Valeant Pharmaceuticals capped a busy week by filing its long overdue 2015 financial results on Friday morning, a move the company expects will cure default risks related to its over $30 billion in outstanding debt. The delayed financial filing may help Valeant begin a process of recovery after months of turmoil, but it also gives new insight into extent of the drugmaker’s woes stemming from operational weaknesses, poor disclosure, and regulatory investigations.
GDP growth in the United States fell significantly, growing just 0.5% in the first quarter of 2016. Despite economists’ predictions of continued economic strength, real GDP growth was just 0.5% in the first three months of this year after rising 1.4% in the fourth quarter of 2015. Economists had expected 0.7% growth after downgraded estimates throughout the quarter, largely due to weak data from the housing, manufacturing, and export sectors.
I’m going to talk a bit about why we need Zero Hedge, and why I continue to link to and read the site. This is key stuff, in my view, so hear me out.
In 2014, journalist and media scholar Dean Starkman set out to answer the question of how it could be possible that the financial news media could miss the biggest crisis in 70 years. After all, weren’t there thousands of reporters covering Wall Street and the economy? Weren’t there hundreds of daily, weekly and monthly publications, websites and TV channels looking at every single story in the markets and behind the scenes at the nations banks and brokerages?
Sometime in the 1990’s, the mainstream financial media became almost wholly dependent on the selling of mutual fund advertisements and, as a result, budget resources within the news industry shifted more toward content for investing rather than for the public at large. Journalists were doing less of the kind of investigative work that didn’t really pay the bills and ended up upsetting big advertisers.
Heading into the crisis, there certainly were some articles about the failing Bear Sterns mortgage funds, the drying up of credit and the bubble in real estate prices. But given the magnitude of the situation, there should have been more. A lot more. You’d have expected to have seen a lot more skepticism too. Instead, the media was skeptical of the skeptics and the band played on. “Who should we believe? Dick Fuld or some guy with a blog?”
This was the tone right up until the eruptions of the summer of 2008, when all hell broke loose. And on the other side of this,
Two months ago, across an assembly-room table in a factory in Jacksonville, Fla., President Barack Obama was talking to me about the problem of political capital. His efforts to rebuild the U.S. economy from the 2008 financial crisis were being hit from left, right and center. And yet, by his own assessment, those efforts were vastly underappreciated. “I actually compare our economic performance to how, historically, countries that have wrenching financial crises perform,” he said. “By that measure, we probably managed this better than any large economy on Earth in modern history.”
Julia Louis-Dreyfus mocked the Mercedes A Class car on “Saturday Night Live” with a commercial for the new Mercedes AA Class, which she noted is the “first fully electric luxury sedan powered entirely by AA batteries.”
Now aren't you glad we added those hedges on Tuesday? Keep in mind that I can only tell you what the market is going to do and how to profit from it – the rest is up to you… Our trade idea from Tuesday morning's post was:
Buy 40 June SQQQ $17 calls for $2 ($8,000)
Sell 40 June SQQQ $21 calls for 0.85 ($3,400)
Sell 5 AAPL 2018 $85 puts for $7 ($3,500)
The idea is we REALLY want to own 500 shares of AAPL at $85, so the $3,500 we collected for selling the puts is free money and AAPL only fell to $95 anyway, so we're feeling very good about our 2018 obligation. Meanwhile, the Nasdaq Ultra-Short (SQQQ) June $17 calls are already $3.10 ($12,400) while the short June $21 calls are $1.15 ($4,600) so we could close that spread now for $7,800 off our $700 cash outlay on Monday and that's a gain of $7,100 (1,014%) in 4 days – you are very welcome indeed and THAT is how we hedge!
That then leaves us with just the obligation to buy 500 shares of AAPL at $85 in Jan, 2018 if it is below $85. The current ordinary margin on 5 short puts is $4,225 according to Think or Swim or we could buy them back for $9.80 ($4,900) and then we'd be cleanly out of the entire trade with a $2,200 gain (314%) in 5 days.
Our portfolios, on the whole, took very little damage on the dip (so far), and keep in mind the upside on the SQQQ spread is $16,000 – so still good protection in case things don't improve…
While there is no doubt that patience is a virtue for investors, exercising prudence is equally important. In our prior article “Limiting Losses”, we examined how taking prudent measures, at certain times, can enhance your ability to create wealth over the long-term for your clients. Despite basic math and historical evidence proving its usefulness, investors typically ignore prudence, especially when it is required most. The siren’s song of a rallying market inevitably proves too compelling for many investors.
The Federal Reserve bought $7.96 billion of agency mortgage-backed securities in the week from Apr. 21 to Apr. 27, compared with $7.407 billion purchased the previous week, the New York Federal Reserve Bank said on Thursday.
On October 23, 1996, the day AT&T announced that John Walter, an industry outsider, would be named CEO, the company’s market valuation dropped by $4 billion. In his book Searching for a Corporate Savior, Rakesh Khurana at Harvard Business School noted that this negative market reaction became a self-fulfilling prophecy, causing the board of directors and other top executives to lose confidence in Walter, and leading to his dismissal only nine months after assuming office.
