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Trouble-Free Tuesday – Markets “Soar and Ignore” but How Long Can it Last?

Image result for big brother trumpGood morning HomeSec!  

That's right, it seems our President has ordered our Big Brothers at Homeland Security to "Compile a comprehensive list of hundreds of thousands of “journalists, editors, correspondents, social media influencers, bloggers etc.”, and collect any “information that could be relevant” about them."  Not only that but they have put the contract out for bid to a private company – what could possibly go wrong?

As part of its “media monitoring,” the DHS seeks to track more than 290,000 global news sources as well as social media in over 100 languages, including Arabic, Chinese and Russian, for instant translation into English. The successful contracting company will have “24/7 access to a password protected, media influencer database, including journalists, editors, correspondents, social media influencers, bloggers etc.” in order to “identify any and all media coverage related to the Department of Homeland Security or a particular event.”

“Any and all media coverage,” as you might imagine, is quite broad and includes “online, print, broadcast, cable, radio, trade and industry publications, local sources, national/international outlets, traditional news sources, and social media.”

Related imageAnd we're already being Trumped for questioning this massive attack on freedom of the press as the DHS has already made the following statement:

If you find yourself skeptical of this proposal of mass state monitoring of the press, consider yourself a bonafide member of the “tinfoil hat wearing, black helicopter conspiracy theorists,” DHS representative Tyler Houlton said Friday. It’s all very routine, he argued, casting the project as an innocent means of “monitoring current events.”

The funny thing is that, although I will submit this article, I'm fairly positive it will be rejected by editors at Seeking Alpha for being "too political" – as many of my posts are.  That's one of the World's top Financial web sites censoring political discussion because the author dares to be critical of the President and against actions which "abridge the freedom of speech, or of the press" and, if that sounds familiar to you – it's because I'm quoting it DIRECTLY FROM THE FIRST AMENDMENT!  

Image result for freedom of press quotesYou know the First Amendment, don't you?  It's the one that our Founding Fathers wrote before the Second Amendment….

Now "abridge" means, essentially, curtail so one could argue that, so far, Team Trump is not "curtailing" anyone's rights – they are simply monitoring or, as Orwell liked to say "WATCHING" whatever we say.  I am constantly curtailed by the editors at Seeking Alpha and that's their right as a private company who are, in turn, WATCHED by HomeSec and don't want to make any waves.  

Of course, having HomeSec monitor everything I write is now only one step away from having HomeSec monitor everything you read – isn't it?  What would come in between this action and that action?  What is protecting you from being watched if you don't stand up against the Press being monitored?  Certainly the Press won't be there to defend you once we are curtailed…  

There is an in-between step, of course.  It's the step Hitler took in Nazi Germany where publishers and authors who had "radical views" were put on lists and, long before they were rounded up and executed, the people who read the banned books and newspapers were discouraged (as in: their "courage" was taken away!) from having any association with them, for fear of also being branded as undesireables.  

This is not Nazi Germany, this is America and we went to war to put a stop to that kind of outrageous action by the last demagogue who tried to abrdige mankind's most basic freedoms.  I don't know how many people saw "The Post" – I only saw it because it was on the plane recently but I would urge you to watch it to get a sense of how hard it was at the time for the Washington Post and the New York Times to go against Nixon by simply publishing the Pentagon Papers, which were nothing more than an internal analysis of the Vietnam War created by the Army, using our tax Dollars, which painted an unflattering view of the Administration and the War Effort

The Washington Post and the New York Times are still enemies of the current State and God help us all if they are abridged by this Administration.  There are many ways to destroy a paper without actually arresting the writers and editors and the economic and public relations ground war has already begun.  We're only one step away from HomeSec adding the line "and their subscribers or readers" before the intimidation phase begins.  

Anyway, while we stil can: On to the market discussion!  

What's really bothering me this morning is the fact that I read a lot and, from my reading, I get the impression that the global economy has plateaued and may even be contracting a bit as various Governments try to get control of their debt (not ours, of course, we're doubling down on $20Tn).  Massive debts in a rising rate environment is one of those things that is absolutely going to cause pain in all sorts of ways – yet none of this is being taken into account in the ever-rising forward p/e expectations of analysts.

About 20% of the S&P 500s earnings this year are coming from a one-time tax cut yet those numbers are not just being extrapolated forward like the $1Tn annual budget deficit the cuts are causing will never be an issue but that there will be no broader repercussions to our country being $30Tn in debt by the end of Trump's second term (or perhaps he will be President for Life by then).  Even at just 3%, assuming the US keeps it's AAA credit rating and the rest of the World keeps buying our debt at record-low rates, the interest alone on $30Tn is $1Tn and that's 1/3 of all the money the Government collects just to pay the interest on what we owe.  

Meanwhile, the population ages and our Retirement System is strained as well as our Health Care System but none of that is as worrying as our aging infrastructure, which has been an "emergency" since 2006 but then the market collapsed, so we put off doing something about it and Trump promised to do something but hasn't.  Like an unfixed leak, the infrastructure issues get worse the longer you ignore them and $4 TRILLION is what is now required to fix just the things that are falling apart, according to the most recent study.  

It "only" costs us $3,400 a year, per family, NOT to act on infrastructure but there's the rub – $3,400 is nothing to the people who got $34,000 tax breaks for ignoring the infrastructure.  To actually do something about it would cost $3/day per family so $1,000/yr x 110M = $110Bn/yr to do what's needed to be done but, as the GOP makes sure you are aware, the bottom 50%, who earn less than $24,000 per family, don't pay much tax (just Social Security, Medicare, Unemployment, State and Local), which means the top 5% would have to pay an average of $2,000 a year and those in the Top 1% would pay perhaps $20,000 a year so your grandma can have reasonable access to public transportation – NO WAY!!!

