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Tuesday Trump the Terrible Signs Death Warrant for Planet Earth

Image result for donald trump vaderToo political?  Well F you!  

Today, the lunatic in the White House will sign an executive order (no Congressional approval – just his own insane plan) to unravel the climate-change policies Barack Obama enacted in the hopes of saving the Planet Earth.  Oh, and fun fact for you Republican voters – WE LIVE ON PLANET EARTH!!!  

Now, I'm not asking you to believe in climate change.  I'm simply asking you to believe in logic. The Republicans like to say: "The science isn't conclusive" and let's say we accept the fact that your child has a high temperature that may prove fatal if it gets higher and 97 doctors you take him to say you need to IMMEDIATELY get his temperature down or he might die but 3 say – we don't know for sure it will kill him so let it run its course. 

So, what do you do?  Do you just let you child sweat and shiver and get worse and worse while you watch and do nothing or do you TRY to do something to make him or her better?  Well, Donald Trump just decided not only not to do anything but to stop every other parent on this planet from doing something.  In fact, although 97% of the scientists believe man-made carbon-dioxide is causing the problem – Donald J Trump (to be known as "Trump the Terrible – Destroyer of Earth" in our future) is also passing laws to INCREASE our production of CO2.  

Image result for rex tillerson signatureAs noted by Stephen Colbert, in that clip from 2014, Exxon (XOM) was a major force in the climate-denying movement and it is THEIR PAID SCIENTISTS that are the 3 out of 97 that deny climate change and, by the way, who signed their checks at the time – Rex Tillerson – our very own new Secretary of State, back when he was just the lowly CEO of Exxon.  

Image result for climate denialOf course it's not a "conspiracy" – it's simply a coincidence that the $100M Exxon donated to the GOP and to anti-climate PACS during Obama's Presidency alone led to the selection of their CEO to be the official foreign-policy negotiator for the United States – even as Exxon itself continues to fund climate-denial science and anti-climate candidates worldwide.  It's not just XOM, of course, most of the oil companies fund anti-climate agendas and for people like the Koch brothers, who make their money burning coal – it's their number one issue.  

As I noted above, my number one issue is my children and I care about their future.  I care about their future enough to do what I can to try to fix the damage we've done to the planet before it's too late.  And, even if I didn't believe it – I'm still not such an asshole that I would prevent other parents from saving their own children simply because it may inconvenience me slightly if they pass laws attempting to reign in the pollution we are clearly causing – whether it's destroying the planet or not.

Image result for climate denialOf course, it's not a minor inconvenience or a small expense to Tillerson and his friends at Exxon and Russia or to the Koch Brothers or other oil companies or companies that sell big trucks so moms can drive to the supermarket in a tank that gets 15 mpg.  To them it's most of their profits and that's why Billions and Billions of Dollars are available to anyone who will help them cling to their profit models and oh boy – did they hit the jackpot by putting this Government in power – they are rolling back 20 years of climate progress in 3 months!  

When I'm upset about a topic like this, I usually ask you to write to your Congressman but what's the point if your Congressman is a Republican?  Will they listen?  Will they stop taking checks from Big Oil?  And what does that even matter when we have a President who issues edicts that reverse regulations that were meant to protect us and our planet with a pen-stroke?  

Image result for inconvenient truthOn the whole, I'm just depressed and I'm venting.  I have been a skier my whole life, starting about 42 years ago, when I was 12 in 1975 and I have skied all over the World so I see with my own eyes how much less snow covers the mountains these days and I'm blessed (or cursed) to be educated enough to know that changes that drastic in this short of a time-period can't possibly be natural – it's all the evidence I need and I've KNOWN it for 20 years already.  

You don't have to care about saving your children or your grandchildren or the planet if you don't want to but PLEASE – don't stop my from trying to save mine.

Thanks, 

- Phil

 


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  1. The frustrating part of this climate change debate is that there is no risk associated with going to renewable energy. It's not like starting to use unknown new technology. It's all proven and it works. The only thing stopping us is not science denial, it's greed hiding behind the denial – the greed of a few old men clutching to their all their billions! Destroyers of earth indeed.


  2. TSLA~~Chinese tech giant Tencent takes 5 percent stake in Tesla

    http://newsroom.fb.com/news/2017/03/more-ways-to-share-with-the-facebook-camera/~~

    FB – Facebook launches 'camera effects' and 'stories' in its flagship app, copying Snapchat (SNAP) 


  3. Tencent – Sounds like a rapper, but it's a very large Chinese firm.

    ~~The web firm Tencent (TCEHY, +0.17%) has become the most valuable company in Asia, and one of the top 10 in the world by market capitalization..
     


  4. Looks like I'm rolling my 275 TSLA calls I wrote yesterday.  That was quick.  Glad they were for this week so not a hard roll to next week when adding some puts.


  5. Good Morning.


  6. I wish Trump would get another spray tan, he's not really orange anymore and I liked calling him the oompa loompa in chief. Why can't we find a nice middle ground and go on with our lives in peaceful enjoyment of the greatest country on earth? It's not anymore, we got fat and lazy and mortgaged our future, but the belief is still there and it's still pretty good. I believe we could be great again if we just stopped allowing politicians to micro manage everything. Why do we have both sides so polarized and screaming "We're all gonna die and it's THEIR fault!" We have a road map, the constitution set up by our founding fathers, but it's been tossed in the trash and central planning has emerged and will be the downfall of us all.

    Who benefits from dividing us and having us at each others throat? I don't hate either side, they both have good points and different perspectives but both insist on taking it to the extreme and shoving it down our throats. When did compromise become a dirty word? Pay no attention to the man behind the curtain… he is the great and powerful Oz. We are so f**ked.


  7. Climate – While we knew that trump would make this move, countries like China and India play catch-up…. :(


  8. Don't forget, corporations are people too.


  9. TSLA very well can be the largest US car company this year.  Past F, next GM.



  10. Chinese Tencent disclosed acquisition of 8.2million TSLA shares for $2.5billion.  works out to $220 per share.  Makes perfect sense that it is now trading at $280!


  11. ~~SHLD Director – Fairholme Cap'l bought 286,600 shares at $8.05-8.46 worth ~ $2 mln.

    Again a small purchase.  But my SHLD put position, which I've been sweating with for some time, has now turned quite positive.  Using today's strength to take some more off the table.


  12. Good morning!  

    Needless to say, long-term investments may not end up paying off…  cheeky

    Nah, fortunately, the real damage doesn't start for a few more decades so our children and grandchildren can deal with that – while they are paying off the $30-40Tn in debt we'll be leaving them.  I'm sure it will be fine so why should we do anything now to stop it?

    This whole country runs itself like a meth addict with a gold card and yet it's the same Republicans that hate that behavior in people but practice it in Government.  

    Anyway, that's out of my system so now let's see if we're bouncing or not.  

    TSLA is bouncing – up to $277 for the 2nd 2.5% gain in a row on news that Tencent is investing.  To me, this is like following Japanese companies into real estate ventures in the 80s but to each their own, I suppose.  If they break $280, I'll be worried about our short play but not yet.

    Big Chart – We're below the 50 dma on the NYSE and that's the noise-free index.  Nothing to get bullish about until they recover.  Dow and S&P right on the lines, not even weak bounces yet.  

    Rapper/Albo – Yeah, I thought they said "Ten Cent bought a Tesla".

    Road map/Mkucs – You know, following a Constitution that was written 240 years ago is only a stone's throw away from following the Quran or the Bible or the Book of Morman to the letter.  Even if they were the wisest men of 1776, they were still men and they were men in burlap undies with slaves and mistresses who made gin in their bathtubs, smoked a lot of pot and did a lot of blow (snuff).  

    Maybe they didn't have all the answers but instead gave us a good start and, best of all, they had the good sense to create a legal framework that was SUPPOSED to adapt with the times.  The real way we went off the track was by NOT honoring their wishes and treating their first draft of our nation's laws like it was some kind of religious document that had all the answers and should never be questioned.

    Who benefits from dividing us?  Really, is that still a question?  Let's see if we can guess:

    Image result for top 1% income

    Yeah, I'm stumped too – who could possibly benefit by keeping the bottom 99% at each other's throats while they scoop up all the wealth of our nation?  What a puzzler?  

    Related image

    Image result for who owns the media

    Related image

    Geoengineering/01 – I don't know, at this point, something drastic like that may be our only hope. 

    TSLA/Lunar – TSLA hasn't been $220 since Jan 3rd so this disclosure is simply timed to give them a boost.  SELLSELLSELL at $277!  

