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Friday Market Flip-Flop – Wake Up and Smell the Coffee Futures!

What a fun market this is!

After being totally bored making money on bullish bets in 2017, 2018 has been a non-stop thrill-ride with money to be made in both directions.  Yesterday, we got yet another chance to short the Russell (/TF) at our 1,550 line and we got another 20-point drop to 1,530, which was good for gains of $1,000 per contract and our call to go long on Coffee (/KCH8) at $119 from yesterday's Morning Report is already percolating at $120.50 and that's good for gains of $562.50 per contract already and gold (/YG, also from yesterday's Report) has jumped from $1,327.50 to $1,330.50 but that's only good for gains of $96.60 per contract, as it's a cheap contract.  

These are just the quick trade ideas we give away for free folks!  If you want more trade ideas, I'll be on Benzinga TV's Pre-Market Prep Show at 8:35 this morning – Tune in here.

Meanwhile, we're not at all fooled by the pre-market bounce in the indexes as we're still not clearing those strong bounce lines and it's the same lines we've been using since the crash, which I last updated in Wednesday's Report:

Since then, have we made any improvements?

No, apparently not, so don't lose perspective and, most importantly, don't get excited when the market, like a ball, bounces less than half of what it fell – especially when it's two weeks later and you're still not moving higher.  It's more likely, at this point, that we're consolidating for a move down than a move up but +180 on the Dow at the open is the pre-market push that reels the Retail Suckers in while the Institutional Investors dump their holdings into the weekend.  

Last time I was on Benzinga, we talked about GreenCoin, which was 0.001 at the time and I don't know if it's just because I'm scheduled to be on again today but GreenCoin has shot up to 0.004, which is up 300% in a month so you're welcome for that one!  

Keep in mind all cryptocurrencies are silly so, if you have more than a double and don't take half off the table (leaving you with half for free) – you are simply being a fool, who is likely to soon be parted with his money!  

Less foolish is our relentless shorting of the Futures at our Strong Bounce Lines which are also the 50-day moving averages this week with the S&P right at 2,728 along with Dow 25,212, Nasdaq 6,650, NYSE 12,970 and Russell 1,550 and it's great when we see the moving averages move right into our Bounce Lines as it means our 5% Rule™ is working, which means the market is being traded by robots (as that's what the 5% Rule assumes) and, therefore, predictable.  

Predictable works for me because Monday, at the NY Trader's Expo, I will be participating in a Live Trading Challenge at the open so see who can make the most money in 60 minutes so we'll be putting all this BS to a test live, in front of a pretty big audience.  I'll also be giving a 4-hour Master Class to open the show on Sunday from 9am to 1pm – so come on down if you want to learn all of our trading tricks!  We got the whole thing underwritten so it's now free!  

Meanwhile, we're shorting the indexes this morning at 25,150, 2,725, 6,825 and 1,540 with tight stops if any of them go back above.  As you can see, we're already up about $2,000 on our Coffee Trade for the day so tight stops at the $122 line now but, long-term, we love that trade and, if you are futures-challenged, there's always the Coffee ETF (JO), which is at $14.80 and the way I'd play it is:

  • Sell 5 2020 $14 puts for $1.30 ($650) 
  • Buy 10 2020 $15 calls for $2.50 ($2,500) 
  • Sell 10 2020 $20 calls for $1.25 ($1,250) 

That's net $600 on the $5,000 spread, so the upside potential is $4,400 (733%) at $20.  We need Coffee (/KC) to be up 33% over two years, which would be $162, which is roughly the 2016 highs but well below $200+ in 2014 and $300 in 2011.  On the whole, we're playing for Global Warming disrupting the growing patterns and causing shortages – something Bloomberg just did a special report on.  

$122 to $162 is up $40 and Coffee Futures contracts pay $375 per $1 so $15,000 per contract but we will be in and out hundreds of times between now and than – usually buying the dips, getting out on pops (like this morning) and then starting the cycle again on the next dip.  We don't mind making the same play over and over again – not when we can pick up $2,000 in a morning, right?  

Have a great weekend, 

- Phil


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  1. Good Morning.

  2. It means nothing if we can't punch through the 50 DMA!

  3. MAGA:

    The number of civil cases filed by the EPA to collect these fines in the first place has also declined. In President Clinton’s first year, there were 73; under Bush, 112; under Obama, 71. In 2017, there were just 48 cases.

    What this means is that the EPA is not going after polluters like it used to.

    Mostly Making America Greatly polluted Again!

  4. Interesting theory:

    The smarter you are, the better you are at constructing a narrative that supports your beliefs, rationalizing and framing the data to fit your argument or point of view. After all, people in the “spin room” in a political setting are generally pretty smart for a reason.[...]

    Duke pointed to another study that showed IQ is positively correlated with the number of reasons people find to support their own side of an argument. So being smarter makes it easier to fall prey to the confirmation bias.

    Obviously (from my own experience) also impacts our investment decisions! 

  5. I can't believe they are still talking about arming teachers! What happens when you have a disgruntled armed teacher in the classroom who starts shooting students. The teacher next door comes in and starts a gun fight? Do we arm the students next? Are these guys for real?

    And now they blame video games! Kids in Japan and Korea play more video games than kids in the USA and yet they have fewer mass shootings. So many video games and many guns = more shootings while many video games and no guns = no shootings. Finding the correlation is not that hard.

  6. Equities are still a girl's best friend, not diamonds:

    Of course, you can always gift a violin instead!

  7. Or a nice parcel of land…Where's Real Estate on that list?…. :)

  8. From Briefing :

    ~~ ABX – Hearing Barrick Gold downgraded to Neutral from Sector Outperform at CIBC . 

  9. I don't know that real estate is such a great investment long term – in any case, too many variables: countries, location, etc…

  10. Good morning! 

    Image may contain: 1 person, smiling, text

    Even if we take back the 50 dmas into the close, we still need a full day over to confirm so I'm still shorting any pop.  

