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Just Another Manic Monday – S&P 2,728 – Again…

Wow, what a "rally".  

Half of Europe is closed and the Dow Futures (/YM) are up 225 points – back to 25,000 (again) and the S&P (/ES) are right back at good old 2,728 (our 20% line) with 6,925 on the Nasdaq (/NQ), again and 1,632.50 on the Russell (/TF) – so same old, same old and happy Monday.  The reason we're up is because China's $500M bribe for President Trump did the trick and suddenly we're rolling over on trade.  I'm glad – trade wars are terrible for the economy and we should give Trump credit if the whole thing was just a ruse to line his own pockets and not just the mindless pursuit of an iditotic policy that was doomed to fail…

Speaking of idiotic policies – we have the FOMC Minutes this Wednesday and 10 Fed Speakers into the 3-day Holiday Weekend (US markets closed next Monday).  I used to run down who was a hawk and who was a dove but they all sound like doves since Powell took over and we'll see if the minutes to the last meeting indicate the Fed is still on track to raise rates 3 times with only 5 meetings left this year. 

As earnings season begins to wind down, we're seeing analysts projecting that the 20% pop in earnings caused by the Trump Tax Cuts for Corporations will somehow happen again next year (it is certainly possible that, if the GOP keeps the House and Senate, they may pass another round of cuts for the Top 1% – crazy as that may seem).  Edward Yardeni of Yardeni research asks "What are Stock Industry Analysts Smoking" and his own 2019 estimates are $166/S&P share, about 5% below consensus.

Of course, all this is assuming nothing goes wrong and the President won't be impeached and we amicably resolve all our differences on Trade with China, Japan, Europe, Mexico and Canada and we peacefully disarm Iran and North Korea and prove Global Warming isn't a problem so Hawaii won't melt and neither will the ice caps and glaciers and Russia won't meddle in the November election (because we haven't done anying about their meddling in the last election, have we?), etc….

So, if none of those things go wrong – what is there to worry about?  

There's still plenty of earnings reports to make our way through this week, including our 2018 Trade of the Year – L Brands (LB) that are still pretty cheap and featured in our Money Talk Portfolo, which we just talked about in Friday's Morning Report.  In that portfolio, back on Sept 6th, we had a net $3,400 outlay on a $30,000 Jan 2019 spread and we're still at net $3,000 so $400 better than our original entry may be the last chance to play before earnings turn things higher.

We reviewed all of our Member Portfolios over the weekend and I reiterated my call to cash in into the madness of the last couple of weeks as the market continues to irrationally plow higher for no particular reason (no trade war with China is today's excuse, but what does it change?).  

There are still plenty of great stocks to buy if this rally is real.  Aside from LB, I see WSM has earnings this week and that's been a Top Trade pick of ours in the Mid $40s before and just this morning, in our Live Member Chat Room, we decided Dave and Buster's (PLAY) was cheap enough to jump in on at $38.

We'll see how much of today's gains hold but, as noted in our Reviews, we didn't see any reason to press our hedges as long as the indexes are trading above their 50-day moving averages.  These moves may be silly and irration but, if the markets are being silly and irrational, we need to go with the flow and trade that way if we want to make money trading it! 

 

 

 


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  1. Time for some new lines on the Russell!


  2. Will oil trade in a specific band:

    http://ritholtz.com/2018/05/rise-shale-oil/

    These features suggest that oil production may be restricted to a price band governed by the cost of unconventional oil extraction. When oil prices rise above the point where shale extraction becomes profitable, producers will start extracting from the shale wells.

    If prices continue to increase above this point, shale production will continue to ramp up until prices reach the top of the band and production hits full capacity. If the price band theory is correct in practice, unconventional drilling may have a dampening effect on oil price spikes.


