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$10,000 Tuesday – One Trade To Make Your Month!

RUT WEEKLYHow would you like to make $10,000?

If the Russell can finish this option period (24 days) 2.5% higher, at 1,178 or higher, we can turn net $1,000 or less cash into $10,000 for you.  After all, if the Fed is going to give away money – why shouldn't we get our share?

I'll preface this by saying that our Members are already long on Russell Futures at the 1,150 line, as we made that call in our live Member Chat Room (become a Member here) earlier this morning.   

If the market is going to remain bullet-proof (and missile-proof too, it seems) then the RUT is now the lagging index and we can construct a play to take advantage of it breaking back up by making a play on TNA, the 3x Ultra-Long Russell ETF.  

Very simply, if we buy the August $72.50 calls for $3.45 and we sell the Aug $76.50 calls for $1.70, we have a net cost of $1.75 on the $4 spread that's $4.64 out of the money (at goal) and that's 6.4% out of the money so, to be safe, we'll need a 2.5% gain on the Russell, from 1,150 to 1,178.75 to make the full $4.  25 contracts at $4 = $10,000 so we can work with that.

But what about the cost of the 25 contracts (at $1.70 x 2,500, that's $4,250)?  Well, there's a couple of ways to offset that.  One way is to sell 25 TNA Aug $65 puts for $1.70 to offset the cost.  The danger there is, if the Russell goes down 2.5% (to 1,121) or lower, we'll be assigned 2,500 shares of TNA for $65 ($162,500) – that could be unpleasant. 

Instead, we can commit to being long TNA at $45 in 2016 by selling just 5 2016 $45 puts for $8, and that raises $4,000 and commits us to owning "just" 500 shares of TNA at $45 per share ($22,500).  

Now, if you don't want to be bullish on the Russell when TNA is down 37% (Russell 1,006), then why are you long on it at 1,150?  

Another fun way to offset the cost of a speculative spread is by selling puts on a stock you REALLY want to own anyway.  Today, in our Chat Room, we were discussing the merits of STNG, who are in the midst of a stock buyback at $9.74 per share (so far) but are still trading at $9.92.  

That puts a bit of a floor on the stock for the near-term and they pay a nice 0.36 dividend (3.9%) so we can sell 40 Jan $10 puts for $1.25 ($5,000) and that pays for our TNA longs with $750 to spare and our worst case is owning 4,000 shares of STNG at $10 per share ($40,000) – right about where it is now.

Another stock we love to sell puts on is ISRG.  That stock is at $388.72 but we can sell the 2016 $300 puts for $23.50 so selling just 2 of those raises $4,700 in cash and our obligation is to buy 200 shares of ISRG for $300 ($60,000), which is 23% below the current price.  

CLF is another constant favorite for raising capital and the 2016 $13 puts can be sold for $3 so just 15 of those raises $4,500 and obligates us to own 1,500 shares of CLF for $19,500 – very efficient!  

So, there's a few easy ways to make a bullish 1,000% return on cash in 24 days if the market goes higher – now we can get back to talking about what's wrong with the market!  

As noted by Citt's Steve Englander:  "Investors took note of a somewhat changes Yellen tone, but are treating the Fed as an outer-orbit risk rather than as an asteroid taking dead aim."  

With a Fed meeting coming up next week, you would think investors would be a bit more "risk on" – not to mention a plane being shot out of the sky, war in Ukraine and Gaza (plus the usual nonsense in Aftica, Afghanistan and Iraq) and sanctions piling up against Russia, which affects their trading partners in the EU and Asai as well.  

Money is flowing back to the Dolar as well as US Treasuries – so SOMEONE is nervous but it sure isn't US Equity Investors, who are hell-bent on trading stocks near their all-time highs coming into Q2 earnings.  The Dollar shot up to 80.83 this morning and is likely to move a lot higher if the Euro fails to hold $1.3475, a level it hasn't been below since mid 2013, when it was 5% lower than that at the lows. 

FXE WEEKLYA 5% bump in the Dollar would be devastating for commodities and equities yet oil (/CLU4, Sept, is now our front-month) hit $103 this morning – where we're also shorting it in Member Chat (and tune in for our Live Trading Webinar at 1pm, EST).

After falling from $137.50 on FXE, we expect support at $133.50 and that's a $4 fall so 0.80 bounces but let's call it $1 and look for $134.50 to be a weak bounce today.  Anything less than that and we are heading DOWN and that would not bode well for the bulls in the short run.  

Meanwhile, over in Dubai, it may be time for round 2 (or is it 3?) of the property bubble as Credit Default Swaps jumped back to 166 basis points.  Dubai has racked up $129Bn of debt transforming itself into a tourism hub and the Middle East base for banks such as HSBC and DB.  “The crisis in Syria and Iraq and the spread of ISIL in neighboring countries is affecting sentiment towards the whole Middle East,” said Samer Mardini of SJS Markets, “Dubai feels that the most.”  

At the same time, the yield curve on US Treasuries is hitting a crisis-level low.  When short-term and long-term yields reach parity like this, there is no benefit in holding long-term paper and investors tend to leave that part of the market, pushing up long-term rates very quickly which may fix the yield curve, but has other, nasty economic impacts.  

Banks have less incentives to lend long and fund capital or residential investment projects since banks can lend short and capture a higher rate.  This reduces the pace of credit growth and the number of new projects financed by debt.  Also, the risk-free rate is an asset class that competes with equities and other asset classes (housing, gold, etc.).  The higher the short-term rate the less speculation in other asset classes which can lead to bubbles bursting.

Maybe the sky isn't falling, but there are certainly some cracks!  


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  1. Verizon 2Q profit rises 93 percent      AP

    Market reaction =  Ho-Hum

  2. Oil Lines

    R3 – 105.97
    R2 – 104.71
    R1 – 104
    PP – 102.74
    S1 – 102.03
    S2 – 100.77
    S3 – 100.06

  3. mart

  4. I guess it's the long term plan:

    And that’s what Sandler expects to happen. By 2017, Deutsche forecasts that Prime subscribers will account for 19% of Amazon’s customer base, (up from about 13% today) and about half its retail profits (compared to about 31% currently)

    The genius, according to Deutsche Bank, is that while the average Prime customer generates $1,000 in profit (through product purchases) over the lifetime of their relationship with the e-commerce giant, new Prime customers cost virtually nothing to acquire: Amazon spends very little on advertising these days, because the value of the Prime program is enough to draw new people in. (The real costs are in free add-ons, such as the Prime Instant Video service, but the costs of running that service, including content, don’t get bigger as Prime adds subscribers.)

    Finally, it would be extremely difficult for any competitor to build a viable competing service to Prime—the required investment would be massive, and Prime is just too big to compete with now, and offering too many products. In other words, it’s becoming a moat for Amazon.

    By 2020, Sandler reckons Amazon could have 100 million Prime subscribers, one of the biggest membership clubs of any industry, and worth a cumulative $70 billion. In this light, Amazon’s market cap of about $165 billion (which looks ridiculous when compared to last year’s profit of just $274 million) starts to look justifiable.

  5. Hmmmm….

    “I have NOT accused Apple of working with NSA, however I suspect (based on released documents) that some of these services MAY have been used by NSA to collect data on potential targets. I am not suggesting some grand conspiracy; there are, however, some services running in iOS that shouldn’t be there, that were intentionally added by Apple as part of the firmware, and that bypass backup encryption while copying more of your personal data than ever should come off the phone for the average consumer.”

  6. Housing market in China not looking very healthy:

    The root cause of the housing bubble is China’s underdeveloped financial market, where investment options are limited,” says Li. “During a downturn, homebuyers lose faith in the continued rise of house prices. When confidence collapses, there is nothing the government can do to boost fundamental demand for expensive properties.”

    That likely means another infrastructure investment bender; SocGen’s Yao estimates that in order to offset the continuing fall in property investment, the government will need to up infrastructure spending by more than 30% versus 2013. While that mega-stimulus will invite a host of problems for China’s fiscal health, it’s probably preferable to the sort of broad-based credit loosening that would juice growth—and likely inflate the property bubble once again.

  7. FU Oil I didn't short because I was paying a contractor rather than making $500.  It's hurts double when you spent money and didn't make money.

  8. /CL – thanks for the futures training Phil! Learning to DD with the ladder and not bail out too soon (ie. hold overnight or over the weekend and have faith in the trade) has made all the difference!

  9. Oil testing $102.50.  Good start to the day. 

  10. Even the Chinese market is getting saturated:

    China’s level of mobile penetration was around 89% in 2012, behind only the United States, Italy, Russia, and South Korea. And it’s not just inexpensive dumbphones: Smartphones made up 82% of all mobile phone sales in 2013, and analysts believe that number could reach 90% this year. Research firm IDC predicts Chinese smartphone shipments will only increase by about 10% next year, compared to 64% in 2013. (Granted, Chinese shipments are still six times that of India.)

  11. Good morning!  

    Oil bouncy at $102.50 (of course) and it's a $1 fall so $102.70 and $102.90 are our bounce watch levels at the moment.  

    RUT can't stay over that 1,150 line and I wouldn't go buying those TNA spreads if it can't even get that obstacle out of the way!  

    • Japan +0.84%.
    • Hong Kong +1.69%.
    • China +1.02%.
    • India +1.21%.
    • London +0.82%.
    • Paris +0.81%.
    • Frankfurt +0.82%.
    • Dow +0.26% to 17,095.50. S&P +0.4% to 1,981.60. Nasdaq +0.49% to 4,446.49.
    • Treasurys: 30-year -0.03%. 10-yr +0.04%. 5-yr +0.08%.
    • Commodities: Crude -0.14% to $102.72. Gold 0% to $1,313.90.
    • Currencies: Euro -0.37% vs. dollar. Yen +0.02%. Pound +0.07%.
    • Stock futures are on track for a solid open, adding to gains after the June inflation report showed core prices rising just 0.1% after a sharp 0.3% gain in May, although energy costs rose by the most since December; Dow +0.3%, S&P +0.4%, Nasdaq +0.5%.
    • Overseas tensions eased slightly, as pro-Russia rebels handed over two black boxes from the downed Malaysian passenger plane to experts in Donetsk in Ukraine.
    • Earnings season is now fully underway: Chipotle is indicated to open +10% after beating estimates, while Dow components McDonalds and Travelers look to open with losses in reaction to below-consensus results; Apple and Microsoft will publish numbers after the close.
    • Major European bourses trade higher across the board even as foreign ministers are expected to discuss additional sanctions against Russia; major Asian indexes ended on a higher note.
    • Treasury prices are little changed; the 10-year benchmark yield is at 2.47%.
    • Still ahead: existing home sales, Richmond Fed.


    • ICSC Retail Store Sales: -0.4% W/W, vs. +0.1% last week.
    • +2.8% Y/Y vs. +4.5% last week.
    • Unseasonably cool weather in the week which curbed demand for summer-clearance items, led to lowest growth since May.


    • Redbook Chain Store Sales: +3.7% Y/Y vs. +4.1% last week.
    • "Unlike ICSC which pointed to weakness for summer goods in the latest week, Redbook notes steady strength for fans, air conditioners, outdoor furniture and sports apparel".

    HLF CFO (not CEO) on CNBC talking Ackman down, stock about $53.25 at the moment.  

    • In an interview on "Bottom Line" yesterday, Bill Ackman declared he will show how Herblife's (NYSE:HLF) Nutrition Clubs are frauds similar to Enron's fake trading rooms reports Bloomberg. He confirmed that Pershing Square Capital Management has spent $50M of investors' money to prove the company is a pyramid scheme. He confidently stated, "Trust me, when you see the stuff we have you will conclude the money was well spent."
    • Herbalife plunged 11% yesterday. Shares are down another 4% premarket on light volume.
    • The webcast is scheduled for this morning at 10:00 EDT via

    CROX with a nice win for us:

    • Crocs (NASDAQ:CROX): Q2 EPS of $0.36 beats by $0.05.
    • Revenue of $376.9M (+3.6% Y/Y) beats by $4.14M.
    • Crocs (NASDAQ:CROX) resumes trading after being halted since yesterday after the close,+6.5% premarket after reporting better than expected Q2 earnings and announcing "strategic performance improvement initiatives" that are expected to result in the closure of retail stores and the scrapping of brands in its product line.
    • CROX says it will exit leases on 75-100 stores and lay off ~180 of its 5K employees, cut back on the number of styles it sells by 30%-40%, and drop categories including fashion leather boots and dress shoes made under the Elite brand, as it focuses on sandals, loafers and other casual shoes.
    • As a result of the store closures, CROX expects annual revenue will be reduced by $35M-$50M with growth resuming in 2016.
    • Press Release

    BTU also performing:

    • Peabody Energy (NYSE:BTU): Q2 EPS of -$0.28 in-line.
    • Revenue of $1.76B (+1.7% Y/Y) beats by $120M.
    • Press Release

    Uncle Rupert gives the market a push this morning using old faithful:

    • Apple (NASDAQ:AAPLhas placed orders for 70M-80M 4.7" and 5.5" iPhone 6 units to be manufactured by Dec. 30, the WSJ reports. That's a sizable increase from the 50M-60M iPhone 5S/5C units Apple initially ordered last year.
    • Orders can change significantly based on consumer demand - for example, iPhone 5C orders were slashed, and 5S orders increased, following last year's launches. But the report still suggests Cupertino expects strong pent-up demandfor bigger iPhones. If accurate, it's a positive for Cirrus Logic (NASDAQ:CRUS).
    • A Taiwanese paper reported two weeks ago Apple had already put in orders for 68M iPhone 6 units. Prior to that, a report stated Foxconn is hiring 100K workers to help with iPhone 6 production.
    • The WSJ's report comes ahead of Tuesday's FQ3 report. With shares up 26% since the FQ2 report, expectations have risen a bit. UBS just hiked its Apple target by $15 to $115, and raised its FQ3 estimates above consensus on data pointing to a mix shift towards the 5S and iPad Air.
    • The firm is cautious about FQ4, noting checks point to possible iPhone 6 supply constraints for display-related components (previous: III). But it's also upbeat about FY15 margin gains, as capex growth slows and the impact of a 2013 revenue deferral policy change fades.
    • On average, analysts polled by Fortune expect 35.9M FQ3 iPhone sales, 14.4M iPad sales, and 3.9M Mac sales.

