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Non-Farm Friday – The Calm Before the Storm

Image result for trump calm before the storm cartoon"You guys know what this represents? Maybe it's the calm before the storm." 

That's the word from our President last night as he prepared for a dinner meeting with his military commanders.  The press asked him WTF he was talking about – as the President has many enemies he'd like to attack from Kim Jong Un to NBC News - who knows which way the drones are going to fly and Trump, ever the consummate game-show host, left us with a cliffhanger saying "You'll find out."  

Certainly Trump needs a distraction after such a terrible week for his Presidency and he's been working overtime to keep the haters spinning in circles, rolling back environmental regulations, arguing for gerrymandering in the courts, taking away birth control, taking away abortion (the GOP needs more poor babies to vote for them), demanding Congress violate the first amendment while defending the second in the wake of tragedy…  Hell, I bet you don't even know the US refused to join the rest of the civilized World in condemning the DEATH PENALTY for LGBT people in other countries

That's right, the US actually voted AGAINST a UN resolution that condemned the death penalty as a punishment for being gay.  This is not fake news, this really happened – in America – in 2017.  The fact is that we live in a world where even today gay people are being arrested, tortured and killed because of their sexual orientation. And the United States didn't just let an opportunity to condemn those atrocities pass by - it did much worse. It took a stand against that condemnation.

This latest vote came as a stark reminder that under the current administration, the United States hasn't just given up its commitment to advancing human rights. It has, instead, changed sides in that struggle.  The resolution urged countries that have still not abolished the Death Penalty (most countries have) to make sure it is not imposed as punishment for "apostasy, blasphemy, adultery and consensual same-sex relations."  That's right, blasphemy too – like speaking out against the Trumpster!  Maybe that's why you haven't heard about this from your regular news outlets…

The fact that the United States, the birthplace of the modern human rights movement, has opposed a measure supported by every single Western and Eastern European country in the body, and every Latin American country (only Cuba abstained), and instead sided with Saudi Arabia, Egypt, China and other countries with troubling human rights records, makes it a very dark day for human rights.

Joe Biden made a speech condemning Trump saying the US is "heading down a very dark path” and urged Washington’s foreign policy establishment to take a stand:

I really feel incredibly strongly that the women and men sitting before me, who have been the intellectual backbone of the foreign policy establishment in this country for decades, have to start to speak out.  President Obama and I have been very quiet and respectful, giving the administration time, but some of these roots are being sunk too deeply. I believe it’s time to challenge some of the dangerous assumptions that are attempting to replace that liberal world order.”

Image result for trump un cartoonAcknowledging that many Americans feel left behind by globalization, he said: “The appeal to populism and nationalism is a siren song, a way for charlatans to aggrandize their power, raise themselves up, break down those mechanisms that were designed, whether in our constitution or internationally, to limit the abuse of power, and destabilize the world.  It’s not alarmist. We’re walking down a very dark path that isolates the United States on the world stage and, as a consequence, endangers – not strengthens – endangers American interests and the American people.”

He derided Trump’s recent appearance at the UN, where the president emphasized national sovereignty and self-interest. “To stand in the well of the general assembly, and wave the flag of narrow nationalism, while warning of a future vulnerable to ‘decay, dominion and defeat’ marks a dangerous revision of political small-mindedness that led the world to consume itself in two world wars in the last century, and it abandons America’s hard-won position as the indispensable nation, as a leader that inspires more than fearTrading insults. Deploying taunting nicknames. Promising to ‘totally destroy’ a country of 25 million people. Such erratic action only worsens the crisis and rejects the possibility of diplomacy.”

Sorry if this has "nothing to do with the markets" but it has to do with life on Earth and, if you are first hearing about these things from me – you need to wonder what has happened to the once-free press in America that a massive reversal of position on Gay Rights goes unreported and former VP, Joe Biden's criticism of Trump goes uncovered or that the President of the United States hinting of a coming war passes with barely a mention – and the markets march up and up – as if nothing is wrong in the World.  We're in for a rude awakening – we just don't know when…

8:30 Update:  Complete and utter disaster on the Jobs Report!  Non-Farm Payrolls were DOWN 33,000 jobs (with +100,000 expected by leading economorons) and that's off from August's +169,000 and the first negative number in many years – go Trump!  You can't blame this on the Hurricanes:  As it turns out, the number of people hired by insurance companies as claims adjusters more than made up for the number of jobs that were displaced by the storm.  

Also, from the bureau of fake statistics, July has now been revised down from 189,000, which boosted the Dow 1,000 points that month, to 139,000 the lowest number of jobs added since July (though now trounced by September).  Will the market now take back those 1,000 Dow points (5%) and then what about this month's terrible report?  Is bad news still good news or is the Fed already locked into a December hike, no matter how crappy the data?  

There's nothing good about this jobs report for the markets.  Less jobs is less consumers to spend and wages continue to pressure upwards, 0.5% this month on a 6% annualized pace – there's a margin-killer.  There are 159,830,000 working Americans who are making an average of $26.55/hr.  That's $22.23 for the bottom 99%, "non-supervisory" positions and in order to increase the average by $4.32 by including the Top 1%, we can see that the Top 1% has to average $450/hr – about 20x more than the Bottom 99% make.  Yep, that's about right.

So if you hear reports about 6% wage growth and your paycheck isn't moving – now you know where the money is going!  

Image result for french revolution guillotineYou can't grow an economy by only giving money to the richest 1% of the people.  This has been proven over and over again for thousands of years.  This is the leading cause of revolutions, for God's sake!  At a certain point, it occurs to 99 people that if they kill that one guy and divided his $450 by 99 ($4.55 each), they'd ALL be 20% richer.  THAT'S Democracy! 

It's not only bad for the continuation of a peaceful nation but it's simply bad for the economy when you pool wealth in the hands of so few people.  Businesses that cater to the masses are very vulnerable as the masses run out of disposable income and the GOP's joke of a tax cut (see previous rants) is only going to make things worse, not better.  At some point (and we think it's this earnings period, which covers the -33,000 jobs and the -50,000 revision) this will start to show up in the earnings of a lot of companies that are trading at record highs because people don't think about the repercussions of these policies – they simply believe tax cuts are good and buy every stock in sight.  

