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Monday Market Movement – S&P 500 Channel Narrows into Earnings

When February started, the S&P looked like this:

Now May is starting and the S&P looks like this:

It's like we've simply zoomed in on the exact same chart but that "zoom" means we've cut 1.67% off the range and now the S&P is stuck in a 3% range, between roughly 2,600 and 2,700 and, if we zoom out a bit more, we see that tightening range is wedged right between the 200-day moving average at 2,611 and the 50-day moving average at 2,688 and the narrower this range gets, the more those averages squeeze together leading to a very exciting resolution at some point.

Remember, the 5% Rule™ is not TA, it's just math but we illustrate the math on charts – that's all they are good for, really.  Charts tell you where you've been, not where you're going and, if you want to stay ahead of the market, you should use the 5% Rule™ – because it tells you which way the markets are heading.  In January the 5% Rule™ told us the markets were wrong and the rally was overdone.  That's why our Short-Term Portfolio is up 85% for the year – because we made the right bet at the right time.

Image result for buffett be greedy when others are fearfulKnowing the bottom of our range lets us know when to buy while other are panicking that there is no bottom and knowing the top of our range lets us know when it's time to cover or sell to the suckers who think rallies will last forever.  What the 5% Rule does, in essense is simply to reinforce Warren Buffet's adage to "Be fearful when others are greedy and be greedy when others are fearful.”

This is not a complicated concept – almost any value investor knows it but there are very few of us value investors left in the World and most of the trading world acts more like the audience in a Bugs Bunny cartoon – stampeding in and out of the positions (5:00) whenever somebody throws a switch.  At Philstockworld, we teach our Members to just sit back, relax and enjoy the show and boy, do we get our money's worth!  

In Member Chat last week, as well as our Live Trading Webinar, we went over our Watch List and there are still over a dozen stocks we like that can be bought cheaply and, as earnings wind down this season, I bet we will be able to add a dozen more value stocks to the list.

One still ridiculously cheap stock on our Watch List is LBrands (LB), the owners of Victoria Secret, Pink and Bath and Body Works – where your kids always go to get Mom a present.  LB was our Trade of the Year when it was $35 last year and we cashed out when it hit $60, because $60 was as stupidly high as $35 is stupidly low but $45-50 is a very good target so we can take advantage of this channel and set up the following trade (we already are long LB in all our portfolios):

  • Sell 5 LB 2020 $30 puts for $5.20 ($1,600) 
  • Buy 10 LB 2020 $30 calls for $8.50 ($8,500) 
  • Sell 10 LB 2020 $35 calls for $6 ($6,000) 

That's a net $100 credit on a $5,000 spread that is 100% in the money to start so all LB has to do is not be lower than $35 in Jan 2020 and you get a 51x (5,100%) return on your $100 credit.  It's also a margin-efficient trade as the worst thing that can happen to you is you are forced to buy 500 shares of LB for $30 (less the $100 you collected) or 15% below the current price – that's your WORST case and then you get a $2.40/share dividend for your troubles

The ordinary margin on the short puts us $1,269 so it's a very efficent way to make $5,000.  It's funny to call this an earnings play as it has a 2-year time-frame but earnings are the week of the 15th (no date yet) and that $100 credit can turn into $500 very quickly after that if things go well – or even not as badly as expected.  

There are many, many undervalued companies out there so there's really no need to chase after Amazon (AMZN) at $1,600/share against their $10 of projected earnings (p/e 160) and maybe their profits go up 50% in 2019 ($15) and let's pretend they double in 2020 to $30, that's still getting $55 back on $1,600 (0.34%) while LB will likely return $10 in earnings and $7.50 in dividends which is $17.50 or 58% of our worst-case entry.

Of course you might get lucky with AMZN or NFLX or TSLA but, over a career investing – do you think you are likely to beat a strategy that returns 58% through earnings every 3 years vs the one that returns 1/3 of 1%?  This is why we prefer value investing – there are plenty of companies out there that actually make great returns for their investors, not in stock price – but in CASH!!! that they produce on the bottom line.  When it all hits the fan – which ones do you want in your portfolio?

Another 1/3 of the S&P 500 report this week so 2/3 done with earnings after this.  The Fed has a rate decision on Wednesday (2pm) and then Non-Farm Payrolls on Friday so it's going to be an exciting week to play – stay tuned for the action! 

 

 

 


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  1. The top 1% keep getting richer because they can diversify and not be tied up in investing in their pimary home::

    https://www.bloomberg.com/view/articles/2017-08-28/how-the-top-1-keeps-getting-richer

    But there’s one big reason why the rich still come out ahead — instead of stocks, the middle class puts a large share of its wealth into residential real estate. Houses tend to earn lower returns than stocks.

    But hey, let's give them another tax cut!


