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Just Another Manic Monday

All-time highs on the Dow

That's all that really seem to matter in the Global markets as we shake off terrible Japanese trade numbers, which was somewhat counterbalanced by China's plan to open up its capital markets – by 2020.  

It's never too early to start celebrating, I suppose but should we be celebrating at all when the Nasdaq and the Russell are DOWN more than 5% for the year?

cotd average stock bear marketThere are 2,000 stocks in the Russell and 3,000 stocks in the Nasdaq Compositie index vs. 30 stocks in the Dow and 500 in the S&P.  As pointed out by Business Insider, even on the Dow, the AVERAGE stock is down 5% and within the S&P, 8% the average stock id DOWN 8% while the Nasdaq and Russell (10 times more stocks!) are clearly in bear market territory – down over 20% from their highs.  

While investors may not have learned anything from the last crash, the Banksters have learned that you can manipulate just a few key, heavily-weighted stocks in order to make an entire index seem to be performing better than the sum of its parts.  This allows the IBanks to dump their shares into ETF suckers, who are forced to buy the crap they are selling (at the day's closing price) as long as they can game the overall index to LOOK like it is doing well.  

SPY 5 MINUTEThat's why we see thise constant "stick saves" into almost every close.  Half the day's volume is done after the bell at what they call "market on close" orders that are automatically generated by ETFs and IRA drips, which forces the retail suckers with IRAs and 401Ks to buy at Top Dollar – no matter how relentless the selling volume was during the actual trading session.  

Don't be shocked, that's why the Banksters designed IRAs and 401Ks and ETFs in the first place!  Really, did you think they were doing it for your benefit?  On the whole, the stock market is nothing more than a Three Card Monte Game, where pretty much everyone playing but you is in on the scam.  

This is why, at Philstockworld, we teach you how to BE THE HOUSE – Not the Gambler!  

INDU WEEKLYAll of this is a show to entice you to put your money on the table.  The MSM acts as the schills, who tell you how easy the game is to win and show you all these people who make a fortune playing (but it's never anyone you actually know, is it?) and they encourage you to BUYBUYBUY because, if you don't play – there is no game.  

Of course SOME people get rich.  There are 7Bn people in the World and that means 7M of them are in the top 1%.  Even if the odds of winning big in the market were 1 in 10,000, there would still be 7,000 people for the media to interview so they can tell you how their "system" (ie, luck) works.  It's like the lottery, the odds of winning are 176M to 1 – yet they tell you all you need is a Dollar and a dream.  

Here's a chart that takes the Forbes 400 list and identifies the sources or wealth weighted by the total amount of wealth created.  As you can see, the best way to get rich, by far, is to found Microsoft.  Running Wal-Mart seems to be a good idea as well and Berskshire Hathaway is also a good career move.  

Inheartance is so much fun it gets named several times but, if those avenues are not available to you – it seems the best ideas are Real Estate, Investments and Publishing.  Interestingly, those are the three things I'm most heavily involved in while I'm waiting for Warren Buffet to give me a call…

What's NOT on this list (and I'm sorry I couldn't find a bigger copy)?  Day Trading is not on the list.  Lotteries are not on the list – even Hedge Funds don't play a big roll.  Apparenly, you have just as much chance becomming a Billionaire through Hedge Funds as you do of inventing the next Google.  INVESTING is the key and what is Real Estate but another kind of investing?  

The rich get richer because they can afford to.  Afford to what?  WAIT PATIENTLY!!!  

I can teach you how to trade.  I can teach you how to invest.  But, what I can't teach you is how to be patient – and that's the hardest thing to get traders to learn.  In our New Member's Guide at PSW, we ask people to watch "The Man Who Planted Trees," which is probably the best lesson on investing you will ever get (if you get it).  

Even if you are just 10 years away from retirement and only have $100,000 saved up and can't afford to put more money in – compounding that $100,000 by 20% a year for 10 years will net you $619,000 and, if you can keep making 20% on that, you'll be taking in over $120,000 ANNUALLY in your retirement.  If you have $100,000 and can put another $10,000 into the account each year for 20 years – even if you only make 12% returns – in 20 years you'll have $1,771,616 and 12% of that will give you $212,000 a year to live on.  

It is realatively easy for us to make 12-20% a year by BEING THE HOUSE and, as I've shown you in the chart above, it's the house that gets rich, NOT the gamblers.   

People who start out with money are able to save and are often taught the merits of saving by their parents and, if you develop that habit at an early age, you will wind up very rich indeed.   

Unfortunately, most people in the bottom 80% don't have enough money to save at the end of the day, which is why this chart on Income Mobility in America is such a joke.  A person making $20,000 a year who can save $2,000 a year at 8% from 20 to 65 would retire with $1M at 65 — BUT SOCIETY DOESN'T LET THEM!  

We do take some of their money in the form of Social Security and it's actually 12% of their income (6% from you, 6% from the boss) so MORE than $2,000 a year from a $20,000 worker and – speaking of three card monte husles – THEN we tell them there's no money in the system when they want to retire!  ROFL!!!  

Anyway, enough about poor people – moral of the story is – TRY NOT TO BE ONE!  It really, really does suck to be poor – avoid it at all costs!  

Now, back to you.  STOP GAMBLING!!!  Start investing.  You will make all the money you ever dreamed you would make by investing – it just takes a little longer.  The difference between gambling and investing is that, with gambling, you MIGHT get rich quick – but you also might go broke just as quickly.  With investing, you have very good odds of getting reasonable, consistent returns (see "7 Steps to Making 20-40% Annual Returns"), but you have to be willing to put in the time and effort to learn how to manage your investments.  

If that takes time away from your trading – that's a good thing!  

We have a Live Webinar Tomorrow at 1pm, EST (click HERE to register) - we'll continue this discussion there.  

 


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  1. Oil Lines

    R3 – 102.37
    R2 – 101.77
    R1 – 100.90
    PP – 100.30
    S1 – 99.43
    S2 – 98.83
    S3 – 97.96


  2. Good article about the consequences of 2 bursting bubbles:

    http://fivethirtyeight.com/features/why-the-housing-bubble-tanked-the-economy-and-the-tech-bubble-didnt/

    In 2000, the dot-com bubble burst, destroying $6.2 trillion in household wealth over the next two years.

    Five years later, the housing market crashed, and from 2007 to 2009, the value of real estate owned by U.S. households fell by nearly the same amount — $6 trillion.1

    Despite seeing similar nominal dollar losses, the housing crash led to the Great Recession, while the dot-com crash led to a mild recession. Part of this difference can be seen in consumer spending. The housing crash killed retail spending, which collapsed 8 percent from 2007 to 2009, one of the largest two-year drops in recorded American history.2 The bursting of the tech bubble, on the other hand, had almost no effect at all; retail spending from 2000 to 2002 actually increased by 5 percent.

    MianSufi.Housing-feature-2

    In other words, traditional macroeconomic models place no importance on the fact that the poor pull back on spending much more than the rich when their limited wealth takes a hit. For example, former Federal Reserve Chairman Ben Bernanke described why academics doubt the importance of distributional issues in his book on the Great Depression, suggesting that differences in spending propensities because of wealth would have to be “implausibly large” to explain the decline in spending in the 1930s. Some economists would make a similar point about the most recent recession.

    We disagree. The dramatic effect of the 2008 housing crash on spending, and its contrast with almost no effect of the early 2000s tech crash, shows how important distributional issues should be in macroeconomics. As the recent craze over French economist Thomas Piketty’s new book, “Capital in the Twenty-First Century,” shows, both economists and lay people are beginning to understand that wealth inequality is crucial for understanding the broader economy.


  3. Not bullish for oil:

    http://fivethirtyeight.com/features/americans-will-burn-less-oil-25-years-from-now/

    casselman-feature-energy-1

    The fuel efficiency piece is pretty straightforward. The average car on the road today gets nearly 22 miles per gallon, and the average new car gets more than 30 miles per gallon. As older cars get replaced, and as new cars improve, the overall fleet will get more efficient. In 2040, the EIA estimates, the average car will get 37 miles to the gallon; new cars will get 47 due in part to stricter environmental standards.2

    The more surprising change is in Americans’ driving habits. For decades, Americans drove more miles each year — even the ’70s oil shocks did little more than slow the rate of growth for a few years. But “vehicle miles traveled,” a measure of total driving, fell in the latest recession and has been roughly flat ever since. On a per capita basis, driving has fallen steadily since 2005 and is now at its lowest level since the mid-1990s.


  4. Good Morning!


  5. StJ – fuel efficiency is improving, but door to door sales, whether it be house to house or salesperson to store is non-existent.  All is done by computer now, and there are few mom and pop retailers.  One of the few traveling sales people left is medical sales to call on hospitals and doctors….

    Good morning!


  6. 1020…heat wave coming this week.  Gonna have to go to the beach with you…if I didn't have to work!


  7. SPY Calls from last Friday….time to make a decision.  Get ready to sell 1/2, so out even.  Or hold on to your britches….


  8. Life's a beach Pharm….. :)


  9. /TF is on goofballs


  10. BE the House….yeah!


  11. 1900 on SPX….here we come!


  12. Go SGEN….


  13. Good morning!  

    Asia was up because we were up and Europe was up because Asia was up and now we're up because Europe is up.  All caught up now?  

    No bounce issues for the Dow, S&P or NYSE – they are all at or near tops.  The Nasdaq topped out at 4,350 (ignoring spike to 4,371) and fell to 4,000 (ignoring spike to 3,946), which is the 200 dma (so it should be bouncy).  That's 350 points and that means we have 70-point bounce lines at 4,070 (weak) and 4,140 (strong).   At the moment we're in between at 4,100. 

    The Russell  topped out at 1,200 (ignoring spike to 1,212) and bottomed out at 1,100 (ignoring spike to 1,091) so that's 100 and that makes for 20-point bounces to 1,020 (not there yet) and 1,140 before we get excited about a rally.  

    Oil gave us a quick quarter earlier but plowed back over the 100.50 line and tested $100.90 for a nice re-entry and now $100.72.  Certainly nothing bullish happened for oil this weekend. Gasoline (/RB) is likely to fall off $2.92 as well.  

    Gold popped back over $1,300 and hi-ho silver (/SI) hitting $19.65.  Now we'll see if it can hold $19.50 on a pullback.  If so, maybe we get another leg to $20.  

    The Nikkei is not joining the Dow on the march higher.  /NKD is at 14,245 and that's what I said Friday morning:

    Dollar rising sharply, 79.72 and /NKD just below 14,200.  If the Dollar stays up and our markets don't tank (Dow currently 16,485 on /YM and /ES 1,868, /NQ 3,525 & /TF 1,092), then /NKD is a good long over the 14,200 line. 

    That's one of those very obvious Futures trades – it's very unusual if the Nikkei doesn't follow the Dow's lead.

    Driving/StJ – That's because cost of gas has outpaced the minimum wage by a mile.  People just can't afford to drive for fun anymore.  It costs me $85 in gas to go 500 miles to Killington.  When I used to go there after college ('85), gas was $1 per gallon and it cost about $20 to get there.  Wages certainly haven't gone up 4x since 1985, have they?  So certainly pleasure trips are taking a hit.  Even with more efficient cars, people are driving less and, even worse, they are breaking Americans of their driving habits.  

    Good gaming chart, StJ.  


