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Faltering Thursday – Tesla’s Big Miss Triggers One of our Great Market Fears

This will be a good test.  

For a very long time I've said that TSLA may be the trigger that takes down the market by forcing investors to re-think the ridiculous valuations they have been giving to these "tech" stocks on the assumption of miraculous future growth.  Our PSW Member Portfolios are now TSLA-free but our Hedge Fund still has short positions on the stock, which will open down about 10% this morning, back around the October lows.

Image result for musk tweetTesla jumped the shark last August, when Elon Musk claimed he had the funding to take the company private at $420/share, causing me to write: "Wednesday’s Whopper – Musk Claims Some Idiot Offered Him $420/share for Tesla!"  I didn't need weeks or even days to know Musk was full of crap because $420 valued TSLA at $72Bn and I know all the rich idiots from my M&A days and none of them are stupid enough to pay $72Bn for an unprofitable car company so our trade idea was:

Let's take Elon at his word and sell 2 TSLA Jan $420 calls for $23 ($4,600) in the STP and buy 3 Jan $450 ($100)/420 ($79) bear put spreads for $21 ($6,300).  That's net $1,700 on the $9,000 spread.

Image result for tesla musk cartoonNeedless to say, we collected our full $9,000 for a $7,300 (429%) and we got another chance to short them over $360 in December and now we're back to the bottom and we'll see if there are any dip buyers left or perhaps they are finally tired of being burned by Elon Musk's BS.  If so, it could be the begining of the end for all the high-valuation Nasdaq companies that are being supported by similarly irrational investors. 

I'm not going to autopsy their delivery report – it's just what we thought it would be and you can open any paper and read that (yes, I said paper – I'm an old man!) but I will point out that you should notice the continuing pattern of qualifiers from TSLA that sound like the excuses of a child who turns in an incomplete project at school.  "It's this, it's that" – on and on with the excuses but how many times do we fall for this nonsense?  

The big excuse in this report is that is was HARD shipping Model 3s to China and Europe but, just like when you interrogate an 8 year-old about their excuse – the facts don't add up.  Let's try to remember that TSLA bumped up their valuation by claiming they had orders and deposits for about 500,000 Model 3s yet, INCLUDING the 60,000 they shipped this quarter, TSLA has only delivered 221,517 to date.  If they REALLY have 500,000 deposits in North America – why are they shipping specluative sales to China and Europe?  

It's not so much the production glitches or the slow sales that keep us short on TSLA – it's the LYING!!!  Companies are not supposed to lie to investors – it's a crime.  At best, TSLA is lying about their deposits but, if they are lying about deposits are they also cooking the books to cover up the lies?  That's a much more serious crime, no wonder Musk is trying to escape to Mars before this all hits the fan.

If it's uncovered the TSLA never had 500,000 deposits for Model 3s or that they took the deposits in bad faith, having no ability to deliver the cars as promised – then they defrauded all the investors who bought the company's stock up from $260 to $360 (and $260 was ridiculous anyway) for about $20Bn in losses.  Even without worrying about the potential crimes and cover-ups, we're still looking at a car company that's delivering just 63,000 cars in their 64th quarter of operation (founded 2003) and they are STILL LOSING MONEY on each car they deliver.  How does that justify a $50Bn valuation?

We had a valuation discussion way back on May 4th, 2017 and, at the time, I said they weren't worth $300/share telling our readers at Seeking Alpha, where we were sharing our amazingly profitable Options Opportunity Portfolio, that we'd be better off buying GM instead and our Trade Idea there was:

Meanwhile, General Motors , a company that MADE $2.6 BILLION in PROFITS in Q1 (that's right, TSLA's entire sales, in profits alone!) is still being valued lower than TSLA and it's just as ridiculous today as it was a month ago when I laid out the following bullish GM options spread idea:

  • Sell 10 GM 2019 $32 puts for $4.25 ($4,250)
  • Buy 25 GM 2019 $28 calls for $7.25 ($18,125)
  • Sell 25 GM 2019 $35 calls for $3.60 ($9,000)

That spread had a net cash entry of $4,875 and the 10 short puts required about $4,000 of ordinary margin and, as we expected, GM closed at $37.78 on Jan 22nd (the expiration day) and the spread paid back $17,500 for a gain of $12,625 (258%) in 20 months.  You don't have to put your money into idiotic momentum stocks to make great returns – simply using options spreads to leverage the return of blue chip stocks can give you fantastic gains and, when a blue chip stock goes down – they usually come back – because, unlike TSLA, they actually MAKE MONEY AND HAVE CASH FLOW!!!

