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Which Way Wednesday – Fed Minutes Edition

Image result for joker money burning gifWhat does the Fed think?  

Well, at least we'll find out what they WERE thinking on Sunday, March 15th (emergency meeting), just as the virus was starting to shut down the US Economy.  At the time, the Fed said: "The coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States. Global financial conditions have also been significantly affected. Available economic data show that the U.S. economy came into this challenging period on a strong footing. Information received since the Federal Open Market Committee met in January indicates that the labor market remained strong through February and economic activity rose at a moderate rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Although household spending rose at a moderate pace, business fixed investment and exports remained weak. More recently, the energy sector has come under stress" and they lowered rates 0.5% to essentially zero

Until the Nobel Prize Committee recognizes my "Microwave Oven Theory of Behavior" I won't be considered one of the World's leading Economorons but this group of Economorons seems particularly clueless, don't they?  I mean, it was an EMERGENCY meeting and the Fed had already promised $1.5Tn in QE funding on Friday, the 13th and the market went limit down on that news.  As I said that morning:

"Pouring more money on the fire is not going to make the virus go away and won't dampen the economic impact of the virus.  It's like giving everyone on the Titanic one Million Dollars and a bucket and claiming you "saved" them.  It's what people who aren't actually able to fix things do to buy time (and votes) but it accomplishes nothing in the end – we need to do better!

"So we will sit back today and see what kind of bounce we get from the Fed's action and whatever BS the Government spins out today but none of it matters – even if we move up over 10% to the Strong Bounce line because that then brings us into the weekend, where things could get worse or better – it's a coin flip.  So we'll have to maintain our hedges, no matter how great the rally is going…

"Nothing has really changed and what we really need is a well-coordinated response to the virus that restores long-term confidence – that is worth more than any rate cut but, for this Government – it's a very tall order indeed."  

It's almost cute that we only had 135,467 confirmed virus cases in the World less than a month ago and 4,981 deaths with 69,645 people having recovered.  Today, after the inept Government response, the US alone has 399,929 cases and, globally, we are at 1,446,557 cases (10x more), 83,149 deaths (15x more) and 307,982 recoveries (3.4x more).  These are not good trends when the change in new cases oupaces recoveries by 3 to 1 and the increase in deaths outpaces increasing recoveries by 4 to 1.  You don't need to be a World Class Economist to know these are BAD numbers and, if we don't get this thing under control quickly, they will be biblically bad!  

The fact that your'e reading this at home in your jammies illistrates how bad things are, right?  Is there any point at all at which we will demand new leadership or are we just going to ride it out with Team Trump to the bitter end?  Not making a political statement, just morbidly curious at how far people are willing to go before admitting they made a mistake…  A month from now, we could be at 10x the above numbers.  Do you think our Government is doing enough to prevent that from happening?  

They'd better be because a month after that, we'd be up to 30M infected in the US and 1M dead – that's the trajectory we're on and every day they drop the ball, Team Virus gets closer to that goal.  New York City alone has 4,000 deaths already (12,000 US) and that city has the best hospitals on the planet!  What if Las Vegas gets hit that hard – have you even seen a hospital in Las Vegas?  

Diary of a Hospital: A Refrigerated Truck Full of BodiesWhile I'm sure Las Vegas has a hospital somewhere off the strip, Nevada as a whole has 2.1 hospital beds per 1,000 citizens and New York City has 6.4 hospital beds per 1,000 people in Manhattan and they are completely overwhelmed and keeping the corpses in refrigerated trucks because the morgues are full.  Do you think the Government is doing enough to help?  People are actually dying – every single day – 4,000 dead in NYC is now worse than 9/11 but at least the Government responded to 9/11 and didn't pretend we had it under control when we clearly did not.

As I said on Monday the 16th, after the Fed's Emergency Rate Cut:

"So we have a complete crisis of confidence and that's why EVERYTHING is liquidating, including gold ($1,475), silver ($12.00 – a buy at this price!), copper, oil ($29.50 – a buy at this price), cattle (yes, cattle is down 45%), corn, soybeans, wheat – no asset is safe as people go to cash but the Fed Funds rates are now so low that you will soon have to PAY the banks to hold your money – yet another stealthy way Trump is going to tax the American people (and the tariffs are still on too).  

"The Dollar, as you can see, is down 1% today but up 3% in the past week, that's making it very expensive to convert your assets into CASH!!! but that's what people are doing at an alarming rate.  Why, because they have NO CONFIDENCE that the Government can fix the virus problem and, as I said to our Members over the weekend:

I’m just keeping an eye on progression but more importantly looking at the reaction in other countries who are willing to tank their economies to stop this virus indicates to me that this is much worse than our government is letting on.   Our government does not get it, they only care about saving the economy when it is the people who need to be saved.

I was wrong about oil, though that changed due to the Arab/Russia squabble but we just cashed in our 3rd set of Silver (/SI) longs for a very nice profit, which more than made up for it.  We took our money and ran on all our Futures longs in yesterday morning's rally because, as I noted in the PSW Morning Report, the bounce was a bit much and we expected a pullback. 

