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Thursday Failure – Fed and Trump Fail to Boost the Markets

Wheeeeee, what fun!  

I was on TV last night and I predicted we had another 2.5% drop in us as yesterday's gains (such as they were) were entirely due to Boeings 16-point gain for the day, which accounted for 144 points to the Dow's 72-point gain so, on the whole, the Dow should have been down 72, not up 72 if BA hadn't had earnings yesterday.  

Of course we played for bounces into the close with a Russell (/TF) long at 1,575 and and S&P long (/ES) at 2,820 in our Live Member Chat Room at 3:33 and those paid a quick $250 per contract on /TF and $200 per contract on /ES on top of the $200 we made in our Live Trading Webinar at 1pm but by the time I was on TV, at 7pm, the markets had gotten silly again and I called for shorts at Dow (/YM) 26,200, S&P 2,540, Nasdaq (/NQ) 6,985 and Russell 1,582.50 as well as a play on the Dollar (/DX) long at 88.75 – though my actual call there was that 88 would hold.  

We also discussed our Money Talk Portfolio, which gained 74% for the year from picks I made live on the show in a $50,000 portfolio and we added trades on General Electric (GE), Barrick Gold (ABX) as well as a hedge using the Nasdaq Ultra-Short (SQQQ) just in case the FANG stocks mess up earnings tonight.  The Futures shorts are way up this morning (8am) with the Dow down 86 points to 26,050 so up 150 at $5 per point is a gain of $750 per contract on that one and /ES is 2,822 (up $360 per contract), /NQ 6,942 (up $860 per contract) and /TF 1,575 (up $375 per contract) so, of course we're keeping tight stops on those gains in this crazy, crazy market as the Egg McMuffins are paid for and that's all we need from our breakfast trades.  

Today is a heavy data day with Productivity at 8:30, Consumer Comfort and PMI at 9:45 along with ISM and Construction Spending at 10 and Auto Sales throughout the day but none of that really matters as Non-Farm Payroll is tomorrow morning (8:30) and we'd better be up from last month's terrible 146,000 jobs and that doesn't even matter because, tonight, we get earnings from Apple (AAPL), Amazon (AMZN), Alibaba (BABA) and Google (GOOGL) with Facebook (FB) already reporting slightly disappointing earnings last night.  

We have plenty of longs and the thing that is most likely to wreck the market this week is diappointing FANG results so that Nasdaq (SQQQ) hedge (see: "Top Trades for Sun, 28 Jan 2018 19:53 – Money Talk Portfolio") or the Dow (DIA) hedge we dicussed in yesterday's report (see "Which Way Wednesday – Fed Edition") are good ways to protect yourself into earnings this evening and NFP tomorrow.   

As you can see from this Zachs chart, with 150 of the S&P 500 reporting so far, earnings are indeed pretty good, up 12% since last year, though a lot of that is Oil and Energy, which is up 185%.  Without that sector, the rest are up 9% in earnings and 4.5% in revenues and that's really good – but is it good enought to pay 26% more for the stocks?

Call me old-fashioned but it seems to me we're overpaying by about 17% and, even if you assume this spectacular growth will continue, it's going to take two years of it to catch up to the current, sky-high valuations.  We discussed this in yesterday's Live Member Chat Room:

I reach another conclusion that lower taxes will not have as big an impact as what is already priced in and the main benefits we're seeing are from repatriated funds, which are a one-time thing.  So maybe we keep rallying this year (BA just said they are buying back $9Bn worth of stock, which is 5%) but that still doesn't mean I want to buy BA for $357, which is a $213Bn market cap for a company that made $5Bn last year (slightly less than the year's before).  

If BA has $9Bn to throw around and if their business is going to grow to the point where they justify 40x earnings – then why aren't they hiring 15,000 people (+10%) and opening a new plant?  TSLA spent $2.5Bn for a Giga factory so figure Boeing (BA) could spend that much and 15,000 $100,0000 people is "only" $1.5Bn so $4Bn, not $9Bn and they could produce 10% more planes on the way to the 100% more expected gains in production and profits that are baked into a p/e of 40.  

They aren't doing that because they know it's a pop that doesn't last and they don't want to be sitting there in 5 years with empty factories and they have no viable competitors so why spend more money just to complete orders faster?  But is that a reason to pay them 40x?  Of course not – it's asinine!  The problem Barry (and many others have) is they are wrong so long they feel the pressure to capitulate and rationalize the market but that's wrong because the market is behaving irrationally and, as Keynes noted:

"The market can remain irrational longer than you or I can remain solvent."

It will end when it ends and not a moment sooner.

That's our very simple premise for shorting the market at this level – we can't see a justification for the kinds of multiples that are being commanded by ordinary stocks and we are long overdue for a pullback of at least 5% – and even that is shallow compared to the run-up we've had – but it's a good start!

Meanwhile, we're not there yet as the fall in the S&P from 2,870 to 2,820 is only 1.7% so, as Robert Frost said "Miles to go before I sleep."  In fact, now it's 8:50 and the indexes have continued lower without a bounce so double those gains on our Futures shorts (you're welcome) and now the play is tight stops on 1/2 and looser stops (weak bounce lines) on the other half – in case we get a really nice sell-off today.  

As I said to our Members on Tuesday as we hit Dow 26,000 – "another 600 points to go to complete this drop cycle".  In fact, the Dow Futures (/YM) are just now crossing back below 26,000 (up $1,000 per contract on our shorts!) so a move down to 25,400 would make another $3,000 per contract if it happens so great for a new trade, right now, with tight stops above 26,000 means you risk losing $5 per point before you stop out vs potential $3,000 gains – THAT IS HOW YOU HEDGE WITH THE FUTURES!  

As noted above, we were interrupted by the ridiculous over-reaction to Boeing's earnings (and they are buying back $9Bn worth of stock, which is 5% of the company) but, other than that, the market action was weak and we'll see how the next couple of days go but, so far, we've failed those weak bounce lines I laid out for you yesterday – and that's the bearish signal we've been looking for to indicate we've got another leg down to go from here.

Speaking of bearish signals, Q4 productivity dropped by 0.1%, missing estimates of leadning economorons of 1.4% by over 100% so nice job (as usual) boys!  Las Q is revised down from 3% to 2.7% and Unit Labor Costs jumped from -0.1% to 2% – massive wage inflation kicking in with the low unemployment and what is Trump doing?  He's stopping people from coming to this country and filling jobs – so of course wages will rise faster than productivity.  That's why we call them Economorons – how is it they can't do this simple math?

On top of that minimum wages have been rising and Health Care costs are going up again as the GOP tries to strangle Obamacare and all these are factors that led us to assume Corporate Margins would begin to slip, leading investors (not idiot traders) to begin to rethink the ridiculous valuations they have been giving to stocks these days.  Notice that, in the above chart, margins haven't improved at all, ex-energy, from Q3 (and only up 0.3% from last year) and those same improving margins for the Energy Sector are an added cost to everyone else.  Again, that's why we call them Economorons – this is really basic, obvious stuff that they simply don't understand!  

The indexes will pause into the open at 25,950, 2,810, 6,900 and 1,565 -those are the key supports but, if they break down without a quick, weak bounce (back over 26,000, 2,812.50, 6,912 and 1,567.50), it's better to look down than up to see where we're going:

Be careful out there!  


