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Toppy Tuesday – Can Earnings Sustain S&P 2,400?

What a short, strange trip it's been.  

As you can see from Afraid to Trade's S&P chart, we are once again flirting with 2,400 on the S&P with about 1/3 of the companies having reported.  Last time we tested the top was March 2nd, and that did not end well and was followed by 3 weeks of selling but it was all "fixed" in less than a week (on 1/5th the volume) after Team Trump rolled out their "tremendous" tax breaks.  One of our Members just mentioned not taking profits on AAPL, which is up 20% into earnings – in anticipation of lower taxes if he holds.  How many trading decisions are being based on this and have nothing to do with market fundamentals?

Another thing I pointed out to our Members in Live Chat this morning is that, yes, the S&P is up 6% since Jan 1st but the Dollar (which the S&P is priced in and which earnings are calculated in) is down 3.5% since the start of the year:

So we have companies reporting earnings in weak Dollars, which makes them look like they are doing better than they actually are and then we price the shares in weak Dollars, which makes them look like they are more expensive than they actually are and PRESTO! the market delusion is complete!  Add to that some budget-busting tax promises and a very gullible population and you have everything you need to rally a market well past its proper valuation.  

Next comes my favorite part of the bubble, where companies use their overseas money to buy back their own stock at all-time highs along with a slew of very poorly timed M&A actions that boost sector after sector as companies that have no idea what to do with their cash seek acquisitions to make it look like they are growing and lock in that fat CEO paycheck for another few years (which, after all, is all that really matters).  

Image result for m&a at the top of a bubbleRemember a few years ago, when there was a relentless wave of Biotech acquisitions?  Notice how, in the end stage, things began to frenzy into an orgy of buying and the Biotech ETF (IBB) climbed from 60 in 2009 to 400 in July of 2015 and then – without warning – reality struck and the index plunged back to 250 (down 37.5%) by the end of the year and now, 2 years later, we're still a bit under 300.  

We were on that bandwagon in 2009 and, in fact, my 2010 outlook ("2010 Outlook – A Tale of Two Economies") featured a dozen Health Care/Biotech Sector plays based on the logic that Obamacare would add 10% of the population to the customer base.  Now TrumpDon'tCare is just as likely to take it away yet the sector is more or less oblivious to the danger its in.  This is just one of many sectors that is unrealistically priced, given a forward analysis of the economy.

Image result for trump opinion changeThey are going to vote on Health Care again, supposedly and I'm going to pretend that politics doesn't affect the market to make your editors happy and we won't talk about the effect of either de-regulating or breaking up banks, whichever one the President is promising to do this morning (depends who he's talking to at any given moment) and that is NOT a political statement, it's an observation!  

Yesterday, Trump said he was "strongly considering" breaking up the banks and the sector took a quick dip and then recovered right away when Mnuchin laughed it off and the Financial community, safely ensconced at the Milken Conference in LA (which is why Trump went of script), realized that Trump means he will first REPEAL Dodd-Frank (wiping out all regulations) and replace it with either nothing or a joke – ending regulation on banks the same way he is ending health care coverage for Millions of Americans.  

This is a brilliant new strategy made possible by voters who don't hold their politicians accountable – they promise you something "better" but, to do that, they have to first take away the thing you have.  43,000 people a year will DIE without Obamacare and that's 4,000 people a month being slaughtered in the window between repeal and replace – this will be the most Americans (non soldiers) dying over Government policy since the Civil War – no wonder Trump has been talking about Andrew Jackson lately - especially in light of the civil war that is brewing under his watch

Speaking of strategies, yesterday's trade idea on Coffee was an instant winner with Coffee Futures (/KC) blasting up from a $135 open to $137.45 into lunch and those coffee contracts pay $375 per $1 move in the price of coffee so that was a very quick $937.50 and you are very welcome!

As a rule of thumb, we like to take quick profits on 0.025(ish) moves in Coffee as it tends to retrace a lot and that's a lot for a day.  This morning there will be another low entry so it's wash, rinse and repeat on that one and Oil (/CL) is also a fun one, now $48.80 and we like playing it long off the $48.50(ish) line with tight stops below that.  

In addition to a lot of earnings reports today, we will get Auto Sales Data for April and that is expected to be generally weak, dipping below a 16M car trend for the first time in 3 years.  It's hard to imagine how we're going to be bringing manufacturing jobs back to America if the auto industry is declining (and Friday's jobs report hangs in the balance) but I guess all those auto workers will be able to find work in the coal mines the President is working so hard to revitalize because coal pre-dates cars by 100 year and, if we want to make America Great Again, we need to go as far backwards as possible – buggy whips anyone?  



 By the way, the fact that we've trailed off considerably since the election is by no means related to politics or Presidential policies – having those sorts of discussions in on a financial site would be wrong so we're going to pretend it has nothing to do with those things and make up some other non-political factors to please the editors and you, the readers, will be happy in your ignorance – isn't that just a perfect system?  

Image result for conservative filtersSeriously, that's what your authors have to do to get published.  Fortunately, I have my own site where I can tell people the truth but, in syndication, it seems the readers are "too sensitive" to discuss politics.  "If you don't like to think about something – ignore it!"  After all, it works for climate change and the deficit and persecuted refugees (sorry, nasty immigrants) and pollution and market bubbles…  No wonder you make such smart investing decisions – your mind is completely uncluttered by things you don't want to think about!  

Me, I like to look at the whole picture.  In fact, I often tell our PSW Members that we should go out of our way to make sure, every day, that about 25% of our reading is from people we disagree with.  For many of our more Conservative Members – I personally fulfill that obligation for them (and they mine) and, frankly, that's what makes it interesting and, more importantly, that's what makes us all better-informed about what's really going on in the World and yes, that does end up affecting the markets!  


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  1. Good morning,  LL smacked on miss.

  2. We have the second round of the elections in France this weekend. Polls are tightening so slightly but I really don't see Le Pen winning now. 20 points is a tough ask with 5 days left:

    Opinion polling for the French presidential election, 2017 Macron–Le Pen.png

    Good analysis at 538:

    In addition, she has underperformed her polls so far so it could really be worse than that. We'll see. I'll be voting on Saturday (we vote the day before in the US because of time difference) and I'll be live blogging again Sunday.

    Overall, I would expect the market response to be somewhat muted if Macron wins. It has to be priced in already or at least a good portion of it. Expect mayhem if Le Pen wins!

  3. Apparently Bush felt betrayed by corporations after he gave that the repatriation tax holiday:

    So what did the companies use the money for? The report found that two things increased dramatically after repatriation: executive compensation and stock buybacks.

    The top five executives at the top 15 repatriating corporations saw their annual compensation increase by 27 percent from 2004 to 2005. Meanwhile, the top 15 repatriating corporations increased their spending on stock buybacks 16 percent from 2004 to 2005 and 38 percent from 2005 to 2006. [...]

    Bush himself realized that the country had been swindled — at least according to a 2015 interview with former president Bill Clinton. Clinton told Inc. Magazine about a conversation he had with Bush. According to Clinton, Bush said “I hope you can figure it out. I’d never fool with it again. They gave me all these promises about, we’d sign a one-time, 5 3/4 percent repatriation tax, they’d put the rest of it into jobs and pay raises.”

    Instead it went into management pay and stock buybacks, Clinton noted. “And he said, ‘I’m done with it.’ It was really a touching conversation. He really felt personally burned by his constituents.”

  4. Capitalism at his worse – American Airlines gives pilots and attendants a raise and Wall Street reacts:

  5. Unionism and a Government run business at its worst – Alitalia workers move themselves into bankruptcy.

  6. Alitalia has been a mess as long as I remember and I am in my 50's…. They used to have such a bad reputation. I don't know now because I have not flown them.

  7. Phil now that TWTR is an investment (maybe) again, what would you recommend as a new entry?

  8. Good Morning.

  9. LL – Lumber Liquidators – GM improving, Sales in line, NI – .93 missed my outlook of -.25 ….  Need to understand why NI so low given Rev in line – looks like it may be discounting  a big amount or mis is wrong.  Still solid progress over last year, but my numbers for the year will need to be updated.  will review earnings call notes today…. if this hits teens again I might be buying.  Made a chunk of change this year on my positions,  but mostly sold all except for some may '17 $16 puts that should expire worthless.