We adjusted the hedges in our Income Portfolio to get ready for the pullback and our timing was perfect and we finished the day at $172,985 thanks to the rally reversal – up another $17,837 thanks to our hedging adjustment.  We did similar adjustments in our Short-Term Portfolio as well, of course, and that was the final stage (#5) of our portfolio adjustment system.  

Usually we have to wait months for these lessons to play out but, in this crazy market, you can see the effects of our portfolio moves in a market reversal in less than a day!  

There is much more craziness ahead but, if you want to know how I can see things better than the Fed – it's because I stick to what's real in my analysis – the same as I do with stocks.  As I noted above, I don't care what the politicians SAY is happening and I'm 57 years old and an expert in my field and I know a lot of these "experts" that give their opinions on the virus, the economy, the markets, etc. and what I do know for sure is that they are generally no better at this than I am – so I'm not swayed by their opinions either (I don't ignore experts, I just don't overweigh their authority).  Generally, I look at the FACTS and form my own conclusions.

That's why, despite my concerns about the Government handling the actual virus, I decided we were oversold on Monday, March 23rd and we added VAC to our Long-Term Portfolio and, on Tuesday, the 24th, I titled the article: "Turnaround Tuesday – Yes, $3Tn is a LOT of Money!" because it is and maybe now it's $6Tn and soon it will be $8Tn – whatever it takes to keep the economy running while we're all shut in for the duration. 

You can read what I wrote about a bottom for the economy on that Tuesday but that Friday (27th), it was: "Fallback Friday – US Passes China to Become Most Infected Nation," where I said:

It is 24 hours later and the US has gone from 69,000 to 85,000 cases in the past 24 hours.  There will be well over 100,000 cases on Monday and 200,000 by the end of next week and, if we are still not getting things together and responding to desperate needs for protective gear in the hospitals and SERIOUS protocols to halt the spread of the virus, the only thing we'll have by Easter (4/12) is 500,000 cases of the virus – almost 10 times what we have on this curent(ish) map.

So we're right on the money 2 weeks later and I'm not saying this to brag – there are a lot of people spewing a lot of BS in the media and I'm just throwing my hat in the ring to remind you that I am a pretty reliable predictor of things to come – if you should be in need of such a thing.  Also, since we are on track with my prediction, then we're probably on track with my economic premise as well but I did warn that next week was going to be the tipping point and, if the Government has not gotten things under control by the time we hit 500,000 cases (this weekend), then they could spiral out of control and all economic bets will be off.

So stay safe and STAY HEDGED!  

 


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  1. Good morning, All!

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

    https://attendee.gotowebinar.com/register/8525206748578167307


  2. Good Morning.


  3. Thanks Phil.


  4. Sorry, super busy this morning! 

    But has anyone heard from Albo? He has not posted anything this week. A bit worried about him now.


  5. Yes thanks Phil for your clear eyed analysis pf our present condition. I was furious with the Supine court hijacking our Wisconsin electoral process and robbing the taxpayer's right to vote, but after reading your logic I am going to readjust my thinking. with a daughter and grandson in NYC I have personal concerns for their survival. One feels so helpless to effect any difference in this ongoing horror but you and everyone on this board is very appreciated.



  6. New York’s virus toll tops 9/11, while Wuhan ends lockdown


  7. Good morning!  

    Albo/StJ – Hope all is OK.  I know he said he was capitulating on M (unfortunately before they bounced) last week but no word since.  Yodi is also MIA this week – I do worry about people in Europe – things are pretty bad there – kind of like NYC in some places.  

    Ongoing horror/Pirate – It is amazing how people will adapt to almost anything.  I guess a lot of authors and filmmakers have explored that aspect of humanity but it really hits you when you and your family are suddenly thrown into a situation that upends your entire life.  To some extent, it's encouraging how well we manage to get through things.  I've mentioned before my family in the UK went through a lot in the war and my family in Europe going further back – well, Jews.  In fact, tonight is the night the Jews are supposed to celebrate their release from slavery around 2,500 years ago - which was then followed by 40 years wandering in the desert so I wouldn't say good times were just around the corner but still, we celebrate it – traditionally with a huge family gathering.  This year is going to be strange.  

    As a parent, I'm very pleased to see my children coping under stress.  They are both out on their own and both sheltering in place with a few friends (the young people's modification) and that's really all you can ever hope for as a parent – to have kids that are resilient enough to deal with whatever life throws at them.  

    We'll all get through this but, as I've said, my mother still jumps when she hears fireworks.  Hopefully our captivity will be brief and the scars will be light – both on our economy and our psyche…

    As JP Morgan said:  We're just returning assets to their rightful owners:

