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Fabulous Friday Finish – Trump Saves the Day?

Image result for trump trade deal cartoonThat's right, we're now expecting Trump to fix everything.  

Well, at least fix trade and the markets are up another 1% this morning, now having recovered the vast majority of last week's drop in aniticipation of a Trade Deal with China (which is not going to happen) and Fed Rate Cuts (which certainly won't happen if we get a Trade Deal with China) and, of course, because the Global Economy is great and can only get better so why worry about paying all-time highs for stocks who are literally warning you that Q4 will have some "challenges"?

Of course, we're still in a situation where there's really nothing else to do with your money other than put it in US Equities.  Bonds take your money, Banks take your money, Real Estate is still dicey, Bitcoin is hardly even a thing anymore, Oil has been decaying – not much left other than equities so we hold our noses and invest.  Well, WE don't – we cashed out last month but that is what people seem to be doing.  We're going to wait to see this round of earnings reports and guidance before we give our beautiful CASH!!! back to the markets. 

Yesterday, President Trump said day one of the Trade Talks went very well and, since we know Donald's a man of his word, the Futures have kicked into over-drive.  The meeting Trump has with China's Vice Premier, Liu He, are not until 2:45 this afternoon so it seems impossible that an actual deal could be accomplished by the market close at 4pm so we'll go into the weekend without knowing for sure and it all could reverse before trading resumes on Monday – not the best premise I've ever heard – that's for sure!  

If there is a trade deal, and even if there's not, we like Freeport-McMoRan down at $9 as they should rebound nicely if there is a trade deal and, even if there isn't, it's still a nice "buy and hold" over the long run. 

Since we actually do want to own it for the long-term, we can add it to our Short-Term Portfolio for now and move it to the Long-Term Portfolio when we start it up again (probably November) but, for now, we can make the following play in our $100,000 Portfolio:

  • Sell 5 FCX 2022 $10 puts for $2.90 ($1,450) 
  • Buy 10 FCX 2022 $5 calls for $4.50 ($4,500) 
  • Sell 10 FCX 2021 $10 calls for $1.50 ($1,500) 

That's net $1,550 on the $5,000 spread but notice we bought 2022 longs and sold 2021 short calls so, if FCX does head over $10, we can roll the short calls to higher strikes in 2022 (the 2022 $12 calls are now $1.40) and potentially add another $2,000 to the spread's potential.  As it stands, it's a relatively small commitment to buy 500 shares of FCX at $10, which is aggressive as it's over the current price but only $5,000 and this trade only uses $916 of orindary margin and will return $3,450 (222%) in profits if FCX is over $10 in Jan of 2022 – not a bad 2-year return on very little outlay!  

We're jumping into FCX today because it will get away from us if there is an acutal trade deal and, if there's not, we'll be happy to double down to a larger position at a lower price and then wait, very patiently, for the trade issues to one day be resolved – even if it's by Elizabeth Warren in 2020 as there is pretty much no way Trump can be re-elected (assuming he isn't impeached first) if we go into those elections still in an economic war with China. 

Speaking of impeachment, two of Rudy Giuliani's Ukranian lackeys (yes, lackeys can have lackeys), Lev Parnas & Igor Fruman were indicted yesterday on Campaign Finance Violation charges for funneling illegal money into the Trump Campaign.  These were also Rudy's point men in getting dirt on Joe Biden and, apparently, they were instrumental in getting Trump to remove the Ukranian Ambassador, Marie Yovanovitch – who will be testifying to the House this morning – so lot's of fun coming up on that front!  

Whether all the illegal fundraising and election interference carried out by Giuliani's right-hand men will tie back directly to Donald Trump (who's personal attoney is Rudy Giuliani) is anyone's guess.  Trump says he's innocent and disavows any knowledge of these men or the hundreds of thousands of Dollars they gave to his campaign – despite the fact that they were one of the largest donors to a super-pac Trump had formed - I'm sure it is all fine…

Parnas and Fruman were arrested at Dallas airport as they attempted to flee the country but fortunately, they were able to get Trump's former lawyer, John Dowd, to represent them despite the obvious conflicts of interest (assuming they are not all co-conspirators), which is nice because Dowd still has technical confidentiality regarding Trump – so probably no one has to be murdered to keep them silient this time. 

