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Tuesday, August 16, 2022

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Trumped Up Tuesday – Let the Impeachment Begin!

Image result for trump impeachment cartoonImpeachment begins in earnest this week.

It may end just as quickly as the GOP-controlled Senate is looking to acquit Trump as soon as possible, preferably without hearing from any witnesses or reviewing any evidence.  This farce will be overseen by Chief Justice John Roberts – which is very sad for our rule of law, of course, as it legitimizes this behavior and sets a precedent for future dictators to rule our country by.  Nonetheless, at least it will be interesting.  

Trump, like Carlos Goshn, has already fled the country and is in Davos for the World Economic Forum, where he just gave the first keynote address in the 50-year history of Davos that did not mention the World at all – except to say how much better Ameirca is than the rest of it.  As noted by the NY Times:

In his 30-minute address in front of a global audience, Mr. Trump did not mention the impeachment trial back home. But he delivered what amounted to a version of his campaign speech minus the red meat to his base, speaking little of international alliances other than touting America’s supremacy in the world.

The president also took a swipe at people demanding action on climate change, the lead agenda item at this year’s conference. Mr. Trump announced that the United States would join the 1 trillion trees initiative launched at the World Economic Forum. But he also declared that “we must reject the perennial prophets of doom.”

The message at Davos was very clear to all but Mr. Trump.  So clear in fact that it was written on the roof of the building:

“Act on Climate” could be read in the snow near Davos as Mr. Trump arrived on Tuesday.

Global warming and climate change top the agenda items for the conference. A star speaker on Tuesday, alongside Mr. Trump, is the 16-year-old climate activist Greta Thunberg, who has said she wouldn’t “waste her time” speaking to Mr. Trump about climate change.  Trump has withdrawn America from the Paris Climate Accord, and his administration has expanded the use of coal, downplayed concerns about climate change and rolled back environmental protections – the signature accomplishments of his 3 years in office.

Trump described climate activists as “heirs of yesterday’s foolish fortune tellers,” knowing that his arch-enemy, 17-year old Greta Thunberg, was scheduled to speak right after him and is scheduled to make several more speehes – all of which are fully booked.  Trump was one and done.   

Ms. Thunberg took pains to distance herself from politics. “This is not about right or left. We couldn’t care less about your party politics,” she said. “From a sustainability perspective, the right, the left as well as the center have all failed. No political ideology or economic structure has been able to tackle the climate and environmental emergency.”

“I wonder, what will you tell your children was the reason to fail and leave them facing the climate chaos you knowingly brought upon them?” Ms. Thunberg, 17, said at the annual gathering of the world’s rich and powerful.  “Our house is still on fire, your inaction is fueling the flames by the hour.”

Which one of these people should be leading the Free World?

Countries and cities where cases have been reportedAnyway, Cimate is too big to worry about so instead investors are worried about tiny little viruses from China and this one is being called Wuhan with hundreds of people infected and 6 people already dead from a SARS-type of pneumonia that has been spreading from person to person.  It may be worse as provinces have been under-reporting cases to avoid panic but this morning the health ministry said: "Anyone who concealed new cases would be nailed on the pillar of shame for eternity."  15 medical workers are now infected as well and the WHO may declare a global emergency.  

The Shanghai Composite dropped 1.4% overnight and the Hang Seng fell 2.6% with the Nikkei down just under 1%.  That led to a weak open for Europe and our Futures were down 0.5% but half-recovering as of 8:30 – so we'll just have to see how things play out from here.  

Despite the short week, 225 companies will report earnings this week including many top S&P Corporations.  We didn't learn to much last week but hopefully we'll see some clear pattens emerging from this week's reports:

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There's very little news and NO official Fed speak this week but plenty of quotes expected from Davos.  Tomorrow we have Mortgage Applications, New Home Sales, the Chicago Fed and Redbook; Thursday will be Leading Economic Indicators, the KC Fed and the Oil & Gas Reports and Friday we have PMI and that's it for the week – very dull from a data perspective so the concentration will be on earnings – and the floor of the Senate…

 

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Boeing halted after 5% drop – eek

Just curious to know any one plaid AMBD PoorMT I did recommend 12/30
 

Yodi – Thanks; I did not play but I did read a little bit about the company and what they do and such; And I am interested in taking a position. Just not sure if I want to do it in a trading account or a retirement account. Do you have a play for now? It is at about $190 now.

BA – selling the Jan 2022 $300 puts for $43 will easily take you across the $300 barrier with room to spare. 

