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Record High Wednesday – Does the Fed Even Matter?

Image result for throw in the towelieThat's it, the bears are dead.  

We'll still keep our hedges, just in case, but we're certainly not going to be looking for new shorts in this 1999-style market that goes up and up and up some more.  Every dip is a buying opportunity and you could already see this week how every dime that flowed out of the Nasdaq went right into other stocks, boosting the other indexes to all-time highs.  

That's OK though because, as noted yesterday, we have PLENTY of ways to profit from a continuing bull market and we do have lots of hedges so we will SLOWLY deploy some more cash and just see if we can ride this wave until it finally breaks.  

Meanwhile, the Futures trades continue to be very good to us with yesterday's morning report idea for the long on /NQ has also hit our $375 per contract at 5,775, just shy of our 5,780 goal – as predicted by our fabulous 5% Rule™.  

Rejection at 5,780 is technically bearish for the Nasdaq but the other indexes are off like rockets so it's not really a great morning to short though I do like playing the S&P (/ES) Futures short below the 2,440 line and Russell (/TF) below 1,430 as long as /NQ stays below 5,780 and the Nikkei (/NKD) stays below 20,000.  And no, it's not a contradiction to short the Futures after saying we can't short the market – this is just playing for intra-day fluctuations – fluctuations that netted over $20,000 worth of gains from last week's morning reports alone!  

We are fairly certain the Fed will be raising rates at 2pm and that should lead to Dollar strength, which will put pressure on the indexes so, although we went long on Oil (/CL) at $46 and Gasoline (/RB) at $1.48 in our Live Member Chat Room earlier this morning, we'll certainly be out by the afternoon.  Oil is down on strong builds indicated in last night's API Report but we think the 10:30 EIA report won't have a 5Mb product build and anything less than 2Mb will now be considered bullish.  Obviously, we'll be using tight stops below our line.

The long-term picture for oil is deteriorating as OPEC's rivals are set to produce more additional oil than is forecast through 2018, putting even more pressure on OPEC to cut back if they want to maintain even these low prices.  

This wouldn't be so bad but the situation we have now is a glut already so we are simply running out of places to store the oil and that forces the producers to incentify the buyers and the way they do that is by lowering the price but lower prices don't actually make you consumer more oil – certainly not in the short run – so that plan tends to fail very badly (as we saw last year).  

So we're only long on oil (and not very) until July 4th and then we think we may see $40 again in the fall.  They'll be lucky to hit $52.50 into the holiday at this rate.  Adding insult to injury for oil demand, European Industrial Production growth slowed down in April to 1.4%, from 2.2% in March.  Iceland, who kicked off our last Global collapse, just cut interest rates as their own economy contracted by 1.9% in Q1 – a very disappointing number prompting a swift response from their Central Bank.

In the UK, however, inflation blasted up to 2.9% in May and the BOE only used inflation as a condition for when to tighten and their target is 2% so even Goldman Sach's stooge, Mark Carney won't be able to avoid a rate hike when they are this far over the mark and that has now prompted calls for the ECB to reverse but Goldman stooge Draghi has, so far, been very firm on continuing to hand free money out to banks for as long as possible.  

Those pressures are likely to push the Dollar (/DX) lower this morning and that will boost equities as well as our commodity plays but then the Fed is likely to reverse it all so we'll watch our lines and look for the best entry though I'll be liking /DX long as well once things calm down.  

There's been a shooting in Virgina where one of the targets was GOP House Whip Steve Scalise was shot along with several other people so expect a crazy morning leading to a crazy afternoon and we'll be covering it live throughout the day. 


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  1. Good morning!

    GOP House Whip, Steve Scalise and others were shot while playing baseball in Virginia. If only they all had guns instead of baseball bats, they could have returned fire!  Can't wait for the NRA to weigh in on this one.  

    Please note Futures shorts above, good time for them!

  2. Good Morning

  3. So far no affect on futures by shooting Republican congressmen! Amazing !

    Phil oil contracts down to about 215k from 290 yesterday. They're making it look pretty easy so far. 

  4. any reason why TSLA is hitting new highs today?

  5. Good morning all! The usual Wednesday webinar will be postponed until tomorrow at 1pm. 

  6. Phil if there is no reaction to this shooting by the market yet, do you expect that it will happen as people start trading at 9 or 9:30 (as opposed to the bots)

  7. Just read the comments section on Fox News over the shooting … there really are no words as to the vile nasty cr*p on that site.  There are people blaming it on a disappointed  Hillary voter.  Just wow.

    I need whatever the Dow is drinking.

  8. Oil/Criags – That's good for the longs, they will be confident. 

    TSLA/Jabob – Do they need a reason?  Don't forget, Asia was closed before that upgrade so it was news to them this morning.  From their perspective, they wake up, read about an upgrade and see a gap up so shorts get squeezed and people jump in.

    Reaction/Craigs – I don't think this market cares about anything these days but TLT is going nuts all of a sudden:

    Seems like people suddenly think the Fed is not raising today?

    That keeps the indexes up and gives "THEM" cover while they sell.

    Silver and gold flying higher too:

    If oil and gas do that I will be having a great day!  

  9. Good Morning.

  10. …maybe scalise can have a ship named after him…

  11. Shorted /TF this morning, and last night.  Stopped out of that.  I now have 1 short /ES at 2441.25.  Also have one long /RB at 1.485 from yesterday, stop now at 1.4875.

  12. Retail sales weak and not much inflation so that's why suddenly they think Fed won't raise I guess.

  13. My long /DX here getting smacked down to 96.5.  grrr.  

  14. Sorry late start – that pesky job!

  15. Thanks for all of your efforts as well stjean!  :)

  16. could wwe please have a day with tsla, amzn, and nflx down with ftr up???

  17. 1020 – I wanted to tell you how much it brightens my day to see your good morning greetings every day. You are truly a beacon for all us around 9:00 AM each day :-)

  18. Stopped out of /ES short now, will see what happens and decide if I'm gonna reload. 

  19. FNSR – Reports tomorrow after the close.  The company has already telegraphed a weak quarter, but you never know how the market will view it.  Think it hinges on their outlook for the rest of the year.  Expect that to be positive, but look to cover some stock with OTM calls, just in case.

  20. Thanks stjean – My cat considers me a "beacon" as well….. ;)

  21. /K.C.  1.275 in sight from 1.25.  Starbucks paid for.

  22. Phil –  GDP – "You are WAY below current consensus of 3%."

    Your right, Q2 Atlanta GDPnow has come down from 4.3 to 3.0.  I'll be generous and raise TNN GDP from 1.0 to 1.75 which will be the high for the year.  Little Iceland is sending a clear GDP signal, while the UK inflation, is sending a massive false positive.

    "The increasing cost of computer games and package holidays helped push up inflation to 2.9% last month"

    All that "inflation" is because since Brexit ruminations back in 2015,  the sterling has taken a POUNDING by the King, pun intended.  Along with the rebound in oil, this has raised the cost of imported goods to the emerald island, while wages are not keeping up.  A classic consumer squeeze, much like in the colonies… 

    Headline retail sales fell 0.3% in May vs. expectations for a small rise. It's the weakest print since January of 2016. Sales ex-autos and gas were flat vs.+0.3% expected. Alongside, core CPI rose just 0.1% in May vs. +0.2% expected.

    The overextended US consumer whose credit life line has run out, is continuing to tap out, and Out.

  23. TSLA/Jabob

    might not be straight up but really no resistance for them to get to 400 and the closer you get to the Model 3 release, the more hype surrounding the stock.

  24. rustle-- they are almost at 400 now.

    worst short ever

  25. TSLA,  Rustle – do you think the short squeeze is still going on?  Next short opportunity (bruised ego speaking) is sell on the news (model 3)?

  26. It would be ironic if the shooter is against healthcare reform….

  27. 10 year bond – "Seems like people suddenly think the Fed is not raising today?"

    Possible, but more likely somebody else has seen the future and it does not work. The bond market is sending the same signal on economic futures as some commodities are, WEAK and WEAKER. Review yesterday's Nattering, there may also be a flight to safety in longer duration bonds, lowering long end rates at the same time short duration rates get hiked.  

