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Terrific Tuesday – Up and Up We Go

Day 6 of the rally.

I'm not upset because I wanted to crash, I'm upset because we didn't get a proper correction and now, this low-volume move back up doesn't give me enough confidence to enjoy the rally or assume we'll get to higher highs than the ones that have been rejected before.  

How many times can we rally because we made progress on fixing things that weren't broken in the first place?  What's next: 

  1. Mars is invading
  2. Trump is talking to Mars
  3. Mars is not invading – market soars to new highs

Have we really gotten this stupid?  What happened to trading on earnings and performance?  I'm a Fundamental Investor so of course I don't like it when the Fundamentals are ignored – it's very annoying.  It doesn't stop us from making money, however as yesterday, right in the PSW Morning Report, I said:  "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."  As you can see, we got a lovely pop off that line at the open:

Oh yes, I should clarify, that was early in the Morning Report (it's sent out to our Members while in progress) but, at the end of the morning report, I said:

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.

So 1,535 was our target and it was a pretty good one – as you can see from the chart.  At 12:24, in our Live Member Chat Room, we flipped bearish and played the Nasdaq Futures to go lower:

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.

You don't need an exciting market to make money, the Futures allow you to make quite a lot from the day-to-day gyrations, while you are waiting for the market to make a proper move.  Meanwhile, our hedges, though unsuccessful, allowed us to stay in our long positions and ride out the dips so now we're almost back to where we started – which was wildly ahead for the year.  That's what hedges are – they are insurance – not bets. 

Essentially, we're trading in a rumor-driven market and, unfortunately, that means we have to keep a constant eye on what Trump is doing as he's ground zero for most of the rumors that drive the market.  We were just discussing in Member Chat how we talk about Trump too much but it's because, every day, there's something to talk about.  I think we might have gone 8 years of Obama mentioning him less often than we do Trump in a month!   The bottom line is, if you are short-term trading the markets and you're not paying attention to what Trump is saying – you are a fool.

Image result for trump trade cartoonYesterday, Trump was weighing more sanctions on Iran and tougher sanctions on China and talking about breaking up Big Tech with anti-trust actions that you would think the GOP would object to but Trump said it so they are fine.  Just don't tell them Liz Warren said it first or their heads will explode!  That's why we shorted the Nasdaq for the knee-jerk reaction but, realistically, it's very unlikely that current anti-trust law can affect tech companies as it's very hard to argue they have monopolies or restrain competition unfairly (domination is not restraint).  The Government spent a decade looking into Microsoft (MSFT), who were on 90% of all computers at the time – and they failed to make a case against them.

Unfortunately, we need to be on our toes because, while stocks are recovering nicely, the Volatility Index (VIX) is not calming down much and that's a very dangerous sign we need to pay attention to.  16 on the VIX implies a 1% move in the market PER DAY so, if we extrapolate that out for the rest of the week, it's 4% up, to S&P 3,016 or 4% down, to S&P 2,784 and, of the two, which one were we recently at?  Of course we are most likely to go 1% up and 1% down and 1% up and 1% down and end up nowhere on Friday – it doesn't seem likely at all we're going to make new all-time highs.  

Stocks up, vols up as trade tensions ebb yet linger

For one thing, the tension with China is still extreme.   Yesterday, Trump warned that tariffs on China will go up if Xi Jinping won't meet at the G-20 summit in Japan. “I think he will go, and I think we're scheduled to have a meeting,” the president told CNBC, adding Beijing is “going to have to make a deal.” Trump also renewed his attack on the Fed, complaining it not having the power over the Fed that he says Xi wields over China's central bank. “The head of the Fed in China is President Xi,” he said. “He can do whatever he wants.”  This is a constant theme with Trump, lamenting that he doesn't have the power of dictators.

CitiGroup (C) warned trade tensions are set to roil stocks, bonds and commodities even more. The bank's base case predicts Trump applying 25% tariffs on additional Chinese goods. If the Fed doesn't cut, expect a “full scale bear market” that sends the S&P 500 down 20% from its April peak, 10-year Treasury yields tumbling to 1.5% or lower and a surge in gold to $1,600 an ounce.  Of course, no one is actually paying attention to anything bears have to say – so why worry?

