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Thank Kudlow It’s Friday – Trade On!

Image result for kudlow crazy"Larry Kudlow says things are going great!

That's enough to pop the indexes another half a point overnight because there is ALWAYS about to be a trade deal with China and we ALWAYS celebrate it as if it's a surprise party – over and over again.   As George Orwell said:

"And if all others accepted the lie which the Party imposed -if all records told the same tale — then the lie passed into history and became truth. Who controls the past,' ran the Party slogan, 'controls the future: who controls the present controls the past. And yet the past, though of its nature alterable, never had been altered. Whatever was true now was true from everlasting to everlasting. It was quite simple. All that was needed was an unending series of victories over your own memory. 'Reality control', they called it: in Newspeak, 'doublethink'."

You need to read 1984 to understand the current political climate in the US, where the (Grand Old) Party practices constant Doublespeak and is always rewriting the past.  "If you tell a lie often enough, it becomes the truth" is another basic tenet of modern propaganda and it's no coincidence the Orwell worked for the British Propaganda Office in the Spanish Wars and WWII as he imagined a society where the truth was subject to change at the whims of whichever party controlled the media – which would become so invastive that there was a screen in every room – watching you as much as you were watching it. 

Image result for orwell quotes"Even Orwell never imagined we'd actually be forced to carry screens with us at all times AND that they would add a microphone AND a GPS tracker AND transaction tracking – so "THEY" would know what we were doing every second of every day.  Gosh, they even track our heart-rates now!

“But what is peculiar to our own age,” Orwell wrote, “is the abandonment of the idea that history could be truthfully written”; that there is a “body… of neutral fact on which neither [historian] would seriously challenge the other.” ?

So we can accept the party's lies and all be good citizens.  The good citizens of Oceana had jobs and enjoyed their rations and they hated the enemy of the moment (whoever the Government chose) and they cheered the economic reports, which always managed to beat the expectations that were lowered just before the reports came out.  It was best not to think about it.  Actually – it was a crime TO think about it...

Image result for 1984 trump"Speaking of crimes, no big excitement from the first two days of impeachment testimony.  We already know Trump did it and the witnesses are confirming Trump did it, so it's all very boring hearing different versions of how Trump did it.  

As long as they can keep us distracted with constant "trade wins" (and now the deal is broken up into 5 parts – so this will drag on for a year) – we'll always have Party victories to celebrate and distract us from any unpleasantness – untill they can spin their scandals into triumphs once again.  

It's all very fascinating to watch – I just wish it were happening somewhere else…

Have a great weekend, 

- Phil


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  1. Let's take a trip down memory lane with Kudlow:


    A trade deal has been imminent for 2 years now! 

  2. Hey Snow – looks like S. Korea didn't want to dig up dirt on Biden:

    Trump is demanding that South Korea pay roughly 400% more in 2020 to cover the cost of keeping US troops on the peninsula, a congressional aide and an administration official confirmed to CNN. The price hike has frustrated Pentagon officials and deeply concerned Republican and Democratic lawmakers, according to military officials and congressional aides. It has angered and unnerved Seoul, where leaders are questioning US commitment to their alliance and wondering whether Trump will pull US forces if they don't pay up.

    For some reasons, all these moves seem to benefit dictators!

  3. Phil/ABC

    What got wrong here? So basically it going down with canopy had some truth in there…and we thought it is overdone…


  4. Some thoughts on the trade war – not getting the anticipated results so far:

  5. StJean/bribes – Heheh! Indeed, guess this is an example for Ukraine.

    By the way, the story of the pig slaughter in Korea is of a disease passed by ticks from Korean wild boars, and by close quarters in pig farms. A major part of the problem is the previous century's slaughter of the great Korean tiger, largest sub-species of the animal (

    With the tigers gone, there's nothing that can kill the Korean wild boar, and they're proliferating all over the peninsula. Fun Fact: they also carry Japanese B Encephalitis, transmissible to humans through mosquitoes.

  6. So many unintended consequences of our actions Snow!

  7. And it's going to get worse since kids will be able to quote alternate science:

    On Wednesday the Ohio House of Representatives passed the “Student Religious Liberties Act,” a law prohibiting students from being penalized when their work is scientifically incorrect so long as they attribute it to their religious beliefs, a local news outlet reported. Rather than using silly metrics based on logic and demonstrable facts, teachers should instead grade students on “ordinary academic standards of substance and relevance” in these cases according to the bill. It doesn’t elaborate on how to parse that brazenly doublespeak decree.

