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Thrill-Ride Thursday – Markets Right Back on Top

What pullback?

We waited all year for the markets to pull back and all we got was a lousy 50-point correction?  This market is completely nuts and this morning the Futures already have us back at the 6,700 line on the Nasdaq (/NQ) along with 25,400 on the Dow (/YM), 2,756 on the S&P (/ES) and 1,565 on the Russell (/TF) while Oil (/CL) is testing $64 despite disappointing demand numbers in yesterday's inventory report.

Facts don't matter in this market – it's all about the momentum at this point and, tempting though it may be, we're not placing many bets against it though shorting /NQ Futures at 6,700 with tight stops above is a no-brainer – as it limits your losses but not your gains (see yesterday's Report).  We took a poke short in yesterday's Live Trading Webinar but then decided long was a better play after losing $105 but now we're done with those and flipping short at the same(ish) levels we shorted on Tuesday afternoon.  

We saw how quickly gains could evaportate yesterday but, if those weak retrace lines keep holding up, we may be consolidating for a breakout to new highs, rather than correcting from our New Year's rally.  Yesterday's strong 10-year note auction alleviated fears in the bond market but that may have been because we sold $20Bn in debt at 2.6%, the highest level since last March.  Today we sell $12Bn of 30-year notes at 1pm and we'll see how that goes.  

One thing everyone seems to be ignorning is a warning from Moody's that Trump's tax plan has put the United States on Negative Credit Watch as they see it as detrimental to our economy overall, with at least $1.5Tn in additional deficits over the next 10 years (in addition to the $8Tn deficit that was already modeled in).  According to Moody's:  

"Any boost to economic growth from the new US tax law will be modest and depend on how businesses and individuals deploy tax savings; growth unlikely to offset negative impact on government deficits."

Additionally, the contribution of tax cuts to aggregate growth will be modest, around one-tenth of a percentage point of GDP.

In other words, everything Trump and the GOP promised you about tax cuts it total BS and it is, in fact, just a $1.5Tn giveawy to the Top 1%, which just so happens to include Trump and his family.  But deficits don't matter when Republicans are in charge – the Democrats will pay the bill next time they are in power (hopefully by November) until then, we can contnue to party like it's 1999! 

Image result for us interest payments as a percentage of gdpThe really scary line on this chart, the one that destroys America and our grandchildren's futures, is the blue line projection of Federal Interest Payments as a percentage of Revenue, which will rise from the current 7% all the way to 22% in 2027 – and that's based on conservative rate assumptions.  Debt rises from 80% of the GDP ($16Tn) to $102% of the GDP, which is also projected to be up 50% by then ($31Tn) by then so we're talking $32Tn in debt 10 years from now thanks to Trump – adding $12Tn (60%) to our total national debt to date.  

The solution for rich people is very simple – we leave!  This debt is going to be unpayable and the US will either default and turn into Greece or we'll have to undergo massive austerity – and turn into Greece.  Either way – it's time to include abandoning this country in your long-range planning because these are the best-case numbers – you don't even want to THINK about the worst-case.  And, keep in mind, this is without allowing for a crisis of some sort that forces massive increases in spending – like Global Warming – thank goodness that's not real, right?

Still, these are long-term problems and not likely to affect the current rally.  We'll keep an eye on the bond rates but then it's earnings season starting tomorrow with key bank earnings and a fun way to play for a miss there is to play the Ultra-Short Financial ETF (FAZ), which is way down at $11.03 this morning as no one seems able to imagine how banks can disappoint us in 2018, which reminds me of people's attitude in 2008 as well.

In 2008 we made a fortune shorting the Ultra-Long Financial ETF (FAS) but that's a more dangerous play for another day.  With FAZ, we can structure a not-too-risky bull call spread that will pay us 50% in 36 days if banks disappoint:

  • Buy 20 FAZ Feb $10 calls for $1.10
  • Sell 20 FAZ Feb $11 calls for 0.45 

This no-margin spread nets 0.65 on the $1 spread that's 100% in the money to start so anything but a bullish reaction to bank earnings should give us an 0.35 (53.8%) gain at February expirations (16th).  The outlay on this trade is $1,300 and it pays back $2,000 if all goes well and we don't lose money until FAZ is below $10.65.  You don't need to make complicated or risky trades to make fantastic returns with options spreads and this one doesn't even require any margin!  We will add it to our Options Opportunity Portfolio (OOP) and see how it goes.

We can also take advantage of the dip in the Dollar today to show a little faith in our own currency.  I like /DX at 91.75 – it held up nicely the other day and gave us a good run – so why not double-dip and see how it goes?  When you see a channel that keeps repeating itself in the Futures – play it!  As with any good Futures entry, the key is to have a good stopping line and, clearly, 91.70 is a break-point where we could take a quick loss and wait for the next cross over to play again.  

In good news this morning, WalMart (WMT) is rasin their base wage to $11/hr, a $300M increase in employment costs that will buy them a lot more than that in good PR and most of that money will just get spent right back in the store because – where else are you going to shop if you earn $11 an hour?  Still, it's nice and hopefully it's a trend that will lead to higher wages and form a good base our economy can grow on.  

Unfortunately, on the other side of the coin, Jack in the Box (JACK) CEO, Leonard Comma, says the are considering replacing their cashiers with robots rather than pay higher wages.  You can already see similar systems in testing phases at McDonald's (MCD) and Wendy's (WEN) locations with both of those chains targeting 20% of their stores for automation in 2018.  If this experiment does well – expect very few fast food jobs by 2020.

And drones don't have to fly – Pizza Hut (YUM) is planning to send this self-driving delivery car to your door:

What a brave, new World that needs no workers in it!  


