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Faltering Friday – Triple Trouble at 2,900 on the S&P 500

"Falling, yes I am falling

And she keeps calling

Me back again"McCartney

Here we go again.  

It's always something that stops us from making new highs as we hover around our 10% line which is the TOP of our expected range into the end of the year.  What we actually expect to happen is we settle back down around 2,700 on the S&P (/ES) but the market doesn't seem to want to correct properly so we keep getting these low-volume rallies that keep us near the top.  

That's fine with us as our Long-Term Portfolio has held up nicely so far while our Short-Term Portfolio, where we have our hedges, made some nice gains on the last dip and we were wise enough to lock them in near the bottom.  We just did an STP Review where we cashed in our Russell Ultra-Short (TZA) hedges and I think, into the weekend, we should add back a new hedge to replace them.  I don't know if rising tensions with Iran and China (who just pledged to stand behind Iran) will bring us back to our DOOM!!! line at 2,800 on the S&P but we can look at hedges similar to the ones we used on May 30th to catch the last dip:

  • Sell 10 Macy's (M) 2021 $20 puts for $3.75 ($3,750) 
  • Buy 40 SDS July $31 calls for $1.50 ($6,000) 
  • Sell 40 SDS July $34 calls for 0.55 ($2,200)

The net cash outlay on the spread is just $50 and it pays $12,000 if the S&P Ultra-Short (SDS) climbs back to $34 and, of course, stays there into July 19th expirations.  SDS is a 2x ETF and currently $31.85 so we need a $2.15 move which is 6.7% so about a 3.5% drop in the S&P should do it – to just under 2,800.  

There's also the long-term obligation to buy 1,000 shares of Macy's (M) for $20 ($20,000) so make sure you REALLY want to own them and, if not, we had a few other suggestions in the May 30th Report for potential offsets to the cost of the hedge.

The way this market is behaving, it's not clear that even a full-scale war with Iran will give us a proper sell-off but, if that's the case, then Macy's will do well and we can certainly afford a $50 insurance policy against our long positions, right?   We see silver and gold spiking higher (good for our gold miner plays and, of course, Wheaton Precious Metals (WPM)) on war concerns while copper is still in the dirt on Trade War concerns.  Overall, it's a lot of concern out there for a market testing its all-time high

Morgan Stanley's Business Conditions Index fell off a cliff in the last reading and the headline index (as opposed to the more reliable 3-month average) is about as low as it was in 2008, when the economy was in full melt-down – so that should be at least a little bit of a concern.

On the other hand, Retail Sales popped 3.2% and it was all E-Commerce as Department Stores fell 4.6% vs last year BUT, keep in mind that stores like WalMart (WMT) and Target (TGT) have made huge E-Commerce pushes in the past year and it's now not so much Amazon (AMZN) gaining market share as simple more and more business is being pushed on-line.  

EVENTUALLY, if enough buisness moves to the Web, there won't be any point to those brick and mortar stores and we'll get another wave of closings and lay-offs and, more and more, the warehousing work is being done by robots and the sales are obviously being done by machines so the robots are, in fact, still stealing our jobs – only it doesn't seem like it when Target closes 100 stores and replaces them with one automated fulfillment center, does it?

Have a great weekend,

- Phil


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  1. We live in post-truth word:

    Fake news often relies on misattribution — instances in which we can retrieve things from memory but can’t remember their source. Misattribution is one of the reasons advertising is so effective. We see a product and feel a pleasant sense of familiarity because we’ve encountered it before, but fail to remember that the source of the memory was an ad.

    One study examined headlines from fake news published during the 2016 U.S. presidential election. The researchers found even a single presentation of a headline (such as “Donald Trump Sent His Own Plane to Transport 200 Stranded Marines,” based on claims shown to be false) was enough to increase belief in its content. This effect persisted for at least a week, and it was still found when headlines were accompanied by a fact-check warning or even when participants suspected it might be false.

    Repeated exposure can increase the sense that misinformation is true. Repetition creates the perception of group consensus that can result in collective misremembering, a phenomenon called the Mandela Effect.

  2. Gold and silver up this morning. 

    In the Pre-Market, GLD traded at the highest price in over a year.

