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Tumblin’ Tuesday – Trade Off (Again)

Image result for wayne's world game off"Game off!

That's all it takes to erase half of November's gains in 24 hours (the Dow Futures are off another 200 points this morning).  Volume in yesterday's down day was double the average day in November and, other than November 20th, when the Dow dropped 50 points – it was more volume than any day in November as well.  

This is not a good way to start the month – especially when last December, the Dow dropped 4,500 points into Christmas.  So far, this is only 400 points yet most traders have already forgotten what happened last Christmas and are trading like the markets only go up and up and up – buying stocks at ridiculous multiples in hopes that someone even stupider will come along and buy it from you at a later time – but what if that time never comes?  Then you are the greater fool!  

We were bored waiting for the sell-off so we initiated some small portfolios, using just a small percentage of what we cashed out with in September but, if we drop another 500 points on the Dow and fail to hold 27,000 and fail to hold 3,000 on the S&P – I think we may have to close those down already and wait until we find a proper bottom to get back in.  

Trump is at the NATO meeting – which means he's not meeting with China or his handlers in Russia – so a mixed blessing there but there's a looming Dec 15th deadline on trade and no progress is being made and that is spooking investors.  Trump also has no friends at the NATO meeting – even Boris Johnson won't talk to him as he's facing an election and people already think he's "too Trumpy."

Trump was as Trumpy as Trump could be today, proposing 100% tariffs on $2.4Bn of French imports like cheese and wine in retaliation for France's Digital Service Tax – which is not aimed at the US but affects US companies (along with all others) but then Trump said HE should be collecting Digital Taxes – so his move didn't improve Tech at all.  

“People take advantage of American companies, if anyone is going to take advantage of our companies it’s us,” - Trump

Trump wasn't done though as he also said "In some ways, I like the idea of waiting until after the election for the China deal."  WTF?  Haven't they been saying for a month a deal would be signed any day?  Now it's "after the election" NEXT Novemember?!?  Clearly Trump has been lying to us (big surprise) and they were never close on any kind of deal so now he's acting like it's his idea to wait until he's done defeating the evil Democrats or whatever he imagines in his head.

What this is really about is Trump wanting to keep his tariff money slush fund – so he can dole out cash to his constituents, hoping to buy the votes he needs to make it not so obvious that Russia will have to manipulate a lot more voting machines to get him elected this time.  Meanwhile, the clock is ticking fast as Trump is scheduled to add tariffs to $160Bn more Chinese Goods on Dec 15th – really ruining Christmas for the Americans who end up paying those taxes.  

Image result for trump false misleading lies"As noted in the Washington Post:  "Chinese officials have never confirmed an agreement was imminent and have said the talks remain ongoing. Trump’s comments Tuesday suggest a deal could be further off than he has recently claimed."  That's something I've been telling you during this whole BS rally – you can't buy based on rumors, that's not investing – it's gambling.  Even worse, how ridiculous to buy based on rumors from a guy who has lied to us a VERIFIED 15,000 times since taking office less than 3 years ago.  That's 5,000 lies a year and we choose to believe he's making a deal with China?  Seriously?

Fortunately, we just reviewed our Portfolios last week so we can benchmark how much damage this little sell-off is doing.  We should test 2.5% pullbacks today and those will be:

  • Dow 28,000 (high) – 27,300 (2.5%) – 26,600 (5%) 
  • S&P 3,1503,075 - 3,000
  • Nasdaq 8,5008,3008,100 
  • NYSE 13,600 – 13,250 – 12,900
  • Russell 1,6501,6101,570

If we lose another 2.5% line, we can expect all the indexes to hit those levels so watch the NYSE closely.  We caught a 100-point drop in the Nasdaq (/NQ) yesterday in our Live Member Chat Room at 10 am, that was good for intra-day gains of $2,000 per contract at 8,300 but we're already below 8,200 now and I said at the time:

20% line on /ES is 3,120 so we'll see if that holds up on the Big Chart and rejected right at the 30% line on /NQ (8,450) is interesting so let's consider the pullback:

So clearly we're off a run from 7,500 but there was consolidation at 8,000 so we need to run both sets but I'll save time and say the strong pullback from 8,000 – 8,500 would be 200 points and the weak pullback from 7,500 to 8,500 would be 200 points – both to 8,300 so THAT is the line we expect to be tested but, of that fails, then we've failed to support 8,000 and we look for 8,100 to hold and, if not, we have to question the validity of the whole move over 8,000 as maybe just a spike in the grand scheme of things. 

