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Whipsaw Wednesday – Mo Quits, Larry and Curly Running the Country!

Wow, what a night!

We’re having technical difficulties this morning and are unable to post our PSW Report but it is available to our Members in our Live Chat Room HERE as well as below (poorly formatted):

https://www.philstockworld.com/2018/03/06/tariffic-tuesday-market-shakes-off-trade-wars-as-kim-disarms/#comment-7090041

Hopefully we’ll have this spot fixed shortly.

Thanks,

- Phil

Overnight, we lost the “adult in the room”, Gary “Moe” Cohn, as he quit the White House rather than pretend he was in favor of the trade tariffs. I’m sure Cohns everywhere are breathing a sigh of relief that their names won’t go down in history next to Smoots and Hawleys in the annals of poor economic decisions. Speaking of anals – Stormy Daniels is suing Trump – just had to mention that! Meanwhile, in referring to the 1930 Tariff Act, I noticed the full name of the Act was:

“An Act To provide revenue, to regulate commerce with foreign countries, to encourage the industries of the United States, to protect American labor, and for other purposes.”

I guess the long name for the new Tariff Act should be the “We never f’ing learn Act of 2018, where the American people fall for the same dog-whistle BS over and over again for the purposes of distracting them from a massive criminal investigation of pretty much the entire White House.”

As I said to our Members this morning: “As to Cohn, I think the panic is over losing the adult in the room. Now it’s like the 3 Stooges came over to do your plumbing but Moe quit. The whole job was going to be a mess but at least, with Moe, there was a chance that it would get done. Now there is no chance and things are likely to get much worse. ” That’s why the market are freaking out this morning, with the Dow down over 300 points.

Overall, this is the kind of panic we see when a company loses its CEO – people sell into the uncertainty. Trump could fix this by appointing someone like Warren Buffett or Janet Yellen to be his Senior Economic Advisor but he’ll more likely choose a spineless toady like Larry Kudlow or the current head of the Council of Advisers, Kevin Hassett, whose primary claim to fame is publishing “Dow 36,000: The New Strategy for Profiting From the Coming Rise in the Stock Market” in 1999.

Speaking of the Dow, you’re welcome for our fabulous idea to short the Dow (/YM) Futures at 25,000 in yesterday morning’s Report – the Dow hit 24,400 overnight and each short contract gained $3,000 for the day but we flipped long in our Live Member Chat Room overnight at 24,500 – a bit early but now those are paying off as the Dow moves back to 24,600 – up $500 per contract on the bullish play already.

The key to our bearish call yesterday was exactly what we charted out in the morning (using the same charts we used all last month) with the S&P (/ES) failing our 2,728 line yet again and having that line act as a firm upside barrier all day long gave us the confidence to stay short into the close:

Oddly enough, the Russell (/RTY) is already back to it’s shorting line at 1,555 as the Dow crosses over 24,600 (which is now the stop for our longs) but we’re not going to short the Russell just because it recovered first. It only fell to 1,540 for just $750 per contract gains by 11am but then took off so it’s a “no play” now and mostly we’re just watching to see where things settle down today before making new bets.

IN PROGRESS


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  1. Phil-JUST SAY MOE!!  Will you make it through the forecasted power outages today?


  2. Good morning! 

    Sorry about the posting problem.  

    I'm waiting for formatting to be fixed but we'll just chat normally meanwhile.

    Indexes stuck at 24,600, 2,710, 6,875 and 1,552.50 so far but 2,728 on /ES is still the only line that matters.  SPX also had a death cross with the 20 dma:

    It's actually worse than the Nasdaq's:

    Dow and RUT bad too:

    So keep in mind what I was saying last week about HOW these lines get drawn.  Unless the index is above the 50 dma, it continues to curve down towards the 200 dma, which is still rising to meet it and form an even worse death cross.  Any losing of the 20 dma will pull that and the 50 dma lower and then we start to get a very ugly technical picture so these indexes can't afford to finish where they are at the moment.  They desperately need to get green or we may get more panic selling into the weekend uncertainty.


  3. Fed's Brainard Suggests Growth Tailwinds May Speed Hike Pace

    Navarro ascendant at White House – letting "Trump be Trump"

    • "Peter Navarro won the trade battle and now Gary's given up," a senior administration official tells CNBC. "It literally reestablishes the intellectual framework and the personnel who were originally envisioned after Trump won the election. We can let Trump be Trump."
    • Under orders from Chief of Staff John Kelly, trade hardliner Navarro was forced to copy Gary Cohn on all emails he sent at the White House. But with the free-trading Cohn now gone, presumably little stands between Navarro and the president.
    • No one emerges victorious from a trade war, IMF Managing Director Christine Lagarde told French radio station RTL, recommending "an agreement between the different parties, and talks."
    • "The macro-economic impact would be serious, not only if the U.S. took action, but especially if other countries were to retaliate, notably those who would be most affected, such as Canada, Europe, and Germany in particular."