  14. Major Earnings for the Upcoming Week:

    Monday:  AMBC, ARNA, CVG, GFN, GOGO, MBI, MCK, RAX

     

    Tuesday: DRD, TTWO, VTNR

     

    Wednesday: A, CSCO, DE, M, PLUG, RMAX, VLP

     

    Thursday:  AAP, ADSK, AMAT, CA, DDS, JCP, JWN, KSS, SINA, WMT

     

    Friday: SJM

     

    Economic Releases (5/12-5/16):

    Monday:

    11:00 am CT – Fed’s Plosser Speaks

    1:00 pm CT – Treasury Budget

                                                                                                                                                                                    

    Tuesday:

    6:45 am CT – GS Store Sales

    7:30 am CT – Retail Sales

    7:30 am CT – Import & Export Prices

    9:00 am CT – Business Inventories

    9:30 am CT – Fed’s Lacker Speaks

                                                                                                                                                                                                                  

    Wednesday:

    6:00 am CT – MBA Purchase Applications

    7:30 am CT – Producer Price Index (PPI)

    9:00 am CT – Housing Marker Index

    9:30 am CT – Oil Inventories

                        

    Thursday:

    Fed’s Yellen Speaks

    7:30 am CT– Weekly Jobless Claims

    7:30 am CT –Consumer Price Index (CPI)

    7:30 am CT – Empire State Mfg. Survey

    7:30 am CT– Fed’s Dudley Speaks

    8:00 am CT– Treasury Intl. Capital

    8:15 am CT– Industrial Production

    9:00 am CT – Philly Fed Survey

    9:30 am CT– Natural Gas Inventories

                                                                                                                                                                                                            

    Friday:

    7:30 am CT – Housing Starts

    8:55 am CT – Consumer Sentiment

    10:50 am CT – Fed’s Bullard Speaks


  15. Good Morning from Duluth Minn 

    With the wind chill of 29, harbor covered with pack ice.


  16. Phil – the board demands you capitulate. Give up your heathen stance of caution and cash. Cross the line and announce that buying is good, short selling is evil and hedges are the devil's work. Face momentum and not the facts. Give the bulls a break. At least it will feel cathartic.


  17. LQMT under 18c


  18. just got it – thanks jabo

    getting fried on /TF – is thing com in down ?


  19. Phil/capitulate  Yeah Phil!  Maybe then the market will correct….. ;)


  20. For a market that should be unraveling like an old sweater, it is sure doing well this morning.  Even my misfit collection of holdings are showing signs of life…but its still early yet.


  21. FCC revising neutrality plan; Netflix follows peers higher • 10:34 AM

    Following a public backlash, FCC chairman Tom Wheeler is backtracking a bit on rule changes (floated last month) that would allow U.S. ISPs to charge content providers for access to a priority "fast lane."

    A new draft of Wheeler's plan seeks comment on whether such arrangements, referred to as "paid prioritization," should be banned. It also states the FCC will scrutinize deals with content providers to make sure non-payers aren't at a disadvantage, prevent ISPs from doing deals with varying terms, and (notably) seek comment on whether broadband should be regulated as a public utility.

    Netflix (NFLX +3.2%), whose bandwidth spend accounts for a sizable portion of its expenses, is higher amid a broader Internet stock rally. The streaming giant has struck direct peering deals with Comcast and Verizon this year, but has also made it clear it's not thrilled with having to make them.

    Cogent (CCOI +2.2%), which provides peering services for Netflix and many others, is also higher. Its shares tumbled after the Netflix-Comcast deal was announced.


  22. CSCO

    Cisco Systems target raised to $26 at MKM Partners; co should have little trouble reporting solid to strong results and guidance  

    From briefing.com :


  23. Capitulation/Winston – Our portfolios are beating the Dow and the S&P by a mile – would seem kind of silly to capitulate when we're more bullish than the indexes already, wouldn't it?   And why are we ahead?  Because we cashed out last year into the holidays and did the bulk of our buying in the Jan/Feb dip.  That's the same strategy we're playing now.  People just don't want to wait for the dip.  

    Meanwhile, look how nice and cheap DXD is getting:  

    DIA is way up there:

    A 5% pullback on DIA is 8.3 points (830 Dow points), back to $158.40 from here.  The June $161 puts are .95 so, if you have $100K to protect against a 10% drop, you can buy $5K worth of the June $161 puts and a 5% drop pays you back $8,000 and a 10% drop to $150 (15,000) would net you $11 per contract so a 10x return is $55,000 back – that's overhedged actually!  

    On DXD, the July $25/28 spread is $1.10 and is $1.25 in the money so you get all the upside on DXD up to a 140% profit on a very small move down in the Dow.  We already have July $28 calls in the STP and it's a little too soon to roll but we will.   

    On a new trade – you can just get out if the S&P holds 1,900 for more than a day – that's not too far from here.  


  24. Also from briefing.com

    Market View: Into mid-morning trade with the DJIA at record highs, & SPX about 4pts. below the ATH, overall sector out-performance now seen in-

    •Solar Energy: TAN +4.4%

    •Biotech: XBI +3.1%, IBB +1.9%

    •Metal Miners: XME +2.8%

    •Internet: FDN +2.5%

    •Steel: SLX +2.6%

    •Coal: KOL +2.4%

    •Small-caps: IWM +2.25%

    •Home-builders: XHB +2.0%
     


  25. MCP/mrm – I see you mentioned maybe time to get out..  I'm looking at adding actual stock here if a bottom forms. the "pile on" by JPM and GS just seems like effort to rout out retail.  Japan gave them a billion a couple years ago to defend against Chinese monopoly, and these issues highlighted a year agon (link below) still seem relevant:

    http://www.bloomberg.com/news/2013-01-01/molycorp-deal-seen-as-rare-earth-play-at-value-real-m-a.html

    Sure has been a shocking drop though. Getting manipulated up and down?


  26. Meanwhile, RUT explodes over 1,120 to 1,130.  

    Neutrality/Jabob – There are other things the ISPs can do to block NFLX – they just haven't pulled the trigger yet but NFLX is not going to put this genie back in the bottle.  

    CSCO/Albo – I lived them in the teens, hard to get as excited about them at $23. 

    MCP/Scott – China flooded the market and MCP ran into problems expanding their new mine.  That's the gist of it.   The real problem is they burned through all that cash and either have to borrow or dillute.  AFTER that, then I'd like getting in on them.  

    LQMT below .17 now  haven't seen that in a while.  People were not happy with the CC and the pace they are moving.  New machines won't come until 2nd half which means you can pretty much scrap 2014 for ramping up sales – even if the orders are there.  I still like them long-term, but it's $1,000 to stick under your pillow and forget about for a few years – unless they get back to .30, in which case you sell 1/2 for a free ride on the rest.  


  27. phil thanks for the wise words this morning.. i rode a nice cl short this morning for .19 cents but then gave it back and a little more shorting rut at 1120. 


  28. Futures giveth and taketh away Toe but I think we'll be seeing 1,120 again.   I like /TF as a short here (below 1,130) as long at /ES stays under 1,890 and /YM stays under 16,650.  


  29. Try this trick in the Futures – instead of waking up and feeling like you have to trade – just paper trade in the morning until something makes such a huge move that it blows you out.  THEN check out whether or not there was a good reason for the move and, if there wasn't, THEN it's time to initiate a trade.  That will save you a lot of heartache and give you much better entries.  Notice this morning, I was only shorting oil (that didn't work either), not the indexes.  


  30. Phil/ I capitulate. I always seem to think you bearish when you are bullish and vice versa :)  But I want to see a lot more of those bullish trades and less of this hedging nonsense :)


  31. Great opening Phil – well done as always and thanks for keeping us on track.  Damn changing jobs keeping me from reading up…..my bad.

    2 expirations looming this week for me we may have already acted on so apologies if I am being redundant.

    1 – Phil DXD, 5/17, we keep waiting and it doesn't cooperate despite the flood of economic data supporting the play, string it out later into the week?  

    2 – Pharm, ARIA, 5/17……roll or punt?

    Thanks!


  32. Phil / TF
    Got caught with my pants down on /TF. Would you wait this out or just get out at loss. 1127 / 1130 seems to be the tipping point range


  33. phil/waiting – it is so true, i need to be far more judicious with my trades than i have been.  it is my biggest weakness right now. 

    i saw 1120 flash on rut and impulsively took the trade.  even if 1120 is a good line to attempt a trade, all the momentum at the time made it lousy in retrospect.


  34. Steve…if you are referring to the calls…they are dead.  The stock is fine, and I have sold the June $8 calls.  I will buy back the May $6 Ps at 5c (free trade in TOS/TDA).  I will then resell the June $6 Ps on a pull back.

    SGEN – buying back the May $30 Ps for 5c.


  35. Bullish trades/Winston – How many bullish trades did we add last week?  I don't think, outside of earnings plays, that we added any bearish ones at all.   Just because I tell you guys I don't trust the rally, doesn't mean we should bet against it.    Our STP is the only portfolio that's aggressively bearish and that one is only down 3% because – we're NOT that bearish!  That's the point – there's nothing really to capitulate – we have some bear hedges on our many, Many, MANY bullish positions – we would never "capitulate" on those and go 100% bullish, would we?  

    Thanks Steve.  If you mean DXD in the STP, those were rolled to the July $28 calls, now .45.  

    /TF/Wombat – Well, I'd DD and average in at 1,125 and I'd play 1x off the 1,130 line for very quick rejections, just looking to pick up nickels and dimes to make up some of the loss.  We spiked to 1,131.20 but only briefly but I'd say any break over 1,130 is time to give up for now.  Watch those Dow and S&P lines to confirm, of course.  

    1,120/Toe – 10-point lines on the Russell are USUALLY good place to trade but you have to have it in context that the move seems toppy (that one certainly did not) and you have AT LEAST two (2) other confirming indexes that are also topping out before you take a short with tight stops.  /TF didn't even pause at 1,120 on the way up this morning – you had to be pretty quick to short it at that line and, if that's the case, you shouldn't be shorting it in the first place!  

    I waited until it STOPPED at 1,130 and THEN I watched it for a while and THEN I said it looked like a good short.  There's no hurry – I would think that by now you can see that there's a set-up to trade 3, 5, 10 times a day – so why do you pressure yourself to get in on any particular one unless it's ALL going your way?  

    And there's 1,127.50 again.  So, two shorts off 1,130 makes up for 1/2 the loss from 1,120, Wombat.  That's what I mean by nickels and dimes.  Now you can assume that's the channel (triangle squeezy channel) and play long over 1,127.50 and short at 1,130 (ish) until it breaks one way or the other.  


  36. On the hour

    12:00 PM ET

    • Dow +0.6%.
    • 10-yr -0.14%.
    • Euro +0.01% vs. dollar.
    • Crude +0.73% to $100.72.
    • Gold +0.86% to $1298.7.


  37. Nordic American Tanker +4% after reporting improved earnings, cash flow

    11:24 AM ET · NAT

    • Nordic American Tanker (NAT +4.1%) is higher after reporting Q1 EPS of $0.05 vs. a $0.31 loss in Q4 2013 and a $0.59 loss in the year-ago quarter, and net operating cash flow of $27.1M vs. $1.9M in Q4 2013 and -$4.9M in the year-ago quarter.
    • Says tanker rates achieved on average for Q1 were $26.3K/day per vessel for its trading fleet, vs. $14.1K/day in Q4 2013.
    • Other tanker shares also are higher: VLCCF +5.9%, FRO +4%, TNK +3.1%, TK +1.5%.


