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GDPhursday – Is the Rally Getting Old or is it Just a Virus?

Image8,000 infections, 170 deaths.  

That's the number we're up to this morning but it is less than 9,000 so not getting wose though the rise in deaths to 170 is disturbing from 106 yesterday.  1.7% is the number I'm more concerned with as that is the Fed's most recent estimate for our Q4 GDP and you would think they would know but this is just the first estimate for Q4 – so the number we hear this morning is a lot more like a guess than a statistic anyway.

We guessed we hadn't heard the last of the coronavirus in yesterday's Live Trading Webinar (replay available here) and we shorted the S&P (/ES) Futures way back at 3,285 and they are already down to 3,245 for a $2,000 gain, per contract (you're welcome!) and the Nasdaq (/NQ) Futures we shorted at 9,142.50 are now down to 9,037 for a gain of $2,110 per contract – not bad for a day's "work", right?

In the bigger picture (there's always a bigger picture) we're simply retesting Monday's low's and we made a lot less money than we did on Monday because, on the whole, we only had a strong bounce which quickly failed and now we're retesting the lows so, if we only get a weak bounce now and that fails – look out below!   But, for now, we'll take our quick profits ooff the table and re-enter shorts below the 28,500 line on the Dow (/YM) Futures with tight stops above. 

Here are the bounce lines for the S&P 500, as calculated by our Flawless 5% Rule™:

We predicted all the index bounces on Monday for our Members in our Live Chat Room at 10:52 and, so far, the indexes have done exactly what we expected, which is actually bad because we expected this would be the start of a breakdown…  Oh well…  

What we're looking for today is signs that the rate of viral infections is slowing (more important than deaths acellerating) and, chart-wise, we'll be looking for more than a weak bounce.  If the weak bounce line isn't taken and held into the close – it will be time for more hedges.  Remember, I can only tell you what is likely to happen and how to profit from it – the rest is up to you!  

8:30 Update:  Q4 GDP is estimated up 2.1%, the same as last Q and much better than the Atlanta Fed's prediction but, as I said, beware the revisions.  Still, it's a good reason to firm up that bottom so now we'll see how well we bounce off this "great" news.  Well, not that great as 2.1% is anemic growth but it was during the Trade War and that's over (sort of) and, if the virus burns out fast – we could be seeing a better Q2 (Q1 is already messed up).  

ImageTesla (TSLA) had a huge pop after hours, all the way to $659 and we have 5 short June $550 calls we sold for $66.50 (net $616.50) in our Short-Term Portfolio so $650 is staring at a loss of $16,750 but, of course, we'll roll and adjust our short calls.  I would put up the idea here – but there's no way to gage the price of the options until they open.  

What we will be looking for is overpriced calls to sell, like the Sept $650 calls for maybe $95 on all the excitement.  That would raise our ceiling to $750 and, HOPEFULLY, Tesla will calm down at some point.  Currently, $650 per share is $118Bn in market cap or about $120,000 for every car TSLA has ever sold – more than Ford (F) and GM (GM)'s combined $80Bn market cap – and they sell $310Bn worth of cars a year and make $11.6Bn in profits.

TSLA's Revenue in the 2nd half of the year was $13.7Bn vs $14.1Bn in the first half and Net Income fell from $450M in the first half to $248M in the second half with earnings per share down from $2.63 in the first two quarters to $1.38 in the last two – that's down 45% so of course the stock is up from $225 to $650 (188%).  And no, it's not just sour grapes because we were short – it's sour grapes because we were right and sales and revenues are slipping and the company did only make $4.01 per $650 share – trading at 162 TIMES earnings.  IT'S RIDICULOUS and it pisses me off but, oh well, we can only hope one day the market becomes rational.  Meanwhile, we'll take that $100 for people who think $750 will come easy, right?

Facebook (FB) is failing in their attempt to get into the Trillion Dollar Club and the stock is falling hard this morning, down 7% to $208 (only $636Bn) as the speed of their growth slows down to 25%.  FB made $6Bn in Q4 vs $320M for TSLA so 20x yet Facebook is only valued at a bit over 5x what TSLA is fetching so either TSLA is ridiculously overpriced or FB is worth $3Tn?

Of course $3Tn for Facebook is only $1,000 per user – so not as far-fetched as Tesla being valued at $120,000 per driver.  Aren't those drivers the exact same people who go home and log into Facebook?  Why would they be worth more money in their car than they are at home?  These are the questions we ponder in the 2020s!  

 


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  1. Good morning, All!

    The webinar replay is now available, here:

    https://youtu.be/4S6GSQSZ2ek


  2. Good Morning



  3. Good Morning!


  4. GDP / Phil – It's 2.1% growth with a $1T deficit! We used to get these numbers with half that deficit! Not big feat to grow the economy by 2% when you inject 5% of GDP to said economy. Makes you wonder what the numbers would be if they had not push through that tax cut. Or what the numbers would be if that tax cut had been directed instead toward the lower income people or even if some money had been spent on infrastructure instead! And predictions are for $1T deficits as far as the eye can see or until we get a Dem elected president I guess!


  5. Seattle raised the minimum wage to $16.39 and guess what, there are still jobs being created. In fact at 1.89%, lower than the national average:

    Image


  6. How about a new TSLA short?


  7. Are the TSLA Jan 21 1000 calls safe – asking for a friend!


  8. Sold 2 TSLA Mar 700 calls.  


  9. TSLA has to be the biggest short squeeze in history !   Using close stops.


  10. FYI… we'll still be uploading the webinar replays to YouTube, but I've also started uploading them to our channel over on BitChute, here: https://www.bitchute.com/philstockworld/


  11. Time to look at MO some people are jumping off the cliff!!!


  12. TSLA / Albo – It's insane, but you can sell TSLA Feb 800 calls for $4! One standard deviation from the current price to 2/21/2020 is $750 on the long side! For March, it's $800. So tempting but so scary at the same time!


