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Record High Wednesday – Diving Dollar Boosts Equity Markets

How low can we go?

Clearly the US Dollar has fallen out of favor, now down 12.5% since Donald Trump took office.  Since the S&P is priced in Dollars, that means it should be  at least 12.5% higher simply to adjust for the weakness in the currency you use to buy it and, over the same period, the S&P has marched from 2,275 to 2,847 so 25% – the market has doubled the Dollar's move, which is actually a typical reaction by the market.

Unfortunately, we have to consider that earnings are also priced in Dollars so companies that aren't earning 12.5% more than they earned last year are actually losing ground when priced in gold, silver, Euros, Yen, Yuan, BitCoin, oil, etc…  This is especially true for S&P 500 companies who make more than half their money overseas and are currently getting the most favorable conversion rates in decades – making this a great time to repatriate money.

Repatriation is also driving the Dollar lower as we're getting a tsunami of Dollars blowing back into the country from overseas.  Some estimate put the number at $2 Trillion that will come back into the country – compare that to $960Bn added to the economy in a year of peak QE by the Fed.  

This is why bonds are collapsing and our rates are going higher – whether the Fed takes action or not – because if you want people to lend you money priced in, yuch, Dollars – you'd better give them a really good rate of return to compensate for the crappy currency you are promising to pay them in.  

Making America great again by changing the measuring stick is not the best way to run a country.  It's like claiming your kid got taller because he was 60 Inches tall but now he's 152.4 Centimeters tall – it's the exact same thing but it sounds like more.  In fact, the last leg of the Dollar dive was caused by Trumps own Treasury Secretary and film producer, Steve Mnuchin, who actually just said at Davos:  "Obviously a weaker dollar is good for us as it relates to trade and opportunities" adding that the currency's short term value is "not a concern of ours at all."

Of course the short-term value of a currency is of no concern to the Top 1%, because they have no need to spend their Dollars when they are weak.  The bottom 99%, however, tend to use their Dollars on a regular basis and can't wait for the opportune moment to make their purchases, as illustrated by this chart showing what a wealthy person can do with $60,000 vs what a Middle Class person can do with $60,000.  

Clearly, in this example, the rich get richer while the average American, who is forced to spend his Dollars on assets that depreciate or goods that are consumed ends up with little to show for it at the end of the same period.  When the currency is failing, the returns on investments get greater and the buying power for the poor is lower so the wealth inequality grows even more rapidly – so Trump's weak-Dollar policies are simply transferring massive amounts of wealth to the Top 1% (who own the car company too!).  

You may be skeptical but consider Venezuela, where their weak currency has boosted the Annual Inflation Rate to almost 6,000% and the 100 Bolivar Bills, which are the country's largest notes, were worth 15 cents each last January, causing President Maduro to "revalue" the currency and introducing bigger bills but that hasn't worked out at all and now the exchange rate is 241,665 Bolivars/Dollar.  So, if I were to tell you how many more Bolivars your Venezuelan company was making this year than last year – you would laugh and say that doesn't count because it's a worthless currency run by a Government on the verge of collapse.

Well, I hate to tell you this but that is the view other countries around the World have of America and you can hide your head in the sand all day long and pretend the FBI investigation into the President's activities is fake or part of some "deep state" conspiracy but – even if that is true – then what kind of mess is this country?  So either we have a corrupt President who colluded with Russia to get elected and then obstructed justice to cover it up or we have a corrupt law enforcement bureau at the highest levels spearheading a shadow government (apparently headed by Hillary Clinton) that holds all the real power in America.  Either way, it makes investing in the US about as attractive as investing in Venezuela.  

Related imageOn the bright side, as you can see, this was great for investors in Venzezuela's stock market and it took years before the country really began to slide into the abyss so the US can circle the event horizon of this economic black hole for years before we get sucked in and crushed.  Meanwhile, party on!  