The trick is to watch what kind of bounces we get off those 2.5% lines – that will tell us if our next bets on the indexes should be bullish or bearish but I have a feeling the White House will at least try to walk back Trump's comments before the S&P (/ES) fails that 3,000 line and 1,585 has been very bounce for the Russell (/RTY) – so it's a great place for a bullish bet with tight stops below.  

At least it's an interesting week!  


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  1. Phil/CLF

    Your opinion on CLF buying AK Steel (all stock deal).

  2. It was bound to happen since I added new lines yesterday :-)

  3. Trade / Phil – And I am sure Trump's friends have been shorting the market in anticipation of the bad news and nothing will happen. For the rest of the traders, when are people going to learn than 100% of what comes out of this White House is either alternative facts, lies or Putin's talking points! How can you even invest in this environment! Don't people realize that assets lose values when the people in charge have no values as well?

  4. Markets are overpriced relative to growth:

    Stocks have surged alongside slow economic growth

    It’s more or less a bull-market tradition to peek at growth estimates right around Thanksgiving and declare the rally in stocks doomed. In the current version, the S&P 500 is up 24% ahead of a year in which gross domestic product isn’t expected to crack 2%. Divergences like that are symptoms of euphoria that investors always regret.

  5. Good Morning!

  6. Good morning!

  7. VIX up another 18% today! Good time to sell some VXX premium again.

  8. stjean/vxx    which one do you like 

  9. VXX / Stockbern – Right now, selling the Jan 21 35 strikes. Just sold a couple right now to keep me busy. Overall, I try to sell at least $2.50 of premium and the 35 strike is super safe IMO.

  10. Stj/VXX

    What is the margin that is put against each one.. I mean in ordinary margin account? in my account it is taking around $500 for each one of those.


  11. Good morning! 

    CLF/DC – Damn, I don't like it and neither do the shareholders (down 12.5%).  They are not paying much more than AKS's yesterday $900M so a $200M premium isn't terrible but I don't think it's the kind of market to take on integration costs and the usual charges that will come with layoffs and divisional shuffling.  Still, I see CLF's point as AKS is half of what they were 2 years ago while currently dropping $110M to the bottom line but next year they have to do CapEx, so making much less ($36M) is planned and that will drag down the combined earnings (and CLF plans to spend too) to about $270M on what is now a $3.5Bn company so the merger effectively takes 2 10x companies and turns them into one 13x company.  It's not terrible but there's nothing here so exciting that I'd want to pay 30% more for the combined entity. 

    Year End 31st Dec 2013 2014 2015 2016 2017 2018 TTM 2019E 2020E CAGR / Avg
    Revenue $m 5,570 6,506 6,693 5,883 6,081 6,818 6,591 6,392 6,254 +4.1%
    Operating Profit $m 135.8 139.4 -211.2 217.6 260.2 364.4 285.4     +21.8%
    Net Profit $m -46.8 -96.9 -509 -16.8 103.5 186 98.6 110.2 36.3  
    EPS Reported $ -0.34 -0.65 -2.87 -0.073 0.42 0.57 0.32      
    EPS Normalised $ -0.34 -0.65 -1.68 -0.073 0.58 0.57 0.49 0.37 0.13  
    EPS Growth %           -0.9 +4.3 -35.7 -64.7  
    PE Ratio x           5.05 5.91 7.85 22.2  
    PEG x           n/a n/a n/a 0.32

    CLF is in the earnings portfolio and fortunately we aimed low but I wouldn't get in now – even if it gets back to our entry.

    CLF Long Call 2022 21-JAN 5.00 CALL [CLF @ $7.27 $-1.15] 20 10/22/2019 (780) $5,900 $2.95 $0.30 $2.95     $3.25 $-0.55 $600 10.2% $6,500
    CLF Short Call 2022 21-JAN 10.00 CALL [CLF @ $7.27 $-1.15] -20 10/22/2019 (780) $-2,600 $1.30 $0.02     $1.32 $-0.33 $-40 -1.5% $-2,640
    CLF Short Put 2022 21-JAN 7.00 PUT [CLF @ $7.27 $-1.15] -10 10/22/2019 (780) $-2,350 $2.35 $-0.26     $2.09 $0.32 $260 11.1% $-2,090

    Big Chart – Watch those 20 dmas – now we need to take them back fast or it's the 50 dmas we'll be testing – and those are pretty much 5% drops.

    LOL StJ – Isn't that always what happens.  You should warn us when you are adding lines so we can short! 

    Values/StJ – This is why we usually elect responsible leaders who at least attempt to be less obvious when they are lying (and keep it down below 3 lies a week, let alone 15 per day!).  Markets don't like usually like uncertainty but this one (so far) seems to be enjoying it.  Very bad if that attitude changes because the uncertainty is increasing – not decreasing.

