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Fa La La Friday – The Weekend Before Christmas

Image result for empty mall'Twas the weekend before Christmas and all through the mall, 

No shoppers were shopping – no shoppers at all!  That's right it's the last shopping weekend of the Retail Apocalypse and there are 9,302 less places to shop than there were last Christmas as that's the amount of store closings this year.  Thousands more store closings could be on the way in the coming years as online shopping continues to replace purchases at physical stores and eat into retailers’ profits. High debt levels and rent have also burdened traditional retailers

PaylessGymboreeCharlotte Russe and Shopko all filed for bankruptcy and closed a combined 3,720 stores, according to Coresight. The majority of those were because of Payless, which filed for its second bankruptcy in February and shuttered 2,100 US stores.  Discount chain Fred’s filed for bankruptcy in September and closed 564 stores. Forever 21 also filed for bankruptcy that month and said it will close up to 178 stores. Forever 21’s closures are not in Coresight’s report since they are not finalized.  Other retailers, such as Ann Taylor parent Ascena Retail, Family Dollar, GNC, Walgreens, Signet Jewelers, Victoria’s Secret and JCPenney, slashed their store footprints to save money and prop up higher-performing stores.  Family Dollar closed 359 this year, while Signet, the parent company of mall stalwarts Kay, Jared and Zales, announced 159 closures.

Image result for mall sales chartAccording to UBS, Online Sales are currently 16% of Retail Sales and will rise to 25% by 2026, which could, in turn, force up to 75,000 additional stores to close, including 20,000 clothing stores and 10,000 consumer electronic stores.  Moody's lowered its outlook on Department Stores heading into the holiday season but it shouldn't affect things much as retailers like Macy's (M), Kohls (KSS), Gap (GPS) and L Brands (LB) are already in the bottom 20 of the S&P 500 in 2019 performance. 

As you can see on the chart – it's not so much that ECommerce has really LOWERED the amount of shopping at malls as it has, very clearly, killed its growth.  Stores are closing, in large part, because the ambitions of the Retailers exceeded the reality of their ability to add sales over time as they have fluctuated around the $150Bn mark for this entire century (so far).  

On the other hand, ECommerce has exploded and is now as big as Mall Shopping but, fortunately, it's not a zero sum game and people do seem to like to do both.  Tomorrow is "Super Saturday" – the last Saturday before Christmas and it's actually bigger than Black Friday, which is merely a marketing attempt by the Retailers to generate excitement early in the season.  148M people are expected to hit the malls this and that would be up over 10% from last year, and if correct, would be a real boost for the beleaguered Retail Sector.

With the economy better, more people working and wages rising slightly, the amount spent per shopper is likely to improve as well.  That's why we are keen on Macy's (M), Limited Brands (LB) as well as Tanger Factory Outlets (SKT), two retail names we feel have been unduly sold off.  All have been Top Trade Alerts for our Members recently, M on 12/9, LB on 11/25 and SKT on 8/1 - none of made much progress but we do like them all still as new trade ideas.

We'll have a better idea next week as to how this holiday shopping season is shaping up but Christmas Eve is Tuesday already – so I expect a whole lot of last-minute shoppers to finally fill up those empty malls this weekend.

"Just there waiting to be filled

With someone else's stronger will

Just some reason to survive

With empty, empty 

Empty lives" – Graham Parker

Have a great weekend,

- Phil

 


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  1. Good Morning!



  2. Phil my wife asks what time of the night you took that photo of the mall?

    You would not be able to take that type of photo during shopping hours here in Europe.


  3. Good morning. Ty for the AAPL feedback yesterday btw.  


  4. Phil/tsla

    Are we shorting tsla here or has the game changed since last year when we went for the $420/350 short, I believe?


