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Testy Tuesday – Painting the Bounce Lines Red

Image result for trump red queenWe're painting the bounce lines red

That's not a good thing but, when the Mad Queen is your President, you just have to go wtih the flow and deal wth the daily mood swings.  This weekend, to honor Veterans Day, Trump dissed the veterans on several occasions and pissed off our allies in the process and then he blamed poor management for the forest fires in Malibu – which is a beach, not a forest.  

Meanwhile, it was a wake-up call to investors to see Trump walk out of a G20 conference and then pull a complete no-show at the 100th anniversary of Armistice Day, which is practically a holy day in Europe as it maked the end of a very bloody conflict in World War I.  Trump is too busy trying to start World War III to take time out to honor the victims of World Wars I and II.  

Meanwhile blood is being spilled all over our bounce lines as they cascade back to red:

  • 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

We lost 4 green boxes yesterday and the Russell, Dow and Nasdaq are very close to triggering 3 more if we're even a little red this morning with the Nasdaq in danger of falling back below it's 10% correction line at 6,870.  Fortunately, as you know from last week's reports, we were not sucked in by the bounces and we remain very well-hedged so yesterday was simply an amusing thing to watch as we gave up last week's gains.  

Oil fell for the 11th consecutive day and is back at the $60 line this morning and we still like it for a bounce but tight stops below.  As noted yesterday, $60 is 20% down from $75 and we could overshoot to $57 but, either way, we expect to see at least $63 into Thanksgiving and we did go long on Gasoline (/RB) as well at $1.615 but, so far, that's not working and we'll have to take a loss below $1.60 and wait to see if $57 gets tested on oil, probably lining up with $1.55 on /RB for our next opportunity to take a long poke.

Apparently, after being dissed in Europe, Trump is now having the Commerce Department look into imposing Auto Tariffs "To protect our National Security" which is odd because foreign cars consistently beat American cars in auto safety tests so Trump is actually going to kill Americans by forcing them to buy less-safe cars in order to protect his fragile ego because Macron and Merkel wouldn't play with him at the G20 and said bad things about Nationalism.

I told you we need to watch the Fed speakers and San Francisco's Mary Daly began weeks of preparing us for the December rate hike with a speech in which she said US policy makers need to be gradually lifting rates in order to create a soft (vs hard) landing for a slowing economy.  

Speaking of slowing economies – Japan's GDP is projected to contract 1% in Q3 – an early indicator of a pretty hard Global slowdown.  On the bright side, we are getting back to the trade negotiating table with China although, in a chincy negotiating tactic from the book of Trump, the US had "demanded" that China put forth a concrete offer before negotiations begin and China, who has read Trump's book – is saying no – so the whole thing could fall apart very quickly, which is why the market isn't taking it as a positive this time (fool me 8 times with false promises of a deal - shame on me!).

Image result for we have met the enemy and he is us trumpTrump's problem is he is a Nationalist and does think He and the US are superior to other countries and seeks to impose his will upon them but it only makes him and US look like a big bully and causes all of our former allies and enemies alike to band together for the common good of taking US  down.  In this way, I guess Trump is honoring World Wars I and II, when most of the World got together to fight off a common enemy – nice work!

I'm hearing a lot of chatter about Powell's speech tomorrow and it's not a major policy statement – just a speech he's making in St Louis but the talking heads on CNBC and Bloomberg are saying they hope he comes across more doveish and, when that is the only buying premise your media hacks can come up with – we're still in trouble!  

I don't think the selling is done, we failed our strong bounces last week and, if we fail the weak bounces this week, then don't expect those 10% drop lines to hold next week.  

The next critical failure would be 25,100 – the 200 dma on the Dow – it's the only index still over the 200 dma so techincally – BAD!  The NYSE is death-crossing, the Russell is death-crossing, the Nasdaq is death-crossing and the S&P needs to get back above it's 200 dma (2,762) very quickly or it will be death crossing in December – just in time for the Fed's rate hike.

We haven't given up hope, we still have our longs – but we still have our hedges too! 


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  1. The best stock market ever – except for that last president:

  2. Trump is truly a despicable person and a pyschiatrist was writing in an article yesterday that the election loss might actually bring the worse out of him because of his narcissism. Well, there you go:

    Gonna make enemies out of our allies. The doctor even suggested that starting a war might not be out of the question! Fun times ahead!

  3. Using LED to grow food faster indoor:

    In addition to shaping the plants, LEDs allow speedy, year-round crop cycles. This permits Zelkind and his team of growers and technicians to produce 200,000 pounds of leafy greens, vine crops, herbs and microgreens annually in a 12,000-square-foot warehouse, an amount that would require 80 acres of farmland (hence the company’s name).

  4. Who thinks we will get the santa rally this year???

  5. Phil// Any recommendations for Apple trade?  I think people will start to buy once it dips below $190.  Thanks.

  6. CTL

    Snippet from article :


    The key investor takeaway is that the market is overreacting to the company pruning inefficient revenue that distracts the organization. The large 11.4% dividend yield remains highly safe as CenturyLink boosts EBITDA margins and consistently generates excess cash flows. Use the stock weakness as an opportunity to own the high-yielding telecom.

  7. Good Morning.

  8. Cramer herding shepple into NVDA?

  9. rb back to 1.60

  10. Phil / AAPL – I was assigned 10X of AAPL  at a net price of 211 ( Was a Nov 220 short put)  - I'm thinking of selling some short callers to bring down my cost.  My long price target on AAPL is about $210 $220 for end of year and higher longer term.

    10X Jan 210 – Short Callers at $5.00 to bring my cost basis down, then doing again later.  I'm fine with holding the stock for a while.  Do you see anything else that makes more sense, in terms of making back the loss? or being more effecient with the cash?


  11. Phil / AAPL – I was in the process of rolling the Nov 220 putters to the March 190 putters ( at 10.5) I have 5X of these now. at the price shown.

  12. CTL / Albo – I would not even be unhappy if they lowered the dividend honestly. Around 7% would make sense, and they could pay off some debt so in the long run could be a smart move. And 7% is still a great rate anyway so I don't know if that would be viewed as negative. Could actually be positive so capital gains and div!

  13. StJ – I don't disagree, but I think we could well get both; the high dividend and appreciation.  I didn't buy the stock for appreciation, which I think will come, but for the high yield.  From my cost basis, I'm getting 14% and have already taken in more than $3 in dividends.

