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GDPhursday – 4.2% Now, Below 3% From Now On

This is not pretty:

While this morning's GDP Report may show that we grew at a 4.2% pace in Q2, the Federal Reserve thinks that's so unusual that our annual GDP gain will still only be 3.1% for 2018 and then they see that DROPPING to 2.5% in 2019, 2% in 2020 and 1.8% in 2021, giving Trump and his policies the worst 4 years of GDP growth since Bush's 2nd term or Hoover's only term.

Image result for trickle down trumpWhat's even worse is that Trump's budget projections expect 4% GDP Growth and if we fall 2% shy that's $400Bn less growth than anticipated and Trillions of additional Dollars will compile into our debt if the Government fails to hit their collection targets – which we all knew was based on a ridiculous trickle-down fantasy in the first place – we just didn't expect it to all fall apart so soon.  

The Fed is calling this the bottom in Unemployment as well and does not project more than the usual amount of jobs to be created, despite the massive stimulus that's been given to the Top 1% and their Corporations.  Again, any idiot could have predicted that but 63M people believed the BS enough to vote for Donald Trump or, more accurately, 62,400,000 believed the BS and the other 600,000 were happly to screw them over in order to get their tax cuts. 

The Fed, for its part, still sees the need to "normalize" interest rates and project a 3.25% rate by the end of next year, which would be 4 more 0.25% hikes over the next 8 meetings but that's going to be miles behind the bond market, which is already hitting 3.05% on the 10-year notes.  Even more alarming, the 10-year note began this month at 2.85% so up 0.2% in a month is a 7% increase in less than 30 days.  While the Fed may be content to keep lending at unrealistically low rates, real-world lenders are not and borrowing costs are increasing – no matter where the Fed sets their "benchmark."  

Rising interest rates traditionally have a negative impact on Business Profits, Home Sales and Consumer Spending so, as long as the stocks you are holding don't have anything to do with those things – you should have nothing to worry about!  

As I noted on Tuesday, we are already getting swamped by companies who are issuing negative guidance for Q3 and the good news is that's going to lower the expecations bar considerably, so it won't be as easy to disappoint but Bed Bath and Beyond just reported a rough quarter and that stock tumbled 15% after hours.  The Retail ETF (XRT) is trading at record highs – it was only at $22 before collapsing to $8 in 2008 and now it's at $52, so it makes a fun short if you are worried about Retail Stocks (and we are).  For our Short-Term Portfolio (STP) we can add the following hedge:

  • Sell 10 XRT Jan $52 calls for $1.85 ($1,850) 
  • Buy 20 XRT Jan $55 puts for $4.15 ($8,300) 
  • Sell 20 XRT Jan $50s for $1.45 ($2,900) 

That's net $3,550 on the $10,000 spread that's more than 1/2 in the money to start so the upside potential below $50 is $6,450 (181%), not bad for 3 months and a great way to hedge potential losses on retail stocks.  

I'm also liking AMZN on the short side again but they are super-scary to short so I think we'll patiently wait to see if they can get back to $2,050 before putting our foot down.  What's enticing about AMZN is you can sell the Jan $2,400 calls for $21 and probably better than $22 this morning as they test $2,000 and, while AMZN has moved 20% in a quarter many times before – they haven't done so when 20% was $200Bn.  Not only that but the Jan $2,400 calls can be rolled to half as many of the 2020 $3,000 calls, which are currently $57 so, if you have the money for it, it's a fun short.

Selling 10 of the Jan $2,400 calls for $21 nets you $21,000 but requires $80,000 in ordinary margin.  Nonetheless, making $21,000 on $80,000 in 3 months is a pretty good use of sideline cash and it's very hard to imagine AMZN gaining 20 times Macy's (M) entire $10Bn valuation in that period of time – their earnings would have to be truly astonishing!   Still, too risky for our Member Portfolios, though we may consider the short position if we can find a good way to hedge it. 

There are lots of ways to make money in a down market.  In fact, we sold $3,000 worth of short Jan $20 calls on BBBY just yesterday in our Live Member Chat Room as well as 8 other plays where we're betting on a flat to down market into the end of the year from here.  I know I've been bearish most of the year but that hasn't stopped us from making long-term long plays because expecting a correction is not the same as expecting a crash – though the correction has, so far, remained elusive

That's why even the positions we're adding have long-term bullish components.  That way, even if we're wrong and the bubble keeps expanding for 3 more months, we have gains on the long side to offset any short-term losses we may incur.  The headline on Durable Goods was encouraging this morning – up 4.5% but, at the core (ex-aircraft), we're only up 0.1% so good for Boeing (BA), bad for everyone else.

