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Monday Market Misgivings – China, Italy, Bonds, Brazil & Brexit

Problems, we've got problems

They're not new problems and trade issues and bond issues are self-inflicted problems but, as was made obvious by the Kavanaugh confirmation this weekend – these self-inflicted problems aren't going to go away soon.  If America is indeed on the wrong path – the wheels are being locked in with lifetime appointments that insure these policies will last long after Trump has gone to pasture.  

As you can see from the chart on the right, other than Israel, Kenya and, of course, Mother Russia, other contries' view of America has been deteriorating rapidly since Trump took office – worse even than Trump's poll numbers at home.  People in other countries consider the United States, not Russia or China or Iran – to be the single biggest threat to World Peace.

Meanwhile, Trump's rollback of Obama's Climate Policies and withdrawal from the Paris Climate Accords has, according to the new report from the United Nations, set us on a path for Global Catastrophe as soon as 2040 which, in case you are not good at math, is only 21.5 years away.  

The report, issued on Monday by the Intergovernmental Panel on Climate Change, a group of scientists convened by the United Nations to guide world leaders, describes a world of worsening food shortages and wildfires, and a mass die-off of coral reefs as soon as 2040 — a period well within the lifetime of much of the global population.

The report “is quite a shock, and quite concerning,” said Bill Hare, an author of previous I.P.C.C. reports and a physicist with Climate Analytics, a nonprofit organization. “We were not aware of this just a few years ago.” The report was the first to be commissioned by World leaders under the Paris agreement, the 2015 pact by nations to fight global warming.

Image result for us rogue nation climateLook, I know you don't want to hear this stuff on a Monday morning but we are talking about a major global crisis and WE ARE MAKING IT WORSE, not better, not even the same, because we have "leaders" who are not only ignoring the problem but ACTIVELY working to make things worse – working AGAINST the efforts of the rest of the World.  Do you know what that makes us?  A rogue nation.

If you don't do something about it, no one will.  This is the fate of our planet we're talking about and we're not taking it seriously.  The UN report estimates the cost of doing nothing will be $54Tn in damages over the next 40 years but the solution is just as expensive and will require heavy taxes on carbon dioxide emissions, perhaps as high at $27,000 per ton by 2100.  To keep that in perspective, the average gas-powered car expells 4.6 tons of CO2 per year!  

To prevent 2.7 degrees of warming, the report said, greenhouse pollution must be reduced by 45 percent from 2010 levels by 2030, and 100 percent by 2050. It also found that, by 2050, use of coal as an electricity source would have to drop from nearly 40 percent today to between 1 and 7 percent. Renewable energy such as wind and solar, which make up about 20 percent of the electricity mix today, would have to increase to as much as 67 percent.

“This report makes it clear: There is no way to mitigate climate change without getting rid of coal,” said Drew Shindell, a climate scientist at Duke University and an author of the report.

Clearly by 2100 we should be able to stop using gas-powered cars and even trucks and buses but we need to start NOW or there won't be a 2100.  Seriously folks, these are real numbers compiled by 91 of the World's top scientists who reviewed over 6,000 studies from around the World – these are FACTS, not fake news!  

Related imageMeawhile, the spread of radical conservatisim is giving Trump allies in his quest to destroy the planet.  This Sunday, Brazil moved towards electing Jair Bolsonaro, the far-right candidate who is also planning to pull out of the Paris climate accords. The former army captain has made provocative statements on a huge range of issues.  He has pledged tough punishments for offenders and the relaxing of gun ownership.  He has also spoken of torture as a legitimate practice and wants to restore the death penalty.  Bolsonaro's misogynistic and homophobic rhetoric has prompted outrage and protests, and he has taken a strong anti-abortion stance.  Sound familiar?  You may as well make him Pence's VP now…

Speaking of ineptitude by the administration, replacement Secretary of State Mike Pompeo blew up the China meeting this weekend on "fundamental disagreements" including what China calls "escalating trade disputes, interfering on Taiwan and meddling in the country’s domestic affairs." “These actions have damaged our mutual trust, cast a shadow over China-U.S. relations, and are completely out of line with the interests of our two peoples,” Foreign Minister Wang told Pompeo.  

China’s public show of displeasure also represented one of the strongest signs yet that the widening list of disputes between the U.S. and China could undermine their cooperation on North Korea.  Unlike a similar trip in June, Chinese President Xi Jinping granted no audience to the U.S. Secretary of State.  In the speech at the Hudson Institute in Washington last week, U.S. Vice President Mike Pence accused China of “a whole-of-government approach” to sway American public opinion, including spies, tariffs, coercive measures and a propaganda campaign.

