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Weakening Wednesday – Powell’s Testimony Doesn’t Really Help

The Fog of Truth.

That's what Robert Reich calls the confusion and bewilderment Americans feel when listening to the President but the same can be said for our New Federal Reserve Chariman, Jerome Powell, who testified before the Senate yesterday and will testify again tomorrow without actually saying anything at all but, like the parable of the blind men feeling an elephant – everyone will be able to draw a conclusion about what he said – even if those conclusions are diametrically opposed to each other

CNBC says "Powell backs more rate hikes as economy growing "considerably stronger"" while Market Watch says Treasury yeilds are heading lower on doveish testimony and CBS says "Jay Powell shrugs off trade worries, expects rates to keep rising" and Bloomberg says "Powell's 'For Now' Caveat a Sign Fed Rate Hikes Not on Autopilot."  So Jerome Powell, like the President, is all things to all people – whatever you want to think he said – he kind of said it.

Is that really what we want in a Fed Chairman?  Why is our monetary policy a closely guarded secret?  There was, briefly, a movement to make the Fed more transparent and have them set firm tartgets for actions well ahead of time but investment banks can't make money if EVERYONE know what the Fed is going to do – who would they be able to bet against with their inside information?

It doesn't get more inside than Goldman Sachs, of course, who have alumni like Neel Kashkari, Stephen Friedman, Bill Dudly, Patrick Harker and Robert Kaplan.  In fact, there are 12 GS Alumni currently on the Fed Board (not to mention Carney heading the Bank of England, and, of course Draghi at the ECB)  and Goldman was even fined $50M after one of it's emploees was caught obtaining regulatory documents from former collegues at the NY Fed but don't worry, no one has been caught since!  Treasury Secretary Steve Mnuchin is also a former GS partner.   

And, of course, a few Trillion Dollars worth of our National Debt (which you and your children owe) was accrued by the Fed (who still have $4.5Tn worth of debt on their balance sheet) bailing out Goldman and other Banksters during the Financial Crisis.  Don't worry, there's no conflict of interest because the Fed is not a Government entity and doesn't work for your interests – they are actually just a Government-annointed cartel, no different than OPEC – except they have no assets of their own and get to take your money and give it to Banksters.

It would be nice if there were some sort of Congressional oversight but that old "balance of power" thing went out the window in the last election and now it's just a free-for-all with our National Debt now $21,214,609,000,000 and that will grow by another $1,800,000,000 by the end of the day and not only is no one doing anything about it – but we've gone completely in the opposite direction and more than doubled down on the annual deficit since Trump took office.  

Out of $3.4Tn collected by the Government, $1.6Tn comes from Income Taxes, $1.2Tn comes from Payroll Taxes and just $254Bn comes from Corporate Taxes – about $12.5% of their $2Tn in profits.  Our citizens are also being asked to pay $47.5Bn in taxes in the form of tariffs and that's just on the $50Bn announced so far – Trump is planning to up it to $250Bn and that will draw another $200Bn out of voters' pockets – the biggest tax increase on the people in history but call it a "tariff" and nobody can see it's a tax – MAGICAL!  

Corporate contributions do not even cover our $305Bn annual interest on our debt and that figure is set to double by the end of 2019 if the Fed keeps on a path to hike 6 more times for another 1.5%.  Meanwhile, our poor consumers have been also going into debt at record levels with $15Tn in Mortgage Loans, $1.5Tn in Student Loans and $1Tn in Credit Card Debt for an average of $58,000 per PERSON or about $170,000 per family.

Now, if you are in the Top 1% and make over $600,000 a year then $170,000 doesn't sound too bad but, oddly enough, the Top 1% don't have much debt – it's the bottom 99% and especially the bottom 80% that are deeply in debt and not likely to get out of it.  What happens to them when interest on all that debt doubles up next year?

And don't even get me started on the monetary dillution they've used to accomplish this all.  The Monetary Base (the amount of hard currency in circulation) has gone up 500% in the first 18 years of this century.  Of course, it had to to keep up with the 600% increase in Treasuries, which are the IOUs printed by the Government but, most horrifying, is the 500% increase in derivatives – now $558 TRILLION Dollars or about 55 times all the money in the World.

If you saw this kind of nonsense on a company's balance sheet, you'd dump the stock but, for some reason, investors seem oblivous to the Credit Bubble and Debt Bomb that's ticking beneath our feet.  The Median Income in the US (half above, half below) is now $32,041 and the Median Home Price is now $328,529 – never in history has a home been less affordable to the average American.  In 2000, the Median Income was $31,471 and the Median Home Price was $165,349 – effectivly, it's gotten 100% worse in the past 18 years!  

No wonder people don't think America is "Great" anymore – it's kind of a nightmare for people below that median line and I don't see how you can have a stock market making record highs when 50%, or more like 80% of the population is clealy being left behind.

As I noted on CNBC/Japan last night – we're moving back to CASH!!! in our portfolios and continuing to short the indexes (same levels as yesterday).  I'll also be on BNN's Money Talk tonight at 7pm.



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  1. Good Morning.

  2. Fog?  I would call it a stench….

  3. yodi
    July 18th, 2018 at 12:49 am | Permalink | Tweet thisIgnore this user

    Phil just a small correction on GIS. In your note you various times mixed GS Goldman Sachs with General Mills. Some members might be confused.

    July 18th, 2018 at 2:40 am | Permalink | Tweet thisIgnore this user


    Just on the Europe news. The joke with Trump by him taking another 180 degree turn re his statement with Putin.

    What an ass surely get yourself a President instead of a clown. It is amazing that guys like this get a salary, even a dishwasher would get fired if he drops his plates.

  4. Are we alone?

    If we own up to the true extent of these uncertainties and do the requisite math, the Oxford study finds that there’s at least a 53 percent chance that we’re alone in the Milky Way and at least a 40 percent chance that we’re alone in the visible universe. Homo sapiens could be the smartest thing going.

  5. "HOmo sapiens could be the smartest thing going?" I am truly beginning to doubt that BUT thanks for my laugh of the day. I've observed wild creatures with more innate sense than many people I know. When  you are incapable of watching out for your own self interest and that of your brood, that is the proof. IMHO

  6. Good morning, All!

    It's Wednesday! Webinar, 1pm!

