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Monday Market Momentum Continues

And we keep going higher!

The S&P is now up 15% for the year and 25% off the December lows and 10% off the June lows, so it's been quite a year for the senior index.  Citigroup (C) kicked off earnings season this morning with a decent report but tomorrow things begin to get serious and it will be a jam-packed couple of weeks as July 4th cost us a week so we're a bit behind in our reporting already.  

Income at C is up 7% from last year at $4.5Bn for the quarter, which is $1.95/share vs $1.85 expected but revenues were only in-line at $18.5Bn so we're not likely to get a very enthusiastic reaction with the stock already at $72 (we are long C with a 2021 target of $75 in our LTP).  There aren't many bank stocks we like but C is one of them so no surprise here.  Wells Fargo (WFC) tomorrow will be much more interesing and Johnson & Johnson (JNJ) also reports in the morning and we'll see what they set aside for their talcum powder scandal.  

These are probably the most fun earnings to play but it's early in the season and we have little to go on though we are already long on Skechers (SKX) and Cliffs (CLF) though SKX passed our $27 target long agao and we're just waiting to get paid as the spread is netting just $11,025 out of a potential $16,000 so it still has $4,975 (45%) left to gain between now and Jan 17th, 2020 even though it's +20% in the money – aren't options fun?

SKX Short Put 2020 17-JAN 30.00 PUT [SKX @ $34.11 $0.00] -10 7/16/2018 (186) $-5,280 $5.28 $-3.11 $-3.58     $2.18 $0.00 $3,105 58.8% $-2,175
SKX Long Call 2020 17-JAN 23.00 CALL [SKX @ $34.11 $0.00] 40 7/20/2018 (186) $25,600 $6.40 $5.55     $11.95 $0.00 $22,200 86.7% $47,800
SKX Short Call 2020 17-JAN 27.00 CALL [SKX @ $34.11 $0.00] -40 7/20/2018 (186) $-22,000 $5.50 $3.15     $8.65 $0.00 $-12,600 -57.3% $-34,600

So, as a brand new trade, you can take this spread and make up to 45% from scratch.  Of course, we netted in originally for a $1,680 credit and we're making almost 10x more than that if SKX finishes the cycle over $27 – now THAT is what I call fun!  SKX is at the top of their trading range and hopefully they pull back a bit on earnings so we can add them to the OOP (though we'll come up with something that makes more than 45% – so dull).  

Our favorite kinds of earnings plays are to pick up stocks other peope are throwing away for the wrong reasons but, as I noted above, early in the season we're more worried about playing defense with our existing positions, rather than chasing after new ones unless there's a particularly amazing bargain to be had (like BBBY last week).  

Getting back to Cleveland Cliffs (CLF), I can't believe they are still down in the dumps and I'm tempted to add more ahead of their earnings on Friday as Iron Ore pricing has shot up and CLF has the advantage of being a US producer in the trade wars yet the stock is languising around $10.50, which is "on track" for our 2021 $12 target but our spread has only gained $1,100 and it's a potential $8,000 spread that's currently net $1,500 so another $6,500 (433%) potential to gain so, even if you missed our original $400 entry last month – 433% upside in 18 months doesn't suck.

CLF Long Call 2021 15-JAN 8.00 CALL [CLF @ $10.51 $0.00] 20 6/14/2019 (550) $6,000 $3.00 $0.63 $3.00     $3.63 $0.00 $1,250 20.8% $7,250
CLF Short Call 2021 15-JAN 12.00 CALL [CLF @ $10.51 $0.00] -20 6/17/2019 (550) $-3,000 $1.50 $0.36     $1.86 $0.00 $-720 -24.0% $-3,720
CLF Short Put 2021 15-JAN 10.00 PUT [CLF @ $10.51 $0.00] -10 6/14/2019 (550) $-2,600 $2.60 $-0.57     $2.03 $0.00 $570 21.9% $-2,030

Here's how ridiculously cheap CLF is:  $10.50 is just under $3Bn in market cap yet last year CLF had $1.1Bn in profit though $475M of that was a tax credit so call it $625M but they'll pay taxes on that this year so we'll call it net profits of $500M for $3Bn and the p/e is 6x at $10.50 but Iron Ore prices have gone up 50% since the start of the year and that can have a tremendous impact on earnings yet estimates for CLF have barely budged (0.57 expected Fri vs 0.55 last year), so I'm expecting a nice beat and raised guidance.  