  13. Copper prices are reflecting some worries I think!


  14. Good morning!

    Got a bit of a bounce but we'll see if it sticks. 

    Deficit/StJ – We still need to spend Trillion on infrastructure – that's not going away just because we ignore it.  No surprise in Seattle.

    TSLA/JMD – Just horrifying.  Still waiting for it to settle down.

    Good luck Albo.

    MO/Yodi – They wrote off more of JUUL, another $4Bn but it  has nothing to do with their core business, which made $1.25Bn 

    Copper/StJ – I like them long off the $2.50 line with tight stops below.

    Speaking of TSLA, for the STP:  The 5 short TSLA June $550 calls are $137, implying $187 so lots of premium in that number.  The Sept $650s are $102 so we'll sell 5 of those and put a stop on the $550s over the $650 mark, let's say $150 per contract.  If we take that loss, we sold the $550s for $66.50 so spending $150 to buy them back and rolling to 5 short Sept $650s means we essentially sold the Sept $650s for $16.50.  Also, we have 5 short 2022 $300 puts we sold for $32 and they are only down to $25.  Let's sell 2 Jan $550 puts for $70 ($14,000) as an additional offset to the short calls.


  15. What has changed since SARS as far as China's importance is concerned:

    Image


  16. Oh no, testing the lows already.  

    Remember, I like /YM below 28,500 with tight stops above.  /ES 3,250 same.


  17. Here my simple TSLA play set up 1/8/20 Original Winstons Idea!!!!

    Position Summaries                                    
    Symbol    Net Shares    Stk Price    Net Chng    %Change    P/L Open    P/L Day    BP Effect        
    TSLA    3.93    649.72    68.73    11.83%    $3,172.00     $104.86     ($6,128.00)        
    Overall Totals    3.93                $3,172.00     $104.86     ($6,128.00)        
                                        
    Cash & Sweep Vehicle    $204,553.33                                 
    BP ADJUSTMENT    $0.00                                 
    OVERNIGHT FUTURES BP    #NAME?                                
    Available dollars    N/A                                
                                        
    Position Details                                    
    Symbol    Opra    Days    Qty    Delta    SPC    Exp    Strike    Option Type    Mark
    TSLA            0    0                    649.72
    .TSLA200221C495    TSLA200221C495    22    -1    -100    100    21-Feb-20    49   C    152.95
    .TSLA200221P495    TSLA200221P495    22    -1    3.93    100    21-Feb-20    495    P    1.78
    .TSLA200221C505    TSLA200221C505    22    1    100    100    21-Feb-20    505    C    143.35

    Profit 3,172.00

    Original position short call sold for 41.30

    short put sold for 38.40

    long call bought for 36.60

    Interesting play holds good if stock goes up!!!!


  18. TSLA – Stops  to entry on this move down.


  19. NYCB is down to just under $11. I have this one in a PSW watchlist but am not sure how long ago it was added… 


  20. Interest rates and oil carve out new lows as stocks slip

    • In the latest coronoavirus news, the WHO this afternoon will announce whether or not it's declaring a Public Health Emergency. Meanwhile, the official figures out of China are 7,711 cases, with at least 170 deaths. The WHO says there are 68 confirmed cases outside of China.
    • U.S. stocks are posting modest losses, with the S&P 500 down 0.75% and Nasdaq down 0.9%. Europe's down 1.2% late in its session.
    • The 10-year Treasury yield continues to quickly head south, down another 3.5 basis points today to 1.55%. That's still pretty large on a relative basis. German 10-year yields are -.041%, Italy 0.946%, and Spain 0.264%. TLT +0.5%TBT -1%.
    • Oil (NYSEARCA:USO) is off another 2.3% to $52.10 per barrel – the weakest level since October. The Energy Select SPDR (XLE -1.1%).
    • Gold (NYSEARCA:GLD) has moved to a multi-year high of $1,583 per ounce.

    Shaky confidence in Altria

    • Altria (NYSE:MO) is down 5.75% after coming in light with Q4 revenue.
    • The tobacco giant is also drawing some notice for its plan to account for Juul using the fair value option. Bernstein analyst Callum Elliot calls the method "very strange" and warns that it could suggest big losses at Juul that Altria want to keep separate from its P&L.
    • "We'd like to see signs that the mess is being cleared up before we turn buyers," states Elliott.
    • Previously: Altria revises deal with Juul (Jan. 30)
    • Previously: Altria EPS in-line, misses on revenue (Jan. 30)

    Hummer goes electric

    • General Motors (GM -1%) confirms that it will launch an all-electric Hummer with 1K horsepower and acceleration to 60 mph under three seconds.
    • The automaker plans to start selling the Hummer EV pickup at the end of 2021 under the GMC brand. Production will be out of one of GM's Detroit plants.
    • The Hummer brand was discontinued when GM dived into bankruptcy in 2009. The rebirth of Hummer won't feature any gas-powered models.
    • The new Hummer look will catch the spotlight this weekend with GM having Super Bowl ad slotted in the second quarter of the game featuring Lebron James.
    • The Hummer EV pickup is part of GM's total planned investment of $3B in all-electric SUVs and trucks.

