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Trade War Thursday – Trump Takes on China

Image result for trump trade war china cartoonWhat an exciting day.  

Trump will be rolling out his economic sanctions against China because what we really need now is more instability in the Global Economy.  Earlier this morning, the PBOC raised their rates in-line with the Fed so we can probably expect trade retaliation in-line with Trump against US manufacturers.  It's certainly going to be interesting, whatever the case.  

While it's very exciting to have International Diplomacy carried out via unilateral decisions announced on Twitter – it does undo DECADES of careful negotiations carried out via shuttle diplomacy by dozens of our Nation's most experienced representatives.  Sadly, once you break Humpty Dumpty, it's very hard to put him back together again but the century is still young – I'm sure we'll be able to fix it later…

Meanwhile, as we expected, the market was not too thrilled about the Fed hiking rates and we made some big money in yesterday's Live Trading Webinar (replay available here) playing them bearish into the meeting and even our Oil (/CL) and Gasoline (RB) shorts turned around this morning for $300 per contract gains as gasoline came back below $2 and oil fell back below $65 (both are our stop lines now and both good for new shorts with tight stops above those lines).

As I said in yesterday morning's Report, 2,640 is our immediate downside target on the S&P (/ES), on the way back to 2,400, which would be $15,000 per contract gains on shorts below the 2,700 line.  We checked our portfolio hedges in yesterday's Webinar and we're generally content with our positions and looking forward to a nce correction – so bring on the Trade War!

FaceBook's (FB) Mark Zuckerberg attempted to put the brakes on their crisis with a timeline that spun the narrative but people aren't having it and Facebook is down again this morning, back at $167 but it will be interesting to see how hard Congress comes down on them as the very data they are accused of mishandling was used by GOP operatives to swing the elections for several high-ranking members of Congress – not to mention the President himself!

Facebook has given up $50Bn in market cap so far but the company is up 40% from $120 in 2016 and still trading at 30 times earnings while facing shareholder lawsuits (for failing to disclose the data breach) and Congressional hearings that may impact their future business model – as well as the business model of many high-flying data companies.  

Also hitting the Tech Sector is Europe's proposal to tax Tech Firms at 3% of revenues, regardless of profits, in order to prevent their usual tricks for avoiding taxes.  The tax proposal ensnares companies that sell digital advertising (GOOGL, FB, TWTR) or provide a platform for online trade between third parties (AMZN, EBAY, UBER?). This exempts such firms as brick-and-mortar department stores that sell designer handbags over their websites, no matter how digital the transactions look.  

This is what a trade war looks like, folks – tariffs and taxes flying about everywhere and randomly huting the profits of companies you invested in – it's not good for the markets and no one ends up winning in the end – and that end can get very, very messy (see WWII).

So we have the Fed tightening and higher taxes and trade wars and the question I ask you is: "Is this the right environment to be paying all-time highs for stocks?"  If the anwser is no – then you need to seriously go through your portfolio and consider which of your stocks may be overpriced and, of course, make sure you are well-hedged! 

I may have forgotten to mention a President that may be indicted next month and the usual possible Government shutdown on Friday but those are business as usual these days and we're already trained to ignore them, right?  

You don't have to believe me.  The title of yesterday's report was: "Federally Funded Wednesday – S&P About to Retest 2,640 as Fed Withdraws" and yesterday afternoon the S&P was at 2,740 and this morning we're at 2,690 so well on our way and up $2,000 per S&P Futures (/ES) short so far (you're welcome).  I can only tell you what's likely to happen – the rest is up to you! 

The Big Bear Signal for today would be the Nasdaq failing the 50-day moving average at 6,824 and it looks like we'll open below it with a 100-point drop so now the question is whether or not we get back over it before the Russell (/RTY) fails it's 50 dma at 1,557.  If that happens – look out below!

Disclosure:  Yesterday, at 9:39 am, I called out to our Members:

Big Chart – 3 50 dma failrues and the Nas is resting right on theirs so 6,820 and bust if they fail and that makes /RTY the laggard, now 1,576 so I'd poke a short below 1,575 with tight stops above and again at 1,580 but, over that and I'd say the Nas must be out of danger anyway – so the premise would be blown. 

