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Whipsaw Wednesday – Only Down 700 Points? Not a Big Deal!

Wimps!

The Dow drops 700 points (1,200 off yesterday's high) and everyone is back to Doom and Gloom.  We are in the MIDDLE of a Global Catastrophe that will play out over the next two to three months – it's the expectations of the participants that need adjusting – not the markets...

This is like standing in the rubble of the World Trade Center the afternoon of 9/11 and asking why the markets haven't gone back up yet – it's irrational behavior.

Yes, the Government APPROVED Trillions of Dollars in stimulus on Friday but it hasn't been deployed yet.  That doesn't seem to stop a parade of idiots from going on TV to say "Well, I guess the market is telling us the stimulus wasn't enough."  What morons!  Even worse is the uncritical response they get from the Hosts (who are usually empty suits anyway) and the Producers whispering in their ears.  Welcome to the 21st Century, where your idiotic opinion gets the same weighting as actual facts!  

As our Members know, there's always a song in my head and this morning it's:

"When I'm riding in my car

And a man comes on the radio

He's tellin' me more and more

About some useless information

Supposed to fire my imagination

I can't get no

Satisfaction" – Stones 

Coronavirus In humans: Money-Making Hype From Your FearWhy do we listen to these people?  When have they ever been right?  The same thing happened in 2008 when the people who had the money (the Top 1%) got their bailouts (TARP) and then went about telling the Bottom 99% that the World was going to end and they should dump all their stocks – the same stocks the Top 1% were buying up because they knew the World was not going to end at all.

I'm not a naysayer – I was one of the first analysts in America to tell people to hedge for a market downturn back on January 23rd, when there were 1,000 cases in China and I was worried it would be like SARS and cause a 10% drop in the market back in 2002.  I was on top of it BECAUSE I'm a student of history and I look at how similar situations played out in the past to indicate what is likely to happen in the future.  This time is almost never different – despite what the man on TV tells you.

Because we hedged, our Short-Term Portfolio (STP) is up 398.7% for the year as of yesterday's close and it's important to step back and look at our hedges and determine whether or not we are adequately covered in case Team Trump continues to bungle their way into 1M deaths – which is way past my 50,000-200,000 predicted range.  With 189,633 US cases as of this morning and about 3,000 deaths (they don't give US totals) and only 7,136 recoveries – things are getting worse and worse but we already expected that – so it shouldn't drastically change our market outlook – yet:

Financial 3x Bear ETF (FAZ) – We played this one as a technical trade when the VIX was high and FAZ was spiking – we just couldn't resist the ridiculous price they were offering for the June $85 calls but now we can play FAZ as a hedge - just in case the bailouts really aren't enough so we're going to buy back the June $85 calls and pocket a $35,175 profit and add the following hedge:

  • Sell 5 FAZ Jan $25 puts for $5 ($2,500) 
  • Buy 15 June $45 calls for $10 ($15,000)
  • Sell 15 June $65 calls for $7 ($10,500)

That's net $2,000 on the $30,000 spread so it's a nice hedge if the banks fall apart and not too risky as we can only be assigned 500 shares at $25 ($12,500) which we would then use to hedge the addition of cheap Financials stocks in our Long-Term Portfolio.  JPM is cheap at $85, C at $40, BAC at $20 – we could even begin selling puts on those to raise some cash but I'd like to see some earnings first.  JPM reports on the 13th, BAC the 14th and C reports on the 15th.   

Short puts – These are offset hedges to other positions and we're not worried about the net entries but our 80 QQQ puts have a nice profit so we can take those off the table as it flips us more bearish and drops cash into our portfolioo.  Also, the TSLA puts make me nervous – so let's take that money and run run too.   

Nasdaq 3x Ultra-Short (SQQQ) – I cannot believe you can still get this spread for $1!  Let's add 100 more for $10,000 and pay for it by selling 15 Jan $20 puts for $7 ($10,500).

S&P 500 2x Ultra Short (SDS) – This hedge gives us $120,000 worth of protection and is currently net $20,360 so pretty cheap insurance.  We sold short May $50s so we hope the S&P doesn't fall too far but it's only a 2x ETF so it would take a 30% drop in the S&P for SDS to get to $50 (60% up from $30) and I think we'll have time to add more hedges between here and there.  

SQQQ – This is our older hedge (we always have hedges!) and we cashed out the winning position but now we're too bullish so we'll buy back the short April calls for a nce $38,125 profit (89.7%) in two weeks and we'll see what kind of pop we get before we decide to re-sell.  That leaves us with a pretty striaghtforward $97,500 spread that's currently a net $1,975 credit so we have $99,475 worth of protection on this spread.

Natural Gas ETF (UNG) – I THINK, with all the oil wells shutting down, that Natural Gas will become a bit more scarce and we only need to get to $15 so let's give it a month and see how it's looking.  This is not a hedge, just a bet but it's kind of a hedge on the hedges as an improving economy would tank the main hedges while this trade makes $15,000.

Oil ETF (USO) – The non-stop wail of the pundits is deafening here.  Not one of them predicted a drop at all but now that oil is at $20 – they are predicting $10, $0 and even, somehow, they will PAY YOU to take the oil (negative prices).  How long will that last as a business model?  It can happen – it happened with Nat Gas in Europe a few years ago when supplies were swelling the pipes and they paid commercial customers to move the gas into their private storage but then the market rebalanced.  

