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Market Mayhem – 12 Fed Speeches in 5 Days Causes Chaos

Get ready for a wild week. 

FOMC minutes are released on Wednesday at 2pm and there are a record 12 Fed speeches in the days that surround them.  Expect the market to gyrate wildly with each tweetable quote and it all kicks off this afternoon with Treasury Secretary Jack Lew, followed by KC's Hawkish Esther George at 8:30.  

Tuesday we have Kocherlakota (hawk) and Dudley (dove), Wednesday is Evans (dove) and the minutes.  Thursday we have Bullard (hawk), Tarullo (dove), Lacker (uber hawk) and Williams (dove) ahead of the realease of the Fed's shocking balance sheet and a look at the ever-expanding US Money Supply.

Friday ends with a bang as we hear from Plosser (uber hawk), George again, Fisher (uber hawk) and then Lacker again – so the hawks very much have the last word into the weekend.  It's not much of a data week (next week is a doozy, though) and, to summarize it's hawk, hawk, dove, dove, hawk, dove, HAWK, dove, HAWK, hawkHAWK, HAWK - do you think, perhaps, the Fed is trying to tell us something?

 

The next Fed meeting is October 28th and we'll hear their decision on the 29th.  If they don't begin to tighten at this meeting, there is no way they'll do it right before Christmas at their last meeting on the 16th.  It seems to me, they are going to be setting expectations for some hawkish action this week and the reaction will give them time to contemplate it going into the next meeting. 

Embedded image permalinkWhat's keeping us from getting too hawkish (bearish) is this chart from Macrobond, which points out that, the last 3 times 10-year rates have been this low, the Fed has begun major rounds of EASING, not tightening policies.  QE increases the money supply and that forces note rates up to compensate and Jack Lew is the guy who has to borrow the money at those rates – so you can see how this week will all tie together once the dust settles

As a hedge, for our Member Portfolios, we're favoring SQQQ (now $36.55) and DXD (now $24.52) to protect us from another slide but the real tilt to hawkish doesn't start until Thursday, after the Fed minutes, so we can assume they will be spun bearish from there into the weekend and we'll look to take nice, short positions against any run-up that comes from doveish Fed statements early in the week.  

SPY DAILYWe're still watching our short-term bounce lines, which are far more forgiving than the long-term bounce lines we'll be looking for after they cross but, for the moment, we'll be content to see all our Strong Bounce Levels taken back (and held) today at:

  • 16,850 (weak) and 17,000 (strong)
  • S&P 1,940 (weak) and 1,955 (strong)
  • Nasdaq 4,420 (weak) and 4,465 (strong) but we'll also know we're not really impressed until 4,510.  
  • NYSE 10,575 (weak) and 10,700 (strong)
  • RUT 1,100 (weak) and 1,120 (strong)

NDX WEEKLYFor this morning, the 50 dma at 197 on /ES (1,970 on the S&P) is going to be the critical line to watch – without taking that back, anything else we see is meaningless.  So far, the /ES futures have stopped dead at the 1,970 mark while the Dow Futures (/YM) struggle at 17,000 and the Russell (/TF 1,102) is sitting just over the 1,100 line and the Nasdaq (/NQ), so far, is sitting just above the 4,025 line at 4,031.  All those lines must hold this morning or we'll quickly flip short in the Futures

Oil is still very weak at $89.60 and we're still expecting to see $85 tested (/CL) while silver is still a long for us above the $17 line (/SI) as is gold over $1,200 (/YG) – but not below for either!   We closed our short USD/JPY trade again this morning at 109.30, picking up another 0.50 winner on our favorite trade of last week.  

It's going to be a crazy, volatile week and that means lots of opportunities for us to make money trading the Futures.  We're doing our Live Trading Webinar on Wednesday this week (Members Only) but last week was a free sample and you can see us demonstrate a live Futures trade that made $500 in less than 5 minutes on the Replay Link.  

Today, meanwhile, will be mostly watch and wait.  

154536 600 Sorry Boy    Reposted cartoons

 

 


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  1. Oil Lines

    R3 – 93.64
    R2 – 92.71
    R1 – 91.21
    PP – 90.28
    S1 – 88.78
    S2 – 87.85
    S3 – 86.35


  2. Good morning!  

    Hey, good news, we're ranked 7 spots higher than last place in Health Care!  

    Embedded image permalink

    This is a great ValueWalk breakdown of HPQ:

    I heard 50,000 layoffs coming!  

    Very nice chart study of what finally constitutes pushing a population to revolt – the Hong Kong data points:

    Embedded image permalink

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  3. Good Morning!


  4. Art Cashin just stated that of the 248,000 new jobs, over 200,000 were folks over 50 years old…..

     

    Mickey D's hiring?


  5. FU TSLA!!!

    FU NFLX!!!

    FU CLF!!!

    FU RIG!!!

    FU ABX!!!

    It was nice taking a few weeks off :-)

    What a  bloodbath to come back to with some  of these  dogs….


  6. gtat- Halt of all news. No quotes on any positions? Supposed to have a business update today-hmmmm..


  7. 154524 600 Ebola and Freedom cartoons

    154471 600 Oil Tank Car Safety cartoons

    GTAT halted!  Could be delay in iWatch production.  

    • Dow +0.37% to 17,073.50. S&P +0.41% to 1,975.97. Nasdaq +0.38% to 4,492.61.
    • Treasurys: 30-year -0.13%. 10-yr -0.01%. 5-yr +0.03%.
    • Commodities: Crude -0.02% to $89.75. Gold +0.34% to $1,197.00.
    • Currencies: Euro +0.23% vs. dollar. Yen -0.29%. Pound -0.10%.
    • The major averages are set to open with solid gains, building on Friday's rally after the better than expected non-farm payrolls report; S&P +0.5%, Dow and Nasdaq +0.4%.
    • Markets ended mixed across Asia, with Hong Kong pro-democracy protests dwindling, and major European bourses are higher across the board.
    • Hewlett-Packard +5.5% premarket after announcing plans to split into two publicly traded companies, one focused on personal computers and printers, and the other on corporate computing and IT services; CareFusion +24% after agreeing to be bought by Becton Dickinson for ~$12.2B.
    • The yield on the 10-year Treasury note eased to 2.431%.

    Gallup US Consumer Spending: $87 vs. $94 in Aug and $84 last year.

    Brazil set for major rally following election

    • The iShares MSCI Brazil Index ETF (NYSEARCA:EWZ) is ahead by 6.7% premarket after President Dilma Rousseff pulls in just 42% of the vote in Brazil's 3-way election, and her more-conservative challenger Aecio Neves gets 34%, well ahead of the 26% support he saw in the most recent pre-election poll.
    • Finishing in 3rd place is Marina Silva with 21% of the votes.
    • Brazilian stocks have been rallying all year on hope Rousseff was set to be tossed, but lately have given back some gains on worry she might in fact win another term.
    • The runoff election will be on October 26.
    • Petrobas (NYSE:PBR) +14.5%, Vale (NYSE:VALE) +3.5%, Itau Unibanco (NYSE:ITUB) +1.6%, Banco Bradesco (NYSE:BBD) +3.9% premarket
    • ETFs: EWZBRFBRXXEWZSBRZUBRAQBZQBRAZBRAFUBRBRZSDBBR,FBZ

    Quantum Fuel supplying dispensing system for Linde hydrogen fueling station

    • Quantum Fuel (NASDAQ:QTWW) +33.9% premarket on news that Linde LLC says it is nearing completion of the first retail hydrogen fueling station the company will operate in the U.S.,which is expected to be online before the end of the year; QTWW is supplying the dispensing system in the hydrogen station installation.
    • "Hydrogen fueling has been making great strides in the U.S., particularly in California where Linde has been involved from the start with AC Transit and is now in the final stages of its first retail station,"according to the company, which is the world's largest manufacturer of hydrogen plants.

    Explosive growth forecast for online grocery sales

    • Online grocery store sales will grow to $80B-$123B per year by 2023, according to a presentation by Brick Meets Click.
    • The explosive growth is expected to be led by the popularity of the service in major cities such as New York and San Francisco.
    • Related stocks: KRSWYSVUWFMAMZNWMT.

    Early read on Golden Week traffic helps boost casino stocks

    • Macau casino stocks rally in early trading after the Gaming Inspection and Coordination Bureau reports casino revenue fell 11.7% Y/Y $3.2B in September.  - So, if not for the Golden Week, this would have been a complete disaster
    • Though the monthly drop in revenue was the largest since June of 2009, some analysts had forecast an even steeper drop-off.
    • Sentiment on the group has also been boosted by strong traffic numbers for the Golden Week holiday.
    • Premarket gainers: Melco Crown (NASDAQ:MPEL) +3.8%, Las Vegas Sands (NYSE:LVS)+3.0%, Wynn Resorts (NASDAQ:WYNN) +3.1%, MGM Resorts (NYSE:MGM) +2.6%.

