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Monday Market Movement – Dollar Down, Markets Up – What Else is New?

The Dollar is down 0.5% this morning.

Dow Futures (/YM) are up 0.5% to match but the Russell (/RTY), Nasdaq (/NQ) and S&P (/ES) are up less than 0.25% as of 8am and that's not at all impressive.  /NQ is right on the 7,100 line, so an easy short below the mark but Apple (AAPL) is holding their developer's convference this afternoon and may say something bullish – so it's a very dangerous short.  Apple popped over $190 last week, now just $65Bn shy of a $1Tn valuation and 7% more ($13.30) will do the trick and we'll have the World's first Trillion Dollar Company.

If AAPL is doing well, the Nasdaq does well and so does the Dow, where every AAPL point is 8.5 Dow points and so does the S&P, where Apple makes up 4% of the 500 Indexe's total weighting.  

If it were not for Apple's great effect on the market, I'd be enthusiastically shorting the indexes but, as it is, we keep getting stopped out of our short positions as they keep making new highs.  This morning we're taking a whack at shorting the S&P Futures at 2,745 and the Dow Futures at 24,750 but tight stops over those lines as we near the pont of maximum crazy but the Dollar (/DX) should be councy at 93.70 and that will hopefully cause a pullback into the open – but only a small one as we expect it to have trouble getting back over 94.

Trade Wars are bad for the Dollar because the Dollar is an instrument of trade and China, Canada, Mexico and Europe have all threatened to retaliate if Trump doesn't reverse his position by this Thursday-Saturday G7 meeting so you bulls out there are betting on Trump being a great deal-maker, which is his repution but not at all his actual results.

Nonetheless, we've punched back over that 2,728 line on the S&P, which generally puts us back in bullish territory until it fails but I called for CASH!!! in early May, as we briefly popped over the line – as I didn't think it would last and I don't have enough faith in Trump's negotiating skills to think this rally will last either but, if we do manage to stay over the line for more than a day – we may have to consider some defensive longs as our portfolios are not balanced bullish enough to keep up with a proper rally.  

Note we were at 2,875 back in January and that's 5% higher than we are now and, in the bigger picture, this is all just a small, bullish consolidation of the rally from our Must Hold Line on the S&P at 2,200 where 2,860 is the 30% line so the expected retracement from there, according to the 5% Rule, would be 20% of the 660 run or 132 points, back to  – you guessed it, 2,728, which is why we're forced to be bullish above that line!  

The strong retracement is basically the 2,600 line and, as you can see, that held up like a champ so, in truth, we should have followed the 5% Rule and been more bullish as we consolidated down there but I was too worried about all the Global issues the market seems very happy to ignore, which is not very different than the way things were 10 years ago – right before we collapsed so, unfortunately, I have to continue to play cautiously until the S&P proves it can make AND HOLD that next 5% gain.

Effectively, that means our caution and hedging will cancel out about 1/3 of the move higher so we expect to underperfom a bullish market by 33% but, as I said, we can fix that with some bullish hedges and we'll look more closely at those during the week.  Oil is back to $65 this morning and gasoline is back to $2.12 so no lasting effect from the pre-holiday pump job that took us to $72.50 – indicating demand is simply not there to support it.  

Unlike the US, Investor Confidence in the Eurozone is at the lowest since October, 2016 at 9.3, in June and that's down from 19.2 in May and significantly below the 18.4 expected by leading economorons.  Investors were spooked by turbulence in the Eurozone, driven by the political uncertainty in Italy that caused significant disruption to Italian markets last week – the things I worry the US is ignoring.

Germany's DAX is actually down 600 points (5%) from its May high while our markets are making new ones.  Usually we all move in lock-step so it's an unusual break and we've been betting Europe is right and US investors are wrong but, so far, it's costing us as the US markets defiantly climb higher – no matter what news hits it.

In on Monday's report, Sentix said “Economic expectations in the eurozone are downright tilting,” adding that investors appeared to be expecting a “serious slowdown in growth” in the euro area.  Please use the sharing tools found via the email icon at the top of articles. The eurozone’s biggest economy, Germany, was also “under pressure,” and saw its reading fall for the fifth month in a row to its lowest level since July 2016. The country appears particularly vulnerable to any escalation of trade disputes with the US, said Sentix, with key sectors such as automobiles and banking “increasingly suffering.”