  2. Good Morning.


  3. Phil/MVEN

    Nice movement up today.



  4. Good morning!  

    Still waiting for those 50 dmas on the Big Chart and it's window-dressing day so it counts even less than most Mondays. 

    MVEN/DC – They seem to be plowing ahead.

    Trade/Den – Also we're apparently not being all that nice even to our allies on Trade – Trade War is still my top bubble-popping concern.

    Trump Tariff Decision Looms, Setting Up a Global Nail Biter

    China’s Factory Activity Decelerates in April

    Dollar Roars as U.S. Growth Story Wins Over World Markets

    U.S. Consumer Spending Rebounded in March

    Inflation Hit Fed’s 2% Target in March

    Inflation Upturn Could Force Fed to Clarify Rate Intentions

    Foreign Investors Lose Some Hunger for U.S. Debt

    Sprint, T-Mobile Merger Deal to Test Antitrust Regulators

    Retail’s Other Problem: Too Few Clerks in the Store

    Amazon Taking Over the World? Not in Europe

    This is interesting, WMT taking a big loss in the UK:

    WMT's ASDA was all about cheap but Sainsbury's was all about quality at reasonable prices.  Sainsbury won by keeping things fresh and local.  

    Seven Jobs Robots Will Create—or Expand

    Artificial intelligence threatens to destroy a lot of jobs. But there’s another side to the story.


  5. /SI took a nice dip, doubled down as planned so 2 @ $16.46 now.

    Back in 2 /NGV8 @ $2.785 too. 

    /NG about 0.05 lower.


  6. Wow, so much for that rally!   Home sales worried people but Duh! with rates popping:

    Spending still outpacing income:  Core PCE rises in-line with forecast
    • March Personal Income and Outlays: Income +0.3% M/M vs. +0.4% consensus, +0.4% prior.
    • Consumer spending +0.4% in-line with consensus, +0.2% prior.
    • Core PCE Price Index +0.2% M/M in-line with consensus, +0.3% prior.

    During March, they went up and up (30-year down) and a lot of people miss a cut-off when that happens as it was about half a point.  In late March and early April, as rates dropped, a lot of people probably locked in so this number should be better next month (April's results).  

    /SI already at $16.46 so that's my stop on 1/2 now (even).

    The "failing NY Times" 

    • The New York Times Co. (NYSE:NYT) is up 4.5% premarket after an upgrade to Overweight at JPMorgan, which sees a company accelerating away from a "declining print business focused on cost-cutting" toward a digital growth company.
    • The firm has bumped its price target to $27 from $25, implying 16.4% upside from this morning's higher price.
    • The stock's up 20% YTD.

    If you are surprised by this chart – then you were indeed influenced by "fake news" via our Liar in Chief . 

    • Stocks start higher, sparked by strong earnings reports and a flurry of deals; Dow +0.7%, Nasdaq +0.5%, S&P +0.4%.
    • European bourses are little changed, with France's CAC +0.3%, U.K.'s FTSE +0.1% and Germany's DAX flat; in Asia, Japan's Nikkei and China's Shanghai Composite both were closed.
    • In corporate news, McDonald's +4.5% after reporting better than expected quarterly earnings and revenues, but Sprint -12.1% after reaching an all-stock merger agreement with T-Mobile US (-5.3%) over the weekend.
    • Meanwhile, Marathon Petroleum (-5.3%) is buying oil refiner Andeavor (+14.2%) for $23B, Prologis (-2.3%) is acquiring DCT Industrial Trust (+12%) for $8.4B in an all-stock deal, and Marriott Vacations (-6.3%) is purchasing rival ILG (+6.4%) for $4.7B.
    • Most S&P sectors are higher, led by financials (+0.7%), technology (+0.7%) and consumer discretionary (+0.6%).
    • U.S. Treasurys are mixed, with the benchmark 10-year yield down a basis point at 2.95% and the two-year yield up by a basis point at 2.49%.
    • WTI crude oil -0.6% to $67.65/bbl.
    • McDonald's (NYSE:MCD) reports global comparable-store sales increased 5.5% in Q1 to easily beat the consensus estimate of +3.8%.
    • Comparable-store sales increased 2.9% in the U.S. to top the 2.7% rise expected. Menu price increases and product mix both contributed to growth.
    • International Lead Markets segment comparable-store sales were up 7.8% vs. +4.4% expected, while comparable sales increased 4.7% in the High Growth Markets segment vs. +3.8% expected.
    • The company's operating income for the quarter was $2.14B vs. $2.04B a year ago. Higher franchised store margins helped to offset lower company-operated store margins.
    • "We continued to build upon the broad-based momentum of our business, marking 11 consecutive quarters of positive comparable sales and our fifth consecutive quarter of positive guest counts," says CEO Steve Easterbrook.
    • MCD +3.66% premarket to $164.11.
    • Previously: McDonald's beats by $0.12, beats on revenue (April 30)
    • Lame growth (in part thanks to the bank's regulatory issues and resulting Fed restrictions) is fully baked into the stock price, says analyst David Konrad, giving Wells Fargo (NYSE:WFC) a two-notch upgrade from Underperform to Outperform.
    • Instead, look to positive catalysts like lower expenses going forward and a likely pass of the Fed's stress tests.
    • Conrad's $61 price target suggests 16.5% upside from Friday's close.
    • Source: Bloomberg
    • Shares up 1% premarket