  8. Good Morning!

  9. Hope you guys took up on my CSCO play yesterday!!!!

  10. The latest economic picture – not super numbers anywhere:

  11. And compare these numbers to what markets are doing:

  12. Phil / Markets – It feels like the markets have run up above where even a really positive Phase one deal would be a let down….  I only see them agreeing to the following key terms – buying farm goods in the 25 to 35B per year nowhere close to the 50B / year trump has indicated, Currency manipulation clause, open Financial sectors and maybe something in the area of tariff relief which is no gain since they are only walking back tariffs that were retaliatory in nature.  Trump would walk back Sept tariffs and maybe kill or postpone December tariffs and possibly lower the 25% tariffs to something lower….  This would probably cause a retreat….  If Huawei is given a reprieve this would be huge in tech but I think this is a bargaining chip….   

  13. Good morning!  

    ACB taking a dive, down 15% but at least they were a penny stock when they started (0.30) so $2.75 isn't the end of the world – they just got caught up in the madness and hit $10 last year.  In reality, $2.75 is $3Bn and they sold $56.8M worth of product and made $10M so $40M a year is not justifying $3Bn and they are retreating from growth projects – so won't turn around too quickly but if they stop spending and sell $200M in product, they should make $50-60M and can easily double from there by 2022 so it's an aggressive valuation – but one they can grow into.

    The ACB 2021 $3s are still 0.75 but the Jan $3s are already 0.30 so net 0.45 is down 0.08 from our 0.53 entry – that's why I liked that spread so much.  The 0.75 sure won't become 0.45 but those short calls will sure go worthless so all we have to do is wait for Jan and then sell another batch of short calls (or cash out if we don't like it) – no need to adjust as the moment as the results give us no reason to press the $1,550 we put into the thing (now $1,350).

    The STP is pretty empty and we sold $1,300 worth of calls on this round and could sell $5,200 more (4x) next year so that's a pretty good use of our $1,350 for the moment.  There's no Aprils yet but the March $3s are still 0.45 and we sold the Jans for 0.52 so not much of a bounce and we'll get that price again.

    That was the point of that trade, the risk was relatively low and there were many ways to win.

    1,600 rejected yet again on /RTY – makes a good short with tight stops if you are brave.  

    Big Chart – NYSE still rejecting as well. 

    Imminent/StJ – Check this out:

    Kudlow is effective.

    SoKo./StJ – So there's no moral imperative here – this is all about money?  America doesn't actually care what actually happens in South Korea – we either get paid or we don't?  WTF kind of foreign policy is that?  And, while I do understand that there may be a contribution component from SoKo – there is no serious deal between parties where a sudden 400% increase is considered reasonable to ask for if you are seriously trying to address an imbalance while maintaining a partnership.  SoKo is 1/15th the size of the US and Trump wants $4.7Bn so that's like someone coming to the US and saying "Pay us $70Bn or else!"  Meanwhile, $70Bn is 10% of our entire military budget – seems excessive….

    In the US, congressional aides and Korea experts familiar with the talks say the President's $4.7 billion demand came out of thin air, sending State and Defense Department officials scrambling to justify the number with a slew of new charges that may include Seoul paying some costs for US personnel present on the peninsula and for troops and equipment that rotate through.

    North Korea has already launched 24 missiles this year, each a violation of UN resolutions, to match the country's previous annual record for firing off projectiles that threaten South Korea and Japan, according to Bruce Klingner, a senior fellow at the Heritage Foundation.

    That's being driven in part by US acquiescence to North Korea's missile launches, which "is raising angst… about whether the US is a reliable ally," Klingner said. "The exorbitant push to further increase the US demand for the cost of stationing US forces overseas is adding to that."

    So it's an extortion scheme.  Trump allows NoKo to violate the treaty and threaten SoKo and then asks SoKo for protection money….   SMART!  

    Also, imagine the shock other countries must have at the "cost" of paying for our military – by far the most expensive in the world on a per-soldier/per-item basis. 