Image result for trump parnas“I don’t know those gentlemen,” Trump said Thursday when asked about the new charges, adding he hadn’t discussed them with Giuliani.  However, Parnas and Fruman had dinner with Don Jr and then with President Trump at the White House in early May of 2018, shortly before they donated to the pro-Trump super PAC, according to since-deleted Facebook posts captured in a report published by the Organized Crime and Corruption Reporting Project, a nonprofit U.S.-based media organization.

Their political giving—aimed at Republicans—was funded in part by an unnamed Russian donor, the indictment alleges. Federal law bans foreigners from contributing to U.S. elections. A limited liability company created by the men was used to disguise the source of some of the money, the indictment alleges.  In July, Parnas accompanied Giuliani to a breakfast meeting with Kurt Volker, then the U.S. special representative for Ukraine negotiations.  The two had lunch with Giuliani at the Trump International Hotel in Washington on Wednesday, according to a person who was in the hotel and saw the three together – just before they attempted to leave the country.  

Move along folks, nothing to see here…

Have a great weekend, 

- Phil

 


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  1. As Palotay was saying, these are the best of times for option traders – big swings both ways with opportunities to sell premium as the VIX goes over 20 and watch it melt with the latest China tweet. You simply have to hold you nerves during the drops…


  2. Cue Trump on Rudy – "“He was a lawyer for me, one of many. Didn't do big deals, did small deals. Begged me for a pardon."


  3. Not very surprising:

    https://www.economist.com/graphic-detail/2019/10/09/exposure-to-air-pollution-is-linked-to-an-increase-in-violent-crime

    Breathing dirty air is linked to aggressive behaviour, according to a new paper by Jesse Burkhardt and his colleagues at Colorado State University and the University of Minnesota.

    I wonder if there is an inverse relationship between white collar crime and pollution though!


  4. Interesting conclusion:

    https://www.institutionalinvestor.com/article/b1hhp2x3vkdcn9/It-Dominates-Everything-It-Touches-But-Can-Amazon-Compete-With-Walmart

    Consumers may well prove to be Amazon’s ace up the sleeve. Davis-Sramek, the Auburn professor, often reminds her students that, besides antitrust issues, Amazon poses mounting environmental threats linked to cardboard and plastic packaging and energy emissions from its shipping network and data centers. “But when I ask students how many of you like Amazon, they all raise their hands,” she says.


  5. The Chinese market comes with some philosophical choices:

    https://www.vox.com/recode/2019/10/10/20908480/apple-china-hkmap-app-censorship-hong-kong-protests-tim-cook

    Amazon spent more than a decade trying to crack the Chinese market with very little to show for it today. Facebook, which has been blocked in China since 2009, also spent years of courtship to get back in, including multiple visits from CEO Mark Zuckerberg, who also made a public pledge to learn Mandarin. In 2016, Netflix CEO Reed Hastings was hopeful that he could work with Chinese regulators; this year he said that wasn’t going to work — “We will be blocked in China for a long time.”

    This week’s news suggests that those guys may be lucky they’ve failed to get in. Aside from ethical concerns about compromising with Chinese authorities to get access to the country’s billions of consumers, working with China could become bad for your brand, as politicians and commentators pile on the companies who do it.

    “Dealing With China Isn’t Worth the Moral Cost,” says the New York Times columnist and former tech reporter Farhad Manjoo, who calls the country “a growing and existential threat to human freedom across the world.” 


  6. Good Morning!


  7. Good morning!

    FCX is already popping so please note our trade above for the STP:

    If there is a trade deal, and even if there's not, we like Freeport-McMoRan down at $9 as they should rebound nicely if there is a trade deal and, even if there isn't, it's still a nice "buy and hold" over the long run. 

    Since we actually do want to own it for the long-term, we can add it to our Short-Term Portfolio for now and move it to the Long-Term Portfolio when we start it up again (probably November) but, for now, we can make the following play in our $100,000 Portfolio:

    • Sell 5 FCX 2022 $10 puts for $2.90 ($1,450) 
    • Buy 10 FCX 2022 $5 calls for $4.50 ($4,500) 
    • Sell 10 FCX 2021 $10 calls for $1.50 ($1,500) 

    That's net $1,550 on the $5,000 spread but notice we bought 2022 longs and sold 2021 short calls so, if FCX does head over $10, we can roll the short calls to higher strikes in 2022 (the 2022 $12 calls are now $1.40) and potentially add another $2,000 to the spread's potential.  As it stands, it's a relatively small commitment to buy 500 shares of FCX at $10, which is aggressive as it's over the current price but only $5,000 and this trade only uses $916 of orindary margin and will return $3,450 (222%) in profits if FCX is over $10 in Jan of 2022 – not a bad 2-year return on very little outlay! 