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  1. Good morning all! 

    The latest webinar replay is now available here:

  2. Historically speaking, when the market goes parabolic like right now, it ends in tears! But you need to read to study history and it's just elitist!

  3. ~~ HMNY

    Helios & Matheson enters into agreement to issue $60 mln in convertible notes  (9.17)

    •Co has entered into a securities purchase agreement with an institutional investor for HMNY to issue convertible notes in the aggregate principal amount of $60 million (the "Notes"). The net proceeds from the issuance of the Notes will be used for general corporate purposes.
    •The Notes will be convertible, at the option of the holder, at a fixed conversion price of $11.44, subject to adjustment.

  4. They opened the entire USA coastline for drilling and by coincidence:

    Up til Dec. 31, 2017, oil companies were taxed 9 cents per barrel to fund spill cleanups.

    On Jan. 1, 2018, GOP let the tax drop to 0

    Another tax cut for oil companies and it's not like oil leaks from offshore platform are likely to happen or be expensive if they do. Shameful.

  5. The long term dangers of inequality:

    More charts at the link!

  6. Good Morning.

  7. Well, buy the dip is dead… there are no dips.

  8. GS raised TEVA  PT from 20 to 25

  9. FCEL taking off, up 6% yesterday and 15% this morning. Conference call in 15 min, will give link if anyone is interested.

  10. Oil! To the sky! 

  11. Good morning!  

    Dollar diving lower, down half a point at 91.64 and that's boosting everything else.  /TF blasting up to 1,573, /YM 25,440, /ES 2,760 and /NQ 6,695 - not much to be bearish about but I do like /TF short here with a stop at 1,575.  

    /RB back at $1.85 is also a fun short and /CL will be too if it tests $65.

    Big Chart – S&P blasting over the 25% line without a pullback?  Nas too – what a bubble this thing is but what can you do other than play along?

    HMNY/Albo – Now we know why they started the crypto talk – to jack up the price ahead of the offering.  

    Oil/StJ – That is unbelievable.  

    30M families with 0 to negative worth is also terrifying.  Between that and the removal of safety nets, the next recession will be a catastrophe for the bottom 1/3 of the country.  

    LOL Mkucs.

    TEVA/Jabob – That's it then, they just needed a good push to get over $20 and now they can move back to $25 with little resistance.

    FCEL/Mkucs – That sucks, I was still kicking them around for the LTP.  

  12. FCEL back to 2.01, not too late… but I'm happy I doubled down when it was $1

  13. Stocks start higher as China anxieties ease

    • Stocks are attempting to bounce back from yesterday's slight losses after China's foreign exchange regulator dismissed a report suggesting the country could reduce U.S. bond buys; S&P and Dow +0.3%, Nasdaq +0.2%.
    • European bourses are lower after minutes from the last European Central Bank meeting said guidance to investors could be changed early this year if the European economy continues to expand; Germany's DAX -0.6%, France's CAC -0.2%, U.K.'s FTSE -0.1%.
    • In Asia, Japan's Nikkei closed -0.3% while China's Shanghai Composite finished +0.1%.
    • In U.S. corporate news, KB Home (+9%) and Delta Air Lines (+1.1%) open with strong gains after both companies beat Q4 earnings and revenue estimates, and Dow components Boeing (+1.3%) and GE (+1.9%) are off to good starts; most industry sectors open higher but gains are limited, with none up more than 0.6%.
    • U.S. Treasury prices are slightly lower after holding modest gains earlier, with the benchmark 10-year yield up a basis point at 2.56%.
    • U.S. WTI crude oil +0.9% at $64.14/bbl, extending multiyear highs.
    • "The language pertaining to various dimensions of the monetary- policy stance and forward guidance could be revisited early this year," according to the minutes of the ECB's mid-December meeting.
    • "A gap appeared to be emerging between favorable economic conditions and a policy stance that remained in a crisis configuration," says one member of the Governing Council.
    • The wording has sparked a 60 pip move higher in the euro vs. the dollar, with the common currency now buying $1.1994. European stocks remain  modestly in the green.
    • The German economy expanded at the fastest pace in six years in 2017, with GDP rising 2.2% and marking the eighth year in a row that the economy has grown.
    • Recent reports from company surveys on industrial production signaled a lively performance in the final quarter, and strong business sentiment and order flows may boost prospects for 2018.

    • The Bloomberg Consumer Comfort Index jumped to 53.5 from 51.8 last week.
    • State of the Economy index increased to 55.8 from 53.6.
    • Personal Finance index landed at 60.2 from 59.4.
    • Buying Climate index rose to 44.6 from 42.5.

    Cryptos plunge as S.Korea plans trading ban

    • South Korea is planning to ban cryptocurrency trading via exchanges, according to Justice Minister Park Sang-ki, sending bitcoin prices plummeting and throwing the virtual coin market into turmoil.
    • It's a major development as the country is one of the biggest markets in the crypto space.
    • The news also follows yesterday's warning from Warren Buffett that speculation in bitcoin, and other cryptocurrencies, "will have a bad ending."
    • Bitcoin -10% to $12,986.
    • Cryptocurrency Ripple has broken higher after announcing a mainstream partnership with Moneygram.
    • Ripple is up about 12% over the last 30 minutes to 1.96387, but still trades at only about half of where it stood a week ago.
    • Ripple statement: "The use of XRP allows MoneyGram to solve the age-old liquidity issue most financial institutions face while saving time and money. Additionally, customers will have the ability to send funds real time, with transparency and certainty."
    • The biggest crypto movers over the last 24 hours are VeChain (+43%), Augur (+36%) and Binance Coin (+22%) on the upside and Dentacoin (-23%) on the downswing.
    • Shares of Moneygram International (NYSE:MGI) skyrocket after the company says it will test partnering with cryptocurrency Ripple on payments.
    • MoneyGram will pilot the use of XRP in payment flows through Ripple's xRapid, solution for on-demand liquidity.
    • The company says XRP remains the most efficient digital asset for payments with transaction fees at just fractions of a penny, compared to Bitcoin fees of about $30 per transaction.
    • XRP is fast too. The average transaction time for XRP is 2 to 3 seconds with other top digital assets ranging from 15 minutes to an hour for a payment transaction.
    • MGI +29.21% premarket to $15.66.
    • Source: Press Release

