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Thrilling Thursday – Tell Us About It, Janet!

SPY 5 MINUTECan Yellen thrill us again?  

On Tuesday, the 11th, we found our thrill on Capitol Hill when Janet Yellen testified before Congress (summarized in my Wednesday post) and the markets took off like a bat out of Hell and today, after a snow delay, is the second part of her double feature testimony over at the Frankenstien place we like to call the United States Senate.  

Will the markets do a time warp and repeat the rocketing performance she set off that week or have we already taken all she has to give (see yesterday's post for my market angst – today I'm staying positive!)?  As you can see from Dave Fry's chart – so far, my prediction of pump and dump action at the top of the channel is paying off and we're having tons of fun trading the Futures but today it's put up or shut up for the Bulls – as finishing this week without taking new highs will not be good enough.  

Already this morning, we picked up our Egg McMuffin money with an early short from Dow (/YM) 16,200 to 16,050 ($750 per contract) and Russell (/TF) 1,080 to 1,070 but now we flipped bullish again at 16,100 (7:08 am) with tight stops – hoping Janet can once again make a new man out of the markets and rose tint our World (had to get in a last Rocky Horror reference).  

.SPX WEEKLYWe were nice and bullish after Yellen's testimony on 2/12, with 9 bullish picks right in the morning post but we got killed on a WYNN short (so far) and AAPL is back to $515 but we added to our long positions yesterday – as it's only the pullback we expected.   AAPL is often held back to be used as rocket fuel when a push to new highs is needed.  Since it's about 15% of the Nasdaq and 4% of the S&P, just manipulating that one stock can give you total control of the markets.

Speaking of manipulating the markets – let's here it for Morgan Stanley, who put out a note on Tuesday raising their price target for TSLA from $153 to $320 (not a typo), which would make TSLA, who sold 25,000 cars last year, worth as much as Ford (F) or GM, who sold over 2M cars EACH in 2013.  That's 100 TIMES more cars – for those of you who, like the Morgan Stanley analyst, struggle with basic math skills….

That prompted Jabob, in our Member chat, to comment on the pending note offering from TSLA: "I wonder if Morgan Stanley is the underwriter?? "  Now, we KNOW the stock market is blatantly manipulated but, surely, it can't be THAT BLATANTLY MANIPULATED, can it?  Well, funny story, turns out it is!  MS is indeed underwriting TSLA's $1.6Bn convertible note deal and both MS and TSLA stand to substantially benefit from the 20% bump in TSLA's price – thanks to the MS upgrade.  

Will anyone be arrested?  ROFL!  Don't be silly, this is America, not some Socialist Nation where the Government regulates things like that.  These guys will get fat bonuses and be featured on the cover of business magazines for their "financial innovation."  As I said to our Members in chat yesterday:

It's BRILLIANT to announce you have to build a factory to provide batteries for 500,000 cars a year when you're currently producing 25,000 because – if you are building a great big battery factory, you must REALLY be serious about selling 500,000 cars and, if you say the batteries will be 30% cheaper – you must be right because, after all, you are a car company and you know what you want to pay for batteries.  Wash, rinse and repeat until you actually believe it…

Imagine if AAPL builds a chip factory to make 300M chips for IPads in 2020, even though they only sold 15M last year.  Now imagine it's for an IPad that costs twice as much as competitors' tablets.  Of course, it did win the tablet of the year award and rich people did buy some, so why wouldn't they be able to sell 20x more in 6 years?  AAPL would get laughed off the planet – Musk gets a halo – amazing!

I'm not going to sit here and tell you why TSLA isn't worth $260 (we're short), or $200 — maybe $150 if you want to be an optimist, today we are bullish, at least back to the lines we just shorted this morning (and don't forget /NG long at $4.50!) and, if we get over those, then we go long on the laggard (standard Futures trick) and we hunt for more long opportunities but, if we fail to get to new highs…  No, I'm not going to go there.  It's Janet's day today and dammit, we love her!  


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  1. Oil lines

    R3 – 104.24
    R2 – 103.57
    R1 – 102.92
    PP – 102.25
    S1 – 101.6
    S2 – 100.93
    S3 – 100.28

    Yesterday's high and low – 102.9 / 101.58

  2. Speaking of central bankers – here are the current yield on 10 years on the G-8 plus Russia:

  3. Interesting article from Barry:

    2-21-14 Market Cap - 1

    Buffett's favorite metric compares the total price of all publicly traded companies to gross domestic product. This metric can also be thought of as a way to judge the valuations for all U.S. companies relative to the total amount of U.S. economic activity. According to Buffett, when the resulting figure is above 100 percent, stocks are overvalued.[...]

    So what does market cap as a percentage of GDP tell us? The answer is: Much less than it used to.

    Valuation relative to U.S. GDP assumes that the U.S. economy is the driver of capitalization. It really isn’t. Numerous studies have found very little correlation between current economic activity and the stock market.

    Then there is globalization. The percentage of income that the S&P 500 derives from overseas activity is now about 50 percent, up significantly from where it was about 20 years ago — in the 30 percent range. Given that half of SPX earnings are coming from overseas, comparing market cap to U.S. economic activity paints only a partial picture.

    Finally, we have to consider the historical track record. This past weekend, Griess noted an interesting anomaly about this indicator to his subscribers. From the time Alan Greenspan first used the infamous phrase “irrational exuberance” in late 1996, stocks have almost always, by this measure, been overvalued. Since October 1996, this ratio has been measured as overvalued (above 100 percent) for all but 17 months (out of 208). That means, according to Buffett’s favorite metric, stocks in the U.S. have been overvalued 92 percent of the time since 1996.

    Or maybe we'll see a huge reversal to the mean and all get crushed…. And  he adds:

    However, indicators go overvalued/overbought or undervalued/oversold and stay there for much longer time periods than one would think they could.

    Which we can relate to!

  4. JCP – Up huge.

  5. Good morning! 

    I'm very concerned about the Yuan issues but the Hang Seng wasn't, they popped 1.75% today, finishing at the highs – so we shouldn't get too worked up about it – yet.  

    Yuan Turns Worst Emerging Carry Trade as PBOC Stokes Volatility. The yuan has gone from being the most attractive carry trade bet in emerging markets to the worst in the space of two months as central bank efforts to weaken the currency cause volatility to surge. The yuan’s Sharpe ratio, which measures returns adjusted for price swings, turned negative this year as three-month implied volatility in the currency rose in February by the most since May, when the Federal Reserve signaled plans to cut stimulus. The exchange rate tumbled the most since 2010 on Feb. 25 amid speculation the People’s Bank of China was intervening to deter one-way bets on currency gains.

    Three warning signs from higher gold prices. Opinion: Trouble ahead: China crash? Deflation? New recession?

    Copper Drops to 12-Week Low on Signs China’s Growth Is Slowing. Copper slipped to the lowest price in more than two months amid concern that China’s growth is slowing and as stockpiles rose in the biggest user. The contract for delivery in three months retreated as much as 0.5 percent to $6,994 a metric ton on the London Metal Exchange, the lowest level since Dec. 4 and traded at $7,012.25 by 12:21 p.m. in Tokyo. Futures are down 0.8 percent in February, poised for a second monthly decline.

    Ukraine far from "fixed":

    JCP up 25% for losing less than thought – talk about a forgiving market!  

    JCP's(JCP) Quarter In Charts: Retailer Generates Least Amount Of Cash Flow In Holiday Quarter In Recent History. (graph)

    RIG up to on a poor report (sometimes we benefit):

    Transocean(RIG) profit slides on lower rig demandTransocean Ltd, owner of the world's largest offshore drilling fleet, said on Wednesday that fourth-quarter profit fell 49 percent from a year ago, hurt by lower rig utilization. The company's net profit attributable to controlling interest fell to $233 million, or 64 cents per share, from $456 million, or $1.26 per share, a year earlier.

  6. Oil flying to $103 but /NG laying there at $4.46.  Maybe a flush ahead of inventory but very dangerous to play.  Usually, nat gas moves maybe .05 in a day – it's been up and down $1.50 in the last 10 – all sorts of margin calls going on and it does remind me of the time those hedge funds blew up on Nat Gas trading.  

    Dollar just got rejected at 80.50 but did pop to 80.60 before that.  We'll see if 80.40 holds.  Yellen's last speech sent us down from 80.90 that Tuesday back to 80 on Friday's close.  We're exactly half bounced since.  

    SHLD rocked earnings – also losing less than expected.  Up 8%.  People are starting to figure out the real estate play, I think.  

    Rates/StJ – What's scary about that chart is that Italy is in the G8!   Not that Russia's any sounder…

    Buffett/StJ – I think the main point is it's an indicator Buffett talked about 40 years ago in a book and the World may have moved on a bit since then.  I doubt Buffett himself is even using it anymore.  It's the same as when people talk about a bank being bigger than someone's GDP – the bank isn't really attached to the local economy that way – if they are an IBank who does business all over the World, then it's no different than Samsung being 25% of S Korea's GDP – it's a benefit to the country and, if they fail, the country doesn't have an obligation to bail them out (though systemic risk can force the issue).  Iceland's banks were 10x bigger than their GDP and Iceland told them to F off when they failed and Iceland recovered as well as any other nation after the crash – WITHOUT any crazy stimulus or bailouts.  

    BIDU all over the place.  

  7. Oil back to $102.50, are you bullish into the natural gas inventory?

  8. dclark41 – I don't think it affects the merger.  I suspect the pressure from the activist led to the merger.  Notice the article was a couple of weeks old.  Thanks.

  9. Big move in /CL.

  10. We knew that already:

    Research on corporate finance by Sean Starrs, soon to be a professor at the City University of Hong Kong, finds that American dominance is far from over. Working from a data-set of the top 2,000 corporations in the world divided into 25 sectors, Starrs found that American firms have the leading profit share in 18, with no other country coming close. He concludes that “despite almost seven decades of increasing global competition and the rise of vast regions of the world (most of all East Asia), American transnational corporations continue to dominate the pinnacle of global capitalism, a phenomenon that national accounts miss.”

    But what’s also missing is the connection between American corporate profits and the US itself. How do corporate profits at US companies benefit America?

    One way is corporate taxes. The Center for Tax Justice released a new analysis today of income tax payments made by the 288 US Fortune 500 corporations that were profitable between 2008 and 2012. Corporate tax revenue has been falling in recent years, and the report finds the average effective tax rate was 19.4%, much lower than the statutory 35% rate, and a third of the companies paid an effective tax rate of less than 10%.

    Of companies with significant offshore profits, CTJ found two-thirds paid higher tax rates to foreign governments than they did in the US. The US effective federal tax rate of the 117 companies earning more than $1 billion overseas from 2008 to 2012 was just 18%, while their foreign tax rate was 26%.

    Another is investment and hiring. All 288 companies in the CTJ combined kept some $922 billion in income—nearly a trillion dollars!—offshore between 2008 and 2012. That spares them US taxes, and means those companies aren’t investing that money into US operations. We know that US corporations aren’t paying workers more, since even as profits have soared in recent years, wages have fallen. There is also evidence that jobs have declined in some sectors, particularly manufacturing, as US corporations have been able to rely more on foreign workers.

