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Monday Market Mayhem – Now it’s the G6

Image result for trump g7 high chairThank goodness!

I thought I was losing my mind as the Futures were up this morning after Trump blew up the G7 meeting and refusted, for the first time ever, to join the rest of the Free World Leaders in signing the joint communique.  How can the markets be bullish when we are walking back the steps the nations agreed were necessary after WWII to prevent WWIII?  Trump can double down tomorrow if he also blows the negotiations with Kim Jung Un and ticks the Doomsday Clock up to 11:59:30.

German Chancellor Angela Merkel said Sunday that President Trump's refusal to endorse a communique from the Group of Seven (G7) leaders was "sobering and a bit depressing."  In the same interview, Merkel said the European Union was preparing to implement counter-measures against U.S. tariffs on imported steel and aluminum.  If they retaliate, they're making a mistake," Trump declared before departing the annual Group of Seven summit, which includes Britain, Italy, France, Germany and Japan. 

Speaking of Doomsday, the Fed is almost certain to raise rates 0.25% on Wednesday and that should kick the 10-year rates permanently over 3% for the duration.  So far, the markets have shrugged off every possible sign of rising rates, rising wages and rising inflation as stock prices have inflated to record levels but, for those of us who believe in Physics, Match, Economics…. Reality – a day of reckoning is coming – we just don't know when.

Crypto currencies are also having a doomsday as BitCoin falls below $7,000 as a South Korean Coin Excahange was hacked over the weekend.  See, this is why we have BANKS and Government-backed currencies – there's a massive system in place that insures against loss and theft of your US Dollars.  We put that in place after years of the exact kind of random losses, robberies and devaluations associated with old monetary systems.  Crypto currencies are sure making things great again – for bank robbers! 

And sure, eventually consumers will wise up and learn to "bank" their crypto-coins in more reputable exchanges with better securtiy and crypto may even develop it's own FDIC to insure deposits but all that stuff is hard to do if you are trying to stay "anonymous" (though it's not really anonymous at all).  Meanwhile, unlike Ripple, which has lost 70% of its value this year vs. BitCoin, which still has almost half of its Dec 31st value, my Dollars don't tend to drop 10% overnight so I'll stick to US Dollars when I'm in CASH!!! – thank you….

Related image8:30 Update:  I guess I am losing my mind as the Futures are turning positive again.  It's Monday though, so we can't take any moves seriously but this stuff is serious folks – it's not going to end well!  As Bernanke said on Friday, the US Economy is very much like Wile E Coyote:  We've already run over the cliff but we're only going to fall AFTER we realize there's no ground beneath us….

The US will borrow another $54Bn this afternoon in 3-year and 10-year note auctions with a 30-year note auction scheduled for tomorrow – all ahead of Wednesday's FOMC Announcement and their Revised Forecasts. Other than that, it's a fairly light market news week so it's going to be all about Trump and Kim tomorrow as we head into June options expirations (already) on Friday.


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  1. It's now a national embarrassment! This elementary school bully of a man-child that we have as president is destroying what had taken 70 years to build to repay his puppet master Putin! Maybe one day there will be charges of treason for this guy – and many in the GOP with him for aiding and abetting!

    And of course, in the course of that rambling press conference, he added many lies to his long list. So who would you believe – Trump or the other 6 guys (and gals)? Like the tariffs on dairy from Canada – we have our dairy quota/tariffs! We have a trade surplus with Canada for crying out loud. How is the rest of the world taking advantage of us – we are the richest country in the world! Is Ethiopia taking advantage of us? It's the mentality of these billionaires complaining about high taxes because welfare people get $500 for food stamps. I guess Trump has not ventured out this bubble!

    And you can bet that North Koreans have studied his psychological profile and will play him like a violin at that summit. Nothing will happen but they will make him look good so that he can claim victory for his base while they keep killing their own people in total impunity!

  2. Putin's plan:

    President Trump is trying to destroy that alliance.

    Is that how he thinks about it? Who knows. It’s impossible to get inside his head and divine his strategic goals, if he even has long-term goals. But put it this way: If a president of the United States were to sketch out a secret, detailed plan to break up the Atlantic alliance, that plan would bear a striking resemblance to Trump’s behavior.

    It would involve outward hostility to the leaders of Canada, Britain, France, Germany and Japan. Specifically, it would involve picking fights over artificial issues — not to win big concessions for the United States, but to create conflict for the sake of it.

    A secret plan to break up the West would also have the United States looking for new allies to replace the discarded ones. The most obvious would be Russia, the biggest rival within Europe to Germany, France and Britain. And just as Russia does, a United States intent on wrecking the Atlantic alliance would meddle in the domestic politics of other countries to install new governments that also rejected the old alliance.

  3. Trump /BDC

    I´m not aware of many aspects on American politics, but what happen if a President becomes ill  or has physical limitations, is any procedure that for example 70% of the Congress members can act and ask for a removal?..we just had one in Spain last week where enough MP decided that the President was not trusty anymore in a corruption scandal.

    I read about impeachment but is another procedure.

    But agree that the man thinks is dealing with a bank about restructuring a debt, not with countries allies for many decades and wars.

  4. Good Morning.

  5. Trump / This is the real reason I think Trump is going after Trudeau after the G7 meeting.  Totally serious about this.

  6. Phil – Don't lose your mind, this market be fine until the midterms….. 

  7. 'will be fine'….

  8. Anyone have thoughts on RH earnings? 

  9. FU NASDAQ!!!!!!!

  10. Good morning!

    Looks like we're opening a bit positive as the market ignores the chaos.  At this point, we're going to need a bigger Big Chart if the NYSE stays over 12,800 and those 200 dmas are going up – so the likelihood of a major breakdown decreases as a rising 200 dma is very strong support.

