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Non-Farm Friday – Is America Working?

How many jobs were created in May?

Expectations are about 190,000 but I'm not sure it matters much as we've been in a very tight, China-like range since 2011 – almost never too hot or too cold.  The Republicans often accused the Obama Administration of manipulating the data which means the current administration believes the data can be manipulated and MUST be manipulated to make it "fair" and give them the same advantage Obama had with his fake data.  See how easy that is to justify?

The US ads about 2M citizens per year so we'd better create 200,000 jobs per month or we're simply adding more unemployed people.  According to the Fed's recent Beige Book (see Wednesday's Webinar for discussion), we're actually running low on employees, with sub-4% Unemployment Rates, usually considered "full employment".  At this point and that's putting pressure on wages which will put pressure on Corporate Margins and it also raises demand for the Dollar (to pay the workers) and all that puts pressure on the Fed to raise rates.

Keep in mind, on this chart, wages aren't going down, they are just accelerating at a slower pace but, in theory, 2.5% is ahead of inflation, which means it is, in fact, eating into Corporate Margins and the more jobs that are created, the more pressure it puts on employers to pay up if they want to get top talent.  We're only in the very early stages of worker empowerment but we're already seeing strikes and tougher labor negotiations as job mobility gets easier as we approach full employment.  

8:30 Update:  223,000 jobs were created in May and the Unemployment Rate has dropped to 3.8% which makes it practically and emergency for the Fed to raise rates at their June 13th meeting or they risk getting behind the 8-ball on inflation.  That means, once again, we'll look to short the Nasdaq (/NQ) at the 7,000 line (tight stops above) as well the S&P (/ES) now 2,720 as long as it's below 2,728 (a $400 loss, so be careful).

We had a lot of fun yesterday with our index shorts.  In yesterday's PSW Morning Report, we jumped on the chance to short the S&P Futures again at the 2,725 line and we got a nice drop all the way down to 2,700 for a lovely $1,250 per contract win.  The Russell (/RTY) shorts did well for us too, falling from our 1,650 short entry all the way back to 1,635 for a $750 per contract winner.  

As planned in the Morning Report, we also shorted Oil (/CL) Futures at $67.50 and we got quick $1,000 per contract gains on those and we also decided, in our Live Member Chat Room, to short Gasoline (/RB) and, as you can see, those made us some very nice gains as well ($4,389).  That's $7,389 in profits for one day's work – don't you think you should learn how to trade the Futures?  It's such a valuable tool to have in your belt but it takes A LOT of practice and hard work to get good at it – it's not something you should do casually.  

We were short on the Oil Report at 11 and, at first, the Futures went up, not down but I said to our Members at 11:07:

I DD'd on my /RB short at 2.195 so 4 avg 2.189 at the moment and I'm good going to my meeting on that note. 

Only 15 minutes later, I hadn't actually left yet and /RB had already started pulling back off that silly spike and I said:

Wheeee, there you go.  Can't let the initial reaction fool you on those reports – more important to think about what it means and play it the way the data sends you!  

Back to 2 short now with a nice profit and a stop over 2.18.

As you can see from the chart, we never had an issue with the stop line and we took the money and ran when I came back from my meeting at 1:35 (see screen shot).  On that trade we were using a method called "scaling in" and "scaling out" of a position (see our Strategy Section) to raise our basis on the shorts so, effectively, we were just playing with 2 contracts that ended up making $2,000 each!  

As it's Friday, we're mostly in watch and wait mode today as the trading is likely to be light and light trading tends to take us higher so we'll be mostly looking for opportunities to improve our hedges into the weekend because, much like Wednesday, nothing has actually changed since yesterday and there's no reason the Futures should be higher this morning. 

Notes are collapsing, yield curves are inverting but suddenly no one cares?  Yep, I'm pretty sure we're going to work on our hedges this morning!  

Have a great weekend,

- Phil


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  1. Not only is this the most corrupt administration ever, it's also the stupidest! This trade war talk is maddening – we are alienating every single friend we have besides Putin and Kim Jong-Un! Even Canada for crying out loud. No one wins trade wars and especially the country that ends up isolated because now the rest of the world will simply ignore us. 

    Because he has been surrounded all his life by yes man, Trump thinks that he earns respect with his tough guy talk because his friends praise him all the time but he has been seen as a buffoon for a while now and that's not changing anytime soon! I can't believe the damage this guy is doing to this country is such little time.

  2. And the media plays along:

    But here’s the thing: If the leader of the country is lying 100 percent of the time, then the coverage of his comments needs to be 100 percent negative. Trump uses the sense that coverage of the president needs to be balanced to avoid accountability. It’s why pundits lavish praise on him anytime he gives a speech that doesn’t include conspiratorial race-baiting, and have been quick to praise him for a nascent diplomatic entreaty with North Korea that, by any relative measure, has been messy and ad hoc at best.

    Covering Trump is no doubt more challenging than covering past presidents. Some days reporters rise to the occasion and some days they don’t. But few reporters, and no major media outlets, have concluded that a president who lies systematically should be covered in a systematically different way than his predecessors. He routinely calls the maxim that there are two sides to every story into question. At the very least, he demands a level of fact checking that previously would have been considered absurd or gratuitous, and necessitates keeping “old news” in the headlines, even as new outrages pile up.

