Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

Choppy Trading and Low Conviction Equals All-Time Highs?

This is a great chart from Morgan Stanley (click for bigger view):

We've sat out the summer rally, for the most part, waiting for a correction that never came and now we enter the last full week of August and we have to consider whether to move some of our cash off the sidelines or to wait into next earnings before making commitments.  Surely there are still bargains to be had and we'll be picking up stocks that are still in the bargain basement but I'm still not willing to chase the ones that are pressing the tops of their ranges – simply too rich for my blood.

We don't need to be "bullish" to make money.  Our Options Opportunity Portfolio (OOP) has gained $5,000 since our last review on 8/5, which is 5% in two weeks (now up 86% for the year) – it has a very healthy mix of bullish and bearish positions and, of course, the bullish positions are our big winners AND we have a very healthy amount (50%) in CASH!!!

Our strategy has been to pick up bargain stocks over the course of the year like Micron (MU) last Sept, Natural Gas (UNG) in Oct, IBM in Oct, Gold (GLD) in Nov, Marvell (MRVL) in Dec, Disney (DIS) in Dec, Biotech Ultra-Long (LABU) in Feb, Oil (USO) in March, Apple (AAPL) in April, Twitter (TWTR) in April, GoGo (GOGO) in May, SunPower (SPWR) in June and Kate Spade (KATE) in Aug – so it's not like we haven't bought anything over the summer – just not much.  

Image result for dividend monopoly cardIt's a very similar strategy to the one we use in our Long-Term Portfolio, over at PSW but with protective elements from our Short-Term Portfolio added in to make a single, well-hedged portfolio that began with just $100,000 last August.  Our most conservative portfolio is our Butterfly Portfolio and that went into expirations up 180% in it's 3rd year – that one is also self-hedging and market-neutral. 

We don't want to rush into things because we're still concerned about China (China Is Grappling With Hidden Unemployment) and we're still concerned about Japan (Japanese Firms Head for Profit Reckoning Next Month as Yen Gains) and Europe is still a mess (Mission Impossible Looming for Italy’s 2016 Economic Growth Goal) and the Fed are certainly going to raise rates at some point, strengthening the buying power of our sidelined Dollars so what's the hurry to rush back in – let's enjoy the end of summer!  

Though earnings season is "over" there's still plenty of action and now we have so much information that we can make some intelligent bets on those that remain.  Best Buy (BBY), for example, has been range-bound and it's very unlikely they'll get back over $35 judging by what others in the sector have reported yet you can sell Oct $35 calls for 0.75 and pick up $75 per contract if they don't pop 10% on earnings and stay down through Oct expiration (60 days).

TOL, on the other hand, has low expectations and they are my 2nd favorite builder.  They are down from $40 last year to $28.78 but they are on track to earn $2.60 per share this year for a p/e of 11 and they are only expected to earn 0.61 tomorrow morning but they beat last Q by 10% at 0.51 in a much slower quarter so I like Toll Brothers (TOL) here and the play I'd make is:

  • Buy 10 Jan $26 calls for $3.90 ($3,900) 
  • Sell 10 Jan $30 calls for $1.70 ($1,700) 
  • Sell 10 2018 $25 puts for $2,50 ($2,500) 

That's a net credit of $300 on the $4,000 spread and, if TOL is over $30 on Jan 20th (expiration day), you will collect $4,000 back for a $4,300 profit (1,433%) in 151 days but you will still have the obligation to buy 1,000 shares of TOL at $25 through Jan 2018, so make sure you REALLY want to be a long-term owner  - just in case it does fall below $25 (-10%).  Still, a 10% discount is not bad for your worst-case, right?

We've seen much-improved housing data, jobs are on the rise and rates are still low – that's how we make a decision to buy a stock with a p/e of 11 – it's not rocket science…  We use option strategies to leverage our cash and, in this case, we're using no cash at all ($300 credit) and simply using our sideline margin ($2,500) to promise to buy the stock if it goes below $25.  For that we are being paid $2,500 by the stockholder who wants a guaranteed floor.  

It's another slow data week but we have GDP on Friday, a couple of Fed reports and some housing data, so not nothing – just not much.  Yellen also speaks on Friday so buy those dips, I guess but I can only imagine she's speaking because GDP is disappointing so I will be continuing our plan to be "Cashy and Cautious" through the holiday weekend.  


Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!

Comments (reverse order)

    You must be logged in to make a comment.
    You can sign up for a membership or log in

    Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

    Click here to see some testimonials from our members!

  1. Treading water for the past week or so – which way to we break? The market has been training us to think that we'll go higher but how long can we ride that free money gravy train?

  2. Looks like we won't need all that oil that we are storing after all – trucks are getting their own standards.

    And as far as fuel consumption, miles per gallon would only reveal a portion of a vehicle's efficiency, since many trucks and vans spend long amounts of time idling. These new regulations will reduce carbon dioxide emissions by 1.1 billion metric tons and save 2 billion gallons of oil over the lifetime of the vehicles sold under the program.

  3. Phil – Maybe that will open soon and you'll have new entertainment options. I wonder how much of that $5B ended up in the pockets of local politicians:

    For that kind of money, they could have build that new tunnel which is more needed than another mall!

  4. Some good lessons in market history:

    • Most market corrections don’t turn into bear markets.
    • Using leverage to boost investment returns often ends badly.
    • The president has very little control over the global economy.
    • Buying new financial products at market peaks is a poor idea.
    • Bull markets last much longer than bear markets.
    • Stocks are six times more likely to be up 20% than down the same amount. (Michael Batnick)
    • Uncertainty is always present and it is not a wise choice to use it as an excuse not to invest.
    • Stocks will do the best job of protecting future purchasing power over long periods of time.
    • Investing in the fastest growing world economies will not guarantee higher investment returns.
    • Most recessions haven’t turned into depressions.
    • Investment costs, savings rates and time in the market are the biggest components in generating healthy investment returns.
    • Factor investing won’t work for most people because of their cognitive deficiencies.
    • There is a large behavior gap between total mutual fund returns and what investors actually receive.
    • The great majority of mutual fund managers will underperform low-cost index funds because of costs.
    • Diversification works, just not every year.
    • Stocks can stay massively over- and undervalued for very long periods of time.
    • Real returns after inflation are the only returns that matter.
    • Stocks are in a bull market 85% of the time.

  5. Little 2 minute animation to put in pictures some numbers about the US population – the 2 or 3 slides about income and wealth are scary:

  6. Bonds and gold have been heavily correlated over the past 10 months:

  7. Good Morning!

  8. Good morning!

    Big Chart looking very "M"-ish – guess I'm still not trained.  

    Trucks/StJ – Hard to say what those numbers mean.  If the program is 2018-2027 that's 10 years but then they say "over the lifetime of the vehicles sold under the program".  Now, I know trucks have 250,000-mile 2-year warranties and then you can get an extension to 5/500 but I think they are pretty trashed after that but let's say it's 10 years per truck.  That still means we're replacing the whole fleet and, starting in 2018, we're dropping 2Bn gallons = 50M barrels of oil per year on avg so about 1M per week cut from US demand is not much really. 

    Mall/StJ – It's amazing to see such a large project just sit there for so many years.  It would be nice if they do it right and make something spectacular but I'm not getting my hopes up.  

    Wealth/StJ – That's always stunning when you look at it but not more stunning than 33% of the people having cats!  34% have IPhones, that's amazing.  

