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Turn Down Tuesday – Trump Crimes and Fed Testimony Reverse the Rally

Image result for trump affairs cartoonCriminal conduct!

Trump's former lawyer, Michael Cohen will for the first time publicly accuse the President of criminal conduct while in office related to a hush-money payment to a porn star.  According to the Wall Street Journal: "The President’s ex-lawyer will tell House Committee he witnessed Trump’s ‘lies, racism and cheating,’ role in hush payments."  This is contrary to Trump and the GOPs position that his payments to the porn star he was cheating on his wife with were perfectly legal and just a normal part of any campaign process and, of course, he's already been given a pass by the Evangelicals who support Trump 100% in all of his exrtra-marital affairs.

Criminal charges are new and that opens up a whole new avenue of investigations for Trump – even if there isn't enough evidence to prove that he's a Russian Agent, placed in power through a coordinated effort that clearly came from Russia and Putin, with money that clearly came from Russia and Putin following through on an agenda that is clearly benefitting Russia and Putin BUT – we can't PROVE that he's purposely doing all this to pay back Putin or if it's just a cooincidence that his staff has already been found guilty of conspiring with Russia and none of that has anything to do with Trump himself.

Sure, that's the ticket, right?  Well, the market has been willing to move along, even as Russian State TV on Sunday listed potential US cities that they could strike first with their new Hyppersonic Missiles.  The report came days after Russian President Vladimir Putin warned the U.S. against deploying intermediate-range missiles in Europe.  You would think the President (any other President) would be outraged but there was not a single tweet as Trump was busy calling for "retaliation" against Saturday Night Live for making fun of him and touting his trade progress with China, which boosted the markets yesterday.

While I know most of you reading this think this is all some sort of Liberal attack against the President (and yes, I am a Liberal), I don't really see how that disqualifies me from being concerned when the Russian Propaganda Network has a whole special about how easily they can now wipe out America with their new missiles and how close they can park their subs to US waters – and our President says NOTHING!  Are you really OK with that?

The problem with having a President who's a Russian Puppet isn't just the wanton economic destruction he causes at home or the decline in respect the rest of the World has for us or the loss of American leadership on the World stage…  The very real consequence of a Putin Puppet leading the US is that – if Russia were to strike first with their terrible new weapons – the Putin Puppet could simply surrender and that's that – the US is part of the Soviet Union.  THAT is why we should be concerned enough to at least investigate whether or not the President of the United States is colluding with the Russians – he's also the Commander in Chief of our Armed Forces and that means you can wake up tomorrow in a different country.

Image result for trump indictmentsMarkets don't like uncertainty and not knowing whether they US will remain independent is a pretty big uncertainty.  It's very worrying to see Putin making these chess moves just when the Russian Investigation is about to release its findings but, no matter how guilty Trump is – you know the drill – he will be defended for being a Putin Puppet by the same people who defend his affairs and his racism and his fraudulent Universities and his vulgar attitude towards women and the Constitution.  It doesn't matter what Trump does – as long as he's doing it for them…

The markets are taking some notice today, reversing yesterday's gains (Monday's never matter anyway) but make sure you are well-hedged ahead of Powell's Fed Testimony on Capital Hill – especially as he speaks to the House tomorrow – who may have a few questions about his $4.5 TRILLION Balance Sheet than the GOP has been giving him since he took office.  

Speaking of Fed Chairmen, the former head of the Federal Reserve thinks President Donald Trump doesn’t understand basic economics, the central banking system or international trade. But she said it in such a way that you might have missed it.  In an interview with Marketplace that aired Monday, former Federal Reserve Chair Janet Yellen was asked if she thinks Trump “has a grasp of” macroeconomic policy, which encompasses everything from unemployment to the rates on bank loans.  “No, I do not,” replied Yellen, who served under Trump during his first year in office.

Can you really believe that EVERY SINGLE PERSON who says something negative about the President has an "agenda"?  Maybe some of them are right?  Maybe we shoudl be concerned?  

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  1. Good Morning!?

  2. It looks like the market like the earnings for M.  Up 4%.

  3. Hope you guys bought M the other day when I advised it was 24.07!!!!

  4. Good morning! 

    Powell just said Government needs to clarify marijuana banking laws – yay!

    Hemp Boca (our CBD/no THC line) is doing very well getting meetings with all sorts of people (Doctors, Pharmacies, Beauty Salons, Fitness Centers) who want CBD-only products, but even they have problems with banking as they are marijuana-adjacent.  

    M/Robert – Ridiculously undervalued is why.  Still miles to go so good for a new trade.

