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Terrific Tuesday – Dow Blasts Higher on Caterpillar, 3M Earnings

2 companies.  

That's all it took this morning to blast the Dow 130 points higher pre-market.  Caterpillar (CAT) was up $10 (7%) and that added 85 Dow points and 3M (MMM) jumped $8 (3.5%) and added 64 points so that's 149 of 130 points added by just 2 of the Dow's 30 components – the rest are net negative.  What a silly index!  The combined market cap of CAT and MMM is $200Bn, only as much as GE but if GE dropped 10%, that would only subtract about 20 Dow points, because GE is a $22.50 stock.

So a $22.50 stock worth $200Bn dropping 10% on the Dow has 1/7th the impact of 2 other stocks with the same TOTAL market cap rising an average of 5.75% between them.  That doesn't just not make sense – it's stupid!  Think how easy it is to manipulate an index that has those kind of price distortions.  

Fortunately, we love these easily manipulated distortions.  Yesterday morning, in our Live Member Chat Room, we shorted the Dow (/YM) Futures as they tested 23,300 and we got a great drop to 23,225 which was good for gains of $375 per contract. 

Even if you don't have access to the Member Chat Room, in our morning's PSW Report, we gave you the long trade idea for /KC at $1.28 and that was good for $375 per contract by 10 am (and today it's back and we can play it again).   

Our other Trade Idea from the Monday Morning Report was:

Silver (/SI) is back to $16.90 and that's down 0.40 from Thursday's close but back to where we went long on Wednesday so why wouldn't we play it again (with tight stops below) as it was a $1,500/contract winner last time?  $16.75 should be the low-low, so that's where I'd look to try again if $16.90 fails and we'll follow up on this one into Wednesday's Live Trading Webinar.  

As you can see, a single contract there picked up gains of $875 by the end of the day and, this morning, we're back to $17 and looking for another nice entry on the long side.  So we're shorting the Dow (/YM) at 23,390 – as we don't even think it will make 23,400 but tight stops over if it does – and we're long on Coffee (/KCH8) again at $1.28 and long on Silver (/SI) again at $17 but tight stops there and try again at $16.90 and $16. 75.  The stops are VERY important – try to lose less than you win and then you only have to be right half the time!

We already shorting Gasoline (/RB) at $1.69 in Member Chat this morning and we'll take the Oil (/CL) short at $52.25 because it looks like it won't make it to $52.50 as we'd hoped.  Futures are a really fun way to day trade as they are very clean to pop in and out of and most Futures traders are technical traders which means, these days, people who read the papers have a huge advantage.

Oil was up this morning on more jawboning from the Saudis, whose desperation to get prices up to justify their Aramco deal is like a palbable stench that permeates all their actions.  Just check out the headlines coming out of their investing conference:      

For a conference that's supposed to be about the "new" Saudi Arabia (where women can now drive… starting in June… maybe) and how they are getting away from oil dependence, this conference has been all about oil and all about Aramco's $2Tn pending offering (soon to be $1Tn).  The "on track" date for the IPO has already been bumped back twice, from now to Q1 and now "2nd half" of 2018, this is not really what you expect from an IPO so "hot" that they will intially offer at 3 times the size of the World's 2nd largest companies (AAPL, XOM).  

Image result for saudi aramco oil reserves

Obviously, if oil isn't over $55 pretty much all of next year, this thing flops and the new Saudi Prince may find his head in a basket, so saying there's a lot of pressure on Prince Alwaleed bin Talal is a bit of an understatement.  Though he already has over $20Bn it's just a small part of the family's $1.4Tn fortune, most of which is locked up in Aramco, which contols 261Bn barrels of proven reserves.  At $50/barrel, that would be about $13Tn worth!

Image result for aramco ipoBut Aramco doesn't get $50, they get about $45 on average and it costs them $10-15 to get the oil out of the ground so call it net $30 and that's "only" $7.8Tn worth of oil BUT they "only" sell 11Mb/d so 4Bn barrels a year is $120Bn a year in theoretical profit, which is why they think they can get $2Tn (16.66 x earnings).  The problem is the Saudi Royal family needs most of that money to run the country that controls that oil and the rise of electric cars and the crackdown on greenhouse gasses means they may not have enough time (65 years at this rate) to get all that oil out of the ground before it's essentially worthless – so it's kind of a "wind-down" asset.  

That is what the Saudis need to fight against.  They need to convince potential Aramco investors of two things:  That oil will stay over $50 a barrel for the long-term and that oil will continue to be consumed at the current pace long into the future.  What if, in reality, consumption drops just 2% a year for the next 20 years?  That would mean that, by 2038, only 5.5Mb would be needed from Aramco as 2% compounded 20x is 48.5% off the current rate.  So their average output over 20 years would be more like 8.5Mb/d and assuming prices hold $50 in that scenario is a pipe dream (or hookah dream, in this case).  

Image result for saudi oil money family8.5Mb/d at $50 is just $93Bn and the Saudis are already running a 10% defict at $120Bn, which is why they are desperate to fill the gap with a $200Bn IPO but even that won't last them and the Royal family may be looking to take the money and run – rather than put it into the sinking ship that is the Saudi economy.  What happens to your Aramco investment then?  We'll talk more about this mess as the IPO moves along.  

Meanwhile, the Saudis are spreading their cash around to pay off anyone and everyone to talk up their country, their company and the price of oil.  CNBC is a non-stop commercial for the Saudis this week and the US is doing it's part to support our "friends" with Climate Denier Scott Pruitt of the EPA now so hated that he's had to double his security at a cost of $2M taxpayer Dollars but he's the most effective ally the Saudis have in rolling back the Global march towards clean energy.  

Now that Nicaragua has signed the Paris Climate Agreement, the only two rogue nations on the Planet Earth that have not signed the accord are Syria and, of course, the United States – two regimes dominated by dictatorial strongmen who insist they are only doing the will of the people.  To the other 195 countries on the planet, we are officially outsiders, intent on destroying the world they are trying to save.  

According to the Government Accountability Office (GAO) the Federal Government has spent $350Bn over the past 10 years on Disaster Relief NOT including the damage from this year's wildfires and hurricanes, which will likely double that total.  Climate change is also expected to double those costs and the GAO considers the situation "dire".

Image result for epa climate cartoonThe report says the fiscal impacts of climate change are likely to vary widely by region. The Southeast is at increased risk because of coastal property that could be swamped by storm surge and sea level rise. The Northeast is also under threat from storm surge and sea level rise, though not as much as the Southeast.  The Midwest and Great Plains are susceptible to decreased crop yields, the report said. The West is expected to see increased drought, wildfires and deadly heatwaves.  Speaking of which, it's 100 degrees in California this morning – on October 24th!  

Earlier this month Trump nominated Kathleen Hartnett White of Texas to serve as his top environmental adviser at the White House. She has credited the fossil fuel industry with "vastly improved living conditions across the world" and likened the work of mainstream climate scientists to "the dogmatic claims of ideologues and clerics."  White, who works at the Armstrong Center, a conservative think tank that receives funding from fossil-fuel companies, holds academic degrees in East Asian studies and comparative literature.

Just the kind of background needed to weigh in on our children's future…


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  1. Getting out of options to pay for that big tax cuts:

    So mortgage interest, charitable deductions, retirement income, state and local taxes, and education accounts are all now off limits. That’s basically everything. There is no longer any way, even theoretically, to pay for the Republican tax cut.

    And yet wealthy business owners want their tax cut. That’s the only reason they supported an obvious simpleton like Trump in the first place. So Republicans need to deliver.

    But how? I predict smoke and mirrors.

