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Which Way Wednesday – The View From the Top of the Market

We did it! 

For a minute anyway – that's how long the S&P 500 held its new record high (2,873.23) for before falling steeply back down to the 2,850 mark and, this morning, we're bouncing back to around 2,860 as more Members of Team Trump are convicted of crimes that the President knew nothing about and didn't discuss and doesn't believe and WITCH HUNT!!!  

I think, usually, in a "witch hunt" the prosecutors don't find so many actual witches, do they?  Webster's actually defines "Witch Hunt" as: "The searching out and deliberate harassment of those (such as political opponents) with unpopular views."  That's not quite the same thing as the actual uncovering of a culture of graft and corruption as well as uncovering evidence of collusion indicating possibly treasonous actions against the United States of America carried out by a political candidate and his family in an effort (successful) to steal the Presidency.

This is serious stuff folks!  No one "did the nose" here – these are real crimes that have been committed and, as Michael Cohen testified yesterday "at the direction of Donald Trump."  Yes, Cohen was the assassin but Trump is the mafia don who ordered the hit – and those guys go to prison too!  And it's not just Manafort and Cohen.  Michael Flynn, Rick Gates and George Papadopoulos have all pled guilty and are currently cooperating with prosecutors.  The case is, of course, still building (you have to be beyond 100% certain if you are going to charge the President of the United States with Fraud or Treason) but here's what we know so far:

Image result for trump with russians table

The President claims these 71 connections between himself, his people, Putin and Putin's people are all just fabrications by the Liberal Media and they must have photoshopped all the pictures and fabricated all the evidence and, of course, made up their own facts.  The funny thing is, it's working.  Trump's relentless campaign against The Truth has caused "facts" to be confused with opinions and, like many dicators who destroy the free press or make them the enemy, it allows his followers to ignore all the evidence against their beloved leader – no matter how damning.

As investors, however, we need to take these things more seriously as at least some of the President's crimes may indeed catch up with him and lead to proceedings that may destabilize our Government and send our markets crashing back to Earth.  We did have a bit of a sell-off as Manafort and Cohen were found guilty yesterday but, as usual, the Futures staged a rally though, with the VIX popping to 15 and staying there – I'd say it's a very fake rally and we'll be shorting the S&P (/ES) Futures below that 2,860 line - just like we did yesterday – along with the same 25,800 on the Dow (/YM), 7,400 on the Nasdaq (/NQ) and now 1,715 on the Russell (/RTY) – same rules as yesterday too to keep us out of trouble!  

Remember the rules – wait for at least two indexes to cross under, then short the laggards unless any of them pop back over – in which case take a quick loss.  Like yesterday, it's a very positive risk/reward ratio that we like – especially when we're testing new highs for no reason on low volume! 

 


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  1. Good Morning!  :)



  2. So now we have an unindicted conspirator in a felony sitting in the White House and the excuse from the GOP is that it has nothing to do with Russia so no need to do anything about it… And they impeached Clinton for lying about and affair? What a freakin' joke!


  3. Come on LB… don't let us down again tonight!!!!!


  4. Good Morning Phil -  

    /KC- Phil,  A day behind here, well.. literally 1/2 day ahead.  In your comparison of gold having a bottom based off extraction costs.  When does the price of coffee cause the the farmer to stop producing?   At some point, if your not making money, you stop producing the product, at least, if you want to have some beans in your pocket.  

    Based off the yesterday's morning post $100 hold line, is it time to add, hold, or call it a day and keep it on the watch list?  If it dips back to $117, I'd like to buy more, unless that $100 front month line has some significance.  TIA


  5. ~~CTL – CenturyLink downgraded to Sell from Neutral at MoffettNathanson.  


  6. CTL- never heard of Moffet Nathanson but did they share any detail?


  7. Good Morning All!

    It's webinar day! Join us at 1pm!

    https://attendee.gotowebinar.com/register/6210460980555560451


  8. CTL / Albo – Might get a better entry after all…


  9. Good morning!  

    Big Chart still looking strong and VIX calming down so all seems well. 

    Joke/StJ – Amen.  Apparently our standards have dropped considerably. 

    Ex-national security official: Cohen plea timing is a confluence of events ‘of historic proportions’

    But it's all "fake news" if it isn't on Fox, where they played cat videos yesterday to avoid discussing the guilty pleas…

    I Just Hacked a State Election. I’m 17. And I’m Not Even a Very Good Hacker.

    How Microsoft spotted another Russian hacking attempt

    That's the crazy thing – Trump (of course) is doing NOTHING to secure our elections.  The entire underpinning of our Democracy – the whole point of our country – is being thrown under the bus and that seems to be OK with the GOP and his followers.  

