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Fool Us Thursday – China Deal Once Again Used to Boost the Markets

Image result for fooling some of the people all of the timeReally?

How many times can we possibly fall for the same thing?  Every time the market takes a dip we suddenly make trade progress with China – according to US Officials, anyway.  Of course we need something good to happen with China to offset today's depressing GDP Report, which will highlight the damage Trump's Government Shutdown has done to the US (and Global) Economy.  

Still, it looks like you can certainly fool some of the people all of the time and the Futures are, as usual, coming off their lows on "news" that China is making concessions in the trade talks.  Reuters reported previously that the two sides were working on written agreements in six areas: forced technology transfer and cyber theft, intellectual property rights, services, currency, agriculture and non-tariff barriers to trade.  Still, progress is not a deal and we are still miles away from a deal which means Trump's Tariff Tax on the American People will continue while China runs out the clock on his Presidency.  

It's been almost a month since the last meeting and the next meeting will be in May and then it's summertime and who knows if anything gets done over the summer yet, today, the Dow came 100 points off the low on rumors that progress is being made – it doesn't take much to get that index excited, does it?

Aside from GDP at 8:30, we get Jobless Claims and Corporate Profits followed by Pending Home Sales at 10 and the KC Fed Manufacturing Report at 11 followed by four (4) Fed speakers – Bostick at 11:30, Williams at 1:15 (on both sides of a 1pm 7-year note auction), Willimas again at 2:30 and Bullard this evening at 6:30 followed by Williams again at 9:25 tomorrow morning.  Williams is the Fed's Uber-Dove, so you can see which way the Fed is looking to steer things into the quarter's end.

It may not feel like it but this has been a great quarter for stocks, with the Dow up about 2,500 points (11%) and the S&P up 300 points (12%) since the year began.  It's just that we've been here since mid-February, so the last 6 weeks of frustration seem like they've been going on forever.  Whether it's a frustrated attempt to break higher or healthy consolidation on the way to new highs remains to be seen as we close the speculation on Q1 and move on to the actual earnings reports – finally.  

8:30 Update:  Well, this is the 3rd revision of the Q4 GDP Report and, once again, it's been revised down – from 2.6% to 2.2% and there's one more revision left.  Q1's GDP is already forecast to be around 1.5% and this will be the first time in 2 year's we've had 2 quarters of sub-2% growth – if trends continue to follow the current path.  

In fact, the ONLY think likely to save the GDP would be a very quick trade deal with China – so the pressure is certainly on this week for Team Trump to come up with something more than empty promises.  Worse than GDP, Real Gross Domestic Income fell from 4.6% in Q3 to just 1.7% in Q4 as the American Consumer continues to be punished by Trump's Trade War.  The deceleration in real GDP growth in the 4th quarter reflected decelerations in Private Inventory Investment, PCE, and Federal Government Spending and a downturn in State and Local Government Spending – more self-inflicted wounds resulting from Trump's Government Shutdown.  

So, on the bright side, things should get better because we did this damage to ourselves but Trump will still be President – and who knows what surprises he has for us in 2019 and 2020?  Meanwhile, we can expect at least another push back to our bounce lines and we know the Fed is on hand to give things a positive spin so, once again (sorry), it's more of a "watch and wait" kind of day as we wind up the quarter.  

Keep in mind, even though it doesn't feel like it, the indexes are off to a very strong start in 2019.


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  1. So we got 2 good GDP quarters out of that $1.5T tax cut… That China deal better be something unreal. But who can believe that Trump and his team (people who don't read) can pull one over the Chinese team who plays Go to relax!

  2. Dont vaccinate your kids and we all pay the bill:

    The numbers can grow much bigger still. Researchers at the CDC estimated that handling 107 cases of measles that occurred in 2011 cost state and local health departments between $2.7 million and $5.3 million.

  3. Indicator?

  4. Good Morning!

  5. Good morning! 

    Big Chart – Not much change but every day below the 50 dma on the RUT makes it harder to get over.  Bullish cross, on the other hand, on SPX today as the 50 dma goes over the 200 dma.

    Go/StJ – Good point.  