    Weighing The Week Ahead: Will Strong Economic Data Send Interest Rates Higher? 

    EU metal tariffs may come this week

    • Fearing tariffs on steel and aluminum imports, German business leaders voiced disappointment on Saturday about the outcome of talks between Chancellor Angela Merkel and President Trump.
    • "We had an exchange of views. The decision lies with the president," she said at a press conference.
    • Europe has been pushing for a definitive carve-out from the higher duties with temporary exemptions set to expire on May 1.

     

    • Russia's Prime Minister Dmitry Medvedev is backing the idea of making it a criminal offense for Russians to observe the sweeping sanctions imposed by the U.S.
    • The restrictions are aimed at destroying Russia's socio-political system and harming the economy and individuals, he declared, adding that the government should support sanctions-hit Russian companies to ensure that jobs are not lost.

    Soggy burritos for everyone!  Chipotle in national partnership with DoorDash

    • Chipotle (CMG -0.5%) announces a national delivery partnership with DoorDash.
    • The restaurant company says the new partnership makes Chipotle delivery available from more than 1.5K Chipotle restaurants across the U.S.
    • During Chipotle's Q1 earnings call (transcript), management indicated that the delivery business would be expanded due to strong demand.
    • Source: Press Release

    Teva down 2% premarket on Allergan sale of remaining stake

    • Teva Pharmaceutical Industries (NYSE:TEVA) slips 2% premarket on modest volume on the heels of the news that Allergan (NYSE:AGN) plans to divest its remaining 34M-share stake from the Actavis transaction.
    • Wynn Resorts (NASDAQ:WYNN) has renamed the $2.5B casino it's building outside of Boston to Encore (from Wynn) Boston Harbor as the company continues to distance itself from founder Steve Wynn after sexual misconduct allegations.
    • Massachusetts state regulators are also expected to issue a decision this week on whether he'll be considered a part of the project for regulatory purposes.
    • Sprint (NYSE:S) and T-Mobile (NASDAQ:TMUS) have made it official: They intend to get together.
    • They've entered into an all-stock transaction at an exchange of 0.10256 T-Mobile shares for each Sprint share, or equivalent to 9.75 Sprint shares for each T-Mobile share.
    • The $26B deal makes an implied enterprise value of about $59B for Sprint; about $146B for the combination. They expect run-rate cost synergies of $6B-plus, representing a net present value of more than $43B.
    • The combination will be called T-Mobile and be headquartered in Bellevue, Wash., with a second HQ in Sprint's home of Overland Park, Kan. T-Mobile chief John Legere will be CEO; Current T-Mobile Chief Operating Officer Mike Sievert will be COO of the combination.
    • Deutsche Telekom's Tim Hoettges, currently T-Mobile chairman, will be chairman of the new company; SoftBank's Masayoshi Son and Sprint CEO Marcelo Claure will serve on the board.
    • With a deal done, the focus will turn to a challenging road to regulatory approval for a deal that would leave the U.S. with three major wireless firms instead of four.
    • Previously: Report: Legere would lead Sprint/T-Mobile combo (Apr. 28 2018)
    • Previously: Sprint slips 11% as $24B value attached to T-Mobile deal (updated) (Apr. 27 2018)
    • Sprint (NYSE:S) is down 10.2% premarket as its covering analysts quickly turn into oddsmakers weighing what they say are slimmer than certain chances that its $26B merger with T-Mobilegets approved.
    • T-Mobile (NASDAQ:TMUS) is down 2.1% premarket for its part.
    • Analyst Craig Moffett gives the deal a 50/50 chance, while BTIG says it has less than a 40% chance of approval in an environment where U.S. regulators may be loath to allow wireless competition to drop to three major firms. The Justice Dept. is already fighting a vertical merger in AT&T and Time Warner, which many say reduces the odds it might go for a horizontal combination.
    • Cowen argues that the DOJ is likely to challenge this deal as well, while Makor Capital calls the deal "dead on arrival."
    • Wells Fargo has downgraded Sprint to Market Perform and given it a $6.25 price target (shares closed Friday at $6.50).
    • Meanwhile, Guggenheim has boosted Sprint to Neutral, and New Street has upgraded it to Buy.
    • T-Mobile is set to report earnings after the closing bell tomorrow and hold a conference call to discuss the report.
    • Huge box office numbers from Avengers: Infinity War could help provide a lift to the broad U.S. exhibitor sector.
    • The Disney superhero mashup generated the largest U.S. opening box office tally ever by clearing $250M. The film also earned an A CinemaScore, indicating that it may have strong box office legs.
    • Keep an eye on AMC Entertainment (NYSE:AMC), Reading International (NASDAQ:RDI), Cinemark Holdings (NYSE:CNK), Marcus Corporation (NYSE:MCS), iPic Entertainment (NASDAQ:IPIC) and IMAX (NYSE:IMAX). There's also MoviePass (NASDAQ:HMNY) to consider. Was the huge box office weekend a positive or negative for the theater subscription upstart?
    • Avengers fever… Disney's (NYSE:DISInfinity War has officially recorded the highest-grossing opening weekend in the history of cinema.
    • The film brought in $250M in the U.S. alone, besting the previous record-holder, Star Wars: The Force Awakens, which made just under $248M domestic upon its release.
    • More records are in store as the movie doesn't even come out in China until May 11.
    • President Trump has threatened to shut down the federal government in September if Congress doesn't provide more funding to build a wall on the border with Mexico.
    • "We will have no choice. We will close down the country because we need border security," he told a rally in Michigan.
    • However, support from fellow Republicans could be complicated as the shutdown would come before mid-term elections in November.

