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Thrilling Thursday – The View From the Top of the Market

Image result for Well , here's another nice mess you've gotten me intoEverything is fine.

Hubaei (center of the virus outbreak) has asked firms not to resume work until March 11th.  It's Feb 20th so that's only 3 weeks from now – why should that concern anyone?  I'm sure things are fine.  Chinese companies (as I predicted, thank you) have been unable to pay their workers, delaying paychecks and cutting salaries.  That's fine.  Shopping malls and restaurants are empty; amusement parks and theaters are closed; non-essential travel is all but forbidden.  Fine.  

“A week of unpaid leave is very painful,” said Jason Lam, 32, who was furloughed from his job as a chef in a high-end restaurant in Hong Kong’s Tsim Sha Tsui neighborhood. “I don’t have enough income to cover my spending this month.”

He's fine.  “The coronavirus may hit Chinese consumption harder than SARS 17 years ago,” said Chang Shu, Chief Asia Economist for Bloomberg Intelligence. “And SARS walloped consumption.”  That's fine.  Without full, regular paychecks and few places to spend them these days anyway, Chinese consumers could cut spending in some categories to zero, said Shu. And it may not bounce back: For example, she said, if you skip your daily latte for two months, you’re not likely to make up for those missed drinks later in the year.  SBUX is fine.  

Rick Zeng, deputy general manager at the Lionsgate theme park in Zhuhai, said they’ve been shut down on government orders since the end of January. Starting next week, some staff will need to go on unpaid leave.  In the southeastern city of Fuzhou, hotel manager Robert Zhang said all but two or three of his 100 rooms are vacant on average nights. Two-thirds of the employees are effectively on furlough, getting some salary but not as much as they’re used to.  They're fine. 

South Korea's number of virus cases went from 31 yesterday to 104 this morning (up 235% in a day) and they had their first death from the virus this morning.  OK, he might not be fine…  Infections in Japan have doubled in the past week to 84 not counting, of course the cruise ship where hundreds were infected DURING quarantine.  They're fine.  

While the U.S. and others placed a 14-day quarantine on repatriated nationals from the Diamond Princess, about 500 people cleared by Japan left the ship Wednesday to go about their normal lives, and were told to call authorities if they feel ill.  That will work out fine.


A passenger takes a taxi after after disembarking from the Diamond Princess cruise ship, Feb. 19.

Photographer: Kazuhiro Nogi/AFP via Getty Images

A Bloomberg survey released Wednesday showed that economists see Japan falling into recession as the coronavirus pummels an economy already weakened by a sales tax hike.  “The coronavirus will probably cause a substantial amount of economic damage in Japan,” Richard Koo, chief economist at Nomura Research Institute, wrote in a report.  Fortunately, we have the upcoming 2020 Olympics in Tokyo to distract us.  Isn't that fine?

Image result for japan debt cartoon

Obviously, Japan is under a lot of pressure to act like the virus isn't happening.  The Olympics are a huge investment and if people panic and don't book flights or hotels and tickets go unsold – the whole thing can turn into an economic disaster in a country that is currently borrowing 4% of their GDP ($200Bn) just to pay their bills.  Japan simply can't afford to prevent a viral outbreak – so they ignore it.

28 of the new cases in Singapore were caused by one person who went to church earlier this week and, so far, 27 other people are infected – but the week isn't over yet.  1,000 people were at the church so I'll take the over on that bet!

Sorry to go on about the virus but the markets are still ignoring it and this is kind of my job, so bear with me (oops, don't say "bear"!).  I'm sure everything will be fine, like our Nasdaq (/NQ) shorts that were down quite a lot yesterday are now almost green and our S&P (/ES) shorts are green too but no good sell-off goes unrallied in this market – so I'm sure things will be… fine.  


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  1. Good morning All! The webinar replay is now up! 



  2. Good Morning!


    (Not so much for Mayor Mike!)

  3. Phil / CLF – thoughts on earnings?

    Cleveland-Cliffs EPS misses by $0.01, beats on revenue

    Cleveland-Cliffs (NYSE:CLF): Q4 Non-GAAP EPS of $0.23 misses by $0.01; GAAP EPS of $0.23 misses by $0.04.

    Revenue of $574.4M (-17.5% Y/Y) beats by $24.65M.