  5. While you were sleeping I have been tinkering with a stock Royal Dutch Shell RDS-A 58.40.
    Stock pays a div of 6.38% PE 11.7, positive cash flow and somewhat in the middle of it’s range.
    Obviously good for an armchair but at 58$ a bit high for some peoples pocket.
    So I did look at the poor man’s trade.
    Buy the Jan22 50 call for 9.60 TOS says. You wish to reduce the cost you can still sell a Jan22  45 put, extreme conservative play, for 2.00 to 2.20.
    The Dec 19 50 call still is priced at 8.60 for comparison,
    Against this you can sell the April 20 55/60 strangle for 2.30.
    Just taking the original cost of the Jan22 call 230/9.60 =23.95% in 4 month.
    Obviously you can be more conservative on the April put and go for the 52.5/60 strangle 1.80
    Again 180/9.60 = 18.75%.
    I do not wish to take my thoughts further to the Dec 19 8.60 and the Jan 22 9.60 being 1$ less the Jan 22 45 put sale of 2.00 you would be steeling the Jan22 call !!! At less than zero you have two years to play this game.


  6. Maya – I shorted it for about a week, and got out with a loss – overall the year my shorts on this were a slight gain.  I think the battery focus – which may be a key driver,  coupled with a possible supply chain sourcing ( for US) out of china needs some resetting of valuation…. I also think of looking at this as a car pure play is not correct.  Having said that, they are not making money, they have to deal with the solar issues, and they need a loan in the next few months…  


  7. TSLA/Maya

    I’m sure Phil will have a more complete thought process about it, but I’d wait. This thing looks like it’s going to squeeze some short sellers in the near term. Maybe wait till it settles down a bit more. There had to be a fair amount of shorts up here that are having their conviction tested at the moment. 


  8. Phil, How about a TSLA short similar to CMG in the short term portfolio?


  9. I see you guys are all out to get burned today


  10. BA does not seem to be able to catch a break right now:

    https://www.theverge.com/2019/12/20/21031243/boeing-cst-100-starliner-oft-launch-failure-orbit

    The first flight of Boeing’s new passenger spacecraft, the CST-100 Starliner, did not go as planned this morning, after the vehicle failed to reach the right orbit when it launched to space. No people were on board the test flight. However, the failure calls into question the Starliner’s future and how long it will take for the team to recover from the mishap.


  11. Today is one of these days when I am reminded once again to not short any of these momo's! I know it can be fun and profitable. It's not worth the aggravation for me when there are better opportunities to go long good companies or short stuff that is more predictable like volatility! 


  12. Scary:

    https://www.theverge.com/2019/12/19/21029992/smartphone-location-tracking-legal-technology-privacy-new-york-times

    That brings me to the most outrageous part of this whole story: the byzantine and perfectly legal machinery of surveillance, constructed in plain sight, is all about advertising. We are being tracked every second of every day by our smartphones, and the whole point is to get people to buy more stuff; the point is to make the people running the system wealthier.

    The Times story ends with a litany of questions, all of which ask the same basic things: is this justifiable in service of profits? And if more people knew exactly what they were giving up when they agreed to a new set of terms and conditions, would they?

    I think the answer to both is a resounding “no.” Our phones are watching us, that much we know, but that doesn’t have to be the case. Privacy isn’t a luxury good. It’s a right, as inalienable as the ones held self-evident in the US Constitution. “Within America’s own representative democracy, citizens would surely rise up in outrage if the government attempted to mandate that every person above the age of 12 carry a tracking device that revealed their location 24 hours a day,” Warzel and Thompson write. And yet we do, in order to see new kinds of posts.


  13. Good morning!  

    Markets with a big run up into the open – we'll see if it sticks.  

    You would think this would matter but no one seems to care:

    Q3 corporate profits decrease $4.7B

    GDP didn't go down, that's a plus:

    Q3 GDP stays at 2.1%

    • Q3 GDP+2.1% vs. +2.1% consensus and +2.1% prior estimate.
    • In this third estimate for Q3 GDP, upward revisions to personal consumption expenditures and nonresidential fixed investment were offset by a downward revision to private inventory investment.
    • PCE price index estimate remained unchanged at 1.5% and PCE price index excluding food an energy stayed at 2.1%.

    PA is investigating fracking links to cancer clusters as well as:

    A second study will look at potential associations between Marcellus Shale development and conditions such as asthma, headaches and preterm births. Prior studies by Johns Hopkins University researchers in other parts of the state have found such associations.

    That's good for Nat Gas (/NG) as it potentially limits long-term supply.  /NGV20 is already $2.35 – you're welcome!  

