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Faltering Friday – Tesla Tumbles, Takes Nasdaq With It

Image result for emperor musk has no clothesWell, that's a big "I told you so!"

Way back in our August 8th PSW Report (and in our Live Member Chat Room the day before) our reaction to the Elon Musk tweet that Tesla (TLSA) was considering going private at $420 with "funding secured" was to call BS and short the stock.  The title of that particular report was:  "Wednesday’s Whopper – Musk Claims Some Idiot Offered Him $420/share for Tesla!" in which I said:

$420 per share?!?

That's $72Bn for a car company that had to run production lines in tents to push out 5,000 cars in the last week of July and, aside from the high level of defects reported in the cars that have been delivered, word is that it's taking weeks to get even basic repairs done and MONTHS for replacement body parts to arrive.  Not only that but the Model 3s that are being delivered are averaging $64,000, not $35,000 as promised and TSLA is going to run out of $7,500 EV credits this year – as well as cash

The company lost $1.9Bn in 2017 on $11.7Bn in sales and, in Q1 and Q2 of 2018, they have lost $1.4Bn on $7.4Bn in sales so 58% more sales 47% more losses – I guess that COULD be called improvement, right?  Liabilities have "improved" from $21.9Bn to $22.6Bn but what's another $700M between friends, right?  TSLA also "needs" to build a $2Bn factory in China and maybe put a roof on their new production lines in Freemont so that's what, about $100Bn to take over TSLA for the joy of losing another $1.5Bn for the rest of 2018?

Image result for musk tweetI 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 indicatators that point to FRAUD…

We took the opportunity, while TSLA was shooting for the moon yesterday afternoon, to set up a short position (we already had both longs and shorts in our Hedge Fund) as I said to our Members:

Let's take Elon at his word and sell 2 TSLA Jan $420 calls for $23 ($4,600) in the STP and buy 3 Jan $450 ($100)/420 ($79) bear put spreads for $21 ($6,300).  That's net $1,700 on the $9,000 spread.

The way this spread works is that we bought the $450 puts and offset the cost of them by selling the $420 puts so anything below $420 net's us $30 per contract ($3,000) and we also sold the $420 calls, so anything under $420 casuses them to expire worthless.  If Elon is committing FRAUD and TSLA gets bougth for $420, the short calls are still worthless (as it's not over $420) and we win.  If Elon is committing FRAUD and TSLA drops lower – we win.  The stock has to go up over 20% by January expirations for us to lose and, even then, we can roll the short calls to a higher strike in a longer month.  So – many ways to win, not too many ways to lose, 417% upside potential return on cash.

While I strongly suspect Musk may have committed a FRAUD – I don't know for sure so I'll make my money betting against people who think they know for sure!

Fundamentals cut both ways and, in this case, we were able to call TSLA Funamentally NOT worth $420 per share – allowing us to short with confidence when Musk's comments spiked the stock higher.  Now the SEC is officially charging Musk with FRAUD and TLSA is down to $265 pre-market and our spread is looking very like it will collect the full $9,000 but Tesla is not out of the woods yet because the board of directors engaged in a cover-up in an attempt to paper over Musk's comments and make it look like there really was a buyer so they too may end up getting charged.

All that is just the cherry on top to the auto company that doesn't actually make a profit selling autos (or trucks or solar panels or batteries or rocket ships or underground tunnels or flame throwers…).  In fact the theory I developed to explain Musk's outrageous behavior recently is that he WANTS to be kicked out of the company – so that he can blame its downfall on someone else in an attempt to salvage his reputation as a visionary people can invest in. 

TSLA is an entity that bleeds a lot of cash and that cash is getting much harder to raise and Musk's little game of announcing stuff that's never going to happen is playing itself out as investors are no longer willing to hand him Billions of additional Dollars to watch them go up in smoke – even if it does benefit the traders who play with the stock.  Musk is simply spinning plates at the moment – trying to do anything he can to keep cash coming in before the company runs out of money.  Recently he talked about opening another GigaFactory in China but it's just another ruse to find an excuse to raise another round of capital to shore up the cash in the rest of the company. 

