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What Now Wednesday – Trump’s Manic Tweets Cost Markets Half Their Gains

He's at it again.

In a tweet that was so bad at 7am that they have already pulled it by 8, Trump pushes the Nuclear Clock to 11:59:59.9 by threatening Syria and Russia with missile strikes.  Remember when Trump said you shouldn't tell your enemies your plans in advance?  Too bad he didn't stick to that. 

The tweet may be gone but the damage is done and the Futures have already given back half of yesterday's silly gains and it's going to be a busy data day with Fed Minutes at 2pm (which was going to bring down the markets anyway) but CPI is coming right up and Atlanta Fed is at 10, EIA at 10:30, a 10-year note auction at 1pm (we're borrowing $21Bn this week) and Bed Bath and Beyond earnings after the close, which I think will be very telling.

Of course, Trump can't stay mad at his Putie for too long and his last tweet (so far) has offered to reconcile by offering to "help with their (Russia's) economy" and "stop the arms race" Trump just started by cliaming to have "nice, new and smart" missiles.  

As noted by Bloomberg, A strike that hits Russian assets in Syria — even if unintentionally — could result in a dangerous game of one-upmanship, potentially dragging the U.S. further into a conflict the president wants to leave. Oil prices rose after Trump’s remarks, while U.S. stock futures fell and the Russian ruble slumped to the lowest level in 16 months.  Russia has already strengthened Syria’s air-defense capabilities, deploying S-400 missile batteries after U.S. strikes a year ago hit a Syrian base.

Image result for trump putin nuclearThe most important thing about a U.S. strike is the potential for Russian casualties as a result of any military activity there,” said Ayham Kamel, head of Middle East and North Africa research at Eurasia Group. “That is where there’s a risk of an escalatory cycle that would be much more meaningful than attacking Assad’s forces.”  In March, Valery Gerasimov, chief of Russia’s General Staff, already warned the US that “in the event a threat arises to the lives of our servicemen, the Armed Forces of Russia will take retaliatory measures against both missiles and the carriers that use them.”

As I warned yesterday, just because China's Xi makes some vague promises about cooperating on trade doesn't mean the World is all fixed and the markets are ignoring what is very, very clearly a worsening macro enviroment.  As I noted to our Members this morning:

No change from my prediction all year, 2,640 will form up as the top of a channel that bottoms out around 2,400 (if we avoid WWIII and all-out trade war with China) and Q1 earnings should start well on Friday with Financials and large caps but, as we move into the meat of the S&P 500, cracks are likely to show that will force a bit of a revaluation and give us a shot towards 2,400, likely in May.

As you cans see from the daily chart, the S&P (and others) has by gyrating wildly for the past few weeks but generally below the 2,640 line and, if we break down below 2,550 to 2,400, it will establish 2,640 as a very serious top and opens us to the possibility of another 10% drop below that if we have another round of bad news.

Earnings will tell the tale and we're expecting them to deteriorate but we don't get into the meat of earnings season until the end of the month and into May so, for now, we'll look for early indications from the Consumer Products and Services Sectors and we'll ignore how much money the Big Banks are making when the Fed is handing them free money and they are jacking up the borrowing rates for consumers.  For the banking sector, current lending conditions remind me of the scene in Scarface where Pacino has a mountain of coke on his desk and just buries his face in it

Meanwhile, the World is still out there and here's what we're ignoring with all this other nonsense going on:

Are Trump's tweets this morning an attempt to distract us from the deepening investigation into his people and his Presidency?  Even if you think the President legitimately woke up and HAD to start World War III this morning, are these the kind of macro conditions that are likely to support near record-high valuations for equities?  

Be careful out there!

 


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  1. Remind again why the markets were cheering yesterday when this morning makes it clear again that our country is in the hand of an unstable person who is being enabled by a cowardly Congress! 


  2. Excellent chart:

    http://ritholtz.com/2018/04/how-much-i-know/

    And so appropriate in the White House right now for our expert President!


  3. Good morning, All!

    There will not be a webinar today.


  4. Good morning! 

    I have a lunch meeting with Jim Heckman from theMaven (MVEN), who PSW will be working with on a new project.  I met their team last night and it's a typical SV Startup crew but lots of good guys and I'll let you know if I think they are investable as the week goes on and I learn more.  PSWI will be getting stock from the venture in any case.  

