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Whipsaw Wednesday – Wild Market Swings Continue

Notice we're not playing the Futures this week.

Last week, we were racking up $5,000 gains almost daily with our Futures calls but this week the market is just as wild but nowhere near as predictable due to Fed interference against the still MASSIVE UNCERTAINTY surrounding the virus.  As I often say to our Members: 

"We only like to play when we feel there's an 80% chance we will win – that way, we're only wrong about half the time and good money-management techniques can take care of the rest."  

So far, the S&P and the other indexes are simply consolidating under the Strong Bounce Lines (see yesterday morning's PSW Report for official levels) and, if they make a move over, it will be good proof of a bottom but, if they make a move back below last week's lows then, in retrospect, it will be very obvious that they were only consolidating for another 10% move down.  

Is the Fed's 0.5% rate cut enough to save us?  Well it wasn't when they had emergency rate cuts in August of 2007 (Dow 13,000 to 14,000) or in January of 2008 (Dow 12,000 to 13,000) or in October of 2008 + $800Bn TARP (Dow 8,000 to 9,000) – after which we fell from 9,000 back to 6,666 so forgive me if I don't get too excited about a 1,000-point, stimulus-driven bounce this week…

Another thing I discussed with our Members yesterday was how the Dow Jones has been manipulated since 2008 when Rupert Murdoch took over the company and made a series of changes that drastically boosted the index.  Bearing in mind that each Dow Component is price-weighted, not market-cap weighted, and adds 8.5 Dow points per $1 in share price – these are the substitutions that have been made under Murdoch:

  • AAPL (now $295) replaced T (now $37) 
  • CSCO ($41) replaced C ($66) 
  • TRV ($127) replaced GM ($31) 
  • UNH ($268) replaced KHC ($26
  • GS ($206) replaced AA ($13) 
  • NKE ($93) replaced BAC ($28)
  • V $190 replaced HPQ ($20)
  • WBA ($47) replaced GE ($11)

That's net +$1,035 in substitutions and, at 8.5 points per Dollar, those manipulations have artificially added 8,797 points to the Dow or 1/3 of it's total "value".  At 26,432, if we subtract the fake gains, the original Dow Components of 2008 would have us at only 17,635 – up about 20% from the pre-crash highs of 14,000.

As we all know, the Dow is the headline index that drives the markets around the World.  Although it's idiotically price-weighted and only has 30 hand-picked stocks, people don't ask how the S&P or the Nasdaq did yesterday – they want to know how many points the Dow gained or lost.  That's especially true in foreign countries but, even in the US, the vast majority of people (even traders) watch the Dow.

Image result for dow jones history chart

So, when Rupert Murdoch bought the Dow Jones corporation in 2008 for $5.6Bn, he took control of the index that drives the markets as well as the narrative that surrounds it (the Wall Street Journal) and that combination has allowed Murdoch to manipulate his own net worth from $4Bn in 2009 to $20Bn today.

Image result for market manipulation cartoonThe fact that Billionaires control the media and the markets isn't news, of course but it is important when you consider the current narrative that the markets should recover their previous highs – especially when the Billionaire-owned MSM uses the Dow to illustrate the "value" of the markets. 

Just keep in mind it's a total load of crap because they are not comparing the same stocks that were in the index in the past and that 40% of the last decades move up has come from manipulation having nothing at all to do with increasing value of the components – the whole thing is a false premise and DON'T tell me these guys aren't smart enough to know that – they are simply lying to you!

Every Billionaire that owns every media outlet WANTS you to be bullish on the market.  That's why the financial media is nothing put a squad of cheerleaders who will say or do anything to get you to BUYBUYBUY – even when common sense tells you clearly not to.  They are high-pressured salespeople pushing over-priced products you neither want or need to please their Billionaire bosses, who own 84% of the wealth represented by those stocks.  

We are starting to pick up some bullish positions but we remain cautious and well-hedged – especially while the indexes are still under their strong bounce lines and, since they need to hold above them for 2 straight days without going under to be truly bullish – it's going to be impossible for us to be bullish into the weekend so, for the most part – we remain on the sidelines this week enjoying the show.  

 


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  1. Trump will hate it but the market move is in big part a response to Biden doing well! Clearly the underlying situation has not changed – no vaccine, no cure, more cases and an unpredictable effect on the economy. But if you look at the futures – big jump last night around 7:00 PM when we started to get news that Biden was doing better than expected and with massive 2008 level turnout in some places. And then we had the Fox News crowd complaining that Sanders was getting cheated… A good sign that someone is worried. 


  2. Morning, All! It's Wednesday, so join Phil at 1pm, here:

    https://attendee.gotowebinar.com/register/8291419789413982732 


  3. Dawgy -"However we'll break the country on healthcare spending saving the other 98% of the useless old people so there's that to think about too."

    That's a terrible thing to say.  This is the generation who helped make America great. Now that they're old, they are useless ?


  4.  

     

     Phil / PFE – been waiting on this one for a bit – at 34 ish with a 4.3% div.  it's getting a bit interesting.  I know they are I the middle of a transition with the spinoff of the generic unit, ( although they will still own 57%) of the combined co along w/ Mylan.  In addition it will be a choppy year w/ election in this space in general.   They have significant cost savings in process which make a marked impact in '22 and this should help margins and EPS.  I'm wondering at what point you think it makes sense to get in – If the really 31 / 32 I think it makes sense to maybe buy stock and sell some puts/ calls around the position.  What are your thoughts on this?n. thanks,

     they are sitting at a 12 EPS which is historically low.  are usually in the 15 to 20 EPS range.  I'm projecting a EPS as flow for '20 – '22

    2.7 / 3.3 / 3.6 with a multiple 12 to 15 gets you to a 34 to 45 / sh price 

    What are your thoughts on this? thanks,

     


  5. Albo – In any case, we are already breaking the country on healthcare spending! Every other advanced nation has a single payer system and manages to have higher life expectancy and lower healthcare cost. But for some reason, it's our system that is better!

    But there are no useless people – old or young! 


  6. Good Morning!


  7. It's only useless until you're one of them!


  8. StJ – Agreed.


  9. GL – Added to my NGL position at $7.78.  Stock is now yielding 20% and has seen a lot of insider buying.


  10. NGL


  11. market must be too volatile investing dot com crashed about ten mins after the open


  12.  Bloomberg backing Biden


  13. Good morning!

    Obviously, 3,100 is a good shorting line on /ES if we test it.    8,800 on /NQ is not bad.  

    Big Chart – That's some crazy action and even more crazy today.  Keep in mind Futures is no volume and we were up this high yesterday morning too.

    Biden/StJ – Certainly helping insurance companies, up 10% across the board.  

    PFE/Batman – I love them long-term and this is a good price.  You can sell the PFE 2022 $35 puts for $5.25 so 10 of those for $5,250 in the LTP is a no-brainer.   You could buy the stock for $35 and sell the 2022 $35 calls for $3.30 to net in for $31.70 and collect the $1.52 dividend but I'd rather buy 20 2022 $30s for $6.50 ($13,000) and sell the $37s for $2.25 ($4,500) for net $3,250 on the $14,000 spread but it's no hurry so just the puts for the LTP.  