That was July 10th-12th and investors weren't biting so he began instead to create a fraud that would prop up the stock price – again to attract investors to a new capital raise and indeed, by the end of July, TSLA was already doing a "stealth capital raise" by adjusting the conversion rates on their bonds – something that's a short-term paper fix only.  Meanwhile, the wheels were falling off the bus Musk was driving and his actions got more and more desparate as he headed into Q3 without additional capital while buring about $750M per quarter:

I'm reviewing all this to remind people NOT to buy Tesla on the dip but to just stay away from the stock – which could go up or down $100 at this point.  Up $100 would be bringing in a big-boy executive to restructure and run the company but I can't imagine any serious auto executive looking at this balance sheet and wanting any part of the mess Elon is leaving behind.  Tesla is a company of smoke and mirrors and it's much more likely we'll find the mirror is broken once the smoke finally clears.

Meanwhile, in things we don't pay attention to, Italy is in turmoil as the new Government, rather than doing something about the deficit, has put forth a budget that's running a deficit of 2.4% of their GDP, which violates EU rules and has shot their 10-year bonds up 11.86% on the day to 3.21% vs. 2.77% for German notes.  Rome has to submit the budget to the EU next month and the EU may reject it, which would downgrade Italy's credit and send borrowing rates even higher. 

That's got EuroStocks down almost 2% this morning but don't worry as we're still doing our window-dressing in the US for the last day of the quarter so don't expect us to follow suit-yet.  In fact, this morning, in our Live Member Chat Room at 8:09, I said:

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! 

 

Looks like we nailed the bottom (for now) and we expect a bounce of 8 points (20%) off the 40-point fall, which would be weak at 7,628 and a strong bounce (40%) would be 7,636, above which we look for 7,650 as a short again but if those fail, the next good entry will be the cross back below 7,600, which could be a nice ride down next week.  

Fortunately, we added a lot of hedging trades in Wednesday's Live Trading Webinar, when we felt the Fed had said nothing supportive of the market highs.  You can see a replay of that here and we also were shorting the Nasdaq Futures live at the time, making our Members a quick $350 during the webinar – which is why you want to catch them live!

Notice on our Big Chart that the Russell has failed its 50-day moving average at 1,700.  There's nothing bullish about the market until it takes that back and watch out below if any of the others fail to confirm a new downtrend but, as I said, not today – today we have to make the quarter look pretty so we can bring some fresh retail suckers in to hold the bags next quarter

Have a great weekend,

- Phil

 


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  1. Crypto and weeds – bubbles resulting from our gambling instincts:

    https://www.bloomberg.com/news/articles/2018-09-27/crypto-and-cannabis-are-the-perfect-post-crisis-bubbles

    But the gambling instinct can be repressed for only so long. And lately we’ve seen the emergence of strange new bubbles. And, yes, I’m talking about crypto and cannabis. The wild trading in shares of Canadian marijuana company Tilray Inc. in September—in which its market value briefly exceeded that of American Airlines Group Inc.—felt a lot like last year’s Bitcoin frenzy. Despite their different paths, the crypto and cannabis bubbles are unmistakable siblings. Spend a few minutes on Reddit pages devoted to Bitcoin, cannabis, or trading, and you can see the overlap and similarities of the communities. According to TD Ameritrade Inc., trading in pot stocks is overwhelmingly done by millennial-aged males. The stats for crypto look the same.


  2. And good quote from that article:

    The economist John Maynard Keynes wrote: “The game of professional investment is intolerably boring and over-exacting to anyone who is entirely exempt from the gambling instinct; whilst he who has it must pay to this propensity the appropriate toll.”


  3. No time to cut social security:


  4. Phil,

    What do you think of Lam Research (LRCX)?

    Thanks


  5. Good Morning!


  6. It's been quite the roller coaster ride on /NG this week! 


  7. Good morning! 

    Kavanaugh didn't offer a word of sympathy or concern for women who have been sexually harassed or abused. It was all about him — portraying himself as the victim of a partisan conspiracy. How can this man ever be a non-partisan justice?