  38. JD.com sets IPO price range, aims for ~$23B valuation

    11:04 AM ET · TCEHY

    • JD.com, China’s second-biggest e-commerce firm behind Alibaba, is looking to sell 93.7M shares (69M from the company, 24.7M from existing holders) in a range of $16-$18M. At the midpoint of its range, JD would be raising $1.17B, and have a valuation of $23.2B (2x trailing sales). (prospectus)
    • The company will trade under the symbol JD. IPO underwriters include BofA/Merrill, UBS, Barclays, Jefferies, Oppenheimer, Piper, SunTrust, and Cowen.
    • JD.com had 2013 revenue of $11.45B (+68% Y/Y), and a net loss of $8M. Gross margin was 9.9%, and fulfillment spend accounted for 6% of revenue.
    • A Tencent (TCEHY) affiliate owns a 14.3% stake going into the IPO. The company recently invested $214.7M in JD, while also agreeing to transfer multiple e-commerce properties and forming an alliance that covers payments integration for its WeChat mobile messaging platform.
    • Founder Richard Liu remains JD’s largest shareholder, and will have 83.7% voting power post-IPO. Hedge fund Tiger Global also has a big stake.
    • JD kicked off its IPO roadshow today, six days after Alibaba filed for an IPO. The FT reports JD has already received enough orders to cover its books.
    • Previous: JD.com files for $1.5B IPO


  39. BP reportedly plans to invest $1.5B in Egypt nat gas production this year

    10:29 AM ET · BP

    • BP (BP +0.5%) plans to invest $1.5B this year to increase its production of natural gas in Egypt, according to state news agency MENA.
    • Egypt needs to import liquefied natural gas for power generation to make up for shortfalls as domestic gas production declines, a sensitive issue ahead of a presidential election two weeks from now; the lack of gas has caused blackouts in winter this year for the first time in decades.


  40. Whirlpool to hold guidance steady at presentation this week

    10:08 AM ET · WHR

    • Whirlpool (WHR +1.9%) says it will reaffirm previous guidance when it presents at the J.P. Morgan Homebuilding & Building Products Conference later this week.
    • Current FY14 EPS guidance from Whirlpool is at $12.00-$12.50 vs. $12.35 consensus.
    • The company’s comments on demand trends will be closely watched even without the sales and profit projections being altered. In the past, execs have made some sweeping statements on the housing market which have caught notice.


  41. Report: British American Tobacco on the prowl for American target

    09:55 AM ET · BTI

    • British American Tobacco (BTI) has hired bankers to advise it on a potential acquisition in the U.S., according to The Times.
    • U.S. firms are a step ahead of BAT in some growth channels including e-cigarettes.
    • Shares of Reynolds American (RAI +3%) and Lorillard (LO +1.9%) are both higher on the day off the development.
    • Potential consolidation in the tobacco industry has been a hot topic over the last month and has already helped to prop up share price in the group.


  42. BHP says tugboat strike could cost iron ore exporters $100M/day in lost sales

    09:54 AM ET · BHP

    • BHP Billiton (BHP +1.6%) says potential strike action by tugboat workers at Australia’s Port Hedland would cost iron ore exporters A$100M/day (US$94M) in lost sales.
    • The warning follows a strike vote by the Maritime Union of Australia after an agreement couldn’t be reached with employers over a new pay deal.
    • Port Hedland, in the Pilbara region of northwest Australia, has grown into one of the world’s largest iron ore export terminals in recent years; it exported 34.8M metric tons last month, a 33% Y/Y increase.


  43. Lilly diabetes treatment performs better than Sanofi’s Lantus

    09:44 AM ET · LLY

    • Eli Lilly’s (LLY +0.7%) Basal Insulin Peglispro treatment for Type 2 Diabetes was more effective than Sanofi’s (SNY +1.5%) blockbuster drug Lantus in cutting blood-sugar levels in three Phase III studies. Lilly’s treatment also led to less weight gain.
    • The company plans to file for U.S. and EU approval of the once-a-day treatment by the end of Q1 next year. (PR)


  44. BofA and JPMorgan estimates ratcheted lower at KBW

    09:29 AM ET · JPM

    • Following JPMorgan’s (JPM) warning on the continued slowdown in trading activity this quarter, KBW cuts its Q2 EPS estimate for the Bank of Dimon to $1.38 from $1.45 and its full year operating EPS estimate to $5.51 from $5.65.
    • At Bank of America (BAC), it’s the trading slowdown, the suspension of the buyback, and worry over litigation costs. The Q2 EPS estimate is cut to $0.30 from $0.33, and full year is lowered by a dime to $0.90. The team at KBW sees this year’s buyback being halved to $2B after the Fed is finished with its review, but is more worried about how future legal costs will affect profitability.
    • Previously: Cyclical or secular? JPMorgan warns again on trading business


  45. Herbalife finds listening bugs at HQ

    09:22 AM ET · HLF

    • Herbalife (HLF) has discovered multiple non-government listening devices at its headquarters in Los Angeles over the past year, Fox News reports.
    • Bill Ackman, who is waging a very public battle against Herbalife, has denied any connection to the bugs.


  46. Rio Tinto named top global mining stock by J.P. Morgan, +3.7% premarket

    09:20 AM ET · RIO

    • Rio Tinto (RIO) +3.7% premarket and the day’s top performer on the FTSE after J.P. Morgan Cazenove names the stock its top pick in the global mining sector.
    • RIO is poised to generate an estimated free cash flow of 9% in 2015, “among the highest across the market, and be in a position to augment a ~4% dividend yield with additional returns of capital,” JPM says.
    • The firm also raises its view of the overall group to Overweight from Underweight, expecting free cash flow improvement, capital returns potential and attractive relative valuation begin to be appreciated more fully in H2.


  47. Logitech +6.7% on Credit Suisse upgrade

    09:05 AM ET · LOGI

    • Credit Suisse has upgraded Logitech (LOGI) to Outperform. The firm considers the peripherals vendor attractively priced following a selloff that has left shares trading at 12.8 2016E GAAP EPS, and sporting a 7.9% estimated 2016 free cash flow yield.
    • Shares more than doubled from July to January, aided by investor enthusiasm for soaring iPad keyboard cover and wireless speaker sales. But they’ve sold off over the last two months, thanks in part to the ho-hum full-year guidance provided with Logitech’s Q1 beat.


  48. Pandora +3.4% on MKM upgrade

    08:50 AM ET · P

    • With shares down 44% from a March high of $40.44, MKM has upgraded Pandora (P) to Buy. The firm cites Pandora’s sticky audience – the company has held Apple, Spotify, and a slew of other rivals at bay – and improving ad monetization/targeting.
    • Pandora ticked higher on Friday, shrugging off reports Apple is set to acquire Beats Electronics. MKM’s upgrade comes five days after Pandora launched Promoted Stations, an ad solution that allows marketers to promote audio streams within a user’s Stations You Might Like playlist section.
    • MKM started Pandora at Sell a year ago, when shares were at $16. It upgraded the Web radio leader to Neutral on March 5, when shares were at $39.


  49. Twitter +2.8% following (another) upgrade

    08:25 AM ET · TWTR

    • SunTrust’s Robert Peck has upgraded Twitter (TWTR) to Buy, and set a $45 PT. He argues improving ad monetization can propel shares higher in spite of slowing user growth.
    • Peck had downgraded Twitter in mid-December, when shares were at $59.
    • BofA/Merrill upgraded Twitter on Friday, citing ad monetization and several other factors. Morgan Stanley upgraded the microblogging platform the day before.
    • The upgrades have helped Twitter bounce 12% from their Wednesday low of $29.51, which followed an ugly lockup expiration day. It’s still down 48% YTD due to a mixture of valuation, growth, and engagement concerns.


  50. Gogo +7% on Q1 beat, guidance reiteration

    08:16 AM ET · GOGO

    • GOGO is reiterating full-year guidance for revenue of $400M-$422M (consensus is at $412.9M), adjusted EBITDA of $8M-$18M, and cash capex of $105M-$125M.
    • North American commercial aircraft online rose by 1% Q/Q and 9% Y/Y to 2,056. Business satellite systems online +1% Q/Q and +4% Y/Y to 5,252, and business ATG systems +10% Q/Q and +45% Y/Y to 2,250.
    • Service revenue +32% Y/Y to $72.3M, down from Q4′s 44% clip. Equipment revenue +48% vs. +53% in Q4.
    • NA commercial aviation revenue +32% Y/Y to $57.1M, with a $5.8M segment profit. Business aviation +47% to $38.6M, with a $16.5M segment profit. Rest of world commercial aviation (still in its early stages) had a $16.9M segment loss.
    • Cost of service revenue rose 32% Y/Y (the same rate as service rev. growth) to $72.3M. Total costs/expenses rose 29% to $105M.
    • Expectations were a little lower than when Gogo posted its Q4 report on March 13.
    • Q1 results, PR


  51. Investors back Mrs. Butterworth’s-Jimmy Dean marriage

    08:00 AM ET · PF

    • Shares of Pinnacle Foods (PF) soar 22.8% to $37.40 after Hillshire Brands (HSH) offers to buy the company
    • Traders are giving Pinnacle a little premium over the calculated deal price of $36.02.
    • The combination of the food companies is expected to be immediately accretive to earnings. By the third year, the merger is forecast to generate $140M in annual cost synergies.
    • HSH +5.6% premarket.


  52. Volkswagen leans on China and Europe to make off for U.S. dropoff

    07:47 AM ET · VLKAY

    • Volkswagen (VLKAY) reports it sold 921.4K VW brand vehicles in China through the first four months of the year, an increase of 18.1% from last year’s level.
    • The automaker is also holding serve in Europe where its 4.1% YTD sales growth matches or edges out the growth of major rivals.
    • In the U.S., the story is different: Sales of Volkswagen brand cars is off 10.4% with the lack of new model introductions a significant factor.


  53. More job cuts coming for JPMorgan?

    07:39 AM ET · JPM

    • As many as another 10K job cuts are on the table for JPMorgan (JPM) this year, reports the NYPost, as business shrinks and regulators continue to hound the bank.
    • “It’s just beginning to hit them over the head,” says consultant Nancy Bush. “Consumers have reduced their debt … the government leveraged up to fill that hole and is now going to start deleveraging. There’ll be layoffs at JPMorgan.
    • The bank today has a headcount of 250K worldwide, down from 280K three years ago.
    • Will Jamie Dimon be one of the exits? “I don’t know when Jamie Dimon finally throws in the towel and says, ‘I can’t take this anymore; this is absolutely absurd,’ but I am starting to believe that this point does exist,” says Dick Bove.


  54. Comps and margins dive at Cache in FQ1

    07:30 AM ET · CACH

    • Cache (CACH) reports comparable-store sales dropped 8.9% in FQ1 on low mall traffic.
    • CEO Jay Margolis acknowledged the retailer also misfired with its product assortment during the quarter.
    • Gross profit fell 380 bps to 27.3% in FQ1 as the company pushed hard on the promotional level.
    • Earlier: Cache misses with its FQ1 earnings report


  55. Fed’s Lockhart bullish about U.S. economy, but visibility limited

    Yesterday, 05:33 AM ET

    • The Atlanta Fed’s Dennis Lockhart expects the U.S. economy to start accelerating to an annual rate of 3% this quarter, although “it may not be clear for several months, or even quarters,” whether GDP is on “a stronger and sustained growth path around a run rate of 3%.”
    • Still, Lockhart believes that growth “will justify beginning the process of raising rates in the latter half of 2015,” with the “normalization of interest rates to be gradual.”
    • Lockhart, who was speaking in Dubai, also said that a test scheme involving reverse repos has been successful and “may very well have a role” in how the Fed tries to influence short-term interest rates. The program allows banks and financial firms to park cash with the Fed in exchange for an overnight loan of U.S. Treasurys. The central bank can manipulate the rates attached to the transactions.