We've been playing the Oil Futures (/CL) long off the $20 line with tight stops below and, at the moment, there are 4 open contracts that are up slightly.  I should have taken them off the table at $20.50 this morning but I was writing this article and missed it!  Inventories are 10:30 and super-risky as we'll likey have a big build and there's no sign Russia and OPEC are cooperating at all so oil COULD go lower but all that is expected so I think maybe a bit of relief from lack of shock.  BUT (and I like Big Buts) I will be shocked if we're not at $30 by July – and that would be up $10,000 per contract from here.

That's what our July USO spread is about too – we expect Oil to go up 50% from $20 to $30 by July and so USO should go up 50% from $4 to $6 by July and that would put our spread $30,000 in the money and it's currently net $1,400 so there's a $28,600 (2,042%) profit potential and the worst case is we get assigned 2,000 shares of USO at net $10.70 ($21,400) from the 20 short puts - and that's still not terrible as a long-term play.  

So our new FAZ hedge offers us $28,000 of hedging potential, 200 of the SQQQ June $25/35 spreads at net $10,000 pays +$190,000 if the Nasdaq fails, SDS has $100,000(ish) upside potential, SQQQ Jan $20/35 spread also is a $100,000 hedge and USO, UNG and the short puts balance losses on the hedges….

Binary options hedging strategywww.metkimhurdacilik.comThat's another $418,000 worth of downside protection for our long portfolios and the LTP started with $500,000 and is down 20% at $400,000 but, with the $500,000 we have in the STP – we're up a combined 50% for the year, despite the downturn.  In fact, with hedges like these, we almost prefer the market head lower before it goes back up but, with hedges like these, we feel free to do a bit more bottom-fishing – as we are very well protected.  

The best thing you can do in uncertain markets like these is to be well-balanced.  If you are balanced, you can go with the flow and make adjustments.  If you are not balanced – you get tossed about in the market turmoil and have to hang on just to survive.  

That's no fun!  

 


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  1. Good Morning.


  2. Good morning, All!

    Join Phil at 1pm for today's webinar, here: 

    https://attendee.gotowebinar.com/register/1822831255617380878


  3. 188,647 cases and 4059 deaths in the US. The bungling is complete, now to endure the consequences. 100,000 dead is practically a certainty and we'll probably see that before the end of April. And then, after so many people are already infected that there is no point in bothering, they'll ground commercial air travel and set up roadblocks, and finish off the economy.  


  4. Dawg/bungling

    They are still screwing it up. Way more needs to be done if we are to avoid 200k, 300k, 500k deaths by the summer. Masks are being exported by many reports, we are woefully short of staffing in this country, and there are still cities that have not seen a surge. Doctors and nurses are being threatened/terminated for trying to protect themselves, they are overextended and undersupplied on multiple fronts.  The social distancing efforts are not consistent or strong enough, particularly in areas like NYC where there is a massive outbreak. The environment is one that is ready to explode in the wrong way. I agree with you, this administration will do nothing but chase its tail and be forced to place more extreme constraints on the country after each month shows things to be worse, essentially choking the economy to death – and allowing its people to drown, literally. 


  5. I think the market will start to tank as the body counts go up.  We need to start looking at stocks associated with funerals, cremation, etc.


  6. Long /SB, DD if it breaks below 10. BRL/USD + some switching back to ethanol from sugar by Brazilian farmers as CL recovers should get it back up to 12-13 in medium-term


  7. Good morning! 

    This is not a big deal, we expected to consolidate around the Strong Retrace (2,500) but testing it and holding is are GOOD things – it would be unhealthy not to test support lines on the way up (which is what happened before and why we crashed so easily).

    These are still the lines we expected – nothing to freak out about so don't overpay for protection, we should pop back up from here once the EU closes, which I think is 12:30 these days.  

    Got to $20.50 so back to 2 long /CL into inventories.  

    See, like I said, just wait a bit and you often get the price you wanted!

    4,059/Dawg – Yikes, that was fast!   We only have 7,136 recoveries so 36% of our outcomes are DEATH!  That's about the worst ratio on the planet…  

    Meanwhile, Trump is refusing to allow people to get Obamacare and, of course, Private Companies aren't signing people up at the moment (unless they pay through the nose) so that's the next crisis is hundreds of thousands of bankruptcies because you don't have to die to go broke from medical bills in the USA.

    Coronavirus cartoons: Trump's ratings jump amid big job losses

    Funerals/Dano – They are doing mass graves in Iran.  No one can go to funerals anyway.  

    My Mom was born in London during the Blitz – to this day she's scared of loud noises.  The windows of her house were blown out a few times but she was never hit – it was just her and my Grandma as my Grandfather was off fighting in India – she didn't meet him until she was almost 5.  They had rationing for 5 years, couldn't leave the house - thought they were going to die any day (especially being Jewish).  My Uncle Henry still eats his chocolate one square per day as a habit from when that was all they could get.  

