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Faltering Friday – Trouble at S&P 2,700 (again)

We're back at our favorite inflection point:

The 2,700 line on the S&P (/ES) has been the midpoint for all of 2018 and we don't have much reason to think that will change in 2019 as, in the bigger picture, we're only in the middle of what is likely to be couple of years of consolidation – even if you do believe the S&P deserves to move up to 3,000 just 10 years after crashing from 1,500 to 666.  Of course, 666 was silly – the result of a panic that took stocks far lower than they should have been (see "The Worst-Case Scenario: Getting Real With Global GDP!" which I wrote on June 6th, 2010).  

On our Big Chart, 2,420 is the 10% line and this chart adds to the argument that it should be moved up 10% to the Must Hold Line, meaning the point below which we feel the market has turned bearish.  Trump's tax breaks have pumped Corporate Profits up enough to call 2,420 the new bottom and that would make 2,700 the new 10% line(ish), where we would expect the index to consolidate before attempting a move to the 20% line, at 2,970.  

The market is down a bit this morning but nothing tragic and, if we can close above our 200-day moving averages on the Dow (25,100) and the S&P (2,697) – this will have been a constructive week, technically.  The 200 dma for the Nasdaq 100 is 7,041 and we're miles below that but miles above the 50 dma at 6,627 so nothing to see there and the NYSE is also drifting between 11,876 (50) and 12,502 (200) along with the Russell, where 1,438 (50) and 1,537 (200) are the lines to watch.  

There's nothing wrong with a little heathly consolidation in the markets – other than the fact that it's kind of boring…

Have a great weekend,

- Phil

 


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  1. Not a big fan of Bezos but what moron at AMI thought that it would be a good idea to blackmail someone who has enough money to buy small countries! So kudos to Bezos. I hope that this all crawls back to the White House eventually like the other political hit jobs from the Enquirer.


  2. Debating ideas to fix the American capitalism:

    https://www.bloomberg.com/news/features/2019-02-07/seven-fixes-for-american-capitalism

    Not all good ones, but to be debated in 2020 for sure.


  3. K Gabor,

    Again I wish to follow up on your IBM question, as I feel you misunderstood your position.
    I like to clarify that you cannot compare a Covered call with a short put. Short puts are always dangerous! That is why we call them CASH secured puts. You need to have the cash to cover for the strike price you sell the put. Having a short stock makes the situation even worse. You are now responsible for the put as well you have borrowed a stock, due to assignment.
    Yes you do have a BCS against your original sold call but this is not the same as buying the stock and selling a call against the stock.. Would you have had the IBM stock, by assignment of the call they would have paid you out the cash value for the stock at the strike price you did sell the call and the short call would have become worthless.
    In your case you did not have the stock, so the broker did lend you the stock (short stock).
    AS IBM did go up, Yes the BCS as well would have gone up in value in as much as you have gained some more on the long call due to the higher delta however your short call will have worked against you in relation to the somewhat lower delta of the short leap call.
    By selling a short put and having a short stock you have two negatives, against a CC where you have the stock (positive) and the short call (negative) Mathematical this equals out.
    I hope this explains.


  4. Why does the GOP hate the poor so much (and why do the poor vote for them)?

    https://www.nytimes.com/2019/02/06/business/payday-loans-rules-cfpb.html

    In her first major policy move, the bureau’s new director, Kathleen Kraninger, proposed eliminating nearly all of the regulation’s substantive requirements, including the “ability to repay” mandate. There was “insufficient evidence and legal support” for the provision, the bureau said. It also sought to drop a limit that would have prevented lenders from making more than three short-term loans without a 30-day “cooling off” period.

    A payday loan customer who borrows $500 would typically owe about $575 two weeks later — an annual percentage rate of nearly 400 percent. If borrowers cannot repay their loans on time, they often borrow more and deepen their debt. It is a hard cycle to break: Half of all payday loans are part of a sequence that stretches at least 10 consecutive loans, according to the consumer bureau’s data.

    This is so sickening! I just don't know what the justification is for this action besides greed from Congress and disregard for other human beings.


  5. SKX with a big earnings beat stock up 5.50







  6. Good Morning!


  7. Good morning!

    Good Capitalism article, StJ – we certainly need some kind of reform but the Autocrats cry "SOCIALISM" the way they used to cry Communism if you even hint at some kind of reforms.  I wouldn't be surprised to see the GOP form another House Un-American Activities Committee that will begin asking people "Are you now or have you ever been a Socialist?"   I wish I were kidding…

    The Washington hearings began on Oct. 22, and the first week featured ''friendly'' witnesses, like Walt Disney, Ronald Reagan and Louis B. Mayer, fulminating against the Red menace. The second week turned unruly as many of the ''unfriendly'' witnesses antagonized the committee, the press and some of the public as well. By the time Lardner testified, the committee's chairman, J. Parnell Thomas, was pounding with his gavel and stating: ''It is a very simple question. . . . Are you now or have you ever been a member of the Communist Party?''

    Payday loans/StJ – Sickening is right!

    SKX/Bert – Those damned value stocks!

    Short Put 2020 17-JAN 30.00 PUT [SKX @ $32.50 $4.80] -10 7/16/2018 (343) $-5,280 $5.28 $-1.63 $-3.58     $3.65 $-2.45 $1,630 30.9% $-3,650
    Long Call 2020 17-JAN 23.00 CALL [SKX @ $32.50 $4.80] 40 7/20/2018 (343) $25,600 $6.40 $4.95     $11.35 $3.45 $19,800 77.3% $45,400
    Short Call 2020 17-JAN 27.00 CALL [SKX @ $32.50 $4.80] -40 7/20/2018 (343) $-22,000 $5.50 $3.00     $8.50 $3.00 $-12,000 -54.5% $-34,000

    That one started out with the Jan $28/34 bull call spread but they blew earnings in July and we took a $1,700 loss (we had a sharp bounce back on the day we adjusted) on 20 of those and rolled down to this bigger position since we though it was an over-reaction and, of course, we thought Dec was just silly but, since we had already doubled down and left the aggressive puts – we didn't add to it again.

    Submitted on 2018/07/20 at 10:04 am

    SKX/Rookie – Well I'm doing the LTP review this morning so we'll adjust it then. 

    More importantly, Skechers' forward-looking guidance failed to meet Wall Street's expectations. It sees revenue between $1.2 billion and $1.225 billion in the third quarter on EPS between 50 cents and 55 cents. Analysts are expecting revenue of $1.26 billion yielding earnings of 68 cents a share.  

    So they predict a rough Q after earning just 0.36 this Q so let's say they make $1.80 for the year ($2 was the previous lowest estimate) – that's still a p/e of 14 so I'm willing to hang on and give them a chance to show us something.  

