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Friday Market Workshop – Portfolio Repair Part 4 – Adjusting Our Goals to Reflect Reality

Time to get real.  

We've had 3 Workshops so far on fixing our portfolios this week:

Now we move onto a very important topic that combines what we have learned and that is Adjusting our Goals.  I talked about this on Tuesday (Part 2) in the Boeing example for someone who bought Boeing at $350 and now it's $150 (today it's $123!) and we do not sit there and HOPE (not a valid investing strategy) that BA will go back to $350 because it's no longer realistic!  

As much as you may love a stock – you have to be realistic when there is damage done to it's financial position or outlook and you have to adjust your expectations accordingly – perhaps even considering abandoning the stock altoghether – especially in times like these when there are other fantastic stocks on sale and, even as I say this, I'm thinking that BA is not really a fantastic stock anymore – they simply have too many troubles to be excited about them – even at $123.

So today we'll take a look at our Earnings Portfolio, which started out with $100,000 on October 21st and was originally supposed to be just quick earnings plays but, the way things went, we ended up getting "stuck" in some good bargains (or we thought as the time) and we rolled them into longer-term bets.  So now it's a bit of a hybrid but that makes it interesting.  At the moment, we're at $132,078 so up 32% for the year but, as you'll see – NOT because our picks were any good – but because our HEDGES saved us!  

Notice we have more cash than the portfolio has value – that's because we follow our core Philosphy, which is:  "Be the House – NOT the Gambler", which means we always try to be sellers of premium, not buyers and that gives us a huge advantage in our trades while also dropping a lot of cash into our pockets – which is very useful when the market sells off and CASH!!! becomes king again.  

When we go through our portfolio, we have to keep in mind that CASH!!! is valuable and we have to have a good reason for using it in our positions – otherwise we should get rid of them and get more CASH!!!  Have I mentioned how much I love CASH!!! lately?  

  • Aurora Cannabis (ACB) – We (PSW Investments) own a cannabis company in California and I can tell you buisness is very good right now under quarantine.  There's that reason to keep ACB as well as the fact that it's a net $280 entry which is now net $865 and has the potential to be $12,500 at $3, though that's very doubtful by the year's end but we have a 2-year call so we can sell the 2022 3 calls for another $720 when these expire and, since that's almost as much as we could collect if we cash out now (we could cover all 50 for $1,500 too) - there's simply no point to not leaving them on.

  • Cleavland Cliffs (CLF) – One of the few US Iron Ore producers should do well when the economy turns back on.  They beat last quarter and made 0.25/share after making 0.33 the quarter before, which was a huge 32% beat so expectations were going up and up.  We believe they have the reserves to ride out the virus and they are clearly a vital industry that will get loans or bailouts if they need it so no reason to panic out.  In fact, we got aggressive and bought back our short calls with a nice profit when they tested $3 and, so far, we've been right about the bounce and they are hopefully consolidating for a move above $4.  I certainly expect them to get back to $6 by 2022 and that would put us $15,000 in the money vs the current net $5,300 for a potential gain of $9,700 (183%) so that's a keeper!   Plus, we can sell some short calls once they hit $6 for a little income. 

  • Hanesbrands (HBI) – Those "brands" are Hanes Underwear, Champion Sports, Maindenform, Polo Ralph Loren, DKNY, Wonderbra and dozens of other wearables you find in every store on the planet.  At $7.25, you can buy the whole company for $2.6Bn which is very, very silly as they made $600M last year and $553M the year before so it takes them just over 4 years to make all your money back (p/e 4).  Again, obviously they will have a tough year with the virus but that's no reason not to own them this cheaply.  Levis had a tough decade with the Great Depression but the people who owned them for $2M in 1935 are probably please that they are $4Bn now (LEVI) – and that's down 50% too! 
  • Anyway, so we like HBI and eventually they should get back to at least 8x earnings and figure earnings will be $500M next year (a bit slow) so that's $4Bn which is up $1.4Bn or 50% so our target for HBI should be about $14 and we have the $10/15 spread for 2022 so right on target and the $10,000 spread is currently a net CREDIT of $4,950 so the profit potential at $15 is $14,950 (302%) so we're certainly happy to hold onto this one.

  • H&R Block (HRB) – Well, our premise was that you can't avoid death or taxes but then the Government gave everyone a 3-month extension.  I'm confident in our 2022 $15 put target but the July $20 calls are never going to happen and we'rd down $7,000 on the spread so let's take 30 of the 2022 $8 ($5.25)/$15 ($2.50) bull call spreads at $2.75 ($8,250) and we can sell 10 of the July $14 calls for $1.50 ($1,500) to get some of that money back so we're spending net $6,750 of our cash to put ourselves into a $21,000 spread that's mostly in the money to start.  Our initial cost of the spread was $1,650 so our total in (not counting short call profits we already cashed out) is $8,400 and we still stand to make $6,600 at $15 not a bad fix for a stock that dropped 50% on us!  

  • IMax (IMAX) – Are we never going to go to the movies again?  Well it seems like it at the moment and IMAX has fallen to $8.80, which is $540M and they made $50M last year, so 10x earnings.  But, they have been investing in massive expansion the past few year, mostly in China and, while that is bad luck this year – it sets them up for $100M years ahead.  Last quarter, in fact, they made $18M.   Unfortunately, IMAX does not have long-term options and only go out to December, which may not be enough time to recover.  
  • So we are down $11,550 on IMAX and we love them long-term but we're not sure when they can recover?  Let's roll our 10 short Sept $18 puts at $9.55 ($9,550) to 20 of the Dec $10 puts at $4.50 ($9,000) and let's roll our 30 Sept $10 calls at $2.25 ($6,750) to 50 of the Dec $5 ($5.50)/$10 ($2.70) bull call spreads at $1.80 ($8,000) so we are spending net $1,800 on top of our initial $8,750 (less profits from short calls already in the portfolio's cash position) for $10,550 but now we're in a $25,000 spread that's $3.80 ($19,000) in the money and we have a $14,450 upside potential (136%) between now and December if IMAX can get back to just $10.  FIXED!  

Again, I want to stress that you should NOT try to fix every position – it's just that these all happen to be excellent positions… ;)    While we are not using much cash, we are using some margin on the short puts, which obligate us to buy the stock at the strike price if assigned so it's very important we REALLY want to own 2,000 shares of IMAX for $10 ($20,000) or we should not be selling the puts!   Over $10, they simply expire worthless and we keep the cash but, under $10 and we might end up having to deal with the shares – though we can buy back the puts at any time and take the loss if we change our mind.

  • IRobot (IRBT) – These guys used to be our Stock of the Century but they sold their Military Robotics Division, which was our favorite stock so now Lockheed (LMT) is our Stock of the Century as we are betting on them to commercialize fusion in the next 20 years and change the World – but that's another article entirely…  The consumer division of IRBT is still fun to play and they missed earnings in October so we grabbed them and it was good for a while but now down on the virus but that doesn't alter our long-term forecast.  We're still miles ahead on this position at net $8,350 but it's a $70,000 spread so there's still $61,650 of upside potential to it and it's $20,000 in the money as it stands so FANTASTIC as a new trade too.  

Macy's (M) – You can boo all you want but I love them.  Last summer, it was estimated that Macy's had $21Bn in real estate and, while that was interesting, it wasn't what excited me.  What did excite me is that they have a 7-story building in New York that's an entire city block and they plan to put 5 more floors on top of it and rent that out.  Herald Square is one of the top 3 places in Manhattan for rental fees and you simply can't build anything of size there as everything is taken – except the air above Macy's!  At "just' $80/foot (yes, insane but true), 1.5M feet will rent for $120M a year and even if it costs them $1.5Bn to build it – it should drop some nice cash-flow to the bottom line.  