    Goats Roam Welsh Town As Coronavirus Lockdown Empties Its Streets

    Tourism In Japan Plagued By The Coronavirus Outbreak

    Coronavirus Pandemic Causes Climate Of Anxiety And Changing Routines In America


  8. Wow, what a net build!  20.9Mb:

    • EIA Petroleum Inventories: Crude +15.2M barrels vs. +9.3M consensus, +13.8M last week.
    • Gasoline +10.5M barrels vs. +4.3M consensus, +7.5M last week.
    • Distillates +0.5M barrels vs. +1.4M consensus, -2.2M last week
    • Supertanker freight rates have fallen after last week's highs as industry participants await the outcome of this week's OPEC+ meeting before making further bookings, Reuters reports.
    • Freight rates could drop further if the meeting results in a decision to sharply reduce production, thus reducing transport and storage demand for oil, but could jump again if no agreement is reached.
    • "From a freight standpoint… we would expect an immediate scale down of Saudi seaborne exports," Anoop Singh, head of tanker research in Asia at Braemar ACM Shipbroking, says, adding that the financial incentives for storing crude in ships also would be eliminated, further weighing on freight rates.
    • The threat of a big production cut combined with lower demand has hurt sentiment in the VLCC market this week, reportedly pushing freight rates along the Middle East-China route lower to ~$125K/day, down by nearly half from $235K/day last week.
    • Stocks reverse yesterday's late swoon to open higher, as the number of daily increases in coronavirus cases in the U.S. has fallen since Friday; Dow +1.3%, S&P and Nasdaq both +1%.
    • Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, says the U.S. death count related to the coronavirus is now lower than initially thought, and he anticipates a turnaround after this week; however, virus efforts should be intensified, he says.
    • European bourses trade lower, however, with Germany's DAX -0.3% and both U.K.'s FTSE and France's CAC -0.7%; in Asia, Japan's Nikkei +2.1%, Shanghai Composite -0.2%.
    • In the U.S., the energy sector (+2.6%) is the big early gainer, while the financial, industrial and tech groups all open ~1% higher.
    • U.S. 10-year Treasury yield up 2 bps to 0.76%.
    • WTI crude oil +4% to $24.5/bbl ahead of OPEC-led talks on potential production cuts.
    • Later today, the Federal Open Market Committee is set to publish the minutes from its March meeting.