Meanwhile, small businesses have never been more confident and they are the ones who hire 70% of the workers in America so I'm not saying we should blindly follow the bears – or the bulls – just that we should keep on our toes and pay close attention to those rumors because they start to matter when they become policy and these small business owners could be optimistic but I know when I ran a small business, I didn't have time to worry about Geopolitics.  

Things were good when money was coming in and bad when it wasn't and certainly in April, money was still coming in but inventory was building and credit was deteriorating and earnings were flattening yet still they were very optimistic about the Future.  Hopefully that trend (blind optimism) continues and the market keeps grinding higher but I'm still a bit skeptical – we'll just have to wait and see.

Meanwhile, we can amuse ourselves with short-term bets!

 


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  1. I can't complain, this is a perfect market – sell premium in the dips and watch it melt when we go up. And we are always only one tweet away from a violent move up or down… Plenty of opportunities.


  2. Good Morning!


  3. These are not the building blocks of a thriving economy but yet that seems OK with 1/2 of Congress:

    https://www.bloomberg.com/news/features/2019-05-23/the-wealth-detective-who-finds-the-hidden-money-of-the-super-rich

    Zucman and Saez’s latest estimates show that the top 0.1% of taxpayers—about 170,000 families in a country of 330 million people—control 20% of American wealth, the highest share since 1929. The top 1% control 39% of U.S. wealth, and the bottom 90% have only 26%. The bottom half of Americans combined have a negative net worth. 


  4. G20 in Osaka will be held on the 28th and 29th of June


  5. I look forward to the House passing a UBI bill


  6. Hard to fathom the valuation on Tableau (DATA) that Salesforce (CRM) paid for. It was not cheap to begin with. 


  7. Good morning! 

    Opportunities/StJ – You said it, very exciting for short-term traders and not bad for long-term either since, generally, we're heading up.  Wealth distribution remains sickening.  That's why the UBI numbers work – the top 1% could double the wealth of the bottom 90% and still have 13% of the country's wealth to themselves.  Of course, keeping out the 1-10% range is missing another 34% so it's 73% of the wealth in the hands of 10% of the people while 90% have to fight it out for the remaining 27%.  Yet this does not seem to bother people…

    UBI/Mike – Well Jackie will be 18 soon so that's $48,000/yr for my family – enough to pay for one of them to be in college at least…  Think what a huge impact that would have on all families – even ones making $250,000 – an extra $48,000 is nothing to sneeze at.  And how could anyone say that won't boost the economy – of course it would!  It's the single most significant thing we can do to reduce inequality and create opportunity because any family can live with dignity and kids can KNOW they are going to college and WILL be able to pay back loans and will be able to pursue their dreams and not just settle for whatever crap pays the rent after school and then the next compromise and the next and suddenly they are 40 and wondering why they didn't save enough for retirement and what happened to all the things they wanted to do in life?  We need to stop that cycle!  

    Image result for life passing by cartoon

    DATA/StJ – Yeah, I don't know what CRM is doing there. 