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  1. ~~8-K filed by Teva this morning.

    On January 31, 2018, Teva Pharmaceutical Industries Ltd. (the “Company”) and Allergan plc (“Allergan”) entered into a Settlement Agreement and Mutual Releases (the “Agreement”). The Agreement provides that Allergan will make a one-time payment of $700 million to the Company. Such payment is expected during the first quarter of 2018. The Company expects to use this cash payment for repayment of a portion of its term loan debt.

    * The Agreement also provides that the Company and Allergan will jointly
      dismiss the working capital dispute arbitration, as described in the
      Company’s quarterly report on Form 6-K filed on November 2, 2017, as well as
      actual or potential claims under the Master Purchase Agreement, dated July
      26, 2015, by and between the Company and Allergan, for breach of any
      representation, warranty or covenant (other than any breach of a post-closing
      covenant not known as of the date of the Agreement).  As reported on an
      amendment to Schedule 13D filed with the Securities and Exchange Commission
      on January 12, 2018 by Allergan, Allergan beneficially owned approximately
      68.7 million of the Company’s ordinary shares as of such date, represented by
      American Depositary Shares, acquired by Allergan as a portion of the
      consideration in connection with the Company’s acquisition of Actavis
      Generics from Allergan under the Master Purchase Agreement.


    ~~Teva  today announced it has completed the sale of a portfolio of products within its global women’s health business across contraception, fertility, menopause and osteoporosis for $703 million in cash. The portfolio, which is marketed and sold outside of the U.S., includes Ovaleap®, Zoely®, Seasonique®, Colpotrophine®, Actonel® and additional products. The business will be known as “Theramex”.

    * “Today’s announcement marks the completion of Teva’s planned divestment of
      specialty products in women’s health,” stated Michael McClellan, Executive
      Vice President and Chief Financial Officer at Teva. “Teva is very pleased to
      complete the sale of our global women’s health portfolio today, which brings
      a significant influx of cash needed to further progress our ability to repay
      term loan debt. With the completion of today’s transaction, Teva has
      generated total proceeds of $2.48 billion from the women’s health
      divestitures, higher than the previously announced $2.3 billion expected

  2. StJL – YO DOG, that's my Super Bowl LII analysis. You might like the Tunes as well. Enjoy and good luck.

  3. Good morning and wheeeeee!  

    My super-bowl analysis is Pats because they always win and, how do they do it?

  4. NOK – Up sharply.  Sold some in pre-market.

  5. Good Morning.

  6. Before Bourne there was Condor. Three Days of the Condor, watched it last night , good movie from 1975

  7. Woof, woof Naybob! 

    It's not the size of the dog in the fight, it's the size of the fight in the dog. - Mark Twain

  8. Bought some GBTC at $13.78.  Playing for a bounce. 

    Risking 1 point.

  9. Good Morning, All!

    The webinar replay is now available!

  10. Zeula – Day of The Condor – Epic, saw it when it came out. The man from Alsace-Lorraine indeed and Out.

  11. Short-term bounce lines are:

    • Weak: Dow 26,000, S&P 2,812.50, Nas 6,912 and RUT 1,567.50 
    • Strong Dow 26,050, S&P 2,825, Nas 6,925 and RUT 1,570

    If we get above those, then we default to yesterday's lines:

    • Weak bounce lines:  Dow 26,130, S&P 2,835, Nas 6,980 and Russell 1,585.
    • Strong bounce lines: Dow 26,260, S&P 2,850, Nas 7,010 and Russell 1,590

    Though, of course, I'll look for consolidations and recalculate based on the week's action by then.  

    For now, it's not bullish for the day until we see those strong bounce lines (first set) taken back. 

    In case you guys missed it this morning:

    Here's the show from last night.  I said we'd follow through another 2.5% to the downside – explaining BA was the whole Dow mover yesterday.

    By the way, I will be teaching a 4-hour class at the NYC Traders Expo at the Marriott Marquis (Times Square) on Sunday, Feb 25th (9am – 1pm).  I don't have a link yet ($150 early bird pricing) but save the date if you're around and I'd love to meet up if people are in town. 

    I'll be in the hotel Sat night so maybe dinner if people are interested?

    Big Chart – Nas 6,900 is a critical hold and Dow needs to get over 26,150 and RUT over 1,584 (10% line) and NYSE over 13,440 (5% line) before this looks even a bit bullish.

    NOK/Albo – Good job sticking with them.

    Condor/Mike – Classic.  My kids can't watch those old movies, the pacing is so much slower than they are used to.

  12. Phil – Johnny Hooker – They just don't make em like they used to.

    Minuteman are going to get what the Postman gets, bit on the ass hard and chased down the block. Bow-wow-wow… 

  13. Naybob – The only thing that worries me is that you have been wrong on the Eagles the entire playoff… But you have been right on the Pats so I guess something has to give on Sunday.

  14. Phil/DX- any premise change to hold long after the fed. 

    PS: sorry to ask, if you already covered this in webinar. 


  15. Hong Kong on alert as ATM withdrawals surge

  16. Trump falsely claims most-watched State of Union

  17. What crazy action. 

    ISM was good:

    • ISM Manufacturing Index59.1 vs. 58.6 consensus and 59.3 prior.
    • Employment 54.2 vs. 58.1 prior.
    • Prices 72.7 vs. 68.3
    • New Orders 65.4 vs. 67.4
    • Production 64.5 vs. 65.2

    • Stocks are flat after opening lower following the release of weaker than expected U.S. productivity data and higher than expected unit labor costs; S&P, Dow and Nasdaq all flat.
    • The government said in a preliminary report that Q4 productivity fell 0.1% while economists had expected a gain of 1%, and preliminary unit labor costs rose 2% vs. an expected 1% increase.
    • European bourses are broadly lower, with Germany's DAX -1.4%, France's CAC -0.5% and U.K.'s FTSE -0.4%; in Asia, Japan's Nikkei finished +1.6% for its first gain in seven days, but China's Shanghai Composite closed -1%.
    • In earnings news, Facebook +2% after reporting better than expected earnings and revenues, Microsoft is flat after also beating top and bottom line estimates, eBay +13.3% after raising its 2018 sales guidance, PayPal -8.9% despite reporting upbeat earnings and revenues, and UPS -6.3% despite beating top and bottom line estimates.
    • Telecom services (+2.4%) is the early sector leader after AT&T (+3.9%) reported better than expected earnings and revenues for Q4 and issued upbeat profit guidance for 2018.
    • Apple, Amazon and Alphabet will issue their reports today after the close.
    • U.S. Treasury prices are little changed so far, with the benchmark 10-year yield a basis point higher at 2.73% and the two-year yield unchanged at 2.14%.
    • U.S. WTI crude oil +0.9% at $65.32/bbl after a Reuters survey showed OPEC's commitment to its supply cuts remains in place.
    • The dollar's faster-than-expected tumble vs. the euro has Goldman moving to keep pace, with the team upping its year-end forecast for the common currency to $1.30 from $1.20 (euro is buying $1.2450 at the moment).
    • Goldman's reasoning for dollar depreciation hasn't changed: Global growth this year will catch up to that of the U.S.
    • Dollar weakness/euro strength should continue past this year, according to the bank, with the euro hitting $1.35 in 2019 and $1.40 in 2020.
    • To review: About one year ago at this time, the euro was buying about $1.04, with many forecasts calling for parity to soon follow. Caveat emptor.
    • With Brent crude already having surpassed its $62 per barrel forecast, Goldman sees the price hitting $75 over the next three months, and $82.50 in six.
    • Brent's at $69.47 this morning.
    • The rebalancing of the oil market has likely been achieved, says the bank, noting "stellar demand growth" along with OPEC compliance and collapsing Venezuela production as combining to speed up the process.
    • One thing necessary for the market to stay in balance will be a continued rise in U.S. shale production, says Goldman.
    • Previously: U.S. crude oil production tops 10M bbl/day for first time since 1970 (Jan. 31)
    • Ford (NYSE:F) unit sales -6.6% to 161,143 vs. -7.3% estimated by Edmunds.
    • Retail sales -4.3% to 115,187 units.
    • SUV sales -5.9% to 55,282 units.
    • Truck sales +2.2% to 74,200 units.
    • Passenger car sales -23% to 31,661 units.
    • Ford's sales update: "Our all-new Expedition and Navigator are off to a hot start across the country; Platinum Expedition and high series Reserve and Black Label versions of Navigator are in high demand."
    • Shares of Ford are down 0.55% premarket to $10.91.