Not that they need it.  Despite dropping to $4.45 from $22 (we liked them at $15!) Macy's JUST announced a $340M profit for Q2, which ended on Jan 31st and Q3 last year, which ends of 4/30, was just $136M and Q4, which ended June 30th, they made just $86M so Q4 is everything and, if they survive into this Christmas – Macy's can still get back on track.  There should be some juicy bailouts and loans in their future but it will be a long, slow recovery so we need to kiss $15 goodbye and shoot for $10:

  • Roll 5 2022 $15 puts at $11 ($5,500) to 15 2022 $8 puts at $4.50 ($6,750)
  • Double down on 25 2022 $5 calls at $1.80 ($4,500) to average $2.20 on 50 ($11,000) 

We were already in for net $4,250 (less short calls we already took profit on) and our obligation was to own 500 shares of M at $15 ($7,500) and now it's to own 1,500 shares at $8 ($12,000), so not too bad – unless they do go BK.  Meanwhile, we have 50 long 2022 $5 calls that are out of the money and we HATE having naked calls (that's being the Gambler, NOT the House) but I'm pretty confident that M will pop back over $6 and we can sell the $10 calls, now 0.67, for $1.25 ($6,250) and then we'd be in for our original $4,250 + $5,750 we just spent less $6,250 we hope to collect is net $3,750 and, if we make it to $10, that will be $50,000 for a gain of $46,250 (1,233%) – see why I can't let this one go?

  • Nasdaq Ultra-Short (SQQQ) #1 – This is our newer hedge and keep in mind a hedge is like life insurance, you don't want to "win".  In this case, we spent net $0 if the short April calls expire worthless so hopefully it will be free protection down the road that should cover us for 2 more month against a sharp downturn.  The spread has the potential to pay $100,000 but we certainly hope we end up with nothing!  
  • SQQQ #2 – This was our active spread and we've torn it apart and put it back together – taking advantage of the gyrations to profit in both directions.  We are left with some hefty profits on the table and job #1 is TAKE THE CASH!!! so we buy back the 65 short June $35 calls and that will leave us a lot more bearish into the weekend – just in case.  We still have 30 short Jan $35 calls and, if SQQQ drops a lot next week, we can sell 30 short Jan $30 calls (now $6, $18,000) and use that money to roll our 95 Jan $20 calls at $7.85 ($74,575) down to 95 Jan $15 calls at $9.50 ($90,250).   It's very important to KNOW what you are going to do if things don't go your way and, if you are comfortable with that – then it's an easy choice to take proftis like these ($34,425) when they present themselves and then you have MORE CASH!!!  

Remember, the hedges provide a money-pump when the market does go down.  We have so much cash in the portfolio because we cashed in some earlier hedges and now we're using that profit to improve our long positions.  If we recover, we'll lose a bit of money on our current hedges but, BECAUSE WE KNOW EXACTLY WHAT WE EXPECT TO MAKE ON OUR LONGS – we know what we can afford to lose on our hegegs to keep things under control.  It's all bout finding the right balance so your portfolio can weather any sort of storm

  • Wynn Resorts (WYNN) – This is a tough one because, even though Macau is open in China, the province requires travelers to quarantine at the airport for 14 days before entering the city and that is NOT the start of an ideal gambling weekend and it's April so 4 months shut in China and probably the same in the US – at least is devastating for WYNN.   We have a small profit and our target is low enough but I don't think it's worth the risk so let's kill this one and look for something better.

See, we found something to cut!  That's because we got new information on Macau the other day that shook our premise and, since there are so many better stories to play out there – why gamble on this one?  As it stands, the positions we have have an upside potential of $153,600 and we have very little downside risk from our hedges while they are very adequately protecting our longs.

All in all, we're very well-balanced – and that was the goal of this week's workshops!

Have a great weekend, 

- Phil


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  1. Good Morning.

  2. If we are looking for indices reverting to mean, it's interesting to see that the Nasdaq is the closest to its 200 DMA which shows how far ahead of the average it was to begin with. For the other indices, it looks like something needs to give on both sides – current data and average – as the gap is so wide!

  3. Not listening to the experts will lead to a greater disaster. Fauci will get banned from the briefings:

    Director of the National Institute of Allergy and Infectious Diseases Dr. Anthony Fauci, who serves on the White House Coronavirus Task Force, called on the Trump administration on Thursday to issue a country-wide stay-at-home order to stymie the spread of COVID-19.

    “I don’t understand why that’s not happening,” Fauci told CNN anchor Anderson Cooper during the network’s town hall.

    The doctor said he didn’t “want to get into” the tension between states’ rights and federally mandated directives.

    “But if you look at what’s going on in this country, I just don’t understand why we’re not doing that,” Fauci added. “We really should be.”

  4. But Hillary had some emails right

  5. Put a fork in FTR?

  6. Good morning!  

    Only 700,000 jobs lost in March?  How does that work with 10M unemployed in the last two weeks?  

    • March nonfarm payrolls-701K vs. -150K consensus and +275K previous (revised from +273K).
    • Marks first employment decline since 2010.
    • Unemployment rate: 4.4% vs. 3.9% consensus and 3.5% prior; marks the largest M/M decrease since January 1975.
    • Futures markets aren't rattled. Nasdaq futures are off 0.3%, and S&P futures are down 0.3% and Dow futures are off 0.5%. 10-year Treasury yield rises 1 basis point to 0.61%.
    • Employment in leisure and hospitality fell by 459K,mainly in food services and drinking places.
    • And this is just the beginning of the effect of the COVID-19 pandemic, as much of the March data was surveyed before many coronavirus-related business and school closures took effect in the latter half of the month.
    • Labor force participation rate, at 62.7%, decreased by 0.7 percentage point over the month.

    Revert to the mean/StJ – Unfortunately, the mean is more like this:

    I think 6,500 to 7,500 is about right for the Nasdaq once people wake up and stop giving 50x and 100x valuations to big tech companies as if they were penny stocks.  

    Fauci/StJ – Sadly, it seems he is going off script because he sees the writing on the wall.  Half the news stations cut away from Trump at his daily briefings and cut back when Fauci speaks – that's too much of a blow to Trump's ego to stand for long.  Also, Trump never listens to him anyway – that's got to be frustrating when it's life and death…

    Emails/Jomp – Oh yeah, I forgot about those.  Thank goodness she's not President or she might have accidentally used her unsecured Blackberry at some point in her 20-hour workday.  Somehow Trump can tweet from the toilet all day and night though…

    FTR/1020 – They are going to re-org, the only question is what happens to the stockholders.  People who stuck with CZR did well but that rarely happens.  

  7. Jobs Report – "It was the largest one-month increase in the rate since January 1975."

  8. Next month will be a doozy…. :(

  9. Jobs # is low because of government methodology.  The report fails to capture the full damage from the virus . The Bureau of Labor Statistics used as its reference period the week ending March 12, which came just as the nation began its near shutdown. 

  10. And down TSLA goes again (along with everything else). 

    • March PMI Services Index: 39.8 vs. 39.1 consensus and 49.4 prior.
    • Composite: 40.9 vs. 40.5 consensus and 49.6 prior.
    • In a bid to lower cost, Cummins (NYSE:CMI) announces reduction in working hours and cuts salaries of CEO, director and employees.
    • “The impact from the pandemic on the global economy has been sudden and is growing, and it is imperative for us to respond quickly to maintain our strong financial position,” said Tom Linebarger, Chairman and CEO, Cummins Inc.
    • CMI is -1.7% to $130.52