    Friday's economic calendar

    U.S. junk bonds poised for reckoning, Moody's says

    • Moody's warns that U.S. junk bonds may be poised for a significant decline after a rally this year has put the riskier end of the corporate bond market spectrum in a precarious state.
    • "High-yield bonds have rallied mightily despite the lack of any observable broad-based acceleration of either business sales or corporate earnings," Moody's economist John Lonski said in a report. "If the anticipated improvement in the fundamentals governing corporate credit quality do not materialize, a significant widening of high-yield bond spreads is likely."
    • The spread between junk bonds and Treasuries — which measures the premium investors demand to hold the riskier bonds — has narrowed significantly this year as yields fell; as a bond's price rises, its yield declines.
    • Moody's says high-yield bonds now appear expensive relative to the fundamentals implied by a number of economic and market metrics even if spreads aren't especially low by historic standards.

    Russia, Ukraine strike new gas transit deal

    • Russia and Ukraine have agreed "in principle" on a new gas transit deal, a senior European Commission official said yesterday.
    • The existing gas supply and transit deal between Russia's Gazprom (OTCPK:OGZPY) and Ukraine's Naftogaz expires at the end of this year, and Russian gas transit to Europe via Ukraine could have been disrupted without a new contract to take effect from Jan. 1.
    • Details of the agreement are not known, but S&P Global Platts says any kind of agreement is striking given that Naftogaz CEO Andriy Kobolev as recently as Wednesday said the chances of a deal before Jan. 1 were "approaching zero."

    Yikes!  Boeing Starliner fails to reach correct orbit in key test

    • Boeing's (NYSE:BA) Starliner astronaut taxi did not achieve the proper orbit needed to reach the International Space Station in a key flight test mission this morning.
    • The Atlas V rocket from United Launch Alliance successfully launched from Cape Canaveral, Fla., as planned, but an hour after launch, the mission team said it is working through an anomaly after "the burn needed for a rendezvous with the ISS did not happen."
    • It is currently unclear whether Starliner will still be able to reach the space station.

    U.S. Steel -8% on Q4 loss and cut in dividend

    • "The current realities of the markets we serve are having a significant impact on our short-term results," said CEO David Burritt, who then promised "swift action" to align the company's operational footprint and financial strategy with new realities.
    • "Fourth quarter expected results confirm the need to change to make the business more resistant to factors outside of our control."
    • Q4 adjusted loss per share is seen at about $1.15M (excludes $225M in restructuring charges). The dividend is being cut to a penny from a nickel.
    • More here
    • X -7.8% premarket

    CarMax +1% after sales beat

    • CarMax (NYSE:KMX) reports total used unit sales rose 11.0% in Q3 and comparable store used unit increased 7.5%.
    • The company says the strong level of sales was supported by growth in web traffic and favorable consumer response to consumer initiatives, which both supported conversions.
    • Gross margin fell 50 bps Y/Y to 12.8% of sales to miss the consensus estimate of 13.2%.
    • Shares of CarMax are up 1.28% to $100.05.
    • Previously: CarMax EPS misses by $0.12, beats on revenue (Dec. 20)

    Amazon is its own biggest carrier

    • Amazon (NASDAQ:AMZN) is "on track to deliver 3.5B packages by the end of the year" via its in-house delivery network, which operates 150 U.S. delivery stations and employs more than 90,000 people.
    • While Amazon already ended its relationship with FedEx (NYSE:FDX), UPS (NYSE:UPS) continues to handle delivery for about half of its global packages.
    • Dealing a potential long-term threat to rival shipping firms, Morgan Stanley estimates the Amazon delivery network will move 6.5B packages by 2022, more than UPS at 5B and FedEx at 3.4B.

  14. any play on oil or gasoline futures after this weeks report with them currently headed in oppositie directions? I don't think that happens to often.

    thanks 


  15. This sounds like great news for Africa at least:

    https://www.engadget.com/2019/12/19/ervebo-ebola-vaccine-fda/

    An ongoing outbreak of Ebola in the Congo has killed more than 2,000 people, and more than 200,000 people have received the vaccine. A study during an outbreak in Guinea " determined to be 100% effective in preventing Ebola cases with symptom onset greater than 10 days after vaccination."

    I wonder if anti-vaxxer would have objections if we have an outbreak of Ebola here!


