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Federally Funded Friday – China Talks and Fed Spending get us Back Over our Lines

You HAVE to be bullish.

If there's anything the last 8 years of stimulus have taught us it's that you HAVE to be bullish.  We have tried one short list since 2008 and we quickly gave it up as we could not catch a break and it's been very rare in the past 10 years that we've found anything we were comfortable shorting (Oil, Netflix, Tesla) for more than a brief period of time and you can see from the action this morning why that's still the case.  Yesterday, Commerce Secretary Wilbur Ross had his "Let them eat cake" moment but he was quickly bailed out with more talk of progress with China Trade Talks as well as the Fed jumping in to now say they won't be selling so many bonds after all.

While the Fed was spending Billions making sure that wealthy people's portfolios didn't suffer during the Government shutdown, Trump vowed to keep the shutdown going as long as it takes to get his wall while insisting the 800,000 Federal Workers who aren't getting paid for a second week were behind him:  “I love them,” Trump said to reporters on Thursday, “Many of those people that are not getting paid are totally in favor of what we’re doing because they know the future of this country is dependent on having a strong border.”  

Ross, on the other hand, who walks around Washington in $600 slippers (with a custom Commerce Department logo, no less!) and is often found in the most expensive restaurants in town, went on CNBC in a $5,000 suit yesterday to complain about Speaker Nancy Pelosi volunteering in a Food Bank, helping the furloughed workers when, instead, she should be capitulating to Trump and giving him his wall:

“I don’t really quite understand why” the food bank visits were happening, Mr. Ross, 81, said on CNBC. Some banks were offering interest-free loans, he said, and because the workers would eventually get their back pay, “there’s no real reason why they shouldn’t be able to get a loan against it.”

Asked by reporters to respond to Mr. Ross’s comments, Mr. Trump said that he had not heard them, “but I do understand, perhaps, he should have said it differently.” He went on to suggest that “local people” who operate banks and grocery stores would be understanding of people who have missed pay.  By that time, Senator Schumer had already called Mr. Ross’s comments “appalling” and further evidence of the administration’s “callous indifference” toward federal workers. But it was Speaker Nancy Pelosi of California, Mr. Trump’s most visible shutdown adversary, who invoked the French Revolution.  “Is this the ‘let them eat cake’ kind of attitude,” Pelosi said, “or call your father for money?” — a reference to an earlier taunt of the president after a shutdown meeting.

Trump's daughter Lara also got some backlash for saying the shutdown amounted to “a little bit of pain, but it’s going to be for the future of our country” while idiot-at-large, Larry Kudlow told reporters the shutdown was "just a glitch" and, when pushed back on that and remined of the very real suffering the shutdown is causing, Kudlow replied: "Am I out of touch?  I don’t think I’m out of touch. I’m addressing the problem.”  Mr. Kudlow also seemed to disagree with a reporter who told him that coming to work during a shutdown was not, in fact, volunteer work because workers “believe in” the President but potentially illegal forced labor by the Administration, which could lead to a torrent of lawsuits.  

If Mr. Kudlow, Mr. Ross, or literally anyone in this Administration would actually meet with federal workers and listen to their stories, they’d know how insulting these kinds of comments are.

Nancy just said she “just doesn’t understand why?” Very simply, without a Wall it all doesn’t work. Our Country has a chance to greatly reduce Crime, Human Trafficking, Gangs and Drugs. Should have been done for decades. We will not Cave!

Yes, this is how our Government works now, the President has brought everyone down, brought the entire country down – to his level!  

What was “highly unusual,” Berkeley's Ken Jacobs said, was that so many members of Mr. Trump’s cabinet and administration have appeared to share those views.  “When you have a cabinet filled with so many people who are as wealthy as this cabinet is, it just seems like they just do not understand or can’t comprehend how your average person lives.”

Keep that in mind next week as this nightmare drags on.  2% of all working Americans are civil servants and, so far 1/3 of them are being affected by the shutdown but that number will increase each week this thing drags on.  Unless you walk in Wilbur Ross' $600 slippers, these people are your neighbors, your friends and YOUR CUSTOMERS.  What happens to your business when 1% of your customers are no longer getting paid?