The real economy, where the real people live, is fraying at the seams while the Top 10% are fiddling and the rights of the citizens are burning.  

That's my bearish premise!  


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  1. Up, up and away!

  2. Positive for QCOM long term, probably negative for INTC:

    In addition to all the features I've already described, the 850 is also supposed to last up to 25 hours, depending on your use. That's a lot longer than the 20 hours that the existing crop of connected PCs provide, which was already impressive. 

  3. Trump / Phil – Once again, the worst people are the GOP Congresspeople that are complicit with this clear abuse of power! 

  4. I guess my Eagles not going to the White House:

    The Phila. mayor had the best line:

    “Disinviting them from the White House only proves that our President is not a true patriot, but a fragile egomaniac obsessed with crowd size and afraid of the embarrassment of throwing a party to which no one wants to attend,” Kenney said.

    And who is the true patriot – Trump or Chris Long:

    In October, Long announced he would donate his remaining 10 game checks to help underserved youth in the three cities he played for: Philadelphia, Boston, and St. Louis. This move generated national attention, including praise from a former president.

    What's more patriotic, saluting the flag or helping the ones in need?

  5. You would have had to be very patient with AAPL at the beginning:

    Who could have predicted that when Jobs returned to Apple in 1997, he would have acquired the management chops to run a multi-billion dollar company? Who could have foreseen that he would move Apple from a computer company to a consumer electronics company, making hand-held products that people the world over lusted after? Who would have guessed that after accepting a $150 million lifeline from arch-enemy Microsoft, Apple would one day be the larger and more important of the two companies?

    Nobody, that’s who. In fact, Apple’s stock hit a 12-year low just a few months after Jobs returned (but before the board fired Amelio). Although Apple had success with Jobs’s first product after returning—the iMac in 1998—it wasn’t until he introduced the iPod in the fall of 2001 that you could begin to see the shape of the modern Apple.

    In other words, you would have to hold onto the stock for more than two decades before it became clear that Apple was going to be a successful company. Even then, you would have had to wait another three years before the stock really started to take off. Even Buffett isn’t that patient.

  6. Good Morning.

  7. Likely government frequently abuses its power…

    "May 13, 2013

    Dear General Holder:

    I am writing to object in the strongest possible terms to a massive and unprecedented intrusion by the Department of Justice into the newsgathering activities of The Associated Press."      letter of protest sent from Gary B. Pruitt, president and CEO of the Associated Press

  8. ~~ TWTR  – -Twitter has made it into the S&P 500.

    S&P Dow Jones Indices said Monday that the social media company will replace Monsanto on its index of top US public companies. The company's stock jumped more than 3% after hours following the news.

    TWTR  ~~ Twitter target raised to $45 at Cascend Securities.. (Whoever they are).

    This stock has turned from stodgy to a strong acting stock, much like MSFT did when Ballmer was replaced.

  9. SPY volume had its lowest day since 12/26 yesterday on record valuation for NAS. Trump has a lot of plates he's spinning over next 10 days. One of them will result in a pullback.

  10. Good morning! 

    This is also insane:

    Big Chart – NYSE is up so we can't be too bearish.  

    QCOM/StJ – Nice recovery for them in progress:

    Sadly, we only have 10 short QCOM 2020 $50 puts we sold for $6.70 back on 4/16 but they are still $4.80 so not too bad as a new trade.  The 2020 $55 ($10)/$70 ($4) bull call spread at $6 for the $15 spread (150% upside potential) is a good pair so let's add 15 of them to the LTP so we have room to sell 5 short for income along the way.  

    Eagles/StJ – Completely outrageous behavior on Trump's part yet, there is so much crap going on that it barely gets a mention. 

    DOJ/Mike – See, we always used to say "Why would people live in a totalitarian state like Russia" yet here's the answer:  Over time, you just get used to it….

    TWTR/Albo – Another one I used to bang the table on.  Now it's "obvious".  

    As expected, volume today was 98M, 23M more than yesterday (30%) on down volume. 

    TWTR/Hanj – They are finally doing what I told them to do (expanding the limit), so I'm very pleased.  

    Submitted on 2015/06/16 at 10:50 am

    TWTR/Rustle – They can't figure out what to do because they don't understand that limiting what you say and read to 140 characters gets tedious after not too long.  That's why kids do texting instead of tweeting – it does everything Twitter does except limit your form of expression

    Submitted on 2016/05/24 at 11:49 am

    TWTR/Albo – They are not going to count links or images in the character limit – I think that's a big plus but it will take a long time for any measurable effect to take place.

    Submitted on 2016/07/12 at 3:52 pm

    TWTR/Craigs – I just can't let them go because they have 300M active users and, if they can figure out something like Pokemon to get them all to give them $1, they'll go up 40% too.

    TWTR/Ging – We're already long and I think they are way undervalued or, perhaps, all of their competitors are way overvalued.  Anyway, tugboats say TWTR is undervalued so that's the way it should go but they really need to do something soon to prove they can monetize those eyeballs.  

    TWTR/Abseth – To me, there's a big value in simply getting 200M people to use you in the first place.  And TWTR is not a flash in the pan so it's 200M very solid users with a huge brand name for $12.5Bn is $62.50 per user – well within normal CPA.  And then think about how much data you can mine from all those tweets and connections!  

    So consider that TWTR has 200M unique MONTHLY active users (1Bn registered) and they know what kind of stuff those people like (who they follow, what they tweet) and that EACH purchase one of their Members makes is worth $65 to someone and a subscription sale is worth $200 and TWTR can leverage those Members over and over again if they do it right.  Sadly though – so far they haven't done anything right but it's the POTENTIAL of the 200M that keeps me in them. 

