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Wishful Wednesday – Fed Edition

Image result for draghi whatever it takesHappy anniversary!  

It's been 5 years today since ECB President and Goldman Sachs (GS) stooge, Mario Draghi said: "The ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough."  At the time, the EuroStoxx index was at 2,000 and now we're at 3,500, a 75% gain in 5 years and Germany's DAX is up over 100%, from 6,000 to 12,281 as of yesterday's close.  That's an average gain of 20% a year for 5 consecutive years – happy anniversary indeed!

The Euro has fallen 20% over that time period, making the gains somewhat less impressive but not too much and "only" down 20% is very surprising as the Yen is down 30% over the same period and the ECB's money supply is up 30% as well.  Actually, the EU money supply is up closer to 100% since 2008, Draghi's "whatever" was just icing on that already well-iced cake.  

None of that comes close to the flood of Dollars that have been printed since 2009 with $3Tn new Dollars in circulation which QUADRUPLED the supply of US Dollars in the World.  Keep in mind those are hard Dollars which the banks then turn around and lend out 10 times each, which is $30Tn more Dollars or 1.5 times our entire GDP so, when you hear our GDP is growing at 2%, you should say "WTF?" as our money supply has been growing at an average of 30% per year for a decade…  

Image result for money supply dollars 2016

That money, in turn, gets pumped into the stock market, which also levers up the cash by about 10:1 on inflows and PRESTO! – it's a "recovery".  Steely Dan said "You Can't Buy a Thrill" but you can certainly buy an economy if you are a motivated Central Bank and no one was more motivated than the former Managing Director of Goldman Sachs, Mario Draghi, whose "former" firm is up 120% since he did "whatever it takes" for them.  

It's kind of cute the way people think there will be no consequences to 300% increases in the money supply.  The way gold, silver and uother commodities are trading – you would think no one ever heard of inflation.  In reality, inflation is everywhere – just not in the places the Federal Reserve counts it.  

  • College Tuition has been gaining and average of 6% per year since 1997 – up 225% since you started saving.
  • Prescription drugs have averaged 13.4% annual increases for the past 20 years – and now you have no health care…
  • Gas (which the Fed does count) has gone up 3.4% a year for two decades.
  • Home Prices, despite the crash, have recovered to an average of 4.1% – about double the rate of inflation but, if you pay 2% property taxes – you may as well be renting. 
  • Movie Tickets have gained 3.3% per year
  • Disney Tickes have gained 5.3% per year 
  • Cable Television has gone up 5.8% per year and much more now that we need internet too (Basic Cable with HBO was $22.35 in 1995).  

Those are real inflation numbers that are impacting the American consumers and certainly wages have not kept up with inflation since the early 1980s and were substantially negative during the crash.  

Image result for wages by year

So where are these Trillions of Dollars going?  Well, to start with, the Banks lost well over $5Tn during the crash and we pretty much GAVE them that money back (we, as in the American people went an additional $5Tn in debt to bail out the banks and yes, Draghi's Goldman Sachs is one of the banks that got bailed out).  A lot of the other money went overseas into tax-haven accounts as artifiically low rates (also funded by you, the taxpayer) allowed companies to move profits over-seas so they wouldn't have to be a tax-paying sucker like you are.  Over $2Tn is now "offshore" for US companies alone and, of couse, their paid politicians are working on ways for them to "repatriate" the profits without penalty – ultimately at your expense too!  

Image result for it's a wonderful life bank runThe Fed will be meeting today and HOPEFULLY they will raise rates because every day they don't raise rates costs us money as we are subsidizing the low rates these companies borrow at and we are also getting screwed when we go to a bank and they pay us 0.25% interest on money they lend out 10x to our neighbors at 4% (40% – 0.25% = 39.75% profit).  The spread between what the banks pay you and what they lend out for has never been higher and bank profits have never been higher and the only person who gets hurt here is you – so it's a victimless crime, right?  

The rest of the money is in the markets, in bonds, in housing and some of it is still floating around in circulation and that's going to cause HUGE problems when and if the real economy picks up as the velocity of money has been dead for years and that's what's keeping general inflation low – as people cut back on so many things in order to pay for the things that keep blazing up in price.  

Image result for income disparity 2016Of course, the suffering of the masses is of no concern to those of us at the top of the heap, right?  People in Donald Trump's income bracket (Top 0.01%) have more than doubled their income in the past 20 years while the income for the bottom 90% has gone up an inflation-adjusted 2% over the same period.  For those of us only in the Top 1%, we've had to suffer with only a 62% increase in wages but it's enough to keep the economy going and, since we (in the Top 1%) own 85% of the stocks – it's been more than enough to fuel a nice market rally.  