    Taser +3.7% premarket on new orders announcement

    • Taser (NASDAQ:TASR) has announced multiple orders of its next generation Smart Weapons and conducted electrical weapons.
    • Significant orders include: CIA: 45 X26Ps and 80 X2s with 100 Taser Cam HD recorders; Dallas Police Department: 2,250 X26Ps; Las Vegas Metro Police Department: 120 X26Ps; U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives: 115 X26Ps.
    • All orders were received in and shipped in Q3 of 2014.

    HP confirms separation into two companies

    • H-P (NYSE:HPQ) has announced its plans to separate into two new publicly traded companies: one comprising of HP's enterprise technology infrastructure, software and services businesses, to be called Hewlett-Packard Enterprise, and HP Inc., which will comprise of personal systems and printer ops.
    • Meg Whitman will become President and CEO of Hewlett-Packard Enterprise; Dion Weisler will become President and CEO of HP Inc.
    • Immediately following the transaction, which is expected to be completed by the end of fiscal 2015, HP shareholders will own shares of both Hewlett-Packard Enterprise and HP Inc.
    • For fiscal 2014, H-P reaffirms its non-GAAP diluted net EPS outlook range of $3.70 to $3.74, and updates its fiscal 2014 GAAP diluted net EPS outlook to be in the range of $2.60 to $2.64. For fiscal 2015, H-P estimates non-GAAP diluted net EPS outlook to be in the range of $3.83 to $4.03 and GAAP diluted net EPS outlook to be in the range of $3.23 to $3.43.
    • Previously: WSJ: H-P breaking up into two companies
    • HPQ +8.2% premarket

  8. Welcome back Jabob!   You could make a fortune just hedging your own bets.  cheeky

    Markets not really strong so far – just the pre-market pop and all buyers are quickly finding sellers now that we're open.  

    Let's not forget that Eurozone Retail sales went off a cliff this morning AND German Factory Orders collapsed – these are not good signs…

    Embedded image permalink

    Did I mention how much these numbers suck?  

    September's decrease in sales was the sharpest for almost a year-and-half as rates of contraction gathered pace in France and Germany. These data corroborate the picture from earlier manufacturing and services releases of renewed weakness in the currency bloc.

    Worse still, on a country level, Germany hit a 53-month low at 47.1 and France was at an 18-month low of 41.8, as the eurozone's economies continue to sputter and flirt with deflation.


  9. GTAT files for chapter 11


  10. Hi Phil I've been looking and listing for the last 6 weeks, in the mean time I have gone to cash and set up a margin account I'm glad say… I'm now ready to start trading options and be the bank… Looks like it might be good timing… Do you have any general advice for someone in my position now and was also wonder if the dxd and sqqq could be good trades on there own when no hedge is needed… Must say I'm enjoying the  info and coverage… It's money well spent….


  11. Thanks Eric – just wow….

    http://www.marketwatch.com/story/gt-advanced-technologies-inc-and-its-subsidiaries-file-for-bankruptcy-court-protection-under-chapter-11-2014-10-06

    GT Advanced Technologies Inc., GTAT, -0.67% announced today that it had, together with certain of its direct and indirect subsidiaries (collectively, GT), commenced voluntary cases under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of New Hampshire. GT expects the court will authorize the company to continue to conduct business as usual while it devotes renewed efforts to resolve its current issues and develops a reorganization plan.

    GT indicated that as of September 29, 2014 it had approximately $85 million of cash. In addition, it is now seeking debtor-in-possession financing, which, once obtained, would provide the company with an immediate source of additional funds. These funding sources will enable GT to satisfy the customary obligations associated with the daily operation of its business, including the timely payment of employee wages and other obligations.


  12. Didn't GTAT get $500M from AAPL recently?


  13. GTAT —WTF? bankruptcy? from a supplier to AAPL….just like that….shit happens


  14. S&P 500 companies are about to use 95% of earnings in share buybacks and dividends this year. http://www.bloomberg.com/news/2014-10-0

    Companies' Stock Buybacks Help Buoy the Market

    Do You Seriously Want To Be Rich? Then Buy Back Shares And Raise The Dividend

    Sorry but stuff like this reminds me how BS this market rally is.  

    Now the shorts are kicking on with /TF 1,100, /YM 16,996, /ES 1,969 and /NQ 4,035.

    Oil $89.27, Dollar 86.47, gold $1,196.7, silver $17.035 (rejected at $17.10), copper $3.029, nat gas $3.92, gasoline $2.37 (lowest in 4 years).  

    VIX still down at 14.31, so not too worried there.

    ISRG just caught an upgrade – testing $500 again. 

    From the Buy List on ISRG:

    ISRG (5/20) is one we always like when it's cheap and they're back at $364.40 and one of the best reasons to enter a bullish play is because you have a very obvious line at which to get out.  $350 is an obvious line.  The 200 dma is actually at $400 and the 50 dma, at $415 is going to death cross soon (unless ISRG rockets back over $400), so no hurry on this one but well worth watching.  2016 $300 puts are $28 for a net $272 entry and that's another 25% down from here.   This one is drifting up already – a very likely official play for next week.  

    Good example of how the Fundamentals can be there for a very long time before the rest of the market wakes up and sees them.  

    GTAT – WTF?  They have $85M in the bank!  

    GT indicated that as of September 29, 2014 it had approximately $85 million of cash. In addition, it is now seeking debtor-in-possession financing, which, once obtained, would provide the company with an immediate source of additional funds. These funding sources will enable GT to satisfy the customary obligations associated with the daily operation of its business, including the timely payment of employee wages and other obligations.

    As a result of the filing, and as is customary with public companies, NASDAQ may temporarily halt trading in the company's stock pending the receipt of additional information on the company's financial condition. The company is cooperating with NASDAQ and will be providing any requested information as promptly as possible.

    "GT has a strong and fundamentally sound underlying business," said Tom Gutierrez, president and chief executive officer of GT. "Today's filing does not mean we are going out of business; rather, it provides us with the opportunity to continue to execute our business plan on a stronger footing, maintain operations of our diversified business, and improve our balance sheet.

    Sometimes, strategic reorgs are a positive step but it won't stop a major panic when they start trading again.  

    TSLA/Albo – Should head up into big announcement on Thursday.  

    Being the House/Triboy – I'd say be patient.  If you are conservative, it's nice to start with short put selling and work your way into longs as the market stabilizes.  For now, we expect more of a sell-off than we've had so far.  Keep an eye on our Buy List stocks and see which ones get cheap over the next few weeks (I think GTAT may be going on sale!).  As to trading DXD and SQQQ – they are fine for bets but keep in mind that's what it is if you're not using them as hedges.  Of course, if you put on a hedge and it's not working – then it might be a good time to sell some puts!  

    GTAT/StJ – Yes but they've burned through almost all that money building their new plant and they won't be able to finish it without making some moves – this is a big move.


  15. oops I just lost $3600 on 4 $9 puts on GTAT lol


  16. Boy, hard to get more than 5 points out of a /TF short.  Still, it is $500 per contract…


  17. GTAT-- Actually I guess I will get early assignment of the shares  and have 400 shares worth about ?not-a-lot? ea…


  18. GTAT/Phil … only back in August on their earnings call they guided for FY'16 earnings of $1.50 per share … presume all fundamentals screwed up now if they are filing for bankruptcy protection?


  19. GTAT up from $1.06 to $1.26…..I'm bullish ;-)


  20. Phil,

    First aid strategy question for an underwater position: I have SLV stock @ 18 and am thinking about selling 16 strike calls (Nov .86, Dec 1.03 or Jan 1.14). Your thoughts please?

    Thanks


  21. I was wondering how often shareholders are left with anything when a company files for Chapter 11:

    http://www.investopedia.com/ask/answers/10/stock-holder-lose-equity-chapter-11.asp

    When a corporation is on the verge of bankruptcy, its stock value will reflect the risk that a Chapter 11 may become a Chapter 7. For example, a company traded at $50 may trade at $2 per share due to bankruptcy speculation. If Chapter 11 is actually filed, the stock price may fall to 10 cents. This value is composed of the potential income that shareholders may receive after liquidation and a premium based on the possibility that the firm may restructure and begin to operate successfully in the future. Private investors can buy and sell these 10-cent shares in the OTC market. The actual value does not reach zero unless the probability of restructuring is so low that a Chapter 7 filing is sure to follow. 


  22. GTAT … well there goes over half of all my profits made all year in one day :(


  23. DMulligan

    I hear you! I took a big hit with GTAT.


  24. i hope clf isn't next


  25. GTAT – UGH!  Is everyone going to hold and see how the dust settles, or is it better to just close it now and move on?


  26. GTAT claims to have a viable business in their statement this morning. If it does disappear it's only $400 more than the $2400 I've already lost, so I might as well buy a couple hundred more shares when it starts trading for more than a couple minutes. 


  27. I don't have any GTAT but isn't the main risk now that they can wipe out the entire class of shares that people have and are currently buying and issue a new class when they restructure, giving all current stock a worth of 0.00?


  28. rustle123

    It smells like GM you end up with nothing Here again it pays just to trade a few of each.!!!!


