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Thin Air Thursday – Markets Begin to Gasp At New Highs

Image result for higher higherHigher, higher!  

Up and up the markets go but we see shorting opportunities this morning IF we cross back below Dow (/YM) 26,100, S&P (/ES) 2,800, Nasdaq (/NQ) 6,810 and Russell (/TF) 1,585.  The rule of thumb for shorting the futures is wait for 2 to cross below and then pick the next one that crosses and keep very tight stops back above the line and if ANY of the indexes go back above their line – kill the trade and wait for the next set-up.

We demonstrated the stopping out part in yesterday's Live Trading Webinar but I missed my chance to flip long as we got caught up in another discussion and missed the Beige Book Rally.  Still it was a nice day trading as we picked up $4,312 on our Coffee (/KC) trade and now we're waiting for a nice pullback to reloaid and do it again.  Speaking of releading, we're still short on Gasoline (/RB) at $1.86 and it's a $1.865 this morning so we're down $210 per contract at the moment – ahead of the EIA Inventory Report at 10:30.

The Futures are not only a fun way to pick up some extra cash while we wait for our positions to pay off but they also provide a quick hedge – even when the equity markets are closed.  As you can see from the chart, our call on the Dollar long at 90 in yesterday morning's PSW Report was also a nice winner, topping out at $750 per contract and now back at 90.40 but we think consolidating for a better move up – hopefully to 92.50, which would be $2,500 per contract gains.  

Remember, I can only tell you what is likely to happen and how to make money playing it – that is the extent of my powers – the rest is up to you!  

As we're moving into earnings season, this last leg of the market bubble is being driven by earnings revisions due, mostly, to Trump Tax Breaks but, as we warned about in December, the reality simply isn't enough to justify the gains.  This is a great BoA/Merrill chart showing how guidance for the S&P has moved up from 148 to almost 151 since the Tax Plan passed.  

That's pretty good, you may thing but really, it's only 2% higher and still puts the 2,800 S&P at an 18.5 forward multiple and, in reality, we expected 149 earnings a year ago and these stocks are up 550 points from 2,250 last January, so that's 24.4% – which seems like a bit of an overshoot for a 2% rise in earnings, doesn't it?  

Let's say your stock was going to earn $100 last year and you paid $1,000 for it.  Now it's projected (not guaranteed) to earn $102 this year – not because sales are up and not because they got more efficient but because they are paying less taxes and now they are asking you to pay $1,244 for it.  You are paying $244 more for $2 more in earnings, a p/e of 122 on the increased earnings.  Meanwhile, taxes are ridiculously low and debt is skyrocketing, which will lead to rising rates which will hurt earnings down the road – so all we've done is borrowed from the Future to make the present look 2% better in order to take 24.4% more of your money for the same stock.  Sucker!  

asdWe'll see how the rest of earnings season panhs out.  So far, only 17% of the S&P 500 have actually reported, so all this stuff is extrapolation.  Next week, 100 S&P companies report and 175 on the last week of the month.  THEN we will have a good idea of how the companies see the tax changes but 2% improvements is certainly not what traders had in mind when they rallied the markets 10% since November, is it?

As I pointed out on Thanksgiving, traders will be disappointed with Q1 results because Corporations were only effectively paying 13% of their income in taxes so "cutting" the official tax rate to 20% really doesn't make much of a difference.  The S&P 500 has added over $2Tn in market cap since than and certainly $2Tn hasn't actually flowed into the index.  In fact, S&P net money flows on any given day are usually from $5 to $10Bn so, even if ALL 40 market days since Thankgiving were $10Bn inflows, that would only account for 20% of the indexes gain and, in reality, it's about half that so the rest is speculation that will need another 400 days of inflows to actually support the current prices.

We don't think that's likely so we're still mainly in cash and yesterday, we discussed some more hedges in the Morning Report and, of course, we have our Futures hedges as well.  Meanwhile, that doesn't prevent us from enjoying the rally.  On Friday, our Long-Term Portfolio was up $21,755 for the year at $521,755 and yesterday we hit $529,495, up $7,740 for the week – those are the gains we are hedging to protect!

Our $100,000 Options Opportunity Portfolio, which you can also follow over in the Seeking Alpha Marketplace, has jumped from $103,300 on Friday to $105,317 so up about $2,000 (2%) for the week is certainly keeping up with the market – even though we're still 90% in CASH!!!, waiting for better deals before we make larger commitments.  I did a full review of both portfolios in yesterday's Live Trading Webinar. 

We also told you about GreenCoin (GRE) yesterday at 0.00137 and this morning, while people are all excited about BitCoin $11,700 (up 11.7%), GRE is back to 0.001891, which is up 38% for the day (we've been consistently outperforming BitCoin for ages).  So congrats to peple who got some bargin shopping in but don't forget to take profits or you will end up like Chris Larsen, the founder of Ripple, who was "worth" $59.9Bn on Jan 4th and now "just" $15.8Bn.  Had he used our crypto-currency profit-taking strategy which we outlined for you in yesterday's report – he would have had $20Bn off the table and $8Bn in coins left – don't be like Chris!  

We still have the overhang of a possible Government Shut-Down which will be followed by a relief rally when they don't actually shut down and THEN, next week, we can finally begin to focus on earnings.  


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  1. A bit disappointing to see Apple sucking up to Trump while Bezos tries to help the DACA kids….

