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Takeaway Tuesday – Trump Takes $1.7Tn from the Poor to Give to the Rich

The new budget is here!  

As not at all promised by Trump when he was campaigning, Medicare will be slashed by $237Bn while $17Bn is being taken away from Food Stamps and yes, the Government will be getting in between you and your grocer as Trump is proposing no longer giving people food stamps, instead sending them boxes of food the Government selects for them (from campaign donors, of course).   

Trump's budget is an outright assault on small businesses and farmers with a 25% cut to the SBA and a 15% cut to Agriculture with limited eligibility for crop insurance and caps on subsidies which will destroy those family farms, forcing them to sell out to big Corporations, who are still able to game the system to their advantage.  

Rural Economic Development Loans and Grants are being entirely eliminated – yet another way of making sure no one can compete with Trump's Corporate Donors, who will also benefit from the 25% budget cut to the EPA. Overall, there's a 42.3% cut to all Non-Defense Discretionary spending. In other words, Trump is cutting about half the stuff the Government does to actually help Americans while giving ALL of that money to the Top 10% – and mostly the Top 1%, of course.  

Despite coming off the most expensive disasters in history and with climate change getting worse, not better, 22% of the Army Corps of Engineers is being cut, which is a shame because, just this morning, new satellite data shows sea levels rising much faster than previously thought and the Army Corps of Engineers does things like building dams and levees to protect our cities from such things.

Image result for cost of disasters 2017But guess what happens when a city is flooded?  SALES!!!  Paint, hardware, carpets, furniture, Government clean-up contracts worth Billions of Dollars to Trump's donors. Isn't that better than spending Millions to prevent the disaster from happening in the first place?  

And, just in case you thought Trump can't possibly be purposely trying to destroy the enviromnent to enrich his Donors – now they want to repeal Obama's restrictions on how much methane is released into the atmosphere by Corporate Donors who drill for oil and gas on Federal Land.  Methane, which is about 25 times more potent at trapping heat than carbon dioxide, accounts for 9 percent of all domestic greenhouse gas emissions.  The rule require companies to capture the gas in order to be allowed to drill but now they can just shoot it off into the atmosphere. Imagine what you would think if China were doing something like this?  

Trump's budget is now projected to add $7Tn to our $20Tn deficit during Trump's 2 planned terms and the White House is saying that's OK, because Congress just approved a higher debt ceiling.  That's with the $1.8Tn cut to Medicaid, Medicare and Food Stamps, which you would think would be hard to pass in an election year.  

So, we're running up debt by $7Tn and taking money away from people who actually spend it in the economy and putting it into the hands of people who have so much money they don't know what to do with it so they drive up the cost of assets by investing in them while seeking to extract higher and higher rents from the poor people who can't afford things like cars or homes or educations – but need them to live.  What a great scam, right?  

Of course such irresponsible nonsense (and, for real nonsense, the BBC is calling Trump's Infrastructure Package a "scam") is hurting the Dollar and we're down 0.5% this morning, back to 89.50 and that's helped reverse the earlier pullback in the Futures, which were down over 200 points on the Dow but none of that matters if we are failing our bounce lines (see yesterday's post) and, of course, rates are going up and, once again, we are forced to confront the math of deficits.

Illustration: John ShakespeareThe US is now $20Tn in debt and we currently spend $440Bn a year (10% of our budget) on the interest on the debt we borrowed at an average rate of 2.2%, which is about 1.25% higher than the Fed Funds Rate.  The Fed, whether they want to or they are forced to, is raising rates to 3.5% over the next two years so call that 4% interest on what will then be $23Tn in debt.  That would then cost us $1Tn a year JUST TO SERVICE THE DEBT.  That's not even accounted for in the budget yet it's $560Bn a year more than we spend now!  

And what happens to us if interest rates rise to 6% over the next 6 years while the debt level hits $30Tn?  That would drive the interest payments on our National Debt to $1.8Tn a year – almost half our current budget and, of course, we would either have to enter levels of Greece-like austerity (and there's already nothing left to cut but the military) or, gasp, raise taxes to pay for it.  

Illustration: Matt DavidsonAs noted by Peter Martin, Trump's tax cuts will hurt in a more fundamental way. Cutting tax is a great way to boost the economy. If the unemployment rate was 10%, it would really help. It would lift the economy without stoking inflation. But when the jobs market is on fire and the unemployment rate is below 4%, it will add gasoline and make inflations' flames fly higher, which also puts more upwards presssure on rates (the rent the Top 1% charge the Bottom 99% to use their money). 

So the Rich are going to get much, much richer while the bottom 99% will go deeper and deeper into debt to pay for it.  One of the only actually democratic things the GOP still believes in is that the National Debt should be equally distributed among all Americans, no matter how rich or poor they are so the $170,337 owed by you is the very same $170,337 owed by Donald Trump to finance all these tax cuts and pay-offs to Campaign Donors.  

In fact, Wells Fargo just warned us that "Debt may be filling the gap for many households when incomes have not kept pace with rising living expenses.  A reversal may be ahead if income growth does not catch up to consumer expectations."  Lower income consumers have been showing signs of weakness, because their income has been growing slower than wealthier Americans’. The pockets of weakness may explain why some asset-backed securities are performing worse even as the unemployment rate dropped in January and consumer confidence and income growth expectations are strong.