    The 2022 $5s just went off at $4.62 and the 2021 $10s are $1.54 not much change yet.  Short puts are $2.77.  

    Big Chart looking good again but we'll have to hold it through Monday.  

    Rudy/StJ – No way – already?  People who go to work for Trump may as well just throw themselves under a bus on the way to the White House…

    China/StJ – I agree, we're allowing them way too much influence over content and, again, this is the very dangerous downside to Corporate Media – none of the big guys want to go after China – so they get a pass on everything.  

    Image result for who owns the media 2019

    If I were NFLX – I'd program a dozen anti-China shows that the rest of the World would probably love.  

    Image result for fuck the chinese government animated gif


  8. Rudy / Phil – Sorry, should have use my sarcasm font! That was Trump's quote on Cohen. But you know, that's gonna happen any day now. Trump has no loyalty whatsoever…


  9. Finally out of BBBY position.  Nice profits, but took a long time.


  10. I love how MGM's bubble says "James Bond" in that chart!  

    Image result for james bond animated gif

    So I'm off to LA later and will be there all next week which means I'll be on and off most days.  I have a super-full schedule of meetings and such and I'll try not to exhaust myself and get sick – like I did last time.

    Rudy/StJ – Shows how crazy things are, that sounded perfectly plausible…

    "Trump shoots person on 5th Avenue – claims he was 'testing a theory'".  See….

    BBBY/Albo – Congrats.  Long, hard road on that one.

    "Many times I've been alone

    And many times I've cried

    Any way you'll never know


    The many ways I've tried "- Lennon/McCartney


  11. LA/Phil – so don't exhaust yourself – meet up with me for some Korean stew, or get 1020 to take you to the Tin Fish for fish tacos.


  12. LA/Snow – I'll have a better idea of what kind of time I have Monday, though Sat (tomorrow) might be my best day if I'm not too tired.  I'm sure 1020 would rather hit Lowell Farms!  

    As if we needed this today:

    • "If the committee chooses to move forward with a cut at the next meeting, I would probably be in favor of that," Minneapolis Fed President Neel Kashkari says at the Council of Foreign Relations in New York.
    • Says central bank's forward guidance has been "hawkish" and having a contractionary effect on the economy.
    • Signs of softening in the labor market is "one big concern," he said. "And now we have evidence that wage growth in softening."
    • via Bloomberg.
    • Kashkari isn't a voting member of the FOMC this year, but gets to vote in 2020.
    • The probability of another rate cut at this month's FOMC meeting, though still high, is receding, according to trading in federal funds futures. The CME FedWatch Tool puts the probability of a 25-basis point rate cut at 68.9% vs. 82.3% yesterday.

