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Wild Wednesday – Trade In Doubt, Impeachment Begins, Powell Testifies and We Take Money Talk to The Street!

Where do I begin?  

The Index Futures are down about 0.5% as Trump once again puts a Trade Deal into doubt.  Europe and Asia are down more like 1% so we might be just getting started or Trump could send out one of those "I was joking" tweets after he threatened China with more tariffs yesterday.  “In the short term the market’s been too optimistic. The best interpretation of the trade situation is that almost everything that can be tariffed has been tariffed,said Christopher Mahon, director of asset allocation research at Barings.  

How come when he says it on Nov 12th, he's quoted in the WSJ but when I've been saying it for two months – no one notices?  I have to get a better publicist – or A publicist….  

Speaking of which, I guess I will have a better publicist as we move some of our Member Portfolios over to starting with our Money Talk Portfolio, which kicks off this evening on BNN (Bloomberg Canada) at 7pm this evening.  Through the end of this quarter, the Money Talk tab usually found on PSW will ALSO be found on TheStreet but, over time, they will get the exclusive on that and a couple of other portfolios as well as some PSW content (also a subscription).   

We closed the old Money Talk Portfolio after two years with a 148.1% gain on Sept 18th as I didn't trust the upcoming quarter enough to risk the gains.  Turned out I was premature in my worries (as I often am because I'm a worrier) but I'm still worried so we're going to start with a couple of conservative trade ideas and see how things go.  The rule of the Money Talk Portfolio is we only do trades we announce on the show, once each quarter so it's a very low-touch portfolio using our options strategies to hedge the risk and lever our returns. 

When closing down the MTP, I did make the following suggestion for a good use of our $124,042 of cash:

Our 2019 Stock of the Year is IBM (IBM) and our IBM position is already 100% in the money at net $2,707 out of a potential $7,500 so, if I were going to keep one trade active – that would be the one as all IBM has to do between now and January of 2021 is hold $135 and that spread will make another $4,793 (177%) so we could, for example, put $27,070 of our $124,043 in cash back to work on just the IBM trade and, if all goes well, it will turn into $75,000 – making almost 100% of our original total in just over a year – so why be more complicated than that?

There's still a lot of potential in all these positions, as noted in the April review, the portfolio has the potential to hit over $200,000 by Jan 2020 but, as I noted, if we cash out now at $124,043 and make another $50,000 on the IBM trade – that's $174,000(ish) anyway but we'd have $100,000 in our pockets NOT at risk through the holidays – that is certainly a much wiser way to go – especially in a portfolio we are unable to adjust between shows.  

So the decision is final, we're cashing out and endorsing our Stock of the Year, IBM, as a replacement bet to keep some of the cash at work but, on the whole, we'd rather risk missing a bit more of a rally on Fed Easing and a China Deal than risk a drop on Fed Disappointment, ongoing Trade Wars, a Hard Brexit, war in the Middle East and, of course, President Trump's random tweets.  

That trade is still about the same price so we're going to be officially adding it back to the MTP although I believe we will go with different strikes, as follows:

  • Sell 4 IBM 2022 $135 puts for $20 ($8,000) 
  • Buy 8 IBM 2022 $120 calls for $23 ($18,400) 
  • Sell 8 IBM 2022 $140 calls for $12 ($9,600) 

That spread is net $800 on the $16,000 spread so $15,200 (1,900%) upside potential if IBM is over $140 in Jan of 2022 – something we have a lot of confidence in.  Your worst case is that you are assigned 400 shares of IBM at $135 ($54,000) so we'll put a stop on 2 of the 4 short puts at $30 ($6,000) which would cause us to take a $2,000 loss, driving our net to $2,800 but still allowing for $13,200 (471%) upside potential.  Then the rest we could would adjust along the way – it's good to be prepared.  

The ordinary margin requirement on the aggressive short puts is just $10,658.60 and would drop to half of that if we are forced to buy back half the short puts – so it's very unlikely to make us uncomfortable along the way. 

IBM was our 2019 Trade of the Year (2-year cycles) and we've been looking over candidates for 2020 and my top pick is Sunpower (SPWR) but, unfortunately, they are spinning off a division and that will make them too messy to trade in a portfolio we don't touch often but, at $8.50, we can sell the 2022 $8 puts for $3 and that nets us in for $5 so, split or no split – I want to sell 10 of those for $3,000, using $2,894 of margin in a fairly efficient manner.  

If it were not for the restriction of the MTP, I would also buy 20 of the 2022 $5 ($5)/10 ($2.70) bull call spreads for net $2.30 ($4,600) and that would put us in the $10,000 spread for net $1,600 with $8,400 (525%) of upside potential at $10+.  The split would make it messy but we don't mind getting dirty for 525% returns – it's just too difficult to leave it restricted to quarterly adjustments. 

So, if Sunpower isn't going to be our Trade of the Year, what is?  

In an uncertain market, we are looking for stocks that are fairly recession-proof and have good value for the money – something very hard to find in the current market.  CBS (CBS) was one of the top candidates in our Live Member Chat Room on Monday and we did, in fact, sell puts on that one in our Short-Term Portfolio:

So that's official for the STP, we're going to sell 5 CBS 2022 $40 puts for $8 ($4,000) in the STP.