In other words, Americans believe all the BS the Administration has been spouting and they've stopped saving and started spending in anticipation of "unbelievable" tax cuts and trickle-down bonuses paid by their greatful Corporate Masters as they bring back the money they stashed overseas to avoid paying taxes for years (which would have boosted Obama's budgets) without any penalty whatsoever.  

Do you really think this is going to end well?

 


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  1. GNC +36% after strategic investment, sales report

    GNC Holdings (NYSE:GNC) reports same store sales increased 5.7% in domestic company-owned stores in Q4 and 2.0% at domestic franchised locations. Despite the gains, total sales fell short of consensus estimates ($558M vs/ $569M).

    CEO update: "Customers are increasingly responding to our simplified pricing model, enhanced loyalty programs, and exclusive product lines, and we made meaningful strides in improving the customer experience across all our platforms… Looking to 2018, we see substantial opportunities to drive profitable growth."

    The quarterly results from GNC are being overshadowed a bit by the new JV in China it announced and strategic investment from Hayao.

    GNC +36.04% premarket to $5.70 vs. a 52-week trading range of $3.13 to $10.9


  2. ~~ GNC-  GNC Holdings reports EPS in-line, misses on revs; enters strategic partnership and China joint venture agreement with Harbin Pharmaceutical.

    Stock up 35% in pre-market.  


  3. Family farms and Small business / Phil – Remember how worried they were about the estate tax for these people as they work to undercut their value. No need to worry about the estate tax when you are bankrupt. In the meantime, good for Trump's kids. These guys are evil!



  4. Phil / GNC – up 36% pre market.  I have the following position after uncovering all my shares last week ( netted about $2K on these last week.

    10K shares ( 6.15) 

    Short 40 Jan '20 $2.5 Puts at (1)

    My thoughts are to sell 5000 shares at 6+ / share,

    and cover the sell the Sept '18 $5 calls for 1.6 ( ish) 

    Would appreciate your feedback on this.   Thanks


  5. And, just in case you thought Trump can't possibly be purposely trying to destroy the enviromnent…

    Come on, Phil. Propoganda much? Just a little exageration for political purpose? 

    Right wing and left wing are just two parts of the same bird, and they both have fleas.


  6. So insane but yet predictable:

    https://talkingpointsmemo.com/news/trump-budget-increase-deficit

    Trump’s plan sees a 2019 deficit of $984 billion, though White House Budget Director Mick Mulvaney admits $1.2 trillion is more plausible after last week’s congressional budget pact and $90 billion worth of disaster aid is tacked on. That would be more than double the 2019 deficit the administration promised last year.

    All told, the new budget sees accumulating deficits of $7.2 trillion over the coming decade; Trump’s plan last year projected a 10-year shortfall of $3.2 trillion. And that’s assuming Trump’s rosy economic predictions come true and Congress follows through — in an election year — with politically toxic cuts to social programs, farm subsidies and Medicare providers.

    We will have deficits higher than when we tried to recover from the worst financial crisis of our generation when the GOP insisted that deficits were a danger to our security. What's going to happen when we have another recession – a $2T deficit financed at higher rates? Cut spending which will deepen a recession, raise taxes which they never want to do? We are so screwed!


  7. And this:

    The White House used Monday’s event to promote its long-awaited plan to increase funding for infrastructure. The plan would put up $200 billion in federal money over the next 10 years in hopes of leveraging a total of $1.5 trillion in infrastructure spending, relying on state and local governments and the private sector to contribute the bulk of the funding.

    That's $20B per year for an infrastructure that needs trillions! A joke but the joke is on us.


  8. HMNY,

    Didn't make sense that HMNY was declining over past few day in the presence of a series of positive articles… now it does.


  9. "Choosing what to ignore — turning off constant market updates, tuning out pundits purveying the latest Armageddon — is critical to maintaining a long-term focus."

    (Jason Zweig)


  10. Meanwhile in other news, republicans and democrats have come together agreeing to record deficit spending across the board on top of record debt… all depends on your point of view, doesn't it.


  11. Dems didn't agree on that tax cut!


  12. https://fred.stlouisfed.org/series/GFDEBTN   --  country loves debt


  13. No StJ they didn't… so in 4 years when the dems take over we can look forward to reversing that. Oh joy.


  14. Good Morning.


  15. I would not worry Mkuc, the last 2 Dems president inherited huge deficits and messed up economies but raised taxes, lowered the deficits and the economy did pretty well. Not perfect, but beats the alternative!


  16. Phil: 

    HMNY – any recommended adjustments.  Should we buy the short calls and double down on the long calls in a BCS? 


  17. I'll take it….


  18. Phil;  thoughts on MET.  Recently hit by disclosure about missed annuity payments.  Seems like an overreaction.  May take another hit over night with earnings after the close.  3.6% dividend yield.  Not looking for a home run, just a solid dividend play.  TIA


  19. TWTR up 6% and the graph looks like crazy accumulation

    …. any body heard any news? 


  20. Comment content omitted because it is too long.


  21. Good morning!  

    The Lord giveth and the Lord taketh away:

    With HMNY, our $130M company is raising $100M in cash so we're diluting – this is not surprising, and has no effect on our long-term outlook but it would be silly not to take advantage ourselves.  We never had HMNY in the OOP, because we thought it might go lower and, in the LTP, we have the Aug $5/10 bull call spread (20) with short $7.50 puts (10) at a net credit of $500 so we're obligated to own 1,000 shares of HMNY at $7 in our $500,000 portfolio.  I think we can work this one out!  

