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Tumblin’ Tuesday (again) – China Retaliates on Trade (again)

Image result for trump china trade cartoonGee, who could have seen this coming?

China did what they said they'd do and took steps to retaliate against Trumps latest round of sanctions, only China is doing it by making a LEGAL appeal through the World Trade Organization while Trump just does whatever the F he wants because, you know, the US isn't part of the World anymore and we don't have to play by THEIR rules.  After all, Trump has already said "Trade Wars are good, and easy to win" and when has our President ever lied to us?

As noted by the FT: "It is possible that Mr Trump would accept a symbolic victory. But Mr Xi cannot afford a symbolic defeat. The Chinese people have been taught that their “century of humiliation” began when Britain forced the Qing dynasty to make concessions on trade in the 19th century. Mr Xi has promised a “great resurgence of the Chinese people” that will ensure that such humiliations never occur again."

Image result for trump china trade cartoonThis is not just about trade, so it won't be easy to "fix". This is about China's emergence as a global leader, something that really bothers Trump & Putin as they take a back seat to Bejing in setting the Global Agenda and China has their 2025 program – a 10-year plan for China to dominate Trade and Tech in the 21st Century. Rather than promoting similar efforts at home by encouraging innovation and R&D, like China is doing, Trump just wants China to stop it.

Seen from Beijing, it looks as though the US is trying to prevent China moving into the industries of the future so as to ensure continued American dominance of the most profitable sectors of the global economy, and the most strategically-significant technologies. No Chinese government is likely to accept limiting the country’s ambitions in that way.

Image result for china rare earth trade warUnfortunately, Trump has not learned or doesn't want to learn from Nixon's great mistake which is:  Don't get into trade wars with people you depend on and with Nixon it was OPEC and oil while Trump doesn't seem to understand that China can cripple what little manufacturing there is in the US by simply cutting off our supply of Rare Earth Metals, which we import 78% of from China and it's not possible to get it from other sources, as China produces 85% of the Earth's supply of Rare Metals. 

And those are just the metals we import from China directly. Indirectly we import twice as much inside IPhones and TVs and Computers. They make our solar panels work and our LED lights as well. Magnets are Rare Earths and those make speakers work as well as hard drives for data storage and Lanthanum is used to make lenses of all sorts while Cerium goes into catalytic converters while both Lanthanum and Cerium are used to refine and process oil. Who needs that stuff?

There is nothing we can do to China that they can't get from some other country but Rare Earths are vital to the function of US Industry yet Team Trump would rather fight than talk.  Fortunately, so far, China has made no threats to use their ultimate weapon but, knowing that they have it means they are very unlikely to capitulate to Trump's demands which means we will be having this overhang on the markets for a long, long time.

Image result for china global tradeAs I noted last Thursday, our Trade Imbalance with Canada was just $9.2Bn out of $500Bn in total trade yet we can't even get Canada to agree on trade adjustments.  We did get Mexico to agree to adjust our $58Bn (out of $500Bn) deficit in trade because Mexico doesn't have other large trading partners while Canada has the EU and Asia and can afford to tell us to go take a hike.

China imports more goods and services than any other country except the US and, despite being 1/2 the size of the US economy, they are almost identical in the amount of goods they import.  The US, on the other hand, exports only 60% of what China does so the "trade imbalance" between the US and China is really just a reflection of our own economic shortcomings – not some insipid way China is "picking on us".  

Also, while Trump is pushing China and the rest of the World away from the US, President Xi spent the weekend at the Eastern Economic Forum in Vladivostok where Xi and Putin look to "advance cooperation on energy, agriculture, high-tech and infrastructure."  As noted by China Daily: "The intensification of the US’ unilateral and policies, seen as unpredictable and threatening both Russia and China, now make economic partnership essential for the two giant Eurasian powers."

Climate change is unlocking the resources of Siberia and the Arctic Basin in ways inconceivable even a decade ago. Moscow and Beijing are the obvious partners to develop the new opportunities on offer. But to focus on economic development in Central Asia, especially in Kazakhstan, as so many studies do, is to miss the point of the long-term focus of specific Sino-Russian economic cooperation. That lies further east and far to the north, across Siberia and the Arctic and along the longest common borders in the world.