    Submitted on 2016/07/27 at 11:52 am

    TWTR/StJ – See above usage chart (old but ballpark valid).  The misprice vs FB is completely insane.  Either FB is way too expensive or TWTR is way too cheap and I'm scared to short FB so I have to go long on TWTR.  

    Submitted on 2016/07/27 at 12:54 pm

    WTR/Ricker – I don't have one now, waiting for it to settle.  We went bullish on TWTR at around $14, so this is just a minor set-back for us.  Obviously, at $14, then the current LTP or OOP positions should work again (if we get there).  If not, then I'll come up with a new one by Friday.  

    Submitted on 2016/08/01 at 12:43 pm

    TWTR/QC – We have TWTR in the LTP with a 2018 $13/20 bull call spread – not going to change that but it's good for a new entry at net $3 and you can sell the $13 puts for $1.85 to offset and net $1.15 on the $7 spread that's $3.80 in the money.  

    TWTR/Abseth – I love being the only guy that likes a stock!  

    In the OOP, we have the TWTR 2018 $10/18 bull call spread, now $4 and it was $3.50 and we sold the $13 puts for $3, now $2 so currently net $2 is still a very good deal for a spread that's $7 in the money with a $6 upside potential (300%) in 18 months. 

    In the OOP, 10 were net $500 to return $8,000 and currently only net $2,000 so still a great trade – just not as great as it was in April, when the VIX was better. 

    Submitted on 2016/08/03 at 12:14 pm

    TWTR/Abseth – From my days as an M&A consultant, I generally value things that way to determine where I'm comfortable.  

    Submitted on 2016/08/11 at 1:16 pm

    TWTR/Abseth – As I keep saying, FB monetizes users 3x better than they do and I have to believe that, at some point, TWTR will figure it out.  

    The funny thing is I have no interest in them now that they've turned up – I love finding the unloved stocks when they are dirt cheap!  

    OPEC/Albo – That is strange, it's like saying OPEC is in charge.  Meanwhile, if they stopped exporting 2.5Mb/d of gasoline, it would be $1/gal cheaper here.

    Pullback/Den – One would think but be careful to avoid relying on logic in this market.

  11. TWTR – Great calls, Phil !

  12. FNSR & other fiber optic stocks catching bids.

  13. FNSR/Albo – Now there's another dog I love long-term! 

    It's not the company's fault if they go out of favor with investors – you just have to learn to spot the diamonds in the rough.

    Speaking of rough diamonds – PSW Investments is about to officially launch our first start-up, the Judgment Search Network, which provides, amazingly, judgment searches for the transfer of real estate title.  That's the official line – unofficially, we will soon to Tax Searches, Flood Searches, UCC searches, etc.  but the judgments alone are a potential $10M/yr opportunity and we've partnered with the largest county search company in the state so we feel strongly we'll be able to capture a good portion of the market.

    We've spent just 1 year and $150,000 for our 1/4 share – mostly it's my time that has been of value as I've done this before.  The potential is huge but, unfortunately, this is launch month so I have a lot of meetings.  Today I will be scarce between 12 and 2 but then back for the close (though I have an interview on CNBC in Japan around 3).  

    Also, now there are just 25 days left for people who want to participate in PSW Investments or the Hedge Fund – that's 25 days until paperwork MUST be filled out and approved (Government regs for the fund) and money must be transferred.  After that, very unlikely we'll be taking anything again until Q4 and, if the JSN project goes – at double the current price!  So contact Greg at Philstockworld dot com if you are interested asap!  

  14. Phil//  I Sold 5 2019 Strike 25.00 at $4.80, now they are $8.40.  Thinking of rolling that trade to Sell 5 2020 Strike 25.00 at $9.10 or so.  The 2019 puts still has some small premium but I thought this might be a good time to roll that over.  Let me know your thoughts.


  15. Phil Being a RE broker for years I presumed that title company's are paid to do this search to make sure titles are clear before transferred. I have a law background so I was used to doing the due diligence in finding errors. Title company's hated me because their closing statements always had mistakes that had to be corrected,  which meant more paperwork. Sometimes sellers had died and heirs were trying to transfer before the estate was cleared through probate. So I presume you are doing the "deep dive" before closing?

  16. This is what happens when the president runs his own business – he is liable to blackmail for his policies. Trade wars could be solved very quickly though as China found out.

    “Canada could add a tax to Trump properties equal to any tariff unilaterally imposed by Washington,” he writes. “The European Union could revoke any travel visas for senior staff in the Trump organization. And the United Kingdom could temporarily close his golf course.”

    The potential points of leverage here are quite real. Trump has two golf courses in Scotland and one in Ireland. The wine list at BLT Prime in Trump’s DC hotel is full of European vintages. Travel sanctions could also be painful. Donald Trump Jr. was vacationing in Spain as recently as April.

  17. Phil/Uber – Uber's primary need to exist (a centralized organization) is to deal with currency. They're in some 100+ countries and dealing with currency for a global company represents work and efficiency loss. Obviously for global companies having a global currency would be ideal. Uber could care less if a driver moves a customer from A to B in Tunisia or Dayton, OH.

    A token externalizes this. If Uber launches UberCoin and takes it as payment in all 100+ countries it shifts the onus to the customer to come up with some in their local jurisdiction (but also the option to use it in the first place). Third party markets trade UberCoin around the world so the company no longer deals in currency. It shifts the inefficiency to the traders' markets (where such activity honestly belongs). 

    The need for the centralized company at this point begins to become unnecessary.

  18. I've been talking about TWTR. I must be on a lot of people's ignore list like 1020 is on mine.

  19. Look At Me.

  20. Phil – I posted yesterday's siloloquy here. I'm thinking how this applies to health care too. We should talk about that.

