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Thank Trump it’s Friday – President Claims Deal with China is Coming


We are officially back to where we were on October 12th on the S&P 500 and still below where we were on the 19th, when I wrote: "TGIF – Closing out a Weak Week in the Markets," saying:

That's right, we opened on Monday at 2,763 and closed at 2,750 on the S&P (/ES) and this morning we're at 2,782 and climbing on a supportive note out of China, whose entral bank governor and banking and securities regulators said recent volatility in Chinese stocks didn’t reflect the nation’s economic fundamentals and “stable financial system.”

That flipped the Shanghai up 2.5% into the close, reversing a sharp downturn as China released weaker (6.5%) GDP data than expected (6.7%).  Chinese exports, by the way, held steady from last quarter as they are not, so far, being affected much by Trump's tarrifs, which is actually bad because that means that there's more potential trouble for their economy ahead.

So here we are again, two weeks later, a little worse for the wear yet people, including reporters who should certainly know better, are calling me on the phone and saying "can you believe this rally?"  Well no, I really can't believe it – it seems kind of unbelievable that we rally yet again on the same "progress" in China trade that both countries trot out to boost their markets when it suits them.  

Oct 19th was options expiration day and we  opened at 2,775.66, ran up to 2,797.77 and closed at 2,767.78 so we could have another interesting day ahead of us – especially with the Non-Farm Payroll Report coming out at 8:30 to povide us with real data that might move the market.  Our last Non-Farm Payroll Report was on October 5th, when the S&P opened at 2,902.54, up a little from the previous days close  despite a big miss in payrolls but we finished that day down 7 at 2,885.57 and we WISH we were less than 120 points (5%) away from that this morning.

Even China's beleagured Shanghai Composite Index gained 2.5% this morning, bouncing exactly off the -30% line we said it would bounce off but -30% means even a weak bounce is a 6% gain from 350, so 371 is the weak bounce and 392 is the strong bounce – why is everybody impressed with weak bounces???  People are so silly.  In our own indexes, we're finally over the strong bounce lines we told you we'd be at before the market turned lower after the election – we're a bit ahead of schedule but the lines are:

  • Dow 24,300 with a weak bounce at 24,800 and a strong bounce at 25,300
  • S&P 2,640 with a weak bounce at 2,710 and a strong bounce at 2,780
  • Nasdaq 6,870 with a weak bounce at 7,080 and a strong bounce at 7,230
  • Russell 1,485 with a weak bounce at 1,530 and a strong bounce at 1,575
  • NYSE 11,880 with a weak bounce at 12,150 and a strong bounce at 12,400

For the record, the current, pre-payroll (8:20) levels are:  25,548, 2,756, 7,075, 1,555 and 12,500 – good progress but we'll see what sticks in 10 minutes.  As usual, 200,000 new jobs are expected but last month was a disaster at 134,000 and, as an even bigger disaster, the Fed said that won't stop them from raising rates – which is usually the consolation for weak jobs reports. 

Frankly, I don't know what would be considered positive as more jobs = more Fed – especially if wages are up as well and also means a stronger Dollar (more Dollars demanded to pay wages), and the Dollar being down 1.25% has beein the fuel for the rally of the lat two days.

8:30 Update:  250,000 Jobs!  That's a huge improvement and hourly earnings are up 0.2% which should send the Dollar a bit higher (so long /DX over 96), which will put a bit of downward pressure on commodities and the indexes but, overall, it's very bullish as more jobs equal more demand for the economy so we're still liking Oil (/CL) long at $63.50 and Gasoline (/RB) at $1.72 but tight stops below those lines and we'll probably have to wait for the Dollar to calm down so Dollar first, then flip to Oil and Gasoline when the Dollar stops going up.

Hmm, looking at the report, last month has been revised DOWN 12% to 118,000 and 20% of 250,000 is 200,000, so we're only a revision away from having ordinary job growth but, for today, I guess we'll take the win.  It may not be a market win, however, as this means the Fed HAS to tighten at their meeting next week (8th) and, of course, the election is on the 6th so next week is likely to be INSANE!!!

