by phil - February 24th, 2017 8:24 am
The whole World is freaking out this morning about the guy Matt Taibbi calls "The Insane Clown President" as he and his posse take a hard turn to the right at the Conservative CPAC gathering in Maryland. I'm not going to get into all the hateful and offensive things going on over there other than to say the rest of the world is rather horrified and today, Trump himself will address the crowd and it's going to be a lot like waving red flags at a bull – so we have that to look forward to.
Unfortunately, I'm going to be live at the Nasdaq this morning so I won't be able to attend the 9:25 MAIN STAGE presentation entitled "If Heaven Has a Gate, a Wall and Extreme Vetting, Why Can't America?" Oh yes, I wish I were joking but it's REAL! The session is moderated by Colorado Rep Bob Beauprez along with CO's Ken Buck, Arizona's Andy Biggs along with Mike Gonzales from The Heritage Foundation and Helen Krieble from the Kreible Foundation.
After that, things get more serious with "Rustbelt, Religion and Realignment". I know, I can't believe I'm missing the fun! Pence, Bannon and the rest of the B Team were there yesterday and the Big Kahuna flies in today and it's interesting because last year he was so vilified at this Conference that he cancelled his appearance.
So, aside from the Conservative feeding frenzy, we had Mike Pence saying yesterday that "America's ObamaCare nightmare is about to end" and Steve Bannon saying "The Globalists aren't going to give us our country back without a fight" and warning the base that "It’s not only not going to get better, it’s going to get worse every day in the media" while Trump is calling China a currency manipulator and Treasury Secretary Mnuchin rolls out a "Weak Dollar Policy."
That's sent Gold and Silver (our Trade of the Year) flying higher while the weaker Dollar covers the flight out of equities by holding up the index (stock prices up as Dollar weakens) long enough to cover the tracks of the smart money crowd. It wasn't enough to help oil though and you are very welcome…
by clarisezoleta - February 23rd, 2017 11:18 am
PhilStockWorld.com Weekly Trading Webinar – 02-22-17
For LIVE access on Wednesday afternoons, join us at Phil's Stock World – click here
00:02:30 Checking on the Markets
00:05:18 FOMC Meeting
00:23:47 Tesla Powerwall
00:43:27 NGJ7 Trade Ideas
00:46:19 Natural Gas Chart
00:52:17 ESRX on Long-Term Portfolio
00:54:11 QCOM on Long-Term Portfolio
00:56:25 Trade Ideas
01:01:30 TEVA Trade Ideas
01:04:10 LNG Charts
01:10:26 PFE Charts
01:11:49 Crude Oil
01:21:38 PFE Trade Ideas
01:22:55 Checking on the Markets
01:39:41 LL Charts
01:42:28 Checking on the Markets
Phil's Weekly Trading Webinars provide a great opportunity to learn what we do at PSW. Subscribe to our YouTube channel and view past webinars, here. For LIVE access to PSW's Weekly Webinars – demonstrating trading strategies in real time – join us at PSW — click here!
by phil - February 23rd, 2017 8:30 am
Our Tesla (TSLA) short is looking good!
Despite releasing an earnings report that looks more like a sales brochure (and the CFO promptly quit, so he won't have to justify these numbers) it's pretty clear to investors that all is not well under the hood of the auto hobby shop. You have to make much more than 8,000 vehicles a month to be considered an actual "manufacturer" – in 1914, with 13,000 employees, Ford (F) produced 300,000 Model Ts while TSLA's 13,058 employees have only managed to produce 75,000 cars (mostly the Model S) in their "amazingly automated" plant.
You would think, 103 years after Ford invented the assembly line, that Tesla could do a little better but hey, give them a couple of more years and they might give the 1914 Model T a run for its money! Given the shortfall in production (90,000 cars were promised for 2016) and the rapidly bleeding cash position, the departure of the CFO and the massive dilution of the shareholders (SCTY was given stock), we're very confident the $2,163 short we gave you yesterday will return the full $7,500 on March 17th (up 246% in less than 30 days) so you're welcome for that and happy St. Patrick's Day!