    Judge Kavanaugh showed America exactly why I nominated him. His testimony was powerful, honest, and riveting. Democrats’ search and destroy strategy is disgraceful and this process has been a total sham and effort to delay, obstruct, and resist. The Senate must vote!

    Yeah, this guy will decide how you will live your life for the next 30 years…

    Just so you know how serious it is when the SEC formally charges you:

    7,650 yet again on /NQ – thanks!  (Back in the shorts)

    Keynes/StJ – Didn't I just say that in Wednesday's Webinar?  Keynes stole that from me!

    Retirement savings chart is scary.  Going to be a massive crisis in 20 years.

    LRCX/Kgab – I like them, they are a good, steady company and seem to have sold off with the semis though they did guide down in their July report to $3.20 so p/e around 40x at 150 still isn't cheap.  I'd keep an eye on them and would be much more interested at $100 but I doubt we'd see that so hopefully just a chance to sell $100 puts (now $8 for 2021) for enough money to pay for more than half of a $100/150 spread (now $57.50/29 = $28.50).

    /NQ/StJ – Crazy week, the trade war fears vs clearly increasing demand.

    And the indexes are bouncing back again, stopped at 7,630 on /NQ.  Have to be more careful on next test as we may break over this time.

    Consumer Sentiment

    • Sept. Consumer Sentiment100.1 vs. 100.8 expected and 100.8 prior.
    • Current economic conditions 115.2 vs. 116.1 prior.
    • Index of consumer expectations 90.5 vs. 91.1 prior.

  8. Whew… who,  go /KC


  9. /KC/Grass – That was great, up $750/contract from our entry so good time to take it off the table and wait for the next pullback!

      


  10. And that's that – I finally worked off my /NQ loss from last month! 


  11. What sucks is I could have just stuck with the /NQ shorts.  And now we're back near those highs but I've lost my taste for going for the big win after that burn.


  12. Roger that, I have scaled out on the way up.  Need to wash, rinse, and repeat to work my loss off on this one.  But, looking MUCH better now.  

    /SB popped as well, /GC moving ever so slowly.  Nice way to enter a weekend. 


  13. My cousin, who doesn't trade and just wants safety, just asked what I thought of doing with a small retirement account over the long term and I thought I'd share my response:

    Given the current uncertainty in the market, I cashed in Maddie and Jackie's 509 College Savings accounts as I'd rather not make money through the elections than lose a semester or a year's tuition.

    That's the best short-term advice I can give you – maybe take a step back and go in cash for a bit and then go bargain-hunting. 


    Meanwhile, look for a good long-term dividend fund.  See the steady outperformance over time:

    Dividend Aristocrats outperformed the S&P 500

    Here's a few good ones:

    Screening for dividend growers

    If we don't have more downturn, EMDV will be interesting but diversifying among those for the long-term is a good way to consistently beat the market's average performance.

    Consider that stocks paying an average 2.5% dividend for 20 years ad 50% to whatever gains the stocks have – or mitigate the losses as well!

    A dividend ETF reinvests it too, so the 2.5% compounds for even better returns.

    - Phil

    /SB/Grass – Nice, I didn't play it but we did catch a good bottom.

    Dollar still going up:

    That's a strong indication that Gold has really bottomed – I actually called $1,185 for Investing.com yesterday but I don't know if they published it.

    Here's my notes from Sept 11th for them:

    “We bought silver at $14 a couple of weeks ago and sold it when it hit $14.30,” said Phil Davis of PSW Investments in New York. “We made $1,500 per contract, an opportunity that was kind of hard for an independent trader to refuse. We’re back in again at $14 and think we’ll hold this time till it reaches $14.50.”

    Blame The Dollar, Not The Metal

    Davis said buying silver at prevailing prices was a “no-brainer” as the metal had so many more uses compared to gold which primarily had three functions: as a jewelry component, hedge against the dollar and long-term store of value against inflation. He said:

    “Many people don’t realize that silver and gold aren’t falling because they are bad investments. They are falling simply because the dollar is stronger. Considering that silver was trading at around $20 an ounce for a long time years ago, commercial buyers would want to lock in before it starts rallying again.”