    The only reason that Trump hasn’t been indicted is that he’s the president

    Crimes are no longer a disqualification for Republican candidates …

    Republicans Have 4 Convicted Criminals Running For Congress In …

    118th Assembly District Republican candidate faces felony for alleged …

    Republican Senate candidate Bekah Halat faces felony charge for …

    New York GOP Assembly Candidate Arrested on Tax Charges

    Rep. Duncan Hunter and wife indicted on fraud and campaign finance …

    Report: Candidate apparently facing child-porn charges | WTOP

    At what point do people realize that something is actually wrong with the party.  There aren't MILLIONS of Senators and Representatives, there's 600 and they are SUPPOSED to be the 600 finest people we can find and the GOP only has to find 300 of them so when you see dozens being indicted – you can't just call it bad luck – there has to be a culture of corruption that lets these people rise through the ranks for years and years until they get all the way to Washington DC, backed by the GOP machine that puts them there.  

    /KC/Grass – Well a fun morning!   I really think they are trying to shake out the weak longs before going higher but we'll see.  It's a one-year trade, not a day trade so it doesn't do much good to stare at it constantly.  I don't KNOW the extraction costs – they don't analyze coffee like oil but I have seen coffee plantations and spoken to people who run them and it's not a very lucrative business so, when the price of coffee drops 20% – it's impossible to believe it's not going to impact production. 

    BUT, that's not going to be an immediate effect.  In fact, consider that a coffee producer with 100,000 pounds of crops who was getting $120 last year ($12M) and maybe made $500,000 is now selling the same 100,000 pounds for $10M.  Maybe they can cut some costs but it's the same beans they have to grow and the same shippers they have to pay so the $500,000 gain turns into a $1.5M loss and then they can't pay the bank and 6 months later they are foreclosed on and what does the bank do?  They dump the beans on the open market when they liquidate the farm.  So the early stages of production collapse can actually LOWER prices and those stages take a long time to play out.

    Yes, I would think the $100 line should hold (though, of course, spikes below don't count) and there's no particular news driving it lower so I'm more inclined to think prices are being manipulated lower as Commercial Traders load up their longs for the next up cycle (like we are doing).  What they can't control is external catalysts that blow their narrative – like today's.

    Kerala floods impact a fifth of India’s coffee production

    Remember, coffee is a sensitive crop and my long-term premise is global warming and wild weather will cause many incidents that impact coffee production (some will be positive too) so, over the course of a year (not a day), we can expect some random string of events to cause a temporary production shortage that will drive up prices – especially when they are so depressed.  SBUX and DNKN are probably locking up production for the next 5 years at these prices (hence the huge spike in "Commercial Hedgers").  On the bottom of the chart is the largest Commercial position ever recorded at these prices:

    Webinar???  I haven't even unpacked my webinar computer yet!


  10. Phil

    Is there a trade on AMC  Entertainment Holdings, Inc.

    If HMNY is over

    Thanks


  11. VIX has completely deflated again so no shorting opportunities are likely. 

    Oil up on nice draw in crude though a build in gasoline and distillates means it's just the normal ramp-up of production into the holiday – the question is whether or not they sell it over the next 3 weeks:

    • EIA Petroleum Inventories: Crude -5.8M barrels vs. -1.5M consensus, +6.8M last week.
    • Gasoline +1.2M barrels vs. -0.5M consensus, -0.7M last week.
    • Distillates +1.8M barrels vs. +1.5M consensus, +3.6M last week.
    • Futures +2.19% to $67.28

    At this point, we want oil to go as high as possible to set up our next short:

    /NG has been another one we've had to ride out a lot of spike on:

    Note the heavy Commercial Hedger action on the way down in 2015 but, sadly, it took a year before it really took off.  

