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Fantastic Friday – Greetings from the Top to all you S-Hole Countries!

What a great start to the year!

The S&P 500 is up from 2,680 to 2,770 so 90 points is 3.3% and our Long-Term Portfolio is already up 4.4% or $21,755 in 8 days of trading.  As you can see, we still have all of our cash on the sidelines as the well-hedged positions we picked up have been cash-positive for us so far – we haven't been confident enough to take big risks yet.  Our $100,000 Options Opportunity Portfolio, which you can follow at Seeking Alpha, is only up 3.3% because we're down $900 on our TZA hedge while, in the $500,000 LTP, CASH!!! is still our primary hedge against a market collapse.  

Our goal is not to "beat" the market on the way up, our goal is to kick the market's ass on the way down or if the market is flat.  By capturing all the good stuff and avoiding all the bad stuff, we can consistently outperform the market year after year without suffering the portflio-killing pullbacks that plague more aggressive traders.  While it's fun to brag about making outsized returns during these market bubbles – it's more fun to "Get Rich Slowly" and retire with plenty of money, isn't it?  

The key to building wealthy over time is CONSISTENCY.  Warren Buffett's Berkshire Hathaway has "only" averaged 16% returns but he's been doing it for 50 years, allowing his initial investors to make 10,000 x returns on their invesments.  

But that's not the way it starts.  It starts in year one with a 16% return and $100,000 becomes $116,000 and then $116,000 becomes $134,000 which becomes $156,000 in year 3 and then $181,000 after 4 years and finally, in year 5, you get to say you've doubled up.  While it may seem like you'll never get to $1Bn in 50 years at that pace – the math doesn't lie – you just need to learn how to CONSISTENTLY make good returns.  

And, of course, anyone who says they have a better system is LYING to you because, after 50 years of measuring, no investor on this planet is richer than Warren Buffett so it's Warren Buffett's model we pursue, picking up good stocks at good prices and building our portfolios over time.  Our only modification to Buffett's system is to use stock options both to leverage and to hedge our portfolios, which is our own: "Secret to Consistent 20-40% Annual Returns."

For example:  Last Wednesday we published our 2018 Watch List, which already has 33 trade ideas to kick-start the year, half of which ened up in the Options Opportunity Portfolio already.  The featured trade idea was for General Electric (GE), which I called the best buy in the market and Buffett finally agreed with me on Wednesday

Our trade idea the week before was simply to sell the 2020 $18 puts for $2.40 which would give us that "right price" entry on GE at net $15.60 if it were assigned to us but, more likely, GE will stay over $18 and the short puts will expire worthless, paying us $2.40 for NOT owning the stock.  In the Options Opportunity Portfolio, we also added a bull call spread and our trade came out like this:

As you can see, our net cash outlay on the trade was just $700 and the ordinary margin requirement for 10 short $20 puts (we went more aggressive on the final trade) is $2,005 so $2,750 cash and margin committed to the trade and, already, less than a week later, we're up $1,095 – a 40% return on our cash and margin and a 156% return on cash.  And it's still good for a new trade as the net $1,795 current price of the spread will return $14,000 for a gain of $12,205 (680%) if GE is over $25 in Jan 2020.

You can see why we don't worry about whether or not we can beat the market.  This one trade in our OOP, using 1.5% of the ordinary margin (2x) and with the very low risk of GE dropping considerably from here will, by itself, create a 15% gain in our portfolio over 2 years.  You don't have to risk a lot to make a lot – that's what we try to teach our Members.  And it only takes a few good trades like this to give our entire portfolio Berkshire-like returns so PATIENCE is a winning strategy here.  Earnings season will give us endless opportunities to pick up good companies at low prices, Intel (INTC) springs to mind, as they are pulling back due to their recent chip issues, which everyone will have forgotten about by next quarter.  

This morning, Canadian Solar (CSIQ) is down 2.5% as they cut Q4 guidance but, because we understand the nature of the Solar Industry, we know that very small shifts in schedules on large solar installations can cause these issues, which have nothing to do with the overall health of the company.  That is exactly the sort of OPPORTUNITY we look for and CSIQ happens to be one of the trades we cashed out of in early December so now is a chance to get back in at $17 or less, hopefully $16 and probably we can sell the 2020 $15 puts for $2.50 or better so all we'll be doing is promising to buy CSIQ at net $12.50 and, if it dooesn't go that low – then we'll just keep the $2.50 for doing nothing.  Isn't investing fun?  

We're still expecting a 10% market correction and we discussed a Banking Ultra-Short (FAZ) hedge in yesterday's report as well as Monday and, last Friday, our morning Report had a the Russell Ultra-Short (TZA) hedge that we're using in the Options Opportunity Portfolio which will pay us $20,000 if all goes well.  We'd almost rather the market goes lower than higher at this point!  

And that's about the size of it.  I'd say they short story is that we're defensively buying stocks to keep our 90% CASH!!! portfolios on par with the market gains while keeping PLENTY of dry powder on the sidelines for reall bargains as they pop up.  Meanwhile, we're still amusing ourselves playing the Futures while we wait (see Wednesday's Live Trading Webinar).   This morning I put out a note to short the Russell (/TF) at 1,592 and the Nasdaq (/NQ) at 6,750 while taking our profits (again) in Gasoline (/RB) shorts from $1.85.  

Have a great weekend, 

- Phil


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  1. Markets nowhere near a sh!thole right now!

  2. Trump clearly has lost it:

    The guy rambles all over the place now. His latest claim is that he has a good relationship with Kim Jong Un! Where does that come from? Aren't the serious people around him really worried right this minute. Time to invoke the 25th now.

    BTW Albo, I notice that Pence tacitly agrees with Trump on Haiti and Africa since he has not come out to denounce what he said yesterday. Or will he courageously wait to see what the polls say in 3 days to come out with some lame statement. When will we all wake up from the ongoing nightmare?

  3. Good Morning.

  4. Quote of the day:

    "There is a big difference between being right about something and being right about when something will happen." (Fred Wilson)

  5. Pat_swap, Dclark,

    I am pretty sure that MrM is short form for one of the members also known as Mr Moccha.

  6. Lotter:

    Yes, that is correct, but I think the stock Pharmacy was referring to was ARNA.

  7. Auto-correct!  Not Pharmacy!  PHARM

  8. Okay my U.S. pals … I got a bridge to sell to POTUS (bad deal on Grosvenor sq btw) and I hear the F-52 fighter jet is the one to get for any aspiring super power.  If its good enough for Norway … 

    Real shame Donny cannot make the London trip.  We were really looking forward to saying hi :-)

  9. Good morning!  

    This girl has only been alive for 30,000 hours – what's your excuse?  

    Image may contain: text

    Image may contain: one or more people

    Yep, they are just like you and me…

    FB caused a pullback but we'll see how things go.

    • Facebook (NASDAQ:FB) is down a hefty 5.6% premarket with JPMorgan taking a dimmer view of what may be a sweeping set of changes to the social network's news feed.
    • That could mean well over $20B off the company's market cap today.
    • Emphasizing the personal over posts from businesses could easily mean fewer ads in the feeds, though CEO Mark Zuckerberg deliberately didn't mention ads in explaining changes, analyst Doug Anmuth says.
    • He has an Overweight rating and $230 price target (still 22.5% upside implied).
    • Meanwhile, Pivotal's Brian Wieser speculates that what it saw as a burgeoning decline in Nielsen's digital consumption rates could have come from the concerns reflected by Zuckerberg's post.
    • Zuckerberg admitted that the changes might mean some engagement measures (including time on Facebook) could go down in the short term.
    • And Stifel has downgraded shares to Hold, departing from a few dozen analysts who have the shares at Buy.

    London/Malsg – Yeah, he chickened out.  

  10. First look at the new OOP, let me know if I missed anything.  NAK calls didn't fill and SAN was a bust – couldn't get the prices so it's a no-trade.

    And here's the LTP:

    We've hit 1/2 the Watch List already and now I'm going to want to concentrate on post-earnings bargain-hunting.  

    No plays yet for the STP or the Butterfly – we'll set up the Butterfly next week but no hurry with this crappy VIX.  

  11. Target and Maceys off to a good start today!

  12. You know things are crazy when:

    Notice the main difference between the OOP and the LTP is the hedge and the hedge, as it's supposed to, is costing us about 25% of our profits.  