    FuelCell Energy +5% as German government issues €4.9M in research awards

    • FuelCell Energy (NASDAQ:FCEL) +5% premarket on news its German affiliate received nearly €5M in awards from the government to support a three-year research and development project targeting enhancements to Direct FuelCell technology by increasing power density and operating life of the fuel cells, leading to lower costs.
    • The research is being performed in Germany by FCEL at an existing facility in Ottobrunn and by joint venture partner Fraunhofer IKTS at a facility located in Dresden.
    • Also: PLUG +3.8%, KNDI +2.9%, BLDP +2.2%, ZBB +1.8%.
    • The latest food scandal in China is spreading fast, dragging in Starbucks (NASDAQ:SBUX), Burger King (NYSE:BKW) and others, as well as McDonald’s (NYSE:MCD) products as far away as Japan.
    • SBUX says some of its cafes previously sold products containing chicken originally sourced from a firm that was shut down Sunday by local regulators for using expired meat and picking up meat from the floor to add to the mix.
    • BKW and Papa John's (NASDAQ:PZZA) say they have stopped using food products supplied by the closed firm.
    • McDonald’s and KFC parent Yum Brands (NYSE:YUMapologized yesterday to Chinese customers after discovering the firm supplied expired meat to the two chains.
    • McDonald's (NYSE:MCD): Q2 EPS of $1.40 misses by $0.04.
    • Revenue of $7.18B (+1.4% Y/Y) misses by $100M.
    • Press Release
    • United Technologies (NYSE:UTX) reports a Q2 net profit increase of $1.68B, up 7.7% Y/Y from $1.56B.
    • Sales increased 7% Y/Y to $17.2B, while revenue climbed 7.4% to $17.19B.
    • "Our focus on growth opportunities and execution in our core markets resulted in another solid quarter," says CEO Louis Chenevert. "We saw a fourth consecutive quarter of organic sales growth, along with strong margin expansion."
    • The company also raised the lower end of its earnings guidance range for 2014 by $0.10 per share, citing strong results in the first half of the year. It now expects earnings of $6.75 to $6.85 per share.
    • Cash flow from operations was $1.7B and capital expenditures totaled $406M.
    • Q2 earnings
    • UTX +0.8% premarket
    • Harley-Davidson (NYSE:HOG) -4.2% premarket after cutting its FY 2014 shipment guidance, citing Q2 sales that suffered from prolonged poor weather across parts of the U.S. and soft demand for its low-priced Sportster motorcycles.
    • HOG now sees shipments of 270K-275K motorcycles to dealers and distributors worldwide in 2014, a 3.5%-5.5% Y/Y increase but down from previous guidance of 279K-284K and a 7%-9% increase.
    • The new bikes, which analysts say were supposed to begin appearing in dealer showrooms in May, did not begin to arrive until late June, but HOG did not explain why the bike was delayed.
    • Otherwise, Q2 earnings were better than expected; HOG says it shipped 92,217 motorcycles to its worldwide network during Q2, a 9% Y/Y increase, and expects to ship 49K-54K bikes in Q3 vs. 54,025 in the year-ago quarter.
    • HOG's Q2 difficulties did not appear to affect rival motorcycle maker Polaris Industries (NYSE:PII), which also reported higher earnings but raised its full-year forecast.

  12. HOG – nice dip on earnings being up, and higher profit margins, and lowered growth expectations to 3.5-5.5% instead of 7-9%.  BTFD!

  13. Phil / QQQ – I hold Aug 95 put for $1.5 as a hedge. Any suggestion where I should roll these to in this relentlessly bullish market?

  14. EGLE – nice move!

  15. Phil,

    I have CMG 2015 500/560 BCS which I bought when the stock was at 520 or so.  Now that CMG has blown past and I dont have any upside other than waiting it out for the premium to expire, is there a trade that you recommend that I can free up cash to do something else?  With the euphoria on CMG's good earnings, should I sell to take my profit and wait for it to come down?


  16. IMAX / Phil … are you tempted at $25?? :)

  17. /TF
    Thanks Phil
    Offsetting my TNA losses with /TF – still don't feel comfortable pulling my Linus blanket

  18. KO selling off after their north american growth stalls. Could PEP be following in the same footsteps tomorrow?

  19. Hlf, thank goodness took the profit and ran Phil. i can't believe Ackman bet his reputation for that!

  20. NFLX selling off nicely.  

    CMG over $650.  

    WMT/StJ – Of course AMZN cuts out the pesky minimum wage sales person too!  Prime is the best – I just ordered 40-packs of batteries from the couch yesterday with one-click shopping on my IPad – it took me less than 30 seconds from when my daughter told me we needed batteries to scratch it off my list.  $10 for AA and AAA and it will be at my house for free tomorrow.  I was disappointed a drone couldn't show up the same day…

    Actually, what if I could do that with services?  We all get leaky toilets or sinks or chipped tiles or loose doors and we usually choose to go to Home Depot and fix it ourselves, not because it saves money but because it's less hassle than calling a plumber or handyman and waiting for him to call back and waiting for him to show up, etc.  What if there was an App that could price out basic service calls and give you an instant estimate of when someone could be there and the approximate cost?  It's almost like Uber for home repair…

    NSA/StJ – Just lie back and enjoy it – it's not going to go away…

    RUT finally moving – 1,153 puts the stop at 1,152, etc on the way up.  

    Contractor/Burr – Exactly what my app will fix!  

    Oil/Ivan – Don't get too carried away – you can get very burned on overnights!  We'll discuss in today's Webinar at 1pm (link here).  

    Oil/Bruce – That lines hanging tough so far but I think there will be a violent sell-off later as the Aug contract goes into death throes.  Unusually large amount of Aug contracts open to start the day:

    Click for
    Current Session Prior Day Opt's
    Open High Low Last Time Set Chg Vol Set Op Int
    Aug'14 104.58 105.25 104.25 104.32 09:42
    Jul 22


    -0.27 5473 104.59 39265 Call Put
    Sep'14 102.77 103.45 102.54 102.59 09:42
    Jul 22


    -0.27 55843 102.86 347710 Call Put
    Oct'14 101.61 102.20 101.41 101.46 09:42
    Jul 22


    -0.27 19112 101.73 178298 Call Put
    Nov'14 100.75 101.22 100.52 100.55 09:42
    Jul 22


    -0.22 12122 100.77 77887 Call Put
    Dec'14 99.76 100.35 99.72 99.75 09:42
    Jul 22


    -0.16 13210 99.91 207274 Call Put

    I doubt they want more than 20M of those so 20M to dump on a contract that expires today is going to be like a magic trick they have to pull off.  

    Smartphones/StJ – I want to be the first to copyright the phrase "Not for all the page views in China." 

    HOG/Scott – Last year they did $3.28 per share and traded at $57.50 average.  This year, they are on pace for over $4, which is 20% better so $69 is a fair estimate so BTFD makes sense on these guys but I wouldn't catch the knife.  See if they get a good downgrade and test $60 – don't forget -5% in a day is as low as we'd expect on one move ($63.50) but that doesn't mean the move is done.  Bounce from $70 I'd round to $1.50 at $65 (weak) and $66.50 (strong) so keep an eye on those but a 12% drop, to $61.50 is where it really becomes worth taking a chance (10% with a 20% overshoot).  

    QQQ/Phel – Naked long puts are very expensive ways to hedge.  The Aug $95 puts are .45, so it cost you over $1 for that insurance.  DXD, on the other hand, can give you a 300% upside with the Oct $24/28 bull call spread at $1.  DXD is currently $24.66 so you are 66% in the money with just .34 of premium and $28 is $3.34 away (13.5%), so 7% drop in the Dow to 15,926 puts you at 3x.  That's a much better use of your insurance dollars and you can roll to another $1 spread before the Oct $24s drop below 0.75 and maybe it costs you (including buying back the short calls, if you choose) .50 to buy another 3 months protection next time.  

    So, then you need to determine how much money you would lose if the Dow drops 7% and let's say you are leveraged and will lose 15% of $100K.  Then you want to offset 1/2 of your $15,000 loss so $7,500 means $2,500 (25 contracts) on this spread would pay back $10K on the dip.  That can then be combined with allocating $10,000 (10% of the portfolio) to some Dow component you REALLY want to own if it drops 10% or more, like PFE, and you can sell 5 2016 $28 puts for $2 ($1,000) as a partial offset.  If the Dow drops, you make your DXD money and, if it doesn't, it's not likely the puts get assigned.  Worst case is you get 500 shares of PFE at $28 = $14,000 to add to your longs.  

    EGLE/Ivan – I still love selling those puts.  In the LTP we're short 50 of the 2016 $2.50 puts, now $1.35, for a net $1.15 entry.  Was $1.50 last week when I said I still liked them for a net $1 entry.  Gosh I love selling puts!  

    Over 1,155 on the RUT and that's $500 per contract (/TF) so all greed now if you don't take it!  

    CMG/Rookie – We have a similar trade in the STP (2016 $465/495 bull spread).  Your Jan spread is net $50 out of $60 best case so you have a 20% "bird in the hand" situation if you wait 6 months vs unwinding the trade now and taking $50 and trying to find some other way to make 20% in 6 months.  Are you really that good?  I'd stick with the bird in the hand because I don't think you have 40% in 6 months in the bush…

    In fact, anyone who want's to make a nice, dull 20% in 178 days can buy the CMG 2015 $500/560 bull call spread for $50 and wait and hope the stock doesn't drop $100 in the next 6 months (and, if they do, you can sell some puts).  

    As to selling the calls, Rookie, that's the kind of thing you do when you feel a move up is undeserved and is very likely to reverse.  CMG had a 25% increase in net income in Q2 on 28.6% more revenues and they only have 1,500 restaurants vs 35,000 MCDs, so room to expand at least 20x from here.  Don't forget CMG came out of MCD – they know how to build a business!  

    /TF/Wombat – Wise use of the Futures, make a free hedge!  

    KO/Pfehl – US getting on a health kick it seems.  Even my kids and their friends were excited to get Veggis Straws the other day at Sky Zone (which is a fantastic business):

    Sensible Portions Garden Veggie Straws - Sea Salt F40-4784306-8200 - 1 oz sealed bag.

    Sky Zone is a stock I'd like to own (not public), $20 an hour and about 200 kids per session and it was packed on Sunday afternoon, when we went.  They have "healthy" snacks and a WiFi cafe and they host parties, etc – and now they are having teen social nights as well.  All it is is a big warehouse building filled with trampolines and minimum wage counselors (and lots, and lots of waivers!) – they must be making a fortune!  

    Anyway, I feel a lot better about taking my kids there than Dave & Busters or the Mall and, as a bonus, when they are done, they are too tired to go to the mall!  

  21. Phil – What is your take on MCD after earnings? 

  22. SkyZone / Phil – these places are deathtraps and a sketchy investment, several people we know were badly injured at the one near our house, including our son who got a concussion and broken shoulder, it was finally closed down due to litigation (not by us).

  23. HLF/Abhish – I think Ackman must be way underwater on HLF and desperate.  He's already put his neck on the chopping block on this one.  If this is all he's got, I'm very surprised.  Good job taking those profits – as I say, it's not worth risking nice gains when you make them so quickly as they can reverse just as quickly.

    9:50 AM We’re waiting for the hedge fund firm Pershing Square’s presentation about Herbalife(ticker: HLF), where Bill Ackman has said he’ll present videos and other documentation of what his researchers found at the neighborhood storefronts run by distributors of the LA-based nutritional supplement firm. His firm’s notorious short sale bet against what he’s called a “pyramid scheme” has at onetime reached $1 billion, he’s said.


    Barron’s visited a bunch of these storefronts and their hapless operators in 2012 (“Where Beauty Is Skin Deep,” May 12, 2012), including some in the impoverished South Omaha, Neb., where they’d been encouraged to borrow their Herbalife entry funds from a local office of the Nobel-prize winning anti-poverty program Grameen.

    Ackman will be playing to a standing room only crowd of more than 300 Wall Street suits at the auditorium of the AXA Prudential building on Broadway. TV trucks crowd the sidewalk outside. CNBC is playing loudly from screens around the stage, while many in the audience hunch over laptop trading screens waiting for Ackman to appear in ten minutes.

    10AM Up-tempo jazz sax playing behind Pershing Square Capital’s logo on the screens. Security has been tight: scanned bags, earphones secret service types.

    10:01 AM Pershing Square’s Bill Ackman jumps right in, without disclaimers.

    After State of California enforcement action 1986, sales declined. The company modified its reimbursement so that recruiters got paid on every level below them, says Ackman. When sales slowed again, the company went private and recruited Michael Johnson from Disney to be Herbalife’s new CEO.

    A strategy document that Ackman says he got from a former Herbalife employee discusses targeting the world’s poorest billions. “inclusive capitalism” should allow the company to make money from the poorest of the poor.

    “How do you target the poorest of the poor?” Ackman asks.

    A slide shows the abysmally low average GDP per capita in countries like Burundi, where the annual average income is below $300.

