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Monday Market Movement – 40,000 Infection, Almost 1,000 Dead – Why Worry?

Yep, we're still talking about the virus.  

The good news is, 3,500 people have now recovered and "only" 37,000 people remain ill.  Oops, 36,000 – the other 1,000 are dead but hey – why should that worry the US Stock Market, which has the ability to ignore everything, it seems…  I HATE to be an alarmist but I am alarmed and not many other people seem to be so I'm going to bring it up – just to maintain awareness until it's really not a worry.

As you can see from the chart, China has hardly been completely covered over with virus hot-spots and I can still see most of the word "Tokyo" (because it's out in the ocean and no one is affected there yet) and only MAJOR cities in the US have the virus so far – why would anyone worry about that?  Last Monday, there were 17,400 people infected and 364 people dead so one could argue that this is more and one could say that green line on the chart, representing Global Infections, has begun to take off – after being flat all month while we "got it under control" but not me – I'm NOT an alarmist….

The Monday before that (Jan 27th), we were at 3,000 people and hardly anyone was dead but I predicted fighting the virus would cost hundreds of Billions of Dollars and knock $400Bn (2.8%) off China's GDP which, of course, would bleed through and affect other economies – all that remains to be seen, of course.  

Image result for spanish flu animated gifLast week, the markets got a pop on word there was a "cure" (viruses are not cured) and a vaccine (vaccines take months to create and more months to manufacture) in China and both turned out to be BS but, as we have learned in the age of Trump, it doesn't matter if something is true or not – as long as it works.  In fact, just this weekend, we got this cheery note:

A cluster of cases in France, Spain and the U.K. confirmed over the weekend all appear to have links to a French ski resort, where the infected people had contact with a British man who had just returned from the conference in Singapore. The meeting, which took place at the Grand Hyatt hotel, was organized by an unidentified company in January and attended by more than 90 foreigners.

The spreading pattern is reminiscent of the SARS outbreak in 2003, when a single infected doctor transmitted the disease to multiple people and it was then carried around the world. Malaysia and South Korea had already confirmed cases of the virus linked to the Singapore meeting last week, and the cluster of European cases indicates that the meeting has become a major seeding event.

Anyway, I don't want to dwell but I do suggest reading up a bit, to keep yourself aware of the risks:

So, you can see why I'm a bit concerned.  Though really, that's nothing compared to my concern over this:

Temperatures on the continent range on average from 14 degrees Fahrenheit (minus 10 degrees Celsius) on the Antarctic coast, to minus 76 degrees Fahrenheit (minus 60 degrees Celsius) at higher elevations of the interior, the meteorological organization said.

Its ice sheet, which is nearly three miles thick, contains 90 percent of the world’s fresh water.

The Antarctic Peninsula, the northwest tip near South America, is among the fastest warming regions of the planet, the meteorological organization said. Antarctica is about the size of the United States and Mexico combined, according to NASA.

The high temperature is in keeping with the earth’s overall warming trend, which is in large part caused by emissions of greenhouse gases.

map of a florida flood - see text belowWhat, us worry?  Florida looks pretty much the same as Vietnam, with most of the land below Orlando sinking into the Ocean over the next 30 years but, amazingly, we are ignorning that too!  Literally people buying propery in Miami will need boats to access the 2nd floor before their mortgages are paid off…

Of course the fishing is going to be fantastic – so there is a bright side with the World's largest artificial reef made up of millions of retirement homes, tailer parks and strip malls.  I think, if we ignore it hard enough, it might just go away – right?

Trump's new $4.8Tn budget ($1Tn deficit – and that's optimistic) has a $740Bn Military Budget, creates a Space Force and has a Mission to Mars but allocates no money to either Climate Change or Infrastructure Spending.  I guess we really are going to test that theory that, if we ignore it hard enough, it will all go away on its own.  

There is a certain point at which the rest of the World may consider the actions of a rouge nation, who is playing with dangerous weapons of mass destruction that may threaten the existence of life on Earth, as the threat that needs to be dealt with by force.  Greenhouse gases are becoming such a threat and Nicaragua, Syria and the United States of America are the only 3 countries in the World that haven't agreed to stop using these weapons of mass destruction under the Paris Agreement.  What would you do if you were the learder of one of the other 186 countries?

No wonder Trump feels the need for a bigger and bigger Military – we may need them to defend our Carbon Criminal Corporations.  These tariffs are nothing compared to the Global boycotts that will begin hitting them in a few years if the US continues to refuse to cut their emissions in-line with the rest of the World but by failing to budget for carbon-neutrality now – we make it impossible to comply down the line as well – we'll be too far behind to change our ways without massive economic upheaval.

