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World Bank Wednesday – Global GDP Gets a Haircut

Global growth forecasts have been cut 12.5% since January.

The World Bank cut its global growth forecast amid weaker outlooks for the U.S., Russia and China, while calling on emerging markets to strengthen their economies before the Federal Reserve raises interest rates. The Washington-based lender predicts the world economy will expand 2.8 percent this year, compared with a January projection of 3.2 percent. The U.S. forecast was reduced to 2.1 percent from 2.8 percent while outlooks for Brazil, Russia, India and China were also lowered.

This is not shocking to us, of course.  I just gave a Live Futures Trading Webinar (replay here) yesterday afternoon where our trade ideas were Dow Futures (/YM) short at 16,920, Russell Futures (/TF) short at 1,171 and Oil Futures (/CL) short at $104.40.  

Already this morning (7:40), the Dow Futures are down to 16,870 and the 5-contract trade we were looking at paid $1,250 on the 50-point drop and the Russell is already down to 1,163 – an $800 per contract gain while oil is stubbornly holding $104.40 but I just re-iterated our short below the $104.50 line for our Members in Chat.

That's why we do these Futures trading webinars.  Where else can you get paid thousands of Dollars while you sleep?  Even better if you don't sleep as that World Bank news came out midnight and our indexes didn't start dropping until Europe opened at 3am.  

I was up and posting at 2:30 in our Live Member Chat Room and, while we were already bearish and this simply confirmed our position – if you were caught too bullish in your portfolio – knowing how to trade the Futures would allow you to put on some quick hedges and save you the pain of a dip.  

While we're CONCERNED that there will be a major sell-off, we're not planning on it (also discussed in yesterday's Webcast) and we discussed 4 of our 29 long trade ideas from the Buy List (Members Only) in yesterday's post and we added TASR as a long play in Member Chat as under $15 is just too cheap for our Stock of the Decade.  

Even if you don't have access to the options play our Members do (using our trademarked system for buying stocks at a 15-20% discount, of course), you can still play this stock at these low prices and make those boring old equity returns on the move back up.  Our trade idea using options spreads gave us a $500 credit with a $7,500 upside potential over the next 18 months (1,500%) so it's a trade that has the potential to make over 80% per month if it goes well – we'll check in once in a while to see how it's going.

Now, back to oil.  Bloomberg reports that China has been buying 600,000 barrels a day (10% of that country's imports) to stockpile their Strategic Reserves.  This has been going on since January and that's about 150 days x 600,000 barrels = 90M barrels of false demand on the Global markets.

 We were discussing the effect our own SPR-filling had on World oil prices back in the Bush administration and we can't blame China for wanting a reserve of their own – just be aware of that this week as OPEC talks about "Global Demand".  

UUP WEEKLYOil inventories should be exciting this morning at 10:30 – we'll keep an eye on the Dollar (now 80.85) as a nice signal.  If the Dollar goes over 81, the Nikkei will be happy (14,990 at the moment on /NKD), but it will put downward pressure on commodities

If you remember, from last week, we discussed Silver as a good inflation hedge at $18.80 and gold at $1,245.  Silver hit $19.30 this morning and that's a .50 move at $50 per penny per contract (+$2,500) and I would suggest a non-greedy exit for now because, if the Dollar gets back over 81 – both gold (now $1,265) and silver should dip back quickly – with silver having much more to lose.  

Still, we are remaining "Cashy and Cautious" and more watching the market from the sidelines at the moment.  We're hoping for a better sale on the stocks from our Buy List but, as with cases like TASR, if some of them get too low, we're happy to intiate a position, especially in our almost all cash Long-Term Porfolio and TASR is definitely a stock we intend to own for the long-term!  

 


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  1. Oil Lines

    R3 – 106.11
    R2 – 105.59
    R1 – 105.03
    PP – 104.50
    S1 – 103.95
    S2 – 103.42
    S3 – 102.87

    Interesting that PP is 104.50 today…


  2. Your next setup Phil:

    http://qz.com/218129

    Bloomberg LP has built a prototype of its data terminal hooked up to the virtual-reality headset Oculus Rift. The company plans to show off the technology—still a long way from becoming a real product—at the Bloomberg Next Big Thing Summit, which begins today in Sausalito, California.

    Putting on the bulky headset transports you to a world of infinite space and, thus, as many screens flashing financial data as you desire. Screen real estate is not an issue here. Twitchy traders who set themselves up with a dozen or more monitors at their desks in the physical world would envy what’s possible in virtual reality.

    The image above has 20 screens, but in a demonstration at Bloomberg’s headquarters in New York, I doubled that and more. 


  3. That's what a bad investment looks like:

    Refunds anyone?


  4. Good Morning!


  5. Jobs.  David Stockman published a great article on June 1 where he showed there has been a 77 month drought in job creation in the U.S. and yet you can find no mention of this in the financial press.  He claims the pool of working-age adults has grown by 14.4 million since Dec. 2007 but only 100k  "new" jobs have been created in that time.  A serious problem being swept under the rug? Or has society evolved to the point where a shrinking workforce can provide for a larger population.  If the latter, what do the increasing numbers of unemployed folks do exactly?  Shop perhaps…


  6. Good morning! 

    Pro shopping was my idea from the other day, Sibe.  I would bet you it will happen but we probably won't live that long.  At some point, society is going to have to undergo some drastic changes – we simply don't NEED these people to work (obviously) to run the country.  As we get more and more efficient and more and more automated, we'll simply need less and less workers.  If the only purpose of a person's existence is to work – I guess we will need to kill all the surplus laborers but, if a man is more than his job – then we'll have to re-evaluate a system that rewards only the "job creators" when they don't even create enough jobs for the available population.  

    Indexes all bouncing at the open – probably a head-fake.  RUT a good long off the 1,165 line (/TF) – same bounce we got yesterday – but right out if it fails.  Oil got us back to 1x on the dip and now $104.44 – gotta be careful into inventory.  Dollar 80.825. 

    Occulus Trading/StJ – So cool.  Have to balance the fact that I have to wear that idiotic head-gear with the fact that I can sit on my couch and see all that!  

    Cantor/StJ – He gets to keep that money too!  


  7. FU NFLX!!!!!


  8. Also funny is this article from primary day (statistics show you whatever you want but they can't compete with facts in the end):

    Cantor's poll comes the same day another poll was released showing him with a 12-point lead.
    WASHINGTON POST
     

    Cantor spend $5.5M on his campaign, Brat spent $200,000!

    Here's a horse that's smarter and more helpful to others than Cantor:

    School shooting map, Jan 2013 – present – see how we learned our lesson after Sandy Hook – Cantor was one of the bastards responsible for blocking legislation to stop this madness – 74 more and counting:

    Screen_shot_2014-06-10_at_1.48.46_pm


  9. Occulus / Phil – I would bet that 10 years from now we will all have something like that (probably more advanced and comfortable) and this virtual reality thing will be completely familiar. No need to have meetings, we'll see each other in fake settings… You won't have to leave your couch at all!


  10. When I said that $100 was resistance for ULTA, I wasn't kidding! What a move… Up close to 15% now.


  11. FU PCLN!!!


  12. Phil // SPR
    Unclear – if China has been stockpiling US oil imported ( 60 MM brls ), why would that be considered 'false demand " ?


  13. Wombat
    Maybe when they fill their reserves – they will/have stop buying.


  14. ok, but thats's a forecast of future demand – I'm curious why Phil called it ' false demand ' ?


  15. Vergara v California – Hooray! A positive development.
    Here is Marcellus McRae's closing argument:

    http://vimeo.com/90273109


  16. China buying oil to stockpile now is round 2, they did a much bigger one about a year and a half ago.

    They will fill it up some day and what does that say about there banking as they are being investigated of fraudulent lending secured by commodities now.

    Perfect world economy.


  17. PHIL/ AAPL   2016 spread   buy 100 Call,  sell 110 Put, sell 74.29 put, for $1.20 credit. I would appreciate your comments.


  18. PHIL 
    the 110 should be a Call


  19. ztennis AAPL play possible put some more numbers to that as it does not make sense to me 


  20. Dow diving now, 16,650 – other indexes should follow so now shorting /TF below 1,165 (with tight stops above) and /NQ at 3,800.


  21. Oil 2.6Mb draw, way more than expected.  Imports way down though.  Gasoline up 1.7Mb and distillates up 900K so net neutral on the button means still not supportive of $104.50 so game still on for the shorts.  


  22. draw of 2.6M, Ha HA Ha HA!

    ~U.S. crude oil refinery inputs averaged over 15.5 million barrels per day during the week ending June 6, 2014, 510,000 barrels per day less than the previous week’s average. Refineries operated at 87.9% of their operable capacity last week. Gasoline production decreased last week, averaging about 8.9 million barrels per day. Distillate fuel production decreased last week, averaging about 4.9 million barrels per day.
    U.S. crude oil imports averaged over 7.1 million barrels per day last week, up by 23,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.1 million barrels per day, 8.1% below the same four-week period last year.


  23. PHIL, AAPL  Buy 2016 BCS 100/110 for $3, sell 74.29 Put for 4.30 = about 1.30 credit


  24. ztennis AAPL makes much more sense but why would you buy a long call OTM ? 


  25. From Doug Kass:

    Over the last few weeks I have observed many money managers and strategist make several crucial points that serve as the fountain of their market optimism.

    There is no or limited complacency in the capital markets.

    Valuations are elevated, but remain reasonable.

    There appear to be few economic excesses and, as such, no boom from which to bust.

    There is no alternative to stocks.

    The U.S. economy is well positioned to return to average (to above-average) growth, with low-cost energy, manufacturing cost advantages and the wealth effect of higher home and stock prices.

    The meme above is consistent and pervasive. After all, the crowd usually outsmarts the remnants (except, of course, at inflection points), so it rarely pays to be proactive. Play the trend, don't fight the tape or question the market's rise and, above all, stay fully invested (if not, you will face career risk). 

    I would argue that :

    We are in a bull market in complacency. Complacency means, "self-satisfaction, especially when accompanied by unawareness of actual dangers or deficiencies." Bulls have rarely been more self confident in view (just watch the talking heads in the business media). But there are numerous dangers to the bull market in stocks that are being ignored by many, including subpar economic growth, which is still (five years after the Great Recession) dependent on exaggerated and extreme implementation of monetary policy, a growing schism between haves and have-nots (after the failure of QE), weak top-line sales growth, vulnerability to corporate profits (and profit margins), a consumer sector that is spent up, not pent up, etc.

    Arguably, valuations ARE stretched. I would repeat for emphasis that while price/earnings ratios (against stated or nominal profits) are only slightly above the historic average, normalized profits are well above the historic average, as profit margins are now exposed to a reversal of the factors (interest rates will rise, productivity will fall and reversals of bank industry loan loss provisions will moderate) that contributed to the 70%-above six-decade average and at a near-60-year high. Looking at nominal or stated profits (projected at S&P $117-120/share) rather than normalized earnings (to account for degradation in profit margins) could prove to be a fool's errand, just like the mistake that was made back at the Generational Bottom (when trailing earnings of only $45/share understated normalized corporate profitability). At that time in 2009, investors were as reluctant to buy as they are emboldened to buy in 2014.

    There are bubblicious pockets of extreme overvaluation. Above all, there is most definitely a bubble in the belief that central bankers can guide the economy higher and into a self-sustaining trajectory of growth absent fiscal and regulatory reform. (It's been five years and we are not yet there.) Importantly, bubbles are not the mandatory starting point to corrections, as stocks often fall from excessive valuation rather than bubbles.

    While equities are less frothy than fixed income. I don't feel stocks are inexpensive or compelling buys at the margin. I don't buy the either/or argument, as cash is an asset class. At numerous times in history, not losing money (and being in cash) is a reasonable alternative to being in risk assets.

    The domestic economy is unlikely to kick in and gain escape velocity in 2014's second half. Though it has maintained its second-half optimism recently, I expect that the Federal Reserve will end up lowering its official economic forecast. The recovery and wealth effect has been lopsided, favoring the wealthy. It is not broad based. This is clear in the U.S. housing market's pause since last summer. The consumer (the average Joe suffering from stagnating wages and higher costs of the necessities of life) remains the Achilles heel of U.S. economic growth. And the growing savings class is an important constituency that will continue to be penalized by zero-interest-rate policy. Most economists have predicted escape velocity for the U.S. economy since 2011. They have been wrong footed and might continue to be.

