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Will We Hold It Wednesday – Nasdaq 8,000 Edition

nasdaq composite history chart8,000 on the Nasdaq Composite!

5,150 was the top in 2,000 before the great crash took it back to 1,200, a 76% drop which took many years to recover from.  In fact, we only got back to 5,000 in 2016 but here we are, less than 3 years later, up another 3,000 (60%) and no, I don't think this time is like 1999 when people were throwing money at terrible stocks but there are still plenty of stocks people are throwing unrealistic amounts of money at and there WILL be a reckoning – one day.

We did consolidate for about a year at the 5,000 line, which means roughly half the people trading thought stocks should be higher and half thought they should be lower but then Trump got elected and promises were made (not kept, just made) and we've been off to the races ever since. 

If we want to determine whether 8,000 is too much for the Composite, we should look at the top 10 holdings, which make up a whopping 40% of the indexes weight while the other 2,629 components fight for the other 60%.  The simple question we can ask here is are these companies worth 60% more than they were in 2016 and, to do that, we can simply look at earnings and revenues because we should expect some real changes, right?

  • While Apple (AAPL) gets a lot of attention as it nears $1Tn in valuation, Microsoft (MSFT) has quietely gotten there without the drama and is "worth" $927Bn at $120.  Revenues have gone from $92Bn to $118Bn (up 28%) while profits in 2016 were $20.5Bn and, last year, they were $16.5Bn but that was due to write-offs and they should do better than $34Bn in 2019 and that's up 70% so yes, MSFT is worth much more than in 2016 but I'm not sure I want to pay $1,000Bn for "just" $34Bn in earnings (p/e 29.5) so I would give this one a B- grade.  
  • AAPL, of course, is my favorite company on the planet and $200/share is $943Bn in market cap but AAPL earned $59.5Bn last year (tax advantaged) and should make $53Bn this year for a p/e of 17.8 – still quite reasonable and a real bargain compared to MSFT.  In 2016, AAPL had $215.6Bn in revenues vs $265.5Bn this year and that's just 23% revenue growth while 2016 profits were $45.6Bn and last year was $59.5Bn so $14Bn more is 30%, not 60%.  I guess you can still say AAPL is undervalued but even I worry about paying 20x earnings for an electronics manufacturer which is still subject to market forces and cycles so AAPL gets a C for justifying Nasdaq gains though I'll add a + as I don't see any reason they should correct much from here.  

  • Amazon (AMZN) has taken over the Universe – or so they would have you believe but, in fact, $232.8Bn in revenues last year were less than AAPL and not even half of Walmart's (WMT) $514Bn and WMT is about 10% of all retail so AMZN is a bit under 5% – a force to be reckoned with but far from dominating retail.  Growth, on the other hand, has been astounding – with 2016 sales at $136Bn so up $97Bn is 71% – right in line with the Nasdaq.  Profits have exploded from $2.4Bn to $10Bn so up 316% so AMZN would get an A for justifying the Nasdaq's gains EXCEPT they are only 10% shy of $1Tn at $1,863/share so they are trading at 90 times earnings.  Of course an optimist would say that, in 2016 at $500 ($241Bn) there were priced at 105x earnings so getting a bit more reasonable but still unreasonable so I'll have to give them a B – and even that is reluctant as I think 90x is ridiculous.
  • Google (GOOG) has been on quite a tear since 2016, when they made $19.5Bn on $90.3Bn in sales.  Last year, revenues were $136.8Bn (up 51%) and profits were $30.7Bn (up 57%) so good steady growth and, at $1,227, GOOG is "only" $850Bn so 27.7 times growing earnings is actually quite fair though not "too cheap" so I can't give them an A but A- seems fair for them.