In December, 2008, it was hard to find people who were willing to buy Apple (AAPL) for $85 per share and the main knock on them was who would be willing to pay $600 for a phone?  Now the new IPhones are over $1,000 and no one bats an eye and Apple's stock is at $153 AFTER splitting 7:1 so, effectively $1,071 per 2008 share and people are still buying it because they are making $9 per $150 share and should make over $10 next year for a p/e of 15 – still underprices after 1,000% gains!  That's why Apple was our PSW Stock of the Year in 2013, 2014 and 2015

This year, we made an inflation play with Wheaton Prescious Metals (WPM) in our Secret Santa's Inflation Hedges (it was SLW then) and our trade idea back in December was: "SLW is nice and low in the channel and we can go lower still by selling 10 of the 2019 $15 puts for $2.80 ($2,800) and buying 15 of the 2018 $15 ($4.75)/20 ($2.65) bull call spreads at net $2.10 ($3,150) so a net outlay of $350 on the potential $7,500 spread has an upside of $7,350 if all goes well."

All has been going well and WPM has been drifting along the $20 line and we still have 6 months to go but already the bull call spread is $3.35 out of a possible $5 ($5,025) and the short $15 puts are $1.20 ($1,200) for net net $3,825, which is up $3,475 (992%) and can still almost double from here if WPM holds $20 as we plan.  That's a pretty good Trade of the Year!  

Our goal as investors is simply to stay ahead of inflation but we need to stay ahead of real inflation – not the BS 2% "target" the Fed likes to quote.  In the real World, if you aren't adding 5% to your savings every year, you are falling behind and we engage in portfolio strategies that are meant to keep you well ahead of the curve.  While most of our investments are conservative value plays, like WPM, we do take advantage of short-term opportunities to make a little extra cash.

I was being interviewed over at the Nasdaq last week, for example and we talked about our Chipotle (CMG) trade idea, which we also featured in last Wednesday morning's PSW Report:

"CMG Aug $370 calls are $14.30 and were $47 two weeks ago.  Those are a fun way to play for the bounce and you can also, if you are brave, sell the $360 puts for $12.30 to net into the $370s for $2 or CMG for $362 – depending which way it goes."

  CMG went even lower and we adjusted the trade (in Monday's Top Trade Alert) to:

In the STP, we have 5 short Dec $370 puts at $29.50 ($14,750), now $47 ($23,500) and we can roll those along to 7 of the 2019 $300 puts at $33 ($23,100) for $400 out of pocket and we're about net $20 on the 7 short $300 puts for $280 entries, worst case.  The new short puts go into the LTP and we'll take the loss in the STP (a way of transferring cash between the portfolios).  The 10 Aug $370 calls at $14.25 ($14,250), now $5.50 ($5,500) and again we'll take the loss in the STP and, in the LTP, we'll open 10 2019 $320 ($68.50)/$420 ($28.50) bull call spreads for $40 ($40,000).

So, in the STP, we take an $18,000 loss and, in the LTP, we make a new net $25,750 spread that pays back $100,000 (almost 300% profit) if CMG can get back to $420.  Good for a new trade, of course.  

Now that we're past earnings, we'll see how CMG does.  Our short-term trade did not work out but we flipped that loss into a longer-term investment in our much larger, Long-Term Portfolio.  As we're short the $370 puts, anything over that line should be good for $50,000 and the rest will be gravy (or salsa, I guess).  

We're waiting on the Fed today and Amazon (AMZN) tomorrow but we've already been shorting oil at $48.50 (/CL) after losing money at $47.20, $47.50 and $48.  4th time's a charm, maybe?  We're also short the Russell (/TF) still (1,445) and Nasdaq (/NQ) hit 5,950, which is also a good short and Dow (/YM) is at our 21,650 shorting line too and S&P (/ES) is being rejected at 2,480 – esentially all of yesterday's shorting targets are being hit this morning – so this can get very interesting – especially with the Fed at 2pm

Be careful out there! 


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  1. Morning everyone!

    Join us for this week's LIVE webinar (1pm Eastern) here:

  2. Good Morning.

  3. petx

    DJ Aratana Therapeutics Announces Positive Results for AT-003 

    Jul 26, 2017 08:30:00 (ET)

  4. John Deere is a bank now?

    Seeing success in the equipment-leasing business, Deere began issuing loans for non-Deere-related things: seed, pesticide, fertilizer. Today, with loans of $2.2 billion, the leading division of John Deere accounts for a full third of the company’s total income. And with profit margins four times higher than they are for sales of equipment, Deere shows no signs of slowing.

  5. Phil / ESRX – Thanks…. I agree with the scale on Anthem deal – not sure this can be saved, but anthem will have to spin paying more for the same service.  ESRX already showed they weren't gauging by changing publishing details on how the rev / profits would look without  anthem.  These were filed with SEC so it's either legit or will be a serious issue if they loose more.  Anyway I picket up more shares AH yesterday and will cover at 65 today.

  6. Phil –  ALK

    Can you comment on their earnings report?

  7. Phil/CMG

    it is down$3 now when it was up around $10. what happened? were the results not good?