    Manhattan apartment rents down the most since 2014

    • Median rent in December of $3,295 per month was down 2.7% Y/Y, according to the report by a leading appraiser and realtor. That's the largest annual decline since February 2014.
    • Landlords for years have been using concessions to prop up headline rents in the oversaturated NYC market, but the damn appears to be bursting, writes Oshrat Carmiel at Bloomberg. The sweeteners are still there – in a record-high 36% of leases last month – but now rents are falling too.
    • Price cuts looked to have pushed down the vacancy rate – at 1.9%, it was the lowest for December in five years.

    What idiots didn't expect this?  Natural gas inventory draw was higher than expected

    • The U.S. has now become a net exporter of natural gas on an annual basis for the first time since at least 1957.
    • Net exports averaged about 0.4B cubic feet per day last year, flipping from net inflows of 1.8B in 2016, according to Victoria Zaretskaya, an analyst for the U.S. Energy Information Administration.
    • The numbers will be officially released by the agency today.
    • The steel industry’s (NYSEARCA:SLX) apparent demand shows a promising start for 2018, and recent due diligence within the sector shows much better Q4 2017 shipments, likely due to hedge buying in front of rising raw materials and the Jan. 16 Section 232 deadline, KeyBanc analysts say.
    • The outlook prompts the firm to raise its 2018 U.S. hot rolled coil price estimate to $655/ton from $615, and to raise stock price targets for Steel Dynamics (STLD +1.1%) and Reliance Steel (RS+1.1%).
    • KeyBanc upgrades Timkensteel (TMST +2.2%) to Sector Weight from Underweight on higher EBITDA estimates driven by higher raw material prices and mix and potential upside in energy demand.
    • The firm also says share prices for AK Steel (AKS -1.2%) and U.S. Steel (X -0.2%) are baking-in persistence of an elevated pricing environment, Nucor (NUE +0.1%) share prices likely are supported by tax reform, and Cleveland-Cliffs (CLF +1.5%) seems under-appreciated despite recent buoyancy in North Atlantic Basin pellet premium and shares could be well suited for tactical upside into the quarter.
    • Source: Bloomberg First Word

    Delta tops estimates, hikes profit guidance

    • Delta Air Lines (NYSE:DAL) reports adjusted pre-tax income for Q4 was $1.0B.
    • The quarter included a negative $60M impact from the combination of a power outage at Atlanta's Hartsfield-Jackson Airport and Winter Storm Benji.
    • The company says it brought in adjusted pre-tax income of $5.5B for the full year vs. $6.12B a year ago.
    • Passenger unit revenues increased 4.2% during Q4, cargo revenue was up 14.4%.
    • "Looking ahead to 2018, we expect to drive solid earnings growth by growing our top line 4 to 6 percent, improving our cost trajectory and integrating our international partner network.  As a result, we are able to increase our previous full-year guidance to $6.35 to $6.70 per share due to additional benefits from tax reform," updates Delta CEO Ed Bastian.
    • Delta expects unit revenue growth of 2.5% to 4.5% in Q1 and EPS of $0.60 to $0.80. The company sees 2018 EPS of $6.35-$6.70 vs. $5.35-$5.70 prior and $6.30 consensus.
    • DAL +1.25% premarket to $56.56
    • Source: Press Release
    • Previously: Delta Air Lines beats by $0.07, beats on revenue (Jan. 11)

    Sears Holdings bid up 9%

    • Sears Holdings (NASDAQ:SHLD) is up 8.8% in what could be an extended reaction to yesterday's financing moves announced by the embattled retailer.
    • The company found an additional $200M in cost savings outside of store closing and raised a cool $100M in new financing.
    • There's also some reports that Sears is considering digital gift cards with a Bitcoin tie-in. Nothing official has come down from the company on the crypto front, but plenty of jokes about a Bitcoin/blockchain name change are circulating.
    • Previously: Sears updates on profitability plan (Jan. 10)

    I like TIVO down here:  TiVo opens new patent fight against Comcast's X1

    • TiVo (NASDAQ:TIVO) is pursuing new patent litigation in its fight against Comcast (CMCSA+1.1%), bouncing off its success at the International Trade Commission.
    • The litigation involves Rovi, which combined with TiVo in early 2016, and alleges that Comcast's X1 platform infringes on Rovi IP with its features for pausing and resuming shows on different devices, restarting live programming in progress, advanced DVR recording features, and advanced search and voice functionality.
    • TiVo will also file action with the ITC regarding the same patents, seeking an order to prevent infringing X1 boxes from import into the U.S.
    • Kodak (NYSE:KODK) is down 13% on what is likely to be a round of profit-taking selling after the monster move upwards on the company's blockchain and cryptocurrency announcement.
    • No major Wall Street firm provides coverage on Kodak, but Seeking Alpha has a couple of articles with analysis on the fireworks this week.
    • Despite this week's moonshot for shares, Kodak still trades well below the 52-week high of $15.50.
    • Previously: Old school Kodak +67% on blockchain move (Jan. 9)
    • Previously: Kodak rockets higher again (Jan. 10)

    Activision +1.9% as Piper likes opening of esports league

    • Activision Blizzard (NASDAQ:ATVI) is up 1.9% premarket after a positive mention at Piper Jaffray, which noted opening night of the company's esports league with praise.
    • The Overwatch League represents another "call option" for Activision, Michael Olson says, along with ads in its King games, and consumer products based on its many properties. (h/t Bloomberg)
    • The league is a route for advertisers to hit a difficult demographic: males in their teens, 20s and 30s, he says.
    • The firm has an Overweight rating on the stock and a $70 price target, implying 4.7% upside.

