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Trilling Thursday – Moving Back to the High End of the Range?

I don't want to get to excited but:

As we did on April 10th, we're poking back over the weak bounce line on the S&P after a huge and silly rally that completely ignored what was actually going on both globally and locally.  That spike lasted 3 days, less than March's 5-day spike over the strong bounce line but tied with February's spike over the strong line while January spent almost the whole month over the strong line before setting the year's lows (and the strong retrace) within 10 days.  

As we expected, yesterday was a fantastic day to cash out as there were buyers for our overpriced stocks all day long.  Have a good vacation smart people who took my advice!  We're expecting to top out at 2,720 (April's high) on /ES and then we'll try a short again but, as we did in yesterday's Live Trading Webinar (replay available here), we're still shorting the Russell (/RTY) below the 1,600 line (tight stops above) and /ES if they fail 2,700 – because we'd hate to miss that fun.  Dow (/YM) below 24,500 and Nasdaq (/NQ) below 6,900 would confirm weakness. 

For the rest of you, let's smash our heads in with those copper cups they serve Moscow Mules in (after drinking it, of course!) so we can get in the right frame of mind to pretend this BS market is worth talking about.  Ah, I remember Club Maximus in New City, NY when Monday's were Kamikaze Night and they played New Wave Music and served 3 shots for $1.   A Moscow Mule is really a Kamikaze but somehow they decided Kamikaze was insensitive or something.  Anway, back then you could get in if you LOOKED 18 so I was drinking there since I was 15, in 1978 and we'd drop $5 on the bar and the bartender would line up 15 shot glass and fill them all up, spilling plenty on the bar as well – ah, good times!  Then we'd dance to these songs:

No automatic alt text available.

No automatic alt text available.Having 15 drinks in front of you makes you generous as well as drunk (and I had a good job so I'd end up buying about 60 on a typical night), so we met lots of girls and had a great time and that's pretty much how the markets are going with low taxes and cheap interest so there's plenty of drinks for everybody and no one thinks the party is ever going to stop.  Unfortunately, eventually you either run out of booze or money and then it's time to clean up and head back to reality.  We're not there yet – but the booze is running low and so is the cash 

You can see the party is winding down as there are fewer and fewer bargains out there and the interest rates are climbing.  As we expected, yesterday's 10-Year Note Auction went off at 2.995%, the highest level since 2014 but the curve is inverting as the 2-year hit 2.526 this week – the highest level since 2008.  So the 2-year is rising faster than the 10-year – not good!  Today we peddle $17Bn of 30-year notes at about 3.15% – also a multi-year high.  This morning we're getting the CPI Report and that looks like it's still 0.2% so nothing alarming on the infation front – yet…

All I know is that, even on special, it's $3 a shot in NYC now and that's up 800% in 40 years so that's a lot of inflation! 

Speaking of inflation, oil has been on a tear flying from $68 to $71.50 (5%) since last Wednesday and that means we're looking for a $1 (weak) retrace back to $70.50 and we're shorting Oil Futures (/CL) below that $71.50 line with tight stops above.  We looked at the EIA report in yesterday's Live Trading Webinar (where we also made over $500 for the 2-hour session with our Futures trades) and we realized the headline numbers, which showed a draw in Crude of 2.2Mb and a draw in Gasoline of 2.2Mb and a draw in Distillates of 3.8Mb (8.2Mb!) was very misleading because the unreported "All other Oils" had a BUILD of 6.6Mb and, overall the net draw in commercial inventories was just 2.7Mb.

Not only that but we imported 500,000 barrels a day LESS than we did last week (3.5Mb) and we exported 21 MILLION barrels of refined products out of the country.  So there is NO actual demand story in the US – just a lot of market manipulation by OPEC as well as the US Energy Cartel, who are making a fortune while you are paying 30% more at the pump than you paid last year.  Keep that in mind when you fill up for gas – not writing to your Congressman and not voting for change is costing you about $15 a tank!  

Keep in mind that, when the GOP forced the US to abandon the 40-year ban on petroleum exports in Dec of 2015, a barrel of oil was $37 and a gallon of gas was $1.75 – in just two years, they've already doubled the price of both!  What kind of idiots would expect anything less when you change the rules so that a country that IMPORTS 7Mb a day of oil can start shipping oil and refined products OUT of the country?  Who could possibly benefit other than energy traders seeking to maximize their profits?

You can save yourself $15 x 52 weeks = $780 per car by writing your Congressman here and telling them how sick you are of them doing things for the oil companies that hurt you:   https://www.writetocongress.org/#/?_k=r53o39

 


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  1. Good Morning, All!

    The webinar replay is now available!

    https://youtu.be/1uYhIIB5z1M



  2. ~~CTL
     CenturyLink beats by $0.05, reports revs in-line; reiterates Adj-EBITDA, FCF guidance
    •Reports Q1 (Mar) earnings of $0.25 per share, excluding non-recurring items, $0.05 better than the Capital IQ Consensus of $0.20; revenues rose 41.2% year/year to $5.95 bln vs the $5.97 bln Capital IQ Consensus.
    •"We generated strong adjusted EBITDA during first quarter 2018 and exited the quarter with annual run-rate adjusted EBITDA synergies of approximately $215 million, a solid increase from the year-end 2017 annual run-rate of approximately $75 million," said Sunit Patel, CenturyLink executive vice president and chief financial officer. "We remain confident in our outlook for the rest of the year and are reiterating our adjusted EBITDA and free cash flow outlook for full year 2018."