    Didn't realize Russia was having such a good year.  Maybe Japan should buy the next President to help improve their economy?  They bought Reagan – he got a $2M "fee" to speak in Japan as soon as he was out of office – twice!  

    AAPL $257! 

  12. Margin / Pat – Not sure about ordinary margin. In my account, it's $187 per contract. Keep on mind that the margin will ramp up quickly if VXX goes up. That's one reason why I post my VXX/VIX chart from time to time to evaluate the risk. Clearly, you can roll up and in time to reduce margin. But something to keep in mind.

  13. And BTW, how many people are selling these calls? Volume today for that strike is higher than normal :-)

  14. Russia / Phil – Interestingly enough, they were faly between 2008 and 2016 but the markets have been moving up ever since November 2016. Probably a coincidence.

  15. Europe not closing that bad – Trump is our problem, I guess:

    Oil holding $55 into OPEC meeting

    More importantly, Brent holding $60

    We can play /RB bullish again over $1.585 with very tight stops below:

    You can always watch Copper to see how trade talks are really going

    No joy for Soy Farmers (also a good indicator)

    This is shaping up to be our biggest volume day since the August sell-off.  That's the problem with low-volume rallies – there aren't enough buyers to support you on the way back down so you go into free-fall when there is strong selling volume, looking for the next support.

  16. I sold 70 contracts today, and intend to sell another 70 if the vix gets over 20.  :)

  17. Of VXX.

  18. Go big or go home Palotay!

  19. VXX/Margin – I sold the Jan 21 $38 for $2.51. In the confirmation screen it say the buying power effect should be -$187 but my actual margin requirement shows as -$442. Interesting…

  20. donate-icon

  21. Where Have All The Stock Market Returns Come From This Decade?

  22. Manipulation Machines

    • So 28,000 to 27,300 on /YM was 500 points and weak bounce is 27,400 (we're there now) and strong is 27,500.

    • S&P 3,150 to 3,075 on the money is 75 points so 15-point bounces to 3,090 (weak) and 3,105 (strong)

    • Nasdaq 8,500 to 8,300 is 200 points so 40-point bounces to 8,340 (weak) and 8,380 (strong)

    We never actually hit 8,500 and we know 8,000 is a critical line on /NQ so 8,400 is the 5% line from there so we could also calculate the move to 8,450 as an overshoot and ignore that and play 8,000 to 8,400 and 2.5% below 8,400 is 8,190 so call it 8,200 (though we pretty much nailed 8,190) and that means the real drop was from 8,400 to 8,200 and 40-point bounces from there are 8,240 (weak) and 8,280 (strong) and notice how 8,280 was bouncy on the way up – so that's the set we should be using.

    • Similarly, RUT 1,630 to 1,590 is a perfect drop so I guess we should use those lines too and that's 40 points and we'll call it 10-point bounces (the RUT is very volatile) so 1,600 (weak) and 1,610 (strong) and we can see the pause at 1,610 on the way down – so those lines are certainly in play.

  23. Shopping traffic up 14% over Thanksgiving weekend

    Image result for not dead yet python animated gif"

    • The National Retail Federation says 190M U.S. consumers shopped from Thanksgiving through Cyber Monday and spent an average of $361.90 on holiday items during the five-day period.
    • Shopping traffic (online and store) was up 14% Y/Y and average spending per consumer was 16% higher.
    • The NRF says its survey found that 124M people shopped in stores and 142M shopped on retailers' websites.
    • The biggest spending age group was the 25-year to 34-year old group. As expected, free shipping and store pickup programs helped to boost online sales.
    • The overall tone from NRF execs was very positive during a press briefing as they noted that an early start to the promotional season didn't erase consumer enthusiasm for the five-day Thanksgiving weekend shopping period. There's also the reminder that the comparison to last year is favorable for the post-Thanksgiving shopping period due to the concerns a year ago over a faltering stock market and looking government shutdown.
    • The read-through from the NRF update appears to be positive for Walmart (WMT -1%), Amazon (AMZN -1.7%), Target (TGT +0.2%) and Costco (COST -0.9%) on a day that has seen U.S.-China trade news dominate the conversation again.

