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Faltering Thursday (as usual) – Investors Hold Out Hope on Trade Talks

dafafdThe art of the deal?

The best deal Team Trump can hope for this week is to keep the Trade Talks with China from completely collapsing and sending the markets into a tailspin.  While you hear idiots on TV saying China is coming to negotiate, Trump has set a midnight TONIGHT deadline on more tariffs and the Chinese response has been to reschedule their arrival from Tuesday to today and I want you to contemplate what unrealistic idiots the TV pundits are when they tell you a guy who just got off a flight all the way from China is going to hit the ground running in order to bend over for Trump and concede on all his points in order to get a deal done by 11:59 tonight.

China's Vice Premier Lui He is landing in DC this morning and is scheduled to have dinner with China-hating Robert Lighthizer this evening but don't be surprised if Lui doesn't even spend the night in Washington because, as Tom Hagen sort of said, "Chairman Xi is a man who insists on hearning bad news immediately."  

The die is already cast as Mr. Lui, unlike in previous visits, has not been given the title of "special envoy", which suggests he is no longer empowered to make any trade concessions on behalf of the Chairman.  In other words, Xi has already told Trump to shove his tactics and has left no room for negotiation on the contract they sent over to Washington last week so now it's up to Trump to either bend over and accept China's terms or throw a tantrum and penalize Americans with more tariffs.  

We're expecting more of a turndown today and a REALLY big sell-off if China leaves with no deal ahead of the weekend though we can expect Team Trump to lie about it and promise things are going great – people are finally catching on to that game and we have to read the Chinese papers to find out the truthy.

Sad.

Powell just made a doveish speech and tanked the Dollar but it's too little, too late as we're selling off hard and fast at the open and that's DESPITE the lower Dollar so NOT GOOD is my summary of the morning action though it is popping our Coffee Futures (/KCZ19) back over $95 and hopefully we'll get another crack to go long Gasoline (/RBN19) at $1.92 as we took an 0.03 ($1,000+) gain and ran yesterday.  

Nasdaq (/NQ) will critically test 7,500 and that should line up with Dow (/YM) 25,600, which was a good long the other day and 2,840 on the S&P (/ES), which is VERY BAD (see yesterday's chart) and the Russell (/RTY) is DOOMED below 1,564, as that's the 50 dma and we're already below the 200 dma at 1,563 and the 200 dma is crossing below the 50 dma and that's called a DEATH CROSS and it means we're all DOOMED!!!!  

As you can see from the Big Chart, those dma's are failing all over the place so DOOM!!! is the forecast unless a trade miracle occurs in the next 48 hours.  Needless to say we'll be reviewing our hedges this morning to make sure they are protecting us adequately – thank goodness we predicted this or it wouldn't be funny at all! 

 


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  1. What kind of deal do we expect from someone who lost over $1B in 10 years making bad deals! This entire administration is a fraud. There used to be people with some education in previous ones, now we have TV pundits. The Chinese will simply play for time now – conceding little stuff today and playing to win in 10 years when we have destroyed our system.


  2. Good morning, everyone! 

    The webinar replay is now available!

    https://youtu.be/kuiSmHYsJFE


  3. “China is going to eat our lunch? Come on, man,” Biden said at a campaign rally in Iowa City, Iowa on May 1. “I mean, you know, they’re not bad folks, folks. But guess what? They’re not competition for us,” Biden said. The following day, Trump said in an interview with Fox News that Biden was being “very naive” about China.

    Have to agree with Trump on this point.


  4. Good Morning!


  5. Why isn't China competition for us? Because they have already won thanks to the greedy corporations who sold our country out for cheap labor!! Anything to screw over the workers and middle class in this country. Is that the "rest of the story?"


  6. Trump is not naive about China, he is simply being stupid! I would not say that China is not bad folks, but we could easily compete with them if we had the right policies in place.


  7. It looks as the right time to do something with STMP…


  8. ….and what exactly are the right policies????


  9. dollar down almost .40 not helping indexes or wti very much  


  10. Would this be a time to roll my 10 short AAPL July 195c (sold at $6.70), now down to around $10.55?

    Holding 20-2020 long 150c.

    THX


  11. Good morning!  

    Getting the nasty follow-through we expected and it's not so bad if 2,800 holds up so let's watch for the Dollar to bounce off 97, which will push the indexes lower and then see if 2,800 holds.  Overall though, it's a f'ing mess.  

    Art on CNBC is talking about Lui losing his "special envoy" title and what it means.  I'm tired of doing their homework for them…

    Deal/StJ – There's no deal because Trump's begging the Fed to lower rates gave China the impression our economy is weak (so did the GDP for that matter) and Trump is looking weak so why should they do anything he wants.  They don't mind waiting 2 years and dealing with a Democrat – we accomplished a lot with China when Obama had the wheel – Hell, we were about to join the TPP before Trump F'd it up!  

    From the time President Obama assumed office in 2009 to the present, positive U.S.-China relations have been vital to the two countries and to the world at large. As Obama himself has said, “The relationship between the United States and China is the most important bilateral relationship of the 21st century.” Forty-four years after establishing diplomatic relations, the world’s two greatest economic powers have forged unprecedentedly close ties. Unsurprisingly, the current relationship reflects varying degrees of cooperation as well as competition.

