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Fabulous Friday – No Worries Into the Weekend?

Image result for s&p 3000 hats2,999.91!  

That's where the S&P 500 closed yesterday and, this morning, they've pumped it up to 3,010 because "THEY" didn't do all this work just to fall short of S&P 3,000.  After all, they already made the hats…  They were wearing Dow 14,000 hats back in July of 2007 – those were replaced by Dow 8,000 hats a year later so let's not get too excited by the fashion accessories worn by the MSM cheerleaders.  

On Monday, Japan is supposed to start restricting key electronic components from being shipped to South Korea and this may become the most damaging battle in the Global Trade War so far as it will screw up a large amount of electronics manufacturing world-wide and the stuff they are making now is what's supposed to be going on the shelves for Christmas – so the repercussions could flow out far and wide.  SoKo's Samsung and SK Hynix are the World's two largest chip-makers – key suppliers to Apple and dozens of other companies.  

Even worse is that this is a preview of the kind of pressure China can exert on the United States by restricting the trade in Rare Earth materials – something we were worried about a month ago but people seem to have already forgotten all about.  Though trade talks resume next week, China has put together a new trade team packed with hard-liners and Larry Kudlow stated that there is no timeline for an agreement and "He also hoped that China would not seek to "wait out" the Trump administration."  So the White House is concerned that this could drag on for 18 more months!

Trade discussusions collapsed in May and now it's July and we're only just getting back to the table.  China has flatly stated they won't capitulate to Trump's demands and threatened to take action using Rare Earth Exports and, unlike Trump, China is not knows for making empty threats while posturing for their base.  Trump, meanwhile, is still threatening to add another $300Bn worth of tariffs if China doesn't play ball with him.

As you can see from the graphic (which is already eclipsed), the indexes are up about 10% since the tariffs were announced 17 months ago so the Administration doesn't feel any particular pressure to give up on their demands but, as China's foreign ministry spokesman Geng Shuang noted recently "As for the talk that China wants to reach a deal more than the U.S., I certainly have no idea where this talk comes from."  So if two sides both say they are not anxious to make a deal – what's the actual chance of making a deal any time soon?

We remain cautious and well-hedged into the weekend.

Have a good one, 

- Phil


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  1. I think that we have reached the point where analyzing the current markets using traditional logic doesn't make sense anymore. It's clear that markets are simply shrugging off bad news or bad macro now simply because people believe that CBs have made a conscious choice to do whatever is needed to avoid any meaningful correction – keeping rates low, driving rates negative in some places, deleveraging slowly or not at all, leveraging more also in some places. At least that's what it looks like, maybe I am wrong but looking at macro numbers, I can't find justifications to be 50% higher than 3 years ago. Although pretty much flat the last 18 months for  the broader indices. 


  2. Phil could you comment on the below statement. Is this where we are heading? Thanks

    "None of this matters, however, as the real reason why the Fed is launching rate cuts, which will eventually culminate with ZIRP and QE is that the Fed will soon have to step in and start monetizing US debt whose issuance is set to explode in 2020 and onward, especially since foreign buyers, as the TBAC warned several months ago, have not added to their net US Treasury holdings in years, and with China set to post a current account deficit this year, the last thing China will focus on is buying US debt when it will need foreigners to buy its own bond issuance instead…"


  3. And people now expect these great returns as if it was historical:


  4. Good Morning!


  5. ~~Symantec and Broadcom (AVGO) still on track to reach a deal, perhaps early next week; they are still hammering out a price, Symantec wants $28/share – CNBC's Faber  


  6. Watch out little M is on the move!


  7. Back over 22.00  needs to travel a lot higher


  8. M has almost a 14% short interest. 5 days to cover with earnings coming 8/13. Previously it has been as low as 17 so with consumers strapped hmmm. Beat earnings last quarter, but the concensus is raised this quarter.