    In the LTP, we still have so much cash that that's essentially our hedge – the willingness to DD and adjust any position as we have ample buying power to do so while, in the OOP, we might not be as comfortable pressing our positions in a sharp correction (are these 15 stocks going to be our whole portfolio if we are forced to DD on all of them?).  

    • "Aflac (NYSE:AFL) has exploited workers, manipulated its accounting, and deceived shareholders and customers, according to nine former employees," reports David Dayen at The Intercept.
    • The story is based on interviews with current and former employees, as well as three lawsuits, says Doyen, with the lawsuits already leading to a number of regulatory investigations. Management and the board, says Doyen, have known about the issues for more than a year, but have disclosed little-to-nothing to shareholders.
    • Shares down 3.15% in active early trading.
    • December Consumer Price Index+0.1% in-line with consensus, +0.4% prior.
    • Core CPI +0.3% vs. +0.2% expected, +0.1% prior.
    • Core CPI +1.8% Y/Y vs. +1.7% expected, +1.7% prior.
    • Core CPI rose 0.3% in December vs 0.2% expected. On a year-over-year basis, core CPI is up 1.8% vs. 1.7% in November.
    • The news has helped send yields back on the rise, with the two-year Treasury yield topping 2% for the first time since September 2008. One year ago at this time, it was just north of 1% – there's been three rate hikes since.
    • Short term rate markets a short time ago had been pricing in just two rate hikes in 2018. Following some very hawkish comments from outgoing FBRNY President Dudley yesterday and this morning's CPI, they may want to skip pricing in three, and just go to four.
    • December Retail Sales+0.4% M/M vs. +0.5% expected. The reading for October was revised up to a 0.9% gain.
    • Ex-autos: +0.4% M/M vs. +0.4% expected, +0.8% prior
    • Control group +0.3% M/M vs. +0.3% expected.
    • Retail sales tracked higher in December, with nine out of twelve categories posted positive growth. A slight miss from the consensus economist estimate was probably offset by the upward revision in the tally for November retail sales.
    • On a year-over-year comparison, the categories showing the biggest pop in December were furniture/home furnishings (+9.9%), building materials/garden equipment (+9.9%) and nonstore retailers (+12.7%).
    • December marked the fourth consecutive month of positive retail sales.
    • The month saw a good showing for restaurants, with sales up 0.7% M/M and 4.2% Y/Y. Department store sales lagged (-1.1% M/M, +0.5% Y/Y) during the crucial holiday month.
    • Q4 net income of $6.2B or $1.16 per share vs. $5.3B and $0.96 a year ago. This year's quarter, however, was boosted by $3.35B or $0.67 per share after-tax from the tax bill, as well as an $848M or $0.11 per share pretax gain from the sale of the Wells Fargo Insurance. Offsetting was a $3.25B or $0.59 per share pretax litigation charge. Adding it all up sounds like a miss vs. non-GAAP estimates for $1.06. Revenue of $22.1B was light by $240M as well.
    • Net interest margin of 2.84% slips two basis points from Q3, and three from a year ago. The decline is attributable to one-time effects from the tax law.
    • As for taxes, the bank's full-year 2017 tax rate was 18.1%, and it's expected to be 19% in 2018.
    • Loan growth looks like it's returned, with year-end total loans of $956.8B down $11B from a year ago, but up $5B from Q3 (first quarterly rise this year).
    • Net loan charge-offs of $751M or 0.31% of all loans vs. $717M and 0.30% in Q3. Total NPAs of $647M vs. $512M.
    • Checking retail banking, average deposits of $738.1B were up about $3.5B for the quarter and about $28B for the year. Primary consumer checking account customers edged higher on a Y/Y basis. Debit card POS purchase volume up 6% Y/Y; credit card purchase volume also up 6%. Home lending originations of $53B fell $6B during quarter.
    • Conference call at 10 ET
    • Quarterly supplement
    • WFC -1.8% premarket
    • JPMorgan (NYSE:JPM) in Q4 booked a $143M mark-to-market loss in its equities unit on a margin loan to an unidentified customer. That loss turned what would have been a 12% Y/Y rise in equities revenue to a flat quarter.
    • Bloomberg is reporting that client as troubled South African retailer Steinhoff, whose stock plunged in early December after disclosing accounting issues.
    • Concerned more with underlying trends in the bank's business, Hedgeye bull Josh Steiner is liking what he sees, noting overall revenue growth was up Q4 vs. Q3 despite a plunge in FICC revenue. Loan growth was higher as well, as was NIM, which rose to 2.42% vs. 2.37% a quarter ago, and 2.22% a year ago.
    • Shares are currently flat in active premarket trading.
    • Previously: JPMorgan tops estimates even as trading revenue tumbles (Jan. 12)

    • Vail Resorts (NYSE:MTN) updates on ski season metrics.
    • The company reports season-to-date total lift ticket revenue at North American mountain resorts was up 1.6% through Jan. 7.
    • Season-to-date ski school revenue was down 4.5% and dining revenue was down 8.7% compared to the year-ago period.
    • Retail/rental revenue for North American resort store locations was down 11.5% Y/Y.
    • CEO update: "Given the truly historic low snowfall across our western U.S. resorts, we are pleased with our results to date, which reflect the stability provided by our season pass program and the investments we have made in our resorts. The 2017/2018 ski season had a very challenging start across our western U.S. resorts due to poor conditions in the early season that continued through the holiday period, reducing both local and destination visitation and spending."
    • Snowfall season to date in Vail, Beaver Creek and Park City was the lowest level recorded in over 30 years.
    • Source: Press Release

    Alaska Air Group updates December and FY2017 traffic

    • Alaska Air Group (NYSE:ALK) reports revenue passenger miles up 9.2% to 4.505B in December.
    • Capacity rose 10.3% to 5.475B available seat miles.
    • Load factor slipped 80 bps to 82.3% for the month, where as it rose 20 bps to 84.3% for FY2017.
    • Press release

    Twitter +2.9% as BTIG sees takeout coming, raises target

    • Twitter (NYSE:TWTR) is up 2.9% premarket with BTIG eyeing it as a takeout target, saying it's "too valuable to remain independent."
    • Analyst Richard Greenfield has boosted his price target to $30 from $25, matching a Street high, and says the company's in the "early stages of a multi-year turnaround."
    • The company could grow revenue in the mid-high teens in 2018 and EBITDA could grow over 20% vs. competing single-digit estimates. (h/t Bloomberg)
    • Shares have risen 42% over the past 12 months, and hit a 52-week high on Dec. 21.

  13. Phil

     Did you/are going to add FTR

     Frontier Communications to the new portfolios?


  14. qcmike//  Here is Phil's posting on Jan. 3rd 2018.  Hope this helps.(

    FTR (1/3/18) – We love them as a turnaround story but no one else seems to.  Their heavy debt load scares people away but we like them and who doesn't love a 35% (no kidding) dividend of $2.40 on a $7.27 stock?  We assume they will cut it in half but that's still huge and maybe 1/4 but still a nice 8.5% dividend if they do that so why would we not want to have some cash in this stock – especially when we can discount it further with options?

    We already added this on 1/2 as such:

    Buy 2,500 shares of FTR for $7.16 ($17,900) 

    Sell 25 2020 $8 calls for $1.25 ($3,125) 

    Sell 25 2020 $8 puts for $4 ($10,000) 

    Here we're spending just $4,775 in cash for a stock that will pay us $6,000 a year in dividends if they don't cut it.  Getting called away at $8 is $20,000 so another $15,225 (318%) in upside potential if they don't go lower but really, on this play, we'd rather they go lower so we can DD at a lower price than "just" make $21,225 at $8+ in 2020 as this is using barely any of our allocation.

    For the OOP, I want to do the same trade but with 1,500 shares and 15 short puts and calls.

    As a new trade today, I also like this set-up (either one but not both, of course)

    Buy 5,000 shares of FTR for $7.27 ($36,350) 

    Sell 50 2020 $8 calls for $1.25 ($6,250) 

    Sell 50 2002 $5 puts for $2 ($10,000) 

    We're spending just net $20,100 so just over $4/share net, which makes the $2.40 dividend 60% of our cash outlay!  If they keep the dividend, we'll be collecting $3,000 per quarter while we wait to see if we get called away at $8 for a 100% gain ($20,100) 2 years from now.  If FTR goes lower, we'll end up with 10,000 shares at about $4.50 but then we'll sell more calls for $1+ and drop our net to $3.50, which is half of the current price and still comfortably within an allocation block.  


