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Thrilling Thursday – Will Big Tech Justify Nasdaq 6,666?

Image result for nasdaq rally fangAmazon (AMZN), Alphabet (GOOGL), Microsoft (MSFT) and Intel (INTC).

All four will report tonight and they make up 20% of the Nasdaq by weight (and AAPL, who are the rest of the Nasdaq that counts, reports on 11/2) so it's do or die for the index that's up 25% since the election but that's still only HALF of the move the FAANG stocks have made (Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX) and GOOGL), who are up 50% as a group since last November.

It's truly a market gong wild and we made some lovely profits on our shorts yesterday, nailing the move oil, as we had said to you in the morning Report:

Meanwhile, in our quest to join the Top 1%, we shorted Oil (/CL) Futures again at $52.50 and the EIA Inventory Report is at 10:30, so that will be fun.  We have Gasoline (/RB) shorts to at about $1.72 avg but they spiked to $1.738 overnight – so a rough ride.

Oil fell to $52 and that was good for gains of $500 per contract while Gasoline hit the $1.70 mark, which was good for gains of $840 per contract and then it bounced right back to $1.735 – so we shorted it again in our Live Trading Webinar but this time, we went with next month's /RBZ7 contract at $1.686 for our Webinar Trade (and you can see our volume spike on the chart!).  This morning, in our Live Member Chat Room, we used our 5% Rule to set goals for a pullback at $1.63, which would be a better than $2,000 per contract gain.  

While we usually don't share trade ideas with cheapskate readers during earnings week, the following trade is such a gift I simply have to tell you about it.  Barrick Gold (ABX) is our favorite gold company and we have them in all of our portfolios but, as an earnings play, I sent out a Top Trade Alert to our Members yesterday afternoon with a trade we discussed in our Live Trading Webinar:

ABX – In the Webinar we decided 50 2020 $15 ($3.45)/$22 ($1.35) bull call spread at net $2.10 ($10,500) and 25 short $15 puts at $2.20 ($5,500) for net $5,000 on the $35,000 spread was an excellent trade into earnings as we're not worried if they go lower as we'd be happy to buy more and, if they pop, you'll be right in the money with $30,000 (600%) upside potential.

That trade will still be playable this morning as ABX missed earnings by a mile, losing $11M vs. $186M that was expected to be earned.  Why does this make me want to reiterate the trade?  Because they had to make an unexpected tax payment to Tanzania of $192M so, without that one-time payment, they beat expectations.  Of course, a loss is a loss and there will be some impact on them but nothing to change the long-term outlook, especially as ABX produced 1.24M ounces of gold at an average, industry-low cost of $772/ounce.  Since they have 100M ounces of gold still in the ground – the future looks bright for ABX!  

Meanwhile, back to the Nasdaq.  Celgene (CELG) just reported good earnings but lowered guidance and they are down 15% pre-market and Amgen (AMGN) beat on earnings and are pulling back.  This will not be good for the Biotech Index (IBB), which has fallen 10% already this month and will critically fail support at $320 this morning, which likely means we'll see $300 again.  We expected this in our Short-Term Portfolio and sold the Biotech Ultra ETF (LABU) December $70 and March $70 calls (10 each) against 20 long March $50 calls and we'll take this opportunity (at $60) to buy back the Dec $70s with a nice profit (sold for $8.80) and increase our upside potential for the next leg up.   

That's how we usually make calls in our Live Member Chat Room but, since this news hit while I was writing the post, I figured I'd just call out the adjustment right here.  The great advantage to our spreads is we can make small adjustments like that (uncovering 1/2 our longs to get more bullish on a dip) without having to change the whole trade.  In the case of LABU, this was a planned adjustment as you can see that they routinely drop on earnings, so we purposely gave ourselves until the end of November by selling the Dec $70s in anticipation of the usual earnings pullback and then we're getting out in March – ahead of April's earnings.  

Over in Europe this morning, the ECB announced it would extend it's QE program into 2018 but will cut the purchases in half, which is still $35Bn/month so "only" $420Bn in stimulus next year vs this years' $840Bn of FREE MONEY handouts.  Not only are they continuing to be semi-generous, but they are leaving rates unchanged at 0.5%.

As you can see from the chart on the right, the balance sheet of the ECB is now 40% of the EuroZone's $20Tn GDP while our own Fed has given away 22% of our $19Tn GDP and the BOJ has already printed 100% of Japan's $5Tn GDP in new money to buy assets with (the BOJ now owns over 10% of the entire Japanese stock market).  An optimist would say that means the US and Europe have miles to go since Japan hasn't impoded – yet.  A pessimist might say we are all doomed.

Kyle Bass is one such pessimist but he's focusing on China and has essentially branded Chairman Xi Jinping as an econnomic war criminal saying:

Today Xi is celebrated in media reports, but when future historians look back, he will be blamed for recklessly building the Chinese economy on a foundation of sand.  Xi desperately seeks credibility, but true developed economies do not impose severe capital controls or move short-term rates hundreds of basis points overnight in attempts to manipulate their own currency.

“Recklessly growing a banking system in pursuit of global economic growth and respect will cause severe financial instability in the years to come.  The dangerous $40 trillion credit experiment with Chinese characteristics will run its course.”

Obviously, Bass has no plans to visit China for the rest of his life!  Very few fund managers have been brave enough to criticize China's policies as the Chinese tend to take criticism about as badly as our President.  We've been discussing the likelihood that China will lead the next global collapse for some time and this week's Party Congress Meeting has done nothing to negate those fears.  If we want to play China short, we can go with the following using FXP, the Ultra-Short China ETF:

  • Buy 20 FXP March $17 calls for $2.20 ($4,400)
  • Sell 20 FXP March $22 calls for $1.20 ($2,400) 
  • Sell 10 CHL March $50 puts for $1.65 ($1,650)

China Mobil (CHL) is our favorite Chinese stock so it makes a nice offset to the bearish spread but you have to REALLY want to own 1,000 shares of CHL for $50 ($50,000), otherwise it's better to just play the straight FXP spread for $2,000, which is still good as it returns $5,000 for a 150% gain in 5 months if all goes well.  With the CHL puts, the net of the spread drops to just $350 and you can make up to $4,650 (1,328%) if all goes well.

