Wow, what a weekend.
There was a tragic shooting in a Texas Church but, unlike last week's response to the NY violence by GOP Congressmen to take immediate action, the GOP now says we shouldn't let one incident panic us into "politicizing" gun violence and regulating them or something. When 300M people have the legal right to own weapons that can kill 25 people in 60 seconds – well, you do the math… Trump, ironically, blames mental health issues (while cutting mental health programs as well).
“This isn’t a guns situation,” Trump added. He said based on preliminary reports, the shooter was a “very deranged individual. Fortunately there was a person shooting in the opposite direction,."
AR-15's were used in all of the following mass shootings: Aurora, Orlando, Las Vegas, Sandy Hook, UMPQUA CC, San Bernardino, Sutherland Springs. It is not a mental health problem, it's a gun problem! And let's not forget, the GOP just passed a bill that puts guns in the hands of the mentally ill and no, I AM NOT JOKING!
Just a few weeks ago, psychiatrists and psychologists were warning that GOP health care reform efforts, most recently in the form of the Graham-Cassidy bill, would have devastated the quality and availability of mental health care in this country. It offered states the opportunity to allow insurance companies to drop mental health care coverage and reduced spending on Medicaid by billions of dollars. It effectively ended the Obamacare Medicaid expansion and reduced federal health insurance subsidies.
While Trump was making light of the violence in Texas, he was celebrating the violent swing Abe's Right-Wing Government in Japan is taking. While one President may have taken the opportunity to remind Japan that their constitution has outlawed war and limited its military since 1947 – leading to 70 years of peace and prosperity, this President wants to be their arms dealer, pushing for Japan to buy "massive" amounts of military equipment.
“We believe that we must bolster Japan’s defensive strength qualitatively and quantitatively,” Mr. Abe said. “We will be buying more from the United States. That’s what I’m thinking.”
Trump wants to arm Japan in preparation for a possible military strike on North Korea, who the President called a “threat to the civilized world.” He acknowledged his aggressive stance, but said “look what happened with very weak rhetoric over the last 25 years—look where we are right now.” Er, NOT at war?
Of course, this is all distraction, distraction and more distraction as Team Trump seeks to do ANYTHING to keep people from talking about indictments and the worsening corruption scandal, which jumped to new levels this weekend with the realease of the "Paradise Papers", which are like the Panama Papers – exposing offshore financial records and already (there are 13.4M pages to go through) Trump's Commerce Secretary, Wilbur Ross, who was already in big trouble, has now been directly tied to Russia in his undisclosed relationship with Vladimir Putin's son-in-law and another Russian Tycoon from Putin's inner circle.
None of this was disclosed at Ross's confirmation hearing because, of course, it would have excluded him from being confirmed, so why would he mention it when it's only perjury not to – and Trump will pardon him for that. The shipping firm pays Ross Millions of Dollars each year and was one of the assets he did not divest when taking a job that directly affects International Shipping.
During his confirmation process, Ross was asked repeatedly about his business ties to Russia, mostly related to his former role as vice chairman of the Bank of Cyprus, which has a long history of financing Russian oligarchs. “The United States Senate and the American public deserve to know the full extent of your connections with Russia and your knowledge of any ties between the Trump Administration, Trump Campaign, or Trump Organization and the Bank of Cyprus,” a group of five Democratic senators wrote Ross after the hearing but prior to his confirmation. Ross responded briefly to a question submitted for the hearing, saying the Russians who invested in the bank “were not my partners,” but he didn’t respond to the senators’ letter.
The Paradise Papers show how deeply the offshore financial system is entangled with the overlapping worlds of political players, private wealth and corporate giants, including Apple, Nike, Uber and other global companies that avoid taxes through increasingly imaginative bookkeeping maneuvers. In all, the offshore ties of more than a dozen Trump advisers, Cabinet members and major donors appear in the leaked data.
Of course, we thought the Panama Papers were going to be a bombshell and nothing happened (other than a Billionaire becoming President and keeping the country's attention focused elsewhere) so we're not expecting too much from the "revelation" that the same elites that now run our Government have been hiding assets overseas and cheating on their taxes and now, "coincidentally" the President wants to allow hidden offshore money to be repatriated at a 12.5% tax rate. No, not at a penalty rate for being hidden away like the IRS charges you if you fail to show your receipts for lunch – at no penalty and a drastically reduced interest rate.
You know, because it helps the family farmers or whatever other BS the weak-minded are willing to swallow…
Speaking of things that are hard to swallow, the anti-Trump voices in Saudi Arabia were rounded up and arrested this weekend including 60 Saudi Princes (don't worry, there are hundreds of them) and prominent businessmen and Prince Mansour and some Government officials were "coincidentally" killed in a helicopter crash. Mansour was son of Prince Abdulaziz, who recently stepped down to put Prince Salman in charge.
