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Tariffic Tuesday – Trump Declares Trade War in Davos

"As we learned after President Herbert Hoover signed the Smoot-Hawley tariff at the outset of the Great Depression, vibrant international trade is a key component to economic recovery; hindering trade is a recipe for disaster" - Asa Hutchinson 

This is how we're making America great?

Back in the 1930s, the Smoot/Hawley Tariff Act was supposed to "Make America Work Again" after the stock market crash of 1929 but, instead, it destroyed trade so effectively that, by 1932, American exports to Europe were 1/3 of what they had been in 1929 and World Trade collapsed – leading to job losses in every country, a 10-year Depression, the rise of Fascism and, of course, WWII.

On his way to Davos, Trump declared tariffs on imports of Chinese solar panels and South Korean washing machines.  Measures his administration said were needed to protect U.S. manufacturers from a flood of cheap imports.  South Korea’s Trade Ministry called the tariffs unfair and argued they violated World Trade Organization requirements, while China’s commerce ministry called the action an “abuse of trade remedies.”  The U.S. action will also mean higher prices for American consumers and, already, companies like Kimberly-Clark (KMB) are cutting 5,000 jobs, citing sluggish sales.  

Solar-industry leaders said tariffs will slow growth in solar-panel installations and the jobs they create, which are more plentiful than in solar-cell manufacturing, a relatively small industry in the U.S. 

The most immediate impact of Trump opening the door to tariffs may be spurring retaliation by trade partners, as well as inviting more U.S. companies to seek help, said Chad P. Bown, of the Peterson Institute. That, in turn, could trigger additional trade skirmishes and fallout for U.S. workers and consumers, saying: “This is now really starting to escalate.  The concern is that now we’re at a tipping point.”

Of course, driving the cost of solar panels up 30% is good for the coal industry, as it makes cheap, clean, renewable energy more expensive but there are 10x more jobs in renewables than there are in coal so this whole thing is idiotic AND very unnecessary, as the main purpose of tariffs is to create jobs and we're already at record-low unemployment, so all this will do is drive up labor costs and spur inflation.  

China’s President Xi Casts Country as Guardian of GlobalizationMeanwhile, while our President is starting a trade war, China's President is taking on the mantle as the champion of free trade and is fully engaged in the Trans Pacific Trade Partnership (with every country but US) and, with Europe, is constructing the new Silk Road with the slogan "One Belt, One Roadwhich envisions constructing networks of ports, railways, pipelines and industrial parks between China and Europe.  China is investing $50Bn in this project and more of that money will now go towards ties with Russian companies as Trump takes the US out of the partnership picture.  

We should foster a new type of international relations featuring win-win cooperation, we should forge partnerships of dialogue with no confrontation and of friendship rather than alliance,” said Mr. Xi in a nationally televised speech.  He called for each country to respect each other’s sovereignty, “social systems and each other’s core interests.”

In his speech, Mr. Xi said China would set up 50 joint science and technology laboratories and offer 5,000 foreign scientists, engineers and managers research trips and training.  “Even if you don’t agree with China’s vision, at least they have one,” said Sudheendra Kulkarni, chairman of the Observer Research Foundation. Now that the U.S. is absorbed with domestic politics, he said, China is “the world’s only remaining thought leader.”

China’s President Xi Casts Country as Guardian of Globalization

America has never faced off in a trade skirmish with an opponent like China in terms of economic size, industrial capabilities and global ambitions.  If it escalated far enough, a trade war could take down the entire global trading architecture. That may, indeed, be Trump’s goal. His longstanding view is that one of the biggest mistakes the U.S. ever made was to usher China into the World Trade Organization in 2001, enabling a competitor. Aides say he regularly threatens to pull out of the rules-setting body.

Tariffs and trade wars have never worked and Trump vasly underestimates the Global Economic power China now commands.  This can all turn very ugly, very fast and – if we weren't hitting the top of the market before – I'd say we're forcing one now though these are slow-moving effects and it may take about 6 months to be able to look back at this moment and say "Yep, that's where things really went to Hell."

Meanwhile, be careful out there!  


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  1. Gonna draw the up 50% line on all the charts. That should hold us up for a month or 2!

  2. This is quite incredible though – we have incompetence at every level of government and worse, a president who seems to think that he can fire FBI employees whenever he wants, who talks nuclear war like it's a possibility and who engages in trade war. I guess markets think that incompetence is great because it doesn't get in the way of short term profits and long term thinking is well, for thinkers, such a liberal elitist value.

  3. And words have power:

    Michigan man arrested for threatening to travel to Atlanta and commit a massacre of CNN employees for “fake news.”

    I wonder where this guy gets this idea!

  4. Markets could still climb much higher:

    Josh here – there is a lag between peaks in momentum and peaks in the S&P 500’s price. In each of the cases, overbought markets as measured by RSI led to continued price gains for awhile longer. In the case of 1986, RSI peaked at a flamboyant reading of 87, and over the following 17 months the stock market went on to return another 34%, after having run up 129% over the preceding 3 years.