    It's not the 9 people that have 35% of the wealth that are killing us – it's the one guy who, rather than having 3.5% like the other top 10, has 42%.  If that ridiculous 39% was distributed back to the bottom 90%, it would more than double their wealth – almost triple, in fact as they only have 23% (0.25% each).  So if the top 1% (3M) gave up 23% of their 42%, they'd still have 19%, which is still more than 5x what the others in the top 10% have and that would double the wealth of 300M people.  

    Yikes, markets heading down sharply at the open!  

  9. Markets heading down….MDVN heading UP!  Zoom Zoom!  Good morning!

  10. good morning phil/  BHI august spread expired and I have  2017 34 short put. what do you suggest now/ thanks

  11. EPZM – in my next write up, I am going to focus on this company.  It has taken a beating, but I like its pipeline.  I am going to start accumulating stock.  One can drive a truck through the option spreads.

  12. morning – been away for awhile.

    Central bankers and bottomless pit to no gains.

    TSLA's gigafactory I'm warming up too. This is a puff piece, but if they can get from ~$190 to $38 like the claim here it'll be an interesting time for electric cars the world over.

  13. Phil – Jelutuck asked a social security ? Yesterday. I'm not there yet – but it would be nice to begin working on a long term very conservative strategy with SS, earlier withdrawals. We have the LTP, STP, Butterfly and OOP strategy, and anyone could be applicable with SS, so maybe a 5th strategy would be to much. A SS strategy could have an additional element of say 2K – 2.5K monthly deposits – and constantly be comparing growth with a taxable element on delaying SS payments. On 2nd thoughts maybe to many moving parts.

  14. Thanks, Nantucket1

    Phil, a few times over the past few years people have asked you about how to use options to generate a very conservative income with minimal risk to principal. Here's why I ask:

    I have been putting off taking Social Security, going by the common wisdom that it pays to wait as long as possible to start collecting to get the biggest monthly benefit, but that assumes zero return on the collected benefits. I put together a spreadsheet that looks at my cumulative benefits if I start now or wait in til 67 or 70 with a variable for what % return I get on the proceeds (since I won't be spending them right away).

    Turns out, if I can generate more than about 3%, I am better off starting to collect now, so I am thinking of setting up a separate account for SS benefits and targeting a 5 or 6% return with low principal risk (using deep ITM covered calls or something). I could build up a couple hundred thousand dollars by the time I am 70 and that would be better than waiting for an additional thousand dollars a month in benefits at 70.

    What do you think of this and what ideas would you suggest for investing such a fund?

  15. DE – was that their largest single day gain, ever? what a market.

  16. TOL/Phil  TOL popped and your play isn't getting filled at those prices.  Wait it out or adjust?

  17. And up we go… Can't stop that market!

  18. TOL trade – is that in the OOP?

  19. EPZM/Pharm  I just sold a few Feb 7.50 puts for $1.40.  Probably could have gotten more.

  20. And it reverses already!  This market is nuts. 

    BHI/Selozi – Well, it's only about 0.40 but, if you don't need the margin, why pay $40 to cancel it?  It will expire worthless in Jan.

    MDVN/Pharm – Nice premium for them.

    Looks like people knew about this deal ages ago.  

    EPZM/Pharm – Very interesting.  Only $425M for the whole company. I see it's just 12,000 Meso patients a year – what does this stuff cost?  Oh wait, I can wait for the write-up.  cheeky

    Hola BDC!  Will be great if it all works but we're still waiting for those $35,000 cars they promised us by 2013 so I don't really buy into their predictions at this point.

    Social Security/Jet, Nantucket – Sorry I didn't get to that yesterday but it's a good topic, though, as you say, too many moving parts to go into that detail.  

    First of all, you have to really go over stuff like this with a financial adviser who has a clear vision of your entire assets, expenses, income, etc. – I can only comment on the portion you are willing to risk in the markets.  

    We ran a retirement income-producing portfolio a few years ago but not many people were interested and it was like watching paint dry, which it should be, to make monthly returns as our primary goal.

    The trick is to put together a nice blue-chip portfolio that pays a dividend so that, no matter what, you get something back every quarter.  

    JNJ, for example, pays 2.7% and you can buy the stock for $119.60 and sell the 2018 $100 calls for $22 and sell the $95 puts for $3.50 to net in at $94.10/94.55.  So your worst case is owning 2x JNJ, which pays a 2.7% dividend for $94.55 so let's say your allocation blocks are $50,000 and 2x would be $18,910, which means you should probably start with 100 shares at net $9,410 and, if called away at $10,000 in 18 months, you will have a profit of $590 plus Nov, Feb, May, Aug and Nov dividends of 0.80 (you just missed Aug) for another $400 so $1,090 back on $9,410 is 11.5% in 18 months is 7.7% annualized.   

    See how unbelievably boring this is!  Just like the LTP, you have to PATIENT and build your positions over time.  If JNJ stays in the $100-120 range, you will roll the puts and calls and collect another 7.7% for the next two years, only if it goes on a real sale do you get to go to 2x or 4x.  

    Now, the same rules apply as we always follow, these are just ones to watch and you really want to only buy them when they are low in their channels BUT, since this strategy, like the LTP, keeps a lot of cash on the side, you can sell puts (we sell one position a month) against stocks you want to buy if they get cheaper.  

    So, rather than jump in on JNJ, you could just sell the 2018 $105 puts for $5.50 as you get $550 right now and you get your JNJ at net $99/50 if they go lower and THEN you convert it to a buy/write to collect the dividends.  If not, you sell more puts and get more $550s.  

    OK, so I'm not going into that kind of detail on all of them but here's some more that are solid payers and solid stocks:

    MMM pays 2.5% at $179.42 and you can sell the 2018 $160 calls for $26.50 and the $140 puts for $5.75 to net in at $147.17/143.585 and the dividend is $1.11, also just missed to 5 forward is $5.55 + $12.83 at $160 is 12.5% if all goes well (and, don't forget, it might not).  

    WMT pays 2.7% and is going to kick AMZN's ass at $72.73 and nice volatility lets you sell the 2018 $65 puts for $3.80 and the $65 calls for $11.20 to net in for just $57.73/61.365 and 5 x 0.50 is $2.50 more plus $7.27 if called away is $9.77 or 16.9% at $65. 

    K pays 2.5% at $83 and you can sell 2018 $70 puts for $3.40 and the $75 calls for $11 for net $68.60/69.30 and you did not miss the dividend (Aug 28th) so 6 x 0.50 = $3 + $6.40 at $75 is 13.7%.

    PEP pays 2.8% at $108.08 and you can sell 2018 $90 puts for $3.90 and the $95 calls for $15.20 which nets you in at $88.98/91.99 which makes the 6 x 0.753 dividends (9/2) $4.52 + 6.02 at $95 = $10.54 or 11.85%.  

    VZ pays 4.3% at $52.57 and a bit better than T at these prices but missed the dividend so 5 x 0.565 = $2.83 and we can sell the 2018 $45 puts for $2.55 and the $50 calls for $4.60 to net $45.42/47.71 so $4.58 at $50 + $2.83 is $7.41 is 16.3%.

    So that's all you have to do, just keep adding trades like these SLOWLY, as we did in the LTP since Nov, 2013 and, of course, you use the margin of the sideline cash to get a good entry on your next target like CG, which pays 15.5% at $16.20 but is volatile so you use it to your advantage and sell March $15 puts for $1.10 and even in an IRA, that's $1.10/net $13.90 = 7.9% on your margin over 200 days for an annualized 15% and either you own CG for net $13.90 and THEN work it into a buy/write to drop you down to net $12 or you just keep your annualized 15% and keep selling puts against your cash.