    Generally speaking, on the U.S. side President Obama has firmly guided the overall direction of U.S.-China relations throughout his two terms in office. To understand this trajectory, we must incorporate into our analysis the president’s personal background, the domestic backdrop of the two countries, changes in the global and regional economic-political landscape, and other relevant factors.

    The persistent friction between the United States and China has made it increasingly important to establish effective mechanisms of communication. Without a doubt, U.S.-China relations are undergoing significant changes: China’s power and status are on the rise, new forms of media are emerging, and science and technology develop rapidly. These changes often occur faster than government policies can respond. Likewise, the global economy has yet to fully stabilize after the financial crisis; the world order is still undergoing reshuffling; and a host of environmental issues, health concerns, and other challenges continue to trouble humanity. All of these problems will test “the twenty-first century’s most important bilateral relationship”. Our leaders and scholars have every reason to pursue win-win cooperation over zero-sum competition, and we must hope that they will continue to do so.

    Of course, we did not continue to do so at all…

    Biden/Den – Unfortunately, people get stuck in whatever they learned in college and, for Biden, that was back in the 60s.  Trump knows China is tough because they kick his ass in negotiations all the time – that's why he has no properties in China – they don't put up with his idiocy.  

    China/Pirate – The whole concept of "competition" in a Global Economy is outdated.  That's like NYC in 1900 saying Detroit was "competition" because they were making all the cars and NY had a trade imbalance with Detroit that had to be addressed.  WE chose to make China our factory floor and we exported all the pollution along with the low-wage jobs because it's a fantasy that factory jobs would be $30/hr if we brought them back here.  That's why they left – it's simply not cost-effective to manufacture in the US – so we stopped doing it.  And, in general, we found other things to do so it all worked out fine but people forget that we have a $500Bn trade imbalance because that's the cost of having clean air and clean water in this country while still buying all the toys we like to have.  Also, they strip mine their own country for the raw materials these things are made out of – more environmental damage we don't have.  

    So 2.5% of our GDP pays for clean air and clean water – what's wrong with that?  What's screwing over the US middle class isn't the lack of manufacturing jobs but the lack of small businesses that are being driven out of towns by the WalMarts of the World and the chain restaurants, etc.   We even have chain hospitals and chain blood centers and chain nursery schools – any business where the money is sucked out of your community to a big office far, far away is a drain on your local economy – far, far more than someone turning a wrench in China.  

    When you shop at a local hardware store the guy who owns the store makes a $100,000+ living and he generally starts people at minimum wage but they get raises over time and get to be managers and such – because local businessmen have actual relationships with their staff.  The store owner pays taxes locally and doesn't get tax breaks from the town and the money he makes is spent locally in other stores and circulates and multiplies and benefits the community.  He's also much more likely to buy things from local manufacturers, which does create manufacturing jobs.

    When you shop at Home Depot, they buy their goods from China, they hire minimum wage workers who they'd rather fire than give raises to and all the profits they make get funneled to HQ in Atlanta, where it does nothing at all for your community.  Also, their "efficiency" means they replace 100 local hardware workers at 10 stores with 50 workers in one Big Box and they probably get a tax break from your town (or have clever accountants that minimize their tax payments anyway). 

    THAT is what is destroying the middle class in this country.  Think how many people you knew that used to own stores when you were young.  On my whole upper-middle-class block we knew each parent by what business they owned – that's not the case with my kids.

    China/StJ – The way we should compete with China is to pursue the knowledge economy and that has to start by educating our children – something else Team Trump is firmly against.  That kind of neglect will damage our country long after he's gone.  

    STMP/Albo – Patience, only day one of panic selling.

    AAPL/Wing – Roll to what?  Why not let them do their job.  Still $10.55 mostly premium and it was only a half-cover.  If I were going to spend $10 ($10,000), I'd roll the 20 2020 $150s at $51 ($102,000) to 40 June 2021 $180 ($39.50)/220 ($22) bull call spreads at $17.50 ($70,000) and put $32,000 in my pocket as now you get back $160,000 at $220 (+$90,000) vs $40,000 more on your current $150s and you have tons of room to roll the short calls or add more longs etc. 


  12. Phil, thoughts on AMC?  Down 10% today after earnings miss.  Nice dividend at 5% plus though.  With all the blockbuster movies lately, would have thought they would be doing better.


  13. Phil, I am long 10 SPY Sep 20 294/291 put spreads (net cost $1). Since the options will take some time to realize all the  money, With SPY at 284, can I exercise both and realize the full $2 immediately? What are my other options? – Thx


  14. OK, let's check the portfolios at about a 5% correction to see how things look with the VIX (on TOS) at 23.40.  Bear in mind intra-day pricing is very erratic as it's based on the worst-case of the bid/ask spreads – not the last sale.