    Finally, there is ownership. At the end of the day, US corporate profits revert to the people that own their stock. Sometimes this is a technicality, especially with so much unrepatriated income—that’s when you see bank-shot plans like Apple’s to borrow money to pay stockholders in the hopes that the tax costs will eventually be less than the interest. Foreign profits do mean good things for America’s public companies, but only 52% of Americans own stock—and more than 10% of US equities and more than 40% of US corporate debt is owned by foreign investors.

    All this isn’t to predict disaster or to suggest that US corporate success isn’t an important phenomenon. But it does point to the lack of a straight line between US corporate domination and benefits to the majority of Americans, all because of the basic infrastructure of globalization. As Starr notes, the way corporate profits return to US drives inequality, disproportionately benefitting the wealthy.

  11. Albo

    THX. Didn't notice the date. First saw it as I was going through SA breaking news. I guess breaking news is the same as "broken" news! :)

  12. Good Morning!

  13. ZU – Definitely in the Momo category.

  14. Think Goldman was pissed that they didn't do the note offering that they raised the PT to 170 from 118 on TSLA?

    • Asian shares mainly rise but European equities and U.S. stock futures fall as investors await testimony from Fed Chair Janet Yellen in the Senate later today. A main focus is on whether recent soft economic data in the U.S., which has been attributed to the severe winter weather, has had any affect on the Fed's tapering timetable.
    • "The markets are in this holding pattern again, waiting for some new developments," says asset manager Stephen Halmarick. "The base case is still that the global economy grows more strongly this year than it did last year but there’s certainly some risk around that."
    • Investors are also keeping an eye on rising tensions in Ukraine, where armed pro-Russian gunmen have seized government buildings.
    • S&P 500 (SPY) futures are off 0.3% as earnings continue to roll in and ahead of Janet Yellen's appearance in the Senate later today. What's the Fed Chair's take on recent weak economic statistics and the weather?
    • Europe's caught in a sizable selloff, with the Stoxx 50's -1.3% led by a 1.7% decline in Germany (EWG). Asia was mostly higher, led by the Hang Seng's 1.7% gain.
    • Treasury yields dip another basis point after yesterday's big move lower, the 10-year now at 2.65%. Gold's up a couple of dollars to $1,332 per ounce.
    • Japan -0.3%, Hong Kong +1.7%, China +0.3%, India +0.65%.
    • Euro Stoxx 50 -1.2%, London -0.7%, Paris -0.8%, Frankfurt -1.1%, Milan -1%, Madrid-1.3%.
    • U.S. stock futures: Dow -0.3%. S&P -0.3%. Nasdaq -0.1%
    • Initial Jobless Claims:  +14K to 348K vs. 335K consensus, 334K prior revised (336K prior).
    • Continuing claims +8K to 2.96M.
    • Jan. Durable Goods: -1.0% vs. -1.6% expected, -5.3% prior (revised).
    • Ex-transport +1.1% vs. -0.4% expected, -1.9% prior (revised).
    • Stock futures erase earlier losses after durable goods fell less than expected and weekly jobless claims rose; the S&P and Dow are now flat, and Nasdaq +0.1%.
    • European markets are broadly lower as Ukrainian tensions rise after armed protesters seized the parliament building in the pro-Russian region of Crimea; Asian shares closed mixed.
    • Janet Yellen will speak before the Senate Banking Committee at 10 a.m., in her second congressional testimony this month; with more data releases since her Feb. 11 appearance, markets will be listening for her views on the weather-effect now that the worst of the storms appears to have passed.
    • J.C. Penney +23% after posting a profit over the holidays and seeing continued sales improvement in the current quarter, Best Buy +8% after Q4 results beat lowered expectations, and Tesla +3% on news of its proposed battery "gigafactory."
    • Treasurys display modest gains, with the yield on the 10-year benchmark note off one basis point at 2.66%.
    • Adjusted earnings of $2B, or $1.06 per share compares to $1 a year ago.
    • Canadian retail banking adjusted net income of $1.3B up 5% Y/Y. U.S Retail banking net income of $398M up 5% TD Ameritrade contributes $65M to U.S. earnings, up 35%.
    • Wholesale banking net income of $230M up 44% Y/Y, thanks to higher trading-related revenue, advisory and underwriting fees.
    • Tier 1 Capital of 8.9% falls 10 basis points from Q4.
    • Quarterly dividend is boosted C$0.04 to C$0.47 per share.
    • Press releaseFQ1 results
    • TD no trades premarket
    • Exxon Mobil (XOMplans to cut spending on new wells, offshore platforms and fuel plants by 13%, averaging ~$37B annually this year and for the next several years, compared with $42.5B in 2013, according to its latest 10-K filing.
    • XOM plans to spend $6B this year on projects to reduce emissions linked to climate change and pollution, a level of expenditure even with 2013, and says it will continue at that rate next year.
    • XOM -0.3% premarket.
    • Doubling down on a losing hand, BAML's John Lovallo reaffirms a $65 price target on Tesla (TSLA) after the stock's surge above $250 yesterday and the announcement of the building of a $5B battery manufacturing facility.
    • Wedbush's Craig Irwin boosts his price target by $70 to $295. "We are raising our 2017 earnings forecast primarily on higher gross margin assumptions as Tesla indicated they expect costs to some down significantly during the first year of volume production at the new facility."
    • The capital raise and gigafactory plans are a positive says Baird's Ben Kallo, maintaining his Buy rating and $245 price target. "(1) the capital raise carries lower dilution than an equity capital raise and (2) the factory's estimated capex of $4B-$5B is substantially lower than many estimates … Furthermore, gigafactory production is expected to reduce battery pack costs per kWh by 30% by 2017 making the Gen III one step closer to reality."
    • Shares +3% premarket
    • YRC Worldwide, Inc. (YRCW): Q4 EPS of -$1.71 beats by $1.10.
    • Revenue of $1.21B (+3.4% Y/Y) beats by $30M.
    • Press Release
    • Earnings are somewhat ahead of preliminary results released last month thanks to an arcane accounting adjustment.
    • Company reaffirms its 2014 outlook for adjusted EBITDA of $390M-$400M, "despite the adverse impact from winter storms during the first quarter" [they have to be kidding] Adjusted EPS is still expected at $0.34-$0.36. Average same-restaurant-sales growth of 2.5-3.5% at Company-operated stores (was 1.9% in 2013). Company-operated restaurant margin improvement of 140-160 basis points.
    • Management expects to continue to sell certain Company-owned restaurants to franchisees. Another 415 restaurants are on schedule to be sold by the end of Q1 for total proceeds to about $235M. Agreements are inked on another 174 restaurants.
    • 8.7M shares repurchased during 2013 at average price of $7.93 each. Pursuant to the Dutch Tender offer, 29.7M shares purchased in February at average price of $9.25 each.
    • Due to the January preliminary release, there will be no CC today.
    • Press releaseQ4 results
    • WEN -3% premarket.
    • Fears of a capital raise are "off the table" says Wells Fargo's Paul Lejuez, pulling his sell rating and raising the PT to $6-$7 from $4-$5. FQ4 was a weak one, but management "took a more confident tone, giving decent fiscal 2014 guidance that featured comp and GM improvement. FQ4 expense savings seem permanent and are expected to flow through to fiscal 2014."
    • "While we can still argue that the stock may not present much value to equity holders, the company itself seems to be standing up better that many previously thought."
    • Acknowledging what looks to be a big rally today, Goldman's Stephen Grambling continues to have concerns: "1) if merchandise margins are back at 2011 levels on "good" product and discontinued brands were only a 190bp headwind, what else is pressuring gross margin vs. history; and 2) with 390M in interest expense and $4B in SG&A, JCP would require $4.4B+ in gross profit or a high 30% margin to generate positive EBITDA on LSD-MSD comps."
    • He also notes the stock isn't necessarily cheap compared to peers. "Our price target and rating (Neutral) are under review."
    • Earlier earnings coverage
    • JCP +25% premarket
    • Total FQ4 sales of $6.099B fell 3.8% from a year ago, with comparable store sales off 2%. EPS of $1.56 compares to $1.66 a year ago. Last year's FQ4 included an extra week in which sales were $169M.
    • Gross margin of 34% is up 70 basis points from last year.
    • Fiscal 2014 EPS guidance of $4.05-$4.45 on total sales expected to increase 0.5-2.5%. Comparable store sales to increase 0-2%.
    • KSS no trades premarket
    • Press releaseFQ4 results
    • CC at 8:30 ET
    • Best Buy Co. (BBY): Q4 EPS of $1.24 beats by $0.23.
    • Revenue of $14.47B (-13.4% Y/Y) misses by $190M.
    • Best Buy (BBY +7.8%) swings to a net profit of $293M from a loss of $409M a year earlier, which included a goodwill impairment of $822M.
    • Comparable store sales -1.2%
    • Gained market share, due to its "strategy to be price competitive" and to improve the customer experience.
    • Cost cuts help offset the negative impact of BBY's mobile warranty and the new credit card agreement, with the affect of the latter higher than expected.
    • In H1, Best Buy expects total comparable-store sales to drop slightly, similar to Q4.
    • Discrete year-over-year income tax related items will hurt FY 2015 results. (PR)
    • Press Release
    • AMC Networks Inc. (AMCX): Q4 EPS of $0.49 misses by $0.29.
    • Revenue of $435M (+29.2% Y/Y) beats by $16.12M.
    • Press Release
    • Boeing (BA) has unveiled an Android-based secure smartphone for defense and security customers that, in shades of "Mission Impossible," will effectively self-destruct if anybody tries to tamper with it – attempts to open the casing will result in the deletion of all data and will make the device inoperable.
    • The Boeing Black will presumably compete with BlackBerry (BBRY), which is the leader in the market for high-security mobile devices.

  15. somebody opened the trap on CL

  16. CL is doing an NG impersonsation

  17. phil, your suggestion for how to adjust NFLX June 290 puts (bought at $5, now $2.5).  TIA

  18. Just drank a really expensive bottle of wine!  

    I popped a $7 bottle of lindemans cab last night and drank it all.  Needless to say I overslept.

     Missed my /CL alert at 103 to short at, and now /CL at 102.  That was a $1007 bottle.

  19. If PCLN, NFLX, and TSLA close red I promise not to write FU for the rest of the month…

    FU TSLA!!!!

    FU PCLN!!!

    FU NFLX!!!!

  20. heres Janet

  21. Phil,

    It appears to my rookie eyes that /CL if following your 5% rule this morning. 103 to 102, with a weak bounce to 102.20.  Did I read that right?  Where it goes from here I haven't a clue since the dollar is weak.

  22. Burrben….you overpaid for the wine.  Its $3.97 at Total Wine stores  LOL

  23. Oil/Bruce – Now it's $102.22 so no, not safe to trade long.  We already didn't like the inventory report and oil is very toppy at $102.50.  I do like the short line at $103 (unless it breaks) but, at the moment, I'd like to see what happens to /NG first at 10:30.  