  8. CL dropped 48.12  backed off to 2 contracts

  9. to clarify, I am in CLU17

  10. IMAX – Reporting earnings today… 

  11. Again I wish to share with you the effect od a drop

    AKAM holding Jan 18 45/60 BCS the 45 dropped by 4.75 the 60 caller only by 1.70 and funny the 40 put increased only by .50 This was only an 11% drop!

    AMGN holding the Jan19 130/170 BCS the 130 dropped by 3.52 and the 170 by 3.47 even steven both are still TTM the 125 Put even dropped by .22 cents with a 1.2% drop only!!!

    ANTM Holding Jan19 125/170 BCS the 125 dropped by 3.75 and the 170 caller only by 2.45. I liquidated all Put this is only a 2.4% drop with both calls still ITM.

  12. batman--imax was supposed to report before the opening i thought?

  13. IMAX – Haven't seen the earnings ?

  14. IMAX reports after close today

  15. gild abx too

  16. Good morning! 

    DE/StJ – CAT is doing that too.  Why not, it's good money.  Big short if there's a massive drought or something.  

    CMG right back to $347.  $355 was the high so far. 

    TSLA/Jabob – You're not still short, are you?

    ESRX/Batman – Oh sure, our call on them was with the assumption they lose ANTM – I think it's more than baked in at this point.  

    Submitted on 2017/04/25 at 7:56 am

    As to ESRX, now down about 8%, we knew they lost ANTM when we bought them, that's why they were cheap.  We sold the 2019 $65 puts for $7.50 for a net $57.50 entry.  Here's a great article on their business model.  ESRX was at $90 before the lawsuit, now $67.50.  Anthem is 25% of their earnings so it's a fair haircut to $65 but that also assumes ESRX will not get a new client to replace ANTM.   Not only that, but they still have the business in 2017, 2018 and 2019 – while they look to replace their client.  

    Meanwile, they beat and earned $1.33 per now $60 share so p/e down around 15 and up to 20 without ANTM, still a good business in 2020 and a great business now.  

    Submitted on 2017/04/26 at 11:52 am

    ESRX/Learner – Now ANTM is saying maybe they will extend.  Bottom line is, no one will give them the deal ESRX is giving them and, no matter how mad ANTM is over the lawsuit (which they lost), it would cost them Billions more to go with another vendor.

    We still have just the 5 short 2019 $65 puts we sold for $7.50, now $7.30.  Tempting to add the bull call spread here.  

    ALK/Burr – The financials are very impressive and Virgin is a great airline and I like what ALK is trying to do.  I generally do not like airlines but this is a good one but I'd be cautious as they are digesting Virgin and also buying more planes so the rest of the year is likely to have a lot of expenses.  Nonetheless, they do have 2019 options and the LTP doesn't have any transports so:

    In the LTP, let's sell 5 ALK 2019 $75 puts for $7 ($3,500) to remind us to keep an eye on them.  

    CMG/Pat – Sabotage!  

    Chipotle's Food Scares Could Be Due to Corporate Sabotage, Restaurant Consultancy Hints

    Chipotle has been subpoenaed as part of a federal criminal investigation

    Chipotle says sick staffer spread norovirus, causing $1 billion market cap loss

    This is why I moved it to an 18-month trade – there will be no quick fix.  

  17. Will be in Prague and Vienna next week if any one

    Wants to meet 

    • Chipotle (NYSE:CMG) trades higher after execs laid out the company's plan to recover from last week's spate of negative news.
    • A comprehensive manager training program will be set in place in an attempt to avoid any more health incidents.
    • New initiatives cycling up at Chipotle include testing of pickup windows, a "tech-enabled" second make line, the roll-out of queso and an updated mobile app.
    • Perhaps the most important reveal from the conference call was the restaurant operator's statement that it saw little resistance from consumers to price hikes.
    • CFO John Hartung: "We are currently reviewing the next year of restaurants for a possible price increase using the same risk profile analyses. While we would like to execute the price increase on the next tier of market sometime in the fall, the exact timing will depend on the timing of a possible queso rollout and the consumer sentiment and visit habits following the events of last week."
    • Chipotle earnings call transcript
    • U.S. Steel (NYSE:X+7.2% premarket after reporting much better than expected Q2 earningsand raising guidance far exceeding analyst expectations.
    • J.P. Morgan's Michael Gambardella, which rates X at Overweight, says the Q2 beat was driven by flat rolled realized prices and costs, with costs lower due to the benefits from the restart of the Keetac facility and typical seasonal improvements in the mining operations, while the tubular business posted a smaller than expected loss with higher shipments and average selling prices as well as lower costs.
    • During today's earnings conference call, Gambardella says he will listen for more on the upbeat guidance, the company's asset revitalization program and management's view on Section 232.