  2. In Colorado, renewables are getting cheaper and competitive with fossil fuels:

    According to Carbon Tracker, based on these bids, new wind+storage energy in Colorado is cheaper than energy from the state’s existing coal plants; solar+storage energy is cheaper than 75 percent of the state’s coal energy. This is worth repeating, because it’s a significant milestone: In Colorado, getting energy from new renewable energy projects with storage is cheaper than getting it from existing coal plants. Coal is dead.

  3. ~~ GNC – Stock up big !

    GNC Holdings reports Q4 same store sales for domestic company-owned stores +5.7%, sees Q4 Adj-EPS of $0.24-0.25 vs $0.23 Capital IQ Consensus Estimate  (3.47)

  4. gnc – albo.. that is great news!… The short squeeze will propel this even higher.

  5. Good Morning.

  6. Morning, All!

    The webinar replay is now available!

  7. ALB  down 11  wow

  8. Thanks Albo… Still bullish! No matter what, I think that you can do fine in that name although stretched now. The mid-40's were truly a screaming buy which is where I have my B/E now.

  9. Now I am mad Phil.  I was going to double down on GNC and you said be careful, I though well maybe 50%, but I never got to it.  God damn gift-horse, what is the saying, never kick one.  YEAHHH!

  10. KODK – Catching some strong bids.

  11. Good morning!  

    Big Chart – WTF?  

    AAPL/StJ – He can make their lives miserable.  This is like a dictatorship, no matter how much you hate him, you'd better be nice to El Presidente.

    I settled in on /TF shorts at 1,585 – going well so far.  

    Still waiting and seeing on /RB, back to even.  

    Dollar still torturing me at 90.25 

    Coal is dead/StJ – That's what I've been saying.

    GNC/Albo – I love it when we gain on crappy earnings!  Shows how oversold it was. 

    Too bad I chickened out in the OOP but we sold 20 of the 2020 $5 puts for $3 ($6,000) in the LTP.  That was net $2 and still people didn't want them – AMAZING! 

    GNC/Baron – Well it could have gone the other way.  All I said was:

    GNC/Baron – Just keep in mind that they COULD go BK, so make sure you are not over-committing to the position.  I like them because I don't think they go BK and I like their turnaround plan but it's still a risk.  

    I said that because you were talking about doubling down in an IRA (where you SHOULD be risk-adverse).  If all goes well now, you'll still make money and you can still sell higher calls for better prices.  

    KODK/Albo – Back up with crypto.

    It's strange as now they've tied their fortunes to crypto currencies.

  12. Hopefully – QCOM will rally further on this.

    EU regulators approve Qualcomm's NXP acquisition

    EU antitrust regulators approve Qualcomm’s (NASDAQ:QCOM) acquisition of NXP Semiconductors (NASDAQ:NXPI).

    The approval depends on Qualcomm fulfilling commitments it made to ease antitrust concerns. 

    For an eight-year period, Qualcomm will offer licenses for NXP’s MIFARE ticketing tech at terms at least equal to today. The company will also put its chips and those of competitors at the same level of interoperability during that period. 

    Qualcomm won’t receive NXP’s standard essential and some non-standard essential NFC patents, which will instead transfer to a third party guaranteeing royalty-free licenses for three years. 

    Qualcomm won’t enforce its rights to the NFC patents it will have, which will also have the royalty-free terms. 

    Closing the NXP acquisition could help Qualcomm offset its legal battle with Apple and the unsolicited bid from Broadcom. 

    Qualcomm shares are down 0.1%. 

    NXP shares are up 0.5%.         

    Previously: Broadcom calls FTC probe 'immaterial'; shares resume gains (Jan. 17)

  13. Gift horse… LOL, I thought it was "You can't lead a gift horse to water but you can look in his mouth…"

  14. Phil/GNC

    Now I remember, its don't look a gift-horse in the mouth I think.  And it does look like I have some room for more calls in my regular account, not so much in the IRA though, but  that has a lower basis anyway.  Still, for me, the timing could not have been better.

  15. Signs that the top is near ?

    From Briefing Trader :

    ~~ " The AAII bull ratio also just hit its highest level since 2010.

    The January BAML Fund Manager Survey showed a 5-year low in cash held in portfolios as well as a measure suggesting the most aggressive equity-to-bond lean in 29 months, along with the two most crowded strategies being short-VIX and long momentum stocks.

    In addition, odd-lot short interest fell to its lowest level in nearly 8 years. This is essentially similar to the ROBO ratio in that it suggests smaller, non-professional market participants herding in a strong manner. In this case, it says that no one with a small account is trying to short high-priced stocks anymore — for the first time in nearly a decade. That is generally a contrarian signal.

    At the same time, we have seen volatility increase on a rising market, which has historically been a clear signal of some sort of corrective action on the very near horizon.

    Finally, the latest Investors Intelligence survey showed the fewest bears in 30 years this week.

    In other words, pretty much every single reliable sentiment indicator is now flashing bright red."

  16. Phil, did you lighten up on /RB at this point rather than risk inventories? Should have some nice gains. 

  17. Here's today's "Where's your sign?" moment of Zen…. Just in case nobody noticed… 

    On 11/15/17, a well know French water company Veolia Environnement,  issued a 3 year, 500 million euro, senior unsecured zero coupon bond priced at -0.026%. The bond (FR0013298387) was rated Baa2 by Moody's. 