    RFMD/DC – This kind of stuff often happens around mergers.  Wouldn't change my mind if long but, short-term on RFMD – $7 us a good place to take profits.  

    And what Albo said.  

    Corporate taxes/StJ – Totally sickening.  

    GS/Rustle – They're in the mix too.  GS, JPM, MS and DB.  

    EBAY has been on a tear since we picked it.  Crossing $58 now:

    AAPL coming off the mats at $515.  

    BRK.B's ($113) annual letter out this week and I like selling the 2016 $97.50 puts for $4.30 and buying the 2016 $110/125 bull call spread for $7.40 for net $3.10 on the $15 spread.  Worst-case is you own BRK.B (proxy for S&P but with a better mix) for net $100.60 (11% off) and best case is 383% upside on cash and 120% return on net $10 margin.  

    NFLX/Lunar – By "adjusting" I assume you WANT to stay bearish?  When I'm wrong but I still believe in a position, I like to buy more time.  You can roll back to 1/2 x the Jan $470/450 bear put spread at $11, which would put you in for net $10 + $6 = $16 on the $20 spread that's in the money.  If you want to work off the extra money, you can sell one March $400 put ($2) for every 4 bear spreads (1/4 cover) and that reduces you by .50 per month.  If you set a stop on 1/2 the short puts at $3 and 1/2 at $4, the most you will lose on a move down (and, with a delta of .10, it would have to be two $10 moves down) is $1.50 on months it goes against you and you make $2 on months it goes your way.  And, of course, any time it goes your way, you are on the way to recovering $20.  You can also use successful $2 wins to widen your spread by rolling your long calls up $2 or the short puts down $2.

    Wine/Burr – That's OK, I learned my lesson leaving a few oil contracts open to go from NJ to Texas many years ago and, by the time I landed, it was a $67,000 plane flight.  That's why I stress not leaving the Futures unattended – trying to use my 10,000 hours to save you heart-ache!  

    Oh come on, Jabob, you didn't even make 24 hours.  

    Janet/Sage – Not on CNBC.  Even Bloomberg is yakking over it.  

    We got rejected right at 16,200 (/YM) and 1,180 (/TF) – not a good sign for the bulls!  

    Oil/Sibe – Less 5% Rule on oil and more 0.50 and 0.25 lines.  Dollar down testing 80.40 so you have to imagine that makes the downside resistance ($102 at the moment) stronger than it would be if the Dollar were going up.  So, we would expect a bounce on oil and, since it fell from $103 to $102, that's $1 and a weak bounce is .20 and a strong is .40 so, unless the Dollar fails 80.40, it's very likely $102.25 is going to be tough to get over and $102.50 almost impossible.  Of course, it's very dangerous because Yellen can knock the Dollar back and forth with a word.  

  24. Phil,

    I have a question on the expiration of index options. At this moment, I'm short a Call Option on the RUT for February week 4 (this week) and the days to expiration shows as "0".  At the same time I also am short a Call Option on the SPX also for February week 4 and the days to expiration shows as "1".

    Do you (or someone else on the board) know the reason for this discrepancy in the days to expiry?

  25. Good morning. Gold & silver mines are up nicely today. Every dip is a buying opportunity? lol Complacency is bad, of course!

  26. Always scale in.   The 1xGILD 2016 62.5/72.5 BCS with the short 62.5 I bought for .80 two days ago, now just filled for net 0.00.  I'm bidding -.25 and -.50 for the next fills.

  27. Europe coming off the mats into their close.  FTSE flat, DAX down 1%, CAC down 0.25%, Italy down 0.8% and Spain down 1%.  Not very enthusiastic.  

    EU Forecasts Weak Growth

    Index options/CSL – They may actually expire on different days but I don't know for sure as I don't usually play them.  I'd check with the broker but you do NOT want to get stuck with those at the close.  

    Gold/Invest – And GS and someone else were very bearish on gold and silver this week.  Did very little damage.  

  28. calison days remaining

    I get that on the RUT all the time but I have traded on what should be -1 so I disregard.

  29. $3.97! Dang, not here in FL.  That's a 100% savings!  If I save $4 per bottle, I only have to drink 250 more bottles to make up my $1000 loss on /CL.  It looks like we have 307 days until 2015, so totally doable.  In fact I could actually go positive on the trade with the 57 extra days left by a little over $200!

  30. Gold / Invest – I actually covered my miners today as it looks like we are stalling a bit here. 

  31. cslanson2

    The RUT settles on friday morning – I believe after all the stocks have traded. You don't want to leave this open as it can gap either way on friday but you will have no control on your position. The last trade date is today.

    The SPX settles on the friday close


  32. DBA still on the March – $27.31.  

    Yellen says since last testimony data has been softer (maybe weather) and they will examine policy in light of changing conditions.  That's bullish!  

    Inflation well below their target, giving them ample scope to push for full employment. 

    Nat gas not looking good at $4.485 with minutes until the report.  I think the draw needs to be over 250Bcf for anyone to care – we'll have to see.  Still, look at the storage level – if we're getting 200Bcf draws in a week and there's only 1,000Bcf left – it won't take much to create an actual shortage!  So, I just talked myself into staying bullish.  

    Oh damn, only -95Bcf.  There goes that premise….  That's not very bullish..  Oh well, $4.495 – no damage. 

  33. Working Gas in Underground Storage Compared with 5-Year Range

    Working gas in storage was 1,348 Bcf as of Friday, February 21, 2014, according to EIA estimates. This represents a net decline of 95 Bcf from the previous week. Stocks were 905 Bcf less than last year at this time and 711 Bcf below the 5-year average of 2,059 Bcf. In the East Region, stocks were 361 Bcf below the 5-year average following net withdrawals of 78 Bcf. Stocks in the Producing Region were 251 Bcf below the 5-year average of 775 Bcf after a net withdrawal of 5 Bcf. Stocks in the West Region were 99 Bcf below the 5-year average after a net drawdown of 12 Bcf. At 1,348 Bcf, total working gas is below the 5-year historical range.

  34. Earnings tonight:

    Consensus – $3.81
    Whisper – $3.99
    Average Move – 9.4%
    Priced into Options – 11.2%

    Consensus – $0.06
    Whisper – $0.07
    Average Move – 7.9%
    Priced into Options – 8.5%

    CRM, I don't get. Another one with an infinity P/E and consensus is for them to lose money in 2014 and 2015!

  35. calanson

    I actually use IWM that follows the RUT, as has been stated /TF or the Russell fund would not trade. Sorry!

  36. Phil

    Thoughts on adding to LINE.  Missed on earn so down 5% today.  Ex date on Mar 6 for divy at 9.3%.  

    I'm thinking of adding more stock and selling the Apr 32C for .70.  

  37. Just checked in. What's going on with RIG?

  38. RIG / Griffin – Earnings….

    I guess a better entry now!

  39. Dollar holding 80.40 while Yellen talks, shows dip last time was overdone – especially against rising global tensions elsewhere.  

    DECK/StJ – They should have good earnings with the cold weather coinciding with shopping season for a change.  At $83.20 they're fairly priced so I like selling 2016 $65 puts for $10 and using that to buy the Jan $75/90 bull call spread for $7 for net $3 credit on the $15 spread that's $8 in the money to start.  Worst case is owning DECK for net $68, which is 18% off.  

    LINE/Burr – Bit of a falling knife at the moment.  I'd wait and see how they settle.  200 dma is way down at $28 and, by the time they get there, momentum could take them through.  Depends on what Nat Gas does too, of course.  

    RIG/Griffin – Blah earnings.  Nothing unexpected.  

  40. RIG Thx. Been waiting to sell puts. Perfect.

  41. Sounds like Yellen wants to stop the taper..

    Maybe she wants to give Elon a govt loan?

  42. Here's a classic bullish breakout of a triangle squeezy thingy:  

    That is not the same as the Euro, which is doing a Spitting Cobra (coiling up for a downward strike):

    Now, you can decide what you see here:

  43. Phil,

      I've heard a lot of good things about Service Now (NOW) and my shop is switching to their Help Desk product. They've gone from $49 in Dec to $70 today after some recent upgrades. Any thoughts?

  44. I wanted to get BDC's opinion on TUCND, it's a Bitcoin-accepting On-line Retailer.  While it is gimmicky, they actually made $94,000 on $674,000 in sales last Q and they had rocketed up to $5 but then the Bitcoin crisis drove them back to $1.40 and now $1.75.  No options, just seems like a fun way to play the mania.  If anyone has an opinion, let me know – just a fun play.  

  45. Sprott interview, discussing how the banks manipulate gold prices, not for the banks to make money, but for the employees to make bonuses…

  46. TA/Phil  – Hmmm. For the SPY pattern, The Rising Dragon?

  47. Tim Eagan

  48. Did I miss this, or has no one gone here yet for TSLA's Gigafactory announcement?  

    "What the hell is a Jigawatt?"

  49. talk about microfinancing your project this guy has received 2.54 bitcoins worth $1490.

  50. Deano – GILD combo just filled EVEN – took a couple of days…

  51. rdn4evr
    February 27th, 2014 at 11:31 am | Permalink | Tweet this Ignore this user

    Did I miss this, or has no one gone here yet for TSLA's Gigafactory announcement?

    "What the hell is a Jigawatt?

    Gigafactor/watt/bit/byte same number. Musk talk that shows he doesn't know technology today it is all about terabytes or NASA y-something like mega-data, mega-spying, mega-secret amount.

  52. wow bitcoin at the hearing!

  53. Guys – glad you like the GILD combo!

  54. GILD/Edro – do you put that in as one custom/combo order or as two orders (a BCS and separate put)?

  55. HI Shadow – sorry, that wasn't a question, that was a quote!

  56. Scott, I put all the short put/bull call in as a single combo with a single price… this time 0.00

  57. Looks like TASR RnD is preparing for the coming Zombie war:

    the fun stars around 0:40

    PS: I'm still trying to get filled on the spread for .40

  58. rdn4evr    
    That wasn't an answer really, it was mocking people and things I find annoying. Musk in particular is a slime bag that never actually says anything you can hang your hat on, instead he uses everything  and anyone else to say anything for him. I call that Chicken Shit!

  59. Burr – thanks..

  60. NOW/Kevin – I don't know enough about them to differentiate why they should be getting 300x projected forward earnings (currently losing money).  The market cap is $10Bn on $240M in revenues, so 40x revenues.  I know that's a bargain compared to TSLA but it's certainly not a stock I like to invest in.  

    Bonuses/Scott – Absolutely, they don't give a crap about the shareholders.  Look at my RBS comment from early this morning – they bank LOST $15Bn and they trimmed their BONUSES from $1.2Bn to $1Bn.   And, do you know what the best part is?  They laid off more than 15% of their employees so each remaining employee actually gets MORE than they got last year – that's a great trick a lot of these Banksters use.  

    Rising/Snow – I don't think so. 

    Financing/BDC – That's one way to get them. 

    Taser Sword/Burr – Oh I want on of those!


