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Meaningless Monday Market Movement – Time for Earnings

It's Monday so we must be up in the Futures, right?

Monday mornings have market the high for the week in 3 of the past 4 weeks (last week being the exception but it was low-volume, holiday training), so we're not taking today's open too seriously, especially at the start of a data-heavy week that gives us Consumer Credit this afternoon, Small Business Confidence and Job Openings tomorrow morning, PPI on Wednesday along with a likely disappointing Petroleum Status Report, CPI on Thursday and Friday, not only do we have Import and Export Prices and the Michigan Sentiment Survey but we'll have earnings from 5 big banks to kick off the season (C, FRC, JPM, PNC & WFC).

So far, the markets seem to be unconcerned about the opening round of the Trade Wars though shots have been fired with the US imposing $34Bn worth of 25% tariffs (taxes) on flat-screen TVs, aircraft parts and medical devices and China has fired back with $34Bn worth of tariffs on US goods including soybeans, Autos and lobsters.  Another $16Bn from each side is expected to be announce Thursday, as Trump heads off to Europe to fight with NATO on the way to kissing Putin's ring next week (read the excellent article from New York magazine titled: "Will Trump be Meeting with his Counterpart of his Handler?").

Whether Trump is actually just a Putin puppet or whether he decides on his own to do things that destroy Democracy and benefit Putin, there sure is a lot of chaos and turmoil out in the World that is already disrupting global trade, global business and global economies – simply not the kind of environment in which you expect the market to be making new highs.  

Oil (/CL) is trading $30 (75%) higher than it was last July and you KNOW that's going to impact the consumers by turning $40 fill-ups into $70 fill-ups and even once a week for 200M cars is $6Bn per week ($312Bn/yr) of after-tax income taken away from US consumers that they used to spend on something else.  Even if 2M new jobs were created and those workers were all paid $1,000 per week, after tax they would only make up about 15% of that drop in overall consumer buying power

As we begin to hear earnings reports this week and next, it's not going to be about last quarter's earnings, which are boosted by tax cuts, but about forward guidance with not only tariffs but a very tight, and very expensive, labor market AND a rising rate environment that puts a strain borrowers.  We've already heard from manufacturers like Harley-Davidson (HOG), Ford (F) and GM (GM), who are warning that tariffs will directly impact their businesses but soon we'll hear from the beef and soy exporters and the shippers who expected to send them to China and whiskey will get 25% more expensive than local brews in China as well.

The ability of tariff-hit companies to weather the conflict may partly depend on the amount of stock they managed to import before higher levies kicked in. But once those supplies run down, they’ll have to absorb the tariffs or pass them on to customers.   Tesla, for example, raised prices for its Model S and Model X by 150,000 Yuan to 250,000 Yuan after the additional tariffs, according to a sales representative. That would take the retail price of a Model S to as much as 1.47 Million Yuan. 

"There’s a high-end portion of 10 percent: restaurants where people pay thousands of yuan for a steak, who said they still need American beef. But the vast majority say they cannot accept any cost increase," a Chinese importer said. “If we try to even push 5 or 10 percent of the cost to them, they will switch to other types of beef."  Suzhou Huadong, which has annual revenue of about 3Bn Yuan, has suspended any further deliveries from U.S. ports. “We are not going to let them onto the sea if this is not resolved,” the company said.

These are all very real issues that are NOT going to be resolved overnight, nor will their effects be truly felt for quite a while – but that's no reason to just ignore them.

Please, be careful out there! 


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  1. Markets will rally another 10% when Trump decides to leave NATO and form an alliance with Putin to combat democracy!

  2. All American or Chinese companies!

  3. Good Morning.

  4. Good morning!

    Big pop at the open so we'll see what holds.

    I tried to sell 2 more /NQ at 7,280 but only one filled so I have 5 short now at 7,248.  

    Oil topped out at $74 and pulled back 0.50 but /RB still at $2.13 with the Dollar at 93.60.

    /RB not that attractive to short below $2.20 as it's too easy to pump up and, as I said last week, I feel better about SCO than trying to guess which way oil is going to go hour to hour.  Looks like they have 10 days to get rid of 370Mb – that's not hard, usually we play oil short if there's more than 45Mb/day to roll.

    Click for
    Current Session Prior Day Opt's
    Open High Low Last Time Set Chg Vol Set Op Int
    Aug'18 73.87 74.28 73.46 73.65 09:41
    Jul 09


    -0.15 195647 73.80 386068 Call Put
    Sep'18 71.59 72.07 71.31 71.58 09:41
    Jul 09


    0.01 46773 71.57 301862 Call Put
    Oct'18 69.31 69.73 69.02 69.45 09:41
    Jul 09


    0.31 18542 69.14 211782 Call Put
    Nov'18 68.86 69.11 68.39 68.86 09:41
    Jul 09


    0.36 10044 68.50 132707 Call Put
    Dec'18 68.15 68.69 67.92 68.43 09:41
    Jul 09


    0.39 17202 68.04 295938 Call Put
    Jan'19 67.60 68.26 67.60 68.05 09:41
    Jul 09


    0.43 4647 67.62 141164 Call Put

    Big Chart – All good now with NYSE over the 50 dma (no death cross) and the Dow confirms another rally over its 50 dma at 24,625, which we're over now so we'll just see if it holds.

    Cool chart, StJ!

