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Will We Hold It Wednesday – Russell 975, Dow 15,200 Edition

INDU WEEKLYNo, we won't hold it.  

I know, I'm supposed to keep an air of drama so you are enticed to read but the top of this article goes out as an early alert to our Members via the PSW Report and I think our subscribers would appreciate knowing as soon as possible that Europe is down over 1% and the US Futures are only down about 0.4% and very likely to fall hard and fast once trading opens.  

We are already short, of course but we picked up more short plays in the Futures this morning and are catching a nice ride down already.  The Dollar is, of course, being manipulated lower – down to 82.65, to mask the market weakness and this is pretty typical behavior in the manipulated market tops I've been warning about for most of the past month.  

As we expected, Japan is down again as Australia's GDP disappoints and Abe is not able to print enough FREE MONEY to satisfy the ravenous bulls – who aren't satisfied with 50% gains in 6 months.  "Please Sir, I want some more" sounds cute when you are a skinny little orphan boy but, when you are a fat Japanese Bankster, bloated off $75Bn a month in stimulus – it's just greedy.

IYR WEEKLYPossibly holding our market up this morning, relative to the melt-down in Europe is a disappointing ADP report, showing just 135,000 jobs added in May vs. 171,000 expected.  Also on the "bad news means more free money" front is a TERRIBLE MBA Mortage Applications number that dropped another 11.5% for the week, now down over 40% in 4 reports.  The Refinance Index dove 15% to its lowest level since November 2011 as the average 30-year fixed-rate mortgage jumped 17 bps to 4.07%, the highest in more than a year.

As you can see from Dave Fry's chart, IYR has been in melt-down for a month and these number simply confirm the trend.  As in Japan, if our Fed's $85,000,000,000 per month stimulus is failing to boost the critical housing sector – there's some very serious problems that smart investors can tell still need to be addressed and, as noted in the "Smart Money" chart we discussed yesterday, we (as our Members are certainly the smart money crowd) are pulling our cash off the table BEFORE the market collapses – no matter how many reassurances Cramer and the Fed give us.  

We already caught a .50 drop ($500 per contract) shorting Oil Futures (/CL) in Member Chat this morning and it's come all the way back to $93.85 (8:40) to give us another crack but more dangerous now as the NYMEX opens at 9am and we can expect the bullish API Report, which showed a 7.8Mb draw in crude, to give them an excuse to drive it higher – where we'll be shorting the hell out if it into inventories at 10:30 since the API number is ridiculous or, at best, is distorted by the Holiday Weekend and represents a one-time thing.  

The Fed's Fisher was predictably bearish last night, Likening the Fed's monetary policy to a Shakespearean play starring a "daring Captain" Ben Bernanke, Act IV which, according to Fisher: "will involve the drama of introspection, with the FOMC evaluating the utility of its navigational tactics, and, perhaps, fine-tuning them, if not altering the course."

He told a Toronto audience last night that there was a "practical limit" to the size of the Fed's balance sheet and investors should not expect "QE infinity." While chances are "extremely low" that monetary policies will help push inflation above the Fed's 2 percent target this year, the bond-buying program is, "at best, pushing on a string and, at worst, building up kindling for speculation and, eventually, a massive shipboard fire of inflation," he said. 

Oh no, honesty from the Fed – RUN AWAY!!!  Now that we've gotten rid of that bearish bastard, it's up to Raskin (8:30 am) and Plosser (noon) tomorrow to re-spin today's Beige Book (2pm) but, frankly, they don't want the markets too calm as we've still got notes to peddle next week – so a little market fear is a useful thing indeed.  TBills and Japan are the main two points Jeff Gundlach and I disagree on as I don't like Japan's fake market nor do I think the Fed is ready to let TLT fail $113 (we have an STP bet on that, in fact) but, otherwise, this is a fantastic presentation that sums things up quite nicely:

I would call your attention to a couple of key slides like this one highlighting Europe's 5-Year Recession:

And this one, which summarizes the entire stupidity of the US tax system in a single chart: 

Keep in mind that's Corporate Profits net of losses from other Corporations so already we're understating real earnings by over $1Tn.  Then, if you consider that profits are also net of very generous deductions given to the top 1% (something we discussed in Monday's Member Chat) and the normal $1Tn of amortization and depreciation of capital goods, we're talking about US Corporations paying about 5% tax on $4Tn of Gross Profits.  If they paid 25% tax, we would have no deficit, we'd have a surplus and our national debt would be paid off in 20 years.  Instead, we have this

Wake up America!  Your country is being stolen from you and no, it's not getting better.  The lunatics are clearly in charge of the asylum in Congress and the whole thing is sponsored by our Corporate Masters, who will squeeze every last Dollar they can out of this country and leave the wreckage for greener pasture once the last job is outsourced.  

That's logistics!  

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  1. Oil Lines

    R3 – 96.66
    R2 – 95.53
    R1 – 94.63
    PP – 93.50
    S1 – 92.60
    S2 – 91.47
    S3 – 90.57

    Yesterday's high and low – 94.41 / 92.38

  2. Good Morning!

  3. I guess there must be lots of high-five at the ECB this week! Man, we have this inflation under control here. Let's see:

    Unemployment – 12.2% (not our problem)
    GDP – Down 1.1% this morning (not our problem)
    Youth unemployment – close to 30% and up to 50% in some countries (not our problem)
    Deficits still climbing (a little bit our problem but nothing spending cuts can't fix)
    Inflation – Negative 0.2%

    See, job well done, inflation is below our 2% target. We actually have deflation. That's better right? Champagne all around Mr. Draghi!

    I know we are not going gangbusters here in the US but these guys suck! And let's imagine for a second that we had chosen the same path here after the 2008 election – no stimulus, the Rick Santelli 5% spending cuts all around (because the deficit that didn't matter in December 2008 was suddenly huge in January 2009) and no QE from Ben. Suppose we would have 10% unemployment and GDP just about even (because after all we can do better here!). Suppose China had gone the same way and not stimulated their economy either. Where would we be today? Europe would suck even more as we are now basically dragging them along… And that means that we would be on a path to also suck more! The austerity vicious circle would have us in its arms.

    Total madness… And Draghi will come out on Thursday making more promises that he can (or won't) keep. There, I feel better now. 

  4. Peter – Here is where we stand as of yesterday's close:

    Back on track so far! Let me know if I missed anything.

  5. I was having a conversation with a guy the other day about GE and how they are selling off a lot of their old "bad" businesses.
    I mentioned that I am pretty sure it will help them to reduce the amount of taxes they pay (if they ever will pay any).
    His response…
    Is it a bad thing that they pay less taxes???
    Phil….???? ;-)

  6. Peter – I checked and if all these positions end up worthless (looking OK so far), we will show a $59K profit in the portfolio. Not bad for a one year anniversary. And you only had to push the margin requirements once last month. Other than that, I doubt that that you went much higher than $150K of PM margin. And some months much less. So great job on your part! And thanks for all your guidance. I guess slow and steady does win the race.

  7. Good Morning back from a fun time in Chicago

  8. This patent war has to end sometimes soon:

    Apple Inc. (AAPL)’s first loss against Samsung Electronics Co. (005930) in a U.S. patent case could mean a ban on imports of some older devices including the iPhone 4 while lessening prospects of the largest smartphone makers ending their legal battles.

    The U.S. International Trade Commission’s decision, posted in a notice on its website yesterday, covers the iPhone 4 and iPad 2 3G sold for use on networks operated by AT&T Inc. (T), T-Mobile US Inc. (TMUS) and two regional carriers, General Communication Inc. (GNCMA) in Alaska and CT Cube LP in Texas.

    I don't know that it helps anyone but the lawyers.

  9. Good morning!

    Oil popped just over $94 (/CL) but testing it again and it's a good short with tight stops.  Inventory report is 10:30 and it should hit the fan then, especially if the build is under a couple of million as API got everyone's hopes up.  

    Market on BS pump into the open that wasn't very strong anyway – don't fall for it.  Big question is will 975 hold on the RUT or but 15,200 already died on the Dow so I'd guess – NO!  

    Hopefully you all have hedges in place, I don't have good advice if you ignored me for the past week and NOW want to catch up but I guess the TZA spread would be the way to go but, keep in mind it only pays off on a prolonged crash – doesn't do much for you short-term.  

  10. Now we really need to either shut down the SCTY play or sell some calls. They are going in the wrong direction fast.

  11. LOL StJ, ECB is a total train-wreck at this point.  I don't see how they get through the Summer without serious riots.  Tomorrow could be nail in the coffin as Draghi fails to come through with anything real but, of course, maybe he'll surprise us and actually do something.  

    Fantastic job on Strangle Portfolio Peter!  

    Taxes/Jabob – Dont' get me started!  Forget GE, GE (or any company) is ultimately a tool used to make money for it's owners.  So, who owns GE?  We do (top 1% and some top 10%).  I know some will say "also retirement plans" but that's BS, the percent of the Global $100Tn market that's owned by pension plans is MAYBE 5%, maybe.  It's the wealth of the top 5% that's in stocks and they make money when their companies make money, whether it's through dividends or just share value.  Even an APPL shareholder may have lost 30% of his money from $600 to $400 (but, if that's where he came in, he isn't old money anyway, so who cares?) still got 20% of the stock's price dropped into the company in cash and, even though the share price doesn't reflect it – a long-term investor doesn't care about that – only people who NEED stocks to go up from month to month or year to year to live on care about such ethereal things.  

    Not paying taxes means not distributing the wealth.  It means if I choose to pay you $50,000 instead of $100,000 and my tax rate is 60%, then my personal benefit is just $20,000 and maybe (MAYBE) I decide it's not worth screwing you for $20,000 but, if my tax rate is 20%, I personally benefit by $42,000 of the $50,000 I screw you out of – that's the perverse incentive of low taxes – it encourages the rich to be as greedy as possible.  

    Also, since I am in the top 1%, I live in a 6,000 sq foot home with 5 bedrooms and 5 bathrooms and an office and a finished basement we never use and a downstairs apartment that's barely used that families of 4 are very happy to stay in for days at a time.  I know even my spoiled family can be happy with much less as my ski condo in Killington is just 1,700 feet with 2 Br and 2 bathrooms and we stay there for a week and love it.  

    Our place in Hunter is just a 1Br but that's fine as we usually are only up there for a night or two but our condo in Tahoe is useless because we can't be stuck there for a week in a 1Br so we rent that out and stay at Caesar's in a suite for free (since I gamble enough to get comped) when we're out there.  

    So my accumulation of wealth allows me to own about 10,000 feet of housing space (plus some time-shares!), most of which we can't possibly use and, if the Government didn't make it worth my while to own more than 4,000 feet – then 4 families from the bottom 80% would probably be thrilled to have 1,500 feet to live in as a "tax" that I pay.  

    That's the problem with inequitable distributions of wealth – it's essentially a zero sum game so, the more the top 10% get, the less the bottom 90% have.  The same goes for food, clothing, etc.  If I'm having a barbeque party and I go to the store to pick up food – I'll buy an extra packet of hot dogs and extra buns and exra hamburgers and cole slaw because I'd rather have more than get caught short and have to go back to the store.  Sure the food may get wasted but my time is worth $500 an hour so I'd rather waste $50 of food than have to spend a half hour of my precious leisure time running back for more food.  Unfortunately, there's some poor family who would love to have $50 worth of hamburgers and hot dogs, right?  

    More accurately, my willingness to consume mass quantities like, for example, having a boat that uses 3 gallons of gas per mile or a private jet that uses the same gas as a 737 that flies 200 people to fly my family back and forth to Disney, where I barely flinch at paying $137 a day per person for tickets.  All those things drive up the price for everyone else.  Why should Disney give a crap that 80% of the people in America can't afford to go there anymore?  That still leaves 60M people who can and the whole park maxes out at about 120M visiting days per year.  My kids are there at least 5 of those days and often 10 (it's one of my time-shares) but it sucks for the 8 other families that can't afford one because rich bastards like me have 10x or maybe 100x more discretionary income and drive up the prices.  

    People in America simply don't understand how bad wealth inequality has become.  Sorry to ramble on about it but it's a real hot-button issue for me.  One that really drives me nuts:


  12. If anybody watched the TSLA shareholder meeting, it was a joke.  The company sounds like they're winging it, many answers were based on they believe the technology should be there in a few years and they should do roughly same profit margin as Porsche but the market cap is already close to Porsche with a tiny fraction of the vehicles sold.  Also if they don't generate cash flow, they won't have much money for R&D which is critical for this company.  Knew the stock would be down today after watching it.

  13. I daytrade a little TZA / TNA most days, and today has the most violent swings in these that I've seen in awhile.  Seems like an indecisive market, be careful…

  14. Europe / Phil – Actually, in 1 month everybody who has a job (of course, that fewer and fewer people) will be on vacation for the summer so a respite for the politicos. But the fall might be more tricky, especially if things don't get better while everybody is getting suntan on the beaches!

  15. Why is the Russell seemingly out of step with the rest of the indices over the last few days?

  16. Wealth distribution / Phil – And the frustrating part of it is that the top 1% and the clowns in Congress that they own don't understand that a more equitable wealth distribution is actually not a zero-sum game. If the bottom 90% do much better, the top 1% will also do better through capital gains and profits as the economy grows. It's just maddening to see such short-sightedness from guys who through their education should know better but who are blinded by greed or ideology (or both). 

  17. Now, where was I?  

    Good news!  We had bad news in ISM and Factory Orders and that means the Fed can't stop so MORE FREE MONEY and the markets bounce off the bad data (isn't it amazing?):  

    Apr. Factory Orders: +1.0% vs. consensus of +1.4%, -4.7% prior (revised).

    May ISM Non-Manufacturing Index: 53.7 vs. 53.8 expected and 53.1 prior (>50 denotes expansion). 

    Europe is bouncing back a bit too with the Dax down just 0.6% but CAC down 1% and FTSE down 1.44% and Spain and Italy fell flat, which is half a point off their open so I wouldn't take a US bounce too seriously – other than an opportunity to lock up shorts.  

    Oil inventories in 20 mins and we're at $93.90.  Very possibly they will spike up on any news so be very careful with Futures but, unless there is, in fact, a huge net draw, I'd see it as an opportunity to press short bets there.

    Nikkei Futures (/NKD) back to 13,020.  Just 99.34 Yen to the Dollar is an epic fail for Abenomics.  