This morning, at 6:58 am, I said to our Members:

/RTY is lagging at the moment and can be played on a break below 1,570 but 24,500 should be bouncy on /YM so not the best time to short.  It's a 500-point drop so 100-point bounces are a lot of slack this morning for the Dow!

Having had weak bounces we are back to shorting both /RTY and /YM at those lines with tight stops above.  


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  1. Rb/CL/Phil- what’s your target for rb, 1.92? CL any target for the short to ride till?

  2. Good morning, All!

    The webinar replay is now available!

  3. Good Morning.

  4. Surprising :

    ~~ P – Pandora Media upgraded to Strong Buy from Mkt Perform at Raymond James. 

  5. Good morning! 

    Not for Bozo, he kicked the bucket. 

    I was on that show once, he asked me my favorite bird and I said it was an eagle and then he said "what sound does an eagle make" and I said "tweet, tweet" – not a good moment in Davis history…   In my defense, that guy is terrifying live, up close to a 6-year old and then he shoves a mike in your face!  I did, however, redeem myself by winning the hippity hop race.  

    A little stick save at the moment but still way down across the board. 

    Target/Dave – I'm done.  I got a nice, $15,000 turnaround overnight – good enough for my day!  As I said yesterday, it's a very dangerous trade into the holidays next week and I was just looking for a pullback, which we got and I'm not inclined to press my luck without some sort of downside catalyst.

    The key to winning consistently in the Futures is NOT playing 9 out of 10 times you look.  On the 10% you feel you are SURE about, hopefully you'll be right more often than you're wrong and then it's just a matter of money management to make sure that, when you win – it's more than you lose.  

    Big Chart – As noted above, now we see if /NQ can take back 6,824 (5 really) and we're just under 6,800 at the moment.  

    P/Albo – There's always someone who loves a stock.  

  6. Phil – Well done !

  7. Target/Phil- true, I shall not be greedy too, thanks for the $4,000 trade idea Phil. Took profit as I see rb going to test $2 again. 

  8. Phil/TZA

    looks like it is a broken instrument. With all these down movements there is little movement in TZA. it is still under 11??


  9. Short RTY at 1579

  10. Stocks sell off, pressured by trade war fears and tech troubles

    • Stocks post sharp losses at the open, with the Dow more than 250 points lower; Dow and Nasdaq -1%, S&P -0.9%.
    • Investors have shifted attention away from yesterday's Fed policy directive and towards the White House, where Pres. Trump is expected to announce tariffs on Chinese imports at 12:30 p.m. ET and is reigniting fears of a trade war between the world's two largest economies.
    • Overseas, the Bank of England left its key policy rate unchanged at 0.5% but it was not the expected unanimous decision.
    • European stocks are mired deeply in the red, with Germany's DAX and France's CAC both -1.7% and U.K.'s FTSE -1.3%; in Asia, Japan's Nikkei finished +1% while China's Shanghai Composite closed -0.5%.
    • In U.S. corporate news, Facebook -1.1% in early trade after CEO Mark Zuckerberg broke his silence over the Cambridge Analytica data controversy and outlined corrective measures.
    • Nearly all S&P 500 sectors are lower, with health care (-1.3%), tech (-1.1%), financials (-1.1%) and industrials (-1.1%) pacing the retreat.
    • U.S. Treasury prices are broadly higher, pushing yields lower across the curve; the benchmark 10-year yield is 9 bps lower at 2.82%.
    • U.S. WTI crude oil futures -0.8% at 64.66/bbl.
    • Still ahead: leading economic indicators, EIA natural gas inventory, KC Fed manufacturing survey
    • The Bloomberg Consumer Comfort Index ticks up to 56.8, from 56.2 last week.
    • March U.S. PMI Composite Flash54.3 vs. 55.2 consensus, 55.8 prior.
    • Services PMI 54.1 vs. 55.7 consensus, 55.9 prior.
    • Manufacturing PMI 55.7 vs. 55.4 consensus, 55.3 prior