  3. Good Morning!

  4. Good morning!  

    Gold and silver pulled back fast – Dollar popping may be why.  

    Big Chart – Nas lost the 50 dma and others are right there so watch which way things break but that low volume we looked at yesterday doesn't bode well for the bulls into the weekend and, of course, the market is completely ignoring all the bad stuff that's going on.

    Image result for droney cartoonOn Iran and the tankers.  Now the US has changed its tune from torpedoes (since the damage was above the water-line so that story was obviously false) to mines but still the damage is too high and also the captain of one of the ships said it came from the sky (drones – who do we know who has drones?).  US claims there was a mine but Iran took it off the ship so there's no evidence but we know they did it because we REALLY want it to have been them – especially if it was really us making people think it was them…

    Image result for droney cartoon

  5. Industrial Production BTE as well:

    • May Industrial Production: +0.4% to 109.6 +0.2% consensus, -0.4% prior (revised).
    • Capacity Utilization 78.1% vs. 78.0% consensus, 77.9% prior (revised).

    CLF is still pretty cheap at $9.66:

    • Dalian iron ore futures ripped to a new record and wrapped up their biggest weekly gain since February, raised by expectations of sustained tightness in supply and strong demand amid China's renewed drive to support its slowing economy.
    • The most-actively traded Dalian September iron ore contract jumped as much as 4% to 797.5 yuan/mt ($115.20), the highest since Dalian iron ore futures began trading in 2013, before ending +2.2% at 783.5 yuan, posting a weekly gain of 11.4%.
    • BHP, Rio Tinto (NYSE:RIO) and Fortescue Metals (OTCQX:FSUMF) all hit mutli-year highsovernight on the Australian Stock Exchange, which itself hit another 11-and-a-half year peak.
    • Some analysts see no end in sight to iron ore's rally that began shortly after Vale's (NYSE:VALE) tailings dam collapse in Brazil in late January.
    • "Supply losses in Brazil look structural, leaving the market undersupplied until 2020," ANZ analysts write. "Attractive steel margins amid stronger infrastructure spending in China bode well for demand."
    Year End 31st Dec 2013 2014 2015 2016 2017 2018 TTM 2019E 2020E CAGR / Avg
    Revenue $m 3,891 3,373 2,013 1,555 1,866 2,332 2,309 2,322 2,326 -9.7%
    Operating Profit $m 1,380 146.3 544.2 297 224.8 666.4 635.3     -13.6%
    Net Profit $m 413.5 -7,224 -749.3 174.1 367 1,128 1,190 495.9 404.5 +22.2%
    EPS Reported $ 5.06 7.14 0.68 0.49 1.24 3.42 3.37     -7.5%
    EPS Normalised $ 5.12 9.77 -0.97 -0.038 1.61 3.44 3.39 1.81 1.40 -7.7%
    EPS Growth %   +90.6       +113.3 +108.3 -47.4 -22.5  
    PE Ratio x           2.86 2.90 5.44 7.03  
    PEG x           n/a n/a n/a n/a

    CLF is probably going to make at LEAST $1.50 per $9.71 share this year and the higher ore prices as well as being local to North America I think gives them a big advantage this Q so I think it's time to jump back into CLF:

    For the OOP:

    • Sell 10 CLF 2021 $10 puts for $2.60 ($2,600) 
    • Buy 20 CLF 2021 $8 calls for $3 ($6,000) 
    • Sell 20 CLF 2021 $12 calls for $1.50 ($3,000) 

    That's net $400 on the $8,000 spread so $7,600 (1,900%) of upside potential if CLF manages to get back over $12 in 18 months.  Of course, we're likely to deconstruct it and take profits early but, for now, that's our goal – just the 1,900% gain (averaging 100% per month is not too shabby). 

    For the LTP:

    • Sell 20 2021 $12 puts for $4 ($8,000) 
    • Buy 50 2021 $8 calls for $3 ($15,000) 
    • Sell 50 2021 $12 calls for $1.50 ($7,500) 

    Here we're taking a $5 credit and we have a pretty aggressive put sale as a trade-off but it's a nice, $20,000 spread so $20,500 (4,100%) upside potential and really we're only risking losing $2 more per share than the OOP and, since the LTP can shrug off a $10,000 loss easily – there's no reason not to be more aggressive.