    Tractor Supply missed estimates in Q4

    • Tractor Supply (TSCO -1.3%) reports comparable store sales of +0.1% in Q4 was below expectations , driven principally by the effect of a period of warmer than expected weather impacting the sales of seasonal products and softness in several holiday discretionary categories.
    • Gross margin rate improved 26 bps to 33.8%.
    • SG&A expense rate +3 bps to 25.2%.
    • During the quarter, the Company opened 30 new Tractor Supply stores and 5 new Petsense store.
    • Store count: Tractor supply +79 to 1,844 and Petsense +5 to 180.
    • FY2020 Guidance: Net sales: $8.75B to $8.9B; Comparable store sales: +1.5% to +3%; Operating margin rate: ~8.9% to 9%; Tax rate: 22.4% to 22.7%; Net income: $575M to $595M; Diluted EPS: $4.9 to $5.1; Capex: $225M to $275M; Share repurchases: 450M to 550M.
    • The Company plans to open ~80 new Tractor Supply stores and 10 to 15 new Petsense locations in FY2020.
    • Previously: Tractor Supply EPS misses by $0.02, misses on revenue (Jan. 30)

    Wealthiest Americans to cut back on stock buying in 2020, Goldman says

    • The richest Americans already own so much stock that they're not likely to buy as much this year compared with 2019, write Goldman Sachs Group strategists including Arjun Menon and David Kostin.
    • They forecast the S&P 500 will end 2020 at 3,400, only a 3.9% increase from Wednesday's close and far smaller than its 2019 gain of 29%.
    • "We expect households to remain net buyers of stocks this year, but demand will likely be lower than 2019," the strategists wrote.
    • Wealthy investors typically boost net purchases of stocks after periods of accelerated economic growth, but then lower demand as the amount they hold rises.
    • They also see stock buybacks declining 5% this year amid increased uncertainty.

    Apple topped Q4 smartphone shipments

    • Apple's (AAPL -0.6%) iPhone shipments hit 72.9M in Q4 (+11% Y/Y), according to new data from Counterpoint Research.
    • Samsung sold 70M smartphones in the same period.
    • Counterpoint attributes Apple's strength to the better-than-expected iPhone 11 performance and associated upgrade cycle.
    • For CY19, Samsung led the global smartphone market with 296.5M units, followed by Huawei with 238.5M and Apple with nearly 200M.

    Facebook sinks as analysts weigh growth profile after earnings

    • Facebook's (NASDAQ:FB) market cap is a little lighter today – by tens of billions of dollars – as it drops 5.9% after last night's earnings report, where the company topped expectations but guided on its call to decelerating growth.
    • That's led to repositioning and new targets among analysts.
    • Pivotal Research downgraded Facebook to Hold from Buy and cut its price target to $215 from $245 (4% downside from Wednesday's close), fretting over a bigger U.S. slowdown than they expected. It also lowered its expectations for revenue, operating income, EPS and multiples.
    • KeyBanc is staying Overweight but lowered its target to $248 from $263; it's accounting for the new forecast but expects margin pressure will ease up over this year and next and still sees big platform opportunities and an improved free cash flow profile ahead.
    • On the other hand, JMP says engagement is still strong and new explore ads and Stories expansion show growth potential. It's sticking with a Market Outperform rating and $250 price target (now implying 19% upside).

    Tanger Factory raises annual dividend

    Tesla +8% as analysts try to keep up

    • Tesla (NASDAQ:TSLA) opens up 8.15% after posting a strong Q4 earnings report. Analyst are mainly playing catch-up with price targets, although some are sounding caution on the road ahead.
    • Oppenheimer ($684 price target): "We believe Model Y ramp commencing several quarters ahead of optimistic estimates suggests TSLA’s product cycle time is improving and remains well ahead of competitors. We believe battery chemistry and density improvements are core to the longer than expected range for Model Y and will help drive weight and cost reductions."
    • Wedbush ($900 bull-case PT): "While Tesla shares remain on a historic rally heading into earnings, the bull party will continue as the aggressive trajectory of Giga 3 production and demand out of Shanghai look very strong out of the gates with the potential to see 150k units/demand out of the region over the next year in our opinion."
    • Canaccord Genuity: The firm moves its price target to $750 from $515.
    • Baird: The analyst team hikes the PT to $650 from $525.
    • Deutsche Bank: The PT goes to $510 from $455.
    • Piper Sandler: The firm ratchets up its PT to $729 from $553.
    • JMP: The firm reasons that the buying stock at the currents levels is an act of faith that will work until it doesn't.
    • The Wall Street Journal: No formal rating from Charley Grant, but some words of caution. "Bulls should spare a thought for the income statement, which is far less impressive. Total fourth-quarter revenue grew by just 2% from a year ago. Meanwhile, thanks to falling sales of cars with higher profit margins, operating income actually declined 13%. And, of course, Tesla lost $862 million in 2019 and has never posted an annual profit in nearly two decades of existence," he writes.
    • Previously: Tesla blasts through $600 after big earnings beat (Jan. 29)
    • Previously: Wedbush sees Tesla cruising to 1M deliveries (Jan. 29)