    Bloomberg/Albo – He hates Sanders (Sanders hates him too).


  14. Bloomberg / Albo – Not surprising. That means unlimited funds for Biden I guess… 


  15. Covered 1/2 of new NGL purchase with the Oct 10 calls at .55.  Expect the stock to  go ex divd 2 times for a total of 78 making it very unlikely that they will be exercised.  And if they are, I'll let someone have the stock at that price !

    Note: NGL comes with a K-1.


  16. 78 cents.  Fat finger this morning.


  17. Albo-NGL- curious as to how you evaluate this type of firm. 20% yield used to be considered unsustainable and perhaps that is baked in to the price. The oil patch is certainly out of favor and for some viable reasons. So , share your thought process if you please.


  18. 1020/Stacey – yeah, that's the obvious ploy. Might be the only way Biden could beat Trump. Still not a realistic hope, IMHO


  19. LOL – CNBD went from running a headline that said "Market up almost 700 points" to "Market up over 600 points" to "Market up over 500 points" to now "Markets Surge" – cheerleders….

    I think the Webinar is best spent reviewing our portfolio positions.



  20. Snow – Where's your morning optimism?

    Stacey can keep Joe on his toes – She's a smart Woman and savvy politician. A solid ticket with different generations and definitely Progressive…. 

     

    I like it!  :)


  21. I was thinking the same thing 1020! That or Kamala! It would be fun to see either of them in a debate with Pence! Although now I do think that Pence is toast – no loyalty in the Trump house. 


  22. And I am sure that Pence will take it like a beaten man… Thank Trump for all that he has done and go back to Indiana!


  23. I wonder if ZM is a bit stretched now! It's a great solution and we use it company wide. And timely for sure with the virus and all. But at 4700x earnings, a bit expensive. Valued at $35B with $6M of income seems expensive. The growth potential is good though but still, very 1999!


  24. I like Kamala – I just think Stacey has the charismatic advantage….


  25. I think consolation prize for Kamala would be the Attorney General position where she can prosecute Trump & his band of merry criminals.  Well, prosecute the ones not already in jail LOL!


  26. You guys are always good for perspective, keeping me out of an echo chamber. I remain pessimistic, though – Biden has too many weaknesses, even beyond the obvious dementia.


  27. Pstas – I have held a core position in NGL for 3 years.  Average cost $9.30. During that period 

    I've taken in $4.68 in distributions.  I've also traded against the position several times as well as writing some OTM options for additional income.  It has been very profitable, even with the pullback in share price.

    There has been no  indication of a cut in the distribution, although a 20% yield would seem to indicate that one is coming..

    I'm encouraged by the recent insider buying.

    Also this from the CEO on Feb 6th conference call

    "This is a historic quarter with record adjusted EBITDA in excess of $200 million, at least 20% higher than any retail analyst projection. In addition, our 12-month trailing common unit coverage ratio skyrocketed from 1 time to 1.5x."

    Complete conference call transcript available on Seeking Alpha.

    Certainly not for everyone, but I like the risk/reward profile.


  28. Hey Snow – I forget sh*t and I'm 20 years younger!  ;)


  29. Albo=thx


  30. Is it worth adjusting the TD position at these levels – roll puts to October $50s?:

    15 Jul $50c @ $5.72

    - 15 Jul $55c @ $2.68

    -15 Jul $55p @ $2.08

    Thx


  31. old people/albo – that was sarcasm. 

    Markets and Biden – the market is not responding to Biden doing well. It's responding to Sanders doing poorly. I don't know how the beltway insiders view it, but judging from the cheap seats, Biden would be my first choice to run against by a mile if I were Trump.


  32. Do we have  a webinar today? Just want to know otherwise it is pool time! 80+ here in Fla!


  33. The Fed tried to restore confidence. It failed



  34. Pirate – We do have a webinar! Does your WiFi reach out to the pool? LOL.

    https://attendee.gotowebinar.com/register/8291419789413982732


  35. TD/Wing – Yes, we'll be going over some of these in the Webinar and more tomorrow and Friday.  That's kind of the LTP position but only 10 short puts and different strikes.  

    Webinar/Pirate – 1pm, pool after.  Yes, hot – I just went across the street for lunch and was way too hot.  Poke bowls rule, by the way!

    Image result for poke bowl delray

    Image result for poke bowl delray

    My favorite lunch. 


    • The Fed cut its rate by 50 basis points yesterday because "risks are obviously rising that this coronavirus is more serious than we were previously thinking," St. Louis Fed President James Bullard said in an interview on Bloomberg Television.
    • "We took out some insurance against the possibility that this will cause a growth slowdown in the U.S," he said.
    • Bullard said he believes that the policy rate is in "the right place, for now, given the information that we have now."
    • As for the March FOMC meeting scheduled for March 17-18, "we can keep our options open, but since we pulled that decision forward, I'm not sure you should put a lot of weight on that March meeting now."
    • The rate cut pushed Treasury yields lower; today, the 10-year yield is at 0.96% after falling to as low as 0.91% on Tuesday.
    • Previously: Fed cut rates to keep U.S. economy strong, Powell says (March 3)
    • Just past noon on the east coast, the S&P 500 is higher by 1.8%, Dow by 2%, and Nasdaq by 1.7%. Healthcare is leading the way, with the XLV gaining 3.7%.
    • Helping the healthcare sector was Joe Biden re-taking the frontrunner role from Bernie Sanders in the Democratic primary last night.
    • Fixed-income doesn't seem convinced today's rally is any more than a bounce. The 10-year Treasury yield continues lower, off another 3.6 basis points to 0.962%.
    • Oil and gold are both marginally in the red.
    • In an unusual short-notice postponement for a high-profile movie, filmmakers with an eye on coronavirus are delaying the opening of the latest James Bond film, No Time to Die, into fall.
    • It was set to open April 2 in the UK/internationally, with an April 10 Easter weekend opening in the U.S. MGM (OTC:MGMB), Universal (CMCSA +1.1%) and producer Eon are now moving it to Nov. 25, the Wednesday before Thanksgiving.
    • That's due not directly to coronavirus fears, but with hopes that global theater business will have returned to full strength, Deadline notes.
    • MGM is handling U.S. distribution for the film, after Sony (SNE +1.4%) managed the last four Daniel Craig Bond films – which grossed $3.2B together.
    • Crude oil futures (NYSEARCA:USO) turn negative following a WSJ report that Russia is still resisting Saudi Arabia's plan to deepen OPEC+ production cuts by 1.2M bbl/day despite pressure from the coronavirus.
    • April WTI crude -0.4% to $46.99/bbl; May Brent -0.9% to $51.39/bbl.
    • Russia likely will end up cooperating, Velandera Energy's Manish Raj tells MarketWatch: "In Vienna, Russia is merely posturing and acting as a tough negotiator in showing its reluctance to make additional cuts. It stands as much to gain from voluntary cuts as OPEC members do."
    • Crude prices already had pared earlier gains after the Energy Information Agency reported a sixth straight weekly rise in U.S. crude supplies.
    • The EIA also reported domestic production edged up to a fresh all-time high of 13.1M bbl/day and "exports from the U.S. climbed to their second highest level on record, suggesting that the U.S. is continuing to capture market share from OPEC+ producers," says Sevens Report Research co-editor Tyler Richey. "Both of those developments are bearish."