    • February Leading Indicators+0.6% to 108.7 vs. 0.3% consensus, 0.8% prior (revised).
    • Coincident Economic Index +0.3% to 103.3.
    • Lagging Economic Index +0.4% to 104.3.
    • The eurozone private sector expanded at the weakest pace in more than a year in March, according to flash data from IHS Markit that showed its composite output index dropping to 55.3 from 57.1 in February.
    • Are trade worries delivering a blow to business and consumer confidence and what will that mean for policymakers at the European Central Bank?
    • Making decisive steps towards a Brexit transition deal earlier this week, including legal terms of citizens' rights and a financial settlement, the EU and U.K. are set to meet for a two-day summit in Brussels to discuss the last major issue.
    • Analysts at ING believe if a transition agreement is reached on the Irish border, "this will open the door even further to a near-term rate hike from the Bank of England."

    • The British central bank held the policy rate at 0.50%, but may raise as soon as May. This decision had been expected by all economists surveyed by Bloomberg.
    • Saying trade wars and Brexit are the biggest risks to both Britainn and the global economy, the Monetary Policy Committee voted 7-2 for holding rates.
    • Policy makers Ian McCafferty and Michael Saunders wanted an immediate increase, arguing that slack in the economy has been used up and wage growth is accelerating.
    • Previously: BoE policy decision on tap (March 22)
    • President Trump will sign a memorandum "targeting China's economic aggression" at 12:30 p.m. today, which will be imposed under Section 301 of the 1974 U.S. Trade Act.
    • Tariffs on Chinese imports worth as much as up to $60B could be unveiled, stoking fears of a global trade war.
    • According to several sources, China is already preparing to retaliate with tariffs of their own focused on U.S. exports of soybeans, sorghum and live hogs.

    • "The U.S. stands ready to defend our producers that may be harmed by foreign country retaliation, in particular farmers and ranchers who are often the first to be targeted by trade actions," according to the USDA.
    • Besides China, more worries could be on the horizon if the Trump administration pulls out of NAFTA. Mexico and Canada together represent nearly one-third of total U.S. agricultural exports.
    • Previously: U.S. set for China tariff announcement (Mar. 22 2018)

    Wheaton Precious Metals beats by $0.03, beats on revenue

    • Wheaton Precious Metals (NYSE:WPM): Q4 EPS of $0.19 beats by $0.03.
    • Revenue of $242.55M (-6.2% Y/Y) beats by $26.03M.
    • Press Release

    GoPro and Jabil strike deal for tech in third-party devices

    • GoPro (NASDAQ:GPROannounces a multi-year deal with Jabil (NYSE:JBL) to put GoPro tech in a range of products potentially including police cameras, video conferencing solutions, and self-driving cars.
    • Jabil will use GoPro’s design and IP in third-party devices, which marks the first time GoPro allowed other manufacturers to build using its supplies. 
    • GoPro shares are down 0.8% premarket to $4.88 and down 41% in the past year.

    Pandora +5.7% on two-notch upgrade at Raymond James

    • Pandora Media (NYSE:P) is up 5.7% premarket after a two-notch upgrade at Raymond James, to Strong Buy.
    • The change is from a previous Market Perform stance after the company announced its $145M purchase of ad-tech firm AdsWizz, a deal that takes pressure off of quarterly user trends, it says.
    • The deal is of a piece with Google's strategy when it bought DoubleClick, analyst Justin Patterson says, in creating a platform for publishers to monetize audio.
    • He has a price target of $8, implying 63% upside.

    WSJ: Whole Foods execs keep leaving Amazon

    Image result for whole foods amazon cartoon
    • Over a dozen execs and senior managers have left since Amazon (NASDAQ:AMZN) purchased Whole Foods, according to a WSJ report.
    • Departing execs have headed bakery, produce, and local-foods divisions. Some left, even after higher-ups asked them to stay, while others were pushed out before the deal closed. 
    • What’s driving workers out? Some top managers oppose reporting to younger Amazon execs while others say Amazon hasn’t properly explained how it will integrate Whole Foods into its business. 
    • Exec departures aren’t uncommon after mergers. Amazon has invited employees to town halls to discuss concerns and this week held an event for suppliers. 
    • Amazon shares are down 1.3% premarket. 