  7. LOL Pirate… No need to look further than the White House for proof that Homo Sapiens needs new rewiring possibly.

  8. Good morning!

    Thanks Yodi, glad someone is paying attention…  wink

    As to Trump, what a national embarrassment!

    Big Chart – BIGGER!!!   Still waiting for NYSE to confirm.  Remember – the 5% Rule is just a thing I made up ("invented" would make it sound more official or maybe "discovered" – then I could get a lifetime gig of spouting BS like Laffer) - it's not supposed to be the official stopping point.  It's not on millions of trader's charts and yet – it actually works while pretty much all other TA fails.  Interesting…

    Smartest thing going/StJ, Pirate – That would be truly depressing. 

  9. Is it time to sell some August 18 SCO for $1.20 against our Sept 14 calls?

  10. ABX wtf???

    • New York, Connecticut, Maryland and New Jersey have sued the federal government to void the new $10K cap on federal deductions for state and local taxes included in the Trump administration's 2017 tax overhaul.
    • Taxpayers have long typically enjoyed the benefits, known as SALT deductions, while critics have said the cap would disproportionately harm "blue" states that tilt Democratic.
    • Chicago may become one of the first U.S. cities to implement a universal basic income program.
    • The proposal, introduced by Chicago Alderman Ameya Pawar, would provide 1,000 families with a $500 monthly stipend – no strings attached.
    • The bill already has the backing of the majority of city lawmakers, and Pawar hopes to soon work with Mayor Rahm Emanuel to implement the pilot program.
    • Less than 24 hours after accepting four hostile amendments to her customs bill, Theresa May has maintained her fragile grip over the Brexit process.
    • She narrowly survived an attempt by pro-European Conservative MPs to keep Britain in the EU customs union, meaning the U.K. will develop its own trade policy after Brexit.
    • The pound plunged 1.2% vs. the dollar ahead of the vote, but has now rebounded to $1.314.
    • Declaring themselves the "flag bearers of free trade," Japan and the EU have signed the world's largest bilateral trade pact covering about a third of global GDP in the "increasing darkness" of international politics.
    • The deal, which involved significant concessions on both sides, will eventually reduce heavy Japanese tariffs on European wine, cheese and other foods and lift EU tariffs on Japanese cars and vehicle parts.

    LOL, they missed estimates by 10%!  Housing starts tumble to nine-month low in June
    • June Housing Starts: -12.3% to 1.173M vs. 1.320M expected, 1.337M prior (revised from 1.350M).
    • Building permits 1.273M vs. 1.329M expected and 1.301M prior (unrevised).
    • Housing starts fell to a seasonally adjusted annualized rate of 1.173M in June – that's down 12.3% from May (which itself was revised lower), and 4.2% from the year-ago level. Single-family starts of 858K were down 9.1% from May, and about flat from a year ago.
    • Forecasts were for just a modest decline to 1.32M.
    • Building permits slipped 2.2% in June to 1.273M – that's the weakest since September of last year.
    • Full report
    • The 10-year Treasury yield is down 1.5 basis points to 2.85%. TLT +0.2%TBT -0.4% premarket
    • Homebuilding/construction ETFs: XHBITBPKBNAILHOMLCLAW
    • MBA Mortgage Applications
    • Composite Index: -2.5% vs. +2.5% (W/W).
    • Purchase Index: -5.0% vs. +7.0%.
    • Refinance Index: +2.0% vs. -4.0%.
    • 30 year mortgage rate at 4.77% vs. 4.76%.
    • Fed Chair Jerome Powell heads back to Capitol Hill today to give his semi-annual monetary policy testimony before the House Financial Services Committee.
    • Yesterday, he stuck to an upbeat assessment on the U.S. economy while downplaying the impact of global trade risks on upcoming rate rises.
    • The bullish outlook buoyed the dollar and put a squeeze on gold, which fell to $1,222/ounce – its lowest level in a year.
    • Previously: Gold slumps to lowest in a year after upbeat Powell testimony (Jul. 17 2018)
    • Buckingham Research sees bumps in the road for the auto retail sector after taking in Sonic Automotive's (NYSE:SAH) profit warning due in part to lower manufacturer to dealer incentives on certain models.
    • Analyst Glenn Chin warns that retailers with a high exposure to BMW and Honda are the most at risk. That list is topped by Sonic at 37% revenue exposure, followed by Penske Automotive Group (NYSE:PAG) at 31%, Asbury Automotive Group (NYSE:ABG) at 24%, Lithia Motors (NYSE:LAD) at 24% and Group 1 Automotive (NYSE:GPI) at 22%.
    • Sonic is down 10.05% in premarket trading, while Penske is 3.47% lower and Asbury Automotive is off 1.38%.
    • Ford (NYSE:F) issues a safety recall for 550K vehicles in North America due to an issue with shifter cable bushings.
    • The recall action covers certain 2013-2016 Ford Fusion and 2013-2014 Ford Escape vehicles.
    • Shares of Ford are up 0.18% in premarket trading to $10.88.
    • Ford press release
    • Airline stocks are rallying after United Continental (UAL +7.8%) delivered the right mix of news to investors (unit revenue growth improvement, capacity constraint, guidance hike).
    • The outlook from United is taking some of the sting off of earlier reports from American Airlines Group (AAL +4.2%) and Delta Air Lines (DAL +3.8%) on fuel price and fare competition pressures.
    • Southwest Airlines (LUV +2.5%), JetBlue (JBLU +2.2%), Alaska Air Group (ALK +3.6%), Spirit Airlines (SAVE +2.5%) and Allegiant Travel (ALGT +2.8%) are all higher in morning trading.
    • Related ETF: JETS.
    • Previously: United +3% on improved full-year guidance (July 17)