    • Dow +0.08% to 25,336.67. S&P +0.09% to 2,781.51. Nasdaq +0.14% to 7,645.51.
    • Treasurys: 30-year -0.26%. 10-yr -0.1%. 5-yr -0.09%.
    • Commodities: Crude -0.91% to $65.14. Gold +0.05% to $1,303.40.
    • Currencies: Euro +0.26% vs. dollar. Yen +0.33%. Pound +0.2%.
    • Multinational companies move about 40% of the profits they earn outside of their home countries into tax havens, the Wall Street Journal reports, citing a study by economists Thomas Torslov and Ludvig Wier of the University of Copenhagen and Gabriel Zucman of the University of California, Berkeley.
    • U.S. companies are among the most aggressive at shifting profits to lower-tax countries in efforts to cut their tax bills, the study said.
    • Such profit-shifting cuts the taxes corporations pay in the European Union by about 20%, a global annual revenue loss of $200B, the paper says.
    • The global trend toward lower corporate tax rates in major countries, including the recent tax reform in the U.S., won't end the practice, Zucman says. Companies can still significantly cut their tax bills by moving profits to countries with effective tax rates of 0%-10%.
    • The study uses 2015 data, so it doesn't reflect the U.S. tax reform that cuts the corporate tax rate to 21% from 35%.Mr. Zucman expects it to take two or three years to see how the new law affects profit-shifting.
    • Genworth (NYSE:GNW+28% in premarket trading after the Committee on Foreign Investment in the United States concluded that there are no unresolved national security concerns regarding China Oceanwide Holdings' proposed transaction to buy GNW.
    • The review's conclusion satisfies one the conditions to closing the proposed deal. It still needs to get  regulatory approvals in the U.S., China, and other international jurisdictions. 
    • Related to the CFIUS review, Genworth and Oceanwide entered into a mitigation agreement, which--among other things--requires Genworth to use a U.S.-based, third-party service provider to manage and protect the personal data of Genworth's U.S. policyholders.
    • BTIG analyst Mark Palmer considers the CFIUS review one of two major hurdles for the deal to clear. The second one is the approval by the Delaware Department of Insurance, which hasn't yet been issued.
    • Palmer, who reiterates a neutral rating on GNW, writes in a note: "Our hesitancy with regard to GNW was due in large part to the significant uncertainty related to the CFIUS and DDOI approvals which most believed were more likely to fail – coupled with our view that the stock could trade in the pennies in the immediate aftermath had the deal falling apart."
    • Previously: Genworth/Oceanwide reiterate commitment to deal (Jan. 4)
    • IHOP Restaurants announces that its new brand name will be IHOb.
    • The Dine Brands Global (NYSE:DIN) property says the "b" stands for burgers.
    • "The big opportunity for the IHOb brand is to develop our lunch and dinner business,” says Chief Marketing Officer Brad Haley. "Burgers are the most consumed entree item for men, women and children in America," he notes.
    • As part of a national burger promotion, IHOb is offering  new Ultimate Steakburgers with unlimited fries and a drink starting at $6.99 at participating outlets.
    • Source: Press Release
    • Previously: IHOP to become IHOb (June 6)
    • PG&E (NYSE:PCG-4.9% premarket after the California Department of Forestry and Fire Protection announced late Friday that its investigators determined that 12 Northern California wildfires last October were caused by electric power and distribution lines and other equipment owned by the company.
    • Cal Fire says it referred eight of the 12 fires to county district attorneys for possible legal action "due to evidence of alleged violations of state law."
    • The fires claimed 46 lives, burned at least 245K acres and incinerated 8,900 homes and other structures; California's insurance commissioner has said insured losses from the tragedy total $9B.
    • “We continue to believe our overall programs met our state’s high standards,” says PG&E, which spends hundreds of millions of dollars every year in fire prevention, including pruning or removing trees.
    • Bloomberg Intelligence analyst Matt Larson says legal decisions in 2H could determine whether Apple (NASDAQ:AAPL) and Qualcomm
    • The companies are involved in over 50 different IP and antitrust proceedings in 16 jurisdictions across six countries. 
    • Next week, the Washington-based International Trade Commission will begin hearing Qualcomm’s argument about three infringed patents. The company is asking for a ban on all iPhone 7 imports that don’t include Qualcomm chips. 
    • A German court will soon decide on a case arguing that iPhones using Intel (NASDAQ:INTC) chips infringe on Qualcomm patents and shouldn’t be sold in that market. A judge already partially agreed with Qualcomm, but the case is on hold while the patent office decides if the patent is valid. 
    • China’s Patent Review Board starts hearings this month for Apple’s request to invalidate patents that Qualcomm is trying to use against the company. 
    • Larson says the decisions for these cases could come in Q3 and says the China case could carry the most weight. 
    • Apple shares are down 0.1% premarket to $191.70. 
    • Qualcomm shares are up 0.5% to $60.55.  
    • Previously: Qualcomm lists three concessions for ending Apple legal fight (May 1)

  11. btw – Nice Rants Phil and StJean!!!

  12. Surprised to see STWD doing so well in our climate of increasing rates!

  13. Thanks 1020… I try to hold back but it's getting hard. It's not just politics, it will have long term impact on our lives.

  14. stjean – It's helpful to be in a deep blue state, 2500 miles away….


    Like the Wife asked,  "What if Kim were wearing an explosive business suit"?…. 

    (Dem Porn)  :)

  15. AMD/Phil- AMD gone through $15 now, I'm still holding the $10 calls 2019… instead of rolling to quarterly $15 calls and still pay more $. Should I just roll to a $17 call and pay only $0.20?

  16. USG- Albo, still have your stock?

    USG Corp. to be bought by Knauf for $44/share

    Unfortunately, I do not. 

    This has been rumored for years. 

  17. Phil, AGO (Assured Guaranty Ltd. (AGO)

    Apologies if I missed any previous comments on this one but seems like AGO has a lot of exposure to Petro Rico debt and I came to know about it based on David Einhorn's short position. Is it worth taking a short position on AGO ? Wanted to get your thoughts.

    Thanks as always.


  18. AMD/Phil- Sorry I totally left out what I sold… I am holding the $10 2019 calls and I sold the 29 June 13.5 calls. They are way ITM now and I was thinking if I should roll to the Oct $15 calls without paying any $$ out…. 

