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The End of May – Heading into June with CASH!!!

I hurt myself today
To see if I still feel
I focus on the pain
The only thing that's real – Nine Inch Nails

Were we wrong to cash out?  

It's hard to feel bad about taking a 19% profit off the table after just 6 months (in our $500,000 Long-Term Portfolio) but we had another low-volume pump-job yesterday that sent some of the positions we closed up sharply and left us regretting our timing – just a little.  

Still, the time to sell your positions is when other people are buying, not while everyone is panicking.  We got great exit prices and, on the whole, it was fairly stress-free.  S&P 1,920 was our predicted top and we pulled the trigger to take the money and run at 1,910 because, as experience has taught us – it doesn't pay to be greedy! 

Last week and this week, I laid out my case for why the economy is not as good as it seems and certainly not good enough to be paying all-time highs for stocks.  As you can see from the chart on the left – I'm certainly not the only one who thinks so as the "smart money" has flown out of the market this year, taking advantage of each record high to sell, Sell, SELL!!!

We were a little more patient, we moved our Conservative Income Portfolio ($500,000) to cash at the end of March and avoided the April sell-off and have since been buying bargain stocks in that portfolio.  We had left our more aggressive Long-Term Portfolio ($500,000) on the table but this last leg of the rally left it up a ridiculous 19% for the year – and that's halfway to our best-case goal so it's a good time to take a break, step back, and see how the market handles early June.  

SPY 5 MINUTEIt's not like we can't find anything to do with our cash.  In additions to our usual Futures trading, we still have our Short-Term ($100,000), Butterfly ($100,000) and $25,000 Portfolios to play with and, since Wednesday morning's call to cash out our LTP (9:36 am), we've added the following 10 virtual trade ideas in our Live Member Chat room:

  • 10 SQQQ July $48/54 bull call spread (now $1,300), selling 1 ISRG 2016 270 put for $17.50 ($1,750) for a net $450 credit (bearish Nasdaq play) 
  • SDS July $26/29 bull call spread at 0.90 (bearish S&P play)
  • SCO July $25/28 bull call spread at $1.25, selling $26 puts for $1.10 for net 0.15 (bearish on oil) 
  • 10 UBNT 2016 $45/55 bull call spreads at $2 ($2,000) (bullish play on Ubiquiti Networks added to our Income Portfolio)
  • NEM 2016 $20/25 bull call spread at $2.20 (bullish on Newmont Mining and gold)
  • FCX 2016 $30/37 bull call spread at $3.15, selling 2016 $30 puts for $3.20 for a net 0.05 credit entry (bullish on Freeport McMoRan and gold and copper) 
  • NFLX Aug $340 puts at $10 (bearish play on Netflix) 
  • Oil Futures short at $104 (bearish play on oil) – already $103 for $1,000 per contract gain and off the table into the weekend (we still have USO puts from a previous position).  
  • 5 WYNN Jan $240/210 bear put spreads at $17.50 ($8,750), selling 4 July $210 puts for $6 ($2,400) with stops on 2 at $8 ($1,600) and 2 at $10 ($2,000) for net $6,350-$9,950 on the $15,000 spread (bearish play on Wynn Resorts) 
  • AAPL 2016 $520/600 bull call spread at $47.50 (bullish play on Apple, Inc.) 

SPX WEEKLYSo, in 48 hours after going to cash, we added back 6 bearish and 4 bullish plays.  We're never "ALL" bullish or "ALL" bearish – we hedge but, as you can see from our picks above, we also sell a lot of risk premium on both sides of the table so that, whether the market is up, down or sideways – we're going to have some winners!

Any idiot can make 20% in a relentlessly up market (see our "7 Steps to Consistently Making 20-40% Annual Returns" video) and we're happy to be that idiot – just not over this particular weekend and, as I told our Members, not until June 10th when, if the market hasn't crashed – we're willing to do some more buying.  

If you want a mindless trade that pays for an entire year of a Philstockworld Premium Membership (still just $5,000 before the price increase coming in September) you can try this:

  • TZA is a 3x ultra-short ETF tracking the Russell, currently at $16.24.  The January $14/21 bull call spread is net $2 ($200 per 100-unit contract) and pays up to $700 (350%) per contract at $21, which is 30% higher on TZA so a 10% drop in the Russell, back to 1,026 would pay the full amount.  $2,000 can be risked (10 contracts) to pay back $7,000 and that $2,000 can be paid for by selling a single AAPL 2016 $480 put for $20 ($2,000).  
  • That gives you $5,000 of upside protection in exchange for your promise to buy 100 shares of AAPL (per contract) for $480, which is 24.4% off the current $635.  100 shares of Apple is, of course $48,000 at $480 and that would use $24,000 of margin in an ordinary account (but only $4,800 of net margin is required for the spread) if you end up buying the stock – so you don't EVER want to make plays like this unless you REALLY want to own the stock you sold puts against at the net price.  

This is what we teach you to do at PSW, to hedge you investments, to trade like a hedge fund manager instead of one of the retail suckers who are always paying the premiums we collect.  If the market goes down, our TZAs pay off and we'd like to buy AAPL at $480 anyway.  If the market goes up, it's very doubtful AAPL goes down and that means this hedge is completely free for the year.  Another bonus to the downside is, IF the market tanks and you are forced to buy $48,000 worth of AAPL, you'll likely have a $5,000 profit on your TZA spread to contribute towards it, netting you into AAPL for $430 per share (32% off).  

This is why we are able to make such good returns in our portfolios – we win if it goes up, we win if it goes down, we might even make a little if the market stays flat!  You just have to learn to BE THE HOUSE – Not the Gambler

Have a great weekend, 

- Phil

 


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  1. mornin ralph


  2. Ypdi 
    Before I forget this morning – very good point to Palotay about short puts. This is what absolutely killed me last year.
    Phil – what would you think as a general recommendation for those of us who are well-hedged and holding a number of previous positions, to simply buy back any short puts until we see which way the wind is blowing.
    And, Ill be the idiot – why June 10 ?


  3. Good morning Sam! 

    Good article to start the day (full is here):

    The U.S. economy shrank dramatically in the first quarter and many economists are talking like a declining gross domestic product is a good thing.

    BloombergBusineweek ran with a headline, “Why the GDP Drop is Good for the U.S. Economic Outlook,” in a story that didn’t offer a very convincing explanation.

    It quoted David Rosenberg, chief economist and strategist at Gluskin Sheff + Associates saying  “The economy is in the process of reaccelerating.” And Michael Feroli, chief U.S. economist of JPMorgan Chase, saying  “As far as terrible reports go, GDP wasn’t too bad.”

    “Nobody likes to see a negative for growth,” Beth Ann Bovino, U.S. chief economist at Standard & Poor’s Ratings Services, told the Wall Street Journal. ”But it doesn’t change my expectation that the economy is recovering at a nice pace. I call it a recovery delayed.”

    Oh, and here’s my favorite:  “I believe this real GDP decline, mostly due to the polar vortex, coiled the ‘economic spring’ even tighter for a sharp snap-back (boing!) this quarter where I have an above-consensus forecast for a 4.0% annualized rise in real GDP,” wrote PNC Chief Economist Stuart Hoffman. “I expect real GDP growth to settle back down to near a 2.8 percent annual rate in the second half of this year.”

    Boing? Is that the technical term for the sharp recovery that is ALWAYS coming NEXT quarter?  (No I mean, NEXT quarter, or maybe the NEXT one after that. Wait, it’s the NEXT one.)

    Economists from the Federal Reserve on down have proven way too optimistic. They didn’t see the 2008 crash coming, they keep predicting a sharp recovery that never comes, and whenever the numbers confirm their folly they find some excuse. This time they’re blaming it on the weather.

    LOL Albo (shorting the Clippers because Ballmer is buying them)! 

    Short puts/Wombat – You don't want to over-leverage, especially in iffy markets like this.  If you don't have the budget to REALLY buy the things you sold puts against, then absolutely you need to keep tight stops on them.  

    As to buying back "any" short puts – as usual, it depends on the positions and your intentions.  Rather than agonize over all that crap, I simply closed out 95% of the LTP, leaving just two short puts that we REALLY want to own if they get cheap but, of course, it's not even a significant allocation in the portfolio if they are assigned to us.  

    We're not re-cashing the Income Portfolio because we already picked things on the last dip and we're generally hedged 20% down from there and all those positions are early in the scale – even the AAPL trade that is killing us at the moment (because we deconstructed the bull call spread and AAPL popped 5%).  

    I plan to review the portfolios today, hopefully that will help.  

    Oil (/CL) failed $103 and now testing $102.75, not much support for another .50 ($102.25) if they fail that but, of course, $102.50 should be a little bouncy.  So, below $102.75 is a re-short or back to $103 with tight stops above.  

    Gasoline (/RB) gave up $2.99 and all the way down to $2.972 before bouncing.  Now $2.975 so good for another bullish poke here but hair trigger if it fails that line ($420 per penny per contract!).

    Dollar dropped to 80.40 to help prop things up, that popped gold $5 ($1,255) and silver $19.05, which is up $250 and enough to buy some Egg McMuffins – so we're happy there.  

     


  4. Good Morning!


  5. Phil/XRT

    That Consumer Spending number was light.  That can't bode well for XRT that is technically heading for a death cross.  Do you like shorting it here? Even though it has many automotive parts companies there are still many department and specialty retailers in the mix of its top 40 holdings.


  6. Phil // Short Puts
    If another way to ask the question is " do you have enough to buy ALL the short puts you've sold' >>
    absolutely not.
    I'll wait for the review


  7. Wombat,

    In my comments I did not wanted to panic any one. Mostly we sold puts to compensate for the cash outlay on BCS (leaps) The puts normally were sold in any case 20 % lower than the market at the time the play was made meaning today that put has even lost more on premium. Remember the twin Towers after a short while the market recuperated again. If you would have paniced at the day of the crash sure your puts are expensive. 


  8. Again, SPY June1 193.5 calls for 42 or 43c.  Monday is a new month, and the funds will be buying early next week. 


  9. PLX…..ok, now that is better.  Approval in Canada.


  10. Phil I hate to be a bore but I do not know how to see the value of the fund we started. We need to remind members that one of us is in need of help and I know Americans are big tippers coming to pay at the dinner table so please just keep some change for that fund!!!!!