  36. Web too flaky for Webinar here in Mex .. will try for the summaries after .. 


  37. I'll take $1Bn!  

    • International Monetary Fund (IMF) Managing Director Kristalina Georgieva has announced a $50B relief package aimed at fighting the coronavirus outbreak and avoiding a global recession. In an interview on CNBC, she said the funds are available "immediately."
    • Wedbush Securities weighs in on how investors should look at restaurant stocks amid concerns that traffic will be impacted by the coronavirus outbreak in the U.S.
    • "Our estimates for the potential impact from COVID-19-related demand destruction logically imply the primarily franchised names within our coverage universe are relatively more insulated," writes analyst Nick Setyan.
    • Domino's (DPZ -0.5%) is seen by the firm as the least impacted by earnings revisions risk, followed by Dunkin Brands (DNKN +0.2%) and Jack in the Box (JACK -3%).
    • Meanwhile, BJ's Restaurants (BJRI -1%) is called out for having the most risk of an EPS hit from the outbreak, followed by Shake Shack (SHAK -0.4%) and Del Taco Restaurants (TACO -1.3%).
    • Overall, Setyan and team see the magnitude of restaurant share price declines since February 21st as not logically aligned with estimates for potential impact.
    • For instance, the 20% drop in Wendy's (WEN +0.8%) and 17% for Jack in the Box don't match up to the estimated drops in profit. When additional factors such as higher food costs as a percentage of sales, the digital/delivery mix, the size of authorized buybacks and the mix of urban vs. non-urban locations are factored in – Chipotle (CMG +1%), Texas Roadhouse (TXRH -1.4%) and Wingstop (WING +0.4%) come out as looking as attractive at current levels.

    Natuzzi (NYSE:NTZ-40%.

    • Bayer's (OTCPK:BAYRY) takeover of Monsanto has been beset by problems, and now its longtime dominance of the $4B U.S. soybean seed market is under threat from rival Corteva (NYSE:CTVA), Reuters reports.
    • Bayer tells Reuters it expects plantings of its genetically modified Xtend soybean seeds to flatline this year following three years of strong growth since their launch with an accompanying weedkiller, forecasting plantings in 2020 will stay at ~50M acres, or 66% of the total U.S. crop last year.
    • Meanwhile, Corteva expects its Enlist E3 seed to make up 20% of the U.S. crop in 2020, the first year it has been widely available.
    • A problem for Bayer is that a herbicide used for Xtend soybeans, dicamba, is known to drift away and damage crops that are unprotected; the company is planning to launch Xtend's next generation seed, XtendFlex, which can be used with an additional herbicide, and the head of Bayer's soybean portfolio says it will be launched in limited quantities this year, pending regulatory approvals.
    • JinkoSolar (JKS -2.9%) tumbles following a negative report from Bonitas Research that alleges the company "exists for the sole purpose of developing PRC assets with JKS' cash that were disposed to Chairman Li at a significant discount to market."
    • JinkoSolar has been "fattened up with five separate equity issuances and US$2 billion -plus in net debt only to be stripped of value by insiders. This is why JKS, despite its purported profitability, [has] failed to generate free cash flow or pay shareholders cash dividends," the report says.
    • "Evidence shows that Chairman Li privatized JKS' most valuable assets for himself, leaving JKS shareholders saddled with debts and construction cost liabilities," according to the report.
    • Chinese filings also reveal Li's brother and Jinko co-counder Li Xianhua secretly benefited from controlling a significant supplier within the company's supply chain, according to the report.
    • JPMorgan analyst Doug Anmuth calls Lyft (NASDAQ:LYFT) shares "extremely compelling" after yesterday's management comment that the coronavirus outbreak had little impact on business.
    • Anmuth notes Lyft's strong fundamentals, including double-digit growth in active riders and revenue per rider, with a "clear path" to profitability in 2021.
    • JPMorgan maintains its Overweight rating. The company has a Bullish average Sell Side rating.
    • Lyft shares are up 2.9% to $38.06.
    • Morgan Stanley previews the highly-anticipated General Motors (GM +0.3%) EV Day event taking place today.
    • "We expect GM to show investors a number of performance specifications of its battery pack vs. key competitors, including head-on comparisons vs. Tesla, which is widely seen as the industry leader in battery pack technology in terms of performance, energy density, and cost," writes analyst Adam Jonas.
    • Jonas and team draw some comparisons between GM and Tesla (TSLA -0.4%). While MS forecasts Tesla to grow EV sales 4X by 2030, GM is expected to grow EV sales by over 30X. Meanwhile, Tesla trades at almost 30X 2021 EBITDA vs. GM's trading handle of just over 2X.
    • In summary, GM is seen having a chance to show serious leadership in decarbonizing its auto fleet with a positive impact on earnings and multiple. Adding it all up, GM stays as the firm's top pick in auto.
    • Anglo American (OTCQX:AAUKFOTCPK:AAUKY) reports rough diamond sales at its majority-owned De Beers fell 35% in the second sales period of the year to $355M from its first cycle, citing weak demand in China due to the coronavirus outbreak.
    • "Following an improvement in demand for rough diamonds during the first sales cycle of 2020, we recognized the impact of Covid-19 coronavirus on customers focused on supplying the Chinese market and put in place additional targeted flexibility to enable customers to defer allocations of the relevant rough diamonds," De Beers CEO Bruce Cleaver says.
    • De Beers runs 10 sales cycles per year occurring roughly every five weeks; the last cycle ended during the week of Feb. 24.
    • In an interview with CNBC, Regeneron Pharmaceuticals (REGN +4.1%) CEO Leonard Schleifer said that the company should have its coronavirus treatment ready for human testing by August. It expects to be producing 200K prophylactic doses by then.
    • Over the next few weeks, company scientists will screen a range of antibodies to identify the best ones to block the virus.
    • He also said that it is "committed" to an affordable product for patients.
    • EIA Petroleum Inventories: Crude +0.8M barrels vs. +2.6M consensus, +0.5M last week.
    • Gasoline -4.3M barrels vs. -2.1M consensus, -2.7M last week.
    • Distillates -4.1M barrels vs. -1.9M consensus, -2.1M last week.
    • Futures +1.93% to $48.09.
    • France’s Cour de Cassation grants an Uber (UBER -0.6%) driver's request to reclassify his relationship with the company as an employment contract.
    • Key quote from the high court: "When connecting to the Uber digital platform, a relationship of subordination is established between the driver and the company. Hence, the driver does not provide services as a self-employed person, but as an employee."
    • The FDA has signed off in Moderna's (MRNA -2.3%) IND for mRNA-1273, its vaccine candidate against SARS-CoV-2, the coronavirus causing the current outbreak.
    • The first batch of product has been shipped to and received by the NIH for use in a Phase 1 study.
    • The coronavirus outbreak will slow global economic growth from 2019's 2.9% rate, said International Monetary Fund Managing Director Kristalina Georgieva.
    • How much it slows hinges on the "timeliness and effectiveness" of governments' response to the health crisis, she told reporters at a briefing.
    • "We have seen a shift to a more adverse scenario for the global economy," Georgieva said.
    • She added that IMF's governing body held a call earlier and expressed "a clear commitment to action in a coordinated manner."
    • Business leaders gathered at a press conference today to call for life to go on as normal in the U.S. even as caution measures are recommended with the coronavirus outbreak.
    • U.S. Chamber of Commerce CEO Thomas Donohue, U.S. Travel Association CEO Roger Dow, Airlines for America CEO Nicholas Calio, National Retail Federation Chief Administrative Officer Stephanie Martz and American Hotel & Lodging Association CEO Nicholas Calio stressed that there are no current warnings on travel in the U.S. and are pushing conference planners to keep to their schedules with upcoming events.
    • Analysts anticipate the impact on travel from the outbreak to extend for a long period of time, muddling the outlook for a wide variety of companies including Hyatt Hotels (H -1.1%), Park Hotels & Resorts (PK +1.9%), Hilton Worldwide (HLT -0.3%), Expedia (EXPE -0.7%), Red Lion Hotels (RLH -3%), InterContinental Hotels Group (IHG +0.5%), Trip.com (TCOM +1.9%), Booking Holdings (BKNG +1.4%), JetBlue (JBLU +0.7%), Southwest Airlines (LUV +1%), SkyWest (SKYW +0.4%), Allegiant Travel (ALGT -0.7%), Delta Air Lines (DAL +1.6%), American Airlines Group (AAL -0.2%), Spirit Airlines (SAVE -0.3%), MGM Resorts (MGM -0.5%), Caesars Entertainment (CZR +0.3%), Eldorado Resorts (ERI -0.8%), Penn National Gaming (PENN -1.5%), Boyd Gaming (BYD +0.6%) and Extended Stay America (STAY +0.6%).