    Once these guys realized that some of their constituents will see a tax increase, they lost courage. So now it's back to dynamic scoring – predicting growth that will pay for the tax cuts. Like in Kansas! I predict a tough time with these tax cuts and large deficits which will be OK until the next Dem gets elected when deficits won't be tolerable again.

  2. This is just insane – are we next?

    Without further adjusting the pace of ETF purchases, we project that the central bank will own 10% of the market sometime between 2022-2026, depending on the interim market performance (see Figure 1).

    Estimated Bank of Japan holdings of Japanese equity ETFs

  3. CBI – Target Raised        DJ Chicago Bridge & Iron Price Target Raised to $20.00/Share From $16.00 by Deutsche Bank CBI 

  4. Good Morning.

  5. Phil, thoughts on WHR?   Getting crushed this AM partially because Sears will no longer carry their appliances.  With the damage from the hurricanes, there has to be to more appliances sold in North America this quarter.  HD, Lowes, Best Buy etc. all carry their products.  Thanks

  6. Phil, can you comment on GM earnings and your LTP position at this point. 

  7. CAT revenue/EPS

    Q3 2012 16.4B/$2.54

    Q3 2017 11.4B/$1.77

    Stock Price

    2012: $85

    2017: $139

  8. Nice one Rustle…

  9. But think of all the tax savings Rustle and that 5% growth we are going to get. They are cheap in that context :-)

  10. Good morning!  

    Republican Investigator Trey Gowdy Stops Pretending, Admits ‘This Is Politics’

    Trey Gowdy has been running point for the House Republican investigation into the Russia scandal, at times going so far as to act like Jared Kushner’s personal defense lawyer. Gowdy’s response to the New York Times about the Russia probe is a world-weary pose of realism. “Congressional investigations unfortunately are usually overtly political investigations, where it is to one side’s advantage to drag things out,” says Gowdy. “The notion that one side is playing the part of defense attorney and that the other side is just these white-hat defenders of the truth is laughable … This is politics.”

    Well, I'm inspired…  WTF happened to this country? 

    That explanation might not sound outrageous on its face. It is certainly true, after all, that both parties in Congress tend to follow their partisan self-interest in conducting (or impeding) investigations. But we have crossed a new threshold when the leader of such an investigation no longer even pretends otherwise.

    When Gowdy was running his endless hearings into Benghazi — a 2012 guerrilla attack that conservative conspiracy theorists had endlessly attempted to use as evidence of an imagined treasonous plot by the Obama administration — he piously insisted the proceedings were designed solely to discover the truth. “As I have said countless times before, this is not about politics,” said Gowdy last year, in one of many such comments. “This is not even about any one individual or a single investigation.”

    Because Gowdy’s objective was to make Benghazi appear to be a legitimate investigation, rather than a naked effort to rough up the Democrats’ leading presidential contender, it was important for him to maintain the façade of objectivity. But his goal on the Russia scandal is the opposite. He means to make the proceedings a joke. The more nakedly partisan it all appears, the better. That’s why Gowdy was insisting “this is not about politics” when a Democrat was president, and now admits, “This is politics.” The sheen of Congressional legitimacy is just one more governing norm Republicans have cast aside in the Trump era.

    What kills me is the lack of outrage.  We just accept these things and move on – things we would have gone to war over when I was young.  

    Wow, we are hitting 23,400 – up 175.  I'm willing to short /YM here.  

    Deficits/StJ – Hard to see how this ends well.   I thought the BOJ already was over that mark on owning the market.  Well maybe not specifically the ETFs.  

    LOL, CNBC now quoting my 2 stocks 140-point point. 

    CBI/Batman – No one seems to care:

    WHR/Options – Well people dis SHLD but they sell 20% of the appliances in this country.  If they cut WHR off, it will take them a couple of quarters AT LEAST to make up that pipeline but, even then, I don't think pushing WHR at BBY (assuming they could) would make up for it as people tend to buy at Sears, and then they pick a brand – they aren't going to not buy at Sears just because WHR isn't there.  So there goes 20% of the shoppers.  

    Actually, at $12Bn, WHR should buy SHLD ($700M) and kick everyone else out!  I agree there SHOULD be an overall boost but it's not like cars – presumably a washing machine and dryer can get wet and then still work.  The company isn't crazy, they cut guidance severely and noted higher costs of materials as well as the lost Sears relationship.  

    On the bright side, WHR does have a very low p/e and will survive because the advantage of a low-margin business (4%) is that SG&A won't kill you when your business shrinks.  Gross margins are 15% so losing $4Bn worth of biz would cost them $600M (assuming no cost cuts) less 15% taxes paid so $500M drops earnings to $400M (1/2) but more likely a 25% drop before they put the breaks on so $600M and I'll give them $700M on recovery and 15x is $10.5Bn so a 10% drop is exactly correct though I bet there are downgrades and panic so I'd wait and hope for another 10% and buy at $150. 

    GM/Jeff – Just went over it on Friday:

    Long Call 2019 18-JAN 28.00 CALL [GM @ $46.10 $0.95] 50 4/5/2017 (451) $36,250 $7.25 $11.03 n/a     $18.28 $0.66 $55,125 152.1% $91,375
    Short Call 2019 18-JAN 35.00 CALL [GM @ $46.10 $0.95] -50 4/5/2017 (451) $-18,000 $3.60 $8.78     $12.38 $1.16 $-43,875 -243.8% $-61,875
    Short Put 2019 18-JAN 32.00 PUT [GM @ $46.10 $0.95] -20 4/4/2017 (451) $-8,500 $4.25 $-3.19     $1.07 $0.01 $6,370 74.9% $-2,130

    GM – So far over target we have to do the math.  $35,000 is the max payoff and currently we're at $28,555 so 25% more to gain is kind of dull and I think GM is toppy so let's cash in our 2019 $28 calls for $18 ($90,000), which is $11 more than the spread pays.  So, with the extra $11 ($55,000), we can roll the short $35 calls ($11.20 = $56,000) up to the $45 calls at $5.05 ($25,250), where they are 100% premium.  We can then buy back the 20 short $32 puts for $1 ($2,000) and sell 20 of the $40 puts for $2.90 ($5,800) so even if the stock doesn't fall, we still have an extra $28,050 against the short $45 calls AND the $35,000 we expected to win on the spread.  If these short calls end up expiring worthless, we will have made a bonus $28,050 (80%) and, if they don't, we will cover with a 2020 spread and start the cycle all over again.  

    So they just announced earnings and they are flat on the news because, as we expected, it's baked in.  So now we let things play out and see what happens.  

    CAT/Rustle – Crazy but I'm shorting /YM, too scary to short CAT. 

  11. Politics / Phil – Can you imagine what a circus they would make of the 4 guys who died in Niger if Obama was still there? I am sure it would only be to pursue the truth then… It's plain disgusting. And we have a 4th grader as President who tweets insults at senators. WTF indeed!

  12. Phil/WHR, 

    Actually, washers and dryers do not work when wet.  Or rather, they work once they are dried out, then then fail within the next month.

  13. WHR

    Looks like the loss of SHLD to WHR is being over stated.

    ~~Whirlpool clarified on its earnings conference call that Sears represents about 3% of its total revenue

    Plus, I read where they'll still supply the Kenmore washers that they make.

  14. Phil,

    Would like to get your thoughts on a SPY hedge: long Dec 254 puts (-2.70, delta .42) and short Dec 257 puts (+3.76, delta .56), net +1.06 with a view to closing out the 257s if the SPY drops below 254. If there is no sell-off keep the 1.06. If the mkt > 257, then close the long puts if things look especially rosy.

    Logically, its tough to justify higher prices if there is no tax cut, which is seeming unlikely but always possible hence the merits of a hedge

    Thanks in advance

  15. TEVA wtf. Every day that POS hits new lows while the market keeps climbing. Dangit!!!

  16. Phil, 

    With T logging in a 52 week low, does it make sense to sell a 2020 30P for $2.40, or are you still advocating a wait and see from the down grade police, after they receive clearance for the T/Twc takeover. Thanks as always….a small position to start with!

