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Tariff-Free Thursday, White House Walks Back Tariff Talk, Markets Rally

What a wimp!

As soon as China threatened to match Trump's tariffs, the White House went into emergency spin control and started saying those were only "PROPOSED" tariffs and they wouldn't really be putting them in place and, even if they go in place, it won't happen for at least 2 months.  2 months from now will be June and the elections are in November so, in short, tariffs are never going to happen.

I'm thrilled as I was STRONGLY against the tariffs though a bit disappointed that we didn't get a bigger dip first but 2,550 on the S&P was only 150-points over our 2,400 goal on the S&P, so we're not going to cry over it after getting a 300-point drop from 2,850. 

Image result for kudlow tradeWe're not out of the woods yet, Trump is still President so anything can happen but, as I've been saying all year, Trade Wars were and still are my number one market fear and at least now we know the adminstration isn't completely ignoring well, everybody (as noted in the chart above), when making their policies.  

Meanwhile, let's accentuate the positive this morning and look at how close our indexes are coming to the bounce lines we predicted in Tuesday Morning's Report (see that post for details and math):

  • Dow 23,800 (weak) and 24,200 (strong) 

  • S&P 2,640 (weak) and 2,684 (strong)

  • Nasdaq 6,500 (weak) and 6,700 (strong)

  • NYSE 12,450 (weak) and 12,600 (strong)
  • NYSE at 12,468
  • Russell 1,520 (weak) and 1,540 (strong)

So, as exciting as this recovery is – we're not there yet, though this is a big save and puts us back on a possibly bullish track but we MUST clear those strong bounce lines into the Weekend and then, as I said a week ago – it's really up to earnings, which start in earnest when the Big Banks report next Friday (and we decided they would start out pretty well).  In fact, for our Members in yesterday's Live Chat Room, we played:

  • If you think you need a bullish hedge, XLF should be fun at $27.62 and the April $27 ($1)/$27.50 (0.65) bull call spread at 0.35 pays 0.50 if they hold $27.50 and that's good for 0.15 (42%) in 16 days.

  • You could also combine it with  short C 2020 $65 puts at $6.50, say 3 of those short for $1,950 pays for 50 of the spreads at $1,750 with $200 left as a credit (net $64.33 on 300 C) with the quick $1,500 upside if the bull call spread pays off.  

  • Also works with WFC, where you can sell the 2020 $50 puts for $5 so maybe 4 short there collects $2,000 and nets a $250 credit in that case.

We're not there yet for adding a more longs from our Watch List but, if we're two months away from even potential Trade Wars and making progress on NAFTA, then we can expect at least a good start to the season as the big financials weigh in with some good news.  In fact, JP Morgan's (JPM) Jaime Dimon just said things are looking very good for Q1.

Today we'll see if we can make and then hold those strong bounce lines but a rejection there will have us shorting the indexes again very quickly.

 


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  1. So Friday, Monday and Tuesday cancel each other… I guess we trade on Wednesday and take the rest of the week off.


  2. Good Morning… HMNY shares up 11% pre-market on …

    MoviePass and Moviefone join forces

    Helios and Matheson Analytics (NASDAQ:HMNY) announces that it acquired Moviefone from Verizon (NYSE:VZ) subsidiary Oath Inc. in what the company calls a "natural alignment" with its MoviePass business.

    The company says Oath will continue to sell Moviefone’s digital ad inventory.

    Oath and Verizon have taken an ownership stake in MoviePass through equity in Helios in connection with the transaction.

    "This investment in digital content expands MoviePass’ reach further into multiple Hollywood touchpoints,” says MoviePass exec Khalid Itum.

    "We believe the acquisition will allow us to connect studios and brands with potential new subscribers, capture their attention, and convert them into paying subscribers," he adds.

    Source: Press Release

    Shares of Helios are up 11.75% premarket to $3.33.


  3. The post office loses money not because of Amazon, but because of Congress:

    https://www.bloomberg.com/view/articles/2018-04-04/congress-not-amazon-messed-up-the-u-s-postal-service

    They are trying all they can to make it not competitive. I guess on the road to privatization!


