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Just Another Manic Monday

Image result for redeye flightIt's one long Sunday for me as I just flew in from California.

I left at 10pm, didn't sleep on the plane and now it's 8am and I find myself essentially continuing what I was saying last Monday (14th), when we flatlined at 2,965 after a very bad Friday sell-off.  This Friday was not as bad, with the S&P finishing at 2,986 and we're still flirting with 3,000 – again.  So it's the same old, same old with not much having changed over the weekend so earnings will be our primary focus for the week.

Lots of fun reports already and, so far, earnings have beaten low expectations, for the most part and we're into the meat of the S&P 500, with about 1/4 of the index reporting this week:

Image

Image

We'll keep an eye on the Tech Sector as the earnings there have been pretty erratic.  Semiconductors rose 6.74% in Q3, topping all six industries in Tech.  Semis are followed by Technology Hardware (+5.26%) in second place and IT Services (-3.19%) at a distant third. The worst Tech Sector Performer has been Software, whose quarterly return stands at a negative 16.3% but still many companies to report.  

In June, Goldman Sachs issued a warning to “write off high-growth tech stocks,” according to a CNBC report – this was not heeded by the market as the Nasdaq is up about 800 points (10%) since June.  The reasons for Goldman’s warning are double: they said that Technology stocks may be overvalued at their current levels, and that talks about potential regulatory changes from Washington may make stocks within the sector something of a “hazard.”

Keep in mind it's not about justifying the 10% move up from 7,200 (thowing out the spike) in the June dip but justifying the ENTIRE 60% move from 5,000 in the beginning of 2017 to 8,000 today.  We ran an analysis of the top Nasdaq stocks back on April 17th, looking at whether or not the Nasdaq could justify 8,000 and we thought it could – and that was our bullish premise at the time but we cashed out at the 8,000 line and now, the question for Q3 is – can they justify 9,000 and, if not – why would we still be in them?   

Outside of earnings reports, we have only 3 Fed speakers this week and not very much exiting data to distract us from earnings reports.  Richmond Fed is tomorrow, Durable Goods, PMI and the KC Fed on Thursday and Consumer Sentiment Friday but, other than that – it's all about who made what last Q and, of course – guidance!

Apple got an upgrade this morning and is being used to prop up the markets – so take any gains with a grain of salt.  An AAPL rally is often used to cover up a broader sell-off as we top out and, of course, it's Monday – you can't take anything that happens on low-volume Mondays seriously.

 


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  1. The last 2 years have been great for volatility trading but Indices are still about where they were in January 2018. In some cases about the same (Dow), in other a bit ahead (S&P) and other lower like the NYSE and Russell.


  2. Good morning!


  3. Thoughts on CMG heading into earnings? 


  4. Image


  5. Image


  6. Good Morning!


  7. Get some rest Phil!


  8. It's Monday and it's meaningless anyway – like most days now it seems!


  9. IBM    UPS downgrades, right on schedule 


  10. Oops that's UBS, not  ups


  11. /NG diving this morning!


  12. Phil/Earnings,

    Any new setups for the OOP Portfolio (new one) with the upcoming earnings?

    regards


  13. Baffled by the notion of negative interest rates? I am and if you are we are in good company as Howard Marks posts his client letter where he addresses the issue. 

    The numbers are staggering around the world and may very well become reality here. (Actually, with present low rates and inflation those nominal rates turn to real negatives). 

    If you squint real hard and make certain assumptions there is some logic to it but it remains a mystery.


  14. pstas    good read thanks. 


  15. Good morning!

    I laid down around 8:30 and just woke up….

    I guess now I'm adjusted back.


  16. MDR had a big bounce on funding news, then lost it all and went negative. 


  17. Big Chart – Classic Loch Ness Monster pattern forming in the S&P.

    CMG/Crazy – We are still short on them in our Hedge Fund and they are still not cooperating.  I think $850 is ridiculous as it's a $23.5Bn valuation for a company that made $180M in the first half of this year so even giving them their estimated $378M for 2019 – that's 62x earnings and, JUST to get to that, they have to average $99M in Q3 and Q4 – 10% more than the first half.  So my bet is they disappoint along the way and then reality (and gravity) catches up with them.

