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Weakening Wednesday – Can Yellen Save the Day?

SPY 5 MINUTEI told you so!  

All of last week, I kept saying the market was only hitting highs because it was being manipulated that way and, by Friday we'd had enough and took our ill-gotten gains off the table once again.  This week, it's obvious we're in trouble – but it's a lot harder to sell your stocks when they're already in trouble, isn't it?

It's a very hard discipline to take winners off the table but you should scale out of posiitons on the way up the same way you should scale into them on the way down (and the Strategy Section at Philstockworld has a great article about scaling – also lots of additional commentary in chat below the article).  

There's nothing wrong with being in cash.  Yesterday, from 1pm until 2:30, we had on of our Live Futures Trading Workshops (replay available here) and our 4 trades made $360 by the close (4pm) for a very nice $100+ per hour salary for just trading a few contracts.  Our trade idea from yesterday's morning post (which you can get delivered to you pre-market, every day by SUBSCRIBING HERE) was to short the Nikkei (/NKD) at 14,350 and this morning we hit 14,050 – good for a $1,500 PER CONTRACT profit!  

SPX WEEKLYThat's one of the things you can do with cash.  We also have fun making earnings plays, like the FSLR trade we added to our Short-Term Portfolio yesterday.  That trade idea was:

I think it's worth a try at selling 5 July $75 calls for $3 ($1,500) and buying, to cover, 4 Jan $77.50/85 bull call spreads at $2 ($800) for a net credit of $700 – let's do a set of those in the STP

If FSLR is under $75 (it's about $69 after earnings), we pocket $700 PLUS whatever value remains on the January bull call spread (probably about half).  That's against zero cash outlay ($700 credit, in fact) and possibly we'll just take quick money off the table and reload for our next earnings trade.  

This morning, ahead of Yellen's 10am speech, we flipped bullish on the Russell Futures (/TF) at 1,105 in our early morning Member Chat and we've already tested 1,110, which is $500 up from that line (though we were more like 1,106 by the time we caught it for +$400 in an hour).  We're done with the long ahead of the Productivity Report at 8:30 – which we expect to be disappointing.  Also this morning, I reiterated our short entry on oil at $100.20 and we already got a dip back to $100, but our goal is $98.50 after inventories (10:30) though now we'd stop out again over $100.20 and wait for a better entry – so stay tuned!  

We've been watching Brent Crude contracts drifting lower and USO (based on WTIC, which is what the /CL Futures reflect) usually tracks it very closely and now Brent is at $107.25, back where it was in early April, when WTIC was under $99.  That is pegging our BS meter to 8.5, especially since the Ukraine crisis SHOULD be supportive of Brent – and it isn't.  That's a huge red flag for oil bulls (the kind they run into and get skewered).  

Speaking of getting skewered:  Here's the Productivity report and is SUCKS – down 1.7% for Q1 and, even worse for our Corporate Masters – Unit Labor Costs are up a whopping 4.2%.  In other words labor costs are rising and they can't whip the wage slaves any harder than they already are.  

There are no cheaper places left to outsource, even CHINA!!! has been dealing with growing labor unrest as it becomes more and more clear that the Communist Party, which was founded to benefit the country's workers and peasants – has become a Billionaire's club for oligarchs – almost as bad as the US (but not quite).  

In China, there is a common saying,” says Lin Dong, of the Labor Dispute Center. “The government doesn’t help the people fix their problems. They fix the people who point out the problems, instead.”  Workers who were valued principally as inexpensive production cogs during China’s initial economic flowering are now expected to star as consumers. Consumption accounts for only 35 percent of the Chinese economy, well below the 50 percent-plus characteristic of East Asian countries such as South Korea, which modernized earlier.

It’s like that old Henry Ford story: I’ve got to pay my workers enough so they can buy my product,” said David Dollar, a former U.S. Treasury Department official in Beijing. “China’s reaching that Henry Ford moment.”  

Unfortunately, the US is far from that "Henry Ford Moment," as you can see from the chart above.  Let's face it, we're a nation of timid sheep who have just sat back and taken it while our wages have flatlined for 25 years while UK workers (the above example) were given 30% increases.  At least the Chinese are smart enough to march – what the hell is wrong with US?

Maybe the rising Unit Labor Costs are finally a sign that US workers are not going to take it anymore.  If so, that will be a long-term benefit for the economy but, in the short run, companies that are addicted to low wages like WMT, NKE, MCD, etc. are in for a bit of pain.  


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  1. Oil Lines

    R3 – 101.66
    R2 – 101.04
    R1 – 100.59
    PP – 99.96
    S1 – 99.50
    S2 – 98.88
    S3 – 98.42

  2. Good morning!  

    Great bit on the Daily Show about the what can now only be described as complete idiocy over Benghazi:



  3. Wow, they spiked us all the way to $100.50 on the 9am NYMEX open – that's a good shorting spot, of course (tight stops above on /CL).  

    Dollar improving – over 79.20.  

    Indexes also giving us shorting spots at /YM 16,400 and /ES 1,870 – don't forget Yellen at 10 though – big wild card.  

  4. Good Morning!

  5. Phil/Benghazi  It's their plan for defeating Hillary in '16….. and an insult to the dead…. :(

  6. Amazing, they lie to get us to war where 3000 soldier die and Fox doesn't think it rises to the level of Benghazi…. 

  7. Some countries will have big demographic problems by 2050:

    No wonder they are building robots in Japan. They'll have 40% of their population over 65 years old by then! The US looks positively good in comparison.

    It's worth driving this point home: America doesn't really have a huge aging problem. We have a very moderate aging problem, which could be handled in the federal budget with fairly modest changes to Social Security and Medicare. What we do have is a health care problem. But that's a problem for us all.

  8. Phil--is there a hedge you would recommend with TSLA for 'someone' who is short the 300 and 340 leaps?

  9. /TF testing 1,105, /ES testing 1,165 – very critical lines.  

    Oil just below $100.50, trying to get over.  Gold slumped to 1,304.  Dollar not holding 79.20 (anticipation of Yellen sprinkling more fairy dust).  

    • Dow +0.48% to 16480. S&P +0.38% to 1875. Nasdaq +0.07% to 4083.
    • Treasurys: 30-year -0.01%. 10-yr -0.06%. 5-yr -0.04%.
    • Commodities: Crude +0.95% to $100.45. Gold -0.41% to $1303.2.
    • Currencies: Euro +0.05% vs. dollar. Yen +0.11%. Pound +0.03%.
    • Stock futures have turned modestly higher on reports Putin was willing to discuss a way out of the Ukraine crisis with regional leaders; Dow +0.3%, S&P and Nasdaq +0.2%.
    • Futures held gains after the U.S. reported a 1.7% drop in Q1 productivity vs. estimates calling for a 1.1% drop.
    • European bourses are mostly higher, while the Nikkei's 2.9% drop led Asian markets lower.
    • Janet Yellen is scheduled to begin her testimony before the Joint Economic Committee at 10 a.m.; investors will be focused on the Q&A period for any signs the Fed may be changing its dovish strategy.
    • Treasurys trade in a tight range, with the 10-year benchmark +1.5 bps at 2.61%.
    • Still ahead: EIA petroleum inventories

    Minnesota moves closer to approving medical pot use

    • Minnesota state senators vote 48-18 in favor of legalizing physician-prescribed medical marijuana. The bill will permit up to 55 dispensing centers around the state although the health commissioner could approve additional sites.
    • Patients could legally possess up to 2.5 ounces of pot to be ingested in pills, oils or vaporized just shy of combustion. Smoking weed would still be illegal.
    • The bill allows for a research study to assess the effects of medical marijuana in pill or liquid form in patients with severe illnesses.
    • The Senate's version differs from the House's version so more work needs to be done before it passes over the Governor's desk.

    Another one I used to have to beg people to buy:  Chesapeake +2.6% as Q1 profit, revenue surges

    • Chesapeake Energy (CHK) +2.6% premarket and may be poised to begin trading at a 52-week high after Q1 earnings and revenues skyrocket Y/Y and easily beat Wall Street expectations.
    • Q1 oil and gas production totaled 675.2K boe/day, up 11% Y/Y after adjusting for asset sales, consisting of 109.5K barrels of oil, 84.2K bbl of natural gas liquids and 2.9B cf of natural gas.
    • Average price it received for its gas during Q1 was $3.27/M cf, up from $2.13/M cf a year ago.
    • Raises 2014 total production growth outlook 9%-12%, up from an earlier forecast of 8%-10% growth, to reflect higher than expected natural gas liquids volumes; raises the midpoint of 2014 operating cash flow outlook by 13% to $5.8B-$6B from prior $5.1B-$5.3B due primarily to the increased production outlook.

    LOL – people can't make up their minds:  Quantum Fuel partners with Ryder on new CNG truck technology

    • Quantum Fuel (QTWW) +28.3% premarket on news that Ryder System (Ragrees to purchase compressed natural gas fuel systems to help reduce costs and increase vehicle uptime for businesses that lease CNG trucks from Ryder.
    • Ryder will be the first transportation company to use QTWW's OEM-quality CNG systems on a national scale.
    • Financial terms are not disclosed

    Strong month in China for Japanese automakers

    • Japanese automakers had another good month in China during April with sales growing at a double-digit clip.
    • Toyota (TM) reported sales increased 12% to 85,800 vehicles, while Nissan (NSANY) saw 15% growth to 118,500 vehicles sold. Honda (HMC) reports later this week with a double-digit sales gain forecast.
    • New models designed specifically for Chinese consumers have helped to stoke the consistent sales gains in China this year for the Japanese automakers.

    Adjectives in focus on earnings day at Tesla Motors

    • Tesla Motors (TSLA) reports Q1 earnings results after the close today with analysts expectingthe EV automaker to show a $0.07/share profit.
    • Revenue will be higher than a year ago, but without clean-car credits from California, the company will likely show a slip from Q4's tally. Analysts see a haul of $699M vs. $562M a year ago and $761M in Q4.
    • Deliveries of around 6.4K Model S cars to customers in Q1 is expected.
    • What to watch: Sales in China won't be included in Q1 results, although a few choice words from the company on early demand could set the tone for after-hours trading. Bulls would like to hear an adjective like brisk or strong. Traders are also anticipating an update on Tesla's Gigafactory plans. Silence about the project could create some worry.
    • TSLA +1.4% premarket to $210.10.

    SouFun -5.3% on soft outlook; E-House -1.1%

    • Though Q1 revenue was roughly in-line, SouFun (SFUN) is guiding for 2014 revenue of $780M-$796M, below an $817.2M consensus.
    • Q1 revenue breakdown: Marketing services (ads) +31.2% Y/Y to $47M, listing services +57.1% to $42.1M, e-commerce services +11.6% to $29.4M, everything else +32.3% to $2.7M.
    • Opex rose 38.6% Y/Y, outpacing rev. growth of 33.2%. Sales spend +47% to $27.5M, G&A +28.3% to $19.3M. Adjusted EBITDA rose 34% to $54.8M.
    • Peer E-House (EJ) is also lower premarket. Worries about a Chinese real estate slowdown have been growing.
    • Q1 resultsPR

    Sears Holdings looks for more stores to close

    • Sears Holdings (SHLD) is expected to announce more store closings as Eddie Lampert looks to execute on an ongoing initiative to cut losses
    • The retail sector has been overrun with store closing announcements following a tough winter for mall traffic. A plan announced yesterday by Office Depot (ODP) to slash 400 stores gave its shares a well-needed 15.8% jolt.
    • Sears says it will also look to act more like a landlord by leasing store space to retailers striving to increase their footprint

    Caesars Acquisition Net loss of $19.70M, beats on revenues

    • Caesars Acquisition (CACQ): Q1 Net loss of $19.70M.
    • Revenue of $226.3M (+49.8% Y/Y) beats by $25.3M.
    • Press Release

    A frank assessment from Whole Foods Market takes down the sector

    • The organic grocer sector is in chaos after Whole Foods Market (WFMcuts its guidance with new competitors cropping up.
    • Exec with Whole Foods gave a frank assessment on their previous outlook during the firm's earnings call last night (transcript).
    • "We were overly optimistic… particularly in light of the rapidly changing competitive landscape," said co-CEO John Mackey.
    • Whole Foods Market is down 18.5% premarket, while shares of The Fresh Market (TFM) is giving up 8.5% and Sprouts Farmers Market (SFM) is off 6.7%.