    Saw The Lego Movie earlier today. Brilliant writing and humor! Loved the "Everything is awesome…" theme song.

    Value is holding up "Tesla car is worth more used than new | MNN –"

    Install heat lasers on "Caution: Falling Ice" signs so they can actually do something about it.

    Alibaba needs to start supplying translators. I requested a price quote for a time machine and the guy sent me a clock.

    Connected device in your home that tells you what the hell that noise is so you don't have to get out of bed.

    Eye tracking software that will not allow you share a link on Twitter or Facebook until you've read 70% of the article.

    Instead of lighting the entire house…Drone light bulbs that follow you around. Self dock in chargers while you sleep.

    Just paid Comcast an undisclosed amount to make sure my tweets show up faster than yours.

    Why waste the gift of gravity? Stair cases that detect if you're going up or down. SKETCH:

  61. Thanks, Stj. Good to know that.

  62. TSLA details

    Although the model S got the highest rating in Consumer Reports, the same issue page 88 "Used cars to avoid, Tesla Model S 13". Like most that were sold last year and Musk says they cost more than new.

  63. Phil/Q


    So I have long term jan 16 bcs of which my max gain is 7.50, if I have 3.30 today would you hold it or take the profit seems 44% in a month I should take my gains as to wait for the remaining 54% is 2 years away, do you concur?

  64. TUNCD - you guys find interesting stuff!

    Quick takes: a .us domain is bad (why not a .com!). It's a company so even if bitcoin "survives" this company might not, therefore investing in this may be even more volatile than investing in bitcoin itself (if there is such a thing), and since bitcoin has already run IMO, you're buying this to perform against any other company. So like any other company you ask the most standard questions at first: Do you like their business (a generic online retailer)? Do you like the management team, who are these guys? What has the CEO done? A reverse merger means they bought some worthless penny stock to front run going public before the business is really there. Sometimes this works and sometimes it's a disaster (especially when it is intentionally a scam). I do like the fact they are US based (MD) and only deal with US customers. They therefore only face US scrutiny on bitcoin which is important for now. Certainly it's new territory because now the SEC can get involved with a "real company" that is exclusively bitcoin related. If the SEC comes down on them, obviously that would be bad.

    With website business like this, go to the website, do you like it? would you use it? I went to the site and signed up (15 seconds, this was easy). They just list a bunch of the usual American shit for sale, separated into categories and a search function that wasn't too useful. I'm not a very good shopper, I never have much of desire to buy stuff. Only once in awhile do I buy something and it's long after I needed it (like running shoes). Having said that in short, rare spurts I'm a chaotic, impulsive shopper (it's how my wife and I bought our last car). So this site doesn't do it for me. I can't look through a list of categories and browse. I would only come to this site if I already had a specific item in mind, which I don't. Maybe a Xmas list for my nephews or the like. So I was looking for something to purchase by browsing categories and I came across chocolate (maybe I could send some to my wife at work as a surprise). But it's so random, I mean 14 boxes of Special K Chocolate cereal for 0.1255 BTC ($74)? Finally I sat back, closed my eyes and said "what have I kinda needed lately" and figured out I've sort of wanted a spare USB-Lightning cable (when I got an iPhone 5 my 1000 iphone 4 cables became useless, and I have only ONE iphone 5 cable, thanks a lot AAPL!). The price was 0.026 btc so OK, $15 is fine I guess, so I checkout. It may be free shipping but they added at 0.0003 fee for handling ($0.18 so whatever) and clicking checkout opened my bitcoin client and preloaded in their payment address (this is the address that I got) and I hit send (transaction was 0.0264 with bitcoin network's 0.0001 transx fee added = $15.50 total). I was a little surprised to see a website force my bitcoin client to open -- never seen that before, but all went smoothly and I will follow up on the shipment of my new iphone cable! Note that the impulsive, chaotic shopper side of me was eye-balling the Macpro (and given my investment in 3 btc's was $30 I can easily justify it to myself….)

    These guys would have to make a compelling case to come over from a super site like AMZN that has made shopping so incredibly easy it's hard to break away. At this point just offering prices in bitcoins, even for an early bitcoin adopter like me, doesn't get me there. I'd rather stick to AMZN where they have the service infrastructure already in place: comparative products, reviews I've come to trust, my shopping history already there of course, more ease of mind if something goes wrong, etc etc. I can sell BTC at coinbase and pay on AMZN with credit card and still get airline miles for the whole thing so it's tough to see how using bitcoin directly saved me anything (and I doubt the site does little more than use a bot to comb amazon for discounted products and then automatically list them on their own site with a bitcoin price that builds in just enough juice to make the whole thing worthwhile for them, but what does that get me?). At the end of the day the same cable for $13.99 on AMZN plus $5.74 for shipping + estimated tax of $1.88 = $21.61, so having said that before this was definitely cheaper so that's good! (but I wonder how these MD guys will deal with sales tax, hmmm, interesting all the way around)….

    Chart-wise, the 1 month chart looks interesting, an initial pop and now some uncertainty… maybe worth treading lightly for a 0.1% position or less ($250 per $250k in portfolio value). Seriously, no more… Savi has another play that made a pop when an OTC stock-dying-business bought an immature bitcoin exchange … forget the symbol started with a W … certainly bitconshop is the only thing that you see if you type "bitcoin" into yahoo finance and let the auto-search take over.

  65. My DECK earnings play:   10 contracts..     STO Feb 28  (this weekly) 84 calls @ 4.15 and 84 puts @ 4.60       BTO Mar 7   (next weekly)  85 calls @ 4.50 and  83 puts @ 5.00       Trade cost not including commissions is  $750.  Maximum profit possible  $4,550.     Maximum risk  $1,750.    The trade is  profitable by EOD tomorrow if DECK does not move more than about 10%.

  66. The question I have about TSLA is that if the batteries in the next 3 years are coming down over 30% in price which means the car will probably come down close to that too and they will retain their profit margins.  Why would you buy a TSLA now, knowing a new one could be 30k less in 3 years and why the hell would you buy a used TSLA knowing those will be worth much less.

  67. Phil/BRK.B – I'm not seeing any options when I use the ticker BRK.B in TOS.  What am I missing?

  68. palotay,

      Try BRK/B

  69. Thx Kevin.  That worked.

  70. TSLA/Shadow – Do you have a link to that?  I don't see it.

    Spread/Sage – It very much depends on what it is, how you feel about it and do you have anything better to do with the money.  If you paid $2.50 and now it's $5.80 and you hope to get $1.70 more, now you are risking $5.80 to make $1.70 vs your original intention of risking $2.50 to make $5.80.  Not only that, but you are "buying into" your new bet (your bet to keep going) at a much higher strike than you started with.  So, unless you think that getting the last $1.70 is a virtual sure thing – there are certainly other ways to make 30% of $5.80 over 2 years, right?  

    TUCND/BDC – Wow, nice job doing research!  That's what I figured though, since you can buy with Bitcoin, you are motivated to try them and I imagine that's what's driving their sales.  Good first-mover advantage but, as you say, I wouldn't bet on them for the long run.  Still, seems like $1.70 could pop to $2.50 and who doesn't like 50% gains?  

    OK folks, we're not getting nwe highs off of Yellen.  Very disappointing! 

    Dollar trying to help at 80.30 but no only a 0.25% pop in the indexes, though AAPL is now helping out the Nasdaq at $526.  

    TSLA/Rustle – How will a used TSLA retain it's value when it's 3-year old $40,000 battery can be replaced with a brand new $25,000 one?   While they may maintain profit margins, if the car drops in price from $85,000 to $70,000, they will make less per car and it's certainly not enough of a drop to get a new class of buyers for the ModelS.  It's just BS stacked on more BS for their valuation but so it AMZN and NFLX and TWTR and GMCR….   

    BRK.B/Patloay – It's BRK/B in TOS (in Yahoo, it's BRK-B), I just use BRK.B as it's easier to read. 

  71. Tesla model S 2013 got a worse than average reliability rating! Are they going to make or assemble batteries? The Panasonic agreement would indicate assemble and 30% is a goal. Make goal?

    Honda Civic Hybrid battery reliability gets worse

    Has risen to 30% and if not on warranty costs about $3,000 plus labor.

    It is the battery thing, costs and problems, Toyota Prius about 1%, 2002-2003 5-4%. Those are up to 12 years old not they are inexpensive.

  72. Rustle123 – They won't be as cool in three years. ;-)

  73. DECK/lflan – thanks..! was looking at them last night myself. Just did your double diagonal and got in for net .29 per set, and is positive from 71.75 through 99.50

  74. Phil – Bored Elon Musk – Please, make it stop!

  75. Phil/TSLA -

    Thanks for the help this morning on adjusting my TSLA position.  I ended up taking your advice and doing the following:

    I closed out my entire position this morning, and then entered into the following position to get my money back.

    Short 30 2015 $170 Puts

    Short 30 2015 $270 Calls

    Long 20 2015 200/300 call spread.


    This has reduced my margin requirement in half, and reduced my delta by 70%.  My breakeven/profit zone is currently between $235 and $318 in January 2015, but if/when TSLA starts going back down, I plan on slowly scaling out of the long Calls of the spread, and then the short puts if TSLA continues to go down, and this will bring my breakeven down on the low end.  


    Thx for the insight.  I feel much more comfortable in this position.

  76. The Ukraine guy is up to $2,087

  77. I completely sold out of FSLR today (entry was 29). I think they've been commoditized. I like other renewable energy plays better at the moment.

  78. TUNCD/Phil – thanks phil, I like playing with new stuff so this was easy. I forgot to mention something I really like about this site and others that take bitcoin only there is NO NEED TO STORE CREDIT CARD INFORMATION ON THE SITE. So single-handedly, credit card fraud and anxiety about credit card fraud is completely eliminated.

  79. Pharm - do you know anything about GALT?

  80. palotay – Just my 2C but lost money is lost money.  To make it up, it doesn't HAVE to be with TSLA.  Maybe TSLA isn't the right vehicle to trade.  I made that same mistake with FAS years ago.  Lost about 10K and turned that loss into a 20K loss trying to "make back" my money on FAS.  While other people who put 10K into shorting /CL at 109, made 100K.  Double Whammy.  But I had the "FAS" blinders on.


    This board / Phil has a awful track record trading TSLA.  Look at the posts from 2013 when it was stated that TSLA "could never" be 80 / 90 / 100 etc.  It really got people into trouble.  I lost near 40K on a trade.  I moved on though to GILD and made that money back.   I probably should have just gone long TSLA, but I didn't believe in it.  I still can't believe it's 250.


    Sometime Phil is blinded by his fundamental bias and while his advice "makes sense" from a fundamental point of view, TSLA isn't a stock that's based on fundamentals.  Trying to use that approach will just get you into trouble.  Just my 2C.  

  81. TSLA/Phil

    Think you misread what I said, I'm saying a used TSLA shouldn't maintain value and don't understand why someone would buy a car now and not wait 2-3 years.