  56. Report: Deutsche Bank clears top executives of wrongdoing over Libor

    Yesterday, 05:13 AM ET · DB


  57. Toyota to end supply deal with Tesla early

    Yesterday, 03:38 AM ET · TSLA

    • Tesla Motors’ (TSLA) deal to supply Toyota (TM) with battery packs and motors for the latter’s rechargeable RAV4 electric crossover vehicle will terminate in 2014, the U.S. company has said, as the Japanese firm is “expected to end” the current model this year.
    • Toyota, which owns 2.4% in Tesla, had said in May 2012 that it would purchase parts for 2,600 electric RAV4 EVs over three years in a deal that was initially expected to be worth up to $100M.
    • However, Toyota has sold a mere 1,594 RAV4 EVs since 2012 through April. In Q1, Tesla earned $15.1M from the agreement.
    • Separately, Toyota intends to boost the production of its Camry sedan at its Kentucky plant by 100,000 units after it stops outsourcing some of the production to Fuji Heavy Industries’ (FUJHF) facility in Lafayette in Indiana. Fuji could produce a new SUV in Lafayette when the Camry contract ends.


  58. Xi: China must get used to “new normal” of slower growth

    Yesterday, 03:15 AM ET · FXI

    • Chinese President Xi Jinping has said his country needs to get used to slower growth as the government carries out reform.
    • “We must boost our confidence, adapt to the new normal condition based on the characteristics of China’s economic growth in the current phase and stay cool-minded,” Xi said.
    • However, the government must also prevent risks and take “timely countermeasures to reduce potential negative effects,” he said.
    • Xi’s comments follow data that indicate slowing growth and falling inflation.
    • The remarks are also the latest from a senior figure – including from Xi himself – that China must tolerate more moderate growth; to lower those “potential negative effects,” the government has announced mini-stimulus measures.
    • ETFs: FXI, PGJ, GXC, FXP, KWEB, YINN, CYB, HAO, CNY, ASHR, CHIQ, DSUM, YANG, TAO, CHIX, CQQQ, MCHI, QQQC, PEK, XPP, YAO, CHXX, YXI, FXCH, CHXF, CHII, ECNS, CHIM, CHIE, FCA, KFYP, CHLC, TCHI, CHNA, CN, KBA


  59. Deutsche Telekom demands $1B+ breakup fee from Sprint over T-Mobile

    Yesterday, 02:09 AM ET · DTEGF

    • Deutsche Telekom (DTEGF) wants Sprint (S) to agree to a breakup fee of over $1B in the event that regulators block the latter’s possible acquisition of T-Mobile US (TMUS), the WSJ reports.
    • The German carrier also wants Sprint to pledge to keep the T-Mobile brand and some of its management.
    • Deutsche Telekom’s demands come after regulators implied they would view any Sprint/T-Mobile tie-up skeptically. Three years ago, Deutsche received $3B when authorities blocked the sale of T-Mobile to AT&T.
    • The sides are working on forging a deal in the near term, but could wait until after a government auction of wireless airwaves – which is expected in 2015 – or under a different White House administration.
    • The operators might have a bit more clarity next week, when the FCC is due to decide on how much spectrum carriers can hold and the rules for the spectrum auction.


  60. More pain ahead for small-caps, Credit Suisse says

    Sat, May 10 · IWM

    • Small-cap stocks enjoyed a bit of a bounce yesterday but they’ve lagged the broader market this year, and Credit Suisse predicts more pain ahead.
    • Even though many individual growth stocks have been hit much harder, the Russell 2000 has dropped only ~9% from its early March 2014 peak; average and median pullbacks in the Russell 2000 since the mid-1990s have been a respective 21% and 14%, so Credit Suisse thinks the historical track record points to the Russell approaching 1,000 (vs. its YTD peak of 1,209 and Friday’s close of 1,097) before finding a bottom.
    • The iShares Russell 2000 ETF (IWM) is down ~5% YTD, with its biggest losers – MLI, MDSO, FNGN, ISIS – all plunging at least 40% so far.
    • Meanwhile, the S&P continues to hold up relatively well, and Citigroup’s Tobias Levkovich thinks easier lending standards for bigger companies is an important factor explaining large-cap outperformance; Bespoke sees large-cap stability holding just as much weight as the argument that weakness in momentum names eventually will spill over to the broad market.
    • ETFs: IWM, TZA, TNA, UWM, VB, VBK, URTY, SCHA, TWM, IWO, RWM, SRTY, DWAS, VTWO, JKJ, FYX, VTWG, UKK, SKK, EWRS, JKK, TWOK, SMLV, PXSC, FYC, PXSG


  61. RadioShack closes near all-time low, analyst says “the ship is sinking”

    Fri, May 9 · RSH

    • RadioShack (RSH) has lost almost half its market cap since the beginning of the year, plunging 9.5% today and coming within pennies of its all-time closing low after reneging on its plan to close up to 1,100 stores.
    • RSH said its credit agreement only allows it to close up to 200 stores per year and up to 600 over the life of its credit agreement, prompting Wedbush analyst Michael Pachter to respond that “the creditors clearly are in control of the ship, and in our view, the ship is sinking.”
    • Pachter sees management and creditors trying to compromise on a smaller number of store closings; otherwise, RSH could declare bankruptcy, holding off the creditors and allowing it to close as many stores as it wants.


  62. AAPL fun … (Oy Vey!)

    CBOE
    Contract Adjustment:

    Pursuant to OCC rules (Article VI, Section 11 and 11A), all outstanding AAPL option series will be adjusted to reflect this 7-for-1 common stock split on Monday, June 9, 2014, at 8:30 A.M. Chicago time. The OCC will issue six additional contracts for each open contract on the ex-date. Also on the ex-date, each AAPL series will have an adjusted exercise price equal to one-seventh of the exercise price rounded to the nearest 1/100th of a point for each AAPL series existing on the business day immediately prior to the ex-date. The option symbol will remain the same. Adjusted exercise prices are shown below. (see link)


  63. Thanks Diamond


  64. UNP/pwright – after expiration of the May2 190s, net on the June 190 calls after commish is 2.2714. Just rolled my June 190s to AUg 190s for 2.49 so net on the Aug 190 is now 4.77, currently trading at ~6.25. Order in to covering with a May4 (this week) 192.5 call at 1.24 


  65. Phil,

    While we await a possible correction – admittedly not the best time to sell puts – what are your thgts on selling puts on ICE @170 strike,Dec or Jan (190 now, 1 yr  range 220-170)?

    Thanks


  66. NAT – if anyone is interested in playing in shipping, a fun read is "The Shipping Man."  Just finished it this weekend and recommend it.
    http://www.amazon.com/The-Shipping-Man-Matthew-McCleery/dp/0983716307


  67. UNP – correction, the May4 192.5s are next week. order filled at 1.24.


  68. AAPL/Diamond – Funny how it's having trouble at $600, soon to be $85.71.  

    ICE/8800 – I think the possibility of rule changes on HFT makes them too much of a wild-card.  Do you REALLY want to own them just 10% down from here (25% off the ATH) if they change the rules and knock out a huge portion of ICE's income?  Will you want to ride that out?  

    No M&A today but everything is getting upgraded:

    • The average junk bond yield of 5.18% is higher than the all-time low of 4.93% hit exactly one year ago, but valuations may be even richer now, says Citi.
    • First off, Treasury yields are higher today, meaning spreads are narrower than they were last year. Secondly, current yields have been sustained at these low levels for a much longer period of time than last year. Citi also notes May has been a seasonally weak period for high-yield ever since the financial crisis.
    • "Will elevated valuations and the calendar turning to May cause the bears to come out of hiding," asks Citi. "To be honest, it’s been very difficult being a bear in this market. The relentless Treasury rally has caught us by surprise."

     

    • FBR upgrades Pac West Bancorp (PACW +3.7%) and TCF Financial (TCB +3.1%) to Outperfom and sets price targets of $47 and $18 respectively.
    • KBW upgrades First Interstate Bancsystem (FIBK +1.7%) to Outperform with $32 PT.
    • Double upgrades are in order for Essent Group (ESNT +2.5%), from Compass Point and KBW, after last week's Q1 earnings.
    • Stifel Nicolaus upgrades Cousins Properties (CUZ +1.4%) to Buy with $13PT after the company beats estimates by $0.02.
    • Guggenheim upgrades Travelers Companies (TRV +1.1%) to Buy and sets a $117 PT.
    • Responding to weakish earnings last week from Barclays (BCS -1.5%) coupled with the plan for an overhaul at the investment bank, RBC Capital and BNP Paribas downgraded the stock to Sector Perform.

     

    • TV broadcast stocks are outperforming for the day after the sector was tapped by M.D. Sass to soar.
    • The investment firm notes there is a disconnect between the 10% of carriage fee revenue broadcasters haul in compared to the 35% of total viewing they account for across the industry. A normalization of the revenue mix is in the "early inning," according to Sass.
    • A timely initiation by Wells Fargo of Media General at Outperform is also giving a boost.
    • Gainers: E.W. Scripps (SSP) +7.6%, Nexstar Broadcasting (NXST) +5.7%, Media General (MEG) +4.8%, Liberty Interactive (LVNTA) +1.9%, Sinclair Broadcast Group (SBGI) +1.9%, Gray Television (GTN) +1.7%.
    • Shares of J.C. Penney (JCP +3.9%) are poking out another gain with a note from JPMorgan adding some support to the bull case.
    • Though the investment firm concedes sentiment remains very negative on the beat-up retailer, it sees upside in H2 as liquidity concerns are eased and management changes are unveiled at the Fall Analyst Day.
    • JCP hasn't traded with a double-digit share price since last November.
    • Morgan Stanley analysts are calling a bottom in coal mining stocks (KOL +2.5%), seeing a recovery in the thermal coal market pulled forward by the recent polar vortex and extreme cold; inventories have been falling rapidly, and the firm believes thermal coal prices will continue to rise.
    • Peabody Energy (BTU +2.6%) is viewed as the best way to play the "modest recovery," believing it offers the least downside risk and little value has been assigned to its met portfolio; BTU also has large exposure to preferred thermal coal basins and boasts potential for increased capital return as market conditions improve.
    • The report is a big boost to coal shares today: ANR +6.5%, WLT +4.5%, ACI +4.7%, CLD+1.4%.
    • The South Korean colossus is investing $2B in the biotech arena in an effort to drive growth from its $347B revenue base. Its main initial focus will be biosimilars with a planned 2016 launch in Europe of an Enbrel biosimilar and a 2017 launch of a Remicade biosimilar.
    • The global market for biosimilars, while lagging in the U.S. due to regulatory uncertainty, is expected to grow to $24B by 2019.
    • According to unit chief Christopher Hansung Ko, "Our mandate is to become No. 1 in everything we enter into, so our long-term goal is to become a leading pharmaceutical company in the world."
    • Related tickers: (IBB) (JNJ) (AMGN) (BIIB) (XBI) (SSNLF) (SSNGY)

  69. Little tree trade SWI

    Buy the Jan16 BC spread 30/37.5 for 4.10 Sell 1/2 Jun14 40c @ .90 Sell GTC same amount of Jan16 30 puts for 3.60 now 3.40 but I will hold my bit for a while until I get my price. This gives you the opportunity to sell monthly calls against this play. I have done the same with the Jan15 play done very well so far.


  70. Phil

    good morning!

    have been away for a couple of weeks and just catching up.

    my investment advisor sold July AAPL 535 calls (one contract only) before earnings against stock long position.

    his premise was that nothing good was going to come out of earnings.

    how would you  handle it now?

    he wants to just be called away at 535 in July, plus the $11 he got for premium.


  71. No M&A…sure there is:

    Lumena won't be going through with that $75 million IPO after all. Shire is scooping up the company and its two development programs for rare liver diseases for $260 million in cash along with an undisclosed slate of milestones. The deal comes as analysts buzz about whether Shire ($SHPG) itself may be targeted for an acquisition by either AstraZeneca ($AZN) or Allergan ($AGN), which are both trying to wrestle out of the grip of an unwelcome buyout offer.

    Shire is going about its business as usual, though, continuing its shopping spree under CEO Flemming Ornskov as the multinational biotech builds up its portfolio on rare diseases. This is the latest in a string of deals for Shire, which just days ago bought out Australia's Fibrotech for $75 million upfront and a string of undisclosed milestones, bringing in a lead drug for fibrosis.

