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$10,000 Thursday – Last Week’s Silver Play Beats BitCoin

Who says you can't make money in this market?

In yesterday's Live Trading Webinar we closed out the long Silver (/SI) trade we discussed in last week's Webinar, as well as last Thursday's PSW Report, where I said:

We actually picked up some Silver Futures (/SI) as they fell back to $15.85 and that's down $2.15 (12%) since September and our 5% Rule™ says that's a 10% drop with a 20% overshoot and, while that's no guarantee of a bottom (real support comes at $15.50) – it's worth a poke down here as we don't expect the Dollar to pop 94 very easily and Gold (/YG) is testing $1,250, which is good support on the yellow side.  

Yesterday's Fed Statement sent both gold and silver flying higher (and BitCoin lower) and we took the money and ran live, during the Webinar with a $10,000 overall gain on 8 contracts that gained 0.25 each at $50 per penny, per contract (the day's gain is coming of a dip).  It's not that we don't still like gold and silver – it's just that making $10,000 in a week is good money – so why risk a reversal?  If they don't pull back to give us another entry, then we'll find something else to trade (and we identified several in yesterday's Webinar).  

The reason we're cautious today is the Dollar (/DX) is down at 93 and that's too low, especially with our Fed in a tighening cycle and already the BOE failed to match the raise and, if the ECB holds off on raising rates too, the Dollar will pop so, this morning, in our Live Member Chat Room, I said to our Members:

If ECB stays easy then Dollar likely to pop so I do like /DX long over 93 with tight stops below.

I think /CL can be played long over $56.50 with tight stops below and /RB over $1.65 with tight stops below now.  

I like /NG at $2.66 but it doesn't like me! 

Futures are fun to play when you are sitting with a ton of CASH!!! on the sidelines.  We can jump in and out very quickly and take advantage of short-term moves.  Dollar (/DX) contracts pay $100 on an 0.10 move and requre $1,980 in margin to trade and 93 is such a good stopping line that we can play 10 contracts for $19,800 in margin and, hopefully, the Dollar adds a point for $10,000 worth of gains for the day if the ECB also keeps their rates lower than ours.  Making 50% in a day is a good way to keep up with the still running-away makets without all that messy owning stock, right?  

It's all connected as the rising Dollar will push commodities (and the indexes) down a bit lower and that then gives us good entries on the commodities, which will begin to recover when the Dollar calms down.  These are very predictable things and all we need to do is keep up with the news (rate decisions this week) and think about how it affects things and then we place our bets accordingly. 

Another key to playing the Futures is to maintain positive risk/reward ratios.  Playing the Dollar bullish at the 93 line with tight stops below risks $20-50 losses (per contract) while the upside, if we get lucky and pop over 94, can be thousands of Dollars.  If 93 does fail, we wait for the Futures to pop back over or try again at 92, also with tight stops.  We're not doing this in a vacuum, of course, we're primarily driven by the logic that, if the US is tightening and the EU and ECB are not – then the Dollar should rise in relative value – not at all complicated!  

People should not fear Futures trading – it's a valuable tool in a trader's toolbox and that's why we teach it during our live Webinars.  The reason we went long on oil and gasoline is because it's manipulated BS and tends to go up into every weekend to screw consumers at the pump – that's one of the most reliable recurring trades in the market!  The only trick to that one is picking the bottom for the week, which usually comes either Wednesday or Thursday and we wisely waited yesterday for a better entry this morning.

Gasoline (/RB) contracts require $4,125 in margin and pay a whopping $420 per penny, per contract – not for the feint of heart.  With oil, we have the Saudis backstopping us as we near $60 on Brent (/BZ), which is $54 on /CL because they have TRILLIONS of Dollars riding on their upcoming Aramco IPO and they will do ANYTHING to keep Brent over $60 ahead of that looming disaster.  Why a looming disaster?  Let's look at yesterday's EIA Report:

As you can see, the US refiners are not making more oil than they did last year – that's up just 1.4Mb/week but they are now shipping 5.4Mb/week MORE out of the country, a total of 22.757 MILLION Barrels of Petroleum Products are being shipped OUT of the US each week to other countries.  That represents more than 1/2 the oil we import (42Mb/week).  If it wasn't for Republicans changing the laws and removing the caps on exports – America would practically be energy independent now!  

Even with this insane amount of product being shipped out of the country and even with the additional 8Mb/week decline in Imports, the US inventories are still essentially full, indicating that Americans have, in just one year, cut consumption by over 2Mb/day (10%).  The games the oil industry is playing by exporting refined product makes it LOOK like America is steadily consuming oil and the same games are being played in Europe but the reality is the Obama-era fuel consumption laws are kicking in hard and it's making a dramatic difference in our demand for oil – especially the oil used for gasoline. 

That's bad news for Aramco, which is priced based on the value of their oil reserves, which are expected to be pumped over the next 40 years.  If the US is able to cut it's conumption by 10% in just one year and we're still very early in the electric conversion cycle – then what will happen to the value of all that oil Aramco has in the ground?  This is no surprise to the Saudis – why else do you think they are trying to cash in now – before people realize how fast consumption rates are really declining in developed markets (and China and India won't help, as they are trying to go green).  

So, long-term, we remain bearish on oil but short-term, we have our weekend pump jobs and we have the Saudis pulling out all the stops to manipulate the markets into their $2,000,000,000,000 IPO.


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  1. Good morning!

    ~~Teva Pharmaceutical Industries Ltd. announced a comprehensive restructuring plan to significantly reduce its cost base, unify and simplify its organization and improve business performance, profitability, cash flow generation and productivity.