The purge and all these coincidences came right after Trump's son-in-law (lots of son-in-laws involved in things) completed a no-longer secret visit to the Saudis and right after Trump hinted that they were looking to help take the $2Tn Saudi-Aramco public next year – all while oil and gasoline prices are skyrocketing for the US consumer. Not since George Bush declared two wars in the Mid-East and jacked oil up to $140 a barrel have things gone this well for Saudi Arabia, the home nation of 15 of the 19 9/11 hijackers, not including Saudi mastermind, Osama Bin Laden.
Getting oil back over $70 (now $56) would mean at least an additional $500Bn for the Saudis in IPO value and that leaves room for a lot of tipping so we can expect lots of "urgent" visits to the Middle East for Team Trump, who will certainly need some cash to help pay for those legal fees as Team Meuller zeros in on the shenanigans. It's going to be fun to watch – again.
It's not a very exciting data week so attention will focus back on earnings as we round out the S&P reports:
TVTY – canary for the market?
In Dallas there has never been a high in the 90’s since they started keeping records from 1898. Three and the last four days we had record temperatures in the low 90’s.
Those records were for the month of November.
Interesting article on oil rolling strategies
oil strategy – the site downloads a pdf to your 'puter
Phil: I have the Jan 18 ABX 12/17 spread with a cost of $2.96. Any suggestions in terms of how I might adjust it. I also have a Jan 18 ABX 10/15 spread (cost. $2.88) that for now I am leaving in place, unless you think that is unwise. (I have ABX stock, short puts, 2019 spreads, and 2020 spreads, as well.) Thanks for your guidance.
you definitely do not want to buy bitcoin now. Last year perhaps.
OMI/Phil – expanding, making acquisitions, cashflow positive, earnings positive, good dividend.. and SLAMMED into and through last earnings and acquisition announcement. What happened? Dip to buy here?
Canary/Scott – That's interesting.
Earnings were the 26th, not sure what this is about.
Heat/Den – NYC too, still in the 70s.
Rolling/Edro – That's a keeper!
ABX/John – Well the $12s are still $2.15 so not too much damage. The 10s are $4.10 and the $15s will likely go worthless so why not cash both long calls and pick up 2020 $13 ($3.25)/$20 ($1.15) bull call spreads at $2.20. So you have about $2 off the table from the $10s and the $7 spreads covering the Jan short calls. When the Jan calls expire worthless, you can sell 1/2x April 15s (0.70) or whatever is 0.60 or better and that's paying you back 0.35 per long (15%) per quarter while you wait. I would also sell 1/2x the 2020 $15 puts for $2.75 – because I have faith.
Bitcoin/BDC – Yeah, get me some last year please.
OMI/Scott – Good niche business with total crap margins ($100M on $9.7Bn in revenues) but that means they don't have to worry about competition – because no one would want half of that! They don't really have options (illiquid, short-term) so I never bother with them but they are a nice long-term hold as a dividend play at this price if you are brave enough to ride out the storm. Like pretty much every company that grows through acquisitions there days – they are getting trashed.
scott DF earnings tomorow. Today someone bought 2000 Dec $9 puts for .50
Fitch Downgrades Teva to 'BB'; Outlook Negative
3:46 PM ET 11/6/17 | Dow Jones
Phil – Spectaaacular AM commentary, here is the theme song for the day. I've waited so long… Out.
DF/Stock – and someone sold them…. who's the smarter gambler? I am anticipating the worst, of course.
Phil – Here's what happened with TVTY – Tivity
Copper – I wonder…where is all that copper today, that China so famously stockpiled a few years ago? Surely they have not used it all?
Did I miss the adjustment and discussion on SCO ?
In France for 2 weeks so I'll post the lines in the morning.
Europe trending down since the open, /NKD rejected harshly at 23,000 (22,880 now) despite the strong Dollar (94.98) and that makes Dow (/YM) a fun short at the 23,500 line with VERY TIGHT STOPS ABOVE. Oil $57.50 is another fun short and /RB is already pulling back to $1.818 while /NG is rejected at $3.15.
TVTY/Naybob – Thanks.
Copper/Scott – They warehouse most of it and then use it as loan collateral, so it can't be used for building and is effectively off the market. Should the banks foreclose and dump the metal, there could be wild swings in that market (not that it doesn't swing wildly anyway):
I loved copper at $2 and $2.50 but it's iffy here so I don't bother. FCX is still the bullish way to play, though they are a double from where we played them last year.
SCO/DM – We got screwed on them as oil moved violently against us. The net of the trade was $1,000 and that's just gone and we're stuck with 10 short Nov $35 puts that are $8 in the money that we'll have to roll out of.
Big Chart – Thanks StJ. Have a good trip.