    Image result for us military cost per soldier vs world"

    Image result for us military cost per soldier vs world"

    Image result for us military cost per soldier vs world"

    Image result for us military cost per soldier vs world"

    ACB/Pat – Nothing really "wrong" – too many companies competing in Canada who thought they'd be able to sell to the US by now so there's an over-supply and, in Canada, they have been very slow to permit dispensaries so they are not even getting the projected throughput in Canada (we have a similar problem in CA with only 600 dispensaries open out of 2,200 licenses that are supposed to be approved).  Also, illegal selling is still a big problem.  I don't know Canada numbers but in CA it's $3.1Bn legal and $8.7Bn illegal at the moment.  Anyway, nothing that wasn't expected by insiders and ACB is bouncing back pretty fast as they took sensible steps to address the issues.  

    Tigers/Snow – What a shame.  Great example of unintended consequences.  

    And what StJ said!

    Religious Liberties Act/StJ – I love it!  Wish I could have used that in Biology class:  "No I cannot name all the parts of the Endochine System as it conflicts with my religious beliefs."  

    CSCO/Yodi – Good bottom call!


    Csco even buying the stock is not a bad deal but better start with selling puts on top they pay 3.12%

    Buy the stock and sell the Jan 21 43put for 4.35 and wait to sell the call.

    November 14th, 2019 at 11:38 am | (Unlocked) | Permalink

    Csco for those who played Entered the stk at 44.65 and 44.70 and the put Jan43 for 4.35

    Numbers/StJ – Without China the World would be in very sad shape and we're messing with China!

    Farm/Batman – It was never going to be $50Bn a year.  I had noted before that China's farm purchases are off $25Bn this year so just going back to normal is what Trump will call $50Bn over 2 years and a "HUGE victory".  I very much doubt there will be any substantial currency deal in this stage but they will be opening up more foreign investment (as they planned to do anyway).  I think we have to give them Huawei or China will walk.  

  14. 5 points on /RTY is $250/contract - protect that gain on a Friday!

  15. SoKo military/Phil – what's frustrating is that Korea already is paying a huge chunk of the US costs, and when you factor in the price of the real estate the US bases are sitting on, it's ridiculous.

    And what Trump apparently doesn't realize is that the biggest base in Korea (also the biggest US base in the world) is aimed straight at China, not the DPRK (

  16. Why Dropbox Stock Is Struggling

  17. The worst isn’t over yet for Kraft Heinz

  18. Capitalism on Trial in Chile

  19. BHC – Still running.  Looking spiky.

     Closed out 1/3.

  20. Has anyone else had this rejected order appear on TOS when closing a deep in the money spread: Rejected-  limit price exceeds strike-difference? I have never had it happen before.

  21. SoKo/Snow – They should tell Trump to take his toys and go home.

    Wow, 27,900 on the Dow, 3,115 on /ES/RTY popping right back to 1,600.  

    Dollar has been helping:

    Empire state manufacturing weaker than the consensus

    • Nov. Empire State Manufacturing Survey+2.9 vs. +5.0 consensus, +4.0 prior.
    • New Orders: +5.5 vs. +3.5 prior.
    • Shipments: -4.2 vs. +13.0 prior.
    • Number of employees: +2.8 vs. +7.6 prior.
    • October Retail Sales: +0.3% M/M vs. +0.2% consensus; -0.3% prior.
    • Retail Sales (less auto): +0.2% M/M vs. +0.4% consensus; -0.1% prior.
    • Core Retail Sales: +0.1% M/M vs. +0.3% consensus; -0.1% prior (revised).
    • Retail sales control group: +0.3% M/M vs. +0.4% consensus; -0.1% prior.
    • October Import/Export Prices: Import prices index -0.5% M/M vs. -0.2% consensus and +0.1% prior (revised).
    • Export prices -0.1% M/M in-line with consensus and -0.2% prior.
    • September business inventoriesflat to $2,041.5B vs. consensus of +0.1% and -0.1% prior (revised).
    • Sales -0.2% to $1,459.4B (M/M)
    • Inventory/Sales ratio 1.40 vs. 1.36 (Y/Y).
    • October Industrial Production: -0.8% M/M to 108.7 vs. -0.4% consensus, -0.3% prior (revised).
    • Capacity Utilization 76.7% vs. 77.2% consensus, 77.5% prior.
    • The Baltic Dry Index fell 0.5% to 1,357 points in London. The BDI now stands about 46% below the 52-week high of 2,518 points struck just 13 weeks ago as lower demand for iron ore and coal shipments continues to impact rates.
    • Panamax rates fell 1.69% to lead the index lower today after Capesize rates edged out a small gain.
    • As political unrest grips the territory, Hong Kong forecast GDP will contract 1.3% in 2019, marking the first annual contraction since the global financial crisis a decade ago.
    • Anti-government protesters paralyzed parts of the city for a fifth day on Friday as university students barricaded campuses and authorities struggled to calm the violence.
    • The U.S.-China Economic and Security Review Commission also said Congress should enact legislation that would suspend the special economic status Hong Kong enjoys under U.S. law should China deploy forces to crush the demonstrations.
    • Hang Seng flat at 26,327.