    GNC, on the other hand, is in the OOP with 20 of the 2020 $2.50/7.50 bull call spreads and 10 short $5 puts at net $700 on the $10,000 spread – that's looking good!  In the LTP, we just sold 20 of the 2020 $5 puts for $3 ($6,000) as we decided to wait for earnings to make a bigger commitment.  

    Oil down to $58.50, /RB $1.666, /NGV8 at $2.75.  

    Big Chart – Now we'll see if we can take back the 50s – how exciting!  Big picture is a failure to take back the 50 dma and heading back to the 200 dma begins to form a downtrending channel or, in the very least, a triangle-squeezy thingy – the downtrend is almost preferable as the triangles can go violently in either direction when they break. 

    And, of course the longer we spend near the 200 dma the more the 50 dma curves down and then you have the danger of forming a death cross (50 dma goes below the 200 dma) so it's not just about staying over the 200 dma but staying at least halfway towards the 50 dma to keep the lines pretty enough for TA people to keep buying.  

    GNC/Batman – Good timing!  That's a very sensible way of taking a profit but you would be cashing in $30,000(ish) and another $8,000 for the short $5s to keep $30,000 more on the table, effectively getting a 20% return on the remaining $30,000 or really $22,000 since the $8,000 is in your pocket now. 

    They don't pay a dividend so I'd sell them all for $6 ($60,000), buy back the short $2.50 puts for $1 ($4,000) and sell 30 2020 $5 puts for $2.20 ($6,600) and pick up 50 2020 $5 ($1.90)/10 ($1) bull call spreads for $1 – as that's just $5,000, leaving you with $57,600 in your pocket and another potential $50,000 to be gained (already in the money for $5,000) if all goes well with the worst case being you own 3,000 shares for $5 again.

    Propaganda/Mkucs – Right wing and left wing are no longer two parts of anything as the right has gone so far right as it's unrecognizable to the left wing (or the bird, for that matter).  Murdering poor people (because they will, for a fact, die without the aid provided, so it's a willful causation of their deaths) to give rich people tax cuts is reprehensible – it's not a "side" – it's a completely contrary type of behavior that we thought we fought 2 World Wars to eradicate.  

    If you want to be a GOP apologist, that's your call but the only people this budget is helping live in Russia or are so rich in this county that they could give a crap what damage is done to the US, it's Government and it's citizens.  

    The Eisenhower/Kennedy/Truman Democracy is the Democracy of hope and freedom that was taken up around the world as an example of the greatness the people could accomplish when working together to achieve great things.  What is this disgusting mess doing?  

    HMNY/8800 – This is their moment and they are "going for it".  Hopefully they win.  I think they will because most people haven't heard of Movie Pass yet but, when they do, they want one.  

    Chart/Mike – 10 more years, 50% higher. 

    HMNY/Learner – I'm giving them the morning to see where they settle and let the options settle down.  

     


  22. MET/Options – Lots of pending class-action suits on that one and look what happened to WFC over time.  Revenues are also way down and trending lower, not sure I want to pay $46Bn for that.

    Year End 31st Dec 2011 2012 2013 2014 2015 2016 TTM 2017E 2018E CAGR / Avg
    Revenue $m 71,196 68,467 68,365 73,376 70,041 63,605 62,583 63,717 63,256 -2.2%
    Operating Profit $m 10,813 2,798 5,334 10,020 8,678 1,006 4,446     -37.8%
    Net Profit $m 6,423 1,324 3,368 6,309 5,310 800 2,455 4,345 5,080 -34.1%
    EPS Reported $ 5.74 1.07 2.91 5.42 4.57 0.63 3.14     -35.7%
    EPS Normalised $ 5.91 2.39 2.63 5.20 4.41 0.70 3.03 4.21 4.89 -34.7%
    EPS Growth % +88.6 -59.5 +9.9 +97.7 -15.2 -84.1 +332.5 +501 +16.1  
    PE Ratio x           63.7 14.7 10.6 9.13  
    PEG x           0.13 0.029 0.66 0.91
    Profitability

     


  23. Also, last Q was a loss and Q1/Q2 were $1.7Bn combined so no way they hit $4Bn projected for 2017.  There are lots of good insurance companies, like AFL who make almost $3Bn for $33Bn.  Rising rates are great for insurers, who are forced to use safe returns for their reserves. 

    Year End 31st Dec 2012 2013 2014 2015 2016 2017 2018E 2019E CAGR / Avg
    Revenue $m 26,341 24,138 22,759 21,025 22,642 21,667 21,618 21,949 -3.8%
    Operating Profit $m 4,563 5,109 4,808 4,151 4,335 4,018     -2.5%
    Net Profit $m 2,866 3,158 2,951 2,533 2,659 4,371 2,912 2,938 +8.8%
    EPS Reported $ 6.11 6.76 6.50 5.85 6.42 11.0     +12.4%
    EPS Normalised $ 7.49 7.04 6.54 6.08 6.56 11.0 7.66 8.03 +7.9%
    EPS Growth % +10.4 -6.1 -7.0 -7.1 +7.8 +67.2 -30.1 +4.91  
    PE Ratio x           7.77 11.1 10.6  
    PEG x           n/a 2.27 1.76
    Profitability

    TWTR/Learner – Actually made a profit.  Look what happened to AMZN and NFLX once people realized you could really monetize hundreds of millions of users.


