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Monday Market Momentum – China and Japan Keep Thing Going

Things are still looking up

This morning, Japan revised their Q1 GDP Estimate from 5.9% to 6.7% as a huge splurge in consumption ahead of the sales tax increase shot Consumer Spending through the roof 3-6 months ago.  It's a great indication of what insane amounts of stimulus can do (Japan is puming about 10% of their GDP into the economy vs. "just" 5% in the US and less than 2% in Europe).  By contrast, Europe's GDP grew just 1% in that 18-country block and the US was down 0.1% during the same period.  

Clearly stimulus works – so – the answer to everything is – MORE STIMULUS!!!  

More stimulus, more stimulus and, when in doubt (or, when needing to hit your numbers) – even more stimulus!  We saw the ECB get on that bandwagon last week and our Fed never stopped so, what can possibly go wrong in a global money-printing party.  Other than this, of course (projections for Q2 in Japan):

Even Japanese traders wised up this morning as the Nikkei tumbled off the high of 15,235 back to 15,160 in the Futures (/NKD) but that's still high enough to give it an official 0.3% gain for the day.  Other Asian indexes also sold off into the close, but not so much as to not print another bullish Monday as Chinese export growth (May) came in strong as well at 7%, after a very weak 0.9% in April.  

This is what happens in a market that ignores bad news (the 0.9% disaster didn't take us down) and celebrates good news – there's literally nowhere to go but up!  MSCI's All-World share index (.MIWD00000PUS on Bloomberg), which encompasses 45 countries and is generally seen as benchmark of global stocks, was up 0.1 percent at 426.77 points, just below its 2007 pre-financial crisis peak of 428.63 points.

This chart is interesting as it gives us a view of both p/e, which has been boosted by stock buybacks and M&A activity, as well as price to sales, which isn't.  The capacity for both investors and analysts (not Dr. Ed) to ignore this kind of information astounds me, as clearly we can see that we are now looking WORSE than we did in 2007, the last time stock buybacks and M&A were used to artificially boost the APPARENT p/e of so many stocks – to mask the fact that we were, in fact, heading into a crisis of biblical proportions.  As Dr. Ed notes:

Many years ago, Professor James Tobin of Yale (and the chairman of my PhD committee) devised his Q Ratio, which is the total market value of a firm divided by the replacement cost of building the firm from scratch. When Q exceeds 1.00, entrepreneurs have an incentive to build it because its market value will exceed its cost. 

That’s obviously a very theoretical construct used to explain the capital spending cycle. Nevertheless, the Fed’s Flow of Funds database includes two series that can be used to derive a Q ratio for the overall market showing the extent to which investors are either overvaluing or undervaluing the capital stock. I adjust it so that it has equaled 1.00 on average since the start of the data in 1952. During Q1, it rose to 1.56, the highest since Q4-2000. 

But Q1 of 2000 was DOWN from the highs we hit in 1999 so perhaps this market madness has another rally leg to play out before correcting (and hopefully not 50% down to the mean line).  That's the problem with being a Fundamentalist – we tend to lose interest in buying stocks long before they finally top out.  

Of course, we're still able to find values – even in a crazy, over-bought market.  This weekend I put up a Buy List for our Members with 29 stock and option trade ideas for playing them.  

My plan is to be PATIENT and add a few to our Long-Term Portfolio, which now has $608,000 in virtual cash to deploy, up from our $500,000 base (+19%) in December.  As you can see from the opening dates of positions from the first half, slow and steady won that race - so no need to change strategies here – especially when we're concerned the market may pull back.

Hightier San FranciscoIF the market does pull back, we'll be thrilled to jump in and start buying but, for now, we remain "Cashy and Cautious" because we're keenly aware that the GDP numbers have been manipulated (entertainment was added in the US, hookers and drugs in Europe, real estate stopped depreciating in China…) and we KNOW the Corporate Profits are manipulated and we KNOW that Consumer Spending is off AND the Consumers are leveraging debt just to keep up these lower levels.  

Richard Green pointed out in Forbes last week that the top 1% are skewing our basic economic measurements, like the Case-Schiller Housing Index, since it's value-weighted so million-Dollar homes have 5x more impact on the index than $200,000 homes.  His example is:  

Suppose that two houses sell in 2013 and 2014.  The first sells for $200,000 in both years; the second sells for $1,000,000 in the first year and $1,500,000 in the second year.  If we were using a transaction weighted index, the average prince increase would be 25 percent (0 percent for the first house and 50 percent for the second).  But with a value weighted index, we put together a “portfolio” of houses and see that the total value increased from $1,200,000 to $1,700,000, or a shade under 42 percent.

That's why, the "Low Tier" Case-Shiller Index (homes under $300,000) still shows housing prices for the bottom 80% still 30% off their highs.  


As Fundamental Investors, when we are presented with unreliable or manipulated data, our preference is to stay out of the market until we have some clarity.  That doesn't mean we don't play at all – we are very able to amuse ourselves while we wait for more information (like July earnings).  Last Monday, for example, I sent out an Alert to our Members to buy TNA (ultra-long Russell) July $76.81 calls for $1.60, adding 20 contracts to our $100,000 Short-Term Portfolio for $3,200 (and I also mentioned them in Tuesday morning's post – available daily, pre-market, by subscribing here).  

RUT WEEKLYThe idea was to have a nice upside trade that would make a bit of money, in case we were too bearish.  We took 50% gains off the table ($1,600) on Thursday but the rally continued on Friday and those calls finished the week at $4, which is $8,000 for 20 or a gain of $4,800 (150%) for the week.  

That's how crazy this market is, you can use just $3,200 in cash and end up boosting a $100,000 portfolio 5% in a week!  This is how the Fed is handing out FREE MONEY to those of us in the top 1%.  If you can afford to play this game, you too can make 5% a week on your money.  We could have been more aggressive but we actually flipped bearish and picked up the TZA (ultra-short Russell) June $17 calls for 0.27, betting $1,350 (less than our profits from last week) on a reversal into options expirations in two weeks.  

On Friday morning, at 10:09, we called the move for the day in our Member Chat Room, saying:

Even if we call 1,900 the breakout on /ES, we're completing a 2.5% move at 1,947.50.  BUT, the real consolidation point, per the 5% Rule, is 1,920 (the 20% line) and a 20% overshoot of that 320-point move (from 1,600) would be +64 to 1,984 with 1,942 a 10% overshoot.  

The NYSE is still under the 10% line (11,000) by about 1% and I don't see the S&P holding a 10% advantage for long, they don't usually diverge by that much and it's the S&P that usually corrects back (always on this chart):

MAYBE this time is different but I'm pressing my Dow shorts (/YM) at 16,900 into the weekend.

Both indexes finished the day just over our targets, with the S&P at 1,949 and the Dow Futures (/YM) at 16,924.  

It sure doesn't look like a chart you want to be shorting and, overall we're not short – just in cash and, for the moment, missing the rally.

We have a live Webinar Tuesday at 1pm (EST) and, if the markets aren't pulling back by then, we're going to get at least one foot on the bandwagon and add a few positions from our Buy List.  We hear from Bullard, Tarullo and Rosengren from the Fed today and there's not much market data this week but it's next week we think will be interesting.  

Meanwhile – PATIENCE!  


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  1. Major Earnings for the Upcoming Week:

    Monday:  HTZ


    Tuesday: OXM, PBY, SAIC, ULTA, UNFI


    Wednesday: HRB, MVC


    Thursday: CASY, FNSR, LULU, RFIL


    Friday: N/A


    Economic Releases (6/9-6/13):


    8:10 am CT – Fed’s Bullard Speaks

    11:45 am CT – Fed’s Tarullo Speaks

    12:30 pm CT – Fed’s Rosengren Speaks



    6:45 am CT – GS Store Sales

    9:00 am CT– JOLTS

    9:00 am CT – Wholesale Trade

    12:00 pm CT – 3-year Note Auction Results



    6:00 am CT – MBA Purchase Applications

    9:30 am CT – Oil Inventories

    12:00 pm CT – 10-year Note Auction Results

    1:00 pm CT – Treasury Budget



    7:30 am CT– Weekly Jobless Claims

    7:30 am CT– Retail Sales

    7:30 am CT –Import & Export Prices

    9:00 am CT – Business Inventories

    9:30 am CT– Natural Gas Inventories

    12:00 pm CT – 30-year Bond Auction Results



    7:30 am CT – PPI

    8:55 am CT – Consumer Sentiment

  2. Oil Lines

    R3 – 103.91
    R2 – 103.49
    R1 – 103.14
    PP – 102.72
    S1 – 102.37
    S2 – 101.95
    S3 – 101.60

  3. I was charting Phil's ideas from the weekend this morning and it's amazing how many stocks are actually technically weak when compared to the indices. It pretty much confirms the graph that I posted last week showing the the market were led by only the 50 biggest stocks. 

    At this point this screams caution until I see more stock make a turn technically…

  4. And good to be back home….

  5. Welcome back, STJ!

  6. Thanks Invest!

    I guess this is not as bad when you compare to other financial crisis:

    With the May jobs report, the U.S. economy is now back to pre-recession peak levels of employment. While this is the longest post WWII recovery the U.S. has experienced — by a good margin — it is important to keep in mind that financial crises are different. When comparing the Great Recession against other advanced economies’ financial crises in recent decades, the current U.S. cycle has outperformed in terms of employment, even as most other measures of financial crises were just as bad — home prices, stock prices, GDP per capita, government debt and the like.

  7. Quote of the day:

    James Stewart, “Why do people the rich and famous put their fortunes and reputations at risk by even approaching the line of insider trading?”  (NYTimes)

  8. Nine charts from last week's numbers:

    Deflation now a real risk in Europe:

  9. Good morning! 

    How Republicans embraced a promising economic theory — and distorted it beyond recognition

  10. Might be time for a breather – the fear and greed index:

  11. Here's a good image for the current market:

  12. Earnings/QC – LULU may be interesting with earnings on Thursday.  Worth playing down here I think and the 2016 $40 puts can be sold for $6.25 so let's sell 5 of those in the LTP and collect $3,125 for promising to buy it at net $33.75 (another 24% off the current price).

  13. Good Morning!

  14. Weakness/StJ – Yes, I was surprised to find 30 stocks (not to mention our previous 19 in the LTP that we still like) that were still buyable.  Shows what an uneven rally we've been having – not broad-based at all.  Welcome back! 

    Forcing money into the stock market much?


    This could become a very big deal:

    HONG KONG—Banks looking into suspected fraud involving metals stored in China as collateral for loans are expanding their probe into more warehouses amid worries the problem is more widespread, according to people with knowledge of the matter.

    A half-dozen banks, including Citigroup Inc. +0.62% and Standard CharteredSTAN.LN -0.15% PLC, provided loans to trading firms that were backed by metals such as copper and aluminum stored at one of China's biggest ports, the people said.

    The trading firms hold the deed to the metal, which can be used to secure financing, but the metal stays in a warehouse. Banks fear a private Chinese company may have used the metal as collateral to get multiple loans, potentially defrauding the lenders and trading firms.

    If the problem is more widespread, banks could cut back on financing for commodities in China, cutting demand and roiling global markets.

    I'm sorry, I would love to be more mindlessly bullish but I'll have to stop reading to do that!  