Needless to say Chinese markets opened sharply lower as they came back from a week-long holiday and, of course, our own futures are continuing last week's downturn on worsening conditions between the World's two largest economies.

Today is a semi-holiday in the US so we can't take the markets seriously and there's not much data this week but there is a lot of Fed speak with 7 market-moving speeches planned for the week:

We're still watching the same pullback lines we expected last week and, so far, the Short-Term Portfolio (STP), where we have our hedges, is up $25,000 since 9/24 while the Long-Term Portfolio (LTP) is down $43,000 so the STP is doing it's job of mitigating the damage and the LTP should look better once the VIX calms down (since we sell a lot of premium, we get hurt when the VIX rises in the LTP). 

On the whole, I'm very pleased with our last round of portfolio balancing – especially the moves we made to make the STP more aggressive!  

 


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  1. General Electric – Barclays upgraded shares of GE to "overweight" from "equal weight," writing that "even the most hardened skeptic might want to re-consider following" GE naming Larry Culp as chairman and CEO. The firm has a 12-month price target of $16 on shares of GE but also laid out a "blue sky" scenario for how the stock can rise if Culp can aggressively improve profitability.


  2. Closing in on some interesting levels! Each time we talk about moving the lines…


  3. Gold getting hammered.


  4. Biggest political crook in a long time:

    https://talkingpointsmemo.com/news/in-shift-mcconnell-implies-he-will-consider-trump-scotus-nom-in-election-year

    McConnell now claims that in blocking Obama nominee Merrick Garland’s confirmation process for months, “we simply followed the tradition in America, which is that if you have a Senate of a different party than the President you don’t fill a vacancy created in a presidential [election] year.”

    By retroactively narrowing his own rule, McConnell implied he would work to confirm a Supreme Court nominee referred by a Republican president, namely Trump, to the Republican-controlled Senate.

    Just making new rules to fit the situation. That is why we now have historians making comparisons with Germany before Hitler:

    https://www.vox.com/policy-and-politics/2018/10/5/17940610/trump-hitler-history-historian

    This is the key point that people often miss when talking about Hitler’s rise. The breakdown of German democracy started well before Hitler: Hyperpolarization led Hindenburg to strip away constraints on executive power as well as conclude that his left-wing opponents were a greater threat than fascism. The result, then, was a degradation of the everyday practice of democracy, to the point where the system was vulnerable to a Hitler-style figure.


    Now, as Browning points out, “Trump is not Hitler and Trumpism is not Nazism.” The biggest and most important difference is that Hitler was an open and ideological opponent of the idea of democracy, whereas neither Trump nor the GOP wants to abolish elections.

    What Browning worries about, instead, is a slow and quiet breakdown of American democracy — something more much like what you see in modern failed democracies like Turkey. Browning worries that Republicans have grown comfortable enough manipulating the rules of the democratic game to their advantage, with things like voter ID laws and gerrymandering, that they might go even further even after Trump is gone.


  5. An example of what Brxit could do to big companies:

    https://www.theguardian.com/news/2018/oct/04/will-nissan-stay-once-britain-leaves-sunderland-brexit-business-dilemma

    When I told him that Michael Heseltine had reflected on the 1980s closures of the north-east’s coal mines and heavy industry as “too unthinking”, Ramsbotham instinctively drew a parallel with Brexit: “Aren’t we in danger of doing the same unthinking thing now?” he responded. “Delivering another potentially catastrophic shock to the economy, without sufficient thinking, planning or foresight?”


  6. Phil/global destruction

    Good morning and thanks for the article.

    Destruction in 2040….”it’s only 19.5 years away, for the math challenged”. 

    You mean 21.5,correct?


  7. Good Morning!


  8. Good morning!

    Interesting that Futures are down 150 but Dow is down only 110 – we'll see who's right.  Clearly sentiment is deteriorating a bit.

    /RB hit $2.05, temping long, /CL $73.50 not tempting though.  Dollar 95.60 at the moment.  /KCN9 hit $120!  

    /YG $1,187.50 is good for a long and stop below $1,185. 

    /SI $14.30 is also a nice entry but could go lower so more scary.


  9. GE/Jabob – That should keep us over $13.  

    Big Chart – If the RUT fails the 200 dma at 1,620 – very bad sign.  Big deal is whether or not SPX fails the 50 dma aat 2,877 and confirms overall weakness so watch for the S&P to fail (more bearish) or NDX to get back over 7,480, which would be slightly more bullish but that's 80 points away now.