  21. UAL was the one we wanted for the virus fears. Was at 90 now 75. Watch RCL CCL


  22. Cought MO at 46.50 !!!!


  23. Macau casinos strategize amid 80% traffic drop

    • Macau traffic is down 80% to 90% based on different sources from the gambling mecca. The question of how much offset there is with operating costs came up on yesterday's Las Vegas Sands (NYSE:LVS) conference call.
    • "I think it would be foolhardy to think we can reduce costs enough to offset what's happening," noted Las Vegas Sands COO Robert Goldstein.
    • Las Vegas Sands says the company is measuring the temperatures of the gamblers it does have visiting casinos and all dealers have masks. Management is also looking to support the initiatives coming out of Beijing.
    • Looking down the road, LVS execs see the traffic bounceback from the flu being huge, but note they can't model yet if the recovery will be in February or March. Meanwhile, analysts have been pointing to the short-term impact of outbreaks of the past that usually last less than six months, although they don't discount that the new coronavirus could set a new precedent.
    • Las Vegas Sands earnings call transcript

    Mastercard invests in AI-powered authentication technology

    • Mastercard (NYSE:MAmakes an investment in Trust Stamp, an AI-powered authentication services company.
    • Trust Stamp applies advanced cryptographic techniques and AI-powered presentation-attack detection tools to biometric and other identity data to create a proprietary non-PII Hash, or EgHash.
    • The EgHash is unique to the subject and provides a tokenized identity that cannot be reverse engineered can be matched and deduplicated using Trust Stamp's probabilistic AI, and verified via zero-knowledge-proofs.
    • The technology is used in multiple verticals, including humanitarian and development services, banking, fintech, KYC/AML compliance, real estate, and law enforcement.

    Deutsche Bank gains 3.3% as restructuring takes hold

    • Deutsche Bank (NYSE:DB) climbs 3.3% in premarket trading as the German lender's Q4 results show progress in its restructuring efforts.
    • Q4 pretax loss of €1.3B ($1.4B) includes €1.1B in transformation charges and restructuring and severance expenses; Q4 net loss amounted to €1.5M.
    • Q4 core bank profit of €465M, excluding specific revenue items, transformation charges as well as restructuring and severance expenses, vs. €78M in the year-ago quarter.
    • Common equity tier 1 capital ratio improved to 13.6%, meeting recent guidance of above 13% for year-end 2019.
    • Reduced leverage exposure by €123B during the quarter to €1.17B at year-end,  driven primarily by progress in the Capital Release Unit, which reduced leverage exposure by €50B to €127B vs. a target of ~€140B.
    • Leverage ratio improved to 4.3% on a phase-in basis ahead of its 4% year-end 2019 target.
    • Reaffirms goal of increasing its leverage ratio to 4.5% by the end of 2020 and to ~5% by 2022.
    • Q4 noninterest expenses were €6.4B, while adjusted costs were €5.1B, down from €5.4B in the prior year quarter, excluding transformation charges.
    • Previously: Deutsche Bank Aktiengesellschaft reports Q4 results (Jan. 30)

    AT&T downgraded on competitive pressures

    • UBS downgrades AT&T (NYSE:T) from Buy to Neutral and trims the target from $42 to $39.
    • Analyst John Hodulik says that AT&T "continues to face secular pressure within its Entertainment and Warner Media units" and expects wireless competition to intensify starting in H2.
    • The analyst expects consolidated EBITDA to decline this year due to pay-TV headwinds and HBO Max investments.
    • AT&T shares are down 0.8% pre-market to $36.75. The company has a Neutral Quant rating.

    AT&T headed for breakup in time – Moffett

    • AT&T (NYSE:T) is headed for an eventual breakup, telecom analyst Craig Moffett tells CNBC in an appearance that throws water on the multiyear consolidation of media and telecom.
    • "Companies that have diversified are not doing as well," he says. "Everything other than the core business is doing a lot worse than the core business, both at Comcast (CMCSA +1.1%) and at AT&T – and at Verizon (VZ -0.9%), wireline results were God-awful."
    • "Look at AT&T's portfolio that we saw yesterday: DirecTV, terrible acquisition and the wheels are falling off. WarnerMedia, already starting to look like there's some really problematic parts of that business."
    • As for AT&T and Time Warner, "I think if you … take your crystal ball and look out a little bit, it's hard to see that portfolio staying together forever. Somebody is gonna come in to AT&T eventually, and whether it's in three years, five years, whatever, they're gonna have to break that company up."
    • But as far as timelines, nothing "really dramatic" is going to happen until the dividend has to be cut, he says, and there's no danger of that right now.
    • Moffett has a Sell rating on AT&T with a $30 price target (implying 19% downside).

    PG&E again threatened with state takeover by California governor

    • California Gov. Newsom reiterates his threat of a state takeover of PG&E (NYSE:PCG) if a deal cannot be reached between the two sides within the next few weeks.
    • Newsom says his administration has laid out "detailed terms" on what a takeover would look like and is working on it with legislative leaders in case it is needed.
    • PG&E must be a "completely re-imagined, completely transformed company," Newsom says, but the state is meeting with the company and "making progress on governance [and] on finance" in the talks.

    AGNC posts 9.6% economic return on tangible common equity in Q4

    1. Includes 4 cents of dollar roll income associated with the company's $7.0B average net long position in forward purchases and sales of agency mortgage-backed securities in the "to-be-announced" market.
    2. Excludes 9 cents per share of estimated "catch-up" premium amortization benefit due to change in projected constant prepayment rate estimates.
    • Tangible net book value per common share of $17.66 at Dec. 31, 2019, up 6.7%% from $16.55 at Sept. 30, 2019.
    • 9.6% economic return on tangible common equity for the quarter, comprised of 48 cents of dividends per common share and $1.11 increase in TNBV per common share.
    • Conference call on Jan. 30 at 8:30 AM ET.