  11. XRT/DC – Well $85 is our official shorting line on them and we already have plenty of shorts and XRT has been iffy at best so I just talked myself out of it.  If they hit $87 again, then they are an easy short but why take a chance below $84?

    This is something I want to start stressing to you guys – DON'T go bullish in the middle or top of a channel and DON'T go bearish in the middle of the bottom of a channel and you will improve your results DRAMATICALLY!  Learn to be patient – there are 9,000 stocks to trade – get in the habit of having a 20-40 stock watch list and, when one of them hits a top or a bottom – THEN you make a trade.  PATIENCE!!

    Shadow fund/Yodi – Yes, I'm very disappointed so far as well – PLEASE folks, it's not only helpful if you contribute a little something but also if you share the link on your own Twitter, Facebook, etc.  $20 from 2,500 people and we're full – surely we can manage that!  


  12. Phil/XRT

    Good point!  THX


  13. Speaking of channel tops – Go CMG – $550!  

    NFLX still flying higher.  All these good feelings because they are raising prices but even if they have 40M subscribers, that's "only" $480M and these new shows cost money and network access is now costing them money as well but no one is talking about rising costs – only rising revenues – so far.  

    On $4.4Bn in revenue last year, NFLX made $112M and they are PRICED at $25Bn for a p/e of 220.  Even if they dropped every penny of $480M to the bottom line and even if the whole thing grows 20%, they're still only at $700M (no f'ing way, $480M is latest projection) in profit and that would be a p/e of 35, still high but less ridiculous.  At $500M, the p/e is 50 – still too high and ridiculously high for a television network, which is what they are effectively becoming.  

    Meanwhile, you can't force the market to get rational and NFLX may head up to $450 before calming down so it's a conviction short if you are going to play it (which means taking heavy losses as we poke at higher and higher short entries until we catch a break) – so not for the feint of heart.  

    SHLD exploding higher (again) 


  14. Eddy's games afoot again! Wonder what he sold, leased, funded etc, etc,


  15. Phil,

    Sure is (SHLD exploding higher) … but why? Is this one of those sell into the excitement, top-of-the-channel moments? Brought to us by Fast Eddie or not. Your thoughts, plesae.


  16. Phil – I'm with wombat. June 10?


  17. Phil/ et al- Thanks for the answers to my spread questions last night, as I really needed that little piece of knowledge to crystallize my understanding of spreads. Your help is much appreciated and I have been doing really well for the last couple of months with fewer and fewer missteps as I embrace the PSW ways and watching my portfolios grow.


  18. Of course it is easy in a rising market, so the real test will come if and when the wheels start falling off. Hoping I have the right hedges in place and can handle anything that comes our way, up or down!


  19. ~~•DragonWave sees 1Q15 revenue up 50% vs. 4Q14.

    Adding to my position in DRWI, one of my falling knives that kept falling.  I'm still at a loss, but believe things are looking up. 4th Quarter was a disappointment.  Since they reported earnings and projected a 50% increase in first quarter, they have received a sizeable (for them) contract in India.  Believe 2Q will be quite a bit higher than 1Q.  Company still losing money, but margins should improve significantly going forward.  Very speculative. Might be worth a look for Kamikaze money.


  20. Just gave to the Shadow Fund. I hope others consider it now that we are mostly in cash. This is a great board with many great members.  Of course we pay, but it's not much for what we get from Phil and the many that contribute regularly (including Shadow) on this site. Sometimes its hard to part from your hard earned gains, but giving (by choice) is an acknowledgement that you are a part of a community that needs you as much as you need it.


  21. Well said dclark41!


  22. Phil,

    Thanks for your guiding hand on AAPL…..just walked away from the 2015 500Call and 2015 360Put….

    Looking to another great trade soon. Thanks


  23. You're welcome DC.  

    SHLD/8800, Pirate - You are dealing with a master market manipulator who purposely drives the stock down whenever he wants to buy shares and drives it up when he wants to sell.  It's gotten way more convoluted now that they've begun moving properties into their Seritage subsidiary – it's like a shell game and only Eddie knows where the little ball is going to be at any given time. 

    No way do I short them, ever.  I just like to buy them when they are cheap (play with Eddie, not against him).  

    June 10th/Snow, Wombat – I think we're being propped up into the close of May and that the selling will commence next week (or today, so far) and, if it doesn't by the 10th of June (Tuesday), then we'll probably remain propped up into earnings and, of course, we love those earnings plays anyway.

    You're very welcome Craigs.  Hopefully you have a good amount of sideline cash – just in case.  That's one of the other keys to our success – keeping a lot of cash handy is a hedge unto itself.  We didn't have any gigantic positions – 5 contracts here, 10 contracts there – and spread across 20 positions using just $4,000 of our $500,000 cash and not even 20% of our $2M+ margin (PM).  By not being greedy, we remain flexible and, as noted before – the only way we end up being "forced" to actually own a stock is AFTER it drops 20%(ish).  That also lets you ride out a lot of downturns.  

    DRWI/Albo – I wonder if last-mile microwave may be losing out in favor of what UBNT is offering (though they are off 2.5% today).  

    I do like DRWI's growth but, unfortunately, 68% of their revenue comes from NOK and that makes people very nervous – as it should!  It's never good when one client is almost all of your business – even if they don't leave you – they can squeeze your margins by threatening to do so.  So it's a gamble that they keep NOK and/or they find some more customers but it's been 14 years – I think their tech may be aging faster than their sales people are improving.  

    Thanks for contributing to the Shadow Fund DC! 

    You're welcome Jasu, congrats.  


  24. I just gave to the Shadow Fund. Easy!


  25. ~~Lifting the ban on oil exports could create more than a million jobs: study

    http://finance.yahoo.com/blogs/daily-ticker/the-u-s--ban-on-crude-oil-exports--is-a-remnant-of-an-era-long-gone—daniel-yergin-222806853.html

    Can you imagine who pays this guy for this? A million jobs with this and 250,000 with keystone. He does have a point about how much refined product goes out. Have you seen how small crews are in oil sites and most important how long? Then the money flows in for a few decades without anyone there.


  26. From Bloomberg, May 30, 2014, 10:19:02 AM

    U.S. stocks fluctuated, after the
    benchmark Standard & Poor’s 500 Index rose to a record
    yesterday, as reports showed consumer spending unexpectedly
    declined last month while confidence slid more than estimated.

    To read the entire article, go to http://bloom.bg/SXlGO9
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  27. From Bloomberg, May 30, 2014, 8:51:00 AM

    Shoppers in Santa Monica, California. Photographer: Patrick T. Fallon/Bloomberg

    Consumer spending unexpectedly fell in April after the biggest surge in almost five years as incomes slowed, a sign the largest part of the U.S. economy will take time to accelerate.

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


  28. From Bloomberg, May 30, 2014, 9:59:55 AM

    Residential housing is constructed in Louisville on May 13, 2014. Photographer: Luke Sharrett/Bloomberg

    This was supposed to be the year that U.S. mortgage rates soared. Instead, they’re retreating.

    To read the entire article, go to http://bloom.bg/1jzCX5q
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  29. From Bloomberg, May 30, 2014, 12:01:00 AM

    The Commodity Futures Trading Commission is seeking detailed information on the incentives that U.S. derivatives exchanges such as CME Group Inc. and IntercontinentalExchange Group Inc. offer to spur trading, according to a person familiar with the matter.

    To read the entire article, go to http://bloom.bg/1kP3Abm
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  30. From Bloomberg, May 30, 2014, 9:13:02 AM


    May 30 (Bloomberg) — Tai Hui, chief Asia market strategist at JPMorgan Asset Management in Hong Kong, talks about Japan, China and India’s markets and economies.
    He also discusses the U.S. economy with Angie Lau on Bloomberg Television’s “First Up.” (Source: Bloomberg)

    Emerging-market stocks fell, trimming
    this month’s advance, as technology shares dropped for a second
    day from a record high. The benchmark equity gauge is headed for
    the longest stretch of monthly gains since 2009.

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


  31. From Bloomberg, May 30, 2014, 8:22:16 AM

    Mario Draghi’s pledge to buy bonds from euro-region governments is allowing the independence movement in Catalonia to advance its cause without facing resistance from investors. Photographer: Jasper Juinen/Bloomberg

    European Central Bank President Mario Draghi’s pledge to buy bonds from euro-region governments is
    allowing the independence movement in Catalonia to advance its
    cause without facing resistance from investors.

    To read the entire article, go to http://bloom.bg/1trZS8k
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  32. From Bloomberg, May 30, 2014, 10:13:37 AM

    The Cowboy and Indian Alliance marches with Neil Young, center,and actress and environmentalist Daryl Hannah, second from right, to the National Museum of the American Indian in Washington, D.C., on April 26, 2014. Photographer Pete Marovich/Boomberg

    Actress Daryl Hannah hasn’t chained herself to the White House fence in support of tougher power plant emissions.

    To read the entire article, go to http://bloom.bg/SWF9hN
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  33. From Bloomberg, May 30, 2014, 10:47:23 AM


    Business investment, which Governor Stephen Poloz has said must increase to lead a sustainable expansion, fell by an annualized 2 percent, the biggest decline for that component since 2011. Photographer: Cole Burston/Bloomberg

    Canada’s economic growth slumped in
    the first quarter as a harsh winter in North America slowed
    housing construction, business spending and exports.

    To read the entire article, go to http://bloom.bg/SXN3ra
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  34. From Bloomberg, May 30, 2014, 10:41:08 AM


    Deepening pessimism in Brazil President Dilma Rousseff’s ability to reverse a slowdown in Latin America’s biggest economy is easing concern inflation will exceed the government’s 6.5 percent target this year. Photographer: Jason Alden/Bloomberg

    Brazil’s economic growth slowed in
    the first quarter as President Dilma Rousseff, who is up for re-election in October, struggles to rebuild confidence that led to
    the biggest decline in investment in two years.

    To read the entire article, go to http://bloom.bg/1kP5Dfn
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  35. From Bloomberg, May 30, 2014, 12:01:00 AM

    Escalating values have spurred more listings as Manhattan apartment owners seek to profit from surging demand. Photographer: Michael Nagle/Bloomberg

    Manhattan condominium prices fell in
    April by the most in more than three years, a sign the market is
    slowing during the busiest selling season.