    Lumena's top prospect is LUM001, designed to prevent the buildup of bile acids in the liver. That drug is being put through a battery of 7 mid-stage studies. Lumena CEO Mike Grey had been planning to hustle that drug to the FDA for orphan cholestatic liver diseases, right after it finishes the relevent Phase II trials. Their other drug, the early-stage LUM002. is aimed at nonalcoholic steatohepatitis (NASH), a popular target in drug development circles.

    For the time being the 17-member Lumena team will stay intact in San Diego, Grey tells FierceBiotech this morning. But eventually he expects that the work managing the therapies will move to Shire's rare disease team in Lexington, MA, adding that he's been fielding inquiries from several potential buyers since the company emerged from stealth mode about a year ago.


  72. X/Phil – what invigorated them so much today?


  73. It appears that Samesuck has found a whole new field (biotech) that they can copy and then claim innovation! ;-)


  74. Maya1 on AAPL

    Possible first fire the advisor It looks like you hold the stock against the 535 caller. Stock has a delta of 1.00 and your caller has a delta of .91 with a premium of 2.45. So in this position I would let it play out till July as your stock will always go up more than the caller until both have a delta of 1.00 At that time or better in July I would close the caller against the stock and use the profit to set up a new play. My two cents


  75. Yodi

    Thanks for your thoughts.

    you are right- he owns 100 shares of AAPL against the short call.

    however, to close out the caller in July, would be at a loss, assuming AAPL stays around these levels.

    so, it will have to be a roll into Jan of the short call and/or conversion to a BCS. I don't know yet how it will play out.


  76. Yodi

    fire the advisor because he SOLD the short call before earnings or fire him because he wants to be called away at $535?


  77. Maya1 I do not see how it will be a loss but rolling the caller up to say 600 will cost quite a bit I do not see how you lose on the stock. I would not have messed with short calls shortly before earnings it was a high stake gamble. Phil even did warn about this!!!


  78. Maya1 Generally on a BC spread you always limit your up site It does not matter if you hold the stock or a call against the caller in your case you will have reached the limit.


  79. Stocks that may be a bit ahead of themselves: DYN, HAR, LMT, NBR, NYT, PBI, STZ, TSN.

    SWI/Yodi – Good call.  

    Welcome back Maya!  How would I handle it?  I'd get a new investment advisor to start… wink  So I guess he sold them for about $11 and now they are $60, so effectively you lost out on the quarterly gains.  The "good" (relatively) news is the 2016 $600 calls are $60, so you can roll to there and at least capture this move before being called away.  Seriously, are you sure he doesn't just want you out of AAPL because it uses up a lot of buying power that is depriving him of commissions on your account?  

    In your situation, I'd sell the stock ($592) and pay $156 for the 2016 $440 calls and roll the short calls to the 2016 $600s (even) so you net $592 + $11 – $156 = $447 with another $160 of upside at $600 for a total of $607 back – that's not too terrible and, since you are out of AAPL, you can sell the 2016 $500 puts for $34 and then you have a re-entry at $466 (or you keep the $34).  

    Lumena/Pharm – Under $2Bn is under the radar these days.  

    X/Scott – China's long-term outlook for continued growth is indicating the Government will not let their targets slip too far.  Of course, what else do you expect them to say?

    Indexes breaking higher now. Theme on television is "why don't more people buy stocks?"

    Samsung/Diamond – Just 1.5% of their annual budget, worth spending some money in.  Don't forget, they are 1/4 of South Korea's entire economy.  


  80. Returns/Phil … hi, I made an 11% return last year which trailed the market. However my target was set as just 15%. I missed the target due to market hedges going against me. That does not bother me. What did bother me in the past was paying a pension company to manage my pension and they averaged a return of 1% per annum from 2001-2011 … just wondering is 11% an ok target for stock market investing by an individual or should I be more aggressive and aim for a higher %… Just a general thought and would appreciate your viewpoint ..Thanks


  81. As you get more confident, you can raise your targets a bit but 11% a year, compounded for a couple of decades, is a LOT of money.  It's not so much about the 11% or 15% or 20% but to be consistent in not losing money – over the long haul that keeps you way ahead of the market and, when the market does dip, then you'll find yourself in a position to do more bargain-hunting.  

    Also, the buy/write strategy (which I assume you're using) may limit gains but it also drives down your basis over the years so, rather than a traditional portfolio where you may hold IBM at $150 and 10 years later it's at $250, in a buy/write portfolio you hold IBM at $150 and 10 years later your basis is $50 with the stock at $250 and the $100 you freed up is already working on another stock.  This is something you don't really see in the first few cycles but, about 5 years in, you begin to realize how powerful the system can be!  

    Take F, for example:    Two years ago they were at $11 and we bought the stock and sold the Jan 2014 $10 puts and calls for $2.50 for a net $8.50/9.25 entry.  This Jan, they were at $15 and the puts were worthless and the Jan $10 calls were $5.  Those got rolled to the 2016 $15 puts and calls for $3.75 and now the basis is $10.75/12.88 with a call away at $15.  At net $8.50, the max profit was $1.50 (17.6%) but at $10.75, the max profit is $4.25 (39%) so, even though it doesn't seem sexy from a P&L perspective in the portfolio, it's well on track despite the stock popping much higher than we thought.  Plus, you get the .50 dividend, which knocks off another $1 each cycle, so now we're talking net 8.75/11.88 – even with a stock that "got away from us".  

    Of course, if the stock goes too far up, we can just let it go because a buy/write can't be burned to the upside.  If a stock goes down, we make a decision, but we usually have 20% downside protection built into the play.  That's going to keep you ahead of the market almost any year – except the ones where the market pops 30%, of course. 


  82. scottmi re: UNP, I also rolled to Aug 190s and paid about the same, covered with may4 192.5s but covered a bit early, didn't get as good a fill as you (only got $.90).  Still it's looking good, green so far and plenty of time to sell premium.  It was sort of nice that last week's covers expired just above the money, allowed for lifting the cover up to the 192.5s.


  83. Phil,

    Thx for your perspective re ICE and HFT. Very true if regulators get religion and walk the path of the righteous… and then again there is the influence of special interests.

    Thanks


  84. VIX….goes splat.


  85. RAX up big on earning day… Does someone know something?

    RAX
    Consensus Estimate – 0.12
    Whisper Number – 0.12
    Average Move – 8.5%
    Priced into Options – 11.45%

    Negative bias on Earnings Whisper but up 4.8% on the day. Leading pigs to the slaughter?


  86. VXX down from $50 to $37 since they reset it back in November down 26%! VIX is down from 13.76 to 12.21 in the meantime only down 11.2%. The Jan 16 puts have lost value since then, but it's the paradox of this trade – the VIX goes lower so the puts go lower as well even thought the underlying instrument is getting killed because the VIX is going lower or nowhere! What counts is the intrinsic value when VXX is at 10 and the Jan 16 25 puts have $15 on instrinsic value. 


  87. Phil

    thanks.

    while I had the concept figured out, I was going to have a hard time figuring out the exact numbers!

    now I can go back to my 'other' hobby.

    while we are on it, what do you think of selling $300 puts on ISRG? There is some trepidation about hospitals not buying their equipment at the rate they were predicting earlier in year.


  88. UNP/pwright – i'm going to get more aggressive with the stop, moving my stop up to a -close- under last week's mild swing low of 187.30 to protect gains. a bit tight, but is also approximate to the 50ma and don't want it to turn into a money loser at this point.. Looking for a close above 192.05 and may add a new spread, perhaps a +Aug 190 / -June 195


  89. Buying stocks in sum pump manufacturers:

    http://gizmodo.com/the-antarctic-ice-sheet-has-started-to-collapse-and-not-1575164209

    For years, scientists have feared the collapse of the West Antarctic ice sheet—a vast swath of ice that could unleash a slow but unstoppable 10-foot rise in sea levels if it melted. So here is today's terrible news: we now know the ice sheet is melting. And there's pretty much nothing we can do to about it.

    The accelerating collapse of the West Antarctic Ice Sheet is reported by two different teams of scientists, in the journals Science and Geophysical Research Letters. Its collapse has been predicted for decades, most prominently by glaciologist John Mercer, but this is the first tangible evidence that it's actually now happening. Warmer waters are most likely responsible for the melting.

    It will take hundreds of years, but that's probably about 1/2 inch every year. Imagine your beach front property with another 15 inches of water 30 years from now during high tides. Although it will be treated as a hoax by some…


  90. UNP – looking more, closing below 185 would be a better confirmation for me that it's lost upward momentum. the 187.3 will be a decision point to maybe roll down the 192.50s rather than exit completely. Have to see what the premiums looks like if get's there.


  91. OK, SPY 189 May5 Ps ~ 1.35.  Scaling in.  5 of them.


  92. X/Phil – was that it? thanks…with this move, was there a People's press release that said US Steel was going to be the exclusive supplier to China?


  93. Phil// Is this is a good time to initiate a position in DXD?  If so what would be your trade suggestion?  Thanks.


  94. scottmi that makes sense, at below 185 that'll be a BE for me, which is better than the loss I would have had on the previous stop.  If we get out 2 weeks and still green, can move the goalposts forward another step, and/or if iffy can go back to the 190s..


  95. Go go go go go……


  96. HFT/8800 – Of course it's not a certainty but, whenever I sell a put, I try to think of under what circumstances the stock might get put to me and then, I have to think if I would still want to own the stock after that bad news.   With F, it would be a recall or a sales slump – things I expect they could ride out.  With BA, a plane crash – also something they could ride out.  With TSLA, however, it would be lack of demand for current or new model or defects – neither of which I would want to ride out.  Same goes for dividend payers who no longer pay a dividend – what would be the point of owning them?  So, with ICE – if they went down because of HFT – I would not be happy to DD nor would I want to ride it out as they rethink their model.  

    VIX/Pharm – 12!  Up 121 on the Dow is not considered volatile these days.  

    RAX/StJ – Didn't you watch Silicon Valley? (good show)  It's all about the cloud!

    ISRG/Maya – I still like them for the long run.  The system is more efficient for hospitals, who are all about the efficiency.  I don't think they'll have explosive growth but it's all about selling the disposables, not the machines and those are still rolling out.  The current p/e is 24 but, as you can see, recurrent revenue keeps climbing and service will keep growing too.  Like CMG, they can eventually raise their prices and really cash in.  New system sales are incremental at this point but also moving at a healthy clip.  Margins compressed because they rolled out a new machine (R&D, marketing) and also, they have already hit the low-hanging fruit from hospitals that are easy to sell and now they are going to have to work harder for each new sale.  Still, it's a nice little business to own a piece of.  

    Ice sheets/StJ – That's the problem – people can't get their head around a problem that takes 150 years to impact us.  By the time the beach houses start falling into the sea – it will be far too late to fix it. 

    X/Scott – I don't see anything else. 

    DXD/Rookie – Well I like DXD if the S&P is below 1,900.  Above 1,900, there's not much reason for us not to press on to 2,000, which is up 5%, which is another 800 on the Dow to 17,500 so, as a hedge I like DXD but, as a bet – not so much.  Trade idea is above.  

    RUT up 2.5% for the day.   That's an entire US index gaining 2.5% in a day on no actual news.  Nasdaq up 1.7%, S&P up 1%, Dow up 0.75%.  SPY volume currently at 1/2 a "normal" day but should pick up to 2/3 by the close.  


  97. Phil somewhere I saw something about biotech was a buy. RUT? Why?


  98. Biotech/Shadow – I think because Samsung got interested in it.  

    RUT plunged 5 points into the close, back to 1,129.30.  That's OK, they can afford it.  


