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Pre-Trade Tuesday – Markets Appear Untroubled But Weakening

No one seems worried.

The Volatility Index (VIX) is back around 13 after a brief spike to 17 when we bombed Iran and Iran bombed our bases in Iraq but that was so last week and now no one is worried about anything as we look forward to tomorrow's signing of the Phase 1 China Trade Pact, which accomplishes nothing in particular after two years of waiting.

The deal leaves out the fundamental changes to Chinese economic policy sought by many U.S. leaders and prioritized by President Trump, who has promised further negotiations. Chinese officials, though, feel they have little to gain from a second deal forcing Beijing to ease state control of the economy, and Trump has already said that a phase-two agreement probably wouldn’t conclude until after the November election.

Image result for china trade deal cartoonU.S. Trade Representative Robert Lighthizer defended the deal Monday, saying on Fox Propaganda Network that it would include “a variety of real structural changes.” He then named only one, commitments to refrain from competitive currency devaluation, which Treasury Secretary Steven Mnuchin announced earlier in the day, already  dropping Treasury’s designation of China as a currency manipulator based soley on their thin promise to behave in the Future.

By giving away leverage with a temporary deal…these structural issues will only become more challenging to address in future negotiations,” Senator Schumer wrote. “China pledging to make short-term purchases of American goods will not address the fundamental problems that undermine long-term U.S. economic opportunity, prosperity, and security.”

Image result for i'll remove the cause but not the symptom animated gifTariffs remain in place that will still cover the same $360 billion in Chinese goods that the Administration taxed before the signing. Nearly two-thirds of everything Americans buy from China are still tariffed, compared with less than 1% before Trump began his anti-China campaign, according to calculations by economist Chad Bown of the Peterson Institute for International Economics.  The deal eases — but does not eliminate the trade-related uncertainty that Federal Chair Powell has blamed for weak business investment and a manufacturing slump.

The "Phase One" Trade Deal was announced back on December 12th and, since then the Dow has gained 1,000 points, or about 3.5%, putting a huge cherry on top of what had already been a 21% rally from 24,000 in January of last year.  Of course there were promises of a trade resolution all fall and the Dow rose from 26,000, where it had stagnated all Summer. 

That was up a realistic 8.3% from the start of the year but it's all distorted from last Winter's market collaspse that cost us 22.5%, albeit briefly.  The Dow was actually at 27,000 at the start of 2018, fell to 22,500 at the end of 2019 and now we're back at 29,000 but the key metric to me is we're up from 17,500 at the 2016 elections and that's 65% in 3 years – historically a bit extreme for market growth.

Image result for corporate taxes 2019If we're going to pay 65% more for stocks, they should be earning 65% more money, right?  Forget the fact that most of the earnings boost has come from paying less taxes – silly as that is, it does still drop money to the bottom line so we'll count it like it's real earnings and can't be taken away. 

Still, it took a 70% reduction in Corporate Taxes to boost Corporate Earnings 20% so it's simply not possible for that to be repeated in the next few years but analysts tend to extrapolate earnings growth to continue at the pace it has for the last few years.  And, if corporate profits are up just 20% but we're paying 65% more for those profits – at what point can investors no longer afford those relatively meager profit returns?

We'll see how well profits are holding up as we begin tallying Q4 earnings.  JP Morgan (JPM), Citigroup (C) and First Republic (FRC) all beat this morning but, as we expected, Wells Fargo missed by 120%, putting up an 0.17 loss vs an 0.93 profit expected by clueless analysts.  WFC noted a $1.9Bn Operating Loss that included an impact from litigation accruals totaling $1.5Bn, or 0.33 per share.

That's right in-line with the expectations we had in yesterday morning's PSW Report (which you can subscribe to here) and the trade set-up in our Earnings Portfolio ended up looking like this:

WFC Long Put 2020 20-MAR 52.50 PUT [WFC @ $52.11 $0.00] 10 1/13/2020 (66) $2,130 $2.13 $-0.09 $2.13     $2.04 $0.00 $-90 -4.2% $2,040
WFC Short Put 2020 20-MAR 50.00 PUT [WFC @ $52.11 $0.00] -10 1/13/2020 (66) $-1,050 $1.05 $-0.06     $0.99 $0.00 $60 5.7% $-990
WFC Short Call 2020 20-MAR 52.50 CALL [WFC @ $52.11 $0.00] -5 1/13/2020 (66) $-625 $1.25 $0.10     $1.35 $0.00 $-50 -8.0% $-675

So we're well on-track to getting $2,500 back from our net $455 investment in 67 days (March options expiration) and all we have to do is keep taking advantage of lazy analysts and we'll have a very nice earnings season indeed.  

More importantly though, let's keep our eye on the macro-picture and make sure companies are growing into these +65% valuations because, if they are not, we're going to be heading into a correction where nothing is likely to be spared – not even Tesla (TSLA) – which is reaching peak idiocy at $550!  


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  1. I am old enough (sadly) to remembers days when these parabolic moves didn't end well! Being told that this time it is different, looking at fundamentals, questioning models was so old fashion! Maybe this time it is different. We'll see.

  2. In the meantime, it's just so hard to wade through all the misrepresentations and lies being peddled each day on matters small and big! They even lie about the weather in DC when everybody can verify the facts for crying out loud! It's mentally draining!

  3. In the meantime, who benefits from the rising markets? 

  4. StJ – It's never different ! ! !

  5. Good Morning!

  6. Yes extremely mentally taxing always having to VMware through all the BS.  Make you want to turn everything off and drop out

  7. Good morning!

    TSLA is just bonkers now, $544 at the open.  They are trying to squeeze out all the shorts (and it's working).  

    BKNG/Mito – We had that good short last time because the China deal was unresolved and we knew travel was down but they bounce back nicely and numbers should be up a bit for the holidays and they have an excuse to forecast a better 20202, so I don't think I'd bet against them this Q - especially the way things are getting bought for silly reasons.  BKNG is not a stock I hate – I just felt they were not taking risks into account in the fall.