    And what StJ said. 

    EPA/StJ – And fewer fines mean less money to go after polluters too AND they are cutting the budget.  

    Arming teachers is insane and arming them with a handgun to stop people with assault rifles is just pointless.  Trump is blaming video games, movies – anything but the guns – all a distraction which, of course, works on an easily distracted population.

    As to equities giving the best returns, wine seems more fun.  Certainly more fun than bonds…

    Land/1020 – Well, let's see, they bought Manhattan for $24 in 1626 and 400 years later it's about $2Tn so call it a gain of 833M% divided by 400 is still 2M% a year on the average.  That's pretty good too! 

    Adjusted for inflation, however – over the past 100 years, real estate investing has generally sucked:

    Image result for manhattan real estate prices 1900

    If you were to compound $100 at 3% for 110 years, you'd have $2,582,so 25x – real estate never touched that – even in the boom.  

    ABX/Albo – Relentless attack on those guys.  

    Barrick Vows Not to Grow for Growth's Sake

    Barrick Gold forecasts 10-year output, provides update on projects

    Barrick Gold sees long-term output drop, promising projects

    Barrick Outlines Organic Investments to Drive Long-Term Value

  11. FU CIBC!!!!!!

  12. 1,530 is still being bouncy but good for $500 yet again ($420 as I stopped out).   And the Egg McMuffins are paid for!  

    /NQ is the fresh horse below the 6,800 line (very tight stops above). 

  13. Phil,

    Rudimentary question.. What platform do you prefer for futures trading, i.e ease of use, etc?

    • GNC Holdings (NYSE:GNC) updates on the status of its terms loans.
    • The company says that it has received consents from approximately 87% of term lenders under GNC Nutrition Centers' credit agreement to extend the maturity date of the loans to March 2021 and to make certain other modifications to the credit agreement.
    • GNC also announced that Harbin Pharmaceutical Group has agreed that this level of participation in the amendment satisfies the minimum participation requirement in the previously announced $300M strategic investment and that both parties will continue working together to complete the transaction.
    • GNC +3.95% premarket to $4.21.
    • Source: Press Release
    • Treasury Secretary Steven Mnuchin yesterday argued the administration's policies will boost wages without creating inflation.
    • That didn't sit well with @TruthGundlach … "Yeah, sure. And we are going to expand the Buffalo Art Museum without making it bigger."
    • Gundlach goes further, arguing if by "miracle wages go up without inflation, not good for profits. If wages go up with inflation, not good for bond yields, ergo P-E ratios."
    The effect of MoviePass:  Cinemark posts strong quarter
    • Cinemark (NYSE:CNK) tops estimates by a comfortable margin with its Q4 report.
    • Admissions revenues increased 4.5% to $443.5M during the quarter and concession revenues rose 10.1% to $261.2M.
    • Average ticket price was $6.72.In the U.S., the average ticket price was $7.98 vs. $7.65 a year ago.
    • Concession revenues per patron was $3.96. In the U.S. concession rev per patron was $4.69 vs. $4.24 a year ago.
    • The company's adjusted EBITDA jumped 11.5% to $187.5M.
    • "The on-going strength of our balance sheet and cash flows affords us a demonstrated ability to invest in long-term growth while returning capital to shareholders," says CEO Mark Zoradi.
    • Previously: Cinemark Holdings beats by $0.34, beats on revenue (Feb. 23)
    • General Electric's (GE -0.3%) transportation unit says it signed a $1B agreement to supply 30 freight locomotives to Ukrainian Railways, as well as additional locomotive kits over 10 years, the rehabilitation of locomotives in the railway’s legacy fleet, and long-term maintenance services.
    • GE says production will start in the U.S. early this, with first deliveries expected this fall; some work will be localized in Ukraine to boost economic development in the country.
    • GE says its TE33A locomotives can significantly reduce harmful emissions, economize on fuel and oil costs, and increase time between maintenance overhauls compared to the legacy Ukrainian fleet.
    • Sitting on a cash pile of more than $100B, with no imminent M&A targets, and no plans for a dividend, Berkshire Hathaway (BRK.ABRK.B) has become one of the globe's largest holders of short-dated U.S. government paper.
    • According to The Oracle, nearly all of Berkshire's $109B in cash (as of Sept. 30) is in T-bills – not an insignificant sum in a $2T market.
    • It raises the question of whether there might be a dividend surprise in tomorrow's annual letter. "[Buffett's] aware that [Berkshire’s cash] is not earning a high rate of return for shareholders,” says a business professor and Berkshire shareholder. “Paying out a special cash dividend, a one-time dividend at the discretion of management, makes some sense.”
    • Veterans will remember it was Warren Buffett who stepped in as chairman of Salomon Brothers in 1991 after a trader there was caught trying to corner the market in two-year government paper. "We're very careful about how many we bid for," jokes Buffett.
    • LendingClub (LC -7.5%) is cut to neutral from a buy at Guggenheim as competiton in the personal lending business intensifies according to analyst Jeff Cantwell.
    • Cantwell, sees lower growth, and mentioned serious competitive pressure from big banks noting Goldman Sachs' recent investor presentation outlining focus on personal loans.
    • Source: Bloomberg
    • Canada inflation rose 1.7% Y/Y, 0.7% M/M against estimated annual inflation rate of 1.4% Y/Y, 0.4% M/M
    • Core inflation which outstrips gasoline was up 1.2% Y/Y, 0.5% M/M.
    • The Bank of Canada aims to keep inflation at 2%, the midpoint of a target range of 1% to 3% over the medium term.
    • A harsh assessment on UPS (NYSE:UPS) arrives this morning from the Deutsche Bank desk.
    • "We see a lack of positive catalysts to justify a Buy rating. UPS shares won't start working in our view until mgmt. can articulate a sound strategy to strike the right balance between price and volumes vis-à-vis Amazon, and talk more concretely about the long-term/structural capital needs of the business as mgmt. 'leans in' to higher B2C shipments," writes DB's Amit Mehrotra.
    • The analyst also cites concerns on UPS' ability to control "burgeoning capex" with capital intensity expectations more than doubling as a percenatge of sales in the last year.
    • Deutsche Bank drops UPS to Hold from Buy due to the broad concerns.
    • UPS -0.36% premarket to $104.70.
    • Pivotal Research Group raises its Hewlett Packard Enterprise (NYSE:HPE) price target from $13 to $20, a 22% upside to yesterday’s close.
    • Firm cites strong earnings performance that shows that the company can squeeze out profits even after selling off the software and services businesses. 
    • Source: 
    • Hewlett Packard Enterprise shares are up 12.5% premarket to $18.49 with a 52-week range of $12.70 to $17.07.  
    • Previously: HPE +14.9% on Q1 beats, upside guidance, Hybrid IT +9% (Feb. 22)
    • Japanese core consumer prices remained at 0.9% in January on higher energy costs, almost matching market forecasts but still below the 2% goal of the BOJ.
    • That adds to growing challenges for Governor Haruhiko Kuroda as he prepares for his second term in April, with the central bank unable to reach its inflation target despite years of massive stimulus.
    • Nikkei +0.7% to 21,893.
    • President Trump has called a meeting with key senators and Cabinet officials next week to discuss potential changes to the biofuels policy, Reuters reports.
    • It follows the recent bankruptcy of Philadelphia Energy Solutions, which blamed the regulation for its demise.
    • Sources said the meeting will consider whether to cap prices for biofuel credits, let higher-ethanol blends be sold all year and efforts to get speculators out of the market.