    It takes a few years to build up positions but the LTP, which is a bit more aggressive, is up 115% in less than 3 years and all we're trying to do is beat 3%, right?   So don't try to turn this into something it isn't, take the time, do it right and you will be able to make safe(ish), spectacular returns without taking huge risks with that retirement money.  

  21. And don't forget, the VIX sucks so it's not a very good time to set up long-term dividend plays!  

  22. DE/Scott – That was a huge move for them.  Very low expectations were beat.  

    TOL/Jet – I have to stop mentioning things in the morning post!  It wasn't a portfolio play, just an idea. I hate taking short-term trades in and out of the portfolio – pain in the ass.  Meanwhile, the Jan $26s last sold at $4.20 and some idiot paid $3.53 for the $30s so that is WAY better than I had expected.  The 2018 $25 puts just sold for $2.25 so it's not that far off and still a good trade.

    And down we go again – what a friggin' joke this market is!  

    Clearly the RUT is lagging so below 1,235 it makes a great short as long as we're under 18,500, 2,180, 4,800 and it would be nice if /NKD were under 16,500 too but not necc.  

    What?  The NYSE never made 11,000 and that was a good reason not to be a sucker and go bullish?  Wow, that's insightful – if only someone had warned us about that beforehand…

    Oil testing $47 on /CLU6.  /CLV6 at $47.65. 

    That refinery is still off-line.

    And honey badger just don't give a damn.

    TOL/Tangled – Nope, just a trade idea.

  23. TM at 100 was a gift.

  24. Oil prices fell nearly 3 per cent on Monday as China ramped up exports of refined products, U.S. oil producers added rigs for an eighth consecutive week, and prospects emerged for increased exports from Iraq and Nigeria.<p>Brent crude futures were trading at $49.39 per barrel at 1028 GMT, down $1.49 …

  25. Johnson & Johnson CEO Alex Gorsky. Image source: Johnson & Johnson.<p>This year, we’ve witnessed all three major U.S. stock market indexes hit new all-time highs, which is nothing short of amazing considering the year began with the worst two-week tumble in recorded history and culminated with all …

  26. Project Fear predicted economic meltdown if Britain voted leave. <b>Where are the devastated high streets, job losses and crashing markets?</b><p>In other …

  27. DUBAI (Reuters) – The world’s largest indoor theme park is set to open in Dubai this month to lure back some of the tourists and residents who often flee abroad during the scorching desert summer.<p>In a sandy suburb beyond Dubai’s concrete jungle and pockets of artificially green spaces, IMG Worlds …

  28. Marijuana’s Investors Prefer To Keep It A Secret

    Money seems to be pouring into the cannabis industry as many investors believe the return on these early investments will be huge. New York-based Tuatara Capital just closed an $80 million cannabis private equity investment fund after raising $93 million.<p>This tops the previous record raise of $75 …

  29. Image Source: Getty Images<p>The VIX volatility index is a mathematical calculation, not a stock, so it cannot be invested in directly. Rather, traders can invest in the VIX through futures, options, or ETFs. Even the best VIX ETFs aren’t a good idea for long-term investors, due to their poor …

  30. <b>Walmart</b> (WMT) is using its vast network of stores to thump nemesis <b>Amazon</b> (AMZN) in the online grocery business.<p>Score one for a legacy …

  31. How Pepsi Is Changing the World

    It’s cutting sugary drinks out of its diet.<p><i>The staff of Fortune and a panel of experts recently named 50 companies to its 2016 Change the World list. PepsiCo is one of them.</i><p>For a company whose name is synonymous with a soda that has 10 teaspoons of sugar per can, discussing the sweetener’s perils …

  32. Out of the multitude of companies, which ones would legendary value investor Benjamin Graham buy today? I’ve compiled ten great companies that fit …

  33. Your mental health is reflected in the images you choose to post on social media, say researchers who have trained a machine to spot depression on …

  34. They’re tiny, wireless, battery-less sensors no larger than a piece of sand. But in the future, these “neural dust” sensors could be used to power …

  35. Voters remain skeptical that either would make a good president<p>Supporters of Hillary Clinton and Donald Trump disagree on a range of policy issues, …

  36. Phil; looking for your advice on an SLV position that I have been battling for 2 years.  Current position is short 50x the January $16 strangle.   My basis is $1.25.  Thanks

  37. TM/BDC – Always great at $100 and pays a $3.64 dividend so a good one to sell puts on whenever they dip.  Options only go out to April but the $105 puts can be sold for $3.80 for a net $101.20 entry – not terrible. 

    SLV/Options – Battling?  Not the best relationship to have with an investment.  You were short on Silver?  Ouch to that!  I advise not to short strangles ever, especially when the thing you are shorting is massively volatile and can blow you out of the trading range!  Since you already did it, I'd just look for an opportunity to get out somewhere near even and, hopefully, at least you learn a lesson for the money. 

    And now the indexes are up again.  You would think with all this action there'd be a lot of volume, but no…

    Date Open High Low Adj Close* Volume
    Aug 22, 2016 218.26 218.80 217.83 218.48 30,627,844
    Aug 19, 2016 218.31 218.75 217.74 218.54 73,419,000
    Aug 18, 2016 218.34 218.90 218.21 218.86 52,989,300
    Aug 17, 2016 218.00 218.53 217.02 218.37 75,134,300
    Aug 16, 2016 218.60 218.68 217.96 217.96 53,213,600
    Aug 15, 2016 218.89 219.50 218.88 219.09 49,813,500
    Aug 12, 2016 218.29 218.71 217.99 218.46 61,313,500
    Aug 11, 2016 218.26 218.94 217.95 218.65 72,504,300
    Aug 10, 2016 218.31 218.40 217.23 217.64 57,941,100

  38. Anyone notice the whipsaw action on the /TF index….  

    from 9:55 to 1025  up from 1229 to 1239……

     Then 11:10 am to 11:30 down from 1239 to 1230

    Then 12:14 to 12:29 whips up from 1231 to 1238…..Is this really someone trading or just bots jerking around the index?

  39. same pattern repeats on /ES and /NQ

  40. Be very afraid if the volume does pick up, actually:

    Sep 04, 2015 192.85 193.86 191.61 192.59 207,081,000
    Sep 03, 2015 196.26 198.05 194.96 195.55 152,087,800
    Sep 02, 2015 194.62 195.46 192.42 195.41 160,269,300
    Sep 01, 2015 193.12 194.77 190.73 191.77 256,000,400
    Aug 31, 2015 198.11 199.13 197.01 197.67 163,298,800
    Aug 28, 2015 198.50 199.84 197.92 199.28 160,414,400
    Aug 27, 2015 197.02 199.42 195.21 199.27 274,143,900
    Aug 26, 2015 192.08 194.79 188.37 194.46 339,257,000
    Aug 25, 2015 195.43 195.45 186.92 187.27 369,833,100
    Aug 24, 2015 187.49 197.48 182.40 189.50 507,244,300
    Aug 21, 2015 201.73 203.94 197.52 197.83 346,588,500
    Aug 20, 2015 206.51 208.29 203.90 203.97 194,327,900
    Aug 19, 2015 209.09 210.01 207.35 208.32 172,946,000
    Aug 18, 2015 210.26 210.68 209.70 209.98 71,692,700
    Aug 17, 2015 208.71 210.59 208.16 210.59 79,072,600

    Whipsaw/Jasu – That is what tends to happen into a big move.