    Stone Fox Capital, if correct, think the dividend is very safe and the stock should trade at an 8% yield.  That implies a price of $27 on the stock.   Certainly no guarantee, and not a blue chip by any means, but I continue to like the risk/reward profile.  We'll see.

    Meanwhile, IIVI is up big today.

  14. CTL  I'm not sure about investing in the stock, but their customer service is not good. Personal experience last week with getting internet repaired. I had to buy a replacement modem. Went to their retail store Oct. 30 and bought a new modem. It turned out to be defective they think. I was told to return a modem for replacement by tech support to the closed store (they did not know CTL closed ALL retail stores Nov. 1!!!!!!). Then told to go to Best Buy to purchase a modem that I could use while returning the defective one. Best Buy salesman said they have not had DSL modems for over a year and CTL keeps sending customers. Friend of mine knows CTL management person here in Tucson and she says they cannon keep customer service people over 2 months because of low wages. I will keep them for internet but buy the stock. 

  15. CTL / txchili – Welcome to the wonderful world of telcos…. I have dealt with Comcast and Verizon and none of them offers any kind of great customer service. VZ being slightly better I guess.

  16. Good morning from Vegas! 

    I'm at the Waldorf Astoria, which is the old Mandarin Oriental but nowhere near as nice as the Four Seasons (in Mandalay Bay) if you are looking for luxury.  My window looks right out at Veer, which is the condo building I was trying to buy a few floors of during the financial crisis – so it's a regretful view as no one believed me when I said we'd double our money easily – would have been 4x by now.  

    My brother Neil is looking to put some people together to buy up some homes in San Diego and turn them into two-family rentals and then sell them for double (2-year process once you establish income stream).  If you are interested in that kind of investment, let me know and I'll put you together with him.  It's too slow for PSWI but I've seen the area he wants to work with – it's 2 blocks from the gentrification wave in that part of town and is very likely to work and he lives there so he can personally oversee the project – a big plus in this kind of investment.

    Trump/StJ – That tweet doesn't even really make sense.  Trump is freaking out furious about how he was treated at that G20 talk last weekend so Europe is now on his enemies list and the nicknames will start flying – destroying our last good relationships in the World.  Putin wins again…  Putin, meanwhile, was seen poking and prodding Donald all weekend – probably putting a bug up his ass about Europe to help cause this rift.  Whether wittingly or not, Trump is nothing more than Putin's puppet.  

    Marvel/StJ – That is way cool, I wonder if they did it to keep track for the films or comics?  That's a cool thing with Marvel, most of their characters interact on the same world and events that happen in one comic or movie are known to have happened and sometimes affect others – complicated but interesting.

    Now Trump is talking about breaking up Big Tech – I guess that's how he can get revenge on Bezos – who cares if he takes the economy down with AMZN?

    Doubled down at $1.60 and then we hit $1.61 so now back to 2 long at about $1.605.on /RB.

    Also have my long /SI at $14 and long /YG at $1,202 but just single contracts to keep track while I'm away.

    80 Acres/StJ – And then sometimes I read something that gives me great hope for our Future…  thanks.

    AAPL/Rookie – See yesterday.  I pulled the trigger on selling 2021 $195 puts for $25.50 (net $169.50) in ALL of our Portfolios (filling this morning at $26.50)  and that's good for now since $25.50 is good money to make regardless.  If AAPL gets stable we will be happy to spend $7 more out of pocket to pick up long spreads, like 2x the 2021 $180 ($41)/220 ($24) bull call spreads at $16 so we'll have a net $73 upside at $220 for our net $7 cash outlay.  Making 1,050% on AAPL in two years is pretty good so we don't have to rush in as we MIGHT get to set up an even lower-strike trade and the net delta of the $180/220 spread is 0.64/0.47 so just 0.17 which means a $10 move higher in AAPL will only make that spread $1.70 (not even 20%) more expensive and it will still pay $80 at $220 but a $10 move lower in AAPL is likely to let us buy the $170/210 spread for the same $16 so it makes no sense at all not to be PATIENT! 

    CTL/Albo – Getting the FTR treatment.  

    Cramer/Jasu – He's constantly pumping stocks that fall from 40x earnings to 30x earnings as "bargains".  Keep in mind when you see those "floors" that Cramer is helping to put them in – they're not natural.  NVDA is still $118Bn and made $3Bn last year – but only because they paid no taxes:

    Income Before Tax 3,196,000 1,905,000 743,000 755,000
    Income Tax Expense 149,000 239,000 129,000 124,00

    They are on track to make $4Bn this year and still not paying taxes but that's not a premise I want to be in for the long term so I tend to assume taxes will normalize at 25% earnings, eventually so I'd say $3Bn at best and that means, even if the sector were still hot – I'd pay $75Bn at best and that's still 1/3 lower than we are now so let's say at $150 I begin to find them interesting.  

    Oh crap, /RB back to $1.585.  /CL $57.78, /BZ $67.79 – what a catastrophe!  That is going to drag the indexes if it stays down there.  I'm not going to DD again until I check the news and find out why the sudden drop

    AAPL/Batman – I really don't see the point of tying up cash with the stock.  As noted above, you can just take your $20 loss and sell the 2021 $195 puts for $27 so now your worst case is back in at net $188 and then use the net $200 you're no longer tying up to pick up some bull call spreads and call it a day.  As to your puts, if you really like AAPL long and don't think it stays this low – then take advantage of the dip (and the high VIX) to sell long-term puts.  As noted, the worst thing they can do to you is make you buy AAPL for $188 – that's only $900Bn!

    • CenturyLink (CTL +0.4%) is streamlining its approach to small-business customers with the launch of specialty offering CenturyLink SIMPLE.
    • The effort is meant to simplify pricing/contracts on a broad line of common services, starting with SIMPLE Internet, which will feature no long-term contract or promotional pricing.
    • Broadband service is considered the most important service for small businesses, and the company's SIMPLE Internet offering is available to more than 1.6M customers.

  17. why do interest rates need to stay low? Why can't Japan let them rise?

  18. I watched Pence's speech with Abe in Japan (on NHK, no US network will show actual news without spin). He is a good politician, much better than trump.