    King +3.4%; bookings grow in spite of Candy Crush decline

    • In spite of softening Candy Crush Saga activity, KING Digital's bookings rose to $641.1M in Q1 from $632.1M in Q4. On a Y/Y basis, bookings were up nearly 3x. Adjusted EBITDA rose over 3x to $248.6M.
    • Daily active users grew 15% Q/Q and 297% Y/Y to 143M, and monthly active users 18% Q/Q and 249% Y/Y to 481M. One weak spot: Monthly unique payers fell to 11.86M from 12.17M at the end of Q4. Gross average bookings per paying user rose $18.02 from $17.32.
    • Candy Crush accounted for 67% of Q1 bookings, down from 78% in Q4.King had three top-10 games in the App Store and Google Play in the U.S., and on Facebook worldwide.
    • Including stock compensation expense, R&D spend more than doubled Y/Y to $46.8M, and sales/marketing spend rose over 3x to $129.1M.
    • Q1 resultsPR

    AOL -7.8% on EPS miss; $101M acquisition announced

    • Along with its Q1 results, AOL announces it's buying Convertro, provider of an ad tech platform that uses algorithms to measure ad views/conversions across multiple channels. AOL is paying $89M in cash + $2M in converted stock awards + $10M in earn-out payments.
    • The deal follows last year's acquisition of online video ad platform, and bolsters AOL's efforts to be a top ad network/tech provider for the burgeoning programmatic ad market. It also comes a day after Google announced it's buying Convertro peer Adometry.
    • Shares are lower in response to AOL's Q1 EPS miss and disappointment with the company's display ad (-3% Y/Y vs. +6% in Q4) and search ad (-1% vs. +5%) sales. AOL attributes the former decline to a $10M hit from "shuttered or de-emphasized brands," including Patch. The latter is blamed on a decline in core search queries. Third-party ad platform revenue, boosted by, rose 55% vs. 30%.
    • Subscription (dial-up ISP) revenue fell 10% Y/Y vs. 8%. Subscribers fell 9% Y/Y; churn was 1.5% vs. 1.3% in Q4 and 1.9% a year ago, and ARPU fell to $19.41 from $20.01 in Q4.
    • Adjusted OIBDA only grew 2% Y/Y to $107.3M, after growing 19% in Q4. Free cash flow was -$10.5M vs. $9.8M a year ago.
    • Q1 resultsPR

    Alibaba reportedly looking to sell 12% stake; SoftBank to keep shares

    • Bloomberg reports Alibaba (ABABA) is looking to sell a 12% stake through its IPO. At a $150B valuation, that would imply raising $18B; at a $200B valuation, $24B.
    • A big selloff in momentum stocks (inc. Chinese Internet companies) might lead to some downward pressure on Alibaba's multiples. At $200B, the company would be worth 92x 2013 adjusted net income of $2.16B - forward multiples might be considerably lower.
    • Meanwhile, though Yahoo (YHOO) is required to sell a chunk of its 22.6% stake at IPO time, SoftBank (SFTBFsays it won't sell any part of its 34.4% stake, in spite of its big investments in Sprint and $3.2B deal to buy Japanese broadband provider eAccess. Shares fell 5.1%overnight in Tokyo.
    • There's some disappointment over the fact Alibaba didn't break out details for its Taobao and Tmall sites. Would-be investors are also keen to learn more about how Alibaba plans to grow its international sales (8.8% of 2013 revenue), an effort bound to put the company on a collision course with Amazon and eBay.
    • Yesterday: Alibaba files for IPO, shows off big numbers
    • Alibaba's prospectus

  10. Speaking of demographics – that could have an impact on housing down the road:

    Mao also underscored the impact of demographics, a point we’ve flagged before: Rapid aging of China’s population means that future workers will have less and less disposable income to spend on housing in the next two decades.

    Taking his argument one step further, JL Warren demonstrates how demographics might also explain the current collapse in housing demand. China’s birth rate peaked in 1987, and since people marry approximately 25 years later, that means demand for “new household formation” homes maxed out in 2012.

  11. FSLR $75 calls not dropping as fast i had expected!

  12. Hillary/1020 – They're going to have to find a new tune by then.  Probably they won't – it's not like they are very creative people…  wink

    Amazing/StJ – Stewart does a great job of pointing out the ridiculous hypocrisy of the thing.  To some extent, that's the problem with the Democrats – they don't go for the throat when the GOP gets caught being evil – they just let it go as if it's so obvious, nothing needs to be said but nothing is obvious to heartland voters.  The GOP gets that and the Dems don't.


    Demographics/StJ – Have I mentioned I like IRBT lately?  

    TSLA/Jabob – I suppose, if it would help you sleep better, the Jan $275/325 bull call spread is $6.30 and the net delta is just 0.13 so a $40 drop in TSLA (20%) would cost about $4 against $44 of upside protection.  Anything up or down 10% and the insurance probably only costs you $2.

    China/StJ – They could, of course, fix this problem by adopting a 3 child policy.  It would take just 20 years for them to have a couple of hundred million more young workers.  Cheaper than robots!  

    Woops – there goes AAPL and the Nas!  

  13. There goes 1,100!  There goes 1,165!  There goes $100 on oil (almost).  

  14. Gotta switch to Bloomie for Yellen.  

  15. 18 handle on TZA

  16. Sent from Bloomberg for iPad

    Watch this video at

    You’ve Heard of Alibaba… but How Do You Use It?
    May 7 (Bloomberg) — Chinese internet giant Alibaba filed for an IPO on Tuesday in what could be the largest U.S. initial public offering ever. It’s been labeled the Amazon of China by some and does business in everything from online payments, music streaming, cloud services, to e-commerce. Bloomberg’s Willem Marx answers The Big Question: How do you use Alibaba?

    Download the free application at

  17. /TF  crushed

  18. Wow, what a ride!  Gotta take some profits off the table on the Futures shorts – people don't like Janet's testimony but she can still pull it out with the Q&A. 

    /NQ at 3,500 – that shouldn't go down easy.  Actually it's a good bullish bounce play, as is 1,090 on /TF (with very tight stops).  /YM 16,300 is also a good line – go long on the laggard.  

    Oil $99.95 gets our $500 back from the conviction short.  

  19. CZR!  All hail Caesar!

  20. IWM stopped on major support going back to last October. It and all associated should bounce here.

  21. BTW this is a 10% correction of the RUT.

  22. ~U.S. crude oil imports averaged 6.9 million barrels per day last week, down by 598,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged 7.6 million barrels per day, 1.1% below the same four-week period last year.Now the facts on oil. Imports down, way down, a little draw.

  23. CZR/Burr – ROFL, debt problems vanish with the stroke of a pen.  

    NEW YORK (TheStreet) — Shares of Caesars Entertainment Corp.  (CZR_) are up 7.06% to $19.87 in pre-market trade after the company announced that it's selling a minority interest in its largest unit, a step that removes guarantees by the casino company on much of its $23 billion of debt and sets the stage for a wider restructuring, Bloomberg reports.

    The company is selling a 5% stake in Caesars Entertainment Operating Co. to unnamed investors, according to a statement.

    Caesars agreed to pursue a stock exchange listing for the unit.

    The sale means some bond investors will no longer hold a claim to the parent company's assets and will have less bargaining power in debt restructuring negotiations. The company was purchased in 2008 in a $30.7 billion leveraged buyout led by Apollo Global Management LLC (APO_) and TPG Capital, Bloomberg noted.

    Good time to reflect on my answer to Wombat's question re. the Butterfly trade on CZR, when he wanted to roll the $20 short puts because they were in the money:  

    Submitted on 2014/05/02 at 2:20 pm

    STP only down 6.6% now.  33% improvement on this little dip means we must be doing something right.  

    CZR/Wombat – It's different in a butterfly because we sold both sides, so we're not too concerned with rolling.  We sold the May $20 puts and calls for $3.20 and CZR is at $18.50 so we're up $1.70 if we leave them alone (but it costs us $2.55 to move them now!) and CZR finishes at $18.50 and better if closer to $20.  In either case, we will roll the losing side (currently the short puts) to a longer spread, probably the June $20 puts and calls, now $3.20, and drop another $1.70 in our pockets.  If we pick up $1.70 a month in premium for the next 20 months on 10 contracts, that's $34,000 we can make by NOT touching the contracts until they run out of premium against our $8,400 long position for a return of 300% plus whatever is left on the longs.  

    You don't need to overthink and overtrade when you are presented with such a steady, simple way to make money.  The point of these trades is to teach people to LEAVE THINGS ALONE and let the inexorable march of time do it's work on the premium you sell.

    The key is to have a VALUE in your head for the stock you are trading and not worry about the PRICE of the stock from day to day.  We've been playing CZR for years now – I think we're getting the hang of it.  

    • "Looking ahead, I expect that economic activity will expand at a somewhat faster pace this year than it did last year, and that the unemployment rate will continue to decline gradually, and that inflation will begin to move up toward 2%," says Janet Yellen in prepared remarks in front of Congress' Joint Economic Committee.
    • "We recognize that much more must be accomplished," she concludes, promising that interest rates will remain low for an extended period of time.
    • Treasury prices are bopping around as she speaks, but remain pretty much as they were prior to the testimony, the 10-year yield up one basis point at 2.60%.

    Oops, forgot about oil in all the excitement – Net neutral on inventories is better than a build for the bulls but the build in gasoline has to be a concern.  Oil back to $100.40 on the news but let's see where they go before we short again.  

    • EIA Petroleum Inventories:
    • Crude -1.8 barrels vs.consensus of +1.2M and +1.6M last week.
    • Gasoline +1.6M barrels vs. consensus of +0.1M and +1.6M last week.
    • Distillates -0.4M barrels vs. consensus of +1.2M and +1.9M last week.

    Good point Shadow.  

    Imports down 600Kbd – that's 4.2Mb for the week less than last week!  Absolutely I'm still for shorting /CL at $100.50!  

  24. Phil/ I have TASR short 2016 15 put sold for 2.60. Should I roll now, or wait for further drop as TASR seems to be in free-fall? Wondering if I'll be able to roll to 10's and double down? Sorry, new at long-dated options. Thx.

  25. No clue why but whatever I paste is stuck in front of the alert. Makes everything out of place, been happening for quite a while.

  26. Wow, very quick $1,000 gain on /TF at 1,100! 

  27. TASR / Phil … tempting now after dipping under $13 .. Jan 2016 puts offering near $3 which gives a breakeven 23% lower at only $10 for average down position. Of course if could go lower but seems worth an initial average down position. What do you think? Thanks

  28. I like this Kass commentrary (part 1)

    The transaction fueled the bubbly action in the market leaders early in 2014.

    Worshiping at the altar of price works — until it doesn't. New tech and social media companies are nothing more than information aggregators driven by advertising that have been insanely overpriced.

    Twitter (TWTR), as measured by its short interest, is among the most hated. There is a reason why investment bankers priced its IPO only a few dollars more than the initial indication — they couldn't get a higher valuation. Twitter may be a great platform and concept, but the brain power and luck it will take to make it a sustainable $10-billion-plus company will be greater than what it took to create it from scratch.

    Despite the recent drop in the Nasdaq, Facebook (FB) still possesses a $140 billion market cap. Twitter's capitalization exceeds $24 billion. LinkedIn (LNKD) trades at a market cap of more than $19 billion and a cool 750x earnings. Salesforce (CRM), which has been an awful stock, still has a $32 billion market cap (with financial statements that belong in the clouds because they are so damn confusing). Tesla (TSLA), down $60 from its high, is still priced as if gasoline won't have a commercial use in five years. Zillow (Z), although its commercials are touching, is priced at 20x sales, and last time I checked, it sells advertising and subscriptions. Then there is Yelp (YELP), a collection of restaurant (and other) reviews, clocking in at 20x revenue.

    Bottom line: Avoid the whole social media space and cover your ears when talking heads, people in flip flops with MBAs and those walking into traffic on their smartphones tell you otherwise.

    As to the broader market, short in May and go away.

    -- Doug Kass, "Short in May and Go Away" (April 30, 2014)

  29. TASR/Phil … that is the Jan 2016 $13 put which is near $3 … forgot to specify that in above post.

  30. Part 2

    The beta earthquake that recently produced a return to Earth of the anointed, high-growth market leaders' stock prices has only begun to bring back reality into the markets.

    The earthquake also revealed (and is a constant reminder of) the idiocy and irrational behavior of managements when the markets allow them to be relieved of common sense.

    Case in point: Facebook's acquisition of WhatsApp.  To remind everyone, Facebook acquired WhatsApp for $19 billion in February.

    In my view, the acquisition will eventually be known as the second worst in history — only rivaled by the 2000 merger between AOL (AOL) and Time Warner (TWX).

    Then and Now

    Though mostly a stock deal ($4 billion in cash, $15 billion in equity), perhaps Facebook should have waited a bit longer to make the $19 billion deal.

    Below is a table of four leading social media stock prices on the day that WhatsApp was acquired by Facebook (Feb. 19, 2014) vs. yesterday's closing prices:

    And below, courtesy of BTIG's Dan Greenhaus, is the broader carnage of some of the market leaders thus far in 2014:

    The S&P 500 closed on Feb. 19 at 1840 — it was lower than it was at Tuesday's 1865 close!

    The broad market is still flat on the year amidst this carnage, but if this is history rhyming (i.e., out of momentum stocks and into perceived value and safe havens), I have suggested that the rotation and leadership change could portend a more significant market correction than we have already experienced.

    The AOL-Time Warner Template

    "We are emerging from not just old media but from an analog world into a digital world, and philosophically people are beginning to understand that the digital world is a transformational universe."

    -- Gerald Levin, Chairman of AOL-Time Warner (2000)

    Facebook's purchase of WhatsApp for $19 billion dollars can only be described as insanity. In all likelihood this purchase will go down as one of the most inflated acquisitions in history.

    Today, as I listen to "Squawk Box's" Becky Quick interview the CEO of (the new) AOL — its first-quarter results were just released — I am reminded of the pendulum of corporate history and that we seem to have returned to the days of yesteryear when AOL and Time Warner celebrated their merger 14 years ago.

    Although AOL had less than half of Time Warner's cash flow, the shareholders of AOL received 55% of the combined entity.

    The wisdom of the AOL-Time Warner merger was simple. Time Warner had the content and broadband infrastructure, while AOL, then the world's largest Internet service provider, acted as a gateway to the Web for some 20 million subscribers.

    Only three years after the largest merger in corporate history (in 2003), AOL Time Warner took a $98.7 billion goodwill impairment charge in writing down the value of the America Online unit, and Ted Turner resigned as vice chairman of the combined companies.