    • The Fed is scheduled to release the minutes from its Aug. 1. gathering this afternoon, but with no interest rate hike at the meeting, some economists think the FOMC had time to discuss "big ticket" issues.
    • Watch for continued discussion of what is a neutral rate – the level that is not stimulating the economy but also not constraining it – as well as talk on the yield curve and trade policy.
    • Bitcoin rises above $6,500 to a two-week high after a relatively calm start to the trading week. In the past two weeks, the cryptocurrency mostly traded in the $6,000 to $6,500 range.
    • Late Tuesday, bitcoin spiked to as high as $6,858.61, up as much as $400 in an hour.
    • Bitcoin  +3% to $6,682.93 at about 9:37 a.m. ET.
    • Previously: CME ahead in bitcoin futures race (Aug. 21)
    • Previously: Can cryptocurrencies recover? (Aug. 16)
    • Germany is calling for the formation of a new payments system independent of the U.S., as well as creating a European Monetary Fund and building up an independent SWIFT system, as a means of rescuing the Iranian nuclear deal.
    • "It's essential that we strengthen European autonomy," wrote Foreign Minister Heiko Maas in Handelsblatt, stating Europe should not allow the U.S. to act "over our heads and at our expense."
    • U.S. and Chinese mid-level officials are set to resume contentious trade talks today, hoping to set a framework for further negotiations as each country prepares to hit the other with a new round of tariffs on Thursday.
    • The two days of meetings are the first formal U.S.-China trade discussions since U.S. Commerce Secretary Wilbur Ross met Chinese economic adviser Liu He in Beijing in June.
    • North Korea is continuing to develop its nuclear program, the International Atomic Energy Agency said in an annual report, despite an agreement reached in June between Washington and Pyongyang to denuclearize the Korean Peninsula.
    • Asked about the report, a White House National Security Council spokesman referred to national security adviser John Bolton's assertion earlier this month that President Trump was holding diplomatic doors open for Kim Jong-un.

    • Citgroup's (C) card mailing volumes sank to 18.4M in July, down 66% Y/Y, the lowest level since 2010, Bloomberg reports, citing a report from Wells Fargo analyst Donald Fandetti.
    • That follows declines of 53% in May and 65% in June.
    • Total industry personal loan mailings exceed credit card mailings in six of the last seven months, boosted by personal loan mailings from Goldman Sachs's (GS -0.1%) Marcus with 44M mailings in July.
    • Capital One (COF -0.3%) leads credit-card mailings, accounting for 28% of industry volumes in July, with 79M mailings in July followed by Discover (DFS) with 43M.
    • Discover's personal loan mailings declined 7% in July, the first Y/Y drop this year, consistent with the bank's increased caution concerning the market.
    • Previously: Citi signs pact with Caterpillar Financial for private label credit card (Aug. 16)
    • Previously: Citigroup's credit-card chief Linville to exit: American Banker (Aug. 13)

    Report: Tepco, Hitachi, Toshiba in talks for four-way nuclear alliance

    • Tokyo Electric Power (OTCPK:TKECF), Hitachi (OTCPK:HTHIYOTCPK:HTHIF), Toshiba (OTCPK:TOSBFOTCPK:TOSYY) and Chubu Electric Power (OTC:CHUEF) are in talks to form a four-way alliance on nuclear power operations that would include jointly decommissioning obsolete reactors, Nikkei Asian Review reports.
    • The companies reportedly are considering the launch of a joint engineering company that handles reactor maintenance with the possibility of combining all nuclear operations under one roof in the future.
    • Tepco and Chubu Electric already have agreed to combine their fossil fuel operations under their JERA joint venture in spring 2019, and a similar risk-sharing arrangement for nuclear would represent a major shift in the business following the 2011 Fukushima disaster, according to the report.
    • ETFs: NLRURA

    Lowe's runs to new high

    • Target (NYSE:TGT) reports comparable sales shot 6.5% higher in Q2 to sail past the consensus estimate for a 4.1% increase.
    • The number of transactions at the retailer were up 6.4% during the quarter, while average transaction amount edged up 0.1%. Digital sales were up 41% Y/Y and contributed 1.5 percentage points to the comp.
    • Gross margin came in at 30.3% of sales vs. 30.4% a year ago and 30.8% consensus. Operating margin was down 20 bps to 6.4% of sales.
    • "We're on track to deliver a strong back half and we've updated our full year guidance to reflect the strength of our business and the consumer economy. As we look ahead to 2019, we expect to achieve scale across the full slate of our initiatives – creating efficiencies and cost-savings, further strengthening our guest experience and positioning Target to continue gaining market share," says Target CEO Brian Cornell.
    • Target expects Q3 EPS of $1.00 to $1.20 vs. $1.09 consensus and full-year EPS of $5.30 to $5.50 vs. $5.15 to $5.45 prior and $5.30 consensus.
    • Shares of Target are up 3.76% premarket to $86.40 (52-week high territory).
    • Urban Outfitters (URBN +6.3%) opens higher after posting strong sales growth in Q2 across brands. The analyst community is out with positive comments on the retailer.
    • Loop Capital Markets lifts its price target to $56 on its expectation for continued momentum.
    • SunTrust moves to a price target of $55 as it points to improved fundamentals.
    • BlueFin Research: "Prominent new trends in women's and the 'urban revival' trends from the late 80's and early 90's are right in Urban Outfitters wheelhouse."
    • Jefferies keeps a Buy-rating on URBN and price target of $58 amid what it calls a "robust" consumer environment.
    • Shares of URBN cruised into the earnings report with short interest at almost 18% of total float.
    • Sources: Bloomberg, Nasdaq.com
    • Previously: Urban Outfitters beats by $0.07, beats on revenue (Aug. 21)
    • Previously: Urban Outfitters tracks higher after earnings (Aug. 21)

