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Turnaround Tuesday – Yes, $3Tn is a LOT of Money!

Image result for oligarch virusMORE FREE MONEY!!!

We're closer to it today than yesterday so the markets have gotten over their temper tantrum about yesterday's delay and now counting the uncountable riches that are about to be thrown around by our Government and our Federal Reserve as well as all the other Central Banksters around the World and we're even having an emergency G20 meeting to discuss even more bailouts for our Top 1% Corporate Citizens because they should never ever suffer the consequences of their bad decisions – like letting the Oligarchs run the World, leaving us totally unprepared to handle a Humanitarian crisis (I know, so many big words to look up!). 

“Sentiment has improved, but to call it a turning point is too strong a word for now,” said James McCormick, global head of desk strategy at NatWest Markets. “It is more of a tug-of-war. Policy bazooka is in place, but will be fighting against very weak data and still worrying trends on Covid-19 data. We are more neutral on risk assets now.”

There's a great article in Bloomberg comparing this sell-off to other market sell-offs but the primary take-away on this thing is IT'S ONLY BEEN 6 WEEKS SINCE THE TOP OF THE MARKET!!!  In that way, the market collapse is most like 1987, when we were in the middle of a rally that had the Dow going from 2,250 in May to 2,750 (22%) in August after already rallying from 1,300 in 1985 and it was all based on Reagan's tax cuts and trickle down BS that masked the "sudden" S&L crisis that exploded and finally popped the bubble and we tested the lows in early October, about 60 days after the top, firmed up around 1,750-2,000 and didn't really get back on track until Aug 1988 and it was a year after that before we were back at our highs.

That's was with MASSIVE intervention by the Government as well.  Government intervention is not a magic wand that will fix everything tomorrow or next month or even next year so those of your sitting around starting at your portfolios with your fingers crossed are NOT likely to be very happy about the outcome in the foreseeable future.  

These things play out over time but, what we can do – is QUANTIFY the known elements (which we discussed yesterday) and REPOSITION ourselves to take advantage of the eventual bounce.  And we will bounce – this is the Dow we are looking at from 1987 – it's at 19,260 now – even after the massive sell-off it's still up 1,000% from where it was 33 years ago – that's 30% average growth per year!  

The reason it's 30% per year is because of compounding and the worst thing you can do to miss out on compounding returns is skip a year and that is what you will be doing if you don't adjust your positions.  We don't call a bottom because of a chart – we call a bottom because this virus is like a neutron bomb – it doesn't destroy the buildings or the factories – just the people and, as soon as the danger has passed – the people who are left can go right back to work and right back to the movies and shopping malls, etc.  This is a temporary problem yet the market is trading like it's a permanent one.  

Also, since it's not specific to the US, the World is all in this together so it doesn't really matter how much we spend to fix it as we're all in the same boat and all countries will have more relative debt on their books and the same relative deficits – that does not advantage or disadvantage the US so it's not a major factor in our decision-making. 

What matters is whether or not we have an appropriate response.  As I have pointed out to our Members, Europe routinely shuts down for the month of August every year and somehow they survive.  The US hasn't even been shut down for 2 weeks and people act like the World is ending.  Even the President is freaking out and  saying this nightmare has to end on day 10 the "lockdown" – which is barely being obeyed.  

Almost 400,000 people around the World have now contracted COVID-19 with the US rocketing up to 3rd place thanks to our completely inept "leadership" and Italy is about to pass China in number of cases and has already passed China in deaths, with 6,077 people dead from Coronavirus – and China had a 60-day head start! 

In order not to freak out Americans, you'll notice that US deaths are broken down by cities – so we don't hit the top of that chart and alarm the voters.  They did that with China too but not Japan or India or even Greenland, where all 4 people who have the virus are grouped together and the other 6 people are avoiding them.  

Image result for causes of death usSo yes, people have the virus and people are going to die, perhaps 2M people in the US if this thing gets out of control but 2M people die of Dementia each year and 3M from Diabetes and 9M from Cancer and 17M from Heart Conditions… 1M people die of Aids, 400,000 are murdered, 800,000 kill themselves 1.3M are killed while driving.  

These are all horrible numbers but it happens every year and we all get up and go to work the next day and the economy doesn't fall apart because, each year 96M babies are born and we have 8Bn people on this planet and the poorest countries in this World like Burundi, Niger, Liberia, Malawi, Congo STILL have GDP per capitas of $1,000 per person and they don't have internet, electricity or even running water and they don't drive to work or stream videos or cry about how bored they are at home while waiting for McDonalds to deliver dinner and EVEN THEY have a GDP that would place the World GDP at $8Tn.

So, assuming we don't all become ox herders who have to carry well water with jugs on our heads (no offense, poor countries – just illustrating a point), what GDP level do you think the Virus will brink us down to?  The current per capital GDP of the US is $65,111 and that sucks compared to Luxembourg at $113,196 or even Switzerland at $83,716 or Macau at $81,151 or Norway at $77,975 or Ireland at $77,771 but we've almost caught up to Iceland at $67,037 – so we have that to look forward to when we are great again...

Anyway, past economic policy failures aside (and every one of those coutnries is Socialist with Universal Health Care), lets say we lose 50M jobs (1/3) and stores and businesses go bankrutpt and it takes us years to recover.  What economy would we be like?  Will we be like Puero Rico ($31,538), which was devastated by a hurricane?  Will we be like Slovenia ($26,234), where our First Lady is from?  Will we be like the Bahamas ($33,749) where they always have 30% unemployment?  

Image result for global gdpThe average Per Capita GDP for the planet Earth is $11,297 x 8Bn people = $90Tn.  Having 1-2Bn people from developed nations drop half of their economic activity would only lower the bar about 10% overall because it's 25% of the people (not even) dropping 50% of their economic activity (not even) = 12.5% total effect.  If, on the other hand, you fill up your tank with gas to go hunt and gather food at the supermarket – you have already blown right past the economic output of Melania's family in Slovenia.

Why then, would you be selling Global Stocks down below 50% of their typical prices when Global GDP is not likely to fall more than 12.5%?  That seems like pretty irrational investing yet we're seeing it all over the world because traders trade on fear – not logic and those of us who can remain logical in a crisis have a World of opportunities available to us.  