    * Kåre Schultz, Teva’s President and CEO, said, "Two weeks ago we announced a
      new organizational structure and executive management team. Today we are
      launching a comprehensive restructuring plan, crucial to restoring our
      financial security and stabilizing our business. We are taking immediate and
      decisive actions to reduce our cost base across our global business and
      become a more efficient and profitable company.”
    * "We will execute this plan in a timely and prudent manner, remaining focused
      on revenue and cash flow generation, in order to make sure Teva is ready to
      meet all of its financial commitments. Teva will optimize its cost base while
      ensuring that we protect our revenues and preserve our core capabilities in
      generics and in select specialty assets, in order to secure long-term growth.
      In 2018, we expect to secure the successful launches of Austedo and
    * The two year restructuring plan announced today is intended to reduce Teva's
      total cost base by $3 billion by the end of 2019, out of an estimated cost
      base for 2017 of $16.1 billion. More than half of the reduction is expected
      to be achieved by the end of 2018. The company expects to record a
      restructuring charge as a result of the implementation of the plan in 2018 of
      at least $700 million, mainly related to severance costs, with additional
      charges possible following decisions on closures or divestments of
      manufacturing plants, R&D facilities, headquarters and other office locations.
    * These steps are expected to result in the reduction of 14,000 positions
      globally – excluding the impact of any future divestments – over 25% of
      Teva’s total workforce – over the next two years.
    * The majority of the reductions are expected to occur in 2018, with most of
      the affected employees being notified within the next 90 days. Restructuring
      efforts will be done in accordance with applicable local requirements.
      Consultations with the relevant employee representatives will begin in the
      near term.
    * In addition to the restructuring plan, Teva is announcing the following
      measures to address the company’s financial situation:
    * The company will immediately suspend dividends on ordinary shares and ADSs,
      while dividends on mandatory convertible preferred shares will be evaluated
      on a quarterly basis per current practice
    * Teva’s annual bonus for 2017 will not be paid due to the fact that the
      company's financial results are significantly below our original guidance for
      the year.
    * The company will continue to review the potential for additional divestment
      of non-core assets
    * Teva will provide full guidance for 2018 in February with the annual results
      and will share a longer-term strategic direction for the company later in
    * Schultz concluded, "These are decisions I don't take lightly but they are
      necessary to secure Teva's future. We will implement these changes with
      fairness and the utmost respect for our colleagues worldwide. Today's
      announcement is about positioning Teva for a sustainable future which we will
      achieve with our talented people. We will ensure that we continue to provide
      high quality medicines to the many patients we serve every day, while
      adhering to the highest standards of GMP compliance."

  2. Good Morning.

  3. FTR – Surprised that my short Dec 10 calls weren't exercised !  

  4. I guess there will be 14,000 people screaming FU TEVA today… But fewer FU from Jabo so overall a positive development. Us shareholders are happy. Isn't capitalism great?

  5. Albo/FTR

    They took my $8 calls, not the 5's.

  6. Do they have until the end of the day?

  7. go /KC 

    * IG ratings: Will meet next week with agencies, lay out the facts and let
      agencies decide, CEO Schultz said.
    * Leverage: Expects to achieve net debt/EBITDA of below 4x by the end of 2020.
    * Deleveraging Plan: Proceeds from Women’s Health U.S. divestitures (Paragard &
      Plan B) were used to make prepayment of $1.77 bn on 5Y and 3Y term loans
      maturities. Initial focus will be on remaining bank debt ($4 bn). Committed
      to utilizing cash flow to pay down debt over the next four years.
    * 5Y Debt maturities:
      2018 $3.5 bn
      2019 $4 bn
      2020 $4.3 bn
      2021 $4.2 bn
      2022 $1.7 bn
    * Covenants: In good shape on covenants for the end of 2017 and will evaluate
      in 2018, CFO stated.
    * Restructuring plan: $3 bn net cost reduction by 2019 with more than half
      realized in 2018. One-time restructuring charge and cash outlay of $700
      million in 2018. Global workforce to be reduced by 14,000 (more than 25% of
      the workforce over the next two years), majority will happen in 2018.
    * Divestitures: Continues to look to divest non-core assets.
    * Dividends: Suspending dividends on ordinary shares and ADRs.
    * Equity raise: Does not plan to raise equity at this time.

  9. Good morning!  

    The market seems to be finding more sellers off these BS opens now.  We'll have to see what sticks.  

    /TF is the downside laggard, I like them below 1,530 with VERY tight stops above.

    Dollar (/DX) already over 93.50 and that's good for $500/contract so tight stops if 93.50 fails as we don't turn down 2-hour $500 gains, right?

    /SI big fail, back to $15.89 but that was a painful hold last week so let's hope closer to $15.70 for a re-entry.  If the Dollar keeps going, we should get it. 

    BitCoin down below $17,000, that's good for gold/silver/reality.

    TEVA/Seer – People are loving it, up 14%.  This is why I love beaten-down businesses with good cash-flow – so many ways to fix things.  

    Image result for kiss my ass in times square

    FTR/Albo – You never know.  That's why I usually just let them play out.  Congrats on a nice win.  FTR only down to $9.33, it would be great if they hold $9 ex-dividend. 

    Big Chart – NYSE 12,800 would confirm the next leg of the rally is legit.  Dow flirting with 25,000 and Nas is over 6,400 this morning – that's the breakdown line now.  

    Capitalism/StJ – Nothing like making money off the misery of others.  What a fantastic thing to base a Global Society on!  

