That's how much Goldman Sachs (GS) took in in revenues in the second quarter. They then used $1.25Bn of it (14%) to buy back their own stock at an average cost of $161 per share and reduced the total number of shares by 17% which allowed them to "beat" estimates by earning $4.10 per share vs $3.70 last year (10.8% more).
That's right – it's a scam! The same scam GS advises it's client companies to do with their own stocks to APPARENTLY inflate their earnings while, in reality, earnings are fairly flat. The same scam, incidentally, GS had the entire country of Greece do – before that whole thing collapsed and took the Global economy with it a few years ago!
By trading heavily from inside this fishbowl, GS was able to bump up their Investment and Lending Revenues by 46%, to $2.07Bn and all those little moves allowed GS employees to take 46% of the profits in compensation – up 6% from last year at $3.92Bn, which is really cool as GS only has 32,600 employees – so that's $1.2M per employee but, somehow, I think the top 326 (0.1%) get a bit more than the other 32,274, don't you?
You would think GS shareholders would be angry that 50% of their revenues go to compensation. After all, a hedge fund only takes 20% of the profits as salary (and that plus 2% of AUM also covers the cost of all operations) but GS, after taking $3.92Bn, drops just $2Bn to the bottom line for their investors or, in other words, GS is like a hedge fund that takes 66% of the profits!
Still, with a p/e of 10, that 33% bone they throw investors is enough to keep them happy but, as with everything else, consider the conditions under which GS is able to make $6Bn in salaries and profits on $9Bn in revenues – Endless Free Money from the Fed, a stock market fueled by Mergers and Buybacks using the same Free Money, massive market manipulation by Central Banks around the World – many of whom are run by former GS employees and most of whom are advised by GS. Perhaps this is as good as it gets for them?…
We briefly failed our first test of 1,920 (see yesterday's notes) but another low-volume rescue kept us from fulfilling the "Wave C" predicion on this Elliot Wave chart – for now.
Not that I'm an Elliot Wave person, of course – my theory is that, if you are going to draw 5 points on a graph you can imagine all sorts of random patterns and SOMETIMES you will be right. About half the time, in fact.
I believe in bigger numbers and our own EXCLUSIVE 5% Rule™ says the S&P bottomed out at 800 (in 2009) doubled to 1,600 last Spring, consolidated there for a quarter and now has made a 20% move to 1,920 – just like it was supposed to since it bottomed in 2009 (see our many, many predictions over the years). In fact, it was March of 2012, with the S&P at 1,404, when we set our new goals for the S&P to 1,600. As I said at the time:
That's right, it turns out our +10% line is still pretty much right on the money, only now we switch our focus to our goal of 1,600 and begin running our numbers off there, rather than from 800. I know I have been (and still am) Fundamentally bearish on the market at the moment – I just think we are making this move too soon – but that is not to say I think the move is unmakeable.
JPM – JPMorgan Chase & Co. – Shares in JP Morgan earlier rallied to the highest level since early August before backing off somewhat to trade up 0.85% on the day at $56.21 as of 11:50 a.m. EST. Weekly calls set to expire next week following the Thanksgiving Day holiday in the U.S. are active this morning. It looks like some traders are positioning for shares in the name to extend gains in the near term, and potentially rise to the highest level since September of 2000 by expiration.
Of the Nov 29 ’13 expiry options changing hands today, the $57.5 strike calls have attracted the most volume. Upwards of 1,900 of the $57.5 calls traded this morning, roughly three times previously existing open interest at that strike of 631 contracts. It looks like most of the calls were purchased for an average premium of $0.24 each, thus positioning buyers to profit in the event that JPM shares rally 2.7% over the current price of $56.21 to top the average breakeven point at $57.74 by expiration next week.
CREE - Cree, Inc. – Options on the maker of energy-efficient LED lighting products are buzzing today, with overall volume rising to more than twice the average daily level for the stock during the first half of the trading session. Shares in Cree are up more than 16% on the day at $52.15 as of 11:15 a.m. in New York. The stock gapped higher on the open after the company raised its guidance for third-quarter earnings and revenue, lifting the price of the underlying to its highest level since March of 2011. Traders positioning for further upside in shares of Cree, Inc. picked up bullish options on the stock straight out of the gate this morning. Weekly calls are attracting light volume, with notable fresh interest in the Mar. 08 ’13 $52.5 strike contracts. Traders appear to be buying the short-dated contracts at an average premium of $0.19 apiece. Call volume is substantial in the April expiry options, notably in the $52.5 strike contracts where more than 6,000 calls changed hands against open interest of just 86 contracts by 11:30 a.m. ET. One or more traders appear to have purchased the bulk of the volume for an average premium of $1.25 apiece within the first 10 minutes of the opening bell today. Initiating the bullish trades at the start of the session is paying off for buyers of the April $52.5 strike calls, with premium required to purchase the contracts having more than doubled since this morning to $2.59 by 11:35 a.m. ET.