The enormous distances, lack of infrastructure and harsh climatic conditions across northern and eastern Eurasia for much of the year have always been the main factors obstructing more rapid economic development between Russia and China. 

Image result for putin puppet animated gifSo who wins from Trump's denial of Global Warming? Russia and China. Who wins from Trumps Trade War with China and sanctions on Russia?  Russia and China. Who wins when Trump withdraws the US from the World stage and leaves a vacuum of leadership in the UN, WTO, NATO, etc.? Russia and China. There has never been a better US leader to advance the interests of Russia and China than Donald J. Trump.  

I think we should give the President the benefit of the doubt and assume he is not knowingly an agent of Russia, carrying out Putin's agenda. Trump is merely an innocent dupe of Russia, carrying out Putin's agenda. You can choose to believe that it's merely coincidence that every single policy decision made by Trump ends up furthering the interest of Putin and Russia.  Yes, you can choose to believe that – it's fine – only history will judge you…

 


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  1. Good Morning!


  2. OPK

    Trading halt on OPKO Health to continue until lawsuit-related information submitted to SEC.



  3. Image result for 9/11


  4. As predicted by Phil here:

    https://www.marketwatch.com/story/seven-reasons-why-big-tobacco-is-likely-to-make-a-move-on-the-marijuana-industry-2018-09-10

    But new comments made by an Altria MO, -0.57% executive show that the company is evaluating opportunities in marijuana. Altria owns Phillip Morris USA, which makes Marlboro cigarettes. 



  5. Good morning! 

    Very quick recovery in the indexes off the bad Futures on good data reports.

    Wholesale Trade

    • July Wholesale Trade: Inventories +0.6% M/M to $636.3B vs. +0.1% consensus, +0.1%  in June (revised).

    Chain store sales growth tops 6% pace gain

    • Chain store sales rose 6.3% in the latest weekly read by Johnson Redbook to mark the second straight month of a +6% pace.
    • Chain store sales are expected to be up 5.7% for the full month.
    • The weekly sales tally may have been boosted by hurricane preparation sales in North Carolina, South Carolina and Virginia.

    NFIB Small Business Optimism Index

    China auto sales fall for second straight month

    • Automobile sales in China fell 3.8% to 2.1M in August, according to data from the China Association of Automobile Manufacturers.
    • Economist say anxiety over China's economy and the impact of a trade war with the U.S. held back consumers. The sales drops were more pronounced in smaller cities amid government crackdowns on peer-to-peer lending.
    • Sales at the SAIC-GM joint venture fell 4% at 158,616 vehicles, while sales at SAIC-GM-Wuling dropped 6% to 145,515 vehicle. Ford sales decreased 36% during the month, while Honda and Mazda also saw double digits falloffs of 10% and 13%, respectively. Toyota was an outlier with a 23% sales pop on Lexus strength. Nissan managed a 4% increase during the month.
    • The Chinese auto market has now seen two straight months of ~4% sales drops

    SEC charges against billionaire Phillip Frost may be 'tip of the iceberg" – Barron's

    • Barron's reports that the SEC's stock fraud charges against billionaire biotech investor Phillip Frost and others may uncover more widespread stock manipulation schemes.
    • The SEC's complaint accuses Frost and certain associates, including penny stock promoter Barry Honig, of "pump-and-dump" promotion schemes to inflate the prices of three tiny companies, believed to be Cocrystal Pharma (NASDAQ:COCP), MGT Capital Investments (OTCQB:MGTI) and MabVax Therapeutics (OTCPK:MBVX).
    • Last year, OPKO and Frost were sued by a former CoCrystal patent attorney accusing Frost of using CoCrystal and other companies in "pump-and-dump" schemes. A federal magistrate has recommended that a motion to dismiss submitted by the defendants be granted, citing the lack of jurisdiction in Minnesota where the lawsuit was filed.
    • Mr. Honig has a long history in the penny stock sphere. He, along with Frost and Michael Brauser, is connected to PolarityTE (NASDAQ:COOL), Eloxx Pharmaceuticals (NASDAQ:ELOX) and ChromaDex (NASDAQ:CDXC), although none have been accused of wrongdoing in connection with these stocks. PolarityTE Chief Investment Officer John Stetson, one of the defendants in the SEC case, was recently let go.
    • Mr. Brauser recently resigned as Chairman of software developer Red Violet (NASDAQ:RDVT), countering that he intended to "defend himself vigorously" against the SEC's "baseless" charges.
    • Honig and Brauser earned a windfall in Riot Blockchain (NASDAQ:RIOT) which jumped 10-fold amidst the blockchain frenzy in late 2017. CEO John O'Rourke, another defendant in the SEC case, resigned over the weekend.
    • Previously: SEC charges Frost and Honig with stock promotion schemes; OPKO down 18% (Sept. 7)