    Year End 31st Dec 2013 2014 2015 2016 2017 2018 TTM 2019E 2020E CAGR / Avg
    Revenue $m 3,215 4,108 4,501 3,904 4,476 4,865 5,193 5,495 6,175 +8.6%
    Operating Profit $m 532.7 710.8 763.6 34.6 270.8 258.4 327.8     -13.5%
    Net Profit $m 327.4 445.4 475.6 22.9 176.3 176.6 249.4 378.3 488.3 -11.6%
    EPS Reported $ 10.5 14.1 15.1 0.77 6.17 6.08 8.62     -10.3%
    EPS Normalised $ 10.6 14.3 15.4 1.25 6.47 8.21 10.1 13.5 17.6 -5.0%
    EPS Growth % +19.9 +34.6 +7.6 -91.9 +419.5 +26.9 +36.4 +64.4 +30.4  
    PE Ratio x           102.5 83.1 62.4 47.8  
    PEG x           1.59 1.29 2.05 1.98
    Profitability

    The stock trades on the logic that they made $450M in 2014/2015 (pre-poisoning people) on $4.5Bn in sales so 10% and that means tha, with $600Bn in future sales they should make $60Bn and that x 40 is $24Bn, which is still ridiculous but not if you accept the higher multiple for all that AMAZING (and fictional) growth. 

    The thing is, labor costs are higher and food costs are higher 5 years down the road so it's not likely they recapture those margins.  CMG was a fad back in 2014/15 and didn't need advertising or discounting to grow and minimum wage was $7, now it's moving to $15 and they have NOT doubled their prices – or automated very much.  

    CMG is priced to perfection and beyond so my play on them is expecting them to fall at some point but that hasn't happened all summer and we've had to roll our short calls along (still covered by a long bull call spread, of course).  Due to the frustration and high-margin requirement, it's not a trade I strongly recommend unless you have a huge account BUT, I do like:

    • Sell 2 CMG Jan $860 calls for $47 ($9,400) 
    • Buy 2 CMG 2022 $900 calls for $145 ($29,000) 
    • Sell 2 CMG 2022 $1,000 calls for $105 ($21,000) 

    That's a $1,400 credit on the $20,000 spread but we don't believe in the $20,000 spread – it's just protection (the short calls can be $100 higher before we get in trouble) and the net Delta of the $900/1,000 spread is 0.57/0.47 = 0.10 vs 0.50 on the short $860 plus the very obvious time (Theta) difference so they'll lose their premium very quickly after earnings in either direction while the long calls will be relatively unaffected (Gamma).  

    That means there's a very high-probability of collecting the short $9,400 and a low probability of losing the whole net $8,000 so, with $4,000 left on the longs and the $1,400 credit burned on the short calls – you can make $5,400 on the spread as a target and the ordinary margin on 2 short Jan $860 calls is $31,494 so not a bad return on margin for 88 days.  Great for accounts that are in cash when you feel like playing but it is a trade that CAN go wrong (like it did in our Hedge Fund) and, even if it doesn't kill you – you can be stuck with the margin while you roll it along, waiting for a dip (that hasn't come all summer) to correct for you.  Of course if you have PM it's not such a big deal but not a good idea for people with less than $500,000 accounts that are just sitting around mainly in cash.  

    LOL StJ! 

    NFLX/StJ – I don't know, the bearish case for NFLX made our month in the Fund! 

    October 10th, 2019 at 3:22 pm | (Unlocked) | Permalink

    NFLX into earnings:

    chart

    We have a big fund bet they stay flat (+/- 10%).  My thinking is that a lot of bad news is already priced in and, since they are subscription-revenues, there won't be any major variation all of a sudden but good news will be tempered with worries about Disney and AAPL services taking share next year.  