Teva (TEVA) is a good value but too uncertain, Oil Service ETF (OIH) also a good value but also too choppy with a dim demand outlook and the uncertainty of the Aramco IPO (will they flood the market with oil trying to make numbers?).  GME and BBY already got away from our lows but Tanger Factory Outlet (SKT) is still unloved and we think they are still stupidly cheap at $15.88 but a bit too Fed dependent to be the Stock of the Year (we don't want something where factors out of their control can hurt their business).   L Brands (LB) is still stupidly cheap but the Biotech ETF (LABU) already popped 40% while we've been considering it.  

Mittal (MT) we would like to see a bit cheaper or at least break over $17.50 finally, Travelers (TRV) is the best bargain on the Dow and a possible play, Northern Dynasty (NAK) is a penny stock but, at 0.57, I'd buy 10,000 shares for $5,700 and forget about it for 5 years – just in case they ever get their permit (I'd also sell half if they hit $1.14 so I'd have 5,000 shares at net $0!).  

Frontier (FTR) is down to 0.75 so do we buy them before or after restructuring?  I'd say 1,000 shares now ($750) and plan to spend $4,250 once they announce a new CEO and get a reaction.  

Barrick Gold (GOLD) is reasonable again at $16.44 and at $15 I'd certainly want to buy them and we can do that with options so very tempting…  Cleveland Cliffs (CLF) is being hurt by the China Trade Issues but, as a North American Iron Ore Manufacturer, they have certain advantages and should really pop if we ever do get a deal.  Capril Holdings (CPRI) already took off on us, IMax (IMAX) is stupidly cheap at $21.25 but hard to call a Stock of the Year as they are a slave to Hollywood's releases to make their share of the money.

Lockheed Martin (LMT) is our stock of the Decade for the 2020s but that's way higher now than when we picked it.  Annaly (NLY) is too cheap at $9.12 and pays a nice dividend but options aren't exciting enough for a Stock of the Year.   Walgreens (WBA) was our first choice for Stock of the Year but someone else liked them so much they offered to buy the whole company and they already popped 25%.  The rest of our Watch List is still too expensive to consider so, given the above, our Stock of the Year for 2020 is:  GOLD!  

After due consideration I'm going to go with Barrick Gold (GOLD), who recently merged with Rangold (was GOLD) back in March and, spun off underperforming assets last Q which left them with an average production cost of $984/oz – still much higher than GOLD used to be at before the merger.  We can trust Barrick Management to keep pushing those costs down while Gold (/YG) itself has jumped to an average selling price of $1,476/oz and the spread between the two is where gold miners make their money and GOLD is on pace to sell over 5M ounces of it next year – along wtih 400M pounds of Copper (/HG), which is costing them around $2.75 to pull out of the ground and is selling for about $2.65 at the moment (China again).  

Year End 31st Dec 2013 2014 2015 2016 2017 2018 TTM 2019E 2020E CAGR / Avg
Revenue $m 12,527 10,239 9,029 8,558 8,374 7,243 8,738 9,755 11,046 -10.4%
Operating Profit $m -8,909 -1,868 -2,350 2,424 3,311 279 3,885      
Net Profit $m -10,366 -2,907 -2,838 655 1,438 -1,545 1,385 975.6 1,656  
EPS Reported $ -9.65 -2.50 -2.44 0.56 0.94 -1.32 0.45      
EPS Normalised $ -1.45 -0.16 -0.20 0.61 0.63 -0.63 0.35 0.52 0.81  
EPS Growth %         +2.9   +7,394   +55.4  
PE Ratio x           n/a 47.4 31.6 20.3  
PEG x           n/a n/a 0.57 n/a

It has been lower and may be lower again but the ongoing global uncertainty could push Gold (/YG) while a trade deal with China can get copper back closer to $3, making profits on that side of the mine as well.  If it were just about the business, GOLD would not be our stock of the year but it's also about what kind of trade we can set up and how certain we are it will pay off and here's where GOLD shines.   Our Trade of the Year will be:

  • Sell 15 GOLD 2022 $17 puts for $3.50 ($5,250) 
  • Buy 30 GOLD 2022 $13 calls for $5 ($15,000) 
  • Sell 30 GOLD 2022 $17 calls for $3 ($9,000) 

The net cash outlay on the spread is $750 and it pays $12,000 if GOLD is over $17 in Jan of 2022 for a profit of $11,250 (1,500%).  The ordinary margin requirement on the 15 short puts is $4,971.75 so it's a very efficient way to make $11,250.  The worst-case scenario is you are assigned 1,500 shares of GOLD at $17 plus the 0.50/share loss from the $750 outlay so $17.50 is not much worse then the $16.44 you'd have to pay now to buy the shares yet you only need it to stay flat to make $11,250 – seems like a good deal to me.

As is customary, we will guarantee that this spread is up at least 200% (net $2,250) before November of next year (2020) or we will give a free 1-year subscription to anyone who signs up for (or renews or extends) and Annual Subscription between now and December 31st.  We have NEVER had to pay on 8 years of making these picks – 100% success rate! 