In fact, the market could soon get another boost as money flees from declining bonds, which are priced in weakening Dollars paying too-low rates to hold onto for the long-term, especially if the Fed shows they really mean business rasing rates and scaling back QE.  Unfortunately, the Treasury needs to sell even more debt to cover the shortfall in tax collection caused by the Trump Tax Breaks for the Top 1% and also, ironically, to pay off the Fed when they redeem their bond holdings.  

Having all that happen at the same time that demand for Treasuries (and Dollars) has been declining and the only thing great about America may be the rising rates at the bank – though maybe we'll start getting free toasters again?  China has already announce they will be scaling back purchases of US Debt and it's very unlikely Trump's declaration of a Trade War is going to make them go easy on us.  Meanwhile, China is facing their own crisis in the $15Tn "Shadow Banking" Industry as the cash-flow dries up and that system begins to collapse in on itself.  

Meanwhile, all that worthless cash has no place else to go so we're still forced to pick up US equities.  Yesterday, for example, we got more aggressive on our GE position in the Options Opportunity Portfolio (we already were more aggressive in our Long-Term Portfolio) on the theory that earnings couldn't possibly be worse than expected with the stock down at $16ish.

I posted the original trade idea in our Jan 3rd Report titled: "Wednesday Watch List Update – Stocks We Like for 2018," where I said:

GE has made a lot of changes and has sold off divisions, raising $78Bn worth of cash but that's also lowered revenues and profits and, because they have maintained an $8.8Bn annual dividend payment, cash flow was -$9Bn in 2016 (not including debt repayments ($58Bn) and stock buybacks ($21Bn).  It will take GE a while to move back to being cash-positive and management has cut the dividend to 0.48 (2.7%) so cash flow will improve.  

We don't really care whether GE goes up or down, as long as they don't go bankrupt but, since we're really in them for the dividend, we don't need to actually OWN the stock since we can simply sell the 2020 $18 puts for $2.40, which is 5 years worth of dividends!  That makes our worst case re-entry owning the stock at net $15.60, a 13% discount to the current price

In our $500,000 Long-Term Portfolio, we have $50,000 allocation blocks so we can own 3,200 shares of GE at $15.60 but we don't want to fill the whole block in one shot.  If GE drops to $9, we'd be screwed and down $20,000(ish) but, if we sell 15 short $18 puts for $2.40 we collect $3,600 against just $2,618 in margin and all GE has to do is stay over $18 two years from now and we make 100% of that money.  

On the other hand, if GE drops to $9, we would be assigned 1,500 shares at net $15.60 ($23,400) and we'd turn around and sell the $10 calls for about $1.50 and the $10 puts for $1.50 and that would drop our net to $12.60 and down just $5,400 or 10% of an allocation block or 1% of our portfolio.  So the risk is VERY manageable and we're pretty sure we'd be very happy to double down on GE at $9 and, even if we did that, we still wouldn't fill a whole allocation block.  

In our $500,000 Long-Term Portfolio, we look for short put opportunities like that every month that pay us $4-5,000 so that we're collecting 10% a year simply for promising to buy cheap stocks if they get even cheaper!

The stock has fallen close to our break-even and the 2020 $18 puts are now $3, so down 0.60 (25%) per contract but NOW we have a cheap entry on the stock and yesterday we added 20 2020 $15 calls at $3.90 ($7,800) and left them naked.  Net of $2.40 collected on the short puts, we're in for net $1.50 with a break-even now at $16.50 and we'll see how that trade goes along.  Eventually we'll cover it and lower the basis further – but not for a while.

So there are still plenty of good stocks to buy cheaply – especially if you use our patented system to buy your stocks at a 15-20% discount to the current market price.  Then we can just cross our fingers and pray for 6,000% inflation so we can brag to all our friends about what clever investors we are! 

Be careful out there!  

 


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  1. Morning, All!