  9. Yes but not in a day


  10. M I just wonder what happened today Possible Phil's wife is shopping there today!!!!


  11. They are teaming up with Dick's Sporting Goods and Miracle Grow for outdoor experiences. Didn't realize they were out of Cinn. Anyways, pays 7% Dividend. Going to take small position.


  12. Good morning!  

    You can see why I jumped on those BBBY adjustments at $10.50 – was so stupidly low…

    Buffett says "Be greedy when others are fearful" and it's worked well for him for 50 years – I'm just humbly following in his footsteps…

    Logic/StJ – Completely out the window but so it was in 2007 too – until suddenly it was "obvious" why we crashed.  

    https://www.philstockworld.com/2007/10/29/monday-market-madness-2/

    Up up an away!

    Super Market is back in action.  Faster than an accelerating debt crisis, more powerful than the Wall Street bears, able to leap rational skepticism in a single bound.

    Unfortunately, that S on the market's chest stands for the dollar, which is down 1% today in foreign trading as a .25 Fed cut seems to be a sure thing and many bets are being placed on .50 OR MORE as the United States seeks to become this decade's Brazil, where the market looked like a really great investment too, right up until it collapsed.

    But there's no sense in dwelling on that now or on the $93 oil or the dollar at 76 (all-time low) or the Euro's all-time high or the possible unwinding of the carry trade or gold punching through $800 or the fact that earnings (with 57% of the S&P reporting) show shocking weakness in the US that is being offset by foreign growth.  Nope, we're not going to talk about any of that as it's time to party like it's Jan 13th 2000 (5 days before the collapse).  This is kind of like 11:45 on New Year's eve when we're all a little tired (those of us who are parents that is) but we pull it together for the big event (in this case the Fed on Wednesday) but, once that ball drops and the band goes home, that party ends really fast!

    No, today is a day for investing in YHOO (got 'em) and seeing what else gets a good run on a day when the markets should gain a full point based solely on the decline of the dollar.  Even Warren Buffett left the country last week to spend his money before it became worthless.  Buffett also said to CNBC that the chance of us heading into a recession at this point is "fairly significant," something that has been ignored by the MSM so far. 

    Well what does Buffett know?  We've got stocks to buy!  The Hang Seng flew up almost 4% today (mainly a gap up) led by financials who rejoiced on the good news by CFC that the mortgage crisis is over.  Sure it's BS but. just like any good party, anything is an excuse for another toast!  

    See, nothing really changes, they change some of the words but it's the same old song.

    I write the same old song with a few new lines
    And everybody wants to cheer it
    I write the same old song you heard a good few times
    Admit you really want to hear it

    We hum the same old lines to a different crowd
    And everybody wants to cheer it
    We run on endless time to reach a higher cloud
    But we never ever seem to get near it – Who

    Debt/Den – I agree as it's the monetary end game I've been warning about for a decade (see above) – it just takes a very long time for Sovereign Currencies to collapse.  The Dollar has lost about 25% of its buying power since Bush Jr began cutting taxes and Obama reversed that a bit but Trump is pushing us right off the cliff again (only from a much weaker level). 

    This is another thing people don't understand about GOP policies – they destroy buying power and it's not felt so much by the Top 1% as we just make more money to make up for it but those who get relatively fixed wages and fixed benefits have their spending power cut tremendously.  Now Trump is pushing for loose monetary policy and a weaker Dollar – catastrophic for the poor and middle class.

    As to the debt, I had a chart the other day showing the US is about 1/3 of all the World's debt and soon we'll hit 40% and then 50% so it will no longer matter if people even WANT to lend us money – there simply won't be enough money in the World to feed that beast.  We need to default or hyperinflate our GDP before we become Greece and, like Greece, we have a sleazy Government using financial tricks to manipulate the books and hide the extent of the problem so, when the extent of the problem is finally revealed – it will be far too later to fix it (kind of like Global Warming).  

    M/Yodi – Not Macy's but they do own Bloomingdale's too.  

    M/Pirate – Yes, that dividend is nice.  