    When FOMC raises, they will also raise the IOER (interest on excess reserves).  This remuneration of deposits or guaranteed welfare, causes further disintermediation for the banks. They are NOT so much in the lending business, because they have been forced into the SAVINGS and speculation business.

    This adds to the Trillions in capital already trapped and malinvested within the confines of the commercial banking system.  Axiomatic, in order for AD (aggregate demand or GDP) to increase, money MUST exchange hands and capital MUST be invested in activities which promote economic growth.  Trapped money cannot flow, dropping transactions velocities (exchange and turnover) into NEGATIVE growth. 

    This negative growth is a reverse vortex which collapses upon itself in a self reinforcing manner, viz. it takes exponential amounts of energy to reverse the process. Thus, every raise consumes GDP and potential future GDP exponentially.  Banks get squeezed further, lending less for C&I, economy shrinks further.  It's called a singularity for a reason, and we are currently on the event horizon and out.

  28. "the congressmen take this charity baseball game seriously"  As seriously as kicking millions off their healthcare plans?….. :(

  29. TSLA/learner

    The short interest is around 25%.  Hard for the stock to go down unless institutions or retail is selling which they are not till release of Model 3.  So the stock is in a perpetual squeeze.  Other than a market crash or very bad news (accounting fraud, major problem with car), your down days will probably not be too dramatic but you can have a 10-15 point up day very easily.  If the Model 3 is a dud and gets bad reviews, this stock can fall 70 points quickly.  Dangerous stock to play right now especially short before Model 3.

  30. meant are selling not is

  31. We got cancelled!  

    The shooting messed up the schedule and Jill's show got bumped.   Oh well, that's showbiz…

    Things seem to be going well, my 2 /ES shorts are up $300 and even /KC is coming back from the dead.   Now I just need the Fed to pop the Dollar.

     Damn, should have played /TF though.  I couldn't watch it so I thought /ES would be safer. 

    /NKD roughly rejected at 20,000:

    Big Chart – Once again the Nas fails to regain positions, though still way ahead of the pack.

    Job/StJ – Don't worry, soon there won't be any…  Did you see that AI article yesterday, white collar jobs on the way out as well – it's ownership class or bust! 

    CPI/Burr – I wonder if that's in time to worry the Fed?  

    Oil inventories coming.

  32. Nat 

    Your last paragraph sounds somewhat like a description of the next Star Trek movie about planet Earth

  33. Oil DOWN 1.7Mb, Gasoline up 2.1Mb and Distillates up 300K – much better than API but sharp move down to throw off the weak bulls first. 

  34. oil falling…looks like inventories were not good news

  35. Butterfly MSFT and CTSH – because I was offline for a day and a half I did miss the price window on the MSFT short SEP $67.50 calls and the long CTSH 2019 $55 puts.   What is the best thing to do about that?

  36. Lending/Jabob – I don't think there's much actual loan demand, that's the real issue.  People are not confident enough to buy homes or build buildings like they used to. 

    Oil still heading down but $45 should hold and $1.455 on /RB

    • EIA Petroleum Inventories: Crude -1.7M barrels vs. -2.7M consensus, +3.3M last week.
    • Gasoline +2.1M barrels vs. -0.5M consensus, +3.3M last week.
    • Distillates +0.3M vs. +0.7M consensus, +4.4M last week.
    • Futures -1.57% to $45.73.

    We fell sharply last week on oil but it was a 3M build, not a 2M draw.

  37. Is the webinar back on for today?

  38. Well I'm 6 long on oil  ($45.48) and /RB ($1.4635) now – couldn't let that opportunity slip away.  Down a quick $8K between them at the moment but I'm fairly sure this is the bottom.

    Webinar/Tangled – No because I'm still in the city.  Could rush home but already rescheduled everything so we'll just have it tomorrow.

  39. Phil/USO

    good time to take position in July USO 9 calls as a new trade?


  40. Phil,

    Also how about SCO bcs   $40/$50  gets us in at net $4 – for August  expiry. or a farther month if we are bearish after July 4th.

  41. RB – keeps going down

  42. AI / Phil – We are actually adding AI to our application to eventually replace some project managers so, yes, going in the job killing direction!

  43. Wow, what a drop in /RB, 4% at $1.44.  Gotta ride out the storm, I guess.  

    Butterfly/Tangled – There's no hurry on either, I'd wait and see how they do.

    USO/Pat – Looking a lot riskier now at $44.75 than it did this morning at $46.50.  I do like the play, though.

    5% drop on /RB is $1.425 – looks like it wants to go there.  

    HOWEVER, this could just all be some desperate rolling over as we often get one sharp did during the week leading up to the end of the cycle.  They do tend to reverse so I'm sticking it out.

    SCO/Learner – There problem with a bull call spread is it has to go up and stay up.  One of the few cases I prefer just a call, so you can take advantage of a good move and cash out.

    AI/StJ – Just be careful when it starts asking you how you do your job.  surprise

    Image result for ai replacement cartoon

  44. I am in both /CL and /RB, 45.10 and 1.4430.  But, playing in August.

  45. 8 long /RB at $1.4579 now.   2 more at $1.425 but then I start tearing up…

    Just the 6 on /CL – one catastrophe at a time….

    Lone gunman got off dozens of rounds but not a word about assault weapons in the MSM.  Gunman is dead, apparently, Congressman is stable.  

  46. Putin is making panicky phone calls to Trump as his budget is based on $50 oil! Sanctions were supposed to be lifted already.

  47. Apparently Capitol Hill Police shot and killed the gunman.  As majority whip doesn't Scalise have a security detail ?

  48. albo,  FNSR do you have a BCS in play already?  I am waiting with a put sale to see if I get a good opportunity, otherwise, happy with my put sale.

  49. phil/shooting  Lone gunman was a Bernie supporter.  An assault weapon is a misnomer.  IF it turns out to be a AR-15 platform, that only means that its a specific rifle stock and a specific grip shape.  Terry Mcauliffe spoke about guns in his speech to the media just now.  I would be more than happy to have a discussion about guns if the MSM will also discuss that they are encouraging violence. 

  50. albo/security  Yes, he did.

  51. Alrighty then, I'm back in /RB after stopping out with a $2600 loss on a few attempts at getting back in. So now my avg is 1.463 on 2. I might add 1 more down here and take it off quickly on any pop. 

  52. 2 long /RB @ $1.4381  and 4 long /QM @ 45.00.  

    Had to bail on /CL, worked too hard (this past month) building my futures bank-roll to lose it all in a single day.  

  53. Some Republicans are spinning this into thank god the Capitol Police had guns and were there.  There is no tragedy that will cause Republicans to go against the NRA.  Think of all the horrific gun tragedies over the last 5 years and not one rule has changed, why would it change now? 

  54. Back to 2 /RB after adding one and taking quick profit on it. 

  55. Phil – "Lending/Jabob – I don't think there's much actual loan demand, that's the real issue.  People are not confident enough to buy homes or build buildings like they used to. "

    With CRE (commercial RE) already in the toilet, and about to implode, not so much demand. The banks CRE overexposure is another snake in the grass waiting to bite someones ass. 

    However, mortgages on recycled foreclosures, not for families who need them at a decent price, but for the flippers who want prices to double, at an all time high.  Again, C&I which has fallen off a cliff (commercial and industrial lending) is what makes an economy because that generates durable economic activity, capex, new hiring and healthy wage inflation.  

    Mortgage lending (the bulk being existing homes), financial transactions and speculative transfers are nothing more than paper shuffling. In the system, these transfer payments like anti matter and matter, get cancelled out and have a deleterious economic effect. viz. they do not add to real or nominal GDP, and only draw off funds which would have been invested in beneficial activity under normal circumstances.  See the Psycho Social Aspects of Spending.

    End result: less income, less spending, rinse, spin and repeat, as the global monetary and economic contraction continues unabated, getting sucked into a black hole, while the banks and band plays on and Out.

  56. Rustle   Illinois (where alleged shooter is from) and VA have Federal Background checks.  More gun laws will not stop this.  Cultural change will.  I am a hunter and I have a lot of guns, some AR platform.  I would happily give them up if we could find a way for everyone to do so.

