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Monday Market Movement – Topping or Popping?

It has not been a good year(s) for value investors.

Well, it's been a good year but not as great as it's been for trend followers betting on growth stocks.  I guess we're not true value investors, because we've had a pretty good year but certainly we could have done better holding our noses and buying more MoMo stocks.  Most of Q2 earnings are behind us and there aren't too many red flags – other than the great big one that shows value to be at an all-time low, and I don't mean value investing, but the VALUE of the stocks we're investing in.

Just because you buy and expensive stock and it gets more expensive, doesn't mean it was worth what you paid for it.  This is part of the "greater fool" theory that marks stock bubbles – you can always find someone to be a greater fool than you were – until you can't – then the bubble pops.

We don't know when these sky-high valuations will come to an end, which is why we rely on hedging, more so than shorting.  With hedging, we maintain our long positions but we use some of the long profits (about 25%) to lock in our gains without sacrificing any additional upside to come (or, at least not 75% of it).  

What's really annoying about this stage of the rally, however, is that stocks that look cheap relative to traditional fundamental metrics such as profit or cash flow have fallen so far out of favor that Goldman Sachs in June questioned whether the markets are witnessing the death of value investing. 

Since that call, the market has gained another 2.5% but, as you can see from the chart, we're back at levels we haven't seen since the 4th quarter of 2015 and the S&P topped out then at 2,116 but fell precipitously to 1,810 by Februray.  That's 306 points or just shy of 15% in 3 months but we're only just getting to the top – we may drift here for a while or, maybe this time is different and the people dumping value stocks (ie. stocks that are a good value) in favor of "growth" stocks (ie. stocks that don't actually have earnings to justify their price) are right and from now on we shouldn't buy stocks that actually make a return on investment  - what a silly, old-fashioned notion that is! 

As noted by Institutional Investor, market funds have become "Individually Rational and Colloectively Crazy":

When people chase returns in unsustainable ways, their stock can and will decline from overuse.  An aggressive, short-term approach to generating returns may lower the returns that are possible in the future.

Asset owners, addicted to high returns, engage in secretive and selfish behaviors that, over time, further deplete and pollute the stock of these returns.  They invest in black boxes they literally don't understand. they dive headfirst into an ocean of individually rational, but collectively crazy decisions.  

Maybe this time WILL be different – we can only hope so but HOPE is not a valid investing strategy, is it?  

Keep in mind that we're right at 2,400 on the S&P now (2,476 actually), and that's up 100% since 2010 making this a bigger rally than any of the above – except the one that led up to the great depression of the 1930s.  But hey, that's no reason not to party like it's 1929, is it?  Again, I'm not saying NOT to invest – you certainly don't want to be left behind by this market – what I'm saying is HEDGE those investments, don't let greed leave you exposed and unprepared for a potentially negative market event. 

On Wednesday we looked at a DXD hedge, which is an ultra-short on the Dow that pays back $20,000 on a $1,300 hedge.  That was predicated on selling Apple (AAPL) puts, which is how we "invest" in longs – even within our short-covering spreads.  Looking over the Dow earnings, there's no particular reason we think AAPL or IBM or BA or other major components will fall in the near future – it's not individual weakness we're concerened about but a change in sentiment that halts the "collective madness" or, even worse, reverses it.  

In our Long-Term Portfolio, we're still adding value stocks.  For one thing, they are cheap and, for another thing, they tend to outperform when the growth trend reverses.  I know that 9 months growth-dominated market moves has left value investors frustrated but, looking at the 2nd chart – don't you think this might be the WORST time to switch horses?

There's been no indication from Warren Buffet that he's given up on value investing so you'll have to forgive me if I stick to my guns a while longer – Warren has 32 years on me, so I defer to his wisdom in these matters and, as of June 30th, Berkshire Hathaway's book value had gone up 6.2% over the past 6 months, which would normally be fantastic but now is simply under-performing with the rest of the value pack.  

If the market does keep climbing, a la 1999, then we can assume those value stocks will catch up a bit but, either way, over the long-haul, it would be an odd moment in history if growth continues to outperform.  Maybe this time is different and we'll all have to learn new market tricks but, for now, better safe than sorry as we move towards the end of summer. 


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  1. Jabo/"it just doesn't matter?" 

  2. yep ;-(

  3. Phil--what will it take for TEVA to stop bleeding? 

    These analysts and all their downgrades… WTF? 

    These are the same clowns that were saying to buy the stock 20+ points higher, right?

    I know TEVA made some bad moves and they certainly aren't shareholder friendly these days.. 

    But under 20? 

    How low can it go?

  4. ~~Israel’s government urged Teva Pharmaceutical Industries Ltd., the country’s largest company, to bring jobs and operations back home while signaling its willingness to aid in a rescue of the beleaguered drugmaker. Story link: {NSN OUB9EF6TTDS3 <GO>}

    * The company has an obligation to Israel because of the special tax benefits
    it’s enjoyed over the years, according to a statement Monday from Economy
    Minister Eli Cohen. Government officials have in recent days successfully
    pressed Teva to delay 350 job cuts in its home market until after the Jewish
    holidays in October, and are asking the Petach Tikva, Israel-based company to
    consider paring costs by targeting the management rather than rank-and-file
    * “Teva’s Israeli workers don’t need to pay the price for failed investments
    abroad,” Cohen said in the statement, after speaking to the drugmaker’s
    interim Chief Executive Officer Yitzhak Peterburg. “The Ministry of Economy
    will discuss with the company the return of activity to Israel and help it
    get out of the crisis it is in.”
    * The Israeli government’s hints about potential support for a rescue plan may
    cheer investors, though its intervention in the proposed job cuts adds
    another level of complexity for Teva, already under pressure to pay down $35
    billion of debt and revive growth. The company lowered its profit forecast
    and slashed the dividend last week, while warning that it may breach debt
    covenants this year if the cash balance doesn’t rapidly improve and it fails
    to raise enough funds from asset sales.

  5. TEVA/Jabo-seems like these guys overreact in both directions and seldom get the balance right. 

  6. thanks seer

  7. doesn't seem to be helping the stock yet

  8. think this is going to take a while.  Will let Phil weigh in. 

  9. where is everyone today?

    vacationing? ;-)

  10. This sums up why hedge funds have lost so much in TSLA.  You look at the company in a fundamental way and investors don't care.  Spiegel from Stanphyl Capital is at wit's end.  Hilarious reading his tweets, you can feel his frustration.  Read from 3 hours ago to 4 hours ago.

    I think TSLA can say they are going bankrupt but have a new Roadster coming out and the stock would be up 20 points.

  11. Good morning! Anyone else in that ZYNE play? Stock down 60% this morning on a failed clinical trial. I suspect it's not worth hanging on now.

  12. jelut….yep.  Science was good and made sense.  Outcome was not.  :(

  13. DIA is a 79 RSI.

  14. Good morning!

    Teva can't seem to get out of it's own way but testing $20 was bound to happen at some point.

    TEVA/Jabob – There is margin pressure in generics and TEVA will make less money for a year or two, mainly because they have committed to pay XXX in development for drugs that will return XX and there's nothing they can do about that.  Going forward, the entire chain will take a haircut and, unless people no longer buy generic drugs, then TEVA will reassert their margins as the sector leaders.  This isn't about lower sales – just a margin squeeze under changing regulations – nothing to do with poor management or bad processes, etc.  Analysts never want to be caught on the wrong side of a call so they all switch to make themselves look more accurate.  It's a bit late to call sells – yet they do.  

    As to how low they can go – they just affirmed guidance above $4/share going forward (p/e 5) but let's say earnings are magically cut in half and the p/e is 10 – how much would you pay?  I'd still pay $20 for $2 in earnings so I'm pretty comfortable paying $20 for $4 in earnings, no matter what the PRICE of the stock is at any given moment.  