    According to the original Bloomberg News story, "The company has floated plans for a 1.2 million-square-foot (111,500-square-meter) office tower that would be used by other tenants, according to a person with knowledge of the matter. Macy’s probably would push for zoning changes around its property to allow for the 800-foot (244-meter) building, which would bring an estimated 6,000 additional people to the area, said the person, who asked not to be identified because the talks are private. The plans are exploratory and may change."

    Seeking to cash in on its most valuable real estate asset, Macy Inc.’s CEO Jeff Gennette confirmed that the department store retailer is considering plans to build a 1.2-million-sq.-ft. skyscraper on top of its Herald Square flagship store in Manhattan, Bloomberg reported last week.

    The tower would be leased to other office tenants, and Gennette said he hopes to have a plan in place by year-end.

    During Macy’s earnings call in February, Gennette said, “In any strategy, to unlock additional real estate value will be on a long-term horizon,” and that Macy’s would “certainly preserve the store and enhance the customer experience.”

    DO YOU WANT TO KEEP UP WITH THE

    Latest industry news, trends and analysis?

    Gennette added that over the last year and a half, Macy’s has been working closely with a team of land use, development and design experts to produce a “menu of economically viable redevelopment alternatives.”

    While a Macy’s spokesperson had no comment on the most recent announcement, she said in an emailed statement to NREI that Macy’s has met with city, government and community leaders as they deliberate on the right opportunity for Macy’s and the surrounding neighborhood.

    “Based on these discussions, we believe the best way to unlock the store’s underlying real estate value and promote economic activity in the area is to build a commercial office tower, while continuing to operate this iconic store as our national flagship,” she said. The company is still early in this process and there are a “number of hurdles we need to cross before we can share more concrete details.”

    Macy’s would likely push for rezoning that would allow for greater density on the site. Reports are that the proposed office tower could bring in some 6,000 additional people to the area.

    The iconic Macy’s building was built in 1901 and covers nearly an entire city block from Broadway to Seventh Avenue and 34th to 35th streets. The 2.2-million-sq.-ft. building contains about 1.1 million sq. ft. of retail space, with Macy’s offices occupying a large chunk of the building’s upper floors. The store is one of the biggest department stores in the world.

    Industry reaction

    “I think if it can be done, it’s brilliant. It’s a great utilization of the space,”’ says Jeffrey Roseman, vice chairman and founding partner at commercial real estate services firms Newmark Grubb Knight Frank in New York City. “It’s arguably one of the best corners on the planet.”

    “Long term, this is a great real estate play,” says Jerry Hoffman, a partner with the Hoffman Strategy Group, a Lincoln, Neb.-based national commercial real estate advisory firm specializing in retail and mixed use. “It’s very valuable real estate. You can’t really go out and buy property anymore, particularly in Manhattan, and so being able to get the kind of economic value out of the real estate that building vertically will bring is a huge opportunity for Macy’s.”

    “I think the potential spending on retail, food and beverage from the 6,000 to 8,000 workers is going to be around $30 million on an annual basis,” he says. “That goes into department stores, drugstores, supermarkets, the Equinox memberships and it also interacts with the rents and the housing in the area. It drives demand for more apartment units.”

    During its fiscal first quarter 2019, Macy’s earnings and same-store sales beat analysts’ estimates. Same-store sales increased by 0.7 percent, better than an expected 0.2 percent decline.

    “We had another quarter of double-digit growth in our digital business, and mobile continues to be our fastest-growing channel,” Gennette said in a statement.

    2019_05_macybuilding.jpg

    That whole block is Macy's (World's biggest store) right in the middle of Manhattan on top of a major subway hub so renting the space will be a no-brainer and all the employees in the building above will be natural customers for the store as well.  Rental wise, you're looking at about $500/ft so $600M/yr in rents would be cash-flow positive right away.  


  13. Actually, if I were Macy's – I'd just move the staff (top 5 floors) out to NJ ($50/foot) and rent that space for some immediate cash!