    Short Put 2021 15-JAN 30.00 PUT [M @ $24.39 $0.03] -10 9/26/2018 (689) $-5,250 $5.25 $3.75 $-5.18     $9.00 - $-3,750 -71.4% $-9,000
    Long Call 2021 15-JAN 20.00 CALL [M @ $24.39 $0.03] 25 1/10/2019 (689) $20,000 $8.00 $-1.10     $6.90 $0.40 $-2,750 -13.8% $17,250
    Short Put 2021 15-JAN 25.00 PUT [M @ $24.39 $0.03] -10 1/14/2019 (689) $-5,900 $5.90 $-0.10     $5.80 - $100 1.7% $-5,800

    • M – Now this would be my Stock of the Year at $25 – how silly!  We are already aggressive and not too much damage.  The short Jan $35s will expire worthless, so thanks for the $3,000 and the rest of the position is good as a new trade.

    And what Yodi said! 

    Big Chart – I don't know what's up with the 200 dma on the RUT but 1,600 is the line to watch and 2,800 on /ES – even though the 200 dma is 2,750 .  

    Powell made nice noises and the Senate wasn't going to grill him – we knew that – so the indexes are generally recovering so far.

  5. Phil,

    What are your thoughts on /KC? Why the weakness?

    • Berkshire Hathaway (NYSE:BRK.B) (NYSE:BRK.A) bought back about $417.6M of stock in October and December of last year, according to the company's annual report.
    • The company had about $30.4B in cash and cash equivalents at Dec. 31, 2018 vs. $31.6B at 2017-end.
    • It also held $81.5B of short-term investments in U.S. Treasury Bills at the end of 2018 vs. $84.4B a year earlier.
    • Buffett and his Charlie Munger continue to "hope for an elephant-sized acquisition," however "prices are sky-high for businesses possessing decent long-term prospects," Buffett writes.
    • More likely, Berkshire Hathaway will continue to expand its holdings of stakes in other companies, but Buffett warns that their expected increase in stock purchases "is not a market call."
    • Rather, they're focused on value investing--whether a part of an attractive business is worth more than its market price.
    • Previously: Buffett: It's time to abandon focus on BV per share change (Feb. 23)

    That's important because we know Buffett has a line and I guess the line is at $190 now.  

    1. Insurance-underwriting loss of $225M vs. loss of $491M a year ago.
    2. Insurance-investment income of $1.16B vs $970M a year ago.
    3. Railroad, utilities, and energy $1.74B vs. $1.21B a year ago.
    4. Other businesses $2.34B vs. $1.82B a year ago.
    • Insurance float was about $123B at Dec. 31, 2018, an increase of $8B since 2017-end.
    • Carrying value of Kraft Heinz common stock decreased 22% to $13.8B at Dec. 31, 2018 vs. $17.6B at Dec. 31, 2017. Fair value of KHC common stock at year-end fell by $11.3B to $14.0B from $25.3B at 2017-end.
    • Book value per class A equivalent share was $212,503 at Dec. 31, 2018 vs. $228,712 at Sept. 30, 2018.
    • Q4 net loss of $24.4B includes investment losses of about $28.5B from a reduction in the amount of unrealized gains that existed in its equity security investment holdings and are net of taxable gains on sales of investments of about $460M in Q4.
    • Warren Buffett's letter to Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) shareholders notes it's time for a change.
    • The Oracle of Omaha says it's now time to abandon the practice of opening its annual reports with a paragraph featuring the percentage change in Berkshire's per-share book value. He cites three reasons:
    • It's shifted from a company whose assets are concentrated in marketable stocks to one "whose major value resides in operating businesses."
    • While equity holdings are valued at market prices, accounting rules require its operating companies to be included in book value at an amount far below their current value.
    • It's likely, over time, that Berkshire will be a significant repurchaser of its shares--at prices above book value but below its estimate of intrinsic value.
    • In future tabulations, Berkshire expects to focus on market price, which can be "extremely capricious," Buffet says. "Over time, however, Berkshire's stock price will provide the best measure of business performance.

    LOL – The time to stop looking at Book Value is before you take a $3Bn hit on KHC in Q1, right?

    KHC still falling…

    The fact that Berkshire is "looking for an elephant" and already owns about 1/4 of the company and could simply DD for $10Bn and own 51% but they are not doing it is concerning.  Seems like exactly the kind of company Buffett would want to pick up at a bargain – so perhaps it's still no bargain or maybe the wheels are already in motion?  It's possible that Buffett will blame 3G's (another big, activist shareholder) cost-cutting pressure on the downturn and MAYBE he will buy out their stake and let the KHC management run the company for a change.  

    /KC/Japar – Oddly enough, the weak Brazillian currency is weakening the arabica futures contracts but there's also generally plenty of supply and no bad news yet in this month's crop reports.  