    The UK went about 250% ($50Tn for the US) of their GDP into debt in WWII and began paying it back in 1950 and made their final payment (to the US) on Dec 31st, 2006.  In the 50s and 60s, the UK had the strongest economy on Earth.  

    UK post-war economic boom and reduction in debt - Economics Help

    Where there's a will, there's a way….  I don't see Trump being able to screw us up past January at worst – he may be removed from office sooner if the body count tops 500,000.




  8. Trump’s Breakdown


  9. Jeff – I don't disagree with anything you said but I didn't want to post the actual numbers I'm coming up with because of getting flamed as making low-information doomsday predictions. But why not? 22,000 next Friday, 110,000 in two weeks. 250,000 by end of April. I'm hesitant to go any farther than that because they're 7 digit numbers. And the 250k end of April is based on some optimistic assumptions about the effect of social distancing. And I'm not pulling these out of the air. It's based on past curves in Italy and the US and our current death toll. Not using case counts because I think they are wholly unreliable. 


  10. Heh. That load of supplies from Russia is interesting; I'm surprised we even heard about it. During the Hurricane Katrina disaster, Korea sent disaster response teams to New Orleans, but that never hit US media to my knowledge.


  11. Oil Inventories about as bad as expected – we should re-test $20:

    • EIA Petroleum Inventories: Crude +13.8M barrels vs. +4.0M consensus, +1.6M last week.
    • Gasoline +7.5M barrels vs. +1.9M consensus, -1.5M last week.
    • Distillates -2.2M barrels vs. +1.0M consensus, -0.7M last week.
    • Futures (CL1:COM -0.6%)

    How crazy is that?  

    As I thought, not much reaction as it's baked in at $20.

    I like /NG at $1.60 too but 1 gamble at a time:

    Wow, computer trading much?

    Death counts/Dawg – Are we taking into account that pastors in Texas and Louisiana would rather risk their parishioners' lives than miss out on passing the collection plate?  

    How Humor Can Combat Coronavirus Anxiety | Time

    Telegraph cartoons – March 2020 - News


  12. Can some one explain to me why TOS is charging Margin on long stock and BCS such as SQQQ

    I got 19/24 Jun BCS 100 of is 10,000 on margin. If the stock goes down it is my problem same with BCS. Only if they go up they some what reduce their margin.???????


  13. Other states – yeah that's the problem. Virtually no testing outside of NY, and they're not going to be able to send a hospital ship to Phoenix for example, so once New York has sucked up all the ventilators, everyone else is going to be re-purposing oxygen generators and CPAP machines. And then there's the small problem that there are no effective controls in place in most states. As highlighted by your point about churches. 


  14. Margins/Yodi – You need to check with them. Sometimes they screw up and the margins give false results and other times it's intentional.  Does the margin represent the $1/share you used to buy the spread?

    • The bounce in stocks begun last Tuesday appears for now to have petered out, with the averages all down nearly 3% in morning action.
    • Treasury yields – it appears – were never convinced the worst was past, and headed lower all through the rally (though the Fed buying hundreds of billions worth of paper surely had an effect). They're down big again today, the 10-year off a full nine basis points to 0.59%. TLT +2.15%TBT -4.1%.
    • There were a couple of better-than-expected economic reports (ADP, and ISM), but those surveys took place earlier in March.

    We made good money on these before but this time the Fed has $4Tn more to throw around so I'm not going to risk it.

    Really not that bad:

    • General Motors (GM -3.3%reports 7% decline to 618,335 vehicles in Q1.
    • "In this uncertain and challenging time, GM and our strong network of dealers are here to help, offering concierge service, providing courtesy transportation to customers in need and offering home delivery where permissible," said Kurt McNeil, U.S. vice president, Sales Operations.
    • Inventory declined 18% Y/Y to 668,443 units at the end of the quarter.

    On the other hand:

    • Mazda (OTCPK:MZDAY -5.6%) unit sales -41.8% Y/Y in March to 15,664 units.
    • Car sales slipped 66.6% to 3,381 units.
    • Truck sales decreased 26.9% to 12,283 units.
    • CPO sales declined 38.9% to 3,392 units.
    • YTD Mazda U.S. sales fell 4.5% to 67,670 units.