    Whether they distribute the money or not, the company I own for $20Bn will make $4Bn and, if they don't distribute the money for 5 years at that rate, they'll have $20Bn in cash for my $20Bn investment.  AAPL has $265Bn in cash for an $814Bn investment and they get little respect either but a lot more than TEVA – for now.  Of course, I had to bang the table on AAPL for 3 consecutive years before their ridiculously low value turned up – maybe the same with TEVA so I guess we'll have this conversation a lot?

    TSLA/Rustle – I think people are relieved they aren't diluting again.  Eventually reality will set in.

    /KC remains strong over the weekend – that's unusual.

    Oil with a nice pullback. /SI bouncing back a bit ($16.21).

    /TF failing again, 1,407 is below the 1,410 weak bounce.

    RUT fell 50 points and is testing 1,400 so 10-point bounces to 1,410 and 1,420 so 1,420 is our goal for the week to confirm we're going higher though over 2,480 on /ES will demonstrate that on its own.

    Oil rejected at $50 and still early in the cycle but now that we're through the weekend, we can play it short again with tight stops.

    ZYNE/Jet – That's why I preferred the bull spread without short puts – too dangerous on these early stage Pharmas.  

    Submitted on 2017/06/13 at 2:45 pm

    We wanted to discuss leverage today so let's talk about how we can limit our risk while still having good upside with a speculative play on the Pharmacy play, Zynerba Pharmaceuticals (ZYNE).  

    ZYNE makes transdermal delivery systems (skin patches) for cannaboid therapeutics (pot) to help treat epilepsy and they are conducting a Phase II trial that, if it goes well in August, could lead to explosive growth.  Or it could fail and they die – so it's the kind of play where we want to limit our losses.  

    Rather than buying the stock for $18, we can instead go past our expected August event and buy a bull call spread that limits our downside risk:

    • Buy 4 ZYNE Nov $15 calls for $7.50 ($3,000) 
    • Sell 4 ZYNE Nov $22.50 calls for $5 ($2,000) 

    That puts us in the $3,000 spread for net $1,000 and our loss is limited to the $1,000 we put in yet our upside potential is $2,000 (200%) at $22.50.  In order to make $2,000 at $22.50 you would need approximately 400 shares of stock for $7,200 and limiting your loss to $1,000 would mean you would have to set a stop at $15.50 and phama stocks are very volatile.

    Using the spread does cap your gains but it limits your losses and gives you great leverage (7:1 in this case).  Not only that but, because you are buying 4 $15 calls for $1,000 ($2.50 each), your break-even is $17.50, which is 0.50 below the current price – giving you a discount to buying the stock right from the start.  

    Since then they have disappointed on earnings and there is the usual fear and panic ahead of their soon to be released Phase 2 trial study.  They got a negative note from a Cantor analyst the other day that really freaked people out:

    Piros noted, "We saw no surprises during the quarter and believe investor focus will remain on Zynerba's first upcoming Phase 2 readout in adult epilepsy. Based on prior studies of adjunctive anti-epileptic therapies, we believe a successful readout might demonstrate an approximate 20% greater reduction in seizure frequency from baseline when compared with placebo. In our view, positive data in epilepsy could significantly increase our confidence in the program, currently at 25% probability of success."

    But, in reality, he's bullish on the stock with a $28 target.  He just thinks this study is risky and we did too, which is why we risked just $1,000 to make up to $3,000.  Now the spread is a bit cheaper ($820) and the upside is essentially the same so I still like it but, as noted at the time, as a leveraged risk play – I have no conviction on the company.

    Given that this is likely an over-reaction, I would roll the Nov $15s (0.40) to Feb $12.50s (0.65) in hopes they bounce back a bit.  If Pharm doesn't think it's hopeless, the short Nov $7.50 puts are $2.85 and that's a net $4.65 entry – not terrible but I'm still unconvicted on this stock.

  15. Well-funded climate denialism is strong. It's a pervasive force that seeps into every pore and crack of society. Even I'm not completely immune to it.

    But how much time does the world-lagging US Head-In-Sand policy really got left? It's always darkest before dawn. Climate change is a massively valuable problem with a significantly different future outlook than what many are predicting now. This false-flag delay only make the future acceleration of the value more extreme. It'll be a wild ride for someone.

  16. TSLA/Phil

    And it's probably only 75mm in interest a year on a cash flow negative company.  Let's here for the bubble stocks.

  17. thanks Phil.. i guess you are sort of pounding the table for TEVA now?

    wish it would stop taking out new lows.

  18. WYNN/phil, seems to be reversing, back up--for a while i thought it was going back to below 120.  do we still have a butterfly position in WYNN officially?

  19. Jabo /TEVA

    I think they are under a speculative attack not based in facts, as Phils says they are generating $4b  that are facts!,  as Seer says Israel has a strong interest  in the company (good and bad to have politicians on it)…it will prevail

    Coming from $32 to $19 is enough to clean the graphic of shorts…and fundamentals remain….perhaps is a good day to be brave when others are fearful 

    It´s a good  day for a naked put in my opinion ( I will)

  20. advill-- i hope you are right…

    but it is a bloodbath again.

    and we had thought it was a bargain at 40.

    now it is over 50% lower and the bleeding continues.

  21. Phil – I think the experience with TEVA, FTR, etc. (See Jabob's FU list), argue strongly for the use of stop loss orders.  The baby sitting required to roll these positions out as much as 2 or 3 years just to get even, when a stop loss order would take one out of the position with a small loss, doesn't seem like the best strategy.  Not to mention the opportunity cost of not using these funds elsewhere.

    There is no doubt that you are a master of option strategy and at saving these positions, but cutting losses is one of the key components of successful trading and very useful..  JMHO.

  22. Phil – Your ports are going to be blistering hot this time of year, prepare for humid heat and monsoon in the afternoon, UV block, hat, shade, hydrate, avoid walking in the sun, take transport with WORKING AC only.

    Sint Maarten – Freaky deaky Dutch, hustle bustle beach and shopping. 

    Voorstraat – Main street, one back of the boardwalk.  You can get ANYTHING here CHEAP.  NO TAX.  Clothing, Jewelry, Liquor, Cigars.  BEWARE of knockoffs.

    Guavaberry Emporium – sample EVERYTHING, then buy, you will.

    On the Boardwalk – Beach

    Lazy Lizard #1 – eat, drink

    Dirty Sanchez Crew Bar #2 – eat more, drink more

    Marigot – French Side – Beach, calm, butterfly farm. BEWARE: if you take a tour to Orient Bay or the Farm, your locked into their stops, your day is shot.  If you take a cab, DO NOT pay until he takes you back.  Otherwise you WILL be stranded.

    San Juan – If you do not have a beach excursion (too many great beaches and resorts) already lined up…  and since its day time you cannot do Mosquito Bay Bioluminescence or make it to Flamenco on Isle Culebra in one day…

    You can visit any number of rum factories or if they still offer it – go to the San Juan Chamber of Commerce, not too far from the Muelle (Pier).  They used to get you loaded on unlimited rum and cokes – Free.

    There are many Old Town walking tours – two words, DO NOT. Hilly, cobble stone, hotter than Hade's, Since the carriage tours have been banned, yes, even the horses had a hard time, best bet, at the port take one of the Segway Tours.  Afterwards you can double back on foot to a bar or eatery of interest.

    La Taberna Lupulo – great IPA's, mui local craft beers on tap and FU Pretzels, it's Albondigas baby!!!!

    Cafe Manolin – Old San Juan, near the port, good eats, authentic, empanadas and onion steak, yum.