    Both the AOL-Time Warner and Facebook-WhatsApp mergers predominantly used stock; both mergers were heralded as being transformational.

    One merger bombed; the other one will as well.

    In the fullness of time, probably sooner than later, the WhatsApp deal will likely yield a $19 billion write-off, mimicking the ill-fated AOL-Time Warner deal.

    I use WhatsApp's product/service. It is an instant message chat room, literally nothing more and nothing less. I am not certain, but I believe WhatsApp has no revenue.

  31. charts didn't come through, can send you the email if you want Phil, to post charts.  Very interesting.

  32. Phil

    Any trades on

    Whole Foods Market, Inc. (WFM), drop on earning miss


  33. Phil,

    /CL still playable at 100.68, or wait for the 100.75 line on the way back down? Thanks

  34. IMGN/Pharm – back on my 'falling knife watch list.'  Getting back to put-selling zone?

  35. Phil glade you put Wombat straight about his rabbit start on CZR after it cools down we land up with 20 again just in time for the next pair of shorts.

  36. Phil – Geat calls on CZR !

  37. Phil-

    /cl -does 100.99 now look like a good shorting line, or is it still too soon to tell? If it is, are the bounce lines at .25 or .50?  I made the rookie mistake this morning of not cashing out a profit at 10:25AM as it hit 99.95 when you called it out, hoping to extend gains at 10:30 looking for your earlier target of 98.50. Within 3 minutes those gains had evaporated and I was lucky to get out even. So, that is a mistake that I hope never to repeat. I only share my shame for other new followers to learn from.  

  38. /cl-looks like I have my answer! 100.99 would have been a good place to short again. 

  39. craigsa620 – I got busted up today on /CL as well.  Comes with the territory.  I missed the 100.99 short and now it's in no mans land again at 100.65.

  40. TASR/Griffin – Roll to where?  Think of it like you own the stock for net $12.40.  The stock is at $12.80.  What should you do?  Nothing.  In fact, if the stock were assigned to you, you could sell the 2016 $13 calls for $3.50 and the $13 puts for $2.80 and your net would be $6.50/9.75 on a buy/write.  If you don't REALLY want to own 2x of TASR at net $9.75, then you should consider stopping out now with your $1.40 loss (10% of the stock price).  That's how you play those short puts – like you own the stock, which is what you promised to do when you sold them.  

    Pasting/Shadow – Didn't your Mom tell you not to play with glue?  I'm not sure what you mean by that, could you clarify? 

    TASR/DM – See above.  How else are you going to control 200M marching Chinese workers?  

    Kass/Rustle – I was going to say that was nice and succinct but then I read the 2nd part.  Good commentary though.  Sure, I'd love to see the charts.  

    WFM/QC – Falling knife at the moment.  Slower growth and margin compression not a good combo and, as I have said for many years (since we used to short them when they were $40 (post split) back in 2006 – it's just a friggin' grocery store!  Grocery stores shouldn't have p/e's in the 30s, no matter how fast they are growing because, in the end, they are still grocery stores.  $30 would be a nice price for them now but $38.50 isn't too exciting until they prove they can take back $40 and hold it.  

    WFM/Palotay – P/E of 30 is a bit rich for a grocery store – even one that is growing (assuming expectations are right).  I think they may hit $40 but then I like them long-term. 

    Oil/Jasu – Yes, we just tested $101 and of course still a short with tight stops over the .50 lines ($101, 100.50…).  It's a very rough ride to play with conviction but I don't have time to do hit and run during the day.  Right now I'm 2x short at $100.68 avg. 

    CZR/Yodi – That's what we like about them, the constant up and down action makes for very high premiums in front-month puts and calls to sell.  

    Thanks Albo.  

    Oil/Craigs – Yes, when our bias is down, we are usually willing to get in at any .45 line ($100.45, $100.90, $101.45, $101.90) with .10 or .15 stops over the .50 lines.  Greed KILLS you in this game.  Getting out even after showing a loss is a victory – you have to learn to accept those.  Thanks for sharing, it is very helpful to others.  

  41. No man's land/Burr – That's my average entry!  Back to 1x, of course and now, if they go back to $100.95, I can DD again and my average goes up to $100.80ish.  We discussed the conviction short yesterday, the risk is losing $2,500 if oil goes up $1.50 ($101.50) without a pullback but, as it stands now, my 1x is up to $100.68, a full $1 improvement over my initial conviction entry at 2:48 yesterday and I'm still even!  That means, if I do get it right, I now stand to make $1,000 extra per contract on a dip.  May have to wait until after nat gas inventories tomorrow, though…

    May 6th, 2014 at 3:53 pm | (Unlocked) | Permalink

    Conviction/Craigs – I took an entry on oil short at $99.62 as a demo and I said I'd leave it with conviction, which means I'd DD at $100 and average $99.81 on 2x and I'd stop those out at $100.06 (down $500) and then get back in at $100.20 (for 2 at average $99.95 average) and DD at $100.90 for 4x at $100.43 with a stop at $101.06 and a possible loss of $2,520.  Of course, if one of our DD gets us even on a pullback, we get right back to one contract to reduce the exposure and reset the cycle.

    Plan the trade – trade the plan!  

    That's another good thing about learning how to scale in and out of the Futures, with practice, you can do the same with long-term option positions as the stocks go up and down in a channel too.  

    I love Bernie Sanders, he sounds like the Aardvark from the Pink Panther cartoons.  

  42. hey ant – i know you're in there ant. i can hear you breathing >>>

  43. Phil,

    I noted some odd behavior in the futures trades on oil this morning.  I have been in short and twice I have clicked the buy to close at a level which held stationary but my buy order did not fill. Each time it moved against me.  I reverted to the Flatten Now button to kill the trade and each time there was a delay of many seconds and I was out with a lower profit than anticipated.  This behavior has probably cost me $100 in potential profits.  Is this delayed response usual or do I have a problem with my feed? TOS says its realtime.  Makes me think I am being played…

  44. sibe //  same prob
    don't hit flatten though – it fills at mark, not limit. call the TOS desk and complain. I've had many a trade either broken or refunded.

    /TF back at 1100

  45. You are absolutely being played, Sibe!  95% of the orders you see are fake.   I demonstrated this to people in Las Vegas a couple of years ago.  It's not your imagination, they are out to get you!  That's why when I do my futures trading, as you can see in the live broadcast, I don't use heart stops and I often let the spike run past my limits.  Sometimes it cost you money, sometimes it makes you money – with practice you get better at telling which is which (hopefully).   

  46. Phil pasteing

    If you chech my post on oil, notice at the end "Now the facts on oil, etc." That was typed first, the begining was pasted but after my headline. It put the paste before and wouldn't allow me to go back and check where my headline went. Other times for the last weeek or so I could see what happened and move things around, today all I could do is submit.

  47. Oil looking at 101, DOW up over 100 points, S&P green, and IWM heading for green. WTF is going on, you would think Yellen said something new or increased bond purchases. Fact is the economy is DEAD!

  48. Shadow/ A friend of mine says that WTF stands for "Wow, That's Fantastic"!

  49. Phil- I have a couple of questions for you. First is there is a huge disconnect between Dow and S&P vs. Nasdaq and Russell today. Which way would you play it? Who is leader and who is laggard? 

    CMG- Still holding the June 515 calls and wondering when we roll if it doesn't improve markedly soon? Is 30 days before expiration a critical time frame? Don't we lose a lot to time erosion if held beyond that 30 day point or is this not the case? I still like this long term and just don't want to watch it become worthless. You probably answered this already in the past, but I can never seem to find what I want when looking through past comments. Thanks.

  50. AIG – nice recovery today. makes you wonder 'WTF' was up with yesterday…

  51. Scott – Did you read the Barrons piece on AIG I linked to?  They think it could double in 5 years.  Nice play for selling strangles if it rises slowly.

  52. AIG/Burr – yes I did and thank you. interesting and I already had a calendar which is now back to it's open after yesterday's takedown. if closes below its 50ma though, i'm out. don't need quite this kind of volatile BS.

  53. Phil:

    If Russian troops, in fact, pull back, is it all in on USO puts? If yes, which month would you suggest?

  54. Hi Phil – I have a question about my NLY position. I am into the stock for a net of $10.75 with an outstanding Jan 2015 $10 Put that I've sold, now up 50%, and 2 Jan 2016 $12 Calls that I have sold as well. My thought was to buy back the 2015 Put and then sell the 2016 $12 Put for $2.55 before earnings come out later this afternoon. Do you think this a good way to play the stock/arnings, or would you wait and see what happens unil after earnings are reported? Or is there a better way to take some of my gains and position myself for the future? As always your insight is much appreciated – thanks in advance.

  55. dclark USO

    A rediculos thought today was the lower imports would be blamed on Russia snactions even though none are on oil of course. FWIW I bought USO puts yesterday and today, May $37. My plan is to get out late today or more likely tomorrow, the 1PM report may shake a few crooks. May should not be held until next week.

  56. Thanks for the feedback Wombat, Phil.  For the record I did not have any stops set today.  I previously had tried various strategies setting stops , mainly to prevent a run-away massacre, but found that trailing or resetting lower almost always resulted in being stopped out at a less favorable and most often wrong time, as Phil repeatedly has said would happen. 

  57. TSLA – I would be delighted to see them drop to 120ish in the days following earnings tonight. really I would.

  58. scottmi…amen

  59. Shadow

    Thanks for your thoughts.

  60. Pasting/Shadow – I'm having Matt and Greg check.

    Gasoline flew up to $2.92 and failing there – no reason at all for that move, pure nonsense.  

    Yellen/Shadow – Blamed the weather for any troubles, says things are fantastic otherwise – WTF is right! 

    Disconnect/Craigs – When things don't make sense the smart move is NOT to play.  Always keep in mind that the Dow is the easiest index to fake – because on stock can move it around.  So, if the Dow is your outlier – ignore it.  The S&P is usually the most reliable and the RUT used to be but clearly people have found a way to manipulate it (probably through ETFs).  The AAPLdaq is what it is and that's why I also watch the NYSE to confirm – since that one is really hard to fake. 

    Also, you have to get away from the mentality that a 100-point gain in the Dow is meaningful – it's just 0.5% – it goes up and down that much in an hour, so why would you read anything into it intra-day.  

    CMG/Craigs – Kind of the same thing.  They just did improve "markedly" from $480 to $520 and now they are $500 and, if they hold that, it will be building a bullish base.  There's no magic spot at which we lose more or less, though the last 20% of premium usually stays until the last couple of weeks.  Originally, in the STP, CMG was the May $525/550 bull call spread at $11.50 and we bought back the $550s for $3.40, so net $14.90 and we rolled to the June $515s for $11.60 (net $26.50) and sold the Jan $280 puts for $10 for a new net of $16.50 on the July $515s.  Currently, the June $515s are $11 and they were $20 on Friday (4 days ago) and there's 44 days left to trade.  Nothing changed on CMG, they went down with the market and with WFM.   In fact, they just got an upgrade today:

    If we sell the $500 calls for $17, we can roll down to the $480s at $28 for about even or we can roll out to a longer month, like the Jan $475/525 bull call spread at $25 and then we'd be net $13.50 on the $50 spread that's $20 in the money with our short June $500 caller.  Do you want to sell a short June $500 caller?  I don't, so I'm sticking with what we have for now.  

    Well, so much for the rally.  Yellen didn't say enough to really change the direction of the river (from yesterday's webinar!).  

    USO/DC – I would never go "all in" on anything related to commodities futures.  That's what broke the Hunt brothers.  Peace talks would drag on because Putin wants to look like he's brokering it and 4th of July is a big consumption weekend so that pushes you back to Aug but still risky so I guess I'd go with the Oct $35 puts at $1.10 with USO at $36.61 as a bet oil falls back below $97.  You could go for the Oct $38.50/36.50 bear put spread at $1.15 – and that's just a bet oil is under $100 that pays 73% if you're right.  Still, just because Putin makes nice doesn't mean Nigeria will or that Iran won't do anything silly or the economy begins to actually recover and boosts demand so – no "all in" – no way. 

    NLY/Japar – I'm not into messing with things so much.  Sounds like you sold one put vs 2 calls and, I assume 200 shares.  If so, then sure, sell one more to cover or, if you did sell 2 that are up 50%, why not just roll one to the higher puts?  I prefer to have new VALUE information before I alter my trades – not just doing it because the PRICE changed.  Perhaps you are sensing a theme to today's comments?  

    You essentially have a buy/write on NLY at about $9/10.75 and you're getting your $1.20 dividends (13%) and, if they are over $12, you get a bonus 33% when you are called away.  That's what happens if you do nothing – why is that not enough to satisfy you that you would rather move to a riskier position?  Do you average more than 30% a year in your whole portfolio?  Will leaving this trade along bring down your average rate of returns?  

    If you were playing baseball and every time you hit a single you tried to turn it into a double and every time you hit a double you tried to get to third and every time you hit a triple you didn't stop and ran home – would you more likely be a hero or the idiot who wasted a perfectly good hit?  

    Baseball Braves animated GIF

    Oil back below $100.50 – lock in profits now, just in case.  

    Stops/Sibe – Once you get used to it, you can use it in your favor and catch a spike once in a while too.  

    TSLA/Scott – Well, AMZN is below $300 and NFLX down below $320 - anything can happen, I guess.  