We're expecting the markets to be held up for the next couple of days to make the end of Q3 look pretty but, after that – it's going to be a wild-card.  


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  1. Good morning! 

    BREAKING: In response to President Trump's allegations, George Washington has released his calendar from the summer of 1749.

  2. Good morning, All!

    The webinar replay is now available!

  3. Accused sex offender in the White House, accused sex offender potentially in the Supreme Court. Working on the woman's vote!

  4. Income inequality showing up in net worth numbers:

    Clearly, the $692,100 average US household net worth figured is skewed by the super-rich who’ve done extremely well since the financial crisis. But it’s still a good number to know if you want to compare yourself to the average.

    The median net worth of US households is a more pedestrian $97,300. Median is the middle point where half the households have more and half have less.

    $97,300 isn’t terrible, but you’re certainly not going to be retiring any time soon if that’s all you got at around 38-40 years old. You will likely go the traditional route of working until at least 62 when you can start collecting Social Security.

  5. The impact of the financial crisis:

  6. Financial Crisis, in my opinion, if Bernanke had called Phil in early 2006/2007 to discuss the state of housing and the markets the worst of it might have been avoided, instead the central bank and regulators closed their eyes and let it all happen and then acted surprised, and no one went to jail

  7. Good Morning!

  8. Big Chart – Interesting with the RUT below the 50 dma but Nas popping again today 

    If the Dollar comes down (94.30), we could get an overall pop.

    Gold and silver getting trashed at the moment on strong Dollar.

    Sex offenders/StJ – I don't know about the women's vote being lost.  According to Trump, Kavanaugh and most of the GOP Senators, girls are just asking for it anyway – so this should play great with all those women, right?  Seriously, I can't believe the number of women who voted for Trump in the first place – they knew what they were getting.

    Median/StJ – Imagine how skewed the top is if the median is $97,300 but the average is $692,100 – that means the top half added $1.3M to the average so really, you have to have $1.3M just to be in the low end of the Top 25%'s "average" – that's why this is a silly number game, they purposely refuse to do a proper breakdown to make it harder to discuss how sickeningly disproportionate the wealth at the top is. 

    You can see in the chart that the Top 10% have a mean net worth of $4.5M (and that was 2 years ago), and it was rising at 10% a year even then.

    The average household net worth by age, education, race


    Even in the Top 1%, they are factors of 100s below the top 0.01%

    I thought the breakdown of the Financial Samurai poll was interesting, with their own 11,000 readers showing a crazy range of wealth:

    How much is your net worth? (All assets minus all liabilities)

    • $1,001,000 – $1,500,000 (11%, 1,188 Votes)

    • $301,000 – $500,000 (11%, 1,184 Votes)

    • $501,000 – $750,000 (11%, 1,149 Votes)

    • $101,000 – $200,000 (10%, 1,059 Votes)

    • $751,000 – $1,000,000 (8%, 822 Votes)

    • $200,000 – $300,000 (8%, 819 Votes)

    • $10,000 – $50,000 (7%, 781 Votes)

    • $51,000 – $100,000 (7%, 713 Votes)

    • $2,001,000 – $3,000,000 (6%, 672 Votes)

    • $1,501,000 – $2,000,000 (6%, 630 Votes)

    • $3,000,000 – $5,000,000 (5%, 493 Votes)

    • Roughly $0, +/- $9,999 (4%, 420 Votes)

    • Negative (4%, 408 Votes)

    • $5,000,000 – $10,000,000 (3%, 287 Votes)

    • $20,000,000+ (1%, 124 Votes)

    • $10,000,000 – $20,000,000 (1%, 79 Votes)


    Total Voters: 10,828

    Still, 200 people in the $10-20M range, reading the same financial column as 2,000 people who have less than $100,000.  It's an interesting dynamic we see at PSW as well. 

    Nice dip in /CL to $71.75 but bouncing back over $72 again – maybe a double dip later but getting close to the weekend.  

    Bernanke/Mike – I actually met with Geithner at the Fed during the crisis and submitted a proposal to stimulate the economy in two ways:

    • 1) The government pays down any mortgage by $100,000 as long as the home is appraised for at least $200,000 (or up to 50% of the home's value) by simply signing a paper at the bank.  That $100,000 cuts the average homeowners Mortgage by about 40% ($250,000 avg) and puts $100,000 back in the bank – the government owns whatever percentage of the home it purchased and gets paid when its sold – including profits.  This would have been no different than the Fed adding $4Tn to their balance sheet except the Fed only gave the money to the banks while this would have helped the homeowners too.
    • 2) Put solar roofs on every practical home in America (about 40M out of 110M) at an average cost of $50,000 per home it would cost $200Bn a year for 10 years and put about 2M people to work and kick-start a massive solar industry in the US (since you know the market is there for at least 10 years) and would also take 4% of homes off the grid each year, lessening the pressure on that crumbling infrastructure.  It would also save the average homeowner $2,000/yr in energy costs so $8Bn to $80Bn a year pushed into consumer's ANNUAL hands during the build-out and all the taxes paid by wage-earners would turn this into a very profitable project over time and, of course, over the 10-year cycle, it's very likely we would develop ways to get the other 70M homes off the grid (as well as companies) and be a clean non-dependent nation in 30 years.  