  6. By the way, when I take trades like that I'm also thinking of them as an offset to our hedges as well.  In other words, we got more aggressive with our hedges but, if we're wrong and things go well for the economy, then the OOP picks up $20,000 on CLF so now I can spend $20,000 on a hedge and feel good about it.

    It's always about BALANCE!

  7. KC low again.

  8. Markets zig-zagging like crazy today – unplayable.  

    /NG taking off though.

    /KC/Kgab – Early summer crops look good, way above last year.  

    The Agricultural Ministry in Colombia have reported that the government have allocated additional funding for the support of the country’s coffee farmers, so as to provide farmers with affordable lines of credit. This being in addition to the funding that they are already providing, to assist farmers with their on going program to replace aged coffee trees with new disease resistant and higher yielding coffee varieties.

    The U.S. Climate Prediction Centre weather forecasting agency have reported that they foresee a 66% chance that the El Niño phenomenon within the Pacific Ocean shall continue for the next three to four months, but with only a 50% to 55% chance for it to continue for a longer period. This is though a relatively mild El Niño that is taking place and so far, it has not brought with it any threatening weather issues for the Pacific Rim coffee producing countries and likewise, for coffee producers further afield.

    So a bit dangerous to play at the moment:

    I think it's so cute that BKS thought someone else would want to buy them! 

    • Barnes & Noble (BKS -2.6%) falls after Publisher's Weekly tips that the company received no new bids during the "keep-shop" period on the Elliott Management deal.
    Year End 28th Apr 2013 2014 2015 2016 2017 2018 TTM 2019E 2020E CAGR / Avg
    Revenue $m 6,839 4,633 4,297 4,164 3,895 3,662 3,592 3,551 3,506 -11.7%
    Operating Profit $m -220 -37.0 90.2 14.7 54.3 -127.9 20.1      
    Net Profit $m -157.8 -47.3 36.6 -24.4 22.0 -125.5 5.46 4.69 25.1  
    EPS Reported $ -3.02 -1.67 0.15 0.053 0.30 -2.10 0.068      
    EPS Normalised $ -2.92 -1.28 0.16 0.095 0.31 -0.89 0.33 0.060 0.34  
    EPS Growth %       -40.5 +222.7       +466.7  
    PE Ratio x           n/a 20.6 114.3 20.2  
    PEG x           n/a n/a 0.25 n/a

    They should be THRILLED to get $500M!

  9. So that JO trade if the coffee crop looks good?

  10. The president of Japanese ship operator Kokuka Sangyo says its crew saw a “flying object” before the tanker attack near the Strait of Hormuz. That account contradicts what U.S. officials say. More :

    I hope that's not the case as we are already looking dangerous on the World Stage and Putin and Xi are buddying up and pitching Europe and Asia that they all need to work together to contain US!  

  11. Why I'm Fully Loaded On Barrick Gold

    • Outdoorsy co-founder Jen Young stated on Bloomberg TV that the RV demand is strong as Millennials and Generation Xers continue to buy and rent. Young pointed to the strong demand on the lower price points in particular and singled out France, Germany, the U.K. and Italy as global markets showing strength.
    • She also noted that the push into RV vacations is pulling away from some traditional tourist destinations.
    • RV stocks: Thor Industries (THO +0.7%), Winnebago Industries (WGO +1.7%), Patrick Industries (PATK +0.4%), Camping World (CWH +0.7%) and LCI Industries (LCII +0.4%).
    • More than 3K unionized workers at one of the world's largest copper mines have walked off the job after failing to reach a labor deal earlier this week.
    • The three top unions at the Chuquicamata mine in Chile, representing 80% of the mine's workforce, rejected a contract offer from state-run Codelco on Wednesday, saying it failed to meet key demands such as an adequate health care plan, fair treatment of workers and retirement benefits.
    • Codelco says its last proposal was the best it could offer "while still being responsible to the country"; Chile wants to transform the century-old deposit at Chuquicamata into an underground mine and part of a 10-year, $39B overhaul of Codelco's operations.
    • Yet LME benchmark copper is lower-0.5% at $5,827/mt after top consumer China reported disappointing manufacturing and investment data, reinforcing expectations of weakening demand prospects from the U.S.-China trade war.
    • March business inventories +0.5% to $2,029.8B in-line with consensus and +0.0% prior (unrevised).
    • Sales -0.2% to $1,462.0B (M/M)
    • Inventory/Sales ratio of 1.39 vs. 1.36 (Y/Y)
    • June Consumer Sentiment 97.9 vs. 98.4 consensus and 100.0 prior.
    • Current economic conditions 112.5 vs. 110.0 prior.
    • Index of consumer expectations 88.6 vs. 93.5  prior.
    • Facebook's "Project Libra" continues to move along, with some reports tipping the unveiling of the FB cryptocurrency as soon as next week. Last night, the WSJ reported more than a dozen companies – including Visa, Mastercard, PayPal, and Uber – had signed up in support.
    • Barry Silbert captures the mood for at least some crypto fans, calling it "THE catalyst that propelled digital assets to mass global consumer adoption."
    • Bitcoin (BTC-USD) continues its strong move this week, now just shy of $8.4K.