  19. Well that is a nice surprise.  I had a short put position on MON and did not know they would jump in value to more than the cost because of the Bayer buyout.

  20. RH/Jeff – The top 10% are doing great, I would think that will reflect well for RH but already baked in, I wouldn't chase them.

    STWD/StJ – Same thing with the Top 10% – hotels are full, vacation plays are all good.

    AMD/Dave – You have short Jan $10 calls bought at a mystery price?  AMD is a very up and down stock caught in a very up and up market.  $17 seems ambitious to me but, if the intention is to push short calls out of the money – that should accomplish it!  

    AGO/Pat – Answering that requires a lot of research.  Einhorn is a smart guy but I need to know a lot more about what's going on over there to chase a short play and they're up 2% this morning so someone strongly disagrees.

    AMD/Dave – If you can roll to the Oct $15s for free – I'd do that and just see how it goes.   You can always roll longer and higher – especially since you are covered. 

    MON/Tangled – Nice bonus.

  21. Phil

    Any trade on Hexcel Corporation (HXL)


  22. HXL/QC – I don't think they are cheap at $6.5Bn ($73) with less than $300M in earning last year.   Revenues are flat, growth is anemic so you're paying over 20x because their sector is hot, not because the company is an outperformer.  I would have liked them at $55 but $75(ish) is up 40% since Sept simply based on sentiment.  They make BA look reasonable – up just 33%:

    Wow, oil just flew higher, back over $66.

  23. Thanks Phil,

    Einhorn is holding those shorts for a while now and when I was looking at their financials revenue and earnings seemed to be trending down and definitely looks like they will have to cut their dividend if Puerto Rico debt is restructured and Creditors demand payment from them as AGO has insured PR debt and other Muni Debts. Please let me know if you get a chance to look at the stock in detail



  24. Trump/Kim meeting has apparently been cut to 2 hours.  Either they already have a done deal or this is already over.

    /NQ back at 7,200 but a scary short after hitting 7,250 last week.

    AGO/Pat – The question is how much is their exposure really?  They may reinsure it and they did make $729M last year against a $4.2Bn valuation.   Management seems to say their max exposure is $4/share if PR defaults which, of course, is still not likely.  That's one year's earnings so I'd certainly be more inclined to buy if that's what tanks them.  The PR default rumor was based on speculation that people who left after the storms wouldn't come back – but that has not been the case:  This is what's back up and running so far.   It's not enough to make me bet on them (but let me know if they do crash) but I wouldn't bet against them.

  25. StJ – I was thinking about your comments, and, this indeed being a Monday (which no longer matter), I wanted to append a lengthy reply. If you strip out completely the politics of left versus right and step back to compare Trump to the 44 previous presidents, the thing that is most striking is how different he is. Communicating every thought and insult via twitter, "well that's news" is pretty much the only non-judgmental thing one can say about it. In order for something so shockingly different to emerge requires something shockingly different to exist underneath in the first place.

    If you subscribe to the theory that the GRU (new KGB) or whoever takes Putin's orders, fought asymmetric warfare against the US by purchasing targeted ads on facebook to reach a 120M+ American voters in 2016 and push them towards Trump, a theory that carries a lot of water based on evidence, you also have to admit that the existence of facebook determined the election. A website that didn't exist in 2004, only 12 years ago, determining global leadership within nearly a decade is different.

    A system of information deprecated really only 20 years ago was based on daily newspapers, where information traveled through a series of filters. Not everyone had access to a write column in a newspaper. So the news was aggregated and written by journalists, the sub sections (sports, arts, leisure, science), etc) by experts who had education credentials and experience in such fields, politics by historians and even the public opinion letters were screened by an editorial board. The internet and Facebook (among others) changed all of that. Information changed. Information is different. Now anyone can write the news, aggregate the news, post an opinion, a world that went form "Read-only" to "Read-Write." Information no longer has the series of filter funnels like it did before. It's now completely decentralized. Watching "traditional" media try to exist and remain relevant while it is being deprecated is fascinating experience. It's like watching Sears and Penny's die.   

    Where it get's really interesting for me, and where other's have failed to describe the phenomena in an adequate way yet, in my opinion, is how to describe this new decentralized information system. You have to look at information in a completely new way or else you risk trying to force fit deprecated theories, like trying to say a car was really just a faster horse. I mentioned this before but I view information like how physicists in the Modern era (~1920's) described light: it was a probability distribution. This means it had multiple properties at the same time; the ability to be interrogated and described as both a particle and wave simultaneously. Information is no longer fact versus fiction, it's a probability distribution. Smart meters might cause cancer, vaccines might cause autism and the Earth might be flat. In the old parlance we'd say "these statements aren't true," but in Modern physics parlance, "they aren't probable." 

    This paradigm is possible now because information has value. Those statements above have low value. Some people are going to believe the Earth is flat. Who knows why. It satisfies something for them. You do not have the ability to influence that nor should your really try. If that's valuable to them then who are you to say it's not? I'm recently coming around to this. It is very new. In fact I've tried just this weekend to switch from a perspective in politics in seeing things from "Left versus Right" to "positive versus constructive." When I see something I like to say, "A-OK, Im positive about that," and when I see something I don't, I say "how can I be constructive about approaching this?" I'm mentioning this to you because I feel like it can help you. Plus, we are both interested in prognosticating future investments, being members of PSW, so I feel OK in explaining it in a long post (meaning, I hope it has benefits for others too). 

    How information has value is changing and the rate it is changing is accelerating. But we're still early into this categorical shift. So this is all very exciting. Back in July 2016, I mentioned Steem, and it's still around chugging along, but it's an interesting model. It's like a decentralized facebook where users can upvote each other and receive new coin payouts ("Steem"). I've been following this farmer and his "farmer's wife" from Kentucky and they've been on for about a year. The information has value to me because I like the nostalgia of non-city farm life. If I'm going to make lavender mint iced-tea, the Farmer's Wife is my go-to #1 expert in the world. She offers valuable information to me and she gets paid for it. Her diary-esque posts and quips make $20-$50 a day. It's a very specific example but it's indicative to the entire paradigm: information has value, and people choose what is valuable to them. This is the Kowledge Economy at full steam (so to speak!). She's no millionaire from this effort, but she does a small amount of useful work (in posting) that several hundred people find valuable (her followers), she gets paid and her followers get valuable content. This concept has a very simply poetry to it. However, multiplied by a billion people, it is very efficient, and therefore has an immense amount of value. It's the mechanism by which, in aggregate, how a seemingly infinite amount of information funnels into the Guassian curve, without the traditional funnels of experts via centralization that described the old paradigm in the past.