    • General Motors (NYSE:GM) unit sales +1.3% to 198,548 units vs. +4.2% forecast by Edmunds.
    • Sales by brand: Chevrolet +5.0% to 141,947 units; GMC -11.4% to 33,058; Buick +4.0% to 13,648; Cadillac -3.9% at 9,895.
    • The Chevrolet Silverado-C/K pickup line impressed during the month with a tally of 40,716 units sold.
    • GM sales update: "Chevrolet led the growth of the small crossover segment with the Trax as well as the mid-pickup segment with the Colorado. Now, we have the all-new Equinox and Traverse delivering higher sales, share and transaction prices."
    • GM ended the month with 94 days supply vs. 63 days at the end of December. Higher inventory in January is typical.
    • Shares of GM -0.21% to $42.32.
    • Toyota (NYSE:TM) unit sales +16.8% to 167,056 units vs. +7.7% expected.
    • Toyota truck sales rose 26% and Toyota pickup sales were up 27% during the month. +20% gains were posted by the Tacoma, RAV4 and Highlander models.
    • Sales by brand: Toyota +17% to 149,142; Lexus +15% to 17,914.

    • Microsoft (NASDAQ:MSFT) provides Q3 revenue guidance on its earnings call.
    • Revenue, about $25.25B to $25.95B (consensus: $25.53B); Productivity and Business Processes, $8.6B to $8.8B; Intelligent Cloud, $7.55B to $7.75B; More Personal Computing, $9.1B to $9.4B. 
    • The company expects the effective tax rate for H2 to be 14% to 18% with a slightly below 21% effective tax rate for FY19. 
    • Microsoft sees FY18 operating margin slightly up on the year with roughly flat gross margin.   
    • Microsoft shares are down 0.3%.      
    • Previously: Microsoft -1.3% despite Q2 beats, 98% Azure growth (Jan. 31)
    • Shares of Ralph Lauren (NYSE:RL) are sliding in early trading after the retailer's comparable sales fell 6% in FQ3 to miss the consensus estimate for a 4% drop.
    • Comparable sales were down 10% in North America and in a bit of a shocker were 27% lower in the e-commerce channel due to a "planned reduction" of promotions and drop in onlien traffic. Revenue was up for the Europe (+8) and Asia (+7%) businesses.
    • Looking ahead, the company expects revenue to fall 8% to 9% for the full fiscal year and operating margin to fall in range of 10% to 10.5%.
    • Previously: Ralph Lauren beats by $0.16, beats on revenue (Feb. 1)
    • RL -6.31% premarket to $107.10.
    Image result for flintstones charge it animated gif
    • Mastercard (NYSE:MA) reports revenue was up 18% on a currency-neutral basis in Q4.
    • Switched transactions were up 17% to $17.7B. Cross-border volume was also up 17% on a local currency basis.
    • Gross dollar volume was 13% higher to $1.4T.
    • Operating margin fell 340 bps to 46.0% of sales.
    • Mastercard paid an effective tax rate of 26.8% (adjusted) vs. 28.8% a year ago.
    • CEO update: "Our ongoing investments in digital and safety and security, combined with our recent acquisitions, position us well to continue to grow our core business and capture new payment flows."
    • Previously: Mastercard beats by $0.02, beats on revenue (Feb. 1)
    • Shares of Mastercard are up 1.77% in premarket action to $171.99 (52-week high).
    • Bitcoin suffered one of its worst months ever in January, and February isn't looking any better at the moment. The crypto is down nearly 9% to a new cycle low of about $9.3K.
    • The vast majority of the rest of the crypto sector is also lit up bright red, with most faring worse than Bitcoin.
    • This morning's FUD is courtesy of India, where Finance Minister Arun Jaitley made comments today suggesting a government crackdown on the usage of virtual currencies. Bitcoin bulls argue nothing has changed.
    • An interesting outlier though is Ethereum, which is flat on the session. In fact, if things keep up a bit longer, the crypto market will have a new king.
    • While Bitcoin is down more than 30% for the year, and 60% from its all-time high, Ether is up 30% in 2018, and very much within sight of its record peak. Ether's market cap of about $110B is only a handful of volatile sessions from overtaking Bitcoin (down to less than $160B this morning).
    • Alibaba (NYSE:BABA) shares are down 4.4% premarket after Q3 results that beat revenue estimates but missed on EPS. FY18 guidance was increased to a growth of 55% to 56% (was: 49% to 53%), which would represent a range of about $245.3B to $246.9B (consensus: $242.6B).
    • Segment revenue: Core Commerce, $11.26B (+57% Y/Y); Cloud Computing, $553M (+104%); Digital Media and Entertainment, $832M (+33%); Innovation Initiatives and Others, $119M (+9%).
    • Key metrics: Annual active consumers on China retail marketplaces, 515M (+16% Y/Y); Mobile MAUs on China retail marketplace, 580M (+18%); adjusted EBITDA, $5.56M; operating margin, 31%; cash from operating activities, $8.48B; FCF, $7.09B; cash and equivalents, $33.87B. 
    • Ant Financial: Alibaba agrees to a 33% equity stake in Ant Financial for retail and expansion benefits tied to mobile payments. Under the new terms, Alibaba will acquire newly-issued Ant Financial equity in exchange for certain IP rights. There won’t be any cash impact to Alibaba following the transaction’s completion. After closing, the companies will terminate the current profit-sharing agreement that had Ant paying service fees equal to 37.5% of its pre-tax profits. 
    • Press release      
    • Previously: Alibaba misses by $0.04, beats on revenue (Feb. 1)
    • In its Q4 report after the close yesterday, PayPal (NASDAQ:PYPL) announced it would remain as a checkout option for eBay (NASDAQ:EBAY) until at least 2023.
    • A few hours later though, eBay announced its plan to drop PayPal as its payment processor, sending PYPL down as much as 15%. Netherlands-based Adyen will gradually take PayPal's spot beginning this year, and will handle a majority of transactions in 2021.
    • "A major setback for PayPal," says DA Davidson's Gil Luria. Though PayPal's total payments volume is less dependent on eBay than in the past, it's still a substantial share.
    • BTIG's Mark Palmer downgrades to Neutral, noting the stock was priced for near-perfection, and the news makes things far less perfect.
    • PYPL lower by 8.3% premarket; eBay +12.25%
    • Previously: Post-earnings rally for eBay (Jan. 31)
    • Previously: PayPal bulls take just a few in profits after strong Q4 (Jan. 31)
    • Altria (NYSE:MO) reports smokeable products shipment fell 8.7% in Q4 and smokeless products shipments were down 0.6%.
    • Total revenue was down 3.2% to $5.281B
    • The company's retail share of the cigarettes market fell 80 bps to 50.3%.
    • Looking ahead, Altria expects full-year EPS of $3.90-$4.03 vs. $4.20 consensus.
    • The company announces a new $1B share repurchase agreement that it expects to be complete by the end of 2018.
    • Previously: Altria beats by $0.11, misses on revenue (Feb. 1)
    • Shares of Altria are flat in premarket trading.