    Poets Passage – have a coffee, chillax

    Great Stirrup Cay – Unless you have a snorkeling tour or water sport deal lined up, be advised.  This is RCL's and like all other "private" islands, A GENUINE tourist trap and waste of time designed to separate you from your money.  Better off spending the day having the run of the ship, relaxing with no crowds, and then listening to the mostly disappointed lemmings bitching upon their return.  Enjoy, Special Travel Agent Cooper Out.

  23. ~~TMUS -T-Mobile US: CNBC's David Faber reporting that TMUS does not believe there is value in Sprint (S) at the current price.

    ~~•Bloomberg discussed that T-Mobile US (TMUS 64.39 -0.13) and Sprint (S 8.66 -0.05) are said to have resumed preliminary merger talks.

    Interesting.   Posturing by TMUS ?

  24. Good summary on ZYNE:

    Zynerba shares plunge as cannabis-based epilepsy gel fails study

    Zynerba is still evaluating data to determine next steps, but said it was not giving up on epilepsy as a target, on a conference call with analysts.

    Data from studies evaluating the gel's use in osteoarthritis patients and in children with Fragile X Syndrome is expected in the coming months, the company said.

    Good article, Pharm.

    TEVA/Jabob – Well, unless there's a significant change in their earnings outlook, they are simply this year's GiLD, which we also had endless FUs over last year until, suddenly, people woke up and realized it wasn't a sub-$70 stock:

    FU GILD!!!!!!

    Jabob Submitted on 2017/05/11 at 9:33 am


    Jabob Submitted on 2017/04/21 at 11:24 am

    FU GILD!!!

    Jabob Submitted on 2017/03/15 at 12:04 pm

    FU GILD!!!

    FU GILD!!!!

    FU GILD!!!

    FU GILD!!!!

    You see, there are suckers who stare at charts and think PRICE determines VALUE and they let that determine their investing stance.  Those are the kind of people who have no patience and tend to buy high and sell low – they are the sheeple we generally take the money from because they don't understand what a stock is worth – only what other people say it's worth.   That means they don't have the balls to hold onto something that is going down – let alone add to it – and they panic out of perfectly good stocks because they don't even know why they are in them in the first place.

    In the LTP, we are all bullish on GILD still:

    2019 18-JAN 65.00 PUT [GILD @ $73.08 $-0.08] -10 10/19/2016 (529) $-9,150 $9.15 $-4.05 n/a     $5.10 $-0.20 $4,050 44.3% $-5,100
    2019 18-JAN 60.00 CALL [GILD @ $73.08 $-0.08] 20 4/11/2017 (529) $24,400 $12.20 $3.43     $15.63 $0.04 $6,850 28.1% $31,250

    WYNN/Lunar – Sure, we sold Jan $130 calls as recently as 6/8 so that's our end-year target.  Long-Term, we're in the money and generally bullish with the $120/140 bull call spread.  They are up on good Macau news this month and they'll be down on bad Macau news next month.

    2019 18-JAN 120.00 CALL [WYNN @ $129.85 $2.34] 20 11/29/2016 (529) $31,660 $15.83 $9.72 n/a     $25.55 - $19,440 61.4% $51,100
    2019 18-JAN 80.00 PUT [WYNN @ $129.85 $2.34] 10 11/29/2016 (529) $11,550 $11.55 $-7.10     $4.45 - $-7,100 -61.5% $4,450
    2019 18-JAN 145.00 CALL [WYNN @ $129.85 $2.34] -20 4/12/2017 (529) $-18,900 $9.45 $5.38     $14.83 - $-10,750 -56.9% $-29,650
    2018 19-JAN 130.00 CALL [WYNN @ $129.85 $2.34] -20 6/8/2017 (165) $-32,000 $16.00 $-4.80     $11.20 $1.15 $9,600 30.0% $-22,400

    Bargain/Jabob – So if you can get a Big Mac for $2, that's a bargain, right?  But if you can get it for $1 – it's no longer a bargain?  Is that how it works?   Just because we thought $2 was a good price, when it goes to $1 we shouldn't buy it?  Why?  Is it because "something" is wrong with them?  Nothing you understand but SOMETHING must be wrong because the price is too good – is that the logic.  Fear of the unknown is the logic?

    Stop loss/Albo – Of course if you don't want to accumulate over time you should stop out of losing positions.  That's NOT what we're teaching people to do in the LTP though, the LTP is all about learning to accumulate value positions over time.  After all, we have to find something to do with the $1.2M in profits we have sitting around (mainly in cash), which came from doing exactly what you don't want to do.

    The OOP is more short-term and more prone to stopping out when a position isn't working but the LTP has a much longer time-frame and a strategy that WANTS the stocks we invest in to get cheaper in the 2nd and 3rd rounds – we only buy the first round in case we're wrong and the stock doesn't get any cheaper so stopping out of the 1st round investment just because there's a loss would be kind of silly, wouldn't it?

    Thanks for the travel tips Naybob but this is about the 10th time I've been to these places, I think I've got it! cool  They actually close a lot of stuff on the ship to kick you out at the ports.  I'm mostly hanging out but the girls have excursions planned every day.

    S/Albo – I don't see the value either – not $34Bn, that's for sure!  

  25. you could beat me up Phil..

    not saying to not buy down here.

    just sucks when these bargains drop 50+% while i am adding and am full.

  26. looks like AAPL will not pull back to 152.

  27. Fun story since it seems like a slow day.  I met Martin Shkreli about 7 years ago at a Hedge Fund conference and get together that my brother's company ran at the time.  He looked pretty much the same, greasy, just got out of bed look and found clothes he had to sniff to see if he could still wear them type look.  I was introduced to him as a guy who was a genius at pharma and he did have a tremendous amount of knowledge.  He was cocky but not an asshole as he seems now. He talked about how he had an apartment that was 9k in rent per month but slept in the office all the time because he was watching the international markets and researching other stocks.  He also told me how he hired outside people to look into other companies he was interested in and found out some pretty shady stuff on some that prevented him from investing in them. He had a fund that was about 10mm (so he claimed at the time) and met someone who's company was going to give him 10mm that night because they liked what he had said.  That's a huge deal to double your fund in one night, a couple hours in fact.  It then turned out, he lied about the size of his fund, he made the leverage he was using make the AUM look larger than it was.  He was kicked off my brother's Hedge Fund site, because when they did their due diligence, they called the administrator he listed he was using and they said he called them but never hired them and they had no auditor.  So nothing could be verified, major warning signs.  So all this comes as no shock to me.  Figured it was only a matter of time.  Don't think he will serve much jail time as everyone did make money with him and a decent amount but I'm sure his mocking everyone on the prosecuting side is not going to help him and he could be an example case.

  28. TEVA sure does seem to be in free fall, but I think this is the time to start selling some puts (or additional puts in my case).

  29. Phil-wondered if you had a sense for determining how much of the stock or stock option action resulted from bond investors hedging positions.  Wondered how much of this is relevant with big debt issuers and names that may not be as liquid on the bond side despite huge issuance.

  30. PWS,

    Apple Watch, per Seeking Alpha articles, will be using Intel's modem for the "stand alone" phone features and will be introduced this late fall.  I have the first gen and will upgrade for certain when they announce it !!  I just keep selling puts at 145.00 for the balance this year.  Into 2018 I am writing 150.00 puts. Generally ROM, (return on margin) is comfortably in the 40's%.   I own a gob of apple. 

    Phil, I know you told me to sell the stock, but didn't as I wanted to capitalize on the unpaid capital gains tax, and I must admit a certain amount of greed now.   No hope, just the facts. FastGraphs show that in a year if the PE jumps upto 18X,  the price will be $194.21.   Currently the PE is 17.6. I closed all my covered calls in early June. Will write more later this fall.