    Silver catching a bid ($22.70) and gold back to $1,406 with the Dollar at 82.66.  I doubt they can take out 82.50 on the Dollar because the BOJ will freak out – we'll see how that goes.  

  18. TNA - wow, right after my post it dropped a buck in just minutes.  My stops are getting hit sometimes seconds after a trade, gonna walk away from trading today until the market takes some Tums.

  19. Thank you, stjeanluc & Phil!  It's fantastic to have the tracking that you do.  We'll need to survive the Fed meeting on 18th-19th to realize that profit.  They are not likely to release the June options premium until after the meeting.  Can we move the Fed meeting by 4 days?

  20. TSLA $90!  

    Welcome back QC! 

    Patents/StJ – Such a massive waste of time.  I wonder if anyone has quantified the cost of patenting and protecting patents overall – must be tens of Billions annually and, of course, all the time people have to spend checking patents whenever they try to invent something.   I guess the new quote is "Build a better mousetrap – and you'll get your ass sued off by the original patent-holder."  

    STP – Very nice.  I think the solution to SCTY (up today at $38) is going to be selling July $40s for $3 and using that $3 to roll the Jan $50 calls ($4.50) to the Jan $40 calls ($7.50) and then we're back in a nice income spread with plenty of time to roll and $20 worth of headroom.  We'll put a stop on 1/2 the short calls (5) at $4.50.  

    We did get a big draw in oil:

    EIA Petroleum Inventories: Crude -6.3M barrels. Gasoline -0.4M barrels. Distillates +2.6M barrels. Crude +0.61% at $93.88. 

    As we suspected, they neglected to mention Gasoline and Distillates last night because it wasn't a good number (up net 2.2M) but the overall net 4.1Mb draw is good news for the bulls.  Still, not good enough when taking into account the previous weekend's disappointment and Distillates are airplanes and trucks, so not a good sign.  

    IN the STP, we have weekly USO $34 puts at .69 and they are now .60 so we'll take that loss on 10 and move (roll) to 10 of the June $34.50 puts at $1.27.  We'll also add 10 SCO June $36/38 bull call spreads at $1.10, selling 5 SCO $38 puts for $1.45 for net 0.375 on each long that's 100% in the money at $94.40 with SCO at $38.09 so we're looking for under $95 to hold

    In the Futures, $94.50 is a rough shorting spot so be careful there but $95 would be great, but I doubt we get there so watch the cross below $94 for a good entry. 

  21. Nothing else in the STP is bothering me, by the way.  SODA back to $68, AAPL we have faith in, FAS we need a pop to short into but not worried about long-term spread, TLT is a next week play, SHLD only needs to hold up and time does it's work.  LQMT is a play on an eventual rumor into AAPL's next earnings, otherwise, it just sits there like a call we hope to exercise.  

    HOV/DC – Who's surprised?  I'm not surprised?  I think they're doing just what we thought and that's the reason they're the only builder I like at the moment.  

    TSLA/Rustle – I still like them long-term and I think they'll be a major brand in 2020 but this is 2013 and I don't like overpaying for stocks based on future prospects – that's all.  They just got $1Bn through stock sales and loans so they'll be fine overall – just not as fine as they're priced for.  Frankly, the only thing I fault Musk for is encouraging people to buy when the stock went over $85 – I just hate to see little guys get screwed but, again in the perverse reward system of Capitalism – his shareholders could sue him if he came out and said "I think we're a little overvalued here."  For that reason, I would have cut him some slack but he lost me when he made a big show of buying $100M of the stock "with his own money" at $100 a share in a PR stunt that fooled tons of retail investors into losing their shirts – that's a prick move to me.  

    Swings/Mr M – Yep, swings like this often come before big moves and those big move usually aren't pretty ones.  

    Europe/StJ – If the Euro is crashing they'll have to keep those vacations close to home.  

    Russell/ZZ – Somehow they have learned to manipulate the RUT.  I'm not sure how, as there's 2,000 stocks in it, but they found the right algorithm to work it like a puppet – but only within those 5% lines.  So, if 975 fails, they'll only be able to jack it around between 950 and 975 – no more 1,000.   

    Distribution/StJ – Right, only the re-investment of wealth from the bottom up can grow the pie.  That's another problem with developing an elitist society – the super-rich don't want to take risks so they don't actually create jobs anymore – they destroy them to make more money and they don't care if the pie shrinks overall, as long as they maintain their piece of it.  That's how we end up with this disgusting rich vs. poor situation we now have and it only gets worse as the pie shrinks further.  

    TNA/Mr. M – I think paying premium to play the upside is a terrible idea.  

    Fed/Peter – I know, the timing sucks in this round.  

  22. Phil,
    Been in the Colorado mountains for a couple of weeks. Went to 90% cash before leaving, so no hedges. Patiently waiting for us to break one way or the other. Thanks for continuing to try to spread the word on inequality.

  23. Interesting that a number of MOMOs bucking the trend.  PCLN, LNKD,ISRG, AMZN, etc.

  24. Phil/XLF – How do you feel about legging into some 2015 (maybe the $16's, if they reach a buck) puts here? Thanks

  25. Phil
    Great call on market weakness!
    "Market on BS pump into the open that wasn't very strong anyway – don't fall for it.  Big question is will 975 hold on the RUT or but 15,200 already died on the Dow so I'd guess – NO!"

  26. fj-jarboe:  How's the weather in CO?  I'm supposed to go there in two weeks.

  27. I guess these people should try to relate to the average citizen more often:

    Sarah Bloom Raskin, a Fed governor, said Tuesday that she was prompted to study the kinds of jobs people are getting to replace jobs lost during the recession after she interrupted her daily commute to the Fed from her suburban Washington home one day to visit a job fair. It was full of opportunities for lifeguards and restaurant workers, but offered little in the way of stable, middle-class jobs.

    “This was kind of eye-opening to me,” Raskin said during a conference at the Roosevelt Institute, a progressive think tank.

    And that goes for politicos as well…

  28. TSLA/Phil
    He had to buy the stock per the loan agreement with GS.  He just hid that part of it from the public.

  29. You're welcome RJ.  Isn't it nice to be on the sidelines watching the carnage?  

    Momo's/Albo – Still a lot of dip buyers who think Draghi and the Fed will save us.  Maybe they will but seems kind of a silly thing to bet on.  TM down 2.5% – no one's jumping in there.  

    XLF/Opes – At $18.50 I'll want to but not $19.50.  Student loan debt is out of control and look at the REITs – banks all have their own REIT segments of sorts.  They aren't making money lending and deposits are down as money moves to the market but turnover (market volume) is down, so not good for their transaction fees.  I'm comfortable calling $20 a top but I'm not sure where the bottom is on XLF but I doubt it's $19.50. 

    Thanks DC – just reading the tea leaves that were already in the cup.  

    ISM/StJ – I think the thing is that, of course May is better than April but it's not better enough – as evidenced by weakness to last year.  Markets that are up 20% SHOULD be concerned by flat to down annual data trends.  

    Ouch!  FTSE now down 2% with the pending close – Germany down 1%, France down 1.7%, Spain now down 0.8% along with Italy.  Ouch!!! 

    Eye-opening/StJ – Goes to show you what a bubble these "top-notch economists" live in.  That's why most analysts aren't worth a damn, they're totally out of touch with reality.  Of course, as noted above, I have that top 1% lifestyle but I'm painfully aware of how wrong it is – so I feel bad about it.  I suppose it's a bit of a defense mechanism for people who get richer to "forget" about what it's like for the rest of the World.

  30. It's funny when people say that increasing the dividend tax will hurt small retirees for example:


    It benefits mostly the top 1% who take close to 70% of that pie. Not many small retirees there!

  31. Phil / TNA/TZA - I play the stock not options, using tight stops usually .30 to .50 range, usually takes a few swings to catch the direction but when you do it's rewarding.  Got the bug from JRW but never fully learned his system.

  32. SGEN has popped both of the last two afternoons, bot some JUN 30 C for 3.25 to see if it's a trend, stop at 2.90 and out EOD regardless.

  33. Euro just crossed the dollar on the upside, careful on U.S. equities with weakening dollar.

  34. Phil. Now that we have broken through the RUT 975 barrier, what do you see as the next layer of resistance?  Trying to judge where to bail out of DIA puts and TZA calls.

  35. Lotta volume on INTC calls.

  36. zeroxzero
    We were in Southern Co. at our land in the front range, only 7200 ft. Around 50 at night, 75 days and dry as a bone.

  37. Loan/Rustle – Right, there was that too.  

    Retirees/StJ – I hate it when they make charts like that but then include the top 1% in the next level.  Hard to get the real picture like that but, either way, I guess it's clear that it sucks to not be in the top 1%…  I shouldn't complain, if it wasn't for Wonkblog and the NYTimes – this data wouldn't exist at all (or at least no one would show it to you).

    Stock market song of the day (per Fisher). 

    At the open: Dow -0.39% to 15119. S&P -0.41% to 1625. Nasdaq -0.39% to 3432.

    Treasurys: 30-year +0.34%. 10-yr +0.22%. 5-yr +0.11%.

    Commodities: Crude +0.69% to $93.95. Gold +0.18% to $1399.75.

    Currencies: Euro -0.07% vs. dollar. Yen -0.48%. Pound -0.26%.

    Market preview: U.S. stock futures follow Europe and Asia lower, although the weaker-than-expected ADP jobs report is heartening investors for what it might mean for what Richard Fisher calls the Fed's "monetary cocaine." Expect the central bank's Beige Book this afternoon to add to the excitement. The S&P Mini is -0.5%.Later Factory Orders, ISM Non-Manufacturing Index 

    10:00 AM On the hour: Dow -0.36%. 10-yr +0.17%. Euro -0.05% vs. dollar. Crude +0.5% to $93.78. Gold +0.41% to $1402.95.

    11:00 AM On the hour: Dow -0.65%. 10-yr +0.29%. Euro +0.06%vs. dollar. Crude +0.79% to $94.05. Gold +0.53% to $1404.65.

    11:16 AM Stocks broadly tumble in late-morning trade, the S&P 500 (SPY -0.8%), the Nasdaq 100 (QQQ -0.8%), and the Dow (DIADOG) off triple-digits. The financial sector (XLF -1.3%) leads the way, headed by a 2.1% decline in Citigroup. Higher interest rates may be the worry, but the stock market's fall pretty much means they're not coming. The 10-year Treasury yield slips 3 bps to 2.10%. TLT +1%,TBT -1.8%.

    12:00 PM On the hour: Dow -0.98%. 10-yr +0.34%. Euro +0.06%vs. dollar. Crude +0.59% to $93.86. Gold +0.44% to $1403.35.

    Is The Fed Losing The Battle For A Sustainable Recovery? 

    Safe havens haven't been so safe lately (see gold, see dividend stocks), and hedge funds are gearing up to attack another, says SocGen – the Swiss Franc (FXF). As Fed tapering draws near, yield differentials between the greenback and the swissie should increase at the same time the SNB continues to pledge a weaker franc. "All richly valued 'safe havens' are potentially perilous assets when liquidity is about to dry up."

    The S&P 500 (SPY) has another 15% upside this year, says Credit Suisse, lifting its year-end target to 1,730 from 1,640, and putting in place a modest forecast of 1,900 for 2014. Stocks remain cheap on a relative basis and earnings revisions have turned positive for the first time in year are among the reasons. Most important is too much pessimism over tapering. Central banks are still going to be expanding balance sheets, says the team, noting it took markets several months to peak after QE1 and QE2 ended. 

    Step 5 (of 12) – Admitting the nature of our wrongs:  The IMF admits major missteps in its prescriptions of austerity for Greece, according to a "strictly confidential" internal document leaked to the WSJ. Christine Lagarde trotted the globe saying the country's debt was "sustainable" even as agency staff couldn't vouch for the claim. Nevertheless, says the IMF, the time gained allowed the EU to firewall the rest of its vulnerable members. - I wonder if they'll make a list of all the people they have harmed and try to make amends (Steps 8 and 9)?

    Worried about the "steady shift" toward alternative securities – such as vehicles buying into various hedge funds – Finra plans to publish a formal warning to investors. The move comes as Morgan Stanley (MS) wealth management chief Greg Fleming says the days of cost cuts are over and he's now plotting an aggressive focus on the top line. "We feel good about the different ways we can enhance business going forward." Finra: "Not so fast."

    Did a computer-driven fund get caught too long the Nikkei and too short the yen? Man Group (MNGPY.PKMNGPF.PK) – the world's largest publicly traded hedge fund operator - tumbles 13.5% in London after disclosing its flagship AHL fund fell 8.9% in the week ended June 3, its biggest loss ever (let's hope so). Adding in the previous week's 3.1% loss, the formerly hot fund is now in the red for the year. 

    Another day, another sell-off (III) in the Philippines, as stocks (EPHE) fall 1.73% in Manila to their lowest levels since late March. Selling pressure predominates across the region as markets in Thailand (THD) and Singapore (EWS) are hit hard, down 2.12%and 1.46% respectively (that's a three-month low for the Straits Times). Things weren't quite as bad in Malaysia (EWM) as equities shed just 0.13% and Indonesian shares (IDX) fall fractionally in Jakarta. Meanwhile, stocks rise 0.77% in Vietnam (VNM).

    Wells Fargo (WFC -0.6%) is well-positioned for rising interest rates, CFO Tim Sloan tells a DB conference (webcast), as the bank can earn higher returns on its investments. He does allow one negative – a slowdown in mortgage refinancing from which Wells has benefitted maybe more than any other U.S. bank. (Previous: Refinancing index dives).

    Day 2 of Bank of America's (BAC) Article 77 hearing led off with a new revelation: Chief Risk Officer Terry Laughlin in Nov. 2011 told the 22 institutional investors in favor of the settlement the bank had been given permission to put Countrywide into bankruptcy if the mortgage lender's liabilities threatened the BofA's viability – the message clearly being the $8.5B settlement was a pretty good outcome for those suffering losses. Naturally, the "objectors" say there were other options rather than signing off on a "sweetheart deal."