    • Lululemon (NASDAQ:LULU) is on pace to open at a record high following a sizzling Q4 earnings report after new products were gobbled up by consumers. Analysts are largely issuing positive comments on the athletic apparel juggernaut.
    • Oppenheimer calls LULU as one of the fastest-growing and healthiest brands in the consumer sector as it bumps it price target to $190.
    • Credit Suisse thinks Lululemon management will be able to focus investors on the long-term growth story as it ups its PT to $190.
    • JPMorgan has both firms beat with a PT of $197.
    • There is some caution being sounded by Jefferies, with analyst Randal Konik saying LULU shares already reflect the upside from digital initiatives and international growth.
    • Shares of Lululemon are up 14.97% premarket to $168.70.
    • Previously: Lululemon Athletica beats by $0.10, beats on revenue (March 27)
    • Previously: Lululemon +10% after strong sales report (March 27)
    • The U.S. Department of Housing and Urban Development charges Facebook (NASDAQ:FB) with Fair Housing Act violations accusing the company's targeted ads of race and color discrimination.
    • HUD says Facebook's housing-related ads also restricted viewers according to religion, sex, disability, and national origin.
    • Facebook says it has been working with HUD to address the concerns, took action to prevent ad discrimination, and is surprised by HUD's decision.
    • FB shares are down 1.2% pre-market to $163.90.
    • Previously: Facebook apologizes for blocking WH aide; settles discrimination suits (March 19)
    • Marijuana Company of America's (OTCQB:MCOA) wholly owned subsidiary, hempSMART, has launched sales of the hempSMART product line in U.K. during the London event on March 23.
    • The team successfully sold out its entire promotional inventory at the launch event, which led to over 1,000 new associates signing up with the Company’s associate networking program.
    • The proposed merger between Newmont Mining (NYSE:NEM) and Goldcorp (NYSE:GG) is endorsed by Glass Lewis, which becomes the second proxy advisory firm to recommend shareholders approve the deal after ISS came out in support earlier this week.
    • "We see no reason to doubt the strategic rationale for the proposed transaction, which would create a leading gold company with greater asset diversification and opportunities to achieve meaningful synergies," Glass Lewis says.
    • Earlier this week, ISS cited "the solid strategic rationale and expected financial benefits, which are bolstered by the recent addition of a special dividend to NEM shareholders," for its recommendation.
    • Separately, NEM announced its leadership team for the combined company, with CEO Gary Goldberg remaining at the helm until Q4 when he will retire, to be succeeded by Tom Palmer, who will stay in the role of President.
    • Cinemark (NYSE:CNK) and IMAX(NYSE:IMAX) announce an expansion of the companies' partnership with the renewal of all Cinemark's existing IMAX locations and the installation of two IMAX with Laser systems.
    • The company says that nearly all of Cinemark's IMAX theatres are now under agreement through 2026.
    • Source: Press Release
    • In case anyone hadn't noticed, the price of oil this year has quietly climbed from less than $50 per barrel to just over $60 a few days ago.
    • That's enough for the president, who minutes ago took to Twitter to demand OPEC "increase the flow."
    • "World markets are fragile … Thank you!"
    • Black gold has added to session losses, now off 1.8% to $58.35. USO -1.4% premarket

  6. All over the strong bounces now except the Nas, which is right on it:

    • Dow 26,000 to 25,400 is 600 points so 120-point bounces to 25,520 (weak) and 25,640 (strong)
    • S&P 2,860 to 2,790 is 70 points so 14-point bounces to 2,804 and 2,818
    • Nas 7,525 to 7,300 is 225 so 45-point bounces to 7,345 and 7,370 
    • Russell 1,580 to 1,500 is 80 points so 16-point bounces to 1,516 and 1,532

    What matters is whether things actually stick, of course.

  7. Having trouble with futures execution on TOS, anyone else?

  8. FMCC-

    It's only the start for Frannie reform, analysts say

    Any insight on how this will play out? 

  9. Think it's interesting that BA can't seem to rally after yesterday's announcement of progress on a fix.

    Stock heading lower ?

  10. Ooops…

    Stephen Moore, President Donald Trump’s much-maligned likely nominee for the Federal Reserve, owes more than $75,000 to the IRS due to unpaid taxes from 2014.

    According to a Wednesday Bloomberg report, Moore’s wife, Anne Carey, said that the debt stems from a mistaken deduction Moore took for alimony and child care to his former wife, when only alimony is deductible.

    Taxes are for the little people though…

  11. albo

    BA problems have not even started yet

  12. Thanks Yodi.  Am staying away for now.

  13. Trouble/Deano – Not here.  

    FMCC/Pstas – That should pop them.  