    • AMC is 2.9% lower premarket (paring some more severe indications) after Loop Capital raises the specter of potential bankruptcy and downgrades to Sell from Hold.
    • The cinema chain was already over-levered going into the "100-year storm," the firm says, and now: "It either runs out of cash or requires a highly dilutive financing."
    • That comes in a revenue-free environment where theaters are expected to be closed for the entire second quarter, the firm says, and perhaps a soft reopening in Q3.
    • It's cut the price target to a Street-low $1, or 68% further downside.
    • JPMorgan keeps an Overweight rating on Wynn Resorts (WYNN +4.9%) after taking in the casino company's liquidity report and update on expected Q1 results (revenue -43% Y/Y).
    • The firm notes Wynn has ~$3.0B in liquidity at present, which gives it about 1.4 years of property opex/cash interest expense burn.
    • Shares of Wynn are up solidly today, but haven't traded over $70 since March 26 and over $100 since March 4.
    • Canadian telecoms are lower this morning, against a market in the green, as Veritas Investment Research cuts them to Sell.
    • The firm downgraded BCE (BCE -1.5%), Telus (TU -2.8%) and Rogers Communications (RCI -1.8%) to Sell all at once.
    • Looking at current pricing in Toronto, the firm's price target on BCE of C$55 implies 3.5% downside; its target for Telus of C$22 implies 2.4% downside; and its target for Rogers of C$60 suggests 3.2% downside.
    • JetBlue (JBLU +3.4%) says it will temporarily consolidate operations in five major metropolitan areas in the U.S. between April 15 and June 10.
    • The airline company says the revised schedules are aimed at reducing excess flying during a time of unprecedented low demand for air travel, while maintaining a critical level of service across the airline's network.
    • The cities where JetBlue will consolidate operations are Boston, Los Angeles, New York City, San Francisco and Washington D.C.
    • Source: Press Release
    • Trulieve (OTCPK:TCNNF), in its fourth quarter results for the period ended Dec. 31, earlier affirmed its outlook for FY2020 and is now outperforming some of its peers in the cannabis sector, despite worries surrounding Covid-19.
    • Hexo (NYSE:HEXO), which earlier filed to conduct a unit offering, is among the worst performers in the sector, down 29%, while Green Thumb (OTCQX:GTBIF) also lags. Cresco Labs (OTCQX:CRLBF) and Curaleaf (OTCPK:CURLF) are marginally higher.
    • Trulieve, which operates predominantly out of Florida, still expects FY20 revenue in the range of $380-400M vs $396M consensus, and adj. EBITDA in the range of $140-160M.
    • CEO Kim Rivers said in the statement that "despite recent developments surrounding COVID-19 and the uncertainty in the global economy, we see strong medical cannabis demand in our target markets and expect to continue maintaining our over 50% market share in Florida."
    • Noting that Brookfield Asset Management (BAM +1.3%) is prepared to weather the economic headwinds from the COVID-19 pandemic, Toronto-Dominion analyst Cherilyn Radbourne raises the stock to Action List Buy from Buy.
    • BAM and its listed affiliates have ~$12B of bank credit lines, which are virtually undrawn, and has historically capitalized on volatile periods, Radbourne writes.
    • The very bullish rating contrasts with the Neutral Quant rating and compares with the Sell-Side average rating of Bullish (2 Very Bullish, 5 Bullish, 4 Neutral.)
    • In the past six months, BAM has declined 6.9%, better than the financial sector median performance of -33%.
    • Nordstrom (JWN +6.4%) warns that while it is impossible to estimate the duration or negative financial impact of the COVID-19 pandemic on its business, it expects quarterly results to be adversely impacted in a significant manner. A long period of stores being closed could lead to a "distressed" financial situation.
    • The department store operator say most of its of workforce has been furloughed or assigned zero hours of work. Some corporate employees were furloughed for six weeks starting on April 5 and top execs are taking salary reductions.
    • SEC Form 8-K
    • With a ~10M Americans losing their jobs in two weeks, WalletHub looked at data from internal credit reports and Google search increases for three loan-related terms in the 50 states plus DC to determine the states where people most need loans.
    • Topping the list are South Carolina, District of Columbia, Virginia, Alabama, and New York.
    • The states where people needed loans the least are North Dakota, Wyoming, Montana, Vermont, and Utah.
    • The interest in getting a loan indicates more people in the state are struggling to make ends meet as COVID-19 disrupts industries.
    • "It also implies there may be more strain on the state's public assistance programs in the near future, and the state may experience a deeper recession than others will," the report says.
    • Winnebago (WGO +5.7%) intends to resume production at certain of locations as early as April 13.