Meanwhile, shorting the Nasdaq (/NQ) Futures at 7,575 is a great way to play the possible sell-off that TSLA may trigger and, of course, we already went over the Nasdaq Ultra-Short Hedges (SQQQ) in Tuesday Morning's PSW Report.  

 


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  1. Have these people ever read the constitution:

    https://talkingpointsmemo.com/edblog/republicans-against-the-1st-amendment

    Six GOP state legislators in Georgia are sponsoring a proposed law that would set up an “ethics board” for journalists in the state and exact civil penalties if journalists or news organizations failed to turn over photos, audio or video of recordings of interview subjects.


  2. Good Disney article:

    https://www.fastcompany.com/90324660/how-disney-grew-its-3-billion-mickey-mouse-business-by-selling-to-adults

    Why would adults wear items splashed with the face of a smiling rodent in the first place? The answer to the question has everything to do with the fact that Disney carefully orchestrated Mickey Mouse’s transformation from a cartoon character to a symbol. Disney ensured that Mickey could morph into almost anything the consumer needed him to be, from an emblem of hope in wartimes to a happy reminder of childhood when adulthood became overwhelming.


  3. phil--how big is your hedge fund?



  4. Good Morning!


  5. Good morning!  

    I'm only here until Noon as I have a 2:30 flight to Boston.  A couple of meetings there and then off to Amherst to see Maddie next week and also to meet with Ken from New Age (MJ Co) and investors regarding a $7.5M project in Lee, Mass – which is near Amherst, fortunately.  It's on the boarder of NY (Albany) too so perfect for a production facility which will hopefully be able to service both states (and certainly will on the CBD side).  

    Big chart still looks good but RUT still isn't confirming and keep in mind what a low bar we've set as the NYSE is still below the must hold line – even with the golden cross.  

    Ethics/StJ – Trump is packing the courts and they are after the First Amendment.  This country is staggering towards a Russia-styled Oligarchy.

    Hedge Fund/Jabob – We should hit $5M this year, at which point we'll open it up to new investors – aiming for $20M by 2021 and then on to $100M…  We also have the separate MJ Fund opening in Q3, that will be wide open for the first $20M (people who are interested contact Greg at Philstockworld dot com).

    Cramer/Albo – What a jackass!  Today he's on talking about how TSLA is uninvestable – as if that's always been his opinion.

    Image result for cramer tesla tsla


  6. albo—hilarious!


  7. Damn, so much for shorting, things are rocketing higher again. 

    TSLA bounced off $260 to $265. 

    • Stocks start modestly higher following reports that Pres. Trump will meet Chinese Vice Premier Liu today and could announce a summit date with Pres. Xi; Dow +0.4%, S&P and Nasdaq both +0.2%.
    • European markets are mixed after Germany reported a 4.2% monthly decline in factory orders for February, although Germany's DAX +0.3% while France's CAC -0.1% and U.K.'s FTSE -0.3%; in Asia, Japan's Nikkei +0.1% and China's Shanghai Composite +0.9%.
    • In corporate news, Facebook +2% in early trade after Guggenheim upgraded shares to Buy and Tesla -9% following a 31% decline in Q1 deliveries and saying its net income will be hurt as a result.
    • Communication services (+0.7%), industrials (+0.4%) and materials (+0.4%) top the early S&P sector standings, while the health care (-0.1%) and real estate (-0.2%) groups trade lower.
    • U.S. Treasury prices are little changed, with the two-year yield up a basis point to 2.33% and the 10-year yield down a basis point to 2.51%; U.S. Dollar Index +0.2% to 97.31.
    • U.S. WTI crude oil -0.2% to $62.35/bbl.