    I mentioned previously how Uber and AirBnB dented taxi cabs and centralized temporary lodging paradigms, to the tune of $100B and counting. They have enormous growth and valuations because they capitalized on the inefficiencies of the incumbent systems by completely ignoring them. Uber said "what's a taxi medallion?" (LOL, so simple!). They do, however have the power of a 2B+ strong global customer base that carry around GPS devices in their pockets, that 10 years ago barely existed at all, so not to get cheeky that's what's different and it is very very different, of course. However, Uber and AirBnb are border cases that indicate where we are going IMO, but aren't yet the Big Dog shift that is still emerging. Facebook aggregates information it owns and advertisers buy the eyballs and trust facebook pushes the adds to potential buyers. This system is changing to remove the central aggregator, which is no longer necessary (like the steemit example above). This isn't occurring because it's "the right thing to do." It's changing because information itself has value and a decentralized system is more efficient. Let's say some young woman wakes up and posts a picutre of her smoothy and how to make it. 3000 people see the post. Via the "likes" or views or whatnot she makes $2.80. Let's continue and say the grocery store gets 10 customers that day as a result and the fruit companies sell 10 fruits, and the workers that work in the supply chain have marginally that much more work to be had (and so on and so forth). All of this commerce occurred because of this smoothy post. In the decentralized model the value goes directly to the content provider (the poster), and the economic value directly to the economic ecosystem (grocery store, fruit grower, etc), without the need the centralized facebook system in the first place. It's like taxi medallions to Uber; you have to step back and picture in 20 years people will say "what's an ad?" I mention often about cryptos but I really no longer need to: I consider information and crypto to be the same thing, like a wave and a particle is to light. Therefore when I'm describing one I'm automatically describing the other simultaneously.

    My theory is Trump is the first president of this new paradigm. Information is instantly global and the US has now exported to the rest of the world the first global leader. How strange it was the Trump brand and not some 40-something JFK-like Dem out of Silicon Valley, which would've been the believable, Hollywood-esque version of this story. Instead it's this 70 year old, esoteric "New York real estater," a multi-decade perennial-almost-has-been, who writes his own doctor's letters. However, it is what it is. If facebook substantially changed how a US president got elected in as little as 12 years, how does it look in the next 10 years of this changing information paradigm, or in 20 years?.

    We still have to figure out how we want to be governed. In my opinion, what we are doing now is figuring that out on a global scale because we are now a global community. Ironic perhaps, that Trump is ran, and currently operates, under the guise of a nationalistic platform. I consider this to be largely irrelevant because the course humanity we are on now is inevitable. Tribalism is human nature, just as a group of Americans may be Steelers or Patriots fans (ick, patriots), so too can a group of Italians and Irishmen have "heritage" or Southerns will want to fly confederate flags. It's just human nature. But IMO as the world gets smaller these become more like St Patrick's Day; a memory of who we were but not a representation fully of who are we are now (and that's a good thing! valuable information!). This adoption in the past always represents friction (just ask the Irish and Italians that duked it out in Brooklyn a hundred years ago). But the end result, the integration of society through distributed information is totally inevitable. Just like Brooklyn was from back then until now. All IMHO of course.

  26. Kim Jong Un Is Out On The Town And Taking Selfies In Singapore

  27. RFIL- in at $2; sold half @ 4.90; Sold another 1/2 this morning @ $8.05.

  28. IQ/Phil- how's the 2020 puts looking now? worth selling any, the IV is high…

  29. Well I thought that was weird.  So I got an email from Ameritrade that sure looked like my short puts on MON would get a bonus from the Bayer merger.  But I could not think of why that would be the case for short puts so I called.   Sure enough does not apply to me.  Am I the only one who thinks this is misleading:

    Your MONSANTO CO option contract(s) have been adjusted to reflect the following deliverable terms:

    ·   Cash $12,800.00

  30. Pstas – Unfortunately I am also out.  It was my hurricane rebuilding play.  It worked well and I moved on.  It would be nice to still have some !

  31. Interesting outlook, BDC.  I would note that the papers were recently disrupted by TV and papers themselves were a disruption of sorts – politicians used to go around on trains and give speeches – not many people actually read the papers.  So a bit of McLuhan's "Medium is the message" and the new medium is information, which is now freely, instantly transmitted via the ubiqitous Interweb of All Thing – or whatever.  Though McLuhan would argue that the medium is still the message and you are describing an illusion of binary transmission where everything is 1s and 0s and lies and truth are disseminated by our Robot Masters without comment or judgment – rendering them indistinguishable from each other.  

    I'm not sure "whatever makes you happy" is a good guide for consuming information.  It may make me happy to believe green means stop and red means go but they are not my own facts and I'm not entitled to them as that "opinion" may be harmful to myself and others.  A primary function of society is to teach these norms to their children so they all grow up to play by the same rules.  I don't disagree with you – the new information systems are replacing that and chipping away at society and what Trump may be is simply an indication of the chaos that is to come as we turn the truth into a popularity contest that gets voted on by the consumers.

    Anyone who's had a bad meal at a 5-star Yelp-reviewed restaurant knows what I mean. 

    RFIL/Pstas – Good call on them! 

    IQ/Dave – I only wanted to sell puts on a pullback, totally gone now. 

    Misleading/Tangled – Seems like you're getting $12,800 to me but it did sound too good to be true. 