    Press Release

  4. Gonna need to add more lines to the Nasdaq!

  5. Virus / Phil – I don't know that people truly comprehend the stress that this virus adds to a society and the damage that could be done if it's not under control. I spoke to people who compared the death toll to the size of the country. They are not looking at the actual cost – 10,000 people who need to be in intensive care. This would be unmanageable for most countries! I heard the virus spread to N. Korea – how will they manage there? It's insane.

  6. Phil,

    Your thoughts on VIAC; Maybe a starter entry 5 contracts to 2022. Thanks as always.

  7. Good morning! 

    Only 500 new infections today and "only" 120 more deaths (1,800 recoveries) so China is turning a corner but now we're worried about other places and, of course, the economic impact on Q1, which is half over.  

    Mike/1020 – He got slammed last night.  Liz tore him a new one!

    Just a few things I didn't get around to in the post:

    China Premier Says Don’t Halt Grain Planting (2:10 p.m. HK)

    Chinese Premier Li Keqiang told local governments to make sure farmers don’t miss the crucial grain planting season during a critical time for controlling the spread of coronavirus.

    Government officials are worried that the epidemic could spread to rural areas, where medical facilities are less developed than urban locales. The outbreak that began in the city of Wuhan has caused more than 2,000 deaths in the nation.

    “If we miss the planting season, we’ll be unable to make up for it, which will have an impact on the economic foundation and social stability of the whole year,” Li said in a release posted on the government’s website. “We are holding the rice bowl for 1.4 billion people in our own hands.”

    China Considers Prolonging Electric-Car Subsidies (6:10 p.m. HK)

    Beijing may extend subsidies for electric-vehicle purchases beyond this year in an effort to revive sales in the world’s biggest market, people familiar with the matter said. The move could add to state aid being considered in wake of virus.

    Policy makers have been discussing the possibility after China’s first annual decline in sales of new energy vehicles, according to the people. Though the talks predate the emergence of the coronavirus as a global threat, the outbreak has piled more pressure on the auto industry by causing production halts and keeping people away from showrooms

    Iran Reports Three Confirmed Cases After Two Deaths (5:18 p.m HK)

    Iran reported three more cases, a day after confirming two people had died from the outbreak. Two residents in Qom and one in Arak and have been hospitalized, state-run Iranian Students News Agency said, citing the country’s health ministry.

    Companies Warns on Virus Impact (4:50 p.m. HK)

    Air France-KLM slumped after it said the outbreak will wipe as much as $216 million from earnings, hammering home the financial impact of the crisis even thousands of miles from its epicenter. Qantas Airways Ltd. said it is slashing capacity on international flights in Asia. The reductions apply to flights to mainland China, Hong Kong and Singapore and will be in place until at least the end of May, the Australian airline said.

    Lenovo Group Ltd. warned of “short-term volatility and challenges” because of disruptions at its suppliers, but the stock surged as the company said most of its plants had re-started operations and demand should rebound once the outbreak stabilizes.

    Indonesia Cuts Rates, Lowers Growth Forecast (4:30 p.m. HK)

    Indonesia’s central bank cut its benchmark interest rate after a three-month pause, and lowered the growth forecast as the spread of the coronavirus threatens the outlook for Southeast Asia’s biggest economy.

    Japan Machinery Orders Rebound Delayed: Lobby (2 p.m. HK)

    The Japan Machine Tool Builders’ Association said a rebound in machinery orders it has previously forecast for the April-June quarter is likely to be delayed by three months as demand in China is hit by the coronavirus outbreak.

    The lobby group had previously forecast the slump in orders to bottom out in the current quarter, but now expects the declines to continue beyond March, JMTBA Chairman Yukio Iimura said at a briefing in Tokyo on Thursday. “We can’t travel to China to get orders and our customers there can’t come here either,” Iimura said.

    China Loan Rate Drops After Central Bank Eases Policy (9:48 a.m. HK)

    China’s banks lowered the benchmark borrowing costs for new corporate and household loans after Beijing slashed a range of policy rates this month to blunt the economic impact of a deadly virus outbreak. Earlier this month, the central bank cut the rates on its short-term funds and one-year loans to commercial lenders.

    China’s economic growth is coming under pressure as the virus outbreak shuts down much of the economy. The health crisis has prompted investment banks to lower their forecasts for the nation’s gross domestic product.