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


  36. From Bloomberg, May 30, 2014, 12:01:00 AM


    Chris Tribble, who struggled with high copays for his colon cancer medicines until his doctor found a less costly alternative, posing on the USS Yorktown in South Carolina. Courtesy Shelia Norman and Chris Tribble

    When oncologist Yousuf Zafar at the Duke Cancer Institute prescribed an expensive pill for a young man with colon cancer two years ago, he assumed his patient could afford it because he had a job and private insurance.

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


  37. From Bloomberg, May 29, 2014, 5:59:14 PM

    Drugs over transplants? Yes, please. Photographer: David Paul Morris/Bloomberg

    There’s a new drug called Sovaldi, manufactured by Gilead Sciences Inc., that can cure hepatitis C. Not every case of it, mind you, but most. John LaMattina of Forbes provides this rundown:

    To read the entire article, go to http://bv.ms/1mwA6xl
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  38. From Bloomberg, May 30, 2014, 9:15:00 AM


    May 30 (Bloomberg) — Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., talks about U.S., Japan and China’s economies.
    He also talks about the Australian dollar with Zeb Eckert on Bloomberg Television’s “On the Move.” (Source: Bloomberg)

    China said it will cut the reserve
    requirement ratio for some of the nation’s banks, the
    government’s latest step to support growth in the world’s
    second-biggest economy.

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


  39. From Bloomberg, May 30, 2014, 9:59:05 AM

    Chilean retail sales rose by the
    least since 2009 in April, while manufacturing output fell at
    the second-fastest pace in four years, indicating that sluggish
    economic growth continued into the second quarter.

    To read the entire article, go to http://bloom.bg/1myWy94
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  40. From Bloomberg, May 30, 2014, 6:57:06 AM


    May 30 (Bloomberg) — Chris Weafer, a founder of Macro Advisory, discusses Ukraine’s gas debt, negotiations today in Berlin over payments to Russia and violence in eastern Ukraine.
    He speaks from Moscow with Guy Johnson on Bloomberg Television’s “On the Move.” (Source: Bloomberg)

    Russia has pulled back most of its troops from the border with Ukraine, according to a U.S. defense official, as government forces continued a campaign to wipe out separatist rebels in the former Soviet Republic’s east.

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


  41. From Bloomberg, May 29, 2014, 8:44:38 PM

    May 22 (Bloomberg) — Seattle Mayor Ed Murray, a Democrat, talks about his proposal to raise Seattle’s minimum wage to $15 an hour, the highest of any big U.S. city.
    He speaks with Mark Crumpton on Bloomberg Television’s “Bottom Line. (Source: Bloomberg)

    Unions and other advocates of higher
    minimum wages saw advances in California and Seattle as
    President Barack Obama’s call to raise the federal minimum
    languishes in Congress.

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


  42. Great news Phil!

    Everything everywhere is declining so we can slingshot to hyper growth in the next quarter or the next, tomorrow never comes!


  43. From Bloomberg, May 30, 2014, 10:39:50 AM

    Consumer confidence fell more than
    forecast in May, a sign consumer spending may be slow to pick up
    in the second quarter.

    To read the entire article, go to http://bloom.bg/SY1njr
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  44. From Bloomberg, May 30, 2014, 7:45:41 AM

    Luxury residential buildings stand on Phoenix Island in the Sanya Bay district of Sanya, Hainan Province, China. Photographer: Brent Lewin/Bloomberg

    China’s so-called mini-stimulus is beginning to morph into something larger.

    To read the entire article, go to http://bloom.bg/1oO6v4E
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  45. From Bloomberg, May 30, 2014, 6:55:37 AM

    The ripples from Indonesia’s ban on
    mineral-ore exports are reaching energy markets, as shuttered
    mines and idle trucks crimp demand for diesel.

    To read the entire article, go to http://bloom.bg/1wvsuC2
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  46. From Bloomberg, May 30, 2014, 5:14:06 AM


    May 29 (Bloomberg) — Martin Wheatley, chief executive officer of the U.K.’s Financial Conduct Authority, talks about regulation of financial services, rebuilding trust, mobile banking and innovation.
    He speaks at Bloomberg’s European headquarters in London. (Source: Bloomberg)

    U.K. house prices rose for a 16th
    month and consumer confidence increased to a nine-year high on
    an improving outlook for the economy.

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


  47. From Bloomberg, May 30, 2014, 9:31:50 AM

    President Barack Obama inspects drought-stricken corn with farmer Roger McIntosh as he visits the McIntosh farm in Missouri Valley, Iowa, in this Aug. 13, 2012 file photo. Photographer: Jim Watson/AFP via Getty Images

    The White House, as it prepares to announce new limits on carbon emissions, is working to transform the debate from distant threats to more immediate issues.

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


  48. From Bloomberg, May 30, 2014, 6:44:50 AM


    Consumer prices have slid on an annual basis for four straight months, prompting policy makers to last month signal an increased possibility for a rate cut in July. Photographer: Casper Hedberg/Bloomberg

    Sweden’s economy contracted in the first quarter as imports surged, masking a gain in consumer spending and a recovery in exports.

    To read the entire article, go to http://bloom.bg/SX5yw6
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  49. From Bloomberg, May 30, 2014, 12:00:01 AM

    French economist Thomas Piketty speaks to during a presentation at King’s College, central London, on April 30, 2014. Photographer: Leon Neal/AFP via Getty Images

    French economist Thomas Piketty published a detailed 4,400-word defense of his best-selling book on income inequality against allegations that he relied on faulty data.

    To read the entire article, go to http://bloom.bg/1kOVEql
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  50. From Bloomberg, May 30, 2014, 9:50:02 AM

    Business activity in the Chicago area
    unexpectedly increased to a seven-month high in May as orders
    accelerated, a sign manufacturing will help provide a boost to
    the economy.

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


  51. From Bloomberg, May 29, 2014, 7:00:01 PM

    The complete skeleton showing the curve of King Richard III’s spine. Courtesy University of Leicester

    The slings and arrows of literary
    insults aimed at King Richard III grossly embellish the
    deformities of the supposed hunchback whose villainy endures
    thanks to William Shakespeare.

    To read the entire article, go to http://bloom.bg/1oP986g
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  52. From Bloomberg, May 30, 2014, 9:43:12 AM

    India’s Prime Minister Narendra Modi’s Bharatiya Janata Party faces the challenge of boosting investment while Rajan keeps borrowing costs elevated to suppress Asia’s second-fastest inflation. Photographer: Udit Kulshrestha/Bloomberg

    India’s economy grew less than 5
    percent for a second quarter, adding pressure on Prime Minister
    Narendra Modi to spur investment after winning the strongest
    electoral mandate in 30 years.

    To read the entire article, go to http://bloom.bg/1myBAqG
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  53. From Bloomberg, May 30, 2014, 7:29:25 AM

    People walk past the municipal waste to energy incinerator plant in Sukhdev Vihar, New Delhi. Photographer: Udit Kulshrestha/Bloomberg

    The residents of Sukhdev Vihar are on the front lines of what may be the world’s foulest war: megacities’ struggle against their mounting piles of refuse.

    To read the entire article, go to http://bloom.bg/1kPt5Jp
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  54. From Bloomberg, May 30, 2014, 7:03:21 AM


    The party’s over. Get used to it. Photographer: Victor J. Blue/Bloomberg

    Why are U.S. banks having a harder time making money? It’s a question that extends well beyond business models, operating environments and market valuations to the role they play in the economy, during good times and bad.

    To read the entire article, go to http://bv.ms/1o52dEO
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  55. From Bloomberg, May 30, 2014, 7:46:38 AM

    Deal toys are back.

    To read the entire article, go to http://bv.ms/1o5ekSn
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  56. Investigation reveals loan changes before Citi Mexican loan fraud

    11:07 AM ET · C

    • Mexican authorities are asking why Citigroup’s (C +0.4%) Mexican unit extended due dates and raised credit limits for Oceanografia more than a year before the fraud was discovered. “You could argue they were being flexible,” says Jamie Gonzalez, head of Mexico’s CNBV, which is conducting the probe. “What is surprising is that the controls weren’t there.”
    • In 2012, Citigroup extended the time between when it lent funds to Oceanografia and when Pemex repaid to 90 days from 20, and the next year it boosted to amount of financing available. “While the flow of resources was coming in, everybody was happy,” says Gonzalez.
    • The bulk of the disputed $400M was lent within about 90 days before the fraud was discovered.


  57. Pandora -3.1% following Amazon report

    11:03 AM ET · P

    • A BuzzFeed report stating Amazon is set to launch a streaming music service (covers songs at least 6 months old) that will be free for Prime subs is leading Pandora (P) to slump.
    • Amazon’s Prime sub base (~20M as of January, per Macquarie) is notably smaller than Pandora’s active listener base (76M at the end of April) for now. Pandora, aided by its giant music-tagging database (i.e. the Music Genome Project) and the time invested by users in creating custom stations, has thus far weathered challenges from Spotify, Apple, and Google, among others.
    • Shares largely moved sideways yesterday after Apple announced it’s acquiring Beats and its subscription streaming service.


  58. Dick’s Sporting Goods higher after round of insider buying

    11:02 AM ET · DKS

    • Shares of Dick’s Sporting Goods (DKS +3.7%) trades higher after the company saw its CEO buy shares for the first time since 2008.
    • Two other insiders joined Edward Stack in acquiring more stock in the company.
    • SEC Form 4s


  59. On the hour

    11:00 AM ET

    • Dow -0.15%.
    • 10-yr -0.05%.
    • Euro +0.32% vs. dollar.
    • Crude -0.87% to $102.68.
    • Gold -0.83% to $1,246.70.