     

    Global Boom Swells the Ranks of the Ultra-WealthyStronger global growth and booming stock markets have been great for the super rich. The number of people with more than $50 million of net assets rose 10 percent last year, the fastest pace in at least five years in 2017, according to a report published Wednesday by broker Knight Frank LLP. The increase, to a total of almost 130,000, came as each of the world’s major economies began to grow at the same time. Asia leapfrogged Europe as the region with the second highest number of ultra wealthy, while North America retained top spot, according to the data compiled by Wealth-X. New York was ranked top in the broker’s city wealth index, followed by London, San Francisco and Los Angeles.

    9 Years "Off The Lows": World Stocks +200%, Central Banks +170%, Dollar Unchanged

    Coinbase launches crypto index fund

    • Coinbase Index Fund will offer exposure to all cryptocurrencies on Coinbase's (Private:COINB) exchange, GDAX, weighted by market cap. As new assets are added to the exchange, they will automatically be added to the fund.
    • Currently the Coinbase Index contains Bitcoin (62%), Ethereum (27%), Bitcoin Cash (7%) and LItecoin (4%)

     

    Australia Economy Slows as Exports Cool, Mining Hangover LingersAustralia’s economy grew at a slower pace in the final three months of 2017 as exports and construction fell, a temporary slowdown the central bank predicts will reverse this year.

    Investors staged a near-record exodus from US stocks in February

    The WSJ Also Uncovered The Source Of The Next Consumer Debt Crisis

    Eurozone economy grows at 0.6% in 4Q7

    • The euro zone economy grew by 0.6% Q/Q in 4Q17, expanding at its fastest rate in more than decade last year, followed by 0.7% gain 3Q17.
    • Euro zone GDP rose 2.3% in 2017, hitting 10-year high compared to previously estimated figure of 2.5%.

     

    Trade gap widens to $56.6B

    • Airlines have already begun canceling flights ahead of the latest nor'easter to hit the Northeast.
    • More than 1,600 have been preemptively grounded for today and another 180 for tomorrow, according to flight-tracking service FlightAware.
    • Combined, about 500 of those came on JetBlue (NASDAQ:JBLU), which operates its busiest bases at New York JFK and Boston.

     

    Chevron(CVX) CEO: We're in 'early innings' of US shale 'really performing'

    WTI Down, RBOB Up After Huge Gasoline Draw, Crude Build

    Dollar Tree falls on earnings miss

    • Dollar Tree (NASDAQ:DLTR) reports Enterprise same-store sales rose 2.4% in Q4, driven by increases in average ticket and comparable transaction count.
    • Same-store sales for the Dollar Tree banner increased 3.8% (on a constant currency basis) and Family Dollar banner grew 1.0%
    • Gross profit rate improved 90 bps to 33%.
    • SG&A expense rate leveraged 40 bps to 21.3% due to lower depreciation costs and lower repair and maintenance costs.
    • Operating margin rate expanded 130 bps to 11.7%.
    • Store count +501 Y/Y to 14,835.
    • Retail selling square footage +3.7% to 116.6M.
    • Q1 Guidance: Net sales: $5.53B to $5.63B; Enterprise same-store sales: low single-digit increase; Diluted EPS: $1.18 to $1.25.
    • FY2018 Guidance: Net sales: $22.7B to $23.12B; Same-store sales: low single-digit growth; Diluted EPS: $5.25 to $5.60; Selling square footage: +3.7% Y/Y.
    • DLTR -9.93% premarket.

     

    • Weight Watchers (NYSE:WTWslipped 4.3% on Tuesday, and the stock added to losses in AH trading, after Oprah Winfrey sold a portion of her holdings.
    • "I am deeply committed to Weight Watchers and continue to see a bright future for the company," said Winfrey, who is continuing in her role as board member, adviser and spokesperson.
    • Shares have gained more than eight times in value since she bought into the business in 2015.
    • MoviePass details how the service is being used to track the locations of users.
    • The issue has cropped up this week after MoviePass CEO Mitch Lowe said the company can "watch how you drive from home to the movies… [and] we watch where you go afterwards."
    • MoviePass statement: "We are exploring utilizing location-based marketing as a way to help enhance the overall experience by creating more opportunities for our subscribers to enjoy all the various elements of a good movie night. We will not be selling the data that we gather. Rather, we will use it to better inform how to market potential customer benefits including discounts on transportation, coupons for nearby restaurants, and other similar opportunities.
    • HMNY -1.73% premarket to $4.52.
    • Stifel downgrades Netflix (NASDAQ:NFLX) to a Hold rating from a Buy on a simple call tied to valuation.
    • "We are attracted to Netflix's business and competitive position but believe share price may have sprinted ahead of fundamentals in the short-term," writes analyst Scott Devitt.
    • "We believe share price outperformance over the next several quarters may be more difficult to achieve given the recent run and increasing expectations. That said, Netflix has built a dominant streaming and content franchise and we continue to like the company's long-term prospects," he adds.
    • The investment firm resets its price target to $325 from $283, essentially flat from yesterday's closing price.
    • NFLX -1.91% premarket to $319.00. Shares of Netflix are up 132% YTD.