I suppose I'm just an old-fashioned guy who thinks things like this actually matter – especailly when the US market reaction is to slam up to record highs.  Perhaps it's because there has been no official retaliation yet or perhaps it's because US investors inclue enough Trump voters who believe we can "win" a trade war and that it will be good for the economy (unlike every trade war ever fought).

So it's going to be an introspective week if the market keeps going higher as we need to think about why we're too bearish in a bull market but, hopefully, this pre-market rally will collapse and I'll get to say "I told you so" and we can get back to our normal trading range.  

Either way, it will be an interesting week!

 


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  1. Funny to hear Giuliani this weekend saying that Trump should not sit down with Mueller because their recollection keeps changing! With what,new alternative facts? The fact that we spent the weekend debating if the president can pardon himself is not a sign of a healthy system.



  2. The Tim Cook outrage over privacy was a bit hypocritical:

    https://www.motherjones.com/kevin-drum/2018/06/apple-isnt-quite-as-outraged-about-privacy-as-tim-cook-pretends/

    An Apple spokesman said the company relied on private access to Facebook data for features that enabled users to post photos to the social network without opening the Facebook app, among other things. Apple said its phones no longer had such access to Facebook as of last September.

    They all use customers data because it's how money is made nowadays! We live in a big data world so we need to adapt!


  3. Good morning!  

    Dollar is bouncing back, 93.85 now but I don't see it popping 94 without news.  

    Trump/StJ – I am trying my best to ignore the drama there.  This will still drag on all summer at least. 

    Telemarketing/StJ – That's interesting.  We don't answer our old main number anymore, just check for voicemail from numbers we recognize, the rest is junk and goes straight to voicemail. Telemarketers have ruined home phones, hopefully they don't do the same to cell phones.

    As to privacy, I think AAPL should champion privacy and make it a feature of their phones.  I certainly want the phone with the best privacy….

    Speaking of AAPL, up another 1% ($2) to $192.25!

    Now that's a bullish breakout! 

    Qs not far behind.  


  4. Good Morning.


  5. Not a tim cook fan…..


  6. Privacy / Phil – Good luck with that. Growth is now on services, even for AAPL and services are monetized using data (even in my business of translation) so all these tech guys will keep on mining all the data that they can. That's how they can offer you the music you like, the movies you like, offers from restaurants and so on! Privacy, like home phones, is dead… And by the way, that makes committing crimes much harder so there is a silver lining I guess!


  7. My 12 year old niece is a bit of an old soul. She told me to put this on my calendar  https://www.youtube.com/watch?v=9Y7X6le5qmE    and she also told me she wants a record player for her birthday.  I asked her if she also wants a five and a quarter floppy drive, but I got a blank stare, so not yet.  I recently took her to see a Queen cover band which was great, and now we are both looking forward to the movie in the fall


  8. RUT took a dive but other indexes still way up. 

    MSFT buying GitHub is a huge Nas booster at $7.5Bn – makes people think everything is undervalued.  

    Privacy/StJ – Total illusion but I would still choose a phone that works to protect mine.  May be a hole in the market someone could exploit.  

    Queen/Mike – Jackie liked Queen when she was younger, now it's mostly rap…

    Oil failing $65! 


  9. Telemktg/StJ

    I was in the business on day one, (paid $400,000 for a PBX of Northern Telecom in 1989 dollars and 300 stations), when I decided to quit the business any retired secretary could buy a Dell call platform for $4,000 plus a $300 software.

    I have 2 technologies  full life period on my profe$$ionel life, Fax (OCR) and Telemarketing.

    You are right Phil, nobody now s a market for 


  10. Telemarketing/Advill – Yeah, that's the problem, it's way too easy now. 

    Speaking of businesses – We're looking at a Pot Business in NJ through PSW Investments.  Rules and permits are coming soon and we already have the connections to get a rare license to sell and, because we have that, a major west-coast grower wants to partner with us on a "joint" venture.  

    Not just for NJ but we're looking to raise about $3M to expand to various states.  NJ market logic is 9M people so 1.5M likely adult users at 2 oz/yr at $200/oz is $600M (conservative figures) but, because NY and PA are not legal yet, NJ should get a lot of tourist business (in NJ, we buy all our fireworks in PA).