You do not have to make the trade to play along but you do have to buy a 1-year subscription!  

Meanwhile, live impeachment hearings begin today and Powell speaks to Congress and who knows what's going on with trade but I have serious doubts.  I may not be a "master negotiator" like our beloved leader but I tend not to say "things are great, we're making good progress" on Monday and then say "If China doesn't make a deal we will place even more tariffs on them – they are scared – they need this deal!" on Tuesday  – that's the kind of thing that can cause self-respecting parties to tell you to F off…

It's Trump that's scared and needs a deal - you don't need to be a poker player to see that all over his face.  


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  1. Good Morning!

  2. Whoa, you're up early, 1020! Coyotes wake you up, too? Nature is beautiful, right?

  3. And living in another time zone too…lol

  4. Morning, All!

    It's webinar day! 1pm (eastern)!

  5. Hey snow! – That coyote is actually an aggressive ragdoll cat – Holly – and she likes to eat early…. :)

  6. I suspect the best "stock" of the year will be cash.

  7. They want another tax cut, but this time for the middle class:

    Especially this little gem buried in there:

    Moore, the Heritage economist, said he is also pushing for a change that would allow capital gains to “roll-over” tax-free if they are reinvested in a different stock. Under this plan, an investor could sell stock in General Electric and reinvest it in Uber without paying a tax on the realized stock gains, as the investor would under current law.

    Would not help the top 1% at all… Just for the middle class!

  8. ptas paper money it burns easy!!! My father used it aready once as wall paper, as it was cheaper than buying wall paper.

  9. Good quote about the China deal:

  10. Looking to set up something with WM 2022 95/115 BCS  cost 11 $ and sell half 90 put @ 5.10 and sell half  an other Jan 20 115 call @ 1.05. just for starters.

  11. advill/time zone – I'm back in southern Cal now, with 1020.

  12. A question for Phil and the chat;

    Don´t you think that being in the actual market moment,  put strangles are a safer proposal?

  13. One of the biggest and oldest milk producers in chapter 11!..


  14. Good morning!  

    We forgot about M and F – also good contenders that need to be added to the Watch List.  Gosh, I'm almost in the mood to build new portfolios with all these nice stocks…

    So I went for a safety pick on GOLD, I don't mind doubling down on them if we have a pullback as a deep recession is likely to doom the EU and the Euro will collapse and gold will skyrocket – but let's not get too ahead of ourselves.  

    Resistance at $1,500 was to be expected, they based at $1,000 but gold actually goes $400, $800, $1,200, $1,600, $2,000 on the major resistance points – going back to ancient times not on this chart.  Anyway, for the short-term purposes, we're looking at a run from $1,000 to $1,500 which retraces $100 (weak) to $1,400 or strong to $1,300 while the $1,200 to $1,600 move strong retraces $800 to $1,520 so that zone between $1,500 and $1,520 is very strong resistance either way. 

    While $1,400 holding would be pretty bullish and we'd look for consolidation between $1,400 and $1,520 for the eventual breakup to $1,600.  

    The Dollar is not much of a factor in the overall 5-year period as it's pretty flat after that first bump up, which is what drove gold down from $1,600 in the first place:

    So, the way I look at it is the Dollar was at 80 from 2012 to 2014.5 and then up to 100 is up 25% while gold fell from $1,600 to $1,200 (ignore the spike lower) which is also 25% – not a coincidence at all.  So now Gold is back near $1,600 – it's appreciated a good 15-20% but you don't see it as the Dollar has re-priced it lower but anything that knocks the Dollar back is going to send gold higher – that's where the pressure is likely to be.

    On the other hand, if the Euro collapses, expect a lot of people to start buying gold for stability and that's good for gold too.  So a few ways to win on the price of gold and then we have ABX's excellent history of driving costs down on the mines they acquire and demand seems to be no problem with 5M oz in sales and supply is no problem with 75M proven ounces of gold reserves (88.5M "probable") give them 15+ years to sell it before they run out but they also have 175M ounces of lower-grade reserves at 1.7g/t vs 2g/t in their Tier 1 mines.  NEM, on the other hand, has 118M ounces but at 1g/t – HUGE difference! 

    CASH!!!/Pstas – Makes me feel better but indexes recovering yet again – AMAZING!  

    Cap gains/StJ – WOW!  So, as long as you are rich enough not to need the money, you get to make tax-free rolling gains forever?  That's the biggest tax break for the Top 1% yet!

    Paper money/Yodi – In Germany, that was certainly true.  

    Image result for germany hyperinflation"

    Image result for germany hyperinflation"

    Image result for germany hyperinflation"

    Wow, oil just blasted off.

    WM/Yodi – I don't consider it cheap just because it pulled back from a 100% run over the past 3 years.  

    Put strangles/Advill – Define a put strangle. 

    DF/Advill – That's crazy.  Could be very disruptive to milk but Lactaid, Almond Milk, etc killed their business model along with changing habits and less children.  