But you won't be able to take advantage of those opportunities by remaining passive.  AT&T, for example, fell from $39 in Janauary to $26.77 at yesterday's close (-31%) and they probably won't cut the dividend because it's not like you are cutting off your phone or cable due to the crisis, is it?  So $26.77 is probably irrationally low.  It's $192Bn in market cap and T made $20Bn in 2018 and $15Bn last year as they merged with Time Warner – and you are not cancelling your HBO subscription either – are you?   

So $26.77 is too low as it's only 10x probable earnings but $39 is too much for this environment so, if you are sitting on $39,000 of T stock (1,000 shares) that is now worth $26,770 – what can you do to fix it?  Surprisingly, the answer is to selll it and switch to options:

Your premise is T goes back to $39, right?  Well we can cash the stock for $26,770 and your plan was to make $13,000 and it might take 2 years to make it back.  You were going to hold onto the stock so there's no harm in promising to buy 500 shares at $25 by selling 10 2022 $25 puts for $5.30 ($5,300), that obligates us to buy 1,000 shares of T for $25 – about the price you have them for now.  

You can then use that money to buy 20 of the 2022 $23 ($5.50)/30 ($2.85) bull call spreads for $2.65 ($5,300) so now you've spent net $0 to be in the $14,000 spread that pays off if T is just over $30, not $39 in Jan, 2022.  Meanwhile, you still have the $26,770 you cashed out and once T is back on track, you can put that money to work on other opportunities rather than having it all tied up in one trade or, if T falls further, now you have plenty of money on the sidelines to adjust your options spread with.

That is the kind of adjustments we did in our Long-Term Portfolio and Butterfly Portfolio yesterday for our Members as well as our 6 other Member Portfolios last week.  If you are not going to add to your positions when stocks are 50% off their usual price (not the peak price – the NORMAL price!), when the Hell are you going to buy?  

There WILL be stimulus and it will be enough to push our GDP back to normal (ish) in the very near future as long as the virus doesn't plague us for more than 90 days.  After that – we'll need more stimulus and a long-term Recession becomes a bigger concern but, as of this moment – if they sounded the "all clear" – you would get up, get dressed and go to the office and all your papers would still be there to shuffle so no lasting damage has yet been done

You will KNOW when that changes – and that's why we still have our hedges – just in case.


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  1. Still adding more lines!

  2. Still looks like Trump will have to be talked off a cliff with the isolation order! When you hear people like Kudlow say that we'll have to make compromises in order to save the economy, they mean putting more people at risk! By coincidence, Fauci has been trying to talk Trump into keeping the isolation recommendation in place but he was not at the briefing yesterday. But Barr was… 

    I wonder what would happen if Trump declares this over and governors keep lockdown in place (even GOP governors are doing it now). Will we see people simply disregard their local authorities and re-open places? Will we need to have law enforcement and NG go out and enforce the rules? That's happening in many places in Europe now. In France, it's up to 1500 euros for infractions now. I read about mayors in Italy freaking out because people simply don't take it seriously – hairdressers going from house to house to cut hair! And spreading the virus… 

  3. Good Morning.

  4. Wow… There we go!

    “Those of us who are 70+, we’ll take care of ourselves but don’t sacrifice the country,” Patrick said. “Don’t do that. Don’t ruin this great American Dream.”

    The lieutenant governor asserted that grandparents have a “choice” to make in the face of “total collapse” in the economy.

    “We all want to live. We all want to live with our grandchildren as long as we can,” he said. “But the point is our biggest gift we give to our country and our children and our grandchildren is the legacy of our country, and right now, that is at risk.”

    Lots of politicians are over 70! They don't seem willing to make that sacrifice! And BTW, what happens when the healthcare system collapses – do we lower the age to 60, 50…. Who makes the next sacrifice. Again, these people are truly sociopaths!

  5. Phil/ SQQQ 

    I am still holding 40 Sept/June SQQQ BCS 16/26, ($2.54/$1.5).  I can’t afford the margin to sell the Sept. 16’s while leaving the June’s to expire.  So I am thinking of rolling the June’s back a month.  I can roll to the the May 25’s for less 0.  I lose $1 in position but don’t paying anything.  If SQQQ remains above 29, I can roll it back out (June) for more premium or just cash out everything.  Regardless, I am not comfortable having to wait until June for the premium to bleed out of the shorts and the need for protection has waned.  Besides by June, it may be to late for both sides.  Is there any other move I should consider in lieu of my margin issue and my desire to get the most from this trade that I can?  Thanks.

  6. Good morning! 

    You know what I HATE?  CNBC is interviewing Mike Purves from Tallbacken Advisers, which was formed in JULY (so they have no history) after shutting down Weeden after years of disappointment.  

    Weeden's Purves Says He Is Bullish on PE Expansion

    So they ask him "What's going to happen with the Stimulus" – as if he has a clue.  They give no weighting to actual experts and most of the people they interview are not qualified to give opinions or make these analyses and the "news" people are mostly empty-headed idiots so they aren't able to counter any ridiculous statements made by the guests – no wonder the market is in such an irrational sell-off!

    Big Chart – Mother F'er!   So, if we're down 40% from the top, +8% is a weak bounce…

    So, StJ – Are you saying that MAGA hat-wearing idiots who wonder around should be shot on site?  I think that may be a great plan….  devil

    Image result for hunting maga animated gif

    Patrick/StJ – What a moron!  Even in Texas I would think he might not get re-elected off that comment.  

    Image result for dan patrick cartoon

    Jobs/StJ – But lay-offs are temporary so 40M people making $1,000/week is $40Bn a week to COMPLETELY offset the loss – $160Bn/month.  If there is a will to act, the damage can be mitigated.  And, of course, unemployment insurance takes care of a lot of that anyway.

    SQQQ/DC – The Sept $16s are $11(ish) and the June $26s are $6 so net $5 to kill the trade is not a terrible gain.  The Jan $30s are $8 and the Jan $45s are $6.50 so you can roll the June $26s to the Jan $45s and roll the Sept $16s to the Jan $30s and get $3.50 off the table now and hopefully another $2-3 when the VIX calms down. 