    EIA shows 7.2Mb draw in oil, gasoline down 1Mb, Disillates down 1.9Mb so in-line with API and we're back to $48.50 in seconds.  angry   That's a good report as we're well past the holidays and now we have another cut by the Saudis to look forward to.  We'll check out the details at 1pm but nothing to be bearish about here.  Nonetheless, I'm sticking with my shorts for the moment and I'll see if maybe people are going to cash in here as there's no likely to be any other bullish news this week.

    /KCH8 stopped me out at the $140 line.  Looking to get back in near $135, of course.  

  18. phil— i am short otm TSLA calls..

  19. VIX            a trader sells 12,500 Sep. $11 puts and buys the $15/$20 call ratio spread 50,000X150,000, similar to recent October spread

  20. VRX     big 10,000 Oct $16 put trade, STO

    WYNN    speculative 4400x  Jan $135 option buy for $9.30

  21. CMG/sabotage – Ha! And you all laughed a few days ago when I remarked how easy it would be to start a norovirus outbreak. Ha!

  22. Phil,

    HAS: Your thoughts on selling 1/18 95p in here (2.45). Earnings OK with a few weak spots( int'l, partner sales). Great brand in consumer space with new Star Wars toy sales yet to come. 95 would be 50% retrace of 52wk range (75 – 115).


  23. TSLA/Jabob – Well, I'd love to short them again around $375, we have a week until earnings and the hype machine should be in high gear between now and then.  MS soon to announce a new ridiculous target so they can secure the next Billion-Dollar round dilutive stock offerings.  

    Of course, it's a good thing when you are losing money, as you can spread the losses over a greater amount of suckers!  

    SEC targets digital currencies

    • U.S. regulators have taken their first shot at deflating the bubble in so-called Initial Coin Offerings, declaring that many of the digital tokens behind the recent mania should fall under securities rules.
    • "The SEC's Report of Investigation found that tokens offered and sold by a 'virtual' organization known as 'The DAO' were securities and therefore subject to federal laws."
    • Continuing to open up its capital markets, China's securities regulator said it will regulate and expand access for all types of investors, while encouraging more long-term institutional participation.
    • The China Securities Regulatory Commissions will also maintain "normalization" of initial public offerings and improve delisting mechanisms.
    • In a rare bipartisan vote, the House has voted to tighten existing economic sanctions imposed on Russia in 2014.
    • The bill would freeze assets and prohibit transactions with specific Russian firms and individuals, and ban certain exports that are used in energy exploration or have possible military uses.
    • It also would require President Trump to obtain congressional approval before relaxing any sanctions against Moscow.

    • A federal judge yesterday dismissed a lawsuit by energy companies and trade groups to stop New York Gov. Cuomo from providing billions of dollars in subsidies to prop up struggling nuclear power plants in the state.
    • The judge rejected claims that federal law did not allow New York and its Public Service Commission to offer credits to promote clean energy and reduce reliance on fossil-fueled or gas plants.
    • Seven plaintiffs had challenged the credits, including Dynegy (DYN +0.6%) and NRG Energy (NRG +0.1%); nuclear generators receiving the credits and their owners, including Exelon (EXC+0.8%), sided with the governor and the PSC.
    • One of the plaintiffs signaled a possible appeal, saying the PSC "failed ratepayers last year when it instituted a $7.6 billion bailout for uneconomic nuclear plants with almost no public input."
    • Copper prices surge to the highest in two years following reports that China could move to ban imports of scrap metal by the end of next year, which likely would boost demand for refined metals in the world’s top importer.
    • LME copper prices hit $6,400/metric ton overnight, the highest since May 2015, and have soared ~5% in two days.
    • Prices also are aided by dollar weakness, which has been helping other dollar-priced commodities; Brent crude oil has climbed back above $50/bbl.
    • Once the biggest offshore rig firm by market, Seadrill (NYSE:SDRL) is again delaying restructuring its $14B in debt and liabilities, reiterating that Chapter 11 bankruptcy was likely.
    • The company's business has struggled as energy firms have slashed investment due to a more than 50% fall in the price o

    • The European Court of Justice rules against steelmaker ArcelorMittal's (MT -1.7%) challenge against how the European Union allocates free carbon permits.
    • A number of companies have made legal challenges against the European Commission, seeking to maximize the free allowances they receive under the Emission Trading System.
    • MT had argued that the EC's calculations were flawed because they did not take into account that steel plants produced their own electricity from gas emitted in the steel making process.
    • Ford (NYSE:F) reports net income of $2B in Q2 off an operating margin in the auto segment of 5.9%.
    • Operating margin was 9.0% in North America, but was negative in both the Middle East & Africa and South America regions. Strong results out of China led to a 4.1% operating margin for the Asia Pacific region.
    • Ford warns that operating margin in North America will fall this year on a year-over-year comparison due in part to high steel costs and development expenses.
    • The automaker expects 2017 EPS of $1.65 to $1.85 vs. prior guidance of below $1.76 and $1.51 consensus estimate.
    • Previously: Ford Motor beats by $0.13, beats on revenue (July 26)
    • Shares of Ford are down 1.15% premarket to $11.14 vs. a 52-week trading range of $10.67 to $13.99.