  14. Mueller testimony delayed by one week










  15. Bond Bonanza

    Economic fears are climbing — but so are the markets, with the S&P 500 and the Dow Jones industrial average both setting recordsyesterday. As Stephen Grocer of the NYT explains, it’s because investors have nowhere else to go.

    Investors should be worried. The continuing U.S.-China trade war, a slowing global economy and simmering geopolitical tensions are all huge causes for concern. The Fed is open to cutting interest rates because things look so bad.

    But they feel that there is no alternative — TINA, in Wall Street speak — to investing in stocks. Lower interest rates mean that borrowing costs will be low, which means that investing in bonds is less attractive than in equities.

    It’s not as if investors are popping champagne. “They are very aware of the signs that an economic slowdown is taking place,” JC O’Hara, the chief market technician at MKM Partners, told Mr. Grocer. “But in a TINA market, where are they going to put their money?”

    Still, the rally could continue for a while. Research by Audrey Kaplan of the Wells Fargo Investment Institute shows that stock-market rallies after Fed rate cuts tended to last at least 12 months after the central bank acted.

    Daimler issues its 4th profit warning in just over a year

    While the S&P is up 4%+ since last earnings season ended, the average stock that has reported earnings this off-season has fallen 0.56% on its earnings reaction day: https://www.bespokepremium.com/interactive/posts/think-big-blog/earnings-season-and-off-season-stats …

    Tropical Storm Barry's winds are now less than 10 mph away from hurricane strength, though officials in Louisiana are most concerned about the heavy rain it will bring https://cnn.it/2YVISyU 


  16. Interesting observation For quite a while I have the NLY sell Jan21 10 call for .30 outstanding. Today 30 calls where filled at .30 even that the option price is only .25.

    I have noticed such behavier on various occation. Some how I think there is insider trading in play.

    People do know something before the public knows about it. Very strange!


  17. Phil,

    Any thoughts on the next gen security companies that has gone public recently such as ZS, OKTA and Crowdstrike? 

    Thanks


  18. Cannabis stocks down for the most part.  MJ is at a 6 month low.


  19. Total U.S. rigs post 8th weekly decline in 10 weeks

    • The total count of active U.S. drilling rigs falls by 5 to 958 after shedding 4 in the previous week, marking the 8th decline in the past 10 weeks, Baker Hughes reports in its latest survey.
    • The number of active U.S. oil rigs dropped by 4 to 784 while gas rigs dropped 2 to 172; two rigs are classified as miscellaneous.
    • August WTI crude +0.5% to $60.47/bbl.

    Boeing 737 MAX must return to service by Q4 or else, Citi says

    • Boeing's (BA +1.2%) 737 MAX needs to return to service by Q4 or else airlines could make plans without the jet for summer 2020, Citigroup analysts say in trimming their stock price target to $430 from $450.
    • The firm warns no one really knows when the MAX will start flying again and that the stock doesn't "work" until the grounding issue is "resolved."
    • Southwest, United and American have canceled MAX flights until the fall; Southwest CEO Gary Kelly said recently that the delay in Boeing delivering its software to the FAA will "delay the timeline for returning the MAX" and that the grounding is lasting "well beyond" expectations.

    Airbus eyes sales of 1,000-plus planes in Latin America, Caribbean

    • Airbus (OTCPK:EADSF +1%) plans to sell at least 1,000 new passenger planes in Latin America and the Caribbean over the next 15 years, meeting about half the demand expected in the region, the company's VP for the region tells Reuters.
    • Alberto Robles, who attended an aeronautic fair near Medellin, Colombia, also says the company hopes to sell its Eurofighter Typhoon jets to Colombia to renew its defense air fleet.
    • More than 700 Airbus planes already operate in Latin America and the Caribbean, ~60% of the region's fleet in service.