    CLF/Batman – No surprise given the China shutdown.  If anything, it's a chance to go long around $7, which has been a good floor but we'll see how it shakes out.   CLF is a cyclical business in a down cycle at the moment and is unlikely to make $200M this year but the good news is that $7/share is less than $2Bn and they are in the middle of acquiring AKS, which accounts for a lot of the turmoil.  So, if you are looking to be in for the long haul – it's not a bad entry:

    Year End 31st Dec 2013 2014 2015 2016 2017 2018 TTM 2019E 2020E CAGR / Avg
    Total Revenue

    3,891 3,373 2,013 1,555 1,866 2,332 2,152 2,004 1,980 -9.73%
    Operating Profit

    1,380 146 544 297 225 666 486     -13.6%
    Net Profit

    414 -7,224 -749 174 367 1,128 839 294 185 22.2%
    EPS Reported

    5.06 7.14 0.681 0.487 1.24 3.42 2.86     -7.54%
    EPS Normalised

    5.12 9.77 -0.971 -0.038 1.61 3.44 2.93 1.09 0.709 -7.68%
    EPS Growth

      +90.6       +113 -14.7 -68.3 -34.8  
    PE Ratio

              2.21 2.59 6.99 10.7  


    For a position on CLF, you can probably sell the 2022 $7 puts for $2.70 – that's a no-brainer to me.  Let's say you sold 10 of those ($2,700) and bought 20 of the $5 ($2.70)/$10 (0.70) bull call spreads for $2 ($4,000), that's net $1,300 (0.65 per) on the $10,000 spread.  That's a good way to go. 

  8. Phil / CLF –  Yep Looks like this year is lost with the acquisition and slump in demand…  Next year should have more debt but higher revenue on lower margins  but eps growing.   I agree and have the 5/10 spread already, and have the 10 put all '22… will take a look at the 7 putter as that may be a way to add to my puts, as I don't have enoughh of those.

  9. Big Chart/StJ – I'm carrying my shorts into the weekend.   The spread of the virus is what concerns me.  People treat Japan like it's first world but it's economy is heading towards 3rd these days and just think of what a Japanese subway is like.  One infected salaryman going to work and back is in close proximity to hundreds of people in an enclosed space and then they, in turn, are all commuters who go home on different trains.  It's like trying to not get the flu – hopeless.

    Image result for japanese subway crowded

    VIAC/Jasu – We just put it in the LTP, still playable:

    VIAC Long Call 2022 21-JAN 35.00 CALL [VIAC @ $35.67 $0.00] 30 1/23/2020 (701) $20,400 $6.80 $-0.37 $6.80     $6.43 $0.00 $-1,125 -5.5% $19,275
    VIAC Short Call 2022 21-JAN 42.50 CALL [VIAC @ $35.67 $0.00] -30 1/23/2020 (701) $-12,000 $4.00 $-0.35     $3.65 $0.00 $1,050 8.8% $-10,950
    VIAC Short Put 2022 21-JAN 32.50 PUT [VIAC @ $35.67 $0.00] -10 1/24/2020 (701) $-4,100 $4.10 $0.75     $4.85 $0.00 $-750 -18.3% $-4,850

    Procter & Gamble talks coronavirus

    • Procter & Gamble (PG N/A) lays out during its CAGNY conference appearance how the consumer products company is looking at the impact of the coronavirus. The comments below are from P&G CFO/COO Jon Moeller.
    • "We face the demand and supply challenges associated with the coronavirus outbreak. China is our second largest market-sales and profit. Store traffic is down considerably, with many stores closed or operating with reduced hours. Some of the demand has shifted online but supply of delivery operators and labor is limited. There are also impacts outside of China: travel retail, a significant reduction in department store traffic in many Asian metro areas, and global supply. We access 387 suppliers in China that ship to us globally more than 9,000 different materials, impacting approximately 17,600 different finished product items. Each of these suppliers faces their own challenges in resuming operations. The operating challenges change with the hour, and of course the path of the virus is unknown, making it very difficult to provide precise estimates of impact."
    • "Results for the January to March quarter in China and for the total Company will be materially impacted on both the top and bottom line by these dynamics."
    • "We continue to believe, based on what we know today, that our fiscal year top and bottom line guidance ranges-and I emphasize ranges-remain the right ones. We will continue to monitor the situation and obviously update you if and when a different reality becomes apparent."
    • Procter & Gamble 8-K filing

    Only the World's largest consumer products company.  I'm sure it will be fine…

    CLF/Batman – I wouldn't go too crazy.  Look at MDR.