  99. Zoom-zoom…

    Dow volume low, but just about the crappy averages we get on the other indices now. Trading volumes have been slowly going down over the last years and Pharm had a good chart showing that. The retail investors are gone, nowadays it's just robots against computers! I don't even know if we can use volume indicators for TA anymore!


  100. I remember when these Tea Party were panicking about the debt…

    http://www.ritholtz.com/blog/2014/05/tune-out-politicians-still-obsessing-over-government-debt/

    It looks like small adjustments to Social Security, Medicare and tax rates could actually make a big difference long term and reverse the curve.


  101. Phil// Suggestion on efficient usage of margins on the regular account. I sold 1 AAPL 2016 450 puts for $46.50 and now they are trading at $18.50 or so but I still have a maintenance requirement of $6372.50.  To gain another $1850.00 I have to maintain a margin of $6372.50.  Should I close the $450 puts and use that margin requirements to buy an AAPL BCS or invest some where else? Thanks.


  102. Returns …  Thanks for the insight Phil


  103. That sounds like a positive number for hospital stocks:

    http://talkingpointsmemo.com/livewire/medicaid-expansion-states-hospitals-fewer-uninsured

    Hospital Corporation of America executives said uninsured admissions dropped 29 percent in states that expanded Medicaid, but actually increased by 5.9 percent in non-expanding states.

    Community Health Systems reported that self-pay admissions — frequently uninsured — fell 28 percent in Medicaid-expanding states, while their self-pay emergency room visits declined by 16 percent in those states but rose in states that declined to expand Medicaid.

    Finally, Tenet Healthcare detected a 33 percent drop in its uninsured visits in expanding states, but a 2 percent bump in non-expanding states.

    Those drops in uninsured visits were typically paired with an increase in Medicaid-paid visits, up to 22 percent, in expanding states.


  104. Is there a link somewhere to the different STP, LTP portfolios?

    Thank You


  105. Phil // Aaarghhh

    took your advice, played for some RUT dimes, then it just shot up so I got out and went into the sun. 

    Of course that's when it plunges at close. 

    Would you be looking at a conviction short on this MF or just sign the divorce papers and move on. 


  106. From Bloomberg, May 12, 2014, 4:39:31 PM


    Traders work on the floor of the New York Stock Exchange on May 7, 2014. Photographer: Andrew Burton/Getty Images

    U.S. stocks climbed, pushing benchmark indexes to records, after Internet and small-cap shares rallied amid deals activity that boosted confidence in the world’s largest economy.

    To read the entire article, go to http://www.bloomberg.com/news/2014-05-12/u-s-index-futures-rise-after-equities-post-weekly-drop.html
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  107. From Bloomberg, May 12, 2014, 2:30:46 PM


    A woman casts her ballot at a polling station on May 11, in Hartsizk, Ukraine. Photographer: Brendan Hoffman/Getty Images

    Rebels in eastern Ukraine said they’re seeking to join Russia after disputed referendums yesterday as the government in Kiev was handed a deadline to pay for Russian gas to prevent supplies being cut off.

    To read the entire article, go to http://www.bloomberg.com/news/2014-05-12/russia-signals-respect-for-ukraine-s-separatist-ballots.html
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  108. From Bloomberg, May 12, 2014, 6:16:48 PM

    Photographer: Bill O’Leary/The Washington Post via Getty Images

    The Catch goes to Seth Masket at the Monkey Cage. He has a great post on the futility of campaign-finance regulation to date. The reaction to regulation has generally been to find new legal ways to shovel even more money into campaigns. As Seth points out, one of the consequences is that the complex mechanisms that are used to work around the law make disclosure meaningless.

    To read the entire article, go to http://bv.ms/1smBGDL
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  109. From Bloomberg, May 12, 2014, 2:30:01 PM

    Flower petals are thrown around Bharatiya Janata Party (BJP) prime ministerial candidate Narendra Modi as he rides in an open jeep on his way to file nomination papers on April 9, 2014 in Vadodra, India. Photographer: Kevin Frayer/Getty Images

    Narendra Modi called for unity in India as exit polls signaled his opposition bloc would win a majority in national elections, boosting his chances of taking power after pledging to revive Asia’s third-largest economy.

    To read the entire article, go to http://www.bloomberg.com/news/2014-05-12/india-exit-polls-show-modi-s-alliance-winning-most-seats-in-vote.html
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  110. From Bloomberg, May 12, 2014, 1:38:46 PM

    I’m over it. You should be, too. Photographer: Paul Thomas/Bloomberg

    The next time you read about a well-known banker calling for an end to banker-bashing, remember Robert Diamond, the former chief executive officer of Barclays Plc. Back in January 2011, Diamond appeared before the House of Commons Treasury Committee in London, where he told lawmakers it was time to move on and stop beating up on the financial-services industry.

    To read the entire article, go to http://bv.ms/1oJ3sds
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  111. From Bloomberg, May 12, 2014, 2:56:44 PM

    U.S. House Speaker John Boehner, an Ohio Republican, said when looking at how generous wind and solar tax credits are, “you’ve really got to scratch your head.” Photographer: Andrew Harrer/Bloomberg

    U.S. Senate Democrats are trying to
    pass more than $80 billion in tax reductions. Their obstacles
    include Republican plans to cut even more.

    To read the entire article, go to http://www.bloomberg.com/news/2014-05-12/senate-nears-showdown-on-reviving-lapsed-u-s-tax-breaks.html
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  112. From Bloomberg, May 12, 2014, 12:01:01 PM

    Jeffrey Gundlach, co-founder and chief executive officer of DoubleLine Capital LP. Demographics are part of Gundlach’s twist on Bill Gross’s “new normal,” a term that the founder of Pacific Investment Management Co. popularized in 2009 to describe an era of lower growth and reduced U.S. influence in the world following the credit crisis. Photographer: Scott Eells/Bloomberg

    Blame the harsh winter for stifling
    economic growth or tensions in Ukraine for sparking demand for
    havens.

    To read the entire article, go to http://www.bloomberg.com/news/2014-05-12/gundlach-s-no-normal-means-treasury-yields-defy-market-selloff.html
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  113. From Bloomberg, May 12, 2014, 10:01:15 AM


    Commuters make their way to work in Washington, D.C. Photographer: Pete Marovich/Bloomberg

    Ryan Yang could have taken a job in a New Jersey DNA sequencing laboratory after graduating from college last year. Instead, the 23-year-old lives with his family in Queens, New York, still unemployed and searching.

    To read the entire article, go to http://www.bloomberg.com/news/2014-05-12/america-on-the-move-becomes-stay-at-home-nation-for-millennials.html
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  114. From Bloomberg, May 12, 2014, 4:22:46 PM

    An engraving of the Devil from the Compendium Maleficarum, by Francesco Maria Guazzo, 1626. Illustration: DeAgostini/Getty Images

    Harvard University won’t halt a “satanic black mass” planned by students at its extension school even though President Drew Faust said she’s opposed to the event.

    To read the entire article, go to http://www.bloomberg.com/news/2014-05-12/harvard-won-t-halt-satanic-black-mass-planned-by-student-group.html
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  115. From Bloomberg, May 12, 2014, 6:42:27 PM

    A bipartisan energy-efficiency bill
    collapsed in the U.S. Senate after a feud over election-year
    amendments related to President Barack Obama’s energy policies,
    casting doubt on a separate measure to approve Keystone XL.

    To read the entire article, go to http://www.bloomberg.com/news/2014-05-12/energy-efficiency-bill-dies-in-u-s-senate-after-fued.html
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  116. From Bloomberg, May 12, 2014, 10:38:55 AM

    Mario Draghi, president of the European Central Bank. Photographer: Jasper Juinen/Bloomberg

    The euro-area’s fastest economic growth in three years probably won’t be enough to stop Mario Draghi from easing monetary policy.

    To read the entire article, go to http://www.bloomberg.com/news/2014-05-11/draghi-drives-ecb-toward-stimulus-even-as-economy-grows.html
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  117. From Bloomberg, May 12, 2014, 4:19:08 PM

    Stocks that were snapped up last year because of the promise of future earnings growth became losers in March, April and May. Los Gatos, California-based Netflix Inc., which rallied 298 percent in 2013, is down 26 percent. Amazon.com Inc. in since March. Photographer: David Paul Morris/Bloomberg

    Nobody saw it coming.

    To read the entire article, go to http://www.bloomberg.com/news/2014-05-11/hated-stocks-unlock-market-as-analysts-no-guide-to-s-p-500-gains.html
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  118. From Bloomberg, May 12, 2014, 10:52:33 AM

    European banks are being urged to
    boost their ability to withstand losses before the conclusion of
    a stress test that is drawing criticism for its design.

    To read the entire article, go to http://www.bloomberg.com/news/2014-05-12/eu-banks-urged-to-boost-capital-now-as-stress-test-doubts-voiced.html
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  119. From Bloomberg, May 12, 2014, 2:53:52 PM

    The U.S. posted a smaller budget
    surplus
    in April than economists projected, as spending
    increased at more than twice the pace of tax receipts.

    To read the entire article, go to http://www.bloomberg.com/news/2014-05-12/u-s-posts-smaller-april-federal-budget-surplus-than-forecast.html
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  120. From Bloomberg, May 12, 2014, 3:40:40 AM

    Confidence in Japan’s economic
    outlook among taxi drivers and restaurant staff and other
    workers soared by a record in April, indicating the blow from
    last month’s sales-tax increase may be short-lived.

    To read the entire article, go to http://www.bloomberg.com/news/2014-05-12/japan-shows-resilience-to-tax-rise-as-confidence-gains-by-record.html
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  121. Mike Luckovich: Spin :-)


  122. This article by Paul Pierce states it may be time to buy the NASDAQ because of extreme bearishness. Before when at these levels we had multi month rallies:

    http://www.gurufocus.com/news/258768/extreme-negative-sentiment-in-nasdaq-stocks--ready-to-rumble


  123. From Bloomberg, May 13, 2014, 4:18:27 AM

    A worker arranges rubber sheets on racks for drying in the smoke house at the Thai Hua Rubber Pcl factory in Samnuktong, Rayong province, Thailand. While top producer Thailand is taking steps to curb output as it has during previous slumps, lower-cost growers including Vietnam and Indonesia are still profitable and show no signs of cutting back. Photographer: Dario Pignatelli/Bloomberg

    Producers of natural rubber used
    mostly in tires are creating a global surplus for the fourth
    straight year, leaving prices mired in a bear market that is the
    worst of any major commodity.

    To read the entire article, go to http://www.bloomberg.com/news/2014-05-13/tire-rubber-plunging-as-vietnam-tappers-expand-world-glut.html
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  124. China data show economy remains stuck in soft patch

    China’s retail sales and industrial output grew an annual 11.9 percent and 8.7 percent, respectively, both missing analysts’ forecasts.

    Read more: http://www.cnbc.com/id/101666026

    Sent from the CNBC app. Available for iPhone
    and iPad


  125. Retail sales could drive trading on Wall Street

    Barring a geopolitical event, the direction of Tuesday’s trade is likely to be determined by data on April retail sales.

    Read more: http://www.cnbc.com/id/101665275

    Sent from the CNBC app. Available for iPhone
    and iPad


  126. EU court: You can ask Google to delete sensitive info

    People can ask Google to delete sensitive information from its Internet search results, Europe’s top court said on Tuesday.