    ADP Jobs Report

    • February Construction Spending-1.3% M/M to $1,366.7B vs. +0.5% consensus, +2.8% prior (revised from +1.8%).
    • Construction spending +6% Y/Y vs. +6.8% prior.
    • Fitch Ratings drops its default rating for Macy's (M -6.0%) to BB+ from BBB-. The rating outlook is kept at Negative.
    • "The downgrade and Negative Outlook reflect the significant business interruption from the coronavirus pandemic and the implications of a downturn in discretionary spending that Fitch expects could extend well into 2021. Fitch anticipates a sharp increase in leverage to over 11x in 2020 from 2.9x in 2019, based on EBITDA declining to around $325 million from $2.2 billion on a revenue decline of nearly 25% to $19.2 billion. Adjusted leverage is expected to be in the low 4x in 2021, assuming revenue declines of over 15% and EBITDA declines of approximately 40% from 2019 levels. Leverage could return to the low 3x in 2022 assuming a sustained topline recovery. A more protracted or severe downturn could lead to further actions."
    • The ratings agency thinks Macy's has sufficient liquidity to manage operations through the expected downturn, noting it ended 2019 with $685M of cash and recently tapped out its $1.5B unsecured revolver. The company has approximately $530M of debt maturing in January 2021 and $450M maturing in January 2022, which Fitch expects it could pay down with the recent drawdown on the revolver.
    • Shares of Macy's are down 64% over the last four weeks.
    • Fitch Ratings drops its default rating for Nordstrom (JWN -7.9%) to BBB from BBB+ and issues a Negative rating outlook.
    • "The downgrade and Negative Outlook reflect the significant business interruption from the coronavirus pandemic and the implications of a downturn in discretionary spending that Fitch expects could extend well into 2021. Fitch anticipates a sharp increase in adjusted leverage to 7.0x in 2020 from 3.0x in 2019, based on EBITDA declining to approximately $550 million from $1.6 billion on a revenue decline of over 20% to $12 billion. Adjusted leverage is expected to decline to the low 3.0x range in 2021, assuming revenue declines of around 10% and EBITDA declines of about 20% in 2021 from 2019 levels. Leverage could return to under 3.0x in 2022, assuming a sustained topline recovery. A more protracted or severe downturn could lead to further rating actions."
    • The ratings agency expects Nordstrom could significantly reduce its capital expenditures from its original target of $600M. Nordstrom is seen having the ability to pay its $500M of debt maturing in October 2021.
    • Shares of Nordstrom are down 55% over the last four weeks.
    • Tangible net book value per share as of the end of the quarter is seen at $12.35-$13.25. That would be down from $17.00 a month earlier, or 24% at the midpoint of that range. Last night's close was $10.58.
    • CEO Gary Kain: "The volatility and lack of liquidity we experienced in mid-March in Agency MBS reached levels I had never witnessed over the span of my 30-year career."
    • He notes improvements in the market plus the sale of some assets have brought market valuations, as well as AGNC's leverage and liquidity back to "recent norms."
    • Putting some numbers on it, balance sheet cash (and related) is about $3.7B, not including $1.3B of capital plus excess margin held at broker-dealer subsidiary Bethesda Securities. The total investment portfolio is $91B, with $1.1B of non-agency paper.
    • "At risk" leverage is seen at about 9.7x, within the company's typical operating range.
    • Shares are down 3.5% premarket to $10.21.
    • Kroger (NYSE:KR) says the grocery store operator experienced strong sales in February before the pandemic triggered an even significantly greater lift in sales in March across both physical retail stores and digital channels.
    • The company notes that it started to see a significant shift in customer behavior during the last few days of February as shoppers started stocking up.
    • "Sales sharply accelerated in March with identical retail supermarket sales without fuel up approximately 30 percent. This was driven by dramatically heightened demand in the middle of the month as customers were stockpiling, which then tapered, but remained higher than normal in the final week, as customers adjusted to the new dining, work and travel restrictions. The demand has been broad based across grocery and fresh departments."
    • Looking towards the rest of the year, Kroger expects volatility in sales throughout the year as the impact of the pandemic on the consumer evolves
    • Airbnb's (AIRB) longer-term bookings are up 20% Y/Y in the last two weeks, according to the startup.
    • The average distance from a guest's home to their rental is down 20% since the beginning of February.
    • Airbnb spokesperson: "We’re seeing a larger share of Airbnb guests booking accommodation in their own communities for all lengths of stays, whether that be because they require extra space for their families or a quiet place to work."
    • Macau casino stocks are lower in early trading after gross gaming revenue fell 79.7% in the gambling mecca during March vs. -79.5% consensus.
    • A new policy from the Guangdong province of requiring all travellers coming from outside mainland China to undergo a 14-day quarantine at designated facilities is believed to be limiting traffic on top of the collapse of international traffic to the casinos. JPMorgan says the Guangdong development is effectively the same as a "casino shut-down" for Macau, with almost every visitor needing to enter the territory through the land border due to the lack of inbound flights. The firm expects the tight borders to lead to a dismal April for the casino operators.
