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Made Up Monday – Trump’s Fake Mexican Melt-Down Ends

All is well, again.

How many times are we going to fall for this BS?  Turns out Trump had already gotten concessions out of Mexico months ago and his "demands" for border security has already been agreed to so there were never going to be any tariffs on Mexico – it was just Trump stomping his feet and beating his chest in order to look like he actually accopmplished something – as well as to distract us from all the crimes he's about to be indicted for.

The Futures are up another 100+ points this morning and we're just 500 points away from a full recover – back to our record highs after a 1,000-point drop in May – and it's only June 10th.

The Russell (/RTY) is lagging in the recovery and can be played long over the 1,520 line but with tight stops below because NOTHING actually happened since the Russell was at 1,620 ($5,000 per contract higher than 1,520) – except the fact that the President has once again shows how completely unstable he is and THAT remains a bit of a concern to me – and it should to anyone who has money at risk in the markets.

We completely ignored last week's TERRIBLE Non-Farm Payroll Report and the downward adjustments to the last two reports and the ecitement over possible Fed Rate Cuts was over statements the Fed made that assumed we were placing tariffs against Mexico that would crash the economy – that's now off the table because the Fed, like us, made the mistake of believing something Trump said he would do (10,796 lies in 869 days so far).

Factory Output drops most since 2002 as boost from Brexit stockpiling evaporatesUK Manufacturing Output fell 3.9% in April and that is a REAL thing that actually happened.  GDP fell 0.4% in April and puts the entire quarter on track for a 0.3% recessionary drop – adjusted from +0.5% expected just two months ago.  These numbers may be skewed by the original Brexit deadline of March 29th, which may have pushed a lot of production and orders into Q1 – ahead of that deadline. 

Unfortuantaly, we won't know the truth until next month, when we'll see if there's a trend but Construction in the UK also fell 0.4%, Industrial Production dropped 2.7% and Trade Volume dropped 10.9% on Exports and 14.4% on Imports, which is an all-time record decline.  Transportation Equipment Production fell 13.4% as well so, if it is a trend – it's a very quick line to total disaster at this pace.  

My new favorite candidate for 2020 is now Andrew Yang, who hit all of my economic talking points this weekend on Real Time with Bill Maher – I'd ask to write for his campaign but, really, it sounds like he's already got me and he does a great job explaining where jobs are really going (automation) and what to do about it (universal basic income):

Stimulus needs to go to people on the bottom where it can trickle UP to the Top 1% – they end up with all the money anyway – this way the bottom 90% at least get to play with it first!  He's even talking about paying for it with my VAT Tax though I wish he'd go harder after Corporations to pay their fair share of taxes.  Maybe he can team up with Liz Warren and make a dream ticket?  

Image result for force weak mindedFox news is already attacking Joe Biden's health – even though the claims are completely baseless.  It's the same tactic they used on Hillary – calling her health into question and saying she had a very bad flu and then saying she had brain damage from falling – even though she mopped the floor with Trump in the debates.  It doesn't matter if your propaganda is true – as long as you repeat it often enough with conviction, you will be able to get weak-minded people to believe it.

Speaking of the influencers of weak-minded people – there is not one Fed Speaker this week because they have a meeting next Wednesday and it's considered a "quiet period" ahead of the meeting, which they are sticking to for a change.  Data-wise, it's a dull week as well with PPI and Small Business Optimism tomorrow, CPI, the Atlanta Fed and a 10-year auction Wednesday, Import/Export Prices Thursday and Retail Sales, Industrial Production and Consumer Sentiment on Friday:

We also have the G20 Meeting coming up at the end of the Month, so of course the believers think Trump will "win" his trade deal with China and that's adding fuel to the bullish fire, as is a $120Bn merger deal between United Technologies (UTX) and Raytheon (RTN), creating an even bigger military powerhouse and consolidating their lobbying efforts to really drive up the Defense Budget Trump said he would get under control but is, instead, up 15% since he took office – and that's without an official war!  