    • The company will continue to evaluate the operating environment and guidance from the CDC, World Health Organization and state/federal governments as it makes its decisions.
    • Production is slated to be begin for Chris-Craft the week of April 13, for specialty vehicles the week of April 1, for Newmar the week of May 4, for Grand Design RV the week of May 4, for Winnebago Motorhomes the week of May 4 and for Winnebago Towables the week of May 18.
    • BTIG sticks with a Buy rating on Darden Restaurants (DRI +2.7%) on its conviction that it is one of the strongest operators in the industry with historical sales and restaurant margin performance that has consistently exceeded peers.
    • Analyst Peter Saleh on the near-term: "Given Darden's portfolio, the company has seen greater disparity with some concepts down (90%) in recent weeks though OliveGarden has been holding up respectably at (60%) amid strong off-premises growth. The company has shifted to survival mode like many others by reducing expenses, curtailing capital spending and increasing liquidity, so we believe Darden is better positioned than most to survive the current downturn, recover and ultimately gain market share when normalcy returns."
    • BTIG assigns a price target of $82 based off a 13.9 PE multiple to the FY21 EPS estimate of $5.89. The PT reps more than 35% upside potential.
    • Citing COVID-disruptions that have dampened da Vinci procedure growth, especially in mid-March onward, Intuitive Surgical (NASDAQ:ISRG) has withdrawn its 2020 financial and procedure guidance.
    • On a preliminary basis, global da Vinci procedures in Q1 were up ~10% from a year ago (procedures were up ~19% in Q4 2019). It shipped 237 da Vinci systems in the quarter, up 2 units from last year.
    • Management will host its Q1 earnings call on Thursday, April 16, after the close
    • Arconic (NYSE:ARNC) says it is cutting capital spending and operating costs to improve its financial profile by ~$200M to help mitigate the impact of Covid-19 on the company.
    • The company will target a 10% reduction in its salaried workforce; its worldwide workforce totaled 15,400 in 2019.
    • The CEO's salary and the board's annual cash retainer will be reduced by 30%, while other senior-level management will incur a 20% pay cut and all other salaried employees take a 10% salary reduction.
    • Arconic also says it is idling its Tennessee and New York facilities until demand returns, while other U.S.-based rolling and extrusion facilities will reduce production and rolling mill facilities in Europe, China and Russia will modify schedules.
    • Starbucks (NASDAQ:SBUX) issues a notice that it's closing seven stores in Japan due to the state of emergency declared in Tokyo and six other hard-hit Japanese prefectures.
    • The state of emergency in Japan isn't a full lockdown.
    • Starbucks Japan press release (in Japanese)

    Annaly Capital Management (NYSE:NLY+22% on Q1 update.

    New Residential Investment (NYSE:NRZ+9%.

    • Damaged by the actions taken to contain COVID-19,  world merchandise trade is poised to sink 13%-32% this year, the World Trade Organization projects.
    • "These numbers are ugly – there is no getting around that. But a rapid, vigorous rebound is possible," said WTO Director-General Roberto Azevêdo.
    • Nearly all regions will suffer double-digit declines in trade volumes this year, with exports from North America and Asia hit the hardest.
    • While a recovery is expected in 2021, the outcomes are largely dependent on the duration of the outbreak and the effectiveness of the policy responses, the organization said.
    • Under an optimistic scenario, trade could rebound 21% in 2021; under a pessimistic scenario, it would increase 24% but from a much lower base than the optimistic view.
    • "The extent of uncertainty is very high, and it is well within the realm of possibilities that for both 2020 and 2021 the outcomes could be above or below these outcomes," the report said.
    • McDonald's (NYSE:MCD) says the global outbreak of COVID-19 has significantly disrupted its business.
    • Currently, about 75% of the chain's restaurants around the world are operational, the majority of which have adapted to focus on drive-thru, delivery, and/or take-away.
    • January and February global comparable sales were strong in most countries, but beginning in mid-March, a significant decline was seen in many markets.
    • Global comparable sales were -3.4% for Q1 (-22% in March). U.S. comparable sales were up 0.1%. The consensus marks from analysts are no longer relevant due to the pandemic.
    • With regard to the balance sheet, MCD says it has taken important steps to preserve its financial flexibility, including suspending buybacks and increasing the cash position by raising $6.5B in the debt markets during Q1. McDonald's will reduce capital expenditures this year.
    • McDonald's pulls both its FY20 and long-term guidance.
    • MCD -0.50% premarket to $174.45.
    • Source: Press Release

  9. Yodi is not MIA, he is compulsory staying in a nice beach town campsite in South Spain, his problem is how to drive back to Germany this month or next.