    And there is no spin – the capitol police guns were pistols supposedly so if that is true, thats a big deal that they faced off against someone with a high capacity gun.  It's not hyperbole.

    The problem isn't guns, its our culture of violence and the fact that its celebrated.  In video games, in movies, in media.

  57. Hey Phil – have you posted LTP lately – always feel like I missed one of your suggestions….

  58. @hanjongin

    Just for the record, I am not a gun owner but have many friends who are and have no problem with people being allowed to buy guns.  But I do think semiautomatic weapons and the amount of ammo someone is able to buy should be limited along with better background checks, and at gun shows any background check since there is none and people who have any history of mental problems should not be allowed to own a gun.  This is just common sense.  Oh and an asterisk on the semi automatic ban, I do think in certain states like Nevada or the Dakota, etc you can allow semi automatic weapons since it is not as populated and there is plenty of desert space to go crazy.

  59. rustle/guns  I will say, and i have said it here before, that NO ONE needs a high capacity magazine.  When I hunt the most I use is 2 shots.  The NRA is a joke but until the culture changes those groups on the far left and right will succeed.

    Another question is why do people think they need guns to protect themselves from the Government, crime etc?  What can we do about that?

  60. rustle/guns part 2  High capacity mags are silly – but I will say that a shotgun will do more damage than a high powered rifle.  The AR hype is a misdirect.  The problem is societal.  If there are no guns, then crazies like this will use something else, say a nail gun.  We keep trying to treat the results and not the cause.  Violence is part of our society.  Have you been to a kids soccer game lately?  Parents are nuts.

    And I agree that those with a history of violent mental disorders should not be allowed to have guns.  But the devil is in the details – who and what defines this?

  61. Learner – I do have some BCS's on FNSR as well as some long stock and some short puts. There could be some interesting action following the earnings report tomorrow evening.  The average analyst is now forecasting revenue and earnings at the low end of the company's guidance, with the earnings estimate at .50.  I think if they report better than that, even it it's only at the company's guidance it should be viewed as a beat.  I continue to think any sell off is a good opportunity to sell some puts.  I don't believe the fiber optic stocks are close to peak earnings on this move.  Of course, I could be wrong.  JMHO.

  62. guns/hanjongin

    how about we agree that ban on high capacity mags, yes a shotgun can do more damage, but you can't shoot 10 people with one shot or get off as many rounds as quickly.  And we'll start with those that have been committed even for a day to a mental facility can not have access to guns ever.  Just that alone would've prevented a few massacres we have already had.

  63. Guns / Hanj – Other countries also have video games and violent movies and yet fewer gun deaths! Not sure there is a direct correlation there, but there sure is one to the number of guns. 

  64. Hanj -The lone gunman was a Bernie supporter and he used a rifle.  Isn't that heresy ?

    Do you know if the Congressman's security was secret service /

  65. @albo

    Capitol Police were there because it the WHIP was there.

  66. Stocky – "Your last paragraph sounds somewhat like a description of the next Star Trek movie about planet Earth"

    That was SPOCK trying to explain the impending macro economic SHOCK. Bones, Scotty, Uhura, Sulu and Chekov are all AWARE, shaking their heads at stammering Fed Head Yellen with her grey muppet like HAIR. The villains are from the planet QE, but aside from their crumpled nose's, they oddly look just like you and ME.  This epic's all about that evil ZIRP and his anti capital twin NIRP, who want hell bent revenge, naturally on one James Tiberius KIRK. Poet and don't even know it and Out for some Saurian Brandy, it does come in handy.

  67. stjeanluc/guns  In those countries with gun "bans" different weapons, or guns are used.  My point was that America does not have a gun problem, we have a violence problem.  

    Rustle/guns  I would prefer a ban for those that cannot get a waiver from a licensed mental health provider.  But anything done will be imperfect and offend someone.  

    Albo/heresay  could be but its being reported by many sources:

  68. guns/hanjongin

    So if I agree to the waiver, you are with me on ban on high capacity mags?

  69. oh and this guy must have been a terrible shot thank God.  +50 shots and he hit about 10%.  Thank God.

  70. rustle/ban  absolutely!!!  Max capacity at 4-5 rounds.  TOTAL.  And no speed loaders.  As I have said before here, if someone wants a high capacity gun, they should have to take additional gun safety, go through more robust checks, and buy INSURANCE that they have to pay for.  If that won't work, ban ALL HIGH CAPACITY mags.  

    BUT – what about confiscation of outstanding pre-ban mags?  Thats where the problem will be.

  71. for right now, let's just get this part done.  And this is how Congress used to work, shame it's not like that anymore.

  72. rustle/ban  I have convinced a number of my hunter friends that this could be a great solution.  And a couple of them are redneck take my gun from my cold dead hands guys.  

    On another note, what the heck is it with Pelosi's weird mumble/laugh??  

  73. Scottmi/OMER wheeeeee!! again today.

  74. pelosi  GREAT GREAT line from her: praying for the President and a successful presidency.  Class act Nancy.  I still don't like your politics or your nervous goofy mumble laugh but class act.

  75. OMER/Hanj – train is out of the station…

    Other topic: This is the second broadly reported issue of a Bernie Bro going postal (there may be more, unreported). Empirically, the evidence is stacking up that it is the Bernie supporters who should be denied guns while all of them are forcibly subjected to mental health evaluations.  Let's just get this part done. Agreed?

    See – who does the determining and with what criteria? I'm sure all those Trump supporting (supposedly) Fox commenters that Malsg saw would be all for it. Devil is in the details, indeed.

  76. scottmi/bernie  Ok, I agree to this.  I think Dems will too.  Let's unite!!

    OMER – i expect a pullback though.  I'm a seller of some at some point.

  77. Radicals in all aspects of life tend to be dangerous whether it's any religion or political affiliation or any other social group.

  78. rustle  you nailed it.  AGREED!

  79. rustle123 


    Here here

  80. ???  How did a Tyson chicken lobbyist get shot with the others?  Tough Biz…..

  81. NWL – boring little consumer products company (Rubbermaid, etc. $26B) with a follow through on breakout from consolidation yesterday.. looks like based on confirmation of their outlook.

  82. GDPNow forecast edges higher

    The Atlanta Fed tracker for Q2 had been in a steep downtrend for the past few weeks – moving from above 4% to 3% at last check. Following this morning's retail sales and CPI reports, it's back up to 3.2% – curious, as both prints came in shy of expectations, with retail sales posting the weakest month since January 2016.

    How does this happen… retails sales came in weak



  83. ?rustle – Don't you mean ?radical extremists?….  ;(

  84. ??? DIE LAPTOP!!!!! ;)

  85. NWL – not very convincing volume, yet, though… hmm

  86. 1020 – 'Die Laptop'   Set a spoof to Wagner and you may have the next Broadway parody sensation! ;-)   I can see it now.. opening scene of helicopter gunships blaring out the music…

  87. pstas – Speaking as a Wisconsin Native….. NOBODY cares about Chicago…. :)

  88. /CL and /RB settled down a bit.  VLO is trending upwards, along with XOM, OIH, and XLE.   

  89. Learner – Atlanta GDP Now is UP – "How does this happen… retails sales came in weak"

    It's as accurate as a weather prediction.  With 300 Phd's and beaucoup systems budget, the Fed has NEVER predicted an economic downturn in advance. What's the weather gonna be like?  Take a good look out your window.

  90. scottmi – Thanks for the :)

  91. Sanctions/StJ – Good article on Trump's dilemma in NYTimes:  Congress Set to Prod Trump, Who Denies Russia Meddled, to Punish Moscow

    "The president faces a looming decision on whether to veto bipartisan sanctions, partly for election interference that he says is a fiction created by Democrats."

    Scalise/Albo – It's my understanding that he had two guys and it took a while to put an end to it and other police showed up.  I also think one of his guys was shot.  Those assault rifles are hard to defend against, the only solution is for all of us to carry one (openly, of course) to even the odds. 

    Paul Ryan is shocked, speaking to Congress now.  

    Guns/Hanj – I think I'll wait for the actual details to come out, thanks.  As we know, guns don't kill people, people with guns kill people.  