    I'm thinking BKNG will make an interesting short due to the 40% drop in Hong Kong tourism, which was one of their strengths last year.  $2,000 is $85Bn and that's tough to justify, even of they do get earnings closer to $5Bn (17x) but last year was $4Bn (21x) so somewhere between is where we are on the assumption of 10% growth:

    Year End 31st Dec 2013 2014 2015 2016 2017 2018 TTM 2019E 2020E CAGR / Avg
    Revenue $m 6,793 8,442 9,224 10,743 12,681 14,527 14,749 15,190 16,499 +16.4%
    Operating Profit $m 2,412 3,073 3,259 2,843 4,530 5,341 5,193     +17.2%
    Net Profit $m 1,893 2,422 2,551 2,135 2,341 3,998 4,157 4,442 4,809 +16.1%
    EPS Reported $ 36.1 45.7 49.5 42.6 74.5 82.3 89.2     +17.9%
    EPS Normalised $ 36.1 45.7 49.5 58.4 75.1 82.3 89.2 102 115.9 +17.9%
    EPS Growth % +30.6 +26.5 +8.3 +18.2 +28.6 +9.5 +6.0 +24.0 +13.6  
    PE Ratio x           23.9 22.1 19.3 17.0  
    PEG x           1.00 0.92 1.41 1.32

    I was already thinking of them as a short (slowly making a Short List) since GOOGL's new travel engine is very dangerous for them.  Also, Shatner is out so less visability and they are trying to coast to save ad money but I'm not sure that's a good idea in the travel biz.  AMZN is also getting into travel booking.  

    Though the stock looks impressive in the short run – they actually have been underperforming the S&P since last year:

    I think for the STP, I'd like to play BKNG this way:

    • Sell 2 BKNG Jan $2,000 calls for $120 ($24,000) 
    • Buy 2 BKNG 2021 $2,100 puts for $280 ($56,000) 
    • Sell 2 BKNG 2021 $1,900 puts for $190 ($38,000)
    • Sell 2 BKNG Jan $1,800 puts for $50 ($10,000) 

    That's a net $16,000 credit on the $40,000 spread so + $56,000 if it all works out but this is more of a Butterfly Play (but short) where we hope to exploit our ability to make $34,000 in 4 months selling puts and calls.  Ordinary margin on the short calls is $76,792 so not something you want to do if you don't have a PM account and, even then, the risk is still severe but it's a good teaching tool and we can afford to lose $20,000 in the STP if things go wrong (hopefully not too wrong). 

    Earnings are going to be early November so we have 2 months to see how it goes before violence is likely.  This is dangerous for all the reasons I outlined to 8800 above! 

    Submitted on 2019/09/19 at 2:09 pm

    BKNG – We just put this one on and it went the wrong way on us but earnings aren't until Nov 4th and, as far as I can tell, trade slowed down travel – especially in China where they are very big.  Note that we sold the short Jan $2,100 calls and the short Jan $1,800 calls for $171.50, which means anything between $1,628.50 and $2,271.50 is a profit and, at $2,055, it's a $116.50 ($23,300) profit in waiting.  So it's a keeper for the portfolio and we'll see how it plays out.  I'm still going to want to clear the decks so we have a proper fresh start next year.

    So, had we not worked the position and cashed out early, it wouldn't have been very good for us anyway.  

    LQMT/Rookie – I love that stock but down at 0.10 now.  My kids still have it in their accounts, about 20,000 shares each after cashing out 1/2 at 0.34 (a double) a while back so no cost basis on what's left from their 0.17 entry.  It's been very frustrating, on the whole, as there's always that hope of AAPL finally using it (they have the exclusive rights in consumer electronics) but it never actually happens – nor do any other major deals.

    Cool note on AAPL:

    In an 8-K filed on August 9, 2010, it was disclosed that Apple (AAPL) secured specific intellectual property rights from Liquidmetal Technologies (LQMT.) in exchange for a licence fee. This gives Apple exclusive rights to commercialize the product in the field of consumer electronics, while Liquidmetal will retain the right to market it in all other fields. The product is Liquidmetal, and it could help make an extremely sleek and aesthetically pleasing IPhone that is virtually indestructible.

    The product is currently being used in several forms, including coatings, powders and alloys. The specific technology that Apple will use is a bulk liquid Alloy that can be molded into casing components for electronic devices. When the molds dry, the result is an extremely hard glasslike substance. It is not transparent, but very glossy and shiny, and does not require polishing. The Liquidmetal is also scratch and dent resistant, and thanks to improvements made to the product over the past eight years, is virtually shatterproof.

    Submitted on 2010/08/18 at 3:42 pm

    LQMT/Savit – They are out of BK and on pink sheets so I think nothing of them.  They already ran up from .20 to .90 on the AAPL news and I’d be concerned that AAPL only bought them to prevent competitors from going down that path as they’ve already invested a lot in whatever it is that glass is on the IPhone 4 – which is pretty damned unbreakable already

    Submitted on 2012/04/18 at 8:07 pm

    LQMT/Diamond – Ah, you know me well!   AAPL paid $20M for the exclusive rights to use Liquid Metal in "electronic products" back in late 2010 – that took the company from 0.11 to $1.76 at the time.  Now they are back to .25 after visiting .12.   So far, AAPL has only used liquid metal to make a "Sim Card Ejector Tool" that you have in your IPhone 3 box (not in the 4s) – I think we are a long way from making IPhones out of this stuff.  

    Submitted on 2012/04/24 at 12:49 pm

    LQMT/Peedle – We discussed that last week, they have many potential industrial uses but they've been going at this since 1987 and it still isn't practical yet.  There's only 14 guys in the whole company and AAPL gave them enough money to keep them alive while they locked up the potential use of the stuff – just in case they ever do get it right and it becomes the next cool thing.  I'm sure if LQMT goes under, AAPL gets the patents.  We liked them at .25 for a gamble but if you didn't get 1/2 out at .50 to leave a free ride – then you are just being silly as it's a long-shot at best. 