    Intel releases "Security-First Pledge" after chip flaw criticism

    • Intel (NASDAQ:INTCposts a “Security-First Pledge” from CEO Brian Krzanich that includes three commitments to customers in the wake of the chip security flaws.
    • Intel says at least 90% of Intel CPUs released in the past five years will be updated by January 15. Updates will then begin for older products. 
    • Promising better transparency: “We know that the impact on performance varies widely, based on the specific workload, platform configuration, and mitigation technique. We commit to provide frequent progress reports of patch progress, performance data and other information.” 
    • Security assurance: Intel will “publicly identify significant security vulnerabilities following rules of responsible disclosure” and add funding for security threat research.   
    • Intel shares are up 0.5% today and down 7.9% YTD.    
    • Previously: Tech giants scurry to patch chip flaws; Intel -2.6% (Jan. 4)
    • Previously: Tech giants see little performance impact from Intel chip issues (Jan. 5)
    • Previously: Intel unveils security updates, self-driving car (Jan. 9)

    Barclays a big believer in Netflix

    • Barclays keeps it simple in laying out why Netflix (NASDAQ:NFLX) is an attractive investmentand is likely to become the second biggest pure media company outside of Disney within three to five years.
    • "Netflix bull case at the core is relatively simple – if subscriber growth is faster than content cost growth over time, it could become one of the most successful media companies. We believe this is possible," writes analyst Kannan Venkateshwar.
    • "Our view is supported by Netflix's global footprint and access to ~550mm broadband subs, demonstrated pricing power, growing content library, changing mix towards local content, and its increasing 'stickiness' due to multiple seasons of established originals," he adds.
    • Netflix is initiated by Barclays at Overweight and assigned a price target of $245.
    • NFLX +0.92% premarket to $214.48.
    • ICE agents have arrested 21 undocumented immigrants in nearly 100 raids of 7-Eleven (OTCPK:SVNDY) franchises across 17 states and the capital, giving owners a tight deadline to prove other employees are authorized to work.
    • "ICE will continue its efforts to protect jobs for American workers by eliminating unfair competitive advantages for companies that exploit illegal immigration," said ICE Deputy Director Thomas Homan.

  14. Scottmi – HL with a sharp two day run. :-)

  15. Phil

      What do you think of the home builders?

     You see any trades in that sector?


    Looking at these two


    LGI Homes LGIH 

    AV Homes AVHI



  16. I heard a theory recently that the US is heading towards what i think was called a "debt jubilee".

    Essentially the central bank will buy back US debt and forgive or pay back the interest to the government. Japan was cited as an example where this is being done without creating runaway inflation.

    Thoughts on something like this? What could the consequences be? is it likely?

  17. Phil – Zerohedge Bloomberg Credit Watch – Standard & Poor's, Moody's and Fitch already had the United States on credit watch negative. Not fake news, just really, really old news. Dec 21

  18. Phil/TIVO

    Are you planning on putting it in the portfolios?

  19. GCAP – Started a trading position at 8.70.

  20. Phil – Credit Ratings – Like those useless credit leeches at Experian, Equifax, TransUnion; S&P, Moody's and Fitch's opines are not even worth the ink used to print a report, much less the paper to wipe ones arse.

    When S&P downgraded US debt from AAA, their CEO was asked to step down 11 days later. So they are to be trusted, as far as you can throw them.  Like bonds and eurodollar futures, Mr. Market is the final arbiter. 

    Credit Default Swaps where the seller of the CDS insures the buyer against loan default is the measure. Hence, CDS prices are a more accurate measure of sovereign debt market valuation,  worthiness or risk. 

    On 5 year CDS US cost has risen 11% in the last 30 days, and 15% since T-rump was elected. Currently 7th in the world at 18 Euro, Germany is the lowest cost, most trusted at 9.40 Euro  See here and Out.

  21. Builders/QC – I think rising rates will spook people for a while so I'd certainly wait for earnings and guidance before getting involved.  TOL is a benchmark, making about $4 per $51.27 share so p/e below 13 is what you need to do better than to mess around with junior builders (TOL is $8Bn).   

    LGIH is not bad, making $5 per $76 share but not as good as TOL though, arguably, growing a bit faster so still interesting.  

    For me, the tie-breaker is TOL has 2020 options and LGIH only goes to Aug – and far less liquid.

    AVHI is very small ($400M) at $18.85, has a p/e in the 20s and options only go out to June with virtually no activity – not even worth considering by comparison.

    Debt Jubilee/CRS – So your Central Bank can print money, buy your own debt and then forgive it?  Wow, why don't we do that all the time?  That is not what Japan has done nor is it, mechanically, what we are able to do.  If our Central Bank forgives $20Tn in debt, it becomes a $20Tn loss that will be charged to treasury, thus increasing our debt by $20Tn – no free lunches.  

    Old news/Naybob – Blame Moody's – they presented it at a conference yesterday.  CDS is a good measure but it was dead wrong in 2008.  No system is perfect.