    Long Call 2019 18-JAN 28.00 CALL [SKX @ $24.24 $-9.01] 20 7/16/2018 (182) $11,600 $5.80 $-4.18 $5.80     $1.63 $-4.88 $-8,350 -72.0% $3,250
    Short Call 2019 18-JAN 34.00 CALL [SKX @ $24.24 $-9.01] -20 7/16/2018 (182) $-6,000 $3.00 $-2.45     $0.55 $-3.55 $4,900 81.7% $-1,100
    Short Put 2020 17-JAN 30.00 PUT [SKX @ $24.24 $-9.01] -10 7/16/2018 (546) $-5,280 $5.28 $3.02     $8.30 - $-3,020 -57.2% $-8,300

    $25 is the net of our short puts so that's about as low as I felt SKX would go – I certainly didn't expect it this soon and Jan certainly isn't enough time to recover so we will buy 40 SKX 2020 $23 ($6.40)/27 ($5) bull call spreads for $1.40 ($5,600) and we will buy back the 20 short Jan $34 calls for 0.55 ($1,100) and we will put a stop on 20 Jan $28 calls, now $2, at $1.50 ($3,000) but hopefully they bounce back to $3 ($6,000) so we have an almost even roll to the new position.  

    Even if we spend the $5,600 and the $1,100 and only get back $3,000 on the Jan calls, we're still in 40 of the 2020 $23/27 spreads that are $2 in the money ($8,000) and we spent $320 on the original trade so now net $4,020 on the $16,000 spread that's $8,000 in the money.  Like I said earlier this week – these are not tragedies – they are opportunities!  

    With our first $1,700 loss and the current net $1,680 credit, we're in the trade for net $20 and it will hopefully pay the full $16,000 as we've now blasted through our newly conservative targets.  

    The nice thing about these conservative spreads is that we can essentially release the allocation block here since we don't consider there to be a danger of failing and we don't anticipate rolling or doubling down so we're just waiting to get the rest of our $15,980 profit and we can take that allocation (we've only tied up $20 in cash and $4,000 in margin in this case) and move on to a new trade.  

    By the way, at net $8,000 out of $16,000 with only 11 months to go – it's still good for a new trade – if making a double isn't too boring for you!


  8. Socialism / Phil – The difference this time I think is that socialism is not a dirty word for the younger and educated generation. They have also seen corporate socialism at work during the financial crisis bailout. Of course hypocrisy has never stop our autocratic rulers to rile against the little people getting the same benefits they want to keep for themselves.


  9. I have 80 SQQQ Mar $15/$22 bc spreads and as it is a down day, there is now about $3k left to capture back if I close out the spread (buy back the short 22's at .08 and sell the $15c at .45).

    Wouldn't it be better to do this than let it go and lose the remaining $3k?

    THX


  10. Indexes falling apart – again.

    Still, nowhere near as bad as last year's post-SOTU.  

    Which Way Wednesday? S&P 3,000 in 2018?

    Only one of 12 "equity strategistspolled by Marketwatch can imagine the market goes lower in 2018 and, frankly, I'm not one of them either as I think we do end up around 3,000 by the end of the year.  I'm simply expecting a correction first.  IF the market keeps going into August, it will become the longest bull rally in history at 9 years – 8 of them under Obama and 1 of them under the guy who claims all the credit for it.  Bush Jr took credit for the Clinton rally too – that didn't turn out well for him or America.

    We went to CASH!!! two weeks ago because we think the market is currently being held up simply because no one wants to sell and take a profit in 2017, when the taxes paid on those gains will be substantially higher than they will be next year.  In fact, you can see from Morgan Stanley's chart that tracks Intra-Year Declines in the market, that this year has been a real outlier and there may be a lot of pent-up demand for selling that will be unleashed in 2018.

    Or maybe not.  That's why we're in CASH!!! – the market is too scary to stay in but also way too scary to bet against – so we're sitting it out and waiting for the dust to settle.  There are still plenty of things to buy.  We reviewed our Top Trades yesterday and found several stocks we'd love to add to our new portfolios in 2018 already.  Still, it's slim pickings in the US markets, where the average price/earnings ratio is 23 times earnings, which is 28% higher than stocks in Europe and 53% higher than the Japanese markets trade.  

    Friday Follies – Trump Promises Dow 30,000

    Meanwhile, we still expect a 10% correction as people take some profits off the table in our lower-tax environment and we're still thinking that Q4 earnings and 2018 guidance are going to be disappointing to investors – especially for companies who will be repatriating those overseas profits and paying one-time tax bills (good buying opportunities if they sell off on that news, however).  

    Thin Air Thursday – Markets Begin to Gasp At New Highs

    Up and up the markets go but we see shorting opportunities this morning IF we cross back below Dow (/YM26,100, S&P (/ES2,800, Nasdaq(/NQ6,810 and Russell(/TF1,585.  The rule of thumb for shorting the futures is wait for 2 to cross below and then pick the next one that crosses and keep very tight stops back above the line and if ANY of the indexes go back above their line – kill the trade and wait for the next set-up.

     

    November, is it?

    As I pointed out on Thanksgiving, traders will be disappointed with Q1 results because Corporations were only effectively paying 13% of their income in taxes so "cutting" the official tax rate to 20% really doesn't make much of a difference.  The S&P 500 has added over $2Tn in market cap since than and certainly $2Tn hasn't actually flowed into the index.  In fact, S&P net money flows on any given day are usually from $5 to $10Bn so, even if ALL 40 market days since Thankgiving were $10Bn inflows, that would only account for 20% of the indexes gain and, in reality, it's about half that so the rest is speculation that will need another 400 days of inflows to actually support the current prices.

    We still have the overhang of a possible Government Shut-Down which will be followed by a relief rally when they don't actually shut down and THEN, next week, we can finally begin to focus on earnings. 

    Then we get into the fateful last week of Jan:

    25th -  Thrilling Thursday – Nasdaq 7,000 Is Our Next Summit

    Can we really go higher?

    Bullish Sentiment is literally off the charts and only 7,826 (11.4%) out of 68,119 investors polled by Earnings Whispers are currently bearish about the markets.  Usually you might thing that's the sign of a turn but if my daughter's softball team were going up against the Yankees, you might see similar sentiment results in favor of the Yankees and that does NOT mean betting against the Yankees is a smart move – just because it's the contrarian play. 

    Sometimes, the crowd gets things right though not this time – this time the crowd is full of idiots who are chasing a trend off a cliff but other times, you shouldn't just be a knee-jerk contrarian.  Meanwhile, as I've been saying since Nov 29th's "Record High Wednesday – We Will All Be Billionaires," if they are going to keep giving money away in the markets – who are we to turn it down?  The Money Talk Portfolio we looked at that morning was "only" up 70.7% for the year and, this morning, those untouched positions are now up 80.9% less than two months later.

    …What we have here is the Oligopolists consolidating their power and sure, we can bet on those companies to do very well down the road but beware if you hold stock in their competition – this is not unlike the game Monopoly, when your competitors start the game with 10 times more money than you – you are not likely to win and will likely go bankrupt as you try your best to move around the board without landing on one of their hotels.