    And Jeff Storey, CEO, stated. "In summary, I feel good about the market opportunity and the progress we're making in serving our customers. You'll see us continue to focus on selling profitable services to our customers, carefully managing our expenses and expanding our margins. We remain committed to and confident in our ability to maintain the dividend."


  3. Pretty cool discussion about Netflix, Disney and Amazon:

    http://ritholtz.com/2018/05/disney-netflix-amazon/

    The guy makes the argument that a streaming service from Disney would put the hurt to Netflix. Also, an interesting tidbit – he says that Netflix actually helped Google and Facebook by helping kill the TV ad model and driving ads to these 2 platforms. Interesting!


  4. CTL / Albo – OK, might have to take a leap of faith on this one!


  5. Good Morning.


  6. STJ – Either you believe management or you don't.

    I do. 


  7. L Brands reports April comps were flat vs -5% (VS -12%, BBW 10% year ago and 4% (VS 1%, BBW 10%) last month; sees Q1 EPS at lower end of $0.15-0.20 prior guidance and $0.18 consensus and sales of $2.63 vs 2.59 bln consensus


  8. albo--i think you will be the winner


  9. Hope so.  Thanks.


  10. FU LB!!!!!!


  11. M gets downgrade from Morgan

    Cut to Sell at Morgan Stanley, $25 PT; The firm is cautious behind ongoing negative store-only comparable sales and continued decline in return on invested capital, or ROIC. Macy's is closing stores, but it is not doing so quickly enough. While those metrics leave the firm cautious, the retailer's shares have advanced over 60% since October, which leaves the risk for investors skewed to the downside.


  12. Good morning!  

    Huge pop in /NG, I took half and ran at $2.80.  Still like them long-term but no sense in not taking profits. 

    /CL hitting our goaaaaaaaaaaaallllllllllll at $70.50, nice $1,000 per contract winner to start the day off right.  Very tight stops if you want to stay with it.  

    Even /KC had a nice little pop.

    This is why my retirement plan is to move to Jersey, where I can sit down at 9am and it's still 3.5 hours before the US market opens and I can trade futures until lunch, get back to CASH!!! and then call it a day…

    Good discussion, StJ. 

    LB – Easter was later so it moved the sales to Q2.  Overall sales were up 8% at $2.63Bn and same-store sales were up 3% but EPS looks like just it will be just 0.17 vs 0.18 expected.  Not really enough to justify the sell-off.  This is not earnings, just a warning and completely understandable with Easter bumped.  It's always their worst Q of the year and they are still on track to make $3/share.  

    Is The #MeToo Era Hurting Victoria's Secret? Two Branding Experts Hold Differing Opinions

    AAPL $970Bn @ $189.  Get your $1,000,000,000,000 hats ready!

    Related image


  13. Phil/LB

    What would you choose for a new trade in LB? I have not entered it yet. Is the one on OOP good as well?

    regards


  14. Phil – CBI/MDR deal is closing today.  How does that affect our options?  I usually get a notice from my broker but did not receive one at this time.  I only have the 12.5 Puts sold.  


  15. Move to Jersey?

    Drinking since 15….explains so much :)


  16. LB down over 8% now.. unreal


  17. LB – very frustrating.  I've adjusted down once already but is it worth it to move down $5 to the $30/40 bull call spread for $1.05? Projected to earn friggin $3 a share and priced at $31.35 and falling.  It was just at $62 in December for crying out loud.  My net on the trade is $37.92.


  18. IQ , sometimes referred to as the NFLX of China, is hitting a new high since its IPO in late March.


  19. albo, IQ – I have a $15/$25 Dec 18 BCS.  This is volatile.  Too bad they dont have 2020 options…would have been great to put in something longer term.  


  20. Learner – Nice play.  I'm long the stock with 1/2 covered by the Sept 22.50 calls.

    So far, so good.


  21. I like how TWTR is behaving.

    Also going back to CHK for some reason I think it'll catch up with the other energy and XOP co's eventually.


  22. Nothing wrong with with starting to booze at 15!  Sadly i looked my age so could't get into pubs until at least 17.

    Phil - what is the best email address and point of contact for the hedge fund to pitch a VC style investment?  I have two UK based guys who have put something together that is really interesting from an investment and social contract perspective.

    Thanks


  23. Our group was in China discussing grid storage and learned an odd fact that natural gas this past year was quite scarce, causing a 7X increase in price in localized regions(!!!). In some instances they were trying really weird tricks like attempting to powderize (word?) or aerosolize coal so they could move it through pipelines. There is a categorical shift from coal/wood to natural gas heat and they have this huge scarcity of it.