    Math, Maya – Oops, I guess I join the ranks of the math-challenged!   Thanks.


  10. As noted above, our new additions to the STP are already pulling their weight.

    We were at $232,125 on our last review (9/19) and we didn't make many changes then as we were still heading up but, on 9/21, it was a Friday and we didn't want to go into the weekend without locking down the insane gains we had in the LTP.  As I said at the time:

    Speaking of uncertainty, I said we should put some cash into STP hedges to lock in these insane LTP gains.  LTP now up 83.3% so 1.6% higher (about $8,000) than it was when I did the review (on the unchanged positions) - MADNESS!!!  

    We rolled DXD more aggressively as well as SQQQ and TZA and added the MSFT bearish play, which is on track and already up $3,000.  While I don't want to be complacent with the LTP, until we break technicals I'm not looking to do anything drastic there.  We have $300,000 worth of downside protection in the STP and we've only gained $25,000 of it so far – we buy the insurance so that we DON'T have to panic or make quick decisions without enough facts.  


  11. Phil,

    What are your bounce lines on /RB? Do you think it’s headed towards 2 or will they keep it around herr


  12. Phil- re: 19 or 21 years for complete global catastrophe. Guess a few years give, or take doesn't make a whole lot of difference. The scientists have been telling us this since the 1960's when I became that dreaded word "environmentalist." We were laughed at then as "tree huggers." But it takes our forests all over the world to counteract the toxic spew from coal, cars etc. Since I lived in Calif the smog was a big deal since one just couldn't breathe! Not serious at all. Anyways thanks for continuing to sound the alarms. God knows that everyone loves to deny, deny, deny just like in 2008!!


  13. /RB/Japar – Well, it's not MY bounce lines, it's the bounce line from the fall and we can call it $2.14 to $2.06 so that's down 8 so call the bounces 1.6 but 1.5 is neater so $2.075 would be weak and 2.09 would be strong.

    Smog/Pirate – My mother, who grew up in London after the war and her friend were telling us stories of "fog" that closed the schools certain days as it would make you sick to breathe it.  Those were the good old days of having factories and burning coal that Trump wants to bring back.  The GOP strategy is to simply delay action until it's too late and then say "it won't make a difference" – then they can jet off to high ground while the bottom 99% drowns.  That is literally their plan!  

    It's no fun paying all that money for a bunker if you never have to use it, right?


  14. Remember – super-low volume today so all the moves are BS – take quick profits if you have them.


  15. PHil-we can always hope the bunkers are underground so they will get their "just desserts." London had a deadly sulphferic acid smog that killed thousands in the early 50's? The depiction of it was horrific.Churchill was prime minister. 


  16. THC/GCI/Phil- I got the rest of the legs in except both of the put sales, I am trying fill GCI 10 puts at .95 and THC 23 puts at 5.2… have been at that for days no luck. However with the market seem to be on a downtrend.. I was thinking no rush to fill them?


  17. Acid/Pirate – That's right, we were getting acid rain and then we actually did something to change the rule – the ones Trump is now rolling back.  Maybe our species doesn't deserve to survive?  

    Meanwhile, a group that is virtually guaranteed to get one of the first recreational pot licenses in New Jersey needs to make sure they hit a key qualification of being 51% minority woman-owned.  They have $10M lined up with a $15M line of credit so it's a serious business and they only need commitments IF the license is approved but, if you are minority AND a woman or know someone who is, they are looking for about $7M for 25% of the business, which would have a huge first-mover advantage.  

    PSW Investments through our partnership with New Age will be supplying the manufacturing back-end for this group either way but, due to the license requirements, we are simply contracting for a % of the profits – no ownership on this one.  

    Big opportunity for people who want to invest directly.  Let us know if interested.  

    Puts/Dave – There's never a hurry to fill short puts as the bull call spreads stand on their own and all the short puts do is enhance the returns in exchange for more margin but, if you can't fill the short puts – it means the bull call spread is doing well and it's not a big deal to improve them. 

    Meanwhile, though, consider how you buy into the position.  THC was as follows:

    September 26th, 2018 at 11:21 am | (Unlocked) | Permalink 

    • Sell 10 Jan $28 calls for $3 ($3,000) 
    • Sell 10 2021 $23 puts for $5.50 ($5,500) 
    • Buy 15 2021 $27 ($10.50)/37 ($6.50) bull call spreads for $4 ($6,000)

    Once again we have a net $3,500 credit on the $15,000 spread and 8 more quarters to sell premium.

    What was our primary goal on the trade?  It was to sell the Jan $28 calls for $3, right?  

    That was a piece of cake.