    Trump set to announce updated hospital/insurer transparency rule today

    • Hospital operators and health insurers may experience volatility today when the Trump administration releases its updated price transparency rule at 2 pm ET.
    • On November 3, the White House announced that it was postponing implementation to allow time to include the latter.
    • Hospital groups vociferously oppose the rule, aimed at driving costs down, citing the "trade secret" nature of negotiated rates with payers.
    • Selected tickers: Humana (HUM +0.3%), Universal Health Services (UHS +0.2%), Tenet Healthcare (THC +0.4%), HCA Healthcare (HCA -0.1%), Community Health Systems (CYH +3.1%), UnitedHealth Group (UNH +0.3%), WellCare Health Plans (WCG -0.2%), Molina Healthcare (MOH +0.6%), Cigna (CI +0.2%), Centene (CNC -0.3%), Anthem (ANTM -0.6%), CVS Health (CVS +0.6%)
    • Wheaton Precious Metals (NYSE:WPM+2% after-hours as it meets expectations for Q3 earnings and raises FY 2019 gold production guidance.
    • Q3 operating cash flow increased 31% Y/Y to $142M, resulting in a 107% gain in adjusted net earnings to $72.7M.
    • WPM says Q3 attributable gold production slipped 2% Y/Y to 104.1K oz. but it remains on track for record annual gold production in the full year; silver output rose 9% to 6.1K oz., and gold equiv. production gained less than 1% to 184.8K oz.
    • Q3 averaged realized gold price jumped 21% Y/Y to $1,471/oz. while the average silver price climbed 15.5% to $17.09/oz.
    • For the full year, WPM raises gold production guidance to 390K oz. from 385K oz. previously, due to continued outperformance primarily from the Salobo mine, while its silver production guidance is lowered to 21M oz. from 22.5M oz. to reflect production interruptions at the Peñasquito mine.
    • Volkswagen (OTCPK:VWAGY +0.9%) unveils plans to ramp up spending on electric and hybrid vehicles and digitalization, earmarking ~€60B ($66B) in investments over the next five years.
    • The company says the figure represents more than 40% of its total investments in property, plant and equipment and all R&D costs during the planning period.
    • Volkswagen says €33B of the total is intended for electric mobility alone.
    • "Hybridization, electrification and digitalization of our fleet are becoming an increasingly important area of focus," CEO Herbert Diess says, adding that the company plans to take advantage of economies of scale and achieve maximum synergies.
    • Volkswagen also is seeking to increase productivity, efficiency and cost base "in light of the worsening economic situation," Diess says.

    William Blair the latest to talk up Beyond Meat-McDonald's potential

    • Beyond Meat (NASDAQ:BYND) opens with a 0.55% gain on more chatter about a national roll-out at McDonald's.
    • This time around it's William Blair talking up the potential for a Beyond Meat menu item at McDonald's globally. Other investment firms have mentioned over the last several weeks the possibility of a global partnership.
    • McDonald's is currently testing Beyond Meat menu items at some locations in Ontario.