    Las Vegas Sands -1% after soft revenue growth

    • Las Vegas Sands (NYSE:LVS) slips after posting lower Macau revenue in Q4 than a year ago and just 0.9% top-line growth overall.
    • Net income was $783M during the quarter vs. -$40M a year ago. Total property EBITDA was $1.39B vs. $1.24B consensus. On a hold-normalized basis, consolidated adjusted property EBITDA rose 9.1% to $1.39B.
    • Macau revenue was down 1% to $2.24 vs. $2.20B consensus. Macau property EBITDA was $811M vs. $786M a year ago
    • Las Vegas properties generated revenue of $475M vs. $424M a year ago and EBITDA of $120M vs. $100M a year ago.
    • CEO Sheldon Adelson's update: "We remain enthusiastic about our future growth opportunities in Asia. This year, we will introduce approximately two million square feet of luxurious suite accommodations on the Cotai Strip with the opening of the Grand Suites at Four Seasons Macao and The Londoner Tower Suites. Additional tourism and entertainment amenities of The Londoner Macao will debut throughout 2020 and 2021."
    • Shares of LVS are down 1.04% in AH trading at $64.00.

    Microsoft EPS beats by $0.19, beats on revenue

    • Microsoft (NASDAQ:MSFT): Q2 GAAP EPS of $1.51 beats by $0.19.
    • Revenue of $36.9B (+13.6% Y/Y) beats by $1.22B.
    • Shares +1.9%.
    • Press Release

    BTIG sees higher prices pacing McDonald's

    • BTIG keeps a Buy rating on McDonald's (MCD +0.4%) despite what it calls "anemic" U.S. traffic.
    • Analyst Peter Saleh notes McDonald's continues to struggle with the breakfast daypart in the U.S. and faces even stiffer competition with the national breakfast launch at Wendy's in coming weeks.
    • Saleh does think U.S. same-stores will be supported by higher menu prices, average check increases from kiosks and Dynamic Yield, as well as the ongoing shift away from deep discounts.
    • "While investors may be disappointed by the higher G&A outlook for this year, we take solace in the expectation for high-single-digit EPS growth, aided in part by a lower tax rate, less currency impact and continued sales momentum," writes Saleh.
    • BTIG has a price target of $240 on McDonald's vs. the average sell-side PT of $229.55.

  24. I've held a position in BB &T for a long time.  It's now Truist, TFC.  (What a dumb name) after a merger with Suntrust.  Had written some Mar 55 calls against the position.  Closed today for a big profit as stock is down big.  Bought 50 of the Feb 52.5 calls for $..13.


  25. Yodi – you must be one of the few people making money on TSLA!

    I thought trying to keep pace with the upward move in CMG last year was bad enough – (and it still keeps keeping on this year). But it taught me one very valuable lesson – don't go naked short on momentum stocks.

    Thankfully Phil's continual warnings on TSLA as something to avoid kept me out of trying to tame this particular beast, and I well remember at the time of a purported deal with the Saudi's – "$420 per share?!?" (September 28th, 2018). And yes, the stock did sell off – but how that thing came back with a vengeance?

    Amazing how the narrative on TSLA appears to have changed. 

    I've adjusted my strategies to accept lower returns in exchange for inbuilt protection at the time of placing the trade rather than buying protection when everyone else does (when downward momentum has already kicked. I'm still working on refining the approach but I feel like I'm getting there.

    It's always horses for courses and doing what it takes to sleep at night. 


  26. Hi Albo – also in TFC courtesy of BBT. But thinking of getting out my position in a company who dreamt up that name. 


  27. TSLA was around $325 on December 5, it's hitting $650 today. Have facts changed that dramatically? Not the story, facts!


  28. TSLA

    How about a Feb iron condor? 

    750/900 calls      550/400 puts       for  $5740 profit on portfolio margin of $10,900


  29. Oil / Phil – On /CL it looks like 51 is both a bounce line and a touch of the long term uptrend so it seems like we're getting close to a good place to get into some USO or UCO calls expiring in spring or summer. Do you think we'll break those two support lines or do you think OPEC will kick in and cut production or bomb something fairly soon? Buy buy buy or wait wait wait?


  30. Jmd TSLA not sure which Fef but I take it Feb 20

    The iron condor you set up brings on one opt 1,124.00. Only at 640 on experation you would achieve this gain.

    under 400 your loss will be (13,800) and over 900 same loss

    Your break even is about 550 and 760 where you would gain about 200.00

    Your spread is out of proportions!!!!


  31. jmd – selling that TSLA Iron Condor gives you a credit fo $11.40 - on 1 contract that $1,140.

    That gives you the chance to participate in a max loss of $13.860. They don't look like favorable odds to me. (info from TOS).

    It may look like easy money, but I would want better odds than that to keep that small a credit. Or am I missing something?


  32. Sorry, was writing while Yodi was pressing send.

    But what scares me is that Yodi and I seem to have built a telepathic relationship!!!!!!!!!


  33. NYCB/Ati – I like them, nice and solid.   We should watch where they settle.

    RCL/BDC – I like them a lot too.  

    BBT/Albo – Yuch, when did they change the name?

    CMG/Winston – That's true, they went from $250 to now $880 in two years so there is a road map for TSLA to keep going.

    TSLA/JMD – Sounds reasonable but would suck if they hit $800+.  Keep in mind they were $450 2 weeks ago (and that would suck too).  

    8,235/DC – That is certainly slowing down a bit (see chart on left of page).  If that's a trend we should be thrilled.