  19. Comment content omitted because it is too long.

    • Qorvo (NASDAQ:QRVOupdates its Q3 guidance with revenue of $800M to $840M (was: $880M to $900M) “due to recent demand changes or flagship smartphones.” EPS outlook drops to $1.70 at the midpoint from the prior $1.95.
    • Qorvo says its demand forecast from China-based handset manufacturers remains “measured and largely unchanged.” 
    • Like Lumentum, which cut its guidance yesterday, Qorvo is in the Apple (NASDAQ:AAPL) supply chain. 
    • The Infrastructure and Defense Products segment is tracking within its prior guidance. 
    • Q3 non-GAAP gross margin expected at 49.5% (prior: 50%) due to lower factory utilization and operating expenses are $4M lower at $161M. 
    • Qorvo shares are down 1.5% to $62.90. Apple is down 1% to $192.18.  
    • Previously: Apple suppliers drop on Lumentum guide, iPhone target cuts (Nov. 12)
    • Goldman Sachs analyst Rod Hall cuts his Apple (NASDAQ:AAPL) target from $222 to $209 and reiterates a Neutral rating.
    • Hall notes that yesterday’s guidance cut by supplier Lumentum due to adjusted customer demand was likely Apple based on the magnitude of the 17% revenue cut and the fact that Android revenues for LITE were only about $10M in the quarter. 
    • The analyst trims his iPhone XR and Max unit estimates and increases estimates for the lower-priced iPhones. Overall, FY19 units are cut by 6% and FY19 revenue by 3.5%.   
    • Apple shares are down 0.9% premarket to $192.36.    
    • Previously: Apple slips after supplier cuts guidance (Nov. 12)
    • Previously: Lumentum drops Q2 guide on shipment cut (Nov. 12)
    • Previously: Lumentum comments on that order cut (Nov. 12)
    • Apple supplier Foxconn/Hon Hai (OTCPK:HNHAFOTCPK:HNHPDreports Q3 net profits of $805.52M, up 18% Y/Y but below the $916.85M consensus.
    • Last week, the company reported October sales were up 21.5% Y/Y.
    • Analysts say Apple shifting from metal to glass for the bottoms of the iPhone 8 and iPhone X hurt Foxconn, the metal part supplier. 
    • Foxconn is also seen as the key assembler of the iPhone XR model, which is reportedly suffering from low enough sales that Apple cut plans for production expansion. 
    • The Foxconn report could weigh on Apple and its suppliers following yesterday’s guidance cut from 3D sensor supplier Lumentum.  
    • Previously: Apple suppliers drop on Lumentum guide, iPhone target cuts (Nov. 12)
    • Previously: Report: Apple cancels iPhone XR output boost (Nov. 5)

    • Stocks are mixed at the open, giving up solid pre-market gains despite reports of renewed trade talks between the U.S. and China; Dow -0.1%, S&P +0.3%, Nasdaq +0.4%.
    • The Dow lags the other major indexes, as Home Depot (-1.5%) is lower despite reporting better than expected quarterly earnings and Boeing (-2.5%) is hit by reports that it withheld information about potential hazards associated with a new flight control feature suspected of playing a role in last month’s fatal Lion Air jet crash.
    • European markets are mixed, with Germany's DAX +0.5% and France's CAC +0.2% but U.K.'s FTSE -0.1%; in Asia, Japan's Nikkei -2.1% while China's Shanghai Composite +0.9%.
    • In the U.S., information technology (+0.4%) looks to rebound from yesterday's shellacking, with industrials (+0.3%) also showing relative strength, while the utilities (-0.4%), consumer staples (-0.3%) and real estate (-0.3%) sectors trail in the early going.
    • Elsewhere, U.S. Treasury prices are higher, pushing yields down across the curve, with the two-year and 10-year yields both 2 bps lower at 2.90% and 3.16%, respectively; also, the U.S. Dollar Index -0.3% to 97.28.
    • WTI crude -1.8% to $58.83/bbl on oversupply fears after OPEC cut its forecast for oil demand growth in 2019 for the fourth straight month.
    • Chain store sales increased 6.1% in the latest weekly read by Johnson Redbook vs. +5.9% for the week prior.
    • Month-to-date sales are 6.1% higher. Of course, November sales will be dominated by the Black Friday to Cyber Monday shopping frenzy period.

    • Macy's (NYSE:M) is going to rationalize its store space under a new plan to reduce the amount of merchandise and the number of employees at underperforming store locations, according to The Wall Street Journal.
    • In some cases, the department store operator will wall off entire sections of stores to leave the space empty if another company can't be found to sublease the space.  VERY BAD IDEA – MAKES THE STORES LOOK DEPRESSING
    • Macy's management is expected to update on the strategy tomorrow during its earnings conference call and provide a tally on how many stores will be affected.
    • Ford (NYSE:F) sales in China fell 31% Y/Y in October to 58,204 vehicles.
    • Sales for Changan Ford Automobiles were down 43% to 31,234 vehicles, while Jiangling Motor sales dropped 8% to 20,969 vehicles. Lincoln sales fell 6% during the month to 4,753 vehicles. Imported Ford brand vehicles were down 15% Y/Y to 1,248 vehicles.
    • Ford Greater China CEO Anning Chen's update: "As part of our 2025 Plan, Ford is rolling out its first wave of our exciting new vehicles, designed especially to meet the needs of Chinese customers. The all-new Ford Focus and new Escort hit showrooms this month and the all-new Territory will follow soon. We believe our future product line-up will help us to regain our sales momentum in this important market and serve as a testament to our commitment to Chinat."
    • YTD Ford China sales -31% to 642,593 vehicles.
    • Full Ford China sales report (.pdf)
    • Shares of Ford are up 0.32% in premarket trading to $9.52.
    What a petty little baby he is! Trump targets French wine
    • President Trump has lined up French wine exports as a possible tariff target this morning in a new tweet.
    • While no specific policy has been suggested by Trump, the development raises the possibility that wine and spirits companies such as Brown Forman (BF.ABF.B), Diageo (NYSE:DEO), Constellation Brands (NYSE:STZ) and Vina Concha Y Toro (OTCPK:VCOYY) could get caught up in a dueling tariff scenario.
    • Crude oil extends its plunge into bear market territory, with U.S. WTI -1.5% at $59.04/bbl and Brent -1.2% at $69.28/bbl, driven by oversupply fears.
    • OPEC cut its forecast for 2019 oil demand growth for the fourth straight month, saying growth in supplies from non-OPEC countries would outpace growth in demand, "leading to widening excess supply in the market."
    • OPEC now sees world demand for crude rising by 1.29M bbl/day next year, down 70K bbl/day from its projection last month and well below its July forecast of 1.45M bbl/day growth, and it expects output from non-member nations to increase by 2.23M bbl/day next year, 120K more than its last forecast.
    • "Although the oil market has reached a balance now, the forecasts for 2019 for non-OPEC supply growth indicate higher volumes outpacing the expansion in world oil demand, leading to widening excess supply in the market," OPEC says in its report.
    • The gloom in the oil market is partly because Saudi Arabia’s efforts to prop up the market are not enough, say analysts at JBC Energy; yesterday Saudi Energy Minister al-Falih said the world's producers may need to cut nearly 1M bbl/day from October levels, but hesitant statements from Russia made traders nervous.
    • Pres. Trump yesterday again urged Saudi Arabia and OPEC not to cut oil production, contributing to oil price weakness.
    • The U.S. Energy Information Administration will publish an estimate of U.S. shale oil production later today, and Commerzbank says "it is likely to reach a new record level in December and thus add to the oversupply."