    NRA/Rustle – Oh we knew that would happen.  It's like trying to pass anti-sword laws for Vikings – we're a gun culture and the NRA will spend untold Billlions to make sure we stay that way.

    Mortgages/Naybob – New homes, of course, are the point.  

    Background checks/Hanj – That's a good point.  That's why assault weapons need to be banned, not just "checked".  If people don't have the ability to fire 100 rounds a minute, then there would be a lot less mass-murders by lone gunmen but I'm sure just as many deer will be defeated – even with less powerful weapons.  

    Image result for bambi gun

    LTP/Rexx – That's tomorrow's project.  

    Protect from Government/Hanj – Well THIS Government finally makes me feel like I need a gun to protect myself from it! 

    What defines/Hanj – Oh I can pretty much tell from most people's Facebook feed and browser history.  I'm sure we can get Watson on the case to decide who can carry and who should be carried away… cool

    Violence/Hanj – I don't blame the media.  It's a fantasy – we all grew up watching Mr. Rogers and we don't have an epidemic of niceness, do we?  Too many countries are 90% less violent than we are and watch the same MSM.  What they don't have is the ready availability of weapons or the culture that supports it (because the NRA will not allow children to be taught that guns are bad).  We got people more or less off cigarettes after 40 years of changing the narrative – we need to do the same with guns.

    Image result for cigaretter use decline

    The problem is the NRA blocks any step in that direction (as the Tobacco Lobby used to do). 

    Bad shot/Hanj – That proves he was a Democrat.  As to a ban:

    Image result for australia gun ban

    Gun Laws/Pstas – When you pass ridiculous ones that are full of holes they don't work.  I guess by that logic we shouldn't have drug laws or speeding laws or health laws or any laws because criminals are only going to break them anyway.  I mean really, do you actually think about the talking points you post here or do the pass unfiltered from your Glen Beck newspaper to us without passing any sort of critical test in your own head?  Not only that but, despite taking what the Chief said out of context, the article still doesn't live up to the headline as he wants TOUGHER laws to get the gang elements in-line.  Weak laws watered down by the NRA and their pet Republicans don't work – that we can agree on!  

    GDPNow/Learner – I have no idea where they come up with these changes.  Perhaps they have access to things ahead of us.

    1 hour to the Fed! 

  92. Oil – Brent and WTI – First death cross (50 dma crosses below 200 dma) since late August in 2014..  after those fateful FOMC minutes in early July which defined Oct as when the punch bowl would be taken away. A sign? and Out.

  93. Never thought I would actually be debating if I should write some calls on TSLA if it hits 400 quickly. 

  94. Nice Day – I need some air….. Have a good day everyone.

  95. As usual, your kneejerk reaction results in missing the point completely so I will pass and stick to trading ideas. End of comment. 

  96. phil/bambo  haha.  As a hunter, I hate these events.  I hate the taking of anyone's life.  I personally only hunt what I eat or what I can donate.  You would be amazed at how many families I have given meat to from a hunt that tell me that it is the only meat they get FOR THE YEAR.  

    And the arguement from some that want to guns to protect themselves from government is BS.  If the government wants to take you out, they can do so without ever leaving their chair.  

    I do like the Australian gun laws bc they allow for legal gun ownership.  I would have no problem with them.  But this is the US, not Australia.  I think it would be hard to do the same here.  BUT – it doesn't mean we should stop trying. 

    How's that:  A gun owner who voted for Trump who would support more gun control laws.

  97. The fed isn't going to help us with oil and gasoline longs, are they? 

  98. Record High Wednesday – crazy. In the subset of 'new highs' that one of my screens pulls up, included at new (dividend corrected) ALL TIME HIGHS are (in order of highest 'sizzle index'):  NWL, DHI, PGR, AGNC, BA, NLY, PEP, JNJ, ABBV, MO, TWO, BK…  Superclose to all time highs include TCEHY and WMT.

  99. Hanj – you are a riddle, wrapped in a mystery, inside an enigma (and I don't really want the key).

  100. Scott – AGNC & NLY aren't at all time highs.  Didn't look at the others. ;-)

  101. scottmi/riddle  oh you want the key….you really want it.

  102. another shooting in San Fran UPS location.

  103. Here is how I get into trouble. I waited for what I thought were decent entries and have an avg of 1.445 on gasoline and 45.15 on oil. So I sit and wait and see thing like Nat comparing to 2014 and I lose my nerve. So here's hoping this turns up a bit before I completely lose my resolve 

  104. TCEHY – Why Tencent will be the biggest company in the world by 2025

  105. albo – "dividend corrected" they are.

  106. scottmi/tcehy  looks great – whats the catch??

  107. Prophet Charts (included with ToS) shows dividend and split corrected charts.

  108. TCEHY owns 5% of TSLA.  Sweet!

  109. TCEHY/Hanj – no catch. Been hearing about their unstoppable growth lately, laying out the rationale for why they will have continued, accelerating growth to dominate the whole of the pan-Asian world.

  110. FU JO!!!!!

  111. Thanks, Scott.  I missed the dividend corrected part.  Seems to me that their recent strong moves are counter-intuitive with the Fed raising rates..  Any idea why they are moving up ?

  112. Other than possibly floating rate loans.

  113. scottmi/tcehy  I'm a buyer of a starting position – haven't decided if i will buy here or wait until it goes higher.

  114. AGNC,NLY/Albo – I will defer to Phil for any insight on these guys. My best guess is yield-seeking funds rotating out of bonds and nasdaq

  115. Phil – RB do you think we have seen the bottom, or we have to wait until after the fed decision?

  116. FU TSLA!!!!

  117. Buyer – Hanj – ha! suggest you wait for the top, then buy. ;-)   I'm going to buy 20 shares for each kid's account. and then we'll see. Jabo, will you let us know if you buy? ;-)

  118. scottmi/jabo  You mean Jinxsy?  Kidding Jabo.

  119. TWTR     big sale of 2019 $15 puts today

  120. 15 mins

  121. ftr down 3+% again… dangit!

  122. I always switch my ES chart to 1 min timeframe to be reminded of the idiocy of the market short term after these announcements.

  123. /TF still red – strange day so far.

    Gun control/Hanj – I'm glad you have a balanced view.  I have no problem with hunting food – I'm a devout carnivore but too lazy to get my own and I do realize someone has to.  I'm surprised some McDonald's in Texas hasn't come up with a happy meal kids can chase down on their own.   It's mainly the assault idiocy that pisses me off.

    Fed/Craigs – I don't think so, no quick bounce either despite 96.50 Dollar.

    AGNC/Scott – Flight to safety still in progress I think.  Both very cheap stocks with good dividends.

    /RB/Bulls – I hope it's a bottom, I have 8 longs!   I need 0.02 just to get even…

    OK, here we go:

  124. Fed raises 0.25% to 1-1.25% and another move still expected and 3-4 more next year so we're firmly at 2.5% next year.  Fed notes inflation still too low so firmly in tightening mode.  Also still talking about tapering QE over the next year by essentially 100% over the next 12 months.  Not bullish at all but mostly beaked in it seems – very little reaction.

  125. Albo – "Other than possibly floating rate loans."

    Attached to LIBOR. Depends if you are long (hold em and collect) or short (issued them and must pay).

  126. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee currently expects to begin implementing a balance sheet normalization program this year, provided that the economy evolves broadly as anticipated. This program, which would gradually reduce the Federal Reserve's securities holdings by decreasing reinvestment of principal payments from those securities, is described in the accompanying addendum to the Committee's Policy Normalization Principles and Plans.

  127. Thanks, NN.

  128. Statement:

    Information received since the Federal Open Market Committee met in May indicates that the labor market has continued to strengthen and that economic activity has been rising moderately so far this year. Job gains have moderated but have been solid, on average, since the beginning of the year, and the unemployment rate has declined. Household spending has picked up in recent months, and business fixed investment has continued to expand. On a 12-month basis, inflation has declined recently and, like the measure excluding food and energy prices, is running somewhat below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.

    Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, and labor market conditions will strengthen somewhat further. Inflation on a 12-month basis is expected to remain somewhat below 2 percent in the near term but to stabilize around the Committee's 2 percent objective over the medium term. Near term risks to the economic outlook appear roughly balanced, but the Committee is monitoring inflation developments closely.

    In view of realized and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal funds rate to 1 to 1-1/4 percent. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.

    In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

    The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee currently expects to begin implementing a balance sheet normalization program this year, provided that the economy evolves broadly as anticipated. This program, which would gradually reduce the Federal Reserve's securities holdings by decreasing reinvestment of principal payments from those securities, is described in the accompanying addendum to the Committee's Policy Normalization Principles and Plans.

    Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Charles L. Evans; Stanley Fischer; Patrick Harker; Robert S. Kaplan; and Jerome H. Powell. Voting against the action was Neel Kashkari, who preferred at this meeting to maintain the existing target range for the federal funds rate.

    Wow, amazing non-reaction.  Fed exactly as expected I suppose and that's good, no big shocks ahead but silly for /DX to be below 97, that's an easy long at 96.60 still.  

    CNBC makes good point that 5 new Members will be in next year so there's no way to be sure what they'll actually do next year.

  129. well on that news I'm taking the kids to the park.

  130. The Board of Governors of the Federal Reserve System voted unanimously to raise the interest rate paid on required and excess reserve balances to 1.25 percent, effective June 15, 2017.

    And here is Beezlebub chapter and verse.

    The Committee intends to gradually reduce the Federal Reserve's securities holdings by decreasing its reinvestment of the principal payments it receives from securities held in the System Open Market Account. Specifically, such payments will be reinvested only to the extent that they exceed gradually rising caps.

    For payments of principal that the Federal Reserve receives from maturing Treasury securities, the Committee anticipates that the cap will be $6 billion per month initially and will increase in steps of $6 billion at three-month intervals over 12 months until it reaches $30 billion per month.

    For payments of principal that the Federal Reserve receives from its holdings of agency debt and mortgage-backed securities, the Committee anticipates that the cap will be $4 billion per month initially and will increase in steps of $4 billion at three-month intervals over 12 months until it reaches $20 billion per month.

    The Committee also anticipates that the caps will remain in place once they reach their respective maximums so that the Federal Reserve's securities holdings will continue to decline in a gradual and predictable manner until the Committee judges that the Federal Reserve is holding no more securities than necessary to implement monetary policy efficiently and effectively.

    Gradually reducing the Federal Reserve's securities holdings will result in a declining supply of reserve balances. The Committee currently anticipates reducing the quantity of reserve balances, over time, to a level appreciably below that seen in recent years but larger than before the financial crisis; the level will reflect the banking system's demand for reserve balances and the Committee's decisions about how to implement monetary policy most efficiently and effectively in the future. The Committee expects to learn more about the underlying demand for reserves during the process of balance sheet normalization.  TRANSLATION: WE HAVE NO CLUE.

    The Committee affirms that changing the target range for the federal funds rate is its primary means of adjusting the stance of monetary policy. However, the Committee would be prepared to resume reinvestment of principal payments received on securities held by the Federal Reserve if a material deterioration in the economic outlook were to warrant a sizable reduction in the Committee's target for the federal funds rate. Moreover, the Committee would be prepared to use its full range of tools, including altering the size and composition of its balance sheet, if future economic conditions were to warrant a more accommodative monetary policy than can be achieved solely by reducing the federal funds rate.

  131. Guns;;;; the crackdown in Australia made guns so expensive the criminals can't afford to buy them so they can't do their crimes anymore which results in them having to go on welfare. Is that what we all want?

  132.  Anyone know what just popped oil? Oh and yay.

  133. Now we're waiting on Yellen's speech.

    Speaking of powerful lobbies:

    If it wasn't for foreign press, we'd have no press at all!  

    Possibly wishful thinking but here's the IEA quarterly forecast:

    We're sure not seeing the evidence so far.

    Guns/CDN – My gosh, you're right, let's go out and give all our lazy welfare queens guns so they can go out and make a proper living – GENIUS! 

    Oil/Craigs – Was just oversold and no good reason to stay there.  /RB still dead.

  134. So much for the pop.  That was quick

  135. craig/ I don't think of a dime as being a pop but either way, oil seems doomed. I live in an oil town that still thinks we will go back to 90 soon.  In a state of denial

  136. Cdnjay…….where are you?  I'm in Edmonton.

  137. CDN – I live in an oil town, Houston, and no one is saying 90.  70 tops , and in 2017, and they are delusional as well

  138. Oil – only question for me is if it will hold $25 when it gets there, or if we get to have $10 oil for a while again.

  139. We're still reacting to April numbers that have been released today: . says Apr commercial stocks rose 19 mil barrels to 3.05 bil barrels

    Also this:

    This is what I was saying last week about real disposable income declining.  The bottom 80% are still having a very rough time.

    Good WSJ article on Fed make-up now and future.

    No change in dot plot – all as expected generally but and Dollar should be stronger.

    Forecasts have been updated too:

    No Trump 4% growth here.  I can't believe there are actually people who thought that was real but it does mean their budget is dead in the water as it's not even in the realm of reality.

    Think about what's going on here – the Fed sees barely 2% growth for the next 3 years AND the "Longer Run" yet they are still forced to tighten because that's all we can manage with maximum stimulus.  In two years, they intend for us to be at 3%, double where we are now (triple where we were last week, really) and think of the impact that will have on Corporate Profits.

    Still, at 1.25% – money has nowhere to go but the stock market.  As long as the anemic growth continues, 2% GDP growth vs 1.25% rates means you are better off in the market than the alternatives but I still think we'll see a rotation to more sensible stocks. 

    Denial/CDN – Not just denial, those people are way out of touch with reality.  Hopefully they don't run the town.

  140. The dollar likes the fed

  141. Start of fed balance sheet normalization this year appears to be new.. perhaps this is not liked by the markets.

  142. Wheeeee on /DX at least.  First thing that's made sense all day.  That was the easiest money in ages! 

    This chart's too slow, just tested 97.

  143. I have several associates who are small wildcatters drilling 2 or 3 wells per year.  All still active and $50 keeps them happy. 

  144. CDN jay is in Calgary which is far more delusional than Edmonton

  145. CDN – I said that when oil went up 3 dimes in a minute. Looked like a pop to me.

  146. craig/ the scale on my chart is too narrow i guess.  And Phil, oil kind of runs this town, its about 35% of the economy directly.  Funny thing is that housing pricing have only dipped slightly and we were very high.  No one is migrating in anymore as jobs are scarce. Crime is up significantly althouth the criminals here don't have Semi Automatics.  I have been waiting for the shoe to drop but no sign of it.  Guess we don't believe in economics

  147. Learner – "Start of fed balance sheet normalization this year appears to be new.. perhaps this is not liked by the markets."

    Understatement.  When the biggest bond customer pulls out of the market, as much as a jubilant penetration, the withdrawal can have much worse effect.  This means others must step up, taking away their punch bowl (excess reserves) for speculation in equities and commodities.  viz. when QE purchases ending in Oct 14, were telegraphed in July 14, this precipitated a 75% collapse in oil prices. Again, the last time a death cross was seen in Oil.  Bonus points, think rising cost of loan funds and all things tied to LIBOR, mortgages and floating bonds. I gotta run some numbers and Out. 

  148. aapl amzn nflx pcln down

    TSLA up


  149. GDP / Phil – I just don't see many catalysts for sustained growth rates over 2% – tax cuts won't do it and spending cuts have the opposite effect. The law of big numbers is starting to catch up to us. When you have a $15T economy, 4% is $600B per year. China generates 6% by adding 20% of debt each year! Not a great ROI!

  150. Yellen saying inflation is lower due to idiosyncratic factors – lower cell phone plans, prescription drug prices ..?? really.  drug prices..

  151. Phil – Jun 25 UUP calls – roll?  or ditch?

  152. Guns ;

    I live  4 months in TX each year and 8 months in  Europe, mainly Spain and my comment about this matter perhaps is a bit different.

    I support and enjoy the fact that in TX I have a house empty most of the year with a backyard and garden open (as most of you do), until now nobody in 10 years  has enter,  nobody will try to enter if the criminal  assume you can be armed in your own house…in the other hand it surprise me that having so many million guns in homes and cars (over 300 million) you have so low death rate (comparing with Australia).