    We don't even have a biz plan yet but the numbers are fantastic and super-early stage and we're going to consider another Preferred offering through PSW Investments (like the one we used to launch the Hedge Fund) or possibly, we're willing to talk to Angel partners right now so let us know if you are interested either way.  


  11. If you are already in PSW investments would there be some participation in the Mary Jane venture?


  12. PSW/  Pot 

    Say Greg  if there is something I can help, I will


  13. IQ/Phil- I didnt get to fill the IQ trade, somehow my TOS say I can fill the BCS @ 3.65, was thinking to try get filled but I dont think I should be selling the 22.5 July calls, any suggestion? or a new trade idea perhaps 


  14. GNC – Hit a new low today. 

    Added 20 short Jan 2.5 puts for ,50.


  15. Phil what is your feeling on TMUS Looks good for a armchair trade at 4.8% yield.


  16. Phil, do you think QQQ or SOXX will ever stop moving up? 

    If so, anytime in the near future? ;-)


  17. IX displaying complacency in face of all of the Trump hardline talk on tariffs. If he's bluffing we will continue skyward.


  18. VIX


  19. PWSI/Tangled – At the moment, PSWI is working to raise capital for and assist with the venture and will hopefully get a percentage for doing that part (assuming success in what we're working on).  If we come up with our own capital too, it would make us better able to negotiate for a larger percentage and, of course, the more people we bring to the table, the more control we'll have of the process.  

    Something/Advill – $1M would be very helpful!  cheeky

    IQ/Dave – It's very hard to get fills on the whole spread at once.  Try legging into them if you can.  Our goal in the IQ trade was 5 short July $22.50 calls for $3 and 20 2020 $15 ($11.80)/22.50 ($8.20) bull call spreads for net $5.20.  That was from 5/23 (the first Wed) at 10:38 and since then, here have been the trades:

    So there were plenty of opportunities to hit our goals and, even now, the $15 ($17.50)/22.50 ($13.75) bull call spread is $4.25 ($8,500) and, since the goal was to net $5,700, you can sell 4 Sept $25 calls for $7.50 ($3,750) and that puts your net at $5,500 and there you go.

    This is why it's more important to learn HOW and WHY we trade than to just follow trade ideas – you have to get the concept of the trade and then you will have an easy time making adjustments as you are scaling into a position.   You can even use the movement to your advantage.

    GNC/Albo – Conference presentation on June 6th, we need to read that one carefully.

    Recent Earnings

    GNC Holdings reported first-quarter 2018 adjusted earnings per share (EPS)of 24 cents, reflecting a 36.8% year-over-year decline. Adjusted EPS surpassed the Zacks Consensus Estimate of 20 cents by 20%.

    Revenues

    Revenues (which now exclude Lucky Vitamin in all periods) in the reported quarter dropped 7.2% year over year to $607.5 million.The drop was primarily because of the sale of Lucky Vitamin in September 2017 and the termination of the Gold Card program.

    Same-store sales increased 0.5% in domestic company-owned stores (including GNC.com sales) in the quarter under review. Notably, this is the third straight quarter of growth. In domestic franchise locations, same-store sales dropped 1.9%.

    Financial Position

    GNC Holdings exited first-quarter 2018 with cash and cash equivalents of $53.9 million, up from $64 million at the end of 2017. Long-term debt was $1.06 billion in quarter under review, compared with $1.29 billion at 2017-end. Net cash flow from operating activities totaled $25.07 million, compared with $46.10 million a year ago.

    Further, the company generated free cash flow of $37.4 million as compared with $33.4 million in the year-ago quarter.

    Image result for telco market share 2018 usTMUS/Yodi – The Sprint merger seems up in the air with regulatory approval needed and it's hard to know what the new company will look like.  I know S bleeds cash so not sure it will be quick for TMUS/S to turn things around.  TMUS/S will be as big as VZ and T and VZ drops $15Bn to the bottom line on $125Bn in sales (12%) and T drops $15Bn to the bottom line on $160Bn in sales (10%) and S loses $1Bn on $32Bn in sales while TMUS made $3Bn on $40Bn in sales (8%) so both are weak in earnings and lower in sales because they discount to their 1/3 of the market to get those sales.  

    The products are generally inferior, though getting closer but you are paying 2-3x per $1 earned for TMUS/S so I'd rather have a coupon-clipping play on VZ or T than play TMUS/S.