  12. JO/Tangled – Couldn't untangle that question, please rephrase.

  13. Untangle ha.  I see what you did there. 

    In the OOP there is a position on JO that was made with the idea that the coffee crop was going to be smaller than usual as I recall.  If the crop will be good should that position still be maintained?

  14. 5 years ago, if Obama had said "Our intelligence indicates Iran attacked the ships" no one would have doubted his credibility – despite being burned by Bush.  With Trump now, no one believes us – this is MASSIVE damage he has done to the reputation of this country and it will take many, many years of hard work for America to be great again – in the eyes of the rest of the World.

    The attack on the Front Altair happened while she was sailing SSE. The explosion and fire occurred on it's starboard side (facing away from Iran and towards UAE). It happened while it was moving, low in the water, and well clear of the Strait of Hormuz.

    Mike Pompeo spews the cover story for a Saudi false flag attack on oil tankers in the Strait of Hormuz designed to involve U.S. forces in a war between Sunni and Shia Islam. The Trump administration seeks to deflect attention from their crimes and corruption. Lie, Deny, Deflect.

    The US has a video they claim shows an Iranian boat removing a mine from the hull but a Seal I know just said to me "That is NOT how you remove a mine!"  These guys just sort of popped it off the hull and put the supposedly live mine on their boat and drove away…  Also, even if it's a night-vision thing, my IPhone gets a better night picture than these Million Dollar Drones seem to!

    JO/Tangled – Ah, much better!   In the OOP we have:

    JO Short Call 2019 20-SEP 40.00 CALL [JO @ $34.03 $-0.19] -10 4/10/2019 (98) $-1,000 $1.00 $-0.25 $-1.00     $0.75 - $250 25.0% $-750
    JO Short Put 2019 20-SEP 35.00 PUT [JO @ $34.03 $-0.19] -10 4/11/2019 (98) $-3,300 $3.30 $-0.70     $2.60 - $700 21.2% $-2,600
    JO Long Call 2019 20-SEP 30.00 CALL [JO @ $34.03 $-0.19] 20 4/10/2019 (98) $8,200 $4.10 $0.55     $4.65 - $1,100 13.4% $9,300

    Our premise is off so maybe we do need to kill it.  Might be better to quit while we're ahead but let's see where we are next week before jumping out based on one good report as they are Sep contracts and $34 is significantly lower than they were last year – if this holds, then we're comfortable with $34 as it would net back $8,000 less $1,000 we owe on the puts would be $7,000 profit off the net $3,900 spread BUT, not really worth the risk if we don't stabilize above $34 next week.

  15. What am I missing on JO at $34?  I do not see the profit there.  Wouldn't the long call be about break even at $34?  Am I misreading your table?