In theory, if the Chinese market doesn't sell off by March, then CHL should hold $50 and you would only be out $350, which makes this a great risk/reward trade.  

We'll have to see how tonight's earnings go but, either way, we'll be looking to go back in on index shorts after the bounce (see recent reports for our shorting lines).  Oh, that's right, I forgot to mention, we got out of our index shorts yesterday at 11:28, when I said to our Members in the Live Chat Room:

Flipped long on /TF – tired of having it reverse on me (1,482.50) 

That's what it looks like when our Members flip long!  

Now at 1,500, we'll take profits if 1,498 fails.  

Time for more fun inside!  


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  1. SGYP

    “The problem here is just pricing, and I am not sure why SGYP didn't budge. But eventually, this will be sorted out if its marketing people can do a good job and IBS-C gets through. That means, if you have a little patience, this could be a huge winner in about a year's time or less, when next year's formulary inclusions are declared sometime in July. That, coupled with IBS-C, and potentially a buyout, could change the game in favor of SGYP, the David in this David and Goliath story.”

  2. Good morning, All!

    The weekly webinar replay is now available!

  3. Good Morning.

  4. TWTR up nicely this morning.  The stock hasn't done much for a long time, but has moved enough back and forth to provide some trading profits. 

    Bought some NOK at $5.04 in pre-market on this big sell off.  Will look to turn it into a BCS after the open.

  5. Earnings and pre-market price reaction.

    TWTR good

    IMAX good

    GNC bad 

  6. 08:28


    Senator Bob Corker (R-TN) on CNBC asked about tax reform amid dispute with President Trump; Corker says he is 'all in' on tax reform; says dispute with Pres Trump will not impact vote  (255.29)

  7. Added more NOK on open.

  8. albo/NOK

    What do you like about NOK?

  9. Nice call on IMAX Phil!

  10. Dclark – It's a stock I've traded for the past few years.  Has been one of my biggest winners.  Have posted on it numerous times.  Its a good company in a tough industry right now, and I believe it will recover.  It also pays a dividend once a year in June.  Obviously started too early, but will continue to add more on further weakness.

  11. GNC  This does not seem that bad

    6-Oct-17 06:53 ET


    GNC Holdings misses by $0.01, reports revs in-line  (8.12)

    Reports Q3 (Sep) earnings of $0.32 per share, excluding non-recurring items, $0.01 worse than the Capital IQ Consensus of $0.33; revenues fell 2.9% year/year to $609.47 mln vs the $614.08 mln Capital IQ Consensus.

    Same store sales increased 1.3% in domestic company-owned stores (including sales) in the third quarter of 2017. In domestic franchise locations, same store sales decreased 1.7%.

    Key Updates

    Transaction growth continued in the third quarter, up 12.4%, resulting in positive same store sales of 1.3%.

    As of October 25, 2017, 9.6 million consumers had joined the Company's loyalty programs, of which approximately 585,000 were enrolled in the PRO Access membership.

    As of September 30, 2017, the Company's cash and cash equivalents were $40.1 million, long-term debt was $1.4 billion and the Company had $246.1 million available under the Revolving Credit Facility.


    26-Oct-17 06:51 ET


    GNC Holdings prelim Q3 $0.32 vs $0.33 Capital IQ Consensus Estimate; revs $609.47 mln vs $614.08 mln Capital IQ Consensus Estimate

  12. Phil  / LABU – if I have no position at them moment in this what would you recommend for a new position? 

  13. Baron / GNC – I agree it's not a terrible quarter.  They have hit the inflection point on SSS, and they jettisoned a losing store model which should help GM.   

  14. Batman,

    Just not sure what to do about it, its not like we are down on it and should double up for that reason.

  15. FU ABX!!!!

  16. SVU coming back a bit. I initiated a new spread last week. Sold the Jan 2019 13 puts for 2.35, bought the 10 calls for 6.4, and now sold the 20 calls for 2.50. Net 1.55 on the 10 dollar spread. 

  17. FU TEVA!!!!

    FU GE!!!!

  18. Good morning!  

    IMAX does well on earnings, great for the OOP:

    Submitted on 2017/10/19 at 1:51 pm

    IMAX – Will people ever go to the movies again?  IMAX traders don't seem too sure.  We're in the money on our call spread anyway but let's buy back the short $20 calls ($2.55 and don't overpay!), taking a chance there will be a winter blockbuster that sends IMAX back to $25, where we'll cover again.

    The Dow is, of course, up 100, as usual.  You would think we'd be over 24,000 since we're up 100 pretty much every morning but we tend to give most of it back.  As usual, /ES, /NQ and /TF ignoring the 30-stock index (that everyone talks about) and flatlining.  

    23,400 is still my shorting spot on /YM. 

    ABX failing $15!  That's the 5% Rule though, that should be it (6% is the 20% overshoot at $14.80).   Revised prices are $2.50 for the 2020 $15 puts (25) and the $15 ($2.95)/$22 ($1.05) bull call spread is $1.85 (50) so net $3,000 on the $35,000 spread now!    I'd by the $15s and wait a bit on sell the $22s – or at least 1/2 of them.  

    SGYP/DC – Yep, we know it's a patience play.  Most people don't have any…

    Big Chart – Well the dip was fun while it lasted (5 trading minutes).

    TWTR/Albo – Well $20 was our spread target and we held steady.  Glad they pulled it off though as it was a Jan spread, not 2019 – so a miss would have made us scramble.  

    Long Call 2018 19-JAN 13.00 CALL [TWTR @ $18.97 $1.83] 30 4/12/2016 (85) $20,100 $6.70 $-0.48 n/a     $6.23 $1.89 $-1,425 -7.1% $18,675
    Short Call 2018 19-JAN 20.00 CALL [TWTR @ $18.97 $1.83] -30 4/12/2016 (85) $-11,400 $3.80 $-2.85     $0.95 $0.47 $8,550 75.0% $-2,850
    Short Put 2019 18-JAN 17.00 PUT [TWTR @ $18.97 $1.83] -30 2/9/2017 (449) $-11,700 $3.90 $-1.70     $2.20 $-0.40 $5,100 43.6% $-6,600

    Good example of an LTP/OOP stock that has gone nowhere since we bought it but, because were conservative ($18 is the OOP target) in our spread and because we sold a ton of premium (net $3,000 credit above), we're going to make a ton of money on this trade.  We'll get paid $24,000 in the LTP and our risk was owning 3,000 shares of TWTR for net $16 ($48,000) so, even in an IRA account, the return on margin is 50% in 20 months.   In a margin account, it used about $4,500,  so 10x on margin!  