That's how bubbles form.   We may soon see how they pop!  

Have a great weekend,

- Phil


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  1. A little behind here, but maintaining IG ratings is a milestone for TEVA despite the negative impact on cash flow (even if split rated):

    ~~S&P Global Ratings said that its ratings on Israel-based Teva Pharmaceutical Industries Ltd. (BBB-/Stable/--) are not affected by Mylan's announcement that it has received FDA approval for both the 20 mg and 40 mg generic versions of Teva's Copaxone for the treatment of multiple sclerosis, and will begin shipping the product imminently.

    * We view the near-term launch of generic competition as a negative development
    for Teva. This is because Copaxone sales will decline earlier than we
    previously expected, resulting in slightly lower levels of free cash flow
    available over the next two years to repay debt. We previously expected
    Copaxone sales to decline from generic competition in 2018 rather than 2017.
    However, we estimate that the accelerated erosion in the Copaxone franchise
    will only slow our expectations for deleveraging by about a third of a turn
    of leverage, which is still consistent with our 'BBB-' rating.
    * Our stable outlook on Teva continues to reflect our expectations that despite
    progress on asset sales with proceeds targeted toward reducing debt, leverage
    will remain more than 4x over the next two years given continued industry
    headwinds and declining Copaxone sales. It also reflects our belief that
    Teva's scale confers significant competitive advantage in the generic drug
    industry, notwithstanding recent industry headwinds.

  2. Relentless…

  3. Good Morning

  4. Democracy / Phil – And don't forget, our best friends in the world now are dictators like Putin, Erdogan and Duterte who kill journalists and opponents. And we have a party who is gerrymandering its way to a illusory majority where the other party needs to get 55% of the votes to get elected. And a supreme court that will validate these tactics. We are really only a DINO (Democracy In Name Only) now. 

  5. And we censor information that could have a negative impact on the popularity of our administration:

    The FEMA website has been an important tool for keeping Americans up to date on disaster recovery efforts in Puerto Rico after Hurricane Maria. But yesterday, the agency deleted statistics about how many people have access to electricity and clean water on the island. The FEMA website now only displays information that casts the recovery efforts in a positive light.

    It's really scary!

  6. Phony deficit hawks:

    That group apparently includes White House budget chief Mick Mulvaney, who during his time in Congress was known as squawking deficit hawk. Back during the 2011 debt ceiling crisis, he famously said that it would be better for the government to default on its obligations than pass a clean hike and warned that “we desperately need is structural change that stops Congress from continuing to spend a bunch of money we don’t have.” He also co-authored a budget amendment known as “cut, cap, and balance”—the name says it all—and once introduced an amendment that would have made Congress offset Hurricane Sandy aid with cuts to other spending, just because.

    And today? Well, now Mulvaney’s job is to sell a tax plan that will almost certainly set the federal government back 13 figures. His new stance is not only that deficits are good, but they are essential if anybody wants tax cuts to grow the economy.

    When it comes to help the average tax payer, deficits are evil but when all the benefits go to the top 1%, they are awesome. How can you even vote for people like him?

  7. Puts things in perspective:

    The circles don't look to be too scale much!

  8. 2017 is the worst year for job in 5 years! Won't see tweets about that – probably fake news!

  9. ROKU – From Briefing Trader :

    ~~ROKU trades up 2% in pre-mkt after Tiger Global discloses a 9.6% passive stake.

  10. Good Morning.

  11. sold a couple FTR nov 12 puts for 1.20

  12. Who keeps buying GM? 

  13. And everything else?

  14. GM – Citi out with unbelievable target !

  15. GM is over a 91 RSI.  Just bought some long puts for next week at 44.50.  They are cheap.

  16. Albo, thanks.

  17. I kept my GM puts and a few short calls; getting creamed and cannot get out.

  18. Phil,  Crude oil seems somewhat up and down. Not sure if it's tradable. Strether

  19. GM/Baron2

    Be careful writing short calls on low priced stocks.  They can easily move big percentages against you very quickly and if you do, have a tight long cover on it.

  20. Phil – "Sorry if this has "nothing to do with the markets" but it has to do with life on Earth."

    There are days when I just want to grab you by the nap of your neck… and lay a big ol smooch on your forehead. Brilliant AM rant, you are correct, and yet, it has everything to do with the markets….

    Seek margin in video games, or cars, or stereos or durable manufacturing, etc. or by starting or investing in a business that produces tangible product or services, NOT R.E. or financial instruments tied to the necessities of life.

    The money shufflers in the Temple Market of Jerusalem profited greatly from the exchange rates that they charged worshipers for shekels to pay the priests, and then from the priests to convert it back into Roman money. In effect, they were "double ending" every deal; and they also profited exorbitantly from 300% loans that they made.

    In this prophets only recorded act of violence, he flipped over the tables and destroyed the marketplace in the temple, and he would not allow any one to carry anything through the temple. And he taught, and said to them…

    "Is it not written, 'My house shall be called a house of prayer for all the nations'? But you have made it a den of robbers."

    Who is Yeshua bar Joseph, and have we learned NOTHING in the 2000 years since?  Greed is good? Greed turns people, their mercantile, economic, social and political institutions into monstrosities capable of perpetrating infinite evils against those whom they purport to serve.  To serve Man, comes to mind and Out.

    "When you turn your own backyard into a major source of wealth, that's when the trouble starts." – TNN

  21. Nat Nay,

    If its OK to go on rants here, my  wife would be very happy if I  did so and stopped "soap boxing" her every few days.  Such a world…

  22. StJL – "We are really only a DINO (Democracy In Name Only) now."

    My friend, this has been the case for over 100 revolutions around the Sun.