    This stuff really isn't that hard if you focus on the Fundamentals and PATIENTLY wait for things to be too high or too low in established channels AND they have a catalyst to reverse.  To summarize:  STUDY & PATIENCE!


  14. Speaking of patience, shorting /CL at $72.95 and /RB at $2.095!

    Dangerous trades but I'd kick myself if I missed the drop light hold over the weekend.


  15. Phil:  I have a 180/200 BCS January 2019.  I was thinking of rolling the 180s down to 150s.  The cost of the trade is approx. $16 and is approx. $16 in the money.  Thoughts?

    Also regarding the Bed Bath discussion yesterday .. 2 thoughts from someone who just took 2 kids to college.  One .. have you seen those coupons in the mail?  Everyday  get at least one 20% off coupon.  Standing in line to buy dorm stuff .. people had literally hundreds of those coupons in hand .. and policy is to allow 1 per item .. so people were getting 20% off per item.  Second .. our bed bath has moved into walgreens type stuff .. shampoos, facial creams ,,, don't know why but to me this seems like desperation as this is not high margin stuff.  Third, Amazon had whole dorm/back to school store with direct delivery to the dorms at significantly cheaper price point than BBBY!  For kid one (who graduated), I bought everything at BBBY.  For kid 2 and 3, everything was bought and directly delivered to the dorms from Amazon.  I would stay away!


  16. TLRY holding a bit. This is how a $10B market cap for a company with $20M in rev starts to feel "normal."

    The TSLA puts I wish I held. It's almost like the SEC charges Musk on a Thursday so they can alert all the insiders to pile into the weeklies. It wouldn't surprise me


  17. Nomigp -  Good observations.


  18. Dividend Aristocrats, looks to be a symptom of low interest rates. Will watch the correlation as rates rise.


  19. Well, that didn't work at all – oil blasted to $73.35 now.  /RB over $2.10.  Dollar ticking a bit lower but no major news that I see.

    European banks sink as Italy set for battle with EU over budget

    • Europe banks and financials drop as the stage is set for a EU-Italy battle over Italy's proposed budget deficit of 2.4% of GDP for the next three years, a higher level the previous administration's target.
    • The iShares MSCI Europe Financial ETF (NASDAQ:EUFNslumps 2.4%, its biggest decline since August 9. YTD return is -7.1%. The euro weakens 0.5% against the U.S. dollar at 0.86 euros to the greenback.
    • Dutch bank ING Groep (NYSE:INGloses 3.3%, while Deutsche Bank (NYSE:DBfalls 3.1% and Banco Santander (NYSE:SANdrops 2.7%. Lloyds Bank (NYSE:LYG-2.9%.
    • Insurers also weaken: Allianz SE (OTCPK:AZSEY -3.3%), Prudential Plc (PUK -2.4%), AXA SA (OTCQX:AXAHY -3%).
    • The decline is more subdued in U.S. financials, with the Financial Select Sector SPDR ETF (NYSEARCA:XLFdown 0.6%.
    • European financial ETFs: EUFNEUFLEUFS
    • Euro ETFs: FXEEUOERODRRULEEUFXURRDEURUEUR
    • Previously: Italy plunges more than 4%, bond yields shoot higher (Sept. 28)

    Random spread/Nom – If I really like a stock, I'm happy to spend $1 to roll down $2 if it's IN THE MONEY (intrinsic value) and, of course, if I REALLY believe in the new target I'm spending a lot of money on.  

    BBBY/Nom – Yes, they are restructuring but not sure why you think shampoos and creams have lower margins than a shower head or a pillow sheet and people buy the shampoos and creams 12x per year for $5, spending $60 – which is much more than they spend on pillow sheets and shower heads.  I just sent my daughter to college up in Amherst and the first thing they wanted to do a week later was go to Target to buy stuff they needed.  We did use AMZN for some things but, day to day, people still go to stores and this one earns more than $1 for every $10 you give them – even with the horrors of AMZN competition.  Still, your narrative is exactly why we're able to get perfectly good companies for such amazing prices as it keeps other people from competing with us for the stock.

    See, and then you say it and Albo agrees with you, leading others not to buy a company with great Fundamentals based on a story.  