  24. biodieselchris 

    The Japanese tried a system with power coal that would run a engine to drive a generator to make electricity


  25. LB – looks like i rolled into it a couple days too early. Dang it. 


  26. i know how you feel scottmi…

    LaMont


  27. Is WYNN really worth $200/share?


  28. Thank you kindly for the feedback on KHC Phil.   

    Bio --  I can't find the article, but it was recently reported China has completed the largest underground NG storage facility in the world.  Then there is this and this…   


  29. Phil/pallets – time to bring back the Salmon P Chasers


  30. Phil, fond memories.  When I was 15, growing up in NJ, they would take our library cards as proof of age in NYC bars…


  31. WSM/Phil, do we have an official position?  if not, do you recommend a buy write with a put sale at 47.50 strike?  thanks.


  32. Record Highs.  America is Great Again! 


  33. China says they are still talking with the US on trade – so the market goes nuts – again.

    Jersey/Tangled – Jersey.  

    LB/Pat – As a new trade, I'd wait for the downgrade police before making a big commitment but this whole move below $35 is silly, so, as a new trade I'd go with:

    • Sell 5 LB 2020 $30 puts for $6.70 ($3,350) 
    • Buy 10 LB 2020 $27.50 calls for $7 ($7,000)
    • Sell 10 LB 2020 $37.50 calls for $3.50 ($3,500) 

    That's net $150 on the $10,000 spread that's $2,500 in the money to start you off!  

    In the OOP (and LTP), our LB position is:

    Long Call 2020 17-JAN 35.00 CALL [LB @ $31.32 $-2.80] 10 3/1/2018 (617) $12,690 $12.69 $-8.44 n/a     $4.25 $-1.16 $-8,440 -66.5% $4,250
    Short Call 2020 17-JAN 45.00 CALL [LB @ $31.32 $-2.80] -10 3/1/2018 (617) $-8,500 $8.50 $-6.20     $2.30 - $6,200 72.9% $-2,300
    Short Put 2020 17-JAN 35.00 PUT [LB @ $31.32 $-2.80] -5 3/1/2018 (617) $-3,000 $6.00 $3.35     $9.35 - $-1,675 -55.8% $-4,675

    So we're in for net $1,190 and, not yet, but our adjustment could be to roll the $35s ($4) to the $25s ($8.50) for $4.50 ($4,500) and roll the short $45s ($1,800) to the $35s ($4,000) so net -$2,200 on that.  The short puts are net $29, so no need to roll those.  That drives our cost up to net $3,490 on the $10,000 spread that's now $5,000 in the money so disappointing that we won't make $8,710 but still on track to make $6,510 (186%).  

    Also, by the way, the current May $35 puts are $4.30 so, even if we don't improve here, that's our roll, not $9 and the 2020 $25s are $4 so we can roll $10 down in 2022, most likely.  Don't let your trading decisions be governed by BS premiums you have no intention of paying.  You KNOW a $35 put is worth no more than $5 if the stock is at $30 so if you sold it for $6 and the broker tells you you're down $3,000 – you have to KNOW that's not how it will play out.

    That's the kind of adjustment we make to a trade that has gone horribly against us and I know some people make it sound like the world is ending but, if you learn to make good, proportional entries, then you'll find adjusting these "losing" positions is no trouble at all and you can go back to having fun instead of obsessing in front of your computer all day, every day. 

    CBI/Fel – We dumped the bull call spreads and just have the short puts.  They will be somehow adjusted but I'm super-confident they'll expire worthless, so I didn't see any point in using perfectly good money to buy them back.  

    Drinking/Tangled – Freshman year in college my roommate and I took a test to see if we were alcoholics and I think we answered yes to about 15 of 20 questions – which was very bad.  So we didn't drink for the whole summer, decided we were not alcoholics and got a great education back off the wagon (I think).

    LB/Rperi – Well buy low and sell high doesn't work unless you know where the low and high is.  We knew LB was silly in Dec and we cashed out, we thought we had a nice dip on 3/1 to $40 so we went back in but, fortunately, lightly – so we had/have plenty of room to adjust.  

    March 1st, 2018 at 10:09 am | (Unlocked) | Permalink

    Also below support but broad market not helping.  No major hurry but I am watching the 2020 $35 puts, now $5.86, as that's net $29.14 and I'll take 1,000 shares at that price in the OOP!  That means it would be silly not to sell 5 of them and take 10 of the bull call spreads – the $35s are $13.40 and the $45s are $8.80 for net $4.60 ($4,600) less $2,930 puts us in the $10,000 spread that's almost all in the money for $1,670.  Let's make that official:

    • Sell 5 LB 2020 $35 puts for $5.86 ($2,930) 
    • Buy 10 LB 2020 $35 calls for $13.40 ($13,400) 
    • Sell 10 LB 2020 $45 calls for $8.80 ($8,800) 

    LB was our original pick for Trade of the Year for 2018 and we are THRILLED to get another chance to enter at this price.  The company is guiding to a disappointing $3.10/share earnings in 2018 so 15x a disappointing year still gets us to our $45 goal!  

    March 1st, 2018 at 10:37 am | (Unlocked) | Permalink

    In the LTP, since we REALLY wouldn't mind owning 1,000 shares of LB, we can be a bit more aggressive and sell 10 2020 $45 puts for $11 ($11,000) and buy 30 of the 2020 $35 ($13.50)/50 ($7.50) bull call spreads at $6 ($18,000) so we're spending net $7,000 on the $45,000 spread that will still be easy to roll and adjust.  