    • Bank of Canada follows the Fed and cuts its overnight rate by 50 basis points to 1.25%, calling Covid-19 "a material negative shock to the Canadian and global outlooks."
    • Bank rate is correspondingly 1.5% and deposit rate is 1%.
    • Update at 10:06 AM ET: The central bank's governing council says it's ready to adjust monetary policy further if it's needed to keep economic growth and inflation on target.
    • "While markets continue to function well, the Bank will continue to ensure that the Canadian financial system has sufficient liquidity," the BoC said in its statement.
    • iShares MSCI Canada ETF (NYSEARCA:EWCrises 1.0%.
    • Nick Maroutsos, Janus Capital co-head of global bonds, sees the record bond surge continuing, with 10-year Treasury yield falling as low as 0.5%, he told Bloomberg Television in an interview.
    • "If you read the tea leaves that central banks are going to continue to ease policy if this coronavirus intensifies, there is going to be a natural bid toward quality assets and that's going to be Treasurys," he said.
    • While he's "not necessarily in a panic mode" since the virus outbreak is temporary, Maroutsos expects bonds to outperform as as long as Covid-19 affects markets.
    • In recent trading, 10-year Treasury yield slips 3 basis points to 0.964%.

    • In a shareholder update, AT&T (T +2.2%) COO John Stankey reiterated company guidance for the coming year and laid out more accelerated share buybacks.
    • Wireless service revenues will grow by more than 2% in 2020, and mobility will continue to be the company's biggest driver of revenue growth and profitability, he says; that's based on expectations for 5G growth and opportunities with the upcoming HBO Max streaming service.
    • The 5G network covers more than 80M people, Stankey says, and nationwide 5G coverage is planned by the end of Q2.
    • A May launch of HBO Max is on track, and more than 10 million HBO subscribers on AT&T distribution platforms will be offered immediate access to HBO Max at launch, Stankey says.
    • Meanwhile, AT&T is in a definitive deal with Morgan Stanley to retire another $4B of common stock through an accelerated share repurchase starting in Q2 (similar to a $4B deal this quarter). Two ASRs plus open market buybacks are expected to bring common shares retired to more than 250M through April.
    • And YTD it's raised $4B by issuing preferred shares.
    • February ISM Non-Manufacturing Index57.3 vs. 55.0 consensus, 55.5 prior.
    • Business activity 57.8 vs 60.9.
    • New Orders 63.1 vs 56.2.
    • Employment 55.6 vs 53.1.
    • 57.3 PMI print is the highest since February 2019.
    • February PMI Services Index: 49.4 in-line with consensus and 53.4 prior.
    • Composite: 49.6 in-line with 49.6 consensus and 53.3 prior.
    • Fastest contraction in business activity since October 2013.
    • Preliminary North America Class 8 net orders in February fell 16% Y/Y to 14,100 units, according to ACT Research.
    • The firm reports February Classes 5-7 net orders rose to an 11-month high of 22,200 units. The tally was up 12% from January, but down 12% from a very strong year-ago comparison.
    • "Weak freight market and rate conditions, as well as a still- large backlog, continue to bedevil new Class 8 orders," observes ACT senior analyst Kenny Vieth.
    • Oppenheimer runs the math on the impact of the coronavirus outbreak on Starbucks (SBUX N/A).
    • The firm sees a $0.12 to $0.16 headwind relative to the consensus 2020 EPS mark of $3.00 as it factors in lost international sales from known store closures and estimated SSS reductions, lower margins from operating deleverage and pressure on international licensed revenue.
    • Oppenheimer lowers it 2021 EPS estimate on Outperform-rated Starbucks to $3.34 from $3.41 prior and $3.44 consensus. The new price target is $95 vs. $105 prior and the average sell-side PT of $95.76.
    • Shares of SBUX are down 8.91% YTD.
    • Netflix (NASDAQ:NFLX) bull Imperial Capital thinks the coronavirus spread could mean stronger subscriber numbers, thanks to a "'cocooning' effect."
    • Shares are up 2.4% premarket.
    • Netflix's service seems "impervious" to the virus, analyst David Miller writes – "but because the price is so low, it is impervious to any derivative recessionary effects."
    • He has an Outperform rating, and has boosted his view of Q1 domestic net subscriber additions to 510,000 from 480,000, and raised the international adds view to 7M from 6.52M.
    • Imperial's $438 price target implies 19% upside.
    • While sell-side analysts are BullishSeeking Alpha authors are Neutral. Netflix has a Quant Rating of Neutral.
    • Alcoa (NYSE:AA+3.1% pre-market as BofA Merrill Lynch upgrades shares to Neutral from Underperform while lowering its stock price target to $15 from $20.
    • BAML analyst Timna Tanners cites valuation, as shares are down 55% from a peak in April 2019 and closed yesterday at its lowest since March 2009.
    • In addition to valuation, Tanners thinks investors may "start to anticipate a sharp Chinese stimulus" in response to the coronavirus, which could act as a positive catalyst for the stock.
    • AA's average Sell Side Rating is Bullish, while both its Seeking Alpha Authors' Rating and Quant Rating are Neutral.
    • The Fed's 50-basis point rate cut and the resulting plunge in long-term bond yields will push mortgage rates to "unimaginable" lows and likely trigger a wave of refinancing that will put billions of dollars into Americans' pockets, the Financial Times reports.
    • The rate cut's effect on mortgage demand should be "instantaneous," Lawerence Yun, chief economist of the National Association of Realtors, told the FT.
    • "People will check into the market next week," he said, due to the "unimaginably low" mortgage rates he expects.
    • Michael Fratantoni, chief economist at the Mortgage Bankers Association, though, says it will take a while for banks to process customers' refinancing applications.
    • "Lenders are scrambling to meet demand," he Frantantoni said, adding that it may take a couple of months for rates to adjust.
    • Quill Intelligence's Danielle DiMartino, though, says "lowering rates can only do so much" to help the economy. Consumers will have to be willing to conferences, vacations, movies and restaurants.
    • "In the longer term, you will have more cash in your pocket but it could get drowned out by this demand shock," she said.
    • Overall, the banking industry isn't expected to profit much from the expected refinancing wave. Revenues from refinancing mortgages and selling them into the bond market account for ~2% of U.S. banks' revenue, according to Autonomous Research.
    • At almost all banks any gain from refinancing will be more than offset by the negative effect of falling rates on mortgage yields.
    • "The rate impact on banks is material and that is being priced in recent weeks in the stock markets," said bank analyst Aaron Deer at Piper Sandler. "It's not positive."
    • Goldman Sachs adds Target (NYSE:TGT) to its Americas Conviction List after taking in the retailer's strategy update yesterday.
    • "We think there is room for the top-line story to exceed their low-single-digit growth guidance as the company continues to benefit from competitor store closures," the firm said.
    • Goldman has a Buy rating on Target and price target of $125.
    • Shares of Target are up 1.66% premarket to $107.60 vs. the 52-week trading range of $70.03 to $130.24.
    • Previously: Target to go even smaller with new store format (March 3)
    • Italy's government will close schools and universities starting tomorrow until mid-March because of coronavirus, Ansa news agency reports, citing unnamed sources.
    • Schools are already closed in the country's northern regions that were hit the worst by the spread of the virus.
    • Meanwhile, Sports Minister Vincenzo Spadafora said the government is likely to order that professional soccer matches and other large sporting events be played behind closed doors, due to the emergency, Ansa reports.
    • Update at 8:50 AM ET: Italy's education minister says no decision has yet been reached on school closure.
    • UnitedHealth Group (NYSE:UNH) is up 9% premarket on modest volume as bargain hunters jump in. Shares sold off 20% last week on coronavirus fears. If the gain holds, it will be the best intraday bullish action since 2011.
    • Joe Biden's strong showing last night vs. Bernie Sanders may have helped remove an existential threat to a number of players.
    • Related tickers: CVS Health (NYSE:CVS) (+2%), Anthem (NYSE:ANTM) (+7%), Cigna (NYSE:CI) (+8%), eHealth (NASDAQ:EHTH) (+4%), Centene (NYSE:CNC) (+6%)
    • Recent announcements on the COVID-19 front:
    • Luminex (NASDAQ:LMNX): Working on two SARS-Cov-2 tests: NxTAG CoV Expanded Panel: should be available to ship to customers in a few weeks. Testing in China to wind up in the next several days. Testing in U.S. underway. SARS-CoV-2 on ARIES real-time PCR system: company has evaluated a single-target test for SARS-CoV-2 while two European reference labs successfully validated a multi-targeted test under Emergency Use Authorization from the FDA. CEO Nachum Shamir says it is premature to quantify the financial impact of these efforts.
    • Arcturus Therapeutics (NASDAQ:ARCT): Partnering with Duke-NUS Medical School on COVID-19 vaccine for Singapore (based on STARR technology).
    • AIM ImmunoTech (NYSEMKT:AIM): Partnering with ChinaGoAbroad to facilitate the entry of Ampligen into China to be used as a prophylactic/early-onset therapeutic against COVID-19.
    • LMNX up 3% premarket. ARCT up 28%. AIM up 22%.