    Submitted on 2012/04/29 at 9:14 am

    I was up for 24 straight hours yesterday – went to Princeton for the 200th anniversary party and planned to be back at night but I ran into some old friends and we ended up closing the bar with a few Italian physicists who were there for a conference on the search for Bose Higson particles and we were debating the nature of the universe with them – crazy day.  

    Learned a lot of stuff though.  A couple of Europeans with brains the size of small planets think LQMT will be used in the IPhone 5 but they also think it's a good idea for GOOG to attempt to just drop asteroids on the Earth without using a space elevator, which makes me realize why they still can't find the Bose Higson particles or dark matter for that matter.

    USO/Jomp – I'll be going over the portfolio moves next.  

    LQMT/Jomp – is a strange little penny stock and needs to be played as such but it is a fun gamble.  They just borrowed another $300K, which is about their monthly burn so they've piled up $3.5M of debt at about 8% and the recent not goes to 15% if they are late.  On the one hand, you could say that it's a good sign that people are willing to lend them money but lenders are just as stupid as investors sometimes and the fact that LQMT was touched by AAPL gives them a halo with enough rope to hang themselves if things don't work out.  That being said, they could also be a 10-bagger if AAPL actually uses their stuff so a fun gamble but very much a gamble at .53.  

    Submitted on 2012/06/19 at 12:27 pm

    LQMT at 0.32 is my fun AAPL trade idea as they just extended their development deal with AAPL and it's possible that one day, they will make IPhones or even IPads out of this stuff (amorphous alloys that are stronger than titanium and lighter than plastic). 

    Submitted on 2012/06/20 at 12:33 am

    LQMT/Burr – I hope you filled, they popped 25% today to .36 and I didn't even get around to them on BNN.  Fly on the wall figured out why we're bullishso now the cat's out of the bag and it will be time to take the money and run again if they pop.  

    Submitted on 2012/09/14 at 3:54 pm

    LQMT/Lmeirner – They will keep diluting until they pay off debts or announce a big deal so very annoying to treat as a hold but a fun stock to trade.  We'll see how low this round takes them but I like them in the teens. 

    And that's pretty much how we've played them since:  Buy it in the low teens and sell the pops.  

  8. Different/StJ – This time sure seems crazier.  I agree it's draining.  I'm so sick of politics but it matters too much to ignore but it's exhausting to wade through the BS.  

    And what Burt said! 

    Image result for tune in turn on drop out

  9. Any one entered the CBRL PoorMT,  the Jan20 157 caller has to be rolled. I am rolling to Feb 160. The stock is 1/16 ex div and pays 1.30!!!!! I will wait to sell the new putter after 1/16.

  10. SPCE/W – has now doubled.  Still resisting the temptation to sell some.  Instead, sold some SPCE Jul 18 calls.  SPCE is now trading at $14.13.  If they expire worthless, they would lower the cost of those warrants by 1/2.  Correlation between SPCE and SPCE/W appears tp be about 80%.

  11. You can sell the June $900 calls on Tesla for $29 right now.  So absurd.

  12. Scratch that.  Those were the 2021's.  Sorry guys.  Need more coffee.

  13. Phil / WBE

    Apologies if I missed this before – what was the consensus on this.  I'm still on the hook for the April BCS and short puts


  14. The latest estimate is for VXX to reverse split by August (unless we have a big correction in the meantime). This would be the longest time (36 months) between 2 reverse splits. The big correction at the end of 2018 is the main culprit. It does happen every time we get close to $10. It's been 1-4 each time so VXX would trade around $40 or so. 

  15. AIMT – From Briefing:

     "Palfozia on track to be approved this month  (31.31 +0.31)

    The presentation at JPM last night didn't reveal much new information. Palforzia is on track for approval by the end of month. The REMS (patient safety/certification measures) includes a convenient online system. The company is ready to launch. Many allergists are already on board and payers (insurance) won't be an issue."

  16. Not sure if anyone is interested in ZYNE any longer, but it's down in the $5 range. I've been out since $15. Starting to dabble in some since the other pot stocks are starting to get some activity. Decent premium in the options as usual.

  17. Phil HLIX – Any thoughts on this company. They provide multiple services to the cannibis industry. Here is their profile.  Thanks

    Helix TCS, Inc. engages in the provision of infrastructure solutions to the cannabis industry. It operates through the following segments: Security and Guarding; Systems Installation; and Software. The company was founded in 2003 and is headquartered in Denver, CO

  18. Albo / SPCE

    such a great pick! can you give you thoughts on my spread and if i should adjust?

    30 x July $10/$15 BCS

    10 x July $9 short puts

    I got in for net $3000  -  up to 6k, 9k to go.

    of course doing well but a little nervous about volatility


  19. Phil / WBA (NOT WBE!!) sorry

    Apologies if I missed this before – what was the consensus on this.

    I'm still on the hook for the April 55/60 BCS and 57.50 short puts


  20. NLS at new recovery high.  Stock has doubled from when I posted on it in less than 3 months. 

    Sold 1/3.

  21. WBA / Potter, Phil -

    I'm also interested in what to do about WBA.

  22. SPCE/Albo – They are losing $50M/qtr and only $85M in the bank so it's doubtful that valuation will hold up as they dilute for more capital – so be careful with them. 

    TSLA/Palotay – It looks like we're going to have to do something like that in our STP position as those 5 short $433 calls are now $150 in the money!

    WBA?/Potter – I take it you mean WBA and I'm for sticking it out on them.  

    HLIX/Jeddah – It's an interesting angle on Cannabis as they offer compliance solutions that are a necessary cost of doing business for the cannabis companies.  They also bought the Amercanex, which is a wholesale exchange for cannabis products but only about $14M in sales with about $10M in losses is why they are a $60M stock at 0.65.  They only have $655,000 in cash and burned $1.4M in the last 2 Qs so dilution is in their future, I'd say.

    WBA/Potter – The April $55s are still $2.30 so I imagine that's about what you paid for the spread and it's too early to roll the short puts but you can INVEST more by rolling the April $55s to the 2021 $55s at $4.90 for net $2.60 and, when the April $60s (0.70) expire, you can sell the July $60s (now $1.50) to get most of your new investment back, etc.  You could also offset the cost of the roll by rolling the April $57.50 puts ($4.50) to the 2022 55 puts at $8 so a 5% lower strike and $3.50 more per contract is a good trade-off for 2 years.  