    Theater-studio relationship to be examined in trial

    • An U.S. District Court in Texas rejected AMC Entertainment's (NYSE:AMC) bid for summary judgment in a lawsuit alleging the company colluded with movie studios such as Disney (NYSE:DIS), Paramount (NYSE:VIA), Sony (NYSE:SNE) and Universal (NASDAQ:CMCSA) to freeze out an independent theater owner in Houston, Texas.
    • AMC is accused of utilizing "clearance" pacts that carved out exclusivity on first-run films in its geographical region.
    • The Hollywood Reporter says the ruling sets up the potential for the first jury trial examining the relationship between movie theaters and film studios since the Supreme Court's 1948 landmark decision in United States v. Paramount Pictures.
    • Related stocks: CNKMCSRDIIPICHMNY.
    • Frontier Communications (FTR -1.8%) is launching a new national branding platform set to refocus it as a go-to for consumers navigating the Internet services market.
    • The company says its message in "Don't Go It Alone" is "The Internet world is confusing and unreliable, but Frontier can be the absolute best guide in the complex maze that is today’s digital frontier."
    • The campaign focuses on whimsical songs from a "balladeer." An internal campaign is training company employees to be all-inclusive guides for consumers.
    • "Our brand goal is to be the customer’s absolute best guide available in navigating the digital frontier; our business goals to accelerate subscriber growth and reduce churn go hand-in-hand,” says Frontier Chief Customer Officer John Maduri.
    • Wells Fargo downgrades AT&T (NYSE:T) from Outperform to Market Perform and lowers its target by $5 to $35, a 5% upside to yesterday’s close.
    • Analyst Jennifer Fritzsche cites continued pressure on entertainment margins with unseen enterprise stability, “new balls to juggle” with Time Warner assets, and the need to achieve delivering targets pushing other priorities “down the list.” 
    • AT&T shares are down 0.7% premarket to $33.19.  
    • Netflix (NASDAQ:NFLX) is testing a payment feature that directs subscribers to pay via a separate Web browser — a move that would directly cut Apple (NASDAQ:AAPLout of the revenue stream.
    • Drawing subscribers separately rather than using their fingerprint or facial recognition on an iPhone would deny Apple its 30% cut from App Store transactions (and 15% on renewals).
    • Netflix is reportedly testing the approach in 33 countries in Europe, Latin America and Asia, until Sept. 30.
    • The streaming service's app is currently third-highest grossing on the App Store, which generated $11.5B for Apple last year.
    • Today's action: NFLX +3.1%AAPL -0.2%.

    And, in case there are people who still haven't jumped into our PSWI project:

    • In a note, RBC Capital Markets says that legal sales of marijuana in the U.S. are catching up to beer and wine, potentially reaching $47B in ten years, implying a 17% CAGR.
    • RBC cites the recent investment in Canopy Growth by spirits producer Constellation Brands as an example of bullish prospects in the space.
    • The cannabis industry is already evolving. Plain vanilla weed is not as profitable as concentrates. In Colorado, which has allowed recreational use for more than four years, the share of plain buds has dropped from 70% of total sales to 46%. Concentrates have filled the gap.
    • Americans overwhelmingly back legalization with 83% in favor of at least some form of legal availability.
    • Canopy Growth (NYSE:CGCannounces that Health Canada has approved an amendment to its cannabis licenses that will allow it to double its growing capacity at its Smith Falls Campus, adding an additional 223,000 sq. ft. of cultivation space at majority-owned Les Serres Vert Cannabis greenhouse in Mirabel, Quebec and a license for a state-of-the-art distribution center at the same campus.
    • The company says its total capacity is now 2.7M sq. ft.
    • The Canadian recreational cannabis market will launch on October 17.
    • Shares are down 2% premarket on potential profit-taking after its sharp run-up.

    If you are an accredited investor, you can play along with PSW Investments as we go for a piece of this market.  Contact Greg at Philstockworld dot com today as we are moving forward with funding this week and we already have several additional projects in the pipeline as many people now want to partner with us as we are acquiring a stake in an experienced manufacturer of concentrates.  

    And it's not even just the US, there's Canada and dozens of other country that are legalizing and mature legal markets tend to move towards concentrate consumption so it's the hidden growth area people haven't crowded into yet.  

    The last time I banged the table this hard on a project was when I wanted to buy a block of units at the Veer in Las Vegas for $37M back in 2012, when prices were still depressed - they are well over $150M now and that's NOTHING compared to the potential in the pot industry!  