    And, even if we were assigned, the LTP has $3M in ordinary (2x) margin and having the stock assigned would use $24,000 of it so we'd have plenty of room to roll and DD if things went the other way, which made this a very low-risk trade (and the chance of TWTR going BK was infinitesimal).

    GNC, on the other hand, not good but, on the other other hand, our target price is $5 – also because we played it conservative and sold a crap-load of premium.  

    GNC GNC Holdings Inc. 6000 12/16/2016 314 $58,800 $9.80 $-2.47 $9.74     $7.33 $-0.79 $-14,821 -25.2% $43,979
    Short Call 2019 18-JAN 5.00 CALL [GNC @ $7.33 $-0.79] -60 4/10/2017 (449) $-22,200 $3.70 $-0.43     $3.28 - $2,550 11.5% $-19,650
    Short Put 2019 18-JAN 7.50 PUT [GNC @ $7.33 $-0.79] -60 4/7/2017 (449) $-20,400 $3.40 $-0.75     $2.65 $0.35 $4,500 22.1% $-15,900

    Of course we need $7.50 to avoid ending up with a net $5.15 entry on 12,000 but the reaction to these earnings is silly as they missed by 0.02 and made 0.31 per $7 share in a quarter.   

    Per management, GNC Holdings made good progress in third quarter as it returned to positive same store sales. 9.6 million consumers had joined the Company's loyalty programs, of which approximately 585,000 were enrolled in the PRO Access membership as of October 25, 2017. The company also launched a GNC storefront on Amazon which continues to exceed the company's expectations.

    Positive same store sales of 1.3% in the third quarter with the third consecutive quarter of transaction growth, up 12.4%

    Supply chain optimization drives approximately $40 million reduction to inventory at September 30, 2017 compared with June 30, 2017

    The impact of hurricanes Harvey, Irma and Maria are estimated to have resulted in a $0.02 reduction to Adjusted EPS in the quarter ended September 30, 2017. sales were up 41.9% for the three months ended September 30, 2017 as we anniversary significant changes in our e-commerce pricing and promotion strategy in August 2016, which eliminated channel conflict and bulk sales.  These changes allowed GNC to successfully launch on Amazon in January 2017 and position the Company for meaningfully positive same store e-commerce sales again in the fourth quarter. 

    The decrease in revenue compared with the prior year quarter was primarily due to the discontinuation of the Gold Card Member Pricing program in the U.S. and the introduction of the Company's new loyalty programs, which resulted in lower revenue of $12.0 million, and a decrease in sales to franchisees of $7.5 million, partially offset by an increase in same store sales of 1.3% for company-owned stores, including

    So still good for a new trade as it has miles to grow.  I love their report, very detailed read.

    Thanks Jeff.  

    LABU/Batman – Not as low as I'd like but, as a new trade, the March $60s are just $19 and you can sell the $80s for $10 so net $9 on the $20 spread and I'd do 10 of those ($20,000) and sell 10 of the $50 puts for $5 ($5,000) for net $5,000 on the $20,000 spread and your worst case is owning $50,000 of LABU 30% down from here (with juicy puts and calls to sell).  

  19. Phil / LABU    Thanks!

  20. Phil / LABU spread probably looks closer to:

    Mar 60 calls ( 20.5)

    Mar 80 Calls (10)

    Mar 50 Put at 5

  21. Phil even with Saudis and Russia making noise about extending output cuts you still like RB short?

  22. phil/TWTR, do you think they can pop $20?

  23. ~~ Oct 25

    TRVG – Trivago lowers FY17 revenue guidance (see 7:07)  (10.76)

    •Co issues lowered guidance for FY17 (Dec), sees FY17 (Dec) revs of +36-39% from +40% prior to ~€1.025-1.050 bln vs. €1.06 bln Capital IQ Consensus Estimate.
    •Adjusted EBTIDA expected to remain positive.

    Beats by $0.02, reports revs in-line  (10.76)

    TRVG has been taken to the woodshed.  Sold some APR 7.5 puts for $125.

  24. What's up is down, what's down is up – I don't know what to do anymore.

  25. albo/NOK

    Thanks.  I will be watching NOK to see if it can hold $4.80.  

  26. I did know enough to buy a little more GNC.

  27. Scott

    ~~ OMER – Omeros reports 'positive' data from its ongoing Phase 2 study of OMS721 evaluating patients with hematopoietic stem cell transplant-associated thrombotic microangiopathy.  

  28. GNC

    Added a little but even so we, or at least me, are flat on GNC today.

  29. TEVA/Jabob – They never seem to stop going down.  Feel free to abandon GE, what a crappy company, right?  

    SVU/Jeff – Cramer was just badmouthing KR too.  Kramer is the leading voice of analysts who say AMZN will take over the World and all that oppose them are a SELLSELLSELL.  

    Cramer's lightning round: There's no upside story for Kroger right now

    Cramer: Chipotle stock is overpriced and should go lower

    Grocery chain Supervalu pressured by activist investor to sell stores

    Amazon’s charts are troubling ahead of earnings: Technician

    Frontier Communications (FTR) Q3 Earnings: What's in Store?

    Congress votes to disallow consumers from suing Equifax and other companies with arbitration agreements

    Anna Faris Explains Why Threesomes Sound Better Than They Actually Are


    And, oh no!  But only passed 216-212 – that's a lot of GOP defectors already.    That's 2 flips away from a tie.  

    The House adopted a budget Thursday that sets the stage for a rewrite of the U.S. tax system, overcoming internal doubts and beginning a six-day countdown for the release of the closely guarded details of the Republican tax plan.

    Eleven of the 20 Republican no votes came from representatives of the high-tax states of New York and New Jersey, who defected because of the party’s plan to limit or repeal the deduction for state and local taxes. All Democrats voted against the budget.

    House Republicans now turn to the even tougher work of writing, amending and passing a tax bill, which they insist will happen by Thanksgiving.