  • Facebook (FB) has been taking a lot of crap this year but that's a result of thier success with roughly half the planet using their website.  At $179, FB is only a $511Bn company so we're out of the Trillion Dollar Club now but FB's 2016 Revenues were $27.6Bn and profits were $10.2Bn while last year they hit $55.8Bn (up 102%) with $22.1Bn in profits (up 117%) and keep in mind we're talking 2018 so just 2017 in between means up 100% in two years.  A+ for FB though you would think they will have to colonize another planet as they are running out of new customers on this one!  
  • Google (GOOGL) again?  What kind of BS is that?  Don't be fooled, it's the same company being counted twice just because there are different classes of shares – that's idiotic.  I'm dropping them to B for cheating! 
  • Intel (INTC) at $254Bn at $57 has more than doubled their earnings from $9.6Bn in 2016 to $21Bn last year but revenues were $59.4Bn and now $70.8Bn (up 19%).  That's because 42% of their income now comes from very profitable Data Centers and look for INTC to pop today as they announced they are getting out of low-margin modem production now that QCOM and AAPL have kissed and made up as there's no point in INTC bothering if they are going to be frozen out of half the market right off the bat.  You don't need to double revenues to double earnings – that puts them in the "A" category as it helps justify a lot of forward-looking enthusiasm in tech.

  • Cisco (CSCO) is another one of my favorite companies with a $250Bn valuation at $57 on $49Bn in sales and $13Bn in earnings vs 2016s $49Bn in sales and $10.7Bn in profits (up 21.5%) so no new revenues and only a small profit improvement and a 19.2x p/e ratio is why I don't bang the table for them anymore as they've gone from $30 to $57 (up 90%) in a bit of irrational exuberance.  D for CSCO!
  • Comcast (CMCSA) – Are there any other cable companies anymore?  All I know is I have XFinity WiFi and it seems to work almost everywhere I travel.  $42/share is a $187Bn valuation but, as you'd expect, revenue and profit growth don't justify the stocks rise from $30 (40%) in two years.  2016 Revenues were $80.7Bn and 2018 were $94.5Bn so up 17% on that side with earnings going from $8.7Bn to $11.7Bn, a respectable 34% but not enough to make me think the Nasdaq is full of bargains but a p/e of 16 is not outrageous so let's give them a B- for the effort. 

  • Pepsi (PEP) is hardly what you think of when thinking Nasdaq stocks but it's in there at $172Bn at $122/share and they seem impressive at first glance, with profits soaring from $6.3Bn to $12.5Bn so call it 100% but it's all tax breaks and one-time gains that won't be repeated.  Realistically, I'd say $8Bn is fair going forward and that's up 30% while revenues went from $63Bn to $64.6Bn – barely a gain at all.  While I'm tempted to give PEP a C for this effort, they are reasonably priced at 20x current earnings and, more to the point, they illustrate the way in which many companies are simply more effient now than they were just two years ago and able to generate more profits per Dollar in revenue – and that bodes well for the whole index as we're in the very early stages of an automation revolution.  We'll give them a B as they are not a tech stock but have still been able to make great improvements.  

Well I'm very surprised as we're in B-B+ territory for the Top 10 so maybe we've been too harsh on the Nasdaq as it's climbed and climbed and climbed and climbed?  While I don't think things are much of a bargain at this level and we're certainly cautious as we saw how fast a 22% correction hit us in the Fall, I guess things aren't all that over-priced either and we were simply a bit too pessimistic about our prospects in 2016.  

Of course, another 20% move up from here is going to need a lot more justification – but let's not just write it off as, clearly, the top 10 (9 really) stocks of the Nasdaq Composite, that make up 40% of the entire index, are able to justify the indexes 60% gain over the past couple of years.  

 


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  1. Good Morning, All!

    Join us for our webinar at 1pm!

    https://attendee.gotowebinar.com/register/8675634225013001229


  2. Added a 40% line for the Nasdaq! Time to move up these lines or signs of a correction?


  3. Good Morning!


  4. /KC taking it on the chin again this morning


  5. QCOM – En fuego !


  6. Good morning! 

    Now IBM taking a big 5% hit this morning, down to $137 but good time to get in as the report was generally fine.  

    /NGV19 down to $2.695 so I added on, now 3 long at $2.7516.  

    /KC getting clobbered again.  /KCZ19 is Dec and those are down to 97.2 so I like those now.  Front-month testing 90.