    What else did we need to do?  We needed to fill the 2021 $27/37 bull call spread for $4.

    Well, the $27s were an easy fill at $9.80 and the $37s came in at $6.25ish for net $3.55 so miles better than we'd hoped so that fill is already way better than we thought at ($5,325) and $3,100 so we're $225 ahead of schedule and now we need to sell 10 2021 $23 puts for $5.50 with 0.22 of wriggle room:

    Not $5.50 but $5 is good and I'd hate to see it go away.  In fact, they've held up very well during the downturn so I'd worry about not filling and sell 5 now and see how it goes for the rest.  Maybe you get 0.50 better and average $5.25 or maybe worse and average $4.75 but we already got a good price on the short calls so it would be silly not to have some offsetting puts. 

    That's what you have to do – you have to think through the position as you are entering it and keep focused on what your intention was in the first place.  These plays were about making cash by selling Jan calls against stocks we like for the long-term.  If THC goes higher, then we'll have to roll the short Jan $28s but we have 50% more 2021 bull call spreads that will be in the money, offset by some short puts as well.  If THC goes lower, then the short calls will expire worthless and the puts will fill at our price – so no worries either way and, more importantly, NO RUSH!!!


  18. Yodi,

    What do you think of IP. Armchair trade worked well, but now is it worth to double down at 47?

    Thanks


  19. Spot VIX over 17…  Go, go, go!


  20. STJ – Any new VXX trades look good ?


  21. The Russell is down around 7% since the beginning of September.


  22. Kgabor IP I am not a great friend of doubling down, I rather pay the piper. Contrary to other believes.

    I hold at present the Nov 9th  51 call sold for .54 cents and the Jan 19 50 put sold for 2.86 now 4.10.

    For a new trade I would go for Jan 19 47/50 for a total of 3.33.


  23. VXX / Albo – I am not adding anymore because I am at my own limit unless we get a huge selloff, but a decent trade would be the Dec 70 calls at $0.80 or so. The delta is 12 so close to what I consider safe and you would need the VIX at over 60 to be in danger. And you can roll to the Jan 80 anyway and we will have longer expirations soon I am sure.

    If you want really safe, you can sell the Dec 90 for $0.45! It looks like the downslide is gaining speed though, maybe you can get better prices in a couple of hours.


  24. Thanks !


  25. Again, VIX is up almost 23% and VXX less than 7%. 


  26. STJ – At Schwab you have to put up 100% to short VXX calls. 

     Do you have the same situation ?





  27. Gambling with Civilization



  28. Illy Aims for Independence by Selling Coffee Capsules With JAB



  29. Phil – Minority AND Woman or Minority OR Woman?


  30. VXX / Albo – That's nuts especially for calls that have a delta of 12! The margin for each Dec 70 call is $304 in TOS + the $71 credit (if you sell at $71). So a 23% return on margin. You might want to look for another broker for that trade.


  31. Sorry for double posting.  I assume they also need to be accredited investors?


  32. Minority AND Woman Fel.  If you don't qualify but your wife does – that works too.  It's a silly think but NJ feels they are somehow addressing two issues for the price of one by pushing for minority-woman-owned businesses.  And yes, have to be accredited too!  The group we're working with is well-connected politically but so are others and they are looking for the magic 51% number to push their application to the top of the heap.  These licenses are worth tens of millions of Dollars as NJ is handing out very few of them and NY is still a year or so away so massive business in NJ for a couple of years.  

    Wow, what a ride on the indexes.  /YG hit $1,180.40 for a second (fat finger?) but back at $1,188.30 now.


  33. DAL/Phil- does Delta look of good value to you at this price?


  34. Thanks, STJ.  I have a small account at TOS.  Maybe I'll move some money over there.


  35. DAL/Dave – Rising fuel prices, rising labor costs, backlash against fees and seat sizes – all headwinds for the airlines next year but DAL is a great operator at $36Bn ($52), dropping $3.6Bn to the bottom line even after paying normal amounts of taxes last year ($2.1Bn on $5.7Bn earned) so that's 10x earnings BUT it's the same $40Bn they grossed in 2014, when they only made $659M, so very wild swings in the bottom line over time but I'd consider 2014 more a one-time thing.