  29. That's why if I'm not in it, I'm not getting into it.


  30. GTAT – We'll have to see what the remaining business model looks like but, if you own them around $12 – kind of silly not to DD at $1 or less to drop the basis to $6.50 where at least there's a chance of recovery.  

    We have GTAT in the Income Portfolio and, fortunately, just 10 short puts (2016 415 puts sold for $4.80) and we'll have to wait for the spreads to settle down before we do something about them but we'll probably try to roll the loss to something lower.  

    SLV/8800 – How about getting out of the stock ($16.38) and selling the 2017 $15 puts for $1.65 and buying the $13/18 bull call spread at $2.80 for net $1.15 on the $5 spread.  Your worst case is you end up owning SLV again at net $16.15 (a bit less than now) but you still have $3.85 of upside without tying up so much cash.  

    Bankruptcy/StJ – True, Chapter 11 is not a big deal but it puts Chapter 7 on the table (liquidation).  GTAT is saying that's not the case but this filing is such a shocker and so contrary to what management has been saying that people aren't likely to hang around to find out.  It seems likely to me that GTAT has somehow failed to produce test products up to AAPL specs and have violated their contract with AAPL and there are probably horrific penalties in it that have forced them into BK.  We won't know what's going on until details come out but it's almost certain existing shareholders will be diluted coming out the other side of this.  

    Damn, I was wrong on GTAT, it's the LTP that has the spread, the Income Portfolio has the actual stock – I forgot about that.  The LTP is taking a relatively minor hit by comparison.  

    Once the puts bottom out (should be $13+) we'll be down another $6Kish.

    The Income Portfolio, on the other hand, is very sad:

    This is why I hate owning stock!  The puts are even worse than that too!  Well, this is why we stick with portion control.  Unfortunately, we'll lose half an allocation block ($50,000) in the Income Portfolio but at least we still have 19 other blocks to work on.  

    GTAT 0.80 now – we'll just have to see where things settle out but, lacking new information, at 0.50 I'm going to DD on each portfolio – just in case it's not as bad as we think.  Because of the guidance, there will likely be shareholder lawsuits re. misleading statements – it's unusual to have such a massive disconnect with no warning.  

    GTAT/Palotay – My attitude is – it can't get much worse, so may as well wait to see how bad it really is. 

    GTAT/Rustle – Yes, they may restructure shareholders, but that's not usual in a Chapter 11.  More likely they'll pay off debts with stock (at the $1 per share value), which would significantly dilute the 150M shares that were outstanding this morning.  So, if 150M shares owned the whole company and they settle $700M of debt (assuming they have to pay AAPL back) for $350M in stock, they'll issue 350M shares at $1 (or 700M at 0.50) and now the 150M shares drop from 100% to 30% and now the /e in the p/e – even if they still make 0.50 per the original 150M shares next year, drops to 0.15 per share but, on the whole, that's not so terrible, is it?  Certainly not 0.50 per share terrible but a stretch to call it $3 but that's why I think doubling down at .50 is a good idea – just in case we get a pop and get half our losses back and, if not – then we lose $10.50 instead of $10…


  31. I understand that GTAT owes AAPL a lot of money.


  32. GTAT / Phil – Maybe these horror stories we heard last month were actually true! If that is the case, something has to be really wrong because as you said then, AAPL would not get involved with anyone without a pretty tough due diligence.


  33. GTAT / Phil StJ.

     

    Is a great operation!, not a single leak, not a inside selling , that in a planned operation like this with the kind of attention of analysts they have is not easy.

     

    Now, what movement  do you Phil, recommend now, buying calls? thi s kind of movements usually means opportunity…( if you are out of the crater)


  34. advill: Trading has stopped, I think.


  35. GTAT, I don't understand why I don't own 400 shares of this right now. Does assignment of a stock take overnight? 


  36. Trading for CLF has also been halted!!!!


  37. GTAT is trading 0.92  at the  moment


  38. Volume is  almost zero but is open


  39. Rumor RIO makes bid for CLF


  40. A wild day at the rodeo!


  41. Phil called it this morning: Market Mayhem lol


  42. GTAT: ouch! Sorry to hear about the BK filing my friends.

    After writing down my whole year portfolio profits in CLF, I was struck by this monologue from an old Robert De Niro movie (2001) called "The Score" that I was watching last night:

    Nick: "I'm gonna say something to you. You're smart, you're talented and you know a few things but talent means nothing if you don't make the right choices. There's plenty of talented people out there who never see the light of day anymore. Last tihng, it takes discipline because this whole game is one big long shot and if you don't have the discipline to stay away from the fliers or from the gambles or whatever else you wanna call a stupid move then, my friend, I'm afraid to say, one day you will go down. It's inevitable."

    I think the moral for me is: hedge and cover everything. Analyze everything from a risk perspective, and if I have any inkling or intuition that something doesn't smell right, get out, no matter the immediate loss.

     

    Back to CLF: I've repositioned and will dig out, but it will probably take 3-4 years.

     

     


  43. How about something else. But cost you now money and can provide a possible 1% return by selling monthly calls on the BCS. ODP if they can make it in Mexico they can make it anywhere.

    Buy Jan17 3/5 BCS for 1.03 and sell the Jan17 put for 1.15  and just keep on selling monthly callers. Regret they do not offer options every month but start with selling 1/2 the Nov 6 call for say .10 even for .05 it is about 1% of the stock value. 


  44. Clark Schultz, SA News Editor

    Tesla Motors (TSLA +2.8%) will announce a series of automated driving upgrades to the Model S at an event scheduled for Thursday, sources tell The Wall Street Journal.

    Tesla is expected to have its own self-driving car model within five to six years.

    Last week, there was quite a buzz over a tweet from Elon Musk that alluded to a 'D" announcement.

    There's still the issue of the "something else" Musk hinted about. Automotive News thinks a certified pre-owned sales service could be in the works.


  45. Phil,

    Thanks for the SLV alternative.


  46. GTAT up to 1.40, party like it's 2009! ( Sorry cheering myself up)


  47. ODP / Yodi

     

    I´m not sure they are still a US own franchise in Mexico, as far I remember US sold to Gigante Mexican supermakets. 


  48. I never had any CLF but am I missing something?  It looks like it's trading and almost unchanged today.


  49. Well, very ugly turn on the indexes now:  16,890, 1,954, 4,000 and 1,090 – we'll see if these hold but I'm not in a bullish mood as we lost the weak bounce line at RUT 1,100 (but just barely).

    GTAT/Albo – They owe AAPL $500M worth of product.  If there was some catastrophic failure and they can't make the glass for the watches – it's all over for them (and money down the tubes for AAPL).  

    AAPL/StJ – As above, it could be a catastrophic failure with their new plant or, it could just be a delay that puts them in a cash crunch, in which case they'll bounce back pretty fast.  Already they are back at $1.40 from 0.80, that's up 66% in 30 minutes.  Too bad we were greedy and waiting for 0.50 (0.75 was the low).

    GTAT/Advill – At this point, as I said above, best is to just DD on the stock under $1. The options are too messy at the moment.  

    Assignment/Sn0 – Yes, it has to go through a process and there's still premium in the puts so a person is better off selling the puts to someone else than assigning you the stock.  

    CLF/Akad – Has not!  

    CLF/Jbur – LOL, that's funny to say you'll dig in after that quote…

    TSLA/Jabob – Back over $260 so it must be good. 

    You're welcome 8800.

    CLF/Rustle – Well down 1.5% but, for them, that's a calm day.


  50. GTAT/jbur – if you do want to take a gamble on a flier though.. try a few of the Jan16/Jan15 $3 calendar (calls) for .25 or less..  ;-)


  51. Some saying CLF was halted for volatility. Because it went up?? LMAO


  52. Phil

    In your opinion what do you think is fair value for CLF today? THX. 


  53. So, even TASR having trouble today, after good news. Feels like should take small profit on it and run before more bad things happen. Newbie response to bad day?



  54. Pharm/gld

    Have you made any adjustments to the oct 124 calls from last week? 


  55. GTAT- Someone somewhere knew what was coming, because there were 55 million shares sold short or about 41% of the float! 


  56. SGEN- Does anyone have any information on SGEN? I don't understand why this company has been getting downgrades all over, when the last news I saw was about positive results on a phase 3 trial. What is causing the drop here over the last month? Is it just moving with the market or is there something big (negative)happening here too?


  57. GLD/Jeff – no.  I also have the Nov 120 calls, at $1.50.  Will confirm with another day and then DD on those.

    SGEN/craig – look at all the names in the space, PTCT, PCRX, SLXP, ICPT, etc.  They are all taking a beating. 


  58. IMGN is under $10.  CRIS is < 1.50, EPZM, AXDX, ACAD.  Risk is off….


  59. Now, available at Staples….the first entirely 3D printed gun.


  60. GTAT – Over 100M shares traded now it seems or about 10x normal volume. And that's close to 60% of the float. They are just day trading them like options now it seems! Down to $1.17 now from $1.40. Might be worth waiting for the dust to settle on this one…. Although the risk factor is a lot lower than when they traded at $20!