    In summary:

    Fear has been driven from Wall Street and there is no concern for downside risk.

    Global economic growth is falling short of earlier forecasts, while a number of regions are flirting with deflation.

    While the shoulders of economic growth have relied on central banker policy, in the absence of regulatory and fiscal reform, QE's impact is now materially moderating.

    S&P profits are estimated to have risen by only about 10% in 2013-14, against a 38% rise in the S&P Index. (The difference is the animal spirits' impact on rising multiples, something everyone now accepts, but none anticipated 18 months ago).

    Though fundamentals remain soft, (with sales and profit growth muted), bulls are self confident in view as share prices propel ever higher.

    Bullish sentiment (measured by Investors Intelligence bull/bear spreads, etc.) is at a historical extreme.

    Shorts are and out-of-favor, endangered (and ridiculed) species.

    There is less to valuations than meets the eye.

    I would strongly consider reducing exposure to the U.S. stock market.

    "I swear its not too late!"

    Position: Short SPY


  26. YODI

    AAPL 100 Call @9.35  90 call ITM @13.35  that would make the trade a debit. +I am an optimist on AAPL.


  27. Zte AAPL OK but here Jan16 BCS @ 6.25 and sell 81.43 jan16 put @ 6.75 Set that aside and start playing shorter month callers against it 


  28. RUT bounced of the 1/22 top and now sit at the 12/26 top, my opinion is we will not make a new high.


  29. 10 years/StJ – 10 years ago, we thought the IPod was a technological marvel – I'd hate to speculate on what we'll have 10 years from now.  Laptop of the year in 2004 was the Dell Inspirion:

    Left-side view of Dell Inspiron 700m (view larger image)

    Specs:

    The review unit Inspiron 700m has the following specs:

    • Intel Pentium M 725 (Dothan 1.6GHz Pentium M Processor)
    • 512MB RAM
    • 12.1 WXGA Widesceen
    • Intel PRO/Wireless 2200 (802.11 b/g) Internal Wireless
    • 40GB Ultra ATA Hard Drive, 4200 RPM
    • 32 WHr 4-cell Lithium-Ion Battery
    • Windows XP Home, Service Pack 1
    • 24x Combo DVD/CD-RW Optical Drive
    • 1-year warranty

    The price for all of this came to $1,446.70 after a coupon code was applied for 10% off.  I ordered the notebook on 8/14/2004 soon after it was announced by Dell and it took almost 3 weeks for it to arrive with the receiving date being 9/7/2004.  Usually a notebook from Dell will ship quicker, but when it s a new release you can expect a longer time on delivery.

    Now we wouldn't get a phone with those specs!  

    PCLN/Jabob – Still in that?  

    SPR/Wombat – Because filling an oil reserve isn't really demand.  At some point, it gets full and then the demand is gone.  Even worse, if they decide they have too much, they can flood the market with extra oil.  

    Tenure/Scott – That will get appealed, I imagine.  

    AAPL/Zten – As long as you REALLY want to own AAPL for $98.80, it's not a bad risk but you are still paying more premium than you are selling.  You can be less greedy and simply play AAPL to be over $85 (down 10%) with the 2016 $70/90 bull call spread at $12, selling the $85.71 puts for $8.60 for net $3.40 on the $20 spread that's 100% in the money to start.  Since you own the $70 calls, you only lose money if you are assigned at net ($89.11+$70)/2 = $79.55, which is about 15% below the current price.  All AAPL has to do is hold $90 and you turn that $3.40 into $20 (up 488% on cash).  In fact, let's put 5 of those in the LTP!  

    AAPL/Zten – Oh you want to do JUST the bull call spread – that's fine then, not too much risk for a nice, potential reward but keep in mind you are betting on AAPL $770 at $110 – that's about 25% up from pre-split.  

    Imports/Shadow – Keep in mind that 8% less than last year is about 5Mb/Week less oil than last year.  That's how far demand has dipped in the US.  There's a reason that the 2017 oil contracts at $85 – they know peak demand has passed and now it's just a question of how long they can fake it before the whole trade unravels on them.  

    In fact, next July is already down to $93.81 – that's a steep decline for 12 months:

    Click for
    Chart
    Current Session Prior Day Opt's
    Open High Low Last Time Set Chg Vol Set Op Int
    Jul'14 104.30 104.79 104.25 104.57 10:40
    Jun 11


    -

    0.22 39488 104.35 208866 Call Put
    Aug'14 103.48 103.93 103.42 103.75 10:40
    Jun 11


    -

    0.26 16181 103.49 224581 Call Put
    Sep'14 102.59 102.92 102.40 102.76 10:40
    Jun 11


    -

    0.27 10195 102.49 168104 Call Put
    Oct'14 101.50 101.83 101.48 101.71 10:40
    Jun 11


    -

    0.29 5184 101.42 100609 Call Put
    Nov'14 100.42 100.78 100.42 100.70 10:40
    Jun 11


    -

    0.30 2837 100.40 59810 Call Put
    Dec'14 99.46 99.83 99.38 99.71 10:40
    Jun 11


    -

    0.28 11304 99.43 230238 Call Put
    Jan'15 98.38 98.81 98.38 98.77 10:40
    Jun 11


    -

    0.31 948 98.46 65087 Call Put
    Feb'15 97.64 97.84 97.62 97.84 10:40
    Jun 11


    -

    0.31 794 97.53 31483 Call Put
    Mar'15 96.83 96.97 96.80 96.86 10:40
    Jun 11


    -

    0.18 1811 96.68 56103 Call Put
    Apr'15 96.03 96.05 95.98 96.00 10:40
    Jun 11


    -

    0.14 444 95.86 23889 Call Put
    May'15 95.38 95.38 95.26 95.26 10:40
    Jun 11


    -

    0.11 291 95.15 21068 Call Put
    Jun'15 94.69 94.80 94.59 94.77 10:40
    Jun 11


    -

    0.25 2715 94.52 88044 Call Put
    Jul'15 94.01 94.01 93.88 93.88 10:27
    Jun 11


    -

    0.07 115 93.81 21619 Call Put
    Dec'16 87.64 87.73 87.58 87.72 10:40
    Jun 11


    -

    0.12 480 87.60 52302 Call Put
    Dec'17 85.75 85.75 85.70 85.75 10:30
    Jun 11


    -

    0.05 155 85.70 20718 Call Put
    Dec'22

    -

    -

    -
    83.80 * 17:24
    Jun 10


    -


    -

    -
    83.34 2 Call Put

     

    If it wasn't for the July 4th holiday – I'd be gung-ho short on oil now.  

     


  30. Phil//  I might be a day late and a dollar short in reminding you about the XRT.  Any short trade ideas on XRT, since it is still over $85.00 mark we look at?  Thanks.


  31. ZTe AAPl the BCS is by the way 85.71/100 jan16 


  32. No interesting earnings today but LULU reports tomorrow morning:

    Consensus Estimate – $0.32
    Whisper Number – $0.35
    Average Move – 8.1%
    Priced into Options – 9.3%

    Nicely in a bottom of their channel!


  33. STJ – FNSR, a stock I hold in my LTP, reports tomorrow after the close.  It's in a very similar space to CIEN.

    Could have a nice move up, if it echoes CIEN's forecast.  If it sells off, will add more.


  34. Kass/Rustle – He and I are on the same page with this one:

    While equities are less frothy than fixed income. I don't feel stocks are inexpensive or compelling buys at the margin. I don't buy the either/or argument, as cash is an asset class. At numerous times in history, not losing money (and being in cash) is a reasonable alternative to being in risk assets.

    Oil broke over $104.50 so now we wait and see.  Maybe another chance to grab those USO June puts we made 33% on yesterday (and a fine example of why we take quick money like that off the table).  

    XRT/Rookie – My fault for forgetting about it.  We discussed it in the morning but missed that nice pop for a better entry just under $86.  Still $85.43 not too bad and the Sept $87/82 bear put spread is $2.15 and that pays 132% on a small dip and you can be more aggressive and sell the $87 calls for $1.85 to net .30 on the spread but I'd be happy with the bear spread and maybe sell calls (and roll higher) if XRT spikes up.  Otherwise, you're in the money and we'll see what happens over earnings.  

    LULU/StJ – We just picked them.  

    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).

    The puts are still $5.60 and I still like them.  Wouldn't want to make a more aggressive play than that on earnings but, if they miss, I'll likely want to add a bull call spread (unless there is a major negative change revealed).  

    FNSR/Albo – Should do well when the telcos get back to infrastructure spending but I don't think this year.  Long-term, I like them.  


  35. FNSR / Albo – I also hold FNSR. I had covered my current position when it weakened but it has recovered since then. I have added some longs uncovered so basically only 1/2 covered now just in case…


  36. PHIL, Why is your AAPL spread better than Buying 100/110 BCS and selling 74.29 Put for $1.30 credit? I am unclear on the merits.


  37. UNP/pwright – exdiv tomorrow so just beware if anything gets called tonight, know what you'll cover with. looks like enough premium left in all my short calls that I don't anticipate being called.


  38. The new terrorism:

    http://www.forbes.com/sites/jaymcgregor/2014/06/11/feedly-and-evernote-go-down-as-attackers-demand-ransom/

    Feedly is currently suffering a DDoS (distributed denial of service) attack, it announced earlier this morning on its blog.

    You may have noticed that you can’t access the website or load any of your feeds via the app. Feedly explained in a short message two hours ago that the DDoS perpetrator is holding Feedly to ransom and asking for money to stop the attack, Feedly has refused to comply.

    CEO of Feedly, Edwin Khodabakchian, said in a short statement: “Criminals are attacking feedly with a distributed denial of service attack (DDoS). The attacker is trying to extort us money to make it stop. We refused to give in and are working with our network providers to mitigate the attack as best as we can.”

    Khodabakchian went on to explain that users’ data is safe and that you will be “able to re-access your Feedly as soon as the attack is neutralized.” He continued: “We are working in parallel with other victims of the same group and with law enforcement.”

    Evernote, which integrates with Feedly, also suffered a similar attack early this morning, although service was quickly restored.


  39. Phil

    Could you comment on this…

    I have July SDS 26/29 call spreads entered at $.94 now $.51.  How do you make the decision to roll out to a longer dated spread or would you not do that yet?  The 26 call is $1.30 so do you wait until this approaches the initial cost of the spread before rolling?  Or do I have that totally wrong….

    Thanks in advance.


  40. CaFords what mining equipment do you have?


  41. i have aapl 2016 600/700 now 85/100 bcs

    apple stock is up 10% from where i initiated this position but the spread has barely budged. 


  42. I picked up several ASIC's on the cheap and power consumption was a concern. They currently run off a solar panel I built in my garage.

     

    I am mining GRE so I can sequester the coins from the market, maybe help foster your idea.


  43. albo / STJ
    FNSR
    Interesting company – cash flow a bit manic.
    can't find any efficient option combos – how are you guys playing this ?


  44. WYNN staging a quick comeback to $200.   That's good for us because we sold the July $210 puts to cover our bearish spread.  

    AAPL/Zten – Because it's already in the money for one thing.  Having more leverage doesn't make your play "better" – just riskier.  I prefer to take more conservative spreads that have a very high likelihood of paying off a reasonable amount.  Of course, that reasonable amount returns $10,000 on $1,700 and makes money on any amount over $79.55, which is over 20% below where you need to be to simply stop losing money.  It's not that your idea is terrible – it's just a much riskier trade and not to my taste, especially after they've already run up 25% in less than two months.  

    Essentially, you won't understand why my trade is better until you compare it with yours 4 or 5 times – but that takes 10 years.  I'm just trying to save you some time and tell you, from my experience, that the more conservative strategy is more likely to leave you happy over the long haul.  

    If you had made that trade in June of 2011 at $50, AAPL was $70 in Jan 2013.  Had you made that trade in June of 2012 at $80, AAPL was $80 this Jan so, in the last 3 years, I'd have 2 wins and you'd have one.  That's a quick example.  