  21. They must be saving the 1 Trillion mark for the 4th of July celebration? Fireworks and all.

  22. bdc – Would someone mind telling my thin-skinned friend that he is not on my ignore list…. :(

  23. BDC – Apparently 1020 still reads your posts!

  24. so none of the Eagles players kneeled during the season huh? So now the only reason they are disinvited is down to actual real reason: they're black.

  25. SPWR has been beaten down again over the last week or so!

  26. By the way, sorry there is no articles – we're transitioning to a new WordPress version as well as AWS (Amazon Web Services) and that's one of the things they haven't fixed yet.  Meanwhile, the posts still go to our Flipboard Magazine – in case you feel like you're missing out.

    Mystery Stock/Rookie – In that case, I'd usually rather roll to 15 or 20 of something lower with MUCH more premium but I need to know what stock.

    Title/Pirate – The homeowner pays them on the HUD but it's a pass-through expense that goes to companies like ours (in the Northeast, at least).  We also will be doing back-office examination for Title Companies down the road as that's an industry about 40 years behind on automation and efficiency.  We're able to run judgments for about 1/2 the going rate and still clear a huge profit.  In 3 months of testing, our accuracy has been superior and now we're ready to roll out the product.  

    Blackmail/StJ – I doubt anyone will make things personal but, then again, where was Melania?

    Uber/BDC – When we were in Albuquerque my daughter called for an Uber to a restaurant called Rio but it booked us a ride to Rio de Janeiro for 7,000 miles.  She only noticed when we were already on the way!  If you could trust people not to murder you and their cars to be clean etc, then anyone could put themselves our for a ride offer and someone could centralize that for maybe $1 per ride – it's the oversight and consistency of service that people pay Uber for (and penalize the drivers for) – not the means of exchange.  

    My American Express card has made currency a non-issue for 20 years.  I buy anything anywhere in a local currency and they do a no-fee conversion at the day's average rate.  I travel A LOT and have never had an issue with it.  So I'm not sure why it would be an advantage for me to get some crypto coin to replace it with.  AMEX does charge a fee but they also insure everything I buy and provide great travel services so I consider the conversion a free service that is accepted world-wide with seamless transaction – I can't see why I would part with that to do something else?

    Thanks for the post, the health-care thing should be explored.  

    Well, my meeting got delayed so I'll be here for a while.

    A bit of a sell-off in progress.

  27. Phil, you have a hilarious, conservative view of the world. Maybe it's an age thing?

  28. I cannot have a macroeconomic discussion with someone who only focuses on themselves as the ONLY example. 

  29. note that you take the most esoteric, unknown, thinly traded cryptos known to mankind as payment at your very own website. Now that's irony.

  30. Thanks stjean!  :)

  31. BDC, you always get angry when I simply question your logic.  Rather than place an ad hominem attack, tell my why a crypto currency – ANY crypto currency is better than my American Express, other than the fees which, very arguably, are far less than the spreads in constantly buying and selling cryptos for both the buyer and seller. 

    As it is I (yes, me, I don't have time to do a massive study or even to cite them) can get paid electronically at no fee and pay my bills at no fee and use my debit card with no fee (also freely converts currency) so what is it I am doing with crypto that's "better"?  While blockchain will ultimately have many good uses – it's a solution in search of a problem as a currency.

  32. Phil – I think you and I should meet in Seattle to throw the snot-nosed one, a 'blanket party'…

  33. BBBY – Trading above the 50 dMA and up in the gap.

  34. Phil// My bad :-(   The stock I had mentioned is FNSR.  Thanks.

  35. Phill/  Corrected my earlier post with the stock and here it is 

    Phil//  I Sold FNSR 5 2019 puts Strike 25.00 at $4.80, now they are $8.40.  Thinking of rolling that trade to Sell 5 2020 puts Strike 25.00 at $9.10 or so.  The 2019 puts still has some small premium but I thought this might be a good time to roll that over.  Let me know your thoughts.


  36. My Costco executive Visa card has no foreign transaction fees and a nice cash back as well….

  37. FNSR/Rookie – Well, at $17, let's say they hit $21 this year and $25 next.  Your short $25 puts are $8.40 with no premium and the 2020s are $9.25, I'd say – still not much premium.  However, the 2020 $17 puts, at the money, are $3.80 and that's pretty much all premium.  Since you sold the short $25s for $4.80, you are down $4 per contract so an even roll to 5 $17s puts back the $2,000 you collected but leaves you with a worst-case of owning 500 shares at the current price of $17 – it also knocks a bit off the margin required to wait out the position.  

    If you sell just 2 more of the $17 puts, that puts $760 back in your pocket and the obligation of 700 x $17 = $11,900, still less than 500 x $25 = $12,500 and should still require a bit less margin – especially if they slip out of the money. 

    Cash back/1020 – I don't know any crypto currencies that do that….

  38. VRX – Up 6% today.

  39. Last week I sold 20 ETM December 6 puts.

    Sold another 20 for $.60.

    • May ISM Non-Manufacturing Index: 58.6 vs. 58.0 consensus, 56.8 prior.
    • Business activity 61.3% vs 59.1.
    • New Orders 60.5% vs 60.0%.
    • Employment 54.1% vs 53.6%
    • Intercontinental Exchange (NYSE:ICE) also reports records in total Interest Rate volume at 7.8M contracts on May 29, May Oil ADV of 2.0M contracts, May Gilt ADV of 339K contracts.
    • Other May trading volume and related revenue statistics: Emissions ADV up 96% Y/Y; European Natural Gas ADV up 27%; Total Ags & Metals ADV up 18%; Euribor ADV up 79%; Sterling ADV up 56%; MSCI ADV up 36%; FTSE ADV up 15%, Equity options ADV; up 42%.
    • Source: Press Release