    Auto lenders take on more risk to attract more customers: WSJ

    • Auto lenders are seeking to offset  slower loan growth by lengthening the terms of auto loans and extending loans to consumers who are stretching further to afford payments, the Wall Street Journal reports.
    • Banks that have said they're increasing loans to riskier applicants include TD Bank (NYSE:TD), Santander Consumer USA (NYSE:SC), and BB&T (NYSE:BBT).
    • In Q1, the average loan term for a new car exceeded 69 months, the second straight quarter it's ever been over that level, says credit-reporting firm Experian. Furthermore, new car loans with 73-month to 84-month repayment periods accounted for more than a third of total new car loans, up from 7% in late 2009.
    • Previously: Wells Fargo ready to accelerate auto loans business: Bloomberg (May 22)

    Analysts weigh in on PG&E liability issues with varying degrees of worry

    • PG&E (PCG -4.9%) is by far the weakest performer among major utilities after Cal Fire's investigation says its power lines and equipment caused 12 wildfires in northern California last October.
    • Wells Fargo sees the development as "incrementally negative" and thinks PCG shares reflect an "overly onerous outcome," but Edison International (EIX -0.7%) is the firm's preferred play for a California regulatory recovery; it rates PCG at Market Perform while trimming its price target to $46 from $48.
    • Citi reiterates its Neutral rating, saying the news increases the stock's downside risk while expressing surprise that Cal Fire is issuing press releases without listing any specific violations and without sharing the full reports.
    • A more optimistic Morgan Stanley rates PCG at Overweight, estimating the company is likely not liable for ~34% of damages reported to date and believing shareholders are unlikely to realize "anywhere close to 100% of both causation and negligence" for all 21 northern California wildfires; Deutsche Bank also reiterates a Buy rating on PCG.
    • But Guggenheim says "all signs seem to point" to PG&E "being imprudent operators in the majority of instances," which means the company should assume liability; it reaffirms its Sell rating on the shares, calling for potentially further downside, especially when the Tubbs investigation is released.

    /TF with a bit of a turn-down but others stil very high.  25,400 on /YM is the best shorting line and, of course, 7,200 on /NQ if it fails – both with tight stops above.  

  32. MON/tangledweb, I think it means the deliverable of the option contact, if exercised, changed from 100 shares of Monsanto to $12,800 in cash.

  33. GNC – Up 8% today.

    FNSR – Also up.  Chart starting to look interesting.

  34. Besides all the political comments, where I can only say, the top notches in Politic do not have any contact to the general public, this includes a swell the baboon clown, standing in the center of the arena hammering his chest.
    I have been asked on different occasions where do you make money by selling short term calls.
    I like to take for example my recent armchair play on AMGN. My original Play 5/7 where I did receive the stock at 168.30 and sell the 165/170 Jun 22 strangle for 8.32. As you will notice this play has done extremely well as much as the stock is trading today at 183.13 and the caller is seriously ITM.
    Now if you do nothing you possible will land up with the cash and you forefoot the stock at 170.
    However if you wish to hold on to the stock you will have to roll. I gave an order to sell the Jul 180/185 strangle at 7.00, and buy back the 170 Jun 22 caller at 14.40. On the surface it looks like you are losing 7.40. However I received 8.32 for my Jun play. So here already I am .92 cents in the plus!!! In addition I increased the value of my stock from 168.30 to 183.13 or 13.83. Obviously the profit on the Stock is a paper profit at present. But I only want to show you where the credit is in the rolling.
    Any questions as usual you welcome to ask

  35. Phil – good points. McLuhan … very interesting! I'm definitely in the "read a lot and learn" phase of this personal project (trying to describe the information/value duality of Knowledge). So feel free to continue to offer ideas like this!

    Traffic lights: Consider my Uncle, to him red and green mean both stop and go at the same time. He's color blind. To him the position of the lights is the important and relevant information. This is anecdotal, but also consider the former drug trading site Silk Road. It went from a deep-web myth to an international drug trading empire, complete with waifish drug Kingpin (Ulbrecht), to FBI-raided yesterday's news in all of 2 years. This story, which was often used at the time as a platform for some to shout "only drug users use bitcoin!," somewhat ironically helped to legitimize bitcoins because the Feds sold Ulbrecht's confiscated coins to the general public as they were giving him a life sentence. But I think the real importance of this story is: the law the is the law. It's still illegal to be a drug kingpin whether you used the ol' US Dollar or the new fangled bitcoin or traded turkey futures. It's still illegal to run red lights. A person's "version" of their personal "red light story" ultimately becomes a pathetic defense lawyer pitch and that's about it. So, it doesn't really affect the way we are governed in that way.

  36. My IQ is 35.

  37. IQ, oops link! And apparently my "smiley's" don't work because they get deleted from my posts. But how have we gone this far without an IQ joke??? :)

  38. Brexit costs / Phil – A good article about the awful impact of that Brexit decision and it seems that the Leave movement were bankrolled by Russia so another attack on our system by Putin and yet he should be invited back to the G7:

    Collins, the chair of the select committee for the Department for Digital, Culture, Media and Sport, said: “Russia is not our friend. And this new material raises questions of the most serious nature. If deals were brokered with Russian government help, it would raise urgent questions about Russian interference in our democracy. 

    Our world is under attack and Trump fiddles!

  39. CMG added today some hot chili to the stock

  40. 2pm stick every day… unreal

  41. AMGN/Yodi – That's been a good one for us in the LTP as we have 15 of the $175/200 spreads with 5 short $160 puts at net $5,000 on the $12,500 spread.  We're up about $8,000 so far and it is about time for us to consider selling calls as well since our plan was to sell 5 per Q once they got back near $190 (we bought them 5/15 as they began to recover).  July $190 calls are $2.15 – not too exciting but only 40 out of 585 days and we collect $1,000 – more exciting over time!

