REALLY like to buy as an offset on these hedges but, keep in mind, if the market does tank, you REALLY will be buying that stock!

    Now that we have a hedge, let's look for a new spread and I have two catching my eye at the moment:

    GE is the most hated stock in the Dow and the S&P, off about 50% from last year's high as the company has sold of divisions and retooled and now their accounting plan has garnered an SEC investigation which is spooking investors.  As I often say to our Members – "If you're not going to buy low, when are you going to buy?" but there may be more pain ahead so we're just going to dip our toes in the water on this one:

    • Sell 10 GE 2020 $15 puts for $1.95 ($1,950) 
    • Buy 20 GE 2020 $15 calls for $3.60 ($7,200) 
    • Sell 20 GE 2020 $22 calls for $1.10 ($2,200) 

    This one has a $3,050 cash outlay and requires $1,312 in margin for the short puts.  If all goes well and GE is back over $22 in Jan, 2020, this spread will net $14,000 for a gain of $10,950, a 359% return on cash.  While the cash return is a bit less exciting than some of our other trades – we feel very confident GE won't go much lower ($14 should be the worst) so the low risk profile makes up for it.

    Our worst case here is owning 1,000 shares of GE for $15 (the put strike price) plus the $3,050 we laid out would be net $18.05 per share and, at $14, we'd be down $4,050 vs the potential gain of $10,950 and we don't feel the risk is anywhere near as likely as the reward – which is what we consider a good trade at PSW!  

    Finally, we like Barrick Gold (ABX) and consider them very undervalued, especially with gold prices climbing.  ABX also has great option prices so we can be a little aggressive here with the stock at $14.25:

    • Sell 10 ABX 2020 $17 puts for $3.75 ($3,750) 
    • Buy 25 ABX 2020 $13 calls for $3.90 ($9,750) 
    • Sell 25 ABX 2020 $20 calls for $1.55 ($3,875) 

    That puts us in this $17,500 spread for net $2,125 and the upside potential at $20 is $15,375 (723%) and it's aggressive because the strike we chose for the short puts is $17, which is $2.25 HIGHER than ABX is trading for now but we only sold 10 and the margin requirement is $1,830 so a good fit for our $50,000 portfolio (initially).  

    So, with the 3 new trades, we stand to make an additional $26,325 less the $2,300 we expect to lose on the hedge is still plus $24,025 on a $7,475 net cash outlay.  Not a bad way to start a new year!


  65. What happens when some teen takes this to school and cooks some other kid that he doesn’t like?? That won’t be good publicity. Why does anyone need one of these? 

    https://www.yahoo.com/tech/elon-musk-apos-boring-company-023500497.html


  66. I want one!  

    Gasoline (/RB) soundly rejected at $1.95 so far.



  67. The Plot Against America



  68. Cannabis Stocks Begin To Reflect The Real Industry


  69. Manmade quakes force Dutch to face future without gas


  70. Dozens Feared Dead as Massive Explosion Rocks Kabul


  71. IMF chief warns Trump’s tax cuts could destabilise global economy



  72. U.S. farmers have much to lose if NAFTA deal collapses


  73. Natural Gas Market Update, End of January 2018



  74. This Is What The Retail Industry Is Talking About Now




  75. AP FACT CHECK: Trump oversells economic performance








  76. Aramco IPO Stalled by Indecision Over Where to List






  77. Good morning!

    I will be at the Nasdaq this morning (10:30) and not in NYC so I have to go there and back so won't be on-line until about noon though I'll check in from the old IPad.

    Futures dipping a little bit but nothing exciting so far.  I still have 6 short /ES at 2,854 and 4 short /NQ at 6,999.68 and still long 8 /DX at 89.10.  Wasn't any news over the weekend to change my mind about March Futures.  

    Dollar up a little bit, but nothing exciting.

    I think oil (/CL) is going to pull back, now $66.24 and I'd play it short with a stop at $66.26 and try again near $66.44 but over $66.50 is game over for shorting.

    /RB also a short if it either crosses below $1.94 or tests $1.95 but also tight stops.  

    I'll be talking about this this morning:

    Huge disconnect as Central Bank buying tapers off and stocks stage a massive rally to start the year:

    It's like no one believes there's no Santa Clause.

    China Stock Euphoria Enters New Stage as Laggards Start to Surge

    Earnings have been ‘unambiguously positive,’ and it’s going to get even better, says JPMorgan

    Big Data week with SOTU tomorrow night and Fed statement on Weds with Yellen's last press conference.

    Trump to Soften Tone in State of the Union, Pursuing Immigration DealPresident will give ‘forward-looking’ and bipartisan speech, White House says.

    President Trump Hints at Retaliation Against EU for Unfair Trade PoliciesDuring an interview to be aired later Sunday, the U.S. president said ‘I’ve had a lot of problems with European Union…from a trade standpoint’.