    Viral Collapse Of Economic Optimism 

    Coronavirus Will Spur Much Deeper S&P 500 Correction 

    Market Decline Driven By A Panic Narrative 

    • The 500 Lockheed Martin (LMT) F-35s include 354 F-35A conventional takeoff and landing variants, 108 F-35B short takeoff/vertical landing variants and 38 F-35C carrier variants for the U.S. and international customers.
    • Another milestone, 250,000 flight hours, include all F-35s in the fleet comprised of developmental test jets, training, operational, U.S. and international aircraft.
    • Nine nations use the F-35 from their home soil, eight services have declared Initial Operating Capability and four services have employed F-35s in combat operations.
    • Abercrombie & Fitch (NYSE:ANF) reports comparable sales rose 1.0% in Q4 to match the consensus expectation.
    • A strong 8% comp at Abercrombie brand stores offset a 2% drop at Hollister stores.
    • The retailer churned up gross margin at 58.2% of sales vs. 57.6% consensus and operating margin arrived at 10.6% of sales vs. 9.7% consensus. The efforts to reduce gross square footage and accelerate the rationalization of the flagship fleet seem to have paid off.
    • Looking ahead, A&F sees revenue growth down at a mid-single digits clip vs. +1.7% consensus. The guidance reflecting the estimated adverse impact of COVID-19 in the range of $40M to $50M and the adverse impact of changes in foreign currency exchange rates of approximately $5M. The company anticipates the outbreak could lead to disruption of product deliveries across the global supply chain.
    • Previously: Abercrombie & Fitch Co. EPS beats by $0.08, beats on revenue (March 4)
    • Shares of A&F are up 7.96% premarket to $13.70.