    Big Chart/StJ – I'd say we can bump up the Dow, S&P and Nas 20% on the Must Holds – I doubt we go much below that anymore so the -10% lines should hold in a sell-off.  

    Indexes turning sharply lower at the open. 

    As the markets are closed Friday – I am going to try to get the STP and OOP reviews done today but will be tricky with the Webinar.  Then tomorrow will be LTP day.


  7. IBM stock of the year remember still my comments to one of the members April 146 caller? Never heard from him again. I told him I would still stick to my 141 and 140????? Possible a putter would be called for today!


  8. /NG making close to multi-year lows it seems!


  9. Lines / Phil – I'll update the charts and have you review them.


  10. IBM try to get some more Jan 21 125 putters for 11.50 a shot


  11. Looks like Apple might not have that much of a choice but to settle with QCOM:

    https://arstechnica.com/gadgets/2019/04/intel-quits-5g-modem-business-hours-after-apple-settles-with-qualcomm/

    Still, it's not clear whether Apple's settlement with Qualcomm forced Intel to leave the 5G market or whether Intel's impending exit from the 5G market forced Apple to settle with Qualcomm. It's likely that the causation ran a bit in both directions.

    I think that Intel was struggling to match QCOM and AAPL knew that they would not be able to provide 5G without QCOM so there you go. Everything settled in one day!


  12. I am sorry I closed my QCOM position earlier but I have been bullish on them for a long time…





  13. Truck drivers see orders, miles fall in latest U.S. slowdown signal


  14. STJ – I remember that you were.


  15. The Truth About Dentistry


  16. Phil/GILD

    Good morning and hello!

    What do you think and how should one get into this sleeping acquirer?

    Matter of time before they announce a buyout of a pipeline enhancer.


  17. IBM/Yodi – Not to worry, back to $141 already now that the suckers have cleared out. 

    /NG/StJ – So strange to see inventories going down and down with prices.  

    INTC/StJ – Well INTC getting out would have forced AAPL to settle (or have no modems).  Carts and horses…  As to QCOM – you're the one that got me to go long!  

    GILD/Maya – Just because they are making acquisitions doesn't mean they are good ones.   Certainly $63.50 ($81Bn) is very reasonable if they hit their $8.5Bn in earnings projected this year and next.  Q2 and Q3 were $2Bn(ish) but last Q was about $0, so they are kind of all over the place and earnings are not until May 2nd, which I'd rather see before I got too heavy on them.

    Year End 31st Dec 2013 2014 2015 2016 2017 2018 2019E 2020E CAGR / Avg
    Revenue $m 11,202 24,890 32,639 30,390 26,107 22,127 21,920 22,512 +14.6%
    Operating Profit $m 4,524 15,265 22,193 17,633 14,124 8,315     +12.9%
    Net Profit $m 3,075 12,101 18,108 13,501 4,628 5,455 8,480 8,709 +12.1%
    EPS Reported $ 1.81 7.35 11.9 9.94 7.67 4.17     +18.1%
    EPS Normalised $ 1.84 7.40 11.9 10.4 7.83 4.20 6.60 6.91 +17.9%
    EPS Growth % +12.6 +301.7 +60.7 -12.4 -24.9 -46.3 +57.0 +4.75  
    PE Ratio x           15.4 9.78 9.34  
    PEG x           0.27 2.06 7.72
    Profitability

    Last earnings/guidance was not taken all that well so they are drifting along in this channel and we are only lucky in the LTP that we sold those $80 calls near the top on 9/26 – or this would be an unpleasant position for us.