  8. OPTT – 3.21… Blast Off!  ;) … really… $3.21…. It's one helluva chart!


  9. hope you got out yesterday!!!!


    • Initial Jobless Claims -10K to 202K vs. +216K consensus, 212K prior (revised).
    • Continuous Claims: -38K to 1.717M vs. 1.750M consensus, 1.755M prior (revised).

    New York Fed's Williams outlines "new normal"

    • The "new normal" for U.S. economic growth and interest rates won't be at the rates seen in the 1990s, says Federal Reserve Bank of New York President John C. Williams.
    • "While many of you will miss the heady days of the 1990s when growth rates were at 4%, the economic fundamentals indicate that these are fundamentally different times," Williams said according to prepared remarks for the Community Bankers Conference in New York City.
    • He sees GDP growth at ~2% this year more reasonable, given that the labor force growth has slowed due to Baby Boomers retiring, declining fertility rates, and smaller increases in productivity.
    • Due to changes in long-run economic fundamentals, interest rates are likely to be lower than in the 1990s and the yield curve slope "is unlikely to return to levels typically seen in the past," he concluded.
    • Previously: Kudlow wants Fed to cut interest rates by 50 basis points: Axios (March 29)

    Bank of America commits $300B to low-carbon, sustainable business

    • Bank of America (NYSE:BAC) says it will mobilize an additional $300B in capital by 2030 through its Environmental Business Initiative.
    • Through lending, investing, capital raising, advisory services, and developing financing solutions, the commitment aims to drive innovation and help accelerate the transition to a low-carbon, sustainable economy.
    • Says the commitment won't affect corporate expenses.
    • The initiative includes such things as underwriting green bonds, renewable energy tax equity financing, and helping clean energy businesses tap global markets to fund sustainable projects.
    • SoftBank (OTCPK:SFTBY) is looking for some $15B more for its massive Vision Fund tech investing vehicle, and it's in early talks for a second Vision Fund, Bloomberg reports.
    • The first $100B Vision Fund has invested more than $70B in tech firms (including start-ups in cancer detection, construction, dog walking, indoor farming, ride-hailing, satellites and window glass), and SoftBank wants to keep up that investing while holding enough to keep buying more shares in existing portfolio companies.
    • New funding could come in a number of ways, including capital raises, persuading state backers in Saudi Arabia and Abu Dhabi to waive debt repayments or taking out more loans.
    • A second Vision Fund — SoftBank's Masayoshi Son has said he wants to start one every 2-3 years — would probably draw from a wider investing pool after heavy Saudi backing for the first one.

    • In his annual letter to shareholders, JPMorgan Chase (NYSE:JPM) CEO Jamie Dimon calls formortgage reform, saying that reducing "onerous and unnecessary origination and servicing requirements" and " opening up the securitization markets for safe loans" will improve the cost and availability of mortgages to consumers.
    • As a result, "we are intensely reviewing our role in originating, servicing and holding mortgages. The odds are increasing that we will need to materially change our mortgage strategy going forward."
    • He also addresses the next downturn, whenever that turns out to be. "We are prepared for — though we are not predicting — a recession," Dimon writes.
    • "The next recession may not resemble prior recessions. Next time, the cause may be just the cumulative effect of negative factors – the proverbial last straw on the camel’s back."
    • Still, he says the firm manages its business knowing there are cycles and to deal with that will continue serve clients, invest in technology, mitigate risk, and seek new ways to grow.
    • White House adviser Larry Kudlow says Pres. Trump will soon issue an executive orderintended to open the door for more natural gas pipelines and exports of liquefied natural gas, pushing back against states such as including New York that have blocked interstate natural gas pipelines.
    • New York in recent years has blocked the construction of several pipelines that would transport gas from the Marcellus shale in Pennsylvania to New England, including Williams' (NYSE:WMB) Constitution and Northeast Supply Enhancement and National Fuel Gas's (NYSE:NFG) Northern Access.
    • It is not clear how a new executive order would overrule the authority of states to rule on pipelines.
    • Meanwhile, the Federal Energy Regulatory Commission earlier this week denied New York's request to rehear the agency's 2018 decision that New York regulators had waived their right to decide on a water quality certification for NFG's Northern Access project because the state waited too long; WMB has made a similar argument in support of its Constitution pipeline