So, despite the positive jobs numbers an despite hitting our strong bounce lines, we're going to maintain our well-hedged stance for our Member Portfolios and, as I noted yesterday, we'd like to add a hedge with a $35,000 upside as $70,000 was the maximum damage our Long-Term Portfolio sustained during the sell-off (all better now) and, since the Nasdaq is kind enogh to be back at 7,100 I think we'll make the following adjustments:  

In the Options Opportunity Portfololio (OOP):

  • Buy to close 25 (1/2) SQQQ June $17 calls for $1.80
  • Buy 25 June $12 calls for $3 (50% more)

That will leave us with 75 June $12 calls and 25 short June $17s into the weekend with $37,500 potential return at $17 and no cover on 50 after that (so another $10,000 at $19, etc.).  SQQQ topped out at $16 and is now $13.20 and we're very surprised AAPL isn't dragging the index lower yet as it's set to open around $208, which is down 6.4% so about a 1.2% drag on the Nasdaq all by itself!  

In the Short-Term Portfolio (STP):

  • Buy to close 80 June $17 calls at $1.80

That leaves us with an aggressive 160 June $12 calls 1/2 covered by short March $14 calls, which we can alway roll back to June $17s for about the same price so either they expire worthless (and we gain $15,000) or we're left with a a June hedge of 160 $12s and $180 $17s so $80,000 up to $17 and $16,000 for each $2 move above that in protection gives us the extra $35,000 of downside protection we wish we had last week.

AAPL is already testing our initial retrace at $207 but below that is $184 and there's no way the Nasdaq doesn't follow AAPL lower if they fail to hold $207 – so watch that line very carefully but I think those changes leave us well-hedged into the weekend and then we'll have to wait and see how the election and the Fed play out.  

Meanwhile, you know how all year I've been banging the table to have plenty of CASH!!!?  It's the only asset up for the month and the only other asset up for the year:

Have a great weekend,

- Phil


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  1. Good Morning.

  2. Eamon Javers‏Verified account @EamonJavers 19m19 minutes ago


    NEW: A senior administration official tells me that the report president Trump is ready to cut a trade deal with China is not true. “There is a long way to go” on negotiations, the official said.

  3. Someone's full of sh*t…again…. 

  4. Blatant market manipulation but no one will get indicted on this one. I stopped imagining the fake outrage from the GOP if Obama had done anything like that!

  5. And you'll see, after the elections Trump will drop that trade talk with China, markets will drop again and he'll blame that on the results of the elections. In the meantime, his friends will be warned and make a killing on the downside. MAGA

  6. October was a bad month for many assets:

  7. Reality check from Josh:

    Ford’s selling at a 6 PE at this point and virtually everyone thinks their dividend is no longer safe from being cut. The company tried to play Trump’s way – press releases about US manufacturing onshoring, being a good soldier about tariffs, sucking it up as their Chinese auto sales figures collapsed, etc. It hasn’t worked. Ford, like all US manufacturers of scale, relies on global supply chains to make products cost effectively and in a timely manner. They need Canada. They need Mexico. They need China. By extension, their customers and employees needed these supply chains to remain intact as well.

    Too bad. So we don’t know what’s going to happen but it’s not looking great for our biggest manufacturers and materials producers at the moment.

    The only thing we know for sure – a promise – is the trillion dollar deficit we’ll be left with from the tax cuts – a gigantic souvenir that we can enjoy and then pass down to our children. Charlie Munger liked to say “The liabilities are always 100 percent good. It’s the assets you have to worry about.” [...]

    We can have a cyclical bear market without it becoming a secular bear market. It happened in ’90. It happened in ’94. It happened in ’98. It happened for a majority of stocks in ’15-’16, although at the index price level this was masked. Perhaps we can expect a similar situation as money becomes more expensive and investors grow more discerning about where to place it.

    Trump blowing a trillion dollar deficit in the form of a tax giveaway to the segment of the population that needed it least (stock market investors and corporations, LOL!) is just the icing on a cake that’s already been baking.

  8. FU GE!!!!!!!

  9. Good morning! 

    Short day for me (1pm, hopefully) as I'm off to Puerto Rico to take a cruise so I can get my family out of this country ahead of the election day riots.  Actually, all the kids in Jersey always have this week off and it's my mother's birthday so it's a week we often take vacations…  I'll be working on the boat most of the week but maybe skipping a couple of days for shore stuff – TBD.

    APPL coming back nicely, that's going to help.  

    /RB DD at $1.70 (it dropped while I was writing the post so I was stuck) so avg is $1.71 on 4 longs but just crossing that so back to 2 long @ $1.71 and, if that doesn't hold – I'm not playing anymore!  

    Trade/1020 – We know it's BS but, as I noted early this morning, CNBC, Bloomberg, Fox etc are all blasting that story in every cycle – that's the purpose of the Financial Media – they are there to herd the sheeple in whenever the Banksters need someone to hold the bag.  