    SHLD/Albo – Glad it came in finally.  I guess they should have admitted they may not be a going concern ages ago – look what it's done for their stock!  

    Wow, /RB almost made $1.65 before turning back down.  

    Oh, and it's cold this morning in NY, so:


  13. Bezos and Musk fighting for control of space…

    https://arstechnica.com/science/2017/03/heres-why-the-imminent-test-of-jeff-bezos-be-4-rocket-engine-is-a-huge-deal/#p3

    It looks like we could all be winners! Better use of their money than the Koch brothers or Trump!


  14. STJ – I wouldn't bet against Bezos.  Musk on the other hand…….

    ~~Amazon.com Inc. (NASDAQ: AMZN) saw its price target raised at Stifel from $912 to $1,025.


  15. TSLA April 265 calls cna be rolled out easily for higher strike price…any guidance phil?  or sit tight?  when does the pressure to keep the stock price up because of the recent capital raise subside?


  16. Albo – What Musk has done with SpaceX is pretty interesting though… But who knows what will happen if TSLA takes a hit.


  17. Phil – Cognitive Dissonance –  "On the whole, I'm just depressed and I'm venting. "

    "Why argue about decisions you're not powerful enough to make yourself?"

    Muck – Juristic Person hood –  "We are so f**ked.?…  Don't forget, corporations are people too."

    "Corporate society takes care of everything.  All it asks of anyone, all it has ever asks of anyone ever, is not to interfere with management decisions."

    Money is not the root of all evil, conscious ignorance is. This ones for you guys with a conscience that does not allow for such.  

    "It's important to have a place to think things out."

    You like skiing, since all the slopes are brown and the sky is grey, lets try something different.  Go get your skates, stand for the corporate anthem and remember….

    "No player is greater than the game itself."

    Jonathan E. Out.


  18. We need a road map, a fair set of rules. The more we stray from it, the worse it becomes. Shall we quote GW Bush? It's just a goddamned piece of paper. End the Fed, put the responsibility for the money supply back where it belongs. Read the damned constitution! We aren't following it at all. Stop bombing other countries and creating more terrorists. Follow the golden rule. Not going to happen until it all falls apart. It's depressing, but the truth hurts. We can't talk our way out of this and we have allowed the consolidation of power by a very few players to the point we have no control. There is no freedom left, just the illusion.


  19. When I hear of "The Founders" I think of "The Creators" and "The Oracle" in the classic  https://www.youtube.com/watch?v=ohB_n7u7oFI

    "Insert the Instrument of Punishment"


  20. TSLA/Lunar – They key is "easily" – they only lose premium faster so no reason to panic yet – especially since the move up is based on two days of dubious news-pumping. 

    No player/Naybob – You do know that the movie sets out to prove the opposite.  That "no player" BS is what the Corporations want you think, that you are powerless and should just "lie back and accept it."  Well, no, I don't.

    Image result for rollerball jonathan animated gif

    Here's the words of the founding fathers we should be following, Mkucs:

    Image result for jefferson revolution 20

    Image result for jefferson revolution 20

    Jefferson wrote in 1825 to William Branch Giles of "I doubt whether a single fact, known to the world, will carry as clear conviction to it, of the correctness of our knolege of the treasonable views of the federal party of that day as that disclosed by this the most nefarious and daring attempt to dissever the Union, of which the Hartford Convention was a subsequent chapter; and both of these having failed, Consolidation becomes the 4th chapter of the next book of their history. but this opens with a vast accession of strength from their (Federal Party) younger recruits, who having nothing in them of the feelings or principles of ’76 now look to a single and splendid government of an Aristocracy, founded on banking institutions and monied in corporations under the guise and cloak of their favored branches of manufactures commerce and navigation, riding and ruling over the plundered ploughman and beggared yeomanry.  This will be to them a next best blessing to the Monarchy of their first aim, and perhaps the surest stepping stone to it."

    That's when it all began falling apart.  


  21. Washington Post reports that the White House sought to block former acting attorney general Sally Yates from testifying to Congress on Russia.

    Smelling more and more Nixonish


  22. Phil

     

    Looking for a income fund or trades  for my IRA

     

    Any thoughts Thanks

    IRA/QC – Let's do that on Tuesday (Monday I'll be in NYC).  


  23. I don't think Jefferson's call for revolution was endorsing Nat Turner or John Brown…he was just tweaking Hamilton and Adams…


  24. Entered a (close) copy of earlier TSLA trade earlier this morning at net 4,100 but higher strikes…

    Hopefully this should be fairly safe:

    Sell 3 TSLA April $280 calls for $9.20($2,900)

    Buy 5 TSLA April $305 puts for $29 ($14,500)

    Sell 5 TSLA April $287.5 puts for $15 ($7,500)


  25. Natty,  I would suggest a more apropos closing should be Alfred E. Out, as a reflection of the sheer madness of it all.


  26. Income/QC – Still need clarification on what you mean.  As I noted, FTR is great for an income at $2.02, selling 2019 $2 calls for 0.45 now, which is 22.5% on top of the dividends so, even if they cut them to 10%, you are getting 42.5% back in 2 years – not sure there's more of an income than that.  

    If you want straight income funds:

    • FDL at $28.70 pays 5.24% and you can sell Sept $27 calls for about $3.50, which makes it my favorite but very thinly traded options so you will be stuck with what you sell.  
    • DVY is dividend stocks at $90.27 and pays 4.2% and you can sell Sept $88 calls for $4.20.
    • DTN is dividends ex-financials at $81.80, paying 4% and you can sell Nov $81 calls for $3.50 

    Revolution/Rexx – I don't think he felt violent revolution was necessary but the reason the Constitution was written to be changed was because he felt each generation should be able to make their own rules as necessary.  We've had many "revolutions" in this country over Labor, Sexism, Racism, War – some violent, some not but, ultimately, it's how we grow. 


  27. Wow, Health Care making a comeback already.  Ryan says they are making progress.  See, they NEED this to pass so they can then pass their tax cuts.  No Health Care, no tax cuts.


  28. Volunteers/Phil

    Good video, love the pics.  Brings me back to a time I don't remember because I wasn't born yet but wish I could've witnessed.


  29. Health Care – At this point, it's making their constituents happy, to secure their seats in '18. The Senate will not have the votes to approve it…..


  30. Phil, LB down again today – any suggested trades at this stage?


  31. Tax reform / Phil – It got tricky so they have to do something. This article is a bit wonkish but gets to the bottom of that argument:

    http://washingtonmonthly.com/2017/03/27/how-a-tricky-tactic-by-congressional-republicans-destroyed-trumps-agenda/

    It's all based on the rules that they have in he Senate. Of course, that crew could just decide to ignore them on a temporary basis – at least until the next Dem president.

    The drafters of the tax reform almost definitely will have to accept that their bill must sunset after ten years because they can’t demonstrate offsets that would make their bill deficit neutral. Politically, they need to convince their Freedom Caucus to authorize what looks like trillions of dollars in deficit spending on the front-end without being able to discuss the details. Technically, they’ll have to craft instructions for short-term year-to-year deficit spending that can survive Byrd Rule challenges, but they’ll have to do this blind before the bill is even marked up.

    And if they can accomplish all of that, which seems exceedingly difficult but not technically impossible, they’ll have to make it into something that can pass the House and can avoid losing more than three members of their caucus in the Senate.

    This is a challenge that looks a lot harder than getting dealt an inside straight. And that’s probably a big part of the reason that Reince Priebus went on “Fox News Sunday” yesterday and “held out the possibility of working with moderate Democrats” on tax reform.

    Good luck with that!


  32. IFRS16 – Off-balance sheet obligations… I wonder how FTR is doing in this respect.

    https://www.bloomberg.com/gadfly/articles/2017-03-20/say-hello-to-3-trillion-in-forgotten-debt


  33. In defense of The Constitution, the system is designed to work from the middle which requires compromise. As the nation grows the value system and it's morals grow. The two sides may be at odds, but the middle ground gets pushed higher and compromise is reached somehow at some point and, at times, thru violent means. Seeds get planted and can be generational. A current cultural war? Looks like it.

    As Phil states, the "revolutions" have been a constant. Despite the vast changes from 1789 to present, we are still a republic, including the present state and the 50/50 divide. Proof The Constitution works? For you to decide. 