    Ackman quotes Herbalife’s CFO who said that nutrition clubs in low-income neighborhoods are the company’s future.

    10:11 AM Slide of letter from HLF CEO Johnson urging his distributors to write their congressmen and disputing that HLF targets Latinos.

    Per Ackman, in 2004 and 2006 Nutrition Clubs and Latino-targeting program return the company’s North American business to growth.

    IMAX/DM – I always like them, it's just a matter of timing:

    IMAX/Stock – Hmm, we do like them when they are cheap but people are bailing ahead of earnings (24th).  I guess because summer box office is off but I didn't see evidence of that in IMax theaters.  Those were packed whenever we went.  I think people have gotten into going to movies for IMAX and, otherwise, waiting to get things at home.  If they go lower, I won't be able to resist adding them to the LTP, anything below net $20 seems good to me.

    So we're not irresistibly cheap yet but $24 seems to be a solid floor.  I guess I'd take the March $25/28 bull call spread at $1.50 and sell $22 puts (now .80) for $1.25 or better if they drop.  If not, then the spread is on track, so no worries. 

    SkyZone/MrM – Interesting because they are spreading like wildfire.  I was watching a section where under 10s were playing trampoline dodge ball and flying around and bouncing off walls and missing each other by inches at great speed and I was actually contemplating the movement of molecules in a gas cloud and trying to figure out, statistically, how long this could keep up before a very nasty collision.  Your comment supports my conclusion (not too long) but, like skiing, they just need to set some precedents and then it's Caveat Emptor!  

    They could make the kids wear helmets but I also think they should limit play time to one hour out of 3 at most because I think exhaustion is the cause of most spills that I saw while I was there.  


  24. AMZN/Phil- based on StJ's earlier post regarding the moat being built by AMZN along with potential valuation once achieved, do you have any interest in AMZN? I was thinking about selling 2016 $310 puts for around $26.

    TNA -Held off buying this spread after your warning, and it is now $2.15 approx. What are your thoughts now? 

    Sky Zone- I used to love these places when my kids were little. They had a ball and were exhausted when we left. unfortunately, everyone wants their kids to be bubble wrapped and expect them to never get hurt playing. Not dangerous, just fun and kids who take chances get hurt sometimes. What this litigious society has done to end all fun activities is the real crime!

  25. HD

    Talked to a dealer friend of mine last week and what is hurting most and they are franchises is accessories and service sales. Warranties are short and older bikes are going somewhere else. Auto dealers are similar with mostly warranty work. Sales are not the main generator of income.

  26. Guessing Ackman's presentation wasn't that convincing.  That presentation just cost him so serious coin today.

  27. Why the heck are health insurers up on ACA Appeals Court news? Without subsidies, many people just won't be able to afford insurance.

  28. CMG/Phil- So that 500/560 BCS is at $52.50 right now? Still worth a poke (actual spread was $48.90-$55.50)

  29. SkyZone - the problem we observed was teen boys, if there was an age limit, for example under 12, they could likely remain fun play zones. But boys who do parkour or martial arts or skateboarding are, or think they are, quite acrobatic, and the collisions and personal mishaps in such a place can be quite fierce.

  30. Phil / TF
    Calling shorts at 1155 ?

  31. Phil – Thanks for the hedging advice! but how do you figure out what your portfolio will do with a move in the index? And skyzone looks like a bouncey castle on steroids. Where was this when I was a kid!

  32. (Reuters)

    Report Delta Flights from JFK to TLV Diverted to Paris Following Rocket Attack Near Ben-Gurion Airport

  33. The CMG trade in the STP (2016 $465/495 bull spread) can be closed at almost full value.  I got 29.65.

  34. Phil/MRM/Skyzone – My Company insured the General Liability of Skyzone or a similar company, with many locations, and while there were a lot of incidents, very few of them turned into anything concerning from an insurance perspective.  The key thing that they did was implement video cameras, to eliminate the argument that the hardware was defective and caused the injury.  

  35. Skyzone/mrm -  had to take my son to Children's for stitches with plastic surgen on lip/mouth for a tumble on the very same place and trampolines in the KOMO photo. A fun visit turned into 12 hours at hospital and $800+… yes, lots of waivers, and not much first aid. But I still like these places!

  36. Ackman – $50 MILLION to investigate HLF? Are you kidding me?? Anybody else find this ABSOLUTELY PREPOSTEROUS!?  If that isn't a signal for any remaining investors to get out of his fund(s), I can't imagine what it would take. Maybe if he cited a Wiccan methodology?

  37. Phil- My wife inherited and IRA a while back which her mother had loaded with Municipal Bonds. This was a terrific way for Mom to invest at 77 years old, getting a nice steady income stream that she considered "safe" , but I feel that for us at 50ish it is not. I have sold 2/3 of the bonds investing the proceeds quite succesfully especially in the last six months since joining here. My question is, do you think there is any value to these instruments yielding anywhere from 5.75% 70 7.5%. I might add that the broker must have needed to dump some Puerto Rico bonds from another client and pushed them off on my mother in law, since there are a couple of those Sales tax backed bonds in the group. I remember that he told her how safe they were due to insurance, and that the drop in price was temporary and a good time to acquire.  

  38. Phil

    Any thoughts on the Aug XOM 100 puts?  The XOM's I have are down about 50% and I'm wondering if we should adjust them at this point.

  39. Phil

    Could you comment on my reasoning below, I'd like to know what you think.

    I have Yhoo Jan 15 38/45 BCS, now down about 30%.  I'm thinking to roll the long 38's down to the 33's for 1.75 (32/33 seems like a floor to me).  That puts me net 3.40 on a 33/45 spread.  I'd let the 45's expire and decide what to do with the 33's if Yhoo doesn't make a 10%+ move up by January or earlier.

    I'd appreciate any other suggestions you have as well.


  40. Phil / DXD
    If I remember correctly, the DXD Aug 24-29 BLCS – we pulled the shorts in a while back. Are you suggesting we recover ?

  41. Netflix slumps on concerns about international profit outlook • 11:24 AM

    "The launch into the six new European markets appears costlier than anticipated," writes Janneyafter taking in Netflix's (NFLX -4.5%) light Q3 EPS outlook. Though the company expects its U.S. streaming contribution profit to rise $18M Q/Q to $245M, its international contribution loss is expected to grow $27M to $42M.

    RBC expects Netflix's international ops to stay in "early-stage margin mode" for several years. Nonetheless, it sees the unit's margins matching U.S. levels long-term, and is reiterating an Outperform.

    Over a dozen firms have still hiked their Netflix targets in response to the company's better-than-expected subscriber adds and healthy Q3 sub forecast. Pac Crest (PT hiked by $10 to $530) notes total Q2 adds of 1.7M beat its forecast by 300K, and that lower marketing spend is offsetting higher content costs (thus driving margin expansion as revenue grows).

    Mentioned on the CC (transcript): 1) CFO David Wells suggests Netflix open to stepping up its content spend once margins hit 30%. U.S. streaming margin was at 27.1% in Q2. 2) Reed Hastings declares the impact of Netflix's price hike on sub adds to be minimal. 3) Expenses related to paid peering deals are dwarfed by content costs. 4) 10%-20% of international content tends to be local fare. 5) Netflix sees its superior TV show library as a differentiator relative to Amazon's European service (formerly called Lovefilm).

    Prior Netflix earnings coverage

  42. ISRG/Phil- Do you read any meaning into ISRG moving >2% into earnings tonight? Does someone know something? I would think that it would be a tough quarter with capital spending still being difficult, a new device to ramp up,  as well as all the questions raised about robotic surgery, which I believe will be answered definitively that outcomes are better using robotic devices. Yet the stock is up in the last few sessions. 

  43. 6db6d6ff766c72e2e5f3ce1d2d2bc2baSpeaking of dangerous attractions, Action Park is a huge hit again and now they are talking about building some gigantic indoor water park there as well.  

     MCD/Willsons – Same heath kick problem.  Also, they dropped chicken tenders because of margins but it was one of the only acceptable things to eat for parents and we still got fries and shakes to go with them so, stupid move.  Also, they messed with the Dollar menu and that too drove people away.  I think it's transitional and they're still making $6 a year (p/e 16) so I wouldn't count them out but we don't get excited about MCD until they are in the upper $80s.  

    AMZN/Craigs – No because it's no different than WMT.  They may sell $500Bn worth of stuff but then they'll only make $5Bn selling it.  Is that worth a $200Bn market cap?  In reality, AMZN sells just $75Bn worth of stuff and makes $275M and has market cap of $166Bn for a p/e of 603 – that' completely ridiculous and WMT sells $476Bn and makes $16Bn and gets a market cap of just $246Bn for a p/e of 16.  Somewhere between 600 and 16 is reality for AMZN and, the bigger they get, the harder it will be to justify the 600.

    If I ran AMZN, I'd be building store brands like crazy.  They have to take control of the manufacturing of some of the products to make any real money (and not Kindle give-away BS).

    TNA/Craigs – Well now we're over 1,150 so game on until we're not.  It's still a good hedge but $2.15 is a bit chasey – I'd offer $1.95 and see if it fills.  I agree on kids – mine were skiing since they could walk and Jackie had one broken leg but, other than that – all good and, if you ask her, she wouldn't give up a second of skiing, mountain biking, rock climbing, skateboarding, etc. in exchange for not having to have limped around for 3 weeks a few years ago.  It's sad what they do to kids now – Jackie has a friend who is scared of escalators and will only take stairs!  When I was a kid my Grandfather would have made me stand at the top of the escalator, told me to stand at the edge and look down – and then kicked me down the thing and told me to man the F up.  That was parenting!  

    HLF/Rustle – Ackman was totally lame!  Same song, different tune.


    I write the same old song with a few new lines

    And everybody wants to cheer it

    I write the same old song you heard a good few times

    Admit you really want to hear it – Townshend

    ACA/Griffin – They don't really like the ACA, long-term, it cuts into their profits.  This will go to appeal anyway and, failing that, will become a huge election issue – I almost think this is strategy by the Dems with just 4 months to Congressional elections – now they can make a chart and show you exactly what it will cost you to vote Republican.  

    CMG/Craigs – Big difference between 20% upside and 14%, though 14% still nice, I'd be patient and offer just $50 and see if it fills.  

    SkyZone/MrM – Not to many older boys when I was there.  It would be a good idea for them to segregate a bit but that's kind of what I saw as all the small boys were in their own section.  They were, by far, the craziest group in the place.

    /TF/Wombat – Not short, just figure that's good money for the longs.  

    Hedging/Pfehl – Well the best thing to do is write down how much you are up or down on a 0.5% move, like we have this morning and then keep a log of any 0.5% or 1% moves and see how much you go up or down and, after a while, you'll get the idea of how much a 1% move affects you and then you can use that information to create some long-term hedges.  This only applies to fairly steady portfolios, of course – if you are in and out of positions like a maniac – it makes it much harder to construct sensible hedges.  

    Delta/Decad – Amazing not affecting the stock.

    CMG/Edro – Thanks, of course we want to take that spread off the table for $29.65 in the STP (2016 $465/495 bull call spread).  

    SkyZone/Palotay – Thanks, good info.  

    SkyZone/Scott – Did your kid want to go back?

    ROFL Scott!  Wiccan…

    Bonds/Craigs – It's nice to get a little tax free income to spend and certainly there's a place as part of a diversified portfolio but I think you are wise to diversify out of it because, as you note, at 50, you can do much better over the long run.  As we saw in 2008, there's nothing likely that's going to take PFE (for example) and the markets down 50% that won't also cause bond defaults and with PFE you can set up a 14% return through options and pay just 20% long-term gains vs 6% hoping Puerto Rico doesn't default over the same period.  

    PFE at $30.67, selling 2016 $30 calls for $2.45 and $28 puts for $2 is net $26.22 and dividends are .26 x 6 quarters is $1.56 plus $3.78 if called away at $30 is $5.34 or 20.3% over 18 months so about 14% a year taxed at 20% for net 11.2% after tax is almost double your tax-free 6%.  

    Even if you assume you start with 1/2x (of the bond you cash in) and that there will be at least 1 period out of 5 where you get a 2x assignment (over 8 years(ish)), you still make 7 x 11.2% = 78.4% return vs 42% on the bonds so 36.4% better returns can then be applied to your 2x purchase and it still works out miles better over the long run.  

    XOM/Jeff – I'll go over those in the Webinar (one hour), please remind me.  I think $104 is a good top and it was an earnings play but this oil spike is burning us so we do need to adjust, at least. 

    YHOO/Jeff – Yes to the roll as it puts you .50 in the money for $1.75, so a good investment but the Jan $45s are .60 and won't burn off until your premium does so why not roll them to the Sept $37s (.70) and youstill have a $5 spread and you have a huge time advantage so, hopefully, if the Sept $37s expire worthless, you'll be able to pick up another $1 on a new sale to help pay for the roll.  You can put a stop on 1/2 the short calls at $1 or just use $35 as a spot you must roll at (you can always roll back to the Jan $45s, or even the $42s (now .95) certainly wouldn't be a tragedy.  

    DXD/Wombat – No, that's just my suggestion for a new DXD trade as of today.  

    NFLX/Jabob – The low-hanging fruit has been picked by them but still, very impressive numbers.  

    ISRG/Craigs – Well, I did mention them in the morning post, so you never know why something is moving.  I think they are clearly underpriced and I'm sure I'm not the only person who sees that.  

    The big money for ISRG is still in the Future as 10 rural hospitals in Africa will eventually be manned by a single surgeon who can log into the local robot and perform surgery.  Those kind of efficiencies trump many other concerns.  