  16. Mall/Yodi – It's a stock photo but I've been in a lot of malls that look like ghost towns in the past couple of years.  We have a lot of dead malls that lose their anchor store and gradually start losing other stores to a newer mall and those malls limp along for years with very little business as long-term lease payments keep them out of bankruptcy but they can only collect the leases from tenants that vacate if the mall is still open.  

    You're welcome Crazy.  

    RDS.A/Yodi – We used to play them, good stock, good value, great dividend ($3.76).

    X cut their dividend – down almost 10%.   Time to sell puts in the Butterfly Portfolio.

    TSLA/Maya – Game has changed, they are on our "Stocks of the Future" list now.  The car thing may not make money but the battery business is going well and I think their solar roof biz may take off too as CA is only the first state to mandate solar roofs on new construction so rich people will all want TSLA's new solar tiles – as it looks 1,000% better.  

    TSLA/JMD – See yesterday's comments from the Short-Term Portfolio.  If our position on TLSA wasn't mostly bullish (with a large short-put position), we would have gotten really screwed on this run up.

    And what Yodi said!  

    BA/StJ – I know, nothing but troubles for them lately.  

    Privacy/StJ – A total illusion nowdays – unless you want to live like Ted Kaczynski - you can't get off the grid anymore.  

    Related image

    “The conservatives are fools: They whine about the decay of traditional values, yet they enthusiastically support technological progress and economic growth. Apparently it never occurs to them that you can't make rapid, drastic changes in the technology and the economy of a society without causing rapid changes in all other aspects of the society as well, and that such rapid changes inevitably break down traditional values.”

    Theodore J. Kaczynski, Industrial Society and Its Future: The Unabomber Manifesto

    “The degree of personal freedom that exists in a society is determined more by the economic and technological structure of the society than by its laws or its form of government. Most of the Indian nations of New England were monarchies, and many of the cities of the Italian Renaissance were controlled by dictators. But in reading about these societies one gets the impression that they allowed far more personal freedom than our society does.

    In part this was because they lacked efficient mechanisms for enforcing the ruler’s will: There were no modern, well-organised police forces, no rapid long-distance communications, no surveillance cameras, no dossiers of information about the lives of average citizens. Hence it was relatively easy to evade control.”

    Theodore J. Kaczynski, Industrial Society and Its Future: The Unabomber Manifesto

    Technology advances with great rapidity and threatens freedom at many different points at the same time (crowding, rules and regulations, increasing dependence of individuals on large organizations, propaganda and other psychological techniques, genetic engineering, invasion of privacy through surveillance devices and computers, etc.). To hold back any ONE of the threats to freedom would require a long and difficult social struggle. Those who want to protect freedom are overwhelmed by the sheer number of new attacks and the rapidity with which they develop, hence they become apathetic and no longer resist. To fight each of the threats separately would be futile. Success can be hoped for only by fighting the technological system as a whole; but that is revolution, not reform.

    Theodore J. Kaczynski, Industrial Society and Its Future: The Unabomber Manifesto

    Technicians (we use this term in its broad sense to describe all those who perform a specialized task that requires training) tend to be so involved in their work (their surrogate activity) that when a conflict arises between their technical work and freedom, they almost always decide in favor of their technical work. This is obvious in the case of scientists, but it also appears elsewhere: Educators, humanitarian groups, conservation organizations do not hesitate to use propaganda or other psychological techniques to help them achieve their laudable ends. Corporations and government agencies, when they find it useful, do not hesitate to collect information about individuals without regard to their privacy. Law enforcement agencies are frequently inconvenienced by the constitutional rights of suspects and often of completely innocent persons, and they do whatever they can do legally (or sometimes illegally) to restrict or circumvent those rights. Most of these educators, government officials and law officers believe in freedom, privacy and constitutional rights, but when these conflict with their work, they usually feel that their work is more important.

    Theodore J. Kaczynski, Industrial Society and Its Future: The Unabomber Manifesto

    He wasn't entirely crazy, he just saw all this happening in 1995 and, like the HERO of a time-traveling movie – he tried to stop it by stopping the key people who he thought were going to be responsible for subjugating the people of the future.  

    Oil/Tommy – We haven't been playing it because it's been silly and unpredictable.  Wednesday's report had a build in Gasoline and Distillates but a draw in Oil yet Oil goes down and /RB goes up – I'd rather play roulette – at least we get to see the little ball go around…

    /NG, on the other hand – I made a huge deal about playing on Tuesday.