    You can also roll the June $26 calls to the April $26 calls ($4) to accelerate the premium decay and, if we stay down, you'll still have nice money on the $16s but a bit risky if the market recovers, of course.  If you want to get something off the table, the June $25s are $6.30 so $4.70 off the table there and then pay $2 to roll the Junes to April and you've got $2.70 off the table and a $1 spread with a 2-month advantage that will hopefully be good for a few more dollars but, on the other hand, you can take a clean $5 now in cash without all the bother.

    Stopping out of /ES longs at 2,350 if it fails.  

    Fresh horse would be /YM over 20,000 with tight stops below.

  7. Good thinking I guess though I wonder how fast they can really ramp.

  8. BA up 20% – this is going to be a Hell of a day for the LTP and Butterfly!

    March 23rd, 2020 at 3:08 pm | (Unlocked) | Permalink 

    BA – Only short put I want to change only because it's so silly now.  The 2022 $110 puts were sold for $30 so net $80 is not a big deal with BA just under $100 but the puts are $50 ($25,000) and the June 2022 $75 puts are $30 so we can sell 8 of these instead for $24,000 and that means we still collected net $14,000 in 8 or $17.50/share so our new net is $57.50 for 800 shares ($46,000) vs net $80 for $500 shares ($40,000), which is why you should ALWAYS be looking for these rolling opportunities as we've lowered our break-even by $22.50 (28%) or really $21.375 as we did use $1,000 that we had collected on the roll….

    Ventilators/Tangled – Those auto lines are very flexible.  They feed in diagrams and parts get spit out and they have thousands of people who know how to assemble things.  Might be some small, specialized bits they need but, as long as they can find them, they can crank out a lot of machines pretty quickly.

    I don't think a ventilator is all that complicated.  

    Image result for ventilator diagram

    Image result for ventilator diagram

    Image result for ventilator diagram

    You don't have to build a 2020 ventilator – just something between 1911 and now would be helpful!

  9. /ES did not stop out but I'll still add those /YM longs if we cross (and then very tight stops on /ES).

    /RB blasted back up too!

  10. FYI R3 pivot on ES is 2393 

  11. /ES  2388 might be it…..

  12. A needed index bounce today but expected given oversold technicals. Fib retrace (38.2%) is as good as any indicator would take us to 2600 ish then possibly back down again as actual earnings declines begin to register. Pre correction earnings forecast was $172 so if we get matching earnings decline of 23% that is $133 and with a p/e of 19.  A more normal p/e of 15 for $133 earnings is 1995. 

    Place your bets. 

  13. Looks like a day to load up on cheaper puts.

    Reasoning: Has this has been "priced in" to a market that was already 30% overpriced before COVID19 arrived? My take is no, but I lost $5k on today's open so I'm wrong.

  14. VIX is down 45% from its recent high. If you're bearish, and had margin difficulty, put diagonals appear to be a pretty good value right now.

  15. Companies that binged on buybacks now seek bailouts from taxpayers

  16. Tokyo Olympics to be postponed to 2021 due to coronavirus pandemic

  17. Good call on /ES, Burt and 1020.  That's a very nice gain for a day but stimulus still to be announced.  

    VIX/Deano – What a ride!

    Japan odd reaction to olympics being postponed:

    Dollar calming down is a big help:

  18. Our STP flips worked out – we're up even more than yesterday!  

    TSLA was a big help.  

    We want to see what Congress comes up with and, of course, keep in mind that we are SUPER BULLISH in the LTP (and others) now so we still want to error on the side of cautious but if we can just convert this to cash, just the cash is a nice hedge to the LTP!

  19. No matter if you're buying a "bull turn around" one month after the bottom fell out of the market due to an unprecedented rise in demand/supply destruction, we need to watch out for this. The Feds are going to come in and pick winners and losers. Getting in on any word on which winners and losers the government is going to pick is critical.

    Given the stock-gate scandal of Senator insider selling that's been exposed recently, they may have an imperative to "leak" such information in order to create a plausible deniability environment going forward. We need to find a stock tips site or reddit thread that seems to have a pulse on this, or at the very least, start guessing which companies they're going to bail out.

  20. A stock market turn around 1 month after a crash has exactly 0.0% historical precedent.

  21. that's a great stat biodiesel

    "A stock market turn around 1 month after a crash has exactly 0.0% historical precedent."

    people think that the only reason for this drop is the virus and that once it's done we are "going up like a rocket" as the con man in chief says

  22. OK, out of JNUG and GDX positions from yesterday.  Will reload on a pullback.  That was quick and painless.

  23. Now it's easy to see how the STP ended up 800% in the last set.  A couple of runs like this and we're swimming in cash.  Last series, the LTP never ended up needing the cash (because the markets came back so quickly) so we just ended up accumulating cash in the STP.

    Short-Term Portfolio  (STP) Adjustments:

    Keeping in mind that the point of the STP is to make money in a down market, we need to think about what we REALLY need to protect the LTP:

    • AAPL – $10,133 to gain and pretty much a sure thing.
    • CHL – Up 45% in a day is pretty good for a put sale and, as much as I love CHL – that's just silly to risk so we'll buy those back.  This isn't the LTP, the purpose was to offset the cost of a spread and mission accomplished (with a bit less offset than we hoped). 

    • FXP – I doubt they get back to $50.
    • JPM – We're certainly going to collect that $3,013.
    • TSLA – I expect to collect that $38,825.  

    • FAZ – We paid $2.40 for the spread and we can take the $50s off the table for $18.85 – let's do that!  If the banking sector starts to collapse, we can cover.  The key to this spread was the STUPID premium we got paid for the short calls, now it would be criminal not to take advantage of that…
    • SDS – Sort of the same as FAZ as we collected stupid money for the short $50s but we do need hedges and this was a cheap one but $35 calls are at the money and the time-frame is short so, rather than let our net $2.90 entry decay into nothing, we can cash the May $35 calls for $5.60 ($44,800) and roll them to a more realistic 80 Sept $30 ($8)/$45 ($3.50) bull call spread at $4.50 ($36,000) so we're taking $1.10 of $2.90 off the table and now we're in the covered spread for net $1.80 that's $5 deeper in the money.  