    Trump has declared the media the enemy of the people, and the media has responded with no fresh tactics. He is fighting a war that uses the media’s own rules against it, and he is winning in a landslide.

  3. Speaking of free trade – Brexit not leading to what people thought it would:

    Indeed, the Brexiteers’ favoured new customs arrangement with the EU would, HMRC estimates, cost businesses an additional £17 billion to £20 billion a year. Far from delivering free trade, the Brexiteers are actually leading the UK towards its most significant imposition of new barriers to trade since at least the war.

  4. Good morning! 

    Fiat/Chrysler sales up 11% in May – that's strong!  Sold 100,000 Jeeps – up 29%.  People are such idiots – as soon as gas prices go down they buy gas guzzlers again.  

    Big Chart – NYSE is still the one to watch but looks good for the open. 

    • More than 230 Chinese stocks, known as A-shares, have been finally added to MSCI's Emerging Markets Index (ETF: EEM), giving ordinary U.S. investors greater access to mainland China.
    • The move is expected to drive a surge of foreign money into local markets, but with U.S. tariffs reigniting fears of a global trade war, Chinese stocks slid overnight, with the Shanghai Composite Index dropping 0.7%.
    • The softening of eurozone manufacturing has continued deep into the second quarter and forward-looking indicators suggest it will at best remain subdued in the coming months.
    • IHS Markit's final manufacturing PMI for the bloc slipped to 55.5 in May from 56.2 the previous month. While the reading was well above the 50 marker, it was the weakest rate of expansion in 15 months
    • Populist parties the 5 Star Movement and the League have agreed on a coalition government, with Giuseppe Conte as new prime minister. That's helping a 20 basis point decline in 10-year government bond yields and a 2.6% advance for the FTSE MIB index.
    • Spain is up 1.8%, following the exit of Prime Minister Mariano Rajoy, who lost a no-confidence vote in parliament. Socialist leader Pedro Sanchez is due to take power.
    • The Stoxx 600 is higher by 1%, and S&P 500 (NYSEARCA:SPY) futures are ahead 0.45%

    Socialists set to take Spain

    • A coalition deal has been reached in Italy as the Five Star Movement and League officially join forces to govern the eurozone's third-largest economy.
    • Besides the threat of the euroskeptic administration, periphery risk may also be coming to Spain.
    • Pedro Sanchez has claimed the country's prime minister spot after his socialist party secured enough votes to topple Mariano Rajoy in a confidence vote over a corruption case.


    • Ensuring that "investors cannot lose more money than they put in," an EU ban on binary options sales to retail customers will come into force tomorrow, with restrictions on sales of contract for differences starting in July.
    • Binary options and CFDs are financial products that give an investor exposure to price movements in securities without actually owning the underlying assets such as a currency, commodity or stock.
    • May Nonfarm Payrolls: +223K vs. consensus +189K, +159K previous (revised from 164K).
    • Unemployment rate: 3.8% vs. 3.9% consensus, 3.9% previous.

    Yields on the rise after jobs beat

    • Alongside the strong 223K jobs added in May, April's count was revised slightly lower, and March modestly higher.
    • Average hourly earnings gained $0.08 to $26.92, now up 2.7% on a year-over-year basis – inline with estimates.
    • The unemployment rate slipped to 3.8% – its lowest level since 2000. The broader U-6 unemployment rate fell to 7.6% from 7.8%. That drop in unemployment, however, came at least in part thanks to another dip in the labor force participation rate to 62.7%.
    • Full report
    • Treasury yields are rising further, the 10-year now up five basis points to 2.913%. TLT -0.9%TBT +1.8%
    • The dollar (UUPUDN) has gained modestly on the news, and gold (NYSEARCA:GLD) has slipped about $6, now off 0.5% on the session at $1,298 per ounce.
    • Canada will further challenge the new U.S. tariffs under both NAFTA's Chapter 20 and the WTO's dispute settlement process, raising the chances that NAFTA negotiations could fall apart.
    • "The U.S. has been taken advantage of for many decades on trade," President Trump declared. "Those days are over. Earlier today, this message was conveyed to Prime Minister Justin Trudeau: The U.S. will agree to a fair deal, or there will be no deal at all."


    • Besides retaliatory tariffs from the European Union, the U.S. is facing "counter-balancing measures" from its northern and southern neighbors after imposing duties on steel and aluminum.
    • Canada's levies will cover C$16.6B in imports, including whiskey, orange juice and other food products, alongside metal tariffs.
    • Mexico's reciprocal measures will also target steel, as well as pork legs, apples, grapes and cheeses.

    A Bigger Tech Bubble Today Than The One In 2000? 

    Why You Should Question The Unicorns 

    Tesla feels the pressure as GM gains, UBS reiterates Sell rating

    • General Motors' (NYSE:GM) 13% gain was today's strongest showing in the S&P 500, as SoftBank's $2.2B investment in its self-driving car unit also prompted an upgrade to Outperform at Evercore ISI with a $50 price target, which assigned an $8/share value to GM's Cruise assets after previously valuing the unit at zero.
    • Tesla (NASDAQ:TSLA) tumbled 2.4% today on the news, as GM and others continue to make progress with their self-driving technologies, and UBS reiterated a Sell rating and $195 price target on the stock, saying investors should pay attention to the liquidity issue regardless of headlines about the Model 3 production rate.
    • Concerns about TSLA's cash burn are valid and it may need even more cash soon, UBS says: "Tesla is levered at 39x trailing net debt to EBITDA, higher than any S&P 500 company. While Tesla has ~$1.7B left on its revolver, we forecast Tesla will need additional capital by [Q4] 2018 to de-risk its balance sheet."