    Retail sales show pockets of strength

    • Retail sales bounced back in October after a disappointing tally in September, showing a 3.7% Y/Y gain when the auto and gas categories are backed out.
    • The category that captures e-commerce sales sizzled with a 14.3% Y/Y jump in October, while grocery stores (+0.4% M/M, +3.4% Y/Y) and motor vehicles (+0.5% M/M, +4.5% Y/Y) also outperformed.
    • Laggards during the month included electronics stores (-0.4% M/M, -3.4% Y/Y) and furniture/home furnishing sales (-0.9% M/M).
    • Economists say the mixed report shows underlying consumer strength offset in certain categories by the impact of tariffs on pricing.
    • Previously: Retail sales on solid ground in October (Nov. 15)
    • Nordstrom (JWN -1.1%) expands its partnership with Rent the Runway in a collaboration that will run across stores, inventory innovation and product development.
    • Rent the Runway drop boxes will be placed in 30 Nordstrom stores after initially being set up at five locations.
    • Nordstrom says it will also become an Rent the Runway platform partner, contributing inventory to the RTR ecosystem to extend the lifecycle of Nordstrom products. Nordstrom and Rent the Runway are also studying opportunities to "empower" customers' shopping experience by creating exclusive product available for both purchase and rental.
    • Rent the Runway is one of the best known of clothing rental upstarts. Earlier this year, Rent the Runway landed a +$1B valuation in a funding round.

    J. C. Penney Company (NYSE:JCP+10% after Q3 results.

    RH (NYSE:RH+7% as Berkshire Hathaway takes stake in the company.

    • Under Armour (UAAUA) pushed early shipments and dumped goods at off-price chains in order to make the company's quarterly numbers, reports The Wall Street Journal.
    • "Shipping plans in the final days of the quarter sometimes contradicted the dates on the boxes, and truckloads of unopened boxes would come back to Under Armour," sources tell the WSJ.
    • The former execs say the tactics were used to help extend a long streak of UA reporting 20% sales growth. That streak finally came to a crashing halt in 2016.
    • Shares of Under Armour are down 0.70% in premarket action to $17.00.

    Nvidia targets raised after Q3 beats

    • Bank of America (Buy) raises its Nvidia (NASDAQ:NVDA) target from $250 to $275 and keeps the company as their top large-cap pick.
    • The firm sees NVDA as uniquely positioned to re-accelerate in existing markets while expanding into new markets, including edge computing, 5G, and advanced auto.
    • The bank praises NVDA's solid Q3 results and notes that the downside sales outlook was likely due to gaming seasonality. BofAML notes that data center sales are re-accelerating and gross margins continue to expand.
    • Cowen (Outperform) lifts NVDA from $195 to $240. The firm says the report indicated a return to normalized growth in gaming and data center.
    • The firm sees an attractive set-up into FY21 when the 7nm product cycles and Mellanox (NASDAQ:MLNX) could move estimates materially higher.
    • NVDA shares are down 0.1% pre-market to $209.51.

    Image result for who's watching the watchmen"

    • Google (GOOG +1.6%)(GOOGL +1.6%) abruptly canceled a project with the NIH in 2017, according to The Washington Post sources.
    • The project ended right before Google was set to publicly post 100K NIH-provided images of chest X-rays. The NIH called and said some of the images still contained information that could identify the patients.
    • Sources say that Google researchers, while planning the project, didn't obtain legal agreements covering patient privacy.
    • In other Google news, a WSJ investigation found the company has "increasingly re-engineered and interfered with search results to a far greater degree than the company and its executives have acknowledged."
    • The WSJ says the actions are often due to pressure from businesses, interest groups, and governments.
    • More than 100 interviews and WSJ testing showed algorithmic changes to favor big businesses, engineer adjustments to information in auto-complete boxes and news results, and blacklisting certain sites separate from those required by law or efforts to curb spam sites.
    • Videogame sales overall dropped off again year over year in October, but against the toughest comparison.
    • Sales fell 34% overall, to $1.03B, according to NPD Group. But October 2019 was the second-best October this decade, trailing only last October's record-setting $1.57B, the firm says.
    • That's due to the now-typical drop in hardware as this console generation ages, along with fewer blockbuster software releases this go-round. Hardware sales fell 41% to $182M; software sales dropped 37% to $620M; and accessories/game card sales dropped 16% to $231M.
    • Year to date, overall spending is off 10% from last year.
    • Nintendo Switch (OTCPK:NTDOY) is again the only hardware platform with gains for October or for year-to-date; it's still the best-selling platform for 2019 vs. the older Xbox One (NASDAQ:MSFT) and PlayStation 4 (NYSE:SNE).
    • Call of Duty: Modern Warfare (NASDAQ:ATVI) debuted atop the software dollar sales chart, outperforming The Outer Worlds (NASDAQ:TTWO) and Luigi's Mansion 3 (OTCPK:NTDOY). The new CoD also becomes 2019's best-selling game.
    • Rounding out the software top 10: No. 4, Madden NFL 20 (NASDAQ:EA); No. 5, NBA 2K20 (TTWO); No. 6, Tom Clancy's Ghost Recon Breakpoint (OTCPK:UBSFY); No. 7, WWE 2K20 (TTWO); No. 8, FIFA 20 (EA); No. 9, Borderlands 3 (TTWO); No. 10, Ring Fit Adventure (OTCPK:NTDOY).
    • Netflix (NASDAQ:NFLX) Chief Content Officer Ted Sarandos says he was surprised that it took so long for Disney (NYSE:DIS) and other media giants to emerge as streaming competitors.
    • "We figured at some point everybody would get into this," observes Sarandos.
    • Looking ahead, Sarandos envisions an environment where Netflix will rely on its own content completely, instead of licensing programming. That expectation explains the huge push by Netflix into developing original series and movies.
    • Shares of Netflix are up 0.44% premarket to $290.89.
    • Fox Corporation (FOXFOXA) has already sold 78% of its Super Bowl ad inventory with prices ranging from $5.5M to $5.6M for 30-second spots, according to Adweek.
    • The network sold all of its "A" slots positioned at the beginning of advertising breaks and is easily ahead of last year's pace of overall sales.
    • Fox deserves some credit for the sales blitz after strategically working with the NFL to shift the number of advertising breaks per quarter to four from five. The contraction of "A" slots created urgency in the market and led to more ad sales going off early at higher rates.