Have a good weekend, 

- Phil

 


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  1. Good Morning Phil,  SQQQ Hedge – I think that I need to roll and while I would leave the short caller to expire worthless it is an IRA and protecting 100K.  

    I have 20 June 15/30 BCS $2.47/$6.07 (Now $0.53/$1.93)
    Thinking of a roll to 20 Sept 12/20 $3.50/$1.75.  So, about $0.36 cents and I reduced my spread from 15 to 8 to be more bullish & save a few coins, if that makes sense.  Thoughts?


  2. Good morning! 

    – EIA’s Annual Energy Outlook 2019 projects growing , , production

    That's giving us another crack at the $2.90 line on /NGN19 (long of course, tight stops below).

    Roger Stone was arrested this morning – Trump says it has nothing to do with him but it's the Mueller Investigation indicting him and the charges include witness tampering, obstruction of justice, lying under oath in connection to the Russia Investigation…

    Mueller’s 24-page indictment against Stone is replete with examples of alleged lies he told, some of them rather brazen. It alleges that around Stone’s late September 2017 testimony before the House committee he “denied having ever sent or received emails or text messages” from Credico when in fact they’d “exchanged over thirty text messages.”

    Stone's legal troubles center around his September 2017 testimony to the House Intelligence Committee, which followed months of wrangling and demands by Stone that his appearance be held in public and that the transcript be released. But the panel, led then by Rep. Devin Nunes (R-Calif.), opted to keep Stone behind closed doors.

    Later, as reports emerged about Stone's more extensive efforts to reach Assange through intermediaries as well as his contacts with Guccifer 2.0 — a Twitter person that the special counsel has attributed to Russian intelligence — Democrats began raising the prospect that Stone may have perjured himself before the Committee.

    Mueller also contends that that Stone leaned on Credico to deny their interactions during the campaign. The indictment says Stone repeatedly told Credico to “do a ‘Frank Petrangeli,’” a reference to a character in “The Godfather: Part II” who gave false denials to a congressional committee.

    Stone peppered Credico with intimidating texts, according to the court document, including “If you turned over anything to the FBI, you’re a fool,” and “I’m not talking to the FBI and if your [sic] smart you won’t either.”

    Conversely, the indictment says Credico urged Stone to revise his testimony, telling him in a message, "You should be honest w fbi.”

    Stone allegedly reacted angrily to the advice, calling Credico “a rat” and “a stoolie” and telling him in an April 2018 email: “Prepare to die [expletive].”

    Ultimately, at Stone's urging, Credico invoked his Fifth Amendment right to refuse to testify before the House committee.

    Image result for trump godfather

    Wow, this stuff is starting to get interesting!  

    Gold, copper and silver doing well as the Dollar is off 0.5% (Fed easing).


  3. SQQQ/Grass – Not sure you can leave the naked short calls in an IRA.  The roll makes sense but it might not be possible.  SQQQ is $13.80 this morning and the 20 June $15s are $1.93 ($3,860) and the Jan $13s are $3.20 but the $12s are $3.50 so I'd go there, of course ($7,000) and sell 10 the $18s for $2 ($2,000) and buy back 10 of the Junes $30s at 0.50 ($500) IF YOU HAVE TO and then you have spent net $ 1,640, assuming you have to buy back half the Junes or $1,140 if not and you can easily catch that back on the next sale and, though it's only a $5 spread on 1/2, you have 6 months to roll the short calls to a higher strike once the short $30s are gone.

    Thanks StJ for putting up the Big Chart last night:

    Same old story, our goal for the week was to hold the 50 dmas and, as long as Team Trump doesn't do anything too stupid – seems like that's in the bag. 


  4. Good Morning!


  5. Phil – Is there a new MJ trade that you could recommend? I know that it's too late to initiate the same trade that is in the portfolios.


  6. NOK and ERIC both up 5% today.  Good 5G plays.


  7. Go GE!


  8. quiet board





  9. Brands Invent New Lines for Only Amazon to Sell




  10. go AAPL!


  11. PCG   From Bloomberg report :

    The state’s finding that PG&E’s equipment isn’t responsible for the Tubbs fire, which tore through wine country in 2017, may slash the company’s estimated $30 billion in liabilities, but not by enough to offset damages from other fires and mounting lawsuits, analysts said. PG&E itself said it still faces “significant costs,” and it’s continuing to plan for a bankruptcy filing as soon as next week, according to people familiar with the matter.