  4. Goiod morning! 

    It's a travel day for me so I'll be in and out but back at the Command Center tomorrow morning.

    FNSR/DC – Silly they sold off so much over AAPL.

    Big Chart – Of course NYSE must hold the 200 dma but that looks safe for now.  Now someone has to make the 50 dma and it looks like RUT should be first at 1,546.50 so long the laggard (probably /YM) if that happens.

    Wednesdays only/StJ – Let's see, no Mon at 55,  no Fri at 60, Tues/Thurs only at 65 and just Wednesdays at 70 – sounds like a plan…

    HMNY/Learner – That's a huge thing.  

    Congress/StJ – So true.  All they have to do is raise the price of a stamp by a nickel and all would be fixed. 


  5. The Dollar is back over 90 so they can drop that to goose the markets if they want.  

    Watch out for any of the levels that are now Green (or black) to turn red – that's a good sign to short the indexes.  6,650 on /NQ is a good line and it's lined up with 24,350, 2,660 and 1,540.


  6. Out of /SI, $675 a contract, Thanks Phil!   Safe travels home.

    HMNY -  Mark Cuban Theatre group signs deal with Movie Pass and a few interesting people join the company.   


  7. ~~Natural gas inventory showed a draw of 29 bcf vs a draw of 63 bcf in the prior week.


  8. FU HMNY!!!!!! WTF? 


  9. Back in NGV8 at 2.796 entry


  10. Good job Grass.  When you get quick profits – take them!

    /NG/Albo – Didn't help at all, down sharply off that report.

    Seems silly to me, $2.65 or even $2.66 is a good buy line.  That's $2.80 on /NGV8

    Dollar still up at 90.18 – that makes the index moves more impressive.

    • Stocks open higher, helped by tech stocks, as the Dow and Nasdaq push for a third straight daily gain for the first time in several weeks; Dow +0.5%, S&P and Nasdaq both +0.3%.
    • European bourses are broadly higher following yesterday's turnaround rally in the U.S., with Germany's DAX +2.5%, France's CAC +2.1% and U.K.'s FTSE +1.7%; in Asia, Japan's Nikkei finished +1.5% while China's Shanghai Composite was closed.
    • In corporate news, Facebook +2.4% in early trading after CEO Mark Zuckerberg said he has not seen a noticeable change in user behavior in the wake of the Cambridge Analytica data scandal.
    • The energy group (+1.2%) shows particular strength so far, while the rate-sensitive utilities sector (-0.7%) is the weakest performer.
    • The latest U.S. weekly initial jobless claims count totaled a slightly higher than expected 242K, but Treasury prices showed little reaction; the yield on the benchmark 10-year note is up 2 bps at 2.81%, roughly where it stood ahead of the release.
    • The Bloomberg Consumer Comfort Index rose to 57.2 from 56.8 for the week ending on March 31.
    • The State of the Economy index fell to 57.8 from 58.7.
    • The Personal Finance index rose to 64.7 from 63.8.
    • The Buying Climate index improved to 49.1 from 47.8.
    • Average U.S. mortgage rates fell for the second straight week, according to the latest survey from Freddie Mac.
    • The 30-year fixed-rate mortgage averaged 4.40% during the week ending April 5, down from 4.44% last week, and the average 15-year fixed-rate mortgage fell to 3.87% from 3.90% a week ago.
    • A year ago at this time, the 30-year and 15-year fixed rates averaged a respective 4.10% and 3.36%.
    • The "anything goes" market for high-yield paper is no more, write Sally Bakewell and Ruth McGavin at Bloomberg.
    • Covenants had been easing for years, culminating with many getting burned thanks to soft terms for the 2016 J. Crew deal.
    • This year, though, investors balked at terms for the $7B Coty deal which would have allowed the company to move investments beyond creditors' reach. Those terms were eliminated from the final offering.
    • And last week, investors forced American Greetings Corp. to put in stronger limits on how much cash the company could return to its P-E owners.
    • It's been three years of subpar performance, and investors in Pershing Square Capital are rushing for the exits, writes David Benoit in the WSJ.
    • Among them is longtime backer Blackstone, and JPMorgan is no longer recommending Pershing to clients. Total assets are down to $8.2B vs. $20B less than three years ago (pre-Valeant).
    • Caps on the amount investors can pull out each year, however, will protect Pershing from a "run" which could force it to unload large holdings like ADP, Mondelez (NASDAQ:MDLZ), Restaurant Brands (NYSE:QSR), and Chipotle (NYSE:CMG) at fire-sale prices.
    • Ackman continues to exude nothing but confidence in his portfolio – both publicly and privately to friends – according to the story.