  60. SouFun slides on pricing worries

    10:45 AM ET · SFUN

    • 86Research observes SouFun (SFUN -4.8%) hasn’t raised its listing prices this year, and thinks real estate agencies might force the company to slash prices.
    • Also: China Real Estate System Index thinks Chinese home prices just fell M/M for the first time since June 2012, declining 0.3% in May. On a Y/Y basis, prices still rose 7.8%, though that’s down from April’s 9.1% clip and March’s 10%.
    • E-House (EJ -1.6%) is also off. Subsidiary Leju (LEJU -0.9%) is down modestly.
    • Previous: Nomura worried about Chinese real estate bust


  61. NPD: Digital movie sales becoming a bigger factor

    10:27 AM ET · DIS

    • Consumers are rapidly adapting to purchasing movies through digital channels, according to NPD.
    • The growth rate for the electronic sell-through of movies is triple of that for TV EST.
    • The exclusive early release window for some digital titles appears to be helping to boost demand and awareness.
    • The trend is encouraging for studios (DIS, LGF, SNE, VIAB, TWX, FOXA, VIA, CMCSA) looking to capture some of the lost revenue from the lower demand for DVDs.
    • Movie theater operators (CKEC, CNK, RGC, MCS, RDI, AMC, DCIN) might look at the development differently with their revenue share mix tilted higher the longer movies stay in a theater.


  62. Cliffs down another 2.4% as it trades barbs with Casablanca Capital

    10:16 AM ET · CLF

    • Cliffs Natural Resources (CLF -2.4%) opens lower after its response to Casablanca Capital’s letter to the company accuses the activist hedge fund of putting “shareholders’ interests at risk.”
    • CLF says its focus on cutting costs and capital spending in the current volatile pricing environment is in shareholders’ best interests, while Casablanca “seems intent on pursuing a costly and time consuming proxy contest, despite Cliffs’ efforts to reach a settlement.”


  63. Analysis: Tiffany ready to shine on

    10:02 AM ET · TIF

    • Oppenheimer sees another leg higher for shares of Tiffany (TIF -0.1%) after the company out-performed last quarter.
    • The investment firm’s price target of $112 allows for another 14% run higher by the shares of the luxury retailer.


  64. Libyan oil fields to remain shut, as prolonged closures delay return to normal

    09:58 AM ET · REPYY

    • Prolonged closures in Libya’s oil fields will delay a return to normal output, and a return to normal production at the country’s largest oil field could be delayed by four months because more than 20 underground pumps needed to be replaced, according to the head of production at Libya’s National Oil Corp.
    • The Sharara field in western Libya, which is operated by Repsol (REPYY, REPYF), is shut after being occupied by local protesters, and underground pumps there have been repeatedly switched on and off amid false starts.
    • Eni’s (E) Abu Attifel field in eastern Libya hasn’t been restarted because it doesn’t want to risk blocking pipelines with the waxy oil it produces if flows are interrupted again.
    • The country’s oil production stands at 150K bbl/day, ~10% of normal levels.


  65. From Bloomberg, May 30, 2014, 8:30:02 AM


    South African Reserve Bank Deputy Governor Daniel Mminele. Photographer: Ian Waldie/Bloomberg

    South Africa will consider increasing
    interest rates even as Africa’s second-largest economy risks
    falling into recession, Reserve Bank Deputy Governor Daniel Mminele said.

    To read the entire article, go to http://bloom.bg/1oP0epA
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  66. From Bloomberg, May 30, 2014, 5:45:10 AM

    Good morning. Here’s my take on some of the stories driving the debate in politics, finance and social issues across Asia today:

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


  67. Madison Square Garden gets an assist from Steve Ballmer

    10:49 AM ET · MSG

    • Shares of Madison Square Garden (MSG +4.4%) shoot higher after Steve Ballmer agrees to buy the Los Angeles Clippers from the Sterling family trust for $2B.
    • The company owns the New York Knicks – one of the most high-profile teams in the NBA.
    • The sale price for the Clips is more than 3X what the Milwaukee Bucks went for earlier in the month.
    • Several offers topped the $1.2B level forcing Ballmer to dig down, according to reports.


  68. Simon Property reiterated a Buy at Deutsche after spinoff

    10:15 AM ET · SPG

    • “We do not view the spin-out as inherently value-creative, but believe SPG‘s post-spin growth profile and increased focus on its remaining mall business could benefit cash flow growth over time and act as a catalyst that highlights the underappreciated value in the shares,” says Deutsche Bank’s Grep Poole, reiterating his Buy rating, while lowering the price target by $10 to $182 to reflect the spinoff of Washington Prime (WPG).
    • Noting Simon’s new 2014 guidance, Poole says the dilution is consistent with his team’s expectations.
    • Previously: Simon Property updates guidance after spinoff


  69. Morgan Stanley: Aggressive Obama emission target would hurt coal

    10:39 AM ET · XLE

    • Morgan Stanley analysts are convinced Pres. Obama’s plan for cutting carbon emissions from existing power plants will call for a greater than 17% reduction when it is unveiled early next week, meaning the impact on coal demand would be “substantial” in the long term.
    • In 2009, Obama called for a 17% cut in emissions from 2005 levels by 2020; if he were to stick to that target, the industry might not feel too much pain since lower coal plant output already has cut U.S. power-sector carbon emissions by ~11% since 2005.
    • NYT reported this week that Obama will use his authority to cut emissions from coal-fired power plants by up to 20%, in turn spurring the creation of a state cap-and-trade program.
    • ETFs: XLE, XLU, TAN, ERX, KOL, IDU, VDE, OIH, ERY, FCG, VPU, DIG, GASL, DUG, IYE, GASX, PXJ, FENY, RYE, UPW, FUTY, RYU, FXN, FXU, DDG, SDP


  70. ~~?The country’s oil production stands at 150K bbl/day, ~10% of normal levels.~~The ripples from Indonesia’s ban on
    mineral-ore exports are reaching energy markets, as shuttered
    mines and idle trucks crimp demand for diesel.

    But if the US lifts the ban on exporting crude Libya can shut down the last 10% and we can stop refining so much diesel for shut down Indonesian mines. Then the bottom of the money chain will stop sandbagging the economy with all their hidden money.


  71. Starting an energy policy would do the economy wonders. Invest in converting every coal plant to gas instead of shipping it out. The US has all it needs to do OK but the mega corps must be forced to do what is right for the country instead of their CEO. Stop all energy imports and exports would be a great start and then that sucking sound that NAFTA caused an we will be fine. Go Seattle $15 per hour! $10.10 will not stop poverty.


  72. phil, morning.

    long 3x aapl  jan 16 450 calls

    long 2x "       "     "    550 calls

    shrt 5x "   "  "    "       700 calls

    problem is the short  3x july 555 calls….was waiting for pullback to sell some puts …hasnt happened

    you mentioned a few things and wanted to get your thoughts with the poss mkt selling next month vs run to 700 for the split….was thinking of adding 1 or 2 jan 16 600 calls or a 600-750 bcs…..tks


  73. Oil jobs/Shadow – Even if it did create a million jobs and you paid those million people $50,000 a year ($50Bn), the still wouldn't compensate for raising the price of oil we pay by 10% ($10 x 20Mbd x 365 = $73Bn) and you're right, those jobs are mostly short-term and would be long gone but the American people would be paying $73Bn a year forever in higher prices.  

    How can there possibly be any logic for a country that imports 7M barrels of oil a day to export ANY???  We already export refined product, which is bad enough but exporting oil is MADNESS!  

    Notice our net consumption of oil is back near the 2009 lows, when oil was $45 but oil is $102.75 for some ridiculous reason.  

    AAPL $642.

    LQMT .21!  NFLX testing $420, WYNN $217.

    VIX 11.46, TLT 114.21, XLF 22.26

    Dollar 80.40, oil $102.72, gold $1,245 – what inflation?


  74. Phil – Thanks for the feedback on DRWI.

    From what I read, it appears that aggregate demand environment for microwave backhaul equipment will grow significantly.
    According to Paul McWilliams, "today most of the cell towers in the world are still using either copper or low-bandwidth TDM microwave backhaul technology, and neither will support the needs of even high-bandwidth 3G let alone 4G.   
    To support the bandwidth of modern cellular standards, the backhaul will need to be either fiber or
    broadband microwave. In emerging markets like India where carriers are preparing to jump all the
    way from 2G to 4G and there is no existing fiber infrastructure, microwave will likely be the
    dominant technology. This will also be true in most other emerging markets. outside China."

    There is also no doubt that having one company account for a large portion of your revenues carries risk.  DRWI is also a significant supplier to Sprint and also has partnerships with CIEN, CSCO, and JNPR.

    As we both mentioned, DRWI is very speculative.  More like a cheap option, which may or may not payoff.

    Sorry, too much time spent discussing a penny stock.


  75. President just said "we need someone to tell us if we need more money for the va"….wow…massive increase in funding coincided with massive decline in service..im sure more money will help oy


  76. Hi Phil.  Holding very profitable positions in AAPL Jan16 450/600 BCS, and AAPL Jan16 500/650 BCS (although I also got caught big time for awhile with an uncovered short position).   Looks like we are blasting through the short calls on these spreads.  Suggestions?  Thanks.


  77. PHIL OIL EXPORTS// we have to figure out a way to keep it artificially inflated when the economic collapse hits….get with the program…


  78. angelcur VA

    I take it we need a high paid oversight-less committee instead of more doctors and nurses.


  79. look at crb index…could be head and shoulders top


  80. taihuichi 

    Looking at your AAPL positions you did not give any indication what you pd for the play however by selling the 600 and and 650 you caped your BCS at 150 no matter where AAPL goes to only if they are below 600 or 650 in Jan16 you will lose some on the long calls.


  81. Thanks for the detailed explanation last night Yodi.  I ended up thinning my herd a little.


  82. Phil,

    As a learning exercise, would DKS be a candidate for an artificial/synthetic buy/write? (div= .125). Dick's dropped below 2 yr support @ 44 (44-58, 2 yr range), briefly and back up today on insider buying.

    Thanks


  83. Is the bad news setting in as it actually is bad. The Fed has already proven all it can do is cover up bank fraud.


  84. Yodi, some modifications in my position along the way, including an uncovered long position in the 450s (which are aggregated in my statement), and they were legged on originally (not as spreads) so I cannot tell you what I actually paid for the spreads.  That's why I didn't include the prices in my first question. My account currently shows my basis in the 450/600 BCS at 56; 500/650 BCS at 63.  However, knowing I am capped by the short calls, my question is whether they should be rolled now, perhaps paid for by some short puts?  Or take some off the table as my 450 longs (basis 103)  have done particularly well.


  85. 8800 

    DKS it does not look to bade setting up a Jan16 BCS 35/45 @ 5.80 and selling a 35put @ 2.35 reducing your cost to 3.45 with a chance of making 10$ on the spread. Obviously you can again start selling monthly callers once the stock has recovered. Under the cercumstances I would even just buy the jan16 call and wait a while to sell the 45 caller. So buy the call and sell the put first. Stock showing good sales and cash on hand, so off hand I can not explain the drop.


