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Tumblin’ Tuesday – Dollar Up, TBills Down, Markets Look for a Bottom

Image result for monks roller coasterWheeeee!

Sell-offs are so much fun when you are ready for them.  We added Delta (DAL) yesterday as a Top Trade Alert since we like the sale price ($52) and were able to construct a nice income-producting trade while we wait for earnings on Thursday.  We can afford to do that because we always hedge our portfolios and keep plenty of cash available for bargain-hunting while others are panicking.  Times like these are when we like to do our shopping!  

Futures are down again this morning as the IMF cuts it's forecast for Global Growth due to the escalating trade wars to which we say – DUH!  To this day what surprises me most about traders (and my fellow analysts) is how oblivious they can be to macro changes until someone of authority points it out for them.  Who could have possibly believed trade wars would be good for the Global GDP?  Only someone listening to Trump and his team of Economorons with no logic filter could possibly think what they are doing is pro-growth.  

Global Groth is still 3.7%, which is not bad but it's worse than the 3.9% forecast they had just 3 months ago and, since trade tensions are getting worse and since Trump is still threatening to ratched tarriffs up from the current $110Bn to $500Bn – we can expect the IMF to downgrade the growth forecasts another couple of times down the road.  Will this also shock and surprise traders?  

Oddly enough, the US and China's forecast is steady, though Trump will be disappointed to miss his 3% promise.  Europe and the Emerging markets are suffering so far but the IMF indicates escalating Trade Wars could knock another 0.8% off the global total – which would be a disaster.  The IMF has already cut the US forecast to 2.5% next year so the trend is down – even at the current trade levels.  

Meanwhile, things in Europe are getting even more stressful as French President Emmanuel Macron, who just won last year with 66% of the vote, now has his support at just 34% followiing a recent poll after a series of scandals and a government shake-up.  While the former investment banker pledged to modernize the French economy, many voters have complained that Macron is arrogant, out of touch, that his labor reforms have benefited only the country’s largest businesses and have grown impatient with the sluggish pace of economic growth and job creation.

Image result for macron unpopularAccording to the French media, Prime Minister Edouard Philippe will submit his government’s resignation to Macron as early as today. Macron would then ask Philippe to form a new government, on which parliament, dominated by Macron’s ruling party, would hold a vote of confidence according to Reuters.  Losing that, it's possible Macron may have to resign his post as well, throwing yet another European nation into chaos.

Europe is such a mess that 5 Junk Bond auctions have been pulled in the past week as rates demanded by potential lenders has begun to skyrocket.  Dutch Lender Van Lanschot tried to borrow $115M at 7.375% and couldn't find enough buyers to roll their debt – these are some very dangerous cracks in the Financial system.  Charles Smith has a good article called: "The Global Distortions of Doom Part 1: Hyper-Indebted Zombie Corporations" which digs into the nature of the problem we are now facing – it is not going to go away some time soon…

We'll see how bouncy the indexes are as we've passed most of our pullback goals already.  Just last Tuesday, we were looking for the Russell (/RTY) to test 1,640 and now we're going to have to test it from below to see if the indexes are recovering or just pausing to consolidate on the way down.  As you can see on the Big Chart, we tested the 200-day moving average at 1,620 and, for now, that has been support and, so far, the Dow hasn't even failed it's 50-day moving average – so it's hard to get too bearish based on this quick retrace. 


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  1. The technical picture is not very pretty now – and could get worse!

  2. Good Morning!

  3. Bonds investors are suffering right now. But they have had a good run:

    Bond investors have rarely seen losses like this over the past 40+ years. There was a hiccup in 1994 when the Fed unexpectedly raised rates and the taper tantrum in 2013 but the small magnitude of losses in the Bloomberg Barclays Aggregate Bond Index since inception since 1976 is nothing short of amazing. There have been a total of three down calendar years in the Agg:

    1994: -2.9%
    2013: -2.0%
    1999: -0.8%

    On the other hand:

    These losses, while never fun to sit through, are not in the same ballpark as what you can experience in the stock market. Bond market losses over a year are like a 4-minute swing in after-hours trading of Tesla stock.

  4. No one cares about deficits anymore:

    In recent decades, Democrats have tried to balance the books when they’ve launched major initiatives — partly because they’ve needed Republican votes to pass legislation. In non-crisis times, deficits have tended to narrow when Democrats have been in office.[...]

    But the political calculus is shifting. Rising Democratic stars support expensive ideas like loan-free college, Medicare-for-all and a federal jobs guarantee. They argue that Republicans rack up deficits when in power — and then sermonize about balanced budgets from opposition. And they’ve concluded that there’s no mileage in being the party that cleans up afterward.


    Look at what our supposed deficit hawks are creating:

  5. The Kavanaugh cash surge

  6. The GOP House is crumbling

  7. ALK has been a nice rangebound premium play this year – looks like it's a couple bucks away from being an interesting put sale candidate again. 