    Read more: http://www.cnbc.com/id/101666786

    Sent from the CNBC app. Available for iPhone
    and iPad


  127. World stocks on the up

    05:44 AM ET

    • Global equities mostly rise following Wall Street’s strong performance yesterday as investors focus on the improving U.S. economy rather than the tensions in Ukraine and more weak economic data out of Chinese.
    • Indian shares continue to party on the strongish probability that Narendra Modi’s Bharatiya Janata Party has won the country’s general election.
    • Japan +1.9%, Hong Kong +0.4%, China -0.1%, India +1.3%.
    • Euro Stoxx 600 +0.1%, London +0.1%, Paris +0.1%, Frankfurt +0.5%, Milan +0.2%, Madrid +0.1%.
    • U.S. stock futures: Dow +0.15%. S&P +0.1%. Nasdaq +0.1%


  128. German investor confidence plunges

    05:15 AM ET · EWG

    • The German ZEW survey of investor confidence has slumped to 33.1 in May from 43.2 in April and missed consensus of 41.
    • However, the current situation print rose to 62.1 from 59.5 and exceeded forecasts of 60.5.
    • Sentiment for the eurozone plunged to 55.2 from 61.2 and fell short of forecasts of 63.5.
    • The fall in the outlook for Germany “should be seen against the backdrop of a strong economic development in the first quarter,” says ZEW President Clemens Fuest. “Already, there are indications that Germany will not be able to maintain this fast pace of growth,” although under the underlying trend should stay positive.
    • The euro takes a dive and is -0.1% at $1.3745, while the DAX is +0.5%. (PR)
    • ETFs: EWG, BUND, EWGS, GERJ, DXGE, DBGR, BUNL, FGM, BUNT, GGOV, HEWG


  129. Bloomberg: Pfizer to raise AstraZeneca bid

    04:37 AM ET · PFE

    • Pfizer (PFE) intends to raise its bid for AstraZeneca (AZN) a second time to “modestly” above the current offer of £50 ($84) a share, Bloomberg reports, adding that the U.S. company will increase the cash portion of its proposal.
    • The new offer would come after AstraZeneca rejected Pfizer’s previous bid of £62.6B ($106B) in which 32% was to be paid in cash and the rest in stock.
    • Pfizer is likely to make the new proposal only after U.K. parliamentary hearings about the deal, which are due to take place today and tomorrow. CEO Ian Read and AstraZeneca counterpart Pascal Soriot are set to testify, with Read likely to face questions about the strength of Pfizer’s pledge to retain British workers and facilities.
    • In the U.S., Read has told the governors of Maryland and Delaware that it’s too early to say how any deal would affect jobs and manufacturing in their states.
    • Separately, Pfizer has sold $4.5B in bonds to repay securities that mature within a year after increasing the auction from $4.25B.


  130. Telecom Italia Q1 net profit slumps almost 40%

    03:58 AM ET · TI

    • Telecom Italia’s (TI) Q1 net profit dropped nearly 40% to €222M ($305.49M) from €364M a year earlier.
    • Revenue fell nearly 12% to €5.19B.
    • EBITDA -8.4% to €2.2B.
    • Debt -€1.2B to €27.5B.
    • Earnings hurt by weakness in Italy and Brazil, and currency fluctuations. (PR)


  131. Reuters: Credit Suisse may have to pay over $2B to resolve U.S. tax case

    03:48 AM ET · CS

    • Credit Suisse (CS) could be facing fines of more than $2B for helping U.S. citizens evade taxes, Reuters reports.
    • The New York State Department of Financial Services wants Credit Suisse to pay $1B, although the figure will probably be reduced following negotiations. The Department of Justice is seeking up to $1.6B and wants the bank to plead guilty to criminal charges.
    • Any penalties would add to the $196M that Credit Suisse agreed to pay the SEC in a related case earlier this year.


  132. Airbus core profit drops 4.6%

    02:37 AM ET · EADSY

    • Airbus Group (EADSY) Q1 adjusted EBIT fell 4.6% to €700M ($963M) but topped consensus of €644M.
    • Revenue +5% to €12.6B vs forecasts of €12.4B.
    • Net profit +93% to €439M ($604M).
    • Free cash flow before acquisitions -€2B vs -€3.2B a year earlier. (PR)


  133. Chinese industrial output, retail sales slow

    02:24 AM ET · FXI

    • Chinese industrial-output growth moderated to 8.7% on year in April from 8.8% in March and missed forecasts for an increase to 8.9%.
    • Retail sales softened to +11.9% from +12.2% and undershot consensus that was also +12.2%.
    • Urban fixed-asset investment +17.3% vs +17.6% and +17.7%.
    • Aggregate financing, the widest measure of new credit, fell to 1.55T yuan ($249B) from 2.07T yuan in March but topped expectations of 1.48T yuan. New local-currency bank loans dropped to 774.7B yuan from 1.05T yuan and fell short of forecasts of 800B yuan.
    • The M2 money supply rose 13.2% on year vs +12.1% in March.
    • The data reflects Chinese attempts to rein in soaring lending at the expense of higher growth, although expectations are increasing that the People’s Bank of China will loosen monetary policy, especially with inflation low and factory gate prices in long-term deflation.
    • The Shanghai Composite is -0.25%.
    • ETFs: FXI, PGJ, GXC, FXP, KWEB, YINN, CYB, HAO, CNY, ASHR, CHIQ, DSUM, YANG, TAO, CHIX, CQQQ, MCHI, QQQC, PEK, XPP, YAO, CHXX, YXI, FXCH, CHXF, CHII, ECNS, CHIM, CHIE, FCA, KFYP, CHLC, TCHI, CHNA, CN, KBA


  134. Tuesday’s economic calendar

    12:00 AM ET


  135. Microsoft’s Office iPad downloads hit 27M; new Azure tools released

    Yesterday, 05:46 PM ET · MSFT

    • Office iPad app downloads have hit 27M in 5 weeks, Microsoft (MSFT) exec Julia White stated at the company’s TechEd conference. The software giant previously announced downloads for the long-anticipated and generally well-reviewed apps topped 12M in a week.
    • Microsoft is also rolling out several new features for Azure for the second time this spring (previous). Among them is ExpressRoute, a solution that (via service provider partnerships) allows Azure servers to directly connect with enterprise servers without touching the public Internet.
    • ExpressRoute yields improved performance for hybrid cloud deployments – Microsoft has been trying to use make strong hybrid cloud a differentiator relative to Amazon Web Services (more focused on public cloud services).
    • Also announced: 1) An Azure anti-malware solution for cloud services and virtual machines. 2) New encryption, data loss prevention, and disaster recovery options. 3) A simplified cloud storage solution that allows multiple virtual machines to share the same file.
    • Microsoft’s Azure revenue rose 150% Y/Y in the March quarter, but the company hasn’t given a specific sales figure. Synergy Research recently declared Azure to be “pulling away” from other rivals chasing Amazon, but its estimated sub-10% share remains well below Amazon’s ~30% share for now.


  136. Rick’s Cabaret International EPS $0.45

    Yesterday, 05:15 PM ET · RICK

    • Rick’s Cabaret International (RICK): FQ2 EPS of $0.45 .
    • Revenue of $32.87M (+14.4% Y/Y).
    • Press Release


  137. Bloomberg: AT&T in talks to buy DirecTV for ~$100/share

    Yesterday, 05:10 PM ET · T

    • Bloomberg reports AT&T (T) is in “advanced talks” to acquire DirecTV (DTV) for ~$100/share – a 15% premium to DirecTV’s Monday close, and a 29% premium to where shares traded before the WSJ‘s May 1 report about deal talks.
    • The acquisition price values DirecTV at $51B, or over $66B after factoring net debt.
    • Bloomberg adds that under discussed plans, DirecTV CEO Mike White plans to retire after 2015.
    • DTV now +5.6% AH to $92.
    • Earlier: AT&T/DirecTV deal could reportedly be announced in two weeks


  138. magicJack -5.4% AH on Q1 revenue miss; guidance reiterated

    Yesterday, 04:47 PM ET · CALL

    • magicJack (CALL) is reiterating guidance for 2014 revenue of $158M-$163M (above a $157.5M consensus) and adjusted EBITDA of $48M-$52M.
    • Registered users for magicJack’s VoIP calling apps rose 21% Q/Q in Q1 to 8.4M. But active magicJack subscribers fell by 100K to 3.1M, with sub activations declining by 20K to 196K. Average monthly churn was at 3.3%.
    • Gross margin fell to 63.2% from 63.9% in Q4 and 69.6% a year ago. A 53% Y/Y increase in ad spend to $4.3M helped fuel a 39% increase in opex to $14.7M.
    • Access right renewal revenue rose 4% Q/Q to $15.4M (44% of revenue), and device sales totaled $12M. Free cash flow was $12.8M, +102% Y/Y and above net income of $9.4M.
    • Q1 results, PR


  139. Rackspace +9.7% AH on Q1 beat, solid Q2 guidance

    Yesterday, 04:17 PM ET · RAX

    • Rackspace (RAX) expects Q2 revenue of $434M-$440M, favorable at the midpoint to a $435.5M consensus.
    • In spite of intense cloud infrastructure price pressure, adjusted EBITDA margin rose 80 bps Q/Q in Q1 to 33.2% (it was down 130 bps Y/Y), and contributing to its EPS beat. Rackspace expects a Q2 adjusted EBITDA margin of 32%-34%.
    • Adjusted free cash flow was $39.9M, up from $15.3M in Q4 and -$1.2M a year ago, and also topping net income of $25M. Capex totaled $101M (24% of revenue).
    • Dedicated cloud (Web hosting) revenue +3% Q/Q and +10% Y/Y to $299.7M. Public cloud revenue (inc. OpenStack) +4% Q/Q and +34% Y/Y to $121.4M.
    • Net upgrade rate fell to 0.9% from 1.1% in Q4. Churn was -0.6% vs. -0.7%. Servers deployed rose 2% Q/Q to 106.2K, and average revenue/server rose $14 to $1,336.
    • Q1 results, PR


  140. Carnival to send a 4th liner to China

    Yesterday, 03:41 PM ET · CCL

    • Carnival (CCL +1.5%) plans to send a fourth cruise liner to China to meet demand in the region.
    • The company will send the Europe-based Costa Serena liner to bolster its ability to add cruises from China to Japan and South Korea.


  141. Apple reportedly drawn to Beats’ streaming service; sell-side has its doubts

    Yesterday, 03:37 PM ET · AAPL

    • Bloomberg reports Apple (AAPL +1.3%) became interested in Beats after trying out its subscription streaming service, which has won praise for its personalization tech – it combines human curation with recommendation algorithms, and takes a user’s mood/environment into account. The news service adds Apple plans to work with Beats to “improve the quality” of its headphones, which have a loyal following but also plenty of audiophile critics.
    • Billboard and the WSJ report Dr. Dre is set to join Jimmy Iovine (previous) as an Apple employee once the Beats deal goes down. Billboard adds the Beats co-founders could take the stage at Apple’s June 2-6 WWDC developer conference.
    • Many on the sell-side aren’t thrilled with the Beats reports. Uber-bull Gene Munster: “We are struggling to see the rationale behind this move. Beats would of course bring a world class brand in music to Apple, but Apple already has a world class brand.” He speculates Apple’s biggest motivation is adding Iovine to its ranks.
    • UBS’ Steve Milunovich offers a more positive take: He thinks Apple might be paying less than 3x sales for a high-margin brand, and sees Beats’ offerings strengthening Apple’s streaming and wearables efforts. Milunovich also sees “philosophical compatibility” between Apple and Iovine.
    • BTIG’s Walter Piecyk isn’t a fan, but isn’t too worried either. “$3 billion is less than 2% of the company’s cash and less than 10% its annual free cash flow … we are more interested in further exploring our belief that rising upgrade rates in the [U.S.] could provide a nice tailwind for Apple in [2H14].”