  86. Ya think Ballmer may be overpaying for the Clippers ?

    ?The sale price for the Clips is more than 3X what the Milwaukee Bucks went for earlier in the month.


  87. Phil, great call shorting WYNN. Bravo!

    how did you figure it out?


  88. albo

    Ballmer if you had seen him jumping on Bloomberg TV today you could have understood.

    The man has lost his concept of the value of money! the 2 B is like a 5$ bill in your pocket. This makes you think when Phil is talking about the 1%


  89. Phil /LQMT: hello phil. do we sell the LQMT we bought the other day for 18 ? whats our target ?


  90. Yodi,

    Thanks for the input on DKS. I think its a reasonable candidate but may be swept down in an general mkt correction.


  91. Shadow, Bad news?  If you can believe the numbers the US GDP in Q4, 2013 was +2.6% and Q1,2014 was -1%.   A swing of -3.6% is massive.  Meanwhile the EU (Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Luxembourg, Malta, Netherlands, Portugal, Slovakia, Slovenia and Spain) combined only grew at 0.2%, Japan +1.1% and China (who knows?) but likely less than last year.  In the old normal these sorts numbers where not the kind stock rallies were based on.


  92. NBA/Albo

    LA Clippers should get at least 2x more than Milwaukee because their TV revenue, attendance and naming rights are worth more being in a major city.  A couple weeks ago, the team was estimated to sell for 1.1 or 1.2B, Ballmer came in at 1.8B after Oprah and Katzenberg came in at 1.6B.  Shelly Sterling said she wanted a 2 before the selling price so Ballmer raised his tag.  What's 200 mill to a guy worth many billions.  This is just another toy to brag about.  This is what happens when you have such wealth disparity.  People on the top don't know what to do with their money, its play money after a while or just sits in banks or bonds helping no one.  Trickle down my ass.  That's why the estate tax should actually increase so you don't leave a legacy of royalty behind.  If someone who is worth billions leaves only 1 billion to family members, I'm sure they can survive.


  93. http://finance.yahoo.com/news/u-house-price-gains-seen-141943135.html~~ U.S. house price rises will likely slow further over the next two years, curbed by tight lending standards, slow wage growth and a lack of first time buyers

    First time anyone has mentioned the higher lending standards. I have been on that since January as it will shutter any housing recovery. OK modify yodi's words on Ballmer, he could give a few hundred thousand down payments to people that can't save it up instead of paying overvalued athletes.


  94. Yodi – Agreed on Ballmer.  Sterling must be laughing all the way to the bank.  Can you picture Ballmer at a game ?  Move over Mark Cuban.

    Rustle 123 -You are so right, esp., on the estate tax.


  95. DRWI/Albo – Not too much time, it's an interesting company, just very speculative.  

    Wages/Shadow – That's the one thing that will actually get me to go gung-ho bullish – a 50% increase in minimum wage which should lead to a 20-25% increase in all workers salaries (and, if workers salaries are 30% of all corporate costs, they go to 36% and profits dip from 20% avg to 14% (but then 16% because they pay less taxes) - boo f'ing hoo!).  

    AAPL/Mill – So, in addition to the 3 you listed, you ALSO sold 3 July $555 calls?  Those calls are $87 now and you have 5 longs at about $500 avg and 8 short, which makes you way bearish AND without any short puts is way way bearish?  Why was that?  The July $555s can be rolled to the 2016 $610s and if you buy 3 more $500 calls, you are all covered.   I don't know what your basis is but hopefully you are making some money on the 5 $500/600 spreads and you can still sell puts eventually, even if they end up being 2018 $600 puts when it finally comes time to roll the position.  You missed a very important step from our last conversation – covering the upside if AAPL went over $600 – now it's a bit late.  

    AAPL/Mill – No, the thing was to roll your calls before less than 25% of the calls value is premium (out of the money).   This is why I kept saying don't short AAPL, we have conviction long but now you are in a position where you have to keep shorting them – even though you don't believe in what you are doing.  That means you will be constantly conflicted until you finally get done with those short calls.  Fortunately, it's only 2 and you do have longs so now you have to look at them as protection for your long gains.  

    Since you have 5 Jan $450/600 bull call spreads at $70 and the $450 calls are $122, I'd cash 2 of those and buy 2 $550 calls for $63 and take the extra $59 x 2 ($118) and roll the 5 $600 short calls ($44) to the $700s ($20) for net $24 x 5 = $120.  That will leave you with 3 2016 $450 calls and 2 2016 $550 calls and 5 short $700s, so you are buying $300 more potential upside for $2 (and raising your target by 10%).  

    NOW you have 2 short May $530s (averaging) at $34 that are PROTECTING the $113 that you are in the money on your 3 $450s and that doesn't seem like a bad thing at all, does it?  The July $555 calls are $23 and you can roll your $68 of short calls to 3 of those and then you have 3 $450s that are $115 below the short calls.  If AAPL goes over $600, you might want to add a few more $550/700 spreads in anticipation of rolling your 3 short $550s to 5 short $600s, but cross that bridge when you come to it.  Again, I think you should close the short puts you have and sell the more aggressive ones (2 or 3) for balance. 

    VA/Angel – It should be mandated that for every troop they send overseas, a certain amount is added to the VA budget.  That way, it would be accounted for along with the rest of the war cost. 

    AAPL/Taihu – Why not just enjoy it?  You are on track at net $100 on the $450/600 spread and net $87 on the $500/650 (which seems like a lovely new play to me).  There's little to be gained from messing around with them at the moment as you have 50% and almost 100% upside from where you are now by just LEAVING THEM ALONE!!!  

    Just because you NOW regret not being more aggressive doesn't mean your positions should now have to take unnecessary risks to make you feel better.  IF AAPL pulls back THEN you might want to sell some puts and widen the spread and, if you are not going to be HAPPY to do that – then why are you not taking the $100 spread off the table?  

    Exports/Angel – It's already artificially inflated as we send 10mb/week out of the country while we import 49Mb – complete MADNESS!  Last year we exported 50% less and oil was $93 so 5Mb/week of exports is already costing us $73Bn a year and they want to triple it!

    CRB/Angel – Looks like:

    DKS/8800 – Well, first of all, I don't give a crap about support and range when I'm deciding whether or not to buy a company.  DKS costs $5.4Bn at $44.50 and they made $337M last year, which was up 10% from the year before and 10% from the year before that so it's a 10% grower.  They missed Q1 by 4% but it was better than last year and the weather did suck and all consumer spending is down so why punish them?  So, would I pay a p/e of 16 for a boring retailer?  Sure I would – because we can drop that p/e to 13 and 10 over 4 years, so the risk is reasonable AND we get to sell into the excitement of the 20% drop:

    I'd take a poke by selling the 2016 $40 puts for $4.10 for a net $35.90 entry, which is another 20% down from here and back to the 2011 lows – which would seem silly.  TOS says net ordinary margin on them is $4.50 so, with 100% return on margin – I wouldn't feel the need to do anything else but you could toss $2 at the 2016 $50/60 bull call spread and put a stop at $1 so you still net $3.10 worst case but you add a potential $7.50 (150%+) to the upside.  

    Bad news/Shadow – I don't thin one day proves anything at all.  Volume is still ridiculous (25M on SPY at the moment) and it would only have surprised me if some people didn't take money off the table into the weekend.  I mentioned earlier, we were likely to give back yesterday's BS gains – that's all that's happening at the moment.  

    Oil bottomed out at $102.40, now $102.70 again.  Still, $500 here, $250 there – before you know it, it's good money!  

    Yodi more aggressive than me on DKS.  

    Clippers/Albo – I think Steve's a football guy and he's got $20Bn and he wants to own a team and there aren't any others for sale so he bid top dollar to take it.  Would you pay 10% of your bank balance for a team?  Why not?  He probably could have gotten them for $1.6 (there were other bidders) but then he would have risked being outbid and I'm sure he's bored and also looking to keep himself in the spotlight.  So given that, it's not that he paid $2Bn (10% of his net worth) – it's that he overpaid by $400M (5% of his net worth).  In that context – who can blame him for getting something he really wants?  Figure the Bucks are in Milwaukee and the Clippers are in LA – that's worth 2x right there and the rest is just a matter of how badly someone wants it.  

    And what Rustle said! 

    WYNN/Ed – That's a constant for us, we've been in and out of them for years and $220 is just our current shorting price and has been since Feb (even though they burned us to $247 for a couple of weeks).  At $180 we go long again – it's just a channel, really and that's then driven by the news cycle and the ebb and flow of casino revenues.  

    LQMT/$25KP, Micro – Had I seen .22, I would have taken it but it's back to .21 now.  Frankly, we took 10,000 shares at 0.18 ($1,800) in the $25KP and I REALLY don't think they'll go to .10 and cost us $800 (3%) so our RISK is limited and they are doing a triangle squeezy thingy between the 50 and 200 dmas which, Fundamentally, we think will resolve to the upside.  So, I'd much rather hang on and see how it goes but .22 will make it tough to not take 1/2 off the table.  

    GDP/Sibe – What, us worry?

    Have I mentioned how much I like CASH!!! lately?  


  96. Sorry if this has laready been shared but I thought I'd share since the campaign is about to end. $1.7M raised isn't too shabby.

    The second video is the best https://www.indiegogo.com/projects/solar-roadways

    I want them in my driveway.


  97. AAPl losing all its day gains ? Anyone ?


  98. Sorry if this has already been shared but I thought I'd share since the campaign is about to end. $1.7M raised isn't too shabby.

    The second video is the best https://www.indiegogo.com/projects/solar-roadways

    I want them in my driveway.


  99. Thanks Phil.  "Relax" is a good thing, will do.  Enjoy the weekend.


  100. STIRLING DIAGNOSED WITH ALZEIMERS

    WHAT A CROCK OF SHIITE

    WHAT A SMART IDEA

    BALLMER REMAINS UNDIAGNOSED


  101. Phil,

    I wonder if GS is dropping a house on AAPL so they can slide in CHEAP later today or Monday? Just my 2 Cents…

    Wombat….walked away from AAPL at 642.5 this morning…..didn't want to play, so took my kitty and went home…..did I say thank you PHIL …..