    Chain store sales keep 4% growth pace

    ETF price wars: BlackRock slashes more fees

    • The road to zero (or at least low single-digits) continues, with BlackRock (NYSE:BLK) cutting fees (effective June 1) on seven of its fixed-income and four of its core equity ETFs. The cuts are most dramatic in the fixed-income vehicles.
    • The iShares J.P. Morgan EM Local Currency Bond ETF (NYSEARCA:LEMB) expense ratio is cut to 0.30% from 0.50%.
    • BlackRock (NYSE:BLKdips 1.5% during its investor day; about 10% off its its 52-week high of $594.52 on Jan. 23. Management covered a lot of ground. Here are some highlights of the investor day slides.
    • Use of technology: COO Rob Goldstein says opening its Aladdin platform enables clients to build their own applications and will lead to greater innovation.
    • On Asia-Pacific: Geraldine Buckingham, global head of corporate strategy, says the region's industry AUM is seen rising at 10.5% compounded annual growth rate from 2017 to 2021 vs 5.2% globally.
    • ETF market growth: ETF market set to double again by 2023, driven by ETFs, driven by alpha tools, all-to-all networked trading, fee-based wealth management, value for money, says Mark Wiedman, global head of iShares and index investments. Three scenarios see ETF  AUM growth ranging from 10% to 20%.
    • U.S corporate bond index futures based on iShares ETF will be coming soon, Wiedman says
    • BLK financial progress: While effective fee rate has declined to 19.1 bps last year from 22.1 bps in 2012, organic base fee growth remains strong--to 7% in 2017 from 5% in 2013, says CFO Gary Shedlin; adjusted operating margin increased to 44.1% in 2017 from 40.4% in 2012.
    • Previously: ETF price wars: BlackRock slashes more fees (June 5)

    Banks sharply raise oil price forecast in WSJ survey on geopolitical risks

    • Brent crude is expected to average more than $70/bbl this year and WTI should average nearly $66/bbl, according to a WSJ poll of 12 investment banks, with both estimates ~$6 higher than the forecast from April’s survey.
    • “The key driver here is basically supply risk – supply risks from Iran and Venezuela,” says Harry Tchilinguirian, global head of commodity markets strategy at BNP Paribas, one of the banks surveyed by WSJ.
    • Venezuelan oil output fell by 50K bbl/day in April to 1.42M bbl/day, and production likely will continue to fall to ~1.2M bbl/day this year, says Warren Patterson, commodities strategist at ING Bank.
    • Crude oil prices edge lower today, with WTI -0.1% at $64.66/bbl and Brent -1.5% at $74.14/bbl.
    • Petrobras (PBR -1.5%jumped nearly 6% yesterday following the appointment of former CFO Ivan Monteiro as its new CEO – helped also by some bargain hunting after huge losses over the previous two weeks – but analysts say the new boos will not likely be able to escape government pressure.
    • Monteiro, seen by oil companies and investors as an avid supporter of changes sought by the departed Pedro Parente, is not expected to get the same carte-blanche from the government as his predecessor, as the political mood in Brazil has shifted.
    • "Monteiro will be under serious political pressure because of the elections,” says University of Rio de Janeiro energy professor Edmar Almeida. “Candidates who are against asset sales, for example, will push hard against any major Petrobras decision on divestments."
    • More is at stake for PBR than potential losses from fuel pricing, as possible investors could be scared away from bidding on stakes in four of PBR's refineries because of the prospect of competing with a company that is forced to sell fuel below cost.

    First Solar -11.5% over two days, capped by BAML downgrade

    • First Solar (FSLR -5.4%) suffers a second straight sharp loss after BofA Merrill Lynch downgrades shares to Neutral from Buy with a $63 price target, slashed from $83, following the Chinese government's move to cut subsidies and halt construction on new solar farms.
    • BAML anticipates a steep drop in 2018 Chinese solar deployments following China's actions, with further declines possible in 2019-20, and expects the decline in Chinese demand and expanded supply to depress prices globally and cause a "deluge" of Chinese imports into the U.S.
    • The firm forecasts FSLR's margins to decline from 35% in 2019 to 20% by 2022, but with some near-term support from the existing order book and fixed-price contracts; FSLR shares have shed 11.5% this week.
    • Duke Energy (DUK) has agreed to curb requests for legislative authority for annual rate increases to pay for a $13B grid upgrade if regulators approve a three-year pilot program based on the plan, as part of a settlement reached with environmental groups.
    • The groups – including the Environmental Defense Fund, the North Carolina Sustainable Energy Association and the Sierra Club – gave up their opposition to DUK’s proposal for the modernization program and to establish annual increases under a streamlined rider in exchange for limiting the rider to a pilot program that expires but could be renewed in 2021 and a reduction in total costs that the commission would approve to $2.5B.
    • The proposed settlement is before the North Carolina Utilities Commission as it considers DUK's $7.8B proposal for grid modernization in the state over the next decade; DUK proposed the modernization program in conjunction with an 11.6% general rate hike, also now before the commission.
    • NASA Administrator Jim Bridenstine is advancing President Trump's proposal that private companies take over operations of the International Space Station, according to The Washington Post.
    • While he declined to specify which companies he had spoken to, Boeing (BA) was selected in August 1993 as NASA's primary contractor to develop and build the ISS.
    • The company's space division has continued to provide engineering and management under extended contracts and is tracking these deals as it works with NASA on future developments.