  44. Look at OPTT move.  50% today so far.

  45. Any guess on AAPL's price tomorrow?  Think it will touch 100?

  46. Phil – AMZN has already started building their own store brands. "Pinzon" and "Strathwood" are just two of many …

  47. OPTT/Palotay – You gotta have faith!  

    What a wild ride it's been so far:

    Ocean Power Technologies Inc. (OPTT) has fired Chief Executive Officer Charles Dunleavy. David Keller, a director, was appointed interim CEO.

    Dunleavy was terminated “for cause” yesterday and will receive no severance payments, according to a filing with the Securities and Exchange Commission today. No details were provided. ( trading halted)

    Submitted on 2014/06/10 at 3:39 pm

    OPTT/Pat – Seems like a bit of an over-reaction but I wouldn't do anything until we get a straight story – maybe the CEO robbed them blind.  Maybe he's starting a new company in the same space…


    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.  

    Submitted on 2014/06/19 at 11:32 am

    • OPTT – They got killed on a scandal and now they are being sued about it.  The good news is, if you own them, you qualify for the class action against them.  Meanwhile, as a play on the stock, we're still going to look to add to the position as it moves lower because – this too shall pass…  

    Submitted on 2014/07/15 at 10:13 am

    OPTT/Palotay – If you are trading it, then out.  If you are in for the long haul, then good time to accumulate.  It will be a long time for them to slog through these shareholder lawsuits. 

    Submitted on 2014/07/16 at 1:18 pm

    OPTT – These guys took a bath recently but, fortunately, our net is just 0.79 x 4,000 shares = $3,160, so nothing to wring our hands over – we knew it was going to be speculative and, so far, it's not disappointing.  We're obligated to buy 4,000 more at $2.50 ($10,000) which would average us at $1.645 on 8,000.  At the moment, we have a $5,900 loss showing so it's not going to get much worse (hopefully), so we'll just give them a while to sort out this mess.  If no improvement by September, we need to bail or below $1 will be red flags. 

    AAPL/Rustle – We're actually expecting a pullback.  Unless they give rosey guidance all of a sudden, I don't see why this Q should be an upside surprise.  

    AMZN/Diamond – Damn, they stole my idea already?!?  cheeky 

  48. Thanks Phil, I'll have to miss the webinar but hopefully will be able to catch the replay. Appreciate your comments. 

  49. Phil, do u think Icahn comes tweet about his HLF position and delivers a good blow to Ackman. i know Soros owns HLF too

  50. Was thinking if they talk up the next iPhone and release date, stock might move up.  Hoping it pulls back, want to write a shit load of puts on it if it does.

    Ackman was successful in creating a short squeeze in HLF.  Love to know how much this cost his fund today.

  51. last message should've started


  52. HLF/Phil- CNBC just had someone on saying that Ackman had said that when he placed his $1B bet against HLF he didn't understand how the Nutrition Clubs worked. These nutrition clubs apparently provide up to 90% of the income for HLF. So, Ackman made a bet without understanding how they derive their major source of income. Crazy. They also said they believe the share price could easily be $150 by next summer. 

  53. Phil / QQQ – i need a roll idea for my QQQ August 94 puts down about 50% from a buck purchased last week.  thanks. 

  54. terra // QQQ


    I dumped mine

  55. Which happens first, NFLX to 400 or CMG to 700?

  56. FWIW TNA players

    I have noticed an unusual number of large IWM sales, the buy side is BOTS.

  57. it's interesting that global food prices are deflating. I didn't see that coming.

  58. rustle123 – I'm going with 102

  59. .. neither did my DBA ; >

  60. Craigsa620 – Municipal bonds shouldn't be in an IRA.  Because they are already exempt from Federal, and perhaps state tax, (depending on where the person lives), they don't need the additional shelter of an IRA.  In addition, because they are tax exempt, they pay lower interest than taxable bonds.

    If you want to maintain some bonds in the IRA, use taxable bonds.  You can get more income out of equivalent quality bonds by buying the taxable ones.

  61. Phil

    Nice little swoon in /TF….any trade into close here?

  62. PLUG players ( should probably rename that )

    what a run
    though got hammered today all the way down to its 200

  63. /TF
    Yeeeeee Hawwwww.

  64. Phil,

    Let me know if you need assistance with collating the blog posts into a book (or equivalent document). I can volunteer my time and have experience in writing engineering conference papers/documents.

  65. wombat

    Hope you were short!

  66. STJ – This move in QCOM today looks like a real breakout, finally.  We'll know tomorrow.  They report after the close.

  67. See any more downside shadow? 

  68. jasu1

    Down? Yes but I was thinking tomorrow, always early or late.

  69. Albo- I agree. As I said, this was inherited and my mother in law was using a firm that specialized in munis as her broker/advisor so naturally they sold her muni's. I am quite angry at what they put her in as I now hold some Puerto Rico bonds that they told her were "safe" investments. Looking at the timing of the transactions, I would say they needed to unload for another more savvy less trusting client. Can't prove anything, but lesson for all, never trust anyone whose income is based on selling investment products. Since she was over 75 and taking regular withdrawals I don't think she was looking at tax implications and was invested in these because she felt safe and trusted her advisor. She had it all in an IRA due to a legal issue to shield the funds from seizure by the feds. Its a long story going back to the S&L crisis. I am now stuck with the inherited IRA, but if not for having the funds in an IRA she could have lost it all due to persecution from some overzealous and (imho) anti-semitic regulators. 

    I have been hoping for bond prices to improve before selling, as well as knowing where to use the cash generated so I don't just have it sitting in a money market for any length of time.

  70. TTWO – gamer investors, what's your take? after getting knocked down with last earnings, broke back into new highs (since 2009). still got legs?

  71. QCOM / Albo – Correct, we'll see if they confirm tonight. Lots on the line tonight as I have a bunch reporting.

  72. STJ – I think QCOM reports tomorrow after the close.  However, you're right, some biggies tonight.

  73. HLF drama turns into a net positive for the stock.  If that's Ackman's best shot, fear of him is off the table.  

    Icahn/Abhish – I think he was just quietly buying and laughing.  

    AAPL/Rustle – I want to get more bullish too on a pullback, not sure we'll get it though.  

    HLF/Craigs – I don't get Ackman, at this point you think he would have been trilled just to get most of his money back and walk away – QUIETLY!  

    QQQ/Terra – I think, like for Phel above, you should move to the DXDs discussed above – same logic.  

    First/Rustle – NFLX $400 more likely.  

    IWM/Shadow – Not a good sign that /TF cannot gain traction.  NYSE 11,015 – also not impressive at all.  

    Food/BDC – Well a lot of the inflation was drought and such and those conditions are mostly going away.  Beef prices caused China to cut back on consumption and each pound of beef is like an acre of corn so exponential savings there when beef consumption retreats.  

    Good IRA point Albo.  

    /TF/Jasu – Same as before, we can always play a pop off 1,150 (with tight stops).  

    PLUG/Wombat – What an insane stock. 

    Book/Decade – You're hired.  Please contact us via Email – I'd really like to get that going and, if you have time to run point, that would be fantastic.  

    TTWO/Scott – They are fairly priced in the low $20s and now it's all about their pipeline and the buzz they get at the CES in Jan.  Their new game, Evolve, won a prize at the gaming expo as best new game but we won't know until fall how they monetize it and those early sales won't be known until Jan's report.  This is kind of a dead spot in their cycle and hopes are high so I'd be careful and wait until after earnings.  

    Health care/Pharm – This is the key paragraph:

    "We believe that this decision is incorrect, inconsistent with Congressional intent, different from previous rulings, and at odds with the goal of the law: to make health care affordable no matter where people live," Department of Justice spokeswoman Emily Pierce said in a statement. "The government will therefore immediately seek further review of the court’s decision. In the meantime, to be clear, people getting premium tax credits should know that nothing has changed, tax credits remain available."

    This will get batted around for a while but I doubt this PRELIMINARY decision will stand as the intent was clear – something a higher court will feel more free to interpret – even if Congress refuses to clean up the language.  

  74. Yes the subsidies are dead, GOP thinks they win but could be some really PO'd people.

  75. It's going to the Supreme Court, eventually.  Obama better hope that he can replace one of the old cronies…. :)

  76. Oh, did I say "for a while" – it's already over:

    The United States Court of Appeals for the Fourth Circuit, in Richmond, upheld the subsidies, saying that a rule issued by the Internal Revenue Service was “a permissible exercise of the agency’s discretion.”

    The ruling came within hours of a 2-to-1 ruling by a panel of the United States Court of Appeals for the District of Columbia Circuit, which said that the government could not subsidize insurance for people in states that use the federal exchange.

    Actually still not settled but, obviously, the White House can take this to higher and higher courts until they get a verdict they like (assuming they'll want to avoid the Supremes) 

    The White House rejected the ruling of the court here and anticipated that the Justice Department will ask that the entire appeals court to review it. Mr. Obama’s aides noted that two district courts have thrown out similar lawsuits and therefore argued that judicial opinions have been mixed at worst. Moreover, they said the ruling Tuesday seemed to fly in the face of common sense.

    “You don’t need a fancy legal degree to understand that Congress intended for every eligible American to have access to tax credits that would lower their health care costs, regardless of whether it was state officials or federal officials who were running the marketplace,” said Josh Earnest, the White House press secretary. “I think that is a pretty clear intent of the congressional law.”

    Reacting to the ruling in Washington, a Justice Department spokeswoman, Emily Pierce, said: “We believe that this decision is incorrect, inconsistent with congressional intent, different from previous rulings and at odds with the goal of the law: to make health care affordable no matter where people live. The government will therefore immediately seek further review of the court’s decision.”

    “In the meantime,” Ms. Pierce said, “to be clear, people getting premium tax credits should know that nothing has changed. Tax credits remain available.”

  77. @shadowfax

    GOP did win, they succeeded for the companies and individuals who pay them.  And other die hard Republicans will just watch Fox News and think overall it's a good thing they don't get subsidies anymore.

  78. Nice example of how Fox News never lets the facts get in the way of a good spin:

  79. Guy on CNBC was saying that he could actually be a negative for GOP if subsidies are struck out because people won't be able to afford their premium and they'll know that their governors is to blame because they didn't setup state exchanges. There are 20 millions people covered by ACA now so it's not like a couple thousand people will be affected…

  80. Phil,

      I think many of us would be eternally grateful if you would create an IRA Portfolio. Should be a piece of cake with your meager workload: 5 or so major portfolios, webinars, TV appearances, Build a Better Berkshire, 5000 daily replies to posts, etc. Should we expect some picks later today? 

  81. rustleFOX

    Last I recall they have less than 2 million viewers. I am expecting emails from my Mormon friends later telling me how Obama Care is dead! They think Romney will win this time, I don't think he will run.

  82. Um….

  83. Phil, i am thinking about buying some Appl july 94.64 puts to insurance against my oct 14 95C. any input will appreciated

  84. UNP/pwright – looks like wil be a strong close over 102. if so, will add another call spread.  Maybe a Jan 100 / Sept 105 diagonal, or a Jan 105 / Sept 105 calendar…

  85. Earning tonight….

    Consensus Estimate – 1.22
    Whisper Number – 1.32
    Average Move – 5.8%
    Priced into Options – 4.65%

    Consensus Estimate – 0.61
    Whisper Number – 0.64
    Average Move – 6.4%
    Priced into Options – 4.54%

    Consensus Estimate – (0.04)
    Whisper Number – (0.01)
    Average Move – 8.3%
    Priced into Options – 7.07%

    Consensus Estimate – 2.76
    Whisper Number – N/A
    Average Move – 10.3%
    Priced into Options – 7.36%

    Consensus Estimate – 0.21
    Whisper Number – 0.23
    Average Move – 13%
    Priced into Options – 12.38%

    Consensus Estimate – 0.38
    Whisper Number – 0.39
    Average Move – 7.7%
    Priced into Options – 5.3%

    Consensus Estimate – 0.79
    Whisper Number – 0.81
    Average Move – 8.1%
    Priced into Options – 7.7%

  86. AAPL July 25 99/100 BCS for 19c.  Right into that 5% move!!!!

  87. scotti re: UNP, it is looking good, I think I might go with you on those

  88. So many fun earning reports tonight.  I'm gonna go buy some popcorn.

  89. What Global Warming?  

    Embedded image permalink


    Report by Federal Reserve Bank of New York finds serious problems in Deutsche Bank's U.S. operations.


    1 out of every 25 New Yorkers is a millionaire. In Monaco, it's 1 in 3. (via )

    At an average cost of $18,000 a year, child care is the biggest line item for many U.S. families.


    High-heeled, leather Crocs not best idea in retrospect, company admits


    Can Ackman please bash gold?

  90. abhishekseth2 / AAPL

    IMO, with earnings tonight, you would be much better off selling a call to cover the position and offer some downside protection over buying a put.  With earnings, you have instant evaporation of premium as soon as that number comes out.  Unless you are expecting a disaster number, sell the call to cover.  If AAPL doesn't have a huge move in either direction, you will be a LOT better off with the call sale.

  91. scottmi re: UNP, it looks like earnings is Thursday, do you want to put new longs on before or after the report?

  92. Thanks JPH

  93. SPX 2000, here we come.  MiM reading: 68.00% with a Buy-side imbalance of $226,027,582 – decent size.  zoom zoom.

  94. Phil/

    No earnings plays today? Staying on the sidelines? Seems like you can find one or two just for kicks.

  95. With you on AAPL Pharm… Cheap pot shot!

  96. UNP/pwright – good call on that. my trigger to consider adding is a close over 102. not afraid to hold the diagonals through earnings, but will mull on that.  benefits can be higher premium on selling the nearer calls. maybe will go with an August short call…

  97. GOP/StJ – I think this issue will really hurt them in the coming election.  Dems can work the courts so the timing is right around November too.  

