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Monday Market Momentum Continues Ahead of the Fed

Image result for powell trump cartoonHow will July end?

It ends on Wednesday and Wednesday is Fed day and the FOMC announces their rate decision at 2pm, where a 0.25-0.5 cut is widely expected, followed by a speech by Jerome Powell at 2:30, where he pretends to explain why cuts were necessary for some other reason than to please the President.  Ahead of that circus, we have the Dallas Fed Manufacturing Survey this morning (10:30), Personal Income and Outlays tomorrow (8:30) along with the Redbook Sales (8:55), Case-Shiller (9:00), Consumer Confidence and Pending Home Sales (10:00). 

On Wednesday morning we have MBA Mortgage Applications at 7am, ADP at 8:15, Employment Cost Index (8:30), Chicago PMI (9:45), State Street Investor Confidence (10:00) and Petroleum Status at 10:30.  Those are the last data-points that are going to influence the Fed ahead of their "decision" and, of course, there will be hundreds of earnings reports highlighted by the following:

Image

So that's the set-up but the outcome seems to be a given as we no longer have a data-driven Fed but a politically-driven one and no one seems concerned that the independence of the Federal Reserve has been a cornerstone of our economic stability since the Great Depression.  While we certainly have our issues with what is essentially a banking cartel operating under the guise of a Government entity – at least they were independent of the White House and ANY kind of check against Presidential over-reach would be welcome these days – as we have very few left – and now the Fed has given up and is about to lower rates when a hike would be more appropriate.  That's just crazy! 

Related imageWith interest rates near their lower band, a key transmission channel of unconventional monetary policies – quantitative easing, yield curve control and forward guidance – has been to entice investors to take greater risk and hunt for yield outside of the traditional investment-grade bond market. This has inflated stock valuations, made junk bond yield look like investment-grade, and increased housing prices in major cities where real estate is a prized possession. All of this has exacerbated wealth inequality and is contributing to the social backlash against economic liberalism, according to economists with Nomura Securities.

Another aspect of inequality is uneven distributional impacts, with very low interest rates disproportionately hitting (retirees) who have much of their savings in low-interest bank saving deposits and young people seeking to save for their first home.  Wall Street traders are making money buying bonds at a premium, then selling them back to a Central Banker for an even greater premium. But as bond prices rise, yields fall and fixed-income investors aren’t making much off their savings and government bonds anymore.

Corporations like Apple have spent upwards of $100 billion borrowing at low interest and buying back its stock, driving up its share price. That’s made Apple shareholders richer. But unless a retail investor is holding Apple stock individually and not in a stock mutual fund, then it is unlikely they sold despite Apple being up over 25% this year alone.  Money goes to money. And QE and low credit costs make that all the easier.

We'll see what the Fed actually does on Wednesday but, with an 0.50 rate cut now expected by most – it will be hard fro them to do anything but disappoint.

 


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  1. Good morning. Expecting a very explosive week of action.


  2. Good Morning!


  3. Everything is awesome again – no rodent infestation on Wall Street!



  4. Some very cool graphics about the housing market around the world:

    https://www.visualcapitalist.com/mapped-the-countries-with-the-highest-housing-bubble-risks/

    Some places are downright unaffordable for the average person.


  5. Surviving Woodstock




  6. Power went out again – very violenty too.  Apparently I need a sturdier UPS.

    Lost a lot of stuff but, needless to say, I made many brilliant market observations this morning.

    Nasdaq took a hell of a tumble, Russell following but not so much Dow and S&P (yet?):

    Dow 27,000 and S&P 3,000 are the big lines though Nas failing 8,000 is a bit worrying.

    Dollar very strong so that can go lower and save things – especially if the Fed does a big cut.

    Of course, what are you going to buy – Boris Johnson's Pounds?


  7. Big Chart – 27,000 is the 12.5% line on the Dow so that's very significant.  Watch those 20 dmas otherwise.

    Minimum wage/StJ – I would think it's the opposite.  Best way to put money to work in the economy is to give it to the workers. 