    Apple's new iPhones could enter trial production in Q2

    • Apple (NASDAQ:AAPL) will enter trial production of its new iPhone series in Q2, according to Digitimes sources.
    • Apple wants an early start to avoid the 3D sensor yield rate issues with last years models, which pushed back the launch date of the iPhone X. 
    • Apple could start delivering the new iPhones early in Q3, and that timeframe could start pushing up component maker revenues as early as Q2. 
    • Suppliers that could move on the news: Skyworks Solutions (NASDAQ:SWKS), Cirrus Logic (NASDAQ:CRUS), Broadcom (NASDAQ:AVGO), Qorvo (NASDAQ:QRVO), Finisar (NASDAQ:FNSR), II-VI (NASDAQ:IIVI), and Lumentum (NASDAQ:LITE). 
    • Apple shares are down 0.3% premarket to $170.76.    
    • Previously: New iPhone X could cost Apple 10% less; Iovine stepping back from Music (March 21)

  11. More buybacks, less investments:

    Since the tax bill, companies have been doing a lot of buybacks. Share buybacks in 2018 have averaged $4.8 billion per day, double the pace from the same period last year, according to an analysis the market data firm TrimTabs provided to CNBC.

    Goldman Sachs in February estimated S&P 500 firms will return $1.2 trillion to shareholders via buybacks and dividends in 2018, increasing share buybacks by 23 percent to $650 billion this year.

  12. Good job Dave, no sense in being greedy when there's always another set-up coming. 

    TZA/Pat – With the ultras, choppy movement kills them but they really shine when there are consecutive down days.  On the whole, TZA tends to track the RUT very well for a 3x ETF.  

    Good short State.  

    Those buyback numbers are insane! 

  13. Covered short RTY short at 1572.. It should really start falling now :)

  14. Phil,   MLPS -

    Here is a quality one that I have been watching – MPLX (Marathon Petroleum's midstream dropdown company)

    Pays a rising dividend $0.61 per quarter. Currently at a 7+% yield. 

    Not very cheap but a serial dividend raiser.

    Organic growth in 2018 is in motion and expect dividends to increase.

    Has raised dividend every year for the last 4 years by 10%.

    Buy at $33.2 today, sell Jan 20 $32 C/P for $8.00, netting you 36% w dividends till Jan 2020 if not called away.

    If assigned, the next batch 2X will be at an average cost of $29 and a 8.4% yield.

    They also announced that the recent tax ruling will have minimal effect on them. 

    There are others with potentially higher payouts but also declining dividends. ex. ETP that can provide 60%+ over two years with an armchair trade (13.4% div yield but declining divs and higher risks). 

  15. how annoying are these MLPs K-1's when reporting taxes? Even in an IRA you still need to report Box 20 UBI, if any.

  16. Well … that's everything killed then.  Anyone want to bet on Trump vs Biden?

  17. In a fight, not 2020

  18. Set up armchair trades with ETE buy stock and sell Jan 19 13/15 strangle at 2.70

    GIS Stock and Oct 45/47.5 strangle for 5.30.

    Leap BCS ORCL 43/52.5  4.22 and sell 45 put 5.10 and go out with a credit. Leave it for a while before selling any cherry calls.

  19. Getting another leg down after not much bounce.  Same old lines as usual on the way to 2,640, as promised:

    Good call State!

    MLPX/Learner – Sounds good but have to look at what it is they actually do.  Kind of funny that they were specifically designed to take advantage of MLP regs.  I like the LNG angle but they have their fingers in all sorts of pockets – which may be a plus, actually.

    MLPs/BDC – I just hand crap to my accountant but I don't think it's terrible, they just send you a 1099 for the income.  

    Trump v Biden/Malsg – I would not mess with Biden and Trump is kind of like a bowl of jelly – those bone spurs make it hard to stay in shape so Biden in round one!  