    • Core operating earnings of $2.2B, or $2.55 per share vs. ($488M), or ($0.44) per share in the same quarter a year ago.
    • Revenue by segment: Commercial Airplanes -6%; Military Aircraft -17%; Network & Space Systems -9%; Global Services & Support -6%.
    • Commercial Airplanes booked 183 net orders during Q1. Backlog remains robust with more than 5,700 airplanes valued at $424B.
    • Updated outlook for 2017: Core EPS of $9.80-$10.00 (vs. $9.20-$9.40); Revenues of $90.5B-$92.5B; Commercial deliveries of 760-765 planes.
    • BA +3.3% premarket
    • Q2 results
    • Coca-Cola (NYSE:KO) reports organic revenue increased 3% in Q2. Net revenue was down 16% Y/Y due to bottling divestitures and the negative impact of F/X swings. The impact of price/mix was +3%.
    • The company's gross margin as a percentage of sales was 62.6%, even with the expectation of analysts.
    • Unit case volume was up 3% for the Europe/Middle East/Africa segment and 1% for the Asia Paficic segment. North America unit case volume was flat during the quarter. Sprite had a solid quarter, while sports drinks lagged.
    • Looking ahead, Coca-Cola expects a 19% to 20% headwind from acquisitions, divestitures, and structural items to comparable net revenue. Full-year EPS of $1.87 to $1.91 is anticipated vs. $1.88 consensus.
    • Previously: Coca-Cola beats by $0.01, beats on revenue (July 26)
    • KO +0.57% premarket to $45.50.

    MGM watch: Block trades, earnings, Mayweather-McGregor

    • The New York Stock Exchange is reviewing a series of block trades on MGM Resorts (NYSE:MGM) that sent shares down 10% yesterday before they were canceled as erroneous.
    • The casino operator is due to report earnings tomorrow before the market opens. Watch for an interesting update from the company on the impact of the Floyd Mayweather-Conor McGregor fight set for August 26. MGM should see a Q3 bonzanza from the extra Strip traffic and gate at the T-Mobile Arena even if oddsmaker rate the fight as lopsided (Moneyline: Mayweather -600 vs. McGregor +400).

    More on Bloomin' Brands' Q2

    • Bloomin' Brands (BLMN -9.2%) reports U.S. comparable restaurant sales fell 0.3% in Q2.
    • Comp for Outback Steakhouse in Brazil rose 13%.
    • Segment revenue: U.S.: $917.37M (-4.3%); International: $115.61M (-3.3%).
    • Adjusted restaurant-level operating margin rate down 30 bps to 15.2% primarily due to higher labor expense, operating expense inflation, service and product investments at Outback Steakhouse and higher net rent expense due to the sale-leaseback of certain properties.
    • U.S. adjusted restaurant-level operating margin rate squeezed 140 bps to 14.1%.
    • International adjusted restaurant-level operating margin rate improved 490 bps to 21.1%.
    • FY2017 Guidance: Tax rate: 21% to 22%; Adjusted Tax rate: 24% to 25%; Number of new system-wide restaurants: ~30.

    ESL Partners ups stake in Lands' End

    • ESL Partners picked up over 550K shares of Lands' End (NASDAQ:LE), according to a SEC filing.
    • The Eddie Lampert investment vehicle now holds a 61% stake in the retailer.
    • SEC Form 13D
    • Shares of Lands' Ends are down 12% YTD.