    /RB is probably up on the usual pre-holiday weekend nonsense – should come back down next week but then there's New Year's – so why play games with it?

    Ebola/StJ – That's great! 



  17. Ebola – I hope it's accepted; those nations have more than their share of antagonism towards medical solutions offered by Europeans/US. Ebola is not easy to spread. It's mostly through bodily fluids, usually blood entering a cut in the skin. This happens in funeral preparations, to hunters skinning game animals, and most often in hospitals with contaminated instruments. A vaccine might help to slow Ebola,  but a lot of the problem comes from game hunting caused in part by poverty caused in part by wars caused in part by European/US meddling…..and caused by local, justified mistrust of any aid offered by outsiders.


  18. Phil, can you point me to why you think Tesla's battery business is going well?


  19. Interesting merger of RUBI and TLRA.

    Craig Hallum: "creating the largest independent advertising exchange.ted ad buyers. Going forward, we see a combined organization set to take share in a consolidated industry, accelerate top-line growth from the inclusion of video/CTV inventory, and a pipeline of innovative solutions like Demand Manager. As such, we are increasing our Rubicon Project price target to $13 based on increased optimism and taking our Telaria price target to $14.

     

    FBR: "both companies (RUBI/TLRA) stand to gain advantages they could not otherwise achieve independently, which together at scale make the combined entity a highly leverage platform for publishers.


  20. Phil – regarding this headline above:

    U.S. junk bonds poised for reckoning, Moody's says

    How do you short junk bonds? Is HYG a good option? May be sell some at the money or in the money calls? Thanks.


  21. Predictions/StJ – I love them.

    Ebola/Snow – All stuff we can fix but don't, unfortunately.  

    TSLA/Palotay – Not nec. financially but a lot of excitement about their new battery tech makes me think they may do well in the future.  They just got a 93Mw order from Alaska using their new Mega Pack model after just finishing a 100Mw project in Australia ($66M) which the customer says has already saved them $28M and TSLA promised to have it up and running in 100 days and they did.  Now Australia is asking for another 250Mw and this can all spread globally for TSLA very quickly.  

    Using Megapack, Tesla can deploy an emissions-free 250 MW, 1 GWh power plant in less than three months on a three-acre footprint — four times faster than a traditional fossil fuel power plant of that size. Megapack can also be DC-connected directly to solar, creating seamless renewable energy plants.

    That's the future baby!  

    Merger/Albo – Interesting.

    HYG/Vkat – I don't short Junk Bonds – they are too unpredictable.  Could have had this conversation last year or two years ago – they just keep climbing (with lots of dips, though).  Not for me.

    The problem is the short call options don't pay enough to make it worth the risk.  You can only get $1.50 for the April $87s and they are 0.90 in the money – screw that!  The April $87 puts are $1 though, if you really want to play, I'd buy those and they have an 0.64 delta so I'd take 1/2 off the table at $1.50 and set a stop at $1.25 on the rest.  


  22. ALBO TLRA… funny, i mentioned them the other day.  Sounded like a hurry up and wait but i guess the ship was ready to set sail


  23. KMX  had a good qtr, however is 5% down, maybe there is short term movement


  24. KMX/Albo – A little cheaper and I'll be interested again.


  25. TSLA/Phil:

    I think that Maxwell Technologies is the key element to create the first electric hybrid in the market, all cars producers have been in the same hybrid formula (batts + ICE)  but Tesla can be the first to integrate a really hybrid electric (with batts+ultracapacitors), this solution in addition to the refinements in charging software can create an option where you have the UC´s capacity for short distances plus the batts for the longer ones, the mix can also help the batteries charge mode,  range, and driving styles.

    There were some ill financed startups that tried to develop the UC´s concept, Maxwell bought or hired people of this ventures some years ago. 


  26. Tesla/Solar Roof

    My dad is a 30 year roofing contractor here in San Diego and was the first to install GAF's solar roof here in Southern California.  He said it was an absolute nightmare and will never install one of those again.  The project was entirely funded by GAF, their tech's were assisting on the job, and it still turned into a disaster.  The tech just isn't ready and physics dictate that the performance will be substantially inferior to traditional panels.  Beyond that, my generation doesn't really find solar panels that ugly as long as they are aligned properly.  My solar was just turned on a week ago today!