    DDoS/StJ – Wow, that's nasty.  How, in this day and age, can we not be able to find out who's doing this stuff?  I have to pay WebAir a monthly fee (monitoring) just to stop this kind of crap from happening.  No one has held us for ransom but people have taken pokes at our server (probably seeing who is vulnerable).  Of course, barbarians have always been at the gate and that's why we build those walls – fire or stone…

    SDS/Jeff – July is still 37 days away and, 37 days ago, SDS was $28 so not too crazy of a play.  Still, you paid 0.94 and the July $26 calls are now .63 so, assuming this is insurance, why not salvage the remaining value and pay for more time?  The Sept $26 calls are $1.25 so it will cost you .63 more to buy 3 more months of insurance.  

    If your longs are nice, conservative, Being the House kind of plays (vs what Ztennis prefers wink), then you will make money on your longs as long as the S&P stays this high or higher.  That means it's easy to calculate whether spending .20 per month is worth the cost of insurance.  Of course, once the July short calls expire, you will be able to sell Sept covers and recover some of the roll cost anyway.  

    Ideally, you wanted to make this move when the price of your long calls fell below the price you paid for your spread but not too much harm so far.  

    AAPL/Toe – Welcome to the World of long-term investing!  Now stop starting at your spread and get a hobby. cheeky


  45. Oops. there goes $104.50 again on oil – game on!  


  46. you can rent from betarigs too. It's cheaper than buying coins at coinader (seriously, the average price at coinader is 74 satoshis and renting the rigs works out to about 20-40 satoshis right now, depending on network rate). Just make sure to point your rent-a-rig at the lowest pool (currently obfuscode). That's what really helps us out right now, spreading the hash around as best we can.


  47. and if you want greencoin credit for the solar you produce of course let me know


  48. OK we have 16,850, 1,945, 3,800, and 1,166.50 with oil at $100.47, gold $1,261, silver $19.21 (told you so), copper $3.045, nat gas $4.54 and gasoline $2.996.  The Dollar is 80.845 and /NKD is 14,985.  Great time to short the laggard (or long the laggard) as we break.  

    I still like that 3,800 line on /NQ and of course 1,170 on /TF and 16,850 on /YM should be a good indicator too.  Consider 1,945 on /ES to be a bull/bear indicator and, of course, watch the Dollar!  


  49. Lumber continues its decent….and now mortgages….me worry…nah!


  50. I have been solo-mining up until today with the big jump in nethash. So not too bad for the coin wallet. I will take a look at the pool.  The panel is only 250w but when I finish the house system I will certainly let you know.  I have been working on small self contained systems for friends to provide inexpensive lighting for large rural shops and barns.  I definately enjoy renewables.


  51. FNSR
    Lots of insider selling as well //

    Phil // Im reading /NQ as the laggard ? Since it won't come down. SQQQ or /NQ ?


  52. Phil you really make me giggle sometimes.

    Welcome to the World of long-term investing!  Now stop starting at your spread and get a hobby. 

    Obviously some trees grow ten feet over night. 

    Some Americans were visiting Colone and every time the guide was asked how long they had taken to build this or the other building the American always remarked that in the US they do that in a 1/4 of the time. So when they came to the Dome of Colone the American again asked again how long did they take to build it. So the guide turned around and said dam it this was not there yesterday.


  53. Wow, the MSM can't stop freaking out about losing Cantor.  Is the GOP really so tone-def that they don't understand how much people hate these Congressmen.  Every incumbent needs to wake up and realize there's a major change in the wind this year.  The Fox crowd is crowing about Obama's poor rating (Dems like him just fine) but he's got double the approval numbers of Boehner or McConnel:

    House Speaker John Boehner is now the overall most unpopular leader in Congress, surpassing even House Democratic Leader Nancy Pelosi who has long held that title. 

    A new Rasmussen Reports national telephone survey finds that just 26% of Likely U.S. Voters have at least a somewhat favorable opinion of Boehner, while 60% view him unfavorably. This includes four percent (4%) with a Very Favorable view of the Ohio Republican and 30% with a Very Unfavorable one. (To see survey question wording, click here.)

    The national survey of 1,000 Likely Voters was conducted on May 27-28, 2014 by Rasmussen Reports. 

    5-8-13 #1

    5-8-13 #3

    5-8-13 #5

    5-8-13 #6

    5-8-13 #8

    5-8-13 #7

    5-8-13 #11

    This is reality – Conservatives should keep this in front of them for reference while you are getting news from your favorite sites.  Sometimes it's good to get an idea on how out of touch (or blatantly misleading) the people you listen to are.  

    I'm not saying the Dems are any great shakes either (obvious from the above) but simply observing that the complacency with the status quo in the GOP is leading you down a path to disaster and Cantor is just an early wake up call.  

    $5,500,000 to $200,000 spent to defeat him in a primary.  The Dems won't be coming in with $200,000…

    SQQQ/Wombat – Tempting but I'd stick with /NQ for the quick dips until AAPL is done heading to $700 – until then, it's going to be hard to keep the Nas down for any length of time.  

    LOL Yodi!  Meanwhile, check back in the US 600 years from now and we'll see what's still standing.  


  54. Thanks Phil…rolled out to Sept.


  55. Phil / who's to blame chart:

    70+4+3+2+4 = 100??


  56. The below should be bullish for FNSR thru Huawei :

    China Mobile continuing to build up TD-LTE network in China, says president 

    China Mobile has established TD-LTE networks in 300 cities around China and will set up in about 40 additional cities by the end of 2014, with the total number of TD-LTE base stations to increase from 320,000 currently to 500,000, and subscribers from 6.5 million to 50 million at the end of the year, company president and CEO Li Yue said at the 2014 GSMA Mobile Asia Expo in Shanghai.

    Wombat – I'm long FNSR stock.  Options trade very thinly as you can see.  I'm long Jan 16 $20 calls,  and short the Jan 15 $30 calls and some Jan 15 $20 puts.  Keep in mind, I'm not very good at structuring spreads. 

    I don't see any sizeable insider sales since March.  Do you ?


  57. Oil $104.25, very nice!


  58. CaFords if you spread the word about the project around a bit I'll send you some GRE


  59. Lots of fun charts at Pew:

    Despite Falling Unemployment Rate, 65% Think Jobs Are Difficult to Find

    More Confidence in Obama, Dems than GOP Leaders on Health Care Policy

    Graphic shows that among Millennials, Gen Xers, Boomers, and Silents, Millennials are more politically independent and more religiously unaffiliated.

    The Decline in Marriage Among the Young

    Millennials have the highest median number of Facebook friends.

    The Young/Old Voting Gap, 1972-2012

    The slow death of a party in one chart:

    Recent Trends in Party Identification, by Generation

    Declining Views of Congress

    Views of Republican and Democratic Congressional Leadership

    Millennials express more favorable views of the Democratic Party than do the older generations. But in the current surveys, Millennials’ views of the Republican Party are about the same as those of older generations.

    Growing Support for Marijuana Legalization

    Broad Support for Legal Status for Undocumented Immigrants; Millennials Favor Path to Citizenship

    Majorities across Generations Oppose Cuts in Social Security Benefits

    Half of Millennials and Gen Xers Doubt They’ll Receive Any Social Security Benefits

    Young Student Debtors Lag Behind in Wealth Accumulation

    Student Debtors Carry a Heavier Overall Debt Load

    Median Debt-to-Household-Income Ratio Much Higher for Student Debtors


  60. Phil

    Any trade on earning for   Capstone Turbine CPST 

      Capstone Turbine Corporation is expected* to report earnings on 06/12/2014 

    Thanks


  61. Alb FNSR why did you buy the stock no div. ?


  62. albo // FNSR
    no, not any big draws but over 6 months about 1mm sold out of 1.3MM remaining. Institutional shares last Q dropped 11%. Thats a red flag to me.
    I love the space but they are not cheap ( with no div )


  63. You're welcome Jeff.  

    Math/BDC – The rest is in solar coins.  surprise

    Oil/Bruce – Good spot to take a profit.  Can always enter if they break below but should be bouncy into NYMEX close.  

    CPST/QC – I liked them back when they crashed under $1 back in '09 but that was from $4 and they never saw that again ($2-$2.40 tops).  Sales have been moving up 20% a year but they always manage to lose money anyway.  They did a 10% dilution in 2012 to raise $35M and they burned $11M last year and they have $38M left but no debt to speak of.  If they had options and I could knock them down to $1, I'd probably like them but they don't, so I don't. 


  64. Yodi – I've owned the stock in my LT portfolio for more than 10 years.  Have traded around the position many times.


  65. Phil/Debt charts

    That makes all of us who went to college and beyond feel really good….those charts are almost half a decade behind and one can only imagine what its like now with the way those curves are heading.  In real life it sucks…the minute you graduate you have a mortgage (student loan) to start paying..that'll definitely put a damper on things (saving/spending/etc.)


  66. scottmi re: UNP, you are right, thanks for pointing that out.  My Jul 97.5 shorts had only $.11 in premium, I think div is more than that so I bought them back for the time being.  Now question is, do I cover my Aug 95 longs with Aug 100s, or do I shoot for the moon and only put on the 105s?  Also this is my first go round with ex div, am I better to cover now or after the dividend?

    Thanks


  67. Cantor is stepping down as Majority Leader


  68. FNSR / Wombat – I am long the Jan 16 15 calls now 1/2 covered with Jun 25 calls. 

    If I recall, this was Rheinharden's favorite name in the space and he was very knowledgeable. We'll see tomorrow.


  69. Barbarians / Phil – I think that the biggest problem is that the guys doing that kind of stuff hide in countries that actually look favorably to this kind of attack on American or Western web site… Not that we are clean in the US either (NSA, cough, cough) but we don't deny service, we only spy on people! 


  70. Albo  FNSR I would sell the stock set up a Jan16 BCS 18/25 sell Jan16 20 p with a net cost of 1$ and start selling monthlies Jul 26 c for 1.15 and making good money on these.


  71. Albo FNSR

    Agree with yodi sell the stock, at least options can offer a hedge. That said I agree with Phil wait. This was one of my fields and it is on hold.


  72. Phil, AAPL – your spread, I entered an order but I don't think it will fill near your price. Meanwhile, I entered an order for 2016 90/100 BCS and sell 74.29 Put for zero cost and it filled (5 + 719 margin)


  73. Albo

    I checked more and this is overpriced P/E over 28 insiders bought a year ago and sold since. Price was 15-17.50 way below 25.


  74. Thanks, Yodi.

    Thanks Wombat and Shadowfax.

    I'm just following the lead of Paul McWilliams and others whose research I respect.  But remember that I'm "Frequently wrong, but rarely in doubt". 8-)


  75. ZTe not bad I would have gone for 85 and a higher put as shown above but as long as you are happy with it I am sure they will be on 100 soon. As discussed before if you enter a long call above the stock price you will just pay for a lot of premium specially if that stock does not come up to expectation at a later stage.


  76. Netflix chips away at pay-TV model • 1:47 PM

    Netflix (NFLX +0.2%) holds 48% of the market share of the U.S. households that don't subscribe to a pay-TV service, according to a new report from Leichtman Research Group

    The percentage of households that subscribe to both Netflix and a cable/satellite service dropped to 80% from 88% a few year ago.

    Subscriber tallies could be higher for Netflix if not for the 15% of users that admitted to sharing their authentication information.


  77. Phil – Just an addendum to all your charts about where the country is on various issues. Here is a big reason why:

    http://www.newrepublic.com/article/118066/brookings-survey-fox-news-home-most-conservative-republicans

    This makes the Fox News echo chamber a hazard for the party. It creates extreme candidates under the guise that they are electable, builds up a false narrative that they are in fact electable and then acts surprised when that narrative doesn’t play itself out. In 2012, this storyline was on full display. In the aftermath of that defeat, Fox and the Republican Party had the chance to fix it by reorganizing the station’s content with more moderate hosts and more accurate coverage. They have chosen not to do so—and it’s only going to continue to hurt them in 2016.