     

    So, believe it or not, 2018 is going to become a stock picker's market and there will be losers as well as winners and the problem with that is currently the indexes are not pricing in any losers at all – so the valuations are stretched across the board.  Yesterday, in our Live Trading Webinar, we discussed Cisco (CSCO) and, while they are one of my favorite stocks and will be bringing back $76Bn from overseas, they are not cheap at $42.30 as that's a market cap of $208Bn and they "only" make $10Bn a year, so 20 times earnings.  The repatriate cash is not "new money" – it's already on their books and has already been earned – it's just being moved around.

    Instead we prefer in that space Finisar (FNSR), who are a $2Bn company at $19 and made $250M last year for a p/e of 8 and they are growing revenues and profits at a 15% annual pace.  THAT is the kind of company we like to put in our portfolios and we did add FNSR to our Options Opportunity Portfolio as well as our Long-Term Portfolio already.  Again, it's not that we don't like, even LOVE CSCO – it's just that they are not on sale – so why buy them?

    26th - Flip Flop Friday – Dollar Rallies Briefly on Trump Statement

    We'll see what happens this morning as Trump is giving his Davos speech (8am, EST) and the theme is "America is Open For Business" touting our resurgent economy and, of course, low taxes and lack of regulations.  In fact, just this morning, Trump named BPs lawyer and noted climate foe, Jeffery Clark to head up the DOJ's Environmental Unit and, as the linked article has to note – "No, this is not a headline from The Onion").  At least Clark has experience (though it's in destroying the environment, not protecting it). 

    To show how serious he is about trade, Trump's appointment for Deputy Chief of US Trade, G. Payne Griffin, just graduated American University in 2014 with a Bachelors Degree in Economics but, don't worry folks – he was an Eagle Scout, so things should be great.  Hopefully he'll work out better than 24 year-old Drug Czar, Taylor Weyeneth, who just had to resign because he lied on his resume. 

    Meanwhile, the President can talk up our economy all he wants to but those pesky facts are still out there.  This morning we just got the Q4 GDP report and it missed by 13% at 2.6% vs 3% expected and that means Trump is certainly missing his 3% GDP claim for the year.  In fact, the average for Trump's first year in office is now 2.52%, so I guess he can still round it up to 3%.  It's certainly not good that GDP has fallen off almost 20% from Q3's high of 3.2% – that's contrary to the economic narrative for sure and really not too supportive of record high markets. 

    28th - Monday’s Market Magic Trick – Rising Without the Fed?

    While we can't count on Corporations to spend the cash they bring back in, we can expect the massive stock buyback trend to continue.  As you can see from Credit Suisse's chart, the only real buyer of US equities for the past 10 years has been the Corporations themselves – who have engaged in MASSIVE buy-back programs that have lowered the share count of US equites by 20% which has therefore inflated the earnings per share by 20% by simply reducing the number of shares those earnings are divided by.  

    This makes our Top 1% CEOs look good and also makes them much, much richer (see: "Stock buybacks enrich the bosses even when business sags") and so far, so good, as the market has gone up despite most companies making roughly the same amount of Dollars they did back in 2008 – they are just changing the math to make things look pretty.

    But, much like the Oil Cartel (OPEC) benefits from cutting supply and making oil more scarce and Crypto Currency purveyors keep their supplies limited to jack up the prices - the Corporate Cartel (MFers) reduces the supply of stock AND they themselves begin buying their stock – as if it's valuable at any price.  The higher the market goes, the more they buy – what can possibly go wrong?

    Like any meth addict, they are now hopelessly hooked on buybacks and simply can't stop.  It's a finite World and they have infinite amounts of money and they can't grow market share so they will reduce the number of shares in their companies to make it look like there's great demand for their stock and, most importantly, to make it look like they are accomplishing something.

    In fact, just this morning, China warned investors that their GDP will likly slow to 6.5%-6.8% this yearand warned of potential black swan or grey rhino effects.  Black swans, or unforeseen occurrences, and gray rhinos, or highly obvious yet ignored threats, are likely to occur this year with adverse consequences – according to China's Vice-Secretary General of National Development, not in a speech but in an Op-Ed of a state controlled newspaper so it's an official Government statement.  That echos an earlier statement made by a former Chief Economist of the Chinese Central Bank. 

     

    I'm not saying the economy sucks or is even in trouble (though China is and Japan is) but it's not so great that we should be paying 30 times earnings for hardware stores or sneaker companies or soft drink makers – all of whom historically trade at more like 15 times earnings than 30.  We had this same conversation about housing back in 2005, 2006 and 2007 and it took 3 more years of record gains before the market finally corrected so far be it for me to keep you from having fun but please, Please, PLEASE:

    Be careful out there!  

    30th - Tumblin’ Tuesday – Markets Take a Much Needed Pause

    Finally!  

    We keep betting on it and it finally happens but don't get exicted about this teeny, tiny pullback – it will take a lot more than this little action to derail the bull market.  I know it's very much in vogue to ignore "facts" and "news" but we're Fundamental Investors – we can't help ourselves and, when the conditions weaken, we bet against the market, no matter how good the charts look.

    Over the long haul, the S&P moves in 800-point units, from 800 to 1,600 to 2,400 and now on the way to 3,200, half of which is 2,800 so that's a very significant line that we overshot without any consolidation this month.  That is not at all what happened at 2,000, which was halfway to 2,400 from 1,600 and, franly we didn't even have much consolidation at 2,400 before blasting higher, which means it's still very possible we pull back to there (down 20% from here).

    31st - Which Way Wednesday – Fed Edition

    Wheeee, what a ride!

    There's nothing like a nice market shake-out to let you know where things stand.  After all the drama though, we're right back to the same 2,835 line we were watching on the S&P in yesterday morning's PSW Report.  If we're back over 2,835 this morning, then all that panic was for nothing and this is merely a little consolidation off a huge run but we did run levels in our Live Member Chat Room that now need to hold on each index (futures) in order to be bullish again (currently we're just waiting and seeing):

    • Weak bounce lines:  Dow 26,130, S&P 2,835, Nas 6,980 and Russell 1,585.
    • Strong bounce lines: Dow 26,260, S&P 2,850, Nas 7,010 and Russell 1,590

    At 8am, we have (in the Futures) Dow 26,257S&P 2,836Nasdaq 6,968 and Russell 1,595 so mixed signals so far and nothing we'd like to throw money at though yesterday, in our Live Chat Room, we were throwing money in all sorts of directions as we played the nice, violent market moves in the Futures.

    Being well-hedged is such a benefit when the market is crashing.  We can sit back and relax and check out our Watch List and look for bargains on stocks we REALLY want to buy, like Apple (AAPL), which pulled back to $166 but we're waiting on earnings to buy more – hoping they disappoint, actually – even though we already have a bullish position.  Barrick Gold (ABX) will be featured in my appearance on Money Talk this evening (7pm), Alaska Air (ALK) just got downgraded by JPM for stupid reasons (United is trying to compete with them in San Fran).  Yes, businesses have competion – get over it!  