Not too much mention of the virus or global warming from the first half of earnings season.  We're still very busy in the 2nd half and we'll see how things go – I'll be very interested to hear what Hilton has to say and Barrick (GOLD) reports on Wednesday and they are our Stock of the Year, so fingers crossed:

Image

Image

I'll put up the data chart but data doesn't really matter, does it?  Earnings don't seem to matter either in this very silly market.  I used to think reality was lurking just around the corner but now I'm not so sure it's even a thing anymore.  We shorted the indexes on Friday (S&P Futures are up $1,500 per contractyou're welcome!) and they seem bouncy pre-market but that's even less real than the regular trading hours, so we're still waiting and seeing.  If oil fails $50 things could get very ugly in energy and that would be a catalyst to drag things even lower:

That's 7 Fed speeches and Powell testifying before Congress – should be an interesting week.

 


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  1. Good Morning!


  2. Phil – Good site to track data on the coronavirus. Lots of stats and some explanation!

    https://www.worldometers.info/coronavirus/



  3. Another TSLA run up??


  4. Good morning!

    Well, if we're heading up at the open we can cash out the /ES shorts (3,310) for a lovely gain and we weren't going to get into /NQ until we were under 9,400 anyway so those we can leave on unless they cross back over and that would be even if they do so one winner and one even is a good start to the week.

    Virus/StJ – These charts do not look like we're over the hump yet:

    Still not such a bad spread outside of China so I'm keeping my optimist hat on for now.

    Oh wait, forget it:

    65 new cases in Japan on the “Diamond Princess” cruise ship. Total on ship quarantined in Japanese waters: 135 cases. Rest of Japan: 26 cases.

    See, if there is just one case somewhere, there can be 135 cases a week later.  Every single case around the World can explode like that if not caught in time.  

    There are currently 400 cases around the World and it was 305 on Friday so, over the weekend, there were 100 people walking around in populated areas who had the disease but were not yet diagnosed.  THAT is STILL a problem!  Actually, 60 of them were on the cruise ship so only 40 walking around – nowhere near as awful but each one could then spark their own little Wuhan – especially if they take a train to the doctor or hospital or if they work in a grocery store, restaurant etc…

    We thought measles were contained after a 40-year global effort and all it took was a few people refusing to be vaccinated and now it's a problem again.  This is why Russian trolls were behind the anti-vax nonsense – what a great way to destabilize you enemies!  Polio is making a comeback to thanks to our new anti-science bias.  

    TSLA $804 – never dies.  Someone started a rumor that GOOG is buying them for $8,000/share – it's almost like I don't even want to play the market with these idiots!  

    Could Tesla Be Worth $8,000 a Share to Google? Now We Are Getting Silly.

    Tesla Shares Gain as Shanghai Factory Re-Opens Following Coronavirus Shutdown

    Meanwhile, Dollar close to 99 – that's usually where it stops but we'll see what Powell has to say.

    Certainly it's putting pressure on things so I'l liking /CL again as it tests the $50 line but $49.95 (-$50) is certainly the stop line there. 

    NOW I want to go back in /NG at $1.785.  This is why I wanted to wait for after the weekend.


  5. TSLA is turning into a trading instrument only! Already over 5000 of the weekly $1000 calls! Trading over $6. Tempting to sell at these prices but a repeat of last week might provide double-digit prices there.


  6. SKT #3 on most shorted list


  7. The Bug/Phil – R0 for the Wuhan virus is estimated 2.8, but for measles is around 20.


  8. StJ – I managed to skim 20 points on a TSLA short.  But only 100 shares.   Scary !


  9. LYFT – Strong today ahead of earnings tomorrow.  Sold 1/2 of the BCS I mentioned on Friday.


  10. From Friday:

    GME/Motox – Bad part of the cycle for them, no big new consoles or games.  

    FXP/Vidt – It's a hedge as China is the most likely thing to fall apart if the virus turns out to be worse.  Doesn't really matter what companies are in them – they are certainly very connected to issues in the mainland.  We don't have to have Chinese longs to have a China hedge but it is smart to hedge the hedge with CHL as they will do well if Chinese stocks do well and, even if they don't do well – we like them as a long-term play.  

    From the STP:

    FXP Short Put 2020 18-SEP 50.00 PUT [FXP @ $58.63 $-0.56] -5 1/24/2020 (221) $-2,065 $4.13 $-1.06 $-4.13     $3.08 - $528 25.5% $-1,538
    FXP Long Call 2020 19-JUN 52.00 CALL [FXP @ $58.63 $-0.56] 20 1/23/2020 (130) $15,000 $7.50 $1.15     $8.65 - $2,300 15.3% $17,300
    FXP Short Call 2020 19-JUN 65.00 CALL [FXP @ $58.63 $-0.56] -20 1/23/2020 (130) $-5,000 $2.50 $0.85     $3.35 - $-1,700 -34.0% $-6,700
    SQQQ Short Put 2021 15-JAN 20.00 PUT [SQQQ @ $17.49 $-0.19] -15 1/17/2020 (340) $-6,900 $4.60 $1.15 $-4.60     $5.75 $0.02 $-1,725 -25.0% $-8,625
    SQQQ Long Call 2021 15-JAN 17.00 CALL [SQQQ @ $17.49 $-0.19] 60 1/17/2020 (340) $29,100 $4.85 $-1.05     $3.80 $-0.10 $-6,300 -21.6% $22,800
    SQQQ Short Call 2020 19-JUN 20.00 CALL [SQQQ @ $17.49 $-0.19] -40 1/17/2020 (130) $-9,200 $2.30 $-0.73     $1.58 $-0.11 $2,900 31.5% $-6,300
    CHL Short Put 2020 18-SEP 45.00 PUT [CHL @ $42.92 $0.00] -5 1/27/2020 (221) $-2,000 $4.00 $0.05 $-4.00     $4.05 - $-25 -1.3% $-2,025

    AAPL is popping things at the moment as FoxCon has clearance to resume production.

    USO/Vidt – As noted above, I put my foot down at $50, but not much conviction until the virus does go away.


  11. LB may be selling off Victoria Secret

    SKT/Coulter – Such a deal!

    Simon Property has agreed to buy Taubman Centers for $3.6B, a 50% premium to Friday's close, and a 100% premium to the price before the buyout rumors hit.

    Premarket action: PREIT (NYSE:PEI+3.5%, Macerich (NYSE:MAC+7%, Tanger Factory (NYSE:SKT+4.2%, Kimco (NYSE:KIM+1.5%, Brixmor (NYSE:BRX+1.4%.

    Measles/Snow – Well let's hope we never have to deal with that.


  12. Proposed budget – I don't know if anyone was listening to NPR this morning, but Russel Voight was on, "ACTING" Director of Budget Management and when I say acting he wasn't very good at it - one of the cuts was that if an individual did not speak English he / she could not get federal aid.  Steve Inskeep said doesn't that discriminate against immigrants and the guy ignored the question and kept on talking.  He also stated that the deficit raised because of Obama, and the host corrected him and said that the raise now is because of Trump's tax cuts – and the guy ignored him.  How long can these people keep their heads in the sand?


  13. What Needs to Happen to Get Boeing’s 737 Max Flying Again?








  14. Acting / rperi – These guys simply don't care and also I don't know that any restrictions based on language would stand in court. They would first need to declare an official language which we don't have. But in any case, we live in a post-truth, post fact world. These guys will pretend that they inherited a bad economy, a highter deficits, high unemployment, etc… And facts won't change their attitude.

    And now comes the real objectives of these tax cuts – cut entitlement. The next budget plans a 21% cut in support for poor people and the argument will be that we can't afford these deficits even though they artificially created them! It's maddening. Then when deficits are lower, they'll cut taxea again… Rinse and repeat.


  15. /NG – long 1 at 1.780


  16. /CL – long 1 at 49.79


  17. The "ACTING" Director of Budget Management said that the tax cuts will pay for themselves- just over a longer period of time. That sounds like the wall financing too. 


  18. Budget/Rperi – Complete joke now.  Tyranny of the minority.

    Court/StJ – We just had a trail with no evidence and no witnesses where the jurors said "We don't need to hear any evidence, we already know he did it but not guilty anyway".  I wouldn't hang my hat on what the Justice system will do anymore!  

    Mr. Trump’s $4.8 trillion budget proposal is slightly larger than last year’s $4.75 trillion request and calls for increased spending on the military, the border wall, infrastructure and other priorities, including extending the president’s 2017 tax cuts. It also includes trillions of dollars of cuts to safety-net programs like Medicaid and discretionary spending programs outside of the military, like education and the environment.

    The White House makes the case that this is affordable and that the deficit will start to fall, dropping below $1 trillion in the 2021 fiscal year and that the budget will be balanced by 2035. That projection relies on rosy assumptions about growth and the accumulation of new federal debt — both areas where the administration’s past predictions have proved to be overconfident.

    According to summary tables reviewed by The New York Times and interviews with administration officials, the new budget will forecast a growth rate for the United States economy of 2.8 percent this year — or, by the metric the administration prefers to cite, a 3.1 percent rate. That is more than a half percentage point larger than forecasters at the Federal Reserve and the Congressional Budget Office predict.

    Robust economic growth rates are not the only area where the administration’s renewed optimism appears in its latest budget. It has also revised down its estimate of the interest the federal government would pay to borrow money over the next decade, based largely on the assumption that the Fed, which began cutting rates in 2019, would raise them only modestly again over the next 10 years. The changes in rate assumptions reduce budget deficits by $1.5 trillion over the course of the decade, according to the administration’s projections.