    I was told the GOP would never go for either plan but some of the stuff we discussed did make it into policy – so I was very happy.

  9. BBBY – Closed my eyes, gritted my teeth, and sold some Jan 12.50 puts for .60.

  10. abx up even with gold getting spanked again…

  11. Comment content omitted because it is too long.

  12. BBBY/Albo – Yes, this is kind of nuts, down 23% now.   They already gapped down on Q1 earnings in April.

    Year End 03rd Mar 2013 2014 2015 2016 2017 2018 TTM 2019E 2020E CAGR / Avg
    Revenue $m 10,915 11,504 11,881 12,104 12,216 12,349 12,361 12,223 12,218 +2.5%
    Operating Profit $m 1,638 1,615 1,554 1,415 1,135 761.3 695.5     -14.2%
    Net Profit $m 1,038 1,022 957.5 841.5 685.1 424.9 393.2 304.1 249.1 -16.4%
    EPS Reported $ 4.56 4.79 5.07 5.10 4.58 3.12 2.92     -7.3%
    EPS Normalised $ 4.56 4.79 5.07 5.10 4.58 3.12 2.92 2.28 1.97 -7.3%
    EPS Growth % +12.3 +5.1 +5.8 +0.6 -10.3 -31.9 -32.7 -26.9 -13.5  
    PE Ratio x           6.04 6.45 8.26 9.54  
    PEG x           n/a n/a n/a 7.46

    Bed Bath & Beyond’s quarterly earnings of 36 cents per share lagged the Zacks Consensus Estimate of 49 cents. The bottom line also plunged 46.3% from the year-ago quarter.

    Net sales came in at $2,935 million and remained almost flat with the prior-year quarter number. However, the top line fell short of the Zacks Consensus Estimate of $2,952 million. Comps, which dipped roughly 0.6% in the reported quarter, negatively impacted the top line. This was because in-store sales declined mid-single digits, somewhat offset by robust sales at its customer-facing digital networks.

    While gross profit fell 7.5% to $988.6 million, gross profit margin contracted 270 basis points (bps) to 33.7%. Higher net direct-to-customer shipping expenses and rise in coupon expenses on account of increased average coupon amounts resulted in the margin contraction. Decline in merchandise market further led to the downside. Gross margin contraction coupled with a 1.1% rise in SG&A expenses caused the operating profit to plunge nearly 53.3% to $78.9 million. Additionally, operating margin shriveled 300 bps from the prior-year quarter to 2.7%.

    Bed Bath & Beyond ended the quarter with cash and cash equivalents of $869.3 million, long-term debt of $1,492.3 million and total shareholders' equity of $2,902.4 million.

    At the end of second-quarter fiscal 2018, the company generated cash flow of about $639 million from operating activities while deploying nearly $181.5 million toward capital expenditures.

    In the reported quarter, the company bought back 2.1 million shares for nearly $41 million, under the current buyback plan of $2.5 billion. As of Sep 1, 2018, Bed Bath & Beyond had shares worth nearly $1.4 billion remaining under its existing program.

    Additionally, the company’s board declared a quarterly cash dividend of 16 cents per share, payable Jan 15, 2019 to shareholders of record as of Dec 14, 2018.

    As of Sep 1, 2018, the company had 1,560 stores in operation, comprising 1,018 namesake stores across 50 states, the District of Columbia, Puerto Rico and Canada; 281 stores under the labels World Market, Cost Plus World Market or Cost Plus; 121 buybuy BABY stores; 83 stores under the labels Christmas Tree Shops, Christmas Tree Shops andThat! or andThat!; and 57 stores under Harmon, Harmon Face Values or Face Values names. Additionally, the company’s joint venture partnership operates 10 flagship stores in Mexico.

    Following the company’s dull performance in the fiscal second quarter, management lowered its guidance for fiscal 2018, which unlike fiscal 2017 has 52 weeks. The view was slashed due to various factors including the expected impact of the Hurricane Florence, and tariffs on imports from China.