We're well over all our bounce lines now so we can't make any bearish bets but what the Nasdaq 100 (/NQ) for a possible rejection at 7,500 and, of course, 2,900 on the S&P (/ES) and 26,200 on the Dow (/YM) also seems to get rejected a lot but we should still squeeze out a quick 15 points on the Russell (/RTY) at 1,535 before that happens and +$750 per contract is a great way to start the week off.

Be careful out there.


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  1. Phil reading this Trump BS every day is actually sickening. Publishing this on our website only falls on deaf ears. You need to find a way to send this to all the clowns, supporting this BS mad clown.

  2. Good Morning!

  3. Yodi – Clowns do not care to read or watch anything negative about the Mad Clown… :(

  4. 1020

    Looking from the other side of the pond, with the exception of Putin, it looks he has made no friends in this world. This blows my mind. Hart to understand that this person is the head of one of the greatest nations, and besides that is or better is supported by a great deal of people.
    I enjoyed this morning the fairy tale of Christian Anderson "the king’s new cloth" Is there any comparison?

  5. Everything is awesome!

  6. nikkei looks kind of low too what do you think phil

  7. BYND & CMG racing to the moon ! 

    Or is it Mars ?

    Or are they the same ?

  8. Interesting read:

    I think it’s hardest for the poor and the rich to teach their kids about money. The first because poverty is not much of a teacher. There’s not much to learn; it’s all necessity. And at the rich end, it’s hard to create the kind of artificial scarcity that you need to make decisions seem as though they mean anything. It’s easier in the middle.

    I think that it makes some sense but it's hard to make an exact comparison between the situation of then rich an the poor. In one case, survival is the objective, in the other dealing with some of the guilt which doesn't work as shown by the Trump family!

  9. Good morning! 

    As I said above, the Russell was the lagging long to play but watch out for /NQ rejection at 7,500 and, as we're back from 7,000 – we could easily see a 100-point (weak) retrace from that line though the drop was 800 and we're already past the half-way point so maybe we just keep going.

    BS/Yodi – Best thing about my trip to Cuba was having a Trump-free weekend.  Unfortunately, Trump is doing the bidding of rich and powerful people ("THEM") and "THEY" want scapegoats for the jobs "THEY" are destroying through automation and "THEY" don't want to create a social safety net to catch all the workers they are displacing so they've turned the Republican Party into the party of Ayn Rand and they brain-wash people into thinking that their poverty and struggles are their own fault for not trying hard enough (and shoving religion down people's throats has long helped to reinforce that belief too) and that successful people deserve to keep every penny, no matter how many people they stepped on and used on the way up.  

    I'm not a Communist, I'm just a Socialist in that I believe that we have a responsibility to ALL the people in our society to make sure no one is left behind and that means there should be a Universal Basic Income that we all agree everyone deserves – whether they work or not.  Yang proposes $1,000/month for every man, woman and child over the age of 18 and it would cost $1.5Tn a year in our $20Tn economy so about 7.5% or about the same as the tax break Trump gave to 1.6M people.  

    Since money moves through the bottom of the economy and tends to multiply 3:1 (3 transactions before it effectively dies in a rich man's bank) it would add up to $4.5Tn to the economy and that would create roughly 3M jobs simply through growth.  As Bill Maher notes though, a lot of people still need the dignity of work and we do need to train people but I think we need to re-educate people to value art, music, craftsmanship, etc again as, eventually, we will pretty much all be out of work thanks to automation.

    Back in the day, they used to hand-carve even the feet of furniture and add artistic flourishes, bricks had designs, gardens were works of art, etc.  Even when I was a kid, almost every bar had a live band and so did many restaurants on weekend (a singer anyway), community theater was thriving when I was younger too – that stuff can come back and create millions of local jobs for people who would really enjoy them – if they didn't have to worry about paying the rent or having a second job to make ends meet.  

    That's why I'm a fan of UBI – it's the best path forward to adapting to mass automation of the labor force.  

    Nikkei/Tommy – I haven't played them in ages because I think Japan has a different set of problems than we do and I'm surprised we all still trade in lock-step though, over the longer-run, the Nikkei is under-performing – which does make sense.