    • QQQ #1 – It was a $6.22 spread and we can take $18.28 off the table by selling the $180 puts so let's do that for $146,240 and we'll put stops on 20 $160 puts at $12.50, $14, $16 and $18, which averages $15.125 so, if we stop all 80 out, our net exit is $3.155 ($25,240) and we risk losing $24,520 against possibly gaining $100,000 that we're pulling off the table now.  Good risk/reward so we do it.
    • QQQ #2 – The above spread was protecting these short puts and now we have the short Jan $160 puts so let's not risk it and take this $26,000 profit off the table and now we can't net lose anything on the QQQs (and we've only had this play for a week).

    Remember, if the market is done going down, this is still a $100,000 gain on a hedge we didn't need – just bonus money for the LTP.

    • SQQQ #1 – We netted into this spread so cheaply I'd rather have the protection than mess around and take a risk.
    • SQQQ #2 – We already took cash off the table and it is sitting in the portfolio so all we really need to do is get the current positions to expire worthless and the cash is ours!  We have one big gamble above on QQQ and we're not net ahead enough to take too many chances so we'll buy back the short April $32 calls as we're up 75% on those and that then gives us a stronger hedge that, hopefully, we won't need.  The net of the Jan $20/35 spread is only $1.75 ($11,375) so it's very cheap insurance in the money on a $97,500 spread and I'm sure we can sell more shorts along the way to pay for that. 

    • TLT – Who know what this thing is going to do?  I say we should be happy we have a net gain and get out.
    • UNG – That one I believe in.  $15,000 spread at net $2,855 means $12,145 left to gain (+ bonus on the extra 10).
    • USO – I believe in that one too.  It's a $30,000 spread at net $3,750 so $26,250 left to gain.  

    The key to this portfolio is that we have $483,883 in CASH!!! and our job, going forward, is simply not to lose it.  Notice the net securities were only -$44,230 so we could have just gone to $440,000 in cash and been done with it but it's not like we don't know how to take advantage of things and we could easily squeeze another $200,000 out of this thing.   All that is from our $100,000 portfolio we played bearishly since Jan 17th, when we started it.  The timing was perfect and the gains we made here were the reason we could aggressively adjust our LTP on the way down.  

    These are the situations these paired portfolios are designed to take advantage of – shame on us if we don't follow through out of fear!

  24. Phil on that SDS adjustment would still be holding the short $50 calls but replace the long $35 calls with the spread just to be sure I understood?

  25. Roubini- hope someone keeps him locked up and under close supervision. 

  26. Roubini / pstas – He is going to claim that he predicted the correction the entire time… Like every year!

  27. Phil/TOL,

    TOL – 2022 – 13/25 BCS @1.90 was the trade idea yesterday or Friday. With TOL jumping 25% does it make sense to chase it or a different spread to get similar cost.


  28. Geez, look at the margin requirements for futures trading!

  29. 50 DIA 4/17 120p for 0.27

  30. Phil, would you say the STP is net positive delta to the market now?  Selling the SDS longs, and the QQQ Puts, and repositioning zeroes out a lot of negative delta.  Just trying to get a feel for the net positioning in the short term.  Thanks.

  31. It is not believable to me people think this is any kind of "bottom."

  32. "hope someone keeps him locked up and under close supervision."

    why? what did he say you can refute? Anything. At all.

  33. DAL cut to junk.

    SDS/Tangled – That's right, the short $50s are way high and it's just a 2x ETF AND we have a long time to roll them so worth the chance.

    TOL/Pat – I would not chase.  Those are things you get to take advantage of when the VIX is very high.  It was attractive BECAUSE it was $1.90, not at any price.  

    Futures/Snow – Wow, $9,000 per contract!  They don't want people participating in the upside.  Energy still "only" $5K, metals $6K…  

    STP/Palotay – Sort of at the moment but, of course, we would quickly re-deploy cash more bearish if we give up 5% gains for the day.  Mostly we're in CASH!!! and we'd just grab new hedges.  FAZ we can roll unless things get crazy so that would work out over time, SDS we are covering and can roll the short calls (still a $90,000 hedge) – can work out over time, QQQ we set stops so net $0 trade, SQQQ still a $97,500 + $100,0000 hedge) so that's $300,000 worth of hedges still in play – not what I'd call bullish.  The difference is we already have $500,000 in cash (after the above moves) and we'd end up with $800,000 in cash and a few pain in the ass rolls we'd have to deal with if the market goes down further. 

    Jackie got into Stevens – that's her first choice (she didn't want to leave her friends).  If only they open it back up by Aug….

  34. Roubini – He reminds me of the monkey with the darts Phil often posts.

    That's the risk he runs when offering an opinion each time a microphone appears….

  35. Trump said he wants the country "opened by Easter" (4/12).

    Image result for what a maroon animated gif

  36. Shmuck….

  37. Always sounding like the big time operator he 'thinks' he is….

  38. 4/12 is better than what it sounded like last night, like he was going to open it on April Fool's Day. Which would have been more appropriate in one respect only. Three weeks is enough time for them to realize it's not a good idea.

  39. Congrats to Jackie! – How great Stevens was her first pick!  :)

  40. I just loath his use of a day of renewal for many as our GO date….

  41. selling 3/27 CVX 60 calls naked

  42. Is there a webinar today?

  43. Wednesday.

  44. Usually.

  45. NYS will have more confirmed cases than all of China by Monday.

  46. Phil-congrats to Jackie.  My father went to Stevens back when it was the top engineering school in the country.  Had multiple offers from GE, IBM etc.   Eventually became a patent attorney so his time there served him well.  Do you really want her back in the old neighborhood, though?

  47. Credit investors are skittish and this was yesterday, but it does make you think.  Liquidity is a backbone and cost of capital matters.

    Monday’s two-point slide in the average bid of the S&P/LSTA Leveraged Loan Index made worse an already historically bad month, and has pushed the volume of U.S. leveraged loans priced below 80 in the trading market to $672 billion at Monday’s close, exceeding the previous record of $472 billion, at the peak of the financial crisis, in 2008.

    Loan prices have been falling at an unprecedented pace. The volume of loans priced below this historically cited 80 level for distress has more than quadrupled in the past week, from $149 billion on March 16.

    In a read of stress ratios across price brackets, nearly all constituents of the S&P/LSTA Index have fallen to a bid price below 90.

    Just two weeks ago only 16% of Index loans were priced below this level. At Monday’s close, 97% of the market was sitting below the 90 price threshold.