    Seattle Police Begin Gun Confiscations: No Laws Broken, No Warrant, No Charges


  4. /RB, is anyone short? 


  5. You have to love that opinion on NFLX – price may have sprinted ahead of fundamentals! Gee, don't you think you could come to that conclusion when the P/E crosses 100, not when it's close to 300. There is simply no growth scenario that could support this valuation.


  6. Tempting jeffdoc but API with a draw so I’m a bit gun shy 


  7. Jeffdoc/RB- Phil called it last evening


  8. This HMNY management ..total amateurs… the CEO making statements like the previous one could turn away existing and potential new MoviePass users.   I hope the fundamentals and growth save our positions from this management team. 



  9. Ravi, yes. That’s why I was asking where folks were


  10. Morning All!

    It's webinar day! Join us today at 1pm Eastern.

    https://attendee.gotowebinar.com/register/3734555404646045697


  11. That explains the move up – all these Trump supporters jumping the market simply because of tweets!

    https://www.bloomberg.com/news/articles/2018-03-06/in-trump-country-the-stock-bulls-are-freaking-out-their-brokers

    “I hear it every day,” said Jimmy Freeman, a financial adviser at Edward Jones in San Angelo, a city of some 100,000 that’s just east of the booming Permian Basin shale oil fields. “The market’s going up because of Trump. They all think it’s Trump.”

    Across middle America, in the towns big and small that voted overwhelmingly for Donald Trump, his most ardent, and financially comfortable, backers are opening stock-market accounts or beefing up existing ones, according to interviews with more than a dozen advisers and brokers. They were spurred on by a stream of presidential tweets crowing about, and taking credit for, the gains throughout 2017 and they remain undaunted now as the rally sputters and the tweeting dissipates.

    How will these guys vote if they get burned?


  12. Are buybacks smart or dumb:

    https://www.bloomberg.com/view/articles/2018-03-06/the-big-and-possibly-dumb-boom-in-corporate-share-buybacks

    Thanks to the big tax cut they just got, corporations do have a bunch of cash on their hands that they need to do something with. Bloomberg Gadfly's Stephen Gandel tallied up recent announcements by 51 S&P 500 companies and found that of their $54.5 billion in estimated annual tax savings, 38.7 percent is going to buybacks and increased dividends, 22.6 percent to business investments, 14.9 percent to employee bonuses, wages and benefits and 2.6 percent to philanthropy (which leaves 21.2 percent as yet unaccounted for). I'm really not sure whether that's a dumb amount of money to be spending on buybacks. I am sure, though, that this long buyout boom will eventually cross over the smart/dumb line, if it hasn't already.


  13. Good Morning.


  14. Power/Seer – No generator, ours broke and, since it was 80 last week, I didn't bother to run out and get a new one.  So, hopefully the lights stay on – not much I can do if they don't as it's a huge storm.  These are still left off from last week.  Mine is PSE&G.  Most people out are west of me.

    Provider Customers Tracked   Customers Out  
    Atlantic City Electric 537,364   1  
    First Energy 1,115,938   29,988  
    Orange and Rockland Utilities Inc 71,949   387  
    Public Service Electric and Gas 2,276,358   1,551  

    /RB/Jeff – I like the short at $1.95 as expectations are now for a big draw and more likely to be disappointed than not and, even if not, grounding flights and autos twice in one week is not going to be good for the rest of the month's demand picture. 

    NFLX/StJ – Thank goodness as we sold the $300 calls for $18 right before they blasted higher.  I understand that guy though – I had been scared to short them until they hit $300 and then that was just too ridiculous for even great earnings/growth to justify.

    HMNY/Learner – Growing pains like Uber and AirBnB but hopefully more like AirBnB as Uber may be the next TSLA.

    Big Chart – 6,866 is still strong on NDX and RUT is over their 50 dma (barely) but NYSE about 12,500 is not good and Dow is having trouble at 24,600 and we know /ES was soundly rejected at 2,728 so more bad news than good for chart-watchers.  

    Burned/StJ – You know if they get burned they'll blame Obama/Hillary.  

    Buybacks/StJ – Dumb almost always wins in retrospect.


  15. Buybacks / Phil – And then there is the dumb political side:

    As public relations, it seems pretty dumb. The big corporate tax cuts passed by the Republican majorities in Congress and signed by President Donald Trump last year were advertised as a way to boost worker pay. Now Senate Minority Leader Chuck Schumer can say with some justification that "the bulk of the savings from this bill aren’t trickling down into higher wages, but into bigger gains for giant corporations and the wealthy."


  16. STJ-Trump herding the retailers in so his buddies can exit.  Phil is right, they will blame Obama/Hilary.  No logic there and unlikely you can educate them.


  17. Well, the dip buyers are still alive, another 100 points up at the open but no real conviction here.  

    Let's watch 2,720, 24,750, 6,900 and 1,560 for signs of rejection but a bit too crazy to play this morning.

    No one is worried:

    /KC with another chance at $120.