    Essentially, administration officials are contending that rising levels of debt in the United States will not drive up borrowing costs, as many conservative economists have long warned, at least for the next several years. They also believe, a rarity among economists, that a sustained stretch of 3 percent growth would not push the Fed to raise interest rates.

    Xi is out on the town:

    The Chinese leader, Xi Jinping, speaking to Beijing residents on Monday in a photograph released by Xinhua, the state news agency. 

    Mr. Xi rarely mingles with the public. In a video released on Monday on the website of Beijing’s municipal government, he appeared on a sidewalk outside the municipal office in the Anhuali neighborhood in Beijing, where he looked up and waved at people gathered at apartment windows to watch the spectacle unfolding below.

    He also chatted briefly with a handful of residents, including two carrying grocery bags. Everyone, per orders issued by the government, wore masks.

    “Let’s not shake hands in this special time,” Mr. Xi said, prompting laughter from those around him. Then he asked, “How much do the vegetables cost?”

    From the front-lines on virus war:

    In magnitude, scale and velocity, 2019-nCoV is too big a problem for any one team to solve. On Monday, China recorded its largest single-day surge of deaths, at 97, pushing the total reported dead worldwide to 910, with more than 40,500 people infected on four continents. On Tuesday, I’m joining my fellow scientists at the World Health Organization headquarters for an urgent meeting to piece together, like a giant jigsaw puzzle, our findings so far. We need to get a clear view of the contagion and plug the holes in our understanding of the disease to inform public health decisions that affect hundreds of millions of lives. Science has a critical role to play in restoring calm.

    We now estimate that it takes about five to six days — possibly upward of 14 days — for someone to show symptoms from when they become infected.

     

    No. 1 is the “clinical iceberg” question: How much of it is hidden below the surface? Because the outbreak is evolving in real time, we can’t yet see the totality of those infected. Out of view is some proportion of mildly infected people, with minor symptoms or no symptoms, who no one knows are infected.

     

    A fleet of invisible carriers sounds ominous; but in fact, an enormous hidden figure would mean many fewer of the infected are dying. Usually, simple math would determine this “case fatality” ratio: divide the total number of deaths by the total number of people infected. In an emerging epidemic, however, both numbers keep changing, and sometimes at different speeds. This makes simple division impossible; you will invariably get it wrong.

    Last month, to start understanding the severity of this illness, my team assisted Chinese experts in analyzing the initial 425 confirmed cases of infection. We learned that 65 percent of people had neither visited a market nor been exposed to another person showing pneumonialike symptoms, which implied, among other things, the possibility that some infected people don’t suffer from obvious symptoms — meaning the illness isn’t always severe.




  19. Elon Musk Tells Users to Delete Facebook | Tech.co


  20. coronavirus – happily for WHO, we have two human petrie dishes going right now, the two cruise ships. With two sample populations of about 5000 each, WHO should soon be able to determine the severity rate and death rate, incubation period, etc, since it is likely that nearly everyone on those ships was exposed before steps were taken to prevent the spread of infection.


  21. Just on the light side

    Set up two armchairs HRB now 21.76 Bought the stock and sold the Jan 21 23 straddle for 4.90 should give a combined monthly reurn of about 2%

    HRB is used by many for tax returns coming up soon so the suckers can pay for the clowns trips to Florida.

    HOOG now 33.68 buy the stock and sell the Jan21 32.5/35 strangle for 6.80 no comments here but should bring as well a combined monthly return of over 2%.

    No TSLA but still 24% a year is nothing to sneeze on.


  22. Just on HOG one O to many sorry


  23. Absolutely maddening.  


  24. One more SKT 13.49 bought stock and sold the Jan 21 13/15 strangle for 2.55, combined return 2.5% pm


  25. HRB/Yodi – We already have them but they got cheaper.

    Earnings are Feb 12, not sure what cased the drop.   

    HOG is dealing with declining revenues:

    Year End 31st Dec 2014 2015 2016 2017 2018 2019 2020E 2021E CAGR / Avg
    Total Revenue
    $m

    6,229 5,995 5,996 5,647 5,717 5,362 4,572 4,620 -2.95%
    Operating Profit
    $m