    • Liquefied natural gas will become a big part of China-U.S. trade once tensions are resolved between the countries, a senior Cnooc (NYSE:CEO) VP Li Hui says at the LNG2019 conference in Shanghai.
    • China already is the world’s second largest LNG buyer after Japan, and Li believes LNG will continue to dominate China’s natural gas imports, which already accounted for 60% of its gas imports last year.
    • China’s LNG imports could double from current levels to reach 110B cm by 2025, driven by a stringent environmental policy and an accelerated restructuring of the country’s energy mix, a China National Petroleum (NYSE:PTR) exec tells the conference.
    • Sinopec (NYSE:SNP) reportedly is ready to sign a 20-year LNG supply deal with Cheniere Energy (NYSEMKT:LNG) once the two countries end their trade dispute.
    • The prospect of reduced global supply and improved demand for iron ore in China is being misread by investors, according to Liberum Capital, which reiterates Sell ratings on BHP, Rio Tinto (NYSE:RIO) and Anglo American (OTCQX:AAUKFOTCPK:AAUKY).
    • The firm acknowledges the supply impact from Vale's tailings dam tragedy and recent optimistic data around the manufacturing economy in China, but "investors should be careful of extrapolating these inputs into a bullish view in the face of continued weakness in Chinese property construction, the main driver of steel demand and the iron ore price, where we see few signs of a recovery in the near-term."
    • Also, Goldman Sachs recommends investors pocket gains in iron ore after the price hit $93.10/ton yesterday, saying that while the iron ore market remains tight and prices could go higher from here, the surge presents an opportunity for investors to take profit.
    • The Federal Aviation Administration says it is forming a team of experts with international aviation authorities and NASA to review the safety of the Boeing (NYSE:BA) 737 MAX jets.
    • The review, to be chaired by former National Transportation Safety Board chairman Christopher Hart, will evaluate the MCAS automated flight control system that may have caused the two fatal crashes of the MAX jets since October.
    • An FAA official says the review is independent of the agency’s timetable for deciding when to allow the 737 MAX back into service.
    • Ford (NYSE:F) reports Q1 U.S. sales were down 1.6% to 590,429 units. The automaker saw a smaller drop for the quarter than either GM (-7%) or Fiat Chrysler (-3%).
    • Ford brand sales were down 2.1% during the quarter and Lincoln brand sales rose 11.2%.
    • Car sales -23.7% to 98,265 units. Fusion sales -3.5% to 41,683 units.
    • SUV sales +5.0% to 213,086 units. Explorer sale -1.5% to 53,306 units.
    • Truck sales +4.1% to 278,898 units. F-Series sales +0.2 to 214,611 units.
    • Sales update from Ford management: "First quarter 2019 sales were solid for Ford. Our winning portfolio continues to deliver. F-Series expanded our leadership position while others slugged it out for second place. We have a close connection with our customers, allowing us to deliver what they need in their trucks. It can also be seen in our record sales of Ford SUVs as well as Lincoln’s significant growth."
    • The respectable quarter by Ford is another indication of the "piecemeal progress" described by Morgan Stanley's Adam Jonas earlier this week that is ever-so-slowly drawing the attention of investors.
    • Previously: Investors kick the tires on Ford (April 1)
    • Shares of Ford are up 0.33% to $9.16.
    • Q1 deliveries of about 63K vehicles – roughly 51K Model 3 and 12K Model S and X – were down 31% from Q4, and well south of analyst hopes for 73.5K. About 77.1K vehicles were produced in Q1.
    • Tesla (NASDAQ:TSLA) takes note of challenges encountered with bringing the Model 3 to Europe and China for the first time, and expects Q1 net income to be aversely impacted.
    • Prior guidance of 360K-400K in deliveries for all 2019 is reaffirmed.
    • Source: Press Release
    • That's the title of a note this morning from Morgan Stanley's Adam Jonas, and likely the question many Tesla (NASDAQ:TSLA) shareholders are asking themselves. Jonas's comments:
    • "We felt the No.1 2019 determinant for TSLA's share price was if it could prove to the market it can be self-funding on a sustainable basis."
    • Given the focus on Tesla’s cashflow and liquidity, many expected Tesla to calm the market by disclosing its cash number. But Tesla only said it has ‘sufficient’ cash on hand, "leaving bears to continue to question the firm’s financial strength and potentially adding to uncertainty with customers and suppliers."
    • The biggest surprise was the "deteriorating mix," with S and X volume 40% below forecast.
    • Jonas's Q1 cash-burn estimate of $0.9B "has downside risk."
    • Bulls will point to TSLA's reiteration of the 360K and 400K full-year unit target, and a strong exit rate of deliveries at the end of Q1.
    • Before results, TSLA announced an event focusing on Autopilot. Historically, these have been sell-the-news events, Jonas says.
    • For those keeping score, Street consensus was 75K deliveries; Jonas's estimate was 67.9K. And Seeking Alpha's own Anton Walhman had deliveries at 65K.