We'll see what joys the earnings season can bring us and we have a ton of Fed speak on tap with 7 speeches just tomorrow and one today, one Thursday and two Friday, all surrounding the Fed's Beige Book Report on Wednesday.  We have the Empire State Manufacturing this mornng, Retail Sales and Industrial Production tomorrow, the Philly Fed Thursday and Consumer Sentiment on Friday – along with about 200 earnings reports this week.  


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  1. AMD advice,  I have 4 Oct 19 $20/25 BCS. I was thinking about rolling the 4 long $20 to 8Jan 21$20/30 BCS.  then rolling 4 short $25 to Jan 20 $28 and selling 4 Jan 20 $28 puts. Good idea? Bad idea?  better ideas?

  2. We have liftoff – everything is awesome. Super growth, low deficit, no tension anywhere and a president taking us back to the 19th century frame of mind.

  3. Good Morning!

  4. Hi Phil.

    Can I get your take on Uranium as an investment, and as a stock pick WSTRF?



    Symantec: Talks have broken down with Broadcom (AVGO) -

    CNBC's Faber; no longer in talks after SYMC would not accept less than $28/share.

  6. CMG

    Chipotle Mexican Grill hits all-time high after Piper Jaffray raises tgt to $824 from $792 .

  7. Only $824?

  8. CMG is another reminders of the late 90's! 

  9. STJ – Reminds of the times back when several of us kept trying to short NFLX.  

    CMG has similar price action.  

  10. Short / Albo – It's all so irrational so using rational thinking doesn't work. Not shorting anything now! Well except volatility of course.

  11. Although long CTL or FTR has felt like shorting CMG – mostly also for applying rational thinking to irrational behavior. 

  12. Yep.  But please don't equate FTR and CTL. 8-)

  13. LOL Albo!

  14. Although I am only painfully long CTL at the moment…

  15. FMCC- any insight on eventual privatization? Some pundits say dilution; others say massive dilution. 

    I would expect some and not a big deal if the new entity is anything like the old, i.e., a money machine. 

    I have a small position cost basis 1.37; now 2.62.

  16. Thoughts on AMD?

  17. STJ – I'm painfully long CTL as well.  But am also holding a bunch of Jan 2021 $10 calls from slightly less than $2 which are showing some promise.

  18. Good morning!

    Kind of drifting along but drifting at the top is often bullish consolidation.  Can't imagine what catalyst would take us higher but US/China talking this week so all they have to do is say they are making progress.  And, of course, tons of Fed speak.

    AMD/Millard – I don't understand paying 100x earnings for AMD.  $33.75 is $36.5Bn and the company has $7Bn in sales (if all goes well) and last year just $337M in profits though projected to double this year but last Q was $16M and the Q before was $38M so very, VERY speculative as the next two Qs would have to make more money than their best two years COMBINED and even that only gets them to 40x earnings!    The Oct $20/25 spread is $14/9.40 so $4.60 is pretty much done and I'd be happy with that and find something that's actually on sale to play with – like INTC!  

    We just added INTC and it's taken off but still very cheap at $50, which is $225Bn on $70Bn in sales and $20Bn in profits so 11x earnings is A LOT cheaper than AMD and INTC is a lot more likely to keep earning $20Bn than AMD is to earn $1Bn.

    Big Chart – Technically in very good shape at the moment.

    Uranium/Tstep – We thought it would come back but gave up two years ago.  It just doesn't seem to gain traction.  As you can see from the chart, Uranium ran up one time – in the madness of the early 00's and is now $24.50 and topped out at $30 in the spring.  The thing is plants don't actually use that much of it and we're not making missiles anymore and there's generally a glut of uranium and Orano (French) just opened a huge processing plant  so it's not something I'd play with at this time.

    SYMC/Albo – What greed! 

    CMG – Nuts.