    1,281 1,156 1,046 882 714 556     -15.4%
    Net Profit
    $m

    845 752 692 522 531 424 452 508 -12.9%
    EPS Reported
    $

    3.88 3.69 3.83 3.32 3.20 2.68     -7.10%
    EPS Normalised
    $

    3.88 3.69 3.83 3.32 3.64 2.95 2.97 3.37 -5.35%
    EPS Growth
    %

    +18.7 -4.81 +3.82 -13.3 +9.39 -19.0 +0.904 +13.3  
    PE Ratio
    x

              11.5 11.4 10.1  
    PEG
     

              12.7 0.860    
     

  26. Oscar ratings hit all-time low

    • Last night's ABC (DIS +0.7%) broadcast of the Oscars – still one of the television events of the year - drew the smallest audience in the recorded history of the show, beating 2018's low.
    • Some 23.6M viewers tuned in on average, a precipitous 20% drop-off from last year, and down 46% from a peak in 2014.
    • In terms of Nielsen ratings, it drew a 5.3 among adults 18-49 (down 31% Y/Y).
    • It's reflective of a secular decline in awards show ratings, though last year's Oscars viewership (the first without a host in some time) had ticked up 12%.
    • As for studios competing for the prestige (and a small revenue bump), awards count ended in a three-way tie between Neon (U.S. distributor of Best Picture winner Parasite), Sony Pictures (SNE -0.3%) and Disney. Netflix (NFLX +0.9%) – which drew heavily from 10 nominations for The Irishman - saw that film left out of award winners entirely.

    Burger King closings in China pile up

    • Restaurant Brands International (QSR +2.2%) outlined the impact of the coronavirus on the company's restaurants in China.
    • During today's earnings call (transcript), QSR management stated that about half of the 1.3K Burger King locations are closed due to local regulations.
    • Tim Hortons has 30 locations in China and Popeyes hasn't broken into China.
    • Last year, Burger King in China only accounted for ~2% of Restaurant Brand International's consolidated system-wide sales tally.
    • Previously: Restaurant Brands +2% after Popeyes dazzles (Feb. 10)

    Foot Locker -5% after Telsey warning

    • Foot Locker (FL -4.9%) slides after Telsey Advisory Group drops the retailer to a Market Perform rating after having it slotted at Outperform.
    • "While the stock trades at a low P/E multiple of 7.3x 2020 consensus EPS—a discount to the average of 9.1x in the past year—it lacks a near-term catalyst to drive the shares materially higher," warns Telsey analyst Cristina Fernandez.
    • The firm set a price target of $42 on Foot Locker vs. the average sell-side PT of $46.27.

    PG&E predicts smaller, shorter shutoffs this year

    • PG&E (PCG +3.8%) says it is investing millions in personnel and technology to reduce the impact of its intentional power shutoffs during California's wildfire season, and believes blackouts in 2020 will darken fewer homes than last year.
    • PG&E filed an updated wildfire safety blueprint with the state's Public Utilities Commission on Friday, outlining plans for hardening its electric grid, improving its weather forecasting and trimming back more tree limbs that could spark fires.
    • This year's blackouts should be "smarter, smaller and shorter," the utility says, outlining goals of reducing the average geographic reach of deliberate blackouts by one third and restoring power to affected areas 12 daylight hours after unsafe conditions pass.
    • California's other big utilities also filed their wildfire prevention plans Friday, with Southern California Edison (EIX +0.9%) and San Diego Gas & Electric (SRE -0.2%) also saying they will lower the size and scope of planned blackouts through grid improvements.

    Oil slides again as traders await news on OPEC+ cuts

    • The energy sector (XLE -0.9%extends its recent weakness, dropping back near last week's lows amid continued worries that the spreading coronavirus will weigh on demand and economic growth.
    • WTI March crude -1.4% to $49.63/bbl; Brent April crude -2% to $53.36/bbl.
    • The group has given up 11% YTD, the only negative S&P sector during the period, and was the market's worst performer in 2019, as crude prices have plunged more than 20% from a peak in January.
    • "The concern remains that the wider markets have yet to reflect the full impact of the disruption" from the virus, Saxo Bank commodity strategist Ole Hansen says.
    • Traders also await word from Russia on production cuts after saying last Friday that it needed more time to decide on a recommendation to reduce output by another 600K bbl/day.

    SoftBank Vision Fund's Uber stake is up 18%

    • During an appearance on CNBC, SoftBank's (OTCPK:SFTBF,OTCPK:SFTBY) Marcelo Claure says the Vision Fund's stake in Uber (UBER) is up 18%.
    • Claure, who serves as the executive chairman on WeWork's (WE) board, says SoftBank has a "great plan" for the coworking company.
    • Claure, responding to recent reports that Vision Fund 2 has hit financing hurdles: "…I think as things start to calm down and you start seeing that Uber was a good investment (ridesharing has an incredible amount of potential), that WeWork has a plan and once we start executing quarter over quarter you're going to see that potentially the additional Vision funds are going to come along."
    • Related: SoftBank is feeling new pressure after Elliott Management built an over $2.5B stake and is reportedly pushing for governance changes, a $20B buyback, and an oversight committee for the Vision Fund.