    Image result for trump vs biden

    And in 2020:

    Image result for trump vs biden

    Wow, another dive lower, 2,666!

  20. Copper testing $3 – double plus ungood if they fail to hold that!

    1,557 should be bouncy on /TF  but 1,550 is the real test:

    1,584 was the 10% line and, 1,557 is the 50 dma and 1,548 is the 7.5% line so it's a very slow slog down between 1,548 and 1,557 but a lack of support in this zone spells DOOM!!!

    For now, we'll assume 1,557 is bouncy and we fell from 1,600 so 43 down is 9 up to 1,566 (weak) and 1,575 (strong). 

  21. Real time lines! 

  22. Phil, anyone.., thoughts on KHC at these levels ?

  23. Getting a bit of a bounce now as the tariffs are not as bad as feared.

    U.S. to Apply Tariffs on Up to $50 Billion of Chinese Imports

    President Donald Trump is planning to levy tariffs on about $50 billion of imports from China, as well as impose restrictions on technology transfers and acquisitions by Beijing to pressure China to curtail what the U.S. considers unfair trading and investment practices. 34813 minutes ago

    As noted on StJ's Dow chart, the 15% line is 24,150 and we bounced right off that and that's down from the 20% line at 25,200 so call it an even 1,000 points and look for 200-point bounces back to 24,350 (weak) and 24,550 (strong) 

    KHC/State – Nice boring company and seems cheap at $61.50, which is $75Bn on $26Bn in sales and $11Bn in profits (who'd have thought they have that much mark-up?) but that's misleading as it includes $5.5Bn in tax benefits and, realistically, I'd look for more like $4Bn+ in profit so call the p/e more like 15-18. 

    Year End 30th Dec 2012 2013 2014 2015 2016 2017 2018E 2019E CAGR / Avg
    Revenue $m 0.000 6,240 10,922 18,338 26,487 26,232 26,549 27,015 +43.2%
    Operating Profit $m 0.000 -8.00 1,568 2,639 6,142 6,773      
    Net Profit $m 0.000 -77.0 657 634 3,632 10,999 4,687 4,980  
    EPS Reported $ 0.000 -0.94 -0.053 -0.22 2.82 3.26      
    EPS Normalised $ 0.000 -0.85 -0.053 -0.22 3.43 3.55 3.82 4.07  
    EPS Growth %           +3.6 +7.60 +6.50  
    PE Ratio x           17.4 16.2 15.2  
    PEG x           2.30 2.49 3.33

    The bottom line is they never should have been in the 90s and this price is about fair but I wouldn't say it's so cheap I can't stay away.

    However, in the LTP, we love boring and we can sell 10 of the KHC 2020 $57.50 puts for $5.50 ($5,500) just to put some money in our pocket and the worst case is owning them at net $52, which is 18% lower than we are now.  

  24. Thx Phil

  25. Electric Car Costs Set to Fall

  26. Eleven Million Millionaire Households – a new record

  27. ~~Dowd resigns as Trump's lawyer amid disagreements on strategy.

    Disagreement on strategy or how many lies they thought they could get away with ?

  28. Phil/GME

    I have 1000 shares at 25, sold the $20 calls for $5 and puts

    Q: would you average down here at $13.70 with purchase of another 1000 or ?2000 shares nad sell calls?

    They DO have a dividend, but I am leary of 10% divs, they invariably get cut and stocks fall

  29. Bullish article on CTL.

    Phil, it's time for you to join me in CTL and move on from FTR, IMHO.

  30. Not a bad day to roll out of your FB into TCEHY..

  31. Trump/Albo – A sign he's about to go to war with Mueller:

    This week, Trump added Joseph diGenova, a former U.S. attorney who has been highly critical of the FBI and Department of Justice (DOJ), to his outside legal team. With Dowd gone, Trump’s outside legal team handling the Russia matter will be led, at least in the interim, by diGenova and Jay Sekulow.