    • Adjusted income from continuing operations of $0.87 per share vs. $0.60 per share a year earlier.
    • Sales by segment: Aviation +9%; Bell +1%; Textron Systems -20%; Industrial +10%.
    • Textron Aviation delivered 48 jets, up from 46 last year, and 47 commercial turboprops, up from 33 last year.
    • Net cash provided by operating activities of continuing operations of the manufacturing group for Q2 totaled $468M, compared to $413M in last year’s second quarter. Manufacturing cash flow before pension contributions totaled $399M vs. $341M.
    • The company also returned $571M to shareholders through share repurchases, compared to $143M a year earlier.
    • Outlook for 2018: Textron expects earnings per share from continuing operations to be in a range of $3.15 to $3.35, up $0.20 from the previous outlook. Full-year cash flow from continuing operations of the manufacturing group before pension contributions is anticipated to be in a range of $750M-$850M, up $50M from its previous expectation. It further expects a one-time gain of approximately $400M from the Tools & Test divestiture in Q3, which is not reflected in this updated outlook.
    • TXT +3% premarket
    • Q2 results
    • BHP Billiton (NYSE:BHP) says its FY 2018 iron ore production hit a record, while full-year copper output jumped and petroleum production fell.
    • In its full-year operational review, BHP says it produced 275.1M metric tons for the year, above its April guidance of 272M-274M metric tons, after rising to 72M tons during the June quarter; for FY 2019, the miner sets a production target of 273M-283M metric tons.
    • BHP says FY 2018 copper output 32% Y/Y to 1.75M metric tons because of rising production at the Escondida mine in Chile, while petroleum production fell 8% due to natural field decline but volume of 192M boe exceeded its 180M-190M boe guidance.
    • The company also confirms it had received bids for its U.S. shale assets and expects to announce at least one deal in the coming months.
    • “We maintain our Hold rating on BHP shares, but we have become more constructive due to recent strong operational performance and a reduced valuation,” Jefferies analysts say, adding that the expect a $2B-plus share buyback when BHP reports financial results next month.
    • Analysts also say BHP's planned $650M FY 2018 charge related to the 2015 Samarco dam failure in Brazil is at the low end of expectations.
    • Caesars Entertainment (NASDAQ:CZRapplied with the New Jersey Division of Gaming Enforcement to offer sports betting at its Harrah's and Bally's properties in the state.
    • The company also applied to offer mobile sports betting out of all three of its Atlantic City casinos.
    • The applications were received in time for state regulators to turn them around before the beginning of the football season.

    Funko pops on Fortnite deal

    • Keep an eye on Funko (NASDAQ:FNKO) today after the company inked a deal with Epic Games to create a range of Fortnite toys and collectibles.
    • The new Fortnite branded collection will feature more than ten different product lines including Funko’s iconic Pop! figures, 5 Star figures, Pint Size Heroes, Vynl, keychains, POP! apparel and more.
    • "We are thrilled to collaborate and partner with Epic Games to create the inaugural Fortnite product collection and to bring these characters to life for the first time," says Funko CEO Brian Mariotti.
    • "Ultimately our goal is to create a powerful merchandise strategy for the Fortnite brand, as well as bring these amazing collectibles to fans around the world," he adds.
    • The collection will be available for purchase at a broad array of retailers worldwide in time for the holiday season.
    • Fortnite has dominated the console gaming scene this summer, leading to some speculation by investors on how to cash in outside of Tencent (OTCPK:TCEHY) through its 40% stake in Epic Games.
    • Shares of Funko are up 12.18% in premarket action.

    Windstream -12%, Uniti -5.6% as Citi pulls Sell switch

    • Windstream Holdings (NASDAQ:WIN) is 12.1% lower premarket, and Uniti Group (NASDAQ:UNITdown 5.6%, as Citi cuts them to Sell seeing too much risk in Windstream's performance.
    • That's a "substantial risk" to both stocks, with Uniti so dependent on Windstream results, the firm says. Even if Windstream prevails in its lawsuit against Aurelius over claims of default, it won't paper over larger issues that need to be addressed. (h/t Bloomberg)
    • Citi set a Street-low price target of $1 for Windstream; it closed yesterday at $4.22 and is at $3.71 premarket. The Street-low price target on Uniti is trimmed to $15; it closed at $21.77 yesterday and is at $20.55 premarket.
    • A tentative trial date for Aurelius' default claim is set for Monday.

    Booming times in the cruise line sector

    • Carnival (NYSE:CCL) is up 1.10% in early trading and Royal Caribbean (NYSE:RCL) moves 3.52% higher after peer Norwegian Cruise Line Holdings says it expects to raise full-year profit guidance.
    • Norwegian Cruise Line Holdings (NCLH +6.4%) CEO Frank Del Rio pointed to the "booming demand" in core markets in his statement. The guidance hike from NCLH is particularly noteworthy with fuel prices still at an elevated level.
    • Previously: Norwegian Cruise Line tips guidance hike (July 18)

    WSJ: Samsung will launch foldable smartphone next year

    • Samsung (OTC:SSNNFOTC:SSNLFplans to launch a foldable-screen smartphone early next year, according to WSJ sources.
    • The prototype codenamed “Winner” has a screen that’s about 7 inches diagonally and a size similar to a small tablet. 
    • The device could price at over $1,500. 
    • Samsung will reportedly start with a smaller rollout for specific markets like mobile gamers. If that’s successful, a broader commercial release could happen in 2H19. 
    • Samsung is also getting ready to launch its Bixby-powered smart speaker. 
    • The speaker will sell for about $300 and debut in the upcoming months  

    Amazon's Prime Day results

    • Amazon (NASDAQ:AMZN) Prime Day was the biggest shopping event in Amazon history, according to the press release that’s a bit light on specific sales data.
    • Prime members purchased over 100M products. 
    • Best-selling products worldwide: Fire TV Stick with Alexa Voice Remote and Echo Dot.
    • A record number of Prime members shopped across 17 countries and Amazon welcomed more new Prime members than on any previous day. 
    • U.S. customers purchased over 300K Instant Pots. 
    • Amazon shares are up 0.2% to $1,847.50.    
    • Previously: Amazon Prime Day. Small to medium businesses rake in over $1B (July 17)
    • Setting a record for antitrust penalties, Google (GOOGGOOGLhas been fined a €4.3B ($5B) by the European Commission over using restrictive licensing practices to benefit its own services on Android devices.
    • The EU's decision would bring the running total of Google fines to €6.7B after last year's penalty over shopping-search services. It could soon be followed by more fines from a probe into online advertising contracts.
    • Alphabet shares are down 0.4% premarket.
    • Previously: Google will receive record antitrust fine on Wednesday (July 16)
    • Update: Google plans to appeal.