    Oil prices up on Iranian sanction pressure

    • Oil prices rise as U.S. sanctions put pressure on Iranian crude exports, tightening the global supply.
    • Benchmark Brent crude oil was up 50 cents to $77.87 per barrel by 7:50 GMT while U.S. light crude was up 15 cents to $67.69.
    • U.S. Energy Secretary Rick Perry met Saudi Energy Minister Khalid al-Falih yesterday as the White House encourages other oil-producing countries to increase output. Perry will meet with Russian Energy Minister Alexander Novak on Thursday in Moscow. 

    EPA set to ease rules on methane leaks for oil and gas companies

    • A rollback of Obama-era rules for oil and gas companies that were designed to limit methane emissions are expected to be announced this week by the Environmental Protection Agency, in the Trump administration's latest move to ease measures addressing climate change.
    • The EPA proposal reportedly aims to ensure oil and gas companies have more time to assess and safely repair infrastructure often in remote locations; among various measures, the changes would give drillers a year to perform leak inspections instead of six months, and 60 days to make repairs instead of 30.
    • While many of the proposal’s details are incremental and relatively technical, more wide-sweeping changes are still under consideration.
    • The proposal follows other moves by the Trump administration earlier this year to ease climate rules, including measures to roll back restrictions on carbon emissions from  power plants and automobiles.

    Boeing raises forecast for Chinese new plane purchases

    • Boeing (NYSE:BAraises its forecast for aircraft demand in China, predicting Chinese airlines will need 7,690 new planes worth $1.2T over the next 20 years to keep pace with rising consumer and business demand for air travel.
    • The new estimate is 6.2% higher than Boeing's previous prediction of 7,240 planes through 2036 made last year.
    • Also in its new forecast, Boeing said China would need 5,730 single-aisle planes, accounting for 75% of total new deliveries during the next 20 years, as well as 1,620 widebody aircraft, or triple the country’s current fleet size.
    • Large airplanes have been left out of China’s retaliatory tariff lists so far, although Pres. Trump has threatened to slap tariffs on virtually all Chinese imports into the U.S. and China could favor Airbus (OTCPK:EADSFOTCPK:EADSY) in future orders; Boeing delivered 202 aircraft to Chinese airlines in 2017, compared with 176 by Airbus.

    Nomura to the sidelines on Tesla

    • Nomura Instinet downgrades Tesla (NASDAQ:TSLA) to a Neutral rating after having the EV automaker lined up with a Buy rating.
    • The Japanese investment firm is moving to the sidelines to wait out what happens with Tesla management after pointing to the "erractic" behavior of CEO Elon Musk. "Notwithstanding improving fundamentals, we believe that Tesla is in need of better leadership (an about face) and are moving to the sidelines until we see what happens with management," updates Nomura.
    • The long-time Tesla bullish firm titled its report to clients "No Longer Investable" in reference to the stock.
    • Nomura lowers its price target on Tesla to $300 from $400, whil keeping a positive long-term outlook on the company's ability to reach 1M deliveries by the early part of the next decade if the management situation is cleared up.
    • Shares of Tesla are down 2.11% in premarket trading to $279.50.