    Coffee RSI Deeply Oversold; Seems to Be Pricing Great Weather in Brazil

    February 26, 2019 8:12AM CST

    The market seems to be looking for a bottom here in coffee, but with great weather in Brazil, talk of continued flow of old crop coffee, and increasing open interest on the recent break is keeping funds on the short side.  The Feb 5th COT report showed managed money traders were net short 49,136 contracts.  If there is some positive technical action and resistance levels begin to give-way, coffee may see a large short covering rally, however the market still lacks the catalyst to spark a move like this.  The recent jump in open interest would also suggest that fund traders are still adding to their net short positions.  With RSI reaching 12, the market is technically oversold and has also seemed to price most of this good weather into the market already.  Resistance comes in at 100.45 and 101.10 with support coming in at 99.20 and 98.65.

    Coffee May '19 Daily Chart

    On the other hand:

    As discussed in Coffee's Next Chapter, the effects of climate change on coffee production could be catastrophic, shrinking the area available for coffee bean growth by a predicted 88% by 2050 (National Academy of Sciences, 2017).

    The BOTTOM for the year was 95 and we flew off that so I'm hoping this will be similar but there needs to be some catalyst to move things up between now and July.

  6. Phil,

    Have some WPM Jan 21 15/20 call debits (.99) off set w/ 15/7.5 put credits (1.70). Would like to stay long but they're already in the money at  ~$22. Not sure best way… Wait for next series?


  7. ROFL:

    When asked about how people would receive the Green New Deal or the federal jobs guarantee contained within it, Trump responded that she does not think “most Americans, in their heart, want to be given something.”

    “People want to work for what they get,” Trump said, citing her time spent traveling around the country over the last four years. “So, I think that this idea of a guaranteed minimum is not something most people want.”

    Like everybody in her family!

  8. Phil,

    Are you accumulating /KC here or using tight stops?

  9. In your above M trade you have 2 sets of shorts puts (unsual) are the short 30 puts supposed to be calls?

  10. CPB earnings tonight, $2.50 expected move. Tempting to sell some puts – seems like they're down just because of the big KHC wipeout.

  11. US housing starts plummeted 11.2 percent in December

  12. Trump, Kim in Hanoi for second round of nuclear talks

  13. Hemp Boca CBD – that's a New Age II/PSWI product? Just trying to keep an eye out for the products as they become available :D

  14. WPM/Brian – 2021 is a long time and the spread is $8.15/4.80 so $3.35 out of $5.  Do you have something better to do with $3.35 than wait two years to make $1.65 (50%) that you are just as sure of collecting?  If so, then sure, move the trade but, if not, just be patient.  WPM is rangey and we may go lower again so, if you want to get more aggressive, how about selling 1/2 the June $22.50 calls for $1.25 – that adds 0.625 to your long gains if WPM goes lower and, if not, you can always roll.  

    If you want to be really aggressive, you could cash the $15s for $8.15 and roll the short 2021 $20s ($4.80) to 2x the short June $22.50s ($2.50) and cover with 2x the 2021 $22.50 ($3.60)/30 (1.60) bull call spread at $2 ($4) so you'll have taken net $1.85 off the table and you have 3 more $2+ sales ahead of you plus whatever balance remains on the new longs – could be a lot more than $5 in the end.  But it's a whole different trade that needs to be much more aggressively managed.  

    I know it's very boring to set up a trade idea that makes 300% on cash in two years and then you have to wait and wait and wait for your whole 300% to come back so you can trade again but, even if you end up netting "just" 40% a year in your portfolio – it gets very exciting – LATER!

    The problem people have with making slow, steady games is that making 40% on $100,000 is $40,000 and that is nice but it doesn't get you to your $1,000,000 dream at all – does it?  The next year, you have $140,000 and another 40% is $56,000 and now you've been at it for 2 years and ALL you've done is doubled your money to $206,000 and the next year it's $82,400 and now you are at $288,000 at the end of year 3 and maybe you realize you have tripled your money so now, when you make $115,200 (40%) in year 4 – you think you should have been more aggressive but at least you have $403,000 and, from here on out, you make more money each year than you started with- even at 20%!  

    Warren Buffett has two investing rules:  Rule #1 is "Don't Lose Money" and Rule #2 is "See Rule #1" – Buffett made his fortune at an average of "just" 16.5% a year – he's just been doing it a long, long time and, most importantly, there were only about 5 negative years out of 50 and those were not terrible set-backs – because he never took terrible risks.  