  16. Jo/tangled, yes long calls about break even,10 short calls expire = +1000, short 35 puts give back 1 so keep 2.3 (3.3-1) and 10 of those is 2300, totaling +3300

  17. What Mike said!  

    On the whole, we're flat for the week so not sure if I want to trigger those shorts but I guess we should in the STP as we cashed out TZA and covered SQQQ so, for the STP (where we already have short M puts):

    • Buy 100 SDS Sept $31 calls for $2.40 ($24,000)
    • Sell 50 SDS July $33 calls for 0.80 ($4,000) 
    • Sell 50 SDS Jan $37 calls for $1.95 ($9,750) 

    That's net $10,250 on the $40,000(ish) spread assuming we'd roll the short July $33s to something higher and we'd either roll the Jan $37s to something lower or we'd spend money rolling the Sept $31s to longer months.  The way we deconstruct these on dips – it's only going to get complicated anyway so why not start out that way if it saves us money?

    • Cheniere Energy (LNG -0.8%) says it has started production of liquefied natural gas from the second liquefaction train at its Corpus Christi facility in Texas.
    • Cheniere says it expects to reach substantial completion of Train 2 ahead of schedule; Train 2 originally was expected to reach substantial completion in H2 2019, with Train 3 to follow in H2 2021.
    • The project has received a positive environmental assessment from the Federal Energy Regulatory Commission, and LNG expects to receive all remaining necessary regulatory approvals by year-end 2019.
    • Latest developments in the winding saga of the proposed merger of Sprint (S -0.2%) and T-Mobile (TMUS -0.2%) have Dish Network (DISH +0.1%) heavily involved in the considerations.
    • An ex parte filing shows Dish honcho Charlie Ergen met with Justice Dept. antitrust chief Makan Delraim and FCC Chairman Ajit Pai in the same meeting Tuesday, and used the opportunity to speak out against the merger.
    • Dish explained the need for a minimum of four nationwide operators in the space, according to the filing. And it also discussed the impact of the merger on its own planned market entry and wireless buildout plans.
    • GOP commissioners on the FCC have indicated they'd support the merger, suggesting it would pass a panel vote, while the DOJ appears more skeptical.
    • A lawsuit by 10 states opposed to the merger will get a pretrial hearing next week, and plaintiffs are pursuing a temporary restraining order that if granted would at least push the merger back several months.
    • In today's action: AT&T (NYSE:T-0.2%; Verizon (NYSE:VZ+0.6%.
    • The Fed's monetary policy-setting arm is likely to drop the word "patient" from its statement next week, setting the stage for a rate cut in July, according to economists interviewed by CNBC.
    • Fed funds futures are pointing to a probability of ~80% for a July rate cut.
    • Some expect the central bank to wait until September to digest more data before making a move.
    • A few, including Goldman Sachs economists, forecast no cuts this year.
    • With inflation stubbornly staying below the Fed's 2% target and a softer-than-expected May jobs report, economists expect the Fed's "dot plot" to lean toward lower rates compared with the lastdot plot in March, which didn't show any rate cuts through 2021.
    • The Fed will release the statement from its next meeting on Wednesday, June 19, at 2:00 PM ET, followed by Fed Chair Jerome Powell's press conference at 2:30 PM.
    • The New York Fed and Atlanta Fed both boost their models for Q2 real GDP growth, partly due to better-than-expected retail sales.
    • The Atlanta Fed's GDPNow estimate is now 2.1%,up from 1.4% a week ago; the New York Fed Nowcast stands at 1.4%, up 0.4 percentage point from its prior estimate.
    • New York Fed Nowcast for Q3 rises 0.4 pp to 1.7%.
    • New York Fed cites positive surprises from retail sales, capacity utilization, and industrial data.
    • The Atlanta Fed cites retail sales and industrial production; Q2 nowcast of personal consumption expenditures increased to 3.9% from 3.2%.

  18. Phil; some advice on my DIS position, please.  It was one of the first positions I put on after joining PSW in 2014.  Needless to say I have very profitable in the position but wanted your insight on possible adjustments.  My current position:

    2021 100/130 call spread 10x, 2021 100 puts 10x and July 120/120 straddle 7 times.  I collected $13 for the straddle.