    Yes that is a negative sign, assuring that if held to the maturity date, those Baa2 investors return on a borderline investment grade junk rating is NEGATIVE. Baa – Baa 2 the sheepish investors indeed.

    When borderline junk is selling with NEGATIVE return, you are no longer in a serial bubble. Crazy indeed, as the inmates are running the asylum and Out.

  18. Veolia / Naybob – Is it also secured with WaterCoin?

  19. Phil/STOR

    Not cheap but Buffet owns it and pays 5%.. At $24.50 the July $25 put and call should net $3.  Thoughts?  Thanks.

  20. "Don't be like Chris" is unfortunately something I need to tell myself every morning…

  21. People in BCC got crushed.

    If the mantra is "be careful out there" in crypto it's

    Be very very very very very careful out there!

    With that said, I'm throwing 0.1 BTC at BCC! :)

  22. This is interesting:

    ~~For years, hospital executives have expressed frustration when essential drugs like heart medicines have become scarce, or when prices have skyrocketed because investors manipulated the market. Story link:

    * Now, some of the country’s largest hospital systems are taking an aggressive
      step to combat the problem: They plan to go into the drug business
      themselves, in a move that appears to be the first on this scale.
    * While Intermountain executives would not name the drugs they intend to make,
      hospitals have long experienced shortages of drugs like morphine or
      encountered sudden price increases for old, off-patent products like the
      heart medicine Nitropress. Hospitals have also come under criticism for
      overcharging for their services, including for some drugs.
    * The idea is to directly challenge the host of industry players who have
      capitalized on certain markets, buying up monopolies of old, off-patent drugs
      and then sharply raising prices, stoking public outrage and prompting a
      series of Congressional hearings and federal investigations. The most
      notorious example is of Martin Shkreli, the former hedge fund manager who
      raised the price of a decades-old drug, Daraprim, to $750 a tablet in 2015,
      from $13.50.

  23. StJL – "Veolia / Naybob – Is it also secured with WaterCoin?"

    LMAO, that would be Clean Water Coin $WATER.  And yes, I know you were not making moutarde en la couche back in 1990 when the whole H1B thing started.  It just seems like yesterday to me.

    Wend. carry over…  BDC – At least I can do something out there in this world internet-tubed world, but man would it be great to be a full-stack developer wizard in this day and age. 

    If one needs good programmers, they can always go to select WalMart's, where device driver and OS Kernel level programmers can be found, like everything and everyone else, working for peanuts. 

    There are no "shortages",  only fake, fake, fake contrivances of convenience for profit, remember its' all about the money.  Like the "shortage" of oil, this is no joke, and here is just one of what has sadly become legion. 

    Snipets from a WIP on the IT/STEM shortage canard… Any and all claims of shortage and outstanding talent are not supported by the data, even after excluding the Indian IT service firms. Instead, it is shown that the primary goals of employers in hiring foreign workers are to reduce labour costs and to obtain "indentured" employees… ?On a variety of measures, the former foreign students have talent lesser than, or equal to, their American peers. Skilled-foreign-worker programs are causing an internal brain drain in the United States.   I Want To Believe and Out.

  24. Wow, Newark might get the AMZN headquarters.  That's great for us.  They have done a lot of work to revitalize that city – adding 20,000 tech workers there could be amazing. 

    QCOM/Learner - Kickin' ass and taking names.

    /KC is the funniest thing to play, you can make the same 0.03-0.05 over and over and over again.

    Hoping to see $120 again at the moment.

    GNC/Baron – Even in an IRA that charges 100% margin, you can still sell the 2019 $5 puts for $2.10 and that nets you in for $2.90 with 72% upside in 12 months.

    If you have stock, rather than DD, you can sell it for $4.62 and buy 2x the 2020 $2.50 ($3.30)/7.50 ($1.50) bull call spread for $1.80 and that still puts $1 back in your pocket, not even counting the short puts.  

    That's so good we'll have to add it to the OOP:

    So for the OOP, let's:

    • Sell 10 GNC 2019 $5 puts for $2.10 ($2,100) 
    • Buy 20 GNC 2020 $2.50 calls for $3.30 ($6,600)
    • Sell 20 GNC 2020 $7.50 calls for $1.50 ($3,000)

    That's net $1,500 on the $10,000 spread that's half in the money to start and our upside potential is $8,500 (566%) and our worst case is owning 1,000 shares of GNC at net $6.50, so it's an aggressive play.

    End/Albo – It's been near for 3 years. 

    /RB/Jeff – Back to 2 short since I'm up $1,000 on my 4 and it would be stupid to blow it. Also, if there's a fake move up – makes it easier to DD.  

    Negative/Naybob – That is seriously insane.  

    STOR/Baron – I haven't looked at them but I trust Buffett though only pays 5% so very dull compared to FTR's 35%!   Am I really taking 7x the risk to own FTR?

    Chris/BDC – Well, I don't mind losing $45Bn if I'm given $60Bn for starting a stupid coin…  cool

    Hospitals/Seer – That's a great step, nice use of their tax break money!  

    EIA time!

  25. Looks like Oil is down 6.9Mb but Gasoline up 3.6Mb and Distillates up 3.9Mb so I'd say it's a disaster but /CL punching up top $63.75 and /RB hitting $1.86 again, where I'm adding back 2 more shorts because that's an idiotic reaction to a net build – especially knowing how much we're exporting (we'll check back at 1pm for the full report).