  15. Steve Bannon just signaled that he’s cutting a deal with Robert Mueller

  16. rookie 


    FRT  Thanks

  17. Not sure what's up with GME. They reported  same store sales up 13% but stock is down 10% today.

  18. T. Boone Pickens Calls It Quits on Energy Trading

  19. Phil – opinion on these for some IRA cash?  And are the negative numbers in the premium or discount to NAV those that are discounted?

  20. VTR dropping over 2% today why?

  21. FTR/QC – It's in both of them (see above).

    Thanks Rookie.

    GME/Jet – It's stupid, they are taking an impairment charge of about $400M because T changed the compensation structure on IPhones (they have a partnership) so they are bumping revenue recognition back a bit.  I will certainly want to add them once they are done falling.

    IRA/Tangled – Those negative ones are discounted to their NAV but, of course, who knows if that math is right.  Those are all good funds though I don't think I trust "global opportunities" but check out the top 10 holdings of each and, if you agree with all 10 – it's a good fund for you.

    I was surprised how easy it was for people to qualify their IRA for our hedge fund – that's something you might want to look into as well.  Not nec. our fund but as a concept.  So far, we're performing about in-line with the LTP.

  22. Just WOW!

    Friggin' RUT came just short of getting me out even so now I'm down $5K as I still have 10 short.

  23. On the bright side, the LTP gained 0.8% ($4,000) since I printed it above so, as with any hedge, I'm giving back 1/4 of my gains on the /TF shorts.  

  24. Sold most of my KODK position at average price of about 10.

    Starting to rebuild a position.  Sold some July $5 puts for $1.34.

  25. Phil/TF- holding the short over the weekend?

  26. KODK/Albo – LOL, that's the way to play it!  

    Well the good news is my average on /TF shorts is now 1,590, the bad news is it's at 1,600 and I have 16 shorts for an $8K loss.  I can't, in good conscience, take a loss on this one – it's too silly.

    Still, everyone is upgrading and there's M&A rumors and BlockChain announcements and such – very hard market to short.

    • November business inventories: +0.4% at $1,895.4B vs. +0.3% consensus and -0.1% prior.
    • Sales +7.9% to $1,420.1B (Y/Y).
    • Inventory/Sales ratio of 1.33 vs. 1.40 (Y/Y).
    • The National Retail Federation reports U.S. retail holiday sales increased 5.5% Y/Y to $692B to top by a wide margin the forecast for a 3.6% to 4.0% gain.
    • Online and other nonstore sales were up 11.5% to $138.4B to account for 20% of the tally.
    • Holiday sales by category (Y/Y): Building materials and supplies stores +8.1%, furniture and home furnishings stores +7.5%, electronics/appliance stores +6.7%, general merchandise stores +4.3%, clothing and accessories stores +2.7%, health and personal care stores +2.2%, sporting goods stores -0.5%.
    • Restaurants, automobile dealers and gasoline stations weren't included in the total referenced by the NRF.
    • National Retail Federation press release
    • Morgan Stanley crunches some numbers on the impact of the cut in the U.S. corporate tax rate to 21% in the U.S. and a minimum 10% international rate.
    • Analyst Dara Mohsenian forecasts a +10% EPS benefit average across the food/beverage and household products industries (ETFs to watch: PBJFTXGIYK).
    • Mohsenian and team think the best positioned names in the sector are e.l.f. Beauty (NYSE:ELF) +34% EPS growth upside, Blue Buffalo Pet Products (NASDAQ:BUFF) at +20%, Estee Lauder (NYSE:EL) at +16%, Dr Pepper Snapple (NYSE:DPS) at +14% and Monster Beverage (NASDAQ:MNST) at +14%.
    • Motorola Solutions (NYSE:MSI) has tagged a new 10-year high today, currently up 3.5% after an upgrade at Deutsche Bank.
    • The firm has boosted its rating to Buy and set a price target of $110, implying near-14% upside form tcurrent pricing.
    • That means Buy sentiment is held by nearly a dozen analysts vs. a handful at Hold.
    • Shares have gained 9.3% over the past six months and 17.9% over the past 12 months.
    • FuelCell Energy (FCEL -1%) is upgraded to Buy from Neutral with a $3.50 price target, raised from $2.50, at B. Riley FBR a day after announcing better than expected Q4 results.
    • The firm believes FCEL has turned a corner after a difficult H1 2017 with an improving revenue mix, margin profile and record backlog, and thinks the company should be able to nearly triple its operating portfolio in 2018 to a portfolio of 30-plus MW from 11.2 MW.
    • Riley also thinks FCEL should be able to garner another multi-MW equipment sale and long-term service agreement with a second Korean power producer.
    • The Nordstrom family is expected to rekindle efforts to take the department store chain private, sources tell CNBC.
    • The family group holds a 31.2% block of shares.
    • Some of the same financing hurdles that got in the way on a takeover deal last year are expected to crop up again.
    • Shares of Nordtrom (NYSE:JWN) are up 3.25% to $51.72.
    • Evercore issues a timely upgrade on Coca-Cola (KO +0.2%) as it sees most of the "bad news" baked into the beverage company's share price.
    • Analyst Robert Ottenstein expects "multi-year outperformance" out of Coca-Cola, but posts low odds for an Anheuser-Busch InBev takeover.
    • Evercore's rating on Coca-Cola goes to Outperform from In-line and the new price target is $55.

    • Baidu (NASDAQ:BIDUlaunches Baidu Trust, a blockchain as a service (BaaS) open platform.
    • Trust uses Baidu’s tech to conduct and trace transactions through use cases ranging from digital currency and billing to insurance management financial auditing.
    • The platform touts “openness” and “customizability” with registration open to the public and blockchain nodes available to customize and deploy.
    • Competition: Tencent launched its enterprise-grade BaaS platform last April, but the platform remains in closed beta.  
    • Baidu shares are up 1.2%
    • Previously: Venture capital deals of the week (Jan. 6)
    • GameStop (GME -9.3%) slides after reporting on holiday sales.
    • The company says total global sales for the holiday period increased 10.6% to $2.77B.
    • Comparable store sales increased 11.8%, led by a 13.7% jump in the U.S. Strong demand for the Nintendo Switch and Xbox One X led the way.
    • Worldwide omnichannel sales increased 21.5% Y/Y..
    • New hardware sales increased 38.3%, while sales of new video game software increased 7.3%.
    • GameStop says it now sees full-year EPS of $3.10 to $3.40 vs. $3.34 consensus.
    • GameStop also disclosed that it expects to record non-cash impairment charges in the range of $350M to $400M, primarily related to its Technology Brands business.
    • Source: Press Release

    Iridium sticks up for SpaceX, blames Northrop in satellite loss

    • In the mysterious disappearance of a classified military satellite, SpaceX (Private:SPACE) is getting a defense from one of its biggest commercial satellite customers.
    • Iridium (IRDM +1.4%) CEO Matt Desch says the loss of the satellite (code-named Zuma) is likely the fault of defense contractor Northrop Grumman (NOC +1.2%).
    • "This is a typical industry smear job on the 'upstart' trying to disrupt the launch industry," he tweeted. "SpaceX didn't have a failure, Northrop Grumman did."
    • He told Bloomberg that while he didn't know for sure what caused the disappearance of the satellite, he speculated a dispenser failed to release it — and that would have been Northrop's responsibility.
    • Previously: SpaceX and Northrop Grumman at center of space mystery (Jan. 09 2018)
    • New concerns have emerged over NASA's plan to routinely ferry astronauts into orbit using private spacecraft, as a report from the agency's top outside safety panel raises red flags about persistent dangers including unconventional rocket fuel systems and anticipated bombardment of spacecraft by tiny meteor fragments.
    • Boeing (BA +1.6%) and SpaceX are developing separate fleets of capsules but neither is likely to meet longstanding safety standards, despite years of testing, re-engineering and high-level government concern about micrometeoroids, according to the report.
    • Boeing has told NASA it expects to launch its first crewed test flight in November, although the date could slip to 2019; shortly before the safety report was issued, NASA revealed that SpaceX’s initial manned flight had been pushed back to December from this coming summer.

  27. Weekend/Ravi – Well I won't hold 16  /TF short but 8 or 5 if we don't pull back.  Ideally though, I'd like to get back to 4 short even at 1,590 as that was my intention on the way up.