    • Stocks are off to a flying start on rising optimism that some sort of U.S.-China trade deal is in the works that could avoid raising tariffs on Chinese goods; S&P and Dow both +1.2%, Nasdaq +1.4%.
    • Pres. Trump is scheduled to meet China's Vice Premier He at the White House at 2:45 ET for a meeting that could extend past the close of today's trading.
    • European bourses also are on the rise, with Germany's DAX +2.1%, France's CAC +1.1% and U.K.'s FTSE +0.5%; in Asia, Japan's Nikkei +1.1%, China's Shanghai Composite +0.9%.
    • In the U.S., eight of the 11S&P sectors are higher, paced by industrials (+1.7%), financials (+1.7%) and information technology (+1.6%), while utilities (-0.3%), consumer staples (-0.2%) and real estate (flat) lag.
    • U.S. Treasury prices are lower, sending the two-year yield up by a basis point to 1.54% and the 10-year yield rising 6 bps to 1.72%.
    • U.S. WTI crude oil +0.8% to $53.99/bbl after surging as much as 2% following overnight reports that an Iranian tanker was struck by two missiles.
    • Still ahead: Michigan consumer sentiment survey
    • Semiconductors move up as hopes rise on U.S.-China trade talks. VanEck Vectors Semiconductor ETF (NYSEARCA:SMHjumps 2.5% in early trading.
    • Among the ETF's movers — Qualcomm (QCOM +3.1%), Broadcom (AVGO +3.2%),  Nvidia (NVDA +3.3%), Intel (INTC +2.5%), and ASML (ASML +2.9%).
    • Piper Jaffray analyst Kevin Barker sees Q3 "even better" for mortgage lenders than the strong Q2, with mortgage applications up 10% Q/Q and reaching levels last seen in 2016.
    • Sees mortgage orginator earnings rising 20% Q/Q; notes "refinance wave" but also headwinds for servicing earnings due to increased amortization expense on increased prepay.
    • PennyMac Financial Services (PFSI +0.5%) (rated overweight) and Flagstar Bancorp (FBC) (rated neutral) are best ways to play the improving market, he writes; he stays cautious on Mr. Cooper Group (COOP) (rated underweight) 
    • Legal overhangs on the share price are overdone, says analyst Lee Hambright, noting a 13% decline from the 52-week high.
    • Settlements in the $50B range are a worst-case scenario, he says, yet are already priced in. A more likely range is $10B-$12B, he argues – $5B for opioids, $5B for talc, and $800M for Risperdal.
    • As for valuation, J&J (NYSE:JNJ) is trading at a 17% discount vs. a 12% premium to the S&P 500 at the end of last year – that's almost two standard deviations below the long-term average.
    • He upgrades to Outperform and boosts his price target to $155 from $148. Shares are up 1.5% early to $131.
    • The Seeking Alpha Authors average rating is Bullish and the Quant Rating Neutral.
    • Previously: Bernstein sees 20% upside in J&J in premarket analyst action (Oct. 11)
    • Barrick Gold's (NYSE:GOLD) Lumwana copper mine in Zambia has drawn interest from China Minmetals, Jiangxi Copper (OTCPK:JIAXF) and Zijin Mining (OTCPK:ZIJMF) Group, Bloomberg reports.
    • China Molybdenum (OTCPK:CMCLF) and Aluminum Corp. of China (NYSE:ACH) also were invited to bid, according to the report.
    • The open pit Lumwana mine is expected to produce 210M-240M lbs. of copper this year and has proven and probable copper reserves of 4.5B lbs.; a deal likely would fetch ~$1B.
    • Ford (NYSE:F) reports sales in China fell 30.3% to 131,060 vehicles.
    • The automaker says the volume drop reflects the slowing industry sales in the nation overall due largely to China V Emission Standard stock clearance actions.
    • Ford brand sales were down 37.7% during the quarter, while Lincoln brand sales were off 24.1% and JMC brand sales declined 13.3%.
    • Earlier this year, Ford’s sales in China fell 35.8% in Q1 and by 21.7% in Q2. Ford's sales in China also dropped 37% in 2018 and 6% in 2017.
    • Looking ahead, Ford China remains focused on its business transformation following the launch of the "Ford China 2.0" strategy.
    • Shares of Ford are up 1.39% premarket to $8.74 amid some trade deal optimism.
    • An explosion damaged an Iranian oil tanker off the Saudi port city of Jeddah, according to Iranian state media, adding that experts suspected it was a "terrorist attack."
    • The tanker is now ablaze and oil is spilling into the Red Sea, unnamed sources told ISNA.
    • Recent attacks in the region have centered on oil facilities and tankers, including a drone-and-cruise-missile strike that halved Saudi Arabia's output and mysterious attacks on oil tankers near the Strait of Hormuz.
    • Crude futures +2% to $54.61/bbl.
    • Update: Iranian officials said that two rockets had struck the tanker belonging to the National Iranian Oil Company.