  3. The top 10% are not to be generally blamed for income inequality. The top 1% are cleaning them out too…

    https://slate.com/business/2018/05/forget-the-atlantics-9-9-percent-the-1-percent-are-still-the-problem.html

    Reeves’ and Stewart’s arguments start to fall apart, however, when they try to explain why we should supposedly pay less attention to the 1 percent. In Dream Hoarders, for instance, Reeves argues that the biggest cleavage in American class is between the top 20 percent of highest-earning households and the bottom 80 percent. “Americans in the top fifth of the income distribution—broadly, households with incomes above the $112,000 mark—are separating from the rest,” he writes. (As of this year, the figure is closer to $121,000.) But even a cursory glance at how America’s income distribution has changed over the past three decades shows why it doesn’t make sense to talk about the whole top 20 percent as a cohesive group or to give short shrift to the rise of the 1 percent. According to the U.S. Congressional Budget Office, the share of after-tax income going to households in the 81st to 90th percentile dropped a bit between 1980 and 2014. The share belonging to the 96th to 99th percentiles rose slightly. And the most dramatic change, by far, has been the rise of the 1 percent.


  4. Good Morning.


  5. Phill/ Ally

    What are your thoughts on Ally financials? They seem to be a full service online bank with good earnings. 

    Thanks 

    Pat


  6. Good morning, I took a small lost at the RTY shorts, Phil you still holding on?


  7. Brazil- do we have any members based in South America, Brazil in particular.?


  8. SVXY – Got rid of it all….fortunately, it just left a scratch….  :)


  9. Good morning!

    Big Chart – Huge breakout on RUT now so can't really short.

    Oil band/StJ – I think consistently over $70 brings enough new production on-line to take us back down.  That's been going on for years.  Good note on Top 10% – something I have been saying for many years:

    All money is an IOU, what else would it be?

    The money supply is controlled by bankers and they just eliminated the M3, which was the only real way to track it. I’m certain serious inflation (or a massive collapse) is just around the corner so I’m just getting ahead of the curve and embracing it.

    Make no mistake about it, we just had a nice friendly revolution where the working class threw out the upper class in a bloodless coup (just like Indonesia last month!). Republicans outspend Dems 2:1 in this loss and that does not bode well for ’08.

    I know that the Dems are really just Republican Lite and there’s not going to be any major changes but the current Admin + Congress just swung the pendulum too far in favor of the top 10% (and the top 2-10% are just deluding themselves that they are in the same league as the top 1%).

    Jefferson (quoted way above) was worried about exactly this sort of boom/bust currency manipulation back in the 1770s (smart guy!).

    Also, from 2009: 2010 Outlook – A Tale of Two Economies | Phil's Stock World

    Despite the change in leadership, 2009 has not been kind to the American proletariat.  There has been a $539Bn decrease in real income and, since 2006, Americans have lost $3.7Tn housing value (15%).  Homes represent 42% of the average family's total net worth but it's worse than that because home mortgage debt is at $10.4Tn, which is 57% of total home worth.  US home equity has dropped from 58% in 2003 to 43% this year, a loss of over 25% in 6 years.  This is reality for American peasants, the 300M people who aren't in the top 10% and don't read the Wall Street Journal (as they have nothing to invest) and don't shop at WSM or TIF or SKS or JWN – all stocks that have been off to the races in the second half of 2009 as the rich grow far, far richer.

    How much richer, you may ask?  Well the chart on the right says it all.  In the past quarter century, the inflation-adjusted household income for the top 3% of Americans has tripled while the other 97% have gained about 50%, roughly 2% per year over inflation.  Since 1979, 80% of the vast GDP growth in the United States has been diverted to less than 10M of its citizens, while the other 295M people struggle to maintain their lifestyles.  Forcing the vast majority of Americans into a life of wage slavery has, of course, been an economic renaisance for those of us fortunate enough to be at the top of the economic pyramid.  

    Since 1979, the hourly earnings for 80% of American workers  (those in private-sector, nonsupervisory jobs) have risen by just 1 percent, after inflation.  The average hourly wage was $17.71 at the end of 2007. For male workers, the average wage has actually slid by 5 percent since 1979. Worker productivity, meanwhile, has climbed 60 percent.  If wages had kept pace with productivity, the average full-time worker would be earning $58,000 a year; $36,000 was the average in 2007. The nation’s economic pie is growing, but corporations by and large have not given their workers a bigger piece but have instead, kept that 60% gain almost entirely for themselves.  

    The typical American worker toils 1,804 hours a year, 135 hours more per year than the typical British worker (3.5 weeks), 240 hours more than the average French worker (6 weeks), and 370 hours (or nine full-time weeks) more than the average German worker. No one in the world’s advanced economies works more for less.  A 2007 report by the Congressional Budget Office found that the top 1 percent of households had pre-tax income in 2005 that was 140% larger than that of the bottom 40 percent so let's not kid ourselves, America, we have effectively re-created a slave-driven economy but we've wrapped it in the flag and keep the slaves in line by providing them with cheap beer, happy meals and 200 channels of corporate entertainment while drumming into their heads that all they need is a dollar and a dream and they too can step right over the fallen bodies of their fellow workers to join us at the top of the pyramid.