    • Macau gross gaming revenue increased 12.1% in May to 25.5B patacas to fall short of the 17% consensus analyst estimate, according to the Gaming Inspection and Coordination Bureau.
    • Macau GGR was up 27.6% in April and 23.7% a year ago in May.
    • Union Gaming analyst Grant Govertsen advises that mainland police actions in the middle part of the month against currency exchange shops at the Gongbei border with Macau could have played a part in mass growth rate deceleration.
    • Macau casino names trade lower after May revenue number comes in below expectations.
    • Though May marked the 22nd straight month of positive growth for the gambling region, the +12% GGR pace fell short of the consensus estimate of +17%..
    • Analysts think a crackdown on money exchange counters near the border city of Zhuhai played into the revenue shortfall, a development seen as only a short-term hindrance.
    • Melco Resorts & Entertainment (NASDAQ:MLCO) is down 3.52% in premarket trading, while Las Vegas Sands (NYSE:LVS) is 2.00% lower. Wynn Resorts (NASDAQ:WYNN) is down 1.91%in early action. MGM Resorts (NYSE:MGM) is off only 0.95% due to a lower mix of Macau business.
    • Previously: Macau gaming revenue up 12% in May (June 1)

    Costco lifts wages

    • Costco (NASDAQ:COST) says it will use savings from lower corporate taxes to lift its starting hourly wage to $14.00 to $14.50 from $13.00 to $13.50. All other hourly warehouse employees will receive hourly increase of anywhere from $0.25 to $0.50 per hour.
    • The new minimum wage will go into effect on June 11.
    • "The estimated annualized cost of these increases will impact about 130,000 plus employees in the United States, will be $110 million to $120 million pre-tax, with Q4 being impacted by little more than $25 million pretax," said CFO Richard Galanti on the earnings call (transcript).
    • Shares of Costco are down 1.18% in premarket trading after Q1 earnings.
    • Abercrombie & Fitch (NYSE:ANF): Q1 EPS of -$0.56 beats by $0.21.
    • Revenue of $730.9M (+10.6% Y/Y) beats by $34.25M.
    • Shares +9.85% PM.
    • Press Release
    • Abercrombie & Fitch (NYSE:ANF) pops after the retailer issues a strong sales forecast to go along with a Q1 sales beat.
    • A&F expects total and comparable sales to rise 2% to 4% this year after earlier guiding for a low single-digit rise. Strength is being seen in both the Hollister and Abercrombie brands.
    • The company also expects gross margin as a percentage of sales to improve slightly this year. Q1 gross margin came in at 60.5% vs. 59.8% anticipated and 60.3% a year ago.
    • "We are off to a strong start in 2018 and we are committed to delivering top and bottom line growth, as we work towards our goal of being a leading global omnichannel apparel retailer," says CEO Fran Horowitz.
    • Shares of Abercrombie & Fitch are up 7.13% in premarket trading to $25.55.
    • Credit Suisse keeps an Outperform rating on Lululemon (NASDAQ:LULU) after taking in the retailer's strong Q1 sales report.
    • "Along with a strong innovation pipeline, strong new customer acquisition (+28% in 1Q) & top-line momentum continuing into 2Qto-date, we have increased confidence in sources of upside to LULU’s +HSD SSS guide for ‘18 despite tougher compares through year," writes analyst Michael Binetti.
    • The CS analyst team raises its price target on LULU to $125 from $105.
    • LULU +6.71% premarket to $112.10.
    • GameStop (NYSE:GME) reports comparable sales fell 5.3% in Q1 to just miss the consensus estimate for a 5.0% drop.
    • Comparable sales were down 2.6% in the U.S. and 11.6% for the international business.
    • New hardware sales decreased 7.9% and new software sales were down 10.6% as both categories came up against a tough category from a year ago when the Nintendo Switch arrived.
    • Digital sales were up 29.6%, excluding the Kongregate business which was sold.
    • Collectibles sales were up 24.4% during the quarter.
    • Looking ahead, GameStop expects full year sales to fall 2.0% to 6.0% and EPS to land in a range of $3.00 to $3.35.
    • GME -4.29% AH to $12.63.
    • China's markets regulator is still reviewing Qualcomm's (NASDAQ:QCOM) proposed $44B acquisition of NXP Semiconductors (NASDAQ:NXPI) and is in talks with the U.S. chipmaker about ways to eliminate negative market impacts from the deal.
    • In response to a question from Reuters, the State Administration for Market Regulation said it will conduct the antitrust review in a fair and open way.
    • Previously: Dealreporter: Qualcomm's NXP acquisition at risk of stalling in China (May. 30 2018)
    • Satya Nadella touted Microsoft's (NASDAQ:MSFT) research in brain technology at the company's eighth Ability Summit, detailing work that could determine how implants could augment a person's intelligence.
    • It's one of the many ways the firm is trying to make technology more accessible to people with various disabilities.
    • Earlier this year ZDNet reported that Microsoft employees had sought a patent for a system that could take action based on brain input.
    • UBS maintains a Buy rating on Apple (NASDAQ:AAPL) and raises the price target from $190 to $210, a 12% upside to yesterday’s close.
    • Analyst Steven Milunovich cites the firm’s consumer survey that indicated “weak iPhone buying intentions but a rising mix, so continued unit pressure but potential for flat-to-up ASP. “
    • In the survey, 44% of planned purchases were for the iPhone X, up for 30% from the October survey. 
    • The analyst notes that Apple remains an aspirational brand, saying, “We do think the P/E could rise over time as Apple is perceived more like Nike than like Nokia.”
    • Apple shares are up 0.5% premarket to $187.87.