  12. /KC – Thank you for the analysis! 


  13. Getting rejected at 2,870 – worth a toss to the short side with very tight stops.  

    1,725 on /RTY, 25,850 on /YM and 7,450 on /NQ.  

    Oil creeping up to $68, /RBV8 $1.96 now (/RB is $2.065) – could have gotten a bit more out of those but our next play is more likely down than up.  

    Dollar found a floor at 95 and depends what the Fed said in their minutes (2pm) but I doubt they say they are done tightening so I still like bear plays into the afternoon.


  14. Nvda/Phil- I have a long position on nvda… still believing in it but I want to cover with some short calls, should I short the sept weekly 275 calls for $3.65?


  15. NVDA/Dave – Well it depends what your long is and I'm not a fan of shorting weeklies as the risk is too high for the small rewards. 



  16. Trump’s Fall: The End Game




  17. Mexican Peso Rally Shows Traders Are Betting a Nafta Deal Is Near


  18. GOP frets as Trump world implodes



  19. Big oil asks government to protect it from climate change




  20. Is there going to be a webinar today?


  21. SQQQ/Phil- what's our SQQQ position for STP is it 160 naked longs?


  22. A number of Chinese stocks,. IQ, HUYA, BIDU, WB, etc.  have begun to recover from big sell offs recently.

    BABA reports tomorrow morning and should affect all these names.


  23. Webinar time!  

    SQQQ/Dave – That sounds like a lot, remind me to check later.  



  24. Trump’s Plan To Prop Up Coal Could Lead To More Deaths, Cost Billions







  25. And, in case there are people who still haven't jumped into our PSWI project:

     

    with Greg?


  26. Would LOVE to get in on the PSWI cannabis investment but don't think i meet the accredited investor requirements!

    I'll have to sit on the sidelines and wish you guys the best of luck, and hopefully Phil has more great opportunities like this for years to come so I can eventually get in on one (although legalized weed does seem like a sort of "once in a lifetime" thing haha)

    Are you accepting investment from anyone outside PSW for this? would love to forward the info/opportunity to some people who would meet the threshold (if Greg has a sort of info sheet with details that could be sent?), but not sure if this is an exclusively for PSW members thing or no?


  27. Phil – any futures positions from the webinar?


  28. SQQQ/Phil- missed out on it too was there talk about the SQQQ position or it was just 80 naked longs


  29. PSWI/Advill – Yes, contact Greg if you either haven't put in your accredited investor paperwork (which would be why you haven't gotten the subscription agreement) or if you didn't get a subscription agreement – you should have it by now.

    PSWI/Crs – Well you might want to check the form in case you meet the qualifications.  There will be many opportunities as we begin working with companies in various states but this is the ground floor all the rest will be based off.  Yes, due to interest, we are raising $500,000 more ($2M total) to fund some of the additional opportunities we are now able to move on so, if we're not full from the PSW side, we'll be happy to talk to other people.  In all cases, someone has to qualify first – before we can send anything else – so still ask Greg for qualification papers. 

    Futures/Ravi – I was looking for a good short and we briefly took /RTY but a quick $60 and out. I don't see enough of a catalyst in either direction to make a bet at the moment though, of course, I'm leaning towards shorting at this altitude, not going long.

    SQQQ/Dave – No, you didn't ask!   Anyway, I just checked and yes, we do have 160 Jan $10 calls at $3.20 (now $2.68) in the STP and we sold 80 Jan $25s against them for 0.72 (now 0.35) and something else we bought back.  Call it net $2.85 so nothing to worry about yet and, eventually, we'll roll the Jan $10s to the April whatever spread and the cycle continues.