  28. Trump just made a huge deal out of proclaiming MLK day a holiday.  I don't understand how they let him do stuff like this – he seems like a total idiot, it's been a federal holiday since 1983 (Reagan).  And then, after saying random stuff for 5 mins he goes "and now, here's our black guy (Ben Carson) to talk about Dr King" – as if he's not qualified simply because he's white.  He should  have asked Bernie Sanders, who actually marched with Dr King.

    Image result for martin luther king jr bernie sanders

    And wow, do they time these things to push new market highs?

    • Restaurant same-store sales increased 0.3% Y/Y in December, according to data from Black Box Intelligence.
    • Comparable traffic was only down 1.8% during the month to mark the second best month in almost two years. Guest spending rose by 2.1% to slown down a bit from the pace over the prior two months.
    • For all of 2017, restaurant same-store sales were down 1.1% to match the same decline as in 2016. Traffic fell off 3.2% in 2017
    • The BOJ previously forecast fiscal year (starting in April) growth of 1.4%, but is seen raising that by 10 to 20 basis points at its Jan. 22-23 meeting, according to the report.
    • The news has helped send dollar/yen a bit lower (yen stronger), now flat on the session at ¥111.18.
    • U.S. Treasury Secretary Steven Mnuchin announced that the recent tax reform will lead to over $1T in growth dismissing the claim that the tax cuts will increase U.S. deficits by $1.1T to $1.5T over 10 years.
    • However, the treasury was talking to congress for additional funding for implementation of the tax plan as funding is expiring on Jan. 19.
    • Source:




  29. Phil / GNC – Any idea on shy GNC is moving up?  I haven't found any news on this

  30. phil, how would you short TSLA here, or would you?

  31. phil, btw, good call on /NG.  $3.20  Goal!

  32. From Twitter: It all adds up: – Sam's Club laid off approx 11,025 employees today. If they are full-time employees making $11/ hour this = $252m – Walmart to give an average bonus of a $190 to each of their 1.4m US employees. This equates to $266m Basically the layoffs pay for the Bonuses :(

  33. Phil, StJL, Mal – "When will we all wake up from the ongoing nightmare?"

    And now your PSW exclusive for the weekend…. Hush, hush my sweet Charlotte, and let the Nattering One tell you a little bedtime story… AG Sessions (John Mitchell) recused himself to avoid conflict and potential prosecution.  

    Flynn (Kissinger), Priebus (H.R. Jr), McGahn (John Dean) and Bannon (H.R. Haldeman) have flipped, and since Comey (Archibald Cox) was fired (don't worry his notes and the Steele dossier are copious), are telling all to Mueller (Leon Jaworski). 

    Meanwhile, there is a much larger problem for POTUS (Tricky Dick Nixon) in the form of Simpson (Woodward) and Fritsch's (Bernstein) enterprising Fusion GPS Senate judiciary committee hearing testimony. The House Intelligence committee has subpoenaed said information, including Trump's financial transactions with his financier Deutsche Bank (Robert Vesco). 

    In their REFUSAL to release said "tapes and transcripts" to the public, Republicans such as Grassely – Iowa (Sam Irwin) and Graham – South Cackleacky (Howard Baker) have so far managed to shift focus and contain that information, while attempting to impugn those testifying.  One can read the opines of the impugned in this NY Times Op-Ed

    Worry not, that damning testimony and evidence (Rosemary's Oval Office Tapes) will eventually be released to the public through due process subpoena.  At which point, campaign manager Paul Manafort (Murray Chotiner), Jared Kushner (Edward Cox) and K.T. McFarland (Alexander Haig), will all come back in from the cold.

    To date, the developing pattern of All The President's Men and the Republican party, is one that clearly demonstrates an endeavor to obstruct justice, by any means and at all costs, including the future of our nation and it's democratic institutions. There is a word for this kind of activity, treason.

    At the end of the day, this is not going to be a pretty bedtime story for Bonzo T. Rump or the Elephants. However much like this bedtime story, it will put this POTUS and a few others, to bed and out of our collective misery.  So to finally answer your question above…

    When asked "how do we get out of here?, we're in a hurry" by those about to be interned in hell, as the Crypt Keeper quipped, "all in good time, all in good time, it can wait, sit all of you".

    One can never say that history does not repeat itself, or that some of us, much like Phil Connors in Groundhog Day, keep reliving it over, and over and over again.  All of the above brings this back to mind. The Crypt Keeper, waxing nostalgic and Out.

  34. Phil


    Are these ETF’s the same or is one better?


    United States Natural Gas UNG

     ProShares Ultra Bloomberg Natural Gas BOIL


  35. GNC/Batman – Probably because it's a stock.  They all seem to be moving up, don't they?  This is what happens with value stocks, another value investor notices them and begins accumulating.  They don't need a reason when the numbers are right.

    TSLA/Lunar – Well, that's always tricky.  Earnings are not until later Feb and they are well below the highs so I'm still waiting for something to happen to send them back to $360 or more, where I feel better about shorting them.  This is, very simply, the middle of the 1-year channel – so it's the dumbest place to short (or go long):

    /NG/Lunar – Yep, once in a while they work out.

    WMT/1020 – Smart.   And they scored major points with the Prez by pretending it was thanks to the tax breaks.

    Crypt keeper/Naybob – Ah, must have been your younger days..

    Image result for crypt keeper animated gif

    UNG/QC – UNG is the one we watch, I don't know about BOIL though the options are much thinner-traded, which counts them out right there.  

  36. OK, so now I'm only down $2,375 on /TF at 1,593 with 16 short so I'm going to stop 6 out if we're back over 1,593 as it's a nice catch-up and leaves me more flexible.  

    Lined up with 25,750, 2,785 and 6,765 so if all of them are below, I'm inclined to stay short but if 2 break over – time to lighten up.

  37. The bonds will trade tight in HY after the initial shakeout, but spreads will widen.  It will be a welcome addition  to the index given what's available in the sector and a big part of it. The two notch downgrade and liquidity rating of 3 out  of 4 is harsh and reflects the analyst's lack of experience (amazing they would assign someone so junior and green to this company, but that's another conversation).

     Looks like I won't get the pullback I was hoping for in the stock, but it should drop if the rest of the market does so maybe there will be another opportunity.

    ~~Moody's Investors Service ("Moody's") downgraded the senior unsecured ratings of Teva Pharmaceutical Industries, Ltd ("Teva") and its subsidiaries to Ba2 from Baa3. Moody's also assigned a Ba2 Corporate Family Rating, Ba2-PD Probability of Default Rating, and SGL-3 Speculative Grade Liquidity Rating. The rating outlook is stable. This action concludes the rating review initiated on December 14, 2017.