    IRA Portfolio/Kevin – Yeah, it's not in the cards but always feel free to ask for ways to play in an IRA.  Everyone has different restrictions, that makes it tricky. 

    Derivatives/Pharm – That's the same old, nasty story we've heard for years, isn't it?  Still kind of stunning when you look at it.  

    AAPL/Abhish – I think the naked call is way too risky in the first place.  Adding puts is just betting against yourself – doubling down on your premium.  Not good.  

    And what JPH said.  

    Earnings/DC – I just had a phone call so no time to look them over.  

    Nice little selling burst into the close.

  98. Phil,

    What software do you use to post the videos?


  99. Videos/Rookie – You mean the daily show?  Site Admins have a "source" button on the chat box and we can use the HTML from a video (most, not all) to add it to our comments.  It's about the only thing I did bother to learn in HTML.  

    EA seems to have done very well.  

  100. scottmi re: UNP, another option might be, if you think they'll beat, put on a 1/2 position in the Jan 100 longs tomorrow, then if beat can cover and wait for things to cool down, put on another set of diagonals.  If don't beat, can turn that into a calendar and put the other 1/2 on at a lower strike.  I looked at the Aug premiums on short 105s, they look OK, but not spectacular. 

  101. IRBT crushed after beating EPS (.28 vs .22 expected) but light on revenues ($139.8M vs $142.5M expected), seems way overdone already at $35.

  102. IRBT/ Seems to me their guidance and earnings were pretty damn good.  Shares down over 9% after hours.  

    However, don't care.  Going to keep the position. 

  103. JNPR – Down after lower forecast.

  104. JNPR / Albo – That's one of the stinkers in my portfolio… Have to decide to either drop that sucker or DD!

  105. XLNX not looking good AH! What's with all the network companies…

  106. PBYI….whoa….

    AAPL…come on…go go go…. 

    MSFT…well, now we know why they are laying off so many.

  107. Not gonna happen on AAPL Pharm…

  108. PBYI - jeepers, why do my bios always go the other direction?  That's amazing.

  109. StJ….still a few days left… :)

  110. Broadcom +2.8% AH; gross margin better than expected

    05:26 PM ET · BRCM

    • Broadcom (NASDAQ:BRCM) expects Q3 revenue of $2.1B-$2.25B, in-line with a $2.19B consensus.
    • Q2 product gross margin was 55%, +280 bps Q/Q and +290 bps Y/Y, and above guidance of 53.95%-54.95%.
    • Q3 product GM is expected to be at 55% (+/- 75 bps), and opex is expected to decline $40M-$60M Q/Q (job cuts related to the baseband exit?)
    • Q2 results, PR

  111. Xilinx -9.2% AH on revenue miss, guidance; Altera -3.2%

    05:13 PM ET · XLNX

    • In addition to missing FQ1 revenue estimates by $18.8M, Xilinx (NASDAQ:XLNX) is guiding for FQ2 revenue to be flat to down 4% Q/Q. The consensus is for revenue $644.5M, 5% above FQ1 levels.
    • Xilinx attributes the FQ1 weakness to soft sales to defense and wireless clients.
    • Industrial, aerospace, & defense sales (31% of revenue) -9% Q/Q and -11% Y/Y, telecom & data center (50% of revenue) +1% Q/Q and +20% Y/Y, broadcast, consumer, & automotive (16% of revenue) +5% Q/Q and +3% Y/Y, everything else (3% of revenue) +39% Q/Q and +11% Y/Y.
    • Gross margin +150 bps Q/Q to 69.1%, and above guidance of 68.1%. Xilinx expects an FQ2 GM of 70%. $100M was spent on buybacks.
    • Altera (NASDAQ:ALTR), which reports tomorrow, is following Xilinx lower.
    • FQ1 results, PR

  112. iRobot -5.7% AH on revenue miss, soft sales outlook

    05:02 PM ET · IRBT

    • iRobot (NASDAQ:IRBT) expects Q3 revenue of $133M-$136M, below a consensus of $149.5M.
    • Full-year guidance is for revenue of $555M-$565M and EPS of $1.10-$1.20 vs. a consensus of $564.8M and $1.11.
    • Q2 EPS received a $0.07 boost from a tax benefit. Domestic home robot sales +7% Y/Y to $42M, international home robots +19% to $91.2M, defense & security -59% to $5.1M.
    • Q2 results, PR

  113. Transocean Partners submits IPO filing

    04:59 PM ET · RIG

    • Transocean (NYSE:RIG) spinoff Transocean Partners (Pending:RIGP) files for an IPO of 17.5M common units at an expected price range of $19-$21.
    • Expected net proceeds of as much as $423M will purchase a 51% stake in three of RIG’s existing drillships; all are working in the Gulf of Mexico, with two operated by RIG for Chevron under contract through 2018 and 2020 at dayrates of $590K and $526K, and one semisubmersible rig on contract to BP until 2016 at a dayrate of $428K.
    • Following the IPO and assuming exercise of the underwriters’ provision, RIG would own 49% of RIGP.

  114. Apple’s gross margin beats guidance; iPad weighs on revenue

    04:52 PM ET · AAPL

    • Apple (NASDAQ:AAPL) had an FQ3 gross margin of 39.4%, +250 bps Y/Y, above guidance of 37%-38%, and driving the EPS beat. FQ4 GM guidance is also at 37%-38%.
    • iPhone revenue (53% of total revenue, and a bigger % of op. profit) +9% Y/Y to $19.8B, after growing 17% in FQ2. iPad revenue -8% (to $5.9B) vs. -13%. Mac revenue +13% (to $5.5B) vs. +1%.
    • iTunes/software/services revenue +12% to $4.5B, Accessories +6% to $1.3B, iPod -40% to $442M.
    • Excluding retail, Americas revenue +1% Y/Y to $14.6B, Europe +6% to $8.1B, Greater China (boosted by China Mobile/4G launches) +28% to $5.9B, Japan +1% to $2.6B (slowed from FQ2′s +26%), rest of Asia-Pac +6% to $2.2B (a notable improvement from -17% in FQ2). Retail revenue +1% to $4.1B.
    • R&D spend +36% Y/Y to $1.6B, SG&A +8% to $2.9B. $5B was spent on stock repurchases.
    • AAPL -0.9% AH. FQ3 results, PR.

  115. More on Intuitive Surgical Q2 results

    04:27 PM ET · ISRG

    • Intuitive Surgical (ISRG +0.9%) Q2 results: Total Revenues: $512.2M (-11.5%), Instruments: $261.9M (-1.0%), Systems: $143.7M (-33.4%), Services: $106.6M (+8.7%); COGS: $167.8M (-3.2%); R&D Expense: $40.2M (-2.4%); SG&A Expense: $161.2M (+10.8%); Net Income: $104.0M (-34.6%); EPS: $2.77 (-29.0%); Quick Assets: $2,043.4M (-22.3%).
    • Instruments shipped: 96 (50 da Vinci Xi).
    • No guidance given.

  116. Juniper offers light guidance; Junos Pulse to be sold for $250M

    04:26 PM ET · JNPR

    • Though it beat Q2 estimates, Juniper (NYSE:JNPR) expects Q3 revenue of $1.15B-$1.2B and EPS of $0.35-$0.40, below a consensus of $1.26B and $0.44. The company says it’s dealing with “some customer-specific dynamics” that are weighing on results.
    • Juniper also announces it’s selling its Junos Pulse security software unit to P-E firm Siris Capital for $250M.
    • Shares -6.1% AH. Q2 results, PR.

  117. Microsoft’s commercial growth picks up; Nokia unit pressures EPS

    04:18 PM ET · MSFT

    • Microsoft’s (NASDAQ:MSFT) Commercial revenue rose 11% Y/Y in FQ4 to $13.48B, an improvement from FQ3′s 7% growth. Commercial cloud revenue +147% ($4.4B/year run rate), Windows volume licensing +11%, enterprise services +11%, SQL Server and System each up double-digits.
    • Thanks to two months of Nokia phone revenue, devices & consumer revenue rose 42% to $10B. Windows OEM revenue +3%, with Pro revenue rising 9% and non-Pro revenue falling 9%.
    • Office consumer revenue +21%, with the Office 365 home/personal sub base growing by over 1M to 5.6M+. Bing search ad revenue rose 40%, but display ad sales fell 11%.
    • The Nokia unit contributed $1.99B in revenue, but only $54M in gross profit. It took an $0.08 toll on EPS. On the other hand, the end of Microsoft’s commercial agreement with Nokia provided a $382M one-time op. profit boost.
    • MSFT +0.2% AH. CC at 5:30PM, guidance will be provided.
    • FQ4 results, PR

  118. Stocks rise on Fed-friendly economic data, rising corporate revenues

    04:15 PM ET

    • Stocks racked up solid gains after several upbeat earnings reports and two economic reports that pointed to a continued U.S. recovery.
    • Sales of existing homes rose 2.6% to a better than expected annual rate of 5.04M in June, the highest reading since October, and in-line gains in consumer prices ease speculation about rising inflation prompting a sooner than expected increase in interest rates.
    • Chipotle Mexican Grill +11.8% after Q2 results crushed expectations, and Ingersoll-Rand +4.3% after a strong revenue increase and a higher 2014 outlook; however, McDonald’s and Coca-Cola fell following disappointing Q2 results.
    • Relative weakness in the blue chips had little impact on high-beta names, as chipmakers, biotechs and transport stocks all finished ahead of the broader market, while the Russell 2000 regained its 50- and 100-day averages.
    • “We’re finally starting to see revenue growth kick in, and that’s the pivot point to this earnings season so far,” Wunderlich’s Art Hogan says.
    • Meanwhile, Herbalife shocked with a +25% move despite Bill Ackman’s allegation that the company’s nutrition clubs lose an average of $12K/year.
    • The yield on the 10-year Treasury note finished flat at 2.46%.

  119. Intuitive Surgical beats by $0.89, beats on revenue

    04:07 PM ET · ISRG

    • Intuitive Surgical (NASDAQ:ISRG): Q2 EPS of $3.73 beats by $0.89.
    • Revenue of $507M (-12.4% Y/Y) beats by $4.77M.
    • Shares +9.9%.
    • Press Release

  120. Electronic Arts beats by $0.23, beats on revenue

    04:05 PM ET · EA

    • Electronic Arts (NASDAQ:EA): FQ1 EPS of $0.19 beats by $0.23.
    • Revenue of $775M (+56.6% Y/Y) beats by $65.85M.
    • Shares +4.5%.
    • Press Release

  121. Nvidia launches Shield tablet, misses out on Xiaomi’s Mi4

    04:03 PM ET · NVDA

    • Nvidia’s (NVDA -0.4%) promises its 8″ Shield Android tablet, rumored for weeks, “[take] mobile gaming to another level.” In addition to sporting a Tegra K1 processor (heavy on GPU power), it features an optional gaming controller and the ability to stream games via Nvidia’s GameStream (PC-based) and Grid (cloud-based) services.
    • A 16GB Wi-Fi-only model goes for $299, and a 32GB 4G model goes for $399. A Console Mode UI pops up when the device is connected to a TV.
    • The tablet faces a slew of challenges, including: 1) The iPad’s dominant position in the tablet gaming space (has much more game developer support than Android tablets). 2) The presence of many cheaper 7″-8″ Android tablets. 3) The fact the controller costs an extra $59.
    • As with its Shield console, Nvidia’s primary goal might be to compel OEMs to make similar hardware, and in doing so boost Tegra sales.
    • Meanwhile, Xiaomi (quickly gaining Chinese share) has opted to use Qualcomm’s Snapdragon 801 processor in its new flagship, the Mi4. Xiaomi used both Nvidia’s Tegra 4 and Qualcomm’s Snapdragon 800 for the prior-gen Mi3.

  122. At the close

    04:00 PM ET

    • Dow +0.35% to 17,111.61. S&P +0.50% to 1,983.45. Nasdaq +0.71% to 4,456.02.
    • Treasurys: 30-year +0.06%. 10-yr +0.05%. 5-yr +0.1%.
    • Commodities: Crude -0.46% to $102.39. Gold -0.53% to $1,306.90.
    • Currencies: Euro -0.41% vs. dollar. Yen +0.06%. Pound +0.09%.

  123. WSJ: Regulators point to reporting problems at Deutsche Bank’s U.S. ops

    03:51 PM ET · DB

    • Deutsche Bank (DB -3.1%) drops sharply after WSJ reports an examination by the New York Fed found the bank’s U.S. operations suffer from several serious problems, including shoddy financial reporting, inadequate auditing and oversight and weak technology systems.
    • In a letter to DB last December, a senior NY Fed official reportedly wrote that financial reports produced by some of the bank’s U.S. operations “are of low quality, inaccurate and unreliable” to the extent that DB’s “entire U.S. regulatory reporting structure requires wide-ranging remedial action.”
    • The letter was said to have ordered senior DB execs to ensure steps were taken to fix the problems, and that the bank might have to restate some of the financial data it has submitted to regulators.

  124. Several analysts raise Halliburton earnings estimates, stock price targets

    03:39 PM ET · HAL

    • Sell-side analysts line up in support of Halliburton (HAL +3.4%), with no fewer than five firms raising price targets after the oilfield services company posted strong Q2 results and signaled a North American demand recovery.
    • Cowen raises its HAL price target to a Street-high $89 from $76, as it notes Q2 results reiterated the positive momentum in North America and highlighted the company’s best-in-class well stimulation business; the firm modestly raises its 2014 and 2015 EPS forecasts to reflect higher North America estimates and a lower expected share count (
    • UBS raises its price target to $87 from $80 and raises its 2014 EPS estimate by 2% and 2015 EPS by 7.5%, reflecting slightly higher North American revenue growth (15% Y/Y, similar to the 2014 growth rate) and only slightly higher margin forecasts (20% 2014 exit rate and 21.4% 2015); the firm believes both assumptions are conservative and upside still exists.