    • Source: Press Release

    • It's been a bad week for mortgage REITs as iShares Mortgage Real Estate Capped ETF (REM -10.3%) declines for the sixth straight session due to market turmoil in MBS.
    • Now KBW analyst Bose George and Eric Hagen are downgrading Annaly Capital Management (NLY -11.5%), PennyMac Mortgage (PMT -20.9%), New Residential (NRZ -23.4%), Redwood Trust (RWT -13.5%) and MFA Financial to Market Perform from Outperform.
    • They also cut Invesco Mortgage (IVR -12.3%) and AG Mortgage (MITT -8.0%) to Underperform from Market Perform due to the uncertainty over residual value remaining for common shareholders after they announced repo defaults.
    • The KBW analysts recommend agency MBS REITS — AGNC Investment (AGNC -8.6%), Two Harbors (TWO -19.1%), and Dynex (DX -8.4%); also sees their preferred shares as attractive.
    • For NRZ, Hagen and George expect the REIT to continue to sell assets to de-risk its portfolio. "We assume that ultimately book value could fall around 60%, which suggests book value of around $7.00," they write.
    • They see a discount to book value warranted for NLY, " given our limited visibility into current book value given the fairly meaningful credit portfolio."
    • Also cites lack of visibility on RWT's longer-term book value for the downgrade.
    • FBI background checks for firearms rose 80.3% Y/Y in March on an adjusted basis, per NICS data.
    • Checks for handguns were up 92% during the month and checks on long guns jumped 74%.
    • Separately, reported earlier this week that it had seen a 792% increase in revenue when looking at the time period of February 23 to March 31.
    • Related stocks: American Outdoor Brands (AOBC -0.1%), Vista Outdoor (VSTO -4.9%), Sturm Ruger (RGR -0.6%) and Olin Corporation (OLN +1.5%).
    • Winnebago (WGO -3.1%) announces additional cost saving measures including reductions to compensation for execs and the board, delaying certain capital expenses, reducing or eliminating non-critical business expenses, freezing hiring, implementing temporary hiring freezes in all locations for non-critical salaried positions and communicating with inventory finance entities.
    • On the cash front, Winnebago says it had $123M on its balance sheet at the end of FQ2 and access to a $193M ABL credit facility.
    • Source: Press Release
    • Dominion Energy (D +0.5%) says it expects to take a $500M-$650M non-cash abandonment charge in Q1 due to early retirement of coal- and oil-fired power plants in Virginia.
    • The planned closings will stem from market power prices, Virginia's recently approved Clean Economy Act and other factors, according to an SEC filing.
    • Dominion also reports it sold $1.5B of 10-year bonds on March 31 and entered into a $625M 364-day term loan on April 1.
    • Mr. Cooper (COOP -18.5%), PennyMac Financial (PFSI -11.5%), Ocwen Financial (OCN -17.0%), and Walker & Dunlop (WD -3.7%) slip in early trading after reports that U.S. regulators are holding off on helping mortgage servicing firms that could be hit with a surge of missed payments from borrowers affected by the coronavirus crisis.
    • Height Capital Markets analyst Edwin Groshans calls a delay a "material negative" for COOP, OCN, PFSI, and WD.
    • The analyst will monitor developments of a Fed facility to provide liquidity to mortgage services and adds that "Ginnie Mae continues to move forward with its plan to advance principal and interest payments to servicers and a memorandum is still expected within a week."
    • KBW analyst Bose George expects larger servicers will be able to fund current servicing advances through new and existing servicing advance facilities and bank lines.
    • George sees potential weakness for MSR owners COOP, PFSI, PennyMac Mortgage (PMT -14.4%), OCN, New Residential (NRZ -16.7%) and Two Harbors (TWO -12.6%), but is still positive on larger ones like PFSI and COOP, as well as TWO, which is primarily in agency MBS REIT.
    • Earlier, OCN pulled guidance for the year and updated on its liquidity.
    • Previously: Mortgage servicers may not get federal assistance – Bloomberg (April 2)
    • FedEx (FDX -2.6%) discloses that it drew down $1.5B from its credit facilities and still has $1.86B untapped.
    • While demand in Asia has picked up a bit for the company, margins in the U.S. will be impacted negatively by the change in mix. Overall, global B2B has taken a hit.
    • FDX is taking actions to manage cash flow and improve liquidity, including capex review and a consideration of alternative financing sources.
    • Iconic CEO Fred Smith will take a 91% pay cut.
    • "We expect the significance of the COVID-19 pandemic, including the extent of its effect on our financial condition and results of operations, to be dictated by, among other things, its duration, the success of efforts to contain it and the impact of actions taken in response. While we are not able at this time to estimate the impact of the COVID-19 pandemic, an extended period of global supply chain and economic disruption could materially and adversely affect our business, results of operations, access to sources of liquidity and financial condition. In addition, an extended global recession caused by the COVID-19 pandemic would have a further adverse impact on our financial condition and operations."
    • SEC Form 8-K
    • 3M (NYSE:MMMwarns of "humanitarian implications" and retaliation from the Trump Administration's request for the company to cease exporting respirator masks that it manufactures in the U.S. to Canada and Latin America.
    • "Ceasing all export of respirators produced in the United States would likely cause other countries to retaliate and do the same, as some have already done," the company says, adding it would cause the net number of masks made available to the U.S. actually would decrease.
    • The company, which has said demand for N95 masks was exceeding capacity, says it will work with FEMA to boost production after Pres. Trump invoked the Defense Production Act against the company.
    • In a tweet last night, Trump said he "hit 3M hard today after seeing what they were doing with their masks."
    • 3M has not directly responded to a Fox News report featuring the head of Florida's Division of Emergency Management accusing the company of shipping N95 masks to foreign countries ahead of U.S. buyers.
    • MMM -1.7% pre-market.
    • Bath & Body Works is opening two stores near Columbus, Ohio back up after local officials agreed that the retailer could be considered an essential business on its promise to sell loads of soap and hand sanitizer products.
    • New York Post reports that parent L Brands (NYSE:LB) has a "grand plan" to open stores across the U.S. off the same premise, although the company had a clear advantage in Columbus with officials due its HQ being located there.
    • Hand sanitizer has been nearly impossible in some markets hit hard by COVID-19.
    • Wedbush warns that loan losses are set to jump at CarMax (NYSE:KMX) after taking in the retailer's sales update.
    • Analyst Seth Basham expects margins to fall at CarMax in the short term.
    • The firm's new price target on CarMax is taken all the way down to $53 from $90. The average sell-side PT is still at $91.21 as analysts have been slow to recalibrate due to the unknown length of the stay-at-home orders in the U.S. Give Wedbush some credit for jumping into the muck.
    • Shares of KMX are down 2.29% premarket to $49.05.
    • Aircraft lessor Avolon says it has canceled an order for 75 Boeing (NYSE:BA) 737 MAX planes that were due to be delivered by 2023, as it adjusts its order book to the industry disruption caused by the coronavirus.
    • The Dublin-based company also canceled commitments for four Airbus (OTCPK:EADSY) A330neo aircraft and deferred delivery dates for an another 25 planes to 2024 and beyond.
    • When Avolon struck a deal in 2017 for the 75 MAX planes and an option on 20 more, it was valued at nearly $11B at list prices.
    • The Baltic Dry Index increased 1.28% to 616 points in London as the slow return of trade to China continues with coal, steel, soybeans, etc., all seeing an increase in demand.
    • The Baltic Dry Index bottomed out at 411 on February 10 and traded as high as 2,518 last September.
    • Capesize rates were down 1.1% in the latest read and Supramax rates fell 3.5%. Panamax rates pushed up 0.7%.
    • Related ETFs: Invesco Shipping ETF (NYSEARCA:SEA), Breakwave Dry Bulk Shipping ETF (NYSEARCA:BDRY).
    • AutoNation (NYSE:AN) says it's taking dramatic measures after seeing significant declines in new and used vehicle unit sales, including a year-over-year decline of approximately 50% during the last two weeks.
    • The retailer is placing 7K employees on unpaid leave, implemented temporary base pay reductions for associates and freezing all new hiring. Widespread spending cuts are also being initiated.
    • On the financial front, AutoNation discloses that it had borrowings outstanding of approximately $790M on March 31 under its revolving credit facility and ~$140M under its commercial paper program. "Based on those borrowings and the maximum leverage ratio contained in our amended and restated credit agreement, we had approximately $1.1 billion of liquidity, including over $400 million of cash and approximately $700 million of availability under our revolving credit facility," updates AN.
    • SEC Form 8-K
    • Morgan Stanley cuts Apple's (NASDAQ:AAPL) target from $328 to $298, citing the coronavirus-related macro uncertainties.
    • Analyst Katy Huberty expects lower iPhone ASPs and upgrades in the coming 12 months.
    • Huberty remains bullish and advises "buying the dip," saying that "Apple is best positioned to recover to its prior long-term revenue and earnings trajectory" due to its customer retention rates and balance sheet strength.
    • Apple shares are up 0.1% pre-market to $245.18. The company has a Bullish average Sell Side rating.
    • Goldman Sachs leaves the Twitter (NYSE:TWTR) sidelines for a Buy rating, seeing an "attractive entry point" after the pullback over the last month.
    • Analyst Heath Terry says that the valuation reflects the ad spend retreat due to the coronavirus uncertainties, but he notes the surge in global user growth.
    • Terry thinks that new and returning users turning to Twitter will "see the value of the platform" and "many will stay."
    • The user acceleration could leave Twitter coming out of the crisis stronger, says Terry.
    • Goldman lowers its TWTR price target from $39 to $35.
    • Twitter shares are up 4.7% pre-market to $24.11. The company has a Neutral average Sell Side rating.
    • Almost 500,000 requests for mortgage deferrals or skip a payment have been completed or are in process since Canada's banks announced a mortgage deferral program over two weeks ago.
    • All together, the country's six largest banks have deferred more than 10% of the mortgages in their portfolio.
    • According to the Canada Mortgage and Housing Corporation, the average monthly mortgage payment of Canadian homeowners is C$1,326 (US$935). Therefore, the cash flow freed up for Canadians from the deferrals completed to date is roughly C$663M per month, or almost C$2B (US$1.4B) per quarter.
    • Constellation Brands (NYSE:STZ) pushes higher in early trading after Q4 EPS sailed past even the highest estimate turned in by analysts.
    • Beers shipment volume was up 7.2% during the quarter and wine/spirits volume rose 1.4% on an organic basis.
    • CFO update: "In this time of uncertainty, we believe we have ample liquidity and financial flexibility and remain committed to our investment grade rating. We have significant capacity under our $2 billion revolving credit facility and we plan to carefully manage our debt position over the next 24 months. In addition, we are expecting approximately $850 million in cash upon the close of the Gallo transaction and we remain focused on prudently navigating the challenging operating environment presented by COVID-19."
    • Shares of STZ are up 4.40% premarket to $137.00.
    • Previously: Constellation Brands EPS beats by $0.41, beats on revenue (April 3)
    • Credit Suisse lowers its price target on Outperform-rated Tyson Foods (NYSE:TSN) to $70 from $92. The new PT still reps 28% upside potential for shares.
    • "The spike in demand for chicken from the grocery channel over the past two weeks is starting to fade (now that consumers and grocers have filled their freezers with inventory) and is no longer sufficient to offset the 50% decline in demand in the restaurant sector," notes the firm.
    • CS thinks the supply/demand imbalance will cause Tyson's chicken margins to drop below their normal algorithm of 5% to 7%.
    • Shares of Tyson are down 0.28% premarket to $54.00.