  14. Platform/Tophy – I use TD's ThinkorSwim, very happy with it.  

  15. Phil – Great call the other day on LC.

  16. Phil/CHL


    So, CHL pays dividend only TWICE a year, in July and Oct.

    They announce the July dividend in March/April 2018.


    Their last 2 dividends were 71cents in July and $1.04 in Oct 2017. (A one time special div. of $2 was also

    paid in Oct)

    They are a market cap of $195B, with trailing earnings of $4.40 and a PE of 11

    Question arises, are they cheap enough to buy here with sale of some June 45 puts for a $1, and perhaps the $50 calls for $1

    Part of my problem is that there is no visibility on the dividend…they could easily cancel a payment and yahoo finance does not understand that they pay only twice a year…so their numbers are incorrect.

  17. Phil – Where do you like shorting NQ here?  if at all that is?

  18. Phil

    Do you see any trades in commodities? 


  19. LC/Albo – Well, I didn't short them, just said they were ridiculous.  

    CHL/Maya – That's the only Chinese stock I do like and yes, $50 is usually where I put in an offer.   I thought they used to have longer-term than Sept, not that thrilling but I'd certainly sell the Sept $45 puts for $2.05 for a net $43ish entry.  As to buying them, as I'm not sure about the market at the moment, I'd just start with that and see what happens.  If they get cheaper – THEN you can add a bull spread and roll the short puts.  

    /NQ/Rayne – 225,200, 2,728, 6,850 and 1,545 are the lines where I find it hard to resist taking a poke short but I wouldn't fight upward momentum – they have to be fading at those levels.  

    Commodities/QC – Well I stopped out of /KC but I still have my /NGV8 longs (2) @ $2.76 and those I will hold to $2.80+ for as long as it takes.  Other than that, nothing very exciting though oil is a tempting short at $63.55 but now early in the new cycle – so no pressure.  

  20. Phil – Just doing my civic duty by trying to help Andrew Janz in his effort to repeal and replace Devin Nunes as congressional rep for the 22nd district near Clovis, CA.  it doesn't get any better than his billboard. Love the slobbering frocks, rally monkey back packs and little white shorts. Nuner's got an ice cream and little Donnie is screamin pissed, both on Kremlin leashes, with Putin at large and in charge. No fake news here.

    We just launched a billboard near Rep. Nunes’s Clovis office, but I’m afraid he won’t see it since he is never in the district working for us. Will you help me make sure the billboard gets in front of him by sharing this photo with the hashtag #goodboydevin. Learn more about me and my campaign to repeal and replace Devin Nunes at 

  21. Speaking of oil, they just rolled the strip and, at the moment, the front 4 months have 1.178Bn FAKE barrels on order so it's going to be tough rolling into 3/21 expiration.   Easter is April 1, so that might help a little but, on the whole, this might be a good month to start looking to short around the 12th – as the pressure mounts.  We'll keep an eye on the chart.  

    Click for
    Current Session Prior Day Opt's
    Open High Low Last Time Set Chg Vol Set Op Int
    Apr'18 62.60 63.57 62.33 63.51 11:42
    Feb 23


    0.74 287711 62.77 498650 Call Put
    May'18 62.44 63.37 62.16 63.32 11:42
    Feb 23


    0.72 41122 62.60 260209 Call Put
    Jun'18 62.08 63.02 61.82 62.96 11:42
    Feb 23


    0.71 33951 62.25 280332 Call Put
    Jul'18 61.66 62.51 61.37 62.48 11:42
    Feb 23


    0.70 12202 61.78 139689 Call Put
    Aug'18 61.30 61.95 60.83 61.95 11:42
    Feb 23


    0.70 12514 61.25 87251 Call Put
    Sep'18 60.69 61.34 60.29 61.32 11:42
    Feb 23


    0.62 9076 60.70 107390 Call Put

    Who was looking for $1.99 on /RBJ8 – We're almost there.  $1.80 on /RBH8 – that's a huge rolling cost!