    • Wynn Resorts (NASDAQ:WYNN) is down 4.05% in premarket trading and Las Vegas Sands (NYSE:LVS) is off 3.45%. MGM Resorts (NYSE:MGM) is 4.66% lower, while Melco Resorts % Entertainment is poking out a small gain of 0.44%.
    • "We're looking at a massive, massive reduction in GDP," said DoubleLine CEO and Chief Investment Officer Jeffrey Gundlach in a webcast titled A Tale of Two Sinks.
    • He expects GDP to fall at least 3% for 2020, and sees many economists' estimates as too optimistic.
    • "It's too much hope" to expect the the U.S. economy will snap back in Q3 after falling steeply in Q2, he said.
    • He also expects stocks will have further to decline. "The low in mid-March — I would bet dollars to donuts that the low is going to be taken out."
    • While the panic of about 10 days ago has subsided some, some of that panic is likely to return again sometime in April.
    • Regarding the $2.2T coronavirus relief bill, Gundlach points out that the major airlines have bought back $45.5B of their stock in the past 10 years and now they're going to get $50B from the relief legislation.
    • "Let them go bankrupt," he said of the airlines. "The planes aren't going to disappear."
    • Says he's exited gold miners.
    • Says "the Fed is going to buy the budget deficit and then some."
    • "All of this stimulus is really negative on the dollar," he said.
    • "The biggest winner out of all of this may be the American economy once we get past a rough patch," Gundlach said.
    • This is a developing story. Check back for updates.
    • The American Petroleum Institute reportedly shows a build of 10.48M barrels of oil for the week ended March 27, its first increase after two straight declines.
    • Gasoline inventories reportedly show a build of 6.1M barrels, distillate inventories show a draw of 4.4M barrels, and Cushing inventories show a build of 2.9M barrels.
    • Data from the Energy Information Administration to be released tomorrow are expected to show crude inventories rose 4.6M barrels last week, according to analysts polled by S&P Global Platts.
    • May WTI crude recently traded electronically at $20.22/bbl after settling at $20.48 today on Nymex.
    • Zoom Video's (NASDAQ:ZM) daily U.S. user volumes hit a record 4.84M yesterday, according to Apptopia data.
    • The company's active users were up 151% Y/Y in March.
    • On the same day, Microsoft (NASDAQ:MSFT) Teams had 1.56M users, and Slack (NYSE:WORK) had less than 500K.
    • Six Flags Entertainment (NYSE:SIX) fires off a short-term  stockholder rights plan aimed at protecting stockholder interests amid the recent share price decline.
    • "The Board believes that the current trading price of company stock does not reflect the company’s intrinsic value. The Rights Plan is intended to enable the company’s stockholders to realize the long-term value of their investment, ensure that all stockholders receive fair and equal treatment in the event of any proposed takeover of the company."
    • The rights plan will kick in if any person or group acquires 10% or more of the theme park company's outstanding shares.
    • Shares of SIX are down 72% over the last 90 days.
    • Tanger Factory Outlet (NYSE:SKT) has drawn "substantially all" of its capacity under $600M unsecured lines of credit, a move that will help preserve its dividend for now.
    • The company intends to pay its Q1 dividend as scheduled on May 15.
    • "The Board of Directors plans to evaluate the payment and rate of any subsequent dividends quarterly," Tanger says.
    • The company's also working to reduce outflows, including deferring its Nashville project and other planned capex.
    • It also says it will remain in compliance with REIT taxable income distribution requirements for the 2020 tax year.
    • The FDA announces its Coronavirus Treatment Acceleration Program that, it says, leverages every tool at its disposal (e.g., cutting red tape, redeploying staff) to speed up the development of therapies to treat COVID-19 infection. Key points:
    • Staff from the Center for Drug Evaluation and Research and the Center for Biologics Evaluation and Research are providing regulatory advice, guidance and technical assistance as quickly as possible, including triaging with developers and scientists to speed up the process. Examples of the new normal include reviewing study protocols with 24 hours and single-patient expanded access requests within three hours.
    • Medical and regulatory staff redeployed to serve on COVID-19 review teams.
    • Streamlined processes and operations for developers and scientists and additional resources for healthcare providers and researchers to help them file emergency requests for investigational products.
    • Advancing relationships with partners in the public and private sectors to rapidly collect and analyze information in areas like illness patterns and treatment outcomes.
    • Xerox (NYSE:XRX) will end its more than $30B tender offer for HP (NYSE:HPQ) after the coronavirus pandemic complicated the financials of the deal, according to WSJ sources.
    • The company will also end its proxy fight to replace HP's board.
    • Share pullbacks have roughly halved Xerox's market cap to around $4B, which reduced its cash and stock offer price from $35B to about $31B.
    • Xerox had planned to borrow up to $24B for the deal.
    • HP shares are down 1.8% after hours to $17.10.
    • American Airlines (AAL -0.3%) plans to retire even more jets than it has publicly stated, according to Reuters.
    • Sources indicate that American now plans to take out of service a batch of 76 Boeing 737s, nine Airbus SE A330-300s and 20 Embraer E190s.
    • The development is another indicator that airlines are planning for a long period of depressed travel demand.
    • Previously: Airline industry recovery seen taking a year (March 31)