    Piper raises Apple on iPhone upgrade rates

    • Piper Jaffray maintains an Overweight rating on Apple (NASDAQ:AAPL) and raises the target from $270 to $290, citing a survey of U.S. iPhone users.
    • The survey showed "solid upgrade rates," which could signal a potential FY20 iPhone revenue upside. Piper previously forecast flat Y/Y growth for the segment.
    • Piper says Apple "is in the midst of a perfect storm" due to iPhones performing at or better than expectations, upside Wearables and Services growth, and the anticipation for the 5G iPhones expected next year.
    • Apple shares are up 0.4% pre-market to $263.55.
    • The company has a Bullish average Sell Side rating.

  22. BHC/Albo – Crazy run.

    ToS/Willsons – That's a new one to me but I tend to do individual legs, not spreads.  

  23. /CL and /NG up nicely today.

  24. Stone verdict is in:

    Image result for doonesbury guilty guilty guilty"

    All 7 felony counts!  

    That means Trump lied to Meuller that he wasn't involved in conspiracy with Stone to hack Clinton campaign.  It's almost like they read the Watergate script and purposely tried to duplicate it…

    No effect on the market, however…

  25. Tos/Wilsson -

    You will get that message when you try to close a spread for more than difference in strike prices.  It won't let you – If you want to try that you will need to take a chance and close each leg separately.

  26. GOLD/Phil
    Hi Phil,
    Yesterday you recommended this trade:

        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)

    Earlier this year I bought 20 GOLD Jan '21 17($3.46)/25($1.22) bull
    call spreads, and sold 10 $17 puts at $2.35. I'm thinking I should
    roll the $17 calls. I would appreciate suggestions. Thanks.

  27. Can't wait to see Stone in an orange jumpsuit. Will be pardoned I am sure though!

  28. Rats back out of the ship at ACB – what a ride!

    GOLD/Sag – At the moment, the net ($2.24) is adequate for the risk/reward.  The problem is your target is unrealistic and I'm way, WAY more likely to make $4 than you are to make $5.76.  In fact, I make $2 at $19.74 by the time you get your first penny in profit (on just the spread).  Not sure when you bought the spread but you HAVE to roll down when it's cheap to do so or why be in the position?  

    Image result for goldmember animated gif"Your current net is net $1.065 per long and the 2022 $13s are $5 and your 2021 $17s are $2.30 so adding $2.70 to the cost is a lot.  I wouldn't do that without rolling the short 2021 $25s at 0.60  to the 2021 $17s at $2.30 as that's net $1.70 towards the roll which puts you in the 2022 $13/2021 $17 bull call spread for net $2.065 and the 2022 $20 calls are $2.10 so that's your likely roll and that will eventually either knock another $1 off the net of the spread or, if GOLD is taking off – what do you care as you'll be getting $7 back at $20?