    NLS/Albo – Wow!

    Russell went flying higher.  

  23. SPCE -Thanks Phil. I know it's risky. 

    Rightly or wrongly I view them as a possible early stage TSLA.

  24. negative tariff news     what a surprise 

  25. Okay, what the heck happened 10 minutes ago?

  26. Phil, I might have missed your trade on WFC after their earnings were kitchen-sinked by the incoming CEO…. I have 5 contracts of the Jan 21 45P sold for $5.25. Does it make sense to add another Jan 2022 42.5P or 45P? for a total of 10 contracts…..Your help always appreciated! Thank you

  27. WBA/Phil, Potter
    Hi Phil,
    I'm still very new at this and like to keep things as simple as possible until I understand what I'm doing.

    For WBA, what do you think of simply adding a WBA Jan 2021 call spread:
    52.50($6.00)/55.00($4.80)? That's $1.20 for $2.50 of strike.


  28. Someone bought 500 TSLA $640 2021 calls @ $61.80???

  29. Can't ague with that, Albo – not when TSLA is at $550 ($100Bn) while still losing money.  No reason SPCE can't do that too.  

    Tariffs/Stock – How is this "news", I was talking about it in the morning post….  I swear, I just can't get used to how slow people are to comprehend what's written in newspapers.  

    Done with /NQ as I feel like it was a lucky escape but still holding 4 /ES shorts at a $250 loss (each) at the moment (3,277) and 2 /YM shorts even (28,915).

    WFC/Jasu – I take it those are short puts?  The 2021 $45 puts are now $2.60 but they should hold up, WFC has strong underlyings – they are just being fined, etc and it's messing with their bottom line.  The 2022 $45 puts are $4.80 but why not just be happy with the $2.60 you'll get on the original 5 and, if that goes well, THEN sell 5 more for another $2.60+ in 2022.  If it doesn't go well and WFC goes lower, THAT is a good time to sell 5 more puts at a higher price.  I think it's a scary market to over-commit in.  

    You never know where the bottom is until you get there…

    WBA/Sag – Nothing wrong with that, I think it's a high-percentage play. 

    TSLA/Coulter – Or someone sold them!

  30. As I have said before, the Tariffs are a slush fund for Trump and he has no intention of letting them go.  

  31. Baby Yoda a catalyst for Build-A-Bear

    • Shares of Build-A-Bear Workshop (BBW +14.9%) are marching higher after the retailer increased full-year guidance.
    • Build-A-Bear also tipped off that it plans to release a Baby Yoda plush in the coming months.
    • "I'm excited to share we will be one of the first companies to provide the digital and internet phenomenon who is trending higher than all the presidential candidates combined," Build-A-Bear CEO Sharon Price John revealed at ICR.
    • Previously: Build-A-Bear lifts guidance ahead of ICR talk (Jan. 14)

    Image result for baby yoda build a bear

    Damn, when my kids were younger, I would have known about this!

    Verizon launches privacy-oriented search engine

    • Verizon Media (VZ -0.5%) has launched a new privacy-focused search engine.
    • It says its OneSearch doesn't track, store or share personal/search data with advertisers, and it's looking for business partners to integrate the search into their privacy/security products.
    • The site is ad-supported so it can be offered for free, but Verizon says ads are contextual (based on keywords) rather than history-based.
    • The site's features include no cookie tracking, retargeting or personal profiling; no sharing of personal data with advertisers; no storage of search history; unfiltered search results; and encrypted search terms.
    • It also features an advanced mode where the results link expires within an hour, improving security in the case of device or link sharing.
    • It's available today in North America on desktop and mobile Web, and will be available via Android/iOS app later this month.

    UBS wealth management starts job cuts in Asia, Europe – Bloomberg

    • UBS Group (UBS +0.8%) has cut as much as 20% of the workforce in some European teams of its global wealth management business and is reducing management layers in Asia to speed decision-making, Bloomberg reports, citing people familiar with the matter.
    • Job losses are occurring at every level from managing directors to assistants, they said.
    • UBS hasn't said how many employees will be affected, but it's likely to about 500, people familiar with the matter told Bloomberg.
    • The dismissals come about six months after Iqbal Khan, co-head of the wealth management unit joined the bank from Swiss rival Credit Suisse.
    • U.S. and Switzerland are likely to be less affected by restructuring of the unit, one person said.
    • UBS is also closing a unit dedicated to the ultra rich and moving some client advisers into regional divisions and others into its global family office unit.
    • It's also eliminating a unit within wealth management called Investment Products and Solutions, which came up with financing structures and investment products. Some positions in structuring, sales, and trading preformed similar tasks.

    JPMorgan positive on Macau

    • JPMorgan estimates Macau gross gaming revenue will fall 2% Y/Y after a strong early start to the month is more than offset by the impact of the slowdown in front of the earlier Chinese New Year this year.
    • "We wouldn’t be surprised to see January printing flat or even marginally positive growth in GGR," notes analyst DS Kim.
    • Due to the Chinese New Year, Kim notes that it's more meaningful to look at January-February combined trends, which the firm models to decline 3% to 4%.
    • "We stay positive on Macau stocks. Despite the recent share rebound, the sector’s valuation still appears inexpensive at 12x 2020E EV/EBITDA (vs. historical average of ~14x), which we view as quite attractive given limited estimate risks to consensus. Added to this is our view that 2020 will see a cyclical rebound in demand, and we stay constructive on the sector."

    Spotlight on Netflix's offshore practices in U.K.