  24. Boy, comments really doesn't like those financial charts – had a hard time printing them. 


  25. Phil – where do you pull the financial charts above from (MET )?


  26. Phil/HMNY/GNC

    I think it is the other way ~ HMNY is in the OOP and GNC (since there was risk of BK and long road to recovery) is in LTP. Hummm  maybe I got these wrong. Please check.

    thanks as always

    regards


  27. Phil, can you re-visit IBM as a new position?


  28. Phil/GNC

    I have 500 shares at 3.9, and sold 2020 2.5 puts for 1.2, as well as the 5 calls for 2. I’m inclined to leave as is and hopefully get called away at 5, which will net me a nice return. Would you adjust? I read your answer to Batman and wonder if I should sell the shares and convert to the same spread you recommended to him. 


  29. Worked my avg on /RB to 1.65 now. Wait and see. 


  30. Phil / GNC – I sold the 1/2 of the shares this am and 5.7 and will look to sell the rest later today….

    I also sold from of the Sept $5 calls which made will be positive I think…..  

    can exit those and the stock ….


  31. From what I see-the Snap benefits (used to be Food stamps) were already cut 50% so a single person gets roughly $50. a month. I know from shopping that can't be more than a week at most of food. Our food bank allows participants to come once a month which might cover at the most 2 weeks. That's some staples, canned goods, good bread donated by local bakery and 2 proteins. Our church donates paper towels and toilet paper and individuals donate laundry, dish soap, shampoo, bath soap etc. Many don't have hot water, working stoves, cars and no way of replacing them. Many are widows, or widowers. Family's get more depending on family size. Local grocers contribute produce, baked goods anything going into expiration. Doing this to people who have worked their whole life's to support this country is a tragedy. Meet these people, interact with them and they are so grateful that someone actually cares for their needs and smiles at them, It gives the proper perspective of gratitude.


  32. Financials/Batman – Stockopedia, it's a paid thing.  

    HMNY/Pat – In the LTP, we have the HMNY spread:

    Wow, Moviepass is getting $2 kickbacks from 4 movie studios for every ticket they buy!  They say when they promote a film – they can account for 10% of the box office and are generally accounting for 3% of the box office.   Prices seem to have gone way up – looks like $50/month now.  

    I don't see any reason not to sell 10 HMNY Aug $7.50 puts for $3.50 ($3,500) in the LTP and buy 20 $5 ($3)/$10 ($1.50) bull call spreads for net $1.50 ($3,000) for a net $500 credit on the $10,000 spread that's half in the money.  Worst case is we end up owning 1,000 shares for net $7 and I'm really starting to like what they are doing.  Revenues in 2016 were $6.7M and this year trending around $6 but I think it's going to explode.  

    Submitted on 2018/01/18 at 10:58 am

    GNC/Baron – Even in an IRA that charges 100% margin, you can still sell the 2019 $5 puts for $2.10 and that nets you in for $2.90 with 72% upside in 12 months.

    If you have stock, rather than DD, you can sell it for $4.62 and buy 2x the 2020 $2.50 ($3.30)/7.50 ($1.50) bull call spread for $1.80 and that still puts $1 back in your pocket, not even counting the short puts.  

    That's so good we'll have to add it to the OOP:

    So for the OOP, let's:

    • Sell 10 GNC 2019 $5 puts for $2.10 ($2,100) 
    • Buy 20 GNC 2020 $2.50 calls for $3.30 ($6,600)
    • Sell 20 GNC 2020 $7.50 calls for $1.50 ($3,000)

    That's net $1,500 on the $10,000 spread that's half in the money to start and our upside potential is $8,500 (566%) and our worst case is owning 1,000 shares of GNC at net $6.50, so it's an aggressive play.

    I'd love to spend the rest of my morning tracking down all or your hunches but, no…

    IBM/JMD – Yes, I meant to add them and still at $150.  

    In the LTP we already have 5 short 2020 $145 puts we sold for $12.50, now $17.50.  No reason to add more, we collected $6,250 so far but we can add the bull call spread so let's:

    • Buy 25 2020 $140 calls for $23 ($57.500) 
    • Sell 25 2020 $170 calls for $11 ($27,500) 

    That's net $30,000 on the $75,000 spread less the put money is net $23,750 so 200% upside potential at $170 in 2 years but plan is to sell 5 or 10 short calls whenever they are up in the channel.  Even now, you can sell 10 April $160s for $2.50 and pocket $2,500 – do that 10 times and the spread is paid for but I'd rather see a bounce and sell $170s for at least $3.  

    GNC/Jeff – Well Batman didn't have a cover, so different animal.  You're going to get a fat return so I'd be happy and move on though you could buy back the $2.50 puts (now 0.80) and sell the $5 puts (still $2.20) and use that extra $1.40 to push the short $5 calls ($2.40) to the $10 calls ($1) and then you double your upside potential (+$2,500) for the cost of agreeing to buy 500 shares of GNC for $5 instead of $2.50 (+$1,250).

    /RB/Jeff – You have to take some back off at $1.675 man!  Greed kills!  

    That was certainly an exciting morning:

    Seriously, it is a very bad habit to scale in without scaling back out!  

    GNC/Batman – Calming down a bit already.

    Gratitude/Pirate – Makes me sad to live in a country that has little of it.  


  33. Phil//RB

    I did! I’m back to 1x just above 1.65. And now stop is at 1.66


  34. /RB – Now set a trailing stop at -.005 so I can lock in my gains. 


  35. Phil

    When you find a stock like Luxottica Group S.p.A. LUXGF that you are interested in with no options what’s the best way to buy?