  61. On GTAT, in the Income Portfolio, we sold 20 of the 2016 $12 puts for $3.40 and now they are $10.90 ($21,800) and we can buy those back (stock at $1.17) and sell 80 of the $3 puts for $2.25 ($18,000) so we spend net $3,800 for the roll but we collected net $6,800 to start so we still have a net $3,000 credit on the 80 short $3 puts and our obligation to buy GTAT is no more (8,000 shares at $3) than it was before (2,000 shares at $12)

    In the LTP, we sold 10 $15 puts for $4.80 so essentially the same thing, let's roll to 40 short $3 puts ($9,000) and buy back the short $20 calls for 0.05.

    CLF/Griffin – Up may have broken the machine.  

    CLF/DC – TODAY, given the current price of iron ore, $8 is a fair price.  In two years, if iron ore is back over $100, $20s is a fair price. Check out the projections for World GDP in 2030 (16 years) – it's up from $70Tn to $160Tn.  Do you think they'll do that without building anything?  It's a 100% increase in the global economy in 16 years, which is just an average of about 4% a year but still – buildings will eventually get built, ships need to ship things, containers need to contain things, etc….  You can say it isn't inflation but it's something and that means, along the way, we're likely to have a growth spurt or two that will be good for the materials sector but where in the next 16 years is kind of hard to pinpoint.  

    Embedded image permalink

    As it says "Prepare for Opportunity"!

    TASR/Griffin – After getting burned on GTAT, I think I'm losing a bit of faith across the board but I think TASR is just consolidating for a breakout back to $18.  

    MSWorld death cross/Pharm – That's not a good sign at all!  

    GTAT/Craigs – Yet no arrests will be made.

    SGEN/Craigs – Well, they don't make any money and "risky" stocks are falling out of favor a bit.  At their current burn rate, they only have a year of cash so dilution is in the cards if things keep going as they are.  At $4.3Bn they are trading at 11x sales while they lose $1 per $35 share (3%) – it's not TERRIBLE but it's not great either – essentially they are priced about where they should be for the risk/reward and you can see that because this ($34) is about where buyers usually step in (10x sales):

    3D Guns/Pharm – I heard they sold out.  

    Big bounce since 1pm:  16,910, 1,959, 4,014 and 1,096 – round and round we go.  Dollar down to 80.25 and I wonder what Lew is going to say (3pm)?  

    Oil flew back up to, you guessed it – $90.25.

    Gold $1,206.80, silver $17.20!  Copper $3.035, nat gas $3.90, gasoline back to $2.405. 

    Risk/StJ – Should have pulled the trigger under $1 on that first sell-off.  Now that they've already bounced, not as attractive until they test 0.50 (if they do).  


  62. The oil lines are working like a charm today – bouncing between R1 and PP almost on the dot. If I didn't know better, I would think that they have machines programmed with these lines – oh wait!


  63. /CL – finally got my chance to exit position with a profit when oil popped up to 90.40! Missed my chance early this morning at 7am. So glad to have gotten another chance now, although I won't be surprised if it shoots up again before the close. 

    SGEN- well I got in at 34 a while back and guess I should have sold when it hit 44, but I kept hearing  this was going to be a breakout company with big blockbuster products on the horizon. I guess the lesson is take profits when available.


  64. AAPL- everywhere you look there is a new report of what a huge winner the iPhone 6 is. Record demand and huge demand in China waiting for release, yet we can't get beyond this 100.50 level and we even had a downgrade from one firm! This just seems crazy.


  65. GTAT  - "No arrests will be made."  I would take that bet — maybe not criminal charges, but strike [shareholder] lawsuits — I would be calling my lawyer right now if I owned a substantial position.  And, since somebody does, and someone will.


  66. GTAT sounds pre emptive i wonder if APPL made a straight equity infusion or if they hold convertiable debt if its convertible guess who controls the game..is it  preferred super debt i haven't read the filing.

    lots of lawyers will come out of the woodwork on this…41% of the float short wow

    those shares are going to be super scrutinized off the cuff it sounds as tho someone balked during a negotiation..let's track the debt should be easy to find out.


  67. GTAT- just saw that the largest holders of this stock are FMR with >17.8 million shs, Blackrock with >11.4 million , Wellington > 10.8 million, and Vanguard >8.4 million. I would guess that these guys are pretty upset and will be doing what they can to see their shares are not diluted. If I have to look for some silver lining, it would be that I am in a boat with these guys and that their interests are aligned with mine. Am I reaching? 


  68. GPRO – Strong today.


  69. ZO you are spot on this was a near feint to the pretense of success

    we need to study that AAPL transaction therein lies the neck electrode that animates a little collaboative 

    craftiness


  70. Phil/ GTAT No takers on offer to buy back GTAT 2016 12 puts. If I hang onto them (only 2 thank goodness!) am I at great risk of stock being put to me even tho they are 2016's? 


  71. Phil

    AAPL BCS 90/130 is that 2015 or 2016?

    Do we have the BCS in one of our portfolios?

    Thanks


  72. From Bloomberg, Oct 6, 2014, 1:46:49 PM


    Oct. 6 (Bloomberg) — Bloomberg’s Mike Regan, Lisa Abramowicz and Julie Hyman examine the trading week ahead after the main concerns of traders in the month of October. They speak in “On The Markets” on Bloomberg Television’s “In The Loop.”

    U.S. stocks fluctuated after a weekly decline, as small-cap shares resumed a selloff and investors awaited the start of corporate earnings season to assess the strength of the economy.

    To read the entire article, go to http://bloom.bg/1rR8O8V

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


  73. Almost all momo's are up today.


  74. From Bloomberg, Oct 6, 2014, 10:52:09 AM


    Debra Summers, left, and Lynne Womble pose for a picture after being married by U.S. Senator-elect Cory Booker at City Hall in the early morning hours of Oct. 21, 2013 in Newark, New Jersey. Photographer: Kena Betancur/Getty Images

    The U.S. Supreme Court rejected calls for a nationwide ruling on same-sex marriage, a rebuff that lets gays marry in as many as 11 new states and leaves legal uncertainty elsewhere.

    To read the entire article, go to http://bloom.bg/1xVV5CA

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


  75. From Bloomberg, Oct 6, 2014, 12:00:00 PM


    A Bank of America Corp. branch in Charlotte, North Carolina. Photographer: Davis Turner/Bloomberg

    American banks are loading up on U.S. government debt, a sign they remain cautious on the economy even with the jobless rate at a six-year low and corporations at their healthiest in a generation.

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

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


  76. From Bloomberg, Oct 6, 2014, 10:05:19 AM

    Natural gas for January in the U.S.
    Northeast is the most expensive in more than a decade on concern
    that pipelines may not be able to ship enough fuel, risking a
    repeat of last winter’s record prices.

    To read the entire article, go to http://bloom.bg/1xW2q5k

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


  77. Craigsa620 – Your loss is probably more painful than their huge losses.  Doesn't matter who's onboard if the ship goes down.

    Phil – Adding $3800 to GTAT.  Good money after bad ?  I always fight the tendency to average down a bad situation.  Try to ask myself, "Is a move I would make right now if I didn't already have a position,  Is this the best place to put new money ?"   Usually, the answer is no.  Frequently, I do average down, but it's funny how our previous commitment colors our perceptions.  JMHO


  78. Looks like the 2:20 express just lifted off…….Long /TF


  79. Phil / The Punchbowl:  You commented this morning:  " This is why I can't get gung-ho bearish – so far, the Fed has stepped in every time we got to this point."

    It seems Goldman read your post: "http://www.bloomberg.com/news/2014-10-06/goldman-says-not-so-fast-as-blackrock-sees-early-fed-increase.html&quot;


  80. Oil/StJ – Now the Dollar's down to 86.10 so be careful shorting.  Same goes for the indexes.  

    Nice job Craigs.  

    AAPL/Craigs – GTAT seemed to have no effect on them.  It is strange they can't pop $100.  

    Lawsuits/ZZ – Inevitable.  

    AAPL/Angel – They pre-paid $500+M in order to give GTAT the money to build a factory that could produce enough glass for them to use.  Failure to deliver by GTAT could have serious repercussions.  

    Meanwhile, GLW anyone?  Their main competitor just went bust.  At $19.18, the Jan $18/20 bull call spread is $1.07 and the short $18 puts can be sold for 0.50 for net 0.57 on the $2 spread.  I'm for doing 20 of those in the STP ($1,140) in the hopes of winning some of that GTAT money back ($4,000 if all goes well).  

    Reaching/Craigs – Well, someone is buying the 144M shares people are selling (ie, all of them).  As I noted earlier, $3 should be about right assuming they survive so, if I were FMR, with $200M on the line, I'd spend $35M to buy 35M more shares and average in for $4.45 and then I'd do my damnedest, as the 1/4 owner of the stock, to make sure I got $3 back at least in whatever deal gets cut.  That is assuming GTAT has some sort of viable product – perhaps they do not, perhaps their assumptions that Sapphire can be mass-produced were all wrong and that's why things are falling apart.  