    • "We expect growth in 2019 to be the weakest since 2016, following evidence of a slowdown in several major consuming regions and countries," according to the International Energy Agency.
    • Demand growth estimates for 2019 were reduced by 65,000 barrels a day to 1M, while 2020 fell by 105K bpd to 1.2M.
    • Cutting the figures for the second consecutive month, IEA's revisions will add pressure on OPEC and its allies to make deeper output cuts in November.
    • A deadly lung illness linked to vaping has now taken the lives of more than two dozen people nationwide, according to the CDC.
    • 219 probable new cases were diagnosed over the last week, bringing the total number of patients to 1,299, but health officials still don't know what's making people sick.
    • Of the cases where doctors know what patients were using, roughly 76% of them said they vaped THC, while 13% said they exclusively used nicotine.
    • Related stocks: Altria (NYSE:MO), Philip Morris (NYSE:PM), British American Tobacco (NYSE:BTI), Vector Group (NYSE:VGR), Imperial Brands (OTCQX:IMBBY) and privately-owned Juul (JUUL).
    • Hooters operator Chanticleer Holdings (NASDAQ:BURG) is shifting from restaurants to cancer drugs, planning a reverse merger with privately held Sonnet BioTherapeutics.
    • Chanticleer shares are up 43.7% after hours, though its market value had dwindled over the past few years to just under $8M ($0.83/share).
    • The deal will result in a publicly traded company operating under Sonnet's name and a proposed Nasdaq ticker of SONN. Chanticleer will spin off its restaurant holdings into a new public company to be owned by current stockholders.
    • "Fred, Patrick, Troy and I continue to be optimistic in the direction of our Better Burger business and the success of the numerous initiatives we have taken as a company thus far in 2019 to enhance delivery, technology, customer loyalty and the focus of building a leading culture for our employees," says Chanticleer CEO Mike Pruitt.

  13. HOnest how can anyone believe anything the big orange clown says? I swear he is so full of it if he fell in a pond he couldn't drown, he would automatically float! Forever! BBBy was a winner though. Miracles do happen!


  14. Stew/Snow  That brings back fond memories of spending a Sunday enjoying stew with my

    Wife's Aunt Ki-Soon and the family, only the stew was cioppino!

     

    I did my best and ate a bowl of shrimp and some delicious Korean rice she would make just for me.

    I'm not a big fan of anything that swims…. :)


  15. Phil, Do you like /KC down here?


  16. /KC – I'm averaging down.  I'm at .9397


  17. Phil – You headed to San Diego? I pick up my daughter at UCLA twice a month and the 405 is a killer. I just did that last night. Round trip – 5 Hours…. :)


  18. 1020 – the CalTrak trains run once an hour, and on time mostly. I take them down to Solano Beach to visit our daughter, son in law, and grandson often. $30 for us old folks, about 2 1/2 hours from Union station.


  19. TShroyer/KC — good price…..just spiked….you are there now…..


  20. Snow – Yeah, we've looked into taking the train and determined by the time she gets to Union Station from school and the trip to Oceanside, could be about 4 hours and I'd rather deal with the traffic and have her with me!  

    Maybe we can meet sometime and have my Daughter treat us to a meal! 

    https://www.niche.com/colleges/search/best-college-food/


  21. Ha! Yes, UCLA to Union Station is the problem. But let's do meet up sometime…..give a whistle. Obviously I know my way around the Korean restaurants.


  22. Thanks Snow, that would be great!


  23. /KC – out at .9430 – I'm glad because I was long too many contracts for my liking.  Will get back in lower. 


  24. and QE begins again, "In accordance with this directive, the Desk plans to purchase Treasury bills at an initial pace of approximately $60 billion per month, starting with the period from mid-October to mid-November."

    https://www.federalreserve.gov/newsevents/pressreleases/monetary20191011a.htm


  25. Snow Question what do you actually pay for a good lunch in Korea. Just stopped by at a coffee/ Restaurant along the coast of France in a small town Ares 2 biers a bottle of water, a spinage soup with two micro pieces of chicken in it could have filled a coffee cup, one ceviche, one micro coffee and a one ball ice-cream 50€, felt like through the 50€ bill out of the car window!


  26.  Volume not very impressive during this run-up on 10/9, 10/10 & today. Smart money in a wait and see mode or they already have gotten out of the market waiting on a buying opportunity below current levels.


  27. Yodi/lunch – hmm, depends on location, as Seoul is expensive, but I lived near Daegu. Nowhere near 50€, though, even in Seoul. Let's see, a bowl of good bibimpap (rice, greens, sliced beef, sprouts, with sesame oil and pepper paste dressing) runs around 8,000 – 10,000 won, so less than $10, and throw in some local rice ale for 3,000 a bottle. Koreans don't really do desert, but at a lot of places you'll get a cup of shikhye (https://mykoreankitchen.com/sikhye/), which is very nice, included in the price of the meal.


  28. /KC/RS – It's sold below the break-even point for the growers so it's a good entry point any time it's lower than 95 but that doesn't mean it won't go lower – just means I'm willing to ride it out.  It did go lower back around 9/11 and stayed down for 4 years but, other than that – pretty solid.