    • STP: $708,885 (609%), was $704,785 (605%)
    • LTP: $1,297,380 (159.5%), was $1,429,270 (185.9%) – Ouch!  
    • Butterfly Portfolio: $165,774 (65.8%), was $165,949 (65.9%)
    • OOP: $277,872 (177.8%), was $300,689 (200.7%) 
    • MTP: $120,923 (141.8%), was $127,663 (155.3%)

    I'd say about half the losses are attributable to the high VIX and, of course, our primary hedge is the Nasdaq (SQQQ) and that's only fallen 400 points from 7,900  so 5%.  We're counting it as 5% from 8,000, so 7,600 is the -5% line and the overshoot is 7,520 and next support is 7,440 but, below that, we'd be looking at a 10% correction to 7,200! 

    Again, our hedges are not designed to protect us from a 5% drop as SQQQ and TZA were at $9 and 3x 5% is 15% to $10.35 – not much of a hedge at all!  It's the 10% ($11.70) to 20% ($14.40) where the 150 hedges in the OOP pick up up to $3 more ($45,000) and the 600 STP hedges add $180,000.  

    Since the OOP lost $30,000 on a 5% drop, we can extrapolate the loss of $120,000 on a 20% drop which would be less than 50% offset by our hedges.  So we might want to add another $30,000 worth of hedges in the OOP.

    The LTP lost $200,000 but a lot of that is due to the VIX and I doubt we'd give up $600,000 on a 20% drop but, just in case, we might want to add another $100,000 worth of hedges to the STP as well.  

    We don't need to add hedges now, this is just a 5% drop and half our losses have come since we looked over the portfolios during yesterday's webinar so a bit harsh intra-day on this 1.5% drop but, again, it's the VIX more than anything and that's probably temporary.

    Oops, FCC just voted to deny CHL access to US Markets.  This has been going on for 7 years (approval process) and is very obnoxious and certainly not something that will help trade negotiations.  


  15. Phil you are right on about China, you do not negotiate on twitter

    We also need a VAT Tax


  16. went long 2 /YM at 25600. wish me luck. 


  17. AMC/Ult – Attendance was down 10% from last year's Q1, which had Black Panther and Avengers didn't make this Q1 so the tough to compare.  Shows you how great IMAX earnings were considering the headwinds they had for the quarter.  Ticket prices are down because of their Pass Program (to compete with HMNY and everyone else these days), so that's a bad trend and food is up 5% but not enough to make up for 5% drop in ticket prices since tickets are $9.50 and food is $4.50 (and I'd like to know where the hell that food is because we spend as much on food as we do on tickets). 

    Bottom line is they missed by a lot and $13.15 is pretty much $1.35Bn and they barely made $100M last year so no one wants to see them drift below that.  This Q is a LOSS of $1.21 per share so 10% of your share cost goes to pay off the quarter's loss – you may as well buy TSLA!  That's vs MAKING 0.14 last Q1 and, for the year, they only made 0.41 so how are they going to come back from this?  The only loss last year was Q3s -0.82 so this is much, much worse and the best Q last year was 0.43 in Q4.

    Overall, this is probably about the right price for AMC and they were as low as $9.26 in the fall of 2017 so maybe at $10 I wouldn't mind selling some puts for $3 (they 2021 $10 puts are now $1.80) to net in for $7 but no way do I think $13 is a good enough sale to jump in.

    My observation on AMC and CNK (who I think are a better buy) is that my kids and my Mom and her friends tend to take advantage of $5 Tuesdays and my kids go to theaters where you can easily go from one show to the other without paying (neither chain does much to discourage this at all) so it's a cheap night out.  In Florida, any theater that doesn't have big leather reclining seats gets no traffic and not only are those seats expensive (very few theaters haven't revamped) but less than half as many fit in the same theater.  They are also spending a fortune on sound and picture upgrades all to fight with my 84-inch HD TV with surround sound at home.  It's a very tough business.  

    Dow down 400!

    SPY/RS – That's not a very good hedge if you want immediate satisfaction.  You could cash SOME of the $294 puts ($15.60) in speculation it will come back but, if it doesn't, you are pretty screwed.  The $291 puts are $14.15 and the 2021 $270s are $18 so, if you were to roll 10 of the Sept $291 puts ($14,150) to 8 of the 2021 $270 puts ($14,400) then, if the S&P went lower, you would make a lot more money and the 2021 $294 puts are $27 so figure it will cost you $10 to roll them after 6 months ($8,000 as you only have to roll 8) and you could cash 2 now for $3,000 so, IF you would like to spend $5-8,000 to have 8 2021 $294/270 bear put spread as $19,200 worth of protection – then this no-cost first step allows you to take $3,000 off the table (call it a stop at $2,500) on your $6,000 max spread and adds $21 ($21,000) more downside protection right away.  

    VAT/QC – That's still my favorite option.

    Good call Daw.  Now we can go long at 25,600 on /YM, 2,850 on /ES and watch 7,535 on /NQ and 1,560 on /RTY and if ANY of them fail – get out of the longs!  


  18. Phil-Yes it is like a house of cards; everything connects to everything else. You left out the advent of mobility with cars, highway interstates  that propelled the advent of Walfart etc. Every small town had their own grocery, post office, gas stations and churches that were in walking, or horse riding distance. But allowing corporations carte blanche on everything including cutting taxes to nothing, allowing huge payoffs to politicians, stashing billions all over the world hasn't exactly helped matters either. This country is catapulting into horrendous problems with the clean water and air and climate change and it all has not happened overnight. Since we are intent on destroying this earth and as soon as there are no more bees, huge famines will strike everywhere. It's inevitable, but no one is worried.