    Interest rates are on the rise, but what if they remain as low as they've been indefinitely? MetLife's (MET) run the numbers and expects no required reserve strengthening on a statutory basis, and only modest GAAP charges, including no one-time loss recognition or goodwill impairment. What about a sharp rise? No impact from an economic standpoint because the insurer is "duration-matched," but from an accounting basis, it's sure to hit book value. Regulators and management are focused on economics. (presentation and webcast from DB conference)

    More on Hovnanian (HOVFQ2: net profit drops to $1.3M from $1.8M last year, which included a $27M one-time gain. FQ2 2013 revenue +24%. Deliveries +18% to 1,424 homes; net contracts +22.2% to $696.1M; contract backlog $1.02B for 2,827 homes, up 34.3% and 23% respectively; contract cancellation rate 16% vs 17% last year. Saw strong demand during spring selling season and was able to raise prices in many communities, thereby offsetting any increases in labor or material costs. Should be profitable for the rest of the year. (PR) 

    Deutsche Bank's top 10 list of oil and gas stocks to buy factors in lower natural gas prices and more supply: XECEQTAPC,CIEQEPCXOEOGCLRNBLGDP. The firm's price targets for Cimarex and EQT, at $99 and $110 respectively, are much higher than Wall Street consensus.

    Global thermal coal prices are unlikely to recover this year unless Australian coal producers lower production or an unexpected event rattles the seaborne market and sends prices north, industry experts at the Coaltrans Asia conference say. Coal (KOL -1%) names are weak in early trading: BTU -1.2%CLF -3.1%ACI -1.2%ANR-1.8%WLT -2%BHP -2.5%CNX -1%CLD -1.9%.

    Back-handed way to downgrade commodities (again):  Joy Global (JOY-1.1% premarket after shares are downgraded to Neutral from Buy with a $60 price target (from $72) at Goldman Sachs, which cuts 2013-15 EPS estimates by an average 15% on declining new equipment share of mining capex budgets and a weaker aftermarket demand outlook. Goldman says it now doesn't see EPS stabilizing until 2014 vs. 2013.

    Shares in Mechel OAO (MTL -3.8%) slide, despite its earlier announcement that it had signed a coking coal supply agreement with China's Shasteel Group. No financials were disclosed. Under the terms of the agreement, MTL's Singapore subsidiary will directly supply Shasteel Group wit

  38. Shares in Mechel OAO (
    MTL -3.8%) slide, despite its earlier announcement that it had signed a coking coal supply agreement with China's Shasteel Group. No financials were disclosed. Under the terms of the agreement, MTL's Singapore subsidiary will directly supply Shasteel Group with 40K to 80K tons of coking coal per month, starting in June. Prices will be determined on a monthly basis. Mechel Carbon has already supplied more than 500K tons of coking coal this year to Shasteel's main coke plant in Zhangjiagang, Jiangsu Province.

    BUT THEY DON'T SELL TO CHINA!!!  Cliffs Natural Resources (CLF -3.4%) is among the S&P's worst performers, as global iron ore capacity is expected to increase faster than demand from China, continuing to weigh on prices, according to the head of Baosteel, China's third-biggest mill. Steel output growth has dropped to less than 5%/year from 20% between 2000-06. BHP -2.9%RIO -1.8%VALE -1.8%. (also) 

    Ejection from the DJIA could be the next shoe to drop in Alcoa's (AA -1%) waning prestige after last week's cut to its credit rating, Bloomberg speculates. AA is now only the second junk-rated Dow member since at least 1980; while GM’s lead in the auto industry helped it stay in the Dow despite junk status until its bankruptcy in 2009, AA’s standing is more precarious due to the diminishing importance of aluminum to the U.S. economy. 

    Solar stocks see a bit of profit-taking after Goldman downgrades JA Solar (JASO -9.3%) and Trina (TSL -6%), and the EU officially announces Chinese module tariffs that will only total 11.8% for now, but could soar as high as 67.9% on Aug. 6 if a settlement isn't reached. Yingli (YGE -5.4%) states its tariff will rise to 37.3% on Aug. 6, which it claims is "the lowest rate" of all Chinese mobile vendors. Trina says its tariff will rise to 51.5%LDK -5.2%CSIQ -3.5%JKS-3.2%CSUN -4.1%SOL -4.4%FSLR -3.4%CSIQ -3.5% in spite of its solar plant sales.

    JA Solar (JASO) and Trina Solar (TSL) are downgraded to Sell at Goldman, with price targets of $4.20 and $4 respectively, the analysts noting exposure to uncertainty surrounding the EU/China tariff dispute. JASO -4%, TSL -1.3% premarket

    France asks for a meeting of EU member states to establish a common position in the escalating trade dispute with China on the export of Chinese solar panels. Levies are due to take effect tomorrow at an initial rate of 11.8%; EU officials will delay for two months tariffs of as much as 67.9% to allow Chinese manufacturers to negotiate a settlement. (earlier)

    Kandi Technologies (KNDI) soars 64% higher as the combination of China and electric vehicles in the same sentence is too much for some investors to pass on. Though the approval for its pure electric vehicle from China's government looks promising, SA contributor Dirk McCoy had the buy call out yesterday for broader reasons including the long-term potential for the company and the lack of any glaring smoking guns on the accounting side.

    Electric vehicle sales appear to have picked up significantlyafter some automakers dropped their lease rates. Honda (HMC) and Toyota (TM) dealers in California report limited supply while Fiat's (FIATY.PK) new 500e has a growing waiting list of buyers. It's a tough pickle for some of the automobile companies to be in as the surge in interest comes at price points which leave them in the red. 

    The Treasury Department plans to sell an additional 30M shares of General Motors (GM), according to CNBC. The offering to be sold on the market will also include shares held by the UAW Trust. GM -1.5% premarket.

    Joe Biden turns on the charm down in Brazil and apparently does a good job of steering the country's president, Dilma Rousseff, towards choosing Boeing's (BA) F-18 fighters in a deal that would initially be worth $4B for 36 jets. Brazil could finally make a decision by the year-end. Meanwhile, Japanese pilots are aghast that when installing the 787's new battery system, Boeing didn't improve the alert system in the cockpit for when the batteries overheat.

    As it seeks to defend its Euro Hawk drones against allegations of runaway costs in Germany, Northrop Grumman (NOC-0.5%) is fighting in the U.S. to keep 18 Global Hawk unmanned aircraft in service amid pressure from the Defense Department to ground the fleet and recognize cost savings of $2.5B over four years. NOC's unlikely ally: California Democrat John Garamendi, whose congressional district is home to the drones' pilots.

    Bank of America downgrades US Airways (LCC) to an Underperform rating from its previous perch of Neutral. After sizing up the merger with American Airlines, the firm thinks estimates on potential synergies flowing from the deal might be too high. LCC -2.8% premarket.

    Hawaiian Holdings (HA) says it increased revenue passenger miles by 17.7% Y/Y in May while only seeing its load factor slip 2.9 percentage points during the same period. HA +1.0%

    Markel Corporation (MKL) fans (why aren't you one?) will enjoy this brief profile of it and CIO Thomas Gayner. Gayner's running a mini-Berkshire in Richmond, taking the money from the insurance business to buy stakes in boring but profitable companies using little-to-no-debt and generally keeping managements in place. The track record is an impressive one. - This is exactly what I wanted to do with the "Build A Berkshire Workshop!"  I'd still do it if we could get $20M together… 

    See, things we love get cheap again:  Casino stocks are taking the weak economic news worse than other sectors as they under-perform major indexes. Bets on Vegas are going south at a higher rate than bets on Macau. Decliners: Caesars Entertainment (CZR-6.2%, Boyd Gaming (BYD-5.5%, MGM Resorts (MGM-3.3%, Pinnacle Entertainment (PNK-2.8%.

    SHFL Entertainment's (SHFL) surprisingly strong quarter was boosted by global sales to casino customers in Australia and Asia as well as margin gains across product categories. During the firm's earnings call, execs painted a bright picture for the prospect that revenue could be boosted through strategic agreements with "online conglomerates." SHFL +5.5% premarket. (transcript) 

    Oh no, more Corporations NOT being hurt by Obamacare!  Panera Bread (PNRA -0.3%) co-CEO Ron Shaich doesn't appear frightened to death over the impact of The Affordable Care Act – called by some the death knell of the restaurant industry. The exec notes it's only a "modest element" of cost inflation and that many Panera employees are already on elected medical coverage.

    Johnson & Johnson (JNJvoluntarily recalls 32M packages of its birth control pill Cilest in Europe, Asia and Latin America after tests reportedly showed that one of the two hormones in the product was being released more slowly than intended. J&J says that one of Cilest's active ingredients did not lead to "defined specification." J&J adds that the pill, which is not sold in the U.S., remains safe and effective.

    Deutsche's Nandan Amladi is a busy man this morning. In addition to downgrading VMware to Hold, he's cutting Microsoft (MSFT -1.1%), Intuit (INTU -1%), and RealPage (RP -1.3%) to Hold, and upgrading Informatica (INFA +1.4%) to Buy. Regarding Microsoft,Amladi thinks "the risk/reward is neutral" at a valuation of 8x calendar 2014E EPS (exc. cash).

    VMware (VMW -0.9%) gets cut to Hold by Deutsche's Nandan Amladi, who's worried about competition, billings growth, and execution. VMware's vSphere virtualization platform "continues to face pricing pressures from [Microsoft's] Hyper-V," and the rise ofOpenStack is "driving up adoption" of Citrix's (CTXS) Xen virtualization software and the Linux-based KVM. Lastly, checks "indicate a fair amount of interest" in Microsoft's (MSFTSystem Center management tools, which compete with parts of VMware's vCloud Suite. IDC estimates VMware's virtualization share fell to 56.8% in 2012, and Microsoft's rose to 27.5%. (cash flow guidance) (Craig-Hallum)

  39. Intel's (
    INTC -1.6%) tablet momentum isn't enough to offset continued PC weakness, and thus 2H estimates are at risk, argues JPMorgan's Christopher Danely. Though Intel is beginning to pick upAndroid tablet wins and could benefit from a flurry of new Windows 8 tablet/convertible launches, its tablet CPU ASP is well below its PC CPU ASP. Morgan Stanley estimates Intel's Atom tablet CPUs will have a $20 ASP in 2014 and 2015.

    Juniper (JNPR +5.6%) spikes higher after CEO Kevin Johnson states at a BofA/Merrill conference his company is seeing a pickup in carrier router spend. Though Juniper's enterprise security ops struggled in Q1, its service provider sales grew 4% Y/Y, thanks in large part to healthy core/edge router demand. Market leader Cisco (CSCO +0.9%) has moved higher in sympathy

    Yelp (YELP +4.4%will benefit from a pending Apple Maps overhaul that will "significantly improve the user experience," argues Wedge Partners' Brian Blair. He sees the update to the oft-criticized Maps, which features heavy Yelp integration, bolstering the local reviews leader's already-strong mobile momentum. Blair trumpets the fact 36% of Yelp's Q1 ad impressions were mobile-related, up from 25% in Q4. (Yelp Q1 data) 

    Yahoo's (YHOO -1%) search page is the latest product to be given a facelift by the Web giant: faster page loads and a more streamlined navigation bar are part of the package. Though Yahoo depends on Bing for search results, Marissa Mayer has argued "most of the innovation on search" will occur at the UI level, where Yahoo can differentiate. comScore estimates Yahoo had 12% of the U.S. search market in April, but its global share is much lower, and a tiny mobile share isn't helping. Meanwhile, a BI survey of 1,200 readers finds 57% saying they're "unhappy" with the revamped Yahoo Mail: users complain about performance, disappearing e-mails, and message-loading errors. - Yahoo still has a search page?  That is news.  

  40. 15,000 line is a no-brainer to play for a bounce on Dow Futures (/YM).  

  41. This is not going to do it for an economy….

    Hourly compensation, meanwhile, plunged 3.8% in the first quarter instead of rising 1.2% as initially reported. That's the biggest decline since the Labor Department began keeping track in 1947, with the largest drop occurring in the manufacturing sector. It follows a huge 9.9% gain in compensation in the fourth quarter, however, and hourly wages and benefits over the past four quarters are actually 2.0% higher. Adjusted for inflation, hourly wages fell an even steeper 5.2% in the first quarter. As a result, unit-labor costs sank 4.3%.

  42. Phil -Are they hugging the lows, waiting for the Beige Book ? What would you expect based on whats been reported thus far? Thanks

  43. Phil/1%   Phil, I feel bad that you feel bad about your 'predicament'.
    While I know you and Tina 'give' generously, maybe you can look for places to give more….
    The ABC story will make you smile.  :)

  44. Phil,
    I hold DIA put spread long July $150 / short June $150.
    At what point should I roll to July? The roll to the July $147 is even but the delta different is 0.53 for the June vs. 0.38 for the July ones.

  45. 1020 – Yup, being a wealthy member of the proletariat must be a head-scratcher.

  46. TNA/MrM – I think one thing to learn is NOT to play it when it's this volatile – I guess you're getting that, although, at this exact moment (970 with the Dow testing 15,000), I do like TNA for the quick bounce off $46.60 but with a dime stop. 

    Dollar/ZZ – Still holding 82.50 per premise that neither Europe or Japan want it stronger.  

    ABX/Jabob – Same news over and over and over again – ignore:

    Last year, the miner pushed back first production by a year to 2014 and raised its estimate of capital costs by about 70 percent.

    Last year, they dropped from $48 to $30 and then recovered to $42.  Now they're at $20 because people are idiots.  If they scrapped this project, the stock would go up just because there wouldn't be any more bad news to report and the write-off would be a massive tax deduction against their $5Bn of pre-tax earnings.  

    RUT/Den – I think we're just grinding back down to 950, which would be a nice consolidation at the top of the old range and back to test the 50 dma properly.  The NYSE has already blown 9,250, which was their -7.5% line on the Big Chart and below their 50 dma and there's no reason the RUT shouldn't follow (in absence of more stimulus).  Gotta watch that 1,600 line on the S&P, below there is DOOM!!! 

    Hourly Compensation/Pharm – HOLY CRAP!  "the biggest decline since the Labor Department began keeping track in 1947,"   OK, homework for everyone is going to see "The Great Gatsby" this weekend – we're almost back there – next stop, SLAVERY!   Actually, you couldn't get away with paying slaves minimum wage as it's not enough for them to have food, clothing, shelter and health care.  Remember, if you whip 'em, you have to fix 'em!  