    The term “overbought” then, should not be conflated with market tops, which happen independently of peaks in momentum, and not concurrently.

    Irrational, but we don't control human behavior!

  5. Good Morning.

  6. I can honestly say I have not read a more sobering, depressing morning post in a long time. Just when you think things can't get any worse… is absolutely numbing the insanity that grips this country.

  7. no solar seems  good for frackin too

  8. Good morning!  

    Nice head-fake at the open but heading back down now.  26,200, 2,840, 6,950 and 1,605 are the shorting lines for the morning.  

    Dollar diving back to 90, would be much worse if it wasn't.

    Oil, on the other hand, up to $64.25 and /RB hit $1.90 and I like that short into inventories, which I think are tomorrow but might be delayed.  If Brent goes over $70 (now $67.25) then no shorting!

    /KC $121 is also worth watching, hopefully $1.20 but I don't mind one long here, another at $120.50 and 2 more at $120 to avg $120.25 (and to make sure I don't miss out).

    Copper getting crushed.

    Depressing/Pirate – Sorry.  

  9. 30% tariff on solar panels & 50% on washing machines. Gee, I wonder who that hurts. Not to mention what is going on at the gas pumps with Opec and Russia colluding to drive up prices.

  10. As least WHR gets helped.  We sold $5,600 worth of puts in the LTP – will easily pay for a new washer and dryer!  cheeky

  11. Well, it does not hurt SPWR or WHR….. I wonder if they complained…..

  12. …and what Phil said… :)

  13. …and WHR stated they were adding jobs…guess that phone call went well… :(

  14. LMAO The Trumps forgo 13th wedding anniversary celebration. Poor Melania-she probably doesn't want to be reminded anyways!!

  15. !WHR.  And many people are saying China did some hacking too, hoping Trump would blow up US's position in world economy for a few condos…

  16. /RB is relentless on it's upward trajectory.  Last year at this time we were around the $1.50 range.  What's changed for it to be up at the $1.90+ range now?  Especially as after the holidays, you would expect a bit of a pullback……..

  17. Nasdaq flying again! WTF!!!

  18. This is some bullshit.  Every time the major indexes show weakness the small caps are held up and back up we go.

  19. TSLA giving up a lot of the gains:

    Trumps/Pirate – You have to think she's a little mad about the stripper.  

    $1.91 – so much for an easy short on /RB.  I have 2 short at $1.911

    /RB/Ult – It's caught up in the whole Aramco oil push.  Oil as $52 in Jan but fell to $47 in March and $42 in June last year and two years ago it was $26 in Feb so this is beyond unusual but, to the people trying to push it higher – we're only halfway there:

     WTF/Jabob – Dollar failed 90.

    That's also goosing oil and gas with Brent now $70.15 and /CL at $64.64.

    And that brings us to our first trade for the Butterfly Portfolio!  

    OIH is a nice, rangy play that's not likely to go up or down more than 20% but should give us good action in between so it's good for a neutral play where we sell puts and calls. 

    Since we think it can move 10% up or down easily we should start small so let's just sell 10 of the March $30 calls for 0.90 ($900) and 10 of the March $29 puts for 0.95 ($950) and we'll just roll the loser.  

    The July $26 puts are 0.80 and the $33 calls are 0.90 so those are our roll targets and our "safe" range.  

    Of course the key to liking a butterfly is seeing how cheaply we can protect it and we only need to protect the outside of our roll, not the whole thing so we can buy:

    • Buy 15 OIH 2020 $23 puts for $1.60 ($2,400) 
    • Buy 15 OIH 2002 $36 calls for $2.10 ($3,150) 
    • Sell 10 OIH March $29 puts for 0.95 ($950)
    • Sell 10 OIH March $30 calls for 0.90 ($900) 

    So we're into the trade for net $3,700 and we have 7 more quarters to sell $1,800 in premium = $12,600, so a lot of potential collections.   We EXPECT to lose on one side, of course and we expect to have to do a 1.5x or 2x roll on the loser so it's a slow grind in the initial set-ups but we can easily double down any leg if we have to and, if we don't have to, we can collect 2-3x in profits.  

    The most complicated thing about a Butterfly trade is learning to be patient and letting it play out.  Generally, we only make adjustments once a month, during expiration week and, even then, only on contracts close to expiration or way off track.  Otherwise, this portfolio is the embodiment of Being the House and constantly selling premium.


  21. ~~Mayor Bill de Blasio and First Lady Chirlane McCray announced that the City had filed a lawsuit today in New York State Supreme Court to hold manufacturers and distributors of prescription opioids to account for their part in the City’s ongoing deadly opioid epidemic. The lawsuit aims to recover half a billion dollars in current and future costs the City will incur to combat this epidemic. In 2016, more than 1,000 people in New York City died in a drug overdose which involved an opioid, the highest year on record. More New Yorkers died from opioid overdoses last year than from car accidents and homicides combined.