    SeaWorld -6% after weak Six Flags outlook

    • Shares of SeaWorld Entertainment (NYSE:SEAS) are down sharply in premarket trading in what is likely a reaction to a stark warning from Six Flags on organic revenue trends.
    • The theme park operator will report earnings of its own next week.
    • SeaWorld is down 5.93% premarket to $33.97.

    Philly Fed Outlook beats estimates, highest since February 2017

    Sturm Ruger sinks after gloomy tone

    • Sturm Ruger (NYSE:RGR) is down 17.12% in premarket action after the company's Q4 results disappoint.
    • CEO Christopher Killoy described a market full of "undisciplined discounting" and "reckless" extension of payment terms in his year-end summary. He also pointed to excessive promotions. Killoy does think Sturm Ruger is positioned to either profitably weather a storm or thrive in a recovering market
    • Revenue fell 13.2% for the company during Q4 and EBITDA for the full year was off 31%.
    • Previously: Sturm, Ruger reports Q4 results (Feb. 19)

    Coronavirus update: Shanghai gains as Beijing continues to bail

    • Former global macro hedge fund manager (and now crypto-evangelist) Mike Novogratz a few days back suggested the coronavirus outbreak was a reason to be bullish on stocks. Why? Because Chinese officials would unleash whatever fiscal and monetary tools they had to offset the ill effect on the economy.
    • A PBOC rate cut followed shortly after, and this morning we've got a few other headlines from Beijing:
    • The government will cut companies' required pension contributions and insurance fees by more than $70B this year.
    • The government is mulling an extension in electric car subsidies after a big sales slump.
    • Another rate cut.
    • The Shanghai Composite rose another 1.85% overnight. It's now up about 10% from the post-Lunar Holiday lows.

    Victoria's Secret to go private

    • L Brands (NYSE:LB) confirms its deal with Sycamore Partners to privatize the Victoria's Secret business and position Bath & Body Works as a highly profitable, standalone public company.
    • Under the terms of the transaction, Victoria's Secret, with a total enterprise value of $1.1B will be separated from L Brands into a privately-held company majority-owned by Sycamore. After taking into account certain liabilities, Sycamore will purchase a 55% interest in Victoria’s Secret for approximately $525M and L Brands will retain a 45% stake.
    • The company intends to use the proceeds to pay down debt, and expects that its overall leverage will be close to its current leverage ratio.
    • "We believe the separation of Victoria’s Secret Lingerie, Victoria’s Secret Beauty and PINK into a privately held company provides the best path to restoring these businesses to their historic levels of profitability and growth," says L Brands Chairman Les Wexner on the deal.
    • Wexner is stepping down as chairman after the deal closes.
    • LB -8.25% premarket to $22.57. The retailer also posted a guidance update, saying it sees Q4 comparable sale down 2% vs. -1% consensus.
    • Source: Press Release

    New Class 6 trucking solution from Plug Power

    • Plug Power (NASDAQ:PLUG+7.9% premarket after announcing a partnership with Colorado-based Lightning Systems, a global developer of zero-emission drivetrains.
    • The collaboration enables both companies to offer the world's first electric, fuel cell-powered Class 6 trucks (up to 12.5 tons) capable of supporting middle-mile delivery logistics between warehouses and distribution centers.

    Domino's Pizza +19% after earnings topper, dividend boost

    • Domino's Pizza (NYSE:DPZ) jumps after comparable sales at U.S. stores rise 3.9% in Q4 to top the consensus mark of +1.9%.
    • Comparable sales were up 3.3% at franchised outlets in the U.S. during the quarter and 1.7% at international stores.
    • Operating margin came in at 17.7% of sales vs. 17.6% consensus.
    • Also standing out from the Domino's report was the 20% boost in the quarterly dividend payout and forecast for global retail sales growth of 7% to 10% over the next two to three years.
    • Shares of DPZ are up 18.60% premarket to $352.35.
    • Previously: Domino's Pizza EPS beats by $0.16, beats on revenue (Feb. 20) +35% after earnings topper

    • (NASDAQ:STMP) soars after blasting past beaten-down Q4 estimates even as revenue fell off 5.5% Y/Y.
    • Adjusted EBITDA of $51.4M was recorded during the quarter vs. $32.6M consensus and $71.3M a year ago.
    • Looking ahead, the company anticipates FY20 revenue of $570M to $600M vs. $521M consensus and EPS of $4.00 to $5.00 vs. $3.31 consensus.
    • Shares of are up 34.63% premarket to $128.52 vs. the 52-week trading range of $32.54 to $203.87.
    • Previously: EPS beats by $1.14, beats on revenue (Feb. 19)