    • Bed Bath & Beyond (NASDAQ:BBBY) wants a judge to hold 1-800-Flowers (NASDAQ:FLWS) bound to a $252M deal between the companies.
    • 1-800-Flowers wants to delay a deal to integrate the acquired business to April 30.
    • Reuters says the confrontation is one of the first examples of a corporate sale coming unraveled due to the coronavirus pandemic.
    • FLWS -3.06% premarket.
    • Ford (NYSE:Fconfirms that the temporary suspension of vehicle and engine production at most of its European manufacturing sites is now expected to run to least May 4.
    • The automaker's restart time on the continent will depend on the pandemic situation in the weeks ahead.
    • "We are hopeful the situation will improve in the coming month; our plans to restart operations, however, will continue to be informed by prevailing conditions and guidance of national governments," notes Ford of Europe President Stuart Rowley.
    • Shares of Ford are down 1.38% premarket to $4.30.
    • MKM trims its Alphabet (GOOG,GOOGL) target by $200 to $1,400, citing "weak macro pockets" in online ads.
    • Analyst Rohit Kulkarni estimates that up to 40% of Google's revenue is related to currently at-risk ad areas, including restaurants, travel, and offline retail.
    • The analyst expects Alphabet to "have a greater near-term disadvantage" due to this exposure, but he sees the company having a faster recovery once the coronavirus pandemic passes.
    • MKM maintains a Buy rating on Alphabet. The company has a Very Bearish average Sell Side rating.
    • MoffettNathanson maintains a Sell rating on AT&T (NYSE:T) and cuts the target from $30 to $23.
    • Analyst Craig Moffett says that most of AT&T's businesses are "highly cyclical," which could cause a "quite steep" consolidated EBITDA drop during a recession.
    • A recession could also put AT&T's dividend at risk if a rising leverage ratio makes bond rating agencies ask for a cut to avoid a debt downgrade, writes Moffett.
    • AT&T shares are down 0.2% pre-market to $28.69. The company has a Neutral average Sell Side rating.
    • American Airlines Group (NASDAQ:AAL) says it will suspend more than 60% of its total international capacity this summer due to a drop in demand.
    • The capacity cuts include an 80% reduction for Pacific routes, a 65% reduction in Atlantic routes and a 48% reduction in Latin America routes.
    • American has also pushed back the start date for new international service from Dallas-Fort Worth, Los Angeles and Seattle to the winter of 2021 from October 2020.
    • Shares of AAL are up 2.39% to $10.30 in premarket action.
    • Arcus Biosciences (NYSE:RCUS) initiated with an Overweight rating and a $21 (41% upside) price target at Cantor Fitzgerald.
    • Avadel Pharmaceuticals (NASDAQ:AVDL) initiated with a Buy rating and a $14 (93% upside) price target at Jefferies.
    • Integra LifeSciences Holdings (NASDAQ:IART) initiated with a Buy rating and a $55 (30% upside) price target at SunTrust.
    • SeaSpine Holdings (NASDAQ:SPNE) initiated with a Buy rating and a $15 (96% upside) price target at SunTrust.
    • Walgreens Boots Alliance (NASDAQ:WBA) upgraded to Hold with a $43 (7% upside) price target at Deutsche Bank.
    • Immunomedics (NASDAQ:IMMU) downgraded to Sell with a $5 (53% downside risk) price target at Goldman Sachs. Shares down 6% premarket on delay in scaling up manufacturing of antibody-drug conjugate sacituzumab govitecan.
    • Precision BioSciences (NASDAQ:DTIL) downgraded to Neutral with a $7 (26% upside) price target at Goldman
    • Tenet Healthcare (NYSE:THC) has priced its private placement offering and has agreed to issue and sell $700M (upsized from $500M) in aggregate principal amount of senior secured first-lien notes due on April 1, 2025.
    • Net proceeds will be used to repay a portion of the $500M revolving credit facility or for general corporate purposes.
    • The company is also seeking an amendment to its senior secured revolving credit facility, which will include increasing borrowing capacity to $2B (up from $1.5B).
    • Closing date is April 7.
    • "Second quarter GDP will decline 7% and the unemployment rate will top 10% as a result of the continued disruption of commerce stemming from the spread of the novel coronavirus," according to fresh projections from the Congressional Budget Office.
    • A V-shaped recovery might also not be in the cards. The report includes the possibility of later coronavirus outbreaks and a slow drop-off of social distancing, resulting in an unemployment rate of 9% at the end of 2021.
    • Big Brother or necessary surveillance? You decide.
    • In an effort to assist in "unprecedented times," Google (GOOGGOOGL) is helping public health officials use its vast storage of data to track people's movements due to the coronavirus pandemic.
    • The "mobility reports" go down to the county level to see if locals are abiding by social-distancing measures, but will use anonymized historical data, with a lag of two or three days.
    • Google is also reportedly exploring individual location tracking with a White House task force, as well as running a handful of testing sites in Northern California in a private-public partnership with the government.
    • If it wasn't for the coronavirus, the news cycle would most likely be exclusively focused on oil market, where demand has dropped by as much as 30M barrels per day (roughly equivalent to the combined output of the Saudis, Russia and the U.S.).
    • The latest? WTI crude prices soared nearly 25% on Thursday for its largest single-day percentage gain in history after President Trump said he expects Russia and Saudi Arabia to announce a major production cut deal.
    • "Recent negotiations will prove irrelevant as prices are low because of depressed demand," chimed in Petrobras (NYSE:PBR) CEO Roberto Castello Branco, as priced fell back 1.5% overnight to under $25/bbl.
    • Storage is also a problem and the U.S. is prohibited by antitrust law to join output cuts (those discussions are taking place on the state level in Texas).
    • Trump meanwhile meets with U.S. oil industry executives at the White House today and there's some speculation he could ask the industry to chip in with their own cuts (on the corporate level).
    • The agenda is additionally expected to include discussions on government support, tariffs on foreign oil, as well as other waivers to ease the pain.
    • Update: A virtual OPEC+ meeting will be held on Monday and will be open to producers even outside the group.
    • Update (6:00 a.m. ET): Crude has now turned around, up another 5% to $26.58/bbl.
    • We're only hours away from a federal program that's expected to dole out at least $350B in loans to small businesses struggling with the coronavirus pandemic, but many banks are still awaiting guidance and necessary requirements.
    • JPMorgan (NYSE:JPM) appeared to be the first lender to publicly say what others had whispered, emailing customers to say it "will most likely not be able to start accepting applications on Friday."
    • The Paycheck Protection program will offer up to $10M to help cover wages for employees, sick pay and eligible mortgage and other immediate debt payments. The loans are for two-year terms at a 1% fixed rate of interest, require no collateral and come with debt forgiveness options for eligible expenses.
    • Previously: SBA launches paycheck protection program tomorrow: coronavirus briefing (Apr. 02 2020)
    • United Airlines (NASDAQ:UAL) President Scott Kirby announces at employee town hall meeting that the company estimates that revenue is down $100M per day amid COVID-19 pandemic.
    • Shares +2.9%.
    • Caesars Entertainment (NASDAQ:CZR) furloughs ~90% of employees at its domestic, owned properties as well as its corporate staff as its properties were ordered closed.
    • CZR -0.16% after hours to $6.45.
    • Source: Press Release
    • Apple (NASDAQ:AAPL) told employees that its retail stores in the U.S. will remain closed and work-from-home procedures will stay in place until early May due to the Covid-19 pandemic, according to a memo viewed by Bloomberg.
    • Apple Senior Vice President of Retail and People Deirdre O’Brien said that "Apple is continuing to monitor local conditions for every Apple facility on a daily basis and that the company will make reopening decisions on the basis of thorough, thoughtful reviews and the latest guidance from local governments and public health experts.”
    • Prior: Apple reopening retail stores in April – Bloomberg
    • Dave & Buster's (NASDAQ:PLAY) is discussing a potential stake sale – maybe a significant one – with private-equity firms amid its pandemic-forced closures, Reuters reports.
    • One financing option the company is considering is private investment in public equity, according to the report – an option that is growing in popularity as companies face a cash crunch.
    • Dave & Buster's had disclosed in today's Q4 earnings that it was talking with outside debt and equity providers in order to address liquidity.
    • Meanwhile, KKR in January said it had taken a minority stake with an eye to discussing the business with management or the board. Dave & Buster's adopted a poison pill when KKR raised its stake to 8.3% this month.
    • Verizon (NYSE:VZ) is experiencing "enormous" growth on its network as the world adjusts to pandemic measures, its CEO tells Bloomberg.
    • In the crisis, "the network becomes extremely important infrastructure," Hans Vestberg says. "We're having enormous growth in the network, with 800M calls a day" – double the amount of Mother's Day, the biggest call day of the year. He also notes 9B messages, equal to New Year's Eve.
    • "At the same time, we've seen 100% growth of gaming in the network, 50% up on VPN, people working from home … but the network holds up very well … we have built a robust network over the years; we're investing a lot of money in our network," Vestberg says.
    • Mobile handoffs are down 29% in the U.S., pointing to a population that is moving around less and less (especially in New York Metro, where they're down 63% week over week).
    • Disney (NYSE:DIS) is set to furlough employees in response to the ongoing COVID-19 devastation.
    • "Over the last few weeks, mandatory decrees from government officials have shut down a majority of our businesses," the company says in a statement. "Disney employees have received full pay and benefits during this time, and we've committed to paying them through April 18, for a total of five additional weeks of compensation.
    • "However, with no clear indication of when we can restart our businesses, we're forced to make the difficult decision to take the next step and furlough employees whose jobs aren't necessary at this time," Disney says.
    • The furlough period begins April 19; workers will remain employees, and will receive full healthcare, with the cost of employee and company premiums paid by Disney.
    • Employees can also use available paid time off at the start of the furlough period, and once furloughed they can receive an extra $600/week in federal compensation through the stimulus bill and state unemployment, Disney says.
    • Cheesecake Factory (NASDAQ:CAKE) says it expects Q1 comparable restaurant sales to be down approximately 13%.
    • QTD comparable sales through February were up 3% before a March drop of approximately 46% as the pandemic led to store shutdowns and consumer anxiety.
    • The consensus comp sales estimate for Q1 isn't relevant because analysts didn't revise their estimates following the March escalation of stay-at-home orders.
    • Source: Press Release