    Consumer discretionary stocks tumble

    • Consumer discretionary stocks are underperforming the broad market today as trade news wipes away some of the good cheer from a strong Black Friday to Cyber Monday sales performance. The damage is being tied to a comment by President Trump that a trade deal could wait until after the 2020 election.
    • Notable decliners include Party City (PRTY -3.7%), Alibaba (BABA -1.9%), Etsy (ETSY -2%), Farfetch (FTCH -2%), Five Below (FIVE -3.5%), Macy's (M -2.5%), Tapestry (TPR -3.6%), Bed Bath & Beyond (BBBY -3.2%), Capri (CPRI -2.6%), Best Buy (BBY -2.2%), L Brands (LB -2.9%), Urban Outfitters (URBN -2.9%), Nordstrom (JWN -2.7%), Gap (GPS -2.2%), Ross Store (ROST -1.5%), Boot Barn (BOOT -3.2%), Ollie's Bargain Outlet Stores (OLLI -3.4%), Lumber Liquidators (LL -4.5%), GameStop (GME -2.8%), Home Depot (HD -1.7%), and Big Lots (BIG -1.3%).

    Genius sues Google for song lyric theft

    • Genius is suing Google (GOOG +0.3%)(GOOGL +0.2%) for copying its content to use in information boxes that appear when users search for song lyrics.
    • The complaint filed in state court in New York has claims against Google that include breach of contract and violating California's unfair competition law.
    • The suit seeks $50M in damages from Google and LyricFind, which provides the music lyrics to Google.
    • Related: Genius first publicly accused Google of lyric theft in June. The lyrics site used a unique pattern of straight and curly apostrophes as a type of watermark that made it clear content was lifted.

    Car prices track higher in U.S.

    • TrueCar projects average transaction prices to be up 1.3% Y/Y in November and 0.4% higher on a month-to-month comparison.
    • BMW (OTCPK:BMWYY) is forecast to see a 4.8% Y/Y jump in ATP, while Fiat Chrysler Automobiles (NYSE:FCAU) is expected to generate a 3.8% increase.
    • Prices are seen jumping at Hyundai and Kia, with ATP forecast to be up 10% and 8.8%, respectively, on the heels of the introduction of the all-new Hyundai Palisade SUV and the Kia Telluride SUV.
    • Honda (NYSE:HMC) and Volkswagen (OTCPK:VWAGY) are forecast to see a drop in prices during the month.
    • "Not only are consumers preferring SUVs which are typically more expensive than their sedan counterparts, but they’re also choosing not to skimp on in-vehicle features and content, a positive indicator of consumer confidence in the economy," says TrueCar Chief Economist Oliver Strauss.
    • "Automaker revenue is coming in strong as well, up 2.2% year-over-year, another signal that the automotive industry remains healthy," adds Strauss.
    • The U.S. auto industry has leaned on stronger pricing to help take some of the sting off slowing volume growth.
    • Source: Press Release

    Loop raises WWE forecasts after counting Saudi events

    • Loop Capital has boosted its forecasts on World Wrestling Entertainment (WWE -0.8%) after incorporating the company's second annual Saudi Arabia event.
    • The firm's Alan Gould bumped his price target to $80, now implying 31% upside, and has raised EBITDA guidance for 2020 and 2021.
    • This year has been an "investment year," he notes, and "2020 benefits from a full year of the new TV contracts, but is also the peak year for capital expenditures" on a new headquarters.
    • The TV deals have upside, the Saudi Arabia event is contractual through 2027, and the company is facing predictable revenue and cash flow growth, he notes.

    Porsche reports 11.5% rise in U.S. retail sales November

    • Porsche (OTCPK:POAHF) unit sales rose 11.5% to 6,326 units in November.
    • 911 sales fell 7.3% to 979 units.
    • 718 sales dropped 41.5% to 247 units
    • Cayenne sales increased 52.4% to 1,972 units.
    • Panamera sales declined 17.9% to 657 units.
    • Macan sales expanded 17.6% to 2,471 units.
    • YTD Porsche U.S. sales up 7% to 56,835 units.

    U.S. considered banning Huawei from financial system – Reuters

    • The Trump administration this year had considered banning Huawei from the U.S. financial system, Reuters reports, as part of its policy arsenal lined up against the Chinese equipment maker.
    • A move to put Huawei on the Specially Designated Nationals list – a "nuclear option" among sanctions – was shelved at the time but could be revived in coming months, according to the report.
    • Placing Huawei on that list would make it virtually impossible for Huawei to complete transactions in U.S. dollars, though it would spur numerous logistical, diplomatic and economic challenges for the U.S. (including hurting allies that already rely on Huawei).
    • The news is the latest following warnings from the United States to other countries not to buy telecom gear from Huawei and ZTE (ZTCOF -1.7%), an effort that will now get real funding. A newly created U.S. International Development Finance Corp. will use part of a $60B budget to help developing countries and their businesses to buy rival equipment.
    • Such a severe move would mean a clear benefit for rival equipment makers Nokia (NYSE:NOK) and Ericsson (ERIC +2.2%).