    Albemarle expects 2%-3% drop in 2020 revenues as lithium prices lag

    • Albemarle (NYSE:ALB+1.3% after-hours despite reporting slightly lower than expected Q4 earnings, but revenues rose 8% Y/Y to $993M due to increased lithium sales volumes and favorable pricing for bromine specialties.
    • Q4 sales of lithium products rose 20% Y/Y to $411M, as higher volumes offset flat prices, bromine specialties increased 13% to $79.7M, and sales of catalysts for refineries – which Albemarle has said are key to funding its lithium expansions – slipped 2.6% to $76.7M.
    • For FY 2020, the company forecasts a 2%-3% drop in sales to a range of $3.48B-$3.53B, in line with $3.53B analyst consensus estimate, resulting in a dip in adjusted EPS of 16%-21% to $4.80-$5.10, in line with $4.96 consensus.
    • Albemarle anticipates lower 2020 results from its lithium and flat-to-slightly lower results from bromine specialties, partially offset by flat to slightly higher results from the catalysts business.

    Cimarex Energy surges after quarterly results, dividend boost

    • Cimarex Energy (NYSE:XEC+7.1% after-hours following mixed Q4 results and an announced 10% dividend increase.
    • Cimarex says it produced 292.7K boe/day in Q4, up 16.5% Y/Y, and averaged 278.5K boe/day for the full year, up 25.5%; Q4 oil production rose 15% Y/Y to 92K bbl/day, and full-year oil output jumped 27% to 86.2K bbl/day.
    • Q4 realized oil prices averaged $54.80/bbl, up 11% from $49.30/bbl in the year-ago quarter, realized natural gas prices averaged $1.19/Mcf, down 45% Y/Y from $2.16/Mcf a year earlier, and natural gas liquids averaged $14.13/bbl, down 32% from $20.71/bbl a year ago but up 31% from the lows in Q3 2019.
    • For the full year, Cimarex realized $52.77/bbl of oil, down 7% from 2018, $1.11/Mcf of natural gas and $13.55/bbl of NGLs sold.
    • Cimarex says it invested a total of $1.32B in 2019, including $944M attributable to drilling and completion activities.
    • Proved reserves at year-end 2019 totaled 620M boe, up 5% Y/Y; oil reserves increased 16%.

    IMAX +4.1% after capping record year with Q4 beat

    • IMAX is up 4.1% after hours following Q4 earnings that surprised to the upside and capped a record box-office year for the company.
    • Total revenue rose 14% to $124.3M, and gross margin got a near eight-point boost as well, to 62.4% from 54.6%.
    • Net income multiplied to $21.4M from $3.8M (adjusted net income hit $21.5M from a year-ago $16.4M, a 31% increase).
    • Q4 revenue by segment: Network, $43M (up 3.3%); Theatre, $77.6M (up 25.3%).
    • For the year, the business "demonstrated significant strength by setting a number of new records for the Company including annual revenue as well as global, international, and local language box office — underscoring the increasing geographic diversification of our business," says CEO Richard Gelfond.
    • As for China, where theaters are still closed nationwide: "We are continuing to monitor the situation closely and needless to say the safety of our team and audiences is our top priority," Gelfond says, adding the company looks forward to improving circumstances.
    • Cash and equivalents came to $109.5M as of Dec. 31, with total bank indebtedness down $37.8M Y/Y to $18.2M. The company had $280M available under its $300M credit facility.
    • Press release

    Sunoco LP Q4 top line up 6%, earnings up 214%

    • Sunoco LP (NYSE:SUNQ4 results:
    • Revenues: $4,098M (+5.75); motor fuel sales: $4,002M (+5.8%).
    • 2.1B gallons sold. Margin/gallon: $0.099.
    • Net income: $83M (+213.9%); EPS: $0.75 (+164.9%).
    • Non-GAAP EBITDA: $168M (-6.7%).
    • Total distribution to be paid to partners: $87M (+1.2%).

