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Monday Market Movement – Can We Go Higher?

Record highs! 

I know it sounds like a broken record (kids don't even know what that means) to say "record highs" over and over again, but that's what the Federally fueled rally has given us – over and over again.  

Certainly the Fed remains EXTREMELY accomodative but they also stand to lose hundreds of Billions of Dollars on their current bond-holdings if rates ever do rise (because they hold Trillions of low-rate bonds, which lose value if higher-rate bonds become available) – so how long can this game last?

It's not just the Fed, of course – other people do buy our bonds (and hold our bonds) and, right now, the people holding high-interest bonds (5%+) are sitting on a gold mine as they are far more valuable than 2-3% bonds.  What happens when that begins to unwind?  Suddenly there will be a flood of bonds hitting the street at 5%+ that the Government, who still borrow $50Bn per month, will have to compete with to raise capital.  Doing this at the same time as the Fed is withdrawing their stimulus can be a disaster.  

We were talking about inflationay pressure in Member Chat this morning and anyone who has a stomach has some idea of what the real inflation rate is in this World.  This chart is from India, where inflation has "slowed" to 8.64% but last year's 15% average led to the ousting of the old government in the recent election.  

Revolution is a slow process, especially in democracies – where the population has the illusion of choice.  We are always enticed by the chance to "throw the bums out" in a few years but then, inevitably, the new bums are just as bad and then we want to throw them out too. 

That's because you can't fix a broken system when everyone is playing just a slight variation on the same news.  The way our own Government measures inflation is a joke, 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:

Yes, seriously, 75% of the US measure of inflation is based on the fake cost of your home, if you were buying it today vs last year.  Of the rest, elictricty, car insurance, hospital costs and college tuition carry much higher weightings than any food or clothing items on the list.  All "THEY" have to do is build a bunch of low-income housing somewhere in Ohio and PRESTO! – the average inflation rate drops – no matter how much the price of everything else rises.  

It's a SCAM!  But it's the kind of scam that will unravel in a big way as inflation is the genie you cannot stuff back in the bottle once it's out.  Looking at the Fed's June POMO schedule, we're already seeing 6 days with no cash injections at all and 9 of 16 days when there will be cash infusions, they will be $1Bn or less, vs a $3.5Bn daily AVERAGE last year.

This is simply economics in action.  In fact, the cartoon on the left was drawn in 1942 by Dr. Seuss, in his political cartoonist days.  There's nothing new going on here and this time is not different except for the fact that this time, the entire world is debasing their currency simultaneously – in a way that has only recently been made possible with the interconnceted global markets.  

That only means that this bubble, when it finally bursts, may be the mother of all bubble bursts.  There will be no safe havens – no escape.  So why is gold $1,247 this morning?  Why is silver $18.80 after bouncing off $18.60?  Part of that is attributable to the 1% rise in the Dollar since last week but a lot of it is the declining picture of global demand.  On Friday, we got a new 8-month low in Consumer Confidence readings and it's showing up in declining Corporate Revenues, which can't be faked the way profits can.

Even with all the mergers and buybacks, the S&P 500 is now trading at 16.3 times earnings, up from 14.8 (+9%) just four monts ago.  Our markets are in serious disconnect from the rest of the World so, either the rest of the World is wrong and the economy is much better than we think – or the rest of the World is right and the US markets are heading for one HELL of a correction.  

As it's time for the market to open, I'll continue this discussion tomorrow.  

In our Live Member Chat, we already caught a nice short on oil at $103 (we had USO puts over the weekend too) and it's already failing $102.50 for a $500+ gain per contract – enough to buy the whole week's worth of Egg McMuffins.  That's why we don't fear getting back to CASH!!! - there's always something we can trade.  In fact, in the first two weeks of May alone, we had 94 trade ideas and already, less than a month later, 85 of them are winners (85%).

There are always opportunities to trade and we find them every day in our Member Chat Room – don't fear getting back to cash in an uncertain market – EMBRACE THE OPPORTUNITY!  

 


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  1. Oil Lines

    R3 – 104.54
    R2 – 104
    R1 – 103.47
    PP – 102.93
    S1 – 102.40
    S2 – 101.86
    S3 – 101.33

    Back into a more normal schedule on French time!


  2. Mixed economic numbers this morning – PMI in China and France higher than expected, Japan in line and Europe and Germany lower than expected.

    CPI in Germany also weaker than expected – no inflation on the horizon and actually the MoM numbers were negative so deflation more a danger it seems!


  3. Major Earnings for the Upcoming Week:

    Monday:  CONN, KKD, VRNT

     

    Tuesday: FCEL, SWHC

     

    Wednesday: FIVE, JOSB, PVH

     

    Thursday:  CIEN, DMND, JOY, MTN, SJM, TITN

     

    Friday: KMG

     

    Economic Releases (6/2-6/6):

    Monday:

    3:00 am CT – Fed’s Evans Speaks

    8:45 am CT– PMI Mfg. Index

    9:00 am CT– ISM Mfg. Index

    9:00 am CT– Construction Spending

                                                                                                                                                                                    

    Tuesday:

    Auto Sales – all day

    6:45 am CT – GS Store Sales

    9:00 am CT– Factory Orders

    12:50 pm CT – Fed’s George Speaks

                                                                                                                                                                                                                  

    Wednesday:

    6:00 am CT – MBA Purchase Applications

    7:15 am CT – ADP Employment Report

    7:30 am CT– International Trade

    7:30 am CT– Productivity & Costs

    8:45 am CT– PMI Services Index

    9:00 am CT– ISM Mfg. Index

    9:30 am CT – Oil Inventories

    1:00 pm CT – Beige Book

                        

    Thursday:

    7:30 am CT– Weekly Jobless Claims

    9:30 am CT– Natural Gas Inventories

    12:30 am CT – Fed’s Kocherlakota Speaks

                                                                                                                                                                                                            

    Friday:

    9:00 am CT – Jobs Report

    2:00 pm CT – Consumer Credit

     

                                             


  4. BRCM up over 15%


  5. Good Morning!


  6. UNP/pwright – moving stop up to 193.87..


  7. BRCM/Phil

    Have 6 x $25/$32 BCS and $25 Put 2016 play.Have sold 3 x June $32 calls against position.Can you advise adjustment after pop in share today. Thanks.


  8. scottmi makes sense.  It's been a great run so far, I wonder if it'll get tired.  But if it pops $200 and holds, maybe stays up there?


  9. UNP/pwright – putting in an order to roll the june 195 calls to July 195s for $1.07.  very tempted to just take half of these off the jun/aug  diagonals off table. oh, roll just went through at 1.07..!


  10. Phil. Just a reminder for a TNA trade.  It was down a dollar Friday and dropped another dollar today in early trading. RUT DROPPING BELOW 1130 could be a sell signal?


  11. scottmi re: UNP, I got the same fill.  Cramer's plugging for UNP, maybe time to get out :)

    http://www.thestreet.com/story/12727101/1/why-jim-cramer-says-buy-union-pacific-unp-stock.html?puc=yahoo&cm_ven=YAHOO


  12. Good morning! 

    Wow, RUT dropping like a rock tied to a bigger rock!  1,124 from 1,137 open already.  So glad we're in CASH!!! 

    Of course, we wanted a TNA trade for an upside hedge so now would be a good time to add one.  TNA is at $68.50, down from $85 when RUT was 1,200 and the July $76.81 calls are just $1.60 while the $70.81 calls are $3.80 so a $6 move in TNA (8%) can net you +135%.  Of course time will decay it but the point is to hedge to the upside – not make a big bet.  I like this because a 2.5% bounce in the RUT (to 1,155) should give us a double or better and there's no limit to the upside so let's spend $3,200 in the STP to play for the bounce – just in case our bearish bets turn out to be a mistake.  


  13. Liquidmetal Technologies Inc. (LQMT)

     

    Filled at .2708 for 1/2  thanks Phil


  14. Phil, 

    The TNA is july 2014 $76.81 buy for 1.42….is that correct? Thanks


  15. cramer/pwright – you're not wrong there as a signal to get out! not going to put another long position on at least, not with that menace stumping for it right now..