    • Management, or at least the lawyers at Bank of America (NYSE:BAC) are taking bitcoin seriously, adding cryptocurrencies to the list of "risk factors" in the bank's latest 10-K.
    • "The widespread adoption of new technologies, including internet services, cryptocurrencies and payment systems, could require substantial expenditures to modify or adapt our existing products and services."
    • BofA is among those leading institutions that have blocked customers from using plastic to invest in cryptos. Its wealth-management clients are also restricted from these types of investments.
    • Bitcoin today is up 4.7% to $10,310.
    • Shares of (NASDAQ:TSTpop 10.7% after the NY Post speculates the company is again an acquisition target of tronc (NASDAQ:TRNC).
    • Tronc circled TheStreet in the past but operations were struggling with a threatened Nasdaq delisting in 2016. 
    • TheStreet had $55M of preferred stock from Technology Crossover Partners on its books but those holdings were converted to about $20M in cash and 6M shares of common stock in November. 
    • Earlier this month, Tronc paid $66M for a 60% stake in consumer product review site BestReviews. 
    • KBR (KBR -9.4%) plunges after missing Q4 earnings expectations and reporting a 21% Y/Y revenue decline.
    • KBR says Q4 engineering and construction revenue fell 45% Y/Y to $293M, primarily due to completion or near completion of several projects across the segment; for the full year, E&C's revenue fell 31% to $1.6B, and overall company revenues slipped to $4.2B from $4.3B in 2016.
    • Operating cash flow for FY 2017 was $193M vs. $61M in 2016, helped by significantly improved overall profitability during the year; backlog rose by $300M to $10.6B.
    • KBR issues upside guidance for FY 2018, seeing EPS of $1.35-$1.45 vs. $1.36 analyst consensus estimate.
    • KBR also says it secured a ~$2B financing commitment to complete a recapitalization plan to finance its SGT acquisition, among other reasons.

  22. /RB - good lord, I usually buy some on Thursday for the weekend pump and of course the week I'm too busy it becomes a rocket ship…

  23. Not sure what's driving it but I guess it's trrying to catch up to the /RBJ8.

    PSO with a big comeback:

    • Pearson (PSO +0.3%) says it's in talks to sell its U.S. school courseware business, the latest in a series of moves the publisher is making to spur a turnaround.
    • The K12 courseware business has been slow to adapt to digital, Pearson says, marking it officially held for sale. The company's talking with multiple buyers about a deal.
    • Its refocus on education has led the company to shed the Financial Times, The Economist and a stake in Penguin Random House in recent years.
    • In guidance provided with earnings last month, Pearson said it expected sales of U.S. higher-education course materials to fall 3% on an underlying basis.
    • The rest of Pearson is doing well, CEO John Fallon says; higher-ed courseware makes up about a quarter of its business.

    That's one from the old LTP:

    Submitted on 2017/08/18 at 12:44 pm

    • PSO – Just sold their education unit today and lost $21M for the Q on $2.6Bn in sales.  We only have 1,000 shares so let's add 1,000 more for $7.75 and sell March $7.50 calls for 0.85 and $7.50 puts for $0.65 so our net on this 1,000 is $6.25 + $12.25 original is net $9.25 half-covered and, if we're assigned 1,000 more at $7.50, we'll end up with 3,000 at an $8.666 avg ($25,980 – still half an allocation) which is great if they stay over $7 as we can make up the rest with a few call sales.    We still have lots of room to DD, so we can also sell more puts if we feel so inclined. 

    Gun names lower as Florida moves to restrict ownership

    • Among gun reforms being proposed by Florida Governor Rick Scott would be requiring anyone purchasing firearms to be over the age of 21.
    • He would also step up efforts to keep anyone with mental issues from possessing a gun.
    • Sturm Ruger (RGR -3.4%), American Outdoor (AOBC -3.4%), Vista Outdoor (VSTO -0.8%)
    • See also: MetLife, Chubb attempt to get in front of gun issue (Feb. 23)

  24. Hey guys, I'll be doing a live trading challenge on Monday Morning, live at the Trader's Expo at 9:30 but I'll have a post up and PLEASE, pre market and at the open, try to let me know in chat if there's anything moving that would be worth playing that first hour.  I'll be sure to check in to see what you guys come up with.  Thanks!  

    Of course I'll be mainly playing the Futures but if anything goes stupidly up or down we can bet against (or something market-moving we can grab at the open) – let me know.  

  25. Finally closed out my PCLN short put position for a nice profit.  Took awhile because of the spike in the VIX.  Don't think they're in any danger of being exercised, but taking risk off the table.

  26. Korea/Snow – thanks.  

  27. CHS/Phil – raised guidance, increased dividend, stock dropping…  buy the dip?

  28. Nothing ever happens on Monday Phil!

  29. CHS/Scott – Not a very exciting retailer with declining sales.  No particular reason to buy them that I see.  LB's dividend is 5% at $48.50, HBI 3% at $19.84 and those are our Trade of the Year and Runner Up so I like either of those miles better than CHS.  

    Monday/StJ – It's not that nothing happens, it's just that whatever does happen doesn't matter.  

    Pushing higher again but still 90 mins to go so a bit early.  2,728 on the button is causing problems and lined up with 6,850 so I"m shorting /NQ again.  

  30. Of course, we might get lucky and Mueller indicts Trump this weekend and you have a 2000 points move on Monday!

  31. STJ – Which way ?   I think it should be up, 8-)

  32. innocent!!!!

    like OJ ;-)

  33. FTR is one crazy mofo stock!

  34. HOV… a lottery ticket or beaten down a bit too much?

  35. Image result for trump and oj

    FTR/Jabob – As I say (way too often) people simply have no idea how to value stocks properly but, for some reason, they trade them anyway.  Perfectly good stocks are too low and mediocre stocks are too high.  Of course – that's how we make our living, so I'm not complaining..

    HOV/Tophy – Well $2.25 doesn't excite me, $1.50 excites me with them or even $2 but we missed the dip but I'd be inclined to buy the next one.  

    HOV is another one that used to have longer-term options and now only go to Aug and no more 0.50 increments, so maybe I won't want to play them unless I can sell the $2 puts for close to $1 (now 0.25), which would be worth a toss.  