  78. Student loans/Jeff – That's why I plan to retire in Europe.  The path the US is heading down is destroying the future.  Kids coming out of school now are at such a competitive advantage to kids in the rest of the World that, 20 years from now, we're going to have a complete disaster on our hands as my generation (the end of the boomers) is all retired and our kids won't even have the possibility of supporting us at 30-40 when they have their student loan, debts, a new mortgage and their own kids' colleges to start saving for.  Their retirement isn't even going to be a possibility.  And BUYBUYBUY Solyent Corp

    The 20th century's industrialization has left the world permanently overcrowded, polluted and stagnant by the turn of the 21st century. In 2022, with 40 million people in New York City alone, housing is dilapidated and overcrowded; homeless people fill the streets; 20 million are unemployed, the few "lucky" ones with jobs are barely scraping by, and food and working technology is scarce. Most of the population survives on rations produced by the Soylent Corporation, whose newest product is Soylent Green, a green wafer advertised to contain "high-energy plankton", more nutritious and palatable than its predecessors "Red" and "Yellow", but in short supply.

    Cantor/Rustle – Wow, that is one hard and fast fall from grace!

    ormer House Majority Leader Tom Delay was found guilty of money laundering and conspiracy to commit money laundering in 2010 but (of course) won an appeal after two Republican judges claimed there wasn’t enough evidence, even though a jury in fucking TEXAS, of all places, disagreed. Jack Abramoff was the poster child for lobbyist influence in government with one notable exception: He was actually convicted of his crimes. He was the centerpiece of an historic corruption investigation, and his shady dealings with Indian casinos lead to him serving almost four years of a nine year prison sentence. In 2003, DeLay and Cantor signed a letter to protect the interests of one of Abramoff’s clients—you guessed it: an Indian Casino. Not even a year later, Abramoff hosted a hundreds-of-dollars-per-plate fundraiser for Cantor.

    Cantor's Twitter account is @GOPLeader – I wonder if they'll take that away from him too?  

    Denying service/StJ – I don't think that would be Iran's opinion.  Remember when we messed up their nuclear plant with a cyber attack?  I'm telling you, time to re-read Gibson – he was spot on with this stuff.  

    "Burning Chrome" tells the story of two free-lance hackers - Automatic Jack, the narrator and a hardware specialist; and Bobby Quine, a software expert. Bobby becomes infatuated with a girl named Rikki and wants to become wealthy in order to impress her. Jack has acquired a powerful Russian "icebreaker" program that can penetrate corporate security systems. Bobby suggests that they use it to break into the system of a notorious and vicious criminal known as Chrome, who handles money transfers for organized crime, and Jack reluctantly agrees to help.

    AAPL/Zten – We need a little dip in AAPL to get a good fill.Still it's only 5 and we're happy to DD so best to just make offers on each leg that you like (even 1/2 entries) and see how it goes.  

    16,825 on /YM!  /NQ gave up 5, RUT back to 1,165 and we'd still like to see another 10 to 1,155 for a full retrace there. 

    Oil bouncy at $104.25 so far, but not much coming up on 2pm

    NFLX/Jabob – So 15% of the users they cite for their statistics don't pay?   I can't wait for their earnings so we can see some actual numbers.  Meanwhile, VZ is going to sue them if they don't cut the crap:

    Maybe they have a point but VZ swears they are not doing it to NFLX on purpose and NFLX is steering customers away from VZ, causing a lot of damage so, should VZ prove this is not their fault – NFLX is totally on the hook for damages.

    I have Optimium, very happy with it and both my girls watch NFLX more often than the TV.  In fact, I'd say 90% NFLX.

    Good article, Rev.  I love the title:

    Does Fox News Cause Ignorance, or Do Ignorant Viewers Prefer Fox News?

    It's scary the way the media can shape peoples opinions on important topics:

    Republican Views on Immigrants


  79. Through happenstance, my paying gigs for the day were cancelled at the last minute (and the Potomac is brown and yucky so I didn't feel like kayaking today).

    FNSR remains one of my three largest holdings (AAPL and ZHNE are still larger).

    Here's my favorite silly thing about FNSR that mostly has seemingly gone unnoticed by the mass market:

    Going back to their Q3 2012 report <http://files.shareholder.com/downloads/FNSR/2826287368x0x547012/aeba564d-7a21-41ea-8d4d-1cbc334adb97/Q312_Earnings_Call_Slides_Feb_2012_Final.pdf&gt; their revenue split datacom to telecom was roughly 50/50 (more accurately 55% / 45%; $133 M / $109 M).

    In that same report, you can see back to Q1 2011 when the split was also roughly 50/50 ($104 M / $103 M).

    In their most recent report <http://files.shareholder.com/downloads/FNSR/2826287368x0x732168/37898c77-1059-451d-bd8d-38293e7471b4/Q3FY14_Earnings_Call_Slides_Final.pdf&gt;, their revenue split is roughly 70/30 (210 M / 83 M).

    Telecom spending has been lagging for *years*, if and when it ever "snaps back", FNSR will skyrocket.  In the meantime, they've expanded revenue by 50% *and* taken a commanding presence in datacom.  And, in the process, FNSR has doubled their datacom business in a bit more than 3 years.  [Granted, there were a few acquisitions along the way...]

    The "Internet of Things" and the "cloud" are both very datacom intensive.  Eventually, they'll also both be telecom intensive.

    If / when telecom spending improves, FNSR has tremendous headroom; in the meantime, they're (mostly) growing 70% of their business by 10% quarter over quarter.  In a not overly friendly worldwide economy.

    I can't help too much for tomorrow's quarterly report.  Both DCOM and TCOM spending is notorious for slipping into the next quarter when the client's are playing games with their books.  But I'm moderately confident that if CIEN had a good quarter, FNSR will probably have at least as good of one. ;-)

    That having been said, CIEN isn't a great proxy for FNSR.  CIEN is more heavily focused on telecom, in fact, traditionally nearly 20% of their business is AT&T!  Whereas FNSR's biggest customer is CSCO (17% of their 2013 revenue).

    Anyway, I continue to hold FNSR as one of my core long-term holdings.

    reinharden


  80. Look at that chart and think about the influence one Billionaire (Murdoch) can have on the entire population.  And keep in mind he has already done this in Australia and Europe and is working his magic in Asia as well!  

    Oh, that reminds me of bit on the Daily Show the other day, showing the hatchet job they are doing on that poor guy who Obama traded prisoners for:

     


  81. FNSR — <http://www.fool.com/investing/general/2014/06/09/is-this-optical-components-supplier-set-for-a-post.aspx&gt; does a better job of summarizing the current trends than I did.

    reinharden


  82. FNSR/Rein – Thanks for the update.  I hope they miss so we can add them to our own long-term portfolio!  


  83. rut under 1165


  84. $2,400 day on /TF – I'm done. 

    Phil / TZA
    Nice call on the double down yesterday. Still wait for .11 to take half off ?


  85. Burning Chrome/ Phil and All:   A PDF for your convenience:

    http://cla.calpoly.edu/~lcall/354/gibson.html


  86. Reinharden -Thanks for your comments on FNSR.  Nice to hear from you.  Interesting, I still have a position on ZHNE from quite a few years ago.  Not as heavy as you thou.  What's the current investment thesis for ZHNE ?

    Are you familiar with EZCH ?


  87. NFLX / Phil – I think that the number of users they cites are paying customers. I don't know how they would track non-paying customers. But the truth is that out of these 30 millions customers, I am sure that 3 or 4 millions do share their ID with family members and friends! At one point they had a policy that you could not connect with the same ID concurrently but that was relaxed. Therefore, much easier to share your credentials!

    Interestingly enough, when NFLX did the same deal with Comcast, the speed increased by 70% in 3 months. It's been 2 months with VZ and no improvement. I find it hard to believe that VZ doesn't have the infrastructure to support the traffic at this point. For example, I can download games of 5-10 GB from Steam at 2 to 3x the speed they show for Netflix! I don't think that they are in a big hurry to help NFLX because it competes against their VOD sales and also their new Redbox offering. A bit of posturing on both sides I am sure.

    There is a good push back on these Telco guys. These guys keep on thinking that when I pay $50 for my broadband connection, it's just to connect to their lines, not to access content. Who needs that…

    https://www.techdirt.com/articles/20060131/0923209.shtml

    AT&T's CEO Ed Whitacre was the one who kicked off all the US telcos publicly talking about ending network neutrality when he complained that it was "nuts" that Google, Yahoo and Vonage got to use his network for "free." Of course, he was ignoring the fees they already paid in bandwidth, along with the fees consumers pay for bandwidth (which they're only paying because they get access to various web sites and services). So, now, he's trying to better explain how, despite the fact everyone has already paid, these service providers are really getting a free ride.

    He's actually suggesting that when we buy bandwidth, we're just buying the bandwidth from the end-point to the backbone… and everything else is just free. He's conveniently forgetting (again) that without the content and services provided at all the other endpoints, the value of connecting from the end to the middle is pretty much gone. No one is paying to connect from the end to the middle. They're paying to connect all the ends to each other. That's the value of network effects, and it's what makes it worthwhile to buy internet access.


  88. Seems today is cyber step up day this week, I am not referring to STJ's post this AM. I believe these hackers work together. Clean you computers after.


  89. reinharden
    Also a ZHNE holder. May I ask what your strategy is ? Straight calls or are they covered with stock ?
    Curious with small caps like this with very thin options.


  90. OPTT beginning slow road to recovery.  I'm still waiting to read a bit more at $1.76.   In the Income Portfolio, we have a 4,000-share buy/write at net 0.79/1.65 so they only fell to our break-even point on 2x and even that would only be $13,160 out of a $50,000 allocation block.  So, it's not like doubling down will be a big deal, nor are we going to miss much off our .80 1x entry should they go higher.  That makes waiting and seeing the best course of action.  
     
    • Dow -0.67%.
    • 10-yr +0.11%.
    • Euro -0.1% vs. dollar.
    • Crude -0.07% to $104.28.
    • Gold +0.1% to $1,261.30.

    About F'ing Time!  EU to probe corporate tax rates in Ireland, Luxembourg, Netherlands