  16. UNP sure has had a roll this year though with good news, new projects completed, growing business..


  17. now if TASR could get off it's knees..


  18. scottmi re: UNP, actually looking at it, I might still think it has some room to run.  Cramer isn't always absolutely wrong about everything (that would be too easy)

    UNP is in a part of the economy where the growth and earnings seem real; maybe going forward at this point with tight stops might still be the way to go..


  19. Construction Spending up less than expected (0.2%), ISM 53.2 is a big miss.  Prices paid from 56.5 to 60!!!  

    China/StJ – The PMI was 50.8, barely expanding. Last week's HSBC (private) reading came in at 49.7 so maybe some fudge factor in Chinese "growth".  

    US May PMI Manufacturing 56.4 vs 56.2 consensus, 55.4 in Apr.

    Canada PMI slips to 4-month low - May's 52.2 read remains in expansion territory, but slides from April's 52.9.
    Brazil PMI falls to 10-month low - May's 48.8 slides from 49.3 in April, and marks the 2nd consecutive month in contraction territory for the Manufacturing PMI.

    LQMT getting towards our .30 target ahead of AAPL event today.  Could be a big winner or could be a huge disappointment so 1/2 off at 0.29 is a good plan in the $25KP (or wherever!). 

    Thanks QC. 

    Wow on BRCM!  I knew I liked those guys…

    BRCM/DM – They're only at $34.50 so no crisis, and less so now than it was when you first looked, which makes a great case for inaction.  Essentially, your longs are a winner and you half-covered, which is excellent, so you own $2.55 on 3 short June $32s and those can be rolled to 4 Nov $35s ($1.90) for about even and (if you want to get more aggressive) you can sell your 6 2016 $25s for $10 ($6,000) and buy 12 $30/40 bull call spreads for $4.40 ($5,280) and roll the 6 short 2016 $32s ($5.50 = $3,300) to 6 more of the Nov $35s ($1,900) for $1,400, which is $600ish more than you took off the table for the $10s.  That leaves you with 12 $30/40 bull call spreads at about .50 more than your original net on 6 $7 spreads so tons more upside and you are well covered with the short Nov $35s and you can buy back the 2016 puts and wait for a dip to sell more to put even more money in your pocket (while wiping out the short callers) or, if never a dip, then you'll probably do very well with a 12 x $5 ($6,000) advantage on your short callers and 15 months to roll.  

    TNA/Den – Thanks for reminder.  RUT was as low as 1,090 recently but bounced back hard and fast.  We can keep playing for those bounces until they fail us.  

    TNA/Jasu – Yes, just buying the calls as a bull call spread would not let us take advantage of a quick bounce.  They did get cheaper while I was posting, which is why we like to ALWAYS sell (or buy) into the intitial excitement.  

    TASR/Scott – Don't worry, crowd control needs should spike this summer.  


  20. Great summary of Net Neutrality by John Oliver last night:


  21. Warning corruption on Yahoo Finance that could compromise your security. No more info but stay away for now.


  22. From Bloomberg, Jun 2, 2014, 10:22:21 AM

    U.S. stocks fell, after the benchmark
    Standard & Poor’s 500 Index climbed to a record last week, as
    technology and small-cap shares resumed declines and a gauge of
    U.S. manufacturing dropped in May.

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


  23. From Bloomberg, Jun 2, 2014, 10:12:55 AM

    The U.S. Environmental Protection Agency is scheduled to unveil the plan — potentially the most significant environmental initiative of U.S. President Barack Obama’s presidency — tomorrow morning. Photographer: Alex Wong/Getty Images

    President Barack Obama is proposing cuts in greenhouse-gas emissions from the nation’s power plants by an average of 30 percent from 2005 levels, a central part of his plan to fight climate change that also carries political risk.

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


  24. From Bloomberg, Jun 1, 2014, 6:03:25 PM

    Why not turn this into economic growth? Photographer: Tomohiro Ohsumi/Bloomberg  

    With the Obama administration’s new carbon dioxide emissions limits for the nation’s aging power plants coming out today, the drumbeat of lost jobs, economic devastation and a liberal “war on coal” has once again reached a crescendo.

    To read the entire article, go to http://bv.ms/1ojIf9l
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  25. From Bloomberg, Jun 2, 2014, 8:03:40 AM


    Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S.. Photographer: Scott Eells/Bloomberg

    If the insatiable demand for bonds has upended the models you use to value them, you’re not alone.

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


  26. From Bloomberg, Jun 2, 2014, 9:53:59 AM

    Lately, the higher the Standard &
    Poor’s 500 Index goes, the less investors care.

    To read the entire article, go to http://bloom.bg/1pKmII9
    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, Jun 2, 2014, 10:35:24 AM

    Manufacturing in the U.S. expanded at
    a slower pace than forecast in May as orders and production
    eased from the previous month.

    To read the entire article, go to http://bloom.bg/RXCxiG
    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, Jun 2, 2014, 12:00:05 AM

    An aerial view of a housing development in Pottstown, Pennsylvania. Photographer: Stan Honda/AFP via Getty Images

    Mike Trafton bought a house in a suburb of Boise, Idaho, where he plans to retire. He made the deal without signing a stack of mortgage papers.

    To read the entire article, go to http://bloom.bg/1kxtT6d
    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, Jun 2, 2014, 10:16:01 AM

    A half-decade after the near-death of American automaking, the Detroit Three have reached an unprecedented milestone: They’re boosting sales while remaining consistently profitable.

    To read the entire article, go to http://bloom.bg/1gW8Ie8
    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, Jun 2, 2014, 9:04:16 AM

    Spain’s King Juan Carlos stands at Zarzuela Palace in Madrid. Photographer: Gabriel Solera/Getty Images

    King Juan Carlos, who faced down a
    military coup that threatened Spain’s return to democracy before
    seeing his family dragged into a corruption scandal, abdicated
    the throne in favor of his son.

    To read the entire article, go to http://bloom.bg/1kxpuAq
    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, Jun 2, 2014, 12:01:00 AM

    An Iphone at Apple’s Fifth Avenue store on April 22, 2014 in New York City. Photographer: John Moore/Getty Images

    There’s a place where mobile applications go to die, and its name is Apptopia Inc.

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


  32. Sent from Bloomberg for iPad

    Watch this video at http://bloom.bg/1iLodAQ

    Sneak Peek at Apple’s New iOS Operating System
    June 2 (Bloomberg) — Cantor Fitzgerald’s Brian White and Bloomberg’s Cory Johnson preview Apple’s World Wide Developer Conference on Bloomberg Television’s “In The Loop.” White’s firm owns more than 1% stock in Apple. (Source: Bloomberg)

    Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  33. Sent from Bloomberg for iPad

    Watch this video at http://bloom.bg/1u7VXQn

    Weak Case Against Carl Icahn, Phil Mickelson: Burns
    June 2 (Bloomberg) — Former federal prosecutor Douglas Burns explains what goes into a probe of alleged insider trading and discusses the leak of information to the media involving Carl Icahn and Phil Mickelson. He speaks on Bloomberg Television’s “Bloomberg Surveillance.”

    Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  34. From Bloomberg, Jun 2, 2014, 8:40:47 AM

    A PhD student loads DNA samples onto a gel while searching for variations in genetic samples that would point to someone’s susceptibility to lung, prostate, breast and colorectal cancer in San Francisco. Photographer: Justin Sullivan/Getty Images

    Pinpointing the genetic changes that cause cancer has been a focus of researchers for more than a decade. Now, top cancer hospitals are making genetic testing a new standard of care in the field.

    To read the entire article, go to http://bloom.bg/1gWpBWh
    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, Jun 2, 2014, 8:17:25 AM


    June 2 (Bloomberg) — Timothy Ash, head of emerging-market research at Standard Bank Group Ltd., discusses the crisis in Ukraine and the prospects for gas talks with Russia.
    He talks with Anna Edwards, Mark Barton and Ryan Chilcote on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

    Vladimir Putin’s territorial ambitions are bumping up against financial markets.