    Feb 1 - Thursday Failure – Fed and Trump Fail to Boost the Markets

     

    Meanwhile, we're not there yet as the fall in the S&P from 2,870 to 2,820 is only 1.7% so, as Robert Frost said "Miles to go before I sleep."  In fact, now it's 8:50 and the indexes have continued lower without a bounce so double those gains on our Futures shorts (you're welcome) and now the play is tight stops on 1/2 and looser stops (weak bounce lines) on the other half – in case we get a really nice sell-off today.  

    As I said to our Members on Tuesday as we hit Dow 26,000 – "another 600 points to go to complete this drop cycle".  In fact, the Dow Futures (/YM) are just now crossing back below 26,000 (up $1,000 per contract on our shorts!) so a move down to 25,400 would make another $3,000 per contract if it happens so great for a new trade, right now, with tight stops above 26,000 means you risk losing $5 per point before you stop out vs potential $3,000 gains – THAT IS HOW YOU HEDGE WITH THE FUTURES!  

    As noted above, we were interrupted by the ridiculous over-reaction to Boeing's earnings (and they are buying back $9Bn worth of stock, which is 5% of the company) but, other than that, the market action was weak and we'll see how the next couple of days go but, so far, we've failed those weak bounce lines I laid out for you yesterday – and that's the bearish signal we've been looking for to indicate we've got another leg down to go from here.

    See, it all starts out innocently and then we keep grinding lower…

    How much does BNN love me?


  11. Yodi,

    I don't understand. If I have short stock then i play that the price will go lower.

    ex. the price is $100 at the moment

    I play that every month itt will go lower with $1. I am greedy and cautious so I sell next month $98 put for $1.

    So if the price is go up with $1. I am protected. If it go higher more than $1 I lose.

    If the price go to $99 for the next month, I make $1 from the short stock and $1 from the short put.
    I cannot make more money than $2 because if the stock go lower then 99 then my short put going against me. 
    It is the same then I have the stock and sell calls against it.
    Of course my situation was more complex, because I had BCS also.
    But the put was not dangerous, because of the short stock. I was protected. It the price go lower I earn the same money on the short stock then lose on the short put. 

    Gabor


  12. Phil / Thinking abt buying back my TWTR short calls since most of the profit has been realized. Will hold the long calls for now. The Feb 29 calls can be sold for 1.30. Thinking about selling more short calls to recoup some of the loss on the long. Can't see TWTR coming back if the downgrade police get their say in over the weekend or early next week. Sound like a decent strategy or would you take a different approach?


  13. Gabor Two negatives do not equalize the situation.The delta of the stock is always 1 but the delta of a call or a put is mostly less, provided you not 100% ITM. If the stock goes down you would gain on the short stock but lose on the long leap call and the short put. However if you happy with what you saying, you are the man controling your funds I hope. I only told you what I would do,


  14. Gabor you owe already 500 stock to the broker, now you want to put your head on the block for an other 500 stock????


  15. trump has the sanction thing on venezuala and apparently the white house has told us gulf refiners that they cant count on Canada for oil due to pipeline problems (theres a shut down due to a leak) and that they will not draw down strategic reserve and specifically that they can expect the Saudis to make up for the supply shortage which does not seam very likey given the Saudis current cut back agenda. can u think of anywhere else this shortage of heavy crude could come from ? Russia  ?


  16. Shorting /NQ on the rips. Happy with 10-20 points so far but maybe there'll be more later if things don't pick up.


  17. Comment content omitted because it is too long.


  18. TWTR/Soma – Not terrible but not good growth so why pay more than $22.5Bn ($30) for $3Bn in revenues with not even $1Bn in profits.  They've lost the growth story and I don't think they've articulated a great vision of the future.  I think they'll stay around but this seems to be all the monetization they're able to manage.  

    Year End 31st Dec 2013 2014 2015 2016 2017 2018 TTM 2019E 2020E CAGR / Avg
    Revenue $m 316.9 664.9 1,403 2,218 2,530 2,443 2,865 3,000 3,421 +50.5%
    Operating Profit $m -77.1 -635.8 -538.9 -450 -367.2 -23.7 353.5      
    Net Profit $m -645.3 -577.8 -521 -456.9 -108.1 1,206 1,041 608.9 688.3  
    EPS Reported $ -3.41 -0.96 -0.79 -0.65 0.33 1.56 1.82      
    EPS Normalised $ -0.17 -3.41 -0.96 -0.79 -0.56 0.38 1.83 0.80 0.89  
    EPS Growth %             +375.2 +107.5 +11.4  
    PE Ratio x           80.1 16.8 38.6 34.6  
    PEG x           0.74 0.16 3.37 2.28
    Profitability

    Even their slides were blah…

    Twitter, Inc. (TWTR) CEO Jack Dorsey on Q4 2018 Results – Earnings Call Transcript

    If you want to stick with TWTR, I'd just sell the 2021 $25 puts for $4.35 so at least your worst case is netting in 30% below the current price.  That puts their p/e into the mid-teens, which isn't awful.  

    Russia/Tommy – You're damned right, Agent Orange strikes again and pulls out a win for Putin!  

    Image result for trump agent orange

     


  19. And take your stinkin' jobs with you!  

    • Amazon (AMZN -2.3%) is reconsidering its NY headquarters, according to The Washington Post sources.
    • The company hasn't yet leased or purchased office space for the project, which would make a withdrawal simple.
    • The tech giant has faced pushback from local politicians and would still have its HQ site in Virginia, where politicians have already passed the related incentive package. NY isn't expected to approve its package until next year.
    • Sources say Amazon could move its NY plans to Nashville, where Tennessee officials approved $15.2M in improvement incentives for Amazon's plan to bring 5K jobs. New York's campus was meant to provide 25K jobs.

    Only NY would tell a company that's trying to put 50,000 jobs (direct and indirect) into a city to F off!

    • Stocks extend losses that have followed two days of negative headlines surrounding U.S.-China trade tensions and slowing economic growth, but the market also may have been due for a pullback; S&P -0.4%, Dow -0.5% and Nasdaq -0.6%.
    • "The fear factor over the trade war has crept back into the market," says Peter Cardillo, chief market economist at Spartan Capital Securities. "We're probably looking at a more defensive situation until we have more clarity" on the negotiations.
    • European bourses are lower, with U.K.'s FTSE -0.2%, France's CAC -0.3% and Germany's DAX -0.8%; in Asia, Japan's Nikkei finished -2% while China's Shanghai Composite has been closed all week for Lunar New Year.
    • In U.S. earnings news, Mattel +25.2% after beating lowered expectations and offering an encouraging 2019 outlook and Phillips 66 +2% after easily beating earnings estimates.
    • All 11 S&P sectors trade in the red, led by consumer discretionary (-0.6%), energy (-0.5%) and financials (-0.5%).
    • U.S. Treasury prices edge higher, pushing the two-year yield down 2 bps to 2.45% and the 10-year yield lower by a basis point to 2.64%; the U.S. Dollar Index is flat at 96.50.