    Have fun on your vacation Phil! We are having enormous amount of smog from the forest fires in BC, Canada. Is it a nice cruise for youngsters in their preteens and midteens?

  31. AAOI – Learner, the stock is up big today.

    ~Also, there was an article in Barron's entitled:

    "Finisar Is the Most Attractive iPhone Supplier."

  32. Yes albo, I am watching AAOI and listened to their earnings call as well.  Still has some more to climb, I am keeping my positions – the transition from 40G to 100G has started and this sell off is a good opportunity.  I think there will be some more volatility, but if this breaks below $60, I will add more.  

  33. Learner, I'm not quite as bullish as you, but I bought some stock Friday at 69.4 for a bounce, and decided to cover it instead of taking a small profit as the option premiums are high.  Covered this morning with Jan 18  75 calls at 10.30.  Way too early, as it turned out.

  34. Beating you up/Jabob – My plan is to break you of bad habits and teach you, eventually, to be a patient investor who will be able to relax and make money.

    Shkreli/Rustle – His type are a dime a dozen in the biz but to be so blatant about it is the shocker and that's the example they want to set "keep quiet while stealing the money!" 

    Bonds/Seer – I don't watch the bonds much but yes, there has to be some hedging going on and, in this super low-volume market, some is all it takes to create imbalances.  I don't think anything is as liquid as it looks but, then again, we don't have crashes that last more than 4 hours – so why worry?  blush

    AAPL/Newt – Well, IF the market doesn't crash and p/es down adjust back down, THEN AAPL may blast higher as it catches up with the S&P.  That would be nice but I wouldn't bet the farm on it.  As to the cruise, the girls (15,17) are having a great time, making friends, etc.  It's a gigantic ship and they meet people in the teen club and then go off on adventures around the ship.  They have wristbands that let them buy stuff (which also tell the vendors their age so they can't drink – not that mine do) and they can go to restaurants and shows with their friends – I love it – I'm in the cabin working and about to have a nice lunch, then finish work and right to the pool, bar, dinner, show – pretty good for a Monday!

    FNSR/Albo – More attractive now that we've had the sell-off.

  35. why would TSLA sell junk bonds instead of their over-inflated junk stock?

  36. Phil – Sounds like a good time !

  37. bio--probably because they could sell the bonds and did not want to further dilute the shareholders.

    Musk had said too often that they wouldn't sell more shares too. not that he hasn't ever done that before.

    It is amazing that it does not even dent the stock.

  38. Teaching/Jabob – see, Jabob, Phil actually loves you, not the least because you're such a good teaching example.

  39. TSLA – If they has to issue stock in a secondary, they'd actually have to nail down some real forecast numbers on production, pro-forma financials and all the risks.   Elon has been pretty successful in selling the fluff and ignoring the facts.  Did anyone listen to that earnings conference call?  What a joke. Totally minor league and would be a total embarrassment to any normal company and that's ignoring the technical difficulties.  It was like a table side chat over a beer.  No facts to speak of.  I get why the shorts never seem to close their position since some day this will go down but technically I expect this POS head back to $385 first.  

  40. The Personality Traits of Good Negotiators

  41. America’s Whiniest ‘Victim’

  42. Hi Phil, you reminded me to mention some stocks today:

    From Friday: these companies are in the fiberoptics field:  OCLR, FNSR (already noted, it's selling off today due to sector weakness – something to do with AAOI, which is plummeting), MTSI, ACIA. Any thoughts on these? Seems most stocks in this area are down along with AAOI.

    Today, looks like some of these are bouncing a bit. 

  43. Phil – "Beating you up/Jabob – My plan is to break you of bad habits and teach you."

    Hopefully, you won't have to resort to this and Out.

  44. Made mcmufin money on TF 1415 to 1412. Now short ES at 2476. want to keep at least one short in the indexes and get out before the lemmings BTFD.  :(  

  45. Jabo / patient

    Let me tell about a personal painful experience, I had a 50% of my portfolio in AAPL, the stock was a disaster 2012 because a coordinated action of traders kept the stock below and behind the market.

    I was frustrated  and finally sold my position, a few weeks later the 7:1 split  put the stock in track ..I got my cash but now a could be 2 million worth position is lost.

  46. advill--i hear ya.

    Obviously, I am just incredibly frustrated.

    Seeing all of these value plays get cut 20-75% in such a short time while the markets are flying is painful.

    I get Phil's legging in strategy.

    But that doesn't mean I want to sell puts and buy call spreads and afterwards see the stock crash so I could adjust, buy more, and hope for a recovery.

    Maybe, others on this board have been successful doing that.

    AAPL was a great Phil call.

    But the timing on the FU stocks like FTR and TEVA? 

    I would love to eat crow on both… but so far they have been horrible.

    But I am NOT saying that initiating a position here is a bad idea (hope not).

    thinking they were cheap at 4 and 40+ was wrong--sorry.

  47. Phil/CMG

    The stock keeps falling 1 to 2 % every day and there is no news and nobody talks about it. Just the same law firms keep reminding the investor again and again. Can someone sue these firms to create a negative news in the market that leads to further stock decline :-)


  48. Trump company applies for casino trademark in Macau

  49. Phil –  "there are suckers who stare at charts and think PRICE determines VALUE and they let that determine their investing stance."

    Indeed, without wisdom and insight, all of the data, information, knowledge and experience in the world, is as useful as white noise.  Wisdom is the patience, understanding and ability to discern, judge and apply that knowledge and experience in a meaningful way.  Insight is the awareness of the underlying essence or truth, knowing the meaning or reasons, or why something IS.

  50. …..hmmmm..what shall I tweet now?.. my Ivanka is a beautiful woman…check my hair…..I wonder what Hillary is doing…got to go pee

  51. Back from a kick-ass lunch.

    Looks like we're green again with oil back over $49.20.  /NG moving back up is nice too.

    Even the RUT is green at 1,414.50.

    Bonds/BDC –  As noted by Stu, it might be a disclosure issue.  Their numbers are getting fuzzier and fuzzier as time goes on with lots of this:

    Image result for and then a miracle occurs flowchart

    By the way, the newsfeeds I read are getting to be 75% Trump (vs maybe 20% Government when Obama was Prez) – I don't know if it's because there is so much going on or if this scandal is more newsworthy than we think but it's amazing how many people are writing about this stuff.

    Stocks/Ilene – Well now it's a bit late but I'll try to get back to them this evening.  

    By the way, I'll be in St Martin tomorrow, not Weds so tomorrow AM I'll be on a boat and back around 1pm – that's my only major planned time-off for the week.  

    Cheap/Jabob – Our initial entries on stocks like TEVA and FTR are based on where we wouldn't mind owning them for the LONG-TERM – it is not a bet that they go higher, we're simply putting in place markers to make sure we at least get something at our long-range target.   Our first trade on TEVA in the LTP was 10 short 2018 $45 puts at $4 ($4,000) and we bought them back for $10,000 in June and sold 14 of the 2019 $37.50 puts for ($14,400) so actually we put another $4,400 back in our pockets and net we sold 14 2019 $37.50 puts for $8,400 ($5.60) so our net entry on 1,500 shares is $31.90.

    Of course, when 2020 comes out, we can roll down to the $30 puts about even and then the $22.50 2021s and the 2022 $15s.  Hopefully, at some point in time, TEVA will stop going lower, the puts will expire worthless and we'll be up $8,400 or whatever. 

    In Feb we bought 10 2019 $25/35 bull call spread for $3.45 and the $25s are still $2 and we can roll them down to the $17.50s at $4.35 for $2.35 and then we're in the money again.