    • The most accurate sterling forecasters see the currency up more than 8% this year. Argentex LLP, which holds the top position for forecasting the pound according to a Bloomberg ranking, sees the currency ending the year at $1.46.
    • “Brexit risks are overplayed, my view is that agreements will be made,” said John Goldie, a dealer at Argentex. “While there is inevitable struggle over this period, I don’t think things have been nearly as bad as previously thought. There is room for the BOE to consider a second rate hike this year. If that expectation gathers ground, that’s another reason to see sterling move higher.”
    • Trade wars and protectionism are wild cards and may sway bullish outlooks according to analysts.
    • “The number one downside risk to our forecast is an escalation of global trade friction,” MUFG’s Derek Halpenny said. “A deteriorating backdrop on trade is certainly not the most favorable type of scenario as the U.K. goes into negotiations on a final trade deal.”
    • The Reserve Bank of India sparked a rally in local bond markets as it held rates for the fourth consecutive time, and also cut its inflation outlook on lower food prices.
    • “The Goldilocks scenario that the RBI has outlined for the new fiscal year could very well indicate rates on hold for the whole year,” says economist Rajni Thakur.
    • The monetary policy committee kept the benchmark repurchase rate at 6%, as expected by all 42 economists in a Bloomberg survey. 
    • “Overall food inflation should remain under check on the assumption of a normal monsoon and effective supply management by the government,” the RBI said in its statement.

    GE to restate 2016-17 earnings under new standard by April 13

    • General Electric (NYSE:GE) it plans to provide restated results for 2016 and 2017 by April 13 to reflect a new accounting standard that takes into account revenue from long-term contracts, according to a letter to investors.
    • GE had said in February that it expected to take a $4.2B accounting charge as it switches to the new standard.
    • GE also says it will report Q1 earnings on April 20 under the new standard, which will have no impact on its 2018 forecast.

    Facebook +3.6%; worst is over, says Deutsche Bank

    • "The worst is likely behind" at Facebook (NASDAQ:FB), Detusche Bank says in an update after hearing company CEO Mark Zuckerberg speak to reporters last night.
    • Shares are up 3.6% premarket after closing fractionally down yesterday.
    • In particular, a contrite Zuckerberg said Facebook isn't seeing meaningful impact to advertising or users from the Cambridge Analytica data-handling scandal.
    • “We suspect that looking back a year from now, if not sooner, this episode will have been a uniquely compelling buying opportunity in the megacap Internet space,” analyst Lloyd Walmsley says, while cautioning that "admittedly a lot rides on Zuckerberg’s Congressional testimony” in the coming week, and he looks to that and an April 25 earnings call as catalysts. (h/t Bloomberg)
    • Meanwhile, BofA Merrill Lynch is maintaining its Buy rating and a $210 price target, implying 35% upside.

    Amazon Key gets more locks; Trump tweets about Amazon again

    • Amazon’s (NASDAQ:AMZN) Key delivery service now supports eight different smart locks with the addition of three Kwikset models and two Yale locks.
    • Those two manufactures account for all of the supported smart locks. 
    • Amazon Key allows users to have a package delivered inside of their home using a one-time lock code and an Amazon Cloud Cam for security. 
    • In other Amazon news, President Trump tweets about the company yet again. The complaint this time is Chinese tariff coverage in The Washington Post, which is personally owned by Amazon founder Jeff Bezos. 