    BA/Albo – As I said, they were over-priced so the correction only corrected the price – I don't think they pop back.

    And what Yodi said.

    Oops, so much for the gains anyway, now we see what holds.

    Exporting MORE /NG:

    • Sempra Energy (SRE -0.7%) is working aggressively to become one of the biggest liquefied natural gas exporters in North America, CEO Jeff Martin tells Reuters.
    • SRE is developing five projects – Cameron phases 1 and 2 in Louisiana, Port Arthur in Texas and Costa Azul phases 1 and 2 in Baja California in Mexico – totaling 45M mt/year; if the company builds all 45M mt/year of capacity, it could become the second biggest North American LNG exporter behind current market leader Cheniere Energy (LNG -0.9%).
    • The first 12M mt/year phase at the $10B Cameron project is already under construction, and Martin says SRE and its Cameron partners – Mitsubishi, Mitsui and Total – are working on a study for an 8M mt/year phase 2 expansion of the facility.
    • At the 12M mt/year Port Arthur project, Martin says SRE has a "big marketing effort to see if we can get sufficient contracts to reach a final investment decision" by Q1 2020.
    • "Costa Azul is a complete game changer," Martin says, noting it is the only facility on the North American west coast that will enable customers to ship Permian shale gas from west Texas across northern Mexico and reach markets in Asia in 12 days, half the transit time it currently takes to send LNG from the U.S. Gulf Coast.
    • March Kansas City Fed Composite Index: +10, vs. +1 prior.
    • Manufacturing Index +17 vs. -4 prior.
    • “Factories in the region reported an uptick in growth in March, following three straight months in which the pace of growth slowed,” said Wilkerson. “Plans for both hiring and capital spending picked up.”
    • RBC resumes Micron (NASDAQ:MU) at Outperform citing a "bottoming of expectations," a non-Apple smartphone ramp in H2, and ramping hyperscale spending towards the end of the year that will benefit the data center.
    • Price target: $50.
    • MU shares are up 0.2% to $39.32.
    • Sprint's (S -2.3%) case to regulators for a $26B merger with T-Mobile (TMUS -2.9%) leans on the assertion that it won't be an effective competitor without the deal -- but some officials are skeptical of that, Bloomberg reports.
    • The No. 4 U.S. wireless carrier has said it might run out of cash if the merger fails, according to the report.
    • Those arguments, part of a so-called failing firm approach that suggests competition will be lessened with the failure of a player, are "relatively weak," according to a former FCC wireless bureau chief.
    • Sprint and T-Mobile are also arguing that the combined company will help the U.S. win the race to 5G commercialization, though the Justice Dept. doesn't consider industrial policy, focusing instead on harm to competition.

    "Phase 3 Study did not meet primary end-points":

  14. There is no media

  15. Gold drops below $1,300, on track for 3-session skid

  16. Phil,

    Is silver a long at that price?

    USD up 0.45% but silver is down 2.14%


  17. Phil can you have a look at UBS Cash flow is very irregular from one year to the next. Stock is on the low end of the scale. Appreciate your opinion.

  18. Phil / making $150k off $100k: on a slow news day, I thought I'd ask the blue sky question that you raised in an early March missive related (although not specific) to CMG:

    We have other, less stressful ways to make $150,000 with $100,000 over 2 years and also it would be more diversified – that's how I end up at my decision.

    Very interested to hear trade ideaps that conform to that objective of $150k from $100k (over 2 years). Why tie up all that capital in the LTP position's Jan 21, $480/$540 BCS when there could be other alternatives – and you'd be making a tidy profit on the spread (even if it's not enough to cover the losses on the CMG short calls)?

  19. CMG – trying to punch its way through $700 – which is friggin' unreal. Maybe cold comfort if it has difficulty doing that and $700 proves to be a solid level of resistance. Earnings are on April 24th, and current options pricing is indicating a range of $625 to $775. Very interesting to see how this develops.

  20. We were talking about BA and the fall out.
    Just would like to draw your attention to Bayer AG a well-known a German company, which bought Monsanto, a mistake they possible will never forget. Monsanto’s weed killer could lead them to bankruptcy. The combined stock value of Monsanto and Bayer is now less than the stock value of Monsanto alone when bought. Bayer’s stock has lost 43%.
    Just a small mistake of Bayer!!!!

  21. Yodi / Monsanto;

    Any suggestion? we rarely analyze here trades for a  downside market.