    Good news/bad news: Inflation surprises, job openings slip

    • In a relatively light economic data week, the Fed's June meeting minutes and Fed Chair Jerome Powell's Congressional testimony dominated the headlines and continued the narrative that risks to the economic outlook are increasing.
    • That fueled optimism that the central bank will cut rates at the end of the month.
    • Stronger-than-expected: When it comes to the data, two closely watched measures of inflation -- the core consumer price index and the core producer price index -- came in stronger than expected, data points that would normally weaken the argument for cutting rates at the next FOMC meeting.
    1. Initial jobless claims fell 13K for the week to 209K vs the 220K consensus and lower than 222K in the prior week.
    2. May consumer credit rose to $17.1B vs. $16.65B expected and $17.5B prior.
    • In-line: In the May wholesale trade report, inventories rose 0.4% to $678.1M, matching consensus and less than the 0.8% increase in April (revised from +0.5%)
    • Weaker-than-expected: Continuous job claims, up 27K to 1.723M, were more than the 1.685M expected and higher than 1.696M in the previous week.
    1. June NFIB small business optimism index, though still near historically high levels, slipped to 103.3 vs. consensus of 104.0 and 105.0 in May.
    2. JOLTS: 7.323M job openings at the end of May trailed consensus of 7.400M and falls from 7.449M in the prior month.

    Tanzania to inspect Acacia's mine gold mine as Barrick deadline looms

    • Acacia Mining says the Tanzanian government will conduct an inspection of its North Mara gold mine before issuing export permits, a sign of increasing government pressure on the miner as it faces an imminent takeover by Barrick Gold (GOLD +0.1%).
    • The inspection is the latest sign of trouble for Acacia (OTCPK:ABGLF) in Tanzania, following a ban on some of its gold exports two years ago by the government following charges it had not paid billions of dollars in taxes.
    • In its quarterly production report released earlier this week, Acacia said output from North Mara surged 39% to 119K oz. accounting for 75% of the miner's total production in the quarter.

    Union Gaming positive on Wynn Resorts

    • Union Gaming analyst John DeCree digs into the developments that came out of Wynn Resorts' (WYNN +1.4%) Investor Day event earlier this week.
    • "Probably the most significant announcement yesterday was the $2bn Crystal Pavilion at Wynn Palace. While construction and capital spend isn't expect to begin until 2021, WYNN announced a firm commitment to the development, which includes two hotel towers totaling ~1,300 new rooms, a world class art museum and theater, among other architectural amenities," states DeCree.
    • He thinks the property's non-gaming concept will help when Macau regulators look at license renewals.
    • Looking ahead, DeCree and team keep the firm's 2021 earnings outlook on Wynn ahead of the casino operator's own estimate with upside seen in both Macau and Boston next year.
    • Union Gaming has a Buy rating on WYNN and price target of $150, which is pretty consistent with the rest of the sell-side but below the Seeking Alpha Quant Rating of Neutral.

    Another Fed voice chimes in for a rate cut

    • Chicago Fed President Charles Evans says more monetary accommodation may be needed to get inflation up to the Fed's 2% target.
    • Evans, who's a voting member on the monetary policy-setting FOMC, commented at an event in Chicago, Bloomberg reports.
    • "A couple" of rate cuts could boost inflation and lift the personal consumption expenditure price index to 2.2% in 2021.
    • Targeting a bit above 2% inflation appropriate at this point; 2.5% would be consistent with the Fed's goals, he said.
    • Yesterday, two non-voting Fed officials, Raphael Bostic of the Atlanta Fed and Tom Barkin of the Richmond Fed, seemed to indicate that inflation is close enough to the Fed's target.
    • Still, Fed Chair Jerome Powell, in his semi-annual appearance before Congress this week, observed that risks to the economic outlook are increasing; that boosts expectations for a rate cut in July and fueled stock market gains.

    J&J down 5% on criminal probe into baby powder asbestos claims

    • Johnson & Johnson (JNJ -4.6%) is down on below-average volume in apparent response to the news that the U.S. Department of Justice is pursuing a criminal investigation against the company related to its alleged misleading of the public about the possible cancer risks of its talcum powder products.
    • The company is already mired in thousands of lawsuits from consumers who attribute their cancers to said products.