  82. BDC – Do you have any favorite renewable energy plays at the moment? I'm short puts on SSNI and SZYM, but am very cautious about the market in general at this time.

  83. FU-GMCR….wait..what?  Phil what does it mean when the amount changed is red?

  84. rustle123

    Tesla model S won't be 30% less in 3 years, with luck they may have a lesser model at that price but I have doubts of TSLA existing by then. The battery thing, life of rechargeable and less 30% is not even close to enough.

  85. Musk/Rdn – I like that guy.  

    TSLA/Palotay – You're welcome, glad to have helped but your cover spread should be 2016, not 2015 and it really can start at $250, since you are in no danger below there.  

    Feb Kansas City Fed Manufacturing Survey: +4.0 vs. +2.0 expected; vs. +5.0 in Jan.

    • Fixed-rate mortgage rates rose for a third straight week, with the average 30-year fixed edging higher to 4.37% from 4.33%, according to Freddie Mac's latest weekly survey.
    • The average rate for the 15-year fixed-rate mortgage rose to 3.39% in the latest week from 3.35% in the prior week.
    • A year ago, the 30-year and 15-year rates were 3.51% and 2.76%, respectively.
    • Her February 12 appearance before the Senate delayed by the weather, Janet Yellen takes the stage today. Her prepared remarks deviate a bit from those before the House on February 11 as she says it's too soon to know the effect of the harsh winter on the recent batch of weak economic statistics.
    • “In the weeks and months ahead, my colleagues and I will be attentive to signals that indicate whether the recovery is progressing in line with our earlier expectations,” she says, sounding like another taper is baked into the March meeting. It would take a "significant" change in the outlook for the Fed to alter the taper, she says, again bringing up the weather as making it difficult to get a handle on things.
    • As for the 6.5% unemployment rate threshold for hiking interest rates? It's gone. "The unemployment rate is not a sufficient statistic to measure the health of the labor market … As we go to a fuller consideration of how the labor market is performing, we need to take all of those things (such as long-term unemployed and labor force participation) into account."
    • The Q&A continues. Watch live here.
    • Treasurys are snoozing through the testimony, the 10-year yield still down a basis point at 2.65%. TLT +0.4%.

    The best part of the housing price recovery may be over (WonkBlog)

    America’s Hottest Housing Market Has Suddenly Cooled Down (Real Time Economics)

    5 odd signs the economy is heating up (Yahoo Finance)

    America Didn’t Decline. It Went Global. (Politico)

     Five Tech Stocks, $400 Billion Cash (YCharts)

    What Do People Have Against Retirement Income? (Harvard Business Review)

    Survey Says: Social Media Gaining Importance as Investment Tool (MoneyBeat)

    • The State Department acted properly in its choice of an outside contractor to review the Keystone XL oil pipeline, the department's inspector general report says, rejecting accusations by environmentalists of undue influence by the pipeline's developer on a draft federal environmental review of the project.
    • TransCanada (TRP) had recommended four companies to State to conduct the environmental review but did not tell the department it had previously worked with one of the companies.
    • Keystone supporters say the report should clear the way for the project's approval.
    • Petrobras (PBR -0.4%) opens lower after shares closed yesterday at an eight-year low, as management has failed to convince investors of an impending turnaround in production and revenues following muddled Q4 results.
    • Some analysts think Petrobras has become cheap; Barclays, for one, doesn't see upside catalysts soon, especially given Brazil's upcoming presidential election, but says downside is limited at this point.
    • But others think the company – and the country – has lost credibility; Rogerio Freitas of Teorica Investimentos in Rio de Janeiro says PBR's decline reflects that of Brazil as a whole, where years of above-target inflation, deteriorating government finances and overly optimistic official forecasts have contributed to skepticism in the markets.
    • Linn Energy (LINE -5.6%) is sliding after reporting disappointing Q4 earnings, while revenues from oil, natural gas and natural gas liquids rose 27% Y/Y to $585M but fell short of analyst consensus estimate of $654M.
    • Q4 average daily production rose 11% Y/Y to 889M cfe/day, but was up only 5.5% after stripping out Berry's contribution; expects Q1 2014 production of 1.07B-1.1B cfe/day and FY 2014 output of 1.07B-1.14B cfe/day.
    • Howard Weil downgrades shares to Sector Outperform from Focus Stock, as the latest quarter and outlook have the firm's estimates of coverage moving down, although a Permian deal could improve coverage very quickly.
    • Also, LNCO -5.3%.
    • The biggest story from Transocean's (RIG -2%) Q4 results might be the big shift in the offshore driller's business strategy that makes its model look more like Seadrill's (SDRL) – and investors today don’t seem too thrilled.
    • RIG is agreeing to build two new ultra-deepwater drillships with options to build three more; RIG has historically been unwilling to build on speculation without contracts in hand, thus the announcement of two rigs and three options is a "radical change" from the past, UBS analyst Angie Sedita says.
    • The firm believes RIG can contract the rigs at economically viable dayrates, but additional rigs into an already over-supplied market will be challenging.
    • Cliffs Natural Resources (CLF +2.9%) extends its commercial agreement with ArcelorMittal (MT) to supply iron ore pellets for an additional two years through the end of Jan. 2017, with a mutual option to extend for a third year.
    • CLF and MT also extend their joint partnership for the Empire Mine located on the Marquette Iron Range in Michigan.
    • CLF also says it is maintaining its FY 2014 sales and production volume expectation of 22M-23M tons from its U.S. iron ore business; iron ore cash cost per ton expectation is $65-$70.
    • Green Mountain (GMCR -1.8%) issued 16.68M shares of common stock sold to Coca-Cola (KO +0.3%) at a price of $74.98 each for  total gross proceeds of $1.25B. As previously announced Green Mountain intends to ease the dilution from the deal by  boosting its share buybacks. In addition, a portion of the proceeds will fund capex for the Keurig Cold beverage system.
    • Press release
    • Previous coverage of the deal
    • In other news, Green Mountain's Canada group announces a partnership with Laura Second – Canada's largest chocolatier – to bring Laura Second signature hot chocolate to K-Cup packs in fall of this year.
    • Press release
    • Fears of a capital raise are "off the table" says Wells Fargo's Paul Lejuez, pulling his sell rating and raising the PT to $6-$7 from $4-$5. FQ4 was a weak one, but management "took a more confident tone, giving decent fiscal 2014 guidance that featured comp and GM improvement. FQ4 expense savings seem permanent and are expected to flow through to fiscal 2014."
    • "While we can still argue that the stock may not present much value to equity holders, the company itself seems to be standing up better that many previously thought."
    • Acknowledging what looks to be a big rally today, Goldman's Stephen Grambling continues to have concerns: "1) if merchandise margins are back at 2011 levels on "good" product and discontinued brands were only a 190bp headwind, what else is pressuring gross margin vs. history; and 2) with 390M in interest expense and $4B in SG&A, JCP would require $4.4B+ in gross profit or a high 30% margin to generate positive EBITDA on LSD-MSD comps."
    • He also notes the stock isn't necessarily cheap compared to peers. "Our price target and rating (Neutral) are under review."
    • Earlier earnings coverage
    • JCP +25% premarket
    • Juniper (JNPR +0.4%) is offering $350M worth of senior notes due 2024. The company says the proceeds will be used for "general corporate purposes," which could include buybacks or acquisitions (among other things).
    • Juniper is only a week removed from promising to spend $2B+ on buybacks through Q1 2015, with $1.2B being spent via an accelerate share repurchase deal.
    • The company had $4.1B in cash/investments at the end of Q4 to go with $999M in debt, but a large chunk of that cash is offshore.
    • Citing concerns about a soft 2014 margin outlook (the result of aggressive investments),Morgan Stanley has cut Baidu (BIDU +2.3%) to Equal-Weight in spite of its Q4 beat and strong Q1 guidance. Shares have given back a large chunk of yesterday's AH gains.
    • Stifel, however, has upgraded shares to Buy and lifted its PT to $238. It expects Baidu's mobile queries will grow to account for over half its total queries in 2014, and notes mobile search ad prices (CPCs) are now at 60% of PC levels (up from 55% in Q3).
    • The firm forecasts 53% and 49% revenue growth in 2014 and 2015, respectively. Adjusted EBITDA is only expected to rise 9% in 2014, but growth is expected to surge to 51% in 2015.
    • Maxim notes mobile's revenue share doubled from Q1 to Q4, and Goldman observes Baidu's app stores, locked in fierce competition with Qihoo (QIHU +2.2%), have a 41% share of Chinese app distribution, per research firm Analysys.
    • CEO Robin Li suggested on the CC (transcript) Baidu, which made a string of big acquisitions in 2013, is open to more M&A in 2014. He also claimed over 60% of mobile ad customers now have a mobile-optimized landing page.
    • Morgan Stanley has resumed coverage on Verizon (VZ +2.8%) with an Overweight and $52 PT, and JPMorgan has added the carrier to its Focus List two days after resuming coverage with an Overweight and $57 PT.
    • MS' Simon Flannery calls Verizon's valuation "attractive," and likes its mobile competitive positioning. He suggests shares have been pressured by the impact of Vodafone's 1.27B-share distribution following the closing of the Verizon Wireless deal.

  86. CC Fraud/BDC – That is a great point.  

    TSLA/Rustle – No, I got it, was agreeing, reiterating point.  As to waiting though, people don't wait for things in this country.  

    GMCR/Cdt – Say it ain't so!  

  87. Oil failing $102 and /NG back to $4.50 – very sad…

    Dollar 80.34

  88. CRM anticipating good earnings? paying a credit to enter the feb4/mar1 dbl diags.. Dipping toe in with a STO Feb4 66 puts, 68 calls and BTO Mar1 65 puts, 69 calls.  Netted in at .31 credit. max risk $100 per setup and profitable between ~60.25 and ~74.75..   Stj listed that about 8% move can be expected, which is inside the umbrella…

  89. I still can't believe these Mofos go up basically every day.

    Why aren't people taking profits?

    Could it be that the sucker are the ones who are selling these instead of buying and holding them?

    We know the shorts have been fools.

    But come on, PCLN over 1360, NFLX over 450, TSLA over 256..

    When does it stop?

  90. Burr/TSLA;



    What is clear to me is that market needs a crazy stock in the screens in a regular basis, it was Mcrosoft, Apple, Amazon, now is Tesla which for my surprise is the first one where they try to merge something  "real" with the same  hype treatment  of the techies.

    My main concern now is not to lose the next one, identify it  in a early stage.

  91. TSLA is worth $1.1M in market cap per car sold [28,000 annual sales (last reported quarter x 4, rounding up even)]

  92. Well now, what did yellen say last? all my positions just lost their wind and some are getting beaten back all of a sudden. dollar not it.. wtf?

  93. Jabob – Watch the first 41 seconds of this clip. This is what it will be like for the longs, once the party is over.  But who knows when.  8-)

  94. albo—hilarious!  Thanks – I needed that…

    I need the momo party to be over soon..

  95. When/Jabob – These things can take ages to run their course, especially in an improving economy, where fresh money comes in every day.  As we saw above, money flying out of bonds – goes to stocks – especially when commodities and currencies are both uncertain.  