    I'm not cynical – I'm just well-informed! 

    Date Open High Low Close* Adj Close** Volume
    Nov 02, 2018 271.60 275.07 274.22 275.03 275.03 9,060,419
    Nov 01, 2018 271.60 273.73 270.38 273.51 273.51 99,219,000
    Oct 31, 2018 270.65 273.23 270.12 270.63 270.63 128,296,300
    Oct 30, 2018 263.67 268.12 263.12 267.77 267.77 157,116,000
    Oct 29, 2018 268.80 270.25 259.85 263.86 263.86 160,749,100
    Oct 26, 2018 265.92 271.00 262.29 265.33 265.33 201,574,600
    Oct 25, 2018 267.38 271.81 266.23 270.08 270.08 138,061,500
    Oct 24, 2018 273.33 273.76 264.70 265.32 265.32 177,806,700
    Oct 23, 2018 270.95 274.87 268.61 273.61 273.61 146,352,700
    Oct 22, 2018 277.00 277.36 274.41 275.01 275.01 82,415,800
    Oct 19, 2018 277.13 279.30 275.47 276.25 276.25 139,901,600
    Oct 18, 2018 279.40 280.07 274.97 276.40 276.40 134,557,500
    Oct 17, 2018 280.44 281.15 277.56 280.45 280.45 110,626,000
    Oct 16, 2018 276.60 280.82 276.07 280.40 280.40 118,255,800

    Overall, up and down volume has balanced out for the past two weeks and overall, we've gone absolutely nowhere in the past two weeks so that means we're consolidating and, so far, we're consolidating BELOW the 2,750 line which is BELOW the strong bounce line at 2,780 – this is not bullish, folks!  

    China/StJ – All about the farm vote there.  Those people are PISSED about the tariffs.  

    Big Chart – Blasting the Nas over that death cross despite AAPL earnings was necessary or we'd be in technical hell.  We'll see where we are next Weds though – that's the first day we're likely to see a real move – after the Fed, of course.  

    Very good Munger quote, StJ!  

    GE/Jabob – Not even any news…

    I think all the dividend funds that held GE (ie, most of them) have to dump them after that dividend cut and it's certainly not a good environment to find buyers.  Hopefully they put in a nice bottom and we can adjust our positions a bit lower.  

    Short Put 2021 15-JAN 15.00 PUT [GE @ $9.58 $0.00] -30 9/24/2018 (805) $-12,000 $4.00 $1.60 $1.83     $5.60 $-0.00 $-4,800 -40.0% $-16,800
    Long Call 2021 15-JAN 10.00 CALL [GE @ $9.58 $0.00] 80 9/21/2018 (805) $25,600 $3.20 $-0.58     $2.63 $0.06 $-4,600 -18.0% $21,000
    Short Call 2021 15-JAN 15.00 CALL [GE @ $9.58 $0.00] -80 10/1/2018 (805) $-12,000 $1.50 $-0.40     $1.11 $-0.04 $3,160 26.3% $-8,840

    The 2021 $10 puts are $2.50 so I think we'll sell  30 of those (not yet) and then put a stop on the $15 puts at $6 and, if those stop out, it will be like a roll and we'll sell 30 more of the $10 puts.  The $8 calls are $3.60 so that's a $1.10 roll (worth it ) and the $5 calls are $5.40 so a $3 roll – almost worth it.  If we do those rolls then we'll be able to sell 40 short-term calls and the Jan $10s are 0.55 so if we could get that for the $11s it's a quick $2,000 collected against a net (so far) $1,600 position (not counting previous losses or cost of rolls).  Certainly it will generate enough to pay for a roll to the $8s ($8,000) over time but not the $24,000 it would cost to drop to the $5s so I think we'll do the $8s first – as it's easy to see how we'll get that back….

    Dollar (/DX) already done with a quck gain at 96.15, hopefully that will light a fire under /RB/KC already blasting off:

  10. Oops, too long-term:

  11. Currently ahead 75 points on a /NQ short.  Just sold 1/2.

    This was such an obvious trade, I'm surprised it worked. Frequently it doesn't.

  12. Yeah, I couldn't understand why AAPL wasn't dragging /NQ lower.  Now they are down 6% again at $209 – really hurting.  

  13. Phil/Aapl

    Good morning!

    Would you entertain buying Aapl at the $208 level today with some spreads?