    To read the entire article, go to http://bloom.bg/SnvGzy
    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, Jun 1, 2014, 4:14:00 PM

    (Corrects unit to billions in ninth paragraph of story published May 31.)

    To read the entire article, go to http://bloom.bg/1lZEQKn
    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, Jun 2, 2014, 2:32:37 AM


    June 2 (Bloomberg) — International Air Transport Association Chief Executive Officer Tony Tyler talks about the outlook for the airline industry.
    He spoke yesterday on the sidelines of the group’s annual meeting in Qatar. Anna Edwards reports on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

    Airline industry earnings that are
    forecast to reach a record this year on surging U.S. gains mask
    margins too thin to provide any real resilience to economic
    setbacks, the International Air Transport Association said.

    To read the entire article, go to http://bloom.bg/1kZV1dG
    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, Jun 2, 2014, 9:03:46 AM


    Mario Draghi, president of the European Central Bank (ECB). Photographer: Andrew Harrer/Bloomberg

    Mario Draghi will confront the threat of deflation this week as he prepares to unleash an array of measures to jolt the economy and ignite prices.

    To read the entire article, go to http://bloom.bg/1kxiJhM
    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, Jun 2, 2014, 4:00:00 AM


    Employees work on a part-completed engine on the production line at a factory in Douvrin. French manufacturing contracted for the first time in three months. Photographer: Chris Ratcliffe/Bloomberg

    Manufacturing in the euro area slowed
    more than initially estimated in May amid weakness in France,
    adding to evidence of the region’s uneven recovery as the
    European Central Bank weighs more stimulus to shore up growth
    and inflation.

    To read the entire article, go to http://bloom.bg/1kxnsjB
    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, Jun 2, 2014, 5:37:52 AM


    Behind such bets is the suspicion that ECB President Mario Draghi will have to do more than cut interest rates and provide liquidity for banks if he is to counter what he calls “the potential for a negative spiral” in inflation. Photographer: Jasper Juinen/Bloomberg

    If central banks are buying, it pays for investors to join in.

    To read the entire article, go to http://bloom.bg/1kxuN2w
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  41. BRCM / Phil .. Thanks 


  42. BRCM / Phil .. Thanks 


  43. FU market!!!


  44. RUT bottomed out at 1,118, back to 1,126 now.  We'll see how things go.  

    Oil laying about at $102.40 with Dollar 80.60 and gold $1,245.  

    Gasoline taking a beating at $2.956 after pinning $2.985 into the weekend.  

    You're welcome, DM. 

    • Dow +0.06% to 16,727.50. S&P -0.01% to 1,923.30. Nasdaq -0.01% to 4,241.73.
    • Treasurys: 30-year -0.36%. 10-yr -0.2%. 5-yr -0.1%.
    • Commodities: Crude -0.21% to $102.49. Gold +0.03% to $1,246.40.
    • Currencies: Euro -0.18% vs. dollar. Yen +0.48%. Pound +0.05%.
    On the hour (11)
    • Dow -0.05%.
    • 10-yr -0.22%.
    • Euro -0.19% vs. dollar.
    • Crude -0.3% to $102.40.
    • Gold -0.02% to $1,245.70.

    Gallup US Consumer Spending: $98 vs. $88 prior

    May ISM Manufacturing Index: 53.2 vs. 55.5 consensus and 54.9 prior.

    • New Orders fell to 53.3 from 55.1; Production 55.2 vs. 55.7; Employment 51.9 vs. 54.7. Supplier Deliveries 52.5 vs. 55.9; Prices 60.0 vs. 56.5; Backlogs 52.5 vs. 55.5.
    • The headline print of 53.2 is the slowest since February, and contrasts with the 2nd half of 2013 when readings were consistently in the mid-high fifties.
    • The 10-year Treasury yield dips one basis point from its level prior to the report, now at 2.49%.TLT -0.2%, TBT +0.3%
    • Full report

     

    • The 10-year Treasury yield turns higher by a few basis points to 2.54% amid a report the ISM miscalculated this month's manufacturing survey data, applying the May seasonal adjustment to April The proper calculation would have had the print at 55.4 – roughly inline with estimates – as opposed to 53.2.
    • The initial print came in at 53.2, short of expectations for 55.5, but the ISM apparently used the April seasonal adjustment for May, and the boner was noticed by a couple of economists. The corrected number is 56.
    • April Construction Spending: +0.2% M/M to $953.55M, vs. +0.7% expected, +0.6% (revised from +0.2%) prior.
    • Private construction spend: $686.5M
    • Public construction spend: $267M
    • The Government Pension Investment Fund should announce a reshuffling of assets in which, predicts Nomura, it would sell as much as $200B in domestic bonds to buy overseas assets. The team at Nomura sees the move as weakening the yen about about 10%.
    • If done at the right time, says Mitsubishi UFJ's Daisaku Ueno, dollar-yen could top ¥110 this year (¥102 at the moment).
    • A Bloomberg survey sees the fund cutting its local bond holding from 60% to 40%, and boosting its targets for foreign stocks to 17% and 14% (from 12% and 11%, respectively).
    • The Nikkei closed 2.1% higher overnight.
    • Hard to believe it's taken this long, but Wells Fargo (WFC) will be requiring nearly all new customers to pay interest and principal on home equity loans from inception. Typically, home equity lines and loans had 10-year interest only periods – never a concern when house prices only went higher, but already hitting some who took out loans a decade a ago, and about to hit a lot more in coming years.
    • "The product should be designed to protect the consumer for the long term,” says Brad Blackwell, a mortgage executive at Wells Fargo. “We took this move not only because it’s the right thing to do for our customers, but because we’d like to lead the industry to a more responsible product.”
    • Wells is the gorilla in home-equity lending, with a 14% market share, and JPMorgan – ranked #3 – is reportedly evaluating a similar policy.
    • KKR (KKRhas terminated KKR Equities Strategies – its first stock hedge fund launched less than three years ago. The fund was made up of a dozen former Goldman Sachs (GS) traders, and was started by KKR to diversify its business.
    • The termination was decided due to "lack of scale" and focus on other hedge fund products.
    • Since its start in 2011, the fund reported an average annualized return of about 5%.
    • At of the start of May, KKR Equities Strategies had about $510M under management. A third of the clients were from KKR, and there were less than 20 external investors.
    • Russia gives Ukraine an extra week to pay in advance for gas supplies or risk a cutoff after receiving a partial repayment, Gazprom (OGZPY) CEO Alexei Miller says upon receiving $786M for supplies received in February and March.
    • Russia's move on gas precedes the resumption of talks with Ukraine in Brussels today on a deal to keep the gas flowing and comes before Pres. Putin visits France this week to mark the 70th anniversary D-Day; Moscow may not have wanted for talk of gas cuts to sour the mood for Putin’s visit.

    Seadrill signs $1.1B rig deal with Total

    • Seadrill (SDRL) signs a five-year, $1.1B contract with Total (TOT) for work offshore Nigeria for SDRL's newly built ultra-deepwater West Jupiter drillship.
    • The West Jupiter is one of eight 6th generation drillships currently under construction for SDRL and is expected to be delivered from the Samsung Heavy Industries shipyard in South Korea this August.
    • The deal is worth ~$600K/day, including mobilization, according to Reuters calculations.

     

     

    • Alcoa (AA +0.6%) and Century Aluminum (CENX +3.6%) are both upgraded to Neutral from Underperform at BofA, which also raises its price objectives of both to $14 from a respective $9.50 and $9 as it notes a higher sustained premium on aluminum prices than it had expected.
    • BofA had believed the premium would ease due to LME rule changes, Improving weather conditions and transportation, and higher interest rates deterring warehouse arrangements; while these factors may still occur, the firm says closures in global smelting capacity and enduring transportation difficulties have helped the premium stick.
    • The firm continues to see Kaiser Aluminum (KALU +0.2%) as the best name in the sector based on its ability to benefit from increased downstream demand.