    Year End 31st Dec 2012 2013 2014 2015 2016 2017 TTM 2018E 2019E CAGR / Avg
    Revenue $m 36,670 37,773 40,362 40,704 39,639 41,244 43,048 44,360 46,461 +2.4%
    Operating Profit $m 2,057 3,400 1,938 7,802 6,952 6,114 5,553     +24.3%
    Net Profit $m 1,009 10,540 659 4,526 4,373 3,577 3,322 3,923 4,485 +28.8%
    EPS Reported $ 1.19 12.3 0.78 5.63 5.79 5.15 4.90     +34.1%
    EPS Normalised $ 2.34 6.65 3.72 4.66 5.40 4.92 4.90 5.55 6.49 +16.0%
    EPS Growth % +84.1 +184.2 -44.0 +25.2 +15.8 -8.9 -0.6 +12.8 +17.0  
    PE Ratio x           10.7 10.8 9.49 8.12  
    PEG x           0.84 0.84 0.56 0.95
    Profitability

    So yes, I'd certainly buy them as a slow accumulator on this sell-off but keep in mind airlines can always drop 20% overnight if there's a crash or a strike and recessions just murder them so you never want to go overboard.  Still, for the LTP, we can add:

    • Sell 5 DAL 2021 $45 puts for $5 ($2,500) 
    • Buy 15 DAL 2021 $50 calls for $10.20 ($15,300) 
    • Sell 15 DAL 2021 $62.50 calls for $5 ($7,500) 

    That's net $5,300 on the $18,750 spread so there's $13,450 (253%) of upside potential at $62 and, ideally, once they are back over $55, we can sell 5 (1/3) the Jan $60s (now 0.60) for over $1, which would be $500 for 3 months and we have 8 more quarters to sell to collect up to $4,500 (85%) against the $5,300 outlay.  

    So, on a trade like this, we're limiting exposure with just 5 puts (keeping in mind we have $50,000+ allocation blocks) and let's say DAL drops 20% to $42.50:  The Delta on the $50 calls is 0.60 so they would drop to $4.20 but the $40s have a delta of 0.76 and are now $15.30 so they would be $7.70 (ish) and we're roll $10 lower for net $3.50 and have 15 of the 2021 $40/62.50 spreads and then we'd sell 5 more of the March $50 calls (now $4.85 with a 0.60 delta) for about $1 (can't count on those deltas to hold up when things get cheap) and then our net would be $5,300 + $3,500 – $1,000 (from 2 short call sales) = $7,800 on the $33,750 spread that's still $3,750 in the money at $42.50 and we'd still be able to work that basis down another $3,500 over the next two years.

    That's without even doubling down or doing anything fancy so, if we're not worried about a 20% drop – it's hard to see a reason not to pull the trigger on the trade after a nice 10% pullback.


  36. GOOGL

    Not good what they did!

     

    Still, I can sell a Jan $1030 put for $24 today. That’s 20% off it’s high of $1280 and 10% off from current price.

    Not too shabby, with 30% margin on 100 shares or $33,600 worth.


  37. TLT has lost 3.5% in 6 days. Imagine holding this for the 3% annual yield, only to lose the whole year's worth of interest payments in single week. TBT up 7% in the same timeframe.


  38. Phil

    What do you think of  Petrobras (PBR) for a trade  ?

    Thanks


  39. PBR/qcmike- we have a trade for that, 2020 7/15 BCS + sell 2020 $12 PUT


  40. TLT, TBT / BDC – Phil might have been 10 years too early betting on TBT! On the other hand, I would not bet on long term interest rates getting too high. We are only one small recession away from lowering rates again. I think that, without any explosion of inflation, there would be too much political pressure to lower rates in that case.


  41. StJ – Perhaps this time they can't manipulate the rates down – they try, but the market fails to behave like it's "supposed to," like it did in the past. Basically, currency inflation becomes the main driver due to massive global debt-to-GDP levels. I don't have anything to back this theory up, but it's my gut feeling right now.


  42. I wasn't that long ago people were talking about negative interest rates. 


  43. GOOGL/Maya – It's insane how many companies are taking our data and losing it.  

    TLT/BDC – I don't know who thought that was going to be stable.  You have to just completely ignore everything the Fed has been saying (and doing) for 2 years….

    PBR/QC – We picked them up a while ago (6/29) in the LTP when they were very out of favor.  Now they are up more than 50% and at our goal of $15 so I don't think I'd be chasing in now but, if they sell off again, they should be worth a look.