  11. Respiratory virus shedding in exhaled breath and efficacy of face masks

  12. Phil / Post-

    When you get a chance I think you meant to say "Again, I want to stress that you should NOT try to fix every position…"

  13. An interesting discussion here in a panel online (very popular option nowadays) is considering the way the U.S is facing the CV crisis with a "preemptive strike" with the rescue package BEFORE the consequences, and saying that Trump acted in a clumsy way in the epidemic front but not in the economic.

    And that it will be decisive in the aftermath of this mess and the recession that is coming… different geography and different points of view.

  14. Trump administration ended pandemic early-warning program to detect coronaviruses
    The program had worked with labs in Wuhan, China, and around the world to detect deadly viruses that could jump from animals to humans.

    Read in Los Angeles Times:

  15. Thanks EMike – BIG difference!  

    Pre-emptive/Advill – After the last crisis, I think they learned their lesson.  Most of the economic damage that was done came from dithering about the bailouts.  Of course, there's still a big difference between promising a bailout and delivering one.  People can't get through to the banks and I know a lot of businesses that are hanging on by a thread and have only not laid off employees BECAUSE of all the promises made of loans, etc. but, so far, they are not materializing, nor is the $1,200 – pathetic though it is.  In fact, on the whole it's still a money grab for large corporations who get Trump's $500Bn slush fund (if they are friendly to him) while 50% of the money earmarked for individuals is simply boosting unemployment.


    Notice large corporations get grants, small corporations get loans!  

    The reality of the bailout could be yet another screw job from Trump – but let's be optimistic while it lasts..

    Warnings/QC – So many ways this guy failed us.  This is from 2018 from Bill Gates:

    “The president was kind enough to spend time with me, and one of the issues I brought up is this opportunity to build new tools that would help us deal with a pandemic,’’ said Gates, who has long warned of the possibility of a global disease outbreak.

    He added: “It is strange that this risk, that the world isn’t doing more. We talk about doing more when we have smaller epidemics like Ebola and Zika, but then the actual follow-up is pretty modest. We think the idea of spending what would be a tiny part of the budget to be ready for a pandemic makes sense.’’


    Sad when you have access to one of the World's smartest people and you just ignore him.  

    Also, Gates was just on the Daily Show for a good interview.

