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Monday Market Mayhem – Trumpdown, Day 22

Image result for no government shutdownAt the end of this week, we'll have gone a month without a Government.

That's kind of dangerous as people may begin to realize they don't need a Government.  Well, rich people don't need a Government – poor people are screwed…  Federal workers are screwed as they didn't get paychecks on Friday, despite 420,000 of them being considered "essential" and working without pay.  When you go to work you spend money on gas, tolls, lunch, day care – it's not like the Government is just asking people to work for free – they are essentially forcing people to dig into their own pockets to support Trump's madness.

Not only that but missing bill payments due to not getting paid will impact the Federal Workers' credit ratings – damaging them and their families for years to come.  #TrumpDontCare

Meanwhile, nothing is getting done and that's slowing US commerce down and we're talking a month – that's 10% of the year and we're not going to be back to 100% right after the shutdown ends as there must be piles and piles of backlogged things sitting on the desks of the 380,000 furloughed workers as well.  Already the Wall Street Journal has estimated that this shutdown will bring GDP growth for Q1 down to 2.2% from 3.1% for all of 2018 – another month and we'll be below 1.5% but it will give Trump an excuse for failing to deliver on his GDP promises – and he needs an excuse because nothing Trump has done has really helped the economy anyway. 

Related imageWe're right in the middle of Flu Season and 30 people are dead and 9,000 people are hospitalized but money to the CDC's Influenza Program (our front-line defense against a national outbreak) has been cut off and that means we have no coordinated program to track and identify flu strains, which is how doctors get guidlines for treatment and how vaccine makers are able to prepare batches of antibiotics to contain the outbreaks.  In other words, not only are people going to die during Trump's little temper tantrum, but this could lay the groudwork for a massive outbreak – the kind that usually doesn't happen in a first world nation.  

The last time the Government shut down was Oct 1st, 2013 and it only lasted 16 days – not a huge effect on flu season.  This shutdown is happening near the peak of the season, it's like pulling back your firefighters just when the fire is getting more intense – bad plan!  That's just one of the many, tiny things the Government does for us that no one seems to notice along with feeding, clothing and sheltering the poor – who will also soon be dying in record numbers as soon as we get a cold snap.  

Image result for trump evilTrump WANTS them to die!  Trump NEEDS them to die!  Because Trump knows the Democrats care about poor people and sick people and Trump doesn't – and that gives him a huge negotiating advantage as he holds our citizens hostage in order to extort $5.7Bn as a downpayment on a $30Bn wall that he's already made sure rich people and corporations won't have to pay for.  If this were the plot of a movie you would say the villain is unrealistically evil, right?

Meanwhile, the Trade War marches on and now China has derailed applications by Visa (V) and Mastercard (MA) to process Renminbi payments – effectively locking them out o fthe Chinese markets.  Over in Europe, the Brexit vote is supposed to be decided tomorrow and it's widely expected that May's compromise with the EU will be rejected and, if she can't swing enough votes her way (she'll get 3 tries) – it's very possible she will be removed from office, which will set everything back just 11 weeks from the drop dead date, when the UK leaves the EU without a working agreement (ie – total chaos).

Labour leader Jeremy Corbyn indicated his party would stage a no-confidence vote in the Government within days of May’s deal being defeated in Parliament on Tuesday.  If a confidence vote failed, he’d be under pressure to back a second Brexit referendum, which would open deep divisions in the Labour Party, many of whose supporters backed leaving the EU in 2016. Corbyn said he’d rather get a negotiated deal to avoid a no-deal Brexit, which would be “catastrophic” for industry and trade. “We will do everything we can to prevent a no-deal exit.”

Amazingly, the crux of the conflict within Britain is over something people in the US thought was resolved decades ago – Nothern Ireland!  The main objection Parliamant has is to guarantees May has offered the EU to make sure a new physical border doesn’t emerge between Northern Ireland, which is part of the U.K., and the Republic of Ireland, which remains in the EU. Critics say the pledges — which constitute what’s known as the "backstop" — risk binding the U.K. to EU rules forever.