    Four Chinese military hackers charged in Equifax breach

    • The U.S. charges four Chinese military hackers for breaking into the computer systems of Equifax (EFX -0.4%) in 2017 and stealing sensitive personal information of almost half of all American citizens, U.S. Attorney General William P. Barr announces.
    • "For years, we have witnessed China’s voracious appetite for the personal data of Americans, including the theft of personnel records from the U.S. Office of Personnel Management, the intrusion into Marriott hotels, and Anthem health insurance company, and now the wholesale theft of credit and other information from Equifax," Barr said in a statement.
    • The hackers broke in Equifax's network through a vulnerability in the company's dispute resolution website, the Department of Justice said.
    • The U.S. government doesn't normally bring criminal charges against members of another country's military or intelligence services outside of the U.S., the Justice Department said. But there are exceptions in cases of "indiscriminate theft of vast amounts of sensitive personal data of civilians."
    • Previously: Equifax to pay $671M to settle data breach suit, regulatory probes (July 22, 2019)

    Consumers, the engine of U.S. growth, still feel good, NY Fed says

    • Consumers don't expect inflation to emerge as an issue anytime soon, according to the Federal Reserve Bank of New York's January 2020 Survey of Consumer Expectations.
    • They're also confident about keeping their jobs and expect household spending to edge up.
    • Median inflation expectations at both one-year and three-year horizons are unchanged at 2.5% and median inflation uncertainty fell slightly for both time horizons.
    • Expected earnings growth expectations increased to 2.6% for one-year ahead, up from 2.2% in December.
    • Median household spending growth expectations increased 10 basis points to 3.0% in January, but remains below its trailing 12-month average of 3.2%.
    • Meanwhile, median expected household income growth was unchanged at 2.9% in January for the third straight month.
    • The mean perceived probability of losing one's job in the next 12 months declined 0.7 percentage point to 14.7% in January and the mean perceived probability of finding a job (if one's current job was lost) increased to 59.8% in January from 58.8% in December.

  27. Roku jumps as optimism builds for earnings

    • Ahead of earnings set for after the close Thursday, Roku (NASDAQ:ROKU) is up 6.4% and back to a two-week high as anticipation grows for positive results.
    • Susquehanna says video ad checks are still positive, which should bode well for revenues. It's also on a "positive trajectory" in terms of users and engagement, the firm says. It has a $150 price target.
    • D.A. Davidson reiterated its Buy rating ahead of the results as well, saying investors look to be underestimating Roku's ability to "exploit the OTT secular shift" in the long term. It has a $185 price target, implying 40% upside.
    • Sell-side analysts are Bullish on average, while Seeking Alpha authors are Neutral. ROKU has a Quant Rating of Neutral.

    Morgan Stanley sees GM doubling in bull case scenario

    • Morgan Stanley slots in General Motors (GM +0.5%) as its top auto pick.
    • "We believe GM’s efforts to electrify the fleet and cut emissions help drive broader cost margin improvement and capital return, supporting a bull case of $10 EPS and a blue sky $100 stock price," writes analyst Adam Jonas.
    • The blue sky scenario from Jonas includes a 2020 EPS forecast of $5.80, elimination of Cruise/Mobility losses of $1.2B, returning GM China to $1B of earnings, achieving breakeven for non-China GM and a contribution from GM Financial of $2.5B in EBIT.
    • The MS base case price target is $46 and the bull case PT is $70 (107% upside). The average sell-side PT is $46.58.

    Amazon wants to depose Trump in JEDI challenge

    • Amazon (AMZN +1.8%wants to depose President Trump, Defense Secretary Mark Esper, and former Defense Secretary James Mattis in its legal battle against a $10B Pentagon cloud contract that was awarded to Microsoft (MSFT +1.6%).
    • Amazon was initially viewed as the favorite to win the JEDI contract.
    • Last July, President Trump said he was looking into the contract after Amazon rivals protested the bidding process.
    • Microsoft was awarded the contract in October, and Amazon followed by filing its protest notice with the U.S. Court of Federal Claims.
    • An AWS spokesperson, to CNBC: "President Trump has repeatedly demonstrated his willingness to use his position as President and Commander in Chief to interfere with government functions – including federal procurements – to advance his personal agenda. The preservation of public confidence in the nation’s procurement process requires discovery and supplementation of the administrative record, particularly in light of President Trump’s order to ‘screw Amazon.’ The question is whether the President of the United States should be allowed to use the budget of the DoD to pursue his own personal and political ends."

    Xerox's new bid could force HP reconsideration – Wells Fargo

    • Wells Fargo analyst Aaron Rakers thinks the raised Xerox (XRX +1.7%) bid for HP (HPQ +1.8%) "will likely force HP management to seriously consider" the request for three weeks of due diligence.
    • The analyst reiterates his belief that a takeover would require a $25/share bid or higher, a dollar higher than the newest offer.
    • Rakers: "We continue to view Xerox’s year 3 run-rate synergy target of $2B as ambitious and believe that the debt load of the combined entity would be burdensome."
    • Wells Fargo maintains an Equal-Weight rating and $22 price target. The company has a Neutral average Sell Side rating.