  19. Great ideas Phil. I'm in the (relatively) Trump-Free Zone north of the border and am still trying to plan for cap gains tax triggered if I sell the 20 AAPL 2020 $150s (and my 20 2021 $140s). You suggested earlier to sell 20 2020 $160s and 20 2021 $150s to cover my longs and form 2 $10 spreads, which seems like a great way to defer the income and still liberate the funds.

    (Apparently there is no advantage to forming a LLC or trader status here as the cap gains would be treated as income and at least the cap gains is only taxed on 50% for individuals.)

    Maybe I should wait for the premium to drop on the July 195s and if the market goes up, implement your $!0 spread plan and then buy the June 2021 $180/220 BCS?

    Would this be a good time to add any AAPL puts?


  20. /YM, /ES – got stopped out but $1750 winnings is a nice bright spot to an otherwise dismal day. Trying to decide whether or not to get greedy and get back in. Maybe not right this second. 




  21. Worried/Pirate – That's what bothers me the most, I was talking about it in the webinar yesterday.  My kids ask me why we let things get so bad and I don't have a good answer.  Even now, staring into the abyss, we have climate deniers etc. that just want to maintain the status quo – even as it hastens our demise as a species.  It makes you realize how other civilizations fall, the Romans probably realized they were getting lead poisoning from the aqueducts but I'm sure there were aqueduct lobbyists in the Senate saying "more studies are needed" and, of course, no one wanted to spend the money to change to copper pipes or go back to well water….

    Image result for co2 in atmosphere

    Yeah, we never learn….

    Canada/Wing – Well I have no idea what their rules are but selling the $160s is a good trick.  I don't see the good in adding AAPL puts while it's so high.  The short 2021 $180 puts are $19.50 and they were $13 last week but the $200 puts are $26 and AAPL could easily drop 10% so, if you are going to sell something like that – make sure you are willing AND able to ride out a move against you because, if a $20 drop will force you to take a loss – you may as well just burn the cash now.  

    Also, I had meant having the $160,000 $180/220 spread AND still having the 10 short calls which you could simply roll along for 18 months.  July $195s are $12 and Jan $210s are $12.50 and June 2020 $225s are $12 and 2021 $250s are $12….  So, unless you think AAPL is going to be more than $12 over $250 – why should you worry?  And, if you do think that – buy more long spreads!

    Well-played Dawg – that was plenty to make in 2 hours.   That goes for /YM and /ES longs – done now at 25,775 ($875/contract) and 2,866 ($800/contract) – both topped out about $1,000, which is great for a day trade.  

    Woo hoo on /KC!  Those guys buying JVA were right.

     

    Here's something strange, /KC is very low but JVA (Coffee ETF) is up 8.5% today.  Someone knows something…

    Well the chart updated itself and gave back half the gains today but you get the idea – looking for discrepancies like that is smart when you are trading futures.  

    I'm sticking with my /KCZ19 though – I'm holding out for at least 100, which should be about $2,000/contract.


    • President Donald Trump said Chinese President Xi Jinping wrote him a "beautiful letter" and that the two leaders may speak soon.
    • The comments come as China's delegation is due to arrive in Washington for the next round of trade talks Thursday afternoon.
    • Trump also said "we'll see" whether a deal is reached, "but our alternative is an excellent one."
    • The Trump administration has filed paperwork for boosting tariffs on some Chinese goods to 25% from 10%.
    • Previously: Asian markets drop after Trump says China 'broke the deal' (May 9)
    • The three major U.S. stock averages climb up from session lows, paring their earlier declines by more than a half, after President Trump softens his stance, saying a trade deal with China is still possible this week.
    • The Nasdaq, now down 0.5%, had fallen as much as 1.9% earlier; the S&P -0.5%, had lost as much as 1.5%, and the Dow, off 0.8%, had declined as much as 1.9%.
    • All 11 of the S&P industry sectors are still in the red, with real estate (-0.1%) outperforming the broader market. Information technology (-1.4%) and materials (-1.5%) are the biggest decliners.
    • U.S. Senators Edward J. Markey, Richard Blumenthal, Dick Durbin, and Josh Hawley ask the Federal Trade Commission to investigate whether Amazon's (AMZN -1.1%) Echo aimed at children violates the Children’s Online Privacy Protection Act.
    • The senators say the products violate the law by failing to live up to parental consent requirements and not allowing parents to delete private information about children.
    • Amazon says the Freetime service on Alexa and the Echo Dot Kids Edition are compliant with the privacy law.
    • Cheniere Energy (LNG +1%Q1 net income of $141M, or 54 cents per share, fell from $357M, or $1.50 per share, in the year ago quarter; exceeds the consensus estimate of 41 cents.
    • The decline is primarily due to increased operating costs from additional natural gas liquefaction trains, higher service and maintenance costs at the SPL Project, increased derivative loss related to interest rate swaps, and increased interest expense.
    • Q1 total revenue of $2.26B rose slightly from $2.24B a year ago; exceeds the consensus estimate of $1.90B.
    • Q1 volumes rose 27% Y/Y to 310 TBtu vs. 244 TBtu a year ago; LNG volumes loaded of 309 TBtu increased 28% from 241 TBtu.
    • Q1 consolidated adjusted EBITDA of $650M from $907M a year earlier.
    • Reconfirms full-year 2019 financial guidance of consolidated adjusted EBITDA of $2.9B-$3.2B and distributable cash flow of $0.6B-$0.8B.
    • Previously: Cheniere Energy Partners beats by $0.18, beats on revenue (May 9)