    Nintendo +4.9% after Switch-fueled swing to Q1 profit

    • Nintendo (OTCPK:NTDOY) is up 4.9% in U.S. trading after swinging to an operating profit in its Q1 thanks in large part to a successful launch of the Switch console.
    • It had lost ¥5.13B last year; this quarter resulted in an operating profit of ¥16.21B, well above expectations.
    • For the Switch, the company notes that Mario Kart 8 Deluxe launched in April to sell 3.54M units; ARMS (a June release) has sold 1.18M units. Holdover The Legend of Zelda: Breath of the Wild sold 1.16M (a cumulative 3.92M).
    • Overall for the quarter, Switch hardware sold 1.97M units and software sold 8.14M units. It's planning a worldwide release for Splatoon 2 this month and Super Mario Odyssey in October.
    • It maintained expectations for the year of an operating profit of ¥65B and still expects to sell 10M Switch consoles.
    • Press Release
    • Oppenheimer lowers its Akamai Technologies (NASDAQ:AKAM) price target by $10 to $60 and maintains an Outperform rating.
    • The firm lowers its Akamai guidance for FY17 to $2.48B in revenue and $2.62 EPS. FY18 estimated with $2.64B in revenue and $2.62 EPS. 
    • Cowen cuts its Akamai price target by a dollar to $60 with a Market Perform rating. 
    • Analyst Colby Synesael cites the company’s weak Q3 guidance, saying the EBITDA margin expectations makes it “difficult for us to have conviction in our estimates.” 
    • Akamai shares are down nearly 11%.       
    • Previously: Akamai beats Q2 estimates, shows game download weakness; shares down 7%(July 25)
    • Wedbush upgrades Cinemark (CNK +1.7%) after watching the movie theater stock fall to a level of a "compelling entry point."
    • Analyst Michael Pachter says fears that a high percentage of millennials have shifted to on-demand film viewing are overblown.
    • The firm moves to an Outperform rating and $4 price target on CNK.
    • Verizon's (VZ +0.8%) been floating any number of acquisitions (with chatter lately focused on DIS) in recent months, to shake off a challenging set of options for revenue growth, but Citi has a more definitive idea: Now-bigger Comcast (CMCSA +0.3%) should buy the carrier.
    • It would be a megadeal with Comcast now worth about $190B and Verizon at a market cap of $182B. But both companies need to push fiber deeper into neighborhoods and Verizon would give Comcast an avenue to stretch its Internet offering outside the home, writes analyst Jason Bazinet.
    • He believes there's more than $2B in annual synergies in the deal and Verizon could come cheaper after selling some of its assets ($32B worth).
    • He's cut Dish Network (NASDAQ:DISH) to sell as a loser in such a deal, since Verizon's considered Dish's most likely buyer. Dish shares are off 1.3%.
    • Bazinet has a Buy rating and price target of $55 on Verizon, implying 24% upside. He's got a $43 price target on Comcast, implying 7.9% upside. (h/t Bloomberg)

    Was Apple behind LG Display’s $7B OLED push?

    • LG Display (NYSE:LPL) announced yesterday plans to invest about $7B on ramping up OLED panel production and investors wonder if Apple (NASDAQ:AAPL) stands behind the deal.
    • During a conference call, an LG Display exec said some of the funding would come from a “strategic partnership” but didn’t name the partner.
    • “If Apple’s funding had not been confirmed, LG Display’s management may have not decided on the huge spending,” a source tells The Korea Herald.
    • Apple wants to lessen its dependence on Samsung for OLED panels, which will feature in the premium iPhone model this fall and potentially all of next year’s models.
    • Previously: LG Display ramps up OLED production to take on Samsung (July 25)
    • Global LCD TV panel shipments were down 0.1% to 123.35M units in 1H17, according to WitsView via Digitimes.
    • LG Display (NYSE:LPL) topped vendors with 25.28M units shipped, but that was a 1.1% drop from the first half of last year. 
    • Samsung Display (OTC:SSNNFOTC:SSNLF) came in fourth place with 18.41M units, down 14% on the prior year due to the closure of a panel plant. 
    • China Star Optoelectronics had the largest vendor growth, up over 22% to 18.17M units shipped.   
    • Samsung recently turned to LG to supply its large LCD panels so that Samsung could instead focus on higher margin OLED production.    
    • Previously: Samsung turns to rival LG for LCD panel supply (July 20)
    • Corning (NYSE:GLW) reports Q2 results with revenue and EPS beats.
    • Display Technologies segment sales down 7% on the year to $748M due to low volume growth and the moderate decline of LCD glass prices. Q3 outlook sees low single-digit percentage growth on the quarter.
    • Optical Communications up 13% to $882M due to fiber-to-the-home demand. Q3 expected up 10% on the year.
    • Environmental Technologies up 2% to $263M due to auto market wins. Q3 sales expected up by low single-digit percentage.
    • Specialty Materials up 27% to $337M based on strong Gorilla Glass shipments. Q3 sales expected up by low to mid teen percentage.
    • Life Sciences up 3% to $221M. Q3 sales expected up by low single-digit percentage.
    • Press release 
    • Corning shares are down 1.28% premarket.
    • Previously: Corning beats by $0.02, beats on revenue (July 26)

  24. HAS/8800 – Not a bargain at $106 but net $92.50 is a decent entry but nothing you wouldn't be THRILLED to double down on if they come back to $80 as there's no real support and a general market sell-off would rip them lower. 

  25. Phil,

    HAS – understood cautionary note (not much between 95 and 87). My rationale was that consumer is doing and feeling somewhat better and kids toys would seem to have a preferred spot on a family's shopping priorities list at least (as long as family income isn't seriously impaired), so worth selling puts as opposed to buying bcs. Thanks.

  26. Does anyone know when the Fed minutes are out? Is it during the webinar?

  27. Phil/market  Even I, who has been very long this market, is getting very concerned about a pullback.  However, I never trade on emotions or hunches and unless the Fed announces they are going to start reducing their portfolio now, the market shall remain bullish yet on very nervous legs.  I am up quite a bit on a number of my tech names and I think they will get hit the hardest.  I think banks, retail and defense would get hit the least.