  14. For some good news-HMY is almost at .02!!! And the MJ stocks are gaining. In this market everyone will need more of something to forget what a disaster everything is!!

  15. AAPL @206. but it will pop back.

  16. Wow, huge reversal, very bad sign!  

    AAPL/Maya – Sadly, I think you should wait and see if we get $184 next week.  

    LOL Pirate!  

    AAPL/Pirate – Below $207 is NOT GOOD for AAPL or the whole market that's attached to it.  And, if AAPL turns out not to be worth $1Tn – then WTF are NFLX and AMZN doing? 

  17. PHil I know about aapl but that company has value and Xmas is coming. They will, I think pop back. Historically they have. Of course we are in a mad, MAD world now. Thank God I hedged. And of course have sqqq's and cash!!

  18. Oh come on – Turn that frown upside down!

    The only 'beatings' there will be next week is Dems beating their chests!   ;) 

    Lot's more work to do!!!

  19. 190 looks more like the line in the sand for AAPL. It's also the 200 DMA (roughly). 

  20. it looks like apple is moving all futures tick for tick

  21. Of course aapl had very little short interest so no big bounce from that. Less than 1% and only a little over a day to cover.

  22. Been awhile since I checked in, stopped out of /RB. That’s been a frustrating one this go around. A bit hard to believe they won’t pop it later today. 

    Phil, are you all done with it? 

  23. OMG, we are ruled by idiots:

    How is adding to our deficit with Malaysia helping our overall trade deficit? And how can manufacturers change their supply chain overnight fro China to Malaysia.

  24. Phil – are you in /CL?

  25. AAPL/Pirate – I have plenty of long-term faith but they are pushing our $207 floor a bit too enthusiastically for my taste.  Good point on short interest (or lack of).

    Hola Jeff!   As I said earlier, I'm done after that last failure at $1.72.  I'm going away for so I'm not going to be able to sit and watch it and I'll be on a boat Sunday/Monday so I'd hate to get burned while I have a poor connection so I'm done with this frustrating thing and I know I'll be freakingly pissed on Monday if we pop over the Iran sanctions, like I thought we would….

    Trade war/StJ – Yeah, if it's so easy for us to substitute why are we running up record trade deficits WITH the sanctions.  These guys are real morons!  

    /CL/Fel – Same as /RB – travel day for me so I'm flat and CASH!!!

  26. Keep in mind this catastrophic turnaround is WITH the BS about a trade deal and WITH a strong jobs report.  

  27. Phil / market downturn – gee, I wonder why ?

  28. Deficit/BDC – If rates do start rising, that's going to be a huge, rolling disaster for decades to come.

    Dollar plowing higher – not helping things.  

    $72.50 on /BZ is key, not good if that fails.  

  29. If this administration was running a business, they would be either thrown out by shareholders for malpractice, bankrupting the company or in jail! 

    Of course, that's pretty much the business history of Trump except for jail (but the decade ain't over yet)

  30. Speaking of moving jobs overseas:  

    • Boeing (BA +1.3%) says it will start operations in December at its 737 completion plant in China, and Air China will take delivery of the first plane produced at the facility.
    • Boeing invested $33M last year in a joint venture with Commercial Aircraft Corp. of China to oversee the plant in Zhoushan, which will install interiors and paint liveries.
    • State-run media quoted Boeing China President John Bruns as saying the factory would deliver only one aircraft this year and gradually increase output until it hits a delivery target of 100 planes per year.
    • Gainers: Newell Brands (NYSE:NWL+15%. Youngevity International (NASDAQ:YGYI+10%. Lifeway Foods (NASDAQ:LWAY+9%. Tempur Sealy International (NYSE:TPX+7%. ACCO Brands (NYSE:ACCO+5%.
    • Losers: American Axle & Manufacturing (NYSE:AXL-26%. Cooper-Standard Holdings (NYSE:CPS-24%. GoPro (NASDAQ:GPRO-21%. Farmmi (NASDAQ:FAMI-11%. The Kraft Heinz (NASDAQ:KHC-10%.