    TIVO/Lala – I would like to but I want to give our current positions a week to settle down so we can see where we have holes to fill.

  22. If one wishes to measure the flow of CDS or Interest Rate Derivatives, go to ISDA.

    Or download historical CDS price and spread data on sovereign, bank and corporate entities, go to AssetMacro.  Enjoy the spread, and Out.

  23. PCLN continues it's move up, and TRVG is up sharply this morning.

  24. StJl – But you need to read to study history and it's just elitist!

    Phil – "WMT – where else are you going to shop if you earn $11 an hour?"

    Thank you both for my ROFLMAO of the day.  Jack's CEO, just has to be the worlds best boss. Some of his employees probably own wood chippers or meat grinders, with his name on em.  Here's one take on the WalMart, Jack in Box economy and Out.

  25. GCAP – Albo……..I started position in it as well, but with options…….will look to turn into a spread on a good up day. 

  26. Phil

     When you have time

     Tenet Healthcare Corp. (THC)

     From Yahoo financials

     What does the “Minority Interest” mean?

     Thank You for the help


    Income from Continuing Operations

    Minority Interest




  27. Sorry

    -24000 not part of post

  28. Ultyguy – Thanks, I'll take a look at those.

  29. COST, TGT moving higher on news of closing of Sams Clubs stores… Less competition. 

  30. PCLN/Albo – We'll see if they can hold $2,000 this time.   TRVG has a long way to go to catch up.

    Minority Interest/QC – If a company is a partner with less than 50% of another company in which they partake in distributions, those constitute a "minority interest" for Income Statement purposes.  As a side note, the value of the company is NOT counted on their balance sheet if they don't control the voting stock – just the income (or loss) that's distributed for their share.  

    COST/Learner – That's huge for them.

    Walmart to shutter some of its Sam's Club locations


    Walmart is shuttering some of its Sam's Club locations, with some stores reportedly closing their doors across the U.S. as early as Thursday. The exact number of stores closing hasn't been confirmed by the company.

    Business Insider first reported on a slew of stores locking their doors Thursday morning, leaving disgruntled employees and confused customers.

    Local media outlets in Texas, New York, New Jersey and Arizona were some of those confirming stores being closed on Thursday. In some cases, employees weren't notified in advance, the publications said.

    They are going to drive a ton of people straight to COST and BJ's.  Too bad COST is not cheap ($7 per $190 share) or I'd jump on that one.  

  31. So, I have 2 /RB short at $1.84995 and 6 /TF short at 1,579.78, 3 long /KC at $124.42 and 4 long /DX at 91.75.    

    Check out VXX – that's tempting!

    Need a job – go to Canada:

    • Canada job vacancy rose 468,000 in 3Q (+15.1% Y/Y) with gains across all sectors, vacancy rate at 2.9% from 2.6%.
    • Canada's labor market saw unexpectedly robust gains in 2017 contributing to the Bank of Canada's decision to raise rates twice last year.
    • Source:

    Germany should lower taxes only when ECB reduces its stimulus: Ifo

    • The German economy expands at the fastest pace in six years at 2.2% in 2017 and set the wheel in motion as Ifo expects the economy to grow 2.6% in 2018 and 2.1% in 2019.
    • If the economy continues to perform so well, it would be wise to postpone the planned tax cuts and implement them only gradually, ideally not until 2019 when the ECB is likely to turn off its money tap," Wollmershaeuser said.
    • Source:
    • First Solar (FSLR +8.7%) breaks out to a new 52-week high after Vertical Group analyst Gordon Johnson – who recently moved over from Axiom Capital – initiates coverage with a Buy rating.
    • FSLR is “decidedly undervalued” for its portfolio of project assets and, despite the stock’s 76% surge over the last six months, is expected to outperform peers over the next year, Johnson says.
    • At the same time, Johnson initiates Solaredge Technologies (SEDG +1.1%) with a Sell rating, as he anticipates an accelerated decline in average selling prices compounded by irreducible manufacturing costs and heightened operating expenses.
    • Peru's government is evaluating a $2.4B railway project to transport mineral concentrates from a copper-rich Andean region to the Pacific coast for export, the deputy mining minister tells Reuters.
    • The proposed 373-mile railway would carry concentrates from Chinese-owned MMG's Las Bambas mine and other copper and iron projects planned to come online in the future, including Southern Copper's (NYSE:SCCO) Los Chancas, First Quantum Minerals' (OTCPK:FQVLF) Haquira and Buenaventura's (NYSE:BVN) Trapiche, the minister says.
    • A railway could help ease tensions between mining companies and farming communities in the Andes that have complained about dust and noise created by diesel trucks that transport MMG's copper over unpaved roads.
    • MoviePass (NASDAQ:HMNY) signs a media partnership with iHeartMedia (OTCPK:IHRT) on an extensive marketing campaign across iHeartMedia’s multiplatform network.
    • The partnership aims to boost MoviePass brand awareness and allows iHeartMedia to be an authorized reseller of ad inventory across the MoviePass website and mobile app.
    • “We have the capability to build significant brand awareness for MoviePass through our unparalleled scale and reach of more than 270 million monthly listeners across the country and our multiplatform assets,” says iHeartMedia's Joe Robinson.
    • "We expect that our partnership with iHeartMedia will fuel our continued growth by targeting more profitable subscribers in low-cost markets, while also opening up a new revenue stream with digital advertising,” notes MoviePass CEO Mitch Lowe.
    • Source: Press Release

  32. Naybob – I generally aim for one LMAO a day although I don't succeed all the time. I moderate myself to avoid ROFLMAO since you run the risk of getting disconnected from your IV which is probably life threatening at your age! 