  15. Mornin Sam

  16. Very good article in Zero Hedge:

    We see the premise of this way of thinking play out in many ways across the financial media at large.One glaring example on CNBC™ was recently brought to light on ZeroHedge™where one has to wonder if the “economic expert” truly understands that without the unchecked, unmitigated, relentless debt spending that’s buying up all this other overpriced debt with money printed out of thin air backed by nothing more than an IOU is actually not debt as one once knew.

    What’s taking place as far as “debt” was once known by the another name: Ponzi. So is now Ponzi a good thing? If we use most arguments made today by many economists one has to conclude: yes. Just don’t say Ponzi, that’s bad. They now say, “quantitative easing,” or “asset purchases.” That’s good. Remember what the meaning of is, is? That’s today’s new math and boy is it making a whole lot of other so-called “experts” rich at the same time.

  17. Our "Job Recovery": 

    This is amazing, no wonder Draghi went negative:

    PBOC Hits Panic Button: Strengthens Currency By Most In 20 Months

    UAE warns Dubai property bubble may be formingLow residential rental yields in Dubai and Abu Dhabi may indicate growing imbalances and overheating in the real estate sector, the United Arab Emirates central bank said on Sunday, in the first official warning about soaring property prices.

    • ECB Money Won't Resolve Euro Risk, Fratzscher Says. President of the German Institute for Economic Research Marcel Fratzscher tells Handelsblatt that large and not unlikely risk remains that euro zone economies may fall into stagnation and deflation from which it may be difficult to exit. ECB measures won't solve the fundamental problems of the banking system and lack of structural reforms. More expansionary fiscal policy may be helpful in short term but won't resolve fundamental problems, including excessive national debt. DekaBank economist Ulrich Kater also said that politically generated economic upswing may collapse into sluggish economy and higher debt when it expires, warns against implementing large scale, debt-financed spending programs.

  18. UNP/pwright – finally got the corrected prices.  I was looking at what split adjusted prices would be a couple weeks ago when considering the 195s, etc.. good standard split prices ok with the 2:1. still happy with it all as is.. will look at rolls or additions as the dust settles..

  19. Greed/StJ – NYSI (longer-term overbought) is just about pegging 1,000 and the VIX, of course, couldn't be more complacent about it:



    Cramer in a suit this morning means the pump is on.  We had a little sell-off at the open but seems under control already.  

    Oil got to $103.80 and I'm willing to go short at $103.75 with a stop over $103.80, as I'd hate to miss a good drop (/CL).   Nothing blew up over the weekend, so why so high?  

    Dollar 80.66, gold $1,254, silver $19.10 (rejected at $19.20 last night), copper $3.03 (bad again), Nat gas $4.69 and gasoline $2.97.

    Still in the Dow Futures (/YM) shorts at 16,900, now painful at 16,921 but I'd hate to miss a drop more than I'd hate to be down $500 per contract (at 17,000) while waiting.  

  20. Phil / Can you reiterate strategy on AAPL since the split ? The last point i have in my notes was wait for the split to settle and Jan16 $540/600 BLCS 

  21. Phil

    Good Morning!

    EBAY: broke down through $50

    what do you think for an initial 1/3 position?

    what strike puts ?

  22. Phil/AAPL  What is your recommendation for re-entering this with short puts?


  23. WYNN falling!

  24. AAPL/Wombat – Well, no real strategy is necessary as they split 7:1 and didn't leave any other class of options so now they are at $92.66 and the old $600 calls are now 7 $85.71 calls and our target on AAPL is still $100 (was $700) and they are right on track so – if you didn't do anything with your old AAPL shares, they should be fine now.  

    In your case, you 2016 $540s are 7 $77.14 calls at $19.25 and the short $600s are now 7 short $85.71s at $14 so net $5.25 on the $8.57 spread means you can leave them alone and make $3.32 (63%) in 18 months if AAPL doesn't drop $6.50 (7%) during that time.  That's a pretty good deal, I wouldn't be so gung-ho to throw it away.  

    Looking at the spreads at the moment doesn't tell us much because they haven't had a chance to settle down, nor have many been traded and the bid-ask spreads are huge (you waited an entire 8 minutes before asking) so I don't know what will be attractive after a week.   At the moment, $74 is 20% down on AAPL and you can sell 2016 $75.71 puts for $5, so I like those, and you can buy the $80/90 bull call spread for $5.30 so net 0.30 on the $10 spread that's 100% in the money to start is very appealing to me as a current AAPL play.  TOS says $7.80 in net margin – so efficient there as well.  

    We should add that to the buy list because – if it gets cheaper – we certainly want it!  

    EBAY/Maya – From the Buy List:

    At the moment, I like selling the 2016 $45 puts for $4.10 as an initial net $40.90 entry (18% off the current price) – but I like waiting PATIENTLY even more.  If they cross back over $50 and hold it, that's a good signal to get in, but never underestimate the ability of idiot analysts to extrapolate a short trend into a long one and scare people out of a perfectly good stock!   

    AAPL/IHS – See above.  

  25. RtS/yo_mamma – the failures are there for sure. I don't hold that the 'plan' is for totalitarianism, though I do go along with George Carlin on who "they" are. The aptness of the threat of totalitarianism or something perhaps just as bad (another all out global war?) is as an unintended consequence of the corporate kleptocracy (or "Corporatism") we are afflicted with today. We are certainly setting ourselves up for such.

  26. Lots of stocks falling but the Indexes keep going up.  

  27. ya, i'm seeing the same

    phil / no apple positions at all, looking for re-rentry – i'll wait.

    tza dropped like a brick – doesn't anyone rad anymore ?

  28. ABX   somebody buys over 9000 October $20 calls for .25

  29. VIX fell right off the chart Friday and is still rolling around on the floor somewhere.

  30. Maya/Phil .. EBAY .. I read this morning that AMZN is launching a mini online payment platform which might help explain EBAY weakness short term …

  31. That was a good article in Salon Phil… I love the conclusions:

    Laffer understood perfectly well that his curve didn’t have the power to tell you whether or not any given economy at any given time was overtaxed or not. That’s why he didn’t draw any numbers on the picture. Questioned during congressional testimony about the precise location of the optimal tax rate, he conceded, “I cannot measure it frankly, but I can tell you what the characteristics of it are; yes, sir.” All the Laffer curve says is that lower taxes could, under some circumstances, increase tax revenue; but figuring out what those circumstances are requires deep, difficult, empirical work, the kind of work that doesn’t fit on a napkin.

    There’s nothing wrong with the Laffer curve—only with the uses people put it to. Wanniski and the politicians who followed his panpipe fell prey to the oldest false syllogism in the book:

    It could be the case that lowering taxes will increase government revenue;

    I want it to be the case that lowering taxes will increase government revenue;

    Therefore, it is the case that lowering taxes will increase government revenue.

  32. Phil – Thanks for posting that buy list.  I was away this weekend, so this gives me a lot of homework to do.  One stock that I would add to your list is BAC.  Financials are looking stronger, and it appears that BAC is nearing the end of their long (and painful) litigation with a settlement around ~12 billion.  Stock looks good technically and I've bought some stock in the past few weeks. Would appreciate it if you would structure a spread out to 2016.  Thanks.

  33. At the open

    09:35 AM ET

    • Dow +0.06% to 16,934.50. S&P +0.03% to 1,950.10. Nasdaq +0.10% to 4,325.10.
    • Treasurys: 30-year -0.24%. 10-yr -0.22%. 5-yr -0.18%.
    • Commodities: Crude +1.02% to $103.71. Gold +0.18% to $1,254.80.
    • Currencies: Euro -0.38% vs. dollar. Yen +0.06%. Pound +0.04%.

  34. On the hour

    10:00 AM ET

    • Dow +0.06%.
    • 10-yr -0.22%.
    • Euro -0.43% vs. dollar.
    • Crude +1.15% to $103.84.
    • Gold +0.18% to $1,254.70.

  35. GMCR down over 7$

  36. Bullard gets even more hawkish

    09:29 AM ET · SHY

    • One month ago saying the price level had stabilized at a low level, St. Louis Fed chief Jim Bullard now says inflation is on the rise, and the FOMC is closer to its goals than at any point in the last five years.
    • News release and presentation
    • The man who only months ago dissented from the dovish side, now says the “Fed faces a classic monetary policy challenge … how quickly should the committee move to return monetary policy to normal.” He’s not a voter on the FOMC this year.
    • Ten-year Treasury yields tick a hair higher as his comments hit the wires, now up two basis points to 2.62%. There’s more reaction on the short end, where June 2016 Eurodollar futures are off 5 points to 98.46, now pricing in about 125 basis points in rate hikes between now and two years from now.

  37. Stock futures tick slightly lower to start the week

    09:25 AM ET

    • Stock futures point to a slight pullback from last week’s records, as excitement around several corporate deals fails to spill into the broader market; S&P, Dow and Nasdaq all -0.1%.
    • There’s no economic data on today’s agenda, but plenty of M&A news with deals announced between Tyson (-1.5%) and Hillshire (+4.7%), Analog Devices (+3%) and Hittite Microwave (+28.5%), and Merck (-0.7%) and Indenix Pharma (+232%); also moving are shares of Family Dollar (+11.5%) after Carl Icahn revealed a stake late Friday.
    • European markets are up slightly but trading is thin with public sector holidays in France and Germany, while Asian stocks start the week higher after China’s 7% jump in its May trade surplus and Japan’s revised Q1 GDP shows strong 6.7% growth.
    • Treasurys will begin the session modestly lower, with the 10-year yield down 2 bps at 2.61%.

  38. GMCR / Yodi – Just giving back Friday's crazy move!

  39. American Airlines reports on May traffic

    09:09 AM ET · AAL

    • American Airlines (AAL) reports total revenue passenger miles rose 2.1% to 19.2B
    • The carrier reports a load factor of 84%, down 30 bps from a year ago. A soft performance in Latin America pulled down the metric.
    • American forecasts Q2 passenger revenue per available seat mile will be up 5% to 7% Y/Y.
    • AAL +0.7% premarket

  40. Macau casino growth estimates clipped by Wells Fargo

    08:47 AM ET · MPEL

    • Wells Fargo lowers its forecast for revenue growth in Macau to 11% from a prior forecast of 13%,
    • The investment firm thinks the VIP segment in Macau has seen some growth deceleration which will provide a bit of an offset to the continued strength in the mass market segment.
    • Macau related stocks: MPEL, MGM, WYNN, LVS, GXYEF, SJMHF

  41. Morgan Stanley further exits physical commodities business; positive write-up in Barron’s

    08:44 AM ET · MS

    • With the sale of its 100% interest in TransMontaigne Partners to NGL Energy Partners, “Morgan Stanley’s (MS) leading commodities division will be leaner, more client focused and better aligned with the rest of the Firm’s businesses,” says Colm Kelleher, President of Institutional Securities at the bank.
    • The deal is expected to result in a non-material gain for Morgan.
    • Source: Press release
    • In other news, Morgan got the Barron’s cover in a good way (or bad way if you’re a contrarian type) over the weekend, with the magazine touting the bank’s transformation towards less risk and less debt trading as providing the model going forward for the rest of Wall Street.
    • The stock’s ahead 0.15% premarket.