  18. Dollar/Ravi – I think the Fed was just as hawkish as they've been and still on track for 3-4 tightening this year but the next meeting, 3/21, is the big one as they must tighten there or more doveish than expected.  After that it's May 2nd, June 13th, Aug 1st, Sept 26th, Nov 8th and Dec 19th so less meetings than last year and, to hit 4, they have to tighten at 4 of 7 meetings remaining meetings though, if they hit March, then right on track to tighten every other meeting – which is a good way to go.

  19. Learner – SWKS getting a nice move 

    Drafting on QRVO's results.

  20. Yes albo – thanks, now if AAPL delivers, I think SWKS will gap up. 

  21. Phil,  gentle reminder -

    banks – when you have some time….   :) 

  22. Phil

     With merger of CBI & MDR

    I have BCS in 2019 and 2020  ( a little in the money ) and puts sold

    What is the best way to handle the new option in situations like this?

     Where closing you just wait them out?

     Combine, roll out, not to worry close

     As always thank you for the help

  23. Phil – /NG?

  24. FU SQQQ!!!

  25. BABA / Phil – Something is not adding up here in the earnings:

    Segment revenue: Core Commerce, $11.26B (+57% Y/Y); Cloud Computing, $553M (+104%); Digital Media and Entertainment, $832M (+33%); Innovation Initiatives and Others, $119M (+9%)

    What happened to that $25B of sales on Single Day?

  26. Phil – Suggestion for the watchlist – OMI – getting crushed today on earnings, but PE, and dividend increase indicate undervaluation. I need to spend some time on the earnings report, but this could be a good one.

  27. ETSY / Albo

    lots of June option action.  $15 puts and $22.50 calls

  28. Filled up with some ARR at 23.49 and CIM at 17 in the end good for armchair trades!!



     Any trades on AAPL earnings today ?


  30. Stockbern – Thanks.  My only position in ETSY is short some $15 puts.

    I like what you do with option volumes.  Often they can provide a good tell.  NOK's trading yesterday sure did,

    ~~NOK Weekly Feb02 5 calls are seeing interest ahead of earnings tomorrow, February 1 before the open (volume: 2800, open int: 3730,

  31. Stopped out of GBTC down a point.  Bad idea.

    Back to the drawing board.

  32. SKT down, and glad I didnt play that one. 

  33. Phil// Just a reminder about the LB trade I had requested yesterday.  Let me know what would be a good trade.  Thanks.

  34. The Fed Balance sheet has yet to move significantly down, according to The Macro Tourist.

  35. Phil – thoughts on initiating a position on SWN? its getting smashed today

  36. Link/RPeri – I guess that's the Trader Expo Link, they didn't send it to me yet.  

    Wow, this market is indestructible!  

    Related image

    Banks/Learner – Sure, so looking forward to it….  crying

    CBI/QC – So far, I'm glad we held on, not sure what the deposition is going to be so, for not, I'm waiting and seeing.  I'm thinking, even if we end up with lilliquid positions – as long as we're netting over $20 we're $15,000 in the money at some point in the LTP and $5,0000 in the OOP.   It looks to me like we'll get 47% of MDR, which is now $2.5Bn at $8.78 though they are supposed to do a 1:3 reverse to even up the prices more.  CBI's value at $21 is $2.2Bn so we're getting a deal.  

    Upon completion of the transaction, McDermott shareholders will own approximately 53 percent of the combined company on a fully diluted basis and CB&I shareholders will own approximately 47 percent. Under the terms of the business combination agreement (“BCA”), CB&I shareholders will be entitled to receive 2.47221 shares of McDermott common stock for each share of CB&I common stock owned (or 0.82407 shares if McDermott effects a planned three-to-one reverse stock split prior to closing), subject to any withholding taxes. The estimated enterprise value of the transaction is approximately $6 billion, based on the closing share price of McDermott on December 15, 2017.

    /NG/Feltok – Weather is warming up so not jumping in:

    Let it find a bottom and then we'll take a look again.

    I'd like to see $2.80 hold as a florr but, even it it does, might be consolidating for a move down (see last Feb).  Once we bottom, we can establish longs based on the overall export figures picking up (not to mention a hot summer's electric usage).

    SQQQ/Jabob – Fun for the few seconds it lasted.

    F the Dollar is more like it – down half a point today:

    There's your rally.

    BABA/StJ – I told you that was all BS but no one calls them out on it.  I'm thinking maybe (giving them the benefit of the doubt) that they are counting merchant sales they don't book but collect a commission on in their Singles Day numbers.  That would explain the shipping issue – they're not the ones actually doing it, they are just the web portal for other vendors but taking credit for their gross revenues nonetheless.  

    OMI/Deano – Well, they certainly got cheap!  No change from my last comment:

    Submitted on 2017/11/06 at 3:56 pm

    OMI/Scott – Good niche business with total crap margins ($100M on $9.7Bn in revenues) but that means they don't have to worry about competition – because no one would want half of that!  They don't really have options (illiquid, short-term) so I never bother with them but they are a nice long-term hold as a dividend play at this price if you are brave enough to ride out the storm.   Like pretty much every company that grows through acquisitions there days – they are getting trashed.

    ARR/Yodi – One of my favorites.  We will have to move on them for our portfolios (CIM/NLY too) – I really miss those massive dividend checks.

    AAPL/QC – Nope.  As we said yesterday, if you're not in them and REALLY want to be, then the 2020 $150 ($36)/$170 ($27) bull call spread at $9 is a nice way to make 100% if AAPL goes higher and, if it doesn't, THEN you can sell the $130 puts, now $7.75 for $10+ and use that money to roll the $150s to the $130s and then you'd be in the $130/170 spread for net $0.  The question is, would you be hoping AAPL goes up or down on earnings if that's your game plan?

    SKT/Stock – All REITs getting panic sold as rates rise.  I like SKT a lot.  