  33. VXX / Phil – Always tempting and always wrong! As discussed before, too much exquisite timing required! Waiting for the next improbable correction to go long SVXY where my price target is infinity!

  34. StJL – "I moderate myself to avoid ROFLMAO since you run the risk of getting disconnected from your IV which is probably life threatening at your age! "

    Thank you for my 3rd today.  Indeed being separated from an IV of Cotes su Rhone Villages - Vinsobres – Rustica 2003, or any bottle of LA VINSOBRAISE with Perial de Brebis or Picodon de Chevre, can be traumatic in the EXTREME, and Out. Wink, Wink.

  35. StJL – FYI – that was DU, not as in my spelling faux pas, a boy named SU.  As for disconnection from said IV,  coitus interruptus would be preferred. Such is the oral orgasm that is French and Italian cuisine and Out.

  36. HL/Albo – hey, nice! I got totally out of them last Feb @ 6.61 and just didn't get back in when down in December (I still like them so what was I thinking?).  re silver, aside from WPM, still have some CDE and PAAS.

  37. Phil/STJ/VXX – I found an interesting VXX play on an options backtester that I pay for.  If you buy the VXX 50/30 delta put spread with 90 days to expiration, and hold it to expiration, you get a 81% win rate over the past 5 years, with an average return of 28.9% per trade.  Obviously, this is going to work much better in an up-trending low vol market, but I like that it is a defined risk trade, so you don't have any severity risk.

  38. VXX/Palotay. Is that a delta-neutral spread?

  39. And is that ITM or OTM. An example would be great, thanks.

  40. Scott – Those are moving up as well.

  41. VXX / Palotay – That sounds about right. Betting that VXX will go down is not a hard guess as we all know. There is not 90 days expiration available now, but for example, you would buy the 27/24 put spread in June right now if June was 90 days away, correct?

  42. Small Caps catching up today.  IWM up big, and, of course, TZA taking a hit.

  43. Palotay – One disclaimer is that strategies around volatility over the last 5 years will be heavily biased as we have been in a relentless up move with extremely low vol and few (if any) meaningful corrections. It would be more interesting to test these strategies between 2005 and 2010 for example. The results might be different.

    For example, I strongly believe that SVXY will reach infinity eventually (split adjusted of course) but I also understand that a bad year will require a lot of patience as the position would take hits with each dip. One could see them as buying opportunities but it will require some courage and patience. What works in the long run is the well founded expectation that the VIX reverses to mean all the time although that mean reversal period can take months.

  44. Markets/Phil –  where is all this 'value creation' coming from? How much of this is money coming -IN- ?

  45. Currently I'm in the March 30/25 puts, with a basis of 3.32.  I entered in December.  It isn't delta neutral  (there is 20 net negative delta (50-30).

    Right now it looks like you would need to buy the 31/23 if you wanted a 50/30 delta spread in the June expiration.

  46. Very promising moves in CLF, TGT, FTR, and TEVA today.  FU portfolio making a nice comeback.

  47. VXX / Palotay – Doesn't that spread have a 64/28 delta?

  48. SVXY/StJ – True, I keep forgetting what a suicide mission VXX is.

    VXX/Palotay – 81% seems good but I'd like to know how it works out in real life.  Let us know if you try it.  We were doing well shorting SVXY puts against a long bear put spread last year but VXX was a widow-maker.

    Value creation/Scott – That's the problem, there isn't enough money in the World to sustain these market gains but, of course, no one will realize that until they try to cash the stocks in.  As it is now, the lower the volume, the more we gain.

    Date Open High Low Close* Adj Close** Volume
    Jan 11, 2018 274.75 275.83 274.56 275.76 275.76 40,825,445
    Jan 10, 2018 273.68 274.42 272.92 274.12 274.12 64,254,400
    Jan 09, 2018 274.40 275.25 274.08 274.54 274.54 57,254,000
    Jan 08, 2018 273.31 274.10 272.98 273.92 273.92 57,319,200
    Jan 05, 2018 272.51 273.56 271.95 273.42 273.42 83,524,000
    Jan 04, 2018 271.20 272.16 270.54 271.61 271.61 80,636,400
    Jan 03, 2018 268.96 270.64 268.96 270.47 270.47 90,070,400
    Jan 02, 2018 267.84 268.81 267.40 268.77 268.77 86,655,700
    • General Electric (GE +1%) is among the top performers on the Dow so far this year, rising nearly 10% after finishing 2017 at the bottom of index with a 45% plunge, and several analysts say the stock is benefiting from crude oil’s rally to a three-year high.
    • “Oil and gas has become a more significant business for them with the Baker Hughes deal,” says Edward Jones analyst Jeff Windau, adding that some value investors have taken positions in GE given the beaten down stock price.
    • Yesterday, Warren Buffett told a CNBC audience that he might buy GE shares at the “right number.”
    • But skeptics still abound: Oppenheimer's Christopher Glynn is sticking with his Underperform rating despite the better oil and gas climate, citing "near-term headlines [which] could include [we speculate] a higher tax rate from reform, and potential for further upsizing of pending legacy insurance reserve funding requirement."
    • Morgan Stanley upgrades Expedia (NASDAQ:EXPE) to Overweight with a $160 price target, 26% higher than yesterday’s close.
    • Analyst Brian Nowak says the company is “planting seeds for faster growth” by moving beyond the largest hotels in Europe and Asia.   
    • The firm thinks Expedia’s non-vacation supply count is about half of Priceline’s but that the “increased selection should lead to higher conversion and an increased ability to bid on Google keywords to drive traffic and user growth.” 
    • Nowak says Expedia’s acquired vacation rental business HomeAway is adding more supply and bookable properties to the Expedia platform. HomeAway could generate a 27% room night growth this year. 
    • Expedia shares are up 2.8%.  
    • Avis Budget (CAR +4.9%) and Hertz Global (HTZ +5%) rally after unit revenue reports from the U.S. airline sector paint a bright picture for travel demand.
    • Both stocks have tracked back a bit from their highs posted earlier in the day.
    • SeaWorld Entertainment (SEAS +6.6%) spikes on positive comments from Stifel Nicolaus after the firm walked away impressed from a meeting with management.
    • Analyst Steven Wieczynski sees momentum building for the theme park operator and thinks shorts could be in for a surprise.
    • Stifel takes its price target up to $17 to rep 13% upside.
    • Sources: Bloomberg,
    • David Long and team aren't expecting much in way of large deals, but instead see most transactions to be for those lenders with less than $1B in assets.
    • The Midwest was a particularly busy region for M&A last year, and possible targets in 2018 include Farmers Capital (NASDAQ:FFKT), Franklin Financial (NYSE:FSB), and HopFed Bancorp (NASDAQ:HFBC).
    • Elsewhere, FCB Financial (NYSE:FCB) and Synovus (NYSE:SNV) look attractive.
    • Source: Bloomberg