    * "The downgrade of Teva's ratings to speculative grade reflects the challenge
      of managing its significant debt burden while facing a prolonged period of
      earnings erosion," commented Morris Borenstein, Moody's Assistant Vice
      President. "While Teva's cost restructuring program will help to partially
      offset declines, execution risk is high. In addition, we believe earnings
      declines from Copaxone and its US generics business will be severe, and that
      meaningful deleveraging to under 4 times gross debt/EBITDA will take several
      years to achieve," added Borenstein.
    * Teva's Ba2 Corporate Family Rating reflects its significant scale in both
      generic and branded drugs, its global diversity, and its position as the
      world's largest generic drug company. Teva has the largest generic pipeline
      in the industry, including first-to-file opportunities. This pipeline,
      together with Teva's branded pipeline, will support revenue growth over the
      long term. Still, Moody's expects base earnings and cash flow to severely
      contract over the next two years due to headwinds in its US generics segment
      and generic competition on its largest earnings driver, Copaxone.
    * Teva's credit profile is constrained by high financial leverage, which
      Moody's does not expect will fall below 4 times gross debt/EBITDA until after
      2019. The company has limited financial flexibility and is facing significant
      debt maturities.
    * Teva is taking significant actions to reduce its cost base by $3 billion over
      the next two years, which will shore up profitability and support
      deleveraging. Moody's expects that Teva will use the majority of its free
      cash flow to reduce debt. It is critical that the cost restructuring plan
      boost cash generation enough to keep pace with maturities and to ultimately
      reduce leverage.
    * While Moody's believes that Teva's cost base will come down, the timing
      through 2019 is uncertain. Moody's views Teva's cost restructuring plan and
      reorganization as aggressive and it raises the risk for business disruptions.
      At the same time, potential portfolio rationalizations in the generics
      segment could harm Teva's relationships with customers.
    * Teva's SGL-3 Speculative Grade Liquidity Rating reflects an adequate
      liquidity profile. Teva has roughly $7.5 billion of debt maturing through
      2019. Beyond previously announced divestiture proceeds, Moody's projects free
      cash flow of around $2.5 billion which is insufficient to cover all of Teva's
      2018 debt maturities without moderate refinancing. Moody's does not assume
      any asset sales, although the company has used asset sales in the past to
      reduce debt. The credit agreements contain financial covenants including
      minimum interest coverage of 3.50 times and maximum net debt/EBITDA of 5.00
      times declining to 4.75 times beginning in 2019 with further step downs.
      Moody's believes that the company will likely breach the leverage covenant in
      the first quarter 2018 unless it amends its credit agreements. Teva has a
      $4.5 billion revolving credit facility expiring in 2020 that is undrawn,
      although access is limited due to covenant concerns.
    * The rating outlook is stable reflecting Moody's view that Teva will be
      focused on debt repayment. It also reflects Moody's expectation that credit
      metrics will be weak over the next 18 months before realized cost savings
      drive improvement.
    * Moody's rates all of Teva's debt Ba2, the same as its Ba2 Corporate Family
      Rating. All of Teva's debt is unsecured and unconditionally guaranteed by
      Teva Pharmaceutical Industries Limited, the parent company.
    * Teva's ratings could be upgraded if the company materially improves its
      operating performance and liquidity, and is able to more than offset price
      erosion with new product launches. Teva would also need to improve its growth
      trajectory, notably supported by successful product launches. Additionally,
      Teva would need to sustain debt/EBITDA below 4.5 times before Moody's would
      consider an upgrade.
    * The ratings could be downgraded if Teva's operating performance remains weak,
      or if it encounters operating disruptions while implementing its major cost
      restructuring plan. Ratings could also be downgraded if free cash flow
      remains weak for an extended period of time, or if Moody's expects
      debt/EBITDA to remain above 5.0 times. Failure to receive covenant relief
      under its credit agreements, or a failure to repay or refinance upcoming debt
      maturities well in advance could also lead to a downgrade.

  38. Phil,   

    Toughest lesson that I am learning right now with my VLO butterfly: Patience. 

    I have a short $87.50 March 18 call and VLO keeps going up.   

    Just worried I am going to get allocated again!.

    Hope this reverses soon after its Jan 29 earnings. 

    Oil rig count increases, relief of Iran sanctions, Gasoline inventory builds 

    - Nothing is stopping this refiner!!!.  up 60% in 6 months ….a refiner??? 

    But.. I am staying put !  For god, country, PSW and my account.! 

  39. Phil (or anybody),

    What are general tactics when you place a multi leg options trade and underlying moves away too quickly to fill a leg? Here's two examples I'm currently in:

    Example 1
        Buy 600 FTR stock @ $7.41 ($4446)
        Sell 6 FTR 2020 $8 call @ $1.30 ($780)
        Sell 6 FTR 2020 $8 put @ $4.00 ($2400)

    FTR went moonrocket before the put filled. Not too sad cause showing net profit, just not as much as if put filled.

    Example 2
        Buy 1 FAZ Feb $10 calls for $1.10 ($110)
        Sell 1 FAZ Feb $11 calls for 0.45 ($45)

    FAZ price sagged before $11 call filled so trade is underwater.


  40. Phil,

    Do you still have your /DX long? Holiding into weekend?

  41. Jabob … I want to see some anger!  

    Moody's slaps Teva with a downgrade

    Moody's has downgraded Teva Pharmaceutical Industries (TEVA +1.7%) to Ba2 from Baa3, the next rating down from the highest non-investment grade (in other words, speculative or "junk"), citing its high debt level and eroding earnings.

    Moody's Assistant VP Morris Borentein says the company's restructuring plan will certainly help, but execution risk is high considering the downward pressure on top seller Copaxone and the U.S. generics business. He believes that it will take several years for the company to delever under 4x gross debt/EBITDA.

    In November 2017, Fitch was the first to downgrade the company to junk status.

  42. FU LEARNER!!!!

  43. I can't believe TEVA isn't lower.

    Incredible recovery.

    I wasn't worried ;-)

  44. Lol !   I am in TEVA too my friend…doing very well this year so far!

  45. crypto 2018 musings and ramblings:

    On a slow Friday when everything is going up, including UNG for crying out loud ;) I thought I'd post some crypto thoughts. BA came into the year at 296 and its at 335. Uh, yeah. Something's going on.

    Biggest caveat of all time: People have been calling crypto "tulip bulb mania for idiots" going back to 2011 when bitcoin was $5. Just because they have not been right yet doesn't mean they won't be. I know no one wants to hear this, but it is the simple truth.

    In previous comments I had described a theory that the nature of money is changing for a third time in world history (from barter/gold, to fiat / real estate backed nation state currency, to crypto). Each one represents a 30X increase in total money supply. No currency system can support a change in the economy paradigm which forces the deprecation. This is because the currency mechanism is incapable of valuing the newer economic system. For example, in 1929 when the stock market crashed worldwide, gold (a peer-to-peer trust system) became incapable of handling a new manufacturing and real estate economic mechanism based around laws (centralized nation/state governments) that are better served by fiat/gov't-debt based fractional reserve currency mechanisms. Agrarian activities that accounted for 50%+ of the aggregate labor of the population became 3% (with the rise of manufacturing), and with the rise of the Knowledge Economy, the exact same thing, manufacturing dropping from 50%+ for the workforce to 20% or less.

    The nature of everything is changing (unfortunately, including nature). Robust manufacturing cities of yesteryear are have become the ghost towns and heroin infused sad stories of a time long since gone by, and very importantly, irreversibly. Energy production is a race to the bottom as robots produce windmills and solar panels that harvest energy that is free (wind, sun). Jobs are becoming (and accelerating) into knowledge economy focii which are no longer niche, but now mainstream: programming, web development, knowledge transfer, AI, databases, self-driving cars, home cleaning robots, robots that clean robots, and somewhat surprisingly, leisure time management. We have more free time as we work less, and were bored! 

    Crypto, which on 1/1/17 was worth ~$20B is currently worth about ~$0.7T. It is still only ~0.3% of the valuation of gov't fiat currency worldwide ($210T). Even so I think the effects of crypto valuation (hence adoption) is rippling through valuations of the system it will ultimately replace: KODK from 4 to 12, boeing from 296 to 335 (+13%) in 2 weeks?? Obviously these are completely different, KODK is simply getting a crypto-craze pop but with Boeing the effect is much more nuanced. We're bored, we're at peace, we have the world's biggest idiot nightmare of a president and, we really don't care. Trump better get a nobel peace prize because a strong international economy is a peaceful one and right now we have just that. Crypto's the crazy glue that hasn't been applied yet. It's the micro-blogger from argentina that gives self-gardening advice to the free timers that grow food for pleasure (not to be confused with agrarian economy that HAVE to grow food to pay the bills), and receives distributed, micro-income as a result. It's the self-driving car that pays the self-driving gas station (that dishes out electrons as "gas") that gets the free-timer from A to B so they can deliver a powerpoint on how to integrate AI into their hairdressing business. It's Zimbabwe that capitulates to decades of unsuccessful attempts to outfox their own recursive corruption in replicating a gov't run fiat system, and replaces it with an Ethereum gov't smart contract and currency system that cannot be gamed by mafiaso insiders.

    There's no philosophers any more. Everyone wants to know "What exact price will X asset be on Y date." Yeah right. The future is all emotions, no facts. Just deal with it. NOBODY KNOWS WHAT THE PRICE WILL BE. But what could the price be and why? OK, so that's interesting. The value of the Knowledge Economy has no valuation because it has no construct for being valued in a nation-state, gov't-fiat system (or a collection thereof, which is our immediate world case scenario). You could look to the derivatives market which I've suggested before. Is that 600T, 1.5Q, 3,4, maybe $5Q. It could be. The above ground gold composition (coincidentally[non?] equal to the physical currency base) is $8-9T. The manufacturing/real-estate economy is $210T (30X). Another 30X is ~$6Q. It's the derivatives that spike up demand for Boeing which pays now all of 2% yield in dividends. Robots don't need to eat, they don't need to get paid 4% on an annuity.