  102. AAPL / something about a worker class action ?


  103. please keep mr stick away today!!!


  104. CARNEY LEAVING AS PRESS SECRETARY

    THIS WAS A DOUCHENOZZLE HAD THE PRESIDENT HAD A MORE CREDIBLE PRESS POINT

    IT WOULD HAVE BEEN FAR BETTER WHO WAS THE FIRST GUY? I LIKED HIM


  105. FRSH up almost 6%. Bake PaPa's at home makes sense.


  106. AAPL/albo   I just closed out my two remaining short  AAPL Jan 16  short 470 and 480 puts for a profit of $11,902.  I'll re-establish a position sfter the June 7 7×1 stock split per Phil's suggestion.


  107. AAPL // jumpin on the Jan16 $520/600 BLCS @ $47


  108. IHS4GOD – Well done.  Selling puts on AAPL certainly has provided a nice income stream for the past year.  Have been doing the same.  Actually, I have rolled up some puts to as high as $520.  Wouldn't want to go higher than that.


  109. Ballmer – My prediction is, after a month or two with Ballmer, the players will petition to get Sterling back!  

    Solar Roads/Real – That was my idea, damnit!  

    AAPL/Wombat – Maybe this but any excuse for a pullback after a move like that:

    You're welcome Taihu – enjoy yourself. 

    You're welcome Jasu – very nice. 


  110. They must have seen my remarks on CAT last night down 1.90 today!!


  111. That's a fantastic idea Cdt!   Could apply to a lot of things, the key is it's only one item out of many that will be ordered and not too many people drink alone – or every day.  Around me, $1,000 is 200 beers – easy to justify as long as I think the business will be around for at least 5 years. 


  112. phil

    repost from earlier as you may have missed it…

    millcreek
    May 30th, 2014 at 11:40 am | Permalink | Tweet this Ignore this user

    phil, morning.

    long 3x aapl  jan 16 450 calls

    long 2x "       "     "    550 calls

    shrt 5x "   "  "    "       700 calls

    problem is the short  3x july 555 calls….was waiting for pullback to sell some puts …hasnt happened

    you mentioned a few things and wanted to get your thoughts with the poss mkt selling next month vs run to 700 for the split….was thinking of adding 1 or 2 jan 16 600 calls or a 600-750 bcs…..tks


  113. Buy program express has left the station – S&P back to 1,920 – good to print the record high for the end of month! 

    Incoming Cleveland Fed chief talks inflation measures

    • Set to take over the Cleveland Fed next week and (and become a voting member on the FOMC), Loretta Mester focuses on the importance of keeping inflation low and stable.
    • "We cannot have full employment over the longer run without price stability over the longer run."
    • Most of her speech is devoted to the best way to measure inflation and count her as not of fan of core CPI – she notes many of the components of the core are even more volatile than the stripped out food and energy. She notes the Cleveland Fed's measures of median inflation may be more informative than the core CPI.

    China home price fall is first in almost two years

    • Average new home prices slipped 0.3% in May from April, the first decline since June 2012, according to China Real Estate Index System. On a Y/Y basis, prices rose 7.8% vs. 9.1% in April and 10% in March. Of 100 cities surveyed in May, 62 showed declining prices vs. 45 in April.
    • At issue seems to be a backing off by buyers outside of major cities like Beijing or Shanghai amid worries of further price cuts and trouble getting mortgages, and a property analyst with CIMB Securities sees home prices falling 10-15% in second-tier cities.
    • Housing starts across the country have slid 9.9% by value through April of this year from a year earlier.
    • TAO +1.9% YTD

    Investigation reveals loan changes before Citi Mexican loan fraud

    • Mexican authorities are asking why Citigroup's (C +0.4%) Mexican unit extended due dates and raised credit limits for Oceanografia more than a year before the fraud was discovered. "You could argue they were being flexible," says Jamie Gonzalez, head of Mexico's CNBV, which is conducting the probe. "What is surprising is that the controls weren't there."
    • In 2012, Citigroup extended the time between when it lent funds to Oceanografia and when Pemex repaid to 90 days from 20, and the next year it boosted to amount of financing available. "While the flow of resources was coming in, everybody was happy," says Gonzalez.
    • The bulk of the disputed $400M was lent within about 90 days before the fraud was discovered.

    Russia-China gas deal could "squeeze economics" of Canada LNG projects

    • The new Russia-China gas deal, along with a new trend of setting prices linked to gas prices rather than the traditional crude oil benchmarks, could upset western Canada's plans for launching a liquefied natural gas export industry, according to a new report by TD Bank.
    • "With so much LNG supply capacity set to come on stream, Asian buyers have more power to bargain for lower prices in LNG contracts, lowering the potential prices Canadian producers would receive, and could squeeze the economics of certain LNG projects,” TD says.
    • Canadian projects still offer attractive spreads and proximity to Asian markets despite the challenges, but proponents must move quickly to grab first-mover advantage, TD says as it expects two LNG projects to secure final investment decisions before the end of the year.
    • Relevant tickers include CVXRDS.ARDS.BXOMTRPREPYYREPYFCEOBRGYY,BRGXF.

    Scam alert!  Cheniere Energy seeking $1.9B increase in stock for executives

    • Cheniere Energy (LNG +2.3%) is asking shareholders for permission to issue 30M shares to pay employees - including CEO Charif Souki, whose pay package last year totaled $142M - which is raising the ire of some institutional investors.
    • The stock would be valued at $1.9B based on yesterday's closing price, more than all the revenue LNG has generated since 2008; the new stock, plus 35M shares already reserved to pay executives since 2011, would be more than 25% of the company's public shares.
    • Advisory firm Glass Lewis says the proposed compensation plan could be excessive and dilute existing shareholders' stake by 12%; the company defends its plan as fair and necessary, noting that it has contracts to sell natural gas abroad that would bring in more than $2B/year for 20 years.

    Ugly week continues for the yellow metal

    • Gold continues its worst week in months, with a morning tumble bringing the metal lower by $15 per ounce to $1,242, a level not seen since January. For the week, gold is down about $50 per ounce, or 4%.
    • To review, gold began the year at about $1,200 per ounce and surged to nearly $1,400 in mid-March. Last year's low set in June and again in December was just below $1,200.
    • Pick your excuse: Lower Chinese demand, lessening tensions in Ukraine, calm in financial markets …
    • GLD -1%
    • This morning's spike in shares of Fuel Tech (FTEK +7.5%) is attributed to a Xinhua report on new emissions standards issued by China's Ministry of Environment to cut down on industrial waste and air pollution, with rules to regulate emissions of tin, antimony and mercury as well as industrial boilers and non-road motor vehicles.
    • Companies that provide air pollution reduction and control solutions include FTEK, CECO Environmental (CECE) and Donaldson (DCI).

    Southwest Airlines rapped on the knuckles by DOT

    • Southwest Airlines (LUV -0.2%) got rapped on the knuckles again by the DOT for violating ruleson fare advertising.
    • The carrier marketed a $59 fare from Atlanta to New York, L.A., and Chicago for routes that were already sold out.
    • Southwest must cough up $200K for the misdeed.
    • What to watch: Industry insiders think the lush profits turned up by airliners in Q1 will increase the focus on fare manipulation and misleading advertising by regulators.

    Conference call bravado falls flat with Lions Gate investors

    • Lions Gate (LGF -12.3%) should see revenue increase by 50% over the next three years as its franchise films deliver, says CEO Jon Feltheimer.
    • The exec also forecasts a jump in profit margins to 14% over the same period.
    • The earnings call bravado did little to sweeten the mood of investors who are focused on thelight revenue for FQ4.
    • Lions Gate earnings call

    Street throws in the towel on Infoblox; Microsoft looms large

    • Infoblox (BLOX -39.9%) has received 5 downgrades after offering soft guidance (again) to go with mixed FQ3 results, and announcing long-time CEO Robert Thomas is leaving once a successor is named.
    • "While large customers, partners and field contacts remain positive on Infoblox’s technology, it has become clear there is not a quick and easy fix for the sharp slowdown in product orders that began last October," writes Pac Crest, cutting shares to Sector Perform.
    • Goldman (downgrade to Neutral) does a mea culpa for its February upgrade. It doesn't expect product rev. growth to re-accelerate in the near-term, given its CEO transition and a belief Infoblox is too focused on a "still-nascent security opportunity."
    • The firm also notes there was an "elevated level of concern" on the CC (transcript) about competition from Microsoft, which is integrating more IP address management/DNS features into Windows Server.
    • Thomas admitted Microsoft's price (or lack thereof) will intrigue some clients. "There's no doubt that when it's installed on a box for free, the customer is going to look at it a bit more closely." But he insisted Infoblox's rich feature set – "They don't have anything like the Grid, for example. They don't have a single management platform." – will help it win deals.
    • Apple's (AAPL +1.2%) investments in "platform enhancements such as mobile payments,connected home solutions, and personal health monitors should be far more important for driving switching costs and installed base expansion" than hardware improvements, writes Goldman's Bill Shope, raising his PT by $85 to $720.
    • The remarks come ahead of next week's WWDC conference, where Apple is expected to show off iOS 8 (inc. a Healthbook app), a home automation platform, and OS X 10.10 (Syrah).
    • Shares are again making new 52-week highs, and are now up 16% YTD. They're still 9% below a Sep. '12 peak of $705.07.
    • Yesterday: Apple roundup

  114. Free Beer what a scam the restaurant business is one of the most unstable business there is you might as well throw the money in a hole. Free beer for life or as long as the restaurant stays open. The later will be better fitting. Not a very sound base to look at a business.


  115. Mill, answered above a while ago. 


  116. AAPL- Found this on SA about the WWDC and why Apple is getting ready to spring something huge. Thought it was interesting enough to share. I don't know how to adjust font, so I apologize if it is too large. 

    The schedule for the WWDC was recently released, and there is one amazing thing about it – many of the workshops have unannounced titles. The placeholders have titles such as:

    To be announced

    We really can't talk about it yet

    This one is still under lock and key

    Our lips are sealed on this one too

    It's going to be great

    Hang in there, we'll talk about this soon

    As a description for these, the schedule notes:

    The title and description of this session will be revealed after Keynote on Monday, June 2nd. Check back to view the updated schedule and favorite the sessions and labs you would like to attend.