    Italy has blocked thousands of people from leaving a cruise ship that docked on Thursday at an Italian port, over concerns that someone aboard might have the virus.

    According to Italy’s national news agency ANSA, a woman from Hong Kong aboard the Costa Smeralda, a vessel owned by Costa Cruises, had a fever and was experiencing respiratory problems. Both the woman and a man traveling with her, who did not present any symptoms, were being held in isolation in a hospital ward aboard the ship and were tested by infectious disease experts from a hospital in Rome.

    A statement from Costa Cruises confirmed that a “sanitary protocol” had been activated for a passenger. ANSA reported that about 6,000 people were aboard; the cruise line declined to give a number, but says the ship has a capacity of 6,522 passengers and 1,678 crew members.

    Russia prepared for a partial closure of its 2,600-mile border with China as fears about the coronavirus outbreak mounted in Moscow.

    Prime Minister Mikhail Mishustin on Thursday ordered 16 of the approximately 25 crossing points that Russia operates on the Chinese border to be closed as of midnight local time. He said the closures would be part of a new raft of measures to stop the infection from spreading to the country from Russia’s southeastern neighbor.

    Russia’s Foreign Ministry urged Russians to postpone all travel to China and suspended the issuance of electronic visas for Chinese citizens.

    Speaking of slowing down – good notes on slowing GDP growth.

    USO/MrM – We did those the other day (Monday's post).  I think by the summer we'll be back in the $60s but who knows between now and then.  /RB at the $1.50 line (but still $3 at the pump).


  34. Ho Ho Winston The man only looks at gains but does not see the losses.


  35. Have you guys noticed that if people cough or sneeze in public now, other people look at them like they have the plague?  


  36. phil /ym short was filled at 2499.  Super bouncy.  Thoughts on a stop?


  37. hmmm lets see how many 'citizens' want the Government out their lives if suddenly this virus arrives… I bet they won;t want to rely on market forces for that shin gig.

    Although sayin that the UK Government's origianl plan was self isolation for evacuees … you have to love budget cuts to healthcare.

    :-)


  38. Here you got a more lealistic Iron condor on AAPL

    Qty    Pos Effect    Symbol    Exp    Strike    Type    PRICE
    -2    TO OPEN    AAPL    20-Mar-20    325    CALL    3.95
    2    TO OPEN    AAPL    20-Mar-20    330    CALL    CREDIT
    -2    TO OPEN    AAPL    20-Mar-20    315    PUT    
    2    TO OPEN    AAPL    20-Mar-20    310    PUT    


  39. /YM/Potter – 28,500 is the stop!  The idea is to enter on a cross below and get out if it goes back over.  

    Made $250 on the first cross under and up a bit on the 2nd but stopped back out and now waiting for a 3rd.  

    Government/Malsg – Well it would be better if we didn't treat people who don't have private health care, then those 80M uninsured people would all be infected but we'd be fine, right?  


  40. Truist – Whoever came up with that name should be fired.  It was probably Kelly King, the CEO. 8-)

    BTW, Winston, those calls have more than doubled.  Wish I'd bought more !


  41. The TSLA iron condor above for only one set of contracts makes $1125 on port margin requirement of $2200  with TSLA between 550(delta .16)  and 750 (delta.1) in 3 weeks. Has room enough to roll. 


  42. Stocks slide after U.S. virus transmission confirmed

    • Stocks bounce down again after the Centers for Disease Control and Prevention, along with Illinois public health officials, confirm the first case of person-to-person transmission of the coronavirus in the U.S.

    Image result for virus panic"


  43. I / Intelsat – I think I discovered this one on this board, took a dive, if the recommender is here, are you holding. DD, or giving up? 


  44. Ouch "I" not me from 25 to 3 Looks to me like GM before they declared BK. I got out of GM at 5 and never trade them again.
     


  45. Tupperware (TUP) appears to be a classic value trap with expected earnings of $2.60 or so and the stock selling at 6.40. Stock is down 80% over the past year and they eliminated their large dividend.  They also carry a heavy lead load.  

    Phil, is the stock a buy at some point, or just leave alone ?  Thanks.


  46. MrMocha – I has a successful trade in Intelsat in December.Not currently involved.  This came out today.

    https://news.bloomberglaw.com/tech-and-telecom-law/fcc-signaling-low-payout-for-intelsat-ses-airwaves-at-auction 


  47. PS AAPL March play above sold for 3.90.


  48. I / albo – Thanks! I did a BTFD B/W at 6 plus protective puts so I'm actually even down here but trying to divine where the floor is.


  49. TUP/ I looked at TUP a few months ago. The reason I didn't dive in is that I think their sales model is broken. Nobody wants to do a tupperware party. I like their products but they let rubbermaid eat their lunch. If they binned the multi-level marketing and started selling in stores and on Amazon/Walmart etc websites then I'd dive in. Or if the divvy was monstrous. 


  50. TUP/Albo – I looked at them once, up to their eyeballs in debt is the problem.  I think they have a big blob of debt due next year that might sink them.  The recent sink is because their main business is now door-to-door in Asia and I doubt that's going well this Q (cough, cough).


  51. Thanks guys !


  52. Don't give the WH ideas Phil… it'll be hunger games … winner gets the vaccine. 


  53. Growth / Phil – this:

    That would be third best and so only one Obama year worse in his second term! And that's with $1T of sweeteners! 


  54. TFC – Sold 1/3 up 300%.  Keeping 33 calls.  So controlling 3300 shares of TFC worth $160,000 for the next 3 weeks at no cost.!  Chance for a substantial gain if TFC bounces back.