     

    Buying a few late February or March puts might be an interesting play as a spec.


  12. Yodi,

    What do you think off ABBV. 

    Thanks


  13. Kgabor115 ABBV at this stage i did sell some Apr 80 puts for 4.07.

    But if you brave buy more stk. When there is fear and blood on the street you buy. My stock was bought at 92 so 12 $ paper loss at present. I wait and see during the day and possible can down scale my position to 85$. Don't forget these boys pay 5.3% per year, nothing to sneeze at!


  14. P.S.ABBV down scaled the 2019 outlook especially due to reduced sales in Europe.

    Same you could say with MO bought yesterday at 43.50 and 42.90, look where they just one day later.


  15. MJ/Soma – Lost higher than we started but I still think they go way past $45 over time.  Just please start with a small amount you'd be happy to DD on if they have a setback and go down $5 before going up $5.

    As a new trade on MJ, I like:

    • Sell 5 MJ 2021 $27 puts for $5.50 ($2,750) 
    • Buy 10 MJ 2021 $24 calls for $10 ($10,000) 
    • Sell 10 MJ 2021 $35 calls for $6 ($6,000) 
    • Sell 5 MJ March $35 calls for $1 ($1,000) 

    That's net $250 on the $11,000 trade so the upside potential is $10,750 (4,300%) at $35 and the first sale is raising $1,000 for 50 days out of 720 so 14 sales ahead means you can make up to another $14,000 selling short calls every couple of months.  Nothing wrong with that trade!  

    NOK/Albo – Too late to chase them but I'll take a harder look at ERIC – we did like them once.

    GE/Soma – Amazing, isn't it?  It's like when Godzilla wakes up after being buried in the ocean for many years…

    Related image

    PCG/Poor guys – Poor everyone affected, there's no one to sue…

    AAPL/Jabob – Let's hope this time they can push back over $160:

    /NG with a nice snap-back already – told you that line would hold!  0.04 made on /NGN19 already.

    /KCN19 topped out at $113 again.

    Now sugar is on sale but I don't know where the bottom should be.

    Dollar really helping today, down 0.8%.


  16. /NQ testing 6,800 and AAPL is not even helping much!  

    We got 99 problems and not one of them is affecting the stock market!  

    Speaking of videos – this one almost made me cry – very uplifiting (long):


  17. Very nice one on /NG Phil – out of half.


  18. Nice way to start the weekend. cheeky


  19. By the way, Star Trek Discovery is finally on Prime Video – AMZN has justified my purchase for this year!

      


  20. Nice move on Copper at $250 per penny:

    chart.ashx (700Ã?340)

    • Stocks open higher amid hopes that a government shutdown solution will happen soon and for a resolution to the U.S.-China trade war; Dow and Nasdaq both +0.8%, S&P +0.7%.
    • Also helping sentiment is a report in today's WSJ suggesting that the Fed may end its balance sheet unwind sooner than expected.
    • European markets are mostly higher, with Germany's DAX +1.6%, France's CAC +1.1% and U.K.'s FTSE +0.1%; in Asia, Japan's Nikkei +1% and China's Shanghai Composite +0.4%.
    • In U.S. earnings news, Intel -7.7% after missing Q4 revenue estimates, guiding Q1 earnings and revenues below consensus and issuing downside guidance for full-year revenues, but Starbucks +4.1% after beating top- and bottom-line estimates and guiding full-year earnings above consensus.
    • All but one of the 11 S&P 500 sectors are higher, led by materials (+1.7%), consumer discretionary (+1%) and communication services (+0.9%), while only the utilities (-0.2%) group is in the red.
    • U.S. Treasury prices tick lower, pushing the two-year yield up a basis point to 2.57% and the 10-year yield up 2 bps to 2.73%; the U.S. Dollar Index -0.5%, pulling back amid renewed strength in the euro.
    • U.S. WTI crude oil +0.6% at $53.44/bbl.
    • Apple (AAPL +2.8%) has received Eurasian Economic Commission approvals for six new tablets, suggesting a major iPad refresh.
    • The registrations were first spotted by MySmartPrice and VentureBeat points out that "the list appears to correspond with three clusters of Wi-Fi and Cellular models."
    • Last week, Digitimes sources said Apple would launch two entry-level iPads in 1H19 likely updating the iPad mini 4 and last year's $329 iPad.
    • Morgan Stanley analyst Katy Huberty says to buy Apple (AAPL +2.5%) ahead of next week's earnings since the bad news is already priced into shares.
    • Huberty:“We believe the recent pullback is an attractive entry point given upcoming services launches and shares already pricing in extremely cautious iPhone replacement cycle and average selling price headwinds."
    • But Huberty notes that Apple needs to "deliver a better than feared" March quarter revenue outlook for further share recovery in the near-term.
    • Morgan Stanley rates Apple at Overweight with a $211 target. The firm predicts Q1 gross margin of 38.4% with $2.65 EPS.
    • Apple cut its Q1 guidance to $84B in revenue (was: $89B to $93B) with 38% gross margin and $8.7B in operating expenses.