    • Stocks rack up another higher open, continuing the extremely positive mood in the market over the past week; Dow +0.5%, S&P +0.6%, Nasdaq +0.8%.
    • Expectations for a Fed rate cut and trade optimism have fueled the rally, and stocks are extending gains today after China announced new stimulus measures that would let local governments use bonds to finance infrastructure projects.
    • A seventh straight gain for the Dow would mark the index's longest winning streak since May 2018, while the S&P 500 is back above 2,900 and within 2.3% of its all-time high set earlier this year.
    • European bourses enjoy solid gains, with Germany's DAX +1.4%, France's CAC +0.8% and U.K.'s FTSE +0.5%; in Asia, Japan's Nikkei +0.3% and China's Shanghai Composite surged +2.6%.
    • In the U.S., the S&P's consumer discretionary (+0.9%), communication services (+0.9%) and energy (+0.8%) sector lead the early gainers, while the utilities (flat) and real estate (+0.2%) sectors lag.
    • U.S. Treasury prices are lower, pushing the two-year yield up 3 bps to 1.93% and the 10-year yield 2 bps higher to 2.14%; U.S. Dollar Index flat at 96.77.
    • U.S. WTI crude oil +0.9% to $53.74/bbl.
    • Global metals and mining stocks trade higher after China iron ore futures jump 6% on speculation that demand will continue to exceed production over the coming months: MT +6.3%CLF +4.8%FCX +4.1%AKS +3.9%X +3.7%BHP +3.2%NUE +2.9%RIO +2.7%XME+2.6%.
    • Reuters reports the most-traded iron ore futures on the Dalian Commodity Exchange hit a daily upper-trading limit with a 6% rally to 760.5 yuan/mt ($109.97); benchmark Shanghai rebar prices rose 3.5% and hot-rolled coil climbed 2.7%.
    • "Tight supply is unlikely to be eased in the short term, but demand for iron ore will be robust despite the moderation of profit margins at steel mills," according to analysts from Huatai Futures.
    • Inventory of imported iron ore at Chinese ports reportedly has fallen to 121.6M metric tons, its lowest level in two and a half years, while utilization rates at steel mills across China stood at a relatively high 71.44% as of June 7, according to data from Mysteel, underlining strong demand for the ferrous metal, although mills in the top steelmaking city of Tangshan have been ordered to reduce production in June.

    • Beyond Meat (NASDAQ:BYND) announces that it will release the latest version of the Beyond Burger at grocery stores nationwide.
    • The company calls the new Beyond Burger patty the brand's  next step forward in its vision of building the Future of Protein.
    • "The new, meatier Beyond Burger features marbling designed to melt and tenderize like traditional ground beef. Made using a blend of pea, mung bean and rice proteins that offer a complete protein source, the blend of proteins provides a meatier taste and texture that mimics the chew and juiciness of beef."
    • Consumer reviews of Beyond Meat patties from long-time carnivores have been largely favorable in comparison to many of the meatless products of the past.
    • The new Beyond Burger will begin shipping this week. BYND -10.81% premarket to $150.08 following a JPMorgan downgrade.
    • Source: Press Release
    • JPMorgan upgrades Dollar Tree (NASDAQ:DLTR) to an Overweight rating and assigns a price target of $122.
    • "Our top-line and margin builds across banners support an inflection to high-single net income growth and low-double-digit consolidated EPS growth beyond FY19," notes JP.
    • The firm says the combination of Dollar Tree stability and Family Dollar's self-help story could drive +$1B annual free cash flow generation by FY20 in a stable/rational low-end backdrop (wages/employment) translating to an overall attractive fundamental risk/reward profile on the retailer.
    • The average sell-side rating on Dollar Tree is Outperform and the SA Authors' consensus rating is Bullish, while the Quant Rating on DLTR is Neutral.
    • Shares of Dollar Tree are up 3.59% premarket to $107.50.
    • Lennar's (NYSE:LEN) announces the final closing of Lennar Multfamily Venture II fund, a $1.3B equity fund targeting investments in class A multifamily communities in the 25 top U.S. metropolitan markets.
    • LMV II's investors include eight prominent institutional investors, a group that consists of foreign pensions, sovereign wealth funds, banks, and insurance companies.
    • Lennar Corp. has a $381M commitment to the venture.
    • With target leverage of 50%, LMV II will provide LMC with capital to develop and acquire $2.6B in multifamily assets across the U.S.
    • LMV II will develop and acquire apartment communities and hold them to generate cash flow for the duration of the fund's eight-year life.