    • Terex (TEX -15.3%) reported Q3 sales increase of 11% Y/Y to $1.23B, booking +22% Y/Y and backlog was at $1.6B (+41% Y/Y).
    • Sales by segments: AWP $634.2M (+13.9% Y/Y); Cranes $301.2M (-0.23% Y/Y) and MP $295.2M (+13.6% Y/Y).
    • AWP bookings grew by 50% to $601M, reflecting continued strong demand across all major regions.
    • Q3 Gross margin declined by 76 bps to 18.9% and operating margin was flat at 5.9%.
    • Segment operating margins: AWP 11.5% up by 120 bps; Cranes -4.7% down by 460 bps and MP 13% up by 210 bps.
    • SG&A expenses increased by 5.1% Y/Y to $160.9M.
    • Net cash used in operating activities YTD was $19.6M, compared to $56.2M a year ago.
    • FY18 Guidance, lowered: Adj. EPS $2.60-2.70 (prior $2.80-3.00).
    • The updated guidance reflects third quarter results, updated production plan in Cranes, higher input costs, including tariffs, and anticipated foreign exchange headwinds.
    • Previously: Terex misses by $0.09, misses on revenue (Nov. 1)

    • Oppenheimer reduces its Universal Display (NASDAQ:OLED) price target from $140 to $120 after the earnings miss and FY guidance cut.
    • Management attributed most of the shortfall to soft demand from Samsung and yield improvement at LG (LPL +4.3%) for its OLED TV. 
    • The firm says it’s unclear when Chinese OLED panel makers will reach the scale of Korean competitors despite high capacity investments for the next two years.
    • Source: Analyst note. 
    • Universal Display shares are down 26% to $95.98. 
    • Previously: Universal Display -19% on misses, downside guide, market warning (Nov. 1)
    • Previously: Universal Display declares $0.06 dividend (Nov. 1)