    Meanwhile, this is using $6,000 worth of cash and margin in a $1.6M portfolio where our allocation blocks are $50-100,000 so yes – it's early and the stock is cheaper and that's a GOOD thing if we decide to build a position.  If not, we take a net $25,000 loss which is 1/2 an allocation block (1.5%) and we move on but, so far, I'm leaning towards looking forward to building a bigger position.  

    If you want to own 3,000 shares of TEVA for $20 when the stock is at $40 – this is what HAS TO HAPPEN in between.  We know stocks go up and down over time and our goal is to be in position to make the big buys when they are down – not when they are up – that's when we sell!  

    Image result for teva chart

    We thought $40 might hold – it didn't.  On the way down we added a bull call spread ($3,750 only) and our real bet is the short puts ($8,400) which we rolled.   Since we expect to ultimately collect $8,400 for the short calls, we still have $5,000 to spend on a bull call spread but we're waiting to find a bottom and then we'll happily add that while waiting to roll the puts to lower, longer strikes.  

    Meanwhile, the $37.50 puts are $19 and the $27.50 puts are $10 so we could do a 2X roll anytime and drop to there but we still like that target 18 months out.  

    As I've said hundreds of times over the years, Jabob, if you want more immediate winners, wait until we do DD to make your first entry.  The LTP plays are not looking for immediate winners, we're simply taking an initial entry at the point at which the value is compelling and, after that, we tend to ignore them for a couple of years (unless someone fixates on them daily and then we have to have endless discussions about the same thing – over and over and over again). 

    CMG/Pat – Not sure what you mean by suing the firms.  I guess investors can get together and file a frivolous lawsuit claim against the firms and claim they are manipulating the stock prices but judges don't tend to award damages if there is even the sliver of a case to be found by the plaintiffs and CMG clearly did damage shareholders – it's really a question of intent and disclosure.  

    Meanwhile, they are doing you a favor by making the stock cheaper or, as Jabob says, making a stock you should avoid because it got cheap!  

    This is no different than what YUM went through and the legal stuff is nowhere near as big a deal as LL or BP and all those companies survived.  CMG is down to $9.7Bn at $340 and they are selling $4Bn and dropping $500M to the bottom line so not super-cheap at 19.5x earnings so I wouldn't expect a big recovery but floating around $400 once things calm down is very likely.

  52. Phil/ St. Maarten;

    Is one of the best islands there, renting a car and moving around is a good way to spend a few days ( which is not your case now) another is renting a sailboat , they have some acceptable spots for scuba and fishing, you can also visit the nudist beaches in the dutch side, quite instructive about democracy!.

  53. GWPH delays its NDA.  Good riddance.

  54. St Martin/Advill – Next summer I plan to stay for a week and get to know it better.

    Well, all green at the close but the volume is nearly 0 – I don't know what's going on but seems like calm before the storm to me.

    Date Open High Low Close* Adj Close** Volume
    Aug 07, 2017 247.49 247.87 247.37 247.84 247.84 26,889,323
    Aug 04, 2017 247.52 247.79 246.97 247.41 247.41 58,858,100
    Aug 03, 2017 247.31 247.34 246.64 246.96 246.96 40,856,000
    Aug 02, 2017 247.47 247.60 246.37 247.44 247.44 47,211,200
    Aug 01, 2017 247.46 247.50 246.72 247.32 247.32 55,050,400
    Jul 31, 2017 247.37 247.48 246.53 246.77 246.77 65,838,700
    Jul 28, 2017 246.65 247.06 246.13 246.91 246.91 50,088,400
    Jul 27, 2017 247.96 248.00 245.68 247.20 247.20 70,766,600
    Jul 26, 2017 247.75 247.79 247.13 247.43 247.43 47,575,400
    Jul 25, 2017 247.68 247.80 247.16 247.42 247.42 54,915,600
    Jul 24, 2017 246.79 246.98 246.28 246.82 246.82 46,622,300
    Jul 21, 2017 246.44 246.91 246.18 246.88 246.88 82,340,800
    Jul 20, 2017 247.28 247.42 246.47 247.10 247.10 47,135,200
    Jul 19, 2017 246.02 247.00 246.01 246.99 246.99 51,034,300

  55. bitcoin total = $3675


  56. O just came across a new digital asset called databits. THe shtick is an AR game (Phil: game tokens!), where you own the creatures who occupy a unique ID on the blockchain. So they're value can change:



    market cap: $26.9 M currently

  57. some spelling errors above, sorry. Anyway, my gaming idea would be to create an AR game that's sort of like pokemon go (walk around and find stuff), except it's basically a straight-up treasure hunt. The blockchain would issue coins with unique, randomized GPS coordinates and "drop" them around the world, and collectors go around and collect them by coming within proximity with their App-enabled phone. The coins would exist as is, and the open market would decide their value. The algos would also randomly select the drop value of the coins where larger amounts are exponentially more rare. The higher the treasure chest's value, the "fuzzier" the coin location would be. Example, a "penny coin" would be accurate to within a couple of feet radius, but a "lottery ticket" 1,000,000 dollar coin would be somewhere within a radius of 5 miles.

  58. TEVA/Phil, Thanks for the write-up on TEVA, I understand this is for longer term, but I am in a CC, average price $35.50 covered with JAN19 30 CALL @ $7.10.  Now @ $1.20.  I close the CALL, right?   Wait for the sell off to calm down and DD (assuming stock is still in favor), then start selling more premiums?    

    Also, sitting on a TEVA JAN19 30 PUT @ $4.20; now $12.20 was not planning on doing anything at this point. 

  59. FGEN….zoom zoom!!!!

  60. Phil just a short not from one of your members: just get the hell of this side for a change and enjoy your vacation with your family!!!!!!!!!!!!!

  61. Phil- can you post details of current futures positions with avg please. Thx

  62. LOL, I'm sure Phil is enjoying himself doing just what he wants to… living the good life, good inspiration

  63. Comment content omitted because it is too long.

  64. Databits/BDC – That's fun, I should buy some for Maddie.   As to other idea, it could lead to people taking dangerous risks searching for coins (ie, would you place coins at Fukushima?).  Pokemon had that issue for a while. 

    TEVA/Joseph – If you own the 2019 $30 already, you can roll down to the $20 ($3.10) for $1.90 and then you are in position to sell $30s for $2+ on a rebound and then net $0 to roll down to the $20/30 spread (other than cost of buying back short call, if there is one).  DD is optional but I'd wait until you KNOW it's done falling as there may be another roll down in your future.  The put I wouldn't worry about, though it may be assigned (and then you can sell lower).  The $30 put are $12.20 with little premium but the $22.50 puts are $6 and you have a net $8 loss so you could just roll to 1.3x essentially even but I don't think $30 is an unrealistic target – so why switch before the 2020s come out if you don't have to?

    Vacation/Yodi – This isn't a vacation (oh no, I sound like Trump!), this is me going with my family on a cruise that they wanted to take.  I'm just along for the ride and I just took a vacation though I am having fun (just got done with my evening) anyway.

    Futures/Ravi – I'm in the middle of the ocean – I'm flat! 

    The good life/Mkucs – That is the point of our system.  Lots of long-term positions we don't have to fuss over that make a nice, steady income – despite those FU losers.  Not much point in having money if you can't spend it because you are trapped in a room watching it all day, right?

    • June Consumer Credit increases $12.4B (M/M) vs. $16.0B consensus and $18.3B prior (revised).