    Join us at 1pm for this week's live webinar!

    https://attendee.gotowebinar.com/register/3883085130978287361



  2. These idiots in Congress pushing that deep state conspiracy are only weakening the institutions that they swore to protect. And they'll act surprised when domestic terrorism picks up against these same institutions. Just like when people claim to want to massacre CNN people because of their fake news! Scary times… 



  3. Good Morning.


  4. This should fuel the rally :-)

    https://www.bloomberg.com/news/articles/2018-01-23/slowing-cash-flow-could-mean-a-nasty-surprise-for-u-s-stocks

    There’s been a “steady” decline in the growth of net operating cash flow in U.S. stocks, excluding the financial and energy sectors, the French bank’s analysts highlighted in a recent note. (Financials have benefited from rising interest rates, while oil companies have been bolstered by the increase in crude prices.)

    The slowdown for the broader group of companies is noteworthy because it’s coincided with both a slump in the dollar and a decline in the yield curve, said the strategists. An inverted yield curve, which will occur if the trend continues, has historically come before economic slumps like the one that started about 10 years ago. And a falling dollar could reflect relatively more positive investor sentiment about economies outside the U.S.

    "If the cash-flow growth signal is correct, and that reinforces the yield-curve view" of the U.S. outlook, "then equity markets could be in for a nasty surprise,” according to SocGen.


  5. Something has to give – either the average rises dramatically or we reverse to mean:

    http://www.crossingwallstreet.com/archives/2018/01/highest-gap-above-200-dma.html


  6. GE – Happy for about 15 minutes today after open…..  then the SEC investigation hit it.  I sold out of my short puts this AM at a tiny profit…. waiting for this to hit 15 to 16 before selling puts again….

    maybe the '20 18 puts for 3.5 or so….  


  7. Good morning!

    I'd like to say the opening pop is fading but lately it's the fade that's been the head-fake so not even going to try to short indexes – especially with the Dollar at 89.10. 

    God bless Coffee (/KC) – it's the one thing you can count on:

    Check out copper's rapid recovery:

    Silver is another one that is often playable around $17 but more likely to cause heart failure:

    Big Chart/StJ – I don't know if even adding 50% lines will take us through the year at this pace.

    Domestic Terrorism/StJ – Nothing would please them more.  Any excuse to expand their powers (while they hold it).

    200 dma/StJ – That does seem extreme but the 200 dma will curve higher at some point and then will look even more bullish.

    Stocks extend gains amid earnings rush

    • Stocks open mostly higher, setting new intraday records for the three major market indexes, as corporate earnings continue to come in strong; Dow +0.5%, S&P +0.2%, Nasdaq +0.1%.
    • European markets are lower, however, with U.K.'s FTSE -0.6%, France's CAC -0.3% and Germany's DAX -0.2%; in Asia, Japan's Nikkei finished -0.8% while China's Shanghai Composite closed +0.4%.
    • In U.S. corporate news, Abbott Labs (+3.8%), United Technologies (flat) and Comcast (+0.2%) all reported earnings and revenue that beat analyst expectations; GE (flat) rose sharply pre-market after reaffirming its 2018 guidance even amid below-consensus earnings and revenues, but has given back its gains on news that the SEC has opened a probe of the company's accounting practices.
    • Most industry groups open higher, led by telecom services (+0.9%), materials (+0.5%) and health care (+0.5%).
    • J.P. Morgan's Jamie Dimon told CNBC this morning that the lower corporate tax rate would lead to higher wages and possibly 4% U.S. GDP growth later this year.
    • The U.S. Dollar Index -0.7% to a new three-year low after Treasury Secretary Mnuchin spoke in favor of a weaker dollar, saying it's "good for trade."
    • U.S. Treasury prices are lower, pushing the benchmark 10-year yield 3 bps higher to 2.65%.
    • U.S. WTI crude oil +0.2% at $64.61/bbl.
    • Still ahead: existing home sales, EIA petroleum inventories
    • Holding court in Davos, the Bridgewater founder yesterday made news when he said, "If you're holding cash, you're going to feel pretty stupid." The economy was already going along nicely, he says, and now the tax cut will add a big jolt.
    • Still hanging in Switzerland, Dalio today says the bond bear market has begun, and just a 1% rise in yields would spark major losses.
    • The Fed, he says, is likely to hike short-term rates faster than expected, but that shouldn't hit markets for about 18 months. In the meantime: "It feels stupid to own cash in this kind of environment." There's that word again.
    • MBA Mortgage Applications
    • Composite Index: +4.5% vs. +4.1% last week.
    • Purchase Index: +6.0% vs. +3.0%.
    • Refinance Index: +1.0% vs. +4.0%
    • 30 year mortgage rate at 4.36% vs. 4.33%.