    * “More New Yorkers have died from opioid overdoses than car crashes and
    homicides combined in recent years. Big Pharma helped to fuel this epidemic
    by deceptively peddling these dangerous drugs and hooking millions of
    Americans in exchange for profit,” said Mayor Bill de Blasio. “It’s time for
    hold the companies accountable for what they’ve done to our City, and help
    save more lives.”
    * “Today, New York City demands transparency and accountability from the
    nation’s largest opioid manufacturers and distributors who have profited from
    people’s pain,” said First Lady Chirlane McCray, who leads the City’s mental
    health and substance misuse efforts. “The greedy and reckless behavior of
    these companies has fueled a drug epidemic that is tearing apart families and
    damaging our communities. I am proud of our City’s resiliency and the
    tremendous courage of those New Yorkers who have saved lives and offered
    support. It is with this kind of compassion that we will help more people
    understand the disease of addiction and get more people on the path to
    * “The opioid epidemic has destroyed the lives of too many New York families.
    Enough is enough, and it is time we hold manufacturers and distributors
    accountable. New York City makes a tremendous step forward today by filing
    this lawsuit as we inch closer to combating the opioid crisis. I thank the
    Mayor and the First Lady for their leadership on this critical issue, and I
    look forward to working with them on providing closure to families affected
    by the opioid epidemic,” said Speaker Corey Johnson.
    * Manufacturer named in the suit are Purdue Pharma L.P.; Purdue Pharma, Inc.;
    The Purdue Frederick Company, Inc.; Teva Pharmaceuticals USA, Inc.; Cephalon,
    Inc.; Johnson& Johnson; Janssen Pharmaceuticals, Inc.; OrthoMcNeil-Janssen
    Pharmaceuticals, Inc.; Janssen Pharmaceutica, Inc. n/k/a Janssen
    Pharmaceuticals, Inc.; Endo Health Solutions Inc.; Endo Pharmaceuticals,
    Inc.; Allergan PLC f/k/a Actavis PLC; Actavis, Inc. f/k/a Watson
    Pharmaceuticals, Inc.; Watson Laboratories, Inc.; Actavis Pharma, Inc. f/k/a
    Watson Pharma, Inc. The distributors are McKesson Corporation; Cardinal
    Health, Inc.; and AmerisourceBergen Corporation.

  22. Phil/Aramco-how far do think they can push the price?

  23. Hard to believe, but FANG is still alive and well. 

    Top point gainers today.

  24. Opioids/Seer – That's interesting.  I don't see it going far against manufacturers who simply make a drug that is used by hospitals legitimately.  Distributors may have a problem.  

    Aramco/Seer – I didn't think they could get Brent to $70, so who knows.  This isn't even the big push, I expected $75 in the summer but if they can hold $60s through the Spring, they may have a shot at $100 in July.  That will, of course, crash the economy – but what do they care? 

    • Crude oil prices rise to new multiyear highs, lifted by healthy world economic growth prospects and continued production curbs; U.S. WTI crude +1.5% at $64.57/bbl, Brent +1.6% at $70.13/bbl.
    • The IMF this week upwardly revised its forecast for world economic growth to 3.9% for both 2018 and 2019, up from its 3.7% outlook on its last update in October, which "further improves the already fairly rosy demand prospects on the oil market," Commerzbank analysts say.
    • “It is not a far-fetched thought to expect global oil demand and oil-demand growth to follow suit shortly,” says PVM Oil Associates analyst Tamas Varga in response to the IMF estimates.
    • Other bullish factors include an expected 10th straight weekly drawdown in U.S. stockpiles when the U.S. Energy Information Administration releases data tomorrow, as well as signals over the weekend from Saudi Arabia that OPEC could extend its production cuts beyond 2018.

    Nice spike in GreenCoin today – hit a penny for a second:

    • via WSJ
    • From an apartment in Long Island City, Queens, a 31-year-old computer programmer built into one of the globe's most-visited sites by tracking prices and other data on hundreds of cryptocurrencies.
    • His decision earlier this month to stop including data from Korean exchanges (where crypto prices are often significantly higher than elsewhere) in his pricing algorithms caused an immediate tumble in prices. Waking up to a big decline, panicky traders sold more, forcing prices down even further.
    • While traders across the globe reacted angrily, has gotten even more popular, with Amazon ranking its 117th globally vs. 142nd prior to the Korea move.
    • "Our goal was and still is to remain a neutral and accurate source for the cryptocurrency community … I think the market was already on a downturn at that point so the timing was quite unfortunate," says the publicity-shy owner of the site.
    • Bitcoin and most of the alt-universe still haven't found their footing, sitting at sharply lower levels today than two weeks back.
    • ChinaNet Online Holdings (CNET +16.3%) is on the move again on a blockchain headline, as the company announces a new joint venture around the technology.
    • It's entered a JV with Wuxi Jingtum and Ford Tree Blockchain Technology to work research and development in the burgeoning area.
    • ChinaNet will be the controlling shareholder in the JV, to be registered in early February.
    • Ford Tree will be responsible for creating and reviewing the operating model for blockchain applications in the venture.
    • Previously: ChinaNet Online +145%, latest to ring bell on blockchain pivot (Jan. 04 2018)
    • Redbook Chain Store Sales+3.8% Y/Y vs. +2.6% last week.
    • Month-to-date chain store sales +3.3% Y/Y.
    • January sales are expected to be up 3.6% Y/Y.
    • The yen slipped 0.2% to 111.15 yen to the dollar as BOJ chief reitereated commitment to strong monetary easing, saying there is still some distance to meeting inflation target.
    • The BOJ said risks to prices are still tilted to the downside, though its slight change to its assessment on inflation expectations to "flat" from "weak" was enough to trigger a bout of yen buying.
    • Germany economic sentiment rose to 20.4 in January against analyst estimate of 17.8, while the current conditions index hit a record high of 95.2, bolstering optimism over the strength of the motor of the euro zone economy.
    • The euro zone economic sentiment increased to 31.8 in January vs. 29.0 in December, 29.7 consensus.