    • A key part of Warren Buffett's strategy is to buy well-run businesses and let the units' management run them without interference. And that's how it's worked. For decades, Berkshire Hathaway (NYSE:BRK.B) subsidiaries have run independently of each other.
    • But the company has evolved to become more collaborative, the Wall Street Journal reports. Starting this year, Berkshire's CEOs started meeting yearly in Omaha to discuss common challenges, such as cybersecurity and hiring.
    • Berkshire is comprised of a broad range of businesses, including insurance companies, furniture companies, homebuilder Clayton Homes, kitchenware purveyor Pampered Chef, Benjamin Moore paints, and real-estate brokerage firm HomeServices of America, among others.
    • In 2013, 37 attendees from 24 Berkshire businesses met for a sustainability summit; last year that figure grew to 140 people from over 40 Berkshire companies.
    • Formal networks have also formed around functions, including CFOs, human resources, and cybersecurity.
    • And out of the CFO gatherings, a purchasing group was created to take advantage of Berkshire Hathaway's scale in negotiating with suppliers.
    • One area that likely to become more centralized is health care. Berkshire is part of a health-care joint venture with JPMorgan Chase and Amazon that aims to reduce health-care costs at the three companies.
    • Target (NYSE:TGT) boosts the minimum wage for workers to $13 an hour for all new and current employees as part of an incremental plan to hit $15 per hour by the end of 2020. The $13 mark is right smack in the middle of the minimum wages at Amazon ($15/hr) and Walmart ($11).
    • The company maintains that its investments in wages and development resources has helped it attract new employees. It also hasn't wrecked earnings as some analysts about a year ago were suggesting, with shares of TGT up 10% over the last 52 weeks.

    WTF?  Ocean Power gives back gains after $15M public offering

    • Up one day, down another. After soaring 55% in yesterday's session due to a contract announcement, Ocean Power (NASDAQ:OPTT) is pointing to opening losses of 61%.
    • The company is selling 4.29M shares at $3.50 in a public offering, with gross proceeds of approximately $15M before deducting underwriting discounts, commissions and other offering expenses.
    • The common warrants will have an exercise price of $3.85 and pre-funded warrants will have a purchase price of $3.49 per share. The offering is expected to close on April 8.

    Micron -3% on downgrade after stock rally

    • Morgan Stanley downgrades Micron (NASDAQ:MU) from Equal-Weight to Underweight citing the recent share gains and the belief that too much optimism surrounds the semi sector.
    • Micron shares have gained 51% since the December low, throwing off the risk/reward balance.
    • The firm says the "growing consensus" that earnings are near the bottom "seems much too optimistic given producer inventories climbing to 25-year highs."
    • Morgan Stanley sees DRAM as oversupplied through the rest of the year with NAND facing "difficult conditions" despite being closer to the bottom.
    • Price target: $32.
    • Micron shares are down 3.2% pre-market to $42.50.