    In March of 2009, the Nas was back at 1,250 – about where it was in Oct 1998.  Now we're up to 4,322 and instead of, we have NFLX, TSLA, etc. (what I wrote yesterday) driving the market higher and higher.  At what point will people demand to see profits to back up the stock prices?  Not as long as they keep getting rewarded for ignoring it.  

    Oil has been behaving today, $102.25 to $102.50 to $102.25, $102.50, $102.25, $103, $102, $102.25, $101.75, $102,50, $102…  If you set your sites on just catching those .25 and .50 moves – you can do very well on days like this (and most days).  

    TSLA/BDC – Well they're worth that much to Elon!  

    Yellen/Scott – She said the exact same thing she said last time and, as we thought, that's not enough to get us over the record highs.  Now we have to wait for next week to see what's what. 

    Cash is relaxing in this kind of market!  

  96. advill / CrazyStock — Agreed — a sort 0f Court Jester stock to focus all the hopes and fears of the punters — very clever.  It even comes with a theme song:!/s/Crazy+Train/3Ci4m4?src=5

  97. Levels we're looking for (from yesterday's post):

    A contrarian investor would have done very well for themselves in the 2000-2003 collapse, but only if they survived the run-up!  That's why I called for CASH!!! last week, not shorting, other than a few 500% hedges that are to be pulled with small losses if the indexes do manage to get over their previous highs (3 of 5, and it has to hold for 2 full days) of Dow 16,588, S&P 1,850Nasdaq 4,250, NYSE 10,406 and Russell 1,182.  

    So, we need to hold those today.  RUT is right on the line, S&P up by 3, Nas is way over.  

  98. Levels / Phil – And I would argue that the Dow is a joke since one single stock can take it down 40 points… It's been lagging way behind all the other indices now.

  99. Speaking of indexes, StJ, turns out the RUT is leading because it has a lot of Biotechs in it.  That makes sense as that sector has had bunches of 100% gainers this year.  Still it's better than the Nas or Dow as an index but NYSE is most important, of course, followed by S&P if you want to weight them in importance.  Still, the Dow is the face of our market for international investors – you have to consider that.  

  100. Not saying the Dow is not important though – they will plaster a 200 point day on the front pages every time. Still a joke of an index…

    The funny part is that they usually compare performances to the S&P 500 and track the Dow in the front pages. Go figure!

  101. Why do people hate telecoms?

  102. StJ:  It's quite a mixed picture.  If you back out technology, which seems to live in a world free of conventional valuation, it has a much more realistic cast to it.  And why has telecom diverged from tech to such an extent — aren't they rather joined at the hip?

  103. Here is a quote for you Phil:

    John Authers, “Ultimately, value’s superiority is simple. It requires looking at things as they are. Growth requires predicting the future.”  (FT)

  104. Zero – It could be argued that Telecom is more akin to Utilities now!

  105. Old but good article - 12 Cognitive Biases That Endanger Investors

    A sample:

    1. Confirmation Bias

    This is a fatal flaw of trading; we tend to surround ourselves with information that validates our own point of view and dismiss input that conflicts with our reasoning (also known as cognitive dissonance).  This is the primary reason why we always strive to see “both sides of every trade” as the residual grist between variant views is where education—and profitability—resides. 

    2. In-Group Bias

    This is a manifestation of confirmation bias, or the tendency to surround ourselves with those who share similar takes on the tape. This could pertain to our physical environment or a virtual experience, such as Twitter.  Not only does this provide a false sense of security in our individual viewpoints, it makes us suspicious—or angry—with outsiders who dare to question how we feel.

  106. STJ – ….and "Frequently wrong, but rarely in doubt." 8-0

  107. Getting a push up into the close.  

    P/Es/StJ – I'm surprised to see materials so high.  Health Care seems to be doing well under Obamacare.  Telcos just never do anything and they take on mountains of debt with very slow growth.  But, over time, very reliable investments.  

    Telco/ZZ – AAPL isn't in there.  Think of how much cable T and VZ have to lay and support years ahead of getting their money back and, when they start to get some payback, new things come along and they have to buy again to keep up.  

    BTU suddenly woke up.  

  108. Wheezing into the close, back at S&P 1,850 (if it holds).  Still, up is up.  

  109. Phil:  I've never understood -  so as not to appear too thick  -- as to whether I should be scaling into my TZA disaster hedge [Aprils] so that I could scale back out again if there were ever a dip [not one since you put it up]  and keep it from being too far underwater.  It works, if you give yourself some sea room.  But is that what we're supposed to do, or just set and forget it, even if it drops 30+%?  Inquiring minds…

  110. TZA/ZZ – Generally, we want to roll them back when the price of the calls we own long goes down to the price we paid for the  spread.  So, what's the actual position?  

  111. Speaking of TSLA all the time, anyone like BYD CO?  IT's the chinese buffett backed electric car maker.  It trades on the pink sheets as BYDDF or in china as 1211

  112. BYDDF/Burr – You would think they would catch a bid with all the TSLA madness.  I don't know much about them but, as you say, Buffett seems to like them (and, oddly, he didn't like TSLA?).  

    TLT snuck up to 108.50 – someone, somewhere is nervous.  

    Dow up 75, S&P up 9 and that's a new high officially.  /NQ hit 3,700 on the dot.  NYSE 10,397 – missed it by that much…

  113. And now… to see what the magic of selling premium into earnings does to the DECK and CRM spreads..

  114. DECK beats big – $4.04. I had consensus at $3.81. Want to see guidance now.

  115. DECK Guidance – Expect 10% revenue growth and 8% EPS growth for 2014.

  116. CRM – Loss of $0.19 compared to expectation for a $0.06 profit! I guess they go up 10% now. Can't have profits now, can we?

  117. DECK – hey they should be opening around 120 tomorrow with results like that. oh wait, they don't have unstable batteries in their shoes.. nevermind.

  118. Next quarter guidance is not that good though Scott…

  119. Looks like DECK will be down more than 10% now… I had a bearish setup with little risk on the downside, but still, it would be nice to make some money.

  120. So Deck beats and sells off and CRM misses and goes up?  I give up!   It's not about what you actually earn – it's all about what you SAY you are going to earn.  Of course, keep in mind the people who are missing now also SAID they would hit higher numbers last Q…

    • Stocks powered through to a strong finish, and the S&P 500 finally managed to push past 1,850 en route to a record high after three days of trying and failing, as congressional testimony from Janet Yellen calmed early investor jitters brought on by geopolitical concerns.
    • Yellen said the Fed likely would continue tapering its asset purchases while tracking data to figure how much recent softness in the economy is due to the weather.
    • As in recent days, activity was driven in large part by short-term players waiting to see if the S&P could hold above 1,850 before buying or selling; when that level was pierced and held, what had been resistance became support.
    • Among S&P sectors, telecoms, techs and materials fared best with utilities and energy the weakest.
    • Treasury prices finished at their highs, with the benchmark 10-year yield down 3 bps at 2.646%.
    • Oil refiners are getting hit today as Brent crude falls to its lowest price in more than a week on rising tensions in Ukraine, shrinking the premium to West Texas crude to the narrowest level since October.
    • Given Ukraine’s location, the country's situation obviously will impact Brent more than WTI; meanwhile, WTI’s losses are limited after U.S. government data yesterday showed crude supplies at Cushing, Okla., declining to a four-month low.
    • Phillips 66 (PSX -2.8%) has dropped 3.5% YTD, while Delek US (DK -5.3%) has plunged 17%, Valero (VLO -4.3%) has slipped 3.8%, Holly Frontier (HFC -3.1%) has fallen 8.2% and Marathon Petroleum (MPC -4.4%) is off 8.5% in 2014.
    • Other decliners today: TSO -1.5%, ALJ -5.4%, WNR -4.2%, CVI -3.4%, CLMT -0.7%.
    • New U.S. auto sales are expected to rise just 0.8% Y/Y in February, according to, which expects to be hampered by poor winter weather for the second month in a row.
    • Edumnds estimates 1.2M new cars and trucks will be sold in the U.S. in February, up from slightly less than 1.2M a year ago and improving from January's total.
    • Among major auto makers, roughly 5% sales declines are projected for GM and Ford (F), with more modest sales drops seen at Toyota (TM) and Honda (HMC); Fiat Chrysler (FIATY) and Nissan (NSANY) are likely report double-digit sales increases, and Hyundai (HYMLF) sales are expected to rise 2%.
    • The Gap, Inc. (GPS): Q4 EPS of $0.68 beats by $0.02.
    • Revenue of $4.58B (-3.0% Y/Y) misses by $20M.
    • Shares -2%.
    • Press Release
    • Q4 comp store sales up 1% from a year ago after being up 5% Y/Y in Q4 2013. Company notes Q4 of 2013 did have an extra week. - Something a lot of people seem to forget! 
    • FY2014 EPS guidance of $2.90-$2.95 compares to the Street at $3.03.
    • Share repurchases of $134M in Q4 with $966M still remaining in buyback authorization. Quarterly dividend is boosted by 10% to $0.22 per share, giving the stock a 2% yield.
    • GPS -1.5% AH
    • Press releaseQ4 results
    • Deckers Outdoor Corporation (DECK): Q4 EPS of $4.04 beats by $0.24.
    • Revenue of $736M (+19.2% Y/Y) beats by $24.53M.
    • Press Release
    • Tumi Holdings, Inc. (TUMI): Q4 EPS of $0.25 misses by $0.05.
    • Revenue of $147.4M (+16.2% Y/Y) beats by $2.47M.
    • Shares +3.1%.
    • Press Release
    • Along with its FQ4 results, Salesforce (CRM) announces CFO Graham Smith is retiring in March 2015. A search will begin for a successor.
    • Salesforce expects FQ1 revenue of $1.205B-$1.21B and EPS of $0.09-$0.10 vs. a consensus of $1.19B and $0.10. FY15 (ends Jan. '15) guidance is for revenue of $5.25B-$5.3B and EPS of $0.48-$0.50 vs. a consensus of $5.21B and $0.50.
    • The deferred revenue balance rose 35% Y/Y to $2.52B in FQ4 after growing at a 34% clip in FQ3. Unbilled deferred revenue rose 29% Y/Y to $4.5B after growing 40% in FQ3.
    • Aggressive spending continues to pressure margins: Opex rose 45% Y/Y to $975.5M (exceeded rev. growth of 38%), with sizable increases in sales/marketing (56% of revenue), R&D, and G&A.
    • Free cash flow fell 13% Y/Y to $201.4M, but (thanks to deferred revenue growth) was well above net income of $47M. For the whole of FY14, FCF was $576.4M.
    • FQ4 resultsPR
    • TiVo's (TIVO +6.6%) FQ4 results were mixed, and ifs FQ1 revenue guidance ($85M-$87M) is below an $87.6M consensus. But the company added 313K MSO subs during the quarter, up from 295K in FQ3, and saw its total sub base rise 34% Y/Y to 4.2M.
    • TiVo has also added $100M to its buyback, raising its total authorization to $186M. $20M was spent on buybacks in FQ4.
    • TiVo-owned subs grew by 6K after declining by 21K in FQ4. TiVo-owned churn fell to 1.5% from FQ3's 1.8%. TiVo-owned monthly ARPU rose a penny Q/Q to $8.56, MSO ARPU rose $0.23 to $1.26.
    • Virgin Media's U.K. ops accounts for over 2M of TiVo's 3.2M MSO subs, but the company's efforts to diversify are bearing fruit. Spanish cable provider ONO added 65K TiVo subs in FQ4, and Sweden's Com Hem has added 38K within three months of its TiVo launch.
    • TiVo stated on its CC (transcript) it expects recently-acquired Digitalsmiths to post double-digit growth for the next several years.
    • Investors are pleased with Iridium's (IRDM +9.9%) guidance for an 8%-12% service revenue CAGR from 2014-2018, and its 60% 2018 OEBITDA margin target (2013 OEBITDA margin was 53%).
    • Iridium is also guiding for 2%-4% service revenue growth in 2014; the consensus for total revenue growth, which also accounts for equipment and engineering/support revenue, is at 4.9%. OEBITDA is expected to grow to $205M-$215M from 2013's $201.1M.
    • Q4 commercial service revenue (62% of total revenue) rose 18% Y/Y in Q4 with the help of a 15% increase in voice/data ARPU to $47. M2M ARPU was unchanged at $16.
    • Billable commercial subs totaled 613K at the end of Q4, up 9K Q/Q and 53K Y/Y. Voice/data subs totaled 340K, and M2M subs 273K.
    • Government service revenue +3% Y/Y, billable subs unchanged at 51K. Equipment revenue -28% (lower phone sales), engineering/support revenue +66%.
    • The satellite network owner expects to pay "negligible" cash taxes until approximately 2020.
    • Q4 resultsPRCC transcript