    As a new play on SKT, you can:

    • Sell 10 SKT 2020 $22.50 puts for $2 ($2,000) 
    • Buy 1,000 SKT at $24.50 ($24,500) 
    • Sell 10 SKT 2020 $20 calls for $5.25 ($5,250) 

    That nets you into 1,000 shares at $17,250 so $17.25/share and called away at $20 (20% down from here) but really we'd be rolling in 2020 either way.  Meanwhile, the dividend is $1.37 x 2 years so $2.74 drops the basis to $14.51 and, even if assigned 1,000 more at $22.50, the average cost per share would be $18.505, which is 25% lower than it is now.  

    I think for the purposes of the LTP, we can just sell 20 of the $22.50 puts for $2 ($4,000) just to remind us to watch them and we'll either establish a position at a lower price or just keep the $4K as we have other REITs we're looking to add at the moment.

    LB/Rookie – I'm a little concerned about this:

    Victoria's Secret parent L Brands, Signet could be hurt by late start to the tax season

    Earnings are 2/28 and they are testing the bottom of the channel so I'd wait to see if it holds

    Balance sheet/Craft – They are still only SLOWING QE – they're not even close to unwinding yet.  

    SWN/Torquio – The problem SWN has is that their cheapest gas, in Marcellus, has the least capacity for expansion due to lack of transport lines out of the area.  All the companies around there have that problem now as they've hit the transport infrastructure limits.  SWN has huge hedges at $3 but it's better than last year, which was closer to $2 so I agree, this should be a good year for them but I wouldn't peg them for huge growth – just nice growth.  They do have options and don't play a dividend so I'd go with:

    • Sell 25 2020 $5 puts at $1.65 ($4,125) 
    • Buy 50 2002 $3 calls for $2.10 ($10,500) 
    • Sell 50 2020 $5 calls for $1.20 ($6,000) 

    That puts you into the $1,000 spread that's more than half in the money for net $375 with $9,625 (2,566%) upside potential at $5.  If we didn't already have CHK, I'd put it in the OOP.

  37. SKT / Phil – My worries about them is that a) they are not cheap relative the to the industry and b) their payout ratio is above 200%. I am not an expert in accounting, but that's also high in the industry.

  38. SKT/StJ – That's why I'm not jumping right in but they've been buying up malls while they're cheap – I like the strategy. 

    Not even below 95% in 2009?  That's the kind of company I want to be invested in!  

    They're spending money to grow – I know that freaks people out and they'd rather have them buy their own stock, but I like it!  

  39. StJL - Naybob – The only thing that worries me is that you have been wrong on the Eagles the entire playoff… But you have been right on the Pats so I guess something has to give on Sunday.

    Worry not and read The Kiss of Death section.

  40. Banks/Learner – I'm still not loving the sector, it's way overpriced in general.  Every one I look at is overpriced.  WFC is not too bad if you think they are done screwing people over (or at least getting caught for it).  Because of the scandal, they are only trading at 17x earnings and they should benefit as well as any other bank.

    That looks impressive but they were $56 in 2016 so little price growth in the past year or so while earnings have shot up (due to scandal).  They pay a crappy (2.39%) dividend so I'd go with the options:

    • Sell 10 WFC 2020 $55 puts for $4 ($4,000) 
    • Buy 10 WFC 2020 $55 calls at $14.50 ($14,500) 
    • Sell 10 WFC 2020 $70 calls for $6.80 ($6,800) 

    That's net $3,700 on the $15,000 spread so upside potential is $11,300 if they make it to $70 but break-even is $58.70 and you make $1,000 per $1 over that line which means you're starting out $7,000 in the money.  

    USB is another one that isn't too expensive at $57.18, probably because they also pay a lousy dividend (2.09%) but well over $4/share with low growth, so they are priced about right.  I'd stay conservative but also with a spread:

    • Sell 10 USB 2020 $50 puts for $3.60 ($3,600) 
    • Buy 10 USB 2020 $50 calls for $11 ($11,000) 
    • Sell 10 USB 2020 $60 calls for $5.50 ($5,500) 

    Here you're in for net $1,900 on the $10,000 spread so $8,100 (426%) upside potential if they nudge up 5% in 2 years – that's a realistic target and the worst case is owning them at $51.90, 10% off the current price.  

    C is also interesting at $79 as they are making $6 per share now (p/e $15) but that's up from $5.30 last year and on track for $7 next year, which would make them a bit of a bargain. Another one with no dividend (1.63%) so another spread:

    • Sell 10 C 2020 $70 puts for $6.60 ($6,600)
    • Buy 15 C 2020 $72.50 calls for $15.20 ($22,800) 
    • Sell 15 C 2020 $85 calls for $9.10 ($13,650) 

    This one's a little more aggressive at net $2,550 and pays a nice $18,750 for a $16,200 (635%) profit if C moves up 10%.  Let's add this one to the LTP and see how it goes.  

    CM, on the other hand, is still crazy cheap at $98.36 paying a $4.22 dividend (4.28%) but crappy options.  Since we REALLY would love to own them in the LTP at $90, I don't mind selling 5 Sept $95 puts for $4.50 ($2,250) just to remind us to watch them.  

  41. Thanks Phil - 

  42. I don’t know who all on this board is involved in Netflix (long or short) but I heard some info regarding an upcoming show they are working on. A screenwriter told someone I know that they are pushing him to crank out a script for a game of thrones type show that is geared more towards teens. They want to start filming this summer 

  43. Some early research estimates for AAPL tonight.   This research house claims iphone X outsold 8 and 8 plus despite Q1 production cuts.   We shall see in the next few hours. 

    I don't know what is consensus expectations of iphone shipments for the Dec qtr.


    Apple roundup: Record Q4 for iPhone, refurbished iPhone 7, India import tax hike

    Apple (NASDAQ:AAPL) sold 22.39M iPhones in the U.S. during Q4, according to Counterpoint Research data.

    The sales pushed Apple to a record 44% market share, up from 37%. 

    Counterpoint said the quarter, which marked the first time the iPhone passed 22M domestically, was particularly impressive because the promotional season wasn’t as aggressive as in the past and upgrade rates were slightly lower on the year. 

    Despite reports of Q1 production cuts, the iPhone X outsold the 8 and 8 Plus by a 2:1 margin in Q4. 

    Refurbished iPhones: Apple could drive sales for its older iPhone models with refurbished iPhone 7 and 7 Plus models available through the official store for $499 (32GB model) to $679 (256GB model). 

    India import tax raised again: Apple’s attempt to gain more than 3% of the Indian market hits another hurdle as the import tax increases from 15% to 20%. 

    The rate was hiked five percentage points to 15% in December. 

    The iPhone SE is the only model assembled locally and exempt from the import tax. But Reuters sources said Apple assembler Wistron plans a new iPhone 6s plant in the country.  

  44. OMI – glad I started small, and covered with calls on them. Will add another slice here.. perhaps in a day or two to see where this might settle. new dividend at this price makes it 5.9% yield. They also still have a health chunk of their stock repurchase fund still available, and they don't seem to be afraid of using it.

  45. You're welcome, Learner. 

    Here's why we started rallying again:

    • This morning's strong ISM manufacturing and construction spending reports has the Atlanta Fed tracker upping its estimate of Q1 GDP growth to 5.4% from 4.2% previously.
    • The Blue Chip consensus forecast is for about 3.2%.