    • Boosted by strong demand in the aircraft market, Boeing (NYSE:BAdelivered 43 of its best-selling 737 single-aisle aircraft in October, up from 37 a year ago.
    • The figures brought total deliveries for the first ten months of 2018 to 625, up from 610 in the same period a year earlier, thanks to the surprisingly strong 61 planes it delivered in September.
    • Boeing expects to deliver 810-815 planes in 2018.
    • Bank of America Merrill Lynch downgrades Best Buy (NYSE:BBY) to a Neutral rating from Buy as it expects a pause to the retailer's momentum.
    • "We continue to see best BBY as one of the highest quality hardline names but after several years of outsized growth and likely less opportunity for big beat and raise quarters, it is harder to justify valuing BBY at a premium multiple," writes the BAML analyst team.
    • Freight expenses, higher labor costs and continued reinvestment are highlighted in the report as BBY profit headwinds.
    • The firm lowers its price objective on Best Buy to $70 from $92 (13X multiple).
    • BBY -2.12% premarket to $65.73.
    • Tyson Foods (NYSE:TSN) is down sharply after FQ4 results arrive below expectations and the company posts a weak guidance update.
    • Tyson expects full-year revenue of $41B vs. $41.5B consensus and full-year EPS of $5.75 to $6.10 vs. $6.21 consensus. "Our outlook excludes any potential impact from the closing of the Keystone acquisition and is relatively equal to FY18 earnings when excluding the income from businesses held for sale before they were divested. We expect continued strong cash flow generation as we grow sales and volume, particularly in value-added and branded products," updates Tyson management.
    • Shares of Tyson are down 3.4% in premarket trading to $59.52.
    • Previously: Tyson Foods beats by $0.25, misses on revenue (Nov. 13)
    • Alphabet’s (GOOGGOOGL) Waymo could launch its driverless taxi service next month, according to a Bloomberg source.
    • The rides would operate under a new brand name. Some of the taxis will include backup drivers who can take control of the wheel if needed.
    • The soft launch will likely happen in Phoenix, Arizona, where Waymo is already on the road with its fleet of modified Chrysler Pacifica minivans. Riders might belong to the existing Early Rider Program.
    • Pricing will be set to compete with Uber (UBER) and Lyft (LYFT).
    • Previously: Waymo scores breakthrough permit in Golden State (Oct. 31)
    • Previously: Latest accident boon for self-driving tech? (Nov. 6)
    • Baker Hughes (NYSE:BHGE) says General Electric (NYSE:GE) has launched a secondary offering of 92M common shares of BHGE, with an underwriters option to purchase up to an additional 9.2M shares.
    • Also, BHGE will repurchase 65M class B common shares from GE and its affiliates in a privately negotiated transaction, with a $1.5B maximum aggregate price for the share repurchase.
    • GE currently owns 62.2% of BHGE, and the deals are expected to maintain GE's stake in BHGE at above 50%.
    • BHGE -4.8%, GE +2.5% pre-market.
    • Earlier: Baker Hughes, GE unveil series of deals; GE to maintain 50%-plus stake
    • Baker Hughes (NYSE:BHGE) and General Electric (NYSE:GE) announce a series of long-term agreements that amend the commercial and technological relationships between the two companies.
    • BHGE and GE will form a joint venture on critical rotating equipment, including aeroderivative and heavy-duty gas turbine technology.
    • BHGE also enters into long-term supply and distribution agreements with GE for heavy-duty gas turbine technology at current pricing levels.
    • BHGE and GE Digital agree to extend their exclusive supplier relationship for digital oil and gas applications.
    • The two companies also say they will cooperate on a proposed sale by GE of part of its stake into the market and to a concurrent repurchase of another part of GE’s stake by BHGE; together, the transactions are expected to maintain GE’s stake in BHGE above 50%.
    • "Earlier this year we announced our intent to pursue an orderly separation from BHGE," says GE Chairman and CEO Lawrence Culp." The agreements announced today accelerate that plan in a manner that mutually benefits both companies and their shareholders."
    • BHGE -2.7%; GE +1.8% pre-market.