  34. Volunteers/Rustle – I remember my older brother's draft card and looking in the paper each week to see if he was being called up.  Fortunately, the war ended before that happened.  Nixon/Ford was replaced by Carter and we were full of hope but then Reagan came in and promised all kinds of crap and, like Trump, it all turned out to be just excuses for him to make his buddies rich.  Kind of left me with a distrust of Republicans and then Bushes came along and, well, can you blame me?

    LB/Leo – As much as I LOVE to day-trade the LTP positions (why else would they be in the LTP), our LB position is 

    Long Call 2019 18-JAN 55.00 CALL [LB @ $47.19 $-0.50] 10 2/1/2017 (661) $10,000 $10.00 $-5.30 n/a     $4.70 - $-5,300 -53.0% $4,700
    Short Call 2019 18-JAN 70.00 CALL [LB @ $47.19 $-0.50] -10 2/1/2017 (661) $-4,300 $4.30 $-2.60     $1.70 - $2,600 60.5% $-1,700
    Short Put 2019 18-JAN 55.00 PUT [LB @ $47.19 $-0.50] -5 2/1/2017 (661) $-4,500 $9.00 $5.70     $14.70 - $-2,850 -63.3% $-7,350

    So, since we don't have a clear bottom forming and since we have 2 years before any of these positions close, I think waiting until earnings (May 17th) would be best as we'd have more facts to work with, rather than just adjusting the trade because it's down.  That still gives us about 20 months to work with.  Q4 was a beat, by the way, and guidance is making $3.20 per $47 share for a p/e of under 15 based on what they warned was going to be an unusually weak year (they cut some lines, sabotaging their own sales). 

    Though I'd love to add more (we only sold 5 puts, so an easy roll), that doesn't mean I'm going to rush into it.  Our allocations are $100,000 in the LTP and we're committed to own $25,000 worth and we're down $8,000 at the moment – so it's not a decision we'll take lightly.

    If we do DD, our current net is 5 @ $55 + net $1,200 on the spread so $56.20 x 5 = $28,100 and if we bought 500 more at net $40 (just an example) in a spread, then our average would be $48.10, about where it is now.  

    So certainly no harm in waiting as it either gets cheaper on earnings (and we DD to a lower avg) or it jumps up and maybe we don't need to do anything.  Most likely, I'll want to roll the $55 calls ($4.90) to the $40 calls ($10.90) for $6 and roll the 5 short Jan $55 puts ($11) to 10 short 2019 $40 puts ($5.50) even so the net effect would be spending $6,000 to give us a total of $7,200 in on the spread and we'd have the Jan 2019 $40/Jan $70 bull call spread at $7.20 with the short 2019 $40 puts and we'd be $7.20 in the money with up to $13,000 profit potential at $70 so we could sell maybe 4 Aug $55 calls for $1.10 ($440) to start whittling down our $7,200.  

    Since $440 is 6% of $7,200 – we're at least getting a little interest while we wait and, at $55, we'd be $15,000 in the money already.

    As I said, no hurry – things may not be as bad in retail as prices suggest:

    Investor confidence rebounds in March

    • March State Street Investor Confidence Index+4.2 points to 95.4 vs. 91.2 (revised from 92.9) in February.
    • "Exiting historically low rates is a policy withdrawal investors have not experienced before; therefore it is natural that such an extreme policy is being questioned," said Ken Froot, co-developer of the index.

    Consumer confidence soars

     

    • Expectations Index 113.8 vs. 103.9 prior.

    FTR/Scott – Why would that article make you wonder about them?

    Frontier Communications – Current Report

    investor.frontier.com/secfiling.cfm?filingID=1193125-16-545005&CIK=20520

    Apr 18, 2016 - Combined Statements of Assets, Liabilities and Parent Funding at … These financial statements are the responsibility of the management of the Business. …… The Group does not have any off-balance sheet arrangements.

    Not every company does that kind of crap – the vast majority don't.

    Proof/PB – While I agree with you on the middle, I'd say there's a lot of countries with much longer histories than ours that could "prove" their system is better – if age and continuity are the only measuring sticks.  I think Ireland is the current winner, with a continuous Parliament since around 900 AD.  Sure they are, in turn, now ruled by the UK, but their own system is intact without change.  Isle of Man is around 1,000 years too.  Seems the best thing is to be subsumed by the UK!  cheeky


  35. …and makes some killer beers, ales and stouts. Any system that gives Guinness Brew a long term lease gets my vote, too!


  36. Isle of Man – ok.  But then what 800 years in UK do to Eire – land,…


  37. FTR/Phil – the article pointed out Telecoms (and showed AT&T) as one of the primary industries that "does that kind of crap." I haven't looked yet, myself, for FTR (I will look for such comments in most recent report), but continued weakness, and upcoming reverse split do make me curious about whatever 'we' who are bullish might be overlooking.


  38. By middle age, the lenses in your eyes harden, becoming less flexible. Your eye muscles increasingly struggle to bend them to focus on this print.<p>But a new form of training — brain retraining, really — may delay the inevitable age-related loss of close-range visual focus so that you won’t need …


  39. US consumer confidence spiked to a 16-year high in March, according to the Conference Board’s monthly survey.<p>The headline index jumped to 125.6, the highest since December 2000. Economists had forecast that the index dipped in March to 114.0 from a 15-year high of 114.8, according to …


  40. Updated 03/27/17 10:30 PM EDT<p>President Donald Trump criticized former Secretary of State Hillary Clinton’s policies on Russia in a series of tweets Monday night, adding, the “Trump Russia story is a hoax.”<p>”Why isn’t the House Intelligence Committee looking into the Bill & Hillary deal that allowed …


  41. Law of physics explains natural drivers of wealth inequality<p>DURHAM, N.C. – A Duke University professor has proposed an explanation for why the income …


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  43. WASHINGTON (AP) — The Latest on House Republicans and health care, tax cuts and other issues (all times local):<p>11:10 a.m.<p>House Speaker Paul Ryan says his chamber will take another crack at a health care overhaul.<p>But he’s offering no timeline, and no details about how leaders would overcome GOP …


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  47. LONDON — Britain’s prime minister and Scotland’s leader met on Monday to discuss the most consequential of questions: Will Britain’s departure from the European Union cause Scotland — joined with England since 1707 — to leave the United Kingdom?<p>But for The Daily Mail, one of Britain’s most popular …


  48. Nunes won’t leave Russia probe; Ryan says no need to

    WASHINGTON (AP) — House intelligence chairman Devin Nunes rebuffed calls to step aside from the Russia investigation Tuesday as demands grew for him to recuse himself as head of that probe.<p>”Why would I?” Nunes said. The calls for him to resign came after revelations about his meeting with a secret …


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  50. The House intelligence chairman says there’s no reason for him to step down from probe into ties between Trump’s campaign and Russia.<p>Updated 03/28/17 11:52 AM EDT<p>Embattled House Intelligence Committee Chairman Devin Nunes on Tuesday rejected calls for his recusal, questioning why he should step …


  51. President Donald Trump’s weekend visits to his Florida estate have been a source of great “financial burden” on the local government, Florida …


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  53. FTR/Palo – thx..  of course, Ackman defended VRX until capitulation, too!


  54. FTR- Phil I still can't seem to wrap my mind around basics of your investing ideas. So, if we buy FTR at $2 you are saying we should also sell 2019 $2 calls at $0.45. What I don't get is what happens to those calls if the price does go up as hoped? Won't we then be obligated to provide shares at the appreciated price or to buy back those calls at an inflated price? Why would we want to sell calls at the same strike price as we bought the stock for as this would seem to dilute any appreciation over the $0.45 price of the calls? I am sure this is basic stuff and I must be missing something that I should know by now, but it just doesn't make sense to me? Did you mean to say we should sell puts? 


  55. Phil, thanks for the LB comments. In the question, I meant the ideas for a new LB trade as I do not have them as part of my portfolio at the moment. But I guess your commentary addresses this as well in a way.


  56. Craig, I think what Phil is saying is that by selling the $2 2019 calls, you are knocking down your pp from $2 to $1.55, which is a great immediate discount.  Approx. two years is a long time to do something with the calls you sell as the stock will seesaw up and down over that time.  Even if you don't do anything and stock gets called away at $2 in 2019, you still get a return of 22.5% over that time.  .45/2 = 22.5%.


  57. And to add to ulty, you'll be able to roll those calls to something higher for evenish if they pop significantly. At that point, if you think they're breaking out you could wait for things to settle down and then sell puts to get your basis down further. I think Phil is getting the net entry down with a higher premium sale up front, adjust from there based on what happens. 