    QQQ/Jabob – One day maybe but AAPL has to stop and then the SOX have to stop – could be a while as they are both in very good cycles.

    VIX/Den – I think it bottoms here (13) and we turn back a bit.  


  20. Phil Thanks for your thorough info on TMUS


  21. You need a lot of love for GE under 14 again, they should take an example on Siemens


  22. ECB scales back Italy share of bond purchases in May: Financial Times

    • The European Central Bank cut back on the proportion of its bond-buying directed at Italy last month, a disclosure that could fuel populist concerns over bond market pressure, the Financial Times reports.
    • The ECB bought net EUR3.6B of Italian government debt under in May, under its bond-buying program. While the amount is higher than in some recent months, it was smaller in terms of overall share of its purchases.
    • Some 28% of its net purchases last month were of German bonds, while 15%  went to Italian debt, the lowest percentage allocated to Italy since the program started in March 2015.

    Reuters: Iran sells first cargo of West Karoun oil to Spain's Repsol

    • Iran has sold its first cargo of West Karoun oil to Spain’s Repsol (OTCQX:REPYFOTCQX:REPYY), as the country tries to boost its oil exports amid looming sanctions, Reuters reports.
    • Iran is marketing the West Karoun crude as Pars oil, and Repsol has agreed to take 500K barrels of Pars crude on a spot basis, according to the report; production from the field is said to have nearly doubled in the past year to 300K bbl/day.
    • Separately, Repsol says a new project with Google using big data and artificial intelligence has the potential to add $0.30/bbl to the refining margin at its its 186K bbl/day Tarragona refinery by optimizing its management.
    • Repsol says the margin improvement could mean an extra $20M/year for the Tarragona complex.

    Biofuel credits slump to five-year lows ahead of expected policy news

    • Prices of U.S. biofuels blending credits hit fresh five-year lows as expectations rise that the Trump administration soon will announce plans for an overhaul of the biofuels program, Reuters reports.
    • Prices of RIN credits fall to as low as $0.18 from $0.22 on Friday under pressure from the expectations, ahead of an expected announcement – which could come as early as today – that will include plans to count ethanol exports toward federal biofuels usage quotas under the U.S. Renewable Fuel Standard and allow year-round sale of fuels with a higher blend of ethanol.
    • Potentially relevant tickers include ADMPEIXGPREREXVLOPBFANDVPSXMPCHFCCVICVRR
    • Solar shares are broadly lower after the government moved to rein in overcapacity in the industry by cutting subsidies and suspending the construction of new farms.
    • Chinese regulators announced Friday that the allocation of quotas for new projects had been halted until further notice, and tariffs on electricity generated from clean energy would be lowered by 0.05 yuan/kwh, a 6.7%-9% reduction depending on the region, effective June 1.
    • The measures are aimed at “promoting the solar energy sector’s sustainable development, enhancing its development quality and speeding up reduction of subsidies."
    • Among relevant tickers: DQ -20.5%JKS -15.2%CSIQ -10.6%ENPH -10.5%SOL -5.1%FSLR -4.9%VSLR -4.5%RUN -2.6%YGE -2.4%.
    • JinkoSolar (JKS -11.1%) and JA Solar (JASO) are downgraded to Sell from Neutral, and Amtech Systems (ASYS -13.7%) and Daqo New Energy (DQ -21.7%) are cut to Neutral, at Roth Capital after China's government released its Solar Management Plan, which the firm believes is "much worse than expected" and will result in a "massive" net oversupply of cell capacity.
    • Given China's new policy, the outlook for module ASPs has "suddenly deteriorated" for both 2018 and 2019, Roth's Philip Shen says; on JASO, while its merger deal was approved, Shen sees risk to the shares if the agreement is not successfully completed.
    • Shen believes the outlook for additional orders for ASYS has deteriorated for 2018 and 2019 and foresees a similar scenario for polysilicon prices, and DQ shares should suffer as poly pricing falls.
    • American Airlines (AAL +1.3%) CEO Doug Parker warns on the impact of higher oil prices on fares in the long term after watching crude jump about 50% in a year.
    • "If it becomes clear this is the new normal you would see over time less capacity and growth in the industry and therefore higher prices, but I don't think that's going to happen in the near term," Parkers advises from the sidelines of the IATA meeting in Sydney.
    • The higher oil prices coincide with a lower overall oil hedging position in the industry.
    • Source: Reuters Morning Call
    • General Electric (NYSE:GE) needs to raise $30B in cash to get to 2.5x leverage as per ratings agencies, JPMorgan's Stephen Tusa writes in a research note, adding that the industrial conglomerate would need to raise $40B in cash to bring its leverage in line with peers.
    • Additional cash would also not change JPMorgan's $11 price target on the stock as it would be dilutive, and likely to be received negatively, especially from retail investors.
    • Source: Bloomberg First Word
    • Previously: JPMorgan: GE short of healthy balance sheet (May. 22 2018)