They argue that May caved in to the EU and betrayed the electorate’s call to regain sovereignty, while treating Northern Ireland differently from the rest of the country. Though May survived a Conservative Party challenge to her leadership on Dec 12th, there’s still opposition on all sides: pro-Brexit hardliners in her party, other Conservatives who are pro-EU, the Northern Irish party that’s been propping up the government as well as the opposition from Corbyn's Labour Party.  

EU leaders have repeatedly said that the withdrawal agreement cannot be changed.  The EU may send a letter offering reassurances about the backstop ahead of the vote in the British Parliament, but neither side thinks this will be enough to swing the result.  European officials are probably waiting to see the scale of the likely defeat on Tuesday before deciding how to respond.  The next EU summit is scheduled for March 21-22, though an emergency meeting could be called earlier.

May hasn’t said what she will do if she loses tomorrow, but she would have to come back to Parliament by Jan 21st with a "Plan B."  Her Cabinet is divided on what that should be.  The opposition Labour Party has said it will try to trigger a general election, though it’s not clear it will have enough support to bring down the Government (yes, they get to do that in England!).  May could put the deal back to Parliament again, with or without some tweaks.  Or the Cabinet could decide to adopt a new approach to Brexit, in an attempt to win a majority.  That would almost certainly mean trying to keep closer ties with the EU Bloc.  Other scenarios:  May could call an election, or lawmakers could try to trigger a re-run of the June 2016 Brexit referendum.

In other words, total chaos in Europe is very likely and investors are not generally fond of total chaos – especially when the US is also shut down and Asia is issuing report after report that indicate a slowing economy.

Meanwhile, our own economy may be slowing or it may not be slowing – there's no way to tell with all our Government data shut down but we have 4 Fed speakers this week and some of the data may come in – very hard to say.  We also have the start of earnings season but Citigroup (C) already missed on revenues to get us off to a poor start this morning.

Needless to say, be careful out there! 

 


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  1. Trump is a subject of a counter-intelligence investigation by the FBI, the GOP's response, we need to investigate…. the FBI.

    Trump confiscates notes from his meeting with Putin, the GOP's response (my translation) – the President is entitled to some private conversations when getting his instructions from his puppet master.

    Obama wears a tan suit, the GOP's response – how dare he disrespect the office of the President!

    There you have it, a party who has shed any pretense that it cares about the country at all!



  2. Good Morning!


  3. GCI – I had a feeling I should’ve closed out those short calls on friday.  Would’ve really helped if they waited a week to make that announcement!  Woulda, coulda, shoulda.


  4. Good morning!  

    Hopefully not too exciting as I'd like to get going to the Cannabis Capital Conference in Miami, where I'm one of those 100 VIPs (invited, not paid), so I think I should be at the meet and greet this evening.  I'll be off-line most of the day tomorrow and Wednesday but I'll check-in when I can.  Should be able to sit down with most of the industry leaders and get a good feel for where things are going and who's hot and who's not for 2019, so worth the time I think.  Of course I'll also be deal-making for New Age, our PSWI asset in California, which will be expanding across the country over the next couple of years.  

    And, by the way, it's 2019 already and we're looking to set up a Cannabis Fund in July in order to get a $100M war chest to make new deals with in all 50 states as things legalize (19 already legal).  Let Greg (@philstockworld.com) know if you are interested and he can qualify you and send paperwork.  After just 1 quarter, we've already gotten 8% of our investment back from New Age – these businesses are cash machines!  

    Big Chart – Getting rejected at the 50 dmas so far but the question is are they weak or strong rejections.  If we hold weak rejections, then it's likely we're just consolidating for a move up.

    Our early morning /RB and /CL plays are working so far.  I'm worried about Dollar strength as Europe begins to freak out over Brexit (again).

    GOP/StJ – What gets me is how many people can't see them for what they are. 

    Balance of payments/StJ – They'd better hope the Northeast never wises up but, with that new tax move they made to screw the blue states – I think it's going to become an issue in the near future.  

    GCI/Idi – Well that's a bit annoying.