  58. Leases – virtually all companies use some form of leasing.  As the Bloomberg article points out some companies are bigger users of operating leases than others. The new lease accounting standard (when effective in 2019) will require all leases to come on the books (i.e. operating leases now will reflect the asset and associated liability).  Wouldn't think this should really impact equity values as analysts typically include leases (including operating leases) as debt when doing equity valuation.  The financial statements will just line up closer to what analysts already do.  The impact will be more around other arrangements that will now meet the definition of a lease and have to come on the books.  Companies will also have to disclose the lease implicit lease rate in their operating leases which will give transparency to financing costs in leases and what companies believe their incremental borrowing rate to be. 


  59. FTR/Craigs et al – i'd correct that math a bit.. Note, all of these numbers are pre-split – but percentage returns should remain the same, and is not including dividends received.
    IF you buy the stock today at $2 and write the 2019 calls at same time for .45, yes, you net in at  $1.55/share. You can assume you will be called away at some point between now and Jan 2019 (661 days away). If (when) you are called, you will be paid $2 per share (regardless if the stock is $2.15, $4, or $10). That will yield an effective return of 29% on the play. If it happens in 365 days, it will be a 29% annualized return.  If it is the last day of the calls expiration, 661 days from now, it would be a 29% / 661 * 365 = 16% annualized return (not including dividends).


  60. Scottmi – Don't write the obituary for VRX quite yet.  The story has yet to fully play out.  I think time will tell that Ackman bought near the high and sold out near the low.  JMHO.


  61. Clarification please on the FTR discussion:  Were we not waiting until the split before buying/adjusting positions?


  62. Why is there no cheering for the yearly high on AAPL?  Have we all become so jaded that we just expect it ? 

     Hope it's not because a lot of people have closed out positions.


  63. Albo – Many of us have covered with short term calls, that are increasingly underwater.  


  64. Ireland/Rexx – Ireland made the mistake of fighting English rule – you have to lie back and enjoy it…

    FTR/Scott – Yes, gigantic companies tend to do it, not smaller ones unless they are hiding something (TSLA, for example).  Glad you are checking up but I don't think we're missing anything – just a whole lot of press firepower being spent convincing people to sell FTR.  

    And what Palotay's article says!  

    FTR/Craigs – If it is over $2 in 2019 you get the stock called away at $2 (+0.45) and you keep the dividends you collected.  What's so complicated about that?  The point was to make a safe IRA-type play, they can't sell puts and making 10-20% a year in an IRA is fantastic. 

    And what Ult said. 

    LB/Leo – As a new trade, I'd be a bit aggressive and sell the 2019 $45 puts ($8.20) and use that money to buy the $40 ($10.90)/55 ($5.40) bull call spread for $5.50 so it's a net $2.70 credit meaning your worse case is owning them at net $42.30 and your best case, over $55 is making $17.70 per contract. 

    Leases/JJ – Good point, it will be nice to see those more clearly.

    Redbook chain store sales: +0.6%

    • Redbook Chain Store Sales+0.6% Y/Y vs. +1.2% last week.
    • March chain same-store sales are up 1.0% through March 25.
    • Redbook notes that a tough comparable to last year's level of Easter sales factored in last week.
    • There are more than a dozen speeches from members of the Fed this week so the narrative is coming thick and fast from the central bank.
    • One highlight will be Janet Yellen's speech today on workforce development challenges in low-income communities in Washington.
    • Watch to see if the officials signal a plan for two additional rate increases this year, as projected in their latest projections.
    • Speaking about "workforce development challenges," Janet Yellen takes note of pockets of persistently high unemployment in low-income, minority areas.
    • Her prepared remarks offer no comment on monetary policy.

    FT: Rio Tinto CEO stays bullish on China

    • Rio Tinto (RIO +1.2%) CEO Jean-Sebastien Jacques tells Financial Times that he has no concerns about China’s economy in the year ahead, and predicts restructuring of the country’s state-owned enterprises would lead to demand for higher quality commodities.
    • China’s crackdown on polluting steel furnaces will lead to greater demand for higher quality iron ore, Jacques says: “If you can supply the right quality of iron ore, then clearly you have a role to play.”
    • Still, the CEO says it is difficult to determine whether more Chinese domestic output of iron ore would come into production due to higher prices.
    • Jacques also says the purchase of BHP's thermal coal assets in Australia by Chinese-controlled mining company Yancoal for $2.45B is underway.

    Auto industry continues on path of making Michigan great again

    • Ford (F +1.7%) says it will "create or retain" 130 jobs as it invests $1.2B to add extra SUV and truck capacity at three separate Michigan plants.
    • The announcement from Ford follows a pattern with the Detroit automakers of long-planned investments being extolled by President Trump as falling in line with his Made in America theme. A more intriguing question could be how the Japanese automakers (OTCPK:NSANYTMHMCOTCPK:MZDAYOTCPK:SZKMYOTCPK:FUJHYOTCPK:MMTOF) and Hyundai (OTC:HYMLF) react to the new administration with their production, jobs and investments.
    • Barclays opined earlier this month that an informal deal between the White House and major automakers could see regulatory relief swapped for a commitment to more U.S. jobs. Some analysts see General Motors (GM +2.5%) as benefiting significantly from the new Oval Office direction, especially with Opel offloaded and Mary Barra in favor with POTUS.
    • Previously: 'Significant' investments in Ford plants (March 28)
    • Tencent Holdings (OTCPK:TCEHYOTCPK:TCTZD) paid around $1.8B for 8.17M shares of Tesla (NASDAQ:TSLA) through open market purchases and as part of the recent Tesla share offering.
    • Tencent is now the fifth largest holder of Tesla shares after Elon Musk, Fidelity, Baille Gifford and T. Rowe Price.
    • In an e-mailed statement, Tencent says it has a long history of backing entrepreneurs with capital. "Elon Musk is the archetype for entrepreneurship, combining vision, ambition, and execution," notes the Chinese powerhouse.
    • Tencent is the largest Internet company in Asia after Alibaba and owns the WeChat social network (889M MAUs). Last year, Tencent backed Chinese EV startup Future Mobility. Shares of Tencent are up 42% over the last year in Hong Kong trading.
    • Sources: Bloomberg and South China Morning Post.
    • Previously: Tencent discloses 5% stake in Tesla (March 28)
    • TSLA +2.04% to $275.74 in a busy premarket session.

    • Faraday Future has scrapped plans to build an assembly plant in the San Francisco Bay area, according to the Los Angeles Times.
    • Construction on Faraday's plant in Las Vegas still hasn't finished.
    • The upstart automaker has designs on building a luxury EV, but is reportedly facing some cash flow issues.
    • Faraday, which is backed by Chinese firm LeEco, debuted the FF ZERO1 concept car last year at CES.
    • Faraday's goal to compete with high-end EV models from BMW (OTCPK:BMWYY), Audi (OTCPK:VLKAY), and Tesla (NASDAQ:TSLA) within the next couple of years may be fading.

    • There's a rally in shipping stocks after Morgan Stanley entered the fray earlier today with a series of upgrades of dry bulk names.
    • Gainers across the broad shipping sector include Star Bulk Carriers (SBLK +15.1%), Safe Bulkers (SB +14.8%), Genco Shipping & Trading (GNK +11.7%), DryShips (DRYS +8.2%), Golden Ocean Group (GOGL +6.9%), Scorpio Tankers (STNG +5.5%), DHT Holdings (DHT+5%), Global Ship Lease (GSL +5.9%), Seaspan (SSW +4.2%), Navios Maritime Partners (NMM +6.2%), Navios Maritime Acquisition (NNA +3.5%) and Eagle Bulk Shipping (EGLE+2.6%).
    • An improved outlook on freight shipping rates is helping to boost sentiment.
    • Related ETF: SEA.
    • Previously: Morgan Stanley upgrades trio of dry bulk shippers (March 28)
    • Previously: Genco Shipping & Trading catches an upgrade (March 28)

    • JPMorgan contends that bullish investors are now focusing on General Electric's (GE) free cash flow, an "emerging bull case" it calls "overstated and not plausible."
    • "The bull case now is that not only can earnings inflect but cash will also ramp to a range of $1.74-2.10, a mid-point that is 3x standing levels, 2x higher than the average of the past 15 years, 40% higher than the prior high in 2009. To us, there is no such thing as 'perspective' when it comes to cash – we believe the problem is that earnings have always been more of an opinion here, cash is a fact. We continue to believe that the sustainable base rate of 2018 GAAP FCF is around ~$1.10 and those recent bullish estimates are overstated, in our view."
    • The firm also cut its price target on the stock to $27 from $29, "which implies a still premium ~4% FCF yield and solid 3.5% dividend yield."
    • Toshiba's (OTCPK:TOSBF +1%) Westinghouse Electric unit will file for Chapter 11 bankruptcy protection today, Reuters reports.
    • Pittsburgh-based Westinghouse has been crippled by cost overruns at two U.S. nuclear energy projects in Georgia and South Carolina; Southern Co. (SO -0.3%) and Scana (SCG+0.3%), the two U.S. utilities that operate the respective nuclear plants, are among its biggest creditors.
    • A Chapter 11 move likely will spark complex negotiations between the Japanese conglomerate, its U.S. unit and creditors, and could embroil the U.S. and Japanese governments given the scale of the collapse and U.S. state loan guarantees for new reactors.