    GPRO/Albo – Amazing!  

    GTAT/Griffin – As long as they have 0.25 of premium or better, you are probably OK but effectively, you own it at $12 (less what you collected), don't delude yourself.  

    AAPL/QC – How about 2017?  It's in the Income Portfolio (30 of them at $10.90). 

    Momos/Rustle – NFLX back to looking like a nice short at $466.  

    GTAT/Albo – Yes, possibly good money after bad but, as noted above, I think when the dust settles – ASSUMING they do have a way to get back on track – I would think there's $3 in the shares down the road.  If that's the case, may as well take a chance on turning $3,800 into $11,400 rather than just accept a $20K loss without trying.  If I didn't have a position, I'd be much more inclined to give it a toss.  We did that with YRCW and SIRI with great success and DNDN once upon a time as well.  But I didn't pull the trigger at $1 or 0.80 so I'm not going to now at $1.05 either but I have resolved to triple down at 0.50 if it happens.  

    Good call Jasu but be careful, 1,100 now resistance (and that's a bad sign). 

    GS/ZZ – Well, these banksters are still talking their book as they haven't had enough volume to unwind yet but yes, I'm very "worried" the Fed will step in because they really can't afford to bail us out again if we have a massive crash – so even a 5% pullback freaks them out. 


  81. Phil,

    Staying just long enough to make a small withdrawal from the bank of wall street. Thanks 


  82. DBA with a nice move today.


  83. Gtat   

     

    Reading around and still is not clear for me why,  It seems  that the most probable reason is a conflict with Apple that could end in legal actions between them.  Still is not clear for me….Iwatch is their biggest ever deal…. any  other news there?.

     

    I´m planning to buy 4K in stock  


  84. No news on Jack Lew yet that I see, maybe no pre-release or maybe he's just saying nothing of note.  .  

    U.S. Treasury Secretary Jack Lew talks about the global economy and the recent G20 finance ministers' meeting in a discussion sponsored by the Peterson Institute ahead of another G20 ministerial meeting and the International Monetary Fund-World Bank fall meetings. 

    More caution on Janus exuberance

    • Noting assets are fleeing Pimco along with Bill Gross – and Gross has been at Pimco since 1971 – JPMorgan's Kenneth Worthington asks what's going to happen when Gross exits Janus Capital (JNS +1.3%) after a far shorter tenure (Gross is over 70 years old).
    • For this reason, says Worthington, revenue based on expected 2016 AUM – say $30B by the end of that year – should be valued at a far lower multiple than otherwise. "We see Janus overvalued on Gross' contribution."
    • Previously: Citi: Janus could be set up to disappoint

    Wow, they could have bought Revel for just $100M - Hilton Worldwide unloads iconic NYC Waldorf Astoria

    • Hilton Worldwide (NYSE:HLTannounces it will sell the Waldorf Astoria hotel in New York City to Anbang Insurance for $1.95B.
    • The agreement will see Hilton continue to manage the property for another 100 years.
    • The company plans to use the proceeds to buy more hotel assets in the U.S.
    • HLT +2.8% premarket

    Nice little REIT:  Whitestone ups occupancy of Houston center to 85%

    • With the signing of Crown Seafood to a 9.7K square foot lease, Whitestone's (WSR+0.1%) Lion Square Property  - whose redevelopment is nearing completion – brings its occupancy to 85% from 77%.
    • Typical of Whitestone's model, the company broke up vacant spaces previously rented to big-box retailers into smaller spaces. The result is hopefully boosted sales for tenants, higher tax revenues for municipalities, and a bigger bottom line for Whitestone owners.
    • Source: Press Release
    • Petrobras (PBR +13.2%) leads Brazilian stocks higher after yesterday's presidential election resulted in a runoff to be held Oct. 26 between incumbent Pres. Rousseff and – in an upset – pro-business challenger Aécio Neves.
    • Raymond James analyst Pavel Molchanov says a Neves victory would be the best outcome by far for PBR concerning the potential for loosening domestic content rules and restrictions on foreign investment; but the analyst warns that even under a Neves administration, it would be unrealistic to expect an immediate dramatic fuel price hike since such a move would be very unpopular move and cause economic dislocation.
    • Among other Brazilian stocks: VALE +2.5%, ITUB +9.8%, BBD +12.7%.

    Gold retakes $1,200, Sterne Agee sees gold at $1,400 in 2015

    • Gold prices bounce off 15-month lows to reclaim $1,200/oz. as the dollar rally pauses, helping strengthen shares of precious metals miners: AU +4.4%, GFI +3%, IAG +1.9%,BTG +3%, GG +2.2%, NGD +1.5%, KGC +1.6%, AGI +1.6%, RGLD +1%, SLW +2.1%.
    • Sterne Agee analysts Michael Dudas and Satyadeep Jain foresee gold and silver prices trending higher, with gold averaging $1,400/oz. in 2015 and $1,450 in 2016 and silver averaging $19 next year and $21 in 2016, as “global demand remains firm, liquidity remains ample and the dollar appears overbought.”
    • With investor sentiment still skeptical, Sterne thinks any supportive macro news flow could provide fuel for a rally; the firm rate Newmont Mining (NEM +1.5%), Agnico-Eagle Mines (AEM +2.4%), Coeur Mining (CDE +1.3%) and Gold Resource (GORO +0.2%) as Buys, with Barrick Gold (ABX +0.5%), Hecla Mining (HL +4.3%) and Pan American Silver (PAAS+1.5%) rated Neutral.

    Bloomberg: Glencore laying groundwork for merger with Rio Tinto

    • Rio Tinto (RIO +9.8%) skyrockets on a Bloomberg report that Glencore is laying the groundwork for a potential merger with the company in the next year that would create the world’s largest mining company.
    • Glencore is said to have has reached out in recent weeks to Chinese state-backed Chinalco, which is Rio’s largest shareholder with a ~9.8% stake, to gauge its interest in a potential deal.
    • However, no talks are yet underway between the two companies, no formal offer has been made, and none is likely before the end of 2014.
    • Glencore (OTCPK:GLCNFOTCPK:GLNCY) CEO Ivan Glasenberg criticizes rival miner BHP Billiton (BHP +1.2%), claiming the latter company's plans to further expand iron ore output will hurt the development of one of Africa’s poorest areas.
    • Glasenberg says the huge amount of iron ore being produced by the world’s three biggest miners – Vale, Rio Tinto and BHP, already is impacting prices and that further expanding output, as BHP said today it intends to do, would make investing in African iron ore a less appealing prospect.
    • Iron ore prices have plunged 40%-plus this year to below $80/ton, their lowest level since 2009, exacerbated by the top iron ore miners ramping up production in the hope they can profit from economies of scale.

    Speculation builds heading into Tesla Motors event

    • Tesla Motors (TSLA +2.8%) will announce a series of automated driving upgrades to the Model S at an event scheduled for Thursday, sources tell The Wall Street Journal.
    • Tesla is expected to have its own self-driving car model within five to six years.
    • Last week, there was quite a buzz over a tweet from Elon Musk that alluded to a 'D" announcement.
    • There's still the issue of the "something else" Musk hinted about. Automotive News thinks a certified pre-owned sales service could be in the works.
    • Previous: Let's talk about the D.

    Whole Foods Market takes a promotional test drive

    • Whole Foods Market (WFM +1.3%) is in the process of trying out price cuts on produce items and sampling more weekly deals, according to Fierce Retail.
    • The test run of promotions will run for a few months in select markets before the company decides if it will push it out nationally.
    • Whole Foods is looking to offset lower prices with operational efficiencies and a trimming of expenses.
    • J.C. Penney (JCP -3.3%) slips after Goldman Sachs issues some cautious comments ahead of the retailer's Investor Day meeting.
    • The investment firm says it lowered EPS estimates on JCP to reflect weaker sales forecasts for the post-BTS period.
    • The Investor Day commentary won't include any major strategic announcements or management transitions, predicts GS.

    Herbalife hires a Compliance Chief in response to Pershing's assault

    • Herbalife (HLF +2%) hires former FTC commissioner Pamela Jones Harbour as the newly-created head of compliance. She will lead a global team covering 91 markets. Ms. Harbour is a former prosecutor who was recently leading the privacy and data-protection team at the law firm BakerHostetler.
    • The move by Herbalife CEO Michael Johnson is one of several he has made in response to the two-year bearish campaign by Pershing Square's Bill Ackman. Mr. Johnson has strengthened his firm's product return policy, banned outside sales leads, added new training and new distributors now must acknowledge protections in writing. One outcome of the hiring of Ms. Harbour may be stricter policing of distributors.
    • Herbalife denies Ackman's accusations that it is a pyramid scheme and says his claims are "completely false and fabricated."
    • Several investigations into Herbalife's business by regulators and law enforcement are ongoing.