    $750 is already $21Bn and their best year wasn't $500M and last year wasn't even $200M and the last 2 Qs combined were $100M – I can't believe they got an uprgrade from this! 

    Year End 31st Dec 2013 2014 2015 2016 2017 2018 TTM 2019E 2020E CAGR / Avg
    Revenue $m 3,215 4,108 4,501 3,904 4,476 4,865 5,025 5,425 6,042 +8.6%
    Operating Profit $m 532.7 710.8 763.6 34.6 270.8 258.4 275.7     -13.5%
    Net Profit $m 327.4 445.4 475.6 22.9 176.3 176.6 205.2 364.3 464.6 -11.6%
    EPS Reported $ 10.5 14.1 15.1 0.77 6.17 6.08 7.08     -10.3%
    EPS Normalised $ 10.6 14.3 15.4 1.25 6.47 8.21 9.40 13.1 16.8 -5.0%
    EPS Growth % +19.9 +34.6 +7.6 -91.9 +419.5 +26.9 +33.7 +59.4 +28.5  
    PE Ratio x           91.5 79.8 57.4 44.7  
    PEG x           1.54 1.34 2.02 2.03

    FMCC/Pstas – Sorry, was going to do homework on that one.  I agree, huge cash machine if the Government lets them go but your idea to take half off and que sera the rest is very logical.  

  19. Hmm, uranium chart failed to print:

    Image result for uranium chart

  20. Phil – you need to turn your skills to momentum analysis rather than fundamental analysis – which is so 1990s or should that be the 1890s when Ben Graham was still playing in the sandpit with Master Dodds?

  21. CMG should be the big short – but who has been successful shorting CMG???? Makes no friggin' sense. So logic says stay away – but what is that mysterious force which draws those of sound mind and body to believe that they know something that nobody else knows. If you can show me a successful short of CMG on this board then I will help you fold up that tent and give you advice on retirement!!!! – I'm in there with you.

  22. Dinosaurs: now in colour

  23. Millard – The 28 strangle you’re proposing to sell is quite likely to result in being on the spot to deliver 800 shares at $28. Well you’ll take in about $10.15 in premiums so if AMD is under $38.15 in January then you’ll make something. I don’t think that’s a safe bet however and in the meantime you’re carrying $5400 in margin. And Phil’s correct as usual when he says AMD isn’t cheap. In fact it’s pretty much the momo of all momo stocks. I can’t add to his analysis there - my point is simply that even if you’re bullish on AMD, as I am, I wouldn’t play that strangle. The 20/30 spread is all ITM and would make over 100% so it’s better but I still wouldn’t do it. I think there are safer ways to make that and this is from a guy that has 200 18/35 2021 call spreads on AMD but obviously I bought them when the share price was a lot lower. 

  24. Momentum/Winston – If you like trend following, have at it but generally it's just more tea-leaf reading that you can use WITH Fundamentals – but I wouldn't use them in a vacuum.

    Image result for momentum analysis

    CMG/Winston – We have about 1/3 short covers in the Hedge Fund as well as the LTP and they are killing us!  I keep thinking things will normalize but this is a hell of a streak they have going.  I think now would be the time to short them (you are a great contrary indicator on momentum) but, like AMZN, just too scary to straight-up short but, as a short(ish) play on CMG, I like:

    • Sell 3 CMG Aug $760 calls for $30 ($9,000)
    • Buy 6 CMG June 2021 $750 calls for $145 ($87,000)
    • Sell 6 CMG June 2021 $820 calls for $115 ($69,000) 

    That's net $9,000 on the $42,000 spread and, if the short calls expire worthless, another sale can make it net free on the $42,000 spread and the net delta on the $750/820 spread is just 0.08 so even an $80 (10%) drop in CMG is only going to hit the spread by $6,000 and that would be a small profit (and then you could sell puts and roll) while, to the upside, you can roll the Aug $780s to the Jan $860s ($30) or the June 2020 $960s so lots of wriggle room.

    Unfortunately, the trade uses $43,000 in margin – so certainly not for everyone.  

  25. Playing around / CMG; I like the thinking process. Why don't you cash out half of the 2021 $480/$540 BCS (10 contracts) in the LTP for $45 and stick them into your trade idea. You know it does not make sense too have such a deep ITM vertical spread and increasing the inventory turnover on this CMG position would be well worth it. A little to lose perhaps but a lot to gain. 