    Nevada casino revenue lower in February

    • Casinos in Nevada reported that gaming win revenue decreased 4.5% Y/Y to $946M in February.
    • Fiscal YTD revenue is up 2.7% to $7.68B through the end of February.
    • Revenue on the Las Vegas Strip fell 5% to $542M during the month, while downtown LV casinos generated a 2.2% gain in revenue.
    • Penny slots brought in $237M during the month, while blackjack followed with $106M and baccarat contributed $98M. Sports books lagged with a $21M win for the month. Total slots revenue fell 4.6%, while total games and tables revenue was off 4.3%.
    • Nevada Gaming Control Board full report (.pdf)

    Chipotle feisty about who's clean in the restaurant sector

    • Chipotle (CMG +1.8%) says it has become the only national restaurant brand with no added colors, flavors or preservatives in any of the ingredients it uses to prepare its food. In addition, no ingredients used are genetically modified.
    • The company says the no-preservatives policy applies to all Chipotle restaurants in the U.S., but doesn't  include beverages.
    • In a shot at McDonald's (MCD -0.2%), CEO Steve Ellis tells Bloomberg, "the way to grow the business is not though limited-time offers, extra value meals or menu proliferation with all kinds of new items.”
    • “For us, instead it’s about improving the basic, wholesome ingredients," he adds.
    • Ellis also was quick to point out to Business Insider that the chicken nuggets from McDonald's aren't "clean" due to the use of industrial ingredients. He also claimed Panera Bread (PNRA+2.3%) exaggerates claims of clean food.
    • The feisty stance from Chipotle has some wondering if menu price hikes might be on the way.
    • Sears Holdings (NASDAQ:SHLD) is up 13.5% on elevated volume to swing back over $10 after yesterday's news of insider buying by Eddie Lampert and Fairholme Capital Management instills a bit of confidence.
    • Execs with Sears continue to defend its SEC filing shocker last week as "in line" with regulatory standards.
    • Previously: Sears Holdings breaks higher (March 27)
    • Previously: Mall store closing blitz continues (March 27)

    CRISPR nabs European patent covering gene editing technology; shares up 2% premarket

    • CRISPR Therapeutics (NASDAQ:CRSP) perks up 2% premarket, albeit on only 110 shares, after its announcement that the European Patent Office has issued a patent covering its in-licensed gene editing technology, specifically the CRISPR/Cas9 single-guide gene editing system for uses in both non-cellular and cellular settings, including cells from vertebrate animals (eukaryotic) in addition to composition claims for use in any setting, including claims for use in a method of therapeutic treatment of a patient.

    Dorsey brushes off calls to step down

    • Jack Dorsey will do "whatever it takes" to make sure Twitter (NYSE:TWTR) and Square (NYSE:SQ) do well, amid calls for the tech founder to focus on one over the other.
    • "I'm going to make sure both succeed," he told CNBC, adding that there are "potential synergies" between the two firms and that Square was looking for further acquisitions, particularly in the machine-learning space.

    IMAX and Warner Bros. to partner on VR experiences

    • IMAX (NYSE:IMAX) and Warner Bros. Home Entertainment (NYSE:TWX) announce that they will partner on a new virtual reality co-financing and production venture.
    • The agreement will see IMAX and Warner develop three interactive VR experiences based on Warner Bros. movies and characters.
    • The first VR experience will be launched later this year when Justice League VR debuts.
    • "It's fitting that with IMAX and Warner Bros.' shared history of launching Hollywood movies in IMAX theatres, today we're entering into our first studio deal to bring original VR content to the multiplex," says IMAX CEO Richard Gelfond.
    • Source: Press Release
    • Rio Tinto (RIO +1.2%) CEO Jean-Sebastien Jacques tells Financial Times that he has no concerns about China’s economy in the year ahead, and predicts restructuring of the country’s state-owned enterprises would lead to demand for higher quality commodities.
    • China’s crackdown on polluting steel furnaces will lead to greater demand for higher quality iron ore, Jacques says: “If you can supply the right quality of iron ore, then clearly you have a role to play.”
    • Still, the CEO says it is difficult to determine whether more Chinese domestic output of iron ore would come into production due to higher prices.
    • Jacques also says the purchase of BHP's thermal coal assets in Australia by Chinese-controlled mining company Yancoal for $2.45B is underway.

  65. Phil,

    Short /YM at 20600?


  66. FTR/Taihu – I'm waiting but people seem fascinated with them on a daily basis.  

    AAPL/Albo As Palotay says, we sold some short calls that are sucking up a lot of the profits at the moment though I would argue they are protecting a $130,000 in the money position that's currently reading just net $82,475 so we have $47,500 more to gain if AAPL holds $130 and the 10 short Jan $110 calls are currently -$33,725  but, of course, they are rollable to a higher strike and, at $140, they are just $30K at expiration.  Of course we'll add more longs, etc but, for now – I like the protection.

    Short Call 2018 19-JAN 110.00 CALL [AAPL @ $142.23 $1.35] -10 6/9/2016 (297) $-8,500 $8.50 $25.23 n/a     $33.73 $1.08 $-25,225 -296.8% $-33,725
    Long Call 2019 18-JAN 100.00 CALL [AAPL @ $142.23 $1.35] 40 10/20/2016 (661) $106,000 $26.50 $18.83     $45.33 $1.48 $75,300 71.0% $181,300
    Short Call 2019 18-JAN 130.00 CALL [AAPL @ $142.23 $1.35] -40 10/20/2016 (661) $-48,000 $12.00 $11.73     $23.73 $0.58 $-46,900 -97.7% $-94,900
    Short Put 2019 18-JAN 100.00 PUT [AAPL @ $142.23 $1.35] -10 10/20/2016 (661) $-10,600 $10.60 $-6.68     $3.93 $-0.11 $6,675 63.0% $-3,925

    /YM/Japar – Been watching all day but we're a bit too strong to pull the trigger, I think.  I'll do a bounce review next.


  67. you'll have to ask me my kid's favorite St Patrick's joke.  But not in print.


  68. Phil – "You do know that the movie sets out to prove the opposite.  That "no player" BS is what the Corporations want you think, that you are powerless and should just "lie back and accept it."  Well, no, I don't."

    Here is a carefully worded 1975 perspective from the film maker Norman Jewison… the game system is constructed [by the corps] to prove that the individual can't possibly succeed…   Power is juice, power is having control over everyone… fight for the very freedom to exist and not be crushed.  Aside from the individual rising above a rigged system, the film is also about the absurdity of conflict and violence to entertain the masses. 27 years later… Jewison bashed the remake as being "too violent" in order to get a message out about multinationals."  Conflicted? or still carefully measuring his words, while getting the message out?  Get your skates on, get in the car and out.


  69. Stocky – "Natty,  I would suggest a more apropos closing should be Alfred E. Out, as a reflection of the sheer madness of it all."

    Apropos and I like it, even.  How much for licensing residuals to that IP?


  70. Bounce lines update:

    2,400 less 2.5% is 2,340 and that's -60 so 12-point bounces to 2,352 (right now) and 2,364 (strong).  Overshoots of a 2.5% drop are the same 12 so 2,328 and 2,316 and you can see how those held and quickly reversed so not bearish at all unless 2,352 fails.

    21,000 less 2.5% is 20,475 and, like the S&P, it held with a minor overshoot that didn't last 2 sessions (so it doesn't count).  525 down is 110 up so we'll call weak 20,600 and strong 20,700.

    5,375 is the 7.5% line over 5,000 and, of course, 5,500 is 10% so, if the Nas is bullish and we're heading to 5,500, those lines should come into play.  5,500 (never hit it) to 5,375 is 125 and we already know the Nas loves 25-point moves so we're looking at 5,400 (weak) and 5,425 (strong) and I'd say 5,425 on Nas would be a sign to look for all the indexes to make new highs.