  121. It's a new world Phil… When a tweet from Icahn can increase AAPL market cap by $10B, when tweets from Musk takes TSLA P/E to 200, you know we are now in the world of social media investing. Forget fundamentals and technicals – it's who tweeted what last. One more reason to stay away from Momos!

    Or start a new list of tweets you want to follow and keep your finger on the trigger. Not for me though.

  122. Phil// Question on Fed Tapering – This reduced tapering is nothing but a reduce volume of money pumped into the market.  What about the money already pumped into the market by the Fed by the name of stimulus? When will they start to buy those back (about 4T dollars pumped to the banks via QE1/2/3)?  Any idea?

    Anyone interested in reading about the fake money creation. read this

  123. Phil/BTU~ what do you think of its long- term perspective? It seems commondities have been gaining tractions. Thanks!

  124. GALT/will – you could say that I know a bit about them….they have an IV carbohydrate for NASH (think Intercept), that seems to work quite well in animals.  But, my issue with their drug is that it is IV.  Intercept's is Oral.  Which would you take?  I am working in the area as well.  Ours is oral.  So, for an investment, they are ok for a few months or playing for positive news.  Long'er term….stay away.  If they get an oral treatment, then they have something.

  125. I'm hoping BYD will be my bitcoin.  

  126. Rookie/Tapering


    Yellen, like Bernanke has not committed to selling the securities, in fact she said again today that some MBS and perhaps Treasuries will remain on the balance sheet for the forseeable future. This reads holding to maturity whilst I do not think they will hold all, they have not revealed what some is. Inflation and more inflation is something that I am sure we will see.

  127. Making new highs (except for the Dow)! The entire market is a MoMo….

  128. This seems to make so much sense except to some people with vested interests:

    They find that high inequality is indeed associated with slower growth, but the mechanism for that slower growth comes in reduced growth spells. That is, it's not that countries with high inequality have steady growth rates that happen to be a little lower than countries with low inequality. Rather, they have shorter spells of economic expansion. In particular, the authors find that a 1-point increase in a country's GINI score (a measure of inequality) is associated with a decrease of about 7 percent in the length of its growth spells.

    In other words, countries with high inequality simply can't maintain economic booms as long as countries with lower inequality. This is consistent with the idea that growth in these countries is driven partly by the rich loaning money to the middle class, which is obviously less sustainable than growth driven by an increase in middle-class wages. In high-inequality countries, growth is too dependent on financialization and leverage. When the merry-go-round stops, as it inevitably must, the boom times are over.

    The IMF team also found that—within reason—redistribution doesn't seem to harm growth. In fact, just the opposite: "The combined direct and indirect effects of redistribution—including the growth effects of the resulting lower inequality—are on average pro-growth."

    To pick up on the theme of the previous post, this is something we all understood back in the era when unions were powerful advocates for the middle class. Of course rising middle-class wages are a prerequisite for sustainable growth in a mixed consumer economy like ours. And the more stagnant those wages are—and the aughts were by far the worst decade for stagnant wages since World War II—the more fragile economic growth is.

    Now we have an IMF report to add to the technical evidence that middle-class wage stagnation is bad for the economy. But who has the raw political power to force the business community to listen to it?

  129. Wow, now I am depressed StJ.

    As for inflation…phooey.  Not gonna happen, except oil and commodities (cough cough, food).

  130. Inflation:  Oh, and Pharmaceutical drugs……yes!

  131. DIA, next week 163 calls.  A ton of them.  This baby is gonna catch up.

  132. Well, my kid's feet aren't as warm as they could be since we are not buying new Uggs, but we are enjoying listening to the Imagine Dragon's song "Radioactive" over and over…..all good, PSW ONWARD to the new day!

  133. shadow – did you pen this this on SA ?

    This just in. Elon Musk has the cure for cancer, world poverty, and everything else plagueing mankind since the beginning of time. He has also achieved perpetual motion with his latest invention that defies the laws of physics. Step aside Chuck Norris and Albert Einstein. You guys have nothing on Elon Musk.


    I predict major problems for these electric cars long term. Lithium Ion batteries over time will not hold a charge. Thus, the range of these cars, should decrease as the batteries get older. The owner will have to replace the batteries at a high cost and the old batteries cannot be recycled. The toxic chemical lithium will be added to the landfill. And not to mention the majority of electricity used to charge the batteries comes from burning coal.


    Electric cars remind me much of ethanol. Early on people hyped it. Even Bill Gates made a large investment in an ethanol producing company. Today, we know ethanol was a mistake that actually hurt the environment. Wake up people and look down the road a few years. TSLA is a ticking timebomb.

  134. Stevegeb – this danny krivit edit of Aretha's Rock Steady should get those feet warmed up! And makes a good addition to that repetitive loop.. ;-)

  135. There you go Scott, nicely done…..only downside is it reminded me that I should have bought Under Armor last year in the 50s…..cheers and good night!

  136. Wombat   110% agree with you, no grid capacity to supply the electric, cars, if you supply them the electricity is carbon or gas utilities mainly so just moving pollution from the tail pipe to the utility, there are not enough materials for the use, this materials are much more useful using them in other applications in electronics or special alloys,  Cost of lithium batteries can not be reduced, there is not sustancial reduction of cost in volume, charging  big lithium packages is dangerous  you need special software and algorithms to safely charge it, you risk having thermal runaways, explosions, cost of batteries needs a $ 10 per gallon to compensate…etc

    But still the market do not recognize any of the potential dangers and run as  lemmings into the cliff….amazing!

  137. The dollar tanked this AM.  /CL heading higher.

  138. Bloomberg Crude Oil "Quick Take"

  139. Lisa Murkowski's Energy 2020 Report to Congress.

  140. SPY 5 MINUTEGood morning!

    Wow on the Dollar – all the way down to 79.80 before stopping, now 79.90 an that is going to cover 0.5% of a pullback, at least!

    Not helping oil ($102.28) or gold ($1,330) or gasoline ($79.94) or nat gas ($4.47) or silver ($21.35) or copper ($3.19 – super-pathetic) and not helping the indexes, which are slightly red across the board.  That does not bode well for our finish today but we have to respect our bullish levels being taken – we're going to be picking up longs on Monday if these levels hold.  The Nikkei is still at 14,930 and we're watching the same 15,000 line we were during the last week of Jan (see yesterday's Trade Review).  

    That was a 1% drop in the Dollar from yesterday's high of 80.60 (3am) before Yellen spoke.  I think we've seen this movie before!  

    .SPX WEEKLYThe Nikkei was once again the only index losing ground in Asia (0.5%, but all fixed since the close) with Hang Seng flat, Shanghai up 0.44%, India up 0.6% and Singapore up 0.5%.

    Asian Stocks Erase Advance as Yuan Drops Most on Record. Asian stocks fell, with the benchmark gauge erasing gains, after China’s yuan posted its steepest one-day loss against the dollar. China’s Shanghai Composite Index lost 1 percent, set for a third monthly slide amid speculation a weaker currency will curb earnings. Hong Kong’s Hang Seng China Enterprises Index slid 1 percent, erasing gains of as much as 0.8 percent, while the benchmark Hang Seng Index fell 0.4 percent. The MSCI Asia Pacific Index declined 0.4 percent to 137.45 as of 11:44 a.m. in Hong Kong after rising as much as 0.2 percent, and is little changed on the week.

    Yen Gains Versus Euro Amid Crimea Tensions; Oil Falls. Japan’s yen headed for its longest streak of gains versus the euro in 15 months as reports that armed men seized an airport in Ukraine’s Crimea region stoked haven demand. Crude oil fell, trimming its February advance, while South Korea’s won and New Zealand’s dollar climbed. The yen rose 0.2 versus Europe’s currency at 11:01 a.m. in Tokyo, a fifth straight advance.


    China Yuan Set for Worst Month in 20 Years on Band-Widening Bets. China’s yuan headed for the worst month in two decades on speculation the government will broaden the currency’s trading band after allowing more volatility in the exchange rate. The yuan in Shanghai slid 1.5 percent in February, according to China Foreign Exchange Trade System prices. That’s the biggest monthly loss in CFETS figures since 2007 and in Bloomberg data before that.

    China Currency Plunges Most In Over 5 Years, Biggest Weekly Loss Ever: Yuan Carry Traders Crushed

    Aussie to End Gains on Signs of Limited Growth: Market ReversalAustralia’s dollar will reverse its biggest monthly gain since September, trading patterns suggest, as decade-high unemployment and a slump in business investment spur speculation interest rates will decline.


    Gold Heads for Second Monthly Advance as Haven Demand Increases. Gold headed for the first back-to-back monthly gain since August as concern that the U.S. recovery may be losing momentum and turmoil in emerging markets boosted haven demand. Assets in bullion-backed exchange-traded products were set for the first monthly increase in 14 months. Bullion for immediate delivery was at $1,332.61 an ounce at 9:26 a.m. in Singapore from $1,331.33 yesterday. Prices are up 7 percent this month and reached a 17-week high of $1,345.46 on Feb. 26. Holdings in ETPs are up 0.3 percent in February after declining last year for the first time since the first product was introduced in 2003, data compiled by Bloomberg show.