  26. Phil/ABX    Holding 20 ABX 2019 $13 calls (basis 5.35) after buying back the short $20 calls awhile ago with $5200 gain.  Sell 2019 calls again to cover or roll to 2020?   Thanks.

    • EIA Petroleum Inventories: Crude -6.9M barrels vs. -3.5M consensus, -4.9M last week.
    • Gasoline +3.6M barrels vs. +3.4M consensus, +4.1M last week.
    • Distillates -3.9M barrels vs. +0.1M consensus, +4.3M last week.
    • Futures -0.72% to $63.51.

    Trump saying Democrats want to destroy the military by shutting down Government.  What a tool.  How is it up to the Democrats when the Republicans have a majority?  

    ABX/Taihu – I'd buy another year while it's cheap.  The 2020 $10 calls are $5.45 so about $2.70 more than your 2019 $13s gives you a year and $3 in position for $2.70 and then you can sell 2020 $17 calls for $2.25 to pay for it and, because you have a $7 spread that's $4.50 in the money, there's going to be no harm in selling 5 (1/4) March $15s for 0.50 ($250) as that can drop $2K in your pocket while you wait.  You can offset the short calls with 5 short 2020 $15 puts at $2.65 ($1,325).

  27. Now flipping to /NQ for my short market horse.  6,820 for 2 but I expect to have 2 more at 6,825 and then 4 more at 6,830 to avg 6,825 on 8 (if we keep going up).

    /ES hugging 2,800

    Dow weak bouncing at 26,000 (26,030 and strong is 26,060)

    /TF was the original horse but took money and ran at 1,580

    VIX is actually worried today

  28. Phil – "Trump saying Democrats want to destroy the military by shutting down Government.  What a tool."

    StJL – "A bit disappointing to see Apple sucking up to Trump while Bezos tries to help the DACA kids…"

    I just got Salmonella thinking about it. Oh well, there's hell toupée, and Out.

  29. Sold some KODK at 10.30 in an IRA.  Shorted some Jul 7.5 puts at 2.42 to replace it.

  30. /RB is just relentless, defies all logic. Another build, another pop. It's the Twilight Zone market.

  31. Phil/Amazon-Newark-sorry, but since Christie screwed us on infrastructure, this would probably end up a disaster for commuters.  I don't think the roads or public transportation in that important commuter hub could handle the influx of that many jobs. 

  32. /RB/Mr M – I'm surprised they are pushing it this much off that report.  Not seeing any other news that's bullish for gasoline.  Of course, they did this last week too a couple of times – way up and then gave it all back.  I now have 6 short at $1.865 so, if I add 2 more at $1.88 I bring the avg up to $1.87 on 8 shorts – that's my current plan.

  33. Thanks Phil, you have more buying power than me, I can double-up at this point so I just wait, at least I'm in the March futures, wait and watch.

  34. "can't" double up

  35. I wouldn't count on anything yet as far as 2nd Amazon headquarters.  They announced a shortlist of 20 cities?   Seems like a nice play to see who's going to give them the biggest tax breaks to be declared the winner.  Of course Toronto is going to win the bid anyway……..:)

  36. HOLY MOLY !

    QUIK, my stock of the year, is breaking out to the upside on 3X normal volume.

  37. With today being an oil and gas day, it occurred to me that we don't have the minute by minute questions from Craig on where the price of a barrel of oil was going.  Did he quit the board?

  38. Albo, why QUIK?

  39. ~~Cleer Chooses QuickLogic EOS S3 Sensor Processing Platform for CES Award Winning Headphone

    - Enables always-on hands-free voice control with dedicated voice trigger
    - Wirelessly connects to Alexa voice services
    - CES 2018 Innovation Awards honoree

    BDC – They have been developing sensor hubs with very low power for cell phones and now wearables and hearables.  Voice is the new hot area, ala Alexa.

    The company is at the Needham conference today and has also disclosed 3 design wins with a tier 1 smartphone manufacturer, likely Samsung.  Probably for production in 2nd half of 2018.

    Company is still tiny and very speculative, but it looks like the fundamentals are finally coming together.

    It's been a long wait.

  40. QUIK/Albo – i'm still with you.. looking good!

  41. Comment content omitted because it is too long.

  42. Newark/Seer – I think they can, they deal with the stadium traffic well enough and, for AMZN, the airport access is great and housing costs in the area are 1/2 of San Fran.

    Double/MrM – Well, hopefully they calm down here.  I just added my 2 and now avg $1.868 on 8 short, back to 4 if we dip, of course.

    Toronto/Ult – True, I'd way rather be in Toronto.  CNBC is saying 50,000 jobs.

    QUIK/Albo – Congrats, you've been pushing that one for a while.

    QUIK – My candidate for stock of the year is catching some bids today after announcing 3 small deals in AI and IOT.  Believe more substantial deals are coming, and that a big ramp up in revenues will follow.

    Craig/Options – I think he has more answers than questions at this point.  

    • Initial Jobless Claims -41K a220K vs. 250K consensus, 261K prior (revised).
    • Continuous Claims: +76K at 1.952M vs. 1.876M.
    • December Housing Starts: 1.192M vs. 1.275M expected, 1.299M prior (revised from 1.297M).
    • Building permits 1.302M vs. 1.290M expected and 1.303M prior.