  26. I'm currently on the phone with TDAM and trying to get an answer as to why the margin for -2 2021 580 puts doesn't reduce the margin for -2 2021 780 calls or at the very lease not increase my margin requirement when I add the short puts.  Anyone else have a broker where this decreases the margin requirements?  Phil I thought I remember reading one of your comments saying you thought it should decrease the overall margin requirement since you can't lose on both.

  27. CMG/Winston - After spending $25,500 on the last adjustments our CMG position is up about $69,500 but has the potential to gain another $170,000 if the short puts and calls (naked ones) expire worthless PLUS whatever the spreads pay out.  At the moment, the $480/540 spread is net $95,300 out of $120,000 potential and while it's "only" 20% more – it's not like we have anything better to do with the money as we're sitting on $713,000 in CASH!!!  We also have $150,000 worth of $700/800 calls, now net $72,000 so lots of upside there as well but I don't believe in $800 – it's just there to protect our 15 short Jan $740 calls from hurting us too badly if I'm wrong.

    Anyway, the main point is that, in this case, the $480/540 spread is just a function of how much cash is in the portfolio as it's better to get 20% than 0% and, if we ever need $100,000 – we know where to get it as CMG is very liquid and deep in the money (so it doesn't need to be hedged), which makes it a clean 20%.

    Margin/Coulter – It should.  Do you have Portfolio Margin on your account?  Even if not, they should offset somewhat but margin requirements for CMG are kind of crazy at the moment.  Are the $780 calls part of a spread?  If so, then they are not naked and don't offset anything – that might be it.

  28. Trump just excused his racist ranting on Twitter by saying "I don't know, there's a whole lot of people who agree with me."  Yeah, that's our benchmark for morality now…

    Mnuchin speaking on FB cryptocurrency.  

    Treasury Dept. has serious concerns over Libra – Mnuchin

    • U.S. Treasury Secretary Steven Mnuchin says he has very serious concerns that Facebook's (FB) proposed Libra cryptocurrency could be used for financing terrorism, Bloomberg reports.
    • Mnuchin added that he's had many meetings with Facebook over Libra and has had discussions with Fed Chair Jerome Powell over the issue.
    • Bitcoin (BTC-USDfalls 0.6% to $10,414.60, according to CryptoCompare.

    Facebook says Libra won't launch until regulators satisfied

    • Facing pushback from both sides of the political aisle, Facebook (FB -0.6%) says it's not launching its Libra digital token until regulators are fully satisfied.
    • Ahead of congressional appearances starting tomorrow, Libra chief David Marcus says the currency is not intended to compete with sovereign currencies and won't interfere with central banks' monetary policy.
    • We know we need to take the time to get this right," he says in prepared testimony. "And I want to be clear: Facebook will not offer the Libra digital currency until we have fully addressed regulatory concerns and received appropriate approvals.
    • Fed Chairman Jay Powell expressed the central bank's "serious concerns" over Libra in testimony before the House last week.

    Regal eyes AMC-like subscription service

    • Regal Entertainment (OTC:CNWGY) could unveil a competitor to AMC Entertainment's (NYSE:AMC) Stubs A-List subscription service as early as this month, according to New York Post. Deadline reports that the service will have three tiers of pricing ($18, $21 and $24 per month).
    • AMC has improved concession revenue and customer loyalty through the Stubs A-list program, which doesn't hurt necessarily hurt the company except for movie showings that are sold out. Barrington Research Associates has observed that on top of selling more concessions, AMC is also gathering useful data on its +860K customers that it can use advantageously.
    • Beyond Regal, Cinemark has yet to unveil a movie subscription service, while pulseless MoviePass (OTCPK:HMNY) is shut down for new subscribers at the moment. Discounted movie ticket subscription service Sinemia closed down earlier this year.