    • Stocks opened the week on a positive note as the Dow notched its ninth consecutive record closing high and the S&P 500 posted a new record high for the first time since July 26, while the Nasdaq did not hit a record but still outpaced its peers for the day.
    • "It's really hard to see anything that could send the market for a stumble," says Bruce McCain, chief investment strategist at Key Private Bank. "Earnings have been pretty good… At some point we're going to hit a roadblock but right now it's hard to see what that will be."
    • Sector movement mostly was modest, with tech (+0.6%) and consumer staples (+0.7%) finishing at the top of the leaderboard and the energy space (-0.9%) settling at the bottom.
    • Tyson Foods (+5.7%) was the top performer in the consumer staples group after beating both top and bottom line estimates and issuing upbeat revenue guidance, and chipmakers helped boost the tech sector.
    • The energy sector was mired in the red as crude oil held a sizable loss for much of the day but retraced nearly all of the decline by the close; WTI settled just 0.1% lower at $49.37/bbl.
    • Treasury prices ended modestly higher, leaving the benchmark 10-year yield down by a basis point at 2.26%.
    • Ignore macro concerns, say David Kostin and team at Goldman, noting a number of reasons making the sector a buy: 1) Jump in capital returns this year 2) Higher ROEs and P/B ratios 3) Valuations still at a discount 4) Deregulation move picking up steam.
    • Investment pros, says Kostin, continue to be underweight the sector, with the top 25 equity income funds holding just a 19% weighting – 700 basis points less than the common benchmark.
    • Baird's David George, on the other hand, takes note of the BKX's 29% advance since the November election vs. the S&P's 16%. As for the benefit of higher capital returns and interest rates, one could make the case those catalysts have been fully baked in by now.
    • Alongside record lows in volatility, the number of short positions in VIX futures just hit a new record, according to Bloomberg. What's more, an ETF which benefits when volatility falls just saw its largest weekly inflow since June.
    • All this comes as we move into August, where historical data show volatility tends to jump more than any other month.
    • According to the report from the FHFA, Fannie Mae (OTCQB:FNMA +3%) and Freddie Mac (OTCQB:FMCC +2.8%) combined would need up to $99.6B in bailout relief under the severely adverse scenario – i.e. big drop in housing prices, widening bond spreads, and market liquidity strains.
    • That's substantially less the $187.5B in combined draws as a result of the financial crisis, as well as the $158.4B remaining funding commitment.

    Trump administration rescinds Obama rule on energy fees for federal lands

    • The U.S. Interior Department today repealed Obama-era rules that changed how energy companies value sales of oil, gas and coal extracted from federal and tribal land, saying they caused "confusion and uncertainty" for energy companies.
    • The valuation rule proposed last year required energy companies to pay royalties on sales to the first unaffiliated customer, known as an arm's-length sale, as the fuel moves to market.
    • Interior Secretary Zinke said the valuation rule had increased costs for coal, oil and gas companies, which hurt production on federal lands, "making us rely more and more on foreign imports of oil and gas."
    • Also, the department today began an overhaul of an Obama-era plan to protect sage grouse that it says will both preserve the species while expanding opportunities for oil development in western states where they live.
    • Repsol (OTCQX:REPYFOTCQX:REPYY) has withdrawn all foreign workers from its oil fields in Venezuela amid the country's deepening political crisis, while Chevron (NYSE:CVX) and Total (NYSE:TOT) have removed some employees and Statoil (NYSE:STO) has pulled its expatriate staff, Bloomberg reports.
    • The departure of workers is a blow to the government because oil production, which has tumbled over the past two years, accounts for 95% of Venezuela’s foreign currency earnings; Repsol gets ~10% of its production from the country, where it owns a stake in the Carabobo heavy oil field and is a partner with Eni (NYSE:E) in the Perla project, Latin America’s largest offshore gas deposit.
    • CVX retains a substantial expatriate workforce in the country, and Repsol and STO still have Venezuelan citizens working at their operations, according to the report.

    • Transocean (RIG -3.5%) enjoyed healthy gains after reporting better than expected Q2 resultsbut shares have since given back nearly the entire advance, capped by a 3.5% thrashing today as oil and gas related stocks are lower across the board.
    • Instinet analysts find RIG's valuation remains "unappealing," calculating RIG’s current book of contracts as worth ~$3.65B vs. an enterprise value of $8B, "implying that RIG needs to win ~$4.35B in awards over the next several years to justify its current share price."
    • Meanwhile, Zephirin maintains its Sell Speculative Risk rating on Noble Corp. (NE -7.7%), saying litigation risks as well as still ongoing dayrate weakness and falling backlog could put additional pressure on the shares; the firm cuts its stock target price to $2 from $3.
    • Also among offshore drillers: ESV -6%ATW -7.3%DO -1.8%RDC -4.2%.

    • Natural gas futures settled $0.02 higher today at $2.80/MMBtu, but Alliance Bernstein analyst Jean Ann Salisbury lowers her gas price outlook to account for high grading, declining initial production rates and lower improvement rates from the shift from oil to gas in the Utica shale.
    • Salisbury calls gas well efficiency improvements "terrifying" – the average gas initial production rate of wells is up 34% Y/Y compared to a 7% compound annual growth rate during the 2012-15 period – and she says it is unrealistic to expect such rates to continue.
    • The analyst is generally bearish in its outlook for gassy E&P companies, expecting more production but weaker prices, and bullish for gassy and NGL midstream; Alliance Bernstein has Outperform ratings on Enterprise Products Partners (NYSE:EPD), Energy Transfer Equity (NYSE:ETE) and Williams Cos. (NYSE:WMB).
    • BP (BP +1.1%) reports one of its natural gas wells in New Mexico's Mancos Shale reached the region's highest production rate in 14 years, pumping 12.9M cf/day of gas in an initial 30-day period.
    • Horizontal gas wells in the Eagle Ford Shale in south Texas typically produce 8M-12M cf/day of gas, according to energy research firm Wood Mackenzie.
    • Dave Lawler, head of BP's shale gas unit, says the discovery means the Mancos Shale – part of the San Juan Basin, which stretches across New Mexico and Colorado – could become one of the top U.S. shale plays.
    • BP says its Mancos well was drilled sideways 10K ft. in the U.S. government-owned Northeast Blanco Unit; the company has said it could drill ~1,600 wells with 5K ft. lateral sections across the San Juan Basin.
    • Global miners surge in early trading, with Rio Tinto (RIO +2.3%) and BHP Billiton (BHP +1.4%) reaching new 52-week highs, as China iron ore prices jumped as much as 7% overnight.
    • Vale (VALE +2.6%), Glencore (OTCPK:GLCNFOTCPK:GLNCY), Anglo American (OTCPK:AAUKFOTCPK:AAUKY) and Fortescue Metals (OTCQX:FSUMF +1.1%) also are higher after Dalian iron ore futures rose to a four-month high while Shanghai steel rebar reached its best levels in five years.
    • “There’s a bit of a relief effect coming from China,” says Didier Saint-Georges, member of the Investment Committee at Carmignac. “[Economic] momentum in China has been quite good, and these fears about demand for commodities and the mining sector were probably not well placed."
    • Also: MT +4.6%X +3.1%AKS +1.4%CLF +2.9%CMC +1.1%RS +1.1%.

    • Reuters reports on lithium demand, and cites a Morgan Stanley analysis that forecasts the production and use of electric cars to rise to 9.4% of 102M anticipated new vehicles in 2025 and to 81% of 132M new auto sales by 2050 from just 1.1% of 86.5M new autos this year.
    • Consultants at Roskill estimate 785K metric tons/year of lithium carbonate equivalent will be needed by 2025, amounting to a 26K metric ton shortfall from anticipated supply, compared to 217K tons of demand vs. 227K tons of supply this year, and other analysts expect an even larger deficit.
    • "There are four names that dominate, and that is likely to be the case for the next five years" – FMC Corp. (FMC -0.3%), Albemarle (ALB +1.9%), Sociedad Quimica y Minera de Chile (SQM-0.7%) and China's Tianqui Lithium – says Jeremy Kent, portfolio manager at Allianz Global Investors.
    • FMC says it plans to boost lithium hydroxide capacity to 30K metric tons/year by the end of 2019 after rising 80% this year to 18K metric tons/year, ALB plans to expand its lithium carbonate equivalent capacity to 165K metric tons by 2021 from 89K tons this year, and SQM says it plans to expand its lithium carbonate capacity in Chile to 63K metric tons by 2018 from 48K tons currently.