    There are two ways that we know that this is not just another upgrade, but rather something exceptional.

    Pervasive

    First is the fact that these anonymous workshops cover virtually every aspect of the topic area, including:

    tools,

    frameworks,

    services,

    core OS,

    media,

    graphics and games

    There is even one at 4:30 on Tuesday under the category Special Events. So it is clear that this must be far reaching since it impacts every single corner of the development system.

    Number

    But the way we really know that this is going to be huge, is the sheer number of workshops with censored titles.

    Of some 235 workshops at the conference, about 118 have redacted titles

    This means that over half of the workshops are on varying aspects of this addition to Apple's products. Clearly, this is a lot more than just a 5-inch iPhone!


  117. Phil – Few trades out there that we might have cleared out but will ask anyway – new job still getting in way of my investing fun.

    HMY 1/15/16 $1/$3 BCS and $3P – small loser since established, but if we are bullish on gold let it ride?

    RFMD 1/17/15 $3C and 1/15/16 $5P – HUGE winner, take off table?

    NAK 8/16/14 $2P – offsets much of RFMD gain, some shares too.  Sit?

    DECK 1/17/15 75/90 BCS – off last quarter's earnings, take the loss?

    Thanks as always,

    Steve


  118. phil……..

    first tks …for some reason i didnt show that whole section earlier……

    in case i misread i only have the rolled 3 sht 555 at present….

    in reading your very bearish comments…i was a little puzzled as my net delta on the position is -70.

    can you explain the why of adding 500 calls vs a 600-700 or so bcs and i will hold off selling puts for now…….as im trying to understand / learn………….tks


  119. Phil,

    Just tuned back in. Appreciate the guidance on DKS. I understand and appreciate your value orientation. I use a stock's 2 yr range for a sense of the present level in the market's historical price valuation – no heresy intended. Thanks.


  120. $25,000 Portfolio Review:  

    We took a gamble and went heavy short on a few things and no luck so far.  I'm not in the mood to press NFLX but we still have 3 weeks for it to go back to where it was two weeks ago.  GMCR is long-term and I still like it (and we already pulled the profitable short puts) and we're already half out of USO – hopefully we get below $100 next week.  

    Butterfly Portfolio Review:  

    How can you not love this portfolio?  It's like a little magic money machine we only need to adjust once a month and it spits out 23% profits!  We're hardly using any cash and still getting great returns.  Each month we have success, we add another position and the profits increase exponentially over time – if you can be PATIENT!

    Income Portfolio Review:  

    Our $30,000 loss on AAPL at the moment is the whole story of this portfolio, that's 6% right there.  No worries though, it was our intent to DD on it if AAPL went higher and I haven't adjusted it yet because I thought over $630 (5% over post-earnings goal) was a bit silly and wouldn't last. 

    We love all our short puts, of course, nothing we'd change there.  

    • UBNT is brand new and still a good entry for people who missed it.
    • CLF is a bit disappointing but fine and also good for a new entry.  Keep in mind we sold the $13 calls so all we care about is that it's over $13 and we make $3,350.   Good for new entry. 
    • OPTT in the same boat, if it holds $2.50 we make $6,840.  Still good for a new entry.  
    • AAPL is killing us (I know I said that, but worth repeating).    When they hit $600 we took the profits on half our calls and short puts and left 10 naked short calls – that was $33 ago.  Still, we do have 5 2016 $600 calls so the most we can lose – up to $750, is $50 ($25,000), which is less than the current loss is showing.  We can add another 5 2016 $600/750 bull call spreads at $50 and then roll the 5 short Jan $550s ($96) to 10 Oct $605s ($50) for about even and then we'd have $150 off protection on our net $40 spread with up to $110,000 of upside (if we can get rid of the short calls and still hit $750) – and that's without selling any puts.  SO – I still can't get myself worried enough to do anything just yet – let's just watch and wait and see if AAPL really does hold this level or if they re-test $600 before next earnings (July 23rdish).

    • ABX – We just repicked those so no worries but no reason to double down yet either.  If anything, I'd just buy 10 more of the 2016 $15 calls ($2.85) and buy back the 10 short 2016 $22 calls (0.98) but we have 18 months left and ABX is at our break-even ($16) so why change anything?  This is a very hard thing to learn in options trading – your portfolio will often LOOK bad and, if you don't understand your positions or remember why you are in them – you can get fooled into making bad decisions.  This is why we stress UNDERSTANDING the trades – rather than just giving them out and that's why reviews like this are so important.  
    • CCJ – Also way behind on paper but CCJ is at $19.90 and we own the $19 calls and sold the $20 puts for a net of $0.50 and we have 18 months for CCJ to go higher.  It shows a $2,500 loss for our troubles so far but, to me – that just makes it a great opportunity for a new entry.  Why don't we add more?  Because we save that for positions that are actually in trouble (and we still believe in), this one isn't.  

    • CLF – This is a tough one because there's a debate about whether or not they are in trouble.  Of course, it's the same debate we've been trading around for 2 years and, so far, we've been rewarded every time we bottom fish.  It is almost time to put more money into this one but we think the whole market might sell-off so we'd rather let it happen first, though I doubt we do better than $15 (now $15.74). 
    • CZR – Showing a loss on all three legs which, if you think about it, shouldn't be possible.  Again, this is why you have to learn to ignore interim balances and focus on whether or not your strategy is sound.  In this case, we're showing a $1,100 loss but we only paid $600 for 10 2016 $15/25 bull call spreads with $18 short puts and CZR is currently at $18.22.  If it closed today, we'd have $3,220 on the spread and the puts would be worthless for a profit of $2,620 (436%) but our portfolio is telling us that we have a 300% loss.  Again, a nice buying opportunity for those who understand our "Be the House" strategy.

    • EBAY – Good for a new entry.  
    • IRBT – Good for a new entry.
    • PFE – Good for a new entry.  
    • RIG – Wow, a profit!  That one's almost 100% in the money already with our max at $45.

    • TEX – Good for a new entry.  
    • TWTR – Good for a new entry
    • WFM – Good for a new entry. 

    That's another important point. Aside from AAPL, the reason we're showing a loss here is because we are re-establishing positions recently.  Every time you enter a long-term options spread you will see an immediate loss in your portfolio because you pay the ask and the portfolio shows the bid, etc.  It's .10 here and .20 there – multiply that by the 460 contracts (46,000 units) we've played here and, at a .15 average, you're going to be "losing" $6,900 at the outset just on the bid/ask spreads.  

    Over the long haul (as you can see from the LTP) that doesn't matter at all but, when you initiate positions, it matters a lot.  Notice we have $551,225 in cash – that's 10% more than we started the year with.  That's the point of the Income Portfolio – to generate cash so mission accomplished so far.  Once we fix AAPL, we'll be in really good shape. 


  121. LQMT-.2332!


  122. Oops, look at the time, I'll have to get back to the other 2 portfolios over the weekend.  

    HMY/Steve – Sure, when we get to next july and they have 2018s, then you can roll.  RFMD – Absolutely, way past greedy now.  NAK – totally speculative, if you are intending to keep it (meaning own it for 10 years), then you need to DD next time it hits 0.60, otherwise, your net is $1 and the stock is at .75 – really that offsets RFMD's gains or is it the paper loss you are freaking out about?   DECK – When the call you own in the bull call spread drops to the net of the spread, it's time to roll.  The Jan $75s (is that so hard to write) are still $10.40 and you can roll those to the 2016 $67.50/82.50 bull call spread at $6.70 and sell the $50 puts for $5.40 for net $1.30 on the $15 spread, plus whatever you netted on the original spread.  Just watch out if they go over $80 as you may want to make an adjustment since you would still have the naked short Jan $90s.

    AAPL/Mill – You have 3 naked short calls on AAPL with no offsetting short puts – that's way too bearish in my books!  So adding the calls it to cover the naked short calls – I don't like naked short calls on AAPL – look what they did to the poor Income Portfolio!  Look how happy the COVERED LTP is by comparison – which do you want to be?  

    Woo-hoo – power move up into the close.  Records baby!  

    DKS/8800 – I'm sure you know but others may not, so I emphasize.  

    LQMT/Pirate – Now we should take off 1/2.  Too late though.

    Have a great weekend everyone!  

    - Phil


  123. LQMT – .25

    News???


  124. Apple rumors on LQMT, I'm sure.  Maybe at the conference they'll demo a Liquid Metal IPhone that you can play handball with without damaging it.


  125. Phil/CCJ

    The spread is a 2015. Net $3.00 was paid for the bcs and the calls are $2.25. Shouldn't they be rolled?


  126. Phil – no freaking, just learning and checking in…..on the option side, the NAK loss only eats into half the RFMD gain.  The kicker are the outright shares of NAK which are already DCA'ed a bit so will park and sit tight.

    Thanks and have a great weekend!


  127. OMG ! ! !   This one I do not believe !

    Federal investigators are pursuing a major insider-trading probe involving finance, gambling and sports, examining the trading of investor Carl Icahn, golfer Phil Mickelson and Las Vegas bettor William "Billy" Walters.


  128. Russell still struggling to go over its 200 DMA. Other indices reaching for the stars….


  129. More info on Icahn and company to follow Albo's breaking news:

    http://www.usatoday.com/story/money/business/2014/05/30/wsj-report-carl-icahn-phil-mickelson-william-billy-walters-insider-trading-probe/9791365/

    According to a story published on the Journal website late Friday, the Federal Bureau of Investigation and the Securities and Exchange Commission are probing whether Mickelson and Walters illegally traded on nonpublic information they allegedly obtained from Icahn about his investments in public companies. The Journal story attributed the information to "people briefed on the probe."

    The feds are said to be investigating whether the past three years Icahn illegally provided Walters — well known in Vegas for his sports-betting abilities — about potentially market-moving investments by Icahn's company, Icahn Enterprises, the Journal story said.

    Don't these guys already make enough that they should not have to cheat…. Of course Icahn's tweets could be also be viewed as insider information.