    Why You Should Consider Investing In AT&T 

    Alphabet: Too Cheap, Down 20% From 52-Week Highs 

    Barclays bearish on Teva, sees 14% downside risk in premarket analyst action

    • Village Farms International (NASDAQ:VFFannounces that Governor Greg Abbott has signed into law Texas House Bill 1325, which effectively legalizes the cultivation and processing of hemp and hemp-derived products, including cannabidiol (CBD) in the State.
    • In anticipation of the passage of the legislation, Village Farms has begun conversion of half of its 1.3M square foot, Permian Basin greenhouse for cultivation of high-CBD hemp and CBD extraction.
    • The Texas Hemp Legislation will require licenses and Village Farms plans to apply for the same. No time frame has yet been provided by the State of Texas for the licensing process.
    • Shares are up 2% premarket.
    • Ford (NYSE:F) Chairman Bill Ford says he disagrees with the assessment that the Detroit automaker is behind peers with its autonomous program.
    • "Our self-driving system, Argo, is incredibly competitive. On the technology side, we are right up there with the very best in terms of time of development but we want to take great care before we let people in these vehicles," maintains Ford.
    • The automaker bought Argo AI in 2017 and is working with several Israel-based several technology firms such as Intel unit Mobileye.
    • Shares of Ford are up 0.61% premarket to $9.88.
    • Self-driving car startup Monet plans to begin operating in Southeast Asia next year.
    • Monet is planning to export a basic version of its on-demand self-driving service platform in Southeast Asia as a simple transportation service or airport shuttle system. The company has long-term plans to introduce on-demand bus and car services in Japan.
    • Monet is a joint venture between Toyota (NYSE:TM) and SoftBank (OTCPK:SFTBY)
    • Susquehanna upgrades Lyft (NASDAQ:LYFT) from Neutral to Positive.
    • The target increases from $57 to $80, implying a 41% upside.
    • Lyft shares are up 4% pre-market to $59.
    • LYFT has an Outperform Sell Side rating.
    • Crocs (NASDAQ:CROX) says it doesn't anticipate that tariffs on Chinese imports will have a material adverse impact on its business due to the company's globally diversified sourcing base.
    • "We expect the amount of U.S. product sourced from China will be below 10% for 2020," notes Crocs management.
    • "We are evaluating various mitigation initiatives which will be implemented to lessen the impact on Crocs of any tariffs ultimately put into effect."
    • Execs with Crocs are presenting today at the Stifel 2019 Cross Sector Insight Conference.
    • Source: Press Release
    • Citi lifts JetBlue (NASDAQ:JBLU) to a Buy rating after having the airline stock slotted at Neutral.
    • The firm's price target of $26 reps 42% upside potential. The PT is well ahead of the 52-week high of $20.14.
    • Shares of JBLU are up 0.88% in premarket trading.
    • A European payment system, known as INSTEX, designed to circumvent U.S. sanctions on Iran will be ready soon, German Foreign Minister Heiko Maas announced as he met Iranian officials in Tehran.
    • The deal has the Trump administration weighing additional penalties against the Special Trade and Finance Institute, an Iranian financial body set up as a go-between for humanitarian trade with Europe.
    • Punishing the STFI could doom Instex because it raises the possibility of sanctions risk to anyone who's a part of the European mechanism.
    • Federal judge Richard Leon appears to be on track to derail CVS's (NYSE:CVS) $69B plans to buy health insurer Aetna, amid concerns the deal would give the nation's biggest drug store too much power and result in higher drug prices, sources told the New York Post.
    • After sparring with lawyers and witnesses for two days last week, Judge Leon scheduled oral arguments for July 17 and is expected to rule soon after that.
    • A rejection by would likely set the stage for an appeal by DOJ, which has recommended that the deal be approved.
    • Alibaba's (NYSE:BABA) voice-controlled assistant will feature in local vehicles from Audi (OTCPK:AUDVF), Renault (OTCPK:RNLSY) and Honda (NYSE:HMC), as the tech giant expands in artificial intelligence.
    • The Tmall Genie is akin to Amazon's Echo. Amazon also has a vehicle version of its Echo, dubbed the Echo Auto, which it announced in September.
    • Representatives of the EU's national governments are meeting today to decide whether to start disciplinary procedures over Italy's rule-breaking debt levels.
    • Deputy Prime Minister Matteo Salvini has chosen, for now, to play the stand-off softly softly, insisting that he didn't want to "pick up a fight with Europe" and that a compromise could be found.
    • Easing concerns about a snap election, heads of the ruling parties are set to meet with finance minister Giovanni Tria to set out a shared budget package acceptable to the EU Commission.
    • Just a month ago, Amazon (NASDAQ:AMZN) opened its first cashier-free convenience store in New York. This morning it will open another.
    • 300 Park Avenue in Midtown will also be the second Amazon Go location to serve brewed coffee and espresso drinks, something the company has been testing back in Seattle in a deal with Starbucks.
    • Cameron Janes, VP of physical stores at Amazon, wouldn’t comment on how many stores Amazon ultimately plans to bring to New York, but it's been reported the company could open as many as 3,000 locations across the country by 2021.
    • Tesla (NASDAQ:TSLA) is gearing up for its annual shareholder meeting – set to kick off today at 5:30 p.m. ET – amid recent wild stock fluctuations driven by sudden sentiment changes on Wall Street.
    • This year, shareholders will consider the re-election of two board members, new equity incentive and employee stock purchase plan, as well as recertification of the company's outside accounting firm, a public policy committee and a proposed simple majority rule to replace the current super majority.
    • After swinging to a loss in Q1, Elon Musk insisted that the company will return to profitability in the second half of 2019, meaning investors will focus on any updates to those predictions.