    Idiot in chief strikes again – couldn't wait to tell people we had good jobs numbers (he gets the report about 7am):

  5. Good Morning.

  6. Trump / Phil – I can't believe that the guy basically announces to the market that the numbers will be good so manipulating the market and no one will say anything!

  7. JILL  – Sold another 1/3. 

    Keeping 1/3.

  8. MAT – New recovery high.  Trading above the 200 dMA.

  9. /ES – are we looking to short again at the 2728 level?

  10. I think Albo and I are the only ones goofing with MAT… after seeing Phil post their top selling toys several days ago I can see why people are staying away.

    Shorted some /YM at 650. 

  11. Atitlan – We have company.  A lot of "gurus" have bought the stock.  I'm not long the stock, but am short a bunch of Jan $12 puts.

  12. Adding a couple more /ES shorts at the 2,728 line, of course.  4 short @ 2,725.875 avg.

    Trump/StJ – Can you imagine telling that guy State Secrets?  I'll bet his idea of foreplay these days is telling his hooker "The first letter begins with an "I" – oops, I mean it sounds like "eye"…."

    MAT/Albo – Very nice comeback for them.

    /ES/Tshroy – We'll keep shorting until it burns us.  

    Volume pretty strong for this early so be careful:

    Date Open High Low Close* Adj Close** Volume
    Jun 01, 2018 272.41 273.60 272.37 273.21 273.21 22,157,589
    May 31, 2018 272.15 272.49 270.26 270.94 270.94 83,427,100
    May 30, 2018 270.50 273.11 270.42 272.61 272.61 69,678,400
    May 29, 2018 270.31 271.17 267.76 269.02 269.02 115,908,600
    May 25, 2018 272.15 272.86 271.58 272.15 272.15 56,374,800
    May 24, 2018 272.91 273.22 270.78 272.80 272.80 76,043,800
    May 23, 2018 271.17 273.39 270.99 273.36 273.36 61,021,700
    May 22, 2018 273.96 274.25 272.24 272.61 272.61 52,966,400
    May 21, 2018 273.01 273.98 272.57 273.37 273.37 58,025,900
    May 18, 2018 271.62 272.03 270.93 271.33 271.33 64,368,000
    May 17, 2018 271.94 273.23 271.13 272.01 272.01 56,536,400
    May 16, 2018 271.14 272.76 271.11 272.24 272.24 53,942,600

  13. Hey there! Yes you, the SEC …. There is an market manipulator in Washington you might want to look into … you can start with his Twitter feed. Maybe Mueller won't need to finish his investigation. :-)

    Having just got back from Canada and meeting lots of people I can safely say that managing to get a Canadian angry without accusing him/her of (a) being an American or (b) talking Ice Hockey is one hell of an accomplishment.

    Congrats DT … btw did anyone wonder if he got Kin K mixed up with North Korean Kim?

  14. By the way, speaking of Trump and dead hookers – where is Melania?  Apparently he faked a tweet from her yesterday but, other than that, no one has seen her for 3 weeks, since she went to the hospital supposedly for some kidney issue.

    Today marks the 22nd day since has been seen publicly. Now, reports she's skipping Trump's trip to Camp David this wknd.

    Here's the fake tweet:

    I see the media is working overtime speculating where I am & what I'm doing. Rest assured, I'm here at the w my family, feeling great, & working hard on behalf of children & the American people!

    You can tell that's Trump's tone easily!

    AAPL is driving the Nas up on the upgrade, up 1% to $189.

  15. I need to wake up from this nightmare!

  16. SOXX flying..

  17. lower left to upper right                                     forever and ever…                       

  18. RE Melania- The fact that NOONE has seen her for 3 weeks is a bit scary. What did Dumpf do- have her committed so he could frolic with his "paymates" undeterred? Or just a cosmetic procedure? Maybe she has filed for divorce since dumpf must be soooo much fun to tolerate! Maybe she is waiting for him to be carted away in handcuffs, That's not only a happy thought for her!!