    Factory orders beats estimates

    • Wedbush Securities analyst Daniel Ives calls Apple’s (NASDAQ:AAPL) choice to halt updates on unit sales and ASPs as the “jaw dropper.”
    • Ives says investors will find it a “tough pill to swallow” with Apple’s transparency taking a “major dent given that tracking iPhone units has become habitual” and it’s “critical to the thesis.”
    • Jefferies analyst Timothy O’Shea says the decision is “fueling fears the company has something to hide.” But he notes that disclosing Services gross margin for the first time could be a “potential catalyst.”
    • Apple shares are down 5% to $211.12.
    • Previously: Apple down 7% on soft guidance (Nov. 1)
    • Previously: BofAML steps to Apple sideline after earnings (Nov. 2)
    • Chevron (NYSE:CVX+2.2% pre-market after Q3 earnings beat Wall Street estimates and revenues rose 12% Y/Y to $44B, although analysts had forecast $47B.
    • CVX says worldwide net oil equivalent production rose 9% Y/Y to a quarterly record 2.96M boe/day from 2.72M boe/day a year ago, driven by the ramp-up of Wheatstone in Australia and the U.S. Permian Basin.
    • Q3 U.S. upstream operations earned $828M vs. a year-earlier $26M loss, reflecting higher crude oil realizations and production; CVX says its average sales price per barrel of crude oil and natural gas liquids rose to $62 from $42 a year earlier, and its average sales price of natural gas of $1.80/Mcf was unchanged Y/Y.
    • International upstream operations in the quarter earned $2.55B vs. $515M a year ago, with the increase due to higher crude oil and natural gas realizations, and higher natural gas sales volumes.
    • U.S. downstream operations earned $748M vs $640M a year earlier, primarily due to higher equity earnings from the 50%-owned Chevron Phillips Chemical JV and lower tax expense.
    • International downstream operations earned $625M compared with $1.17B a year ago, largely due to lower gains on asset sales.
    • Q3 worldwide capex totaled $5.12B vs. $4.45B in the year-ago quarter; YTD capex totals $14.34B vs. $13.38B a year ago
    • ArcelorMittal (NYSE:MT+4% pre-market after saying it received a binding offer from Liberty House Group for its Dudelange operation in Luxembourg and some of its finishing lines in Belgium.
    • By finding a single buyer for the complete divestment package, MT says it has now met its commitments to the European Commission in its acquisition of Italian steelmaker Ilva.
    • Liberty House already had agreed to buy MT’s assets in Italy, Romania, the Czech Republic and Macedonia.
    • Exxon Mobil (NYSE:XOM+2.1% pre-market after reporting solid beats for Q3 earnings and revenues, and $11.1B in cash flow from operating activities was the company's highest total since Q3 2014.
    • XOM says Q3 production fell 2% Y/Y but rose 4% Q/Q to 3.78M boe/day; liquids production gained 6% while natural gas volumes fell 4%, largely due to a continuing near-term shift in U.S. unconventional development from dry gas to liquids.
    • "We’re pleased with the increase in production from the second quarter of 2018 recognizing it reflects contributions from just one of our key growth areas, the Permian," says CEO Darren Woods. "We expect to continue to increase volumes over time as we ramp up activity in the Permian and new projects start up."
    • XOM says Permian unconventional production showed strong growth in Q3, with a ramp-up of 38 rigs currently in the Midland and Delaware basins.
    • Q3 upstream earnings totaled $4.23B vs. $1.57B in the year-ago quarter, driven by higher prices, liquid volumes growth and favorable one-time tax impacts, Q3 downstream earnings totaled $1.64B vs. $1.53B a year ago, helped by higher U.S. margins capturing crude differentials, while chemicals earnings were $713M vs. $1.09B in the year-ago quarter.
    • Capex during Q3 totaled $6.58B vs. $5.99B in the year-earlier quarter; YTD, capex is $18.08B vs. $14.08B a year ago.
    • Seagate Technology (NASDAQ:STXgains 2.4% after reporting Q1 results that beat EPS and revenue estimates with a 14% Y/Y revenue growth.
    • Revenue breakdown: HDD, $2.8B (consensus: $2.78B); Enterprise Systems, Flash and Other, $190M (consensus: $201.8M).
    • Capacity shipments: Total, 98.8 EB (consensus: 98.9 EB); Enterprise, 45.5 EB (consensus: 50.7 EB); Edge (Client) Non-Compute, 34.6 EB (with 23.4 EB from Consumer Electronics and 11.2 EB from Consumer; consensus: 19.1 EB); Edge (Client) Compute, 18.7 EB (consensus: 29.1 EB).
    • Other key metrics: FCF, $410M; cash flow from operations, $587M; cash and equivalents, $1.9B; gross margin, 31%; net income $496M.
    • Repurchase plan: Board approves a repurchase authorization of up to $2.3B outstanding ordinary shares. The addition brings Seagate’s total repurchase authority to $3B.
    • Earnings call is scheduled for 9 AM ET with a webcast available here.
    • Press release.
    • Previously: Seagate Technology beats by $0.15, beats on revenue (Nov. 2)
    • Fannie Mae (OTCQB:FNMA) sees paying a $4.0B dividend to the U.S. Treasury Department by year-end; though Q3, Fannie has paid $171.8B in dividend to the Treasury.
    • FNMA -0.3% in premarket trading.
    • Q3 net income of $4.01B vs. $4.46B in Q2; decrease driven by lower credit-related income due primarily to a reduction in the benefit from the redesignation of loans from held-for-investment to held-for-sale and a smaller improvement in home prices compared with Q2.
    • Q3 total comprehensive income of $3.98B compares with $4.46B in Q2 and $3.05B a year ago.
    • Q3 net interest income of $5.37B vs. $5.38B in Q2.
    • Q3 net fair value gains $386M vs. $229M in Q2.
    • Expects to remain profitable on an annual basis for the foreseeable future.
    • Previously: Fannie Mae misses by $0.52 (Nov. 2)
    • Weight Watchers International (NYSE:WTW) reports that its subscriber count at the end of Q3was up 24.9%, driven by growth in all major geographic market. End of period digital subscribers were up 36.5% and end of period digital + studio subscribers rose 7.5%.
    • Service revenue was up 15.2% on a constant currency basis.
    • Operating income jumped 31.1% to $118.9M as sales leverage kicked in. EPS was up to $1.00 from $0.65 a year ago.
    • Looking ahead, Weight Watchers lifts full-year guidance to $31.5 to $3.25 vs. $3.10 to $3.25 prior.
    • Shares of Weight Watchers are down 13.85% premarket to $59.00 due in part to the high expectations going into the report.
    • Previously: Weight Watchers misses by $0.05, misses on revenue (Nov. 1)
    • Bank of America Merrill Lynch downgrades Apple (NASDAQ:AAPL) from Buy to Neutral and drops its target from $220 to $235.
    • Wamsi Mohan cites slower growth in App Store revenue (especially in China), the December quarter guidance implying weaker-than-expected iPhone unit sales, and weaker growth in emerging markets because of the dollar’s strength.
    • Mohan also notes that investors will interpret Apple ending iPhone unit sales as a negative.
    • Mohan: “Post results we are incrementally concerned that not all the weakness is capture in N/T and we are likely to see further negative estimate.”
    • Apple shares are down 6% premarket to $208.92.
    • Previously: Apple down 7% on soft guidance (Nov. 1)