    That means 3-4 orders of magnitude more for crypto from here. You know, with that big caveat of course. There's winners, there's losers, there's big price swings, there's newcomers, there's decades to go. But there it is.

  46. VLO/Learner – Things just go up and up.  I would think oil has risen faster than gasoline and that's bad for VLOs margins.  Have to wait for earnings but, if earnings justify the move, the March $87.50s are $10 and the Jan $95s are $10 so not a terrible roll and you can offset with 2020 $75 puts at $5.65 to give you even more room to run before even doubling down on the longs.

    FTR/Dhall – There's nothing to do, you simply have a covered stock and will be called away at $8 for a net $1.89 (31%) profit plus the dividends – my heart bleeds for you!   The $8 puts are now $3.30 and that's not too bad and you can sell 1/2 so at least you get that if they keep going up and, if they go down, you can sell the other half for $4 and than you avg a not bad $3.65 on all 6. If not, so sorry about the 31% profit while you collect 0.60 (10%) dividends each quarter – what a disaster!  cheeky

    FAZ/Dhall – Well that's worse because you didn't want to be naked long and now the Feb $10s 0.90 and the $11s are just 0.30 so the spread is now 0.60.  Since you only did one I'd simply wait and either FAZ goes up next week and you get your 0.45 for the short $11s or it goes lower and then you can DD cheaply and maybe roll to a deeper position.  

    /DX/Japar – Yes, those (4) I'm just hanging on to.

    TEVA/Learner – The stock doesn't seem to care much.

    LOL Jabob.

    /RB back at $1.85 is tempting again for the weekend.   Check out the massive exports (22Mb/week) and we still had a build in product!  

    What's crazy to me is, no matter how many times I point this out – the media never mentions it.  They just take the "demand" number from the headline draw and ignore the build in stocks every time.  

    Nice essay BDC.   Let me know when you have time to plot getting GRE to a penny!  

  47. BDC, how would you suggest holding GRE? I have mine at right now and would like to keep it closer. Thanks.

  48. Phil:  UVXY

    Do you ever trade this?  25 million traded today

  49. Regulators form working group for Crypto – Mnuchin

    • Speaking the The Economic Club in D.C., Treasury Secretary Steven Mnuchin says the Financial Stability Oversight Council has formed a working group to look into cryptocurrencies.
    • "We are very focused on cryptocurrencies … We want to make sure that bad people cannot use these currencies to do bad things." Oh, the irony.
    • Cryptos, meanwhile, are nearly universally in the green today. About the most modest rally is in Bitcoin, whose overwhelmingly dominant position in cryptos continues to erode. It's higher by less than 2%, while Ethereum – for instance – is up more than 8%.
    • Xunlei Limited (NASDAQ:XNET) — a video/advertising firm before its "Wanke coin mining" project put it into the blockchain/crypto space — is off 27% following a Chinese industry group warning over the burgeoning area.
    • On WeChat, China's National Internet Finance Association posted a statement syaing its members shouldn't be conducting illegal activities and shouldn't engage in any ICO-related or cryptocurrency trading.
    • The group thinks Xunlei's LinkToken, made for financing by nature, is an example of an ICO in "disguise." (h/t Bloomberg)
    • Still, at $16.73 currently, the stock is nearly quadruple its October price pre-pivot.
    • "This isn't necessarily a condemnation of the economic impact of the tax law,” PNC Financial (PNC -0.4%) CEO William Demchak tells the WSJ, "but will it necessarily cause more borrowing?"
    • In other words, with less money needed to pay taxes, companies may not have to borrow as much.
    • For PNC's part, average total loans in Q4 were up 5% Y/Y, thanks to commercial lending. Consumer lending actually fell from a year ago. The bank boosted loan loss provisions to $125M from $67M a year ago, with the consumer side being the culprit.
    • PNC this morning topped both top- and bottom-line estimates, but the bulls are taking a breather after the stock's big run. Shares are down 0.3% today.
    • Previously: PNC Financial beats by $0.09, beats on revenue (Jan. 12)

    Another rough session for REITs

    • The major averages are on track to set new records at the close, but the REITs (IYR -0.7%) are underperforming by a mile again on interest rate concerns.
    • Late yesterday, FRBNY President Bill Dudley was sounding very hawkish, and this morning's core CPI report came in faster than expected. The two-year Treasury yield subsequently jumped above 2% for the first time since 2008.
    • Short-term rate markets have only been expecting two rate hikes this year, and have now just begun pricing in a third. Judging from Dudley's talk yesterday, they may want to consider a fourth.
    • Welltower (HCN -1.6%), Ventas (VTR -2.3%), Healthcare Trust (HTA -1.3%), National Retail (NNN -1.1%), Essex Property (ESS -1.9%), Weingarten Realty (WRI -0.8%), Kite Realty (KRG-0.9%), Public Storage (PSA -1.1%), Gramercy Property (GPT -1.6%)
    • "Recent media stories regarding Aflac (NYSE:AFL) contain false allegations made by a very small group of independent contractors," says the company. The claims, says Aflac – insider trading, fraudulent sales and financial manipulation, among them – have been internally investigated and found without merit.
    • Shares are a bit off their lows, but still down 7.7% on the day.
    • Source: Press Release
    • The pullback is overdone, says Evercore, calling The Intercept's news report "filled with hyperbole."
    • Previously: Aflac down more than 3% on fraud allegations (Jan. 12)

    Trump extends Iran sanctions relief; oil trades near session highs

    • Pres. Trump has extended sanctions relief for Iran, as expected, keeping the Obama administration's nuclear deal intact for at least another 90 days.
    • The Trump administration says this will be the final time sanctions are waived.
    • At the same time, the administration issues new sanctions targeting 14 Iranian officials over Iran’s ballistic missile programs and a crackdown on government protesters.
    • U.S. crude +0.5% at $64.14/bbl; Brent crude +0.5% at $69.60/bbl.
    • The total U.S. rig count rose by 15 to 939 following last week's decline of 5, according to the latest weekly survey from Baker Hughes; it is the largest increase since May.
    • The oil rig count jumped by 10 to 752 while gas rigs gained 5 to 187.
    • A year ago, the total rig count was just 659, with oil rigs at 522 and gas rigs at 136 (plus one miscellaneous).
    • U.S. meat production is forecast to increase 3.8% this year to mark the biggest jump in more than 20 years.
    • Growing flocks and herds in the U.S. have helped to boost profit for meat producers such as Tyson Foods (TSN -0.1%), Sanderson Farms (SAFM) and Pilgrim's Pride (PPC +0.5%) as supply keeps up with demand. Cheap grain has also been a bottom line driver.

    Wow, this guy really earned his bonus!  Stifel sees huge benefit for Costco from Sam's Club closings

    • Stifel Nicolaus estimates that Costco (NASDAQ:COST) could add $1.8B in sales due to the closing of 69 Sam's Club stores .
    • Analyst Mark Astrachan estimates that 47% of the closed Sam's stores clubs are within 5 miles of a Costco and 87% are within 20 miles.
    • "We further believe it illustrates Costco’s outperformance relative to Sam’s in recent years, which we anticipate will continue," writes Astrachan about the development.
    • Shares of Costco are up 1% today to follow on yesterday's post-announcement pop.
    • Source: Bloomberg,
    • Previously: Costco spikes after reports of Sam's Club closings (Jan. 11)
    • SunTrust Robinson Humphrey raises its Amazon (NASDAQ:AMZN) price target from $1,270 to $1,400.
    • Analyst Youssef Squali cites Amazon’s “maniacal focus on the customer” and leveraging technology innovation to disrupt across multiple industries including commerce, entertainment, and IT. 
    • The differentiation and sustainable advantages “should continue to enable the company to grow disproportionately faster than peers, gain market share in several segments of the global economy and sustain above-peers valuation multiples for years to come.”   
    • Amazon shares are up 2.1%.    
    • Previously: Fox TV's Walden out of running for Amazon Studios chief (Jan. 11)

    'Battlefront' concerns spur MS to downgrade Electronic Arts

    • While some analysts think Electronic Arts (EA +1%) has been punished too hard for flak around tentpole game Star Wars: Battlefront II -- recently, Wedbush and BMO -- Morgan Stanley is downgrading on the issue.
    • Analyst Brian Nowak has lowered his rating to Equal Weight from Overweight, pointing to a poor start for Battlefront II, and lowered his sales forecast to 10M units from 13M.
    • It's unlikely the much-discussed microtransactions will make an appearance in the game until fiscal Q4, and when they do they'll be "heavily scrutinized" due to the existing backlash, no matter how conservative the company is, Nowak says.
    • He's lowered his fiscal 2018 EPS estimate to $0.13 from $0.16, and cut the stock's price target to $120 from $126, implying 6.1% upside from current pricing.
    • Previously: EA +1.3% as BMO sees opportunity in 'Star Wars' sell-off (Jan. 08 2018)
    • Previously: Wedbush: Sell-off is overdone, future is bright for EA (Jan. 02 2018)