    As to rats, how can anyone from NYC badmouth any city's rat issues?

    Image result for nyc rat population

     in February, the Trump Tower Grille in the president’s signature Manhattan property was reported for “live mice” and other health code violations.

    New York City health inspectors visited the restaurant on 11 July 2018 and found “evidence of mice or live mice” in and around the kitchen, a violation of sanitary standards that was deemed to be “critical”.

    The inspectors also found the restaurant to be “not vermin-proof” and said it was “conducive to attracting vermin” and “allowing vermin to exist”.

    The New York Daily News reported that the Trump Tower restaurant has been cited for health code violations in each of the past five years, including sightings of “live roaches” in 2016 and “filth flies” in 2017.

    Many other Trump property health code violations here.  


  8. rats/Phil – it's just amazing. The US has the world's largest geographic area of pandemic yersinia pestis in rodents, and this area is expanding eastward continually, especially with the climate catastrophe. All that has to happen is for that area to hit a city with a large population living in poverty and a lot of rats, with little to no budget to control that. St. Louis springs to mind.


  9. BA is just about down to our original Jan21 250 put sale, at least I did. I got 13.25 for them they now 12.88!!!!

    Just to keep an eye on BA!!!


  10. Morning Phil – I'm debating between an option spread using SQQQ or DXD as a market hedge against a negative reaction to Wednesday's rate decision. Can you give me your thoughts on which you would use?


  11. /NGN20 down to 2.384. What’s a good spot to DD? Or do you think we need to throw in the towel?


  12. Plague/Snow – Well, that's one way they decreased the surplus population in Europe.  

    mediaeval doctor

    You think we can't afford health care now…

    BA/Yodi – I believe I said $300 is where I want in so still waiting patiently.  Good lesson in how long it takes these things to play out:

    BA/Yodi – Right you are, we did sell 10 $280 puts in the LTP, got a good price ($21) and I certainly don't mind net $259 if assigned.  I was hoping for $300 to establish a long spread. 

    Hedge/Willsons – I still like SQQQ best as the Nas is full of overpriced major components (though not APPL or it would be a no-brainer) and AAPL holds up the Dow as well.  SQQQ also pays better as it's a 3x and not a 2x.

    /NG/Dawg – I think weak hands are being flushed ahead of possible China Trade deal.  One of the things they can easily do to "balance" trade is to buy more US Nat Gas as we currently supply just 2.28% of their needs.  

    Image result for china natural gas imports

    Image result for china natural gas imports

    I'd wait until a bottom actually seems to be forming before doubling down though as it also doubles the pain of holding.


  13. TRI a very overvalued company.


  14. CMG new highs on the upgrade:

    Can't resist making a play since we're swimming in cash in the STP so let's:

    • Sell 6 CMG Sept $800 calls for $33 ($19,800)
    • Buy 10 CMG 2021 $860 calls for $108 ($108,000) 
    • Sell 10 CMG 2021 $980 calls for $67 ($67,000) 
    • Sell 3 CMG Jan $700 puts for $24 ($7,200) 

    We're in the spread for net $14,000 and the net delta on the 2021 spread is 0.19 so a $20 move down in CMG will cost us $3.80 ($3,800) but would make us $19,800 on the longs and we have 6 quarters to sell and roll.  We're selling less puts because we are bearish and the 2021 $520 puts are $24 – so I'm pretty confident we can roll out of trouble and the same goes to the upside, where the 2021 $1,140 calls are $33 and, before we owe that money, we collect $120,000 back on the long calls for a net $106,000 profit so this is not so much about KNOWING where CMG will be in two months but rather about KNOWING where it's not likely to be in 2 years, which would be $107 over $1,140 ($1,250) before we begin to take a net loss (and even then we can adjust along the way).

    Weighing that against the opportunity to make $19,800 in 53 days (Sept expiration) with 536 days until Jan, 2021 means we can make 10x $19,800, which is 25% of the entire STP so it seems silly not to give it a try…

    TRI/Den – $68.50 is $34.25Bn and it's deceptive because they made $4Bn last year but it was a one-time event (divestiture) and they are projected to go back to under $1Bn going forward though it is, overall, a restructuring and, down the road, they may end up justifying $60s. 