    • Break up Facebook (FB -1.1%)? Chatter's on the rise about that prospect today, following a New York Times op-ed by the company's co-founder, Chris Hughes, with the headline "It's Time to Break Up Facebook."
    • CEO Mark Zuckerberg is "a good kind person," Hughes writes. "But I’m angry that his focus on growth led him to sacrifice security and civility for clicks. I’m disappointed in myself and the early Facebook team for not thinking more about how the News Feed algorithm could change our culture, influence elections and empower nationalist leaders. And I’m worried that Mark has surrounded himself with a team that reinforces his beliefs instead of challenging them."
    • "Mark’s influence is staggering, far beyond that of anyone else in the private sector or in government," he writes, adding "I feel a sense of anger and responsibility."
    • Meanwhile, Sen. Richard Blumenthal tells CNBC that the company needs to be broken up. He's been critical of the prospect that an upcoming Federal Trade Commission fine over privacy violations might be limited to $5B.
    • Elsewhere on the network, Jim Cramer says even trust-busting Teddy Roosevelt wouldn't break up Facebook.
    • "In the end, this is a social media site," Cramer says. "It's not the American party like the Communist Party or the Soviet Union, I mean it's a darn social media site."
    • "For a long time all we cared about was that foreign companies were killing us," Cramer says. "So then we suddenly have these fabulous companies that are really dominant, and now we have to worry that our own dominant companies are killing us? Shouldn't we be proud?"
    • The Philadelphia Semiconductor Index is down 2.7% compared to the 1.9% for tech sector (NYSEARCA:XLK) drop on a combination of US-China trade tensions and Intel's (NASDAQ:INTCweak long-term guidance during yesterday's investor event.
    • Intel had previously cut its FY19 outlook, helping dampen hopes of an H2 semi recovery. Yesterday, INTC guided three-year revenue growth in the low single digits with flat PC sales offsetting double-digit data center growth and gross margins decreasing with the 10nm ramp.
    • Dialog Semi reported Q1 results that met revenue estimates and beat on EPS
    • Cronos Group (CRON -8.2%) reported revenue of C$6.5M, versus Bloomberg estimates in the C$6M-C$8.4M range. For reference, the company had about a C$7B market cap.
    • In other cannabis news, a study form Dalhousie University shows Canadian as far less enthused about the prospect of legalized edibles (which are set to become legal in October).
    • According to the survey, just 36% say they would purchase such products, down from 47% two years ago. Only 26% say they would purchase in a restaurant, down from 39%.
    • Tilray (TLRY -1.5%), Canopy Growth (CGC -3.4%), Aurora Cannabis (ACB -2.2%)
    • The ETFMG Alternative Harvest ETF (MJ -2.2%)
    • The 30-year fixed-rate mortgage averages 4.10% for the week ending May 9, 2019, down 4 basis points from 4.14% in the prior week and vs. 4.55% a year ago, according to the Freddie Mac Primary Mortgage Market survey.
    • Investors turned to the bond market amid worries that the U.S.-China trade dispute will hurt the U.S. economy, causing the 10-year Treasury yield to decline.
    • "A combination of low mortgage rates, a strong job market and modest wage growth should spur homebuyer interest and also serve as an incentive for homeowners looking to refinance this spring,” said Freddie Mac Chief Economist Sam Khater.
    • The 15-year FRM averages 3.57%, down from 3.60% in the previous week, and vs. 4.01% a year ago.
    • The 5-year Treasury-indexed hybrid adjustable-rate mortgage averages 3.63% vs. 3.68% in the prior week and 3.77% a year ago.
    • Previously: Mortgage rates fall after four weeks of rising (May 2)
    • Representative Alexandria Ocasio-Cortez (D-NY), in partnership with Vermont Senator Bernie Sanders, is set to introduce today legislation that would cap interest rates on all consumer loans at 15%, The Intercept reports.
    • Not only would the legislation stifle the payday lending industry, it would also reduce what many American pay on their credit cards if it passes.
    • Ocasio-Cortez also plans to propose postal banking in separate legislation, as a way to offset the reduced access to credit that would occur with the interest-rate cap.
    • Payday lenders CURO (CURO -3.3%), FirstCash (FCFS -1.3%) and Enova International (ENVA-2.3%) decline, as do many credit-card related stocks-- Mastercard (MA -1.6%), Visa (V -1.9%), American Express (AXP -1.7%), Discover Financial (DFS -1.8%).
    • Gogo (NASDAQ:GOGO) reports Q1 beats despite the 14% Y/Y revenue drop. Reaffirmed FY19 guidance has in-line revenue of $800M to $850M (consensus: $830.98M), adjusted EBITDA of $90M to $105M (consensus: $93M), and a FCF improvement of $100M.
    • Revenue breakdown: Business Aviation, $70.5M (+2%) with Services +12% and Equipment -18% (largely due to timing); CA-NA, $96.1M; CA-ROW, $33M (+72%).
    • CA-NA aircraft online decreased to 2,412 from 2,840 due to the de-installations expected to be completed at the end of June. CA-ROW aircraft online increased 55% Y/Y to 641.
    • Q1 adjusted EBITDA came in at $38M.
    • 2Ku aircraft online reached more than 1,100, up 100 in the quarter.
    • Cash used in operating activities was $6.2M, and unlevered FCF was $11.1M.
    • Earnings call starts at 8:30 AM ET with a webcast here.
    • Press release.
    • Previously: Gogo beats by $0.18, beats on revenue (May 9)