    As a pure penny stock play, I'd say the fact that they are having a kick-off conference with 200 publishers at the 4 Seasons in Whistler indicates it's worth a toss at $1.50/share for a quick flip as the buzz goes around over the next week.  If the event goes well, just the buying of the people at the conference would overwhelm the stocks usual $10-50,000 trading days! 

    Paul Ryan is not running for re-election!  That is the best news I've heard all year!  If only we can get Cruz out too….

    Big Chart – Goodbye Rut 1,540 (50 dma) – we hardly got to know you….

    Again, whatever the reason, if we keep gyrating between the 50 and 200 dma we get closer to forming a triangle squeezy thingy with a death cross right into earnings – Yikes!  

    Cowardly Congress/StJ – My daughter asked me the other day "why doesn't checks and balances work"?  Hard to answer without being cynical.  

    By the way, I'm up in Whistler at the 4 Seasons so lots of rich and famous from the states and yes, they probably lean liberal but it's amazing how many people I talk to who are formulating an escape plan if Trump is still President in two years.  Not idle talk, people are buying houses and establishing business ties in other countries (making it easier to get a visa) "just in case".

    I'm here until about 2pm today as I have a lunch meeting.  Tomorrow very doubtful after 11:30.


  5. Phill/  I have the following position on HMNY and loosing money on all these trades and would like your suggestion.  BTW, these trades are in the retirement account.

    (1) 1000 shares bought it at the total cost of $7980.00 and loosing $5120 on this trade

    (2) Sold 2 Aug18 Strike $7.5 puts for a total of $640 and loosing $360 on this trade

    (3) Sold 10 Aug18 Strike $5 puts for a total of  $1750 and loosing $975.00 on this trade.

    Thanks.


  6. Markets shaking off the bad news already.  

    Dollar tested 89, good long on /DX down there with tight stops below. 

    Oil $66.44 and I already shorted one /RB at $2.0427 from yesterday and we're still there so I'll leave that and work into a couple of /CL shorts ahead of inventory.

    API was kind of neutral with Distillate draw offsetting gains in oil and gasoline but those headlines, if consistent at 10:30, will send them lower most likely:

    Crude +1.76M Gasoline +2.01M Distillate -3.85M Cushing +1.45M

    Just looking to grab quick profits off the initial reaction.


  7. yodi, what is the "TURBO C. same stock 50.48".

    do you mean Citibank?


  8. Good Morning.


  9. Ryan/Phil  Amazing!  You really should come out West more often. Glad you're feeling better!   :)


  10. HMNY/Rookie – You are in for $7.98/share?  

    First of all, if a stock drops 20% on you you either stop out or plan to DD on another 20% drop so you average 20% lower on 2x.  The next 20% down you either stop out or plan to DD 20% lower for 4x at an average of 30% off, etc.  Any time you are not willing to DD if the stock drops another 20%, you should be stopping out.

    If a stock is at $10 and you buy 1x more at $6 that's $8 avg when the stock is at $6 and then, if you DD at $4, you have 4x at $6 avg and again at $2 is 8x at $4 avg for $32 spent to own 8x when your original play was 1x at $10.  If 1x at $10 was a 1/4 allocation block, that means you have still only used 3.2/4 of an allocation block and you are down $12 of a $40 allocation (30%) even though the stock is now down 80% from where you started.  

    If your allocation blocks are no more than 10% of your portfolio, then you take a 3% loss at that point if you decide they can't come back from $2.

    So, with HMNY, you bought 1,000 shares for $7.98 and sold 2 puts and 10 calls for $2,390 so net $5,590 and you are obligated to buy 200 more shares at $7.50 ($1,500).  Oops, you didn't sell calls, you sold more puts, which is WRONG because you weren't being the house and selling premium.  And what is this complete BS selling Aug puts – who taught you to do that and NOT collect another 18 months of premium by selling the 2020s?

    So, with HMNY you paid net $5,590 but you promised to buy 200 more at $7.50 and 1,000 more at $5 and you didn't sell any calls so this trade is ugly instead of easy to fix.  Still, at this point you are in for $5,590 + 200 @ $7.50 ($1,500) and 1,000 at $5 ($5,000) so 2,200 at $12,090 or $5.49/share.

    Rather than convert though, I'd roll the 12 Aug puts ($3,800) to 10 of the 2020 $5 puts at $3.50 ($3,500) so now you are in 1,000 shares for $5,890 and now you can sell the stock ($2.80 = $2,800) and buy 50 of the 2020 $2.50 ($1.35)/$5 ($1) for 0.35 ($1,750) which leaves you in $12,500 worth of spreads for net $4,840 with the 10 short $5 puts so at $5 you still more than double your money and worst case is you are assigned 1,000 at net $9.84.  