    Image result for number of children in the us"

    Image result for number of children in the us"

    AI/Advill – I hope so, spoofing is so expensive.  I used to complain about it all the time but I lost interest as nothing ever changed. 

  15. Yodi, while hyper inflation may yet be in the cards down the road (especially given the growing attraction to the MMT – Magic Money Tree concept) we are not there yet. FWIW, over in your neck of the woods, Denmark now has negative rates for large customer deposits not to mention negative mortgage interest rates. So, you get paid to buy property and get dinged if you save cash. At some point, bundles of $100 bills or Euros in a bank safe deposit box may actually be the new normal. I talk to people about this and get shoulder shrugs and rolling eyes. As the old saw goes, just because you are paranoid does not mean they are not out to get you!

  16. Phil cheap good stocks are hard to find. What about OXY with a div. of 8.2% From 87 to 38 cheap enough?

  17. Comment content omitted because it is too long.

  18. OXY/Yodi – As you know, I don't care what other idiots paid for a stock – only if I see the value currently.  OXY at $38.13 is $34Bn as a fairly traditional oil company.  Since 2014 they've netted about $0 and they lost $900M last Q after making $630M each in Q1 and Q2 so net $360M so far this year.  I'ts not like they make more at Christmas so even $1Bn puts them around $1.4Bn for the year so 27x earnings is RIDICULOUS for an oil company – I wish I had had the balls to call shorts when they (all of them) were double the current price in the spring but 50% off 60x earnings still isn't a bargain to me! 

    2018 was anomalous and was extrapolated into 2019 and that failed and then they decided to buy Anadarko, causing Icahn to dump 1/3 of his shares, threaten proxy fights, etc.  That's a stay-away to me:

    Year End 31st Dec 2013 2014 2015 2016 2017 2018 TTM 2019E 2020E CAGR / Avg
    Revenue $m 20,277 19,442 12,598 10,196 12,653 17,771 18,428 20,640 25,247 -2.6%
    Operating Profit $m 6,708 -1,204 -9,638 -1,755 695 4,503 2,351     -7.7%
    Net Profit $m 5,903 616 -7,829 -574 1,311 4,131 1,136 1,428 1,051 -6.9%
    EPS Reported $ 6.11 -0.18 -10.6 -1.31 1.69 5.36 1.33     -2.6%
    EPS Normalised $ 6.69 5.18 -1.95 -0.61 2.38 5.88 2.33 1.88 1.29 -2.5%
    EPS Growth % +21.8 -22.5       +146.9 -59.6 -68.0 -31.6  
    PE Ratio x           6.53 16.5 20.4 29.8  
    PEG x           n/a n/a n/a 0.54

    Occidental Petroleum (OXY +2.2%) spikes higher after activist investor Carl Icahn cut his stake in the company by nearly a third while vowing to launch a proxy fight against the board next year.

    In a letter to shareholders, Icahn reaffirms his fierce opposition to OXY's $38B deal for Anadarko Petroleum, calling it "one of the worst I've ever seen."

    "The Oxy/Anadarko merger made no sense for stockholders, but perhaps it made sense for Vicki Hollub… and certain board members who, we believe, were concerned that OXY would be a takeover target, and therefore grossly overpaid to acquire Anadarko in order to protect themselves and their jobs," Icahn wrote.

    "Although OXY has dropped 42% since April, oil has only dropped 12%," Icahn said. "We believe this is because Wall Street has completely lost faith in Hollub and her board and has concluded, in my view, that Hollub and her board will put their interests far above the best interests of OXY's stockholders."

    Icahn says he has sold 10M shares in OXY and now holds 23M shares, valued at ~$900M; he had owned a $1.6B stake as of May 30.

    If cheap stocks are hard to find we just wait for stocks to get cheap.  

  19. OXY thanks Phil great comment, yes oil is a gamble I stick to XOM always made money with them

  20. How America Ends

  21. Ruth Bader Ginsburg misses court due to illness

  22. Sold last of my TWOU on the morning spike.   Sold some Dec $20 puts on the big pullback.

    Phil – BHC up almost 30% following the Citron report which I posted on October 15 th.  Options up much more.

    I like your GOLD pick.  Thanks.  The metal seems to be putting in a bottom.

  23. " they will get the exclusive on that"  Phil you mean the Street will get some stuff we do not see?

  24. Tangled/exclusive – I read that to mean Phill will store those particular portfolios on The Street and not here. However, Phil always thinks out loud here, as this is an education forum, when planning and adjusting portfolios, and I suspect he will do that for ideas that end up in The Street portfolios.

    At least, that's my take.

  25. No. 1 milk company declares bankruptcy amid drop in demand

  26. BHC/Albo – They didn't even make the watch list as they got away so fast, what a shame.  

    At least we caught them before the bigger move:

    BHC/Albo, Vkat – We liked them recently but they took a long time to find a bottom.  