    AAPL having trouble holding $590.  Of course we knew they'd get resistance at $600 so no biggie.  TWTR finally found a floor (for now) at $30.  

    SCTY dropping like a rock today – give hope to TSLA bears. 

  61. Oh sorry, done with the longs in the Futures from 10:25 now – no reason to push our luck now that we're out of gas.  /YM 16,450 is +150 ($750), /TF 1,100 is + 10 ($1,000), /NQ 3,520 is + 5 for a lame $100, so still the laggard if you wanted to keep one bullish but I'd rather be back to cash and see what happens.    

  62. FSLR – i'm short.. but this is a joke. the only sense to the market is that everything is too damn overpriced, but woe to anyone who tries to play it

  63. Looking at the 1PM report it is clear that total stocks went up ,gasoline supplied went down, and net imports up since last week but down 13% from last year, to me that is a lot less oil demanded.

  64. Phil I am looking at you comment re NLY . The member has a question on the Jan15 put sold. And due to the Stock price of 11.80 is I think his concerned about assignment of the put. There for the question shall he roll the same to Jan16 12 put. I as well hold the Jan15 put and look at the situation as follows. The jan15 putter has still a premium of more than .90 cents. So now one will assign and pa you an extra .90. Rolling to Jan16 one will forefoot this premium so for my two cents why pay premium even that the stock may fall for the amount of the div. after tonight.

  65. FSLR/Scott – LOL, I wasn't watching.  WTF?  Such silliness.   Oh well, makes me look clever – I featured that play in the morning post.   

    Oil Inventories/Shadow – Refinery capacity rose 1% but products supplied only rose a tiny bit.  1% of a week's consumption of 18Mbd is about 1.2Mb that got sucked into refineries but didn't come out.  In fact, very strangely, Refinery capacity is up 5% since last year but they're actually supplying LESS total products – what a friggin' scam!  Where is it going?  An extra 1Mbd is going INTO the refineries but it's not coming out???  I'll bet the refiners are piling up storage internally to keep cushing scarcely supplied and goose prices.  Yet no arrests will be made…

    NLY/Yodi – No, it was a 2015 $10 put, not a $15 put.  No possible way that gets assigned and, even if it does, so what?  

  66. Phil – SCO – great call on oil last week.  I closed the SCO spread out with oil around 99.5 per your recommendation.  

  67. Sorry thought it was the 15put but 10p absolute no assignment.

  68. Oops, forgot image for oil inventories:

    SCO/Terra – I wish you would have reminded me then, should have been the official call.  

    I get mixed up by those all the time too, Yodi. 

  69. Earnings tonight:

    Consensus Estimate – 0.95
    Whisper Number – 1.01
    Average Move – 11.1%
    Priced into Options – 10.08%

    Consensus Estimate – 0.12
    Whisper Number – 0.15
    Average Move – 9.9%
    Priced into Options – 10.46%

    Consensus Estimate – 1.00
    Whisper Number – 1.00
    Average Move – 3.5%
    Priced into Options – 4.2%

    Earnings Whispers has an upward bias on GMCR, a neutral bias on TSLA and a downward bias on RIG. So one of each. They have not been great so far with their predictions but it's new so maybe some tweaks are needed…. 

  70. Phil

    Like grocery stores won't buy what won't sell, retailers of gas won't buy at the present prices.

    An aside is I pay with the computer mapping in my car mostly for performance. Lately I shut off the air flow sensor and built a volummetric effieciency speed density table. Under cruise conditions went from 23 to 34 mpg a steady 55 mph I can get 50mpg, goes down drasticly every 5 mph after that or any wind. May not pass emitions but it can be tweaked for many more miles per tank, takes only a few minutes to reflash to other maps.

  71. Nice call on XRT! I sold just now for a 65% gain. 

  72. Earnings:

    TSLA may go up on talk about Norway (where there are massive incentives for EVs) and CHINA!!! (which is CHINA!!!) but I don't see them popping $220 (up 10%) or failing $180 (down 10%) too easily as those are the 50 and 200 dmas.  I'm generally bearish on TSLA and you can sell 3 Sept $200 calls for $26.50 ($7,950) and buy 2 2016 $220/300 bull call spreads for $20 ($4,000) and sell 2 2016 $140 puts for $22 ($4,400) for a net credit of $8,350, which means you have $80 x 2 = $160 upside protection on the long spreads plus $83.50 in cash = $243.50 divided by 3 short calls = $81 of upside protection without even taking rolling into account.  Let's do a set of these in the STP and see how it plays out.  THIS IS A HIGH MARGIN, HIGH-RISK TRADE – NOT FOR EVERYONE! 

    GMCR we already have a short bet on in the STP, the Jan $110/90 bear put spread is only $13 out of a possible $20, still a fun bet.  

    RIG we are already long on in the Income Portfolio with the 2016 $35/45 bull call spread, now $4.65 with the short $35 puts, now $3.70 for net $1.  It was a $1 credit when we bought it, so up 200% out of a possible 1,100% so far.  

  73. I still don't see TSLA making it with only electrics. Part of my point with oil prices and tuning my car, not at all leagal but it shows what can be done with gas engines. I actually got to 60 mpg but the air/fuel was so lean I could burn a hole in the pistons. Can't afford thateven with it programed to much richer with a little more throttle. The new cafe requirements could go way up especially if the idiots would listen to reason, burn half the fuel, a few % more co and nox would still be less. And back off on diesel engines!

  74. Gas/Shadow – To some extent, people can't live without it.   They HAVE to get to work, etc, so a bit of demand inelasticity, which is why it's so profitable to manipulate the markets.  

    XRT/Palotay – About time!  

    In the $25,000 Portfolio, we have a nice win on the XRT June $82 puts – up 75% at $2.55 and, more importantly, up more than the cost of the leftover May $79 puts.  So let's take the June $82 puts off the table and leave the $79 puts to benefit if XRT does indeed fall further.  That way we lock in a $600 winner.  

    In the STP, we have 10 XRT June $82 puts, now $2.55, let's sell half and put a $2 stop on the rest to lock in $750 in profits.  

    Thanks Palotay for paying attention!  

  75. Electric/Shadow – I think electric cars are the future.  Killing dinosaurs and waiting 200m years for them to liquefy and refining the ooze into fuel is just not an efficient system for powering transportation.  I say, turn all roads into solar panels and put little wires under the cars (like bumper cars have) to feed power directly to them while they're driving.  A few improvements in battery technology and we'll never have to worry about fuel again..  cheeky

    Car Epic animated GIF

  76. Electric roads and contact aren't needed induction just like some recargables today, no contact needed. Still need to make cleaner power when the sun isn't shining.

  77. Electric / Phil – My colleague talked to a guy who has plans to build solar panels over the roads in some countries where sun exposure is constant. They would be basically, like a elevated train over the road except covered with solar panels. I am guessing in this country we could generate more than enough electricity with such a plan but it has not shot since it goes against the Koch brothers' financial interest. But I bet you they'll build one in China.

  78. stjean

    The panel efficiency will have to go way up or very little traffic, a big problem with electric cars and trucks is the take a lot of energy. It would take a rooftop of panels and the car home all day to charge a TSLA.

  79. Based on what I've see re. rooftop solar and new spray-on solar, I'm taking about actually MAKING the road out of solar panels.  I think we can get there.  Think of the millions of miles of roads we have in this country and all the sunshine that falls on them.  Probably all the electricity the country could possibly need.  

    In fact, the sun provides the Earth with enough solar energy in one hour (4.3 x 1020 joules) to power all of our energy needs for one year (4.1 x 1020 joules) [source: Biello]. But the dilemma over the years has been how to harness that solar energy and put it to use.

    Solar cells are made from semi-conducting nanoparticles called quantum dots. These quantum dots are mixed with a conducting polymer to make a plastic. Spray-on solar panels composed of this material can be manufactured to be lighter, stronger, cleaner and generally less expensive than most other solar cells in production today. They are the first solar cells able to collect not only visible light but infrared waves, too.

    Spray-on solar panels will be sold as a hydrogen film that can be applied as a coating to materials — potentially everything from a small electronic device to a new way to power an electric car's battery. Similar to the solar technology of today, spray-on panels could be incorporated into buildings themselves, not just rooftops. One day you may buy clothing with solar film woven into the fabric.

  80. If you thought you missed shorting /YM at 16,450, /ES at 1,870 and oil at $100.75 – now's your chance!  

  81. Good chart from Rustle (thanks):

    And below, courtesy of BTIG's Dan Greenhaus, is the broader carnage of some of the market leaders thus far in 2014:

  82. Phil I am still waiting for some big number per square foot. The world is a very large area half lit all the time, if we could just spray that film on the oceans we would be set with low efficiency.

  83. High-risk TSLA -  I take this to mean DO NOT PLAY THIS unless you have 50,000-plus in free margin AND are wombat-crazy. ;-)

  84. Carnage / Phil – Did you mention buying cheap this morning Phil?

  85. I guess it's the results that count:

    Chinn compared scores on the ALEC-Laffer "Economic Outlook" ranking to actual growth in 2013-14 and looked for a trend. There wasn't one. "If there is any evidence," he concludes after a more detailed look at the data, "it suggests that a higher ALEC-Laffer Economic Outlook score is associated with a worse economic performance."

    However, although a high ALEC-Laffer ranking may not stimulate any actual growth, Hiltzik points out that it does correspond to reduced taxes on the wealthy and slashed spending on state services that benefit the poor and working class. In other words, it may not affect growth, but it sure is a good deal for the rich. And that's what counts, isn't it?

    Here's what he found, in a nutshell: "Kansas and Wisconsin, ranked 15th and 17th in terms of the ALEC-Laffer Economic Outlook Rankings, are doing equally badly relative to US employment growth. In contrast, Minnesota (ranked 46th) is outperforming the United States and those two states…What about California? It is ranked 47th by ALEC-Laffer, and yet is doing the best in terms of employment amongst the four states." 

  86. My quote for the day:

    Ben Carlson, “Self-awareness and humility are two huge attributes that I look for when parsing my financial advice.”  (A Wealth of Common Sense)

  87. Good fundamental analysis article:

    To the extent that a P/E ratio measures price relative to earnings, its reciprocal – if you flip the fraction – is simply a measure of earnings relative to price. In other words, given the stock has a certain price, what percentage of its value is created every year in the form of earnings. In essence, the E/P ratio is simply a measure of “earnings yield”.

    From this perspective, knowing a stock’s earnings yield and its E/P ratio should be highly appealing. As with any investment, stocks with a high earnings yield should probably generate a decent return, and stocks with a low yield are probably less likely to do so. While there is an astonishing amount of debate about whether a stock with a P/E ratio of 25 is riskier than a stock with a P/E ratio of 12.5, is there really any debate that a stock yielding 4% (whether those earnings are ultimately being distributed as dividends or reinvested for growth) is probably not as good of a deal as a stock yielding 8% (to be distributed or reinvested as well)? Because mathematically, a P/E ratio of 12.5 vs 25 and an earnings yield of 8% vs 4% (respectively) are the exact same thing!

    Of course, there are times that an investor might still want to buy a stock with a current earnings yield of 4% instead of one with a yield of 8% – for instance, where the investor has a strong belief that earnings will rise significantly with growth in the near future, such that what appears to be a “low” earnings yield today will end out being more favorable in the future. And that’s a valid viewpoint to have, with the caveat that it becomes intuitively obvious that you really should only ever buy a stock with a yield of 4% instead of one with 8% because you expect that company’s earnings and fortunes to grow significantly (or because you expect the company yielding 8% to be poised for an earnings tumble). Otherwise, you’re just buying a stock generating less cash and having a lower yield. It shouldn’t be any great surprise that it will have a lower expected return!

    E/P Ratios Vs Subsequent Annualized Returns

    Buying an E/P over 7% seems to garantee no loser 5 years out!

  88. High-Risk/Scott – Yep, those are about the right criteria.  

    Carnage/StJ – There's always something to buy.   That's a good study, glad people are starting to call them on their BS.  

    Kitces/StJ – I don't know, the guy never heard of PEG?  

  89. TSLA / nice spread Phil – I like ===

  90. PEG / Phil – That's different and PEG is a much better indicator than P/E anyway. But I guess his point is that inexpensive stocks generally don't hurt you much in the long run…

  91. Wheee, big rally into the close now.  Another low volume day but not as low as the last two.  

    We'll check our bounce levels tomorrow.  

    Just want to keep things interesting for you, Wombat.  

  92. You have to love Martin Wolf – I guess we are all Japan forever:

    Low interest rates are certainly unpopular, particularly with cautious rentiers. But cautious rentiers no longer serve a useful economic purpose. What is needed instead are genuinely risk-taking investors. In their absence, governments need to use their balance sheets to build productive assets. There is little sign that they will. If so, central banks will be driven towards cheap money. Get used to it: this will endure.

  93. Wolf/StJ – So we should all just risk it 'till it breaks?  Then what? 

    Wow, in all this excitement, the RUT can't get back over 1,105 on /TF!  That can't be a good sign.  Big push in the last mins should make it pretty for the overseas traders.  

  94. Phil. Dow up 117 and rut turning green at finish. I read the divergence as weakness.  What's your take?

  95. My take is I'm glad I'm on the sidelines, Den!  UNH and V were good for 50 of the Dow points so nothing special overall.  Yellen didn't say anything more bullish than usual and earnings are still pretty lame.  Still, they engineered a bounce – now we'll just have to see how far they can take it.  