    The Economic Consequences Of Debt

    • Beazer Homes USA (NYSE:BZH) gains 5.8% in premarket trading after after the homebuilder announced debt and stock repurchase plans and forecast improved profitability in the coming fiscal year.
    • "We are anticipating improved profitability, with a growing community count and a higher average selling price helping us counter more competitive market conditions," says President and CEO Allan P. Merrill.
    • Board approves new share repurchase program for up to $50M of common stock; plans to initially buy $16.5M of outstanding shares under an accelerated share repurchase program.
    • Plans to use cash on hand and cash generated from operations to fund share repurchases.
    • Intends to reduce outstanding senior notes by about the same dollar value as shares repurchased during FY2019.
    • Fiscal Q4 results: Excluding notable items, net income from continuing operations was $38.0M, up from $29.9M a year ago.
    • Q4 adjusted EBITDA rose to $90.1M from $76.9M.
    • Q4 homebuilding revenue rose 14% to $761.5M; average selling price increased 6.6% to $372,600 and closings rose 7.4% to 2,044 homes.
    • Q4 cancellation rates increased to 21.5% from 20.6% a year ago.
    • Q4 net new home orders slipped 0.8% Y/Y to 1,305.
    • Backlog at Sept. 30, 2018 was 1,632 units with a dollar value of $628.0M, compared with 1,855 units and $665.8M a year earlier.
    • Conference call 10:00AM ET.
    • Previously: Beazer Homes reports Q4 results (Nov. 13)
    • D.R. Horton (NYSE:DHIbuys Westport Homes, a homebuilder in Indiana and Ohio, and about 3,200 lots through option contracts for about $190M in cash.
    • For 12 months ended Oct. 31, 2018, Westport Homes closed 886 homes with an average home size of about 2,200 square feet and an average sales price of $264,000. It had about $234M in revenue for that time period.
    • Westport will operate as a separate division within D.R. Horton.
    • Assets acquired through the Westport purchase includes 3,500 lots, 400 homes in inventory, and 550 homes in sales order backlog, mostly in Westport's Indianapolis and Columbus operations.
    • Previously: More on D.R. Horton Q4: Home closings, net sales orders rise 11% Y/Y (Nov. 8)
    • Home Depot (NYSE:HD) reports comparable-store sales rose 4.8% in Q3.
    • The comp sales for the U.S. stores was 5.4%.
    • Gross margin rate improved 20 bps to 34.8%.
    • SG&A expense rate +30 bps to 18.3%.
    • Operating margin rate flat at 14.7%.
    • Merchandise inventory up 9.9% to $14.75B.
    • Number of customer transactions increased 1.4% to 394.8M.
    • Store count +3 Y/Y to 2,286 for the period.
    • FY2018 Guidance: Sales: ~+7.2%; Comparable-store sales: ~+5.5%; Operating margin rate: ~14.5%; Tax rate: ~24%; Diluted EPS: ~$9.75 (~+33.8%), Repurchases: ~$8B.
    • HD +2.96% premarket.
    • Previously: Home Depot beats by $0.26, beats on revenue (Nov. 13)
    • Natural gas is expected to overtake coal as the world’s second largest energy source after oil by 2030 due to a drive to cut air pollution and the rise of LNG.
    • The estimates are based on the IEA's "New Policies Scenario" that takes into account legislation and policies to reduce emissions and fight climate change.
    • They also assume more energy efficiencies in fuel use and other factors.
    • Japan's central bank has become the first among G7 nations to own assets collectively worth more than the country’s annual economic output, with its hoard reaching a staggering ¥553.6T ($4.9T).
    • Assets started ballooning when Governor Haruhiko Kuroda took the BOJ helm in early 2013, vowing that such steps would boost Japanese inflation to 2% in two years.
    • That target has proved elusive, barring a brief increase in prices after a sales tax hike in 2014.

  20. Well, now I had to add 2 more /RB longs at $1.57 – now my basis is $1.585 on 4 longs.  Hopefully we hold around here but it's only a 4% drop, not 5%, maybe another 0.015 to go ($1.555) but then I'd still expect a bounce back to $1.57 (weak from there).

  21. Pence / BDC – Please, the guy is not that smart and a bigot! And apparently he has no courage either. Being a sycophant to Trump all these years is not an attractive trait!

  22. Yup, pence is a pretty low bar, with no testicles….

  23. BABA> Phil I have sold half of my position at 4…just two days to go!

  24. BABA/Lionel – Thanks for the reminder.  In the STP, let's sell 5 (1/2) of our Nov $145s for $4.50 in the STP and a stop on the other 5 at $4.  The reason to take a quick profit on 1/2 is we lock in gains and also because it's easier to sell the calls while it's going up!

  25. Good call Phil on BABA. Hopefully We get $7 on the other half by Friday!

    Maximum pain on RB today 11/14. We had a similar pattern in 2017 and 2016 with a flush down prior to TG.

  26. Txchili – I don't disagree with your comment on CTL. but keep in mind that the old CenturyLink was a poorly managed company.  The Level 3 guys are now running the company, and I look for customer service to improve.

    By all accounts Level 3 was a well managed company.

  27. Long term /RB charts are still not bullish!

  28. ….so buy some weekly SCO calls?

  29. Jean-Luc/ Macron declared "Nationalism is a betrayal of Patriotism". It has been 24 hours and Trump is still struggling with the meaning of it. Naturally he gets upset! 

  30. /RB/Lionel – I think it should be lower, just not into Thanksgiving.  As I have been predicting for years, every time a car is sold, demand goes down and the models they have to predict consumption don't account for that and, of course, electric cars send the whole thing into a tailspin.  Couple that with all the drilling we're doing in the US and there's really no bull case for oil outside of forced manipulation by OPEC or some kind of war/santction disruption in the Middle East but those are artificial and can only interrupt, but not change, the fundamental oversupply in the market.