    "If congress has the right under the Constitution to issue paper money, it was given them to use themselves, not to be delegated to individuals or corporations. The bold efforts that the present bank has made to control the government and the distress it has wantonly caused, are but premonitions of the fate which awaits the American people should they be deluded into a perpetuation of this institution or the establishment of another like it…If the people only understood the rank injustice of our money and banking system there would be a revolution before morning." – Andrew Jackson, 7th President of The United States 1829 – 1837

    Just before the 21st President Woodrow Wilson (1913-1921) died, he is reported to have stated to friends that he had been "deceived" and that "I have betrayed my Country", referring to the Federal Reserve Act of 1913, passed during his Presidency.

  23. Baron – "If its OK to go on rants here, my  wife would be very happy if I  did so and stopped "soap boxing" her every few days.  Such a world…"

    Some hard learned tips which I have dispensed here in the past seem apropos.

    Rule #1: Although you are usually right, she is always right.

    Rule #2: The magic phrase is: Yes, Dear. or Si, Cara Mia

    Rule #3: The perfect diffusion technique is: Honey, would you like a drink or glass of wine?

    Rule #4: Never attempt to soap box the MRS. Refer back to Rule #1, rinse, spin and repeat and Out.

  24. Good morning! 

    Well, that sell-off didn't last long, did it?

    Looks like it's going to be one of those days when we roll our shorts higher into the weekend in preparation for more buying (to balance us more bullish) next week – as we'll need to back to playing long if this thing continues next week.

    They're spinning the jobs number as being all hurricane.  Leisure/Hospitality was down 111,000 but it's always down in Sept, after summer ends.  Hard to say how much of that is really the storm.  In May we had 11.7M employed and now it's 11,655M so a bit less but April was 11,641M – so there's more people working after the summer than before but nor more than during, when we peaked at 11.759.  

    TEVA/Seer – Hopefully that was ALL the bad news now done with. 

    Big Chart – Time for a bigger chart already!  The RUT is actually pausing right at the 5% line but no pullback yet but it's a very good sign when you see the 5% Rule being obeyed like that (it means we can play the prediction game).  1,440 to 1,512 is 72 points so 14-point down 1,498 and 15 below that is 1,483 – those are the retrace lines to watch and no luck so far – even on the morning dip. 

    Still, we keep getting those 5-point drops from 1,515 and that helps a lot if you are scaling in and out.

    DINO/StJ – Well, it was a nice 240-year run.

    FEMA thing is really scary and the press is scared to go at him because he is willing to attack them and he is vindictive and he will use the powers of his office against them.  You're only a "nation of laws" if the people at the top enforce them.  We are way off the rails here…

    Scale/StJ – Yes, it's a good chart but they blew the scale big-time. 

    GM/Baron – People are extrapolating post-hurricane car purchases out a lot farther than they should.  

    GM/Albo – WOW!  

    Oil/Streth – Not now it isn't.  /RB might be good for a bounce at $1.55 if it hits it but /CL not really until $48.50 – too dangerous between there and $50 if you missed the short entry (on failing the strong bounce at $51). 

    Smooch/Naybob – I'll settle for a high five, thanks.  kiss

  25. Once again, this is why we like to always have some /KC on the back-burner!  

    Submitted on 2017/08/24 at 6:43 am

    /KC tried to shake out the weak hands before turning higher:

    Submitted on 2017/08/29 at 3:45 pm

    /KC with a nice pullback – maybe another entry opportunity at $128 if we're patient, about $132 on /KCH8

    Submitted on 2017/09/06 at 2:53 am

    Dollar long (/DX) at 92.25 is a good play, /KC(H8) long, of course, at $1.31, /NG long at $3.185 and with /TF, we can go long at 1,400 with tight stops above and that will be confirmed by /YM over 21,750, /ES over 2,460 and /NQ over 5,950 so those are the watch lines.

    Submitted on 2017/09/26 at 7:21 am

    /KC back where we like them long (the $130 line)

    Submitted on 2017/10/02 at 1:22 pm

    /KC looking bottomy.

    /KCH8 is at our long goal at $130.

    /TF/Japar – Just hanging on for now, want to see how 1,500 goes this week.  I'm not adding more but my break-even is still 1,471, which is now 2% down from here so not likely I'd get it in a day.  I'd rather put money into long /KCH8 than more /TF shorts!  

    /KCH8 is at $133.10, /KC is $1.29 so about an 0.4 gap between the front month (charted) and the March contracts we're playing.  It's a pretty well-behaved range – between $130 and $140 on a monthly basis but there can be downside pain – so tight stops below $130 and be PATIENT for good entry.  If it does break up to a higher cycle, we'll just PATIENTLY wait for that to prove out and then play that but coffee is grown all around the World at different times, so it generally flip-flops around depending on the most recent of dozens of reports each month.

    Remember, our overall premise is Global Warming damages sensitive coffee crops and it takes 3 year to grow in new areas so, at certain points, /KC will blast up on shortages – but it may take years to play out so we are THRILLED to make 5 or 10 points ($375/point). 

  26. Nat Nay,

    It has taken years but the Mrs. can now take my diatribes without telling me what I am doing wrong or how I should deal with it.  (She has suggested some tranquilizers in the past.)

  27. WYNN.  it's nice how morgan stanley goosed it yesterday with PT increase to 150 before cashing out today.

  28. Well the market is super-toppy and our strategy is to pick a weekend like this, where we press our puts (going more bearish) and then, if we don't fall apart next week, we begin buying again to balance things out.  

    OOP Hedging Adjustments:

    SVXY – Our Dec $90 puts are $7.40 and the net of the spread was $5.30 but I doubt we'll go much higher than 100 (famous last words) and now at $97.75.  Let's roll the long puts to the March $105 ($20)/80 ($9.50) bear put spread ($10.50) for +$3.10 and that widens our spread from $20 to $35 and puts us much higher and in the money – well worth $3.  Let's also buy back 5 (of 20) of the Dec $80 short puts at $4.90 and put a stop on 5 more at $6.  Those will pay $70,000 below $80 and currently valued at $21,000 so $49,000 upside on the hedge.

    SQQQ – Let's buy back the Jan $45 calls for 0.30.  They are super-unlikely to be hit but a waste of margin.  Our March $23 calls are $3.60 and we paid net $2.68 so OK so far but let's be realistic and assume a 10% drop the Nas would be a 30% bump to $32, so no reason not to sell $32s but let's sell 25 (1/2) March $30s ($1.30).  That still gives us $7 x 25 ($17,500) protection on the 25/25 spread and then the naked 25 calls have no limit (and we can sell calls against them on a spike).  Call it $35,000 of protection though vs $20,500 current value is $14,500 of protection.