     

    • U.S. Steel (X -0.9%) says it will idle two facilities in Pennsylvania and Texas that make tubular steel for an indefinite period, blaming the unfair import of tubular products into the U.S.
    • The idling of the loss-making operations will affect ~260 employees and reduce the company's U.S. tubular facilities from 10 to eight.
    • IATA cuts its forecast for airline profits on concerns China's economy will slow down.
    • The impact of increased regulatory and infrastructure costs in Europe are also a concern.
    • The revised outlook from IATA is for industry profits of $18.0B this year, down from a March estimate of $18.7B.
    • Airbus (EADSFEADSY) is still deciding the details for its possible re-engined A330. If produced, COO John Leahy feels the plane will sell more than 1,000 units and stretch production through 2030.
    • The company is already seeing demand for the possible A330neo. Air Lease (ALexpressed interest yesterday for a purchase of the newly upgraded planes.
    • Pressure is building as rival Boeing (BAupgrades to the new 777X and 737 MAX, and have received FAA approval for longer routes on the new 787 Dreamliner.
    • Improved traffic at restaurants chains in April helped boost the Restaurant Performance Index monitored by the National Restaurant Association by 0.3% to 101.7.
    • The Expectations Index, which measures the six-month outlook for operators, improved 0.2% to 102.2 to mark the highest level for the index in two years.
    • Starwood Hotels & Resorts (HOT) will shift strategy to meet the demand of a growing influx of Chinese urban travelers.
    • Chinese travelers are forecast to take 1.7B trips per year by 2030, up from a current level of 500M.
    • The company has a personalized Chinese travel program and call center in place. More luxury hotels catering to Chinese travelers are also planned.
    • Marriott International (MARannounces a plan to expand its portfolio of global luxury hotels at a rapid pace.
    • The company says it will add 200 upper-scale hotels over the next three years.
    • The investment by Marriott and its franchisees will amount to close to $15B.

    Avon Products buyout talk picks up

    • Analysts sizing up Avon Products (AVP) think the company might be open to a sale with recent turnaround efforts sputtering.
    • The board has been pushing actively pushing for a golden parachute in the form of accelerated vesting in what could be a sign that the stance on a takeover has changed.
    • Tupperware Brands (TUP) and Coty (COTY) are potential suitors, while a private equity acquisition could allow the company to save money by relocating its tax domicile.

    Up 10% on all the Fundamentals we observed ages ago:  Broadcom +10% on strategic alternatives news; strong guidance

    • The company has hired JPMorgan to help explore strategic alternatives for its cellular baseband business, including a sale or wind-down.
    • Either action could be expected to save about $600M in annualized R&D and SG&A expenses, says Broadcom (BRCM), after filtering out reductions in stock-based compensation.
    • Along with the news, Broadcom updates its outlook for the quarter ending this month, continuing to expect revenue of $2-$2.1B, but now seeing product gross margin to be at or above the high end of previous guidance.
    • Source: Press Release
    • Shares +10.7% premarket
    • Rosenblatt Securities reports Google is testing a Samsung OLED microdisplay chipset for use with Google Glass.
    • Likewise, OLED-Info.com reports Google "isn't happy" with the performance of Glass' LCoS microdisplay and "wants to upgrade to an OLED." However, the site adds Google is thinking of using French startup MicroOLED's products, rather than Samsung's.
    • Himax (HIMX) shares aren't responding well to the reports. They tumbled a week ago amid rumors Google, which has a 6.3% stake in Himax, will no longer use the company's LCoS microdisplays. Synaptics-Renesas worries also appear to have played a role.
    • Universal Display (OLED +0.6%) is edging higher. The Glass reports follow one stating Samsung will be providing Oculus with OLED displays sporting resolutions above 1080p for use in its VR headsets.
    • Samsung has been dabbling in OLED microdisplays for years, but its products haven't gained much traction thus far. The Korea Times reported a year ago the next-gen version of Glass will rely on a Samsung microdisplay.

    Samsung reveals smartphone using Tizen

    • Samsung (SSNLF) has announced its first commercial smartphone using the Tizen open-source platform. The Samsung Z featuring the new system will be available in Russia in the third quarter before expanding to other markets.
    • Tizen is being developed with companies including Intel (INTC) and Vodafone (VOD).
    • The new platform is revolutionary for Samsung, as the company is the world’s biggest maker of mobile devices using Google’s (GOOGGOOGL) Android operating system.
    • Previously, Tizen was only used on Samsung smartwatches. The watches went on sale in April.
    • Google (GOOGGOOGL) is planning to extend Internet access to the unwired regions of the world via satellite, in an effort to add new Internet users, and boost revenue and earnings.
    • The new project's estimated price ranges from $1B-$3B, and will start with 180 small, high-capacity satellites orbiting Earth at low altitude.
    • Google's previous projects to extend connectivity involved high-altitude balloons and solar-powered drones.
    • Google (GOOG) plans to spend ~$1B to more than $3B to build a fleet of satellites providing Web access to unconnected and underserved regions, the WSJ reports.
    • Google's project will reportedly start with 180 small satellites orbiting the earth at relatively low altitudes, and is being led by the founder of satellite services startup O3b Networks.
    • The effort comes on the heels of Google's purchase of solar-powered drone maker Titan Aerospace (also aims to provide Web access to remote areas), and the launch of Project Loon, an effort to prove 3G-or-faster Web access for the planet using hot-air balloons.
    • Larry Page has argued balloons are cheaper and easier to deploy than satellites, but satellites offer more capacity, and have seen their costs drop sharply in recent years. Analyst Tim Farrar thinks Google will replace Loon in favor of Titan's drones, and have Titan complement a satellite network.
    • Google has also been reported to be close to acquiring Skybox Imaging, a provider of high-res satellite imagery and related analytics services, for ~$1B.
    • Globalstar (GSAT) +1.2% premarket. Other satellite services firms that could be affected by Google's move: VSATLORLSATSIRDM.
    • Apple (AAPL) will reveal more iBeacon technology at the World Wide Developers Conference in San Francisco starting today.
    • Virgin Atlantic has already installed beacons in London's Heathrow Airport so a smartphone automatically displays a boarding pass when the passenger comes to the gate or security. LabWerk has also produced an app to alert drivers of empty spots in parking garages based on the beacons.
    • Mobile devices receive the low-power Bluetooth signal within 500ft of a beacon. The transmitter price is now between $5 and $20, but is expected to fall to less than $2 next year.
    • Apple has also addressed iBeacon privacy concerns, saying the beacons don't track users, since they only send out a signal, and don't receive information.

  45. FU PCLN!!!

    FU NFLX!!!


  46. is the site not working or did everyone fall asleep??


  47. I'm still here.  


  48. Hey Phil, what do you think of VRNS (Varonis Systems)?


  49. FU NFLX!!!!

    It appears to be working.



  50. Long-Term Portfolio Update (LTP):  This is an easy one today!  We cashed out last week and, as expected, the running net of the portfolio understates the actual value due to some poor spread indications as well as a couple (like EGLE and SHLD) that were just giving strange balances.  Now we have $607,450.00 in CASH!!! and we're up 19.5% for the year (because we technically owe some of that cash to the guys we sold puts to – for now) and ready, willing AND waiting (patiently) to do a bit of bargain hunting:

    We summarized all the entry and exits of the old positions last week.  There are plenty of great trade ideas still floating around on that list!  

    Short-Term Portfolio Update (STP):  This one is VERY bearish as we were up 4.5% this morning on the dip and now back to flat.  Of course, it was supposed to be very bearish as the STP is a hedge against the bullish LTP but – now that we don't (for the moment) have any money at risk in the LTP, we have to think carefully about whether we want to be so short-term bearish.

    Already this morning we added the TNA calls but we have never made an effort to get this portfolio to neutral – so it's going to take more than one small adjustment.  Also, neutral isn't a working strategy for this aggressive portfolio, where we bought more premium than we sold so neutral is BAD for us – as we are not Being the House!  