    Corning gains after GT Advanced files for Chap. 11

    • Corning (GLW +1%) has gradually moved higher after Apple sapphire supplier GT Advanced filed for Chap. 11 bankruptcy. GT hasn't yet provided details about the role Apple played in its move.
    • Corning sold off last year after GT announced a major partnership with Apple. Last month, Apple announced two of its three Apple Watch models will feature sapphire cover glass, but it opted against using sapphire to cover the iPhone 6's displays - all signs suggest Gorilla Glass is being used.

    GoPro, Ambarella rally following Hero4 launch, bullish notes

    • JMP has hiked its GoPro (GPRO +7.6%) target by $45 to $105 following U.S. store checks that point to strong early demand for the Hero4 (went on sale yesterday).
    • JMP even goes as far as to call Nicholas/Jill Woodman's recent share donation a positive. "Between the crisp execution in getting the Hero4 to market in such a timely manner, the impressiveness of its still expanding online media presence, the ongoing no-show nature of any material competitive threat, and the philanthropic generosity of its founder and CEO, our confidence in the GoPro outlook remains strong."
    • Meanwhile, Stifel has hiked its target for video processor supplier Ambarella (AMBA+3.5%) by $3 to $47. "Following over 20 investor meetings with management, we are convinced that Ambarella's focus on high-quality video with highly efficient compression capabilities at low power is redefining applications for video."
    • The firm argues Ambarella has at least a 3-year lead on rivals – its HD compression tech is highlighted – and also talks up its non-GoPro opportunities. "While many think of AMBA shares as a play on GoPro, we believe the company is also poised for +20% growth in IP Security, Automotive, Wearables and Drones over the next few years."
    • With shares having more than doubled from their $25 IPO price, Raymond James has decided to downgrade Mobileye (NYSE:MBLY) to Market Perform.
    • Nonetheless, RJ still considers Mobileye "well-positioned to benefit from increasing [advance driver assistance systems] adoption rates and the ultimate realization of an autonomous driving future."
    • Deutsche downgraded on account of valuation a month ago. Shares currently go for 56x 2015E sales.

    Telecom equipment/component names drop after EZchip warns

    • EZchip (EZCH -12.5%), a top supplier of network processors for edge/access routers, now expects Q3 revenue of $19M, below prior guidance of $22M and a $22.6M consensus.
    • CEO Eli Fruchter: "We have seen weakness in orders as well as inventory adjustments across most of our key customers that are serving the carrier networking equipment space. We believe this is a temporary slowdown, caused primarily by a weaker carrier spending environment that the market is currently going through." Like others, he's optimistic growth will soon pick up.
    • Fruchter's remarks echo those from Cisco (EZchip's top customer), Juniper, Ciena, Finisar, JDS Uniphase, and several other firms. Soft North American wireline capex (led by AT&T) has especially been taking a toll on the industry.
    • Several telecom equipment and component/chip suppliers are following EZchip lower.CIEN -2.8%. CAVM -2.8%. OCLR -2.7%. ZHNE -2.7%. CYNI -3.1%. AFOP -2.1%. NPTN-2.4%. OPLK -1.7%.

    Reaction to the new NBA media rights deal

    • ESPN's new deal with the NBA will let it experiment with selling online access to "out of market" games outside of the traditional pay-TV bundle.
    • Though the initiative could take several years to take form, it will mark another small step toward a la carte programming for consumers.
    • Media analysts note the length of the contract between the NBA with Disney (DIS +0.7%) and Time Warner (TWX) effectively boxes out Fox (NASDAQ:FOXA) and NBC (NASDAQ:CMCSA) until past the 2024-2025 season.
    • On the pay-TV side, operators such as Comcast, Dish Network (NASDAQ:DISH), AT&T (NYSE:T), Cablevision (NYSE:CVC), Time Warner Cable (NYSE:TWC) and DirecTV (NASDAQ:DTV) have to fret over an online product competing with their sports packages which include NBA games.

  85. NFLX/Phil

    NFLX moving up because redbox abandoned it's streaming service today.  GPRO up on a ridiculous 105 price target from JMP Securities. Would love to read how they justify valuation.  Still holding my 95 calls this week which aren't down that much, .50.


  86. we are not getting the full story on Ebola….nurse in Spain contracts it

    Once again questions emerge just how the virus is transmitted, because if the nurse, who obviously took every possible precation against the world's most dangerous virus that is supposedly non-airborne, contracted it, then it clearly leads to speculation that Ebola may be transmitted by means other than what the population is being told.


  87. I'm curious about why a number of members want to take a flyer on GTAT, with less than zero information about it's apparent collapse.  I would be cautious.  

    "God said to Abraham kill me a son

    Abe said man you must be putting me on
    God said no, Abe said what?
    God said you can do what you want Abe, but 
    Next time you see me coming man you better run
    Abe said where do you want this killin done?
    God said out on highway 61"


  88. GTAT- lawsuits have begun. 


  89. GTAT – "is facing a severe liquidity crisis due to circumstances that will be more fully described" during a court proceeding in the near future. Source: Dow Jones Newswires


  90. add EZCH to the list


  91. Phil,

    When you have a moment, I wanted to get your feelings on VLO in light of the EPA's proposal to mandate changes to the refining process to decrease sulfur content (great for the air breathing humans among us) which VLO has indicated would cost $400 mil. Since all refiners will be saddled with similar costs I'm thinking these added costs will just be passed on to the customer, so I'm not really seeing this as a great negative from the perspective of owning VLO, other than making solar, etc more cost competitive much farther down the line.

    Thanks in advance for your thoughts.


  92. Good summary of GTAT (and still no one knows what's actually going on):

    As of September 29th, the company had approximately $85 million in cash. GT is now seeking debtor-in-possession financing, which would provide an immediate source of funds. The company will look to reorganize, as the press release details that the company needs to "resolve its issues". Whatever these issues are, investors were completely blindsided, as this company seemed to have an extremely bright future just last week.

    GT shares obviously plunged on the news, and would seem to be completely worthless now. Investors that were hoping for large gains are now saddled with a tremendous loss. In my three plus years at Seeking Alpha, I don't think I've seen something as surprising as this. In the end, the important part here is that investments always carry risks. Trying to play the Apple-supplier game completely failed here, and I'm guessing that investors will have more caution going forward in this respect. The sad part is that even with shares down 85% at this point, they could head a lot closer to $0.

    Good attitude Jasu.  

    DBA/Albo – Coming on strong now:

    GTAT/Advill – Don't be too eager.  It's possible that, after taking $500+M from AAPL as a PRE-PAYMENT for the delivery of $500+M worth of Sapphire glass, the company's new plant (which they spent the $500M on) is over time and over budget or, even worse, the processes involved in mass-producing the glass didn't pan out as expected with the machines halfway done and now they need to scrap the project and start again.  The will certainly force AAPL to move to another supplier and, of course, ask for their $500M back – hence the company needs a bankruptcy judge to keep AAPL's army of lawyers off their doorstep while they try to deal with the mess. 

    NFLX/Rustle – Right, I forgot about that one.  GPRO totally nutty too but soooooo crazy it's hard to bet.  

    Ebola/Terra – I think its in the cocoa beans!  How's that for a rumor?  The nurse had been treating a priest who got it in Africa.  If the guy is covered in sweat and blood and dying, it only takes one mistake by the nurse to get infected – that doesn't mean it's more contagious than thought, only that you can't expect no one else to get infected when thousands of cases are being treated by thousands of doctors and nurses.  This is why the real F-up was us not spending $1Bn (they needed $100M) and sending in teams of doctors to help out in Africa when the first few hundred people were infected – you have to stop these things early or they do get out of control.

    It's not complicated – it's just SCIENCE – the longer you wait to fix it, the worse it gets!  

    Wise words, ZZ

    VLO/8800 – I agree and VLO, as a bigger refiner, is hurt less by spending $400M than others (though others spend less, I imagine).  VLO does $138Bn in business so it's 2.8% of one year's revenues, figure 10 cents a gallon to consumers.  Certainly not a reason to sell VLO!  

    GTAT/Advill – The plot thickens!  

    At least one analyst Business Insider heard from after the announcement sees one possible reason for the sudden change from GT Advanced: Apple pulled the plug.

    Jeffrey Osborne, an analyst with Cowen & Co., wrote that Apple, which lent GT $578 million as part of a supply agreement last November, "had the ability to call the interest free loan back and it appears they have done that."

    Last November, GT and Apple entered a multiyear sapphire materials agreement that would include GT manufacturing sapphire materials at an Apple facility in Arizona. That agreement said that GT would reimburse Apple over five years, starting in 2015. 

    In his note, Osborne wrote that the agreement with Apple, "was made in order to allow GT to purchase components for the manufacture of ASF systems at the Arizona facility leased from an Apple affiliate company."

    "Repayment was initially scheduled to begin January 2015 and follow a five-year schedule," Osborne wrote. "In its repayment terms, it is most likely that a substantial amount of additional current portion of prepayment was triggered as a result of covenant terms held between GTAT and Apple in relation to operating and financial metrics that the company likely failed to meet."