    TZA – Same here, let's buy back the useless short Jan $30 calls (0.07) and now we can roll our April $14s ($1.50), which are still more than the net $1.12 of the spread (now $1.19 as we spent 0.07) and we'll roll them down to the April $11s at $2.80 and sell the April $16s for $1.15 so it's net 0.15 on the roll and we STILL have a lower net cost than the original spread but now we're down to $11/16 on 80 is $40,000 of upside and we only paid $10K to start so +$30,000 protection.

    That's the point I want to hammer home.  While it may seem expensive to set up an insurance hedge – they are surprisingly cheap to maintain.  You do have to watch them and the rule of thumb is to take action before the price of your long position drops below the net of the spread but, sticking to that rule – you rarely get in big trouble when it comes time to adjust.  

  29. GE/phil, would you open a new position here?

  30. MS/Lunar – What a pack of thieves they are.  Also behind TSLA.  

    GE/Lunar – Maybe next week if things are stable but I'd rather see earnings. 

  31. Bought some DSX this morning, a dry bulk shipper.  The Baltic Dry Index ( BDI) has been on the rise and DSX has broken above the 50,100,and 200 dMAs. 

  32. Learn from my mistakes.   I should know better.  Whenever I swing for the fences I pop out.  I am holding short $105 calls on EFX.  I bet they would not rise more than 13% within 37 days.  But I really knew nothing about how EFX makes their money and that was totally wrong.   To add insult to injury at one point I was up 60% of the potential gain and did not put a stop loss on the play.   At expiration every dollar above $108.50 will cost me 3.3% of my stock market gains YTD.  So not a catastrophe but still painful and stupid as hell.  The smart move now might be to go ahead and take the loss while the price is down a little this morning but I still have 15 days of time value to lose and there is always the chance of a miracle save (or a disastrous spike).

  33. rustle, following your gm trade (not with money, just learning).  i assume you bought at ~34 cents.  are you planning to sell your 44.5 puts today, or hold till monday.  thanks!

  34. STP Hedging Adjustments:

    FAS – While it's this high, let's sell 20 2019 $50 puts for $14 ($28,000) but let's put a stop on 10 of the 2019 $37 calls at $25 so, if we stop out – it's a better than even 2x roll at worst.  If FAS does go lower on earnings, then we will have $28,000 more downside protection.  The nice thing about FAS is it has horrendous decay.  It's a 3x ETF and XLF is up 20% since May so FAS should be up 60% but it's only up 38% so the solution is to always just give it more time to decay on short calls.   With the new shorts, this is a $68,000 hedge that cost us $0 (and the loss is reflected in our current balance – so it's all upside from here).

    SQQQ – Our March $23s are holding their value but, as noted in the OOP adjustment, we're not likely to go higher than $32 on a 10% dip but I can't, in good conscience, pay $1 for the short $40s so let's just sell 60 of the March $30s for $2 ($12,000) and we'll use that money to roll our longs if the need arises but, for now, they are in the money.  And yes, it's a slight over-cover ($120) but the other 60 short calls are miles away.  100 x $7 is $70,000 on this hedge and we were in for net $35K but now collecting $12K more is net $23K so upside is $47,000 (+40 uncovered to $40). 

    TZA – Ouch!  Too aggressive here was painful but we sold lower puts, so smart!  As with the OOP, we'll buy back the short Jan $22 calls (0.19) and roll our long April $14s ($1.55) to the April $11s ($2.82) and we'll pay for some of that ($25,400) by selling 100 of the April $16 calls for $1.10 ($11,000).  That's net $14,400 to move $2 in the money and our payoff is 200 x 5 = $100,000 vs the current value of $0(ish) and net $14,000 we put in makes $86,000 upside and keep in mind we're $40,000 in the money now so we CAN'T lose unless our longs are going up.  

  35. Rustle – Your friend Ackman getting squeezed in HLF today. ;-)

  36. Shippers/Albo – Such madness in those things, I gave up playing with them – but it is fun.  The main reason I stopped is because all the new ships have been built and delivered over the past 10 years so it's very had to figure out the value of a fleet vs the debt etc.  I guess companies with the most new ships and serviceable debt would be the way to go – but it's a lot of homework to get there.  

    DSX, for example, has $600M in debt and had revenues of $37.7M last Q and lost 0.26/share, which is 5% of the share price lost in a Q so 20 Qs away from $0 at that pace, which means they'd better have a HELL of a good turnaround story, right?  So let's say they double their revenues to $300M/yr and drop 20% to the bottom line ($60M), which would be double any other shipper.  Still a long way from paying debt which, even if 5%, would cost $30M just to service.  $BDI has been strong for a year so, if they're not making money now – will they ever?  

    EFX/Tangled – Well it's kind of normal for a company to get back half their losses on an incident as naysayers and dip buyers jump in.  In fact, the 5% rule says the drop from $142 to $90 ($52) was SUPPOSED to bounce $10 to $100 (weak) and $20 to $110 (strong) at least and they haven't even made $26 yet ($116), which is where you are probably very screwed.  I see VC firms buying people's lawsuits for $3,000 and they are not idiots, they have to expect to collect $10,000 per incident to take a gamble like that and $10,000 x 140M is, well, it's a really big number for a Friday so leave it at that.  

    It won't likely be that bad but it is likely to suck so I'd give it to the $116 line before rearranging the deck chairs.  

    You know me, if I thought it was even worth $80 I would have sold some puts but I wouldn't even trust the short 2020 $60s for $5 at this point.  Of course you didn't see me selling calls either – too dangerous for my blood…  blush

    Holy crap, the Nas is trying to go green!   Might be time to throw in the towel…

    Image result for towelie throw in the towel animated gif

    HLF/Albo – I'm still waiting for all the "proof" he was going to show us?  How is he not in jail?