    1,400 less 2.5% is 1,365 and we're just getting back to that.  35 lower was 1,330 and we did test that so, on the 5% drop, that's 70 points with 15-point bounces to 1,345 and 1,360 and, on the 2.5% drop, 1,360 is the base line and then we'd better use 7.5-point bounces to 1,367.50 and 1,375.  If we're bearish – 1,365 should not be taken back. 


  71. FTR/Taihu – pre-split I have an order in to buy shares at 1.89. I'll take that before split to round out an existing position. Not covering with calls.  But I do love the ATM covered call play. Very hard to resist it. Just today though I had IRBT called away that were covered way back with $35 calls (most recent were Jun $35 calls) that I could not roll out anymore for credit. So I got a nice closure on IRBT… initially purchased at $29.40 in 2015 and several episodes of writing/rolling $35 calls reduced that to net $24.33 so after 515 days is a 43.8% gain (31% annualized gain).  If it wasn't a covered call play though.. with IRBT currently at $64.37 it would be a 119% (or 84% annualized) unrealized gain.


  72. RAD / Phil,

    I noticed David Einhorn increased his position in RAD as the stock fell off the cliff do you think its a good opportunity to buy ?

    Thanks as always

    Pat
     
     


  73. Phil, my FTR holdings bit of mishmash: Long 4000 shares (basis 3.43), -20 Jan18 3.50 calls (.35), -40 Jan18 3 puts (.75),  -20 Jan18 4 puts.  Was waiting for the split.  Any advice for now (other than how did you get into that mishmash)?


  74. Amazing strength that 1.07 in the CBOE pur call usaully potends weeks of rally..not that I played it!


  75. Just for the record, if you played opposite Gartman, you did very well again.


  76. Pat – I noticed that Einhorn bought a significant amount of RAD in the 4th quarter last year at higher prices.

    Have there been more recent purchases ?    Thanks.


  77. Phil, also if you please:  +20 85/130 Jan18 BCS (basis $9.40); +25  100/130 Jan19 BCS (14.65).  Prior short puts against these have been closed.  Any changes?


  78. FTR/Phil -  this is from page 9 of their Nov 2016 10-Q. Sounds like they may not be including such things in their balance sheet at this time:
    "Leases
    In February 2016, the FASB issued ASU No. 2016 – 02, “Leases (Topic 842).” This standard establishes the principles to report transparent and economically neutral information about the assets and liabilities that arise from leases…. The new guidance is effective for fiscal years beginning after December 15, 2018,  including interim periods within those fiscal years. Early application is permitted.  Frontier is currently evaluating the impact of adopting the new standard, but has not yet determined the impact of adoption on its consolidated financial statements."


  79. BTW, your suggestion to me for TSLA stop order on my Jan18 short 150 puts were hit today at $3.80.  Thanks!  That said, the short 300 calls (basis $24), are way down from where they were (I'm okay with that).  Previously closed out a profitable 220 long call position.  What to do now?


  80. Any thoughts on SONC earnings tonight?


  81. Why is the market up so much.  AAPL is almost 144.

    Anyone know?


  82. NYSE at 11500


  83. albo – I noticed on their 13F so these must be at the higher prices but since the merger is off and they dropped in prices I was wondering if it is a better entry point now.


  84. Pat – I saw that the proposed merger was at a standstill with the FTC, but not that it had been cancelled. 

    Has it been officially cancelled ?


  85. RAD/Pat – I think WBA is going to kill them eventually.  Even at $4.50, you'll be lucky if they cover 0.05/share for a p/e of 90 and this is not, by any stretch of the imagination, a growth story.   So, from that info – I'd say short Einhorn!  

    FTR/Taihu – The big worry would be that post-split, they will jump up in value and you won't be able to DD but, other than that, waiting is the smart play though you may want to clean out the short puts and calls once they announce (before they become difficult to trade).  Then, after the split, you can re-sell at the new prices. 

    AAPL/Taihu – I'm guessing, so not going to make a big thing but I'd sell the Jan $85 calls ($59 = $118,000) and roll them to 25 2019 $130s ($25 = $62,500), which closes that short leg and I'd roll the 2019 $100s ($46.50 = $116,250) to the $130s ($25 = $62,500) so now you have $109,250 in pocket and 25 2019 $130s, covering the Jan $130s ($19) and I'd roll those to the 2019 $155s at $14.50, which puts another $9,000 in your pocket so you have $118,250 off the table and still 25 $25 spreads that will pay another $62,500 if AAPL is over $150 and, if it isn't, won't you be glad you sold!  After that, you can sell 8 covers like June $145s ($4.50) for $3,600 and that then becomes your rolling fund on the longs – it costs about $2.70 ($6,750) to roll the 2019 $130s to the $125s.  Do that 4 times and you deepen your spread by $50,000.

    Leases/Scott – Does it say how much?

    TSLA/Taihu – What to do now?  Wait and see what happens.

    SONC/Datra – Lots of bad earnings in that space and all we have left are the June $22.50 short puts – that I'm willing to risk.

    Market/Rookie – Because the health care deal is back on according to Paul Ryan.  Also, very high consumer and investor confidence – as high as it was in early 2008 now.  

    NYSE/Rexx – Yep, if they hold it tomorrow, we'll have to scramble for more bullish plays.  


  86. Holy cow, 4 already!  What an exciting day…

    Didn't do us any good but not too much damage to the portfolios since it was on Friday at this time:

    OOP is hanging around 170%, Butterfly 232% (a couple of positions are hurting us), LTP is over 150% AND the STP is back to 395% thanks to the fall in FAS (and TZA), so all looking good and we do seem to be thriving on chaos – so let's look forward to more of it next week!

    Now we have OOP 170.5%, Butterfly 228.3%, LTP 153.9% and STP 372% so once again the LTP makes up for STP losses (as it's 5x bigger) and the OOP, which is self-hedging, does little and the Butterfly, ironically, is our most erratic – as we have a couple of positions way out of range.  


  87. TSLA likely to open at 285 tomorrow, i think.


  88. 20,700 on the button on the Dow.  

    /YM 20,637 (weak), /ES 2,353 (weak), /NQ 5,407 (weak), /TF 1,365 (weak) – so all weak bounces and stopping right there.  Follow-through to strong lines will be a bullish turn but failing to hold weak will be a bad sign tomorrow.  

    As usual, volume not impressive in a rally:

    Date Open High Low Close Adj Close* Volume
    Mar 28, 2017 233.27 235.81 233.14 235.26 235.26 78,847,879
    Mar 27, 2017 231.93 233.92 231.61 233.62 233.62 86,296,100
    Mar 24, 2017 234.38 235.04 232.96 233.86 233.86 112,504,900
    Mar 23, 2017 234.28 235.34 233.60 234.03 234.03 100,410,300
    Mar 22, 2017 233.77 234.61 233.05 234.28 234.28 97,569,200
    Mar 21, 2017 237.47 237.61 233.58 233.73 233.73 131,809,300
    Mar 20, 2017 237.03 237.36 236.32 236.77 236.77 52,537,000
    Mar 17, 2017 237.75 237.97 237.03 237.03 237.03 89,002,100

  89. SHLD closes on high for the day, up almost 20% today and up 30% in the last two days.

    "Curiouser and Curiouser !" cried Alice.


  90. ‘Deep Subprime’ Auto Loans Are Surging

    Anyone know of a way to take a short position on whoever is issuing this paper? 


  91. Scott / No filer is including operating leases on their balance sheet currently – because it's not in accordance with GAAP.  As noted in my comment above, there is a new standard out that all public filers will be required to apply starting in 2019, which requires operating leases to come on the balance sheet.  I challenge you to find a 10-K or 10-Q that doesn't have that exact same disclosure.  You can look in the footnotes at the operating lease commitments if you want an idea of magnitude.


  92. market looks poised to stay up through EOQ.  April, might be another story.


  93. First time in a long long time that /CL barely moved on an inventory report!


  94. FTR/Phil – this is what I found in the 10-k for period ending 12/31/16, filed 3/1/17.

    The consolidated balance sheet p. F-5 indicates:
     - LT Debt as of 12/31/16 to be 17,560 (millions)
     - Total liabilities as of 12/31/16 at 24,494 (millions)

    The note regarding future contractual obligations p.44 states:
     - LT Debt not including interest to be 18,178 (millions)
     - Total obligations to be 30,065 (millions)

    Anywhere from 618 million to 5.57 billion difference…  I am not a qualified accountant and these numbers ARE disclosed, so I wonder if "this kind of crap" is material, or not.