  8. Phil / SNE- Hi Phil, what are your thoughts on Sony at this level?  TIA


  9. what are your thoughts on market affect of trumps tweets this morning 


  10. Amazon Ends Restaurant Delivery in Face of Fierce Competition 

    Time will tell but a shakeout in the Grubhub/Ubereats et.al. world seems inevitable. Appears to me that restaurants have climbed on this band wagon because everyone else is doing so. Running your business based only on retaining market share is not a long term success plan. 


  11. SNE/EMike – I meant to buy them at $42 but forgot.  Now $50 and still not bad but, for the LTP, I'd rather net in for $42.50 by selling 10 SNE 2021 $50 puts for $7.50 ($7,500) as that pays us $7,500 to keep an eye on them and $42.50 would be a fantastic entry point – even in a crash.   Thanks for the reminder.

    Year End 31st Mar 2014 2015 2016 2017 2018 2019 2020E 2021E CAGR / Avg
    Revenue ¥m 7,767,266 8,215,880 8,105,712 7,603,250 8,543,982 8,665,687 8,785,987 8,986,665 +2.2%
    Operating Profit ¥m 24,847 68,548 290,888 281,073 729,905 894,235     +104.8%
    Net Profit ¥m -128,369 -125,980 147,791 73,289 490,794 916,271 537,210 583,504  
    EPS Reported ¥ -125 -113 117.5 56.9 379.7 707.7      
    EPS Normalised ¥ -123.9 -113 119.3 104 403.2 707.7 439.5 467.6  
    EPS Growth %       -12.8 +287.7 +75.6 -37.9 +6.38  
    PE Ratio x           7.60 12.2 11.5  
    PEG x           n/a 1.92 1.31
    Profitability

    Of course that's in yen – just shy of Y1Tn in profits this year but note it declines after this very good year but still a respectable roughly $5Bn/yr on a $60Bn current valuation.  I think some of the Japanese companies don't get noticed by screening programs because they report in Yen and mess up the algos that are looking for them.

    Trump/Tommy – I'm trying not to get involved today.  Certainly there's nothing wrong with the President wishing to communicate with his constituents?

    • See: "we're not doing anything in the Senate regarding the Mueller Report" – it's so nice when our system of checks and balances still manages to allow the President and the Senate to work as if they were one voice – it really speeds up the Democratic process when there's no resistance, don't you think?
    • "Fed interest rate way too high" – Yes, that 1.25% must be killing his buddies in the Building Industry – how can they pay such outrageous rates?  
    • "Maria, Dagan, Steve, Stuart V – "  – It reminds me of Romper Room!  

    What happened to the rally?  Trump may have to take back his "Good day in the stock market" tweet already…

    7,600 rejected on the nose on /NQ.