  37. Hi Phil,

    What price on oil will you flip long ?



  38. Phil you said about EFX "It won't likely be that bad but it is likely to suck so I'd give it to the $116 line before rearranging the deck chairs."

    Is there some advice there I am not understanding?

  39. CHL/Phil – low in channel. time to add or good for new entry?

  40. Oil/Pat – Well we hit my $1.55 call on /RB and that was already good for a penny ($420/contract) and then another 0.005 ($210/contact) so far.  THAT was the easy call. 

    Oil, as I said (and I drew a picture and everything!), would bounce off $49 to $49.40 before legging down but, since it's Friday, it would be silly to play it short but I don't like the Fundies enough to go long either.  

    At $48.50 I'd consider playing for a bounce next week but I'd much rather see $47.50, when we could expect at least an 0.50 bounce (weak) that would be worth playing.

    If $49 were a solid floor, then $49.40 (weak bounce) would act as resistance to the downside.  Don't forget, it's not a real resistance point ($49) just an even-dollar line likely to cause a technical bounce.  If $48.50 is going to hold, that's a $4 drop from $52.50 and the bounces would be 0.80 (weak) and $1.60 (strong) to $48.90 and $49.70 should be bounce from above.  So far, $49.70 has failed and if they can't retake $48.90 – then it's very likely $48.50 won't hold either and we're going for $47.50.  But this will take until Weds to play out.  

    CHL/Scott – $50 is where I always love them.  $102BN in revenues, $17Bn in profits, $205Bn market cap at $50 so p/e of 11.7.  1st half revenues were up 5% so chugging along and they just made a massive order for optical equipment – so I guess they are pushing fiber service too.  They also pay a 5.5% dividend!  

    It's a good time to take a shot in the LTP but, sadly, options only go out to March so in the STP, let's sell 20 CHL March $50 puts for $1.70 ($3,400) and see how it goes.  If it goes well (as previous put sales have), we just keep the money and, if it goes poorly, we have a cheap entry point for the LTP.  It's like we can't lose!  

  41. S – weak, and just testing swing low from May. a close below 7.32 would be a technical fail. I'm sure the bots are watching.

  42. and TSLA making its move to 500!

  43. GM/lunar

    Holding till next week to see if profit taking happens.  If it doesn't and I decide to cover and lose..20 on a few options, not getting hurt.  Loss is limited to actually .35 as a worst case rather than shorting and have stock run up 4 points on me.

  44. Good spot for long on /NG?

  45. Phil, sorry but not clear on SQQQ OOP adjustment.  What would be the final count?  Thanks.

  46. CHL – looking at a buy/write.. buy shares, sell March $50 straddle for $4, netting in at 46.22(ish). If called away (assuming don't roll out the calls) is 8% return in ~5 months (18.5% annualized). Dividend payouts seem to be a goofy schedule (July and Oct) so can't count those in yet. Hmm. not quite up to +2% monthly return so not armchair trade (is that minimum, Yodi?). Pass for now. Simple puts are good for potential entry if in margin account.. giving a 35% annualized return against regular margin if expire..

  47. KNDI – wow!  Ok. Taking some off the table. maybe al..

  48. Nasdaq green… sorry Phil, that was me. I bought some SQQQ calls. Go figure.

  49. Phil – You raise very good points on DSX.  I bought primarily on the technicals for a short term trade.  Also, even though the BDI has been rising from the lows, if it continues, DSX should be good for a trade. JMHO

  50. TSLA/Lunar – I'm rooting them on so we can short again!  

    /NG/Dreamer – They often crater Mon/Tues so I wouldn't jump in now.   Very mild weather not good for demand. 

    SQQQ/Baron – We end up with 50 long March $23 calls and 25 short March $32 calls.  

    CHL/Scott – Nothing wrong with that play.  I'm just happy selling puts until I get a good entry and, if I never do, then I'll sell a lot of puts.  cheeky  If we're collecting $1.70 for March that's about $4/year which is 8% a year without even owning them.  

    Jobs/Scott – I see plenty of help-wanted signs around here.  I also see plenty of people with 2 jobs to make ends meet.  I seriously don't think slaves worked longer hours than a lot of people I know.  The whole "freedom" thing is a bit overrated when someone gets up at 7, works their day job and then reports to their night job at 6pm and is home around midnight.  There's only so much freedom you can use between midnight and 7am…

    KNDI/Scott – I guess it wasn't too late to chase them the other day! 

    SQQQ/Mkucs  – Nah, it's the whole World that's insane, not just you….

    DSX/Albo – I'm not saying it's not good, just pointing out the flaws I see that keep me out.  Lot's of ways to make money without buying and holding. 

    CNBC interviewing my favorite analyst:  Hugh Johnson.  Cracks me up every time they introduce him.  

  51. Scott – Great move in KNDI !

  52. Awww, I feel so loved :)

    Wait, what?


  53. Albo – as ever, "if it was only a bigger position…"  Would love to see FTR do something like this.

  54. FWIW – Tidbits on the BDI :

    ~~The Baltic Dry Index has exhibited extreme volatility over the past 14 years with rises and falls broadly corresponding to bull and bear markets for industrial commodities.

    BDI’s all-time high of 11,793 was reached on May 20, 2008 in the second of two parabolic spikes when commodity prices peaked. By December 5 of that year, it had plunged to a post-1986 low of 663 for a 94% decline as commodities demand crashed amid the global economic crisis.

    From early 2012 to Q3 2016, a deep bear market for commodities resulted in the Index trading well-below its previous low. Its all-time bottom of 290 occurred on February 11 of this year (2016) due to severely depressed demand for iron ore and coal and a glut of carriers.

    Currently BDI is trading around 1300-1400. 

    Room to run ?

  55. iPhone 8 – did anyone get one of these yet? might get a new phone this afternoon…

  56. Phil/CHL

    Their last 'regular' dividend was actually $1.00 and they also paid a one time 'special' dividend of $2.04.

    So, if that $1 per quarter continues, that's an almost 8% yield!!

    Co I had some short calls against the stock, I lost out on the special dividend. Luckily, I also had an equal number of short puts and collected it at that end.