    Stone/StJ – Trump should pardon him quickly to set an example for others to follow.  Stone's been a good boy and hasn't said a word against Trump – he needs a dozen guys like that to take the fall for him.

    • Baker Hughes (BKR +3.6%) rallies after Susquehanna upgrades shares to Positive from Neutral with a $27 price target, ticked up from $25, forecasting compelling earnings growth through 2021 with double digit annual growth in free cash flow.
    • Susquehanna analyst Charles Minervino notes a strong backlog of work in the long cycle Turbomachinery and Process Solutions and Oilfield Equipment businesses.
    • Earlier this week, BKR broke ground on its first chemicals manufacturing facility in Saudi Arabia.
    • BKR's average Sell Side Rating is Bullish, while its Seeking Alpha Authors Rating and Quant Rating are both Neutral.
    • The Supreme Court will hear a dispute between Oracle (ORCL +0.5%) and Google (GOOG +1.3%)(GOOGL +1.4%) that stretches back nearly a decade.
    • Oracle sued Google in 2010 for violating copyright law by using Java in its Android operating system.
    • Google won two lower court victories and then lost an appeal before the U.S. Court of Appeals last year.
    • Oracle has previously said it wants $9B in damages.
    • A Supreme Court decision will come before next July.
    • The SEC's enforcement division is examining WeWork's (WE) business and investor disclosures to determine if the company violated financial rules in the period leading up to its failed IPO, according to Bloomberg sources.
    • The preliminary review might not lead to an enforcement case.
    • Sources say WeWork has retained lawyer Andrew Ceresney, the former head of the SEC enforcement unit.
    • Cancellations of Boeing's (BA +1.3%) 737 MAX flights are extended until March 4 by United Airlines (UAL +0.4%), making it the latest carrier to withhold the aircraft from scheduling until early March.
    • American and Southwest last week announced extended cancellations through early March.
    • United previously canceled MAX flights through early January, and the new timeline would lead to more than 8,500 flights being canceled between November and the first few days of March.
    • The March date would mark nearly a year since regulators around the world issued a safety ban on the MAX following two fatal crashes.
    • Warren Buffett's Berkshire Hathaway (BRK.ABRK.B13F stock portfolio value grew 3.1% Q/Q to $241.67B as of Sept. 30.
    • Occidental Petroleum (NYSE:OXY) RH were notable positions, while Red Hat (NYSE:RHT) was a notable exit.
    • Reduced stakes include Wells Fargo (NYSE:WFC), Phillips 66 (NYSE:PSX), Sirius XM Holdings (NASDAQ:SIRI).
    • Top 5 holdings – Apple (NASDAQ:AAPL), Bank of America (NYSE:BAC), Coca-Cola (NYSE:KO), Wells Fargo, American Express (NYSE:AXP) – account for 65.95% of the portfolio.
    • The total count of active drilling rigs in the U.S. declines for the fourth consecutive week and the 11th time in 12 weeks, sliding by another 11 rigs to 806, according to the latest Baker Hughes survey.
    • The oil rig count sheds another 10 to 674 and gas rigs lose one rig at 129, while 3 rigs are classified as miscellaneous.
    • WTI December crude is little changed by the data, +1.7% to $57.74/bbl.

  29. Did I not mentioned OXY the other day?

  30. Stone / Phil – The only small problem though is that if I understand correctly (I am not a lawyer), you could not pardon someone who could implicate you in a criminal activity.

  31. TEVA trading in double digits on JNJ opiod liability ruling.



  32. Another one for the Dividend Portfolio:

    China Mobile is way too cheap to ignore at $39, which is $159Bn and they pay a lovely $1.95 dividend, so 5% at the moment.  Even when you divide by 7 yuan to the Dollar – it's a lovely $105Bn in Revenues and $15.5Bn in profits that are stable, not growing but the p/e is 10 and I don't mind paying that for stability.  Most likely, if not for the trade war – they'd be up 10% from here.  