    Also, Dowd may have to give testimony against Trump now:

    Dowd’s predicament arose after Washington was set alight by what may be the single most moronic tweet in the checkered tweet history of the administration. The president sent out a tweet responding former national security adviser Michael Flynn's plea agreement by saying “I had to fire General Flynn because he lied to the vice president and the FBI. He has pled guilty to those lies. It is a shame because his actions during the transition were lawful. There was nothing to hide!”

    The three words “and the FBI” could constitute an admission against interest for the president in the investigation of possible obstruction of justice. Flynn was “fired” on Feb. 13, 2017. That was the day before Trump reportedly asked then FBI Director James Comey to ask him to go easy on Flynn. (Trump has denied that he ever asked Comey to drop the investigation against Flynn.)


    With the media in full frenzy, Dowd came forward to fall on a sword. He claimed that the words were his alone and he was “sloppy” in referring to knowledge of lying to the FBI.  However, this week media is reporting that White House Counsel Don McGahn told Trump before Flynn was fired that he believed Flynn had misled the FBI.

    It is hard to imagine how Dowd could ethically continue to perform his duties as an attorney after compromising himself and his client so thoroughly.  Dowd is now an obvious potential witness for special counsel Robert Mueller. There is no reason why Mueller should accept his claim that Trump did not approve these words or that the admission did not reflect Trump’s knowledge at the time of the Flynn firing in February. 

    This was the wrong time and the wrong prosecutor for Dowd to push the envelope of attorney-client privilege. Mueller has already shown a troubling and dismissive view of legal privilege. He was accused of trying unsuccessfully to nail a defense lawyer by taping an attorney-client meeting in Boston when he was U.S. Attorney. More recently, Mueller effectively turned Paul Manafort's former lawyer, Melissa Laurenza, into a witness against him; he got a court order for her testimony under the “crime-fraud exception.”

    Since Mueller is investigating obstruction of justice, Dowd’s testimony would be easier to acquire then Laurenza’s. Moreover, it is not clear what role Dowd was performing as tweet muse. Lawyers are under various ethical limitations in discussing pending cases or investigations or witnesses. It is not clear how a lawyer can issue statements under the name of the client without approval or a clear understanding from the client. This was not a tweet from counsel speaking on behalf of Trump. It was speaking as Trump.

    Writing under the name of your client (without his sign-off on the statement) raises a novel but no less troubling concern, particularly when you are attacking a potential witness against your client. Dowd seemed to blur the line of counsel with being a type of public relations flack in authoring tweets under Trump’s name. While it is always dangerous to combine the roles of lawyer and flack, it becomes intolerable when you add the third role as potential witness.

    Calling this “sloppy” drafting is like calling the Titanic “incautious navigation.” Dowd seriously undermined the position of Trump by clearing away any serious barrier for Mueller to demand information on his communications with Trump. 

    So many scandals, we forget that one from last month.  

    GME/Maya – Well, if I understand correctly, you sold $20 puts AND calls for a total of $5, right?  Assuming it's 2020, the $20 calls are now $1.20 and the puts are $8.50 so the same net and that assignment of more at $20 still looms so I would not dive in so hard, so fast.

    The dividend is 0.38 and they just paid March so next is June and you get 1,000 for $380.

    If you cash the stock for $14 ($14,000) and roll the short $20 puts ($8,500) to 20 of the short 2020 $13 puts at $3.50 ($7,000) and roll the 10 short $20 calls ($1,200) to 15 short 2020 $15 calls at $2.20 ($3,300) you would be in for your original net -$20,000 + $14,000 - $8,500 + $7,000 – $1,200 + $3,300 = -$5,400 and now you can buy 20 $10 calls for $4.50 ($9,000) and that puts you in 20 of the 2020 $10/15 bull call spreads for $14,400 and it's a $10,000 spread but 1/4 uncovered and you can make up the $4,400 by selling 10 July $16 calls for 0.75 ($750) while you wait.  

    If GME starts doing well, then the puts go worthless and you can add more longs or roll the short calls higher to widen the spread and, if GME tanks, you are assigned 2,000 shares at $13 ($26,000) plus your loss (assuming it's total) puts you in 2,000 at $20 as your worst case but that's more effective than doubling down now to average $17 and you have an excellent chance to get even at just $15 without dumping a ton of cash into the trade. 