    In Europe you have no gun problem but we have a lot petty crimes, pickpockets in Barcelona are a plague, stealing bikes parked in the street in France etc. but we don´t have deaths. 

    Assault rifles, grenade launchers and other militar grade guns must be prohibited, the U.S Constitution was redacted in a moment of extreme violence in U.S, with the West still to conquer, I´m sure that Jefferson, Washington or any other could see what it´s today they could condemn it.

  153. Phil – RB do you still see this thing going up toward the 4th?

  154. Normalization/Learner – Been a long time since we rode without training wheels.

    Shoe/CDN – Yeah, it's going to get ugly if oil is back below $40 for you guys.

    Stepping in/Naybob – Don't forget this is where the Fed can lose control because people don't "step in" out of generosity – to do so they need to be enticed by rates and the Fed has no real idea what natural rate will have to be offered to attract real bond buyers – especially at the rapidly expanding levels the Trump budget calls for (even with the BS math).

    TSLA/Jabob – Best to ignore them for a couple of years.  

    GDP/StJ – No way with the Fed removing QE – we'll be lucky not to dip negative.  

    Drug prices/Learner – I think that's because Obamacare has lowered effective prices (to the consumers) considerably.  That will all be reversed, of course.  

    UUP/Jeff – I want to see where they are tomorrow.  Can't get much worse.  

    /RB/Bulls – Yes but we'll need to roll to the Aug contracts next week (or maybe Friday). 

    Well, not too exciting other than Dollar popping back over 97.  I'm going to try to get ahead of traffic so I'll catch up when I get home this evening (have a meeting on the way back).

  155. /CL     After being over 1 year doing trades in oil i´m pretty sure that market reactions are exactly the opposite of what logic recommend, as per today, it was "obvious" that price should contain or go up, I don´t know if there is a way in which algos and bots receive information of where are most of the open orders in real time.

  156. Since TSLA is working out so well, I have started my own eco car company.  Even more eco than batteries.  Here is the prototype, will be looking to raise 1bn immediately.  My company has not lost a dime:

  157. lol rustle…

  158. Phil// With the fed raising rates ARR is still going up.  One would think with the interest rate on the way up, ARR's interest payments will also go up and there by reducing their net revenue.  So what makes 'ARR' go up in these market conditions?  Thanks.

  159. Looks like the SLW (WPM) trade of the year is working out well for everyone.  WPM @ 20ish, which is above the top of the spread we put on (15/20 bcs)

  160. Good article on 538 on how Trump is hurting populists parties in Europe:

    Nothing like sheer incompetence to scare people away!

  161. Hanj-You try to sound so magnanimous, " I donate to others what I don't eat." What a joke. You deprive other living creatures of their lives so they don't live to see, feel and enjoy another day just for the "joy" of killing them and the power you feel when you do it. AND your not part of the problem with gun violence!!  I have witnessed gun nuts in Wisc who blow away a fawn while its eating and leave it lay there while the doe stands over it for days. It was such a blast to blow away this beautiful creature and whether it was eaten, or not makes no difference. If you love nature and watch and interact with our Mother, you do end up hating guns and eventually those who perpetuate this injustice to other living creatures, or beings.

  162. StJL – "GDP / Phil – I just don't see many catalysts for sustained growth rates over 2% – tax cuts won't do it and spending cuts have the opposite effect. The law of big numbers is starting to catch up to us. When you have a $15T economy, 4% is $600B per year. China generates 6% by adding 20% of debt each year! Not a great ROI!"

    Phil – GDP/StJ – "No way with the Fed removing QE – we'll be lucky not to dip negative."  

    Like I said, 1% bumped up to 1.75% being generous, as in cooking the books and really negative.

    Phil – "Don't forget this is where the Fed can lose control because people don't "step in" out of generosity – to do so they need to be enticed by rates and the Fed has no real idea."

    Oh So True… As commented, THEY HAVE NO CLUE.  The dealers are REQUIRED to buy, but others, not so much.  Unless of course, your Japan or China who hold so much, they have a vested interest.  Pun intended. It's going to get interesting in short order. Pun indended. Again, refer to that oil chart from 2014 for a possible clue. Still running numbers and Out.

  163. gun violence does have it place sometimes, like last weekend near Helena, where 623 gophers died  due to me and my buds .22 scoped rifles.

  164. pirateinvestor 


    Here Here !

  165. Phil – RB – why we need to go to the August contracts? The current one does not expire until 6/30.

  166. Isn't shares of TSLA going to be released tomorrow from being locked up????

  167. or is that wishful thinking?

    i thought i saw something about this week but i am not sure?

  168. JABO, yes there is a secondary offering that gets unlocked tomorrow. I am hoping this run-up has been setting up the price to be high for all those secondary holders to sell. We’ll see.

  169. jelutuck--from your mouth to ……


  170. Latch, you live in Montana? I'm drawn to the state, seems like my kind of country.

  171. mckuc- went to college there, School of Mines..Butte,  My favorite state , after Texas of course.  

  172. Have 1 RBN7 at 1.438  and want to pick up another at 1.4315. 

  173. 2 /RBQ7 long at $1.4381  4 /QMQ7 long at $45.00

  174. thanks joseph. I will roll to RBQ7

  175. Hola people!  

    I'm always so happy to be home – don't know why I leave…

    Futures down a bit but nothing drastic, Dollar hanging just below 97.  Gold and silver lost almost all their gains, oil and gasoline still near lows.  

    LOL Rustle, let's start a Kickstarter immediately.  

    Rates/Rookie – The very slow path of the raise gives the REITs plenty of time to adjust.  They've been priced like there will be sudden damage.  And, of course, 3% bond rates aren't going to pull people away from 10% dividends.  

    Trump/StJ – I said a long time ago the best thing for the Dems would be for one of those idiots (any of them would have done) to win while they still had control of Congress so we could be reminded what a disaster Republicans are when they get their way.  Last time they controlled Congress and the President before the Bush debacle was Hoover (and Ike one term) and that was enough of a lesson to keep the Dems in charge of the House until 1995 with only two interruptions.  Sadly, America has forgotten the lessons of the Great Depression and the crony Capitalism that led up to it but Trump is reminding us very quickly so maybe he will make America Great again, for the next 70 years after we get rid of him…

    /RB/Bulls – Because 6/30 is before 7/4 and you don't want to get forced out days before the event we were waiting for, do you?  

    TSLA/Jabob – Yep, lock-up ends tomorrow, will be interesting.  

    • As expected the Federal Reserve boosts the Fed Funds rate by 25 basis points to 1%-1.25%.
    • Looking at the policy statement, the Fed expects to begin shrinking its balance sheet at some point this year. More details in the Policy Normalization Principles and Plans.
    • The vote in favor was unanimous.
    • Moving to the economic projects, the "dots" continue to show an expectation for one more rate hike this year, and a terminal Fed Funds rate (roughly by the end of 2019) of 2.9% (actually down a hair from 3% seen in March).
    • The UE rate is now seen ending 2017 at 4.3% vs. 4.5% expected three months ago. It's seen at 4.2% by year-end 2019 vs. 4.5% expected three months ago.
    • Core PCE inflation is now seen ending 2017 at just 1.7% vs. 1.9% expected three months ago, but still getting to 2% next year and 2019.

    • The press conference got underway minutes ago, and the Fed Chair is reading her opening statement.
    • Watch live here
    • Economic growth appears to have rebounded, says Yellen, noting – among other things – stabilization in the labor force participation rate as signaling a stronger jobs market. Recent weak inflation readings (including this morning?) appear to have been driven by "one-off" items.
    • The Fed expects to begin reducing its balance sheet this year. While the expectation is that the balance sheet is cut "appreciably" below the current level, it will remain above pre-crisis levels.
    • So far no hint of dovishness from the Fed boss.
    • She has not had any conversations with the president about her future (her term as Fed chair ends early next year); asked if she desires to stay on, she declines to answer.
    • Returning to inflation, Yellen isn't buying the recent low readings, instead blaming them on "idiosyncratic" items, such as cell phone plans. "It’s important not to overreact to a few readings and data on inflation can be noisy."
    • Fans will remember a decided dovish tilt to the economic projections and Yellen press conference three months ago. Not so today – Yellen is dismissive of anything that might suggest softness in the economy. Up nearly 1% earlier in the session, gold (NYSEARCA:GLD) has returned to about flat for the day. Down 11 basis points at one point today, the 10-year Treasury yield is now off 7 bps.
    • Asked about the gap between market (dovish) and Fed (more hawkish) expectations, Yellen says that's not unhealthy.
    • Addressing a question about potential new Trump Fed appointees, and their decidedly anti-regulatory tilt, Yellen says she does not believe regulations have played a big role in holding back the economy.