  48. ROFL!   Butterfly Portfolio, without the changes being logged, is now down 9%, from -49% yesterday.  That's what I mean when I say you have to understand the profound effect the VIX can have on your paper balance – it's crazy!

    This is going to be fantastic once we log in yesterday's very bullish changes

    Butterfly Portfolio Review: $50,751 is down 50% and we are going to add $100,000 to this portfolio so we can make some aggressive moves.  It is not our intention to have a bullish Butterfly Portfolio but you have to play the hand you are dealt and these are some ridiculously low prices we're able to take advantage of.

    I guess we won't need to add that $100,000.  

    My quick list for Jeddah doing nicely too:

    March 23rd, 2020 at 10:59 am | (Unlocked) | Permalink

    $10K/Jeddah – I'd put $400 into 1,000 shares of FTR (0.40) – just in case!  Another $360 in NAK (0.36) as you can afford to gamble a bit when you are young.  Then there's F at $4.14, X at $5.76, HOV at $6.85, CLF at $3.38, SPWR at $5.93, IMAX at $10.50, GPRO at $2.51, BBBY at $4.70… By sticking to things that are cheap, he can afford to buy 10% more whenever he gets $1,000 and all those stocks can double or triple in a recovery and not likely to lose more than 1/2 if they avoid BK, which would make the drip investing more powerful.

    Now you guys understand in September why I said I'd rather just cash out and wait for the next big sell-off.  Yesterday would have been the day we first jumped in but not sure how many Members we'd still have left after just saying "still waiting" for 6 months…

    If the Government doesn't screw things up, I'm going to move 1/2 my kids college accounts off the sidelines.  

    Stevens/1020 – I was hoping she'd go to MIT (got in too) but she loves NYC and 90% of her friends are staying in the area and Stevens is very good for Computer Science so she may as well be happy because – as we've just been reminded – life is too short not to do the things you like with the people you love.  

    Webinar/Batman – Am I adding Tuesdays now?  You guys are slave-drivers!  

    China/BDC – Italy first, 69,176 now.  Only 12,000 behind China.  US 49,768 but of course, that's with no testing.  This says it all:

    Hoboken/Seer – I used to live there and I loved it.  She's a real city girl so it's perfect for her.  She wants to be a coder so she could really go anywhere and drop our after a year and get a job but I hope she spends 4 years having the time of her life.  I liked my college so much I double-majored so I could spend a extra year!   Of course a year wasn't $70,000 back then…  angry

    Credit/Seer – We're still on the precipice of a real crisis but the Fed is putting Trillions into play and, in theory, the Government is about to step up with at least $2Tn (in the first round).  

    Ah, Schumer just said they "are at the 2-yard line".  

  49. Phil – where the dollar going, up or down? Up because of demand or down because all of the free money? 
    how about silver, is the recovery coming to an end?

  50. Dollar/Akrum – I think it will balance out around 100-102.  /SI was way too cheap – I have longs in that as usual and expect to see $15.  Also have my copper longs and /RB (not doing well today) and /ES stopped out when 2,400 failed.

  51. Hi Phil along similar lines regarding SDS I have 20 June 36/41 for $1.70, would you do the same adjustment and roll to 20 of the Sept 30/45? thanks

  52. Appreciate pep talk today Phil. Made it back from HUX Mexico on last flight to Toronto on Sun, hopefully in good health, now in quarantine.

    Portfolio not so much ..  intermittent Internet with rapidly moving market turned some of my rolls into pancakes. Needs ventilator resuscitation, limited margin! Would like to REPOSITION (further) as suggested, limited brain cells:


    8 IBM Jan’22 $120calls ($21.7) rolled to ’22 $110calls ($21.5)

    BUT sell order on $120s not filled .. still have them as well (now $8.2) and 

    -8 IBM ’22 $140 calls ($11.4)

    -4 IBM ’22 $135 puts ($21.2)


    Could sell the $120 calls (about $8.2), or wait, or sell some short calls against them?                              

    Roll the $135 puts? (IBM $101)

    15 TD July $50calls ($2.68) rolled to Oct $45 ($5.29) calls but sell order on $50s not filled, still have them as well (now $.83).

    TD -15 July short $55puts rolled to 15 $52.5 puts but buy order on $55 puts not filled .. still have them also ($18.75)!

    -15 TD July $55calls (2.68)


    -6 MMM ’22 $155puts ($16.8)

    4 MMM ’22 $140 calls ($31.7)


    40 SPWR ’22 $5 calls ($5.4)

    -20 SPWR ’22 $8 puts ($2.7)

    THX for any help (no swearing now ;)

  53. Oops .. forgot:

    -10 BBBY '22 $15 puts ($5.5)

  54. If we knew that it only took $2T to move the Dow 8%, we could it every year and be open only one day the entire year!

  55. Phil-can't believe Jackie passed on MIT?! I'm back in school to make a career shift and have been using their online coursework to review some prereqs.   The videos really demonstrate the quality of the professors and their ability to actually teach (IMHO).  My cousin got his Phd there and is now provost.  I am always impressed when  he tells me what they are doing.  It's restoring my faith in the educational system.  Now if we could only be so forward looking with our public schools (at all levels).

    Leveraged is where the growth has been in the market and 50% or more of the spreads are based on opinions on credit.  I'm not sure the Fed can control that.  We'll see what happens near-term, but it does seem that credit investors are expecting a recession and related shakeout of the excess.  A lot of those loans are energy related or LBO, but it can become a self-fulfilling prophecy if sentiment remains negative.

  56. Futures margins for my TOS account is 13,200 for es  and 7,700 for CL and RB per contract. Are you getting different pricing?

  57. SDS/Motox – The idea of June is that we'd get rapid appreciation on the way up but now the $36s are $6 and you can salvage that but you don't want to pay $4+ for the $41s so how can you leave them and protect yourself?  Sept $30 ($8.50)/45 ($5) bull call spread at $3.50 gets your original $1.70 + 0.80 off the table and leaves you with the well-covered short calls and 2 months to roll so yes but only you want to buy 10 more longs if SDS goes over $40 and 10 more longs over $42.50 – so you are able to do a 2x roll without stressing.