    • The European Commission is preparing an investigation into the corporate tax codes in Ireland, Luxembourg and the Netherlands. The probe is examining the low tax rates global companies pay in the three countries, and will make known if their tax deals are allowed under EU law, or amount to illegal state aid.
    • If the investigation reveals that multinational corporations received the state aid, the commission could obligate them to pay it back, even though such requirements are uncommon.
    • The probe comes after yesterdays news that Apple used Irish tax laws to allow it to pay just a 3.7% tax rate on non-U.S. income during its last fiscal year. Other companies that will be investigated include Amazon (AMZN), Google (GOOGGOOGL) and Starbucks (SBUX).
    • The Senate blocked a bill to lower interest rates on student loans through higher taxes on the wealthy via the Buffett rule.
    • The measure received 56 "yes" votes and 38 on the "no" side.
    • Related stocks: CECOLOPEDVAPEILRNSTRABPIAPOLCPLAEDU.
    • Bank of America (BAC) and the U.S. Department of Justice have reached an impasse in their settlement deal regarding the sour mortgage investments the bank sold before the financial crisis.
    • On Monday, Bank of America offered more than $12B to settle claims and the federal investigation, although it appears that the DOJ is seeking a higher amount. BofA then sought to continue negotiations yesterday, although the DOJ moved towards completing its civil complaint against the bank.
    • Affirming the ratings of Canada's largest banks, Moody's cuts their outlook from stable to negative, thanks to the government's plans to implement a "bail-in" regime (i.e., creditors to take a haircut) for systemically important lenders.
    • "The government's intentions are clear, and if a legislative framework permitting bail-in can be implemented, it will likely be negative for creditors," says David Beattie from Moody's.
    • Among those affected: RYTDBMOBNSCMNTIOF.
    • Citigroup (C -0.9%) and a number of other large Western banks active in commodity financing deals in China are frantically trying to assess if they've fallen victim to suspected commodities fraud emanating from the giant Qingdao port, reports the NYT. At issue are whether loans the banks made actually have the collateral they're supposed to have at the port.
    • A typical deal in this murky world of finance: Copper (or another metal) is imported using a letter of credit, then warehoused in duty-free zones and pledged as collateral for cheap bank loans, the money from which is then used to speculate. After a few months, the importer either sells the copper or the speculation. Goldman estimates up to $160B has flowed into China since 2010 through these types of loans.
    • The investigation centers around one importer who may have pledged the same stocks of metals as collateral for multiple loans, amassing a debt of more than $160M.
    • Citigroup is focusing on loans to Mercuria Group, and late last month Mercuria informed Citi improprieties may have taken place at metals warehouses. Citi is already dealing with the fallout from the Mexican fraud, and this could raise further issues about controls at the bank.
    • JPMorgan (JPM +0.8%) holds an "appropriate – not excessive – amount of liquidity," says CFO Marianne Lake, presenting at the Morgan Stanley Financials Conference. The bank is managing duration for a more normalized rate environment. The opportunity cost of being short the market has rarely been cheaper (bank's emphasis, not ours).
    • Webcast and presentation slides
    • As for the previously tipped roughly 20% decline in trading revenue in Q2, Lake says this base case still holds.
    • Net interest margin and net interest income is expected to be relatively stable over the next two years, with the significant upside coming when the Fed takes up front-end rates. For perspective, NIM averaged 2.95% from 2005-10, fell to 2.23% last year, and the bank is modeling 2.65-2.75% over the next rate cycle.
    • Marriott Hotels (MAR -1.5%) announces it opened its 4,000th hotel with a new opening in Washington, DC.
    • The company operates the third-most hotels in the world behind and InterContinental Hotels Group and Hilton Worldwide.
    • Russia and Ukraine remain deadlocked in their natural gas dispute, as a new round of talks ends in failure with neither side budging from their own demands on future gas prices and debts.
    • Ukraine maintains that a Russian offer to lower the price of gas by $100 per 1,000 cubic meters to $385 was unacceptable, while the Russian side insists it has put its best and fairest offer on the table.
    • EU energy chief Guenther Oettinger, who has acted as mediator in the talks, hopes to set up more meetings before next Monday, the new deadline imposed by Gazprom (OGZPY) for Ukraine to pay off part of its arrears for past gas consumption.
    • Vietnam says the Chinese oil rig at the center of a bitter territorial dispute appears to be on the move again, while China denies Vietnamese accusations that it had sent warships to the scene.
    • Vietnam's Directorate of Fisheries says the Cnooc (CEO) rig had shown signs of moving towards the east and southeast; Vietnam has said the rig is in its 200-nautical mile exclusive economic zone and on its continental shelf, while China says it is operating within its waters.
    • TransCanada (TRP) CEO Russ Girling says he remains "very optimistic" that the Keystone XL pipeline will get built, but he isn't sure when it will happen.
    • Girling adds that the cost of the project will be "materially more" than the current $5.4B estimate, but he can't say how much more because "there's no sense announcing new costs until we actually know when we're going to start construction."
    • The CEO also expects TRP will file an application for its C$12B Energy East pipeline with the National Energy Board in mid-August; Energy East is expected to carry 1.1M bbl/day of crude from Alberta's oil sands to refineries in Quebec and New Brunswick.
    • Anadarko Petroleum (APC +3.1%) moves to 52-week highs before pulling back a bit amid speculation it may be the subject of takeover interest from Exxon Mobil (XOM +0.6%).
    • APC has “an asset base that would be coveted by any large player looking to make that kind of a splash," says a Raymond James analyst. "The question would be, is now the time for that?"
    • APC says it doesn't comment on rumors.
    • BHP Billiton (BHP -0.3%) may cut production at its Goonyella Riverside coal mine in eastern Australia after announcing the termination of a mining service contract to cut costs amid a sharp drop in coal prices.
    • Two years remained on the contract for pre-strip work and were worth ~A$360M; the termination, effective Sept. 9, will result in 427 contractors leaving the site.
    • Goonyella Riverside produced 12.4M metric tons of met coal in the year to June 2013, and BHP says output in the current FY will be unaffected by the contract termination.
    • Ford (F) and Honda (HMC) will gain 50 bps of U.S. market share over the next three years while other major automaker remain level, according to estimates from Bank of America Merrill lynch Global Research.
    • The investment firm sees a U.S. SAAR selling rate of 18M vehicles per year by 2018.
    • 2017 market share forecast: General Motors (GM) 17.9%, Ford (F) 16.2%, Toyota (TM) 14.4%, Fiat Chrysler (FIATY) 11.5%, Hondda (HMC) 10.3%, European automakers 8.3% (BAMXY,DDAIFVLKAY), Hyundai-Kia (HYMLF) 8.1%

     

    • Hyundai (HYMLFannounces it sold its first hydrogen fuel-cell car in the U.S.
    • The automaker's Tucson fuel cell vehicles is similar to the CUV model.
    • The Tucson's driving range is 265 miles, although hydrogen refueling stations are mainly limited to California.
    • Boeing (BA -2.3%) is easily the Dow's biggest decliner today following two pieces of bad news – one specific to Boeing, the other to the airline industry.
    • RBC downgraded BA shares to Sector Perform from Outperform, believing most of the good news already is out and reflected in the stock; Boeing "has become an execution/cash deployment vs. an upside to growth story, and this is likely to cap any multiple expansion from here," RBC writes.
    • Also, today's surprise cancellation of an Airbus (EADSF -2.9%) order raises questions over new aircraft demand, whether for the Airbus A350 or a more general wobble of confidence in a previously solid market that could also hit Boeing.
    • Airbus (EADSF) has received a major blow after Dubai's Emirates airline cancelled its entire purchase of 70 Airbus A350 jets. The cancellation also stung engine maker Rolls-Royce (RYCEY), the sole engine maker for the A350.
    • The deal, which closed in 2007, was worth around $16B ($22B based on the current price catalog). Rolls-Royce commented that the cancellation will result in a £2.6B ($4.4B) loss from its order book.
    • revised outlook from Lufthansa (DLAKY) is pressuring other airline stocks today.
    • Pricing competition from Middle East carriers on long hauls to and from Europe is a rising concern for Lufthansa and creating a ripple effect for other routes.
    • Decliners: Delta Air Lines (DAL) -3.6%, Alaska Air Group (ALK) -2.0%, United Continental (UAL)-3.7%, Hawaiian Holdings (HA) -2.5%, American Airlines (AAL) -2.9%.
    • ICSC forecasts comparable-store sales for retail chains will increase by 3.5% Y/Y in June.
    • The pace is slightly less than the snap-back from a slow Q1 that some analysts forecast.
    • The read on June from the research firm is that wholesale clubs (WMTCOSTPSMT) and furniture stores (PIRBBBYLZBETHRHHVTKIRKWSM) showed "outstanding strength" for the first full week of the month.
    • Related ETFs: IYKUGESZK
    • survey from comScore indicates 58% of consumers have added items to their shopping cart in order to qualify for free shipping.
    • More than 80% of respondents said they would be willing to wait an additional two days for a delivery in order to qualify for free shipping.
    • The results fall in line with the general margin-crunching trends at UPS (UPS -0.2%) and FedEx (FDX -0.6%) of seeing a higher mix of lower-cost delivery orders.
    • new coffee service app from an Israeli start-up did a soft launch in New York City with positive early results.
    • The $45-per-month Cup service gives subscribers unlimited purchases of basic coffee and tea drinks at the 40 participating independent shops. A premium service at $85 per month opens the door for premium espresso and latte drinks.
    • Both Starbucks (SBUX -0.4%) and Dunkin' Brands (DNKN -0.6%) have 10X the number of locations that Cup has under its fold so far.
    • The firm's goal is to expand out of NYC in the future.
    • A switch by Vitaminwater (KO) to replace sugar with the artificial sweetener stevia has created an uproar on social media channels.
    • A search on Twitter or Facebook of the term stevia leads to a broad and spirited rant against the ingredient.
    • Execs at PepsiCo (PEP) are likely watching the reaction closely.
    • Boyd Gaming (BYD +4.9%) trades higher after the company reaches a settlement with the city of Atlantic City over tax credits.
    • The company will receive a tax refund of $88.25M for tax years 2011-2013 and a credit of $17.85M for this year.
    • SEC Form 8-K
    • Danone (DANOYcloses three dairy plants in Europe due to soft demand.
    • The company says it has seen some local cases of surplus capacity which led to the decision to shutter plants in Italy, Germany, and Hungary.
    • Information on thousands of credit and debit cards used at P.F. Chang's went on sale on underground websites, according to the Krebs on Security website.
    • The privately-held restaurant holding company hasn't confirmed a breach, but has promised an update shortly.
    • The big picture: The push to adopt chip-and-pin technology in the payments industry has accelerated since Target's large data breach last December.
    • Net income for the quarter ending April 30 from continuing operations of $929.1M or $3.36 per share vs. $688.9M or $2.51 a year ago.
    • Total assisted returns for fiscal 2014 of 13.6M fell 6.2% Y/Y as the company discontinued its free 1040EZ promotion in nearly all markets.
    • HRB +4.3% premarket
    • Previously: H&R Block beats by $0.13, beats on revenue
    • Fitch Ratings gives a dire outlook for RadioShack (RSH -0.7%) after the company's FQ1 results underwhelmed.
    • The ratings agency expects a restructuring at RadioShack before the end of the year with excess liquidity very tight.
    • If Fitch bumps its rating on the retailer down a notch to C it would signify a belief that a default is imminent.
    • A new report forecasts Walgreen (WAG) could save $4B in federal taxes over the next five years by relocating its headquarters to Switzerland.
    • Though some large shareholders are pushing for the company to make the tax inversion move, the action could also cause a major public relations backlash with Walgreen bringing in a quarter of its revenue from Medicare and Medicaid.
    • A decision on the issue is expected by the end of the summer.
    • Pre-surgical planning, metal printing (aided by Phenix Systems), and Google's Project Ara(modular smartphones) all serve as growth opportunities for 3D Systems (DDD +0.7%), writes UBS' Steve Milunovich, upping his PT by $4 to $51.
    • Milunovich, who launched 3D at Neutral and Stratasys (SSYS +1.8%) at Buy on April 1, notes 3D (just raised $300M) suggested "its M&A strategy focuses on what it calls 'the 3Ms of 3D printing:' medical, materials, and metals."
    • On the other hand, he thinks 3D downplayed its efforts in desktop printing, where Stratasys' MakerBot unit has a leading position, and believes low consumer traction could be a risk.
    • Pac Crest (Outperform) likes 3D's outlook for 30%+ revenue growth through 2015, but cautions H-P's pending market entry is a potential concern. 3D's 2015 revenue growth consensus is currently at 29.6% (could rise following yesterday's guidance hike).
    • Positive analyst dispatches are outweighing a downgrade to Hold from Gabelli's Hendi Susanto, who values shares at $50 (25x 2014E EV/EBITDA).
    • Investor day slides (.pdf)
    • BofA/Merrill has upgraded Micron (MU) and SanDisk (SNDK) to Buy from Underperform. Its Micron PT has been upped by $18 to $40, and its SanDisk PT by $45 to $125.
    • Analyst Simon Dong-je Woo, who struck a much more cautious stance on Micron in a March note, now thinks "further upside" is likely (in spite of a 33% YTD gain) thanks to solid industry pricing and Micron's cost-competitiveness.
    • His FY15/16 EPS estimates have been raised by ~50% on average, and he expects a dividend payment by the end of FY15 (ends Aug. '15).
    • Also: Cresit Suisse has upped its Micron PT by $20 to $50 (a Street high), arguing the memory giant can eventually sustain EPS of $5.
    • Woo downgraded Micron to Underperform on Dec. 23, when shares were at $22.17.
    • Cisco (CSCO +0.1%) is hatching a major reorg that could include a retirement announcement from John Chambers as soon as September, "several sources close to the company" tell veteran industry journalist Scott Raynovich.
    • Chambers, 65, stated in 2012 he might retire in 2-4 years. Cisco's recent challenges, together with long-term concerns about the threats posed by white-label hardware and SDN, have heightened speculation Chambers might call it quits.
    • Sales chief Rob Lloyd and COO Gary B. Moore are seen as the frontrunners to succeed Chambers, after both were given the title of president in 2012.
    • The fact Cisco shares have largely been range-bound since 2004 (in spite of huge buybacks) has fueled criticism of Chambers' performance.
    • Bloomberg's report follows an April WSJ report calling Globalfoundries "the lead candidate" to buy IBM's (IBM -0.6%) chip manufacturing/foundry ops. Notably, Globalfoundries is said to be more interested in Big Blue's chip engineers and IP than its relatively old wafer fabs.
    • A source states the unit has been losing as much as $1.5B/year. Its Q1 sales fell 16% Y/Y amid continued share losses to Globalfoundries, Samsung, and foundry giant TSMC (TSM -0.5%).
    • Nonetheless, the business claims high-profile foundry clients such as Cisco and Juniper, and has a history of leading the way in mass-producing new chip technologies/materials, such as silicon-on-insulator (SOI) and silicon germanium (SiGe).
    • That could help Globalfoundries as it tries to gain ground against TSMC, which has a long list of blue-chip mobile processor, GPU, and FPGA clients.
    • The WSJ's report stated the unit has received $1B+ bids – less than the $2B+ IBM was initially seeking.
    • Shares of CBS (CBS) move higher in premarket action after the company decides to divest CBS Outdoor Americas (CBSO) earlier than anticipated.
    • Wells Fargo is out with early commentary on the development. The firm says the early conversion of CBS Outdoor to a REIT is a positive and likes the implications for CBS shareholders.
    • Media industry insiders like the visibility the split-off will help present for CBS shareholders.
    • CBS +1.4% premarket
    • Execs at Warner Bros. (TWX) face some criticism for the studio's swing-for-the-fences strategy which has stumbled as of late.
    • Hollywood insiders say Warner Bros. penchant for only aiming for monster box office hits has left it vulnerable in the post-Harry Potter era. Profitable hits in the $100M-$200M domestic box range are lacking.
    • What to watch: Though the Lego franchise hold some promise for Warner Bros., it might have to wait until the Batman vs. Superman movie in 2016 before topping the charts again.