  7. Oil went flying:

    /KC plowing higher too:


  8. Good news in Texas offsets weakness in Chicago but it's all about oil:

    • Dallas Fed Manufacturing Survey: +21.8 vs. +18 consensus and +22.8 prior.
    • Production: +25.3 vs. +14.4 prior.
    • Capacity Utilization: +18.7 vs. +11.1 prior.
    • New Orders: +27.9 vs. +10.3 prior.

  9. NYT at +47% is my best position. The value of real news.


  10. The situation in is making the country unlivable (see: Hanke Misery Index). , which I found to be the 3rd most miserable country on earth, can’t handle the mass of migrants fleeing the humanitarian crisis at home.

    https://www.nytimes.com/2018/04/28/world/americas/venezuela-brazil-migrants.html?smid=tw-nytimesworld&smtyp=cur

    Ah, Israel attacked Syria:


  11. Wow, things really went south hard and fast!  


  12. phil – confirming 4 PM EDT tomorrow


  13. Yes Chris and we'll also set something up with the Web guys as well.


  14. Actually, BDC, the Web conf will be Thurs at 4:30 – please make yourself available for that as there are lots of people to collect.  


  15. the market's already red for the week! I didn't have time to get short. Turnip's economy is too easy. 2018: Volatility up and markets down! Sad!


  16. Thurs is fine (1:30 pacific I assume)


  17. Yes, 1:30 for you.





  18. in 1857 the US discontinued the half cent. Which is interesting considering it's worth about $0.125 today with inflation. The US cannot even commit to ending the penny, let alone the nickel and dime. The largest common currency back then, the $20 gold piece, is worth $500 today (face value – gold value is $1250+). 

    The US should discontinue the change and bring back the $500 and $1k bills. Why bother having anything under a quarter?








  19. It is funny.  Where have all the semi-conductor bull analysts gone?  They claimed MU was going to 100.  If it so valuable, why not LBO it.  MU wait for 40 or get in now?





  20. That way Mu would look better at 40. 45 still to high, no div just a value stock!


  21. Wow, Netanyahu just gave a slide presentation taken from documents stolen from Iran detailing their entire nuclear program.  It was very cool – like the end of a spy movie where the evidence gets to the guy who exposes the evil scheme to the World.   We'll see what the fallout (get it?) from this will be…

    Coins/BDC – I think coins are ridiculous at this point but so is cash, really.

    MU/That – I love them when they are low in the channel.  The 200 dma is $42 so that will probably be the bottom and $37.50 was the spike low in Feb but then they jumped to $63 in March – so it's a crazy stock in both directions.  

    IMAX is down for some reason.

    For DIS – One month until DeadPool2 and then Han Solo movie – I din't know who is betting against them or IMAX:

    The full list of Disney movies coming out in 2018 including trailers, cast, and more!

    So that's 6 big ones just from Disney that are left for the rest of the year.  DeadPool is not Dis, even though it's Marvel and there's another Jurassic World.

    /RB tested $2.15, /CL $69.50.   I don't think it's supported by so crazy it's hard to bet.  



  22. Trump makes another speech – markets turn even lower.  

    Not a good way to end the month.  

    I'm out of here at 3pm for a meeting, by the way.