  17. 10-year yield tops 2.40% for first time since May

    • The post-Labor Day move higher in interest rates continues, with the 10-year Treasury yield up 3.5 basis points to 2.404%. The year's high in the 10-year yield was 2.62% set back in March. TLT -0.6%TBT +1.2%
    • Banks are welcoming not just the higher rates, but the steeper yield curve, with the SPDR KBW Bank ETF (KBE +0.7%) topping the S&P 500's 0.1% advance.
    • The broader financial sector (XLF +0.7%) is outperforming as well.
    • Oct. U.S. PMI Composite Flash54.5 vs. 54.8 consensus, 54.6 prior.
    • Services PMI 55.9 vs 55.2 consensus, 55.1 prior.
    • Manufacturing PMI 54.5 vs. 53.3 consensus, 53.0 prior.
    • Redbook Chain Store Sales+3.5% Y/Y vs. +3.6% last week.
    • Month-to-date sales are up 3.4% through October 21.
    • October sales are expected to increase 3.6%.
    • The Bank of Japan is weighing a small cut to its inflation projection for this year in a quarterly report to be released next week, Bloomberg reports.
    • Lowering the forecast will reinforce the view the BOJ will carry on its easing program long after its global peers have moved in the opposite direction.
    • The divergence could also trigger the yen to weaken around 120 vs. the dollar.

    China's Total Debt Rises to About 260% of Economy

    The 4 Possible Channels For A Chinese Financial Crisis

    Venezuela's unpaid debt just grew to nearly $600 million, days before a make-or-break bill

    BOE Policy Makers Will be Wary of Making a Premature HikeAs the Bank of England considers raising interest rates for the first time in a decade in November, policy makers will be mindful that the history of central banking is littered with premature hikes. Banks including UBS AG and UniCredit have expressed concern that tightening now would be a mistake, and business groups such as the British Chambers of Commerce have called on the BOE to wait. If Governor Mark Carney raises and history proves unkind, he would join the European Central Bank and the Bank of Japan in the pantheon of those who damaged economies by moving too soon.

    House Conservatives Say Tax Bill Draft Is Coming Within DaysHouse and Senate leaders laid out an ambitious schedule for drafting and releasing tax legislation over the next few weeks — a set of deadlines that must be met to try to achieve President Donald Trump’s goal of delivering major tax-rate cuts by year’s end. House Freedom Caucus Chairman Mark Meadows said Monday he’s been promised that the House Ways and Means Committee will release its plan about seven days after this Thursday’s scheduled vote on a budget resolution. That would mean a bill text would be published on or before Friday, Nov. 3.

    8 tax changes for 2018 you need to know

    Republicans Face Tough Decision on Bipartisan Health BillLegislation has enough support to pass, but President Donald Trump opposes it, and that could prevent a floor vote.

    U.K. opens probe into Equifax hack

    • The cyberattack on Equifax (EFX +0.2%) affected about 150M Americans, and also millions of U.K. citizens. That country's Financial Conduct Authority today announces its own investigation into the matter.
    • Equifax says it's already working closely with the FCA, among others.

    Palladium Prices Soar in Sign of Global Growth and Auto DemandThe price of the rare metal, a key component in gasoline engines, exceeded $1,000 a troy ounce for the first time in 16 years earlier this month.

    Inventory Levels Of These GM(GM) Plants Still In "Danger Zone" Even After 2 Hurricanes And 6,000 Job Cuts

    • Credit Suisse had raised its price target on Boeing (BA +1%) to $310 from $300, reiterating an Outperform rating on shares.
    • The firm expects the U.S. planemaker to deliver strong Q3 results tomorrow on a favorable delivery mix.


    • Net earnings of $939M, or $3.24 per share vs. $1.1B, or $3.61 per share, in the same quarter a year ago.
    • Sales by segment: Aeronautics +14%; Missiles and Fire Control +3%; Rotary and Missions Systems +0.2%; Space Systems -1%.
    • Cash from operations $1.8B; Capex $222M; Repurchased 1.6M shares; Paid cash dividends of $522M; Record backlog of $103.6B at the end of the quarter.
    • Updated outlook for 2017: Diluted earnings per share of $12.85-$13.15 (vs. $12.30-$12.60), on net sales of $50B-$51.2B (vs. $49.8B-$51B).
    • LMT -1.2% premarket
    • Q3 results

    Supersized Family Farms Are Gobbling Up American Agriculture

    McDonald's battles through restaurant sector pressures

    • McDonald's (NYSE:MCD) impressed again in Q3 with U.S. comparable sales growth of over 4% during a quarter that saw high population areas of Florida and Texas come to a standstill during the major hurricanes that struck.
    • The solid mark could indicate that some of McDonald's U.S. promotions are generating repeat traffic, note analysts. The extra sales are needed by the restaurant operator due to extra pressure from higher labor wages and elevated commodity costs. In McDonald's 8-K, the restaurant chain disclosed that its Q3 U.S. restaurant margin fell to 15.5% from 16.9% a year ago.
    • Another talking point from the quarter was the accelerated pace of refranchising in China and Hong Kong that has put the initiative "more than a year ahead of schedule," according to CFO Kevin Ozan.
    • Previously: Comparable sales strong at McDonald's (Oct. 24)
    • MCD +1.02% premarket to $165.01, not that far off from the all-time high of $167.90.

    Whirlpool to stop supplying Sears with some products

    • Whirlpool (NYSE:WHR) says it notified Sears Holdings (NASDAQ:SHLD) that it won't supply the chain with Whirlpool brand products after failing to reach terms on a deal. The company will continue to supply products from the Kenmore brand.
    • The disclosure was made on Whirlpool's earnings conference call.
    • Whirlpool is down 9.59% in premarket trading. Shares of Sears are inactive in the early session.


    • Corning (NYSE:GLW) is up 3.8% and quoting back within pennies of a 52-week high after Q3 results where profits and sales rose and beat Y/Y with strong results in its fiber segment.
    • The company reached 1B km of optical fiber sales during the quarter, and net sales in its Optical Communications segment rose 15% to $917M.
    • Net income was up 37% Y/Y to $390M on a GAAP basis, and EPS rose 50%. Core earnings dipped 7% to $433M.
    • GAAP net sales by segment: Display Technologies, $768M (down 15%); Optical Communications, $917M (up 15%); Environmental Technologies, $277M (up 5%); Specialty Materials, $373M (up 26%); Life Sciences, $223M (up 4%).
    • As for outlook: “Year-to-date achievements and fourth-quarter expectations are strong," says CFO Tony Tripeny. "We anticipate that every business segment will meet or beat the plan we set in January due to strong operating performance and early sales from our near-term growth investments."
    • Press Release


    The "Nightmare Scenario" For Publishers: Facebook Is Testing A 'Pay-To-Play' Model