  22. China shows maximum sincerity, goodwill, but trade deal requires joint efforts: Ministry of Commerce

    There's no economy strong enough to survive the chaotic meddling of a complete incompetent irrational child like meglomaniac wth an inferiority complex loser

    Today’s WSJ article about U.S. -China trade war , the photo was took in last year, Not last month.

    China denies reneging on US trade deal and vows to defend itself https://www.scmp.com/economy/china- via

    SAYS U.S. AND TRADE NEGOTIATORS WILL MEET AT 5 P.M. (2100 GMT) ON THURSDAY this is new TV

    China Threatens To Pull Money From Silicon Valley: “Trade War Will Become A Tech War”


  23. Are we bouncing yet?

    Dow 26,400 is the 10% line on the Big Chart and 27,000 is the 12.5% line so I'd guess we'd better use 26,700 which is 11.25% and just so happens to be where we topped out which means the range we're in is more likely still 24,000 to 26,400 (10% line) with an overshoot to 26,840 (20% of the 2,400-point run), rather than a proper 15% run (27,600) with retraces.

    So we ignore the move above 26,400 and the 5% pullback from there is 25,200 (5% line), which we haven't hit yet but we still use the bounce lines of that 1,200-point drop so 20% is 240 but the Dow likes even numbers so call it 250 to 25,450 (weak) and 25,700 (strong) and we're at 25,800 a the moment.  

    Retraces from 26,400 would also be 250 then so 26,150 (weak) and 25,900 (strong) are the levels we should be taking back if this pullback is going to reverse.  Failing 25,700 again would be a big warning sign.

    /ES was way over the 10% line (2,860) but back to test it again now.  Holding it is very healthy, on the whole.  The 15% line is 2,990 and we didn't hit that and 2,935 is 12.5% so that's where we should count the drop from and back to 2,860 (the rest is an overshoot) is 75 and 20% of 75 is 15 so we're looking at 2,875 as a weak bounce and 2,890 as a strong bounce for the S&P.  

    7,800 is the 20% line for the Nasdaq and the rest is overshoot and back to 7,475 is the 15% line so those are clearly what we use and it's a 325-point move so 65-point bounces to 7,540 (weak) and 7,605 (strong) – which is right where we're sitting at the moment.  

    Russell didn't make 15% at 1,656 (not lately) but 10% at 1,584 is clearly too low to call a top so we have to split that baby at 1,620 (12.5%), which just so happens to be the exact spot they failed.  So 1,620 to the 7.5% line at 1,548 seems about right and that's a 72-point drop so call it 15-point bounces and call it 1,550 so 1,565 is weak and 1,590 is strong.

    VIX calmed down fast as Trump says Xi gave him a "beautiful letter"

    That's right, the market reacts to what Trump says as if he's telling the truth – AMAZING!


    • LTP gained $25,000 back already.  
    • STP down $5,000
    • Butterfly up $3,000
    • OOP up $1,500
    • MTP down $2,000 

    As I said, intraday balances are BS BUT I'm trying to get a handle on whether or not we need to improve our hedges so I'm going to be keeping track for a few days as it's been a while since we've had any actual volatility. 


  24. Good TSLA article, sums up the most recent BS quite nicely:

    A DANGEROUS MIND.

    By Peter M. DeLorenzo

    Detroit. The latest Muskian nightmare roiling this industry emerged at a press event yesterday in Palo Alto, California, when Elon Musk declared that: 1. Newly-developed Tesla autonomous technology will put a fleet of robotaxis on the road by the middle of 2020. 2. Up to one million Tesla vehicles will be configured to take advantage of this technology and become part of the shared robotaxi network, with no humans required. And 3. “The fundamental message that consumers should be taking today is that it’s financially insane to buy anything other than a Tesla. It will be like owning a horse in three years,” according to Musk.

    Well, isn’t that special. The rocket impresario, who should stick to rockets by the way, is promising that he has discovered the magic technical silver bullet that will save his downward trending company and transform the transportation industry in eighteen months. We have certainly heard these outlandish statements from Musk before, as he furiously tried to will his boutique auto company into something more; but this time he has clearly lost all touch with reality. You have to remember that companies with far deeper pockets than Musk’s recurring corporate flim-flam act have been expending billions of dollars on AV technology, and not a single one of these companies is suggesting that their advanced autonomous technological developments are ready to be unleashed on the streets and byways of America sans driver.