    Better/1020 – I do love it out here, think I'll take a few weeks in the fall.


  11. rookie— looks like we need to pray for HMNY to stop dropping..;-(


  12. ?Phil – You're not only West, but Canada as well….a Progressive's Shangri-La!


  13. Lunar the stock is WSM now at 50.68 and the C stands for TURBO CHARGED!


  14. 2,650 on /ES again, still a fun shorting line.  

    Lined up with 24,250 (usually 350), 6,615 and 1,547.50.

    /SI blasting to $16.75, /YG 1,355.  

    Progressive/1020 – I notice Vancouver got way more conservative than last time I was out here.  Didn't see that coming.


  15. Jabo:  Agreed :-)


  16. Advil. I was to scared to stop in Barcelona, just my German number plates would have been a taget. We made a bow around it. But nextime we will meet somewhere some place!


  17. Scared/Yodi – Cancun is certainly falling apart! 

    Mexico’s party hotspot Cancun sees 14 murdered in 36 hours as tourist town is overrun by drug gang violence

    Do you even go to Mexico anymore?


  18. Vancouver – Really?  Could it be all the new residents from the Far East?….


  19. Vancouver/1020 – It's the oligarchs, they are taking control everywhere.  Rising rents and home prices drive out the poors and hands them voting control and they quickly change the face of cities.  

    EIA:

    • Oil up 3.3Mb
    • Gasoline down 0.5Mb
    • Distillates down 1Mb 

    Overalll it's worse than API so should be a winner for our shorts!  

    Remember, quick money – tight stops! 


  20. Toronto may not be much different….. :(


  21. CL blasted up


  22. CL showing its normal rational side.


  23. I think someone just wanted oil to go to 6666 …


  24. I have 2 short /RB at 2.06. Will take quick profits 


  25. Best headline of the day … https://www.marketwatch.com/story/john-boehner-is-joining-a-marijuana-company-2018-04-11?mod=bnbh

    John B knows how to cope in a post trump world 


  26. Lol, that didn’t go as planned. 


  27. Avg. on 2 now 2.065


  28. This is amusing to me:

    John Boehner, former Republican speaker of the House of Representatives, and Bill Weld, a former Republican governor of Massachusetts who was the 2016 running mate of Libertarian presidential candidate Gary Johnson, are joining the advisory board of Acreage Holdings, which owns cannabis licenses and assets in the 30 stateswhere cannabis is approved for medical or recreational use.


  29. Phil Cancun, Yolanda visits her family but I stay in Europe, have given up on the place.


  30. From Briefing "

    ~~•There were two loud blasts heard in Riyadh… Saudi Arabia capital
    •News shows there was a rocket intercepted over Riyadh.
     


  31. the market doesn't care about Syria or Russia. The former has no economy, and if the latter were a US state, it wouldn't even be in the top 3. What the global market cares about is the world's biggest economy and the fiat currency that represents it.

    To that end, I'm reading words like "brutal" and "frightening." The "moral values" and "fiscal responsibility" of the Republican party have been revealed as an utter and total fraud, a con-job of euphemisms that represent a minority of authoritative, white privilege at-all-costs tribalists. These non-sensically gun-gorified, zero self-worth national socialists will stop at nothing to oppress their anti-freedom filth on the rest of us, including burning the house down like petulant, snowflakey miserable children that they are if they don't get their whittle-bitty-waa-waa way. They'll burn it all down. If you don't believe me I have one word for you: Trump.


  32. GE news

    Mark Keller, chief executive and chief investment officer of Confluence Investment Management, focuses on conglomerates, so it's not surprising that the advisor had held a large position in General Electric.

    What's surprising is that Confluence, which is based in St. Louis, sold in the first quarter all 2.8 million GE (ticker: GE) shares that it had held at the end of 2017, according to regulatory filings. Perhaps Keller saw, as we noted in Barron's Feb. 17 cover story , that "GE's best days may lie in the past."


  33. Long /RBM @ 2.0545 one contract… longer time to play, for that just in case syndrome.    

    Nice little 5 cent spike in /NG this AM.    


  34. daveH--looks ike we will need to be praying for GE to also stop going down… dangit!