    GILD Short Call 2021 15-JAN 80.00 CALL [GILD @ $64.78 $-0.66] -25 9/26/2018 (640) $-28,750 $11.50 $-7.93 $-6.75     $3.58 - $19,813 68.9% $-8,938
    GILD Short Put 2021 15-JAN 67.50 PUT [GILD @ $64.78 $-0.66] -15 9/26/2018 (640) $-12,225 $8.15 $2.80     $10.95 - $-4,200 -34.4% $-16,425
    GILD Long Call 2021 15-JAN 55.00 CALL [GILD @ $64.78 $-0.66] 25 1/10/2019 (640) $43,375 $17.35 $-3.78     $13.58 $-0.53 $-9,438 -21.8% $33,93

    As a new play on GILD, I'd sell the 2021 $60 puts for $7.70, maybe 5 for $3,850 and then keep an eye on 10 2021 $50 ($16.25)/65 ($7.80) bull call spreads at $8.45 ($8,450) in hopes of doing better and the net delta on the spread is 0.25 so a $4 drop would get you a $1 less spread so net $7.75 would be a good price top pay (as $60 was never hit in Dec) and if you net in for $8 ($8,000) or less it's net $4,150 on the $15,000 spread that only requires GILD to drift along from here.  Of course, if earnings suck on May 2 – you better be EXCITED to double down as they test $50 and this position would be down about $8,000 at that point…


  18. SIG- what is your current take on Signet?


  19. Short-Term Portfolio Review (STP): $704,785 is DOWN $36,413 since our 3/6 review.  We haven't been liking this rally but, rather than bail in the LTP (which is up a ridiculous $195,985 since our 3/13 review), we stuck with the plan and took some of our LTP's paper gains and bought more downside protection to lock them in.  As we only "spent" $36,413 (18.5%) we certainly should be deploying at least another $20,000 on our hedges – if we intend to let these crazy LTP profits ride – which I have mixed feelings about.  

    Keep in mind that the LTP was $1.25M on 3/13 and today, on 4/17, those positions are up 16% in a month – that's clearly ridiculous and that's why we HAVE to spend money on more hedges – just in case reality ever rears its ugly head.  My review of the Nasdaq this morning leads me to be slightly more inclined to continue with our FOMO portfolio but if you started with $500,000 last Jan and now you are at $1.45M – it's really not the kind of gain you should be leaving on the table!  

    As a very fortunate bonus, we have had several very nice sell-offs which gave us MASSIVE (600%) gains in the STP along the way – and then the LTP recovered so we never needed that cash anyway – so it's all sitting in the STP, with $582,870 in CASH!!! and only using $316,500 in margin.  We could be doing a lot more with this portfolio but, with the LTP paying off like a broken slot machine – I prefer to be ready to take action at a moment's notice and the LTP is way to big to quickly unwind – so it's all about STP flexibility to keep us out of trouble.  

    • AAPL – Not at all worried and $11,450 still coming.
    • CELG – Also not worried with $1,093 still coming.  
    • DIS – Almost pointless but we don't need the margin and not in the least bit worried so we'll wait for our last $540.
    • TWTR – Also not worried with $2,088 coming to us. 
    • TNA – Let's roll the 40 Jan $55 puts at $6.75 to 40 Jan $65 puts are $10.75 for a net $4 roll ($16,000).  That widens our spread and pays us $40,000 if they just go back to $55.  So we're buying $26,000 more protection.  

    • SQQQ – We bought 200 more $10s at $1.80 and already they are $1 out of the money.  The problem is the next roll is the Jan $5s at $4.20 and that's way too much so I'm considering rolling to the 2021 $8 calls at $2.90 (+1.55 = $62,000) and selling 200 Jan 2020 $12 calls for $1 ($20,000) and then we're $40,000 in the money and we get $120,000 at $12 before we have to roll the short calls (only 1/2 cover) and the 2021 $25s are $1 so 400 x $18 is $720,000 – that's pretty good protection – and it lasts two years.  So I guess we'll do it – spend net $42,000 to go $40,000 in the money and add one year of protection and we'll count on the LTP to do better than that if things keep going up.  Realistically, if the Nas drops 20%, SQQQ goes up 60% to just $14.40 so what we really have here is $6.40 x 400 in protection ($256,000) on anything but a catastrophic drop.

    • CAT – Good thing we have some longs to offset the losses on the hedges.  We should look for more.
    • MJ – The short April $37 calls will go worthless and we'll stay uncovered into earnings.  

    • TZA – Our other big hedge and in the money so no reason to change things now.  1.6% of $9.22 is the same potential $16.50 which pays $9.50 x 200 = $180,000 protection here.  