    This is a rare trade.  In fact, I've never done this before. Just lucky.


  55. FROM WSJ

    BREAKING NEWS:

    *The World Health Organization Declares the Coronavirus Outbreak in China a Global Public Health Emergency

    *WHO Says It Has Confidence in China’s Ability to Control the Coronavirus Outbreak


  56. Phil / markets – after WHO declaration above…. markets moving up ?


  57.  There was the additional commentary that the WHO did not want to restrict travel.




  58. What Living To 150 Might Look Like


  59. doesn't make a lot of sense to me I would have thought progressing to emergency status would go in hand with needing more protective measures not recommending less.


  60. batman they didn't recommend any restrictions on trade or travel? which doesn't make sense to me why not just not bother declaring emergency until there is need from international perspective.


  61. WHO/Batman – The general tone was that things were under control and they are only declaring an emergency as it allows them to grant extraordinary aid to countries that can't afford to contain the virus without help.  Sounds kind of reasonable.  Very few cases outside China so far (less than 100) so it is pretty much contained – from what we know at the moment.  It could still devastate China – but Global Pandemic seems off the table, so that's nice…

    Still, I'd rather go by the data (we've had great calls following it) so best to wait until Monday and see what trajectory the infections are on.  Looks like we're right about 9,000 today and that's not really slowing the spread very much but tomorrow, if we're under 12,000 – that's good progress (down from 50% per day).  

    8,000 of the infections came since last week but last week they were already locking things down so very possible the first 1,000 people infected a lot of people but the next 8,000 infected were surrounded by paranoid people in masks and kept from traveling etc. so, if this thing is working, we should see a pretty drastic drop-off of the infection rate by next week.  If not – better hit that bucket list…

    Image result for virus spread"

    Image result for virus spread"

    Image result for virus spread"

    Here's the biggest problem:

    Image result for virus spread"

    So 27 people had it on 12/31 and we didn't see 100 until two weeks later.  27, 40, 60, 90, 135 would be the 50% progression but it was 1/2 of that for whatever reason.  The lockdown came last week (21st) but 5M people got out of town before that happened and, clearly, some of them were infected as we have instances all over China and Globally but, more to the point, 5M people went out last week and, very conservatively, 500 of them had to be infected – even with screening.  That is enough, unfortunately, to be a major bomb if this virus incubates for 2 weeks before getting serious enough to notice as the above graph can be replicated like that for each patient that gets out. 

    Still, markets not looking worried so why should we be?  


  62. Boy where is Theranos when you need them?  They could have tested all of China with their instant blood kits…  


  63. Ruh-ro!  

    SEC, others propose changes to 'covered fund' restrictions for banks

    • Five federal financial regulatory agencies are seeking public comment on a proposal to ease the Volcker Rule's general prohibition on banking institutions from investing in or sponsoring hedge funds or private equity funds, known as "covered funds."
    • One change would permit banks to extend financing to startups and small- and medium-sized businesses through qualifying venture capital funds.
    • It also proposes excluding credit funds.
    • Comments will be accepted until April 1, 2020.
    • The SEC says the changes are faithful to the Volcker Rule's aim to restrict high-risk, speculative trading, and investment activity and its directive to preserve customer-oriented lending and financial services that are vital to capital formation and efficient functioning of markets.
    • "I believe that the proposed amendments could, if adopted, facilitate capital formation, improve competition and market efficiency along a number of dimensions, and do so without increasing risks to investors," said Securities and Exchange Commission Chairman Jay Clayton.
    • Besides the SEC, the other agencies putting forth the proposal are the Federal Reserve, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency.
    • Previously: Volcker revamp to ease venture-fund curbs on banks – Bloomberg (Jan. 27)

  64. That sputum chart is gross.


  65. Interesting:

    Shell status quo would put it out of business in eight years

    • Royal Dutch Shell (RDS.A -4.2%) has just eight years of production left in its oil and gas reserves after falling for the sixth year in a row in 2019, according to a Reuters analysis.
    • The company's reserve life last increased in 2013 to just below 12 years, but it has been on a downward trend ever since and hit 7.9 years last year.
    • The reserve life of several of global oil and gas producers, including BP and Total, has dropped in recent years, but Shell's is now significantly below the industry average in 2018 of ~11 years, Reuters says.
    • After the 2014 oil price crash, companies began to shift their focus to profitability, leading many to sell assets to raise capital, which in turn led to a decline in reserves.
    • Shell CEO Ben van Beurden said today during the company's post-earnings call that the decline in reserve life "doesn't represent the truly integrated and diverse portfolio we have or our focus of value over volume."

    Submitted on 2017/07/07 at 7:22 am

    Death of oil/StJ – That's exactly the time-frame I've been predicting for years but the Volvo announcement (no more gas-only cars by 2019) probably means that time-frame (2040) is still conservative.  So now the rest of the World is waking up to my peak demand theory which then leads to our Stranded Oil Theory that impacts the Saudis (so they are selling Aramco now) and other producing countries, whose reserve values will run downhill fast.

    Don't shoot the messenger, DC (and certainly don't cough on him!).  


  66. Phil / WHO – Well makes some sense, although I think at this time they are getting a lot of pressure to not impact business, which makes some sense given that China is doing all they should be doing….  however the numbers don't tell a strong story…. I'm sure they've modeled incubation periods and feel reasonably comfortable…. but they are probably a quick trigger for limiting travel ….