    Boston Beer -7% after light profit guidance

    • Boston Beer (NYSE:SAM) slides in AH trading after the company issues guidance below expectations. The alcoholic beverage player is seeing higher advertising, promotional and selling expenses amid an increase in competition.
    • Looking ahead, Boston Beer sees FY20 EPS of $10.70 to $11.70 vs. $11.72 consensus.
    • Shares of SAM are down 7.23% AH to $398.00.
    • Previously: Boston Beer EPS misses by $0.29, beats on revenue (Feb. 19)

    The Cheesecake Factory EPS misses by $0.03, beats on revenue

    • The Cheesecake Factory (NASDAQ:CAKE): Q4 Non-GAAP EPS of $0.58 misses by $0.03; GAAP EPS of $1.10.
    • Revenue of $694.13M (+18.6% Y/Y) beats by $20.6M.
    • Shares -6.56%.
    • Cheesecake Factory (NASDAQ:CAKE) reports comparable sales growth of 0.6% in Q4 vs. +0.8% consensus.
    • Restaurant margin was 15.0% of sales during the quarter vs. 15.8% consensus.
    • The company opened three Cheesecake units, one North Italia and two Flower Child units during the quarter.
    • Guidance is expected to be posted by management on the earnings call.
    • Shares of CAKE are down 6.56% AH to $38.20.
    • Press Release

  10. DPZ….

    My BCS blow up! incredible.

  11. Fates of humans and insects intertwined, warn scientists

  12. Trump’s budget will wreak havoc on the American economy

  13. Morgan Stanley to Buy E-Trade for $13 Billion

  14. Leslie Wexner to Step Down as Victoria’s Secret Is Sold

  15. SPCE – Unreal !

    Covered a second 1/3 by selling the July 50 call for $10.20

  16. SPCE/Albo – OMG!

    Virgin Galactic soars for ninth straight session

    • Shares of Virgin Galactic (NYSE:SPCE) are up 10.4% in early trade, putting them on track for a ninth straight gain after skyrocketing over 100% over the past eight sessions.
    • According to Fidelity, Virgin Galactic has passed Apple and Tesla as the most popular stock among retail investors.
    • "It can't be stopped right now, and these things tend to end badly – but you try to tell someone that," Jim Cramer told CNBC's Squawk Box.

    Natural gas inventory draw slightly more than estimates

    • Cheesecake Factory rallies as sentiment turns positive

      • Oppenheimer keeps a Perform rating on Cheesecake Factory (CAKE +4.6%) after taking in the restaurant chain's Q4 earnings report, but sees some reason to be optimistic.
      • "This outlook could alleviate near-term investor fears around margin- driven EPS reductions. Management suggested any acquisition synergies would likely benefit model in 2021," writes analyst Brian Bittner.
      • "Overall, the core Cheesecake Factory business appears steady with drivers related to off-premise, marketing, limited reservations, etc. Simultaneously, the North Italia/FRC acquisition helps boost unit growth, which, if excellently executed, could gain more appreciation with valuation at 13–14x P/ E and ~8x EV/EBITDA," he adds.
      • Shares of CAKE trade at their highest level of the year.
      • Previously: The Cheesecake Factory EPS misses by $0.03, beats on revenue (Feb. 19)

    Theme park investors eye Six Flags shocker

    • Cedar Fair (FUN), SeaWorld Entertainment (SEAS -2.3%) and Disney (DIS -0.3%) are all being watched closely today after Six Flags Entertainment (SIX -16.8%) warned on soft organic revenue trends and higher wage pressure for the year ahead.
    • Despite the gloomy outlook from Six Flags management, Wedbush analyst James Hardiman observes that the issues could be company specific.
    • "When we put it all together, the developments of the past six weeks are fairly shocking for Six Flags. As of three months ago, although nobody believed it, the company was still technically targeting $750M in Modified EBITDA by 2021. At this point, the company is likely to miss this target by a quarter of a billion dollars," he writes.
    • Previously: SeaWorld -6% after weak Six Flags outlook (Feb. 20)

    Leading indicators sail past estimate

    • January Leading Indicators+0.8% at 112.1 vs. +0.3% consensus, -0.3% prior (unrevised).
    • Coincident Economic Index +0.1% at 107.3.
    • Lagging Economic Index flat at 108.7

    Domino's Pizza races to new high

    • Cowen analyst Andrew Charles says there is a lot to like from the numbers spilled by Domino's Pizza (DPZ +26.1%) earlier today.
    • "Encouragingly, 4Q same store sales accelerated 20 bps on a two-year basis from 3Q, relative to a 500 bps deceleration in two-year trends from 3Q to 4Q in both 2017 and 2018," he notes.
    • Charles also says Domino's $1B of share repurchase authorization were executed well, with nearly $600M of repurchases in Q4 at an average repurchase price of $287.83 per share.
    • Cowen keeps an Outperform rating on DPZ and price target of $325. Shares of DPZ have blasted right past nearly all sell-side PTs and have traded as high as $375 today (all-time high).
    • Previously: Domino's Pizza +19% after earnings topper, dividend boost (Feb. 20)