     The nonbinding budget resolution doesn’t need to be signed by President Donald Trump, and is separate from spending bills that actually fund the government. But it is a crucial step because Republicans can now use fast-track procedures that avoid a filibuster in the Senate, meaning they could pass a tax bill without Democratic votes.


    The House Ways and Means Committee plans to release a tax bill Nov. 1 and could consider amendments soon after. The outlines of the plan have been clear for months. Republicans want to drop the corporate tax rate to 20% from 35%, set a 25% rate on businesses that pay through their owners’ individual tax returns, repeal the estate tax and make tax filing simpler.

    What they haven’t done is show how it all adds up or offer enough detail for families to calculate their future tax bills.

    There are obstacles looming in every direction. In the House, where Republicans have a 239-194 edge, opposition by members from high-local-tax states narrows the party’s margins significantly. So far, party leaders haven’t been able to reach a compromise that would continue some federal tax break for local property taxes.

    The release of details will unleash a lobbying frenzy as businesses and interest groups see exactly how Republicans plan to pare back tax breaks. That will force the bill’s authors to play defense.

    “This is just tax cuts for the rich. This is not tax reform,” said House Minority Leader Nancy Pelosi (D., Calif.). “It’s not what our values are about. It’s really a shame.”

    Paul Ryan, of course, is on TV claiming total victory. 

    LABU/Batman – Well you waited but net $10.50 not terrible still.  It's going to keep changing, of course but last on the $80s was $11.18 at 11 and and $20.97 for the $60s so I'd bid $21 and 1/2 and ask for $12 on 1/2 to get my $9 and, when those fill, I'd go for the next 1/2.

    /RB/Craigs – How do those cuts (IF they happen – they've been saying this all year) affect the price of gas in New Mexico?  I just see another chance to short /CL at $52.50 at the moment.  

    TWTR/Lunar – Probably not without some consolidation.  They are up over 15% today, I'll be thrilled if they just hold $18.50 next week.   Let's not get too excited, they only made 0.10/share!  

    TRVG/Albo – I can't tell those things apart.  

    What to do/Baron – Earnings are always strange.  Just stick to the basics and look for real values.  

  30. TRVG – I agree, Phil.  They all blur together, which is why there might be some consolidation in the industry to combat PCLN, the 800 lb. gorilla.   Stock just looks cheap to me in the 6's.

  31. Baron – "What's up is down, what's down is up – I don't know what to do anymore."

    Always remember this and this and what Phil said, Out.

  32. Yes, the Russia-Trump Investigation Is Real

  33. Butterfly, PG, thoughts on selling puts and possibly more short calls with stock here at 87.50 again

  34. Nat Nay,

    The APP, that take me back.  Her name was Meredith, and she was already out of college and working for UVa's development office when I was a 2nd year

  35. GAO to probe activities of Trump voter fraud commission

  36. Does any get the feeling that decent earning reports are being sold, (for whatever reason)?

  37. Damnit! I put on the ABX trade but wasn't paying attention and overpaid for the long calls. Just a reminder to look at the prices closely before you send your orders. I'm still good on the spread but lost some potential gain due to that mistake. 

  38. Will The GOP Pass Anything Before Midterms?

  39. Fed fight gets even weirder

  40. CELG – Has lost more than 1/3 of its value in October.  Phil, has it been punished enough to sell some OTM puts ?  Thanks.

  41. Dollar over 94.  Very likely to testy 95 now.  

    Yep, such a healthy Global Economy.  Move along, nothing to see here…

    Silver and gold taking a hit:

    I've got 2 long /SI now at $16.90 avg.  

    TRVG/Albo – They'll be luck to make a penny a share – not that cheap! 

    PG/Mike – Well, we got out of the short Oct $87.50s for 0.75 ($750) and made $5,750 so I think we can afford to wait and see if they bounce before covering this low in the channel.  If they go lower, we'll sell low puts and spend the money to widen the spread (rolling the long calls down) but there's no hurry.

    Earnings/Baron – It's not about the earnings but the expectations vs the reality.   F, for example, is flat today on great earnings because, after gaining 20% since last Q – they'd BETTER have great earnings to justify the move higher.  That's why I think the market is toppy – it's all based on expectations (tax cuts, earnings, GDP growth) that can't possibly match the expectations of being 25% better than last year. 

    ABX/Jeff – That's why I reflexively offer close to the bid to see if that fills before doing anything else.  Surprising how many times you get lucky.

    CELG/Albo – A stock down 20% in a day is generally waiting for an excuse to go lower.  They lowered targets all the way out to 2020 but it is still $7 per now $96 share so p/e around 14 is not terrible so, if it's right for your portfolio, keep an eye on the short 2020 $80 puts, now $10 – as that's a nice entry and then maybe the $80 ($30)/110 ($16) bull call spread at $14 and you've netted in for $4 on the $30 spread that's 50% in the money.  In fact, though I think we can do better, we can start with 5 units in the LTP as that costs us just $2,000 of our cash but makes $15,000 if CELG recovers in 2 years.  

    Keep in mind, Albo, that we intend to at least DD once on this small entry so if it goes lower, we'll be THRILLED to step up our position.

  42. Thanks, Phil.

  43. OMER/Albo – yeah,..go figure. tiptoeing into short puts..

  44. Some nice breakouts today.. SQ, STM, TER, …

  45. TWTR – very jaded/skeptical it can hold 20..expectation is will fade back to 18ish and waffle around until next earnings… very tempted to sell Dec 20 calls.  feeling a calendar or diagonal may be in the cards.

  46. Comment content omitted because it is too long.

  47. You're welcome, Albo. 

    ABX now getting double-hammered as gold drops $10.  

    • Barrick Gold (ABX -6.7%) plunges a day after reporting Q3 earnings narrowly below expectations but punctuated today by a downgrade from Credit Suisse, which says the momentum behind ABX's turnaround story is slowing.
    • "We now believe that the focus will shift to the weaker operational results in 2017 YTD… value loss at Acacia and ABX's relative production profile vs. peers over the next three years," the firm writes in its downgrade to Neutral from Outperform with a $22 stock price target, trimmed from $24.
    • Separately, ABX says a $300M “good faith” payment its Acacia Mining unit will make to Tanzania could be “in the region” of a total settlement for its tax dispute with the government.
    • “It would be premature of anybody to sit and say [the $300M payment] is a final position, which is why we refer to it as a down payment: there’s more work to be done yet," ABX COO said during today's earnings conference call.