    General Electric target lowered to $19 from $21 at Citigroup; Buy


    $19……I'll take it.

  9. albo--I will be dancing at 19!!!!!

  10. Me too, Jabob.

  11. GE / Albo – Citi must have spotted a downtrend we missed :-)

  12. Good morning!  

    Chain store sales were good.  

    Chain store sales up 6.5% in weekly read

    • Chain store sales jumped 6.5% in the latest weekly read by Johnson Redbook vs. +5.7% for the week prior.
    • A break lower in temperatures across parts of the U.S. is being cited as a sales driver.

    Bonds/StJ – It amazes me how surprised they are that they are losing money.   That deficit chart says it all – why do people think we'll be rewarded for spending like idiots?

    ALK/Ati – Yes would be nice if they come back a bit.  We sold 2020 $45 puts for $8.10 back in Jan as a benchmark and the 2021 $45 puts are now $2.30 – nowhere near as good as our LTP entry.

    GE/Albo – That would be nice.  

  13. That's a good point on ALK - A lot of times, when a stock sells off harshly, you get really good prices on long-term puts – that's what we took advantage of with ALK in Jan but keep in mind that one of the reasons we liked them in the first place was BECAUSE we got such a good price on the puts – which put us at a net entry we'd be very comfortable with.  

    Just because it's the same stock we liked a year ago – doesn't mean the conditions are the same now.

    Stocks edge lower as 10-year yield retakes seven-year high

    • Stocks open mostly lower amid continued bond yield pressures, with the yield on the benchmark 10-year Treasury note surging as high as 3.26% to extend last week's seven-year high; Dow -0.3%, S&P -0.1%, Nasdaq +0.2%.
    • However, the 10-year yield has since pulled back to its flat line and now hovers near 3.22%, which helped stocks recover some of their overnight losses.
    • European markets are modestly lower, with France's CAC -0.1%, Germany's DAX -0.2%and U.K.'s FTSE -0.3%; in Asia, Japan's Nikkei -1.3% and China's Shanghai Composite +0.2%.
    • In U.S. corporate news, Papa John's +6.9% following reports of a potential takeover bid from Trian Fund.
    • Utilities (+0.6%) and consumer discretionary (+0.4%) top the early sector standings, while materials (-2.1%) and industrials (-0.9%) post sharp losses.
    • Elsewhere, the International Monetary Fund trimmed its global growth forecast to 3.7% from 3.9% in both 2018 and 2019, and lowered the U.S. growth forecast to 2.5% from 2.7%, citing global uncertainties such as the U.S.-China trade war and Brexit.
    • U.S. WTI crude oil futures +0.4% to $74.62/bbl.

  14. Oil and Gasoline turning down.

    Even /NG:

    Euro Stoxx good to watch as 5% back from 3,440 was 3,268 so perfect turn off a 170 fall so call it 3,270 + 35 = 3,305 (weak) and 3,340 (strong) for bounces.

  15. QUIK

    Under the category :

    "Throwing good money after bad"


    "Fish or cut bait".

    I added one last piece to my long suffering QUIK position.  Now a 3X position in a very speculative little stock.


  16. "We sold 2020 $45 puts for $8.10 back in Jan as a benchmark and the 2021 $45 puts are now $2.30 – nowhere near as good as our LTP entry."

    Wow – yes, excellent points all around on ALK. 

  17. Irritating item of the day:

    I bought a new Lenovo computer about 6 months ago which came with a free 6 month subscription to McAfee virus protection.  Within a few days after the protection expired, I started getting an audio notice that I had porn on my computer and to call or email a certain website. I knew this was IMPOSSIBLE, because I was only using this computer to run a trading program. Nevertheless, I succumbed to the daily warnings to renew my virus protection and paid the $39 ( discounted 1st year -reg $99) annual fee. Immediately the porn warnings stopped. I ran the McAfee scan, which found zero issues with my computer. I was totally scammed.   

  18. QUIK/Albo – What is it you expect them to do?  Very small company.

    /RTY flirting with 1,640 but not getting back over it.

    It's a good sign for the 5% Rule when you see a number you picked a week ago act like significant resistance – shows you're on the right track.