    • Might the FOMC surprise with no rate hike this afternoon? There's a buying panic at the long end of the Treasury curve, with the 10-year yield down 10 basis points to 2.115% – another low for the year, and a level not seen since the day after the U.S. election.
    • Meanwhile at the short end, traders are pricing in only this afternoon's rate hike, and then nothing more for 2017.
    • There was some weak economic data this morning – retail sales had their worst month since Jan. 2016, and core CPI continues to fall – but it's hard to imagine this news causing a 10 basis point drop in the 10-year.
    • The major averages are flat, but the KBW Bank ETF (KBE -1.7%) and KBW Regional Bank ETF (KRE -1.5%) are both sharply lower – partly reversing a big run higher over the previous week.
    • Bank of America (BAC -1.6%), Citigroup (C -1%), JPMorgan (JPM -1.4%), Morgan Stanley (MS -1.7%), U.S. Bancorp (USB -1.5%), New York Community (NYCB -2.3%), PNC Financial (PNC -1.2%)

    • U.S. crude oil tumbles to fresh lows, now -3.4% at $44.90/bbl, on the heels of EIA inventory data which showed a smaller than expected draw draw of 1.66M barrels vs. the consensus outlook for a much larger draw.
    • Last night's API inventory data showed a build of 2.753M barrels of oil for the week ending June 9, compared to the previous week's draw of 4.62M barrels.
    • Oil futures have taken out last week's lows and are now at the lowest levels since November 2016, and the energy sector (XLE -2.4%) has slumped to the bottom of the S&P.

    • The EPA said yesterday that it would propose a two-year stay of the Obama administration's oil and gas industry methane emissions standards while the agency reconsiders the regulation.
    • The move would extend the 90-day administrative stay announced on May 31 of previous EPA rules requiring oil and gas companies to capture leaking emissions, obtain engineer certifications and install leak detention devices.
    • Obama's EPA had finalized the rule last May as part of a federal effort to cut pollution of methane; drillers say the rule would be costly and duplicative, and have urged Trump administration regulators to reconsider the measure.

    • For the first time, Monthly electricity generation from wind and solar, including utility-scale plants and small-scale systems, exceeded 10% of total electricity generation in the U.S. for the first time, based on March data, the EIA reports.
    • Electricity generation from wind and solar has grown with increases in wind and solar generating capacity; on an annual basis, wind and solar made up 7% of total U.S. electric generation in 2016.

    • Occidental Petroleum (NYSE:OXY) CEO Vicki Hollub predicts U.S. oil prices will rise to "a solid $50 or above" over the next 12 months but that it is still too soon to say the oil crisis over.
    • "Inventories need to come down more," she tells Fortune. "There needs to be more certainty around the price today. Although we're close to $50, there's still uncertainty in the markets around whether it's going to stay at $50 or whether it's going to go lower."
    • Hollub also says OXY expects to raise oil production over the next few years to pre-downturn levels, up by 80K boe/day, or ~14% over the company's 2016 output from ongoing operations.
    • Fracking service providers may be hit especially hard if oil prices fall any further, if E&P companies borrow a tactic from last year’s slump in saving money by doing the initial drilling but not the final frack jobs that complete wells.
    • Analysts and company officials say a drop to $40/bbl oil could halt rig growth for smaller drillers in less active U.S. shale basins, and undercut efforts by fracking service providers such as Halliburton (NYSE:HAL) and Patterson-UTI (NASDAQ:PTEN) to raise their fees.
    • Oil at $45/bbl “slows most U.S. shale plays" – including the Bakken, gassier parts of Eagle Ford and the Niobrara – and under $40, the SCOOP play in Oklahoma and even the Delaware and Wolfcamp formations in the prolific Permian Basin start losing money, UBS analysts say.
    • Oil and gas companies should consider cutting their growth forecasts now but probably will not, Mizuho’s Tim Rezvan says, since 2017 production is largely locked in with new drilling rigs in place, but companies may discuss possible reductions to 2018 estimates when they report Q2 earnings.
    • Qatar will sign a deal to buy as many as 36 Boeing (NYSE:BA) F-15 fighter jets from the U.S., despite efforts by Saudi Arabia and other neighboring countries to isolate the country for what they say is its support of terrorist groups and Iran.
    • U.S. Secretary of Defense Mattis and Qatar's Defense Minister completed the $12B agreement today in Washington, according to the Pentagon; Congress last year approved a sale of as many as 72 F-15s in an agreement valued at as much as $21B.
    • The deal is the latest in a string of mixed messages sent by the U.S. administration: Pres. Trump appears to back Saudi Arabia, Secretary of State Tillerson has tried to take a more neutral tone, and the Defense Department has praised Qatar, which hosts the regional headquarters for U.S. Central Command, which includes a major air base the U.S. depends on to target Islamic State.
    • Insurance companies say they are not obligated to help pay for Duke Energy's (NYSE:DUK) multi-billion dollar coal ash cleanup because DUK long knew about but did nothing to reduce the threat of groundwater contamination.
    • The claim is in a filing by lawyers for nearly 30 U.S. and international insurance companies that were sued by DUK in March to force them to cover part of the utility's coal ash cleanup costs in North and South Carolina.
    • DUK says the insurance policies generally promise to help pay for property damage "caused by an occurrence," even if liability for an incident does not become known until decades later.
    • The insurance companies say they are not on the hook to pay, because DUK stored its coal ash in unlined pits as part of its normal practices, thus any property damage "was caused intentionally, by or at Duke's direction."
    • DUK was well aware that burning coal to generate electricity leaves byproducts containing toxic substances that can contaminate groundwater, according to the insurers.

    Gold miners sell off as spot price falls following Fed rate hike

    • Gold miners post broad losses as spot gold prices drop after the Fed forged ahead with an interest rate increase and additional plans to tighten monetary policy; gold futures now -0.6% to $1,260.40/oz.
    • SPDR Gold Shares ETF (GLD -0.6%) retreats back towards yesterday's lows of the week near the $120 level.
    • Among the bigger precious metal names: ABX -2.1%GG -3.1%NEM -2.2%AEM -4.4%WPM -3.1%KGC -3%EGO -3.3%RGLD -2.2%IAG -7%.
    • Bloomberg Intelligence wrote earlier this week that if the trend of the current rate tightening cycle is sustained, gold should bottom within a few days of today’s FOMC meeting, if history is a guide.
    • Source: Bloomberg First Word
    • U.S. Steel (X -4.2%) plunges after Axiom Capital analyst Gordon Johnson predicts the company will be forced to cut its EBITDA guidance again when it reports later this summer.
    • Johnson says his "proprietary X EBITDA guidance tracker analysis" points to another ~28% cut; "on average, using a 90% confidence interval, over four observations (2Q16-1Q17), our approach has predicted X’s EBITDA within 96% of the guided number – X began guiding EBITDA this way in 4Q15."
    • Johnson, an establish bear on U.S. Steel, rates X as a Sell with downside to $14 by year-end.