    Year End 31st Dec 2013 2014 2015 2016 2017 2018 TTM 2019E 2020E CAGR / Avg
    Revenue $m 12,702 12,607 11,257 11,166 5,297 5,501 5,609 5,917 6,143 -15.4%
    Operating Profit $m 1,481 2,498 1,526 1,390 1,008 758 764     -12.5%
    Net Profit $m 137 1,909 1,255 3,098 1,395 3,949 4,404 567.1 927.1 +95.9%
    EPS Reported $ 0.16 2.57 1.49 1.47 0.60 0.31 0.31     +13.3%
    EPS Normalised $ 0.45 2.88 1.46 1.64 0.78 0.46 0.31 1.17 1.91 +0.2%
    EPS Growth % -83.2 +538 -49.3 +12.3 -52.4 -41.5 -53.7 +156.4 +63.0  
    PE Ratio x           154.4 223.9 60.2 36.9  
    PEG x           0.99 1.43 0.96 3.29
    Profitability

    Not something I'd want up about 70% for the year – that's silly!


  15. Chart

    Investors need to remember that Chipotle only grew Q1 revenues at 13.9% even with the 9.9% comp sales growth. Business isn't exactly booming outside of digital sales which account for virtually all of the sales growth. Digital sales grew 100.7% to reach 15.7% of total sales.

    A lot of the growth at Chipotle is just a normalization of sales following the health scare. Average restaurant sales finally topped $2.0 million again after peaking at $2.5 million back in mid-2015 before the health scare.

     

    In the process, restaurant-level margins are normalizing by hitting 21.0% in Q1, up 150 basis points from 19.5% last Q1. With the expectation of higher costs now, the prediction has always been that Chipotle returns to 23.0% or 24.0% restaurant margins, not the 27.0% margins achieved in 2015.

    The stock has surged due to the big EPS growth, but the growth rate isn't sustainable. The restaurant operating margin jumped 180 basis points last year to 18.7%, up from an unreasonably low 16.9%.

    Using 2019 and 2020 revenue targets and aggressive restaurant margin gains, Chipotle still doesn't come close to analyst EPS targets:

    2019

    • Revenues @ $5.43B
    • Restaurant margins @ 20.0% = $1.09B
    • OpEx @ 11% = $0.60B
    • Operating income = $0.49B
    • Net income = $0.322B (30% tax rate)
    • EPS = $11.50 (28M shares)

    2020

    • Revenues @ $6.05B
    • Restaurant margins @ 21.5% = $1.30B
    • OpEx @ 11% = $0.67B
    • Operating income = $0.63B
    • Net income = $0.441B (30% tax rate)
    • EPS = $15.75 (28M shares)

    So, even if the company achieves a 280 basis point expansion from 2018 to 2020, the EPS target is only about $15.75, not $16.50. Chipotle might be able to make up the excess via higher revenues or lower taxes. Either way, the point is that the stock is expensive based on aggressive margin expansion.

    The odd part is that analysts list the stock as a Buy despite trading above their average price target. Again, part of the problem with the stock is a lack of reality from the investment community that continues to push the stock despite common sense.


  16. TRI   Over the past several years they have migrated their programming support of their tax compliance products to contractors and overseas to India. They have retired experienced U.S. senior staff. This is a disaster waiting to happen.   


  17. NFLX is out of control:

    • Netflix (NFLX -1.3%) plans to invest more than $520M to make three big-budget Hollywood films, sources tell The Wall Street Journal.
    • 6 Underground (Michael Bay) and The Irishmen (Robert DeNiro, Al Pacino, Joe Pesci, Martin Scorsese) are expected to be released this year, while Red Notice (The Rock, Ryan Reynolds, Gal Gadot) will be filmed this year.
    • The biggest risk of the three is anticipated to be The Irishmen. The historical drama with a budget estimated of between $173M and $200M is set to be unveiled at the New York Film Festival in late September.
    • Of particular interest as Netflix goes big budget is how many screens the films land on. Large theater chains like AMC Entertainment (AMC +0.3%) typically require a 90-day window for films before they can be streamed, meaning Netflix will have to use independent chains or cut a deal.