    Goldman gets back in Disney's corner with Fox deal done

    • Walt Disney (NYSE:DIS) is up 0.6% premarket after Goldman Sachs reinstated the company at Buy: It's "the dawn of a new era" after the company bought the media assets of Twenty-First Century Fox.
    • Goldman advised on that deal, and had suspended its previous Buy rating in December 2017.
    • Now the impending launch of Disney Plus marks a "momentous" shift in content monetization, though investors will need to be patient with some heavy lifting around the launch, suggests Drew Borst. Meanwhile the market may be so focused on Fox and the streaming launch that it's overlooking the benefit of growth in the Parks, film and consumer products businesses, he writes. (h/t Bloomberg)
    • Borst has a price target of $142, implying 26.2% upside from a current $112.52.

    Twitter bull boosts target

    • With the stock's recent gains pushing past his $33 price target, Guggenheim's Michael Morris, raises to $41, suggesting more than another 20% upside.
    • He praises Twitter's (NYSE:TWTR) steps on fake accounts and trolls as having "strengthened the core user experience."
    • Shares are up 0.2% premarket to $34.45.
    • Facebook (NASDAQ:FB) is up 1.6% premarket after an upgrade to Buy at Guggenheim, from Neutral.
    • The firm's stance comes for a reason unsurprising to bulls: It thinks investors will continue with patience for increasing risk from privacy issues that continue to show up in headlines.
    • The firm's Michael Morris boosted his price target to $200 from $175, implying 15.2% upside.
    • Previously: Bloomberg: Facebook user records stored publicly on AWS servers (Apr. 03 2019)

     

    • Apple (NASDAQ:AAPLcuts the U.S. price for its HomePod smart speaker from $349 to $299, a nearly 15% drop.
    • HomePod prices were also cut in other countries with discounts as high as 18% in some parts of Europe and Asia.
    • Rumors suggest Apple is working on a second, lower-cost HomePod model to better compete with market dominators Amazon and Google.
    • In India, Apple drops iPhone XR prices with the 64GB model discounted by at least $259 with a credit card cashback campaign, according to Reuters sources.
    • Sources say the in-store discounts are a short-term promotional offer.
    • Apple discounted iPhone prices in China after regional weakness dinged the Q1 results. The tech giant also boosted the trade-in value of iPhones in a bid to shorten the growing upgrade cycle.
    • Apple (NASDAQ:AAPLadds M&A head Adrian Perica to its exec leadership page online, suggesting a growing focus on new deals.
    • The listing says Perica now reports directly to CEO Tim Cook. CFO Luca Maestri previously oversaw M&A.
    • Perica joined Apple in 2009 and was involved with the 2014 acquisition of Beats and the investment in Chinese ride-hail company Didi Chuxing.

  10. OPTT/Jabob – Only half out, now going to DD to get back to where we were at lower cost (net $0 now, will be $1.60 if DD).  The company insanely followed through with a planned cash raise at a crazy-low price.  Must have somehow been contracted and they can't get out of it.  This is a crazy penny stock and very speculative but I like the technology a lot (like LQMT).  


  11. Actually, I bought today at $3.21… :)


  12. do you thinks wti is due to fail 62 phil


  13. Phil, anyone,

    Does anybody recommend a VPN for use in travelling on a cruise to the Baltics, Scandinavia, and St. Petersburg. Also going to pay for AT&T passport service for Cell connection. Any other options, please advise. Thanks as always


  14. Oil/Tommy – There's a lot of stuff pushing oil higher, one bad US inventory report isn't going to cut it.  I'm in stay away mode at the moment, though I do like /NG long (see news above) on the /NGV19 contracts.  Oil will be a good short after the July holiday but we're already gearing up for Easter (19th) and then Memorial Day (end of May) so plenty of optimistic oil traders around.  Keep in mind we were much higher last year.  