  67. Aramco/StJ – LOL, why don't they just lie like everyone else?  That tells you all you need to know, they know that Aramco is never going to be worth $1Tn, let alone $2Tn.  Half of those "assets" will end up stranded and the price is not likely to sustain $70 for long periods of time going forward.

    Funny how long it takes for these things to play out.


  68. Tempting to short the run-up. 

    AAL pilots are suing to stop China flights.

    No sense of certainty here so just watching and waiting at the moment.  


  69. Closed out TSLA trade for small profit.  Don't want to keep it overnight.


  70. Public-health officials warned that the dangerous new virus at the heart of a fast-spreading outbreak is growing more contagious, piling more pressure on an already strained containment effort.719 minutes ago

    Image result for virus don't panic"

    State attorneys general will meet with U.S. Justice Department attorneys next week to share information on their respective probes of Alphabet’s Google unit, a step that could eventually lead to both groups joining forces2

    Hundreds of regional grocery stores are closing or selling struggling pharmacy counters, as consumers make fewer trips to fill prescriptions and big drugstore chains tighten their grip on the market.37

    Good job Albo!


  71. Coronavirus: this perfectly priced market hasn't caught up to the realities of a virus yet. I know it's still a push/pull of fake "mania and fear" versus fake "reality," but I think the fake reality is the losing side. Every US airline has canceled flights to China. This will last the next 6 weeks. A BMW plant in Germany is closed with 18,000 employees. Doing nothing. A cruise ship with 7000 passengers is basically a floating quarantine vessel. Disney is closed. Macau is closed (-90%). Business is closed. And the virus has yet to even spread. Just this damage alone is enough to topple an 11-year old bull market priced to QE infinity perfection.

    Let's take a look at the confirmed cases. There are 7600+ in China versus 105 in the rest of the world (data here) through 1/29. That looks encouraging for "us." But then graph those on the same plot with different axis. Oops, doesn't look so good anymore. This graph should scare you. The "rest of the world" is simply "China" albeit we are a month or so in arrears. They have the same exponential slope.

    This market has flown off of the irrational exuberance rails. It's like a meth addict on day #4 with no sleep. Addicts will throw $650 for a single share of Tesla (a car manufacturer making a commodity product) at this stage. What happens on Day #5 for addicts? Ugly. This could all be really bad.


  72. AMZN up around $200 after hours – wow!


  73. So many of you know more about options then me, so will throw this out to Phil and everyone

    AAPL 2021 $210 calls are $118

    AAPL 2022 $210 calls are $123

    AAPL June 2022 $210 calls are $124

    shouldn't there be some kind of play to make money on that?? there are probably other similar strikes, but I noticed those since I was trying to roll up and out some 210s


  74. IBM names Krishna CEO as Rometty steps down; shares +3.9%

    IBM says Ginni Rometty is stepping down as CEO, and the company has elected Arvind Krishna to the post.

    The move is effective April 6.

    Krishna is currently senior VP for Cloud and Cognitive Software.

    Alongside the move, Red Hat chief James Whitehurst has been elected IBM president, also effective April 6.

    Rometty will continue as executive chairman through the end of the year, at which point she will retire after a 40-year career at Big Blue.

    Shares are up 3.9% postmarket.

     


  75. Phil / X --

    X just reported — losses weren't as doomsday-like as analysts had prophesied, so up in afterhours.

    For X in the Butterfly portfolio, I believe we bought back the 2022 $17 short calls for $1.25, as well as the March 2020 $14 calls.  We are left spreadless with only the 2022 $10 long calls.

    Would it make sense to sell covered 20 March $10 calls for $0.61?  Or the April 17 $10 calls for $0.75?


  76. Bezos'ex-wife might be the richest woman in the world now!






  77. Wow, nice move by AMZN!  

    Virus/BDC – Nice summary.  

    10,000 infected, 213 dead at the end of the day.  That's 25% more infections in 12 hours, still 50% a day, apparently.  

    The American Airlines pilots’ union said on Thursday that it was suing the airline in an attempt to halt all service between the United States and China, citing “a threat to the safety of passengers and flight crew.”

    In a statement, the union, the Allied Pilots Association, said it was instructing its members to turn down requests to fly to China.

    The airline had previously announced that, because of declining demand, it would suspend flights from Los Angeles to Beijing and Shanghai starting on Feb. 9. Service from Dallas to those cities is expected to continue.

    In another development, United Airlines on Thursday announced a new wave of cancellations affecting hundreds of flights through the end of March. The cutback, a response to declining demand, will reduce the number of daily flights from 12 to four from its United States hubs to Beijing, Hong Kong and Shanghai.

    In all, the reduction includes 332 round trip cancellations between Feb. 9 and March 28.

    AAPL/Coulter – Well, they are all so deep in the money you just have the time premium and nothing more.  There's a $1 difference between 2022 and June 2022 so, you could infer that they should hold their value pretty well and, if you sell the 2021 $210 calls for $118, they have about $4 in premium and then you can hopefully get another $4 against the $10 you are paying and maybe a few more but why bother? 

    The 2021 AAPL $320s are $36 and the 2022 $330s are $45.50 so net $9.50 between them and the 2022 $350s are $37 so, if AAPL goes higher, you should get a $20 spread for net $9.50 and the short calls should decay twice as fast so figure $35 and $16 down the road is almost $20 right there – pretty easy way to double up. In fact the Jan $330s are now $31 and the Feb $320s are $9.50.

    IBM/Batman – I thought she did a good job overall.  

    X/Vidt – Only popping to $10 so far.  I think I might want to give them room to run.  When the virus is done, they could go right back over $12.