    JPMorgan expects cash flow gusher at Wynn Resorts

    • JPMorgan sees growth pillars in Boston, Las Vegas and Macau helping Wynn Resorts (WYNN +1.8%) generate $8.95 of free cash flow per share in 2019 (7% FCF yield), $11.89 in 2020 (9% FCF yield) and $12.88 in 2021 (10% FCF yield).
    • Analyst Joseph Greff calls valuation on Overweight-rated Wynn attractive in comparison to historical levels and peer Las Vegas Sands. Greff and team assign a price target of $155 to the casino operator vs. the sell-side average PT of $145.
    • Shares of Wynn have traded in a range of $90.06 to $167.59 over the last 52 weeks,

    Marvell +2.8% as new bull praises next phase

    • William Blair starts Marvell (NASDAQ:MRVL) at Outperform with analyst Alessandra Vecchi predicting the company's "next phase" of growth is just beginning.
    • Vecchi cites expansions into a number of growth verticals, including 5G, auto, and ARM-based server builds.
    • The firm thinks MRVL could surpass its long-term target of 6% to 8% revenue growth, and still sees the runway for margin expansion. Gross margin could exceed 66% and operating margin could reach 35% by the end of FY22 or early FY23.
    • MRVL shares are up 2.8% to $26.10.
    • Marvell has an Outperform average Sell Side rating.

    Boeing 737 MAX grounding could stretch into 2020 – WSJ

    • Boeing (BA -1%) is today's biggest Dow Jones decliner following a weekend WSJ report that its 737 MAX jet may stay grounded until early 2020 due to the time it will take to fix flight control software and complete other steps.
    • No firm timeline has been established but under the latest scenario, the global MAX fleet is now anticipated to return to the air in January 2020, a full 12 months after Boeing proposed its initial replacement of software eventually implicated in a pair of fatal crashes, according to the report, citing some Federal Aviation Administration officials and pilot union leaders.
    • Boeing executives, FAA engineers and international regulators have steadily expanded their safety analyses to cover a growing list of issues spanning everything from emergency recovery procedures to potentially suspect electronic components.
    • In recent days, American Airlines and United Airlines said they would keep the 737 MAX off their schedules into November (III).

    Crocs rides Piper Jaffray upgrade higher

    • Crocs (CROX +6.4%) trades higher after landing an upgrade from Piper Jaffray to an Overweight rating.
    • "Crocs’ outlets have been seeing solid traffic during the summer season & pricing appears to be better vs the April/May season," observes analyst Erinn Murphy.
    • Murphy also notes that the Vera Bradley collection at Crocs stores is selling very well.
    • Piper assigns a price target of $27 to Crocs. The Seeking Alpha Quant Rating on Crox also bullish.

    Bull lifts MSFT target before earnings

    • Nomura analyst Christopher Eberle maintains a Buy rating on Microsoft (MSFT) and raises the target from $131 to $161.
    • Eberle: "Material upside to numbers appears likely to be less in fiscal 2019 than in years past, but we believe Microsoft’s best-in-class management team will continue to execute as it has in previous years. We continue to believe Microsoft’s positioning in enterprise software places it at the crux of driving customers' digital transformation."
    • The firm expects "relatively in-line" results when Microsoft reports earnings on Thursday. Consensus estimates have revenue at $32.78B with $1.21.
    • Microsoft has a Buy average Sell Side rating.

    Gulf of Mexico rigs, Louisiana refineries to re-start operations after Barry

    • Some producers in the Gulf of Mexico have begun to re-staff their offshore crude and natural gas platforms following the passage of Tropical Storm Barry.
    • Exxon Mobil (XOM -0.2%) says it is returning workers to its three GoM platforms where staff was evacuated, with "minimal production impact."
    • Chevron (CVX +0.1%) says it is in the process of restarting six crude oil platforms that it shut, and Royal Dutch Shell (RDS.A -0.1%) says it is still monitoring the situation and its assets in Auger, Salsa and Enchilada remain shut-in with production in the Mars Corridor curtailed.
    • BHP (BHP +0.7%) says expects to return workers to its two shut assets today, while Enbridge (ENB +0.2%) plans to return crew to an offshore natural gas platform.
    • Louisiana's oil refineries, which account for ~18% of total U.S. operable refining capacity, were largely spared from the storm's destruction.
    • Phillips 66 (PSX -0.2%) says its Alliance refinery is being prepared for restart today after shutting it down on Friday.
    • PBF Energy's (PBF -3.7%) Chalmette refinery cut production rates slightly because Barry halted new deliveries of crude.
    • XOM says its refinery and chemical plant in Baton Rouge and a storage terminal in Sorrento, La., respectively, are operating normally.