    • Spirit AeroSystems (NYSE:SPR) says it is initiating a 21-day furlough of production workers and managers supporting Boeing programs in Kansas and Oklahoma, and is cutting pay for U.S.-based executives by 20%.
    • Boeing recently suspended production at its Washington state and South Carolina facilities.
    • Spirit's workforce reductions will affect 2,800 employees in Wichita, Kan., and 400 in Oklahoma., and the company also will implement a four-day work week for its salaried workforce at Wichita until further notice.
    • The company also will defer more than $120M of planned capital spending, reduce its cash dividend to $0.01/share and continue to suspend its stock buyback program, among other moves.
    • Spirit says as of April 2, it had a cash balance of $1.83B and debt of $3.04B, including a fully drawn $800M revolving credit facility.
    • SPR +6.2% pre-market.
    • Constellation Brands (NYSE:STZ) says it's taking additional steps to reduce its brewery production activities in Mexico due to the pandemic.
    • With an eye on demand, the company says it has shifted resources to accelerate production of high-volume products and built substantial product supply across its warehouse and distribution network in the U.S.
    • STZ +2.95% premarket to $154.00.
    • Source: Press Release
    • JPMorgan cuts Apple (NASDAQ:AAPL) from $350 to $335, citing "limited" customer engagement during the coronavirus pandemic.
    • Analyst Samik Chatterjee says the firm is "drastically cutting" Q2 sales estimates, which assumes that retail stores outside of China reopen by mid-May at the earliest.
    • The analyst sees a "a steady ramp in activity to normal sales levels by the end of C3Q."
    • Chatterjee expects a one to two-month delay for half of the 5G iPhone models planned for this fall.
    • Apple shares are up 1.3% pre-market to $262.77
    • Conagra Brands (NYSE:CAG) reaffirms its prior FY20 guidance in a rare instance of a retail sector company sticking with its original numbers through the pandemic.
    • The reason for the confidence from Conagra management is pretty easy to see. Conagra reports retail sales were up 31% Y/Y for the week ending on March 29. Sales of staples were up 55% during the week.
    • CAG +1.44% premarket to $30.89.
    • Sector watch: The development looks fairly positive for Campbell Soup (NYSE:CPB), General Mills (NYSE:GIS), Mondelez International (NASDAQ:MDLZ) and Kellogg (NYSE:K) as well.
    • A Zoom Video (NASDAQ:ZM) shareholder hit the company with a class action suit, alleging overstated privacy standards and misinformation about end-to-end encryption.
    • Shareholder Michael Drieu says in the filing that Zoom shares have plummeted since a recent wave of media reports discussing the company's security issues.
    • Zoom CEO Eric Yuan recently pledged to do better on the security front.
    • Today, Zoom announced the creation of a CISO Council and Advisory Board and hired former Facebook Chief Security Officer Alex Stamos as an outside advisor.
    • Related: NYC schoolsSpaceX, and NASA have banned the use of Zoom, citing security concerns.
    • Dick's Sporting Goods (NYSE:DKS) plans to furlough a "significant number" of workers at stores, distribution centers and corporate headquarters.
    • The furloughs will become effective on April 12.
    • Dick's is just the latest in a long string of retailers to push the furloughing lever with stores closed.
    • SEC Form 8-K
    • Shares of DKS are up 1.05% in premarket action to $24.10 vs. the 52-week trading range of $13.46 to $49.80.
    • Oppenheimer expects Denny's (NASDAQ:DENN) systemwide same-store sales to fall 55% in Q2 and remain negative for the rest of the year due to impact from the pandemic.
    • Yesterday, Denny's reported Q1 domestic system-wide same-store sales are expected to be reported down approximately 6% Y/Y. Same-store sales were up 2% through the end of February before plummeting 19% in March.
    • Despite the soft sales expectations for Q2 and beyond, Oppenheimer keeps an Outperform rating on Denny's and price target of $13 (55% upside potential).
    • The Denny's math: "Off our new estimates, DENN trades at a 9%+ FCF yield and 8x EV/EBITDA. While the near-term is full of uncertainty, we remain attracted to DENN's evolved story and believe the stock can recover nicely when virus fears fade. Our new price target represents a 6% FCF yield, a discount to our prior 5% target."
    • Shares of Denny's are up 3.80% in premarket action.
    • Michael Burry, the medical doctor-turned-investor of "The Big Short" fame, has been railing against the stay-at-home orders by most states, saying the massive economic contractions aren't necessary to contain the epidemic.
    • For steps that need to be taken, "nothing is more important now that loans to small and mid-sized businesses, and the U.S. Treasury, backed by the Fed, is providing that liquidity, which is vital," he told Bloomberg News via email.
    • Looking towards the recovery… "Economically speaking, we have to realize the policy-driven demand shock will be resolved by 2021."
    • "But Japan and the U.S. are putting more than 20% of the GDP into new fiscal stimulus, and easy money will be the rule."
    • That will bring back the stock and debt markets.
    • However, he sees inflation a risk as "countries will also look to bring supply chains home and many employees will need retraining with higher cost."
    • Piper raises Apple's (NASDAQ:AAPL) target from $260 to $300, citing the firm's biannual teen consumer survey.
    • The survey showed the iPhone and Apple Watch as the most popular smartphone and smartwatch, respectively.
    • Of those polled, 85% owned an iPhone, the highest percentage in the survey's history.
    • Strong AirPods interest shows the "already strong attach rate and solid purchase intent" in Apple's non-core products, says Piper.
    • The firm maintains an Overweight rating. Apple has a Bullish average Sell Side rating.
    • Apple shares are up 1.1% pre-market to $262.20.