    40% of Japan's Government Revenues are used to cover their 200% of GDP debt – just paying the interest and the interest rate they are paying is roughly 1%.  That means if rates rise to 2%, 80% of their Government intake would have to go to debt service and they'd have to raise taxes, no matter how much they don't want to as they haven't got enough room to cut services because it's not BY 40% but 2/3 of the remaining 60% of revenue that goes to running the Government.

    Any loss of faith in Japan can quickly lead to a debt-spiral that turns them into Greece very quickly and a default on $10Tn would completely screw over the Global economy.  So we have that to look forward to.  

    CMG/Albo – Amazing how people buy them back up.

    Money/StJ – I found with my kids that starting them off young was best.  When we'd go to Disney – I'd give them each $20 for the day and let them make their own decisions so they'd learn the value of money as well as how to budget over time.  By lunch, Jackie would have nothing left and by the end of the day, Maddie would have $15 left.  Maddie is still a great saver – even in college – and Jackie has learned to be a hard worker to support her extravagant lifestyle.  

  10. Goaaaaaaaaalllllllllllllll at 1,535 on /TF and, with /NQ rejected, there's no point in being brave. 

  11. Oh, sorry, /NQ wasn't rejected, we're over 7,500 – it's /ES that isn't taking 2,900 yet.  Either way, out of /RTY with $750 is smart and we can play for a cross over 1,535 again as long as /ES has popped OR /YM has popped 26,200 but, at the moment, it's 2,895 and 26,156 with /NQ 7,533.

  12. I think that's my all-time favorite video…

  13. Phil good comment but still where are the masses of people with a hungry belly and why do they not revolt?

    Are they blind?

  14. Bill Maher/Phil  That was a good show. While watching the Andrew Yang, my wife looks at me a says "this guy has some great ideas" I told her you should read PSW daily (even if stocks aren't your thing) as I've been suggesting for the last 10 years…. Thanks Phil. 

  15. Yodi – A revolt may mean less time on their smart phones….

  16. everything is looking good for the long on rtv and oil futures but im being patient it feels like a trap

  17. Revolution/Yodi – It takes a lot.  There are plenty of jobs, they just don't pay well so people go more and more into debt and, as long as they can do that, they accept their fate.  It takes an event like we had in 2008, when people were evicted from homes and got their credit cut off – to get people angry enough to vote in a liberal.  

    Image result for obama hope

    As soon as people have $100 in the bank – it's very easy to scare them into thinking the Government is coming to take it away – so they vote Republican and say "screw those poor people" – even if they were one of them last week.  Crazy…

    Tell the wife I said hi 1020!

    Trap/Tommy – 2,902 on /ES so if /YM crosses 26,200 then I'd go back in /RTY (now 1,533.5) long.

  18. Nope, I'd call this a general rejection of our levels.  That's why we wait to confirm ALL our lines get crossed before making bets!

  19. With the Nas up 1.8% and Trump talking about tech anti-trust, I'd go short /NQ at the 7,550 line with tight stops above.  Lined up with 26,160, 2,900 and 1,530.

  20. Supreme Court rules against oil drilling platform workers

  21. Wow, oil took a big tumble – almost hit $53 just now. 

    Indexes down nicely too and, of course 7,500 is going to be bouncy so don't be greedy!

    See, even on a dull Monday we can still make a few $$$.  cool

  22. Very nice for LMT over 3 years as their current sales are only $54Bn so + 20% in sales AND of course, they still have to maintain and repair the fleet and that's going to be no less than 10% of the $34Bn a year, probably more like 20%…

    • The U.S. Department of Defense says it has a "handshake" agreement with Lockheed Martin (LMT -0.7%) for the first multi-year purchase of F-35A fighter jets that would cut the price by 8.8% and bring the price of each aircraft below $80M/year earlier than expected.
    • The agreement is preliminary and a final deal is expected to be sealed in August for the 12th batch of jets worth $34B, Reuters reports.
    • The first-ever multiyear agreement for the jets represents a shift in sales practices from annual purchases to more economic multi-year deals that lower the cost of each jet to $81.35M from $89.2M.