  11. SCO/Den – I thought we said $18?  If we hit $65 on /CL, maybe we'll just take the money and run on the long calls (which are the $13s at $2.65, now $4.50 so $5+ now is better than selling a cover at $5 and waiting a month….

    ABX/Jabob – I can't imagine what it could be…

    It's a puzzler…

  12. The real question is, what would make the Dollar get weaker?  Tariffs seem to make it stronger and the Fed is tightening faster than other Central Banks – even if it is very slow.  I guess they could solve Brexit and that would boost the Pound and the Euro though, even together, they are just 1/3 of the Dollar's size.

    Remember in 2007/8, when the rest of the World was having all sorts of problems and we thought our economy was doing great so we ignored it until it was too late?  Ah, good times…

  13. Anyone see EIA?

  14. U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 5.8 million barrels from the previous week.

  15. BRK/B

    Berkshire Hathaway Amends Share Repurchase Program Omaha, NE (BRK.A and BRK.B) – The Board of Directors of Berkshire Hathaway Inc. has today authorized an amendment to Berkshire’s share repurchase program. The earlier share repurchase program provided that the price paid for repurchases would not exceed a 20% premium over the then-current book value of such shares. Under the amendment adopted by the Board of Directors, share repurchases can be made at any time that both Warren Buffett, Berkshire’s Chairman and CEO, and Charlie Munger, a Berkshire Vice Chairman, believe that the repurchase price is below Berkshire’s intrinsic value, conservatively determined. The current policy whereby share repurchases will not be made if they would reduce the value of Berkshire’s consolidated cash, cash equivalents and U.S. Treasury Bills holdings below $20 billion will continue. Berkshire will not initiate any share repurchases under the amended program until it publicly releases its second quarter earnings, currently scheduled after the close of the markets on Friday, August 3, 2018.

    This popped the shares this morning. This muddies the Buffet Put theme a bit (i.e., buyback @ 120% of book value) as "intrinsic value" is a much more subjective metric. More telling, I think is the underlying message that they are not finding reasonably priced companies to buy so want to do something with the growing cash horde. The message is clearly markets are overpriced. 

  16. BRK/pstas, it also might be a way to provide liquidity to the foundations that Buffet just gave a lot of shares to.  

  17. Thanks Mike. Looks like gasoline down more than expected. That should boost /RB I would think 

  18. Sorry, was working on OOP review and forgot about oil report.   It was not as bad as API, so a relief rally:

    • EIA Petroleum Inventories: Crude +5.8M barrels vs. -3.6M consensus, -12.6M last week.
    • Gasoline -3.2M barrels vs. -0.1M consensus, -0.7M last week.
    • Distillates -0.4M barrels vs. +0.9M consensus, +4.1M last week.
    • Futures -0.66% to $66.72.

    Good call on /RB, Japar but I don't think it will go far as the underlying fundamentals are very scary for oil/gasoline.

  19. Scum….


    I don't care if it is a good legal move for them – It's an incredibly bad PR move.

    But what the hell do I care?, I'll never walk into a mgm property again…. :(

  20. Hi all, just recently joined the chat and was following through the recent newsletters and discussions. I have about $75k to play with sitting with Interactive Brokers and wonder what would the recommended approach be these days… There are a few portfolios here but most seem to have been in place for many months… With markets at risky level, would recommendation be simply to follow the individual deals like the GIS yesterday + recommendations on futures, while keeping significant part of the account in cash?

  21. Good Afternoon

  22. Update

    I moved from Minnesota to Vancouver Washington last week

    Anyone in the area ?

  23. Hi Alter welcome to the club. I am not too sure about your broker as many people here trade with TOS. The PM margin is above 125K which mean you need more than 125K to get a better margin base. So 75K I assume, as well with Int. Brokers puts you in to a standard margin condition.

    Meaning selling puts requires the fully cash secured cash to start.

    GIS of yesterday is a tree planting play where you sell a Leap BCS and sell at the same amount ½ the amount of puts also leaps. I mostly sell the same amount of put as the BCS.

    During the period of the leap BCS you can sell ½ the amount of short month OTM caller, to receive extra cash, while you waiting for the leap BCS to mature.

    Now for my liking the GIS play does not bring good premium in respect of selling caller, as the company pays a div of 4.5% p.a.

    So in this case I play the armchair trade. Buy the stock and sell a shorter or further out month mostly strangle or even straddles. With these plays you obviously need more cash to buy the stock to start but it is a much more relaxed play, and the return combined return of div and option play gives you between 2 to 3.5 % per month. Obviously stocks do not have a date to mature.

    Both type of plays are written up in the member’s corner and I would recommend to read up on them.

    With the tree planting plays you obviously have much higher leverage and less cash outlay.

    Should you not understand some of the gibberish, you very welcome to ask. We all are here to help.

  24. The gibberish above means half the amount!!! Sorry it comes out that way.

  25. Options Opportunity Portfolio Review (OOP): We no longer carry this portfolio over at Seeking Alpha – I hardly even write for them anymore as the only reason I was putting up with their editors was because we were doing that project.  I found it to be distracting going back and forth so we didn't renew it  

    Anyway, we're down a bit from our 6/12 review, showing  $108,876 from $116,948 at the time so down $8,072 (8%) but that's partly because VRX, which was up $4,065 now shows only a $100 profit because they changed their symbol and the options are all showing no value, including the $13,000 worth of calls we own.  So we'll have to ignore that for now and focus on the individual stocks.

    We added positions and now we're low on cash AND I don't like the market at the moment so, like the Money-Talk Portfolio, we'll be looking to take things off the table.  