    • While the coronavirus will impact its upcoming results, General Electric (NYSE:GE) is backing its financial outlook for 2020.
    • Covid-19 will hit free cash flow by $300M-$500M in Q1, as well as operating profits by $200M-$300M. Adjusted Q1 earnings are seen at around $0.10 per share, compared to a pre-coronavirus Street forecast of $0.13.
    • For all of 2020, General Electric sees revenue growth in the low-single digits across its power, aviation, renewable energy and health care segments, but sees profits margins expanding in its troubled power division. GE Capital is expected to generate a loss of between $0.3B-$0.5B.
    • Management will also discuss a compensation deal with Boeing – for jet engine payments – on a conference call starting at 8:00 a.m. ET.
    • GE shares are up 2.9% in early trade, rallying with the broader marker.
    • Wedbush analyst Henry Coffey upgrades AGNC Investment (NASDAQ:AGNC) to Outperform from Neutral.
    • Sets price target to $20.25; implies 13% upside potential from Tuesday's close and compares with average PT of $18.60.
    • Coffey's rating on AGNC is more bullish than the Sell-Side average rating of Neutral (4 Bullish, 10 Neutral).
    • In the past six months, AGNC has climbed 21% vs. the financial sector's median performance of -2.1%.
    • AGNC rises 1.8% in premarket trading of 2,857 shares.
    • Dollar Tree (NASDAQ:DLTR) reports comparable sales increased 0.4% in Q4 to miss the consensus mark of +1.8%.
    • Comparable sales were up 1.4% at Dollar Tree-branded stores vs. +2.2% consensus and fell 0.8% at Family Dollar stores vs. +1.3% consensus.
    • Gross margin improved 20 bps to 31.0% of sales during the quarter to edge past the consensus estimate of 30.7%. Operating margin was 9.2% of sales vs. 9.1% consensus.
    • Looking ahead, Dollar Tree sees Q1 revenue of $5.89B to $5.99B vs. $6.02B and EPS of $1.00 to $1.09 vs. $1.20 consensus.
    • CEO outlook: "Plans for the year include approximately 1,250 Family Dollar H2 renovations, the launch of Dollar Tree Plus! 2.0 initiative, and a focus on driving sales, improving gross margin and managing costs effectively… While our first quarter outlook includes expected pressure from the incremental tariffs and promotional activity, we believe we are well-positioned to deliver improved sales, operating margin and earnings in the following three quarters and for full-year fiscal 2020."
    • DLTR -3.75% premarket to $78.75 (52-week low).
    • Previously: Dollar Tree EPS beats by $0.04, misses on revenue (March 4)
    • Wells Fargo upgrades Chipotle (NYSE:CMG) to an Overweight rating from Equal-weight on confidence in the growth story.
    • "We believe Chipotlane stores are set to accelerate the company’s move back toward all-time high store-level sales, margins and returns, which we do not believe is appreciated by the market," writes analyst Jon Tower.
    • Tower sees Chipotlane stores carrying higher volumes (~16% better), margins (~10% better) and overall returns than traditional format stores.
    • "We have greater confidence in company reaching new highs for system AUVs and regaining (if not besting) historical highs for store-level margins which should culminate in earnings exceeding our prior (and the Street’s current) expectations over the next several years," he adds.
    • WF assigns a price target of $1,000 to Chipotle vs. the average sell-side PT of $930.11 and 52-week high of $940.28.
    • Shares of Chipotle are up 2.09% premarket to $751.46.
    • Ryanair Holdings (NASDAQ:RYAAYreports traffic rose 9% to 10.5M customers in February.
    • The airline's load factor flat Y/Y at 96%.
    • Laudamotion traffic up 67% to 0.5M customers with a 94% load factor.
    • The European Central Bank and the Bank of England are likely to announce stimulus measures in the coming days after the U.S. Fed surprised with a large emergency rate cut.
    • "The ECB could introduce a special facility targeting SMEs (small and medium enterprises) hit by the crisis with looser terms and conditions than other open-market operations," added Frederik Ducrozet, senior economist at Pictet Wealth Management.
    • The ECB is also providing other types of stimulus to the eurozone via an open-ended bond-purchase program and cheaper funding for banks.
    • Companies ranging from Google and Twitter to Indeed and JPMorgan have asked many of their employees to work from home to help prevent the spread of coronavirus.
    • Italy (79 deaths, 2,502 cases) is now the worst-affected country from the coronavirus outside Asia, overtaking Iran now in terms of the number of fatalities and infections from the virus.
    • WHO added that the coronavirus death rate is 3.4% globally, higher than previously thought (and compared to the less than 1% infected by seasonal flu), but it doesn't spread as efficiently as influenza .
    • NBCUniversal (NASDAQ:CMCSA), which holds U.S. broadcast rights for the Summer Olympics, has sold more than $1.25B in national advertising for the games, with nearly 90% of its inventory already booked.
    • The previous record, of $1.2B for the 2016 Rio Olympics, was also held by NBC.
    • The rapidly spreading coronavirus has prompted fears the Olympics could be canceled, though the International Olympic Committee on Tuesday urged athletes to prepare "full steam.'
    • Chevron's (NYSE:CVXprojected investor returns exceed levels paid out in the years preceding the 2014-16 oil market collapse, but they nevertheless "look well supported by the balance sheet," RBC analyst Biraj Borkhataria says.
    • The presentation "looks more like evolution than revolution, and continues the prior mantra around lower for longer capex, and a steady uptick in Permian performance," Borkhataria says.
    • In a surprise move, Chevron CEO Mike Wirth pledged today to return as much as $80B in dividends and share buybacks to shareholders over the next five years, driven by a doubling of production from the Permian Basin which eventually will account for a third of the company's global output.
    • "Returning cash to shareholders is "doesn't rely on higher oil prices," Wirth said. "It relies on self-help to greater cost efficiency, continued capital discipline and effective portfolio management."
    • Many Permian producers are struggling to generate cash after taking on debts to fund expansions and drilling, but Chevron is insulated from those problems because it inherited most of its holdings in the region during its 2001 takeover of Texaco.
    • Goldman Sachs forecasts global oil demand will shrink 150K bbl/day this year, including a global demand loss of 2.1M bbl/day in H1, and cuts its price forecast for Brent crude (NYSEARCA:BNO) to $47/bbl in Q2 from $57/bbl previously, amid the worsening coronavirus outbreak.
    • Goldman had expected worldwide demand growth to rise by 550K bbl/day and by 1.1M bbl/day before the coronavirus, and it sees Brent prices bottoming in April at $45/bbl before gradually recovering to $60/bbl by year-end, vs. its previous outlook for a $53 trough and a recovery to $65.
    • A potential OPEC+ production cut of 1M bbl/day would remain well short of Goldman's forecast global demand loss in H1 alone.
    • The American Petroleum Institute reportedly shows a build of 1.7M barrels of oil for the week ending Feb. 28, the sixth consecutive weekly increase.
    • Gasoline inventories reportedly show a draw of 3.9M barrels, distillate inventories show a draw of 1.7M barrels, and Cushing inventories show a draw of 1.4M barrels.
    • Data from the Energy Information Administration to be released tomorrow is expected to show crude inventories rose 3.5M barrels last week, according to analysts polled by S&P Global Platts.
    • April WTI crude recently traded at $47.12/bbl after settling at $47.18 today on Nymex.
    • Alphabet (GOOG,GOOGLcancels its Google I/O developer event scheduled for May 12-14 due to the coronavirus outbreak.
    • Yesterday, the company had said it would move the conference online.
    • Alphabet statement: "Over the coming weeks, we will explore other ways to evolve Google I/O to best connect with and continue to build our developer community."

  38. That's the news and now it's Webinar Time!


  39. Phil / indexes: since their 2009 lows, the Naz is up 602%, SPY +356% and the Dow only +308%. So their manipulation was pretty much a failure. 


  40. Joe "I picked the wrong week to stop sniffin' hair" Biden? 

    He's got 5.1% on trump currently (Feb poll average). I know, I know, polls polls polls. But actually, they were fairly accurate in 2016. Hillary won the popular vote 51 to 49% (normalizing to just the two contestants), the polls had her about +3-4% and she ended up with 2%. Sleepy JOe is 52.5 to 47.4 (for +5.1%), so that's substantial and he hasn't been "running against Trump" yet; only running to for the nomination. Kiliary's unpopularity kept 1 or 2 out of a hundred people from showing up to vote and there you go: she shows up on the softer side of the polling margin of error and Trump sneaks in with WI, PA, MI's 100k vote difference.

    Trump's base loves him, but those outside his base, they do not. There's a lot of motivation for Sleepy Joe right there. The VP pick is irrelevant, save the fact that Sleepy Joe, like Trump, is old, and the VP might become the P, so it needs to be legit operator. So Stacy Adams and Kalama Harris are both out. Warren is the obvious chooice, but as an east coast liberal, she brings nothing to the midwest voters, so it'll probably be someone like Manchin, or a popular midwestern dem. I personally like those Big Sky state democrat governors like Freudenthal (WY) or Schweitzer (MT). African Americans are 98% in the bag for the democrat and the key suburban women demographic are 60-65% without a woman or black VP candidate.