  36. You are right Albo – up! But simply because Pence is an empty suit that would sign anything that Congress puts in front of him like more tax cuts or something… 

  37. AAPL testing $175, which is up 1.5% for the day, leading the Nasdaq higher.  

  38. Phil,

    Are you still short /NQ or did you stop out? Holding over the weekend?

  39. Phil

    With rising rates should we have a trade on

    ProShares UltraShort 20+ Year Treasury TBT


  40. Comment content omitted because it is too long.

  41. Rick Gates (Trump Campaign Deputy) pleads guilty to lying under oath and conspiracy.  That's a big deal.  

    Markets don't seem to care so far but I'd sell into the close as Manifort should be next and then we're at Trump's inner circle next.  

    Remember, these things are slow – no matter how incredibly guilty the President is:


    • June 17, 1972: The plumbers are arrested at 2:30 a.m. in the process of burglarizing and planting surveillance bugs in the Democratic National Committeeoffices at the Watergate Building Complex.
    • June 20, 1972: Reportedly based on a tip from Deep Throat (associate director of the FBIMark Felt), Bob Woodward reports in the Washington Post that one of the burglars had E. Howard Hunt in his address book and possessed checks signed by Hunt, and that Hunt was connected to Charles Colson.
    • June 23, 1972: In the Oval Office, H.R. Haldeman recommends to President Nixon that they attempt to shut down the FBI investigation of the Watergate break-in, by having CIA Director Richard Helms and Deputy Director Vernon A. Walters tell acting FBI Director L. Patrick Gray to, "Stay the hell out of this". Haldeman expects Gray will then seek and take advice from Deputy FBI Director Mark Felt, and Felt will obey direction from the White House out of ambition. Nixon agrees and gives the order. [5] The conversation is recorded.
    • September 15, 1972: Hunt, Liddy, and the Watergate burglars are indicted by a federal grand jury.
    • November 7, 1972: Nixon re-elected, defeating George McGovern with the largest plurality of votes in American history.
    • January 8, 1973: Five defendants plead guilty as the burglary trial begins. Liddy and James W. McCord Jr. are convicted after the trial.
    • January 20, 1973: Nixon is inaugurated for his second term.
    • February 28, 1973: Confirmation hearings begin for confirming L. Patrick Gray as permanent Director of the FBI. During these hearings, Gray reveals that he had complied with an order from John Dean to provide daily updates on the Watergate investigation, and also that Dean had "probably lied" to FBI investigators.
    • March 17, 1973: Watergate burglar McCord writes a letter to Judge John Sirica, claiming that some of his testimony was perjured under pressure and that the burglary was not a CIA operation, but had involved other government officials, thereby leading the investigation to the White House.
    • April 6, 1973: White House counsel John Dean begins cooperating with federal Watergate prosecutors.
    • April 27, 1973: L. Patrick Gray resigns after it comes to light that he destroyed files from E. Howard Hunt's safe. William Ruckelshaus is appointed as his replacement.
    • April 30, 1973: Senior White House administration officials Ehrlichman, Haldeman, and Richard Kleindienst resign, and John Dean is fired.
    • May 17, 1973: The Senate Watergate Committee begins its nationally televised hearings.
    • May 19, 1973: Independent special prosecutor Archibald Cox appointed to oversee investigation into possible presidential impropriety.
    • June 3, 1973: John Dean tells Watergate investigators that he has discussed the cover-up with Nixon at least 35 times.
    • July 13, 1973: Alexander Butterfield, former presidential appointments secretary, reveals that all conversations and telephone calls in Nixon’s office have been taped since 1971.
    • July 18, 1973: Nixon orders White House taping systems disconnected.
    • July 23, 1973: Nixon refuses to turn over presidential tapes to Senate Watergate Committee or the special prosecutor.
    • Vice President replaced:

    • October 20, 1973: "Saturday Night Massacre" – Nixon orders Elliot Richardson and Ruckleshouse to fire special prosecutor Cox. They both refuse to comply and resign. Robert Bork considers resigning but carries out the order.
    • November 1, 1973: Leon Jaworski is appointed new special prosecutor.
    • November 17, 1973: Nixon delivers "I am not a crook" speech at a televised press conference at Disney World (Florida).

      • November 27, 1973: the Senate votes 92 to 3 to confirm Ford as Vice President.
      • December 6, 1973: the House votes 387 to 35 to confirm Ford as Vice President, and he takes the oath of office an hour after the vote.
    • January 28, 1974: Nixon campaign aide Herbert Porter pleads guilty to perjury.
    • February 25, 1974: Nixon personal counsel Herbert Kalmbach pleads guilty to two charges of illegal campaign activities.
    • March 1, 1974: In an indictment against seven former presidential aides, delivered to Judge Sirica together with a sealed briefcase intended for the House Committee on the Judiciary, Nixon is named as an unindicted co-conspirator.
    • March 4, 1974: the "Watergate Seven" (Mitchell, Haldeman, Ehrlichman, Colson, Gordon C. StrachanRobert Mardian, and Kenneth Parkinson) are formally indicted.
    • March 18, 1974: Judge Sirica orders the grand jury's sealed report to be sent to the House Committee on the Judiciary.
    • April 5, 1974: Dwight Chapin convicted of lying to a grand jury.
    • April 7, 1974: Ed Reinecke, Republican lieutenant governor of California, indicted on three charges of perjury before the Senate committee.
    • April 16, 1974: Special Prosecutor Jaworski issues a subpoena for 64 White House tapes.
    • April 30, 1974: White House releases edited transcripts of the Nixon tapes, but the House Judiciary Committee insists the actual tapes must be turned over.
    • May 9, 1974: Impeachment hearings begin before the House Judiciary Committee.
    • June 15, 1974: Woodward and Bernstein's book All the President's Men is published by Simon & Schuster (ISBN 0-671-21781-X).
    • July 24, 1974: United States v. Nixon decided: Nixon is ordered to give up tapes to investigators.
    • Congress moves to impeach Nixon.