    NFLX/Cturb – They are working on so many shows it's ridiculous.  My cousin is a screenwriter and says about 1 in 4 people he know has a deal with NFLX.  Quantity not quality at this point.  Apparently, they identify a demographic they want and then select the elements of a show that demographic likes and then tell someone to just write something with that profile.  What it actually is doesn't seem to concern them.  

    AAPL – Sadly, I have to go to the dentist right at the close so I'll have to catch up on the fun later.  

    By the way, I told you all that negative crap was BS:

    • Apple (NASDAQ:AAPL) sold 22.39M iPhones in the U.S. during Q4, according to Counterpoint Research data.
    • The sales pushed Apple to a record 44% market share, up from 37%. 
    • Counterpoint said the quarter, which marked the first time the iPhone passed 22M domestically, was particularly impressive because the promotional season wasn’t as aggressive as in the past and upgrade rates were slightly lower on the year. 
    • Despite reports of Q1 production cuts, the iPhone X outsold the 8 and 8 Plus by a 2:1 margin in Q4. 
    • Refurbished iPhones: Apple could drive sales for its older iPhone models with refurbishediPhone 7 and 7 Plus models available through the official store for $499 (32GB model) to $679 (256GB model). 
    • India import tax raised again: Apple’s attempt to gain more than 3% of the Indian market hits another hurdle as the import tax increases from 15% to 20%. 
    • The rate was hiked five percentage points to 15% in December. 
    • The iPhone SE is the only model assembled locally and exempt from the import tax. But Reuters sources said Apple assembler Wistron plans a new iPhone 6s plant in the country.  
    • Previously: Apple admits to government questioning; new iPhone coming to India? (Jan. 31)

    After all that fuss and bother we're about flat for the day at the moment.   

    Oil is popping, though.

    • Valero Energy (VLO -1.8%) and Marathon Petroleum (MPC -2.1%) are sharply lower even after both refiners beat estimates for Q4 earnings and revenues (III), in an apparent example of selling the news.
    • Analysts have said refiners likely would outgain other energy groups this year as they benefit from rising U.S. oil production and some of the biggest gains from the recent tax law changes; over the past six months, VLO has jumped 37% while MPC has climbed 20%.
    • In today's earnings reports, VLO reported a $1.9B gain to net income and MPC a $1.5B increase from the tax changes.
    • VLO said it plans $2.7B in capex during 2018 compared witth ~$2.4B spent in 2017, and MPC said it expected to spend $1.6B this year vs. $1.7B earmarked last year.
    • “The reduction in the corporate tax rate is a catalyst for incremental investment in the business,” says MPC CEO Gary Heminger; MPC’s 2018 capital spending plan includes $950M in refining upgrades to make cleaner fuels and export enhancements and VLO plans to pour $1B into growth projects this year.
    • Q4 operating income at MPC's refining business surged more than 4x while VLO's jumped 52.2%, supported by higher gasoline and distillate margins.
    • India has joined the list of countries banning cryptocurrencies altogether as India's finance minister Mr. Jaitley stated that "The government does not consider cryptocurrencies legal tender or coin and will take all measures to eliminate use of these cryptoassets in financing illegitimate activities or as part of the payment system".
    • This announcement triggered panic selling in cryptocurrencies as Bitcoin trades 9.5% lower at $9100 at 12:30 ET, ETH at $1061.80 lower 4.7%, XRP at $0.9630 lower 12.8%.
    • However, the government would adopt blockchain, the technology that supports cryptocurrencies to speed the move toward a digital economy.

  46. OMI – filled Feb 17.5 put @ .75. trying for more at .80 but so far, no takers.

  47. Phil/F   Been on planes for the past few days and haven't kept up.  Did you pull the trigger on a Ford trade?

  48. Infographic: Thousands Of American Bridges Are Falling Apart  | Statista

    This is shocking to me, such low penetration in so much of the country:

    Infographic: U.S. Home Broadband Penetration by State | Statista

    On the other hand, huge opportunity for FTR in Texas!  

    Talk about bad infrastructure:

    Infographic: The Countries with the Fastest Internet | Statista

    Infographic: A Rare Occurrence: Bipartisan Support for Net Neutrality | Statista

    Infographic: Why Net Neutrality Is More Important Than Ever | Statista

    Infographic: Netflix and YouTube Are America's Biggest Traffic Hogs | Statista

    Infographic: Is MoviePass Ringing in a New Era for Movie Theaters? | Statista

  49. Nas taking a dive ahead of FANG earnings – very interesting!  

    Image result for very interesting animated gif

  50. OMI – also filled Jun 17.5 put @ 1.85 – giving me march and june dividends (.52) and leaving additional 1.33 off strike price.

  51. OMI – …and Sept 17.5 puts filled @ 2.40.  offers net entry at $15.10, if put to me, or another way to compare is just like getting paid 3 quarters dividends in advance, on net entry of $15.88 per share (implying a 6.5% dividend yield on cost basis going forward).  

  52. NFLX – my sister, who's a first AD, worked on several netflix shows, especially orange/black, but she's doing a series for Amazon right now – something about modern Romanoffs. Anyway, shooting right near us, so I get to see her, which is nice.

  53. GOOGL is losing what AMZN is gaining at the moment – +/- $50 each

    It's up to AAPL to break the tie but I'd play /NQ long above 6,900 with tight stops below because the above report indicates, to me that AAPL will make $20Bn this Q, pushing the year way over $50Bn on a stock you can buy for $850Bn that has $250Bn in cash.  

  54. Learner / Banks – I'm looking at UBS on the above trade.  I analyzed them 2 years ago so need to redo this.  But I like them then….  Which of those banks caught your eye?

  55. Phil / Banks – thanks for the info on the banks….  

  56. AAPL / Counterpoint – this seems like crazy talk

    Despite reports of Q1 production cuts, the iPhone X outsold the 8 and 8 Plus by a 2:1 margin in Q4. 

  57. batman,  'C' looks the cheapest and safest from a risk/reward perspective and I have my eye on WFC – waiting for them to F up and then buy at the next dip.  I like BAC too but just has gone up too fast. 

  58. learner –  form a price standpoint WFC is the best value – no doubt – I had owned them for years – still hold some preferred shares – don't know about how much damage they have inflicted.  

  59. AAPL earnings coming through

  60. AAPL eps slight beat $3.89 vs $3.86.. Revenues were just shy of consensus $88 bln vs $89.5 bln (consensus)  – stock is slightly down AH.   Iphone X – top selling iphone. 

  61. AAPL – Solid Quarter with Record sales and EPS, also outlook for Q2 is solid…. I'm surprised the stock is not taking off.   iPhone ASP at 796!  Hopefully is stays down…. want to double down my spreads!

  62. batman – you know AAPL well… thoughts on why they did not beat and raise? ASP was high but perhaps unit growth is below expectations…Looks like a slight beat and inline guidance for March qtr…  perhaps thats why stock is slightly down. 