    BBBY has $12Bn in revenues, which is 1/15th of AMZN's revenues and BBBY has $420M in profits, which is 1/7th of AMZN's profits yet BBBY is valued at $2Bn, which is 1/50th of AMZN's valuation.  In the short run, any retailer can kick any other retailer's ass by selling things for less money.  The question is who survives over the long run.  

    RH is another good comp as it's a way upscale BBBY.  They have $2.4Bn in sales (1/5) and $2M in profits (1/200th) and a 1.5x valuation to BBBY.  

    Bottom line – it's not a rational market – by any stretch of the imagination.  Last time we played RH, we were selling 10 2019 $25 puts for $6 in the old LTP, back in Dec 2016, when they were in the mid $20s – I guess those will expire worthless.  wink

    So now BBBY is out of favor and people think they suck because the stock fell 60% and I like the Fundamentals and think it's a buy.  We'll have to check back in 2 years to see if that one works but by then I'll be liking the next value retailer that's out of favor that people panic out of and we'll have the same debate all over again.

    TLRY/BDC – I can only hope New Age gets so "abnormal" one day!   


  20. BBBY   The 20% coupons ARE Bed Bath's primary marketing strategy and not a symptom of something wrong. Anyone who goes there KNOWS to bring a handful of coupons.  Even the cashiers will work with you to use the coupons that will give you the biggest discount.  In fact, you can pay them an annual fee and get a permanent discount without having to present any coupons at all.  Also, shopping there  with your college bound kid is a great way to let them get accustom to life on their own. Also, if you are buying sheets and pillows, why not shampoo and deodorant. And what Phil said.  :)


  21. Turns out many of the same people who buy sheets and pillows are also consumers of shampoo and deodorant!  cool


  22. Phil/LRCX Earnings – I think your EPS numbers are not correct; 

    06/2017 to 06/2018 = $17.87

    06/2018 to 06/2019 = $15.23 (Est)

    06/2019 to 06/2020 = $18.02 (Est)

     And they pay $4.40 as dividends


  23. Phil – Lest you forgot,  I'm in BBBY puts.  Sold them yesterday morning before your post about the stock.  Don't have a firm conviction as you do, but the Jan 12.50 puts seemed like a great bet to me.


  24. LRCX/Vkat, Kgab – Apparently they were guiding down to $3.20 for the QUARTER – my bad!  This is from Stockopedia – they're pretty accurate.  If that's the case, then $153 is very reasonable, though I'd want to get a handle on why revenues and profits shot up so much and if they are sustainable first.   

    Year End 24th Jun 2013 2014 2015 2016 2017 2018 2019E 2020E CAGR / Avg
    Revenue $m 3,599 4,607 5,259 5,886 8,014 11,077 10,460 11,503 +25.2%
    Operating Profit $m 118.1 677.7 788 1,074 1,866 3,171     +93.1%
    Net Profit $m 113.9 632.3 655.6 914 1,698 2,381 2,532 2,887 +83.7%
    EPS Reported $ 0.66 3.62 3.70 5.22 9.24 16.5     +90.5%
    EPS Normalised $ 0.66 3.21 4.10 5.22 9.42 16.7 15.4 17.5 +90.6%
    EPS Growth % -51.2 +383.4 +27.8 +27.3 +80.6 +77.0 -7.61 +13.7  
    PE Ratio x           9.03 9.77 8.59  
    PEG x           n/a 0.71 0.44
    Profitability

    2018 is over for them, those are not estimates.  They lost a bit in Q2 but made $590M, $778M and $1Bn otherwise so about $1.4Bn for the year against a $24Bn valuation and we can assume the bad Q was a one-time thing so maybe good for $2Bn, which does make them look like a bargain so remind me to take a closer look over the weekend.  

    BBBY/Albo – Good call, go with the head and not the heart.