    I have been treating the position as a PSW butterfly so I have been sell quarterly premium.  Thanks




  19. DIS/Options – Sounds on track to me.  Of course the July calls are in the money but the puts expired worthless so you just need to take the short July $120 calls ($22) and roll them to the Sept $130s ($14) and I would buy back your 2021 $100 puts for $3 and sell the Jan (2020) $135 puts for $6.70 so net close to even on the new short straddle and you can just roll the losing side in Sept.  If DIS keeps going higher, you might want to consider 7 June 2021 $135 ($24)/160 ($13) bull call spreads at $11 and then roll the short calls to maybe 12 of something with a higher strike (and more premium).  

    Dow almost green – amazing!  

    • Tesla is (TSLA +0.2%) is looking to ramp up sales in the U.S. even further in order to achieve a quarterly deliveries record, according to Electrek.
    • The EV automaker is said to be currently delivering cars at a rate of approximately 1K a day.
    • "Furthermore, there are almost 7,000 more deliveries planned over the next 7 days and even more last-minute deliveries are expected over the last week of the quarter as buyers try to get deliveries before the now $3,750 federal tax credit on Tesla vehicles goes down again," writes Frederic Lambert.
    • Tesla aims to deliver between 33K and 36K vehicles in June to break the North America delivery record.
    • Sprint (S +4.1%) and T-Mobile (TMUS +1.5%) have jumped in the past few minutes alongside a New York Times report that their merger is near approval from the Justice Dept.
    • AT&T (T +0.3%) and Verizon (VZ +1.2%) are also near session highs.
    • That approval will be conditioned on the sale of multiple assets to build a new wireless competitor, according to the report.
    • And such a plan would ding the suit filed by 10 attorneys general to stop the deal. The settlement could come in the coming week.
    • Sprint and T-Mobile have approached Dish Network (NASDAQ:DISH), Charter (NASDAQ:CHTR) and Altice USA (NYSE:ATUS) about buying Boost Mobile (Sprint's prepaid service) and associated airwaves.
    • General Motors (GM -0.7%) is tagged with a Sell rating at CFRA, downgraded from Hold with a $32 price target vs. $40 previously, citing weak sales and the effects of the U.S.-China trade war.
    • GM global sales fell 10.4% in 2018, including a 7% drop for U.S. sales, "and recent data suggests that demand remains weak, particularly in China," which accounted for 43.5% of GM's total vehicle sales, CFRA analyst Garrett Nelson says.
    • Believing GM likely will lower its earnings guidance, Nelson cuts his outlook for full-year profit estimates for 2019 and 2020.
    • DocuSign (NASDAQ:DOCUgains 4.6% after the Momentum user conference.
    • Morgan Stanley says the event "showcased core product strength widening the competitive moat" and management inspired "confidence in sustainability of forward growth."
    • The firm maintains an Overweight rating and $61 PT.
    • General Electric (GE -0.5%) potentially stands to win a large share of multibillion-dollar contracts to rebuild Iraq's electricity system, reflecting a change in how Iraq intends to award the work after the U.S. government lobbied for the company, Reuters reports.
    • Iraq's prime minister said in April that Siemens (OTCPK:SIEGY -1.6%) was well-placed to win the bulk of ~$14B in future deals for new plants, repairs and power lines, but under U.S. prodding, Iraq is now asking both Siemens and GE to bid on contracts and expects to make awards to each of the companies, according to the report.
    • "Political pressure on the Iraqi government… pushed the Abadi government to change plans and allow GE to get on board," an Iraqi electricity ministry official tells Reuters. "Talks are underway to decide about mid- and long-term contracts, which we expect to be divided between them."
    • The total count of active U.S. drilling rigs falls by 6 to 969, the fifth decline in six weeks, according to Baker Hughes' latest weekly survey.
    • The oil rig count is down 1 to 788, the lowest since February 2018, while gas rigs fall by 5 to 181.
    • Total U.S. rigs are down 90 from 1,059 a year ago, with oil rigs down 75 and gas rigs lower by 13.
    • WTI crude oil is little changed by the data, +0.8% to $52.72/bbl.

  20. Right at 2,900 again and Dow right near 26,200 with /NQ 7,530 and /RTY 1,530 to end the week.

    Have a great weekend everyone, 

    - Phil

  21. Boeing crisis, trade tensions cast pall over air show

  22. Happy Father's Day to all the Great Dads!   :)

  23. Pessimism About Happiness

  24. Good morning!

    Futures have been zig-zagging but up at the moment.  