    I am inclined to lean bearish into Thursday's ECB meeting, because a weaker Euro (on more easing) would strengthen the Dollar and knock down our stocks and commodities (Dollar 80.70) as we speak.  Also, if the ECB doesn't ease, then disappointment likely to knock Global Markets lower.  Seems unlikely we can do anything but drop into the weekend but, as I've said, we're essentially just watching and waiting until next Tuesday (June 10th) – and we'll see how things look then.

    •  DXD – To some extent, it's silly to be $1,100 short on DXD and $3,000 long on TNA in the same time-frame.  So, we need to plan to take advantage of any good move on TNA this week.  
    • TNA – We ended up in at $1.50 so let's take $2+ and run if we get it.  Probably Russell 1,140ish
    • TWTR – Still looks dead (it's the remainder of an old spread).  
    • GMCR – We have until Jan but it's very annoyingly tenacious above $110. 
    • NFLX – We spent a lot of money chasing these but we're going to have to spend some more to stick with it.  Earnings are late July (after expiration) and the stock is at $420, which is nonsense, so we're going to pick up 5 Sept $420/370 bear put spreads at $20 ($10,000) and sell 5 July $400 puts for $14 ($7,000) and sell 3 July $450 calls for $10.50 ($3,150) for a net $150 credit and we'll see how that goes.  We can't lose both sides so it's like our butterfly plays but a bit more aggressive.  
    • USO – Wow, they are actually working!  I'd like to see $100 but, if no dip by Wednesday's inventories – we'll give up. 
    • CI – Long-Term Play that should go to LTP anyway so let's cash it out at $1.80
    • NTAP – That was quick money on earnings, no reason to kill it as it's free money for now. 
    • RIG – A little dull and too long term for this portfolio but also free money I'd hate to part with.  
    • CAKE – On track
    • CMG – On Track 
    • FAS – XLF at $22.34 is higher than we thought.  We sold June $90s with FAS now $94 but we're well-covered to $105 with 19 months to roll, so who cares?  Though only $4 in the money, the June $90s are $5.40 so it would be madness to pay that – so we wait.  July $93s are $5 and the Oct $101s are $5 so only if we think FAS pops $100 in the next 4 months should we be worried, that's about $23.50 on XLF.
    • FB – On Track
    • FSLR – On Track
    • LQDT – On Track.  We were very aggressive with these, so we should not be complacent as it's really only a weak bounce so far ($26 to $12 is $14 so $2.80 bounces is $14.80 weak and $17.60 strong and you can see the support at $17.60 on the way down, which re-enforces that being the strong bounce line).  So, I'd say a failure of $14.80 is a stop out on this one.  
    • SLW – This is one of those trades that's an opportunity to press when it gets cheap.  HOWEVER, we don't expect a short-term catalyst so it's more of an LTP play and what we'll do, next week, is shut this down and open one in the LTP.  
    • TSLA – Nicely on track.  
    • WYNN – No payoff yet but we only put it on a few days ago.  Still good for a new entry.  

    Well, not much to change.  I like all of our positions so it's just a matter of being opportunistic to the bull side for a bit of balance.  TNA, our 3 short puts, CAKE, FB, LQDT and SLW are already bullish plays.


  51. Phil I saw you making the other day some remarks about US steel X I am holding quite a bunch of putters Jan15 20 even 22 putters all still with a 50 to 60% profit. but if they tank than these profits could turn easily in to loses. It is normally not my way to close a 7 month out position buying back a good amount of premium to close, but in this case what do you think. TIA


  52. Working/Jabob – We're cashed out and waiting for 6/10.  It's very relaxing, you should try it.  

    VRNS/Ging – Argh, there are so many of these guys, how can you tell who's a winner?  These guys are growing revenues but also growing losses and it's reflected in the stock falling to 50% of the IPO price.  They lost $4.7M in Q1 of 2013 but, now that they got money for their stock, they were able to lose $8M (+70%) in Q1 of 2014.  Even worse, they only took in $4.2M more in revenues ($15.4M) so they pretty much lose $1 for every additional $1 they sell – if you do buy this stock, you'd better hope they don't double their sales or they'll be  out of cash in no time!   To make $15.4M, they spent $14.2M on sales and marketing.  Of course, it's hopefully recurring subscriptions but – ouch!  

    So it's a cute little company but not the kind I'd play with as it's not a space I speculate in.  

    Oil $102.10 is best so far – stops should be $102.25 now.  


  53. ISM now re-revised back down to 55.4 – what a joke!  If 3rd World countries did this we'd say "that's why we don't invest in those stupid countries – they can't even put out proper reports".  

    X/Yodi – When in doubt…   Those steel prices are crazy low and it's gotten to the point where X and others are shutting down plants – and the re-start time on those plants is months so the cycle can swing pretty good once it does BUT, if I'm right about a downturn – X certainly won't be spared.  


  54. We did have a bullish trade idea for IBM this weekend:

    IBM has been holding it's 200 dma at $182.50 and I like them here for a long.  I especially like that you can sell the 2016 $160 puts for $9 to net in at $151, because who doesn't want to own IBM for $151 (the 2011 low)?  So that makes a great bullish offset with a net $16 margin or you can be aggressive and add the 2016 $160/185 bull call spread at $14 for net $5 on the $25 spread that's $24.50 in the money to start.   Definitely one to add to our Buy List should it improve – if I wasn't very bearish at the moment, I'd add it today (probably 5 to own $82,500 of it long-term in one of our $500KPs)


  55. PHIL//did you see this?!!
    bloomy said ism was really 56.0…not 53.2…wow…ism gave the wrong number out….this is so crazy

    tlt diving

     its crazy

     its so bad for psychology…..and seems so orchestrated
      aapl diving

     notice all the talk of china qe and stealth stimulus…..and yet no big move up in shanghai stocks


  56. AAPL now wowing them at the WWDC – down to $623 and THAT is why we didn't roll last week!  

    Nas and RUT down half a point, Dow and S&P flat .  I like /YM short if they fail 16,700 (now 16,724) or /ES if they fail 1,920 (now 1,922) but I'd short the last one to cross and use the other to confirm the downtrend.  

    Oil stopped out, back to $102.32 now, no re-load until $102.95 (if we get it).  


  57. ISM/Angel – And now they say 56 was wrong too.  I think they are trying to just make everyone completely sick of the markets.  Not sure why, though…  

    Keep in mind it's a busy data week with NFP on Friday and ECB and BOE Rate Decisions and Euro-zone GDP and PPIs and CPIs – this is nothing – the whole week is going to be nuts.  

    Speaking of nuts, /NKD 15,080 on faith that Abe can get the Yen back over 105 (weak to the Dollar), now 102.40.


  58. AAPL
    incredible update – they're in simply their own league
    the street is insatiable 

    they just want a frickn TV


  59. homekit, ya baby – here it comes


  60. Apple Partners With Mayo Clinic On 'HealthKit,' A New Hub To Monitor Your Health

    http://finance.yahoo.com/news/apple-reveals-healthkit-hub-monitor-182133568.html


  61. Health Kit/Wombat – That is a good idea.  So many ways they can sell monitoring equipment too.  


  62. Check out this scam – sent to Tina from KING, Candy Crush people:

    PROLONGED INACTIVITY WARNING

    Dear tina,

    We're sorry to see that you have been inactive for 5 months now. We're writing to inform you that if you stay inactive, we will start charging an account management fee from next month onwards. This fee of $2 is deducted monthly from any accounts that have been inactive for 6 months or more. We will NOT charge your credit card at any time. The fee is taken from the money you (may) have in your account at King.

    Of course, we'd rather you play our games instead! If you wish to continue playing, simply log on to http://www.royalgames.com and your inactivity flag as well as the upcoming account management fee will be removed.

    We will start charging the fee in one month's time from the date of this email.

    This is an automated email and replies to the sender will not be responded to. If you have any questions or would like to get in contact with us for any reason, please contact our support team at http://www.royalgames.com.