  57. Baron – It has taken years but the Mrs. can now take my diatribes without telling me what I am doing wrong or how I should deal with it.  (She has suggested some tranquilizers in the past.)

    Brings this to mind… and Out.

  58. Phil -  you said about EFX "It won't likely be that bad but it is likely to suck so I'd give it to the $116 line before rearranging the deck chairs."

    Is there some advice there I am not understanding?

  59. Scott/iphone8

    Just got it this week.

  60. NLY -  Phil what does this say to you about NLY as a dividend investment?

  61. dclark – and is it awesome? exceeding all expectation? faster than slicked.. ? :-)
    in short, worth it? or can't see any difference from previous, wish you waited for X, or made move to android? thanks--!

  62. scott – I upgraded my 5s to a 7-plus last week. The sales rep (AT&T store) said the 8's only advantage over the 7 was the induction charging which I don't care about and it as $100 less. Perhaps they are pressuring their sales reps to move old inventory, but I fell for it…

    1020 – I was pretty rattled earlier this week but I feel I owe you an apology

  63. Phil, Thanks for clarification on SQQQ.

  64. Albo – BDI – US Exports of Coal and China's demand for higher quality Iron OrePlatts reports

  65. BDC – thanks. my 5 is like the scene in the Holy Grail "I'm not dead yet…I feel fine…" but local provider has the wagon around today and offering special deals. If they are feeling generous on trade-in, I just might let them take my nine-pence.

  66. BDI/Albo – I don't think so.  It never should have been $1,300 – that was ridiculous and unsustainable (as evidenced by the entire global economy collapsing).  Just because people went insane one (tulips) – doesn't mean it will ever happen again:

    I know you want to argue that we're still in the low end of the total range but ships today are way bigger and more efficient, so cheaper to operate and then price competition kicks in.  The biggest problem the shippers have now is the new ships are coming on line (3-5 year lags) but they can't afford to scrap the old ones so they end up selling them to a hungry shipper and thus capacity keeps going up – which lowers the value of that capacity.  

    Global Container Shipping Outlook 2017

    Good report to read on the subject.

    8/Scott – Maddie (17) very reluctantly had to give up her 5S because the screen was doing strange things and ended up getting the 8.  Turns out she's very pleased with it, especially the camera improvements and the nifty speed.  I'm waiting for the X but my phone now reboots without being asked.   We're fairly sure AAPL sabotages old phones when the new phones come out as the "upgraded" OS tends to overpower the older phones, forcing you to either roll back the OS update (and lose your new features) or to sign another contract and get another phone.   Sneaky and effective.  Also, the kids don't even think that's a bad thing – more like a feature that gives them an excuse to have their parents get them a new phone.  

    That's something that occurred to me.  I'm not sure you can get away with owning a phone for less than $50/month with the contract and all and that's $600/yr per kid through college plus the phones for you and your wife is $24,000 over 10 years that we used to do something else with in life.  Talk about taxation!  

    CHL/Maya – Well I don't count on bonus dividends but the 5% seems reliable.  Good job selling both sides. 

    EFX/Tangled – Sorry, been reading too much Naybob. surprise  Reference to "deck chairs on the Titanic" meaning trade is possible disaster and moving things around may not help so not much need to do anything other than wait and see if $116 fails and they start calming back down (which is what I think will happen).  

    NLY/Tangled – I'd rather have them dilute my $13Bn company by 5% to raise $780Bn than borrow $780Bn, right?  They need money to buy stuff and their stock is way high (up 50% in two years) so why borrow money and have repayments compete with dividends for distributions (management doesn't want that – they get the dividends too!) when you can just sell a bit of stock and then go out and buy more loans that will increase your cash flow?    

    So, it's great for my favorite REIT but I need to see $10 before I'll be excited about jumping back in.  Hopefully as the Fed starts tightening next year. 

    7+/BDC – Jackie has that one, loves it.   I'm the family loser now, I only have a 6…  frown

    You're welcome Baron.

  67. OhScott

    Not a huge phone person. I own a business and we usually upgrade after 2 years.  Went from a 6 to an 8 because “I could”, rather than for any particular reason.  It’s working well so far.  The transfer was pretty seamless, and there hasn’t been any issues.  I am an Apple guy, so I really don’t expect anything to go wrong when I upgrade.  And nothing did.  

    I did notice that the battery life is much better.  I had a normal day yesterday and still had 75% battery life at the 3nd of the day. My old 6 battery was pretty much toast when I got to the end of each day.  One more thing, there isn’t a port for your earphones.  You have to use an adaptor that is provided.

  68. Phil – All good points on BDI, I'm sure.  But it's just a short term trade.  Didn't mean for you to take that much time on it.  Thanks.

  69. iPhone/Phil – thanks!

  70. phil, i'm looking for a tesla long spread to act as a hedge against the short calls that i've been rolling along.

    do you suggest 2019 $350/450, or 2019 $320 /420.  

  71. phil,suggestions on the sco 33/39 nov spread

  72. iPhone/Clark – thanks..! I love/hate smartphones. My 5 is now 4.5 years old, and hope to get as much longevity from whatever is next. Really like the smaller form factor of the 5, and am loathe to move larger. I expect I'll get over it, though. ;-)

  73. I've kept my 5s and use it just on wi-fi – not having quite the same issues as Phil on rebooting but the battery is so pathetic now the upgrade just for that alone was worth it. Also, the 7+ screen is just huge in comparison; it makes the 5 look like a toy.

    The storage upgrade is huge too, 128GB seems to be standard now (256 available) and the 5s was back in the old 16 GB days. That's just was to small now, and I was always deleting text chains (with images and movies in them) and managing apps to keep the storage down, so the freedom with 128 GB is a big boost.

  74. BDI/Albo – No problem, hadn't looked in a while so it was a good day to catch up.  

    You're welcome Scott.

    TSLA/Lunar – Wow, I have to pick a long spread on TSLA?  Well, I have no faith and they don't have 2020s so has to be 2019 and they are at $356.  So, as a hedge, you just want to stop the bleeding if they go higher, so it doesn't make sense to pay up for the $320s, right?  I don't know what short calls you have but look ahead to where in 2019 you could end up rolling them and, if it's $350 – then that should be about where your spread starts.  Also, I wouldn't want to spend more than what you expect to gain on the short calls – otherwise you are just guaranteeing you will lose something.  