    Solid gains in the mall sector

    • Mall stocks are breaking higher in an unexpected move. There was a solid data release earlier today when Johnson Redbook reported another 4.0% weekly gain in U.S. chain store sales to add to the recent positive sentiment on consumer spending.
    • Gap (NYSE:GPS) is leading the way with a 4.01% jump. Also moving higher are Macy's (M+5.8%), Sears Holdings (SHLD +8.4%), Dillard's (DDS +4.6%), J.C. Penney (JCP +3.1%), Tailored Brands (TLRD +4.5%), Tilly's (TLYS +3.4%), Urban Outfitters (URBN +2.2%), Guess (GES +2.2%), Chico's FAS (CHS +2.4%), DSW (DSW +1.4%) and Express (EXPR +4%) are all pointing up as well.
    • Well-known fashion designer Kate Spade was found dead in her apartment this morning after she apparently hung herself, according to police sources.
    • Kate Spade sold the last of her shares in her eponymous company in 2006, well-before it was sold to Tapestry (TPR -1%).
    • Shares of Tapestry broke sharply lower after the news broke, but have since recovered a bit.

    Starbucks lower as new chapter begins

    • Shares of Starbucks (NASDAQ:SBUX) are down 2.24% to $55.70 as investors adjust to the news that Howard Schultz is leaving the board.
    • "He was the one who could and did step in when needed. Yes, SBUX has a deep bench and talented board … but there was only one Howard," writes Morgan Stanley analyst John Glass on the development.
    • Other firms such as Bank of America Merrill Lynch are sounding similar themes on some short-term question marks for Starbucks amid rising competition, while keeping long-term bullish views in place. A potential venture by Schultz into politics isn't anticipated to have any bearing on SBUX's share price.
    • The company's new lead independent director will be former J.C. Penney CEO Myron Ullman.
    • Sources: Bloomberg, CNBC
    • McDonald's (MCD -0.5%) CEO Steve Easterbrook says the company will add self-service kiosks to about one thousand restaurants each quarter for the next two years.
    • "What we’re finding is when people dwell more, they select more," points out Easterbrook. He notes the extra time at kiosks is helping to boost the average amount spent by a McDonald's customer as compared to in the regular checkout line.
    • Piper Jaffray lowers its price target on Neutral-rated General Mills (GIS -1.5%) to $45 from $47.
    • The firm points out some risk if major Blue Buffalo customer PetSmart closes some stores and reminds of the presence of Amazon in the sector with the Wag brand.
    • Shares of General Mills are down 28% YTD.

    Valeant breaks out of brief consolidation, up 5%

    • Longs in Valeant Pharmaceuticals (VRX +4.8%) are, no doubt, enjoying today's breakout from a two-week base, albeit on below-average volume.
    • The company continues to make progress in restructuring its debt and creating more financial flexibility. A few days ago, it announced the full refinancing of its secured revolving and term loan credit facilities and the closing of its recent debt offering.

    Reuters: China investigating DRAM companies for price fixing

    • Reuters source confirms Chinese regulators are investigating the top DRAM companies for alleged price fixing.
    • The investigation is targeting Micron (NASDAQ:MU), Samsung (OTC:SSNNFOTC:SSNLF), and 

    • Key quote from the source: “The investigation has kicked off in earnest.”
    • The rising cost of chips has hurt Chinese electronics manufacturers that operate at lower margins than overseas rivals. 
    • South Korea’s senior industry ministry official says Samsung and SK Hynix haven’t done anything wrong and that the rising prices are due to strong demand and the fact that “factories can’t keep up with that level of demand even at full capacity.”
    • Samsung held 45% of the DRAM market in Q1, according to Trendforce data, with SK Hynix holding 28% and Micron coming in third with 23%. 
    • Micron shares are up 0.9% to $59.62.  
    • Previously: China launches foreign chipmaker probe (June 4)
    • Previously: Samsung admits to visit from Chinese regulators (June 4)
    • Cascend Securities raises its Twitter (NYSE:TWTR) price target from $40 to $45, a 19% upside to yesterday’s close.
    • Firm says it has direct measurements of new Twitter app downloads that show organic growth in user demand through May. 
    • Cascend thinks Twitter sees itself as a sophisticated video/content delivery platform and that simplifies and enhances user engagement and ad sales. 
    • The firm expects the new strategy to increase daily users and ARPU above trend.
    • Source: 
    • Twitter shares are up 4.4% premarket to $39.54 still gaining on the news that Twitter will replace Monsanto in S&P 500.   
    • Previously: With Monsanto deal near, Netflix to S&P 100; Twitter to S&P 500 (updated) (June 4)
    • CNBC sources say Alphabet’s (GOOG -0.2%)(GOOGL -0.2%) Google was talking to GitHub about an acquisition in recent weeks before Microsoft (NASDAQ:MSFT) made the purchase.
    • The sources suggest Microsoft’s bid was high enough to keep Google to the side and that Microsoft ended up paying 25x revenue, which would make for annual revenue of about $300M. 
    • Last August, GitHub said its annualized run rate was $200M. Last fall, the company said it was on track to book over $100M a year from enterprise products alone. 
    • Microsoft shares are up 0.2% to $101.86     
    • Previously: Microsoft acquires GitHub for $7.5B (June 4)

  40. EVERYONE is interested when they get it…

    • Amazon (NASDAQ:AMZN) has a secretive group working on cancer research, medical records, and last-mile delivery, according to CNBC sources.
    • The group called Grand Challenge is a research team meant to explore new ventures that could expand the tech giant’s footprint like Alphabet’s Google X lab. Google X vet  Babak Parviz runs Grand Challenge. 
    • Grand Challenge has added over 50 people in the past four years. The organization is housed under AWS in the business sense and reports to AWS CEO Andy Jassy. 
    • A Challenge project called Hera involves taking unstructured medical record data to identify an incorrect medical code or a misdiagnosis. The group is starting to pitch Hera to commercial health insurance companies. 
    • Amazon shares are up 2% to $1,698.21. 

    RUT has been going up and up, now testing 1,665.  Other indexes back at the day's highs too.

    HMNY down again but here's a good article on them.