    Waiting on the Fed this week (Weds).

    A lot of debt restructuring this morning:

    • Puerto Rico has inked a deal with its bondholders on how to restructure $35B of debt, which could allow the U.S. territory to emerge from bankruptcy in early 2020 after three years of financial limbo.
    • The agreement, which is on the framework for the plan of adjustment, provides for more than a 60% average haircut for all $35B, a 36% haircut on pre-2012 general obligation bonds, and a 27% haircut on public authority bonds.
    • Of the roughly $13B in outstanding GO bonds, the bonds issued pre-2012 would receive $0.64 on the dollar, while the 2012 and 2014 GO bonds have a settlement option of receiving $0.45 and and $0.35 on the dollar.
    • Deutsche Bank (NYSE:DB) is planning to overhaul its trading operations by creating a "bad bank" to house or sell assets valued at up to €50B – after adjusting for risk – and would shrink or shut its U.S. equity and trading businesses, FT reports.
    • Meanwhile, Goldman Sachs (NYSE:GS) is pulling together four separate units that invest in private companies, real estate and other hard-to-access deals, in a bid to boost its flagging stock price, sources told WSJ.
    • The division is likely to have around $140B in assets, making it nearly as big as KKR and about one-third the size of Blackstone.
    • The U.S. Trade Representative’s Office tomorrow will kick off seven days of testimony from U.S. retailers, manufacturers and other businesses about President Trump's plan to hit another $300B worth of Chinese goods with tariffs.
    • The timeline means Trump would not be able to trigger the fresh wave of levies until after July 2, when a seven-day final rebuttal comment period ends.
    • The duties would hit consumer goods hard, including cellphones, laptop computers, toys, video game consoles, television sets, clothing and footwear.
    • China's investigation into FedEx (NYSE:FDX) over misdirected mail should not be regarded as retaliation against the U.S. company, state news agency Xinhua said on Sunday.
    • "China is willing to share the opportunities in its courier market with foreign investors. Undermining Chinese clients’ legitimate rights and interests, however, is not acceptable."
    • The move came after Huawei complained that FedEx had diverted parcels destined for the Chinese tech giant’s addresses in Asia to the U.S., while  the latter said the packages were "misrouted in error."
    • India will impose higher retaliatory tariffs on 28 U.S. products including almonds, apples and walnuts from Sunday, following Washington's decision to strip the country of preferential access to the American market.
    • New Delhi initially issued an order in June last year to raise import taxes as high as 120% on a slew of U.S. items, incensed by Washington's refusal to exempt it from higher steel and aluminum tariffs, but repeatedly delayed the decision as the two nations engaged in trade talks.
    • U.S.-India bilateral trade reached $142B in 2018, a seven-fold increase since 2001.
    • Airbus (OTCPK:EADSF) is considering bringing the world's first hybrid-electric airliner to market, Bloomberg reports, a move that would open up a new front in its ongoing battle with Boeing (NYSE:BA) and mark a technological leap for the aerospace industry.
    • While Airbus has been public about its interest in hybrid engines, the company is now said to be willing to consider powering its most important aircraft with the technology, as it considers its strategy for replacing the A320neo narrow-body in the next 15 years.
    • While hybrid technology likely will not be available until after 2030, Airbus is confident that airlines would be prepared to wait for the step-change in efficiency that a hybrid would provide, according to the report, which adds the decision will come down in part to whether Boeing decides to accelerate its own clean-sheet narrow-body design in the wake of the 737 MAX crisis.
    • Drugmakers Amgen (NASDAQ:AMGN), Merck (NYSE:MRK) and Eli Lilly (NYSE:LLY) today filed a lawsuit to keep them from needing to disclose the list price of prescription drugs in direct-to-consumer television advertisements.
    • A new regulation from the U.S. Department of Health and Human Services set to take effect in July is part of the government's efforts to bring down costs for consumers, but the companies oppose the proposed rule, saying list prices do not reflect the final price paid by patients as it excludes rebates and discounts drugmakers may offer.
    • The rule "mandates an approach that fails to account for differences among insurance, treatments and patients themselves, by requiring disclosure of list price," AMGN says.

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