    Macau casino stocks tumble on growth concerns

    • The selling pressure continues in Macau. MGM China (OTCPK:MCHVYOTCPK:MCHVFfell 7.42% in Hong Kong trading today, while Wynn Macau (OTCPK:WYNMYOTCPK:WYNMF) was down 3.28% and Sands China (OTCPK:SCHYYOTCPK:SCHYFpeeled off 3.72%.
    • Deutsche Bank may have been a factor in the action after the investment firm slashed its Macau 2019 gross gaming revenue forecast outlook to +4% from +11%. The investment firm voiced concerns that the +20% tumble in the Hong Kong Hang Seng Index could lead to less VIP traffic.
    • The new 2019 GGR growth estimate from DB also means industry EBITDA growth would come at only +5% for the year vs. +13% consensus.
    • Separately, Bernstein issued a warning that Macau GGR last week tracked below expectations.
    • In the U.S., Melco Resorts & Entertainment (NASDAQ:MLCO) is down 1.43% in premarket trading, while Las Vegas Sands (NYSE:LVS) and Wynn Resorts (NASDAQ:WYNN) are down about 1%. MGM Resorts (NYSE:MGM) is flat.

    IMAX signs new deal in China

    • IMAX(NYSE:IMAX) announces that it signed a deal with Wayning Cinema Line for the development of 14 new IMAX theaters.
    • Wanying Cinema Line (Shenzhen) is a wholly-owned subsidiary under China Resources Land responsible for the operation of all its cinemas under its MixC cinema brand.
    • The IMAX theatres will be installed in new MIXCINE branded multiplexes within China Resources Land's new luxury shopping centres, a majority of which will be located in tier one and tier two cities.
    • "We are pleased to build on this new partnership with China Resources Land, China's most influential integrated urban developer and operator, that will leverage our premium brand and The IMAX Experience as the anchor attraction for its luxury shopping complexes," says IMAX CEO Richard Gelfond.
    • "IMAX is now more entrenched than ever in the fabric of China's cinema industry as we continue to expand our network through forging partnerships with the nation's leading developers, exhibitors and studios and by presenting a growing number of Chinese blockbusters," he adds.
    • Shares of IMAX China (OTC:IMXCFOTC:IXCNY) finished up 0.10% in Hong Kong today.
    • Source: Press Release

    Amazon's business-to-business company hits $10B annualized rate

    • Amazon (NASDAQ:AMZN) says its business-to-business platform sales hit a $10B annualized rate globally.
    • Amazon Business launched in 2015 and hit $1B in sales a year later. 
    • Business now operates in eight countries. U.S. customers include schools, hospitals, and over half of all Fortune 100 companies. 
    • Amazon shares are down 0.3% premarket to $1,932.75.

    UBS raises its Apple target on potential 20% services growth

    • UBS maintains a Buy rating on Apple (NASDAQ:AAPL) and raises its target from $215 to $250, a 14.5% upside to yesterday’s close.
    • The firm cites Apple’s “recurring hardware revenue stream” from iPhones and thinks the services segment could grow 20% a year for the next two years 
    • Apple's fall launch event is scheduled for tomorrow. 
    • Apple shares are down 0.2% premarket to $218.01.        
    • Previously: Apple will announce new iPhones on Sept. 12 (Aug. 30)

    Big Chart – Bouncing off the 50 dma ends up being a "healthy correction" from a technical standpoint.

    MO/StJ – Inevitable. 


  6. Phil / AVGO – have been looking at this one for a bit now,   I'm thinking 270 is a reasonable target on this one.  I do think it's a bit high in the channel but was looking at the following.  Would like your thoughts on target and set up.  Thanks

    10X Jun'20 $230 Calls (25)

    10X Jun '20 $250 Calls (40)

    Was looking for a short Call to end of year and as well a a short put ( maybe the June 18 Put for 15.5)


  7. Phil / AVGO typo on set up see correction below

    10X Jun'20 $230 Calls (40)

    10X Jun '20 $250 Calls (25)

    Was looking for a short Call to end of year and as well a a short put ( maybe the June 18 Put for 15.5)


  8. I watched "Active Measures" last night, a new documentary that goes though painstaking detail about Russia's operation to manipulate our election.  Some very compelling info that is really frustrating. It makes you wonder what Mueller has on Trump.  Probably a lot more than currently known.  I would recommend watching.