    • Ad agency stocks are lower following Interpublic Group (IPG -6.2%) on the way down after IPG posted disappointing earnings that it linked to declining industry trends.
    • IPG shares are at their lowest point in a couple of years. Publicis Groupe (OTCQX:PUBGY), which also posted earnings that were a letdown this quarter, is 2.8% lower. Omnicom (NYSE:OMC) is off 1.9% and at its lowest point in a year and a half.
    • WPP (NASDAQ:WPPGY), meanwhile, is down 3.2% to four-year lows.
    • "Organic revenue was negatively impacted by broader trends that are being felt throughout much of the industry," IPG chief Michael Roth said in his company's earnings report, adding that "client caution" prompted a revision to its full-year outlook.
    • Helios and Matheson Analytics (NASDAQ:HMNY) announces that its $9.95 MoviePass theater subscription service has surpassed over 600K paying monthly subscribers as of October 18.
    • The company says the growth rate exceeds initial projections. As a point of reference, MoviePass had about 20K subscribers on August 14
    • MoviePass had a reported subscriber churn rate of 4.2% for month 1 and 2.4% for month 2 after announcing its new $9.95 per month subscription price. Based on current churn rates, monthly subscriber retention is above 96% and average paying monthly subscriber life expectancy is 46.8 months.
    • "When you apply computer science and machine learning to an industry that we believe has lacked significant innovation, useful patterns start to emerge,” says MoviePass CEO Ted Farnsworth.
    • Helios and Matheson Analytics shareholders still have to approve the company's purchase of its majority stake in MoviePass
    • HMNY +18.05% premarket to $15.70 vs. a 52-week trading range of $2.20 to $38.86.
    • Source: Press Release

    Nikkei Asian Review: Apple will ship 20M iPhone X units this year

    • Nikkei Asian Review sources say Apple (NASDAQ:AAPL) will only ship around 20M iPhone X units in 2017, which is half of what was planned.
    • The iPhone X has grown to a production rate of 10M units per month but lengthy supply issues mean supply doesn’t have time to catch up with demand. 
    • Apple’s reliance on Samsung as the only OLED panel supplier and issues with a component of the 3D sensor system caused ongoing delays with the device.
    • KGI Securities estimates that 2M to 3M iPhone X units will be available at launch.
    • Pre-orders begin Friday with shipments starting on November 3. 
    • Previously: KGI: Apple will ship 2M to 3M iPhones for X launch (Oct. 20)

    U.S. Revises Timeline on Niger BattleMilitary describes what happened in the Oct. 4 ambush which marked the single deadliest U.S. military combat toll during the Trump administration.

  18. phil, your thoughts on GILD?  earnings 10/26  thanks.

  19. WHR/Baron, Albo - I'm liking them more if Kenmore is still being made by WHR.  That makes this fairly inconsequential.  I imagine that 3% number is correct for the WHR brand but Kenmore is huge, hard to imagine they are including that.   

    Anyway, this is what we call and Option Opportunity so let's take advantage of the sell-off and sell 5 of the WHR 2019 $130 puts for $7 ($3,500) in the OOP and, in the LTP, let's sell 5 of the WHR 2019 $155 puts for $15 ($7,500) and see how things go.  

    SPY/8800 – So you want to have a very complicated (to think about) bull put spread where you sell Dec $257 puts and buy the $254 puts for net $1.06.  So your max gain, if SPY is over $257 (now $256.54), is $1.06 and your loss, if SPY goes lower, tops out at $1.94.  I'm not sure how it's a hedge, since you lose money on a sell-off – unless you are generally bearish and looking for a $1.06 upside hedge in which case – I still don't like it, of course, as your risk is double your reward on a position that's a total coin flip.

    Unless you are MORE than 66% sure that you'll win, then taking trades that have a 2:1 risk/reward ratio is virtually guaranteeing you will lose money over time.   Even if you are 75% sure, the cost of a losing streak of these kinds of bets completely dwarfs the gains of a winning streak and again – recipe for disaster.  

    TEVA/Jabob – Imagine how great it will be when the market keeps falling!  Actually, considering it's down "every day", it's holding up pretty well.

    Wake me when there's volume.  

    T/Jasu – Yes, waiting to see how the merger ends up.  Nothing wrong with taking a poke here but you may be stuck with old options if they re-issue, and you know how annoying that is.

    GILD/Lunar – Well, they are up over 20% since our bottom at $65 and we have a 3/4 covered 2019 $60/75 bull call spread and short $65 puts so my thoughts are I'm very happy with that – it's already up $20,000 our of $30,000 potential and, if they dip on some earnings disappointment, I may want to get more aggressive but most likely they will be over $85 after earnings.  

    As a new play on GILD, I like the 2020 $75 ($15)/$90 ($9) bull call spread at $6.  You can buy 10 of those for $6,000 and sell 5 of the 2020 $65 puts for $6 ($3,000) to net into the longs at $3,000 with a $15,000 payoff at $90 and a $12,000 profits (400%).

  20. What's going on with \RB…..was looking for a 3 penny drop…..not a rise…….:(

  21. Well, here's oil at $52.50 and /RB at $1.70 – I just picked up both.  I have the long /SI and /KC and 4 short /YM at 23,393 at the moment.

    /RB/Ult – Saudis having a day-long cheer-leading fest for oil.  

  22. Trump now saying his tax plan will generate $4Tn (maybe for his pals…).

  23. And boasting about the stock market

  24. Kroger crossed over its 50 DMA.

  25. IBM dropping into the gap

  26. This is what happens when you give a con man the most powerful pulpit in the World.  

    He's just one of those salespeople that will say anything to close a deal.  

    • General Electric (GE -1.5%) extends yesterday's shellacking that sent shares to their worst one-day loss in six years following fresh downgrades by Morgan Stanley and UBS; shares are now -30% YTD and are at their lowest levels since early 2013.
    • Today brings two more downgrades, with Oppenheimer cutting GE to Underperform from Perform as it sees free cash flow yield insufficient to establish a conviction floor on the shares at current levels.
    • Stifel downgrades shares to Hold from Buy and lowers its price target to $22 from $26, driven by the substantially reduced expectations for $7B in Industrial cash flow from operations for 2017 and ~$10B in 2018; given this scenario, Stifel thinks GE will implement a dividend cut to $0.45 from $0.96, which would imply stock support at ~$22 on an assumed dividend yield in-line with S&P 500 at ~2%

    Top economists warn that inequality is the biggest danger for global growth

    'The entire Sears business declined over time,' Whirlpool CEO lashes back

    Puerto Rico electric utility awards $300 million contract to Trump-connected Montana company

    The great thaw of the Arctic is happening far faster than once expected



    See if this works,  its Einhorn's 3Q letter to investors

  28. Notice ATI's 8% swing

  29. Now that I am reading Einhorn's letter closer, I quote below, as it reflects conversation I just had with my wife; maybe its time to consider diversification of strategies.  I have two, one is Phil, the other is high yield dividend that I add to when down (so not  very often); maybe time to add a momentum strategy too, at least on the next pullback???

    "Even so, the market remains very challenging for value investing strategies, as growth stocks have continued to outperform value stocks. The persistence of this dynamic leads to questions regarding whether value investing is a viable strategy. The knee-jerk instinct is to respond that when a proven strategy is so exceedingly out of favor that its viability is questioned, the cycle must be about to turn around. Unfortunately, we lack such clarity. After years of running into the wind, we are left with no sense stronger than, “it will turn when it turns.”

    For a moment, let’s consider the alternative. Might the cycle never turn? Our strategy relies on the assumption that the equity value of a company equals the market’s best assessment of the current and future profits discounted at the company’s cost of capital. Our ability to outperform often comes from our skill in finding opportunities where the market has misestimated current or future profitability or miscalculated the cost of capital by over- or underestimating the risks.

    Given the performance of certain stocks, we wonder if the market has adopted an alternative paradigm for calculating equity value. What if equity value has nothing to do with current or future profits and instead is derived from a company’s ability to be disruptive, to provide social change, or to advance new beneficial technologies, even when doing so results in current and future economic loss? It’s clear that a number of companies provide products and services to customers that come with a subsidy from equity holders. And yet, on a mark-to-market basis, the equity holders are doing just fine."

  30. GNC – Big volume in the Nov 7.5 puts (2033). 

    They report Thursday.