    Barclays increases Microsoft's price target ahead of Q2 earnings

    • Barclays raises its Microsoft (NASDAQ:MSFT) price target from $89 to $95 ahead of earnings later this month.
    • The raise came in a broader note about the U.S. Software market.
    • Barclay’s VAR survey results suggest a healthy spending environment for the market. The VAR survey included increased interest in Enterprise E5 for Office 365, which could drive ARPU expansion.   
    • Microsoft shares are up 1.5%.     
    • Previously: Microsoft brings end-to-end encryption to Skype (Jan. 11)

    Apple roundup: Cowen's iPhone build note, Mac sales +7%, AR glasses discussions

    • Cowen says Apple’s (NASDAQ:AAPL) iPhone builds for Q4 CY17 held up well compared to expiations as evidenced by strong seasonal performance in the supply chain.
    • But the firm remains cautions for Q1 CY18 as fieldwork showed less of a tailwind mix from the new iPhones versus a month ago. 
    • Big Mac quarter:  IDC data shows that Mac shipments grew 7.3% on the year during the December quarter, which pushed the market share up to 8.2% from 7.7%. But those numbers still put Apple in fourth place overall. 
    • The PC market achieved its first positive holiday quarter in six years driven by HP (NYSE:HPQ) (share: 23.5%; Y/Y growth: 8.3%), Lenovo (OTCPK:LNVGF) (share: 22.2%; Y/Y growth: flat), and Dell (NYSE:DVMT) (share: 15.7%; Y/Y growth: 0.7%).  
    • AR talks:  Bloomberg reports Apple was among the tech giants talking with suppliers of AR glasses parts during #CES18. 
    • Apple shares are up 0.8%.  
    • Previously: Apple faces questions from U.S. Senator, class-action lawsuits, and tax reveal (Jan. 10)

    UXVY/Lala – We tried it once, didn't like it.  All the VIX ever does is go down, the bets are no fun other than the SVXY we played last year that we might do again (after earnings).

  50. LTP 5.4% – I guess we will be able to cash out in July at this rate and call it a year!  

    OOP 4.1% – Also having a good day.

    • Viacom shares are spiking (VIA +6.6%VIAB +8.6%) along with CBS (CBS +1.7%) as TheWrap says the two are seeking a merger.
    • Shari Redstone, whose Redstone family firm National Amusements controls the two companies, is again pursuing the recombination of the two companies that split more than 10 years ago.

  51. That's a nice way to pop new highs into the close.

    Have a great weekend folks! 

    - Phil

  52. For those interested, our Divisional Playoff picks are up. The best football of the year. Enjoy, IV time and Out.

  53. UVXY / Lalalinda  – A lot of daytrading in that instrument because it's volatile enough. The decay due to the way it's structured makes it ideal to sell calls against it and I posted many times about that last year. Same with VXX. The only problem is that it can move yo very quickly and run your position over and you have to be ready to roll in strike and time and double down (or up I guess!) if needed.

    For me, the better instrument is SVXY which I predict is going to infinity eventually but with some rough bumps along the way. I (and others) are waiting for the next correction to load up the truck with that and then sell options along the way (both calls and puts depending on the situation of course).

  54. Picking against my Eagles Naybob! Switch the IV to Cheez Wiz….

  55. BDC, I installed the GRE wallet and it shows "Wallet (out  of sync)" and at the bottom "187 weeks behind". I assume I need to somehow sync this wallet with the blockchain? I can't find any documentation on how to do that.  Any help would be appreciated!  This might also help other PSWers who might have GRE at Coinexchange.  Thanks.

  56. BDC, there is also a little box at the bottom right of the wallet UI that when I mouse over it says "0 active connections to Greencoin network".  I think there is a problem but I have no clue how to fix it.  Thanks.

  57. jel: in the wallet; Help -> Debug Window -> Console. In the Console command line type exactly:

    addnode onetry

    where the nodes come from this list:

    for example "addnode onetry"

    After some, usually short, amount of time it will begin syncing and you shouldn't have to do this in the future. Also, the wallet my stall out when syncing. You can type "getblockcount" in the Console to see if its continually advancing. It usually will freeze from time to time which is common for PoS coins (I was just having this problem, but much worse, with CarbonCoin). The fix is simple: completely quit out of the program, wait 10-15 seconds, then reopen it.

    This video isn't a bad exercise to watch because all of these wallets essentiall work the same way:

    It shows you where the wallet folder is and stuff like that. Also, once you have your own coins you can participate in staking which serves to generate more coins for free. 

  58. Thanks, that looked promising but didn't seem to do anything.  I tried a couple different IP addresses and stopped and started the app a few times, still no change. Could some of those IP's be non operating?  I'll try a few more and see what happens.  We can take this off to an email thread if you don't want to clog up the PSW site.

  59. StJL- "Picking against my Eagles Naybob! Switch the IV to Cheez Wiz…."

    LMAO, here is some info that might, or might not help your Eagles on Saturday? American process cheese stuff, and my freaky deaky Dutch friends love it.

    With all those beautiful rounds of Beemster, Edam, Graskass, Gouda, Leerdammer, Leyden, Limburger, and Maaslander, as the Progressive Box screamed, WHY? I'll never know, just one of those mysteries in life and Out.

  60. stjeanluc:  uvxy


    Thanks for the help!

  61. Good one Naybob! And switch to Comté if you want some real cheese!

  62. StJL – "Good one Naybob! And switch to Comté if you want some real cheese!"

    Trebek queries, due to the process methodologies employed, and raw milk from French simmental cows, a distinct terroir makes each wheel of this Gruyere variant unique. Alex, what is Comte. The smokey, salty, savory complements a Manchego Viejo from those lovely little La Mancha sheep. Thinly shaved with some Prosciutto or Jambon, and a glass of Vino Tinto.  Time to hook up my IV again and Out.

  63. Phil/BDC  Well, I am still stuck trying to load my GRE wallet.  If you have any prayer of getting GRE to a penny, you have to develop a more user-friendly way to store and trade them because the very arcane way it works now is a real impediment for even a technically proficient investor. Solve that in parallel with some sort of promotion and demand-building and it has a chance.

  64. Fly, Eagles fly…. How about that Eagles defense Naybob! And Foles…

  65. Bright Outlook for the Economy and Stocks

    Barron's annual roundtable- always good info. I do like this quote:


    Or, as Roundtable newcomer Paul Wick put it, if rates go up, “the discounting mechanism is going to take a chain saw” to stocks with extravagant valuations.

  66. StJL – "How about that Eagles defense Naybob! And Foles…"

    Congrats, your birds of prey spotted 10 points on two turnovers, the D shut the Dirty Birds out in the 2nd half, and Foles held his own on three long FG drives to win.  Thank the Eagle's defense and enjoy the chariot ride until next week.  As you don't want to see the Norsemen's D, pray for the Saints and Out.

  67. Dollar declining again this morning while indexes continue to rise. What and who is contributing to driving the dollar lower? Last January, the dollar index was at 103 and a year later we are close to 90. That is almost a 15% decline. Anyone have recommendations on good reference material that they would recommend so that I can better understand the forces at play?  Thanks.

  68. This there a new post for today?

  69. Is anyone else on the board today? Haven't ever seen it like this at 1pm….

  70. MLK holiday for the markets and Phil today.  Took me a while to figure it out………..:)

  71. StJ – for whatever it is worth on SVXY…  simulating it back to 2004 shows it is at 

    2/23/07   $20.97

    11/20/08  $1.58

    1/22/13  $21.76       scary long recovery time 

  72. Hola people! 

    I hope everyone is having a nice weekend.

    Congrats to Eagles fans though not a very impressive win.  One wonders what the point is when the Patriots are only going to kick your ass eventually…  

    Had a nice little dip on /TF I'm cashing in on as the other indexes are still high – so maybe just lucky.