    Beige Book/Vedam – Well, if the Economy is improving then the Fed hasn't got a reason to ease further and that's bad for stocks and if the Economy is failing, then it's despite $85Bn a month and that means QE isn't working anymore.  I don't really see a good outcome other than whatever CNBS et al can spin out of it for a bounce.  

    Wishes/1020 – I like those guys.  They're up in Mass and I know Susan from the Michael Fox Foundation.  

    DIA/Yshen – That's not a very good spread as the Deltas are a bit too close.  It's the kind of thing you do with a 3-month + advantage or 2 months to a weekly, not month to month.  At the moment, the June $150 put is $2.15 (vs. $1.05 for the weekly) and your July $150 put is $3.25 so you can roll the June putter to the July $147 puts (now $2.15) even and then you have a $3 spread for net whatever you paid.  That's the roll you do if you HAVE to but, meanwhile, I'd just do a "stop" at $2.50 on the roll and hope that time erodes the caller faster than that.  Of course, since your time advantage on the caller is just 44 days to 16 days, your time decay advantage is 2:1 so you can chart what to expect over the next 14 days, which is your caller loses $2.15/14 per day (about 0.07) while you lose $3.25/44, or about 7.4 so, not much point to this spread at all.  

    Wealth/ZZ – I know many, many people who've jumped several wealth brackets and, generally, they tend to leave their old life behind and that includes their "old" friends as well as their old concerns.  It's amazing to me how quickly and easily people forget where they come from and lose empathy for those that are still there.  Perhaps it's human nature but I prefer to aspire to something better – sorry if that's confusing.  

  47. Nasty stuff on CNBC.  Reuters pays the ISM to get a special "high frequency" release of their numbers and then sells it and sends it out milliseconds before the release (they are supposed to do it at the same time) and $28M of SPY and 369 other stocks were traded off that data in 15 miliseconds before anyone was supposed to have it.  Reuters says "oops, sorry" but all the Bot traders keep the profits and no arrests will be made.  

  48. SGEN - Closed the calls at my stop, back in at 2.60, better entry point.

  49. Phil:  It was tongue in cheek, your humanism is well known.  I have the advantage, such as it is, of being surrounded with very poor people by any U.S. standard.  I have over a dozen on  payroll, machete-wielding salt of the earth guys, and I spend time with them every day, know their families, and have ample opportunity to be grateful simply for having been born on one piece of real estate versus another.  Had a long talk with the headman over coffee this morning; it keeps it real. 

  50. Keeping it real/ZZ – That's good.  It upsets me that more people aren't able to.  You aren't inundated by Conservative media or the constant stream of talking points I get whenever I have to engage my fellow citizens – it does make me realize how important the right to bear arms is because, one day, we'll have to kill these bastards.  8)  

  51. zero - A "headman" with a "machete"……Better than an ADP home security system!   :)

  52. Phil – Is "fellow citizens" code for friends and family?   ;)

  53. Mr M
    The JRW system has rules that you aren't following. 1 Never use stops. 2. wait for confermation. 3 It is a one trade deal and you need lots of screens
    If you are going to try it I will post more points of change because it and USo puts are all I do. Oil is phil's game that I only play profit and different from him I buy out in time ITM puts will about a delta .5.
    I expect we turn down again about 97.92 line.

  54. phil or anyone—what happened to JRW??

  55. 1020 – I am indirectly related to a fearsome machete fighter here.  I've interviewed him about technique.  He watches the opponent's eyes.

  56. Phil -I'm thinking now might be a good time to invest in gold stocks for the longer term.  Have traded them, but don't currently have any position.  What would  you suggest positions for new plays in ABX, GDX and maybe GLD?  Thanks. 

  57. jabobeast
    JRW's last message was to Phil saying he was sick and would be back ASAP. So now a year later I have 2 ideas;
    He was very very sick and didn't recover, hope not, I for one miss him maybe the most.
    He is staying in Morrocco, he got a second citizenship, they are very strick with where you put your wealth. He had to put millions into their banks to get the papers. He is not allowed to do the US trades. He always said you can use the system on any index. I have used the QQQ on and off but make more with IWM.

  58. Also, I know of the problems in the leveraged ETFs, but NUGT looks cheap here.  Worthwhile or not ?

  59. Beige Book is out but nothing encouraging.  Economy slowly improving is no reason for more free money:

    Summary of Commentary on Current Economic Conditions by Federal Reserve District

    Prepared at the Federal Reserve Bank of Minneapolis and based on information collected on or before May 24, 2013. This document summarizes comments received from business and other contacts outside the Federal Reserve System and is not a commentary on the views of Federal Reserve officials.

    Overall economic activity increased at a modest to moderate pace since the previous report across all Federal Reserve Districts except the Dallas District, which reported strong economic growth. The manufacturing sector expanded in most Districts since the previous Beige Book. Most Districts noted slight to moderate gains in consumer spending and a moderate increase in vehicle sales. Tourism showed signs of strength in several Districts. A wide variety of business services expanded, and transportation traffic increased for producer, consumer, and trade goods. Residential real estate and construction activity increased at a moderate to strong pace in all Districts. Commercial real estate and construction activity grew at a modest to moderate pace in most Districts. Overall bank lending increased since the previous report. Credit quality and deposits increased, while credit standards were largely unchanged. Agricultural conditions remained mixed across Districts, as weather patterns varied. Overall activity in the energy sector was flat, and mining was down.

    Hiring increased at a measured pace in several Districts, with some contacts noting difficulty finding qualified workers. Wage pressures remained contained overall, although several Districts reported a modest or moderate rise for selected occupations. Districts reported level prices to mild price increases; some manufacturers raised prices and some increases for input prices were noted.

    The manufacturing sector expanded in most Districts since the previous Beige Book. Activity increased in the Boston, Cleveland, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco Districts. Manufacturing contacts in the New York District reported steady business activity. In the Philadelphia District, manufacturers reported that orders and shipments have fallen somewhat, and in the Richmond District, manufacturing activity softened since the previous report, although there were scattered reports of improvement. Most firms in the Boston District are reasonably optimistic about the outlook, and many contacts in the Cleveland District believe that business conditions will continue to improve slowly during the second half of the year. However, the near-term outlook has waned somewhat in the New York District.

    Continuing a theme from the previous report, strength in residential construction was a boon to manufacturers who supplied that industry. Firms in the Philadelphia District supplying the home-building sector reported strong orders, and the Cleveland District noted that suppliers to residential construction were among those seeing the strongest activity, while the Richmond, St. Louis, Dallas, and San Francisco Districts all reported increased demand for lumber or wood products. Growth in the auto industry was noted by the Philadelphia, Cleveland, Atlanta, Chicago, and St. Louis Districts, although the Chicago District reported that the auto industry grew at a more moderate pace. Producers of inputs for the oil and gas industries saw growth in the Philadelphia, Cleveland, and Atlanta Districts. The food processing industry grew in the Philadelphia and Dallas Districts. Electrical equipment saw increased activity in the Boston and San Francisco Districts but lower activity in the Philadelphia District. Demand for fabricated metals expanded in the Philadelphia District, while specialty metal manufacturers in the Chicago District reported small increases in new orders, noting that their customers had become more cautious. Fabricated metals producers in the Dallas District reported that demand remained steady for both private and public projects.

    The defense industry experienced weakening activity in the Cleveland District, and a producer of defense equipment in the Richmond District cited government sequestration and orders being canceled or delayed. Steel production was mixed. Steel producers in the Cleveland District reported that shipping volume was stable but remains below levels seen early in the first quarter, and both the Cleveland and Chicago Districts noted an increase in imports of steel. The St. Louis and San Francisco Districts reported an increase in demand for steel. Lower demand for primary metals was noted in the Philadelphia and Dallas Districts.

    Consumer Spending and Tourism
    Most Districts noted that consumer spending increased during the reporting period, ranging from slight to moderate gains. Retail activity in the Boston, Philadelphia, and Dallas Districts was characterized as modest or moderate, while the Cleveland, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, and San Francisco Districts reported slight growth. Retailers in the New York District reported that sales were tepid in April but picked up in May. Meanwhile, the Richmond District noted that sales were flat during the reporting period. The Boston, New York, Philadelphia, Cleveland, Richmond, Chicago, and Minneapolis Districts reported that late winter weather slowed retail sales; the Chicago District noted that sales picked up once warmer weather arrived. Demand for home furnishings and furniture was strong or picked up in the Boston, Cleveland, and Richmond Districts; however, furniture sales slowed in the Chicago District. The Kansas City District reported that appliance purchases were particularly strong. Inventories were generally at desired levels in the New York and Chicago Districts. The outlook for retail spending was positive in the Kansas City and Dallas Districts, while more cautious expectations were noted in the Boston, Cleveland, and St. Louis Districts.

    Vehicle sales generally increased moderately across Districts. The New York, Richmond, and San Francisco Districts reported that sales remained strong or at high levels. Meanwhile, the Minneapolis District reported modest growth in auto sales, and contacts in the Kansas City District reported that sales declined. Used car sales increased in the Chicago and St. Louis Districts, while the Richmond District noted that the availability of used cars improved. Meanwhile, the New York, Cleveland, and San Francisco Districts reported a shortage of used cars or a decline in used car sales. Inventories increased in the Cleveland and Kansas City Districts, while inventories were lean in the Philadelphia District. More respondents to a St. Louis District survey indicated that inventories were too high than too low. The Philadelphia, Cleveland, St. Louis, Kansas City, and Dallas Districts noted that the outlook for future sales was generally positive.

    Tourism showed signs of strength in several Districts. The Boston District reported increased tourism revenues but noted that attendance at museums and attractions was down, perhaps due to weather affecting leisure travel plans. The New York District noted that tourism activity was mixed but fairly robust since the previous report. The Richmond District reported that unseasonably cool weather negatively affected some resorts. Leisure and international travel continued to experience healthy demand in the Atlanta District. Extended winter weather boosted skiing in parts of the Minneapolis District. The San Francisco District reported that travel and tourism activity in Hawaii was robust, while activity in southern California declined a bit. Hotel occupancy and room rates were higher in the Atlanta and Kansas City Districts. Advanced bookings and the overall outlook for summer travel were optimistic, but the San Francisco District noted some concern that the flow of international visitors could taper off in coming months due to potential weakness in the global economy.

    Nonfinancial Services
    Nonfinancial services activity grew at a modest to moderate pace since the previous report. The Philadelphia District noted steady gains, while moderate growth was reported in the Minneapolis District. The San Francisco District saw flat demand for health care and legal services. The Boston District noted sluggish activity in information technology services, while the Kansas City District saw increased demand for high tech services. Information technology, distribution, business support, health care, engineering, and hospitality firms expanded in the St. Louis District. The Richmond District reported "renewed vigor," especially for technology and architectural firms. The Dallas District saw strong demand for accounting services and modest increases in legal services.

    Transportation activity increased. The Cleveland District noted strong activity, while both import and export traffic increased in the Richmond District. The Atlanta District reported increased movement of petroleum products and wood products but decreased shipments of grain products, metallic ores, military machinery, and transportation equipment. The Dallas District saw increased cargo and container volumes. The Kansas City District reported slower transportation activity due to poor weather conditions. Minneapolis District contacts expected small increases in freight traffic in the second half of the year.

    Real Estate and Construction
    Residential real estate and construction activity increased at a moderate to strong pace in all Districts. Several Districts reported that higher demand and low inventory of homes available for sale are resulting in multiple offers on properties. Almost all Districts reported higher home sale prices. The Kansas City District reported concerns that appraisals were not keeping pace with price increases. Foreclosed properties available for sale have declined significantly in the San Francisco District. The rental market remains tight with noticeable increases in rental rates in the New York District. Residential construction increased across all of the reporting Districts. Several Districts noted increases in multifamily projects. The Minneapolis District reported that many markets saw huge percentage increases in building permits from a year ago. Builders are cutting back on discounting in the Cleveland District. The Richmond District noted that increased construction has pushed up the price of building lots, and the Atlanta District reported that the lack of available lots has constrained building activity. The Philadelphia District commented that builders are facing problems, as the long housing recession has disrupted the supply chain for materials and the pool of skilled workers.

    Commercial real estate and construction activity expanded at a modest to moderate pace in most Districts. The New York District reported that the Manhattan market is particularly robust. The Chicago District noted that an increase in demand for leasing was pushing up commercial rents, with strong demand from the health care sector. However, a market in the Boston District indicated no change in commercial rents or vacancy rates since the previous report. A market in the Richmond District had more hotels complete construction, and retail space was absorbed at a faster pace. Commercial construction continues to expand. The Philadelphia District said that most construction activity is related to ongoing demand for industrial warehouse space, higher education facilities, and public utility infrastructure. The Atlanta District reported that most activity was coming from build-to-suit projects. The Dallas District noted an increase in office building construction. The Cleveland District said that many projects are in development, but new inquiries are weak. The San Francisco District noted that in some regions, construction of publicly funded commercial projects has slowed due to funding constraints from state and local governments.

    Banking and Finance
    Overall bank lending increased modestly since the previous report. The Cleveland District noted that consumer demand for auto loans increased and that demand for residential loans shifted from refinancing to new purchases. The Chicago District indicated modest growth in business loan demand. The Dallas District reported robust growth in residential mortgages and auto lending with continued weakness in corporate transactions. The New York District saw an increase in demand for all types of loans except commercial and industrial loans, where demand was unchanged. San Francisco District banking contacts reported ample liquidity and competition among lenders for well-qualified business borrowers but limited credit availability for small businesses. The Philadelphia District noted slow loan growth, and the Atlanta District reported weak loan activity.

    Credit quality improved, on balance. The New York and Cleveland Districts reported widespread decreases in delinquency rates for business and consumer loans. Several Districts reported that credit standards have not changed much since the previous report.

    Agriculture and Natural Resources
    Agricultural conditions remained mixed across Districts, as weather patterns varied. Recent rains brought drought relief to the Atlanta, Chicago, and Minneapolis Districts but delayed or slowed plantings in the Richmond, Atlanta, Chicago, St. Louis, Minneapolis, and Kansas City Districts. Meanwhile, drought conditions worsened in the Dallas District, and contacts in the San Francisco District remained concerned that limited water availability in parts of the District could pass through to lower seasonal hiring and reduced agricultural output in coming months. Farm incomes increased in the Minneapolis District, while farm income growth softened in the Kansas City District. Well over 90 percent of the St. Louis District's winter wheat crop was rated in fair or better condition, but winter wheat crop conditions deteriorated further in the Kansas City District, with much of the crop in relatively poor condition. Forage crops were having a great spring in the Richmond District, and pastures and hayfields were in good condition.