    • Morgan Stanley names its favorite "high conviction" stocks ahead of the earnings season.
    • The firm's list of stocks for which earnings are seen as a positive catalyst includes Anthem (NYSE:ANTM), AT&T (NYSE:T), Diamondback Energy (NASDAQ:FANG), DXC Technology (NYSE:DXC), Eaton (NYSE:ETN), Garmin (NASDAQ:GRMN) Liberty Formula One (NASDAQ:FWONK), Occidental Petroleum (NYSE:OXY), PG&E (NYSE:PCG) and SVB Financial (NASDAQ:SIVB).
    • Morgan's list of stocks for which earnings is seen as a negative catalyst includes Sensata Technologies (NYSE:ST).
    • The broad view from the Morgan analyst team on earnings is that the Q3 numbers will come in strong, but that updates on margins, tariffs and guidance are likely to steal the show.
    • Exxon Mobil (XOMpledges to give $1M over two years to promote a surcharge on carbon emissions to fight climate change, marking the first contribution by a major oil company to such an effort.
    • XOM's contribution will go to Americans for Carbon Dividends, a new group co-chaired by former Senate Majority Leader Trent Lott, which is promoting a carbon tax-plus-dividend policy first proposed by two former Republican secretaries of state, James Baker and George Shultz.
    • “This is the first time a U.S. oil and gas super major is putting real money behind a carbon pricing effort,” says Ted Halstead, chief executive of the Climate Leadership Council that developed the underlying plan.
    • “Shell’s core business is, and will be for the foreseeable future, very much in oil and gas… and particularly in natural gas,” Royal Dutch Shell (RDS.ARDS.B) CEO Ben van Beurden said in a speech at the Oil & Money conference.
    • The Shell CEO sees global natural gas demand rising by an average 2% annually through 2035 and demand for liquefied natural gas growing at twice that rate.
    • Van Beurden said Shell is not "going soft" on oil and gas even as it invests more than other Big Oil peers in clean energy, spending $1 B-$2B/year on renewables and low-carbon energy; he especially sees natural gas – the least polluting fossil fuel – playing a major role throughout the decades of transition and beyond as demand for electricity and plastics grows.
    • Qatar Petroleum CEO Saad Al Kaabi said “natural gas will continue to play a key role, not as a so-called transition fuel but rather as a destination fuel."
    • Natural gas currently comprises ~22% of the global energy mix, but many energy executives see it as part of the shift to low-carbon economies.
    • International and Dutch trade unions filed a complaint at The Hague accusing Chevron (CVX+0.6%) of funneling billions of euros through letter box companies in the Netherlands to avoid taxation.
    • It is not clear why CVX was singled out in the complaint, but the unions say CVX’s Dutch subsidiaries, through frequent intra-group operations whose main purpose was the avoidance of taxes in multiple jurisdictions, breached the spirit of Dutch corporation tax law.
    • The unions say tax avoidance deprives workers they represent of basic government services and pressures their wages.

    • Keeping an Outperform rating on the stock, William Blair analyst Nicholas Heymann said General Electric (GE +0.6%) is worth $14.60-$16.78 per share without its Power division, and $20.10-$22.30 with it.
    • If the conglomerate offloaded a large minority stake in GE Digital for $10B, value could increase to $21.25-$23.45 per share.
    • Heymann also believes new CEO Larry Culp and the likely $23B writedown on GE Power will be the final chapters of the conglomerate's transformation.

    Wendy's in the background of potential Trian-Papa John's deal

    • Trian's apparent interest in Papa John's International (PZZA +7.3%) puts a spotlight on how Wendy's (WEN +0.3%) might figure into the equation.
    • Trian holds a 13% stake in Wendy's and has three seats on the board of directors. leading to the question if Trian would push for Wendy's to acquire the pizza chain. In early analysis on that scenario, CL King thinks a Wendy's buyout would be messy.
    • There's still a lot to be settled, with no firm offers in yet on Papa John's and the company's ex-CEO/Chairman still distracting.
    • Papa John's is up 7.3% on the day, while Wendy's has nudged up 0.3%.
    • Previously: Papa John's +17% on report Peltz is weighing takeover bid (Oct. 8)

    Rumor mill drives up eBay 6%

    • Shares of eBay (NASDAQ:EBAY) are up 5.99% after some unsubstantiated rumors of Carl Icahn taking an interest in the company circulate around.
    • The outsized rally is rather surprising considering that at this point there isn't much to the Icahn chatter beyond Twitter posts.
    • Trading volume on eBay is already over 8M shares vs. the daily average of 10.2M shares.

    Comcast wraps purchase of Fox's Sky holdings

    • As expected, Comcast (CMCSA +1.7%) has closed on its purchase of Twenty-First Century Fox's (FOX +0.2%FOXA +0.2%) holdings in Sky (SKYAY +0.3%), moving its acquisition of the UK broadcaster a step closer to completion.
    • Fox's overlapping offer to acquire Sky had lapsed, Sky noted yesterday, recommending anyone who hadn't yet accepted Comcast's offer do so immediately.
    • It's expected Sky's listing on the London Stock Exchange will be canceled Nov. 7.