  19. Hedging Adjustments:

    • Forgot to mention from the Webinar discussion, DXD reverse split so, if you have the 100 July $8s, they are now 25 July $32s but if you still have the July $8s, you should be able to get 0.70 for them (not today!) and that's $7,000 and our new DXD position in the STP is 50 Oct $32 ($3.45)/36 ($1.90) bull call spreads at $1.55 ($7,750).
    • Also in the STP and in the OOP, let's buy back the 40 (or 20) SQQQ Sept $20 calls at 0.60 ($2,400/1,200).  If SQQQ goes lower, we'll roll the 80 long $15 calls lower and pay for those with short sales.  
    • Finally, for the STP , there's no sense rolling the 50 TZA July $10 calls at 0.30 ($1,500), so we'll just buy 50 of the Oct $8 ($1.55)/13 (0.35) bull call spreads at $1.20 ($6,000) to pick up another $25,000 of insurance.  Since we're leaving the July calls too – we have a lot of short-term disaster protection. 
    • In the OOP, we still have 25 short Jan $20 calls at 0.32 ($800) so let's buy them back and roll our 50 Jan $10 calls ($1.10) to 50 of the Jan $7 ($2.50)/$12 (0.80) bull call spreads at $1.70 so for 0.75 (both costs) we move $2.40 in the money on the $5 spread.  

  20. I'm Important.

  21. SA article on IQ urging caution.  Meanwhile the stock keeps barrelling ahead.  Option premiums are huge.  The Jan $30 calls are over $5.  Unreal.

    • The European Union files a World Trade Organization challenge against U.S. tariffs on steel and aluminum imports, as it prepares a list of U.S. exports that could be slapped with €6.4B ($7.5B) worth of levies as soon as June 20.
    • The EU says the U.S. measures are “pure” protectionism, as its WTO action will challenge Pres. Trump's national security justification for the tariffs; European leaders have rejected Trump's suggestions that EU countries – 22 of them NATO members – pose security threats to the U.S.
    • At the same time, the EU also files a WTO case against China for undermining intellectual property rights with forced technology transfers.
    • Canada also is challenging the U.S. tariffs under both the WTO's dispute settlement process and NAFTA’s Chapter 20.
    • Trump sent out a Tweet this morning that appears to threaten possible action against Canada’s lumber industry.

  22. Wow, life is getting strange:

    • In its latest esports news, Activision Blizzard (ATVI +1.4%) notes the first Grand Finals of its Overwatch League have sold out Barclays Center.
    • More than 20,000 tickets to the Brooklyn event moved after going on sale to the public May 18.
    • The first season of the league kicked off Jan. 10 and moved through four stages since, each with a stage final. The championship is scheduled for July 27-28.
    • The two teams reaching the Grand Finals will compete for a share of a $1.4M prize pool.

  23. WTF???

    • The Trump administration is making plans to order grid operators to buy electricity from struggling coal and nuclear plants, a move that could represent an unprecedented intervention into U.S. energy markets, Bloomberg reports.
    • The U.S. Department of Energy would exercise emergency authority to direct the operators to purchase electricity or electric generation capacity from at-risk facilities, according to the report, which cites a draft memo circulated before a National Security Council meeting on the subject.
    • "Too many of these fuel-secure plants have retired prematurely and many more have recently announced retirement," only to be replaced by less-secure, less-resilient natural gas and renewable power sources, the memo says.

  24. Can you imagine what would have happened if Obama has "ordered" grid companies to favor solar plants?

  25. Case solved:

  26. LOL!!!

  27. Overwatch League – Where we're headed….   :(

  28. Labor force participation of people who should be retired (65+):

    I shorted the Nasdaq!  

  29. Coal and nuke / Phil – The hypocrisy of these guys is limitless…. When Michelle Obama wanted to have rules about having better food options in school cafeteria (a good thing) is was tyranny! But burning more coal is somehow a good thing! 

  30. China's central bank expands range of assets it takes as collateral for its loans

    US workers put in more hours than workers in all four Nordic countries and way more hours than workers in Denmark and Norway. Getting down to Danish and Norwegian levels of work would be like giving American workers 2.2 additional months of vacation each year.

    What is especially interesting about America’s high number of hours worked is that normally hours worked declines as hourly productivity goes up. This is true generally across countries and also true within the Nordic countries. But it is not really true of the US, which works far more hours than its hourly productivity would predict.

    When you look only at the Nordic countries, you see that this graph is basically a mirror of the prior one. In the prior graph, Finland and Sweden work the most hours. Here they have the lowest per-hour GDPs. In the prior graph, Denmark and Norway work the least hours. Here they have the highest per-hour GDPs. That’s the usual trend across most countries: the higher the per-hour GDP, the lower the hours worked.

    The US bucks this trend. In 2016, the US produced $69.6 of GDP per hour worked, a tick above Denmark. Yet the country’s workers put in 23 percent more hours than Danish workers. Put another way: the US could have Danish levels of well-being and work 2.2 fewer months each year, but instead it works way more than Denmark and has wild levels of inequality, poverty, and absolute material deprivation.

    New research implies that the food stamp ban for drug offenders has cost the state of Florida “over $70 million to date, a number that grows with every new trafficker who resorts to crime to make up for the lost benefits.”

    But the unemployment rate is just one indicator of how the U.S. economy is doing, and it’s not always the best one. Simply being out of work isn’t enough for a person to be counted as unemployed

    Wow, /NQ 7,080, /ES 2,732, 1,645 on /RTY and 24,650 on /YM.  The other levels have been hit often but Nas seems to be aiming for 7,200 again, which held for an hour in March before dropping back to 6,400 (10%).