    Osborne also noted that GT's cash and equivalents fell to $85 million on Monday from $333 million back in June, and while Osborne hasn't yet been able to confirm this, it seems this drawdown most likely resulted from early repayment triggers in the Apple loan. 

    GTAT 3 mo

    GTAT 3 day

    That's always a danger when your business is so dependent on a single source of revenue but it seems GTAT essentially put their head on the chopping block and dared AAPL to drop the axe.


  93. Talking about nutty, Phil, you can get a nice premium writing a 775 call on CMG for earnings week (10/24), I can't imagine they hit that high.


  94. Wow, today flew by!  

    Coffee up almost 7% today.  

    CMG/Rustle – It does seem ridiculous for $2.50 but the margin is $67!  


  95. By the way, tomorrow I have to leave at noon so no Webcast – we'll do it on Wednesday at 1pm instead. 


  96. GTAT / Phil – The fascinating part of the story is that before that sapphire glass deal, GTAT seemed to have had a decent business going. I don't know what percentage of their business was in the sapphire boule production, but they were involved with solar and polysilicon besides sapphire. It starting to look like maybe they made a big bet on sapphire being the way forward and they hit a big potholes. Remember these stories back when the iPhone 6 came out that they had trouble producing correct boules and all. It sounds to me like there was some fire below that smoke. 

    In the meantime, what's the value of the rest of the business. Can't be zero! But if AAPL is looking for their money back, it could be tough avoiding BK and starting fresh with the other 2 legs of their business.

    I also wonder who else makes sapphire glass because AAPL is still using that for their camera lenses and iWatch. Or will they switch back to Gorilla Glass.


  97. GTAT   Still something don´t fit because is not the first time Apple has problems with suppliers, as a matter of fact is an expert in dealing with suppliers problems, specially with the valuable experience in China.

    I don´t believe that a  normal problem with an american supplier could trigger a so bad reaction

    The magnitude of the market reaction means perhaps something that is worst than production problems is happening… a fraud? false reports of quality or price?, we´ll see but my feeling is that is something not related with a temporal production problem,…is not Apple style. see LMQT for example.


  98. advill,

    I agree this seems suspicious.  I wonder if Apple might arrive at the 11th hour with a buy-out proposal that GTAT can't refuse. 


  99. GTAT/StJ – As Advill notes, something doesn't fit.  It's just not likely AAPL could be so totally wrong about a supplier that just two weeks ago, they announced an iWatch (not all of them) using Sapphire as well as the lenses on all their cameras and the thumb spot on the 6s.  If anything, I think AAPL had the right to take production elsewhere (paying GTAT just a royalty) if GTAT was unable to deliver on time and they have executed that due to GTAT missing a deadline (probably 9/30).   We'll have to wait and find out.  

    I agree Advill, this can't be the whole story.  

    Almost reminds me of the time we kept buying SIRI down to 0.10 in their crash – except SIRI wasn't BK, they were just trading like it:

    That chart didn't look too promising either!  


  100. I remember with SIRI we had 10,000 in one of our Portfolios at about $1.40 average and we doubled down at about 0.60 for 20,000 at $1 but then we were sick of them at 0.50 but then, at 0.11, we figured how much could it hurt to buy 20,000 more for $2,200 and that dropped the basis to about 0.56 and we took half back off when they hit that (so relieved!) and then got a huge profit on the rest.  It was a rough ride because GS et al would downgrade them pretty much every week – trying to chase every last retailer out of the stock before letting it come up again…


  101. I just don't understand why these people are still in business – another side of poverty that is overlooked. Rich people don't have to borrow at 650%:

    http://arstechnica.com/tech-policy/2014/10/at-650-interest-that-online-payday-loan-is-a-steal/

    Online payday loan operators threaten their customers, promote loans designed for long-term indebtedness, and charge exorbitant interest rates, according to a study by the Pew Charitable Trusts.

    "Lump-sum loans online typically cost $25 per $100 borrowed per pay period—an approximately 650 percent annual percentage rate," Pew said.

    The report, "Fraud and Abuse Online: Harmful Practices in Internet Payday Lending," (PDF) comes a month after the Federal Trade Commission halted an only payday scheme that the government said "allegedly bilked consumers out of tens of millions of dollars by trapping them into loans they never authorized and then using the supposed 'loans' as a pretext to take money from their bank accounts."


  102. Phil

    Your SIRI could be now $132K


  103. I am sure good for another $10 up:

    http://www.engadget.com/2014/10/06/tesla-selling-own-used-cars/

    The second-hand business for most consumer products, including automobiles, is constantly booming. It doesn't matter if you go through the actual manufacturer or websites like Craigslist and Ebay, the marketplace certainly exists. Knowing this, it looks as if Tesla is prepared to offer more than just a brand new, hot-off-the-press option on its vehicles — something that's typical among car manufacturers. According to Automobile News, Elon Musk & Co. are already working on a plan to sell the Model S used in the near future, as a way to compete against OEMs with similar alternatives in place.

    Tesla's Certified Previously Owned initiative has reportedly been confirmed by Simon Sproule, the company's vice president of communications, who said, "With the Model S fleet now heading toward the first cars hitting three years old, we are looking at CPO and how to best structure." The plan, per the report, would begin in the spring of 2016, right when Model S early adopters are scheduled to qualify for the Tesla buyback guarantee program.


  104. St J-TSLA simon sproule left Tesla today to go to aston martin!


  105. I guess that's also good for another $10 cturb!


  106. From Bloomberg, Oct 6, 2014, 6:23:28 PM


    Oct. 6 (Bloomberg) — Phyllis Papadavid, senior global-currency strategist at BNP Paribas SA, says the euro could “undershoot to $1.15″ if there is “further significant deterioration in the macro-economic outlook.”
    She spoke in an interview with Bloomberg’s Guy Collins on Oct. 3. (Source: Bloomberg)

    The dollar weakened the most in more than 12 months, dropping from a four-year high, as uneven U.S. labor-market data refueled the debate over when the Federal Reserve will raise interest rates.

    To read the entire article, go to http://bloom.bg/ZLpF49

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


  107. From Bloomberg, Oct 6, 2014, 4:42:11 PM


    A 10-piece chicken nugget order will cost $1.49 beginning today for a limited time in the U.S., the company said in a statement. Source: Burger King via Bloomberg

    Burger King Worldwide Inc. (BKW) is
    lowering its chicken nugget prices to 15 cents each as fast-food
    chains compete to lure budget-minded customers.

    To read the entire article, go to http://bloom.bg/1BIq42B

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


  108. Watch this video at http://bloom.bg/1yIbrAa

    Hong Kong Protests Dwindle as Relative Calm Returns

    Oct. 6 (Bloomberg) –- Asia Society Center on U.S.-China Relations’ Orville Schell and Bloomberg’s Mia Saini discuss the Hong Kong protests. They speak on “Street Smart.” (Source: Bloomberg)

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


  109. Watch this video at http://bloom.bg/1vDKvxP

    `Good Chance’ S&P 500 Will Advance to 2,100, Lee Says

    Oct. 3 (Bloomberg) — Thomas Lee, co-founder of Fundstrat Global Advisors LLC, and George Goncalves, head of interest-rate strategy at Nomura Holdings, talk about the outlook for U.S. stock and bond markets.

    They speak with Trish Regan and Michael McKee on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

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


  110. From Bloomberg, Oct 6, 2014, 12:31:06 PM

    WASHINGTON, DC – AUGUST 20: A guard stands on the steps of the Supreme Court Building, August 20, 2014 in Washington, DC. Today the high court blocked gay and lesbian couples from marrying in Virginia and puts on hold a federal appeals court’s verdict last month striking down the state’s ban on gay marriage. (Photo by Mark Wilson/Getty Images)

    The Supreme Court threw gay marriage back into the national political conversation Monday, a month ahead of midterm elections and just before the 2016 presidential campaign begins in earnest.  It’s a situation Republicans in particular had hoped to avoid.

    To read the entire article, go to http://www.bloomberg.com/politics/articles/2014-10-06/how-gay-marriage-decision-instantly-changes-the-midterms

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


  111. From Bloomberg, Oct 6, 2014, 12:14:43 PM

    Democratic challenger Alison Lundergan Grimes has moved ahead of Senate Minority Leader Mitch McConnell in a Bluegrass Poll released Monday.

    To read the entire article, go to http://www.bloomberg.com/politics/articles/2014-10-06/grimes-ahead-of-mcconnell-in-kentucky-bluegrass-poll

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


  112. From Bloomberg, Oct 6, 2014, 7:05:06 AM


    Bank of England Governor Mark Carney. Photographer: Simon Dawson/Bloomberg

    Mark Carney is set to reach the central banking punch bowl before Janet Yellen, yet she may drain more stimulus.

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

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


  113. From Bloomberg, Oct 6, 2014, 6:30:56 PM

    It’s made of sapphire or whatever.