  28. Latch  yes 2pm eastern time

  29. Fed/Latch – 2pm.

    Hits/Hanj – People are so committed bullish that a real correction should get ugly but, as you say, not unless the Fed turns off the taps.  

    Webinar time!  (almost).

  30. stockbern/vix – i was reading about vol last night and today put on this trade for $0 in case things reverse:

    sell vxx dec 10 p

    buy vxx dec 7 p (not needed in large accts but reduces margin reqt a lot for me)

    buy vxx oct 12 c

  31. vxx – the above combo breaks the optionsxpress algo for gain/loss in a funny way, currently shows a loss on this position of -32,985,348,833,279,800.00%

  32. IMAX earnings moved to after Bell.

  33. batman…hope that isn't a bad sign

  34. Mr M   thx, I was waiting for the FED.

  35. look at EXAS, the poor man's ( no insurance)  colonoscopy

  36. DJ Gilead Sciences Initiated at Buy by Redburn 

  37. For the OOP:

    • Buy 500 F for $11.03 ($5,515) 
    • Sell 5 F 2019 $10 calls for $1.63 ($815) 
    • Sell 5 F 2019 $10 puts for $1.02 ($510) 

    That's net $8.38/9.19 ($4,190) and we're obligated to buy 500 more at $10 ($5,000).  The dividend is 0.60 ($300/yr) and, if we get called away at $10, that's another $1.62 ($810) profit so a nice 20%+ return on a stock you can pass on to your grandchildren.

  38. go JO!!!

  39. F – hmmm… I question whether there is any auto mfg stock you can pass on to your grandchildren

  40. Autos/Tangled – True, they might die out by then.  Especially if the Chinese get those teleporters working. 

    Physicist: China's teleportation of data into space a 'profound' feat …

  41. Autos – Once autos die out, perhaps….    Teleportation has advanced a little bit since 2002, it would be to cool to teleport into another country in a flash of light.  Goodbye TSA! 

  42. Nice little sell-off on /TF now.  

    Oil hanging tough:

    Teleportation/Joseph – I love the fact that Star Trek had the basics 50 years ago – good sci fi writers are also good futurists.  I have to agree with Dr. McCoy – not a fan of destroying the original and making a copy on the other side – even if it's a flawless process…

  43. Autos / Phil – I would think that Ford would be one of the survivors but my grandchildren is only a fuzzy concept right now and a lot can happen for sure. I imagine that conversation in 1890 – "You can pass shares of Horse Buggy Inc, to your grandchildren!"

    • The VIX dropped to its lowest level ever in intraday trading with a slide to 8.84. The fear gauge moved off the historic low after the FOMC statement was released and currently stands at 9.40.
    • TechCrunch runs down a slate of new information regarding the upcoming trial between Uber (Private:UBER) and Alphabet’s (GOOGGOOGL) Waymo.
    • A judge rules that Anthony Levandowski can be called to testify with some stipulations including limited, vetted questions and the fact that Levandowski will likely continue to plead the Fifth. 
    • Levandowski is the engineer that worked at Waymo, downloaded some tech files as he left to form a start-up, and then brought those files along when Uber acquired his start-up. 
    • Waymo claims Uber has used those tech files in its own self-driving car endeavors. Uber denies the claim. 
    • Other revelations: former Uber CEO Travis Kalanick now has his own attorneys, and Alphabet Sergey Brin is likely to be deposed, though he was apparently trying to avoid such a fate. 
    • The case goes to trial in October. 
    • Previously: Alphabet asks judge for Uber CEO resignation letter (July 20)

    Fuzzy/StJ – That's why we often just take the money and ride a fresh horse for the next cycle.  The concept is the same – even if you don't end up with the stock you started with.  

  44. STJ > Buggy Whips still seem a thriving trade >

  45. Whips/Aquila – They sell like hotcakes on Amazon!  devil

  46. S&P went red – that's interesting.

  47. Fresh horse / Phil – Pun intended?

  48. Best in one place list of the real world problems I have seen

  49. GILD--no tease please

  50. Phil,

    Do you think /DX is lower than it should be? 

  51. so far, GILD no tease, IMAX no love…. all square

  52. FTR dividend news.

  53. IMAX beats by $0.01, misses on revs

    Font size: A | A | A


    4:32 PM ET 7/26/17 |

    Reports Q2 (Jun) earnings of $0.15 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus of $0.14; revenues fell 4.3% year/year to $87.76 mln vs the $89.26 mln Capital IQ Consensus.During the quarter, the Company installed 34 theaters, of which 33 were for new theater locations and one was an upgrade. The total IMAX theater network consisted of 1,257 systems as of June 30, 2017, of which 1,154 were in commercial multiplexes. There were 580 theaters in backlog as of June 30, 2017, up 31% from the 442 in backlog as of June 30, 2016. Continuing the Company's record signings momentum from 2016, IMAX signed contracts for 92 new theaters and three upgrades to existing theaters in the second quarter of 2017. Through the first six months of 2017, the Company signed contracts for 130 new theater systems and four upgrades across 24 countries, including the US, China, India, Japan, Germany and The Netherlands.