    All that being said, I imagine the $365 ($61)/420 ($41) bull call spread at $20 provides you with $55 of potential and that's +$35 so that's the amount of cushion you get per $20 but keep in mind that, if you "win" on the short calls, you are likely to lose on the spread.  I think $100 spreads are excessive,  the $350/450 is $45, you could buy 2 of the others and have $70 upside vs $55 and your upside hits max at $420, not $450.  

    SCO/Jash – It's right on track, why change it?

    I think I said at the time, that was easy money.  Not even worth playing the Futures when would could just add those for $1,100 (on 20 with 10 short $35 puts) and get $12,000 back.  Looks like net $4,000 now with another $8,000 left to gain.  It's one of those that are still good for a new trade, with $8,000 (200%) still to be made.  Not only that, but it looks more likely now than our 9/14 entry.  

    Well basically flat after all that nonsense.

    Have a great weekend,

    - Phil

  75. You want to hear something creepy?

    I just booked a flight to Florida for Thanksgiving on Southwest, which I do not usually use. I signed up for their stuff and completed the transaction, which all seemed very normal.

     But, when I went to the living room to put it in my iPad, I already had a message in my calendar with all the flight information asking if I wanted to confirm adding it.  My computer is not linked to my iPad. I can’t figure out how that happened. It’s kind of intrusive, but also very useful.

    Goes to my point about The future of AI systems, they are going to get so smart that they won’t be any point to Amazon or travel site for that matter. You will just ask for stuff and it will get it for you and how he gets it won’t matter much.

  76. Future AI/Phil – I still love 'Box' from Star Cops…

  77. Phil – If you use Gmail and get email confirmation it will done automatically! Creepy, yes but very convenient. My wife sends me her flight information when she goes away and her flight ends up in my calendar. 

  78. And then Google will tell me that I should leave for my flight or appt. now if I want to be on time..

  79. Gnc / very interesting view

    Kellogg's RXBar Deal Is Indirectly Good For GNC


    Kellogg's bought RXBar for $600 million.

    Per the Chicago Tribune, Kellogg paid 6X FY2017 sales.

    Given GNC's vertical integration and excellent LEAN Products, the multiple Kellogg paid for RXBar bodes well for the outlook for health and wellness products.

  80. Day trading

    Anyone on the site doing day trading?

    Past few months, I have been making option trades most fridays, opening and closing the potion trade( same day.

    I try to limit my losses on the losers, with tight mental stops, sometimes, hard stops.


    The plan is to pay for "weekend leisure activities"!!

    My goal usually is to come away with $2000, using anywhere between 2-5 trades. I am not counting the costs of trading..

    And this is just for fun…to keep the noggin stimulated…

    I ONLY sell premium!

    Example for today:(all options expired today and all trades were started today)

    NFLX -sold $200 calls for $0.75- expired

    AMZN-  $997 and $995 calls for $1.25- expired

    GOOGL- sold the $990 calls for 1.25- stopped out with a loss of 1.2.

    3/4 successful trades.

    I am NOT recommending this for anyone and I know Phil (whose site this is) will not be enthralled with this, but as I said, it's for fun only and if I can continue to limit the losses, then no harm done.

    This is only possible on some Fridays…if I see the trade. Sometimes, the way the market is moving, I don't 'feel the mojo' and recognize that there may be "no trade".

    Great weekend, all!

  81. Phil – that's only half-creepy, since you're logged into both (SWA and google). Full creepy is being on Angie's List searching for a handyman, and having "need a Handy Man?" show up, on another device, in the ads on yahoo, when I'm not even logged in to yahoo under any username.

    My wife says hey can track it to the IP, so for example Angie's list request goes out with "handyman" in the http request (which comcast can see), then they auto-sell that info to ad-makers that contract with content sites (yahoo), and poof, instantaneously, my own web search is being advertised back to me elsewhere.

  82. To reduce the creepiness.  

  83. Tillerson chaos lays bare Kelly’s struggle to manage White House

  84. CBO: Federal budget deficit rises to $668 billion

  85. EPA moves to rescind Obama plan to slow global warming

  86. AP-NORC Poll: Trump fares poorly in public’s view

  87. Financial analysts signal caution

  88. Less than 1% of EPA administrator’s meetings are with environmental groups

  89. What are sanctuary cities?

  90. Phil – EFX/Tangled – Sorry, been reading too much Naybob. surprise  Reference to "deck chairs on the Titanic" meaning trade is possible disaster and moving things around may not help so not much need to do anything other than wait and see if $116 fails and they start calming back down (which is what I think will happen).  

    Blaming me for effective utilization of a time tested idiom? Just as every cop is a criminal, and all the sinners saints, you honor and humor me, thank you for my ROFLMAO of the weekend. 

    "Rearranging the deck chairs [on the Titanic].” 

    To do something pointless or insignificant that will soon be overtaken by events, or that contributes nothing to the solution of a current problem. Also, often used to describe a futile action in the face of impending catastrophe.  First used in print in 1969, in Time Magazine, in reference to reforms in the Catholic Church. How apropos.

    Related for Baron, when the MRS blames me for events that I had no control over, and in some cases was not even remotely involved in, I oft use this rejoinder… 

    While your at it my love, please do blame me for the decline of Western Civilization. Tell me baby, what's my name?   

    Today's related moment of Zen…. Of late [musically] we have lost Tom Petty, Walter Becker, Glen Campbell, Gregg Allman, Chuck Berry, Al Jarreau and Larry Coryell, while #1 in everybody's dead pool, next to Eddie Van Halen, the indestructible Keith Richards lives on and Out.

  91. Are Space, Time, And Gravity All Just Illusions?

  92. Phil – something creepy? – privacy, creepy, yes but very convenient. Half creepy, they can track it to the IP.  We previously Nattered about Facebook and zombie cookie tracking, a wise Grasshopper covers tracks with VPN and smart DNS, however….