    Toyota to test solar panels on a Prius

    • Toyota (TM +0.9%) plans to test using solar calls on vehicles under a new partnership with Sharp and Japan's national research and development organization.
    • The Japanese automaker is outfitting a Prius Prime with Sharp's modified solar cells on the vehicle's roof, hood, rear hatch door and rear hatch door garnish.
    • The initiative has the potential to significantly improve the driving range of the BEV.

    Fannie, Freddie swoon after `massively diluted' note from Bove

    • Fannie Mae (OTCQB:FNMAslumps 9.9% and Freddie Mac (OTCQB:FMCCfalls 9.6% as Odeon strategist Dick Bove notes the GSEs' common equity "will be massively diluted" and there's no model in place "that suggests that this dilution can be overcome," he told Bloomberg in an email.
    • "The primary mortgages industry is in deep disarray and this must be fixed before the secondary market becomes a reasonable investment,” he wrote.
    • Height Capital Markets initiates Fannie and Freddie common equity at sell, junior preferreds at buy.
    • In the past six months Freddie has risen 66% and Fannie shares have jumped 72% as investors expect some progress on restructuring and ending government conservatorship status; compares with financial sector median performance of +4.9%.

    Recent fund freezes highlight reliance on ETFs for liquidity

    • With recent high-profile examples of funds freezing withdrawals because too many customers are demanding their money back — i.e., Woodford, GAM Holding, H2O Asset Management — some are calling into question how wise it is to rely on exchange-traded funds to act as cash equivalents that can be sold off quickly to pay fleeing clients.
    • The concern is that ETFs may not be that easy to convert to cash during a selloff. Any breakdown in the relationship between the prices of the funds and their securities, particularly in fixed income, could imperil owners, Bloomberg reports.
    • The European Systemic Risk Board says that this price mismatch could increase systemic risk by destabilizing institutions that rely on ETFs for quick cash.
    • Secondary trading ensures that there will always be a market, proponents say. If an ETF price falls below the value of its holdings, traders can step in to buy the ETF shares and trade them for the underlying securities. They sell the securities at the higher price, pocketing the difference, and  bringing the price of the ETF closer in line to its value.
    • When considering an ETF for liquidity management, an investor or portfolio manager needs to consider how actively traded that particular ETF is within its sector, according to Stephen Laipply, head of fixed-income strategy for BlackRock’s U.S. ETF business.
    • While some banks have scaled back ETF trading after the financial crisis, electronic brokers have stepped in; but they might back out in a volatile market, resulting in funds trading at a discount.

    Ford,Volkswagen announce details on mega-alliance

    • Ford (NYSE:F) and Volkswagen (OTCPK:VWAGY) formally announce the expansion their global alliance to include electric vehicles and to collaborate with Argo AI to introduce autonomous vehicle technology in the U.S. and Europe. The alliance does not involve cross-ownership between companies like some other powerhouse partnerships in the auto industry.
    • Volkswagen is investing $2.6B in Argo AI, the autonomous vehicle technology platform company that is said to have the largest geographic deployment potential of any autonomous driving technology to date. Volkswagen and Ford independently will integrate Argo AI’s SDS into purpose-built vehicles to support the distinct people and goods movement initiatives of both companies. As part of the transaction, Volkswagen also will purchase Argo AI shares from Ford for $500M over three years. Ford will invest the remaining $600M of its previously announced $1B cash commitment in Argo AI.
    • The full transaction represents a valuation for Argo AI that totals more than $7B.
    • Ford and Volkswagen will have an equal stake in Argo AI, and combined, Volkswagen and Ford will own a substantial majority. The remainder will be used as an incentive pool for Argo AI employees.
    • “While Ford and Volkswagen remain independent and fiercely competitive in the marketplace, teaming up and working with Argo AI on this important technology allows us to deliver unmatched capability, scale and geographic reach," says Ford CEO Jim Hackett said.
    • As expected, Ford will also become the first additional automaker to use Volkswagen’s dedicated electric vehicle architecture and Modular Electric Toolkit (called MEB) to deliver a high-volume zero-emission vehicle in Europe starting in 2023. Ford expects to deliver more than 600K European vehicles using the MEB architecture over six years, with a second all-new Ford model for European customers under discussion.
    • Finally, Ford and Volkswagen say they are on track to deliver commercial vans and medium pickups for each brand by 2022.
    • +0.88% premarket to $10.28. Shares of Volkswagen are up 1.67% in Frankfurt.
    • Source: Press Release