    • Bayer (OTCPK:BAYRY -3.5%) is sharply lower after Q3 profit fell 26% Y/Y to €2.89B ($3.26 billion) from €3.88B a year earlier and disclosing another jump in the number of lawsuits alleging the company's recently acquired weedkillers cause cancer.
    • Bayer says 9,300 plaintiffs have now brought lawsuits over glyphosate-based weedkillers made by recently acquired Monsanto vs. 8,700 at the end of August.
    • “We’ve decided to defend ourselves by every means available, because glyphosate is a fully safe and good product when properly used," CEO Werner Baumann said during today's earnings conference call.
    • The company says Q3 sales rose 23% Y/Y to €9.91B from €8.03B a year earlier, and sales at its crop science division surged 84%, boosted by the addition of Monsanto; the new lines of business picked up in the takeover performed much better than other parts of Bayer’s agriculture unit, notes Bernstein analyst Gunther Zechmann.
    • But estimates of the agricultural unit’s profitability may be too high, says analyst David Evans at Kepler Cheuvreux; aside from all accounting complications related to the merger, it has been "a tough year as well with drought in Europe and trade tensions," Evans says.
    • Home Depot (NYSE:HD) is down 2.9% after the company warned during its conference call that Q4 comparable sales will decelerate from the level seen in Q3 due to a tough comparable to a year ago when $400M worth of hurricane-related sales were generated.
    • Management pointed to the strong economic growth in the U.S., while acknowledging that some housing metrics are moderating. Still, big ticket sales by Home Depot of transactions over $1K accounted for ~20% of total U.S. sales on 9.1% Y/Y growth.
    • While the company set implied Q4 guidance of $2.10 to $2.12 to fall short of the consensus estimate of $2.17, RBC Capital Markets is out with a reminder that Home Depot tends to be conservative with its outlook.
    • Home Depot earnings call webcast
    • Shares of Home Depot are now down about 7.4% over the last week.
    • Amazon (AMZN +2.2%confirms that it selected D.C. and NYC for its split HQ2.
    • The company says it will receive $1.525B in performance-based direct incentives in Long Island City over the next 10 years. The total includes a refundable tax credit of up to $1.2B through the state’s Excelsior Program. The amount is based on a percentage of salaries Amazon expects to pay employees over the next decade or $48K per job for 25K jobs. 
    • A $325M cash grant from Empire State Development is based on the square footage of the buildings occupied in the next decade.   
    • Amazon’s “National Landing”/Crystal City location will get $575M in performance-based direct incentives on 25K jobs created with an average wage over $150K. 
    • The Commonwealth will invest $195M in infrastructure improvements in the neighborhood including metro stations and a pedestrian bridge to Reagan National airport.    
    • Previously: Amazon picks NYC, Northern Virginia for HQ2 (Nov. 12)
    • Previously: AWS opens East Coast GovCloud (Nov. 13)
    • Previously: Amazon to set operations hub in Nashville, with 5,000 jobs (Nov. 13)
    • Vodafone (NASDAQ:VOD) is up 9.2% to its highest point in a month after a tough quarter came in largely to analysts' expectations, and new CEO Nick Read set up a path forward, with a dividend freeze to help address heavy debt and a focus on simplification and cost control.
    • For the six months, revenues fell 5.5%, mainly due to a loss it took on disposing of Vodafone India in the merger with Idea Cellular and other impairments.
    • On an organic basis, service revenue rose 0.8% for the six months; for the quarter it was up 0.5%, a slowdown from a first quarter growth of 1%.
    • Despite that slowdown, EBITDA rose 2.9% based on continuing expense cuts.
    • Free cash flow (pre-spectrum) was €0.9B vs. a prior-year €1.3B; post-spectrum, it was €0.6B vs. last year's €0.4B. Net debt stood at €32.1B as of Sept. 30, reflecting FCF of €0.9, proceeds from Verizon loan notes of €2.1B, offset by €2.7B in final fiscal 2018 dividend payments, spectrum purchases of €1B and a net outflow to India of €0.8B for the Idea transaction.
    • The company updated and narrowed full-year guidance for organic EBITDA growth of about 3% (vs. previous guidance for 1-5%) and boosted expectations for free cash flow to about €5.4B from €5.2B.
    • Previously: Vodafone Group reports 1H results (Nov. 13 2018)
    • Press release
    • WTI crude oil has tumbled to its lowest price of the year, now off 4.8% to $57.04 per barrel. The price stood above $76 just over one month ago.
    • The major averages are mostly unfazed, with the S&P modestly higher, and DJIA modestly lower.
    • Previously: Crude oil extends losses as OPEC warns of 2019 oil glut (Nov. 13)
    • China says the U.S. decision to cut off a state-backed chipmaker from it suppliers breaks World Trade Organization rules and sets up a U.S. monopoly.
    • China’s comments happened at a WTO meeting today. Last month, the U.S. Commerce Department put Fujian Jinhua Integrated Circuit on a list that can’t buy components, software or tech from U.S. firms. 
    • Micron (MU +1%) has accused Jinhua and Taiwanese partner United Microelectronics (UMC-2.1%) of stealing its chip designs. 
    • The U.S. is concerned China will flood the market with cheap chips, forcing domestic chipmakers out of business and leaving the military without a supplier, creating a national security concern. 
    • China says Jinhua hasn’t started production yet and isn’t threatening DRAM manufacturers in the United States.       
    • Previously: U.S. indicts Fujian, UMC for Micron IP theft (Nov. 1)
    • WeWork (VWORK) raises another $3B from SoftBank (OTCPK:SFTBFOTCPK:SFTBY) with the same terms as the $1B convertible preferred financing from August.
    • This infusion does come straight from SoftBank proper rather than the Vision Fund. 
    • WeWork had $6.4B of pro forma cash at the end of September. Q3 revenue was up to $482M from the $241M in the prior year’s period with a net loss of $497M.  
    • Previously: WeWork secures $1B SoftBank investment (Aug. 10)

  31. Nationalism/Lionel – I don't think Trump is capable of even grasping Macron's concept.  I think Trump's entire thought process is "Emmanuel said something bad about me, F him!" and then he puts tariffs on French wine to teach Macron a lesson.

    Trump issues delayed broadside against Macron – CNNPolitics

    I don't know why people bother trying to figure out what Trump is thinking – I don't think there's a big thought process going on.  Trump is just the male version of a dumb girl that just goes along with whatever you say and pretends to like whatever you are into and gets upset when she thinks you're not being nice to her.

    Image result for trump caveman

  32. RB/ Absolutely Phil. I totally agree with your oil predictions having read your posts for a few years already.

    But I still believe the market is super rigged and we will end up 5c higher in a week time :)

  33. TRump / Phil – As I posted earlier, mental health professionals are trying to figure out what Trump is thinking and they paint a very bleak picture for the next 2 years! There is a thought process, unfortunately, it's a dangerous one.

  34. There are many new signs that Donald Trump is mentally deteriorating

  35. Phil,

    Do you still think oil could rally up to at least $60 around Thanksgiving? Thx

  36. strange that SCO is up about the same % as oil is down (its supposed to be a 2x inverse)? Any idea why? do we expect it to catch up or is it just a matter of the ETF not perfectly tracking after the recent prolonged down move?

  37. Looks like oil has dropped around 25% and SCO has gained 40% to me. Still not a 2X – really great example of the decay built into those leveraged ETFs if that's the reason for the discrepancy. 

  38. /RB/Lionel – I think it should be lower, just not into Thanksgiving.

    Yet you're long ? ?

  39. Yes Albo/ Went long this morning, RB shot up to 1.59. Now I am having a poke again at the same level 1.565

  40. Good luck, Lionel.

    Actually, I was addressing Phil, who said the above.