  18. Phil / DLTR – good operators…. taking it on the chin today down 14% – I'm itching to get a position since I sold them off in the high 90's…..  What do you think ?


  19. It sure feels like 1987


  20. That was nice on /RB! I’m back now to 1x at 1.94


  21. STJ—-have u been to a place called Hyeres France—going there for a wedding and thinking of driving around in the Provence area--any ideas—--thanks


  22. Much less draw in /RB than API showed:

    • EIA Petroleum Inventories: Crude +2.4M barrels vs. +2.7M consensus, +3.0M last week.
    • Gasoline -0.8M barrels vs. -1.2M consensus, +2.5M last week.
    • Distillates -0.6M barrels vs. -1.2M consensus, -1.0M last week.
    • Futures -1.18% to $61.86.

    This report is nothing to be bullish about, $62.50 on /CL and $1.94 now on /RB are good shorting lines.


  23. /RTY blasting up to 1,570.  6,905, 2,720 and 24,770 – happy days are here again.

    FTR back over $8 but NAK under $1.

    Good summary on NAK, which we have 10,000 shares of in the OOP – not doing well.  

    https://cnafinance.com/northern-dynasty-minerals-nak-stock-are-you-paying-attention-yet/18400


  24. Phil / DLTR – good operators…. taking it on the chin today down 14% – I'm itching to get a position since I sold them off in the high 90's…..  What do you think ?  

    One of the best operators in this space, plus in the mid stages of assimilating acquisition, supply chain is a great advantage.  Downside is GOP cutting back on food stamps, and possibly other benefits…..  Margins are improving ( already at best of industry).   


  25. StJ – they'll blame the coming trump crash on democrats somehow. This has been going on for 30+ years, why would it change now?

    I don't see 2018 markets finishing higher than they started. That big -40% chunck may come this year but next year is more likely. 20% rebound in 2020. It'll look like 2007-2009 IMO (+11 years).


  26. Phil, I have a very messy position in ABX. I established what looked like safe BCS and short put positions last year and bought back the short calls when they lost value, believing that ABX was going to establish a new base, but it kept going down.  Now I have no more premium to erode and am essentially just in an artificial long position. Current positions are

    Long 10 Jan 15 Calls now $.62

    Long 35 Jan 13 Calls now $1.06

    Short  10 Jan 15 Puts   now $3.68

    Short  14 Jan 17 Puts  now $5.48

    Short 15  Jan 20 Puts  now $9.15

    I show a loss of about $30K on the open positions, but have closed $16K of gains leaving a net loss on the positions of $14K.  My current positions will get me back to break even at a stock price of about $14.50, which is not impossible if gold rises a bit this year and I think the selling on ABX is overdone.  I suspect there is a better way to get that $14K back, but it probably means liquidating my current positions and starting over.  What do you think?


  27. Phil,  I also have a fairly large position in CDE, which is about break even right now.  The CDE chart looks WAY better than ABX and the premiums are good, maybe I should just add to my CDE postion, except that would leave me over-allocated to that one company and I'm not comfortable with that.  Is there another miner that you like as well as ABX that is in more of a neutral or up trend?  Thanks much.


  28. Wheee on /RB! Done for the day, up a few k. 


  29. DLTR/Batman – Well, they barely reacted to the Food Stamp thing, which is actually a really big deal so no surprise to see them back at the 200 dma on disappointing earnings.  The question is, going forward, are they worth $90?  They are guiding to $5/share but that's still an 18x p/e and this is still a retail store so $90 is nothing to get excited about and where's the real growth catalyst?  

    Don't forget, a good economy is not good for stores that cater to the poor (WMT take note).  

    Anyway, my issue here is why would I buy DLTR, who make less than $1Bn on $20Bn in sales with a $20Bn valuation when I can buy M for $9.2Bn with $25Bn in sales and $600M in profits (in a tough year last year too).  Seems to me more likely M can get closer to DLTR's 5% profits ($1.2Bn) than DLTR is going to punch higher than they are now and M has super-valuable real estate backing them up and caters to the people who have disposable income.

    • DLTR is $88.50 and you can sell 2020 $75 puts for $8, which isn't terrible.  
    • M is $30.25 and you can sell 2020 $25 puts for $4.10 so 2x of those is a smaller commitment and a bigger discount (net $20.90 is 34% off, net $67 is 24% off).

    So given all that, I don't have a compelling reason to choose DLTR over M.

    ABX/Jet – Down $14K is a lot but all of that is in short puts, really.  About $25K of short Jan puts so it seems to me you can shut it all down and sell 30 of the 2020 $15 puts for $4.15 ($12,450) with 50 of the 2020 $10 ($3.30)/$15 ($1.45) bull call spreads at $1.85 ($9,250).  If you are down $14K and you sell the long calls for $4,000 that's -$10,000 and rolling the puts costs another $12,500 so you'd be in for $22,500 less whatever you collected on the short puts, maybe $8,000 so figure $15,000 in play and you need $15 to get $25,000 back. 