    SD/1020 – No time.  My brother is coming from SD to LA as I have no way to get there with my schedule. 

    Food/1020 – I can't see how it can be better than UMass – they have a Vegas buffet for a meal plan but with much better food than Vegas has.  

    Obviously/Snow – That's racist!  cool

    QE4/Mike – They are hitting all the levers today – makes me think there won't actually be a deal.

    50 Euros/Yodi – OMG!  I really don't understand how regular people can afford to live…

    Volume/Den – Here's our round-trip volume:

    Date Open High Low Close* Adj Close** Volume
    Oct 11, 2019 296.27 298.71 296.26 297.44 297.44 37,558,347
    Oct 10, 2019 291.18 294.21 291.00 293.24 293.24 55,296,300
    Oct 09, 2019 290.75 292.30 290.06 291.27 291.27 62,359,400
    Oct 08, 2019 291.04 291.85 288.49 288.53 288.53 95,708,100
    Oct 07, 2019 293.47 295.26 292.77 293.08 293.08 59,610,500
    Oct 04, 2019 291.14 294.63 291.08 294.35 294.35 65,091,200
    Oct 03, 2019 287.81 290.45 284.82 290.42 290.42 85,278,800
    Oct 02, 2019 291.50 291.51 286.64 288.06 288.06 122,539,500
    Oct 01, 2019 297.74 298.46 293.00 293.24 293.24 88,242,400
    Sep 30, 2019 295.97 297.55 295.92 296.77 296.77 51,662,400

  29. Phil/racist – Heheh…I would curse you in Korean, but I can't get the font to show up here.


  30. Yodi /Lunch

     

    Are you sure you didn´t order  "menu dégustation"?  LOL.

    Must of my bad experiences in France is restaurant-related.


  31. TSLA will report earnings next Oct.23th….any idea for quick money?..


  32. Advill No still feeling sick from the lunch!!!! Looking forward to the Spanish pricing, general as well as restaurants.


  33. WLL – Up 11%.   Covered some.


  34. Font/Snow – Like this:  ????

    TSLA/Advill – So dangerous.  It's another on in the Hedge Fund we sold puts and calls against.  I don't see $320 coming back and $150 is my prediction for next year so leaning bearish overall.  You can sell Jan $180 puts for $4.10 and the Jan $300 calls for $6.50 so $10.60 leeway makes money from $169.40 to $310.60 – a nice, wide spread that should expire before the next earnings.

    Partial deal!  

    • U.S. and China reach a partial deal that would broker a truce in the trade war and set the basis for a broader deal that Presidents Trump and Xi Jinping could sign later this year, Bloomberg reports, citing people familiar with the matter.
    • As part of the deal, China would agree to some agricultural concessions and the U.S. would provide some tariff relief.
    • The agreement is tentative and subject to change; Trump and China's vice premier, Liu He are set to meet this afternoon.
    • Stocks hold onto their gains; the Nasdaq climbs 1.9%, the S&P 500 advances 1.6%, and the Dow rises 1.6%.
    • 10-year Treasury falls, pushing yield up 7 basis points to 1.742%.
    • SPDR S&P China ETF (NYSEARCA:GXC) is up 2.0%.

    It is literally THE LEAST they could have possibly accomplished – you can see how desperate Trump is getting.