    Citi reiterates Apple Buy on capital returns

    • Citi reiterates its Buy rating for Apple (NASDAQ:AAPL) and $200 price target, a 17% upside to yesterday’s close.
    • The firm says Apple will use its tax reform proceeds to significant increase its capital allocation. 
    • Analyst Jim Suva: “We do expect volatility ahead as consensus estimates calibrate to lower March and June quarters given more tempered demand for iPhone X. Looking ahead, we expect investor focus to be on the impact from Apple’s capital returns strategy, which we estimate could be a $100B increase, the 2H18 lineup, and continued strength in Apple’s Services segment.” 
    • Apple shares are up 0.8% premarket to $172.92.  

  11. Futures/Phil- is there any differences between the different month futures contract besides the Days remaining? It's not like those weekly option where vol are lesser and spread is wider right?



  12. CTL

    CenturyLink: Temasek Holdings increases active stake to 11% (Prior 9.7%) .


  13. Futures/Dave – Well the difference is people are betting where the index will be at the end of that contract, so the amount varies with the sentiment – not different than options. To some extent, there will be less vol on longer contracts – especially with commodities.  

    Looks like we topped out so far at 24,600, 2,670, 6,650 and 1,550.  

    Strong bounces were 24,200, 2,680, 6,700 and 1,540, so it's a mixed bag and it depends now if we have 3 green or 3 red whether we call it bullish or bearish.  

    World food prices rise 1.1 percent in March: U.N. FAO

    • World food prices rose 1.1% M/M, 0.7% Y/Y to 172.8 in March driven by increases in grains and dairy costs, the United Nations food agency said on Thursday.
    • "Declines in price quotations for sugar and most vegetable oils were more than offset by increases for maize, wheat and most dairy products," FAO said in a statement.
    • The Food and Agriculture Organization's said global cereals output in 2017 was 2.646 billion tons, up 33 million tons from 2016, but it expected maize and wheat production to decline in 2018 based on early forecasts.
    • Eurozone sales increased at a slower rate of 0.1% M/M, 1.8% Y/Y compared to 0.5% M/M, 2.1.% Y/Y in February as shoppers cut back on non-food purchases indicating a slowdown of business in the start of the year.
    • Food, drink and tobacco sales grew after a month-on-month contraction and year-on-year stagnation in January.
    • Sales of pharmaceutical and medical goods and of automotive fuel rose during February after declines in January, but other non-food products either rose by less than in January or fell.

    • Australia is now beginning an investigation into whether Facebook (FB +2.2%) broke its privacy laws after the company acknowledged that data from 300,000 Australian users may have been used without authorization.
    • The country's privacy commissioner, Angelene Falk, will ""confer with regulatory authorities internationally" on the matter.
    • Meanwhile, adding to CEO Mark Zuckerberg's calendar is an appearance before a joint Senate hearing between that body's Commerce and Judiciary committees Tuesday. The two key panels will host “Facebook, Social Media Privacy, and the Use and Abuse of Data” at 2:15 p.m. ET that day.
    • Zuckerberg is already set to appear before the House Energy and Commerce Committee next Wednesday.

     



  14. The Week in Fact-Checking: Malaysia is criminalizing fake news



  15. HIMX – might have put the bottom in last week. just tipped the 5dma back up.  if closes above it again, may be entry point.


  16. AMD/Phil – low in channel, trying to regain $10. Is there value in them around here? earnings outlook is pretty positive


  17. Amd/Scott- I’m in amd I think best is to sell the puts like $10 or $11.


  18. AMD/dave – thanks. there recent margins have been desperately thin.. less than 1% net income against revenue when they finally eeked out 'profit' this last year.  Is there room and or product mix that will give them more?  Comparing to ON (different sector, but better margins!) for silar market cap and ON has been magnitudes better.


  19. 'their' recent…


  20. similar market.. good grief 


  21. Good article on total addressable market for Tesla's Model 3.  I'm still short, even though I lightened up a little in the $250s.  

    https://seekingalpha.com/article/4160861-tesla-model-3-mass-market-vehicle


  22. Wow, these moves are just ridiculous:

    HIMX/Scott – What's special about them?