    So we're spending more than we intended – almost 1/3 of our paper gains but now we have a very solid $450,000 worth of protection if the markets pull back 20% – that makes me feel better about letting the LTP positions ride.  


  20. Amazing performance Phil.  Kind of absurd really.  I'm looking forward for when you reset at the end of the year, so I can just mirror this 100%.



  21. Morgan Stanley's Glass upgrades DPZ, downgrades CMG ahead of next week's earnings; BofA/Merrill launches coverage on cannabis names, calls HEXO 'Top Pick.

    I believe several of us are long HEXO


  22. SIG/Pstas – They have very easy comps as they wrote their way off to massive losses last year.  They took a $496M loss last May (strange quarters) after writing down $590M so a profit was there for the taking and last Q (ended 2/2) they took a $108M loss with $330M in write-downs so I like them – eventually.  People have no patience for retail turn-arounds but I think this is a great bottom on them but all we have in the OOP is 5 short 2021 $20 puts we sold for $5.30 (still $5.30) as I'd like to see them make a profit before buying more.  

    100%/Palotay – As I pointed out yesterday, the current MTP positions are on track to make 100% over the next two years.  I don't know why people feel that a position has to be "brand new" to play it.  As usual, I often say "good for a new trade" when reviewing portfolio and those too make up a great set to build a new portfolio with.  I've been trying to demonstrate the power of compounding returns as we LEAVE OUR POSITIONS ALONE for the most part.  It's this constant chasing after the next new thing that kills most people's performance.  

    CMG/Albo – I hope he's right!  Over $650 is a big repair job in the LTP and the hedge fund – where we have short calls that really burned us.  I didn't stop out though because I think it's an absurd valuation at $19.25Bn for a FAST FOOD RESTAURANT with $5Bn in sales and $175M in profits and, even if they hit the $400M projected by fantasy enthusiasts, that's still 47.5x earnings.  At some point, you have to bet on reality.

    Year End 31st Dec 2013 2014 2015 2016 2017 2018 2019E 2020E CAGR / Avg
    Revenue $m 3,215 4,108 4,501 3,904 4,476 4,865 5,306 5,853 +8.6%
    Operating Profit $m 532.7 710.8 763.6 34.6 270.8 258.4     -13.5%
    Net Profit $m 327.4 445.4 475.6 22.9 176.3 176.6 343.9 429.2 -11.6%
    EPS Reported $ 10.5 14.1 15.1 0.77 6.17 6.08     -10.3%
    EPS Normalised $ 10.6 14.3 15.4 1.25 6.47 8.21 12.5 15.8 -5.0%
    EPS Growth % +19.9 +34.6 +7.6 -91.9 +419.5 +26.9 +52.0 +26.5  
    PE Ratio x           86.1 56.6 44.8  
    PEG x           1.66 2.14 2.34
    Profitability

    Will 4/24 earnings justify CMGs $300 (75%) jump since Dec?  If it does – I may have to fold up my tent and retire as I clearly don't understand the markets…


  23. I guess I could just liquidate my portfolio, and just match the current LTP/STP now.  I'd rather not just do the ones that are still good for a new entry, because my problem has been getting the balance right (longs vs hedges).  My plan is to match the LTP/STP exactly for awhile, so I can get a better feel for how you balance things.  


  24. Match/Palotay – I certainly wouldn't do that as I'd rather liquidate the LTP at the moment. Only FOMO is keeping us in and it's a legitimate FOMO with these monthly gains but, if there's a sharp correction, we could lose a very fast 20% in the LTP ($300K) and the hedges are now long-term, so they wouldn't really kick in and that would be very manageable starting from 180% below where we are but starting at $1.5M and blowing 20% – that's no fun.  Much easier to base the MTP and practice with that.  

    Webinar time!