    GAF, for those that don't know, is one of the major composite shingle manufacturers.

    That said, I 100% agree with the battery tech being a major growth driver as well as Maxwell's super caps.  That major development out of Goodenough's lab last year could revolutionize the industry and I've also read rumors that Tesla almost has a million mile battery (longevity, not range).  Both of those make electric cars and grid storage a much closer reality. 

    https://spectrum.ieee.org/energywise/energy/environment/a-glass-battery-that-keeps-getting-better

    advill/super(ultra)caps

    Adding to what advill said: The big issue with these caps, at least so far, is that the energy density is still abysmal.  Power density is incredible but the amount of energy/volume, energy/$, and energy/kg are still awful.  The great part is just the amount of current they can handle.

    Lithium Ion Battery:  Chemistry dependent but these are ranges and orders of magnitude

    100–265 W·h/kg specific energy for a lithium ion battery (this metric is proportional to range for an electric car)

    ~250 – ~340 W/kg specific power (proportional to safe charge rates as well as acceleration of an EV)

    100-700e-3 ohm (proportional to charging and discharging losses)

    Ultracaps: Again, vary wildly by chemistry but this is a specific Maxwell UC

    5Wh/Kg specific energy (2%-5% energy density per kg)

    7kWh/kg specific power (20-28x power density per kg)

    Resistance <5e-3 ohm

    Long story short, ultracaps can tolerate MUCH higher current a and run with much lower losses yet the amount of weight and volume you'd require to hold an equivalent range would nullify the benefits.  These are still developing at an incredible clip but, ultimately, I think you're going to see batteries become a thing of the past in EVs to be replaced by ultracaps--just need to see these things develop their power density to a much greater degree.  That is also going to be dependent on the development of stronger dielectrics to really push up the supported voltage of these things.  If, somehow, you could get keep the other parameters of these caps the same while bumping their supported voltage from 2.7V to 12V, you'd get an almost 20x increase in energy storage and a massive increase in power density to boot.







  27. Maxwell/Advill – It certainly shows they are serious about upgrading their battery tech.  It was only a $200M pick-up but nice to see they don't think they are going to develop everything in house.  Interestingly, Musk was writing his PhD on ultracapacitors (but he dropped out) way back when.  I don't think TSLA is going the hybrid route internally but it's a smart move if they intend to supply the battery tech to the hybrid industry.  Also, hybrid planes will be a big thing in the near future….

    Nice breakdown JPH, thanks.

    Good chart of Moore's Law at work on Lithium-Ion:

    Related image


  28. JPH/ UCs

     

    There were a couple of companies working on an "ultra-ultrapure" material, the theory is that having a 100% clean clay material  ( not a single atom of a different element)  creates a special condition that allows storing huge amounts of electrons with not so heavy packages. 

    I´m getting older about the name of the company  and I lost them (perhaps because they failed)  


  29.  Phil/tsla

    I bought one of their model S- very nice, but the interior still does not compare anywhere near the MZB interior.

    Having said that, I have been long the stock with 2022 calls with lots of time to sell short dated calls once the stock calms down a bit.

    I don’t, however know how profitable their battery line or their solar business is.


  30. Ultrapure/Advill – I think that's something the White Nationalists are working on…. cool  Actually, BASF has a patent for ultrapure carbon – so it's not dead yet.  

    CMG/Pstas – Yet they keep getting analyst upgrades.  

    Profitable/Maya – That's a tricky word where TSLA is concerned but I'm looking at $66M for 100Mw and the customers are thrilled with how cost effective it's been in the first year and and the world consumes 18,608,000 Mw of electricity annually so 186,080 x $66M is $12.2Tn of potential business out there – sure beats building cars!  If the cost vs conventional is saving money now – that's only going to improve down the road and TSLA is clearly the leader in a massive business.  Then there's the Solar Panels, which are now mandatory on new home construction which is maybe 600,000 in CA at $30,000/roof (super-conservative) = $18Bn market potential there and 20x that ($360Bn) around the country annually and again, TSLA is the leader and people buy their batteries along with the roof systems so more winning there.  And they also make cars….