    2019 growth forecast faced with uncertainties: Dallas Fed's Kaplan

    • There's "lot of uncertainty" around the Dallas Fed's forecast for 2019 U.S. GDP growth of just under 2%, says its president, Robert Kaplan.
    • Fiscal stimulus is waning, the U.S. economy is still absorbing nine interest rate increases in the past three years, and European and global growth is slowing, he told Fox Business Network.
    • Demographics are also a cause for concern. An aging population, slowing workforce growth, sluggish productivity, and a need to improve math, science, and reading skills--"those are also headwinds that may mean we may even grow more slowly" in 2019 and into 2020.
    • Still, he doesn't see much of a chance for recession in 2019.  "I think we're in the right position having paused at the Fed and being patient and giving some time for economic conditions to unfold," he said.
    • Previously: Bullard warns of 'restrictive' Fed policy and downside inflation risk (Feb. 8)
    • U.S. high-yield funds pulled in $3.86B for the week ended Friday, the largest amount since July of 2016, according to Lipper data.
    • Meanwhile, $6B in new U.S. junk bond issues mark the most for a single day since March 2017.
    1. CCC-rated Clear Channel priced at lower end of talk; deal increased to $2.235B from $2.2B after receiving orders of more than $5B.
    2. CommScope boosted its offering by $750M after receiving orders of about $8B; $3.75B 3-part offering priced at tight end of talk.
    • High-yield stands out as best-performing segment in fixed income with 4.93% return YTD; CCCs offer the best returns at 5.73% YTD.

    Cliffs +10% as significant rise expected in iron ore premiums

    • Cleveland-Cliffs (CLF +10.6%) climbs to its highest level in four months despite reporting below consensus Q4 adjusted EBITDA and revenues, as the company says the full impact of the catastrophic effects of Vale's recent tailings dam breach have not yet been properly quantified.
    • CEO Lourenco Goncalves said in today's earnings conference call that CLF anticipates a "significant increase" in iron ore premiums, a shortage of iron ore and pellets causing higher iron ore premiums as well as higher U.S. steel prices in 2019.
    • The CEO says the boost in profitability the company expects to see from HDI is at best underappreciated by outside investors and at worst not factored in at all in valuation models.
    • Goncalves said the company plans to increase capacity at its Toledo HBI plant to 1.9M metric tons/year from 1.6M metric tons/year and expects to spend $830M rather than the previous $700M figure to account for additional tonnage.
    • Source: Bloomberg First Word
    • Lockheed Martin (LMT -0.8%) delivered 91 of its F-35 jets in 2018 as promised, but only 54 were "on-time" based on monthly contract targets and 19 of those were reclassified from "late" in a settlement of production issues with the Department of Defense, Bloomberg reports.
    • The late deliveries mark the fifth straight year in which LMT missed monthly dates, which are different from annual targets worked out with the Pentagon's F-35 program office, according to the report.
    • The 91 deliveries were “an encouraging milestone” but LMT did not meet “all their monthly contracted delivery requirement dates,” according to the program office’s spokesman.
    • The $406B program remains hobbled by delivery delays and deficiencies as the fighter jet heads into increased production.

    Image result for tobacco bribes
    • FDA Commissioner Scott Gottlieb is calling in the CEOs of Altria (MO -0.7%) and Juul (JUUL) to the agency's headquarters to explain why their efforts to combat teenage vaping trends have fallen short.
    • Gottlieb says he is puzzled why Altria made its big commitment to Juul when it stated previously that pod-based products contribute to the youth epidemic.
    • A spokesperson for Altria says the company is looking foward to meeting with the FDA commissioner.
    • Visitor arrivals to Macau during the Chinese New Year holiday period were 26% higher than last year for the first four days of the holiday period, according to data from the Macau Government Tourism Office.
    • More than half Macau's 23 five-star casino hotels are reported to have been fully booked for at least four days out of the week-long holiday period.

    Toy story: Mattel outperforms Hasbro

    • The grounds may be shifting in toyland, notes The Wall Street Journal's Elizabeth Winkler.
    • She points to Mattel's (MAT +22.7%) "superior" performance to Hasbro (HAS -4.3%) during the holiday season amid the Toys "R" disruption, led by Barbie (+12% Y/Y) and Hot Wheels (+9%). Meanwhile, Hasbro fell far short of estimates with its Q4 report. Could Mattel's performance turn some heads after years of lagging its larger peer (by market cap)?
    • "Under CEO Ynon Kreiz, it has cut around $650 million in costs and laid out plans to revive sales with a film department to bring its toys to the screen. Mattel still commands a lower multiple of revenue after Friday’s jump. Investors may decide it’s time to switch teams," writes Winkler.
    • Mattel isn't being ignored on Wall Street either, with analysts busy raising their price targets. New PTs are in from BMO Capital ($23), SunTrust ($15) and Goldman Sachs ($12).
    • Related: JAKKS Pacific (JAKK +2.5%) is higher after the two reports from the sector are digested.
    • Previously: Mattel pops after posting unexpected profit (Feb. 7)
    • Previously: Hasbro sales down across brands (Feb. 8)

    Chip stocks slide on Goldman warning

    • The Philadelphia Semiconductor Index drops 1% after Goldman Sachs' warning on "very soft" fundamentals.
    • Full quote: "Our recent industry discussions suggest that memory fundamentals remain very soft, and prices continue to decline. This is in contrast to the significant rally in the memory and HDD stocks year to date even on weak fundamentals."
    • The firm says EPS scenarios that seemed improbable are now likely and says its former Micron EPS downside scenario of $3 to $4 EPS is "now a base case."
    • Chip stocks on the move: (AMAT -1.9%), (NVDA -1.1%), (AMD -0.4%), (LRCX -0.9%), (INTC-1.6%), (MU -3.8%), (WDC -1.3%).

    Sprint sues AT&T over branding claims in 'fake 5G' issue

    • The dustup over what exactly is 5G networking has come to litigation among the big four wireless carriers, as Sprint (S -2%) has sued AT&T (T -0.8%) over its branding claims.
    • AT&T has been marketing 60 MHz of faster spectrum as "5Ge," a move that's drawn criticisms of "fake 5G" since the standards for the new networking technology aren't yet finalized. The 5Ge offering comes over AT&T's 4G network.
    • Sprint says AT&T is misleading customers into thinking they're getting the 50-100x speed burst of 5G by putting the 5Ge logo on phones that aren't equipped to support 5G networking. It says a survey shows 54% of AT&T customers believed 5Ge was the same or better than 5G, and that 45% think an AT&T phone they buy today will be capable of supporting 5G

    Second Qualcomm-Apple ITC decision rescheduled

    • The  U.S. International Trade Commission will decide on the second Qualcomm (QCOM -1.2%) and Apple (AAPL -0.4%) patent case on July 26 after the original January 22 date was delayed by the partial government shutdown.
    • The first ITC decision was already rescheduled for March 26.