  41. Rigged/Lionel – That's why I keep poking at /RB long but it doesn't seem to know it should be higher into the holiday… angry

    Oil/Sun – I don't see why it shouldn't but so weak at the moment – hard to get enthusiastic.

    Well, this is it, $1.555 on /RB.  For good or ill my last DD (8 long at $1.57 avg) before throwing in the towel.

    Image result for towelie i have no idea

    SCO/CRS, Ati - There's still an element of sentiment in an ETF and they don't balance it out on the fly, they just try to buy instruments that will give them that 2x inverse performance – when you get 5% intra-day moves in oil – they can't keep up.

    /RB/Albo – Seemed like a good idea at the time…  We have gotten run-ups into every holiday this year and we've made tons and tons of money.  This time, we're losing a ton as it goes the other way.  

  42. FBI report shows 17 percent spike in hate crimes in 2017

  43. Trump Weighs Replacing Kelly, Set To Fire DHS Chief

  44. I’ve now got 2 /RB long at 1.56, been taking pennies along the way as it’s come down. Will do the same here and get back to one as quick as possible. 

  45. CHK – Very big interest in the Nov 3.5 calls. Traded over 7,000 contracts.

  46. Phil – Maybe you are just too early on /RB for the Thanksgiving bounce.

  47. Long a couple of /CL contracts.  RB moves are too expensive for my taste.  I play with scared money.

  48. Albo, that’s true. We’ve been too early for a week or so. Hard to pass up when it makes a 5% move down in a day though. Stops are critical, and non-greedy repetitive entries and exits have netted good wins though. 

  49. You should expect a bounce (can't predict the size) on /RB as it's really deeply oversold now but as we know, they can remain that way for a while…

  50. Thanks, Jeffdoc.  I hear you.  But I'm more comfortable playing /Cl, or in the case of gasoline, trading UGA.

    And besides, I am the self proclaimed worst futures trader on the planet ! ! !

  51. You’re just smarter than the rest of us Albo! We can’t help ourselves. 

  52. Not smart at all.  Just closed out /CL for small loss. :-(

  53. market taking it on the chin? any thing happened!

  54. SCO flying

  55. This market just doesn't want to bounce – maybe people realize that we are governed by a maniac. Instability is not great for long term planning.

  56. Wow, oil down 7% for the day, /RB down 6% and both sitting at their lows into the NYMEX close – total breakdown in pricing.

    Too early/Albo – WAY too early!

    Not seeing anything in particular that happened to drive us lower – I think we're just still in a big downtrend to a 20% correction and there's just a ton of denial along the way.  

    2,655 is the 10% line from 2,950 and another 300 points, back to 2,350 is a proper correction.  300-point drop gives you 60-point bounces to 2,715 and 2,775 and we just failed 2,775 so 2,715 is the next line to watch and, below that 2,655 but the only reason we'd be back there is because we've just been consolidating for a breakdown so it's much more likely to fail this time, then the whole number support at 2,600 but, below that, we start using the bounce lines at 2,350 which is 600 points down which is 120-point bounces to 2,470 and 2,590 but, with a big number, you round it to the whole number of 2,600 so 2,600 is the strong bounce line of the 20% correction!  See how it all ties together?

    All in all, the behavior of /ES is very consistent with a long-term correction back to 2,350 and, in our first attempt, we bounced off the strong bounce line of 2,350 which gives us a good indication that 2,350 will hold and presents a great buying opportunity – if we're PATIENT! 

    Given that, we can then calculate what the strong bounce lines are from 20% corrections on the other indexes and see if they are holding true as well:

    27,000 x 0.8 = 21,600 so that's 5,400 points so call it 1,100 point bounces to 22,700 (weak) and 23,800 (strong) but the round up gives us 24,000 as the strong bounce line off the 20% correction.  Hmmmm…

    7,700 x 0.8 = 6,160, which is down 1,540 so call it 300 point bounces from 6,150 (it's not a science, it's a rule I made up so I can round it however I want to!) and that's 6,350 and 6,650.  Damn, worked again! 

    1,750 x .8 = 1,400 so down 350 gives us 70-point bounces to 1,470 and 1,540  and you can see that we already hit the weak bounce line on the button on /TF, which has been leading us lower the whole time and should cross back under the strong bounce at 1,540 first (oops, did that already!).

    So there you go – all pretty obvious and obviously that means there's still a lot of downside money to be made if these strong bounce lines begin to fail.

  57. I had an SCO short put position from a year (or two?) ago, rolled the short puts down and out at some point during the painful oil run-up (now have $25 short puts), strongly considering just buyignt hem back and booking the loss at this point, this position has been a thorn in my side for a while and getting out with a reduced loss seems reasonable. 

  58. What Trump is thinking??? That is a total waste of time. Instead, pick which of the 9 traits of NPD he is exhibiting. Thinking has nothing to do with it.

  59. Phil/SCO,

    any SCO trade, maybe a bear put spread, for playing the bounce in oil? or just wait….


  60. SCO/CRS – They are blasting up now with oil failing $55 – down 8% on the day.  This is going to cause a cascading crisis in the OPEC countries (and not very good for our own economy's energy sector).  If we stay down here there will be sovereign credit downgrades and defaults and then unrest in Arab states when the money stops flowing.  The Prince may lose his head at this pace…  

    I don't disagree though, you should be thrilled to get out close to even because today's $3 gain can reverse just as quickly so, on the whole, you should be THRILLED we're no longer at $12 and leave it at that!

    SCO/Pat – The trend is not your friend shorting SCO – it's just crazy so stay away for the moment.

  61. The Prince Salman took power last summer (June 2017) and he's only 33, this can be a great excuse for others in the family to take power (the king is a bit senile and is 83) in a nice "Game of Thrones" sort of blood-bath.  Remember how he imprisoned all those people and took their money – that was the other side of the family…  They are sure to be sowing seeds of discontent and saying he mismanaged OPEC and they can use the Khashoggi thing to hang him with – most likely they are weighing out the repercussions of using him for a scapegoat or maybe negotiating with the US to get our backing to dethrone that side of the family.  Could be interesting…

    Don't forget, oil does cost something to produce, maybe $30 for the Saudis so going from $75 to $55 takes their profits from $45 to 25 – that's painful!   It's $73Bn less revenues (10Mb/d) in a $230Bn economy (32% of GDP).  Also, they've totally F'd the Aramco deal now.  Even if oil does recover, this will put a painful cap on value as they've proven that even extreme measures taken by OPEC can't support $70 on Brent (now $65).