    Overall activity in the energy sector was flat, and mining was down. The San Francisco District saw decreased natural gas drilling. The Cleveland, Atlanta, and Kansas City Districts noted that oil activity was flat and that natural gas activity was up. The Minneapolis District reported that the energy sector remained strong. The Dallas District said that drilling activity was up. Coal mining was down slightly in the Cleveland and St. Louis Districts, while coal mining in the Kansas City District was steady. Iron ore mining production was down in the Minneapolis District.

    Employment, Wages, and Prices
    Hiring increased at a measured pace in several Districts, with some contacts noting difficulty finding qualified workers. Labor markets continued to improve in the New York District. The Boston District reported that with only a few exceptions, businesses were not hiring much beyond replacement, while labor markets in the Richmond District were uneven. Labor markets continued to improve slowly in the Chicago District. The St. Louis District reported that employment levels over the past three months have stayed the same or increased for a majority of contacts. Labor markets tightened in the Minneapolis District, particularly near the oil boom area in western North Dakota and eastern Montana, although some easing in the pace of growth was noted over the past six months. Labor markets were steady in the Dallas District. The New York, Philadelphia, Richmond, Minneapolis, Kansas City, and Dallas Districts cited examples of contacts reporting difficulty finding qualified people to fill vacancies. The Richmond and Cleveland Districts noted that new hours of service regulations may exacerbate difficulty finding truck drivers. A number of Districts reported solid demand for workers in information technology, health care, and engineering. The Richmond and Atlanta Districts cited employment reductions due to cutbacks in government orders or staffing at government offices. Among staffing services firms, billable hours increased in the Philadelphia District but decreased in the Boston District. Meanwhile, staffing services were steady in the Dallas District and mixed in the Cleveland District. The outlook for hiring was generally positive in the Richmond and Minneapolis Districts.

    Wage pressures remained contained overall, though several Districts reported a modest or moderate rise for selected occupations. The Cleveland, Minneapolis, Dallas, and San Francisco Districts indicated that overall wage pressures were subdued. The Philadelphia and Kansas City Districts reported that wage pressures increased slightly, while reports were mixed in the Richmond District. The New York District noted that although qualified job candidates were said to be increasingly hard to find, most employers were holding the line on compensation. Exceptions included increased wages for home builders in the Philadelphia District, and legal and financial services in the Dallas District. Contacts in the Richmond, Chicago, and Kansas City Districts expressed concern over the effect of health care reform on labor costs. The Philadelphia and Cleveland Districts reported increased costs for health insurance.

    Districts reported level prices to mild price increases. The Boston District reported that aside from food, input prices were generally unchanged, although a few manufacturers have raised their own prices. Manufacturers in the Richmond District indicated that finished goods prices grew at a somewhat quicker pace. The Kansas City District reported that while finished goods prices remained fairly flat, manufacturers planned to raise finished good prices over the next few months to partially offset higher input costs. However, most firms in the Atlanta District continued to report having little pricing power, and the Chicago District noted that pass-through to downstream prices remained limited. The Philadelphia and Cleveland Districts reported higher construction materials prices. Meanwhile, the San Francisco District noted that prices for cement, logs, and lumber edged up, while prices for wood products, steel, and some metals declined. Gasoline prices spiked higher in the Minneapolis District, and several Districts noted that natural gas prices increased since the previous report. The Dallas District reported that most contacts expect price increases to remain modest for the remainder of the year.

    Nothing here to suggest Fed would want to ease more and plenty to suggest they should be backing off.  

  60. mrmoca
    FWIW I never play up and down now, not smart, as the trend is your friend. So today I sold about 12:00 and reshorted at 1:40 I had 5 indicators of a change and it was at the line. Hope this helps.

  61. Phil, I have IWM puts at the $100 strike and profit on them, bought for $4.05, now $4.80.  It was a pure directional play.  I think we may go lower, but I believe you'd say in this situation that I need to adjust as they are now in the money, so a lot can be lost on a quick snap-back. What would you advise? Or do you think I should let them sit?

  62. AMZN/phil – interesting set of spikes in last couple weeks going up to just under $272.. Any interpretation to make from this? solid ceiling?  consilidation for going up or bots reaching up to take out short stops before it all goes down?

  63. "Consolidation" that is..

  64. Guys- Any easy way for one to go  back to the 2010 phil daily's? Thanks

  65. Code/1020 – No I mean the people in my town and people I meet at events, especially the ones who seek me out to tell me how wrong I am about being a "Liberal."  

    Wow, oil snuck back over $94 again.  Persistent little bastards…  Still a short below that line (/CL).  

    Nat gas back to $4 but gasoline $2.85 (and now a good short there too on /RB).  

    Machete/ZZ – I'm pretty much from the Indiana Jones school of thought on that one.  

    Gold/Albo – ABX I think is the best play.  GDX has a lot of junk in it and, contrary to what we originally thought, no one is coming in to scoop them up.  So it makes sense to stick with the biggest and best alone.  NUGT not good, it's one of those useless ultras that decay to death. 

    JRW/Shadow – You never heard from him?

    That was, by the way, the lamest bounce ever.  This is where that weak bounce rule (20% retrace of drop) will save you every time from getting suckered into buying on dips!  

    IWM/Mecho – I assume those are July $100s and yes, it's a lot to leave on the table.  You can cash out and flip to the TZA June $32/34 bull call spread at .80 so you're in those for net 0.05 after your .75 profits so you have no downside risk and can make another $1.25 on a very small move down in the RUT (TZA currently $32.86).   You can set a stop at .40 to lock in some gains and, if that triggers, you already know how to go long again on IWM if it gets back in the zone that just worked for you.   That's always a good patter – take momentum trade profits and put them into a leveraged spread – you get to play with free money while keeping cash on the side for the next opportunity.  

    AMZN/Scott – Vry solid seller around $270 for the whole year.  AMZN claims to be all things to all people but, in fact, doesn't make much money at any of them.  In the last two years, they've made $600M against a $121Bn market cap so a p/e of about 200.  They are the classic example of making no money on each sale but making it up with volume.  In a correction, they can drop 20% very, very fast but they are also very scary to short.  Given today's move, however, the August $225 puts are cheap at $3.10 as it's just 16% down from here and earnings are 7/22 so they should hold their premium pretty well.  The Delta is .13 so we lose $1.30 on a $10 rise in AMZN which puts a stop at about $275 with a roughly $1 loss (the delta will shrink as the stock goes higher and the strike falls out of the money) so I like the risk/reward enough to call for 5 of these in the STP with a stop at $2.

    2010/Vedan – When you go to my tab and go back one, you'll see page number in the URL.  Try adding chunks of 50 to it and then narrow it down when you get close.  

  66. Phil- What was the reaction to last month's Beige book? We seem to have continued grinding higher. Except that there was no WSJ article about a QE about face. Thanks. 

  67. Whoever is supporting TSLA at the secondary price offering is doing a hell of job.  They can't close below 92.

  68. That is good enough for me out of everything, lost a nickel on USO puts but made 5 times that on IWM. DOW down over 200 everything down 1.5% feels like enough for today.

  69. Phil JRW never anything. I think he is OK  and waiting to sell his California house to get out. He talked plenty of bailing. What do you think?

  70. JRW / Phil – I actually sent him an email last month but he never got back to me…

  71. If you want something bullish, HOV is a gift at $6.  Very simple on them as you can sell 2015 $5 puts for $1.25 and that pays for most of the $2.50/5 bull call spread at $1.50 so net .25 on the $2.50 spread that's 140% in the money at $6 and your worst case is owning 1x of HOV at net $5.25.  This is how we get FREE MONEY!!!

  72. BBook/Vedan – I don't think there was on last month but April was essentially the same blah report on the 17th and we had been falling into that report and it did nothing to reverse it but then it was expiration week and we popped the last day.  Maybe that's a pattern?  

    WTF – TSLA just came back $5.  What a silly stock!  Oh, here we go – more manipulation that no one will be arrested for:

    Tesla Shares Slide, Musk Tweets Supportat 2:02PM EDT

    Enough/Shadow – I agree, would be very surprising if we fall more than this for the day.  Yesterday we were down 0.675%, today 1.25% so tomorrow 2.5% if this is where we finish (and if this is a proper correction).  That would be hitting the 5% Rule by Friday and we'll watch those 4% lines very closely – but let's worry about that only if we have to. 

    JRW/Shadow, StJ – Hopefully he's just off the grid and having fun.  

  73. Phil what I plan is if the RUT is below 975 at the close is buy a few puts.
    So far I have had a great run since I got fixed Feb. 27th. The real shit deal is all short term and I am still down over $200,000 since 2008. If I were a corporation I would owe nothing. Since then I have put half a million into the medical industry that an insurance company should have paid instead of lawyers.

  74. TSLA - for your gambling money, Friday 90 puts are under a buck.

  75. JRW amazing how people just fade out of some once life, he must have signed off from PSW???

  76. Sitting back today and watching the show incredible how TSLA and AAPL holding on by their teeth even the market drops 200 pts

  77. Phil/Liberal   Sorry to hear that. I loath labels. I just say: It's who I am… though at times, it is difficult to avoid using labels myself.
    As far as your town – move the wife and kids before high school to one of many laid back areas in Southern Cal.
    You'd be invisible…. :)

  78. SOLD ABX Jan15  $18 puts, Bought ABX Jan 15 $20 calls, and sold Jan 15 $30 calls for .40 credit.

  79. IRWD – I have bought back the 17.5 Callers (Nov).  I have also sold more 12.5 Ps.

    SGEN – I have bought back the 50 Callers (January).  Waiting for the bounce to sell more 30 Puts.

  80. JRW/ I always wondered whether he moved on because things were so good or so bad. The % gains that JRW posted on such a regular basis makes me think he must have made his pile and decided enough was enough.

  81. Phil best idea!
    Get out of NJ so CA is OK and other places. You kids deserve to see how people outside the NE NYC live. California  even Montana don't care who you are or what you have. They hate eastern accents but you on TV are not bad and correctable.

  82. Into TZA Oct. 30/$37 BCS AT $$1.11.  Bought 20 $30 calls at $4.45 and sold 20 $37 calls at $3.34.

  83. Winston:  A cynic [that wouldn't be me, natch] might guess that JRW blew his wad and bailed.

  84. Pharm – I guess I missed your IRW posts.  Do you have a link or could you give me the 10 second version?  Thanks.

  85. IRWD.

  86. Winston
    JRW's system is deadly accurate if you can concentrate all day. I think he loved it and doing it another way. It takes years and you have to do just that. He made 2 million dollar trades, he is addicted to it. The hardest thing I did was stopping last year when it was so clear I wasn't up to it. Even now I am doing a modified swing because some days like today I fell asleep at 11:40. Wish I coud make bigger plays but I only put in 50% and that is of a small number, JRW did 25% max.

  87. That's a nice trade albo.

  88. Albo – IRWD was the Nov 12.5 Ps Sold, 15/17.5 BCS for net 65c credit.  Here.

  89. This is the SEC law for social media:
    "No insider can tweet / pump-up a stock or release any news through Social Media unless that person informs shareholders first".
    It'll never be enforced for TSLA.

  90. MCP/BDC – can sell Dec $5 puts for .91..  RegT margin only $178

  91. Actually, let's put down some bounce levels:  

    • S&P fell from 1,670 (these are rough tops) with a low of 1,610 (non-spike) so call it 60 points with a 12-point retrace at 1,622 (weak bounce) and 24-points taking us to 1,634.  That's the point at which the bulls are back.  Since we spiked to 1,670 last Tuesday, they have to retrace 40% in less than a week – otherwise the momentum is lost and it will be very hard to go higher.  In fact, every day they don't make the levels makes it that much harder (as they do damage to the dmas!). 
    • Dow 15,500 is the top call and 14,960 was the bottom today.  If they can't get back over 15,000, they're toast anyway but we'll call it 540 points and that makes our weak bounce 108 to 15,108 and strong at 15,216, which is back to our 15,200 line.  
    • Nasdaq 3,500 is too big to ignore so we'll use that and call 3,400 the low, which is a tight range and obviously that puts us at 3,420 and 3,440 before we get excited.  
    • NYSE did not make 9,600 last Tuesday but it's a good, solid top and let's call it 9,200 (even though we're below it) as we're dealing with a longer time-frame so that's 400 points with 80 point bounces to 9,280 and 9,360.  
    • Russell fell from 1,000 on the button back to 969 so 31 x .20 is 6 to magical 975 and then another 6.5 to 981.4 (to be exact) is our strong bounce.  Since we double bottomed at 976 on the way down – I super-doubt we'll get back to 981.

    Remember, the longer it takes to bounce, the weaker the bounce is – like a ball losing momentum.  

    Great run/Shadow – Took 5 years to lose it, don't try to make it back in one.  

    TSLA/MrM – That stock is like Lazarus but I like that play.  

    Invisible/1020 – That doesn't suit me either.  I like giving radical thought to those who usually don't.  

    ABX/Albo – Nice spread. 

    By the way, TSLA $110 to $90 is $20 so $94 weak, $98 strong – now $96.

  92. TSLA – Up on the day….. and the beat goes on.

  93. I dumped my TSLA puts at a profit ealier in the day, you need the reflexes of a cat [or the brains of a gerbil] to attempt to make money shorting that bad boy!!

  94. Phil
    It wasn't all lost. Those 20% co pays and needing a lawyer took plenty of it. So now all that I want is for my house to gain back $350,000. Tax on that would be about $0000000000. perfect number.

  95. LOL zero.  And balls of steel.

  96. JRW- who was he (did he have a color to his posts) and what was his method?

  97. TSLA – 5ma rejection? Down boy!

  98. Newt- Someone will have to give you the link to "Notes on JRW's Pivot Point Strategy".

  99.  Good time to add that TSLA short if you're brave!  July $100/90 bear put spread is $5.50.

    SEC Rule/Rustle – Wow, someone should tell the SEC that – clearly they've never heard of it.  

    House/Shadow – Maybe good for a DD?  