    • UK public sector net borrowing decreased to a seasonally adjusted £0.98B in December from revised figure of £6.65B in November and estimate of £4.20B.
    • The public sector net borrowing excl. public sector banks decreased by £6.6B to £50B in the current financial year-to-date (April 2017 to December 2017) and expects it to be £49.9B during the financial year ending March 2018.
    • The report also showed that the UK public sector net cash requirement rose to £25.13B from revised figure of £13.152B.

    Bloomberg: Big oil plans tenfold expansion of cost-cut collaboration

    • The world’s biggest energy companies plan to significantly widen a two-year effort to standardize the kit they use to pump oil and gas, hoping they can deliver significant cost savings, Bloomberg reports.
    • "Standardization could save the oil and gas industry hundreds of millions of dollars every year," BP CEO Bob Dudley says in an interview at the World Economic Forum in Davos.
    • The companies plan to expand their list of standardized kit to 40 from the initial four items agreed on when they started their collaboration in 2016, according to the report; the initiative includes BP, Royal Dutch Shell (RDS.ARDS.B), Total (NYSE:TOT), Statoil (NYSE:STO), Repsol (OTCQX:REPYFOTCQX:REPYY), Chevron (NYSE:CVX) and Saudi Aramco.

    Old favorite:  Alegheny Tech +5% following strong Q4, optimistic outlook

    • Allegheny Technologies (ATI +5.4%) jumps to a 52-week high after Q4 earnings easily beat analyst expectations, with improved Y/Y performance in both its High Performance Materials & Components and Flat Rolled Products business segments.
    • ATI says continued strong sales of next-generation jet engine products, which rose 26% Y/Y, drove Q4 HPMC segment operating profit margins to 12.7% of sales, while the FRP business generated more than $22M operating profit, or nearly 6% of sales, for the segment's best quarter in five years.
    • For 2018, the company expects continued revenue growth and operating margin improvement in HPMC segment and for FRP to build on operational improvements and product mix benefits achieved in 2017.
    • Base metal mining companies including Freeport McMoRan (FCX -3.4%) and Teck Resources (TECK -2.5%) are smacked as copper prices fell after inventories surged the most in 10 months.
    • Bloomberg analyst Andrew Cosgrove foresees more sideways to downward movement in the short run, with key catalysts including select physical market indicators remaining soft, better output visibility from miners as a result of earnings season and weaker seasonal demand in China.
    • Iron ore miners such as Vale (VALE -4.5%) and Cleveland-Cliffs (CLF -2%) also are lower amid falling prices, as steelmakers in China, facing a decline in profitability, switch back to using more lower-grade material, cutting into demand for higher-quality ore.
    • Also: AA -1.9%SCCO -1.6%BHP -1.2%RIO -1.2%.

    A Look At The Lithium-Ion Battery Recycling Industry And Companies 

    General Electric: How Low Can It Go? 

    • Chicago Bridge (NYSE:CBI) has broken ground for the Lake Charles Power Station, a new natural gas-fired combined-cycle power plant for Entergy Corporation subsidiary Entergy Louisiana.
    • The scope of work on the project includes the engineering, procurement, construction and commissioning for the 994 megawatt plant, which features advanced-class turbines for the efficient production of clean power generation.
    • Wynn Resorts (WYNN +2.1%) CEO Steve Wynn issued a strong outlook for the Macau sector during yesterday's conference call.
    • The long-time casino heavyweight said the company was generating midweek business in the mass casino in the $3M and $4M day level during a period it expected a post-New Years Day slowdown.
    • Wynn also laid out why in some respects Macau is still in the early innings. "I stress to people who were interested in our company and who invest in gaming that the Macau market is still only touching a tiny percentage of the potential market that's there. And as these hotels gain public acceptance, we notice the really important changes," he noted.
    • Susquehanna analyst Rachael Rothman issued a similar appraisal on the sector last week.
    • "The recent acceleration in Macau's mass market growth is a positive and makes us incrementally more optimistic on the 2018 outlook for Macau," wrote Rothman.
    • "The acceleration in mass market growth, if at least partially sustainable, will translate into lower cannibalization from the three new mass market casino openings in 2018, support higher EBITDA margins and cash flow, and potentially lower volatility," she predicted.
    • Shares of Wynn topped $200 for the first time since 2014.
    • H&R Block (HRB +5%) breaks higher after updating on the impact of new tax laws.
    • Tax reform update: "With respect to corporate income taxes, the Company is expecting an annual effective tax rate of approximately 8% to 12% for FY18, comparing favorably to the annual effective tax rate for FY17 of 33.1%. A significant portion of the items generating the tax benefit in FY18 are related to the Tax Legislation becoming effective during FY18 and are not expected to recur. Starting in FY19, the Company currently estimates its annual effective tax rate will be approximately 23% to 25%."