    Obviously, a 5% popular vote doesn't automatically win the electoral college, but I don't see Sleepy Joe losing any state that Crooked Hilary won and he will probably win MI, PA and NC and ME-02 (284 EVs), and I think he can pull off AZ, IA, WI, OH and FL (and NE-01) for 359 EVs. 

    Predict It still has trump at 55% chance, so he's strong there, and the gamblers are a binary group and consider possible scenarios like martial law declaration, Russian interference, voter suppression, etc, as part of the process for sluicing out the winning bids. Not bad for a guy that has a permanently-underwater approval rating.

    Also, if you're the gambling sort, Biden may still win CA, and it currently pays 25 to 1….


  41. Biden's dream map. No hair to sniff, but lots and lots of EVs.


  42. Albo / NGL – 20% div is tempting but why is it so high? Investors fearing BK or another CHK disaster? I think carbon based energy is like the Sears and retail of 1990's … on the way out and not coming back.


  43. BDC -Very suspect indeed.  Read my 12:01 PM answer to Pstas and read the company's earnings call transcript.  Management is very positive, and buying lots of shares.  As you know, any yield like this is usually a warning sign, and it might be here, but I think at this level on the stock that it's worth the risk. But as you know, I'm frequently wrong !


  44. Lots and lots of adjustments to make in the Webinar – I will document tomorrow.

    Shorting /ES at 3,100 and long /CL at $46.90.

    Failure/BDC – Not at all as the Dow gives the others comfort.  If the Dow were only up 100% I very much doubt the Nasdaq would be up 602%.

    Biden/BDC – I wonder if Trump has the balls to keep pushing the Ukraine nonsense?  He sure used Bengazi like a club long after Hillary had been cleared on that one.


  45. I have an upside target of 3120 for /ES before a possible pullback


  46. BA in $285…. feelings about buying some additional  280 puts?


  47. BA/Advill – Airlines aren't scheduling Max until Sept at this point and still no actual approval.  Below $300 is very compelling but they will earn no money this year – perhaps a huge loss.  I would wait until earnings at least (end of April).  


  48. Biden + Abrams/ Harris – This was suggested by @JRubinBlogger, to which Anand Giridharadas @AnandWrites responds with "Black women are not condiments" https://twitter.com/AnandWrites/status/1231999797877510147/photo/1


  49. Up 1,000 points – Happy Days!  


  50. Trump / Phil – Hahaha, of course they will keep hammering om Ukraine even if there is nothing there! Lots of suckers out there!


  51. /CL / Phil

    missed the webinar! bummer.   i also went long /CL @$47.   Where's your upside target / stop?

    cheers


  52. Kustomz – Nice call !  Hope you were trading /ES.


  53. And there you go:

    https://talkingpointsmemo.com/news/graham-johnson-biden-campaign-burisma

    After telling CNN reporter Manu Raju Wednesday morning that he told President Trump that Biden will be “tough” to beat in the general election, Sen. Lindsey Graham (R-SC) appeared to suggest that Senate Republicans plan to go after the former vice president for his son’s tenure on the board of Ukraine energy company Burisma.


  54. Thanks albo, the breakdown took place at 3198 on /ES, thats my longer term target, next few days. Barring any new Cvirus that would cause a panic.


  55. /CL/Potter – Just waiting to see how strong OPEC comes out with cuts.  I'd be happy with $48.50 on 2 longs.

    /ES burning me but I'm sticking with overnight.

    Dow up just under 1,200 points, /ES over 3,100 strong bounce.  All is well – let's hit the movies!


  56. The tourism industry is going to take a hit for sure. Every day you hear about conferences being cancelled. Gonna be tons of empty rooms at hotels and in airplanes! 


  57. Phil, speaking of /CL, I can't remember if this was posted.

    https://oilandgas-investments.com/2019/latest-reports/get-ready-for-doubles-and-triples-in-the-oil-sector-in-2020-peter-lynch/

    If he's right, they are even more compelling here with USO down 23% YTD.

    Coronavirus will undoubtedly cause problems, but it won't be around forever.  Meanwhile some of these yields are very high.


  58. Oh wait – a new disaster!  

    • Hasbro (HAS +3%) discloses that the coronavirus outbreak has disrupted production in China of planned Baby Yoda toys.
    • "The occurrence of these types of events can result, and in the case of the coronavirus has resulted in, disruptions and damage to our business, caused by both the negative impact to our ability to design, develop, manufacture and ship product (the supply side impact) and the negative impact on consumer purchasing behavior (the demand side impact)," reads the company's SEC filing on the issue
    • U.S. economic activity grew at a "modest to moderate rate" over the past several weeks, according to the Federal Reserve's Beige Book report.
    • Consumer spending picked up, but was uneven across the country.
    • Notes indications that coronavirus hurt travel and tourism in the U.S.
    • Manufacturing activity expanded in most parts of the country; however, some supply chain delays were reported due to coronavirus; producers fear further disruptions in coming weeks.
    • Check back for updates.