    That this latest charade from Musk is yet another desperate act in an attempt at saving his floundering company is obvious. Where it differs from other Muskian braggadocio is the fact that he is insisting that his AV technology is safe for mass application and consumption. Sorry to disappoint all of the St. Elon acolytes out there, but this is the insane part. Unleashing a fleet of zombie Teslas on the streets of America curated by a notorious nanosecond-attention-span personality such as Musk is the quintessential definition of flat-out crazy. You can’t even squint hard enough to suggest that this is, in some way, shape, or form, rational thought. It’s a case of an intermittently brilliant mind that has wandered over the line into the Abyss of Darkness. A dangerous mind that is so obsessed with pushing his perpetually sinking car company into some sort of elevated stratosphere that he is willing to treat real people as so much collateral damage.

    This is insanity writ large, automotive or otherwise. The hubris on display by Musk in this unfolding debacle is almost incalculable. Think about this for a moment. Yes, Musk as an entrepreneur has accomplished much, and he can and should be lauded for his rocket achievements, but this is something entirely different altogether. Completely ignoring the very sketchy performance of his company's own "hands-free" driving features, Musk has now crossed over into that twilight dimension where his grip on reality has become fleeting. 

    He now steadfastly believes that all of his thought balloons are heroic and visionary, that everything he touches is beyond failure and that the rest of the world is just too ill-equipped to comprehend his greatness. After all, we’re collectively just too dim to understand. The final component of his slip into the Abyss of Darkness is on full display with this latest act, which can simply be expressed by the idea that if people are too dense to keep up with his brilliance, then he will do what’s best for them whether they understand it or not. And oh, by the way, while he’s at it he will propel Tesla to the pantheon of corporate America.

    It’s encouraging that a large portion of the media and analysts on Wall Street have grown tired of St. Elon’s act. The countless overpromising followed by the reality of those boasts when they come up woefully short have taken its toll on the blind reverential loyalty that used to be reserved for every utterance by Musk. Now, it’s thankfully in very short supply. Yes, there were a few holdouts in Palo Alto who have had their Muskian chips surgically implanted at the base of their skulls and who chanted huzzahs at the feet of their Master, but this time Musk has gone too far. 

    And this time there should be consequences.

    This country is 25 years away – at least – from widespread adoption of autonomous vehicles. Yes, there will be scaled deployment in limited, commercial applications primarily in urban centers over the next two decades, but driverless Teslas careening around less than two years from now? It is a recipe for disaster the likes of which simply defies calculation.

    I have been around this business since childhood. First growing up in a hardcore auto family deeply immersed in the business, followed by my own exploits in advertising and marketing over two decades, then creating the content for this website for the last coming-up-on 20 years. And I am here today to tell you that I have never seen or heard anything more irresponsible and flat-out dangerous than what went down in Palo Alto yesterday.

    Cooler heads must prevail, which ultimately means that Elon Musk must be prevented from getting even remotely close to executing this plan.

    And that’s the High-Octane Truth for this week.


  25. From the above paragraph in the opening dialoge,

    China's Vice Premier Lui He is landing in DC this morning and is scheduled to have dinner with China-hating Robert Lighthizer this evening but don't be surprised if Lui doesn't even spend the night in Washington because, as Tom Hagen sort of said, "Chairman Xi is a man who insists on hearning bad news immediately."  

    My only question: Is Lui staying at the Trump Plaza Hotel in DC?  If so, this is all a farce! 


  26. I love my Tesla.  Best auto buy ever!  


  27. Which one Pharm?

    Anyway, I'm not saying it's not a nice car but that doesn't mean the company will make money selling it – people have a lot of trouble separating those concepts.  

    Good article:

    China had been willing to protect intellectual property and open its markets to American business, but the Trump administration wanted the agreement to specify that some of those changes be made in Chinese law. For China, any legislative change or policy reversal could be a very public — and potentially humbling — reminder that it gave ground under pressure.

    “That would bring back painful memories of the days of national humiliation in our history,” said Wang Yong, the director of the Center for International Political Economy at Peking University. “China has made too many concessions.”

    The blaring nature of the Trump administration’s broadsides has sharpened the dilemma that Mr. Xi faces in the negotiations.

    “To have Trump doing it so publicly is obviously very, very difficult for Xi Jinping,” said Susan L. Shirk, a professor at the University of California, San Diego, who worked as a deputy assistant secretary of state responsible for China under President Bill Clinton. “It makes it much more difficult for him to make the compromises needed.”

    Yet if Mr. Xi holds to a tougher line, Mr. Trump could act on his threat to raise tariffs on $200 billion of Chinese goods as soon Friday. Such a step could shake confidence vital to keeping aloft economic growth in China and around the world, Tu Xinquan, a professor at the University of International Business and Economics in Beijing, said in an interview.

    For the party, stable economic growth is fundamental to political legitimacy.

    “Everyone may have greater doubts and uncertainty about the future of the Chinese economy, Chinese-U.S. relations or the global economy,” Professor Tu said. “This uncertainty will certainly affect production, investment, and consumption.”