    Auto parts names fall as trade clouds return

    • Auto supplier stocks are falling hard on the prospect that the U.S.-China trade battle won't be resolved shortly, and perhaps not until after the 2020 election. The development means investors have to factor in the potential for almost another of tariffs than impact auto parts and the supply chain.
    • Notable decliners include Adient (ADNT -9.3%), Tenneco (TEN -7.7%), American Axle & Manufacturing (AXL -6.5%), Garrett Motion (GTX -5%), Delphi Technologies (DLPH -4.7%), Goodyear Tire & Rubber (GT -2.2%), Dana (DAN -2.9%), Veoneer (VNE -3.1%), Meritor (MTOR -3%) and Aptiv (APTV -2.8%).

    Sure, why not, they make $500M a year….  Lululemon seen growing to $40B stock

    • Cowen says it sees a path for Lululemon (LULU -1.4%) to trade with a $40B market cap off a Nike-like free cash flow multiple. That market cap is about $10B above where Lululemon stands today.
    • "We have confidence that new product, integrated marketing, and online momentum combined with loyalty, a healthy high-end customer demographic, and athleisure fashion trends will yield traffic, improving conversion, and comps," says analyst John Kernan on LULU's momentum.
    • Kernan also points to the retailer's international business and men's sales as catalysts.
    • Cowen keeps an Outperform rating on Lululemon and an one-year price target of $250.
    • Shares of LULU are up 83% YTD.

    Citi picks Altria over Philip Morris

    • Citi sees more upside for tobacco sector investors with Altria (NYSE:MO) than Philip Morris International (NYSE:PM) based on current valuations on the two.
    • The firm lifts Altria to a Buy rating from Neutral, while sliding Philip Morris to a Neutral rating from Buy.
    • Shares of Altria are up 0.52% premarket to $49.89. Philip Morris is down 0.55% in the early session.

    Kuwait to invest up to $1B in Saudi Aramco IPO – Bloomberg

    • Kuwait's government will invest as much as $1B in Saudi Aramco's (ARMCO) IPO, Bloomberg reports, as the kingdom continues to ask regional allies to bolster the share sale.
    • The Kuwait Investment Authority had been reluctant to commit significant funds to the IPO, but was told by the government that a stake was in the country's strategic interest, according to the report.
    • Kuwait's move follows Abu Dhabi, which reportedly will invest $1.5B in Aramco, and would be a relief for Saudi Arabia after plans to market the IPO globally were abandoned.

    Brazil economy on stronger footing

    • Record low interest rates are spurring consumer spending and business investment in Brazil, leading the economy to grow at its fastest pace in six quarters.
    • GDP expanded 0.6% in Q3 from the previous quarter and 1.2% from the same period a year earlier, according to the Brazilian Institute of Geography and Statistics.
    • The central bank's benchmark lending rate is now 5% (vs. 14.25% three years ago), and it has signaled another half-point rate cut next week at its last policy meeting of 2019.
    • Keep an eye on tariffs. The Trump administration reinstated duties yesterday on steel and aluminum from Brazil due to its "massive currency devaluation."

    EU opens data probes into Google, Facebook

    • The European Union opens preliminary investigations into the data practices of Google (GOOG -0.4%)(GOOGL -0.4%) and Facebook (FB -1.7%).
    • European Commission spokesperson, to CNBC: "The Commission has sent out questionnaires as part of a preliminary investigation into Google’s and Facebook’s data practices. These investigations concern the way data is gathered, processed, used and monetized, including for advertising purposes."
    • The tech giants tell CNBC they are happy to cooperate with the Commission.
    • Earlier this year, the EC opened a formal investigation into Amazon for potential data violations.

    Toyota Motor U.S. November sales rose 9.2%

    • Toyota (TM +0.1%) unit sales +9.2% to 207,857 units in November.
    • Hybrid sales grew 65.4%; Toyota division hybrid sales increased 68.4% and +51.4% for Lexus division.
    • YTD unit sales down 1.4% to 2,175,976 units.
    • Toyota division sales advanced 8.4% to 177,764 units.
    • Lexus division sales increased 13.8% to 30,093 units.
    • Total YARIS sales decreased 36.6% to 910 units.
    • Total Corolla sales expanded 17.3% to 24,752 units.
    • Camry sales rose 4.3% to 25,611 units.
    • Prius sales +11.9% to 6,723 units.
    • On the SUV front, RAV4 sales +26.4%, Highlander sales -0.9% and Land Cruiser +2.8%