    As good as TOR is, encrypted P2P tunneling and the number of servers your VPN uses sacrifices some speed, there are malicious TOR servers, and many sites intentionally block TOR viz. Netflix, buying a dedicated IP addr as an add on probably gets one through that restriction.

    Sadly, for home broadband and wireless, your ISP and for that matter VPN, is free to collect (log) and sell your data without your permission.  

    In addition, beware that mandatory data retention laws where enforceable (viz Australia), force ISPs and VPN's in that jurisdiction to record all the customers Internet activity and make it available to law enforcement authorities.  And you thought the ubiquitous they wouldn't know when your dunny roll was down to the last square? HA!! Try wiping again and Out.

  93. Millennials Aren’t Killing Your Favorite Business

  94. Maya1

    Day trading

    Good idea

    Please keep us updated

  95. Maya, seems like a fun idea, so what criteria are you using to select these? How are you finding those 2-5 trades?

  96. It looks like "oh, shit!" time once again here in the Republic of Korea. Monday is the final holiday (anniversary of the proclamation of the Korean alphabet) in a 10-day long holiday (we visited relatives, ate a lot of good food), and Kim Jongeun thinks it's time to give his long-range missile a try. Who knows if Trump knows that's coming (although Reuters does – but he has been resuming/maintaining the belligerence with quotes like "only one thing will work", and "you'll see". Nothing like starting your week off with a bang. Gallows humor is useful here.

  97. Phil it looks like a few refineries and platforms were shut down for a couple of days, so do you think the spike in rob on Thursday was all we can expect from this fast moving storm and we might drop in price from 1.55-6ish or could there be a quick spike to begin the week based on those brief closures? I am hoping you might see something to indicate if there is a trade here or if it's too volatile and bouncy to make any call. Thanks. 

  98. RB, not rob in my previous post. 

  99. Fri-trading/Craigs

    Well, most of the 'criteria' are basic stuff taught here by Phil: namely, don't over commit, add to positions, let the market come to you, and limit your losses.

    As far as choosing the trades, some of it is related to stocks AND companies I am familiar with. It also has to do with what I think the market will do that day, depending on what the European markets did, news for the day and whether things are overbought/oversold.

    I use the same criteria for the stocks.

    To use NFLX as an example, I premised that $200 would be psychologically tough to break during the same day. I waited for it to go as close to $200 . Once I sensed it was reversing, I sold the $200 calls. While the stock stayed right around $198 for a while, I saw the premium start to diminish gradually. This allowed me to put a hard stop on my position. Once this was done, I looked for other opportunities.

    I saw AMZN…and same premise there…$1000 would be tough to break. So, I sold the $997 calls. Once it reversed downward, I put a hard stop on my position and added to it by selling the $995 calls as I expected it to continue falling. Then I just kept an eye on the positions and did not even have to put stops.

    Opposite of above, GOOGL did not work out as I expected and once it went against me, I stopped out quickly. Sometimes, I will open a position, knowing I have some built in protection. In case of GOOGL, I owned the stock and my worst case would have been being called away and I would not actually have lost any money. Although GOOGL failed at this level a couple of months ago, it seems to want to to break through $1000, along with the rest of tech stocks that want to melt up.

    Sometimes, I sell puts. I did not share a small gain on Friday on the post with you was in AAPL. I did not TERRIBLY MIND owning AAPL at $152.50 and sold some puts for a few hundered $$'s in premium. Had I been put the stock, my back up plan was to sell deep in the money next weekly calls for some more pocket change and be called away next week. 

    Sometimes, because of where the stock numerically is on the day, with respect to option strike prices, there  is no trade there. This, for example was the case with FB on Friday. I could not get more than a couple cents worth premium for out of the money calls OR puts. 

    Other times, I look for initial, rapid movement in stocks, expecting the initial excit,ent will wear off, if not reverse. Even if it does NOT reverse, the initial excitement in premium tends to decay quickly.

    I am always trying to learn…keeping emotions out of it and most important, I try NOT to chase and limit losses on the losing trades. One that totally got away from me a while back was RHT where I had to convert it to a longer term trade to recoup, so to speak.

  100. Donald Trump is playing zero-dimensional chess

  101. Maya1 

    Are you trading weekly?


  102. Why Your Orange Juice Might Be From Brazil: Florida’s Trees Are Dying – WSJ

  103. Pence Walkout Was a Cynical, Expensive, Pre-Planned Stunt

  104. Trump Disapproval Rating Nears 70 Percent: Poll

  105. Trump is distracting us to death

  106. QC

    I try and trade most Fridays, but some weeks, nothing is obvious and so, I don't push it.

    Other Friday's, I may be busy..

  107. NRA opposes full ban on ‘bump stocks’ used by Vegas gunman

  108. Why Rick Perry’s proposed subsidies for coal fail Economics 101

  109. Bannon’s Next Victims

  110. Good morning!

    It's kind of a holiday, so even more meaningless Monday than usual today. 

    I had a nice family weekend, visited a couple of schools with Maddie (it's that time already!) – She was 3 weeks premature, just 4lbs, 15 oz and now she's going to college – crazy!  

    Day trading/Maya – It's a good strategy, I don't "object" – it's just not for me.  My objection to short-term selling like that is that, sometimes, you get badly burned but, if you do it consistently, it usually pays well enough to compensate.  

    IP/BDC – There is no privacy anymore, so I don't worry about it.  I just told Maddie to be careful what she says about herself where it says "What is your worst quality?" on an application because anything she says may be used against her later in life – no matter how much they say it's "confidential"?  

    VPN/Grass – That's a reasonable price for a layer of security but, as Naybob notes, still an illusion of privacy in the end.

    Richards/Naybob – Heroine is quite the preservative, apparently.  

    Korea/Snow – Good luck!  

    Rob/Craigs – Despite a lot of effort to spin things this weekend, the fundamentals remain weak.  Still too tricky to make calls but back over $1.55 or off $1.50 I'd like /RB long with tight stops.  Don't forget we're still expecting $48.50 at least on /CL, so that should drag /RB lower too.