    If we pop over $12 you can then sell 10 calls for $1 ($1,000) every couple of months.   HOWEVER, since you can also get $5 for selling the WPM 2020 $22.50 puts – I'd sell 20 ($10,000) of those and 20 ($8,000) of the ABX so you don't have too many eggs in one basket and $5,500 more in pocket.

    CDE/Jet – Again, too many eggs in one basket.  If anything, I'd cut CDE back and concentrate on fixing ABX because, if all gold dropped – what would happen?  Would you have the firepower to roll them both?  If not, pick one you're willing to go to bat for over the long-term.

    /RB/Jeff – Good job.  That was a fun one.  I love it when the market reacts stupidly to obvious data! 

    Speaking of stupid – down we go again!  


  30. I finally broke down and got the IPhone X this weekend.  Very happy with it except it's too slippery and I don't like using a case.  Speed is amazing, way more screen size than my old 6+ and the speakerphone is better than my home Polycom.  

    /CL took a nice bath too!  Testing $61 now.

    I should just sell a service where I make a weekly call on the oil inventory report!  cool


  31. Thanks, Phil.  I like your idea of diversifying with WPM and I think I'll hold on to my long ABX calls since they have little value now and if gold or ABX pops, that is like free money.  I can go to WPM short puts for less margin than I am using on the ABX short puts and if WPM goes down I can add a BCS. 


  32. Phil/iPhone

    I have a very low profile spigner case for my iPhone X. Barely even notice it. Take a look, you can find them on amazon. 




  33. FNSR – Phil, excellent timing for the hedge fund !


  34. Hedge Fund/Albo – Well we kind of follow the best advice for following PSW – wait for a position we like to go against us and then, if PSW decides to press it – THEN it's time to make our first entry.  Saves a lot of money!

    Case/Jeff – I just ordered a thin gel case on AMZN for $10 – we'll see how it looks tomorrow apparently.

    Webinar time soon!


  35. NFLX/Phil, i have sold naked 6x Apr 250 calls. Was thinking of rolling up $40 in strike to Sept 290 for cost of $15. I have 3 covered by Jan 2020 300/400 bull call covers. Is it worth doing the short call roll? Thanks


  36. Wow, MAGA at work:

    https://www.motherjones.com/kevin-drum/2018/03/trump-demands-0-26-cut-in-chinas-trade-deficit/

    Is this a Dr. Evil parody? Last year we ran a $375 billion dollar trade deficit with China. This year it will be—who knows? $400 billion? How would you even know if it had gone down by a quarter of a percent?

    Donald Trump frequently makes no sense, but this makes even less than no sense. What the hell is he talking about? Was this seriously a formal request to the Chinese government? They must be laughing their asses off.

    I guess he is banking that for his followers, $1B is a huge number and they have no clue of the size of our trade with any of our partners! I think that we always underestimate the lack of knowledge of these guys.


  37. Well that was fun.  We made a quick $445 on /RTY and /NQ during the webinar so well worth the 2 hours of listening to me pontificate I imagine.

    Beige Book points to a strong economy but that then leads to Fed tightening so not sure what people are so happy about.  Can't short now but 1,575 on /RTY is my current goal for a new short entry and lines up with 24,750, 2,720 and 6,925.

    NFLX/DM – You sold 6 short calls against 3 long spreads?  Ouch!  Well, the Jan $300s are $90 and the $400s are $53 so net $37 is all you have there.  Giving NFLX all the way to Sept (6 months) when it's up $140 since Dec means they could be at $500 by then and then you'd be down $20,000 per contract ($120,000) vs having $30,000 of protection on your spread.  Not sure I love that plan.

    I don't know what you sold the April $250s for but they are now $72 with not much premium but let's assume you sold them for $20 and you're down $52 ($31,200).   I'd split them into 4 short 2020 $250 puts at $34 ($13,600) and 6 short April $300 calls at $32.50 ($19,500) and then your protection is in the money and a more reasonable cover and you'll just have to roll them higher (June $320s are $30, Sept $350s are $30, Jan $380s are $30) if they are in the money.  Remember, you don't have to get all the money back in one shot when you have 2 years to sell.

    I'd also put a stop on one put at $40 and one at $50 and the other 2 you can always 2x lower.  

    Trump/StJ – Making America an International laughing stock.  


  38. Phil / DLTR – Thanks for the feedback.  good points to consider.  DLTR is still in the middle of integrating their Family Dollar Acquisition.  They are still rationalizing the footprint as well as integrating supply chains and back offices.  So there is still some leverage in bot GM and OM. It seems to me they have several levers yet to pull, and know the formula as well as proven track record.  The real estate they have is not as desirable as the Macy one and of course GM is not in the same ball park.  In general I stay away from retail unless I see something compelling.   I had DLTR pegged at a at about a  100 to 115 target but have not looked at in in a while.  I sold out of it in the high 90's.   I have not pulled the trigger, but need to do some homework.  


  39. DLTR/Batman – It's a nice business but there are lots of nice businesses.  

    Wow, snow is really piling up now – looks like a foot with hours left to the storm.