    GoPro -3.8% on analyst downgrade

    • Morgan Stanley downgrades GoPro (NASDAQ:GPRO) from Equal Weight to Underweight and lowers the price target from $9.50 to $5 (nearly 21% downside on yesterday’s close.)
    • Analyst Yuuji Anderson says the market gives too much credit to the company’s strategic value since it has limited earnings power.
    • Anderson expects negative trends to continue into 2019 since camera usability isn’t improving at a fast rate. 
    • Source: Bloomberg First Word.    
    • GoPro shares are down 3.8% to $6.06
    • Logitech (NASDAQ:LOGI) shares are up 5.8% premarket following Q3 results that beat EPS and revenue estimates.
    • Raised FY18 guidance has revenues up 12% to 14% on the year to $2.47B to $2.5B (consensus: $2.46B; was: $2.43B to $2.47B). Logitech expects operating income between $270M and $280M (was: $260M to $270M.) 
    • Key Q3 results: Non-GAAP operating income, $117M (+18% Y/Y); cash flow from operations, $189M (+27%); total operating expenses, $175M; cash and equivalents, $564.8M; total liabilities, $823.5M.   
    • Press release    
    • Previously: Logitech beats by $0.07, beats on revenue (Jan. 22)
    • Small-scale romantic fantasy The Shape of Water (FOXFOXAled all films with 13 Oscar nominations in a year where box-office clout and awards cred are overlapping less and less.
    • It was followed up by Three Billboards Outside Ebbing, Missouri (FOXFOXA), with nine nominations, and Christopher Nolan's war film Dunkirk (NYSE:TWX), with seven nominations. Three Billboards and The Shape of Water add up to a nomination haul for the Fox Searchlight label, which distributed both.
    • Along with those three, all nominated for the top award, other best picture nominees include Call Me By Your Name; Darkest Hour (NASDAQ:CMCSA); Get Out (CMCSA); Phantom Thread(CMCSA); and The Post (FOXFOXA).
    • Greta Gerwig became just the fifth woman nominated for Best Director, for Lady Bird, and Jordan Peele just the fifth black man nominated, for Get Out; Steven Spielberg was left out despite directing best picture nominee The Post.
    • Netflix (NASDAQ:NFLX) did well, drawing seven nominations, but (NASDAQ:AMZN) drew just a single nomination.
    • Oscar nominations can provide some monetary lift to a few films each year that are still running in theaters. But most of this year's best-picture nominees are smaller in budget, with only Dunkirk and Get Out earning more than $100M. The year's top-grossing film, Star Wars: The Last Jedi, is nominated in sound, score and visual effects categories.
    • The 90th Academy Awards will air on March 4 on ABC (NYSE:DIS); Jimmy Kimmel is returning as host and the network was reportedly looking for up to $2.6M in advertising from the telecast despite a few years of declining ratings.
    • Netflix (NASDAQ:NFLX) is up 11% in premarket action after the company's strong subscriber growth sends analysts scrambling to crunch numbers again. Piper Jaffray summed up the bull camp on the streamer when it maintained that Netflix has reached "escape velocity" in its path to stay ahead of content spending.
    • On the Netflix conference call, execs disclosed a $39M write-down of future projects during the quarter. That mark appears to be related to the House of Cards issue after a large number of sexual harassment allegations against Kevin Spacey emerged.
    • PT boosts on Netflix: Wells Fargo to $285, JPMorgan to $285, Goldman Sachs to $315, Buckingham Research to $257, Stifel Nicolaus to $283, Pivotal Research Group to $300.
    • Netflix earnings call transcript
    • Previously: Netflix smashes subscriber estimates (Jan. 22)