    • January U.S. PMI Composite Flash53.8 vs. 54 consensus, 53 prior.
    • Services PMI 53.3 vs. 54 consensus, 52.4prior.
    • Manufacturing PMI 55.5 vs. 55 consensus, 55 prior.

    Nat gas futures sizzle as forecasts expect February cold blast

    • Natural gas prices continue to soar, as February futures rise more than 4% to $3.588/MMBtu, the strongest for a most active contract in more than a year, boosted by forecasts for more frigid temperatures in parts of the U.S.
    • Forecasts for below-normal temperatures and elevated heating demand across the central U.S. early next month have sparked the market this week, analysts at TFS Energy say.
    • Analysts say expectations for an outsize drawdown in natural gas out of storage this week also have contributed to the gains, noting that supply already is 12% below the five-year average.
    • Stocks on watch include CHKRRCCOGSWNEQTARGPORECR
    • ETFs: UNGUGAZDGAZBOILKOLDUNLDCNGGAZB
    • Earlier: WSJ: China LNG demand sucks gas out of global market, raising prices (Jan. 23)
    • Industrial operating + Verticals EPS (excluding 4Q charges not included in guidance on November 13, 2017) of $0.27, down 41% from the $0.46 reported in the same quarter a year ago.
    • Strong Q4 performance in Aviation and Healthcare, but Power continued to be challenging, with segment profit down 88%.
    • GE removed $1.7B in structural costs in 2017, above the $1B it was targeting for the year, while the company aims to remove another $2B in 2018.
    • Adjusted earnings for 2018 are expected to be $1.00-$1.07 per share, versus a consensus of $1.06.
    • GE +2.1% premarket
    • Q4 results
    • General Electric (NYSE:GE) is looking at "different structuring alternatives, not breaking up the company – and there is a difference," GE Capital Aviation Services CEO Alec Burger told the Air Finance conference in Dublin.
    • Last week, CEO John Flannery said the conglomerate was looking at restructuring options "including separately traded assets" after it announced more than $11B in charges from its long-term care insurance portfolio and new U.S. tax laws.

    U.S. airlines in retreat after United capacity shocker

    • Spirit Airlines (SAVE -4.8%), Hawaiian Holdings (HA -4.7%) and Allegiant Travel (ALGT -3.9%) trade sharply lower along with their larger airline peers after United's capacity guidance rattled the sector.
    • The added capacity from UAL is expected to send fares lower in key markets.
    • Airline stocks are weak in early trading after United Continental (NYSE:UAL) throws a scare with its capacity guidance.
    • United plans to add U.S. capacity over the next three years at over a 6% pace if the conference call (transcript) guidance is extrapolated (domestic vs international). The unexpected disclosure from UAL threatens to disrupt across many key markets.
    • Shares of Delta (NYSE:DAL) are down 5.39%, JetBlue (NASDAQ:JBLU) is off 4.47%, American Airlines Group (NASDAQ:AAL) is trading down 5.88%, Alaska Air Group (NYSE:ALK) is 5.14% lower and Southwest Airlines (NYSE:LUV) is showing a 4.23% loss. United Continental (UAL) is the worst off of the bunch in early trading, down 7.82% at last check.
    • Related ETF: JETS.

    Goldman bearish on Valeant, sees 19% downside risk, shares off 6% premarket

    • Goldman Sachs rates Valeant Pharmaceuticals (NYSE:VRX) a Sell with an $18 (19% downside risk) price target.
    • In a note, analyst Dana Flanders cites the remaining high debt level, legal risks and competitive pressures that will constrain growth.
    • Shares are down 6% premarket on higher-than-average volume.