  54. Barrick Gold beats by $0.05, beats on revs; co reaffirms gold and copper production for 2017, aims to reduce $7.9 bln at start of 2017 to $5 bln by end of 2018

    Font size: A | A | A


    5:09 PM ET 7/26/17 |

    Reports Q2 (Jun) earnings of $0.22 per share, excluding non-recurring items, $0.05 better than the Capital IQ Consensus of $0.17; revenues rose 7.4% year/year to $2.16 bln vs the $2.03 bln Capital IQ ConsensusAll-in sustaining costs in the second quarter were $710 per ounce, compared to $782 per ounce in the second quarter of 2016Gold production in the second quarter was 1.432 million ouncesTotal debt was reduced by $309 million in the second quarterAchieving and maintaining a strong balance sheet remains a top priorityCo intends to reduce its total debt from $7.9 billion at the start of 2017, to $5 billion by the end of 2018-at least half of which it is targeting this yearCo continues to expect full-year gold production of 5.3-5.6 million ounces, at a cost of sales of an all-in sustaining costs of $720-$770 per ounceCo continues to expect full-year copper production of 400-450 million pounds, at a cost of sales an all-in sustaining costs of $2.10-$2.40 per pound

  55. joseph--I can't believe FTR isn't a steal down here.

    How bad could they be doing if they didn't cancel their dividend?

  56. AMZN – Amazon: Treasury Secretary Steven Mnuchin in Senate testimony questioned why AMZN does not collect sales tax on 'marketplace purchases.

    Yet AMZN is up another 6 points in the after market.

    Nothing seems to stop it.  Tomorrow's earnings should be interesting.  Rolling up AMZN deep OTM has proven to be a very good strategy this year.  At least, so far.

  57. Phil I am curious about why you are sticking with the short play on oil? Bullish inventory numbers, Saudis are talking production cut compliance , demand in both US and China doesn't seem to be deteriorating that quickly and US shale seems to be pulling back a bit on ramping up. What is the catalyst for lower oil prices right now? Is it just due for a 5% rule pullback?

  58. I wonder if earnings even matter tomorrow for AMZN. These MoMos seem to go higher regardless of earnings or lack thereof. We have been saying that they are overvalued and they only seem to keep getting more overvalued. I read Phil's analysis and there isn't any better confirmation bias that I have seen. The most compelling reasons that AMZN should be much lower. TSLA too. NFLX too.. FTR too (jk)..

    But these Mofos just keep flying higher and higher… 

    What will ever make them come down???

  59. You know Jabo that there is such a thing as downward momentum - see FTR! MoMos all…

  60. stjean—i will believe it when i see it! ;-)

  61. Artificial Intelligence, Real Food

  62. Death Of The Internal Combustion Engine

  63. How AI Will Change the Way We Make Decisions

  64. Foxconn hands Walker ‘grand slam home run’

  65. Hail to our flounder in chief

  66. Why record U.S. oil exports are poised for even more growth

  67. ~~ TWTR down 9% after reporting flat MAU Q/Q at 328 mln with sales down 5% Y/Y.

    Here we go again !

  68. Jabob – Speaking of MOMOs :

    ~~ FB- Facebook beats by $0.20, beats on revs.

    Stock up 10 points in pre-market so far.

  69. Good morning! 

    Another chance to short at our levels if you are still a believer, they are the levels we expected on Tuesday, to fail at, so we'll see.

    The markets are very enthusiastic into tomorrow's Fed meeting and they certainly haven't let us down in quite a while but I'm more of a mind to short at 5,940 on the Nasdaq (/NQ) and 1,445 on the Russell (/TF) as long as the Dow is below 21,650 (/YM) and the S&P needs to be below 2,480 (/ES).  We're long the Dollar (/DX) at $93.50 and long Natural Gas (/NG) at $2.925 so we'll see how those go – along with our Oil shorts (/CL).  

    We're at 21,675, 2,480, 5,985 and 1,445 with /NKD 20,120.  /ES 2,480 is the best short (with tight stops) and you know I love my /TF shorts.  One day it will break down – I just want to be there when it happens! 

    Oil tested $49 ($48.94) but back to $48.50 now, /RB rejected at $1.62 and I like them both short.  /KC made a full recovery.  

    Dollar still weak or things would be worse.

    Fresh horse/StJ – Of course!  

    Great article Tangled. 

    GILD/Jabob – Back on track.  

    /DX/Japar – I hope so, I have 2 longs (93.74).  See Euro article above.  

    IMAX/Learner – I was good with their earnings.  

    TWTR/Albo – That's exactly what I said might happen in the Webinar.  If the 50 dma holds, they'll be fine.