  5. Phil; I'm confused.  You were short 4 /NQ on friday at 7175 and sold 2 at 7262 this AM so wouldn't that have been 7204  not 7240?

  6. whaat so you think of ym short here as the laggard with oil down.


  7. The Brexit process is a complete mess now – Boris Johnson just left. And Trump is arriving in the UK soon with instructions from Putin I am sure.

  8. its ok i got my answer pump time

  9. Lots of articles trying to goose oil prices with the usual fear and extrapolation nonsense:

    /NQ/Options – I was back to 2 into the close on Friday when we had that nice drop back below 7,220.  I think I was short at 7,175 around lunch and then it went to around 7,235 so I doubled down to avg 7,210 and then out back to 2 at 7,220 less the loss is about 7,200 net but then I shorted 2 more this morning at 7,262 (7,236 avg) and then another at 7,278 has my average around 7,240 on 5, I guess. 

    Oops, /NQ just hit 7,245 so back to 2 (7,233ish)!  And, of course, I'll double down again if we go back to 7,283 to avg over 7,250 on 4.

    /YM/Tommy – Very tough to short such a run but 24,650 has been a good top so worth a chance if we go below it with tight stops above. 

    In the bigger picture – we're still low in the Dow's channel so EXTREME caution shorting here:

    Brexit/StJ – Interesting timing, I wonder if they were pressured out to put May in a bad position ahead of Trump (who she's been standing up to so far).  

  10. London is flying a giant inflatable Trump baby to coincide with the visit by POTUS. This is what 70 years of UK/US relations now looks like. #funnyifitwasnotsotragic

    SI is seeing some movement and with the Bucky dropping might be heading back to $17

  11. Could oil prices spike above $150?

  12. The NCAA Is Quietly Softening Its Ban On Cannabis

  13. After Years of Easing, Meet Quantitative Tightening: QuickTake

  14. Phil,   

    Your thoughts on MDLZ as a butterfly position?  Mondelez 


  15. Waiting for the NCAA to start replacing/supplementing Ben-Gay with cannabis.

  16. Brexit – 'They' need to get out of this mess starting with a confession from boris….

  17. Anyone have information or preference for any of the following cannabis plays or any other legit. recommendations? MO, CGC, CRON, MJ

  18. 24,750!

    /SI/Malsg – Hopefully just starting a nice move but I don't think the Dollar will go much lower:

    MDLZ/Learner – Good call actually.  Range has been between $39 (not counting spike) and $45 recently and even going back to 2015, the same range had generally held.  It's right in the middle at $42.34 and it's certainly a stock we don't mind getting "stuck" owning so we can make a bullish butterfly on it and we certainly could use a new one so let's add this to our Butterfly Portfolio:

    • Sell 10 MDLZ 2020 $40 puts for $2.65 ($2,650) 
    • Buy 20 MDLZ 2020 $40 calls for $5.55 ($11,100)
    • Sell 20 MDLZ 2020 $47 calls for $2.25 ($4,500) 
    • Sell 5 MDLZ Aug $42 calls for $1.40 ($700)
    • Sell 5 MDLZ Aug $42 puts for 0.88 ($440) 

    So our net entry is $3,950 and we have 557 days to sell until 2020 expiration and Aug expiration is 39 days away so we're selling about 1/14th of our time for $1,140.  14 sales of $1,140 is going to be $15,960 of premium sales ahead of us, which is a nice return (and these are very cautious quarter-sales to start with) and we also can make up to $14,000 back on the spread if MDLZ finishes at $47 so there's potential here for a $24,000 gain (600%) if all goes perfectly – but it never does.  Let's just say we have a very high degree of confidence in this trade making us some money! 

    Thanks Learner, it's about time we added another Butterfly play!  

    Cannabis/Soma – My top cannabis play right now is the company PSW Investments is working with (private equity).  I just met with them in NY this weekend and I think they are perfectly positioned to take advantage of an exploding market.  If you (or anyone else) is interested, let Greg know (admin at philstockworld dot com) right away as we're putting a deal together for them asap.  

    Other than that, I like MO the best as a long-term play – even the guys I was talking too, who've been on the medical side for many years, think it's only a matter of time before MO buys up dozens of players and rolls out a national product.  One of the things I like about our guys is they are willing to position themselves to be sold – not looking to fight it out and that translates into a nice cash-out for PSW Investments! 

  19. For Members who are following some of my armchair trades.

    KHC we purchased at 57.03 now 64.42 I have decided to close the Jul. 57.5 Caller at 7.10 and sell a new strangle 67.5/70 Aug for 3.50 to 3.55. The July putter we live to go worthless. Over the 39 days we show a combined return of 4.5%

  20. Similar situation with D we purchased the stock for 64.26 and is now 69.11. I repurchased the July 65 caller for 4.30 and selling the Aug. 67.5/70 strangle for 2.25. combined return is 2.9% for the 39 days.

    Sorry the KHC strangler is 62.5/65 and not as quoted above. I mixed the two.

  21. On cannabis I do have a small stock purchase in CANN. We discussed this matter before and I must agree with Phil, that when the time is ripe companies like MO and PM will chew them up, as they are looking desperately for a new outlet.