    Or are there options on the other market

    Description

    Luxottica Group S.p.A., together with its subsidiaries, provides fashion, luxury, sports, and performance eyewear worldwide. It operates through two segments, Manufacturing and Wholesale Distribution, and Retail Distribution. The Manufacturing and Wholesale Distribution segment engages in the design, manufacture, wholesale distribution, and marketing of proprietary and designer lines of prescription frames and sunglasses, as well as performance optics products. This segment offers its products under proprietary brands, such as Ray-Ban, Oakley, Vogue Eyewear, Persol, Oliver Peoples, Alain Mikli, and Arnette; and licensed brands, including Giorgio Armani, Emporio Armani, Armani Exchange, Brooks Brothers, Burberry, Bulgari, Chanel, Coach, Dolce&Gabbana, DKNY, Michael Kors, Paul Smith Spectacles, Prada, Miu Miu, Ralph Lauren, Polo Ralph Lauren, Ralph, Starck Eyes, Tiffany & Co, Tory Burch, Valentino, Versace, and Ferrari. The Retail Distribution segment operates prescription eyewear stores primarily under its retail brands, including LensCrafters, Sunglass Hut, Pearle Vision, OPSM, Laubman & Pank, GMO, David Clulow, Salmoiraghi & Viganò, Ray-Ban, Oakley, Oliver Peoples and Alain Mikli stores, The Optical Shop of Aspen, and ILORI; and licensed brands, such as Sears Optical and Target Optical. As of May 16, 2017, it owned, operated, and franchised a network of approximately 8,000 stores. The company was founded in 1961 and is headquartered in Milan, Italy. Luxottica Group S.p.A. is a subsidiary of Delfin S.à r.


  36. QC Mike- I think it is LUXTY otc. They have competition from a new IPO EYE that does the vision market which of course is expanding with the "graying": of America. Haven't done the due diligence on either yet, but you  just reminded me.


  37. Phil,

    LL – what's your back to the wall feeling?

     In response to Albo on monday, you said 'we never loved them' but were tempted by the scandal related sell-off.

    Earnings (-1.63) reflected legal class action costs, sales dropped 5% from '15 to '16, net loss of $68 mil  in '16 vs loss of $56m in '15 vs profit of $63m in '14. Mgt talked a turnaround gameplan and the stock seemed to me to be forming a bit of a base which was then destroyed by the Wedbush analysis. In that they just broke to a new low (<24) –  due to the Wedbush report –  is it time to leave (long stock assigned from short puts @ 29)  or do you see any reasonable prospects of a comeback? Competing against HD andf LOW.

    Thanks, as always


  38. /RB/Jeff – Good man.  4 for me and down to maybe $1.66 avg after this morning.  Was up to 10 so very comfortable now.  As I said when we started last week, I have a lot of conviction because of holiday weekend but yesterday we got that silly pop so I cashed out but then got back in at day's end and then DD 2x this morning (not quite 2x as we never hit $1.65 – thank goodness!) and then back to 4 with a stop on 2 at $1.68 now and probably I'll take $1.70 on 1/2 regardless. 

    LUXGF – They may have options on a European exchange but not at all on US systems so I simply don't play them – although they are a very solid company (but not cheap at $62 and yes, there's also LUXTY at $60 for some reason).  

    LL/8800 – I have no interest at this price.  They are just a lumber store that usually gets along and makes a reasonable, but unexciting profit.   The reason I turned into a fan is they dropped 80% for very stupid reasons that weren't likely to last.  It's like when I was banging the table on BP – I don't like the stock much – except for that time the dropped 60% on news they were very likely to recover from over time.  

    Pre-crisis, LL had $1Bn in sales and made $66M so, given the type of business they are, I'd pay 15x or about $1Bn.  Currently they are priced at $650M at $23 so still a good deal but not exciting enough to play here.

    Year End 31st Dec 2011 2012 2013 2014 2015 2016 TTM 2017E 2018E CAGR / Avg
    Revenue $m 681.6 813.3 1,000 1,047 978.8 960.6 1,014 1,034 1,112 +7.1%
    Operating Profit $m 42.4 78.3 126 104.1 -83.2 -93.6 -46.8      
    Net Profit $m 26.3 47.1 77.4 63.4 -56.4 -68.6 -46.3 -32.1 25.1  
    EPS Reported $ 0.93 1.68 2.77 2.31 -2.08 -2.51 -1.64      
    EPS Normalised $ 0.93 1.68 2.77 2.31 -2.08 -2.51 -1.64 -1.22 0.81  
    EPS Growth % +0.01 +80.6 +65.0 -16.8            
    PE Ratio x           n/a n/a n/a 30.1  
    PEG x           n/a n/a n/a 0.72
    Profitability

    Since you already own them at $29, my attitude would be I don't hate them enough to take a loss but I'd ditch the stock ($23) and sell 2020 $28 puts for $9 and buy the $20 ($8.50)/30 ($4.50) bull call spread for $4 so you are taking net $28 off the table and you still have $10 upside at $30 and worst case is you own them again at $28, which is cheaper than you own them now.  


  39. LUXTY is buying Essilor International with a stock swap which would basically move Lux into a lens maker. They are hitting problems, though as the EU is concerned about antitrust concerns.


  40. I stopped out at 1.685 on /RB. Will see where it settles and decide if I’m back in. 


  41. Phil,

    Thx for the LL guidance.