    Considering all these factors, the company now envisions fiscal 2018 earnings per share to be at the lower end of its earlier guided range, at about $2.00. Earnings per share were earlier expected to be in the low-to-mid $2 range. In fiscal 2017, Bed, Bath & Beyond delivered adjusted earnings per share of $3.12. The Zacks Consensus Estimate is currently pegged at $2.30 for the fiscal year.

    For fiscal 2018, management still projects capital expenditures to lie between $375 million and $425 million.


  13. We got into BBBY on 4/20 (after selling 2020 $17.50 puts for $2.80 on 1/8) so we committed to own 2,000 shares for $35,000 at the time.  Earning "just" $2/share doesn't make me not want to own them for $17.50 – especially as we can draw a nice income selling calls. 

    Short Put 2020 17-JAN 17.50 PUT [BBBY @ $14.53 $-4.28] -20 1/8/2018 (477) $-5,600 $2.80 $1.75 $-2.20     $4.55 - $-3,500 -62.5% $-9,100
    Long Call 2020 17-JAN 15.00 CALL [BBBY @ $14.53 $-4.28] 30 4/20/2018 (477) $13,950 $4.65 $-1.67     $2.99 $-2.83 $-4,995 -35.8% $8,955
    Short Call 2020 17-JAN 22.50 CALL [BBBY @ $14.53 $-4.28] -10 4/20/2018 (477) $-2,200 $2.20 $-1.09     $1.11 - $1,090 49.5% $-1,110
    Short Call 2019 18-JAN 20.00 CALL [BBBY @ $14.53 $-4.28] -20 9/26/2018 (113) $-3,000 $1.50 $-1.29     $0.22 $-1.21 $2,570 85.7% $-430

    So far, we're down $5,000 on the position and we'll make the following adjustments in the LTP:

    • Roll 30 BBBY 2020 $15 calls at $2.75 ($8,250) to 30 2021 $12.50 calls at $4.40 ($13,200) 
    • Sell 20 2021 $15 puts for $4 ($8,000) and put a stop on the 20 short 2020 $17.50 puts at $5.25 (now $4.75) – hopefully the stock bounces back before we trigger out of the 2020 puts.  

    ?So, during the "crisis" we're putting $3,050 in our pockets but we eventually have to buy back the 2020 puts for hopefully less than $10,000.  The net of the original spread was $3,150 so we'll be in the spread for no more than $15,000 and our break-even will be about $17.50 but, of course, we'll sell more calls along the way to reduce that. 

    In the OOP, we'll make a similar adjustment:

    Short Put 2020 17-JAN 17.50 PUT [BBBY @ $14.55 $-4.26] -5 1/8/2018 (477) $-1,400 $2.80 $1.78 $-2.20     $4.58 - $-888 -63.4% $-2,288
    Long Call 2020 17-JAN 15.00 CALL [BBBY @ $14.55 $-4.26] 20 8/29/2018 (477) $9,600 $4.80 $-1.90     $2.91 $-2.91 $-3,790 -39.5% $5,810
    Short Call 2019 18-JAN 20.00 CALL [BBBY @ $14.55 $-4.26] -20 9/26/2018 (113) $-3,000 $1.50 $-1.26     $0.24 $-1.18 $2,520 84.0% $-480
    • Sell 5 2021 $15 puts for $4 ($2,000) and put a stop on the 5 2020 $17.50 puts at $5.25
    • Roll 20 2020 $15 calls at $2.75 ($5,500) to 20 2021 $12.50 calls at $4.40 ($8,800)

    ?Here we're spending $500 to improve the position plus, possibly having to buy the short puts back for $2,625.  We were more conservative in the smaller OOP in our put sales and we were fully covered – that helped mitigate the damage. 

  14. Phil – I may have been early on my sale of BBBY puts.  Difficult to know, but quarter-end window dressing might take it lower thru tomorrow.  I'll add more if that happens.

  15. BBBY / Albo. Phil – 3 day rule in effect with such big moves!

  16. STJ – Good rule, but not iron clad. :-)

  17. That's true Albo – I added more CTL the other day using my 10 minute rule :-)

  18. Phil

    Any trades with there spin off of Pharm for pets

    Henry Schein, Inc  HSIC 


  19. STJ – Good one !

  20. Phil,

    Any thoughts on Dow going into the weekend? I have a small short position that I am contemplating to hold or not


  21. BBBY/Albo, StJ – 20% off is so silly that I would rather lock in those prices now and DD if it gets "worse" later.   Here are the EPS estimates over the past 90 days – keep in mind they just guided down to $2/share:

    So they are guiding down 0.20 over 3 years and possibly looking to do better in 2020 but the bottom line is, I give them $15 and they earn $2/yr – that's a good trade so I don't really care what other people think – as long as they hit that number, the value will be realized eventually.   By the way, there's 17 analysts following this stock so these targets aren't the random opinions of a couple of guys and BBBY is a straightforward retail play – not some unfathomable operation.