  130. Busy week – PMI everywhere, rate decisions and employment numbers!


  131. Good morning!

    CCJ/RJ – My mistake, thanks.  Though it's only got 6 months, the goal is a modest $24 (now $20) and I'd like to give it a chance to make the 200 dma at $20.60 before giving up on it for 2014.  At the moment, the Jan $19s are $2.40 (last was $2.22 but bid is $2.35 and ask is $2.45) and it's $2.10 for us to roll to the $2016 $17s – so a very good deal for us, but then it exposes us to more downside losses if CCJ fails.  The short Jan $20 puts are $2 and the 2016 $17 puts are $2 so there's not much to worry about here and, if the VIX gets bigger – we'll net positive on the roll – another reason to wait PATIENTLY.  Don't forget, with CCJ – it's all about when Japan restarts their nuclear program.  Right now it's priced as if that's never going to happen but I don't think they can afford another year of waiting – it's just a question of when they announce.  

    As The Diplomat noted last week, Japan’s nuclear energy providers are struggling to remain profitable with all the country’s nuclear reactors currently offline. The government is highly aware of its struggling nuclear power sector, and the threat of another summer where Japan’s energy grid is stretched to the limit, and energy imports soar.

    Our thinking hasn’t changed about restarting the reactors as soon as their safety has been confirmed,” according to the Japan Times.

    Yagi gave three conditions upon which the reactors would be restarted. First, the power plant must receive a positive safety inspection from the Nuclear Regulation Authority (NRA). Yagi said permission to restart would also need to be granted by both local and central authorities. Receiving permission from Prime Minister Shinzo Abe’s government should be a minor hurdle. However, winning the support of nearby communities will be much more difficult. The mayor of Maizuru, Ryozo Tatami, whose city is within 30 km of the Oi power plant, said, “We need a safety check involving experts selected by Maizuru and Kyoto Prefecture.”

    Despite strong local opposition, Abe’s government is determined to bring back online as many nuclear reactors as logistically possible. On Wednesday, an NRA official told AFP that Abe’s government wants to replace two of five commissioners serving on the NRA when their terms expire. One of the commissioners Abe reportedly most wants to replace is Kunihiko Shimizu, who has been criticized for saying that at least two reactors sit on active fault lines.

    The multiple dimensions of Japan’s nuclear conundrum make grappling with it (and finding a nationwide solution) difficult for all parties involved. Abe’s government is determined to bring down energy imports that wreak havoc every summer with Japan’s balance of trade, which is exacerbated due to the weak yen. Local governments and their constituencies are determined to keep the tragedy of Fukushima as far from their own doorstep as possible. The inability of Tepco to adequately address the continued problems at the Daiichi power plant only further reinforces the fear of people who live near existing reactors. Despite Abe’s insistence, local populations are likely to keep the number of reactors that come back online much lower than the government wants, at least in the near future, as long as the central government and energy providers give them veto power.

    NAK/Steve – It's supposed to be a pillow play – the kind you put a small bet on, stick it under your pillow for 10 years and then see if you got lucky or not.  That's true with any penny stock except LQMT, which we follow very closely, so we're pretty confident when we commit to it but, even so, $1,800 was the most I could justify in a $25KP and I sure wouldn't have let it drop 40% before stopping out if it could be avoided.  Notice NAK has never been in any of our portfolios – it's just not good enough, merely a fun, speculative play – but it's not fun at all if you put too much money on it!  

    Interesting Albo:

    Federal investigators are looking into whether Mickelson and Walters may have traded illegally on private information provided by Icahn about his investments in public corporations, the source told Reuters, confirming reports on Friday.

     

    The investigation centers on suspicious trades in Clorox Co CLX.N by Walters and Mickelson as Icahn was trying for access to the board of the consumer products company in 2011, the New York Times reported, citing people briefed on the probe.

    Icahn had accumulated a 9.1 percent stake in Clorox in February 2011. In July, he made an offer for the company that valued it at above $10 billion and sent its stock soaring.

    Investigators were also looking into trades that Mickelson and Walters made related to Dean Foods Co DF.N, the Journal cited the people as saying. The New York Times cited people briefed on the investigation as saying that in that particular case, investigators are looking into trades placed around 2012 just before the company announced quarterly results.

    Those trades appeared to have no connection to Icahn, the newspaper added. Icahn told Reuters he had never purchased shares nor been involved with Dean.

    Even if Icahn did leak information about his plans regarding Clorox, it may not necessarily have violated the law. Insider trading regulations prohibit trading based on material, nonpublic information obtained from someone who breached a fiduciary or confidentiality duty by disclosing it.

    As a non-board member, Icahn owed no duty to Clorox shareholders. It is possible, though by no means definite, that Icahn owed a confidentiality duty to his own shareholders.

    Doesn't sound like a big deal to me but you never know.  Very tough to go after Icahn as he's not really an insider (purposely) but, with CLX, the fact that he was trying to shake up the board at the time may have pushed it over the line.  Certainly the SEC is looking for a high-profile case as a warning to others but, with Icahn, they are probably bringing a knife to a gun fight as he's got $23Bn and the SEC's entire operating budget is $1.3Bn – Ichan can force them to spend tens of millions on a trial and drag it out for years (already been 3) and it's only possible for them to investigate at all since Obama has pumped their budget from $900M under Bush – so a 50% increase since the Financial Crisis but still not enough for all the things they are supposed to be doing. 

    In fact, if you want to know how tight the SEC's budget is, look at the notes:

    Notes:

    Budget Authority figures above do not include carryover or recoveries

    A. Includes $20,705 for Disaster Recovery, $24,820 carryover for Pay Parity, $30,900 for 2nd Supplemental, & $336 rescission.

    B. Enacted at $913,000, but SEC was required to leave $25,000 unobligated to apply towards FY 2006.

    C. FY09 authority includes $10,000 Supplemental and does NOT include $17,000 reprogramming

    D. FY13 authority does not include $66,050 sequestration reduction

    Would be kind of rough for them to say "includes $50,000,000 attempting to prosecute Carl Icahn" – a miss on a play like that is how people lose their jobs.  

    Big Chart – WOW!  Gotta go for TNA on a long hedge next week – someone remind me please.  

    Tweets/StJ – They're not likely to open up that can of worms – would call so much of social media into question.

    Non-Farm Payrolls next week – another reason we're waiting until June 10th!  If sentiment is changing, PMIs could drop fast as they are essentially sentiment reports.  Japan's leading numbers are likely to suck as well. 


  132. Phil/CCJ

    Thanks! I am in the bcs, but have not sold any puts yet. I had just noticed you telling another member he should be rolling when the net of a bcs drops below the price of the caller and thought it would be a good time for you to comment on why rules such as this are not hard and fast.


  133. Phil/WFM/FYI

    On the Income Portfolio the 2016 sold $33 puts are showing an entry price of $3.45 and current price of $3.15.  That should be a gain not loss as it is showing.  It looks like they were entered as long puts in error.


  134. rj_jarboe

    Please what do you understand of below the price of the caller 

    example CCJ jan16 BCS 20/25 @ 6.51 / 4.00  so my net cost is 2.51 Present situation 

    3.10 / 1.58 which caller are you refering to ? I look at it that way the play has cost my 2.51 my long call is still 3.10 .59 over the net cost as the caller of 1.58 is actually worthless.  HereI am not including any short term caller sales!! Please explain. TIA


  135. It seems there is a labor shortage in US construction, restaurant / hotel, and wage growth is picking up.  If so then maybe bullish for stocks and Phil's long term prediction is coming true, the Fed will get their wish and there will be inflation.  If this is true, maybe good for earnings over next 6-12 mo for companies dependent on US demand.


  136. Good morning!

    I hope everyone had a nice weekend.  

    Brent is down to $109 and our oil just failed $103 (rejected at $103.50 overnight) and should be much lower than just a $6 gap below Brent, so still a good short on /CL below $103. 

    CCJ/RJ – What are "rules" not hard and fast.  Because they are guidelines, not RULES.  Because every situation needs to be evaluated based on the overall conditions and the conditions specific to that stock and the recent news and the news you ANTICIPATE to be coming between now and your target date and then there are factors like the low VIX environment we're in now making some plays attractive and unattractive and also we have to take into consideration the overall balance of the portfolio and how changing a position will affect that balance – taking into consideration our overall market outlook and, of course, we need to remember WHY we went into a position in the first place and whether its worth allocating more resources.  Then, sometimes – it's just a matter of feeling that you are simply better off waiting for more information before committing more capital.  Once you've taken that into consideration AND you are happy with price you are getting for the strike you wish to shift to – THEN you can roll. 

    WFM/DC – Thank you very much, corrected now.  

    Inflation/Pwright – I'm not really seeing a labor shortage at the moment, do you have any articles to support this?  I do think we've misallocated jobs and there will be one when we do begin to expand and that will cause shortages of supply that will accelerate inflation further but I don't think it's here yet.  Most inflation we're seeing at the moment is top down inflation that results from too much money in the hands of Billionaires being wasted on luxuries (beef, coffee, hotels, airfare, movie tickets…) and not from the bottom 80% creating mass demand for goods and services.  

    Meanwhile, the reason the Fed can keep claiming there is no inflation (and screwing seniors on their COLA adjustments) is because 57% of the measured inflation rate is Owner's Equivalent Rent, which means, even if you are not buying a house, when your house gets more affordable (lower price, cheaper mortgage), that's considered to detract from the total rate of inflation of everything else with a 114% weighting to the rest!  It's a completely BS system:


  137. Good morning Phil; re: inflation, now I'm having trouble finding the article I was reading yesterday, but:

    http://online.wsj.com/news/articles/SB10001424052702304163604579530182403048114

    about construction industry, also there have been articles about a shortage of people willing to take jobs like waiter, bellhop, etc.; I remember reading that an experienced drywall guy used to command $15-20, now can get about $18-25, etc.  It seems that a lot of the shortages are in areas like this / building, labor, direct services, etc., whereas the sort of "white collar" office jobs are coming back less quickly.  I know in the lumber industry there is a shortage of loggers and experienced mill workers, labor costs are likely going to go up.  A lot of people that used to work these jobs have gone to the Bakken to chase oil and gas, or what not.  At any rate, I know my comments are poorly documented :) I will see if I can get some better data.  If it's true though, it would seem like somewhat good news, at least on a cyclical level..



  138. Yodi

    I think we are on the same page. On Phil's spread the $19/24 bcs cost $5 & $2 for a net of $3. Now the $19 calls are $2.25 (according to the portfolio Phil posted below) which is $.75 below the net of $3. In your case, you are as you stated still $.59 above the net.