  8. Good morning…

    CBI making a move today 9+%.

    Goldman pushing down VRX so their clients can load up before earnings.  


  9. Phil/TEVA-

     

    I have remnants of a position from last year that I have crawled back to a small loss – my question is with the stock at $21 – do you see more upside or should I liquidate and look to possibly re-enter later.  I don't think it made the "watch list" so I am guessing you think the big move is over.

     

    Thanks


  10. Looks like 1.1 million barrel draw in oil, 3.1 million barrel build in gasoline.


  11. Phil / HBI – I uncovered 50% of this at when the stock hit 22, and I'm looking to recover / balance the BCS.

    My current position is 2020

    50X 18 Calls ( 4)

    25X 23 calls (1/88) this is loosing money

     I'm thinking of either selling the 2020 27 Calls at 20 and end up with the following:

    25X of the 18 (4)  / 23 BCS (1.88)  

    25X of the 18 ( 4) / 27 BCS (2)

    The other option I am looking at 

    Sell the full BCS position and just start over with this 

    50X of the 20 (5) / 27 ( 2) BCS

    Would like your take on this.  Thanks


  12. Oh, and /NQ 7000 in case you missed it.


  13. Good morning, all!

    Been away for a while..now back for a while!

    Phil,

    I have CHL at $51.49.Collected the last dividend and the special $2 dividend.

    I also sold the March $52.50 calls for $0.47, now $1.79.

    They pay a $0.70 quarterly dividend, supposedly!. I say supposedly because it’s had to find information on the next dividend amount and date etc.

    What are your thoughts? Roll the short calls? Be called away and move on? Or do nothing, as there is still a lot of premium in the calls….


  14. Oil not as bad as API but still a big build in /RB – done with those shorts, of course.  We'll see if Brent can hold $70.

    • EIA Petroleum Inventories: Crude -1.1M barrels vs. -1.0M consensus, -6.9M last week.
    • Gasoline +3.1M barrels vs. +2.5M consensus, +3.6M last week.
    • Distillates +0.6M barrels vs. -1.5M consensus, -3.9M last week.
    • Futures +0.08% to $64.52.

    CBI/Learner – About time.  Big position in the LTP.

    Long Call 2020 17-JAN 15.00 CALL [CBI @ $20.89 $1.87] 30 1/8/2018 (723) $15,000 $5.00 $1.85 n/a     $6.85 $1.15 $5,550 37.0% $20,550
    Short Call 2020 17-JAN 25.00 CALL [CBI @ $20.89 $1.87] -30 1/8/2018 (723) $-5,250 $1.75 $0.35     $2.10 - $-1,050 -20.0% $-6,300
    Short Put 2020 17-JAN 20.00 PUT [CBI @ $20.89 $1.87] -20 1/8/2018 (723) $-11,000 $5.50 $-1.15     $4.35 $-0.30 $2,300 20.9% $-8,700

    TEVA/Jeff – I still like them but not enough to add to the Watch List – so that should tell you the story.  It's way higher than where we went in so just not exciting now that it's back over $20.

    HBI/Batman – With the stock at $23+, the 2020 $18s are $6.50 (or should be, the spread is $5.50/7.20) and your short $23 calls are about $4.  I'd get the $6.50 ($32,500) and pick up 60 of the 2020 $20 ($5)/27 ($2.10) bull call spreads at $2.90 ($17,400) which puts $15,100 in pocket and then you can roll the 25 short $23s ($10,000) to 20 short April $24s at $1.10 ($2,200) and you'll make back your remaining $7,800 in dribs and drabs – even faster if you sell 20 2020 $20 puts for $2.20 ($4,400) to balance them.  

    That way, rather than have a $22,500 spread that pays at $27 and a $12,500 spread that pays at $23 and $5,500 in pocket, you have a $42,000 spread that's $18,000 in the money at $23 and $14,000 in pocket with a chance to sell 7 more $2,000 short calls for another $14,000 while you wait.

    /NQ/Jeff – Amazing!  