    • AAPL – Certainly not worried about short $145 puts, expect to collect +$2,350.
    • CG – Not worried and expect to collect +$250.
    • SQQQ – Let's buy back the Jan $25 short calls for 0.55 ($2,200) and we'll look to sell shorter-term calls on Nasdaq dip.  Sept $18s were $1 two weeks ago so that's about what we'd like to target.  Currently it's showing net $9,300 but at $18 (20% Nas drop) it would pay $32,000 so about $20,000 worth of downside protection.  Expect to lose $4,000 (it's a hedge!)
    • TZA – These are fine as is since they are $8,600 in the money and the position is showing net $5,325 so, even if TZA is flat – we don't lose money and the potential return at $12 is $25,000 so $20,000 worth of downside protection.  Expect to lose $3,000.  
    • FTR – Fell out of our trading range but the pesky calls are still $1.05.  I'm waiting for earnings but inclined to double down since we could buy more stock for $5 and sell the 2020 $5 calls for $2 and the $5 puts for $2 so net $1 for 1,500 more shares ($1,500) vs net $2,850 we spent so far.  Keep in mind that, even at $5, this is $7,500 worth of stock yet the net shows just net -$90.  Expect to make +$7,500.

    • ABX – Down with gold against the strong Dollar but this too shall pass and they just put out a very nice production report that investors ignoredLet's buy back the short 2020 $20 calls for 0.35 ($700) and we'll re-sell when they re-cover.  $15 is very reasonable so net $10,000 vs current net $3,000 so expect to make $7,000.  
    • ALK – On track for $5,000 and currently net -$4,055 so we expect to make $9,055.  
    • BBBY – Waiting on earnings, certainly they can hit $22.50, which would be $5,000 and currently showing net $1,222 so we expect to make $3,778.  I'm surprised the $25 calls are holding up so well – otherwise I'd want to buy them back.
    • C – Already at goal.  Potential for the trade is $20,000 and currently $6,150 so we are on track to make $13,850, which is another 225% from here if they just hold $70.  We only paid $1,000 to start but 225% is not bad for a new trade – and there's less uncertainty now than when we bottom-fished in late June.   

    • CDE – On track at $1,775 for possible $6,000 so we expect to make $4,225.
    • CHK – Big fall from $5 but our target is for 2020 and we're "on track" for the full $5,000 and currently netting just $249 so I think we'll keep the expected $4,951 gain.  
    • CHL – Blocked from entering US caused them to tank so we sold puts because China's 6.9% annual growth with 1.4Bn consumers is still pretty good.  Nice opportunity for a new entry at net $1,987 and, if all goes well, we expect to hit $7,500 for a gain of $5,513.  

    • F – Nothing wrong with this trade but it's tying up too much cash when we need some so let's kill it but leave the short puts open so we can still expect to gain $2,423.  
    • FNSR – At $18 already and we're only looking for $20 so we expect to collect the full $14,000 and the current net is just $3,775 so great for a new trade and we expect to make another $10,225.
    • GE – What a disaster they have been.  We're already playing them aggressive and, when 2021 comes out, we'll roll the short puts.  At the moment, the $10 calls are $4.35 so paying $2 to roll down $3 isn't worth doing and I don't want to sell $15s ($1.45) to cover so we'll leave it alone but no particular expectations of profit on this one (HOPES, but not expectations).  
    • GNC – Another down in the dumps play but we're positioned just fine and we do expect to get back to $5 which would be $5,000 vs current net $625 so here we do expect a $4,375 gain.
    • HBI – Our co-Stock of the Year is doing much better than our Stock of the Year (LB) and, technically, HBI is our actual stock of the year as they were down when LB was up at Thanksgiving, when we made the official announcement.  Short story is – buy LB!  On this trade, we're almost at the money for the full $8,000 but the net is only $3,975 so a double expected at +$4,025.

    • HMNY – We just doubled down at 0.20 and we're looking to DD again at 0.10 if we can.  I would not put this in the expectations column and we're currently down $7,288, which is more than I wanted to be but if you can really sell the 2020 $2.50 puts for $2.47 – I'd sell 100 for $24,700 and your worst-case is losing $300 but your best case is making $24,700 – that's a fun trade!  
    • HRB – They guided lower and tanked hard and we took the opportunity to buy back the short calls.  I'm pretty sure they get back to $26, which would be $4,000 and then we can sell calls or cash out.  At the moment it's net $1,075 so we have at least $2,925 more to gain.

    • IMAX – Possibly the best range-trading stock on the market.  Well over our targets and we expect the full $10,000 in Sept and it's currently netting $8,550 but this is another one we can cash out – simply because we haven't found many we're willing to let go of and we do want to raise cash.  Making $1,450 between now and Sept is a great trade if you decide to keep it.
    • LB – As noted above, our Trade of the Year back on sale (SLW/WPM was on sale a few times too) at $32 and we're just waiting for $40 to sell calls again so call that $30,000 off our current net $8,500 so looking to make $21,500 on our Trade of the Year.  
    • NAK – None of our gambles are working.  Down $11,956 is where all our profits went this year but they are making progress and the possibility (though slim) of making $50,000+ on this is too much fun to pass up.  What they have is the World's largest untapped deposit of gold, copper and molly but what they don't have is permission to mine it from the Government – as the Alaskan fishing industry is 100% against their mine due to run-off concerns.  I'm betting Trump's EPA don't care and they'll be allowed to move forward and the stock will rocket higher but it's a very slow process.
    • SCO – Let's take the money and run on the calls and leave the short puts for an anticipated $875 additional gain.  
    • SPWR – Ouch, we were very aggressive and it's not working yet.  Not going to anticipate anything but I  still like them.  

    • THC – On Think or Swim I see last sales of $24.96/18.60 on the bull call spread so $8.35 x 15 = $12,525 and the short puts are 0.75 ($750) so net $11,775 out of a possible $12,000 we can certainly cash in!  
    • VRX – As noted, we should get the full $7,000 back on this and it's currently net $0 due to the change in symbols so expect to gain $7,000 but doesn't work as a real trade since what's showing for us is an error BUT, for the purpose of what we expect, since we do own the spread – the $7,000 is real. 
    • WBA – Brand new trade I love and already up $2,950 at net $2,950 (we entered for net $0) and we expect to make the full $15,000 for another $12,050 gain from here.  

    • WPM – Last year's Trade of the Year is pulling back with silver but this is a long-term play we expect to get fully paid on for at least $20,000 at $25+ and currently it's net $10,710 so worth keeping with an expected gain of $9,290.