  24. Iron ore futures rise as Vale cuts short-term production view

    • China's iron ore futures rebounded overnight after top iron ore miner Vale (NYSE:VALE) lowered its Q1 2020 production outlook to 68M-73M metric tons from prior guidance 70M-75M mt.
    • The most-traded iron ore contract on the Dalian Commodity Exchange, expiring next month, settled 1.7% higher at 651.50 yuan/mt ($92.56) after rising as much as 2.2% during the session.
    • Vale said yesterday it planned to cut production at its Brucutu mine in Brazil for as long as two months as it evaluates the stability of the nearby Laranjeiras dam, leaving the mine operating at just 40% of normal capacity.
    • The revised outlook comes as iron ore inventory at ports in China has dropped to the lowest in nearly 10 weeks while steel demand remains firm.
    • Global producers are indicated sharply lower, however, on sudden pessimism over the likelihood of a U.S.-China trade deal: BHP -2.7%RIO -1.6%.

    Roku +1.1% on new Street-high target from Needham

    • Roku (NASDAQ:ROKU) is up 1.1% premarket, signaling a rebound from a heavy decline yesterday, with its biggest bull moving to a new Street-high target.
    • Needham's Laura Martin has raised her target to $200 from $150, now implying 47% upside.
    • Overall, the sell side is Bullish on the stock, as are Seeking Alpha authors.
    • It has a Quant Rating of Neutral.

    Chain store sales soar in latest read

    • Chain store sales increased 7.9% for the week ending November 30, according to the latest report from Johnson Redbook. Underpinning the big gain, the comparable a year ago was on the soft side and this year retailers launched Black Friday deal earlier than ever.
    • Sales for November were up 5.3% Y/Y and 0.4% M/M

    Peloton ad goes viral

    • Peloton (NASDAQ:PTON) has been trending on Twitter after running a holiday commercial that has been the subject of both criticism and jokes for the reaction of a wife that receives the gift of Peloton from her husband.
    • Analysts have been quick to note that a marketing miscue could also be called a brand awareness boost.
    • Either way, shares of Peloton are down 4.14% in premarket trading after a 19% rally over the last week amid reports of strong Black Friday store traffic and conversions.
    • Peloton's ad vs. a spoof version

    Alibaba adds 75M shares to Hong Kong offering

    • Alibaba (NYSE:BABAwill sell an additional 75M shares in its Hong Kong listing at HK$176 each.
    • The addition fully exercises the 15% over-allotment option.
    • The shares are expected to start trading on December 6 and will raise HK$13.2B.
    • Alibaba shares are down 1.8% pre-market to $192.71.

    Piper Jaffray hikes PT on Tesla

    • Piper Jaffray lifts its price target on Overweight-rated Tesla (NASDAQ:TSLA) to $423 from $372, well-above the average sell-side PT of $299.23.
    • The Piper analyst team references Tesla's high-volume manufacturing, impressive opex control and frugal capital spending in making its call. There is also a reference by PJ to the Tesla cool factor with consumers.
    • TSLA flat in premarket trading at $335.12.

    Cleveland-Cliffs buys AK Steel in $1.1B stock deal

    • Cleveland-Cliffs (NYSE:CLFagrees to acquire AK Steel (NYSE:AKS) in an all-stock deal valued at ~$1.1B.
    • Under the deal terms, AKS shareholders will receive 0.40 shares of CLF common stock for each outstanding AKS share; the fixed exchange ratio implies a consideration of $3.36/share.
    • The deal represents a ~16% premium to yesterday's closing price of $2.89 for AKS.
    • CLF says the acquisition implies a total enterprise value of ~$3B.
    • Upon completion, CLF shareholders will own ~68% and AKS shareholders will own 32% of the combined company.
    • CLF CEO Lourenco Goncalves will lead the new company, while AKS chief Roger Newport will retire.
    • CLF says it expects to realize ~$120M in annual cost savings within the first 12 months after closing.
    • AKS +2.4%, CLF -11.6% pre-market.

    Worst slump on record for HK retail sales

    • Hong Kong's retail sales in October fell by their steepest on record, sliding 24.3% to HK$30.1B ($3.85B), as ongoing anti-government protests gripped the city.
    • Tourist arrivals also plunged 43.7% from year ago to 3.31M, according to the Hong Kong Tourism Board.
    • "It's very hard to imagine that the retail sales numbers and tourist arrival numbers will be any better in November given how much of a step-up in protest and violence that happened during that time," said Martin Rasmussen, China economist at Capital Economics.