  23. Britons Have Become Poorer


  24. You think Trump sent them a gift?


    • Lunch break at the DOJ/AT&T (T -0.3%) antitrust trial over the company's $85B takeover of Time Warner (TWX -0.9%), and the morning brought closing arguments from the government.
    • Justice Dept. attorney Craig Conrath recapped the government's opposition to the deal, based centrally on its contention that the transaction will add hundreds of millions of dollars to consumers' bills each year.
    • As for a key AT&T argument, that the company needs to keep up with a duopoly of Facebook and Google in the race for ad dollars, Brian Fung notes Conrath is dismissive: “The fact that AT&T wants to compete in some other market, that doesn’t give them a free pass to reduce competition in the pay-TV market.”
    • Updated 1:06 p.m.: Time Warner jumps back to flat after the DOJ says in court that if the deal isn't rejected, there need to be structural remedies (such as the sale of assets to enable the deal).
    • Previous trial coverage

    • A "collection of yawn businesses," says Andrew Left, arguing that what started as an innovative payment company is now just another processor, selling for a very rich valuation.
    • He's not impressed with the bitcoin "nonsense" either, noting trading on Square's platform has been insignificant.
    • His short-term target of $30 implies about 35% downside.
    • SQ -2.7% to $46.28.
    • Evercore ISI's Umer Raffat (OUTPERFORM/$155) says the selling pressure on Celgene (CELG-5%) is an overreaction to the bear thesis of a one-to-three year delay in refiling its marketing application for MS med ozanimod. He expects the company to resubmit its application by late summer/early fall, adding that the potential two-year animal study related to the safety of principal metabolite CC112273 could be done on a post-marketing basis.
    • Source: Bloomberg
    • Previously: Celgene down 4% on extended timeline for ozanimod resubmission in U.S. (April 30)
    • Speaking to his country in a TV address, the Israeli prime minister says his government has information showing Iran as secretly working to build nuclear weapons.
    • Israel intends to share the incriminating documents with the U.S. and the IAEA, says Netanyahu.
    • A source tells Bloomberg the U.S. has verified the authenticity of the documents.
    • Oil has moved to near session highs, up 1.15% at $68.95 per barrel.
    • Editas Medicine (EDIT -2.7%), Intellia Therapeutics (NTLA -1%) and CRISPR Therapeutics (CRSP -2.9%) are all in the red as arguments get underway in the U.S. Court of Appeals in the long-running dispute over ownership of the CRISPR/Cas9 gene editing technology.
    • Attorneys representing the University of California-Berkeley and the Broad Institute of Technology in Boston are squaring off in an attempt to bring closure to precisely who owns what, a lucrative outcome for the winner.
    • UC-Berkeley's Jennifer Doudna and French collaborator Emmanuelle Charpentier were the first to file their patent application but Broad's Feng Zhang out-maneuvered them when he filed for accelerated review of his application filed later by paying a $40 fee.
    • CRISPR-Cas9 is the "next big thing" in biotech because of its unprecedented precision in editing DNA. CRISPR, the acronym for "clustered, regularly interspaced short palindromic repeats," uses RNA to guide the molecular scissors, the Cas9 enzyme, to a specific DNA sequence where it makes a specific cut in the DNA and triggers the cell's DNA repair machinery to address the genetic defect.
    • Previously: CRISPR/Cas9 fight could be far from over (Feb. 17, 2017)
    • Previously: Battle lines solidified in fight over CRISPR/Cas9 patents (Dec. 16, 2016)
    • The Information details the breakdowns that led to Intel (NASDAQ:INTC) closing its wearables division this month.
    • Intel spent $175M to acquire smart-spectacle company Recon Instruments in 2015. Initially, Intel CEO Brian Krzanich seemed passionate about the project but he then refused to fund an AR-chip project requested by Recon head Dan Eisenhardt. 
    • Eisenhardt’s costly project would’ve taken over a decade to provide returns and Krzanich wanted results faster. 
    • Intel started cutbacks and discontinued the Recon Jet spectacles last summer. Earlier this month, most of the Recon team was laid off when Intel closed the wearable device unit called New Devices Group. 
    • The Information notes that this was one of Intel’s many failed diversification efforts that also include moving into cybersecurity with a $7.7B McAfee acquisition (Intel sold a 52% stake for $3.1B) and the $884M purchase of IoT software company Wind River, which Intel sold earlier this month for undisclosed terms.    
    • Intel shares are up 0.2% to $52.82.    
    • Previously: Intel buys fitness smartglass maker Recon for reported ~$175M (June 17, 2015)
    • Previously: Intel spins out Wind River unit to TPG (April 3)
    • The Atlanta Fed tracker sees Q2 GDP growth at a strong 4.1%. This will be subject to revision over time. Fans of the gauge will remember it initially expected Q1 growth north of 5%, before settling at 2%.
    • Q1 growth according to the government's first estimate published on Friday was 2.3%
    • IMAX (IMAX) says Avengers: Infinity War recorded $41.5M over the weekend on its screens to mark the third largest IMAX opening ever. The tally is impressive considering that the film hasn't opened yet in China.
    • The company says the latest Avengers installment is the first Hollywood film to ever be shot 100% with IMAX cameras.
    • "We believe this weekend's results are another clear indication that moviegoers are seeking out the biggest blockbuster events in the immersive IMAX format and an incredible start to what is shaping up to be a very promising summer lineup," says IMAX CEO Richard Gelfond.
    • IMAX press release
    • Previously: Huge Avengers weekend bodes well for exhibitor sector (April 30)