  20. Yodi, 

    I bought back IBM short yesterday. Just theoretically I tried to understand the situation better. I think I try it on demo account


    • In a Thursday evening speech, St. Louis Fed President (and notable dove) James Bullard thinks Fed rate policy is a "little bit restrictive here, and we might be putting downward pressure instead of upward pressure on inflation."
    • The central bank should be more worried about slower growth and slower inflation rather than any price pressures, he argued. GDP is forecast to be "considerably" slower than 3% with risks tilted to the downside, even as the Fed is expected to miss its 2% inflation target yet again.
    • “We have to, even today, be more worried about missing to the low side than the high side,” he says.
    • He's not yet ready for a rate cut, though: "I'm pretty happy where rates are today," he says, and while the Fed can wait and see a bit, it needs to guard against the downside.
    • He's also ready to scrap the "dot plot," saying the FOMC should "reassess how much forward guidance we want to give in this environment."
    • Canada added 67K jobs in January, racing past estimates for a gain of just 5K. The unemployment rate actually rose by 0.2% to 5.8% as more folks entered the labor force.
    • Wages perked up as well, rising 1.8% Y/Y vs. estimates for 1.6%.
    • The news has sent the loonie (NYSEARCA:FXC) surging by about 70 pips vs. the dollar, now buying $0.7551.

    Trump's China caution deflates U.S. investors on edge over trade

    • U.S. stock futures point to additional losses after Pres. Trump said yesterday that he would not meet with China's Pres. Xi before a March 1 deadline set by the two countries to achieve a trade deal.
    • The remarks, which followed comments from White House economic advisor Larry Kudlow that a "pretty sizable distance" remained between the two sides, dampened growing optimism for a trade deal in the short term and weighed on stocks.
    • "The keystone in the wall of worry is the trade discord," CFRA Research's Sam Stovall said. "Should the negotiations crumble, so too will near term support for equity prices."
    • Elsewhere, European markets are mixed after a report showed German exports rose more than expected in December, while in Asia, Japan’s Nikkei tumbled 2% to its lowest level in a month.
    • Pres. Trump is set to sign an executive order next week banning Chinese telecom equipment from U.S. wireless networks, in a move aimed at protecting the U.S. from cyber threats, Politico reports.
    • The administration plans to release the directive before the Feb. 25-28 MWC Barcelona conference to send a signal that future contracts for cutting-edge technology must prioritize cybersecurity, according to the report.
    • Many countries seek to deploy next-generation 5G wireless networks to power the rapidly proliferating internet of things, and Chinese firms such as Huawei and ZTE are aggressively pushing to build these networks at a lower cost than their competitors.
    • Investors piled record volumes of cash into emerging markets shares and bonds in the past week amid expectations that the U.S. dollar will weaken as the Fed pauses interest rate hikes, according to a Bank of America Merrill Lynch note.
    • Some $11.1B flowed into bonds, the biggest amount since May 2018 and $4.3B went into equities.
    • About $400M was pulled from precious metals, its first drop in in nine weeks, according to EPFR data.
    • High-yield bonds inflows of were $4.8B, the biggest week in three years; emerging market debt took in $4.4B.
    • Bank of America (NYSE:BAC) has given a $2.5B boost to its common stock repurchase program.
    • That $2.5B worth will be bought back by June 30.
    • In June 2018, the company had announced $20B in buybacks to be completed by the end of June 2019.
    • The board and the Fed have approved the additional repurchases, which offset an increase in regulatory capital.
    • Analysts say today's merger deal between BB&T (NYSE:BBT) and SunTrust (NYSE:STI) could serve as a "catalyst for consolidation" as other large regional banks feel the pressure to take on the industry's largest players.
    • The deal is the largest U.S. bank merger since the financial crisis resulted in new regulations that kept banks out of recent deal-making booms, but rules have loosened considerably in the Trump administration, leading some to predict more consolidations in the industry.
    • The two banks struck the deal from a position of strength, as each reported strong Q4 earnings last month with no signs of pressure near to mid-term, said Terry McEvoy, managing director at Stephens, who also mentioned Regions (NYSE:RF), KeyCorp (NYSE:KEY) and Comerica (NYSE:CMA) as potential candidates for M&A activity.
    • Banks already subject to Fed oversight such as PNC Financial (NYSE:PNC) and U.S. Bancorp (NYSE:USBmight be attracted to regional banks if the price and geographic fit are reasonable, Heard On The Street's Justin Lahart speculated.
    • "A positive share reaction to the transaction could help induce managements to more actively consider tying up with other depository institutions," UBS analysts said; BB&T bounced 4% and STI surged 10% in today's trade.
    • Meanwhile, Rep. Maxine Waters, Chair of the House Financial Services Committee, said the proposed deal "raises many questions and deserves serious scrutiny" from banking regulators and Congress.

    It's official--Dun & Bradstreet is private

    • An investor group including Cannae Holdings (CNNE), CC Capital Partners, Bilcar, Black Knight (BKI +0.3%), and funds affiliated with Thomas H. Lee Partners LP closes on the acquisition of Dun & Bradstreet (NYSE:DNB).
    • William P. Foley II, chairman of Cannae and executive chairman of Black Knight, becomes executive chairman of Dun & Bradstreet's board.
    • Black Knight CEO Anthony Jabbour also becomes Dun & Bradstreet CEO.
    • Previously: Cannae reports pricing of $1.45B of notes for Dun & Bradstreet deal (Feb. 1)
    • Natural gas flows to U.S. liquefied natural gas export terminals should increase in the coming days after reportedly collapsing to their lowest levels in nearly a year as fog clears along the Gulf Coast.
    • Analysts tell Reuters the decline was caused by fog that forced  several vessels to drop anchor in the Gulf of Mexico as well as maintenance work at the LNG terminals and the pipelines feeding them.
    • The three LNG export terminals in the U.S. – Cheniere Energy's (NYSEMKT:LNG) Sabine Pass in Louisiana and Corpus Christi in Texas, and Dominion Energy's (NYSE:D) Cove Point in Maryland – reportedly pulled just 1.5B cf/day of gas from pipelines today, down from a record 5.5B cf/day on Jan. 5.
    • Harmony Gold (NYSE:HMY) says it expects H1 headline earnings per share will come in 87%-97% lower than this time last year, citing a 915M rand ($67M) depreciation charge due to a decline in value of its Hidden Valley mine in Papua New Guinea, while total costs rose 6%.
    • But HMY says total gold production for the period jumped 34% Y/Y to 751K oz. as a result of investments in Hidden Valley and the Moab Khotsong mine.
    • Hidden Valley reached commercial levels of production last June, prompting the larger depreciation charge.
    • Iron ore futures extend their recent rally, surging as much as 5.8% to $94/ton in Singapore, the highest since August 2014.
    • Prices are up 9% so far this week after jumping 14% last week in the aftermath of the deadly accident at a Vale tailings dam in Brazil that knocked out 40M tons of annual production.
    • Vale invoked force majeure earlier this week after a judge forced it to suspend some operations at its Brucutu mine in Brazil, a move the company said would result in the loss of an additional 30M tons/year of production.
    • A major risk is that the Brucutu operation may be "the first of many of Vale’s mines to see its production halted," with the prospect that tighter regulations may affect supplies from other miners, Citigroup says.
    • This week’s price action has occurred as markets in China, the most important iron ore user, have been closed for Lunar New Year; iron ore's direction should gain clarity when the country's exchanges resume on Monday.