  96. GMCR beats but guides weak, gotta see earnings call at 5pm.

  97. tsla

  98. FU TSLA  !!!! ( thats for you jabo )

  99. TNA  - Made 4 moves of over 1.50 today as weekly 65'puts  ping ponged back and forth from 1.70 to .73 to 1.30 to .85 ending 1.53. The last move up of .50 was made in the last 30 minutes before close.

    Not for the faint of heart.

  100. thanks Wombat!!!

  101. tsla guidance ? shares are dropping

  102. Wolf / Phil – I don't think he meant to invest in NFLX or TSLA… But more risk than 30 year bonds paying 3%. And he does mention that in absence of individuals taking the risks, government should pick up the slack… Makes sense to me.

  103. Just arriving of a visit to London  our sons invited us for 60´s….I think it cost me about $ 3,500 or more being out of Phil recommendations, but don´t tell them!  (lol), will try to recover in the next days.

  104. Phil / RB   Question,  it got a nice dip  and today recovered, what you think still is feasible a long  around $3.00  ?…behaves with oil report?


  105. RIG

    Transocean beats by $0.41, beats on revs .

  106. albo

    Where are you getting your early reads on earnings? THX

  107. Tesla's deliveries, spending to ramp in Q2 • 4:22 PM

    Tesla (TSLA) produced 7,535 Model S units in Q1, up from Q4's 6,587 and above guidance of 7,400. The company delivered 6,457 units, slightly above guidance of 6,400 but below Q4's 6,892.

    Tesla expects to produce 8.5K-9K Model S units in Q1, and to deliver 7,500. Leases are only expected to account for ~200 deliveries due to lead times.

    Gross margin was 25.4%, +20 bps Q/Q in spite of a $2M reserve for underbody shield retrofits. GM is expected to improve slightly Q/Q in Q2, and to reach 28% in Q4.

    SG&A spend rose 150% Y/Y to $117.6M, R&D spend rose 17% Q/Q and 48% Y/Y to $81.5M. SG&A is expected to grow 15% Q/Q, and R&D 30%.

    Operating cash flow was $61M, and capex totaled $141M. The full-year capex forecast is still at $650M-$850M.

    The company expects to be "marginally profitable" in Q2; the consensus is at $0.27. Full-year free cash flow is expected to be slightly negative.

    Shares -4.9% AH

  108. MCP getting flogged AH on poor earnings.

  109. TNA – my comments concerning movement should have referred to calls, not puts.

    Bought 10k's (1000 shares) at $1.70 at. 9:49. Bought 20k's at .87 at 10:35 and with the RUT down at 1097 at 11.27 bought 20 more contracts at .73.  My average price was .98 cents.  The last buy was right after Phil stated we were due for a bounce. ( And thanks for that Phil, as it confirmed my own suspicions and added to. My confidence to stick with the position).

    Eigthteen minutes later sold 10k's at $1.30; at 12:24 10 more at $1.28; sold 20 at $1.17 at 2:47 and the 


    final 10k's at $1.30 at 3:49pm as the market rose into the close.

  110. TSLA right where we want them as our long positions don't lose money – very nice!  

    Dollar creeping up, makes /NKD happy, now 14,200 which is playable long with tight stops.  

    Gasoline $2.86 to $2.96 is kind of the range, so $2.92 is a tough call.  This morning I would have said yes at $2.88 for the usual weekend bump but I don't think oil or gasoline should have moved up today.  

  111. So that's a day with a day trader. No break from 8 to 4, no lunch no bathroom breaks.  Along the way accumulated a position in DIA 165 put's at average of $1.40.  

  112. Dclark41 – From Briefing Trader.

  113. denlundy – Where did you spend this day?  New firm?

  114. Phil: this guy need some help, maybe you should talk to him.

  115. Burrben – In the comfort of my office – gone independent – couldn't take the bull shit any longerany longer

  116. Burrben – In the comfort of my office – gone independent – couldn't take the bull shit any longerany longer

  117. Albo, insightful but:

    For today’s Outside the Box, Rich has written a piece that summarizes his chief concerns about the domestic economy in 2014. Those concerns focus around the fact that growth in both real disposable personal incomes (adjusted for inflation and taxes) and consumer spending have barely advanced in the wake of the Great Recession.

    In compensation – and it’s an unhealthy form of compensation – government transfer payments as a percentage of disposable income have grown from 9% in 1970 to nearly 20% today.

    These 2 problems go hand in hand – the lower 50% don't see their income rise so they have to rely more and more on government programs. Can't blame them for that and we can't blame the government for helping them either. If more of the wealth would actually trickle down some more instead of gushing up, we would not have that problem.

  118. Tesco launches credit card for people with poor credit ratings

  119. Walmart and Walgreen’s Join The List of Retailers Testing iBeacons in Stores

  120. I'm still not clear on why TSLA dropped 8% AH, when they beat top and bottom with their BS NonGAAP acrobatics // 
    thanks jabo – saw the highlights. Is this a push it down so all my bankster friends can get in 
    guidance is becoming a little clearer and sanity is returning, regardless of the numbers this Q ?
    anyone ?

  121. Global 2000: The Biggest Oil & Gas Companies Of 2014

  122. Mondelez And DE Master Are Teaming Up To Create A $7 Coffee Business

  123. Few important notes from the Q1 Release:


    1.Very weak beat on Model S deliveries for a bar that was set very low (6400)


    2. Guidance of marginally profitability in Q2 when expectations are for $0.27 EPS in Q2 (more than double this quarter's non-gaap net income)


    3. Guidance of negative free cash flow for the year. How will Tesla finance debt payments and the giga factory with negative FCF?


    Tesla needs hockey-stick growth in the second half of 2014 to justify current price

  124. TSLA / Wombat – Maybe a nice tweet from Musk could do it!

  125. Best volume in a week. But Russell could not break above its 200 DMA!

    It was a year ago that we moved our lines!

  126. StJ / TSLA
    Would have to be Giga-Tweet 

  127. From Bloomberg, May 8, 2014, 5:47:37 AM

    May 8 (Bloomberg) — Christopher Wood, chief equity strategist at CLSA Asia-Pacific Markets in
    Hong Kong, talks about the outlook for emerging and developed markets, and investment strategy.
    He speaks with Rishaad Salamat on Bloomberg Television’s “On the Move.” (Source: Bloomberg)

    European stocks gained for the first
    time in five days as earnings from BT Group Plc and Enel SpA
    beat estimates and Barclays Plc pledged to cut jobs. The euro
    advanced as policy makers met to decide on rates, while
    Australia’s dollar gained and nickel climbed to a two-year high.

    To read the entire article, go to
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  128. From Bloomberg, May 7, 2014, 8:30:01 PM

    Employees work on an elevated work platform near the propeller of a ship under construction at the Hyundai Samho Heavy Industries Co. shipyard, an affiliate of Hyundai Heavy Industries Co., in Yeongam, South Korea. Photographer: SeongJoon Cho/Bloomberg

    The global economy is going back to the future.

    To read the entire article, go to
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  129. From Bloomberg, May 8, 2014, 12:00:23 AM

    It’s time for the shale revolution to push west, Bowker said. Pressed to reveal a more specific location for his “super-secret” potential bonanza, Bowker joked, “Is this guy a landman?” Photographer: Matt Nager/Bloomberg News

    Where others see purple mountain majesties, Kent Bowker sees buried treasure.

    To read the entire article, go to
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  130. From Bloomberg, May 8, 2014, 3:57:23 AM

    Glencore Xstrata Plc Interim Chairman Tony Hayward. Photographer: SeongJoon Cho/Bloomberg

    Glencore Xstrata Plc (GLEN) appointed former
    BP Plc Chief Executive Officer Tony Hayward chairman as the
    mining company run by billionaire Ivan Glasenberg adds to its
    oil assets.

    To read the entire article, go to
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  131. From Bloomberg, May 8, 2014, 12:01:00 AM

    March 18 (Bloomberg) — Haim Bodek, founder of and a managing principal at Decimus Capital Markets LLC, talks about high-frequency trading and industry regulation.
    He speaks with Alix Steel, Matt Miller and Keri Geiger on Bloomberg Television’s “Market Makers.” (Source: Bloomberg)

    The second-floor loft on William Street in lower Manhattan, normally abuzz with young equity-options traders connected to Sang Lucci Capital Partners, was quiet for a week last month.

    To read the entire article, go to
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  132. From Bloomberg, May 8, 2014, 4:24:48 AM

    May 8 (Bloomberg) — Kevin Daly, chief U.K. economist at Goldman Sachs Group, discusses the outlook for Bank of England monetary policy ahead of today’s interest-rate decision, the pound and mortgage availability.
    He speaks with Francine Lacqua on Bloomberg Television’s “On the Move.” (Source: Bloomberg)

    Bank of England Governor Mark Carney will steer officials to keep borrowing costs at a record low today as he relies on untested tools to control a surging housing market.

    To read the entire article, go to
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  133. From Bloomberg, May 8, 2014, 4:24:56 AM

    Social media companies have fallen eight of the past 11 days amid concern that user growth is slowing and valuations are excessive after last year’s 64 percent rally. Photographer: Chris Ratcliffe/Bloomberg

    The rout in social media stocks is
    burning investors who piled into one of last year’s most popular
    exchange-traded funds.

    To read the entire article, go to
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  134. Sent from Bloomberg for iPad

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    Barclays Cuts Jobs, Reduces Non-Core Risk-Weighted Assets in Revamp
    OTAS Technologies Head of Research Simon Maughan and Bloomberg’s Manus Cranny discuss the overhaul at Barclays and what the strategy means for its investment banking unit with Mark Barton and Anna Edwards on Bloomberg Television’s “Countdown.”

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  135. Sent from Bloomberg for iPad

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    Watch What Goes Into Building Your Laptop
    May 8 (Bloomberg) –- Ever wonder what the inside of your laptop looks like? Bloomberg visited Chinese computer maker Lenovo’s U.S. manufacturing plant in Whitsett, North Carolina to find out how many components, steps and people it takes to build Thinkpad laptops. (Source: Bloomberg)

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  136. Sent from Bloomberg for iPad

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    Softbank’s Son Gets $58B Payday Thanks to Alibaba
    May 8 (Bloomberg) — With Alibaba filing to go public, the biggest winner won’t be founder Jack Ma or his fellow executives or even venture capital backers like Silver Lake Management LLC. It’ll be Japan’s Masayoshi Son. Zeb Eckert has more on Bloomberg Television’s “On The Move Asia.” (Source: Bloomberg)

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  137. Sent from Bloomberg for iPad

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    Sorry NFL Rookies, You’re Not Making Any Real Money
    May 8 (Bloomberg) –- Top picks in the NFL Draft earn multi-million dollar contracts, but the agents who represent these rookies are seeing rising costs and shrinking returns. Legendary NFL agents Tom Condon and Leigh Steinberg explain why taking on rookie clients has become more problematic and less profitable. (Source: Bloomberg)

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  138. Sent from Bloomberg for iPad

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    Has Marissa Mayer Cut All of the `Dead Weight’?
    May 7 (Bloomberg) — Bloomberg’s Paul Sweeney and Cory Johnson recap Yahoo CEO Marissa Mayer’s comments at TechCrunch’s NY Disrupt 2014. They speak with Emily Chang on Bloomberg Television’s “Bloomberg West.” (Source: Bloomberg)

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  139. Sent from Bloomberg for iPad

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    What’s Behind the Decline in the Yuan?
    May 8 (Bloomberg) –- Brewin Dolphin Wealth Management Research Head Guy Foster discusses China’s currency with Anna Edwards and Mark Barton on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

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  140. From Bloomberg, May 7, 2014, 7:01:01 PM

    May 1 (Bloomberg) — Athanasios Vamvakidis, head of Group-of-10 currency strategy at Bank of America Corp., talks about the outlook for the euro and European Central Bank policy ahead of next week’s policy decision.
    He speaks with Bloomberg’s Niki O’Callaghan in London. (Source: Bloomberg)

    Here’s what to look for when the
    European Central Bank’s 24-member Governing Council releases its
    monthly interest-rate decision for the euro area at 1:45 p.m.
    and ECB President Mario Draghi holds a press conference in
    Brussels at 2:30 p.m.

    To read the entire article, go to
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  141. From Bloomberg, May 7, 2014, 7:01:22 PM

    This Jan. 15, 2014 file photo shows a Los Angeles Police officer wearing an on-body cameras during a demonstration for media in Los Angeles. London’s police force will begin wearing cameras on May 7, 2014. Photographer: Damian Dovarganes/AP Photo

    London’s police force will start testing smartphone-sized wearable cameras today, deploying 500 of the devices to record a police-eye-view of the city. The Metropolitan Police service is hopeful that the cameras, clipped onto officers’ chests, will aid evidence gathering, said James Hulme, a spokesman for the Met.

    To read the entire article, go to
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  142. From Bloomberg, May 8, 2014, 5:19:20 AM

    An armed pro-Russian fighter takes position by railway tracks in the eastern Ukrainian town of Slavyansk on May 7, 2014. Photographer: Vasily Maximov/AFP/Getty Images

    The U.S. and its allies said there’s no sign Russia is withdrawing forces from the Ukrainian frontier after President Vladimir Putin shifted his tone on the conflict and urged separatists to postpone an autonomy vote.