    It takes 5 years for our system to really hockey-stick for you but sticking with these nice, conservative spreads on solid, blue-chip companies and diversifying the risks and HEDGING against catastrophic losses is a great formula for long-term success – you just have to learn the one thing I can't teach – which is PATIENCE!  

    No matter how good a market is or overbought things are – there will always be a Macy's or KHC or FTR just sitting around waiting for a long-term investor to come along.  There's no harm in waiting and there's certainly no harm in learning to leave a portfolio alone and just let things go.

    /KC/Japar – It's a conviction trade for July.  Came in /KCN19 at $105 and DD at $100 to avg $102.50 on 2x and 2x more at $97.50 would be 4x at $100 and maybe I'd go 8x at $95 but, if that doesn't work by July – I'd roll to next year – not add more.  Coffee has been lower – very scary below $100.

    And, don't forget, as soon as there's a bounce that gets me even, I cut back 1/2 (at least).

    M/Doro – I don't know and it's so hard to search comments for M as the search thing finds all words with "M" or "m" in them.  I can't see that we would have done a $10 spread and I'm pretty sure what happened is that I made a call JUST to sell the 2021 $25 puts for $5.90 since they were such a good deal and forgot we already had the other short puts but, since I love M and think $25 is ridiculous – I saw no reason to cancel it.  

    CPB/Ati – Or they may be suffering from similar issues.  Still, I like the idea.  In the LTP, we sold 10 of the 2021 $35 puts for $5 on 9/28, now $7.

    Hemp Boca/Ati – That's a new, different company we're working with.

    All of our bath bombs are hand made with our balanced combination of clinically formulated CBD’s, infused with home grown herbs, and in house extracted essential oils. No artificial dyes, or preservatives are used in the manufacturing process, so it will never stain your tub and is safe for absorption.

    Directions: Fill tub with hot water, drop in your bath bomb and enjoy! For best results allow yourself at least 30 minutes to soak and enjoy the full effects of the CBD and Essential oils. Sit back relax and enjoy the fizz

    Possible CBD Benefits:

    Pain relief Anxiety relief Provides relief for Psoriasis, Rheumatoid Arthritis, MS (Multiple Sclerosis), Diabetes and Epilepsy Reduce seizures and convulsions Suppresses muscle and spasms Increases efficacy of the immune system Reduces nervous system degeneration Kills or slows bacterial growth and fungal infection Inhibits cell growth in skin tumors/cancer cells


  15. Phil

    is this what you are looking for ?


    Sell 10 M 2021 $30 puts for $5.25 ($5,250)

    Buy 15 M 2021 $30 ($9)/$40 ($5) bull call spreads for net $4 ($6,000) 

    Sell 10 M Jan $35 calls for $2.70 ($2,700

  16. Phil

    I think this is the date on M

    January 10th, 2019

  17. qcmike: it is a Top Trade idea from Wed, 26 Sep 2018. It was one of 9 Top Trade ideas in that post.

  18. Thanks Winston

  19. M/QC – Thanks for finding that!  It's a bit out of context as that trade was part of our 9 Trade Ideas from 9/26 when we were LOOKING for companies that we could make money on when they went LOWER and M was one of those trades so the original point was to make money on the short Jan $35s and THEN turn it into a bullish spread.  So, in the context of that discussion, we reviewed the M trade and made changes:

    M has come down far enough to be interesting but let's start small into earnings:

    • Sell 10 M 2021 $30 puts for $5.25 ($5,250)
    • Buy 15 M 2021 $30 ($9)/$40 ($5) bull call spreads for net $4 ($6,000) 
    • Sell 10 M Jan $35 calls for $2.70 ($2,700)

    That's a net $1,950 credit on the $15,000 spread and we have 8 more volatile quarters to sell.  If it goes down – we have a credit, so we don't care and, if it goes up, we're happy to buy more longs and roll the short caller.  

    That was the original trade and our 1/10 changes were:

    Well, success on the short calls but our spread got crushed.  Fortunately, it was a small one and, as noted this morning, we still like M so now we can get aggressive as we had no real commitment on the next credit spread with just 10 short puts ($30,000) as our worst case.  We're going to roll the 15 2021 $30 calls at $3.70 ($5,550) to 25 of the 2021 $20 calls at $8 ($20,000) and we'll buy back the 15 short $40 calls for $1.75 ($2,675) as they are pointless and we'll wait for a bounce before selling calls again.  Now we're in the 25 2021 $20 calls with the 10 short puts for net $15,175 or about $6 per long so $26 is our break-even and that's where we are! 

    Of course, once we sell short calls, that number will start dropping so again, this is how our positions are DESIGNED to function.  It would have been nice to make $13,050 with no worries but that didn't happen but now we only need M to get back to $30 (our prior entry) and we net back $25,000 for almost our original gain goal and there's another $25,000 at our old target of $40 if things go really well – 3x what we would have made if just the original play had gone perfectly so let's hear it for imperfections!  