    You can: 

    • Sell 5 NFLX Nov $300 calls for $10 ($5,000) 
    • Sell 5 NFLX Nov $250 puts for $7 ($3,500) 

    That's $8,500 in pocket so you have $17 of wriggle room above or below the strikes before you lose any money (or roll, of course).  If we hit the middle, that's $8,500 in 36 days!  Profit range is $233-$317.

    That was more aggressive than CMG but already the short $300 calls are $2.30 ($1,150) and the short $250 puts are $2.15 ($1,075) so net $2,225 is a very quick $6,275 (73%) profit already – even though NFLX is pretty much right where it was when we made that bet a week ago.  

    /NG/StJ – That was strange.

    Another chance to go long on /NG over the $2.25 line.  0.05 is $500 per contract, so fun to play for a quick move up.  /RB is a good long to play at the $1.60 line too – with very tight stops below.

    OOP/Pat – There will be no new OOP – it's redundant.  And certainly I won't initiate a new $100,000 portfolio with gambling – what kind of message would that be sending?  

    Negative rates/Pstas – You people aren't putting your money into houses and the banks need a new way to steal it from you – what's confusing about that?

    Image result for banksters robin hood

    Image result for banksters robin hood

    MDR/Stock – They withdrew forecasts as well, that really freaked people out.  Also, not selling storage tank business as previously planned so people are worried they are using money to prop it up.

    Wow, 1pm already – time really flies when you sleep the first 3 hours of the day!  cheeky


  18. @Phil / CMG – ty! Time flying – ????.


  19. Trump is rambling on about all kinds of stuff (mostly lies of course) and mentions again that we have the greatest economy ever. We are growing at 2% per year while adding $1T or more than 5% of GDP to the debt! What kind of business person looks at these numbers and talks about greatness? Someone who has bankrupted many companies I guess. 


  20. @stjeanluc – precisely. He doesn't get business basics. The silence reg deficit across the board is telling though and concerning. What happened to a balanced budget concept?


  21. Entrepreneurs’ tax break fails to boost investment, says IFS


  22. How GE Shafted Its Retirees







  23. More on CMG:

    BTIG gives a full-throated defense of Chipotle (NYSE:CMG) this morning, noting the restaurant chain is in the middle innings of a turnaround through its digital and menu innovation.

    "We continue to believe that $25 in EPS, nearly double our 2019 estimate, is achievable, if not beatable, as the sales recovery drives restaurant and operating margin expansion," writes analyst Peter Saleh.

    "We believe menu innovation such as the recent Carne Asada LTO that launched in mid-September will drive both transaction gains and menu-mix given its higher price point," he adds.

    Also, Saleh and team expect Chipotle to launch a quesadilla product that will be a material same-store sales growth driver.

    BTIG's price target goes to $890 from $825 off higher estimates for 2020 vs. the sell-side consensus PT of $811.03. Also on Wall Street today, Loop Capital hiked its PT on Chipotle to $950 from $860 on a similar theme to BTIG's bullish stance.

    Besides the dependence on the price of the avocado, Chipotle will face several problems expanding its menu overseas. Many of the critical ingredients of the Chipotle menu are expensive in Europe, and adapting the menu and prices would reduce the edge it has cultivated in the US. The expansion in Germany, for example, began in 2013, and this year it opened the second location, and the French market has behaved in similar ways.

    Growth/StJ – Sadly, that's the global model now.

    And what Chicken said.