  22. Comment content omitted because it is too long.

  23. Buybacks set for record, but share gains don't match

    • S&P 500 companies are on track to repurchase up to $800B in shares this year – a total that would top 2007 record, writes Michael Wursthorn in the WSJ.
    • A full 57% of those companies, however, are trailing the S&P 500's 3.2% advance in 2018 – that's the highest ratio underperforming since 2008. The S&P 500 BuyBack index – which tracks performance of the 100 largest stock repurchasers – is up just 1.3% year-to-date.
    • One has to wonder if corporate executives are buying high – just as in the previous record year of 2007.
    • Among sizable repurchasers this year not seeing a very good ROI: Oracle (NYSE:ORCL), McDonald's (NYSE:MCD), Bank of America (NYSE:BAC), and JPMorgan (NYSE:JPM).
    • Buyback-related ETFs: PKWSYLDTTFSSPYBTTAC

    How To Play The End In The Bank Rally: Part III 

    Eurodollars signal tighter monetary policy coming in late '19/early '20: Bloomberg

    • Some bond traders are looking more at eurodollar futures than the U.S. Treasury yield curve, says Bloomberg columnist Brian Chappatta.
    • "The world’s most actively traded money-market derivatives give a more precise estimate of when the good times may wind down," he writes.
    • Eurodollars, which Chappatta says are very sensitive to the expected path of Fed rate increases, signal that central bankers will have to stop raising interest rates late next year or in early 2020. That compares with mid-May when the eurodollar curve was positive through 2021.
    • "If traders are right, and the Fed will have to stop after a few more hikes, then suddenly 3% appears to be about the best yield investors can expect over the coming decade," he writes.
    • Eurodollar 3-month down 0.02% to $93.345 today, and down 0.53% YTD.
    • By the way, the spread between the 2-year and 10-year U.S. Treasury notes are about 28 basis points in midday trading; that compares with 35 basis points two weeks ago.
    • Previously: Markets taking exception to rising rates (July 5)
    • Emerging-market central banks are dipping into about $6T of foreign reserves in an effort to prop up currency declines, the Wall Street Journal reports.
    • In the first five months of this year, central banks added $114B to reserves, the fastest pace of accumulation in four years, according to data from the Institute of International Finance. That stopped in June as emerging markets faced a stronger U.S. dollar and increased trade tensions, which weakened their currencies, stocks, and bonds.
    • Brazil has spent almost $44B on market intervention this year, India has spent about $17B, and Argentina has spent more than $10B in reserves in April and May.
    • The People's Bank of China said it will keep the exchange rate stable and at least one state-owned bank has bought yuan to help support the currency.
    • The move doesn't always work. Brazil's currency is down almost 14% this year and the Indian rupee is down 7.1%. Though the Argentine peso recovered almost 4% this month, it's still down 34% for the year.
    • “Such action is often ineffective if not followed by interest-rate rises," says Benn Steil, a senior fellow at Council on Foreign Relation.
    • Previously: Another record low for Argentine peso (June 29)

    • Investor morale in the eurozone rose in July to 12.1, end a five-month run of declines, however, the specter of escalating trade tensions with the United States risked depressing sentiment again.
    • Trump threatened last month to impose a 20-percent import tariff on all EU-assembled vehicles, which could upend the industry's current business model for selling cars in the United States.
    • The Bank of France re-affirmed France 2Q18 GDP forecast at 0.3% and said expects a general rebound in business activity for July.
    • The central bank's business sentiment indicator for the industrial sector rose to 101 points and service sentiment indicator rose to 103 points in June.
    • The French economy is showing signs of stalling after a pick-up that followed President Emmanuel Macron's election in May last year
    • Mastercard (MA +0.1%) is testing cards with built-in fingerprint scanners to verify customers' identities and is talking with some banks in the U.K. to bring such payment cards to market,CNBC reports.
    • The technology is intended to replace password and speed the process of making online payments and in-store contactless transactions.
    • “The use of passwords to authenticate someone is woefully outdated, with consumers forgetting them and retailers facing abandoned shopping baskets,” said Ajay Bhalla, president of global enterprise risk and security at Mastercard.
    • Warren Buffett's equity-index put options written by Berkshire Hathaway (BRK.A +0.9%)(BRK.B+0.9%) started expiring in June, with the last expiring by January 2026, Bloomberg reports.
    • The deals, started between 2004 and 2008, bet that stock prices would rise in the long term and added $2.4B to Berkshire's earnings from 2008 to 2017.
    • Buffett has ended some other derivative deals, exiting credit-default agreements in 2016. And in 2012 he terminated some contracts tied to municipal bonds.
    • As preferred holdings converted and derivative bets expired, Berkshire is looking to invest more than $100B in cash and U.S. Treasury bills, the article says.
    • Previously: Apple and Buffett hoovering up large chunk of Apple (May 8)
    • Shares of Toll Brothers (NYSE:TOL) are -23% YTD. Barron's says TOL "appears to be significantly undervalued."
    • “Toll has a high-quality land base and a good management team that has the ability to deploy capital through buybacks and other actions to improve returns,” RBC's Michael Dahl says. He has a $46 price target on shares, implying 24% upside.
    • CEO Douglas Yearley: “There is a disconnect between our business and the share price, The stock was $52 in January, and it’s $37 today. Throughout that period of time, business has been good, and we’ve done a terrific job diversifying the company.”
    • “We think we’re astute land buyers and set ourselves up well for the future.”
    • Unlike peers like D.R. Horton (NYSE:DHI), Lennar (NYSE:LEN), and PulteGroup (NYSE:PHM), who cater mostly to entry-level home buyers in the Sunbelt, Toll is focused on the market’s upper end. The average price of a Toll home was $813K, about double that of its big rivals.
    • S&P is boosting its rating on Hovnanian (NYSE:HOV) to CCC+ from CC, saying the homebuilder has adequate liquidity to cover the next 12 months.
    • Outlook on the rating is negative, however, as the firm notes the risk that the company will generate enough EBITDA and enough liquidity to meet interest payments.
    • Source: Bloomberg
    • "Investors can’t be blamed for wondering whether it’s worth investing in bonds," Barron's cover story says this weekend. Investment-grade corporate bonds are down 4.9% YTD, putting them on track for the worst calendar-year since 1974.
    • What's a fixed-income investor to do?
    • Barron's suggests "sticking with funds that pose less interest-rate risk than the Bloomberg Barclays U.S. Aggregate Bond index, the primary investment-grade benchmark," specifically short-duration high-grade funds.
    • Mentions:
    • Thompson Bond (MUTF:THOPX), an investment-grade fund with a duration of 1.1 years and a 3.4% yield.
    • Semper Short Duration (MUTF:SEMRX), an ultrashort fund, yields 2% and has returned 1.1% this year. With a duration of three months, it has held up well, beating 93% of peers.
    • "Investors could place 25% in the Invesco BulletShares 2020 Corporate Bond ETF (NYSE:BSCK) and add 25% each to three more BulletShares ETFs maturing in 2021, 2022, and 2023."
    • Eaton Vance Floating Rate Advantage (MUTF:EAFAX), a top performer, is up 2.5% this year.