    Meanwhile:

    Image result for polar bear sun tan


  40. Added first /RTY short at 1,574.10, have conviction to 1,585 so figure I add 1 at 1,576 for 1,575 avg and then 2 more around 1,580 for 1,582.50 and then more at 1,587.50 for 8 at 1,585 and down $2,000 over 1,590.  Hopefully won't go that far but hopefully I get more than 1!  


  41. Phil

    Would you use the SPY for a hedge for example May 272/262 ?

    Thanks


    • A tight labor market was helping lift wages across most of the U.S. and contributing to “moderate inflation” in most areas, according to the Federal Reserve's latest Beige Book.
    • “Across the country, contacts observed persistent labor market tightness and brisk demand for qualified workers, as well as increased activity at staffing placement services,” the report says. “Most districts saw employers raise wages and expand benefit packages in response to tight labor market conditions.”
    • Prices rose in all districts, the latest Beige Book says, “and most reports noted moderate inflation,” vs. the Jan. 17 survey which noted that “most districts reported modest to moderate price growth."
    • The rate-setting FOMC is scheduled to meet March 20-21, which investors widely expect to result in a rate increase.
    Ran out of suckers to buy their stock:  Bloomberg: Uber seeking $1.25B loan
    • Uber Technologies (Private:UBER) is looking for a $1.25B term loan, sources tell Bloomberg, and it's talking to existing lenders to pursue the deal.
    • That would be on top of an existing $1.15B term loan issued in 2016 that it got at Libor +400 points, Bloomberg says.
    • That earlier loan was arranged by Morgan Stanley and comes due in 2023.
    • General Motors (GM -0.8%) Mary Barra says demand for the all-electric Chevy Bolt is picking up to warrant an increase in production
    • "We are encouraged by this momentum, and because of increasing global demand for the Chevrolet Bolt EV, we are announcing today that we will increase Bolt EV production later this year at our Orion Assembly plant north of Detroit," updated Barra at a conference today.
    • Exxon Mobil's (XOM -3%) aggressive plans to triple production by 2025 comes at a cost: $24B spending on capital projects this year, $28B next year and an average of $30B during 2023-25.
    • Capex is the price you pay for cash flow,” says Chairman and CEO Darren Woods, who notes every $1 in capex by XOM in the past decade has generated $1.20 in operating cash flow.
    • The higher spending “highlights that there are no easy fixes to rejuvenate Exxon’s portfolio, and it is likely to take time for this investment to flow through into higher earnings, cash flow and returns,” says RBC Capital analyst Biraj Borkhataria.
    • “Please disclose more and meet us more. We would be greatly appreciative,” Wolfe Research's Paul Sankey tells Woods at today's analyst meeting; Woods does not commit to participating on XOM's earnings conference call, but says he has been meeting more with investors.
    • GBH Insights thinks FANG stocks are "primarily insulated" from tariff and trade war concerns due to the primarily services nature of the tech companies and the international distribution of revenue.
    • The firm sees a "rounding error" from higher input costs for Apple (NASDAQ:AAPL) and a "negligible" impact on Amazon (AMZN -0.4%) if tariffs are levied on steel and aluminum. Facebook (NASDAQ:FB) and Netflix (NASDAQ:NFLX) stand even further away from damage due to higher input costs.
    • "While it will be a hand holding period over the coming weeks as the tariff details become better known, we see minimal impact on these tech names despite worries on the Street," writes GBH analyst Daniel Ives.
    • General Electric (GE -2.8%unveils GE Reservoir, a giant new battery platform for storing electricity generated by wind turbines and solar panels for later use.
    • GE says the new 1.2 MW battery unit using lithium-ion technology is the first in a series to be launched under the Reservoir platform, which it expects to start shipping by early 2019; the company says it has already lined up a customer, which it does not name.
    • GE has the expertise to be a big battery competitor, says Ravi Manghani, director of energy storage at GTM Research, but he questions whether it will demonstrate the staying power needed to see the battery market grow into a sector substantial enough to benefit its bottom line.
    • Cryptocurrencies are lower after the SEC issues a statement reiterating that online trading platforms for digital assets have to be registered.
    • The regulator also warns on investor misconceptions with crypto platforms.
    • SEC statement
    • 24-hour moves: Bitcoin -9.8%, Ethereum -8.2%, Cardano -16.0%, Ripple -7.9%, EOS -12.2%, Bitcoin Cash -9.9%, Litecoin -9.2%.

     


  42. here is a bet someone placed on tariffs 

    NUE  1000 Jan20 $100 calls bought to open for $2.10 to $2.45,  max time and strike 


  43. If your longs track SPY well, then it's fine for a hedge but I'd rather use SDS as a bullish spread.  SQQQ still my favorite because there aren't as many SPY stocks trading at 100x earnings. 

    NUE/Stock – That's crazy.  

    Damn, just got the 1 short /RTY!  Already up $125 so stop at $100 now.