    OK, liberal rant over now – I feel better having indulged my Dickensian side and identifying with the plight of the workers but workers don't buy stock market newsletters so f*ck them, right?  We are investors and we shouldn't be worried about if it's FAIR or RIGHT that we have established an economic engine that funnels the wealth of the nation to the top – if you are reading this article, then chances are you are on or near the top and our job is to figure out how to maintain or improve our position and my biggest failing of 2009 has probably been worrying about the long-term repercussions of impoverishing 295M people when really it's just us (me and my 9,999,9999 economically close friends) that we need to worry about and we have jobs and money and assets and stocks so, once again – F*ck those people!

    Now that we have Russia and China on board with this Capitalism thing, we are more efficient at exploiting the global labor force than ever.  Corporate profits, other than 2008, have climbed an average of 13% a year without increasing wages a single cent over that same time period.  Corporate profits have climbed to their highest share of national income in sixty-four years, while the share going to wages has sunk to its lowest level since 1929 – Perhaps there has never been a better time to invest in Corporate America than right now.  Our global GDP has climbed to about $55Tn, up 100% in 20 years and, the best news of all is that we've made sure that over $21.5Tn (71%) of that growth went to the top 10% of the population.  By keeping the money amongst ourselves, we can be sure that it goes where we WANT it to. 

     

    What does it matter if the capital allocation to the great, unwashed masses barely keeps up with their population growth when our cut grows by leaps and bounds?  We only need them to have just enough to eat and to be able to dress and transport themselves to a place where we can get that 1,800 hours of highly-productive work out of them.  This makes good, economic sense.  If we give money to the world's 6Bn poor people, they're only going to go and buy bread (or dare I say cake) and maybe shoes or clean shirt and mostly they will buy them at Wal-Mart or, even worse, make it themselves and there's little profit for us in that.  By keeping the vast global wealth "in the family," so to speak, we can sell IPods and Hummers and luxury homes and diamonds and gold and other high-margin, unnecessary items to each other that allow the corporations we invest in to make obscene profits which, in turn, makes us EVEN RICHER!  Isn't that fantastic?

    So let's not kid ourselves that anything in this country is being done for the benefit of the 90% who serve us.  We provide the basics and there are even many fine companies who can make money selling those basics like KO, MCD, JNJ, WMT… that we can invest in. 

    ALLY/Pat – I like them, making about $1Bn/yr and valued at just $11.6Bn at $27.  Only pay a 2% dividend, so no point in buying the stock but we can promise to buy it by selling 10 2020 $25 puts for $2.70 ($2,700) in the LTP as it drops $2,700 in our pocket and puts them on our Watch List – in case they get cheaper.  

    RTY/Dave – In and out, 4 short at 1,636.6 at the moment.

    6,950 is a better short on /NQ with tight stops over that line.

    SVXY/1020 – This is why I stay away.  

    Gold is still dogging it at $1,284.  /SI up at $16.50 again after hitting $16.27 last night.  /KC took off, $119.50 and $121.70 on /KCU8!.

    Dollar thinking about 94! 

    I have a lunch meeting soon – back around 1-1:30.


  10. Good Morning.

    Note the consistent camel case capitalization and period. I will attempt to be regular in posting this.







  11. Trump Defends Administration’s Trade Strategy With China



  12. Well, my day is right on schedule but it looks like everyone else took the day off! 


  13. OPK/phil- any thoughts of OPK now after the announcement?


  14. I think VLO could go to 200


  15. Chicago Fed National Activity Index reflects little change in economic growth in April

    Weighing The Week Ahead: Will Higher Interest Rates Lead To Lower Stock Prices? 