    • For those not following closely, the Fed's 2% inflation target is a fairly recent addition to its mandate, put in place in 2012, partly at the urging of then-Chairman Ben Bernanke.
    • Bernanke has been among those urging the target to be revisited, and he's now joined by outgoing FRBNY President Bill Dudley (source: interview with FT).
    • The issue: Adherence to the target could prevent the Fed from hiking rates as much it would like, thus giving less room for the central bank to ease policy when the next crisis hits.
    • Dudley is quick to add he doesn't see any economic worries on the horizon (they never do), and is dismissive of the idea that a correction in the stock market could sink the economy.
    • Average fixed mortgage rates rose for the second consecutive week, according to the latest Freddie Mac survey.
    • The 30-year fixed-rate mortgage averaged 4.04% for the week ending Jan. 18, surpassing 4% for the first time since May 2017 and up from 3.99% a week ago, and the 15-year rate averaged 3.49%, up from last week's 3.44%; last year at this time, the 30-year and 15-year fixed rates averaged 4.09% and 3.34%, respectively.
    • A sub-4% rate on the benchmark 30-year mortgage may have receded into the sunset amid an environment of broad U.S. economic growth, tightening labor markets and firming inflation.

    • "Investors are positioned for an upside acceleration in equities that has become increasingly difficult to support given the weakness in credit,” says Goldman strategist John Marshall.
    • Credit and equity markets have begun the diverge over the past 10 days, he says, noting falling corporate bond prices, even as the equity of those same corporates continues to rise.
    • Thought the widening seems more like positioning, rather than an expression of fundamental weakness, says Marshall, it nevertheless pays to hedge by buying equity puts.
    • Source: Bloomberg's Lu Wang
    • Excluding a $990M charge related to the tax bill, Q4 net income of $1.5B or $0.84 per share was up from $1.5B and $0.74 a year ago. Estimates were for $1.77. Revenue rose to $9.5B from $9B.
    • Annualized ROE in Q4 (excl. those tax charges) was 8.6%; for all 2017, it was 9.4%.
    • Institutional Securities pretax income of $1.2B vs. $1.3B a year ago, on revenue of $4.5B vs. $4.6B. Investment banking revenue of $1.4B vs. $1.3B. Sales and trading revenue of $2.7B dropped from $3.2B, with fixed income revenue of $808M down from $1.5B.
    • Wealth Management pretax income of $1.2B up from $891M a year ago. Pretax margin of 26%, and net revenue of $4.4B up from $4B. Net interest income of $1.1B up from $984M.
    • About $1.25B of stock bought back during Q4; for all 2017, $3.75B or 80M shares repurchased.
    • Previously: Morgan Stanley beats by $0.07, beats on revenue (Jan. 18)
    • MS +2.1% premarket

    KeyCorp down 2% after results and outlook

    • Backing out merger-related and tax reform charges, Q4 EPS of $0.36 was up a nickel from one year ago, and met expectations.
    • Average loans of $86B dipped just under 1% from Q3 and were up just less 1% from one year ago. Average deposits of $103.8B down 0.9% Y/Y; cost of deposits of 0.31% up nine basis points; NIM after adjustments of 2.97%, up 15 basis points.
    • Provisions of $49M down from $66M a year ago.
    • 2018 outlook: Average loans of $88.5B-$89.5B; average deposits of $104.5B-$105.5B. Net interest income of $3.9B-$4B assumes just one rate hike (in June); noninterest income of $2.5B-$2.6B; noninterest expense of $3.85B-$3.95B; net charge-offs to average loans to be below long-term target of 40-60 basis points; GAAP tax rate of 18%-19%.
    • Long-term targets are refined: Cash efficiency ratio of 54%-56% (previously was set to <60%); net charge-offs to total loans of 40-60 basis points (same as previous); ROTCE of 15%-18% (previously was 13%-15%).
    • Presentation slides

    Saudi Aramco signs Chevron, CB&I to enhance chemicals technology

    • Saudi Aramco says it signed a deal with Chevron (CVX -0.2%) and CB&I (CBI +0.2%) to enhance and commercialize technology expected to boost Saudi Arabia's chemical production.
    • The agreement aims to further develop thermal crude-cracking technology that can produce chemicals directly from oil, which Saudi Aramco has developed to increase chemical output as part of a plan to accelerate diversification of the country's economy.
    • Aramco says the companies will utilize Chevron Lummus Global's hydro processing technologies and CB&I's ethylene cracker technology to enhance the technology.
    • Alcoa (NYSE:AA-6.2% premarket after Q4 earnings missed estimates, citing a drought in Brazil that hurt bauxite production and higher power prices in Spain that raised expenses.
    • “We have lower than expected global alumina segments due to weather delays and difficulties with shipload,” CEO Roy Harvey said in an earnings conference call, noting the results came in ~$50M lower than the company’s expectations.
    • AA said it does not expect U.S tax reforms to have a material impact on 2018 results, and announced plans to freeze its pension.
    • But J.P. Morgan's Michael Gambardella keeps his rating at Overweight and raises his price target to $68 from $55, believing AA will start looking to return cash to shareholders as long as alumina and aluminum prices hold, and the stock possibly could be added to the S&P 500 in the next few months.
    • Cowen analysts raise their AA price target to $59 from $51 while keeping its rating at Market Perform, but BofA Merrill Lynch trims its target to $63 from $67.
    • Chile’s environmental regulator orders the closure of Barrick Gold’s (ABX -1.1%) Pascua-Lama mining project but cuts its fine for violations to 7B pesos ($11.5M) from $16M previously.
    • ABX says the order to close the existing surface facilities is consistent with its plan to advance a study for an underground mining operation at Pascua-Lama, which it says would reduce the overall environmental impact.
    • The project, which straddles the border of Argentina and Chile in the Andes Mountains, was put on hold in 2013 due to environmental issues, political opposition, labor unrest and development costs that ballooned to $8.5B.
    • SQM +2.8% premarket after Chilean development agency Corfo says it reached a deal with the company, ending a long dispute over royalties in an area that is home to one of the world’s richest lithium deposits.
    • The deal frees SQM to apply for an increase in its production quota amid a demand boom and surging prices for the metal used in batteries to power electric cars, and raises the royalties paid by SQM to equal those established in a similar contract between Chile and rival lithium producer Albemarle (NYSE:ALB).
    • Under the new contract, SQM could produce up to 216K metric tons/year of lithium carbonate through 2025 in the Salar de Atacama, the source of half the company’s revenue, if it makes certain investments and obtains the relevant permits.
    • Ryanair Holdings (NASDAQ:RYAAY) finished 2.7% higher in Dublin after the company reported forward progress in labor negotiations with pilots.
    • U.K. pilots are said to have accepted Ryanair's terms on a new pay deal.