  42. That's 18 months after the election to finally get to the President.  We're only in month 13

    Accused Date charged Charge(s) Case status(es) Jurisdiction Ind.
    George Papadopoulos October 3, 2017 1 count: false statements Pleaded guilty on October 5, 2017[158] D.D.C. [159]
    Rick Gates October 27, 2017 8 counts: conspiracy against the United Statesconspiracy to launder moneyfailure to file reports of foreign bank and financial accounts (×3), unregistered agent of a foreign principalfalse and misleading FARA statements, and false statements Pleaded not guilty on October 30, 2017[160] D.D.C. [161]
    February 22, 2018 23 counts: assisting in the preparation of false tax returns (×5), subscribing to false tax returns (×5), filing a false amended return, failure to report foreign bank and financial accounts (×3), bank fraud conspiracy (×5), and bank fraud (×4) Not yet plead E.D. Va. [162]
    February 23, 2018 2 counts: conspiracy against the United States, and false statements Pleaded guilty on February 23, 2018[163] D.D.C. [164]
    Paul Manafort October 27, 2017 9 counts: conspiracy against the United Statesconspiracy to launder moneyfailure to file reports of foreign bank and financial accounts (×4), unregistered agent of a foreign principalfalse and misleading FARA statements, and false statements Pleaded not guilty on October 30, 2017[160] D.D.C. [161]
    February 22, 2018 18 counts: filing false tax returns (×5), failure to report foreign bank and financial accounts (×4), bank fraud conspiracy (×5), and bank fraud (×4) Not yet plead E.D. Va. [162]
    Michael Flynn November 30, 2017 1 count: false statements Pleaded guilty on December 1, 2017[165] D.D.C. [166]
    Richard Pinedo February 2, 2018 1 count: identity fraud Pleaded guilty on February 2, 2018[167] D.D.C. [168]
    Alex van der Zwaan February 16, 2018 1 count: false statements Pleaded guilty on February 20, 2018[6] D.D.C. [169]
    Dzheykhun Aslanov February 16, 2018 8 counts: conspiracy to defraud the United Statesconspiracy to commit wire fraud and bank fraud, and aggravated identity theft (×6) Fugitive D.D.C. [170]
    Anna Bogacheva February 16, 2018 1 count: conspiracy to defraud the United States Fugitive D.D.C. [170]
    Maria Bovda February 16, 2018 1 count: conspiracy to defraud the United States Fugitive D.D.C. [170]
    Robert Bovda February 16, 2018 1 count: conspiracy to defraud the United States Fugitive D.D.C. [170]
    Mikhail Burchik February 16, 2018 1 count: conspiracy to defraud the United States Fugitive D.D.C. [170]
    Mikhail Bystrov February 16, 2018 1 count: conspiracy to defraud the United States Fugitive D.D.C. [170]
    Concord Catering February 16, 2018 1 count: conspiracy to defraud the United States Fugitive D.D.C. [170]
    Concord Management and Consulting LLC February 16, 2018 1 count: conspiracy to defraud the United States Fugitive D.D.C. [170]
    Internet Research Agency LLC February 16, 2018 8 counts: conspiracy to defraud the United Statesconspiracy to commit wire fraud and bank fraud, and aggravated identity theft (×6) Fugitive D.D.C. [170]
    Irina Kaverzina February 16, 2018 7 counts: conspiracy to defraud the United States, and aggravated identity theft (×6) Fugitive D.D.C. [170]
    Aleksandra Krylova February 16, 2018 1 count: conspiracy to defraud the United States Fugitive D.D.C. [170]
    Vadim Podkopaev February 16, 2018 1 count: conspiracy to defraud the United States Fugitive D.D.C. [170]
    Sergey Polozov February 16, 2018 1 count: conspiracy to defraud the United States Fugitive D.D.C. [170]
    Yevgeny Prigozhin February 16, 2018 1 count: conspiracy to defraud the United States Fugitive D.D.C. [170]
    Gleb Vasilchenko February 16, 2018 8 counts: conspiracy to defraud the United Statesconspiracy to commit wire fraud and bank fraudaggravated identity theft (×6) Fugitive D.D.C. [170]
    Vladimir Venkov February 16, 2018 7 counts: conspiracy to defraud the United States, and aggravated identity theft (×6) Fugitive D.D.C. [170]

    /NQ/Japar – Oh no, those stopped out – everything is going up so no point in being brave but now I'm liking /TF again at 1,545 again and /YM 25,200 is back.  /NQ is very tempting though if they come back below 6,875.

    TBT/QC – That thing never works out.   It tends to decay faster than TLT can fall.  

  43. Phil:  I have 6400 FTR shares at an average cost of $15.70 (after a good deal of doubling down).  Given the strength in the stock today, would you sell any calls to cover these shares prior to earnings?  The market seems to be betting that FTR will divest some of its landline assets to get its debt more under control per the Feb 2 Bloomberg article.  Would you sell some cover or hope for some kind of good news?  FTR has moved up prior to earnings before only to drop afterwards when "hope" was not rewarded.  

  44. Better representation on how fast Mueller is moving or maybe how crooked that entire Trump campaign was:

    Maybe too many easy targets! Missing from that list – Obama. No special prosecutor there.

  45. Also interesting – Trump and Fox complaining that it's been 9 months since they started and have not come up with anything on Trump, Whitewater lasted 7 years! Plenty of time to dig the many skeletons in Trump gold plated closets.

  46. Phil/RB- I was looking for 1.99 on RB April. Thought it would hit today. 

  47. FTR/John – Well, 6,500 shares is a lot and also down a lot at $15.70.  I'd sell 2,500 for $8.90 ($22,250) and that's less the $102,050 you're in for for net $79,900 on 4,000 is about $20 per share and then you can sell 40 2020 $10 puts for $4 ($16,000) and 40 2020 $8 calls for $2.40 ($9,600) and then you have net $54,300 ( $13.57) called away at $8 ($32,000) with a $5.57 loss if FTR flies up and you end up owning 4,000 more at $10 ($40,000) if assigned back for 8,000 shares at $94,300 ($9.43) if FTR goes lower.  

