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Tuesday, February 7, 2023

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Faltering Thursday – GOP Losses and Trump’s Lack of China Deal Spook Markets

China Donald Trump & Xi Jinping (Reuters/D. Sagolj)Mr. Trump went to China.  

That's it, nothing happened.  The deal-maker in chief made no deals, though he did take credit for $250Bn in business deals, which were actually the course of our normal trade with China, like $36Bn worth of Boeing (BA) planes, most of which were already part of their existing backlog.  While these transparent attempts to puff himself up may work with the gullible US voters, Trump faced mockery in the Chinese press – even the "official" press which said: "Emotional venting cannot become a guiding policy for solving the nuclear issue on the peninsula."

There was no trade deal, no pushback on exports, no movement on China's currency manipulation, NOTHING which Trump promised during the campaign and nothing is coming from Trump's "great friendship" with China's President Xi.  Trump went so far, in fact, to absolve China for unfair trade practices saying they were only doing what's best for their country and it was the fault of past US Presidents for making bad deals – like the one he is sticking to by leaving China empty-handed.  

"After all, who can blame a country for being able to take advantage of another country for the benefit of its citizens. I give China great credit, but in actuality I do blame past administrations for allowing this out-of-control trade deficit to take place." 

Japan's Nikkei went on a wild ride last night and is currently off 1.666% at 22,580 after bottoming out at 22,500 and we noted this action in Tuesday's morning Report and shorted the Dow Futures at 23,500 in our Live Trading Webinar yesterday along with Oil (/CL at $57.50) and, yesterday, in our Live Member Chat Room, my comment to our Members into the close (3:58) was:

Indexes curling over, Good time to short /ES at 2,590 (tight stops above).  Lined up with 23,500, 6,340 and 1,480.

Those last 3 were, of coure, the Futures for the Dow (/YM), Nasdaq (/NQ) and Russell (/TF) and the Dow has already gone below 23,400 for a nice $500 per contract win while the S&P (/ES) just hit 2,575, which is good for gains of $750 per contract overnight.  Oil already hit our goal at $56.50 and that was good for $1,000 per contract gains as well and we even FINALLY sqeezed a small profit out of Gasoline (/RB) as it came back to the $1.80 line.

We're taking quick profits here because no sell-off has lasted more than a few hours recently but it's fun to pick up a little side cash once in a while – so we don't feel like we're totally wasting our time on our hedges.  By the way, we discussed a good TZA hedging strategy yesterday – that's still in play for the moment.  

Meanwhile, we continue to make stupid money in our portfolios.  For example, back on Sept 6th I appeared on BNN's Money Talk, where we initiated a new $50,000 Portfolio to track our picks and already, just two month's later, our 4 positions have rocketed up 61.2%, driving the net up to $80,587 for a quick $30,587 gain:

If the market is going to just keep printing money like this, far be it for us to not play the game but this is RIDICULOUS, returns like this are simply not sustainable over the long run – where is all the money supposed to come from?  On the show, I noted we liked Limited Brands (LB) enough to make it our Stock of the Year for 2018 and that spread required just a net $3,400 cash outlay (the short puts require margin too) and already the net of the spread is up to $14,850 for a gain of $11,450 (336%) and, again, this is just 62 days later!  

Just to be clear though, it is RIDICULOUS that we have a market where I can go on live TV and tell Millions of people how to make 336% returns on their cash in 62 days.  I may be good but this is a broken market with RIDICULOUS price mis-matches that, in theory, shouldn't last but, in practice, they just keep going on and on as the Fed's insane monetary policy continues to feed the bubble.  

This is why we hedge.  This is also why we have so much CASH!!! on the sidelines (have I mentioned how much I love CASH!!! lately?).  For one thing, we can make PLENTY of profits with small trades like the ones above – we don't need to over-commit and, for antoher thing, we want to stay very liquid to take advantage of the correction – if it ever comes.  As I mentioned last month, I could not hedge my children's 529 college plans effectively so I CASHED!!! them in.  I'll put the money back to work in January, if we survive those earnings but I couldn't imagine leaving unhedged money in play as we head into the end of 2017.