  43. Thanks, Scott.  Glad you are

    • Credit Suisse sizes up the impact of tax reform on Starbucks (SBUX +0.6%).
    • The firm estimates Starbucks will pay a global tax rate of about 24% to 25% vs. ~33% prior to drive about $425M in tax savings.
    • Starbucks is expected to reinvest about $125M in the tax savings in areas such as staffing and technology.
    • CS boosts its 2018 EPS estimate to $2.45 from $2.28 and 2019 EPS estimate to $2.88 from $2.64.
    • Despite the higher profit expectations on Starbucks, analyst Jason West and team keep a Neutral rating in place due to concerns over comparable sales headwinds.
    • Starbucks is due to report earnings on January 25.

    Meet the names in the Amplify blockchain ETF

    • There's some interesting names listed in the top 20 holdings of the blockchain-focused Amplify Transformational Data Sharing ETF (NYSEARCA:BLOK).
    • The top ten holdings are Taiwan Semiconductor (NYSE:TSM), Overstock (NASDAQ:OSTK), Digital Garage (OTC:DLGEF), SBI Holdings (OTCPK:SBHGF), IBM (NYSE:IBM), Nvidia (NASDAQ:NVDA), Square (NYSE:SQ), Hive Blockchain (OTCPK:HVBTF), GMO Internet (OTCPK:GMOYF) and Intel (NASDAQ:INTC).
    • Further down the holdings list are Red Hat (NYSE:RHT), Visa (NYSE:V), Oracle (NYSE:ORCL), AMD (NASDAQ:AMD) and Mastercard (NYSE:MA) – all seen as having some part of blockchain innovation.
    • BLOK is up 1.39% from the $20 starting price.

    GNC Holdings on a rocket ride after guidance update

    • GNC Holdings (NYSE:GNC) reports same store sales for domestic company-owned stores increased 5.7% in Q4.
    • The company expects to report EPS in the range of $0.24 to $0.25 vs. $0.23 consensus.
    • GNC had cash of $64M at the end of the quarter and long-term debt of $1.3B.
    • "In the fourth quarter of 2017, our efforts to reposition the business continued to gain momentum," says GNC CEO Ken Martindale.
    • Source: Press Release
    • Shares of GNC Holdings (GNC +39.5%) are strapped to a rocket after the company's Q4 preliminary results come in ahead of expectations.
    • The nutrition products seller also backed its full-year free cash flow guidance for a tally of $190M to $210M.
    • Previously: GNC Holdings updates on Q4 results (Jan. 18)

    Verizon sees $4.10 impact to full-year EPS from tax reform

    • In an SEC filing, Verizon (NYSE:VZ) has estimated that the recently passed tax reform will have a fiscal-year impact to EPS of about $4.10.
    • "Verizon estimates that the enactment of the TCJA will result in a one-time reduction in net deferred income tax liabilities of approximately $16.8B, due primarily to the re-measurement of U.S. deferred tax liabilities at the lower 21% U.S. federal corporate income tax rate," the company says.
    • GAAP accounting calls for Verizon to record impacts of tax law changes on deferred income taxes in the quarter enacted.
    • It also says it doesn't estimate material impacts from either the repatriation tax or implementation of the territorial tax system.
    • In the same filing, Verizon says it expects 2018 impacts from an accounting change on contracts with customers: an increase in pretax retained earnings of $4B-$4.6B, and a total expense reduction of $0.9B-$1.2B.

    Live Ventures jumps 22% after reporting tenfold EPS gain

    • Live Ventures (NASDAQ:LIVE) is up 22.2% and reclaiming a three-week high after posting fiscal year results where it pointed to a 93% gain in revenues and a tenfold increase in earnings.
    • The company had posted some results from its Q4 in late December, but said it needed additional time to calculate earnings due to finalizing purchase price allocation tied to its acquisition of Vintage Stock.
    • EPS rose 988% to $2.94 when excluding one-time noncash gains from a deferred tax asset and a bargain-purchase gain booked in fiscal 2016. EBITDA was $23.21M.
    • Operating income, meanwhile, rose 680.7% to $18.1M.