    The Information: Apple's iPhone fraud struggles in China cost billions

    • Apple’s (NASDAQ:AAPL) struggle to stop iPhone repair fraud in China cost the tech giant billions of dollars, according to a report from The Information.
    • Apple temporarily closed its retail store in Shenzhen, China, five years ago due to the lines of customers wanting to trade in broken iPhones. Sources say the store logged over 2K warranty claims per week in May of that year, more than any other Apple store in the world. 
    • The company investigated and found the replacement surge was due to a fraud scheme where thieves bought or stole iPhones, removed valuable components, and replaced them with fakes. Thieves were returning the iPhones to Apple to receive replacements they could resell. 
    • At the peak, 60% of warranty repairs in China and Hong Kong were fraudulent. Apple set aside $1.6B for warranty costs in FY13 and ended up spending $3.7B instead with much of that coming from the Chinese fraud.
    • Apple tried to deal with the problem using a variety of identification tactics to no avail. But the company now requires all replacements to be sent off to repair centers that can perform more rigorous fraud testing. Fraudulent claims are now down to about 20% of the total.  
    • Bank of America Merrill Lynch reiterates its Buy rating on Apple (NASDAQ:AAPL) and says the firm’s survey suggests iPhone upgrade interest “rose significantly in recent months.”
    • The survey included 91K global consumers and was conducted from March to September. Analyst Wamsi Mohan says the results showed 33% of respondents planning to upgrade to the iPhone versus the 15% for Samsung. Of current iPhone owners, 70% planned to stick with the brand for their next phone. 
    • Price target reaffirmed at $256, a 14% upside to Monday’s close. The FY19 EPS estimate is $14.41 (consensus: $13.62).  
    • Previously: Citi raises its Apple target, FY19 EPS estimate on XS sales (Oct. 8)

  19. This morning's rally is being brought to you by the Dollar and it's 0.4% decline:

  20. QUIK – Phil, you are right they are tiny, but making progress toward what I believe will be rapidly increasing revenue based on the following and other expected developments.

    Wearables ? Naver Labs in Korea ($20B market cap) – Smartwatch via Korea Telecom (KT)? Tier 1 Smartphone OEM – 1st Wearable design locked down, anticipate shipment in 1H’2019.? Tier 1 Smartphone OEM – 2nd Wearable design anticipate being completed by end of 2018

    Hearables? Cleer, Inc. selected EOS S3 for its EDGE Voice wireless headphones, a 2018 CES Innovation Awards honoree ? Multiple Amazon Alexa-enabled Hearable Design Wins shown at CES 2018 expect to ramp in 2H’2018Sensor Processing SoC Market Adoption Ramping Now Tablets? Large Chinese OEM – Shipping in two Design Wins Smartphones ? Japanese OEM – recently signed MOU for multiple smartphones.

    It's been a long time coming, and a very frustrating wait, but hopefully it's getting closer to fruition.  A total spec, but at less than $1 per share I think it's worth a shot.  FWIW  My cost is 20% higher than it is right now. :-(    Not too mention opportunity cost. 

  21. QUIK/Albo – Thanks, just curious as to what they're up to.  That's OK, I'm still waiting for LQMT and NAK…

    • Interbank lending rates in Hong Kong--a center offshore trading for the yuan-- climbed Tuesday,possibly from efforts by China's central bank to prevent too much erosion of the yuan, the Wall Street Journal reports, citing several analysts.
    • The overnight cost of borrowing yuan for Hong Kong banks surged to 5% from 1.745% Tuesday to its highest level since May.
    • There have been times in the past when Chinese authorities increased interbank lending rates during periods of currency depreciation pressure to deter traders from making bearish bets, the analysts said.
    • Raising short-term rates makes it more expensive to make bets against the yuan using borrowed funds.
    • Though the weaker currency helps to boost exports, China is also seeking stability, according to the analysts.
    • The yuan is up 0.1% against the U.S. dollar trading at 6.92 yuan to the greenback. YTD, the yuan has weakened about 6% against the dollar.
    • Boeing (BA +0.2%) reports Q3 total commercial airplane deliveries of 190 vs. 202 in the year-ago quarter, with 568 total deliveries so far this year.
    • But YTD deliveries, up from 554 at the end of September a year ago, could indicate an easing of production problems that had caused unfinished planes to pile up at Boeing’s plant in Renton, Wash.
    • Boeing, which aims to deliver 810-815 total planes in 2018, is in front of rival Airbus (OTCPK:EADSFOTCPK:EADSY), which delivered 503 aircraft through September, up from 454 deliveries in the same period last year.
    • Google (GOOG +0.1%)(GOOGL +0.2%) officially unveils the Pixel 3 and Pixel 3 XL flagship smartphones at a launch event. The devices matched up with the plentiful leaks leading up to the event.
    • Pixel 3: The 5-5inch 3 and 6.3-inch 3 XL have identical internal specs with the Qualcomm Snapdragon 845, an Adreno 630 GPU, 4GB of RAM, 64GB or 128GB of storage, and Android 9 Pie.
    • Both phones have the glass window on the back with the distinctive cutout plus squeezable sides, and an imprint fingerprint sensor on the back. There’s one rear camera but two front-facing camera that includes one with a wider field of view.
    • The Pixels 3 include a new feature where Assistant can screen for spam calls to allow the user to decide whether to block the caller. The phone answers itself on suspected spam calls and provides a call transcript.
    • Verizon remains the exclusive carrier in the United States. Preorders start today with pricing details to come.
    • Home Hub: Google’s answer to the Amazon Show has a 7-inch screen and a fabric covered base available in the Google standard colors of Mint, Pink, Chalk (gray), and Charcoal (black). The Assistant-enabled Hub has far-field microphones, physical volume controls, and a microphone on/off toggle. Ambient EQ takes a sensor and algorithm to adjust the screen’s color during the day and turns it off automatically at night. There’s no front-facing camera, though, so Google Duo video calls are out.
    • Pixel Slate: The Slate is a Chrome OS tablet with a detachable keyboard and comes a year after the Pixelbook and following the Android-based detachable Pixel C.
    • Pixel Stand: The wireless charging accessory lets users dock the Pixel phone in an upright position for easier use while recharging. The new Pixels are the first to support wireless charging (up to 10 watts.)
    • Update with some pricing:  Pixel Slate is $599 for the slate with the optional keyboard running $199. The Hub is $149.
    • Update: Preorders are now available for the Pixel 3 and Pixel 3 XL with shipments happening on October 17. But the Pixel device stock history suggests you might need to be a bit flexible with that shipment date.
    • Verizon will offer a buy-one-get-one deal on the preorders. 
    • Or you can order through the Project Fi wireless service where there’s a $799 service credit for buying two phones.
    • German exports unexpectedly fell 0.1% M/M in August, missing estimate of 0.3%, while imports dropped by 2.7%, in a fresh sign that manufacturers in Europe's largest economy shifted into a lower gear over the summer months.
    • ING economist Carsten Brzeski blamed the low trade volumes over the summer months on a general weakening of global manufacturing activity and a temporary blip in domestic demand.
    • Household spending has become an important growth driver in Germany as consumers are reaping the benefits of record employment levels, rising real wages, increased job security and cheap credit due to the euro zone's expansive monetary policy.
    • Germany's wider current account surplus rose to €15.3B from €15.1B in July, unadjusted data showed.