    • At least $6.02B of U.S. leveraged loans are set to price by the middle of next month, resulting from a surge in launches today, Bloomberg First Word reports.
    • Borrowers are seeking to arrange financing before the bank industry slows down in August.
    • Among seven loans in the the market with bank meetings this week are two leveraged buyouts — DigiCert $1.55 first-lien term loan for the Clearlake/TA Associates' LBO and WestJet (OTC:WJAFF) $1.96B first-lien term loan for Onex (OTCPK:ONEXF) LBO.
    • Other big deals include Savage Enterprises $960M first-lien term loan for repricing and Sedgwick $1.1B incremental TLB for acquisition of York Risk Services.
    Image result for tom tomorrow invisible hand
    • Installations of global solar energy projects are expected to jump nearly 18% to a new high of 114.5 GW this year, says the Wood Mackenzie consultancy, which believes the solar market has returned to growth after slowing last year in China.
    • "The market is now back on a strong growth trajectory – 2018's slowdown was just a blip and we expect annual installations to rise to around 125 GW per year by the early 2020s," Wood Mackenzie says, adding this year's gains will be driven mainly by Europe – particularly Spain – the U.S., India, Vietnam, Egypt and the United Arab Emirates.
    • The biggest growth over the next few years will come from countries expected to install 1-5 GW of solar power, the report says; last year there were seven such markets but there should be 19 by 2022, including Saudi Arabia, France and Taiwan, according to the report.
    • Relevant tickers include TANFSLRENPHSPWRSEDGVSLRRUNTERPCSIQJKSYGE
    • Boeing (BA -1.4%) shares slide to a two-month low as Standard & Poor's says it may lower the company's credit rating due to the ongoing crisis in the 737 MAX program.
    • S&P says Boeing's credit metrics likely will deteriorate over the next few quarters and could fall below the threshold of cash flow to debt that normally triggers a downgrade.
    • Boeing also disclosed plans to sell bonds this year in a six-part offering that analysts believe will take priority over share repurchases at least until the 737 MAX is brought back into full service.
    • Boeing's debt could rise above $24B before year-end "as a result of working capital build up related to the 737 MAX grounding, but this will begin to decline once deliveries resume," Fitch Ratings said following Boeing's filing of the bond sale prospectus.
    • July Dallas Fed Manufacturing Survey general business activity index: -6.3 vs. -5.0 consensus and -12.1 prior.
    • Production: 9.3 vs. 8.9 prior.
    • Capacity utilization: 11.2 vs. 9.6 prior.
    • New Orders: 5.5 vs. 3.7 prior.
    • The U.S. ethanol industry is nearing a breaking point under the weight of the U.S.-China trade war and the surge in the number of small refineries exempted from U.S. biofuel laws, Green Plains (GPRE -2%) CEO Todd Becker tells Reuters.
    • The sustained downturn in margins finally will begin taking its toll as some producers run out of money: "Some plants will slow down, some will shut down, some will shut down forever," Becker says.
    • U.S. ethanol production in early June reached nearly 1.1M bbl/day, the highest seasonally on record, but margins to produce ethanol ETH-CB-REF are at the lowest seasonally since 2015, according to Refinitiv.
    • Becker says the industry has been undisciplined, continuing to ramp up production amid weak demand growth and growing supplies; GPRE has decided to cut production in the past, but this time it has the capital and operational plan to sustain weak or negative margins, the CEO says.
    • Restaurant stocks are catching a lot of attention over the last two weeks after the strong earnings reports from Chipotle (CMG +3.6%), McDonald's (MCD +0.3%) and Starbucks (SBUX-0.3%) highlighted strong consumer spending patterns in the U.S.
    • Goldman Sachs jumped heavily into covering the sector today by adding CMG to its Conviction Buy List and issuing buy recommendations on MCD, Starbucks, Shake Shack (SHAK +1.6%) and WingStop (WING +2.1%).
    • Analyst Katherine Fogertey says the stocks "best capture" a strong macro and are better insulated from rising costs. Fogertey thinks the names are also set to benefit from third-party delivery and will leverage their technology advantage.
    • Goldman was less positive on Dunkin Brands' (DNKN -0.5%), Domino's Pizza (DPZ -2.9%), Yum Brands (YUM -0.2%) and Restaurant Brands (QSR -0.8%), as they are all were slotted at Neutral. Wendy's (WEN -1.3%) and Jack In The Box (JACK -1.2%) were tagged with Sell ratings on the view they will give up market share.
    • The best-performing restaurant stocks this year through July 26 are CMG +81%, WING +51%, QSR +44%, Denny's (NASDAQ:DENN) +35%, Yum China (NYSE:YUMC) +34%, Dine Brands Global (NYSE:DIN) +34%, Performance Food Group (NYSE:PFGC) +33%, Chuy's Holdings (NASDAQ:CHUY) +31% and Red Robin Gourmet Burgers (NASDAQ:RRGB) +30%. The list of worst performers includes BJ's Restaurants (NASDAQ:BJRI), El Pollo Loco (NASDAQ:LOCO) and Fiesta Restaurant Group (NASDAQ:FRGI).
    • PayPal (NASDAQ:PYPL) slips 1.6% in premarket trading after Guggenheim downgrades the stock to sell from neutral, citing numerous headwinds for 2020 including eBay separation, Brexit, and regulatory changes in Europe.
    • Sees deceleration in TPV and revenue growth next year and "departures of key executives for PYPL as further negatives."
    • Quant rating Neutral; before this action, Sell-Side average rating was Outperform (20 Buy, 9 Outperform, 10 Hold, 1 Sell).
    • See peers comparison.
    • JPMorgan puts the brakes on Starbucks (NASDAQ:SBUX) with a downgrade to Neutral from Overweight on a call tied to valuation. "Valuation has become beyond a stretch. Plus, being very late cycle often means continued rising labor costs matched with difficulties of generating sustained increases in same-store traffic," reads the analyst note. The firm keeps a price target of $91 in place.
    • Baird lowers the restaurant stock to a Neutral rating with a PT of $98.
    • Goldman Sachs starts off coverage on SBUX with a Buy rating and price target of $110.
    • Shares of Starbucks are down 1.01% premarket to $98.11 after a strong post-earnings rally last week.