    Also, their R&D expenses for the F35 will be dropping too.  Unfortunately, LMT is high in the channel but I do like them long-term as a fusion play as well.  

    Year End 31st Dec 2013 2014 2015 2016 2017 2018 TTM 2019E 2020E CAGR / Avg
    Revenue $m 45,358 39,946 40,536 47,290 49,960 53,762 56,463 57,983 61,043 +3.5%
    Operating Profit $m 4,505 5,012 4,712 5,888 6,744 7,334 7,892     +10.2%
    Net Profit $m 2,981 3,614 3,605 5,173 1,963 5,046 5,593 5,799 6,873 +11.1%
    EPS Reported $ 9.04 10.1 9.93 12.1 13.0 17.4 19.4     +14.1%
    EPS Normalised $ 9.90 10.1 10.1 12.3 13.0 17.7 19.5 20.5 24.7 +12.4%
    EPS Growth % +17.0 +2.0 +0.3 +21.3 +5.8 +36.5 +36.0 +15.7 +20.3  
    PE Ratio x           20.0 18.2 17.3 14.4  
    PEG x           1.27 1.16 0.85 1.38

    $350 is only $100Bn in market cap for them so dropping $5Bn to the bottom line is still OK but I think this news makes these earnings estimates too conservative.  I guess we can work off the premise that we'd certainly like to get into LMT for $300 so let's do this in the LTP:

    • Sell 5 LMT 2021 $300 puts for $18 ($9,000)
    • Buy 5 LMT 2021 $330 calls at $50 ($25,000) 
    • Sell 5 LMT 2021 $365 calls for $30 ($15,000) 
    • Sell 2 LMT Sept $360 calls for $11.20 ($2,240) 

    So we're in the $17,500 spread for a net $1,240 credit and we have 5 more cycles to sell so possibly $11,000ish in credits plus the spread could be $28,000 if LMT goes up $13 (3%) in 18 months – I like those odds!  Worst case is we own 500 shares for less than $300 ($150,000) but we'd certainly roll down before doing anything drastic (the June $370 puts are $18 so figure we can roll down $60 every 18 months – that's pretty comfortable).

    This was our old LTP trade that we already cashed in:

    LMT with really good earnings, on track to make $17+.  P/E around 20 at $324 but they still look like the top contender to commercialize fusion first – which is a Trillion-Dollar opportunity, long-term.

    I like them because they are one of the last remaining companies with a real R&D budget.  I think at $250 I'd be really excited to own them so no reason not to sell 5 LMT 2021 $280 puts for $21 ($10,500) in the LTP, to remind us to keep an eye on them (and to drop $10,500 into our pockets). 

  23. Wow, lots of selling into the close.  Dow lost 100 of the gains.  

  24. I respect the right of everyone's political views, especially on Phil's site, but what about showing respect to all the clients who pay a lot of money every month to receive trading advice on this site and don't share your political views? Can you guys manage to chill just a bit on all the Trump bashing? Imagine being on a site run by conservatives who use their trading site to bash Obama without a breath, day in and out. You would get tired of it, would you not?

    I don't particularly care about Trump, I'm here to make money. And I think this site, despite the handicap of the left leaning views, one of the best at doing that, so I've endured reading, for years, all the daily anti-Trump BS. Sure, at times the Trump news plays a role in choosing trades, but the incessant political diatribe and rhetoric on this site is not only an annoyance, but it is a low grade background static that gets in the way of finding the trade ideas. I won't be continuing my membership for this very reason. Maybe you don't care Phil. But subjecting your readers to your daily anti-Trump rants lowers the overall vibe, like listening to someone complain about taxes, cold weather or stale bread. l love it when you're upbeat, and calling the markets right, that's fun and exciting! Please, I'm sure I'm not alone here in asking for more of that, and less of the other. Thank you.