    Best part is that we will then have no worries selling 10 short calls.  Even now, the April $47.50s are $1.30 so $1,300 x 10 sales would be $13,000 back on our $7,000 spread while we wait to see if we collect $45,000.  Man I love options!  cool

    So we specifically went in with half positions EXPECTING to make an adjustment and add more if they went lower.  So far, we're only up to the adjustment phase.  

    Keep in mind, the Report that Morning was titled: "Failing Thursday – Hedging for the Next 10% Correction" with the Dow at 25,500.  Today the Dow is at 24,700 after jumping 200 points.  None of this was unexpected.  

    Fund/Malsg – The hedge fund doesn't do that, just stocks, Futures and options.  PSW Investments is our Venture Capital arm (they own the Hedge Fund anyway).  You can just send something to Greg and we'll be happy to take a look.  

    Speaking of which, it's already mid-May and we're closing this round of investments in both PSW Investments and the Hedge Fund on June 30th.  Not sure we'll take any more this year so PLEASE get your paperwork into Greg (@ philstockworld dot com) if you are interested in investing in either as it takes a while to process!

    China/BDC – That's why LNG is going to be huge.  It's the only thing that will fill the gap in the short run.

    WYNN/Tangled – No.  People are happy they finally resolved getting the Wynn's out of their hair (they were going through a divorce too and fighting over the company) but that doesn't change the fact that they are in debt up to their eyeballs ($10Bn) in a rising rate environment and only making $400M (without tax benefits) against a $21Bn valuation – no thank you!  

    $10,000/BDC – We'll need more than that the way Trump is going. 

    Image result for hyperinflation zimbabwe

    Library cards/Taihu – LOL, that's great.

    WSM/Lunar – I've been hoping to see $45 before getting back in.  I'd wait to see if they hold the bottom of this channel after earnings in 2 weeks:


  34. Thanks Phil – I'll email Greg and make some introductions.


  35. Phil, thanks.  makes sense on WSM.

    how about T.  sell 30 put and buy 28/33 bull call spread? 2018.  or would you suggest stock as they pay ~6%


  36. Phil – what is the next place you are looking for entry on /RTY short?


  37. LB folks,  even if the stock is put to you, at these levels, we are at 7% dividend yield (LB pays $2.40 per share as of now).    Not bad for future armchair trades to continue to harvest more returns if necessary.   


  38. Learner T yes for an armchair trade, but LB you need an underwater chair!!!!


  39. WYNN / Phil – It's unbelievable that people simply ignore one ratio like debt/equity which is over 10 in the case of WYNN! These are numbers usually associated with companies that need to make high infrastructure investments like telco for example. Yes, they had to build new casinos… But they are casinos and the dealer rarely loses there. With few exceptions – see Trump! I mean LVS and MGM are below 2! They build casinos too.


  40. Lol, Yodi… I still remember your dislike for LB last year when we initiated positions in the 30s.   


  41. Learner good memory , I sometimes could be right aswell!!!


  42. Yodi.. you are always right.  ;)    I made my trade and profits on LB last year, now, looking to establish new positions with this sell-off.  Another opportunity!  


  43. yodi, how would you play T? thanks in advance.


  44. Phil – I know you've been high on GE and i think I read recently that they have a very large pension liability (somewhere in the range of $30 billion)? just wanted to get your take on it; I assume this is priced in but how much risk does this sort of liability present for a large company like GE?


  45. Learner T  sell the Jun 15 32/33 strangle for 1.40 (P/C) and buy the stock gives you a combined return of 4.01%. Buying the stock at 31.92 will give you a better capital gain, as you will not enjoy the div. over this short period, However you looking for 1.08 in Capital gain if called. Your break even is about 30.60/34.40. If T will not be over 33 in June you can set up a new armchair.


  46. Trades/Phil- I just got a good read on the L brand trade. You mentioned that don't let the BS premiums affect your trade your trading decisions. I was wondering does that mean for especially the short PUTs, don't really read into the premiums but focus more on the cost basis on the short puts? just like yesterday on the stock HMNY, you mentioned for the 2020 Short puts, if I choose not to roll down to $2.5 and instead on only roll to $5 is not wrong too because we are expecting the stock to trade above that by 2020? 


  47. You're welcome Malsg, Lunar. 

    T/Lunar – Here's some food for thought:

    Rethinking Your AT&T Position After The Michael Cohen Revelation

    /RTY/Rayne – Well we're looking for 2,728 on /ES to be the next resistance but don't forget, running from the weak to the strong bounce line is not a sign of weakness – it's a sign of recovery and we can go another 130 points to full recovery around 2,850.  So, with /RTY , probably 1,620 or 1,625 would be the similar spot and 6,975 on /NQ and 24,850 on /YM but again – if we're running up to the strong bounce lines and holding them – that's a bullish sign, not bearish.

    Casinos/StJ – I think they (all of them) are overbuilding casinos in an up market with high degrees of consumer confidence and they'll probably screw it all up again and most of them will have to re-organize but there's no punishment to that – CZR has the same management they had pre-BK and now with easy comps and less debt moving forward – THAT is the Trumpian way!  