    Yours sincerely,
    The Royalgames.com team

    Wow, what nerve!  I imagine KING is in big trouble already as this kind of notice is semi-legal at best.


  63. The usual is wait way past too late to inform the public but I suspect there is a full on cyber attack in progress. Beware of second party firewalls. Just think about my early warning and all the strange goings on today. Please be careful!


  64. YHOO/Shadow – Check this out:

    Fidelity Contrafund cuts Yahoo stake by 41 percent this year

    Reuters-4 hours ago
    The $108 billion Contrafund owned 24.3 million Yahoo shares at the end of … In April, the fund sold about 5.3 million shares in Yahoo, an 18 …

  65. Shadow – My gmail account was hacked this morning, and a sketchy email was sent to all of my contacts.  Could be just a coincidence.  


  66. Phil not just Yahoo, MSN and CNBC are tagged even the AAPL reports through???


  67. Another slow day, I cant figure whats less exciting  MamaMancini's Holdings, Inc. (MMMB)                        the stock or the meatballs.    :)


  68. Phil,

    Any idea why the big boys are holding AAPL to an 89.6 split equivalent? Does this mean that as holders of the split today, they are waiting to run it up in the next few days prior to distribution on Friday? Any benefit in buying today? just thinking……   


  69. Hack/Shadowfax – I think Krebs has it right: http://krebsonsecurity.com/


  70. Phil or Anyone – What happens on June 10th ? Seen you refer to it often but no idea what.


  71. snow hack

    Thanks for finding that! I have stopped all searches. Phil and the tina note fit like a glove. I have found this site weird since last week ended.


  72. SBUX/     I see a roll from 2015 to 2016 of a call spread to the $72.50/82.50 bcs with $60 puts sold  x3600 times


  73. Wow, ain't life grand.  NHOTC.  All is well in the motherland.  Glad I did not show up.

    SGEN…..data are looking good at ASCO. 


  74. Gmail/Palotay, Shadow – Interesting, I got a mail from my Mom's ex-boyfriend asking for cash – an obvious scam, I guess he was hijacked too. 

    MMMB/Stock – I like those meatballs.  Good base to work off for a quick meal.

    AAPL/Jasu – I think they just ran up too much ahead of WWDC, which was never meant for major product announcements.  Now the people who bought based on that hope are getting out.  

    June 10th/Brit – We never pay attention to Mondays and this Thursday is the ECB and Friday is jobs so, if we don't get a sell-off into this weekend, next Tuesday (10th) should be a good time to do some bottom-fishing.  

    Very strange flatlining on charts after that spike down and then up today.  


  75. SBUX/Stockbern: Good catch on SBUX. I usually have "open interest" open on my layout (since I'm always looking at liquidity before entering), and  not "volume". I may just have to add it to the layout.


  76. SGEN is in bed with Roche.  I have to say….I am going to load up on them.  It is unreal how may clinical trials they have ongoing. 

     

    ASCO will be my focus for the write up…yes, I know I have said it before.  I promise to have something in the next week or so…..life is just way too busy.


  77. Pharm // SGEN
    Went as much as I could into cash today. What do you reco on SGEN next week.


  78. SGEN – How about short the 2016 $35 puts, and long the 2016 $35 calls, for about even. That way you get 100% of the upside above $35.  


  79. SGEN – I like Palotay's play…..

    On another note…..


  80. From Above:  Which bond are you going to invest in???????? 


  81. Russell not getting any traction – getting close to a death cross. Not that significant historically, but psychologically! Large cap indices ignoring all the news now.


  82. And from StockCharts – showing the Russell differential:

    RELATIVE WEAKNESS IN KEY GROUPS UNDERMINES MARKET… Link for today's video. The S&P 500 and Dow Industrials notched new highs yet again, but the Russell 2000 remains well below its spring highs and continues to lag. Chart 1 shows the Russell 2000 in red and the S&P 500 in black. Notice that the Correlation Coefficient ($SPX,$RUT) even turned negative for a few days in mid May. It is quite rare to see a negative correlation between the S&P 500 and Russell 2000. This indicator, however, is back into positive territory, but the performance differential remains.


  83. BTU getting close to the recent lows again after trying to break out:


  84. Industrial metals – copper and silver are down for the year:

    Interestingly enough, Brent is down while WTIC is up… 


  85. Good morning!

    Futures are flat as a pancake heading into EU open, which is also flattish, despite Asia being generally up.  

    HSBC China Manufacturing at 49.4, still contracting but stable.  

    Hang Seng was up 0.7%, Shanghai flat at 2,040, Nikkei up 0.66% at 15,030 (and /NKD matching now) with India up 0.7% and Singapore down 0.15%.  

    Yen Boosts Japanese Stocks

    Japanese-trade-balance-in-billions-Japanese-trade-balance-in-billions_chartbuilder (1) (1)

    PBOC Calls for Targeted Loosening Measures

    How China Hides Its Tumbling Housing Market: It Simply Ignores It

    Screen Shot 2014-05-23 at 12.32.21 PM

    RBI Leaves Key Rate Unchanged

    Thai Junta Aims to Revive Economy

    Thai Confidence Picks Up After Coup

    Thailand's consumer confidence picked up in May, the first recovery in 14 months, after the army's intervention in monthslong and sometimes violent political turmoil.

    Brazil-retail-sales-year-over-year-change-Brazil-retail-sales-year-over-year-change_chartbuilder

    Here Comes QE In Financial Drag: Draghi's New ABCP Monetization Ploy

    Europe needs a 'Big Bazooka', but the ECB is preparing a peashooterEurope’s high command has convinced itself the worst is over, and with a little fine tuning by the ECB, decent growth will return.

     

    Whatever The ECB Does This Week, It Won't "Deliver A Significant Impulse To The Real Economy"

     

    ECB Rate Cut Would Be 'Rather Cosmetic,' Stark Writes. Possible interest rate cut by .1-.15 ppts would have little impact as rate tool has been exhausted, former ECB chief economist Juergen Stark writes. No investment decision would depend on such a small rate change, making the step "rather cosmetic in nature." Euro exchange rate is "certainly not" a reason to further loosen monetary policy as FX rate is only relevant to monetary policy if it has significant impact on price developments. Euro-zone inflation of .7% "means price stability," all other interpretations are misleading. Monetary policy focused on medium term should ride out the current trough in inflation rather than stoke expectations of quantitative easing.

    Europe’s Power Supply at Risk From Investment Dearth, IEA SaysEurope is in jeopardy of running short of power because wholesale electricity prices are too low to encourage spending on new thermal plants, according to the International Energy Agency. The region needs more than $2 trillion in power-industry investment by 2035 and about 100 gigawatts of new thermal capacity in the decade to 2025, the Paris-based IEA said today in its World Energy Investment Outlook. Electricity prices are more than 20 percent below the level necessary to spur investment, according to the adviser to 29 nations. One gigawatt is enough to power about 2 million European homes.

    Merkel Threatened to Vote Against Juncker at Summit. German Chancellor Angela Merkel and British Prime Minister David Cameron both want to block election of Jean-Claude Juncker as president of the European Commission.

    BOE's Carney May Need to Play a Fourth Card

    Europe File: As the U.K.'s central banker comes to the end of his first year in charge and already is on his third monetary-policy innovation. What next?

     

    U.K. Could Leave EU If Juncker Chosen, Cameron Cited by Spiegel. Prime Minister David Cameron warned German Chancellor Angela Merkel at European Union summit that choosing Jean-Claude Juncker as next European Commission president could set U.K. on path to EU exit, citing participants it doesn't identify. Cameron said on sidelines of May 27-28 summit in Brussels that Juncker victory could destabilize his govt to the point that proposed U.K. referendum on EU membership might have to be brought forward and would probably result in vote in favor of leaving.

    A new French revolution is about to rip apart the EU. France is close to one of those periodic explosions that have shaped French history. When this happens the EU will never be the same again.

    Screen Shot 2014-06-01 at 10.54.31 AM

    EU orders France to 'step up' austerity cutsPolicymakers order France to bring spending into line as Francois Hollande reels from defeat at the hands of Marine Le Pen in European elections.