    • Debt of American companies had their third-worst 100-day returns since 2000, Bloomberg reports, citing a JPMorgan Chase index.
    • Also, a Bloomberg Barclays index of U.S. investment-grade credit is down 3.9% so far this year, while developing nations' dollar bonds have fallen at about the same rate.
    • Though corporate America's earnings looks healthy, rising benchmark interest rates could lead to investment-grade debt with average duration of more than seven years. Securities with longer duration suffer stiffer losses when rates climb, and gain more when rates decline.
    • Meanwhile, in developing countries, the stronger dollar and concerns about credit quality after taking on lots of debt make investors nervous.
    • For the full year, JPMorgan strategists don't see corporate bond losses as dire as the past 100 days. They cite strong demand among pension funds and overseas investors for long-dated notes.
    • Previously: Higher rates halt stock rally, for now (May 15)
    • "Carmen Reinhart dropped an interesting stink bomb on the markets last week," JPMorgan Asset Management Global CIO Bob Michele tells Bloomberg.
    • Economist Reinhart took note of higher debt levels in emerging markets, as well as the increased exposure of that debt to foreign currency.
    • Michele agrees: "These economies have levered up and it’s not clear they can absorb higher funding rates going forward." 2016's taper tantrum ended up being a nothing-burger, says Michele, but this time, monetary tightening is the real deal – QE is over and a central bank rate hike cycle shows no signs of slowing
    • Paving the way for heavier international sanctions, Venezuela's Nicolas Maduro won a new six-year term on Sunday in an election deemed illegitimate by the opposition and foreign governments.
    • The economy has been in recession since 2014, with the bolivar currency down 99% in the past year and inflation at an annual 14,000%, according to the National Assembly.
    • China to "actively and steadily" deleverage and tackle financial risks, citing the country's five-year plan (2016-2020) for the financial sector.
    • China will significantly boost the share of direct financing in its financial system, especially equity financing.
    • China will continue to promote the process of yuan internationalization, expecting cross-border yuan payments to account for over a third of all cross-border payments by 2020.
    • Indonesia's central bank will conduct three foreign exchange swap auctions this week to ensure there is enough rupiah liquidity in the market following the hike in its key rate, the 7-day reverse repo rate by 25 bps to 4.50%
    • The overnight contract for the Jakarta Interbank Offered Rate rose to 4.22528 percent on average the following day, from 4.02500 percent.
    • The rupiah has been under pressure in past weeks as U.S. Treasury yields rose and the dollar rallied. The currency continued to fall despite BI's rate hike and on Monday it softened further to trade at 14,195 to the dollar, its weakest since October 2015
    • The supposedly bullish news of a power-sharing agreement between Italy's Five Star Movement and The League isn't doing much to help that country's market for government debt, and chatter about a eurozone break up is again entering the conversation.
    • Italy's 10-year government bond has exploded higher by 18 basis points today to 2.40%. Against Germany, it looks even worse, as 10-year Bund yields are down six basis points.
    • Italian stocks are the worst performers on the Continent as well, with the FTSE MIB down 1.5% vs. the Stoxx 600's 0.3% advance.
    • Checking another peripheral name, Spanish 10-year yields are up 7.5 basis points to 1.50%, and the IBEX 35 is off 0.45%.