  30. Phil- thx




  31. LB???


  32. And, of course, we're waiting for next week's inventory to short Oil and /RB:

    • U.S. crude oil jumped to its highest level in two weeks after government data showed domestic stockpiles fell last week by 5.8M barrels, nearly 4x more than expected; October WTI +3.1% to settle at $67.86/bbl, Brent +3% at $74.80/bbl.
    • "As refinery runs continue to kick around close to a record high – easing just 89K bbl/day last week – and as imports have dropped off on the prior week, crude inventories have shown a solid draw, particularly on the U.S. Gulf Coast," said Matt Smith, commodities research director at ClipperData.
    • Oil also has found support from a weakening dollar this week and the prospect of a drop in oil exports from Iran.
    • Price Futures Group's Phil Flynn thinks oil "may have put in its low price for the year. Barring any shock headlines or economic catastrophes, the technical seasonal outlook and the fundamentals suggest that the downside correction in oil should be over."
    • The pitch by bankers looking for Tesla's (NASDAQ:TSLA) advisory business is that Elon Musk is a visionary on the level of Jeff Bezos, Steve Jobs and Michael Dell, according to the sourcesspilling to Fox's Charlie Gasparino.
    • His banker crowd sources concede that Tesla will have to recapitalize if the go-private plan doesn't work out.
    • Earlier today, there was a report that well-known crisis communications firm Joele Frank has been hired by Tesla.
    • Other tidbits from Tesla world: Huge crowds were reported in Australia at Model 3 events this week, while Business Insider probed feedback from Tesla customers on service.
    • Tesla is flat on the day at $322.15.
    • Hemp (OTCPK:HEMP -2.7%) inks a Letter of Intent (LOI) with an an unnamed California seed company for the purchase of 100M organic cannabidiol-rich hemp seeds over a five-year period. The company also has the first right of refusal to buy all the seeds above this amount.
    • Specific financial terms are not disclosed.
    • The American Gaming Association is out with its annual report on the commercial casino industry.
    • The AGA reports that total U.S. commercial casino gross gaming revenue rose 3.4% to $40.28B last year.
    • The states with the largest percentage increases were Maryland (+34% Y/Y), New York (+16%), Oklahoma (+10%) and Kansas (+7%).
    • Nevada GGR was up 2.8% to $11.57B to account for 29% of all revenue.
    • GGR was down 3.8% in West Virginia, due chiefly to new competition in the D.C. region.
    • AGA outlook: "Competitive pressures are set to grow in key commercial states in the coming years. Two commercial properties are set to open in Massachusetts in 2018 and 2019, and will reshape the competitive landscape of the New England region."
    • A September fed funds rate hike may be in the offing, according to FOMC minutes from the July 31-Aug. 1 meeting released today.
    • "Many participants suggested that if incoming data continued to support their current economic outlook, it would likely soon be appropriate to take another step in removing policy accommodation." according to the notes. That phrase is very similar to one released in May; the FOMC raised the fed funds rate in June.
    • Still, of course, the fiscal policy-setting committee will keep a close eye on how the economy develops." Many participants reiterated that the actual path for the federal funds rate would ultimately depend on the incoming data and on how those data affect the economic outlook."
    • Trade risk:  "Participants observed that if a large-scale and prolonged dispute over trade policies developed, there would likely be adverse effects on business sentiment, investment spending, and employment."
    • The potential for an escalating trade dispute would present "a challenge in determining the appropriate monetary policy response,"
    • (TLT +0.3%), (TBT -0.6%)
    • U.S. dollar index -0.19% to 95.03.
    • U.S. Treasury ETFs: TMVTBFEDVTMFTTTZROZVGLTTLHUBTSPTLDLBSVUSTXTYBSDLBLOPER
    • U.S. dollar ETFs: UUPUDNUSDU
    • Previously: Trump `not thrilled' with Fed chairman Powell raising rates: Reuters (Aug. 20)

  33. Lb earnings today???


  34. FU LB!!!!!!


  35. Victoria's Secret parent L Brands stock falls as company cuts profit outlook

    Font size: A | A | A

     

    5:46 PM ET 8/22/18 | MarketWatch

    RELATED QUOTES

     

    4:02 PM ET 8/22/18

    Symbol

    Last

    % Chg

     

    LB

     

    32.49

    -0.06%

    Real time quote.

     

     

    Victoria's Secret parent L Brands stock falls as company cuts profit outlook Shares of L Brands Inc. (LB) fell 4% in the extended session Wednesday after the parent company of Victoria's Secret, Bath & Body Works and other brands reported second-quarter earnings above expectations but cut its profit outlook for the year. L Brands said it earned $99 million, or 36 cents a share, in the quarter, compared with $139 million, or 48 cents a share, in the year-ago period. Net sales rose to $2.98 billion, compared with $2.76 billion a year ago. Comparable-store sales rose 3% in the quarter. Analysts polled by FactSet had expected L Brands to report earnings of 34 cents a share on sales of $2.98 billion. The retailer cut its full-year 2018 profit guidance to between $2.45 a share and $2.70 a share, from $2.70-$3 a share previously. It said it sees flat earnings to a 5-cent per-share profit in the third quarter. In the same statement, L Brands said that Denise Landman, chief executive of Victoria's Secret Pink brand, will retire at the end of the year. Amy Hauk, an executive at Bath & Body Works, will replace Landman as CEO of Pink. 