    Law/BDC – Yes but we need to accept certain truths to have laws.  False information can't only have "low value" – it has to have negative value if it's detrimental to society – like the kind that saddles you with a disastrous leader…

    Putin/StJ – Speaking of facts:  How is it that the entire population of this country isn't outraged that Russia meddled in our political process.  Whether you like Trump or Hillary – the point should be that ANY manipulation of our voting process is unacceptable and we should be doing everything necessary to make sure it never happens again.  Kennedy wouldn't have stood for it, Johnson wouldn't, Nixon would have wanted heads on spikes, even Carter would have been furious, Reagan would have declared war, Bush I spent his whole life trying to stop those guys, Clinton would have made a great speech and called it the greatest challenge of our age, even Bush II would have realized this was a very bad thing and Obama would have said that, no matter what our differences, we are all American citizens and we are united in our outrage over this meddling by Russia in our political process and that Putin would come to regret the day he tested the resolve of the American people and the strength of our Democracy.  

    What has Trump done?

    CMG/Yodi – Another one blasting off:

    So much for a pullback.  

  42. I posted right before the election on how troubling a Hillary win would've been at the state level. The GOP controls 34 state legislatures and 38 is a super-critical majority where states can hold a Constitutional Convention (where the Constitution can be re-written). I was trying to figure out why I was relieved that she lost and this is why. The legislative branch was becoming too powerful for one party. The anti-Hillary block would've been the galvanizing speigelhammer that smashed the blue team to bits and pieces. The second 100,000 people in WI, MI and PA decided this election all of that instantaneously evaporated. Just look at Virginia, Dems went from 34 to 49 (50 minus a coin flip) of 100 legislature members! Now picture this occurring in 40+ red and purple states. Now you see why lot's of Red Team members are being enlightened as to the personal value of "spending time with family."

    Total state level legislatures number 7,383. Here's the numbers I'm watching: 4,141 to 3,145 (97) GOP-DEM (vacant). I think the GOP will lose at least 500 seats. So you're looking at roughly 3700 each DEM/GOP or so after Nov 6th. That's about a 13% shift, which is defensible. In 2020 it'll be even further for blue. You can look back in 2006/2008 how it went from Bush 2 fatigue to new Obama "hope," Red to Blue at the state level across the board and then 2010-2016 back in the other direction, and around and around we go

    The second Hillary conceded it was over for Team Red at the state level. Then it's just time and pressure. Every time Trump tweets love for a new dictator or Pruitt buys a $1500 pen keep this in mind. 148 days from today we go sort it out. Amazingly, out of the 728 days between even-year election cycles we are 528 days in, so only 20.3% to go! We're in the homestretch now — Hang In There!!!

  43. I'm chomping at the bit to sell some OTM calls on TSLA & CMG.  Think they are both over priced.  But not interested in doing it until they roll over.  If they ever do. 8-)

  44. Phil/Law – consider as an example that the "truth" is simply information that is within one standard deviation from the mean, or in other words, "where most people behave most of the time because it benefits society the most." It's like the absulte truth for the position of an electron… there is none! But certainly an electron exists. Certainly human law can exist as a probability if natural law exists as such, considering the former is a construct of the human imagination and the latter is a construct of God's… (or ours?? are we in the Matrix or did we create it??). It's too much fun considering all of this stuff. Mind bending…

    The closer you interrogate the position of an electron the less certain you are of it's velocity (more accurately, its momentum), which is Heisenberg's uncertainty principle and I like equate that to the concept of "Knowledge," or the Knowledge Economy, where the more you push on parsing Information the more nebulous it's Value, and vice-versa, where Information is the "position" and "value" is how it's transacted ("velocity" or momentum). I know it sounds stupid but I'm trying to make it work… ;)

  45. albo

    "IF THEY EVER DO" is right!  Good grief this market is resilient and forgiving!

  46. From RFIL conference call: He deserves recognition for clarity and inspiration. I am biased as when I ran my own business, my oft repeated mantra to anyone who would listen was – "do the right thing and the money will come". 

    Chief Executive Rob Dawson:

    As I said in the past in simple terms, we need to sell more stuff to more customers and then make stuff fast and efficiently….

    I frequently share with the team the three expectations I have for being a part of the Company. First, work hard, I expect you to outwork anyone else who's in a similar role and we're seeing some success here. Second, be honest and ethical, just do the right thing. Third, leave everyone in a good or better position than when you found them. If we do these things along with executing on simple growth strategies, the financial growth results will be there and I believe that's what contributed to our success thus far in the last few quarters.

  47. Dclark – The TSLA Jan $400 calls can be sold for $40 !  Tempting, but no reason to step in front the price action we're seeing.  If Elon has driverless cars on the road by August, all I can say is WATCH OUT.

  48. TSLA/Albo – I'm with you on that one but CMG is on a huge roll.

    Truth/BDC – The truth of an electron is that it exists, not where it exists at any given moment.  That is not knowable.  My children exist but I don't know where they are at the moment either.  That does not nullify their existence.  We're somewhere between Philosophy and Quantum Theory at this point…

    Watch out/Albo – I'll certainly be watching out when crossing the street.  Gives a whole new meaning to "silent but deadly".  devil

    Just a hint of selling in the last 15 mins but it looks like they'll hold green.

  49. "Using Bitcoin is an effete act of rebellion…"  LOL!

  50. Phil/BDC

    Really enjoyed the recent exchange of ideas. If only political discourse were similar interesting rational, respectful expressions of differing positions. 

  51. Biodieselchtis:    Thanks for the discussion of knowledge is value. I found it very thought provoking.

  52. Europe Considers Next Moves After Trump’s G-7 Brush-Off

  53. Fed watchers await rate forecast with a hike all but certain

  54. Good morning!

    Looks like Donald is back in the running for a Nobel Peace Prize.  It's a good thing, no doubt about that.

    Not good enough to boost the markets, though – just kind of flat at the moment but that's normal the day before the Fed.

    Not much in the news either – I guess everything has been on pause waiting to see how NoKo works out.  Meanwhile, it's a process that will take ages anyway.