    Image result for evils of capitalism

    Image result for evils of capitalism

    Not the $5s/Baron – That's super-strange.  

  10. FCC to vote on Net Neutrality today.  Meeting starts at 10:30 AM.  Could be interesting.

  11. Phil/FTR

    Lets say I have 2020 $5 calls I sold for $3, and nothing else at this point, where would you go with this stock now. 

  12. Space rock… nah, but it could be a space whale… Dr Who anyone?

  13. Pstas – Glad to see that you still have some GLUU.

  14. Phil/FTR,

    I shouldn't just ask you that kind of question open-ended.  My idea was to start buying shares to cover those $5 calls as the stock comes down which is what I expect, along with selling 2020 $8 puts, and between the two to fully cover the calls.

  15. Tax plan/ property taxes

    Forcing people to move to Raleigh and Phoenix.

  16. The best and worst college towns – Charlottesville, VA would have been on the list as best, but now…

    What?! Omorosa is out!  How could that happen?

  17. Nice move in TWTR this morning.  Highest price in more than a year.

  18. What Disney Is Getting From Fox

  19. Bitcoin’s fractioning problem

  20. The Pentagon Is Not a Sacred Cow

  21. US retail sales jump in November on strong holiday sales

  22. Vermont Is Set To Legalize Recreational Marijuana Next Month

  23. EOY review, 5 great picks: HFC NTDOY TWTR ROBO and CF

    … and this general advice (40X ago)

    looking for a blow-put 2018. Trump crash anyone?!?!?  :) :) :) !!!!!!!!

  24. Retail sales boosted by strong online spending

  25. Where People Are Working Beyond 65 [Infographic]

  26. Bitcoin fever exposes crypto-market frailties

  27. Look at the South racking up all that debt, and Nevada.

  28. And the chart on where people work over 65, in Asia, where age is respected.

  29. Greetings, All!

    The webinar replay is now available!

  30. DJ L Brands Price Target Raised to $70.00/Share by Morgan Stanley 

  31. Wheeee, nice sell-off.  Quick $500 on /TF, /RB up nicely, /CL up almost $1 – all is well.  

    That's why I was thrilled to take off /SI yesterday – it's not like we're never going to find another trade so take the profits and wait PATIENTLY for the next opportunity.  

    Net Neutrality/Albo – I fear the worst.  

    FTR/Baron – You mean you were short FTR?  Those calls are $4.20 now and you can buy the stock ($8.69) and that nets you in for $5.69 and, if you collect the next dividend, you're in good shape and then you can consider adjusting.  I'd also sell the 2020 $8 puts for $3.60 so you effectively DD at $4.40 so, worst case, you own 2x at $5 and the short calls go worthless.  If FTR goes up, you get 2x the dividends and you can cover with $8 calls at $3 and drop your basis to about $3.50 on the whole set with 1/2 called at $5 and 1/2 called at $8.

    Space Whale/Mkucs – They're serious about this one though.  Possible that aliens use mass of asteroid for shielding on long journey with ship in the middle, safe from damage.  If we're not their destination and they are sleeping on their trip – we may never know as they pass us by.

    Moving/Baron – I'm off to Florida.  Stupid to live in NJ and pay $22,000 of non-deductible taxes on a home that's bigger than we need.  Also, no state Income Tax.  

    Omorosa/Baron – That's going to come back to bite them, she's a really loose cannon.  

    TWTR/Albo – Going to 280 characters finally did it.  Something I said they should have done years ago.  

    TSLA running out of gas.

    TrumpCash/BDC – We should start that.  

    LB/Jabob – Yeah, F them!

    Did you like the warm-up photo I posted above?  cheeky?

  32. Local taxes / Phil – My guess is that they will be deductible again in 2019 after all the blue state Republican congressmen find themselves out a job! 

  33. hilarious

  34. TEVA – Cantor Fitzgerald reiterates Hold rating, $10 PT. This price target represents a -36.31% downside over the stock’s previous closing price of $15.70.

    DEC 14, 2017 | 9:41AM | BY STOCKNEWS.COM STAFF

  35. Cantor/Jabob – Well, everyone is entitled to an opinion.  Theirs just happens to be wrong…

    • November Retail Sales+0.8% M/M vs. +0.3% expected. The reading for October was revised to a 0.5% gain.
    • Ex-autos: +0.8% M/M vs. +0.7% expected, +0.7% prior
    • Control group +0.8% M/M vs. +0.4% expected.
    • Retail sales came in strong for November with 12 out of 13 categories in positive territory for the month. Compared to last year, retail sales were up 6.3% during the month.
    • Many of the strongest year-over-year gains were recorded in categories that have been limping along for parts of the year, including gas stations (+12%), furniture/home furnishing stores (+8%), auto dealers (+7%) and electronics/appliances stores (+6%).
    • The nonstore retailers category (Amazon and gang) showed a 2.5% M/M and 10.4% Y/Y increase in sales for the month.
    • The broad-based nature of the retail sales print should add some legs to the recent rally in the sector. Watch some of the usual suspects such as Wal-Mart (NYSE:WMT), Target (NYSE:TGT), Best Buy (NYSE:BBY), Home Depot (NYSE:HD), Lowe's (NYSE:LOW), Macy's (NYSE:M), Gap (NYSE:GPS), Costco (NASDAQ:COST), Five Below (NASDAQ:FIVE), Dollar General (NYSE:DG), Signet Jewelers (NYSE:SIG) and Williams-Sonoma (NYSE:WSM).
    • The Bloomberg Consumer Comfort Index falls to 51.3 from 52.3 last week.
    • State of the Economy index edges down to 50.9 from 52.1.
    • Personal Finance index drops to 58.9 from 60.1.
    • Buying Climate index tracks to 44.0 from 44.7.
    • October business inventories: -0.1% at $1,885.7B vs. -0.1% consensus and +0.0% prior.
    • Sales +6.5% to $1,400.8B (Y/Y).
    • Inventory/Sales ratio of 1.35 vs. 1.49 (Y/Y).
    • Roughly halfway into the budget year, sales and income tax revenues are about $208M below projections - this after big spending cuts, boosted fees, and forcing teachers to pay more into their pensions.
    • The shortfall has forced the state to raid its rainy-day fund and budget-reserve funds. That's a particularly big problem, says Budget Director Paul Potamianos, given the strength of the economy. What happens when a recession hits?
    • The governor this week proposed a mix of spending cuts and tax increases to help fill the hole.
    • The PBOC unveiled a five basis-point boost to some reverse-repurchase rates overnight, minutes before the country’s release of economic data for November.
    • The indicators suggested little change in the growth rate, with industrial output, retail sales and fixed investment figures close to economists' estimates.
    • Equities declined modestly on the news, with the Shanghai Composite falling 0.3%.