  42. BHP cuts another 170 iron ore jobs in Australia

    08:41 AM ET · BHP

    • BHP Billiton (BHP) has cut another 170 jobs at its key Mt. Whaleback iron ore operation in the Pilbara region of Western Australia state, on top of 100 layoffs last week tied to iron ore production.
    • Spot iron ore prices are hovering just above two-year lows, eating into profits at BHP and rivals such as Rio Tinto (RIO) and Fortescue Metals (FSUMF) and prompting the mines closures, asset sales and job losses.
    • BHP is Australia’s no. 2 exporter of iron ore, which accounts for a majority of its earnings.

  43. PBOC cuts reserve ratios for certain banks

    08:30 AM ET · TAO

    • China’s central bank on June 16 will cut the reserve ratio by 50 basis points for some banks focusing on lending to the rural sector and smaller companies, with the move also applying to financial leasing and auto financing firms.
    • The action follows a promise two months ago by the State Council to take action to boost economic growth.
    • In other news, land sales plunged in May, with 1,767 deals over 300 surveyed cities down 45% from a year ago and 19% from April. May is traditionally a big month for sales, but developers, says real estate website Soufun, are in “wait-and-see” mode.
    • Property developer stocks (TAO) slipped in Hong Kong (EWH) overnight, including Poly Property off 7.7%, Shimao Property down 4.3%, and Fantasia Holdings off 2.3%.

  44. stjeanluc GMCR suits me fine

  45. Analysis: Taco Bell marketing a factor in slow McDonald’s U.S. sales trends

    08:22 AM ET · YUM

    • Some restaurant sector analysts think Taco Bell’s (YUM) aggressive breakfast push has cut into McDonald’s (MCD) breakfast market share to slow overall growth trends for the company in the U.S.
    • Though execs with McDonald’s cited “ongoing broad-based challenges” as a drag on U.S. sales, the relentless marketing push by Taco Bell to younger consumers could be aging the brand.
    • MCD -0.2% premarket

  46. Interesting times: Spanish rates below U.S.

    08:11 AM ET

    • The yield on Spain’s 10-year government paper slips nearly 5 basis points to 2.595% today, compared to 2.62% for U.S. 10-year Treasurys.
    • In this, Spain has joined Ireland, whose 10-year notes yield less than 2.50%. Italy at 2.72% has yet to join the party. Greece? Its 10-year notes trade at 5.78%.

  47. Phil, Dmulligan

    thanks re EBay.

  48. McDonald’s reports on May sales

    08:08 AM ET · MCD

    • McDonald’s (MCD) reports global comparable-store sales rose 0.9% in May vs. 0.8% consensus.
    • Geographic comparable-store sales breakdown: U.S. -1%; Europe +0.4%; Asia/Pacific/Middle East/Africa +2.5%.
    • Systemwide sales increased 2.4% in May, or 3.4% in constant currencies.
    • MCD -0.3% premarket

  49. Merck buys Idenix

    07:59 AM ET · MRK

    • In an all-cash deal, Merck (MRK) acquires Hep C drug maker Idenix Pharmaceuticals (IDIX) for $24.50/share ($3.85B). The company has an attractive portfolio of Hep C product candidates based on nucleotide/nucleoside chemistry and prodrug technologies.

  50. Tyson Foods confirms $8.55B deal to buy Hillshire Brands

    07:39 AM ET · TSN

    • Tyson Foods (TSN) confirms a deal to buy Hillshire Brands (HSH) for $63 per share in a deal valued at $8.55B.
    • The company will use cash on hand and a bridge loan to fund the acquisition.
    • Execs will discuss the merger on a conference call at 8:30 AM EST.
    • Shares of Tyson are down 2.8% in premarket action, while Hillshire Brands is up 5.1% to $61.95.

  51. Nissan unveils electric van

    07:12 AM ET · NSANY

    • Nissan (NSANY) is launching its second all-electric vehicle. The commercial van called the e-NV200 will go on sale in Europe this month and in Japan in October.
    • Despite a slow market acceptance of its first electric car three years ago, Nissan is still scheduled to manufacture the e-NV200 and two more zero-emission electric vehicles by March 2017.
    • Sales for the company’s first electric car called the Leaf are still growing slowly, having climbed 70% to 52,000 vehicles in the last fiscal year.

  52. Amazon expands into the online payments market

    04:54 AM ET · AMZN

    • Amazon (AMZN) will expand further into the online payments market today by launching its new role of managing subscription payments – starting with start-ups and other companies.
    • The service will allow more than 240M users to use credit card details stored on to pay for services such as a monthly phone bill or a digital music subscription. Fees will be charged for each transaction.
    • PayPal (EBAY) is set to feel incoming pressure, as Amazon encroaches on the sector it has long dominated.

  53. Russian companies look to trade in Asian currencies

    01:58 AM ET · CYB

    • Russian companies are looking to change their dollar-denominated contracts if necessary, to renminbi, Hong Kong dollars or Singapore dollars due to increasing western sanctions.
    • The move shows a Russian shift towards Aisa, as tension mounts between Russia, Europe, and the West.
    • Sanctions have led Russian companies to limit their dependence on the western financial markets, and increase the importance of bilateral trade with China.
    • There has been a marked reduction in lending activity from U.S. and European banks to Russia, since the annexation of Crimea in March.

  54. Turnaround in play at Office Depot

    Sat, Jun 7 · ODP

    • Steep cost cuts and merger synergies have helped guide Office Depot (ODP) back to profitability, notes Barron’s.
    • No-nonsense CEO Roland Smith has narrowed the focus of the company. The exec wants Office Depot to pursue the higher margin opportunities presented in business services.
    • KeyBanc thinks the office supply giant could see EBITDA of $800M per year by 2016 as initiatives play out.
    • The early innings turnaround has attracted value investors keying in on the potential for ODP shares to more than double.
    • The wildcard in the mix: The FTC included online competition in a market review related to the merger of Office Depot and OfficeMax. That assessment leaves open the possibility Staples (SPLS) and Office Depot could merge one day without a regulatory roadblock.

  55. State Department corrects errors on Keystone XL estimates

    Sat, Jun 7 · TRP

    • The State Department is correcting several errors it made in its study evaluating the impact of the proposed Keystone XL pipeline, including a new estimate of hundreds more deaths and thousands more injuries that could occur if the project were rejected and oil traffic by rail increased.
    • The initial study noted that without the pipeline, companies instead would move the oil by rail, which could contribute to 700 injuries and 92 deaths over 10 years; the updated report raises those numbers more than fourfold.
    • TransCanada (TRP) says the update reaffirms that the safest and most environmentally responsible way to move oil is through a pipeline, opponents say the report highlights the dangers of developing Canada’s oil sands at all, and State Department officials say the corrections have “no impact” on the integrity of the first report.

  56. VMware responds to Cisco, claims strong SDN momentum

    Fri, Jun 6 · CSCO

    • Responding to comments from John Chambers and other Cisco (CSCO) execs suggesting VMware (VMW) has only a handful of paying clients for its NSX software-defined networking (SDN) platform, VMware CEO Pat Gelsinger recently declared NSX’s client base has hit 100.
    • Gelsinger: “Some [clients] are in prototypes, some are in full deployment, but they’re paying customers.” He adds two older VMware SDN clients, Rackspace and eBay, are “at dramatic production scale,” and that many customers use NSX to create a secure network within a network.
    • Also: Gelsinger claims Cisco’s shots at VMware are good PR. “Cisco declared us public enemy No. 1, so all of a sudden every customer, every purchasing agent, has to say, ‘What’s going on over there?’”
    • NSX, backed by many Cisco rivals and enabled by VMware’s 2012 acquisition of early SDN leader Nicira, can be used to enable networks running on commodity gear, rather than proprietary/high-margin hardware from Cisco and others.
    • Cisco is countering with its Insieme/ACI platform, which it argues delivers (thanks to hardware/software integration) better network/app visibility and simpler management. VMware and other critics assert it’s much costlier.

  57. Storage sales fall in Q1; EMC/IBM lose share, NetApp gains (relatively)

    Fri, Jun 6 · EMC

    • Thanks to a 25% drop in high-end storage spend, external disk storage and total disk storage sales respectively fell 5.2% and 6.9% Y/Y in Q1, says IDC. Those figures contrast with Q4 growth rates of 2.4% and 1.3%.
    • Market leader EMC, which depends heavily on its high-end Symmetrix line, saw its external share fall 110 bps Y/Y to 29.1%, and its total share fall 50 bps to 22.4%. EMC previously reported its high-end sales fell 22% in Q1; strong flash/scale-out storage sales partly offset the drop.
    • NetApp’s (NTAP) low high-end exposure allowed its shares to grow 30 bps and 50 bps to 15.1% and 11.7%, in spite of a 2.8% revenue drop. H-P’s (HPQ) external share rose 40 bps to 8.8% (3PAR strength), but its total share fell 20 bps to 15.1% (server weakness).
    • Things still look bleak for IBM, which reported a 23% Y/Y Q1 system storage revenue drop: Its external share fell 200 bps to 8.8%, and its total share 180 bps to 10.1%.
    • The total disk share of non-top-5 vendors rose 370 bps to 28.8%. Chalk that up to both surging demand for cloud storage (getting cheaper by the quarter) running on commodity hardware, and solid momentum for flash/hybrid storage upstarts such as Nimble (NMBL), Pure Storage, and Nutanix.
    • Hard drive/assembly suppliers: STX, WDC, HTCH

  58. Chesapeake board OKs spinoff of oilfield services business

    07:30 AM ET · CHK

    • Chesapeake Energy’s (CHK) board approves the spinoff of its oilfield services operations into a separate, publicly traded company called Seventy Seven Energy.
    • The two companies will be separated through the distribution of SSE stock to CHK shareholders following the close of business June 30, as expected.
    • CHK said in March it planned a spinoff of its oilfield services operations, which generated $2.2B in revenue last year.

  59. UNP/pwright – so.. I have short july 97.5 calls, long Aug 95s, covered by short aug 97.5s and aug 100s, and long Nov 97.5 calls.  The august cover themselves nicely as is. The July 97.5 is the first roll to consider, though is a nice calendar as it is now with downside gain. If UNP continues to hold 100 and move up, might just roll this right to Nov 100s for credit, leaving us with all verticals (two sets in August, one in November), then look at any new diagonals or calendars to make.

  60. FDX – the headlines of package deliveries shows declines both global and domestic, and UPS has a management change, so FDX pops up? yeah, that's all so bullish.

  61. Now oil up around $104 so good for a re-short (/CL) with tight stops over the line.  

    AAPL/Wombat – Waiting is an excellent plan.  

    RUT 1,173 on /TF – getting tempting to shrort.  Not at all good for TZA.

    ABX/Stock – That's one I feel very strongly about. 

    EBAY/DM – Yes but just because AMZN launches something doesn't mean it will ultimately work.  It's not like AMZN takes PayPal now…  While AMZN has a huge leg up getting something adopted, they still have many years to gain acceptance and build an audience.  Paypay was sold to Ebay in 2002 ($1.5Bn), so it's been 12 year pushing on that platform to get where it is.  Square was going to kill PayPal last year.  

    BAC/Albo – They were on my watch list but didn't make the cut due to the latest round of fines – I think it needs time for the dust to settle still.  I certainly don't think they'll go BK though, so just selling the 2016 $15s for $1.65 is a good way to get started at net $13.35 and, from there, you can see how things go.  

    GMCR/Yodi – It was ridiculous that they were up in the first place.  

    You're welcome Maya. 