    Tuesday's economic calendar

    Trump, Kim sign 'comprehensive' document

    • Following a highly anticipated summit in Singapore, President Trump and North Korean leader Kim Jong-un signed what they respectively described as a "pretty comprehensive" and "historic" document.
    • Details are incoming, with President Trump scheduled to hold a press conference any minute now. The U.S. reportedly offered Kim Jong-un "unique" security guarantees in return for denuclearization.
    • Update: The document includes the following four points: Establishing new US-DPRK relations, building a lasting and stable peace regime on the Korean Peninsula, reaffirming commitments to work toward complete denuclearization and recovering POW/MIA remains.
    • Press Conference: U.S. stock index futures remained unchanged as President Trump said "sanctions will remain in effect" and "we are not reducing military capabilities." He added that "we will be stopping war games, unless we see future negotiations are not going as they should."

    Trump wants 'real deal' with Iran

    • Speaking to reporters following the historic meeting with Kim Jong-un, President Trump said he believes relations could also improve, in time, with Iran.
    • "After the sanctions kick in – and they are brutal what we've put on Iran – I hope that they're going to come back and negotiate a real deal because I'd love to be able to do that, but right now it's too soon to do that."
    • Previously: Trump, Kim sign 'comprehensive' document (Jun. 12 2018)

    German economic sentiment lowest since 2012

    • The mood among German investors worsened in June, with ZEW's economic sentiment survey falling to a negative 16.4 from minus 8.2 in May – the lowest level since 2012.
    • "The recent escalation in the trade dispute with the U.S. as well as fears over the new Italian government pursuing a policy which potentially destabilizes the financial markets have left their mark on the economic outlook for Germany," said ZEW President Achim Wambach.

    Japan core machinery orders rebound, signal capex recovery intact

    • Japan's core machinery orders ROSE 10.1% in April jumped the most since the start of 2016, bolstering some hopes for durable growth in capital expenditure seen as crucial for a recovery in the economy after a contraction in the first quarter.
    • The less-than-expected increase in factory output and an unexpected decline in household spending in April added to concerns about the fragility of the economy after it contracted in the first quarter.
    • With inflation struggling to accelerate toward its 2 percent price target, the Bank of Japan is widely expected to stand pat at its policy setting meeting this week.
    • Source:

    Retail investors bank on hedge against inflation: Bloomberg

    • Retail investors are putting a lot of money into securities that hedge against the risks of rising price pressures in advance of a consumer price report by the U.S. Labor Department on Tuesday, Bloomberg reports.
    • Last week, a record $1.2B flowed into the top 10 exchange-traded funds focused on Treasury Inflation Protected Securities--or TIPS--according to a JPMorgan Chase analysis of data going back to 2005.
    • May's consumer-price index is expected to climb 2.7%, fed by rising gasoline prices, according to economists forecasts. Core CPI is seen up 2.2%, the most in more than a year, Bloomberg says.
    • The stronger the inflation growth, the more likely that the Federal Reserve will boost the target rate range by 25 basis points on Wednesday.

    Auto lenders take on more risk to attract more customers: WSJ

    • Auto lenders are seeking to offset  slower loan growth by lengthening the terms of auto loans and extending loans to consumers who are stretching further to afford payments, the Wall Street Journal reports.
    • Banks that have said they're increasing loans to riskier applicants include TD Bank (NYSE:TD), Santander Consumer USA (NYSE:SC), and BB&T (NYSE:BBT).
    • In Q1, the average loan term for a new car exceeded 69 months, the second straight quarter it's ever been over that level, says credit-reporting firm Experian. Furthermore, new car loans with 73-month to 84-month repayment periods accounted for more than a third of total new car loans, up from 7% in late 2009.
    • Previously: Wells Fargo ready to accelerate auto loans business: Bloomberg (May 22)

    Lots of reasons to like ConocoPhillips, BMO analysts say in Outperform rating

    • ConocoPhillips (COP +1.7%) is initiated with an Outperform rating and $78 stock price target at BMO Capital, which cites several encouraging company-specific tailwinds and favorable industry-wide dynamics.
    • Among BMO's bullish factors working in favor of COP are expectations for robust free cash flow of $6.4B in 2018 and $6.3B in 2019, the likelihood of increased stock buybacks and dividend growth through at least 2022, and 70% of the company's production is tied to Brent crude which gives COP better exposure vs. the 30% average for large cap peers.
    • COP also boasts on the best Bakken positions when considering its scale and productivity, its liquefied natural gas and oil sands assets should enjoy stable production over the coming years and generate meaningful free cash flow, and the stock looks attractive based on multiple metrics such as dividend yield, EV/EBITDA, P/E, price/cash flow and free cash flow yield.

    First Solar defended at Baird, citing comfort in revenue visibility

    • First Solar (FSLR -2%) extends its 25% swoon following an eight-session losing streak, despite favorable comments from Baird analysts as a “fresh pick” that is undervalued relative to peers.
    • Maintaining an Outperform rating with an $85 price target, Baird's Ben Kallo believes revenue visibility, with ~80% capacity contracted through 2020, will fortify FSLR from near-term module pricing pressure driven by Chinese regulation.
    • Kallo does not expect contract cancellations, which would result in forfeited down payments and potential penalties. and anticipates "minimal impact" from foreign policies given that FSLR has less than 3 GW of capacity left to sell through 2020.
    • Earlier: Solar industry headed for downturn after Chinese policy shift, Goldman says (June 7)

    Wheaton Precious Metals buys cobalt stream from Vale mine in $390M deal

    • Wheaton Precious Metals  (NYSE:WPMagrees to acquire an amount of finished cobalt equal to a fixed percentage of cobalt production from Vale's (NYSE:VALE) Voisey's Bay mine.
    • WPM says it will pay $390M up front upon closing of the cobalt stream plus ongoing payments of 18% of the cobalt spot price per pound delivered.
    • WPM will be entitled to production starting in 2021, coincident with the anticipated ramp up in underground production from Voisey's Bay.
    • Combined with Vale's separate streaming agreement with Cobalt 27, WPM and Cobalt 27 will provide Vale $690M in funding for the combined purchase of cobalt equal to 75% of Voisey's Bay cobalt production effective Jan. 1, 2021.
    • Earlier: Vale reaches $700M deal to sell future cobalt production (June 11)