    Banks ease a bit following rate hike

    • There's been a flurry of prime rate increases announced following the FOMC's latest 25 basis point hike in the Fed Funds rate. We're looking hard, but haven't been able to find one notice of a boost in deposit rates.
    • Markets anticipate though, so despite this largess visited upon the nation's lenders, their stock prices are slipping just a bit.
    • The SPDR KBW Bank ETF (NYSEARCA:KBE) is lower by 0.15% today, and now down about 2% since yesterday afternoon. The Regional Bank ETF (NYSEARCA:KRE) is seeing similar action.
    • Individual issues: U.S. Bancorp (USB -0.2%), Regions Financial (RF -0.3%), New York Community (NYCB), Huntington (HBAN -0.7%), PNC Financial (PNC), BB& T(BBT -0.1%), Fifth Third (FITB -0.5%)

    IEA sees oil surplus in early 2018

    • "We see that 2018 might not be quite so happy for OPEC producers," the IEA said in its latest monthly report, as the group cuts back on its output.
    • Amid a recovering oil price, U.S. crude producers are staging a comeback that has allowed many of them to restart operations.
    • "In the first half the surplus could be 200K bpd before reverting to a deficit of about 200K bpd in the second half, leaving 2018 as a whole showing a closely balanced market."
    • Crude futures flat at $56.60/bbl.
    • The group is set to generate more free cash flow in 2018-19 than at any other time in recent history, says Neil Mehta and team, upgrading their view to attractive from neutral.
    • Among individual issues, ConocoPhillips (NYSE:COP) is boosted to Buy from Neutral, and Husky Energy (OTCPK:HUSKF) – ahead of a potential dividend resumption – to Neutral from Sell.
    • Source: Bloomberg's Arie Shapira

    EIA Natural Gas Inventory

    • The Justice Dept. has confirmed a criminal investigation into Uber (Private:UBER), though its filing is predictably light on other details.
    • A letter from Acting U.S. Attorney for Northern California Alex Tse confirms the probe to Judge William Alsup, who's presiding over the self-driving car litigation between Uber and Waymo (GOOGGOOGL).
    • Tse's letter describes information given investigators by ex-Uber employee Richard Jacobs about Uber using devices to keep information separate from Uber's official systems (a place where trade secrets might not be discovered, for example).
    • A letter from Jacobs to Uber's general counsel that allegedly contains similar information will be entered into the record Friday, and Alsup has delayed the Waymo-Uber trail into 2018.
    • Investors are liking the U.S. airline sector today after Delta Air Lines (DAL +3.3%) issued a positive outlook at its Investor Day event and a shining upgrade on Southwest Airlines (LUV+2%) from Atlantic Equities drew notice.
    • The general assessment is that airlines have some upside with 2018 unit revenue growth and free cash flow.
    • Mild gainers include American Airlines Group (AAL +1.6%), United Continental (UAL +0.9%), Allegiant Travel (ALGT +0.4%) and Alaska Air Group (ALK +1.1%).

    IBM teams up for quantum computing push

    • IBM has teamed up with major companies including Samsung (OTC:SSNLF), Honda (NYSE:HMC), JPMorgan (NYSE:JPM) and Barclays (NYSE:BCS) to develop quantum computing for commercial use.
    • IBM most recently tested a prototype of a 50-qubit quantum computer, which is approaching a threshold known as "quantum supremacy," or can perform calculations that are beyond the reach of a classical supercomputer

    Wynn Resorts strikes land deal on Las Vegas Strip

    • Wynn Resorts (WYNN +0.1%) strikes a deal to acquire 38 acres of land on the Las Vegas Strip directly across from Wynn Las Vegas for $336M. The new plot includes 34 acres being unloaded by Crown Resorts (OTCPK:CWLDFOTCPK:CWLDY).
    • The casino operator says the agreement completes an "unique assembly" of contiguous real estate of approximately 280 acres that spans from the Las Vegas Convention Center on Paradise Road to Industrial Road on the west, including 3.5K feet of frontage on the Las Vegas Strip
    • Wynn says future development of the land will change tourist visitation patterns in Las Vegas, drawing more visitors to the north end of Las Vegas Blvd.
    • Source: Press Release

    Express Scripts ups 2017 guidance, sees non-GAAP EPS as high as $7.87 next year

    • Express Scripts (NASDAQ:ESRXupdates its 2017 guidance and announces its outlook for next year.
    • 2017: Non-GAAP EPS: $7.00 – 7.08 from $6.97 – 7.05; non-GAAP EBITDA: $7.37B – 7.45B from $7.35B – 7.47B; total adjusted claims: 1.158B – 1.172B.
    • 2018: Non-GAAP EPS: $7.67 – 7.87; non-GAAP EBITDA: $7.6B – 7.8B; cash flow ops: $4.9B – 5.4B; total adjusted claims: 1.345B – 1.395B.
    • Company's enterprise value initiative expected to cost $600M – 650M and will deliver cumulative savings of almost $1.2B by 2021.
    • Management will host a conference call this morning at 8:30 am ET.