    • Legal experts say the conclusion by California fire investigators that PG&E (PCG +22.7%) equipment did not ignite a 2017 wine country wildfire probably would not stop the company from going ahead with its planned bankruptcy.
    • Bankruptcy will give PG&E "breathing space" to formulate a plan to prevent its equipment from causing more catastrophic fires in the future, says bankruptcy attorney Jared Ellias, but "they are not out of the woods. There are more fires to come."
    • Avoiding jury trials makes it likely that PG&E will still file for bankruptcy, says Michael Kelly, an attorney representing victims of several fires in lawsuits against PG&E; "I don’t think it has anything to do with money," Kelly says. "I think it all has to do with lawsuit tactics."
    • J.P. Morgan analyst Christopher Turnure estimates PG&E now is largely absolved of $7B of liabilities but continues to face ~$28B of gross fire liabilities, and potential liabilities continue to exceed the financing capacity of the company.
    • Twitter (NYSE:TWTR) is 3.1% higher just minutes after positivity from Citron Research, which says "What a difference a month makes."
    • The company's shares slid just a month ago as Citron referred to Twitter as the "Harvey Weinstein of social media" and put a $20 price target on.
    • In its update, Citron says "Twitter will be A-OK because of AOC" — referring to freshman U.S. lawmaker Alexandria Ocasio-Cortez, making a splash due to a dominant presence on Twitter.
    • "The 'anti-Trump' has adopted Twitter has her medium of choice and will bring a new generation of users with open minds on the platform," the firm says. "More importantly, it will keep Twitter the idea leader for the next presidential election."

    • The FAA has halted some flights into LaGuardia Airport due to air traffic control staffing issues, according to CNBC. It's a development that's been building up all week amid warnings on TSA and air traffic controller staffing shortages.
    • Earlier this week, Southwest CEO Gary Kelly called the government shutdown "absolutely absurd" without pointing a finger specifically at either political party.
    • Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MSasked some counterparties to cancel or amend trades in Jardine Matheson Holdings (JMHLY, JARLF) after a $41B flash crash on Thursday saw shares trade at far below market level, Bloomberg reports, citing people familiar with the matter.
    • In the pre-open auction in Singapore on Thursday about 167,500 Jardine Matheson shares traded at $10.99, far below the day's previous close of $66.47, then bounced back within minutes.
    • Implies a loss of about $9M for those who sold at the pre-market level.
    • Unclear if the at-market sell orders from Goldman and Morgan Stanley sparked the plunge or if other factors played a part.
    • Singapore Exchange decided not to cancel the trades, saying sellers had "ample time" to withdraw orders if they didn't want to sell shares at the low price; says sell orders far outnumbered bids during the pre-open and that neither a fat finger or malfunctioning computer systems was the blame.

  21. I have to agree on TWTR, worth a toss while they are still low:

    • In the OOP, let's sell 5 TWTR 2021 $28 puts for $5.10 so our worst case is a net $22.90 entry in exchange for paying us $2,550 NOT to buy TWTR.
    • In the LTP, let's sell 20 TWTR 2021 $28 puts for $5.10 so our worst case is a net $22.90 entry in exchange for paying us $10,200 NOT to buy TWTR.

    That ain't workin', that's the way you do it
    Money for nothin' and your chicks for free


  22. MTP up 4% for the week (can't tell on the others as I haven't updated yet) so Money for Nothin' all week, apparently….