    • IBM – So you have 16 longs and 8 shorts and the puts.  I would not worry about the put target but the $135 puts are $46 and the $105 puts are $25 and it MIGHT be margin-efficient to roll down to 8 of those but make sure with your broker.  I would sell the $110s ($11.50) to another sucker and roll down to the $90s at $21.50 and roll the $140 puts to the $110 puts (+$6) so you'd be in 16 $90/110 spreads for the same(ish) money.  
    • TD – Same thing with short puts but you can't double your exposure like that.  So you have 15 of each at $18ish and the $40 puts are $8.  ToS says $6,000 margin for 10 short $52.50 puts and $6,691 margin for 20 short $40 puts – that's why I like those rolls but it doesn't save margin, just costs not too much.  The problem with TD is you don't have a lot of time to turn around and you may be throwing good money after bad so maybe you are better off with more IBM at a much more realistic target to double your money on the spread.  
    • MMM – At $126, I don't think I'd bother as the targets are fine.  Again, I don't get why no short calls but hopefully you bought them back.  The $140s are $16.50 and you can sell those and roll your $140s to the $100s at $36 and again, a much more realistic target on the $40 spread.  
    • SPWR – God I hope you sold calls on these!  $8 is a fine target so no need to do anything.  The $5 calls are now $3.50 and the $8 calls are $2.50 so you could sell 100 $8s for $25,000 and buy 60 more $5 calls for $21,000 and then you have $30,000 worth of sensible $5/8 spreads you paid net $12,200 for.  
    • BBBY – The 2022 $15 puts are now $11 and the $8 puts are $5 so a 2x roll again should be close to margin-neutral and makes for a much easier target.  

    One day/StJ – Good plan!

    MIT/Seer – I wanted her to go for my benefit but she argued she can always watch their courses anyway and she has friends at Stevens and tons more in NYC and Jersey schools.  Her HS is not like mine – my friends went to the far corners of the country but hers are staying local and she doesn't want to make new ones as we've lived in the same place her whole life.  I don't have friends like that – I moved many times when we were young so my oldest friends are from Jr High, her oldest friends pre-date day care!  

    As to opinions on credit, I thought they should freeze ratings for 3 months – that would have been a big help (though maybe people wouldn't lend into the uncertainty).  

    Futures/Bert – Still getting $9,900 for /ES and $5,087 for /CL and $5,060 for /RB.  

  58. Market up and oil up but not ET.  That's just mean.

  59. Wonder why the big difference 

  60. /Bertll- IB is charging me 25k for ES long. Used to 3500. :(

  61. BDC/Roubini- MMT in not mainstream; no workers in CA to pick fruit? Dystopian view of supply chain; and getting arrested for leaving my house. Enough?

  62. Thanks for the laughs eveyone! Waiting for my flight at Tampa airport which is basically empty! There are a few people waiting for his flight to Mpls after they bumped and changed the flight 4X! They are coming around spraying the seats and arms of the waiting area. Wow will be glad to get back to Lake Superior!~ Only 3-4 covid up there!

  63. Roubini- on the plus side, however, at least he did not call anyone a criminal or sociopath :)

  64. Ravi  I closed my IB account last week and moved everything to TD

  65. it's annoying I have to wait a whole day for this fake market to drop back to reality.

  66. France is only 1 week ahead of us. Enough?

  67. If we think that dept stores will skip paying their rent for the next few months, in order to survive the crisis.  What does that do to the mall REITs like SKT, MAC, Etc?  

  68. VIX isn't buying the rally here

  69. Roubini / pstas – He might be thinking worse… I am trying to only use characterizations that can be easily proven :-) (see the Texas example this morning)

  70. truth to the CA fruit pickers though. Republicans trying to ram "relaxed visa rules" (i.e. the wall built for illegals is to KEEP THEM HERE, as I always knew) through with the multi-$T giveaway to the 0.01% And of all the world's ironies, this one is the most precious:

  71. And now Manu Dibango has died of Covid-19 (for jazz fans)

  72. "Modern Money Theory (MMT) is a heterodox macroeconomic theory that describes currency as a public monopoly for the government and unemployment as evidence that a currency monopolist is overly restricting the supply of the financial assets needed to pay taxes and satisfy savings desires.

    MMT's main tenets are that a government that issues its own money:

    1) Can pay for goods, services, and financial assets without a need to collect money in the form of taxes or debt issuance in advance of such purchases;
    2) Cannot be forced to default on debt denominated in its own currency;
    3) Is only limited in its money creation and purchases by inflation, which accelerates once the real resources (labor, capital and natural resources) of the economy are utilized at full employment;
    4) Can control demand-pull inflation by taxation and bond issuance, which remove excess money from circulation (although the political will to do so may not always exist);
    5) Does not need to compete with the private sector for scarce savings by issuing bonds."

    If you're saying this somehow does not describe exactly where we are in currency evolution right now I am at a loss for words. Not only is MMT "mainstream", incumbent and dominate, it's actually evolutionarily necessary at this point to see what system of transactions deprecates this currently dominate mechanism.

  73. Is trump going to "sign" this stock market day again? Idiot.

  74. Apr VXX 50/60 call spread was $1.50 this morning, thought I'd get cute and offer $1.35 for some as a hedge. The price has only gone up all day, currently $2.50… guess I'm not the only one nervous about the market reaction to the stimulus.

  75. MMT sounds like Zimbabwe to me!

  76. LOL Tangled.

    Such margin discrepancies! 

    Have a good flight Pirate.  

    REITs/Palotay – That's what bailouts are for.  Banks don't want them to go under so they will amend their loans and gap 3 months on them – end of story.  People are trying to make something out of all these things but any two rational people can fix them with minimal discomfort.  As long as we get a handle on things within 3 months – it's really not that big a deal if people cooperate. 

    Katrina caused $250Bn in total damage, a good portion of that directly impacted just New Orleans and it lasted for a year.  2,000 people died, 300,000 homes were destroyed, shelters and hospitals were overwhelmed – yet the city survived and people went back to work – despite all sorts of dire predictions.  This disaster may be 10x worse, 20x worse ($5Tn in damage, 40,000 dead?) but it's spread over the whole country and, unlike Katrina, the Government IS doing something about it.  

    VIX/Coulter – That's not how the VIX works.  Today was a 10% up day – just as volatile as a 10% down day.  

    I can't believe they still haven't settled the stimulus.  Today could reverse tomorrow if they fail to have something.