    Restaurants/Pstas – Uber has begun charging a 15% "service charge" that is NOT a tip for the driver so, if you want to tip the driver 10% – you are paying 25% more for your food plus there's often a delivery fee on top of that so they won't last long at those prices and Door Dash is similar.  I agree that restaurants will strike back and create their own services that don't screw with the customer so much.  The idea was to sell more food but how many people are really ordering at those prices.

    GRUB had $1Bn in sales last year, up from $700M in 2017 and they made $78M and last Q they did $323M in sales and made just $7M as competition heats up.  GRUB is at $6.3Bn ($69) so about 100x $60M which they HOPE they can make this year.  It's another one of those services that caters to the rich but the larger segment of the population isn't too keen on paying 25% more for dinner.

    Also, I hear GOOG is going to start comparing prices for you from different services for the same restaurant – that's going to really kill these guys if people begin to wise up.


  12. If I were Groupon, I'd work out a delivery service that DISCOUNTED the food – I bet that would do well.


  13. Phil/STT,

    what's with STT? again down 3%. it is up one day but then down again. no specific news that I could see.

    regards


  14. STT/Pat – Ouch!  I don't see any news and Q1 was $1.24/share in earnings vs $1.19 estimated – all of that was off about 25% from last year though.  AUM was up though, so it's not like they are losing customers or market share – just a rough environment.  Q1 is always the worst Q and they still expect to make over $6 for the year so even a p/e of 10 puts them at $60 so $55 is simply too low. 

    Year End 31st Dec 2013 2014 2015 2016 2017 2018 TTM 2019E 2020E CAGR / Avg
    Revenue $m 9,864 10,274 10,360 10,207 11,170 11,982 11,895 11,916 12,271 +4.0%
    Operating Profit $m 2,666 2,437 2,298 2,120 2,899 2,999 2,871     +2.4%
    Net Profit $m 2,050 2,022 1,980 2,143 2,177 2,599 2,446 2,403 2,588 +4.9%
    EPS Reported $ 4.43 4.53 4.47 4.97 5.92 6.32 5.89     +7.4%
    EPS Normalised $ 4.61 5.12 5.40 5.40 6.47 6.39 5.98 6.41 7.33 +6.8%
    EPS Growth % +13.4 +11.1 +5.4 -0.07 +19.9 -1.2 -13.2 +0.30 +14.2  
    PE Ratio x           8.95 9.57 8.92 7.81  
    PEG x           29.8 31.8 0.63 0.71
    Profitability

    That's $21Bn at $55 for the whole bank and no one wants it?  


  15. I'm doing the Hemp Boca Show at 2:30 so I'll be leaving at 2.  Hopefully the market doesn't collapse.  

    Lots of excitement in Hemp Boca land as Jean just got back from Thailand and we're in the running to supply their NHS with CBD and, because that minister is also in charge of Laos, we are very likely to be working with that country too.  In addition, we're working with an International Distributor who wants to pick us up in 30 countries!  

    Next week, we're going to a show in NYC being put on by Kevin Harrington (Shark Tank) as a showcase product so I'll be there Weds-Mon but I don't think I'll miss much work time – the main thing is Thurs night and then it's just schmoozing and meetings for 3 days.  

    Meanwhile, Ken at New Age is signing a go-forward agreement in Mass and we're also working on putting together a group in Illinois, who are just legalizing.  New Age is meeting with Hemp Boca in NYC next week to possibly manufacture some CBC products for them (see how I make it all work together?).  

    We're still looking to fill out investors in our Cannabis Fund, so let Greg know if you are interested (if you haven't already, of course).  I WILL get back to everyone this weekend with updates.

    Our regular hedge Fund, Capital Ideas, is also taking on new investors for the 2nd half – also contact Greg.  