  25. Not much of a dip, overall but the RUT took a hit.

    • Kroger's (KR -0.4%) self-driving grocery delivery service launched at a store in Houston today to mark the second location for the company's program.
    • Kroger is partnering with the Nuro on the service that involves self-driving Toyota Prius vehicles delivering online orders.
    • Later this spring, Kroger will have self-driving delivery options out of four stores (2 in Houston, 2 in Scottsdale, Arizona).
    • U.S. economic activity expanded at "slight-to-moderate" pace in March and early April, the Federal Reserve Board observes in its Beige Book report.
    • Contacts in reporting districts expect slight-to-modest growth in the months ahead, little changed from the last report.
    • While manufacturing activity was favorable, trade-related uncertainty is an issue in many districts.
    • Mixed consumer spending reports suggest sluggish sales for general retailers and auto dealers.
    • Agricultural conditions are still weak, with "contacts expressing concern over the impact of current and future rainfall and flooding."
    • Loan demand reports were mixed, but indicated steady growth.
    • Previously: Beige Book tells tale of slight-to-moderate economic growth (March 6)
    • Facebook (FB +0.1%) is working on its own rival voice assistant to take on Alexa, Google and Siri, CNBC says.
    • That's another project from the company's Facebook Reality Labs skunk works, according to the report.
    • Led by a team based out of Redmond, Washington, the project has been in the works since early last year, but Facebook trails a dominant lead built by Amazon.com (AMZN +0.3%) and Google (GOOG +0.7%GOOGL +0.6%), and to a smaller extent Apple (AAPL +1.8%).
    • It might fit a few places, the report notes: Facebook already offers its Portal video-chat device (currently equipped with Amazon's Alexa) as well as Oculus VR headsets.
    • ArcelorMittal (MT +3.4%) says it received approval from the European Commission for Liberty House's acquisition of the seven European steelmaking facilities MT was required to sell to fulfill its Ilva purchase.
    • The assets consist of including integrated steelworks in Romania and Czechia as well as finishing plants in Belgium, Italy, Luxembourg and North Macedonia.
    • The EC says there are no longer competition concerns, with only limited overlaps between the activities of Liberty House and the steel plants acquired.
    • Shares of Nio (NYSE:NIO) are up 4.0% amid reports that China may cut down on automobile license restrictions in major cities.
    • Sources say new subsidies for new energy vehicles could also be instituted.
    • China's National Development and Reform Commission hasn't confirmed the report.
    • Great Wall Motors (OTCPK:GWLLF) was up 9.9% today in Hong Kong and BYD (OTCPK:BYDDF) was 13.7% higher, while Dongeng Motors (OTCPK:DNFGFOTCPK:DNFGY) posted  a 6.2% gain. Geely Automobile soared 12.8%.
    • The U.S. Depart of Justice has charged 60 people, including 31 physicians, with illegally prescribing and distributing opioid painkillers. The DOJ claims that the group, which includes 53 medical professionals, are tied to ~350K prescriptions and 32M pills.
    • The operation, launched by the Trump administration last year, was conducted by the federal Appalachian Regional Prescription Opioid Strike Force.
    • Opioid-related tickers: Endo International (ENDP -5.6%); INSYS Therapeutics (INSY-5.2%); Titan Pharmaceuticals (TTNP -2.4%); Dr. Reddy's Laboratories (RDY+0.6%); Mallinckrodt (MNK -10.8%); Perrigo (PRGO -1.7%); AbbVie (ABBV -3.1%); Opiant Pharmaceuticals (OPNT +1.4%); Allergan (AGN -5.2%); Teva Pharmaceutical Industries (TEVA-3.5%); Alkermes plc (ALKS -3.9%); Amphastar Pharmaceuticals (AMPH -4.2%); Cassava Sciences (SAVA +1.8%); BioDelivery Sciences (BDSI -6%); Assertio Therapeutics (ASRT-7.6%); Nektar Therapeutics (NKTR -5.3%)

    • The Atlanta Fed's model for Q1 real GDP growth ticks up to 2.4% from 2.3% on April 8.
    • The contribution of net exports increased to 0.50 percentage points from 0.20 pps and Q1 real nonresidential equipment investment growth fell to 2.1% from 4.8%.