    Gannett Gets $1.36 Billion Hostile Bid From MNG Enterprises

    We're here:

    Long Call 2019 18-APR 10.00 CALL [GCI @ $9.69 $-0.13] 50 9/26/2018 (98) $4,600 $0.92 $-0.35 $0.92     $0.58 $0.02 $-1,725 -37.5% $2,875
    Short Call 2019 18-APR 12.50 CALL [GCI @ $9.69 $-0.13] -50 9/26/2018 (98) $-1,000 $0.20 $-0.15     $0.05 - $750 75.0% $-250
    Short Put 2019 18-APR 10.00 PUT [GCI @ $9.69 $-0.13] -30 9/28/2018 (98) $-3,000 $1.00 $-0.05     $0.95 $-0.05 $150 5.0% $-2,850
    Short Call 2019 18-JAN 10.00 CALL [GCI @ $9.69 $-0.13] -30 9/26/2018 (8) $-2,250 $0.75 $-0.65     $0.10 $0.00 $1,950 86.7% $-300

    The offer is at about $12 so paying back $2 on calls we sold for 0.75 would be annoying but the calls are only $1.40 at the moment and $1.30 in the money at $11.30 (below the offer) so I think do nothing for now as the put/call combo was $1.75 so our net out is no big deal.

    Trump is saying he thinks he's getting a good deal with China that's way better than other deals – the usual BS but it's boosting the markets in the usual way. 


  5. Meanwhile, the President of the United States is saying the FBI is corrupt.  


  6. /KCN19 with a nice Monday dip to $108.50 – that's a nice long with tight stops below $108.  


  7. Phil/GCI — I'm seeing very different quotes on GCI than shown above.  Can you take another look at this one?  


  8. Phil / Would like your thoughts on BTI and SMHB. TIA


  9. Phil are you doing any portfolio reviews this week?  It has been a while on the LTP.  Enjoy the conference.


  10. GCI/Idi – Those are delayed as far as prices, that's just our LTP position.  Now $11.50 and much more in our favor, which is why I wasn't worried in the first place.  That's why you have to understand how options pricing works – you can't always go by what the screen says at any given moment:

    Long Call 2019 18-APR 10.00 CALL [GCI @ $11.49 $1.74] 50 9/26/2018 (94) $4,600 $0.92 $0.76 $0.92     $1.68 - $3,775 82.1% $8,375
    Short Call 2019 18-APR 12.50 CALL [GCI @ $11.49 $1.74] -50 9/26/2018 (94) $-1,000 $0.20 $-0.08     $0.13 - $375 37.5% $-625
    Short Put 2019 18-APR 10.00 PUT [GCI @ $11.49 $1.74] -30 9/28/2018 (94) $-3,000 $1.00 $-0.73     $0.28 - $2,175 72.5% $-825
    Short Call 2019 18-JAN 10.00 CALL [GCI @ $11.49 $1.74] -30 9/26/2018 (4) $-2,250 $0.75 $0.65     $1.40 - $-1,950 -86.7% $-4,200

    BTI/Soma – I tend to stick with MO for the same reason I like ABX (sector leader, very liquid).  I like MO's financials a lot better too.  Not sure what SMHB is supposed to be.

    Reviews/Options – The last review was 12/14 so it's been a month, like it usually is.  Of course my intention is to have it done by Friday but the convention is making that tough.  We have a lot of Jans expiring so I guess I just have a lot of work to do Thurs and Friday…


  11. Phil /  I am rolling over a 401k into an IRA account.  I know margin has been issues for me and others on the site over the years. I would like to steer clear of any potential margin issues down the road. Is using a maximum of 50% available margin a good rule of thumb?  The account is worth about $500k.


  12. Have been short NOK puts for several years.  Current position expires on Friday.  

    Sold some Jul 6 puts for .20.


  13. 50%/Ross – It's a very good rule of thumb but also, when you see the market turning sour (more red boxes), be proactive about stopping out short puts – they tend to be the real margin killers.  You should be aware of the margin on all your positions and try to keep tighter stops on the things that are margin-expensive (or don't play them at all) so you can always make quick adjustments to keep your margin under control.  