    PetroChina hikes gas supply to help meet demand

    • PetroChina (PTR -0.4%) is stepping up natural gas supplies from both domestic fields and imports to meet customer demand, raising April gas supplies by 14% Y/Y, parent company CNPC says.
    • PTR hiked production in the first four months of this year at major domestic fields Changqing, Southwest, Tarim and Qinghai by more than 2% from the year-ago period to 30.5B cm, and raised imports of natural gas by nearly 29% during the same period, CNPC says.
    • Reuters reported last week that PTR had curbed the feed of gas to some users in the northern and western parts of China since early May to help head off possible shortages next winter.
    • Japan's Tokyo Gas receives its first shipment of liquefied natural gas from Dominion Energy's (D+0.1%) newly completed Cove Point export plant in Maryland.
    • The cargo is the first of 2.2M metric tons/year of LNG that Japanese companies are purchasing under long-term contracts from Cove Point, which Nicholas Browne, senior gas analyst at energy consultancy Wood Mackenzie, says "could not come at a more timely juncture for Japan" at a time of U.S.-Japan trade tensions.
    • Tokyo Gas has a contract to buy 1.4M metric tons/year of LNG from Cove Point for 20 years, and Kansai Electric Power has contracted to take 800K metric tons/year.
    • Spirits Airlines (NASDAQ:SAVE) is up 2.85% after JPMorgan tips that the company has raised domestic fares.
    • The second part of the equation will be if other airlines match the fare hike on competing routes.
    • Source: Bloomberg
    • Tesla (TSLA +2.9%) falls short of landing a recommendation from Consumer Reports after the publication says it found several flaws.
    • "The Tesla’s stopping distance of 152 feet from 60 mph was far worse than any contemporary car we’ve tested and about 7 feet longer than the stopping distance of a Ford F-150 full-sized pickup," reads the review based on tests on different Model 3s.
    • "Another major factor that compromised the Model 3’s road-test score was its controls. This car places almost all its controls and displays on a center touch screen, with no gauges on the dash, and few buttons inside the car. This layout forces drivers to take multiple steps to accomplish simple tasks. Our testers found that everything from adjusting the mirrors to changing the direction of the airflow from the air-conditioning vents required using the touch screen."
    • Other Model 3 features such as steering and handling drew positive remarks from the reviewers.
    • Tesla has had generally positive reviews from CR, including the Model S winning car of the year and best car in its category several times.
    • Full Consumer Reports review
    • Shares of Tesla are off their session high.
    • Lyft (LYFT) wants to launch an electric scooter fleet in San Francisco, according to The Information.
    • Competition: Spin, Bird, and Lime all recently launched scooter services in the area. But the companies didn’t have permission and Lyft is talking with city officials about applying for a permit. 
    • San Francisco plans to issue permits for up to five companies during the 24-month pilot program. Each company could have up to 500 scooters. 
    • Lyft competitor Uber (UBER) recently acquired bike-share startup Jump for $200M.  
    • Previously: Uber acquires Jump Bikes (April 9)

    Gogo -3.2% on analyst downgrade

    • UBS downgrades Gogo (NASDAQ:GOGO) from Buy to Neutral.
    • Gogo shares are down 3.2% to $5.12.  

    Analyst updates on Macau

    • Nomura Instinet analyst Harry Curtis estimates that Macau gross gaming revenue rose ~20% in May, a mark that tops the current consensus mark of +14%.
    • Jefferies analyst David Katz reports industry sources are citing accelerating dynamics in Macau over the last week.
    • A new update from Bernstein indicates that high rollers in Macau prefer properties operated by Melco Resorts a& Entertainment and Wynn Macau. The firm says the two casino operators have the highest mix of visitors with a monthly income of over CNY15K ($29K U.S.).
    • Within the tilt to the premium side of the business, Melco is drawing younger patrons than Wynn Macau.
    • Macau casino stocks: Wynn Macau (OTCPK:WYNMFOTCPK:WYNMYWYNN), Sands China (OTCPK:SCHYYOTCPK:SCHYFLVS), MGM China (OTCPK:MCHVFOTCPK:MCHVYMGM), Galaxy Entertainment (OTCPK:GXYEF), SJM Holdings (OTCPK:SJMHFOTCPK:SJMHY), Melco Resorts & Entertainment (NASDAQ:MLCO).

    Valeant Pharmaceuticals: Worth At Least $30 

    Will 'Public Shaming' Sink Celgene? 

    • World Wrestling Entertainment (NYSE:WWE) has jumped 4.7% after receiving a "massive" offer to make Fox (FOXFOXA) the new home of SmackDown Live, ESPN reports.
    • Specific terms weren't known but the deal is set to begin in October 2019.
    • That news comes after NBCUniversal (NASDAQ:CMCSA) declined first refusal on SmackDown,choosing instead to focus on Monday Night Raw.
    • SmackDown Live has averaged 2.59M viewers/week this year, while Raw has averaged about 3M.

  16. OPK/Dave – Was there another announcement?  If not, we talked about the Medicare non-recommendation last week.  That we'll have to wait and see what actually happens.

    VLO/BDC – At these gas prices, why not?  I just spent $75 to fill up my tank – that can't possibly hurt the economy, right?


  17. Still short a bunch of KODK $5 and $2.50 puts. Looking better.


  18. Phil I feel sorry for you filled up my car 65 Ltr. for 84€ that is diesel!


  19. FWIW – If anyone is interested.

    QuickLogic EOS S3 Platform Enables Ultra-Low Power Amazon Alexa Support for Products Using Qualcomm Bluetooth Audio SoCs

    http://ir.quicklogic.com/news-releases/news-release-details/quicklogic-eos-s3-platform-enables-ultra-low-power-amazon-alexa


  20. KODK/Albo – Crazy ride on that one.  

    TLSA BS this morning not helping much – maybe people are starting to catch on to the scam?