    • General Electric (GE -0.2%) drifts lower after maintaining its full-year financial forecast despite an anticipated Q1 hit from the coronavirus outbreak.
    • CEO Larry Culp stressed in a conference call that "what we don't know outweighs what we do know at this point," but he is sticking with GE's 2020 industrial free cash flow guidance range of $2B-$4B, even as the coronavirus knocks Q1 free cash flow by $300M-$500M and operating income by $200M-$300M.
    • For GE's aviation business alone, segment CEO David Joyce estimated a $200M-$300M hit to FCF from the virus, but for the full year, organic revenue should grow in the "low-single digits" percentage range with FCF "flat to up."
    • A skeptical Robert Stallard at Vertical Research Partners thinks GE "may have been a bit optimistic with its aviation revenue forecast for 2020… [If] we see airlines hunkering down because of coronavirus then there could be spares destocking, deferred maintenance and increased old aircraft retirements."
    • On the impact of the 737 MAX groundings, Joyce said an agreement was reached with Boeing on payment terms for production deliveries in 2020, and the engines delivered in 2019 that are now on "parked" aircraft; Culp said because of thet agreement, working capital will be a "significant positive" in 2020.
    • A group of diagnostic companies met at the White House today to discuss their progress in developing tests for SARS-CoV-2, the coronavirus causing the current outbreak.
    • Representatives of Abbott (ABT +4.6%), Thermo Fisher Scientific (TMO +5.1%), LabCorp (LH +5.2%), Quest Diagnostics (DGX +5.8%)and the Mayo Clinic were there. LH CEO Adam Schechter said the industry is working together to increase the availability of the tests, adding that his company expects to launch one "soon."
    • Vice President Mike Pence stated that the U.S. Department of Health and Human Services has included coronavirus testing as an essential health benefit for health plans, a move that should increase availability.
    • In an interview with Fox News, HHS Secretary Alex Azar said the CDC was shipping enough tests to assay 75,000 samples per week, adding that its private contractor was shipping "over a million testing capability to hospitals, labs and others who want that.”
    • About 40 minutes before the closing bell, stocks are retaking yesterday's lost ground, with the S&P 500 up 3.15%, the Dow 3.5%, and Nasdaq 2.8%.
    • The risk-on mode has the 10-year Treasury yield back above 1%, but just barely.
    • Oil and gold are down marginally.
    • Maybe helping, Congress this afternoon agreed on an $8.3B spending package aimed at the coronavirus outbreak.
    Image result for turn those machines back on meme
    • Shares of Dave & Buster's Entertainment (PLAY +9.3%) pop after KKR (NYSE:KKR) discloses that it upped its position in the company to 8.3% from 6.3%.
    • D&B has been under pressure recently due to concerns that traffic could be impacted negatively by coronavirus anxiety.
    • United Airlines (UAL -0.7%) says it will cut its flight schedule in April as the global coronavirus outbreak continues to sap demand for travel.
    • United plans to cut international flights by 20% and domestic flights by 10%.
    • The announcement by United is likely to be mirrored in various degrees by other carriers as a large number of business conferences and spring break trips have been canceled.
    • Consumer staples are having a strong day with Dow components Procter & Gamble (PG +4.3%) and Coca-Cola (KO +3.8%) leading the way.
    • The sector is popular this week off a mix of the strong consumer stockpiling trend, attractive dividend yields and defensive positioning of investors.
    • Notable gainers include PepsiCo (PEP +3.1%), Mondelez International (MDLZ +4.6%), Costco (COST +4.1%), Colgate-Palmolive (CL +4.8%), Kimberly-Clark (KMB +4.8%), J.M. Smucker (SJM +3.7%), Clorox (CLX +3.2%), Hershey (HSY +3.3%), Campbell Soup (CPB +7.1%), Hormel Foods (HRL +3.8%), General Mills (GIS +3.8%) and Kraft Heinz (KHC +2.3%).
    • The Consumer Staples Select Sector SPDR ETF (NYSEARCA:XLP) is up 3.60% on the day to outpace broad market averages.
    • The Securities and Exchange Commission will allow publicly traded companies an additional 45 days to file certain disclosure reports that would otherwise have been due between March 1 and April 30, 2020.
    • "Among other conditions, companies must convey through a current report a summary of why the relief is needed in their particular circumstances," the SEC said in a statement.
    • The commission said it may also extend the time period for the relief, with any additional conditions it deems appropriate, or provide additional relief as circumstances warrant
    • Nomura analyst Jeffrey Kvaal cites recent Foxconn comments that it expects to return to normal operations by the end of the month, which Kvaal sees as "slightly better than hoped and thus a positive for Apple (NASDAQ:AAPL)."
    • Kvaal says the estimate indicates that "Apple’s supply chain is recovering faster than hoped," but notes there could still be demand impact related to the coronavirus.
    • Nomura maintains a Neutral rating and $295 price target. Apple has a Bullish average Sell Side rating.
    • Apple shares are up 3.6% to $299.78.
    • Related: Earlier today, Apple supplier Dialog Semiconductor said its main contract manufacturers should be near 100% capacity by the end of March.
    • Campbell Soup (CPB +7%confirms it's seeing higher demand for products, including last weeked when consumers rushed to grocery stores, Costco, Target and Walmart to stock up.
    • "There's no question that we're seeing some uptick – it's just hard for me yet to know the level of sustained need," states Campbell CEO Mark Clouse. In particular, Campbell Soup is seeing higher demand for SpaghettiOs, canned pasta and Swanson canned chicken. The question moving ahead will how much of the sales were just pulled forward from a later month.
    • While Clouse says the company is looking for alternatives for ingredients it buys from places where supply chains are being disrupted, he also notes that only about 10% of CPB's total ingredients come from outside of North America and China accounts for under 2%
    • Starbucks (SBUX) is telling employees to regularly sanitize door handles, chairs, tables and coffee bars amid the coronavirus outbreak. Store managers have been given the green light to boost employee hours by 1% to account for the extra cleaning.
    • While the company has re-opened about 85% of its stores in China that were closed at the peak of the outbreak, the chain is now reacting to the flurry of new cases globally including some in its home base of Seattle.
    • Starbucks also changed its annual shareholder meeting scheduled for March 18 to an online format.
    • Earlier today, Wedbush issued a sweeping note on the oversold status of many restaurant stocks, but didn't recommend SBUX to investors quite yet as its analysis didn't take into account the global impact of the coronavirus.

    • Movie-theater names are sharply lower again against a strong market – feeling a rough month coinciding with rapidly changing developments around the globally spreading COVID-19.
    • AMC Entertainment (NYSE:AMC) is -6.1% today; Cinemark (NYSE:CNK-5.7%IMAX -3.7%; Marcus (NYSE:MCS-4.5%.
    • Some fallout could be tied to the high-profile postponement of the latest James Bond film.
    • That represents not only a big April opening taken off the table – the last Bond film, Spectre, opened to $70M domestic – but also a potential bellwether for other event pictures considering the same delays until the Asian theatrical market settles somewhat.
    • Theaters have been closed due to the coronavirus across China as well as Korea, Japan, Italy and France.
    • General Motors (GM +1.7%) told investors at today's EV Day event that the company plans to invest $20B by 2025 in electric and automated vehicle technology.
    • Looking down the road, GM thinks it can be profitable after its EV transition by slashing the number of powertrain combinations in use, as well as simplifying batteries and vehicle architectures.
    • CEO Mary Barra stated that the automaker is on track to cut battery cell costs to less than $100 per kilowatt-hour in a profit-boosting development.
    • Barra also reiterated a GM goal of selling 1M electric vehicles annually in the U.S. and China by 2025.
    • Cheniere Energy (LNG -2.2%) and Cheniere Energy Partners (CQP -0.7%) trade lower even as natural gas prices edge off multi-year lows, recently +0.2% to $1.803/MMBtu.
    • Asia spot gas prices have dropped below the $4/Mcf cash cost of supply, "which is not sustainable," according to Bernstein analysts led by Neil Beveridge. "Prices will have to rise or U.S. capacity has to shut down… sooner rather than later."
    • Bernstein suggests several explanations why that has not yet happened: some buyers have contracts to take the fuel, some buyers can pass costs through to end users at cost, a 60-day period is required before capacity can be turned down, and shipping costs are falling sharply.

  59. Oil/Albo – We talked about a few during the webinar.  OIH is very cheap again too.  


  60. VPU activity indicating there's no real chance of a recession. This could go to 90 if investors are wrong.



  61. Canceled bookings, empty rooms: coronavirus takes toll on tourism




  62. SXSW will go on despite coronavirus concerns





  63. Albo/Phil/All- interesting Peter Lynch comments re: oil/energy. My thinking has been to avoid these stocks as long term headwinds are substantial. However, I also have been thinking there could very well be some trading opportunities and now or soon may be one such chance. 

    Given the recent virus related volatility there still may be more downside in the sector(s). However, against the herd can be rewarding. Thoughts in general? Specifics ? XLE; OIH; ?


  64. There was a good draw this week in gasoline and distillate but the virus is a wildcard and OPEC is a wildcard so I’m not really in a hurry to jump in. We did pick up Exxon and Maybe we will add a refiner as well but I don’t want to go to crazy.

    First I want to make portfolio adjustments and then we can think about adding new things. 






  65. Cruise ship being held off at sea so authorities can test for coronavirus