    • Analysis from Tax Watch UK suggests that Netflix (NFLX +0.3%) could catch the eyes of regulators due to its shifting profit offshore to avoid British taxes.
    • TW's breakdown of Netflix's offshore practices: "Sales are made from outside the UK, even though there is a substantial UK presence. This offshore sales hub is located in a jurisdiction with a strong treaty network (the Netherlands). The sales hub makes a very low profit margin as large costs are paid to related companies. The UK office sells its services to the wider Netflix group at a low margin and as a result there is little profit left in the UK."
    • The investigative think tank says the Netflix structure is particularly concerning given the steep rise in the profits for the streamer in recent years, which suggests that the problem can only get worse.
    • Some U.S.-based multinationals have faced regulatory backlash in Europe for their offshore practices.

    Impossible Whopper momentum slows down

    • Average daily orders of Impossible Whoppers (IMPF) at Burger King locations owned by Carrols Restaurant Group (NASDAQ:TAST) have fallen to 28 from 32, Carrols CEO Dan Accordino stated at the ICR conference.
    • An average Burger King restaurant owned by Carrols sells 234 beef Whoppers a day, noted Accordino.
    • Burger King plans to test an Impossible Croissan’wich breakfast menu item (made with a meatless sausage) later this year.

    Encana wins shareholders' OK for move to U.S.

    • Encana (ECA -1.6%) says 90% of shareholders voted in support of the company's plan to relocate to the U.S. and change its name to Ovintiv.
    • The company is now free to move forward with its plan that has added to the gloom in Canada's oil industry, which is suffering from a lack of pipeline space that has depressed prices and prevented production increases.
    • ECA said it wanted to move from Calgary to Denver because it would provide access to larger pools of investment capital, including U.S. index funds and passively managed accounts.
    • According to Bloomberg data, 71% of ECA's shareholders are in the U.S. and 20% are in Canada.

    Amazon offers loan to Deliveroo – Bloomberg

    • Amazon (AMZN -1%) has offered food delivery company Deliveroo a loan to help with the startup's capital crunch, according to Bloomberg sources.
    • The size of the loan is unknown, but Deliveroo is reportedly seeking "significant funds" to continue operations.
    • Deliveroo had about $240M in cash and equivalents at the end of 2018 and a net loss of $302M.
    • Amazon led a $575M round in Deliveroo last May and was seeking a minority stake, which was blocked by the UK competition regulator. The regulator is conducting a probe and will provide a decision by June 11.

    Freeport McMoRan cut at Credit Suisse on copper surplus view

    • Freeport McMoRan (FCX +0.3%) edges higher even after Credit Suisse downgraded shares to Underperform from Neutral with a $10 price target, cut from $11, citing valuation and the firm's copper surplus outlook.
    • FCX "lacks valuation support" given mid-cycle EBITDA and the copper production reset "sharply lower" in 2023, Credit Suisse analyst Curt Woodworth says, adding copper has much less cost support than aluminum in a downturn and faces "sharply higher" supply-side risks in 2021-23.
    • The U.S.-China Phase 1 trade deal likely will have minimal implications on metals demand, Woodworth also says.
    • FCX surged 5% yesterday as copper prices are forecast to climb in 2020.
    • FCX's average Sell Side Rating and Seeking Alpha Authors' Rating are both Bullish, while its Quant Rating is Neutral.

    GameStop sliced up after holiday sales dud

    • GameStop (GME -14.2%) falls sharply after an eye-popping 28% drop in holiday sales.
    • Analysts for the most part aren't showing a lot of sympathy for the retailer today.
    • Benchmark: "Deteriorating financial momentum has accelerated, management appears to have abandoned accountability and we see zero terminal value."
    • Baird: The firm says "challenges continue," with the console and digital transitions representing a double whammy.
    • Loop Capital Markets: The analyst team warns that fiscal 2019 results are tracking to be significantly worse than in the last year of the prior video game console cycle.
    • Wedbush: "Once GameStop is debt free, the short thesis begins to deteriorate. The upcoming launch of new video-game consoles is seen as a positive catalyst."
    • Shares of GameStop are still above where Michael Burry was reported to have taken a long position, leading to speculation on whether the famed Big Short investor is still long or took his firm's profit off the table.

    Cheniere moves closer to bringing Sabine Pass storage tanks back online

    • Cheniere Energy (LNG +1.2%) says it received regulatory approval to prioritize the return to service of one of the two storage tanks at its Sabine Pass LNG export facility that have been offline since a leak nearly two years ago.
    • While Cheniere has effectively managed operations at the Louisiana terminal with three other storage tanks during the outage, the company says the ability to use the additional capacity will allow more flexibility, especially during times when consumption is high or access to feedgas may be limited because of pipeline maintenance.
    • Cheniere has yet to receive formal approval to actual bring the tanks online, as it works to satisfy corrective actions the Pipeline and Hazardous Materials Safety Administration and the Federal Energy Regulatory Commission required to help prevent another leak.

    MAX taken off American Air schedules through June 3

    • American Airlines (AAL +1.7%) is pulling the Boeing (BA +1.2%) 737 MAX from its schedules until June 3, more than a full year later than it expected the jet to return to service.
    • United Airlines also doesn't expect the MAX to return until early June, a sign that carriers are expecting the problem to extend to the peak second- and third-quarter travel seasons.
    • American estimates the grounding cost it $540M in pretax income last year and recently reached an initial compensation agreement with Boeing (the airline had 24 MAX planes at the time of the grounding last year and 76 on order)

    Disney rebounds on report of app download rush

    • Walt Disney (DIS +0.8%) has gotten a big jump into positive ground after a report that says mobile downloads of its Disney Plus app have neared 41M.
    • Disney Plus was the top app story of the year, Sensor Tower says in a new report, noting more than 30M downloads during Q4 (after a Nov. 12 launch).
    • Disney Plus grossed more than $50M in its first 30 days, even with a seven-day free trial, according to the report – well ahead of subscription video rivals like HBO Now (T +0.2%) and Showtime.
    • And it notes in December, Disney Plus earned more U.S. revenue than HBO Now's best month (even allowing for revenue spikes around the final season of Game of Thrones).