  17. Typical bubble behavior – one stock beats and people throw money at the whole sector:

    Restaurant stocks follow Domino's higher

  18. Have been long some ERX (3X Energy Bull ) for a few weeks.  Decided to add some more.

  19. This DPZ jump is absurd, nothing justifies it, just a planned  short squeeze

  20. Is it time to think about selling some short calls agains the SPWR bcs (40 Jan'22 $5c, -20 Jan'22 $8p, up about $4k) while the bubble continues?

  21. DPZ/Advill – I wouldn't pay $12.5Bn for this:

    Year End 30th Dec 2013 2014 2015 2016 2017 2018 TTM 2019E 2020E CAGR / Avg
    Total Revenue

    1,802 1,994 2,217 2,473 2,788 3,433 3,551 3,595 3,875 13.8%
    Operating Profit

    314 345 405 454 521 572 605     12.7%
    Net Profit

    143 163 193 215 278 362 383 396 430 20.4%
    EPS Reported

    2.48 2.86 3.47 4.30 5.83 8.35 9.08     27.5%
    EPS Normalised

    2.48 2.84 3.48 4.31 5.88 8.27 9.15 9.42 10.7 27.2%
    EPS Growth

    +29.9 +14.6 +22.2 +24.0 +36.5 +40.6 +10.6 +13.8 +13.8  
    PE Ratio

              35.9 32.5 31.6 27.7  

              2.60 2.35 2.28 1.92  

    Not enough growth to justify 30+ p/e.   Big buyback driving EPS at the moment – $600M in Q4 is 5% of the company – there's half the "growth" in EPS.  

    SPWR/Wing – We sold some short puts already in the MTP, I don't remember having a spread but sure, I'd sell 10/40 for now and another 10 if rejected at $11 or, if not rejected, then $12,etc. 


  22. Asia to absorb LNG supply growth from mid-2020 – Shell

  23. VIAC getting crushed, by the way. 

    Cut /NQ shorts back to 2 but those I'll add to if we go back up.

  24. I have to leave at 1:30 for a meeting, hopefully back by the close. 

  25. SPCE

    Morgan Stanley out negative.. 

  26. What's got the market nervous? I usually see the headline more easily than I am right now… virus? Bernie?

  27. Used the drop to buy some SPCE Warrants at $19.20.  Covered with the 2/28 SPCE 37.5 calls at $5.

    The warrants move up more than the stock percentage wise. At least they alway have.

  28. SPCE – That was a fun ride! 

    Bernie is worse than the virus according to Cooperman.  

    John Oliver was so good this week, by the way.  Great discussion of Medicare for all. 

  29. By the way, this is all I can think of when listening to Bernie:

    Image result for ant and aardvark animated gif

    Still love him though.

    Earnings Portfolio Review: $101,324 is down $9,146 from last month's review and only up 1.3% overall now.  The good news is, the whole portfolio is good for a new trade!  The overall portfolio is looking to make net $35,000 with the current positions and we thought we'd have more chances to play but the virus made things too sketchy this earnings season so we wait — patiently.  

    • HBI – On track.
    • WYNN – Virus hit them hard and we jumped in but no put sales yet. 

    • ACB – Hopefully the bottom.
    • CLF – We're in the right position, as noted above. 
    • HRB – Usually they pick up by March/April as people remember what a racket this is.

    • IMAX – Still down in the dumps as virus spreads around Asia but I still like them.  I guess we may as well get more aggressive and buy  back the short June $22 calls for 0.20 ($400) and roll our 20 June $18 calls at $1 ($2,000) to 30 Sept $15 calls at $3 ($9,000) and we'll wait for a nice bounce to sell covers.  As we started out at net $3,175 and we're spending net $6,600, we're now in the 30 longs for net $9,775 or $3.25 each so our break-even is $18.25 (though we'll have to deal with the puts at some point). 

    • IRBT – Doing very well.  
    • M – We only need them to hold $15 – should have been braver.  

    • SQQQ – Hedges don't seem very useful these days and no point to leaving the short March $27 calls when we can close them out for $250 and open up a slot.