  25. FB – 50M user account breach. Anyone ready for crypto-enabled social media yet?


  26. Here's what's got oil going today:

    A growing chorus of industry leaders are predicting the return of $100 oil for the first time since 2014

    Also, the US cartel is trying to artificially boost consumption by stopping ethanol from being blended in but that conflicts with what the farmers want so who know who'll win this one:

    Oil lobby clashes with Trump over ethanol plan

    Also helping to boost oil:

     

    The price of oil is up 22% this year. But the cost has doubled if you’re buying in Turkish lira and crude is up 39% in Indian rupees and 34% in Indonesian rupiah

    Oil's leap toward $100 is softening the blow of Russia sanctions

    Putin wins again! 

    in other news: the Trump administration argues that we shouldn't bother to reduce the amount of oil we burn in our cars because we're doomed anyway

     

    Trump administration sees a 7-degree rise in global temperatures by 2100

    But the administration did not offer this dire forecast as part of an argument to combat climate change. Just the opposite: The analysis assumes the planet’s fate is already sealed.

    The draft statement, issued by the National Highway Traffic Safety Administration (NHTSA), was written to justify President Trump’s decision to freeze federal fuel efficiency standards for cars and light trucks built after 2020. While the proposal would increase greenhouse gas emissions, the impact statement says, that policy would add just a very small drop to a very big, hot bucket.

    OMG, we are so DOOMED!


  27. Holy crap, what a bunch of quitters! I guess the mentality is to make as much money as possible and f@ck our kids and grand kids! Just that right there disqualify them from leading a country… Or be a parent for that matter.


  28. So that $100 oil is basically a tax on the US consumers that is also a gift for Putin! And no one seems to be upset! 


  29. Upset/StJ – We're too busy worrying about women's rights being taken away at the moment.  

    A sexual assault survivor just confronted Jeff Flake (who just announced he's voting for Kavanaugh): "Don't look away from me! Look at me and tell me that it doesn't matter what happened to me, that you will let people like that go into the highest court of the land"

    Indexes pulling back again – quite the roller coaster today.

    I took the money and ran on /RB pullback (just $350) and I'm rising 4 /CL short at $73.115 avg but back to 2 if I can get even, of course. 

    /NG still crazy

    Stan Druckenmiller: Intuitively, you can make a case that we're going to have a financial crisis bigger than the last one, because all they did was triple down on what, in my opinion, caused it.

    Well it's official, most Americans are unrealistic idiots:


  30. Let's not forget Aramco who loves $100 oil long time…. ;)


  31. Phil

    CPB  Campbell Soup Company

    do you see and trades or a buy out ?

    Thanks


  32. CPB/QC – $11Bn is not  good against 2018s $261M in earnings but projection for the future at $744M and $790M and they pay a nice $1.40 (3.5%) dividend too.  So yes, I'd say this is a bit of a gem coming off an unusually low earnings year but there's a huge battle for the board, so it's likely to be a rocky road.  

    Still, I'd pay $30 for them so, in the LTP, there's no reason not to sell 10 of the CPB 2021 $35 puts for $5.20 ($5,200) as our worst case is owning them at $29.80 and, if there is a buyout, then we get zero'd out early.  If they do go lower, I think I'd be happy to sell more puts and add a bull spread – good call!  

     


  33. Close enough on /CL ($73.15) to get back to 2 short, now down $130/contract and I don't mind holding 2 over the weekend but 4 could be expensive if we get it wrong.


  34. Was listening to a podcast recently (MacroVoices) and they had a guest on (Marin Katusa) who was giving his take on how he see's Uranium is going to be a great investment over the next 3-7 years. 

    Basically, given his analysis and what he described as very conservative assumptions on both supply and demand over that time frame, even his worst case scenario was relatively bullish. 

    More to the point, he would not name his favorite play on the sector outright, but did give some hints, and I'm wondering if anyone has any idea? He said there was only one company doing this at the moment at any significant level, and he described it as sort of the same model as Wheaton precious metals, where the company isn't actually involved in the mining of the commodity but makes rights/warrants deals with various producers. 

    I think he alluded it to being a Canadian firm as well. 

    Anybody have any ideas? if we can pinpoint the company would be interested to hear Phil's take on it!

    Thanks


  35. I wonder why CPB had such a bad year and why we should expect that to change? Betting that more people will buy cheap crappy soup in a recession?