    To read the entire article, go to
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  143. From Bloomberg, May 8, 2014, 3:00:28 AM

    People walk inside the burnt Trade Union building where more than 40 people died in a fire during the recent clashes in Odessa. Photographer: Veli Gurgah/Anadolu Agency/Getty Images

    Vladimir Kiriyev says he was walking
    with his children near their apartment in Odessa when he saw an
    attack on a pro-Russia camp as the assailants backing Ukrainian
    unity set tents on fire and beat everyone who tried to flee.

    To read the entire article, go to
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  144. From Bloomberg, May 7, 2014, 4:48:10 PM

    President Barack Obama, amid U.S.-
    Russia tensions over Ukraine, notified Congress he will withdraw
    Russia’s eligibility for lower tariffs accorded to developing
    countries under the Generalized System of Preferences program.

    To read the entire article, go to
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  145. From Bloomberg, May 8, 2014, 5:00:03 AM

    A DirecTV technician installs a new satellite TV dish for a tenant at an apartment building in Lynwood. DirecTV has a market value of $45 billion after its shares rose 43 percent in the past year. Photographer: Patrick T. Fallon/Bloomberg

    AT&T Inc. (T), the second-biggest U.S.
    mobile-phone carrier, is in talks to buy satellite-television
    company DirecTV (DTV), people with knowledge of the situation said.

    To read the entire article, go to
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  146. From Bloomberg, May 8, 2014, 12:00:01 AM

    Extensive reconstruction work was carried out in 2000 by the current owner and substantial updates were made in 2013 including new Wolf, Sub-Zero and Miele appliances, new cherry kitchen cabinet faces, extensive lighting and sound systems. See more Tucson, Arizona homes for sale on zillow.

    Greg Leffel, an investor in Columbus, Ohio, said he relishes cash deals as much as he dislikes home loans. He has spent $150,000 buying and renovating 10 foreclosed houses in the past two years and turned them into rentals.

    To read the entire article, go to
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  147. From Bloomberg, May 8, 2014, 5:30:44 AM

    The won is the best performer among 31 major currencies tracked by Bloomberg since March 31, appreciating 4 percent. Photographer: SeongJoon Cho/Bloomberg

    The prospect of South Korea’s first
    interest-rate increase since 2011 is giving the won the world’s
    best returns in a resurgent market for carry trades.

    To read the entire article, go to
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  148. From Bloomberg, May 8, 2014, 5:42:15 AM

    An armed pro-Russian fighter takes position by railway tracks in the eastern Ukrainian town of Slavyansk on May 7, 2014. Photographer: Vasily Maximov/AFP/Getty Images

    President Vladimir Putin said Russia
    is testing its entire military’s combat readiness through a
    series of countrywide drills, ramping up tensions less than a
    day after he pledged to pull forces back from Ukraine’s border.

    To read the entire article, go to
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  149. From Bloomberg, May 8, 2014, 5:23:10 AM

    Agricultural Bank of China Ltd. is
    seeking as much as 80 billion yuan ($12.8 billion) from selling
    preferred stock to bolster its capital position, which is the
    weakest among China’s top four lenders.

    To read the entire article, go to
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  150. From Bloomberg, May 8, 2014, 12:01:00 AM

    IOC President Thomas Bach said, “The Olympic Games are in good hands with a partner whom we trust. We can say this because of the longtime experience we have with NBC, who have a more-than-excellent track record when it comes to broadcasting the games.” Photographer: Martin Rose/Getty Images

    NBC’s decades-long partnership with
    the Olympics is paying off.

    To read the entire article, go to
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  151. From Bloomberg, May 8, 2014, 4:50:53 AM

    Vessels are loaded with iron ore at the ship loading facility at Fortescue Metals Group Ltd.’s Herb Elliott Port in Port Hedland in the Pilbara region, Western Australia. Australia’s Port Hedland, the world’s biggest bulk-export terminal, shipped a record 28.9 million tons of ore to China in April. Photographer: Sergio Dionisio/Bloomberg

    There’s so much cheap iron ore
    flooding into China that rates for the ships that carry it are
    forecast to jump almost 70 percent by June, even as the world’s
    second-biggest economy grows at the slowest rate in 24 years.

    To read the entire article, go to
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  152. From Bloomberg, May 8, 2014, 2:00:00 AM

    German industrial output unexpectedly
    fell for the first time in five months in a sign that expansion
    in Europe’s largest economy is slowing.

    To read the entire article, go to
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  153. From Bloomberg, May 8, 2014, 4:02:34 AM

    Indonesia’s central bank held its key
    interest rate for a sixth straight meeting as policy makers seek
    to narrow a current-account gap even as economic growth slowed
    to the weakest in more than four years.

    To read the entire article, go to
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  154. From Bloomberg, May 7, 2014, 8:00:00 PM

    Workers stand in a suspended platform ready to clean windows at the Shanghai World Financial Center in the Pudong area of Shanghai, China. Shanghai’s economy is projected to grow by $734 billion from 2013 to 2030. Photographer: Tomohiro Ohsumi/Bloomberg

    Cities in China from Shanghai to
    Chongqing will grow the most among global metropolises in the
    next 16 years, according to a study by Oxford Economics Ltd.

    To read the entire article, go to
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  155. From Bloomberg, May 8, 2014, 5:37:16 AM

    The Philippine central bank ordered
    lenders to set aside more money as reserves a second time this
    year to curb liquidity and price pressure, while holding the
    benchmark rate for a 12th meeting.

    To read the entire article, go to
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  156. From Bloomberg, May 8, 2014, 12:35:45 AM

    Japan will start issuing new 5,000 yen
    ($49) notes to make it easier for a growing number of visually
    impaired people in the aging society to distinguish between
    denominations of bills.

    To read the entire article, go to
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  157. From Bloomberg, May 8, 2014, 4:21:02 AM

    Keeping policy unchanged for now gives the ECB some leeway to ready itself for radical measures should its economic projections next month show the inflation outlook has worsened.Photographer: Andrew Harrer/Bloomberg

    Mario Draghi probably won’t embark on a new era for monetary policy just yet.

    To read the entire article, go to
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  158. From Bloomberg, May 8, 2014, 3:49:42 AM

    May 8 (Bloomberg) — Hao Hong, Hong Kong-based chief China strategist at Bocom International Holdings Co., talks about the country’s economy, stock market and central bank policy.
    He speaks with Rishaad Salamat on Bloomberg Television’s “On the Move.” (Source: Bloomberg)

    China’s exports and imports (CNFRIMPY)
    unexpectedly rose in April, helping leaders put a floor under a
    slowdown in the world’s second-biggest economy.

    To read the entire article, go to
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  159. From Bloomberg, May 8, 2014, 12:30:00 AM

    Venezuela’s government announced the start of electricity rationing in western Zulia state as well as water rationing in Caracas to reduce demand on the power grid, a day after Ford Motor Co. (F) halted production in Latin America’s largest oil exporter.

    To read the entire article, go to
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  160. From Bloomberg, May 7, 2014, 6:03:21 PM

    Playing Chinese chess at the beach in a Speedo is OK. Photographer: Brent Lewin/Bloomberg

    Not even armed police could keep middle-age nude sunbathers from Dadonghai Beach in Sanya, a tropical resort in south China, last weekend. But the police could instill a sense of caution, as evidenced by photos published across China’s state media that showed those sunbathers going about their business in Speedos lowered to their thighs (“cunning half mast,” tweeted Chris Buckley of the New York Times), ready to raise them at the first sight of law enforcement.

    To read the entire article, go to
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  161. From Bloomberg, May 8, 2014, 12:01:19 AM

    Photographer: Ralph Orlowski/Bloomberg

    In recent months, Europe’s economies have begun a tepid revival. It’s the adjective, not the noun, that should guide the European Central Bank’s next move on monetary policy.

    To read the entire article, go to
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  162. From Bloomberg, May 7, 2014, 6:04:43 PM

    Legal in 44 states. Photographer: Bill Pugliano/Getty Images

    Employees of a Jack in the Box restaurant in Fort Worth, Texas, got a glimpse last week of an America where the more extreme element of the gun-rights movement has its way. Their reaction? They hid in the freezer. Parents in a public park in Georgia, confronted by another display of gun rights, called 911.

    To read the entire article, go to
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  163. From Bloomberg, May 7, 2014, 3:35:41 PM

    Alibaba filed for its initial public offering last night and as you can see from the chart below, it is more than merely the “Amazon of China.”

    To read the entire article, go to
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  164. From Bloomberg, May 7, 2014, 2:00:32 PM

    On reflection, I was overly optimistic. Religious activists pray following oral arguments in Town of Greece v. Galloway on Nov. 6, 2013. Photographer: Saul Loeb/AFP/Getty Images

    (Corrects description of Thomas’s opinion in first and second paragraph, and in second footnote.)

    To read the entire article, go to
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  165. From Bloomberg, May 7, 2014, 1:38:34 PM

    Jack Ma may have to tangle with the SEC. Photographer: Qilai Shen/Bloomberg

    Yesterday, Alibaba Group Holding Ltd., China’s largest online retailer, filed the registration statement for its initial public offering. One of the risk factors it cites is the possibility that the Securities and Exchange Commission may suspend the mainland Chinese affiliate of its outside auditor, PricewaterhouseCoopers of Hong Kong.

    To read the entire article, go to
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  166. From Bloomberg, May 6, 2014, 9:28:05 PM

    A news ticker on the Morgan Stanley building in Times Square in New York reports that the Chinese e-commerce behemoth Alibaba has announced that it has filed plans for an initial public offering on May 6, 2014. Photographer: Richard Levine/Demotix/Corbis

    Today, Alibaba Group is China’s largest e-commerce company. But more importantly, what will it be tomorrow?

    To read the entire article, go to
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  167. From Bloomberg, May 7, 2014, 5:58:44 PM

    AOL Inc. Chief Executive Officer Tim Armstrong. Photographer: Pete Marovich/Bloomberg

    AOL Inc. (AOL)’s higher spending to attract
    an audience for advertisers squeezed its profit margin in the
    first quarter, causing a shortfall against analysts’ estimates.
    The shares sank 21 percent.

    To read the entire article, go to
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  168. From Bloomberg, May 7, 2014, 4:43:33 PM

    Twitter Inc. (TWTR) shares fell to the lowest
    since the company’s initial public offering, following the
    lifting of restrictions on stock sales by insiders and early

    To read the entire article, go to
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  169. SunEdison misses by $0.08, misses on revenue

    06:20 AM ET · SUNE

    • SunEdison (SUNE): Q1 EPS of -$0.25 misses by $0.08.
    • Revenue of $577.6M (+33.9% Y/Y) misses by $16.28M.
    • Press Release

  170. Asian and European Indices higher overnight

    06:00 AM ET

    • Japan +0.93%.
    • Hong Kong +0.42%.
    • China +0.26%.
    • India +0.10%.
    • London +0.39%.
    • Paris +0.66%.
    • Frankfurt +0.67%.

  171. Middleby misses by $0.23, beats on revenue

    05:50 AM ET · MIDD

    • Middleby (MIDD): Q1 EPS of $1.78 misses by $0.23.
    • Revenue of $372.47M (13.8% Y/Y) beats by $8.47M.
    • Press Release

  172. World stocks boosted by Yellen, Chinese trade

    05:11 AM ET

    • Global equities are higher following better-than-expected Chinese trade figures and dovish comments from Janet Yellen, and ahead of interest-rate decisions from the European Central Bank and the Bank of England.
    • The ECB is expected to leave its benchmark rate at 0.25%, while the BOE is seen maintaining its key rate at 0.5%.
    • Japan +0.9%, Hong Kong +0.4%, China +0.2%, Hong Kong +0.1%.
    • Euro Stoxx 50 +0.4%, London +0.5%, Paris +0.6%, Frankfurt +0.6%, Milan +0.5%, Madrid +0.4%.
    • U.S. stock futures: Dow +0.1%. S&P +0.05%. Nasdaq +0.1%

  173. Costco revenue climbs 7% in April

    04:44 AM ET · COST

    • Costco’s (COST) net sales grew 7% on year to $8.56B in April.
    • Comparable sales +5%, topping consensus of +3.2%. U.S. +5%, international +2%.
    • Excluding the effects of gasoline prices and currency swings, comparable sales increased 5%; U.S. +5%, international +7%. (PR)

  174. Toyota FQ4 net profit slips 5.4%

    03:52 AM ET · TM

    • Toyota’s (TM) FQ4 net profit dropped to ¥297B ($2.9B) from ¥314B a year earlier, hurt by extra costs, including for R&D.
    • Sales climbed 12.5% to ¥6.57T ($64.5B).
    • Operating profit fell to ¥436B from ¥502B.
    • The company forecast that FY 2015 operating profit will rise to ¥2.3T from a record ¥2.29T last FY, although it expects sales to be flat at ¥25.7T.
    • The car-maker also predicted that net profit will slip 2.4% from ¥1.82T as demand in Japan declines following the increase in sales tax and the impact of the weaker yen wears off.
    • In FY 2014, Toyota benefited from the falling yen and cost cutting over the whole year, as well as increased vehicle sales mainly in Japan and North America.
    • Toyota aims to increase volume to 10.25M vehicles this FY from 10.13M, citing a recovery in the U.S. and Europe, although the company is cautious about emerging markets.
    • Toyota declared a year-end dividend of ¥100 a share. (PR)

  175. Barclays plans to axe 19,000 jobs

    03:27 AM ET · BCS

    • Barclays (BCS) intends to slash 19,000 jobs over the next three years, including 7,000 at its investment bank, where operating profit halved in Q1.
    • Barclays will cut 14,000 positions this year, above an expected 12,000-14,000.
    • The U.K. company also plans to create a “bad bank” that will incorporate £115B ($195B) worth of risk-weighted assets from the investment bank, as well as the firm’s retail banking operations in Italy, France, Spain and Portugal. The aim is for the investment bank to account for no more than 30% of the company’s risk-weighted assets vs 50% now.
    • Barclays will give greater focus to its retail activities in Britain, its Barclaycard credit card division, and its African business.
    • The company will book £800M in costs as part of the overhaul, adding to £2.7B that was announced in February 2013.
    • However, within two years, by Barclays aims to increase its dividend payout to up to 50% of adjusted earnings vs current guidance of 40%.
    • Shares are +3.4% in London. (PR)

  176. Chinese trade surprisingly grows

    02:38 AM ET · FXI

    • Chinese exports increased 0.9% on year in April after falling 6.6% in March and beat consensus for a drop of 1.7%.
    • Imports +0.8% vs -11.3% and -2.3%.
    • The trade surplus more than doubled to $18.45B from $7.71B and topped forecasts of $13.90B.
    • Exports breakdown: U.S. +4.1%, EU +7.8%, Southeast Asia +5.9%, Taiwan -9.7%, Hong Kong -31.3 (due to problematic invoicing last year).
    • The readings follow other data which indicate that China’s economy has been slowing and come after a 2.8% fall in the yuan vs the dollar this year.
    • The strong growth “will create pressure for China to reverse the recent yuan depreciation,” says Citigroup economist Ding Shuang.
    • “The external demand side is not such a big problem for China now, because the genuine recovery is there,” says Wei Yao, the China economist at Societe Generale. “This is actually offering some support to China’s growth.”
    • The Shanghai Composite is +0.4%.