  23. ADR's- info for what it's worth- I noted a charge of $20 on my TOS account for an ADR stock holding. I am told this charge is not from the broker but from the bank that holds the foreign shares and issues the ADR (American Depository Receipts). Had the same thing in a Schwab account . 

    Called both to find out what it was and they said they could not waive the fee but both brokers gave me a bunch of free trades to compensate. Worth a shot if you have an ADR holding. 


  24. Yodi-I have stk @ 18.85 with a 10.19% dividend? I thought it might have been stx @ 42 with a 6.90 Dividend, but not near what your quoting. Just wonder what stock. Phil thanks for the Paul pick me up. It was -18 this AM and now -3 with winds for horrendous wind chills. That video made my day!!


  25. Deal reached is the word.


  26. soma???


  27. Don't want to spread rumors, but this is coming from a HF buddy of mine


  28. Trump supposed to make announcement I think?


  29. ty!


  30. Shutdown deal might be happening! 

    Nice way to end the week…


  31. Nice two day move in GNC.


  32. GNC/Albo – Another crazy-undervalued stock.

    Big position in the OOP:

    Short Put 2020 17-JAN 5.00 PUT [GNC @ $3.19 $0.12] -10 1/18/2018 (357) $-2,500 $2.50 $-0.28 $2.50     $2.23 $-0.08 $275 11.0% $-2,225
    Long Call 2021 15-JAN 2.50 CALL [GNC @ $3.19 $0.12] 100 12/26/2018 (721) $10,000 $1.00 $0.55     $1.55 - $5,500 55.0% $15,500
    Short Call 2021 15-JAN 5.00 CALL [GNC @ $3.19 $0.12] -100 12/26/2018 (721) $-5,000 $0.50 $0.25     $0.75 $0.06 $-2,500 -50.0% $-7,500

    Another good example of how the process works:

    Submitted on 2018/12/26 at 2:10 pm

    • GNC – Last time we weren't sure but now I'm sure.  Let's roll our 40 2020 $2.50 calls at 0.90 ($3,600) to 100 2021 $2.50 ($1)/$5 (0.50) bull call spreads at 0.50 ($5,000).  We're spending $1,400 and capping our upside at $25,000 but to make $25,000 on the 40 calls, we'd have to be at about $8.50, not $5!   This is what I mean by mechanical rolls, realistically, we can expect GNC to get back to $3.50 or $4, which would put our $2.50 calls up to $4,000 or $6,000.  Having 100 of them makes the same level $10,000 or $15,000 – for the additional $1,400.  If we don't believe in GNC enough to spend $1,400 for that – why would we be in the trade at all?  

  33. Only a 3-week deal, which is why the markets aren't going crazy but better than nothing:

    Trump, Lawmakers Reach Tentative Deal to End Shutdown for Three Weeks

    President Trump and congressional leaders have reached a tentative deal to reopen the government for three weeks while negotiations over border-security funding continue. The White House said Mr. Trump would make remarks shortly about the shutdown. 41 minutes ago

     


  34. Taking bets – Will Trump utter the phrase "release the hostages"?


  35. Now it's through 2/28 with no new funding for the wall (via my buddies) so let's see how Trump tries to call this a win…


  36. Actually, there is $1.3Bn for border security but that's just the old levels extended out 6 weeks though the funding isn't specific so Trump can claim it's a down-payment on his wall.

    The House is not in session but, if the GOP agrees with the Dems (special conditions), they can vote with whoever is around and pass it.


  37. Pirateinvestor  What ever you quote it is not STX which is today 43.66 and I did sell the Mar  c/p 11/07/18 for 6.00 div 5.7%. It looks to me you looking at CIM which trades for that price of 18.84 and has a div of 10.6%


  38. Closing LaGuardia was the last straw, the phones were ringing off the hook in Congress and the GOP put a lot of pressure on Trump or else they were going to vote it anyway.