    • New York's attorney general confirms that the state is suing to block the $26B merger of Sprint and T-Mobile along with nine other attorneys general.
    • Named as plaintiffs along with the State of New York are California, Colorado, Connecticut, Maryland, Michigan, Mississippi, Virginia, Wisconsin and the District of Columbia.
    • They're suing Sprint (NYSE:S), T-Mobile (NASDAQ:TMUS) and their parents SoftBank (OTCPK:SFTBY) and Deutsche Telekom (OTCQX:DTEGY).
    • "If the merger is consummated, it will cause substantial harm to consumers in the Southern District of New York and across the United States," the complaint reads.
    • Current action: Sprint -5.3%; T-Mobile -1.4%; SoftBank -1.7%; Deutsche Telekom flat.
    • Copper prices are higher after China's government announced new measures to stimulate economic activity, with Comex copper for July delivery – the most-active futures contract – recently +0.6% to $2.6775/lb.
    • Prices are on track to advance for the fifth time in the past seven sessions, though they are still 9.5% below their April high on fears that trade tensions will slow the global economy and hurt demand for industrial metals.
    • Copper's price slide has been accompanied by – and in part driven by – a dramatic increase in short positioning by money managers on the CME's high-grade copper contract.
    • China said overnight it would accelerate financing of major infrastructure projects through "special-purpose bonds" issued by local governments, the country's latest effort to bolster growth amid the trade dispute with the U.S.
    • Other industrial metals also climbed alongside copper, with, zinc, nickel and lead each advancing 1% or more on the London Metal Exchange.
    Ah ha – This just in:  State Street -4.2% on dimmer Q2 outlook
    • State Street (NYSE:STTslumps 4.2% after CFO Eric Aboaf said the bank's fee revenue is likely to fall 1%-2% Q/Q in Q2 on "lower FX volatility and lighter client volumes.
    • Bloomberg reports comments made at an industry conference.
    • Sees Q2 net interest income declining 8% Q/Q as a result of "significant turn in the interest-rate evironment.
    • In April Aboaf had expected fee revenue flat to +1% in Q2 and NII falling as much as 2%.
    • Lovesac sank (LOVE -15.8%) after it reported Q1 loss wider than analysts' expectations; Net loss was $9.1M compared to a net loss of $5.7M last year; non-GAAP operating loss was $9.1M vs. $5.4M last year.
    • However, sales rose 53% to $41M, while comparable-store sales jumped 43.5%, and showroom sales gained 31.7% with internet sales soared 83.5%.
    • Gross margins decreased 340bps to 51.3% primarily driven by the 10% tariffs on China levied by the U.S. partially offset by reduced costs of Sactionals and Sac products.
    • "As we look to the remainder of the year, we will continue to make critically important infrastructure investments in support of our growth while adjusting various aspects of our operations to offset much of the impact of tariffs on goods from China," said CEO Shawn Nelson."
    • Previously: Lovesac EPS misses by $0.11, beats on revenue (Jun. 10 2019)
    • Boeing (BA -1.5%) reports May deliveries fell 56% Y/Y to 30 planes from 68 in the year-ago month, as deliveries for its top-selling 737 MAX jets remained halted.
    • Net orders YTD remained in negative territory, with a total of minus 125 net orders.
    • Rival Airbus delivered 81 aircraft in May, up 59% Y/Y, and 313 in the January-May period, a 40% increase.
    • Walmart (WMT +0.6%) announces a deal with US Solar to subscribe to 36 of US Solar's community solar gardens located throughout the state of Minnesota.
    • The retail giant says US Solar's 36 one-megawatt community solar gardens will generate clean, renewable energy and provide energy savings to Walmart locations in 13 separate counties.
    • The first solar gardens have already been built and the remainder are targeted to be online by the first half of 2020.
    • Source: Press Release
    • Domestic auto sales in India fell 21% in May as the industry recorded the worst month of growth in 18 years.
    • SUV sales were down 5.6% to 77,453 units, while passenger car sales fell 26% during the month, according to the Society of Indian Automobile Manufacturers.
    • SIAM expects 3% to 5% passenger vehicle sale growth for the current fiscal year that started on April 1.
    • Related stocks: Maruti Suzuki (OTCPK:SZKMF), Tata Motors (TTM +4%), Honda (HMC +0.7%).
    • The London Metal Exchange's plans to launch a new contract for lithium are deprived of a key source of pricing data as top producer Albemarle (ALB +2.4%) says it will not participate in the effort.
    • The contract would go against the company's view that lithium is a specialty chemical, not a commodity, David Ryan, ALB's head of corporate strategy and investor relations, told a lithium industry conference today in Santiago, Chile.
    • Ryan spoke on a panel presentation alongside executives from rivals SQM (SQM +3.6%) and Tianqi Lithium, who agreed that lithium is not a true commodity but stopped short of saying their companies would not work with the LME.
    • Unlike for copper or other metals used to make electric cars, no traded price exists for lithium, leaving the industry's investors and executives without a full sense of the global market.
    • ETF: LIT
    • U.S. oil demand jumped 500K bbl/day to 20.46M bbl/day in 2018, the biggest increase in more than a decade and accelerating a trend of rising oil demand since a trough in 2009, BP says in its latest annual Statistical Review.
    • BP raises its estimate for oil reserves for the U.S. – which became the world's top producer in 2018 – by 22% to 61.2B barrels from 50B barrels at the end of 2017, while lifting its estimate of Saudi crude reserves at year-end by 12% to 297.7B barrels from 266.2B.
    • The report includes a warning that the world risks losing the battle against climate change, as extreme temperatures sparked a 2.9% surge in global energy demand - the fastest rate since 2010 – and a 2% rise in carbon emissions last year.
    • "It's clear we're on an unstable path with carbon emissions rising at their fastest rate since 2011," BP Chief Economist Spencer Dale says.