    Good chart, Pharm.  

    FDX/Scott – Yes, the transports amaze me, flying up for no particularly good reason.  

  62. Breakups of the big banks beginning?

    Yesterday, 08:27 PM ET · CS

    • Amid a number of challenges to bond trading facing the large banks – namely declining revenue and tougher capital rules – Credit Suisse (CS) is considering spinning off its recently-formed Wake USA, which last month began taking trades in Treasurys and Treasury futures, reports the WSJ.
    • “It’s a novel idea,” says Larry Tabb of Tabb Group. “By partnering with Tower [a developer of electronic-trading technology], Credit Suisse keeps their client relationships, solves their regulatory capital issues, as well as providing better and tighter pricing to their clients.”
    • For Credit Suisse, turning Wake into an independent company would allow the bank to keep a share of the profits from client trades without having to set aside additional capital.

  63. Retail coffee prices rise by 9-10%

    Yesterday, 09:43 AM ET · KRFT

    • Kraft (KRFT) raised prices by 10% on its product lines – Maxwell House, Yuban roast and ground coffee brands, as a result of climbing bean costs which went into effect on June 6.
    • J.M. Smucker (SJM) has already increased prices on its retail brand’s Folgers, Dunkin’ Donut roast, and ground coffee products by ~9% last week. This past week the company also reported lower sales in FQ4 due to pricing actions in the quarter.

  64. United Continental facing challenges

    06:06 AM ET · UAL

    • United Continental (UAL) is still facing a series of challenges nearly four years after the deal between United and Continental closed in October 2010. The company faces an outdated fleet, slipping customer satisfaction and unmatched losses compared to its rivals.
    • The company experienced a terrible 2012, after losing a total $723M. Last year, the airline came back with $571M in earnings, but declined again during the first quarter of this year posting a $609M loss.
    • Analysts still expect United Continental to report a profit for the current quarter and year, and many have assigned a “buy” rating. The company’s stock did climb 28% this year, although it is still has underperformed compared to it’s rivals. Delta’s (DAL) share price jumped 55% this year, while American Airlines (AAL) stock has climbed 77%.

  65. Time to Double Down on our TZA June $17 calls at .10 in the $25KP and STP.  That means 1/2 out a .18+ on a pullback.  

  66. LULU/Phil – $40 puts are at $5.80. Take that entry or wait?

  67. Russell (/TF) is up from 1,120 to 1,173 since Wednesday.  From 1,120, 1,176 would be the 5% line and, if we assume at least a weak retrace there, 20% of 56 is 11.2, back to 1,165ish.  So I do like pressing TZA here as that pullback will get us even or better and I also like playing /TF short below 1,176.50 with very tight stops above. 

    Speaking of tight stops, oil $104.14 just tapped $104.20, which was our next re-entry (so far, so wrong).  

    LULU/Ivan – Rule of thumb is 5% or less is acceptable on a long-term play where you expect to make 100%.

    More of M&A's power to boost the market:  Chip stocks gain as semi consolidation wave continues
    • A slew of chip stocks are rallying following Analog Devices' (ADI +5.9%) $2B deal to acquire RFIC vendor Hittite Microwave.
    • The purchase is part of an M&A wave that has hit the semiconductor industry over the last 12 months, as chipmakers try to gain scale, cut opex, and grow their cross-selling opportunities by consolidating. Other deals: RF Micro/TriQuintAvago/LSIMicrochip/ISSC.
    • ADI, which shares many telecom equipment, defense/aerospace, and automotive clients with Hittite, predicts Hittite's RF, microwave, and millimeter wave ICs will complement its RF and signal-conversion (ADC/DAC) products.
    • Several RF and analog/mixed signal chipmakers are higher, but they're not the only gainers:RFMD +1.8%. TQNT +1.8%. PSMI +2.5%. LLTC +1.6%. MSCC +2.1%. IDTI +3.8%. ATML+3.4%. IRF +1.4%. SIGM +3.9%. AMCC +3.8%.

  68. RIG/Phil – from the buy list. The 7% yield seems too juicy to pass up. Should we not try to capture that as well?

  69. alrighty folks go download the wallet and I'll send you some coins. Just post the send address!


     USO up 1.3% today at $38.13.Will it soon be time to Buy the July $39 Puts ? $1.22/$1.25 at the moment.

  71. Netflix talks broadband speed and error messages • 11:20 AM

    Netflix (NFLX -0.7%) is out with its ISP Speed Index for May and takes a swipe at "some" large ISP providers (VZTWCCHTRCVC) along the way.

    ISP Speed Index (Mbps): Cablevision-Optimum 3.03, Cox 2.94, Charter 2.87, Suddenlink 2.83, Comcast 2.72, Time Warner Cable 2.45, Bright House 2.23, Windstream 1.90, Verizon FIOS 1.90.

    The company says some ISPs are harming consumers by double-dipping to get fees from subscribers and content providers for the same access.

    In an interesting twist, Netflix says it will continue testing using an error message when a broadband provider has persistent network congestion. A broad roll-out of the policy is being considered.

    Previous: Netflix vs. Verizon over error message

  72. biodieselchris

    How does one "send" the address?

  73. Phil – As I've previously said, I'm probably the worst in the world at structuring spreads, but decided to go with the following on BAC:

    Bought the Jan 16 $12 calls for $4.50.  Sold the Jan 15 $17 calls for .68 and the Jan 16 $15 puts for $1.64.  Probably not the best move,  but I think BAC can move up close to $20 over the intermediate term.

  74. man… this bull just wont quit.. amazing

  75. bio/greencoin – address: GdosB1bzEoqs6Fxr7GkUXwB2JzmoZYBsfA


  76. Peter,

    Should be be adjusting our SPX straddle – getting a little close for comfort at 1960 calls?  Or did we already and I missed it?


  77. biodiesel/


    Thank you!

  78. Dow is almost at 70 RSI, Nasdaq is above that and McClellan is currently around 140-150 with today's movement.  Approaching very overbought on all levels.

  79. BDC….  here I am…. GZWNXX7pqZEWTPrjw52YesDgiFbjyUPMgD

  80. UBNT moving today

    good one Wombat

  81. BDC – congrats on launch! I'm in..   GaGGW8EJY33f6sNoNQHSPnpkekZPUU6jxY

    thank you!

  82. biodieselchris – I am in … Thank you! :-)


  83. stock
    they just came ouit with their new Nanobeam UFO devices – they sell for around $150 – incredible.
    their plan is to get them networked all over the world so they can penetrate rural areas in need.
    they look like a big M&M about 8 inches wide – super cool

  84. Cheap/StJ – Nice to see it quantified on paper.  

    RIG/Ivan – If you buy the stock for $43 and tie up $4,300 on 100 shares and sell the 2016 $45 calls for $3 and the $40 puts for $5.50 that's net $3,450 less 1.5 (18 months) an irregular $200 dividend so $300 lowers your basis to $3,150 and your best pay-off is $1,850 at $50 in 2016 (58%).  If, however, you buy 2 of the 2016 $40/50 bull call spreads for $3.50 ($700) and sell 2 of the $40 puts for $5.50 ($1,100), you have a net $400 credit and your upside at $50 is +$2,000 for $2,400 total (almost double the buy/write) or 600% on cash or 133% on ($1,100 in margin + $700 in cash).  Also, since you are obligated to own 2x RIG in both cases, if you own the stock your net is $31.50/40.75 while the artificial buy/write nets you in at $40.25 – so you even do better to the downside.  That's why…

    USO/DM – We nay have to skip this month because of the 4th of July. Maybe they'll get to a stupid high that's worth a fall SCO play but too easy to move it up from here with a big holiday weekend coming. 

    BAC/Albo – It's a reasonable target, I just don't think you'll miss all that much waiting for earnings next month so we can get a clearer picture of the impact of all these fines.  They gapped down from $16.50 ($1 higher than they are now) to $15 in April so it's not what I'd call a riskless trade – unless you think everyone who sold them below $15 from late April until the end of May just didn't understand something that you do.

    Quitting/Jabob – It's a Monday – can't count this at the best of times and Friday was total BS.  


    Same program is running today so far.  

  85. Greencoin/BDC  I know a few folks who would probably be interested in this.. Are you ready for this to be shared out further? Any intro message you would like included or 'invite' mechanism?

  86. RIG/Phil – Big thanks for the explanation. I'm starting to get it…

  87. Phil / Flies
    I know were suppose to leave these alone, but i have a question about DIS butterfly
    +5 Jul $25 call ( $26 )
    - 5 Jul $80 puts ( $1.76 )
    -5 Jul $82.5 call ( $1.70 )
    +5 Jan16 $95 puts ( $19.05 )

    Both July calls and puts are in the money, and theres not much more premium to burn on the puts. 
    My question // is it appropriate when the front end of a butterfly is we'll in the money to shut it down / or do you always wait until expiration and roll the loser. >>> ?

  88. GILD just got whacked

  89. Tesla Motors to go open source with Supercharger network • 12:54 PM

    Tesla Motors (TSLA -0.4%) plans to open up the design of its Supercharger system in order to encourage a standard forming in the industry off of the platform, reports Engadget.

    Though the initiative makes sense to analysts as a convoluted system of manufacturer-specific networks isn't feasible, they also note that there is a touch of risk with giving away the intellectual property.

  90. EPZM – since the strangle did not sell, I am selling the Nov $25 call for $4.  That just went through.

  91. Too late for SGEN with today's runup? 

  92. PGNX up almost 10%.  Nice.

    ARIA – $8 July Calls…STO.  Covers stock.

    SGEN….June Puts….whew!  Buy them back.  So don't mess around now.

  93. Breaking records…

    The S&P 500 has spent 388 days above its 200-day moving average, after just breaking the record set by the uptrend of the 1960s by 3 days. This coming week it will match the 1996 uptrend record of 393 days. 


  94. It would be nice to see SGEN go over $39 for good!

  95. BDC Here I am. Thanks


  96. Greencoin/BDC – So 389,813 GreenCoins = 1kg of C02 and you have 1,000kg per ton (ish) so we need 400M Greencoins to offset a ton of carbon and the going rate for a carbon offset is about $20/ton.  I stand by my offer of $100 for 5M.  On the bright side, at least you have an established comparable trading system to work with.    Anyway, you can send my 5M coins to:  GRiiwPFdTRXTAgAxmMgmd9pzQkKnfgaTUC

    You're welcome Ivan.  

    DIS/Wombat – As happens every month, one of our butterflies popped their range with 6 weeks to go.  This month, it's DIS but, like every other month we have this conversation, I'll tell you that I'm not inclined to do anything because a lot can happen in six weeks, though the trade you put up is NOT what we have in the Butterfly Portfolio.  The July $82.50 calls are $4 and the July $80 puts are .35 so $4.35 with the stock at $85.72, which is $3.22 in the money on the calls.  So, by doing nothing, we know we will make $1.13 (25%) of the current short premium.  You'd have to be pretty damned sure you are right before throwing $1.13 out the window.  Also, looking ahead to Oct, the $85 calls are $4.55, so that's a better than even roll and the $82.50 puts are $2.70 and we own the 2016 $55 calls, which are $30 in the money to the Oct $85s and we only paid $24.32 for those – so I'm failing to see the problem here…

    And, as usual, I will tell you we don't "always" do anything – we look at the stock, the options, where we think it will be next quarter and next year and we decide if it's worth sticking with or not.  What we always DON'T do is react to change in PRICES when there hasn't been any news that changes the VALUE.  