    Doesn't matter if they make money now – the top-line will certainly be there and Moore's Law indicates their production costs will keep going down so their model is like a chip company that spends a lot on R&D but reaps the benefits through the sale cycle.

    Tesla Annual Revenue

    (Millions of US $)
    2018 $21,461
    2017 $11,759
    2016 $7,000
    2015 $4,046
    2014 $3,198
    2013 $2,013
    2012 $413
    2011 $204
    2010 $117
    2009 $112
    2008 $15

    Quarterly they are at $17Bn so far this year so maybe $23-24Bn to end the year is slowing from last year but it sounds like 2020 is shaping up well for them.  While I wouldn't go long on them at $400 ($73Bn) – I wouldn't short them either.  


  31. Looks like $10 should be a good support line for X but the trend has not been good:

    X United States Steel Corporation weekly Stock Chart

    Tariffs didn't save these jobs (or the coal jobs for that matter)

    https://www.barrons.com/articles/u-s-steel-cut-its-dividend-here-are-5-reasons-why-51576855578


  32. X / StJ

    Not for my STP, cutting the dividend will force many conservative portfolios to sell it


  33. Adjusting/Holding&Hoping/Stopping Out; interesting to hear the different perspectives. I get the feeling that not too many people are doubling down and adjusting positions when it comes to losing positions – but maybe that is a case of people learning from Phil's virtual trade ideas but not necessarily following them or trading them like Phil. Much better that people are finding their own style.

    And of course, every portfolio is likely to form a normal distribution of returns over longer periods of time – losers are just part of the game. But cutting losers quickly is important.

    Phil / M – thanks for the adjustment – it made a lot of sense doubling down on the short puts, and rolling the spread down. 

    Luck also plays a ginormous roll – case in hand, closed out some short puts on X yesterday for a profit.

    Royal Dutch Shell – been a stockholder since 1997, and enrolled in their DRIP program. 


  34. X/StJ, Advill – $11.85 is $2Bn and they made $1.1Bn last year and this year maybe – $300M but they are restructuring and a vital US industry (not replaceable, like coal) so I think they are pretty solid down here.  It's not the US that's killing them, it's Europe and Asia.

    X down 11% now and the 2022 $12 puts are now $3.50 for a net $8.50 entry – that's tempting but only up 0.30 from earlier in the week and they should be higher – so no reason to jump in now – we'll see what happens next week.


  35. SPCE -Continues recent strength.  SPCE Warrants (SPCE/W or SPCE/ws) are up 31% since I added them 9 days ago.

    Added a BCS on SPCE, the July 10/15 at $1.50.  Spread is $.85 in the money.

    Thanks, Phil.  I wasn't aware of the company until you posted on it.


  36. Looks like we're going to hold up today. 

    Amazingly, Christmas Eve is considered a working day in the Markets but Christmas Day is closed.  Same with New Year's Even and New Year's day.

    Tuesday I'll be leaving early for Thailand and I arrive there on the 26th at 4am (date change) and it's 3:29 on Saturday there now so I THINK it will be 4pm Wednesday here (EST) when I arrive in Thailand Thursday morning.  That means that Thursday NIGHT I will try to get a post up for you guys to see Thursday Morning and same on Friday and I'll let you know what shape I'm in then.  

    Then Monday (30th) night, I write Monday Morning's post (it should be good because I'll already know what's going to happen that day!) but kind of iffy that I write the New Year's Eve am post in my New Year's Eve pm – I'm sure I'll be at some function or party….

    That means Jan 2nd, pm for me, I'll be writing the Jan 2nd am report for you but I'm back on a plane Jan 3rd at 4am to go home so no way I'm going to put a post up on Friday, 3rd – as I'll be in the air (though maybe if there's good Wifi on the plane). 

    Thanks to the magic of time travel, I'll be back Friday afternoon and I have 2 days to recover and then we are back to normal.   

    Have a great weekend, 

    - Phil

    You're welcome Albo – very nice!


  37. Wow Phil. This is quite the 180 re: Tesla. I hear you saying you wouldn’t go long, but to speak so glowing about their prospects is surprising. I have to push back a little. Not sure where this is coming from, the one big quarterly earnings surprise (where they pulled a bunch of one-time lever that will be hard to repeat)?  They have financially engineered other quarters in the past, only to report huge losses in the following quarters. There is still very little evidence that the auto business can be profitable, especially without government subsidies. 