    Gas/Yodi – That's the only flaw in your lifestyle – you need gas.  

    Uh-oh!  

    • Atlanta Fed president and CEO Raphael Bostic sees the U.S. economy rising at about 2.5% this year and slowing to 1.75% over the medium term.
    • Bostic favors two more rate increase this year.
    • If the real interest rate is likely to remain low, then giving the Fed enough room to fight run-of-the-mill economic downturns requires boosting the nominal interest rate.
    • "On balance, I view the economy as on track and believe we are close to mandate-consistent outcomes for both inflation and employment," he told the Atlanta Economics Club in a speech today.
    • With inflation already on target, Bostic wouldn't be surprised to see a "modest overshoot" of the Fed's longer-run target. "Inflation is likely to run a bit above 2% for a while," he said.
    • The upside risk to his economic outlook is the prospect of capital spending resulting from tax reform, while a downside risk is uncertainty from changes in trade policy.
    • Source: Speech
    • Previously: Emerging market funds show stress under impending Fed rate hikes: FT (May 11)

  21. I am shocked what about Oxygen?????????


  22. O2/Yodi – So far, it's cheaper.  

    Getting a little pullback into the close but have to wait for tomorrow to wipe out today's gains, I guess. 

    • Semiconductors head towards the close strong on the eased China-US relations and Micron’s (MU +3.9%) increased guidance.
    • The Philadelphia Semiconductor Index is up 0.8%.  
    • Other movers: Intel (INTC +1.2%), KLA-Tencor (KLAC +1.4%), Lam Research (LRCX +2%), and Qorvo (QRVO +1.8%). 
    • Analysts are applauding General Electric's (GE +2.7%) deal to merge its transportation businesswith Wabtec (WAB +3.9%) in which GE will get $2.9B in cash and  50.1% ownership of the combined company.
    • "This deal is the largest cornerstone for John Flannery's plan to divest non-core assets," William Blair analyst Nick Heymann tells CNBC. "If this stock starts to move higher, people will worry about missing the upside."
    • "GE is no longer a contrarian stock. It's a value stock," Heymann says, rating GE at Outperform; while he does not have an official price target, he thinks shares can rise to $20-$22 in the next 12 months if the company generates $10B of annual free cash flow or $1.15 of free cash flow per share.
    • "The removal of this capital-intensive and secularly challenged business is still a net positive overall for GE's portfolio transformation," RBC Capital's Deane Dray writes, adding that "the $2.9B cash infusion helps give GE some welcomed cushion for its liquidity needs."
    • “Both business units have been impacted by the extreme cyclicality and uneven order flow of the locomotive business, and both units are likely to see improved demand in the next two years coming off a trough in demand in 2017,” says CFRA's Jim Corridore, who continues to rate GE a Hold.
    • Wells Fargo's Allison Poliniak-Cusic likes the deal for WAB, "with GE's locomotive positioning coupled with its increasing focus on digital and analytics being additive to Wabtec's portfolio."
    • Analysts are applauding General Electric's (GE +2.7%) deal to merge its transportation businesswith Wabtec (WAB +3.9%) in which GE will get $2.9B in cash and  50.1% ownership of the combined company.
    • "This deal is the largest cornerstone for John Flannery's plan to divest non-core assets," William Blair analyst Nick Heymann tells CNBC. "If this stock starts to move higher, people will worry about missing the upside."
    • "GE is no longer a contrarian stock. It's a value stock," Heymann says, rating GE at Outperform; while he does not have an official price target, he thinks shares can rise to $20-$22 in the next 12 months if the company generates $10B of annual free cash flow or $1.15 of free cash flow per share.
    • "The removal of this capital-intensive and secularly challenged business is still a net positive overall for GE's portfolio transformation," RBC Capital's Deane Dray writes, adding that "the $2.9B cash infusion helps give GE some welcomed cushion for its liquidity needs."
    • “Both business units have been impacted by the extreme cyclicality and uneven order flow of the locomotive business, and both units are likely to see improved demand in the next two years coming off a trough in demand in 2017,” says CFRA's Jim Corridore, who continues to rate GE a Hold.
    • Wells Fargo's Allison Poliniak-Cusic likes the deal for WAB, "with GE's locomotive positioning coupled with its increasing focus on digital and analytics being additive to Wabtec's portfolio."
    • Deere (DE +2%) enjoys strong gains following China's agreement to buy "massive" amounts of agricultural equipment – although no specifics have been provided – and have jumped 8% since it reported quarterly results last Friday, but Melius Research thinks DE shares may have gotten ahead of themselves.
    • Melius's Rob Wertheimer warns the bull case for agriculture, and by extension DE, relies on "record levels of equipment inefficiency and excess machinery continuing to worsen… we can’t see a way to be as sanguine as consensus."
    • But Wertheimer says farming practices are changing to use less power per acre prepped and planted, as GPS and guidance systems make horsepower more productive.
    • The analyst does not see a way to justify DE's big gap with Caterpillar, especially given catalysts at the latter, thus he reiterates a Neutral rating on DE and $164 price target; the firm rates CAT as a Buy.