    HSIC/QC – While I like the supplies side of Health Care, I don't see why I'd pay 26x earnings for it.  $85 is a $13Bn market cap for a company with a slow-growing (<10%) $12.5Bn in sales and a not growing $500M in income – that's just not exciting to me.  The spin off doesn't create value, it just creates two companies and you're better of waiting and seeing which one has more growth potential after the fact, but I assume it's the pet side though there's plenty of competition there already.  

    Dow/Pat – It's too crazy to bet against (or for) at the moment.  We're keeping up our hedges but they keep proving pointless as the indexes keep grinding higher.  We don't have any real "bets" on the Dow going down – just hedges against our long positions.  

  22. 8,000 was the Dow low and 16,000 is 100% up and 24,000 is the next 8,000-point gain so the zone we're in now is 16,000-32,000 and we're certainly consolidating at 24,000 with only a mild pullback.  Ideally, we want to draw lines around 24,000 and 10% below 24,000 (21,600) would be the Must Hold line, below which we'd be bearish but above which is still a bullish zone.

    The 5% Levels, however, would be drawn around 24,000, not 21,600 so the increments would be at 1.25%, 2.5% and 5% would be 300, 600 and 1,200 point moves so those are key lines for the Dow to cross.  

    So, over 24,000, the 5% lines are 25,200, 26,400 (where we are now), 27,600 and 28,800 on the way to 30,000 and we'll look for channels to form within those zones but, for the moment – it's moving too fast and with not enough volume to call anything firm:

  23. Will kavanaugh even testify?….

  24. Time to re-review that short list….

  25. Potus is angry at his staff for not knowing that Dr. Ford is a very credible victim/witness….. :)



  26. Any one see news on WPM up 4% today  with silver and gold  both red

  27. Phil, in your Mean/Net Worth chart the homeowner versus renter is eye-popping. This is a single data point that shows the scam of the "it's better to rent" argument. 

    The by race breakdown was actually quite shocking as well, IMO.

  28. Bertll – Canadian court rules in favor of Cameo in tax dispute. CCJ has a similar issue with the tax authorities. Thinking is that if CCJ won their dispute, that is favorable for WPM case…

  29. Thanx Eric 

  30. Kavanaugh/1020 – He's supposed to testify later but he should be smart and withdraw before this gets too embarrassing.

    Short list/1020 – Didn't miss anything so far.

    /NG having a strange couple of days.  Inventory build was much lower than expected:

    WPM/Bert – No news at all either. 

    You don't know WHEN your value plays will pay off – only that they probably will eventually:

    Long-Term Portfolio Review (LTP) – Part 2:  

    • WPM – Time is our friend on this one as we have to wait patiently for silver to pop.  Our 40 2020 $15 calls are $3.55 ($14,200) and I don't want to sell them unless they go below $3.25 ($13,000) so we risk $1,200 but no worries if they stay over $17.   I want to add 50 of the 2021 $12.50 ($6)/20 ($2.25) bull call spreads at $3.75 ($18,750) so that's our "roll" and hopefully we can eventually get that much for the 2020 $15s to make it an even one

    With all of the 2020 and 2021 move – BE PATIENT!  Stocks move up and down all the time so just simply put a bid in for your price and wait and see if you get it.  Only when you fill one of your legs at a price you offered should you be considering paying more (or collecting less) for the other leg(s) you need to fill.  

    With WPM, for example, it's low in the channels so I'm anxious to buy the long calls for $6 so I'll buy 20 of them (easy fill) and ask for $2.50 for the $20s and I either get that (because WPM goes higher) or it goes lower and my next 20 2021 $12.50s will be cheaper than $6 so, either way, I save some money!  

    Wash rinse, repeat until you fill.

    Renters/Bdc – Well to some extent, people who have lower net worths tend to rent and not own – that skews the data.  By the way, give me a call when you can – I have a nibble on your project.

    CCJ/Eric – Good point, thanks.

  31. Phil/short list   Sorry, I was thinking S.C. nominees….

  32. A sudden downturn – taking a poke on /NQ shorts below 7,670.

  33. here was a terrible 7-year auction at 1pm.  3.034% was up 0.009% during the auction!   First auction over 3% since 2010.  Bid to cover fell from 2.65 to 2.45 with Direct Interest (Institutions) just 12.8% from 19%


    Ugly 7 Year Auction Draws Huge Tail As Bid To Cover Slides

    Well I have a 7,672 avg on 2 /NQ shorts – we'll see how they go.