  95. jjennings – thanks. I believe you!  The interest on long term debt was an 11.26 billion add to the obligations. Not sure if that is on the balance sheet normally or not. Did not look to be as "accrued interest" is only 437 million, and that is not even in line with the interest on LTD of 1,533 million shown for 2017 in the obligations note.


  96. When in doubt, look at the cash flow and cash balances to see if they are servicing your phantom debt or not.  If they are – then they are probably fine.  

      2011 2012 2013 2014 2015 2016
    Period End: 2011-12-31 2012-12-31 2013-12-31 2014-12-31 2015-12-31 2016-12-31
    Period Length: 12M 12M 12M 12M 12M 12M
    Currency: USD USD USD USD USD USD
       
    Net Income/Starting Line 157.6 153.3 115.5 133 -196 -373
       
    Depreciation/Depletion 1,403 1,267 1,170 1,139 1,320 2,031
    Deferred Taxes 87.4 80.5 -7.51 -78.0 -167 -206
     Non-Cash Items 10.1 145.5 254.6   228 170
     Changes in Working Capital -85.6 -93.7 -36.4 76.0 116 44.0
    Cash from Operating Activities 1,573 1,552 1,496 1,270 1,301 1,666
       
     Capital Expenditures -824.8 -802.5 -634.7 -688 -863 -1,401
     Other Investing Cash Flow Items, Total 62.2 167.6 92.2 -1,999 -15.0 -9,858
    Cash from Investing Activities -762.7 -634.9 -542.5 -2,687 -878 -11,259
       
     Financing Cash Flow Items -11.4 -121.4 -186.8 -42.0 -119 -45.0
    Total Cash Dividends Paid -746.4 -399.4 -399.8 -401 -576 -707
    Issuance (Retirement) of Stock, Net         2,665  
    Issuance (Retirement) of Debt, Net 22.6 603.7 -813 1,651 6,305 1,487
    Cash from Financing Activities -735.2 82.9 -1,400 1,208 8,275 735
       
    Net Change in Cash 74.8 1,000 -446.5 -209 8,698 -8,858
    Starting Cash Balance 251.3 326.1 1,327 891 682 9,380
    Ending Cash Balance 326.1 1,327 880 682 9,380 522
     

    Looks to me like they service their debts just fine and they borrowed cash and sold stock to buy those customers from Verizon.  Now those customers increase their revenues and make them more able to service additional debt and, when that debt gets paid down (7 years) then they have a $9Bn asset and the revenues that derive from it – free  and clear.  Oh no – please get me out of this stock!  

    Oh, they could cut the dividend and pay it off in less than 5 years instead.  


  97. By the way, as clearly no one seems to understand what FTR is doing:

    Verizon Communications vz says it has reached a deal to shed its traditional telephone line business in 14 states in a deal worth $8.6 billion.

    The deal will triple Frontier's size and make it the nation's largest communications provider focused on providing voice, broadband and video services to rural markets and smaller cities.

    The deal gives Frontier 4.8 million access lines to residential and small business customers.

    The deal includes Verizon's wireline assets in Arizona, Idaho, Illinois, Indiana, Michigan, Nevada, North Carolina, Ohio, Oregon, South Carolina, Washington, West Virginia and Wisconsin as well as some assets in California.

    In its press release, Verizons says, "As of year-end 2008, these operations served approximately … 2.2 million long-distance customers; 1.0 million high-speed data customers, including approximately 110,000 FiOS Internet customers; and 69,000 FiOS TV customers."

    Frontier says it expects to save $500 million annually, by leveraging existing networks and infrastructure. About 11,000 Verizon employees who support the landlines will move to Frontier with union contracts intact, Verizon said.

    FTR had $15Bn in debt in 2014.  Now they have $24Bn in debt and if they triple their sales (or even close) AND trim the costs anything like $500M – then we're looking at maybe 5x profits down the line.  Until then, it's a transition and they are bound to have some growing pains.


  98. The Emerald Isle: Phil, I would correct your statement on Ireland before the word gets out:

    "I think Ireland is the current winner, with a continuous Parliament since around 900 AD.  Sure they are, in turn, now ruled by the UK, but their own system is intact without change."

    The United Kingdom comprises England, Scotland, Wales and Northern Ireland. The Republic of Ireland is an independent state, effectively since 1923. Many lives have been lost in the cause of Irish independence and the partition of Ireland. It has been a sad and sorry story.


  99. Scott / FTR – Take a look at their Future Contractual Obligations and Commitments disclosure on page 44 of their 2016 10-K. They disclose $247 million in operating lease obligations.  Once they adopt the new standard they will gross up the balance sheet to record the assets and liability.


  100. Actually I was thinking of Scotland being ruled, I know about the Irish mess, of course.  I just checked and it seems that Ireland only goes back to 1300 (tied with UK), so Isle of Man is definitely the winner by hundreds of years.  Being a place no one can find on a map is very helpful in maintaining continuity, I suppose.  


  101. FTR/Phil, jjennings – thanks. awesome! happy to have dipped into the murky depths a bit as I consider holding/adding.
    Palotay – thanks for the SA article. The FTRPR preferred are very interesting.


  102. you wrote yesterday;

    GILD.  You can sell the 2019 $65 puts for $9.20 and I'd rather sell 5 of those than 10 of the $55s ($5).  Then you can buy a 2x 2019 $60 ($13.20) 70 ($8.55) bull call spread at $4.65 and it's about net 0 on the spreads that make you $10 at $70, starting out $7.50 in the money.

    Phil--what do you think about this trade in comparison to your rec?

    You can sell five 2019 $60 puts for $7.10.  Then you can buy a three 2019 $50 ($19.25)-- $70 ($8.25) bull call spreads at $11 and it's a net credit of $200 on the spreads that make you $20+ at $70, starting out $7.10 in the money.


  103. Is it just me that Verzion would quote a figure from almost 10 years ago? They don't have more up to date numbers than that?


  104. FTR- interesting discussion today. I am not in the position but looked at the financials again and they look a tad questionable with a negative net worth after taking out the goodwill and "other intangibles" . Maybe I am just old fashioned but I like my companies on a more solid financial footing except for perhaps a spec play. Once again, I will pass and best of luck to all of you taking the plunge. 


  105. Huge spike in RH after earnings.  Another great pick by Phil.  Now we just need the rest of the retailers to follow suit.


  106. FTR

    Phil said, " Oh, they could cut the dividend and pay it off in 5 years instead." 

    Phil don't forget that land line are depreciating assets, and who knows how many will be left at the end of 5 years or even 3 years.

    That said, I think you're right about the play.


  107. Resolution is now off to the president’s desk<p>Internet providers now just need a signature from President Trump before they’re free to take, share, and even sell your web browsing history without your permission.<p>The House of Representatives passed a resolution today overturning an Obama-era FCC rule …


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  114. Ryan’s genius reputation as a wonk is already damaged; his “tax reform” plan is no better than his health care bill<p>For years now, Rep. Paul Ryan, R-Wis., has bamboozled huge numbers of political journalists and Beltway insiders into believing he’s some kind of policy genius. It’s a reputation he …


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  123. Fact checking Trump’s ‘alternative facts’ about Mexico

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  134. Support for focusing on alternative energy development (is up slightly since December 2014, but wide political differences remain.


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  143. LaRonda Hunter, a business owner in Fort Worth, Tex., views the Affordable Care Act as a literal job killer. Fearful of triggering the law’s employer mandate, which requires businesses with 50 or more workers to offer health insurance or pay penalties, Ms. Hunter has held off on expanding her small …


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  146. “Believe me, this could be very interesting information.”<p>Goodnight Yellen.<p>by kimblecharting – Mar 28, 2017 12:18 PM<p>Silver bear market could end …


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  157. Good morning! 

    Dollar finally back up over 99.50 but only a bit.  

    /YM testing 20,600 from above – off a bit from yesterday's close.  /ES 2,350, /NQ 5,406 and /TF 1,361 – all off their highs and we can play the laggards below those lines (5,400 on /NQ and 1,360 on /TF).

    Europe is flattish but EuroStoxx failed to hold 3,400 and Dax 12,250 – both lame:

    As noted above, these are just the weak bounce lines we expected to get to (and fail) after last week's sell-off so, if we're breaking down here – it's a good sign to short the indexes again.