    Systemic problems at PG&E helped cause deadliest California fire, report says

    • PG&E (NYSE:PCGfailed to properly inspect and maintain its transmission lines for years before a faulty line started the November 2018 Camp Fire, according to a new 700-page report from the California Public Utilities Commission.
    • State investigators already had determined that PG&E equipment started the fire, which killed 85 people, but the new report goes further, alleging numerous serious violations of state rules for maintaining electric lines and specific problems with the upkeep of the transmission line that started the fire.
    • Investigators also found that PG&E crews had not climbed the tower that malfunctioned and sparked the Camp Fire since at least 2001, a violation of company policy requiring such inspections on towers that have recurring problems.
    • The report's findings could lead California to impose fines and other penalties, and could influence ongoing investigations by California's Attorney General and the Butte County District Attorney, which are deciding whether to file criminal charges against the utility and its executives.

  25. Looks like weak bounces are all we're getting – not a good sign.

    STP only down about 5% today so not bad.  Butterfly is actually up a bit as things that got away to the upside calmed down.  Would be even better without the strong VIX.  

    Money Talk is flat – 0.2%, Hemp Boca -4.4% overall, Earnings up 1.6% total and Dividends pulls into 2nd in the New Portfolio Grand Prix with a 3.6% gain.  

    What I'm most interested in is how they handle a rough market.  Not big pullbacks so far and, if that's the case – then they are the right stocks for what's likely to be a rough year ahead.  

    Chart showing that Merkel and Macron are viewed with more confidence internationally than Xi, Putin or Trump.


    Line chart showing that confidence in Trump remains low in key EU countries.

    Worse than Bush!!!  And that guy wiped out the Global Economy!   And imagine if he didn't poll so well with Nazis: 

    Chart showing that supporters of right-wing populist parties are more likely to have confidence in Trump.

    Chart showing that fewer now say U.S. takes into account their interests.

    Image result for braveheart freedom animated gif"


    Line chart showing that a shrinking share in the EU believes U.S. respects its people’s personal freedoms.

    Line chart showing that negative ratings for Trump and U.S. in Germany continue.

    Line chart showing that in Mexico, fewer than one-in-ten rate Trump positively.

    Line chart showing that in Canada, only a quarter of the public has confidence in Trump.

    Line chart showing that fewer than a third of Japan’s adults have confidence in Trump, but U.S. favorability remains high.

  26. VXX / Daveo – It's because the margin requirements include the original margin and the cash you receive. It adds up.

  27. Trump / Phil – But if you listen to him, more respected than Obama! That's probably what Putin tells him all the time, playing him like a violin! It's so amazing what it has come to here. I don't want to hear another conservative lecturing me on national security for as long as I live.

  28. Down day / Phil – And the dollar is down today so could be worse!

  29. StJ / VXX – Ahh, that makes sense. Thanks

  30. Could be good for QCOM:

    The upper mid-range 765 series represents Qualcomm's first systems-on-a-chip with integrated 5G, saving them from using separate, power-hungry modems to take advantage of next-gen wireless. That could extend battery life, of course, but it should also make 5G handsets more affordable.

    The problem with 5G modems has been battery life. This is a solution it seems.

  31. Dollar/StJ – Only down a bit today but down 1% this week so yes, much worse overall.

    QCOM/StJ – What a great company.   

    Qualcomm unveils new Snapdragon platforms

    • Qualcomm (QCOM -2.6%announces the new Snapdragon 865 smartphone system-on-a-chip and the lower-end Snapdragon 765/765G.
    • The two new platforms focus on 5G and AI. The 865 platform has the Snapdragon X55 5G Modem-RF system, and the 765 offers 5G connectivity plus "advanced AI processing, and select Snapdragon Elite Gaming experiences."
    • More details will likely come out tomorrow as QCOM continues its Snapdragon Tech Summit.

    Averages stage modest bounce attempt

    • A bit more than 30 minutes before the close, the averages are well off their worst levels of the session, with the Nasdaq down 0.6% and S&P 500 0.8%. The DJIA is off 1%.
    • The day's best-performing sectors are the defensive ones, with the health care SPDR (XLV -0.3%) and consumer staples SPDR (XLP -0.4%) down just modestly, and the utilities (XLU +0.4%) in the green.

    Gold closes at nearly one-month high on safe-haven trade

    • Gold futures (GLD +1%) rose to their highest mark in nearly a month, enjoying safe-haven buying interest after Pres. Trump said a U.S.-China trade deal could wait until after the November 2020 presidential election.
    • February Comex gold settled +1% to $1,484.40/oz., the highest settlement for a most-active contract since Nov. 6, while March silver ended +1.7% at $17.24/oz.
    • "There is flight to safety in gold right now," says Bob Haberkorn, senior market strategist at RJO Futures. "All signs point towards a move back above $1,485 on the February contract, which could be enough to push it above $1,500."
    • Among precious metals mining stocks: HMY +10.6%GFI +8.3%SBGL +8.3%HL +8.3%EXK +7%AU +5.4%FSM +4.1%KGC +3.6%PAAS +2.6%AG +2.6%AEM +2.3%GOLD +1.9%.