  125. State Street says rest-of-year expenses could grow faster than revenue

    03:09 PM ET · STT

    • State Street (STT +0.1%) beat expectations for Q2 earnings and revenues, but warns that it would be challenging for it to increase revenue faster than expenses this year.
    • CEO Joseph Hooley now sees STT’s Q3 operating expenses ~$20M higher than in Q2 and expenses in Q4 roughly unchanged from Q3; in Q2, operating expenses rose 3.7% Y/Y to $1.82B but fell 5.2% Q/Q.
    • STT also now expects 2014 regulatory costs to be higher than previously expected, after forecasting a range of $30M-$40M.
    • Analysts also note that Q2 results benefited from a much lower tax rate, which added ~$0.09/share to profit.
    • Q2 net interest margin narrowed sharply to 1.12% from 1.31% a year earlier and 1.24% in Q1.

  126. Fuel-cell stocks rally on GE plans, FuelCell project award

    02:31 PM ET · GE

    • GE’s (GE -0.2%) plan to build a new fuel-cell manufacturing facility in upstate New York to improve the production of fuel cells that run on natural gas isn’t lifting its own shares, but it seems to be providing a big boost to fuel-cell stocks and other alternative energy names.
    • FuelCell Energy (FCEL +14.5%) is soaring after Germany’s Federal Ministry for Economic Affairs and Energy awarded it and a joint venture partner €5M (~$6.7M) in a project to increase power density and the operating life of fuel cells, which would cut costs.
    • Ocean Power Tech (OPTT +35.3%) is exploding higher today with no company specific news to account for the strength, and water management solutions provider GreenHunter Resources (GRH +13.8%) is up sharply on MLP news.
    • Also rising: PLUG +6.9%, BLDP +5.8%, ZBB +4.8%, CBAK +2.3%, CPST +5.1%.

  127. Credit Suisse quits commodities trading, cuts $8B from risk-weighted assets

    02:13 PM ET · CS

    • Credit Suisse (CS -1.7%) says it will quit commodities trading after chalking up its biggest loss since the financial crisis in 2008, the result of a 1.6B Swiss franc ($1.78B) fine from U.S. authorities for helping its clients evade taxes.
    • Abandoning its commodities unit will lower assets by $8B and leverage exposure by $25B, which should reduce the bank’s U.S. regulatory capital and reserve requirements; leverage exposure currently is $1.28T vs. its target of $1.11T.
    • Elsewhere within the company, CS says the wind-down of non-strategic units has resulted in a $3B reduction in leverage exposure and a $6B reduction in risk-weighted assets.
    • On CS’s overall Q2 performance, Helvea analyst Tim Dawson calls it mixed, with lower than expected profitability in the wealth management business; while the winding down of the weak commodities trading business may help, Dawson says, CS still maintains too many relatively small, lackluster areas of investment banking.

  128. Lexmark gains on Q2 beat, strong guidance

    02:10 PM ET · LXK

    • In addition to beating Q2 estimates, Lexmark (LXK +3.5%) expects Q3 revenue to be flat to down 2% Y/Y, and EPS to be in a range of $0.85-$0.95. That’s mostly above a consensus for -3.2% growth and EPS of $0.95.
    • Lexmark is also guiding for 2014 revenue to be flat to down 2% (consensus is -2.8%), and EPS to be in a range of $3.95-$4.15 (consensus is $3.93).
    • Hardware revenue rose 7% Y/Y in Q2 to $183M, a turnaround from Q1′s 8% drop and helping fuel the Q2 beat. Supplies revenue -1% Y/Y (to $602M) vs. -1% in Q1, software/other revenue -1% (to $106M) vs. +13% in Q1.
    • Laser supplies (+5%) were a strong point, as were sales related to Lexmark’s managed print services business (+14% to $195M). Legacy inkjet revenue fell 33%.
    • Gross margin +40 bps Y/Y to 40.8%. Opex +2% to $267M. $19M was spent on buybacks.
    • Q2 results, PR

  129. America Movil higher following Q2 beat

    01:57 PM ET · AMX

    • America Mobil (AMX +1.9%) had Q2 revenue of 202.6B pesos ($15.7B), +4% Y/Y and beating a consensus of 198.7B pesos. EBITDA rose 2.4% to 66.6B pesos ($5.1B), beating a 65.8B consensus, and net income rose 32% to 18.8B pesos ($1.45B).
    • Access lines +3% Y/Y to 338.7M – 266.9M mobile, 31.6M landlines, 20M broadband, 20.3M pay-TV. Mobile subs +1.8% Y/Y but -2% Q/Q, wireline revenue-generating units (RGUs) +7.5% Y/Y and +1.7% Q/Q.
    • Mexican mobile subs fell 2.8% Q/Q to 71.3M ahead of AMX’s planned asset sales, and Brazilian subs were nearly flat at 68.8M. Mexican wireline RGUs -0.2% Q/Q to 22.3M, Brazilian RGUs +2.7% to 34.5M.
    • AMX ended June with $7.2B in cash/securities, $6.3B in affiliate investments, and $38.9B in debt.
    • Earnings release (.pdf)

  130. WSJ: EU set to revisit Google settlement, probe other areas

    01:17 PM ET · GOOG

    • Following intense criticism of the deal, the EU will likely revisit parts of its search antitrust settlement with Google (GOOG +1.3%), the WSJ reports. A decision on the matter is expected in September, ahead of antitrust chief Joaquin Almunia’s November departure.
    • In addition, the EU plans to investigate Google’s practices in other areas, including (most notably) its Android licensing terms for mobile OEMs. A formal Android investigation is considered likely.
    • The EU has already been studying the licensing terms, which require a variety of Google apps/services to be bundled with its version of Android. The bundling is pivotal to Google’s Android monetization strategy.
    • An EU ruling freeing OEMs from having to bundle Google apps/services might not have a big impact on installation rates (given their popularity with consumers), but it could give OEMs more leverage negotiate higher traffic acquisition payments. Google is believed to make huge traffic acquisition payments to Apple in exchange for having Android act as Safari’s default search engine.

  131. Herbalife rebounds after Mr. Ackman fails to deliver a knockout punch

    01:05 PM ET · HLF

    • Shares of Herbalife (HLF +14.8%) pop on a 5x surge in volume after investors regain confidence that the company “ain’t done yet.” In this morning’s webcast, Mr. Ackman presented the findings of the investigation into the firm’s Nutrition Clubs (NC) that Pershing Square sponsored. Unfortunately for shorts, there was little new information that would portend a collapse of the company. The investigative team looked into > 240 Nutrition Clubs in the U.S., Mexico and six other countries. There are > 37,000 NCs in Mexico that account for 75% of HLF’s business in that country. Latinos figure prominently in Herbalife’s growth.
    • Investigative reporter-cum-analyst Christine Richard was the person who gave Mr. Ackman the idea of shorting Herbalife. She led the investigative effort into the NCs. She says that the clubs make money via the “certification” process for aspiring NC owners. They work for free, must consume and pay for product each time they report to a club and must deliver at least 10 repeat customers to the teaching club before they are allowed to open their own. The total investment is ~$3,000 which is similar to the initial investment in inventory for Supervisor status, it’s just spread out over time. Mr. Ackman asserts that the NCs use deceptive tactics and violate labor laws by forcing people to work for free.
    • According to the company, 33 – 41% of its earnings are derived from NCs. If they were to be shut down (by government action) the company would face a catastrophic collapse. Mr. Ackman believes the proportion is as high as 50% of earnings. He admitted that Canada is the only government that has looked into the situation thus far.
    • As a crowning touch at the end of presentation and prior to the Q&A, Mr. Ackman called Herbalife CEO Michael Johnson a predator and a criminal. He then got emotional as he described his immigrant ancestors’ pursuit of the American Dream. Regrettably, the camera didn’t pan the audience to see how many members were teary-eyed as well.

  132. Travelers -4% as claims from wind, hail storms push up catastrophe costs

    12:41 PM ET · TRV

    • Travelers (TRV -4.1%) is sharply lower after Q2 earnings fell short of estimates as claims from hail and wind storms in the U.S. increased catastrophe losses.
    • The pretax impact of catastrophes grew to $436M in Q2, from $340M in the year-ago period; TRV’s combined ratio was 95.1%, up from 94.3% a year earlier.
    • Net written premiums rose 5.8% to $6.16B, driven partly by the inclusion of Canadian insurer Dominion, which TRV acquired in Nov. 2013; overall, total revenues increased 1.6% to $6.79B.
    • Separately, a federal appeals court rules TRV should pay more than $500M to satisfy asbestos-related claims stemming from its coverage of policyholder Johns-Manville, reversing a lower court ruling.

  133. New highs for Chipotle as Street predicts momentum will continue

    12:12 PM ET · CMG

    • “With most restaurants struggling to drive positive traffic, CMG remains an anomaly, justifying an outsized valuation, with scarcity worth the premium,” says Barclays in response to Chipotle’s (CMG +12.8%) big Q2 beat. However, the firm is hesitant to recommend shares, given they now trade at 39x forward EPS.
    • “As more of Chipotle’s markets are touched with menu price increases this quarter, the company is teed up for at least another two quarter of strong earnings growth,” thinks Belus Capital.
    • The company attributes only 250 bps of its 17.3% same-store growth (blew away a consensus of 10.5%) to its price hikes. Average transactions during peak lunch and dinner hours each rose by 8 Y/Y, and average check size rose by 5%, thanks partly to larger group sizes.
    • Chipotle did admit on its CC (transcript) its price hikes led to a “slight shift” among customers from steak to chicken, but insists “customers have generally responded well” otherwise. The company also noted it’s experimenting with take out-focused restaurants that have limited seating, particularly in U.S./European locales with high real estate costs.
    • Prior Chipotle earnings coverage

  134. Netflix slumps on concerns about international profit outlook

    11:24 AM ET · NFLX

    • “The launch into the six new European markets appears costlier than anticipated,” writes Janney after taking in Netflix’s (NFLX -4.5%) light Q3 EPS outlook. Though the company expects its U.S. streaming contribution profit to rise $18M Q/Q to $245M, its international contribution loss is expected to grow $27M to $42M.
    • RBC expects Netflix’s international ops to stay in “early-stage margin mode” for several years. Nonetheless, it sees the unit’s margins matching U.S. levels long-term, and is reiterating an Outperform.
    • Over a dozen firms have still hiked their Netflix targets in response to the company’s better-than-expected subscriber adds and healthy Q3 sub forecast. Pac Crest (PT hiked by $10 to $530) notes total Q2 adds of 1.7M beat its forecast by 300K, and that lower marketing spend is offsetting higher content costs (thus driving margin expansion as revenue grows).
    • Mentioned on the CC (transcript): 1) CFO David Wells suggests Netflix open to stepping up its content spend once margins hit 30%. U.S. streaming margin was at 27.1% in Q2. 2) Reed Hastings declares the impact of Netflix’s price hike on sub adds to be minimal. 3) Expenses related to paid peering deals are dwarfed by content costs. 4) 10%-20% of international content tends to be local fare. 5) Netflix sees its superior TV show library as a differentiator relative to Amazon’s European service (formerly called Lovefilm).
    • Prior Netflix earnings coverage

  135. Peabody Energy revenue rises, sees coal market improving

    10:59 AM ET · BTU

    • Peabody Energy (BTU +1.5%) moves higher after reporting a Q2 loss that was in line with estimates and a ~2% rise in revenue, helped by an increase in shipments and prices at its mining operations in the western U.S.
    • Q2 U.S. mining revenue rose 6.2% to $1.03B, while revenue per ton gained 1.1%, but revenue from Australian mining operations fell 5% to $744.8M, with revenue per ton down 15%.
    • Issues downside EPS guidance for Q3, now seeing a loss of $0.40-$0.53 vs. analyst consensus expectations for a $0.18 loss.
    • Nevertheless, BTU sees market conditions improving, noting that coal’s market share of global energy consumption is now 30%, highest since the 1970s, U.S. coal demand has been expanding for the past two years, and seaborne market fundamentals are seen improving into 2015.

  136. Goldman to offer bond using total return swap

    10:37 AM ET · GS

    • Goldman Sachs (GS +1.3%) is planning €10B in sales of a controversial new type of bond that utilizes total return swaps, at the same time the derivatives are gaining popularity in the market due to the historic lows of credit investments.
    • Total return swaps allow investors to gain exposure to a portfolio of bonds or loans without actually having to come up the cash needed to own such assets. Investors pay money to a bank or other counter-party in exchange for income linked to the performance of the underlying basket of securities.
    • The new bond is being classed as a “covered obligation,” and uses a total return swap struck with Mitsui Sumitomo Insurance on a changeable portfolio of fixed income assets.
    • S&P already gave the offering a AAA rating, but Fitch warns that the deal’s “structural protections and collateralization levels are too low” to warrant such a designation.