    • Oil is set for its biggest weekly loss since February as the U.S. reportedly agreed to let eight countries – including Japan, India and South Korea – keep buying Iranian oil after it reimposes sanctions on the OPEC producer.
    • Secretary of State Michael Pompeo will formally announce the number of exemptions later today ahead of a deadline at midnight on Sunday.
    • Beyond that point, any country unloading a tanker from Iran risks the full wrath of the U.S. government.
    • Crude futures -0.2% to $63.58/bbl.
    • It's the latest in reversing the Obama administration's move to normalize relations with Cuba, after tightening travel and financial transactions by Americans.
    • National Security Adviser John Bolton has branded Cuba, Venezuela and Nicaragua a "troika of tyranny" and announced new measures against the countries – promising they "will feel the full weight of America’s robust sanctions regime."
    • He also praised Brazil's newly elected conservative firebrand, Jair Bolsonaro, as "positive signs for the future of the region."
    • CEFs: CUBA
    • General Motors (NYSE:GM) is "on track" to roll out a ride-sharing service in 2019 that would rely on autonomous vehicles.
    • The self-driving cars can currently run safely at speeds of up to about 30 miles per hour, and the service will be limited to a small geographical area.
    • After substantial investments this year from SoftBank and Honda, GM's autonomous vehicle unit, Cruise, is now valued at $14.6B.

    On the whole, nothing that bad going on.  All the exemptions we're granting takes the teeth out of Iran sanctions so oil is down as that catalyst is gone.  Still a bit below what I'd expect into Thanksgiving but that's still 3 weeks away.  

    Don't forget our SQQQ adjustments in the post above but very late if you failed to get in on the morning rally that has reversed by 200 points now.  

    Also, we wanted to sell our long SCO Nov $15 calls ($2.75) in the STP, which flips us bullish on oil with 40 short Nov $18s but 40 short Jan $15 puts balance them somewhat.  It's a $3 spread so we should take $2.75 and run and hope the short calls end worthless.  

    In the OOP, it's a similar set-up and we have 10 short Nov $14 calls ($3.70) so let's cash them too but more risky as we only sold the $16s to cover and SCO is $17.60 so we'll have to adjust that one if SCO keeps going up. 

  31. KHC- another low risk income trade (like IBM) after getting hit on earnings:

    Covered call on stock- sold Dec 52.50's @ 1.50 plus the next dividend of .62 = over 4% return if called away in Dec. Great return for just a month and 1/2. 

    Should work in IRA'a also.  

  32. LOL, that didn't take long:

    • "We're not on the cusp of a deal," says Larry Kudlow, appearing on CNBC.
    • Global markets got a charge overnight on reports the U.S. and China were near a trade deal. The air's been leaking out for a few hours, and Kudlow's comments have sent the averages to another leg down.
    • The S&P 500 is now off 1% and Nasdaq 1.35%.
    • Atlanta Fed cuts GDPNow model for Q4 real GDP growth to 2.9% from 3.0%.
    • Real government spending growth estimate revised to 2.2% from 2.4% and contribution of inventory investment to GDP to -0.05 percentage points from -0.01.
    • Those two factors more than offset increased estimate of nonresidential equipment investment growth to 11.8% from 10.9%.
    • Previously: Mulvaney sees no need for interest rate hikes, sees Powell keeping his job (Oct. 26)

    The only reason Kudlow would have done that is if China was going to bust them for lying.  

  33. Well, I'm going away so here's the current portfolio positions for quick reference:


    Butterfly Portfolio:

    Money Talk Portfolio:

    Short-Term Portfolio:

  34. LOL check out Trump's latest tweet 


  35. do you

    think we will turn phil at ym25000 and es 2700  lol

  36. I'll still try to put the reviews together and move them to the right tab over the weekend.

    Long-Term Portfolio:

  37. Turn/Tommy – We shoud, in the very least, get weak bounced off those so /YM 25,700 to 25,000 is 700 points down so the intraday weak bounce is 140 back to 25,140 and then 25,280 would be strong but still red for the day if that fails to break over. 

    Well, I have to run – don't let the markets collapse without me…

    Have a great weekend folks, 

    - Phil

  38. Who cares about AAPL – SBUX is up over 30% since July! And still not that pricey relatively speaking at 18x earnings and forecasting 14% earnings growth.