  9. Telcos catching bids today.  CTL, VZ, & T are up nicely.  FTR, not so much.


  10. AVGO/Batman – I do like them long-term.   It would be a shame to have a position like that though, that you can't sell premium on and it's very risky when you run them that tight.  You are looking at spending $15 (though poor prices) on a $20 spread, not much to make there.  I would go with:

    • Sell 10 AVGO 2020 $150 puts for $8.50 ($8,500)
    • Buy 10 AVGO 2020 $230 calls for $37.50 ($37,500)
    • Sell 10 AVGO 2020 $260 calls for $25.50 ($25,500)
    • Sell 4 AVGO Jan $240 calls for $12 ($4,800)

    That's a $1,300 credit on the $30,000 spread so upside potential is $31,300 (2,400%) and you have used 129 out of 647 potential sale days so 3-4 more sales left to boost the collection.  Any time AVGO is lower, you can simply roll down the longs with the money from the short calls and, if it's higher, you can roll the short calls along (the June $280s are $8.50) 

    Active Measures/Palotay – Very scary stuff and the worst part is that we've done nothing over the past two years to secure this election.

    FTR/Albo – Every day over $5 is a good day!


  11. Phil, what is your current view on the index futures? Too risky to play?


  12. will you be liking cl/ short at 69 if it makes it today

    thanks




  13. World Hunger Is Rising





  14. Indexes/Alter – Yes, blowin in the wind this week – too dangerous to play with.

    Oil/Tommy – No, there's a lot of sanction talk with Iran and several other trouble spots boosting prices.  At the moment, we'd like to see a bullish inventory report that gives us a nice, high target to short.  

    /SI, of course, is a good long at $14, as usual.  /KCN9 is back to $108.65, also a good place to get back in on the long side.


  15. Phil / AVGO – Thanks for the feedback…. I’m braindead this am

    My proposed spread was supposed to be BCS Jun 20. 230 ( 40) / 270 (25) so about a 150% run … But your spread was better… along with the more conservative putter.

    thank you


  16. IBM getting no respect.  It may not be sexy but $12-14/share for $146 is a very good deal.

    Year End 31st Dec 2012 2013 2014 2015 2016 2017 TTM 2018E 2019E CAGR / Avg
    Revenue $m 102,874 98,367 92,793 81,741 79,919 79,139 80,770 80,301 80,061 -5.1%
    Operating Profit $m 22,540 20,244 19,986 15,944 12,330 11,400 11,446     -12.7%
    Net Profit $m 16,604 16,483 12,023 13,190 11,872 5,753 5,755 12,668 12,567 -19.1%
    EPS Reported $ 14.7 15.3 15.6 13.6 12.4 12.0 12.2     -4.0%
    EPS Normalised $ 14.7 16.0 16.8 13.6 12.7 11.4 12.2 13.8 14.0 -4.9%
    EPS Growth % +6.3 +8.7 +5.3 -19.1 -6.7 -10.1 +6.2 +20.8 +1.68  
    PE Ratio x           12.7 12.0 10.6 10.4  
    PEG x           0.61 0.58 6.29 3.53
    Profitability

    We already have them in the LTP – adding more longs when the spiked low a few months ago:

    Short Put 2020 17-JAN 145.00 PUT [IBM @ $146.46 $0.81] -5 1/17/2018 (493) $-6,250 $12.50 $0.83 $-12.50     $13.33 $0.33 $-413 -6.6% $-6,663
    Long Call 2020 17-JAN 120.00 CALL [IBM @ $146.46 $0.81] 15 6/28/2018 (493) $36,075 $24.05 $5.45     $29.50 - $8,175 22.7% $44,250
    Short Call 2020 17-JAN 150.00 CALL [IBM @ $146.46 $0.81] -15 7/6/2018 (493) $-14,850 $9.90 $0.98     $10.88 $0.42 $-1,463 -9.8% $-16,313

    You're welcome Batman!  


  17. AAPL up $5 is turning everything around.  45 Dow points by itself.

    About a 250-point swing in the Dow off its lows.