    Since they are not likely to blast over $25, I'd set up like the above MJ trade – looking to generate income along the way.  You don't want to get burned to the upside so 3x coverage is best, something like:

    • Sell 5 BHC 2022 $18 puts for $4 ($2,000)
    • Buy 15 BHC 2022 $20 calls or $7 ($10,500)
    • Sell 15 BHC 2022 $27 calls for $4.50 ($6,750) 
    • Sell 5 BHC Jan 24 calls for 0.80 ($400)

    That's net $1,350 on the $10,500 spread so $9,150 of upside potential at $27 in two years.  Small put-side commitment and, of course, you get about 8 more chances to collect $400 ($3,200), which turns this into a lovely credit spread over time.  

    They did blast over $25 so burned on the short calls and we'll have to roll them out but, fortunately, only a 1/3 cover.  

    Submitted on 2019/02/19 at 2:24 pm

    BHC/JMD – Did I say they should be a Butterfly?  While I do like them as a new, bullish trade, the moves from $25 to $17 and back during just Dec and previous, MANY massive moves before that make them not the kind of trade we'd do a Butterfly on as it's not a question of IF you get blown out of your shorts but WHEN.

    The point of a Butterfly play is to sell short puts and calls on a regular basis.  Let's say we sell each Q and the BHC May $25 puts and calls are $4.50 so all BHC has to do is hit our target on the nose and we make $4.50 but that's not likely (and the way BHC moves, no target is LIKELY within $2) but let's say we make $2 and we have 7 chances to collect for $14 over 2 years. 

    Let's say the spread is only $5 so + $9 if all goes well but just one move to $18, like we had in Dec, would put us $7 behind on the puts so net $3 loss vs $4 sold (ish) means it would take us 3 more months just to get even but if we get blown out again and lose another $3, then it will take us almost all of next year to catch up and now it's a pointless trade wasting space and resources in our portfolio. 

    We try to avoid letting that happen by NOT getting into stocks that are too volatile to predict.

    Called that one!  

    Gold with a good move today despite the strong Dollar (Powell on hold).

    TheStreet/Tangled – Never will anyone get something elsewhere that Premiums don't get here (although "here" might move – I'm waiting to see what they offer).  Initially, I plan on doing a more Top Trade type of thing for TST but, realistically, we'll have to see what the market responds to. 

    That's why we didn't jump right in to TST.   Originally, I was scheduled for BNN on the 27th, so I told them we'd do the Trade of the Year and thought I had plenty of time but then they bumped me to today (and I didn't object because my family already objected to the 27th) but still wanted the trade of the year and the new portfolio (their viewers are "freaking out") but TST wasn't ready really and their marketing/branding people are trying to figure out how to best use me as Maven continues to merge with TST – all very complicated and I don't really have time to deal with it so I'm just going with the flow for now. 

    Speaking of no time for things – Webinar time!  

  27. During Webinar time maybe Yodi would let me know if he uses any of the following in his armchair portfolio.  All going ExDiv tomorrow.  DUK, SJM, EXC, EMR, GLW or LLY.  Looking to add some income to my portfolios and appreciate your thoughts.  Thanks

  28. Dividends/Options – I like NLY, M and SKT for dividends.  F is good too – we should add some to the Dividend Portfolio tomorrow.

    SKT is $16 and pays $1.42 in dividends – about 9%.  You can buy it and sell the 2022 $13 puts for $2 and the $15 calls for $2.30 to net in for $11.70/12.35 so worst case is you own 2x for $12.35 less $2.84 if the dividends don't tank is net net $9.51 is the 2-year break-even and, if called away at $15, the gain is $5.49 (36.6%) – very nice.

    M is at $16 too and pays $1.51 but people are more worried about them and you can sell the 2022 $13 puts for $3.20 and the $15 calls for $3.90 so just net $8.90/10.95 is very nice less $3.02 on the dividends over 2 years is net net $5.88 and called away at $15 is 9.12 (155%), which is incredible for a dividend play!  

    NLY is already in the dividend portfolio and so is SKT and M so not adding those after all.  We're miles ahead on M, up a bit on SKT and down a bit on NLY – though they made a distribution that covers it already.

  29. Phil/F

    Good afternoon!

    So, F has trailing earnings of $0.4 last 4 quarters. Yet their dividend is $0.60 annually.

    So, the way I see it, something has to give.

    Unless there is a strong earnings growth catalyst, how can they sustain the $0.15 quarterly dividend?