    TSLA/Jabob – Sounds a bit desperate to me. 

    SGEN/Sun – You can still sell long puts, they haven't changed much.  The 2016 $35 puts can be sold for $7.50 and that's net $27.50 on the entry (30% off) or you make $7.50, which is almost 20% of the current stock price and all it has to do is hold $35 and the net margin is only $4 – so very efficient.  

    S&P/StJ – It's like Joe DiMaggio.  

    As long as the market stays out of Cleveland, it should be fine…

  97. Dark Pool Trading…..This is gonna be VERY interesting….

  98. RRD – just got a fill on a 2016 $15 put for 2.50. Good in IRA too even with full cash cover as getting equivalent of a 10.2% dividend, annualized.. better than buying the stock if you don't count potential upside (which would reward you as an earlier cash-out for even higher annualized return).

  99. BDC – I am in:  GM6qhJ5e3ZWq8t898QYMwGD5ZZpFVm9RQt. Do let us know when you want to promote it, my background is in enviro policy/business sustainability, and I would be happy to pass it around.

    Phil – Grew up an Indians fan, thanks for another fun fact!

    And, while we are in a sharing mood don't forget about the Shadowfax fund -

  100. ARGHH ! ! !   All weekend I watched commercials for Samsung's new curved TV.  Decided to buy some OLED stock this morning.  Got distracted and forgot.  Bummer.  Not a stock I'd want to own for the long term, but missed a good trading opportunity.

  101. GJyG91wGKA7CzhUshcAjmsSeEQYzaxVJPf

    thanks bdc

  102. FDX and UPS are most certainly hedged for their fuel at all times, but higher costs still can't be helpful.

  103. Seems like a 2pm sell is kicking in!

  104. bdc – GdzARLdYb1NmTTvABWCkk4vwKbpPgzTtsx



  105. oil catching a breath before next surge?

  106. Dark pools/Pharm – I think they are just looking to scapegoat a few people and then back to normal once people forget.  

    RRD/Scott – Very nice 

    Shadow Fund/Mb – Yes, thanks.  Please give what you can to help out Shadowfax.

    OLED/Albo – Could be really good if those things catch on.  Haven't seen one yet.  

    Fuel/Scott – I won't last past their hedges (summer).  

    Meanwhile, oil got to $104.42 and I ended up 4 short at $104.20 avg, now back to 2 since it's dipping.  Nice conviction play on /CL – still hoping for a good drop.  

  107. Phil // DIS
    So, I found out why this was so confusing. I entered the fly late, so I had to gauge the July's instead of the May's. Thats what you posted last week on the Butterfly trade sheet.
    My mistake was I bought the July $55 calls instead of buying the Jan16 $55 calls – thats why it threw me off.
    I"m not mentioning this to irk you – I remember we were going to use this and a few other flies to learn from. I know the strategy is to let them be and we don't ALWAYS do anything and HOPE is not an investment strategy, etc etc. I get it.
    I really like the construction of flies- I'd like to do them more so I ask questions. 
    So, in a butterfly you have your base ( Jan16's ) and you have your sold premium positions ( lets call it front month ), that you continually roll.
    >>  The July $82.50 calls are $4 and the July $80 puts are .35 so $4.35 with the stock at $85.72, which is $3.22 in the money on the calls.  So, by doing nothing, we know we will make $1.13 (25%) of the current short premium. >>
    can't wrap my head your logic here, but i do see what you're doing with the rolls.
    I'll roll the July $55's to the Jan16's and leave the rest alone, because a lot can happen in 40 days ; >

  108. Lending Falls

    Lending for mortgages to purchase homes fell to $115 billion in the first quarter, the lowest in three years, according to the Mortgage Bankers Association. In the first three months of 2014, buyers plunked down $105.1 billion of their own money for properties, compared with $84.7 billion a year earlier, according to Bloomberg data. The share of purchases made by investors, who typically pay cash, dropped to the lowest first-quarter level since 2010.

    “The whole investor class, the ones doing most of the cash purchasing until now, is stepping back,” Yun said. “Baby boomers are taking their place.”

  109. Banks are not going to like the above….and thus rates are going to move…sometime … and then things will get fuggily!

  110. OLED

    Actually been around quit a while and believe it or not the prices have come down a lot, at first it was 10K for a little set. Has lots of unmatchable performance features but looks like they have not seen an inexpensive way to manufacture. Watch out for a breakthrough beyond higher volume sales.

  111. Just finishing "Flash Boys" and the SEC has turned it's head to a gross amount of criminal activity that I agree that the dark pool thing is a scapegoat also.  If they take action against HFT programs now they look like they were extremely negligent in the prior 10 years.  The SEC is an agency that will shake the individual retail guy down for stealing a $1 but turn the other way when an institutions are stealing hundreds of billions.

  112. Phil, in anticipation of Jun expirations next week, I've got a few butterflies I'll need to adjust at that point (I know it's early, although I'll be traveling next week, wanted to make sure I understood the moves so I can make the trades even if I miss a post while I'm on the road)

    I've got JPM Jun 55 calls which will need to be rolled and 55 puts which will likely expire worthless

    Also TXN Jun 48 calls which may need to roll (or expire worthless) and 45 puts which will likely expire worthless

    My inclination is just to roll forward the JPM calls to Sept 55s and sell the Sept 55 puts, I think I can net about $2K in premium for the 3 months, for the TXN would just sell the Oct 48 calls and 45 puts, about $2700 in premium for 4 months, in both cases it comes out to about $650-$700 per month of premium per position.  Let me know if I'm thinking about this the right way; I know it's early to talk about these yet, can wait til later in the week or after hours (I just want to know what I'm up to before I head out of town)..


  113. Thanks Phil…

  114. DIS/Wombat – The logic is we have 2-year contracts that cost $47 but, since they are $55 calls and $80 puts, they will absolutely be worth no less than $25 on expiration.  So, net we paid $22 in premium for 2 years on our longs and, each quarter, we are able to sell $6 worth of premium.  We don't care whether DIS goes up or down, as long as we can sell $6 8 times in two years, we'll get $48 back on our net $22 paid.  Once in a while, DIS may move out of our channel and we'll collect a bit less – but we have a big cushion and, of course, we'll roll our longs at some point and do this for more than just two years. 

    Rates/Pharm – That would not be a good thing.  Obama trying to address Student Loan debt before that blows up in our faces.  

    OLED/Shadow – We were buying those guys in 2006 at $6.  Lost interest at $60 but back at $30 getting interesting again.  

    SEC/Rustle – Easier to get a win against the little guys.  

    JPM/Pwright – It's just a matter of where you want to roll them to.  JPM has earnings on 7/15, ahead of expirations, so you may not want to sell a July combo as they will annoyingly hold a lot of premium until the earnings day.  You always have to be aware of those factors when choosing your short positions.  TXN is right after earnings, so there's a bit of an advantage to selling the Julys and then the Augs.  I agree with your JPM idea (selling Sept $55 puts and calls) because who know's which way it will go so just collect a lot of premium and see what happens.  On TXN, though, you can pick up $1.60 for July $47 calls and $0.70 for the puts for $2.30 in 39 days, that's good money.   

    You're welcome Sun.  

  115. CLX – wow, big day for bleach!

  116. Phil/JPM –  I was just about to mention this butterfly trade as well.  My first thought is to roll the $55 puts since they are down to .08, but leave the calls to roll later. Since the June calls expire in two weeks, shall we officially roll the June $55 into September in the Butterfly portfolio.  I certainly killing the puts for now.

  117. CL – continuing strength with new ATH after breaking out of consolidation last week.  Easing in with a long Jan15 67.5, short Aug 70 call diagonal

  118. JPM/Rev – They jumped from $53 to $57 in 3 weeks and there's two weeks left and we think the market is stretched so why not give them a chance to pull back?  What if we had adjusted when they were $2 under $55?  Now we'd be kicking ourselves as they popped $2 over but now, at $2 over, you want to lock that in and then we go back to $53 and what will you do – just mindlessly chase it up and down every time it wriggles in the channel?

    The Butterfly Portfolio is up 23% BECAUSE we leave it alone and let it do it's job.  Go read back the last 6 months and see the monthly discussions with people asking me should we adjust this and should we adjust that and me saying "no, we should leave it alone until expiration like we planned."   This is why I hate this portfolio, even though it's an excellent strategy - it generates more questions than all the other portfolios combined because people can't just wrap their heads around the concept of leaving things alone.  

    JPM is at $57.50 and we sold June $55 puts and calls for $1.79 so our break-even is $56.79.  We initiated it on 5/23 so it's a whole two weeks old and we spent just $4.73 on our longs, so we have 18 months to make 0.27 per month to make a profit and we can, if we want to, sell the Sept $55 puts and calls for $4.50, which almost all of the long position paid for in 3 months.  BUT – I, for one, would rather wait two weeks, so that I can get more information and HOPEFULLY make a more intelligent targeting decision for September before I commit 15% of my remaining selling power.

    Meanwhile, oil back to $104.40, gold $1,253, Dollar 80.67, /NKD 15,200, VIX 11.32, TLT 111.48 – Really iffy market. 

    RUT is up over half a point at 1,174 but the rest are flattish.  Still waiting to see NYSE 11,000 to confirm a rally and let us move the Big Chart.   

  119. USO/Phil – dare we put on new shorts?

  120. USO/Scott – As I said above, the July holiday makes it ugly.  I like quick hit and runs on the Futures but USO needs a bigger move to make money and I'm not sure we'll get it.  If oil gets over $105, I'd be inclined to play SCO but I wouldn't want to be the sucker paying premium to play USO at the moment.  

    /ES having trouble at 1,950 after having been well over this morning.  

  121. For oil players the high of May 23 is equaled today, they have had 2 weeks of manipulated totals and this week could be a build. FWIW wish I could play it tomorrow but not a chance I can afford and wanted to share what has worked in the past. Don't forget this is a eia weekly play and prices will not go higher for gas or diesel here! Phil also has the holiday pointed out.

  122. Another ATH.  Ho hum!

  123. Ho hum is right.  Tomorrow, hopefully, we'll get a better idea of what's real. 

  124. Russell on a tear again today – making up for these past months.. Back at the up 17.5% line that was resistance back in January. 

    Now the number of stocks above their 200 DMA in the S&P 100 is at record highs for the year. Maybe this move is a little more broad base the last couple of days – Russell and S&P 100!

  125. Phil re: TXN, you are right, Jul premiums are pretty good, that can add some juice to the returns on these, structuring around earnings adds another wrinkle.  Many thanks. 

  126. And in the strangles portfolio we have the RUT 1180 calls. At the time, I commented that it was 1.645 standard deviation away or only a 5% chance of touching and we did touch that today so an unusually strong upward move this month in the Russell – something you see once every 2 year or so! Indices moving like momentum stocks. 

  127. IGT/Phil    !!!!

  128. Phil – but just watch over the next few weeks how the CO2/coin grows. 00 coins is 1.3 g of CO2 now but let's see what that is next year!!!  

    Scott – it's basically completely public at this point. Anyone with interest can go to and read about it and solicit being a renewable producer by emailing me (see "Contact" page).