    • Barrick Gold (NYSE:ABX) unveils a strategic cooperation plan with China's Shandong Gold, including potentially working together on acquisitions.
    • ABX says the document builds on an earlier agreement signed between the two companies in April 2017, when Shandong acquired 50% of ABX’s Veladero mine in Argentina.
    • ABX also discusses the potential to work with Shandong at the Pascua-Lama operations, on the border between Argentina and Chile.
    • The companies say they will share technical expertise related to mining technology and information management, and provide access to their respective supplier networks, service providers, investors and capital providers.

    • BMW plans to acquire €4B ($4.7B) worth of battery cells from Chinese battery maker Contemporary Amperex Technology as part of a long-term contract.
    • Some of the CATL battery production will be done in Germany.
    • The German automaker hasn't made a decision yet on whether it will start producing EV batteries on its own to meet its increasing demand.
    • Contemporary Amperex Technology is planning an IPO on the Shenzhen Stock Exchange.
    • Tesla (TSLA +0.2%) CEO Elon Musk plans to visit Shanghai tomorrow and Beijing from Wednesday through Thursday, sources tell Bloomberg.
    • The details on the purpose of the trip aren't known yet, although Musk mentioned last month the company's goal to build a car, battery-pack and powertrain plant in Shanghai.
    • Tesla (NASDAQ:TSLA) starts the week off with a 1.85% gain as reports circulate that Elon Musk is planning to visit Shanghai for an event with the local government.
    • The company registered a new company in Shanghai's Free-Trade Zone earlier this year, which is expected to be part of a local manufacturing push and/or Tesla Gigafactory.
    • Previously: Tesla hikes prices in China in response to tariffs (July 8)

    • An Embraer (ERJ +0.5%) shareholder reportedly has filed a complaint with Brazil’s securities regulator against a planned takeover of the company's commercial aircraft arm by Boeing (BA+1.8%).
    • The shareholder filed the complaint with regulator CVM late Friday, arguing that the deal would effectively grant control of ERJ to Boeing, against the company's statute that forbids any investor from owning 35% or more of its shares directly or indirectly, according to the Valor Econômiconewspaper.
    • The report does not specify the size of the shareholder's stake in ERJ but said the stake was very small.
    • Saudi Arabian Airlines is exploring a potential order for Boeing (NYSE:BA) 777X widebody jets, sources told Reuters.
    • The potential order could alleviate production pressure for the American planemaker, which is now unlikely to sell 80 jets that IranAir ordered before the U.S. withdrew from a nuclear deal.
    • PepsiCo (PEP -0.8%) reports FQ2 results tomorrow before the market opens. Analysts anticipate the beverage giant to post sales of $16.04B and EPS of $1.52.
    • The pace of organic sales will be closely watched by analysts, with a mark of 1.5% higher expected to be enough to satisfy investors. Free cash flow is seen coming in at $1.96B for the quarter.
    • CFRA expects improved results from PepsiCo. "While North American Beverage volumes declined 2 percent in 2017 and 3 percent in the first quarter of 2018, we expect volume trends to improve in the remainder of 2018 on planned increases in advertising and marketing," writes Jospeh Agnese.
    • Looking ahead at the full fiscal year, analysts forecast that PepsiCo will guide to EPS at around $5.66 and free cash flow of about $6.37B