  30. I can't believe we're up 100 after all that.

    • Stocks perk up into the green as Fed Chair Jay Powell testifies in Congress, stressing that current monetary policy stance is appropriate.
    • The Nasdaq, S&P 500 and the Dow each edge up 0.1%.
    • 10-year Treasury holds onto gains; yield falls 3 basis points to 1.884%.
    • The strongest S&P 500 industry sectors are utilities (+1.3%) and real estate (+1.0%), while the weakest are financials (-0.5%) and energy (-0.4%).
    • Add the political problems in Chile and other parts of Latin America to Caterpillar's (CAT -1.3%) troubles, after the company reported its three-month rolling sales growth in the region slowed to 4% in October, matching January data that was the weakest since mid-2017.
    • Latin America accounted for ~9% of CAT's revenue in 2018, according to Bloomberg, and weakness in the region accelerated the slowdown in the company's worldwide sales growth to 3%, the worst since April 2017.
    • Other three-month rolling sales data shows global resource industries rising 7%, construction industries gaining just 2%, and energy and transportation retail sales declining 4%.
    • Peloton (NASDAQ:PTON) is up 7.44% off reports the company is exploring apps for Amazon Fire TV and Apple Watch.
    • Peloton is also said to be considering selling cheaper fitness machines, according to Bloomberg.
    • Shares of Peloton are over $25 for the first time since November 4.
    • Total U.S. household debt increased 0.7% to $13.95T in Q3, up $1.3T higher, in nominal terms, than the previous peak of $12.68T in Q3 2018, according to the Federal Reserve Bank of New York's Quarterly Report on Household Debt and Credit.
    • The largest component of household debt, mortgage balances, increased by $31B in Q3 to $9.44T; balances on home equity lines of credit, which have been falling since 2009, declined by $3B this quarter, bringing the total outstanding balance to $396B.
    • Auto loan originations remained high in Q3 at $159B, a small increase from Q2 2019; mortgage orginations, which include mortgage refinancing, stood at $528B vs. $445B a year earlier.
    • Credit standards tightened slightly, with median credit score of newly originating mortgage borrowers rising to 765, a six-point increase vs. Q2; median credit score for new auto loan originations increased to 711, an 8 points higher than in Q2.
    • General Electric (GE -1.5%) is lower and the culprit may be longtime bearish J.P. Morgan analyst Stephen Tusa, who published another negative analysis of the stock, which he rates at Underweight.
    • GE has jumped more than 25% since reporting better than expected Q3 earnings on Oct. 30, which Tusa says has been propelled by "the notion that management has set a bottom on fundamentals, with the company raising guidance a sign of change in the revision trajectory."
    • Tusa disagrees with the premise, saying earnings headlines are a "small fraction of meaning when it comes to forward fundamentals," and GE is "missing guidance on core business [operating earnings] that was set in March."
    • Tusa thinks the reason for the upside forecast is lower restructuring spending, an area of improvement he does not consider a sign of a turn in GE's business fundamentals.
    • Blowout streaming subscriber numbers for Disney+ after just one day has Wedbush analyst Dan Ives considering the ramification for Netflix NFLX.
    • Ives' breakdown: "With content being king and Netflix the clear leader in streaming with ~160 million subs worldwide, the goal of Disney and Apple is clearly shaking this leadership position as we continue to believe that 10%+ of Netflix's installed base could be disrupted/higher churn by these two stalwarts entering the streaming landscape. The streaming landscape is going to also get a lot more crowded over the next 6 months with Peacock, the content rich NBCUniversal unit set to launch in April 2020 and AT&T unveiling its horse in the streaming race HBO Max slated for a May 2020 launch with higher price points ($14.99) and the Friends franchise already in tow. This does not include entrenched competitors such as Amazon Prime Video and Hulu among others already with a major presence among consumers with this cord cutting phenomenon showing no signs of slowing down."
    • Netflix bulls have been pointing out that the streamer has a game plan in hand for the new onslaught of competition.
    • As for share price, Netflix has given back a good chunk of its early 2019 gains, but is still up 7.5% YTD.
    • Walt Disney (NYSE:DIS) has legged up 1.7% after announcing that it passed 10M subscribers to Disney Plus on yesterday's launch day, passing a mark analysts had only expected by the end of the year.
    • Facing multiple reports of glitches in accessing the service on launch day, the company had pointed to demand that exceeded even its expectations as reasons for some of the troubles.
    • Disney has a five-year target of reaching 90M subscribers, at which point rival Netflix is expected to have about 300M. In Q3, Netflix claimed more than 60M paid domestic subs and more than 97M international subs.
    • Updated 12:24 p.m.: A brief dip hits Netflix (NASDAQ:NFLX), down 1%.