  10. This Italian will never fly Alitalia…. :(

  11. Trump praising Duerte of the Philippines, even though he's another murdering tyrant but I'm sure this praise has nothing to do with a business conflict that Trump might have as the completion of Trump Tower Manila is near.  He would be impeached already if it wasn't a Republican House and Senate and they would have numerous things to choose from.

  12. 1020 – reminds me of a joke: Why does the Pope kiss the ground every time he lands at a new destination? Because he flies Alitalia

  13. :)

  14. rustle – I had no idea our Bag in Chief has a hi-rise project in Manila….

  15. Trump's History Lesson yesterday was a classic.  He is like a homeless man with dementia you would see wondering around Port Authority telling people these made up wacky tales about the past.

  16. F dangit!!

  17. Phil / GNC: morning Phil. What do you think about buying a may or June 7.5 – 5 put spread. Selling the 7.5 and buying the 5

  18. Jabob – FWIW, bought some more F at $10.92.  Looking at selling some more puts.

  19. albo — i hope we get a reversal with the FU portfolio soon.. GILD and FTR tonight.

    these "value" stocks keep getting cheaper — opposite of the "overvalued" shorts that keep hitting new highs.

    o well 

  20. Phil// Is this F entry still a good one or you suggest something different since the stock is down .45 today

    Sell 10 F 2019 $12 puts for $2.43 ($2,430) 
    Buy 1,000 shares of F for $11.15 ($11,500) 
    Sell 10 F 2019 $10 calls for $1.80 ($1,800)

  21. GM / F down but TM up….  the numbers are down across… 

  22. I agree.

    I got burned when NUGT had its reverse split.  Should have seen that coming.  I closed out all of my short puts on FTR when they announced their reverse split, but still holding some common from higher levels. 

  23. Phil, 

    CL going long at 48.50 ish as you recommended. …. I still have earlier CLs that I am dollar cost averageing.  Are you still holding on to your earlier CL bets? adding more at this level?


  24. Good morning!  

    Well, the good news is we're not extreme overbought yet, just Tech – which is pinning the needle.  

    LL/Scott, Batman - Wow, down 20%?  That's a bit harsh.  Revenues were a beat ($248.4M vs $233.5M expected) but loss was 0.93 ($26.4M) vs 0.21 expected.  Gross margins were up too so looks like a buy opportunity to me.  Same store stales up 4.7%

     the Company recorded a charge of $18.0 million related to its outstanding formaldehyde-related multi district litigation ("MDL") and its abrasion-related MDL. 

    There's the whole difference.  We'll give them a chance to settle but they can go right back in the OOP again.  We still have them in the LTP, but that's the Jan $10/17 bull call spread – 20% down and still not worried but maybe we'll buy back the short $17s..  

    Big Chart – BIGGER!!!    Actually, we're double-topping mostly so let's see where the trend takes us.  What else can Team Trump say to rally the markets?  I guess infrastructure is still on the sidelines.  Doesn't seem to matter what they actually do – as long as they say they will do it, the market acts like it's a done deal. 

    Le Pen/StJ – I notice the narrative now is that Macron is an evil "Rothschild Banker".

    Airlines/StJ – That's the problem with the whole system, we treat workers as an expense now, not as business partners.  People used to understand that there was a division of labor and that most people worked with their hands and some people organized the rest and those people got a reasonable share of the total profits.  Now, with 300:1 average CEO/worker pay – it's like they aren't even in the same universe – let alone the same company yet, somehow, the shareholders blame the workers for taking too much….  

    The real problem is the expectations for passive profits is out of control.  For the first 200 years of American Capitalism, we were happy to make a bit more than bank interest.  Well now bank interest is not even 1% and companies that don't drop 10% to the bottom line are "in trouble".  That 10% predominantly comes by underpaying the workers (because the dictates of Capitalism assumes your are already paying as little as possible for buildings and materials).   That's why charts like these have such perfect correlation:

    Image result for income disparity wages

    Image result for income disparity wages

    Image result for income disparity wages

    We're making America great again by re-introducing slavery through low wages, no retirement, no health  care, no social safety net – NOTHING but work till you die.  F yeah!  

    See, Latch agrees with me!  surprise

    Image result for conservative filters

    TWTR/Craigs – Where were you when we were BUYBUYBUYing at the bottom?  In the LTP, we have:

    Long Call 2018 19-JAN 13.00 CALL [TWTR @ $17.55 $0.01] 30 4/12/2016 (262) $20,100 $6.70 $-1.43 n/a     $5.28 $0.15 $-4,275 -21.3% $15,825
    Short Call 2018 19-JAN 20.00 CALL [TWTR @ $17.55 $0.01] -30 4/12/2016 (262) $-11,400 $3.80 $-2.45     $1.36 $-0.02 $7,335 64.3% $-4,065
    Short Put 2019 18-JAN 17.00 PUT [TWTR @ $17.55 $0.01] -30 2/9/2017 (626) $-11,700 $3.90 $-0.93     $2.98 $-0.04 $2,775 23.7% $-8,925

    We have a similar but better position in the OOP ($10/18 with short $13 puts).   As a new entry, I'd go with: 

    • Sell 10 TWTR 2019 $17 puts for $3 ($3,000) 
    • Buy 20 TWTR 2019 $15 calls for $5.20 ($10,400) 
    • Sell 20 TWTR 2019 $20 calls for $3 ($6,000) 

    That's net $1,400 on a $10,000 spread that's $2.50 in the money ($5,000) with $8,500 of upside potential over $20.  Worst case is you own 1,000 shares of TWTR at net $18.40 so it's an aggressive spread from that perspective but that's what you get when you refuse to buy low and try to jump on the bandwagon after the earnings confirm our projections!  

    LOL Torquio!  

    GNC/Micro – Calling the bottom?  I think it's reasonable but June can blow up in your face, with GNC, I'd rather give them until at least next earnings and the Jan $5s are only $3 and the Jan $10s are $1 so net $2 on the $5 spread makes that a nice trade with a 150% upside potential and 125% in the money to start.  

    F/Albo – I agree, a BUYBUYBUY down here ($11) 

    F/Rookie – Looks good to me!  

    TM/Batman – Weak Yen trumps all.  I like TM down here.  I was struck, in the auto numbers, by how lame sales are outside the US for F and GM.  TM sells more cars in the US than they do Worldwide combined. 

    /CL/Learner – Yep, here's our $48.50 long entry and /KC just tested $133.50 but back to $135 already – very crazy trading there.  

  25. Jabob – FWIW again, I sold  Jul 11 calls against this latest purchase to either lower my purchase price by .43 or provide a 4.6% return for 2 1/2 months.

  26. thanks albo… I added to my F position a little higher. One of these days the FU portfolio will reverse… i hope ;-)  

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  47. TWTR- Where was I when you were yelling buybuybuy at the lows, I was recovering from buying when you first suggested TWTR at around $40 as an earnings play. So, yes I was in for a long time and finally got out when it finally started moving up, not far from where it is now, so if the trend is finally up, I'd like to try again perhaps, but I'm not so sure that anything is really different yet. Just considering this one after having been burnt by it.

  48. The girl’s chess coach was disgusted with the “disturbing incident”<p>At a National Scholastic Chess Championship in Putrajaya, Malaysia, a 12-year-old girl was reportedly forced to quit the competition after a tournament director reportedly found her dress “seductive.” According to the girl’s chess …

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  54. Jabob – My observation has been that Phil is usually eventually right  on the value plays, but it sometimes requires a lot of averaging down in the positions, i.e., CLF, ABX, LL, etc.  My only problem with that approach is the time and attention necessary to bring a losing position back to good health. It involves time, aggravation, and opportunity cost .  For that reason I frequently use close stops and get out before that happens.  Sometimes I get whipsawed doing that, but most of the time I'm glad I stopped out.

    That being said I'm sitting with a fairly substantial loss in VRX, and a few others.  Sometime it's hard to maintain one's discipline; at least for me.

  55. BIOC- I have asked a few times if anyone is still following this stock and whether this was a onetime play when it popped a few months ago or if this is worth looking at again as the price is back where we first looked at it? If anyone ever answered, I apologize for not seeing it and would ask for a repeat. Thanks all.