  24. Kroger announces $17M investment in Northern Kentucky distribution center

    • Kroger (KR -1%announced a $17M investment in its distribution center on Mt. Zion Road in Florence, Kentucky located in Boone County.
    • This investment will ramp up production at the facility and create 250 new jobs, majority full-time positions.
    • The project is supported by a Kentucky Business Investment incentive of up to $1M over 10 years.
    • The company's annual eligibility for the performance-based tax credit is linked to investment, job creation and retention, and average hourly wage targets.
    • "This significant investment in the distribution facility and our associates will allow us to more efficiently reach our customers and help to deliver on new ways to shop with Kroger, as we redefine the grocery customer experience through Restock Kroger," said Frank Bruni, Kroger's Vice President of supply chain and logistics.
    • Dine Brands International <<(DIN>> will bring the world-famous IHOP restaurant brand to South America for the first time through an agreement with new franchisee Percapitals S.A.C. to open 25 restaurants in Peru in the next ten years, The first IHOP restaurant is expected to open in mid to late 2019 in Lima.
    • "Expansion throughout Latin America is a high priority for IHOP and finding highly qualified franchisees like Percapitals S.A.C. is key to executing that strategy," said Dan Lecocq, executive director, international development, Dine Brands. "We are pleased to take this next step towards our global growth and are actively looking to continue to expand throughout both Central and South America."
    • Wells Fargo dials back expectation on theme park operators at about the halfway point of the summer season. Higher U.S. gas prices and lofty valuations are cited as factors.
    • The firm lowers SeaWorld Entertainment (NYSE:SEAS) to a Hold rating from Buy and assigns a price target of $22 to rep a 1.7% swing lower from Friday's closing price.
    • Wells also takes Six Flags Entertainment (NYSE:SIX) to Hold from Buy, and sets a price target of $74 to rep a 3% downward move.

    • Macau casino stocks are higher to start the week after a strong day was put in by the Hong Kong-listed players.
    • Yesterday, Morgan Stanley issued a Q2 forecast for gross gaming revenue of $9.2B (+17% Y/Y, -6% Q/Q), although the firm thinks EBITDA will be pressured by rising labor rates in Macau and a casino win rate below average.
    • Meanwhile, JPMorgan points to "compelling" valuations in the sector in its first sector note of Q3.
    • In premarket trading, Melco Resorts & Entertainment (NASDAQ:MLCO) is up 3.00%, Wynn Resorts (NASDAQ:WYNN) is 2.33% higher and Las Vegas Sands (NYSE:LVS) is showing a 2.50% gain. MGM Resorts (NYSE:MGM) is up 1.48%.
    • Galaxy Entertainment (OTCPK:GXYEFrose 5.13% in Hong Kong today and SJM Holdings (OTCPK:SJMHYOTCPK:SJMHFshot up 9.65%.
    • Related ETF: BJK

    Losers (and winners) as Trump freezes $10.4B in Obamacare payments

    • via Notable Calls
    • According to Jefferies, it's a near-term negative for Anthem (NYSE:ANTM), as it's been a risk-adjusted receiver. For Molina (NYSE:MOH) and Centene (NYSE:CNC), though, it's a short-term positive as both are actually payers into the pool (about $1B each) thanks to healthier than average memberships. Longer-term for all three, the impact is more volatility and uncertainty.
    • JPMorgan says Anthem would not be able to collect an expected $400M-$500M, while Molina and Centene could avoid hundreds of millions due from 2017. Molina might see $1 per share benefit.
    • For every $50M of risk-adjusted payments Anthem misses out on, it would cut EPS by $0.15 annually, says Barclays.
    • BAML: Centene could see a 3.6% boost to 2018 EPS, Molina a 20.2% boost, and Cigna (NYSE:CI) a tiny benefit.
    • Add it all up, and Notable Calls is seeing about $1 in EPS headwind to Anthem. With the stock trading at a 12x multiple, it could get hit $7-$10 per share. Shares are down 0.8% premarket to $240.23.
    • Previously: Payments halted under Obamacare program (July 8)

    Jefferies positive on GameStop

    • GameStop (NYSE:GME) catches a timely upgrade from Jefferies to Buy from Hold.
    • The investment firm expects the new plan of GameStop's new management team to help the company improve results.
    • Jefferies assigns a price target of $18 to rep 19% upside potential for shares.
    • GME +1.45% premarket to $15.37 vs. a 52-week trading range of $12.20 to $22.37.

    World Cup fever filters down to some bottom lines

    • Greene King (OTC:GRKGFOTCPK:GKNGY) and Marston's (OTCPK:MARZFOTC:MRTPY) are both up about 2.30% in London trading after England advanced to the semi-finals of the World Cup.
    • The extra games for the Three Lions essentially works out to the equivalent of a few days worth of extra revenue for the pub operators.
    • The strong performance by European teams could also boost results for Coca-Cola European Partners (NYSE:CCE) and Coca Cola HBC (OTC:CCHBFOTCPK:CCHGY), according to analysts.
    • Nike (NKE +0.5%) has France, England and Croatia still alive in the tournament as far as uniform sponsorships, while Adidas (OTCQX:ADDYY) is down to Belgium. Reports indicate that England merchandise has been the hottest seller of the four teams still remaining.