  16. Instead of putting Bill Gates in charge of the response, we have Mike Pence and Jarrod…  

  17. Phil – the chart for Hanesbrands (HBI) is missing, CLF was duplicated instead.

  18. Gosh everyone's a critic!  cheeky 


  19. Good thing it's Friday – I'm clearly slipping at the end of the week….

    • After a weak attempt to rise early in the session, the three major stock averages swing into the red, with utilities, communication services, and financials sectors sliding the most.
    • The slump comes after the U.S. economy lost 701K jobs in March, as data only starts to reflect the impact of the coronavirus pandemic.
    • The S&P 500 falls 1.4%, the Nasdaq slips 1.3%, and the Dow loses 1.5% in late morning trading in New York.
    • Treasurys rise, pushing 10-year yield down 2 basis points to 0.57%.
    • Crude oil climbs 6.1% to $26.87 per barrel; gold creeps up 0.3% to $1,631.00 per ounce.
    • U.S. Dollar Index gains 0.5% to 100.66.
    • None of the 11 S&P 500 industry sectors is in the green; utilities (-1.9%), communication services (-1.9%), and financials (-1.7%) lead the decline, while consumer staples (-0.2%) and materials (-0.2%) fall the least.
    • In overseas markets, equities are mixed. The Stoxx 600 falls 0.7%, U.K.'s FTSE 100 rises 0.9%, Germany's DAX slips 0.3%, and France's CAC 40 sinks 1.4%.
    • Investors are bidding down travel stocks once again as the realization of a long period for sluggish demand continues to settle in. Some of the selling pressure is now related to macroeconomic concerns on Q3 and Q4 even after the stay-at-home orders are lifted.
    • Casino decliners include Monarch Casino & Resorts (MCRI -11.4%), Eldorado Resorts (ERI -8.7%), Twin River Worldwide (TRWH -6.7%), Wynn Resorts (WYNN -9.0%), MGM Resorts (MGM -7.4%), Boyd Gaming (BYD -9.0%), Las Vegas Sands (LVS -6.7%), Melco Resorts & Entertainment (MLCO -4.5%) and Caesars Entertainment (CZR -2.2%). Macau and regional companies are both being hit on the negative vibe.
    • Hotel chains moving lower include Park Hotels & Resorts (PK -11.2%), InterContinental Hotels & Group (IHG -7.6%), Hilton Worldwide (HLT -5.4%), Hyatt Hotels (H -9.8%), Marriott International (MAR -7.3%), Wyndham Destinations (WYND -6.8%) and Stay America (STAY -7.3%).
    • General travel-related names Playa Hotels & Resorts (PLYA -17.0%), Vail Resorts (MTN -4.5%), Booking Holdings (BKNG -3.2%), Expedia (EXPE -2.6%) and Hilton Grand Vacations (HGV -8.0%) are also in decline.
    • In early 2009, Goldman Sachs (GS -2.2%) was the only Wall Street bank represented at a congressional hearing that didn't own a private jet. That's now changed.
    • Goldman CEO David Solomon ordered two top-of-the-line Gulfstream G700s for ~$75M each at the end of last year, Bloomberg reports, citing people with knowledge of the matter.
    • Solomon has already come under criticism for accepting a 20% pay raise in 2019 to $27.5M as the firm's stock price lagged its competitors for most of his 18-month tenure.
    • Goldman spokeswoman Leslie Shribman told Bloomberg that owning the jets will be be more cost effective than its current arrangements for senior executives to travel on private jets through a fractional ownership with NetJets.
    • JPMorgan Chase and Morgan Stanley have had their own jets for years.
    • Some in the firm see the jets as attention grabbers; traditionally, top Goldman bankers had access to rides on planes shared with others rather than own their own jets, because they didn't want to further tarnish a less-than-stellar image on Main Street.
    • And the extravagance, against the backdrop of soaring unemployment sparked by the coronavirus pandemic, can attract unwanted scrutiny and may re-ignite the same kind of anger that people director towards bankers after the 2008 financial crisis.
    • Needham cuts its estimates on several semiconductor stocks, particularly concerned about the coronavirus outbreak's impact on auto and industrial production.
    • The firm's cuts include NXP Semi (NXPI -5.3%), ON Semi (ON -2.4%), Nvidia (NVDA -4.9%), and Microchip (MCHP -2.4%).
    • Apple suppliers are dropping after Morgan Stanley bull Katy Huberty trimmed the tech giant's target, expecting weaker iPhone ASPs and demand.
    • Suppliers on the move include Qorvo (QRVO -4.4%) and Skyworks (SWKS -3.7%).
    • In Europe, financial services group Oddo included STMicroelectronics (STM -3.7%) in its prediction that the semiconductor market's growth is "set to collapse."
    • Oddo downgraded STM from Buy to Neutral.
    • The Philadelphia Semiconductor Index is down 2.7% compared to the tech sector's 1.9% drop.
    • The Trump administration has considered a mandated shutdown of oil production in the Gulf of Mexico due to the coronavirus spreading among workers, WSJ reports.
    • The proposal comes as Chevron (NYSE:CVX) and BP reported this week that some workers on Gulf oil platforms had tested positive for the virus; it is unclear if the proposal is still under serious consideration.
    • Shuttering Gulf platforms over health concerns also would have the effect of curtailing U.S. oil production amid a worldwide glut of oil that has sent prices plunging, and possibly assisting a potential truce in the Saudi-Russian oil price war.
    • But forced cuts would be controversial with many in the oil industry; Chevron, Exxon (NYSE:XOM) and others are opposed to oil market interventions, saying the free market is the best way to resolve oil imbalances.
    • If the U.S. shuts all Gulf of Mexico production, it would cut ~2M bbl/day from overall U.S. production of 13M bbl/day.
    • Crude oil prices are extending yesterday's sharp gains: WTI +5.6% to $26.75/bbl, Brent +8.9% to $32.62/bbl.
    • Bank of America (BAC -3.7%) says 500K of its 66M customers deferred loan payments due to the financial impact of COVID-19.
    • "We're working with our customers who need help, who are losing their jobs," BofA CEO Brian Moynihan told CNBC in an interview. "We have to preserve their ability to have cash flow.
    • Meanwhile, for small business owners, BofA is the first of the major U.S. banks to accept online applications for the government's $350B small business relief program.
    • The bank received 10,000 applications for loans within an hour of the portal going live at 9:00 AM ET, he said.
    • Moynihan said the bank is initially focusing on existing "borrowing" clients before turning to other small business customers, then new clients.
    • At mid-morning, JPMorgan Chase (JPM -3.0%), Wells Fargo (WFC -3.9%), and Citigroup (C -4.6%) weren't yet accepting applications for the paycheck protection program, CNBC reported.
    • ViacomCBS (VIAC -4.9%VIACA -5.9%) has completed a deal with beIN Media Group that gives ViacomCBS a 49% stake in film/TV studio Miramax.
    • That comes with a distribution deal for Paramount Pictures covering Miramax's film library, which has historically been weighted toward prestige pictures and award winners.
    • The ViacomCBS stake comes for a total committed investment of $375M – $150M at closing, and $45M annually over the next five years – and beIN will retain its 51% stake in Miramax.
    • Miramax leadership will continue in existing roles.
    • Fannie Mae (OTCQB:FNMA -2.7%) and Freddie Mac (OTCQB:FMCC -0.8%) have the enough resources to last through a lockdown of ~12 weeks, but would need funds from Congress or the Federal Reserve after that, Mark Calabria, director of the Federal Housing Finance Agency, told the Financial Times in an interview.
    • The two government-sponsored enterprises, which have been under FHFA's auspices since the 2008 financial crisis, back $10T of U.S. mortgages.
    • Almost 10M Americans have filed for unemployment benefits in the past two weeks and Congress passed a bill allowing homeowners to forego payments on federally-backed mortgages for up to a year.
    • ~300K borrowers have asked for forbearance on loans backed by Fannie and Freddie as of April 1, he said.
    • General Motors (GM -0.5%) and its joint ventures delivered more than 461,700 vehicles in China in Q1.
    • Cadillac deliveries topped 26,800 units and Buick delivered nearly 129,600 units.
    • Chevrolet deliveries surpassed 50,900 units.
    • Baojun sold nearly 82,200 vehicles and Wuling deliveries exceeded 172,200 units.
    • Source
    • The current slowdown in commercial aerospace may be a two-year problem, Raytheon Technologies (NYSE:RTX) CEO Greg Hayes tells CNBC.
    • The company has a "very solid balance sheet" with $7B cash on hand and $5B in backstop financing, as well as record $70B backlog on the military side, and "as we deliver that, we're going to generate strong cash flows even with the commercial aerospace business down," the CEO said.
    • Hayes also said Otis (NYSE:OTIS) and Carrier (NYSE:CARR) – which were spun off into new companies starting today – had "gangbusters" results in China last month as business returend, and said Otis is especially resilient in a recession environment
    • Analysts are positive on Tesla (TSLA +4.1%) after Q1 deliveries topped many of the coronavirus-adjusted estimates out there on the EV automaker.
    • "We believe production at 103K vehicles for the quarter despite coronavirus shutdowns bodes well for a rapid and profitable recovery for TSLA in advance of other automakers," writes Oppenheimer analyst Colin Rusch.
    • Rusch sees Tesla as positioned well to navigate through the pandemic uncertainty given its $2.3B equity raise, $6.3B cash balance at the end of 2019 and $3B in available credit lines. The firm keeps an Outperform rating in place.
    • Wedbush analyst Dan Ives also sees Tesla cruising along after its better-than-feared Q2 deliveries update. "While cash burn will be heightened in the near term due to this anomalous global situation, we believe the longer-term trends remain very healthy and $20 of annual earnings power down the road is achievable and still remains the target bogey to hit over the coming years for Musk & Co.," he notes.
    • The commentary on Shanghai from Tesla was positive, but some doubters are pointing to the lack of any financial numbers in the release.
    • Previously: Tesla rallies after deliveries top 88K (April 2)
    • Analysts are generally in with praise for RingCentral's (RNG +2.2%new video product offering amid the sharp increase in work-from-home services, but they don't consider it a big needle-mover in a competitive market.
    • RingCentral Video is a "viable lower-end replacement for Zoom (ZM +0.1%)," with a clear incentive to push it out now, bullish Rosenblatt says (it has a Buy rating and price target of $245, implying 9% upside). Meanwhile it looks "very capable" but "largely as expected," says Needham (which has a similar target of $240).
    • Morgan Stanley, meanwhile, says tools like this are doing well now but that's mainly built into valuation already. It's rated RingCentral Equal Weight and has a $190 target vs. current pricing of $224.71.
    • Sell-side analysts are overall Very Bullish on RingCentral, as are Seeking Alpha authors.
    • It has a Quant Rating of Neutral.
    • Kinder Morgan (KMI -2.8%) says it has suspended construction on part of the Permian Highway natural gas pipeline after a drilling accident sent a mixture of bentonite clay and water into drinking wells in Blanco County, Texas.
    • Nearby landowners say they were not notified about the accident by Kinder Morgan and only learned about the contamination when muddy water came out of their faucets this past Sunday.
    • The $2B, the 430-mile pipeline was designed to move 2B cf/day of natural gas from the Permian Basin to Kinder Morgan's facility at the Katy natural gas hub near Houston.
    • The project has faced stiff opposition from Hill Country landowners over environmental and safety concerns.