  36. Phil / BBBY. Think the downgrade police may be done with this one.   I don't have a position but am looking to sell the following:

    20X '21 $12.50 for 2.5.    Can you please recommend a BCS to go with this… along w/ any ST caller.


  37. ABX 

     

    GOLD +7% confirms merger with Barrick Gold (ABX).

    In other ABX news, Barrick Gold enters investment agreement with Shandong Gold Group which will purchase up to $300 million of Barrick shares.



  38. Katusa/Crs – What you listened to was part of an ongoing informercial for his service.  Not sure if there's any substance to his BS.  We used to play CCJ in hopes that uranium would come back but it got boring waiting for them as they've been around $10 since 2016.  I still like them long-term but it's all about whether or not Japan restarts plants – otherwise there's still a surplus.   I don't know what the mystery streamer is – it's probably just a canadian stock with no US presence.  

    CPB/Bill – My kids have barely grown into soup yet (other than ramen bowls and miso) but, for sure, they are not going to cook anything if you can get it out of a can instead.  I don't even know why they bother making kitchens anymore – none of my daughters' friends actually cook anything.   As to why they had a bad year – new CEO kitchen-sinked the Financials and they took a loss killing off their fresh foods business (as I said, no one wants that).  They are in a restructuring that aims to cut $650M/yr so that will, in theory, drop $400M to the bottom line, after taxes.   Also, they bought Snyders this year and borrowed $6.5Bn to do it – that will take time to wash through as well and it's also why they show a nice bump in revenues going forward as a combined company. 

    BBBY/Batman – Well they missed their chance today as it's up near $15 and, as I noted yesterday at $14.50, it had gotten too low for people to be bearish so I wanted to act while the price was low, rather than risk it bouncing back quickly.

    I'm not sure what you want me to recommend as we just did a roll yesterday in the LTP so I don't see why that would change today.  We rolled 30 2020 $15 calls at $2.75 to 30 2021 $12.50 calls at $4.40 (now $4.90) to take advantage of the sell-off and we didn't cover because we think below $15 is stupid.  If you feel the need to cover, I'd just sell 1/2 of the 2021 $20 calls at $2.35 and see how that goes but I think we can get at least $3 for them if we wait and that makes the new spread net $1.40.  And obviously I wouldn't sell a short-term caller either if I think it's way undervalued. 


  39. Wow, shaming works!  Jeff Flake leads call for 1-week FBI investigation before confirming Kavanaugh.  


  40. If a woman tells her story and no one in her government hears her- does her government exist at all? No. Women have no government. We are ungoverned, so we will become ungovernable. Way to radicalize women, . We will now become strategically and relentlessly disobedient.


  41. Phil. Bbby. Thanks 


  42. The best part of this is that McConnell has clearly lost control of the Senate.  Just this morning he assured Trump he had the votes.  


  43. This is the worst soapbox saga ever. It just makes me sick to my stomach that our daughters have to feel and hear all this total and complete disrespect for and against women. This country has sunk to such new lows that it is nothing but disgusting. 27 years ago we watched in horror with Anita HIll and Clarence Thomas, that the courts victimized her for just trying to have a decent job. I feel eviscerated.


  44. I was thinking of trying out a fake news experiment. I need something brand new so I can make it up out of whole cloth, what I came up with was earthquakes. I doubt anyone currently believes earthquakes are fake. Do you think if I put out a fake news website, vis-a-vis anti-vaxxer or smart-meters cause cancer, I could get followers to actually believe me? It would contain all of the usual suspect convenants, e.g., that "earthquakes" are a liberal-socialist government conspiracy (led by California of course!) to control your lives through building permits and taxes, and "we're just asking questions, why are these snowflakes scared of questions?," and the pseudo-scientific goal-seeking that comes from the convenient misinterpretation of scientific data and instrumentation concepts that just happens to support the theory at hand, etc etc etc.

    The general premise is to test how a society can have something that is scientific certainty, say the earth being round, but can still support a Flat Earth society (though I can't tell yet if this is a joke or not). This is in furtherance of my developing theory that information in the Knowledge Economy is shifting to being a probabilistic function based on transactional value, as opposed to binary black or white "true or false" that dominated in the Manufacturing Economy.