    • The Philadelphia Semiconductor Index gains 1.8% compared to the 1% for the tech sector (NYSEARCA:XLK) after signs of progress in the US-China trade negotiations.
    • White House adviser Larry Kudlow says the December tariffs could be withdrawn if talks go well, which followed China saying it would work with the U.S. to address the core concerns of each party.
    • Top semi movers: AMD after a target boost, ON (ON +3.5%), Micron (MU +3.5%), Nvidia (NVDA +2.8%), and Cirrus (CRUS +2.4%).
    • Amazon's (AMZN +1.4%) third-party sellers have a problem with selling expired food items to consumers, according to a CNBC report citing talks with brands, consumers, sellers, and consultants.
    • A data analysis firm specializing in Amazon Marketplace recently analyzed the top 100 food products for CNBC and found at least 40% of sellers had more than five customer complaints related to expired products.
    • Amazon tells CNBC that products sold on the site must comply with laws and Amazon policies. Third-party sellers have to provide Amazon with an expiration date for items meant for consumption and must guarantee the item has at least 90 days left on its shelf life.
    • Teva Pharmaceutical Industries (TEVA +17.3%) has settled a lawsuit brought by two Ohio counties over its alleged role in the opioid epidemic there.
    • Under the terms of the agreement, it has agreed to pay $20M in cash over three years plus $25M (wholesale value) of opioid dependence med Suboxone (buprenorphine and naloxone) over three years. At this point, all defendants have settled the Ohio case except Walgreens Boots Alliance.
    • It has also achieved an agreement in principle with Attorneys General from North Carolina, Pennsylvania, Tennessee and Texas, as well as certain defendants, for a global settlement framework. Under this agreement, the company would donate $23B (wholesale value) of Suboxone over the next 10 years plus up to $250M in cash over the same time frame.
    • Neither settlement includes an admission of liability.
    • Ford (F -1%) plans to invest more than its initial targeted investment of $4B to develop self-driving technology, according to a company blog post.
    • "Ford continues to plan for initial commercialization of a self-driving service in 2021, with a focus on building to scale after launch. But to have a successful and sustainable service in the autonomous vehicle space, we need to build an entire business that’s scalable — the vehicle is just one part of the broader picture. In addition to building a vehicle, it is crucial we understand the customer experience, self-driving technology and vehicle operations," writes Jim Farley.
    • Raymond James Financial (RJF +1.8%) says it's eliminating transaction fees for stock, ETFs, and options for registered investment advisers (RIAs) in its Investment Advisors Division, CNBC reports.
    • The move comes after a number of electronics brokers eliminated commissions for online trading of stocks, ETFs, and options.
    • The Raymond James move, though, only affects fee-based accounts offered by certain financial advisers, which have no direct trades by the client.
    • The fees that advisers were paying generally ranged from $8 to $10 per trade, depending on the size of their practice, one adviser told CNBC.
    • Halliburton (HAL +8.1%) reverses an opening loss in a big way after company execs promise more cost cuts after reporting a bigger than expected drop in Q3 revenues.
    • HAL, which earlier this month cut 650 jobs in North America, said it would take steps over the next few quarters that will lead to $300M in annualized cost savings.
    • "Regardless of the cuts and idling of equipment, the size and scale of our business in North America give us the ability to drive a sustainable model without sacrificing our leadership position," CEO Jeffrey Allen Miller said on today's earnings conference call.
    • HAL warned of increased declines in North American activity, seeing Q4 revenue for its hydraulic fracturing business down by low double digits and margins by 125-175 basis points.
    • HAL is "taking costs out more aggressively than the Street forecast, which it expects to lead to strong Q4 operating margin improvement in the Drilling & Evaluation segments despite falling revenue," says AKap Energy's Anish Kapadia.
    • Rival Schlumberger (SLB +4.1%) also surges higher.
    • Money-market stress that fueled a spike in short-term borrowing rates last month is likely to get worse even with the Fed's moves to inject billions of dollars into the financial system, JPMorgan Chase said in a report.
    • It's not convinced that the U.S. central bank has resolved issues in the funding markets, according to note from analysts led by Joshua Younger.
    • Last month, the Fed started overnight repurchase agreement operations in more than a decade to help maintain the federal funds rate within the target range, which was 2.00%-2.25% at the time. (The fed funds rate target was cut to 1.75%-2.00% on September 18, the day after the repo operations started.)
    • Funding pressures re-emerged last week even after primary dealers — or firms that are allowed to trade directly with the Fed — took all the available overnight liquidity from the Fed and sold it as many T-bills as allowed.
    • Earlier this month, the New York Fed's Open Market Trading Desk said it's extending its repo operations through at least January 2020 and will purchase Treasury bills of ~$60B per month through at least Q2 of next year to maintain "ample reserve balances."
    • "We recommend viewing these moves as highlighting the limitations of the Fed’s chosen solution to their operational issues,” the analysts wrote.
    • The rate for overnight loans secured by general collateral first traded at 1.93%/1.92% Monday, compared with last week, when it traded at levels just over 2%.