  31. VIX is flat, interesting.

  32. Phil – "Just the kind of background needed to weigh in on our children's future…"

    We paid Kathleen "really beneficial impacts of CO2" Harnett Smith our Nattering respects last week. Further research revealed that at one point, Schrodinger lined his cat's box with some of her papers, books and videos. Complaining about unacceptable sanitary conditions, an odious stench wafting about, and that it would be utterly redundant, the cat refused to shit in the box and after watching her videos, voluntarily drank the poison.  Smart kitty and Out.

  33. Phil RB popping 1.71, is this just Saudi talk? 

  34. Nat-Have you read the book Shrodinger's Cat and Einstein's Dice? Another good laugh begs the question of  where the hell does he find these morons? Talk about the bottom of the litter box!

  35. Phil – this is politics – "What kills me is the lack of outrage.  We just accept these things and move on – things we would have gone to war over when I was young."

    What a difference 50 years can make… My faith was so much stronger then, and I believed in fellow men, and I was so much older then, when I was young and Out.

  36. Phi, Nat Nay,

    My outrage is greater, but my willingness to take action is less.  Age, and a recognition that if no one else wants to stand up, I will be the first shot.  That was fine when I was young, and could recover.  And having been shot before, I now hide under my bed, searching only for the strength to act against my outrage.  And so here, in this chatroom, I seek the advice from  Phil and you all that will allow me to hold my nose, and "BUY, BUY, BUY!"  Because if you can't beat them, join them.

  37. Pirati – "Nat-Have you read the book Shrodinger's Cat and Einstein's Dice? Another good laugh begs the question of  where the hell does he find these morons? Talk about the bottom of the litter box!"

    Yes, general relativity equations break down and fall apart for very small applications. This is why Schrodinger's quantum mechanics, which can't explain gravity, reigns at that level.  This explains why a quantum theory of gravity which supersedes general relativity is the holy grail of modern science. On very large applications general relativity also has major problems. So never mind the Bullocks….  

    God does not play dice, she just makes it up as she goes along? capricious and whimsical indeed? When all else fails and the previous theory we've banked on for decades doesn't work out, just fill in the blanks with another BS theory. Gotta keep the endowments and funding coming, economist's and central bankers are no better. 

    Of late, this MO has been put to use in the extreme. You know that scum at the bottom of the toxic nuclear waste shit barrel? We are witnessing what can be dredged up from underneath it, and Out. 

  38. Baron – Buy, Buy, Buy – triple down, as that would be a good bye and Out.

  39. 200 DOW points because according to CAT, the entire world is building stuff (presumably with cheap money).  So I am beginning to wonder if in fact, this time is different.  I'm no economic historian, but if interest rates can be maintained low, and the government has taken on all the risk of lending, and technology and demographics keep inflation under control, then money can be printed, asset prices can continue to rise, and the middle class can be pushed down until such time as whomever is left at the bottom cannot afford rent or food.  Then you get social upheaval and revolution, but in our time, in this country?  Maybe I won't triple down, but I cannot keep waiting either.  So just one (1) or two (2) BUY's.

  40. Nat-Since Einstein came up with the "wave" theory he came to the conclusion of predictability at most levels, but definitely not all. The odd smash of the racket ball occurs; therefore randomness. That's what I consider this and the total meltdown in the banking sector which was not random, but planned & executed from our illustrious politico's and bankers. That's what frightens me-like we are all puppets in their giant game of national Monopoly.

  41. Einhorn/Baron – Of course he's talking about value investing without an underlying options strategy, keep that in mind.  While I may underperform a fund that bought TSLA at $180 last year – I'll certainly sleep better at night with GM and F and GM is up 50% and F is flat to last year but we had option strategies on both that gave us over 100% returns – WITHOUT buying stocks where the gains could easily evaporate overnight.  There's no real advantage, using our Be the House strategy – to gambling on momentum stocks – since we do limit our upside anyway.  I've been doing this for more than 20 years and yes, in 1999 it seemed like I should have given up and gone with the sock puppet and in 2007 it seemed like I should have gone all in on energy and real estate because I was "underperforming" but, over the past 20 years?  No way has anyone outperformed this strategy.  

    Image result for compound interest table

    If you can make a consistent 20% a year and do it safely, you will become very, very rich.  Gambling and chasing the latest fad may give you a good year or two but, over time, it's usually rapidly given back so be very careful.  It's often a good sign of a top when people like Einhorn throw in the towel and, just because he uses the word "value" – doesn't mean he's even close to playing in our sandbox.

    GNC/Albo – Hedging against a drop or selling while they are expensive?  

    See, there's a good example.  Einhorn would call this a failure of a value play simply because he plays it wrong.  Here's what we did:

    GNC GNC Holdings Inc. 6000 12/16/2016 312 $58,800 $9.80 $-1.66 $9.74     $8.15 $-0.01 $-9,930 -16.9% $48,870
    Short Call 2019 18-JAN 5.00 CALL [GNC @ $8.15 $-0.01] -60 4/10/2017 (451) $-22,200 $3.70 $0.25     $3.95 $-0.18 $-1,500 -6.8% $-23,700
    Short Put 2019 18-JAN 7.50 PUT [GNC @ $8.15 $-0.01] -60 4/7/2017 (451) $-20,400 $3.40 $-1.20     $2.20 - $7,200 35.3% $-13,200

    We bought the stock for $9.80 but then we sold the $5 calls for $3.70 and we sold the $7.50 puts for $3.40 so we collected $7.10 and our net entry is $2.70 which means, as long as GNC is above $7.50 (30% LOWER than our entry), we get called away with a $2.30 (85%) profit in 2 years so 42%/yr.   Even if assigned to us, it's ($2.70 + $7.50)/2 = $5.10 so our worst case is owning 12,000 shares for barely over ($60,000) the $58,,800 that 6,000 shares cost us a year ago.  If that happens, we'll simply sell 2020 $5 calls and $5 puts for about $5 and then we'll be in for $0/2.50 so we can withstand another 50% drop or get called away in 3 years for a 100%(ish) gain, still 33% a year.  Einhorn can't do that!  

    /RB/Craigs – I don't see any news.  Heading into NYMEX close.  

    When Naybob was young:

    Image result for 2001 cavemen animated gif

    Joining them/Baron – Amen to that.  If they are going to build walls, you'd better be able to afford to be on the inside.

    World/Baron – This is why we haven't cashed our longs – you have to be in it to win it these days.  That's a lesson I did learn in 1999 – you can't make money sitting at the sidelines clucking your tongue at the idiots who are still buying (and you sure can't make money shorting it – until the last second, of course).

    Waves/Pirate, Naybob – Cool stuff.

    Image result for einstein wave animated gif

  42. CAT/Phil

    Would never short them still, just showing for reference.  They actually have real products that are sold for profits unlike many other companies that have no profits.

  43. I hear you Phil, loud and clear, but I have been hesitant notwithstanding.  Call it the fall out from 2009 and my oh so close figurative death as a real estate developer, and I knew many for whom it was death, figurative, and in a couple of cases, literal.  That's why joined the chatroom, to p my game and put it to use.

    Even with that, as we speak I am looking to buy a house, modest though, with cash, notwithstanding that I don't really want to, simply because I need a place to  live and have no place better to invest.  I know, its only 5% return, but I have no other real estate at this point, and it still leaves me with plenty for the stock market.   The point is, you have to be invested it seems, someplace, somehow.

  44. We are getting close to an EV breakthrough:

    Now Toshiba says it has a breakthrough battery that can add 320 kilometers (199 miles) of range from a six-minute charge.

    The problem has always been range anxiety, but a six minute charge for 200 miles is really manageable. Long lithium again!

  45. Phil it looks like they are forecasting a big drop in stockpiles and that is why oil and gasoline are popping today. You think that with hurricane effect in the rear view it should be the opposite.  Sure hope you're right. 