    • Alpha Pro Tech, Ltd. (NYSEMKT:APT) pops 16% pre-market after disclosing orders for its proprietary N-95 Particulate Respirator face mask rose 62% from March 11, adding $14.1 million to its March 11 total.
    • APT has seen "exponential increases" in near-term and long-term purchase orders that extend beyond Q3 2020 and 1H 2021. Alpha Pro has also seen a "significant increase" in face shield products, with orders reaching $11.6 million since Jan. 27.
    • NOTE: APT has booked quarterly revenue in the range of $7-8 million for the past 7 quarters. 
    • Affirms expectations to ramp up its phase 1 face mask production by early May, and cautions that its JV in India to produce other disposable protective apparel is under a Government mandated shutdown and the co. will seek other measures.
    • APT shares have seen increased buying since the outbreak, rising 250% in the past 3 months.
    • Marathon Oil (NYSE:MRO) cuts its 2020 capital spending outlook for the second time in a month, now expecting to spend ~$1.3B, $600M below its estimate provided last month and $1.1B lower than its original $2.4B forecast.
    • The revised capex plan represents about half the company's spending from a year ago.
    • Marathon says it will suspend drilling activity in Northern Delaware, in addition to previously announced actions to fully suspend Resource Play Exploration and Oklahoma activity.
    • The revised plan includes "frac holidays" in the Bakken and Eagle Ford during Q2 before the company transitions to a lower and more continuous drilling and completion program during H2 2020 in both basins.
    • MRO +4.6% pre-market.
    • Cowen lowers targets for semiconductor companies, noting the "impossible to determine" downsides in the current macro environment.
    • Analyst Karl Ackerman says that revenue "may contract another 20%" and gross margins could fall 600 bps, based on data from past recessions.
    • Cuts: Seagate (NASDAQ:STX) from $65 to $50, Western Digital (NASDAQ:WDC) from $88 to $75, Qorvo (NASDAQ:QRVO) from $130 to $110, Skyworks Solutions (NASDAQ:SWKS) from $130 to $110.
    • Businesses seeking funds through the CARES Act's payroll protection plan are complaining that U.S. banks are prioritizing existing borrowers over ones that haven't already had lending relationships.
    • Bank of America (NYSE:BAC), the first major bank to start processing applications, was even sued over processing applications from existing clients.
    • Meanwhile, banks say they're forced to prioritize existing customers in order to obey federal rules intended to prevent funding terrorists or money launderers, known as KYC, or "know your customer" rules.
    • The Trump administration contends that the PPP loan process is working well with only a "few glitches."
    • Large and small banks are seeking relief from the KYC requirements, with no progress, so far, Greg Baer, president of the Bank Policy Institute, told Bloomberg News.
    • “Small businesses and policy makers should understand that a primary reason most banks will be extending these loans only to existing customers is because the anti-money laundering process is so onerous and time-consuming,” Baer said .
    • The initial steps of processing a new borrower's application can take as much as two hours of work, then verifying that the information is legit can take a month or longer.
    • Only 69% tenants paid any of their rent in April's first five days, according to the National Multifamily Housing Council. That compares to 81% in March's first week, and 82% in April's first week one year ago.
    • The actual situation for most (tenants and landlords) may be somewhat worse as the data is from a survey of 13.4M investment-grade rental apartments, i.e. likely to be occupied by higher-income tenants.
    • While this doesn't necessarily mean a wave of evictions (new laws around the country kind of prevent this), the delinquent rent is likely to move up the chain as landlords then struggle with mortgage payments, possibly setting off a wave of losses in CMBS-land.
    • Bernstein upgrades Twitter (NYSE:TWTR) from Underperform to Market Perform and raises the target by $2 to $29.
    • Analyst Mark Shmulik cites the "more reasonable" valuation after the recent pullback, but he calls this a "cautious upgrade," waiting to see if users stick around after the coronavirus pandemic clears.
    • Twitter shares are up 2.8% pre-market to $26.32.
    • The company has a Neutral average Sell Side rating.
    • Party City Holdco (NYSE:PRTY) has extended the temporary closures of its stores until further notice.
    • The company will temporarily reduce the base salary by 50% for Brad Weston, CEO, 30% for Todd Vogensen, Chief Financial Officer and 15-20% for the remainder of the executive leadership team, and the Board of Directors will forgo Q2 cash retainers.
    • The company has furloughed ~90% of store employees and 70% of wholesale, manufacturing and corporate employees.
    • Party City to significantly reduce FY2020 capital expenditure budget and also announces reduction in advertising, occupancy and other store operating expenses, as well as professional and consulting fees.
    • PRTY -3.24% premarket.
    • MBA Mortgage Applications
    • Composite Index: -17.9% vs. +15.3% (W/W).
    • Purchase Index: -12.0.% vs. -11.0%.
    • Refinance Index: -19.0% vs. +26.0%
    • 30 year mortgage rate at 3.49% vs. 3.47%.
    • The data is for the week ended April 3.
    • "There must be some kind of way outta here," said the economist to the task force, as governments around the world develop plans to get their economies back on track.
    • In the U.S., the effort appears to be dependent on testing far more Americans than has been possible to date, though planning is still in the early stages.
    • The economy would likely be reopened in phases, beginning in smaller cities and towns in states that haven't yet been heavily hit by the virus.
    • Until then, "there's too much confusion… I can't get no relief."