  24. PHIL/CMG   As usual, I'm sure you are just early.


    • U.K. House of Commons Speaker John Bercow rejected the Boris Johnson's government bid to try to win approval in Parliament for the exit agreement Johnson secured last week in Brussels.
    • Bercow ruled that a second vote on Johnson's Brexit deal can't take place on Monday, citing a parliamentary rule dating to 1604 that prevents the government from repeatedly asking for votes on the same motion.
    • On Sunday, ministers said the government has enough support in Parliament to get the Brexit deal ratified.
    • Previously: Johnson asks EU for delay of Brexit deal (Oct. 20)
    • UBS downgrades IBM (NYSE:IBM) from Buy to Neutral and cuts the target from $170 to $140.
    • Analyst Munjal Shah says it will "be difficult for the company to achieve sustainable mid-single digit revenue growth."
    • The analyst also sees pressure in the legacy tech business in 2020, a situation that could grow even more challenging in 2021.
    • IBM shares are down 1.8% to $131.74. IBM has a Hold average Sell Side rating.
    • The phase one trade deal with China "has to be the right deal and it doesn't have to be in November," U.S. Secretary of Commerce Wilbur Ross told Maria Bartiromo in an interview on Fox Business Network.
    • When asked if the U.S. and China are basically in the same place as they were before the September trade meetings, Ross said, "I think we're in a better place…Remember, for a while there was not talk."
    • Issues in the phase one agreement mostly deal with China increasing agricultural purchases and opening up the financial industry to U.S. companies (which the country had started doing before the trade negotiations).
    • Phases "two and three are really where the meat is," Ross said, referring to issues dealing with structural reform in China and enforcement mechanisms.
    • Ross also sees the potential for a quick trade deal with the U.K. after the country exits the European Union.
    • "We've made very clear to Boris Johnson and the others there, we're happy to do a deal very quickly with the U.K.," he said. "The issues between U.S. and U.K. are far smaller than the issues between either of us and the EU."
    • Stifel turns positive on JetBlue (JBLU +4.5%) with an interesting M&A angle in the mix beyond the favorable view on JetBlue's valuation.
    • The firm sees some logic to Southwest Air (LUV +0.1%) buying either JetBlue or Alaska Air (ALK +2.6%).
    • The M&A wildcard is a large part of the reason that Stifel drops LUV to a Hold rating and elevates JBLU to a Buy rating.
    • Bank of America Merrill Lynch thinks Peloton Interactive (PTON -2.1%) looks attractive with shares down almost 20% since the IPO and trading below the firm's group of "high-quality" peer multiples.
    • "We are constructive on large fitness TAM, high user retention, and long-term margin benefit from subscription mix shift," advises analyst Justin
    • Dunkin' Brands (DNKN +0.4%) plans to introduce plant-based sausage sandwiches at more than 9K U.S. Dunkin' restaurants in the U.S. beginning on November 6.
    • The national launch of the Beyond Meat (BYND -1.8%) sandwiches follows a test run of the alternative protein product at 163 locations in Manhattan over the last three months.
    • Alcoa (AA -2.7%) is downgraded to Hold from Buy at Gabelli, where analyst Justin Bergner anticipates various risks that prevent the aluminum market from recovering in the coming years coupled with modest pre-pension free cash flow."
    • Bergner is concerned by Alcoa's latest outlook for flat 2019 aluminum demand growth as well as its comment about increased scrap content in Chinese aluminum product exports.