    More than two years into the Trump presidency, Chinese officials still appear to struggle to understand the president, his temperament and his negotiating style. American politicians and experts say that Chinese counterparts often fail to grasp how far and fast wariness of China has hardened into hostility.

    Mr. Xi’s top economic official, Vice Premier Liu He, who leads the Chinese negotiators, could also suffer a setback in his standing if the latest talks falter.

    “If, say, Liu He comes back to Beijing empty-handed, and there’s more tirades from Trump on his Twitter account, I think things could get really wild,” Zhang Jian, an associate professor of government at Peking University said in an interview. “It’s going to spill out of the economic waters.”

    The Chinese have also complained about dealing with a mercurial president they say is apt to turn private disagreements into public brawls.

    “Trump’s personality is different, we all know,” said Professor Tu. “He would take something that hasn’t been settled in negotiations and treat it as so-called backsliding by China, or whatever, and then announce it.

    “An ordinary president,” he said, “wouldn’t act this way.”

    30-year note auction ($19Bn) wasn't the disaster yesterday's 10-year note auction was but we're on very shaky ground.  

    Demand for benchmark 10-year notes at Wednesday's U.S. Treasury auction was the worst in a decade, data shows, following Tuesday's sleepy 3-year Treasury note auction that also drew lackluster demand.

    Why it matters: The historically weak auctions have come despite falling stock prices and strong buying of safe-haven U.S. debt for much of the year, showing diminishing appetite among some investors.

    Worth noting: Data on foreign buyers of Treasury notes is reported on a lag, so it's not yet possible to know whether diminishing Chinese purchases are responsible. However, foreign investors, especially China and Japan, have accounted for a declining share of U.S. government debt buys during the early months of the year.



  28. U.S. Seizes North Korean Ship for Violating Sanctions


  29. May 9th, 2019 at 12:59 pm | Permalink | Tweet thisIgnore this user

    CTL

    Bought a bunch of CTL 2021 $10 calls today for 2.10-2.13.

    Company reiterated 2019 guidance.  Looking at strategic alternatives such as spinning off wireline into separate company.

    Think the market is seriously mis-pricing this stock.  We'll see.


  30. Betting predictions to be part of Fox Sports analysis




  31. You’ll never believe what Trump said about the Mueller report today


  32.  Well, they did it, they put more tariffs on though both sides say they are still negotiating. Dow down about 100 so far, likely we re-test the lows if this drags on.  Bostic (Fed) warned that tariffs could lead to higher inflation.   Kind of a strange dynamic as you could take it that the Fed has Trump’s back and would take steps to control the backlash though, of course, if it’s inflation then they would raise rates and that’s not very good for the market    


  33. This "seized" North Korean ship sounds more dramatic than it is; the ship has been detained since 2018 in Indonesia; so this is just a hand-over. It would be another issue if the US were to start stopping NK ships on the high seas.


  34. Good morning!  

    Ship/Snow – Crazy how the news just seems to be looking to stir up trouble sometimes (often).

    So they are having it both ways at the moment with the tariffs taking effect as of midnight BUT they are meeting again today and Trump just tweeted out his own brand of crazy:

    How can all the tweets have the same time stamp?  That makes no sense unless he was rapidly cutting and pasting something that was already written.

    Notice he says "no need to rush" and keeps insisting the tariffs are like found money, rather than a tax on our own citizens.  How can he even pretend to not know that's complete BS?  As I've said all along, this is just an excuse to extract money from the same idiots who believe he's helping them.

    Beijing has said it would retaliate against the U.S. actions. As soon as the tariff increase took effect, the Chinese Commerce Ministry expressed regret and reiterated that Beijing “cannot but take necessary countermeasures.” It didn’t specify how or when Beijing would retaliate.

    “I’m different than a lot of people,” Mr. Trump said at the White House. “I happen to think the tariffs for our country are very powerful.”

    China has rejected U.S. claims that it has backtracked in negotiations—the source of a setback this week that threatened to scuttle a potential trade agreement between the two countries.

    “I came here this time, under pressure, to show China’s great sincerity,” Mr. Liu said in an interview with state broadcaster CCTV after arriving in the U.S.

    Hey, I was on CCTV last year!

    While Beijing has yet to spell out how it will retaliate, its options range from a reciprocal hiking of tariffs to punishing American companies. Beijing could sit on business license requests by U.S. companies or withhold permission from American banks, brokerages and car makers to increase stakes in their China ventures.

    In previous rounds of retaliation, Beijing has imposed punitive duties on U.S. farm products, causing exports of U.S. soybeans, sorghum and pork to fall. A likely move now would be to raise tariffs on $60 billion in American goods—from semiconductors to chemicals—to 25%, from the current 5% to 10%. That was China’s initial plan last fall to counter the U.S. duties on $200 billion in Chinese goods. When the U.S. set its tariff rate at 10%, China kept to the lower threshold, and now that the U.S. has moved higher, Beijing could follow.

    After getting back to flat, the Dow is now down 100 again and we'll see what happens but China will retaliate over the weekend so the bias is down, not up.