    Analysts unimpressed with Citi's Q2

    • After an initial pre-market advance, Citigroup (C +0.1%) fell after the market open as analysts weighed in on Q2 results; shares have since recovered some during the conference call.
    • KBW analyst Brian Kleinhanzl notes net interest margin of 2.66% fell short of KBW's 2.70% estimate and Q1's 2.70%; loan yields and securities yields also missed.
    • Q2 results were "essentially in line," writes Credit Suisse's Susan Roth Katzke.
    • Jefferies analyst Ken Usdin said that when excluding the Tradeweb gain, "most items were a little lower" than consensus estimates.
    • Previously: Citigroup's consumer unit bolsters Q2 results (July 15)

    Uranium names gain as Trump nixes import limits, begins nuclear fuel review

    • U.S. uranium producers recoup a little of last Friday's losses that followed reports Pres. Trump would decline to issue quotas for domestic uranium production, which the White House later confirmedUUUU +2.3%URG +4.9% and UEC +6.1% after all lost more than a third of their value on Friday.
    • Trump created a working group to review the U.S. nuclear fuel supply chain over the next 90 days, asking to find other ways to boost the domestic uranium industry.
    • Petitions from UUUU and URG had sought quotas requiring 25% of the U.S. uranium market be sourced domestically.
    • The action could mean uranium production in the U.S. will "effectively disappear," but it also could bring utilities, which had largely stopped buying uranium because of the uncertainty about whether use of non-U.S. uranium might be curbed, back to the spot market, says Dustin Garrow, managing principal at Nuclear Fuel Associates.
    • Electric utility companies with nuclear power plants, including Duke Energy (DUK +0.7%) and Entergy (ETR +0.4%), had fought against the miners' petitions, arguing their costs would rise if they were forced to source U.S. uranium.

    Nomura picks favorites in the cruise line sector

    • Nomura weighs in on the cruise line sector ahead of the release of Q2 earnings across the sector.
    • "We expect NCLH and RCL to have more constructive forward booking commentary than CCL did in its June outlook and beat more recent diminished yield expectations," previews analyst Harry Curtis.
    • Curtis and team also expect onboard spending and ticket prices to top expectations.
    • Nomura has a Buy rating on Norwegian Cruise Line Holdings (NCLH +1.2%) and Royal Caribbean (RCL +2.2%), while Carnival (CCL +0.6%) is slotted at Neutral.
    • "RCL and NCLH have underperformed badly since early May, (Cuba, CCL and yield skepticism) and are valued at 10x and 8.5x 2020E EPS despite nearly mid-teens EPS growth, improving ROIC and strong balance sheets."

    L Brands dips after Citi cut

    • L Brands (LB -0.9%) trades lower after Citi downgrades the retailer to a Neutral rating from Buy and drops its price target to $27.
    • Citi warns cultural norms are shifting away from the Victoria's Secret brand and sees toughs comparisons ahead.
    • Separately on the public relations front, Victoria's Secret has been mentioned in some media reports on the Jeffrey Epstein scandal.
    • Shares of L Brands are down about 5% over the last week.

    Trump to increase use of American steel in infrastructure projects

    • Steel producers are higher after the White House says Pres. Trump will sign an executive order this week designed to increase the amount of American steel and iron used in infrastructure projects; AKS +2.3%STLD +1.9%MT +1.7%X +1%CLF+0.8%NUE +0.7%.
    • The order will direct agency heads to "encourage recipients of new federal financial assistance awards to use, to the greatest extent practical, iron, steel, aluminum, cement and other manufacturing products" produced in the U.S., according to trade advisor Peter Navarro

    FuelCell warns of potential bankruptcy amid financing squeeze

    • FuelCell Energy (NASDAQ:FCEL-19.2% pre-market after warning about its liquidity position, saying it has "significant short-term debt and other obligations currently due or maturing in less than one year which are in excess of the company's cash and current asset balance."
    • FCEL says it may be unable to refinance the Hercules credit facility; although the maturity date of the facility is April 1, 2020, FCEL says it may not meet certain covenant requirements if it is unable to refinance the Hercules credit facility by Aug. 9, 2019, which could result in a default.
    • FCEL says it may sell as much as $42M of common stock in an at-the-market sales plan, and plans to use any proceeds to pay down debt, including the Hercules facility and its loan from NRG Energy.