    • Anglo American (OTCQX:AAUKFOTCPK:AAUKY) says its majority-owned De Beers Group sold $390M of rough diamonds in its ninth sales cycle of the year, the most since June and 31% higher than the $297M sold in the previous cycle.
    • Still, it was the first time De Beers has sold less than $400M at its November sight since at least 2016.
    • With buyers growing more frustrated with the cost of rough diamonds as the price of polished gems slumps, De Beers has cut prices across the board by ~5% and is offering more flexibility to its customers, allowing them to reject some purchases.
    • "The price cut was the big story of the November sight," which boosted trade in the secondary market and made the cheapest diamonds profitable for the first time "in a long while," according to David Harari, co-founder of diamond trading platform Bluedax.
    • If Chesapeake Energy (CHK +6.4%) can maintain today's rally, a positive close would snap a six-day losing streak that has cut the stock price by more than half to as low as $0.64.
    • The company announced after yesterday's close that its second largest shareholders had distributed 310M CHK shares to the partners of funds that it manages; then Reuters reported this morning that Comstock Resources is in talks to buy CHK's Haynesville shale assets.
    • Even a fresh downgrade from Morgan Stanley says the firm expects CHK to "successfully manage" a potential break in some of its debt obligations.
    • In cutting shares to Equal Weight with a $1.25 price target, Stanley said it expects CHK to "successfully manage through the potential covenant breach in 2020, [although] it will likely require strategic action and/or waivers."
    • Tagging along for today's ride is Crestwood Energy Partners (CEQP +1.9%), which has a close customer relationship with CHK and whose units are closely correlated with CHK shares.
    • "I think the new normal now is low interest rates, low inflation and probably lower growth," Fed Chair Jerome Powell said in testimony to Congress's Joint Economic Committee.
    • Even with the lower interest on its debt, the government still needs to reduce its budget deficit, Powell said.
    • "The debt is growing faster than the economy — that's unsustainable," he said, adding that it's not the Fed's job to say how the government should cut the deficit.
    • "We need to get the economy to grow faster than the debt," Powell said, otherwise future generations will be paying more of their taxes to cover the government's debt costs than for other things like health care, etc.
    • Regarding interest rates, the futures market is expecting no change in interest rates at the December FOMC meeting. The probability of the federal funds target range staying at 1.50%-1.75% is at 96.3%, according to the CME FedWatch Tool.
    • With rates lower than they've historically been, that "leaves less room to cut in this new normal" when the next downturn occurs, Powell said.
    • Typically, in the post-war economy, the Fed has cut interest rates by close to 5% during a recession, he points out. That's one of the reason's why the central bank is reviewing its monetary policy tools.
    • Initial results of that review should be released mid-year 2020, the Fed has said.
    • 10-year Treasury holds onto gains; yield falls 3 basis points to 1.884%.
    • Update at 12:32 PM ET: When asked what fiscal policies should be focused on to support continued economic growth, Powell said, "the longer-term issues that we face," particularly "labor force participation and productivity, which is closely linked to education… those are the things that are going to matter for our children and grandchildren."
    • The hearing has concluded.

    • Jack Ma says Alibaba's (BABA -2.5%) Singles' Day performance "did not meet the expectations" he had imagined.
    • Ma partially attributes the performance to the warm weather, saying cold weather drives apparel sales, and the event falling on a Monday.
    • Related: Earlier this week, Baird noted that BABA's record Singles' Day sales reflected a "meaningful deceleration from 2018 levels."
    • Occidental Petroleum (OXY -0.5%affirms its strategic alliance with Ecopetrol (EC -0.5%) to develop 97K net acres of OXY-owned Midland Basin properties in west Texas.
    • EC, in its first foray into the Permian Basin and the U.S. onshore, will pay OXY $750M for a 49% stake in the joint venture and provide $750M in carried capital as it develops the acreage with OXY, which will operate and own a 51% interest.
    • OXY also says it had completed sales of $200M in non-core assets and will use the proceeds to pay down debt.
    • OXY says actions it already has in progress will allow it to exceed the upper end of its original $10B-$15B divestiture goal by the middle of 2020.
    • UBS is out with bullish takes on the major videogame publishers, pointing to "solid levels of demand" industrywide for the key holiday season even amid a "noisy" competitive environment.
    • It's raised its price target on Activision Blizzard (ATVI +0.6%) to $66 from $56, implying 26% upside. It's also boosted its price target on Electronic Arts (EA -0.4%) to $122 from $117, implying 27% upside.
    • It's expecting Activision's Call of Duty: Modern Warfare to sell at least 25M units, with World of Warcraft III: Reforged to hit 10M units.
    • Meanwhile, it's initiated coverage of Take-Two Interactive Software (TTWO +0.4%) at Buy, pointing to upcoming "multiple key secular tailwinds" for a company with a "proven track record" on content and capital allocation. Key catalysts include esports, Asian growth and (near term) performance of games including Borderlands 3 and NBA 2K20.
    • A $140 price target on TTWO implies 17% upside.
    • Barclays initiates coverage on U.S. specialty retail, apparel and e-commerce with an overall Neutral view, with a positive outlook on the off-price channel offsetting a negative stance on the mall sector.
    • Off-price retailers Burlington Stores (BURL -0.3%), Ross Stores (ROST +0.1%) and TJX Companies (TJX +0.1%) all earn Overweight rating. "As a group, the companies benefit from inventory dislocation and have relatively less risk of passing price through from tariffs. Of the three stocks, and despite having the highest valuation, we favor BURL given its unit growth potential and the recent appointment of Michael O’Sullivan as CEO (most recently COO of ROST)," notes analyst Adrienne Yih.
    • Mall names Gap (GPS -2.4%) and L Brands (LB -1.5%) are started off with Underweight ratings. "We see comp and EPS risk in FY20 for both," warns Yih.
    • The firm's broad look at retail also yields VF Corp (VFC), National Vision (EYE -1.5%), Ralph Lauren (RL +0.2%) and Williams-Sonoma (WSM +1%) as interesting picks tagged with Overweight ratings. Meanwhile, Wayfair (W +0.9%) is initiated at Underweight. "We expect the mix of slowing top-line on a larger base of comp sales, combined with critical spending to fuel growth, to perpetuate losses," writes Yih.
    • Nike (NKE +1.1%) is Barclays' overall top pick in retail. Yih and team highlight the company's international growth, higher margin direct to consumer growth and apparel category growth as long-term drivers. Nike is seen maintaining its low 30s ROIC and improving the direct to consumer business.
    • ArcelorMittal (MT -1.6%) trades lower despite winning an upgrade to Overweight from Sector Weight with a $21 price target at KeyBanc, seeing easing input costs helping margins vs. spot steel as well as a potential path to exit its troubled Ilva assets.
    • KeyBanc's Philip Gibbs says that following recent due diligence, including his firm's Q4 "SoS" survey, estimates rise on primary carbon sheet spreads on better mill supply discipline against easing de-stocking pressures and subdued raw materials.
    • Gibbs says Overweight-rated Nucor (NUE -0.6%) and Reliance Steel (RS +0.1%) are his favorite through-cycle investments, while MT's valuation vs. trough EBITDA has become "intriguing."
    • MT's average Sell Side Rating and Seeking Alpha Authors Rating are both Bullish, while its Quant Rating is Neutral.
    • Harmony Gold (HMY +4.3%) reports FQ1 gold production fell nearly 5% Y/Y but rose 1.5% Q/Q to 361.1K oz.
    • HMY says total gold revenue for the September quarter jumped 20% to 8B rand ($537M), as it received an average gold price of $1,449/oz. vs. $1,315/oz. received in the June quarter and $1,263/oz. in the year-ago period.
    • The miner says an unexpected geological structure at Kusasalethu meant four panels were stopped, and as a result some high grade areas were being mined at lower grades than expected; it expects Kusasalethu to be back on plan toward the end of FY 2020.
    • Production guidance remains unchanged at 1.46M oz. for the fiscal year, which ends on June 30.
    • Air fares in the U.S. fell 0.4% in October on a month-to-month comparison, according to data compiled by the Bureau of Transportation Statistics. Fares fell back after being up for two consecutive months.
    • Air fares were up 1.5% in October compared to a year ago on an unadjusted basis.
    • BTS data