  44. Pushing for green into the close, /ES at 2,729.25! 

    Turns out FTR was just rolling that debt:

    • Frontier Communications (FTR +1.6%) is offering $1.6B in second-lien secured notes in a private transaction.
    • The offering, tied to the company's tender offers amounting to the same aggregate size, is for debt due 2026.
    • Those tender offers are planned to expire April 2.
    • Kroger (KR -4.9%) is sharply lower ahead of the company's earnings report due out out tomorrow morning.
    • Some recent stumbles in the retail sector with big names appear to have investors edgy. "It is possible that the cumulative effect of the recent commentary by WMT, TGT, and DLTR are causing some anxiety before KR earnings," Pivotal analyst Ajay Jain tells Bloomberg.
    • Consensus estimates on Kroger are for revenue of $30.8B, identical sales growth of 1.4% and EPS of $0.63.
    • Sector watch: Smart & Final Stores (SFS -4%), SuperValue (SVU -4.3%), Sprouts Farmers Market (SFM -2.5%), Natural Grocers By Vitamin Cottage (NGVC -3.9%) and Weis Markets (WMK -1.3%).

    That's it – there's no news to justify this pop into the close but kind of scary to short. 


  45. Still, had to short another /RTY at 1,576.1.  Same DD schedule if we go higher.   


  46. So now they are backtracking and saying Canada and Mexico may not have to pay tariffs if they are friends with us.


  47. Wow, the snow is so heavy that trees are falling all over the place around here!


  48. Snow/StJ – we had that happen in Omaha once, in the 90s, a heavy snowfall in autumn before the leaves had dropped. The weight of the wet snow and the leaves dropped so many trees that the town looked like a bowl of tossed salad. Lights were out all over town, and it was flipping cold. Our house had a gas fireplace that could be lit with a match, and that's where we huddled.


  49. Thanks Phil re NFLX idea … I have the John M Keynes feeling about market irrationality and personal solvency ????


  50. Good morning!

    /ES back at 2,726 for another try at the strong bounce line. 

    Nas Futures are up 25 at 6,950 because whatever.  

    Kind of a nothing day ahead of NFP tomorrow morning:

    • China will respond "as necessary" in the event of a trade war with the U.S., according to Foreign Minister Wang Yi, cautioning that such a battle would harm all sides.
    • The warning comes as China released its latest trade data, with exports up 44.5% and imports growing 6.3% in February.
    • That left the country with a trade surplus of $33.74B, and a January-February trade surplus with the U.S. of $42.92B.
    • Eleven nations are set to sign a final Trans-Pacific Partnership trade deal in Santiago, Chile, which will reduce tariffs in countries that together amount to more than 13% of the global economy – a total of $10T.
    • More members? "Once TPP becomes effective then we can start discussions on accession," said Kazuyoshi Umemoto, Japan's chief TPP negotiator.
    • Current participants include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
    • Previously: Mnuchin floats U.S. rejoining TPP (Feb. 28 2018)

    Japan’s GDP Growth Tops Forecasts on Investment, InventoriesThe Japanese economy has grown for eight straight quarters, its longest expansion in nearly 30 years, as global demand for its exports fueled record corporate profits and rising business investment. Yet wage gains and household spending have remained lackluster, and key January indicators, including industrial production, suggest growth may weaken or even disappear in the first quarter. A build-up in inventories during the fourth quarter could weigh on first-quarter results.

    Draghi Stares at Trade War Abyss as ECB Ponders Stimulus OutlookMario Draghi’s progress toward a stimulus exit is likely to stay slow for now, with inflation too low for comfort and the global economy up against a trade-war-in-waiting. U.S. tariffs and retaliation by Europe and others could harm the outlook for the euro area, where exports have played a huge role towing the economy out of its slump. That could add to the European Central Bank president’s argument when he pushes back against some ECB officials lobbying for a change to policy guidance.

    Buy-the-Dip Believers Rejoice After White House Tries to Ease Trade Tension. Gary Cohn’s departure from the White House won’t end the bull market, at least not yet. The S&P 500 Index stormed back from losses of almost 1 percent to end little changed, as investors heeded a strategy that’s worked more often than not during the nearly nine-year bull run: Buy the dip.

    107 House Republicans send letter to Trump asking him not to do his tariff plan

    • More than 100 House Republicans have signed a letter to Pres. Trump objecting to proposed tariffs on steel and aluminum imports, as the plan is expected to be unveiled tomorrow.
    • White House press secretary Sanders said today there may be “potential carveouts” for Mexico, Canada and possibly other countries, but it is unclear if these will be addressed tomorrow; Trump may take additional action later to give national security exemptions on a country-by-country basis.
    • The letter from Republican lawmakers cites “deep concern” about the tariff's potential effects on U.S. business and consumers: “Because tariffs are taxes that make U.S. businesses less competitive and U.S. consumers poorer, any tariffs that are imposed should be designed to address specific distortions caused by unfair trade practices."

