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Tumblin’ Tuesday – Monday’s Gains Quickly Reversed

So much for that "rally".

We call them "Meaningless" Mondays for a reason as nothing that happens on a Monday is any true indication of market direction – it's usually a low-volume affair that can be quickly reversed.  Yesterday's volume on the S&P ETF (SPY) was 37.8M, less than what we usually have on a half-day of holiday trading.   Volumes have been low for a long time as we topped out in the market and that's very scary as it indicates very weak support below the current prices.  

Things are especially meaningless ahead of the Fed, which is geared up to disappoint the markets unless they give us a 0.5% rate cut, more than reversing December's 0.25% hike that sent the S&P down to 2,346, which is now 22% below our current level.  If your stock is not earning 22% more than it was in November – then why would it not be able to fall back to that level just as quickly?  

Beyond Meat (BYND) has been a market darling since its IPO in May at $25 and yesterday, at $222, they annouced earnings that were fairly ordinary and certainly not indicative of a 1,000% run but it wasn't the earnings that took them down 13% to $193 – it was the announcement that they would be selling 250,000 additional shares to raise $56.5M and that the CEO would be able to sell 1% of his 3,177,922 shares for $8M with lock-ups waived for some of the other big pre-IPO Investors (yes, it's optional, not mandatory – a lockup provision is there to protect the underwriters, not the ordinary shareholders, so it can be waived at the underwriter's discretion).  

Keep in mind, despite their current valuation (not value!) of $13Bn, BYND's IPO only raised $240M by selling 9.6M (16.5%) of the 58.3M shares outstanding because they didn't know it was going to go to $240 in 3 months, did they?  So it's very rational, with the stock above $200, to raise some more cash and it's very rational for the people who originally invested in the company to want to take a little off the table.  It's not usual to change a lock-up period post-IPO, the lockup is sort of a promise made to new shareholders by original shareholders that they won't be dumping on the open market for, usually, 6 months.

Obviously, anyone paying $13Bn for a company with $67.3M in quarterly sales and a GAAP loss of $9.4M ($6.9M non-GAAP profit) does not deserve your sympathy but voiding the lockups is a drastic change of narrative on the stock and that's really screwing everyone who bought the stock above $150 for sure and possibly all the way back to $75 – if they were foolish enough to leave all those paper profits on the table ahead of earnings that could not possibly live up to the hype.

ImageThe question we have now is can the entire Market live up to the hype as many, many stocks are priced at ridiculous valuations that assume everything will be amazing going forward?  So far, 218 of the S&P 500 companies have reported and earnings are up 4.8% from last year and the index is up about 10% but, then again, we were overpriced already last year and now we are just more so.  Expectations, however, were for a decline in earnings and, so far, investors are relieved at the results.

A lot hangs on Apple (AAPL) this evening as their earnings are roughly 5% of the entire S&P 500's total net profit but none of that really matters until we get our rate decision tomorrow at 2pm and even that doesn't matter compared to what Powell has to say about it at 2:30.

Meanwhile, check your wallet while we wait as Capital One (COF) got hacked and 106M credit card holders and loan applicants now have all their personal data for sale on the Dark Web.  How did this happen, well COF stores their data on Amazon's (AMZN) Cloud Service and a single, 33 year-old who used to work for Amazon's Web Services, was able to break COF's firewall and pull their client data off the server.  The bulk of the exposed data involves information submitted by customers and small businesses that applied for Capital One credit cards between 2005 and early 2019.

Image result for socialism cartoonNot that any of that matters as Equifax has already lost the information of 150M Amercians (essentally, all of us) and were recently fined $700M or about $4.666 per person who's entire financial history is now scattered across the Internet.  We have a very broken system and it's exactly the sort of thing that Governments should step in and fix but, of course, that sounds like Socialism and it's better to have completely dysfunctional Capitalism than anything that even LOOKS like Socialism in this country!  

And, of course, NONE of this is actually Socialism, which is defined as: "A system in which the means of production are owned by the state and there is no private property."  That is not even remotely close to what's being proposed by Democrats in America or even in Europe – or pretty much anywhere since Marx.  I know that definition sounds like Communism but Communism believes the Socialst system should be run under a Totalitarian Government – that's the difference.  

So, in order to fight fake Socialism, the Conservative Capitalists in the US (who are actually Oligarchs) are scaring you into accepting a Totalitarian Regime run by the Top 0.1% that supports their vision, which is no closer to Capitalism than Socialism is.  True Capitalism has FREE markets, which would mean no tariffs or protectionism and would mean equal opportunities for ALL citizens and ALL foreigners to compete in the marketplace on a level playing field that did not favor the entrenched corporate intersts.  NO ONE is fighting for that, are they?  


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  1. They'll probably talk about China soon!

  2. I don't know how this applies to our situation as generally the Fed doesn't cut rates when markets are topping and the economy is growing.

  3. Good Morning!

  4. Venezuela faces the loss of Citgo – and desperately needed dollars

  5. Ethiopia plants more than 350 million trees in 12 hours

  6. Good morning!

    Trump said (and it's no accident on a down day) that the Dow would be 10,000 points higher if not for the Fed.  

    Big recovery off the low open – we'll see what sticks.  

    Returns/StJ – Usually the Fed is cutting BECAUSE the economy is collapsing.  This is very different.  

    Consumers are still very confident:

    • July Consumer Confidence135.7 vs. 125.0 consensus; 124.3 prior in June (revised).
    • Present situation Index 170.9 vs. 164.3 prior.
    • Expectations Index 112.2 vs. 97.6 prior.

  7. US issues hacking security alert for small planes

  8. MDR getting killed today, could be an interesting play:

    • 34% sequential-quarter increase in backlog to $21 billion, including a record level of $8.9 billion for offshore/subsea

    • Strong revenue coverage expected for 2020, with $7.4 billion already in current backlog

    • Revenue opportunity pipeline remains strong at $90 billion

    • $1.0 billion total cash availability at end of Q2 2019

    • Cameron and Freeport LNG projects continue to progress on schedule

    • Net loss for Q2 2019, reduced guidance for 2019 and update on asset sale processes

    They merged with CBI, who we liked but we wisely got out as it was going to be a rough integration and they probably aren't done yet but now it's getting attractive again close to $6.  I'd like to see them stabilize but the 2021 $5 puts can be sold at the moment for $1.40 and that's a nice discount (net $3.60) to the current price and, at $2 I'd pull the trigger for the LTP (40 would be net $12,000 if assigned) and we could add the bull call spread later.  At the moment, the 2021 $4 ($3.15)/$8 ($1.65) bull call spread is net $1.50 so 100 of those for $15,000 less the $12,000 collected on the puts would put us in the $40,000 spread for net $3,000 and our worst case would be getting assigned 4,000 at $4 ($16,000) plus the $3,000 would be net $4.75 per share.

    Year End 31st Dec 2013 2014 2015 2016 2017 2018 TTM 2019E 2020E CAGR / Avg
    Revenue $m 2,659 2,301 3,070 2,636 2,985 6,705 8,308 9,934 10,983 +20.3%
    Operating Profit $m -456.7 16.4 112.7 138 307 -2,256 -2,307      
    Net Profit $m -508.9 -76.0 -18.0 34.0 179 -2,687 -2,778 278.7 427.6  
    EPS Reported $ -6.45 -0.96 -0.23 0.36 1.88 -17.9 -15.5      
    EPS Normalised $ -5.20 -1.27 0.18 0.70 1.89 -7.71 -6.68 1.60 2.23  
    EPS Growth %       +297.7 +171.5       +39.7  
    PE Ratio x           n/a n/a 6.31 4.52  
    PEG x           n/a n/a 0.16 0.29

  9. Europe down two percent!

  10. MDR / Phil – This has been a rough ride, although down to where we see support:

    MDR McDermott International, Inc. monthly Stock Chart

    3 days rule in effect…

  11. Gimme a break!

    As if one major college-related scandal weren’t enough in a year, there comes this news: wealthy parents in Illinois are reportedly scamming financial aid for their college-bound children by transferring guardianship to someone else, freeing up said children to claim financial independence. Is this pretty unethical? Absolutely. Is it illegal? Apparently not!

    More tax cuts needed?

  12. CNX – Up nicely.

  13. Europe/Den – Very ugly but our President saved our indexes – MAGA!

    Dollar still strong:

    Copper still down as Trump tweets nasty about China:

    BYND bottomed about $185 and back to $212 already.

    MDR/StJ – That's why we dumped the stock when they bought CBI – wasn't a ride I wanted to get on but I do like the combined company and yes, that's why we're waiting.

    Kids/StJ – Well I'll admit I considered it.  If they were poor they'd pay half as much for college so I should just toss in an extra $125,000?  That is kind of BS.  

  14. Comment content omitted because it is too long.

  15. BOJ stands pat, trims inflation outlook

    • The Bank of Japan kept its monetary policy steady overnight while trimming its inflation forecasts, taking a wait-and-see approach ahead of an expected interest rate cut from the Federal Reserve tomorrow.
    • It also left unchanged its pledge to keep interest rates extremely low through at least spring 2020, likely reacting to expectations of additional stimulus from both the Fed and the ECB, meaning there is limited upside for the yen.
    • It's also important to note that Japan is seeing pain in its factories from a slowdown in the global economy and pressures from trade tensions.
    • Nikkei +0.4% to 21,709.
    • Borrowing by the federal government is set to top $1T for the second year in a row as the Treasury expects to issue $814B in net marketable debt in the second half of this calendar year, bringing total debt issuance to $1.23T in 2019.
    • That would represent a slight decline from borrowing in 2018, when the Treasury issued $1.34T in debt, but more than twice as much as the $546B it issued in 2017.
    • Low borrowing costs, meanwhile, suggest that markets remain unfazed by all the red ink. While government debt has soared since the financial crisis, 10-year Treasury yields have fallen to near 2% from more than 5% in 2006, holding down government interest payments.

    • June Personal Income and Outlays: Income +0.4% M/M vs. +0.3% consensus +0.4% prior (revised).
    • Consumer spending +0.3% M/M in-line with consensus, +0.4% prior (unrevised).
    • PCE Price Index +0.1%M/M in-line with consensus, +0.1% prior (revised).
    • Core PCE Price Index +0.2% M/M in-line with consensus, +0.2% prior (unrevised).
    • Chain store sales increased 4.5% for the week ending July 27, according to the latest report from Johnson Redbook.
    • Month-to-date sales through July 27 increased 4.7% Y/Y, +1.0% M/M.
    • Comex copper futures for September delivery -1.1% to $2.6875/lb. after comments from Pres. Trump dimmed hopes for a U.S.-China trade deal anytime soon, and he also accused Beijing of not holding up its end of previous agreements.
    • Trump tweeted that China is not keeping its promise of buying more U.S. agricultural products, adding "That is the problem with China, they just don't come through."
    • Copper prices have fallen ~10% below their April peaks, hit by fears that trade tensions and slowing economic growth will hurt demand.
    • Analysts are keeping a close eye on copper and other industrial metals amid trade uncertainty because China is the largest source of demand, accounting for roughly half of global copper consumption.
    • Among copper-focused names: FCX -1.6%TECK -1.8%SCCO -1%.
    • In an interview with CNBC, Health Secretary Alex Azar revealed that the Trump administration is working on a plan that would allow the U.S. to import medicines from Canada, but offered no additional details as to how the plan would work.
    • The drugs industry will surely oppose the initiative

    • Lawmakers in Congress from both political parties have accused the Trump administration of delaying an $8B sale of Lockheed Martin (LMT +0.2%) F-16 fighter jets to Taiwan, NYT reports.
    • They are now questioning whether the Trump administration is postponing approval of the sale, either to avoid upsetting Beijing while delicate trade negotiations are underway or to use it as a bargaining chip.
    • The auto supplier sector is trading lower again following lowered guidance from Dorman Products (DORM -13.7%) and a day after Cooper Tire & Rubber (CTB -4%) set a negative tone. New tweets from President Trump criticizing China may have also dampened expectations that progress on trade talks would be reported this week.
    • Notable decliners in morning trading include Cooper-Standard Holdings (CPS -5.5%), Motorcar Parts of America (MPAA -1.4%), American Axle & Manufacturing (AXL -4.3%), Superior Industries (SUP -2.7%), Modine Manufacturing (MOD -4%), Meritor (MTOR -2%) and Tenneco (TEN -3.9%).
    • issues a report on early traffic patterns at Lululemon's (LULU) new concept store in Chicago that includes a restaurant and workout classes.
    • The data suggests the new branch managed to drive visits in off-hours with major increases in the percentage of visitors in the morning and evening. The store also showed a greater proclivity for driving traffic during weekdays and off-peak shopping days.
    • As expected, the new Lululemon location impacted negatively traffic at a nearby LULU store, meaning the company will have to be strategic in the placement of more concept stores.
    • "The roll-out of new formats is going to be critical to determining whether Lululemon can maximize its retail footprint throughout the country," concludes
    • Sony (NYSE:SNE) is up 2.7% in early U.S. trading after its Q2 profits hit another record thanks to image sensor demand, though it has trimmed a recent full-year revenue forecast as sales begin to slow.
    • Those image sensors are needed in plentiful multi-lens smartphone cameras, and lines are running at full capacity.
    • But revenues dipped year-over-year (to ¥1.93T) and the company guided lower on sales for its televisions, smartphones, and the PlayStation 4 console.
    • It did reiterate profit guidance at ¥810B for the coming year.
    • Q2 operating profit jumped 18% to ¥230.9B (about $2.1B), with the image and sensing business earning ¥49.5B to make up for a drop of ¥9.6B in gaming.
    • Meanwhile the image sensor results gave Sony the ammo it wanted to counter activist Dan Loeb's call to spin off the business, with the company calling it a key pillar of its future growth strategy.
    • Lynx Equity Research analysts are hearing "rumblings" that Google (GOOG,GOOGL) is dissatisfied with Intel's (NASDAQ:INTC) server platform.
    • The firm's field research into the hardware supply chain suggested Google-specific server boards are being made with AMD's (NASDAQ:AMD) Epyc CPU, which would mark a huge gain for AMD and loss for Intel.
    • The Google news comes in a note discussing AMD's competitive advantage with the firm seeing management focusing on multi-year market share gains. Lynx notes that TSMC's recent 7nm capex increase is positive for AMD with Intel's 10nm server CPU at least a year from its production ramp.
    • Lynx: "We see AMD headed up for the $40 level by year end and INTC headed down for the $45 level."
    • AMD reports earnings after the bell today with consensus estimates expecting $1.52B in revenue and $0.08 EPS.
    • Analysts are largely unfazed by Beyond Meat's (NASDAQ:BYND) earnings report, calling the growth and margin numbers solid.
    • Of course, investors got way out in front of Wall Street in bidding up BYND. Bernstein lifted its price target to $172 today on a positive assessment of the company's growth track, a mark that stands below the current trading price but way above the consensus sell-side price target of $126.83.
    • During the earnings call (transcript), Beyond Meat management didn't address the secondary offering, but did highlight that a gross margin rate in the mid 30s is still a reasonable target for the company. There also seemed to be some indication that large global chains are interested in partnering with Beyond Meat, but are still trying to figure out how to integrate meatless products into their menus and operations.
    • Shares of Beyond Meat are down 13.00% premarket to $193.10. Beyond Meat began trading on May 2 at $25 per share.
    • Previously: Beyond Meat EPS misses by $0.15, beats on revenue (July 29)
    • Previously: Margins improve at Beyond Meat (July 29)
    • Previously: Beyond Meat -11% after earnings, secondary offering (July 29)

  16. ConocoPhillips misses Q2 estimates amid lower crude prices

    • ConocoPhillips (NYSE:COP-1.9% pre-market after Q2 earnings came in slightly short of Wall Street expectations and revenues fell 9% Y/Y to $8.4B, hurt by lower crude oil prices in the quarter.
    • COP says Q2 earnings were lower compared with the year-ago quarter primarily due to lower realized prices and a lower unrealized gain on its Cenovus Energy equity, partially offset by higher volumes.
    • COP realized $50.50 for each barrel sold in Q2 compared with $54.32/bbl in the year-earlier quarter, as U.S. light crude prices averaged $59.91/bbl in Q2, down 11.8% from the prior-year quarter, while Brent crude averaged $68.47/bbl, down 8.7% from a year ago.
    • Q2 production excluding Libya totaled 1.29M boe/day, rising ~6% Y/Y and exceeding the high end of company guidance; COP expects Q3 production of 1,29M-1.33M boe/day for Q3 and BOED and full-year output of 1.31M-1.34M boe/day excluding Libya.
    • Excluding working capital, Q2 cash from operations of $3.4B exceeded capital expenditures and investments, generating $1.7B of free cash flow.
    • COP says it expects operating plan capital of $6.3B vs. prior guidance of $6.1B, attributable to additional exploration and appraisal drilling in Alaska and the addition of a drilling rig in the Eagle Ford field at mid-year.
    • Celgene (NASDAQ:CELGQ2 results ($M): Revenue: 4,400 (+15.4%).
    • Key product sales: Revlimid: 2,732 (+11.4%); Pomalyst/Imnovid: 619 (+22.1%); Otezla: 493 (+31.5%); Abraxane: 316 (+30.0%).
    • Net income: 1,571 (+50.3%); non-GAAP net income: 2,079(+31.2%); EPS: 2.16 (+51.0%); non-GAAP EPS: 2.86 (+32.4%)
    • 2019 guidance: Revenue: $17.2B – 17.4B from $17.0B – 17.2B; Revlimid: ~$10.8B (unch); Pomalyst/Imnovid: ~$2.5B from ~$2.4B; Otezla: ~1.9B (unch); Abraxane: ~$1.2B from ~$1.1B; EPS: $8.71 – 9.44 from $8.90 – 9.63; non-GAAP EPS: $10.65 – 10.85 from $10.60 – 10.80.
    • Shares up 1% premarket on light volume.
    • Previously: Celgene EPS beats by $0.24, beats on revenue (July 30)
    • Corning (NYSE:GLW-1.8% reports Q2 EPS in-line with estimates and beats on revenue.
    • Q2 revenue breakdown: Display Tech, $848M (+9% Y/Y); Optical Communications, $1.09B (+7%); Specialty Materials, $369M (+8%); Environmental Tech, $366M (+15%).
    • FY outlook: Corning says all segments are on track for sales growth in FY19. Environmental Technologies is expected to surpass its previous FY growth expectations, and the Display Tech pricing environment is expected to improve to a low- to mid-single digit percentage.
    • Earnings call starts at 8:30 AM ET with a webcast here.
    • Press release
    • U.S. Silica (NYSE:SLCA+3.8% pre-market after easily beating Q2 earnings expectations, as overall volumes sold rose 9% Y/Y and 2% Q/Q to 4.9M tons.
    • SLCA says it Industrial and Specialty Products business delivered a 21% Y/Y improvement in contribution margin dollars to a record $50.1M, or $51.61/ton, even as total tons sold fell 5%, which the company says shows the effectiveness of its strategy of increasing focus on higher margin products.
    • In the Oil and Gas segment, SLCA sold a record 3.9M tons as west Texas capacity continued to ramp up, and the segment's contribution margin of $71.5M was better than expected, despite some pricing pressure in west Texas, partly due to a strong performance from SandBox, which posted another record load count as loads increased 14% Q/Q, and June exit load volumes hit an all-time high.
    • SLCA says it will focus on reducing the level of its outstanding indebtedness, and anticipates that some of its free cash flow after capital expenditures and the regular payment of dividends will be used to strengthen its balance sheet.
    • Under Armour (NYSE:UAA) reports revenue rose 3% on a constant currency basis in Q2.
    • Wholesale revenue fell 1% to $707M whereas direct-to-consumer revenue grew 2% to $423M.
    • North America revenue down 3% to $816M while International revenue up 12% to $339M.
    • Apparel revenue -1% to $740M; Footwear revenue rose 5% to $284M; Accessories revenue flat at $106M.
    • Gross margin rate improved 170 bps to 46.5%, driven by supply chain initiatives, regional mix and restructuring charges in the prior period.
    • SG&A expense rate +50 bps to 47.5%.
    • Inventory decreased 26% to $966M.
    • Total debt was down 24% to $591M.
    • FY2019 Guidance: Revenue: ~+3% to +4%; North America revenue: slight decline; International revenue: low to mid-teen percentage rate increase; Gross margin rate: ~+110 bps to +130 bps; Adjusted gross margin rate: ~+70 bps to +90bps; Operating income: $230M to $235M; Interest and other expense net: ~$30M; Effective tax rate: ~22%; Diluted EPS: $0.33 to $0.34; Capex: ~$210M.
    • UAA -12.17% and UA -11.36% premarket.
    • Previously: Under Armour EPS beats by $0.02, misses on revenue (July 30)
    • NXP Semiconductors (NASDAQ:NXPI-6.5% after Q2 results that met revenue estimates and beat on earnings. Downside Q3 guidance has revenue of $2.21-2.27B compared to the $2.35B estimate.
    • Q2 revenue breakdown: Auto, $1.03B (consensus: $1.04B); Industrial & IoT, $390M (consensus: $390.3M); Mobile, $297M (consensus: $272.8M); Communications, Infrastructure & Other, $499M (consensus: $497M).
    • Gross margin was flat with consensus at 53.3% and operating margin came in higher with 28.9% versus 28.1%.
    • Earnings call starts at 8 AM ET with a webcast here.
    • Press release.
    • Altria (NYSE:MO) reports smokeable products shipment volume rose 0.4% in Q2 to easily outpace the 10.6% drop anticipated. Smokeless products shipments volume was down 3.6% during the quarter vs. -2.4% consensus.
    • Altria authorized a new $1B share repurchase program slated to finished by the end of 2020.
    • CEO update: "We’ve maintained our focus on the adult tobacco consumer and believe that with our leading premium tobacco brands, U.S. commercialization rights to IQOS, investment in JUUL and pending transaction for on!, we are best positioned among tobacco peers to lead through a dynamic time in the U.S."
    • Looking ahead, the company anticipates the 2019 full-year domestic cigarette industry volume to decline at a rate of 5% to 6%. Full-year EPS of $4.15 to $4.27 is expected vs. $4.19 consensus.
    • Shares of Altria are up 1.37% premarket to $51.00.
    • Previously: Altria EPS in-line, beats on revenue (July 30)
    • Merck (MRKQ2 results: Revenues: $11,760M (+12.4%).
    • Key Product Sales: Keytruda: $2,634M (+58%); Januvia / Janumet: $1,441M (-6%); Gardasil / Gardasil 9: $886M (+46%); Proquad, M-M-R II and Varivax: $675M (+58%); Bridion: $278M (+16%); Isentress / Isentress HD: $247M (-19%); Zetia / Vytorin: $232M (-39%); Nuvaring: $240M (+2%); Rotateq: $172M (+10%); Simponi: $214M (-8%).
    • Net Income: $2,670M (+56.4%); EPS: $1.03 (+63.5%); Non-GAAP Net Income: $3,356M (+17.6%); Non-GAAP EPS: $1.30 (+22.6%).
    • 2019 Guidance: Revenues: $45.2B – 46.2B from $43.9B – 45.1B; GAAP EPS: $3.78 – 3.88 from $4.02 – 4.14; Non-GAAP EPS: $4.84 – 4.94 from $4.67 – 4.79.
    • Shares are up 3% premarket.
    • Previously: Merck EPS beats by $0.14, beats on revenue (July 30)
    • New Residential Investment (NYSE:NRZQ2 core earnings of $219.8M, or 53 cents per share, increases from $204.3M, also 53 cents per share, in Q1.
    • Current quarter core EPS misses the consensus of 54 cents.
    • Chairman, CEO and President Michael Nierenberg said the company is focused on protecting book value and executing on certain initiatives as it faces the prospect of a lower interest rate environment.
    • "In particular, our emphasis on developing our origination and recapture business is expected to help contribute to our overall performance as we navigate this environment," he said.
    • NRZ gains 0.4% in premarket trading.
    • Q2 net interest income of $188.0M falls from $269.9M in the year-ago quarter.
    • Acquired mortgage servicing rights totaling ~$53B unpaid principal balance (UPB) during Q2.
    • Purchased $273M face value of non-Agency RMBS and completed one securitization of loans through exercise of call rights with ~$596M of UPB.
    • Acquired $1.6B UPB of RPLs during the quarter and completed one non-qualifying mortgage loan securitization for UPB of ~$305M.
    • Book value per share of $16.17 at June 30, 2019.
    • Conference call at 8:00 AM ET.
    • Previously: New Residential Q2 NII falls 30% Y/Y (July 30)

  17. Phil, MO is nearly 4.5% down. Do you like them at this level?

  18. MO/Alter – We picked them up by selling the $50 puts for $9.65 for a net $40.35 entry so yes, I love them at that level.  Our short calls were $55s and our longs are $40s we bought back on 12/21, when they were down about this level but from a sharper decline, so we got good premiums. 

    The earnings were fine as they made $1.07 per $48.22 share but cigarette shipments were down 7% and, even though they bought Juul (for way too much) to offset that – it's kind of an alarming decline for a company that makes 90% of its money selling tobacco (for now).  There's also widespread legislation raising the age for tobacco to 21.   So, as a new trade, not that sexy as these profit targets are likely to come down considerably as both Juul and CRON are investments that will be slow to pay off (but they are paying interest on the debt now). 

    Year End 31st Dec 2013 2014 2015 2016 2017 2018 TTM 2019E 2020E CAGR / Avg
    Revenue $m 24,466 24,522 25,434 25,744 25,576 25,364 24,884 19,758 20,054 +0.7%
    Operating Profit $m 7,000 7,576 8,138 21,780 10,029 9,082 8,500     +5.3%
    Net Profit $m 4,535 5,070 5,241 14,239 10,222 6,963 6,189 7,841 8,357 +9.0%
    EPS Reported $ 2.26 2.56 2.67 7.28 3.56 3.78 3.37     +10.8%
    EPS Normalised $ 2.63 2.59 2.84 3.02 3.46 4.08 3.86 4.19 4.48 +9.2%
    EPS Growth % +10.4 -1.6 +9.6 +6.4 +14.6 +18.1 +1.6 +2.55 +6.95  
    PE Ratio x           12.3 13.0 12.0 11.2  
    PEG x           4.84 5.11 1.73 1.56

  19. Cuba Expands Internet Access to Private Homes and Businesses

  20. Woo-hoo – who needs financial aid – my kids can pay for their own damned college now!  Congrats to all who played along (hopefully this time is for real):

    • Northern Dynasty Minerals (NAK +6.7%) surges as much as 14% on word that Pres. Trump has scrapped restrictions blocking the company's Pebble Mine in Alaska.
    • More to come..

    FU Environment!  FU Salmon!  

  21. CNX now up 26%.  Covered some with Jan 8 calls.

  22. Good call on them, Albo! 


    Added to my losing CNX position.  And sold more puts.

    Southeastern Asset Management's second quarter comments:

    • CNX Resources successfully separated its coal business from the natural gas company and has sold gas assets at good prices. CEO Nick Deluliis and the board, which includes three members suggested by Southeastern, can continue to sell some or all the company’s gas reserves, as well as monetize its pipeline assets. Insider buying has been significant. 

    Southeastern owns 29% of the outstanding including 10 million shares purchased at $7.65 last month.

    • Apple (AAPL) reports Q3 results after the bell today with analysts expecting $53.39B in revenue with $2.10 EPS.
    • Consensus revenue breakdown: iPhone, $26.31B; iPad, $5.17B; Mac, $5.45B; Wearables, Home, and Accessories, $4.82B; Services, $11.68B.
    • Gross margin is expected at 37.6% versus the 37-38% guidance and operating expenses at $8.72B.
    • Q4 guidance estimates: Revenue, $60.9B; gross margin, 37.8%; operating expenses, $8.75B.
    • Potential color: Apple could comment on its global settlement with Qualcomm or more recent $1B acquisition of Intel's smartphone modem business.
    • Rewind: Last quarter, Apple reported Services strength and an upside outlook. On the call, execs revealed that the iPhone revenue decline was significantly smaller in the last week's of the quarter due to trade-in and incentive programs and price cuts.
    • Casinos in Nevada reported that gaming win revenue shot up 11.6% in June to $1.04B.
    • Revenue on the Las Vegas Strip was up 17.7% during the month to $617M, while downtown Las Vegas gaming win was up 13.0% to $23M. Boulder casino gaming win was up 9.5% to $67M.
    • Total slots win across the state was 7.31% higher to $637M off a win percentage of 6.7%.
    • Games and tables win increased 19.0% to $405M off a win percentage of 16.7%. Baccarat gaming recovered with a 114% jump to $158M during the month.
    • Nevada-related casino stocks: Caesars Entertainment (CZR +1.7%), MGM Resorts (MGM+0.2%), Boyd Gaming (BYD +2.7%), Wynn Resorts (WYNN -1.6%), Caesars Entertainment (CZR +1.7%), Las Vegas Sands (LVS -1%), Full House Resorts (FLL +8.1%) and Red Rock Resorts (RRR +0.1%).
    • Sirius XM (NASDAQ:SIRI) is up 1.2% after Q2 earnings where it topped expectations on top and bottom lines and raised full-year guidance.
    • Big gains came from the Pandora Media acquisition. Pro forma revenues rose 9%; as reported, a big burst in advertising helped pace revenues to a 38.5% gain.
    • Net income fell to $263M from $293M.
    • EBITDA grew 22% to a record $618M, with margin up 330 basis points to 31.2%.
    • Revenue breakout: Subscriber, $1.54B (up 17.9%); Advertising, $358M (up 662%).
    • The company raised its 2019 revenue guidance to approaching $7.8B (pro forma) and boosted EBITDA expectations to $2.35B.
    • It reiterated guidance on net subscriber additions and free cash flow. It sees self-pay net sub additions approaching 1M and free cash flow of about $1.6B.
    • Earnings call transcript
    • Press release
    • JPMorgan Chase (JPM -0.3%) signs onto a five-year deal with Persado to use artificial intelligence to create marketing copy.
    • In a pilot, Chase saw click-through rates as high as 450% on ads using Persado AI vs. 50%-200% range for others.
    • "We hope to use Persado not just in marketing, but in our internal communications to make things more relevant to employees, as well as in our customer service prompts," said Kristen Lemkau, JPMorgan Chase's chief marketing officer.
    • Terms of the deal weren't disclosed.
    • Anglo American's (OTCQX:AAUKF) De Beers unit reports another sharp drop in diamond salesto the lowest since late 2015, as the producer said it allowed struggling customers to defer more purchases to later this year.
    • De Beers says it sold just $250M of rough diamonds in its most recent offering, compared with $391M sold in the previous sales cycle and $533M sold in the comparable sales cycle a year ago.
    • "With ongoing macroeconomic uncertainty, retailers managing inventory levels, and polished diamond inventories in the midstream continuing to be higher than normal, De Beers Group provided customers with additional flexibility to defer some of their rough diamond allocations to later in the year," De Beers CEO Bruce Cleaver said in explaining the results.
    • CNX Resources (CNX +21.8%) rallies off 52-week lows after reporting strong Q2 resultsincluding a 50% Y/Y revenue increase to $605M, as quarterly sales volumes gained 10% Y/Y to 135B cfe.
    • CNX raised its outlook for FY 2019 production volumes to 510B-530B cfe from previous guidance of 495B-515B cfe and sees 2020 production volumes of 570B-595B cfe, which equates to a ~12% annual increase, based on the midpoints of guidance.
    • At the same time, CNX cuts its outlook for 2019 consolidated EBITDAX of $885M-$925M from $920M-$950M previously, citing lower natural gas prices, and forecasts consolidated 2020 EBITDAX of $945M-$1.01B.
    • The updated guidance assumes 2019 Nymex gas price of $2.45/MMBtu on open volumes and a basis differential of negative $0.275/Mcf, compared to the previous view which assumed a 2019 Nymex gas price of $2.88/MMBtu and a basis differential of negative $0.225/Mcf, based on the midpoints of guidance.
    • CNX says its hedge program, coupled with the 2020 development plan and capital program, positions it to generate $135M in free cash flow in 2020 at forward strip prices on open volumes, while growing production ~12% from 2019; based on this activity, CNX expects to be free cash flow positive and have flat production in 2021.
    • JPMorgan Chase (JPM -0.3%) vows to take its "full force" to China, bringing it in direct competition with state-run Industrial Commercial Bank of China (OTCPK:IDCBF), the dominant player in China and the world's largest bank, Bloomberg reports.
    • JPMorgan received approval to hold a majority stake in its local securities joint venture and plans to take full ownership of its China operation when rules allow, probably by 2020.
    • Benjamin Quinlan, CEO of Hong Kong-based Quinlan & Associates, financial services consulting firm, says JPMorgan will have to carefully choose which businesses it will focus on to meaningfully compete.
    • “I don’t think they will ever contend against ICBC, given the sheer size of resources at ICBC’s disposal," Quinlan said.
    • ICBC overtook JPMorgan as the biggest bank by assets in the wake of the 2008 global financial crisis. Recent numbers put ICBC's assets at $4.0T vs. JPMorgan's $2.6T.
    • ICBC is also more profitable. Its net income will probably exceed JPM's by 40% this year and by even more in 2010, according to analyst estimates compiled by Bloomberg.
    • See more global and FX news.

  23. Rate Cut Show

  24. Finishing week except the RUT, which is close to 1,600.

    Tomorrow will be fun and, of course, AAPL earnings.

  25. FEYE getting hammered on earnings.  

    • FireEye (NASDAQ:FEYE) plunges 10.6% after reporting downside Q2 EPS with a narrow revenue beat. The downside Q3 forecast has revenue of $217-221M (consensus: $228.84M) and EPS from $0 to $0.02 (consensus: $0.07).
    • The FY outlook includes a 73% gross margin (consensus: 74.9%) and an operating margin between -1% and 0% with billings of $935-955M.
    • Q2 billings totaled $221M. FEYE missed gross margin estimates with 72% versus 74.5%.
    • Earnings call starts at 5 PM ET with a webcast here.
    • Press release.
    • Gilead Sciences (NASDAQ:GILDQ2 results ($M): Revenues: 5,685 (+0.7%); Product sales: 5,607 (+1.2%); HIV sales: 4,041 (+10.3%).
    • Key product sales: Genvoya: 980 (-15.5%); Truvada: 718 (-6.1%); Descovy: 358 (-11.2%); Odefsey: 387 (+0.5%); Biktarvy: 1,116 (+999%); Yescarta: 120 (+76.5%).
    • Net income: 1,880 (+3.5%); non-GAAP net income: 2,331 (-6.5%); EPS: 1.47 (+5.8%); non-GAAP EPS: 1.82 (-4.7%).
    • 2019 guidance: Product sales: $21.6B – 22.1B from $21.3B – 21.8B.
    • Shares up 1% after hours.
    • Previously: Gilead Sciences EPS beats by $0.11, beats on revenue (July 30)
    • Mondelez International (NASDAQ:MDLZ) reports organic sales rose 4.6% in Q2 to top the consensus estimate of 4.3%. Pricing contributed 3.0 percentage points of the growth and volume/mix added 1.6 percentage points.
    • Gross profit was down 90 bps Y/Y to 40.6% of sales due to unfavorable year-over-year change in currency and commodity hedging activities.
    • Operating margin was 16.7% of sales on an adjusted basis.
    • Looking ahead, Mondelez expects organic sales growth of 3% vs. +2% to +3% prior view and EPS growth of ~5% vs. +2.9% consensus. Free cash flow of ~$2.8B is anticipated for the full year.
    • MDLZ +3.96% AH to $57.00.
    • Previously: Mondel?z EPS in-line, beats on revenue (July 30)
    • IMAX (NYSE:IMAX): Q2 Non-GAAP EPS of $0.32 beats by $0.04; GAAP EPS of $0.19 misses by $0.05.
    • Revenue of $104.8M (+6.6% Y/Y) beats by $6.53M.
    • Shares +2.16%.
    • Press Release

  26. Apple earnings: $2.18 per share, vs $2.10 per share expected

  27. AAPL – Earngins Beat 2.18 ( vs 2.1CE)  and Rev down -7% vs -10% CE…  But strong outlook for Q4 outlooking flat to up rev and higher Margins.   This is driving uptick

  28. AAPL looks good, testing $215 on the release.  $2.18 beats $2.10 expected and sales $53.8Bn vs $53.4Bn expected so nice and steady.  Projecting Q2 $61-64Bn vs $61Bn expected so another bump there.

    Anyone getting out of AAPL the year before 5G is nuts!   That should break the cycle of people holding onto phones because your average AAPL buyer has money and wants the best and not having a 5G phone is NOT going to be the best next year by a long shot.  

    “This was our biggest June quarter ever — driven by all-time record revenue from Services, accelerating growth from Wearables, strong performance from iPad and Mac and significant improvement in iPhone trends,” said Tim Cook, Apple’s CEO. “These results are promising across all our geographic segments, and we’re confident about what’s ahead. The balance of calendar 2019 will be an exciting period, with major launches on all of our platforms, new services and several new products.”

    “Our year-over-year business performance improved compared to the March quarter and drove strong operating cash flow of $11.6 billion,” said Luca Maestri, Apple’s CFO. “We returned over $21 billion to shareholders during the quarter, including $17 billion through open market repurchases of almost 88 million Apple (AAPL) shares, and $3.6 billion in dividends and equivalents.”

    Apple is providing the following guidance for its fiscal 2019 fourth quarter:

    • revenue between $61 billion and $64 billion
    • gross margin between 37.5 percent and 38.5 percent
    • operating expenses between $8.7 billion and $8.8 billion
    • other income/(expense) of $200 million
    • tax rate of approximately 16.5 percent

    I love this company!  

  29. AAPL – hit appx $1 Trillion Mkt cap after hours.

  30. IMAX – Solid numbers 

    IMAX (NYSE:IMAX) reports gross box office from DMR films was up 6.5% in Q2 to $365M. Network business revenues increased 6.3% to $65M.

    Adjusted EBITDA was $41.4M during the quarter and adjusted EBITDA margin was 43.8%.

    Looking ahead, IMAX anticipates low double-digit IMAX global box office growth and adjusted EBITDA margin to be approximately 41% to 42%. Total theater installations are expected to be around 185 to 190 units.

    CEO update: "IMAX is on track to deliver its best year ever at the box office, with the success of Spider-Man: Far From Home, The Lion King, and our record-breaking, first local language animated release in China this past weekend, Ne Zha, leading a strong second half film slate and building on our solid first-half."

    IMAX +2.06% AH to $21.76.

  31. China’s next debt jitters will be among households

  32. Apple Earnings Show One Thing