Other than warning you not to buy the dip in TSLA, I've lost interest and am moving on. Paulo Santos wrote a great article analyzing their earnings if you are interested, but we have bigger fish to fry now that we're done with Tesla – no sense beating a dead horse, even an electric one. Just be aware that there are only 790 Super Charger sites in the US and that's 36% growth from last year – how do they get to 300,000 sales with that slow growth (and there are 114,533 gas stations)?
So, what else is going on in the World? Well, we scored a nice win on Natural Gas Futures (/NGV7) from yesterday's live Trading Webinar with a nice $1,190 per contract gain for our Members – not bad for a half day's work, right?
by ilene - February 22nd, 2017 11:13 pm
Want a stronger economy? Give immigrants a warm welcome
Immigrants have long been a scapegoat when economies are sputtering, jobs are being lost or security is a concern.
President Donald Trump’s planned wall along the Mexican border, for example, is premised on the notion that immigrants are pouring across the border (they’re not), taking Americans’ jobs (they haven’t) and committing a disproportionate share of crimes (they don’t).
The presumed threats of immigration were also front and center in Trump’s recently announced plan to deport millions of people who were in the U.S. illegally.
We saw something similar when U.K. voters opted for a “Brexit” from the European Union last year, when many British politicians cast immigrants as a threat to the physical, social and economic welfare of natives.
While it has become a popular notion in the West that immigrants jeopardize the job prospects of natives, over 30 years of economic research (including my own) give strong reason to believe otherwise.
And in fact, the opposite may be more likely: There’s evidence immigrants actually promote economic growth.
Why we blame immigrants for our troubles
Extensive reviews of research on the topic (like this one) show that most studies of how immigration affects native wages and employment found very little effect.
Although economists have yet to arrive at a complete consensus, decades of studies generally do not support the notion that immigration harms the economy, market wages or native employment. So why do so many believe it when research suggests otherwise?
A central issue is that it is easy to think that the labor market is a zero-sum game and the number of jobs available is fixed. If everyone were competing over a finite number of jobs, more immigrants would mean fewer opportunities for natives, and vice versa, right? The reality, however, is much more complex, as I will show. Further, it is simply false to think of the number of jobs as fixed in the first place. Employment has been generally rising since 2010, which means more jobs for everyone.
by ilene - February 22nd, 2017 9:16 pm
Courtesy of John Mauldin, Outside the Box
As readers know, I have been doing a multipart series on the proposed tax reforms for the last three weeks in Thoughts from the Frontline. My intention is to finish this week. In part two I talked about what I like about the Better Way proposal, and in part three I pretty much eviscerated the border adjustment tax (BAT), which I think has the real potential to create a global recession. You’ll need to read the series to see why, but a lot of it has to do with simple game theory, which the measure’s Republican proponents are ignoring. If you upset the equilibrium, the other partners at the table will change their strategies, too.
Let me repeat that what I find encouraging about the proposed tax reforms is that they are fairly radical in the sense that there is not an obvious constituency for much of what is proposed, and it will require some real leadership in Congress to get them passed. In the past I have proposed a series of tax reforms (sometimes with my friend and fellow economist Steve Moore, in op-eds around the country) that are pro-business/entrepreneur, but we have always constrained our proposals by what we saw as political reality.
If the Republican leadership thinks they can get the BAT through Congress, then I’m going to take the constraints off my thinking and propose something that is even more radical but much more workable and would not come with the negatives that the current Republican proposal does. (It is also something that most economists would agree with, at least in theory.) It would unloose a massive amount of entrepreneurial spirit and free up capital to go where it can be most productive, AND it will balance the budget. My proposal will makes the United States heads up more competitive vis-à-vis the rest of the world world and yet allow other countries to respond in a similar fashion, making their own economies more competitive but without their having to try to outcompete with us and thereby hurt global trade. But that’s all for this weekend…
by phil - February 22nd, 2017 8:28 am
"The 7% Solution" was the "lost" manuscript of Dr. John Watson recounting his famous patient's recovery from cocaine addiction. In a similar manner, we have a market that is clearly on crack and, coincidentally, the Nasdaq Composite is up exactly 7% (5,350) from it's 5,000 line since Jan 1st – time for a bit of reflection indeed!