     

    • Acquisition-hungry Alibaba (ABABAis buying the 1/3 of top Chinese mobile browser vendor UCWeb it doesn't yet own for a mixture of cash and stock. The price hasn't been disclosed, but Alibaba claims the deal is the biggest Chinese Web merger in history, exceeding Baidu's (BIDU+0.4%) $1.9B purchase of app store provider 91 Wireless.
    • UCWeb has a 50%+ share of the Chinese mobile browser market, and also has 35% of the Indian market. The company claims 500M total browser users, as well as 50M users for its Android app store, which competes against Baidu and Qihoo's (QIHU +3.8%) popular stores.
    • More importantly for Baidu (and also relevant for Qihoo), UCWeb claims a 20%+ share of the Chinese mobile search market on the back of 100M active users. A mobile search JV was launched with Alibaba in April.
    • Meanwhile, CNBC reports Alibaba will likely file a new F-1 early next week that includes its Q1 results. Odds are Yahoo (YHOO +0.6%). which has been reporting Alibaba's results a quarter in arrears, will move on the numbers.
    • CNBC adds Alibaba is still expected to go public in the first week of August. Bloomberg previously reported Alibaba is eying an Aug. 8 IPO.
    • Arguing Amazon's (AMZN +1.5%) "consistently high returns on capital outweigh margins" at this point, Goldman's Heath Terry has added the e-commerce giant to his firm's Conviction Buy list.
    • Terry admits some concerns, such as AWS price pressure and slowing media growth (just +8% Y/Y in Q1 vs. 27% EGM growth), are "likely to persist," but nonetheless is a fan of Amazon's strong ROIC.
    • The upgrade came with Amazon down 17% YTD going into trading.

  91. Albo (ZHNE) — I’ll have to write more about that later.

    They’re still one of my top 3 holdings (but my average cost of entry is down below 50 cents so my reality may differ from other folk’s).

    I’m not familiar with EZCH; however, I’m somewhat old school and secretly believe that if you’re going to make chips, you should be able to make your own chips and run your own fabs. ;-)

    That having been said, http://seekingalpha.com/article/2237183-should-ezchip-be-considered-a-solid-long-term-investment (especially the comment of sethbru) makes me think that perhaps it’d be worth reading about.

    Making terabit scale network processors (NP) isn’t easy. That EZCH is on the brink of launching a fifth generation NP means that they most be doing something right.

    It’s both interesting and frightening that roughly 2/3′s of their revenue comes from CSCO, JNPR, and ZTE. One, that means that they’ll be hard-pressed to take market share from anyone else there. Two, they’ve tremendous risk if BRCM’s network processor gains traction in one of those vendors. Three, it arguably caps their growth to that of those three companies (granted, GOOG could do stuff with them in their own datacenters).

    Similarly it’s both interesting and frightening that they’re about to attempt to double their total addressable market — I like companies that are focused. Doubling one’s focus is a risky endeavor!

    My short version (based on quickly reading a 1/2 dozen articles) — worth reading more about but I don’t know what distinguishes them from the other players in the space (or adjacent spaces).

    mikel


  92. UNP/pwright – now that the stock ticked up again, not enough premium left in my july 97.5s so will roll to nov 100s.  Not going for 105s yet with current rolls. if/when go there, will be with new diagonals.


  93. Thanks.


  94. RUT bounced off 1,160 very nicely, now testing 1,165 from below but a bad trend if they don't get back over (1,165 was the weak retrace line we were watching yesterday). 

    Very nice Wombat – good discipline!   My bad for missing the pop on TZA, would have liked to lighten up but I guess we can give it until tomorrow to see how the global markets take in today's action.  

    Chrome/Jbur – I feel bad for authors and song-writers these days.   How do they ever get paid?

    VZ/StJ – Well, NFLX is using 1/3 of the bandwidth but paying nothing for the build-out necessary to run it.  I suppose if not NFLX, then someone else would be sending content to the same people so why single them out just because they have the most popular delivery platform?  

    Fabless/Rein – I don't mind the fabless guys but you have to value them as to their patents and contracts, rather than how we usually look at a manufacturer and that makes things tricky. Good points on vulnerabilities.  

    Submitted on 2014/04/30 at 2:07 pm

    EZCH/Albo – It's a small, fabless semi, which means they are only as good as their last contract.  I think the issue with them is they were priced for really big growth with NP-5 that didn't pan out.  If they hit current projections, the p/e is 20 at $24 – I don't really see what would take them to $36 in a conservative market, which is what is likely to lie ahead.  I don't know enough about what others are working on in the network processor market to say whether EZCH has a defendable advantage – they do seem to be ahead of the game for non-embedded chips but serious OEM's will stick to their own solutions.  

    They're not likely to have a terrible Q so you can sell EZCH Jan $20 puts for $1.75 for a cheap entry and, if you want to be aggressive, you can add the $25/30 bull call spread for about the same and you make $5 if they pop or you buy them for 20% off for the long haul.

    That one is another good example of how we can see VALUE long before the price settles down.  As StJ noted yesterday, you can never expect to time perfect bottoms but our entry system allows us to take a poke at a position once it hits a PRICE we feel is below the true VALUE and, after that, all we have to do is wait for the rest of the market to wise up (sometimes it takes a while…).  


  95. VZ / Phil – That's true, these telco guys build all these big pipes and charge a lot to buy lots of bandwidth and then bitch when you actually use it… Why would I need a 50 Mbps pipe to read emails? Downgrade my plan to a 512 kbps line for $2.50/month then. I bet you VZ would complain if we all did this. I said it before, look at the FiOS commercials – they talk about streaming movies, downloading stuff etc… the fastest internet they say. And then when you use it, they complain. I guess it's only good for commercials.


  96. ZHNE – Strategy? I just try and find companies that I like that seem vastly underpriced relative to their merits and (mostly) hope that their stock will eventually be rewarded. Phil’s ability to find long-term options strategies combined with my ability to find companies has served us both well in the past. ;-)

    ZHNE doesn’t many options to speak of (and I’m inordinately fond of LEAP-based transactions when it comes to options).

    And the last several years I’ve been working on a variety of projects that have limited my ability to play with the stock market (sometimes for months at a time). So I don’t have very many plays at the moment that require even weekly monitoring of my holdings. And as my partner in crime has neared her retirement, I’ve been increasingly more focused on income and diversification for her than capital gains for me.

    Anyway, as a result my situation is likely different from other folks.

    I like ZHNE as a 3 to 5 year company. I’m less worried about this quarter. But I’m guardedly optimistic about this quarter and will look at short-term roll-the-dice calls tomorrow (or in the next 30 minutes). ;-)

    reinharden


  97. FU mr stick!!!!


  98. reinharden
    perfectly understandable.
    i think my question was more generic. When you find a company like this that has very thin options, do you buy the stock and just accumulate, or do you progressively buy calls.
    I think ZHNE only goes out Jan15 ( hardly LEAPS )
    Anyone feel free to respond.


  99. Damn, 2:15 buy program…..to the minute.  What a crock 'il doodle doo….


  100. Stick/Jabob – I don't know, I kind of like getting a reset on my shorts every day.  Better than chasing down.  

    /NQ popped right back to 3,799 from 3,784 – crazy intra-day moves for no reason at all. 

    Crock/Pharm – You said it!  We need to learn to go long at 2pm.


  101. Still no volume on SPY.  Better than yesterday but not by much.  

    Summer is usually slower – may have to short trading firms at this pace.  

    Looks like pump job is failing today – selling kicking up at 5 mins to close.  


  102. Here's the "logic" for not worrying about Global Warming:

     

    Ah, there's the bell.  Dow "only" down 99, not 100 – good save! 


  103. Shouldn't AAPL volume be much higher after the split… I imagine that people who were trading a 100 shares at $600 would trade 600 and $100. But apparently that is not the case unless they split the volume as well as to not mess up technical analysis!


  104. nope – they gave it -1.0001    haha ahaahahahaha


  105. Did you guys see this?


  106. That's one strong arm Phil!


  107. See, if you watch a few thousand hours of baseball – something exciting does happen!  cheeky


  108. Go A's
    Cespedes dropped it on purpose so he could make play of the week, Cojones.


  109. If you watch 90 minutes of soccer, there is sometimes a goal :-)


  110. Speaking of soccer – tomorrow, first game of the World Cup! We should start a bracket for that… Only 2 or 3 billion people will be watching.


  111. This is Nate Silver predictions:


  112. Your NRA in action – finishing a botched robbery in style!  

    Reminds me of this scene from Boardwalk Empire (when is that coming back?):


  113. Berghal / Phil – Another example of these hypocrites tin the GOP trying to hang anything they can on Obama because nothing has stuck so far and they are so desperate to find some kind of scandal to start impeachment proceedings. 

    Like Hillary was saying the other day, when 500 Marines died in Lebanon back in the 80's when Reagan was president, Dems actually supported him, honored the dead, tried to find a solution. When the crisis hit in 2008, Bush had to get the Dems help to pass emergency measures to save the economy. It was never a bed of roses, but what had to be done was done. But now these clowns do nothing but look for ways to actually make it worse (even if that means hurting the economy) so that they can hang Obama. It was really a good night last night with Cantor gone. Now there won't be an immigration bill and the GOP will lose the Hispanic vote like they have lost the African-American vote and there won't be a way back for a long time! Good luck in 2016 and after when angry old white men are not the majority anymore.


  114. HL – wow.. really been rising back up out of the hole it fell into


  115. Looks like the cable companies have found an effective solution to the bandwidth issue:

    http://www.theonion.com/articles/nations-cable-companies-announce-theyre-just-going,36254/


  116. Albo (ZHNE) — I don't really have a long, fancy description for ZHNE handy.  So forgive the stream of consciousness that follows.  Years ago I had more numbers, but I've not been tracking ZHNE quarter over quarter for the last few years 'cause I've been busy with other things.

    ZHNE has managed to take a business that was caught in a horrible situation at the beginning of the Great Recession and make it profitable on a much smaller revenue base.  At the same time, they've continued to build and advance their products when their larger competitors simply gave up and left ZHNE's market.

    Now, ZHNE is one of the last small companies left standing in their space.  They're operating right around the penny per share EPS range which means that any growth / leverage / increase in margins is going to go straight to their bottom line and have an outsized impact on their EPS growth rate.

    They've got a $100 million market cap on $122 million in profitable sales.  So a .8'sh PS ratio.  And their forward PE is still under 10.

    On the negative side, they've a long sales cycle and a long collection cycle.  Their receivables are down 10% recently from $33 million to $30 million, but they're 90+ days.

    They used to be US-centric, but when the US financial system collapsed the world, Obama announced a national broadband plan and a national smart grid plan that was largely never implemented.  This had the effect of freezing two of ZHNE's primary markets as everyone waited to see what kind of federal dollars would be available (not many it turned out).  Now, as a side effect, ZHNE does nearly 2/3's of their business outside the US: however, they're still well-respected by their US market and a return to capital expenditures in the US would have an out-sized impact on ZHNE.