    • The turnaround continues, says BTIG's Peter Saleh. With the stock ahead more than 50% year-to-date and nearing his $460 price target, Saleh boosts to $500.
    • He takes note of improving new unit sales volumes, declining labor turnover, and the boosted restaurant margin outlook.
    • Look for more catalysts at the company's strategy call set for June 27.
    • CMG +0.65% premarket to $441.50.
    • Macy's (M +1%) moves higher after Evercore ISI double upgrades shares to Long from Short, saying Wall Street's fears about a "retailpocalypse" stemming from the rise of Amazon are overblown as classic retailers and brands are learning to adapt in a digital age.
    • "Macy's and others will have equal opportunity in the coming years to compete for the attention of discretionary consumers given a core set of competitive advantages that are not going away," Evercore's Omar Saad writes.
    • "Macy's has been implementing processes to improve inventory flow and management," Saad says. "These efforts are just starting to pay off, with inventory continuing to decline over the past year while retail gross margins held relatively steady and finally inflected to positive in the first quarter of 2018."
    • The analyst raises his 2018 EPS estimate for Macy's to $3.15 from $2.95 and his 2019 EPS outlook to $3.40 from $3.10.

    IQiyi +1.4% with no clear catalyst

    • IQiyi (NASDAQ:IQ) shares are up 1.4% to $28.86 with no clear catalyst.
    • IQiyi shares are up 24% in the past week and up 64.5% in the past month since the IPO in late March.  

    FBR Riley: 'Solo' bringing Disney back into 'movie reality,' but no crisis

    • Disney (DIS +1%) is facing a "tough return to movie reality" after a hard slap from heavily underperforming Solo: A Star Wars Story, FBR Riley says.
    • The studio has had a "can't-miss mystique" over recent years, Barton Crockett says, and Solopunctures that. But even a loss there is offset by strength elsewhere in the studio's slate, he notes, and points to other films outhitting their weight (particularly Black Panther). (h/t Bloomberg)
    • He's Neutral on shares with a price target of $123, implying a healthy 22.6% upside from current price.
    • SunTrust raises its Amazon (NASDAQ:AMZN) price target from $1,900 to $2,000, a 22% upside to Friday’s close.
    • Analyst Youssef Squali expects Amazon’s private label business to generate $25B in revenue by 2022, up 108% from SunTrust’s $3.6B estimate for 2017. 
    • Squali: "As strong an e-commerce platform as Amazon has become over the last 20 years, we believe that the best has yet to come. Private label is one of the highly under appreciated trends within Amazon, in our view, which over time should give the company a strong 'unfair' competitive advantage. 'Unfair' because it'll be very difficult to dislodge the company once it attains it; fair because it's earned, not bestowed." 
    • Amazon shares are up 0.5% to $1,650.32. 
    • Apple's (NASDAQ:AAPL) annual Worldwide Developers Conference starts today with the keynote scheduled to begin at 1 PM Eastern.
    • Watch the event live here.
    • Update:  CEO Tim Cook says there are now 20M Apple developers worldwide.
    • The App Store turns 10 next month and it now welcomes over 500M weekly visitors.
    • This week, the money that developers have earned from the App Store will top $100B dollars for the first time.  (Apple gets around 30% of the cut or 15% from developers who get users into long-term subscriptions.)
    • Update: IOS: Software Engineering SVP Craig Federighi announces iOS 12 and says that 81% of the current iOS install base is using iOS 11 right now.
    • IOS 12 will be available or every device that supports iOS 12 so older devices won’t get left in the cold.
    • In iOS 12, apps launch 40% faster, keyboard launches 50% faster, and camera launches 70% faster on older devices.
    • Update: ARKit: Apple worked with Pixar to make the new file format for AR: USDZ, which is described as “something like AR Quick Look.” The format allows for a WYSIWYG experience in AR.
    • Companies supporting the new file format include Adobe (with an appearance on the WWDC stage), Autodesk, Sketchfab, and Quixel. It also works in News and on the web.
    • New AR measurement tool called Measure introduced. The app has a camera view and tabs for measuring and using it as a level.
    • ARKit 2 gets improved facial tracking, realistic rendering, 3D object detection, and the expected shared experiences feature that lets users have the same experience on multiple iPhones.
    • Update: Photos: Search is getting improved with better photo recognition. Photos will index events by time and place. A “For You” tab will include featured photo suggestions and a Sharing section that suggests where and how to share certain pictures.
    • Update:  Siri: New feature/app Shortcuts lets any app “expose quick actions to Siri.” Users can record a custom phrase with the Add to Siri function. For example, “travel plans” could launch the Kayak app and trip reservation details. Siri Suggestions can be added to the lockscreen for things done on a daily basis, like checking traffic or ordering coffee.
    • Update:  App news: Stocks app gets a News element with curated business news stories and iPad support. Voice Memos getting a rebuild and iPad support. Apple Books gets new name, new design, and a “reading now” feature as a progress reminder.
    • Managing device use: Do Not Disturb is easier to activate and will include timers and new controls for bedtime and in the morning. IOS notifications will be grouped on the lockscreen, it will be easier to customize notifications, and Siri can suggest you turn off notifications for unused apps.  
    • And the expected Screen Time app that shows how much time the user spends staring at the phone screen/certain apps, which includes a weekly activity summary. Parents can get the summary from their child’s phone and set allowances to limit time or access to certain apps. 