SNDK - SanDisk Corp. – Shares in SanDisk increased 2.0% to $51.43 on Tuesday morning amid strong gains in U.S. equities and a price target increase to $70.00 from $55.00 at Susquehanna. Options activity on the provider of data storage products and solutions suggests traders are prepared for shares in the name to extend gains in the near term. Volume in SNDK options is concentrated in the weekly calls as of the time of this writing, with upwards of…
DPZ - Domino’s Pizza, Inc. – Shares in Domino’s are bucking the trend today, rising as much as 2.2% to an all-time high of $43.74 on Thursday morning, even as most stocks decline on weaker-than-expected consumer confidence data for the month of December and the failure of U.S. lawmakers to arrive at a budget compromise. Options traders hungry for fresh highs in Domino’s Pizza shares in the first few months of the New Year snapped up call options on the name today. Bulls picked up around 100 in-the-money calls at the Jan. $43 strike for an average premium of $1.11 apiece, and purchased 70 of the higher Jan. $44 strike calls at an average premium of $0.60 each. Like-minded strategists looked to the Mar. $45 strike calls as well, buying 150 of those contracts at an average premium of $1.65 a-pop. Traders long the $45 strike calls stand ready to profit at expiration in March 2013 should shares in DPZ rally another 6.7% to top a new record high of $46.65 by expiration. The stock has gained 40% during the prior six month period. Domino’s Pizza is scheduled to report fourth-quarter earnings at the end of February, several weeks prior to March options expiration.
JPM - JPMorgan Chase & Co. – Options traders positioning for shares in JPMorgan Chase & Co. to rally during the first week of the New Year snapped up weekly calls on the largest U.S. bank by total assets this morning. Shares in JPM are down 1.8% this morning at $43.17, moving lower along with the broader market on disappointing consumer confidence data and concern the U.S. may go over the fiscal cliff. Traders anticipating a strong start to the New Year for shares in JPMorgan appear to have purchased more than 1,000 calls at the Jan. 04 ’13 $44 strike for an average premium of $0.52 apiece during the first 20 minutes of the trading session today. Call buyers stand ready to profit at expiration next week should shares in JPM reverse course and gain…
INTC - Intel Corp. – Shares in the chip maker are in negative territory this morning, trading lower with the broader market on signs budget talks are stalling and lawmakers may not reach a deal by year end. Intel’s shares are down better than 2% to stand at $20.59 as of midday in New York. Fresh interest in weekly call and put options on the name this morning suggests traders are preparing for volatility in the price of the underlying through the end of 2012. Options players bracing for Intel’s shares to potentially fall sharply during the next four trading session snapped up around 1,000 puts at the Dec. 28 ’12 $20 strike and another 550 puts at the Dec. 28 ’12 $19.5 strike at premiums of $0.07 and $0.04 apiece, respectively. Traders long the $20 and $19.5 strike contracts may profit in the event that Intel’s shares drop roughly 3.2% and 5.5% to settle below the effective breakeven prices of $19.93 and $19.46 by expiration next week. Meanwhile, strategists holding out hope that a deal gets done and lifts equities in the near term appear to be purchasing upside calls today. The Dec. 28 ’12 $21 strike calls saw the most volume, with upwards of 5,000 contracts in play during the first half of the session. Time and sales data suggests the bulk of the volume was purchased for an average premium of $0.15 apiece. Buyers of the $21 strike calls profit at expiration as long as Intel’s shares rally 2.7% to settle above $21.15.
HALO - Halozyme Therapeutics, Inc. – Upside calls on biopharmaceutical company, Halozyme Therapeutics, Inc., are active today, with shares in the name rallying as much as 30% to $7.19 on Friday morning. The stock popped after Halozyme announced it will work with Pfizer to create up to six new injectable drugs. Options traders positioning for HALO’s shares to extend gains during the next four weeks purchased around 250 calls at the Jan. 2013 $7.5 strike for an average premium of $0.37 per contract. Call…
VRTX - Vertex Pharmaceuticals, Inc. – A sizable bullish position initiated in Vertex options this morning looks for shares in the drug maker to regain some of the steep losses realized during the past two months. Shares in Vertex Pharmaceuticals are trading flat on the session at $39.10 as of 11:20 a.m. ET, but have dropped 35% since the second week in October. One options trader who appears to have purchased a 3,500-lot April $42/$55 call spread for a net premium of $2.66 per contract stands ready to profit from a strong rebound in Vertex shares through expiration. The spread starts making money if shares increase 14% over the current price of $39.10 to surpass the effective breakeven point at $44.66, with maximum potential profits of $10.34 per contract available in the event shares jump 41% to hit $55.00 by expiration in April.