    Markets going up, not down, into the close

  49. KSS – I can't short it, but if I had some, I would sure sell it here.

  50. (which probably means it has only just begun it's monster move to new all time highs)

  51. SGYP – have a small postion. Just "doubled down" by selling Jan 2019 2.50 puts @ 1.00

  52. KSS/Scott – This market is pretty much unshortable.  Any analyst that mentions a stock can pump it 5% – no matter how high it already is.

    And, of course, we spiked even higher into the close – amazing!  

    7 short /TF now at 1,581.04 avg.  

  53. Hmm. That is not what it is showing on my TOS. 

  54. Sold a 30% of my GRE yesterday, for 8x more than I paid for it a few weeks.  Fun!

  55. Senators reach Dreamers deal, but Trump has yet to sign off

  56. TEVA – TEVA leads the way today as the best performing large cap stock, closing up 8.48%.

  57. 5 coolest robots we’ve seen at CES 2018

  58. Why People Really Quit Their Jobs

  59. VXX / Palotay – You are right, I was looking at March!

  60. I know, NY Times is fake news but….c’mon man!

  61.   Shithole countries.  Please, let's impeach this embarrassment !

     He has devalued the office by an unbelievable  amount.

    Don't think that is the correct word, but you catch my drift.

    Nail him Mueller !

    Pence is probably a lightweight, but so much better.

  62. Albo – We need to go further! Any public official who doesn't ask for a public apology from Trump should also be removed from office. Trump cannot represent this country anymore. It's clear that he is a racist and unfortunately for him, close to 50% of this country is not white anymore. I want to see what Ryan and McConnell will say tomorrow – more excuses I am sure. The 2018 elections can't come soon enough. And really, Pence is not much of an improvement with his homophobic views. Hardly a uniter there.

  63. JPM Biotech/Pharma this year was nutso….absolutely bonkers.  I am trying to figure out who is buying whom!  Get ready!

    One company I would totally watch, and we were in them many moons ago (cough cough MrM), was a biotech with a weight loss drug…I need to be 'careful', but their pipeline is very, very compelling.  Data read is coming up for a drug …. where Celgene just bought a rival for…$8B+.  Play at your own risk, but I love what is coming…..Survey said?

  64. Pharm, MrM ? 

    I am unable to find that ticker. Can you please tell which one is this ? 



  65. What robot strippers say about sexism, tech and the future

  66. Pat swap

    Perhaps ARNA. Arena Pharmaceuticals.

  67. Good morning!  

    JPM beat on earnings so there goes my premise that the Banksters will disappoint.  Of course, they are an amazing bank and never miss but $1.76 vs $1.69 est is pretty good.  Now we'll see if that justifies $110 overall but on track to make $8 for 2018 is a p/e of 14 at $112, so not expensive at all.

    • Q4 net income of $2.4B or $1.07 per share vs. $6.7B and $1.71 a year ago. This year's result, however, includes a $2.4B negative impact from the new tax bill. Backing that out, Q4 earnings would have been flat from last year, and EPS was $1.76, up a nickel Y/Y, and topping estimates by $0.07.
    • $6.7B returned to owners in Q4 – $4.7B of buybacks and $0.56 per share dividend.
    • Among Consumer & Community Banking items, provisions of $1.231B were up 30% Y/Y, with a net reserve build this year vs. a sizable release a year ago. Behind the build was $200M in credit cards, driven mostly by loan growth.
    • Among Corporate & Investment Bank items, FICC revenue plunged 34% Y/Y (or 27% if excluding the impact of the tax bill). Estimates had been for a drop in the high teens.
    • Tangible book value per share of $53.56, up 4%. CET 1 ratio of 12.1%.
    • Conference call at 8:30 ET
    • Presentation slides
    • Previously: JPMorgan Chase beats by $0.07, beats on revenue (Jan. 12)
    • JPM +0.15% premarket

    Noisy' fourth quarter for banks, but bright 2018 ahead, say analysts

    Wall Street Bank With Three Felonies Sends Employee To Head SEC Trading Division

    Nonetheless, I'm up to 10 short /TF at 1,584.32 and down about $4K at the moment (1,592) and will keep shorting until we're over 1,600 (and 6,750 on /NQ).  Taking 0.02 and running on /RB as it makes up for my /TF losses.