    Gilead Sciences (NASDAQ:GILD) upgraded to Top Pick with a $91 (36% upside) price target at RBC. Shares up 1% premarket.

    • Deutsche Bank warns that third-party delivery services pose a "competitive intrusion" for Domino's Pizza (NYSE:DPZ).
    • The firm initiates coverage on the pizza stock with a Sell rating and a price target of $208. DB's bearish take in Domino's is the only one on Wall Street (11 Buy-equivalent ratings, 7 Hold-equivalent ratings), while the Seeking Alpha Quant rating on DPZ is Neutral.
    • DPZ -1.95% premarket to $254.00. The 52-week trading range is $231.28 to $305.34.
    • Just Eat (OTC:JSTLFOTCPK:JSTTY) has reached an agreement in principle for a merger with Dutch rival Takeaway.com in a deal estimated to be worth about £9B.
    • Just Eat says the possible combination would create one of the largest online food delivery companies in the world, with scale, strategic vision, industry leading capabilities, leading positions in attractive markets and a diversified geographic presence. The possible combination is also said to be based on compelling strategic logic and represent an attractive opportunity for both companies to build on the strong individual platforms of Just Eat and Takeaway.com with the potential to deliver substantial benefits to respective shareholders, customers, employees and other stakeholders.
    • Just Eat press release
    • Shares of Just Eat are up 28.8% in London trading.
    • GrubHub (NYSE:GRUB+5.2% and Uber (NYSE:UBER+0.9% are up pre-market after European food delivery companies Takeaway.com and Just Eats announce they're in the "advanced stages" of a $10B merger.
    • The combined entity would have a market value of about $10B and would directly compete with Uber Eats and the Amazon-backed Deliveroo.
    • The companies have until August 24 to receive investor approval for the deal.