    • Eurozone PMI fell to 18 month low in May to 54.1 from 55.1 in April.
    • The pace of growth has slowed from the turn of the year and – possibly of concern to policymakers at the European Central Bank inflation pressure also eased last month.
    • New order growth weakened, backlogs of work were amassed at a shallower rate and hiring slowed causing the future output index to sink to 63.7 from 65.7.
    • Source:
    • Activity in the UK service sector picked up at the fastest pace in three months in May at 54.0 from 52.8 in April, compared to forecasts for a reading of 52.9 citing a solid upturn in overall business activity across the service economy.
    • The three PMI surveys indicate that GDP looks set to rise by 0.3-0.4% in the second quarter.
    • A similar survey of the manufacturing sector on Friday showed that activity picked up in May for the first time in six months, but the underlying trend remained weak, while another report on Monday showed that construction activity growth remained subdued last month.
    • Source:
    • China's services sector expanded at a steady, solid pace in May at 52.9, with companies accelerating hiring on the back of the strongest optimism for future growth in 11 months, however, companies reported slower growth in new orders and weaker pricing power pointed to intense competition even as input costs rose at a faster pace.
    • The new business sub-index in Tuesday's PMI fell to 52.5 in May from 53.0 in April, though companies hired at the fastest pace since January.
    • Caixin's composite PMI covering both the manufacturing and services sectors also remained steady in May at 52.3, suggesting economic growth remains relatively resilient despite worries about rising borrowing costs, cooling investment and trade tensions with the United States.
    • Source:

  41. edro00 

    What do you think of

    Northwest Biotherapeutics, Inc

    The company  NWBO ? 

  42. AMZN

    Another day.  Another $2.5 billion for Bezos.

    He probably equaled Trump's net worth just today.

  43. Phil; I have troubling position in AMZN (I know not your favorite stock).  I have the 2020 1350/1550 BCS 4x but I also have the June 1400 calls 2x.  I also have a few OTM Puts .  Bottom line is I could buy back the 1400 calls for a huge loss and still be profitable if AMZN is above 1550 at 2020.  What would you suggest?  Roll out the June calls and add puts, increase the spread by rolling out the 2020 1550 calls or change the overall long BCS (taking some profits on original position).  I'm not giving all the pricing details since I have done many rolls and short put sales along the way.  I'm more interested in the strategy and not having you try to price out everything.  TIA

  44. Phil,

    Any thoughts on starting a call position on GS or XLF?


  45. Phil/ NAK

    On the move

  46. NWBO – I believe their science is good.  They recently published an interim results of their Phase III trials at   .  Unfortunately they are a very small biotech on the OTC market ($0.28/share).  Disclosure – I own shares.

    From their article: " A population of extended survivors (n = 100) with mOS [median overall survival]  of 40.5 months, not explained by known prognostic factors, will be analyzed further."  Thats 100 folks stlll alive out of 331!  With Glioblastomia!  and it works with other types of cancers also.

    I lost a good friend to brain cancer – check them out.

  47. Phil:  What are your thoughts on PSO these days?  I have some uncovered shares purchased at 10 with a $2 profit.  I can sell 10 calls for 2.15 or so, or I can simply close out the position, take some profit and raise some cash.  What is your take?  Thanks.

  48. Phil/currency, no no not angry at all!  My main point is crypto"currency" is NOT A CURRENCY (it is however, poorly named, but that is the nature of the English language). It is a System of Trust that has characteristics of a currency (along with equities, debt, and commodities). I've mentioned this 1000 times. 

    American Express is also not a currency. It is a Transaction System (far worse than MC or Visa IMo but maybe the fees are better now?). You don't own anything with American Express. You simply participate within their transaction system, which happens to be based in (probably) US dollars. American Express could just as easily be processing bitcoin in the background, to which you are 100% agnostic. As an aside, if transacting in the background with bitcoin is cheaper for AMEX than the US dollar, they will eventually switch.

    Bitcoin, as a transaction system alone, was deprecated by the nerds following it as an argument in 2013 (I remember because we talked about it back then). In fact "Bitcoin is not a transaction system!" was the actual name of the bitcoin conference talk I went to in San Jose in May 2013. Transaction systems are either instantaneous or not instantaneous; block times don't matter whether they are 10 minutes or 15 seconds. Bitcoin/blockchain as a transaction system was a solution looking for a problem, they already existed! It's a known known. However, I will point it out your same point with a different twist: let's say you wanted to compare bitcoin transactions versus gold instead of the US dollar. Then it's 1,000,000 times better! You can confirm a transaction of any amount in an hour or so anywhere in the world. No scales, no 10-ton shipping logistics, no possible theft. Way better…

    Currently my central point is cryptocurrency is a more efficient System of Trust than nation-state fiat currencies. Therefore, their continuing evolution and ultimately adoption is inevitable, in only my (and in mine alone, apparently) humble opinion. I suspect you're readers want to be told that it's all a big Tulip Bulb / Beanie Baby Mania, but that's what the lazy mainstream media says, so why would we tell that Big Lie here? But there may be some (perhaps 1 in a 100) who want to know how an asset class worth $150M in 2012 hit $840B earlier this year (now $350B). Some people might be curious about that. And I have some theory on why that may be.

  49. Phil:  Regarding my PSO question, I can sell December 10 calls for probably $2.35 or so.

  50. NWBO – UCLA led the study  – here is their take on it;

    An international study led by UCLA researchers has found that a personalized vaccine may help people with glioblastoma, the deadliest form of brain cancer, live longer. The vaccine, known as DCVax-L, uses a person’s own white blood cells to help activate the immune system to fight cancer.

    Nearly 30 percent of people in the ongoing trial have survived for at least three years after they enrolled in the study. Currently, the average life expectancy for people diagnosed with glioblastoma is 15 to 17 months, and less than 5 percent of people who receive standard treatment survive more than five years after they are diagnosed.

    “The survival rate is quite remarkable compared to what would be expected for glioblastoma,” said lead author Dr. Linda Liau, professor of neurosurgery at the David Geffen School of Medicine at UCLA and a member of the UCLA Jonsson Comprehensive Cancer Center. “The 20 to 30 percent of long-term survivors in immunotherapy clinical trials are the people in whom we think there may be a particularly strong immune response against their cancer that is protecting them from getting tumor reoccurrence.”

  51. Just got done with my pre-interview with Japan, this is what confuses them:

    4)     The May jobs report showed the US economy keeps to grow. Meanwhile, the trade uncertainty still remains. A fresh news that China is investigating the US and South Korea chipmakers came out on Monday. It seems global economy except the US slow the economic growth. How do US investors view this current situation?

    AMZN/Options – Well, they are certainly working for you so far.  The missing info is whether or not this is a big position for you.  Anyway, you have 400 x $200 ($80,000) coming to you on the bull spread less whatever you owe 2 short July callers.  The July $1,400s (silly numbers) are about $300, which is what they are in the money for and your spread is currently $490/365 so net $125.

    I worry about a 1999 market where AMZN goes to $2,000+.  You can trade your 4 $125 spreads in for 6 of the $1,600 ($340)/1,800 ($240) bull call spreads but, at net just $125, you would be better off adding 2 of those that are much lower in strike.  

    I would propose adding 4 more longs (8 total) and selling 2 of the $1,500 puts for $127 ($25,400) to pay for half of that.  Then you can take the 2 short June $1400s at $300 ($60,000) and roll them to 4 short Sept $1,650 calls at $1,690 calls at $101.50 ($40,600).  So you spend $60,000 for 4 more less $25,000 for the short puts and spend $20,000 on the roll of the short calls so $55,000 out of pocket (for now, you can sell more calls when these 4 expire) but you have $160,000 worth of longs in the money covering short calls out of the money.  

    Obviously, a big sell-off would suck so keep a reasonable stop on the puts and be prepared to sell more calls if, say, $1,600 fails.  

    GS/Harip – I can't love the financials in a rising rate environment – no matter how much the market has written the Fed out of the picture.  We'll see next week if that's true.  

    NAK/Lala – LOL!  

    That does sound very promising Edro and the "right to try" thing is going to be great for them.

    PSO/John – They didn't make the cut as we came back in Jan but I still like them long-term.  Up about 20% since then but only just now recapturing 2016 levels.  Still, they cut the dividend to 2% and that was our main reason for liking them – I don't see too much upside from here

  52. edro00 – that os extremely good news.

    It would be fantastic if cancer got kicked in the next ten years.

  53. edro00 

    Thanks when you look at the five year chart on yahoo

    You wonder what money they use to run the company

    15 people

  54. Phil, what are you doing with "Japan"?

  55. Good points BDC, we'll have to see how it shakes out though.  For now, I still "Don't leave home without it."

    PSO/John – Sorry, had to do my interview.  I think that's a good entry (stock with short calls, then sell puts if it drops 20%).

    Cancer/BDC – Can you imagine the global chaos if 2M people a year in the US didn't die from cancer?  SS would go BK real fast!   Heart disease is worse, apparently but, without cancer, you'd be waiting for your heart or lungs to give out or a stroke and, of course, dementia would move way up as a cause of death too with people living 5+ more years on avg.  Also have to consider the economics – how many hospitals would go BK?  

    Japan/BDC – Just an interview with CNBC Japan.  I told them crypto currency wasn't real money and they should all dump it before it's too late.  cheeky

  56. Japan/crypto – LOL keept he price down while we're all buying it !!!

  57. Fund Managers Are Ditching Wall Street for Florida

  58. hospitals/incentive - this is very interesting. I'm formulating my HealthCare EcoSystem idea right now, but it hasn't gotten very far. There's somethng to your comment though, almost like a hidden incentive to NOT find cures. It's a little conspiratorial but while were in the blue sky phase of hashing out the US-HealthCoin idea, we need to consider everything.

    The highest level question – what are we currently not valuing that we need to value?

  59. endro00/NWBO

    I wish that were around in 2012 when I lost my mother to that dreadful disease (Glioblastoma).  I also remember Denederon, a small biotech, that tried to launch personalized immunotherapy for prostate cancer patients.  It was exciting for a fleeting moment before they were evicerated and sold off.  Perhaps they were too early to exceed with such a novel idea.  Good luck with trade.  Just don’t bet the farm.

  60. Good morning! 

    No webinar today – have that meeting and now a family thing I have to go to so I'll be on and off but mostly off.  Hopefully we can get the Webinar done tomorrow – but I might be being optimistic.

    Nothing happening, mixed news on trade progress and we're testing 7,200 on /NQ, which is where we had a big fail last time so I'm betting it short, of course, but tight stops above because it's more like 1999 than March 2000.

    Mnuchin Favors Less Sweeping Investment Limits for China, Sources SayThe Treasury Department wants President Donald Trump to rely on legislation to tighten scrutiny of Chinese investments in the U.S. instead of an executive move imposing sweeping new limits, according to three people familiar with the matter. Treasury Secretary Steven Mnuchin has until the end of June to present to the president his department’s final recommendations on Chinese investment curbs. Trump directed Mnuchin to draw up the restrictions as part of a probe into China’s alleged theft of intellectual property that also allows the imposition of tariffs.

    China Offers to Buy $70 Billion in Goods to Fend Off Tariffs.

    Investors Are Getting Used to Trade War Bluster.

    Dow just shy of 25,000 now, 2,757 on /NQ and 1,666 (of course) on /RTY with the Dollar down 0.6% from yesterday morning.