    (note for some reason, without the "www", won't resolve. I am trying to fix this)

    Coins sent (500): Daveo, CaFords, dclark41, diamond, pharmboy, Phil, scottmi, traderd, wombat and mb22. Let me know if I missed anyone! Free coins awarded past this point are 250 coins.

  129. ^^^^ above I meant "500" coins = 1.3 g CO2.

    A few more fun things: if you're interested in getting 1 or 2 free greencoins at a time there are 2 online faucets set up here and here. Or if you tell folks about greencoin they can go there to get a few for free (since they don't have PSW-Free-Greencoin privileges like you do  )

    There is also a block explorer for tracking transactions. For example, the award to Phil is here.

    If you want to hit the exists you can trade for BTC here. (…. or buy more GRE's!)

    Phil 5M/looks like the going rate is currently ~$2k. It's a thin market though — needs some volume! Only ~5.1M coins have been minted so far — it'll be hard to accumulate that many for awhile.

  130. Interesting comparison between iOS and Android:

    As he puts it, “For Google, devices are dumb glass and the intelligence is in the cloud, but for Apple the cloud is just dumb storage and the device is the place for intelligence.”

    He points out that as smartphone platforms have matured and as the most important smartphone features have been added to both iOS and Google, Apple and Google have begun innovating in ways that are uniquely Apple and uniquely Google. For example, iBeacons take advantage of the hardware Apple sells. Apple has been adding Bluetooth Low Energy support to its hardware for a few years, and now iBeacons can take advantage of this in clever ways.

    Google can’t do this because they don’t control the hardware Anroid runs on. But Google has Google Now, a differentiating feature on Android that blows Siri out of the water. What makes it so great is that Google can integrate what it knows about you from all of its cloud services to provide you with extraordinarily useful information.

    “Apple is moving innovation down the stack into hardware/software integration, where it’s hard for Google to follow, and Google is moving innovation up the stack into cloud-based AI & machine learning services, where it’s hard for Apple to follow,” Evans writes.

  131. BDC coins

    I have no account but PSW members have been very generous and would you consider some for paying down my problem at some future time. I could give an account to send direct and as cheap as they are today may be a very inexpensive option. The site doesn't take electronic coins but maybe you could change their mind. Thanks for any consideration and this may be a stupid idea that may prove inexpensive and help pay down those bills. 

  132. Phil / DIS
    Yep, I understand the theory even better from your explanation – thanks.
    I think what threw me was my flipped leg and that really weird calculator mind of yours ; >


  133. bdc // very cool man

  134. shadow, there is no need for an "account." You just go to the coin website and download the wallet (depending on which OS windows or mac). For windows you extract the zip somewhere and then go into the folder and launch greencoin-qt (with the icon next to it). When it opens let it catch up with the network (you need to be online for this to work):

    Click "Receive" (near the top)

    In the bottom left click "New Address". name it something like "Shadow Donation". Click OK

    Once made, your new address will appear in the list, you can right click on it and select "copy address"

    You can paste that address in here like the others did and solicit coin donations from folks. I'll certainly send you some and maybe others will in time. Hopefully the price goes up and it'll help you out some.

  135. mb22 send me an email let's discuss  -- biodieselchris at gmail











  137. CZR, If you sell the 2016 12.50 puts for 2.73 (midrange between bid and asked), you will make over 10% a month if it is over 12.50 in Jan 2016. It is super margin efficient in a non margin acct.

  138. BDC – GbdBnG1TEF93NRAnRw24xL3fbL8sE1bYoQ


  139. BDC

    Not sure how to get the wallet to actually function. I hate to bother you with this and I thank you for the GreenCoins, but when I open the GreenCoin-Qt all I get is an empty wallet that says (out of sync) and has a zero balance. On the bottom of the GreenCoin window it says "No block source available" and the computer icon on the right corner has an "X" near it. Is there something I need to do to make this work (sync)? On a MacBook Pro.  Thanks for the help.

  140. If you want to donate green coins to the general medical pay fund this should be the address, hope I did it right Biodiesel.


  141. BDC –            GP6MzSDc5qFGD2igQZiSrd11eJr1UYrxJM



  142. Glad I am not the only one confused if the coin thing works, I just have no clue what anything means.

  143. Wombat

    I received something similar a couple of days ago (in the junk file now!). As Phil says: "Be careful out there!"




  144. shadow:

    Can't seem to get mine to work.

  145. From Bloomberg, Jun 10, 2014, 12:36:11 AM

    June 10 (Bloomberg) –- Bloomberg’s John Dawson reports on Private wealth in the Asia-Pacific region jumping 31%, making Asia the fastest-growing region for affluent families. He speaks to Angie Lau on Bloomberg Television’s “First Up.” (Source: Bloomberg)

    Rich Chinese helped make Asia the fastest-growing region for affluent families as the increase in global wealth accelerated last year, according to a study by Boston Consulting Group.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  146. From Bloomberg, Jun 10, 2014, 12:24:07 AM

    June 2 (Bloomberg) — Mark Kiesel, deputy chief investment officer at Pacific Investment Management Co., talks about the performance of stock and bond markets, central banks’ policy and investment strategy.
    James Liu, global market strategist at JPMorgan Funds, also speaks with Trish Regan, Alix Steel and Jonathan Ferro on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

    Macau’s government plans to further restrict the use of China UnionPay Co.’s debit cards at casinos, curbing money flows to the world’s largest gambling hub by making it harder for bettors to buy expensive items that they exchange for cash. Casino stocks slumped in Hong Kong.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  147. From Bloomberg, Jun 3, 2014, 4:41:53 AM

    June 2 (Bloomberg) — Mark Kiesel, deputy chief investment officer at Pacific Investment Management Co., talks about the performance of stock and bond markets, central banks’ policy and investment strategy.
    James Liu, global market strategist at JPMorgan Funds, also speaks with Trish Regan, Alix Steel and Jonathan Ferro on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

    Galaxy Entertainment Group Ltd. (27) fell
    the most in almost a month in Hong Kong trading, leading
    declines among casino operators as Macau gambling revenue grew
    by the slowest in four months.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  148. From Bloomberg, Jun 9, 2014, 11:53:31 PM

    Elderly women sit by the side of a road on Gogo Island in Matsuyama. As an aging population draws down its savings, Japan will become more dependent on foreign creditors to finance its budget deficits and manage the world’s biggest debt burden. Photographer: Yuriko Nakao/Bloomberg

    Japan risks losing its position as
    the world’s top creditor nation, as dwindling savings become
    insufficient to finance growing public debt, a Bloomberg News
    survey of economists indicates.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  149. From Bloomberg, Jun 9, 2014, 11:48:49 PM

    June 4 (Bloomberg) — Fan Cheuk Wan, chief investment officer for Asia-Pacific at Credit Suisse’s private banking and wealth management unit, talks about China’s economy.
    She also discusses European Central Bank policy with Angie Lau on Bloomberg Television’s “Asia Edge.” (Source: Bloomberg)

    China’s inflation accelerated in May to the fastest pace in four months on food costs, while a decline in factory-gate prices moderated.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  150. From Bloomberg, Jun 10, 2014, 2:18:57 AM

    June 10 (Bloomberg) — Khiem Do, Hong Kong-based head of Asian multi-asset strategy at Baring Asset Management Ltd., talks about China and South Korea stocks.
    Do also discusses the outlook for China’s economy and central bank policy. He speaks with Angie Lau on Bloomberg Television’s “First Up.” (Source: Bloomberg)

    June 10 (Bloomberg) --U.S. equity-index futures fell while
    the yen strengthened for the first time in three days and gold
    advanced. Chinese stocks climbed after the government cut
    reserve ratios for some lenders and oil advanced before a report
    on American stockpiles.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  151. From Bloomberg, Jun 9, 2014, 7:00:01 PM

    Daniele Nouy, member of the Supervisory Board of the European Central Bank’s Single Supervisory Mechanism. Photographer: Daniel Roland/AFP/Getty Images

    Daniele Nouy is coming face to face
    with the awkward side of Europe’s banking union.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  152. From Bloomberg, Jun 10, 2014, 2:35:43 AM

    Haruhiko Kuroda, governor of the Bank of Japan, will hold a press conference after the BOJ’s next policy decision on June 13. Photographer: Tomohiro Ohsumi/Bloomberg

    A gauge of expected price swings for
    the yen versus dollar remained near a record low before the Bank
    of Japan
    meeting this week, while trading in Japanese government
    debt almost ground to a standstill.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  153. From Bloomberg, Jun 10, 2014, 2:33:02 AM

    Emerging-market stocks rose, with
    the benchmark index headed for the highest level in 13 months,
    as a gauge of technology shares rallied to a record and China
    announced details of measures to boost lending.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  154. From Bloomberg, Jun 10, 2014, 2:43:23 AM

    A combine unloads a hopper full of harvested soybeans into a tractor trailer on a farm in Fairfield County, Ohio. Production in the U.S., the world’s largest grower, will jump 10 percent this year to an all-time high of 3.631 billion bushels, and inventories before the 2015 harvest will be double a year earlier, a Bloomberg survey of 25 analysts showed. Photographer: Ty Wright/Bloomberg

    Minnesota farmer Bob Worth has sold
    most of his soybeans on bets the biggest rally in five years is
    about to end.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  155. From Bloomberg, Jun 10, 2014, 1:04:39 AM

    June 9 (Bloomberg) — Ukraine’s Independence Square in Kiev is a living monument to revolution even after new president Petro Poroshenko was inaugurated on June 7.
    Ryan Chilcote reports on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

    Ukraine’s Foreign Ministry said
    peace talks with Russia in Kiev yielded progress, after the
    country’s new president called for a rapid end to separatist

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  156. From Bloomberg, Jun 10, 2014, 12:00:07 AM

    Warren Buffett briefly lost track of
    how many billions of dollars his Berkshire Hathaway Inc. (BRK/A) is
    spending to build wind and solar power in the U.S. That didn’t
    stop him from vowing to double the outlay.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  157. From Bloomberg, Jun 9, 2014, 11:00:21 PM

    May 13 (Bloomberg) — Peter Redward, principal at research firm Redward Associates Ltd. in Auckland, talks about China’s economy, central bank policy and currency.
    He also discusses Australia’s budget with Rishaad Salamat on Bloomberg Television’s “On the Move.” (Source: Bloomberg)

    Chinese policy makers have been
    saying since February that two-way swings in the yuan are the
    “new norm.” A surprise surge in the currency shows that they
    mean it.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  158. From Bloomberg, Jun 9, 2014, 10:18:52 AM

    Ghana’s central bank is printing
    money to help finance the government’s budget deficit,
    threatening to fuel inflation and weaken a currency that’s
    already the worst performer in Africa this year.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  159. From Bloomberg, Jun 9, 2014, 3:00:00 PM

    Bill Gross, co-chief investment officer of Pacific Investment Management Co. (PIMCO). Gross says yields can stay low because growth and interest rates won’t return to pre-crisis levels. Photographer: Andrew Harrer/Bloomberg

    The gulf between bulls and bears has
    never widened so quickly in the $12 trillion market for U.S.
    government bonds.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  160. From Bloomberg, Jun 9, 2014, 10:10:35 AM

    Job seekers wait at a job fair in New York City. Photographer: Spencer Platt/Getty Images

    Vera Johnson from Seattle is barely making do, let alone saving for retirement.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  161. Tuesday’s economic calendar

    12:00 AM ET

  162. H-P unveils water cooling technology

    03:08 AM ET · HPQ

    • H-P (HPQ) has unveiled a water cooling technology for its new Apollo family of server computers that run financial models and create complex designs. The innovation will replace energy gobbling power fans that previously stopped models from overheating.
    • The new design takes the heat out of the machine from a safe distance, unlike gamers’ machines that pump water near heat-generating processors. By keeping the water farther away, there will less likely be a leak on expensive components.
    • “The innovation opens the door for H-P to chase orders in a $4B segment of the market where it hasn’t had products before,” says Antonio Neri, chief of the company’s servers business.