    Related image

    Image result for czr restructuring

    Related image

    GE/Crs – Due to a decade of low rates, the money in their reserves did not grow as planned and so they owe 600,000 people $30Bn more than they have put aside, that's about $50,000 per retiree but, more importantly, there's the assumption they will live to be 77 and pay out the $5,000 deficit over 10 years and interest so call it 14 years of payments of $5,000 or $3Bn a year in the worst case.  This assumes, of course, that the current fund of $82Bn continues to generate very low returns and maintains the short-fall.

    Image result for how big is ge's pension fund

    As you can see, in 2016 they generated just $2.8Bn of interest on $70Bn – not even 5%.  If they have a $3Bn annual shortfall and they generate a 10% return, problem solved.  It also should be noted that GE has $80Bn in cash and they could just take a hit and dump it into the pension plan but they don't feel that's the best use of the money since there's no urgent need and they can do a lot better with $30Bn than make 5% a year.  

    They could also offer to cash-settle pensioners and maybe half would take 1/2 in cash – problem solved again. 

    • GE is a $127Bn company that drops $8Bn a year to the bottom line and has $31Bn of unfunded pensions and people are acting like they will go BK.  
    • BA is a $200Bn company that drops $9Bn a year to the bottom line and has $20Bn of unfunded pensions – no one is worried
    • GM is a $52Bn company that drops $5Bn a year to the bottom line and has $19Bn of unfunded pensions – no one is worried 

    Image result for how big is ge's pension fund

     Same for the others – not a peep about pensions except for GE, where it's the apocalypse?

    HMNY/Dave – 0.66 now so not expecting anything.  As noted in this good article – they either fix it an take off or they are done for but it's 50/50.

    MoviePass parent drops another 46%


  48. Silly markets coming down again, S&P just shy of goal:


  49. HMNY/Phil- I have not able to roll my short $7.5 puts down to $5 or $2.5 but now I am still letting the order queue to roll down at to the $5 puts and see how the company will perform over the years as I have time till 2020 but I have manage to roll further my $1 calls to $0.5 calls @ $0.10. I was wondering if I that's a move you will agree with?


  50. Learner / LB – Do you have a view of how safe the dividend is?  They are sitting at an 85% payout ratio with CF just covering….  


  51. Lerner/ LB  above – FCF just covering Op CF well above 


  52. Phil, Thoughts on uso or sco play for options impaired. Where do you see oil peaking?


  53. /RB 2.19!! 


  54. /RB – I’m short 1 contract here. 


  55. Phil – LB adjustments – apologies if I am losing track but I believe there was a later adjustment to the LTP position – from the April 20 post:

    LB – Another opportunity to deploy some cash.  We're only obligated for 10 at $45 so let's roll those short puts at $14.50 ($14,500) to 15 of the $37.50 puts at $9.40 ($14,100).  We may as well buy back the 30 short $50 calls for $2.10 ($6,300) and spend $2.20 ($6,600 to roll the 30 $35 calls ($5.80) to the $30 calls at $8 and we'll half cover by selling 15 $40 calls for $4.20 ($6,300) so we're spending net $6,600 to push our calls $15,000 into the money – smart!   We'll start selling short calls when they recover too.  Even now, Aug $40s are $1 for 119 days out of 637 so there's $6,000 we can recover over time selling 10 short calls per period (not yet, of course). 




  56. Where all that Micheal Cohen bribe money really ended up going


  57. Link to the LTP LB adjustment is here.

    That was a half cover on the short calls, and I don't think there was an opportunity to sell short covers as the stock did not recover.

    If I have misunderstood, ignore the post, otherwise what are your thoughts on a further adjustment to the latest LTP position of:

    15, Jan 20 $37.50 short puts

    30, Jan 20 $35 long calls

    15, Jan 20 $40 short calls



  58. Giuliani’s Law Firm Undercuts His Statements as They Part Ways


  59. The U.S. Economy Isn’t Immune to Rising Oil Prices


  60. @batman/ LB – divis… As you note, the operating cash flow is well above the div payments.  They can easily throttle the capex and share buybacks and keep the dividend going. The share-buybacks in the last 2 years have helped lower the dividend burden – less shares outstanding.  


  61. HMNY/Dave – At this point, you may as well buy the stock for 0.63 if you want to play.  As to the short puts, they are going to be worthless unless things massively turn around.  I think it's fine to have the 0.50 calls for 0.35 but it saves you a bit of premium to just buy the stock now. 

    USO/Jmd – All we've been doing is making very quick in and out moves that are not at all suitable for options – it's generally a no-play at the moment but a good short around late July if we're around $75.

    /RB/Jeff – Wow, that's really excessive!   At $2.20 I have to take a poke short but not yet. 

    LB/Winston – Well, that's why it was unofficial, I need to square all these things up first.  I'll try to get it all straight by tomorrow AM so remind me.

    • L Brands (NYSE:LB) is down 7.94% after disclosing April sales and lowering its expectation for Q1 EPS.
    • The weak report from the retailer prompted several sell-side analysts to come in with scathing notes.
    • Loop Capital downgrades L Brands to Sell, with analyst Laurie Champine lamenting the Victoria Secret's business is ignoring the change all around it.
    • The assessment from Buckingham Research isn't much brighter. The analyst team calls L Brands "dead money" at the moment as it lowers its price target to $31.
    • L Brands traded at a multi-year low of $30.70 earlier today.
    • Sources: CNBC, Bloomberg
    • Previously: L Brands lower on updating Q1 earnings guidance (May 10)

    • The Bloomberg Consumer Comfort Index fell back to 55.8 from 56.5 for the week ending on May 6. The sharpest drop was in the Buying Climate component of the index.
    • The index has dropped two consecutive weeks.