  39. FU GIS!!!!

  40. hmm AAPL got back to 207 to end the day

  41. US restores Iran sanctions lifted under Obama nuclear deal

  42. Voters raise concerns about voting machines, poll access

  43. Donald Trump didn’t tell the truth 83 times in 1 day

  44. I'm glad I'm not a soybean farmer under trump

  45. Korea update time! (by Snow, your on-the-ground reporter).

    A report by the Human Rights Watch (fundamentally a mouthpiece for the US government) has been circulating this week, bemoaning the treatment of women in northern Korea (the DPRK). The US lets these things out periodically whenever it appears talks between north and south are progressing. The appeal is usually to Korean conservatives, but this cleverly appears aimed at liberals and women, especially, a clever tactic.

    The UN Command (that is, the US, that is, John Bolton) is firm in not allowing ground traffic – trains in particular, but road repair crews as well – to cross the DMZ, stating that sanctions would be violated. As southern Korea (the RoK) did not place or request these sanctions, it's unclear what right the US has to block the border. A major worry of the US is that if peace is declared, the US bases will be closed. This could have the dreaded, notorious domino effect. The UN Command rear is based in Japan, especially Futenma in Okinawa, which exists primarily to launch attacks against the DPRK. If peace is declared by the RoK and DPRK, those bases are redundant – in other words, the US loses its Japan bases. That would mean that "Japan would cause the termination of the SOFA and allow Japan to reassert total sovereignty over its territory.[6] Specifically, Article 15 of the 1954 Status of Forces Agreement specifies: “ This Agreement and agreed revisions thereof shall terminate on the date by which all the United Nations forces shall be withdrawn from Japan … ”
    United Nations Command-Rear was created, therefore, as a legal construct designed to ensure the treaty requirements needed for indefinite use of Japanese territory were met, or what The Mandarin has described as "a form of legal trickery".[6] UN Command-Rear, itself, describes its existence as one designed "to maintain the UN?GOJ SOFA [United Nations-Government of Japan Status of Forces Agreement]".[7]" (from

    On the other hand, the US Command – excuse me, the UN Command – could be a catalyst to help this happen. My friendly acquaintance Tim Shorrock thinks so:

  46. Any suggestions/comments on the following play:

    I have an 5 AAPL Jan20 $125 put @ $8.45 now $2.12.  Does it make sense to roll this higher?

    I am thinking 5 APPL Jan21 $150 put @ $7.60.  This nets a $5.50 credit.  It is the only position that I have in Apple and I don't recall reading anyone doing this… so if it is a bad idea, please let me know.   Thanks

  47. All of Trump’s Stock Market Tweets in One Chart

  48. snow – good reading, thx

  49. BRK/B- earnings reported Friday after the close. Income shows substantial gain for the Q and Yr. however, must be noted that recent GAAP changes require reporting unrealized stock holding gain/loss must be reflected in the income statement. 

    At September 30, 2018, our book value per Class A equivalent share was $228,712. Insurance float (the net liabilities we assume under insurance contracts) was approximately $118 billion at September 30, 2018, an increase of $4 billion since yearend 2017.

    Book value per B share $152. Historical trading price range has been 1.2 – 1.6 X BV. As of Friday's close price to BV is 1.35.

    The "old" stock buy back level was 120% of BV or $182. 

    Still sitting on boatloads of cash. Idle thoughts – getting back in to IBM or even GE? 

  50. Vegas Oddsmaker Predicts GOP Upset

  51. NoKo- the news is mispresenting northern Korea's position just a tad. The DPRK has been taking steps – stopping rocket programs, not producing or testing nukes – but the US has done nothing, especially with easing sanctions. So northern Korea is saying, hey, we're giving on this, what's up with you guys? Start showing some sincerity or things return to re-arming.

  52. Good morning! 

    NoKo/Snow – They are  nuts to trust this Administration to keep their word.  Look what Trump's doing to Iran just to score points with his base (not to mention migrant women and children).   Thanks for commentary, interesting political/military web going on over there.

    AAPL/Grass – That makes no sense unless those are short puts you're talking about?  I'd roll higher – $150 is way down and not much difference in margin (check your broker first) for the extra $5 but a lot more time so a slow way to make money.

    BRK/Pstas – What a money-machine they are!  $180 was Buffett's buy zone but should be more like $200 now so 200 dma is likely to be rock-solid unless the market completely crashes.  I'm sad we don't have any in the portfolios – we might have to fix that.

    Markets kind of flat but it's early but, day ahead of the election and two days before the Fed – flat makes sense.