     

    White House says Trump may exempt Canada, Mexico from tariffs

    Reports of Problems at Crypto Exchange Send Bitcoin TumblingBinance cites ‘irregularities in trading activity’; SEC warns of risks surrounding such exchanges.

    Japan punishes seven crypto exchanges

    • Bitcoin is slumping for a third day, extending its fall below $10,000, amid fears of a regulatory clampdown in Japan and the U.S., the world's most active markets for digital assets.
    • Japan's Financial Services Agency punished seven cryptocurrency exchanges, ordering two of them to suspend business, just hours after a warning from the SEC that many online trading platforms must register with the agency.

     

    The SEC just made it clearer that securities laws apply to most cryptocurrencies and exchanges trading them

    After Record Debt-Fuelled Splurge, US Credit Card Usage Post Sharp Slowdown

    Crude oil slides 2% as trade war worries weigh, U.S. production rises again

    • Crude oil prices fell more than 2% amid mounting concerns of a potential trade war and after U.S. government data showed a second straight weekly increase in crude inventories and production.
    • April WTI crude settled 2.3% lower at $61.15/bbl while Brent crude fell 2.2% to $64.34/bbl, and energy stocks were one of Wall Street's weakest performers although losses have been whittled away near the day's close.
    • Crude prices had briefly pared losses after the EIA reported that U.S. inventories rose by 2.4M barrels in the last week, which was below analyst expectations for a 2.7M-barrel increase.
    • "The generalized market anxiety over what could end up being a global trade war is dragging everything down," says Again Capital partner John Kilduff. "It does not bode well for future economic growth and increased energy demand."

     

    • Cheniere Energy (NYSEMKT:LNG) plans to announce soon a final investment decision on its third liquefied natural gas processing train in Corpus Christi, along with other growth projects, CEO Jack Fusco told the CERAWeek energy conference today.
    • In addition to expanding capacity at its export facilities, Fusco said Cheniere also would seek to increase pipeline capacity to its facilities, in part because of the impact from Hurricane Harvey.
    • Cheniere is adding a fourth pipeline to its Sabine Pass export facility as well as a second and third to Corpus Christi, which will incorporate redundant space in case of unforeseen events, Fusco said, noting that the company managed to keep two of the three Sabine Pass lines running at any given time during Harvey.
    • “I think our pricing structure is solid. Our business model is solid,” Fusco said.
    • The Pentagon estimates it will cost nearly $16B to modernize the fleet of Lockheed Martin (NYSE:LMT) F-35 jets through 2024, including $10.8B for software development and $5.4B for deploying the updates.
    • It's the first time the estimate was made public.
    • The F-35 has been previously criticized for being too expensive, including by President Trump and other U.S. officials, who have also pointed to numerous production delays and cost overruns.
    • The U.S. Air Force says Boeing (NYSE:BA) likely will again miss a key deadline for the contract on its KC-46 refueling tanker, which already is 14 behind the initial scheduled date of August 2017.
    • Boeing’s program schedule continues to show that it plans to deliver the first 18 tankers, two spare engines and nine sets of wing-mounted refueling pods by October, but the Air Force now says the required deliveries are “more likely” to be completed “in late spring 2019,” pointing to delays in FAA airworthiness certifications and "completing the flight test program."
    • The Air Force says the potential delays would not add to taxpayer costs, since Boeing is required to use its own funds under its “fixed priced-incentive fee” contract, which caps the Air Force’s liability at $4.9B; the Air Force estimates Boeing will complete the contract for $6.3B, while the company expects to complete development work for $5.9B.

    Costco(COST) Outshines Other Discount Chains, But Concerns Linger

    I told you they were too cheap!  Cigna buys Express Scripts for $67B

    • Cigna (NYSE:CI) is nearing a deal to buy Express Scripts (NASDAQ:ESRX), WSJ reports, and the transaction could be announced as soon as today.
    • In 2015, Cigna agreed to combine with Anthem (NYSE:ANTM), in a deal that was scuttled by regulators, while late last year, Anthem said it would launch its own PBM, dealing a blow to Express Scripts, which is a partner of the health insurer.
    • It's official: The cash and stock transaction is valued at approximately $67B, including Cigna's assumption of approximately $15B in Express Scripts debt.
    • The merger consideration will consist of $48.75 in cash and 0.2434 shares of stock of the combined company per Express Scripts share.
    • ESRX +15.7% premarket

    Amazon(AMZN) Admits Alexa Is Creepily Laughing At People

    "We're Going To War" California Governor Blasts "Full Of Liars" Administration Over Immigrant Lawsuit

    • The Florida House has passed a school safety bill in response to the shootings at a Parkland high school that left 17 dead, sending the measure to Governor Rick Scott for his signature.
    • It would raise the minimum age to buy rifles from 18 to 21, create a waiting period on sales of the weapons, and provide additional funding for armed school resource officers and mental health services.

  51. PQEFF/Advill – Be careful with Petroteq, they have gone through several name/symbol changes and recently teamed up with a blockchain company – seems like they will do anything to pump up the stock, which makes me worried that they might be a bit scammy.


  52. Thanks!!!!!