    Anyone want to bet I could make it stick? :)


  45. Good study:

    Yesterday, Kavanaugh said he would be willing to do *anything* to clear his name. But Senators asked him repeatedly if he would support an FBI investigation into the allegations. By our count, Kavanaugh refused to answer 17 times.

    Also, more GOP machinations are exposed:

    Although Chairman Chuck Grassley, R-Iowa, said that his staff had made "eight requests" for evidence from Deborah Ramirez's attorneys, complaining that "the committee can’t do an investigation if attorneys are stonewalling," according to emails obtained by the New Yorker, Grassley's description of the communication between Republican staffers and Ramirez's attorneys was misleading.

    Ah hindsight – the TSLA weekly $275 puts:

    Good note on why China may dominate us on AI going forward.  Ultimately, I'm not sure any human will end up winning this race…

    Eviscerated/Pirate – I don't see how any guy who has daughters can put up with what the GOP is doing.  I knew plenty of frat boys like that in college and, back in the 80s, taking advantage of drunk girls was not considered rape but we still thought they were sleazbags.  I think an FBI investigation will lead to a lot of stories about Kavanaugh and his buddies coming to light but will it be enough to stop the GOP from ramming him into a lifetime appointment where he gets to decide if women should be allowed to have abortions after being raped by frat boys?  That remains to be seen but I think it will come back to haunt a lot of them in November.  

    "Go up and down the streets of Jerusalem. Look now and take note; search her squares. If you can find a single person, anyone who acts justly, anyone who seeks the truth, then I will forgive the city."

    Have a good weekend, 

    - Phil


  46. Debt to GDP chart / Phil – If you look at the curve, where do the problems originate? The Fox crew always say that Obama doubled the deficits, but our debt slope are greater under the Reagan and Bush years! What happened then – tax cuts for the top 1%, more income inequality. That means that the rest of the population get indebted to send our kids to college, pay for our healthcare, buy houses and cars! And the government has to borrow money to make ends meet.


  47. Nice to see Kavanaugh delay. I think lie detectors should be mandatory in all these cases. Both parties take the lie detector. It makes sense for both parties. Men who believe women make this stuff up should approve because it should reduce false claims. And the women should like it that there is some check on the guy's denials. If it's all going to come down to verbal statements, there should be some objective way to measure truth that doesn't depend on anyone's public performance in a high pressure environment.


  48. BDC In this society at this moment you could say the Martians are landing like happened 68? years ago and you'd probably cause a panic like it did back then!


  49. I'm all for investigating and looking into these things but my understanding is that polygraphs are not reliable and can fairly often produce false positives. 

    That could be awful for either party, the accused could fail on a false positive or in fact be guilty and pass the test. If the victim failed on a false positive in such a public case as is going on now I can't imagine the blowback on that either, not a good scenario. 


  50. Martians/PI – Good idea… maybe spin the story to suggest we are the martians? 


  51. House passes GOP bill to make new tax cuts permanent


  52. Only these 8 states require sex education classes to mention consent



  53. How the F.B.I. Will Investigate the Kavanaugh Accusations



  54. Is Your Salad Habit Good for the Planet?




  55. Apologies if this has been referenced previously, but Howard Marks' latest missive is an excellent piece on the current investing environment – a well crafted perspective on caution. 


  56. Thousands in Central Park panic after barrier collapse




  57. The ultra-liquid ultra-rich







  58. Trump Administration Sues Over California Net Neutrality Law




  59. Saudi shelves $200 billion SoftBank Solar project: WSJ




  60. Good morning!

    So much for skipping Mondays….

    Markets off to a flying start on NAFTA deal news.  We were at all-time highs so ending NAFTA didn't take us lower, so how does extending NAFTA make us go higher?  Same with TSLA – Elon Musk isn't in jail yet – but the DOJ hasn't settled and the lawsuits from the shorts have a lot of teeth now for Billions in damages. 

    Oil $73.50 but not sure why yet.  Still 2 short at 73.34 avg.  /RB $2.09 still early in the cycle.