    AMD/Scott – Never my favorite and I don't see how $10 is "cheap" when they made 0.17 per share last year and, even if they double it – still not cheap.  Just because something was stupidly valued before and now it's come down to overvalued, doesn't mean you should bet on it getting stupidly valued again.

    In the past 3 years, AMD has lost net $1Bn, "improving" to $43M profit last year on $5Bn in sales.  Retailers laugh at their margins.  Compare it to INTC who have $62Bn in sales and drop $12Bn (20%) to the bottom line with a market cap of $235Bn, which is p/e 20 (which still isn't exciting but it's way better than AMD) and I can't understand why you would even consider AMD vs the top stock in their space. 

    ON/Scott, Dave – Way better pick!  $10Bn market cap, $5Bn in sales $800M in profit at about $1.70 per $24 share – THAT is interesting.

    TSLA/Palotay – What a comeback!

    Well, I have to fly – see you guys bright and early on a Non-Farm Friday!


  23. I had TSLA calls in the wrong week! So close!! I hate that!!! :(


  24. Ya gotta wonder if any of Trump's friends are getting tip offs to short the futures overnight whenever Trump proposes another stupid tariff.


  25. And then follow up tips to go long whenever his cabinet cronies are set to go on TV and say the exact opposite…


  26. I concur eMike, be nice to be a fly on the wall…

    long /YM here…  

    TIGHT TIGHT stops for me, but looks like a gift

     

    Long /NGV, /NGH, /SBN


  27. Out of /YM, way to bouncy for me….   How do you have tight stops on the indexes?   Before you know it… it bounces way past where you had a stop in mind, then… I find myself chasing it.   




  28. Samsung Electronics estimates 56 percent jump in profit



  29. Trump Doubles Down on Potential Trade War With China


  30. Donald Trump’s buy fear and sell greed


  31. Scarborough: When does the SEC come after Trump for lying about Amazon?


  32. Wow, looks like I missed some fun after hours!

    Oh well, time for bed and will see how this one plays out in the morning.   Just when we thought we might have to get bullish again… 


  33. Good morning and wheeee!  

    Back to good old 2,640 so this whole week didn't matter – which is generally how I like my vacations to go (though usually not up and down 100 S&P points:

    Senator Sasse sums up yesterday's action very well:

    “Hopefully the President is just blowing off steam again but, if he’s even half-serious, this is nuts.”

    Sen. Ben Sasse

    “China is guilty of many things, but the President has no actual plan to win right now,” Sen. Ben Sasse, R-Neb., said in a statement.

    “He’s threatening to light American agriculture on fire. Let’s absolutely take on Chinese bad behavior, but with a plan that punishes them instead of us. This is the dumbest possible way to do this,” he said.

    Sasse’s home state of Nebraska could be particularly hard-hit by retaliatory Chinese tariffs against U.S. agricultural exports.

    Earlier Thursday, Trump inflamed fears of a trade war with an announcement that he was seeking $100 billion in tariffs on top of the $50 billion already proposed for certain goods from China. Futures markets immediately slumped on fears that the move will make the already jittery stock market even more volatile.

     

    Reports @realDonaldTrump doubling down on China tariffs will tank markets for 2 reasons: 1) a trade war looks more likely and 2) it underscores that this is a president who thrives on confrontation and turbulence, traits sure to unnerve markets that prefer comity and stability

    Once again, the President engages in a policy that only helps Russia – yet no arrests will be made…

    We're still waiting for Non-Farm Payrolls (should be good, about 200,000) but now we have to see if the WH can walk back Trump's new statement but then that just makes him look out of control and unstable – not such a good thing.  Also, we have Consumer Credit at 3pm, that's likely to show some strain.

    Don't forget, we expected to drift around 2,640 into earnings – this is just a very rough way of doing it!  

    It's the same lines we were playing 6 weeks ago! 

    Probably longer – that's just one example I found…


  34. XLF trade, I am a bit tempted to buy back some of the 27.50 April I sold.