  137. Altria adjusts EPS guidance, launches new $1B buyback

    10:30 AM ET · MO

    • Altria (MO -0.4%) has slightly tweaked its 2014 EPS guidance range to $2.54-$2.59 from $2.52-$2.59; consensus is at $2.57.
    • The company has also announced a new $1B buyback to be finished by the end of 2015. $132M was spent on buybacks in Q2, leaving $53M remaining on a prior $1B program.
    • Smokeable products revenue (exc. taxes) +0.8% Y/Y to $4B, with higher prices offsetting a 4.8% drop in shipment volume (cigarettes -5%, cigars +11.1%). Division op. income (OCI) +3.6% to $1.8B.
    • Smokeless products revenue (exc. taxes) +0.7% to $428M, op. income +5.6% to $285M. Shipment volume +1.6%. Wine revenue +6.8% to $141M.
    • Altria (current dividend yield of 4.5%) expects to continue paying out ~80% of adjusted EPS through dividends.
    • Q2 results, PR

  138. North Dakota saltwater spill cleanup could take years

    10:14 AM ET · CMLP

    • The site where an underground pipeline owned by Crestwood Midstream Partners (CMLP +0.3%) leaked 1M gallons of saltwater into the North Dakota badlands earlier this month could take at least three years to clean up, according to an official involved in the cleanup.
    • CMLP says there is no evidence the spill reached Lake Sakakawea, a source of drinking water for the Fort Berthold Indian Reservation; beaver dams are credited with helping contain the leak.
    • Saltwater (brine) is a byproduct of oil production that can be 30x saltier than seawater, and is considered an environmental hazard.

  139. Lockheed Martin expects F-35 investigation to end soon

    10:10 AM ET · LMT

    • Lockheed Martin (LMT +2.4%) has announced that the investigation into the engine failure that has grounded the F-35 for almost a month is still ongoing, but is confident it will get resolved soon.
    • “The safety investigation board is still undergoing the analysis,” says CFO Bruce Tanner. “I don’t believe we are quite at the root cause yet.”
    • Last week U.S. military officials lifted the flying restriction on the F-35, but limited what the plane could do.

  140. Comcast loses more video subs, but offsets with broadband growth

    10:07 AM ET · CMCSA

    • Comcast (CMCSA +1.6%) lost 144K video subs in Q2, lowering its total base to 22.5M. Broadband subs grew by 203K to 21.3M, and voice subs by 137K to 11M.
    • Total “customer relationships” were flat Q/Q at 26.8M. Triple product customers make up 36% of the base vs. 34% a year ago.
    • Cable division data: Video revenue +1.2% Y/Y to $5.2B, broadband +9.7% to $2.8B, voice +1.3% to $922M, business services +22.4% to $965M, ads +7.5% to $599M, “other” +3.9% to $485M. Op. cash flow margin was steady at 41.4%.
    • NBCUniversal revenue +0.3% to $6B, but op. cash flow rose 20.4% to $1.4B. Segment data: Cable networks +2.6% to $2.5B, broadcast TV +4.9% to $1.8B, filmed entertainment -15.3% to $1.2B, theme parks +12.8% to $615M.
    • Comcast spent $750M on buybacks. Its total free cash flow fell 40.7% Y/Y to $1.16B, due largely to higher working capital needs (film/TV production spend) and a 19.4% increase in capex to $1.8B.
    • Q2 results, PR

  141. Existing Home Sales rise in June

    10:01 AM ET

  142. Richmond Fed Mfg. Survey

    10:02 AM ET

    • June Richmond Fed Mfg. Survey: +7 vs. +5 forecast, +4 in June.
    • Shipments 3 vs. 2
    • Capacity Utilization 4 vs. 7
    • Number of Employees 13 vs. 4
    • Average Workweek 3 vs. 5
    • Wages 16 vs. 12

  143. Coca-Cola revenues miss estimates as North America growth stalls

    09:58 AM ET · KO

    • Coca-Cola (KO -2.6%) opens sharply lower after Q2 revenues fell Y/Y and finished below expectations as North America sales declined for the second straight quarter.
    • Q2 global unit case volume grew 3% Y/Y but was flat in North America, despite increased marketing around the World Cup and the launch of the “Share a Coke” campaign; J.P. Morgan analysts had expected volumes to gain 1%-2% in North America, which accounted for 45% of total Q2 revenue.
    • On the bright side, gross margin widened to 61.7% as input costs declined 3.4% from a year earlier.
    • KO also says adjusted earnings would be hurt by $0.02 in H2 due to the restructuring of its juice operations in Russia and the separation of its Brazilian bottling operations last year.

  144. Amazon slips on pre-earnings Citi downgrade

    09:49 AM ET · AMZN

    • Citi has downgraded Amazon (AMZN -0.7%) to Neutral ahead of Thursday’s Q2 report, and cut its target by $19 to $395.
    • Though believing Amazon’s core retail ops are performing well – ChannelAdvisor’s June data was quite healthy – Citi notes many investors have grown frustrated over a lack of earnings leverage. It also thinks heavy capex and major price cuts for AWS will pressure margins over the near-term.
    • Also: UBS is out with a cautious note, stating survey data indicates heavy opex will limit margin upside.
    • Shares have underperformed the Nasdaq this year, but have also staged a healthy rally from their May lows. Its 2015 EBITDA estimates are below consensus.
    • Update (12:10 PM): Shares have shrugged off the downgrade, and are now up 0.4%.

  145. McDonald’s profit slips as same-store sales come in flat

    09:46 AM ET · MCD

    • McDonald’s (MCD -2.3%) opens lower after reporting a 1% Y/Y drop in Q2 earnings, which also came in below expectations,
    • Global comparable sales from Q2 were relatively flat vs. expectations of a 0.8% gain, reflecting negative guest traffic in all major segments: Same-store U.S. sales fell 1.5% vs. estimates of a 0.3% decline, reflecting negative comparable guest traffic amid “ongoing broad-based challenges,” same-store Europe sales fell 1% vs. expectations for 0.7% growth, and Asia/Pacific same-store sales rose 1.1% vs. estimates for 1.5% growth as China sales remain strong.
    • Continuing strength in China is questionable following MCD’s entanglement in another Chinese food safety scandal; Forbes’ Brian Solomon says, “If, as they have in the past, Chinese customers again spurn fast food chains associated with safety problems, it could negatively impact the earnings for McDonald’s.”

  146. Lockheed Martin beats estimates; raises full-year outlook

    09:39 AM ET · LMT

    • Lockheed Martin (LMT +2.1%) announced an increase of Q2 2014 net earnings of $889M, up from $859M Y/Y.
    • Net sales fell slightly to $11.3B from $11.4B in the second quarter of 2013.
    • Cash from operations increased in Q2 to $977M, compared to $623M Y/Y.
    • Lockheed’s CEO also announced a new outlook reflecting the company’s excellent performance:
    • “Based on our solid program execution and operational performance through the first half of the year, we increased our 2014 financial guidance for profit, earnings, and cash flow,” says CEO Marillyn Hewson. “Our sound strategy, diverse portfolio and focus on affordability are yielding results and delivering value to our customers and shareholders.”
    • The company raised the financial outlook for its FAS/CAS pension income and cash from operations by $100M, and increased its full-year earnings outlook to a range of $10.85 to $11.15 per share – compared to the previous $10.96 per share.
    • Q2 earnings

  147. Verizon’s postpaid adds, service growth relatively healthy

    09:33 AM ET · VZ

    • As previously disclosed, Verizon (VZ +0.6%) had 1.4M retail postpaid net adds in Q2, up from 941K a year ago and increasing the total base to 98.6M. 1.15M tablet net adds contributed heavily to the gains. Phone net adds were 304K. On the other hand, retail prepaid subs fell by 14K to 6.04M.
    • Wireless service revenue growth slowed to 5.9% Y/Y from 7.5% in Q1, but is still healthier than AT&T/Sprint’s. Equipment revenue (pressures margins) +22.2%, boosted by smartphone upgrade plan adoption. Wireless op. margin +10 bps Y/Y to 32.5%.
    • Retail postpaid churn was 0.94% vs. 1.07% in Q1 and 0.93% a year ago. Average revenue/account (ARPA) rose fractionally Q/Q and 4.7% Y/Y to $159.73.
    • Wireline revenue (31% of total) +0.3% Y/Y vs. -0.4% in Q1. Consumer revenue +5.3%, but small business -2.2%, global enterprise -1.9%, and global wholesale -5.5%. Wireline op. margin was just 2.7%, but that’s up from 0.8% a year ago.
    • FiOS TV adds totaled 100K, and Internet adds139K. Those numbers are up from Q1 levels, but down from year-ago levels. Verizon now has 5.4M FiOS TV subs, and 6.3M FiOS Internet subs. Total FiOS revenue +14.4% Y/Y.
    • Verizon still expects 2014 capex of $16.5B-$17.5B vs. $16.6B in 2013.
    • Q1 results, PR

  148. Geeze, it amazes me that people can be AAPL bears, that company is almost perfect!

  149. MORL has got to be a crock of ****, right?

    Nearly 20% dividend with a monthly payout and 0.35% expense.  No way that is a legit product…

  150. Imax, Shanghai Film to open 19 screens in China

    HONG KONG (AP) — Imax and China's biggest state-owned film exhibitor are teaming up to open 19 giant screen cinemas in the world's No. 2 movie market.

    Imax Corp. and Shanghai Film Corp. said Tuesday that a "significant number" of the theaters will open before the end of 2015.

    No financial terms were disclosed. Shanghai Film already operates three Chinese Imax theatres.

    Box office revenues in China surged 27 percent last year to $3.6 billion, making the country a crucial market for international film companies.

    Government policies aimed at encouraging growth of Imax and 3-D movies are helping boost the format's popularity in China's tightly controlled film market.

    "Transformers: Age of Extinction," the latest instalment of Michael Bay's blockbuster robot film franchise, earned nearly $10 million at Chinese Imax screens on its opening weekend, more than double the previous record, the company said.

    The deal comes a year after Imax partnered with another Chinese company, Wanda Cinema, to open up to 120 of the Canadian company's theatres.

    At the end of 2013, Imax had 173 cinemas in China and plans for 230 more by 2021, according to its latest annual report.

    That puts China on track to become Imax's No. 1 market globally, overtaking the United States, where box office revenue growth is stagnating and the company has about 380 cinemas.

  151. ?Citi has downgraded Amazon (AMZN -0.7%) to Neutral ahead of Thursday’s Q2 report, and cut its target by $19 to $395.

    Wow !   Talk about taking to the woodshed ! ! !   Cut their price target by a whole $19.  You tellum Citi.

  152. Phil – With regards to AAPL earnings report today, what were the things that you found most interesting?

  153. Phil

    Is there anything in IRBT's earnings report that makes you hesitate increasing position size at the current price. THX.

  154. Does anyone know if Phil discussed the August XOM puts during the webinar today? I'll try to get to the replay once posted but just wondering if any or you would mind filling me in on any adjustments that were suggested.


  155. XOM/jeffdoc - I believe his take was not to roll but to double down on the 100 puts since they cost 50% less now.

  156. Thanks Ivan, appreciate that.

  157. From Bloomberg, Jul 23, 2014, 5:32:45 AM

    European stocks rose for a second
    day as companies including Daimler AG reported better-than-expected earnings. U.S. stock-index futures were little changed,
    while Asian shares climbed.

    To read the entire article, go to

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

  158. From Bloomberg, Jul 23, 2014, 4:52:11 AM

    Industrial production fell for a third month in May and factory orders dropped more than economists had predicted, according to separate reports in July. Photographer: Krisztian Bocsi/Bloomberg

    America’s appetite for German stocks
    is cooling as Europe’s biggest economy shows signs of weakening
    and its equities hover near record levels.

    To read the entire article, go to

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

  159. From Bloomberg, Jul 23, 2014, 4:57:04 AM

    Wal-Mart Stores Inc.’s Asda unit, the second-largest food retailer, slashed prices in November. Photographer: Simon Dawson/Bloomberg

    U.K. supermarkets may be masking the
    true scale of price discounting, complicating the task facing
    policy makers as they debate how long to keep interest rates at
    a record low.

    To read the entire article, go to

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

  160. From Bloomberg, Jul 23, 2014, 5:50:33 AM

    Dieter Zetsche, chief executive officer of Daimler AG. Photographer: Gianluca Colla/Bloomberg

    Daimler AG (DAI)’s plan to restore its
    Mercedes-Benz brand to the top of the luxury-car market gained
    traction in the second quarter as surging deliveries of the
    flagship S-Class sedan propelled a jump in profitability.

    To read the entire article, go to

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

  161. From Bloomberg, Jul 23, 2014, 3:34:25 AM

    Investors are signaling confidence
    that inflation in Hungary will stay subdued and the forint will
    stabilize after the central bank’s surprise conclusion to
    Europe’s longest interest-rate cutting cycle.

    To read the entire article, go to

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

  162. From Bloomberg, Jul 23, 2014, 5:18:59 AM

    ABB Ltd. (ABBN) earnings dropped for a
    third consecutive quarter, missing analyst estimates, amid
    mounting charges at the unit for offshore wind and solar

    To read the entire article, go to

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

  163. From Bloomberg, Jul 23, 2014, 2:21:42 AM

    July 23 (Bloomberg) — Svein Richard Brandtzaeg, the outgoing chief executive officer of Norsk Hydro ASA, talks about global supply and demand of aluminum and smelter capacity.
    He spoke yesterday with Bloomberg’s Firat Kayakiran in London. (Source: Bloomberg)

    Aluminum prices are set to increase
    as producers refrain from adding capacity and demand rises, said
    Norsk Hydro ASA (NHY)’s outgoing chief executive officer.

    To read the entire article, go to

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

  164. From Bloomberg, Jul 23, 2014, 5:59:08 AM

    July 22 (Bloomberg) — Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ, talks about the consumer price index for June released today by the Labor Department and Federal Reserve monetary policy.
    CPI increased in June 0.3 percent after a 0.4 percent gain the prior month, matching the median forecast of 85 economists surveyed by Bloomberg, (Source: Bloomberg)

    European stocks rose for a second
    day as earnings from Daimler AG to Akzo Nobel NV beat estimates.
    Emerging market shares advanced to an 18-month high as
    Indonesia’s rupiah led gains among higher-yielding currencies.