    Long Call 2020 17-JAN 7.00 CALL [PBR @ $15.22 $1.31] 30 6/29/2018 (466) $11,100 $3.70 $4.90 $3.70     $8.60 $1.25 $14,700 132.4% $25,800
    Short Call 2020 17-JAN 15.00 CALL [PBR @ $15.22 $1.31] -30 6/29/2018 (466) $-3,000 $1.00 $2.18     $3.18 $0.73 $-6,525 -217.5% $-9,525
    Short Put 2020 17-JAN 12.00 PUT [PBR @ $15.22 $1.31] -10 6/29/2018 (466) $-3,300 $3.30 $-2.01     $1.30 $-0.27 $2,005 60.8% $-1,295

    So our max return in the LTP on PBR is $24,000 and the current net is $14,980 so $9,020 more to gain but Brazil is crazy and we have to wait a year to make the $9,000 so I think, for the LTP, we should put a stop on 10 (1/3) of our PBR 2020 $7 calls at $8 as the low bid is now $8.50 and the delta is 0.97 so a cross below $15 will flip us a bit bearish on the overall position.  

    Cashing out $8,000 now would give us plenty of money to cover the open short 5 2020 $15s ($3.18) with, for example, 10 of the 2021 $10 ($7.25)/20 ($2.40) bull call spreads at $4.85 so we'd have plenty of upside and room to set tight stops on 5 more of the 2020 longs. 

    Globals/BDC – I agree.  At a certain point, the constant need for Governments to borrow money to finance their massive debts overwhelms the system and printing money doesn't help (inflation) so there's no winning at a certain inflection point – which we're probably running right into in the near future.  

    Fortunately the World will melt soon and we won't have to deal with these things…

    Image result for global warming cartoon


  44. Phil/GOOGL

    I agree with you. It’s very hard to protect my data and lots resources required to be put in place.

    Meanwhile, GOOGL has short term support at $1140 and longer term at around $1000.

    Certainly, even with regulatory issues overhang, their long term prospects I like.


  45. Rates / BDC, Phil – It's true that we might reach a point where no matter what the Fed decides, rates don't go down simply because the market refuses to prices the underlying instruments accordingly although we might be still some ways from that. Look at Japan! Of course, our biggest concern here is the fact that we already run trillion dollar deficits in the face of a good economy so we could be in a Japan situation very quickly with a small hiccup and lower tax revenues or as some propose, simply cut the social safety nets and risk social unrest!

    As far as debt to GDP is concerned, I guess some inflation could have a positive effect.


  46. notable option trades on some names mentioned here:

    BBBY   1000 May 12.50 puts 

    PZZA     1000 Jan19 $55/65 bull call spreads with 1000 October $49 puts sold

    QSR       3100  April $60 calls    


  47. StJ – good points, there are so many factors in play it is very difficult to process the amount of information and data we have now. Global warming, aging population and peak population, knowledge economy transition, debt and currency.

    Gold - At 1,186/t.oz gold is worth $36.9M per tonne, or about $6.5T for all above ground gold (176k tonnes). For many good reasons gold is hated as an asset, most notably because it is useless, but with GDP/debt infused global currency issues the price could move quite a bit, $30T is not unreasonable, ~$5,000 per t.oz, and this is still only a fraction of the currency supply (M3? ~$220T?). People have been losing on gold since 1980, except for that really nice run up from <$300 to $1850 from 2000 to 2011. Except for that, gold has almost been exactly the reciprocal and offsetting consequence of the 30 year bond run. It's worth gambling on it a little, IMO. I bought some GLD 2020 calls Friday but they are 20% off today! Frack! I have a problem entering weak positions. But today it's a good entry IMO.


  48. Data points / BDC – My premise some years back was that central banks around the world are simply on the for the ride most of the time. They have some models, but there is no way to take into account all the possible variables so they are like apprentice sorcerers, trying stuff that their model suggest and sometimes the experiments yields something and sometimes it blows up. 



  49. Climate/BDC – I've said it before but, as a lifetime skier who's traveled the World and gotten very familiar with snow patterns and the way streams cut into mountains and various beaches I've visited over 50 years – I have always felt climate change was very, very real and also understated.  You can see the massive changes that are occurring all over the World – things that were essentially the same since my grandparents were children at the turn of the century were drastically changing in my lifetime.  You don't need science reports to tell you climate change is happening when Killington closes an entire mountain (they had 6) because it didn't get enough snow for 3 consecutive seasons or when resorts that used to be fully open by Thanksgiving now don't have enough snow on New Year's.  

    Same with the beaches, you can see houses are closer to the shore than they used to be – too close often enough and the damage from storms is getting worse and worse – insurance companies can back that up with ample data.  People can pretend something isn't happening all they want but that doesn't stop it from happening…

    Data/Maya – I like AAPL.  I think AAPL is smart enough to realize they can take the lead in protecting people's data and their OI is just right to clamp down on data loss.  If they can come up with secure privacy systems as a feature on their devices and become a trusted entity for your data – that's the first step towards their second Trillion in valuation.  