    Criteo -12.4% on expected impact from Apple change

    • Criteo (NASDAQ:CRTOupdates the expected impact of Apple’s Intelligent Tracking Prevention (ITP).
    • Criteo says recent changes to iOS invalidates the company’s projected 9% to 13% net negative impact on FY18 revenue ex-TAC.  
    • The iOS 11.2 update blocks the ad ecosystem Criteo uses to reach Safari users. The company is working on an “alternative sustainable solution for the long term” but can’t yet assess its effectiveness. 
    • If the new solution doesn’t mitigate ITP impact, Criteo expects a 22% net negative impact on FY18 revenue.   
    • Criteo shares are down 12.4% premarket.    
    • Previously: Criteo down after Q3 report issues weak guidance, Apple ITP impact (Nov. 1)

    Disney-Fox call: $2B in cost synergies; no Murdoch role?

    • On a conference call with analysts discussing a $52B acquisition of key media assets of Twenty-First Century Fox (FOXFOXA), Disney (NYSE:DIS) chief Bob Iger notes the deal should close in 12-18 months and highlighted the chance to expand Fox's Avatar franchise particularly considering new theme park lands.
    • Along with the chance to unify rights and bring more content (X-Men, Fantastic Four, Deadpool)into the Marvel Cinematic Universe, Disney gets Fox's distribution rights to the first Star Warsfilm.
    • After speculation that Fox CEO James Murdoch would come into Disney in a senior role and perhaps become a succession candidate for Iger, Iger says while Murdoch will be "integral" to combining the companies, "he and I will be discussing whether there is a role for him or not at our company."
    • The deal will be accretive to EPS for the second fiscal year after closing, says Disney CFO Christine McCarthy, and Disney expects roughly $2B in cost synergies by 2021.
    • With Fox continuing to pursue a buyout of the rest of Sky (OTCQX:SKYAY) before its Disney transaction, McCarthy says Disney's leverage will be about 2.9x total debt/EBITDA; 2.2x if the Fox/Sky deal is not completed. The company expects to return to historical leverage levels in any case 24 months after deal completion.
    • Taking majority control of Hulu is going to be beneficial and result in "flowing more content in Hulu's direction," and managing Hulu "becomes a little more clear, a little more effective" in the new era, Iger says.
    • Fox's regional sports networks are a "perfect complement" to ESPN's offerings, which are national in nature and will benefit from regional focus, Iger says.
    • Iger expects the deal to receive a "significant amount of regulatory scrutiny" both in the U.S. and internationally, but that it will be important to remember the "aim of this combination is to create more high-quality product for consumers around the world" and to deliver it in more compelling ways.
    • Premarket: DIS -0.9%FOX -0.9%FOXA -0.9%.
    • Previously: Mouse eats Fox: Shares up; implications for Hulu, film franchises (updated) (Dec. 14 2017)
    • Previously: Mega-media: Disney confirms Fox deal (Dec. 14 2017)
    • What happens to the remainder of Twenty-First Century Fox (FOXFOXA) after a historic media asset combination with Disney? It becomes "Fox," a new "growth company centered on live news and sports brands."
    • That means the most-watched cable news along with coveted long-term sports rights.
    • Fox shares have turned lower premarket after an initial goosing: FOX -3% to $31.38; FOXA-3.8% to $31.50. The transaction values Twenty-First Century Fox at $28-$30 share depending on the Disney stock reference price used ($30/share, based on Disney's closing price yesterday).
    • “The new Fox will draw upon the powerful live news and sports businesses of Fox, as well as the strength of our Broadcast Network," says Rupert Murdoch. "It is born out of an important lesson I’ve learned in my long career in media: Namely, content and news relevant to viewers will always be valuable. We are excited by the possibilities of the new Fox, which is already a leader many times over.”
    • In a symbolic move, while Fox's moviemaking assets go to Disney, its studio lot in Los Angeles will stay with Fox.
    • It's also keeping its equity investment in Roku (NASDAQ:ROKU).
    • The company is planning to follow through with its acquisition of the rest of UK broadcaster Sky (OTCQX:SKYAY) before that interest goes to Disney; it expects the Sky acquisition to close by June 30.

  36. ~~S&P Global Ratings said today that its ratings on Israel-based Teva Pharmaceutical Industries Ltd. (BBB-/Negative/--) are not affected by Teva's announced plans to reduce costs by $3 billion by 2019, reduce its workforce by 14,000, and suspend its common dividend. The company also announced plans to reduce net debt leverage below 4x by 2020.