    Also, the 2021 $30 puts are now $9 and we have tons of cash and margin so let's just sell 10 of the 2021 $25 puts for $6 ($6,000) with a stop on the $30 puts at $11, at which point we'd buy those back and sell 10 more $25 puts for probably $7.50 but hopefully we head higher and it's just free money.

    So pretty much what I thought – at least my logic is consistent…

  20. Phil / M – why not just buy the stock for the dividend and sell some short calls agains that?  6.3% divi.  IS the divid safe? 

  21. M/Batman – You could go that way but, frankly, the dividend payers are a bit of a drag on the LTP vs our usual strategy.

  22. That's a lot of wrist-slaps:

    • Goldman Sachs (GS +0.5%) says losses relating to ongoing lawsuits could exceed its reserve for such matters by up to $1.9B, according to a recent filing.
    • That amount has gone up from the up to $1.8B figure it gave in September.
    • The amount covers "reasonably possible" outcomes.
    • Among legal issues it faces are investigations regarding its role in arranging a $6.5B debt offering for Malaysia's 1MDB Fund; Malaysia is seeking $7.5B from Goldman.
    • Previously: Goldman's Solomon gets $23M compensation in 2018 with a catch (Feb. 1)

    Remember the good old days when it wasn't so expensive to run a criminal operation?  Friggin' Elizabeth Warren and her "rules" and "morals"!   Doesn't seem to bother GS investors much.

    • U.S. stocks bounce around during midday trading as Federal Reserve Chairman Jerome Powell talks with Senate members in his semiannual monetary policy report to Congress.
    • The S&P 500 up ~0.1%, and Nasdaq and Dow are essentially flat.
    • Powell repeats the Fed's view that the U.S. economic outlook is still a favorable one, however risks on trade policies, slowing global growth, and Brexit are providing cross-currents.
    • By sector, utilities (-0.5%) and real estate (-0.3%) lag the markets, while energy (+0.4%) and financials (+0.4%) are the strongest performers.
    • 10-year U.S. Treasury yield falls 2 basis points to 2.643%
    • Federal Reserve Chairman Jerome Powell tells the U.S. Senate that "uncertainty is elevated around several unresolved government policy issues, including Brexit and ongoing trade negotiations."
    • Fed estimates 2018 U.S. GDP growth at a little less than 3%.
    • Policy decisions will continue to be data dependent, he says.
    • Prepared to adjust any of the details for completing balance sheet normalization in light of economic and financial developments, he comments in a prepared statement.
    • 10:18 AM ET: "We need a broad policy on how to sustain our labor force participation," he notes. He says among global economy, the U.S. is at the bottom of labor force participation league tables for both men and women, with part of the issue being demographics of an aging population.
    • Declines to comment on question as to whether President Donald Trump has a good grasp of how the economy works.
    • Says he would welcome clarity regarding how marijuana companies that are legal on a state level can gain access to banks. Though cannabis is legal in a number of states, it's still illegal on a federal basis, so banks can't deal with those companies.
    • 10:50 AM: The U.S. defaulting on U.S. debt is "beyond even considering" and would be a "very big deal." The issue is topical because the federal borrowing limit is set to be reinstated on Saturday at $22T, but the Treasury will use extraordinary measures to conserve cash to keep making payments--that's expected to continue at least through the summer.
    • "The world believes in our full faith and credit," Powell said.
    • 11:20 AM: Sen. Elizabeth Warren chastises the Fed for "backroom" discussions with banks before they submit merger applications, a practice that she says reduces the transparency of the Fed's merger approval process.
    • 11:45 AM: When asked about modern monetary theory, Powell responds: "The idea that deficits don't matter for countries that borrow in their own currency is just wrong." Earlier he said that U.S. government spending is on an "unsustainable path," and thus, spending needs to decline or revenue needs to rise.
    • Notes that decisions about spending and raising revenue "is really for you" referring to his questioners in the Senate.
    • 12:16 PM: Powell's testimony concludes his testimony, saying the FOMC continues to monitor cross-currents to the U.S. economic outlook, remains patient and "is in no rush to make a judgment on changes in policy."
    • Overall, the banking system is strong with much higher capital levels, much more liquidity, better risk management, and no bank failures in 2018, Federal Reserve Chairman Jerome Powell says in testimony before the U.S. Senate Committee on Banking, Housing, and Urban Affairs.
    • Financial Select Sector SPDR ETF (XLF +0.3%), SPDR S&P Regional Banking ETF (KRE+0.2%).
    • Says the Fed will evaluate the proposed merger of BB&T (BBT +0.3%) and SunTrust Banks (STI+0.4%) "carefully, fairly, and thoroughly with a lot of transparency."
    • Expects to receive the application from the two banks in the next few weeks.
    • Previously: BB&T-SunTrust deal attracts lawmaker's scrutiny (Feb. 8)
    • Chain store sales increased 5.2% for the week ending on February 23, according to Johnson Redbook.
    • Month-to-date sales in February are up 5.1%.
    • Sales are expected to be up 4.9% for the full month.
    • December Housing Starts-11.2% to 1.078M vs. 1.260M expected, 1.214M prior (revised from 1.256M).
    • Building permits 1.326M vs. 1.290M expected and 1.322M prior (revised from 1.328M).