  177. German industrial output surprisingly drops

    02:12 AM ET · EWG

    • German industrial production fell 0.5% on month in March after rising 0.6% in February and missed consensus for an increase of 0.2%.
    • On year, output +3% vs +4.7% in February.
    • Breakdown: construction -2.2%, intermediate goods -0.9%, consumer goods +0.5%, energy +1.8%.
    • The euro takes a bit of a dive and is now flat at $1.3913, while DAX futures are also little changed. (PR)

  178. Thursday’s economic calendar

    12:00 AM ET

  179. PennyMac Mortgage lower after slide in earnings

    Yesterday, 10:22 PM ET · PMT

    • Net income of $37.9M or $0.50 per share is off 28% from Q4 on net investment income of $76.6M off 20%. Dividend of $0.59 per share.
    • Book value per share of $20.88 up from $20.82 at the end of the 2013 after payment of dividend.
    • CEO Stan Kurland: “The reduction in earnings for Q1 was driven by reduced income in PMT’s correspondent lending business and lower gains in the distressed whole loan portfolio.”
    • Investment activities segment: $33.1M in pretax income on revenue of $64.3M vs. $48.4M and $78M in Q4. Net gain on investments of $42.6M off 11%. Net interest income of $19.6M is lower by $2.9M. Net loan servicing fees of $7.4M fell from $12.2M.
    • Distressed mortgage investments: Distressed mortgage loan portfolio gains of $39.9M down from $50.6M. Company acquired $436M UPB of nonperforming whole loans and REO in Q1; has another $41M UPB under agreement and expected to settle in Q2.
    • Correspondent lending segment: Pretax income of $3.1M falls from $6.3M on revenue of $12.3M, off 32%.
    • Source: Press Release
    • Previously: PennyMac Mortgage misses by $0.14
    • PMT -3.7% AH

  180. Prospects for Senate vote on Keystone XL fade over amendments fight

    Yesterday, 07:35 PM ET · TRP

    • A Senate squabble over energy policy and procedure looks likely to kill a vote on the Keystone XL pipeline (TRP), as Democratic leaders reverse course on bringing up a measure sought by Republicans and some Democrats from energy states.
    • Majority Leader Harry Reid had indicated he might bring to the floor a measure approving construction of the pipeline as part of a deal tied to passing an energy efficiency bill, but prospects faded today when Reid said he wouldn’t allow more amendments to the bill, angering Republicans, who now may block the bill from advancing.

  181. U.S. takes voluntary approach on crude oil tank car rules

    Yesterday, 07:20 PM ET · CSX

    • The U.S. Department of Transportation announces steps to improve the safety of shipping crude oil by rail, but unlike its Canadian counterpart, is taking a voluntary approach to the phase-out of older tank cars known to be vulnerable in derailments.
    • The agency recommends energy producers that ship by rail discontinue the use of older DOT-111 model tank cars; in contrast, Transport Canada two weeks ago required a three-year phase-out of older tank cars.
    • DOT is matching Canada’s requirement that railroads disclose to state and county emergency management officials the routing, volume and frequency of crude oil shipments.
    • Related rail/oil stocks: CSX, UNP, NSC, KSU, CP, GWR, OAS, NOG, KOG, CLR, WLL, EOX.

  182. Transocean +3% AH after big Q1 earnings beat

    Yesterday, 06:43 PM ET · RIG

    • Transocean (RIG) +3.1% AH after reporting a 42% increase in Q1 earnings and 7% higher revenues, beating Wall Street expectations.
    • Average daily revenue gained 14% Y/Y from a year earlier, while costs fell 5.8% to $1.59B.
    • Contract backlog stood at $26.1B as of its mid-April fleet status report, and RIg says it has since locked in an additional $470M worth of work.
    • Overall utilization rose to 78% from 75% in Q4 2013, but fell from 80% in the year-ago quarter.
    • Fleet revenue efficiency was 95.7% in Q1 vs. 91.7% in Q4; revenue efficiency on ultra-deepwater rigs was 96.4% vs. 90% in Q4.

  183. Zillow +5.1% AH on Q1 beat, guidance; Trulia +1.3%

    Yesterday, 05:53 PM ET · Z

    • Zillow (Z) guides on its CC for Q2 revenue of $75.5M-$76.5M, above a $71.8M consensus. Full-year revenue guidance has been hiked to $304M-$308M from $288M-$294M (consensus is at $294.8M). Full-year EBITDA guidance is now at $48M-$50M (up $10M at the midpoint).
    • Q1 results beat estimates on the back of a 72% Y/Y increase in Marketplace revenue to $53.4M (real estate +77%, mortgages +45%), and a 62% increase in Display (ad) revenue to $12.9M.
    • As expected, Zillow spent aggressively: Sales/marketing spend rose to $34.9M from $19.8M a year ago, R&D spend to $17M from $10.6M, and G&A to $14.7M from $8.2M.
    • 4,654 Premier Agent subs were added, raising the total to 52,968. ARPU +6% Q/Q and +10% Y/Y to $286. Average monthly unique users +51% to 70.7M.
    • Trulia (TRLA) is following Zillow higher.
    • Q1 results, PR, datasheet, prepared remarks

  184. Gilead BOD approves share repurchase plan

    Yesterday, 05:39 PM ET · GILD

  185. Ford announces $1.8B share buyback

    Yesterday, 05:20 PM ET · F

    • Ford (F) says it will buy back up to 116M shares worth ~$1.8B to offset the dilutive impact of some of its convertible debt.
    • The share repurchases will offset the dilutive effect of potential conversions of Ford’s 4.25% Senior Convertible Notes due Nov. 15, 2016, and share-based employee compensation granted in 2014.
    • Ford says the action will reduce its diluted shares by ~3%.
    • Shares +0.7% AH.

  186. CenturyLink +1% AH on revenue guidance, broadband sub growth

    Yesterday, 04:54 PM ET · CTL

    • CenturyLink (CTL) expects Q2 revenue of $4.48B-$4.53B, favorable at the midpoint to a $4.49B consensus. EPS is expected to be in a range of $0.62-$0.67 vs. a $0.64 consensus.
    • Q1 free cash flow was $860M, -15% Y/Y but well above net income of $381M. Op. cash flow margin fell 340 bps to 39.4%, and op.income margin 310 bps to 15%. Capex rose 1% Y/Y to $662M.
    • Consumer revenue was roughly flat Y/Y at $1.51B; business revenue rose 4% to $1.56B; whole sale revenue fell 5% to $862M; hosting revenue (previous) rose 6% to $354M.
    • Broadband subs grew by 66K Q/Q to 6.06M, access lines fell by another 120K to 12.88M. 24K Prism TV subs were added, raising the total to nearly 200K.
    • $319M was spent on buybacks. The dividend yield is currently at 6.2%
    • Q1 results, PR

  187. Roundy’s Supermarkets misses by $0.02, misses on revenue

    Yesterday, 04:39 PM ET · RNDY

    • Roundy’s Supermarkets (RNDY): Q1 EPS of $0.01 misses by $0.02.
    • Revenue of $1B (+1.7% Y/Y) misses by $10M.
    • Shares -4.3%.
    • Press Release

  188. SolarCity +5% AH on strong guidance, bookings

    Yesterday, 04:39 PM ET · SCTY

    • SolarCity (SCTY) now expects to deploy 500MW-550MW of systems in 2014, up from a prior 475MW-525MW. The company is also establishing 2015 deployment guidance of 900MW-1GW (81% growth at the midpoint). Positive cash flow is still expected for 2014.
    • 82MW of systems were deployed in Q1, down from Q4′s 103MW but at the high end of a guidance range of 78MW-82MW. Deployments are expected to grow to 105MW-110MW in Q2 (+103% Y/Y at the midpoint).
    • Q2 EPS is expected to be in a range of -$0.90 to -$1.00 (consensus is at -$0.64). GAAP gross margin is expected to be in a range of 50%-55% (up from Q1′s 45%), and GAAP opex is expected to grow to $100M-$110M from Q1′s $81.8M.
    • 136MW were booked in Q1, +34% Q/Q and well above deployments of 82MW. Cumulative energy contracts +21% Q/Q and +97% Y/Y to 100.6K, cumulative customers +19% Q/Q and +84% Y/Y to 110.7K.
    • Q1 results, PR

  189. Caesars Entertainment misses by $1.34, misses on revenue

    Yesterday, 04:34 PM ET · CZR

    • Caesars Entertainment (CZR): Q1 EPS of -$2.70 misses by $1.34.
    • Revenue of $2.1B (-1.9% Y/Y) misses by $70M.
    • Press Release

  190. Keurig Green Mountain +6.4% on earnings beat, expanded Smucker deal

    Yesterday, 04:33 PM ET · GMCR

    • Keurig Green Mountain (GMCR) +6.4% AH as FQ2 earnings and revenues beat estimates, buoyed by strong coffee sales and cost cuts.
    • Sales of single-serve packs rose 13% to $898M, while sales of brewers and accessories rose 8.5%.
    • FQ2 gross profit increased 10% and gross margin improved to 41.5% from 41.3%.
    • Sees FY 2014 EPS of $3.63-$3.73 vs $3.72 analyst consensus estimate; sees revenues in the high single digits.
    • Says it is expanding its partnership with J.M. Smucker (SJM) with a multi-year agreement to make and sell Folgers and other SJM brands in formats that work with new Keurig brewing systems.
    • Authorizes a new share repurchase program of up to $1B over the next two years.

  191. Tesla’s deliveries, spending to ramp in Q2

    Yesterday, 04:22 PM ET · TSLA

    • Tesla (TSLA) produced 7,535 Model S units in Q1, up from Q4′s 6,587 and above guidance of 7,400. The company delivered 6,457 units, slightly above guidance of 6,400 but below Q4′s 6,892.
    • Tesla expects to produce 8.5K-9K Model S units in Q2, and to deliver 7,500. Leases are only expected to account for ~200 deliveries due to lead times.
    • Gross margin was 25.4%, +20 bps Q/Q in spite of a $2M reserve for underbody shield retrofits. GM is expected to improve slightly Q/Q in Q2, and to reach 28% in Q4.
    • SG&A spend rose 150% Y/Y to $117.6M, R&D spend rose 17% Q/Q and 48% Y/Y to $81.5M. SG&A is expected to grow 15% Q/Q, and R&D 30%.
    • Operating cash flow was $61M, and capex totaled $141M. The full-year capex forecast is still at $650M-$850M.
    • The company expects to be “marginally profitable” in Q2; the EPS consensus is at $0.27. Full-year free cash flow is expected to be slightly negative.
    • Shares -4.9% AH
    • Q1 results, shareholder letter (.pdf)

  192. Annaly Capital misses by $0.06

    Yesterday, 04:21 PM ET · NLY

    • Annaly Capital (NLY): Q1 EPS of $0.23 misses by $0.06.
    • Revenue of $530.93M (-4.4% Y/Y)
    • Shares -2.45%.
    • Press Release

  193. Molycorp, Inc. misses by $0.05, misses on revenue

    Yesterday, 04:17 PM ET · MCP

    • Molycorp, Inc. (MCP): Q1 EPS of -$0.29 misses by $0.05.
    • Revenue of $118.5M (-18.5% Y/Y) misses by $25.98M.
    • Shares -8.8%.
    • Press Release

  194. Core earnings fall at Annaly as interest margin slides

    Yesterday, 04:16 PM ET · NLY

    • Core EPS of $239.7M or $0.23 per share vs. $350.1M and $0.35 in Q4.
    • Book value per share of $12.30 up from $12.13 after payment of $0.30 dividend.
    • Interest rate spread of 0.90% tumbles 53 basis points from Q4. CPR of 6% vs. 7% in Q4.
    • Portfolio: Agency MBS of $77.8B up from $73.4B in Q4 (was $112.2B a year ago). Fixed-rate mortgages make up 93%, adjustable-rate 7%. Total commercial real estate investments of $1.7B, up from $1.6B in Q4.
    • CC tomorrow at 10 ET
    • NLY -0.3% AH
    • Source: Press Release

  195. Precious metals decline; writers search for excuse

    Yesterday, 03:11 PM ET · GLD

    • Generally upbeat economic comments from Janet Yellen make for a convenient excuse for sizable declines in precious metals today, but then how do we explain lower yields at both ends of the interest rate curve? At 2.62% before Yellen sat down in front of Congress, the 10-year Treasury yield is now down to 2.59%, and the December 2015 Eurodollar contract – as good a proxy for worry over rate hikes as exists – has gained five basis points (higher price means lower chance of hike).
    • Maybe more at work could be chatter about a de-escalation of tensions over Ukraine.
    • In other news, the China Gold Association reports the country’s total Q1 gold consumption at 322.99 metric tons, up 0.8% from a year ago. Consumption of gold bars, however, fell about 44% to 67.954 tons.
    • GLD -1.4%, SLV -1.3%

  196. Lawsuit against AmEx can proceed

    Yesterday, 02:47 PM ET · AXP

    • The antitrust suit was brought by the DOJ and several states in 2010, charging American Express (AXP +1.8%) with setting rules preventing merchants from offering discounts/incentives to customers using less expensive (to the merchants) forms of payment.
    • In requesting dismissal, AmEx argued the government could not prove the card company had significant market power, but the judge ruled the government didn’t have to prove this, but instead could show AmEx’s conduct had an “adverse effect on competition.”
    • Visa and MasterCard were also sued over this, but settled immediately.