    Model 3 lands European approval for Autopilot

    • Tesla's (TSLA -1.7%) Autopilot feature has been approved in Europe for the Model 3 vehicle, according to Bloomberg.
    • The approval for the feature arrived in this morning from the Netherlands Vehicle Authority RDW.
    • Previously: Model 3 Autopilot feature not yet approved in Europe (Feb. 7)

    Nike and Lowe's top consumer picks at Oppenheimer

    • Oppenheimer digs into the consumer sector today and takes a more offensive posture on select names with outsized spending trends expected to continue.
    • Nike (NKE +0.3%) and Lowe's (LOW) are called out as "top picks" in the sector by the Oppenheimer analyst team.
    • On Nike: "We have turned even more impressed with the underlying operating prowess of the company and its brand. In addition to strong top- line dynamics, tighter inventory management globally continues to result in improved full price sell-through, thereby unlocking margin upside in the NKE model."
    • On Lowe's: "Consistent with our now more upbeat stance towards prospects for consumer spending and discretionary consumer broadly, we reiterate our positive call on home improvement retail."

    Restaurant same-store sales up 2% in January

    • Same-store restaurant sales rose 1.96% in January to match December's pace and mark the best two-month period in tracking conducted by TDn2K for over two years.
    • Same-store traffic was down 0.72% in January and fell 1.12% on a rolling three-month basis. Some analysts were suggesting going into the current earnings season that the government shutdown and Polar Vortex were drags on restaurant traffic in January.
    • TDn2K breakdown: "Bad weather negatively impacted restaurant sales during January. Though most regions of the country experienced positive same-store sales growth during the month, the four regions that had flat or declining sales year over year were among the most impacted by severe winter storms. The worst performing region based on same-store sales growth during January was the Midwest (-0.5 percent sales growth)… the best performing segment based on same-store sales during January was fine dining, undoubtedly assisted by a shift in the New Year’s Eve holiday, which fell into the first week of the year in 2019. Conversely, this segment was among the worst performers in December, as the effect of this holiday shift worked against them. Other top performing segments during January were quick service and family dining."
    • Chipotle (NYSE:CMG) hits a milestone by opening its 2,500th restaurant.
    • Company execs are hosting a ribbon cutting event today at the store located at The Shops at Todos Santos in Concord, CA.
    • CMG -0.18% premarket to $584.75. Shares are up over 11% for the week.
    • Source: Press Release

    Ubiquiti Networks +10.5% as Enterprise revenue surprises to upside

    • Ubiquiti Networks (NASDAQ:UBNT) is up 10.5% premarket after it cleared Street bars with its Q2 earnings, including revenue that topped highest analyst estimates.
    • Non-GAAP EPS rose 75% to easily beat consensus. Gross profit rose 45% to $140.2M, and operating income grew 39% to $91.7M.
    • Days sales outstanding dropped to 52 from last quarter's 54; inventory rose by $155M to $251.7M Y/Y, and was up $116.8M from the previous quarter.
    • Revenue breakout: Service Provider Technology, $113.2M (down 5.6%); Enterprise Technology, $194.1M (up 48.2%).
    • Revenue by geography: North America, $121.2M (up 27.7%); South America, $20.9M (up 0.8%); EMEA, $134.4M (up 31.7%); Asia Pacific, $30.7M (down 7.1%).
    • Cash and equivalents were $293.3M as of year-end, vs. $666.7M as of last June 30. It also has $145.8M in securities available for sale.
    • Previously: Ubiquiti Networks beats by $0.30, beats on revenue (Feb. 08 2019)
    • Press release
    • Goldman Sachs lowers its CY19 EPS estimates for Western Digital (NYSE:WDC) and Micron (NASDAQ:MU) citing memory pricing that remains "very weak."
    • The firm thinks Q3 gross margins will fall on the quarter with only modest improvements coming in Q4.
    • Goldman notes that past memory downturns have resulted in supply cuts, which then helped bring in the next upturn.
    • Micron shares are down 3.1% premarket to $38.17.

  21. Gabor good for you now you wait for a good up day and you sell half the amount of OTM cherry calls against your BCS. Possible a 140 should do.


  22. I am taking  a pook at ADM. ex div 2/15 Selling the 29 March 40/42 strangle for 1.55 and made an offer to buy the stock at 41.70 at present. combined monthly return 2.5%


  23. Might be a good day to have a look at HSIC



  24. HSIC/Yodi – They spun off their Animal Health Business to CVET, which I don't think is trading yet so the dip reflects business that is not coming back – it's in the new entity.   They collected $1.1Bn cash for HBIC, which they are using to cut their current $2.2Bn in debt in half.  CVET "borrowed" the $1.1Bn to buy the parent company's assets – tricky move!  

    Animal Health was about 50% of sales so now they are predominantly a dental supply company with about 1/3 medical supplies but it's hard to say where the cash-flow was coming from.  This is one I'd want to see a couple of earnings reports before jumping in.  If they had 2021s, I might be tempted to sell puts but they only go to July and so thinly traded it's not even worth messing with.


  25. Image result for cbd horsesSpeaking of animal health – just had a meeting and we're putting out CBC edibles for horses!  Apparently it has a very noticable calming effect on them so great for transport, etc. and no negative side-effects reported.  

    We also have puppy treats and also very calming but also good for older dogs with aches and pains but the calming part is getting doggy day-care people very interested.

    Image result for cbd horses


  26. HSIC Phil thanks Good analyse. Wait and see!!!

    ADM closed armchair 29 Mar strangle 40/42 for 1.50 and bought the stock for 41.49


  27. Any thoughts on DAN? Kinda looks cheap right now.


  28. Phil

    Did we / Should we update  M  ?

    30/40 2021 BCS

     Thanks


  29. Love this:

    Last September, Frances O’Grady, the general secretary of the Trades Union Congress (TUC), made headlines for positioning the 4-day work week as a priority issue for the Labour Party. She emphasized its urgency at the organization’s 150th annual gathering, arguing that evolving technology should be cutting the number of hours spent at work.

    “In the 19th century, unions campaigned for an eight-hour day. In the 20th century, we won the right to a two-day weekend and paid holidays,” she said. “So, for the 21st century, let’s lift our ambition again. I believe that in this century we can win a four-day working week, with decent pay for everyone. It’s time to share the wealth from new technology, not allow those at the top to grab it for themselves.”

    I think even if we just changed it to 4 10-hour days it would really improve people's quality of life.

    ROFL:

    NEW: ’s Bedminster golf course employed so many undocumented immigrants that there’s an entire town in Costa Rica built on Trump paychecks. We found it. “My whole town practically lived there,” one said of the Trump course.

    This is why Trump's buddies at the enquirer are trying to get Bezos to lay off the President.  Real investigative reporting scares the crap out of Trump, that's why he also relentlessly attacks the Times.  No news IS good news when you are a crook!

    The workers say paid them $8/hour to operate heavy equipment. No benefits. A licensed, legal operator would have cost him $51/hour, including benefits.