    • AT&T (NYSE:T) is up 0.6% on standard volume after an appeals court affirmed the district court ruling that permitted its takeover of Time Warner.
    • Investors' reaction so far: (finally) closure on an overhang that threatened, however weakly, to undo a merger that charged forward with a deal closing last June.
    • But technically, the Justice Dept. could still ask all D.C. Circuit appellate judges en banc (rather than the three-judge panel) to hear the appeal, or appeal it to the Supreme Court.
    • In response, AT&T's General Counsel David McAtee says “The merger of these innovative companies has already yielded significant consumer benefits, and it will continue to do so for years to come.
    • "While we respect the important role that the U.S. Department of Justice plays in the merger review process, we trust that today’s unanimous decision from the D.C. Circuit will end this litigation.”
    • And while this decision may not be a surprise, it's material that it will tear down a "firewall" set up shortly after Judge Leon's original decision for AT&T, meaning that the parent conglomerate can now get more fully involved in pricing and staffing at WarnerMedia than it has been.
    Image result for jumping bandwagon animated gif
    • Moody's drops its ratings outlook on Kraft Heinz (KHC -0.5%) to Stable from Positive after factoring in last week's flurry of developments from the food giant.
    • "The declining trend in Kraft Heinz's operating performance is concerning, but does not affect Moody's view that the company's credit profile remains low investment grade. The 9% decline in 2018 EBITDA and the further 10% decline budgeted for 2019 partly reflect rising inflation that has outpaced the company's ability to raise prices and cut costs as well as its stepped up brand investment aimed at driving future sales growth. Moody's believes that the company will recover more of its cost inflation over the next year and that its recent commercial investments will support stronger sales growth. Moreover, Moody's expects that Kraft Heinz will sustain its leading position as one of the world's most profitable large package food companies. Although the company's adjusted EBITDA margin fell by 280 basis points to 27.0% in 2018, this is still significantly stronger than the company's package food company peers."
    • The ratings agency affirms the Baa2 senior secured debt rating on Kraft.
    • Dick's Sporting Goods (DKS +0.5%) CEO Ed Stack was on MSNBC this morning talking guns, roughly one year since the company made the decision to stop selling firearms to customers under 21, end assault-weapons sales and pull high-capacity magazines off of shelves.
    • Stack said more than 90% of the responses from customers have been positive even as some gun sales were lost. He said the board still backs the decision on firearms and noted the minimal impact on the overall business.
    • The numbers support Stack's contention. Shares of Dick's are up 19% since the company made the decision to stop selling guns to easily outpace the S&P 500 Index and retail sector averages over the same period.
    • Match Group's (MTCH -1.9%) Tinder launches a Spring Break mode that will be live from March 4 to March 31 in 20 popular vacation destinations for college students.
    • Tinder U members will need to look for the Spring Break card to opt-in for the experience.
    • In Q3, the company said it would start marketing Tinder as a way to enjoy the "single lifestyle" after years of downplaying the casual nature of the app. Match now has the acquired dating app Hinge that focuses on long-term relationships, so Tinder is free to let its hair down.
    • Apple (AAPL +0.4%) Music is heading for Google's (GOOG -0.6%)(GOOGL -0.7%) Home speakers soon since a Music sign-in option appeared in the Home app this week.
    • Music recently launched on Amazon's Echo devices.
    • Apple is breaking its historically insular ecosystem to drive Service revenue growth as iPhone sales lag. Apple's HomePod has taken a small portion of the global smart speaker market with a Q4 share of 4% compared to Amazon's nearly 36% and Google's 30%.
    • Shake Shack (NYSE:SHAK) trades lower after the restaurant operator's guidance disappointed.
    • Shake Shack's traffic fell 0.3% during the quarter and the company's outlook suggested another drop is ahead. "We’re guiding to 0% to 1% same-Shack sales for the full year consistent with 2018. And this includes roughly 1.5% price taken on a blended basis in late December 2018 partially offset by the expected continuation of traffic trends experienced over the last 8 to 10 quarters," stated CFO Tara Comonte on the earnings call (transcript).
    • On Wall Street, Cowen boosted its full-year comparable sales estimate on Shake Shack to +1.3% from +1.0% after taking in the report, while SunTrust backed its Buy rating and upped its price target to $58.
    • Shares of Shake Shack are down 4.27% in premarket trading to $50.02.
    • Previously: Shake Shack beats by $0.03, beats on revenue (Feb. 25)
    • Previously: Shake Shack -4% after restaurant margin falls (Feb. 25)
    • Caterpillar (NYSE:CAT) has been downgraded by two notches to Sell from Buy at UBS, which also slashed its PT on the Dow heavyweight by around 20% to $125 per share.
    • "We expect 2020 EPS to decline ~8% year-on-year, as continued growth in mining and buybacks will not be enough to offset headwinds in construction and oil and gas, in our view," UBS analyst Steven Fisher wrote. "We do not believe an earnings decline in priced in to the stock. We expect downward earnings revisions to pressure the stock over the next 12 months."
    • CAT shares are off 3.5% premarket, indicating an opening bell price of $136.40 each, a move that would cut the stock's three-month gain to around 9.7%.