  41. I guess I should update this post from last Aug 13th but, on the whole, my value picture hasn't really changed since:  "Thoughtful Thursday – Contemplating the S&P 500".  Of course, we had 17 Republican candidates back then – now we've wisely settled on Trump to be our next leader…

    Oil was $42.50 that day.  


    Hedge/QC – I'm happy with our mix in the STP (Jan SQQQ and TZA spreads, Dec SDS calls).  I wouldn't want to be too aggressive as it's just as likely that another round of massive QE is dropped on the markets as it is that we collapse.  If not for NLFX and SCO, the STP would be up over 200% at this point – that's a good sign that the hedges have been working well! 

    And speaking of conversations that last for years:

    August 13th, 2015 at 1:23 pm | (Unlocked) | Permalink

    TSLA/Rustle – Well IMAX is a real bargain compared to TSLA,.  I was in the Garden State Mall yesterday and they had a TSLA store with ONE car, not even the SUV or a mock-up of the SUV, just the regular model S that they say is $70,000, unless you want it to work – then it's $95-135.  They are holding 65% residual value on a 3-year lease and that is what will ultimately undo the company as there is no way a 3-year old electric car with a depleted $40,000 battery pack is worth $58,500 out of the $90,000 you paid for it.   Multiply those losses ($10K per vehicle is generous) by the number of vehicles delivered under lease (50,000 ish so far) and that's $500M in losses that will have to be realized at some point.  

    The only thing saving TSLA for now is that they only delivered 2,700 cars in 2012 and almost all of them were cash sales and probably most of 2013 was too, so it doesn't really hit the fan for them until 2017, when the 2014 leased cars begin rolling over.  

    Musk says he will buy about $20M worth of shares.  That's out of $13.1Bn (per Forbes) or 0.15% of his money and $10Bn of that money is his TSLA stock!  So of course he'll spend $20M to "set an example" buying TSLA, if his little purchase pushes his 40M shares up just 0.50 – he's even on the transaction!  

    And, of course, the real point is to get other suckers to give you $470M so TSLA can lose that because the first $5Bn they've spent haven't netted a dime in proifts so far.  What a scam!  

    That was at $250.

    August 13th, 2015 at 1:23 pm | (Unlocked) | Permalink

    ABX/Jeddah – I don't believe they are going BK but you never know.  We've been holding on in the LTP with 20 short 2017 $15 puts and 25 long $5 calls.  With the stock at $8, it's not too promising – looking but it is 18 months away and I don't see the point to doing anything until we can see the 2018 options.  If I had the 2016 $15 puts ($7.30) I could roll them to 2x the 2017 $10 puts ($3.50) and sell the 2017 $8 calls ($2.05) and roll my 2016 $5s ($3.20) to the 2017 $3s ($5) without taking any money out of my pocket.  Since that sounds kind of attractive – I'd rather wait for the 2018s to come out than take a loss just because I'm impatient or don't like staring at a red entry in my portfolio. 

    You can look back at the whole week's posts here – it's good to review what we were doing around a crash to see if the ducks are lining up again. 

  42. Phil, 

    From your previous comment: "be very afraid of a volume pick up", and then "this is what tends to happen into a big move" ….care to elaborate "UP MOVE" or "DOWN MOVE" …..Thanks as always!

  43. Elaborating/Jasu – It's what happens before a big move in either direction but, as you know, my bias is down because I think things are generally over-priced.  I'm reminded of that reading last year's posts because I found more things I liked buying last year than I do now so that's not a good sign.  

    However, Fundamentals are completely out the window these days, much as they were in 1999 so I just can't bring myself to spend money on shorts – just in case this bubble keeps inflating.  

  44. New Post….whew!  Chart below is a weekly.  I am long via shares.  Starting small.  Good for smaller accounts, not more than 5-10% of the account allocation.

  45. Phil / bias — mine is down as well but again its election year and I think Yellen will be accommodating in her speech. Markets may be going for new highs. I'll be sitting on the sidelines while I wait for CL to get back to $40.

  46. We're only charging $995 for the weekend 

    Phil, clarification please- is the $995 your fee or just the community cost sharing for the facilities, etc.?

    And that is tentatively for Nov?

  47. IEP/Phil – Per your quote the other day, Carl says he's levered 149% short.. Time to go long IEP?

  48. Meanwhile, AAPL is at $108.36 and is dropping $8.50 to the bottom line in 2016 and they have $35 per share in CASH!!!, so saying they have a p/e of 12.7 is an overstatement.  If we are in a bubble rally, AAPL will catch up eventually and, if we do turn down and AAPL drops 20% to $85 – the p/e will be under 10 and more like 5 if you take the cash into account and it would be the best stock you could buy in the crash. 

    So, as usual, AAPL is my favorite stock in the World.  1/3 of all Americans own IPhones – what other brand of any kind has that kind of penetration?  Coke is one that comes to mind.  Only 350M Rubik's cubes have been sold since the 80s – not even close to 1Bn IPhones.   Only 500M Harry Potter books.  350M PlayStations is very good too but you get the idea.  IPhones are pretty much the most successful consumer product of all time and those things don't tend to just disappear – people are pretty brand-loyal unless you really mess up (new Coke).

    Anyway, AAPL's dividend is a sad $2.08 (2%) but one day they might make a special dividend to return some cash and you could suddenly get $10 or so dropped in your pocket.  The stock would drop too but MSFT did it once and it was great for shareholders long-term.  

    You can sell AAPL 2018 $95 puts for $7.50 to net in at $87.50 and that's a very fair price and, if you want to be more aggressive, you can buy the $100 ($16.35)/$125 ($5.50) bull call spread for $10.85 and that would net you into the $25 spread that's $8.20 in the money for $3.35 with an upside profit potential of $21.65 (646%) in 515 days.  

    If you think you are missing something, it's a good thing to do to put some of your cash to work but I do think we're going to correct (and the market is already down again on today's roller coaster) so I want to be PATIENT but I know a lot of you feel you are missing something and, hopefully, a 646% return on some of your cash will take the edge off…

  49. EPZM/Pharm – Put me down for selling the Feb $7.50 puts for $1.40.  That nets in for $6.10 and, unless something is wrong, I'd be happy to make a bigger commitment down there.  

    Elections/Latch – See, but listen to yourself (and I'm not picking on you, everyone is doing it) – "My bias is down but magic fairies are interfering with reality…"  Clearly this is not a bullish premise, right?  So very wise to stay on the sidelines and, unfortunately, very boring.

    $995/Pstas – That's our break-even cost (assuming things haven't changed) on the seminar for 20 people and then, with more people, the marginal costs decrease a bit.   Frankly, we haven't gotten much interest for Vegas this year – I think our free (for Members) weekly Webinars dilute the audience for a live, paid weekend but, for me, I love an excuse to go to Vegas!  

    Anyway, if people are interested in doing a live seminar in Vegas on Nov 11-13 or 18-20, please let Greg know (at philstockworld dot com).  The way we've done it in the past is the first 20 people to pay $995 get refunded a portion as we hit thresholds of more people so maybe $100 per 10 people that sign up is the refund so, if 50 people end up coming, you get $300 back for being early to commit.

    Here's our last one (we didn't do one last year because not enough people signed up in time):

    PhilStockWorld Las Vegas Conference Caesar’s Palace – Nov 9th and 10th, 2014

    Welcome to Las Vegas!

     Yes, I want to spend Veteran's Day Weekend

    2014 learning how to beat the market with



    November 9th & 10th 2014 

    Caesar's Palace · Las Vegas, Nevada

    Join us for the PSW Conference where you'll learn:

    • How to critically analyze today's markets and economy
    • What strategies to apply to the current market conditions
    • When to hold your trades and when to fix them for bigger gains
    • How to use futures to leverage portfolio returns
    • How to incorporate fundamental analysis for long-term wins
    • The investing trends that will matter next year
    • Our top stock picks for 2015




    6:45pm – Dinner – Nobu – Caesar's

    9:00pm – Poker – Caesar's


    Sorrento Room – Caesar's

    9am – 12:30pm – Session #1 – Global Macro, Session #2 – Portfolio Strategies

    12:30 – 1:15pm – Working lunch

    1:15 – 4:30pm – Session #3 – Craig Stevenson, Session #4 – Short-term and Futures Trading

    6:45pm – Meet for Dinner at Rao's


    Sorrento Room – Caesar's

    6am – 1:30pm – Live Trading Session (with working breakfast)

    That dinner at Nobu was epic and we'll do that again but I think we'd do Carmine's this year for Italian - it's more casual and fun. 

  50. IEP/Scott – If you want to play the market short, it's a good way to go but Carl's a little wild for my taste and it's possible he gets very screwed on a move higher and is over-leveraged and has to liquidate painfully so I'd rather just play TZA or SQQQ, where I don't have to worry about things I can't see. 

    Speaking of magical IPhones:

    Nikkei Asian Review: iPhone model featuring curved OLED display coming in 2017

    • The publication cites sources claiming 4.7-inch, 5.5-inch and premium 5.5-inch or larger iPhone models will be available in 2017. The premium model is reportedly "equipped with a screen bent on the two sides," while the 4.7-inch and 5.5-inch offerings are said to retain flat displays.
    • Samsung Electronics (OTC:SSNLF), Apple's (AAPL -1%) major competitor in an increasingly challenging smartphone market, is a speculated supplier of flexible OLED screen technology for the 2017 iPhones. Samsung already makes use of OLED display capabilities with curved Quad HD Super AMOLED screens featured on the company's newly released Galaxy Note7 and existing Galaxy S7 lineup.
    • The 2017 iPhone iteration will mark the tenth anniversary of Apple's revolutionary device and is expected to be a major refit in comparison to this year's upcoming iPhone 7.

    Interestingly, a curved screen could allow for a buttonless phone, since you can touch changing buttons on the sides.  That would lower the amount of openings and we already know they are going for wireless headphones and wireless charging is already a thing so it's possible we could be heading towards an IPhone that is a solid, waterproof, piece of glass.  That's kind of cool!  

  51. Phil/ boring.  Ahh the futures are just the pill for that :) :( :)

  52. CAVM – who is Cavium? Just bought QLGC which I had a small odd-lot remainder position in from years ago (and had stopped following). Nice payout and nice gain for new position, but know nothing about these guys and time to learn. Any know anything about them? From press release.. "Cavium is a relatively small player in the semiconductor space. With the acquisition of QLogic, the company is looking to expand its datacenter and storage business and widen its clientele…"

  53. VRX…..keeps on giving.  

  54. Hi Phil

    Thoughts on CBI here? I missed  the previous play  2018 35/50  BCS  32.5 puts  but what about a new play now that its come down…..Thx

  55. Indexes coiling like their ready to bite.

  56. Do you know what is weird?  They have dozens of oil analysts on CNBC during the day and not a single one of them mentions today is contract rollover day.  It's like they don't even want people to know such a thing exists…

    Futures/Latch – More like a craps table today. 

    CAVM/Scott – Not too small, $3Bn.  They make the embedded security crap in semis, so not something people generally pay attention to and they don't make money, so not something I pay attention to either!  

    VRX/Pharm – Must be time to short then… cheeky

    Wow, slow news day too, nothing worth mentioning.  Let's see what the Twitterverse has to offer:

    Reorg: A boon for ?

    16,000 Files Vanish: Inspector General Says Army Has No Idea How It Spent $6.5 Trillion

    R&D spending coming back finally:

    Has the entire market ingested hallucinogens or something? I've been trading for 30 years, and today is absolutely psychotic.

    Just 11% of Trump backers are very confident in an accurate vote count in U.S.

    Register for our Aug 24 webinar to learn about a tool that provides nearly real-time supply/demand data

    Who's best for the economy? Among voters, roughly a tie: Among business economists, 55-14:

    The FRED Blog finds that the share of workers with multiple jobs has declined gradually

    Here's more proof things keep getting better for the top 10%

    Fed Admits Another $4 Trillion In QE Will Be Needed To Offset An "Economic Shock"

    52 percent of Republicans say voter fraud is a “major problem”

    The illiquid assets that underline concerns about capital at Europe's investment banks

  57. Oil rollover / Phil – I had Bloomberg in the background earlier and someone did mention that this morning. I guess they don't take bribes like CNBC there.

  58. CBI/Sun – That's one we should adjust in the LTP.  We have 10 each, down about $3,000.  They had a weak Q2 and lowered guidance but still $4.85 per $32.30 share makes the valuation silly (down from $5.25 earlier estimate).  Compared to the MoMos, they aren't getting attention but long-term, they are strong and solid and this is just a down cycle for them, which is when we should be buying cyclical stocks, right?

    In the LTP, the $35s are $4.40 and the $30s are $7 so $2.60 is a little more than I like to pay for a roll and the short $50 calls are still $1.25 (we sold them for $2.85) so I'm not inclined to buy them back and $32.50 for the puts ($6, sold for $4.90) is still well below our target $40ish for the stock so there's nothing to adjust at these prices.  That means, there's not really a "better" trade than the one we have but, as a new trade, I'd go with:

    • Buy CBI 2018 $30 calls for $7
    • Sell CBI 2018 $40 calls for $2.75
    • Sell CBI 2018 $30 puts for $4.75

    That's a net 0.50 credit on the $10 spread and worst case is owning CBI another 10% down from here.

    Bloomberg/StJ – They do have way better analysis but, sadly, it's CNBC that moves the markets.  That's what I mean though, obviously any competent analyst would mention it as a factor but apparently CNBC doesn't want it discussed.  Also, you notice in the papers that they drop the Nigeria cease-fire story to explain why oil drops – that's because "THEY" want you to think it's a big factor so they get more bang for their buck from Rent-A-Rebel when they need it so "THEY" pay their newspaper buddies to puff up stories and condition traders to react to the news they can control.  

  59. Phil – I still have a FAZ BCS 31/36 that you mentioned as a short term play about three weeks ago and said you would adjust or take off the table rather quickly.  Well – I was away for a week and then forgot to check on it – do you remember what adjustments were made???

  60. I saw money monster last night on Apple TV. Was entertaining enough to to watch. 

  61. Psychotic market/Phil – they SPY 15 min chart has a nice "volatility compression pattern" look to it… which will ultimately just result in nothing I expect, as volume didn't show any particular build. Another week of going nowhere, with stops abused and damage inflicted on anyone taking a stand in any direction..!?

  62. Pew Divergent Voters/Phil – interesting chart, showing that Trump supporters are more optimistic about the future than Clinton supporters. The Clintonistas having a 50% increase in "going to be worse" while the Trumpsters have a 16% reduction in the same metric. From that we must infer (mustn't we?) that Clinton supporters are… Misanthropes! Doomsayers! INTJs*!  Vegans*!   ;-)

    p.s. just got back from a few days in the farthest NW corner of the continental US, around Forks and La Push in the Olympic Peninsula, and this depressed rural area was FULL of giant TRUMP 2016 yard signs, business window signs, highway banners, etc. Not one Clinton sign to be seen, though a few Bernie bumper stickers (I assume to be visiting tourist vehicles like mine).  Which reminds me, your flip comment that "The public wants to see two mad dogs attacking each other" is almost an insult. The "people" didn't really get a say, did they? Not with the DNC and the media shutting down Sanders run. And it is NOT what "the people" want, is it? If you believe that, perhaps you are (as a Clinton supporter?) one of these misanthropes, too!

    *INTJ Misanthropy:
    *Vegan Misanthropy:

  63. On NYSE today advancing issues nudged out declining issues but declining volume almost twice that of advancing volume.

  64. Phil  Your morning headline mention of choppy trading certainly described today's ups and downs.

  65. Lol scottmi, where…in what dark crevice of the internet did you find that vegan advocacy website you posted? 

    As i was reading through I still wasn't sure if it was for real of if it was the work of an internet troll. The running "animal kill counter" counting animals slaughtered by the second on the side bar was creative, I think thats the first ive ever seen a counter used for that purpose!

  66. Phil in this crazy market do you have any opinion if oil will resume the rally now that contracts have rolled and they can manipulate it up or will it move down now on the overwhelming news about Nigeria, Iran, China, and the glut, etc? I am guessing it is too difficult for a trade, but I would just love to know what you think about it and if possible what you think NG will do over the next few weeks? Any chance ng moves back up near $3 any time soon? Is there anything in the news to give us any direction? If theres

  67. FAZ/Jeff – You mean from the morning post on 8/2?  That was a hedged trade example and it was:

    • Buy 10 FAZ Sept $31 calls for $3.25 ($3,250) 
    • Sell 10 FAZ Sept $36 calls for $1.30 ($1,300) 
    • Sell 5 WFC 2018 $40 puts for $2.80 ($1,400) 
    • That spread is net $550 on the $5,000 spread that's $2,700 in the money to start.  The upside potential is $4,450 for an 800% return on cash if FAZ is over $36 in 45 days (Sept 16th) and the worst case is you own 500 shares of Wells Fargo (WFC) at $40 ($20,000), which is a great long-term hold and pays a 3% dividend.

      We're expecting XLF to turn down as the smaller banks check in and, if not, we'll kill the trade for a small loss by the end of next week.  

    So that's what you SHOULD have done.  Now the $31 calls are $1.80, which isn't bad as the spread was net $1.95 but the short $36s are still 0.40 so the proper play is to leave them naked as we're past earnings and no longer expecting a financial melt-down.  The short WFC puts should expire worthless and, if you clear the $1,800 back, that less $550 is the profit on the broken trade – not terrible.  

    SPY/Scott – Final volume was 55M – so pathetic.  I guess this stock market fad is winding down and people just aren't playing anymore.  

    Pew/Scott – Not so sure about your chart-reading skills there:

    Ah, I see what you are doing there – very clever.  Good twisting of statistics to make a case that clearly can't be made through ordinary logic.  Must be all those Dems that believe in Global Warming skewing the poll numbers on the future end.   What idiots – being concerned about things they can't see…

    As to the people – they do get to vote and they vote for the same crap every time.  Hillary was the party candidate, Sanders mounted an outside run with great success but, like the GOP, the party insiders wanted their party person to lead them.  Trump did win the populist uprising, Sanders did not because he didn't really do enough to differentiate himself from Hillary in the end and she was the safer choice.  

    I agree the MSM killed Bernie and boosted Trump but that's because, as I said, people want to see mad dogs attacking each other and they already have rooms filled with files on Clinton dirt, so no research required – they just need Trump to bring it up so they can reprint their old content.  

    Speaking of content – Trump calls the Clinton Foundation a fraud and demands an audit while he, a man who gives nothing to charity (except NBC's money) won't release his tax returns.  The Clinton Foundation is as respected in the charity world as the Gates Foundation for all the work they have done over the years – it's an amazing organization (Charity Watch gives them an A with an AMAZING $2 cost to raise each $100 – best of any charity) but the kind of work they do:  Climate Change, Women's Rights, Global Healthcare, Environmental Protection…  is exactly what the GOP and their F-buddy donors want to shut down.  That's why Trump is attacking them – it's not enough not to give to charities – you have to stop the charitable behavior of others!  

    I was just listening to Trump lie for 5 straight minutes about the Clinton Foundation – just making stuff up and then using those "facts" as a case to call for shutting it down.  Nothing will happen to him, there are no consequences – that's really sick!  

    Declining/Den – It's all about the volume.  As to the headline – my bad, that was supposed to be tomorrow's headline but I just got back from vacation and thought today already happened.  cool

    Oil/Craigs – I think oil stays weak through Dec and maybe starts picking up into XMas and New Year's and then $50ish next year if you want to call that a rally.  As to /NG, I don't think anything over weeks, I think /NG is worth $3 by the end of the year and $3-4 range next year as exports trend up but an 0.50 swing in either direction is never surprising so I bet long close to $2.50 and short over $3.25 and, other than that – I don't play.  

    A hurricane in the gulf is your best chance for a move up so watch those storm charts and wait for a good one to form – If you can't resist the urge to gamble but, essentially, you are like any schmuck at the track reading the racing form and trying to figure out if your horse runs better with a lighter jockey on a sunny day from the outside starting gate – it's just a bunch of random BS that you end up using to justify your urge to gamble – nothing more…

  68. Vegans/crs – Ha! oh there is lots of misanthropic "fun" out there (vegans just happen to have a lot of discussion in that vein), and easy to find if you remove your google filter-bubble and use…Bing! ;-)   More entertainment here:  Speaking of dark corners, how about this from a Satanist's perspective: "Pragmatically speaking, I like the fact that the masses vote, abuse drugs, believe in Jesus, follow sports, and worship a flag. They are tools of social engineering that keep the many-too-many sedate, pacified, and out of many people's hair (chiefly, my own).” ? Matt Paradise, Bearing The Devil's Mark (found in the goodreads quotes link above).  Enjoy!

  69. But really, who among us doesn't have at least a little misanthropy in them..?

    ok. enough of that!

  70. Foundation / Phil – How about the Trump Foundation rating? Can't find a rating anywhere and in case, it looks like it's used as a cookie jar when Donald needs to donate OPM! But still not much accountability in the press.

  71. NG- you were playing it long at these levels not too long ago , so I was asking if there was any reason to look at it again. Didn't really need a lecture on gambling. Same with oil. You were shorting recently so I asked about it. I even said that the premise was gone so just curious what you were thinking it might do from here. I am not going to trade futures unless there is a solid reason as there seemed to be recently. I held some NG longs over the weekend to see if they might bounce today, which they did and I'm thrilled it worked out (just wish I had a crystal ball to know that I didn't need to lighten up so early) but I realise that was just lucky. So now I will wait and watch for direction or opportunity from here. Helps to know that you think oil may have a downward bias if the news and events don't change that premise. I would only trade it now on possible bounce or retrace from big moves or some news or event that is worth trading on. Not looking to gamble but looking for direction. If NG heads towards 2.50 I may take a poke.

  72. Good morning!  

    Lectures/Craigs – Sometimes, when you ask a question, the answer is a "teaching moment" in which I make a point that, clearly in this case, I need to make to many people because, while I was a away, there was rampant gambling in the Futures that didn't go well for some people.  So, I'm sorry if you took it personally but, when I answer a question, you're not the only one I'm talking to.  

    When I talk about gambling I am, however, making a point you never seem to get.  As you say right above, "you were shorting recently, so I asked about it."  I know I have said, perhaps several hundred times, that 9 OUT OF 10 TIMES that I look at the Futures, I don't see a play I like.  The reason I seem successful is that I very rarely make a futures trade – only when I think conditions are right.  By the way, I don't look at the futures 10 times a day, I'm talking pre-market, intra-day and post market so maybe one out of 3 days I see something worth playing and then I bring it up.

    So, just because I played something a week ago bullish (/NG at $2.57), doesn't mean I like them bullish now "down around here".  The contract period is different, the inventories are different, the news cycle is different and the sentiment is different.

    If you (and not you, Craigs because you would never do this) are not PATIENTLY waiting for the contract you are waiting to move to the top or bottom of a channel before you make a bet – YOU ARE GAMBLING! (not you, of course, Craigs).  There is NO POSSIBLE WAY to know which way a futures contract will go at the best of times and LEAST OF ALL when it's in the middle of a trading range so WE DON'T PLAY IT.  We don't play it because the odds are not clearly in our favor and when we put our money into predicting an outcome where the odds of winning are not clearly in our favor – THAT IS GAMBLING!  

    If gambling were a good thing to do, then somewhere on the list of the World's richest men would be at least one gambler, don't you think?  As I have often pointed out, the Forbes 400 list is always full of men who OWN casinos – just never someone foolish enough to play at one for a living.  

    Another thing you seem to miss is that I don't play /NG every day or /CL or /YM or /YG or /RB — that's because every day I look at all the Futures and I look to see which one might be playable – I don't fixate on one or the other because, if you do that, then it will only be one out of 100 times that something is worth playing.  

    All of my trade ideas start with the news, THEN I look to see if there's a trade to be made.  I don't look at the charts until after I've decided to look for a trade so, if I read that a silver mine is shut down, I then look to see if /SI is low in a channel or resting on good support for a bullish trade (and I also look to see if the news already got a reaction – in which case I missed it and move on).  

    You constantly wish for a "crystal ball" but that's the exact opposite of my process, which is summed up very simply by this picture that I suspect you've seen before:

  73. I admire your patience.Every great teacher has it.

  74. Anyway, back to the markets.  Wow on the declining volume on the NYSE yesterday:

    It’s Getting Scarily Quiet in the Market

    The S&P 500 has been remarkably tranquil. The danger isn’t so much complacency about markets but complacency about central banks.

    Europe is in a good mood after a flat Asia as the EU leaders just made a post-Brexit promise that all will be well.  Also, there was improving PMI data:

    Merkel Says Brexit Is U.K.’s Loss While Pledging Results for EUGerman Chancellor Angela Merkel said the European Union needs to show it can prosper without the U.K. as she and the leaders of France and Italy sought to chart a way forward for Europe. “We respect Britain’s decision but naturally also want to make it clear that the other 27 are working for a prosperous, safe Europe,” said Merkel, standing alongside President Francois Hollande and Prime Minister Matteo Renzi on an Italian aircraft carrier to show resolve in mastering the continent’s crises. “We need results,” she said.

    Eurozone PMI Data Point to Quicker Recovery

    Eurozone flash composite PMI ahead of expectations

    • Eurozone flash composite PMI came in at 53.3 for August to top the consensus estimate of 53.1.
    • Eurozone services PMI 53.1 vs. 52.8 consensus.
    • Eurozone manufacturing PMI 51.8 vs. 52.0 consensus.

    Germany manufacturing levels off

    • IHS Markit’s composite Purchasing Managers’ Index dropped in Germany to a 54.4 reading from 55.3 in July. The gauge for the services sector fell to 53.3. Markit said the report signalled a weaker pace of expansion for the nation.
    • Full Markit repport

    Tuesday's economic calendar

    Global markets higher as Fed meeting looms

    • Global markets are slightly higher in a week largely dominated by the upcoming Federal Reserve meeting in Jackson Hole, Wyoming. A speech on Friday by Fed Chair Janet Yellen could settle the matter on if a September rate hike should be priced in.
    • South Korea, Australia, and the main China index showed gains, while the Nikkei 225 fell slightly after Japanese flash PMI for August came in weak at 49.6.
    • European markets are in positive territory after August PMI readings didn't show significant Brexit blowback, with the Euro Stoxx 50 up 0.84% in midday trading.


    Issues of diversity and lack of firepower teed up ahead of Fed meeting

    • The Federal Reserve is feeling more heat on its lack of diversity ahead of the central bank's annual gathering in Jackson Hole, Wyoming later this week.
    • Four Fed presidents plan to meet with activist group Fed Up on Thursday to discuss the issues of income inequality and reform requests. Fed Up is also pushing a proposal to make the regional Fed banks government entities, an issue the Fed policymakers are likely to push back hard on.
    • Also on the Fed radar is a new paper questioning how much firepower the central bank has under current conditions to combat a recession in the U.S. The issue is expected to be debated at the meeting in the Tetons.

    Asia Stocks Swing as Investors Await Yellen, Energy Shares Fall

    China caught in 'dead money' trap as central bank pleads for fiscal stimulus

    China's Best Bank Called 'Mirage' of Shadow Lending. Case of Bank of Tangshan highlights opaque financial risks across the nationThe bank is the most prominent example of the off-loan-book wizardry that’s turbo-charging some of China’s small and mid-sized banks, creating opaque risks that could lead to failures, bailouts or liquidity shocks that jolt the nation and global markets in the years ahead.

    The Risks From China's Shadow Banking Industry

    Monetary policy has nationalized the Japan stock market: CLSA

    Ow, my wrist!  Wells Fargo to pay $3.6M fine for deceptive student loan practices

    • Wells Fargo (NYSE:WFCagrees to pay a $3.6M fine to the U.S. Consumer Financial Protection Bureau as part of a civil penalty for illegal student loan servicing, plus $410K in restitution to borrowers.
    • The regulator says thousands of student loan borrowers encountered problems with their loans or received misinformation about their payment options because of breakdowns in WFC’s servicing process.

    Jeffrey Miller: "I Don’t Know How Dumb Things Will Get Before Central Banks Finally Stop"

    Jim Grant: "This Will Turn Out To Be Very Bad For Many People"

    Toll Brothers EPS in-line, beats on revenue

    • Toll Brothers (NYSE:TOL): FQ3 EPS of $0.61 in-line.
    • Revenue of $1.27B (+23.3% Y/Y) beats by $20M.
    • Press Release

    Oil Prices Slump as Hopes of OPEC Production Agreement Fade

    Oil extends its downward swing

    • Oil prices are lower again as the market digests reports indicating that Iraq is preparing to ramp up its export levels.
    • Iraq oil production rose sharply in July to hit 3.71M barrels a day.
    • Strong oil output out of China and a new ceasefire with militants in Nigeria are also on the eyes of traders.
    • WTI crude oil futures -3.03% to $47.05/bbl. Brent crude -1.14% to $48.60/bbl.


    Oil Faces Dark Clouds as China Chases Blue Skies for G-20 Summit. China is throwing the world’s leaders a party, and oil bulls may be hit with the hangover. Authorities in the Asian nation have ordered hundreds of factories to curb activity ahead of the Group of 20 summit in Hangzhou in early September, in a bid to ensure blue skies when the red carpet is rolled out. The curtailments, along with flooding earlier this summer, may cut petroleum demand in the world’s second-biggest oil consumer by 250,000 barrels a day in the third quarter, according to industry consultant Energy Aspects Ltd.

    The oil rally isn't here to stay

    Mobileye and Delphi Automotive confirm self-driving partnership

    • Delphi Automotive and Mobileye to partner up in self-driving car push

      • A key autonomous driving partnership between Delphi Automotive (NYSE:DLPH) and Mobileye (NYSE:MBLY) is expected to be announced later today.
      • The two auto suppliers want to pool investment and execution risk amid the rapidly developing self-driving car push in the industry.
      • Shares of both companies are down roughly 10% over the last 52 weeks.
    • Mobileye (NYSE:MBLY) and Delphi Automotive PLC (NYSE:DLPH) confirm they will form partnership to jointly develop a complete SAE Level 4/5 automated driving solution.
    • "Our partnership with Delphi will accelerate the time to market and enable customers to adopt Level 4/5 automation without the need for huge capital investments, thereby creating a formidable advantage for them." says Mobileye CTO Amnon Shashua
    • A conference call is scheduled for 9:00 a.m. ET to discuss details of the partnership.
    • MBLY +4.253% premarket to $48.54
    • Source: Press Release
    • Previously: Delphi Automotive and Mobileye to partner up in self-driving car push (Aug. 23)

    New York says GE’s Hudson River cleanup still not adequate

    • General Electric's (NYSE:GE) seven-year, $1.6B dredging campaign to remove industrial pollutants from the Hudson River has been inadequate, the New York Department of Environmental Conservation says in a letter urging the federal EPA to closely scrutinize the effectiveness of dredging in its project review due to be released by April 2017.
    • At least 136 acres of river bottom and 35% of the PCBs discharged from a pair of GE factories along the Hudson near Albany have not been removed, the state agency says, adding that it has asked permission from the Army Corps of Engineers to dredge the Champlain Canal, which runs into and at times is a channel of the upper Hudson.
    • New York's move could pose a new PCB-related headache for GE, which has been eager to move past the cleanup obligations that have long dogged the company.

    Analysts differ on Deere after Q3 earnings beat, $500M savings target set

    • Deere (DE +0.8%) adds to Friday's 13.5% surge that followed its strong FQ3 earningsbeat, but analysts differ on whether the stock has come too far too fast.
    • Citi raises its FY 2016 and 2017 estimates for DE, citing the better than expected Q3 report and plans for more structural cost reductions, and hikes its stock price target to $100 from $87 with a Buy rating, arguing that equipment has been one of the few spots in the broader agriculture space that is not experiencing price deflation.
    • BMO analysts note that DE’s diluted shares outstanding have fallen to ~316M from 429M in FY 2010 and that DE is underproducing retail demand by 15%-20% in its ag equipment business, providing "powerful levers that the company has to drive EPS above prior trough levels."
    • However, Morgan Stanley retains its Underweight rating and $76 price target, saying the stock now reflects the $500M DE expects in cost savings by FY 2018 and warns that the company may not realize the full $500M in savings if its revenues are lower than in FY 2016 or if some of its costs rise.

    The Wynn Palace era begins

    • Steve Wynn was in Macau today for the opening of the highly-anticipated Wynn Palace and he didn't hold back on the hyperbole.
    • "Wynn Palace is arguably the most beautiful hotel in the world, which is a wonderful thing to be able to say," gushed Wynn.
    • "It's our gift to the community, to the public. It will be here forever and it's perhaps unlikely we'll see a place of this scope and artfulness in our lifetimes again," he added.
    • The Wynn recipe of floral art, a lake with a fountain show, expensive art, and exclusive restaurants were all mixed together for the Wynn Palace complex.
    • Analysts have been largely optimistic about the ability of the $4.1B Wynn Palace to bring in strong non-gaming revenue along with solid traffic to its allotment of gaming tables
    • Wynn Resorts (NASDAQ:WYNN) is down 0.37% on the day to $97.01. Shares have cracked over the $100 mark a few times over the last few months before bumping into a ceiling around $105.

    Strong growth for retail e-commerce sales continues

    • Retail e-commerce sales are forecast by eMarketer to increase 24% Y/Y to $1.95T this year to account for 8.7% of all of retail spending.
    • Retail e-commerce sales in North America are seen rising 15.6% to $423.34B.
    • EMarketer expects retail e-commerce sales to balloon to $4.058B in 2020 to represent just short of 15% of all retail spending.

    Best Buy beats by $0.14, beats on revenue

    • Best Buy (NYSE:BBY): Q2 EPS of $0.57 beats by $0.14.
    • Revenue of $8.53B (flat Y/Y) beats by $130M.
    • Best Buy (NYSE:BBY) reports comparable sales increased 0.8% in Q2.
    • The retailer saw domestic comparable online sales spike 24% during the quarter.
    • International revenue was down 1%.
    • Best Buy pulled tight on spending in Q2, with SG&A expenses as a percentage of sales down 30 bps to 20.8%.
    • Best Buy raises its outlook for Q3 EPS to $0.43 to $0.47 vs. $0.45 consensus.
    • BBY +15.12% premarket to $37.76.
    • Press Release


    Hardware declines, thin slate again weigh on videogame sales

    • Videogame spending fell 14% overall in July, again facing tough comparisons with last summer and again led down by hardware, according to NPD Group.
    • Overall sales fell to $480.1M, while hardware dropped 30% Y/Y to $141.3M. With a new Xbox One S already released, and two new PS4s reportedly on the way, unit sales fell 10%, and average price was down 22%. Portables were up 23%; consoles down 37%.
    • Videogame software (now including digital estimates) dropped 5%, to $210.3M, and PC game software fell 12% to $11.4M. Accessories spending also dropped 5%, to $117.1M.
    • In individual games (ranked by dollar sales), cash cow Grand Theft Auto V (TTWO+0.8%) overtook Overwatch (ATVI +0.4%) for the top spot, followed by Lego Star Wars: The Force Awakens (TWX -0.4%). Including digital full-game sales has lifted GTA V,which had been falling down the physical sales chart. Other titles of interest: Call of Duty: Black Ops III (NASDAQ:ATVI) at No. 5, and Minecraft (MSFT +0.1%) at No. 6.
    • In an uncommon outcome, Xbox One outsold the PlayStation 4 (SNE +0.9%) in July thanks to a reduced average price, with Wii U (OTCPK:NTDOY +1.6%) again in third place among hardware.

    Congress Demand An Explanation For Epipen Price Increases; Mylan Slides

    NBCUniversal closes $3.8B DreamWorks Animation acquisition

    • NBCUniversal (CMCSA +0.2%) has closed on its $3.8B acquisition of DreamWorks Animation (NASDAQ:DWA).
    • As planned, the studio will be folded into Universal's Filmed Entertainment Group, where it joins Universal Pictures, Fandango, and NBCUniversal Brand Development.
    • Holders of DWA get $41 in cash for each share.
    • DWA will be delisted from Nasdaq, and the studio will redeem its $300M outstanding in 6.875% senior notes, redeeming them at 105.156% of principal amount plus accrued and unpaid interest.
    • Shares jumped in April on news of the deal and have gained 59% YTD.

    Bill Gates Net Worth Tops $90 Billion For First Time: 0.5% Of US GDP

    Zika could spread to other Gulf Coast states, health official warns

    FEMA Proposes Rules for Construction in Flood Areas

    Test Your Genes to Find Your Best Diet

    Trump: FBI 'Can't Be Trusted' With Clinton Foundation Probe