  163. Evercore upgrades Netflix; shareholders reject chairman/CEO split

    Yesterday, 06:29 PM ET · NFLX

    • Evercore has upgraded Netflix (NFLX) to Overweight after the bell. The firm upgraded Netflix to Equal Weight last October, when shares were at $355. It launched coverage at Underweight the prior April, when shares were at $169.
    • Separately, shareholders have rejected a non-binding proposal calling for the chairman and CEO roles (both currently held by Reed Hastings) to be split by a 53/47 margin. Hastings was re-elected to Netflix’s board by a 74/26 margin.
    • NFLX +0.5% AH.

  164. Receptos +36.7% AH; RPC1063 hits primary endpoint

    Yesterday, 06:00 PM ET · RCPT

    • Receptos’ (RCPT) RPC1063 multiple sclerosis drug met its primary endpoint (reduction in MRI brain lesion activity) during Phase 2 trials.
    • The company adds its ongoing Phase 3 trial “has been designed to confirm and extend [Phase 2] results.” Phase 2 results for the use of RPC1063 in treating ulcerative colitis are expected in Q4.

  165. Only a fraction of big gas export projects will be built, Shell exec says

    Yesterday, 05:57 PM ET · RDS.A

    • Only a fraction of the big natural gas export projects being developed around the world will become reality, as high costs and low profit margins in the gas sector sink those that once had promised huge returns on investment, Royal Dutch Shell (RDS.A, RDS.B) director of projects and technology Matthias Bichsel tells Reuters.
    • He knows from experience: Estimated development costs for the Gorgon LNG project in Australia (Shell owns 25%) have soared from $37B initially to nearly $55B thanks to high labor expenses and complex technology, Shell quit the Wheatstone LNG project in the country, and it also has abandoned a proposed gas-to-liquids project in Louisiana.
    • In Asia, where 70% of global LNG trading takes place, spot LNG prices have fallen more than 35% this year to their lowest since late 2012.
    • Bichsel nevertheless says the long-term outlook for the sector is positive: “We’re talking decades ahead, we see a decrease in oil demand and gas will take a more prominent role, including from shale gas. But it’ll take time.”

  166. GoDaddy files for IPO

    Yesterday, 05:48 PM ET

    • GoDaddy, long reported to be hatching IPO plans, has filed its S-1. No symbol has been proposed yet; the IPO underwriters include Morgan Stanley, JPMorgan, Citi, Barclays, Deutsche, RBC, and Stifel.
    • The domain name registrar/Web host had 2013 revenue of $1.13B (+24% Y/Y), and a net loss of $200M. In spite of the loss, adjusted EBITDA was $199.1M, and unlevered free cash flow $175.2M. Bookings totaled $1.4B (1.2x revenue).
    • Q1 metrics: Revenue of $320.2M (+22% Y/Y), net loss of $51.3M, adjusted EBITDA of $79.3M, unlevered free cash flow of $49.9M, bookings of $438.5M (1.4x revenue).
    • At the end of Q1, the company had $1.09B in debt, $134M in cash, and $1.17B in deferred revenue. It managed 21% of the world’s domain names at the end of 2013.
    • P-E firms KKR and Silver Lake each own 28% stakes going into the IPO. TCV owns 12.6%.

  167. Smallcaps lead market higher but trading remains light

    Yesterday, 04:20 PM ET

    • Stocks eked out gains in another session of sparse trading, with today’s spate of corporate deal-making and the remaining after-glow of last week’s European stimulus moves giving little reason for investors to sell.
    • Smaller-company stocks continued to outperform, with the Russell 200 index gaining 0.9% to 1172 and maintaining a strong catch-up effort following a selloff earlier in the year.
    • The broader tech sector ended with modest gains while slipping into the close, aided by Apple’s 1.6% gain on its first day of trading after the recent 7:1 share split and Analog Devices’ deal to acquire Hittite Hicrowave.
    • Treasurys slumped overnight but reclaimed some of their losses during the session ultimately, the 10-year note fell 5 ticks, pushing its yield higher by 2 bps to 2.61%.

  168. AmEx teams with Uber for mobile loyalty program

    Yesterday, 03:21 PM ET · AXP

    • The integration into the Uber iOS app allows American Express (AXP +0.9%) U.S. card members to choose to earn double points or use points for Uber rides, “the first time,” say the two, “that consumers can use loyalty reward points seamlessly in-app and in real time for on-demand transportation in this way.”
    • Source: Press Release
    • Previously: Uber raises $1.2B at $17B valuation

  169. South African platinum strike talks fail, mediator quits

    Yesterday, 02:44 PM ET · AAUKF

    • Wage talks between South Africa’s AMCU union and major platinum producers end in failure, with the mining minister quitting his mediation role and dashing hopes for an end to the five-month strike.
    • AMCU has led the strike of more than 70K mineworkers since Jan. 23, asking for monthly wages of the lowest paid underground employees to be more than doubled to 12.5K rand ($1,174) by 2017; the companies offered increases of as much as 10%.
    • The world’s three top platinum producers – Anglo American Platinum (AAUKF, AAUKY), Impala Platinum (IMPUY) and Lonmin (LNMIF) – say they have forfeited earnings of 22B rand and employees have lost 9.6B rand in wages since the strike began.
    • The news lifted platinum prices higher by ~$15, or 1%, from a session low of $1,436/oz.
    • ETFs: PPLT, PTM, PGM.

  170. Binary event looming for Orexigen

    Yesterday, 01:54 PM ET · OREX

    • Orexigen Therapeutics’ (OREX +0.9%) long wait for marketing clearance for its weight loss drug Contrave (naltrexone) should be over by Wednesday’s PDUFA date. The company had to resubmit its NDA after conducting a study to assess Contrave’s cardiovascular risk after the FDA sent the company a CRL in January 2011. Based on an interim analysis of the 8,900-patient Light Study, the data show that there was no excessive cardiovascular risk with the use of Contrave versus placebo in overweight and obese patients.
    • Marketing partner Takeda Pharmaceuticals U.S.A. will launch Contrave with its 900-strong sales force. With this amount of heft it should give Vivus (VVUS -0.9%) and Arena (ARNA -1.3%) a run for their money.

  171. The battle for the 12 minutes of breakfast

    Yesterday, 01:46 PM ET · K

    • Data from NPD Group indicates the average American spends 12 minutes a day on breakfast.
    • The highly-contested daypart pits major cereal sellers such as Kellogg (K), Post Holding (POST), and General Mills (GIS) against fast-food chains like McDonald’s (MCD), Starbucks (SBUX), Taco Bell (YUM), and Dunkin’ Brands (DNKN).
    • Convenience-store chains are also a major factor as C-stores such as Circle K (ANCUF), 7-11, Pantry (PTRY), BP Connect (BP), On the Run (XOM), Speedway America (MPC), Kwik Shop (KR), and Qwiktrip continue to innovate and show some positive growth trends.
    • What to watch: Analysis from Edward D. Jones suggests consumers tend to stay with their routines. The read is that companies in the breakfast business need to compete for market share within their segment – instead of trying to change consumer behavior. Taco Bell is utilizing that strategy with its marketing message which paints McDonald’s as old-fashioned.

  172. Autodesk buys 3D game engine developer

    Yesterday, 01:40 PM ET · ADSK

    • Autodesk (ADSK -0.7%) has bought Bitsquid, the Swedish creator of a 3D game engine used by multiple console/PC game developers. Terms are undisclosed.
    • Autodesk says it’ll use Bitsquid’s engine to “supercharge its portfolio of tools for game makers through the development of a new 3D game engine,” as well as to “create new tools that push the limits of real-time 3D visualization for architects and designers.”
    • The company goes as far as to say the deal will “revolutionize real-time exploration of complex data” for CAD projects. “Imagine being able to walk through and explore any type of design, from buildings to cars, with the same freedom you experience in the open world of a next-generation console game.”
    • The purchase comes as the gaming industry’s E3 conference gets underway. Autodesk already sells its Maya animation software and 3ds Max modeling/rendering software to game developers.
    • Past acquisitions: Creative Market,, Delcam

  173. Speculators exit gold longs

    Yesterday, 01:29 PM ET · GLD

    • Alongside the decline in gold prices to levels not seen since January is a sharp fall in speculative long bets on the metal to levels not seen since January. According to CFTC data (as reflected in this great graphic from Reuters), pros are net long 51K gold contracts, nearly 100K less than 3 months ago.
    • Gold today is ahead $2 per ounce to $1,254.

  174. ChannelAdvisor: Google/Amazon comps improve in May, eBay slows

    Yesterday, 01:08 PM ET · ECOM

    • ChannelAdvisor (ECOM -0.9%) clients saw a 28.1% Y/Y Amazon (AMZN -0.3%) same-store sales increase in May. That’s up from April’s 27%, and is the highest figure reported for Amazon since last June.
    • eBay (EBAY -0.1%), whose Marketplaces ops have been losing share to Amazon’s 3rd-party services for some time, saw its same-store growth fall to 11.5% from April’s 14% and March’s 17.8% – auctions -11.1%, fixed-price +13%, Motors +15.6%. eBay’s security breach and Google algorithm changes both appear to have taken a toll.
    • Same-store sales driven by search ads – mostly Google (GOOG +0.8%) AdWords – rose 11.7% Y/Y, much better than April’s 4.3% – paid clicks +7%, cost per click +4%, conversion rates +7%.
    • Google Shopping/product listing ad sales grew 21.4%, up from 7.8% in April. Growing ad buys and a 29.3% increase in click rates offset an 18.7% drop in average order value.

  175. Fannie survey: Housing recovery fading

    Yesterday, 12:58 PM ET · FNMA

    • Those who say it is a good time to sell a house increased to 43%, a new all-time high, says Fannie Mae (FNMA -0.4%) in its May National Housing Survey. Those who say it’s a good time to buy dipped a bit to 68%.
    • “Consumers’ lukewarm income expectations and reticence about the economy seem to be holding back housing demand,” says Fannie chief economist Doug Duncan. “This year’s spring and summer home buying season has gotten off to a slow start, even as mortgage rates have trended lower over the past two months … The rebound in home sales will likely be too modest to pull sales for all of 2014 ahead of last year.”
    • Speaking to Duncan’s remarks: Those who say their household income is significantly higher than a year ago fell four points to 21%.
    • Homebuilder ETFs: XHB, ITB, PKB

  176. Aubrey McClendon is back in the big leagues with $4.2B in new deals

    Yesterday, 12:58 PM ET · CHK

    • Mac is back, as former Chesapeake Energy (CHK) CEO Aubrey McClendon’s American Energy Partners announces $4.2B in acquisitions across shale formations in Texas, West Virginia and Ohio.
    • The biggest deal is a ~$2.5B acquisition of ~63K net acres of oil and gas properties in Texas’ southern Permian Basin from Enduring Resources.
    • In two other acquisitions totaling $1.75B, he’s acquiring 27K net acres (with 40M cf/day of natural gas production) in the Utica shale region of Ohio, and he’s taking 48K acres (with 135M cf/day of nat gas production) in the Marcellus shale of West Virginia, both from Shell’s (RDS.A, RDS.B) East Resources division and an unnamed private company.
    • “He’s making bets on the same type of assets he did at Chesapeake,” Oppenheimer’s Fadel Gheit says. “The guy is consistent.”