Facebook now has 1.65 billion users spending an average of 50 minutes a day on its platforms (FB, Messenger, Instagram, Whatsapp, etc). The amount of time spent in devotion of our online selves now rivals the amount of time humanity spends in worship of the major religions. Can the Catholic Church claim a billion and a half people doing anything for almost an hour a day in service to it? Can Islam? Buddhism may come close, or Hinduism, but probably not really, should you calculate the actual minutes of the day and the actual amount of worshippers.
But we love ourselves and sharing facets of ourselves with the world. Projecting the Us that’s fit for the consumption of others. Or some better, smarter, richer, sexier version of ourselves. It’s just a snapshot or a line of text, we have all the control in the world when we reveal in small doses.
Facebook’s market cap is $330 billion as a result of its explosive open to new highs this morning. It’s trading at more than 13x sales and is now one of the most valuable companies in the history of planet earth. You can say it shouldn’t be for reasons A, B, and C – and these would be rational opinions. But has any company before ever monopolized this much of humanity’s time and attention, en masse, around the world? Will any subsequent company be able to do so any time soon?
The Super Bowl is the most widely watched event in the world, and it’s because roughly 100 million people watch it. Facebook wouldn’t get out of bed for that kind of nightly audience. And think of the dollar amounts that the Super Bowl commands for thirty-second ads. Facebook’s usage is more than 10X the Super Bowl and it’s 24 / 7 / 365.
And here’s the best part – no one expects to be paid anything to create content for the platform. We’re the football players. We’re the announcers. We’re the cheerleaders. We do it for free, out of the sheer joy we experience from the exposition of ourselves. And we never get bored of it.
For the first time ever, Berkshire Hathaway's annual meeting in Omaha goes digital and is being webcast live on Yahoo Finance. Those so inclined can watch Warren Buffett and Charlie Munger's deep thoughts in real time from the Woodstock of Crony Capitalism at the webcast link below.
The global rally in equities reversed and lost ground last week. All eight indexes on our watch list were negative for the week, and the average of the eight was a disappointing -2.18%. The range was considerable, from China's top-performing Shanghai Composite, down less than a percent to the Japan's Nikkei, down over five percent.
A Closer Look at the Last Four Weeks
The tables below provide a concise overview of performance comparisons over the past four weeks for these eight major indexes. We've also included the average for each week so that we can evaluate the performance of a specific index relative to the overall mean and better understand weekly volatility. The colors for each index name help us visualize the ...
In the latest clear sign that low oil prices are taking their indirect toll not only the US shale sector, leading to billions in capex cuts and hundreds of thousands of lost oil and gas jobs, on Friday Saudi newspaper al-Watan reported that the multinational construction conglomerate Saudi Binladin Gropu (which was founded in 1931 by Sheikh Mohammed bin Laden Sayyid, father of Osama bin Laden who was removed as a shareholder in the business in 1993 and disowned by the family) has laid off 50,000 staff as pres...
Starting in 2014, the US Dollar experienced one of its strongest 12-month rallies in its history. That strong rally pushed it up to the top of a trading channel and drove monthly momentum to the highest levels in the past 15-years.
Over the past 12-months, the US$ has pretty much just traded sideways.
Joe Friday Just The Facts; US Dollar could close out the month at “new monthly closing lows” when looking back over the past 15-months, as momentu...
Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.
Remember this? It was Monday. PRGO is down from around $130 to under $100 since I started following it LAST WEEK. That's down almost 25% in a week, and almost 50% in the last year. So I wrote,
"Perrigo CEO Joseph Papa leaves Perrigo (PRGO) to lead Valeant (VRX) while PRGO issues a warning about missing earnings expectations. Not surprisingly, PRGO stock plummeted today.
Robert Ingram, Chairman of the [Valeant] Board, stated, "The Board has conducted a thorough search process and believes that Joe is the ideal leader for Valeant at this time. He has a strong shareholder orientation,...
Reminder: OpTrader is available to chat with Members, comments are found below each post.
This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).
We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options.
Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.
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Back on September 2, 2015 when bitcoin was trading at $230, we laid out the simplest and most fundamental reason why, irrelevant of one's ideological persuasion with "alternative" or digital currency - bitcoin would soar.
it was earlier this summer when the digital currency, which can bypass capital controls and national borders with the click of a button, surged on Grexit concerns and fears a Drachma return would crush the savings of an entire nation. Since then, BTC has dropped (in no small part as a result of the ...
Although we try to stay focused on finding and managing promising trade ideas, the comments in the comment section sometimes take a political turn (for access, try PSW — click here!). So today, Jean Luc writes,
The GOP debate last night was just unreal – are these people running to be president of the US or to lead a college fraternity! Comparing tool size? The only guy that looks semi-sane is Kasich. The other guys are just like 3 jackals right now.
And something else – if Trump is the candidate, that little Romney speech yesterday is probably already being made into a commercial. And all these little snippets from the debate will also make some nice ads! If you are a conservative, you have to be scared now.
Phil writes back,
I was expecting them to start throwing poop at each other &n...
This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible. Feel free to contact me directly at firstname.lastname@example.org with any questions.
Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts. After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.) Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.
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