    Dollar up to 94.50.   Notes are failing too:

    European stocks are really happy:

    Kansas City fed manufacturing survey

    • Oct. Kansas City Fed Composite Index+23, vs. +17 in Sept.
    • Manufacturing Index +20 vs. +22.
    • "Factory activity accelerated further in our region this month, posting its highest composite reading since 2011,” said Wilkerson.


    I guess it's back to the good old day's of a poker game in every saloon:  Pennsylvania a step closer to 'explosion' in gambling
    • The Pennsylvania Senate approved an expansion of gambling in the state.
    • The bill, which still needs to be approved by the PA House, is being closely watched by casino operators because it allows some casino-type games at truck stops and other retail locations. Bidding on ten new casino locations will also be opened up under the legislation and online gaming would be regulated.
    • "If you pass this bill, you will see an explosion of gambling in Pennsylvania like you've never seen before," says House Gaming Oversight Committee Chairman Scott Petri. What Petri didn't say was that the iGaming legislation imposes a 54% tax on internet slots. The 16% tax on poker and online table games is more in line with the rates in other states.
    • Height Securities on PA gaming: "We continue to believe that in the end there are better-than-even odds (at 55%) a final agreement will include gaming expansion / internet gaming legalization."
    • PA-related casino stocks: Caesars Entertainment (NASDAQ:CZR), Las Vegas Sands (NYSE:LVS), Penn National Gaming (NASDAQ:PENN), MGM Resorts (NYSE:MGM), Wynn Resorts (NASDAQ:WYNN) and Eldorado Resorts (NASDAQ:ERI), The Stars Group (NASDAQ:TSG).
    • Related ETF: BJK
    • The Pennsylvania House voted 109 to 72 to approve a broad expansion of the state's gambling options to follow on the House's approval yesterday.
    • The final piece of the puzzle will be landing the signature of Governor Tom Wolfe.
    • Shares of Penn National Gaming (NASDAQ:PENN) are down 4.26% on the day amid the developments. Presumably, investors are concerned over the impact of the new casinos and truck stop gambling allowed through the bill. Other casino companies in the mix include Caesars Entertainment (CZR +0.4%), Las Vegas Sands (LVS -0.9%), MGM Resorts (MGM +0.2%), Wynn Resorts (WYNN +0.8%) and Eldorado Resorts (ERI -2.2%). Online gambling player The Stars Group (TSG) is another name to watch.
    • Previously: Pennsylvania a step closer to 'explosion' in gambling
    • "You cannot cut yourself to glory, and those that have tried to do that will ultimately fail,” says Barclays (BCS -8.6%) CEO Jes Staley on the earnings call. He was responding to analystsquestioning his decision to invest more in the trading operation despite three consecutive quarters of lame results.
    • Trading revenue in Q3 fell 31% vs. an average decline of 15% for the bank's peers.
    • With today's big decline, Barclays is now off about 17% for the year, making it the worst performer in the Bloomberg Europe 500 Banks and Financial Services Index.
    • Staley has made building up the investment bank at Barclays the key to his turnaround strategy, and has been selling off non-core units and slashing payrolls in order to allocate more capital to the unit.
    • Previously: Barclays misses by £0.01 (Oct. 26)

    • There don't appear to be too many issues with the quarter - as is being seen with other agency REITs, income dipped, but book value gained as the yield curve narrowed in Q3. AGNC's (AGNC -1.5%) economic return topped 22% on an annualized basis for the quarter.
    • A near-10% premium to book value, however, may have mREIT fans looking for cheaper alternatives.
    • AGNC earnings presentation slides
    • Also on the move down post-earnings is Armour Residential (ARR -1.6%) – the company posted another strong quarter, but trades at a barely visible discount to book value.
    • Eking out gains after reporting last night are relatively cheaper alternatives CYS Investments (CYS +0.1%) and Capstead Mortgage (CMO +0.2%).
    • Other players today: Annaly (NLY -1.2%), Chimera (CIM -0.4%), MTGE Investment (MTGE-0.4%), MFA Financial (MFA -0.4%), Anworth (ANH -0.6%), AG Mortgage (MITT -0.2%), Dynex (DX -0.6%)
    • FBR's David Corak breaks it down, noting mostly disappointment with an 80 basis points dip in occupancy despite aggressive price-cutting.
    • There's also same-store revenue growth (2.6%), and it slowed for the 10th consecutive quarter. Corak thinks this metric could fall below 2% in Q4.
    • The company didn't include $13M of hurricane-related costs in reported FFO. Adding those in would have led to a bottom-line miss.
    • Source: Bloomberg
    • Public Storage (PSA -3.9%), Life Storage (LSI -2.7%), CubeSmart (CUBE -2.5%), Extra Space (EXR -3.3%), National Storage (NSA -3.2%), Global Self Storage (SELF +0.6%), Jernigan Capital (JCAP -1.2%)
    • Previously: More on Public Storage's Q3 (Oct. 26)
    • Previously: Public Storage beats by $0.01, misses on revenue (Oct. 25)