  35. Gold breaking out to 2 month high  Wouldn't be surprised to see it test the $1400 level on this run.

    Long GLD calls even though I don't like paying the premium.


  36. John Bonger .. er..Boehner,,  whatever


  37. Wow, that was a crazy reverse on /CL.  I'm back short at $67.45 with a stop over $67.50 – I dare them!  /RB too at $2.075 – ridiculous!  

    Boehner/Malsg – Good fit for him.  Actually, I can't believe he's still alive – the guy never wasn't smoking something.

    I guess the Ryadh news is what spiked oil up like that – nice timing from Rent-A-Rebel to negate a bad oil report!  

    And how do you really feel, BDC?  surprise

    GE/Dave – I think I'll wait for their earnings before arranging a funeral.

    Speaking of explosions – they are blasting for avalanches up here – rocking the mountain.

    Gold/Albo – Just keep an eye on the Dollar, which is likely to bounce.  Gold also spiking off the explosions, I think.  There's also the inflation hedge angle, of course:

    Oops Mark:

    Here's a growth industry we can invest in:

    America has been successfully destroyed:


  38. This is why I'm a long-term, fundamental investor:


  39. phil/FTR, do you think they will pop $9 on this run?


  40. you laugh and ignore me at your own peril. I have a knack for being right.


  41. Boston forecast keeps getting worse. 20 mph head wind and heavy rain now. ug


  42. CL,RB/Phil- looking at latest results, still good short at this levels? thinking of taking the June contracts for longer duration, 67 for cl and 2.0688 rb.


  43. Phil, new bank earnings spread? I think you've discussed C and XLF recently


  44. Almost all green again as the Nas leads things higher.  Zuck continues to do well.

    FTR/Lunar – I think $9 is easy but $10 will be rough without positives from earnings/guidance.  Still, a very good run and they should consolidate between $9 and $10 before moving on to levels where Jabob will definitely be kissing my ass….

    Boston/BDC – Those poles are shifting, Boston may be the new North Pole…

    Oil/Dave – I have 4 short /CL at $66.75 avg and I wanted to DD at $67.50 but didn't make it.  On /RB I have 3 short at $2.057 avg and I need one more at 2.069 to avg $2.06 on 4, which is my goal.  I'm happy to go to lunch on those.

    Banks/JMD – I think we should see how they do before doubling down.


  45. been waiting impatiently Phil!!!!

     

    https://tenor.com/view/kiss-me-funny-gif-9281377


  46. Phil I don't have any bank exposure yet. Should I still wait?


  47. Took profits on /NG, /SB, though still holding 1 each /NGV, /NGH, /ZLN and 3 /SBN all long — after a nice spike up in /NG and /SB.    Short 2 /RBM8 @ $2.0628 avg now.  Thank you for the guidance Phil.


  48. Further to this morning’s plays, I do have IP in my long armchair play with grinding out 2.48% per month. The stock still is at the lower range and will make his declaration I think 5/20. I entered a TURBO CHARGER by buying the stock and sell a May 52.5/53 strangle at 3.31, showing a monthly return of 5.34 % per month. Up and down protection 56.31/49.19.


  49. Oil/Phil- will you hold it into the weekend?


  50. Banks/JMD – I think the Big Banks will give a good report on Friday but I think the smaller, regional banks will begin to show issues with loan quality and loan margins so I'm not really gung-ho, just think it's a good play on a few.

    You are welcome Grasshopper.  

    Image result for kung fu grasshopper meme

    Oil/Dave – Not if I make money before then! 


  51. armchair trades/Yodi- I have always wondered how does this armchair trades work, I understand that if in the end, the stock get's called away then I do not do anything letting everything expire or cancelled on each other. What if the stock drops down and I am assign with more stock? do I just do another strangle up? 

    Thanks for enlightenment 


  52. Oil/Phil- of course, I am looking at the 20day chart, was thinking to take profit around mid $65 range for CL and $2.03ish for RB? am I looking this right?


  53. Yodi, I have been meaning to check in on IP, thanks for the reminder.  Which options did you sell for May?


  54. HON/Phil – Honeywell has been on a LONG time watchlist for me. finally has had a big of a pause/pullback. Can't know if is going to continue down or not. Is there a place you see value/entry for them? 