  177. Unlikely winners in REITs in May

    Yesterday, 12:31 PM ET · CCI

    • With a 2.91% gain in May, REITs outperformed the Dow, S&P 500, and Russell 2000, but fell shy of the Nasdaq’s 3.1% gain. Leading the way for REITs were infrastructure plays, returning 6.55% thanks to strong demand from wireless carriers as they transition from 3G to 4G, writes Trepp’s Susan Persin.
    • Speaking last week at NAREIT’s REIT Week, Crown Castle’s (CCI) Ben Moreland also noted boosted demand from first responder/public safety networks.
    • Manufactured housing REITs returned 5.03 in May, and UMH Properties management – also at REIT Week – noted shipments are low by historical standards and financing remains a challenge even with Warren Buffett being a fan of the sector: Berkshire Hathaway (BRK.A, BRK.B) owns the two dominant lenders. Other players in manufactured housing: SUI, ELS.

  178. BP gets unfavorable Supreme Court ruling to hold off Gulf spill payments

    Yesterday, 12:22 PM ET · BP

    • The Supreme Court rejects BP’s (BP +0.1%) request to halt disputed payments stemming from the 2010 Gulf of Mexico oil spill, Bloomberg reports, refusing to put a hold on lower court rulings that require the company to begin making the payments.
    • Under its normal scheduling practices, the Court will decide late this year whether to actually take up BP’s appeal.

  179. China Mobile invests $880M in Thai carrier

    Yesterday, 12:08 PM ET · CHL

    • China Mobile (CHL +0.3%) is spending $880M to buy an 18% stake in Thai carrier True. The company is getting a 13% discount to True’s Bangkok trading price prior to the announcement.
    • CHL, the world’s biggest carrier in terms of sub count, has been cautious with its overseas expansion efforts to date: Prior to the True deal, its biggest foreign investment was the acquisition of Pakistani carrier Zong (formerly known as Paktel).
    • But with the company sitting on $70B in cash and contending with both slowing growth and intensifying competition in China, a pickup in foreign investment activity could be in the cards. Chairman Xi Guohua mentioned last year CHL is on the lookout for foreign acquisitions.

  180. Treasury prices relative to G7 at cheapest in 4 years

    Yesterday, 11:46 AM ET · TBT

    • The U.S. 10-year Treasury yield of 2.62% is 72 basis points higher than that of the G-7 average, the largest spread since April 2010, according to Bloomberg.
    • Earlier this morning, the yield on Spanish 10-year paper fell below that of Treasurys, also for the first time since 2010.
    • Trying to come up with a reason other than sheer madness, analysts point to the divergence of monetary policy between the U.S. and Europe, noting the ECB last week cut rates and hinted at QE, while the U.S. is tapering and eyeing rate hikes as soon as mid-2015.

  181. Offshore drillers float higher, at least for a day

    Yesterday, 03:18 PM ET · SDRL

    • Shares of offshore drillers are floating higher as Morgan Stanley’s team returns from a visit to Norway having seen increased signs of demand returning, with the newest most efficient rigs favored.
    • Stanley views Seadrill (SDRL +0.2%) as the best way to play an improving rig market, as it expects to lock up 2014-15 availability relatively soon, which should again tighten up the dividend and financing debate and result in a tightening of the yield.
    • Noble Corp. (NE +1%) is higher even as Susquehanna cuts its estimates following last week’s fleet status update, noting that newbuild jackup Tom Prosser was contracted at a $203K dayrate, and the contract on the Paul Romano was cut from two years to six months, causing a $223M reduction in contracted revenue for 2015-16.
    • RDC +1.8%, ATW +1.5%, RIG +0.7%, DO +0.2%, ESV +0.1%.

  182. Please send me the link to join the webinar today. thanks

  183. Phil – DIS Flies

    According to the Butterfly Power Option charts published, you have the 55 Calls and the 95 puts ( not 80 Puts as you told Wonbat) cost $47 and worth minimum of $40, so $7 premium to make up in 6 quarters, needing $1.17/qtr min from the shorts to cover.

    I think I can do these in my UK pension as they are double diagonals with the longs ITM (like STJ’s calendars but both ways at the same time)

    I assume the $20 ITM longs were chosen to keep the premium down.

  184. Phil/JPM – You know I've been around the rodeo here for a few years and I ask about 4 questions a year.   You can just say, don't roll yet even though the premium on the puts has disappeared.  I asked only because you were describing a roll to the previous questioner.   I did not want to roll calls yet, so I wondered if it was a move you were advising to all of us on the butterfly portfolio.   My real question is this: does it ever make sense to roll one side of a butterfly if the premium disappears?if you have answered this too many times, my apologies for missing it.  

  185. BDC/Greencoin


    Thanks in advance

  186. Good morning!

    Oil $104.77 and NOW it's getting to be an interesting short.  I'm still trying to find a reason for it popping – can't find one other than Russia and Ukraine failing to reach an agreement over nat gas but our nat gas FELL 0.10 to $4.60.  Meanwhile, Brent made it back over $110 too – so I'm not jumping on any shorts just yet.

    Indexes more or less flat but Dollar jumped up to 80.90 as Euro flops down to $1.354 and the Pound is at $1.678 with the Yen at 102.30.  I think the Dollar is only up as the BOJ tries to stop the Nikkei from failing 15,000 (now 14,985) as that index fell 200 today.  

    Both Chinese markets were up 1% this morning with India flat, Singapore down 0.34% and, officially, the Nikkei was down 0.85%.  Europe was down half a point at the open but recovered sharply at about 5:30 (EST) and is now up about 0.2% into lunch.  

    The funny thing about Europe popping is the reason they popped – it was this report:

    • The German think tank ZEW has outlined their growing concern of dangerous bubbles after the European Central Bank cut interest and deposit rates last week and hinted at quantitative easing.
    • "I've got a bad feeling about this…I am concerned by the danger that the ECB is producing new bubbles with its policy of cheap money," says Clemens Fuest. "We have all the ingredients of a bubble: The prices of real estate and stock markets continue to rise, and on the bond markets, yields are falling despite high risks."
    • To overcome the crisis, Fuest proposes action from governments in Europe, and not to leave structural reforms only up to the ECB.

    I really f'ing give up if THIS is now considered bullish by the market!  

    Europe Stocks Edge Higher

    European stocks edged higher, continuing a three-day winning streak that saw Germany's DAX close above the 10,000 mark for the first time ever. 5:59 AM


    Italian Companies Flock to Debt Markets

    Debt issuance by Italian companies has surged so far this year as businesses continue to shift away from bank financing and go to the market for fresh capital. 5:34 AM

    MoneyBeat: If Euro-Zone Yields Don't Start Rising, Panic

    Euronext Could Be Valued Up to $2.4 Billion

    EU Ministers in Russia for Ukraine Talks

    Russia-Ukraine Gas Talks Stumble

    U.K.'s Cameron to Host China's Li

    BOJ Beat: Officials Encouraged By Strong U.S. Data

    Consumer Prices Rise in China

    Concern Over Commodities Fraud Spreads

    So, seems like a head-fake to me – if the Dollar stays up over 80.90, I have to think oil heads back down so yes to the short at $104.75 and the low of the night was $104.50 – so don't be greedy and, of course, tight stops on /CL.

    Same short on the Dow from yesterday and the RUT is nice (/TF) if it fails 1,170 with tight stops on that one.

  187. Chart (to the bulls to ignore) of the day

    6-9-2014 6-31-56 PM Student Loans











  188. You're welcome Pwright.

    IGT/Stock – That's one of the problems with my system, I value companies from an M&A perspective and that means that, once in a while, our picks get bought out from under us.  Of course, when you have a buy/write and the stock gets bought – your bonus is you get your full cash-out right away.  $13 was our target on the IGT spread for a nice 57% gain.  



  189. BDS;  Thanks     GTctVU6XtzNGzsBQW3uCSU4JWwRENvxVCV

  190. GM Phil// XRT flirting around $85.xx.  Is this a good time to initiate a short position on XRT?  Thanks.

  191. IRBT was up 5% yesterday, too.  TEX also made a big move and, of course UBNT.  

    Greencoins/BDC – So, by my calculations, I can offset one burp…  wink

    AAPL/StJ – But if I want to use Google Now on my IPhone, I can.  That's a big problem for their model if AAPL has stuff GOOG can never have but anything Google has, AAPL can use.  

    You're welcome Wombat.  Might be genetic – Jackie got a perfect score on her national math test. 

    Big Chart – Those cobras are coiling up.  

    Valuation/Pstas – But what do you do when the GDP is faked?   Since GDP is the denominator and we pushed it from $16.5 to $17Tn with our little adjustment last year, I think we're even higher than the chart makes it look. 

    CZR/Jomp – Yes, it's a great stock to play but you do have to pay attention in case they do run into trouble with their debt.  

    Webinar link for today is HERE!  

    DIS/Britkid – Even better then!  That's why we do it that way, it's considered fully covered on both sides in a restricted account.  Generally, I prefer the ones where we're only covering out of the money but someone had asked me to set one up they could use in an IRA.   So yes, the point was to simply pay no premium (or little as possible) while still being allowed to sell front-month puts and calls.  

    JPM/Rev – Sorry, it was just getting to be a question pile-up and the comment wasn't aimed at you specifically – you just happened to ask the question that prompted me to make it!  Yes, it does sometimes make sense to make a roll but not very often – generally if there's a silly spike that we think will reverse but, generally, the strength in the play is being a month or a quarter smarter BEFORE we make the next roll.  

    XRT/Rookie – NOW they are at our shorting spot.  Remind me in the new post and we'll see what looks good.  

    Speaking of a new post – I guess I'd better write one!  

  192. BDC/greencoin


    Sounds cool, Thanks!

  193. Phil – the only news on oil yesterday stated that the prices were rising due to "possible increase in demand in the second half of 2014 due to the positive economic data from the top three oil consuming nations, using the following macroeconomic data; US adding more jobs in May than had been expected, China importing more oil than a year ago in May, and Japan increasing their GDP forecast for next year." 

    What a joke! This seems like a ridiculous excuse for increasing prices that can't possibly stand up to any real scrutiny of the facts, but this was the headline yesterday explaining the rise in price. Now that I have spent almost six months paying attention to the price of oil, I am really appalled at just how much this market is manipulated and how we are being raped every time we go to the pump and fill up. I can remember telling everyone who would listen back in 2000 when G.W. Bush stole the election, that he was put in office by the oil companies and we would see the price of gas rise. I must admit that I was surprised at how fast it happened and how steep the rise was. Now that I am seeing how this market works, it is once again infuriating to know that prices should and could be lower if there was anyone in government regulating this. Unfortunately, our lawmakers finance their campaigns with money that orders them to keep quiet and let this continue!