  63. Lerner 

    Con Call is starting now in a few – I'll listen in… I don't see any issues with the growth numbers or regional numbers – china a bit light but not terrible…  stock moving up now…. I picket up 1K shares ofer hours at 166.xx – but could not get any more..

    I'll give you my thoughts after cal

  64. AMZN--Phil would love to hear your opinion.

    This supposedly overvalued stock seems to be taking over the world.


  65. batman & learner    Phil mentioned USB not UBS

    USB had some nice buying in the 2020 $60 calls on Jan4th

  66. Yes, stockbern  thanks… – USB (US Bancorp) not UBS. 

  67. Shorting AMZN has been a bad trade for a while. Yes, they do come down from time to time. But the long term trend has not been kind to shorts! There are just too many other fish in the pond.

  68. stjean—understatement of the year.

    Dumbest short ever for me.

  69. Dumbest short for a lot of professionals as well…. 

  70. AAPL now up $6+ to  $173.  Off we head to the races…

  71. Learner / AAPL – The con call went well.  I see no issues with anything.  While this may not be a 'super cycle' with the three skus and the staggered launches the tail off on phone sales will be less pronounced.  They mentioned that the X was the best selling phone every week since announcement.  Phone ASP went form 618 to 796 sequentially.  Rev Growth normalized for the for the 13 wk vs 14 wk qtr was 21% vs 13 % in the announcement.   Tax going from 26% to 15% and they are planning on being cash neutral – which means they are planning on taking on more debt to balance thier cash… today this is a Plus 183B so they plan on making this a zero balance with debt equaling cash – over time.  They will provide their capital allocation plan next quarter.   My current model have them at a price point of 190 this year and 220  next.  I need to re do these models and make some assumptions on capital and taxes… this is probably about 10 to 15 dollars off on taxes and cap return…  Planning on allocating a  1 or 2 full positions on this this week or next.  


    Phil – Once I have my new targets will be asking for some help on setting up some news. spreads …

  72. Well I guess people decided AAPL earnings were good, up 3.5% now.   

    • Q1 was a week shorter than last year!  
    • 1.3Bn users is 1/2 of FB's users but who do you think it more engaged (and has more money)?  And that's just a side note to their hardware biz but FB alone is $561Bn.
    • 240M music subs is about the same as NFLX's video subs (NFLX at $115Bn) and grew 100% this year.
    • Wearables were 2nd largest contribution to revenue growth.

    /NQ certainly liked it – up 50 points for $1,000 per contract!  That's almost enough to buy and IPhone!  cheeky

    LOL – it's funny because we're rich….

    AMZN/Jabob – I gave up on them years ago when they burned us on shorts.  The stock grows and the valuation stay about 300x earnings as it grows – never normalizes.  Kind of a cult thing – I just stay away.

    And what StJ said!  

    UBS is NOT as good as USB!  

    AAPL/Batman – I'm very disappointed they didn't come down, we haven't even got them in the hedge fund yet. 

    BitCoin testing $9,000.  Just $8,000 to go and I might buy some again.  

  73. UBS was a typo on my part meant UBS

  74. AAPL earnings – the only issue or risk this year is the battery throttling issue.  Both form a legal standpoint ( doesn't matter that they owned up it and provided a good response)  and from a sales standpoint.  I think the battery replacement will have an impact on new phone sales but not sure how much.  

  75. Phil / AAPL – My notes and outlooks

    Earnings / Rev  this quarter were a nominally ahead of consensus ( 3.89 / 88.3B) vs ( 3.86 / 87.3B) + 16% and 13% YOY.

    (Note EPS would have grown at 21% when normalized for 13 vs 14 wks this quarter v last year)

    Phone sales were down 1% in units, but up 13% in revenue to the iphone X sales and ASP going from 618 to 796 sequentially.  

    Strong Cash flow generated at 28.3B and total cash in BlanceSheet  at 285.1B with long term debt at 104B. 

    Services at 8.5B on 18% YOY

    other products ( wearables + accy) at 5.5B 36% YOY growth. 

    1.3B active users growing by 30M last qtr.

    Pad at 13B 6% YOY and Mac at 5.1B -5% yoy.

    Nothing wrong with the quarter, other than the no unit growth in the Phone line.  China at 11% growth is OK ( 19% normalized for week difference)

    Next quarter – Mgmt Outlook Rev 60 to 62B, GM 38 to 38.5 %, Op Ex 7.6 to 7.7 other exp at 300M and tax rate of 15%


    my outlook for Q2:

    Rev – 62B, GM at 38%, Op Ex at 7.6 and EPS of 2.65. full year outlook of EPS of 11.35 EPS with a 17.5 X multiple SH = 190 to 200)


    For 2019 assume a 9.5 % growth rate and an EPS of 12.43 and a 17 X multiple SH = 210 to 220


    2019 price target 195

    2020 price target 215


    Things to watch.  Battery replacement impact on NP phone sales.  Rate of deceleration of phone sales – both these could drive price down, negative sentiment from battery, issues with component pricing.  On the plus side capital allocation could increase share buyback speed and size, and could increase dividend payout.  The new product launch of new phones, and ipads, as well as continued growth in services – these need to stay in the 18 to 20 % growth rate range.


    Phil – these are my thoughts…. I’ll provide my current positions and would like your feedback on how to position them. 

  76. Batman – Thanks for the color. 

    Phil – I wish it had dropped too so I could position for 2020. Maybe we might get an opportunity if there is a wave of profit taking.   

  77. Phil – follow up to my earlier post.  Below are my current positions.  Iv’e have a negative slant to my positions because I was expecting a pull back…. I’d like to flip more bullish now, and get good balanced positions.   Prices shown are my costs.  I’d like to balance out the 160 / 200 BCS, as well as close out the 10X ’20 200 short calls and start a new position.  Your advice and counsel would be appreciated.  Note my target prices are as follows –

    2019 price target 195 ish

    2020 price target 215 ish


    20X Long  Jan ’20 160 Call ($30.75) 

    50X Short  Jan ‘20 190 Call ( 20)


    15X Short  Apr ’18 195 Call ( 1.9)

    10X Short  Jun ’18 190 Call (7.7)


    10X Short Jan ’20 150 Put (13.2)

    5X Short  Jan ’19 155 Put (10.4)


    10X short Jan ’20 200 Call ( 10)

    Thanks for your help 

  78. Helping the base – LOL:

    A few years ago, the Obama administration issued a rule saying that if a restaurant owner collected tips and put them in a pool, all the money had to go back to the wait staff. This rule is currently being litigated on the grounds that it exceeds the power of the Department of Labor, and maybe that’s true. But the Trump administration wasn’t happy with just that. They wanted to repeal and replace the rule, but they also wanted to retain their populist street cred. So they commissioned a study to show that the Obama rule wasn’t necessary anyway since tips would all be distributed to workers regardless.

    Now, common sense tells you this is very, very unlikely. The new rule doesn’t forbid employers from skimming money off the top of the pool,¹ and human nature being what it is, this means that some employers will. Not everybody has a heart of gold, after all. And sure enough, that’s what the study concluded.