    ZHNE mostly sold a one-stop shopping experience to the Tier 2 and Tier 3 carriers / municipal telecoms.  End-to-end solutions with everything that they need from alarm lines to dial-up Internet services to DSL to FTTP to some wireless.  At affordable prices.  It was relatively easy for ZHNE to transition that product mix into selling into hotels (several major hotel chains have decided it's easier to roll their own national network than to outsource), enterprises, and smaller competitive telecoms outside the US.

    Now for the more touchy / feely part.  Years ago Ascend bought one of the startups I've worked with and I came to know several of the folks who went on to form Zhone.  I've stayed in touch with them over the years and worked with them again when I subsequently worked with another (now defunct) startup that was playing at the intersection of the FTTP space with the smart grid space.  After a lengthy competitive analysis, CALX and ZHNE were our two favorite GPON providers.

    As a result, I think I understand how Mory Ejabat thinks (having been flown across the country (with several others) on more than one occasion for the sole reason that he wanted to yell at us to encourage our product development efforts at ASND).  And I like the approach they've taken to their market.  Largely a common source base is leveraged across multiple platforms, the central office equipment is designed to be capable of dealing with a morass of various inputs (POTS, ISDN, DSL, active Ethernet, even GPON), and they can move a customer from an alarm line to a POTS line to an ISDN line to a DSL line to an Ethernet line simply by plugging them into a different port and changing out the customer premises equipment.  The ALU's of the world prefer to sell a different box at the central office for each communications technology.  Which makes perfect sense for the Bells and Verizons of the world, but not so much for a municipally operated telecomm.   Or an enterprise.  Or a hotel chain.

    So, with those biases on my part and ZHNE's low multiples and the depressed nature of their market over the last 6+ years, I perceive ZHNE's stock as being greatly compressed and poised to explode.  And, if and  when telecom spending returns to the second and third tier US markets, ZHNE will likely take a disproportionate share of that business.

    In favorable economic times, several years from now, I see them as $350 million to $500 million revenue company with ratios better than ADTRAN's (ADTN).  ZHNE does $122 million in revenue with 283 employees ($431k/employee); ADTN does $645 million with 2,010 employees ($320k/empoyee).

    For fun, let's say $250 to $500 million in revenue and a PS of 2 for a 4x to 8x increase from ZHNE's current price.  Some smallish number of years from now (barring the forthcoming global economic collapse).

    reinharden


  117. reinharden

    Glad your still kicking and this last post I agree with you. My only concern is there is no real base to US or world economy and sooner or later it will implode. That said I feel the world will implode first whenever that happens.


  118. Reinharden – Thanks.  Will keep my position and possibly add when I see the numbers ramp up.  Frequently knowledgeable people in your industry see things before the rest of us do.  That's my opinion on the situations at EZCH & QUIK.  Not from things that I see, but from people with backgrounds in this area who do in-depth research.  Doesn't mean they're going to be right, but their opinions are based on insights in this industry.  We'll see.  Thanks again, and don't be a stranger on this board, we really appreciate your input.


  119. Watch this video at http://bloom.bg/1jjpnEf

    Mario Draghi’s $4 Trillion Problem

    In today’s “Global Outlook,” Bloomberg’s David Ingles takes a look at China’s foreign exchange reserves.

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


  120. From Bloomberg, Jun 11, 2014, 8:22:11 PM


    Haruhiko Kuroda, governor of the Bank of Japan. Photographer: Tomohiro Ohsumi/Bloomberg

    Bank of Japan officials are
    considering maintaining a large balance sheet for the central
    bank even after it achieves its inflation target, reducing the
    risk of a surge in long-term bond yields, according to people
    familiar with the discussions.

    To read the entire article, go to http://bloom.bg/1loBeF6

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


  121. From Bloomberg, Jun 11, 2014, 5:26:08 PM

    A trader works on the floor of the New York Stock Exchange. Photographer: Jin Lee/Bloomberg

    The primary election loss of U.S. House Majority Leader Eric Cantor, who helped broker deals to end standoffs on the federal debt ceiling in October and February, has investors concerned that policy makers may find future agreements more difficult to reach.

    To read the entire article, go to http://bloom.bg/SzIxyi

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


  122. From Bloomberg, Jun 11, 2014, 7:31:28 PM

    How does a political veteran with a
    $5 million warchest lose to an ill-funded neophyte? One way is
    to spend it poorly by, for example, airing more than 1,000
    television ads without ever talking directly in them to voters -
    - and frequently broadcasting your opponent’s image.

    To read the entire article, go to http://bloom.bg/1plGFI8

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


  123. From Bloomberg, Jun 11, 2014, 7:41:31 PM


    May 29 (Bloomberg) — Martin Wheatley, chief executive officer of the U.K.’s Financial Conduct Authority, discusses trading-activity regulation, rate rigging, bank bonuses and the British economy.
    He speaks with Guy Johnson and Olivia Sterns on Bloomberg Television’s “The Pulse.” (Source: Bloomberg)

    Traders who manipulate currency rates or borrowing costs could face criminal charges under plans to be announced by Chancellor of the Exchequer George Osborne in a crackdown on bankers less than a year before a general election.

    To read the entire article, go to http://bloom.bg/Uujr61

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


  124. From Bloomberg, Jun 11, 2014, 9:10:05 PM

    Asian stocks fell, with the regional
    benchmark index retreating from its highest close in six years,
    as investors weighed valuations after U.S. equities declined.

    To read the entire article, go to http://bloom.bg/1plOnSE

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


  125. From Bloomberg, Jun 11, 2014, 7:00:01 PM


    Nigeria’s Petroleum Minister Diezani Alison-Madueke said the Organization of Petroleum Exporting Countries reaffirmed the ceiling for a fifth consecutive meeting. Photographer: F. Carter Smith/Bloomberg

    OPEC, which supplies about 40
    percent of the world’s crude, kept its production target
    unchanged in a widely anticipated move that left the group’s
    output below forecast demand for the rest of the year.

    To read the entire article, go to http://bloom.bg/1ocZAoS

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


  126. From Bloomberg, Jun 11, 2014, 2:50:40 PM

    The Wal-Mart Stores Inc. (WMT) trucker
    charged in the fatal New Jersey crash that injured actor Tracy Morgan had a lengthy commute from his home in Georgia before
    reporting to work, two people familiar with the probe said.

    To read the entire article, go to http://bloom.bg/1ocVHAe

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


  127. From Bloomberg, Jun 11, 2014, 12:00:01 PM


    June 10 (Bloomberg) — Lu Ting, head of Greater China economics at Bank of America Corp. in Hong Kong, talks about the world’s second-largest economy, and its government and central bank policies.
    He speaks with Angie Lau on Bloomberg Television’s “First Up.” (Source: Bloomberg)

    China announced new steps aimed at bolstering slowing economic growth by cutting taxes, spending more on developing the Yangtze River region and expanding financing for exporters.

    To read the entire article, go to http://bloom.bg/Szj4VQ

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


  128. From Bloomberg, Jun 11, 2014, 5:34:28 PM


    June 10 (Bloomberg) — John Ryding, co-founder at RDQ Economics, Scott Wren, equity strategist at Wells Fargo Advisors LLC, and Roger Daly, a fixed income trader at Brean Capital, talk about the U.S. economy, Federal Reserve policy and bond and stock markets.
    They speak with Trish Regan and Julie Hyman on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

    Federal Reserve officials, concerned that selling bonds from their $4.3 trillion portfolio could crush the U.S. recovery, are preparing to keep their balance sheet close to record levels for years.

    To read the entire article, go to http://bloom.bg/1nwsBbE

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


  129. From Bloomberg, Jun 11, 2014, 3:01:56 PM

    The U.S. posted a $130 billion budget deficit in May and the smallest shortfall for the first eight months of a fiscal year since 2008, as a stronger economy and rising employment bolster revenue.

    To read the entire article, go to http://bloom.bg/SzDdLx

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


  130. From Bloomberg, Jun 11, 2014, 1:33:08 PM

    The U.S. economy probably contracted
    even more in the first quarter than currently estimated as
    spending on health-care services unexpectedly dropped, according
    to analysts at JPMorgan Chase & Co. and Pierpont Securities LLC.

    To read the entire article, go to http://bloom.bg/1q4plat

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


  131. From Bloomberg, Jun 11, 2014, 7:03:25 PM


    Where policy makers should fear to tread.                                                            

    Ever played Ouija board? You put your fingers on a planchette, and the spirit world moves the pointer around a board featuring numbers and the alphabet to deliver messages from the other side. I’m starting to wonder if the global economy is like a giant Ouija board; the more policy makers try to steer the pointer in the direction they’d like it to go, the more it goes awry.

    To read the entire article, go to http://bv.ms/1q5iUUS

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


  132. From Bloomberg, Jun 11, 2014, 5:54:38 PM

    How is this good for the environment — or the economy?

    The most pointed moment of President Barack Obama’s meeting tomorrow with Australian Prime Minister Tony Abbott will probably be when the two discuss climate change: Obama has just proposed new rules on carbon emissions from power plants, while Abbott is ending the $23-a-ton carbon tax imposed two years ago by his predecessor.

    To read the entire article, go to http://bv.ms/1logXzx

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


  133. Lloyd Blankfein talks energy and politics

    07:20 PM ET · GS

    • Goldman Sachs’ (GS) Lloyd Blankfein is hitting the interview circuit this week, and some of his most interesting comments involve natural gas drilling.
    • North America needs to take advantage of its strong energy position, Blankfein says, concerned about U.S. regulatory uncertainty: “If investors have to worry about politicians changing the rules around natural gas drilling, they will be more hesitant to put their money into growth opportunities.”
    • But he hesitates to throw his weight behind the Keystone XL pipeline, sounding more like some politicians when saying “we have to reconcile the schism between the people who are only thinking in terms of the environment and the people who are only thinking in terms of supporting the economy, and get some sort of accommodation between the two.”
    • Enjoy the current quiet market, because it can’t last forever, and there’s always a risk of “some exogenous event… that’s going to cause people to have to reset their portfolios.”
    • On his own company, he attributes Goldman’s success to its ability to “aspire less to foresee the future and more to be a great contingency planner.”


  134. Instagram gives Facebook a Chinese opening

    07:16 PM ET · FB

    • Though Facebook’s (FB) core site and apps largely remain blocked in China, Instagram has been growing rapidly in the Middle Kingdom. The photo-sharing platform’s iOS app is now ranked #66 in the Chinese App Store, and a number of Chinese celebrities have 100K+ followers for their Instagram accounts (largely from within China).
    • The widespread use of Instagram with the Weibo (WB) microblogging platform (129M MAUs) has fueled much of the growth. Instagram has added a Weibo sharing option for its apps, and its pictures are often used by Weibo posters to cover major events.
    • Bloomberg reported in May Facebook is taking steps to open a Chinese ad sales office, but there aren’t any signs its core services will soon be given a green light. WhatsApp isn’t blocked, but it faces an uphill battle wresting Chinese share from Tencent’s WeChat.


  135. Boeing hit as Cantor’s loss clouds Export-Import Bank’s future

    06:49 PM ET · BA

    • Boeing (BA) is the “biggest loser” from Rep. Eric Cantor’s surprising election defeat, as congressional re-authorization of the Export-Import Bank – which arranges financing that helps foreign airlines buy jets – is now threatened after losing an advocate in the House leadership.
    • Cantor’s upset brings the bank’s future into question, analysts say; if the bank isn’t renewed by Sept. 30, the agency can’t finance new deals, though it could service existing commitments.
    • Boeing also was downgraded today by RBC on valuation, and shares also may have been hurt by questions over new aircraft demand in light of Airbus’ Emirates order cancellation.


  136. Expedia joins Bitcoin bandwagon

    06:34 PM ET · BITCN

    • Two weeks after Dish Network announced it’ll accept Bitcoin (BITCN,BTCS), and five months after Overstock did so, Expedia has done the same.
    • Not surprisingly, the online travel giant doesn’t expect huge initial volumes. But its size – 2013 gross bookings totaled $39.4B – makes its vote of confidence a big one.
    • Last month, eBay CEO John Donahoe suggested PayPal will eventually support the virtual currency, but didn’t give an ETA.
    • Coinbase currently shows a bid-ask spread of $625.46-$626.49.
    • Previous: Bitcoin jumps as Apple signals a measure of approval


  137. Northern Gateway decision could be delayed, Canada resources minister says

    06:17 PM ET · ENB

    • Notwithstanding the optimism of Alberta’s energy minister, who expects Canada’s government to approve the Northern Gateway (ENB) pipeline this month, Natural Resources Minister Greg Rickford says the Canadian government could delay a decision.
    • “This is an extensive report with 209 conditions, and the government obviously has the clear option of taking that on its face, or other options that would or could include delays,” Rickford says.
    • The government was expected to decide by June 17 on the proposal to build the 525K bbl/day pipeline which would carry crude from Alberta’s oil sands to a deepwater port in British Columbia.