ZQK - Quiksilver, Inc. – Options on apparel and accessories retailer, Quiksilver, Inc., are more active than usual on Friday ahead of the company’s fourth-quarter earnings report next week. Shares in the maker of casual wear under its Quiksilver, Roxy and DC brands are trading up 2% today at $4.09 as of midday on the East Coast. Traders exchanged more than 7,500 option contracts on ZQK during the first half of the session, sizable volume versus the stock’s average daily options volume of around 1,300 contracts. The Dec. $5.0 strike calls are seeing the heaviest trading traffic, with more than 4,200 lots in play against zero open positions. It looks like most of these calls were purchased for an average premium of $0.05 apiece, perhaps by one or more strategists expecting the price of the underlying to pop after earnings. The stock posted double-digit percentage gains following the release of third-quarter earnings in September and after the second-quarter earnings report in April of this year. Buyers of the $5.0 strike front month call options on ZQK this morning may profit at expiration should shares in the name rally nearly 25% to top the breakeven price of $5.05.…
FLO - Flowers Foods, Inc. – Shares in the provider of packaged bakery products are up nearly 7% this morning at $23.86 as of 11:35 a.m. after the stock was raised to ‘buy’ from ‘hold’ with a 12-month target price of $25.00 at Keybanc Capital Markets. Flowers Foods, Inc., which sells its products under a number of brands, including Sunbeam and Tastykake, has attracted far greater-than-usual options activity in recent trading sessions on speculation the Thomasville, Georgia-based baker may consider purchasing some of rival Hostess Brands, Inc.’s assets as that company enters bankruptcy proceedings this week. Flowers Foods shares are up nearly 30% since Monday of last week. Traders positioning for shares in the name to extend gains purchased upside calls on Flowers this morning. The Dec. $25 strike call was purchased 50 times for a premium of $0.15 apiece, while 140 of the Jan. 2013 $25 strike calls were picked up at an average premium of $0.33 each. These contracts make money if shares in the name hit fresh 52-week highs by their respective expiration dates. Meanwhile, strategists who established bullish positions last week are seeing sizable gains in the value of their option contracts as shares sprint to the upside. The purchaser of 90 calls at the Dec. $20 strike last Monday for a premium of $0.30 apiece now holds contracts that cost $3.90 apiece, or thirteen times as much, as of midday in New York. Similarly, traders who picked up 180 of the April 2013 $22.5 strike calls at $0.90 apiece on Friday, find the value of their contracts increased 120% to $2.00 since the prior trading session. Finally, put buying at the $22.5 strikes in January and April indicates some traders are establishing downside protection to hedge possible declines in the price of the underlying in the months ahead. Overall options volume on Flowers this morning is greater than 1,050 contracts versus the stock’s average daily options volume of 45 contracts.…
JPM - JPMorgan Chase & Co. – Trading traffic in JPMorgan call options this morning suggests some traders are positioning for shares in the U.S. bank to rally to their highest level since May by the end of the week. U.S. stocks are moving broadly higher on Monday and JPM shares advanced 2.3% to $41.40 by 11:30 a.m. ET, after the ISM’s U.S. factory index rose to 51.5 in September. Traders snapping up weekly calls on the stock are well-positioned to benefit from further upside in the shares in the near term. More than 6,300 calls have changed hands at the Oct. 05 ’12 $42 strike against previously existing open interest of 2,750 contracts. It looks like most of the calls were purchased for an average premium of $0.10 apiece, thus positioning buyers to profit in the event that JPM shares rally another 1.7% to top the average breakeven price of $42.10 by expiration this week. Shares in JPM, up more than 30% since the first full week in June, last traded above $42.10 on May 7th. The company is scheduled to report third-quarter earnings ahead of the opening bell next Friday.
IP - International Paper Co.– Shares in global paper and packaging company, International Paper Co., rose 0.85% on Monday morning to $36.63, and may soar to their highest in more than five years in the near future. The stock has moved sharply higher during the past 52 weeks, trading up 70% versus the first week of October 2011. A large bullish options play initiated on IP in the first hour of the trading day suggests one strategist is prepared for shares to extend gains into 2013. The trader appears to have paid a net premium of $1.12 per contract to buy a 5,000-lot Jan. 2013 $38/$42 call spread. The bullish position starts making money if shares in International Paper rally another 7% to top the effective breakeven…
MCD - McDonald's Corp. – Traders hungry for bullish options on McDonald’s Corp. purchased upside calls on the stock this morning, with shares in the world’s largest restaurant chain rising as much as 0.90% to $92.10 at the start of the session on better-than-expected August same-store sales growth in its Asia Pacific, Africa and Middle East region. Options players positioning for shares in MCD to extend gains during the next five weeks snapped up Oct. $92.5 and $95 calls. The Oct. $95 strike call is the most heavily traded at present, with around 3,700 contracts in play as of 12:15 p.m. in New York. It looks like most of the $95 calls were purchased for an average premium of $0.51 apiece, thus preparing buyers to profit at expiration next month should the price of the underlying rally another 3.7% to exceed the average breakeven price of $95.51. Bullish activity spread to longer-dated contracts expiring in December, where around 2,600 of the Dec. $95 strike calls were purchased for an average premium of $1.21 each. These contracts may be profitable at expiration if the Big Mac maker’s shares rally 4.5% to top $96.21, the highest since May. McDonald's is scheduled to report third-quarter earnings ahead of the opening bell on October 19th, the last session available to trade the October options before they expire.