    • Verizon (NYSE:VZ) is up 1.7% premarket after posting Q4 earnings where revenue solidly beat expectations and profits jumped, with a boost from late-breaking corporate tax reform.
    • EPS more than quadrupled in GAAP terms, while non-GAAP EPS was flat at $0.86. Adjusted EPS included a net pretax loss of about $2.6B along with a one-time after-tax boost to earnings estimated at $16.8B (about $4.10/share), among other adjustments.
    • The company posted 1.2M retail postpaid net subscriber additions in Q4, which includes 647,000 postpaid smartphone net adds (431,000 net phone additions). The total included 193,000 tablet net adds and 550,000 other connected devices, led by wearables.
    • Retail postpaid churn was at 1%, and retail postpaid phone churn was 0.77% (under 0.9% for the 11th straight quarter, Verizon notes).
    • Revenue breakout: Service revenues, $27.48B (up 3.3%); Wireless equipment revenues, $6.48B (up 13%).
    • For 2018, it's guiding to low-single-digit revenue growth and EPS growth on a GAAP basis and, excluding new revenue recognition impact, expects to hit Y/Y wireless service revenue growth by mid-2018. Capital spending will be $17B-$17.8B including a commercial 5G launch, and expected tax reform savings will give to $3.5B-$4B uplift to cash flow from operations, yielding a $0.55-$0.65 gain in 2018 EPS.
    • Earnings slides
    • Press release
    • Apple (NASDAQ:AAPL) shipped 29M iPhone X units in CY17 Q4 (Apple’s Q1 FY18), according to Canalys estimates, and 7M were shipped in China.
    • Canalys says the 29M units are slightly below expectations likely due to the initial supply constraints and splitting the launch with the iPhone 8 and iPhone X. 
    • Buyers didn’t balk at the premium price tag due to financing plans and trade-in programs. 
    • Strong sales in older iPhone models helped Apple hedged the risk of launching three new phones last year. 
    • New MacBook: Digitimes reports that Apple will release an entry-level, 13-inch MacBook in 2H18. 
    • Sources say touch panel maker General Interface Solutions will supply LCM for the product after becoming a MacBook supplier in CY17 Q4.   
    • Supplier shift: Foxconn (OTCPK:HNHAFOTCPK:HNHAY) could add its iPhone unit to a new Shanghai spinoff called Foxconn Industrial Internet, which will house its networking services and cloud computing operations. 
    • Shareholders need to approve the spinoff at the shareholder meeting on January 31. 
    • Apple share are up 1.1%.    
    • Previously: Apple's HomePod smart speaker launches Feb. 9 (Jan. 23)

  25. FU FANG!!!!!

  26. Bought some GE yesterday for a trade.  Taking that position off.  Earnings are tomorrow morning, and I'll step aside.  Still short some puts.

  27. I have a bitcoin farm trying to rent commercial space in one of my buildings.  Trying to decide if its a good idea to rent to them.  Any thoughts guys?

  28. GRE. Actually the highest Greencoin traded in the last 24 hours on the one real exchange was about one-sixth of a penny, which is still a nice move up from a few weeks ago!

  29. Nice move in HMNY today.

  30. GE/Albo – Hard to imagine it can get worse.

    In the LTP, we have the 2020 $15/20 bull call spread (40) with short $18 puts (20) and we're down about $4K at net $0 and I LOVE this for a new trade but it's not worth us doubling down or even rolling ahead of earnings because either we won't need to and we're back on track for a $20,000 return or we need to and we can add to the position much more cheaply.  

    BitCoin Farm/Willsons – Well they pose a fire risk running servers 24/7 and may strain your power lines and Internet services and, of course, they could randomly go BK and stiff you but, if it's an otherwise empty space and they're paying a good price – just get a nice deposit and hope for the best.

    GreenCoin/Jet – I have to open up an account on the unreal exchange!  

    HMNY/Albo – I'm starting to really like their plan.

    • Helping sentiment is a big Q4 earnings beat from Popular (it's up 7%) and the Governor's promise to move forward with plans to privatize the troubled power utility, Prepa.
    • MBIA (MBI +6.3%), Evertec (EVTC +7.6%), Ambac (AMBC +4.9%), Assured Guaranty (AGO+2.1%), OFG Bancorp (OFG +4.4%), First Bancorp (FBP +4.9%).

    Technical issues close largest exchange in Vietnam

    • Trading on the Ho Chi Minh City Stock Exchange will be closed tomorrow to mark a third straight day for an outage of Vietnam's largest exchange.
    • The technical problems started around the closing on Monday when prices couldn't be matched correctly.
    • The market cap of the stocks traded on the Ho Chi Minh exchange is roughly $100B.
    • Related ETF: VNM.
    • The price of liquefied natural gas is near three-year highs as China replaces coal with gas, sucking up global supplies of the fuel, WSJ reports.
    • Chinese LNG imports rose by nearly 50% last year and the country has now passed South Korea to become the world’s second largest importer behind Japan, but the extra imports still have not been enough for some parts of Chinese industry; BASF (OTCQX:BASFY) stopped producing some chemicals at a Chongqing-based facility due to “a supply shortage of natural gas," and says production remains suspended and does not yet known when it will resume.
    • Royal Dutch Shell (RDS.ARDS.B), the biggest LNG shipper and producer, estimates trade will increase by a third from 2016 to 2020 to 350M metric tons/year.
    • EU antitrust regulators will sanction Qualcomm (NASDAQ:QCOM) for hurting competition by paying Apple (NASDAQ:AAPL) to use its chips exclusively, according to FT.
    • Qualcomm paid Apple to buy all of its communication chipsets from 2011 to 2016.
    • EU fines for such discretions are capped at 10% of a company’s annual turnover, which would put Qualcomm’s maximum payment at about $2B. 
    • The fine would give Apple power in its ongoing legal battles against Qualcomm for “exclusionary tactics and excessive royalties” and weaken Qualcomm as it tries to fight off the unsolicited bid from Broadcom.   
    • EU regulators will reportedly announce the sanction tomorrow.    
    • Previously: Qualcomm: Shareholders should block Broadcom picks on regulatory concerns (Jan. 23)

  31. Is there anything that will stop this nonstop run in the Nasdaq?

    It hits new highs every day?