    Well, we didn't cash out too much because these trades are so damned good (and we have $40,000 worth of downside protection) but we are taking F ($14,138), IMAX ($8,550), SCO ($9,000) and THC ($11,775) off the table for $43,463 and that puts us back over half cash (including the few adjustments) so I'm happy.

    We should all be happy that we're looking at a potential gain of $133,160 less $7,000 from the hedges (and more when we roll them) is about $125,000 (125%) by Jan 2020 if all goes well.  And, of course, if any of our gambles (which have been killing our gains) actually pays off – we could go much, much higher so it's a fun portfolio with a solid base but no more taking chances until we're back on track for 40% this year.  

  26. Wow, I can't believe I'm supposed to do the webinar in 45 mins – these reviews kill me! 

    I have to bolt after the Webinar too to get ready for Money Talk tonight.

    MGM/1020 – I can't believe they can be so insensitive. 

    Welcome Ego!  As you can see above, many of the trades that are in our portfolios are still great for new entries.  With just $75,000, I'd stick to stocks that are under $20 as much as possible – as they are less likely to kill you on an assignment or margin.  We take new trades all the time (see our Top Trade Alerts above) but make sure you read our Education and Strategy Sections first and maybe consider practice trading for a while to get the hang of things.  No, I don't like the market now but that means if I like a new trade – I must REALLY like it.

    R&D/StJ – If that includes private R&D then it's not impressive at all since twice the size of China and 4x Japan and have 80% of the World's market cap corporations here.  

    Vancouver/QC – I'm not there but I do love it there – good move!  

    Thanks Yodi, especially for Members' Corner contributions.  

  27. Vancouver/QC – yep, for 31 years

  28. R&D- This looks like old-ish data but you can sort on R&D by % of GDP-

  29. Thanks, Yodi and Phil.

    Indeed, on margin requirements with IB, the "margin impact" which shows us for GIS trade as almost 5 times higher than what Phil mentioned in the trade. So, yeah, will start with looking at Member's Corner…

  30. Webinar Time!

    Margin impact/Ego – While the margin on the short puts is just $2,000 – there's also the $6,000 CASH you are putting into the bull call spread, that's why.

  31. qcmike – welcome to Washington! There are a handful of us here, scattered about…

  32. tangledweb / scottmi 


    This is my e mail

    After I get settled in we can gettogether maybe lunch?

  33. Anyone from Edmonton, Alberta in the group?

  34. CHL/Phil – retesting recent (channel?) low… like CHL around here or 'meh'? nice dividend. earnings growth expected. PE around 10.  but of course, China…

    interesting commentary/observations re China:

  35. Well, I'm shorting /YM up here at 25,180 (5) out of principle, hoping it makes an "M" back to 25,100.  Any earnings disappointment can do it.

    If you missed the Webinar, there was nothing in the Beige Book to make me want to pay record-high prices to chase stocks.  Labor shortages, rising material costs that can't be passed onto the customers, not enough truckers to move the goods, trade/tariff uncertainty….  Not good but still being ignored overall.

    Also in the webinar, I took 2 long /SI at $15.58 – way too cheap! 

    Look what happened last July:

    That's a $10,000 per contract move! 

  36. CHL/Scott – We have CHL in the OOP (above) and the LTP:

    Long Call 2018 21-SEP 40.00 CALL [CHL @ $43.63 $-0.13] 20 3/13/2018 (65) $13,000 $6.50 $-2.65 $6.50     $3.85 - $-5,300 -40.8% $7,700
    Short Call 2018 21-SEP 47.50 CALL [CHL @ $43.63 $-0.13] -20 3/9/2018 (65) $-3,500 $1.75 $-1.58     $0.18 $-0.08 $3,150 90.0% $-350
    Short Put 2018 21-SEP 47.50 PUT [CHL @ $43.63 $-0.13] -10 3/23/2018 (65) $-3,800 $3.80 $1.10     $4.90 $0.20 $-1,100 -28.9% $-4,900

    Both are still good for a new trade as a good long-term bargain.

    Good China article, Scott – thanks.

  37. Looking the graphs of Earning Whispers  the only one  that sound interesting is PTC. in my opinion 

    Know nothing about them.

  38. Nothing I want to bet on.   I think NDLS may be overpriced and due for a fall – they lose a fortune and not all that much revenue growth.  I can't imagine why people are buying them up like this at now $500M ($12) when they lose $50M/yr.   There's no money in the bank – they'll have to dilute.

    Thin options but you can sell 10 Aug $12.50 calls for $1 ($1,000) and pick up 20 Aug $10 puts for 0.60 and hopefully get out with $1+ ($800) and the $1,000 from the short calls but too small a fish for our portfolios and not enough conviction to take a big risk.  

    Also, DPZ seems overpriced as well (I must be off starch) at 43x earnings.  Won't take much of a slip to send them lower.  

    Unfortunately, you can only sell the Aug $300 calls for $5, which is just 2% of the price so no thanks!  I think buying the Aug $270 puts for $5.50 is kind of a fun gamble – figure the risk is $3 on a $10 move higher to almost $300 but, if they drop 5% it's $15 lower and the $290 puts are $14 so more reward than risk maybe.  

  39. Phil / OOP @ SA – you may want to contact SA as the signup page for OOP is still up and running and looking for new business with a new portfolio for 2018.

  40. SA/Winston – That's odd.  I thought they took it all down.  I wonder if they stole it from me and is using the name going forward?

    IBM and AXP not exciting earnings for the Dow but no damage either.

  41. SA/OOP : this is the link for the signup page which comes up on Google search:

    This informs me that:

    On Options Opportunities we do a few things. 

    We offer a BALANCED, hedged portfolio of 20-30 low-touch trade ideas. I spell out exactly what positions we take, so readers can have information on how they might invest.

    Our 2nd Options Opportunities Portfolio ? started fresh on Jan 2nd, 2018 and gained 10.6% ($10,600) in the first 4 months for our Members. We focus on opportunistic long-term options plays to suit people who are looking for great ideas and each position is mapped out with trading goals.  Our current positions have $140,520 of upside potential by Jan 2020 – if all goes perfectly.

    We share our watchlist with you to keep our eyes on the ball for the next big idea. We've already published the 24 names we're watching for this year and we're waiting for the right time to make a move.