  138.  

    CAT

    Caterpillar Inc. declares $0.70 dividend

    Caterpillar Inc. (CAT) declares $0.70/share quarterly dividend, 16.7% increase from prior dividend of $0.60.

    Forward yield 2.57%

    Payable Aug. 20; for shareholders of record July 21; ex-div July 17.


  139. bdc // $$$
    did you see the botching /expedia article ?


  140. Restoration +12.1% AH on FQ1 beat, strong guidance

    04:57 PM ET · RH

    • Restoration Hardware (RH) expects FQ2 revenue of $443M-$453M and EPS of $0.62-$0.64 vs. a consensus of $452.1M and $0.61. FY15 (ends Jan. ’15) guidance is for revenue of $1.86B-$1.89B and EPS of $2.24-$2.30, above a consensus of $1.85B and $2.20.
    • Comparable brand revenue +18% Y/Y in FQ1 vs. +24% in FQ4. Direct revenue (48% of total) +24% vs. +33%. Retail store count fell by 1 Q/Q and Y/Y to 69.
    • Gross margin was 34%, -310 bps Q/Q and +20 bps Y/Y. SG&A spend was 32.7% of revenue, down from 33.6% a year ago.
    • Shares are making new highs AH.
    • FQ1 results, PR


  141. BNP pushed to remove numerous executives

    04:35 PM ET · BNPQF

    • Vivien Levy-Garboua was in charge of North American compliance from 2005-08 and is currently an adviser of senior bank execs, and Ben Lawsky – chief of New York’s Dept. of Financial Services – wants him removed, along with at least a dozen others, including the bank’s COO.
    • The executive ousters, of course, are in addition to the $10B-plus fine being sought by the DOJ. Lawsky also wants to suspend BNP Paribas’ (BNPQF) ability to transfer money through its New York branch – an idea being fiercely resisted by the bank which says it will cost it a good deal of business.
    • Previously: BNP and Hollande should be thankful it’s only $10B


  142. Amazon music service reportedly lacking Universal; Pandora +4.9%

    04:33 PM ET · AMZN

    • Amazon’s (AMZN) Prime streaming music service won’t feature Universal Music’s catalog, the NYT reports. The NY Post reports something similar, while adding the service is expected to launch tomorrow.
    • The NYT also states the ad-free service “will omit most new releases” – BuzzFeed has reported only songs at least 6 months old will be offered – and that Amazon “used an outside firm to obtain ‘compulsory’ [songwriter] licenses” through federal copyright provisions, after publishers rejected proposed contracts.
    • Universal Music is one of the big-3 labels (along with Sony and Warner Music). Its artist list includes Eminem, Lady Gaga, Jay-Z, U2, and many other popular acts.
    • Pandora (P) closed sharply higher following the report. Its shares fell on May 30, after BuzzFeed’s report arrived.
    • An Amazon event widely expected to feature a 3D smartphone launch is due a week from today.


  143. Stocks slump after World Bank forecast, Dow takes worst hit in three weeks

    04:20 PM ET

    • Stocks slipped from recent record highs, with the Dow’s triple-digit loss marking its biggest one-day point and percentage decline in three weeks, following the World Bank’s reduction of its global growth forecast.
    • The market may have been due for a pause anyway regardless of the revision; Sam Stovall points out that 32 months have passed without a decline of 10% or more vs. the post-WW II average of 18 months.
    • Losses were broad with every sector except energy down for the day; a major drag on the S&P was BofA (-2.1%), which has reached an impasse in negotiating a settlement with the Justice Department over its mortgage investments.
    • Participation remained well below average, with today’s 520M shares representing the lowest NYSE floor volume of the year.
    • Treasurys surrendered early gains during the afternoon, as the 10-year yield fell one basis point to 2.63%.


  144. NQ Mobile -11.7% after false report, lack of 20-F timetable

    04:00 PM ET · NQ

    • A false report (attributed to a fake Xinhua Twitter account) stated NQ Mobile (NQ) had fired auditor PwC. NQ has since affirmed PwC remains its auditor, but has added it still has no timetable for filing its delayed annual report (form 20-F).
    • Shares have now given back most of the huge gains they saw a week ago after NQ released its special committee’s findings, and are down 44% YTD.
    • Debate on SA remains fierce. Quoth the Raven thinks a still-pending financial audit from PwC “could be a lose/lose situation for NQ.” Justin Giles thinks NQ will likely receive an unqualified audit that fully clears the company.
    • Yesterday: NQ Mobile sells stake in NationSky


  145. Dearth of deals leads Oaktree to cut fund size

    03:52 PM ET · OAK

    • Struggling to find deals for its latest distressed-debt investment fund, Oaktree Capital (OAK -1.3%) has cut its $3B asset-raising target all the way to about $1.8B, reports Bloomberg. The firm also plans to shorten the investment period to 3 years from 5.
    • Given the lack of traditional distressed opportunities, Oaktree is spending more time on European nonperforming loans, shipping, commercial real estate, and energy, says Ronald Beck, a managing director at the firm. “You have to be very sector specific.”
    • “Financing is readily available and there’s little corporate distress,” lamented the firm’s John Frank a few months back, adding Oaktree is more likely a seller than buyer in the current environment.


  146. Apollo’s Harris not so sure about retail and private equity

    03:30 PM ET · APO

    • “I’ve seen retail come in and out of this asset class at exactly the wrong time for three cycles,” says Apollo Global’s (APO +0.9%) Josh Harris. “This is about the time that retail floods in right at peak multiples and gets hammered, and then at the first sign of trouble flees.”
    • Presenting today at the Morgan Stanley Financials conference (earlier coverage), Harris isn’t buying the pitch of Blackstone’s (BX) Steve Schwarzman and Carlyle’s (CG -1.9%) David Rubenstein that mom-and-pop investors are going to be significant contributors to P-E assets under management.
    • “I think some of what you’re seeing is simply a [up] cycle,” says Harris, “and it will turn around a bit … We’re going to be disproportionately an institutional platform.”
    • ETFs: PSP, PEX


  147. Heard during Starbucks’ investor presentation

    03:23 PM ET · SBUX

    • Execs with Starbucks (SBUX +0.3%) presented today at the William Blair & Company Growth Stock Conference
    • EPS growth of 20% to 22% is forecast.
    • The company expects to have 1.5K stores in China by the end of the year.
    • Sales have improved at every 2-hour interval of the day with the 11:00 a.m.-1:00 p.m and 1:00 p.m.-3:00 p.m. windows showing the strongest pace of comp sales gains.
    • Offering beer and wine at stores has lifted the average ticket level at participating stores.
    • CFO Scott Maw notes tea is a bigger market than coffee and is growing at a faster pace. Tea opportunities could broaden as tea concept stores in the U.S. draw notice.
    • “Significant innovation is on the docket,” says management. Look for the trend of 1% to 2% of comp growth from innovation to continue at Starbucks.
    • Express ordering via mobile app is on the agenda. Testing is ongoing.
    • Webcast


  148. Phil // Kids
    I have 50K et aside in a bank for kids stuff ( vacations, school stuff, classes, etc )
    I will put this in its own account and would love to not touch it.
    Can you recommend a strategy that is conservative, yet liquid.
    I was thinking an energy MLP or perhaps an emerging markets ETF
    or possibly put it all in GLD and gorget about it ?
    Would love your guy response //


  149. ConocoPhillips upgraded, target raised to $90, at Howard Weil

    02:57 PM ET · COP

    • ConocoPhillips (COP +0.4%) is upgraded to Sector Outperform with a $90 price target, up from $75, at Howard Weil, which says the COP story has shifted into execution phase.
    • The asset base is now poised to deliver 6%-10% cash flow compound annual growth through 2017 from a combination of 3%-5% production growth and 3%-5% margin expansion, Weil says, as its confidence in COP’s unconventional prowess is growing based on the recent analyst day presentation, higher production targets and efficiency gains in the underlying assets.


  150. Good morning!  

    Futures flattish but oil flew up to $106.34 and now crossing $106 and of course that's a shorting opportunity on /CL but ONLY below $106 as this is about al-Qaeda (ie. Rent-A-Rebel) attacking Iraq – just in time to pump up prices into the July 4th weekend.


  151. Better late than never for the Big Chart – got hit by a mild case of the flu (so far) yesterday (a gift from my daughter) and had to turn in early…

    That little breather is most welcome to our Strangles portfolio as we were hitting the call strikes!


  152. Oops, forgot to print news.  No oil is threatened – yet (it's in the south)


    • Iraqi Drama Catches U.S. Off Guard

      The quickly unfolding drama prompted a White House meeting Wednesday of top policy makers and military leaders who were caught off guard by the swift collapse of Iraqi security forces.

      • Kurdish Fighters Mobilize to Stop Threat
      • Islamist militants swept out of northern Iraq Wednesday to seize their second city in two days, threatening Baghdad and pushing the country's besieged government to signal it would allow U.S. airstrikes to beat back the advance.
      • An alarmed Iraqi government also asked the U.S. to accelerate delivery of pledged military support, particularly Apache helicopters, F-16 fighters and surveillance equipment, to help push back fighters from the Islamic State of Iraq and al-Sham, an al Qaeda offshoot known as ISIS. The U.S. said it has been expediting shipments of military hardware to the Iraqis all year.
      • During the day's advance, the Islamists took the oil refinery city of Bayji, though security officials there said the vital refinery in the city remained under the protection of some 250 government troops.

    That last point is critical!  Keep in mind Iraq is a country of 20M people so these "cities" they are talking about are no bigger than your local towns and these "al-Qaeda troops" can be held off by 250 properly trained troops.  In Tikrit, which fell, "dozens" of gunmen invaded the city and the local forces ran away.  

    Here's a picture of the Iraqi soldiers that are heading up there to quell the violence:

    That's right, it's another case of the media turning nothing into something or, as I said – Rent-A-Rebel.  Figure someone wires al-Qeada $10M in exchange for them causing a ruckus and oil shoots up $2 and people holding those 200,000 open NYMEX contracts make $400M overnight – what a deal!   And what timing with only 6 sessions left to the rollover date and all those open contracts to sell!  

    Asia was off about half a point except India, which was up half a point.  

    Europe is rallying into lunch but that means turning positive off a half-point down open.  

    LOL Pwright!  

    Stream of consciousness/Rein – Hey, that's my writing style!  cheeky

    As to ZHNE, they do have Jan options that pay a good premium and you can buy the stock for $3.20 and sell the Jan $2.50 calls for $1.25 and the $2.50 puts for .45 for net $1.50/2, which is a nice 37% discount so let's add a block of 3000 for $4,500 to the LPT to keep an eye on it as it makes $3,000 (66%) if called away at $2.50 in Jan – or we can roll it.  

    $50K/Wombat – I'd pick 5 dividend stocks that you can buy/write to a 20% discount and pay 5-10% dividends so you have a good chance of making 20% each year.  Anything from our Buy List or the old LTP would do. 

    CIM, for example, is $3.20 and pays .40 per year and you can sell the Jan $3.50 calls for .10 and the $3.30 puts for .35 for net $2.75/3.025 so you can buy 3,000 for $8,250 and you'll get $300 per Q as a dividend plus another $1,350 if called away at $3.30 for a total of $900 (3 dividends left) + $1,350 = $2,250 or 27% back in 7 months

    Let's add that (3,000) to the LTP too so we can all take a vacation next year!  

    Don't forget, Wombat, it's a toppy market so you want to stay diversified and cautious.

    Sorry you don't feel well, StJ – thanks for being a trooper and getting the chart out.  

    Oil $105.75 for a quick win already! 


  153. Looks like LULU has found another bottom to its channel… Big miss, guidance lowered – not a good mix now.