  23. Have been playing along on IMAX for a bit – it's been a good one. Currently flat, but scaling into some more short puts at the moment.


  24. Phil / $1000,000

    Will think about it …lol


  25. Things are holding up into the close so far.  24,800 on /YM and just under 2,750 on /ES.  Volume is low but normal low for a Monday.   

    Date Open High Low Close* Adj Close** Volume
    Jun 04, 2018 274.530 275.185 274.400 275.005 275.005 29,473,628
    Jun 01, 2018 272.410 273.940 272.330 273.600 273.600 68,905,300
    May 31, 2018 272.150 272.490 270.260 270.940 270.940 93,519,900
    May 30, 2018 270.500 273.110 270.420 272.610 272.610 67,499,700
    May 29, 2018 270.310 271.170 267.760 269.020 269.020 115,908,600
    May 25, 2018 272.150 272.860 271.580 272.150 272.150 56,374,800
    May 24, 2018 272.910 273.220 270.780 272.800 272.800 76,043,800
    May 23, 2018 271.170 273.390 270.990 273.360 273.360 61,021,700
    May 22, 2018 273.960 274.250 272.240 272.610 272.610 52,966,400
    May 21, 2018 273.010 273.980 272.570 273.370 273.370 58,025,900

    Have to go get my daughter at school, will check in later.


  26. Knowledge has value. Cryptocurrency (System of Trust) is a transactional equity in knowledge. As we continue to evolve into this new system the evidence is more clear every day, take for example with this evolving concept of "fake news." It is an inevitable construct of an increasingly interconnected global society where every single individual's opinion is available to everyone else instantaneously. Consider the Flat Earth idea. There is a probability it is true. The probability is very low. It therefore has very low value. This is an extreme, but it frames Fake News well: knowledge is not an absolute. It's a probability function. We learned this about electrons and protons in the Modern Physics era, and for scientists then it was most disturbing, but the truth was an election location is not a tiny little orbiting object, like a teeny version of the moon to the earth, it's instead a probability function (this is intensely fascinating for those who didn't take physics in college, I encourage you to at least check it out). 

    Climate change has become a political conversation. Every new article that inserts new scientific data into the conversation is immediately parsed by two different camps immediately and exactly to opposite effect. In political conversations all knowledge is exactly worthless. No disrespect to politicians but economically speaking only politicians have incentive (to win). Their incentive is to get votes, at least half the group +1, and therefore they divide individuals into what they think will give them at least this composition. Individuals carry their water because it determines how we are governed, which is important to the individual.