    Here’s a boring couple of sentences:

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

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


  114. From Bloomberg, Oct 6, 2014, 6:04:48 PM


    It won’t be over until it’s over.

    Will polling prove accurate in 2014?

    To read the entire article, go to http://bv.ms/1nXHFD9

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


  115. From Bloomberg, Oct 6, 2014, 5:11:58 PM


    The sky is not the limit.

    If you’re a reader of the New York Times, or any real-estate site that focuses on the Big Apple, you have probably spent some time over the last few years marveling about the city’s seemingly infinite demand for eight-figure apartments. Well, apparently even developers are starting to wonder if this can last. They’re downsizing their ambitions to smaller units that go for a dainty seven figures, or shifting out of residential development entirely.

    To read the entire article, go to http://bv.ms/1uSo9tv

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


  116. These 50 DMA need to be punched through for the S&P and Nasdaq. Russell still the sick index.


  117. NYC — a very entertaining place to visit, pure masochism as a lifestyle, even if you have a chopper pad on top of your eight-figure condo.  Just the 24 hour dull roar will fry your brain over time.  Finding a taxi in the rain — and it rains 1/3 of the time, often for weeks — is impossible, so you need a chauffeur.  And finding him/her as your limo circles the block with a dozen others is as bad as hailing a taxi.  It has its cultural bright spots, e.g. the Met, NYC ballet, and the smaller museums, but you have to be a serious agorophobe to remain there longer than it takes to accumulate enough money to buy a beach or mountain house out west.


  118. Good morning!

    Things started breaking down about as soon as Europe opened this morning (3am) on more weak data. 

    Japan and India fell into the close with Japan down 0.67% and India down 1% while Shanghai was closed (they were closed yesterday too) and Hang Seng up half a point.  Singapore also sold off all day to end up down 0.28%.  

    The BOJ held rates at 0.10% and that was disappointing to people who wanted 0.0% or less (yes, they want to be paid to borrow money now!).  Hong Kong's Manufacturing PMI was 49.80 (contracting) and word is Retail Sales in Hong Kong for "Golden Week" are off about 50% – that's like Christmas missing by 50% for us.  

    Stagflation Risk Seen Holding Back BOJ on Yen Drop: Japan CreditBank of Japan Governor Haruhiko Kuroda faces resistance to faster monetary easing as politicians and businessmen lament the waning buying power of the yen. The yen’s effective exchange rate against a basket of currencies was at 77.2 at the end of August, lower than its 10-year average of 92.93 and near a more than two-decade low of 74.91 reached in January. Its nominal rate broke above 110 per dollar last week for the first time since 2008.

    Japan Needs Sales Tax Increase, Economist Ito Says. The planned increase to 10% from 8% next October is necessary to reduce the nation's fiscal deficit, economic professor Takatoshi Ito said in a speech in New York. Ito advocates >10% rate, warning of potential fiscal crisis.

     

    Hong Kong Pops the China BubbleThe protesters know that what’s hailed in the West as ‘the China dream’ is a hoax. Whatever comes next with the demonstrations in Hong Kong, they’ve already performed a historic service. To wit, they remind us of the silliness of the China infatuation so prevalent among pundits and intellectuals who don’t live in China.

    China Removes Phantom Staff, Government Vehicles to Cut SpendingThe Chinese government removed staff who receive salaries without working and cut government car use amid an austerity drive by President Xi Jinping. A total of 162,629 so-called “phantom employees” have been cleared out of central and provincial governments, state-controlled financial companies and universities as of Sept. 25, the official People’s Daily reported yesterday. The country also disposed of 114,418 vehicles, about 95 percent of a planned cut, it said in a separate report.

    RBA Holds Rates at Record Low to Spur Growth in Slowing Economy

    Hockey Says Falling Commodity Prices to Hurt Australia’s BudgetFalling commodity prices will hurt Australian government efforts to rein in its budget deficit, spurring possible new savings measures, according to Treasurer Joe Hockey. “Lower commodity prices in iron ore and coal are going to have an impact on our budget bottom line,” Hockey said in an interview in New York yesterday. “There are many variables at play but there will be a negative impact.”

    Cotton Glut Eroding Cost for Gap Jeans as China Buys LessCotton inventories in the U.S., the world’s top exporter, are heading for the biggest increase since 1986 as growers across the South store more crops that, for some, are worth less than they cost to produce.

     

    North and South Korea Navies Trade Warning Fire Near Border

    Samsung Earnings Slump as Galaxy Smartphones StruggleSamsung Electronics Co. (005930) posted its biggest drop in quarterly profit since at least 2009 as the world’s largest smartphone maker loses ground to Apple Inc. and Chinese competitors. Operating profit fell 60 percent to 4.1 trillion won ($3.8 billion) in the three months ended September from a year earlier, the Suwon, South Korea-based company said in a regulatory filing today. The shares rose on expectations fourth-quarter earnings will improve on new devices.

    Europe got the bad data at the open with German Industrial Production dropping 4% and UK Industrial Production was flat (and they are supposed to be in good shape).  France's Annual Balance sheet for Aug was running at -94.1Bn Euros, 10Bn worse than last month and way over the EU's 3% limit for a 2Tn Euro economy!  Those on top of yesterday's 5.7% drop in German Factory Orders and a 13.7% drop in European Investor Confidence has Europe down about 1% heading into lunch.  

    EU Prepares to Reject France's 2015 Budget, Setting Up Clash Over Deficit

    France's stagnation is tragic to watchFor all its reformist talk, France’s government will merely rearrange the deckchairs.

    Our Futures are off half a point and back in technical Hell now.  The Dollar falling below 86 didn't help and now it's bouncing back over and that will be super-unhelpful if people panic back to the buck.  I wouldn't bet too much against our indexes here – we're still on the doveish side of the Fed Speak today!  

    Oil bottomed out at $89.75 and now we should be able to play the channel back to $90.25 so bullish on /CL with tight stops at the $89.75 line for now.  Gold is $1,207, silver $17.36 (topped out at $17.625), copper $3.03, nat gas $3.90 and gasoline $2.39.

    Party's coming to a close for high-debt companiesCompanies that have used cheap money to load up on debt and boost earnings have been the market darlings for the past two years, but it's a trade that is getting old. With tightening conditions—particularly a rising dollar and upward pressure on interest rates—companies with weak, high-debt balance sheets would be the big losers as that trend plays itself out.

    Treasury Yields Sliding Back In Line With Taper

    White House urges U.S. regulators to rein in Wall Street risk-takingU.S. President Barack Obama is urging the country's top financial market regulators to find additional ways to "prevent excessive risk-taking across the financial system," White House spokesman Josh Earnest said on Monday. Obama spoke about his concerns in a closed-door meeting convened earlier with the heads of regulators at the Federal Reserve, Securities and Exchange Commission, Commodity Futures Trading Commission and Consumer Financial Protection Bureau, among others.

    Stephen King Fears "The World Is Starting To Look Like Orwell's 1984"


  119. Payday/StJ – That's a really sick thing (but so are credit cards), they get their hooks in people like loansharks – worse even.  At least when you couldn't pay a loan shark, they would just break your legs and you could call it quits – these guys hound you forever!  


  120. SIRI/Advill – We got out at about $1 unfortunately, though it didn't feel so at the time!  

    TSLA/StJ – LOL, you're right.  Musk is really a genius – they are already stuck with the cars thank to his idiotic guarantee of 50% valuations on returning leases (which is how he has been artificially keeping the lease prices low) and now he's spinning the fact that they are going to be stuck with cars that he can't possibly flip for cash into a positive – and the press just buys it - He's f'ing brilliant!  

    GTAT – In case you guys missed it, this article from Bloomberg did the best job so far of outlining where things stand

    Big Chart – Every day under the 50dma only makes the resistance stronger (and allows it to curve down).  We don't blame the Nas and the S&P for being rejected there – that's normal on a first attempt back but it's put up or shut down day and we have weak futures and bearish Fed speak coming in the 2nd half of the week so really do or DIE today. 

    NYC/ZZ – Good observation on the "dull roar" – that's why I ended up moving out of the city, where I lived for a while after college.  Growing up in the country (we had a farm and farmer's market at the end of my block and were zoned for 1 acre minimum, my neighbors had horses), I thought I wanted to live in NYC but what bothered me the most when I moved there (midtown by the Empire State Building) was waking up at 6am and looking out my window and seeing the streets full of people running around already.  

    I'm an early riser and I love having the house or hotels or cruise ships or cities to myself when I travel – nothing I like more than a quiet morning stroll.  There is no such thing in NYC, never, not for one second of the day – it is literally the city that never sleeps.  All the rest I don't mind, you learn how to deal with the traffic (the subways are actually fine) and where to go when to get tables and tickets to events but the total lack of relaxation 24/7/365 just gets to you after a while.  

    GTAT/Palotay – Another good article that adds color to the issue, thanks.

    Oil $90.20!  Good enough to close it for now.   Dollar back over 86 so not worth risking.


  121. TSLA,  So they get to loose money each car they sell, twice.  What a deal…