  22. Phil – GS

    What are your thoughts on Goldman Sachs?  I feel with the recent deal with Apple they might be able to capture a larger valet share in consumer banking. Below is a set up I was thinking about.

    Buy Jan 20 call strike 180

    Sell Jan 20 call strike 210

    Sell Jan 20 put strike 190

    Thanks as always.


  23. Good Afternoon!    Hey, here's a trade you guys might like.  CMG:  Sell an April Iron Condor. as follows;      BUY 1 770 CALL, SELL 1 760 CALL, BUY 1 630 PUT, SELL 1 640 PUT.     for $1.40.  Margin 1K per contract so this could earn 14% on margin in 3 weeks.  There is 90% chance this trade will come in.  Look at the chart…..very attractive pattern for this trade.    Earnings are AFTER April 18 so not much chance of an abrupt move prior to that.         Happy Trading!   

  24. advill, Bayer is at present in very dangerous waters. The law suits in the US could cost them their neck.

    I was even looking at BA selling a 250 Jan 20 put at 4.30, but just wait and see, that put could grow still very fast.

  25. Iflan, Only 10 days ago CMG was trading at 639, so only on the put side for 75$ you stick your head out for 930$. Could be a bit of a poker game.

  26. Wow, CNBC just had Buffett on for 90 mins doing an infomercial for US Equities…  Are we really in this much trouble?

    Silver/Kgab – People are panicking into the Dollar and Inflation is dead so I wouldn't catch a knife on /SI and /YG but, when the Dollar gets rejected at 97 or maybe 98 – then it's a good pick-up.

    You can also just play /SI over $15 with tight stops below or /YG over $1,300 with tight stops below.

    Keep an eye on the Dollar, of course.  

    Copper is doing well off the China rumors:

    UBS/Yodi – Well I can see profits are uneven and cash flow is painfully so with the company taking a massive ($18Bn) hit last year as well as 2015.  I THINK they way they are booking this, is that they are booking changes in working capital as cash-flow which may have made sense when it was steadier but this makes them look insane.  On the whole, I'd ignore it and focus on P&L, which is also nuts.  

    Year End 31st Dec 2013 2014 2015 2016 2017 2018 2019E 2020E CAGR / Avg
    Revenue $m 29,984 30,702 33,885 30,548 31,593 32,034 30,152 31,156 +1.3%
    Operating Profit $m 3,531 2,688 5,706 4,209 5,351 5,991     +11.2%
    Net Profit $m 3,645 3,943 6,449 3,348 969 4,516 5,005 5,505 +4.4%
    EPS Reported $ 0.89 0.99 1.71 0.88 1.02 1.18     +5.7%
    EPS Normalised $ 1.31 1.55 1.91 1.36 1.34 1.42 1.33 1.47 +1.7%
    EPS Growth % +80.5 +18.2 +23.7 -29.1 -1.5 +6.5 -6.42 +10.5  
    PE Ratio x           8.45 9.03 8.17  
    PEG x           n/a 0.86 1.61

    I don't blame them for variations in their AUM size or available capital – they are supposed to lend it out at some point.  As long as they turn it into profits, that's fine and the key is that pretty steady $30M in revenues which translates to about $4Bn in profits and the bank is $43Bn at $12 – about right and maybe a touch on the low side but nothing thrilling about their growth or anything else.

    CMG/Winston – Not sure what the question is?  CMG now $700 and our LTP position is:

    Long Call 2021 15-JAN 480.00 CALL [CMG @ $699.18 $1.31] 20 11/20/2018 (659) $180,000 $90.00 $178.25 $33.65     $268.25 - $356,500 198.1% $536,500
    Short Call 2021 15-JAN 540.00 CALL [CMG @ $699.18 $1.31] -20 11/20/2018 (659) $-133,000 $66.50 $159.00     $225.50 - $-318,000 -239.1% $-451,000
    Short Put 2021 15-JAN 450.00 PUT [CMG @ $699.18 $1.31] -10 2/19/2019 (659) $-30,400 $30.40 $-7.40     $23.00 - $7,400 24.3% $-23,000
    Short Call 2019 21-JUN 600.00 CALL [CMG @ $699.18 $1.31] -8 2/15/2019 (85) $-40,000 $50.00 $65.25     $115.25 $-0.09 $-52,200 -130.5% $-92,200

    I'm not going to give $100 to the short $600 callers so, if this is where we are, I have to roll but I can't go over the scenario every single week again.   It will be what it will be in June and, if it's this high, we'll have to roll it and possibly double down the longs but I'd rather not – IF that's an available option.