    • AA's 12% two-day post-earnings rally reflected better than expected proceeds from non-core asset sales and a view that estimates have bottomed, in Bergner's view.
    • AA's average Sell Side Rating is Outperform, and its Seeking Alpha Authors Rating is Neutral.
    • Stock buybacks by S&P 500 companies totaled $161B in Q2, down 18% from Q1 and down 17% Y/Y, Goldman Sachs reports in a note to clients.
    • Though Goldman expects the trend to continue, this year is still on track for the "second highest total on record."
    • "Early indications suggest second-quarter weakness in buybacks may persist," the bank wrote.
    • Sees 2019 total buybacks down 15% to $710B and down 5% in 2020 to $675B.
    • Buying back stock makes per-share earnings look better as the overall earnings figure is divided by a smaller number of shares; stock prices also often rise after buybacks also due to the lower number of shares outstanding.
    • Goldman sees the reduced pace of stock buybacks part of a larger trend of spending cuts due to trade uncertainty and slowing global growth.
    • In H1 2019, total cash spending fell by 4% Y/Y, says Goldman, which expects cash spending for the entire year to drop by 6%, making it the sharpest annual decline since 2009
    • Boeing (NYSE:BA-2.6% pre-market as two Wall Street analysts throw in the towel after keeping buy ratings on the stock throughout the 737 MAX debacle.
    • Credit Suisse analyst Robert Spingarn cuts shares to Neutral from Outperform with a $323 price target, slashed from $416, and UBS's Myles Walton downgrades the stock to Neutral from Buy with a $375 target.
    • Boeing sank nearly 7% on Friday after leaked messages from a former test pilot showed he might have unintentionally misled regulators about the safety of the grounded 737 MAX jet.
    • Credit Suisse's Spingarn says he can "no longer defend the shares in light of the latest discoveries, discoveries which significantly increase the risk profile for investors," and believes the pathway to return to service for 737 MAX "could be obstructed as the messages may shatter the fragile trust" between regulators and Boeing.
    • UBS's Walton says he has lowered his free cash flow estimates for Boeing by ~$3.5B for 2019-21 and another ~$5B in 2022-23 and reduced his medium-term growth rate assumption to 2% from 3% previously.
    • BA's average Sell Side Rating is Outperform, while its Seeking Alpha Authors Rating is Neutral.
    • Canopy Growth (NYSE:CGC) is up 2% premarket on light volume in reaction to its announcement of developments in Europe.
    • In the UK, its pharma unit, Spectrum Therapeutics, has received licenses from the Medicines and Healthcare Products Regulatory Agency and Home Office to store and distribute cannabis-based medicinal products (CBMPs). The license also allows Spectrum to import CBMPs directly from its European and global networks.
    • Spectrum will be the exclusive distributor of medical cannabis to the Grand Duchy of Luxembourg. The contract, allowing it to receive medical cannabis from its licensed facilities in Denmark and around the world, will be in effect through 2021.
    • The Walt Disney Company encountered a "good news/bad news" scenario this weekend with the debut of Maleficent:Mistress of Evil, its sequel to the original released in 2015 (both starring Angelina Jolie).
    • The good news was the movie's number one spot in the rankings. The bad news was the $36M gross, almost 50% lighter than the first movie and the company's worst showing all year.
    • Mistress of Evil generated $117M overseas, however, raising its weekend take to $153M.
    • In second place was Warner Brothers' Joker with $29.2M, raising its U.S. gross to $247.2M since its release several weeks ago.