  30. I'm calling it now the 2020 Olympics are not happening.

  31. I'd say 75% they happen.  Things would have to be worse for next two weeks and linger through March to begin impacting summer plans but, as noted above – Japan could be ground zero for the next major surge in cases.  

    A test event for the Tokyo Olympics scheduled for later this month that would have involved some non-Japanese athletes is being revamped because of fear of the spreading virus from China.

    It's now limited to only Japanese athletes with the Olympics just over five months away.

    Image result for mad magazine medicine

    Image result for mad magazine medicine

  32. Gotta take the win on /NQ and /ES, will switch to /RTY (1,690) if we turn back down.

    Oops, actually I can't do that as I have to go to my meeting so I'll have to live with those lovely gains…

    Later all,

    - Phil

  33. Phil /CL   

    went long @ 54 with stop at 53.98.. see how that plays

  34. LL – Something seems out of whack.  The stock is up ~2.00 (25%) and the May $9 puts are up on the day.  Go figure.  Sold a few.

  35. Anyone else find it annoying that they are taking LB private at these levels?  They are just going to make the necessary changes in branding/tone, repackage and sell it back to the public markets in a few years at double the purchase price. 

  36. Thoughts on VIAC.  Management gave a rough forecast for 2020.  When you added to the LTP you stated "we hope it gets cheaper and we can sell more puts and add more longs or widen the spread".  Are you still confident about their strategy?

  37. Gee, how much do the think the PPT will run up /NQ after hours today…

  38. Averages down, but A/D line positive.

  39. Hey, I'm back.  

    Being a notorious liberal pays off for a change, Hemp Boca (one of our PSW Investment Projects) is invited to guest present at the Soros Foundation in NYC – HUGE!

    Some recovery into the close and I'm back short 2 /RTY at 1,695 but that's it for now. 

    TSLA still hovering around $900.

    LL/Albo – That is strange but it's supply and demand driving the intra-day.

    LB/Palotay – I think they are selling it too cheap but they need the cash ($500M) and they are only selling 1/2 and Victoria Secret was only 36% of income (about $200M) Bath and Body Works is 63% ($400M) and growing, so they are focusing on the growth side of the business and giving someone else a chance to turn VS around.  So they'll still make $400M + $100M from their half of VS + they have 5 years' worth of future cash from VS to play with now.   Not a terrible deal.

    VIAC/Options – It's really just merger expenses hitting them, $250M in "surprise" costs from the merger.  I still feel good about it but need to read more to double-check the premise so feel free to remind me tomorrow.  

  40. This might have something to do with the LL action:

  41. Ouch, Futures moving down – don't know why.  Still off the lows though.

  42. Against U.S. CDC recommendations, the Japanese government released 500 passengers off the Diamond Princess with NO ADDITIONAL MANDATORY QUARANTINE.  Some were last tested up to a week before.  Most of them took public transportation to their next destination. Some of them are actually from where I live.

    "Hong Kong also intends to quarantine its citizens from the vessel, prompting a rebellion from some who say they would rather stay free in Japan. "

    As we all know from the Fukushima debacle, the Japanese government is unprepared for and completely inept at ad hoc disaster management.  So I'm pretty sure Japan is going to be the next country to go down from this virus. So 2nd and 3rd largest economies in the world are going to knocked out for the next few months.   I'm sure the U.S. stock markets will rocket up another 20% though…

  43. time for another Sept '18 to Dec '18 stretch.

  44. Hooray for Hemp Boca – that's great news!

  45. Goldman Sachs warns of stock market correction

  46. South Korea ups emergency response as viral cases surge

  47. Prepare for Socialism

  48. Virus cases balloon in S. Korea as outbreak shifts, spreads

  49. When a Pandemic Meets a Personality Cult



    So, here’s the response of the Trump team and its allies to the coronavirus, at least so far: It’s actually good for America. Also, it’s a hoax perpetrated by the news media and the Democrats. Besides, it’s no big deal, and people should buy stocks. Anyway, we’ll get it all under control under the leadership of a man who doesn’t believe in science.

    From the day Donald Trump was elected, some of us worried how his administration would deal with a crisis not of its own making. Remarkably, we’ve gone three years without finding out: Until now, every serious problem facing the Trump administration, from trade wars to confrontation with Iran, has been self-created. But the coronavirus is looking as if it might be the test we’ve been fearing.