    Coeur Mining's Q2 shows double-digit production gains across all metals

    • Coeur Mining (NYSE:CDE+5.2% pre-market after reporting Q2 production of 86.6K oz. of gold, 3.1M oz. of silver, 5.3M lbs. of zinc and 5M lbs. of lead.
    • "Operational results were in-line with our expectations and reflect solid, double-digit production increases across all four metals we produce," says CDE President and CEO Mitchell Krebs.
    • CDE says Q2 gold and silver production at the Palmarejo mine in Mexico rose 22% and 36% Q/Q, respectively, to 28.2K and 1.7M oz., citing higher throughput and recovery rates.
    • Q2 silver, zinc and lead production at the Silvertip mine in British Columbia jumped a respective 44%, 43% and 62% Q/Q to 300 oz. of silver, 5.3M lbs. of zinc and 5M lbs. of lead.
    • CDE reaffirms total full-year production guidance of 334K-372K oz. of gold, 12.2M-14.7M oz. of silver, 25M-40M lbs. of zinc and 20M-35M lbs. of lead.

    CannTrust holds product sales; shares down 18% premarket

    • CannTrust Holdings (NYSE:CTST) has implemented a voluntary hold on sale and shipment of all cannabis products as a precaution while Health Canada visits and reviews its Vaughan, Ontario manufacturing facility.
    • The hold was placed through customer service line and online as of 11:59 p.m. on July 10.
    • Also, a Special Committee of the Board of Directors has been established to investigate this matter in its entirety.
    • Shares are down 18% premarket

    China's trade surplus with U.S. rises 11%

    • Chinese trade data surprised investors with an 11% increase in the trade surplus with the U.S. in June, rising to $29.92B (from $26.89B in May), an unexpected result at a time when the trade tensions between the two countries are still rising.
    • Data on Thursday previously showed the Los Angeles and Long Beach port complex in the U.S., the nation’s busiest and the No. 1 for ocean trade with China, handled 5.1% fewer inbound containers of cargo in June, as the countries go back to the drawing table for a trade deal.

    IEA predicts another oil glut in 2020

    • Oil is headed for its biggest weekly gain in three as simmering Middle East tensions, shrinking U.S. crude inventories and Tropical Storm Barry in the Gulf of Mexico threaten the supply outlook.
    • Despite the developments and recent rollover of an OPEC-led output cut, the IEA is forecasting another glut in 2020.
    • "This surplus adds to the huge stock builds seen in the second half of 2018," the agency declared, adding that "market tightness is not an issue for the time being" but predicted growth of 1.4M barrels per day next year (from 1.2M bpd in 2019).
    • Crude futures +0.7% to $60.64/bbl.

    Daimler skids on latest profit warning

    • Daimler (OTCPK:DDAIF) has issued its fourth profit warning in just over a year, this time blaming higher costs to deal with a recall of vehicles fitted with faulty Takata airbags and increasing funds set aside to address diesel emissions-tampering allegations.
    • As a result, second-quarter profits will likely swing to a loss of €1.6B, excluding interest and taxes, a near 40% plunge from the same period last year.
    • Full year earnings are also expected to be "significantly" below the previous year's levels, sending Daimler shares down as much as 4.5% in Frankfurt.