    Reuters: Comcast lines up buyers for Fox sports nets in new deal prep

    Twitter -8.4% after report of mass suspensions

    • Twitter (NYSE:TWTR) has led S&P downdrafters today, now -8.4%, in its first market action since a late-Friday report that the company is suspending more than a million accounts a day for fakery or spam involvement.
    • That number's high enough to lead to a drop in monthly users when the company issues its Q2 report.
    • Monthly active users were up 3% in Q1, to 336M.
    • The company's set to report before the open on July 27.
    • Credit Suisse sees nearly 20% upside in Baidu (BIDU +2.9%), upgrading ADRs to Outperform.
    • Analyst Thomas Chong set a price target of $307, 22% up from Friday's close and 18% higher than current pricing.
    • Meanwhile, a key artificial-intelligence exec in the company is exiting. Cheng (Jesse) Lyu, founder of Baidu unit Raven Tech and previously the company's GM of intelligent hardware, is leaving the company for personal reasons.
    • Previously: Baidu upgraded at KeyBanc; shares up nearly 4% (Jul. 09 2018)
    • Alibaba (NYSE:BABA) and BT Group (NYSE:BT) are in talks to form a cloud-services partnership.
    • The tie-up could be similar to an existing deal that Alibaba has with Vodafone (NASDAQ:VOD) in Germany.
    • It's the latest move by China's Alibaba to make incursions in Europe against Earlier, Alibaba and Bollore (OTCPK:BOLRF) agreed to jointly develop projects in areas including cloud services as well as clean energy and logistics.
    • Premarket: BABA +1%BT -0.3%.

  25. Cannabis/Yodi – The company PSWI is working with has been a leader in CA medical cannabis products for years and that has given them great market recognition and also a huge first-mover advantage with equipment, products, distribution, etc.  Their "solutions" for smoking are great, including a gel product that goes into a pen-like device (not quite the same as vaping) where a battery warms it for low-smoke inhalation.  They also have the edible market cornered with half of the CA edibles being white-labeled by their lab. 

    What was much more interesting to me though, was a discussion I had with their pot scientist (a really cool guy who knows everything about cannabis) about hemp and it turns out they have a process to turn hemp into a sort of bio-degradeable plastic that would be far superior to paper straws and the only issue is the mix of laws for shipping hemp products.  We're going to work on that one as whole countries are banning straws and that's just a start to what can be done.

  26. IRBT offering nice premium on Jan 2020 $80 calls.

  27. Hi Phil,

    Any thoughts on KNX ?



  28. Phil thanks for the in depth info. Especially the straws are a big issue in Europe! I know it is normally not discussed openly at our site, but may I suggest you could explain here a bit more how members could be participating. You might get a much greater audience.

  29. Interesting China’s prime minister meets Merkel in Berlin. Main discussions are new trade agreements between the two countries. In general this might be working out negative for the clown president.

  30. IRBT/Scott – That stock moves $20 in a month more often than not, be careful.

    KNX/Pat – I don't watch the truckers much but KNX is a good one though expensive at $39 as that's $6.6Bn and they might have made $485M last year but that was due to a $291M tax refund.  In prior years, they were doing $100M but now they merged with Swift so we can assume 2.5x for $250M but then, even if you give them another $100M for synergies (will take time to prove out) then you're looking at over 15x for a trucker, which strains the limits.  Last Q, in fact, was $70M and the Q before, without the tax break and with normal taxes was just over $100M so the logic checks out at $250-$400M range.  

    That's fine though, I just wouldn't play them aggressive but you can sell Feb $35 puts for $2.20 and pick up the $35 ($6.40)/40 ($3.50) bull call spread for $2.90 so net 0.70 on the $5 spread is not a bad way to get started with them.

    Participating/Yodi – PSW Investments is simply an LLC that operates like a venture capital group concentrating on angel-level investments in companies where our expertise can make a difference – not just our money.  By pooling our capital, we are able to diversify our risks on various projects that have long-term payouts, but hopefully at high multiples.  Also, we look for good cash-flow producers so we can maintain our dividends, which are running over 10% for our early investors.  

    For example, we own 2% of FUNN Networks, which had a $20M offer so $400,000 (potentially) from our $50K investment so far.  We own 10% of TradeExchange, which will be releasing an app this year and could become massive if it catches on (tens of millions) – that sort of thing (and we own Philstockworld too!). 

    In the case of the Pot Company, they were shopping a deal looking for $3M and, unlike everyone else who looked at the deal, I sent back their numbers restructured and showed them they could do their expansion for $1.5M and give up half as much equity, so now they love us and want to work with us going forward.  If we just help them raise cash, we'll get a little bit of the stock as a reward, but we're probably going to be able to fund the whole thing as this is a very, very exciting way to get into the space without risking it on a grower or retailer.

    We also have other companies we can hook them up with so we think we can double or triple their sales, which are already doubling naturally and the market is expanding rapidly as more states legalize but, since they are pot scientists – we don't have to worry about crossing state lines as we're selling the technology and processes between the growers and the retailers.  That's why I love this one!

    Anyone who is interested in investing with PSW Investments should contact Greg (at philstockworld dot com) and he can get you qualified.

  31. This is interesting, Consumers go massively into debt and it doesn't seem to bother anyone at all:

    • May Consumer Credit increases $24.5B (M/M) vs. $12.7B consensus and $10.3B prior (revised from $9.3B).