  46. Does anyone know when the NGX7 contract expires? 

  47. House/Baron – I always advise my friends who are able to buy a multi-family home and rent out part for income.  It's such a boost to your long-term returns to have someone else helping with the costs.  I'm sure you know the numbers – it's more about accepting less space and privacy now in exchange for financial security later.  

    My niece bought one in CA and started out 10 years ago in the smallest of 3 units, moved up to the bigger unit as her finances improved and now she's getting married and buying a 2nd 2-family home with her fiance so she can rent out the entire first home (paying off an $800,000 mortgage in 15 years) while building equity in the 2nd.  If all goes well, in 10 more years she'll be free and clear on home 1 and ready to leave home 2 and on to home 3 (but with $2M in assets behind her).  

    CAT/Rustle – You know I love them when they are cheap and there's no denying the global growth story but we're not even growing as fast as the debt – so it's an illusion we're all participating in. 

    mauldin 1

    mauldin 2

    Image result for global growth debt

    Image result for global growth debt

    Image result for global growth debt

    Image result for global growth debt

    Image result for global growth debt

    Image result for global growth debt

    We report, you decide.  

    Toshiba/StJ – That would be great!   Titanium and Niobium may be the things to play (no idea how though but ATI springs to mind).  

    Stockpiles/Craigs – Would be strange if suddenly there was a huge draw but maybe exports ticked up again.  

    /NGX7/Craigs – Well that's tricky as Thanksgiving is a holiday and not sure if they count Friday so it's either Mon (20th) or Tues (21st) – don't know which.

  48. Phil -  Older than dirt? HELL, that's my coffee. Just ask Dathan, Methuselah got nothin on me.

    Pirati – "That's what frightens me-like we are all puppets in their giant game of national Monopoly."

    We always have been, when Ray Dalio warns about the 60%, really 90%, at the bottom, somebody needs to start paying attention.   The theory of randomivity is one of the few on solid ground, but Leroy Jethro Gibbs Rules 39 and 39A are the gold standard, there is no such thing as a coincidence, or small world.

    Baron – " the government has taken on all the risk of lending, and technology and demographics keep inflation under control"

    Sic em Toto…. While everyone was looking at the terrorists, and giving up their rights and freedoms, that man behind the curtain pushed all the risk of lending, as well as public/private pensions and healthcare to the public at large.  They scam and or fail, the sheeple pay as it should be for those who take collective naps.

    As for inflation, the cold hard truth is, its been running in double digits annually since 2000, see the more accurate 1980 CPI here, for a localized shock look at the Chapwood Index, and read its common sense methodology.

    And now for your moment of Zen… Outrage? Revolution? Greed is good and Let them eat cake come to mind. Coming full circle from that cup o joe… verily, this is the road we are on, pay attention to the fine guitar and prescience of those lyrics. Time for my IV and Out.

  49. Phil – Good example on GNC.

  50. Nat "but I was so much older then I'm younger than that now." Bob Dylan

  51. Phil, That's how I started out, right out of law school with a 3-family, then a  duplex on Jersey Shore. Then CO for office buildings, condos, rehabs.  Then NC for raw land development.  Did well at first, then got overextended.  In 2009 4 million in contracts defaulted and it was over.  Spent the next few years picking up the pieces of what was left.  Asset protection, legal work, and luck left with us with less than half of what we started with and 1/5 of what we had at the top.  Very nasty.

  52. I think it was Bernard Baruch who answered a question put to him on how he made all his money in the stock market. "I sod too soon." Was his reply

  53. A little bit of selling into the close?

    Inflation/Naybob – Very good point.  

    Nasty/Baron – Wow, a real bubble burst story.  Well, stocks have bubbles too and people are just as apt to deny them while they are in the middle of one.  Diversification is key.  And hedging, hedging is key…  

    Baruch/Jomp – Wise but a poor speller (or maybe he had a lisp?).

  54. Nat Nay,

    From the perspective of those who count, the government has taken on the risk of lending, and inflation is in college costs and healthcare, again, not important for those who count.  As my wife points out, and she is even older than I, from our time frame, even value investing may be to long to wait.  I can't agree with that, but clearly outrage is too early; there may well be many more years before the  pain justifies true outrage.  And even then, as Phil has pointed out, the central banks probably have at least one more save in them.  If Einhorn  throwing in the towel is  a sign, we'll know soon enough.  But no more wagers on it from me.

  55. Phil/Jomp/Nat Nay

    Very funny about Baruch; had to think about it for a second. 

    An interesting day of trying to play devil's advocate.  No vocal takers.  My simple point is that for years I have been risk-off, and just because that debate is heating up with  this melt-up, does not mean that the end is close.  Frankly, as I said a few days ago, I cannot get myself to go long, but I won't go short either.  And still that has been the wrong call as the melt-up continues.

  56. Baruch, good one phil

  57. LOL – Jeff Flake just gave an anti-Trump speech on the Senate floor, calling on fellow Republicans to join the resistance!    Now I'm happy!  

  58. And he announced that he's not running for re-election.

  59. Craigs,

    last trading day Nov 28th for NGX7, calendar here:


    Going long/Baron – We still seem to find a few value stocks every week.  That's at least 150/yr – plenty to fill up most portfolios.  Go check out the Top Trade Reviews (Portfolio Review Section).  Those are shorter-term trade ideas – even though I do use long-term options to trade them (just in case I'm wrong).

    Sen. Jeff Flake says `impulse to threaten and scapegoat' could turn US, party into `fearful, backward-looking people'

    “I will not be complicit,” he said in an extraordinary speech on the Senate floor that excoriated his president and his leadership.

    His decision not to run again throws into question whether Republicans can retain his seat – and their hold on the Senate majority.

    And now a protester threw small Russian flags at Trump.  

    Here's Flake's speech:

    Mr. President, I rise today to address a matter that has been much on my mind, at a moment when it seems that our democracy is more defined by our discord and our dysfunction than it is by our values and our principles. Let me begin by noting a somewhat obvious point that these offices that we hold are not ours to hold indefinitely. We are not here simply to mark time. Sustained incumbency is certainly not the point of seeking office. And there are times when we must risk our careers in favor of our principles.