    • Albemarle (NYSE:ALB-3.5% AH despite reporting better than expected Q2 earnings and in-line revenues that were 10% higher than in the prior-year quarter.
    • Q2 sales in ALB's lithium and advanced materials business totaled $318M, up 36% Y/Y, primarily because of favorable pricing impacts and increased sales volumes, but sales of bromine specialties fell 1.4% to $204M, mostly due to lower pricing impacts and unfavorable currency exchange impacts.
    • ALB issues in-line guidance for FY 2017, seeing EPS of $4.20-$4.40 vs. $4.36 analyst consensus estimate and revenues of $2.9B-$3.05B vs. $2.95B consensus.
    • ALB hit an all-time high in today's regular trading after gaining 43% YTD, and Josh Brown praised the stock on CNBC today as his preferred way to play the electric vehicle market, saying "this thing is breaking out… [the] trend looks phenomenal."


    Manitowoc +9% after easy Q2 earnings beat, improved guidance

    • Manitowoc (NYSE:MTW+9.3% AH after reporting a big Q2 earnings beat along with revenues that fell 14% Y/Y to $394M from $457M a year ago but nevertheless exceeded analyst estimates.
    • MTW says most of the sales decline was due to lower crawler crane shipments in the Americas as it shipped a "significant volume" of the items in the prior year, as well as lower rough terrain crane shipments in the Americas and in the Middle East due to continued weakness in oil and gas market demand.
    • Q2 orders of $379.5M, which included the initial production order related to the U.S. Army contract, were up 9% Y/Y, and backlog of $491M at the end of the quarter was up 25% from the year-ago quarter ending backlog of $393.5M.
    • MTW also raises its FY 2017 guidance to a 5%-7% Y/Y decline vs. a prior outlook for an 8%-10% drop, and adjusted EBITDA of $59M-$69M from its previous forecast of $41M-$59M.
    • Moody's assigns a B2 corporate family rating to Tesla (TSLA +0.1%) and issues a Stable outlook following the company's issuance of new notes that sit in a junior position to the $1.9B secured credit facility. The ratings agency also sets a speculative grade liquidity rating of SGL-3.
    • Moody's on Tesla: "As a result of the rapid ramp up in Model 3 production and the significant increase in capital expenditures required under the production plan, we expect that Tesla will remain free cash flow negative into 2019. Given this negative free cash flow outlook, the uncertainties associated with the launch of the Model 3, and the potential cash requirements necessary to cover the maturities of its convertible debt, Tesla will face large cash requirements through 2018. The liquidity resources available to the company provide moderately adequate coverage of these cash requirements. This is reflected in the SGL-3 liquidity rating. Tesla's principal liquidity sources include the company's $3 billion in cash, proceeds from the proposed note offering, and $900 million available under its $1.9 billion secured revolver. Without the proceeds from the note offering, Tesla's liquidity position would be stressed."
    • Previously: Capital raise for Tesla's Model 3 (Aug. 7)

    • Avis Budget (NASDAQ:CAR): Q2 EPS of $0.30 misses by $0.28.
    • Revenue of $2.24B (flat Y/Y) misses by $30M.
    • Shares -10.33%.
    • Press Release
    • China is on pace to become the world's largest market for stout beer this year as popularitycontinues to grow in the region. Demand for the darker form of beer is expected to continue to rise. Euromonitor sees stout demand jumping to 659M liters by 2021.
    • Diageo's (NYSE:DEO) Guinness business and Tsingtao Brewery Company (OTCPK:TSGTYOTCPK:TSGTF) are both squarely in the middle of the boom with their China lineup. Anheuser-Busch InBev (BUD -0.3%) also has a few stout plays in China.
    • The New York Times reports that there is a growing trend among health insurers specifying branded drugs over generics, driven by more attractive margins for pharmacy benefit managers (PBMs), but saddling patients, in many cases, with higher out-of-pocket costs.
    • Examples of the trend include Merck's (MRK -0.4%) cholesterol med Zetia (ezetimibe), Boehringer Ingelheim's stroke risk reducer Aggrenox (aspirin/extended-release dipyridamole) and Endo Pharmaceuticals' (ENDP -0.3%) pain reliever Voltaren Gel (diclofenac sodium).
    • Shire's (SHPG +0.2%) ADHD med Adderall XR (mixed salts of single-entity amphetamine) is another case where negotiated discounts with middle men have preserved much of its market share, 29% last year, but at a reduced return. According to research outfit SSR Health, Shire's take/pill has steadily declined, $1.73 in Q1 2017 versus $2.93 in Q1 2013, despite the list price holding relatively steady at $7.12, reflecting the ever-growing haircut from PBMs and distributors (i.e., McKesson (MCK +0.4%), Cardinal Health (CAH +0.5%) and AmerisourceBergen (ABC-1.2%)).
    • In December, CVS Caremark (CVS +1.2%) informed pharmacies that some of its Medicare prescription drug plans would only cover branded versions of 12 drugs, including J&J's (JNJ-0.4%) schizophrenia med Invega (paliperidone).
    • Teva Pharmaceutical Industries' (TEVA -6.4%) SVP for customer and marketing operations Christine Baeder says, "You definitely see a much more aggressive posture [from branded drug makers] than you used to see."
    • The tactic appears to be spreading to biosimilars.
    • Tenet Healthcare (NYSE:THC-11.1% AH after reporting a larger than expected Q2 loss and cutting FY 2017 guidance below Wall Street expectations.
    • THC now sees full-year EPS of $0.69-$0.99 from its earlier outlook for $1.05-$1.20 and below the $1.20 analyst consensus estimate, on revenues of $19.1B-$19.4B from its prior view of $19.7B-$20.1B and below the $19.7B consensus.
    • THC says its full-year outlook is hurt by the sale of its Houston-based assets announced last quarter, lower patient volumes and lower than expected revenue from its Conifer unit.
    • For Q2, THC says its adjusted admissions on a same-hospital basis, which include patients who stay in the hospital overnight and those treated on an outpatient basis, fell 1.4% Y/Y.
    • "We are not surprised by these results and view the admissions growth headwinds facing the hospital sector as longer-term issues that will not be solved in the coming quarters," Piper Jaffray analyst Sarah James says