  77. Not just ready to go long yet! Plenty can still go bad in the coming weeks! 

  78. MMT should be called modern wealth confiscation theory whereby the government funds fraud, waste, and abuse by effectively confiscating the wealth of its citizens at the rate of inflation. 

    ET – another chance to buy cheap. If they don't cut the dividend it's yielding 25.4% on cost. Crazy! But we thought that about Macy's right before they suspended the dividend, so there ya go.

  79. MMT/BDC – Clearly full employment has not been a driver of inflation.  Also the Dollar's status as a reserve currency gives us unique abilities that would cause disruption in other countries but seems to not even be a bump in the road for us.  Again, look at Japan, who are 300% of their GDP in debt with 60% of their tax collections going to service their debt.  They should be bankrupt according to that list but apparently it's not a problem for them and, in fact, they still suffer from deflation.  People not only buy their bonds but buy them for sub-zero rates. 

    Part of this is because ALL the banks are printing money and there's a demand for the "safer" currencies like Euro, Dollar and Yen – no matter how unsafe their own monetary policy seems to an academic who ignores what's actually happening in the World.   The money is not circulated so it doesn't inflate – 90% of the money being printed goes to the Top 1% and inflates nothing but their net worth – how does another zero on Jeff Bezos's net worth alter the price of gold, oil or silver unless he uses it to buy gold, oil or silver?  

    The US can print $1Tn right now and all it does is inflate the market $1Tn and that goes right to the balance sheet of people in the 1% who were down $3Tn and they want to know when they are getting their other $2Tn back – none of that money is going to alter the price of a movie ticket or a pound of hamburger.  

    Referred to as Black Monday, the historic stock market day reportedly triggered multi-billion dollar losses for some of the richest people around the world, Forbes reported March 9. According to Forbes’ calculations based on its proprietary wealth-tracking platform, the top 10 biggest billionaires lost a combined $37.7 billion due to the crash of the stock market.

    And then there's this:

    From the time the Great Recession started in late 2007 until it officially ended in 2009, the richest 1 percent of America saw its income drop 36.3 percent, according to a new report by economists Emmanuel Saez and Thomas Piketty [PDF]. Collectively, the top 1 percent lost 49 percent of the billions in wealth that vanished like so much Lehman Brothers stock.

    But before you start writing that sympathy card to your favorite hedge fund manager, remember that the U.S. is now in its sixth-longest economic expansion in history — 51 months and counting — and most of the benefits are trickling up to the wealthy.

    According to Saez, the top 1 percent (earning at least $394,000 a year) saw its income rise 31.4 percent between 2009 and 2012. And because the income of the bottom 99 percent of earners rose an anemic 0.4 percent in that same period, the top 1 percent captured 95 percent of the total growth in American wealth during the economic recovery.

    As the chart shows, it's nothing new for the super-rich to reap the lion's share of the growth in income (before then losing a small amount of their gains). But 95 percent is a pretty eye-popping number. Even when the top 1 percent saw its income skyrocket 98.7 percent during the Clinton administration, Saez notes, they only accrued 45 percent of the new wealth generated.

    Where does that leave us in terms of the haves and have-nots? In a place we haven't been in at least 100 years. For the first time since the government started collecting the relevant data in 1917, the wealthiest 10 percent (earning at least $114,000 a year in 2012 dollars) is earning more than half — 50.4 percent — of U.S. income. The top 1 percent is eating nearly a quarter of the American income pie:

    In 2007, before the recession, the top 1 percent brought in 23.5 percent of the money, about the same percentage as in 1928, right before the stock market crash that precipitated the Great Depression. But income disparity flattened out considerably in the post–World War II years, as this chart from The New York Times illustrates:

    By 1973, the top 1 percent earned only 7.7 percent of U.S. income. But the percentage has been rising in fits and starts since the 1980s, and now it's clear that "even after the recession the country remains in a new Gilded Age," says Annie Lowrey at The New York Times. And like the last Gilded Age, a lot of the explanation can be found in the stock market. Lowrey explains:

    Generally, richer households have disproportionately benefited from the boom in the stock market during the recovery, with the Dow Jones industrial average more than doubling in value since it bottomed out early in 2009. About half of households hold stock, directly or through vehicles like pension accounts. But the richest 10 percent of households own about 90 percent of the stock….

    The economy remains depressed for most wage-earning families. With sustained, relatively high rates of unemployment, businesses are under no pressure to raise their employees' incomes because both workers and employers know that many people without jobs would be willing to work for less. The share of Americans working or looking for work is at its lowest in 35 years. [New York Times]

    As Slate's Matthew Yglesias notes, the Great Recession was egalitarian in that everybody lost some money, but "the catastrophic recession approach to reducing inequality doesn't look so good" right now.

    Image result for In bear markets, stocks return to their rightful owners

    That's what this is all about – whenever they want to clear the decks and dump the poor people out of the market – they tank it.  Any excuse will do and all the little people panic out of positions and all the rich people buy them back and then they sell them all again at inflated prices on the next rally.  

    Over and over again, it pumps all the wealth from the poor to the rich every cycle.

    Next time it will be housing again as people will have forgotten that scam so they'll push people into homes they can't afford and then crash the market and buy the homes back for half the price (with more bailout money, of course).  

  80. Wow, 20,000 WAS a good entry on /YM!  That fresh horse system is great…

    Almost 20,700 now!  + 12% for the day.

    I don't think I can leave this overnight – would feel like such an ass if it reversed.  

  81. Not much faith in the Fed it seems:

    Update: Drawing on revolvers – 33 facilities, $31.3B added to list

    The coronavirus pandemic has had swift and severe economic repercussions, as government restrictions and containment efforts have curtailed business activity. Uncertainty over how long this might persist and the ultimate toll it will take has many companies scrambling to shore up cash positions by tapping the capacity on existing credit facilities.

    The attached Excel file lists corporate debt issuers who announced recently they would be drawing down on existing, undrawn credit facilities. More detailed information and links are also included. The information is sourced from public SEC filings. The below table shows drawdowns that were added to the list today.

    Note that roughly $31.3 billion in RC draws were captured today. About $105.5 billion has been captured since March 5.  

  82. Looks like the list didn't post, but there are highly rated companies in there not just HY.

  83. 18,000 new infections since this morning (414,277), 1,400 more deaths (18,557), 5,000 more recoveries (107,806).   