  25. A bit of a gamble before earnings.

    WMB earnings 5/2 sell Jun 25/26 p/c strangle for 1.70 and buy stock. Potential combined income 4.64 % in 46 days!

    Williams Companies (WMB) is seeing favorable earnings estimate revision activity and has a positive Zacks Earnings ESP heading into earnings season.


  26. Phil / MSFT – Announced a pretty strong quartet across the board – Linked in looks like it's contributing and Azure is growing at 90+ percent …  Windows 10 adoption is doing well on the adoption front.  I think there is still more growth in Azure and more synergies to be had….. possible a 115 stock….   What do you think?


  27. Nice play Yodi.  

    ABX goes down no matter what happens:

    • Barrick Gold (ABX -1.7%) and NovaGold Resources (NG +0.6%) say their proposed Dolin gold mine in Alaska has received final environmental clearance from the U.S. Army Corps of Engineers.
    • The proposed mine, which contains 39M oz. of gold in the measured and indicated (M&I) resource categories, is expected to require a $6.7B investment from the two companies, which are developing the assets in a 50-50 partnership.
    • The Donlin project to production is expected to take about four years for production to begin but has far to go in the permitting process before construction and operations can begin.

    39M oz of gold is $52Bn so, for an extra $6.7Bn, they'll have to clear about 15% above extraction to make a profit.  Currently ABX is averaging $500 (58%) over extraction ($850), so it seems like a good thing to me as profits over 20 years would be about $33Bn at $1,350/850, even split 50/50, it's a 50% bump in ABX earnings once this thing is on-line.  This is what ABX has been doing with the money they made from selling off less-productive mines!  

    • The two announce an agreement to create live content and advertising opportunities from across the entire Disney (NYSE:DIS) portfolio on the Twitter (NYSE:TWTR) platform.
    • Twitter and ESPN will announce specific live shows in development at presentations later today and this week.
    • TWTR has spiked to a session high, up 5.3%. Disney remains up 1.5%.
    • Baker Hughes (BHGE +0.6%) and W&T Offshore (WTI +3.7%) announce a joint program to explore and develop as many as 14 drilling projects in the Gulf of Mexico.
    • BHGE will provide a full suite of integrated oilfield services and oilfield equipment including drilling, completions and production, and subsea production systems for the drilling projects, most of which are operated by W&T.
    • “This partnership with BHGE is the type of collaborative arrangement that is enabling renewed activity in the Gulf of Mexico," says W&T Chairman and CEO Tracy Krohn.
    • Amazon (NASDAQ:AMZN) Smart Home founder Charlie Kindel has left the company after five years.
    • In a blog post, Kindel explains his exit: “The pace of the past 5 years has finally gotten to me and I simply need to catch my breath. I’ve recently been joking with folks that “I used to get my adrenaline rush going heli-skiing. Now I just go into work.” I have a car restoration project that is two years behind schedule. My home automation system needs a complete revamp (it’s gotten a bit crusty since it was installed in 2001).” 
    • Kindel’s current employment plans? “Relax and goof off.”    
    • Previously: Chico's to sell on Amazon (April 30)

    MSFT/Batman – I understand they are doing great but great, with $21Bn in revenue, only works out to $3.29 per 7.5 BILLION share float.  So, at 100, the p/e is 33 and it's very hard to move the needle when you have to earn $7.5Bn more Dollars (33%) to add just $1 per share.  There's no indication at all that this will happen this decade.  It doesn't make MSFT a bad company – just not a company I'd put money into when GOOGL does all the same cloud BS and is just as omnipresent as MSFT but they only have 600M shares and they make about $40 per $1,023 share for a p/e of 25.

    And, of course, why buy either one of those when ABX is $13.50 and IMAX is $23.40 and LB is $35?

    OK, gotta run!  


  28. LVVV- on another run! Up 44% today. 


  29. Phil / MSFT –  They are doing some good things under the new CEO ( it's amazing how much Steve Ballmer held them down).   I'll stare at the the numbers more closely.   I have a 2 full position on LB and on Imax I sold off on the spike with a some good gains…  I still about a 1/2 position on the stock now looking to build this back up on a pull back.   