  32. Pirati – "I can honestly say I have not read a more sobering, depressing morning post in a long time. Just when you think things can't get any worse… is absolutely numbing the insanity that grips this country."

    Phil – "Depressing/Pirate – Sorry."

    Damn it Jim, it may be sobering and depressing, but its the truth.  And now your moment of Zen for the day… Saul once taught me this…

    One cannot appease the truth with the opinions or desires of others. Sometimes the truth hurts and must be dispensed without flattering words, nor any cloak for covetousness.  

    The truth must be told, when people want to hear it, and especially when they don't.  Sometimes one must be willing to become an enemy of others, in order to tell them the truth. 

    It takes more than knowledge of the truth, to tell the truth.  It also takes the courage to proclaim it as truth, and defend it. 

    Never try and separate yourself from the truth, as if to say don't hate me for telling the truth. To do so is like saying that one understands the truth, but does not agree with it. 

    One who tells the truth, should not be ashamed of it, for one cannot prove the truth, when they are ashamed of it. 

    A messenger of the truth, never apologizes for telling the truth. Speak the truth in love, and save "I'm sorry" for when you are actually wrong. 

    The truth is out there, please keep telling it Phil.  Truth is, everyone has to believe in something, and I believe its time for my IV, putting the soapbox away now and out.

  33. Stopping/Jabob – I think it will take some earnings misses from Nas players but so far, so good.

    Truth/Naybob – Well it doesn't usually end well for truth-tellers, does it?

    Image result for you can't handle the truth jesus

  34. ~ MAT – Mattel (MAT +12%) and Hasbro (HAS +6%) lifting in recent trade .

  35. Hi Phil,   just a reminder as you had requested in an earlier thread.

    Which banks/insurance cos can we bet on for a 2020 spread given the environment of rising interest rates.? 


  36. Toys/Albo – Not sure on what basis they are rising?

    Banks/Learner – Did I promise that?  Arrrgh, that's a lot of work! 

  37. Bought some DGAZ at 19.80 on this big pullback.  Just looking for a scalp.

  38. Phil / GE – Bug run up today going into earning tomorrow.  I'm thinking of selling out of my short puts and take a small game…..  Do you have any insight into earning tomorrow?

  39. FAZ is getting crushed in the OOP so let's make an adjustment to our Feb $10/11 bull call spread.  

    • Roll 20 FAZ Feb $10 calls at 0.32 ($640) to 40 April $10 (0.68)/$11 (0.40) bull call spreads at 0.28 ($1,120)
    • Also, we need to put a stop on the remaining 20 short Feb $11 calls, now 0.08 at 0.20.

    ?We began at net $1,300 and we're putting another $480 into it so we're in the $4,000 spread for $1,780 so far.  If we buy back the short calls for $300, then $2,080 but we'd only be buying them back if we're back on track!  

    Also in the OOP:

    • Roll 50 TZA April $11 calls at 0.75 ($3,750) to 40 July $9 ($2.20)/$12 ($1) bull call spreads at $1 ($4,000) 
    • Put a stop on 25 (1/2) of the TZA April $15 calls (0.25) at 0.40 ($1,000) 

    We spent $4,500 initially and now 250 more is $4,750 on the $12,000 spread and another $1,000 if we have to buy back the short calls.  

    We'll make an adjustment to our GE position ahead of earnings to get more aggressive:

    • Roll 20 GE 2020 $18 calls at $2.50 to 20 GE 2020 $15 calls at $3.90 for net $1.40 ($2,800)
    • Buy back 20 GE 2020 $25 calls for 0.75 ($1,500) 


    IMAX is good to add to at this level now that September is out:

    • Buy 15 IMAX Sept $19 ($3.30)/25 ($1.10) bull call spreads at $2.20 ($3,300) 
    • Sell (close) 10 IMAX June $21 calls at $1.70 ($1,700)
    • Buy (close) 10 IMAX June $26 calls at 0.45 ($450)

    ?Here we're spending net $2,050 on top of the $1,150 we previously spent on what is now a $9,000 spread so still a very good return if IMAX can get back to $25.

  40. Phil – "Truth/Naybob – Well it doesn't usually end well for truth-tellers, does it?"

    It ends much worse for those who do not tell the truth, the whole truth and nothing but the truth.  For certain President's, that can be a real Corker, and Out.

  41. GE/Batman – The OOP wasn't as low as the LTP so I got more aggressive but we may have to sell calls and roll down – so I'm staying flexible.  Hard to imagine it's going to be as bad as the chart indicates though. 

    Amazing – up into the close yet again.  

    Check out the DAX breaking out:

    If Euro Stoxx make new highs – we're going to have to get more aggressively bullish to keep up!  