  36. LB – They should be lapping easy comps in quarter after this, yet cut profits to end of FY.   This is concerning, it is seeing weakness across both clothing brands.  Significant discounting did not help the top line.  This points to  loss of customers, maybe loss of brand loyalty and or the younger demographic.  which is even worse.  There will be no turn around this FY.  I don't see anything in their release that points to them looking hard at the change market relative to how they are positioning their product to women – more objectifying…. when others are appealing to a women's strength without the objectification.   I need to listen to concall in the am.   May be time to short this. 


  37. Phil / LB –   i'm not sure I've given up on them long term , but short term ( 6 mo to 9 mo) , they are in a mess and BBW will not offset VS and Pink issues.

    LB usually has a strong 4Q  and I was thinking they would pull it off… not.

    I 'd like your help  on shorting this to end of year or.  early next year….   any thoughts on this?  Make some money on the short and hold on to the position longer if you think the Divy is safe.  payout ratio at 75% last year now looking like 95% for this year.

    Looks like EPS of 2.55, 2.7 and maybe 2.9 is for for this year and next two.

    I have 5K shares at 35. / sh, and have

    10X '20 30 Puts (5) and

    20X '20 35 ( 6) Puts, 

    20 X 25 (8) Calls 

    All my short callers will be worthless about with $0 in the AM so will sell ASAP…  70X Short Dec '18 40 Callers  will make a few $K 


  38. oops I had 70X NOV '18 callers at 1.x now will be under.3 in the am so will exit those.


  39. Phil / LB – Looked at details of numbers – Rev was up 3%  YOY for 6MO, Profit down about 32% YOY 6mo.  Next Qtr looking at .04 EPS vs .3 last year, and Q4 must come in at $2 vs $2.11 4 qtr 18 vs 4 Qtr 17…. so the is not terrible IF THEY EXECUTE.  This would say comps should turn but 1 to 3 quarters later than I was expecting….   Given the track record of the company I'm not sure.  Also they have a new CEO at Pink out for the Body works area…  And pink was not a great story last quarter ( according to some channel checks) …..  Look forward to your view on this….


  40. Yodi,

    Is KIM is good for an armchair trade?

    Gabor


  41. LB…what a POS!


  42. Good morning! 

    LB continues to disappoint but I'll still pay $38 for a company earning $2.55 (15x) and this is clearly an off year for them.  

    In the LTP, our target for 2020 is $35 but we own the $20 calls so even $30 pays us back $30,000 against the current net $22,950 (not including the $37.50 puts, which we'll have to roll) and up to $45,000 at $35 so it's really not about whether they can do this or that but can they sustain 15 x $2 earnings?  I think so! 

    Short Put 2020 17-JAN 37.50 PUT [LB @ $32.49 $-0.02] -15 5/11/2018 (512) $-14,550 $9.70 $-0.05 $-14.45     $9.65 - $75 0.5% $-14,475
    Long Call 2020 17-JAN 20.00 CALL [LB @ $32.49 $-0.02] 30 5/24/2018 (512) $42,000 $14.00 $-1.00     $13.00 - $-3,000 -7.1% $39,000
    Short Call 2020 17-JAN 35.00 CALL [LB @ $32.49 $-0.02] -20 5/24/2018 (512) $-11,000 $5.50 $-1.30     $4.20 $0.37 $2,600 23.6% $-8,400
    Short Put 2020 17-JAN 30.00 PUT [LB @ $32.49 $-0.02] -15 5/24/2018 (512) $-7,800 $5.20 $-0.10     $5.10 - $150 1.9% $-7,650

    In the OOP, unfortunately, we were more aggressive (or less as we didn't spend money to roll) so we'll move into a position more like the LTP.

    Short Put 2020 17-JAN 35.00 PUT [LB @ $32.49 $-0.02] -10 3/1/2018 (512) $-7,000 $7.00 $1.40 $-5.01     $8.40 - $-1,400 -20.0% $-8,400
    Long Call 2020 17-JAN 25.00 CALL [LB @ $32.49 $-0.02] 20 7/12/2018 (512) $18,000 $9.00 $-0.25     $8.75 - $-500 -2.8% $17,500

    I HOPED (not a valid investing strategy) that they would have a better quarter and the quarter wasn't bad but the guidance sucked.  We'll see what they say about it at the CC but the $10 calls I want to roll down to will lose a lot more value than the $25s we're rolling out of so the roll will be cheap and then we'll see what we decide to do about covering. 

    The same thing happened after May's warning (10th) and again on the actual earnings (24th) so go read the comments then when people were freaking out – if you are going to play these kind of stocks, you have to be able to take advantage of these moves.

    L Brands: Expectations Are Dire

    https://www.philstockworld.com/2018/05/24/thursday-market-fakery-pump-it-up/

    LB – Oh no, they will only earn $2.70 per $34 share?!?  Why God, why????  Holy crap people, the reason we like them is because people are idiots and don't know how to value a company – don't go run and join them as soon as we hit a bump in the road!