    • EU Orders Italy to Tighten Belt More

      European Union authorities told Italy to adopt more austerity policies, despite pleas from Italian Prime Minister Matteo Renzi for breathing space from EU requirements to cut its large debt burden.

    SPY 5 MINUTEWe're still leaning bearish but hope springs eternal into the ECB meeting on Thursday.  

    Dow Futures (/YM) still a good short if they fail 16,700 with /ES below 1,920 to confirm.  /NQ is just below 3,725 and /TF just failed 1,125 so those are our watch lines to short the laggard.  If they break up – then I'd go with /TF over 1,125 for a bullish play. 

    Oil is $102.48, gold $1,246 and over $1,250 is a bullish bet on /YG.  Our standard bet is to go long on /SI over $19 but still under at $18.89 and no play if they can't make it (unless we get to $18.50, then gamble again).  Copper $3.14 not terrible, nat gas snuck back to $4.60 and gasoline $2.949.

    Tuesday's economic calendar

    Secondary Sales Squeeze InvestorsSlide in Technology, Health-Care Stocks Has Cooled Demand for Follow-On Sales. A gold rush in public-company stock offerings has failed to pan out for many investors. The recent collapse of highflying technology and health-care stocks has stung buyers who paid steep prices for shares sold by the companies earlier this year in a surge of deals known as follow-on offerings. That has cooled demand for the sales,… ?

    Global watchdogs rattled by lack of fear in the marketsA storm alert today from Simon Derrick at the Bank of New York Mellon. He cites three warnings from leading central bankers, all alarmed by the remarkable disregard for risk in the equity, credit, and currency markets.

    How worried should investors be? Here’s how worried. (WSJ)

    Tranquil markets are enjoying too much of a good thing (FT)

    5 Things To Ponder: Yogi-Isms

    Has The Next Recession Already Begun For America's Middle Class

    The Linoleum Economy

    Steen Jakobsen: Expect A 30% Stock Market Correction in 2014

    Groupthink 101: What All Goldman Sachs(GS) Clients Believe Will Happen

    The 'Bad Boys Of Finance' Are Going Mainstream — And The Average Investor Is Not Ready

    "MOVE Over" Warns BofAML; Treasury Yields Set To Move Higher

    Experts Are Lining Up To Warn About The Leveraged ETFs That Could 'Blow Up' The Whole Financial System

    McMansions Are Back And Are Bigger Than Ever

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    Seattle Raises Its Minimum Wage To $15 An Hour

    A Third Of America's 18- To 34-Years-Olds Live With Their Parents

    As US stocks soar, bonds offer a warning (MoneyBeat) 

    The ‘other’ great bond mispricing theory (FT Alphaville)

     

    • Investors have pulled an estimated $4.3B (1.9%) out of Pimco's Total Return bond fund in May, contracting the world’s largest fixed income fund to $229B. The company will publish exact numbers in the next few days.
    • The May outflow was the worst since last October, and has been the 13th consecutive month of outflows for the fund. Investors seem to have started withdrawing from the fund last spring, when the Fed began preparing the market to expect a tapering of its quantitative easing bond buying program.
    • In comparison: The Barclays US Aggregate bond market index is up 3.87% in 2014 so far, Pimco's Total Return fund is up 3.32%.

     

    U.S. commodity ETPs see net $4 bln outflow through May -Lipper data

    • Utilities Size Up Carbon Limits

      New limits on greenhouse-gas emissions would force sweeping changes in the U.S. electric system but wouldn't deliver the knockout blow to coal that mining companies and some power producers had feared.

    Coal-state lawmakers rally against power plant emissions crackdownCoal-state lawmakers, accusing President Obama of using a back door to impose strict emissions limits on power plants, are rallying to slam that door shut — claiming the plan would cost jobs and jack up electric bills. In Kentucky, West Virginia, and other states that rely on coal to fuel their own economies — and that help generate power for everybody else — officials vowed Monday to introduce legislation halting the newly announced EPA plan.

    • Barrick Gold (ABX -0.9%) CEO Jamie Sokalsky tells FT the company has learned from its mistakes, including the aborted acquisition of Newmont Mining and the failure of its Pascua-Lama project.
    • Sokalsky plays up the potential for ABX to grow on the back of its gold discoveries in Nevada, and says that even without a merger ABX will still look for ways to co-operate in Nevada with Newmont.
    • Sokalsky also says it will take a more gradual approach to growth after shelving its attempt to build the huge Pascua-Lama gold mine in South America, and the change of emphasis shows how miners have been forced to temper their ambitions because of weak gold prices.
    • FQ1 operating income of $16.2M (+6.6% Y/Y)
    • Store count of 855 (+3.3%)
    • Domestic same store sales +2.3%; constant currency international same store sales -2.2%.
    • Cash provided by operating activities of $13.7M ($14.4M a year ago).
    • Management notes severe weather as same store sales in the Southeast fall 1.5%.
    • Full year adjusted EPS guidance is cut to $0.69-$0.74 from $0.73-$0.79.
    • CC at 4:30 ET
    • Previously: Krispy Kreme Doughnuts EPS in-line, misses on revenue
    • KKD -9% AH

    FTC vs BurnLounge ruling bolsters the legitimacy of Herbalife's business model

    • The U.S. Court of Appeals in San Francisco rules that digital music seller BurnLounge is an illegal pyramid scheme because its distributors pay for the right to sell products and are motivated primarily by payments by the company for recruiting new members. The income from merchandise sales is incidental to the income from recruiting. The court did not state that commissions paid to the sales force, rather than customers outside of the firm's distributor network, are illegal.
    • Observers of Herbalife (HLF -0.1%) have been closely watching this case. Many believe the court's ruling is a positive for the company because it clarifies the issue of paying commissions to distributors purchasing products. Multilevel marketing attorney Kevin Thompson says, "As long as the products have legitimate value the company will be in a good position to thwart off pyramid arguments."

    Telecom hardware stocks slide on AT&T capex report

    • Jefferies reports AT&T (T -0.1%) significantly cut its wireline capex starting last month.
    • It thinks many companies could be affected, including equipment vendors Alcatel-Lucent (ALU-2.2%), Ciena (CIEN -3.9%), Juniper (JNPR +0.2%), and Adtran (ADTN -5.1%), and component vendors JDS Uniphase (JDSU -2%) and Finisar (FNSR -0.7%).
    • As its is, AT&T's 2014 capex budget ($21B) is down $200M from 2013's spending level. Moreover, the carrier's huge mobile infrastructure needs and the DirecTV deal could be motivating it to cut wireline spend.
    • Also: AT&T may be looking to keep capex down ahead of the full rollout of Domain 2.0, an initiative meant to improve network flexibility, lower costs, and cut provisioning times through the embrace of software-defined networking (SDN) and network functions virtualization (NFV).
    • MKM has argued Domain 2.0 will be a negative for Cisco, but a positive for Ciena and Finisar, among others.
    • Frontier (FTR -1.6%) has obtained a new $350M senior term loan facility, and plans to use the proceeds to help pay for its $2B acquisition of AT&T's Connecticut wireline assets.
    • The telco has also extended a $750M revolving credit facility to May 31, 2018. A prior facility was set to mature on Nov. 3, 2016.
    • Frontier had over $8.1B in long-term debt at the end of Q1, and $954M in cash/equivalents. Q1 interest expense totaled $171M.