    Trendforce cuts iPhone estimate after Foxconn delay

    • Hon Hai/Foxconn (OTCPK:HNHAF,OTCPK:HNHPD) received approval to resume production at its Zhengzhou facility but hasn't been allowed to start back up in Shenzhen, according to Reuters sources.
    • Foxconn mainly assembles Apple's (AAPL -0.7%) iPhones in Zhengzhou, but some assembly occurs in Shenzhen, which is also the company's Chinese HQ.
    • About 16K people (or under 10% of facility employees) have returned to work in Zhengzhou.
    • Market research firm Trendforce cuts its March quarter iPhone production forecast by about 10% to 41M.
    • Related: Wedbush analyst Daniel Ives called Foxconn's delay in getting workers back a "shock the system" that will further disrupt Apple's supply chain.

    WWE -3.1% amid two-notch cut at Wells Fargo

    • World Wrestling Entertainment (NYSE:WWE) is 3.1% lower premarket following a two-notch downgrade at Wells Fargo after "two many misfires" for any near-future interest from investors.
    • The firm cut WWE to Underweight from Overweight, and slashed its price target to $36 from $80, implying 15% downside.
    • There are several longer-term downside risks, Steven Cahall writes, including potential disappointments from the India and Middle East deals, elevated operating expenditure growth and longer-term concerns about distribution rights values.
    • Meanwhile, monetizing the WWE Network may be incremental but "we're not convinced this will be an earnings game-changer."
    • Sell-side analysts are Bullish overall, as are Seeking Alpha authors; the stock has a Quant Rating of Very Bearish.

    Inflation picks up in China

    • China's consumer inflation rate rose 5.4% in January to sail past the 4.9% mark anticipated by analysts and 4.5% pace in December.
    • Higher food prices were recorded during the month, driven by strong demand ahead of the Lunar New Year holiday and soaring pork prices.
    • After stripping out the more volatile food and energy prices, core inflation was up 1.5% during the month.

    Daimler to slash up to 15,000 jobs – Handelsblatt

    • Daimler (OTCPK:DDAIF) plans to cut as many as 15K jobs as it intensifies its existing cost cutting measures, Handelsblatt reports.
    • The German automaker said in November that it would cut at least 10K jobs and lower staff costs by ~€1.4B ($1.5B) by the end of 2022, which the company now expects will be exceeded by a significant amount, according to the report.
    • Daimler reportedly will announce the expanded savings at its annual news conference this Tuesday.

    Victoria's Secret deal expected this week

    • L Brands (NYSE:LB) is expected to announce sometimes this week a deal to unload its Victoria's Secret brand to Sycamore Partners.
    • The Victoria's Secret business generated $7.4B in sales last year, but is viewed by some consumers as out-of-date with its focus. A few months ago, Victoria's Secret canceled its once-popular annual fashion show.
    • Shares of L Brands are down 10.7% YTD.

    Mattel closes factories

    • Mattel (NYSE:M) says it closed two factories in Asia and plans to shutter another one in Canada as it keeps looking for ways to cut costs.
    • Manufacturing sites in China and Indonesia were shut down last year by the toy company, while a facility in Montreal that makes Mega Bloks is scheduled to be closed sometime this year.
    • Mattel's manufacturing strategy differs from the outsourcing strategy used by rival Hasbro (NASDAQ:HAS).
    • Mattel employs about 35K workers during peak manufacturing periods.
    • Shares of Mattel are down 7.6% over the last 52 weeks to trail by a wide margin the 11.6% gain for Hasbro. Both companies step into the earnings confessional later this week.

    Facebook battles IRS in $9B tax lawsuit

    • A trial between the IRS and Facebook (NASDAQ:FBgoes to trial this week as the latter attempts to fend off a tax liability that could cost it some $9B.
    • The trial represents the culmination of a longstanding legal battle, which will decide whether more of Facebook's profits should have been taxed at a higher U.S. rate, rather than in the company's Irish subsidiary.
    • It could also shape the government's ability to crack down on companies' efforts to shift profits to low-tax countries.

    Ten U.S. refineries emitted excessive benzene in 2019 – report

    • Ten U.S. oil refineries released cancer-causing benzene in concentrations that exceeded federal limits last year, according to government data published by Environmental Integrity Project.
    • Philadelphia Energy Solutions' refinery in Philadelphia recorded the highest benzene concentrations, at nearly 5x the EPA standard, according to the report, followed by HollyFrontier's (NYSE:HFC) Navajo Artesia plant in New Mexico, with more than 3x the federal standard.
    • Six of the 10 sites listed are located in Texas: Total's (NYSE:TOT) Port Arthur refinery, Chevron's (NYSE:CVX) Pasadena refinery, Flint Hills' Corpus Christi East refinery, Valero's (NYSE:VLO) Corpus Christi East, Shell's (RDS.ARDS.B) Deer Park and Marathon Petroleum's (NYSE:MPC) Galveston Bay.
    • The two other refineries named are Chevron's Pascagoula in Mississippi and PBF Energy's (NYSE:PBF) Chalmette Refining in Louisiana.
    • "These results highlight refineries that need to do a better job of installing pollution controls and implementing safer workplace practices," says EIP Executive Director Eric Schaeffer. "Now, EPA needs to enforce these rules."
    • The Environmental Protection Agency said "It is important to note that benzene concentration levels monitored at the perimeter of a refinery do not reflect benzene levels in the community."