    CTL/Albo – True they are only down 40% while FTR is down 65% but I'm more of a glass is 1/3 full kind of guy…  cheeky

    That is cool, BDC. 

    TCEHY/Scott – I stay away from them because I simply don't believe the numbers.  If they are true, they are amazing though:

    Year End 31st Dec 2012 2013 2014 2015 2016 2017 2018E 2019E CAGR / Avg
    Revenue CNYm 43,894 60,437 78,932 102,863 151,938 237,760 338,214 442,939 +40.2%
    Operating Profit CNYm 15,479 19,194 30,542 40,627 56,117 90,302     +42.3%
    Net Profit CNYm 12,732 15,502 23,810 28,806 41,095 71,510 84,573 110,556 +41.2%
    EPS Reported CNY 1.37 1.66 2.54 3.05 4.33 7.50     +40.6%
    EPS Normalised CNY 1.43 1.64 2.31 2.93 4.15 6.58 8.83 11.6 +35.7%
    EPS Growth % +35.4 +15.0 +40.5 +27.0 +41.4 +58.6 +34.3 +31.9  
    PE Ratio x           55.8 41.5 31.5  
    PEG x           1.62 1.30 1.14

    That's not what I see in their quarterlies, where sales are more like $10.8Bn and EPS is 0.32 for 5.42Bn shares ($1.734Bn) and there I have trouble justifying a $500Bn valuation but I can't figure out what the truth is so – I just stay away….

    I guess an optimist could say we recovered half the losses?

  32. BAC/Phil- Understand we got C in the LTP, was wondering have you considered BAC since BAC is one of the big lenders and entering a raising interest rate environment worth to take a peek? 

  33. /RB & /CL  Phil -  what do you make of RB moving up while Cl gets dragged down?

  34. BAC/Dave – I like them too but C got cheap first.  If BAC pulls back a bit more, I'd like them too.

    /RB/Rayne – It's its own animal but often it follows oil.  I think it's just another chance to short as I simply don't see people paying more at the pump without cutting back but, as I keep saying, VERY dangerous into the holiday weekend next week and I made my money so I'm content to wait a week rather than waste a week starting at it trying to convince myself it's safe to jump in again.

    Dow looks like it's going to re-test the lows.  Ugly rebuke of trade policy if it fails 24,150.

  35. With copper, if we throw out the spike to $3.30 and call $3.25 the move up (which makes sense as it's the 30% line from $2.50) then we have an 0.25 fall that gets 0.05 bounces to $3.05 (weak) and $3.10 (strong).  I think today we have a weak bounce (this week, actually) that is consolidating for a move down.

    The market jolted lower in Dec when copper last took a dive but not too much effect compared to the madness we've had recently.  I just think it's yet another bad sign that will cause meetings that cause trading houses to flip their tradebots to SELL mode and, as I have often noted – there simply aren't enough real buyers around to sell to and the market can drop very, very fast.

  36. Do we still feel good about CLF ?

  37. CLF/State – They should benefit from tariffs but not looking like it so far. 

    So this is what we deny people just because they don't have money:

    Instead we give tax cuts to Billionaires.  

  38. ugh Ugly sell-off towards the close. It's weird that my DXD hedge is only up $1000 with the longs and short cancelling most of each other. 

  39. 24,000!  2,650 on /ES,  6,716 and 1,552 – what a day!  

    STP not doing as good as it should (up 57%).  If we're lower tomorrow, we need to press some hedges.  LTP still up 10% though.  OOP is better balanced though still down 3%.  

  40. DXD/Dave – That's not weird, that's how it works.  That kind of spread only really protects you if the Dow goes down AND STAYS DOWN.  Of course, if it goes down and comes back – your positions improve and you don't need the hedge.  The reason we put DXD in the STP for July is that I do expect us to be lower in July than we are now but, in between, they losses will mostly cancel out the gains.  