    Model Y said to be coming early

    • Deutsche Bank says suppliers in Taiwan are being requested by Tesla (TSLA +0.6%) to deliver Model Y parts a full six months ahead of the original schedule.
    • DB thinks the development could mean that the Model Y will be ready as early as Q1 of 2020.
    • During Tesla's Q3 earnings call (transcript), Elon Musk said the company was ahead of schedule on the Model Y, but didn't mention anything specific about a Q1 launch of the crossover.
    • An early launch of a model hasn't been part of Tesla's DNA.

    BMO unveils plans to cut 5% of global workforce, takes $357M charge

    • Bank of Montreal (BMO -2.4%) limps to its lowest level in three months after Q4 earnings fell to $1.19B, hit by a $357M restructuring charge related primarily to severance that will affect 5% of its global workforce.
    • BMO did not disclose details about where or when the job cuts would occur, but the bank had ~45.5K employees at the end of October, so a 5% cut suggests 2,275 jobs would be affected.
    • CFO Tom Flynn says the bank's efficiency initiatives announced today will save $200M in its 2020 financial year, which began Nov. 1, and $375M by Q1 of its 2021 financial year.
    • "Our financial objectives remain unchanged," CEO Darryl White says. "Our goals over the medium-term are to achieve average earnings per share growth of 7%-10%."
    • "In Canada, we expect macroeconomic conditions to remain constructive in 2020, improving modestly from 2019 with stable interest rates and unemployment running at a four decade low of 5.6%. In the U.S., we expect economic activity to slow modestly in 2020 in response to trade protectionism," White says.

    Raymond James defends Peloton

    • Raymond James is sticking with an Outperform rating on Peloton (PTON -8.6%), despite the backlash against the company's "The Gift that Gives Back" ad campaign.
    • Analyst Justin Patterson thinks the ad will be pulled due to the online furor and notes Peloton is no stranger to memes poking fun at it. Perhaps more importantly, Peloton Black Friday traffic was reported appeared to be solid, which bodes well for the two-month holiday period sales tally.
    • Previously: Peloton ad goes viral (Dec. 3)

    Verizon, Amazon team on 5G edge computing

    • Verizon (VZ -0.1%will become the first to offer 5G network edge computing with the new AWS (AMZN -1.2%) Wavelength service.
    • The teaming lets developers deploy applications requiring ultra-low latency to mobile devices using 5G.
    • The companies are piloting AWS Wavelength on VZ's 5G Edge compute platform in Chicago for a select group of customers, including the NFL and game company Bethesda.
    • Additional deployments will roll out across the U.S. in 2020.

    Freeport-McMoRan under pressure

    • Freeport McMoRan (FCX -5.6%) is one of the two worst performers today on the S&P 500, slammed by renewed worries that a U.S.-China trade deal may not happen until after the 2020 election, if at all.
    • Copper is widely used in industrial applications, so the latest trade news has sparked concerns that FCX shares have run up too much with a 36% gain off its Oct. 9 low, and copper futures today -1% to $2.63/lb. as growth concerns feed worries about supply-demand imbalances.
    • Technical selling pressure also may be a factor, as today's loss has sent the stock below its 200-day moving average of 11.05/share.

    Cleveland-Cliffs plunges, AK Steel rallies on deal reaction

    • Cleveland-Cliffs (CLF -12%) shares are primed for their steepest decline in three months after agreeing to buy AK Steel (AKS +3.5%) for $1.1B.
    • The deal is "expensive" because it values AKS at 8.5x next year's estimated EBITDA, higher than its peers, says BMO analyst David Gagliano.
    • AKS has a total debt of $2.24B as of the end of Q3, placing it at 3.81x the company's trailing 12-month EBITDA, higher than CLF's 3.55x.
    • CEO Lourenco Goncalves' "track record of successfully executing turnarounds at Cliffs and Metals USA bodes well for the combination, though it's possible the deal was done more to lock up a home for Cliffs' future pellet offtake, while providing a lifeline to AK Steel," Bloomberg analyst Richard Bourke writes.
    • "We do not foresee a competing bid nor antitrust issues for the proposed CLF-AKS deal, but CLF may have some work ahead to win over shareholders," Jefferies analysts say.