    Generally, our LTP/STP system is based on having a lot of margin between the two portfolios so we're generally more concerned with the net balances than the margin requirement but, if you go back a few reviews, you'll see that even there I trimmed positions to save margin and we cashed in a lot of short puts for the same reason.  Better safe than very, Very sorry!  


  14. Phil/GCI — exactly, which is why I was wondering if your decision to "stand pat" might be different, and if you'd be inclined to take any of the profits off the table.  Thanks.


  15. Ross;  most IRA's don't provide margin.  The only one I am aware of is Tastyworks.  I use margin in my taxable brokerage account and I feel there is a balance having the IRA without margin (i.e. no additional risk). IMHO


  16. GCI/Idi – It's a firm offer and our short calls expire Friday so I'd just as soon wait and see.  

    OK, so I BELIEVE that the LTP is now up to date with all changes since last review.  This is not a review, just a snapshot to see where we stand:

    We were very fortunate that our bullish adjustments paid off and today's early sell-off has had very little lasting damage so all seems well at the moment but I'll still likely want to put some of our gains into more protection – just in case….

    Also, because we added those 9 $100,000 plays, we have too many open positions (another reason I'm constantly behind now) so I'd love to cut about 20% of them if possible.






  17. NEM buying GG!  


  18. Oops, forgot to roll the AAPL longs to the $120s in the LTP (all portfolios was the call). 


  19. Consolidation in the gold mining sector it seems! I guess they are cheap enough now. That seems to make more sense than buying at the top!


  20. too bad they didn't buy Barrack!!!


  21. Although these 2 are not cheap – LOL!


  22. I mean GOLD… or Barrick ;-)


  23. Phil a quick question.  What website do you use to track our virtual portfolios?  

    Thanks!



  24. Less and less volume every day:

    Date Open High Low Close* Adj Close** Volume
    Jan 14, 2019 256.860 258.300 256.420 258.140 258.140 32,843,842
    Jan 11, 2019 257.680 259.010 257.030 258.980 258.980 72,873,300
    Jan 10, 2019 256.260 259.160 255.500 258.880 258.880 96,823,900
    Jan 09, 2019 257.560 258.910 256.190 257.970 257.970 95,006,600
    Jan 08, 2019 256.820 257.310 254.000 256.770 256.770 102,512,600
    Jan 07, 2019 252.690 255.950 251.690 254.380 254.380 103,139,100
    Jan 04, 2019 247.590 253.110 247.170 252.390 252.390 142,628,800
    Jan 03, 2019 248.230 248.570 243.670 244.210 244.210 144,140,700
    Jan 02, 2019 245.980 251.210 245.950 250.180 250.180 126,925,20

  25. After hitting goal at $1.40 on /RB, it's back to $1.38 but no more plays.

    /CL topped out at $51.75 and now $51.15 – also no longer a trade.  

    /KC I still like ($108.85 on /KCN19) 