  23. Hi Phil,  I missed your call to liquidate GE options yesterday.  The now non-standard options are still trading actively today, but a new option series has not been issued.  At this point, would recommend that I wait until the new options appear before cashing out, so that I can transition to them immediately?

    By the way, did GE or the CBOE issue an announcement saying that a new option series would be created, or did you just assume that this would be the case?   It wasn't clear to me that a new option series would be inevitable.  GE sold an important part of their healthcare portfolio and received cash and had pensions assumed in so doing, the value of this division still stayed within the company, just in a different form.  Had they spun off healthcare to their shareholders, then it makes sense to me why a new option series would be inevitable, but not in this case.  Anyway, what was your reasoning?

  24. Just for what it is good, Yesterday I did mentioned T. BX and M.

    Bought yesterday stock of M @ 24.54 and sold the May 23 put for 1.53. No calls yet. Wait for stock to recover.

  25. Testing 2,800 again on /ES.  26,125, 7,138 and 1,585 are lined up with it as well as NYSE 12,715. 

    7-year auction went well so people are relaxing.  

    GE/John – Did you miss the chat call, the Email, the text message or the Top Trade Alert?  crying  Well, at least they are still trading but 0.75 lower than yesterday.  We don't KNOW what will happen with the options but those things tend to get messy so we decided it's easier to just get out and get back in when the coast is clear.  I THINK (call your broker) that you now have the option + 0.54 shares of WAB but I'm not sure exactly what happened but that should make up for the drop in share prices (WAB is 0.75×100).

    And yes, we just assumed this would be the case (messy options) as it often is – simply not worth the hassle – especially since, by the time we want to exit in 2 years – the bid/ask spreads will be so big you can drive a truck through them.  

    [$$] GE Transportation Workers Are on Strike Under New Owner

    Wabtec (WAB) Surges: Stock Moves 6.4% Higher

    General Electric (GE) to Divest BioPharma, Closes Wabtec Deal

    Edited Transcript of WAB earnings conference call or presentation 25-Feb-19 1:30pm GMT

    GE's Big Debt Problem Just Disappeared

    Wabtec offers 2019 projections after merger

  26. PSW/AAPL

    I am not able to find the AAPL setup that Phil had suggested. it was a short term one with 170/190 bcs or something.


  27. AAPL/Pat – We talk about them so often.  You are throwing me with the short-term thing though.  Was it a pre-earnings play?  I went back to the beginning of the month and didn't see it.  Maybe this:




    AAPL/Pat – The Feb $160 calls are now $24.10 so, YAY! on those.  That's $12,050 from $2,750 and you want to be part of more upside then I would add 5 2021 $160 ($32)/190 ($18.25) bull call spreads at $13.75 ($6,875) and that would take $5,175 off the table so almost a double off the table and you still have a spread that can pay up to $15,000 if AAPL is over $190 in two years.  As I noted above, if you simply keep making $8,125 (118%) on each $6,875 every two years on these "boring" plays – you'll be plenty rich enough in 20 years.  

    A good portfolio should have some short-term gambles in them but, when you make a nice score, it's smart to put the big money into long-term conservative positions with an excellent chance of making you 20-40%.  In this case, it's 60% a year for two years – there's certainly nothing wrong with that and you have twice as much short-term money to gamble with as you had when you started anyway!  