  34. LQDA….wow.

    Hope all are well here.  I must say, I don't like swimming…as I am still trying to keep my head above water!  Working sucks! ")>

  35. DavidsTea confirms marijuana producers are knocking on the door

    • DavidsTea (DTEA +15.6%) was approached by six marijuana producers this summer about a potential collaboration, according to chairman and interim CEO Herschel Segal (h/t Bloomberg).
    • Segal said in an interview with La Presse that DavidsTea didn't talk to the companies because the timing wasn't right.
    • "For the time being, it is too dangerous to try anything. But one can think about it and dream about it," Segal stated.

    Nomura updates on Las Vegas trends

    • Nomura updates on room rates in Las Vegas for Q3. The firm's tracking shows rates are tracking slightly lower in Q3 on a year-over-year comparison, but are up sequentially.
    • Digging into the details, analyst Harry Curtis and team point to strong November room rates for MGM Resorts MGM (+6% Y/Y) and Caesars Entertainment (NASDAQ:CZR) (+2% Y/Y).
    • "We believe investors may be pricing in accelerating rate pressure for LV operators in 2H18-1H19, which we are not seeing in our data," states Curtis in his update.
    • MGM and Caesars are both rated Buy at Nomura.

    Stifel raises Amazon to Street-high target implying $1.23T valuation

    • Stifel gives Amazon (NASDAQ:AMZN) the new Street-high price target of $2,525, a 27% upside implying a $1.23T valuation.
    • Analyst Scott Devitt says the firm supports “where Amazon’s investment dollars are focused as we believe this better positions the company for continued market share gains.” Cited investment areas included Prime, AWS, India, logistics, video content, and Alexa.   
    • Amazon shares are up 2% to $2,013.50.    
    • Previously: Amazon hits $1T market cap (Sept. 4)
    • Previously: Jefferies: Amazon could hit $1.5T by 2020 (Sept. 25)

    Bed Bath & Beyond slides to 19-year low

    • Wells Fargo says it saw very few encouraging signs from Bed Bath & Beyond (BBBY-20.9%) with its FQ2 print.
    • "With the benefits of Toys 'R Us closures, a strong consumer environment and a host of ambitious company initiatives failing to materialize in our view thus far, we remain bearish on 2018, and see further downside risk ahead," warns the WF analyst team.
    • Wells lowers its price target to $14 (8X the 2019 EPS estimate) and keeps an Underperform rating.
    • Elsewhere on the Street: Telsey cuts its price target to $16, Citi moves to a $13 PT, KeyBanc drops its PT to $15, BAML lowers its PT to $13.
    • Shares of BBBY hit a 19-year low low of $14.17 earlier in the session.

    Homebuilders drop as August pending home sales unexpectedly fall

    • Homebuilders sink after August pending home sales unexpectedly sank, mortgage rates rose for a fifth week, and the Fed hiked interest rates with signs that another is likely in December.
    • Direxion Daily Homebuilders and Supplies Bull 3x Shares ETF -3.5% and iShares US Home Construction ETF (BATS:ITB) -1.2%.
    • William Lyon Homes (WLH -3.3%) leads the decline. KB Homes (KBH -2.6%) also falls even though Raymond James upgraded the stock, saying Wednesday's selloff was overdone. That drop was partly a result of the Fed raising rates and partly from mixed Q3 results
    • Also heading down: D.R. Horton (DHI -2.1%), PulteGroup (PHM -2.5%), Toll Brothers (TOL -2.1%), Beazer Homes (BZH -1.8%), and Lennar (LEN -2.2%).

    Lockheed adds $1B to stock buyback program, raises Q4 dividend by 10%

    • Lockheed Martin (LMT +0.8%) pops higher after its board authorizes the purchase of up to an additional $1B in shares in its stock buyback program.
    • With the increase, the total remaining authorization for future repurchases in the buyback program totals ~$3.7B.
    • LMT also raises its Q4 dividend to $2.20/share, a $0.20 increase over the previous quarter.

  36. Phil – When is the next big Canada cannabis government decision – I heard there was something happening in Oct but do see anything big?