    Carbon dioxide has no value once it's emitted so it cannot be traded like a commodity because it has no underlying value, such as corn or oil. It is therefore a political construct to create carbon credits and force a market of buyers and sellers. In another construct, voluntary carbon credits can be created (government free constructs). The economic force that ultimately determines their use and value comes from customers of companies that want to see their products and services be relatively less carbon output intensive. These have worked to a small, varying degree. Ultimately they have been failures, the former because governments do not allocate scarce resources efficiently and the second because it doesn't properly value the "commodity."

    Carbon dioxide emissions have shown to be problematic in their cumulative emission but the breadth and scale of the problem is massive. We don't know the extent of the actual problem but most importantly the cost. It is impossible for a group of super scientists to get together and pump a bunch of data into a supercomputer and spit out an All-Knowing Answer. This presents an interesting problem dynamic: CO2 has no value and the information gives us no clear answer.

    Web 3.0 can probably be described as the mobile phase. First (v1.0) you had static web pages and google search. Then facebook de-anonymized the internet a decade later (2004). By 2014 the mobile phone had taken over and added a geolocation to facebook's "real person." This simple innovation has remarkable consequences. For example, look at Uber. They single handedly shattered every taxi-medallion government/mafioso relationship that people had worked generations to build, in every single city, in every country around the world, all at the same time. I mean, we're talking a nuclear blast here. They just obliterated it. Uber's reward for this is a $50B+ valuation in 5 years. In fact, the only reason why Uber has centralization at all is because no decentralized construct existed that could've seeded the organization at the time. Uber is essentially a software protocol that matches customers to drivers. The drivers and customers are both social equity owners in the construct of the organization; the customer gets from A to B and pays money which the driver earns. The entire organization is more valuable because as a social organization it's transactional value infinitesimally increased due the single transaction. A "traditional" centralized organization removing 10% of every transaction is no longer necessary, as long as the organization has a decentralized currency (System of Trust) internal to its operations.

    Web 4.0 provides for such transactional decentralization. IMO this will transform social media of course, replacing it's centralized advertising business model with decentralized knowledge ownership but also the next stage of Uber/AirBnB will become (or be replaced by) decentralized protocols because they are more efficient at the margin (a driver wants the extra 10%, to be sure!). While intellectually interesting to consider these specific cases, it's actually limiting to do so, kind of like a solution looking for a problem: Uber and facebook already exist after all. But there are areas where the combination of these two concepts (decentralization and knowledge) are nothing short of fascinating, and two really really big places to look is Climate Change and Healthcare.

    Healthcare we will need to save for another day, but we have discussed a great deal about Climate Change and it's something I've spent several years thinking a lot about, and will become (in my mind and, apparently, ONLY my opinion) one of the first and most powerful effects of the early transition to the Knowledge Economy. Knowledge has value, and mitigating climate change most certainly has value but in the current economic system that value is impossible to effectively capture. Because of this, instead climate Change has devolved into a massless, valueless, zero-sum political discussion. The decentralized System of Trust has the ability to categorically shift the carbon paradigm from a political one to an economic one. It does so by providing for an equity and transactional currency based on the knowledge itself, and not some underlying commodity. 

    The theoretical construct of a "carbon credit" ceases to exist entirely. This is the big point one needs to wrap their mind around that I think a lot of people miss. The value is in the knowledge. Because the knowledge is cumulative in nature, and no one individual has all, or none, of the knowledge, the actions of the entire group determine the self-valuation of knowledge itself. This is the system we need to create, which up until now we did not have the ability to do. I think it'll have the same effect on the climate change discussion and landscape that Uber had on taxi cab medallions. In my next post, I will describe the system I think we could create in great detail. 

    Onward and upward!


  27. BBBY's chart starting to look interesting.


  28. Carbon Credits / bIodieselchris

    Am I hoping beyond hope that emitted carbon dioxide may soon have a very serious resource value what with the materials conversion process that Vanderbuilt University researchers just found. Maybe it's like Pat Boone said a long time ago: There's a goldmine in the sky.

     


  29. Manafort accused of witness tampering, might have to spend the rest of pre-trial in prison.  Throw in the rumors of him being broke and not able to afford his high priced lawyers & this is not good for ol' draft dodgin' Donny-

    https://www.reuters.com/article/us-usa-trump-russia-manafort/manafort-attempted-to-tamper-with-potential-witnesses-us-special-counsel-idUSKCN1J1043


  30. Yodi:

    Good Morning!, hope all is fine  and enjoying the Springtime, a question, have you any  armchair with GIS  looks like is in the bottom of the cycle yielding over 4%


  31. Good morning!

    No news is good news as the market continues to go higher for no reason. 