  32. Volume is ridiculously low yet they'll just say "Dow up 300" and call it a win:

    Date Open High Low Close* Adj Close** Volume
    Jul 09, 2018 276.5500 277.8500 276.5000 277.6036 277.6036 33,510,459
    Jul 06, 2018 273.1400 275.8400 272.7100 275.4200 275.4200 66,459,500
    Jul 05, 2018 272.1700 273.1800 270.9600 273.1100 273.1100 56,925,900
    Jul 03, 2018 272.8700 272.9800 270.4200 270.9000 270.9000 42,187,100
    Jul 02, 2018 269.5100 272.0400 269.2400 271.8600 271.8600 63,554,800
    Jun 29, 2018 272.1200 273.6600 271.1500 271.2800 271.2800 97,592,500
    Jun 28, 2018 269.2900 271.7500 268.4900 270.8900 270.8900 76,650,500
    Jun 27, 2018 272.2600 273.8700 269.1800 269.3500 269.3500 105,110,700
    Jun 26, 2018 271.6400 272.5600 270.7900 271.6000 271.6000 68,547,400
    Jun 25, 2018 273.4400 273.6200 269.1000 271.0000 271.0000 137,854,200

  33. BA is good for 65 Dow points by itself today.  GS adding 45, CAT 40 – that's half the gain from 3 companies.  Doesn't negate it but means it's super-thin gains that can be quickly undone.  

    DXD July $32 calls are $1.05 with DXD at $3.90 so 0.15 of premium for 11 days and DXD was $35 this morning so figure take the loss at 0.50 (should be a $1 drop, same as today) or, if it goes your way – easy double.  

  34. Wow, even a push into the close.  

    Will be interesting to see if this sticks.  Not much data tomorrow but Weds is a big day.

    Date ET Release For Actual Forecast Consensus Prior Revised From
    Jul 09 15:00 Consumer Credit May   $11.0B $12.4B $9.3B  
    Jul 10 06:00 NFIB Small Business Optimism Index June   NA NA 107.8  
    Jul 10 10:00 JOLTS – Job Openings June   NA NA 6.698M  
    Jul 11 07:00 MBA Mortgage Applications Index 7/07   NA NA -0.5%  
    Jul 11 08:30 Core PPI Jun   0.2% 0.2% 0.3%  
    Jul 11 08:30 PPI Jun   0.2% 0.2% 0.5%  
    Jul 11 10:00 Wholesale Inventories May   0.5% 0.5% 0.1%  
    Jul 11 10:30 Crude Inventories 07/07   NA NA +1.2M  
    Jul 12 08:30 CPI Jun   0.2% 0.2% 0.2%  
    Jul 12 08:30 Core CPI Jun   0.2% 0.2% 0.2%  
    Jul 12 08:30 Initial Claims 7/07   228K 225K 231K  
    Jul 12 08:30 Continuing Claims 6/30   NA NA 1739K  
    Jul 12 10:30 Natural Gas Inventories 07/07   NA NA +78 bcf  
    Jul 12 14:00 Treasury Budget Jun   NA NA -$90.2B  
    Jul 13 08:30 Import Prices Jun   NA NA 0.6%  
    Jul 13 08:30 Import Prices ex-oil Jun   NA NA 0.2%  
    Jul 13 08:30 Export Prices Jun   NA NA 0.6%  
    Jul 13 08:30 Export Prices ex-ag. Jun   NA NA 0.5%  
    Jul 13 10:00 Univ. of Mich Consumer Sentiment – Prelim Jul   NA 97.8 98.2

  35. Phil,

    What are you doing with your /NQ shorts and what is your position 

  36. Trump-Ordered Talks on Future of Fuel Economy Stuck in Neutral

  37. As I mentioned already yesterday, the king without cloth, will slowly lose even his hide! I feel the clown’s actions will provoke serious damage to the US economy. Germany and with that Europe seeks closer ties to China. Indicated by the yesterday’s visit of the prime minister of China to Berlin.

    Not only the industry, especially car production, but also the banking industry will enjoy much greater freedom in China. Even political views are still of great difference, in the end we even have to move our trading and with that our PSW site to China or Russia!!! Jokes aside, from a European point of view, I sincerely hope that the people who govern the US at present will see the light, by not only thinking the US is the greatest.

    Even England, still thinking as country with all its colonies, (non-existing any more) will think twice now to go it alone.

    I possible, as none US person, are more concern about the stability of the US, as US citizens living in the US. They need to step out of the box to see the light and not follow blindly the mad man.

  38. Trump Poised to Enter NATO Meeting as Wild Card Among Allies

  39. Good morning!

    Futures pumped up about 0.25% but it's one of those things where Asia was up because we were up and now Europe is up (not much) and that's taking our futures up but none of it matters until we start actually trading.  Clearly we're technically bullish now so things will have to break down before it's smart to make bearish bets.

    /NQ/Japar – I've worked my way into 8 short now at 7,286 and down about $5,000 so hopefully this is the top (7,325) and not a pause on the way higher.  I plan to stop out over 7,325 and wait to see where I can re-enter as it's not that hard to make back $5K but $10K might waste my whole week.