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  62. Albo

    you can feel good about ETSY, good call on that one

  63. Thanks, Stockbern.  So far, so good.

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  88. He’s gonna lie about it. A lot.<p>Last week, Donald Trump proposed an enormous deficit-increasing tax cut slanted toward the interests of high-income families. That’s a tough sell at a time when public opinion has tilted sharply against cutting taxes on the rich, and when a low unemployment rate and …

  89. The Milken Institute Global Conference kicked off Monday, convening 4,000 power players in Beverly Hills, California, to opine on topics from …

  90. Traders scramble to cover bearish bets as unexpected bad weather strikes<p>US wheat prices jumped 8 per cent in two days as worries over the damage …

  91. CNBC – I've always been impressed with Michael Bloomberg…..

  92. ParkByte: the devs behind this coin have been sluggish, but underlying idea is a good one (blockchain based IoT for parking). Could be a 10-100X-er, but as always super high risk.

  93. TWTR/Craigs – Not much is different from when it was $40, really.  That was back in May '15, when they dropped back from $50s.  You've held it that long and never added?  That one seemed good at the time (April 2015) but we bailed with a loss as it relentlessly went lower:

    BIOC/Craigs – Not me, penny stock I would not touch.  I know Pharm liked it when it was cheap, not sure where he's at now but his upside target was $2.50, which was a dead-accurate call. 

    $48.50 failing on /CL

    /NG getting interesting at $3.20, $3 is a great line but we might not see it as pool season should lead to a drawdown this month.

    Bloomberg/1020 – Incredible guy.  The kind of guy you meet and you can see why he's a Billionaire. 

  94. albo-- The reason I am here is because I think Phil is excellent at analyzing companies and the markets. I also think he is a closet Trump fan…;-) I don't trade futures because I know I would really screw up eventually on a "conviction" trade and it would cost me anything I made beforehand. I am sure Phil will probably be successful but I always wonder if anyone else on the board is doing as well as him. It seems like Craigs is doing well trading futures. Maybe Burr too. Hopefully, everyone here will continue to do well even if we do actually have an event that causes the market to actually move big (maybe they will catch the right direction and hit a homerun). Phil always says futures should be a part of the tool chest but I doubt they are for everyone (especially me).

    As far as Phil's averaging down/piecing in value strategy-- I also try to layer in to positions and it makes sense to me. Unfortunately, the aggravation usually makes it very difficult to offset the opportunity cost of trades that don't go against me immediately. You mention CLF, ABX, and LL. You could throw in FCX, BTU, RIG, GNC, GTAT, JO, F, TWTR, FTR, M, LB, TEVA, and GILD.

    When and "if" these names come back Phil will look like a genius. Especially, if he pounds the table on any of them. I always worry that some of those "value" plays recovered with the alltime highs that we have seen. What if the market actually stops moving higher? Also, selling puts at 17 and seeing the stock drop to under 7 makes it very hard to stick to the averaging down strategy in the face of a runaway bull market. I know GNC could be a good turnaround story but it still is frustrating and it "feels" like being short AMZN or TSLA…

    That being said, I don't want to discount the incredible job Phil does here and his AAPL conviction trades and most of his other calls have been fantastic over the years. Phil is a great teacher and I am sure he will break out of his slump soon ;-) jk Phil

  95. Jabo – always follow your own convictions – the advice of others is there to add to your own set of information only. Ultimately you must decide what's best for you; where to take risks.

    I can't believe my basis in ethereum was $60 — now $16,500! Talk about banging the table…. I wish I had just shut up and invested $5k (now $1.4M). Oh well. That was a fool-me-twice situation (in july 2014, bitcoin had already done it's own 100X run over the previous 18 months)

  96. PBI – and a big jump for these guys, finally.  this market is nuts. it's drop or pop. must be algorithms.

  97. Bloomberg / Phil – You mean a real billionaire! 

  98. Workers slavery / Phil – A couple of more years and maybe Trump can learn how Civil War start!





  100. Trump's latest tweet

    "Obamacare has contributed to slow growth.  One of our greatest Presidents, Alexander Hamilton, saw this coming, HUGE dilemma"

  101. oops

  102. I believe it was here? that someone posted a good article on spotting fraud through earnings reports.. can't find it now though, dang it. Want to look over LL and PBI with those items in mind… I did find a similar set of 'red flags' here:

  103. BDC—-being away I have missed much—but how do u invest in these coin things u keep talking about ;-)   —-   I am absolutely clueless and therefore should do nothing—but—-could u tell me what u like now and how I put a little in just for fun

  104. Phil,

    Oil going lower, but XOM is still at 82.xx? Was waiting to sell XOM 2019 $70 Puts. Waiting sucks! Thanks as always  

  105. AAPL  selling one June $140 put and buying two $155 calls,     got to do something to keep the day interesting

  106. Oil – API inventory report should be out 4:30 ?  lets see how that helps.. EIA due tomorrow. 

  107. Stock Picking. Value Investing, Company analysis. Phil ticks all the boxes. But sometimes we might forget that this is a subscription based website to gain an education not a fortune. Phil is a teacher not a hedge fund manager. Compound investing was invented a long time ago and is probably ignored by most of us because it is too boring. But it may be the fastest way to a fortune. Ask Phil to help you develop better skills, not better stock picks.

  108. Slump/Jabob – Well that's why I'm running the LTP for 3 years now – what you call a slump, I call moving into large quantities of long-term holdings at a cheap price.  As with the above TWTR trade, I can go back to the Portfolio tab and find every trade we made and every adjustment we made since day one and, DESPITE all the FU Stocks (10 out of 60?) the portfolio tends to make great progress and, of course, these are the new FU Stocks because a lot of the older ones (AAXN (TASR), ABX, BHI, CLF, CMG, DIS, FCX, GOGO, HOV, IBM, IRBT, KATE, LL, MU, OIH, SKX, SPWR, SVU, TWTR) used to be FU stocks and now they are a major part of our overall profits (not to mention countless others that have been cashed out at this point).  

    And yes, we had some catastrophes (ARO, CCJ, MYL, SDRL) but, by exercising our allocation strategy, no single loss can kill us and by scaling in, we tend to lose small and win big – with time and PATIENCE!  That's exactly what I'm trying to teach people in the LTP, how to scale in, how to fix trades that go against us and how to make great money as a LONG-TERM investor, who trades once a month – not once an hour.   

    You talk about opportunity costs in holding losing positions but that's a matter of time-frame.  By that logic, you should sell your home every time the real estate market drops, pay the fees and go through the hassle of finding another home, which you then stay in until the market drops again.  It's a valid strategy – but no way to live…

    Crypto/BDC – I think we may be in at just the right time on these things.  Despite missing the boat on Bitcoin, I've seen a huge gain in interest and chatter and, before long, there will be a flood of money moving into the space.  

    PBI/Scott – A lot of it has to do with the Fundamentals having been thrown out the window so every earnings report is "shocking" to most of the people who are in a stock.  Sadly, another one from our Watch List stops being cheap:  

    PBI (3/5) – Pitney Bowes used to sell fax machines and now they sell information management services – a great adjustment but one that has caused many problems and they have missed EVERY SINGLE QUARTER for the past 3 years!  Margin pressure in Digital Commerce caused them to take a $168M impairment charge that led to the horrific drop since Nov.  Still, cut guidance is for $1.75 per $13.57 share and that makes them well-worth taking a chance on, since they also pay an 0.75 (5.5%) dividend.  The 2019 $13 puts can be sold for an awesome $2.50 for a net $10.50 entry and that's 3 years worth of dividends paid to you for NOT owning the stock.  I don't think they will recover much but the 2019 $13 calls are only $2.40 – because no one thinks they are recovering and if you sell the $17 calls for $1 it's net $1.40 on that side, so a nice net $1.10 credit on the combo, if you are so inclined.  

    And F them off my 3/5 entry, right?  Went down $1 before going back up because I can't call perfect bottoms, I can only tell when something crosses a line I absolutely consider a fair bottom and, at that point – I like to step in and start buying.  If they want to make it cheaper and my target price is still the same – I buy more.  It's really not a complicated strategy…

    Trump/Rustle – I can't believe the markets don't care that he tweeted a shutdown in Sept would be good.  As to Hamilton, I think I did hear him rapping about the evils of Obmacare on stage in NY so maybe Trump is right on that one….  wink

    Oh, here's how we know Trump learned a new fact, he shares it with the class in his 140-character history report:

    This actually scares me because I think Trump is saying he would never let that happen, meaning he will crush states that oppose him and probably considers any talk of a Trexit (I hearby copyright) will be considered treasonous and well – Gitmo for all!  Or maybe we'll just end up in one of those Media Internment Camps he's building.