  42. pirateinvestor 

    I was looking at the brands they own

    They were trying to buy Maui Jim

    Thanks 


  43. GNC/Phil,

    did'nt manage to get on GNC, will you still recommend a trade on it or let it slide?




  44. Experts: What states can do to secure their elections








  45. HMNY     sold 20 2020 $5 putts for 2.7;    bought 20 2020 $5 calls for 1.75







  46. Phil/HMNY    Hi Phil.  Were you just re-iterating the HMNY trade or are you suggesting another trade at this level (as I am in the current trade)?   Seems like a stock purchase here may make sense as it comes along with a 5 year warrant to buy at 6.50.




  47. Jmd_  I like the risk/reward potential of your trade.


  48. Wow, $1.69 on /RB.  Stop at $1.685 now.  

    GNC/Dave – The main reason I like GNC is there are lots of people who think it will go BK (driving up the short put pricing) and I see little chance of that happening.  That being the case, I can construct a trade were I have little fear of the "worst case" (being assigned) and we can have fun with the leverage.  

    In the LTP, we sold 20 GNC 2020 $5 puts for $3 ($6,000) and now they are $2.10 ($4,200) and still good for a new trade and, in the LTP we will add:

    • Buy 50 GNC 2020 $2.50 calls for $3.50 ($17,500) 
    • Sell 50 GNC 2020 $7.50 calls for $1.65 ($8,250) 

    That's net $9,250 on our new spread less $6,000 we collected is net $3,250 on the $25,000 spread that's half in the money already.  Even taken with the puts at $4,200, the net is $5,050 with a $19,950 (395%) upside potential and the worst case is owning 2,000 shares for net $14,200 ($7.10) assuming you just sit there and watch the spread go to zero and never roll the puts.  

    In the OOP, we already have that spread at net $700 for 20 – even better than the LTP's price.

    While it looks like a falling knife, MoviePass (HMNY) is probably just repricing to the stock offering and, in the OOP, we don't have them at all so let's play ball!  

    • Sell 15 HMNY 2020 $5 puts for $2.60 ($3,900) 
    • Buy 25 HMNY 2020 $2.50 calls at $3.25 ($8,125) 
    • Sell 25 HMNY 2020 $7.50 calls for $1.10 ($2,750)

    That's net $1,475 on the $12,500 spread so potential to gain $11,025 at $7.50 (747%) and we're more than half in the money already!  Aren't options great?  

    Worst case is owning 1,500 shares at net $6ish 

    In the LTP, we have 20 HMNY Aug $5/10 bull call spreads we paid net $1.50 for and we sold 10 Aug $7.50 puts for $3.50, which are now $3.70.  Let's adjust by:

    • Roll the 10 Aug $7.50 puts at $3.70 ($3,700) to 20 2020 $5 puts at $2.60 ($5,200) 
    • Roll 20 Aug $5 calls at $1.10 ($2,200) to 50 2020 $2.50 calls at $3.25 ($16,250) 
    • Sell 20 2020 $7.50 calls for $1.10 ($2,200) 

    So we're putting net $13,350 less the original $500 credit is $12,800 on the $25,000 spread only 10 longs are still uncovered and the Aug can be rolled and re-sold to reduce costs down the line.  


  49. /RB just stopped me out at $1.685 but a nice $6,000 day!  

    Speaking of stocks that used to be $5 – Thanks Trump!

    • Steel stocks (SLX +0.9%) are higher as Pres. Trump talks up the industry, saying the U.S. is being "decimated" by countries dumping their steel products and calling for tariffs as an option to counter the problem.
    • Trump says U.S. steel companies are "hanging on for their lives," and he wants to make sure that "we still have a steel industry."
    • X +2.4%MT +2.2%CLF +3.1%AKS +1.6%NUE +1.5%STLD +1.4%SCHN +1.6%RS+1.1%WOR +1.3%.
    • China has expressed concerns over excessive protectionism in the steel sector by the United States, and urged it to show restraint in a probe into steel imports, an official with Chinese Ministry of Commerce (MOFCOM) said on Tuesday.
    • Although no insights have been provided on the results of an investigation into steel and aluminium imports, the probe could lead to broad tariffs or import quotas among other steps.
    • China to oppose any unfair and unreasonable trade measures by United States against its steel companies, arguing protectionism will "poison" the industry.


  50. Phil/GNC

    New here.. First comment.

    "the worst case is owning 2,000 shares for net $14,200 ($7.10) assuming you just sit there and watch the spread go to zero and never roll the puts.  "

    quick question. Is it a typo? should it be 

    "the worst case is owning 2,000 shares for net $5800 ($2.90) assuming you just sit there and watch the spread go to zero and never roll the puts. "

     


  51. Any chance ABX will make it over $14 this week? :) .  Kinda forgot about those $14 calls I had for February…….I believe earnings are tomorrow. 


  52. ~~Israeli police find 'sufficient evidence' to indict Benjamin Netanyahu.


  53. Welcome Ayyaps!   Your first comment and you are checking my math?  Not a way to get on my good side, buddy!  angry  Just kidding – it thrills me to know people are paying attention and yes, I did get mixed up but so did you:

    We sold 20 GNC $5 puts.  These obligate us to buy 2,000 shares of GNC for $5.  Originally we sold them for $3 ($6,000) but, in the context of that math, I was talking about as a new trade, if you sold them now for $4,200.  THEN you lay out $9,250 for the spread, leaving you in the spread for net $5,050.  If you are then assigned and you let the spread go worthless (loss of $5,050) AND you have to buy 2,000 shares for ANOTHER $10,000, leaving you with 2,000 shares that cost $15,050 or $7.52/share.  