  30. Phil / ABX – tow full position on that one as well…. 


  31. ASDA/Walmart – Sainsbury's merger. The media can put whatever spin they like on this deal – but in a rare moment of Freudian truth – the CEO of Sainsbury's tells it like it really is – watch this short clip of him preparing to be interviewed on TV (but remember to turn up the volume). If only all CEO's were this honest!!!!


  32. A clearer version of Sainsbury's boss Coupe caught on camera singing. 


  33. MO and PM we should have a close look for future armchair trades. Possible have missed the 51 price for MO already. But let us have a look what May will bring.


  34. Korea – What I'm hearing from US media and friends here is so cliched and thoughtless that it's worthless, to wit, "We're hopeful but cautious", and "Can the North be trusted (implicit no, it's all a show)". No analysis or thought at all, and what bothers me is my friends here on the ground spouting that line. No one is willing to be joyful over the meeting except most Koreans. Here's a well-written, researched, articulate article (in other words, it reflects my perspective and biases) that will give you a different view than you've heard so far: https://medium.com/@flowermingo.official/north-koreas-about-face-makes-total-sense-here-s-why-f8e571125416


  35. Wonderful finish to the day…. if you are short!

    But back in the swamp, it looks like the last guardrail against catastrophe called the President an idiot. That can't be comforting regarding our long term peace prospects.


  36. Batman – RE: MSFT.  I have been holding my position since $60s last year, and have made it into a costless position by selling forward calls.   I am just worried to add more at this level.  MSFT may outperform but if the broader market corrects for any reason, MSFT will follow and perhaps then,  offer a better opportunity for another play. 


  37. Tenet Healthcare Q1 top line down 2%; non-GAAP EBITDA up 26%; cash flow down 39%; earnings guidance raised; shares up 5% after hours

    Tenet Healthcare (NYSE:THCQ1 results ($M): Revenues: 4,699 (-2.4%).

    Net income: 99 (+286.8%); non-GAAP net income: 59 (+318.5%); non-GAAP EBITDA: 665 (+26.2%); EPS: 0.96 (+281.1%); non-GAAP EPS: 0.57 (+311.1%); cash flow ops: 113 (-39.2%).

    2018 Guidance: Revenue: $17.9B – 18.3B (unch); non-GAAP EBITDA: $2.55B – 2.65B from $2.5B – 2.6B; non-GAAP free cash flow: $725M – 925M; EPS: $1.02 – 1.75 from $0.92 – 1.02; non-GAAP EPS: $1.36 – 1.70 from $0.73 – 1.07.

    Q2 Guidance: Revenue: $4.475B – 4.675B; net income: ($5M) – 10M; EPS: ($0.05) – 0.10; non-GAAP EPS: $0.15 – 0.29.

    Shares are up 5% after hours on modest volume.


  38. Learner / MSFT –  Congrats on your position !  

    I sold some puts early on but never established a position.  I'm kicking myself now…..  I agree with your view.  I'm hoping for a pull back sometime around the elections in general… hopefully this will become more attractive 


  39. LMT/Phil- looking to buy soon?


  40. Good morning!

    Futures kind of flat after being down a bit.  

    MRK, AET and PFE beat.  

    Dollar 92 taking /SI down to $16.27 so looking to DD again.

    Most of Europe and Asia are closed for their Labor Day.  UK is open but it's going to be slow.

    • Monthly auto sales this morning won't include numbers from General Motors (NYSE:GM) as the carmaker ditches the figures in favor of quarterly reporting.
    • GM posits that the industry would be better off without the monthly reading as the cutthroat nature of the auto business contributes to short-term fluctuations that aren't indicative of legitimate trends.
    • The Trump administration is delaying a decision about whether to impose steel and aluminum tariffs on the European Union, Canada and Mexico until June 1, giving key allies a reprieve as the countries carry out further negotiations.
    • The administration, which has granted temporary exemptions to a few countries, also has reached initial agreements with Argentina, Australia and Brazil that will allow them to avoid the tariffs for now; details of those agreements are expected to be finalized in the next 30 days.