    Year End 31st Dec 2013 2014 2015 2016 2017 2018 TTM 2019E 2020E CAGR / Avg
    Revenue CNYm 630,177 651,509 668,335 708,421 740,514 736,819 734,414 746,430 767,760 +3.2%
    Operating Profit CNYm 135,649 117,320 102,922 118,088 120,126 121,387 111,457     -2.2%
    Net Profit CNYm 121,692 109,218 108,539 108,741 114,279 117,781 108,203 107,609 110,151 -0.7%
    EPS Reported CNY 29.9 26.8 26.5 26.6 27.9 28.8 26.4     -0.8%
    EPS Normalised CNY 30.3 27.5 25.0 27.8 30.3 29.0 26.8 26.3 26.9 -0.9%
    EPS Growth % -6.2 -9.2 -9.0 +11.2 +8.7 -4.3 -13.5 -9.26 +2.24  
    PE Ratio x           9.50 10.3 10.5 10.2  
    PEG x           n/a n/a 4.67 5.29

    For our dividend plays, we value stability over growth and we've been loving CHL all decade when they hit the low $40s so no reason to pass this up and we will start with (they only have June contract lengths):

    • Buy 500 shares of CHL at $39.09 ($19,545) 
    • Sell 5 CHL June $37.50 calls for $3.20 ($1,600) 
    • Sell 5 CHL June $42.50 puts for $4.30 ($2,150) 

    That's net $15,795 and we get called away at $18,750 for a $3,000 (19%) gain in 7 months, but we'll certainly look to roll and keep things going.  It's an aggressive put sale but net $38.20 is a price I don't mind paying to be in 2x so I'd rather do a smaller 500-share start with the aggressive puts than 1,000 shares selling the $37.50 puts for $1.40.  

    Meanwhile, we should catch a $1 dividend in May (only twice a year, May/Sept) for another $500 (3%) so a very nice 7-month return of 22%.  Margin on the short puts is just $3,913.24 – so an efficient trade too! 

  33. TEVA / Albo – At this time I'll take anything positive until I can unload them either called away or simply take my losses.

  34. STJ – I hear you ! 

    It's been a struggle.

  35. TEVA/Albo – Nice recovery on them.

    TEVA – Still a bit early but I guess they'll survive and they are priced not to.

    You can sell 5 TEVA 2022 $7 puts for $2.60 ($1,300) and buy 20 of the 2022 $5 ($4)/12 ($1.85) bull call spreads at $2.15 ($4,300) for net $1,700 on the $14,000 spread so $12,300 (723%) of upside potential if TEVA can get back to $12 and you are starting out $4,000 in the money.  Worst case is you end up owning 1,000 shares of TEVA for $7,000 + the lost $1,700 so net $8.70 ($8,700) so it makes a pretty efficient play – even if it's for an IRA.

    That's the kind of play we build a portfolio with because, if it goes well, we make 12.3% of a $100,000 portfolio on the one trade and, realistically, we don't expect we're risking much more than $4,000 before we'd give up so it's well worth an allocation block (and we don't mind owning TEVA for the very long-term) and very little cash or margin commitment means we have more firepower to allocate to other trades.

  36. Nice trade, Phil !

  37. Nice 200-point gain to finish the week on a high note.  /RTY still not over 1,600 for some reason and NYSE at 13,486 – what a tease!  

    Have a great weekend, 

    - Phil

  38. At this point, not worried about TEVA going away. They have the Israel put below them.. But man, this has been a brutal ride.

    TEVA Teva Pharmaceutical Industries Limited monthly Stock Chart

  39. GOLD/Phil – Once again, thank you!

  40. Regarding Roger Stone: I think the issue is the pardon prevents you from taking the 5th since you have no risk associated with your testimony.  You can sing away with no risk of prosecution.  If Roger Stone is pardoned, he can be compelled to testify in any case in which he has knowledge.  He refuses to testify and he is committing other felonies for which he can go down.

  41. You’re welcome, Saguaro!

    Good point, JPH –  I forgot how tricky it illegal conundrums can be.  

  42. Trump Betrays the Military

  43. Trump’s Impeachable Tweet

  44. Trump ignores Pentagon advice and intervenes in military war crimes cases

  45. 2 people shot as gunfire breaks out at a high school football game in New Jersey

  46. Trump Retreats From Flavor Ban for E-Cigarettes

  47. The party of lying liars

  48. WeWork May Lay Off Thousands