    I don't know where I got $14,200 from – doing too many things at once at the time….

    ABX/Ult – There's always a chance.  That's why they have "00" on the roulette wheel.  cheeky  I'm a believer as gold is more now than it was in Q4 last year and their costs are probably lower but they may have some charges from all that nonsense in Peru that hold them back.  I would not make a short-term bet on them like that – it's too hard to predict earnings.  

    That's not to say I'd even be surprised if they pop back to $15 – just that I wouldn't bet on it happening right away.  

    Netanyahu/Albo – No wonder he and Trump were getting along so well.  Trump's new budget tosses him $200M.

    Israeli police on Tuesday recommended corruption charges be brought against Prime Minister Benjamin Netanyahu, in a move that could lead to a formal indictment and threaten his grip on power.

    The police recommended that prosecutors charge the Israeli leader for receiving gifts from businessmen, including billionaire Hollywood producer Arnon Milchan and Australian billionaire James Packer, according to a statement. They also said Mr. Netanyahu tried to negotiate favorable coverage in a newspaper in return for limiting the influence of another daily.

    The police urged that Mr. Netanyahu be charged with bribery, fraud and breach of trust, but it is now up to the country’s attorney general to decide whether to indict him and on what formal charges. The police announcement is expected to further pressure Mr. Netanyahu to step down after a monthslong police investigation that has divided Israeli public opinion.

    Imagine if our police (FBI) did their job and arrested politicians for such small infractions?  

    Those are just some of the hits – be sure to stay for the whole concert!  

    Image result for trump nixon cartoon

    Image result for trump nixon cartoon

    "But Bibi and I have known each other a long time — a smart man, great negotiator. And I think we’re going to make a deal. It might be a bigger and better deal than people in this room even understand. That’s a possibility. So let’s see what we do."

    "I think they very much would like to make a deal or I wouldn’t be happy and I wouldn’t be here and I wouldn’t be as optimistic as I am. I really think they — I can tell you from the standpoint of Bibi and from the standpoint of Israel, I really believe they want to make a deal and they’d like to see the big deal."

    - Trump

    I'd say by tomorrow Trump will claim he doesn't really know Netanyahu…


  54.  speaking of gold,  lots of options traded in GDX the last couple of days.  Yesterday a big load of 2020 $34 calls bought and today another 900, over 48,000 in open interest- max time and strike. Also today 2500 $17 puts STO for 2020.  Somebody betting big on gold miners. 


  55. GDX/Stock – I think it will pop at some point but I also would like to see the Dollar back at 92.50 (so I know it won't go too much higher) before jumping into gold or silver.

    Well that was a fun day, Dow went from down 180 to up 40 and, of course, the VIX is down 1.5% because, hey, that's not volatile.  


  56. No progress from yesterday:

    Big picture bounce lines:

    Dow 26,500 to 23,500 is 3,000 points (wow!) and that's 600-point bounces to 24,100 and 24,700, which we're testing now.  

    S&P 2,850 to 2,550 is 300 points (you know it's BOT trading when ES is exactly 10% of the Dow move) so 60-point bounces to 2,610 and 2,670 and we're right there.  

    Nas 7,000 to 6,300 is an even 10% and 700 points so 140 bounces to 6,440 and 6,580 – not there yet. 

    RUT 1,600 to 1,450 is 150 so 30-point bounces to 1,480 and 1,510, just testing 1,500 now.

    So we're looking good and it's normal, of course, to pause or even pull back at the strong bounce lines and all you have to do is chart 20% retraces of the run from the bottom to the strong bounce to see if we're holding a weak or strong retrace from the strong bounce lines.  

    At the moment, it seems like we're consolidating for a move higher.  

    Still, it's good, healthy consolidation between weak and strong (as long as it now breaks higher).


  57. AFL splitting stock.


  58. Chipotle pops after nabbing Taco Bell CEO

    Feb. 13, 2018 4:42 PM ET|About: Chipotle Mexican Grill, Inc. (CMG)|By: Clark Schultz, SA News Editor 

    Chipotle (NYSE:CMG) officially announces that Brian Niccol has been hired as chief executive officer and will be added to the company's board.

    The appointments become effective on March 5.

    "I will also focus on dialing up Chipotle's cultural relevance through innovation in menu and digital communications. This will attract customers, return the brand to growth, deliver value for shareholders and create opportunities for employees," says Niccol.

    Shares of Chipotle have jetted up 11.81% in AH trading to $281.01.

    Previously: Taco Bell CEO heads to Chipotle (Feb. 13)


  59. HBI – I can't find the current HBI position….  does anyone have it?


  60. BIBI/ friend of Jared's – has slept at his apartment. https://forward.com/fast-forward/362898/when-bibi-slept-in-jared-kushners-bed/


  61. CMG – The new CEO seems to have very good experience with Taco Bell dealing with quality perception issues, as well as targeting a younger group through social media and menu changes.   He also seems to have a good handle on operations, and given the higher margins in CMG he should be able to squeeze out some margin expansion.   I have only sold some '20 280 puts but think this thing may have some legs….

    WSJ article. 