  55. And how do you really feel?/Phil  Read a bit on the dark side….Did you know that Seattle averages 152 rainy days a year?…. ;)


  56. …bit of a pullback…


  57. There is so much more to be optimistic about in the months ahead – I too, have a 'knack' for being right… :)


  58. minutes out


  59. Well, no surprises in the Fed minutes, now we'll see what levels stick.

    Oil/Dave – I very rarely hold it overnight as it's so dangerous but, if I'm wrong during the day and I have conviction, then I might let it go a day or two.  It's not about charts.  Right now, weak dollar should bounce and war talk in Syria and Missile thing were unusual events that boosted oil despite a poor data report so I feel those will wash out by tomorrow.

    HON/Scott – Remind me tomorrow AM, I'm off to a lunch now. 

    Seattle/1020 – As a kid who spent many summers in England, I quite like the rain…

    No major moves so far – enjoy the day, I'll touch base later.


  60. Mike Bought the stock at52.45 and sold the strangle ( call 53 and put 52.5) combined credit 3.31.

    Let me know if you come clear with this. Happy to help


  61. Paul Ryan’s Sad Legacy


  62. Thanks Yodi, looks like you transacted in the weekly options for 11th of May (I didn't see a $53 call for monthly 18th of May expiration), did I get that right?


  63. Mike you right it is the play of 11 May


  64. Donald Trump’s resignation is officially on the table


  65. Meet the New Robot Army


  66. Mike as explained before, the Turbo Charged plays are short term plays. You do center on a stock, where you feel has potential, and you like even if assigned. In the assigned position you can set up again a short or a longer armchair play. In case you called you just lend up with the cash. I personally do not like to enter these type of plays with stock, being on top of the ladder. At present we do have a very unstable type of market. Matter of fact, with this clown, you can expect anything from day to day. I bet you the guy will inform his broker before his next tweet.


  67. 4/11/2018 Cowen has cut its price target for General Electric (GE) to $12 from $15.

    The firm has maintained its rating of market perform for shares.


  68. SNA – Snap-On, another long time watchlist stock with big pullback to 20Y  daily/monthly/yearly trend support lines. Maybe still a falling knife (not entering now) but putting back into regular watch list. Not big option market for them however…but proper buy/writes are possible.  


  69. FU COWEN!!!!!!!!


  70. FB – back to where big buying supported on 3/20, 3/21. If it can't reclaim and hold 170… how much will bail out?


  71. CERN – why has this been dropping down? Seems to have very manageable debt, generates income and cash no problem, pays no dividend. forward earnings expectations are higher… very tempting if this gets to 55 to sell some $50 puts


  72. CERN… is Watson going to drink their milkshake?


  73. CVS,WBA/Phil – both are in a long slow slide.. ever coming back/find support or is the retail pharmacy/drugstore model going to evaporate?


  74. Not the best of finish! IMO, the trend is still down. And the market is not going to get help from Washington any time soon, quite the contrary it seems.


  75. Not a good finish it all.


  76. /RB and /CL back up to 2.07. I can’t see why. Probably just the boys screwing with me after I put a buy order in to buy one back. 


  77. Funny Jeffdoc, seems like it always works that way, eh?  We must have put our buy orders in at the same time.  

    Long /RBM avg 2.0585 and /CLM avg. 66.73  2 each  

    Will /RB, /CL spike up, if rockets start flying in Syria?  If so, I am inclined to cut my losses and wait for another entry point. 


  78. Short… not, long.  


  79. BBBY guidance disappoints, down 14% in AH. damn


  80. Wheeee….  /RB and /CL….  

    BBBY/Phil - I wasn't able to get into the trade a while back, looking for a new entry, if you feel they are being mistreated.  


  81. Phil,

    What’s your exit on /RB and /CL?


  82. Good morning!

    Nice move down on /CL and /RB so all is well.

    Futures being jammed up another half a point fr no particular reason and the Dollar is back to 89.5 and we'll see if it can get over that line.

    CVS/Scott – I think they are both long-term value plays.  Why are drug stores suddenly bad business after consolidation in the space with an aging population?  I think the war on opioids has people worried but people will keep taking pills.

    BBBY/Dave – What a shame, earnings were good too, getting killed on guidance, which does not bode well for Retail.

    Exits/Japar – As I said, we're in for the quick money so, at $66.36, my stop is $63.51 and at $2.0459, my stop is $2.0475 – TIGHT!!!  On /RB, I'm up $2,000+ so of course I want to lock $2,000 in.  With /CL it's $1,600 so $1,500 gets locked in as + $3,500 is a good way to start the day – so why blow it?