    Dimon likes U.S.-China trade pact, sees some de-coupling

    • The U.S.-China phase-one trade deal that's due to be signed tomorrow is a "real one" that has "has substance and depth", JPMorgan Chase (JPM +2.2%) Chairman and CEO Jamie Dimon told Fox Business Network's Maria Bartiromo in an interview today.
    • He's not sure what will happen after this deal is signed, he said. Still, Dimon expects a "little bit of de-coupling between China's economic system" and the U.S.'s "for security purposes and otherwise."
    • JPMorgan, though, isn't de-coupling with China. "I still think that China is going to continue to grow," he said. "I think they want JPMorgan to be there to help set transparency and standards and rules."
    • As happenings in the U.S., Dimon expects to see more regional bank mergers in 2020. " I think there's a lot of business logic for it," he said.
    • On the economic side of things the U.S. consumer which accounts for ~70% of GDP, continues to be strong.
    • "Their confidence levels are very high," Dimon said. "Their jobs are going up. Their wages are going up. Their savings are strong."
    • As for the corporate side of the economy, he sees some of last year's uncertainty from geopolitics and trade abating. "That’s behind us now," he said. "I don't think it could be totally gone, but hopefully a bunch is behind."

    Hasbro seen having a better holiday than Mattel

    • Stifel expects Hasbro (HAS -0.2%) to post strong holiday quarter sales when the toymaker reports, while Mattel (MAT +0.7%) is seen disclosing a drop in sales.
    • The firm says Hasbro's quarter will see a significant boost from Frozen 2 and Star Wars products, while American Girls and Fisher-Price will underperform for Mattel in comparison to last year.
    • Stifel has Hold ratings on both toy stocks into the earnings reports due out in a few weeks, but the firm's price target on Mattel of $13 implies a larger drop in share price than the Hasbro PT of $103.

    Lithium producers rise on optimism over China electric vehicles

    • Lithium producers are rallying this week, as investors bet on a rebound in electric car sales in China after government assurances its subsidies for buyers would not be cut further, Financial Times reports.
    • Shares of Albemarle (ALB +1.7%) have climbed 9% and SQM (SQM +3.6%) are 15% higher YTD.
    • Shares in Chinese lithium producer Ganfeng, which supplies Tesla, jumped 8% in Hong Kong today, while Tianqi Lithium surged 9% in Shenzhen.
    • Recent comments from China's minister for industry and information technology that subsidies for electric car purchases would not be cut further this summer, sparking expectations of a rebound in electric car sales this year after sales of electric cars and hybrids fell 4% last year to 1.2M.
    • Other relevant tickers include FMCLTHMLAC

    Citigroup Q4 reveals 'number of positive trends'

    • Wolfe Research analyst Steven Chubak sees "a good number of positive trends" in Citigroup's (C +2.2%) Q4 helping to boost its shares.
    • Those trends include revenue growth across Global Consumer Banking, full year ROTCE of greater than 12%, and better efficiency; Chubak notes that Citi shares have been underperforming its peers YTD.
    • Citi beat expectations on net interest income and noninterest revenue, but missed on provision expense and loan growth, KBW analyst Brian Kleinhanzl writes.
    • Like JPMorgan's Q4, Citi's stronger-than-expected noninterest revenue was driven by trading, which increased 31% Y/Y and FICC, up 49%.
    • On the earnings call, Wolfe's Chubak says he'll focus on updated ROTCE targets, CECL guidance, strong consumer loan growth and sustainability, and outlook for capital return.
    • Conference call coming up at 11:30 AM ET.
    • See Key Stats Comparison with those of its peers.
    • Previously: Citigroup Q4 reflects gains in consumer, investment banking units (Jan. 14)

    U.S. auto sales forecast to fall slightly in 2020

    • TrueCar forecasts U.S. auto sales will dip 0.8% to 16.9M units in 2020.
    • "While sales will dip below the 17 million mark for the first time since 2014, when you look at the broader picture, 16.9 million vehicle sales are healthy," says TrueCar Chief Industry Analyst Eric Lyman.
    • Even as new vehicle sales are projected to soften slightly for 2020, revenue could be higher with the average transaction price for a new vehicle expected to rise by 2.5% Y/Y to $36,348 amid the continuing shift by buyers to SUVs and trucks.
    • TrueCar forecasts manufacturer incentive per unit spending will rise 3.3% this year to $3,863 per unit.

  32. Sure am glad there is no way to make $ on BYND.  The thing is like a cash machine.

  33. Boeing posts negative orders for first time in at least 30 years

    • Boeing (NYSE:BA) lost orders for 87 commercial airplanes for all of 2019, according to the company.
    • spokesman tells CNBC he's not sure when the last time that happened, but say's definitely not in the last 30 years.
    • Rival Airbus (OTCPK:EADSFOTCPK:EADSY) had positive orders of 768 in 2019.
    • Boeing shares are modestly in the green today.

    Atlantic Equities turns bearish on smartphone giant

    • Atlantic Equities analyst James Cordwell downgrades Apple (AAPL -0.5%) from Neutral to Underweight and raises his target from $235 to $275, saying the upside potential from 5G is "now more than fully priced in"."
    • Cordwell: "The extent to which 5G will ignite consumer demand is far from clear, particularly in the early stages of the technology’s rollout, when coverage of millimeter wave 5G (which will deliver the real uplift in connectivity speeds) will be very limited. Costs associated with 5G could also pressure gross margins, limiting the earnings growth that actually comes through in FY21."
    • The analyst thinks few services will make a real impact on Apple's financials and that wearables are unlikely to make a major difference, even if the Apple Watch and AirPods continue to see momentum.
    • Related: Earlier today, Wedbush outlined its $400 bull case for Apple on its 5G and services potential.

    FEMA official rips PG&E's deal with California wildfire victims

    • The Federal Emergency Management Agency is defending its effort to collect $3.9B in claims from PG&E (PCG +2.9%) for relief it provided after the utility's power lines sparked deadly wildfires in 2015-18.
    • A top FEMA official yesterday criticized PG&E and fire victims' lawyers for negotiating a deal that could put the U.S. government in the position of trying to claw back money it already has paid to people who lost family members, homes and businesses.
    • "It really, quite frankly, boggles my mind why the [fire victims'] lawyers would appear to want to relieve PG&E of its responsibility and make California and FEMA the enemy here," FEMA regional administrator Robert Fenton said.
    • Fenton also expressed frustration that FEMA could be forced to seek money from the $13.5B fire settlement for some of the same losses the agency already doled out, even though FEMA was excluded in the confidential negotiations that led to the deal.
    • PG&E and fire victims' lawyers repeatedly have asserted that the government agencies are not entitled to a cent from the settlement fund.