  20. Johnny Depp may have been unfairly accused as it turns out.  That one really bothered me as I've met him and he did seem like way too nice a guy to be beating his wife.  Of course, you never know for sure but this is how out of control these accusations can get.  


    Speaking of beer – liquor sales up about 40% and, since that's retail sales, it's way more profitable for STZ than when people drink in bars and restaurants.

    In the LTP, we can sell 5 STZ 2022 $75 puts for $9 ($4,500) to net in for $66 and that's pretty much free money.  If they go lower, I'd be happy to sell more puts and set up a bull spread but, for now, nothing wrong with selling puts as we cleared out some of the original round already.

  21. Image

    Dr. Fauci: “I don't understand” why all US states are not under stay-at-home orders.

    GREAT news this week regarding the Keystone XL Pipeline – moving forward with fantastic paying CONSTRUCTION jobs for hardworking Americans. Promises Made, Promises Kept! #MAGA

  22. Friggin Twitter – I wonder if they make it like that on purpose so you can't cut and paste it?  That last tweet was from Trump, of course.  

  23. A woman was arrested for failing to socially distance. She spent the next 36 hours packed in a cell with two dozen other women.

    LOL, NYTimes reporters are upset that new Editorial Guidlines are changing their headlines to be less critical of Team Trump in this time of crisis, so they are posting their original with the edits:





    This was our last free paper!  

  24. I am as anti Trump as anyone but I agree with this editorial decision for the most part looking at these before and after headlines.  If you say Trump is stupid for not doing X, it will never happen.  If you say wouldn't is be great if we could somehow accomplish X, there is a chance it might happen.

  25. Phil – What are your thoughts on GVA? Thanks.

  26. Comment content omitted because it is too long.

  27. Image

    Still liking my /NG longs (now at $1.58).


    "Landlords are in quite a bind. They have got reputational issues — no one wants to kick out struggling tenants; they have got their own debt covenants. As much as they would love to agree deals with tenants, they can’t."

    The accounting scandal at Luckin Coffee, a start-up that aimed to displace Starbucks in China, has caught out several of the world’s most powerful investors.  BlackRock and Singaporean sovereign wealth fund GIC were among those who invested in private funding rounds in the months before Luckin’s initial public offering last year. Louis Dreyfus, one of the world’s biggest traders of orange juice and coffee, and Melvin Capital and Centurium Capital were also backers. Shares in Luckin crashed more than 70 per cent on Thursday after it disclosed that an internal investigation had uncovered Rmb2.2bn ($310m) in fabricated transactions.

    We're tracking coronavirus growth rates in metro areas around the U.S. Explore the data here.


    : BREAKING: Ontario is forecasting between 3,000 to 15,000 deaths WITH public health measures. 100,000 deaths WITHOUT public health measures.

  28. Trying again…

    Headlines/Tangled – Don't you think maybe coddling him and not calling him out for his BS is what got us into this mess in the first place.  These reporters aren't bloggers, they are professionals living mostly in NYC where a crisis is raging and they want people to WAKE UP!   Watering down the headlines is not going to save any lives – Trump gets "handled" by everyone who is scared of upsetting his fragile ego.

    The smartest decision I made a week ago was to stop watching Trump’s daily propaganda briefings. I can get a recap of anything I need to know from reporting, and spare my mental health by not ingesting the lies and gaslighting. This is an act of self care.

    Jared Kushner is working tirelessly to figure out how this virus got into Harvard without help

    Walter Bloomberg




    That's what tanked the markets this morning.

    This is an interesting trend:


    Rightwards arrow

    lush fund for Wall Street was almost immediately available, very liquid, and practically comes with concierge service from Treasury. The $350b for small biz is slower, w/ more strings, & less liquid. Ease of capital is a baked-in inequality, too.

    Don't shoot until you see the whites of their Protein Coats!  


  29. Phil – where do you see the NG going to (this series)? Given the 8-10% contango month over month, I guess you are expecting a short term price increase?

  30. I think you can send the same message with a more sophisticated choice of words.   But I understand the other point of view.

  31. GVA/1020 – I would not have liked them except for the sell-off but nice and cheap now.  Good boring business but they'll take an ugly loss this year keeping it running and they only have Dec options so I would just take the Dec $10 ($6.30)/20 ($2.20) bull call spread for $4.10 and see how that goes before making any major commitment.  If they go up, you make a nice $5.90 and, if it goes down, THEN you can consider selling puts (The $7.50 puts are not $1 so not worth selling, $10s are $1.75) and rolling to longer-month $7.50 calls when they come out.

    /NG/Rn – Well the current contract is /NGK20 and it's good for 24 days and IF that doesn't work, THEN we roll to June which has 29 more days and it won't cost 8-10% by that time.  To me though, a lot of wells are shutting down and NG is mostly used to make electricity, which we're still using.  

    Natural Gas | EBF 301: Global Finance for the Earth, Energy, and ...

    Here you go Tangled:

    Wizard of Id for Dec 15, 2016, by Mick Mastroianni and Johnny Hart ...

  32. Wow, was my timing perfect or are some of you overpaying for /NG?  Be careful!  

  33. Ha!  I stand corrected.

  34. That /NG helped my day. Holy REITS! 

  35. Not ideal:

    Volume is very low today, 88M on SPY should finish around 120M is lowest since mid-Feb.  Might have to give the sell-off a pass as of course there are nervous people into the weekend and no buyers so down we go but it doesn't indicate a big mood change.  