    Welcome back Maya!  I can't believe we forgot to buy CHL for the LTP when it was still below $50!  

    I love them long-term but they don't have long-term calls.  They are only a bit over the strike, so I wouldn't worry too much and the calls are $1.75, so way more than the usual dividend.  The Sept $52.50s are $3.30 so sure, I'd do that roll or even the $55s at $2.25 if you want to gamble they go even higher.  You can also sell Sept $50 puts for $2.10 but, if you are doing that, I'd stick to the $52.50 short calls but then you are collecting 10% of the stock's price over 8 months and the dividend is all bonus on top.


  15. Phil/CHL

    Thanks.

    Tempted to take a little bite of the airlines…Maybe SWA or Delta. The latter is down more and maybe better ‘value’ short term. SWA is likely better positioned for any capacity expansion as well as longer term.

    Thoughts?


  16. Is the nasdaq down or am I dreaming?


  17. Airlines/Maya – ALK is my current favorite.  We sold 5 short 2020 $60 puts in the LTP for $6.20, now $7.85.

    They bought Virgin American and I think there's room for growth there – especially with oil booming again, which is good for their home state.  I take it you mean LUV (Southwest)?   PE 18 vs PE 10.5 for ALK – one is high in the range, one is low in the range.  

    Down/Jabob – Oh great, now they are all falling when I didn't bet today!  

    Oh well, at least we pressed our OOP hedges.


  18. Phil / HBI – thanks for the feedback… i do think at 25 to 27 tgt price is reasonably ( maybe even 30) so I'm closing out and moving to 20. /27 thanks!


  19. Phil/Airlines

    For reasons I do not know, I have never even considered ALK!!?

    But now that you m up, will look into them

    Thank you


  20. FU 1% Bank Toasters!  Loved the rant this AM Brother Phil.  This equities and oil party probably keeps going until late Feb along with rising yields, then things might get just a little interesting.


  21. Phil/SPWR

    Two days down big on volume.  Any thoughts on tariffs?   Thanks.


  22. You're welcome Batman.

    You're welcome Maya.

    Interesting/Naybob – The old Chinese curse.  

    SPWR/Baron – They manufacture panels in the Philippines and are subject to import rules, even though they do the vast majority of their work in the US.  To move manufacturing to the US would take 2 years to build, even if ignoring environmental issues and it's very capital-intensive, which is why these tariffs are idiotic.  SPWR will now file an exclusion request, which is likely to be granted and then the stock goes up again. 

    Trump’s solar tariffs may well cost US taxpayers more than $400 million

    SunPower CEO Says Solar Industry Will Suffer From Trump Tariff

    I still love our 2020 $7/12 spread with short $7 puts in the LTP because this too shall pass.

    /TF all the way back to 1,600 – we'll see if it holds.  Basically, it was a harsh reject of the Nas at 7,000.


  23. Webinar time!  (15 mins)


  24. Sold 1/2 of DGAZ scalp trade, up .70.


  25. What???

    • Energous (NASDAQ:WATTannounces completion of a $40M at-the-market equity offer.
    • Net proceeds were approximately $39M and the company plans to use that money for general corporate purposes.
    • A total of 2.2M shares of common stock were sold at an average price of $18.01.
    • Energous shares are up 14.3%

  26. WATT

    I was too short and got  blown out, so I added shorts and then  Citron spooked it and I made money.  Two days ago I covered the last of my shorts, so now I'm long.  I will take luck any day of the week, particularly since its not my usual MO.


  27. It's gotta said: at least the "deep state" actors are Americans.

    The Russian actors are, well, Russians. 

    Sort of not a moral equivalent going on here…


  28. Phil- any futures trades from webinar?

    DX – are you still holding long?

    Thx


  29. BDC – " It's gotta said: at least the "deep state" actors are Americans. The Russian actors are, well, Russians. Sort of not a moral equivalent going on here…"

    Deep state actors, Russian actors, Moral equivalent? Stormy Daniels is a porn actor and Out.