    You can also join us for our weekly webinars with stock, options and futures ideas and a live look at how we trade at PSW's $1,000/month Premium Member Site. 

  42. Phill// Your thought on selling HMNY 2020 strike $1.00 puts for $0.95 cents.  Thanks.

  43. For Babies, Life May Be a Trip

  44. MGM Resorts Suffers Backlash After Suing Shooting Victims

  45. Buffett buyback shift signals lack of good ideas

  46. Druckenmiller 2018 Hamilton Award Speech: a good read. About 5 minutes.

  47. Equities: 3Q outlook positive but longer term view cloudy

  48. Asian stocks drift lower as investors await news on trade

  49. Apple Deserves an EU Fine, Too

  50. Good morning!  

    Nice little dip on the Dow this morning to almost the 25,100 line – as hoped.   More trade war talk spooked the market plus all the other turmoil continues.  Strong bounce is 25,140 and, if that fails, we should re-test 25,100 and below that, there's really no support down to 25,000 so, if 25,140 fails – you can play that short with tight stops above.

    The Pound and Euro fell hard on more Brexit turmoil and that pushed the Dollar over 95, which collapsed gold and silver (I doubled down on /SI so 4 now at $15.44 avg).

    Much as it hurts (now down $6,000 on 10 contracts), I'm not going to get out of gold because the Dollar is pushing it down – that's silly.  Below $1,200 I would have to stop out though.   

    Also, 10-year below 120 – Danger Will Robinson, Danger, DANGER!!!

    Oil coming back down hard and fast:

    Busy data day ahead and, of course, lots of earnings.

    EU mulls U.S. tariffs on coal, pharma, chemicals

    • The European Union will consider introducing tariffs on coal, pharmaceuticals and chemical products from the U.S. if President Trump imposes restrictions on European cars, Germany’s Wirtschaftswoche magazine reports.
    • The potential trade measures will be decided based on the outcome of a meeting next week in Washington between European Commission President Jean-Claude Juncker and President Trump.
    • President Trump said the U.S. may hammer out a trade deal with Mexico, and then do a separate one with Canada later, sowing fresh doubts about the future of the NAFTA.
    • The warming relationship and progress with Mexico could prod Canada on some areas of disagreement, according to political strategists.
    • The administration is looking for a win on trade, since talks with China have stalled.

    Cal3 measure removed from November ballot

    • The so-called Cal3 measure – also known as Proposition 9 – which seeks to split California into three states, has been removed from the ballot in November following a ruling from the state's Supreme Court.
    • Opponents argued that the initiative posed a "revision" of the state constitution, as opposed to an "amendment," and the justices need more time to review and decide the merits of the case

    Venezuela's oil industry collapse puts PetroChina projects in limbo

    • PetroChina (NYSE:PTR) is forced to reconfigure a long-delayed refinery project that was designed to process Venezuelan crude, as the deteriorating situation of the country's oil sector places future supplies at risk, Platt's reports.
    • The move underscores China's attempt to salvage the 400K bbl/day Guangdong Petrochemical refinery project in which both PTR and Venezuela's PDVSA had planned to invest, as well as China's failing downstream projects that were planned with PDVSA, jeopardizing $50B-plus of Chinese loans, much of which was pumped into Venezuela's oil industry.
    • Venezuela's June production fell 60K bbl/day to 1.3M bbl/day, and the International Energy Agency says the country's faster than expected decline could see production capacity dropping below 1M bbl/day by year-end 2018, implying an annual drop of 730K bbl/day.

    Unanimous FCC sends Sinclair/Tribune deal to hearing

    • The FCC has voted to adopt a hearing designation order on Sinclair Broadcast Group's (NASDAQ:SBGI) $3.9B buyout of Tribune Media (NYSE:TRCO).
    • That comes in spite of Sinclair's attempt today to alter divestiture plans to avoid a hearing on the deal. That move came in response to comments from FCC Chairman Ajit Pai that he planned to refer the matter to an administrative law judge, a likely deal killer as it pushes action months into the future.
    • The vote was unanimous in backing Pai on the hearing.
    • SBGI is down 1.5% after hours, adding to a decline of 2.3% during the regular session; TRCO is down 0.3% after gaining 2.3% today.

  51. Here's my Money Talk segments #1 and #2.  

  52. SA/Winston – Well, that's my site.  It's funny because I guess, as a Member, it shows that it's down for me.  I don't know what happens if you click "subcribe" there but they certainly should take that down.

    HMNY/Rookie – Well, if you can sell the $2 puts for $1.95, why limit your upside?  I think it's fantastic, limited losses and nice 19:1 upside so risk $500 to make $9,500 is a fun gamble but don't spend that $9,500 they put in your pocket or the loss will hurt a lot if you have to come up with the cash after you spent it!

    I love the picture that went with this article above:

    GOP Deplorables STILL Don’t Believe Russia Hacked the Election Even AFTER Trump Said They Did

  53. Speaking of Republican Insanity – Sasha Cohen falls GOP and NRA idiots into supporting fake and RIDICULOUS idea of arming children in the schools.  These are real people who are influential policy makers – what else but "deplorable" describes them?

  54. "The Liberals are using these school shootings to further their anti-tragedy agenda."  Priceless (5:50)!   And then they guy agrees with him!   He also gets the guy to high-five him over "It's not rape if it's your wife."  Though at least the guy says (hoping) "That probably won't be on the air."  

    What's really horrible is how easily he can push himself in front of actual Congresspeople with a lunatic agenda and then gets them to give testimonials reading obvious (to others) nonsense off a teleprompter.  He gets Joe Walsh (R-IL) to say "A first grader can become a first grenader" and Larry Pratt cites totally fake studies stating children have "the pheromone Blink 182" which is, of course, a rock band along with other pop-culture nonsense that goes right over this guy's head yet he's the "expert witness" Congress goes to to pass laws!

    Only a drastically under-educated populace falls for this kind of BS! (or elects these morons to represent them)

    Joe Walsh's excuses for how he was fooled just goes further to show what an idiot he is.  He basically says: "Well, they gave me a fake award so I was willing to say anything they wanted and, of course, I never check facts before going on TV and making policy statements." 