    AAPL struggling to hold $150 - frown

    Honey badger don't care…


  26. NY grants hemp license to Canopy Growth; shares up 11%

    • The State of New York has granted a license to Canopy Growth (CGC +11.2%) allowing it to process and produce hemp. The company plans to invest $100M – 150M in the state to establish operations capable of producing "tons of hemp" annually.
    • Related ticers: (TLRY +6.7%)(CRON +2%)
    • Following through on his previously announced commitment, U.S. Representative Elijah Cummings (D-MD 7th District), Chairman of the House Oversight Committee, has opened an investigation into the pricing practices of 12 drugmakers, demanding information and documents on pricing approaches, R&D investments and corporate strategies designed to preserve market share and price power. He says that he will remain "laser focused" on the matter. A hearing is set for January 29, the first of several planned.
    • The targeted companies are: AbbVie (ABBV -2.6%), Amgen (AMGN -1.7%), AstraZeneca (AZN-3.7%), Celgene (CELG -0.1%), Eli Lilly (LLY -1.5%), Johnson & Johnson (JNJ -1.1%), Mallinckrodt (MNK +0.1%), Novartis (NVS -1.1%), Novo Nordisk (NVO -3.7%), Pfizer (PFE-1.3%), Sanofi (SNY -1.7%) and Teva Pharmaceutical Industries (TEVA -0.1%).
    • Last week, Rep. Cummings and Senator Bernie Sanders (D-VT) introduced a bill aimed at curbing the rise in drug prices.
    • This year, the U.S. government will spend ~$99B for medicines under Medicare Part D. Prices of brand-name meds increased 62% from 2011 to 2015, even allowing for rebates and a 17% drop in prescriptions. 94% of widely used branded medicines more than doubled between 2005 and 2017.
    • Teva Pharmaceutical Industries (TEVA -0.7%) has agreed to pay $135M to settle a 2005 lawsuit filed by the Attorney General in Illinois accusing it and 46 other pharma firms of fraudulently inflating wholesale drug prices that are used to calculate Medicare reimbursement rates. AG Lisa Madigan says the companies' alleged misbehavior caused taxpayers to overpay for their drugs.
    • She has recovered more than $436M to date from the defendants. Litigation remains in process against nine drugmakers.
    • New Age Beverages (NBEV +14.1%) rallies to its highest level since October on heavy volume.
    • The upturn in shares coincides with the ICR Conference in Florida, where some cannabis-beverage developments could be on the way.
    • PG&E (PCG -48.8%) plunges by ~50% after unveiling a plan to seek bankruptcy protection amid mountainous liabilities linked to California wildfires.
    • Nearly all of PG&E’s ~$18B of bonds were trading sharply lower, sending their yields to record highs, Reuters reports, citing data from MarketAxess.
    • The drops are particularly large among its nearest maturities, with bonds maturing in October 2020 and May 2021 both falling by more than 7 points in price, with their yield spreads surging to 12.65 and 11.16 percentage points, respectively, much higher than the 4.5 percentage point average spread of high-yield notes over Treasuries.
    • Eight of the top 10 most-traded U.S. corporate bonds this morning belong to PG&E, with the most actively traded a $3B note coming due in March 2034, according to MarketAxess.
    • William Blair analyst Nicholas Heymann has reiterated an Outperform rating on General Electric (GE -1%) in a research note partially titled "End of Apocalypse Scenarios Now at Hand."
    • The prospects are rising for a "possible material expansion" of the sale of non-core GE businesses vs. the company's original earlier plans last updated in June 2018.
    • GE's risk profile is also likely to "significantly improve" as uncertainties regarding its financial leverage, government investigations, unfunded liabilities, and turnaround plans for Power are likely to emerge over the next few months
    • Alibaba (BABA -1.5%) has seen its share price rise 8% so far this year, but shareholders appear to be factoring in the broader economy and "growth expectations are re-setting," said Karen Chan, an internet analyst at Jefferies.
    • "A bigger worry for investors than the slowdown is how China’s regulators will behave this year," she added. "Investors are uncertain about how policy would be playing a role in the sector going forward."
    • Worries about systemic risk, particularly in a year of slowing growth and problems with debt, may also force action against the larger players.
    • Gannett (NYSE:GCI) is up 15.5% after a hostile $1.36B bid arrives from MNG/Digital First.
    • That's a $12/share cash offer, vs. Friday's closing price of $9.75. MNG is asking Gannett to enter discussions immediately about a strategic combination.
    • It's also asking for a review of strategic alternatives, and a moratorium on acquiring additional digital assets, as well as holding off on a new CEO until it commits to a "feasible, strategic and financial path forward."
    • The stock has lost 41% of value since the Tegna spin-off, MNG notes in its letter, meaning the team leading Gannett hasn't demonstrated it's capable of effectively running it as a public company.
    • Gannett has acknowledged receiving the bid and says it will carefully review it.
    • MNG owns and operates one of the country's biggest newspaper businesses, with about 200 publications.
    • The Federal Reserve may be done with its rate-hiking cycle says former Federal Reserve Chair Janet Yellen at the National Retail Federation's annual Big Show event in New York, CNBC reports.