    As to the ways to make 150% in $100,000 – the LTP is full of those as are the Top Trade Ideas – just pick one you like – preferably not betting against a fast food company doubling up.

  27. Phil – the question is what are your top 3 favorite trade ideas amongst all the current trade ideas to turn $100k into $150k in 2 years (excluding any idea that has the letters CMG in the ticker symbol!).

  28. Winton CMG is not a relaxing armchair. Look at the chart, my feeling is what goes up that fast can come down even faster.!

  29. Bayer/Yodi – I coudn't imagine what they were thinking when they did that.  MON was a known environmental criminal – even without the new cancer info.  

    GS/Pat – Well it's good targeting as AAPL customers have all the money and this might make them hate GS less.  I don't think you are leaving any room for error with the 9-month trade at the money.  I'd go with:

    • Sell 5 GS 2021 $150 puts for $10.50 ($5,250) 
    • Buy 5 GS 2021 $150 calls for $52.50 ($26,250)
    • Sell 5 GS 2021 $190 calls for $28.50 ($14,250) 

    That's net $6,750 on the $20,000 spread that's at the money now so $13,250 (196%) upside potential if GS simply doesn't go lower for 20 months and a short put that's a lot easier to roll if you get in trouble.

    CMG/Iflan – Not much chance of an abrupt move?  You have a 10% window and they are up more than 10% this month, more than 10% last month (almost 20%) over 20% the month before and the month before that they were down 20% after being both up and down 20% in October BUT November was pretty flat – so it would have worked then…

    And what Yodi said!  

    3 ideas/Winston – Well, I'll have to consider that, maybe tomorrow.  Are you saying I can't pick a CMG short?

  30. CMG earnings April 24. The P options are 3 times higher after earnings. Someone knows something. Also projected a 1.00 to 1.50 higher than last quarter. Estimate 2.90. Hmmm. Since I don't even like their food seems very contrived to me.

  31. And on low volume too?

  32. Phil,

    I love this GS trade. I only bought 3 of them. Already up $157. (10 minutes)

    And has 4.5 theta. So as I understand, it makes me every day $4.5. $135/month if GS doesn't go anywhere.

    Please correct me if I am wrong.

    Buy the way I was more optimistic and bougth 155-190 spread and sold the same 150 put.

  33. Sorry I meant 155-195 spread

  34. GS/Kgab – That's right, you don't have to be so aggressive to make very nice money on those things.  

    Well, we ended up green again but all window-dressing – can't draw any conclusions.  