    /RB just under $2.26 – very tempting short but it's a holiday weekend.  

    /CL $72.50 is a good spot too.  frown


  23. Long but thought provoking (mostly some extended text on a lot of ideas expressed here)

    https://www.theatlantic.com/magazine/archive/2018/06/the-birth-of-a-new-american-aristocracy/559130/


  24. GE

    ~~General Electric ticking lower after Fox Business's Charles Gasparino reports insiders say further dividend cut or elimination is possible as CEO Flannery scrambles to reduce costs.  


  25. Dollar returns to 93.45. maybe time for some air to come out of RUT.






  26. Scientists Can Now Bend And Stretch Diamond Like Rubber


  27. Good morning! 

    Literally nothing going on this morning.   

    • Japan -0.18%.
    • Hong Kong Closed.
    • China +0.02%.
    • India +0.15%.
    • London +0.08%.
    • Paris -0.08%.
    • Frankfurt +0.03%

    ?Tuesday's economic calendar

    • It would be the biggest rewrite of financial laws since the Dodd-Frank reform act passed after the financial crisis.
    • The House is soon expected to vote on a Senate-passed bill that would raise the level at which banks are considered "systemically important," exempts smaller banks from rules banning proprietary trading and loosens minimum standards on certain home mortgage loans.
    • Previously: Senate passes bill easing Dodd-Frank (Mar. 15 2018)
    • Brexit negotiations will resume today in Brussels following Theresa May's compromise offer at last week's Western Balkans summit in Sofia.
    • Her new “backstop” proposal would keep the U.K. tied to European customs rules for longer in a bid to solve the Irish border issue.
    • While she forced ministers to get behind her plan, it received a cool response from EU leaders and officials.
    • The easing of trade tensions between the U.S. and China is continuing, with the latter pledging to cut import tariffs on passenger vehicles to 15%, down from 25%. Import duties on car parts will be reduced to 6%.
    • It comes after Washington froze its proposed Chinese tariffs and looked into lifting the ban on ZTE, while Beijing halted its probe into U.S. sorghum imports and restarted the review of the Qualcomm-NXP deal.
    • The U.S. and China have agreed on the broad outline of a deal that would save China's ZTE (OTC:ZTCOY), WSJ reports, as the two nations move closer to resolving their trade dispute.
    • It would be required to make significant changes to management and the board, as well as pay possible fines, to lift a ban on U.S. companies selling the telecom giant components and software.

    • The fiscal outlook for the U.S. "is not good," according to Goldman Sachs, and "lawmakers might hesitate to approve fiscal stimulus in the next downturn."
    • The bank expects the federal deficit to increase from $825B (or 4.1% of GDP) to $1.25T (5.5% of GDP) by 2021, and by 2028, it forecasts the number to balloon to $2.05T (7% of GDP).
    • Besides a critical evaluation from Consumer Reports, Tesla's (NASDAQ:TSLA) Model 3 needsto sell more expensive editions to keep the company afloat.
    • "Shipping min cost Model 3 right away wd cause Tesla to lose money & die. Need 3 to 6 months after 5k/wk to ship $35k Tesla & live," tweeted Elon Musk.
    • The bare-bones version was supposed to help Musk reach his goal of creating an "affordable mass-market electric car."