    So, your current $43,520 loss drops to a $22,280 if called away at $8 but, if FTR doesn't go to the moon on earnings, then you get your dividends on 4,000 shares and you are even or better and you can always buy more longs or roll the short calls up if you get more confident after earnings.  On the downside, you've dropped your basis to $9.43 for less cash than you're in for now with 1,500 more shares.  

    For future reference, don't just DD – would have been way better if we did similar things on the way down!  

    Good chart, StJ – I guess these investigations have gotten much slower since Watergate.  I can't believe Whitewater took 7 years – that's crazy! (though it did turn out Bill had sex with an intern!) 

    /RB/Ravi – Well, you called it.  The question is now will you play it?  Too scary for me.  

  48. Here's why we're up today:

    Date Open High Low Close* Adj Close** Volume
    Feb 23, 2018 271.79 274.31 271.25 274.15 274.15 50,656,999
    Feb 22, 2018 271.10 273.05 269.64 270.40 270.40 102,454,000
    Feb 21, 2018 271.90 274.72 269.94 270.05 270.05 98,883,700
    Feb 20, 2018 272.03 273.67 270.50 271.40 271.40 86,369,700
    Feb 16, 2018 272.32 275.32 272.27 273.11 273.11 160,420,100
    Feb 15, 2018 271.57 273.04 268.77 273.03 273.03 111,200,300
    Feb 14, 2018 264.31 270.00 264.30 269.59 269.59 120,735,700

    Last Friday we did 3x the volume. 

  49. Keep things in perspective:

  50. People who want to meet up for dinner in NYC tomorrow night (Marriott area), let me know here and I'll figure it out by tomorrow morning – depending on how many.  

  51. Phil, do you have plans Sunday for dinner?  I plan to attend Sunday and Monday.  

  52. Phil/Dinner, Count me in for Tomorrow night dinner. Thanks.

  53. Sunday/Options – Not sure on Sunday as I may be tired with my morning thing and then hanging at the booth until 4-5 pm but stop by and we'll see.  

  54. Wow, powered up all the way to the close.  

    I have 4 short /TF at 1,546 and I'll carry those into the weekend (assuming no big sell-off in the next 15 mins) but clearly well over the lines now so Monday will be all about holding them.  

    Have a great weekend, 

    - Phil



    have a great weekend PSW.


    Thanks Phil!!!

  56. Phil dinner Saturday – I can join.  Thanks

  57. Phil – all cryptos are silly is right! Good attitude on that space still, IMO. 

  58. Where are you guys meeting up?

  59. I’ve started scaling slowly into BLOK. Will build over time and this is a long term hold position 

  60. It was bound to happen… Never Mind The Bollocks Terrorism have struck at the PyeongChang 2018 Olympic Winter Games.

    Our man on the scene Snow, How are Olympic fans and locals taking all the monkeying around over the small wobbly package that was delivered at the speed skating event in Gangneung Oval on Friday? 

    From all appearances it would seem that gravity was working against this globally infamous perpetrator, in breaking a 5 year silence to deliver a very important message and Out.

  61. So far for dinner, I see just Rexx and Ayyaps.  I have to confirm a table (Nobu 57), so let me know by 11.  

  62. Berkshire Hathaway Annual Letter to Shareholders:

    Berkshire’s gain in net worth during 2017 was $65.3 billion, which increased the per-share book value of both our Class A and Class B stock by 23%. Over the last 53 years (that is, since present management took over), pershare book value has grown from $19 to $211,750, a rate of 19.1% compounded annually

    The BRK/B shares ( A shares divided by 1500) book value = $141.16 raising the "putative floor" of 120% of BV for share buy backs or $169.

    In our search for new stand-alone businesses, the key qualities we seek are durable competitive strengths; able and high-grade management; good returns on the net tangible assets required to operate the business; opportunities for internal growth at attractive returns; and, finally, a sensible purchase price. That last requirement proved a barrier to virtually all deals we reviewed in 2017, as prices for decent, but far from spectacular, businesses hit an all-time high. Indeed, price seemed almost irrelevant to an army of optimistic purchasers.

    Are prices stretched? 

    The ample availability of extraordinarily cheap debt in 2017 further fueled purchase activity. After all, even a high-priced deal will usually boost per-share earnings if it is debt-financed.

    The debt millstone- one of the first metrics I use in evaluating a company is its debt level-high octane fuel when times are good but can result in unpleasant circumstances when pressed. 

    Despite our recent drought of acquisitions, Charlie and I believe that from time to time Berkshire will have opportunities to make very large purchases. In the meantime, we will stick with our simple guideline: The less the prudence with which others conduct their affairs, the greater the prudence with which we must conduct our own

    Over the years, I have learned to read between the lines of Buffet's letter. It's my guess this is a not so subtle commentary on very inflated stock prices. 

    I made the bet for two reasons: (1) to leverage my outlay of $318,250 into a disproportionately larger sum that – if things turned out as I expected – would be distributed in early 2018 to Girls Inc. of Omaha; and (2) to publicize my conviction that my pick – a virtually cost-free investment in an unmanaged S&P 500 index fund – would, over time, deliver better results than those achieved by most investment professionals, however well-regarded and incentivized those “helpers” may be. Addressing this question is of enormous importance. American investors pay staggering sums annually to advisors, often incurring several layers of consequential costs. In the aggregate, do these investors get their money’s worth? Indeed, again in the aggregate, do investors get anything for their outlays?….