    * We view the announcement as slightly positive to creditholders given the
      company's clear commitment to deleveraging, but this is moderated by the
      expected decline in revenue in 2018, added risk from executing on such a
      large restructuring initiative, and the expectation for significant costs to
      achieve restructuring through 2019. We expect Teva to repay, rather than
      refinance, the majority of its upcoming $3.5 billion debt maturities in 2018,
      supported by cost savings, S&P said.
    * Our negative outlook reflects our view that there is additional uncertainty
      around Teva's ability to control and predict its financial results and its
      ability to generate cash flow to repay debt, given heightened competition in
      key franchises. Our base case reflects our expectation for continued generic
      price erosion and volume and pricing declines for Copaxone, for which we
      expect sales of roughly $2.1 billion in 2018 and $1.5 billion in 2019, lower
      than our previous estimate. We believe the business is increasingly difficult
      to forecast given recent guidance revisions, S&P said.
    * While we believe that Teva is committed to keeping leverage below 5x in the
      long term, we expect leverage to remain elevated above the mid-4x area
      through 2019, given the weaker-than-expected operating results and cash flow,
      S&P said.

  37. These knee jerk reactions in target prices demonstrate the lack of analytical talent (or incentives).


    ~~BofAML analyst Jason Gerberry on Teva.


    Cost cuts meaningfully above expectations
    * This morning, TEVA announced it will reduce its cumulative spending (COGS +
      OpEx) by $3bn by end of 2019. Key takeaways: 1) cuts were on a net basis,
      with half achievable by end of 2018 and remainder by end of 2019, implying
      spend closer to $13bn versus consensus $15.6bn; 2) topline impact unclear-
      TEVA did not provide 2018 financial guidance, leaving investors to ponder the
      negative impact these cuts will have on the business as well as magnitude of
      Copaxone and US generic erosion. Taken together, cost cuts drive higher
      EBITDA but magnitude is difficult to predict. Based on much higher than
      expected expense cuts, we are raising our PO to $17 (from $11/shr), while our
      updated 2019 multiple of 8.5x EBITDA (9.5x prior) is more consistent with
      generic peers like MYL. Reiterate Underperform given risk further downside,
      Copaxone and US Gx. Our income rating moves from 8 (same/lower) to 9 (pays no
      cash dividend) on announced dividend suspension.
    US generics: updated product strategy show-me story
    * On the call, TEVA management characterized the US generics as a "very dynamic
      situation" and the company is reviewing each and every product. The plan will
      be to make price adjustments on certain products and eliminate low profit
      products. The strategy is not novel, as prior TEVA management teams have
      discussed culling the portfolio and focusing on profitability. In our view,
      mix has been the bigger impediment to TEVA's US generic growth and declining
      margin profile. Given the large ANDA backlog and continuing US price pressure
      group purchasing organizations we forecast US generics declining ~10% in
      2018. We are trimming our '18E g-Concerta forecast to $300m (from $450m)
      based on exit weekly share (46% vs 2017 avg 69%).
    R&D bare bones, future efforts to get more focused
    * Key takeaways on the call 1) TEVA plans to combine its brand and generic R&D
      efforts; 2) TEVA remains committed to Phase 3 fasinumab for chronic pain, a
      program TEVA incurs half of $1bn in spend; 3) management did not specify
      contribution of cost cuts by spending line-item, but indicated 2018 cuts
      would mainly come from OpEx. We forecast $1bn run-rate post implementation of
      cost cuts (vs ~$1.7bn 2017).

  38. Phil/FTR

    Thanks.  Not short but neutral and got caught not expecting that big a rise but figuring it would go down after div.  I have a bad habit, (make that two bad habits) of holding on until painful and then adjusting right before it turns, and the second, not recognizing when something is reversing, rather than just bouncing around, which seems to happen more and more (those V shaped recoveries) in this market.  I always want to think that price will come back and give me a better chance, but this market has been loath to let people in once a stock reverses.  Didn't help that I didn't expect Congress to  actually come through on a tax plan before the end of year sending stocks, including FTR, up so much.

  39. Phil / Aliens


    I always thought the best way to travel in space is in a into a big hole in an asteroid that shields and protects.


    BDC  It seems that BTC will have 12 forks! next year do you know something about what the forks mean?. thanks

  40. Phil/FTR, assigned 6000 shares at $8 (paid .60), also short FTR1,  40 Jan 3s (.75) and 20 Jan 4s (.90) both way OOM.  Advice pls.

  41. ~~Moody's placed the Baa3 senior unsecured ratings of Teva Pharmaceutical Industries, Ltd. ("Teva") and its subsidiaries under review for downgrade.

    * Teva faces significant challenges to sustainably reduce its financial
      leverage to levels acceptable for its current rating over the next couple of
      years. Earnings declines in Copaxone will be significant, potentially
      exceeding lost earnings that Moody's had earlier anticipated. At the same
      time, weakness in the US generics business will weigh on Teva for at least
      the next two years. Moody's recognizes that Teva's announced restructuring
      plan resulting in drastic cost cuts and a suspension of its dividend are
      credit positive. However the company has now said that it will not consider
      other actions — such as equity raises. Moody's review will focus on (1) the
      timing and execution risk of achieving $3 billion in cost savings; (2) the
      potential negative ramifications of drastic cost cuts on things such as R&D
      productivity and quality control ; and (3) the impact of the restructuring on
      cash flows and leverage through 2019.
    * Teva's Baa3 rating (under review for downgrade) reflects its significant
      scale, global diversity, and position as the world's largest generic drug
      company, as well as one of the largest manufacturers of active pharmaceutical
      ingredients. It is also supported by strong, albeit declining, cash flow. The
      rating is constrained by Teva's high financial leverage and high profit
      concentration in Copaxone.

  42. FTR/Baron – No worries.  That's exactly the kind of habits we help you break with our portfolio exercises.  I know it seems frustrating but I make it a point to avoid touching the positions other than once a month, when we're in expirations week.  Generally we ignore the noise and focus on, very simply, whether the position is on or off track to our long-term goals.  You'll be amazed at how relaxed you become once you learn to follow our program.