    WSJ: GE exploring exit from railroad business

    • General Electric (GE -0.3%) is looking to sell, spin off or partner its century-old railroad businessWSJ reports, as a major part of new CEO John Flannery’s plans to divest more than $20B worth of assets in the next two years.
    • GE is one of the world’s biggest makers of freight locomotives, but the business is cyclical and has been suffering lately from slack demand, and the unit's revenue has declined 8% and profits have dropped 15% in the first nine months of 2017.
    • It is not clear what the transportation business may be worth or what other units GE is looking to jettison, according to the report; the division accounted for $4.7B of GE’s total $123.7B in revenue last year.
    • Shares nevertheless are lower again and may be headed for their worst weekly performancesince plummeting 11.5% during the week ending May 15, 2009.
    • Buffalo Wild Wings (NASDAQ:BWLD) is up 16% after the company issued a surprise boost in guidance.
    • Analysts weren't expecting the restaurant operator to record the level of sales and cost savings that was struck, but are quickly adjusting.
    • Wedbush: Lifts its price target to $115 and calls the new guidance "realistic."
    • Tesley: Hikes its price target to $125 and points to the "steady" progress on sales and costs.
    • Morgan Stanley: Raises its price target to $124, but still wants to see a new CEO take the reins.
    • Raymond James: Cites sales uncertainty for 2018 as it recommends that investors not chase the rally.
    • Dougherty: It's all green lights from the firm as it upgrades to Buy from Neutral.
    • Maxim: Calls out more potential for cost savings and EPS growth as it backs its Buy rating and $160 PT.
    • Sources: @NotableCalls, Bloomberg and CNBC.
    • Previously: Buffalo Wild Wings EPS of $1.36 (Oct. 25)
    • Previously: Higher wing costs nip at Buffalo Wild Wings (Oct. 25)
    • Dunkin' Brands (NASDAQ:DNKN) trades lower after setting the mid-point of its full-year EPS guidance below the consensus estimate of analysts.
    • The restaurant company also disclosed that it expects low single-digit comparable sales growth for Dunkin' Donuts U.S. and slightly negative comparable sales for Baskin-Robbins U.S.
    • Q3 recap from Dunkin' CFO Kate Jaspon: "Our third quarter financial performance included approximately eight percent revenue growth and greater than 11 percent operating income growth, although the latter was offset by an increase in tax expense related to our recent debt refinancing deal that impacted net income."
    • Previously: Dunkin' Brands misses by $0.02, beats on revenue (Oct. 26)
    • DNKND -2.51% premarket to $54.00.

    • Healthcare investors are taking it on the chin today. The selloff is widespread, affecting most hospital operators, pharma companies and others.
    • Selected hospitals: (CYH -4.5%)(THC -8.3%)(LPNT -1.1%)(HCA -2.7%)(HUM +0.3%)(UHS-5.6%)
    • Selected pharma: (ABBV -1.2%)(JNJ +0.1%)(AGN -1.8%)(AZN -1.3%)(BMY -3.9%)(LLY -0.8%)(GSK -3.7%)(PFE -0.9%)(NVS +0.1%)(SHPG -3.7%)(VRX -1.5%)
    • Selected generics: (MYL -1.7%)(PRGO -1.9%)(TEVA -0.8%)(LCI -2.3%)(AKRX -0.7%)(IPXL-2.3%)
    • Ford (NYSE:F) crushes estimate with its Q3 report as its automotive operating margin improved to 5.0% during the quarter.
    • The company reported an adjusted pre-tax profit of $2.0B, led by $1.7B out of the North America segment. Lower costs were driven by net material cost efficiencies and the lapping of major recall from a year ago. The bottom line also benefited from a lower effective tax rate.
    • Operating margin by segment: North America 8.1%, South America -9.9%, Europe -1.2%, Asia Pacific 7.9%.
    • Looking ahead, Ford sees 2017 EPS of $1.75 to $1.85 vs. $1.65 to $1.85 prior and $1.74 consensus.
    • Previously: Ford Motor beats by $0.10 (Oct. 26)
    • Shares of Ford are up 1.74% in premarket trading.
    • Uber (Private:UBER) launches a new “add-a-stop” feature that makes it easier for riders to pick up friends along the way from original pick-up location and the destination.
    • Riders can add the stops at the same time as hailing the original ride by hitting the plus button next to “where to?” and inputting the extra locations. 
    • New lawsuit: Three female engineers are suing Uber for gender and race discrimination. The Latina software engineers say the company has an employee rating system that is “not based on valid and reliable performance measures” and favors men, white, and Asian employees.  
    • Value math: SoftBank hopes to value Uber between $50B and $70B for its investment purposes. An anonymous shareholder tells Axios’ Dan Primack that Uber should have a valuation over $95B using calculations factoring in competitor performances and company investments. The shareholder wants to sell shares to SoftBank, but the math stands on its own.  
    • Previously: Barclays and Uber launching rewards credit card (Oct. 25)