  100. This is not looking good!
    A few very large blocks selling in last 10 minutes. Yesterday they were buys.

  101. SCTY up 4.4% today too – Elon should only manipulate one stock a day or someone may actually notice…

  102. No stones for a Tesla short here.  I'm with the gerbil.

  103. EXEL /  Pharmboy      2026 Jan15 calls traded today

  104. Dow volume 105M ahead of the bell – low volume and it's all downhill is a bad combo.  Need a big volume capitulation day to stop this slide but, of course, ECB and BOE tomorrow morning so maybe Draghi can save us but, if not – another 2.5% down is likely, at least. 

  105. Big money flow into SPY last 15 minutes, unsurprisingly.

  106. QQQ in a large sell program all BOT now.

  107. CSX really moving down last couple days, finishing at lows.

  108. zero
    That is where the money is going? The QQQ sell went for 1 minute after the bell.

  109. 141M after the bell.  

    TSLA rejected smack at $98. 

    Down pretty much 1.5% across the board on the indexes, finishing at day's lows. 

    TLT jammed back to 115.29, as expected, VIX 17.43 – fear is creeping back in.  Glad to see no one here seems particularly bothered by a sell-off!  

    Nikkei down to 12,890!  99.18 Yen to the Dollar is not going to make Japanese exporters very happy.  

    Gasoline finally fell back to $2.825 – what a joke that pump was.  Oil finishing at $93.68 but I'm loving them short.  

  110. Phil. Why should we be bothered by sell-off? You forewarned us and hopefully everyone had TZA calls and DIA puts in place. Also should have raised cash over last two weeks.  USO should be next to tank. It would make my week.

  111. Got to love Elizabeth Warren. She has proposed that student loan rates should receive a one year fixed rate of .75%, the equivalent  to federal discount rate. Why?  Because this is the same interest rate that big banks get when borrowing from the federal government.

  112. Thanks Phil, for banging the table on getting short and getting to cash.  Usually when this happens in the market I am freaking out but I actually made money this week thanks to you.  That HOV trade was a great way to re-deploy some of my cash.  

  113. …and why exactly did TSLA go back up?!  

  114. Shadow:  This is the WSJ page I was looking at, bargain hunting.  SPY wasn't anywhere on the page 15 mins. before the close, and suddenly it shot to the top.  Can't tell you what it means, exactly, but Phil probably can, other than it was a massive infllow:

  115. Phil / Taser:  I've learned, both the easy and hard ways, to follow instructions and ask questions later when in the heat of battle.  Here goes: sell the TSR Dec 2013 7.5 put / buy the $5 Dec 2013 call.  I did it, natch, since  like Taser, but would  ask why both put and call are so deep in the money on this one.   Is this is a devilishly clever maneuver to stay well in the money executed in a falling market in the event of further nasty selloffs?  Please explain, if you have a moment.

  116. AMGN / Pharm – What's up with Amgen?

  117. Monday, June 3, 11:43 AM Amgen (AMGN -3.1%) slips today as analysts give a muted response to its experimental skin-cancer drug, T-Vec, despite delivering better-than-expected study data at ASCO. The problem is a new class of PD-1 immunotherapy drugs from Merck (MRK) and Bristol-Myers (BMY) are dominating the field. RBC predicts they'll "eventually usher in new standard of care" for melanoma, and limiting T-Vec's sales potential to only around $300M to $500M annually – which isn't much considering the multibillion-dollar market potential for PD-1 drugs. Comment! [Healthcare, On the Move]

    Pharm….  Do you see anything here for long term play?

  118. CLF / Phil – Your followers who steal your ideas will hear you then some analyst will come out in a week or so and say…. CLF is a great buy since they don't sell products to China!  What if you tweet it out?

  119. Good morning!

    Forewarned/Den – I'm glad most people were willing to lighten up, unfortunately, I never know if people are paying attention until after the fact (9 of 10 Members almost never comment in chat).  So far, this evening, we're having about a 0.25% bounce and oil is back over $94 (and still a short on /CL on a cross back below) with the Dollar flat at 82.56.   Oil may be up because Japan is not restarting nuclear plants yet (may also be a good re-entry for CCJ) and China has announced they will curtail coal use in major cities (but I doubt their alternative is to burn more oil!).     

    The Nikkei is popping 250 points off it's 12,900 bottom, crossing 13,150 now and opps, 13,125, 13,145 – totally nuts!  At 13,200 they're a short again (/NKD).  As the Futures were way ahead of the Nikkei proper, this is registering at – 1.1% on the Index, which is at 12,875 so the Futures are disconnected at the moment but maybe they know something.  

    The Dow Futures are just under 15,000 and that's still a good mark to go long (/YM) to lock in gains if they get over but very tight stops below as Asia is red across the board – down about 1% but, of course, that's just a reaction to our session and doesn't mean a lot.

    It's all up to Europe later with the CB decisions coming around 7:30-8 but Draghi also speaks, which matters less this time as he promised the World last time and kind of has to deliver today (what's he doing, waiting for Europe to get worse?). 

    Thursday's economic calendar:

    Chain Store Sales

    7:30 Challenger Job-Cut Report

    8:30 Initial Jobless Claims

    9:45 Bloomberg Consumer Comfort Index

    10:00 Quarterly Services Report

    10:30 EIA Natural Gas Inventory

    4:30 PM Money Supply

    4:30 PM Fed Balance Sheet

    At the close: Dow -1.44% to 14959. S&P -1.42% to 1608. Nasdaq -1.11% to 3407.

    Treasurys: 30-year +0.74%. 10-yr +0.32%. 5-yr +0.14%.

    Commodities: Crude +0.39% to $93.68. Gold +0.32% to $1401.65.

    Currencies: Euro +0.09% vs. dollar. Yen -0.93%. Pound -0.58%.

    Market recap: Stocks tumbled across the board, with the Dow dropping below 15,000, following a selloff in overseas markets, an underwhelming ADP jobs report, fear over Fed tapering and maybe a natural pullback given the recent highs. Bullish ranks have thinned in recent weeks, with the S&P down in eight of the past 12 sessions. Stock losses are sending money into the bond market, lowering the 10-year yield to 2.09%. 

    9:08 PM Japanese stocks opened lower again today after U.S. equities took a big hit and the dollar struggled to stay above ¥99. The Nikkei Average lost 0.5%, on the back of Wednesday's 3.8% plunge, with exporters leading: Sony (SNE -3.8%), Hino Motors (HINOY.PK-3%). 

    9:32 PM After opening down about 1% following the big decline in the U.S., the Nikkei quickly erases the loss and turns 1.1% higher in mid-morning trade. There's no bounce in Sydney (EWA) which sits at the day's low, off 1%. The aussie (FXAfalls 0.5% to its lowest level in more than a year, buying $0.9490. S&P 500 futures +0.25%.

    Fed Beige Book: Overall economic activity increased at a "modest to moderate pace" except at the Dallas District, which reported strong growth. Manufacturing expanded in most districts; moderate gains in consumer spending and in vehicle sales were observed. Overall bank lending rose; credit quality and deposits increased. Hiring increased at a measured pace in several districts.

    "The market is in panic mode into nonfarm payrolls," says SocGen's Guillaume Salomon of emerging market currencies (CEW). The South African rand (SZR) continues to lead the way down, off 2% vs. the greenback, but also off today is the previously stalwart Mexican Peso, -1%. "The thing to remember is the exit door – whatever emerging market you're talking about – is always relatively narrow."

    Visa (V -1.6%) says it has three new deals with mobile point-of-sale providers in its back pocket to help it provide merchants with more wireless payment solutions. Though seemingly in competition with mobile POS leader Square, Visa is also an early round investor in the company.

    U.S. domestic crude oil production exceeded imports last week for the first time in 16 years, according to the EIA's latest data. Since Jan. 1997, weekly U.S. crude imports averaged ~9.2M bbl/day, topping domestic output by 3.5M bbl/day. But by late 2014, U.S. crude oil output should top imports by nearly 2.5M bbl/day. A slow shift, 16 years in the making, is set to become a flood in little more than 16 months.

    ConocoPhillips (COP), Suncor (SU) and Husky Energy (HUSKF.PK) offer the best value among energy shares, with Exxon (XOM) and Murphy Oil (MUR) at the bottom of the value heap, Barclays says. COP will rely on its "unmatched" North American unconventional oil portfolio to get better returns for its investments, the firm says in upgrading shares to Overweight with an $80 target (from $67).

    The champagne may be flowing at Chevron (CVX -0.8%) after Argentina’s Supreme Court lifted the freeze on CVX assets in the country, removing a major obstacle to the company's plans to invest there. But the biggest beneficiary may be YPF (YPF +2.2%), which has faced difficulty in attracting investment since Argentina nationalized Repsol's 51% stake in YPF last year. If CVX is willing tosign a devil's pact, maybe others will too.

    L&L Energy (LLEN -7.59%), which operates coal mines and production facilities in southern China and recently engaged a consultant to help it explore expansion into Northern China, took losses today after information emerged about China's plans to announce curtailment of coal use in major cities.

    Barrick Gold (ABX) says it will submit its water management plan for the delayed Pascua-Lama mine to give Chilean regulators "imminently." Far from hinting it might scrap the project after so many difficulties, ABX says Pascua-Lama will be a "key asset" when completed and it is fully committed to complying with Chile's regulators.

    Kansai Electric Power (KAEPY.PK -4%) slips again today, after losing more than 9% in the previous session, as Prime Minister Shinzo Abe says shuttered nuclear power plants will resume operations, but only after their safety was guaranteed.

    Shares of Yingli Green Energy (YGE -4.5%) burst higher, then fall back, on headlines that the solar company entered into a one-year, $100M deal with DuPont (DD -2.2%), extending a 2012 agreement. The deal includes a supply of solar materials from YGE to DD, installation of a solar power plant at DD and co-marketing initiatives. 

    FuelCell Energy (FCEL): FQ2 EPS of -$0.04 beats by $0.01. Revenue of $42.4M (+75.7% Y/Y) beats by $4M. (PR)  More on FuelCell (FCEL): FQ2 beats solidly across the board as total sales jumped 75% Y/Y. Net losses narrowed as margins widened to 5.5% from 0.01%, aided by a diverse sales mix. Product sales, which make up the bulk of revenue, jumped 84% to $34.4M due to higher fuel cell kit sales and revenue from its Bridgeport fuel cell park project. Service and license revenues were up 19%, while advanced technologies contract revenue nearly doubled. Shares +12.2% AH.

    Monsanto (MON -3.3%) calls the genetically modified wheat found in Oregon an isolated occurrence, likely the result of an accident or deliberate mixing of seeds. MON says tests of 600 samples of each of two wheat varieties planted by an Oregon farmer show no presence of the experimental Roundup Ready wheat, and tests of 30K wheat samples in Oregon and Washington also show no contamination.

    Caterpillar (CAT -1.4%) slips after Goldman cut its price target to $97 and reduced 2013-15 estimates by 10% earlier today. The firm cites soft mining capex and limited cyclical upside in its core Power Systems markets for the lower numbers.

    Shipping magnate John Fredriksen expects the tanker market to remain depressed for at least two more years, but is more optimistic about the outlook for other arms of his shipping empire. The rig market looks strong for another three to five years, he says, which bodes well for Seadrill (SDRL), which has an aggressive growth strategy with 19 new rigs incoming.

    Tesla Motors (TSLA -0.2%) roundup: 1) Tesla Motors plans to launch a Gen III electric sedan in 2016 which will have a range of at least 200 miles and could sticker for half the price of the Model S. Though still two years away, the new model would presumably be near a price point of EV entries from Toyota and Nissan. 2) CEO Elon Musk says that even after the automaker paid off its DOE loan, it's sitting on a cash pile of about $760M. 3) A Musk tweet makes it clear the founder is in for the long haul: "…just as my money was the first in, it will be the last out."

  120. The current session of the Nevada legislation is moving along quite nicely for the casino industry (MGMWYNNBYDPENN,ASCAPNKCZRLVSBJK). Bills to legalize online poker in the state and to protect large casino properties from slot machine parlors and establishments with sports betting kiosks have both passed, while a bill that would see casino employees avoid state taxes on comped meals looks likely to pass. (Previous: Vegas casino stocks falling faster than Macau plays)

    Las Vegas Sands (LVS -0.7%) says it will repurchase $2B worth of common stock, according to a Bloomberg headline.

    Retail Geeks thinks it's a worthwhile venture to track which brands are attracting the most new Facebook fans, more as a backdrop to help provide context and comparative peer data than to assume a linear relationship to sales trends. In the hunt for Facebook relevance – Amazon (AMZN), Nautica (VFC), and Fanta (KO) are three hot brands – while OfficeMax (OMX), Hanes (HBI), and Krispy Kreme Doughnuts (KKD) are barely moving the Facebook meter.

    Dollar General's (DG +3.1%) "rare misstep" (III) provides investors with an "attractive entry point," according to Wells Fargo analyst Matt Nemer, who believes the fundamental story for the company is unchanged. What with opening 165 new stores and relocating another 207, there were simply "too many balls in the air" during Q1, Nemer says.

    The yo-yo stock movement at Furniture Brands (FBN +17%) that got the NYSE's attention yesterday looks to have short squeeze written all over it – FBN currently has more than 4M shares short. The company was also a short target last summer.

    More on Coldwater Creek's (CWTRQ1Comparable retail sales and revenue fall 10.5% and 8.4% respectively, although the quarterly net loss is narrower than some anticipated. CEO Jill Dean notes that the results are in line with the high end of internal expectations thanks to "gross margin rate expansion and disciplined expense management." For Q2 the company sees flat to negative comps growth and a net loss of $0.55-0.75/share versus consensus of a $0.55/share loss. (PR) 

    A study in the European Heart Journal suggests Alzheimer's drugs such as Pfizer (PFE -0.6%) and Eisai's (ESALF.PK) Aricept, Novartis' (NVS -1.3%) Exelon, and Johnson & Johnson's (JNJ -0.4%) Razadyne may reduce the risk of heart attacks and death. 