    • Treasury Secretary Steven Mnuchin is unconcerned about the bond market's ability to absorb rising government debt after his department said it borrowed a record amount for the first quarter.
    • "By definition supply and demand will equate," he told Bloomberg TV.
    • Net borrowing totaled $488B, exceeding the old record of $483B in Q1 of 2010, a period when the U.S. was struggling to pull out of the financial crisis.
    • Bitcoin has "elements of all of the different asset classes," according to CFTC Chairman J. Christopher Giancarlo, stating that the popular cryptocurrency is part currency, part security and part digital coin.
    • "At the end of the day, it's for Congress, and not regulators, to decide whether new policies should be evolved for these new asset classes… I don’t see it being resolved any time soon."
    • As the closely watched "vertical merger" case wrapped up in court, Judge Richard Leon indicated that he could be considering a decision that wasn’t a clear approval or blocking of AT&T's (NYSE:T) Time Warner (NYSE:TWX) deal.
    • He asked about the possibility of imposing a remedy, like saying the $85B acquisition could go forward if the companies sell a particular asset. A decision should come on June 12.
    • In a decision that surprised no one, the Reserve Bank of Australia kept benchmark rates at 1.5% for a 21st successive month, the longest spell of inactivity since 1990.
    • Inflation is expected to remain muted even as the "Australian economy remains for growth to pick up, to average a bit above 3% in 2018 and 2019," RBA Governor Philip Lowe said in a statement.
    • The U.S. Supreme Court declines to take up an attempt by Williams Cos. (WMBWPZ) to revive the Constitution Pipeline project, which the natural gas industry had argued that New York's state government was usurping federal authority and acting as a veto on U.S. pipeline permitting decisions.
    • The project has been stalled since April 2016, when New York's environmental regulator rejected a water quality certification, which was upheld by the Second U.S. Circuit Court of Appeals.
    • Williams says it planned to continue pressing its case for a rehearing at the Federal Emergency Regulatory Commission.
    • Transocean (NYSE:RIG-2.3% after-hours as it reports a larger than expected Q1 loss and a 15% Y/Y decline in total revenues to $684M
    • Q1 contract drilling revenues rose 5.5% Q/Q to $664M, primarily due to the addition of four harsh environment semi-submersibles when it acquired Songa Offshore, but gains were partly offset by reduced operating days on some ultra?deepwater rigs that rolled off contract; results also include $38M in early termination fees on the Discoverer Clear Leader compared with $25M in the prior quarter.
    • Cash flows from operating activities declined to $103M from $141M in the previous quarter, also due mostly to the receipt in Q4 of the early termination payment related to the Discoverer Clear Leader.
    • RIG's acquisition of Songa Offshore during Q1 added $3.7B in contract backlog, which totaled $12.5B as of the April 2018 fleet status report.
    • Lockheed Martin (NYSE:LMT) is awarded a $1.4B contract for recurring logistics services for delivered F-35 Lightning II Joint Strike Fighter air systems in support of the U.S. Air Force, Marine Corps and Navy and foreign military sales customers, the Department of Defense announces.
    • Services to be provided include ground maintenance activities; action request resolution; depot activation activities; Automatic Logistics Information System operations and maintenance; reliability, maintainability and health management implementation and support; and supply chain management, the Pentagon says.

    Final numbers make 'Avengers' even bigger all-time smash

    • Marvel's 'Avengers: Infinity War' did even better in final weekend numbers than the record-setting preliminaries indicated, grossing $257.7M to set a domestic opening record, and setting a worldwide record with a whopping $630M.
    • Disney (NYSE:DIS) had projected $225M after Thursday previews, and then said in Sunday projections that it had made an all-time best $250M.
    • But Disney had been conservative with estimates on the other Avengers films, Box Office Mojo notes.
    • Nearly all other films in release suffered with all the oxygen out of the room, each losing half or more from their take last week, with one notable exception: Marvel fellow Black Panther jumped back into the top five from the No. 8 spot.
    • A Quiet Place (VIAVIAB) returned to the No. 2 spot but kept performing for Paramount, adding $11M to hit cumulative domestic gross of $148.5M; and I Feel Pretty (STX) stuck at No. 3 with $8.2M.
    • Rampage (NYSE:TWX) was No. 4 with $7.2M (cumulative domestic: $78M) and No. 5 Black Panther (DIS) added $4.7M to its own impressive cumulative numbers: $688.4M domestic and $1.334B worldwide.

  41. No news conference after the Fed meeting, that's interesting.

    Coupe/Winston – Poor guy, people are judging him for humming a tune off camera (officially) – how ridiculous.  Also, I don't see why he can't be in a good mood, he just got WMT to surrender and his stock popped 20% – they are in the money!

    NoKo/Snow – I agree, assuming Kim is not insane then ending the conflict is the best way forward for his people and his reputation.  They are saying Trump may get a Nobel Prize but I think they'll give it to Kim if they pull this off – he also "negotiated strongly" to achieve the peace.  Kim sent his sister to the Olympics.  Trump wasn't there and his proxy, Pence, refused to even look at her (well, she is a woman – I guess he's not allowed).  Of course, we can't forget this whole process was started by Dennis Rodman and giving him the Nobel Peace Prize would be so funny – I think it HAS to be done! 

    Image result for rodman kim jong un

    LMT/Dave – We liked them at $240, I can't get motivated at $320.