Please, be careful out there!  

 

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~~ M – Macy's beats by $0.03, reports revs in-line; reaffirms FY18 guidance.  

albo–do you think M will be over 18 today?

Jabob – Dunno, but weak market doesn't help.

Have been looking for a transcript of their conference call to see if they addressed the dividend.

Well, at least it "shouldn't" crash like the other FU stocks did after their ERs…. I hope

Good Morning, All!

The webinar replay is up!

https://youtu.be/NBpqIcsAsk8

CTL intends to continue to pay their extremely high dividend.

~~This from Jeff Storey, COO of CTL and prior CEO of LVLT

                                                          
 "I want to get my perspective on the CenturyLink dividend. I've had the chance to speak with the board of directors, Glen and Sunit about it and we all agree, we are firmly committed to the dividend. As I look at our financial plans over the next few years, I'm confident about our ability to meet the dividend obligation and believe it is an important component of our equity story.."

If this happens, I'd think the stock would move up to make the yield 8-9%.  But I have been very wrong on this stock.

Go M!

PLEAE NO TEASE!!!

ROKU – Now up 20%.

M revenues down. Earnings just financial engineering?

Phil – I remember you mentioned FUNN.  Good deal.

I guess I should have will it STAY above 18 today. These FU stocks always seem to lose any short lived gains. DANGIT!

/CL – Spiked up.  Turmoil in Saudi Arabia being cited.

Biodiesal/VNQ

VNQ nicely tracking TLT, and I am short TLT at this level.  Interestingly, VNQ strong today but usually when VNQ is going up its volume is strong, but not on this run, so probably  a good short.

/NK ~~The Nikkei blasted off early in the Japanese equities session, breaking out above 1996 highs. Then it reversed on no clear catalyst and fell about 4% in a straight line.

ROKU now up 44%.

Left quite a bit on the table.

QUIK – Up 20% today following conference call with some positive guidance.

Phil/BBBY

Can you revisit the trade in LTP? Have you done a calendar spread and the long call is 2019 and the short call is 2020?

regards

Phil / INFN

I have a small position @ 10.15 and they just got hammered for guiding lower + restructuring plan.  I feel they are in a shorter term down cycle with CAPEX from CentryLink / Level3 down, but longer term think they are strong in both DCI (Data Center Interconnect) and SubSea.  I'd appreciate your's and anyone else's perspective(s). Looking to add / bail if there is good / bad sentiment on the board.  

Here's what looks to be today's torpedo.

Finally, regarding our outlook, while we do not typically provide guidance beyond one quarter, given the uncertainty around market dynamics and pace at which our business will recover from customer consolidation, I wanted to provide some perspective on how we're anticipating our revenue in 2018. With our addressable markets expected to grow only low to mid-single digits, I feel good about outgrowing the market, but I'm less confident in our ability to grow 10% or greater for the full year 2018. That being said, with the actions we are taking to lower our cost structure, I believe even at a lower revenue level, Wall Street's current expectation that we get back to profitability during the second half of 2018 remains reasonable.

 

Phil

 The Howard Hughes Corporation HHC

 What are thoughts on this company

 

Thanks

Phil?CL

So not sure I understood your prior comment; more Saudi shakeup over the weekend should cause oil to rise, correct?

INFN – Thx Phil .. sure wish I didn't miss your INFN – Earnings are 11/8, why risk it?  Let's cash these.

AAXN,  no downgrades so far and holding its own today after the earnings drop.  Sell some premium?

Phil,

Do you anticipate downward pressure on /CL as it nears expiration?

M/Phil –  You may find this interesting.  Generally agree with the comments, they are very late getting into the off-price game.  Also, agree with you that this is a real estate play but pricing will face headwinds as rates rise.

https://www.retaildive.com/news/macys-sales-drop-as-focus-shifts/510497/

M   the issue that bothers me is the declining yearly revenue

SEDG – a lot of companies with ridiculous pricing. take this Israel solar inverter company… no business even being public, imho. nothing particularly special or 'moat' for inverters. its competitors will be subsidiaries and minor divisions of larger companies. people will buy anything!

blocknet $0.05 to $30 just this year. The ol' 60,000% gainer…

Big whoops, sold another PCLN Apr 1300 put for $15.50.