  20. NLY/Yodi – I often just ask for a price and wait for it to fill.  Works about 2/3 of the time.  

    Security/Harip – ZS is pretty new, just IPO'd last year and they seem to be using the money to buy other companies.  They've doubled in price to $80 and that's a $10Bn valuation for a company with $300M in sales so would I pay 33x SALES for a company?  Not a chance!  OKTA is also on an acquisition binge and $135 is $15.5Bn for them and that makes sense because they have $500M in sales so I guess they should be priced 50% more than ZS, right?  NO, not right at all – they are both ridiculously priced and over-hyped.  CRWD is way too new but also crazy at $14.5Bn and MAYBE $400M in sales.  I don't know how these companies are getting these valuations – it's truly amazing.

    Cannabis/Albo – Yeah, the Canadian companies went out so overvalued and they have completely failed to justify their numbers so far.  Some of them will down the road, just not all of them.  Note the CTST news item above – whole operation is on hold while they get inspected.  We see that in the US too – so many sloppy operations.  New Age is clean as a whistle and still had to wait 4 months for CA permits.  


  21. How’s the volume today? Low as usual? 


  22. Phil you have any idea of the status of the PSW K-1 ?   No reply from Greg for a few days.


  23. Volume/Jeff – Same low as usual.  

    Date Open High Low Close* Adj Close** Volume
    Jul 12, 2019 299.85 300.43 299.51 300.33 300.33 27,412,722
    Jul 11, 2019 299.32 299.58 298.20 299.31 299.31 50,826,100
    Jul 10, 2019 298.37 299.66 297.78 298.61 298.61 58,448,500
    Jul 09, 2019 295.54 297.52 295.48 297.19 297.19 41,101,300
    Jul 08, 2019 297.01 298.26 296.22 296.82 296.82 45,841,800
    Jul 05, 2019 297.44 298.64 296.01 298.46 298.46 51,677,300
    Jul 03, 2019 297.18 298.82 297.02 298.80 298.80 40,898,900
    Jul 02, 2019 295.61 296.49 294.68 296.43 296.43 61,504,500
    Jul 01, 2019 296.68 296.92 294.33 295.66 295.66 79,107,500
    Jun 28, 2019 292.58 293.55 292.01 293.00 293.00 59,350,900
    Jun 27, 2019 291.31 292.06 290.89 291.50 291.50 40,355,200
    Jun 26, 2019 291.75 292.31 290.35 290.47 290.47 51,584,900
    Jun 25, 2019 293.70 293.73 290.64 290.76 290.76 82,028,700
    Jun 24, 2019 294.23 294.58 293.47 293.64 293.64 47,582,700
    Jun 21, 2019 294.13 295.52 293.76 294.00 294.00 83,309,500

    K1/Tangled – We had troubled getting it all done (didn't get it from some of our investment cos) and Greg's been finalizing so, HOPEFULLY, early next week.  Greg says he did send you something just this morning – please check to make sure you have it.  

    Russell perked right back up:


  24. 3,016 – very impressive.  

    Expirations are next week so maybe some action.  

    Have a great weekend, 

    - Phil


  25. FMCC- Hope you have some insight as to what the future holds re privatization and potential dilution. 

    I have some common at cost of 1.37, now 2.62. 

    Of course, this was/is a bet on eventual privatization or some form thereof. Assuming the process goes forward, I always expected some common dilution but there has not been a lot of info available on which to make any judgement.  A couple of analyst have weighed of late calling for "some" or "massive" dilution down the road. Take your pick. 

    If the new version is anything like the old version of Freddie it should once again be a money machine so I have no problem with some dilution. Just cannot get a sense of how this is likely to play out. Presently I am inclined to sell half to recover my cost and leave the balance as house money play. 

    As Charlie Munger is fond of saying, some opportunities are too complex and just go in the "too hard" pile. Perhaps this is one of those? 

    Anyone else have any input?


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