  197. FireEye triggers security stock rout; lockup expiration looms

    Yesterday, 02:24 PM ET · FEYE

    • FireEye (FEYE -26.2%) has crashed to new post-IPO lows after offering light EPS guidance to go with a revenue beat, and has sparked a sharp selloff in IT security stocks on (another) down day for momentum plays. PANW -10.2%. IMPV -7.1%. PFPT -6.8%. QLYS -8.7%. FTNT -3.3%.
    • Citi is worried about a lack of “opacity” for FireEye’s top-line numbers following the Mandiant deal. “Management noted ‘bookings’ for both FireEye and Mandiant grew >50% Y/Y. With FY13 growth of near 100% this leaves an outstanding question of whether or not business decelerated meaningfully on an organic basis.”
    • Others are more positive. Wells Fargo (Outperform) is still confident about its forecast for 50%+ revenue growth over the next 3 years, and the “disruptive nature” of FireEye’s business model (integrated threat-prevention hardware/software/services). Goldman (Neutral, but with a $58 PT) thinks organic growth is good enough, and expects a flurry of new products to provide a boost.
    • FBN (Outperform) is still bullish long-term, but also notes product revenue was below consensus, and is on edge over a May 21 lockup expiration that will lead 68% of shares to become eligible for sale.

  198. Chatter picks up on Crocs’ comings and goings

    Yesterday, 02:20 PM ET · CROX

    • Shares of Crocs (CROX -1.2%) get a jolt off of chatter indicating the company has canceled an appearance at a conference.
    • The retailer is expected to participate at the Stifel Nicolaus Consumer Conference in June.

  199. Patton Boggs settles with Chevron in Ecuador dispute, agrees to pay $15M

    Yesterday, 02:12 PM ET · CVX

    • Chevron (CVX +1.1%) and Patton Boggs reach a proposed settlement in which the D.C. law firm, which had represented the Ecuadorean plaintiffs in the disputed $9.5B environmental verdict, would pay CVX $15M.
    • For a law firm of Patton Boggs’ heft, the settlement is highly unusual: It agrees to cease efforts to enforce the judgment against CVX and withdraw from related litigation, it promises to turn over to the company any profits from the case, and agrees to cooperate with discovery efforts by CVX, which is waging a global effort to undermine the Ecuador verdict.

  200. Vietnam Index hits three month low

    Yesterday, 01:16 PM ET · VNM

    • “We have been very busy buying stocks these days,” says Andy Ho, CIO at VinaCapital, as the decline in Vietnamese stocks has brought valuations low relative to the rest of Southeast Asia. The best performer in Asia through late March, the VN Index has tumbled 8.6% since, bringing its P/E ratio to 13.3x vs. 16x in Thailand, 20x in the Philippines, and 22x in Indonesia.
    • There are rising tensions with China over disputed waters and macro worries like Ukraine also find their way into markets there, but the economy is still expected to grow a robust 5.8% this year and inflation should be stable in the 6% range.
    • VNM +1.2% today

  201. Alberta crude price breakout spells danger for Keystone XL

    Yesterday, 12:41 PM ET · TRP

    • The price of crude from Alberta’s oil sands has surged nearly 60% since November, as new pipelines connect producers with refineries on the U.S. Gulf coast, meaning Canadian producers can begin to see a better return on investment while U.S. refineries can lessen their reliance on oil from Mexico and Venezuela.
    • It also lessens the importance of the Keystone XL pipeline (TRP), WSJ‘s Ben Winkley writes, making it that much easier for the White House to delay a decision to clear the project.
    • Traders say the current price gap of ~$20 between Alberta crude and benchmark WTI is about right, so with just a handful of refineries set up to receive tar sands crude, more transport capacity may not be needed, Winkley suggests.

  202. Sony’s Spider-Man makes the most out of ducking Godzilla

    Yesterday, 12:21 PM ET · SNE

    • The Amazing-Spider Man 2 crossed over the $100M in sales for its first seven days following its U.S. release and is up over the $420M globally.
    • The box office haul trails some estimates and adds some weight to the theory that Spider-Man is a bit played out to U.S. audiences.
    • Studio execs at Sony (SNE) are getting high marks for the timing of the film’s release. A head-to-head confrontation with Godzilla would not have gone smoothly, according to Hollywood buzz.

  203. Investigation of banks’ Asian hiring practices expands

    Yesterday, 12:11 PM ET · JPM

    • It started late last year amid a report of JPMorgan’s (JPM +1.3%) practice of hiring children of well-connected Chinese, but the WSJ reports the SEC is seeking information from a host of banks – including Credit Suisse (CS -0.3%), Goldman Sachs (GS +0.8%), Morgan Stanley (MS), Citigroup (C +0.5%), and UBS – about their Asian hiring. Fortunately, this sort of thing never happens in the U.S.
    • At issue are possible violations of the Foreign Corrupt Practices Act which bars U.S. companies from anything that could resemble a bribe to foreign officials. The probe has rattled bankers in the region, says the Journal, with some choosing to walk away from potential deals which could come under scrutiny at some point.

  204. SEC reportedly probing brokers over HFT

    Yesterday, 10:58 AM ET · AMTD

    • Now getting investigatory direction from popular books, the SEC has reportedly sent out subpoenas and record demands from a number of brokerage companies as it looks into the way retail customer orders are routed, executed, and filled.
    • It’s unclear which firms have received the requests, but a guess of TD Ameritrade (AMTD -1.2%), Schwab (SCHW -0.9%), and E*Trade (ETFC -1.5%) – all of whom bank coin selling customer orders – wouldn’t be a bad one. Also maybe on the list: Fidelity and Interactive Brokers (IBKR -2.6%).
    • The SEC probe comes amid the the high-profile launch of Michael Lewis’ latest, Flash Boys.

  205. Chipotle: Buy Before It Gets Expensive

    03:47 AM ET | by Gemstone Equity Research Includes: cmg

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  206. SolarCity Earnings: Great Growth, Funny Math

    02:54 AM ET | by Casual Analyst Includes: scty

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  207. Annaly Remains A Top Income Stock

    12:21 AM ET | by Seeking Profits Includes: nly

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  208. Tesla: Wait For $140-150 To Buy

    Yesterday, 09:25 PM ET | by Seeking Profits Includes: tsla

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  209. Phil –  Is there anyway to post all the news under a different user name?  Such as PhilsNews?  While I might not be the majority opinion, I find all the news posts repetitive to my news feed and time consuming to filter through, looking for you're comments in the morning.  It's much more pronounced on a mobile device which doesn't auto refresh.

    If you posted under a different user, we could choose for ourselves to ignore or read the posts.  Just my 2c as a long time member.

  210. Phil. See the market at a very pivotal point. This is the third time this in last 6 months the RUT is challenging the 1,100 line, Dec & Feb being the prior assaults. With the RUT & NAS both below their 50 day average and RUT below 200,the question is whether this is the precursor to a larger overall market decline or we now bounce back and the RUT and NAS recover.  OVER THE SHORT TERM, I can't see the tech heavy NAS recovering, but am keeping my options play open to a big move in either direction. A critical turn is near is only point that's clear.

  211. /cl climbing from 100.35 to 100.70…  not sure where she stops.

  212. Phil,

    I hold NLY – 500 shares and -10 Jan 16 $10 Puts.  I am thinking of selling calls on the poor earnings news.  Your recommendation would be appreciated.

  213. Phil & Burr – I like the idea of the news postings under a separate username as well. Coming in for a short stop to catch up should be much easier if there were a way to filter to just Phil's comments and later catch up with the news. Good idea IMHO.

  214. pcln before the open..weird

  215. Completely agree on the dump of news.

  216. Good morning!  ECB and BOE rate decisions and more Yellen talk today (9:30) is keeping the balls in the air.

    German Industrial Output was -0.5% with year/year output at 3% from 4.7% on last reading.  That's shockingly bad – and they had nice weather!  

    Not going to cash in the LTP has already cost us 1.5% ($7,500), so I'm certainly not inclined to think we're missing something on this bounce yet.  The Income Portfolio, which is 90% cash, is still up 7% vs now 9.7% in the LTP.  It's actually nice to have a control portfolio like this to compare to.

    Oil just went back over $100.50, so a stop out on /CL until it gets back below with a small profit.  

    Solar Roadways/Fig – Cool!  I'm glad to see someone is doing it already.  A little too soon, I think, a couple of more generations of cell efficiency (5 years) and I can see the economics kicking in.  

    Mauldin/StJ – Yes, I'm surprised he said that but I guess he's just saying what Rich said.

    TSLA/Wombat – Sales are off.  That's a bad thing when you only sell 6,000 cars a quarter!  They made 7,500 cars and sold 6,500 cars so they can't blame production constraints.  It's possible that 2,000 cars are on boats to China and Norway and technically not sold yet – they didn't have an international pipeline filled with cars before so filling it can cause sales dislocations.  I'm not sure if that's the case but, if it's not – they've got some major problems as the Model S may already be peaking in sales. I also find it very disturbing that SG&A went up 150% (+$70M) from last year – that's a lot just to sell a few more cars, especially for a $200 stock that's HOPING to make $1 a share this year.  

    All in all, TSLA did just what we thought they'd do and they are worth just what we thought they are worth ($100-$130) but the new models will keep hopes alive and they are probably going to stay over $150 unless the overall market crashes – then they might get reasonable.  

    Big Chart – Nas and RUT may be telling the real story but we have to respect the NYSE and say maybe it's just rotation to large caps.  As StJ notes, it was a year ago that we moved our lines, figuring 1,800 would be the top of the S&P in 2013 and 1,850 this year.  I still think 1,850 is a reasonable target for the end of this year, after a correction. 

    News/Burr – That's a good suggestion, I'll have Greg and Matt look into it.  Any idea for a news color or is blue good?  

    Critical/Den – Or we could establish a solid floor if we take off from here.  If we do hold this AND make new highs, THEN I will finally redraw the big chart lines.  Not holding my breath, though.  

    Oil/Burr – Small victory on the conviction short and now we re-load below $100.50 or back at $101.   We expected to stay high into Nat Gas inventories, which should be a small build due to pool openings.  

    NLY/Sibe – Book value ROSE from $12.13 to $12.30, you can't put too much value on the quarterly income numbers as there are a lot of factors – it's like randomly going to the beach, looking at where the tide is at any given moment and saying "this is absolutely where the water always is."  The rate spread tightened during the quarter and it takes them time to adjust it (kind of like how grocery stores and restaurants are being squeezed by increasing food costs before they can pass it through).  

    When the tide goes back out, they can benefit from the other side.  I'd expect them to turn up this morning during the 10am conference call.  Unfortunately, the "analysts" who follow REITs tend to understand them as poorly as the people who invest in them.  The reason I like NLY is they have a smart management team who can ride out all sorts of market conditions and, in Q1, they've been cutting their leverage to position themselves for increasing interest rates down the road – something I very much believe in – but, at the same time, rates fell this Q, so they got squeezed a bit.  If they are right, and rates go up, they will be better positioned than the REITs who focus on quarterly profits to take full advantage of the better spreads.  

    So, let's wait for the CC and see where they are – probably $11.50 end of day.  For future reference – you need to play this game with yourself BEFORE earnings and say "what will I do if they miss?"  If you were unwilling to ride out a 5% dip in the stock – you should have sold calls AHEAD of earnings, when you would have gotten a better price.  Of course, as I'm sure you've noticed, I almost always sell calls because I'm not greedy and I'd rather have the protection in place – just in case I'm wrong.  When you buy a stock and sell the puts but not the calls, then you are levering your risk with no protection – I'd be nervous too! 

    PCLN bucking like a bronco.  

    Gotta work!  

  217. News and comments / Phil

    Perhaps now that you are asking, having a number in each comment could help to go more directly, sometimes comments comes from something that was written 1 hour before with many other comments in the middle.

  218. pcln bronco got kicked in the nuts!!!