  22. CAH looking interesting, pays a fat $1.91 (3.5%) dividend at $54.35.

    They are a massive company sales-wise but very think profit margins but the market cap is only $16.3Bn so fairly priced at the moment.  I like the CAH short 2021 $45 puts at $5.20, it's more than the dividend and worst case is you end up owning them for net $39.80, which is another 25% off the current price so let's sell 5 in the LTP and see how it goes.

  23. Phil / SMCI – This company is getting hammered over a story that has been refuted by AAPL, AMZN and the US and US governments.   One of the key experts in the story has indicated that he provided info on how a hardware hack might be done…. but stressed it was very hard to do and really software or firmware bugs were more efficient.  In addition he indicated that the 'scenario' he described a year ago was exactly what the reporters 'discovered'.  In addition he was never contacted again by Bloomberg despite him saying he wanted to talk to the about the erroneous reporting.  I"m thinking of buying share in this…. there is no reason for this stock not to be at 15 / sh at the very least.   

  24. Both GM & F are hitting new yearly lows.

  25. Phil / WHR

    I have a position in WHR that is down quite a bit thanks to the trade war and I am wondering if I should leave it alone or roll things down? How would you adjust the following trade, or should I just leave it alone seeing I have over a year for this trade war garbage to get back to normal? 

    -2 Jan20 $130 Puts (Sold at $16.94, now at $27.35)
    4 Jan20 $120 Calls (Bought at $21.04, now at 9.95)
    -4 Jan20 $140 Calls (Sold at $11.76, now at $5.02) 

  26. SMCI – The new story that was just published today is kind of suspicious   The security guy working with an un identified client found this in August and is just now reporting…. something like this – if foreign sabotage was detected or suspected… must be reported to government immediately  - yet over as of yesterday claimed it had no reason to suspect his had happened.  and no reproductive of the 2013 hack…  this just does not make sense…. If I did not know better – I would say there is a short seller feeding info to Bloomberg….

  27. Zacks thinks Retail is looking good:

    Going by the NRF’s recent sales projection, the retailers are all set to revel again in the euphoria of the upcoming holiday season. Data compiled by the nation's largest retail trade group calls for a 4.3-4.8% rise in November and December sales (excluding autos, gas, and restaurant) to $717.45-$720.89 billion, up from $687.87 billion last year and better than the five-year average sales growth of 3.9%.

    Deloitte’s recent holiday sales projection of a 5-5.6% increase also hints at happy times ahead for retailers. Holiday sales, excluding motor vehicles and gasoline, are likely to be more than $1.10 trillion between November 2018 and January 2019. Meanwhile, e-commerce sales are estimated to improve 17-22% to reach $128-$134 billion.