  39. Thanks Yodi-it is stx not stk. Thanks for clearing that up! You know we read your posts and take them seriously!!


  40. Longleaf Partners (Southeastern Asset Management) comments on CTL :

    "CenturyLink (CTL) (2%, -0.65%, -26%, -3.25%), the telecommunications company, was a fourth quarter detractor, but ended slightly up for the year after substantial gains earlier in 2018. The stock declined after third-quarter revenues came in below expectations, but our appraisal rose with 7% yearly EBITDA growth as higher margin revenue within the Enterprise segment increased and consolidated free cash flow (FCF) nearly doubled year-over-year. CenturyLink's FCF is more than $3.00 per share and growing, yet the stock trades around $15. Revenues declined in part because the company wisely exited unprofitable business lines, prioritizing capital efficiency and deleveraging over top line growth. The dividend moved back up to a mid-teens yield with minimal chance of any cut. We expect consolidated EBITDA to grow by a low-single digits percentage next year, but within that number we believe high-value Enterprise fiber revenues and cash flows will grow above that, making up for the low-quality legacy landline run off. CenturyLink remains an overweight position given its deep discount and the quality of both its management team, led by CEO Jeff Storey, and its fiber assets, which we believe are of high strategic value to numerous infrastructure investors."

    Meanwhile Guggenheim says sell.  That's what makes a market.

     


  41. Pirateinvestor Don't take it tooooo serious,


  42. Well that was fun.  Trump said "It's not like we ever needed a wall that goes all the way across the border…"  ROFL!  

    Still going to take a week to get back to normal, GDP damage too late to fix.

    Trump, Lawmakers Reach Deal to End Longest Shutdown in U.S. History

    President Trump and congressional leaders have reached a deal to reopen the government for three weeks while negotiations over border-security funding continue. Mr. Trump said he will ensure federal employees receive back pay “very quickly or as soon as possible.”

    The forecast of fourth-quarter real GDP growth was not updated on January 17, because the 's new residential construction report was not released due to the partial government shutdown: .

    In 2014, the last time China went into a slowdown, household debt was about 40% of the GDP. Now — just more than four years later — it has risen to 60%, matching the European Union and the United States. https://www.businessinsider.com/chinese-consum

    I wonder where we are for the State of the Union, which was supposed to be Tuesday.


  43. Border patrol shares video showing migrants climbing over border wall with ladder

    The national desk at was killed off today. This was my first full-time editing gig, and I nearly didn't take the job, but despite tday's gloominess i'm glad I did. It's been great, and I'm proud to ride out the front door with my team.

    • CNN: Roger Stone arrested
    • MSNBC: Roger Stone arrested
    • ABC NEWS: Roger Stone arrested
    • CBS NEWS: Roger Stone arrested
    • FOX NEWS: Hey look over there, a gorilla!

     

     

    Meanwhile, in Venezuela – Chaos!  

     

     

    Robert Mueller: Hello FBI, I need to you to arrest Roger Stone.

    FBI: You got it!

    Mueller: Sorry you’re not getting paid right now.

    FBI: We’ll do this one for free.

    Mueller: Have fun! FBI:

    Mind if we tip off CNN so the television cameras can film it?

    Mueller: If you must.

    ROFL:

     


  44. Phil, any updated take on FTR? I had some short puts, subsequently rolled down to $4 short puts (2020), if assigned (which looks likely) I'll be in for net $2.45/share (which aint bad considering) at which point I figure to start selling some calls. 


  45. FTR/Crs – Unfortunately, it's a very long-term turn-around and the progress will be measured in quarters so no, no update.  They need to show progress this year after we gave them a pass last year and rising rates give the bears a lot of ammunition to call their financials into question.  

    Chart

    So basically, if their debt ($17.6Bn at about 8.5% avg) gets 30% more expensive (Fed rates go from 3% to 4%) then their cash flow goes bye-bye.  Of course, they think they have it handled (most of the loans are fixed, not floating) and intend to drive more profits to the bottom line:

    We are targeting a $500 million run rate benefit to EBITDA by year end 2020…we anticipate revenue enhancement initiatives in both commercial and consumer to drive approximately $150 million to $200 million in EBITDA benefit. Second, we expect operational improvements to drive another $150 million to $200 million in EBITDA benefit. And finally, customer care and support opportunities driving approximately $125 million to $175 million in EBITDA benefit.