    • Berkshire Hathaway’s investment in Delta Air Lines (DAL +0.7%) rose above the fund's typical 10% comfort threshold by mistake when Delta bought back its own stock and Berkshire increased its holdings, Warren Buffett tells CNBC.
    • “What I didn’t realize was that that purchase had taken us over 10%,” Buffett said. “I was already in territory I didn’t plan to get, so I just decided to buy a whole lot more stock.”
    • “The airline industry is a very, very competitive business,” said Buffett, who has been piling into airline stocks including Delta, Southwest, American and United Continental since 2016. “I don’t think it’s a suicidal business anymore, but it was for quite a while.”
    • On Boeing (BA), Buffett said the company has a lot of work to do quickly following the two recent fatal crashes but that the incidents won't “change the industry,” noting the overall industry-wide improvement in safety in recent years.
    • On the U.S. economy, "It does look like the pace of increase in the economy has slowed down. I'd call it somewhere close to noticeably, but I wouldn't go beyond that."
    • Buffett says a slowdown in BNSF, the railroad company owned by Berkshire, is flashing a signal of slower growth but some of the data may be distorted by seasonal factors such as weather.
    • ETFs: JETS
    • Warren Buffett on Apple's (NASDAQ:AAPL) push into entertainment: "There's a lot of smart people with resources. I wouldn't want to play in that game myself."
    • Buffett: "I'd love to see them succeed, but that's a company that can afford a mistake or two."
    • Buffett's comments came during The Gatehouse's Hands Up for Success luncheon.
    • Cheniere Energy (LNG -0.3%) is upped to the Conviction Buy list with an $87 price target, raised from $84, at Goldman Sachs, which sees the stock as the best way for investors to gain exposure to the growing U.S. liquefied natural gas industry.
    • Cheniere’s buildout of shipping infrastructure should give it a "first mover advantage" to offer exports faster than peers, says Goldman's Michal Lapides. "Simply put, Cheniere maintains competitive advantages," including its scale, a strong operational track record, flexibility for customers and a relative low cost structure at several sites.
    • "While difficult to quantify, we believe a potential China-U.S. trade agreement could drive a significant amount of new contracts not in our current forecast for Cheniere," Lapides adds.
    • Cheniere replaces Kinder Morgan (KMI -0.4%) on Goldman's Conviction Buy list, with Lapides citing the stock's outperformance for the removal and valuation for keeping his Buy rating
    • Gold stocks trade broadly lower as Comex futures suffer their largest single-day percentage decline since August and settle below $1,300/oz. for the first time in two weeks; front-month gold -1.6% to $1,295.30.
    • A stronger dollar has hurt gold and U.S. Treasury yields have halted their recent slide, a negative for gold because it becomes less attractive to yield-seeking investors when yields rise.
    • Elsewhere in precious metals, most-active palladium futures sank 7.9% to $1,309.70/oz. for a 16% slump from last week’s all-time highs, while platinum and silver also fell ~2%.
    • Among major gold names: GOLD -3.1%KGC -3.6%AUY -2.8%AEM -2.4%SBGL -9.3%AU-6.3%GFI -5.7%KL -5.9%.
    • Along with charging Facebook (NASDAQ:FB) with Fair Housing Act violations today, the Dept. of Housing and Urban Development is examining policies at Twitter (TWTR +1.7%) and Google (GOOG -0.4%GOOGL -0.5%) over the same issue, The Washington Post reports.
    • "They want to make sure that other companies aren’t getting away with something that one company is investigated for,” a source tells the Post.
    • The probe of Facebook reportedly began in late 2016, and Google and Twitter were informed late last year that they were being examined, according to the report, meaning action could be coming their way in some months.
    • Scrutiny of all tech platforms (with addressable advertising) as potentially enabling housing discrimination perked up last summer when Facebook faced a HUD complaint over the matter.
    • The World Trade Organization rules in favor of the European Union in a 14-year trade battle with the U.S. over plane subsidies given to Boeing (BA +0.1%), affirming an earlier ruling that a tax break granted by Washington state, where Boeing builds most of its planes, was illegal.
    • But the ruling is limited: Except for the relatively small Washington state tax program, which the U.S. says was worth just $100M/year, the decision finds no grounds upon which the EU can seek damages from an arbitrator.
    • The level of retaliation the EU will be able to impose on U.S. goods and services is based on the harm done to Airbus (OTCPK:EADSF +0.2%)  rather than the amount of aid given to Boeing; the EU and U.S. likely will argue before the WTO over the amount of retaliatory tariffs they can impose.
    • Airbus calls the decision "a clear victory [that] vindicates our position that Boeing, while pointing fingers at Airbus, has not taken any action to comply with its WTO obligations, contrary to Airbus and the EU."
    • Boeing says the WTO rejected "every allegation of unlawful subsidies to Boeing with the single exception of one measure – the Washington state business and occupancy tax."
    • Though the Federal Reserve is committed to its dual mandate of achieving maximum employment and price stability, the U.S.'s central bank needs to keep an eye on global risks that filter into the U.S. economy, Federal Reserve Vice Chair Richard Clarida said in a speech Thursday.
    • He pointed to past instances, such as the 2011-13 eurozone recession and the China's currency devaluation in 2015-16, where "accommodative policy responses in the United States helped ward off actual contractions of U.S. activity."