    • Of note this week, the Fed's September meeting minutes highlight increased risks to the economic expansion and diverging views on what to do about it. The number of reports coming in on the weaker side may bear that out.
    • Inflation still lags the Fed's target and small business optimism isn't as high as hoped for, but, on the bright side, consumer sentiment easily beats consensus. And the consumer represents a larger part of the economy than the manufacturing sector.
    • Weaker-than-expected: Prices, on both the consumer and producer side of things, exhibited weakness last month. September’s core consumer price index -- which excludes the more volatile food and energy segments --  ticked up only 0.1% M/M, trailing the +0.2% consensus and slowing from the 0.3% rise in August.
    1. Producer price index in September also disappoints, falling-0.3% M/M compared with +0.1% consensus; core PPI, down 0.3%, compares with the +0.2% estimate.
    2. Continuous jobless claims increase 29K to 1.684M vs. the 1.653M expected.
    3. September’s NFIB small business optimism index reading of 101.8 fall short of the 102.0 consensus and receded from 103.1 in August.
    4. Export prices fall 0.2% in September vs. August, even weaker than the consensus estimate for no change; still they didn’t sink as much as the 0.6% decline in August.
    5. August job openings of  7.051M was weaker than the 7.191M expected and 7.174M in July, which was revised down from 7.217M.
    6. August wholesale trade inventories rose 0.2% at $680.7B, less than the 0.4% increase expected; sales were flat at $499.1B.
    • In-line: September's consumer price index is unchanged from August and matched consensus; but the core number comes in weaker (see weaker-than-expected).
    • Stronger-than-expected: University of Michigan’s October consumer sentiment print at 96.0 comes in better than the 92.0 consensus and the 93.2 reading in September; current economic conditions index at 113.4 outpaces the 107.5 estimate and index of consumer expectations at 84.8 exceeds the 81.7 estimate.
    1. Initial jobless claims fall 10K to 210K this week, fewer than the 219K expected.
    2. September import prices rise 0.2% M/M vs. -0.1% consensus and turns around from a 0.2% decline in August. Export prices weaken, though (see weaker-than-expected).
    • Coming up next week: On Tuesday, New York Empire state manufacturing index for October; on Wednesday, September's retail sales and Fed's Beige Book; on Thursday, September building permits and housing starts, Philly Fed manufacturing index for October, and September's industrial production.
    • The Federal Reserve is extending its repurchase agreement (repo) operations through at least January of 2020 to ensure reserve supplies are enough to mitigate risk of money market pressures.
    • The Fed will purchase Treasury bills through at least Q2 of next year to maintain "ample reserve balances at or above the level that prevailed in early September 2019."
    • The 10-year Treasury falls, pushing yield up almost 7 basis points to 1.74%; (TLT -1.3%), (TBT +2.6%).
    • The central bank is making the moves now to prevent the recurrence of pressures that built up in the short-term lending among banks in mid-September, which pushed the federal funds rate above the Fed's 1.75%-2.00% target range.
    • "These actions are purely technical measures to support the effective implementation of the FOMC's monetary policy, and do not represent a change in the stance of monetary policy," according to the Fed's statement.
    • The New York Fed's Open Market Trading Desk plans to buy Treasury bills at an initial pace of ~$60B per month starting from mid-October to mid-November.
    • Term repo operations will be conducted generally twice a week, initially with an offering amount of at least $35B per operation.
    • Overnight repo operations will occur daily, initially at an offering amount of at least $75B per operation.

    • WeWork (WE) is talking with a group of banks led by JPMorgan Chase about $5B in financing, Bloomberg says, amid reports that the company could run out of cash as soon as a month from now.
    • A debt package could come together as soon as next week, according to the report.
    • The Financial Times reported that the company would need new funding by the end of November. Aside from the JPMorgan-led talks, SoftBank is in discussions to raise its part of a funding package to $2.5B, bringing its total investment to $11.5B.
    • That news has led WeWork bonds to bounce off record lows, with 7.875% notes due 2025 rising to 83.5 cents on the dollar today. Those bonds were down to 81.25 cents yesterday.
    • GoPro (NASDAQ:GPRO) is up 9.5% after saying it's started shipping the HERO8 Black cameras ahead of the planned date of Oct. 15, following a production delay.
    • The cameras are on their way to customers who preordered, as well as shipping to retail and channel partners.
    • It's also turned on its Trade-Up program for the HERO8 Black.
    • The company had said the production delay would shift shipments of the camera to Q4 from Q3.
    • Southern California power providers Edison International (EIX -1.7%) and Sempra Energy (SRE -0.5%) are lower as a wildfire rages out of control in the northern foothills of California's San Fernando Valley, forcing the mandatory evacuation of ~100K people so far.
    • The Saddleridge Fire, which erupted late yesterday and grew to 4,700 acres by this morning as strong winds swept across the Los Angeles metro area, is moving north toward the city of Santa Clarita, according to the Los Angeles County Fire Chief Deputy.
    • Winds of 20-30 mph are expected to continue through the early afternoon with gusts up to 50 mph in the fire area, the National Weather Service says.
    • PG&E (PCG +6.3%) shares begin to claw back from yesterday's 29% shellacking, as the utility says it has restored electricity to 426K California businesses and residences while another 312K customers remain without power.
    • PG&E shut down power to prevent its equipment from sparking wildfires during dry, windy weather and has begun to restore power after winds subsided and workers could inspect its power lines.
    • Meanwhile, facing rising public anger over the massive blackouts, California Gov. Newsom blasts PG&E management for the outages while suggesting the utility, whose service extends to about 16 million customers in California, is too big.
    • "This is not a climate change story as much as a story about greed and mismanagement over the course of decades… a desire to advance not public safety but profits," Newsom said at a press conference yesterday.
    • Citigroup analyst Praful Mehta has come out with a Sell rating and $5 price target on PG&E shares after the judge overseeing the company's bankruptcy case terminated PG&E's exclusive right to advance a reorganization plan.
    • Mehta sees a 75% chance of the stock going to zero and a 25% likelihood of PG&E getting its own plan selected, which would include a rights offering at $20/share.