  55. Good drop back to /YM 25,100 pays for the Egg McMuffins this morning!

    This is seriously my retirement plan.  I'll live in Europe, watch the EU open at 3am, EST, have my breakfast do a few US futures trades and be done for the day by noon my time…

  56. If you are late to the party, now we can use /YM 25,100 as the stop line if it goes below.  Lined up with 2,807.50, 7,375 and 1,690 so the usual 3 of 4 rules apply (in either direction really).  

    On /YM, if we bounce, then failure at weak bounce (25,120) would be bearish but over that it's back to watching 25,140 and much more dangerous to short there the 2nd time.  I'm still hoping for that next 100-point leg down but IBM is +40 Dow points this morning and we're waiting on Travelers and I don't see why they would not be doing well and higher rates are good for them (interest on policy reserves) and they are low in the channel so +$5 for them would be another 40 Dow points.


    Don't forget, we haven't had earnings from companies affected by tariffs yet.

  57. Yeah, looking over the earnings, I'm taking the money and running at 25,100 – too risky as TRV can wipe out all the gains and doesn't seem likely to make things worse.  Can't worry about every other stock when a weighty Dow component can cost me money so not worth the risk….

  58. Who is America -  Tried to order a BFF (4:38), but Amazon doesn't stock them – Bummer! 

    Very alarming you have elected officials spouting off on camera and then trying to explain they were duped.  This is disturbing on so many levels..   

  59. hi phil are you playing front month for silver or another month


  60. Butterfly Portfolio Review:  We finally added a new one (MDLZ)!  Of course, we don't need to be hasty in this portfolio, which may be the most reliable (and boring) way to make money I've ever come up with.  Now we're up 20.6% at $120,587 and that's up $5,042 from our 6/14 review, where we made NO CHANGES AT ALL.  The May 17th review was the active one, where we adjusted BOTH of our positions at the time and added AAPL – that one was hard work! cool

    Now we have a crazy 4 positions to manage so cancel that long trip you were planning.  No, just kidding, the whole point of this portfolio is that we only make adjustments once a month, at most, other than if we decide to add something – which is very rare.  

    We still have $84,680 in CASH!!! but this is a very low-risk portfolio and we really don't need to rush our deployments since it's such a powerful money-maker.  Measure twice and cut once is the guiding principle here.

    • AAPL – We're right on the money with the July calls and earnings are not until the first week of Aug so we'll let them expire (stop at $1.50 though) and I don't think Q2 was very exciting for AAPL, so a small beat at most.  The short July calls were ballsy as they were a full cover and I think, into earnings, we should just wait and see as our $180/220 bull call spread is obviously bullish but the short $160 puts seem safe so let's just let it play out and make our bets after earnings.

    • DIS – They popped and earnings are 8/7 but fortunately we only 1/3 covered with short July $105s, which are currently $5.65 ($2,825).  Our long spread, however, is in the money with $18,750 potential so there's no reason not to roll to 7 (1/2 cover) short Sept $110 calls at $4.20 ($3,360) – so we actually collect another $535 and roll our protection $5 higher where we DEFINITELY collect $18,750 before we owe the short callers a penny back (in the long run).  We were WAY more aggressive with our put sale, so it was a bullish call back in May and I don't like the pricing of the Sept puts ($105 puts are just $1.35), so we won't sell any for now and we'll see how earnings play out.   

    Keep in mind that, logically, we are already very well-covered to the upside with our bull call spread and our short 2020 $90 puts that still have $1,453 to give us as well and the short calls are a hedge against a loss on our long spread but adding short puts doesn't give us more protection to the downside and it doesn't add enough upside protection to make them worth a risk – so we simply don't play.

    • MDLZ – Brand new so nothing to do but wait and see if we keep our Aug $42 target.  Like GIS, they really couldn't be more boring and we have $5 of wiggle-room (12.5%) on our short put/call combo and, even so, we only sold 5 of each as it's a new trade. 

    That's typical with our Butterfly Trades by the way.  We entered the 2020 $40/47 spread for net $3,500 after the put sale so we're generally playing a bit bullish but that's our base position.  The real key to the Butterfly plays is what we expect to generate in income and our first short calls were at the money Aug $42 short puts and calls for $1,023, which is already 30% of what we laid out for the first 45 days out of 560 we had to sell.  

    So what this trade (and this portfolio) is really about is selling $1,000 10 times against a $3,500 position and that's our very likely profit ($6,500) and then whatever we make on the spread (up to $14,000) is a bonus.  No wonder this portfolio does so well so consistently!  

    Meanwhile, we don't really care which way it goes as 1 of the 2 shorts WILL expire worthless and then we'll roll the loser and sell more of the opposite side and we'll keep widening the target zone until we get lucky and finish in between the short puts and calls (so they both expire worthless and we keep it all).  Not a bad trading plan…

    • OIH – The short July calls will expire worthless and, since we only have a 2/3 cover on the longs – there was never any danger so it would simply be irresponsible not to sell 5 more and OIH doesn't have earnings as it's an ETF – another good reason to play them.  We're dead-center in the channel and there are no Sept contracts so let's go out to Oct and sell 5 of the $25 calls for $2 ($1,000) and the $25 puts for $1 ($500).  If OIH does hit $24 again, then maybe we'll sell some 2020 puts but, for now, our entry was net $5,425 and we made $900 on the July calls we sold in May so 60 days and now we're selling 90-day calls for $1,500 so on track to sell $9,000 against the long position is perfect and, if OIH finishes at $30+, we'll get a $15,000 bonus for that (or $7,500 at $25).

    That's it, that's all it takes to make really good returns in a very low-touch portfolio.  If you struggle making consistent money in the markets (or don't have time to do a lot of trades), I urge you to try these positions.  As they are all about selling front-month premiums, there's never really a bad time to enter – it's all about what you pay for the long position vs what you can reasonably expect to sell against it.  

  61. /SI/Tommy – The "front-month" is Sept (/SIU8) so no reason to target something longer.  Worst-case is I just roll them over but it's not like /KCN9, where I felt like we might need a year to ride out the madness.  

    Woops, 7:30 already?  Time to go to work!