    TiVo +3.5% on Google deal

    • TiVo (NASDAQ:TIVOannounces Google (GOOGGOOGL) expanded its multi-year patent license agreement to include YouTube TV.
    • The agreement covers Google using TiVo tech worldwide and offers a license for Google products and services across web-based platforms and devices. 
    • TiVo shares are up 3.5% premarket to $15.     
    • Previously: TiVo opens new patent fight against Comcast's X1 (Jan. 11)

    Comcast cut to Neutral at Nomura in slowing-growth environment

    • Comcast (CMCSA -0.2%) has gotten a cut to Neutral at Nomura/Instinet, which sees a cable leader facing slowing growth in what has been a healthy business line, broadband Internet.
    • "Comcast’s superior broadband product, sophisticated user interface, and unique content ownership merit the healthy appreciation in the shares," says analyst Jeffrey Kvaal. Comcast stock has risen 16% since the end of November.
    • "We do, however, believe Comcast now faces heightened challenges – OTT is driving declines in linear video and broadband growth should slow. Peer EBITDA multiples on our slightly below-consensus estimates yield a $45 target; historical ranges do not support further upside."
    • The $45 price target is a boost from Nomura's previous $42, and implies 8% upside from current pricing.
    • Lions Gate Entertainment is up strong in early going (LGF.A +4.5%LGF.B +4.4%) after a Deadline Hollywood piece floating a buyout by some potential big suitors.
    • (NASDAQ:AMZN), Verizon (NYSE:VZ) and even a CBS-Viacom combo (CBSVIAVIAB) have been sniffing around the company, the report says.
    • The studio has come to the forefront of M&A talk in media as a smaller player who may need bigger pockets and infrastructure to compete.
    • Verizon could benefit since it's been looking for a shot in the arm in mobile video. A CBS-Viacom-Lions Gate trio would result in a significantly strengthened media firm with a stake in several areas.

    Amazon cancels three shows, looks for blockbusters in programming shift

    • Amazon (NASDAQ:AMZNcancels three original series as the company moves away from awards bait and towards shows that could become international hits.
    • Cancellations: “I Love Dick,” “One Mississippi,” and “Jean-Claude Van Johnson.”
    • The niche programming model was pushed by former Amazon Studios head Roy Price, who was forced out last year after a sexual harassment investigation. CEO Jeff Bezos had previously told Price to steer towards finding the streaming service’s answer to “Game of Thrones.” 
    • Projects currently in development include an overall deal with “The Walking Dead” creator Robert Kirkman and a series based on J.R.R. Tolkien’s “The Lord of the Rings.”
    • Amazon also plans to cut back on indie films, according to Reuters, in favor of bigger-budget projects that could lure more users to the Prime service. 
    • Sources say Amazon wants films with budgets in the $50M range but won’t completely abandon the indie model. 
    • Amazon shares are up 0.5%

    Apple still owes EU tax bill, payments start in March

    • Apple’s (NASDAQ:AAPL) plan to repatriate overseas cash and pay $38B in U.S. taxes doesn’t reduce its $16B EU tax bill.
    • The Commission that slapped Apple with the bill said the amount owed to Ireland could be reduced if other countries showed Apple should’ve recorded its sales there instead or if its European subsidiaries had to pay more tax to the parent company. EU authorities say the U.S. tax payment announcement doesn’t meet the criteria. 
    • And Apple’s payments to Ireland now have a finalized schedule, according to RTE.
    • Payments will begin in March once the escrow account is in place and continue until September.  
    • Previously: Apple plans to add $350B to US economy, $38B in repatriated tax payments (Jan. 17)
    • Previously: Bloomberg: Apple employees will get $2,500 bonus (Jan. 17)

  44. Phil/ABX   Thanks.

  45. LQMT/Phil – new entries to be considered here?

  46. New polls show Trump at 37% approval

  47. The NRA Is Part of the Trump–Russia Scandal Now

  48. Hi All

    Back home before i leave again

    BDC—finally bought 1 sh of GBTC ans sold for a profit   ;-) what r your thoughts on the cryptos—thanks

  49. A Look Back at Trump’s Approval Ratings

  50. Utility Guy – Of course Toronto is going to win the bid anyway……..:)

    If I had to lay odds, it's probably going to Nashville, Raleigh or Austin. Cheaper labor, tech savvy. It's all about the money, but what do I know? Little, and what I do not know is immense or should I say like Phil's other unknown brother…. at any rate, it's my IV time so take off hoser and Out.

  51. LQMT/Scott – Good time to start a rumor that AAPL will buy them with their cash.  I still like them but it's a slow grind.  Just one of those penny stocks you buy and forget for 10 years.  

    What they have is very, very cool tech but they haven't been able to commercialize it and maybe never will.