    SMCI/Batman – I am wondering if this is some sort of attack on our part (GOP) to villainize China and justify or distract from the breakdown in trade negotiations.  It doesn't seem all that likely that Chinese spy chips are in IPhones since, even if it somehow got past AAPL quality control over and over again, it would also have to never come up in a repair job and, of course, those fan tear-downs are very thorough as well.  

    Image result for iphone teardown

    Image result for iphone teardown

    Related image

    So no, there's no Chinese chip in an IPhone but it is possible that servers have chips in them and that's the crux of today's allegation.  

    What lends more credence to this second Bloomberg story than the first is that a security researcher said he inspected the implant first-hand, rather than the reporters having to rely on descriptions from several sources who allegedly had knowledge of the implants.

    Yossi Appleboum, co-founder of Sepio Systems and former Israeli intelligence officer, provided Bloomberg with evidence and documentation — which wasn’t published alongside the story — that the alleged implant was introduced at the factory where the telecom’s equipment was built. He also said there are many ways that China’s supply chain is compromised and implants could be introduced.

    Plot twist: Bloomberg didn’t name the telecom because of a non-disclosure agreement between Appleboum and the company.

    We asked Appleboum several questions by email — including if the telecom company informed the FBI of the discovery — but he did not immediately respond to a request for comment. If that changes, we’ll update.

    This new story certainly adds more to the mix on Bloomberg’s continuing reporting streak on hardware hacks, but doesn’t negate the apparent failings — or the lack of evidence — in its first report.

    So, I don't think I'd want to jump on SMCI with both feet but someone just sold the April $12.50 puts for $4.60 – that's not bad if you can get a fill over $4.

    Scammed/Stock – Yes, these things are such BS and they pretty much try to hold you hostage if you fail to "renew" or PAY for the "free" software that came with your computer.   Also, I like your logical deduction that that's not the computer you use for porn…  wink

    WHR/Martin – Yeah, they are still getting hammered but I think it will pass – eventually.  The 2020 $120 calls are still $8.20 and you paid net $5ish for the spread so why not salvage the $8.20 and roll those to the 2021 $100 ($21.50)/$120 ($13.50) bull call spread at $8 and put stops on 1/2 the short 2020 $140s (now $5) at $7 – just in case.  That would add $3.50 to your net ($8.50) of the long calls which would then be covered by the 2 short calls, which could then be rolled along.  

    Meanwhile, the short 2020 $130s at $5,400 that you sold for $3,400 can be rolled to 3 of the 2021 $100 puts at $14 ($4,200) and you'd still be in for $2,600/3 = $8.66ish per short put.  I would not rush to sell those but I'd wait for WHR to stop falling, then sell 3 but leave the 2 2020 short puts (with stops) to see if maybe there's a good bounce before buying back.  

    SMCI/Batman – You would think Bloomberg has better reporting standards than that and they are standing by their story for whatever reason.

  28. CAH   if you buy the stock and sell the Jan 2021 $55 calls and $45 puts you make 14% annualized, not too bad for a set it and forget trade

  29. Also failed to mention CAH is a "Dividend Contender" or a stock that has increased its dividend each year for the last 10-14 years

  30. CAH/Stock – That's why I was looking at them in the first place but I'm not so gung-ho on the sector that I want to do more than secure a cheap entry through the short put for now.  As I noted above, very thin margins and there's wage pressures and tariffs and potential competition from AMZN and, of course, who knows what's going on with our health care system, which is bound to collapse as the population ages and our Government seems determined NOT to fix it under any circumstances…

  31. Phil / SMCI – for some reason the options are only taking closing orders – no new open orders…  about a few K at 12.7 today…  I'm sure we'll have more info to jerk this around a bit.  

  32. CAH I am following your conversation on this stock. Do have the same as armchair trade. OCT 52.5/55 and Jan 19 47.5/50. But I am not too happy with the stock performance. Bought stock at 63 and as well at 52. Great fluctuation!!!! My two cents. Not all what looks cheap is cheap!

  33. CAH  if you do the buy write and still sell the puts AND you are assigned a second round your average is $41.05, not much more than just selling the puts only.  Though you are one round ahead of our usual style.

    I wouldn't recommend it for our board unless you start really small,  since its a $55.00 stock. 

  34. SMCI/Batman – That's why I couldn't make it an official trade – too thin, too iffy.

    CAH/Yodi. Stock – I agree, down at our net $39.80 I like them but wouldn't plant a flag at $54 and, of course, I only want 1x at $39.80 so THEN I have room to DD and roll.

    /CL is a tempting short crossing back under the $75 line but market is very choppy so you have to be very careful and, of course, very tight stops over the line.

  35. Phil / SMCI – Serpio – this is a startup w/ less than 1Mill valuation, and looks to be a two or three man show.   the technology they use to find hardware issues is not incredibly advanced, I'm not sure why any major company would let them into their communication grid, to find issues.  In addition they found this due to a power spike which is pretty easy to detect….  I'm still skeptical – a 2Million dollar company finds a hardware hack and corroborates this story, a day after the stock had moved up almost 35%….  