  62. You know who is suffering now too – Putin! Time to start a new crisis…

  63. While Russia produces about 9Mb/d, they have a $1.6Tn GDP – 5x the Saudis so not only can Putin stand it longer but it also forces OPEC+ to NEED him more than ever to stabilize prices and, while they are down, Putin acts like he's doing a favor for the Russian people while driving his competition out of business in the Russian oil industry.  As usual, Putin wins!

    Image result for putin wins

    Putin Says Oil at $60 Suits Russia With OPEC Weighing More Supply 

    And he means Brent!  

  64. todays drop in oil looked like a flush to me i play and follow a number of small and med cap energy companies mostly canadian. ive had the destinct impression that some powers that be have been pushing down the prices of these companies since august of this year these companies regardless of dealing in heavy or medium or light oil have fallen to lows that they have not been at since oil was 35 or  40 dollars a barrel after very recently reaching new highs.Time will tell but i think a very well orchestrated entry into energy companies has just been accomplished and this flush was to shake out any last stubborn longs. 

  65. Russia / Phil – Talking to my Russian colleagues, it's not so rosy! They can use all the money they can grab now… If Putin says he happy with oil at $60 it's probably just him playing mind games with the other producers. Sure, on a personal basis, he and his cronies are happy! 

  66. Oil won't be needed much longer anyway:

    The Law on Climate Change and Energy Transition seeks to ban the sale of vehicles that depend on fossil fuels (including hybrids) by 2040, according to a document the ministry sent Earther. Electric cars and their charging stations will take over. Spain also plans to take its electricity production 100 percent renewable by 2050, which will further help it reduce its greenhouse gas emissions to 90 percent below 1990 levels by then.

    Putin has about 10 good years to sell his oil at the highest possible price! After that it will be cheaper than water! And the next cartel will be the drinkable water cartel.

  67. Phil / CMG short term short calls – time to go back to the well?

    I note this comment from the LTP part 2 Portfolio Review back on October 19th:

    CMG – Earnings next week and we're up $85,000 on the short calls so screw that – I'm not taking a risk.  Let's buy back the short Jan $460 calls for $38,000 () and we'll leave the spread and, if it goes well, we can sell calls again and, if it goes badly, we sell puts, drop the calls to a lower strike and sell calls again.  Once again, I'd prefer if the stock goes against us as I think we'll make more money over the long run if we have to add to the position but, if it goes higher, we "only" have a $240,000 spread we paid net $19,800 for! 

    After earnings CMG sold off, but then they rallied back strongly, and now sort of debating which way to go. 

    You took off 20 Jan 19 $460 calls, you could reload on selling 20 of the March $480 @ $40 calls bringing in $80k? What's not to like!

  68. Oil rises as OPEC, partners discuss supply cut

  69. Congress Likely to Shelve New Russia Sanctions as Clock Runs Out

  70. 2018 midterms update: What has changed since election night

  71. The Vaporware Presidency

  72. The Real Florida Recount Fraud

  73. Trump calls on Florida Democrat to concede, implies fraud

  74. Good morning!

    Back on schedule though I'm the only person in this hotel who's awake (just looked for coffee – too early).

    Flush/Tommy – I agree.  I sent this over to yesterday but all they used was this out of this:

    On Nov 13, 2018, at 5:32 PM, Barani Krishnan wrote:

    > Hi,

    > Truly appreciate if you could give some thought to this as it will form an analysis I'm writing: 

    > 1. Can WTI break below $50 between now and before Dec 6, given today's price action alone? I know it can bounce back too. Please give me a few lines of your reasoning. 

    > 2. Also, I know you've seen booms and busts. But did today's sheer collapse stun you? Is it the work of quants?

    On Tue, Nov 13, 2018, 6:28 PM Philstockworld wrote:

    1) It is possible, but very unlikely that oil goes below $50 – at least not for very long.   The problem with the auto market is simple, oil never should’ve been above $60 in the first place.  

    Oil was running between $50 and $55 last fall when OPEC enacted production cuts.  That would be completely artificial way to boost the price and did nothing to change the underlying fundamentals – there is simply more oil that can be produced than is required. That means that, by default, there is a glut.    

    Oil prices has since been held up by incidents with katat and recently, Irene but those are also artificial and do nothing to change the supply/demand fundamentals. As soon as Trump’s sanctions against Iran gave most of Iran’s buyers exemptions, it took away the bullish premise that had kept prices high into the fall.  

    Meanwhile, slowly but surely, day by day, every time someone buys a new car that car gets much better mileage than the car they had before.  This persistent reduction in overall demand is not really modeled into long range forecasts that are still following models from when cars consistently got about 20 miles per gallon, not 35+ that global fleets are averaging today.  

    2) Today’s move down was very surprising and came on rumor is that Russia was not on board with production costs as well as data that shows demand was lower than expected (of course).  I imagine some large found was unwinding a big position, we will probably hear something about it later.  

    With the bullish premise being dismantled and coming into the slowest demand part of the year, there is simply no buyers for the oil people trying to sell.  As I’ve often told you, the “demand“ purported on the NYMEX for front month contracts is fake but they are contracts for real deliveries and, like a game of hot potato, the fakers are now caught with contracts that they can’t unload at any price.  

    - Phil

    That's show biz, I guess…

    Bit of a turn-up this morning but nothing exciting as OPEC+ talks 1.4Mb/d cut but look at /NG hitting our goaaaaaaaaaaalllllllllll already ($4.50):

    Should be good for CHK too.  /NGV19 hit $2.85 and now back to $2.72!  Congrats to all who stuck that one out!  CHK still playable – despite all the FU's:

    CMG/Winston – Thanks for the reminder.  Now do it again in today's chat please!  

  75. You guys are talking about energy prices being manipulated.

    Isn't it interesting that someone bought more than 8,000 of the 11/16 CHK 3.5 calls yesterday.  They closed at $.14.

    Voila ! ! !

    Today /NG up sharply and CHK looks to open above $3.70.

    Coincidence ?

  76. FWIW, bought some DGAZ at $3.89. 

    Total spec.

  77. Frozen Out of China, American Farmers Refuse to Sell Their Soy

  78. Sold 1/2 up .80 or 20 %.  Stop at entry on balance.