    • Brexit, a sharp slowdown in global growth outlook, and trade tensions pose the prominent global risks today.
    • "In the presence of these risks and with inflation pressures muted, we can afford to be patient and data dependent as we assess in future meetings what adjustments in our policy rate might be necessary to sustain growth, employment, and price stability in the U.S. economy," he concluded.
    • Deepwater oil and gas explorers including Royal Dutch Shell (RDS.ARDS.B) and Talos Energy (NYSE:TALO), along with contractors such as Ensco (NYSE:ESV) and TechnipFMC (NYSE:FTI), told the Scotia Howard Weil Energy Conference this week they see a revival coming, a message in stark contrast to a subdued outlook for shale at the event.
    • Hess (NYSE:HES), which has assets in both shale and in offshore, offered the starkest contrast between offshore and shale when CEO John Hess showed a slide about what it would take to get the same amount of oil from the Permian Basin vs. Guyana, one of the biggest offshore discoveries of its kind: the remove 120K boe/day of oil, the Permian Basin would need a $12.8B investment compared to $3.7B for the first phase of the Liza section of the Guyana project, where Hess is teaming up with Exxon (NYSE:XOM).
    • "Take a look back from when we were at this conference one year ago today and we’re up 25% just in terms of the number of open tenders that are out there year over year," ESV CFO Jon Baksht said. "We are seeing that increase in spending and increased activity in the offshore space today."
    • FTI has said it expects to total a quarterly record for inbound orders of subsea gear during the current quarter.
    • Other offshore drilling contractors include RIGNEDOSDRLRDC.
    • Vale's (VALE -2.6%) iron ore sales could be cut by as much as 75M mt/year this year as a result of January's deadly dam collapse, with a 50M mt/year reduction in sales under the most optimistic scenario, CFO Luciano Siani says.
    • In today's earnings conference call, Siani expressed confidence that a deal will be reached with authorities in the coming weeks on restarting Brucutu, one of its largest mines in the state of Minas Gerais, where dam disasters occurred this year and in 2015.
    • Vale said its worst-case guidance for FY 2019 would leave sales volumes at 307M metric tons, a big drop from its earlier 382M mt full-year forecast but nearly flat vs. sales of 309M mt achieved in 2018.
    • The company reported a big jump in Q4 profit, the last full quarter before January's deadly dam burst.
    • In a reminder of the continued tense atmosphere in the state, Vale last night activated alarms in areas below three tailings dams due to an elevated risk of rupture.
    • The pound sterling sinks 1.0% as U.K. Prime Minister Theresa May plans to hold a vote on Friday in Parliament solely on the withdrawal agreement she made with the EU, Bloomberg reports (update at 12:34 PM ET).
    • Unlike the two previous failed votes on the deal, this one will withhold the part that focuses on the future trade and security relationship with the EU. (update at 1:24 PM ET.)
    • May's bid on Wednesday to gain backing for her Brexit deal by offering to quit as U.K. prime minister fell flat.
    • In addition, through a number of "indicative" votes yesterday, Parliament couldn't agree on any option other than they don't want to leave the EU without a deal.
    • May's de facto deputy Cabinet Office minister David Lidington, though, insists the deal May negotiated with the EU is the only way forward.
    • “The deal the government has negotiated is the best option available," he said.
    • Previously: U.K. Parliament fails to get a majority on any Brexit option (March 27)
    • Wirecard (OTCPK:WCAGY,OTCPK:WRCDFsays it's suing the Financial Times over investigative reports alleging book-padding at the Singapore office, causing shares to plunge.
    • Wirecard filed an official case with the Munich regional court to seek a ruling on the merits of its case against FT and reporter Dan McCrum. If the court approves, Wirecard will then pursue financial compensations.
    • Singapore authorities launched an investigation that is still ongoing. Wirecard hired a firm for an independent review that cleared the German headquarters of any wrongdoing but said some Singapore staff could face criminal liability.


  35. We already have a conservative BCS on GS don’t we? Any consideration of rolling the short calls to a higher strike or maybe adding some uncovered long calls. Not to get hyper about it but I think this card is going to be a winner. And GS has some good online banking products as well. 

  36. Phil – CMG short – sure you can pick it, but I will consider it as a 'bonus' play – doesn't count towards the 3 sensible ideas that I am looking for :) .

    Of course, at some point CMG will go down – so shorting it every month will work eventually! 

    But price / value / fundamentals are so disconnected on the CMG beast that I am not sure one can construct a rational play that has a chance of working. Take for example those Jan 20 $600 short covers that were selling at around $80 (when that was a potential adjustment, and the concern was (perhaps understandably) that we would never see that price again – well, those same $600 short calls are selling now for $150. Perhaps not the end of the world, but there's a lot of time to give the caller between now and January next year, and the adjustments are a big ask.

    Of course it only needs a poorly received earnings report for that imbalance to correct itself. 

    Just a few reflections.

  37. Pirate / CMG options pricing – it's due to the significantly elevated implied volatility (about double) of the options around the earnings date (26 April expiry) versus the options before earnings (18 April expiry).