    White House Corrects Fannie And Freddie Narrative 

    S&P 3,300 – The Bull Vs. Bear Case 

    Molson Coors -2% after two-notch BAML cut

    • Bank of America Merrill Lynch drops Molson Coors Brewing Company (NYSE:TAP) two notches to an Underperform rating from Buy.
    • "TAP has integrated the MillerCoors and Miller International acquisitions well from a cost and cash flow perspective while sales have lagged," notes BAML.
    • "We see heightened potential that TAP will need to increase spending to stabilize market share on core brands and accelerate investments in premium/'beyond' beer segments over the next year," warns the firm.
    • BAML's price objective goes all the way down to $50 from $70 to factor in lower EPS estimates for FY19 and FY20. The average sell-side PT is $65.94.
    • Shares of TAP are down 1.77% premarket to $53.43.

    Teva down 5% premarket on Morgan Stanley downgrade on opioid litigation risk

    • Teva Pharmaceutical Industries (NYSE:TEVA) slips 5% premarket on average volume on the heels of a downgrade to Underweight with a $6 (35% downside risk) price target at Morgan Stanley (MS) citing its potential exposure from litigation associated with the U.S. opioid epidemic.
    • MS downgraded Endo International (NASDAQ:ENDP) to Underweight with a $3 (27% downside risk) price target as well (shares down 5% premarket on light volume).

    'Lion King' scores $54.7M China debut

    • Disney (NYSE:DISThe Lion King hauled in $54.7M during its China debut, higher than the openings of Jungle BookBeauty and the Beast and Aladdin.
    • A strong opening abroad is a good sign for Disney as critics had mixed feelings ahead of the film's North American debut on July 19.
    • Even if the movie underperforms its estimated $175M-$200M opening weekend, expectations are that the film will have a long run in theaters this summer and into the fall.

    China posts weakest growth in 27 years

    • Weakened by trade tensions with the U.S., China's economic growth decelerated to its slowest pace since 1992, growing by 6.2% in the second quarter and prompting expectations of more stimulus.
    • The data was weighed down by an impasse in negotiations that shattered hopes for a trade deal in late May, though President Trump and Xi Jinping got discussions back on track in the waning days of June.
    • Separate economic figures handily topped forecasts as the country’s industrial output grew 6.3% in June from a year earlier, while retail sales surged 9.8%.

    Barneys New York explores bankruptcy filing

    • Facing a liquidity crunch, Barneys New York is reportedly exploring options that include a bankruptcy filing, which could come as soon as this month.
    • It's just one of many department stores that's struggling as shoppers buy online or from brands directly.
    • Nordstrom (NYSE:JWN) is trading nearly $20 a share lower than a $50/share buyout offer it rejected two years ago as too low, Saks-owner Hudson's Bay (OTCPK:HBAYF) is considering going private after its stock fell nearly 50% in the year through June, while shares of Macy's (NYSE:M) are down 40% YTD.

  29. NBEV / Phil – I did a buy-write on this one a few months ago, is this a good place to DD or just keep rolling the covers I have and wait for good news?