  25. thetik preople like you are the reason people like trump and hitler exist

  26. thetik somethings are more important than money and im not a guy who has much but if a person at this point in history does not understand the importance of stopping trump and anyone else like him then you my frend and your children deserve the fate that awaits you

  27. Good morning!

    Trump-bashing/Tick – If Trump stops doing really horrible things that ruin our country, I would be THRILLED to stop talking about him.  I'm sorry if what I say sounds negative but that's my assessment and it does affect the markets so not talking about him would be a disservice to all our readers and pretending I'm OK with the guy would be downright dishonest.  Also, if your motive is to motivate me to change my ways, rather than say you are leaving (and lowering the pro-Trump base), in which case there's no point at all to my creating content that caters to your particular political views, why not offer a carrot instead and get 100 Conservatives to sign up for Premium Memberships if I can go a month without saying something bad about Trump?  I doubt I could do it – but I think that might get me to try.  cheeky

    See, I'm also willing to sell out for money – just like Donald Trump!  Now, that can't be bashing since that's the behavior you are attempting to solicit from me so you must consider it an admirable quality for a person to lie to you in order to make a buck, right? 

    And Tommy, personal attacks are uncalled for though it does remind me of why I speak up:

    Image result for first they came for poem

     I don't censor what you say because that would be UNAMERICAN and I'm more than willing to have an intelligent discussion (take a note, Tommy) on the issues or even all the things you like about Donald Trump, Mitch McConnell or any of the other sychophants who populate the GOP these days.  You must have some good stuff to say as I haven't been able to change your mind since the Obama was President.  

    And, by the way, when Obama was President we hardly said a word about him because he didn't do bat-shit crazy things to move the markets every day – he just did his friggin' job – very well, too!

    Image result for the tick

  28. yes sir never a dull moment at philstockworld

  29. Image result for hitler hitler hitler cartoon

  30. Well, Tommy, I didn't vote. I surrendered my American passport back in 2010 and moved to South Africa. But half the country did vote for Trump and that's how you got Trump and it's said a nation gets the leader they deserve. But anyway, breathe, be happy, enjoy life, as this too shall pass.

    Phil, I think you guys just prefer a well spoken, sophisticated front man for the deep state to a crude, poorly spoken one. but it makes no difference (ie. three Presidents, same two wars). The whole of western (corporate) culture is what's sick, and blaming one man is really not going to fix it.

    Thank you for not censoring me, because I'm not bashing you. I like and respect you and your site, biases aside, or I wouldn't pay for it. I am just asking respectfully if we can tone it down a bit. It's an agony to plow through all this vitriol daily. Anyway…on with the show…let's trade something!? :)

  31. What is, is only an indication of what your focus has been on in the past. There is no such thing as a static reality, and there is no such thing as a reality that exists outside of yourself. Looking at what is because you think you must face and accept reality causes intense focus on what is, which only reinforces the energetic vibration of what is. Therefore, all you will be able to manifest into your reality is more of what is. If you are interested in intentionally creating your life and finding bliss, your focus should be aimed at what you like about what is and what it is that you want to be- and in turn, that will end up being your reality.

    Swan, Teal. The Sculptor in the Sky

  32. RB/ Long. Good traction before API numbers.

    A bit of tolerance works wonders.

  33. Wow Tick, that was suddenly serene!  

    Unfortunately, with Obama, the President doesn't have as much power as you think and FORTUNATELY, with Trump, the President doesn't have as much power as you think but the scary thing is the system of checks and balances we have in place is being dismantled by Trump and the GOP, paving the way for a President who has way too much power and if you think you are going to be safe from the repercussions of that in South Africa – think again…

    It's not Trump I object to personally, it's right-wing extremism bordering on Fascism and, at the moment, the leader of that movement happens to be Donald Trump.  wink

    Image result for trump fascist cartoon

    Suffering in silence, they've all been betrayed

    They hurt them and they beat them, in a terrible way

    Praying for survival at the end of the day

    There is no compassion for those who stay

    I'll be there!

    I'll be there!

    I will be there!

    There must be someone who can set them free:

    To take their sorrow from this odyssey

    To help the helpless and the refugee

    To protect what's left of humanity