    Analysts focus on Wells Fargo's expenses, weak fee income for Q4 miss

    • Although Wells Fargo's (WFC -3.9%) Q4 net interest income and provision expenses exceeded KBW's estimates, the bank's expenses, average loan growth, deposit costs, and mortgage banking fees missed, writes analyst Brian Kleinhanzl.
    • "The quarter was noisy but the end result was that noninterest revenues and expenses missed, he writes in a note.
    • Jefferies analyst Ken Usdin calls Wells Fargo's Q4 EPS "messy, including a big litigation reserve and elevated expenses elsewhere."
    • Reported EPS of 60 cents included several items that pushes core to 85 cents-90 cents (vs. $1.12 consensus), Usdin figures.
    • He points to $1.5B litigation costs, still-elevated other operational losses, $362M gain on Eastdil sale, $166M of tech project write-downs, $134M gain on sale of Pick-a-Pay loans, $125M reserve release, and $153M Q/Q decline in LIHTC-related income related to timing.
    • Weaker fee income and higher-than-expected expenses were the main drivers of the miss, writes Wolfe Research's Steven Chubak.
    • "Until he [new CEO Charlie Scharf] is ready to help frame the timeline and opportunity on expenses and other profitability targets, and so long as fundamentals continue to lag Money Center peers, we expect shares will remain in purgatory," Chubak said.
    • Previously: Wells Fargo Q4 disappoints, CEO says costs are too high (Jan. 14)

  34. New Jersey set to ban flavored vaping products

    • The WSJ reports that New Jersey lawmakers have passed legislation tightening regulations on e-cigarettes, including a ban on flavored vaping products.
    • Penalties for retailers selling tobacco or vaping products to customers under the age of 21 will be stiffened, the use of coupons or discounts to purchase the items will be banned as will the sale of vaping liquids that contain more than 2% nicotine.
    • Governor Phil Murphy, a Democrat, will need to sign the package into law.
    • Several weeks ago, the FDA announced its proposed policy banning the sale of flavors (except menthol and tobacco) in pod-based e-cigs.

    Another wild ride for Beyond Meat

    • Shares of Beyond Meat (NASDAQ:BYND) are up 9.07% amid frenzied action that has seen significant breaks higher and lower in the morning session, as well as a short trading halt by the Nasdaq for volatility.
    • Beyond Meat has traded as high as $135.23 and as low as $118.51. A high level of short interest on BYND accounts for some of the volatility.

    Image result for trump failing new york timesNYT +1.5% after detailing record digital year

    • New York Times (NYSE:NYT) is up 1.5% after the company unveiled details on a record digital year that CEO Mark Thompson is announcing at internal town hall meetings today.
    • The company hit a goal of $800M in annual digital revenue a year early (it had planned in 2015 to double revenues of $400M by the end of 2020).
    • It added more than 1M net digital subs last year, the highest run-rate since it launched its digital model (and in fact the highest number of net adds in company history). And the company has more than 5M total subscriptions, including 3.4M core news subs.
    • The company is set to release its Q4 results before the market open on Feb. 6 with a conference call set for 8 a.m. that day.

    Tesla rally finds a new gear

    • Tesla (NASDAQ:TSLA) is higher once again on red-hot investor sentiment and with another firm jumping in with a price target hike.
    • Jefferies boosts its price target to $600 from $400 as it points to the ability for Tesla to add sales in the power storage and third-party battery sales businesses.
    • The firm also expects Tesla to be profitable this year on a stand-alone basis excluding tax credits.
    • "We think it would be wrong to exit Tesla on valuation given that: it is the only [automaker] engaged in a positive-sum game in [electric vehicles] amid rising market acceptance," advises Jefferies analyst Philippe Houchois.
    • Tesla is up 2.94% on the day and 28.76% higher for 2020. Shares have more than doubled over the last 90 days.

    Virgin Galactic beefs up hiring

    • Virgin Galactic (SPCE +4.1%) plans to bring on another 50+ employees in New Mexico, including a variety of STEM positions.
    • The jobs include propulsion and avionics mechanics, as well as engineers, a spokeswoman told Albuquerque Business First.
    • Following Virgin's first consumer flight, expected to take place in June, the space company plans to scale operations with an estimated 16 flights to take place this year, 115 next year and 270 by 2023.

    MGM Growth, Blackstone REIT to acquire MGM Grand, Mandalay Bay

    • MGM Growth Properties (NYSE:MGP) and Blackstone Real Estate Income Trust form a joint venture to acquire the Las Vegas real estate assets of the MGM Grand and Mandalay Bay for $4.6B.
    • Also, BREIT will buy $150M in MGP class A shares.
    • MGP will own 50.1% of the joint venture and BREIT will own 49.9%.
    • At closing, MGM Resorts International (NYSE:MGM) will enter into a long-term triple net master lease for both properties and provide a full corporate guarantee of rent payments.
    • MGM Resorts will continue to manage, operate and be responsible for all aspects of the properties on a day-to-day basis, with the joint venture owning the properties and receiving rent payments. Initial annual rent will be $292M.
    • BREIT is externally managed by a subsidiary of Blacktone (NYSE:BX).
    • MGM Resorts will sell the Grand Las Vegas to the JV in a transaction valued at $2.5B; MGM Resorts expects to receive cash proceeds of ~$2.4B and ~$85M in MGP operating partnership units.
    • MGP has agreed to deliver cash for up to $1.4B of MGM Resorts' existing operating partnership units.
    • MGP currently owns the Mandalay Bay real estate.
    • Transaction is expected to close in Q1.
    • Previously: MGM close to selling off two more Vegas Strip properties (Jan. 14)

    Deutsche boosts Alphabet ahead of earnings

    • Deutsche Bank raises its Alphabet (GOOG,GOOGL) target from $1,550 to $1,750 ahead of the earnings report expected on February 3.
    • Analyst Lloyd Walmsley doesn't think the company will see deceleration Q/Q even with the slightly tougher comps.
    • The analyst will watch the results for signs of improved disclosures under new CEO Sundar Pichai and for the company stepping up its buyback pace.
    • Alphabet shares are up 0.03% pre-market to $1,439.59. The company has a Very Bullish average Sell Side rating.