    "Many companies we met with in the PC food chain stated 2Q13 is tracking towards the low end of guidance," writes JPMorgan's Christopher Danely (previous), calling this a negative for Intel (INTC) and AMD. Danely also puts the ASP for Intel's Atom tablet CPUs at $25-$30 (a little above Morgan Stanley's $20), and the ASP for its notebooks CPUs at $110. Bernstein's Stacy Rasgon, meanwhile, thinks 2013 is beginning to resemble 2012, when Intel ramped Ivy Bridge production on hopes of a demand pickup, and was "forced to cut loadings and inventories" at year's end. He also estimates Intel's server CPU unit will need to grow 20%+ Y/Y in 2H to meet aggressive guidance.

    A $3.9B funding shortfall could lead the $12/share special dividend attached to Carl Icahn and Southeastern Asset's bid for Dell (DELL -0.1%) to fall to $8.50-$9.35/share, argues Dell's special committee in a presentation justifying its rejection of the offer in favor of Michael Dell/Silver Lake's $13.65/share deal. The committee argues Icahn/Southeastern are underestimating minimum cash needs by $1.7B, and ignoring the need for $1.4B in cash for maturing debt. The presentation amusingly tries to paint as bleak a picture as possible for Dell, highlighting its PC share losses, declining margins, relatively low R&D spend, and x86 server pricing risks (in spite of recent share gains). Shareholders vote on July 18. 

    More on VeriFone: FQ3 guidance is for revenue of $400M and EPS of $0.20, below a consensus $460.5M and $0.50. While service revenue (boosted by M&A) rose 14% Y/Y in FQ2, systems revenue (65% of total) fell 19%, worse than FQ1's 10% drop. Gross margin was 42.2%, -240 bps Y/Y. North America sales -6%, EMEA -16%, Latin America -11%, Asia-Pac +2%. In spite of a 10% revenue drop, opex was roughly flat Y/Y (exc. litigation contingency expenses) thanks to a 10% increase in R&D spendPAY -9.2% AH. CC at 4:30PM ET (webcast), look for questions about competition from both mobile payments upstarts such as Square, and traditional rivals such as NCR. (PR)

    More on AMD: In an about-face, AMD says it's now open to developing chips for hardware running Android or Chrome OS. This partly has to do with AMD's plans to develop ARM-based processorsand its interest in expanding its custom chip business, but the eye-popping growth of the Android tablet is also probably playing a role. ARM processor vendors such as Qualcomm and Nvidia have a head-start, as does Intel, which has scored a few Android tablet wins and hopes to enable ~$200 Android systems. Hardware using AMD's 28nm Temash CPU (aimed at Win. 8 tablets) is due in 2H, as are systems based on Intel's 22nm Bay Trail Atom CPU. 

    VMware (VMWEMC+1.6% AH after COO Carl Eschenback tries to use a BofA/Merrill conference talk to reassure investors on edge over EMC's cash flow guidance and downbeat sell-side commentary. Eschenbach has reiterated VMware's Q2/2013 guidance and operating cash flow targets (the latter might be below consensus), is optimistic about a 2H demand pickup, and claims the vCloud Suite is seeing good momentum. Shares fell 2.5% in regular trading following Deutsche's downgrade. 

    "Educated guesses" put the price tag for SAP's purchase of hybris around $1.2B-$1.5B, says AllThingsD's Arik Hesseldahl. BMO believes the deal makes SAP a top-3 e-commerce software vendor, along with Oracle and IBM, and others see similarities between SAP's plans to create an end-to-end CRM software platform for analyzing retailer data and engaging with customers across channels, and Salesforce's (CRM) attempts to create an end-to-end cloud marketing platform with the help of ExactTarget. Discussing the deal, co-CEO Bill McDermott stated SAP wants to provide "everything a CEO needs to run a corporation in full intimacy with their consumer" in real-time.

    "Shoppable windows" are eBay's (EBAY -2.3%latest ideafor expanding into the bricks-and-mortar realm: the e-commerce giant is setting up four 9' x 2' touchscreens in busy parts of NYC that will allow customers to order items from retail partners, and have them delivered within an hour via couriers (who use PayPal Here to accept payments). Fifth & Pacific (FNP) is the first retailer to sign up; the company sees it as a way to offer more inventory than can be shown off in stores. eBay is already testing a home pickup service,developing apps for physical retailers, and hatching plans for a large-scale same-day delivery network.

     Zynga (ZNGA -2.8%) keeps falling as yesterday's shareholder meeting (it apparently featured ~25 shareholders and no media) fails to create enthusiasm following its layoffs and bookings warning. Mark Pincus promises the restructuring will yield a culture change. "We want to get back to being a nimble company that moves quickly to innovate, iterate, and find the player heat." But Pac Crest is unimpressed. "Unfortunately, cutting [Zynga's] worst developers will not make its best any better." Meanwhile, Zynga's rivals claim they're faring better (Facebook's Q1 payments data arguably backs that up). (previous)

    The Guardian of London has posted a copy of a "top secret" court order instructing Verizon (VZ) to provide the U.S. National Security Agency with records of all calls made within the U.S. or originating in the U.S., through July 19, 2013. The accompanying article says the order went into effect on April 25 affecting millions of Verizon customers. In the exclusive article, the Guardian says that it is likely though unknown that other U.S. carriers are also affected.

    BlackBerry (BBRY +0.6%) is talking with rival OEMs about having BlackBerry Messenger pre-installed on their phones, says COO Kristian Tear; the remarks come a month after BlackBerry announced iOS/Android versions of BBM would arrive this summer, exciting some investors and stoking fears among others of less hardware differentiation. BBM claims a base of 61M active users (many of them in emerging markets), with 70% of them using it daily. The iOS/Android apps will face competition from WhatsApp (200M+ users and #2 in Google Play free download rankings), Skype (#3), and Facebook Messenger (#4), among others.

    BlackBerry's (BBRY +1.3%) next touch-only flagship BB10 phone will be called the A10, launch in November, and be sold by Sprint, CNET reports, while providing scant details about its specs. Following the launch, the touch-only Z10 and QWERTY-sporting Q10 will reportedly be sold as mid-range devices (is a Q10 successor also on tap?). AllThingsD reported in March Sprint will sell a Z10 successor in 2H. 

  121. The White House 
    officially unveils 5 executive actions and 7 legislative proposals aimed at patent trolls. In addition to previously-reported items (III), the White House plans to review ITC procedures for setting import bans, and recommends giving businesses "better legal protection" for using products targeted by suits. Though many tech companies applaud the move, Microsoft (MSFT) is worried it "targets software innovations more broadly." Quartz isn't impressed, arguing (among other things) the action doesn't touch existing patents, and that the USPTO remains understaffed. Potentially affected companies: ACTGWILNVRNGVHCRPXC.

    Apple (AAPL -1%) roundup: 1) Wells Fargo thinks Samsung's ITC patent win will, at most, have a $0.24 EPS impact, assuming a 60-day presidential review and a new iPhone in September. 2) Brian White expects the iPhone 5S to have a fingerprint scanner built into its home button, and thinks it will enable device unlocking and content purchases. 3) Canaccord's Mike Walkley believes Samsung's U.S. smartphone sales have passed Apple's following the Galaxy S4 launch; comScore estimates Apple picked up more U.S. share going into the launch. 4) Apple plans to hire 7.4K workers for its Cupertino HQ between now and the 2016 completion of its "spaceship" HQ; it currently employs 16K workers in and around Cupertino.

  122. Wow, /NKD plunged back to 12,825!  That's insane money on the futures short at $5 per point per contract…  MADNESS!  

    Warren/Den – Yeah, when can she be President?

    You're welcome Julian.  That's a good attitude, it's good to buy things on the way down, the same way it's good to short a few things on the way up.  Too many people want to try to time going from 100% bullish to 100% bearish and that rarely works.  

    TSLA/DC – Really, you expect there to be a reason?  ;)

    SPY/ZZ – On a crazy day like this, with 40% of the volume for the day after the bell, could be all kinds of imbalances.  Keep in mind that SPY is "only" a $135Bn ETF and all that 401K money comes in after the bell (buying at Market On Close prices) and that's almost always bullish money.  Also, on a day like today, each of the components can be wild in their own rights:

    Top 10 Holdings
    Company Name % of Total 
    Dollar Value 
    (in thousands)
    APPLE INC ORD  2.88%  $3,988,998.72
    EXXON MOBIL CORP ORD  2.76%  $3,822,790.44
    MICROSOFT CORP ORD  1.73%  $2,396,169.37
    JOHNSON & JOHNSON ORD  1.65%  $2,285,363.85
    CHEVRON CORP ORD  1.64%  $2,271,513.16
    GENERAL ELECTRIC CO ORD  1.60%  $2,216,110.40
    GOOGLE INC ORD  1.52%  $2,105,304.88
    PROCTER & GAMBLE CO ORD  1.45%  $2,008,350.05
    PFIZER INC ORD  1.45%  $2,008,350.05
    Total:  18.15%  $25,139,002.35

    TASR/ZZ – Yes, it's a conservative play that accomplishes a lower net entry so you simply wipe out the premium on the $5 calls while only obligating yourself to own 1x more of the stock at net $7.50.  I'm not sure when that one was from but, if I were doing it today, I'd buy the $7.50 calls for $2.25 and sell the $7.50 puts for .50 and then you have a net $9.25 entry, which is right where the stock is now, with a DD at $7.50 for 2x at $8.375, which is a 10% discount to the current price but you get 100% of the upside from here and you can even sell short puts against it with no danger to the upside.  As you know, the call has an advantage over the stock as it will lose less on the way down (delta .78) than the stock, so that's another 22% cushion you get for free.  Meanwhile, to the upside, you get 100% of the move up from here.  Why would we enter any other way? 

    LOL, I was just looking for where that TASR pick was and the search thing brought up "Turning $10,000 into $50,000 by Jan 21st!" from June 2010.  I forgot about that one – from back when TASR was getting AAPL-like treatment and I put up my Star Trek premise for buying them. 

    Tweeting/Jfaw – I tweet some stuff but, frankly, there's a reason I like having a private site.  While I realize people take my ideas and repackage them – that's fine with us as we have plenty of time to get in.  I certainly don't want to be Cramer, stampeding people into things and driving up prices in quick, unsustainable moves.  Remember last summer, when I mentioned GNW on TV and the stock went nuts?  That's kind of scary….  I try to be like Greenspan and not say much publically so, when I do have something important to say, people listen.  

    CLF, by the way, is still a gift at this price ($18.23).  China has surplus iron but iron is heavy and expensive to ship, plus, there's a time delay and they certainly can't dump it on US Markets, where the demand is due to ANTI-DUMPING laws, so they all compete at spot and CLF has a decisive advantage on shipping cost and time for the US, Mexico and Canada.  They do less than 5% of their business overseas but they get sold off with the sector, like today.  We already have CLF in the Income Portfolio at net $18ish but you can sell the 2015 $18 puts for $5.10 at the moment for a net $12.90 entry.  CLF had a non-recurring $1Bn loss last year but usually make about $1Bn a year and are valued at $2.7Bn – even if it takes them 4 years to make $1Bn – that's still a good deal! 

    Asia's down about 1% across the board now, mostly finishing at their lows.  Europe is opening flattish ahead of the CB's and it's time for me to take a nap as it should be an exciting day….

  123. Phil – I put on three ETF hedges – FAS puts, DIA puts and TZA puts – FAS gave the biggest bang for the buck.  Speaking of financials, anyone looking for long puts might consider MA – they are down significantly last couple of days after a runup from $520 to $585, now at $560, looks like they have more room to go down…any TA masters want to check?

  124. CLF – Thanks.  I own them at net $23.00.  Selling premium when the market finds a floor.  And for tweeting, that was tongue and cheek.  Your assessment of tweeting is spot on! 

  125. As predicted here, the 50 DMA are now in play. Well, except for the NYSE which failed his yesterday. For some reason, that index has been hit a lot harder than the others even though it is the broadest. 

  126. SODA / Nicha – Wow, Coke and now Pepsi… As Phil said, I am not sure it makes sense for these guys as they would be cannibalizing their sales even if they sell their own syrup recipes. Unless they just want to shut it down!

  127. SODA's is $75 in pre-market at the moment. up around 9%. Another rumor, crazy!

  128. ** Test

  129. Good Morning

  130. Good morning again! 

    Looks like I didn't miss anything while napping – even the Nikkei finally froze (12,930). 

    Oil $94.21, gold $1,400, silver $22.44, copper $3.333, Nat gas $3.999, gasoline $2.8264.  '

    Dollar 82.425, Euro $1.3117, Pound $1.545, 99.07 Yen to the Dollar. 

    Europe kind of flattish coming into lunch – waiting on rate decisions and so are we but also they had some sort of "technical problem" that kept NYX closed until about 4:30:

    Euronext (NYX) exchanges in France, Belgium, Portugal and the Netherlands have opened after trading was delayed because of technical problems. European indices diverge from U.S. and Asian markets, and are mostly higher ahead of policy decisions at the BOE and ECB. EU Stoxx 50 +0.2%, London +0.2%, Paris +0.2%, Frankfurt+0.2%, Madrid +0.6%, Milan -0.2%.

    3:37 AM The Nikkei (EWJ) swings between gains and losses before closing -0.8%, dragged down Wall Street's losses overnight in the wake of a weak ADP jobs print yesterday. The Nikkei has lost over 19% since hitting a 52-week high on May 23 – a drop of 20% would put the index in a technical bear market. Chinese shares decline for the sixth day in a row, hurt by fears about the economy. Hong Kong-0.8%, China -0.1%, India -0.2%. 

    6:00 AM Overseas: Japan -0.9%. Hong Kong -1.1%. China -1.3%. India -0.3%. London -0.01%. Paris +0.3%. Frankfurt +0.1%.

    7:00 AM On the hour: S&P +0.32%. 10-yr +0.04%. Euro +0.15% vs. dollar. Crude +0.52% to $94.23. Gold +0.45% to $1404.85.


    Look Out Below: ‘Thundering Herd Is Moving the Wrong Way’ (Moneybeat)

    Credit Suisse’s Garthwaite: ‘Just buy stocks’ (FT Alphaville)

    Poll: 87% See Risk of Stock Crash by year-end (MarketWatch)

    Survey Says…Economic Risks Bear Watching (WSJ)

    The Hidden Jobless DisasterAt the present slow pace of job growth, it will require more than a decade to get back to full employment defined by prerecession standards.