    Intel announces release dates, specs for X-series processors

    • BlackBerry (NASDAQ:BBRY) shares are 3.4% lower in premarket trading after Goldman Sachs has resumed coverage with a Sell rating.
    • Rivals such as Citrix, VMware and Microsoft look to be bundling enterprise mobility management more broadly (and from a bigger footprint), turning up competitive pressures, writes analyst Gabriela Borges.
    • There's also limited visibility on the company's opportunity in the automotive market, she writes. There's risk in Street expectations for estimates in the second half and fiscal 2019.
    • Goldman's price target of $8.50 implies 10% downside from the current price of $9.44.
    • BBRY is up 37% in 2017.
    • Gogo (NASDAQ:GOGOfell 2.3% (and is down another 2.1% after hours) after a mixed Q2 report where it posted a bigger-than-expected loss but also double-digit gains in revenues that beat the Street.
    • Net loss swelled 10% to $44.2M, with $14M in increased costs for launching 2Ku service for new and existing partners as well as OEM 2Ku programs and costs associated with its next-gen ATG solution.
    • EBITDA fell 31% to $9.9M, missing an expected $14.9M.
    • Revenue breakout: Service revenue, $154.1M (up 20.8%); Equipment revenue, $18.7M (down 6.2%).
    • Revenue by segment: Commercial Aviation – North America, $101M (up 9%); Commercial Aviation – Rest of World, $14.1M (up 145%); Business Aviation, $57.8M (up 18%).
    • It reaffirmed long-term guidance and full-year 2017 expectations for revenue to the high end of $670M-$695M (vs. consensus for $692.9M), EBITDA at low end of $60M-$75M (vs. consensus for $60.4M), gross capex of $290M-$330M and 2Ku installations of 450-550 aircraft (about 150 in Commercial Aviation – Rest of World).
    • CBS (CBS +1.4%) is up fractionally after hours following a beat on top and bottom lines in its Q2 earnings as licensing and affiliate fees outpaced modest advertising growth.
    • Revenues rose 9.4% and operating income rose 3%. Meanwhile, adjusted EPS was up 18% on a headline basis and up 12% as adjusted.
    • Affiliate and sub fees were driven by 25% gains in retransmission fees from CBS network affiliated stations, along with additional help from digital subscription services.
    • And licensing was up 12% despite a difficult comp to a year-ago quarter that contained international sales for five Star Trek series.
    • Revenues by segment: Entertainment, $2.18B (up 12.2%); Cable Networks, $571M (up 6.5%); Publishing, $206M (up 10.2%); Local Media, $412M (up 4%); Corporate/eliminations, -$116M.
    • Revenues by type: Advertising, $1.3B (up 4.3%); Content licensing and distribution, $1.06B (up 12%); Affiliate and subscription fees, $848M (up 15.7%).
    • Operating cash flow was $231M; free cash flow was $190M vs. a year-ago $181M.
    • Conference call to come at 4:30 p.m. ET.
    • Press Release
    • As part of the newsmaking in its earnings call, CBS (CBS +1.4%) — now up 0.7% after hours — is taking its broadcast streaming service worldwide.
    • CBS All Access will be offered internationally through a partnership of CBS Interactive and CBS Studios International; it's headed to Canada first, in the first half of 2018, before going to "multiple continents," says CEO Les Moonves.
    • Prices for the international version weren't disclosed yet; All Access is available in the U.S. for $5.99/month or $9.99/month commercial free.
    • On the call, Moonves said that against a previous goal of 8M subscribers for All Access and its direct Showtime service by 2020, the company is ahead of pace and will hit 4M combined by the end of this year.
    • Previously: CBS beats as fees, licensing outpace ad gains (Aug. 07 2017)

    'Dark Tower' rules summer's slowest weekend at movies

    • The Dark Tower (SNE -0.8%) prevailed at the box office in the summer's flattest weekend so far, knocking war epic Dunkirk (TWX -0.1%) from the top spot.
    • The Stephen King-based sci-fi fantasy film drew a disappointing $19.2M but still edged Dunkirk's$17.1M. It added just $8M in foreign markets to hit a worldwide $27.15M.
    • Dunkirk, meanwhile, ran its worldwide three-week cumulative total to $314.2M.
    • Also bumping down a spot apiece amid Dark Tower's debut were The Emoji Movie (NYSE:SNE), at No. 3 with $12M, and Girls Trip (NASDAQ:CMCSA), at No. 4 with $11.4M. Atomic Blonde(CMCSA) dropped off from last week's four spot to No. 7 with $8.2M.
    • Meanwhile in longer runs in the top 10, Spider-Man: Homecoming (SNE), at No. 6 with $8.85M, ran its cumulative domestic total to just shy of $295M and its worldwide grosses to just short of $671M.
    • National CineMedia (NCMI -2.8%) is another 2.5% lower aftermarket following Q2 earnings that missed on double-digit revenue declines as theater attendance fell.
    • Revenues fell nearly 16% and OIBDA dropped 28.8%, to $42.3M. Operating income dropped 3.9! to $28.3M.
    • Total screens increased 0.7% to 20,623; founding member screens declined to 16,716 from 17,028, and Digital Content Network Screens were at 20,033, down from 20,061.
    • Total attendance fell to 160M from 172.2M; founding member attendance slipped to 132.5M from 145.9M.
    • “The second quarter completed a challenging first half of 2017, but the second half of 2017 is shaping up nicely so far with the third quarter pacing ahead of last year," says CEO Andy England.
    • It's reaffirming full-year guidance (including impact of an every-five-years 8% hike in theater access fees) for revenue declining from 1-6% ($422M-$442M, vs. consensus for $430.1M), and OIBDA dropping 6-12% Y/Y (to $202M-$217M, vs. consensus for $208.3M).
    • It expects $18M-$20M in integration payments from Cinemark and AMC associated with Rave Theatres and Carmike Theatres.
    • Press Release

  66. Morgan Stanley Asks At What Point Will EURUSD "Breathlessness Turn Into Outright Altitude Sickness"

    • Chinese trade data produced a rare miss in July with annual growth levels undershooting expectations.
    • Exports from the world's second-largest economy rose 7.2% from a year earlier, while imports expanded 11%, resulting in a trade surplus of nearly $47B.
    • China also said it will pay the biggest economic price from the new UN sanctions against North Korea, but will always enforce the resolutions.

    China Confident Sanctions Will Bring N. Korea to Table

    China's Minsky Moment Is Imminent

    Bond Bears Balk at `Trade of Decade' as Emerging Markets TestedThe case against emerging markets is gaining steam in one corner of the bond world. Investors yanked out $680 million from JPMorgan Chase & Co.’s emerging-market debt exchange-traded fund last month, the biggest-ever flows reversal. Traders are concerned that after an 18-month rally, rising yields in developed markets from the U.S. to Germany could wreak havoc across emerging markets similar to the taper tantrum of 2013, when developing-nation currencies depreciated by about 14 percent and local bonds lost an average of 7.3 percent, according to data compiled by Bloomberg.

    Mysterious Trader With "Nearly Unlimited Bankroll" Said To Manipulate, Dominate Price Of Bitcoin

    The Madness Is Back: Homeowners Take Out Mortgages To Buy Bitcoin, Cars And Wine

    The Problem With Electric Cars? Not Enough ChargersTo hit its sales targets, Tesla has to sell 430,000 cars by the end of 2018 and 10,000 a week after that—but where are they all going to plug in?

    Electric Car Boom Drives Rush to Mining's $90 Billion HeartlandA scramble by the lithium market’s biggest players to tie up supply of the high-tech metal is gathering pace in the 170-year-old heartland of Australia’s $90 billion mining industry. Rising Chinese demand for lithium-ion batteries needed for electric vehicles and energy storage is driving significant price gains and an asset boom in Australia, already the world’s largest lithium producer. The fast-developing hub is drawing investment and deals from global producers as well as chemical-to-battery manufacturers in China, the top consumer.

    Rare Earths Are China's Most Potent Weapon In A Trade War

    Big Tobacco’s Next Big Thing? Tobacco. Unlike e-cigarettes, new heat-not-burn products heat tobacco instead of a nicotine concoction.

    Silicon Valley "Outraged" After Google(GOOGL) Employee Pens Viral Doc Slamming "Anti-Conservative" Culture

    Inside the world of Silicon Valley's 'coasters' — the millionaire engineers who get paid gobs of money and barely work

    More Lonely, Fewer 'Friends', Less Sex – Have Smartphones Destroyed A Generation

  67. Fact-Checking – sounds like a great professor/class:

  68. Phil you seriously do not have to compare yourselves with a clown.

    But honestly take my advice, I know you cannot breathe without PSW, but they can do without you for a few days, and you will find you really come back like a new fresh human, not as a clown!!!!