    Airline sector on watch after Delta's earnings shine

    • A solid earnings report from Delta Air Lines could give a lift to the airline sector.
    • "Overall, this result demonstrates a healthy demand environment over the holiday period, and solid momentum entering 2020, which we would expect to lift the group today," notes Credit Suisse on the Delta numbers.
    • In premarket action, United Airlines (NASDAQ:UAL) is up 1.44% and American Airlines Group (NASDAQ:AAL) is 1.72% higher. Southwest Airlines (NYSE:LUV) and JetBlue (NASDAQ:JBLU) are showing more modest gains of about 0.90%. Spirit Airlines (NYSE:SAVE), Alaska Air (NYSE:ALK) and Hawaiian Holdings (NASDAQ:HA) could also get a boost from Delta's report when they start trading.
    • Previously: Delta Air Lines +5% after earnings topper (Jan. 14)

    Apple gets another PT boost on 5G

    • UBS raises its Apple (NASDAQ:AAPL) target from $280 to $355, citing the bank's latest smartphone survey data, which showed over 20% of respondents seeing 5G as a positive factor and improving iPhone purchase intent.
    • The bank now expects iPhone sales to hit 196M in FY20, up 5% Y/Y.
    • In other Apple calls, Wedbush bull Daniel Ives thinks AAPL has the potential to become the first company to hit a $2T market cap by the end of next year.
    • Ives sees a $400 bull case by the end of the year, a 30% upside.
    • The analyst cites the "5G tailwinds and services momentum potential over the coming years."
    • Apple shares are down 0.2% pre-market to $316.44. The company has a Bullish average Sell Side rating.

    Ulta Beauty seen benefiting from department store meltdown

    • Oppenheimer weighs in on the impact for Ulta Beauty (NASDAQ:ULTA) of Macy's closing around 30 stores.
    • The firm says 50% of expected Macy's store closures have an Ulta store within 3 miles and 87% have an Ulta store within 10 miles.
    • "We expect share gains from the department store channel to persist and continue to watch JCP and any changes to its store footprint that include more than 650 Sephora stores," writes analyst Rupesh Parikh.
    • "Given ongoing makeup category challenges, we still expect a volatile ride from here for ULTA shares. Consistent with our strategy since the August sell-off, we would be opportunistic on pullbacks," he adds.
    • Oppenheimer has an Outperform rating on ULTA and price target of $310.
    • Shares of Ulta Beauty are up 8.91% for the early part of 2020

    Chain store sales stay solid in latest read

    • Chain store sales increased 5.0% for the week ending January 11, according to the latest report from Johnson Redbook.
    • Johnson Redbook estimates sales will rise 5.5% for the full month on a year-over-year comparison.

    Consumer price index trail estimates

    • December Consumer Price Index+0.2% M/M vs. +0.3% consensus, +0.3% prior.
    • Core CPI +0.1% M/M vs. +0.2% consensus, +0.2% prior.
    • On a year-over-year basis, headline inflation is now at 2.3%, vs. consensus of 2.3% and 2.1% previously.
    • Core inflation on a year-over-year basis is now at 2.3% in-line with consensus of 2.3%, and 2.3% previously.

  35. Phil,

    WFC….thanks for your input! Need to cool off with the market at these levels. 

  36. Quite a ride today.  

    I think we get to the signing tomorrow and then a bit of a sell-off to end the week.

  37. Yodi/CBRL

    I did a trade similar to the one you did except I originally sold the Feb. $160 calls for $2.14.  This latest bump in price ($162.29) has chewed up all the premium in the sold call.  Other than the upcoming dividend, I don’t see any news that makes me believe this stock will go much higher; certainly not higher than $165. Would you roll the call out to avoid assignment?  The March $160’s would add another $1.95 premium and should get me past the dividend while maintaining appropriate downside protection to the 2022 $135 long calls I hold.  Thanks for the idea. 
    original trade:  buy: (2) 2022 $135 long calls ($24.21)/ sell: (1) Feb. $160 call ($2.14) / sell: Feb. $150 put ($2.99)

  38. New Video Shows Two Iranian Missiles Hit Ukrainian Plane

  39. Democrats release new documents on eve of impeachment trial

  40. TSLA/ Phil     A short squeeze is clear, and a necessary correction also, but something is propelling the price, Elon shacked space industry putting all the tradicional companies in shame, reducing launch prices 10x to start with, perhaps something is coming that can change the 100 years idea around cars and transportation, can you recommend any other long term play that risking low can put us in the game ( I was out of your previous plays).

    this is interesting

  41. Dclark,

    CBRL see also my comment:

    January 14th, 2020 at 10:36 am |  

    Any one entered the CBRL PoorMT,  the Jan20 157 caller has to be rolled. I am rolling to Feb 160. The stock is 1/16 ex div and pays 1.30!!!!! I will wait to sell the new putter after 1/16

    But you already have the Feb 160 caller. So you just need to look at the premium of the Feb. 160 strike price. The extrinsic value is before opening this morning 1.81. the div. is only 1.30 so no wise man will call on you and pay you 0.51 cent more than the div. Always look at the extrinsic value! The reason why I recomment to roll to Feb. 160 is, the time is shorter than to March and I expext CBRL will still drop a bit after the 1/16. Only if the extrinsic value will be less than 1.30 you should roll to Mar 165. But always check after opening.

  42. P.S Even the Mar. 160 has still an extrinsic value of 3.76 and with the option price of 6$, puts you safe up to 166.00.

  43. advil TSLA have you become a keen gambler?

  44. Yodi

    Thank you!