    Nokia -18.4% with no light ahead in key Networks business

    • Nokia (NYSE:NOK) has come out of the open down 18.4% in U.S. trading as Q3 earningsshowed its key networking business took a hit in a market challenged by consolidation and Chinese competition.
    • Market conditions for 2017 will be "slightly more challenging" than anticipated in Networks, where it now sees a 4-5% decline for the year along with a further 2-5% decline in 2018 (the third straight year of decline). It declined to provide sales guidance in its Nokia Technologies business.
    • Net sales fell 8.3% (non-IFRS) to €5.5B, though adjusted EPS rose to €0.09 due to a lower than expected tax rate of 15% (the company reported a wider loss on a headline basis, -€0.03 vs. a year-ago -€0.02).
    • With margins up, though, Nokia expects to propose a higher dividend for 2017 (€0.19/share vs. 2016's €0.17).
    • Revenue breakout: Networks, €4.82B (down 9%); Nokia Technologies, €483M (up 37%); Group common and other, €251M (down 15%). In Networks: Ultra Broadband Networks, €2.1B (down 17%); Global Services, €1.36B (down 2%); IP Networks and Applications, €1.37B (down 4%).
    • It's guiding to overall capex of about €600M in the full year (mostly to the Networks business, and above a previous €500M).
    • Press Release
    • Q3 non-GAAP income of $78M or $0.10 per share vs. $61M and $0.09 a year ago. Estimates were for $0.07.
    • Adjusted EBITDA of $207M, or 35% of revenue vs. $181M and 29% a year ago.
    • Average monthly average users of 330M up 4% Y/Y. Average daily average users up 14%. The company says it previously overstated MAUs – by 2M in Q2, 2M in Q1, and 1M in 2016 Q4.
    • Q4 outlook: Adjusted EBITDA of $220M-$240M, with margin of 35%-36%. Company expects GAAP profitability if it hits the high end of the adjusted EBITDA range.
    • Conference call at 8 ET
    • Previously: Twitter beats by $0.03, beats on revenue (Oct. 26)
    • TWTR +8% premarket
    • Time Warner (TWX +0.4%) beat expectations with Q3 earnings with broad gains, where HBO saw its highest quarterly growth in 13 years and Turner Broadcasting added subscriber strength.
    • Revenues grew 6% overall, and adjusted operating income was up 13% to $2.3B with support from all divisions.
    • HBO revenues grew nearly 13%, helped no doubt by the record seventh season of hit series Game of Thrones, which due to a delay fit entirely in Q3 this year.
    • Revenue by segment: Turner, $2.77B (up 6.1%); Home Box Office, $1.6B (up 12.6%); Warner Bros., $3.46B (up 1.7%).
    • For the first nine months, cash from continuing operations hit $4B (up 12%) and free cash flow came to $3.6B (up 8%).
    • It reaffirmed its full-year outlook, expecting adjusted operating income to rise in the high single digits (exclusive of any merger effects or costs tied to the AT&T (NYSE:T) acquisition).
    • For Q4, it's expecting steady subscription growth from Turner, with ad revenues increasing low single digits and operating income to "increase significantly." HBO is expected to increase subscription growth but also see higher programming cost growth, with a net increase for operating income. Warner Bros. operating income is expected to decline due to the release mix (including last year's release of Suicide Squad).
    • Press Release
    • Seven groups from across the political spectrum have joined together to urge the Justice Dept. to reject AT&T's (T +1%) $85B bid for Time Warner (TWX +0.5%), objecting to the power over television that the combined company would have.
    • More liberal consumer groups including Public Knowledge and Consumer Federation of America joined conservative Tea Party Patriots and the American Family Association in a letter to Attorney General Jeff Sessions saying that AT&T's already the top pay TV company, and adding the Time Warner content powerhouse consolidates too much influence.
    • In particular, the groups warned that possible "zero rating" (exempting AT&T content from data caps) would lead to favoring Time Warner programming over competitors.
    • "While the undersigned groups’ opinions diverge significantly on many policy issues, we are united in our desire to ensure that free expression is not threatened by an increasingly limited number of companies that dominate U.S. media," the seven groups write
    • Alphabet’s (GOOGGOOGL) self-driving car unit Waymo will launch a test program on the snowy roads of Michigan this winter.
    • The company operates test fleets in the more temperate weather of California and Arizona and has tested some vehicles in Tahoe but Michigan will provide the harshest weather test yet. 
    • Waymo CEO John Krafcik writes, “For human drivers, the mix of winter conditions can affect how well you can see, and the way your vehicle handles the road. The same is true for self-driving cars. At Waymo, our ultimate goal is for our fully self-driving cars to operate safely and smoothly in all kinds of environments.” 
    • Waymo operates a 53K square foot tech center in Novi, Michigan.      
    • Previously: Lyft announces $1B funding round led by Alphabet (Oct. 19)

  48. Good deal from TicketMaster for Beach Boys VIP (lots of locations) at $370:

    Choose The Beach Boys Platinum VIP Package for exclusive access, including:

    • One premium ticket within the first 10 rows
    • VIP meet & greet laminate
    • Backstage meet & greet session and photo opportunity with Mike Love and Bruce Johnston (limited quantity, small cameras / cell phones encouraged)
    • Autographed copy of New York Times Best Seller "Good Vibrations, My Life as a Beach Boy" by Mike Love and Jim Hirsch
    • The Beach Boys 50th Anniversary of Good Vibrations hardcover coffee table book
    • One (1) physical copy of the highly anticipated new double album by Mike Love titled "Unleash the Love". Set to be released on November 17, 2017 via BMG, the special double album will feature 13 brand new songs and 12 re-recordings of Beach Boys classics. The album is produced by Grammy® Award-winning producer, Michael Lloyd. "Unleash the Love" is a testament and continuation of Mike Love’s remarkable career.

    Get your tickets today!

    Cool nostalgic thing to do. 

  49. Phil,ABX/DNKN

    ABX/Who hands out 300 million as good faith, not the Donald.

    DNKN/Was down, now up, but that didn't sound like a good quarter.

  50. Can hardly believe how Defense stocks getting hammered today:

    RTN, GD, NOC, LMT,

  51. Phil – "Yep, such a healthy Global Economy.  Move along, nothing to see here…"

    Thank you for my LMAO of the day, and this for Baron, Out.

  52. ESRX

    Why dropping suddenly?

  53. Trump announcing war on opioids, which is really a way to cut the $78.5Bn (crazy!) spent on them so he can call it a budget cut and pass that money to his rich friends while your poor relatives who are dying in pain will be told "well, at least you're not going to get addicted."  The cornerstone of his program is essentially "Just Say No" but he is acting like he discovered gravity with his "idea" to teach people the dangers of opiods.  More to the point, he's pushing limits on prescriptions to 7 days and making it much more difficult for doctors to hand out prescriptions.  

    Yes, there are abuses but nothing like what Trump claims.  For one thing, only 16,000 people died of opioid abuse, he says 64,000, which is more like the total number of overdoses, but not fatal.  On the other hand, 33,636 people were killed by guns – yet that's not a crisis…

    Good faith/Baron – I don't know, O'Reilly clams he handed out $32M in "good faith".  ABX isn't lying, that's an ongoing revenue-sharing dispute that SHOULD take care of all forward issues.  ABX wouldn't have done it if it wasn't better than walking away, they are 60% partners in that mine so the cost was split anyway. 

    Defense/Scott – No big budget increase.  

    ESRX/Baron – They sell a lot of opiods.  In their case, that damage is already long baked-in.  

  54. IBKR – quite the volume support and continuation for IBKR's breakout last week.

  55. Phil/RB – are you still short?

  56. Hi Phil and All,

    Does Alaska Air Group, Inc. (ALK) look good for a position? 

  57. Phil/ESRXABX

    ABX Just disconcerting to see contradictory statements of whether this was it or not, so assuming not stupid, then 300 million should be more or less it

    ESRX CVS is bouncing back I see.  Figured it was Trump and opiates but that makes sense that ESRX would sell a lot.

  58. ESRX   Drug Stocks Drop After Report That Amazon Has Obtained Pharmacy Licenses — MarketWatch

  59. GNC falling back; that doesn't look pretty as it did 3 hours ago.  Could have saved all that boasting about how I bought more at the bottom.

  60. phil, shouldn't the russel pull back and do a proper test of 1485, or do you think thaty. was it yesterday?

  61. Boy did I jump back into NOK too soon.  Will let it settle a couple of days before buying more, but I do like it at this level.