  15. Wheee on /CL – that was easy money!  


  16. Yodi- back on March 10, TD Ameritrade emailed a notice that All 3x's leveraged etf's will no longer be pm eligible. 

    They had a long list of affected issues. 


  17. NFLX calls. Locked up at home with fresh government cash on the way, I mean seriously, is anyone going to cancel their netflix subscription?


  18. Needs – A robust and competent FEMA would have been a great source for organization and distribution…

    Heck of a job, Brownie!


  19. Plain Talk: Mitch McConnell can never be trusted


  20. The Interminable Body Count


  21. 10 Things to Know for Today


  22. How I finally fell for Florida


  23. Fell for Florida? – Seriously, I don't get it. It must be an East Coast thing…. ;)



  24. we're at 1000 cases/hour



  25. If anyone is going to buy Mays for the real estate play – now is the time.  if not – I'm thinking BK is a really possibility.


  26. M / Macy's – If anyone is going to buy Mayc's for the real estate play – now is the time.  if not – I'm thinking BK is a really possibility.


  27. I don't see how the nurses and doctors can possibly survive the stress and danger and duration of the task before them.


  28. Macys-

     

    Wouldn't they be in a better position than most retailers because they own many of their stores and wouldn't have to worry about rent.


  29. M/Jeff – Ah but then the problem comes if the commercial real estate market collapses and they have to write down Billions of Dollars worth of properties and they can't liquidate them – even if they want to.  

    If this crisis goes for more than 60 days, the economic fallout grows exponentially.  The Government already screwed up as they didn't put in programs to keep things in place – which is what they should have done:

    • Everyone gets to skip 2 rental or 2 mortgage payments and the money is spread over the remainder of the term (extended by 2 skipped months).  That could be automated with a simple form.
    • Everyone gets their average paycheck of the past year (2019 taxes) or past 3 months – whichever is greater.  

    Payroll is $500Bn a month so that's the max cost of that and you're not paying rents – just extending them and the Fed can deal with bailing out the big boys and rental landlords who are impacted unduly on a case by case basis but then you only have 100,000 people to deal with – not 100M!  

    Do the same extension with the CC companies, auto loans and insurance payments (covering the interest on skipped payments without impacting people's credit) and THEN everyone can get by on $1,200 for a month or two. 


  30. Phil, Pstas Yes I am aware of the ETF'S but I have nacked long stocks Take BP 24.44 400 stk margin 1470. CODI 400 stk margin 777. ENB 200 stk margin 817.

    This is what I can not understand.


  31. The Bug/how long – Looking at tha stats, https://en.wikipedia.org/wiki/2020_coronavirus_pandemic_in_the_United_States#CDC_reported_U.S._totals, I think I see the daily new cases coming close to a peak. Figure number of active cases will peak about 2 weeks later, then things will begin to slide down, maybe early May…..
     


  32. Slowly building a position in Jul/Oct UGA over the past few days. Spreads are wide, but I'm patiently legging in. Averaged 0.50 for Jul 9/12 bull call spreads (hooray!), still working Oct. Seems like it could still really tank… or someone will cook up a war.


  33. Here an other exsample ETN 200stk Apr 105 short calls x2 worth .10 cent not even worth paying 10 cents to close, Margin 2155.


  34. Same with the Futures, Yodi – $13,200 for an /ES contract now.  It's cheaper to play the options!

    Almost Webinar time!