    • The U.S. and China tentatively schedule a new round of talks with the hopes that they'll lead to a signing ceremony in late May or early June, the Wall Street Journal reports, citing a person familiar with the situation.
    • Under the draft, U.S. Trade Representative would travel to Beijing the week of April 29 and Chinese representative Liu He would come to Washington the week of May 6.
    • If senior officials reach an agreement in the next couple of weeks, a presidential signing ceremony could occur as soon as Memorial Day, according to the person.
    • Markets don't seem to care. Nasdaq and the Dow are flat; the S&P is down 0.2%.
    • 2-year Treasury yield falls less than 1 bp to 2.398% and the 10-year yield slips almost a bp to 2.587%.
    • Previously: U.S.-China trade talks near final round (April 13)
    • With speculation again rife about the potential success of a merger of Sprint (S -5.7%) with T-Mobile (TMUS -2.2%), Citi says its bear-case scenario in case of a breakdown values Sprint at $3/share — 50% downside from yesterday's close.
    • The firm still likes T-Mobile deal or no deal and is bullish on AT&T (T -0.4%) and Verizon (VZ-1.3%) even in a four player market, but "We believe Sprint would need to formulate a plan to improve marketing effectiveness and sustain elevated network investment, while managing net debt leverage and FCF needs."
    • Meanwhile, TDS (TDS -3.3%) and U.S. Cellular (USM -3.7%) might benefit from a measured promotional environment or as deal targets for scale hunters like Sprint or T-Mobile, the firm says, and upside for tower firms like American Tower (AMT -0.8%), Crown Castle (CCI -0.7%) or SBA Communications (SBAC -0.6%) might be limited even if the merger fails since they're already elevated. (h/t Bloomberg)
    • March U.S. mutual fund and exchange-traded fund long-term flows of $44.0B, bringing Q1 long-term flows to $136B, matching the same period in 2018, according to Morningstar estimates.
    • Overall passive U.S. equity funds pulled in almost $24.1B in March while active U.S. equity funds lost $17.9M to outflows.
    • Bond funds for the month continued to see inflows with $35.3B going to taxable-bond funds and $8.8B to municipal-bond funds; marks the best quarter for muni funds since 2009.
    • Among the 10 largest U.S. fund families, Vanguard led monthly inflows with $21.8B; T. Rowe Price (TROW -0.8%) had the largest monthly outflows at $2.9B.
    • iShares Core S&P 500 ETF (IVV -0.1%) led all funds with $7.3B of inflows with Vanguard Total Stock Market Index (VTI -0.3%) coming in second.
    • Previously: Active U.S. equity funds beat passive for first time in 5 years: Morningstar (Feb. 20)
    • Kona Grill (NASDAQ:KONA) warns on a potential bankruptcy filing in a SEC filing.
    • "It is possible that even a successful implementation of one of the strategic alternatives that we are pursuing will require us to make a filing for protection under Chapter 11 of the U.S. Bankruptcy Code," updates the restaurant operator.
    • SEC Form 10-K
    • Shares of Kona are down 36% YTD.
    • If Blackstone Group (BX -0.1%) puts the Las Vegas hotel and casino up for sale, it would be the first major operating casino on the Strip to come to market in more than 10 years, the Wall Street Journal reports, citing people familiar with the matter.
    • Deutsche Bank and PJT Partners have been hired to explore alternatives for the property, including a sale, they said.
    • Potential buyers include Wynn Resorts (WYN -0.1%) and MGM Resorts International (MGM+0.8%) and possibly Asian firms like Genting Group (OTCPK:GEBHF) or U.S. regional casino companies.
    • A sale could fetch $4B or more if it goes to another casino operator, according to some real estate and casino executives.
    • The hotel and casino's EBITDA has almost tripled since 2014 to more than $300M. The Cosmopolitan's hotel rooms' average daily room rate, at more than $330, is the highest on the Strip, according to public filings and people familiar with the matter.
    • New York-based Blackstone purchased the Cosmopolitan in 2014 for $1.7B and spent $500M more on finishing and renovating the property.
    • Health insurance exchange operator eHealth (EHTH -16.6%) slumps on more than 50% higher volume as investors move to the sidelines in apparent reaction to the noise on healthcare policy emanating from Washington, DC.
    • Presidential candidate Bernie Sanders (I-VT), for example, is advocating a Medicare-for-all system that he says the U.S. is already doing indirectly.
    • Fellow candidate Elizabeth Warren (D-MA) is also touting a single-payer approach.
    • Republicans, meanwhile, are trying their best to repeal the Affordable Care Act, an unlikely outcome considering the Democratic majority in the House. Repealing the act, known as Obamacare, would most likely be a negative for EHTH and compatriot exchange operator Health Insurance Innovations (HIIQ -2.6%).
    • Health insurers and managed care providers are down again today.
    • T-Mobile (TMUS -3.4%) and Sprint (S -5.4%) are sharply lower today, reflecting yesterday's after-hours declines from a WSJ story pointing to regulatory pushback on their $26B merger plan.
    • That news provided an immediate drag on their Big Four counterparts as well; today, AT&T (NYSE:T) is off 0.5% and Verizon (NYSE:VZdown 1.8%.
    • Parents of the two betrothed companies are lower: T-Mobile owner Deutsche Telekom (OTCQX:DTEGYdown 1.1%, and Sprint owner SoftBank (OTCPK:SFTBYdown 2.1%.
    • Deutsche Telekom's in good shape whichever way the merger goes, suggests UBS, noting that share prices for the German incumbent don't seem to factor in much upside.
    • Meanwhile, Goldman Sachs says a failure of the deal could mean positives for those sitting on needed spectrum: Dish Network (DISH +2.3%) and Intelsat (I +3.6%). While T-Mobile and Sprint have a deep portfolio together, none of the Big Four U.S. carriers likely have enough by themselves for 5G deployment.
    • Previously: Report DoJ opposes T-Mobile-Sprint merger 'simply untrue,' CEO Legere says (Apr. 16 2019)
    • Apple's (NASDAQ:AAPL) Q1 iPhone shipments totaled 37M to 42M units compared to the 40M to 45M supply chain sources expected in January, according to OTR Global.
    • The miss was due to weak demand for the iPhone XS and XR models.
    • Q2 shipments are expected between 28M and 33M units, down 21% to 24% on the quarter.
    • Apple will report earnings on April 30.
    • EIA Petroleum Inventories: Crude -1.4M barrels vs. -1.2M consensus, +7.0M last week.
    • Gasoline -1.2M barrels vs. -2.1M consensus, -7.7M last week.
    • Distillates -0.4M barrels vs. -0.8M consensus, -0.1M last week.
    • Futures +0.11% to $64.12.