    Oil right at $48.50, Brent failing $52, /RB failed $1.65 again but Honey Badger don't care and is at $3.21 but $3.37 on /NGV7 and that's enough for me at the moment.   Hopefully we drop back to $3.25 and I'll get back in with my 0.12 cushion.

     

    Fed's Powell says central bank still in 'wait-and-see' stance regarding Trump policies

    And Now Fake Consumer Confidence Too: Gallup Says Confidence In The Economy "Tumbled"

    Russia Investigation Stalls in House. Lawmakers have called for GOP chairman to step aside.

    Police union warns on 'sanctuary city' cuts

    • Fraternal Order of Police leaders have warned President Trump that he could endanger public safety if he follows through with cuts in federal grants to "sanctuary cities."
    • On Monday, U.S. Attorney General Jeff Sessions said the Justice Department would restrict grants to jurisdictions that do not cooperate with federal immigration authorities.

    Shutdown threat returns after ObamaCare repeal meltdown - In this year’s budget battle, Ryan will likely need Democratic support, which will be tough to get if Republicans try to use the package to defund Planned Parenthood and seek spending cuts elsewhere. All this comes before debate even begins over the budget plan for next year, which Trump wants to include billions more for the military, and a U.S.-Mexico border wall. And any compromise on spending cuts will almost certainly spark opposition from the Freedom Caucus.

    Congress just cleared the way for internet providers to sell your web browsing history

    After GOP Health Bill’s Demise, More States Weigh Expanding MedicaidVirginia, Maine and North Carolina are among the states taking steps toward growing their programs.

     

    Britain is the least of Europe’s problems

    4 Factors Driving Oil Prices This Summer

    Reuters: Schlumberger sees Ecuador's unpaid bills hurting quarterly results

    • Schlumberger (NYSE:SLB) CEO Paal Kibsgaard says $1.1B in unpaid bills from Ecuador's state-owned oil company will hurt its quarterly results, Reuters reports.
    • Kibsgaard says talks between top SLB executives and Ecuadorean ministry officials since October "have made no real progress," and that the company has been forced to expand debt to finance operations in the country, according to the report.
    • SLB has invested $3B in Ecuador so far under contracts signed earlier this decade to expand production at two oilfields, out of total investment that was to reach $4.9B over 20 years.

    Japan Retail Sales Rise Less Than Forecast, Slowing From JanuaryJapan’s retail sales rose less than economists forecast in February, signaling that consumer spending is struggling to gain traction.

    RH jumps 15.9% on Q4 beat, robust revenue guidance

    • Restoration Hardware parent RH (RH +3.6%) is up 15.9% after hours after reporting Q4 earnings where revenues declined less than expected and the company forecast robust growth ahead.
    • "We are now through the most uncertain stages of our transformation," says CEO Gary Friedman, who said a temporary depression in financial results will strengthen the brand ahead.
    • While adjusted net revenues fell 9%, comparable brand revenues were down 18%. Adjusted net income fell to $27.9M from a year-ago $41.2M.
    • The company's guiding to Q1 revenue growth of 16-20% ($530M-$545M, well above consensus for $485M), with 5 points coming from accelerated inventory optimization and another 5 from the acquisition of Waterworks. The revenue boost will have a negative effective on margins and earnings, it says, forecasting net income of $0.8M-$2.4M (EPS of $0.02-$0.06 vs. consensus for $0.05).
    • For the full year it sees revenues of $2.3B-$2.4B (8-12% growth, and vs. consensus for $2.32B) and EPS of $1.78-$2.19 vs. an expected $1.94.

    • Unraveling four-decade old ties, Theresa May will invoke Article 50 of the Lisbon Treaty at around 7:30 a.m. ET with a hand-delivered letter to EU President Donald Tusk.
    • That will set the stage for two years of landmark negotiations, including trade, immigration and the future of Britain's $2.6T economy.
    • While the Brexit decision last summer came as a surprise and rocked markets, stocks quickly recovered and even notched record highs.
    • Scottish lawmakers have voted 69-59 to seek a new referendum on independence within the next two years, presenting the British government with an unwelcome distraction as it pushes the EU exit button.
    • "The mandate for a referendum is beyond question, and it would be democratically indefensible – and utterly unsustainable – to attempt to stand in the way of it," declared First Minister Nicola Sturgeon.

    • EU antitrust regulators have blocked a $14B merger between Deutsche Boerse (OTCPK:DBOEY) and the London Stock Exchange (OTCPK:LNSTY) because of the companies' combined market power.
    • "As the parties failed to offer the remedies required to address our competition concerns, the commission has decided to prohibit the merger," said Margrethe Vestager, the EU's antitrust commissioner.

    Goldcorp -7% as investors cool to costs of Chilean joint venture with Barrick

    • Goldcorp (GG -6.9%) plunges nearly 7% after committing nearly $1B, including ~$445M in upfront costs, to a joint venture with Barrick Gold (ABX -2.6%) that will see the companies own and operate at least three properties in Chile’s Maricunga region.
    • The announcements are a “slight strategic negative” for GG, according to Goldman Sachs' Andrew Quail, saying the deals highlight the company’s "lack of large-scale organic growth projects when compared to its peers” such as ABX and Newmont Mining; the deal is “strategically neutral” for ABX, Quail says, but could become positive as it represents a move toward risk-sharing among large miners.
    • For GG, investors are unsure whether what was likely to be a big capital project would have a high enough rate of return, Gabelli Gold Fund research analyst Chris Mancini says, adding that development partnerships could make sense on other big gold projects, such as Seabridge Gold's (SA -0.4%) KSM project in Canada and Northern Dynasty's (NAK -3.5%) Pebble deposit in Alaska.
    • The impact of the deal on GG is “neutral to slight positive," GMP Securities' Steven Butler says, as the purchase prices look reasonable but much depends on future direction of commodity prices, capex estimates, timing of development and competition with other projects.
    • Lockheed Martin (NYSE:LMT) is expected to receive Pentagon approval on Thursday to begin production for 200 new CH-53K King Stallion heavy cargo helicopters for the U.S. Marines, Reuters reports, citing the Defense Department official heading the program.
    • The expected award, valued at $27B, would cost $87M on average for each helicopter each and $105M including spare parts and certain service contracts; the program also includes more than $6B in R&D costs.
    • The new helicopter would replace the CH-53E Super Stallion, which has operated as the backbone of field logistics for the Marines since the mid-1980s.

    Sales drop at Sonic worse than anticipated

    • Sonic (NASDAQ:SONC): FQ2 EPS of $0.15 beats by $0.01.
    • Revenue of $100.2M (-24.8% Y/Y) misses by $4.77M.
    • Shares -7%.
    • Press Release
    • Sonic (NASDAQ:SONC) reports same-store sales fell 7.4% in FQ2 as the chain lost market share. Analysts expected same-store sales to be down about 4.5%.
    • Drive-in margins at company-owned stores fell 210 bps during the quarter. Food and packaging costs at company drive-ins as a percentage of sales fell 10 bps to 27.4%. Payroll and employee benefits were up 230 bps to 39.4% of sales.
    • Sonic store count +34 Y/Y to 3,562.
    • "Our second quarter results reflect a sluggish consumer environment, weather headwinds and share losses following exceptionally strong performance over the prior two years," notes Sonic CEO Cliff Hudson.
    • Guidance: The company forecasts FY17 same-store sales growth of -2% to 0%. Drive-in-level margins are seen falling in a range of 15.5% to 16.0% vs. 16% to 17% pior view. Sonic expects to open 65 to 75 new franchised drive-in locations during the year.
    • SONC -4.26% AH to $22.90.
    • DragonWave (NASDAQ:DRWI) is again on the move (up 25.9% in postmarket trading) after touting a customer win.
    • The Knoxville Utilities Board has chosen its Harmony Enhanced MC backhaul solution, the company says. The agency, independent of the city of Knoxville, Tenn., will use the radios to extend existing fiber/wireline facilities into a hybrid wireless/wireline network.
    • Shares have jumped after hours from time to time after customer contract wins, but YTD the stock is down 48%.
    • DragonWave plans an April 5 webinar to discuss the utility use case.

     


  158. GILD/Jabob – Why sell 5 to buy 3?  Seems extreme to me since you almost double the obligation for not too much benefit.  If you sell 5, you get a $200 credit with $6,000 max upside but if you sold 3 and bought 4, you'd pay net $2,200(ish) with $8,000 upside so the same $5,800 with a lower downside obligation (easier to roll or DD).  Frankly, if you are so tight on money that you do this sort of thing to save $2,000 – you shouldn't be selling naked puts in the first place!