  79. That MOFO AMZN better not trade over 1500…

    no gravity

  80. Wheeeeeeeeeeeeeeeeeeeeeeeeeeeee!

  81. Amazon and Apple Gush Over Holiday Sales

  82. The Republican Plot Against the F.B.I.

  83. Don’t Believe the Liberal F.B.I.

  84. Senator seeks documents on Russia money links to the NRA

  85. Tehran hijab protest: Iranian police arrest 29 women

  86. Stocks Retreat Ahead of U.S. Jobs Report

  87. Scientists move closer to a universal flu vaccine

  88. Donald Trump Jr screws up and incriminates his father with the dumbest tweet of all time

  89. Democrats reveal Devin Nunes is under criminal investigation in Trump-Russia scandal

  90. Donald Trump just bet his presidency and his life on Carter bleeping Page

  91. Good morning and wheeeeee!  

    This seems to be DB's fault.  My Grandpa Max (English) used to blame the Germans for everything, so it feels right to me:

    • Deutsche Bank (NYSE:DB) said Friday that it had lost €2.2 billion ($2.7 billion) in the fourth quarter and some €500 million for the full year, with all three of its business units taking punishing revenue declines in the quarter.
    • The lender ate a €1.4 billion charge related to the new U.S. tax law last quarter, and expenses were also higher than anticipated.
    • This marks the bank's third consecutive year in the red.
    • Shares were off 6.7% in premarket trade.

    We're hitting 25,900, 2,800, 6,850 and 1,560 so exciting new lines to test but they should be weak bouncy in the very least and probably strong bouncy into the open.  

    Bitcoin $7,878 – I might not have to wait long for my $1,000 buys to fill.

    People are not too worried:

    Now I'm pulling the trigger on /KC

    Another factor is all this Trump crap coming to a boil – fears of all his policies being undone if he's indicted and the GOP get killed in the election (only 7 months away!). 

    • In most market cycles, higher interest rates have little effect on markets … until they do. The cryptocurrency sector has been the most frothy space this time around, and it's in full crash mode now, with double-digit percentage daily declines the norm.
    • Stocks may have begun to take notice of tighter money this week, and the downturn in the S&P 500 – while relatively tiny – is looking like something more than just a blip on the longer-term chart.
    • More losses appear in store for the open, with S&P 500 and Nasdaq 100 futures down 0.7%, and Dow futures off 0.9%. The 10-year Treasury yield holds at a multi-year high of 2.79%.
    • Amazon remains sharply higher premarket following last night's earnings; Google sharply lower, and Apple modestly in the green.
    • Bitcoin is now taking out $1K markers on the downside with the same speed or more with which it took out milestones on the upside a few weeks ago. The crypto – around $11K not many hours ago – at one point this morning slipped below $8K. It's currently down 10.8% at $8,133.
    • Holding up strong until about midday yesterday, Ethereum has joined the crash with gusto, down 20% to $819. Ripple, Litecoin, Dash, and the rest of the sector are down as much as 30%.

    Japan Authorities Raid Coincheck Office After $500 Million HeistJapan’s Financial Services Agency raided Coincheck Inc.’s offices a week after the cryptocurrency exchange lost about $500 million to hackers, hauling out documents and computers as evidence. The inspection was conducted to ensure security for users, Finance Minister Taro Aso said. The theft, which follows the disappearance of about $470 million worth of Bitcoins from the Mt. Gox exchange in 2014, sent shockwaves through the global virtual currency community.

    2 economists just eviscerated bitcoin, saying it should be trading at $20. Here's their logic: The supply of bitcoin increases only slowly towards its famous fixed limit and is now around 15m. The use of bitcoin as a means of payment is currently around $100m per month, or $1,200m a year. Were bitcoin just like ordinary money each bitcoin would be used around four times a year in making transactions. So we have 60m bitcoin payments supporting $1,200m worth of bitcoin transactions, which requires that each bitcoin is worth $20. There's always a "but" with such analysis. And the "but" in this case is that bitcoin could be worth its current value, but it would have to see a 1000-fold increase in its use as a form of payment. 


    BoJ Offers To Buy Unlimited Debt, Boosts POMO In Panic Response To Surging Rates

    China Default Angst Flares After Rare Case With Junk BondA rare event in a corner of China’s credit market is fueling concern that more defaults are looming, adding to strains sparked by the government’s crackdown on leverage. A timber company in the country’s northeast decided this week not to pay off perpetual bonds despite having an option to do so. That was a first for a junk-rated issuer of such securities in China. Firms that raise money with perpetuals never have to pay off the principal, in theory. But in practice, the bonds usually have coupon rates that increase at set dates along with options letting issuers repay the securities to avoid the escalating interest charges.

    Chinese Stocks Tumble As Hong Kong Officials Monitor Surge In ATM Withdrawals

    Bond-Market Pain Reaches 30-Year Treasuries as Yield Breaches 3%The benchmark 10-year U.S. yield hurtled toward 2.8 percent, setting fresh highs since 2014, and the 30-year yield broke through 3 percent for the first time in eight months. Treasuries found little support throughout the trading session — no more month-end buyers like pensions and index funds to step in, and little sign of demand from Asian buyers. Most traders were content to let the bear-market narrative run its course after the worst January for the world’s biggest bond market since 2009.

    With gasoline exports on the rise, refinery CEO sees global demand going higher in 2018

    Tesla raises $546M in first asset-backed securities deal

    • Tesla (NASDAQ:TSLA) today sold $546M of bonds backed by lease payments on Model X and Model S vehicles, and was able to cut interest rates on the multi-part deal from levels initially floated to investors, WSJ reports.
    • The largest tranche, a $422M slice of debt assigned the highest possible credit rating by Moody’s, came with a 0.3 percentage point yield premium above the benchmark swap rate, down from earlier guidance of 0.4-0.43 percentage point, while the lowest-rated slice sold at a 2.65 percentage points yield premium, down from guidance of 2.8-2.9 percentage points.
    • TSLA's first dip into the asset-backed securities market came about six months after it sold traditional corporate bonds for the first time.

    Key takeaways from Alphabet's Q4 earnings call

    • Alphabet’s (NASDAQ:GOOG) Q4 call was heavy on talk but short on details. Here’s what we did find out:
    • Earnings were up 18% on the year, ex-EU fine.  
    • Management explained higher TAC on the fact that stronger growth areas (mobile revenue) require higher costs. The company expects year-over-year growth in site TC to slow after Q1. 
    • Mobile search and YouTube biggest contributors to revenue growth. 
    • YouTube stats: Users watch an average of 60 minutes a day on mobile (phones and tablets); 1.5B monthly viewers; YouTube TV now available in 30 markets.   
    • Responds to COGS pressure by saying it reflects product mix. 
    • Waymo progress is accelerating and has surpassed 4M miles of driving in the real world. 
    • Excited about 2018 investments in biggest bets: cloud, hardware, YouTube, and machine learning. 
    • Google Cloud already a billion-dollar per quarter business. 
    • Stock repurchase: Authorizes an $8.6B stock repurchase of Class C stock. 
    • Alphabet Class C shares are down 2.3% aftermarket.    
    • Previously: Alphabet misses by $0.37, beats on revenue (Feb. 1)
    • Previously: Alphabet -3.2% after Q4 EPS miss, higher TAC; Hennessy chosen as chairman(Feb. 1)

  92. I’m long /NQ at 6860. Stop at 6870 now