    Image result for media internment camp

    Earnings/Pstas – I'm taking it with a grain of salt.  CNBC was talking this morning (maybe re, what I said) about companies that have most of their earnings overseas (generally the S&P 500) are outperforming US-based companies by a wide margin. 

    FactSet still shows us WAY ahead of the curve on S&P price to earnings.  

    Ah, here's the citation on earnings:

    • S&P 500 companies that generate more than half their revenue overseas are posting quarterly earnings growth of 19.9 percent on average, double that of companies that conduct most of their business domestically, according to FactSet.
    • About 46 percent of S&P 500 sales overall come from foreign markets.
    • To be sure, there's another reason why earnings look so good: A year ago, they were pretty bad.

      Last year's poor results for S&P 500 companies overall, including four straight quarters of earnings decline, set a low bar for companies to overcome. Matching improved growth in coming months may be more difficult.

    Image result for s&p 500 buyback index 2016

    Image result for s&p 500 buyback index 2016

    Earnings/Scott – I remember reading it but I can't find it.  Do you remember any unique search words that would help?  Fraud is not there (not in the title anyway).  

    Coin things/Savi – We now have a section on the main page of the site for Digital Currencies (boxes on the side) and BDC wrote an instructional post so we can all go out and get $500 worth of GreenCoins and then we will see if we can figure out a way to get them trading and turn it into a viable currency that can move to a major exchange.  PSWInvestments bought some GreenCoins early on and has been mining them so we have about 150M of them – getting them up to $1 would be nice, getting them to the $1,400 BitCoin fetches would be even nicer (currently worth about 1/100th of a cent). 

    In fact, our investment in GreenCoin is up only because it trades at about 1 Satoshi, which is 1/100,000,000 of a Bitcoin (0.000014) and the lowest possible number so the rise in the value of BitCoin is the only thing improving the value of GreenCoin so far.

     XOM/Jasu – XOM makes money on chemicals and refining when oil is cheap, I think $80 is a firm floor for them. 

    Also from the Watch List last Q:

    XOM (2/17) – Still cheap at $81.50.  You can sell the 2019 $80 puts for $9 and buy the $70 ($14.25)/85 ($5.75) bull call spread for net $8.50 and you get an 0.50 credit on the $15 spread that's $11.50 in the money to start.  

    Interesting/Stock – Yeah, I know what you mean.  

    API/Learner – It better help, though I don't see any reason why we'd suddenly have a drawdown other than the vagaries of the delivery cycles. There's no way oil can get going while there's all this uncertainty about whether or not OPEC is going to suddenly dump another 1.5Mb/d on the market if they can't agree to extend production cuts at the end of the month.

  109. And what Winston said except that we will be starting a hedge fund towards the end of the year!  

  110. Phil, UBS today along several fronts recommended several companies I thing were related to SUN before changes. What do you think:

    Sunoco Logistics Partners (SXL) at $24 with target of $31 down from $38 and 10% dividend

    Energy Transfer Partners LP (ETP)  at $23.5 with target of $31 down from $43 with 17.9% dividend

  111. *think

  112. Phil – In your hedge fund.  How do you feel about not charging PSW members any carried interest ? 8-)

  113. Thanks Phil

  114. Phil, can you give me your thoughts on BID?  This is another  FU stock, where you banged the table, and it eventually recovered and then some.  I made good money on the way back up.  Right now I'm holding 10 2019 28/37 spreads, and 20 of the 2019 33/42 spreads, short 10 $30 puts, and short 15 July $40 calls (basis 3.60, now 8.70).  Earnings are coming up on May 10th.  The short calls that are in the money have me pretty bearish on BID, which I feel good about, as I think they have gotten a bit ahead of themselves at over 26X PE.  I intend to stay well covered to protect my longs, but wanted to get your opinion on the position overall, and whether you would suggest any adjustments.  Thx!

  115. ouch .. crude now below $48 – scr***d by crude. 

    This is about time OPEC starts the propaganda talk

  116. AKAM earnings play – short May5 $60 puts and long May26 57.5 puts for net .52 credit (actual fills a few minutes ago). positive return for anything down to $56.50 (9% away) on the underlying.  Will find out tonight how much a winner it may be…

  117. AKAM – of course, might get crushed. who knows these days?

  118. Phil, Did OPEC just agree to give their oil away for free; down 80 cents in 2 minutes? Roller coaster ride for sure!

  119. ?You're driving down a street in D.C. on a rainy day and they are full of water and you see mike mulvaney standing on a flooded street corner…?what do you do?….. :)

  120. ?there's no doubt what I'd do…..

  121. ?…..this laptop doesn't know the end is near… ;)

  122. Jasu1 – An apparent example of "them" running the stops in /CL.

  123. UAL – what, they think they are going to get all the Alitalia business?

  124. I was all proud of myself for averaging down on /CL today. Lol! These bastards won't let me enjoy that for even a few hours. 

  125. TWTR-Of course I didn't hold it forever at those high levels, I made the same adjustments as you did along the way. I guess I didn't mention that, but I adjusted as the stock price dropped and mitigated some losses when it finally did move up, I got out. Now that it is hopefully trending up again, I might like to get back in. 

    CL- I was in the black this morning when we hit $49.28 and I had to hold onto one contract to add a few more dollars when it went back over $50. Dumb dumb dumb. 

  126. Savi / Coins - yep – see Phil's link above for the instructional post. "Investing" is very easy but there are some steps. Please assume 100% risk loss -- so not for any type of risk averse money whatsoever obviously. It is very "Wild West" and what I mean by that is a totally unregulated place to be playing around.

  127. Phil – at your next gathering I'll plan to attend and represent the coin side of things. I can give a 1-hour presentation/seminar and engage in 1-on-1's with people. Pencil me whenever the next west coast endeavor gets scheduled.

    Also, bring your A-game to the poker table. I go for the throat ;)

  128. Trump Future Internment Camp is Fake News! Shame on you Phil! :P  :P (but you had me googling that one…)

  129. UAL – Munoz's apology this morning worth almost $1 BILLION in market cap gain today. That is one silver-tongued hombre.

  130. Is VRX up 8+% today, or is it a mirage ?

  131. Thanks BDC

  132. Phil what do you think of

    Royal Dutch Shell RDS-A as a similar trade to the XOM trade we have

    They also have a nice dividend 7 %  it would be good for an IRA to do a covered call 


  133. SXL/JMD – As far as I understand, SXL is no more and they've merged into ETP but this all just happened, like today, and I'm always wary of getting into one of these things until I see a couple of Qs of combined earnings.  If oil is not back in the $60s in the summer, then ETP massively overpaid (via dilution) for SXL.  

    Hedge fund/Albo – We shall strive to save our Members as much as possible, of course.  

    BID/Palotay – Forgot about them, one of the ones we cashed out in the end.  Earnings are a wildcard and WOW, $48 – they were under $20 last year!  Anyway, earnings are random depending on the auction cycles and the mood of the buyers but with the market gaining the way it is, I'm not worried about whether or not they'll find people to drop $20M on a painting.  I think $50 is hard to break and $40 is a likely pullback if anything at all is wrong so you sound well-positioned to me.  Just plan on buying a 2020 spread layer in the Fall if they pop $50.  On the whole, they are really not earning more than last time they were at $47 (mid 2015) though EPS was lower then.   Makes me wonder if they purposely engineered the sell-off so they could buy back their own stock cheaply?  

    Whoa, oil falls to $47.50!  People are really nervous about the API/EIA reports.  

    TSLA/Palotay – Very true, they can engineer whatever they want with all those variables to play with.  

    OPEC/Jasu – I think anything short of the actual agreement won't move the market much higher.  

    Laptop/1020 – That will be funny when we have AIs because you can't even type that sentence without giving your laptop some massive insecurities.  Will they run away?  Go on strike?  Kill you in your sleep?  1st World problems, as they say….

    UAL/Scott – Sure, it's the same customer base (who don't mind being treated like cattle as long as the seat is cheap).  

    Even worse for oil, the Dollar went down – to 98.82.

    Camp Trump/BDC – LOL, I thought that was obvious enough that I didn't need a disclaimer…  Actually it was an artist that put them around a town or something.  I love it! 

    Munoz/Scott – He said the passengers will be winning so much, they will be tired of winning and they will say "Please Oscar, no more winning, we're tired of winning!" Works on the suckers every time…

    The most personal comment came from Rep. Duncan Hunter, a California Republican, who told Munoz, “I was going to ask, why do you hate the American people?”

    VRX/Albo – Changing their name and probably their ticker to put it all behind them so they can get back to overcharging for drugs out of the spotlight.   Very bullish!  

    LOL Jeff – and what I said!   Gosh, I hope I didn't cause the sell-off, I'm still long.

  134. VRX is pretty exciting again. I'm thinking of re-entering!

  135. CAG, K, GIS  

    one of these days they will be a buy, but not yet. 

  136. AKAM – just a tad over an hour to go for the premium on the May5 $60 puts to go "pfffft!"…

  137. Scott    AKAM   if they get back to $50 I like them

  138. scott – ??

  139. RDS.A/QC – I like them and BP as overseas companies.  BP is like betting on Dr Evil though and at least RDS,A pretends to be nice (because they are Dutch).   Neither one is particularly cheap at the moment (relatively).  Also with Shell, I can think of 3 or 4 major lawsuits regarding pollution, spills and there's even one about them causing earthquakes – so a lot of potential bombs that make me not want to buy them high in a channel.  Earnings were $21Bn in 2014, $5.5Bn in 2015 and $8.1Bn last year so very erratic and oil is not strong so think low.  Meanwhile, it costs $227Bn to buy the company so, if they are making less than $12.5Bn – I'm not interested at this price.  EPS is projected to be about $2 – p/e of 25 – high for an oil co (XOM makes $4 per $82 share = 21).  I think all the oils may be over-priced re. future earnings expectations and the only reason I liked XOM was because of their diversification (only 30% of profits come from selling oil).  

  140. AKAM/Stock – this is just a trade for me. no position or investment.  May5 67.5 calls are selling for .85..!

  141. AKAM/BDC – earnings at 4:30pm ET… posted a play earlier, sold may5 $60 puts (covered with May26 57.5 puts).

  142. COH is another one that didn't do well at first.

    AAPL $147.50 into earnings.  That's $775Bn.  If they move up or down 10%, that's $77Bn in money flow and +/- $25Bn is considered a busy week for the whole market!  

  143. I think TSLA can actually engineer a small profit with negative cash flow for quarter.  They will push deliveries they didn't count last quarter into this one and all the autopilot revenue too and Solar City is impossible to decipher.  But they did something similar two quarters ago and it backfired.  Stock was flat on day then went down.

  144. rustle.. from your mouth to …

  145. "Gnosis" went live today. I've been hearing some buzz about this one coming along for awhile now. They run a smart contract on top of the Ethereum blockchain that serves as a prediction market of sorts. There fine art example is interesting (in the link). Price-wise, they're already at $95 per coin and ~$105M market cap so I'm waiting on the sidelines for now. I'd say you have realistically a 5-20X upside and that is, literally, not enough "juice" to jump in a coin at this point.

    GreenCoin paying bounties for signing up solar producers — $14 in bitcoin! Get someone to sign up! They get on-going greencoin payouts and you get bitcoin for the bounty. What a deal! :P

  146. AKAM – fyi in case of misunderstanding, when I said "no position or investment" I meant in the way of timeframe. I am in with an "earnings play" and not as a "swing" or "position" trade, or investment…

  147. FLO – selloff accelerated today.. what news?

  148. looks like most TSLA bear authors are capitulating even before tomorrow's earnings…

  149. MOS – crushed with big volume on earnings.

  150. Phil, any thoughts on MELI?

  151. Wow, they squeeked out greens at the close by tiny fractions.  

    AAPL earnings will take about 30 mins, unfortunately.  

    /TF closed below 1,400…

  152. GILD dropping again

  153. who rained on the dollar?  darn it!

  154. FTR dropping too

  155. NRG – hmm.. reaching for the gap from 1/13 on it's way down to channel low with a 12-handle?

  156. GILD missed  – down 2.5% AH. 


  157. FTR/Jabo – nice split. turns 10,000 shares in 666. Goldman must have been their advisors. 

  158. HBI – beat this qtr but lower guidance for next qtr, although FY guidance intact. 

  159. spoke to soon on ETSY

  160. Phil, position construction question…A lot of OOP positions are call spread plus short put and some time an additional short call above strike price of call spread…is there a name for this kind of trade..I wanted to understand the risk and time decay better…any reading suggestions? Also I wanted to understand the butterfly trades better Thx Dave

  161. FTR crushed…dangit POS!!

  162. Anyone have what must have been decent API numbers?

  163. Wow, GILD simply can't get out of their own way.  The funny thing is they earned $2.23 and the miss was 0.05 (2%) so they are down 2% but down to $67 on probably $9 in earnings – so silly.

    Meanwhile, if TSLA loses a penny less than expected, they'll go up 5%. 

    Ah here/s AAPL, $2.10 vs $2.02 expected.  Revenues miss by 0.08Bn!  That's going to cost them.. 

    IPhones only 50.8M – less than expected by 1.5M (people probably waiting for the 8).   $50Bn more buybacks.  

    I think it's too soon for API.

  164. what is your thoughts on FTR? Buy AH?

  165. Jabo if it is a pos, why would you be buying it?

  166. maybe it is a cheap POS? ;-)

  167. scott -

    did you hear anything about this? details are sketchy…

    heard the CEO abruptly left for Singapore. I don't know the details, so I won't use the word "fled." yet…

  168. Reminds me of the guy who sees a pos, picks it up , smells it, tastes it then says "glad I didn't step in it".

  169. FU CRAIGS!!!!

  170. ;-)

  171.  C'mon that was funny, I don't care who you are! ????

  172. TSLA- finally proof that this can go down! Not much but gives me hope. Who has the balls to buy back the short(?)puts that are down 74% already into earnings? No, me either, but I wish I did because there just ain't no way no how they can justify this valuation. But of course we can't bet against Musk too much.

  173. Looks like AAPL is planning to buy back another 8% of the company over the next 24 mos.

  174. crude up to $48, API report must have been decent… anybody has numbers?

  175. Stratos/BDC – no… but how exciting: International intrigue right in little ol' Seattle.

  176. Apple Continues Its Comeback Campaign, but iPhone Worries Persist


  177. FTR $1.77!   Dividend drops to 0.04 (half).  All looks good to me as a long-term investor – let's clear the short-term traders out and get to work.  Reverse split sucks, we'll have 267 shares so we'll get 333 more, I suppose.  

    AAPL down a bit on those earnings.  

    HBI/Learner – Bots see the words "lower guidance" and the 2.5% Rule kicks in.  Humans will fix it tomorrow. 

    ETSY – Ouch!  Down 15%.  

    Names/Millard – We don't trade like "normal" options traders so hard to read up on what we're doing.  I call a stock position with short puts and calls a buy/write – because we're buying the stock and writing….  well, I'm sure you get it.  When we choose to buy a call instead of the stock (usually because the dividends aren't worth allocating the cash), I call that an artificial buy write – because we don't have a real position in the stock.  We used to do traditional Butterflies but, after years of trial and error, we adapted this variation but the name Butterfly stuck.  A proper butterfly play for us is to buy long-term puts and calls that are each out of the money and then write inside puts and calls with shorter time-frames to collect the premiums.  That's one you should ask in tomorrow's Webinar and we can discuss.

    FTR/Jabob – Well I think we're going to take it up to 15,000 so we have 1,000 shares when it's all done.   It's going to be $27/share and the dividend will be $2.40 so we're still pulling 10% when all is said and done.  We'll sell $25 calls for a few bucks and then some puts for a few bucks and there's $6 off our basis while we wait and see.  If we buy 9,000 more at $1.80 that's $16,200 + $18,600 original purchase is $2.32 per current share or $34.80 per new share not including puts and calls we already sold (which pretty much cancel out).  

    We'll collect back $2,400/yr in dividends and we still have only used 60% of an allocation block.  If we have 20 allocation blocks in a $500K portfolio like this, we'd be collecting $48,000/yr in dividends alone.  Not bad for an FU stock…

    Stratos/BDC – Maybe turned out to be a scam.  I assume the FDA is looking more closely at these claims these days. 

    API/Learner – Now it's out:

    data show heavy drop in weekly U.S. crude supplies -4.15Mb Gasoline -1.93Mb Refined oil -0.436MB Crushing -0.215MB

    Big draws all around.  First time in a long time.  This move is not too impressive though.  

  178. AAPL $144 now.  

  179. AKAM – was beautiful at 60! Then the guy just kept talking… now cracking under 56.  STFU already!

  180. Phil where do you think AAPL will settle down? I have been waiting for a drop to get in again and it's too early but I am curious if you have any thoughts about a reentry target I could look for even if it's not until next qtr. I am now Mr patience 

  181. RB already up from 1.515ish to 1.536. I thought about it but had a nice profit from this morning move up to 1.55 and heard Phil telling me not to be greedy. May have to try it if we get any pullback overnight 

  182. At $55, AKAM might be worth a look. That's a decent line. Maybe sell some 50's put.

  183. AKAM at 55 is a 12% drop from the close. last earnings was a 10.6% drop by the time it was done the following day. Was very interesting to see all the this-week OTM calls sold (and bot) for good premium. Lots of expectation out there for upside move. 

  184. AKAM is really volatile on earnings so the premium does get boosted a lot! I guess call sellers are happy now! I'll apply my 3-day rule now and see where we settle on Monday.

  185. Stockbern – We certainly did speak too soon !   Back to the drawing board. 

    My only play was the sale of a bunch of Jan 2019  7.5 puts.  Still think EBAY buys them, and hopefully for more than $7.50.  We'll see.

  186. These people are evil and maybe people who voted for them will wake up to that fact when they realize that their health insurance is worth nothing. And that applies not to poor people, but even people who had employers healthcare. They pass that amendment to appease the Freedom Caucus and look what it allows:

    Under current law, allowing large employer plans this type of flexibility has limited impact since all states’ essential health benefit definitions are required to meet basic federal standards. But if each state could set its own definition of essential health benefits, as states would be allowed to do under the MacArthur Amendment, the consequences of allowing this flexibility would be significant.

    Suppose that even one state secured a waiver that allowed it to drop maternity services, mental health services, or prescription drugs from the definition of essential health benefits—a  plausible scenario since these services were commonly not covered in individual market plans prior to the ACA and since waivers would be easy to obtain. In this case, a large employer plan that wanted to impose an annual or lifetime on limit on these services could simply adopt that state’s definition of essential health benefits. Likewise, a large employer plan that did not want to limit enrollees’ out-of-pocket spending with respect to these services could also take this approach. In a more extreme, but still plausible, scenario in which even one state elected to completely eliminate its essential health benefit standards, the requirement to provide these protections would effectively disappear entirely for large employer plans nationwide.

    So, if you feel safe with your nice employer's healthcare, make sure you save money for catastrophic health problems. At this point, they are making the system worse than it was even before Obamacare. I guess employees are an expense that gets in the way of corporate profits! Just sick.

  187. Bought some TWLO in the after market at $23.80.  Down 30% after beating revenues and earnings. but giving a lower forecast.

    Another falling knife ! 

    Plan to write against the position tomorrow morning.

  188. Nice article about NNTaleb with some of his delightful commentary re economists:

  189. Phil, I held off on prior positions. What do you recommend for a new play on FTR now? I assume now's the time.  Also, although your premise on their expansion into Verizon households makes sense, I worry about the trend toward replacing landlines all together with cellular service. It seems to me that this trend will accelerate most in lower income households.How does this affect FTR?

  190. Because 3x is not enough! Imagine the decay!

    SEC approves request to list and trade quadruple-leveraged ETfs

    One of the funds is designed to deliver 400 percent of the daily performance of S&P 500 <.SPX> stock index futures, while another fund will aim to deliver four times the inverse of that benchmark.

  191. AAPL/Craigs – Nothing at all wrong with their qtr.  They are on a path to our $160+ target.  Whether or not they pull back first is up to the broader market. We'll be lucky to see $120 again because, after this, they announce new products and then the 10th Anniversary iPhone hits and by next year cars will be announcing AAPL entertainment systems…  Might be my Stock of the Year again next year…

    Good call on /RB, the environment is too crazy not to take profits.  

    Health Care/StJ – What gets me is it's such a short-term gain.  After 4 years of this nonsense, certainly enough people will have health horror stories that they'll vote these guys out.  The devastation this causes will take years to correct – great profits for insurance companies until then.  

    And the worst part is, it's all such a lie.  EVERY OTHER CIVILIZED COUNTRY has a system that covers 100% of the population at less than 1/2 what we spend on health care – the problem isn't with covering poor people, the problem is the entire system that needs to be torn down and rebuilt from scratch centered around Universal Health Care.  

    Cells/JMD – They currently partner with T to provide cell services and, of course, even people who don't have phones still want web connections (FIOS that they get from VZ).  Also, you have to understand the economics of FTR as they are a low-cost rural provider so they've been getting just $9Bn from 9M subsribers, so $1,000 per subscriber on average.  Adding the VZ services and 3 major states allows them to up their game considerably and all they have to do is figure out how to sell $10/month more to 9M people and that extra $1Bn drops right to the bottom line.  Oh, and they just announced $2.36Bn for Q1 revenues, so an $11Bn pace already and they didn't even book the new customers yet for a full qtr.  

    4x/Deano – Wow!  4x ETFs and 100-year bonds.  Why don't they just go to people's homes and take their money?  It would be more honest and save time.  Just wait until Trump has a great idea to deposit your SS money in those accounts….