    • Oil tanker rates keep climbing, with benchmark Middle East-to-China rates rising another 2.8% overnight to WS 212.71, equating to daily earnings of $241K, according to Baltic Exchange data.
    • Other major rates for very large crude carriers also advanced, including those for routes from the Middle East to the U.S. Gulf and to Singapore, as well as West Africa to China, as refiners and energy traders scramble to secure ships to either transport or store crude oil amid plunging demand and prices.
    • The daily cost of hiring a VLCC has more than doubled over the past week, according to Clarksons Platou.
    • Standard Chartered estimates supply could outstrip demand by nearly 22M bbl/day in April, 19.5M bbl/day in May and 13.7M bbl/day in June.
    • Frontline's (NYSE:FRO) NYSE-listed shares jumped 22% in March, while Euronav (NYSE:EURN) climbed 24% and International Seaways (NYSE:INSW) gained 17%.
    • Tennis mainstay Wimbledon is the latest major sports event to fall off ESPN's (DIS +0.3%) schedule, as the championships have been canceled for the first time since World War II.
    • "It is with great regret that the Main Board of the [All England Lawn Tennis and Croquet Club] and the Committee of Management of The Championships have today decided that The Championships 2020 will be cancelled due to public health concerns linked to the coronavirus epidemic," AELTC says.
    • The 134th edition of the competition will be held starting in June 2021, it says.
    • It was set to run June 29-July 12 this year.
    • The Wimbledon Championships scheduled to take place from June 29 to July 12 have been canceled by the All England Lawn Tennis Club due to the pandemic.
    • It's the first time since World War II that the prestigious tennis championship has been called off.
    • The sports world is seeing the cancellations stretch further into the summer in a development that is seen as troubling for Nike (NKE -3.0%), Under Armour (UAA -10.8%) and Adidas (OTCQX:ADDYY -1.7%).
    • The next big spotlight is on major league baseball, which is expected to start the season without fans.
    • Stocks seen benefiting from a longer stretch of Americans staying at home are marching higher today with the vision of an Easter return to normal activity in the U.S. dashed.
    • Social distancing plays Blue Apron (APRN +15.1%), Kroger (KR +4.9%), Peloton Interactive (PTON +1.5%), Sprouts Farmers Market (SFM +4.4%), Office Depot (ODP +2.7%), Papa John's International (PZZA +2.6%) and Sanderson Farms (SAFM +0.5%) are all higher.
    • Oppenheimer analyst Chris Kotowski sees banks' earnings on average sinking as much as 38% in 2020 and 2021 under a severely adverse scenario of 10% unemployment with core economic EPS bottoming out in Q1 2021 and returning to "more or less normal" in Q4 2021.
    • "P&L will be ugly for a while, but balance sheets will be fine," he writes in a note to clients, similar to comments made by KBW analyst Brian Kleinhanzl.
    • Upgrades U.S. Bancorp (USB -6.0%) to Outperform; Kotowski sees the stock's pullback makes the "flight to safety" name more attractive relative to the market.
    • Continues to recommend Bank of America (BAC -5.1%), Citigroup (C -6.5%), CIT Group (CIT -9.8%), Goldman Sachs (GS -3.5%), and Morgan Stanley (MS -5.9%).
    • Expects investment banks (Goldman Sachs and Morgan Stanley) to recover more quickly than lending banks.
    • For the sector overall, "we believe that the ~40% declines YTD discount something far worse than a few quarters of weak earnings and thus would buy the dip."
    • Kotowski's Outperform rating for USB is in line with the Quant rating of Bullish; and is more optimistic than the Sell-Side average rating of Neutral (5 Very Bullish, 2 Bullish, 14 Neutral, 3 Bearish, 1 Very Bearish).
    • Hold on tight if you are long restaurants stocks. The base case from SunTrust Robinson Humphrey on the restaurant sector is for casual dining same-store sales to be down ~80%, fast casual SSS down ~40% to 60% and fast food SSS down 20% to 40% through May before a slow recovery begins.
    • Naturally, earnings estimates and price targets are drastically reduced across the sector, although Buy ratings are kept in place on Darden Restaurants (NYSE:DRI), Dine Brands (NYSE:DIN), Chipotle (NYSE:CMG), Noodles (NASDAQ:NDLS), Wingstop (NASDAQ:WING), Jack in the Box (NASDAQ:JACK), McDonald's (NYSE:MCD), Restaurant Brands International (NYSE:QSR), Carrols Restaurant Group (NASDAQ:TAST) and Wendy's (NASDAQ:WEN) with an eye toward long-term valuations. Of that group, McDonald's is called the safest bet and TAST the most risky.
    • Analyst Jake Bartlett also upgrades Denny's (NASDAQ:DENN) and El Pollo Loco (NASDAQ:LOCO) to Buy ratings after they passed a stress test.
    • Bartlett on Denny's: "DENN's 12% off-premise mix is a benefit, but we expect SSS to be sharply impacted by the virus, troughing at -80% in April/May. We are upgrading the shares due to DENN's strong liquidity position (~$121M), which we estimate could support them for over a year at zero sales."
    • Bartlett on LOCO: "We expect LOCO's 70% off-premise, including 40% drive-thru, its family oriented offerings, and the addition of new delivery partners in late '19 and in early '20, to support sales. We expect LOCO's SSS to trough at -40% in April/May… Our $11 PT (+30% upside) is based on a '22 EV/EBITDA of 8.0x, a discount to its 12.0x 3-year average."
    • Perhaps most importantly, Bartlett sees limited liquidity risk across the sector, with only Dave & Buster's Entertainment (NASDAQ:PLAY) seen needing a capital boost.
    • Morgan Stanley has cut the price target on a Walt Disney company (DIS -1%) that's caught in the "crosshairs" of a recession and global pandemic.
    • Widespread closures expected through the end of June will hit a variety of the company's businesses, analyst Benjamin Swinburne writes: parks and resorts, retail stores, global movie theaters, and live sports broadcasts.
    • He's still overweight on the stock, and sees an "entry point worth the risk" in the company's recent decline (down 30% from November).
    • But he's cutting his price target to $130 from $170 (currently implying 36% upside).
    • Street analysts are Bullish on Disney overall, as are Seeking Alpha authors. The stock has a Quant Rating of Neutral.
    • Bernstein thinks Tesla (TSLA -6.0%) has enough cash to survive the impact of the pandemic.
    • Unsurprisingly, analyst Toni Sacconaghi forecasts Tesla will miss unit sales goal this year and sees revenue dropping as much as 20%, but the overall assessment isn't dire.
    • "The company’s pain is likely to extend through the second and third quarters as the economic weakness wrought by the coronavirus pandemic could dwarf anything seen during the Great Recession," he warns.
    • "On the brighter side, Tesla's cash balance is likely to hit its lowest point of around $6.6 billion in the second quarter, and Tesla only has about $100 million of debt due this year, and is facing a $1.4 billion convertible bonds in March 2021."
    • Tesla is due to report on Q1 deliveries at any moment.
    • Citigroup (C -8.7%) CEO Michael Corbat tells CNBC the bank is working "around the clock" on an online portal that will allow small business owners to apply for loans to keep paying their workers during coronavirus-induced shutdowns.
    • Last Friday, President Trump signed a $2.2T economic aid program that includes $350B of loans for small businesses that will converts to grants if they retain their employees through the economic downturn. Treasury Secretary Steven Mnuchin had said the program will be available starting this Friday.
    • Citi is “making sure that we’ve got the digital interface set up so that people can apply online, we can get the documentation we need online for the vast majority of these loans, and we can get this money into small businesses hands as quickly as we can,”  Corbat said.
    • Banks have been deluged with questions from business owners on how the program will work. One small-business loan specialist, Ami Kassar, CEO and founder of advisory firm MultiFunding told Inc. that it may take banks at least three to four weeks to be ready to process loan requests.
    • "The next few weeks will be a mess," he said. "No one is open for business to start processing these new loans today." 
    • Hard Seltzer sales soared 335% over a four-week tracking period, per Nielsen data.
    • The leading seltzer brands in the U.S. are White Claw, Boston Beer's (NYSE:SAM) Truly and Anheuser-Busch InBev's (NYSE:BUD) Bud Light Seltzer.
    • The next few weeks to a month will be an interesting for the red-hot category as the huge jump in unemployment comes into play and social distancing prevents parties and large gatherings from happening. Analysts also seem unsure if the stockpiling trend will extend much further into April.