    Forks/Advil – That's short for forking over speculators with a 12x dilution!  

    FTR/Taihu – You sold $8 puts for 0.60?  Well if you netted in for $7.40 and the stock is $8.62, then say "thank you" and sell them or are they covered with the short calls.  Are the Jan $3s short calls?  Not much you can do if so.  or the $4s, you'll just get called away unless, of course you want to DD and do lots of adjusting.  I'm reading that you have 6,000 @ $7.40 covered by 40 Jan $3s at 0.75 and 20 Jan $4s at 0.90 but, on the whole, the position makes no sense.  

  43. All red now.  Dollar backing off high of 93.75.  

    Done with /RB at $1.67 – no need to be greedy.  Stop on /CL at $56.75 but I'd take $57 and run there too.  

    • In a 3-2 count, the FCC has voted to overturn the net neutrality regulations set in 2015 under previous chairman Tom Wheeler.
    • The news is seen as a victory for Internet service providers, who had been restricted from giving priority to forms or sources of Internet access in rules that sought to regulate service providers as utilities under Title II.
    • In current action: CMCSA +0.9%CHTR -1.4%T -0.2%VZ -0.6%S -0.3%TMUS -1.5%CTL-0.9%ATUS +0.2%FTR -10% (ex-dividend today); DISH -0.9%CCOI flat.
    • Netflix (NASDAQ:NFLX), seen as a key beneficiary of the now-overturned rules, is trimming gains, up 1.1% now.

  44. Thanks Phil.  Sold the $8 calls, not puts, so some loss there as well.  Out of FTR, done, kaput.

  45. Goodbye Net Neutrality rules… It used to be a time when the same people who agree with that were talking about getting rid of Obamacare because the majority of the people didn't like it. But the majority of people actually like net neutrality rules… Oh well!

  46. FTR/Taihu – Hopefully they sell off again and we can get back in cheap.  

    Neutrality/StJ – I'm not sure most people know what it means.  

    Wow, /TF tested 1,505, what a great mover that one is.  All stopped out now.  I picked up $2K on /ES too so a good day, on the whole, to be sitting on CASH!!!  

    Now, if everyone would please go out and drink some coffee – all will be well….

  47. Triple witch could be a bitch…

  48. Net neutrality / Phil – They soon will when rates go up and their favorite web site is blocked or is slowed!

  49. FU FTR!!!!!

  50. Can someone tell why the VIX is up

  51. Thanks for the encouragement Phil.  I keep learning, 3000 hours into my 10,000.

  52. Witch/Mkucs – I don't think so.  People simply aren't going to sell this year when taxes are 30% higher than they will be next year.   Fund managers can't sell – it would be fiscally irresponsible, no matter how bad an idea they think it is – they would get held accountable to the fact that they knew it would have an adverse tax effect on their clients.

    Neutrality/StJ – Now we'll wait and see what actually happens.  Of course the consumers will get screwed but what about NFLX?

    VIX/Baron – Maybe people nervous ahead of tomorrow's witching day. Not really "up" anyway:

  53. Phil – Yesterday's FOMC Hike – The Devil Is In The Details.

    As opposed to October 2017, in January 2018, the maturity rollover limit on Treasury securities increases from 6B to 12B, and Agency MBS increases from 4B to 8B.   

    Translated: All amounts DOUBLED, those under are NOT rolled over, and must be retired or liquidated. More supply, how does this affect pricing and rates?

    In addition, these details were added:

    The Committee also directs the Desk to engage in dollar roll and coupon swap transactions as necessary to facilitate settlement of the Federal Reserve's agency mortgage-backed securities transactions.

    Translated: Sounds like agency MBS might need a hand with dollar roll and coupon swaps due to liquidity issues and pricing.

    In a related action, the Board of Governors of the Federal Reserve System voted unanimously to approve a 1/4 percentage point increase in the primary credit rate to 2.00 percent, effective December 14, 2017

    Translated: The primary rate charged to the commercial banks, also increased 25bps. Squeeze NIM much.  Take it for what it's worth.  Leland Gaunt Out.

  54. Wall Streeters reportedly spend up to $10K on 'healing crystals' to attract love and success

  55. Phil – "Moving/Baron – I'm off to Florida.  Stupid to live in NJ and pay $22,000 of non-deductible taxes on a home that's bigger than we need.  Also, no state Income Tax."

    If this offends you, Floridians or those living in the South so be it. Having lived that unique experience, one cannot put a price on their well being and sanity. There is no amount of money in the world that could get me to live in a den of apathy and ignorance again.

    As always, there are good people everywhere, and you make the best of it, but I recommend trying elsewhere.  With love brother and Out.

  56. QUIK with a nice move today on good volume,

  57. Asia oldsters/Phil – as Naybob just said on another topic, the  devil's in the details. Mandatory retirement is nearly universal in Korea, and it's low to very low. Tenured university professors must retire at 65, although some colleges make it 60. I believe 65 is the age for government workers as well (and Korea is not a federation, so that applies nationwide), but corporations is where you really see people chopped – 55 or even 50 is the limit in many corporations. The rationale is that the oldsters have to make room for the young people moving up, a component, I guess of having a steady-state economy rather than a growth economy.

    So why are the oldsters still working? Well, upon retirement it's possible and common to collect a lump-sum payout, and people use this to start a small business. Loads of scammers stand ready to assist people with that, one of my cousins has been scammed out of large sums three times that I know of, having put bucks into a "sure thing". It was, too, just not for him.