    • "If there is a downturn in the global economy and that spills into the U.S. … It's very possible we may have seen the last interest rate hike of this cycle," she said.
    • The Fed started raising rates in 2015, for a total of five rate increases under Yellin's watch through 2017.
    • "Perhaps another rate hike or two is perfectly possible, but nothing is baked in," Yellen said.
    • Previously: Fed debates bond portfolio size, composition (Jan. 11)
    • Positive updates from ICR have sent Destination XL Group (DXLG +12.9%), Boot Barn (BOOT+12%), Lululemon (LULU +7.1%), American Eagle Outfitters (AEO +3.8%), Tilly's (TLYS +2.9%) and Denny's (DENN +1.7%) all higher in morning trading.
    • The positive vibe from ICR has been enough to lift the S&P Retail ETF (NYSEARCA:XRT0.2%, even with broad market averages showing declines.
    • #ICR19
    • iPic® Entertainment (IPIC -1.3%expects Q4 revenue in the range of $36.5M – $37.5M (previous guidance $34.5M – $36.5m) vs. a consensus of $36.17M; Comparable-store sales growth of 1.5% – 2.0% (previous guidance -5.0% – 0.0%).
    • Full Year 2018 Sales Results: Total revenue of $143.0M – $144.0M (previous guidance $141M – $143M) vs. a consensus of $142.69M; Comparable-store sales growth of 1.6% – 2.0% (previous guidance 0.0% – 1.0%).
    • Initial FY19 financial outlook: Total revenue of $153M – $158M (~+7% – 11% Y/Y) vs. a consensus of $159.94M; Comparable-store sales growth of low-to-mid single digits; Store-level EBITDA, a non-GAAP measure, of $19M to $21M; Adjusted EBITDA, a non-GAAP measure, of $(3.0)M to $(1.0)M; Capital expenditures of $17M – $19M, net of tenant improvement dollars, marking a substantial decrease from 2018.
    • Facebook (FB -1%) is facing a ban on gathering some user data in Germany as the country's antitrust regulators ramp up pressure after a years-long investigation.
    • Germany's Federal Cartel Office will present Facebook with a ruling on needed actions in the next few weeks, Bild am Sonntag reports.
    • The regulators' probe focuses on Facebook's acquisition of data from third-party apps (but including WhatsApp and Instagram) and tracking nonmembers of the service.
    • A compelling case from Germany could lead to a wider EU investigation, Alex Webb notes, since Germany is a continental leader on regulation and "any big change it makes could be the thin end of the wedge." Likely regulation will take time to force change but could be just the beginning of lengthy battles at the company.
    • Micron (NASDAQ:MU) has come out of today's open down 4.3% after Morgan Stanley warns about continued doldrums in the shares despite months of declines.
    • "While we see value in the stock, we don’t see a rebound at any point in 2019," writes analyst Joseph Moore, and the firm is cautious on semiconductors overall. But: "There remains too much fundamental optimism in our investor conversations around Micron in the short term." (h/t Bloomberg)
    • Shares have fallen more than 40% since May but the balance sheet is built to "weather a severe storm," he says.
    • The firm reiterated its Equal Weight rating and price target of $33, near a Street low and now implying 4.3% downside.
    • Wedbush analyst Dan Ives calls Apple's (NASDAQ:AAPL) pricing hubris on iPhone XR the major factor in the "earnings debacle" for December. Ives say while iPhone XS continues to be focused on premium price points, the linchpin on the upgrade cycle was XR within the China region representing ~20% of all iPhones in the window of an upgrade opportunity. "To put numbers around this, with ~750 million active iPhones worldwide based on our estimates and 350 million of those in a window of an upgrade opportunity over the next 12 to 18 months, we estimate between 60 million to 70 million of iPhones slated to be upgraded/new purchases are out of the key China region," he notes.
    • Ives thinks Apple should "aggressively" cut prices in China on XR and pull forward an estimated is roughly 15M to 20M iPhones sales that would otherwise be sitting idle or be lost to competition.
    • He also recommends that Apple make a major content acquisition to drive the services flywheel. "In a nutshell, ultimately with $250 billion+ of potential dry M&A powder now is the time for Apple to rip off the band-aid and finally do significant content M&A with the landscape ripe otherwise it will be a major strategic mistake in our opinion that will haunt the company for years to come, with content being the rocket fuel in the services engine that is currently missing in the portfolio," he writes. On that M&A wildcard, Ives and team call A24, Lionsgate and Sony Pictues (NYSE:SNE) "higher probability" targets and sees Viacom (NYSE:VIA)/CBS (NYSE:CBS) and MGM Studios as "medium" probability targets. Netflix, Disney and various videogame publishers are called "low" probability targets.
    • Wedbush keeps an Outperform rating on Apple and price target of $200.
    • AAPL -0.76% premarket to $151.10.
    • Sears (OTCPK:SHLDQ) today will start considering bids for its assets, debating between liquidator proposals and a last-ditch $5B bid by chairman and controlling shareholder Eddie Lampert.
    • Complicating the case are creditors that claim Lampert's hedge fund, ESL Investments, controlled Sears and loaned money to Sears entities to get an unfair advantage over them in what is called "equitable subordination."