The real story to the Nasdaq is, of course, Apple (AAPL), which is up 19% at $137 from $115 at the start of the year. AAPL is about 15% of the Nasdaq so it's responsible for 2.85% of the 7% gain in the Nasdaq, which is 40% of 7% – that's quite a burden for one company to carry. However, we feel the move in AAPL is justified so it's not AAPL's value we're questioning but whether or not AAPL should have dragged his 99 brother and sister stocks up the hill with him or are they all irresponsibly flying too close to the sun and investors are about to get burned?
There are a lot of overpriced (by normal standards) stocks on the Nasdaq but I think Tesla (TSLA) can serve as a good proxy this evening when they report Q4 results (or lack thereof) after running up 53% since Dec 2nd, when they were at $181.50 (now $277). That's a market cap of $44.6Bn, just shy of Ford (F) at $49Bn and GM (GM) at $56Bn – even though TSLA produces just 50,000 cars a year and lost approximately $2Bn doing it. That's a loss of $40,000 per car people! How on Earth are they going to sell $35,000 cars if they are losing $40,000 per $90,000 car they sell now?
We're short on TSLA in our Short-Term Portfolio as this Q should include the "earnings" of SolarCity, Musk's solar venture which had been bleeding cash before TSLA acquired it. Musk has to check a lot of boxes and explain how he's going to sell over 100,000 Model 3s in 2017 when there isn't even an actual car yet. Our short play is this:
by ilene - February 21st, 2017 10:01 pm
Courtesy of Michael Batnick
A few weeks after the election, a friend of mine told me he sold all of his stocks in his 401(k). He was happy with the 13% his portfolio earned in 2016 and felt that stocks had gone too far too fast. He understands that he can’t time the market, but he just couldn’t help himself. His mind was made up and he would get back in when stocks came back down to earth.
I’ve had conversations with other friends and family members asking me if they should take similar measures. Now these are just anecdotes, indicative of nothing really, but it does seem like there is a giant disconnect. Civilian enthusiasm for stocks, at least from my perch, is nowhere near euphoria, but at the same time stocks are expensive on basically every single metric.
So people are paying more for stocks as they make new all-time highs, and yet the “feel” is more this is gonna end badly than I don’t care just get me in. How can these two contradictory things exist simultaneously and what is creating this disconnect?
Howard Marks commented on this recently in his interview with Barry Ritholtz and said interest rates are responsible:
I don’t believe most people are thinking very optimistically. I think most people have reservations, most people understand that economic growth is uncertain, most people understand that we don’t know how the central bank experiment with zero rates is gonna end up or how it gets reversed, and of course most people are concerned about the geopolitical developments in the world today. I believe that enthusiasm is not unrestrained, on the other hand, people may be thinking in not a bullish way but I think they’re acting in a bullish way. What accounts for the difference? Rates near zero. And when you live in a low return world, you have to take risk to get return. People are willing to take risk because they’re hand cuff volunteers. People who do things not because they want to, but because they have to.
by phil - February 21st, 2017 8:38 am
Up, up and away!
The markets are looking well-rested after a long weekend and US Futures are once again off to the races – for no particular reason, of course. Who needs a reason when things are going to be so great – again? Things in Europe are pretty great, despite the rampant Socialism and, ew, immigrants – as Eurozone Business Activity jumped from 54.4 to 56 in February – the best reading in 6 years.
Those fools are still following those failed Obama-style policies the Trump team has vowed to reverse as quickly as possible so let's hope the President will be able to save us from impending prosperity or, even worse, successful diversity and that disgusting goodwill towards refugees and don't even get me started on free trade, free medicine and housing for the poor – it's a sick, depraved state and they're not going to fool us with all their "success" – we know a Socialist plot when we see one, right?