  16. On yesterdays play LMT down big NOC and RTN all down. What gives. Wrong tweet of the clown?


  17. /ES – Rode the short from 2,900 to 2,880 and taking that gain. So tempting to now go long with /NQ at 7,500 but I think I be happy for one day and stay put. 


  18. Hey Phil,

    IPOA owns a bunch of shares in Slack. It seems to me that once Slack goes public on 6/20 IPOA should pop up. Am I missing something?

    Thanks, Sunil


  19. LMT/Yodi – I think people are focused on the 8.8% discount LMT is giving on the planes but it's in exchange for a 3-year commitment on a massive order – not detrimental to me.  

    Nicely played Buckeye.  If the Dollar were higher or the VIX lower, I'd feel better about a long but neither is true.

    IPOA/Sun – Interesting premise.  IPOA is just a $208M company at $10.34.   I don't know what "a bunch of shares of Slack" is.  IPOA is "blank check" company that raised $600M in 2017 at $10 and now they are back at $10 and they still have $326M left to spend as of 3/31 but show $709M of liabilities (apparently Class A shares subject to redemption and you are being offered class B shares who are a distant second in line).  As a rule of thumb, if I can't figure out how something like this is not a scam – I just stay away.  


  20. IPOA/Sun – I don't see that they do own any Slack shares at the moment:

    Results of Operations

     

    We have neither engaged in any operations nor generated any revenues to date. Our only activities from May 5, 2017 (inception) to March 31, 2019 were organizational activities and those necessary to consummate the Public Offering, described below, and identifying a target company for a Business Combination. We do not expect to generate any operating revenues until after the completion of our Business Combination. We have generated and expected to generate non-operating income in the form of interest income on marketable securities held after the Public Offering. We have incurred and expect to incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.

     

    For the three months ended March 31, 2019, we had net income of $4,042,995, which consists of interest income on marketable securities held in the Trust Account of $4,193,961, offset by operating costs of $133,046 and an unrealized loss on marketable securities held in the Trust Account of $17,920.

     

    For the three months ended March 31, 2018, we had net income of $1,758,024, which consists of interest income on marketable securities held in the Trust Account of $2,321,396, offset by operating costs of $466,305 and an unrealized loss on marketable securities held in the Trust Account of $97,067.

    It's possible that their "marketable securities" include Slack shares but that stretches the concept of "marketable securities" in a pre-IPO company.


  21. Off to the radio – see you all later!  




  22. Well, that turned out to be a blah day, down a bit but not too much damage.