  18. AAPL $1.078T !!


  19. Transition to the knowledge economy: as crypto slowly but inevitably takes over fiat expect to see fiat become inflationary like this (vis-a-vis AAPL at $1.078T). 


  20. Keep in mind this article is over 4 years old, so you get to see over the last 4 years who was right and who was wrong.


  21. NXPI – Getting hit today on Analyst Day.


  22. Phil/)AAPL

    Seems like a lot of hearding going on; bringing the pigs in for slaughter.  USB gave them an upgrade today to $250 based on their services segment’s growth prospects, but that certainly wasn’t a bold call or new news.  The environment for AAPL shares is ripe with risks while Trump’s tariff war with China ensues.


  23. AAPL/BDC – I don't know, we've had stock bubbles before without putting all our money into alternate currencies, haven't we?

    AAPL/DC – It's one of the only good values left in the market and a new line coming out – hard to keep people out of the stock at this point.  I think they would just pass tariffs along – I doubt AAPL buyers are very price-sensitive.  They end up spending more on Apps than they do on the phone itself anyway.

    I know Maddie just found out that the limit for group chat when non-IPhone people are included is 10 because, unlike her HS, where pretty much no one doesn't have an IPhone, in college, only 8 of 10 people have an IPhone so they had to set up two groups of 10 instead of one of 20 because 3 of the 20 kids did not have IPhones.  

    That doesn't bode well for other manufacturers.   

    Also, this:

    Single iPhone users don't want to date someone with an Android …

    It's not you, it's your Android: confession of singles with iPhones


  24. HD is up 7 points in the past two days as a play on hurricane Florence.

    LOW also up.


  25. To be sure, they aren't currencies. They are a system of trust. So we can either call them what they really are, or not talk about them at all. Note that gold, another system of trust, peaked at 1850+ in 2011. So maybe, maybe not on your comment, and also keep in mind progress moves forward and backward looking data, by default, alway uses old information.


  26. Phil/AAPL: you said that Apple buyers aren't price-sensitive.  You weren't kidding!  I just saw this in the paper:

    "According to WalletHub’s 2018 Credit Score and iPhone survey, nearly 28 million Americans believe that getting one of the Apple iPhones to be introduced this week is worth going into debt to purchase."


  27. HD/Albo – Looks like they are going to be very busy on the East Coast.

    Trust/BDC – Yes, it's a marathon, not a sprint so many, many years to see how this plays out but I don't think gold was a trust issue – it's a currency alternative and, to some extent, the need for it as a safe haven has been disproven – so it's less likely to trade that much over extraction costs going forward.  Cyrpto is also an alternative so, when people get out of currency, they might us crypto and run it up but not if it looks unreliable as well.

    I don't consider it "old information" as any currency, whether it's base metal or fiat or cyrpto is simply a means to exchange labor, goods and services so, to the extent that it facilitates a better transaction – then it has value to the users.  You can dress it up in all sorts of fancy theories but that's the very real economic reason the things exist in the first place and it's not that complicated to figure out from there.

    It's only when you want to assign more value to base metals, fiats or cryptos than they are really worth that you have to get into convoluted theories about their place in society and their ability to adapt to the changing Global Economy or whatever but, for the $100Tn in global transactions that take place in a year, 99.9% of it is still done using Fiat Currencies and most of that is transferred electronically using EFT, ACI, ACH, etc. which have relatively no friction costs and have proven to be very safe and secure so far.  

    If you have something that's cheaper, faster, safer and more secure – THEN I think you'll be on to something but, otherwise, it's going to be just another niche product. 

    AAPL/Tom – And the Top 20% is 60M people who don't have to go into debt to buy an IPhone and I bet there's another 20M people who don't think of their phone contract as going into debt anyway.  That right there covers 2 years of US IPhone deliveries and then it's time to buy a new one!

    Image result for iphones by income bracket

    AYI-survey

    Image result for iphones by income bracket

    And, while we tend to focus on the expensive IPhones, keep in mind the other IPhones get cheaper and more available to the masses.  This is the same thing they did with the IPod and we know how many IPod competitors remain after 20 years!  