    Trump gears up for $1 trillion infrastructure plan, but GOP lawmakers push back on the idea of a gas tax

    Trump will reportedly ask for $716 billion in defense spending in 2019 budget

    Trump team weighs nationalizing 5G

    • National security officials in the Trump administration are looking at options where the U.S. government could take over part of the country's mobile network as a way of guarding against "dominant malicious actor" China.
    • The report from Axios describes two options: The U.S. government pays for and builds the single network – an unprecedented nationalization of private infrastructure – and an alternative where U.S. wireless providers build their own 5G networks, which would be less commercially disruptive to the industry.

    Can you imaging having to buy your Internet from the Government?  If you think they were spying before – imagine what will happen when they control the access!  Not only that but it becomes a stealth tax they can raise any time.  If you can make 200M people pay you $100/month….

    Chinese markets are selling off into the close on warning from a minister:

    • Chinese markets slipped into negative territory overnight after Fan Hengshan, vice secretary general of the National Development and Reform Commission, wrote an op-ed that black swan or grey rhino high-impact events were likely to take place this year.
    • The warning from the the country's top economic planner comes as the first official Belt and Road bonds were issued on the Shanghai Exchange.
    • Shanghai -1% to 3,523.

    And I love this story, will be a fun Congressional investigation:

    • In initial disclosures about security flaws discovered in its processors, Intel (NASDAQ:INTC) notified a small group of customers, including Chinese companies like Lenovo and Alibaba, but left out the U.S. government, sources told WSJ.
    • The decision raises concerns as it potentially could have allowed information about the chip vulnerabilities, dubbed Spectre and Meltdown, to fall into the hands of the Chinese government before being publicly divulged.

    Canada, Mexico reject ISDS proposal

    • Mexico and Canada have rejected a proposal by the Trump administration to remake a corporate arbitration system that's a key part of NAFTA, WSJ reports.
    • The investor-state dispute settlement, or ISDS, is widely backed by multinational businesses because it allows them to avoid lengthy court battles and potentially discriminatory behavior abroad if unfairly treated by an action of another NAFTA government.

    On Trade, World Wonders Whose Rules U.S. Plays By

    President Donald Trump’s message at Davos aimed to soothe anxieties of business and political elites, but it left the world unsettled: Whose rules does the U.S. intend to abide by? And why does it punish so many countries when only one, China, is systematically breaking the rules?

    • This year's flu outbreak is more severe than any other since the 2009 swine flu pandemic and its intensity is still increasing.
    • "We often see different parts of the country 'light up' at different times, but for the past 3 weeks, the entire country has been experiencing lots of flu, all at the same time," said Dr. Dan Jernigan, the director of the CDC's Influenza Division.
    • Schools in at least 11 states have also closed as the worst flu epidemic in nearly a decade intensifies.
    • Flu vaccine manufacturers: SNYGSK
    • The Commodity Futures Trading Commission will fine three European banks for "spoofing" and manipulation of the futures market, Reuters reports.
    • The derivatives regulator will issue fines to UBS, Deutsche Bank (NYSE:DB) and HSBC that will number in the millions of dollars each, according to the report.
    • The fines are the result of a multi-agency investigation along with the Justice Dept. and FBI, Reuters says.

    Alibaba's first big carmaker investment

    • Alibaba (NYSE:BABA) and Foxconn (OTC:FXCOF) have co-led a 2.2B yuan ($348M) funding round into Chinese electric-vehicle manufacturer Xiaopeng Motors, marking Alibaba's first big investment in a carmaker.
    • Executives from the two companies said the move will allow them to tap into the intersection of the internet, artificial intelligence and traditional manufacturing.
    • Xiaopeng is among the startups striving to become China's Tesla

    Lowe's unveils new $5B stock buyback program

    • Lowe's (NYSE:LOW+0.9% after-hours following news that its board authorized a new approved a new $5B stock repurchase program.
    • LOW says the new buyback plan has no expiration date and is in addition to $2.1B remaining from a previous program.
    • LOW shares are up 15.6% already this year.

    Keep in mind this is not "NEW" M&A, this is one buyer replacing another:  Sanofi scoops up Ablynx for €3.9B

    • Trumping an offer from Novo Nordisk (NYSE:NVO), Sanofi (NYSE:SNY) has agreed to buybiotech company Ablynx (NASDAQ:ABLX) for €3.9B, marking the French drugmaker’s second big takeover this month after acquiring Bioverativ.
    • "With Ablynx, we continue to advance the strategic transformation of our R&D, expanding our late-stage pipeline and strengthening our platform for growth in rare blood disorders," said Sanofi CEO Olivier Brandicourt.