    Chipotle Picks Taco Bell CEO Brian Niccol to Be Its New Chief

    https://www.wsj.com/articles/chipotle-picks-taco-bell-ceo-brian-niccol-to-be-its-new-chief-1518557401?mod=djemalertNEWS


  62. AP FACT CHECK: Trump vastly overstates depth of labor pool









  63. A ‘Harvest Box’ for Low





  64. America’s Transformation Into An Oil Exporting Nation




  65. Hilton fourth quarter revenue jumps 24 percent on more booking at higher prices


  66. Global Stocks Gain Ahead of U.S. Inflation Numbers




  67. Japan’s Economy Grows for Longest Stretch in 28 Years


  68. Are traffic-clogged US cities ready for congestion pricing?


  69. US inflation: five things to watch




  70. Happy Valentine's Day!  

    Related image

    No massacre for the markets as we're up 150 points 

    Looks like CMG is up $30 pre-market!  Don't forget we had a plan for this! 

    February 7th, 2018 at 10:38 am | (Unlocked) | Permalink

    We have CMG in the LTP and I still like the trade, though you could set it up a bit lower now.  

    Good thing we sold the short calls – that kept us out of trouble.  It's too early to pull the trigger but the $310s we'll buy back and wait for a bounce to sell something else for $5-6,000.  If we do that every few months (just 30 days on this one), we'll pick up $20,000 per year as a bonus while we wait to see if we get $30,000 for the spread that was a $10,600 credit to start!  

    That's the sneaky way the LTP works over time.  It's a pretty simple trade with a high probability of success but we can work it into a $70,000 gain off a $10,000 credit over 2 years.  

    And we only sold 5 puts hitting us for $13,000 in margin.  The risk of assignment is $135,000 so 13.5% of our buying power but it's not a realistic risk.  What's the chances CMG falls below $200?  It's not nothing – look what SVXY just did – but realistically, I look at the risk at 500 x $70 (to $200) for $35,000 vs making maybe $80,000, so well worth it (and then we can roll the puts too!).

    February 8th, 2018 at 12:16 pm | (Unlocked) | Permalink 

    CMG – We're kind of even so let's get more aggressive.   We'll buy back the 4 short March $310 calls at $1.40 – not because I think we'll come back but it clears the slot for a sell on the bounce.  Now we'll take a proper risk and buy back the 10 short 2020 $310 calls ($38) as they are up $12 ($12,000) and I want to lock it in.  We can then roll our 10 long 2020 $280 calls ($50) to 10 long 2020 $260 calls ($58.50) as that's well-worth $8.50.  

    So now, if CMG goes higher, we'll sell the $310s again for $50 but have a much wider spread that's deeper in the money (and we'll sell more short calls).  If CMG goes lower, the $300 calls are $43 and we'd sell them by $40 and we'd be in a $40 spread ($10 wider) at a $20 lower strike for net $6.50 more.  That's our worse (not worst) case!  

    That's a really quick way to make $30,000 in the LTP!  We made a similar move in the hedge fund as well.

    There's the real difference between TA and Fundamentals – that was a fundamental-driven decision that ignored the very ugly chart and took advantage of the incorrect move to buy options at their cheapest (and sell them at their most expensive).  Now that we're recovering – I don't have to be greedy or guess the top, we just stick with our plan (but better prices than we thought) and we're left with a fantastic spread that should pay us another $50,000 which we can sell $50,000 worth of short calls against over the next two years.  

    Long Call 2020 17-JAN 280.00 CALL [CMG @ $272.12 $-32.21] 10 1/2/2018 (709) $63,000 $63.00 $-10.25 n/a     $52.75 - $-10,250 -16.3% $52,750
    Short Call 2020 17-JAN 310.00 CALL [CMG @ $272.12 $-32.21] -10 1/2/2018 (709) $-50,000 $50.00 $-9.30     $40.70 $-20.80 $9,300 18.6% $-40,700
    Short Put 2020 17-JAN 270.00 PUT [CMG @ $272.12 $-32.21] -5 1/2/2018 (709) $-17,600 $35.20 $6.50     $41.70 $5.10 $-3,250 -18.5% $-20,850
    Short Call 2018 16-MAR 310.00 CALL [CMG @ $272.12 $-32.21] -4 1/3/2018 (37) $-6,000 $15.00 $-12.73     $2.28 $-13.33 $5,090 84.8% $-910

    This was the original trade:So our net entry was a $10,600 credit and we bought back the short $310s for $1.40 ($560) and the short $310 calls for $38,000 ($38) and we spent $8,500 to roll the $280s lower so net $36,460 for what is now 10 2020 $260 calls that are almost all in the money and the 5 short 2020 $270 puts that are $20 out of the money.  So, if we sell the 2020 $350 calls for $36 or more, we're in a $90,000 spread for free and have tons of coverage to sell calls, like 4 April $300s for $10 ($4,000) using 65 of the 702 days we have to sell.  

    That's not bad for one slot in a $500,000 portfolio!  

    Keep in mind we built that play PATIENTLY.

    HBI/Batman – We don't have an HBI or LB position and I'm still more inclined to add LB though HBI did come down nicely (because it's in a worse channel).  

    February 7th, 2018 at 11:39 am | (Unlocked) | Permalink

    HBI/Batman – Well I hope they disappoint, so we can get back in.  Been waiting for them and LB to report and see who's a better deal after.

    Just to be clear, I like LB better than HBI – it's just that, by Thanksgiving, LB had already pooed and HBI didn't so I went with the one that was a better deal at the time but it was my intention that LB be the trade of the year and that's the one I'd prefer to replicate (still in the Money Talk portfolio).


  71. /RB for another go? Not sure ahead of inventories. 


  72. Me either – not playing.