  192. FSLR had a nice beat, bodes well for SCTY (under TSLA).

    • First Solar (NASDAQ:FSLR+8.2% AH after routing Q1 earnings and revenue expectations, and guiding full-year results above Wall Street consensus.
    • FSLR sees FY 2017 EPS of $0.25-$0.75 vs. its prior outlook of flat to $0.50 and $0.29 analyst consensus estimate, and revenues of $2.85B-$2.95B from previous guidance of $2.8B-$2.9B and $2.79B consensus.
    • For the full year, FSLR also forecasts gross margin of 12.5%-14.5% from 11%-13% prior; net cash balance of $1.5B-$1.7B vs. $1.4B-$1.6B prior, and operating cash flow of $350M-$450M vs. $250M-$350M prior; estimates for total GW and capex remain unchanged at 2.4-2.6 and $525M-$625M, respectively.
    • Apple (NASDAQ:AAPL) is off 1.8% after posting a fiscal Q2 report where investors' eyes were thought to be looking past numbers toward a dividend hike and any information about a fall iPhone refresh, though the company missed on revenues and iPhone shipment expectations.
    • In updating its capital allocation, the company boosted its dividend 10.5% and added $35B to its buyback authorization.
    • Revenue by product lines: iPhone, $33.25B (up 1%); iPad, $3.9B (down 12%); Mac, $5.84B (up 14%). Services revenue (iTunes, App Store, Apple Music, AppleCare, Apple Pay) $7.04B (up 18%); Other products (Apple Watch, Apple TV, Beats, iPod) $2.87B (up 31%).
    • Revenue by region: Americas, $21.16B (up 11%); Europe, $12.7B (up 10%); Greater China, $10.73B (down 14%); Japan, $4.49B (up 5%); Rest of AP, $3.8B (up 20%).
    • Financials: The overall capital return program gets a $50B boost and has its timeline extended by four quarters. The company plans to spend $300B by the end of March 2019 in the expanded program. Buyback authorization goes to $210B from $175B; dividend up 10.5% to $0.63/share.
    • It's guiding to Q3 revenue of $43.5B-$45.5B (vs. consensus for $45.59B); gross margin of 37.5-38.5%; opex of $6.6B-$6.7B; other income of $450M; and a tax rate of 25.5%.
    • Conference call to come at 5 p.m. ET.
    • Apple press release
    • Twilio (TWLO -1.2%) is the top postmarket decliner on the NYSE, down 30.5% and shedding nearly a billion dollars in market cap, after its Q1 earnings beat expectations but contained below-consensus guidance for the current quarter and year.
    • Revenue grew by nearly half again over last year, to $87.4M, and was up 7% from Q4; base revenue rose 62% Y/Y and 7% sequentially to $80.6M.
    • Net loss on a GAAP basis was $0.16 vs. a year-ago loss of $0.37; non-GAAP EPS was -$0.04 vs. a year-ago -$0.05.
    • Active customer accounts rose to 40,696 from last year's 28,648.
    • CEO Jeff Lawson alluded to "changes in the relationship with our largest customer" — likely Uber — but "our momentum across the business continues to be strong, with a 42% year over year growth in Active Customer Accounts and a 62% year over year growth in Base Revenue during the quarter.”
    • For Q2, it's guiding to revenue of $85.5M-$87.5M (light of consensus for $87.6M); base revenue of $81.5M-$82.5M; and non-GAAP EPS of -$0.11 to -$0.10 (vs. consensus for -$0.08).
    • Meanwhile, for the full year it sees revenue of $356M-$362M (below consensus for $369.8M); base revenue of $340M-$343M; and non-GAAP EPS of -$0.30 to -$0.27 (vs. expected -$0.16).
    • Press Release
    • Archer Daniels Midland (NYSE:ADM) plunged 8.8% in today's trade following soft Q1 earnings and a warning that massive global grain stocks are making it difficult to turn a profit trading grain internationally.
    • ADM said the outlook for its agricultural services segment, its largest in terms of revenue, appeared weaker than it did at the beginning of the year.
    • CEO Juan Luciano reiterated the point during today's earnings conference call, saying "with ample stocks around the world, there is a very subdued environment for us to make profitable international trades," adding that ADM will continue to analyze its trading operations for cost savings but that most of the restructuring was done.
    • Bumper crop harvests in South America are adding to the world grain oversupply; slow selling in Brazil has kept U.S. exports competitive in the global marketplace, but ADM says South American competition may be a challenge in H2.
    • British Columbia Premier Clark says she is ready to impose a C$70 ($51) carbon tax on every metric ton of U.S. thermal coal passing through the province’s ports if she is re-elected next week.
    • Clark, who is seeking a third term on May 9, called for a thermal coal export ban last week in retaliation for Pres. Trump’s new tariffs on softwood lumber, which sent shares of Cloud Peak Energy (NYSE:CLD) and Canadian export terminal operator Westshore Terminals (OTCPK:WTSHF) tumbling.
    • The move likely would violate international trade laws, and Westshore and its U.S. customers "would have financial recourse with the B.C. government for lost revenues related to a possible ban," says an analyst at TD Securities.
    • The planned sale of a stake in the Saudi Aramco national oil company "will be not be very far off 5%" and occur in 2018, Deputy Crown Prince Mohammed bin Salman says.
    • The Saudi government would retain sole control over Aramco's oil and gas reserves and would decide on production levels, and would have a concession to monetize those reserves, Prince Mohammed says.
    • The proceeds from the Aramco sale will help to develop other industries inside Saudi Arabia and will be invested by the kingdom's top sovereign wealth fund, according to the prince, who has said the IPO would value Aramco at ~$2T.
    • FireEye (NASDAQ:FEYE) came out of a halt and is up 13% in postmarket trade after its Q1 earnings showed a much smaller loss than expected and revenue beat the Street as well.
    • The company more than halved its net loss on a GAAP basis (to $0.48 from $0.98). On a non-GAAP basis, net loss of $0.09 was much narrower than a year-ago loss of $0.47.
    • Cash flow from operations was similarly above guidance at -$17M, vs. a year-ago -$22.5M. Billings were down 18% Y/Y to $152.4M, but came in above the guidance range of $130M-$150M.
    • Revenue breakout: Product, $23.7M (down 29.6%); Subscription and services, $150M (up 11.7%).
    • For Q2, it sees revenue of $173M-$179M (above consensus for $172.7M), billings of $155M-$175M, non-GAAP gross margin of about 72%, a net loss of $0.10 to $0.14 (above consensus for a net loss of $0.15) and cash flow from operations ranging from -$17M to -$27M.
    • For the full year, it's guiding to revenue of $724M-$736M (above expectations for $722.8M), billings of $745M-$775M, a non-GAAP net loss of $0.26 to $0.36 (above consensus for a loss of $0.48), and positive cash flow from operations of $1M-$10M.
    • Press Release
    • Etsy (ETSY +3%) has tumbled 14.8% in postmarket trade amid news (along with earnings) that CEO/Chairman Chad Dickerson will step down from his posts.
    • Josh Silverman has been named the new CEO, effective tomorrow. Fred Wilson, lead independent director, will become chairman.
    • Dickerson will serve in an advisory role until May 31.
    • In other executive shuffles, Chief Technology Officer John Allspaw is leaving the company, to be succeeded by Mike Brittain, VP of Engineering. Allspaw will also serve as an advisor until May 31.
    • Previously: Etsy +3.5%, targeted by investor for strategic review (May 2 2017)
    • Q1 adjusted income of $2.9B or $2.23 per share vs. $4.3B and $3.03 one year ago. Estimates were for $2.28.
    • Revenue of $6.51B shy of estimates of $6.63B.
    • Harvoni sales of $1.37B about inline with expectations; Sovaldi sales of $313M vs. $380.3M estimate; Epclusa sales of $892M vs. $898M estimate; Truvada sales of $714M vs. $815M estimate; Genvoya sales of $769M vs. $645M estimate.
    • Full-year revenue guidance of $22.5B-$24.5B is reiterated.
    • Conference call at 4:30 ET
    • Previously: Gilead Sciences misses by $0.05, misses on revenue (May 2)
    • GILD -2.3% after hours

    • Kinder Morgan (KMI -0.5%) reaches a deal with Russian steelmaker Evraz to supply it with ~250K metric tons of pipe for the expansion of the Trans Mountain pipeline.
    • KMI says more than 75% of the pipe for the project will come from Evraz's plant in Regina, Saskatchewan.
    • The expansion project will nearly triple the size of the Trans Mountain pipeline and ship 890K bbl/day of crude from Alberta to British Columbia.

    • ConocoPhillips (COP -2.3%) is lower after reporting a Q1 loss, hurt in part by higher than expected operating costs, but at least one analyst – Wells Fargo analyst Roger Read – is not at all rattled by the unexpected loss.
    • Read writes that the EPS miss "could be a minor negative, but both production and operating cash flow exceeded our expectations while full year production guidance was unchanged."
    • The cash flow beat "came in spite of a much larger negative deferred tax impact, which speaks to underlying performance of COP," according to Read.
    • In today's earnings conference call, CFO Don Wallette Jr. said Q1 results included a $200M loss from a currency hedge tied to the British pound and a ~$100M benefit from a tax loss carry forward.

  193. Aapl/Phil

    Thanks for your advice, always appreciated.

    So, not so much a tax issue, but more to protect against a 5% or greater drop.

    Here is what I did before their earnings…sold 25% of my stock at 147.50

    Against the rest, I sold the June $140 calls for $8.25, protecting down to $140 if needed.

    And just for fun, I bought the weekly $145 puts for $1.50( small price to pay if they bombed on earnings)

    So, overall, I am happy with the insurance I was able to 'generate' for 1% of the price of stock.

    Now, depending on what happens, I have the luxury of deciding and being in the driver's seat with respect to whether to sell and buy your spreads or not.

  194. Having done all that meandering, I must say it was fun!

    More important, I could not have done something like that 2 or 3 years ago and reading and thinking about your teachings has been a tremendous asset.


  195. AKAM – you know, this may be the first time I've ever really identified with Homer…!

  196. For seven years, the steadily expanding auto industry has helped drive the American economy forward, racking up billions in profit and paying workers hefty bonuses, all while consumers flocked to dealerships and drove sales to record heights.<p>It is a boom that President Trump has been counting on to …

  197. On Tuesday afternoon, the House of Representatives voted to pass a bill that Republicans have promoted since the Newt Gingrich era, one that would allow private-sector employees to exchange overtime pay for “compensatory time” off, electing to accrue extra hours off rather than extra pay in their …

  198. Here’s why Russia is opening the door to cryptocurrencies

    Russia has announced that it will legalize the use of cryptocurrencies. The government confirmed last week that a draft bill would create the legal framework for trading in bitcoin, dash, ether, and other digital currencies.<p>This comes a year after the same Russian institutions said people trading …

  199. A divide has formed in the US equity market.<p>As the investing public has continued to devour stocks, sending all three major indexes to record highs in the last few months, corporate insiders have been offloading shares to an extent not seen in seven years. Selling totaled $10 billion in March, …

  200. Microsoft’s lightweight version of Windows 10 is a bit more locked down than first anticipated.<p>In an FAQ page for Windows 10 S, as the just-announced variant is called, Microsoft notes that its Edge web browser will be the default in the new operating system.<p>That much was known already, as the main …