    So anyway, coffee shops, chicken-and-beer joints, that kind of thing. You don't often see oldsters working part-time jobs; that's the domain of high school and college kids. Something my school, DGIST, has done that is quite clever is hire retirees on a part-time basis to teach a class or two. There're about a dozen of us on campus, all experienced teachers who enjoy teaching, most in late 60s and early 70s. DGIST (which is a government STEM university and research institute along the lines of CalTech) pays us a reasonable salary, although not of course what we received before retirement, covers our national health insurance cost (which is only 60,000 won a month anyway), and gives us rent-free apartments in staff housing. So a very nice deal for us and a nice deal for DGIST, who gets a bunch of teachers who love teaching and can help the junior faculty (including many fresh PhDs) get their careers started.

  58. Florida/Naybob – Just because I officially live there, doesn't mean I'll only live there.  I will have 2 girls in college so I'll be spending weekends up there (until they get sick of me) and I still have my ski house and I have to be in NY twice a month for TV.  My parents did the same thing when they semi-retired – they just tended to travel more for the first 10 years they were down there.  

    ORCL beats and announces buyback extensions.  COST beat too.  COST ECommerce up 43.5% – wow!  

    Meanwhile, quietly sneaking higher:

  59. Phil – Not really there – I kinda thought that, just thinking like my attorney Justin Case.

    Muck – Next false flag, fake alien attack? Wild stuff…

    Not wild stuff, been saying that since Roswell. Just watch the "History" Channel programming lineup.  Aside from Paul Ryan, Mitch McConnell and POTUS, there are no little orange or green men.  TALKING MONKEYS ARE THE ALIENS. The truth is out there… trust no one, except your IV and Out. 

  60. Phil – BTW – Justin Case Esq. works for the law firm of Boyd, Dewey, Cheetum and Howe. Referrals are appreciated and Out to my IV.

  61. FWIW- I just posted an item for sale on Craigslist and noted that now one can choose to accept payment in cryptocurrencies. 

  62. One of the best theories I've heard, from Linda Moulten Howe, aliens are us from the future, time or alternate dimension travel, here to warn us. Of course the military does all it can to kill any that pop up. Government has done a good job convincing us there are no aliens, but there's too much evidence, it isn't all fake. I do believe Roswell happened and more, and black budgets are partially spent on reverse engineering. Tech took an awesome leap shortly after 1948. 61 years from Wright brothers to landing on the moon… of course there are some that don't believe that either… and the earth is flat… lol. This isn't the forum for it, just been watching a lot of youtube lately and it is interesting.

  63. Touch a position only in expiration week…

    Some how I missed that Mantra but it sounds like a good one….Need advice on TWTR I have 15 Jan 19 $15/22 BCS but I covered 5 short with $21 Jan 18…Should I roll Jan 18 short call now, wait until 2018?

  64. Millard,

    TWTR is a stock not paying any div. Earnings is 2/8. The extrinsic value of the Jan 18 21 caller is still .44 cents. After the New Year anything can happen, most looking for a down turn. So I ask you why you would give .44 cents away. Even if the stock goes up and your Jan. caller would be more expensive, remember the caller where you intend rolling to will have a higher value as well.

  65. Poll: Most believe Trump trying to obstruct Russia probe

  66. Fees Rise for Underfunded Pensions

  67. A Spike Higher In Bullish Investor Sentiment

  68. California issues 1st licenses for legal pot market

  69. Report: Rich will get still richer unless policies change

  70. Trump thanks Putin for remarks on strong U.S. economy

  71. The G.O.P.’s Legislative Lemons

  72. Trump’s security paper offers stark vision of global rivalry

  73. Good morning! 

    Nothing exciting happening, just drifting into the weekend at this point. 

    Aliens/Mkucs – I'm of the opinion that there is life out there but, sadly, light is the limit to speed and time and distance are near infinite so the chance of another developed species living at the same time in a space close enough for us to communicate with them – even if there are millions out there – is very, very slim.  We've only been able to communicate for a bit over 100 years and our species is already about to wipe itself out with the same scientific advances that brought us here (via global warming or Trump's tiny, itchy trigger finger).  That's like looking at a stadium full of people (the observable universe) for one second in one random section to try to find a girl you dated in Jr High because you heard she might be at the game. 

    Our attempts to send messages are about as effective as you randomly yelling "Hey Debbie!" and expecting her to hear you only we don't know their names or what language they speak or whether they even communicate verbally.  Imagine trying to catch an ant's attention by calling it's name.  We have way more genes in common with that ant than we're likely to have with an alien civilization.  

    Related image

  74. Debbie says Hey!  How bout that…

  75. I know it's hard to imagine and depends on your point of view. If you believe they are already here then it's not such a stretch. There are cycles in everything, I can imagine millions of years of societies growing until technology wipes them out… and starting over again and again. History does repeat, or at least rhyme, and many things we don't understand and couldn't possibly grasp at our own level of technology. Who's to say aliens (let's call them gods who came from the heavens) didn't show up and genetically engineer us. Some believe it was done to create a slave race to mine for gold… that the great flood was caused to wipe out the out of control experiment and didn't quite do the job. We are fast approaching that ability ourselves. Solves the missing link question… it's fun to imagine all the possibilities… but that would destroy numerous belief structures, so it would be a struggle for society to accept even with concrete evidence. There are lots of things we used to believe, like the earth being the center of everything that simply wasn't true… but people were tortured and killed for even discussing such ideas. Google cargo cult… explains how religions can come to be based on contact with an advanced technology they couldn't imagine even existed… fascinating stuff.