    /ES right at the 2,750 line – we'll see if they get over without a pullback.  

    LTP is up 22.3%, which is $611,571 – up about $13,000 since the 5/19 review so I guess nothing to really complain about.  STP only took a small hit so we're well-balanced and still more bullish than I feel.  

    Nasdaq notches record close as shares of Apple and Amazon jump to new highs.

    Tech Stocks Soar To Record High As US Macro Tumbles To 8-Month Low.

    Goldman Sachs Doesn't Think There's a Bubble in Tech Stocks.

    Charts point to big biotech breakout.

    Cash-rich companies are set to pour $2.5 trillion into buybacks, dividends and M&A this year.

    Internal documents reveal Tesla(TSLA) is blowing through an insane amount of raw material and cash to make Model 3s, and production is still a nightmare.

    7 Things Apple Introduced That Could Improve Your Life.

    Here's everything Apple unveiled at its biggest conference of the year.

    Yuan’s Global Push Back On

    After more than two years on the back-burner, there are signs that China is once again focusing on its efforts to increase the yuan’s status in global finance. Since May, initiatives from the central bank and government have included starting full operation of a new phase of an international payment system, making it easier for overseas lenders to borrow the yuan to help facilitate foreign investments in onshore bonds and stocks, and signaling the resumption of a program for mainland investors to buy offshore assets with the yuan that’s been on ice since 2015. The yuan grabbed a record 2.8 percent slice of global payments three years ago, before a crackdown on outflows in the wake of the 2015 devaluation saw that figure shrink to 1.7 percent as of April. These days — with China’s foreign reserves rising and volatility staying low — officials have a window to refocus on President Xi Jinping’s quest for a bigger Chinese role in global finance.

    China’s Blueprint for Skirting U.S. Steel Tariffs.

    Central Banker Observes Sudden "Evaporation" Of Dollar Funding, Warns Of Global Turmoil. 

    I think people are not expecting a Fed hike but that may be the wrong idea this time – we'll see next Weds.  

    It’s ‘America First’ All Over Again Across Financial Markets.

    OPEC Holding Production Steady

    OPEC is holding oil production steady even as it debates an increase. The Organization of Petroleum Exporting Countries pumped 31.9 million barrels a day last month, unchanged from revised levels for April, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data. April’s output was the lowest in a year. The cartel and its allies are discussing whether to revive output after supply curbs they agreed to in late 2016 succeeded in clearing a global oil glut. Saudi Arabia and Russia, the biggest two producers in the accord, have signaled that more oil will flow later this year to make up for potential declines in Iran and Venezuela. Still, they will have to convince others in a 24-nation alliance, some of whom prefer the higher prices. Oil declined in New York Monday, dipping below $65 a barrel for the first time in almost two months.

    Even honey badger!

    Home values are skyrocketing at the fastest pace since 2006

    First-Time U.S. Homebuyers Account for Almost Half of Mortgages.

    Trump Disinvites Philadelphia Eagles From White House Visit. 

     Department Of Homeland Security Compiles List Of All Bloggers, Journalists, & "Social Media Influencers".


  32. Good treatise BDC, you should publish that somewhere – at least in PSW Member's Corner.  

    I think my main issue with decentralized Uber, AirBnB, etc. is the reality of human interaction.  We used to have decentralized systems where you would drink at the tavern and stay at whatever inn you came across but the quality and pricing were uneven so Howard Johnson's and Holiday Inn became centralized brands people trusted.  Things like that led us towards centralization and there are certainly benefits to buying your car from Ford, rather than whatever the kid down the street made in his garage.

    "Knowledge" is no different, what some call knowledge others call bullshit and yes, we can rate and review them all – but those ratings and reviews are also BS.  Ideally, I'm with you 100% but, realistically, I don't think mankind is that evolved yet.  

    Sky carbon/Yo – That would be nice! 

    Manafort/EMike – Wow, what a mess.  I think Team Trump greatly over-estimates the "loyalty" of their cronies once the screws are tightened.  Mafia guys (who Trump worships) keep quiet because of a lifetime of conditioning and, of course, knowing they will most likely die if they flip – I don't think the Trump Organization has quite the same rep – though there certainly will be a lot of them in prison together…