    • Two days before the Fed's FOMC makes a decision on whether to cut its benchmark interest rate and by how much, President Trump once again bangs the drum for lower interest rates.
    • As he has before, Trump complains that the EU and China will further cut their interest rates and "pump money into their systems, making it easier for their manufacturers to sell product," he said in a tweet.
    • "In the meantime, and with very low inflation, our Fed does nothing — and probably will do very little by comparison. Too bad!"
    • CME FedWatch Tool puts probability of a 25-basis point rate cut at 76% and of a 50-bp cut at 24%.
    • Futures point to a modest rise at the opening bell; Nasdaq, S&P 500, and Dow futures each rise 0.1%.
    • 10-year Treasury rises, pushing yield down 1 basis point to 2.055%.
    • Last week, the ECB kept rates unchanged.
    • Chipotle (NYSE:CMG) is on watch after being added to the Conviction Buy List at Goldman Sachs.
    • Goldman analyst Katherine Fogertey says CMG has lagged the sector and the S&P 500 meaningfully since food safety issues arose at the company in 2015. Chipotle is now Goldman's top pick in the restaurant sector and is tagged with a $1,000 price target vs. the sell-side average PT of $714.86.
    • Shares of Chipotle are up 1.56% premarket to $792.00 (52-week high).

  18. CMG Play: Heads you Win / Tails you Win. Phil – I admire your gunslinging approach to trading CMG. Lost for metaphors, but I guess if you can't beat 'em, join 'em. At least BYND makes CMG look reasonable. If CMG collapses then your instincts are right – and if CMG continues its upward momentum then you make money (as long as you can find a way to manage those CMG  $740 shorts in the LTP. However, what about considering the Jan 21; $740 / $840 BCS @  $52 – which is $60 ITM. Looks a better risk/reward?


    • Morgan Stanley lowers its estimate for Tesla (NASDAQ:TSLA) 2019 deliveries to 345K units vs. 347K prior and the automaker's guidance range of 360K to 400K. The firm believes the step down in the U.S. EV tax credit at the end of last month may have pulled forward some demand into Q2.
    • MS also drops its full-year gross margin estimate to 17.4% from 19.6%. "We forecast Tesla exiting 4Q with an 18.9% auto gross margin (ex. regulatory credits). We would note that for many years, Tesla management have targeted an auto gross margin of over 25% in a steady-state, but this quarter seemed to show an increased dependence on FSD take rates and regulatory credits to meet this target," writes analyst Adam Jonas.
    • Morgan Stanley keeps a price target of $230 on Tesla as a material reduction in the gross margin and deliveries forecasts are offset by a reduction of the CAPEX forecast. The price target is well below the average sell-side PT of $271.77.
    • TSLA +0.57% premarket to $229.29.

    Whistling Past The $70 Trillion Debt Graveyard 

    • Pfizer (PFEQ2 results: Revenues: $13,264M (-1.5%); Biopharma: $9,595M (+1.7%); Upjohn: $2,807M (-10.8%); Consumer Healthcare: $862M (-2.7%).
    • Internal Medicine: $2,330M (+2%); Vaccines: $1,375M (-2%); Oncology: $2,236M (+18%); Hospital: $1,913M (-8%); Inflammation & Immunology: $1,219M ; Rare Disease: $521M (-9%).
    • Key Product Sales: Ibrance: $1,261M (+22.8%); Eliquis: $1,085M (+22.0%); Prevnar 13/Prevenar 13 : $1,179M (-5.7%); Xeljanz: $613M (+32.4%); Enbrel: $420M (-23.8%); Lyrica: $1,175M (-3.9%); Lipitor: $407M (-21.9%); Norvasc: $216M (-20.9%).
    • Net Income: $5,046M (+30.3%); EPS: $0.89 (+36.9%); Non-GAAP Net Income: $4,520M (-1.6%); Non-GAAP EPS: $0.80 (+3.9%).
    • 2019 Guidance: non-GAAP EPS: $2.76 – 2.86 from $2.83 – 2.93; Revenues: $50.5B – 52.5B from $52B – 54B.
    • Shares are down 1% premarket.
    • Previously: Pfizer EPS beats by $0.05, misses on revenue (July 29)
    • Former Fed Chair Janet Yellen supports a 25-basis-point cut in the central bank's benchmark interest rate due to a weaker global economy and low inflation in the U.S.
    • "The global economy has weakened. I think partly it’s weakened because of conflicts over trade and the uncertainty that’s caused for businesses," she said at an Aspen Economic Strategy Group meeting. "The United States isn’t an island. We’re part of the global economy. What happens in the rest of the world – in Europe, in Asia – affects the United States."
    • Barclays (NYSE:BCS), JP Morgan (NYSE:JPM), RBS (NYSE:RBS), UBS (NYSE:UBS) and Citigroup (NYSE:C) are being sued by investors over allegations they rigged the global foreign exchange market, in a test of U.S.-style class actions in Britain.
    • The claim, estimated to be worth more than £1B, was filed at the Competition Appeal Tribunal.
    • Some of the world's biggest investment banks have already paid more than a combined $11B in fines to settle U.S., British and European regulatory allegations that traders rigged the currency markets.
    • Negotiators for the U.S. and China are facing off in Shanghai this week in another attempt to piece together a trade accord.
    • While there are much lowered expectations for the kind of sweeping deal that appeared within reach this spring, modest wins might be obtainable.
    • Those include U.S. insistence that China commit to legal changes to protect intellectual property and abandon state subsidies to business, as well as Beijing's demands that the U.S. drop all tariffs as a condition for a deal.
    • Data overnight showed Chinese industrial profits dropping in June after a brief gain the previous month, demonstrating the concerns created by the trade war.
    • Boris Johnson's high-level Brexit cabinet is set to hold its first meeting today and will gather every day until an Oct. 31 deadline for leaving the EU.
    • Michael Gove, named to a job that makes him Johnson's top aide, will lead the sessions.
    • "We still hope they [the European Union] will change their minds, but must operate on the assumption that they will not," he wrote in the Sunday Times. "No deal is now a very real prospect, and we must make sure we are ready."
    • Sterling -0.4% to $1.2329.
    • An emergency meeting with parties to Iran's 2015 nuclear deal – Britain, Germany and France plus Russia and China – was valuable but there are unresolved issues, according to Iranian official Abbas Araqchi.
    • "The atmosphere was constructive. Discussions were good. I cannot say that we resolved everything, I can say there are lots of commitments," he told reporters after a meeting in Vienna.
    • Iran has said it will withdraw from the pact unless the Europeans find ways to shield its economy from the U.S. sanctions.
    • It's not even August and Disney (NYSE:DIS) has already collected a record-shattering $7.67B at the 2019 global box office, beating its previous annual record of $7.61B in 2016.
    • The $7.67B figure includes $5.09B amassed overseas, marking the first time any Hollywood studio has surpassed the $5B threshold internationally.
    • More to come… The rest of Disney's 2019 calendar includes Thanksgiving tentpole Frozen 2and the year-end holiday offering Star Wars: The Rise of Skywalker.
    • Lyft (NASDAQ:LYFT) Chief Operating Officer Jon McNeill is leaving the company, according to CNBC sources.
    • McNeill joined the ride-hail company from Tesla in early 2018.
    • Lyft shares are down 2.3% to $64.01.


  19. CMG/Winston – That works too but I'm more bearish than that so I don't want to spend extra money to have a lower long.  Like a butterfly play, it's just a backstop in case I'm wrong and CMG breaks out of the channel.  Also, I don't think CMG is worthless so I'm not too worried about selling puts – I just don't see how they can justify $750 for the long-term.