    Hey Savi!  Like a ship passing in the night, right?  See yesterday's post for my thoughts and BDC's thoughts on cryptos. wink


    • GE is down another 2.7% to a 6.5-year low of $16.87 as investors price in another dividend cut and remain unconvinced a break-up will yield any incremental value.
    • Sitfel's Robert McCarthy yesterday added his voice to that contingent, assigning zero value to GE Capital in light of "seemingly permanent" suspension of dividends as it funds another $15B of reserves over the next five years.
    • He figures fair value for GE of about $18 per share.
    • The XLI - which counts GE as its 5th-largest holding (behind Boeing, 3M, Honeywell, and Union Pacific, and just ahead of Caterpillar) – is down 0.4% today.
    • Previously: GE continues lower as analysts see problems with potential breakup (Jan. 17)

  52.  BDC – I would appreciate your opinion on GCAP as a crypto play.  I've put on a 1/3 trading position based on this summary from


    GCAP announced that it had launched Bitcoin trading in Australia and Singapore on its City Index service.  Customers are able trade the value of the cryptocurrency through a highly-regulated broker, without the need to set up a digital wallet to take delivery of and store tokens. GCAP offers Bitcoin trading either as an OTC derivative or as a future, both of which allow traders to speculate on Bitcoin prices without owning the underlying asset. The launch in Australia and Singapore follows the launch of Bitcoin trading to customers in the UK and Europe last month. Its Bitcoin futures offering in the US is available through its Futures Online and Daniels Trading brands. GCAP plans to complete the global roll out of Bitcoin trading in the coming months, introducing Bitcoin trading in Asia and the US. It also plans to expand its cryptocurrency offering to include Ethereum and other digital currencies in early 2018.

      Also, yesterday I sold some $5 puts.  I believe Ultyguy is also long some options.


  53. Oil is the same old nonsense – we're exporting a full day's supply of oil every week and then we're surprised there's a draw in inventory.   Oh, and we're also importing 7Mb less oil than we did last year:

    BitCoin almost back to $12K but, falling $10K from $20K means $2,000 is a weak bounce.

    Well, other than the Nas, we're a bit red for the day but not too much damage. 

  54. hey phil just catching up  – i know you're busy.  but a couple things seem missing from LTP update from last week.  just wondering if you didn't do them or just missed them or I missed an adjustment.  (1) sale of GILD puts (2) M buy write and puts (3) sale of partial hedge CMG short calls (4) NAK buy write and put sale. Thanks.

  55. phil – one mistake in what I just wrote – NAK wan't for LTP so ignore that part of my comment.  thanks

  56. Making America not trusted again:

    Trend: Global Leadership Approval

    Below China for crying out loud….

  57. Phil – Thanks for your comments on QUIK.  Full disclosure :  I sold a few thousand today at 2.10.  Still have 170k reasons to cheer it on.  Way too heavy for my portfolio size.  Especially, with market looking toppy.

  58. Albo/GCAP – they make money so not a pure OTC penny stock scam like lots of fly-by-night crypto plays popping up. Still risky though. I sorta like KODK, but it's because they're desperate. They might make a key investment in energy storage or something that goes nuts over the next decade (and is ripe for blockchain innovation as well).

    GBTC – I'd be preparing for another leg down here. 

  59. BDC/ I just read your last comment from yesterday's post.  I understand your concern with not wanting to expose yourself to the legal liability of trying to get GRE off the ground again, without having $250k for the potential legal costs.  Have you thought about simply purchasing insurance to cover your potential liability?  You should be able to buy directors & officers and errors and omissions insurance, for $1M of limit each (or more) for a tiny fraction of the $250k, and then the insurance companies will handle the defense if you get sued.  

  60. GILD/Rexx – Sorry, though I did mean to make it an official trade and though I did highlight it on the watch list, I never specified an amount so I can't really call that an official LTP trade.  Still, I totally endorse it.

    M/Rexx – That one was done properly and I will add it in.  Same with CMG – thanks for proofreading! 

    Trust/StJ – Wow, it's almost like Putin was in charge of this country the way we are losing our grip on the World Stage.  We dropped from 48 to 30?  I wonder if even Hitler had that much of an effect on Germany in his first year?  

    QUIK/Albo – Great job and great job not being greedy.

    Good idea Palotay.  My objection to the legal thing is that there's nothing lawyers can do to make you bullet-proof and they certainly won't give you any guarantees – they'll just charge a ton to research it and give you an opinion letter that's barely worth the cost of the paper it's written on because the potential plaintiff will have another lawyer with a different opinion.  

    The issue seems to be about making equitable distributions and I think we can narrow the focus to that aspect and set up a documented system that is then disclosed to potential coin buyers and sellers (by making it easy to find on the web) and then it's just a matter of not cheating.

  61. Germany has replaced the United States as the top-rated global power in an international poll.

    Just 30 percent of people interviewed last year across 134 countries approved of U.S. leadership under President Trump, a drop of nearly 20 percentage points since 2016.

    China has nearly reached parity with the U.S., and Russia is barely trailing it at 27 percent.

    There were bright spots for Mr. Trump in Belarus, Israel, Liberia and Macedonia, where approval of American leadership has surged.

  62. Good morning!

    /RB hit $1.865 but back to $1.875 at the moment, /CL at $63.60 and I'm liking that short now with a stop over $63.75.  There was a note from IEA that US could become the World's largest producer of oil this year and also this:

    UPDATE: U.S. Oil Output Expected to Surpass Saudi Arabia, Rivaling Russia for Top Spot…

    Iraq’s Crude Oil Production Capacity Could Hit 5 MMbpd

    And we already know the apparent US gasoline demand is driven by our exports:

    Image result for us gasoline exports 2017

    I don't know, I guess I put too much faith in reality coming into play at some point…

    Got burned on my Nasdaq shorts so I doubled down just shy of 6,850 with a stop over that line, 7 short at 6,835 now.


  63. Phil, Any interest in SO; Initial Sale of 5 contracts 2020 $40 Puts for $3 or better. Thanks as always