     

    Also, there is little evidence that they have a defendable moat in the battery business.  Their EVs have more range because they have sacrificed reliability and longevity, for headline range figures (I’ll try to dig up the article on this, but it is based on chemistry and their decision to utilize 100% of charge, when other automakers only use 80% to boost battery longevity). Other auto-makers are going in a different direction (solid-state batteries), but even if they have a slight edge, they have a minuscule R&D budget and will find it very hard to keep up with the better funded competition.  Furthermore, isn’t that business destined to be commoditized and receive an appropriately low cyclical multiple?  

     

    It is also a huge stretch to say that Tesla is a leader in Solar (another low margin commoditized business). Their deployments have been dropping steadily each year since the SCTY acquisition. Now their claim to fame is this unreleased solar shingle product, and we have no reason to believe Elon’s claims that he has figured it out. He promised this product years ago, and faked the unveiling with a non-working prototype. He lies all the time (see the SCTY deposition transcripts). The cost is going to be excessively high compared to traditional solar panels, with lower energy yields, so it will only be a product for the Uber rich. What is a realistic estimate of the TAM for a product like that (assuming it works and can be installed at a reasonable cost). 

     

    This company is completely reliant on getting more capital from

    Investors to keep the cash incinerators well stocked.


  38. FWIW.  Long both RUBI and TLRA from earlier. Also put on a BCS on RUBI.

    I think they both go higher.


  39. TSLA/Palotay – I have simply come to respect their ability to ride things out and their battery business may save the company.  I certainly don't trust Musk so I still won't go long and the multiple is obscene but I am mostly saying why I wouldn't short them – despite the issues you raise (which are obvious and we've been talking about them for years yet, like Trump's many, many crimes – they don't seem to matter).

    You are right about Solar, SCTY was the leader by a mile and now, inside TSLA, they have slipped to 3rd place but I believe they are purposely restructuring and halted sales this year but, again, with Musk you never know what to believe.  Commodity or not – they are going to sell a lot of panels under the new law and commodity producers make money too.

    Image result for tesla solar roof sales competition

    If you want to be bearish on TSLA, I'd be way more worried about this chart:

    Image result for tesla solar roof sales competition

    Not much competition there. 

    Image result for tesla battery sales by quarter

    Image result for tesla battery sales by quarter

    Again, I'm not telling people to buy TSLA, just saying a bullish case can be made and stating what it is – in order to warn people not to short it either.


  40. X in the Butterfly / Phil --

    So we are still watching X into next week, to see if we sell puts?   (If a change is made to a Virtual Member Portfolio, is there somewhere definitive to check out all the additions/removals, other than the passing reference in the mass of chat posts?)

    X March $14 calls are now at $0.55, down from ~$1.64 when we entered in end of Nov/early Dec.

    Is it better to just leave this as is, or to close this one out for a profit and sell a March $14 call at a lower strike — maybe $12?  March $12 call is $1.24 now.


  41. Palotay/Musk

     

    When you analyze  Musk, you analyze the person, he started SpaceX with 10 engineers, 2 mariachis and 1 maraca ..it is now a company with several breakthroughs that the fat cats never ever imagined. The air force, CIA, NSA, etc has an increasing number of launches in 2020 and 2021

    The planetary internet with 6000 satellites serving signal around the globe is another breakthrough, having rockets costing 20x less to build and operate is another prime for him.

    In the car business, he created almost alone the EV market after many failures with GM and others, he will flood China with cars built there, Berlin is the city where right now the 3th mega factory is being built, cybertruck (300.000 units reserved) is anther out of the frame concept , the E-trucks are already with thousands backorder with blue-chip companies.

    Batteries, a mega factory is building batteries in the U.S., another one is being under construction in China, he has something in hand for sure with this, with an organic growth mentality is rare when decides too buyout something, Maxwell is one.

    Agree with you in solar panels, new technologies are coming together like a rain, the next years will have a brutal consolidation, but the California fires provided a new market that will be replicated in other parts in the U.S.

    As Phil says, he can be the Tucker of 21th century but still is difficult to accept that will fail in everything…and have to say that I don´t have yet a penny invested in Tesla






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  46. Phil – Happy Hanukkah to you and your family.