    • General Motors (GM +3%increased its commitment to manufacture in the U.S. during its latest offer to the UAW, according to Bloomberg.
    • Sources indicate that the automaker pledged to invest $8.3B in U.S. plants this week to sweeten its overall labor offer from an original commitment of around $7B.
    • Analysts have noted previously that GM was likely to have held back some manufacturing decisions into the labor negotiations knowing they would be needed to finalize a deal.
    • Shares of GM are higher on the day with the forward progress of the U.S.-China trade talks spurring some buying action
    • Restaurant industry sales slipped into actual year-over-year contraction during September, according to the latest data from TDn2K.
    • The research firm says for the first time in two years growth was negative during Q3 with same-store sales growth of -0.4%, even with the quarter ending on a positive note after a 0.1% gain in September. Same-store traffic was down 3.5% in Q3 to mark the worst quarterly result of the last two years.
    • TDn2K economist Joel Naroff says the downturn in manufacturing due to the trade war has had a negative impact on restaurant spending. Some restaurant analysts thinks consumers are trading down with their restaurant visitations to the benefit of chains like Denny's (NASDAQ:DENN) and Wendy's (NASDAQ:WEN), but at the expense of overall spending.
    • Steel stocks are among the big winners in early trade amid renewed optimism for a U.S.-China trade deal: X +9%AKS +8.3%CMC +5.4%MT +5%STLD +4.9%WOR +4.1%NUE +3.9%RS +2.5%.
    • It's not just the tariffs, as a resolution of the trade dispute likely would lead to more confidence for spending and investing by industrial companies, which have been in a state of limbo for many months, as noted by Briefing.com.
    • Another modest tailwind seems to be GM's update on labor negotiations, as automotive is a key market vertical for steel names.

  35. I would be very careful selling naked puts on Tesla. They are structurally bankrupt, and sentiment is shifting. They spent billions on the Model 3, and have zero chance of recouping their investment (they continue to lose big money each quarter, while delivering decent volumes). Furthermore there is a scary amount of unreserved warranty costs, huge looming potential legal liabilities, potential regulatory intervention with "autopilot", etc. At some point this is going to matter; and it is going to fall apart, accelerared by margin calls on Elon and Kimbal's pledged shares, and you will not want to be short any naked puts. Who knows the timing, but this quarter they are going to show large YOY revenue declines, which is really bad for a growth company valued as richly as Tesla, and after Uber, WeWork, I wouldn't just assume the market is going to continue to ignore these deficiencies forever. Just my 0.02. 


  36. College food has improved since I attending. The Amherst area does have good local farms supplying them. I went on a visit with my Son to a little Ivy- NESCAC school and they were serving Scallops for lunch!







  37. TSLA/Palotay – I would be more worried if the overall market wasn't pushing back to highs.  In a forgiving mood, I think and I don't see how revenues can be that far off with deliveries up plus Musk can do fun stuff like order $1Bn worth of batteries from Solar City and book that revenue but then not bill TSLA until next Q so it's all profit and no cost on  the books.  Once people start to pick those threads apart – THEN the clock starts ticking.

    Scallops/Randers – That's crazy.  We used to be happy to smuggle "chicken pucks" out of the cafeteria for snacks – that was luxury to us! 

    And, on that note, I'm off to sit in a tiny little seat for 6 hours!

    Have a great weekend, 

    - Phil


  38. Safe travel Phil! 


  39. Phil/TSLA – ASPs have fallen off a cliff, with Model S/X volumes down 30-40%, at a lower ASP after several price cuts, and Model 3 ASPs way down from the lofty level last year when they were working their way through the high margin backlog.  




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