  37. Canada/Batman – Here's where we are at the moment:

    Controlling access

    At coming into force on October 17th, 2018, subject to provincial or territorial restrictions, adults who are 18 years of age or older would be able legally to:

    • possess up to 30 grams of legal cannabis, dried or equivalent in non-dried form in public
    • share up to 30 grams of legal cannabis with other adults
    • buy dried or fresh cannabis and cannabis oil from a provincially-licensed retailer

      • in provinces and territories without a regulated retail framework, individuals would be able to purchase cannabis online from federally-licensed producers
    • grow, from licensed seed or seedlings, up to 4 cannabis plants per residence for personal use
    • make cannabis products, such as food and drinks, at home as long as organic solvents are not used to create concentrated products

    Cannabis edible products and concentrates will be legal for sale approximately one year after the Cannabis Act has come into force on October 17th, 2018.

    Possession limits for cannabis products

    The possession limits in the Cannabis Act are based on dried cannabis. Equivalents were developed for other cannabis products to identify what their possession limit would be. One (1) gram of dried cannabis is equal to:

    • 5 grams of fresh cannabis
    • 15 grams of edible product
    • 70 grams of liquid product
    • 0.25 grams of concentrates (solid or liquid)
    • 1 cannabis plant seed

    This would mean, for example, that an adult 18 years of age or older, can legally possess 150 grams of fresh cannabis.

    The reason you're not seeing anything is that the rest is up to the provinces:

    Strict regulation

    Federal, provincial and territorial governments share responsibility for overseeing the proposed new system.

    The Federal government's responsibilities are to set:

    • strict requirements for producers who grow and manufacture cannabis
    • industry-wide rules and standards, including:

      • types of cannabis products available for sale
      • packaging and labelling requirements for products
      • standardized serving sizes and potency
      • prohibitions on the use of certain ingredients
      • good production practices
      • tracking requirements of cannabis from seed to sale to keep it out of the illegal market
      • restrictions on promotional activities

    Provinces and territories are responsible for developing, implementing, maintaining and enforcing systems to oversee the distribution and sale of cannabis. They would also be able to add their own safety measures, such as:

    • increasing the minimum age in their province or territory (but not lowering it)
    • lowering the personal possession limit in their jurisdiction
    • creating additional rules for growing cannabis at home, such as lowering the number of plants per residence
    • restricting where adults can consume cannabis, such as in public or in vehicles

    Essentially, as of 10/17 – pot is fully legal in Canada and the rest will be a process.

  38. kavanott is a real A-Hole….. Is this a guy we want to give a lifetime position?


    Let's bring in the FBI.

  39. HEY PHARM! Did the animal pharma thing ever happen?

  40. Kust…no.  My management would not let me pull the asset or any assets out of the company…so, they sit there rotting. I am going to start screaming like Kavenaugh.

  41. I can't understand why this isn't kicked to the FBI and Kavanaugh, his friend and Ford take lie-detector tests.  That's how we investigate things!

  42. Well, regardless its been awhile and hope all is well. Miss your insight on pharma.


  43. August farm prices received Index -2.2% (M/M)

    • The August Prices Received Index for agricultural production is 89.5% of its 2011 base, down 2.2% from the July 2018 index and 4.9% from the August 2017 index
    • The crop production index +3.6% M/M to 89.9: The livestock index -6.4% to 89.3.
    • Food grains +7.2% M/M and +10.8% Y/Y.
    • Feed grains -0.9% M/M and +2.5% Y/Y.
    • Oilseeds -4.4% M/M and -5.7% Y/Y.
    • Fruits and nuts -1.7% M/M and -2.2% Y/Y.
    • Other crop +0.9% M/M and +10.6% Y/Y.

    Gold tumbles to near six-week low as dollar strengthens

    • Gold slid to its lowest level in nearly six weeks, as December Comex gold settled -1% to $1,187.40/oz., while the dollar strengthened following the Fed's latest interest rate hike.
    • The release of the final Q2 U.S. GDP “put downward pressure on the yellow metal,” says Oanda senior market analyst Alfonso Esparza. “The pace of [economic] growth was confirmed as strong in the U.S. and validates the more hawkish views" of the Fed.
    • “The path of least resistance remains lower for gold as real interest rates (and more important, the outlook for them) continue to climb, and the trends are still bearish on the charts,” says Tyler Richey, co-editor for the Sevens Report.

    AMC Entertainment subscription service picks up steam

    • AMC Entertainment (AMC +1.1%) says its A-List subscription service now has 380Kmembers.
    • The A-List service saw 120K members join during the last six weeks alone.
    • Early analysis from AMC is that the subscription platform is creating an "incremental" increase in attendace at theaters. The theater chain expects an increase in domestic attendance this year for the first time in three years.