  36. Positions are hard to roll. Try to roll GOOGL from Jan20 1000 to Jan 21 1030. even had it standing 1$ more than the ask no takers!!!!

  37. Just yesterday I tried to close the TSLA Jan put vertical the ask was .50 below the max 30$ no takers. It looks like we have to wait to the bitter end to take the full price. Today my 450/420 is 29.25 did not try but sure no takers

  38. Phil /SMCI / GOP planted story.   This makes a lot of sense….  An Israeli company happens to find the hardware….  could this be a planted hack?  It would flow very nicely into Trumps national security scares and further strengthen the case for more tariffs and more local sourcing of mfg.    This something does not smell right here.

  39. SMCI/Batman – I know, it sounds fishy on so many levels but, coming from Bloomberg, I have to believe they wouldn't just publish a rumor or any story like this without some real evidence.  We already know the WSJ is a right-wing sham – if Bloomberg turns out to be useless as well – then we're better off throwing darts at a board to make selections than reading the Financial Press!  

    Rolling/Yodi – Well if you try to have the broker do a "roll" they generally won't unless they are able to skim some off the top – which makes it hard to fill.  I just close one leg and open another.  I leg in and out of everything, get way better prices that way – especially if you use some sensible timing on the swings.  

    • Adjusting to U.S. Treasury yields at seven-year highs, investors are taking record amounts of cash out of large-cap, municipal bond, and REIT exchange-traded funds
    • About $2.7B, or 12% of assets, was pulled out of the $18.3B iShares Russell 1000 ETF (IWB-0.1%) on Monday, its largest outflow since it began 18 years ago. The ETF tracks the Russell 1000 Index, made up of the largest 1,000 companies in the Russell 3000 Index.
    • An outflow of $464M from iShares Cohen & Steers REIT ETF (ICF -0.1%)  was its biggest outflow, amounting to about 19% of its assets. iShares U.S. Real Estate ETF (IYR -0.2%) had $87M get pulled on Monday, resulting in outflows for the week of more than $834M.
    • For municipal bond ETFs, Vanguard Tax-Exempt Bond ETF (VTEB), the market's third-largest fund tracking municipal bonds, experienced an outflow of $25M on Monday. the largest since the $3.6B fund started three years ago. Investors yanked $9.5B last week from BlackRock's $9.5B iShares National Muni Bond ETF (MUB), the largest muni ETF.
    • Previously: Treasury yield high weighs on futures (Oct. 9)
    • Bill Ackman called Starbucks (SBUX +2.9%) one of the "greatest businesses in the world" as he revealed his stake in the coffee chain today at the Grant's Fall 2018 Conference.
    • The activist investor kept it pretty simple in explaining the upside potential, pointing to the big runway in China and coffee's popularity with teenagers.
    • "This is an extremely dominate business," Ackman extolled.
    • After a rough stretch over a couple of years, Ackman's Pershing Square has doubled the return of the S&P 500 Index so far in 2018.
    • Previously: Starbucks higher after Pershing Square discloses stake (Oct. 9)

    • The National Highway Transportation Safety Administration issued a clarification on its car safety testing ratings today. The agency noted that while a 5-star rating is the highest safety rating a vehicle can achieve, the NHTSA does not distinguish safety performance beyond that rating or make a distinction on the "safest" vehicle among those at the 5-star level.
    • The development follows the awarding of a 5-star safety rating to the Tesla (TSLA +5.4%) Model 3 and some eye-popping headlines from media outlets ("Tesla’s Model 3 is the safest car on the planet according to the NHTSA"- BGR and "Tesla Model 3 is safest car ever, according to NHTSA" - in reaction.
    • The EV automaker for its part was quick to point out that the Model 3 has the "lowest probability" of injury of any car tested by the NHTSA and said there was no safer car in the world based on the strong results for the Model S and Model X as well.
    • Tesla on the Model 3's safety mark: "Model 3 was also designed with an extremely low polar moment of inertia, which means that its heaviest components are located closer to the car’s center of gravity. Even though Model 3 has no engine, its performance is similar to what’s described as a 'mid-engine car' due to its centered battery pack (the heaviest component of the car) and the fact that Model 3’s rear motor is placed slightly in front of the rear axle rather than behind it. Not only does this architecture add to the overall agility and handling of the car, it also improves the capability of stability control by minimizing rotational kinetic energy."
    • NHTSA press release
    • Lyft (LYFT) is asking banks for formal pitches ahead of a potential 2019 IPO, according to Bloomberg.
    • Lyft would next evaluate IPO bankers and issue formal underwriter mandates with a target of a March or April offering.
    • The last private funding in June valued the company at $15.1B.
    • Rival Uber (UBER) is also expected to go public next year.
    • Google (GOOG -0.6%)(GOOGL -0.7%files to appeal the $5B EU fine for anticompetitive behavior by its Android mobile operating system.
    • Google’s statement to Reuters: “We have now filed our appeal of the EC’s Android decision at the General Court of the EU.”  
    • Previously: Google poised to appeal EU Android fine (Oct. 9)
    • EU privacy regulators are ready to use fines and temporary bans on companies violating the new privacy law, and the first sanctions could happen by the end of the year.
    • The European Union General Data Protection Regulation came into effect on May 25 and gave consumers more control over personal data and regulators the power to fine up to the higher of 4% of global revenue or €20M. 
    • Companies that could end up in the crosshairs include Google (GOOG -0.5%)(GOOGL -0.5%) and Facebook (FB +0.8%), though their most recent public data flubs happened before the GDPR kicked in.  
    • Australia's government rejects the call from the UN Intergovernmental Panel on Climate Change to phase out coal power by 2050, saying renewable energy cannot replace baseload coal power.
    • Deputy Prime Minister McCormack says Australia “absolutely” would continue to use and exploit its coal reserves, despite the IPCC’s dire warnings that the world has just 12 years to avoid climate change catastrophe.
    • McCormack says coal mining is very important to Australia because it provides 60% of the country’s electricity, 50K jobs and is its “largest export," and he has not “seen anything that’s going to replace coal in the near future."