    Yes. These workers did present fraudulent documents. Trump Org says its checks didn't show they were fraudulent, tho the Trump club did not take the most easily available step to improve those checks — enrolling in e-Verify.

    Copper production has ground to a halt in Chile due to flooding.  I think /HG is worth a toss in case this story catches on over the weekend.  Stop under $2.80, of course, now $2.808.

    Also, good news on China can really pop it too.

    Whitaker initially pleads ignorance of the tweet referring to the special counsel investigators as a "lynch mob," then, when confronted with the tweet, claims he wasn't indicating that *he* endorsed the idea they were a lynch mob.????

     

    Whitaker pleads ignorance as to whether FACT™ received any foreign donations while he led it, despite having been its ONLY employee. ????

    Be very careful, money is flying out of equities this week:


  30. if we don't have position in M is it good time to sell some puts? Jan 21 $20 strike?


  31. DAN/Dawg – Auto parts are usually a safe, steady(ish) investment.   They are tracking about $400M for the year and $16.50 is only $2.4Bn for the whole company so yes, I'd call that a good deal.  They even have leaps so I'm for selling 20 of the 2021 $15 puts for $2.75 ($5,500) in the LTP to remind us to keep an eye on them and, if they do fall back to our net of $12.25 – I'd be inclined to add the bull call spread.  Good idea! 

    Year End 31st Dec 2012 2013 2014 2015 2016 2017 TTM 2018E 2019E CAGR / Avg
    Revenue $m 7,224 6,769 6,617 6,060 5,826 7,209 8,007 8,108 9,086 -0.04%
    Operating Profit $m 364 471 378 390 315 471 551     +5.3%
    Net Profit $m 300 244 319 159 640 111 223 426 478.2 -18.0%
    EPS Reported $ 1.40 -0.082 1.88 0.97 4.36 1.98 2.77     +7.2%
    EPS Normalised $ 1.62 0.024 2.34 1.21 5.01 2.40 3.20 2.91 3.33 +8.2%
    EPS Growth % +4.8 -98.5 +9,510 -48.4 +314.8 -52.1 +33.5 +21.2 +14.5  
    PE Ratio x           7.07 5.30 5.83 5.10  
    PEG x           0.33 0.25 0.40 0.56
    Profitability

    M/QC – Waiting on earnings (2/26) but I certainly like them down here.  

    Short Put 2021 15-JAN 30.00 PUT [M @ $25.21 $-0.45] -10 9/26/2018 (707) $-5,250 $5.25 $3.35 $-5.18     $8.60 - $-3,350 -63.8% $-8,600
    Long Call 2021 15-JAN 20.00 CALL [M @ $25.21 $-0.45] 25 1/10/2019 (707) $20,000 $8.00 $-1.05     $6.95 - $-2,625 -13.1% $17,375
    Short Put 2021 15-JAN 25.00 PUT [M @ $25.21 $-0.45] -10 1/14/2019 (707) $-5,900 $5.90 $-0.45     $5.45 - $450 7.6% $-5,450

    I don't mind owning them for net $22ish (if both are assigned) so that's not a problem and the $20 calls are in the money at $7 and the $15 calls are $10.50 so too much to roll so there's not really much to do and I do like the target ($30+) as that would expire the puts and put the long calls $25,000 in the money from out net $8,850 entry (and we've sold short calls along the way).  

    If you have the short $40 calls I'd buy them back for $1.10 as you're only going to collect 1/7th of a penny per day in your best case over the next two years so why leave yourself less flexible.  If you have the long $30s, those are $2.85 and the $20s are $7 so $5.15 to roll down $10 would put you in-line with the LTP but we do intend to roll again and DD if M goes lower (unless it's something really bad) so it might be a lot cheaper to wait than spend $7 now – in case it goes against us.

    M/Millard – Sure, I love selling the 2021 $25 puts for $5.50 for a net $19.50 entry.


  32. HSIC / Phil – My daughter works in sales there and was actually now transferred to the spinoff company that deals only with animal health (Covetrus). Unfortunately private as it seems that they do well.


  33. Animal Health/StJ – Yes, it gets bigger and bigger.  That's why we're doing the pet CBDs now.

    Well, not too much damage done to the indexes today.

    Europe is really hurting though and Japan so not sure how long we can keep this up by ourselves.  

    VIX isn't worried:


  34. Thank you for taking a look at Dana! Wasn't sure how to play it…Also your trade ideas have already paid for the year's PSW dues for me (and then some!), so thanks for that too.


  35. Animal health – I had bought pet insurance for my dog, premiums are about $100 a month so someone is making a killing in the pet insurance business….

    Was annoying to be paying that much but my dog randomly had a major health issue recently and we had vet bills of nearly $7000 which was covered 80% so in the end was thankful I had it! (My dog is doing much better recovering on a cocktail or pills). 


  36. You're very welcome, Dawg! 

    Have a great weekend everyone, 

    - Phil

    Pets/Crs – Well people do love their animals.  I bust my Mom's chops because her car has a picture of her dog on the back along with "I love my Yorkie" but she has 6 children (4 steps), 11 grandchildren and 2 great grandchildren and not a mention!  


  37. Animal health / Phil – It's incredible, my kid worked as a vet tech before the sales job and they can never find enough qualified people it seems. The money is now with pets and old people. The best ones are of course old people with pets – that's the gold mine there.


  38. Whitaker: ‘I don’t believe we were tracking’ family separations



  39. Paul Manafort continued Ukraine work in 2018, prosecutors say




  40. Hi everybody, 

    Reading about Maxwell batteries news (MXWL) and why Elon Musk decided to buy it for $270 million , they developed a new technology that allows more energy per kg.in combination with ultracapacitors.

    Financials are not so fancy but perhaps a play makes sense it’s in the low side 

    http://s21.q4cdn.com/566123494/files/doc_presentations/2019/Maxwell-Needham-Conference-Deck.pdf







  41. Snowbound California guests freed after 5 days at lodge








  42. 2019 Grammys Winners: Full List








  43. Plummeting insect numbers ‘threaten collapse of nature’



  44. Good morning! 

    Popping about 0.5% on (yes, again) good news about China Talks.  Europe's up 1%,

    U.S. Futures Point to Gains as Mnuchin Flies to China for Trade Talks

    U.S. stock futures edged higher as U.S. officials arrived in Beijing to start another round of trade negotiations with China.

    Meanwhile, on the home front:

    Talks on Border Security Stall as Shutdown Looms

    Negotiations over a bipartisan deal for border-security funding have stalled, aides familiar with the talks and other officials said, raising the specter of another government shutdown at the end of this week. 1752

    And this:

    Prepare to Pay More for Diapers, Clorox and Cat Litter

    Makers of household staples started raising prices last year on diapers, toilet paper and trash bags to offset higher commodity costs and boost profits. Executives are promising to raise even more prices this year. 124

    U.K. Posts Slowest Growth in Six Years Amid Brexit Worries

    U.S. Economy Week Ahead: Inflation, Delayed Retail Sales

    The eurozone is just one crisis away from a hell of its own.

    /NG finally making a good move back: