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Turnaround Tuesday – Trade Talk Turns Positive

And up we go again!  

As you can see from our S&P (/ES) chart, we made a perfect weak bounce yesterday so today we see if we can get follow-through to the strong bounce line at 2,910 but keep in mind that it's easy to manipulate the indexes within their bounce lines – the hard part is breaking over them.  Also, the end of the month is coming so we have the usual window-dressing to prop up the markets along with the Government and Fed meddling – everyone wants the market to go higher – so why isn't it?

Clearly SOMEONE is selling and they seem to be selling hard as these low-volume rallies exhaust themselves and it doesn't have to be one person but someone or some group clearly is cashing out of the market and then the suckers come in and buy the dips until it's time for the sellers to dump their shares again.  Wash, rinse, repeat after that.  

Yesterday, at the G7 conference, Trump was a bit more flexible-sounding on the China Trade deal and China said they would love to negotiate a deal but this is what they all say all the time – and we're now into year 2 of these "negotiations".  The US and China both wanted peace in Vietnam and then Korea – remember how that worked out?  These are two stubborn super-powers and, after two years, China has no reason to give into Trump as it's 50/50 that he'll be gone in a year – why would they give him concessions?  No one in China is up for re-election next year.

Meanwhile, it's very possible we're all just being played and Trump's goal is simply to make the conflict appear worse than it is so he'll look better when he "fixes" it.  Nothing the President has said or done has changed the fact that the last meeting with China was held on July 31st and the next meeting is scheduled for September.  Between then and now, here's what happened:

  • August 1, 2019: In a reversal, Trump abruptly announces the US will move forward with tariffs on virtually all remaining imports from China.
  • August 2, 2019: China warns it will retaliate with "the necessary countermeasures" if Trump follows through with his latest tariff threats, which the country says violate an agreement reached at G20.
  • August 5, 2019: The US Treasury Department labels China as a currency manipulator after the country allows the yuan to breach the psychologically key level of seven against the dollar. China says it will halt purchases of American agricultural products.
  • August 9, 2019: Trump threatens again that the US will cut ties with Huawei. The Commerce Department says it will hold off on making a decision on licenses to do business with the telecommunications giant.
  • August 13, 2019: The US delays a portion of tariffs on China, set to take effect September 1, until December 15. The administration says the move was meant to avoid disruptions to the holiday shopping season in the US, a rare acknowledgement that tariffs can raise prices.
  • August 19, 2019: The Commerce Department says it will grant a temporary reprieve to Huawei, giving companies an extra 90 days to find an alternative to the telecommunications giant.
  • August 23, 2019: China prepares retaliatory tariffs on $75 billion worth of US products and says it will reinstate duties on cars. The escalations are set to go into place the same dates as on the US side.
  • Trump vows to hit back against those countermeasures, announcing the US will raise the tariff rates on Chinese products by about 5%. Financial markets tumble sharply as the president also orders private US companies to leave China, sowing confusion even though the command carries no legislative weight.
  • August 25, 2019: Trump suggests to reporters that he's having "second thoughts" on trade escalations. The White House clarifies that statement hours later, saying the president only regrets not raising tariffs on China further.
  • August 26, 2019: Trump moves to cast a positive light on trade negotiations as financial markets open. He says Chinese officials called over the weekend and want to make a deal but declines to elaborate. China disputes that claim.

Image result for trump china cartoonSo nothing actually changes until September which means all this is just THREATS Trump is essentially making to pressure the Chinese to come to the next negotiations ready to make a deal.  This is how Trump negotiates – we can only hope China hasn't read "The Art of the Deal" or they'll be miles ahead of him.  But, of course, this is what Trump says about China in the book:

“I’ve read hundreds of books about China over the decades. I know the Chinese. I’ve made a lot of money with the Chinese. I understand the Chinese mind.”

I guess that would be nice if we really believed Trump read hundreds of books about anything, but even Trump has admitted he pretty much never reads anything (except the bible!).  Meanwhile, China has "The Art of War" which advises "Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win” and, another favorite of mine (and China's):

“If your enemy is secure at all points, be prepared for him. If he is in superior strength, evade him. If your opponent is temperamental, seek to irritate him. Pretend to be weak, that he may grow arrogant. If he is taking his ease, give him no rest. If his forces are united, separate them. If sovereign and subject are in accord, put division between them. Attack him where he is unprepared, appear where you are not expected .”

That does sound a bit like things are going in these negotiations and, unfortunately, the US is the arrogant, divided enemy in this case.  Trump's negotiating tactics have certainly won him some victories but that type of brinksmanship has also caused him to go bankrupt 5 times – leaving his partners in a lurch while Trump quickly moves on to other projects – like running America!  

Well, best of luck to Trump as passengers on the Titanic don't root for hitting an iceberg just because they don't like the captain.  The wheels are in motion and now it's September so this market will be put up or shut down – depending on which way the China deal goes – and then we have the Fed on the 18th so hope springs eternal – or for another 3 weeks, at least…

 


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  1. Good Morning!


  2. Oops, looks like I posted in the portfolio review page. My bad… 


  3. Oil demand will shift dramatically depending on how aggressive we become with EV:


  4. The next recession might suck for millenials:

    https://www.theatlantic.com/ideas/archive/2019/08/millennials-are-screwed-recession/596728/

    The next recession—this year, next year, whenever it comes—will likely make that Millennial disadvantage even worse. Already, Millennials have put off saving and buying homes, as well as getting married and having babies, because of their crummy jobs and weighty student loans. A downturn that leads to higher unemployment and lower wages will force Millennials to wait even longer to start accumulating wealth, making it far harder for them to accumulate any wealth at all. (Compound interest is magic, after all.) Their trajectory, already terrible, might get even worse.


  5. A sea of negative rates:

    https://ritholtz.com/2019/08/how-low-will-us-treasury-bond-yields-go/

    Germany on Wednesday sold 30-year government bonds at a negative interest rate for the first time, meaning investors are effectively paying the government to hold their money. Europe’s largest economy raised €824 million ($914 million) by selling bonds that will be worth €795 million at maturity in 2050.

    In the U.S., yields aren’t negative. But 30-year government bond yields this month fell below 2% for the first time, prompting the Treasury Department to express interest in selling debt with 50- and 100-year maturities. Yields for 30-year government bonds have fallen below zero in Holland, Denmark and Switzerland, and below 1% in the U.K., Portugal and Spain.


  6. Good morning!

    MO up 7% pre-market on merger talks.   That's good as we just bought back the short 2021 $55 calls in the LTP leaving us with 20 2021 $40 calls we paid net $6,150 for (with 10 short $50 puts) so $43.075 is our break-even.

     

    • The mega-tobacco deal might be on. Philip Morris International (NYSE:PM) confirms that it's in discussions with Altria (NYSE:MO) regarding a potential all-stock, merger of equals.
    • The company says any transaction would be subject to the approval of the two companies' boards and shareholders.
    • Regulators would also have their say on the deal.
    • Philip Morris International says it intends to make no further comment regarding the discussions unless and until it is appropriate to do so.
    • MO +8.15% premarket to $50.97. PM -3.55%.
    • Source: Press Release

    Big Chart – Still waiting for NYSE and RUT to take back their 200 dmas and the others better not get stuck below the 20 dma – that would be a sign of weakness (the smaller dma causing resistance means there must be less upward pressure to fight it).  

    Oil demand/StJ – I think, over that time-frame, if we don't make aggressive changes we'll have much worse climate disasters to deal with.

    Negative yields and the state of Millenials are a very bad combination down the road.  Hard to avoid a recession when the 20-40 year-olds have no money.  And just wait until they find out their parents have no money and probably need help into retirement.  

    Still, doesn't seem to stop anyone from shopping:

    • Chain store sales increased 5.7% for the week ending August 24, according to the latest report from Johnson Redbook.
    • August sales are expected to be up 6.6%.

  7. This is what we're watching at the moment:

    Dorian track 4 am update 8-26

    dorian florida Georgia carolina

    That's a bad one for me as it's hard to pick a place to go to if we lose power.  I'm only a mile from the ocean (Delray Beach) so really hoping it turns north but that won't be good for Puerto Rico and this is the last thing they need.

    • Morgan Stanley analyst Brian Nowak thinks Alphabet (GOOG +1%)(GOOGL +1%) could add as much as $5B to FY20 revenue due to strength in Maps ($1.6B in the 2020 revenue), Discover ($2B), and e-commerce sites ($1.3B).
    • Nowak says the potential of the sites shows Alphabet's "multi-year revenue runway remains long," and thinks the $5B could prove conservative if all of the products come through.
    • Morgan Stanley maintains an Overweight rating and $1,450 price target. Alphabet has an Outperform average Sell Side rating.
    • Bristol-Myers Squibb (BMY +0.3%) will collaborate with Seattle, WA-based Presage Biosciencesto explore the use of the latter's CIVO platform in Phase 0 cancer studies.
    • CIVO, a device comprised of a microinjector and fluorescent tracking microspheres, is designed to enable intratumoral microdosing of anti-cancer agents.
    • BMY Head, Clinical Mechanisms Jonathan Leith says, "At Bristol-Myers Squibb we are seeking a more precise understanding of how treatments impact each patient to help inform tailored therapeutic strategies that will offer the greatest possible benefit. This collaboration may provide important insights about how our compounds work mechanistically in combination studies and help us bring forward more effective options for patients with cancer."
    • Royal Bank of Canada (NYSE:RY) and Toronto-Dominion Bank (NYSE:TDwere issued noticesof hearing by the Ontario Securities Commission to settle charges of foreign-exchange trading malpractices.
    • Both banks failed to sufficiently supervise and control their forex trading businesses from 2011 to 2013, the province says in its statements of allegations.
    • Furthermore, certain compliance monitoring issues continued into 2015, the OSC alleges.
    • Both bank's forex trading businesses allowed "inappropriate sharing of confidential customer information" by their traders with traders at competitor firms on a regular basis, OSC says.
    • The hearing will be held on Friday at the commission's Toronto office.
    • According to Canada's Financial PostRBC stated, "the conduct covered by the allegations occurred many years ago, and we have taken a number of steps since that time to enhance our controls."
    • RBC added that it would discipline, up to and including termination, "anyone on our platform who does not comply with our high standards of behaviour and the applicable laws and regulations in any jurisdiction.”
    • Statement of allegations relating to Royal Bank of Canada.
    • Statement of allegations relating to TD Bank.
    • Raymond James analyst Justin Patterson says Uber (NYSE:UBER) has a compelling valuation with the potential to re-accelerate revenue in H2 and 2020.
    • Patterson sees a gap between investor interest and the share price due to model complexity, accounting noise, lack of catalysts during the quarter, and lockup period concerns.
    • The analyst says catalysts could form in November with Q3 earnings and the lockup expiration.
    • Raymond James maintains an Outperform rating and $54 target. Uber has an Outperform average Sell Side rating.
    • Uber shares are up 0.5% pre-market to $33.49.
    • A Russian aircraft leasing company is suing Boeing (NYSE:BA) for breach of contract, in the first lawsuit brought against the U.S. plane maker by a customer over the grounded 737 MAX.
    • Rostec subsidiary Avia Capital Service says it gave Boeing a $35M cash deposit to secure an order for 35 of the MAX jets, which it wants returned with interest, plus $75M in "lost profit," $115M in compensatory damages and "several times the amount" in punitive damages.
    • The Russian firm says it would be willing to discuss an out-of-court settlement with Boeing.
    • William Blair analysts expect Roku (NASDAQ:ROKU) to hit 80M active accounts by 2025 with platform revenue of $4.5B.
    • In the recent Q2 report, Roku said it reached 30.5M active users in the quarter, up 39% Y/Y.
    • The firm says Roku's streaming service is growing faster than Netflix at its international expansion stage.
    • Key quote: "Looking at Roku’s most recent nine quarters against those of Netflix in the beginning stages of Phase II, Roku, on average, achieved 9% quarter-over-quarter growth, compared with Netflix’s average of 8%."
    • William Blair maintains an Outperform rating and $145 price target. The company has an Outperform average Sell Side rating.
    • Roku shares are up 1.4% pre-market to $145.02.

  8. Dorian / Phil – Nothing that a nuke could not fix I guess…

    Looks like an early opening to the hurricane season though. Hopefully a calmer one than the previous ones although we seem to be doing everything we can to make it worse.








  9. Oh no, things went south on the indexes pretty quickly.  

    I was just wondering if we should add more hedges into the rally.  So far, this is the only hedging trade we made since expirations:

    In the STP, I want to add 200 Jan $35 ($7)/45 ($4.60) bull call spreads for $2.40 ($48,000) as that's another $200,000 cover and, more importantly, it lets us set stops on the 2021 $200 calls, which are up slightly ($15,000) and we'll be able to take a $100,000 gain off the table if it comes (or stop out with a small loss).

    In the OOP, I want to cash out our 50 SQQQ Jan $30 calls at $9 ($45,000) and our 50 short Jan $50 calls at $3.85 ($19,250) for net $25,750 (up $34,500) and replace them with 100 of the Jan $35/45 bull call spreads at $2.40 ($24,000).  

    At the moment, the Jan $35 ($5.60)/$45 ($3.85) bull call spread is $1.75 so still a good deal with SQQQ at $35.35.  A 10% drop in the Nas would give us a 30% pop in SQQQ for our $45 goal, returning $8.25 (603%) against a 10% correction so very good short-term protection with no margin requirement but it works better if you are able to roll out the Jan $35s before they fall below $1.75 (the net of the spread) to a new spread that covers the short Jan $45s until they expire.  Then wash, rinse repeat and you can keep hedging without spending more money.


  10. Oh and the Jan $30s are down to $8, so we saved $1 there too!


  11. Here's what spooked the market:

    • The Fed fired its first shots against the president last week, with the Jackson Hole vibe being a lot more hawkish than most expected.
    • Now former central bank pezzonovante Bill Dudley is out with a piece urging the Fed to explicitly state it won't bail out an administration that "keeps making bad choices on trade policy." One wonders … Does that mean the Fed has an official opinion on what trade policy should be? Is there a Fed mandate other than inflation and growth that we haven't heard about? Isn't that the job of elected officials? Interesting stuff.

    I don't like this trend in /NG prices.  I always said the rest of the World would come down but I thought we would rise first but that's not happening – the rest of the world is simply collapsing so I think we should take the money and run on /NG futures (next year too) and see where things settle down.  Scary article in the WSJ for longs.  

    • Mexican Pres. Lopez Obrador confirms a deal to end a standoff with several natural gas pipeline operators over contract prices, allowing them to avoid international arbitration and begin increasing gas deliveries across the country.
    • The deal announced by Lopez Obrador and the head of state-run power utility CFE will reduce what Mexico pays the firms to transport natural gas.
    • The government says the new deal will result in $4.5B in savings, or more than 30% of what the government was obliged to pay under the original contracts.
    • Several pipelines, including the South Texas-Tuxpan submarine pipeline, which was completed in June, could begin operations within weeks.
    • The agreement includes three companies involved in the project: TC Energy (NYSE:TRP), Sempra Energy's (NYSE:SRE) iEnova Mexican subsidiary and Carlos Slim's Grupo Carso (OTCPK:GPOVF).
    • "This deal guarantees the supply of gas for the electric industry for many years, so that we won’t have outages, and for the development of national industry," Lopez Obrador says.

    Shipping picking up into the holidays:

    • The Baltic Dry Index increased 2.1% to 2,213 points to mark a fourth consecutive day of gains.
    • Rates moved up for the Capesize (+2.2%), Panamax (+1.0%) and Handysize (+2.1%) categories.
    • "We are seeing strong fixture activity in both the Pacific and Atlantic markets," notes Jefferies analyst Randy Giveans.
    • "Market seems pretty strong for the foreseeable future as newbuilding deliveries remain minimal," he adds.

  12. Phil/ PM-MO merger: from Bloomberg this comment at least gives some information on which to base a potential trade:

    "

    The transaction would give Philip Morris roughly 58% ownership of the new company, with Altria holding the rest, according to a person familiar with the terms who asked not to be identified because the details haven’t been made public.

    They are considering a no-premium deal based on the companies’ closing share prices on Aug. 23, according to the person. The companies would aim to close the deal within six months and expect to make no divestitures, the person said."

    PM closed on April 23rd @ $81.22 and MO closed @ $46.59.

    I've got no idea to work out the maths, but shouldn't there be a possibility to sell calls on PM that would be rendered worthless once (if) the deal is announced. Obviously a lot of water to flow under the bridge until talks are successful (btw – those talks are like the right hand talking to the left hand – and it would be a great swansong for the Chairman of PM to retire after recreating this tobacco behemoth).

    It just goes to show how devoid of any innovative ideas both companies are in terms of strategic thinking for the new world order.


  13. MO/Winston – PM is capped at $112Bn (down 7%) while MO is capped at $85Bn.  MO just collapsed off the highs at $52.50 and now back below $46 and I don't know what's up with that – this is not a slam-dunk deal.  I'm a fan of combining the company, that's a great idea but I don't think that PM calls will go worthless – you are more likely to end up with messy options.  I was going to cash out our MO position over $50 to avoid the hassle but they dropped too fast so now we'll have to wait and see.

    I think there will be a new, combined PM company and MO shareholders will get 0.42% of that stock, not the same as getting PM stock now.  They may just make a totally new ticker and name though – these are just talks so far.  Still, this explains why PM said they weren't getting into the cannabis business, MO is already in it!  


  14. Thanks Phil – will be interesting to see how this one plays out. It must be very difficult for the market makers to price the individual equities (MO & PM) and the associated options until more information is available. Better to screw with everybody so they stay away.


  15. I just saw this :

    For the first time in well over a decade, you now earn a higher rate of interest to lend money to the US government for 3 months than for 30 years.


  16. Information/Winston – All rumors for now but I have no idea why MO dropped like that.  

    Notes/Albo – That's just nuts.  They were worried about the inversion last week but not as muchthis week (so far):

    • It's not surprising. When bonds rally, yields decline and financials sink. And the more-pronounced inverted yield curve puts nerves more on edge.
    • The SPDR S&P Bank ETF (NYSEARCA:KBEfalls 1.5%; for the past six months, it's slumped 11% compared with a 3.0% increase for the S&P 500.
    • The six biggest U.S. banks are all in the red: Bank of America (BAC -1.4%), Citigroup (C -2%), JPMorgan Chase (JPM -1.2%), Wells Fargo (WFC -0.3%), Goldman Sachs (GS -0.9%), and Morgan Stanley (MS -1%).
    • Regional banks aren't any better. The SPDR S&P Regional Banking ETF slides 1.3%, losing 13% in the past six months.
    • Among the biggest losers in that category: Bank OZK (OZK -2.8%), CIT Group (CIT -1.9%), Axos Financial (AX -1.5%), and Comerica (CMA -1.3%).
    • There are a few bright spots in non-U.S.-based multinational banks — Royal Bank of Scotland (RBS +1.3%), ICICI Bank (IBN +1.8%), LLoyds Banking Group (LYG +0.2%), and Deutsche Bank (DB +0.7%).
    • Credit companies are especially hard-hit: American Express (AXP -0.9%), Synchrony Financial (SYF -1.2%), Capital One (COF -1.5%), Discover Financial (DFS -0.8%), and Alliance Data Systems (ADS -3.1%).

    At least this makes sense:

    • Opioid-related companies are not enjoying any of buying in Johnson & Johnson (JNJ +1.8%) after an Oklahoma judge fined it $572M over its role in the opioid epidemic there, a ruling that it intends to appeal. Whatever the final amount is, the company has ample resources to pay it as well as future amounts from pending lawsuits.
    • Others with less robust cash reserves may be under more pressure as the cases wind through the courts.
    • Selected tickers: AmerisourceBergen (ABC -4.4%), McKesson (MCK -4.5%), Cardinal Health (CAH -4.1%), Mallinckrodt (MNK -12.3%), Endo International (ENDP -6.9%), Teva Pharmaceutical Industries (TEVA -6.7%)  

    Because old people are soon going to be getting poorer:

    • JPMorgan Chase (JPM -1.7%) is considering the sale of the credit-card portfolio it built in its partnership with the AARP, the nonprofit that represents 38M people, Bloomberg reports, citing people with knowledge of the matter.
    • The deal would include about $1B in credit-card receiveables, they said. Alliance Data Systems (ADS -3.1%) is among the parties interested in the portfolio, according to one of the people.
    • For ADS, the acquisition would help it get closer to achieving $20B in credit-card receivables, up from $17.6B at midyear.
    • For JPMorgan, the country's largest credit-card issuer, it's a relatively small deal; the bank has $158B in outstanding card loans on its books at the end of Q2.
    • President Trump blames the Fed for U.S. manufacturers' difficulties in exporting to the rest of the world.
    • "Our Fed has been calling it wrong for too long!" Trump writes on Twitter.
    • This comes after former Fed official Bill Dudley penned an op-ed piece saying the shouldn't bail out the Trump administration for making "bad choices on trade."
    • The U.K.'s opposition parties will try to pass a law that would force Prime Minister Boris Johnson to seek another delay in the country's exit from the European Union, in a move to avoid a no-deal Brexit at the end of October, Reuters reports.
    • Meanwhile, the British government is working "to find a wide range of flexible and creative solutions" to run the border with Ireland after Brexit, a government spokeswoman said.
    • The U.K'.s Brexit negotiator David Frost is due in Brussels tomorrow to discuss the border issue with the EU's executive Commission.
    • The British pound gains 0.7% against the euro, its strongest level in about a month

  17. I like selling those MO 2021 $40 puts for $4.65 – I very much doubt they see $36.35 again.  


  18. Image

    This is amazing:

    The Fact Checker has evaluated false statements President Trump has made repeatedly and analyzed how often he reiterates them. The claims included here – which we're calling "Bottomless Pinocchios" – are limited to ones that he has repeated 20 times and were rated as Three or Four Pinocchios by the Fact Checker.

    Great article on GDP.


  19. CMG getting ugly. No idea why this valuation makes sense but being short calls is short term painful for sure. 


  20. distribution/Phil, TARP + ZIRP + QE = increasing wealth inequality 


  21. CMG/Palotay – Wow, what a breakout.  

    In the LTP, we have:

    CMG Long Call 2021 15-JAN 480.00 CALL [CMG @ $826.80 $0.00] 20 11/20/2018 (507) $180,000 $90.00 $285.55 $57.65     $375.55 $0.00 $571,100 317.3% $751,100
    CMG Short Call 2021 15-JAN 540.00 CALL [CMG @ $826.80 $0.00] -20 11/20/2018 (507) $-133,000 $66.50 $259.25     $325.75 $0.00 $-518,500 -389.8% $-651,500
    CMG Short Put 2021 15-JAN 450.00 PUT [CMG @ $826.80 $0.00] -10 2/19/2019 (507) $-30,400 $30.40 $-16.75     $13.65 $0.00 $16,750 55.1% $-13,650
    CMG Long Call 2021 15-JAN 700.00 CALL [CMG @ $826.80 $0.00] 15 7/8/2019 (507) $232,950 $155.30 $51.90     $207.20 $0.00 $77,850 33.4% $310,800
    CMG Short Call 2021 15-JAN 800.00 CALL [CMG @ $826.80 $0.00] -15 7/8/2019 (507) $-165,000 $110.00 $37.60     $147.60 $0.00 $-56,400 -34.2% $-221,400
    CMG Short Call 2020 17-JAN 740.00 CALL [CMG @ $826.80 $0.00] -15 7/8/2019 (143) $-114,000 $76.00 $45.50     $121.50 $0.00 $-68,250 -59.9% $-182,250
    CMG Short Put 2021 15-JAN 560.00 PUT [CMG @ $826.80 $0.00] -10 7/11/2019 (507) $-40,000 $40.00 $-11.25 $-40.00     $28.75 $0.00 $11,250 28.1% $-28,750

    The whole thing is net -$35,650 at the moment but, of course, there's $42,400 worth of puts that will expire worthless if CMG doesn't go lower and we have $20,000 left to collect on our $480/540 spread and $60,000 left to collect on our $700/800 spread and the short Jan $740 calls have $20 in premium ($30,000) so, if CMG expires at $843, we pocket another $152,400 and that's being PROTECTED by the short calls, which can be rolled to the 2021 $880 calls at $120 and, by then, we would add 20 of the June 2021 (or probably 2022) $800 ($175)/1,040 ($75) bull call spreads for $200,000 that would pay $480,000 if CMG keeps going up and up and up.  And, of course, we've already cashed in massive gains on earlier calls.  

    These kinds of trades may feel ugly while they are in progress but the "problem" is you have a huge amount of insurance in the short calls and you aren't taking advantage of it by taking long positions they are already able to cover.  

    And you don't have to have too much faith in CMG since the June 2021 $100 spread pays $240 – you can go in a little at a time and the net delta on the $800/1,040 spread is only .26 – so you won't get too damaged if we do sell off while the Jan $700 calls have a 0.78 delta so they lose 3x to the downside and you will gain $60,000 on them at $880 and then you can just roll them again to $960 etc.  All CMG has to do is go down once and you win.

    At $182,250, the short $740 calls are also a nice overall hedge on the market to cover the whole LTP. 

    Inequality/Mike – It's really getting out of hand.  Getting more money out of the bottom 90% is like squeezing a stone so the Top 1% have to start going after the Top 10-1% to increase their wealth now and, eventually, they can only turn on each other.  


  22. MJ back to getting killed:

    • Gold futures (GLD +0.7%) pushed to their highest settlement in nearly six-and-a-half years and silver jumped to a more than two-year high, as safe-haven demand kicks into high gear.
    • December Comex gold settled +1% to $1,551.80/oz., the highest finish for a most-active contract since April 2013, and September silver surged +2.9% to $18.153/oz., the highest for a most-active contract since April 2017.
    • Precious metals prices enjoyed a boost as losses mounted in the U.S. stock market, Treasury bond yields and the dollar.
    • Pres. Trump's talk of a deal with China may be just "rhetoric from the White House as opposed to an actual fact pointing to negotiation," says Bart Melek, head of commodity strategies at TD Securities in Toronto, adding "When gold does really well and gets quite expensive, investors on the margin will move into silver… not a big surprise that silver is doing well."
    • Gold and silver stocks easily outperform the broader market, and the Global X Silver Miners ETF (SIL +3.8%) and Silver Trust ETF (SLV +2.8%) each trade at better than 52-week highs.
    • Global X MSCI Argentina ETF (NYSEARCA:ARGT) falls 1.9% after Argentina exceeded for the first time a guideline on reserve sales that were included in a $57B standby agreement with the International Monetary Fund.
    • The nation sold $302M in the foreign exchange market, traders told Reuters, exceeding the $250M limit on daily reserve sales in the agreement, which was set when the exchange rate was above 51.5 pesos per dollar.
    • The Argentinian peso is down 1.6% at about 56.23 pesos per greenback.
    • Argentina's central bank has sold more than $1B in its own reserves to support the currency amid political uncertainty triggered by the left-wing opposition's victory in a primary vote this month for October's presidential election.


  23. Phil, any thoughts on why WBA and THC are getting beaten up today?  I have been waiting for a dip to initiate these trades. Thanks


  24. Phil

    Whats up with NRZ  ?

    Thanks


  25. Thought MO drop was the vaping lawsuits in NC and doubts on the merger



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  28. WBA/Robert – I don't see any particular reason why either one is selling off but WBA is only down a bit while THC took a huge hit.  Goes back to my theory that a lot of big money is simply getting out of the market.

    NRZ/QC -Just another REIT getting dumped – the same thing that was wrong with it in December – nothing really, just sentiment.

    MO/Coulter – They were already down to $47 over the lawsuits, the additional drop today makes no sense. This is certainly not the first time they've been sued.  

    Saved by the bell as we were really selling off into the close.  

    • Dow 25,000 is the mid-point and bounce lines are 25,550 (weak) and 26,100 (strong)
    • S&P 2,850 is the mid-point and bounce lines are 2,880 (weak) and 2,910 (strong)
    • Nasdaq 7,200 is the mid-point and bounce lines are 7,360 (weak) and 7,520 (strong)
    • Russell 1,440 is the mid-point and bounce lines are 1,472 (weak) and 1,504 (strong) 

    The only change was RUT failing at the weak line (1,455) but NYSE did too so ponder that.

    Nas not far from failing at 7,560 and 2,865 is alarming for /ES too.






  29. Good morning!

    Indexes pretty flat at the moment but looking weak.  I think we're pinned for window-dressing into the end of the month on Friday though someone may take advantage and start selling into the support programs. 

    API showed a massive 11.1Mb draw on crude with gasoline down just 0.3Mb and distillates down 2.5Mb so it's most likely just refiners making more gasoline (that's in process) ahead of the holiday weekend (this weekend) but that doesn't stop the bulls from running Brent (/BZ) back to $60, where it's a good rejection play this morning and /CL is $56, also good for a pullback – tight stops above make this a low-risk trade.

    Silver really blasting off:

    Oil Rises as Industry Data Shows U.S. Crude Inventory Draw.

    Silver & Gold Soar, Yields & Small Caps Plunge As Trade-Deal Hope Tanks. 

    Peloton to Pursue Nasdaq Listing, Dual-Class Stock Structure in IPO.

    Purdue Pharma offers $10 billion – $12 billion to settle opioid claims

    Hasbro CEO: Moving out of China has ‘gone very well for us’

    Sub-Prime Auto Credit Deteriorates In July, Says Report.

    Fighting Escalates Dramatically As Both Sides Prepare For "The Final War" Between Israel And Iran.

    New Poll: 70% Of Americans Are Angry At The Political Establishment.