    • At issue is a Texas law prohibiting auto dealerships and vehicle manufacturers from sharing ownership.
    • Berkshire Hathaway (BRK.ABRK.B) got into the auto dealership business in a big way in early 2015 thanks to its $4.1B purchase of the Van Tuyl group, then the country's 5th-largest auto retailer. Trouble is, Berkshire is also the owner since 2005 of Indiana-based RV manufacturer Forest River.
    • Berkshire earlier this year attempted but failed to push through a change to the Texas law allowing an exemption if the dealerships and manufacturers sell different type of vehicles.
    • Berkshire Hathaway Automotive CEO Jeff Rachor: "The dealer franchise laws are written so broadly that they prohibit an apple manufacturer from owning an orange dealership. They also prohibit a financial holding company from owning both an apple manufacturer and an orange dealership.”
    • The bureaucrats at the Texas DMV have determined that Berkshire's dealerships and RV manufacturer should lose their licenses. Berkshire has requested a hearing to dispute. Also possible is some sort of settlement between Berkshire and the State.
    • Source: Nicole Friedman at the WSJ

    • Guggenheim remains convinced that Macy's (M +1%) is an "iconic brand at a good value" after meeting with the company's upper management.
    • Analyst Robert Drbul points to Macy's merchandising initiatives on big-ticket items and sees upside with the Backstage business.
    • His positive view on Macy's (Buy, $26 PT) is also based on the prospect of some real estate moves.
    • Drubl: "Macy's continues to evaluate all of its real estate opportunities including whether it should sell a store, sell off a parking field or an off parcel; team with a developer and contribute a property; and/or co-invest with a developer, as management remains focused on creating value for shareholders in various forms. Macy's has monetized various stores, including the Brooklyn, Pittsburgh, Minneapolis, and Men's Union Square locations, and plans for the flagship Herald Square location in NYC are being developed."
    • Shares of Macy's are down 37.2% YTD.

    • IDC updates the firm’s predictions of worldwide IoT spending to include $800B in spending this year (+16.7% Y/Y).
    • 2021 forecast expects spending to hit $1.4T. 
    • Largest IoT segments in 2017: manufacturing operations: $105B; smart grids for utilities: $56B; freight monitoring: $50B;  product asset management: $45B; and smart building tech: $40B. 
    • Growth segments expected to soar in 2021 include smart home tech with an anticipated 19.8% CAGR, airport automation with 33.4% CAGR, and electric vehicle charging with 21.1% CAGR. 
    • Related IoT stocks: (QCOM -1.1%), (CSCO -0.7%), (INTC -1.3%), (AAPL -1.4%), (AMZN-0.8%), (AMD -2%
    • Nvidia (NASDAQ:NVDA) Automotive head Rob Csongor testifies in front of a Senate committee today about the importance of artificial intelligence in self-driving cars.
    • The Commerce, Science, and Transportation Committee was hearing from a panel of manufacturers and industry experts about autonomous vehicle testing and deployment
    • “Our technology is being used by more than 225 automotive companies worldwide, including Audi, Tesla, Toyota, Volvo, Mercedes and others. We are now at the point where we can create AI systems that have levels of perception and performance far beyond humans, and importantly, do not get distracted, fatigued or impaired,” says Csongor. 
    • Csongor specifically mentioned the AI capabilities of Nvidia’s Drive PX computing platform. 
    • Legislation has lagged behind innovation in autonomous vehicles and the panel discussed the need for nationwide standards that would allow for more thorough testing during development
    • Apple (NASDAQ:AAPL) iPhone launches attract a deluge of anonymous rumors, but occasionally a supplier provides the information. Nikkei reports that supplier Wistron confirms the new phones will feature wireless charging and a more waterproof design.
    • "Assembly process for the previous generations of [iPhones] have not changed much, though new features like waterproof and wireless charging now require some different testing, and waterproof function will alter the assembly process a bit," says Wistron president and CEO Robert Hwang.
    • Wistron will supply about half of the screens for the 5.5-inch iPhone with Foxconn filling the rest of the orders.

  176. Trump could not leave well alone! Comey tells him that he is not under investigation so Trump fires him and now he is under investigation. And that's barely 5 months into his presidency! That has to be some kind of a record I guess. People in the White House needs to start getting lawyers now. If he found guilty I guess Congress doesn't have to impeach him, but the hypocrisy of people who rushed to impeach Clinton for the same thing might be too much for a big enough part of the electorate to become dangerous for one's career. The odds of impeachment have probably increased a bit now.

  177. And no Phil, people will never learn! Did the average Joe do so bad under Obama that we had to put in power again the guys that led us to the worst financial crisis in a generation? Sure inequality has not gotten better, but who made it worse over the last 25 years? Oh well… 

  178. Phil – RB Bulls — you are one of us right?

  179. looks like Scalise's injuries are more serious. Who knew Democrats could be so violent?

  180. Phil – I got cold feet on RB. Looking at the yearly chart, it seems like 1.4 is the next stop down. Buying here at 1.43 seems in the middle of the channel. 1.3 is the floor and that is where this train is heading. just too much inventory and not enough driving before the July 4 weekend. …out.

  181. Yes Latch – I like the quote I heard today of us Dems being "Quiet and Reserved until They're Not"…..


    Mr. scalise is fortunate that Dem was a bad shot.

  182. Latch – "where 623 gophers died  due to me and my buds .22 scoped rifles."

    Did you eat them? There exists a personal hell… a room where one is repeatedly: strapped into a chair, the chair pops up and back down, through a hole that opens in the ceiling above, men with giant hammers are waiting to play… Whack A Mole!!!  Solace? Perhaps some of those 623 were gopher hunters in a previous incarnation, only to be born again the next day, as a gopher. Thank you for my Serling zen and karmic journey for the day and Out.

  183. Phil,

    What are your /NGV7, /RB and /CL positions?

  184. Good morning!

    Mueller Probe Examining If Trump Obstructed Justice

    President Trump’s firing of former FBI Director James Comey is now a subject of the federal probe being headed by special counsel Robert Mueller, which has expanded to include whether the president obstructed justice. 908

    Australian PM Mocks Trump: ‘We Are Winning So Much’

    Now we know why Trump was thinking about firing Mueller the other day, I guess he knew this was coming.  

    Dollar at 97.30 and indexes lower but oil and /RB holding on(ish) so not too bad.  

    Obama/StJ – The problem is things didn't get better for the bottom 90% under Obama.  He should have pushed jobs/infrastructure first and then health care and all would have been better but health care, though necessary, doesn't "feel" like anything to people who can't make a mortgage payment.  That is the problem with Liberal policies, they do things that may be for people's own good – even when the people aren't sure they want it or even object.  That gives room for the Reps to come in and promise chickens in every pot at the shining city on the hill where America will be great again.  Vague nonsense trumps specific policy that requires personal sacrifice for the good of the nation.  

    /RB/Latch – Yes, I'm holding out and hopefully won't lose more than the $10K I'm down now at $1.425 (8 short at $1.458).  At least I have long /DXs but not enough (4) to make up the damage yet.  I understand the cold feet, last year was a disaster at this time for /RB but I think that's the reason for the panic sell now – lots of people think it will repeat but I could be wrong and end up in a coach seat to Europe….  angry 

    Who knew/Latch – Who knew a Democrat could be as psychotic as the last 57 Republican psychos with guns?  Just give us 6 more months of Trump and you might see!   cheeky  Of course, many mass shooters have low IQs or are mentally troubled and that is, essentially, the GOP base so it might not be fair to assume the GOP causes mass-murdering, anti-social psychopaths – it's just that they appeal to them.  So far, Homeland Security has not had to issue a warning about Left-Wing Extremism.  

    /NGV7/Japar – 6 of those at $3.01, also not doing well at $2.97 and /CL is 6 long at $45.48 so not catching any break this morning.

    Europe is down 1%, I'm surprised we're holding up so well:

    • China's central bank has left interest rates unchanged, unlike its decision in March when it raised rates within hours of the Federal Reserve's hike.
    • The Swiss National Bank held its negative rates, stating the move and its willingness to intervene in the forex market will ease pressure on the franc.
    • Attention now shifts to the Bank of England, which could be more inclined to maintain its loose monetary policy following last week's surprise election results.
    • Today and tomorrow will also see rate decisions in Turkey, Russia and Japan.

    Literally no interesting news this morning.

  185. BOE left rates unchanged too so, as expected, we are the only CB that is tightening at the moment.

  186. /RB dipped below 1.42  --  How low before you lock in those coach seats?  

    I am thinking of buying 1 more 

    long 2 /RB @ 1.438