    Mad man/Yodi – It is amazing to see what the people of this country are willing to tolerate.  I watched "Frost/Nixon" last week and it's amazing to think that Nixon was impeached over things that Trump does 4 or 5 times EVERY DAY!  The new thing is that, for every crime committed by Trump, the Conservative media says "What about —" and then goes on to talk about real or imagined crimes "committed" by Democrats as if "everybody does it" is the ultimate defense.  You can see the morals decaying in this country like one of those sped-up images of a corpse decaying and falling apart.  Just look at the 4pm article above about the 91 year-old Mexican man who was beaten at a 4th of July celebration and told to "go back to Mexico" – he wasn't even illegal, just visiting family.  That's America now – this is what he's making us into…

  40. Phil the sad thing is no one stands up for values any more. China might have a different policy but it is a massive and still developing country, whereas with logical thinking, there will be still a lot of potential, whereas the US, stupidly enough needs other countries, as it is not any more a developing country and it needs to deal and export to outside countries, but the US government or at least the baby thinking king does not see it. Well as you can see, before his arrival in England, they floated for him a baby Trump in diapers. Does that not say it all?

    On the other side of the coin, I see countries show a great deal more respect for foreign authorities, just as seeing the prime minister of China, visiting Germany. Possible they thry not to show thinks like this in the US news.

  41. On MPC selling a small vertical put 67.5/65 for .55 Break even 66.75. Stock trading at 71.82. Some money to buy the next breakfast

  42. To follow up on yesterday's rolling on armchair trades I like to comment that some stocks have reasonable recovered from their recent lows, you might also consider closing the stock position and waiting for another dip. Especially the next candidate is AMGN. I am still toying with the idea to close the play. Bought on 5/7 and 5/15 averaging 170 now 194. My 3x play packet is up 6,200 in ONE MONTH!!!! Even armchair trades can get itchy.

  43. You're right, Yodi – on the Conservative networks (CNBC, FOX), you would never know that China met with Germany at all.  No news is another form of fake news – if Fox doesn't like a story and can't spin it negative – they simply act like it never happened at all.

    • PepsiCo (NYSE:PEP): Q2 EPS of $1.61 beats by $0.09.
    • Revenue of $16.09B (+2.4% Y/Y) beats by $50M.
    • Shares -0.57% PM.
    • Press Release
    • PepsiCo (NYSE:PEP) reports organic revenue growth of 2.6% in Q2.
    • Foreign exchange translation positively impacted revenue by 1%.
    • Revenue by segment: Frito-Lay North America: $3.84B (+4%); Quaker Foods North America: $527M (-5%); Latin America: $1.84B (+1%); North America Beverages: $5.2B (-1%); Europe Sub-Saharan Africa: $3.12B (+11%); AMEA: $1.57B (-2%).
    • Latin America operating profit up 18% to $269M.
    • Asia, Middle East and North Africa operating profit advanced 61% to $496M.
    • Total core gross margin contracted 35 bps to 54.8%.
    • Total core operating margin flat at 19%.
    • FY2018 Guidance: Organic revenue growth: in line Y/Y; Core EPS: $5.70; Tax rate: low 20s; Net capital expenditure: ~$3.6B; Cash flow from operating activities: ~$9B; Free cash flow: ~$6B.
    • PEP +0.92% premarket.
    • Previously: PepsiCo beats by $0.09, beats on revenue (July 10)

    Small business optimism beats consensus

    • Trade war… China's commerce ministry will raise "anti-dumping tariff rates" tomorrow on some optical fiber products originating from the U.S., increasing the levy range to between 33.3% to 78.2%, compared with 4.7% to 18.6% as set in 2011.
    • U.S. companies including Corning (NYSE:GLW), OFS Fitel and Draka Communications Americas are among the firms affected by the change.
    • Germany and China have reiterated their commitment to the multilateral rules that govern free trade at a meeting in Berlin, as trade tariffs from the U.S. push the countries closer together.
    • The nations signed €20B in deals that included companies like BASF (OTCQX:BASFY), BMW (OTCPK:BMWYY), Volkswagen (OTCPK:VLKAY), Daimler (OTCPK:DMLRY) and Siemens (OTCPK:SIEGY), underlining the close economic ties between the world's two largest exporters of goods.

    • Escalating concerns over potential supply shortages had oil on the rise overnight.
    • Workers on Norway's oil and gas offshore rigs have gone on strike after rejecting a proposed wage deal, shutting down production at Royal Dutch Shell's (RDS.ARDS.B) Knarr field in the North Sea.
    • Separately, OPEC President Suhail al-Mazrouei defended the oil group against President Trump's recent demands for higher oil output, saying OPEC does not shoulder the blame.
    • Crude futures +0.7% to $74.34/bbl.
    • "Pfizer & others should be ashamed that they have raised drug prices… at the same time giving bargain basement prices to other countries in Europe & elsewhere. We will respond!" President Trump wrote on Twitter.
    • While Pfizer (NYSE:PFE) reissued a statement from a week ago, saying it upped the list prices on just 10% of its portfolio, it is among just four drug companies that upped prices on their medicines a second time this year.
    • Nokia (NYSE:NOK) and China Mobile (NYSE:CHLsign a one-year frame agreement valued at €1B.
    • Nokia will provide China Mobile with best-in-class, end-to-end tech solutions to enable a next-gen network for cloud and machine communications. 
    • Nokia will also provide elements of its mobile radio access and core portfolio.  
    • Nokia shares are up 0.7% premarket to $5.89.
    • China Mobile shares are down 0.1% to $45.30.       
    • Previously: Nokia, China Mobile to collaborate on AI and 5G (July 6)

  44. Further to the production of car batteries, China has signed just yestersay an agreement with Germany to build and open one of the greatest battery production plants in Germany. Might give TSLA something to think about.

  45. While the clothless King is dreaming, other countries are reshuffling their cards.