    US at 51,542, also up over 10%, Italy 69,176 also 10% – that's during the day today!  

    So we'll be very close to 500,000 cases by Friday and well over 20,000 deaths and Italy will have passed China and US right behind.  

    I guess we'll need some more hedges for the weekend!

  84.  We don't have PM in Canada, margin on one ES contract is $47,000 Cdn.

  85. These are active cases net of recoveries (or death).  China getting things under control but not ROW:

    That's what we need to see before we can go back to work!  

    China leveled off at 80,000 in early Feb and now it's late March so no Easter Mr Trump!

    Yikes, Italy 700 something deaths today!  6,820 is 1/3 of the World's total dead so far (Trump can catch us up).  

  86. How much faith do you have in the numbers from China?  I am not saying they are significantly wrong, I just do not know if they should be believed.

  87. Phil / MMT – that was very well put! Stop it with the facts and data! I'm an emotions-only trader… ;)

    Anything can happen overnight, up or down on any given day of course, but keep in mind 4 months ago nobody had ever heard of COVID19 and as little as 1 month ago it was an "over there" problem while we basked in the glory of market ATH's after an 11 year bull run. It is very difficult to say that in 3 to 4 months from now the picture will look like anything anyone is predicting right now. I would take that with a big grain of salt.

  88. not that stock chart reading is the least bit useful but today's green hammer looks a lot like March 4th's

  89. tangled – speaking for me alone, my faith in China's numbers is non-existent. In fact, I believe they're total fabrications from the very beginning. Look at the curve for China of deaths vs recoveries. It is two perfectly smooth diverging curves. If you look at that same graph for every other country in the world, it jumps all over the place, often with the two lines crossing each other more than once. So I don't buy China's numbers at all. They've been cooking those numbers like Betty Crocker.

  90. You want to see some cooking, look at Russia's numbers. My colleagues there were telling me that no one is getting tested and when people show up sick, it's categorized as pneumonia! And besides, they have only one lab who can do the testing now from what I was told. But pneumonia stats are way high this year… But hey, no test, no virus, right?

  91. And old people are getting $25/month to stay home and this is not the old Russia. $25 gets you nowhere in Moscow or St. Pete! It's a total joke. And Putin is sending supplies to Italy buying goodwill while his hospitals have nothing! Not going to end well.

  92. On the other hand, spoke to someone whose best friend works for Lockheed and apparently they are tooling up to make ventilators. 

  93. Who gives a shit about China. Are we going to stop dying here because we pour over their BS data? Maybe we should focus on what's going on over here? Our data is immediately observable and trustworthy (until trump hides unemployment figures, that is).

    The stock market's (DOW) percentage gain today was the 5th largest ever. The four biggest gains, and #6, occurred between 1929 and 1933. The next two (#7 and 8) were in October 2018 (see chart in link). Do we need to revisit what happened then? I don't know about the 30's, a bunch of Silent generation whiners picking through grocery store dumpsters to feed themselves and their families or whatever whiney nonsense! Feeloaders I say! Welfare-ers! Nickelodeons! However, I do recall November 2008 through March 2009 still feels vaguely familiar….

    In other words, look out below. 

    The younger generation (anyone younger than a fairly old boomer) hasn't really experienced it, but markets can go down for a very long time. From 1965 to 1982 the Dow went from 7900 to 2100. That's 17 years!

    The three largest gain periods, by far, are the Eisenhower, Clinton and Obama era's. Everything else is utter shit. Now we're in the era of trump and his minions. The worst of the worst. The guy openly described, with quite a bit of pride and cheer I might add, the particular way he enjoys sexually assaulting women. Yes, that is our President of the United States. The Genius that won't show us his transcripts, the Billionaire that won't show us his taxes, the Healthiest President Ever that won't release his medical records (or a fake doctor letter even written by a real doctor and not by himself).

    In other words, LOOK OUT WAYYYYY BELOW

  94. anyone know whats up with the big deal

  95. One E.R. doctor's description of his day's work:

    "For the rest of your shift, nearly every hour, you get paged:

    Stat notification: Very sick patient, short of breath, fever. Oxygen 88%.

    Stat notification: Low blood pressure, short of breath, low oxygen.

    Stat notification: Low oxygen, can't breath. Fever. 

    All day…

    Nearly everyone you see today is the same. We assume everyone is #COVID?19. We wear gowns, goggles, and masks at every encounter. All day. It's the only way to be safe. Where did all the heart attacks and appendicitis patients go? Its all COVID.

    When your shift ends, you sign out to the oncoming team. It's all #COVID?19. Over the past week, we've all learned the signs – low oxygen, lymphopenia, elevated D-dimer. 

    You share concerns of friends throughout the city without PPE. Hospitals running out of ventilators."

    As long as this is the reality in our hospitals then all efforts should be focused on bolstering the healthcare system and protecting and equipping healthcare workers and first responders.

    All this talk about restarting businesses, schools and ending lockdowns at this point in time is counterproductive because it creates a false sense of security which leads people to just shirk self-quarantine/social distancing measures and go about their normal lives, and businesses to start forcing their employees to come into work, which will only increase the spread and prolong the epidemic.

    As long as those coronavirus stastistics keep going up, then there is no basis for the markets to stop going down, because we know the only way to keep Trump invested in taking this pandemic seriously is for the stock market to keep falling.

  96. good news updates

    one funny tidbit: even though COVID may kill 75k Americans, it may also save 75k from lung disease caused by pollution. 

  97. A bit of "Gallo's" humor

    Heard a Dr. on TV saying in this time of Coronavirus staying at home we should focus on inner peace. To achieve this we should always finish things we start and we all could use more calm in our lives. I looked through my house to find things i'd started and hadn't finished, so I finished off a bottle of Merlot, a bottle of Chardonnay, a bodle of Baileys, a butle of wum, tha mainder of Valiumun srciptuns, an a box a chocletz. Yu haf no idr how feckin fablus I feel rite now. Sned this to all who need inner piss. An telum u luvum. And two hash yer wands, stafe day avrybobby!!!

  98. LOL pstas…

  99. Based on some calculations I've been running, I predict the united states will have 715,744 cases and will peak on April 17th.

  100. Prince Charles caught it.

  101. pstas – Brilliant!