  26. NG

     Natural gas futures fall to a 34 month low as build season begins/record U.S. production continues; with U.S. nat gas futures back around $2.50/MMBtu.


  27. /NG/Albo – This is what I'm putting my faith in:

    U.S. natural gas exports will continually be the largest new demand sector in the country.

    We're exporting about 2Bcf/day now, on the way to 7.5Bcf next year and 10+ in 2021, that's 3.65Tn bcf of new exports over the next two years – production will NOT keep up over the long haul and certainly not consistently.  

    Image result for natural gas exports

    Image result for natural gas production 2019


    • Kinder Morgan's (KMI -0.2%) proposed Gulf LNG export plant in Mississippi moves closer to receiving approval for construction after receiving a positive final environmental impact statement from Federal Energy Regulator Commission staff.
    • Construction and operation of the project would result in some adverse environmental impacts but "avoided or reduced to less than significant levels" if KMI follows some recommendations, FERC staff says in the report.
    • Gulf LNG is designed to have two liquefaction trains that together will produce as much as 10.8M mt/year of liquefied natural gas, or ~1.4B cf/day.

  28. Phil, do you have any positions in KC now? I’m thinking I’m thinking of taking a poke in October. If journalists are in what is your basis?  Thanks


  29. Good morning!

    Futures down a bit but recovering,  Barr press conference at 9:30.

    /KC/Jomp – I have a whole one /KCZ19 at $95.45 – I just want to make sure I'm in something if it ever pops but global warming could just as easily lead to bumper crops.  The bet is on weather changing and I assume, eventually, it will be for the worse but no guarantees.