    Americans Short on Financial Know How (Real Time Economics)

    Learn Your ABCs Before Hiring a Financial Advisor (Morningstar)

    Madoff, other felons say markets are unfair (MarketWatch)

    Bond Losses Accelerate as Junk Sales Surpass 2012: Euro Credit. Bondholder's losses on high-yield debt are deepening in Europe as issuance of junk securities this year already exceeds the total for all of 2012, with companies taking advantage of record-low borrowing costs.

    ETF Selloff Outpacing Junk Signaling More Losses: Credit Markets. Losses on junk-bond exchange-traded funds are outpacing the broader U.S. speculative-grade market by the most in three years, signaling a deepening slump for debt that traded at record-high prices less than a month ago. BlackRock Inc.'s $14.5 billion iShares iBoxx High Yield Corporate Bond ETF, the biggest of its kind, plunged 2.6% in May, 2.1 percentage points more than the decline in the Bank of America Merrill Lynch U.S. High Yield Index. Investors redeemed 3.3 million shares, or about $305 million, from the fund June 4, its biggest one-day outflow on record.

    U.S. Company Credit Swaps Rise as Investors Weigh Fed Stimulus. A gauge of U.S. corporate credit risk rose to the highest level in two months amid speculation on the future pace of Federal Reserve stimulus.

    Danger Will Robinson – Danger, Danger!!!  The Bank of England leaves policy unchanged, it's benchmark rate remaining at 0.5% and the QE program on hold at £375B. This is the last meeting before Bank of Canada Governor Mark Carney takes over the top spot at the BOE.

    French Q1 unemployment rose to 10.8% from 10.5 in Q4 2012; excluding France's overseas territories, the rate increased to 10.4% from 10.1%. The aim of French President Francois Hollande is to reverse the growth in unemployment – which has been going on for almost two years – by the end of 2013, although some economists don't think it will peak until 2014. (PR)

    RTS Futures Signal Bear Market Isn’t Finished: Russia Overnight. Russia’s dollar-denominated RTS Index (RTSI$) entered a bear market and futures contracts pointed to further declines as prospects for weaker commodity prices sour investor sentiment in the world’s biggest energy exporter. 

    Greek unemployment edged up to a fresh record of 26.8% in March from a downwardly revised 26.7% in February. While the figure is double the eurozone average of 12.2%, there is at least one place in Greece where joblessness is not a problem: the farming village of Anavra – population 500 – which actually has negative unemployment.

    Asian Stocks Slide to Lowest Since January on U.S. Data. Asian stocks fell, with the regional benchmark index heading to a four-month low, after U.S. jobs and factory data missed estimates and investors speculated whether the Federal Reserve will scale back bond purchases.

    With its board due due to meet early next week, the Bank of Japan is reportedly divided over policies that could make its monetary loosening appear to be piecemeal, something it is determined to avoid. One source of dispute is over whether to double the maturity of loans the BOJ extends to banks to two years in order to stabilize the bond market; another is to whether to raise the limit on the BOJ's purchases of REITs.

    Abenomics Won’t Be ’Magic Bullet’ for Japan, Says Johnson of MIT

    Japanese PM, Mr Abe’s speech on the country’s growth strategy disappointed investors. He did not refer to restarting the country’s nuclear programme, something a number of analysts had expected. He stated that he would promote private sector investment through the removal of bureaucratic barriers. He also promised to open up the infrastructure, health and energy sectors and promoting FDI into Japan, together with improving career opportunities for women. Certain cities would be allowed to introduce lower taxes and deregulate further creating, in effect special economic zones. Mr Abe also set a goal to increase earnings by 3.0%. All laudable sentiments, but there were few specifics or any meaningful measures and his statement will not make a difference in the short and medium term. The Nikkei reacted negatively with the market -3.8% lower and the Yen strengthening.

    Gottex Fund Cuts Bets on Small Japanese Companies After Rally. Gottex Fund Management Holdings (GFMN), which allocates $6.4 billion to hedge funds, has cut its largest Asia fund’s bets on small Japanese companies whose share prices may fall more sharply in the market correction

    China Export Gains Seen Halved With Fake-Data Crackdown. China’s crackdown on fake export invoices used to disguise money flows is probably trimming the nation’s trade figures, revealing subdued global demand that will weigh on economic growth. Outbound shipments may have grown 7.1 percent in May from a year earlier, less than half the previous month’s reported 14.7 percent, based on the median estimate of 34 economists ahead of data due June 8. Import growth probably slowed to 6.9 percent from April’s 16.8 percent, a Bloomberg News survey showed.


    China has more cards to play in EU trade dispute – People's DailyChina still has plenty more cards to play in an increasingly ugly trade dispute with the European Union, the official People's Daily newspaper said on Thursday, accusing Europe of not realising that its global power was waning. 

    Paris threatens EU-US talks as China trade war looms. Paris is threatening to block EU-US trade talks that Britain wants to launch at this month’s G8 summit in Northern Ireland if French demands to exclude cultural industries such as music and film are not met. Washington, London and Brussels are pushing hard for a new transatlantic trade agreement to boost the US and European economies, with President Barack Obama swinging his weight behind the move.

    China’s Small-Company Stocks May Fall Further 10%, Shenyin SaysChina’s ChiNext index of small companies may fall a further 10 percent from current levels because of valuations and concern they may miss earnings estimates, according to Shenyin & Wanguo Securities Co

    China Vanke Chairman Says Country Faces Risk of Property BubbleChina Vanke Co. Chairman Wang Shi said the country’s property market faces the risk of a “bubble,” reiterating concerns the nation’s biggest developer by sales raised three months ago. The bubble isn’t “light,” Wang said at a conference in Shanghai today. “If the bubble lasted, it will be dangerous.” 

    China Blogger Who Began Querying Home Prices Taken to TeaTwo men greeted him at the police station as he was escorted in from the January cold. Peng Chengxian didn’t ask who they were. Each wore a light-colored jacket and carried a dark handbag. They must be “Guo Bao,” Peng says he thought. That’s the name of China’s secret police in charge of keeping order among more than 1.3 billion people for the ruling Communist Party. 

    Emerging Market Stocks Turn From Best to Worst. (video)

    Emerging markets displace Europe as fulcrum of world risk. There is a wicked double edge to the emerging-market boom that has so enthralled us for the past decade. The economies of these rising powers are by now big enough to shake the entire world if they come off the rails. My fear is that a China-led BRICS shock will transmit a wave of deflation across the planet, pushing the West over the edge into another downward leg of trade depression. The eurozone polity cannot withstand such a blow. Youth unemployment is above 40pc in Italy, Spain, Portugal and Greece, and “nominal” GDP is contracting across the four countries, meaning that high debt is rising on a shrinking base. Another twist of the deflation knife will be lethal.

    Members of Congress from both sides have started making concerned noises about Shuanghui's proposed $4.7B acquisition of Smithfield Foods (SMD). Congress' worries include food safety, especially given Shuanghui's problematic record, although Smithfield has pointed out that the combined company won't be importing pork into the U.S. The honorable members might also want to read Jonathan Safran Foer's book "Eating Animals," which is scathing about Smithfield's practices.

    Luxury Sales Hit by Chinese Fears of 'Ostentation'Solid earnings and soaring share prices for Tiffany, Michael Kors and other luxury brands has led to widespread talk of a new boom in high-end goods, but it may be too early to pop the corks on the Dom Perignon. A new study from one of the world's top luxury experts predicts that growth in such sales will be as much as 50% slower this year than last. The main reason: China.

    Costco (COST) May same-store sales: +5%. Total sales+7% to $8.13B (PR)

    Son of a bitch!  The hot rumor on Tuesday was that Coca-Cola in interested in buying SodaStream (SODA); today's hot speculation is that PepsiCo (PEP) is in negotiations to acquire the Israeli company for $2B or more, well above its market cap of $1.43B. PepsiCo could even be willing to pay as much as $95 a share, or 37% more than SodaStream's close of $69.35 yesterday. However, the latter also wants to check its options with Coca Cola. - This story is from The Calcalist, the same Israeli business magazine that said FB was buying Waze, which turned out to be totally untrue.  Our move will be to buy back the short puts in the STP and keep our long puts, most likely as this is the same nonsense as KO was a couple of days ago – I wish I could short them now ($89).  

    SodaStream (SODA +26% to $87.01) shares froth effervescently following a report that PepsiCo (PEP) is in negotiations to acquire the Israeli company for $2B or more and is willing to pay up to $95/share. Barclays says that a deal would be "earlier cycle than we would have thought." - What idiots!  They don't have the balls to say "this sounds like BS to us!"  I can't believe what passes for news these days.  Of course, no arrests will be made.

    LOL – that didn't take long:  PepsiCO (PEP) CEO Indra Nooyi pours some cold water on rumors the company is putting together a bid to buy SodaStream (SODA). The exec says it was the "first time" she has heard of the notion. In the past, Nooyi has been a strong proponent that organic growth opportunities still exist at the multinational. SODA +13.9% premarket. 

    Amazon’s cloud is how big again? (Gigaom)

    Working in partnership with the FBI and authorities in over 80 countries, Microsoft's (MSFT) Digital Crimes Unit has launched a successful attack on one of the world's biggest cyber-crime rings. Microsoft forced the closure of at least 1,000 out of an estimated 1,400 malicious networks known as Citadel Botnets, which are believed to have stolen over $500M from accounts at financial companies such as American Express (AXP), PayPal (eBay), HSBC (HBC), JPMorgan (JPM), Royal Bank of Canada (RY) and Wells Fargo (WFC).

    New, Improved Google Maps Lets User Launch Missile At Any Location On Globe (The Onion)

    comScore Reports April 2013 U.S. Smartphone Subscriber Market Share (comScore

    The DOJ vs. Apple case: Amazon (AMZN) exec Russell Grandinetti testifed the company was delivered an ultimatum by publishers that they would withhold books if it didn't abandon its pricing structure. After some tense negotiations, Amazon relinquished control of its pricing and went to the model the DOJ maintains Apple helped force upon the e-book industry. 


    REVEALED: NSA Is Collecting Phone Records Of Millions Of Americans Daily.


    Iowa City Is About To Take An Unprecedented Stand Against Government Surveillance Technology.

    This does an excellent job of explaining the IRS scandal:  Visualizing IRS-Gate: Bureaucratic Blunder Or Political Profiling?

    Scientists poke frozen mammoth, liquid blood squirts out (Wired)

  131. Phil/nap~good morning! I need to learn that from you to stay awake when you think the opportunities are and nap strategically! :)

  132. 6:53 AM Pepsico (PEP) CEO Indra Nooyi pours some cold water onrumors the company is putting together a bid to buy SodaStream (SODA). The exec says it was the "first time" she has heard of the notion. In the past, Nooyi has been a strong proponent that organic growth opportunities still exist at the multinational. SODA +13.9%premarket. 

  133. MA/Jerconn – We have never had luck shorting them.  I agree they are crazy high but every time they get there, they consolidate, have more earnings growth, and then go crazy higher.  I just gave up playing them as it's only pure luck if you do catch a rare dip but, of course, $600 would have been a logical line for a little pullback.  

    You're welcome Jfaw.  Yep, I'm getting pretty good at tweeting,  I try not to make too many tweets, as it pisses me off when people tweet BS stuff, but I do notice the most popular tweeters are the ones who tweet "Just had new flavor at Starbucks – OMG, soooo awesome! #coffee" – so far, I haven't gone there…

    By the way, does anyone use the tweeting function from comments?  Please do or please retweet my stuff when you think it's worthy.  I would like to get more twitter followers than Musk!  

    Big Chart – Wow, that was pretty quick hitting our downside goals.  Not sure they're going to hold with the NYSE plunging right through.  Next logical lines are those April lows, which are pretty much the 200 dmas and another 2.5-5% down from here.  

    NYSE/StJ – I think because it's the broadest, it's the hardest to keep up once money starts moving out of the market.  That goes back to the Smart Money chart the other day and the way we felt that they were fakely covering exits at the end of May.  Looking at the charts, it makes sense that the NYSE was harder to fake so they couldn't paint that double top like they did on the others.  

    SODA/StJ – I like the fact that the CEO of PEP actually took the time to call CNBC and say the rumor was BS.  It's so annoying to be used by rumor-mongers like that.  In a real market, that magazine would be investigated and someone would go to jail – that's twice in one week – not a coincidence – follow the money!!!

    Strategic napping/Invest – I don't use an alarm.  I never force myself to wake up but, when the markets are exciting, I do tend to wake up about 3am and I check my IPad and I either get out of bed or go back to sleep.  As a rule though, you have to be sharp when you're trading (same with poker) and it's just silly to do so while you're tired so, if I'm tired, I go back to bed (or the couch really, as I fall back asleep watching Bloomberg or the Daily Show), which often happens if I'm up at 3 around 4:30-5 and another hour or two usually does it for me.  

    Check this out.  It's the anniversary of Tiananmen Square and the Chinese censors won't allow the picture of the boy standing up to the tanks so someone replaced the tanks with the giant rubber duck from Hong Kong Harbor and it's gone viral in China:

    It's very hard to suppress freedom of speech in the Internet age…

  134. 7:45 AM The ECB leaves policy on hold, its benchmark rate remaining at 0.50%. Mario Draghi's press conference begins at 8:30 ET.

    A soon-to-hit tapering of QE may now be consensus, but top BlackRock strategists just aren't seeing it yet, instead doubting the labor market or inflation will be strong enough. Economic headwinds from forced budget cuts are only starting to take effect and Jan. 1 brings another – Obamacare – whose penalties on hiring may lead to less of it. Further waves of asset purchases may be as likely as tapering.

    Add SocGen's professional bear Al Edwards to those doubting (previous) an imminent tapering: "I might be wrong, but I just don't see this economy as healthy," he tells CNBC. "If I am right than any sharp rise in bond yields (TLT) should quickly derail this apology of a recovery." The monthly jobs report (25 hours away) is definitely popcorn-worthy again. 

    Nonetheless, the Dow has popped 15,000 and is a long (/YM) for the duration above that line.  I'm very surprised but I guess they are going to jam us up on whatever Draghi says but the FACT of no change in ECB policy means I wouldn't trust any move up (but no reason not to make some Egg McMuffin money from the BS Dow move, right?).  

  135. Actual Hong Kong duck, by the way – very cool:

  136. Thanks for sharing the tips, Phil. Trading is like fighting in a battlefield--> need to be sharp. My friends like the HK duck too!