    Nikkei already up up and away:

  42. The American Petroleum Institute (API) reported a surprise build of 4.755 million barrels of United States crude oil inventories for the week ending January 17, ending the streak of seven large draws in the previous seven weeks, according to the API data. Analysts had expected a drawdown of 1.6 million barrels in crude oil inventories.

    Last week, the American Petroleum Institute (API) reported a huge draw of 5.121 million barrels of crude oil, along with an increase in gasoline inventories of 1.782 million barrels.

    This week, the API is reporting another build in gasoline inventories of 4.117 million barrels for the week ending January 17. Analysts had expected a smaller 2.486-million-barrel build.

    The WTI and Brent benchmarks both saw big gains on Tuesday as the IMF painted a rosy picture of the global economy for 2018 and 2019. At 3:27pm EST, WTI was trading up 1.75% (+$1.11) at $64.68. The Brent benchmark was trading up 1.52% ($1.05) at $70.08—the over-$70-threshhold being a significant psychological level to break through, and a new multi-year high for the closely watched international benchmark.

    Distillate inventories saw a decrease this week of 1.280 million barrels, largely in line with the forecast for a 1.471-million-barrel decline.

    The American Petroleum Institute (API) reported a surprise build of 4.755 million barrels of United States crude oil inventories for the week ending January 17, ending the streak of seven large draws in the previous seven weeks, according to the API data. Analysts had expected a drawdown of 1.6 million barrels in crude oil inventories.

    Last week, the American Petroleum Institute (API) reported a huge draw of 5.121 million barrels of crude oil, along with an increase in gasoline inventories of 1.782 million barrels.

    This week, the API is reporting another build in gasoline inventories of 4.117 million barrels for the week ending January 17. Analysts had expected a smaller 2.486-million-barrel build.

    The WTI and Brent benchmarks both saw big gains on Tuesday as the IMF painted a rosy picture of the global economy for 2018 and 2019. At 3:27pm EST, WTI was trading up 1.75% (+$1.11) at $64.68. The Brent benchmark was trading up 1.52% ($1.05) at $70.08—the over-$70-threshhold being a significant psychological level to break through, and a new multi-year high for the closely watched international benchmark.

    Distillate inventories saw a decrease this week of 1.280 million barrels, largely in line with the forecast for a 1.471-million-barrel decline.

  43. Jabo – we are in one crazy super-market currently. It's quite insane really.

  44. NFLX wow!

    Go Real News! awesome

  45. PHIl,

    Do you think there is a floor for /DX? How low do you think it will get?

  46. I’m down about $1000 a contract, so don’t ask me!

  47. Phil, Am I on the right track?

    1/20th annually – Would you confirm I am learning?  Using NOK (market cap 28B) as an example, the revenue would need to be 1.4B a year, growing 10% a year, and not much debt or other issues.  When you look at debt… is there a debt to asset ratio figure that I can use as a benchmark?  

    Are you still holding /RB into inventories? 

    Thank you kindly

  48. "Tariffic Tuesday" best title ever

  49. Opioid commission member: Our work is a ‘sham’

  50. Kentucky school shooting: 2 students killed and 17 others injured

  51. Johnson & Johnson loses $10.7B after sweeping US tax changes

  52. Me too! Trying to figure out when to add more or to get out!

  53. Good morning!  

    Futures up yet again for no particular reason.  

    Dollar down 0.5% is really what's happening.

    The Dollar is so weak even the Loonie is gaining:

    API/Edro – Thanks.  Weak Dollar is supporting oil and /RB but hopefully API will confirm the builds.

    /RB/Grass – Yes, I still have 2 short at about $1.91.  Would have taken $1,000 off the table if I were awake at 4am but I missed it and I still have faith so waiting and seeing.

    Floor/Japar – Well, going back to 2008, the Dollar is much stronger than it was until 2014, when it finally made a real move out of the 80s.  It was when the Fed stopped easing and stopped adding QE but consider that QE added about $1Tn to the economy per year and now repatriation of cash will do maybe more than that.  That may be why Dollars are getting priced so weak – anticipation of more supply.

    TPP members reach agreement on deal

    • Negotiators from 11 Pacific Rim nations have agreed on a new Trans-Pacific Partnership amid an arrangement on autos with Japan and the suspension of intellectual property provisions that had been a concern for Canada.
    • The deal will likely be signed in Chile on March 8.
    • Without the U.S., the combined gross domestic product of the agreement amounts to $12.6T, or 15.8% of world GDP.

    EU slaps Qualcomm with $1.2B antitrust fine

    • EU antitrust regulators have slapped a €997M ($1.2B) fine on Qualcomm (NASDAQ:QCOM) for paying Apple (NASDAQ:AAPL) "billions of U.S. dollars" to shun rival chips in its iPhones.
    • "This meant that no rival could effectively challenge Qualcomm in this market," said EU Competition Commissioner Margrethe Vestager.
    • The fine is massive, thought it's well below the more than $2B the commission could have sought under Europe's antitrust laws.
    • Previously: FT: Qualcomm facing potential $2B EU fine over Apple (Jan. 23 2018)

  54. PHIl,

    What’s your /DX position and what is your plan? I need some help… I’ve got 10 long at 90.57