Phil

Its interesting DAL does not have any 737 MAX planes

Phil

I missed the trade of the year so what was the trade

Thanks

Vkat ABMD well it is a bit late now, as the horses have left the stable. I initiated the play when the stock was trading at 168!!!! I do not like to jump on a running train, even the stock is still a the low side of the scale. I would keep an eye on it for now.

Aeroplanes – a choice of two – Airbus or Boeing. 

Bought the synthetic stock at $310 – (cost $1.50) buying Jan 2022 $130 call / selling the Jan 2022 $130 put. Will add some protection later on when the volatility settles down.

Hold that post – seems silly not to sell the March 20 $300 calls for $22.50. They roll to the Jan 2022 $400 calls – I'll settle for that.

Yodi/ABMD – No problem. Thank you. I will keep an eye and see if it pops a bit.

Phil – 2 Questions now that everything seems toppy/stretched:

1. You do lot of bull call spreads and short puts on the same stock typically; Can we do something similar on the bearish side; As in, buy a Bull Put Spread and sell out of the money Calls to pay for the spread.

2. Are there butterfly spread varieties on the bearish side;  can we look into a few Bull Put Spreads and selling out of the money Calls and Puts

We can look at some non-profitable highly values stocks like CVNA, W, SHOP and so on; Or some profit making but high values (high PE) stocks like ULTA, FLT, NFLX

Thanks.

BA / Phil – I am staying far, far away! The problem is that there is some trust issues with that company now and it's not a great thing when dealing with people's lives. I can say that I don't trust Verizon for example, but it's simply because their support people can't seem to give me straight answer. My life is not in danger. At this point, I would not fly on one of these 737 MAX and I am sure I am not the only person. BA might be losing huge chunks of the market for a while. 

IBM also issued an upbeat outlook for the current year.

https://www.wsj.com/articles/ibm-earnings-hint-at-signs-of-turnaround-11579641192

IBM Earnings Hint at Signs of Turnaround 

Big Blue’s fourth-quarter earnings boosted by Red Hat deal and mainframe computers

Adjusted earnings per share for this year should be at least $13.35, up from $12.81 in 2019, the company said. Analysts surveyed by FactSet were forecasting the company to earn $13.28Adjusted earnings per share fell around 3% to $4.71 but came in ahead of expectations of analysts surveyed by FactSet. Analysts had projected $4.69 adjusted per-share earnings for the quarter ended December 31. Adjusted net income fell by about 5% to $4.2 billion, IBM said.IBM slight beat in earnings with slightly above CE outlook 

International Business Machines Corp. IBM 0.56% reported a slight increase in quarterly revenue, ending a streak of falling sales and providing a first indication Chief Executive Ginni Rometty’s roughly $33 billion acquisition of open-source software giant Red Hat may help turn around Big Blue’s fortunes. 

 

The company on Tuesday said fourth-quarter revenue rose 0.1% to $21.78 billion in the quarter after five straight quarters of year-over-year declines. 

 

 

The new Corona Virus outbreak is coinciding with the Chinese New Year's holiday, which is the biggest holiday in China and usually sees HUGE amounts of travel and tourism.  We're talking billions of people squeezing into trains, planes and tourists attractions.  Not a recipe for anything good, unless the government just outright starts quarantining whole cities and enacting travel restrictions.

 IBM 

IBM (NYSE:IBM) +4.5% reports Q4 beats with a 0.1% Y/Y revenue growth, breaking the streak of five consecutive Y/Y declines.

Revenue breakdown: Global Technology Services, $6.95B (consensus: $6.99B); Cloud and Cognitive Software, $7.24B (consensus: $7.12B); Global Business Services, $4.24B (consensus: $4.26B); Systems, $3.04B (consensus: $2.84B).

Total cloud revenue was up 21% to $6.8.

Red Hat revenue was up 24% to $1.07B, normalized for historical comparability.

For FY20, IBM sees operating EPS of at least $13.35 (consensus: $13.29) and FCF of about $12.5B.

Earnings call starts at 5 PM ET with a webcast here.

Press release.

FWIW the first reported case of the new Corona Virus in Japan was a Chinese traveller who purposely took cold medicine to suppress his fever while on the plane and went undetected at the airport.  It wasn't until a few days after he landed that he went to a hospital.  I wonder how many people on that airplane were infected. 

TBH, until this outbreak dies down, I have zero plans to ride an airplane or go to a tourist attraction — which nowadays are INUNDATED with tourists from China, so there is a possible explanation for why airline stocks are down despite not having Boeing 737-Max planes.  It also makes you think how much of a hit it will be on the economy and GDP.

Also good thing we are cutting funding for the CDC to finance the tax cuts right? Not going to bite us in the ass much I am sure.

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