    • A steady rise for Gogo (NASDAQ:GOGO) today is punctuated with 9.1% gains after a new filingdiscloses that new CEO Oakleigh Thorne and his Thorndale farm bought 187,529 shares yesterday.
    • Thorndale Farm acquired the shares at a price of $5.3025 each.
    • After the transaction, Thorndale Farm's holdings stood at 25,777,888 shares.
    • The stock's coming off a 52-week low of $5.05 reached on Tuesday.
    • A return to $100/bbl Brent crude is possible, BofA Merrill Lynch analysts say, as a decline in Iran’s oil exports due to new U.S. sanctions and a collapse in Venezuelan production coincide with OPEC-led supply curbs.
    • “Looking into the next 18 months, we expect global oil supply and demand balances to tighten,” BAML says, forecasting a market deficit of 630K bbl/day this year and 300K bbl/day next year.
    • BAML raises its Brent price outlook to average $70/bbl for 2018 and $75/bbl for 2019 but also sees the "risk of $100/bbl oil next year," saying global oil markets likely will tighten further if a new Iran deal is not reached in the next six months or OPEC and Russia extend production cuts into 2019.
    • On a related note, Centennial Resource Development (CDEV) CEO Mark Papa says U.S. shale producers will not raise output to offset any global oil squeeze, particularly in light of current pipeline constraints.
    • At last check, Brent crude -0.3% to $76.98/bbl and WTI -0.2% to $70.98/bbl.
    • Ubiquiti Networks (NASDAQ:UBNT) has jumped 7.2% after beating on top and bottom lines in its fiscal Q3 report and launching a new $200M stock repurchase program.
    • Net income rose to $76M (non-GAAP basis) from $64.6M; gross profit was up to $114.5M from $99.1M a year ago. Income from operations rose to $84.9M from $73.4M.
    • GAAP gross margin rose to 45.7% from 45.4%.
    • Revenue by product type: Service Provider Technology, $100.9M (down 3.7%); Enterprise Technology, $149.5M (up 31.6%).
    • Revenue by geography: North America, $94.8M (up 20.7%); South America, $19.9M (down 28.4%); EMEA, $113.7M (up 29.6%); Asia Pacific, $21.98M (down 9.3%).
    • Cash and equivalents were $690.8M, up from $604.2M last June 30. Some $128.6M of that is held in subsidiaries outside the U.S.
    • It's now tracking toward the low end of its previous revenue and EPS guidance for the full year.
    • Conference call to come at 11 a.m. ET.
    • Press release
    • Macy's (NYSE:M) opens with a 3.1% downward swing after Morgan Stanley slaps an Underweight rating on the department store operator.
    • "Macy's continues to undergo core operating challenges, similar to peers in the department store space. Despite closing stores proactively, store-only comps remain negative and we forecast them to remain so in the future," reads the MS note penned by analyst Kimberly Greenberger.
    • "Expense cuts, real estate monetization, and secondary growth initiatives are encouraging, but we think the market needs to see core retail EBIT stabilization and a return to strong cash flow generation in order to become more constructive on the stock," she adds.
    • The investment firm sees more ROIC deterioration for Macy's this year and estimates EPS of $3.55 for the full year. Add it all up, and MS comes up with a price target of $25 on Macy's.
    • Groupon (NASDAQ:GRPN) is up 3.5% premarket as analysts come in with upgrades and target increases after yesterday's earnings beat.
    • Double-digit price gains yesterday evaporated to just a 0.8% gain by the close.
    • D.A. Davidson has given the stock a Street-high price target of $8, implying 64% upside. The company's real story is its work to ramp full-price sales, analyst Tom Forte says — which if successful "would go a long way to closing Groupon’s virtuous circle – value to the consumer, merchant, and Groupon." (h/t Bloomberg)
    • UBS has upgraded the shares to Neutral and given them a $5.50 price target.
    • Meanwhile, Cowen has bumped its target to $5.75; B. Riley has raised its target to $6.30; and Morgan Stanley has raised its target to $4.60.
    • Earnings call slides
    • Earnings call transcript
    • Airline fares fell 2.7% M/M in April in a rather sharp move downward that followed two straight months of 0.6% gains. Bloomberg reports the monthly drop was the largest in four years.
    • The average fare during the month was 6.9% lower than the level from a year ago on an unadjusted basis.
    • The airline fare price index can be influenced significantly by increased competition in just a few key markets.
    • Related stocks: LUVUALDALAALJBLUALKHASAVEALGTSKYW.
    • Related ETF: JETS.

  62. WINSTON!!!!



  63. HMNY/Phil- my question was actually meant to further understand the strategy behind the trades you set-up. For example, holding the short $5 put VS $2.5 puts on HMNY, both seem okay to live with as we still have 2 more years to go and like you said the company it's a now or never stage so… I was wondering why spend more $ to roll down when we still have loads of time to spare on the short puts? While DD on the long calls makes more "direct" sense where for example, $0.10 to roll the $1 calls to $0.5 calls is a 20% ITM gain on paper.