  30. Puts/ When you write put options on a stock, do you receive interest on the premium received from your broker? IB stated that the amount has to be over $100,000 in order to receive this interest.  IB does pay an excellent rate on idle cash and has low commissions but was wondering what others have seen.  Thanks

  31. NBEV/MrM – This is not much more than a penny stock in the pre (if ever) money-making phase.  Beverage industry is very fickle, things do well for a while but often don't have legs so I'd be careful about over-committing if there are no signs they are gaining traction, though they did just get a deal with WMT, so there's some potential (but the margins probably suck).  Last year they did $52M in sales and lost $21M and got a $9M tax break so it "only" looks like they lost 0.17 per $1 in sales as opposed to the 0.40 they actually lost.  This Q it looks like $58M in sales (they did a reverse merger with Morinda so not due to better sales) and only lost $8.5M in operations so losing 0.15 per Dollar is improving and they have $109M in cash but $80M in debt but it does look like they can stick it out for quite a while so, if you have faith – maybe they'll figure out how to make a profit but when will they make $20M to justify a $300M valuation at $4?  That's a tough one – I'd wait to see if they stay on track with another $50+M this Q.  First Q with WMT is very tricky as the orders bump up but that doesn't mean they won't boomerang back if they don't sell.

    Interest/Tshroy – ToS "sweeps" your money to an overnight interest-bearing account but it's very small amount of interest.  

  32. Phil, after the latest leg up, what would you is the best instrument for hedging? Would it be SDS?

  33. "an economy whose prosperity is faltering cannot indefinitely sustain an ever-growing burden of financial promises. By definition, whatever is unsustainable eventually fails, and this is as true of monetary systems as of anything else."


    Michael Hudson interview. It's long but you should definitely read it. I pulled out some quotes below:

    "American parent companies have already moved their factories abroad. They have given up on America. As long as Trump or his successors refrain from changing that system – as long as he gives tax advantages for companies to move abroad – there’s nothing he can do that will restore industry here."

    "If you’re an investor, you can make more money by dismantling the U.S. economy. Finance is cosmopolitan, not patriotic. It doesn’t really care where it makes money. Finance goes wherever the rate of return is highest. That’s the dynamic that has been de-industrializing the United States over the past forty years." [BDC - Trump enables and accelerates this of course, though his base doesn't know it, they are all about emotion, "race and gender" and PC nonsense.] 

    "Bonnie Faulkner: Do you think that Donald Trump understands what he’s doing?

    Michael Hudson: I don’t think he understands. I think he has an oversimplified view of how the world works. He thinks that if we devalue the dollar, we can undersell China and Europe [but with having no factories or production here] it’s like saying, “If we had some ham, we could have some ham and eggs, if we had some eggs.”"

    "Since 1980 the U.S. economy has been made very high-cost. Yet there also has been a huge squeeze on labor, by raising the prices it has to pay for basic needs. Even if wages go up, people can’t afford to live as well as they did thirty years ago. A radical restructuring is needed in order to restore a full-employment industrial economy. You need de-privatization, you have to break up monopolies, you need the kind of economy and economic reform that America had under Franklin Roosevelt in the 1930s. I don’t see that happening." [BDC - what if we had a green new deal??]

    "You can do one of two things: You can help labor or you can help Wall Street. 

    That’s what makes the United States the “exceptional country.” The value of our currency is based on other countries’ savings." [so what happens when this comes to an end? watch out]

    "They [China] see the United States as a dying economy."

    "Michael Hudson: If it continues to let Wall Street do the economic planning, the economy will look like that of Argentina.

    Bonnie Faulkner: And what does Argentina look like?

    Michael Hudson: A narrow oligarchy at the top, keeping labor at the bottom, taking away labor’s rights to unionize – an economy whose financial and military sectors have won the class war."

    America’s banks are owned by the stockholders and bondholders, who would never let Chase Manhattan or Citibank or Wells Fargo just forgive their various categories of loans. That’s why public banking is so much more efficient from an economy-wide level than private banks. It’s why banking should be a public utility, not privatized.

  35. Hedging/Alter – I still think SQQQ has the fastest path up.  So many inflated earnings that could disappoint and the Japan/SoKo thing is bad for tech too as well as these taxing tech bills rolling around Europe.

    Hudson/BDC – He's right, we need Socialism and, if we don't get it, this country is DOOMED!  The reason we have lower wages and rising prices is Corporate Greed – they squeeze the consumer and the squeeze the laborers and they don't give a damn about the long-term damage they are doing.  

  36. Biodiesel - De-Dollarizing the American Financial Empire – This is really interesting and scared the hell out of me…..    thanks for sharing - everyone eon this board should read this

  37. phil/batman – agreed and thanks for the feedback