    Apple extends store closures in China

    • Apple (NASDAQ:AAPLextends its retail store closures from February 10 to between February 13 and 15 due to the ongoing coronavirus outbreak.
    • Last week, Apple said it would close all 42 of its stores in the region until after the extended Lunar New Year holiday ended.
    • The stores reopening on the earlier dates will likely have limited hours. The time frame is still fluid due to uncertainty around the virus.

  28. Jeepers, the markets are soaring on a contagion, imagine how fast a little war somewhere would get us to /NQ 15,000!


  29. It's incredible but I guess the override is that money simply has nowhere else to go, so you need an active reason NOT to put money in stocks every day (and the ETF money pours in every day too).

    9,500 on /NQ!  Gotta short that out of principle but these moves are crazy.  

    In the STP, we have 60 long SQQQ Jan $17 calls at $3.65 and we can roll down to the $15 calls at $4.30 so net 0.65 to roll down $2 is a no-brainer.  We DO want protection all year long so this is just the maintenance fee ($3,900) to maintain our hedge.

    In the Earnings Portfolio, we have 30 long Jan $20 calls, now $2.90 so we'll roll those as well down to 30 long $15s at $4.30 and here we're spending $1.40 to pick up $5 in position.  We were smarter here as we sold short March $27s and we should buy them back for 0.20 as they are useless paying 0.10/month but, if we do get a pop in SQQQ, we can lock it in by selling new short calls

    SQQQ Short Call 2020 20-MAR 27.00 CALL [SQQQ @ $17.18 $-0.50] -20 12/5/2019 (39) $-5,700 $2.85 $-2.68 $1.24     $0.18 $-0.03 $5,350 93.9% $-350
    SQQQ Short Put 2020 19-JUN 22.00 PUT [SQQQ @ $17.18 $-0.50] -15 1/17/2020 (130) $-6,450 $4.30 $1.75     $6.05 - $-2,625 -40.7% $-9,075
    SQQQ Long Call 2021 15-JAN 20.00 CALL [SQQQ @ $17.18 $-0.50] 30 1/21/2020 (340) $12,000 $4.00 $-1.13     $2.88 $-0.13 $-3,375 -28.1% $8,625
    SQQQ Short Call 2021 15-JAN 30.00 CALL [SQQQ @ $17.18 $-0.50] -30 1/24/2020 (340) $-7,650 $2.55 $-0.78     $1.78 $-0.03 $2,325 30.4% $-5,325

  30. /NQ / Phil – principles are expensive, the short hurts already!


  31. Anyone,

    on Cost Basis/Transaction History for TD Ameritrade, I have "ret capital" (return of capital) on most of my REITS. According to TD it's money returned but not recorded on statement and no cash have been returned to my account.

    I"m guessing someone here can explain it better then TD support.

    Thanks


  32. /NQ/MrM – I think Tuesday's are more realistic than Monday's and we'll be over 1,000 deaths – that usually freaks people out.  

    ROC/Gardling – ROC should be the percentage return IF the position makes maximum profit at expiration so it's a theoretical number of what COULD be returned to your account over time.  


  33. REIT /gardling -  Here's my take on your question.  The return on capital on reits is a part of the quarterly dividend you receive.  For example for NLY, a dividend of $0.25/shr was paid 10/31/19 :  $0.06449 of it is non-dividend distribution (or return on capital, which reduces your cost basis) and $0.18551 is Section 199A Dividends (which goes into your 1040 as div). On your monthly statement, only the $0.25 div shows, but on your 1099B, it will be broken out into the 2 categories.  Here's the information from NLY's investor relations site :   https://www.annaly.com/~/media/Files/A/Annaly-V2/2019_dividend_tax_information.pdf   Hope this helps.


  34. Trump’s Latest Crackpot




  35. REIT/bai2r ,

    the dates doesn't line up. In the case with NLY, div payment was (example) 7/31/19 and 10/31/19 but my return of capital was 6/27/19 and 9/27/19. For ARR I have return capital on 11/14/19, 12/13/19 and dividend payment on 11/27/19, 12/27/19.

    I've never seen "Ret Capital" until a few days ago when I noticed that my cost basis was down, so I'm guessing this is something new with TD Ameritrade. Another thing is Net Change doesn't add up anymore with stock positions + option positions + other transactions. Not even close. Anybody else noticed that ?