  64. Learner / LB – thanks….  Good point on the buybacks,  They are closing some stores so that should help in the Capex….  If the div is safe this is great….  see what they say about it in the CC next week.

    I actually bought the stock on the way down  ( this AM was my lastest buy) I had it covered at 39 but now need to find a new ST cherry call for this.  looking at 36 or 38 prior to end of summer as they stock  typically shoots up going into holidays.


  65. Man do I get sick of hearing about LB. Never owned, never will. Have 0 interest in retail, especially niche retail.


  66. We need Trump 2020. What the hell will MSNBC talk about without him?

    Funny how trump dumps on the "mainstream media." It's called virulent mutual symbiosis. It's when your milk is her shit and her shit is your milk.


  67. HMNY/Dave – Well if you sell 2x the $2.50 puts, you are selling more premium and have a better chance of hitting the hurdle at $2.50, of course, to get them to expire worthless.  There's little additional obligation taken on with a 2x roll, though we did a 2.5x roll – so a bit more.  

    I remember when SIRI went to 0.12 and we kept buying while the rest of the World thought they were going BK – that one turned out well and made tons of money – this one might not but it's the same logic – if it works out, we could make a lot more than we're likely to lose.

    SYMC getting crushed now.  Good time to poke short on /NQ at 6.965 as it may pull back if people rethink those bets.  

    Submitted on 2008/05/01 at 4:54 pm

    Like right now I have $3,250 worth of SIRI calls which have been red for a month and I’ve had no inerest but they popped 20% today which alerts me to take a look at getting another round, probably much more than the 50 contracts I have if they look like they’re going to break $2.80, where it becomes worthwhile for me to sell $3 calls against them.

    Submitted on 2008/07/30 at 12:38 pm

    SIRI/XMRS/Malai – I like it in concept but, like any merger, it may be a long, long way from payoff.  I certainly like SIRI as a long-term hold to scale into.  XXX

    Submitted on 2008/07/31 at 9:59 am

    SIRI – I’m up to 5,000 at $1.60, good for now.

    Submitted on 2008/08/04 at 12:01 pm

    SIRI – I’m DD at $1.36 to 10,000 shares.

    Submitted on 2008/08/06 at 5:14 pm

    SIRI – I really like them.   Maybe I’m nuts but I think this is a great buy and forget kind of play.  Kind of reminds me of when TWX and other cable plays were out of favor in their first decade… 

    Submitted on 2008/08/08 at 12:16 pm

    SIRI – down 11.5%, still like them but no more money for Mel until he shows me something

    Submitted on 2008/08/15 at 12:21 pm

    SIRI – come on already!

    Submitted on 2008/08/28 at 12:33 pm

    SIRI – in for the long haul

    Great article on GS’s possible motive for manipulating SIRI stock.

    Submitted on 2008/09/16 at 10:12 am

    SIRI way down at .79!  I’ll wait for Dan, he’s got the timing on these…

    Submitted on 2008/09/16 at 2:51 pm

    SIRI – I think it’s a bear raid and Mel agrees with me.  He’s really pissed and banging the gong with investors, something about GS and other preferred holders wanting to do a roll at good prices and screwing them over.  It’s like buying cable companies when they ran out of gas for a while, good long, long term things to hang onto (hopefully).

    Submitted on 2008/10/03 at 11:29 am

    SIRI does seem cheap here but they seemed cheap at $1.40 too!  Don’t forget though that we went through the same BS sell-off with TASR all the way down to $5.  Just like TASR, SIRI is a real company with real revenues and real prospects for growth.  If the financing logjam clears up, they may start looking good again.

    SIRI still .50!

    SIRI back at .35.  GS downgraded target to .25 on Tues and dropped them from .44.  It’s a very liquid stock and the low was .32 so you can buy some here, DD at .32 to avg .335 and stop out at .30 for a 10% loss against it going back to .44 and giving you a 30% gain.   Actually, this may be wrong but it looks like you can sell Jan $2.50s for .20 – if so, why would you not?

    SIRI worth a gamble at .17 assuming the world suddenly isn’t going to end.

    Submitted on 2009/01/13 at 12:45 pm

    SIRI/Jo – I do like them long-term.  Mel is a great operator and he’s already got the talent taking less than originally promised to be "team players".  Long-term people think that the technology can be overrun but what they don’t see is they have locked up all the talent and after listening to top market (supposedly) radio for 40 years, I have to say that people you actually don’t mind listening to on the radio are few and far between.

     

    SIRI/Mr. M – Those bankruptcy rumors on companies that aren’t out of business are always fun to play up, especially when you get down to pennies but very risky of course.

    Submitted on 2009/02/17 at 6:04 pm

    SIRI/Jordan – I haven’t had time to look into the deal but the bottom line is they gave up 40% of the comany for a $530M loan so that doesn’t imply much value.  They may have been better off going BK and renegotiating their contracts, which are killing them as they were a product of SIRI and XMSR warring to outbid each other for rights – pretty stupid now that they are combined.   No car sales is not good for growth in the near future.  Meanwhile, I’m not sure their revenue can service their debt and they just blew off DISH – one of the only people who would place a good value on their satellites.  So, all in all, a fun stock to buy $500 worth of and pretend you lost it for 5 years and see what happens but nothing to take seriously down here.