    To read the entire article, go to

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

  165. From Bloomberg, Jul 23, 2014, 12:00:01 AM

    A U.S. council of regulators is poised to label MetLife Inc. (MET) a potential threat to the financial system, subjecting the insurer to oversight by the Federal Reserve, two people with knowledge of the matter said.

    To read the entire article, go to

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

  166. From Bloomberg, Jul 23, 2014, 5:25:09 AM

    July 14 (Bloomberg) — European Central Bank President Mario Draghi testifies about ECB policy and the European economy.
    He speaks before the Committee on Economic and Monetary Affairs of the European Parliament in Strasbourg, France. (This is the first part of the question-and-answer portion of Draghi’s testimony and is courtesy of Europe by Satellite. Source: Bloomberg)

    Before the Federal Reserve and fellow central banks go to work raising interest rates, they first need others to go to work.

    To read the entire article, go to

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

  167. From Bloomberg, Jul 23, 2014, 3:40:52 AM

    The deutsche mark is dead. Long live
    the deutsche mark.

    To read the entire article, go to

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

  168. From Bloomberg, Jul 23, 2014, 4:57:34 AM

    The nine-member panel led by Governor Mark Carney “would have the opportunity to consider in more depth” labor market indicators before next month’s gathering where new forecasts will be released. Photographer: Chris Ratcliffe/Bloomberg

    The Bank of England said some
    members of its Monetary Policy Committee have started to argue
    that the risk of a rate increase undermining the recovery has
    fallen as growth becomes more entrenched.

    To read the entire article, go to

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

  169. From Bloomberg, Jul 23, 2014, 1:30:00 AM

    Stena Bulk, whose lineup includes 15 so-called Ice Class vessels capable of sailing through the Arctic, was hired by South Korea’s Hyundai Glovis Co. to transport 44,000 metric tons of naphtha from Ust Luga near Saint Petersburg to Yeosu last year, according to CEO Hanell. Source: Stena Bulk AB

    Melting Arctic ice is widening a path for ships to deliver European oil to Asia, stoking South Korea’s ambition to become a regional storage and trading hub.

    To read the entire article, go to

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

  170. From Bloomberg, Jul 22, 2014, 9:33:51 PM

    Less than 24 hours after Xiaomi unveiled new products aimed at stealing away more Apple fans in China, the California consumer-electronics giant reported earnings that show it’s still strong in the world’s largest mobile market. Photographer: Tomohiro Ohsumi/Bloomberg

    Less than 24 hours after Xiaomi unveiled new products aimed at stealing away more Apple fans in China, the California consumer-electronics giant reported earnings that show it’s still strong in the world’s largest mobile market.

    To read the entire article, go to

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

  171. Watch this video at

    Apple’s Gross Margins Guidance: Why Is It a Concern?

    July 22: Estimize CEO and Founder Leigh Drogen, Raymond James and Associates Managing Director Tavis McCourt and Bloomberg’s Cory Johnson discuss Apple earnings and product sales.

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

  172. Watch this video at

    How Murdoch Will Win His Time Warner Takeover Bid

    July 22 (Bloomberg) — Forbes Media Chairman and Editor-In-Chief Steve Forbes and Bloomberg’s Jeff McCracken discuss Rupert Murdoch’s tactics in previous takeover bids. They speak on “Street Smart.” (Source: Bloomberg)

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

  173. Watch this video at

    Apple IPhone Profitability Is `Excellent’: Munster

    July 22 (Bloomberg) — Gene Munster, an analyst at Piper Jaffray Cos., and Alex Gauna, an analyst at JMP Securities, talk about Apple Inc.’s third-quarter earnings and outlook.
    Apple said quarterly profit rose 12 percent to $7.75 billion, with a jump in iPhone and Mac sales helping to make up a drop in iPad demand. Munster and Gauna speak with Cory Johnson on Bloomberg Television’s “Bloomberg West.” (Source: Bloomberg)

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

  174. Watch this video at

    Future of Trucking: Big Rigs Become Robot Convoys

    July 23 (Bloomberg) –- Peloton Technology has developed a vehicle-to-vehicle communication system that has the potential to transform the trucking industry. By tethering two trucks together using advanced sensing intercommunications, the Silicon Valley startup says they can improve safety while cutting costs for thousands of trucks on the road. Video by: Sadie Bass, Justin Beach. (Source: Bloomberg)

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

  175. From Bloomberg, Jul 23, 2014, 5:46:45 AM

    Protesters holding Palestinian flags burn an Israeli flag on a rooftop where a placard reading “zionism = nazism” hangs, prior to the departure of a demonstration, banned by French police, in Paris on July 19. Photographer: Francois Guillot/AFP via Getty Images

    European leaders warned against a rise in antisemitism in the region after some protests over Israeli military action gave way to racist slogans.

    To read the entire article, go to

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

  176. From Bloomberg, Jul 23, 2014, 12:35:06 AM

    July 14 (Bloomberg) — Bobby Samini, attorney for Los Angeles Clippers owner Donald Sterling, talks about the legal battle between Sterling and his estranged wife Shelly over the sale of the National Basketball Association team.
    Samini talks with Trish Regan on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

    Donald Sterling accused his wife and the National Basketball Association of fraud in a new lawsuit over the proposed $2 billion sale of the Los Angeles Clippers to former Microsoft Corp. (MSFT) Chief Executive Officer Steve Ballmer.

    To read the entire article, go to

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

  177. From Bloomberg, Jul 23, 2014, 12:32:44 AM

    U.S. Steel Corp. Chief Executive Officer Mario Longhi said in a June interview, “The magnitude of the change that needs to happen is not small.” Photographer: Peter Foley/Bloomberg

    In March 2013, Mario Longhi lobbed
    an unexpected question into a roomful of 150 U.S. Steel Corp.
    managers: Who here would buy the company’s stock, tomorrow?

    To read the entire article, go to

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

  178. From Bloomberg, Jul 22, 2014, 7:00:01 PM

    For the past two decades, growth in
    the global economy spelled higher revenues for the Organization
    of Petroleum Exporting Countries. Not any more.

    To read the entire article, go to

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  179. From Bloomberg, Jul 23, 2014, 5:42:34 AM

    Listings for residential properties for sale are displayed in the window of a property agency in Chenjia, Chongming Island, China, on Wednesday, May 7, 2014. Chenjia aims to more than triple its population to 210,000 by 2020, according to a brochure provided by the local government financing vehicle. Photographer: Gregory Turk/Bloomberg

    Chinese banks will probably offer discounted mortgage rates to their clients in the second half of 2014 as demand in the country’s housing market weakens, according to a Bloomberg News survey.

    To read the entire article, go to

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

  180. From Bloomberg, Jul 22, 2014, 5:00:00 PM

    Traders work on the trading floor of the Hong Kong Stock Exchange in Hong Kong, China. Photographer: Lam Yik Fei/Bloomberg

    Companies going public in Hong Kong are getting the message that less is more.

    To read the entire article, go to

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  181. From Bloomberg, Jul 23, 2014, 12:10:05 AM

    China’s premier Li Keqiang, coping with a 16.4 percent plunge in new property construction in the first half of this year, is trying to meet the growth target he announced in March without resorting to broad-based stimulus that may exacerbate debt risks. Photographer: Chris Ratcliffe/Bloomberg

    China’s efforts to stimulate the
    world’s second-largest economy are insufficient so far to
    achieve the government’s growth target of about 7.5 percent,
    according to a survey of analysts.

    To read the entire article, go to

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

  182. From Bloomberg, Jul 22, 2014, 5:36:35 PM

    July 22 (Bloomberg) — The cost of living in the U.S. rose in June, paced by a jump in gasoline that is now reversing, bolstering Federal Reserve Chair Janet Yellen’s view that recent increases were temporary. Michael McKee reports on “In The Loop.” (Source: Bloomberg)

    The cost of living in the U.S. rose at a slower pace in June and home sales climbed to an eight-month high, showing the economy is generating little price pressure as growth accelerates.

    To read the entire article, go to

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

  183. From Bloomberg, Jul 22, 2014, 12:40:12 PM

    Home sales, at least in the U.S., seem to be rising. Existing home sales in June increased to 5.04 million annualized. That number may be affected by the weather, as June sales most likely come from contracts signed after the depths of winter.

    To read the entire article, go to

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

  184. Pharm,

    UBS just raised Puma Biotechnology (PBYI, $59.00) from $125.00 to $325.00!

  185. Good morning!  

    This is why the bears need to just give up.  Just above, on the CPI chart, the Bloomberg article says: "The cost of living in the U.S. rose at a slower pace in June and home sales climbed to an eight-month high, showing the economy is generating little price pressure as growth accelerates. "  

    But growth is NOT accelerating.  We JUST had a GDP report that showed exactly the opposite, yet here we have a noted MSM publication simply ignoring that FACT.  

    How do people read these things and just accept them?  How do authors write them?  How do editors OK them?  Not even the commenters seem to catch it – it's like the whole World just accepts the BS of the moment.  This is what Orwell predicted it would be like in a future where the media became electronic and the past was instantly forgotten by a population that was unable to think for itself.  

    It took took them 30 more years than planned, but here we are!  

    And if all others accepted the lie which the Party imposed -if all records told the same tale — then the lie passed into history and became truth. 'Who controls the past,' ran the Party slogan, 'controls the future: who controls the present controls the past.' And yet the past, though of its nature alterable, never had been altered. Whatever was true now was true from everlasting to everlasting. It was quite simple. All that was needed was an unending series of victories over your own memory. 'Reality control', they called it: in Newspeak, 'doublethink'.

    The past, he reflected, had not merely been altered, it had been actually destroyed. For how could you establish even the most obvious fact when there existed no record outside your own memory?

    Orwell also nailed it as to our present form of Government and the media:

    By comparison with that existing today, all the tyrannies of the past were half-hearted and inefficient. The ruling groups were always infected to some extent by liberal ideas, and were content to leave loose ends everywhere, to regard only the overt act and to be uninterested in what their subjects were thinking. Even the Catholic Church of the Middle Ages was tolerant by modern standards. Part of the reason for this was that in the past no government had the power to keep its citizens under constant surveillance. The invention of print, however, made it easier to manipulate public opinion, and the film and the radio carried the process further. With the development of television, and the technical advance which made it possible to receive and transmit simultaneously on the same instrument, private life came to an end. Every citizen, or at least every citizen important enough to be worth watching, could be kept for twenty-four hours a day under the eyes of the police and in the sound of official propaganda, with all other channels of communication closed. The possibility of enforcing not only complete obedience to the will of the State, but complete uniformity of opinion on all subjects, now existed for the first time.

    Meanwhile, Fox is buying TWX (AOL, Turner Networks, CNN, HBO, Cinemax, Warner Brothers, Cartoon Network, DC Comics, People, Time, Fortune, Sports Illustrated) - and no one is freaking out.  

    If this deal goes through, how long do Bill Maher and John Oliver have left?  

    IRBT/Jph – They got hosed by a big drop in military orders this Q.  Otherwise, looking very good.  People selling are simply clueless.  

    AAPL popping a bit this morning now that people have digested the earnings.  

    MORL/JPH – The dividend payout is very uneven but it's been an impressively steady grower for the past year.  Could go the other way fast if rates rise and the REITs drop but a great way to play REITs bullish.  

     IMAX/Diamond – That's 25% growth from China alone over 7 years – not bad.  

    AMZN/Albo – Glad to see C draws the line at 1,000/1 p/e ratios!  

    AAPL/Diamond – All as expected really.  "Most interesting" was how dead IPod sales are – almost time to terminate that product.  $1.6Bn in R&D for the Q is on pace for over $6Bn in R&D this year – that's $6,000,000,000 just on R&D, which is more money than all but 300 companies on the planet have in total sales!  The thing about AAPL R&D is that, unlike MSFT R&D – they actually come up with something from time to time.  AAPL is now spending as much on R&D as IBM – assuming they are not wasting their money – that's going to have very strong implications on future growth.

    Apple R&D spike hints at new products

    Apple price target raised to $123 from $111 at Cantor

    5 reasons why Apple could rise another 16% this year

    Apple's (AAPL) CEO Tim Cook On Q3 2014 Results – Earnings Call Transcript

    BNN just called and they want me on next week to explain how I knew AAPL was going to be the stock of the year back in Jan, when they were crashing.  LOL – I love the fact that hardly anyone is a Fundamentalist anymore!  

    IRBT/DC – Not at all, military orders were down 50% and they still rocked it.  That means military money is just a bonus for them at this time.  

    XOM/Jeff – Doubled down was the decision.  Average .75 now. 

    Big Chart – All time highs on the S&P again.  Meanwhile, NYSE only barely over Must Hold and RUT and Dow below.

    Europe and Asia generally up, oil $102.50 – same old, same old…

  186. Phil- seems like oil is reacting nervously to news out of mid east. Are you still shorting with it spiking to $102.60 this morning? I would think with nothing really changing and Gaza just being a replay of what happens there every few years, we should still be shorting under 102.50

  187. Don't forget, inventories are 10:30, not a good short ahead of those, though still tempting.  Big draw last week is unlikely to be matched.  

    The American Petroleum Institute, an industry group, said on Tuesday that U.S. crude inventories fell 555,000 barrels last week to 374.7 million, with stocks at the Cushing, Oklahoma, delivery point of the U.S. crude contract down 1.4 million barrels.

  188. PBYI.  Biggest gap up evah?