    Performance comes, performance goes. Fees never falter

    Sure makes me want to run out and invest in a hedge fund :)   

  63. Phil – sorry I'm late but I'm still in, assuming you're still up for it. Thanks

  64. Well, just 3 of us for dinner then, I'll be sending an Email when time is confirmed.

  65. The most popular explanation for the recent stock market sell-off is that the wage component of the recent employment report engendered inflation fears. I suppose that could have been a contributing factor, but I don't really subscribe to that theory. The bottom line is that there were too many distortions in that [ jobs and wage] report to take the threat of wage push inflation seriously. Besides, there is no evidence – despite decades of trying to prove a link by economists like Janet Yellen – that wage inflation is connected to general inflation.Joseph Calhoun

    Mr. Calhoun would be correct, as increasing wages are not the principle engine of inflation.

  66. One less mainstream piece of this inflation hysteria boom is the velocity of money. In case you haven't yet heard, monetary velocity is rising. From that we are supposed to infer all the usual – wages, inflation, higher rates, and utter destruction in bonds if not the whole Western economic structure.  Appealing to money velocity as a basis for inflation expectations in 2018 is another one of those highly desperate over-interpretations that have become quite common.Jeffrey Snider

    Much like Hamilton and Chin, then Wen and Arias, Snider sees the resultant pattern, has a piece of the puzzle, but fails to dig farther to address the underlying causes. 

  67. Bookstores Sales Declined in 2017

  68. If there is a boom here, I just don't see it. Perhaps the term itself needs to be clearly defined…. the very idea of a looming, inflationary economic boom is totally ridiculous. This economy remains as bad as it was during one of the worst periods of sustained economic malfunction in post-war history; and the compensation figures show that hasn't changed… The compensation data, as well as the numbers relating to productivity, demonstrate that to the end of last year, despite all mainstream expectations entering 2017, nothing did. It didn't matter what the unemployment rate was – the actual economic condition was nothing like what it appeared to suggest. So, we begin 2018 with all the same deficiencies, all the same questions, none of which yet have any answers. Where's the boom? – Jeffrey Snider

  69. Where's The Inflation? A masterful tour de force in logic, common sense and paying attention to the devil in the details…

    Wage pressures should be exploding right now…. a rumble of inflation shot right through everything at the release of the payroll report. Unsurprisingly, it's not actually what the BLS data shows. The underlying figures have instead been displaying the exact opposite tendency from inflation. There is weakness all over these reports, constant weakness, too. 

    Not only are wage pressures conspicuously absent,… wage pressures should have started building  …at the start of 2015, three years ago now… if the regressions were at all correct, something would have happened long before today.

    Instead, the Fed keeps moving the goalposts, a sign of confusion not confidence. They have constantly lowered their estimate for where wage pressures should begin to blow out because wage pressures never do.

    Average weekly earnings are trending lower, not higher; Average hours declined; Total hours, the aggregate level of labor utilization, were nearly flat year over year. Again consistent with, of all things, rising revolving consumer credit in the back half of last year. What wage inflation is going to develop from this kind of employment background?

    This one fact alone explains why for three years Economists and FOMC officials have been in vain predicting always future bouts of wage-driven inflation that just can't happen.

    +200k is well below what's needed for minimal economic gains, let alone anything like a boom. This is how you get no wage growth from a 4.1% unemployment rate, as well as slowing and fragile labor utilization (hours) consistent with a much different economy than a booming one.

  70. Studies are increasingly clear: Uber, Lyft congest cities

  71. Phil / Ideas for your  trading contest:

    U.S. Mexico relation in a new low today, MXP can have violent moves and some U.S companies culd be affected in the opening today like  F




  72. Just making a Top Trade Alert from 3/9 morning post:

    Imax (IMAX) is getting cheap again at $20.35 and that trade was featured last Month on Money Talk, where we adjusted that portfolio to get more aggressive as they tested $19.  IMAX shot up to $24 in Feb but back to $20 now means yet another chance to enter this trade at not too much more than we paid at the time:

    A Wrinkle in Time comes out this weekend but, much more importantly, the Avengers is coming along with plenty of other potential hit films so we still love IMAX and the Sept calls capture the summer box office.  The $15s are now $6.10 ($12,200) and the $20s are now $2.60 ($5,200) for net $7,000, which is up $1,000 (16.66%) from our entry in a month but it will still pay back $10 for a $3,000 additional profit (42%) in Sept if IMAX does manage to hold $20.  That seems like an easy way to make money, right?

    So there are PLENTY of stocks we like long and, when they pay you 42% in 6 months – we don't need many of those to make really good returns.  That's how our Long-Term Portfolio can be over 80% in cash and still make 11.6% in just over 2 months  That leaves us plenty of cash on the sidelines to improve our positions (as we did with IMAX last month) and, most importantly, to hedge – because these markets are crazy and so is our leader – anything can happen and we need to be ready for it!  

    Next week will be very busy with CPI and PPI and Retail Sales, the Philly Fed, Industrial Production and Housing Starts and then it's time for earnings again as Oracle (ORCL) reports on the 19th, Lennar (LEN) and FedEX (FDX) on the 20th and our 2017 Stock of the Year, Wheaton Prescious Metals (WPM) rports on March 21st and there's another bargain to be had at $19.66 – down from $22.50 in Jan.  

    We don't play WPM to win, per se, we simply play them not to lose and there's huge premiums so sell so what we like on WPM is:

    • Sell 5 WPM 2020 $20 puts for $3.55 ($1,775) 
    • Buy 10 WPM 2020 $15 calls for $6 ($6,000) 
    • Sell 10 WPM 2020 $20 calls for $3.50 ($3,500) 

    That's net $725 on the $5,000 spread that is almost 100% in the money to start.  All WPM has to do is be above 20 in Jan 2020 and the short puts expire worthless and the spread pays $5,000 for a $4,275 (589%) return on cash (the ordinary margin on the short puts is $1,014) and those are the kind of "set and forget" trades we love to have in our Long-Term Portfolios (we already have longs on WPM in all 3 of our bullish portfolios).