    Here's Everything Apple(AAPL) Announced At WWDC

     

    • Apple (AAPL -0.6%) kicks off WWDC by revealing Mac OS X 10.10 (Yosemite). As rumored, 10.10 features an iOS 7/Jony Ive-influenced design overhaul that includes translucent effects, new icons, and a generally "flatter" UI. Apple has also thrown in a "dark mode" for pro users.
    • Other new features include: 1) An updated Notification Center with an iOS-like "Today" view and the ability to (via the App Store) add widgets. 2) A Spotlight search revamp that includes integrated local/Web search and the use of location data. 3) A new version of Safari that delivers better performance and lowers power draw.
    • A cloud storage/file-syncing solution called iCloud Drive has been launched. Like Dropbox, SkyDrive, and other existing solutions, iCloud Drive creates a local folder that syncs with other devices, and with a cloud drive. Notably, it supports both Mac and Windows hardware.
    • Also launched: Handoff, a feature that allows users to move tasks between iOS and Mac OS devices with a mere swipe. An e-mail being written on a phone can be quickly moved to a Mac, and SMS chats and phone calls can also be transferred. The AirDrop file-sharing service now works between iOS and Mac OS gear.
    • The Mac installed base is now above 80M. 40M+ copies of OS X  Mavericks have been installed since the update arrived last year.
    • Live blogs: IIILive stream.

     

    • iOS 8 (AAPL -1.3%) adds support for interactive notifications, a feature that allows users to act on notifications (e.g. like/comment on a Facebook post) as soon as it pops up on a screen.
    • As expected, a Health app (rumors called it Healthbook) has been launched. Relying on a platform called HealthKit, the app offers an integrated view of health/fitness data from iDevice sensors and 3rd-party apps/services. Initial partners include Nike and the Mayo Clinic.
    • As with Mac OS, Spotlight search has been updated: It provides recommendations and location-specific info as a user searches. The iOS keyboard, long due for an update, has been overhauled and now (like many Android keyboards) supports predictive suggestions.
    • Other features: 1) A Family sharing service that allows content to be shared between up to 6 family members. 2) Improvements for iPhoto, Messages, and Mail. 3) A slew of new features for Siri, including song and streaming voice recognition.
    • Tim Cook states 800M+ iOS devices have been sold (up from 700M last September), and that Apple has added 130M new users over the last year. Cumulative iPhone and iPad sales have respectively topped 500M and 200M. 75B+ apps have been downloaded through the App Store, up from 50B+ in May 2013.
    • After rallying to new 52-week highs in recent weeks, Apple shares are ticking lower.
    • Live blogs: IIILive stream.
    • Previous: Apple unveils Mac OS Yosemite

     

     

    • Apple's (AAPL -1.2%) reported home automation platform has been unveiled. Called HomeKit, the platform acts as "a common network protocol" for 3rd-party hardware/chips that can be managed by iDevices – initial supporters include Broadcom, Cree, TI, Philips, Honeywell, and Haier.
    • HomeKit also integrates with Siri – saying "Get ready for bed" can result in a connected house automatically locking its doors and dimming its lights.
    • Apple promises iOS 8 will deliver major GPU performance enhancements, such as a 10x increase in draw-call rates. Electronic Arts (EA -1.9%) is bringing its powerful Frostbite engine to the platform.
    • For the first time, iOS will support 3rd-party keyboards. Swype owner Nuance (NUAN) has ticked slightly higher in response. The OS will also add support for inter-app communications, a feature long requested by developers.
    • Also: 1) Siri now has a Google Now-like always-on mode. Saying "Hey, Siri" activates the service. 2) The Touch ID fingerprint sensor has been opened up to 3rd-party apps. 3) Like Yosemite, iOS 8 supports 3rd-party Notification Center widgets.
    • As expected, iOS 8 will launch to consumers in the fall (likely in tandem with the iPhone 6).
    • Live blogs: IIILive stream.
    • Previous coverage: Mac OS YosemiteiOS 8

     

    • Apple, which previously took a hard-line stance against Bitcoin (BITCNBTCS) wallet apps, has updated its App Store review guidelines to state apps "may facilitate transmission of approved virtual currencies provided that they do so in compliance with all state and federal laws for the territories in which the app functions."
    • Coinbase is now showing a Bitcoin bid-ask spread of $673.68-$675.89, putting the virtual currency well above a Sunday close of $646.01. It's now up ~71% from an April 10 price of $395.34.
    • Previous: Dish Network to accept Bitcoin payments

     

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  86. Death cross/StJ – I think it will be a big deal if they fail the 200 dma, especially if the Nas follows down and fails the 50.  Still, the other indexes look like they have no intention of turning back down, no matter what those two do. 

    I like BTU down here still, regulations were expected and, if anyone can learn to live with them – it's BTU. 

    I can't believe people were disappointed with AAPL yesterday, they made a MASSIVE overhaul of their internal structures that lay the foundation for years of application growth.  This is the problem with investors – they don't understand that there's no point in introducing new phones and devices if people haven't written cool new things to run on them.   It's not some "chicken and egg" problem – the apps must come first or you have a lump of useless hardware!  


  87. AAPL / Phil – There was some really good progress on the iOS front yesterday, but it's not as sexy as new phones or a TV set… At the same time, AAPL is not anymore leading the way like it used to with everything. For some features, they are playing catch up – keyboard (finally – one of the reasons I can't use an iPhone), widgets, apps connectivity and others. 

    But overall, there were some good news yesterday but non-tech guys won't know the difference….


  88. Apple & Phil & STJ

     

    Problem is that investors are expecting a new WOOW! product whatever the organic growth and ' planting trees'  that Apple isa doing is going to collide with investors, they were used to the Steve's way of cinematographic presentations.

    I agree that yesterday presentation shows a dramatic improvement and is showing where and how we will interact in the future with our "things" , house, car, health, business, entertainment etc…..problem for us (as investors) is that there is no market recognition for that  even when everybody could agree that nothing is going wrong.


  89. /RB Jul ´14 /Phil

    I got trapped in 2 long  (2.9675) contracs whch are being painfull what you think? will become better? or do I take the loss?.

     

    Thanks 


  90. AAPL / Advill – The problem also is that there are many players on all these fronts and everybody expects AAPL to be the best in every segment and it's becoming increasingly difficult. The Wow factor is getting harder to generate. I guess we are all blase…


  91. Futures falling off now, Europe off more than 0.5%, we're chasing them down about 0.25%.

    AAPL/StJ, Advil – Traders (can't call them investors) are simply not patient enough for a company like AAPL  Their expectations don't match up with the reality of the product cycle.  AAPL is the king of innovation and product development and they've come out with a total of 9 product lines in 33 years (and that's counting Macs and PCs and Lisas and Laptops as different!).  What amazes me is what idiots the analysts and TV talking heads are too – it's like none of them have a sense of history or even the vaguest understanding of what it takes to bring products to market.  It's fine with us – we take full advantage of trader idiocy by keeping our eye on the long ball, but it really pisses me off when we go through these Apple-bashing cycles every time they don't have a new product (which averages 11 of every 12 quarters):

    Where's the Ford toaster?  Ford TV?  Ford Watches?  How dare they just make cars for 120 years!!!

    Now GE - there's a company that knows how to diversify (same 120 years to get there, though):

    Gasoline/Advill – Well, chances are, if you wait until July 4th, they'll be back over $3 by then.  Or maybe Friday.  In between though, it can get a lot more painful so, rather than riding out a break below $2.94 again, why not set a stop there (say $2.9375) and re-enter at $2.92 with 3 and stop those below the line and then 4 at $2.90 with a stop and 4 again at $2.875 or $2.85 and, eventually, it will snap back.  That's how you "stick with" the Futures – you can't just hold on to losses though, they get so big that even a recovery won't help (like when Nat Gas fell from $6.40 to $4.40 – now it's $4.60 – not helping much…).  

    Futures trading is inherently dangerous and the whole key is to manage your losses.  That should be practiced with single contracts until you are so good at getting out that you involuntarily hit the right keys – even when you don't have any open contracts.  THEN you are ready to play with 2 contracts until your winning percentage is at least 50/50 (could be years) and THEN you are ready to scale into larger positions and "ride things out".  Skipping right to riding things out without the experience is no different that deciding that tomorrow you'll go be a pro football linebacker and getting on the field with a bunch of 300-pound guys who are going to kill you – don't be so surprised at the inevitable results! 


  92. Great comment, thanks Phil.


  93. AAPL /  STJ.

    Perhaps is a good idea to buy naked puts for the next weeks…