     

     


  27. I'm adding to my hedges up here.  That Morgan Stanley note about revisiting the December lows sounds likely to me.  


  28. Short-Term Portfolio Review (STP):  Yeah, since I'm not going to be here, let's look as the STP.  I think it's current but I also think something we added is still missing.

    So SCO is what it is and the short puts are what they are and UGA is a dud.  We'll have to fix CELG if we haven't already, we should have rolled MJ long ago, MSFT will come back eventually so we'll roll them along, TSLA is done at full price as is XRT…

    • SQQQ we can flip more bullish (better hedge) by just buying back the short March calls.  Though they are not likely to go in the money, if we did have a sell-off, we would not be able to cash in some of the 2020 $15 longs like we like to do with so many short calls so $5,500 is a fair price to lean a bit more bearish.
    • TZA – In this case, we're up 81% on the April $15 calls so buying those back makes us very bearish and we can roll the 200 2020 $15 calls @ $2.15 to the $12 calls at $2.75 for 0.60 and then we're 0.50 in the money for 0.60 ($12,000) with a much wider spread.  

    I'm off to Miami! 


  29. GM Morningstar took up TP on GM -  GM stock rose on Jan. 11 at times by nearly 9% after it announced 2019 guidance at a New York analyst day. We had been modeling 2019 adjusted diluted EPS of $6.39, well above consensus of $5.86, because of GM's ability to keep realizing more scale and its fresh light truck offerings in the U.S., so the guidance results in only a $1 per share increase in our fair value estimate to $47. For 2019 GM expects adjusted automotive free cash flow, which excludes the Cruise autonomous vehicle business, of $4.5 billion-$6.0 billion, up from $3.4 billion in 2018 including a discretionary pension con tribution. GM guides for adjusted diluted EPS of $6.50-$7.00, and we now model $6.54. The stock also reacted favorably to GM saying it will exceed its 2018 EPS guidance given on Oct. 31 of $5.80-$6.20. GM reports results on Feb. 6. For the entire note, click here.




  30. Steve King Loses House Committee Seats Over White Supremacy Remark



  31. Mueller Probes an Event With Nunes, Flynn, and Foreign Officials at Trump’s D.C. Hotel




  32. Missing trade for STP:

    The May $125s are $14 and the $140s are $6.25 so net $7.75 on the $15 spread is good for 100% upside by itself if the CAT comes back (it usually does).  We only have 5 short 2021 $100 puts in the LTP and we sold them for $10 last time they dipped so plenty of room for more so, for the STP, we'll start with a short-term play as follows:

    Sell 5 CAT 2021 $120 puts for $15.30 ($7,650) 

    Buy 10 May $125 calls for $14 ($14,000) 

    Sell 10 May $140 calls for $6.25 ($6,250)

    That's net $100 on the $15,000 spread so $14,900 of upside if all goes well and, if not – we'll have a CAT spread in the LTP!  




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