  142. Alcoa nears 52-week highs, reportedly moving into energy trading in Brazil

    Yesterday, 03:28 PM ET · AA

    • Alcoa (AA +4.3%) jumps to within pennies of its 52-week high following a FT report yesterday that the company will reduce aluminum production in Brazil and move into energy trading.
    • A long drought caused many of Brazil’s hydropower dams to dry up, which has helped push up spot energy prices; Alcoa’s plan is to take advantage by selling some of the power saved by reducing production for higher profits.
    • Brazil’s national electricity operator estimates power supplies will drop by up to 6% if reservoir levels, currently at 38% capacity, continue to fall; hydro accounts for more than 70% of Brazil’s energy supplies.


  143. Sony reportedly halts OLED TV development; Universal Display lower

    Yesterday, 02:56 PM ET · SNE

    • The Nikkei reports Sony (SNE +0.5%) is halting OLED TV development. Universal Display (OLED -5.2%) spiked sharply lower on the report, but has recovered some of its losses.
    • Sony, which showed off the world’s first 4K OLED TV in January, has already called off an OLED TV JV with Panasonic. Today’s report follows one from a week ago stating Samsung is scrapping plans for an OLED TV plant, as sky-high price tags relegate the technology to niche status for now in spite of its image quality and form factor strengths.
    • Universal is giving back a portion of the big gains it saw on Friday due to a Q1 beat and guidance hike that drew plenty of sell-side praise.


  144. GM to offer embedded Wi-Fi option in 2015 models

    Yesterday, 02:50 PM ET · GM

    • General Motors (GM +1.6%) says it will offer embedded 4G Wi-Fi on 2015 models.
    • The automaker says after a GM Onstar customer’s free trial period ends a data plan can be purchased for as low as $5 per month.
    • GM is ahead of Detroit rivals in offering Internet connectivity with its models.
    • What to watch: The initiative could rekindle the Onstar IPO talk that sometimes crops up when the service breaks through with a new innovation.


  145. GE, Devon Energy announce technology partnership

    Yesterday, 02:44 PM ET · GE

    • General Electric (GE +1.3%) and Devon Energy (DVN +0.3%) say they will team up to develop systems to help boost the flow of liquids from oil wells.
    • The companies plan to work together to develop and test products to enhance the performance and economics of unconventional oil and gas projects, including artificial lift systems used for increasing the flow of liquids from production wells, advanced drilling technologies and water treatment solutions.
    • The announcement comes after Chevron and GE formed a technology alliance in February.


  146. Sucker rally in Brazil?

    Yesterday, 02:32 PM ET · EWZ

    • Brazil’s on the move higher again, up 1.6% on the session, helped by release of a central bank survey showing economists cutting their inflation forecast 11 basis points to 6.39% while hiking their GDP growth estimates six bps to an average 1.69%. The central bank has hiked rates for nine straight meetings, bringing the benchmark Selic rate to 11%, and the hope is May will see a pause in the cycle.
    • Also at work in the rally are hopes President Rousseff may not gain reelection in the fall, but JPMorgan isn’t so sure. “We believe May will show stability in the polls … the President will have her own TV appearances, which together with the announcements on higher social spending on Labor Day, should stabilize her ratings, while the opposition will have limited room to make the news cycle.”
    • EWZ is up about 25% since mid-March.
    • Morgan Stanley continues to fight the tape, remaining underweight the country amid what it expects will be slowing growth, continued upward pressure on rates, and more weakness in the real. The team notes it’s not seeing the quick narrowing in the current account deficit associated with big rallies in Indonesia and India.
    • ETFs: EWZ, BRF, BRXX, EWZS, BRAQ, BRZU, BRAZ, BZQ, BRAF, UBR, BRZS, DBBR, FBZ


  147. Mall retailer stocks get moving in the right direction

    Yesterday, 02:27 PM ET · ARO

    • Some out-of-favor teen retailers are staging a comeback of sorts today – led by Aeropostale (ARO +7.1%), Wet Seal (WTSL +3.9%), and Abercrombie & Fitch (ANF +3.3%). Tilly’s (TLYS +3.6%) and Buckle (BKE +2.3%) are also in on the action.
    • There are some channel checks out indicating a pick-up in traffic at malls, although today’s move looks to be led by momentum.
    • The rush back into mall some retailers is helping to give a lift to the S&P Retail ETF (XRT).


  148. Ingram Micro outperforms following Stifel upgrade

    Yesterday, 02:07 PM ET · IM

    • Stifel’s Matthew Sheerin has upgraded Ingram Micro (IM +2.9%) to Buy, and set a $32 PT.
    • Sheerin argues the Street’s margin concerns for Ingram are overblown, and expects the IT distributor to deliver $80M-$100M worth of cost cuts. He expects more details about Ingram’s cost-cutting efforts at its June 25 analyst day.


  149. Analysis: Sears should liquidate while it can

    Yesterday, 01:51 PM ET

    • Ten-year Sears Holdings SHLD employee Steve Dennis makes an intriguing pitch on his blog on why the retailer should liquidate itself (h/t CNBC).
    • At the top of his list are the points that Sears longer holds a value proposition and is facing an increasing gap with rivals.
    • After a few potshots at CEO Eddie Lampert, Dennis notes that even strong brands such as Craftsman and Kenmore are losing more value every day.
    • “It’s only Sears legacy equity and Lampert’s ability to pick at the carcass that has propped up the corpse, ” eulogizes Dennis.


  150. Good morning!  

    Not a whole lot of follow-through in the Futures – we'll just have to see how things shake out.  Nikkei popped 275 points, now 14,450, so that long worked out sensationally.  That was a 2% gain for the Nikkei and Hang Seng was up 0.4% but Shanghai down 0.1% and India still happy with Modi, up 1.3% and Singapore down 1% is about as mixed as it gets.  

    Europe started off happy but sold sharply into lunch.  Still up 0.5% on DAX, 0.1% on CAC, down 0.66% in Italy and flat in Spain and UK.  I think the sell-off was surprising slump in confidence by German Investors.  

    Not too much on the news front – it's all about how high we can take things now and, don't forget, without holding a level for 2 consecutive closes – it doesn't count. 


  151. Oil 101.35. That Jul 100 /cl put option I bought down 16%. Time to roll?


  152. Margins/Rookie – Making $1,800 on $6,300 is 30% over 20 months, that's 1.5% per month.  Do you have better, safer ways to make 1.5% per month on your money?  If so, then sure – close it but, if not, why would you shut it down?   That's a question you need to ask yourself with any position.  In this case it's "Do I have a better, safer way to use $6,300 to make $1,800?"  If not, then I'm sorry but you'll have to live with your boring 18% annual returns.  

    AAPL 2016 $380/450 bull call spreads are $62 on a $70 spread – so that's not a better way to make money at AAPL $450, is it?  You can sell the 2016 $400 puts for $9.20 and take half your money off the table and reduce the margin to $5,000, though it seems like more bother than it's worth.  If you hadn't sold just 1 short $450 put, you could have sold 1/2 as many $500 puts for $34 and the margin on those should be $5K each net of the cash, so that would cut your margin substantially if you were willing to risk the $50 in position.  I guess you can do that with 5 of the minis.  

    You're welcome, DM.  

    Hospital numbers/StJ – Wow, what great proof that Obamacare is already working and having a huge impact.  

    Portfolios/Jcristal – We review them every week in chat.  Last week it was Tues for the LTP and Monday for the others.  This week is options expiration, so we'll go over everything tomorrow officially but we'll also be discussing them in today's Live Webinar.  

    RUT/Wombat – I can't wrap my head around your time-frame since we talked about shorting at 1,130 and then we got that drop to 1,125 at the close and that was that.  It's certainly not a good idea to short the RUT with the other indexes making new highs – that's why we picked /NKD long yesterday.  

    May 12th, 2014 at 9:59 am | (Unlocked) | Permalink

    Dollar rising sharply, 79.72 and /NKD just below 14,200.  If the Dollar stays up and our markets don't tank (Dow currently 16,485 on /YM and /ES 1,868, /NQ 3,525 & /TF 1,092), then /NKD is a good long over the 14,200 line. 

    May 12th, 2014 at 11:25 am | (Unlocked) | Permalink

    Futures giveth and taketh away Toe but I think we'll be seeing 1,120 again.   I like /TF as a short here (below 1,130) as long at /ES stays under 1,890 and /YM stays under 16,650

    May 12th, 2014 at 12:03 pm | (Unlocked) | Permalink

    /TF/Wombat – Well, I'd DD and average in at 1,125 and I'd play 1x off the 1,130 line for very quick rejections, just looking to pick up nickels and dimes to make up some of the loss.  We spiked to 1,131.20 but only briefly but I'd say any break over 1,130 is time to give up for now.  Watch those Dow and S&P lines to confirm, of course.  

    1,120/Toe – 10-point lines on the Russell are USUALLY good place to trade but you have to have it in context that the move seems toppy (that one certainly did not) and you have AT LEAST two (2) other confirming indexes that are also topping out before you take a short with tight stops.  /TF didn't even pause at 1,120 on the way up this morning – you had to be pretty quick to short it at that line and, if that's the case, you shouldn't be shorting it in the first place!  

    And there's 1,127.50 again.  So, two shorts off 1,130 makes up for 1/2 the loss from 1,120, Wombat.  That's what I mean by nickels and dimes.  Now you can assume that's the channel (triangle squeezy channel) and play long over 1,127.50 and short at 1,130 (ish) until it breaks one way or the other.  

    Please don't say you "took my advice" when you only cherry picked the bit of my advice you wanted to follow.  The Russell didn't fly over 1,130 so fast that no human being could have been expected to stop out.  It poked over 1,130 at 1:40, rolled along that line until 2:30 then went up until it topped out at 1,135.10 at 3pm and then dove into the close.  

    Not only that but we KNOW that a triangle squeezy thingy often ends in the stock or index moving violently up OR down – and we don't know which it will be but the other indexes breaking up to new highs were the clearest possible indicator to get out of those shorts.  

    The only time I called for a short on /TF yesterday was when it first hit 1,130 at noon (off a 20-point run)  and that gave us several moves down to 1,127.50 (4 in fact) but then, as I said, it popped out of the channel and it was time to stop playing.  It sounds to me like you need to practice a lot more and play a lot less still.  

    Also, from a 5% Rule perspective, /TF made a 20-point move up to 1,130 and a 20% weak retrace was expected to take it back to 1,126, which is exactly what happened.  Since it held a weak retracement – that indicated strength and we then expect a move over the resistance and that's what we got.  Our lines for the RUT were 1,120 and 1,140 so this move completes with a test at 1,140 and any failure of 1,120 is back to bearish but, in between those two lines – unpredictable.  

    LOL Diamond – I like that one:

    051014-toon-luckovich-ed

    Nasdaq/Jomp – If we kick into rally mode, it could be good for a ride but I'm more likely to PATIENTLY wait to catch those same stocks on the way back down when the rally's done than jump in here.  

    Oil/Burr – $101.50 is our main shorting line.  Dollar 80.20 so I like the oil short.  They haven't gotten rid of many contracts and just 5 days left to trade – I'd say they have trouble ahead:

    Click for
    Chart
    Current Session Prior Day Opt's
    Open High Low Last Time Set Chg Vol Set Op Int
    Jun'14 100.63 101.44 100.36 101.29 07:03
    May 13


    -

    0.70 29236 100.59 200532 Call Put
    Jul'14 99.99 100.78 99.72 100.63 07:03
    May 13


    -

    0.69 9914 99.94 245342 Call Put
    Aug'14 99.07 99.88 98.86 99.72 07:03
    May 13


    -

    0.63 2611 99.09 134764 Call Put
    Sep'14 98.15 98.96 98.00 98.73 07:03
    May 13


    -

    0.55 2232 98.18 113398 Call Put

    That's not a pretty strip for the bulls, so I do like shorting oil but, of course, they can pump it up into inventories to help themselves make the rolls.  


  153. Phil – just a few minutes to market open.. but see no post yet for Tuesday..