    You have OPEC cuts which is fundamentally bullish for oil vs the record US production (fundamentally bearish) and then there's sanctions and trade wars skewing things – makes it very tough to call.  

    With /NG, China has already indicated they will buy lots of LNG and LNG exports are going up and up and up and production in the basins is unlikely to keep up and, even if it does, it will take quite a while to build pipelines to get it out.  So lots of good reasons /NG should be more now than it was last year.  

    People give UNG a hard time but it hasn't lost that much ground to /NG over the year so I like it for an OOP trade and our time-frame is past hurricane season so let's do Jans:

    • Sell 5 UNG Jan (2020) $23 puts for $2.25 ($1,125) 
    • Buy 10 UNG Jan $20 calls at $4.25 ($4,250) 
    • Sell 10 UNG Jan $25 calls for $1.90 ($1,900)

    That's net $1,225 on the $5,000 spread that's half in the money with a $3,775 (308%) upside potential at $25 in just 7 months.  


  15. Phil,

    Is there a new trade for GM given it is still in the middle of a channel?  And what about a new one for DIS now that the Fox deal is done?

    I must have missed that Maddie goes to UMass Amherst.  I have a good friend who has a daughter making her decision by May 1 between Rutgers (my Alum) and Amherst.


  16. How is Boeing up $12 today when all the reports that are coming out about the crashes are negative for them????  Somebody propping this thing up………….


  17. @ultyguy…….The 2 crashes involving BA planes have been attributed to a software glitch, not to any inherent problem with the planes.  The software problem gets corrected and  they continue to manufacture and sell good planes.  I'm long BA.  


  18. GM/Rperi – We make these great trades because we buy them at the bottom of the channel – not the middle.  F is cheaper than GM at the moment and showing signs of growth (see news above).  At $9.26, they pay a lovely 0.60 dividend (6.66%) and you can buy the stock and sell the 2021 $7 calls for $2.45 so your premium (0.20) is more than the dividend (0.15), which means even if you are called away, you still get an extra 0.05 that Q.  If you pair that with the short 2021 $10 puts for $2.10 it drops your net to $4.71/7.35 (if assigned 2x), which would make the dividend close to 10% if assigned but, of course, the only reason you're likely to be assigned is the dividend is in jeopardy.  

    Anyway, so owning the stock is a great thing or you can just sell 20 of the 2021 $10 puts for $2.10 ($4,200) and buy 40 of the 2021 $7 ($2.45)/10 (0.90) bull call spreads for $1.55 ($6,200) and that's net $2,000 on the $12,000 spread that's $9,000 in the money to start with a $10,000 (500%) upside potential.  Not bad for a little auto-play…

    Rutgers/Rperi – I lived in New Brunswick for a bit after college so very familiar with Rutgers and Cluck-U Chicken.  I do love Amherst though, such a great place to go to college.  

    DIS/Rperi – A little expensive at $114.20 after Dumbo flop but many more movies coming this year that should do well.  The parks are packed and Star Wars sections are opening up so should be a good year for them.  Since I'm happy to own them at $100, you could sell the 2021 $100 puts for $6.65 and consider it free money (as long as you REALLY want to own the stock) and then go for the $100 ($23)/120 ($11.70) bull call spreads at $11.30 for net $4.65 on the $20 spread which I consider nice but not great and DIS is channely enough that I only like to play when it's great.

    BA/Ult – People be crazy.  Even if they "fix" the software, one more crash and there will be all sorts of chaos so too risky going forward – especially at $400!  

    BA/Iflan – I disagree as the software is there to cover up the design flaw they caused by moving the engines forward, which causes the plane to pitch up.  It would be a major re-design to change that and that's the way they saved the fuel so there would be no reason for the plane to exist if they had to move the engines so I'm sure a lot of lawsuits will reveal BA chose profits over lives along the way on these planes and that can get very ugly for them.  If I were an airline who was late in the line anyway to get my 737s, I'd strongly consider switching to Airbus.  