    Also, they are aggressively upgrading their network:

    This last quarter, we’ve been investing around those speed sales and probably manifest itself is really around either some older equipment they got changed out, that was perfectly suitable for what they were taking at the time to next generation equipment and also investments in the links in the transport system in the network. Our view is that we will have the entire network in 2019 fully capable ubiquitously at 1 gig. So, whatever the competitive environment looks like, we’ll be well positioned.

    FTR Revenues are $2.2Bn/qtr ($9Bn/yr) yet you can buy the whole company for $210M at $1.98 while S has $32Bn in revenue and $46Bn in debt yet they are a $25Bn company.  If you bought FTR, paid off the debt for $17Bn, you'd have a company that's dropping $2Bn a year to the bottom line with room to improve but, then what would be the next move – BORROW MONEY TO EXPAND – that's how the telco business works so punishing FTR for being a telco is a bit silly.

    Dow up 2,700 points during the shutdown (35 days) - we'll see how it does not that the Government is open…


  46. Phil,

    In the financial space, which of the following would appeal most in present environment: BLK, TROW or STT?

    STT has lowest p/e, p/s, profit margins and marginally better rev and inc growth but has some debt whereas TROW's stock has outperformed (with slower descent) in the 2018 equity market.

    Your thoughts appreciated.

    Thanks


  47. Phil – how do you consider volume when crossing weak and strong bounce lines


  48. Tesla is in a jam. Should have bought puts at $340 but was hoping for $360 to enter, never got there. $920M in convertible bonds to pay off in March, Musk announced they'd do 50/50 for bondholders that want to convert. Price is way below the conversion price, but seems Tesla can raise the conversion ratio at will so the 50/50 conversion is still in play (but at a lower price). Huge negative working capital however, and it's not at all clear that demand is holding up. In any case, it is massively overvalued no matter how Q4 looks and Q1 is shaping up to be flat or down, who knows with Q2 but could be a cliff.

    Thoughts anyone? 


  49. Financials/8800 – You can't go wrong with BLK but $410/share is tough to digest in most portfolios.  TROW is also good but STT, I think has the right focus for the next few years and quite the bargain at $72.60, which is only $27.6Bn with a $2.6Bn drop:
     

    Year End 31st Dec 2013 2014 2015 2016 2017 2018 2019E 2020E CAGR / Avg
    Revenue $m 9,864 10,274 10,360 10,207 11,170 11,982 11,988 12,403 +4.0%
    Operating Profit $m 2,666 2,437 2,298 2,120 2,899 2,999     +2.4%
    Net Profit $m 2,050 2,022 1,980 2,143 2,177 2,599 2,586 2,732 +4.9%
    EPS Reported $ 4.43 4.53 4.47 4.97 5.92 6.40     +7.6%
    EPS Normalised $ 4.61 5.12 5.40 5.40 6.47 6.46 6.80 7.64 +7.0%
    EPS Growth % +13.4 +11.1 +5.4 -0.07 +19.9 -0.2 +5.34 +12.3  
    PE Ratio x           11.0 10.5 9.34  
    PEG x           2.07 0.85 1.41
    Profitability

    We could use a Financial in the LTP and STT 2021 $60 puts can be sold for $5 and that's free money so let's sell 10 of those and pick up 20 of the 2021 $60 ($17.50)/80 ($8) bull call spreads for $9.50 and that's net $14,000 on the $40,000 spread so upside at $80 is $26,000 (185%).  Not bad for a conservative spread.  

    Volume/Coulter – Of course it's a factor, but only if far off the norms. 

    TSLA/Dawg – Yeah, we missed our shorting opp and I don't want to chase below $300 but I wouldn't pay that for them or $200 for that matter…

    Have a great weekend folks,

    - Phil







  50. quiet board this weekend?


  51. Good morning!

     I’m having the same quiet problem in the webinars. I think people are just not having enough problems in such a good market. Not really a bad thing but gets kind of dull.   

     Given how quiet it is, I have given the OK to start a sales campaign soon. I don’t like  adding too many Premium Members as the newbies tend to ask a lot of questions and take a lot of time and I have a lot of my plate these days but, as you say, it’s so quiet I’m willing to risk it.  That’s another factor, I think, a lot of people add as trend-watchers, who can’t ask questIons, aside from all out Top Trade Members, who aren’t in chat at all.   




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  54. phil

    too quiet

    hopefully not the calm before a bad storm.




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