    Image result for iphones by income bracket


  28. in HD 210 weekly puts @ 0.42


  29. I'm an active part of this "new energy order." It's going to be big over the next 10 years! Very Exciting!


  30. definitely like the IOS/android stats.  except for the redheads. but thats saying too much


  31. AAPL- have never owned any  aapl product though my son bought us an Ipod. Now that I see the prices, I never will! A phone is a phone and they all do the same things. Reminds me of the Izod shirts,Levi's jean and all the other faddy things of the past. The fact that people will go into debt only reaffirms my view of the shallowness of the masses.


  32. Look who they elected- POTUS!


  33. HD – I wrote the weekly 217.50/230 credit spread for .52.  Just a small play.  I think HD is a bit inflated at the moment. 


  34. BioD – Do you have any favorite technologies for the "new energy order"? Clearly alternative energy (power generation, storage, transmission) and energy management (transmission, load stability, conversion, etc.) companies have a large future. For the near future, water treatment processes could have a big market in the fossil fuel business (fracking). Your thoughts are appreciated…. Eric 


  35. The Hurricane …"It's tremendously large and tremendously WET"….   POTUS


  36. Divestments/BDC – That's a hell of a figure! 

    Gingers/Rexx – They ruin everything…  cheeky

    Image result for gingers south park animated gif

    IPhone/Pirate – It's actually a pretty nifty piece of technology.  I use my IPhone and IPad a lot more than my computers or TV and they are the cameras I take on vacation, my scanner/fax, etc.  If you consider all the things you don't need if you have an IPhone (or any smart phone) – they're not expensive at all and, for many low-income people, the phone is their primary computer and TV and game system and IPhones perform a bit better so people want them for that reason for the same reason a person wants a good computer.  

    Well at least Trump seems to be doing a good job getting us prepared for the hurricane.  This is a good chance for him to do something right.  

    Oops, he's right back on the defensive saying Puerto Rico was a great success.  Why can't he just say they got caught with their pants down and they'll never make that mistake again?

    HD/BDC, Tshroy – I agree it's overdone but this is going to be a very big storm with lots of damage and lots of rebuilding – not sure I'd short so soon. 

    A Warning On Canadian Pot Stocks

    5 Reasons Apple Is A Dividend Growth Dream Stock

     North Carolina braces for 'days and days' of rain, flooding from hurricane

    What to expect during Apple's iPhone launch event

    "Tremedously wet" – LOL!

    Seriously though, this looks pretty bad…


  37. Speaking of MJ stocks, HYYDF is up 55% in 15 days.

    Stockbern, hope you have some.


  38. Albo, yes doing very well with HYYDF.  I bought it before it went public in Oct 2016 for under a buck  (Canadian) from a NY group doing a capital raise for them. An activist sent them a letter last week.  You have to search for it, but its out there. 


  39. Dammit NLY!


  40. NLY – $10.17 per share offering.  Crap is right!


  41. Hi all,  can anyone point me to the most recent portfolio reviews?  I can't find a link under Virtual Portfolios and don't know how else to search the posts for it.  Thanks very much in advance!


  42. We only did some quick reviews in chat (check that week) as I was on vaca last expiration, full reviews will be done next week.

    As to NLY, we bought them for $10.05 on 3/2 and sold 2020 $12 puts for $3.15 so net $8.85 if we end up owning some more for a $9.45 avg on 5,000 shares.  So far, we've collected 0.30+0.30+0.22 in dividends, which is 0.82 or 12% of our $6.87 net entry in 6 months.  I don't understand why people think that's a bad thing.  They are a REIT, they pay out all their profits so they're not going to go higher in price – as long as they maintain $10, we just keep collecting our dividends.


  43. What are the relative merits of buying (for example) NLY and selling puts vs buying NLY and selling slightly above the market calls?