  19. Nothing like a good 'ol software fix for a design flaw… :(  


  20. Well, have to go catch my plane, will check in from the airport.

    Nas coming down nicely now but I'll have to take 30 points and run as I don't want to risk leaving them open.  

    /YM is the lagger at the moment, you can play a cross below 26,300 with tight stops above. 

    /CL a fun short below the $62.50 line as long as /BZ doesn't pop $70.

    Yet another chance long /SI at $15. 


  21. Volume is anemic again!


  22. Does anyone have any idea what is going on regarding M today.  It is up $1.22.  So far I have not found any particular news to explain the sharp rise.


  23. VPN / jasu1 – I use Nord VPN with generally good results. They are based out of Europe so probably a good fit given your destination. One tip is select the P2P connection on your phone, don't let the app pick a server or you'll have lots of sites and apps that don't work, I got this from their tech support.


  24. jasu1 

     I use Express VPN because they have good service in the  USA and Asia, Philippines with good results


  25. Thanks, Phil.  Cluck-u and Stuff Yer Face Amen!

    I am already in on Ford as you have been banging on the table with that one for a while.  I closed out a profitable DIS 85/110 spread in Jan just looking for a few new long term trades.

    Have a great trip~    


  26. SMAR / Pharm – quite a ride today, 10% swing on an upgrade. I didn't stop out at 38 like you suggested, watching and waiting, I like the company.


  27. BA / Design Flaw

    Note: most of what I've read about this problem is here at PSW.  I haven't done too much independent reading on it so this is my opinion of what I've read here.

    As far as using software to handle a hardware change, that is a standard practice in the engineering world.  There are certain things best accomplished from a hardware standpoint but, in my mind, this seems like a worthwhile trade-off to make a hardware change that improves the performance of the product while expecting your software team to implement the controls to benefit from it.  To me, this problem comes across as a failure of the software team to properly implement the control system as opposed to a hardware failure.

    Where I do see a hardware problem is the failure of the system to properly report the angle of ascent and the lack of redundancy to make sure that there is no single point of failure can take down the plane.  Otherwise, this is really a software fix for a software problem, not a software fix for a hardware problem.

    Source: I am a computer engineer.  Primarily a hardware engineer but I do a ton of software work as well.


  28. BA / JPH – The lack of redundancy is actually troubling in an airplane… I guess they can't make every sensor redundant, but in this case, it might have been a mistake.


  29. VPN / Jasu – I also have good experience with Nord VPN although some servers were slow. They were one of the only VPN I could use for Netflix although that's changing it seems.

    FYI – While in St Petersburg, VPN providers might have to comply with Russian censorship laws and might still ban access to some sites or leak you data to the government. It's a bit complicated – my colleagues there use VPN all the time to get access to LinkedIn for example, I would just be careful what I browse while there…


  30. Phil will PSW Investments have any interest in the MJ fund?


  31. I see the markets recovered, as usual.

    My airport time was way more hectic than I thought and I went straight to a meeting – finally checked in just now.

    M/John – Same as everything, China Deal fever.  M gets a LOT of stuff from China, tariffs suck for them.  That's why I just re-picked them – just self-inflicted wounds that will go away very quickly (one day). 

    BA/JPH – Thanks for that perspective.  I just don't find that acceptable with lives at stake.  Especially a fix that relies on a single sensor and seems to be poorly written.

    PSWI/Tangled – I don't do anything anymore that isn't through PSWI.  PSWI will, as we do with the Capital Ideas Hedge Fund, have a stake in the management company and, down the road, may also invest in the MJ Fund.  







  32. Trump Says He Wants Herman Cain, Former Pizza Executive, for Fed Board



  33. SPY volume. 45,997,505.  





  34. India weighs ban on popular online game after deaths


  35. Winning the War on Poverty


  36. 58,536,039  SPY  VOLUME.  Nothing supporting this move up. Overall market volume is down. Not a sign of a market that wants to break out on the upside.