  201. <b>By late 2014 I’d finally had enough.</b><p>After so many run-ins with the bitter incompetence and bureaucratic indignity of the banking system, <b>I decided</b> …

  202. SAN FRANCISCO — What if part of your job became teaching a computer everything you know about doing someone’s job — perhaps your own?<p>Before the machines become smart enough to replace humans, as some people fear, the machines need teachers. Now, some companies are taking the first steps, deploying …

  203. SAN FRANCISCO — Apple’s iPhone business is sailing squarely into the doldrums between new models.<p>The company said Tuesday that the number of iPhones sold globally fell 1 percent in the first calendar quarter, compared with the same period a year ago, although revenue rose to $52.9 billion as more …

  204. Just when you thought your legroom in economy class couldn’t get tighter.<p>American Airlines (AAL) is planning to decrease the front-to-back space between some of its economy class seats by another two inches.<p>The airline says it plans to add more seats on its coming Boeing (BA) 737 Max jetliners. To …

  205. There was a time when Apple investors were loath to call it a “dividend stock.” Now it’s the biggest dividend stock there is.<p>Apple announced after …

  206. GOP changing health bill as Trump leans in hard

    Updated 05/03/17 12:42 AM EDT<p>House Republicansworked late into the night Tuesday on last-minute changes to their Obamacare repeal bill, as President Donald Trump began rallying support to muscle the stalled legislation across the finish line.<p>Senior Capitol Hill and White House officials said a new …

  207. Mindhack For Faster Learning<p>In March 2016, DARPA — the U.S. military’s “mad science” branch — announced their Targeted Neuroplasticity Training (TNT) …

  208. WASHINGTON (Reuters) – Democrats in the U.S. House of Representatives opposed to Republican legislation that would repeal major sections of the Dodd-Frank financial reform law on Tuesday made multiple efforts to delay the bill.<p>The House Financial Services Committee was due to consider …

  209. WASHINGTON (AP) — The Senate on Tuesday confirmed Jay Clayton, the Wall Street attorney chosen by President Donald Trump to lead the Securities and Exchange Commission.<p>The vote was 61-37 to give Clayton the job of running the independent agency that oversees Wall Street and the financial markets. …

  210. WASHINGTON — The former chairman of one of the House committees that drafted legislation to repeal and replace large parts of the Affordable Care Act came out against a new version of the bill on Tuesday, saying the measure now “torpedoes” protections for people with pre-existing medical conditions.<p>…

  211. <b>The UK will not pay a €100bn (£85bn) “divorce bill” to leave the EU, Brexit Secretary David Davis has insisted.</b><p>He told ITV’s GMB programme the UK would pay what it was legally obliged to do “not just what the EU wants”.<p>It comes amid claims by the Financial Times that the financial settlement sought …

  212. Hillary Clinton on Tuesday sharply questioned President Trump’s conduct in office, criticizing his foreign policy pronouncements and penchant for posting on Twitter, and described herself as “part of the resistance.”<p>Mrs. Clinton, who has kept a relatively low profile since her defeat in the …

  213. <b>Washington (CNN) —</b> Bob Hemseath, whose corn-farming business hinges on the whims of mother nature, is comfortable with uncertainty.<p>But as the fourth-generation farmer heads onto his northeast Iowa farm for the 2017 planting season, it’s the uncertainty coming from the White House that has Hemseath …

  214. Economic growth in the 19-nation euro area probably clocked in at 0.5 percent in the first quarter, underpinning European Central Bank President …

  215. Investors start to shake off the AMD fan self-delusion.<p>Ryzen shown to be inferior to Intel core for core.<p>Charting the Hibben Effect.<p><i>Rethink</i> …

  216. <b>Washington (CNN) —</b> Former Acting Attorney General Sally Yates is prepared to testify before a Senate panel next week that she gave a forceful warning to the White House regarding then-National Security Advisor Michael Flynn nearly three weeks before he was fired, contradicting the administration’s …

  217. Good morning! Here’s what you need to know in markets on Wednesday.<p><b>The EU has raised its opening demand for Britain’s Brexit</b> <b>bill to an upfront gross payment of up to €100bn.</b> According to an analysis by the Financial Times, the Brussels has bumped up its payment demands from an earlier €60 billion, …

  218. Microsoft launches a slew of IoT-related offerings

    Microsoft this week announced the launch of Microsoft IoT Central, a software as a service (SaaS) designed to reduce the complexity of deploying …

  219. Since the 1970s, coastal US cities have implemented laws that make it impossible for housing supply to equal demand. Proponents of these laws argue they are important for historic preservation, environment protection, and the livability of cities. Conveniently, such laws also happen to inflate the …

  220. Trump calls for a ‘good shutdown’ in September

    ‘Our country needs a good “shutdown” in September to fix mess!’ Trump tweets.<p>Updated 05/02/17 04:04 PM EDT<p>President Donald Trump on Tuesday seemingly called for an end to the legislative filibuster in the Senate, frustrated that Republicans were unable to include his policy goals in a must-pass …

  221. A May Day march in Portland, Ore., “devolved into a full-scale riot with random acts of vandalism” by anarchists late Monday, police say. Attacks on police and emergency personnel resulted in 25 arrests.<p>Molotov cocktails, smoke bombs and other items were thrown at police, according to member …

  222. U.S. auto sales fell 4.7 percent last month, the most pronounced slowdown of the year and a strong indication that 2017 will put an end to seven …

  223. <b>General Electric</b> (GE) reported earnings on April 21--and the folks at <b>Oppenheimer</b> are just now getting out a final note on its results, which either …

  224. Thanks Phil (FTR). So What would you rec for new position?

  225. Good morning! 

    AAPL/Maya – What's better protection than taking your entire basis off the table?  I was also saying there's no point in tying up $147.50 to get a $2.28 dividend payment.  It's all about how much you have and what you expect to make.  Do you expect AAPL $180?  $200?  Well, let's say you think $200 and you'll time it all perfectly and make $50 on $147.50.  Is there a better way to do it than owning AAPL and selling covered calls?  

    Of course there is because we can buy 3x AAPL 2019 $130 ($26)$160 ($11.50) bull call spreads at $14.50 ($43.50) which pay $90 at $160 (20% less than your target) for a $46.50 profit and, to make it $50, you sell 1x the $130 puts for $10 so now, you have laid out just $33.50 in cash and $10 in ordinary margin and all AAPL has to do is hit $160 and you make $56.50.  Your worst case is having AAPL assigned back to you at $130 and, if you keep a stop on your spread at $16.50, then net $145 means no worse than you are now – except you have $114 in cash and $228 in ordinary margin to do something else with for the next two years.  

    Having the cash on the side means you have the flexibility to adjust as well as take advantage of other opportunities and, of course, hedging.

    Fed day today, supposedly, they will be on hold but here's their calendar:

     Month   Date Event
    Jan/Feb 31-1 FOMC Meeting (Jan/Feb) 
    March 14-15* FOMC Meeting (Mar)
    May 2-3 FOMC Meeting (May)
    June 13-14* FOMC Meeting (Jun)
     July 25-26 FOMC Meeting (Jul)
     September 19-20* FOMC Meeting (Sep)
     Oct/Nov 31-1 FOMC Meeting (Oct/Nov)
     December  12-13* FOMC Meeting (Dec)

    * Meeting associated with a Summary of Economic Projections and a press conference by the Chair

    So, if they don't hike now, they have 6 more chances but no way they do Dec again and they don't like Nov with elections though this is an off year.  If they want to do 3 more, they almost have to do one now or they won't have the flexibility to push back later.  Atlanta Fed's GDPNow shows 4% growth in Q2 and the Fed will feel a need to put a damper on that for sure. 

    China Stock Traders Are Most Defensive in Years on Growth Doubts

    Belgian finance minister warns EU: change or die

    Bonds Bid On Dismal Data, Crashing Carmakers, And Crude Carnage

    WTI/RBOB Pop After Biggest Crude Draw Since 2016, Surprise Gasoline Draw

    Intel on 'imminent threat' drove airline electronics ban, top lawmaker says

    Tim Cook said how Apple(AAPL) plans to double its fastest growing business by 2020.

    Apple(AAPL) boss Tim Cook says 'reports about future products' likely delayed quarterly iPhone purchases

    On the whole, it's a nice, mellow morning ahead of the Fed.

  226. Decided to scalp the TWLO that I bought yesterday in after hours trading.

    Up $1.55