    Submitted on 2009/08/03 at 2:13 pm

    SIRI at .47.  Yes it’s chasing but they are a big winner on an auto turnaround story.  It does sound like the clunkers program will be expanded.  This is a scale in, if you have $500 to spend then it’s $125 at .47, $125 at .37 and $250 at .27 and then you sit for a year…

    Submitted on 2009/08/04 at 2:11 pm

    Meanwhile – SIRI hit .54, up 15% today – can I get an AMEN?!?  Of course half out with a stop back at .47 on the rest to lock in 7% over 2 days

    Submitted on 2009/11/13 at 11:50 am

    SIRI/Llorens – I like them very long-term but no idea where they will be in Jan.  That stock does whatever the traders need it to do.  Generally, we like to buy them on dips but we haven’t touched them since they were .40 and almost doubled.  They touched .50 in early October but came back so fast we missed that entry.  You can buy the Jan $1 call for .05 so let’s say you were going to buy $1,000 of SIRI hoping to make $300 by Jan and planning to stop at $900.  You can just take $100 and buy 20 Jan $1 calls for .05 and offer to sell 20 Jan $2.50 calls for .05 which, if it hits (doubtful), gives you a free ride.  You can also offer to sell 10 Jan $1 calls for .10 and if that hits, you have 10 free calls and if they make it to .30, you make $300 as it’s essentially the same 1,000 shares you wanted.  A good run to $1 by Dec 31st should get those calls to at least .15. 

    Submitted on 2010/01/11 at 4:39 pm

    SIRI/Ernest – We are full up on them from .30 back in the summer.  We sold half at a double and the rest is under the mattress for a few years.  They are a very dangerous stock but not likely to go BK (someone would buy them I think) so if you can sell the June $1 puts for .45 or better, that’s a nice entry but, otherwise, I’d rather wait for them to get closer to $1 to do a proper buy/write as a new entry.  The last sale of the June $2 calls was .05 but if you offer to sell them for .10 and get it, then you can buy the June $1 calls for .10 and it’s a free trade – never hurts to offer. 

    That is almost 2 years of trading a "disaster" until it finally turned around and made us a fortune.  You don't get those kind of opportunities that often and I don't often chase after things like this but I get that vibe from HMNY but, if you are buying it expecting something good to happen tomorrow, next week or even next year – it's a bad plan!  


  68. Debt/Equity ratio- StJ- apparently this is an old fashioned, out of date metric for company evaluation. A couple of other examples- take a look at LB and MCD balance sheets. 

    This was cited recently as worthy of consideration given that this time is different and the old methods no longer apply. 

    Place your bets. 


  69. This time is always different pstas! Until the end results is the same… 2000 comes to mind, and 2007 as well. Incredible how fast we unlearn lessons. 

    Debt to income ratio was also an outdated metric when it came to mortgages in the aught because real estate prices would always go up! 

    In any case, I bet on black (as a reference to money)!


  70. PSTS – Article – book value distortion…. interesting.   thanks for sharing


  71. Kodak’s lost crypto moment mirrors its decline


  72. Good morning!

    Markets holding on to yesterday's gains so far.   All about that strong bounce line.  

    Bullard speaking at 8:30 so we'll see what he has to say and then Consumer Sentiment probably decreasing a bit at 10, but nothing likely to move the market other than Trump's Drug speech later and that's bound to spook that sector so I'd short /ES here (2,725) as we know they have trouble at 2,728 so $150 loss limit but very likely to give us a little run lower (though maybe wait until Bullard to be sure).  

    2,725 on /ES is lined up with 24,750 on /YM, 6,975 on /NQ (still a shorting line with tight stops above) and 1,608 on /RTY and same there with a stop over 1,610.

    Also, Dollar is back to 92.41 and may be bouncy here – so more ways to pressure the markets.  

    Oil $71.37 and /RB 2.19 is also a short with a stop over $2.20 but only for quick money.

    Friday's economic calendar

    What Happened in the World Economy This Week and What It Means.

    Four Things to Look for in Trump's Drug Pricing Speech Friday

    Nvidia(NVDA) Reveals Crypto Sales for First Time and Predicts Big Drop.

    Amazon(AMZN) Stops Buying Prized Shopping Ads on Google(GOOGL).

    Record Buybacks Help Steady Wobbly Stock Market.

    Symantec(SYMC) plunges 20 percent after it reveals internal investigation by board's audit committee.

    JP Morgan(JPM) revamps its stock trading business in a sign of the changes sweeping through Wall Street.

    Supplier fire isn't just hurting Ford, supply issues are rippling across auto industry.

    Oil prices risk spiking to $100 a barrel next year, Bank of America analysts say.

    Gas Price Tops $4 In California For First Time Since July 2014. 

    Commerce Secretary Wilbur Ross: I think China 'agreed to the concept' of reducing the trade deficit.

    China "Regrets" Trump's Decision, Vows To Protect Iran Nuclear Deal. 

    Dropbox(BOX) falls despite beating on every count.  

    US Posts Biggest Budget Surplus In History.