  31. Labor participation rate / Phil – Also, remember when Rick Santelli on CNBC used to tell everybody that these job numbers were bad because the LPR was getting lower and that the Obama administration was killing businesses!

    For some reason, we don't hear about that anymore even though the stats are worse now than they were then:

  32. unemployment fake news. What about the workforce dropouts and underemployed. Remember how much about that we always heard? Magically it's never in the news any more. Imagine that!

  33. TWTR – Never thought it would move this much in one day.

  34. Let the games begin – JBSAY- in at $4.60 so everyone eat more beef, chicken and pork not to mention Pilgrims Pride Butterball turkey!  :)

  35. Santelli/StJ – What a schill that guy is!  

    Magic/BDC – I think the big mistake the Dems make is assuming voters are too smart to fall for that sort of nonsense.  

    TWTR/Albo – 5% not that much but a hell of a run.

    Meanwhile, /CL taking a dive back to $66.  So much for May's gains!  

    Honey badger don't care:

    • The total U.S. rig count rose by just 1 to 1,060 following last week's surge of 13, according to Baker Hughes' latest weekly survey.
    • Oil rigs added 2 to 861 – the highest figure in more than three years – while gas rigs fell by 1 to 197 and two rigs remained classified as miscellaneous.
    • A year ago at this time, the overall rig count was 916, oil rigs totaled 733 and gas rigs were 182.
    • WTI crude oil futures trim earlier losses, recently -1% at $66.38/bbl.

    • Current Tesla (NASDAQ:TSLA) employees tell CNBC that at least four fires have occurred in the paint shop of the Fremont factory over the last few years.
    • The sources laid the blame for the fires on the company's lack of proper maintenance, training and cleaning procedures. They also said a recent fire in April (which was previously disclosed) contributed to a slowing down of Model 3 production and has created health concerns.
    • A Tesla spokesperson said the April fire wasn't "significant" in nature and highlighted the safety procedures the company now has in place.
    • Shares of Tesla are up 1.66% on the day, almost fully recovering from a minor stumble yesterday.

    Did Musk cover up the fire when he said they were closing the assembly to "revamp" production?  If so, prepare for SEC Investigation.

    Elon Musk Suspends Tesla Model 3 Production for a Second Time …

    Apr 17, 2018 - Tesla Model 3 Production Temporarily Suspended for a Second Time to 'Improve Automation' … Despite Elon Musk’s recent assurance that he’s “feeling pretty optimistic” about the state of Tesla, the electric automaker is temporarily suspending production of its Model 3 vehicle …

    That is a big no-no!  

  36. Trump is meeting with one of Kim Jong Un's aids.  I don't think he understands how empowering it is for Kim for him to meet personally with just an emissary.  

  37. TWTR could go 10X

  38. IBM/phil – why lagging so much against MSFT, AAPL, INTC, etc?

  39. BURL – good beat, nice pop. Picking up Sears customers/business as that get's shut down?

  40. TWTR is really a surprise for me because clearly the stats are not that great. But Trump is giving them all the publicity they can handle! I wonder if the guy is long the stock – or better options (too much thinking though).

  41. Speaking of tweets, people are already saying that if we don't get a tweet ahead of the June employment numbers, it means that they will be bad and people might act upon that! Of course, it might simply be that someone told Trump that he is not supposed to announce the numbers! Either way, that will mess up the market! Good job DJT!

  42. you can get an FDIC insured 6 month CD at 2.05% right now people.

  43. IBM/Scott – Long, slow turnaround.  Will take a very long time for people to warm up to them again.

    BURL/Scott – I don't understand your theory…  Sears has customers?

    2.05%/BDC – That's crazy!  Certainly the biggest thing being ignored by the markets at the moment.

    Indexes turning back down but no reason I see.  

  44. Very important article to read:

    Microsoft (NASDAQ:MSFT), Cisco (NASDAQ:CSCO), and Dell (NYSE:DVMT) represented roughly 50% of the market capitalization of the NASDAQ 100 in 2000. They too earned boatloads at the turn of the century. That did not stop them from losing three-fourth or more of their value in the 2000-2002 tech wreck. (Note: Cisco is still 35% below a nominal all-time high from 18 years ago.)

    Today, the 'FAANG 5' account for a large percentage of the S&P 500 as well as nearly 40% of the NASDAQ 100 (Facebook 5.5%, Amazon 10%, Apple 12%, Google 9%, Netflix 2%). Meanwhile, the foolishness associated with gaining even more FAANG exposure in portfolios can be seen in everything from margin debt excess to closed-end fund premiums.

    Consider a company that most people love, Uber (UBER). It has plans to "go IPO" in 2019. Yet, it lost nearly $3 billion in 2016 and has lost $4.5 billion in 2017. Not only does it lose tons of cash but there are halfway decent competitors. It may be a phenomenal company with the goal of becoming the "Amazon of transportation," but the valuation of $68 billion is exactly the type of IPO silliness that occurred in 2000.

    Remember, 50% of S&P 500 corporations are rated BBB. That's just one notch higher than junk-rated debt. Even in a mild period of contraction for the economy, many of those would be downgraded to junk, forcing investment-grade bond funds to sell them. Other bondholders will want to liquidate as well.