    Japan/StJ – I have always said Japan is unique and, once the rest of the World goes down that path – the path will disappear and, for Japan, that will be catastrophic – as they are too far down the road to turn back. The only inflation that would save us is wage inflation but that will decrease the relative wealth of the Top 1% to the Bottom 99% so they will never go for it.  Look for more trickle down BS as the solution to all that ails you.  While we were all distracted by the Kavanaugh circus:

    House panel advances key bill in new round of GOP tax cuts

    New estimate: GOP's second tax cuts would add $3.8 trillion to deficit

    EDITORIAL: Tax Reform 2.0 is just another GOP scam to benefit the …

    House passes GOP bill to make new tax cuts permanent

    Gold/BDC – /SI paid $300/contract already today.  /YG hasn't moved yet.


  50. The impacts of climate change at 1.5C, 2C and beyond


  51. Alphabet shuts Google+ social site after user data exposed





    • German industrial output dipped 0.3% in August from 1.3% in July, suggesting Europe's largest economy lost steam in the third quarter.
    • Jennifer McKeown, economist at Capital Economics, said the weak reading, combined with a recent downturn in retail sales, indicated the economy had not sustained its strong start to the year.
    • Economists are taking an increasingly pessimistic view of the German economy, with the top German institutes last month revising down their 2018 growth forecast and warning that an escalation of trade friction involving the United States could cause a major recession in Germany and Europe.
    • A global economic downturn has become "more likely", making it urgent for governments to set cash aside, Germany's central bank was set to tell the world's top financial policymakers gathering in Indonesia.
    • Germany's Bundesbank was set to tell the summit that global growth remained robust but the economic cycle was now past its peak, while risks had risen due to political uncertainty relating to trade conflicts and Brexit negotiations.
    • "The advanced economic cycle in Germany and internationally makes a downturn more likely," Bundesbank vice president Claudia Buch said in a statement published on Monday.

     