INTC - Intel Corp. – Shares in the chip maker are on the mend today, up 1.3% at $23.57 as of 12:25 p.m. ET, reversing some of the declines suffered during the prior two trading sessions. A large bullish risk reversal initiated on INTC this morning suggests one big options market participant is positioning for further gains in the price of the underlying this year. It looks like the strategist sold around 25,000 puts at the Dec. $21 strike at a premium of $0.45 each in order to partially offset the…
The rise in rents and home prices is adding additional pressure to the bottom line of most California families. Home prices have been rising steadily for a few years largely driven by low inventory, little construction thanks to NIMBYism, and foreign money flowing into certain markets...
Ever since early 2015, we have repeated that with the world caught in a negative rate "race to the bottom", which even S&P now admits, it is inevitable that the US will join the rest of the DM central banks, especially after the flawed and much delayed attempt to hike rates into what is at least a quasi recession.
Now, with sellside chatter that it is only a matter of time before the Fed will likewise join the fray despite stern warnings by the likes of Deutsche Bank that more easing will only exacerbate conditions for global financial firms, JPM's Michael Feroli has set the "bogey" or the catalyst for what will be needed for the Fed to finally admit defeat and go not only back to zero but below ...
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A quick post before the Superbowl begins. Friday's action was very disappointing if you were in the bullish camp; poor jobs data contributing to the malaise. However, investors can view this as another buying opportunity, with the Nasdaq clocking the 10% percentile of historic weak prices dating back to 1971, and the Russell 2000 making fast work of a push back to 958. Again, it's not about investing everything at once, but perhaps using the coming year(?) to build long term positions. I would be happier to see a 40-60% trim from highs - keep an eye on my bottom watch table, but this is the kind of action which helps reset the bulls count.
The S&P registered a clear break of rising trend. Volume was lighter, so it wasn't necessarily a panic sell. And while it could be viewed as a breakown, the glass half full crew would see this as a drop back...
Throughout the past 30 days of wild volatility, here’s what I didn’t do.
Panic. Worry. Sell.
In fact, the best I did was add to a couple of positions yesterday. The world was already in an uncertain state for the past 3+ years. It’s just that with the market rising, we pushed the issue to the back of our mind and ignored it.
A number of systemic, structural forces are intersecting in 2016. One is the rise of non-state, non-central-bank-issued crypto-currencies.
We all know money is created and distributed by governments and central banks. The reason is simple: control the money and you control everything.
The invention of the blockchain and crypto-currencies such as Bitcoin have opened the door to non-state, non-central-bank currencies--money that is global and independent of any state or central bank, or indeed, any bank, as crypto-currencies are structurally peer-to-peer, meaning they don't require a bank to function: people can exchange crypto-currencies to pay for goods and services without a bank acting as a clearinghouse for all these transactions.
Last year, the S&P 500 large caps closed 2015 essentially flat on a total return basis, while the NASDAQ 100 showed a little better performance at +8.3% and the Russell 2000 small caps fell -5.9%. Overall, stocks disappointed even in the face of modest expectations, especially the small caps as market leadership was mostly limited to a handful of large and mega-cap darlings.
Notably, the full year chart for the S&P 500 looks very much like 2011. It got off to a good start, drifted sideways for...
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Baxter Int. (BAX) is splitting off its BioSciences division into a new company called Baxalta. Shares of Baxalta will be given as a tax-free dividend, in the ratio of one to one, to BAX holders on record on June 17, 2015. That means, if you want to receive the Baxalta dividend, you need to buy the stock this week (on or before June 12).
Back in December, I wrote a post on my blog where I compared the performances of various ETFs related to the oil industry. I was looking for the best possible proxy to match the moves of oil prices if you didn't want to play with futures. At the time, I concluded that for medium term trades, USO and the leveraged ETFs UCO and SCO were the most promising. Longer term, broader ETFs like OIH and XLE might make better investment if oil prices do recover to more profitable prices since ETF linked to futures like USO, UCO and SCO do suffer from decay. It also seemed that DIG and DUG could be promising if OIH could recover as it should with the price of oil, but that they don't make a good proxy for the price of oil itself.
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 email@example.com 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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