    What's going to matter is how the virus count goes on the weekend.  US is up to 1,000 deaths/day and could be 2,000/day by the end of next week and then 10,000 more over Easter Weekend and 20,000 more (3,000 day) in the following week and, at some point, people might start thinking it's a problem….

    But at least the NY Times will have a nice headline so as not to make any waves…

  36. For Ati:

  37. Boy, that's the kind of movie I used to see with my daughters.  Today Jackie (18) tells me she loved this:

    Now I understand why people love Grandchildren so much – you can't possibly get enough time with your kids while they are young to be satisfied!  And that's from a stay-at-home Dad….

  38. So Trump comes out of the meeting with oil companies and announces agreement for biggest ever production cuts spiking oil prices, then the producers say that is not what was agreed tanking oil prices?

  39. Phil doesn't closing under 2500 get us the next leg down? or do we have to wait to see if Monday closes below it also? But then again if it's meaningless Monday do we have to wait til Tuesday? : )

    Serious question though — might be getting painted up as I type

  40. Stick!

  41. Yep, pretty amazing.    Now it's spiking up again so who knows what's true? 

    I think the fact that they are all talking means $20 is a good floor and that's all we were looking for anyway.  

    /NG still going so my exciting weekend is paid for…  cool

    What I would like it to hold 2,500 into the close (+35) as it would be nice to close the week above the strong retrace line.  Might happen in 10 mins.

    Either way, have a great weekend folks, 

    - Phil

    2,500/Coulter – It's a bad sign but, as I said above, the volume is low so we can't really tell until Tuesday (because Mondays are meaningless) – you get that…  

    That's why I leaned a bit more bearish in the morning adjustments though – not worth the weekend risk. 

  42. As of 3:21 pm

    Yesterday we were at 998,047 (+7.8%) around noon, 51,335 (+13.4%) dead and 208,630 (+8%) recovered.  US had 234,462 (+13.7%).  

    So, US is far worse than the rest of the world in it's spread (and don't forget we're bringing the average up a lot all by ourselves with 32,000 (41%) of the 78,000 new global cases) and US recoveries are 9,445 vs I think 5,000 deaths so also I'd say we're like a 3rd World country except here's a list of 100 third world countries doing a better job of handling this than we are!  

    Ignoring the US disaster, you still have to start seeing recoveries outpacing deaths and even without our 1,000, there were 7,000 (29%) more deaths globally against 17,000 recovered – that sucks!  

    So, US will have about 8,000 dead Monday and we'll cross 10,000 before Wednesday and we'll be about 400,000 infected by Wednesday – getting very close to overwhelming the Hospitals and the markets are closed on Friday (happy Easter!) and it's going to be very hard to go bullish into a weekend where 3 days later there will be 15,000 dead and well over 500,000 infected.

    All things we can consider over the weekend (unless you have somewhere else to be)…

    For homework, please talk to friends about how their businesses are holding up – kind of like a Beige Book thing – we should swap stories and try to figure out how bad the impact is so far.  

  43. If Elon Musk gets in trouble with the SEC for statements that are not true on deals, Should Trump be responsible for his oil production cut agreement that was not factual?

  44. Homework: construction company (unlisted) that I have a very small stake in (but large for me – 20% net worth) just today withdrew guidance and noted that forecasted earnings for full year 2020 would be lower due to customers shelving projects already awarded, and new projects being put on hold or delayed due to covid impacts to engineers and architects etc. Considering it's customers are typically government entities and Fortune 500 companies across all commercial, civil and industrial construction sectors – tells me capex is headed south in a big way. Note that construction is considered essential in most places so while there are some cost increases due to internal covid responses (disinfection, monitoring, support staff working from home), most of the impact is on the revenue side and mostly in commercial construction. Energy projects had already started drying up before guidance was originally issued so oil prices are a piece of this but small. No updated guidance was offered citing the rapidly changing measures being put in place in the US and Canada  

    A friend is an office manager for a large commercial developer/builder/property manager (unlisted also – in fact I think entirely privately owned) and they're continuing to work on existing projects but are in massive cost-cutting mode on the property management side. 

    Neither of these companies expect to incur lasting damage or for this to be in any way an existential threat. But I also need to note that they both have fortress balance sheets and ridiculous amounts of untapped credit. 

    Veterinarian friend – wellness exams, vaccinations and dental cleaning are way way down. People still bringing pets in for oncology and emergencies. Waiting rooms are closed. Pets get dropped off curbside where customers are met by techs in full garb. Pay by phone from the parking lot. 

    Pet grooming – her business has fallen off a cliff. Less than 25% typical revenue. Same procedure for drop off and pick up as the vet  

    And these last two are Arizona businesses where generally no one is taking this all that seriously, relative to NY for example. 

  45. Unless something magical happens over the next 4 weeks, we will have the worst Covid-19 statistics in the developed world! But I am sure Jared and others will be congratulated for doing such a great job!

    Not ready to go long or to go out!

  46. Coronavirus in Europe – The EU+UK have over 418,000 cases and almost 36,000 deaths. Population 512M or so. 

    US has 275,000 cases and 7,000 deaths. Population 330M or so. 

    EU = 70 deaths and 816 confirmed cases per million

    US = 21 deaths and 831 cases per million

  47. Yes, but Europe was about a month ahead of us so we’re catching up fast.  We were 220 per Million just over a week ago – that was the chart we looked at last weekend.  

  48. LA mayor on Bill Maher saying they are 14 days behind NY – that timing is very important when comparing virus stats.  

  49. Eric Garcetti – Look for him in Washington at some point.

    Gavin Newsome – This guy is sharp and gets sh*t done….

  50. The Killer Flu of 1918: A Philadelphia Story

  51. What’s Next in the War on Covid-19?

  52. Will Rent Get Paid? Shutdowns Hit REITs

  53. Image may contain: 2 people, possible text that says 'February 26 "Within a couple of weeks it will be down to close to zero. That's a pretty good job we've done" March 29 "If we have between 100,00 and 200,000 deaths, we've done a very good job"'

    How could we have possibly known what to do to prevent a pandemic?  

    Image may contain: 2 people, people standing and outdoor

    Image may contain: 1 person, dog

    Meanwhile, just to remember there's a World full of people worth saving:











    Minnesota & Vermont will classify grocery store employees as ER workers, qualifying for free childcare.


    Bosnia and Herzegovina. More discipline than 1st world countries


  54. There are some real heroes out there – the healthcare workers, grocery clerks, truck drivers, delivery people and more.

    And then we have that gross incompetence in display every day from this administration. They go so far as correcting website information that contradicts what Jared said. Reminiscent of the old picture editing under Stalin in Russia. And the denial of facts that are so easily proven, the constant misinformation about testing, treatment, numbers. Trying to blame an administration that has been out of power for 3.5 years. Not taking responsibility for anything. The belittling of some people who take their roles as leader seriously like mayors, governors. The lack of political courage. And so on… 

    I hope to be around in 30 years when history judges this crew!

  55. Homework:  Just to show you how widespread this virus and economic impact is, here's an excerpt from an email of a real estate agent in Cabo, Mexico:  Interesting note that hotels are just now closing. 

    Los Cabos is currently under a “Stay at Home” public health order, with only essential businesses permitted to continue operations. This order is in effect until April 30th.  The State government of Baja California Sur has mandated that all hotels in the area must close by tomorrow, Monday, April 6th.  As of this morning, Los Cabos has 20 confirmed cases of COVID-19, and 0 deaths.  The local community has heeded the warnings; beaches, private businesses, and nearly every non-essential operation has shut their doors.  While our offices are closed, I am still diligently working on inquiries for summer, fall, and even next winter.

  56. Interesting website:

  57. STJ/judgement of people in 30 years

    I pray it doesn't take more than THIS year! It is so pathetic as to be severely nauseating.

    I never, ever, thought or was taught in medical school that political crimes could be a cause of nausea!!