  35. The old standby distraction:  start another war

    Donald J. Trump

     

    ?@realDonaldTrump

     

     

    Upon information and belief, Iran or its proxies are planning a sneak attack on U.S. troops and/or assets in Iraq. If this happens, Iran will pay a very heavy price, indeed!


  36. belief….


  37. "The old standby distraction:  start another war"

    Raising my ask on those UNG calls… you just know they're dying to do this, as irresponsible as it is.


  38. Not UNG – UGA calls!


  39. Damn, /CL hit $21 while I was giving the Webinar and I missed it.  

    Pence/1020 – Another guy who would be a disaster as President.

    War is a good idea, however, we could use a nice distraction at the moment.  I guess that's why /CL spiked up.  

    I agree with Ati – I'm in /NG down here ($1.59)

    /RB good too at 0.56 but I'm not going to chase. 


  40. wow spike down into close again – tow days in a row……


  41. Not a pretty finish but 7,400 holding on /NQ and 2,450 on /ES (so far).


  42. rookie
    April 1st, 2020 at 3:12 pm | Permalink | Tweet thisIgnore this user

    Phil//  I would like to know what are the plans for the below trade on IMAX (sorry I didn't give you the full picture yesterday when I asked about IMAX)

    Our 2nd new position for the MTP is one I am thrilled with and that's Imax (IMAX), who have been clobbered on the China shut-down and New Years is their big time of year but, as a long-term investment, this too shall pass and it's incredible that we get to jump into this stock this cheaply so our trade idea will be:

    Sell 10 IMAX Sept $18 puts at $2.50 ($2,500)

    Buy 20 IMAX Sept $15 calls at $3 ($6,000)

    Sell 20 IMAX Sept $20 calls at $1 ($2,000)

    I believe you had asked us to buyback the short $20 calls

    Thanks.


  43. Phil – oil – don't you think we will go below $20 once we have lock down in every state?….and thanks for your comments on the dollar last week where everyone is gonna flood the market with free money and rebalance the dollar higher. 


  44. Oil back above 21.00


  45. IMAX/Rookie – In the Money Talk Portfolio, we can't make new changes but in the Earnings Portfolio, we did the following:

    IMAX – I just wish they had longer-term options.  $18 is still a fair target so let's leave the short puts but we can roll the 30 Sept $15 calls at $3 ($9,000) to 30 Sept $10 calls at $4.30 ($12,900) to widen the spread by $15,000.  If we get a chance to roll the $10 calls to the $5 calls for less than $2 – we should do that too!

    So all we did was roll the Sept $15s to the $10s – I din't think the $5s got cheap enough so far. 

    Oil/Akrum – Short-term maybe but then we'll bottom out and head back up into the summer.  


  46. So I see proposals for our great leader to fix the price of oil at $50.  Where do people think all the oil that would be pumped at that price would be stored?


  47. Some pessimism, Why own equities if companies plan to cut dividends and some will end them all together? Like I said before, many investments are/will yield zero/negative. Certainly feels like we've reached the end game. Stock market and RE were the last bastion for the average investor. RIP.


  48. Coast Guard: Cruise ships must stay at sea with sick onboard




  49. Local hospital (NNJ) has over 500 COVID patients and all ventilators are in use.  They are building an ICU in the cafeteria with plans to build others in other spaces since more are pouring in.  Still a shortage of PPE and no deliveries of that or ventilators in sight.  NJ went democrat in the election so no surprise there.  If I haven't won the genetic lottery or am not lucky, then I'm probably in trouble since that is the best hospital around me.  


  50. Average days on ventilators are also higher than  others have reported at 21 days.  Not sure if there is something specific driving that.


  51. It feels like the beginning of a last big squeeze to me too, Kustomz. 0% interest in the bank as well. Middle class people will be left with very few ways to get ahead. Imagine what it'll be like when the Fed starts buying ETFs.

    CCL tanked again. The last time it was here I bought 7-8 day out $13 calls for .20 and sold them back out for an average of somewhere over $4. Rinse/repeat today with the same number of contracts. Total lotto ticket. Maybe nobody jumps in to save them this time, maybe rumors swirl.


  52. Cases per 1M people:

    World: 119

    US: 638

    more winning


  53. Atitlan, the only way any of this survives is through price fixing by governments and central banks of the world. We are half way there now, they will have to take complete control sooner or later. Trump is talking about supporting higher oil prices and the fed is in the markets today more than ever before, its evolving and there is no end to it now.






  54. UN: Pandemic could shrink global economy almost 1% in 2020




  55. Finished legging into UGA Oct 9/12 bull call spreads for .20 credit. I'm happy to keep doing this again and again if the market will keep accommodating!