Fortunately, our Top Trade Ideas (see review here) since the election have been 95% bullish with 11 of our 14 November/December picks already making money (they are generally long-term trade ideas). The 3 "losers" (so far) are certainly worth a look, especially our lone bearish hedge using the Dow Ultra-Short ETF (DXD), offset with a short put on Bed, Bath and Beyond (BBBY), though the original trade is down so the new set-up would be:
- Sell 10 BBBY 2019 $35 puts for $3.45 ($3,450)
- Buy 40 DXD July $12 calls at $1.30 ($5,200)
- Sell 40 DXD July 16 calls at 0.35 ($1,400)
The net of that spread is $350 and it gives you $12,000 of upside protection if DXD goes from $13 to $15, which is up 15% and DXD is a 2x short so the Dow would have to fall 7.5% to collect in full but, at $13, the spread is $1 in the money and pays $4,000 (a $3,650, 1,042% return on cash) if the Dow simply doesn't go higher than 20,600. That makes it an excellent hedge.
by phil - February 20th, 2017 7:45 am
The pressure is on!
Top Trades has become one of Philstockworld's most popular Memberships and that's a shame because I actually hate trading services that just give out trade ideas. Unfortunately, that's what the market demands and, though Top Trade Members miss out on the trading education and deep discussions we have in our Live Member Chat Room, they usually do get a lot of great trades.
That is, until September they did! In our first year of Top Trades, beginning in August of 2015, 96 out of 119 Trade Ideas (80.6%) were immediate winners and half of the initial losers turned around over time and became winners as well. Perhaps it was shooting fish in a barrel in a bull market. Unfortunately, our second year got off to a rough start, with just 7 of our 16 ideas in September and October winning by Dec 10th (we have to give them some time before reviewing). Of those 9 losing trades:
- ERIC is improved but still red
- TEVA has not improved
- MON is now a winner
- CMG is a home run
- SGYP is a huge winner
- LL got worse
- TASR is now a winner
- TWTR still in the red
- JO was a winner but now a loser again (wild swings)
So 4 of our 5 losers are now winners and these are long-term trades, for the most part – it's not like we can expect every one to win immediately. The point is that these reviews are simply initial snapshots to see how we're doing – in case our trade need adjustments in their early stages – they are far from the final word on these trades. In this month's review, we will pick up in November and review the next two months.
The secret to our success in Top Trades is PATIENCE!!! Patience is the hardest thing we try to teach our Members at Philstockworld as it tends to take years of practice and the nice thing about the Top Trades Membership is that you don't have a choice – we make…
by ilene - February 19th, 2017 10:32 pm
Courtesy of John Mauldin, Thoughts from the Frontline
Today we come to part 3 of my tax reform series. So far, we’ve introduced the challenge and begun to describe the main proposed GOP solution. Today we’ll look at the new and widely misunderstood “border adjustment” idea and talk about both its good and bad points. What follows may make more sense if you have first read part 1 and part 2. Next week we’ll explore what I think would be a far superior option, though one that is based on the spirit of the current proposal. If House leadership thinks they can get the present proposal through (doubtful), then they should stop messing around and do something really controversial by changing the entire terms of engagement. As my friend Newt Gingrich has often told me, “John, real change requires real change.”
Next week we’ll explore what I think would be a far superior option, though one that is based on the spirit of the current proposal. If House leadership thinks they can get the present proposal through (doubtful), then they should stop messing around and do something really controversial by changing the entire terms of engagement. As my friend Newt Gingrich has often told me, “John, real change requires real change.”
Warning: There is something in this series to offend almost everyone. Everything is fair game. If nothing else, I hope that no one can accuse me of simply talking the Republican book. I think this letter will pretty much eviscerate the key component of the proposed Republican tax plan. I hope the plan will be seriously changed. Many of you have direct contacts with your Senators and Representatives on both sides of the aisle. I urge you to send this letter to them and talk to them. This is one of the most serious national conversations we have ever had.
We can all argue about how big government should be, but whatever we decide upon, we must pay for, if not through taxation then through a massive debt-deflationary depression or serious inflation. (Next week we’ll talk about how to avoid these problematic outcomes. Yes, it can be done.)…