    Junk bonds themselves may already be sending up a smoke signal. The 50-day moving average of the SPDR Barclays High Yield Bond ETF (NYSEARCA:JNK) crossed below its 200-day moving average in March. Moreover, the current price is below both the 50-day and 200-day trendline.


  45. 2.05% / Phil – That was on my wall of worries yesterday! Let's see how many companies will have to roll debt that will cost them more than 2% of what they paid before. I know how much more money my mortgage would cost at 2% more! Painful. I imagine that it will also be painful for businesses! 

  46. So much for the sell-off, they are certainly sticking the close!  

  47. More to come?

    • Harley-Davidson (HOG -1.3%) warns it will suffer a “significant impact” to its sales after the European Union revealed plans to raise tariffs on a range of U.S. imports, including big motorcycles, in retaliation for new U.S. tariffs on EU metal exports.
    • “We believe a punitive, retaliatory tariff on Harley-Davidson motorcycles in any of our major markets would have a significant impact on our sales, our dealers, our suppliers and our customers in those markets,” the company says, adding that it is evaluating ways to manage anticipated cost increases following the EU’s proposed measure.
    • Europe, the Middle East and Africa accounted for ~21% of HOG's global retail sales during the previous quarter.

  48. Have a good weekend, 

    - Phil

  49. You can't even get away from the markets for the weekends anymore. At least not in Omaha at this stock market-themed bar where drink prices can have spikes and drops. I wonder if they'll be implementing hourly beverage option transactions?

  50. I love that idea!  Too bad it's in Omaha….

    Meanwhile, unfortunately:

    • "If the U.S. introduces trade sanctions including a tariff increase, all the economic and trade achievements negotiated by the two parties will not take effect," according to an official statement from China, carried by the Xinhua News Agency.
    • The warning, which added that the negotiating process should be "based on the premise" of not fighting a "trade war," comes as the two sides wrapped up their latest round of trade talks on Saturday.

    Who knows though, maybe that will take us up to new highs the way this market reacts to things?

    Ouch for DIS:

    • If Solo: A Star Wars Story (NYSE:DIS) was just a disappointment in its debut weekend — despite a prime setup to make a splash — its second weekend is qualifying as very bad news indeed.
    • The film is tracking toward grossing just $29M this weekend despite playing in 4,381 North American locations, a two-thirds drop-off that has the movie on pace for a sub-$200M domestic total gross.
    • It should still hold the overall lead over Deadpool 2 (FOXFOXA), but might not.
    • It drew $84.4M domestically last weekend, below a reduced forecast for $105M-$115M.
    • Why is Solo failing? Blame is coalescing around several reasons, though the biggest might be Disney's choice to bring the film out just five months after its last Star Wars film, The Last Jedi?
    Another Disney disaster:
    • After canceling its biggest hit of the season, could ABC (NYSE:DIS) bring back Roseanne for a second time — by taking the controversial comic out of her namesake show?
    • Network powers are considering re-branding the show and writing it around Sara Gilbert's character, Roseanne's daughter Darlene, TMZ reports.
    • Gilbert is checking with cast members to test feelings in case ABC goes forward, and John Goodman is reportedly "very interested."
    • Such a move would save dozens of jobs on the show after its abrupt cancellation following star Roseanne Barr's tweet that former Obama adviser Valerie Jarrett was the spawn of "Muslim Brotherhood and Planet of the Apes."
    • Canceling a show that averaged more than 18M viewers likely meant a hit of more than $100M in ad revenues to ABC.

    • General Electric (NYSE:GE) is reiterated with a Neutral rating and $16 price target at UBS, as analyst Steven Winoker thinks GE will be able to cover its payout this year and next – but just barely.
    • Winoker crunches the numbers and believes as long as GE continues to execute on asset sales, the company can cover its dividend through 2019, but he warns of "little wiggle room for error" and that "the dividend commitment holds back the segments."
    • The analyst forecasts adjusted free cash flow of $5.5B this year and rising to $8B after disposition proceeds, and taking out $4.2B billion in dividend payments would leave ~$3.5B to support GE's balance sheet; for 2019-20, "together with additional asset sales and little margin for error, GE could generate just enough FCF but we argue a bigger cushion is warranted."
    • Fiat Chrysler (NYSE:FCAU) today unveiled a five-year plan to invest €9B to develop and deploy electric and hybrid cars as it expands its lineup of electric-powered vehicles.
    • If all works out, CEO Sergio Marchionne expects FCAU would double operating profit to €16B ($18.7B) by 2022 and hit double-digit profit margins from 6.8% today.
    • “This plan will provide the portfolio of products aligned with our brands that will ensure our ability to comply in each region” with stricter emissions and fuel-economy standards, says the outgoing Marchionne.
    • But FCAU shares slid 7.2% in today's U.S. trade, as investors reportedly had anticipated news about possible spinoffs.
    • Earlier: Fiat posts strong month in U.S. (June 1)

  51. China tariffs / Phil – It's simply another incentive to eventually offer more bribes to Trump. He will threaten to retaliate, they will offer him or his family some "compensation" and all will be well…

  52. So many example of Trump making horrible deal:

    If the myth of Trump, negotiator par excellence, started in earnest with the publishing of The Art of the Deal, the prime-time television show in which he starred cemented it. And similar to the deal he struck with Schwartz to write his book, the negotiation that birthed “The Apprentice” was lightning-quick. Trump agreed with producer Mark Burnett to a 50-50 split without consulting any advisers, according to Trump Revealed. And when he attempted to get a giant pay raise after the show’s wildly successful first season, he … didn’t get it.