KR – easy stop to chose: go long any way you want, and EXIT if stock closes below $20.

choose..

Phil/Tai/Stock/M-Backstage is much better than the off price offerings from Saks or Nordstroms.  The Backstage stores were formerly full-fledged Macy's stores so they retain that set up, feel and organization.  Many of the other off-price outlets are a mess of merchandise where it is impossible to find anything.  So far, Backstage is offering first run merchandise whereas many of the other off-price outlets are offering seconds (see the fine print on the websites).  The same store sales and revenue declines are troubling though.  Is there an impact from online sales?  I've seen that there are better discounts online than in stores so perhaps that pulls some sales away (online sales are not broken out, but I've seen some estimates that they are expected to grow to $5B).  They have had a growing online presence and appear to be adapting, albeit slowly, to the new paradigm.  Clearly, they are suffering from the lack of growth in wages for the general population and that premise is supported by the growth in off-price and value outlets over the post downturn period.  The deal with Brookfield to examine the real estate and the pledge to direct free cash flow to debt reduction in conjunction with the cost cutting should help (especially with the probability of interest rates creeping up).  Wage growth likely won't come soon enough to help them, but when it does, how will that impact the landscape and their sales?  I won't get into the other positive Phil mentioned like the credit cards or other real estate.

Caveat, I'm not a shopaholic.  These are just some things noticed through my own observations, speaking with others and perusing various discussion boards and news outlets.

I am flat for the day, which makes me a badass, but I'd like to find a something to buy, preferably sosme QQQ momo stock that is down big for no reason.  Any ideas?

Actually, let me clarify.  I am up here, but down in the IRA; however, I am starting to put to use the strategies I have learned here in the IRA.  I am particularly fond of the kind of trade Phil set up for me with BGS.  Buy the stock, then sell the put and call slightly below.  Lock in a nice profit if it sits still or goes down a little, and get a nice discount if it goes down a lot.

Albo, I saw that lone PCLN put trade and was wondering who in our group did that  🙂  

Stockbern – Did you mean to say, who in our group was that foolish ? 😎

I'm thinking that's some short covering with M.  I went from short to neutral yesterday and expect some pullback to get longer.  We'll see.

phil/CMG…sure would be nice if it went up a some.  i have 2019 $350 put which is tying up $15K margin per contract in my fidelity trading account.  can't seem to find out when 2020 options come out.

Baron – Sold 1/2 of the CTL I bought in the aftermarket, up $1.80.

Stock catching some bids.

Lunar CMG I am in the same boat and do not feel good about this stock I do not think the 2020 will help very much.

Albo/CTL

Did better than me.  I sold at high last night figuring I would get a chance later, which I would have if the market hadn't been so nuts. (Wasn't paying attention.) And I wasn't really worried cause my puts and calls get me in at $14.80 anyway, so didn't need more.  But its being bought today it looks like.  More BS to shake us out.  Nice trade, congrats.

Im heading to NYC with my parents and siblings for 3-4 days in early December, been a couple times before but would love any suggestions / recommendation since i know Phil and others here have spent significant time there!

We're staying at the Gramercy Park hotel, plan is to do some eating, shopping and maybe see a show. 

I've seen Avenue Q (and loved it) others in my fam have seen Hamilton and Book of mormon which would have been my other choices, any shows other than these that people would highly recommend? preferably something funny.

Also any restaurants in the general vicinity that youd recommend? Will prob grab taim falafel for a quick lunch, tompkins square bagels, maybe russ and daughters. But in terms of some nicer dinner spots? Gramercy tavern? Beatrice inn? Sugarfish? wanted to try carbone but looks like its near impossible to get a reservation even this far out.

Any insights would be much appreciated! Thanks

Thanks, but still underwater.

yodi, i am looking to roll each 350 to 2x at a lower strike.  right now i can sell 2x 280 or 290's for about an even roll.  i am hoping that if the 2020's come out…i can go to $250 or $260s.  thx.

Jabob – M ! ! !

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