    • U.S. stock index futures looked poised for fresh record highs as the unofficial start to earnings season kicks off this morning. Dow +0.4%. S&P +0.2%. Nasdaq +0.1%.
    • Overseas, the euro jumped to a three-year peak against the dollar after German party leaders reached a breakthrough in talks to form a "grand coalition."
    • Oil is down 0.6% at $63.43/bbl, gold is 0.7% higher at $1332/ounce and the 10-year Treasury yield is up 2 bps to 2.55%.

    GRE/Palotay – Congrats!  It's fun to be able to say you participated in the great crypto bubble of 2017 (might be over already).  I guess you were the big seller that was keeping it down yesterday?  

    Greg still has our order out to sell 10% at around 0.003 – that's what topped it earlier in the week.

    Bitcoin still holding $14,000 so pretty good considering all the bad press this week.

    Bitcoin Set for Worst Weekly Slide Since 2015 as Scrutiny Rises

    Fed's Dudley Is Worried About "Elevated Asset Prices", Sees "Real Risk" Of US Overheating, Hard Landing


    • The euro jumped to a three-year peak against the dollar overnight after German party leaders reached a breakthrough in talks to form a "grand coalition" following months of political uncertainty in the eurozone's largest economy.
    • The ECB added to the bullishness on Thursday by signaling in minutes from its mid-December meeting that it is planning to slow its stimulus program more quickly than investors had expected.
    • Euro +0.8% to $1.2123.

    S&P cuts Brazil rating deeper into junk

    • Citing the government's failure to pass key fiscal reforms, Standard & Poor's has downgradedBrazil's credit rating deeper into junk territory, to BB-, or three notches below investment grade.
    • It's a slap in the face for the administration of President Michel Temer, which has been touting Brazil's progress in recovering from its worst recession on record.
    • The stock market has also been hitting new records.
    • While negotiators have officially set a March deadline to rewrite NAFTA, President Trump told the WSJ that he was "a little flexible," taking into account Mexico's July 1 presidential and legislative elections.
    • "They can pay for it indirectly through NAFTA… We make a good deal on NAFTA, and, say, I'm going to take a small percentage of that money and it's going toward the wall. Guess what? Mexico's paying."

    Why a U.S. move to exit NAFTA is not the end of the free-trade deal — or free trade

    The Spark Behind Iran’s Unrest: Millions of Defrauded InvestorsThe collapse of investment firms offering outlandish returns fueled the protests that grew into the biggest challenge to the regime since 2009.

    Gundlach: "I Should Change My Firm's Name To DoubleBlockchain"

    Brent crude hits $70 for first time since 2014

    • Brent crude oil breaks above $70/bbl for the first time since 2014 before settling at $69.26/bbl, extending the market’s strong start to the year, underpinned by the effectiveness of OPEC output cuts and geopolitical risk in producing countries such as Iran.
    • In the U.S., WTI crude climbed to $63.80/bbl after trading as high as $64.77, as domestic stockpiles posted their eighth straight week of declines, the longest stretch during winter in a decade.
    • Noting that U.S. crude inventories are at their lowest level since August 2015, PVM Oil Associates analyst Tamas Varga says “OPEC is edging ever closer to its desired target of reducing OECD industrial stocks to the five-year average.”
    • Gary Ross, head of oil at S&P Global Platts Analytics, who forecast $70 Brent oil last year, sees potential for the market to keep rising as he thinks many are still overestimating the size of remaining inventories.
    • Eugen Weinberg, head of commodities research at Commerzbank. thinks the oil market is overheating: “$70 is too much. It is not completely unexpected, given the price momentum. But there will be a reaction in U.S. shale, and OPEC’s strategy will backfire massively.”

    California Approves $41 Million for Electric Vehicle Charging

    • General Motors (NYSE:GM) has filed for government approval to deploy the "first production-ready vehicle designed from the start without a steering wheel, pedals or other unnecessary manual controls."
    • The Cruise AV (Autonomous Vehicle) – a rebranded version of Chevrolet Bolt EV – will be ready to hit the road by 2019, assuming GM receives clearance from the NHTSA and the individual states in which it wants to run the robo-taxis.

    AMD drops after acknowledging vulnerability to Spectre flaw

    • AMD (NASDAQ:AMD) shares drop following a Yahoo Finance interview with CEO Lisa Su, who acknowledges again that the company’s chips were affected by the Spectre security flaw.
    • Key quote: “To clarify, for Meltdown, AMD is not susceptible. We don’t have a susceptibility to that variant. But with Spectre, AMD is susceptible.”
    • As Google outlined in a blog post earlier today, the Spectre flaw comes in two variants Google called Variant 1 and Variant 2 while Meltdown was Variant 3. Variant 2 was the hardest problem to resolve.
    • AMD shares are down 3.6% aftermarket.

    PC Shipments Rise for the First Holiday Quarter in Six YearsDemand for personal-computers rose over the holiday season for the first time in six years, buoyed by commercial upgrades and pockets of improving consumer demand. Although shipments declined slightly overall in 2017, it still marked the most stable year the market has seen since 2011, IDC said in a report Thursday.

    Facebook(FB) Introducing Sweeping Changes: Will Prioritze Only "Trustworthy" News

    • Checking in with Super Bowl advertising: NBC (CMCSA +3.1%) is almost sold out of its inventory for this year.
    • It has a handful of spots available for the Feb. 4 championship game, it says, and is charging more than $5M for the average 30-second spot.
    • It's expecting ad sales revenue to exceed $900M for the Winter Olympics (also on the way next month) and should hit $1.4B from the Super Bowl and Olympics combined, according to NBC Sports' Dan Lovinger.

  68. Phil,

    Still long /DX? Why is it going down?

  69. It's down because the Euro is popping (see news above), so not worried.

  70. Thanks Dclark