  20. Nas can't quite seem to get 8,000 back on /NQ but most of the damage is reversed.

    Gold is strong against a strong Dollar

    Oil back up


  21. Could A Hydrogen Society Change The Planet? Yes — Here’s Why


  22. What are you feeling regarding AAPL earnings?



  23. FTR – credit downgraded last week…  Fitch Ratings has downgraded the Issuer Default Rating (IDR) of Frontier Communications Corporation and its subsidiaries to 'CCC' from 'B-'. Fitch also downgraded the ratings of the company's debt


  24. AAPL/Den – No idea.  I think they must be doing well overall but well enough to justify $1Tn?  That's a lot trickier.  They need to be dropping $12Bn+ to the bottom line to be on a $60Bn pace for the year as last Q was $11.5Bn and this is another "weak" quarter but then things pick up towards the end of the year.  $60Bn in earnings makes a $1Tn valuation a no-brainer (15.2x) but anything less than that gives the bears a chance to declare AAPL dead – as they love to do when they can.

    Notice expectations are lower for this year than last as there's no new phone cycle but, if AAPL can prove they don't need one – then they prove they are very undervalued at $1Tn.

    Year End 29th Sep 2013 2014 2015 2016 2017 2018 TTM 2019E 2020E CAGR / Avg
    Revenue $m 170,910 182,795 233,715 215,639 229,234 265,595 258,490 256,650 267,432 +9.2%
    Operating Profit $m 48,999 52,503 71,230 60,024 61,344 70,898 65,491     +7.7%
    Net Profit $m 37,037 39,510 53,394 45,687 48,351 59,531 57,170 53,218 54,812 +10.0%
    EPS Reported $ 5.68 6.45 9.22 8.31 9.21 12.2 11.7     +16.5%
    EPS Normalised $ 5.68 6.45 9.22 8.31 9.21 12.2 11.7 11.4 12.5 +16.5%
    EPS Growth % -9.9 +13.6 +42.8 -9.9 +10.8 +32.6 +7.5 -6.54 +9.73  
    PE Ratio x           17.0 17.8 18.2 16.6  
    PEG x           n/a n/a 1.87 1.18
    Profitability

    FTR/Batman – Coming into 8/6 earnings at the low so we'll see.

    $140M buys you the whole company at $1.30 but that's about what they are projected to lose this year.


  25. BYND beats and raises guidance but still down 6% from those crazy highs.  Still, holding $220 ($13.3Bn) is amazing.  Lost $9.4M on $67.3M in sales.  Stripped of one-time items though, call it a profit of $6.9M and people will latch onto that though even if they keep that going and multiply it by 10 to $280M – $13.3 is still a lot of money for 10x their projected earnings.  MADNESS!!!

    “We are very pleased with our second quarter results which reflect continued strength across our business as evidenced by new food-service partnerships, expanded distribution in domestic retail channels, and accelerating expansion in our international markets,” Chief Executive Ethan Brown said in Monday’s announcement. “We believe our positive momentum continues to demonstrate mainstream consumers’ growing desire for plant-based meat products both domestically and abroad.”

    See also: Beyond Meat has hit the ‘short-squeeze trifecta’ as borrow fees keep soaring

    The sharp rise in Beyond Meat shares has attracted a bevy of short sellers, who have driven costs to borrow the shares in order to bet against the high prices to astronomical levels. As of Monday, shares were commanding a borrow fee of 135.9%, rising to 150% for new borrows, according to analytics firm S3 Partners.

    Too bad it's unshortable as I'd love to short them here.  Jan $200 puts are $84 – that's INSANE!!!  I guess we could grab the Jan $300 ($153)/$200 ($84) bear put spread for $69 but it's such a rip-off it takes all the fun out of playing..


  26. I looked at BYND over the weekend and the only way I could find to play it at all was by selling calls, which seems quite risky although the premiums are hefty and it is somewhat tempting. Selling a call spread might work. I didn’t look at that. 


  27. RIG, MDR, and ILMN having a rough go after earnings announcements.


  28. Add SSNC into above losers category.


  29. ILMN looks OK. Check out RH