    Streaming services pay more for music

    • Songwriters just claimed a major victory in the fight for better pay from streaming giants as the U.S. Copyright Royalty Board bumped up streaming revenue rates over the next five years to at least a 15.1%, from a previous 10.5%.
    • The 43.8% pay raise is the "biggest increase in CRB history," according to the National Music Publishers' Association, and will affect many companies including Alphabet (GOOGGOOGL), Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Spotify (Private:MUSIC), and Pandora (NYSE:P).
    • ID tech: Facebook (NASDAQ:FBacquired ID verification startup Confirm.io for undisclosed terms. The team and tech will fold into Facebook.
    • The three-year-old company provided an API that let companies quickly verify the authenticity of a government-issued identification card. 
    • Confirm.io raised at least $4M since its launch. 
    • CAR-T developer: Gilead Sciences (NASDAQ:GILD) and Lilly Asia Ventures (NYSE:LLY) were among the investors in a $100M Series A round for Tmunity. Other investors included Ping An Ventures, the Parker Institute for Cancer Immunotherapy, Be the Match BioTherapies, and Penn Medicine. Tmunity has now raised $110M in funding.
    • Tmunity develops novel products using the immunological potential of T-cells to fight cancer. The company has two solid tumor pipeline projects in early clinical development: one CAR-T (chimeric antigen receptor T-cells) program and one TCR (T-cell receptor) program.   
    • Competition: Novartis (NYSE:NVS) has the FDA-approved CAR-T treatment Kymriah for B-cell acute lymphoblastic leukemia, and Kite Pharma (now owned by Gilead) received approval for Yescarta for non-Hodgkin lymphoma. Celgene (NASDAQ:CELG) just acquired the rest of CAR-T developer Juno Therapeutics (NASDAQ:JUNO). 
    • Linear generator: American Electric Power (NYSE:AEP) participated in an $83M Series Cround in linear generator manufacturer EtaGen. The round brings EtaGen up to $133M in funding. 
    • Fellow strategic investors Centrica Innovations, Statoil Energy Ventures, KCK Group, Louis M. Bacon, joined AEP. Existing investors include Bill Gates and Kholsa Ventures.  
    • Commercial drone: Intel Capital (NASDAQ:INTC) , Comcast Ventures (NASDAQ:CMCSA), Verizon Ventures (NYSE:VZ), and Syngenta Ventures (NYSE:SYT) were among the participants in a $75M Series D round for commercial drone company PrecisionHawk. The round brought the total funding up to $104M and was led by Third Point Ventures. 
    • PrecisionHawk was founded in 2010 and provides drones and associated software and services so that companies can use unmanned aerial vehicles.
    • The startup says it has clients in 150 countries in industries including agriculture, insurance, energy, and construction.  
    • Competition: Other drone startups include Kespry ($61.4M total funding), DroneDeploy ($31M), Iris Automation ($10M), and Prenav ($6.5M). 
    • Outlook competitor: Microsoft (NASDAQ:MSFT) Outlook competitor Front raised a $66M Series B round led by Sequoia and DFJ. Total funding now stands at $79M. As part of the investment, Sequoia’s Bryan Schreier will join the Front board. 
    • Front has 2.5K companies using its shared inboxes and other communication channels including text messages, live chat, and Twitter. Front has dozens of integrations with third-party services. 
    • Front processed over 350M emails and messages last year and half of its DAUs don’t open Gmail or Outlook at all, which has inspired Front to work on developing a client for single users that still have a share option.
    • The startup has enough cash for the job with the CTO claiming a nine-year-long runway. 
    • Meal subscription:  Blue Apron (NYSE:APRN) competitor Sun Basket received a $57.8M funding round that included a $42.8M Series D round led by August Capital and a $15M debt segment from Trinity Capital Investment. Total funding now tops $100M. 
    • Sun Basket stands apart for offering organic, healthy meals with options for specialized diets like paleo and gluten-free with plans to add vegan, Mediterranean, and pescatarian options.  
    • VentureBeat reported that Sun Basket hit a $275M revenue run rate this month with net revenue up 280% on the year. 
    • AR camera app: SoftBank (OTCPK:SFTBYOTCPK:SFTBF) and Sequoia Capital China invested $50M in AR camera app developer Snow China, which is owned by Naver Corporation (OTCPK:NHNCF).  
    • Snow will use the investment to build on its AR tech and spread out further geographically beyond the current markets of Korea, Japan, and China. 
    • Snow’s Snapchat-like (NYSE:SNAP) products include the B612 and Foodie apps, which include picture filters and stickers. The company launched in 2015 and now has more than 100M subscribers.         
    • Previously: AWS buys security startup with NSA roots (Jan. 24)
    • Previously: SoftBank fund leads $865M round in construction startup (Jan. 24)