    Dollar still getting killed:

    Which is saving /CL and /RB

    I haven't read any news yet so not sure if there's any other story on oil but, if it's just the Dollar, then it's a good chance to short it (and more /RB). 

    Wallet/Jet – I advise getting a Greg.  He handles all that nonsense.  I wouldn't go near crypto if I had to deal with that stuff myself.  I agree there needs to be a more user-friendly way to run this stuff, maybe we can get rich developing something.

    Forces/Den – Look who's in charge of this country?  Do you think that doesn't affect the standing of our currency?  Look at the moronic fiscal policies – could not have done more to destroy the Dollar if we had put Putin in charge (directly). 

    Post/Japar – Sorry, holiday weekend

    • U.S. Markets Closed.
    • Martin Luther King Jr. day

    And, anyway, what's the point?  It's over for us:

    • Alibaba's (NYSE:BABA) deep neural network and an AI software developed by Microsoft (NASDAQ:MSFT) have outscored humans on a Stanford University reading comprehension test, which demanded answers to more than 100,000 questions.
    • Scores: Microsoft 82.65; Alibaba 82.44; Humans 82.304.
    • The win has broader implications for how companies deploy machine learning to replace customer service jobs that have so far relied on call-center employees to handle inquiries.

    Ford is now spending more than TSLA on R&D:

    • Ford (NYSE:F) will significantly increase its planned investments in EVs to $11B by 2022 and have 40 hybrid and fully electric vehicles in its model lineup.
    • The figure is sharply higher than the automaker's previously announced target of $4.5B by 2020.
    • "We're taking our mainstream vehicles, our most iconic vehicles, and we're electrifying them," Chairman Bill Ford told reporters at the Detroit Auto Show.
    • #DetroitAutoShow18

    Good for CVS, WBA:

    • The entire continental U.S. is experiencing widespread flu right now, the first time in the 13 years of the current tracking system that that has happened, according to the CDC.
    • The rate of flu hospitalizations nearly doubled last week to 22.7 per 100,000 people compared with the previous seven days.
    • Federal authorities also disclosed that 20 children have died from the virus and 7% of senior deaths last month were to blame on this year's virulent strain.
    • Flu vaccine manufacturers: SNYGSK


    • According to the report, a Metropolitan Bank (NYSE:MCB) customer on Thursday was notified that the bank was "ceasing all international crypto-related wire transfers," effective immediately. The move was reportedly thanks to alleged international fraud associated with one of the bank's clients.
    • Occasionally referred to as "The Bitcoin Bank," the fast-growing and recently IPO'd Metropolitan is a favorite for transfers with cryptocurrency companies and investment firms. According to Seeking Alpha contributor Wall Street Crypto, Coinbase (Private:COINB) wire transfers are sent to MCB, and the exchange's Shift bitcoin debit card is an MCB product.
    • The Fortune report does note that MCB's crypto customers likely have alternative banks to fall back on.
    • Bitcoin's having a rough weekend, and is flirting with dropping below $13K again. Ethereum on Saturday surged through $1.4K for the first time, but has pulled back to $1,288.

    Nothing about oil in particular.

  73. SVXY / Tangleweb – Thanks for analysis. That's why I mentioned that you would certainly need some patience with that instrument and enter at an appropriate time. I imagine that selling calls along the way will lower your actual cost and certainly adding more at $1.58 would have been quite profitable! It's now trading at $138 so a nice move from the lows. 

    Overall, I think that most of these volatility instruments are untested because they were created after one of the most volatile period in investment history and we know that there is a good chance history will repeat itself. It's quite possible that there will be major bumps again but look what happened in 10 years – a 1000% return. It's really a long terms play.

  74. Patriots / Phil – At least the Eagles don't cheat to win :-)

  75. Succinct Summations for the week ending January 12th, 2018.


    1. All major U.S. stock indexes hit all-time highs this week.

    2. Wholesale trade rose 0.8% m/o/m, above the 0.7% expected increase.

    3. Retail sales rose 0.4%, below the 0.5% expected; November was revised 0.1% higher to a 0.9% increase.

    4. Core CPI rose 0.3% m/o/m, above the 0.2% expected increase.

    5. MBA mortgage applications rose 8.2% w/o/w.


    1. Jobless claims rose from 250k to 261k, above the 245k expected. The 4-week moving average is up to 250.75k.

    2. PPI fell 0.1% m/o/m. Less food and energy also fell 0.1%, both below the 0.2% expected increase.

    3. Import prices rose 0.1% m/o/m while export prices fell 0.1%, displaying a lack of inflation in December.

    4. NFIB small business optimism fell from 107.5 (a 13-year high) to 104.9, below the 107.9 expected.


  76. Phil – Super Bowl – Did you forget? The Patriots and Eagles have to actually make it there first by beating the two best defenses in the NFL, which will be no easy task. 

    Unlike the imaginary rotisserie league, political pollster NCAA Football BCS or Bullshit Championship Series, all other major sports on the planet, at every level, professional or college, actually have a real playoff system that includes all teams. 

    This is why they play the games, to determine a real champion on the field of play. On any given Sunday and Out.

  77. It's been tough for home teams this year and the trend could continue next week! The Jaguars looked pretty tough against the Steelers.

  78. Petition launched to block Trump from G7 meeting

  79. Hope everyone is enjoying their holiday.

    Anyone have a recommendation for a tax accountant in the NY metro area?  Mine is moving.

  80. 2018 looks like an arms sale bonanza

  81. The first climate refugees in Vietnam are starting to emerge

  82. jel – email me at biodieselchris at gmail

    this always gets worked out, it's just not intuitive stuff

  83. Nattering. HIlarious. Let's see, I could stomach watching the "real champion (pre determined patriots) on the field of play" for about 5 minutes. 

    Play #1: 3rd and 9 for Ten. and they get a first down. Oops, except for that "holding" call that didn't happen. Now 3rd and 14. Drive ends.

    Play #2: Patriots pinned on their own 4. 3rd down and they get stuffed, and in comes a false start call to boot. Oops! Nope! Ref conference turns it into encroachment. First down.

    Play #3: BDC turns off the TV

  84. Phil,

    As previously mentioned about Australian housing sector crash, I was able to find some more information.

    I also found Australian Bank Stocks trade on US markets. Do you think we can create a play on any of the below banks ? I am still trying to find the bank with highest residential mortgage exposure but all the big four banks may be interlinked. 
































































  85. Phil,

    It seems WBC and CBA have the highest mortgage share where as NAB's business is more Australia centric and NAB seems to be more exposed to the retail Australian market. Link Below

    Thanks as always 


  86. Phil – Downright creepy, I'm trading the London open and /NKD hits 24,000 at the exact same second that /YM hits 26,000, wow. Poor /NQ couldn't make it to 6,800 in sync, but not far off so likely the bots will continue to play with it overnight until they get aligned, I'm sure someone will get a screenshot of the magic.

  87. Good morning!  

    Futures up crazy, GE down on one-time charge (good time to buy if you don't have them).  Can't see much reason for any of it other than money coming out of BitCoin again:

    Crackdown fears push Bitcoin under $12,000

    • It's not a good day for cryptocurrencies, with South Korea stating a ban on trading was now "a live option" and China reportedly raising the bar on its cryptocurrency crackdown.
    • Bitcoin dropped more than 10% within an hour, eventually tumbling 14% to under $12,000 for the first time since Dec. 6, while ethereum and Ripple posted losses of more than 20%.
    • Previously: Singapore hopes crypto tech will survive 'crash' (Jan. 15 2018)
    • The Pentagon is planning to develop more "low-yield" nuclear warheads and a sea-based nuclear cruise missile, according to a leaked draft of the 2018 Nuclear Posture Review.
    • That strategy, which is expected to be formally unveiled later this month, has yet to be approved by President Trump.
    • It follows reports that Russia has developed an unmanned underwater nuclear drone that has a range of 10,000 kilometers and can carry a 100-megaton nuclear warhead.

    Oddly I'm still even on my 4 /TF shorts at 1,599.37.

    Aussie Banks/Pat – Great report.  Remind me later and I'll take a look but you also have to take into account currency changes, rates, etc if you are playing banks.  Sounds like NAB is a good candidate (based on your premise) but they have no options so all you can do is short them but their p/e is just 15 so you need a hell of a crisis to really hurt them.  WBC is Wabco Holdings on the NYSE, not sure where you are getting that symbol.

    Magic/MrM – Looks like BS to me but looks like magical market to most.