    Now is such a time.
    It must also be said that I rise today with no small measure of regret. Regret, because of the state of our disunion, regret because of the disrepair and destructiveness of our politics, regret because of the indecency of our discourse, regret because of the coarseness of our leadership, regret for the compromise of our moral authority, and by our — all of our — complicity in this alarming and dangerous state of affairs. It is time for our complicity and our accommodation of the unacceptable to end.
    In this century, a new phrase has entered the language to describe the accommodation of a new and undesirable order — that phrase being "the new normal." But we must never adjust to the present coarseness of our national dialogue — with the tone set at the top.
    We must never regard as "normal" the regular and casual undermining of our democratic norms and ideals. We must never meekly accept the daily sundering of our country – the personal attacks, the threats against principles, freedoms, and institutions, the flagrant disregard for truth or decency, the reckless provocations, most often for the pettiest and most personal reasons, reasons having nothing whatsoever to do with the fortunes of the people that we have all been elected to serve.
    None of these appalling features of our current politics should ever be regarded as normal. We must never allow ourselves to lapse into thinking that this is just the way things are now. If we simply become inured to this condition, thinking that this is just politics as usual, then heaven help us. Without fear of the consequences, and without consideration of the rules of what is politically safe or palatable, we must stop pretending that the degradation of our politics and the conduct of some in our executive branch are normal. They are not normal.
    Reckless, outrageous, and undignified behavior has become excused and countenanced as "telling it like it is," when it is actually just reckless, outrageous, and undignified.
    And when such behavior emanates from the top of our government, it is something else: It is dangerous to a democracy. Such behavior does not project strength — because our strength comes from our values. It instead projects a corruption of the spirit, and weakness.
    It is often said that children are watching. Well, they are. And what are we going to do about that? When the next generation asks us, Why didn't you do something? Why didn't you speak up? — what are we going to say?
    Mr. President, I rise today to say: Enough. We must dedicate ourselves to making sure that the anomalous never becomes normal. With respect and humility, I must say that we have fooled ourselves for long enough that a pivot to governing is right around the corner, a return to civility and stability right behind it. We know better than that. By now, we all know better than that.
    Here, today, I stand to say that we would better serve the country and better fulfill our obligations under the constitution by adhering to our Article 1 "old normal" — Mr. Madison's doctrine of the separation of powers. This genius innovation which affirms Madison's status as a true visionary and for which Madison argued in Federalist 51 — held that the equal branches of our government would balance and counteract each other when necessary. "Ambition counteracts ambition," he wrote.
    But what happens if ambition fails to counteract ambition? What happens if stability fails to assert itself in the face of chaos and instability? If decency fails to call out indecency? Were the shoe on the other foot, would we Republicans meekly accept such behavior on display from dominant Democrats? Of course not, and we would be wrong if we did.
    When we remain silent and fail to act when we know that that silence and inaction is the wrong thing to do — because of political considerations, because we might make enemies, because we might alienate the base, because we might provoke a primary challenge, because ad infinitum, ad nauseum — when we succumb to those considerations in spite of what should be greater considerations and imperatives in defense of the institutions of our liberty, then we dishonor our principles and forsake our obligations. Those things are far more important than politics.
    Now, I am aware that more politically savvy people than I caution against such talk. I am aware that a segment of my party believes that anything short of complete and unquestioning loyalty to a president who belongs to my party is unacceptable and suspect.
    If I have been critical, it not because I relish criticizing the behavior of the president of the United States. If I have been critical, it is because I believe that it is my obligation to do so, as a matter of duty and conscience. The notion that one should stay silent as the norms and values that keep America strong are undermined and as the alliances and agreements that ensure the stability of the entire world are routinely threatened by the level of thought that goes into 140 characters – the notion that one should say and do nothing in the face of such mercurial behavior is ahistoric and, I believe, profoundly misguided.
    A Republican president named Roosevelt had this to say about the president and a citizen's relationship to the office:
    "The President is merely the most important among a large number of public servants. He should be supported or opposed exactly to the degree which is warranted by his good conduct or bad conduct, his efficiency or inefficiency in rendering loyal, able, and disinterested service to the nation as a whole. Therefore, it is absolutely necessary that there should be full liberty to tell the truth about his acts, and this means that it is exactly as necessary to blame him when he does wrong as to praise him when he does right. Any other attitude in an American citizen is both base and servile." President Roosevelt continued. "To announce that there must be no criticism of the President, or that we are to stand by the President, right or wrong, is not only unpatriotic and servile, but is morally treasonable to the American public."
    Acting on conscience and principle is the manner in which we express our moral selves, and as such, loyalty to conscience and principle should supersede loyalty to any man or party. We can all be forgiven for failing in that measure from time to time. I certainly put myself at the top of the list of those who fall short in that regard. I am holier-than-none. But too often, we rush not to salvage principle but to forgive and excuse our failures so that we might accommodate them and go right on failing—until the accommodation itself becomes our principle.
    In that way and over time, we can justify almost any behavior and sacrifice almost any principle. I'm afraid that is where we now find ourselves.
    When a leader correctly identifies real hurt and insecurity in our country and instead of addressing it goes looking for somebody to blame, there is perhaps nothing more devastating to a pluralistic society. Leadership knows that most often a good place to start in assigning blame is to first look somewhat closer to home. Leadership knows where the buck stops. Humility helps. Character counts. Leadership does not knowingly encourage or feed ugly and debased appetites in us.
    Leadership lives by the American creed: E Pluribus Unum. From many, one. American leadership looks to the world, and just as Lincoln did, sees the family of man. Humanity is not a zero-sum game. When we have been at our most prosperous, we have also been at our most principled. And when we do well, the rest of the world also does well.
    These articles of civic faith have been central to the American identity for as long as we have all been alive. They are our birthright and our obligation. We must guard them jealously, and pass them on for as long as the calendar has days. To betray them, or to be unserious in their defense is a betrayal of the fundamental obligations of American leadership. And to behave as if they don't matter is simply not who we are.
    Now, the efficacy of American leadership around the globe has come into question. When the United States emerged from World War II we contributed about half of the world's economic activity. It would have been easy to secure our dominance, keeping the countries that had been defeated or greatly weakened during the war in their place. We didn't do that. It would have been easy to focus inward. We resisted those impulses. Instead, we financed reconstruction of shattered countries and created international organizations and institutions that have helped provide security and foster prosperity around the world for more than 70 years.
    Now, it seems that we, the architects of this visionary rules-based world order that has brought so much freedom and prosperity, are the ones most eager to abandon it.
    The implications of this abandonment are profound. And the beneficiaries of this rather radical departure in the American approach to the world are the ideological enemies of our values. Despotism loves a vacuum. And our allies are now looking elsewhere for leadership. Why are they doing this? None of this is normal. And what do we as United States Senators have to say about it?
    The principles that underlie our politics, the values of our founding, are too vital to our identity and to our survival to allow them to be compromised by the requirements of politics. Because politics can make us silent when we should speak, and silence can equal complicity.
    I have children and grandchildren to answer to, and so, Mr. President, I will not be complicit.
    I have decided that I will be better able to represent the people of Arizona and to better serve my country and my conscience by freeing myself from the political considerations that consume far too much bandwidth and would cause me to compromise far too many principles.
    To that end, I am announcing today that my service in the Senate will conclude at the end of my term in early January 2019.
    It is clear at this moment that a traditional conservative who believes in limited government and free markets, who is devoted to free trade, and who is pro-immigration, has a narrower and narrower path to nomination in the Republican party — the party that for so long has defined itself by belief in those things. It is also clear to me for the moment we have given in or given up on those core principles in favor of the more viscerally satisfying anger and resentment. To be clear, the anger and resentment that the people feel at the royal mess we have created are justified. But anger and resentment are not a governing philosophy.
    There is an undeniable potency to a populist appeal — but mischaracterizing or misunderstanding our problems and giving in to the impulse to scapegoat and belittle threatens to turn us into a fearful, backward-looking people. In the case of the Republican party, those things also threaten to turn us into a fearful, backward-looking minority party.
    We were not made great as a country by indulging or even exalting our worst impulses, turning against ourselves, glorying in the things which divide us, and calling fake things true and true things fake. And we did not become the beacon of freedom in the darkest corners of the world by flouting our institutions and failing to understand just how hard-won and vulnerable they are.
    This spell will eventually break. That is my belief. We will return to ourselves once more, and I say the sooner the better. Because to have a heathy government we must have healthy and functioning parties. We must respect each other again in an atmosphere of shared facts and shared values, comity and good faith. We must argue our positions fervently, and never be afraid to compromise. We must assume the best of our fellow man, and always look for the good. Until that days comes, we must be unafraid to stand up and speak out as if our country depends on it. Because it does.
    I plan to spend the remaining fourteen months of my senate term doing just that.
    Mr. President, the graveyard is full of indispensable men and women — none of us here is indispensable. Nor were even the great figures from history who toiled at these very desks in this very chamber to shape this country that we have inherited. What is indispensable are the values that they consecrated in Philadelphia and in this place, values which have endured and will endure for so long as men and women wish to remain free. What is indispensable is what we do here in defense of those values. A political career doesn't mean much if we are complicit in undermining those values.
    I thank my colleagues for indulging me here today, and will close by borrowing the words of President Lincoln, who knew more about healing enmity and preserving our founding values than any other American who has ever lived. His words from his first inaugural were a prayer in his time, and are no less so in ours:
    "We are not enemies, but friends. We must not be enemies. Though passion may have strained, it must not break our bonds of affection. The mystic chords of memory will swell when again touched, as surely they will be, by the better angels of our nature."
    Thank you, Mr. President. I yield the floor.