    AAPL/Pat – Sorry, that was the Jan $160s but no, doesn't change anything, you had a nice score so now you can put the money in something that has a higher percentage chance of making money.  If you still want to gamble, just subtract what you want to make for a short-term bet out of what you can afford on the more conservative play.


    After all that BS the markets finished red?  These are not good signs…

  28. FTR Earnings

    Total fourth quarter revenue of $2.12 billion, stable sequentially

    Net loss of $219 million in the fourth quarter, with loss driven by goodwill impairment

    Adjusted EBITDA1 of $895 million, a sequential increase driven by improved Consumer revenue performance, continued strong expense management, and early benefits from the company’s transformation program

    Transformation program initiatives expanded further in the fourth quarter, and the program enters 2019 with strong momentum


    Frontier is issuing the following financial guidance for 2019:

    Adjusted EBITDA – $3.45 billion to $3.55 billion

    Capital expenditures – Approximately $1.15 billion

    Cash taxes – Less than $25 million

    Cash pension/OPEB – Approximately $175 million

    Cash interest expense – Approximately $1.475 billion

    Operating free cash flow – $575 million to $675 million

  29. I thought these were interesting comments from Powell…


    Powell later added that the “single biggest thing” that drives the “unsustainability” is health care delivery. “We spend 17% of GDP, everyone else spends 10%. … It’s not that benefits themselves are too generous. We deliver them in inefficient ways.”

  30. Imax – this is a solid Quarter / Year.  They are projecting a strong year next year with Rev growth in the 6 % ( my interpretation) and margin expansion as well as improved ROIC (greater than 10%)

    This looks to have some tail winds. 

    IMAX expects blockbuster 2019

    IMAX (NYSE:IMAX): Q4 Non-GAAP EPS of $0.26 beats by $0.01; GAAP EPS of $0.03 misses by $0.04.

    Revenue of $108.96M (-13.2% Y/Y) beats by $5.41M.

    IMAX (NYSE:IMAX) is flat in AH trading after the company posts a mixed Q4results.

    Adjusted EBITDA was $133.2M during the quarter. Gross margin was 50.1% of sales at $54.6M vs. 47.9% of sales a year ago.

    The company says the total IMAX theater network consisted of 1,505 systems at the end of the quarter, of which 1,409 were in commercial multiplexes. There were 564 theaters in backlog at the end of the quarter, compared to the 499 in backlog a year ago. 88 theater systems were installed in Q4.

    CEO update: "We believe our achievements last year set the stage for IMAX to have a blockbuster year in 2019. We further differentiated The IMAX Experience®, increased awareness of the IMAX brand and tackled key challenges in China, where we delivered our strongest box office year ever and doubled the industry growth rate."

  31. The most popular Porsche is going electric

  32. Video shows AP reporter shoved by guard at EPA headquarters

  33. Pakistan Downs Indian Jets in Worst Escalation Since 1971 War

  34. Good morning!

    You wouldn't know it from reading the WSJ but the markets are down because India and Pakistan have shot down each others fighter jets.  Apparently, Bohemian Rhapsody has Pakistan feeling all full of themselves and they seem to have flown into Kashmir (another great concert) which, when we used to care about such things – was the most likely place on Earth a nuclear war would possibly break out.  

    This is still backlash from the terror attack on India, which killed 40 people we didn't care about on Valentine's Day and India retaliated and bombed what they claim was a Militant Base inside of Pakistan.  We still sell arms to both countries, so this war is great for us!   Actually, Pakistan already pissed off Trump and the GOP by switching to China as their main weapon supplier (much cheaper).

    The report said the United States was once the largest exporter of weapons to Pakistan. But recent tensions between the two countries have significantly affected arms sales, particularly from 2013 to 2017, when there has been a large decrease in arms transfers from the U.S. to Pakistan.

    China has become the biggest supplier of arms to India's archrival neighbor, providing 35 percent of its arms to Pakistan from 2013 to 2017.

    Relations between the U.S. and Pakistan deteriorated after a November 2011 incident in which 26 Pakistani troops were killed in NATO attacks on two military checkpoints. Pakistan retaliated by closing both of its borders into Afghanistan, effectively suspending NATO supply convoys through the country to its land-locked neighbor.

    The Trump administration has accused Pakistan of supporting militant groups that launch attacks across the border into Afghanistan, accusations that Pakistan denies.

    Pakistani officials say geopolitics demand that the country should not be relying on the U.S. only when it comes to security needs.

     What excitement! 

    All I see turns to brown

    As the sun burns the ground

    And my eyes fill with sand

    As I scan this wasted land

    Try to find, try to find what I feel


  35. Related image

  36. War Games reference. I see you Phil!