    Anti-fraud efforts ramping up with sports betting

    • MLB is pushing for legislation to require the sharing of data on sports betting in states outside of Nevada. League officials says the efforts are part of an anti-fraud push as sports betting moves into the mainstream.
    • While sports betting is seen as a huge windfall for state coffers and land-based casinos, MLB wants to keep a level playing field through data-sharing between bookmakers, regulators and sports leagues to check for betting irregularities.
    • Politicians in a large number of states are busy drafting laws to regulate sport betting, while in Delaware sports bets are already rolling in and they are a Governor's signature away in New Jersey.
    • Another hand in the pot: ESPN reports that a deal is being negotiated in West Virginia for University of West Virginia and Marshall University to receive 0.25% of all the money wagered on all college sports. Colleges are looking for a cut to cover the extra monitoring that may be required of their student-athletes and athletic programs

    Attractive valuation on Royal Caribbean highlighted

    • Wolfe Research's Jared Shojaian explains why Royal Caribbean (RCL +0.5%) looks appealing at its current share price.
    • "Shares of RCL are down 23% since the peak back in January, and its forward P/E multiple has contracted by 28% from 15.2x to 10.9x mostly due to rising oil/USD and concerns about future supply growth. RCL has undeservedly been hit the hardest in the group, in our view, which we attribute to more exposure to the Caribbean. We think RCL’s valuation has created a very attractive risk/reward and we have three charts to illustrate our view," writes the analyst.
    • Wolfe Research initiated coverage on Royal Caribbean in January with an Outperform rating.

    Home Depot to make big supply-chain investment

    • Home Depot (HD +0.9%) plans to spend around $1.2B over the next five years to upgrade its online shopping capabilities.
    • Supply chain exec Mark Holifield says the company is making the investment to add 170 distribution facilities so that it can reach 90% of the U.S. population in one day or less. The retails also plans to build around seven e-commerce fulfillment centers to help speed up deliveries to customers' homes or job sites.
    • "This is part of an $11 billion overall plan to re-engineer our company to ensure that we are prepared for the future in retail," says Holifield.

    Buy the dip in gene-editing stocks – SunTrust

    Baird restates bullish videogame take on cusp of E3

    • With industry trade show E3 ramping up for an official start tomorrow, Baird is bullish on videogame makers that it says aren't short on growth drivers.
    • It's a "must own" sector, analyst Colin Sebastian says, "on track to become the largest segment of media and entertainment globally" as it runs toward $145B in revenue by 2020.
    • "We expect multiple catalysts to drive continued growth and profitability gains for top 'pure-play' publishers including Activision (NASDAQ:ATVI), EA (NASDAQ:EA), Ubisoft (OTCPK:UBSFY) and Take-Two (NASDAQ:TTWO)," he writes.
    • He's reiterating Outperform ratings on ATVIEA and TTWO. Key catalysts ahead: digital downloads, microtransactions, esports, mobile, and streaming/cloud services — along with a new generation of consoles expected in 2020 or 2021.
    • In today's market action: ATVI +1%EA +0.9%TTWO -0.1%OTCPK:UBSFY +1.6%SNE +1.1%MSFT -0.6%OTCPK:NTDOY +0.2%GAMR -0.1%.

    Dave & Buster's up 18% after earnings

    • Dave & Buster's (NASDAQ:PLAY): Q1 EPS of $1.04 beats by $0.11.
    • Revenue of $332.19M (+9.2% Y/Y) beats by $10.14M.
    • Shares +11.23%.
    • Press Release
    • Dave & Buster's Entertainment (NASDAQ:PLAY) reports comparable sales fell 4.9% in Q1 vs. -5.7% consensus estimate. Total sales were 9.2% higher as new stores contributed.
    • Adjusted EBITDA was up 0.4% to $95.9M. As a percentage of sales, adjusted EBITDA came in at 28.9% vs. 31.4% a year ago.
    • Operating income as a percentage of sales fell 350 basis points to 17.6%.
    • D&B development update: "In fiscal 2018, we are on track to open 14 to 15 new stores, representing 13% to 14% unit growth. At the top end of the range, these store openings include 11 large, two small and two 17K format stores, and will skew towards new markets for our brand. We currently have five stores under construction."
    • D&B FY18 guidance: Total revenues of $1.20B to $1.24B vs. $1.23B consensus, comparable store sales decrease in the low-to-mid single digits, net income of $95M to $110M.
    • PLAY +18.17% AH to $56.51.
    • Previously: Dave & Buster's beats by $0.11, beats on revenue (June 11)
    • Previously: Dave & Buster's CEO to step down (June 11)

    M&A hangs on AT&T-Time Warner deal

    • If U.S. District Court Judge Richard Leon approves AT&T's (NYSE:T) deal for Time Warner (NYSE:TWX) today, Comcast (NASDAQ:CMCSA) will formally go up against a bid from Disney (NYSE:DIS) to acquire most of Twenty-First Century Fox (NASDAQ:FOX), CNBC reports.
    • More implications? If approved, it will also likely raise the chances that a proposed merger between Sprint (NYSE:S) and T-Mobile (NASDAQ:TMUS), the third and fourth biggest U.S. wireless providers, will succeed in passing regulators.

    Apple changes iOS guidelines to ban crypto mining

    • Apple (NASDAQ:AAPLupdates its iOS guidelines to ban apps from cryptocurrency mining.
    • Current cryptocurrency mining requires more power than what a smartphone provides, but Apple’s rule change could get ahead of lower power crypto that could come out in the future. 
    • Previous iOS guidelines had already banned apps that don’t “use power efficiently” or those that “rapidly drain battery, generate excessive heat, or put unnecessary strain on device resources.” 
    • A new cryptocurrency-specific section specifies that apps can’t “mine for cryptocurrencies unless the processing is performed off device” like in cloud-based mining. 
    • Apple shares are down 0.2% to $191.41.

  55. So, if you were Russia and you wanted to make you guy look amazing on the world stage then maybe you might phone up your pal Kim and tell him to play nice. Couple that with a 180 from Fox News and hey presto … Global Statesman.

  56. Well, Rodman had a good day, not a total loss, eh'?