    Exxon, Chevron seen following European peers into renewables

    • Big oil companies such as Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX), which have slower than their European peers in venturing into renewable energy, are growing more likely to make room for cleaner energy in their portfolios, Goldman Sachs analysts say.
    • XOM and CVX have the lowest score among the international oil majors in terms of renewable investments, but that will change, Goldman’s co-head of global natural resources, Gonzalo Garcia, tells Bloomberg.
    • “I don’t see how they can stand on the fence when every projection suggests that in the next couple of decades renewable energy will be the dominant source of electricity around the world,” Garcia says.

    Nice little dip in progress, 7,660 is now the stop on /NQ.  At 7,650 it's almost certain to bounce so good place to take a profit and then back in if we break below.

  44. I mean wow…

    Forty-eight percent of white evangelicals say that embattled Supreme Court nominee Brett Kavanaugh should be confirmed even if the allegations of sexual assault against him are true.

    But can't vote for Obama because clearly he was worse than a sex offender! Just wow….

  45. The only problem with this process is, if Kavanaugh does get in, even if he didn't feel that way before – his attitude is going to be "F those liberals!"  

  46. Kavanaugh is saying he's a good guy because he just appointed 4 women to be his law clerks.  One of the charges against him is he appointed lots of female clerks under a "hotness" test.  He's a bit tone deaf I think…

    Also, he's got this very unfortunate pause and sniff thing where he scrunches up his face – that's not going to play well….

    He says he coached girls teams and didn't molest any of them.  Quick – call the Pope!  

  47. I wonder how it would have played if instead of attacking the victim, he had simply said that he had no recollection of that party, but he was young and stupid and might have done stuff that he regrets now. Apologize and say that he has been working hard to make up for errors of his youth! Of course his record on the bench doesn't scream compassion for women but that might have been better than what we see now! What could happen if he is confirmed and accusations are corroborated, is that he would be guilty of perjury and could face impeachment. 

  48. "F those liberals"  You got that right!  :(

  49. Like that was not going to be his MO anyway! :-)

  50. TSLA taking a dive, back to $290.  SEC files suit.  No wonder he's pushing that Mars launch – no extradition!  cool

    One day they'll run out of fanboys – but not today:

    Looks like they are pulling out all the stops to stuff inventory to sales this Q – people are catching on.

    Kavanaugh now angry and contentious and evasive answering Feinstein's simply question "Why Judge, if you are innocent, do you not want a proper investigation into this matter?"   He knows that makes him look terrible but the way he's responding is worse. 

  51. Hey, if The SEC says Elon lied,  then that means that the entire company, including the board also lied and engaged in cover up after the fact. Who is going to be left? 

  52. Who ever bought tomorrow's TSLA $300 puts at a less then a $1 is going to make out like a bandit tomorrow morning.  Congrats if that was anyone on here.  

  53. Phil. Thanks for the cannibis info

  54. Phil cannibis.   There are three provinces that are ahead of the game in terms of growing and production.  Not sure where they are on use.   

  55. Who ever bought tomorrow's TSLA $300 puts at a less then a $1 is going to make out like a bandit tomorrow morning.  Congrats if that was anyone on here. 

    That'd be a nice lotto ticket - short a bunch of suddenly OTM bear call spreads though! It's sadly ironic how Musk's attempt to shut down the shorts has resulted in one of the best short plays of the year so far. 

  56. Good morning!

    Futures down but not out, good time to cash in those /NQ shorts if you still have them (7,620) for a nice $600/contract gain!  

    TSLA – Well we didn't get a chance to add more but I'm feeling good about my BS call on Musk back on 8/7, which we played in the STP and, on 8/8, I wrote:

    Wednesday’s Whopper – Musk Claims Some Idiot Offered Him $420/share for Tesla!

    I don't want to say FRAUD in regards to Elon Musk's claim that someone is offering to take Tesla private for $420/share as I don't know it's a FRAUD but it does sound kind of like a FRAUD – given what we know about the situation yet FRAUD is a word we don't toss around likely, even when dealing with known con men – not when there's no hard evidence of FRAUD – just a large amount of indicators that point to FRAUD…

    Long Put 2019 18-JAN 450.00 PUT [TSLA @ $307.52 $-2.06] 3 8/7/2018 (112) $27,750 $92.50 $53.28 $92.50     $145.78 - $15,983 57.6% $43,733
    Short Put 2019 18-JAN 420.00 PUT [TSLA @ $307.52 $-2.06] -3 8/7/2018 (112) $-24,000 $80.00 $38.53     $118.53 - $-11,558 -48.2% $-35,558
    Short Call 2019 18-JAN 420.00 CALL [TSLA @ $307.52 $-2.06] -2 8/7/2018 (112) $-4,400 $22.00 $-15.73     $6.28 $-0.52 $3,145 71.5% $-1,255

    On to the next post.