    No, I did not write that speech – but now I'd vote for that guy!  

  61. Guys, know any handy report available which shows market indices return year to date when you exclude FANG stocks? Thanks

  62. Edro- NGX7 expires Oct 27 as it turns out. This is the November contract, but thanks for that link which enabled me to find this. Great tool. 

  63. /NG/Craigs, Edro – Sorry, I was thinking /CL/NG is very different.  

    Handy/DM – No, would be interesting though.

  64. Well a sell-off into the close makes me feel a little better.

  65. Trump's response to Flake will probably be "Jeff Flake, loser, wouldn't be reelected without my support, SAD! Covfefe"

  66. Reich calls BS on Trickle Down:

    Only 20% of the population can understand what the mainstream press writes about monetary policy

    When Is A P/E Not A P/E, Or How To Turn 90 Into 22 In Three Easy Steps

    Goldman Sachs: There are only 50 perfect growth stocks in the world

    Oh well, at least someone is still having fun:


  67. Baron – For anyone who still shops and pays their bills, isolation of inflation to college and healthcare occurs perhaps in some bubble, of which zip code, I nor the majority can afford to live in. For those of us who don't "count", but can count, ten percent is still 10%, and we see, feel and experience it up front and personal every day. 

    Always has been and ever shall be, they leave nothing to risk, all bail outs, boondoggles and policy SNAFU's, are ultimately on John Q's dime and nobody else's, you pay one way or another.

  68. Jomp – " "but I was so much older then I'm younger than that now." Bob Dylan"

    You know, he wrote that rejection or should I say, recantation of his early idealism in 64, yet never performed it live until 88.

    In light of recent passings  in the musical world, one might appreciate this highly coveted 1992 rendition with McGuinn, Harrison, Petty, Clapton, Young and The Jester.  Now I am late for a very important date with my IV and Out.

  69. Good for Senator Flake.

    IMO, he didn't go far enough.

  70. And some people still care!  


    Bitcoin is 'Enron in the making': Billionaire Saudi Prince Alwaleed skeptical over cryptocurrencies

    Trump asked GOP senators for a show of hands in support of Fed chair nominees during lunch today

    Watch an activist scream ‘Trump is treason’ at POTUS — and toss Russian flags at him

    Wealthier Depositors Pressure Banks to Pay Up This is small now & will likely grow as the FOMC tightens $$

    U.S. Supreme Court dismisses remaining Trump travel-ban case

    Who wore it better?

    Flake/Albo – I think that was just the right chord because he didn't want to tilt so far as to alienate the people he was trying to reach – or give fodder to Fox to discredit him.   That was one of the great speeches in US political history – something we rarely get from the floor of Congress these days!  

  71. ESRX – Small profit beat but Revenue a bit light.  In addition taking up outlook slightly and projecting higher customer retention.  This to me is a good quarter.   They have concall in the AM.  I have a position with short puts and calls.   They look to be taking the right steps in cost reduction in preparation for Anthem exit.   If they can pick up a major customer coupled with the savings it would certainly punch this up.  Still think this is a 80 stock sitting here.


    ST. LOUIS, Oct. 24, 2017 /PRNewswire/ -- Express Scripts Holding Company (Nasdaq: ESRX) announced 2017 third quarter net income of $841.7 million or $1.46 per diluted share.  2017 third quarter adjusted earnings per diluted share was $1.90.*  


    Third Quarter 2017 Results

    The following compares third quarter 2017 and 2016 operating results:

    Adjusted claims of 343.6 million, down 1% – See Table 1 

    GAAP net income of $841.7 million, up 16% 

    GAAP earnings per diluted share of $1.46, up 27% 

    Adjusted EBITDA of $1,947.4 million, flat from 2016 EBITDA – See Table 3 

    Adjusted EBITDA per adjusted claim of $5.67, up 1% from 2016 EBITDA per adjusted claim – See Table 3 

    Adjusted net income of $1,093.6 million, flat from 2016 adjusted net income – See Tables 5 and 5A 

    Adjusted earnings per diluted share of $1.90, up 9% – See Table 4 

    Net cash flow provided by operating activities of $1,899.9 million, up 28%

    2017 Guidance 

    The Company increased its guidance for its full year 2017 adjusted earnings per diluted share from a range of $6.95 to $7.05 to a range of $6.97 to $7.05, which represents growth of 10% over 2016 adjusted earnings per diluted share results at the mid-point of the range.  

    The Company expects total adjusted claims for the fourth quarter of 2017 to be in the range of 347 million to 363 million.  Adjusted earnings per diluted share for the fourth quarter of 2017 is estimated to be in the range of $2.03 to $2.11, which represents growth of 8% to 12% over the fourth quarter of 2016.   

  72. Too bad these speeches are being made by people who retire because they are scared of facing the rabid electorate that Trump drive to a frenzy everyday with insulting tweets! Hopefully more will speak up now but I doubt it. The GOP is getting ready to accept Moore in the Senate so that tells you something – a racist, homophobic, religious fanatic guy who said that Supreme Court decisions can be ignored at will. A true constitutionalist I guess. That doesn't bode well for the discourse there.

  73. Saudis aims to diversify economy with new $500bn city

    Xi shifts Communist dogma that drove a 30-year China economic boom

    The worst kind of inflation:

    Damn, now I'm in the mood for Cluck U… 

    CMG with a big miss – $1.33 vs $1.66 – ouch!  Right back to $300.  

    Photo published for Fiscal conservatism, RIP

    "Fox & Friends" host thinks public doesn't need to know about troops in Africa, but felt differently about

    EU buries its plans to split up retail and investment banking

    Einstein’s theory of happiness sold for $1.5m

    If malls are dying, why is one of the largest U.S. mall operators building a new one?

    Yiannopoulos appears on Murdoch-owned channel, suggests Ellen was complicit in Las Vegas mass murder

    There’s a hole in the theory that the ‘Amazon effect’ is keeping US inflation down

    Amazon offered billions in tax breaks from cities and regions vying to host its second headquarters

    The president's $4,000 lie

    Oil is steady around $52, with U.S. reserves expected to fall again

    President Trump called Sen. Bob Corker a 'lightweight.' Mr. Corker said Trump 'has great difficulty with the truth'

    Bank of England may raise interest rates next week – but a premature hike can be dangerous

    /RB flying higher – $1.734.  /CL at $52.62.   Someone is really counting on a good report!  I'm still short 4 at $1.72 avg on /RB (down $2K) and 1 at $52.50 on /CL.

  74. Phil API says crude was a build but gasoline was a 5mb draw as were distillates. Are we staying short gasoline? 

  75.  We won’t really know until we see the EIA report.  I’m not inclined to change mine, but it is a dangerous position.

  76. Fact check: Sarah Sanders’ list of Trump accomplishments

  77. Trump’s day of unity turns into GOP crackup

  78. Phil / Att.  Earnings were not impressive I think there are tough times ahead  haven't turned around customer churn and they are starting a large investment in G5 along with integrating twc.  I think Wall Street will hammer them.   They're doing the right things in investment and content, throwing off lots of cash and margins are ok.  Hope the get taken down under 133 I'd love to take a position now.   Would like your thoughts on them. 

  79. UK GDP growth picks up in Q3

  80. Here comes Boeing …

  81. Social media may not be hurting the minds of our youth

  82. BBC apologises over interview with climate sceptic Lord Lawson

  83. CMG – Ackman strikes again !