  30. /RB – wow, it appear they could discover alien technology that makes combustion engines obsolete and this thing would still go up!  They've had inventory builds for weeks yet shorting this keeps biting me.


  31. Sold another 1/4 of DGAZ up $1.02.


  32. Sold last 1/4 up $1.4.


  33. Good job , Albo. 

    Talking about scalping- LVVV- bought some more when it traded down to $.01. Sold today at $.018. 


  34. WHOA !   8-)


  35. Luck/Baron – Better to be lucky than good.

    Deep state/BDC – Where's Jack Bauer when you really need him?

    Image result for jack bauer president

    Futures/Ravi – Sure, we played /TF long for the bounce:

    Yes, I'm still long the Dollar, 10 now at 90.35 — so annoying.

    /RB/MrM – Crazy stuff but that's why we take a penny and run when we can.  With Brent over $70, you can't play anything short.

    Image result for total recall alien reactor

    Strong bounce lines looking like they're going to fail now.  

    Doesn't mean much, just a flat day in the books.


  36. Phil/DX- thanks, on the same boat. 14 long @90. Let us know if you add or throw-in towel. Thx


  37. Mr. M – "/RB – wow, it appear they could discover alien technology that makes combustion engines obsolete and this thing would still go up! "

    Thanks for my LMAO of the day.


  38. PHIl,

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


  39. Naybob, Super Glue should help with that.


  40. here comes mr stick?


  41. Will do Ravi.

    Image result for towelie don't forget to bring a towel gif

    /DX/Japar – I think the dirty laundry has been aired at Davos and now it's up to the Fed to show they are serious about tightening which SHOULD give the Dollar a bit of a floor.

    • Treasury Secretary Mnuchin earlier today sent the dollar to a new bear market low when he extolled the virtues of a weak greenback to a Davos audience.
    • Also in Davos, Commerce Secretary Wilbur Ross tried to walk back those comments, and in D.C., White House spokesperson Sarah Sanders tells reporters the dollar is stable, reflecting the strength of the economy.
    • Nice words, but the administration has made clear for months its preference for a weaker currency. It's getting it … bigly.
    • The dollar index remains down 1% on the session at a three-year low.

  42. Phil – "The old Chinese curse."

    With six, you get eggroll, and this guy as a bonus. Hippy Dippy and Out.


  43. PHIl,

    Are you still in your /DX grade? What is your position?


  44. Japarikh/DX – see 2 messages above yours from Phil. 


  45. What is happening (or not) to ABX?  Gold has surpassed the last high in September (~1350) but ABX has not responded (18 then vs. 15 now). They should have continued to reduce their operating cost. I wonder what is this telling us?


  46. Thx Ravi. I missed that








  47. IBM is sending Watson to the Grammys




  48. Good morning! 

    Not much going on and the markets are drifting higher (of course).

    This was a good one:

    • Taking a swipe at the International Energy Agency, Saudi Energy Minister Khalid Al-Falih accused the body of overhyping the impact of U.S. shale growth on the oil market.
    • "I was not disputing the amazing revolution of shale. [But] in the overall global supply demand picture it’s not going to wreck the train. That's the core job of the IEA, not to take it out of context."
    • Crude futures +0.7% to $66.07/bbl
    • Previously: IEA: US world's next largest oil producer (Jan. 19 2018)
    • The dollar index stretched overnight losses to plumb 88.89, marking three-year lows, after U.S. Treasury Secretary Steven Mnuchin suggested a weak greenback would be good for the U.S.
    • That's a departure from decades of traditional U.S. policy, though Mnuchin clarified that the U.S. administration was not concerned about the level of the dollar in the short term.
    • Ahead of the ECB's policy decision today, the euro is heading in the opposite direction, extending its overnight rally to $1.2428, its strongest level since December 2014.
    • South Korea's gross domestic product saw a quarterly contraction in the final three months of 2017, falling by a seasonally adjusted 0.2%.
    • The dip is partly attributable to a base effect from outstanding growth in Q3, as well as the 10-day Chuseok autumn holiday that hit industrial output.
    • Meanwhile, North Korea sent a rare announcement overnight addressed to "all Koreans at home and abroad," saying they should make a "breakthrough" for unification without the help of other countries.
    • After months of negotiations that started with a hostile takeover bid, two of Canada's major marijuana producers have agreed to the biggest deal in the country's booming pot sector.
    • Aurora Cannabis (OTCQX:ACBFF) will buy smaller rival CanniMed Therapeutics (OTC:CMMDF) for C$1.1B ($852M), as companies jostle to benefit from the country's legalization of recreational marijuana use later this year.
    • Previously: Aurora Cannabis ups bid for CanniMed to C$1.1B (Jan. 24 2018)
    • That didn't take long. LG Electronics (OTC:LGEAFannounced that prices on its washing machines are going up due to President Trump's decision to implement steep taxes on the South Korean company's appliances.
    • Consumers should be prepared for prices to go up by 15% to 20%, said Dinesh Kithany, an appliances analyst with IHS Markit. That could translate to washing machines that are $70 to $100 more expensive.
    • Related tickers: WHR
    • Following a deal with environmental groups, Six Flags Great Adventure (NYSE:SIX) has announced that construction will soon begin to make its New Jersey property the world's first solar-powered theme park.
    • The 23.5-megawatt project, which will include solar carports over select parking lots and 40 acres of ground-mounted solar panels, aims to be fully operational by the end of 2019.
    • General Electric (NYSE:GE) finished today's trade with another drop, -2.6% after news of an SEC investigation served as a reminder that the bad news is not over for the company.
    • The probe is in "very early stages," CFO Jamie Miller said during today's earnings conference call. “There’s nothing here I‘m overly concerned about.”
    • But there is "rightful concern" that GE was not conservative enough in its revenue recognition practices, "given how significantly the power markets have deteriorated and how severely GE underestimated those trends," Bloomberg's Brooke Sutherland writes..
    • “If nothing else, board governance will be heightened and the auditors will sharpen the effort,” says Melius Research analyst Scott Davis, who thinks the stock has found a bottom and that the company was more transparent on its earnings call than the "dismissive GE of the past."
    • Citi's Andrew Kaplowitz highlights GE's near-term cash generation as a key metric to watch, noting that the company's Q4 adjusted industrial cash flow from operating activities of $7.8B was well above company guidance; for the full year, GE's adjusted industrial CFOA of $9.7B beat guidance of ~$7B.
    • The market's concerns with GE appeared to drag down Baker Hughes (NYSE:BHGE), -5.7% as well; Evercore ISI reiterated an Outperform rating, saying the Q4 report was a modest positive overall although transparency about GE's intentions would be good for all shareholders.
    • Dolby Laboratories (NYSE:DLB+9.4% after-hours as it easily beats expectations for FQ1 earnings and revenues, and guides earnings and revenues above consensus.
    • "We had a strong first quarter and are off to a great start this year," says President and CEO Kevin Yeaman. "Adoption of Dolby Vision and Dolby Atmos continues to expand, with more mainstream availability of TVs and sound bars, and the first PC with Dolby Vision announced by Lenovo."
    • DLB issues upside guidance for Q2, seeing EPS of $0.74-$0.80 vs. $0.71 analyst consensus estimate on revenues of $295M-$305M vs. $290.5M consensus; for FY 2018, DLB expects revenues of $1.15B-$1.18B vs. $1.16B consensus.

  49. Good Morning… this one is for Pharmboy — does the thesis change now?

    FDA OKs Synergy Pharma's Trulance for IBS-C; shares up 16% premarket

    The FDA approves Synergy Pharmaceuticals' (NASDAQ:SGYPTRULANCE(plecanatide) for the once-daily treatment of adults with irritable bowel syndrome with constipation (IBS-C).

    TRULANCE was first approved in the U.S. a year ago for the treatment of chronic idiopathic constipation.

    Shares are up 16% premarket on average volume.

    Previously: Synergy Pharma files U.S. marketing application for expanded use of Trulance; shares ahead 1% (March 27, 2017)