    Same with GE, back at $14 again, where it's a screaming buy.  

    These are INITIALLY 2-year trades and sure, it would be great if, like THC or IMAX or SPWR or VRX or CMG they took off in the first Q and blew through our targets without any trouble but it would be juvenile to expect that to happen every time – as much so as it would be completely irrational and ignorant of the working of Finance to think that it's easy to make 300% returns on trades just because that's your opening ask when you set up a spread.  

    If it were that easy – then the premiums would be such that we'd only be able to get 20-40% initially, since the odds so strongly favored a winning outcome.  

    We're down net $11,000 on our LB position in the LTP, worse tomorrow and it looks like this:

    Short Put 2020 17-JAN 37.50 PUT [LB @ $34.05 $0.06] -15 5/11/2018 (604) $-14,550 $9.70 $-0.55 n/a     $9.15 $-0.25 $825 5.7% $-13,725
    Long Call 2020 17-JAN 30.00 CALL [LB @ $34.05 $0.06] 30 4/20/2018 (604) $23,400 $7.80 $-0.10     $7.70 $0.70 $-300 -1.3% $23,100
    Short Call 2020 17-JAN 40.00 CALL [LB @ $34.05 $0.06] -15 4/24/2018 (604) $-6,375 $4.25 $-1.15     $3.10 $-0.70 $1,725 27.1% $-4,650

    Currently it's a $30,000 spread and is currently valued at $4,725.  At $2.70 per share, let's say they are worth 14x so $37.80 and at least 12x so $32.40 is very fair (on low end of guidance with each 0.10 beat adding $1.20) for Jan 2020.  Since our calls are $30s, it doesn't make sense to stay in for $32.50 so we have to decide whether to fold with a $15,000 (guessing) total loss tomorrow and lose 1/3 of a $50,000 allocation block which we can easily make back if we have a 1/4 investment ($12,500) that does make 300% – so one winner wipes out 3 losers.

    Or we can spend $5 to roll the $30 calls to the $20 calls ($15,000) and buy out the 15 short $40 calls for $2.50 ($3,750) and then sell 20 of the $35 calls for $4.50 ($9,000) so we've spent net $9,750 to be in the 2020 $20/35 bull call spread with the short $37.50 puts.  Since we think it's ridiculously low, we could sell 15 more of the $30 puts for $6 ($9,000) and then we're back to our original $11,000 loss on the $45,000 position that's $36,000 in the money at $32 and, since we still have 10 calls uncovered, we can begin selling 10 July $35s for $1 ($1,000) and, if we do that 10 times, we erase $10,000 in cost and drop our net on the $45,000 spread back to $11,000.  

    Yes, we have to work at it and yes, we're committing $20,000 to make $45,000 instead of $11,000 to make $30,000 we originally hoped for but now we have a wider spread that's 90% in the money with a very good chance of success and a in a good position to generate a bi-monthly income while we wait. 

    This is not a flaw in the strategy – IT'S THE DESIGN!

    As a new spread, that would be:

    • Buy 30 LB 2020 $20 calls for $6 ($18,000) 
    • Sell 20 LB 2020 $35 calls for $4 ($8,000) 
    • Sell 15 LB 2020 $30 puts for $6 ($9,000) 

    That would be a net $1,000 CREDIT on the $45,000 spread so the upside potential is $46,000 at $35 and 33% of your gains aren't even capped (but it is our intention to sell some short calls as they recover).  The ordinary margin on 15 short $30 puts is about $5,000, so this is a very margin-efficient way to make $46,000 and, since it's our Trade of the Year, if you sign up for a new PSW Annual Premium Membership ($9,995) by May 31st and this trade doesn't return more than $10,000 by May 31st of next year (or your renewal date) - I will give you another year for free!  You don't even have to make the trade – just subscribe (and stay, of course), so you either pay for the year with profits from the trade or you get two years for the price of one.  

    There, that saves me a lot of time and effort!  

    Meanwhile, indexes are flatlining so far.


  43. LB – folks – dont forget at these price levels, the dividend yield gets quite juicy- 8-9%+ and as Phil had discussed earlier, if they cut dividend, most likely the stock will go up.  So I don't mind if my $30 puts get assigned as my net cost will be in mid $20s and there the div yield is even higher – then we can arm-chair this further with covered calls.   I think this is very compelling value at this juncture.  One quarter of stabilization and the valuation will reset very quickly.  We are selling puts to get prices at a discount,,right? Well, this is playing out here and this stock gives great dividends too… 


  44. Phil – I"m taking you up on your offer for the new spread…..