    Gold Fix Study Shows Signs of Decade of Bank ManipulationThe London gold fix, the benchmark used by miners, jewelers and central banks to value the metal, may have been manipulated for a decade by the banks setting it, researchers say.


    • Japanese industrial production grew at the fastest pace since June 2011 in January, jumping 4% on month after a drop of 0.9% in December and surpassing consensus of +3%. Soaring production of transport equipment and machinery helped to boost output
    • Construction orders surged 15.2% on year vs +4.9% previously.
    • Retail sales leapt 4.4% vs +2.5% in December and expectations of +3.8%. On month, sales +1.4% vs -1.2% previously.
    • Overall household spending +1.1% vs +0.7% prior and forecasts of +0.2%.
    • The strong figures are not a total surprise, as a bump in economic activity has been expected ahead of a rise in sales tax in April, which is forecast to then drag on the economy.
    • Meanwhile, core inflation, which excludes food prices, held steady at 1.3% on year in January, above consensus of 1.2%.
    • Core core CPI, which excludes food and energy, stayed at a 16-year peak of 0.7%.
    • Overall inflation slipped to 1.4% from 1.6% in December.
    • The unemployment rate stayed at 3.7%, as expected, although the number of open positions increased to 1.04 for every person seeking work, the most since August 2007.
    • The Nikkei falls 0.55%, while the USD-JPY is -0.4% at ¥101.70.


    China Must End Its GDP WorshipFor China to get off the growth treadmill would be a giant reform all its own. Why? Well, there are at least three major challenges China will never be able to address if leaders feel obliged to keep growth above a specified level: local government finances, pollution and the shadow-banking system.

    China's Property Industry Can't Maintain High Growth. China's property industry can't maintain the high growth of recent years because the nation's economy has entered a period of medium-high growth, citing Li Wei, head of the Development Research Center of the State Council. The supply-demand situation in the property market will see major changes after more than 10 years of high growth, the report cites Li as saying.

    People’s Daily Arms Netizens to ‘Kill the Devils’An online platform for China’s Communist Party is encouraging citizens to take out their hostility toward the Japanese in the virtual world. While Beijing flexes its muscles in a very real way in the East China Sea, ordinary Chinese can now play a game called “Kill the Devils” on the website of the People’s Daily newspaper, the official mouthpiece of the party here.

    That's 10% of the planet's GDP, in Debt, per year: Sovereigns to increase borrowing in 2014 to $7.1 trillion -S&P. Sovereign debt borrowing is expected to rise by 2.7 percent to $7.1 trillion this year, with the biggest relative increase coming in sub-Saharan Africa, a new study by Standard & Poor's showed on Thursday. The increase in long-term debt borrowing, equivalent to $185 billion, will be led mainly by the United States and Japan, which will account for 57 percent of the total in 2014. The next biggest sovereign borrowers this year are projected to be Italy, China and Brazil.

    • Bitcoin exchange Mt. Gox has filed for bankruptcy protection with debts of ¥6.5B ($63.6M).
    • The Japanese firm's Web site went dark on Tuesday amid fears about the possibility of bankruptcy and speculation of a massive security breach that involved the theft of 744,400 bitcoins.
    • Bitcoin is -3.2% at $558.

    INDU WEEKLYEurope had a good open but blew it, led down by Spain, who are down 1.25% from their open.  CAC is down 0.5%, Italy 0.25% but London and Germany are flat heading into lunch but 6,800 briefly broken on the FTSE – so watch that.  Also watch the 10,000 line in Spain (now 10,035).  

    • Eurozone unemployment held steady at 12% in January, as expected. (PR)
    • February inflation was also unchanged at 0.8% on year vs consensus of 0.7%. Core inflation rose to 1% from 0.8% in January. (PR)
    • The euro spikes and is +0.6% at $1.3789.
    This is what popped the Euro:  German retail sales blow past expectations
    • German retail sales recovered smartly in January, jumping 2.5% on month after dropping 2.1% in December and topping consensus of +1%.
    • On year, sales +0.9% vs -1.5% and -1.2%.
    • The euro spikes vs the dollar from earlier lows and is +0.05% at $1.3717, while DAX futures are flat. (PR)
    • French consumer spending dropped 2.1% on month in January after rising 0.2% in December and missed forecasts that were +0.2% also. (PR)
    • Producer prices -0.6% vs +0.2% a month earlier. (PR)
    • The CAC 40 (EWQ) is +0.1%.
    • Italian unemployment rose to a fresh record high of 12.9% in January from 12.7% in December and exceeded forecasts that were 12.7% also.
    • The increase comes despite Italy exiting recession in Q4.
    • Meanwhile, bond yields have been touching eight-year lows lately. The 10-year is now little changed at 3.47% but fell to 3.455% yesterday.
    • The FTSE MIB is -0.3%. (PR)

    Rome Is On The Verge Of Detroit-Style Bankruptcy

    • Armed Russian soldiers have taken over two important airports in Crimea, Ukraine's acting interior minister has said, adding that the actions are an "armed invasion and occupation." The airports are in Sevastopol, where Russia's Black Sea Fleet is based, and in the Crimean capital of Simferopol.
    • The developments come just a day after gunmen seized government buildings in the region.
    • Meanwhile, Vladimir Putin has ended his silence over the events in Ukraine, saying Russia will "continue contacts with partners in Kiev” and work with international bodies to offer financial help. Putin made no mention of deposed President Viktor Yanukovych, who has apparently received Russian protection, nor of the situation in Crimea.
    • The USD-UAH is -0.4% to 11.21 Ukrainian Hryvnia.
    • WTI Crude is -0.4%, while Brent is -0.2%.
    • More on Ukraine
    • Update: Russia has denied that its troops have seized Belbek Airport in Sevastopol.

    RUT WEEKLYOur Futures are red by about 0.25% (6:30) with the dollar at 79.93, we'll see if 80 is taken back and we have a Q4 GDP report at 8:30, Chicago PMI at 9:45, U of M Sentiment at 9:55, Pending Home Sales at 10 and Ag Prices at 3pm.  Very busy for a Friday.  

    Yellen Sticks to Plan Amid Weather DoubtsFed Chairwoman Adds Winter's Impact on U.S. Economy Remains Unknown.

    • The budget deficit dropped to the lowest level since 2008 last year, falling to $680B from $1.1T in 2012. The rate of the drop was the sharpest since the end of World War II.
    • As a proportion of GDP, the deficit was 4.1%, down from a peak of 10% during the depths of the Great Recession.
    • The fall was due to an increase in federal tax revenues amid economic growth and tax hikes, and to a fall in spending. A slowdown in health costs also helped.

    Natural Gas Heads for Biggest Weekly Drop in New York Since 1996. Natural gas futures fell for a fifth day in New York and headed for the biggest weekly drop in 17 years after a government report showed a U.S. stockpile decline that was smaller than forecasts. Natural gas for April delivery fell as much as 1.3 percent in today’s electronic trading on the New York Mercantile Exchange and was at $4.486 per million British thermal units at 10:08 a.m. in Singapore. Volume for all futures traded was 86 percent below the 100-day average. Gas is down 27 percent this week, approaching the biggest slump since December 1996, and down 9.2 percent for February.

    • Tesla (TSLA) has raised $2B in the largest U.S. convertible-bond offering in over two years, the FT reports.
    • The electric-car company had originally sought to sell only $1.6B worth of debt, but increased the amount due to strong demand. An over-allotment provision could take the deal to $2.3B.
    • The sale comes amid a 70% surge in Tesla's share price since the start of the year.
    • Tesla sold $800M in five-year debt with a coupon payment of 25 basis points and $1.2B in seven-year notes at 125 basis points. Both bonds have an equity conversion premium of 42.5%.

    Deckers Outdoor(DECK) Falls After Forecasting Surprise Quarterly LossDeckers Outdoor Corp. (DECK), the maker of Ugg boots and Teva sandals, dropped as much as 20 percent in late trading after the company forecast an unexpected first-quarter loss. The company, based in Goleta, California, projected a loss of 16 cents a share for the current quarter. Analysts had estimated a profit of 10 cents on average, according to data compiled by Bloomberg.

    • A German court has thrown out a €1.57B ($2.15B) lawsuit that accused Apple (AAPL) of infringing two patents that allow mobile phones to make emergency calls even when networks are overloaded.
    • The lawsuit was filed by Munich-based patent holding company IPCom in 2007.

    Supreme Court Rules Police May Search A Home Without Obtaining A Warrant

    Yes, The Government is Spying on You Through Your Webcam – Another “Conspiracy Theory” Proven True




  141. Tweets/StJ – They have people who track trending tweets on stocks but, so far, it hasn't actually proven effective.  

    Tapering/Rookie – That's something we talked about at our Atlantic City conference last year in great detail.  There is TONS of money sloshing around the system, what we don't have is VELOCITY.  If velocity is zero, you can have infinite amounts of money and it still does nothing for the GDP.  The Fed can't SELL (not buy back) their holdings as it would flood the economy with assets there is no demand for.  What they can do is, one day, STOP buying TBills and, eventually, over time, the ones they have will expire and their lack of buying more will effectively lower their balance sheet.    The same goes for their mortgage paper – eventually the homes or properties will sell and someone will send them a check.  Since the Fed doesn't owe any interest on the $4Tn they created and since they don't have any real P&L to report to anyone  - they can sit on this stuff till the cows come home.    That's an excellent graphic. 

    BTU/Invest – I think there's a certain economic reality that keeps coal in the mix for now but even China is starting to crack down on coal consumption, as there's no point in worrying about powering a city if all the people in it have suffocated.   As noted above, this is one of the reasons China's GDP is slowing – they have overgrown and are now suffering the consequences of rampant industrialization.  Still, coal is a huge part of the International Energy Picture and that won't stop on a dime so BTU is undervalued short-term, but I wouldn't make it a big long-term wager, because no one is building new coal power plants these days.  

    Big Chart – Undeniably impressive move now.  Still could be an "M" pattern but more likely now the down right leg will be higher than the rising left leg and that's a long-term bullish pattern if we get a mild dip. 

    IMF/StJ – Amazing how little press this study gets.  Zero TV time. 

    DIA/Pharm – Very likely if we hold up next week.  

    Radioactive/Steve – That's a good one

    Good article, Jfaw, thanks.

    Source: U.S. Department of Energy data compiled by Bloomberg

    Thanks for Congressional Report too.  

  142. Good morning. Phil! Thanks for your response regarding BTU.

  143. "Tesla sold $800M in five-year debt with a coupon payment of 25 basis points and $1.2B in seven-year notes at 125 basis points. Both bonds have an equity conversion premium of 42.5%."

    Let me get this straight !  People are lining up to loan TSLA 2 billion dollars and in return will get either .25% or 1.25%.  Plus they get the opportunity to convert into TSLA stock at $360.  This makes no sense to me.  What is the rating on this preposterous piece of paper ?

    If you want to own TSLA stock, why not just buy it and forego the .25 or 1.25% on your money.  If you need such massive income, sell OTM calls.

    Phil, please tell me I have this wrong ! ! !