  62. /CL – A close here would be peeking above its one year daily resistance line, seems like shorting gets dangerous after that. Have any of you chartists out there computed a target based on this breakout (if it holds)?

  63. FU Falling knives!!!!

  64. Could have covered  the TRVG short puts for 20-25% profit, but am going to keep them.

    UNIT – Closed  back above the 50dMA.

    Nice late day bounce in CELG.

    Here come the heavyweight earnings !

  65. Phil / Amazon,

    Looks like they had a huge quarter, is the spike worth shorting or wait and watch ?



  66. AMZN – sure glad i'm not short!! YEOUCH!!

  67. GILD beat but market not impressed.  too bad!

  68. /RB/Ravi – Yes, still short.  I think the rollover popped things but we'll have to see.  

    ALK/Ilene – Yes, I like them.  Trouble integrating with Virgin but should work out.  

    CVS buying AET?  

    GNC/Baron – Just have to give it more than a few days.

    AMZN just blew out numbers.  0.52 vs 0.03 expected.  Of course that's per $1,000 share but at least p/e may be back below 500 now.    About $100M (0.25) of that likely came from WFM's earnings.  

    RUT/Lunar – Not if everything is so strong.  Now the Nas will lead things higher.  Not a good time to short.  

    NOK/Albo – Well, that's why I hope you did the cautious entry (we had a low target – they were just getting ahead of themselves):

    NOK/Albo – Interesting but years before something happens (been years of negotiations that broke down leading to this):

    Shares of telecom vendor (NOK) were briefly halted and are now down 7 cents, or 1.5%, at $4.83, after the company said it is suing (AAPL) for infringement of 32 patents pertaining to displays, user interface, software, antennas, chipsets and other functions. The suit has been filed in Dusseldorf, Mannheim, and Munich, Germany, and in the District a court for the Eastern District of Texas, said Nokia. Nokia said it had negotiated for "several years" with Apple but is now "taking action." Said Nokia, Since agreeing a license covering some patents from the Nokia Technologies portfolio in 2011, Apple has declined subsequent offers made by Nokia to license other of its patented inventions which are used by many of Apple's products.

    AAPL isn't cheap – if they thought the patents were worth buying, they would have done so.

    AMZN/Pat – I'm not going back to shorts yet.  Let's see where they go.  Also need to see where the money really came from.  

    Submitted on 2017/10/19 at 3:20 pm

    • AMZN – They keep going for $1,000 and keep failing.  Our intention was to risk earnings but it's too scary so let's take the $13,208 profit in the hand and get out of the bush!  

    GILD/Lunar – Not going down is good for me!  

  69. ~~ GOOG – Alphabet beats by $1.17, beats on revs .


  70. Phil – This was my post in May :

    May 4th, 2017 at 12:19 pm | Permalink | Tweet thisIgnore this user 

    NOK – Back above 6.  Big winner !

    Covered some with Jan 6 calls @ .54.

    Now 80% covered.

    I later sold most of the position.  Getting back in again.  As Scottmi so eloquently put it.  I'm tiptoeing back in.

  71. Meanwhile, we may have to flip bullish on the Qs at this pace.  MSFT made $6.58Bn on $24.54Bn in revenues – up 12% from last year and a solid beat.   Cloud is still growing and even offset soft PC sales.  Office 365 going well for them too.  

    WYNN beat too but down a bit as that was baked in.  

    NOK/Albo – Oh, good job then.  That's the great, non-greedy way to play it.  

  72. MAT crushed – suspends dividend.  0.09 vs 0.56 expected.  Kids play with apps, not toys!  

  73. Tech earnings look solid,

    GOOG +

    MSFT +

    INTC +

    AMZN +

  74. GILD – lower end of guidance was raised.  Hep C drug sales were flat. Conference call will show what upside they will get from the cancer drugs from Kite.  That will then move GILD. 

  75. Phil what about ng? Looking at the extended weather forecasts it seems like seasonal weather is just around the corner and yet the price has been languishing this week. Any thoughts since I know you always like this due to the export situation? 

    Seems like the oil and gasoline futures have decided to pop. I think if CL takes out $53 we could see quite a pop. What about you?

  76. With a 10 million barrel draw of total product , plus Saudi/Russian jawboning I can't figure out why we were shorting today in the first place. Maybe tomorrow will tell the story of why Phil made the call. 

  77. FU GILD!!!!!

  78. The numbers put up by GOOG as far as growth is concerned are quite impressive. 24% revenue growth YoY. EPS growth over 30%. At that rate it's tough to say that they are grossly overvalued. The question is if this can be maintained – the law of big numbers starts to enter in the equation. Although that doesn't seem to stop AMZN revenue growth. But GOOG actually makes some decent profits… So valuation wise, not the same story. And MSFT really cooking now that Ballmer is gone – 16% EPS growth YoY. 

    GOOG looks the cheapest of them all now when you figure out growth.

  79. I am sure CL will end up proving Phil right by end of day tomorrow. He is almost always right and if I had his patience I would have lots more $

  80. GNC – Great summary on the quarter.  I agree with the assessment.  The quarter ( minus the lowering of FCF) was spot on.  I read through the results and the transcript and this is going in the right direction. This is an in line quarter essentially.   The article below hits all the key points I took away from the earnings.  I bought some STK at 6.85 ( too early ) and sold Dec 7.5 Calls for .5 – if called away it is a nice return if not, I'm happy to hold into next year.   Q2 '18 should be  when the results start looking better. 


    GNC: Surprises That Shouldn't Have Been

  81. These GOP guys in Congress are really evil and meanspirited:

    But instead, Republicans and Democrats in the House are digging in, feuding over — just as CHIP advocates feared — Obamacare and other programs….The problem is offsets — spending cuts to pay for CHIP’s funding for the next five years. Congress needs to find about $8 billion in savings.

    So they need to offset the $8B for children insurance with spending cuts but they are OK with an additional $1.5T of debt for tax cuts. There are no words to describe these guys anymore! And some people say that both sides are the same. Right!

  82. What Worries? Big Tech Companies Post Glowing Quarterly Profits

  83. Phil, 

    Any futures trade on /NGH8, or /NGV8?

  84. More ACA Plans to Come With No Premiums in 2018