  31. Options Alpha Sorry I do not have sufficient Gigs to participate in the webinar, as I am not on a home base but on travel. But yes I hold DUK in my BCS trades.

  32. But for me now at 88 good for armchair as well.

  33. F/Maya – They are making $1.25 per $8.81 share and paying out 0.60 – I don't see an urgent problem unless you know something else?   They haven't missed a payment in the last 6 years (as far back as I can see) and they've even paid a few specials.  In 2013, they paid 0.10, rising to 0.125 in 2014 and 0.15 in 2015 and on Jan 2016 they paid 0.55 and Jan 2017 they paid 0.20 and Jan 2018 0.28 so this year, with no special – it's already less than last year.

    This year they'll make more than last year and next year about the same, so I don't see a problem:

    Year End 31st Dec 2013 2014 2015 2016 2017 2018 TTM 2019E 2020E CAGR / Avg
    Revenue $m 146,917 144,077 149,558 151,800 156,776 160,338 157,978 144,094 143,269 +1.8%
    Operating Profit $m 12,791 200 6,982 5,786 4,881 3,203 1,609     -24.2%
    Net Profit $m 11,953 1,231 7,373 4,589 7,731 3,677 1,603 4,915 5,185 -21.0%
    EPS Reported $ 2.94 0.31 1.84 1.15 1.80 0.89 0.37     -21.3%
    EPS Normalised $ 1.87 -0.14 1.74 -0.028 1.65 1.27 1.30 1.23 1.29 -7.4%
    EPS Growth % +19.1         -23.2 +3.9 -2.79 +4.95  
    PE Ratio x           7.13 6.94 7.33 6.99  
    PEG x           n/a n/a 1.48 0.58

    LOL, we were talking about shorting TSLA in the Webinar and suddenly it's tanking.  

    I'm off to do Money Talk!

  34. CHK, is a bagger or a bust?….has options


    Yodi, 88!  congratulations, I know you and you don´t look like !!

  35. This is fun, compare TSLA (62.4Bn at $350/share) to F above ($35Bn at $8.80/share):

    Year End 31st Dec 2013 2014 2015 2016 2017 2018 TTM 2019E 2020E CAGR / Avg
    Revenue $m 2,013 3,198 4,046 7,000 11,759 21,461 24,420 24,341 29,811 +60.5%
    Operating Profit $m -61.3 -186.7 -716.6 -667.3 -1,632 -388.1 -14.8      
    Net Profit $m -74.0 -294 -888.7 -674.9 -1,961 -976.1 -828 -92.6 1,017  
    EPS Reported $ -0.62 -2.36 -6.93 -4.68 -7.47 -5.72 -4.78      
    EPS Normalised $ -0.62 -2.36 -6.93 -4.68 -7.47 -5.21 -4.16 -0.65 5.40  
    EPS Growth %                    
    PE Ratio x           n/a n/a n/a 64.9  
    PEG x           n/a n/a n/a 0.70

    How ridiculous is that?

    CHK/Advill – We have played with up and down success, overall, they tend to be a disappointing hold. 

  36. Facebook has shut down 5.4 billion fake accounts this year

  37. ‘They provided the entertainment!’ AOC mocks Republicans who called impeachment hearing BORING