    Trump made $50,000 an episode in the first season. In the second season? “He wanted a million dollars an episode,” Jeff Zucker, the current boss of CNN and former head of NBC, told the New Yorker’s David Remnick last year. And what did Zucker give him? “Sixty thousand dollars,” Zucker said.

    “We ended up paying him what we wanted to pay him.”[...]

    Why do so many people think Trump is such a skilled negotiator?

    Because he says so—over and over and over.

  53. Who knows though, maybe that will take us up to new highs the way this market reacts to things?


    looks like it this morning…

    will there ever be a correction again?

  54. Good morning!

    No correction today but, of course, Dollar is down half a point so indexes up half a point not actually impressive and commodities are down so double BS on the index move:

    Europe is not as happy:

    VIX is still relatively high too:

    Higher rates – who cares?

    $16.40 continues to be the buy line in /SI – other than the spikes below.

    I see no reason in the news not to short /ES at 2,745 and //YM at 24,750 – only 100 points over our usual shorting line.  The news flow is really not very positive.

    • Eurozone investor sentiment deteriorated sharply in June, reflecting the recent volatility and political uncertainties in the Italian economy.
    • The measure of confidence compiled by Sentix plunged to 9.3, down from 19.2 in May, marking the lowest score since October 2016.
    • Fears of a trade war with the U.S. also weighed heavily on the gauge
    • The principle of solidarity among members of the eurozone should not turn the bloc into a debt-sharing union, Germany's Angela Merkel told Frankfurter Allgemeine Sonntagszeitung.
    • "I will approach the new Italian government openly and work with it instead of speculating about it intentions," she added, after Italy swore in a populist coalition on Friday.
    • The country accounts for 23.4% of the eurozone's public debt and 15.4% of the bloc's GDP.
    • Wrapping up a heated G7 meeting in Canada, top global economic leaders on Saturday askedU.S. Treasury Secretary Steven Mnuchin to convey their "unanimous concern and disappointment" about the metals tariffs imposed by Washington last week.
    • "Ministers and Governors agreed that this discussion should continue at the Leaders' Summit in Charlevoix (set for June 7), where decisive action is needed. The aim of this should be to restore collaborative partnerships to promote free, fair, predictable and mutually beneficial trade," the group said in a summary statement written by Canada.
    • "If the U.S. introduces trade sanctions including a tariff increase, all the economic and trade achievements negotiated by the two parties will not take effect," according to an official statement from China, carried by the Xinhua News Agency.
    • The warning, which added that the negotiating process should be "based on the premise" of not fighting a "trade war," comes as the two sides wrapped up their latest round of trade talks in Beijing on Saturday.

    Weighing The Week Ahead: Is It Time To Worry About A Trade War?

    Apple: iPhone X, Record Profits And A Much Higher Stock Price 

    Dell Technologies +2.9% on Q1 revenue beat


    • Chinese regulators are investigating Micron Technology (NASDAQ:MU), Samsung Electronics (OTC:SSNLF) and SK Hynix (OTC:HXSCL) as the country tries to reduce dependency on foreign chips, WSJ reports.
    • Some speculate the probe concerns the rising cost of DRAM chips – the three companies are dominant suppliers – or it might be seeking to use the current DRAM pricing environment to gain leverage for a technology transfer.
    • MU -0.5% premarket


    • Dented by higher fuel and labor costs, global airline profits this year are set to slide from the record reached in 2017.
    • Net income for 2018 is likely to total $33.8B, 12% lower than a December forecast for $38.4B, according to the International Air Transport Association.
    • The new forecast compares with an all-time high of $38B airlines made last year, which was boosted by special accounting like one-off tax credits.
    • If Solo: A Star Wars Story (NYSE:DIS) was just a disappointment in its debut weekend — despite a prime setup to make a splash — its second weekend is qualifying as very bad news indeed.
    • The film is tracking toward grossing just $29M this weekend despite playing in 4,381 North American locations, a two-thirds drop-off that has the movie on pace for a sub-$200M domestic total gross.
    • It should still hold the overall lead over Deadpool 2 (FOXFOXA), but might not.
    • It drew $84.4M domestically last weekend, below a reduced forecast for $105M-$115M.
    • The first-ever Star Wars film to lose money?
    • In its second week, Solo earned just $29.3M from North American theaters – a 65% drop from its opening weekend, which was itself a disappointingly low take for a film with a high production budget.
    • The Disney (NYSE:DIS) movie has now earned $148.9M domestically vs. the estimated $250M it cost to make.
    • Previously: 'Solo' movie trajectory worsens with 66% drop-off forecast (Jun. 02 2018)
    • Why is Solo failing? Blame is coalescing around several reasons, though the biggest might be Disney's choice to bring the film out just five months after its last Star Wars film, The Last Jedi.