    Long Call 2018 20-JUL 8.00 CALL [DXD @ $8.78 $0.31] 200 3/2/2018 (120) $22,000 $1.10 $0.00 n/a     $1.10 - $0 0.0% $22,000
    Short Call 2018 20-JUL 10.00 CALL [DXD @ $8.78 $0.31] -200 3/2/2018 (120) $-10,000 $0.50 $-0.05     $0.45 - $1,000 10.0% $-9,000

    Wow, looks like we nailed it with that 2,640 call yesterday.  

  41. Trade policy / Phil – What trade policy? Right now, all we have is Trump deciding what he thinks is best without consulting his advisors. Not that asking Kudlow would help as far as the economy is going but he might actually have 20-30 IQ points on Trump (low bar I know). 

  42. Soon Trump will own all top 10 worse down days in the Dow in points!

  43. oh wow CL went even lower. RB holding $2.

  44. LOL StJ – A very low bar indeed.  I can't believe Trump wants to be in a room with that guy.  Kudlow is like nails on a chalk board to me – between the sound of his voice and the intelligence-insulting BS he spouts – I can't even keep the sound on when he's on TV. 

    Speaking of Trump idiots, Wilbur Ross was trying to defend the trade war on Bloomberg and said that China was doing $500Bn worth of damage to the US and then the woman asks him – "So how do $50Bn worth of tariffs make a dent in that?" and then someone interjected that the Tariffs are only a 25%(ish) tax on $50Bn worth of goods, so really $12.5Bn out of "$500Bn in damages" – in other words, complete and utter, pointless bullshit!  

  45. Also, Trump has no actual tariff plan – what they are saying is they are going to "take suggestions" from US manufacturers who want to get even with China as to which items to tax.  So his plan is to play let's make a deal for months – something that will line a LOT of pockets for people seeking access to plead their tariff case.  

    Welcome to Trump World!  

    2.5% rule on /ES and /NQ/YM already down 3% and /RTY is lagging at -2.2%.

  46. Wow, what a day!  

    At least it's interesting.  

    Let me know if you guys are having trouble with hedges/balance – this is a very good test for our portfolios.  

  47. Any Index futures position at close ?

  48. I wouldn’t put any index futures at the close, but Long  6700 on /NQ  is tempting. Too much risk of some follow through overnight for me. 

  49. Wheaton Precious Metals' (WPM) CEO Randy Smallwood on Q4 2017 Results – Earnings Call Transcript

    Hanesbrands: Championing A Compelling Upside

    Tesla: Another Model 3 Delay?

    Good list of companies with good upward revisions in Q1 Earnings Expectations:

    Futures/State – If I were going to play, I'd play for the bounce at 2,640 on /ES or /YM back over 24,000 with tight stops below.  

  50. And what Jeff said!  

  51. MU beat, but stock is down 5% AH (recovered from 10% down).  Will be listening to the call.  As far as I understand, fundamentals for this market are still very strong, but might be caught in the market moves…

  52. We are truly ruled by idiots! 

  53. MU/learner- It's just a bad day to report anything. I think once the dust settled, MU will go back to 60+ or even 70. They beat + guide up.

  54. Yes Dave, thanks… I saw that.  Lets wait for the dust to settle – the fundamentals are definitely pointing higher and most analyst price targets are in the $70-$100 range.

  55. Reciprocal tariffs are on the way. China starting small, but starting nonetheless. 

    Asia's Response After Trump Announces Tariffs Against China – Bloomberg Business

  56. Phil/hedges

    I’ll need some new ones I think. Not sure about everyone else but I would love to hear what your next mattress hedges would be. 

  57. Anybody know what popped RB and CL?

  58. I would say that appointing someone as NSA who is advocating war on Iran is a good excuse for the pop in oil… Get ready for some distraction from the Russia probe by ways of wars on Korea and Iran!

  59. Japan maglev contractors formally charged in bid rigging

  60. France braces for nationwide strikes over Macron’s reform drive

  61. Good morning!

    Futures off their worst levels but still not green.  

    Bolton is a real step down for the Trump Administration – another tick on the doomsday clock…