    • Caesars Entertainment (CZR +2.6%) and MGM Resorts (MGM +2.9%) are higher on the day after a positive note arrives from the JPMorgan desk.
    • JP analyst Joseph Greff says the Vegas Strip is holding up fine and sees the recent selling pressure on the casino stocks as tied to technical factors, interest rates and macro considerations.
    • Looking down the road, Greff reminds that the new Raiders stadium and the MSG Sphere will help support Las Vegas Strip traffic.
    • JPMorgan has an Overweight rating on both Caesars and MGM.
    • Sources: Las Vegas Sun, Bloomberg
    • With a tenure-defining race for 5G on with rival AT&T (T -0.3%), Verizon (VZ +0.6%) CEO Hans Vestberg is looking at a heavy shakeup of management to pick his team going forward, Bloomberg says.
    • The carrier is already looking to cut costs, with buyout offers reportedly going out to a quarter of the company's workforce in a move to save billions.
    • Now Vestberg is said to be personally interviewing the top 300 leaders at Verizon, some of which have described the process as re-interviewing for their jobs.
    • Vestberg joined the company in March 2017 and took over the CEO spot from Lowell McAdam.
    • Most of the team should be selected by year-end, at which point Vestberg is expected to go to investors to share his strategy — said to include realignment to sell sets of services as a unified company, vs. Verizon's old approach of silos in separate wireless, landline, data and IT units.
    • Other carriers pushing for 5G service (and a merger to better compete): S -1.1%TMUS -0.8%.
    • Frontier Communications (FTR +1.5%) has launched a new gigabit Internet service in its fiber markets, boosting its mainline consumer speed as well.
    • Gigabit service will come to its FiOS and Vantage fiber markets. The company is also offering a symmetrical 200/200 Mbps service, and adding new speed tiers of 300/300 Mbps that previously weren't offered in Indiana, Oregon and Washington.
    • Vantage Fiber is offered in parts of Connecticut, North Carolina and Minnesota, while the company's FiOS is available in the Tampa Bay, Fla., region as well as areas in Southern California, Dallas, and parts of Indiana, Oregon and Washington

  40. F / ford broke under 8 today

  41. Our grandparents had to storm Normandy to defeat fascism. You just have to fill out a ballot.

    Bill Ackman’s Presentation On Startbucks (SBUX) – “Doppio” $$

    Next time I'm flying Singapore Air

    If you have Amex you can transfer miles to get this!

    I read the FBI report. This whole thing is a sham. This stunted, strangled investigation was designed to provide cover, not to provide the truth.

    BREAKING: just used the FBI report to attack Dr. Ford, saying there’s nothing in it that corroborates her account. Of course it doesn’t. They didn’t interview anyone who would corroborate her account. So of course it had nothing in it corroborating her account

    Big U.S. banks are set to report record postcrisis profits for the third quarter, but underneath the blockbuster numbers are reasons for caution

    This is clever:


  42. Very Good! 

  43. No Kavanaugh bump for Republicans so far, new poll says

    Tropical Storm Michael was upgraded to a Category 1 hurricane on Monday as it barreled toward the Gulf Coast. It could hit Florida as a Category 3 storm.

    LOL – Catch your dinner in this restaurant!  That's why I love NYC – we'll try anything…

  44. can CRON be the next pot stock du jour please?!

  45. Smci / Phil.   Here some background the work these reporters have done in the past.  They appear to jump to confusions. Not know technical details of what the are covering and create hyperbole. This is crappy reporting one wonders why they are not being managed more closely

  46. Salvini Says Italian Spread Won’t Touch 400 in Dare to Investors

  47. Canada set to become largest country with legal pot sales