  25. BA down $14 is hitting the Dow for about 100 points so things are stronger than they look.

    /NG can't get back over $2.25


    • Teva Pharmaceutical Industries (TEVA +6.6%) is up on more than triple normal volume, but has retraced 10% from its intraday high of $8.95 on reports that plaintiff attorneys are "not on board" with its announced global settlement framework.
    • Nomura Instinet's Matthew Howlett notes that the strength of mortgage banking results and credit in bank Q3 results last week bode well for fee style/origination/credit-focused mortgage REITs when they start reporting in the coming weeks.
    • "Agency MBS REIT earnings results should remain weak and volatile, but their discounted valuations should be the offset," he wrote in a note to clients.
    • And he doesn't see any reason why strong earnings momentum shouldn't continue into Q3 for the hybrid/credit side; "premiums to book value multiples should be maintained, if not increased, post earning," he wrote.
    • Howlett points out that Wells Fargo last week guided to sustained production volume in Q4 and production margins; PennyMac Mortgage Trust (PMT +1.3%), Redwood Trust (RWT +0.6%), New Residential Investment (NRZ +1.1%), and Ellington Financial (EFC -0.2%) "all have origination capacity in some form and should benefit from this trend," he wrote.
    • Sees high residential volume production driving strong loan growth at Chimera Investment (CIM +0.5%) and New York Mortgage Trust (NYMT +0.2%).
    • With banks benefiting from mortgage servicing rights-tied hedging, Howlett sees a similar trend with New Residential and Two Harbors Investment (TWO +1%).
    • Estimated Q3 reporting dates: Oct. 25 — New Residential; Oct. 30 — Chimera; Nov. 1 — PennyMac, Ellington; Nov. 5 — New York Mortgage Trust, Two Harbors; Nov. 6 — Redwood Trust.

  26. AMTD reports tonight and I don't think they are going to miss or cut guidance significantly as all this no fee BS just happened last month.

    Let's make an Earnings Portfolio with $100,000 to do some earnings plays while we wait for a good time to start rebuilding the main portfolios.  For AMTD, we can:

    • Sell 5 AMTD 2022 $30 puts for $4.20 ($2,100) 
    • Buy 10 AMTD Jan $38 calls for $2.30 ($2,300)
    • Sell 5 AMTD 2021 $45 calls for $2.60 ($2,600) 

    That's a net credit of $1,800 on a $7,000 spread where we are disadvantaged by time but not really as an up move or flat would let us cash out Jan and then pick up a 2022 bullish spread to cover the short 2021 $45 calls and a down move would give us a better entry on a 2022 spread and we could roll and DD on the short puts and sell more calls.  

    That was the bell though so not an official play as it's too late but we'll see how it goes.



  27. CMG – the short that never says goodbye. Certainly sharpens the saw on improving one's rolling techniques.

    But continue to try and short this puppy successfully is turning into a rather masochistic fantasy trade.

    Anyhow, I hope that when CMG announces earnings tomorrow after the close they will prove me wrong (but not too wrong).



  28. Negative rates forever? Central bankers look for an exit



  29. I´m visiting  Mexico after a nephew wedding in  P.Vallarta and in MexicoCity I saw 2 massive buildings that WeWork bought which are practically empty, don´t know if it´s the same in U.S cities but in Mexico they are losing money, in addition to that a lot of the construction boom here is related to laundering practices of drug money so perhaps a scandal could be in the way.


  30. Phil / AAPL – I'm looking at cashing in about 1500 Shares ( book the LT Gain) and set up a BCS to stay in it at a lower risk.  I'm looking at the following 2022

    Buy 20X Jan '22 $225 ( 45) 

    Sell 20X of the '22 $280 (22)

    Sell 5X of the '22 $190 Puts (15). then maybe 5 later…

    I'm thinking that 280 to 300 is a reasonable target given the new lower priced iPhone ( maybe $499 at 40 Million per year adder in '22.  along with services picking up as well.   However I'd like your thoughts. on the BCS and if it's too aggressive, or if you think I should hold off on a new position.   Either way I'm selling the shares.  Appreciate your feedback. 


  31. China overtakes US in rankings of world’s richest people