  44. GM / F – Really good article 

    https://www.morningstar.com/videos/882137/ford-vs-gm-which-is-the-better-dividend-play.html

    here's a bit of the article…. full article at site

    Let's talk about Ford first since its yield is higher. The company ended second quarter with $25.2 billion of cash and investments outside of its finance arm, with 86% of that held in the U.S. Ford also has about $11 billion available on credit lines. Given that the annual regular dividend is about $2.4 billion, we see this liquidity as more than sufficient to keep the dividend safe, but we do think the firm could take a break paying a special dividend when a downturn occurs.

     

     

     

     

    The question, of course, is can Ford keep the regular dividend in a recession while also paying out at least $7 billion in cash restructuring over the next three to five years per its July earnings release. We think it can, because the company's liquidity excluding Ford Credit is already over $6 billion above the firm's long-term target of $30 billion, which gives it a buffer to burn cash in a recession. More cost savings are coming via further platform reductions down to five modules from nine platforms presently; there's $25.5 billion of cost cuts identified through 2022 primarily in materials, engineering, and marketing, as part of CEO Jim Hackett's emphasis on making Ford more physically fit; and the company's U.S. product lineup is finally getting updated soon. 

    Next year and in 2020, new generations of high volume profitable light-truck models such as the Escape, Explorer, and F-150 launch and Ford enters new segments such as a compact off-road vehicle to rival Jeep and also brings back the Bronco. These moves and others will bring Ford's U.S. portfolio average age down to 3.3 years by 2020 from 5.7 this year. Concentrating more dollars where it makes the most profits in light trucks should help results over time and help Ford maintain its dividend.

    There's two other reasons we think Ford's dividend is safe. One is a practical one in that we feel the Ford family, which always has 40% voting power through supervoting shares, wants its dividend as do many outside shareholders. The second reason is the captive finance arm, Ford Motor Credit. CFO Bob Shanks this year in interviews and on earnings calls has said the credit arm's June 30 managed receivable balance of $151 billion is nearing a ceiling management that has for the division of $155 billion. This means the captive is in a position to make distributions back to the parent. This year the captive expects to pay Ford about $2.5 billion compared with $406 million last year, and Shanks is guiding to a typical annual payout of about $1.6 billion to $1.7 billion. That payout alone is nearly 70% of the regular dividend each year. So, we think even in a downturn, Ford's regular dividend is safe, but I would not be surprised to see the supplemental dividend cut or eliminated in a downturn.

    Now despite Ford's higher dividend yield relative to GM's, I like GM stock more than Ford. Ford's stock is slightly cheaper on a price to fair value basis, but until management better articulates its strategy, I think the market will remain frustrated with Ford stock even though I think it's quite cheap, so investors will likely be waiting a while. GM on the other hand is in the midst of a $14 billion buyback program which we like a lot because we think the stock is cheap, it is ahead of Ford in autonomous vehicle launch targets by two years, and it just started launching its new full-size pickup platforms. 

     


  45. Stockbern – Great deal !  

    Way ahead of me.


  46. NLY/Phil- if we are not expecting upside just wish to collect dividends along the way, I was wondering why not the preferred shares?


  47. Good morning! 

    Merits/Tangled – The calls weren't paying enough for us to bother and the stock never went higher or we would have sold calls.  As to the puts, they were paying plenty (net $8.85) and, if NLY had gone higher, they reduced our basis to $6.90 so, if NLY went to $12, PLENTY of upside but anything over $8.85 was bonus money on the short puts so just as good as selling calls, especially the crappy NLY calls.

    F/Batman – Now that is a good analyst! 

    Preferred/Dave – Only because it would be completely insane to start discussing preferred shares along with all the other stuff we talk about.  There's nothing wrong with picking those up on this type of stock but, as noted above – I still like the combo of the stock and short calls as anything over $8.85 is profit and we still get the dividends.

    Oil testing $70 as API showed a huge 8.6Mb draw but /RB up 2.12Mb and Distillates are up 5.82Mb, so it's all BS and we'll have to wait for API to see what's real.  Hopefully there will be a bit more of a run-up but, if you have the discipline to play with VERY TIGHT STOPS, then shorting oil below $70 and /RB below $2.025 is the way to go.


  48. Morning…   Ray Dalio on Bloomberg, don't know much about him… except he is American billionaire investor.  And, he is giving away his book for free.