    • Research firm China Renaissance lowers estimates broadly across the Macau casino sector.
    • "We have cut our FY19E EBITDA projections by 2%-20%, to reflect the potential for further GGR growth slowdown in 4Q18E-FY19E," notes analysts Angela Han Lee and Nate Deng. Macau gross gaming revenue is expected to grow 3% in 2019.
    • Melco Resorts & Entertainment (MLCO -4.1%), Sands China (OTCPK:SCHYYOTCPK:SCHYFLVS), Wynn Macau (OTCPK:WYNMFOTCPK:WYNMYWYNN) and Melco International (OTC:MDEVF) are all lowered to a Hold rating from Buy. China Renaissance picks MGM China (MGMOTCPK:MCHVFOTCPK:MCHVY) as its top sector pick and also has a Buy rating on Galaxy Entertainment (OTCPK:GXYEF), while Hold-rated SJM Holdings (OTCPK:SJMHFOTCPK:SJMHY) is called the "least preferred" name in the group due to market share loss and volatility.
    • Eurozone investor morale fell to 11.4 from 12 in September, aginst the forecast of 11.7, as concerns about Italy's fiscal policies and tighter scrutiny of the car industry's compliance with emissions rules weighed on sentiment.
    • A sub-index measuring expectations rose slightly to -8.3 from -8.8. A sub-index on current conditions fell to 33 from 35, hitting its lowest level since April 2017.
    • "The cause of the slight fall in the index probably lies in the discussion about the auto sector in Germany and uncertainties over the future fiscal policy of the Italian government," Manfred Huebner, managing director of Sentix, said.
    • Press Release
    • With the technology sector dropping, a bearish analyst note on Square (SQ -10.8%), and concern over how much longer consumer credit will be profitable, the fintech and payment sectors are taking a hit.
    • Global X FinTech Thematic ETF (NASDAQ:FINXsinks 4.1%; Square (SQ -10.8%) is its biggest holding; also includes PayPal (PYPL -4.8%), First Data (FDC -2.9%), and Fiserv (FISV -1.6%).
    • PureFunds ISE Mobile Payments ETF (NYSEARCA:IPAYslumps 3.1%; it includes Mastercard (MA -3.8%), Visa (V -3.1%), Paypal, American Express (AXP -1%), Square, Fiserv (FISV-1.6%), Worldpay (WP -3.2%), and Discover Financial (DFS -0.5%), among others.
    • While credit-card companies earn more from their floating-rate loans as interest rates rise, their stocks aren't reflecting a rosy outlook, Aaron Back writes in the Wall Street Journal's Heard on the Street column. The upshot: It makes sense to be cautious with credit-card stocks this late in the economic cycle.
    • Previously: Two analyst takes on Square--one rosy, one not (Oct. 8)
    • Previously: Goldman is said to reduce Marcus lending goal for 2019: Bloomberg (Oct. 8)
    • Gold is on track for its biggest one-day price decline since mid-August after the U.S. dollar rose to approach its highest level in nearly two months; Comex gold currently -1.3% to $1,189.70/oz., and silver -2.3% to $14.31/oz.
    • The greenback jumped last week after a series of upbeat U.S. economic data that should keep the Federal Reserve on track to raise interest rates again before year-end.
    • “Gold’s weakness is not just due to the stronger dollar, but the rising yields, too,” says Forex.com technical analyst Fawad Razaqzada. “Together, these factors are proving to be a toxic mix for the non-interest-bearing and buck-denominated commodity… Unless at least one of these influences are not put right, gold will struggle to sustain any rally."
    • Adding to the jittery mood, China’s central bank yesterday lowered the level of cash commercial central banks need to keep in reserve.
    • Irving Oil says a "major incident" occurred today at its Saint John refinery in New Brunswick, following reports of a "bed shaking explosion" and fire.
    • The refinery can produce more than 320K bbl/day of gasoline, diesel heating oil, jet fuel and other petroleum products, more than half of which is exported to the U.S.
    • The refinery likely is the most important in terms of fuel imports into the U.S. Northeast market, according to Tom Kloza, global head of energy analysis at Oil Price Information Service.
    • Reports of the fire have sparked a rally in futures in refined products; gasoline was up ~2% after the reports.
    • Facebook (FB -0.5%) has tagged a six-month low today after bullish Credit Suisse trimmed its price target on lower near-term expectations for ad growth.
    • The firm still expects long-term revenue growth but says the company should feel the hard Sept. 30 cutoff for access to third-party data in the short term.
    • Meanwhile, other continue to underestimate potential from the stream of new ad products, and short-term drivers include Instagram and Stories as well as potential monetization of Messenger and WhatsApp. (h/t Bloomberg)
    • The firm cut its target to $210 from $225, now implying 34% upside from current pricing of $156.52.
    • Previously: Facebook launches Portal smart speakers with eye on video calls (Oct. 08 2018)
    • Citi raises its Apple (NASDAQ:AAPL) price target from $230 to $265 (18% upside) expecting next year’s EPS to beat consensus. Analyst Jim Suva raises his FY19 EPS estimate from $13.92 to $14.43 (consensus: $13.61.)
    • Suva: “We increase our financial model primarily due to higher ASPs & stronger gross margins given the consumer preference for higher memory configurations of iPhones coupled with the new falling memory prices.”
    • Suva says memory represents 10% to 15% of component costs in the base iPhone models but higher storage phones that cost the consumer $100 more only costs Apple an added $20.
    • The analyst’s checks suggest strong demand for the iPhone XS/Max with customers opting for higher memory iPhone configurations, which matches the early checks from analyst Ming-Chi Kuo. 
    • Previously: Ming-Chi Kuo: iPhone XS Max has 4x sales of XS (Sept. 24)
    • Microsoft (MSFT -0.4%unveils its Project xCloud game streaming service for consoles, PCs, and mobile devices.  Public trials of the service will start next year. 
    • The project is already in testing to find solutions for cloud gaming obstacles like low-latency, graphical fidelity, and framerates plus preparing for player input types.
    • Microsoft has enabled compatibility across existing and future Xbox titles by building custom hardware for its data centers. The company architected a customizable blade that can host the components of multiple Xbox One consoles and the associated infrastructure. Those custom blades will be scaled across Azure regions over time. 
    • Competitors: GeForce Now (NVDA -0.1%), PlayStation Now (SNE -0.2%), Blade’s Shadow, and Google’s (GOOG +0.3%)(GOOGL +0.3%) testing Project Stream, which streams games through the Chrome browser.   
    • Previously: Now testing: Play Assassin's Creed in Google Chrome (Oct. 1)
    • Previously: Morgan Stanley: Google's gaming entry the future of delivery (Oct. 2)

  52. If you sold the Dec 70 VXX calls for $0.80 earlier when I posted for Albo, they are already down to $0.55 so a nice 30% profit in a couple of hours (or 8% on margin). Always sell in the panic for these VIX instruments.


  53. Nice !


  54. What a crazy day to start the week.


  55. Mike Pence Announces Cold War II


  56. Papa John's +17% on report Peltz is weighing takeover bid

    Oh really,  no surprise there. See my post at 2:43