    "There must be some kind of way outta here

    Said the joker to the thief

    There's too much confusion

    I can't get no relief

    "No reason to get excited

    The thief he kindly spoke

    There are many here among us

    Who feel that life is but a joke

    But you and I, we've been through that

    And this is not our fate

    So let us stop talkin' falsely now

    The hour's getting late" – Hendrix 


  10. This was next on You Tube – pretty cool:


    • The French economy shrank the most since World War II in the first quarter, according to the Bank of France, and the outlook for the rest of the year is souring significantly.
    • The central bank estimates a 6% slump, hurt by a coronavirus-induced collapse in supply and demand.
    • Things are also looking grim in Germany. According to a joint forecast from 5 leading German institutes, Europe's largest economy probably shrank by 9.8% in the second quarter, its biggest decline since records began in 1970.
    • "I don't think it's going to be a rapid" bounce back, former Fed Chair Ben Bernanke told a virtual discussion hosted by the Brookings Institution.
    • While the economy could contract at a 30% annualized rate or more in Q2, he brushed aside comparisons to the 12-year-long Great Depression, saying, "if all goes well in a year or two we should be in a substantially better position."
    • Bernanke also sees interest rates at zero for a long time and said a case can be made to stop bank dividend payouts.
    • Google's (GOOGGOOGL) G Suite, which competes with Microsoft Office 365, had over 6M paying businesses in March, up from 5M in February 2019, according to vice president and general manager Javier Soltero.
    • The Google Meet video-calling service – included in G Suite – is even getting 25 times more use than it did in January.
    • Google will also provide premium features of Meet, like room for up to 250 participants, free of charge through the end of September.
    • First quarter earnings season kicks off in under a week, starting with the financial sector, with reports expected from JPMorgan and Wells Fargo on April 14.
    • This time around, "beats or "misses" will largely be irrelevant, because the results will be lowered by a tremendous increase in provisions for loan loss reserves, as well as considerations for a difficult economic cycle through 2021.
    • Some analysts haven't even updated their estimates since before Feb. 19, when the S&P 500 hit its last closing record, meaning consensus estimates are dulled by "stragglers."
    • "Companies are running out of cash," said John Chambers, the legendary tech CEO who turned Cisco (NASDAQ:CSCO) into a powerhouse, expecting the worst over the next nine months to year.
    • He sees the pandemic as a three-axis disrupter to the economy, healthcare system, and global supply chain, with the travel and airline industries recovering much more slowly than retail and financial institutions.
    • "Companies will either be destroyed or break away if they follow their North Star," he cautions, adding that "for many, it will be like a second chance to do an IPO."
    • During the interview with MarketWatch, Chambers also dropped names like Shake Shack (NYSE:SHAK), Zoom Video (NASDAQ:ZM) and Delta Air Lines (NYSE:DAL) as examples of large businesses that have taken the necessary steps to transform their operations in the digital age.
    • "We came close to a deal but we are not there yet," tweeted Eurogroup head Mario Centeno, following 16 hours of discussions over additional stimulus to help the bloc weather the coronavirus pandemic.
    • "I suspended the #Eurogroup & continue tomorrow, thu."
    • Reasons for the breakdown? A dispute reportedly took place between the Netherlands and Italy over the conditions attached to the potential use of credit lines from the European Stability Mechanism. Ministers also sparred over the wording of a joint statement.
    • In a bid to manage cost, Tesla (NASDAQ:TSLA) will furlough all hourly workers until May 4, as it expects to resume normal production at U.S. facilities on May 4.
    • 30% pay cut for Vice Presidents and above, 20% for Directors and 10% for everyone else for all the U.S. employees, while there will be comparable reductions for non U.S. employees. Pay cuts to stay effective until the end of Q2.
    • Prior: Tesla letting off contract workers at US car and battery plants
    • Source
    • Yesterday, Airbnb (AIRBannounced a $1B fundraising round led by Silver Lake and Sixth Street Partners, which included a combination of debt and equity.
    • Reuters sources say the deal includes $1B in five-year debt yielding 11% to 12% and warrants that convert into stock worth a bit over 1% of Airbnb's total equity.
    • The sources say the warrant exercise price values Airbnb at $18B, less than its lowered $26B internal valuation, and the $31B during its last funding round in 2017.
    • Airbnb reportedly wants to terminate a $1B credit facility, and the company is talking to banks about a new line of credit worth up to $750M or $1B.
    • Post updated to change title.
    • Hanesbrands (NYSE:HBI) says the actions it's taking to increase its cash position include limiting discretionary spending, reducing executive pay, managing inventory and leveraging the company's e-commerce business across the online channel.
    • As part of its pandemic response, Hanesbrands is also diversifying production to include face masks.
    • All 1.2K brand stores in the U.S., Europe and Australia are closed on a temporary basis. Retail store employees have transitioned to furloughed status with continuation of benefits. The company plans to call these full-time and part-time employees back to work as soon as stores can be reopened.
    • Source: Press Release
    • Boeing (NYSE:BA) says it will make two new software updates to the 737 MAX's flight control computer, as it works to win regulatory approval to resume flights after the jet's grounding.
    • Boeing says the software updates will address two issues: One involves hypothetical faults in the flight control computer microprocessor which potentially could lead to a loss of control, while the other issue could lead to disengagement of the autopilot feature during final approach.
    • The company does not expect the issues to affect its current forecast of a mid-year return to service for the 737 MAX.
    • The Federal Aviation Administration says in separate statement that it is in regular contact with Boeing, which must must demonstrate compliance with certification standards for the MAX to return to service.
    • Amazon (NASDAQ:AMZN) needs people and capacity to handle a surge in orders from its own customers, so the company will place on hold a new delivery service that competes with UPS and FedEx (NYSE:FDX), WSJ reports.
    • Amazon has told shippers the Amazon Shipping service – which has been rolled out in a few U.S. cities to deliver non-Amazon packages – will be paused starting in June, according to the report.
    • The company has said it wants to hire 100K warehouse workers and is currently focusing on shipping essential items during the coronavirus outbreak.
    • Walgreens Boots Alliance (NASDAQ:WBA) has entered into an agreement for a $500M revolving credit facility.
    • It comes via HSBC.
    • It's a 364-day senior unsecured facility that allows for borrowing U.S. dollars, pounds and euro.
    • Some 20%-25% of Western Canada's oil production could be shut in during Q2, Enbridge (NYSE:ENB) CEO Al Monaco said at a virtual investor conference held by Bank of Nova Scotia and Canadian Association of Petroleum Producers.
    • Western Canada produced ~4.5M bbl/day in March, and Monaco's outlook is in-line with a forecast cut of 1.1M-1.7M bbl/day from Royal Bank of Canada.
    • Cenovus Energy (NYSE:CVE) CEO Alex Pourbaix said the company has reduced output at its Christina Lake oil sands operation by 40K-45K bbl/day and can cut more if needed.
    • "We could go beyond that if we need to, and we could keep that up for many months," Pourbaix said, also reiterating support for further Alberta government curtailments to avoid a storage crunch.
    • But Imperial Oil (NYSEMKT:IMO) opposes any government-ordered curtailments, said Daniel Lyons, senior VP of finance and administration.
    • "Anything is on the table" for Imperial's future curtailments, and they would occur at its Kearl, Alberta mine, which can modulate production more easily than its Cold Lake in situ site, Lyons said
    • Disney (NYSE:DIS) is 1.5% lower postmarket, nearly reversing its gain today, after Wells Fargo downgraded it to Equal Weight, from Overweight.
    • It's forecasting zero park attendance for the second half of fiscal 2020, and perhaps 50% capacity in fiscal 2021: "We don't think Parks can get back to anything close to full capacity until testing and/or vaccines are far more ubiquitous."
    • As for the other parts of the broad storm facing the company: National broadcast and sports will see advertising CPM compression that will become "structural beyond a coronavirus recession"; and while the studio segment is taking a hit from closed movie theaters, the company is in better shape there because it will "ultimately break the theatrical window" and tap its premium video on demand capabilities.
    • The firm's Steven Cahall cut his price target to $107 from $155, now implying 6% upside.
    • Aimed at easing short-term financial pressures caused by the COVID-19 pandemic, UnitedHealth Group (NYSE:UNH) is accelerating payments and other financial support to front-line healthcare providers.
    • It has also suspended prior authorization requirements to a post-acute care setting and when a member transfers to a new provider.
    • Other measures include extending timely filing deadlines for Medicare Advantage, Medicaid and Individual and Group Market health plans and implementing provisional credentialing to make it easier for out-of-network licensed clinicians to participate in UNH networks.
    • TC Energy (NYSE:TRP) says it has started construction on the long-stalled Keystone XL oil sands pipeline across the U.S.-Canada border in northern Montana.
    • The state's Department of Environmental Quality issued the final state permits the company needed last Friday.
    • The company says ~100 workers will be involved in the pipeline's early stages, but it expects the number to rise into the thousands in the coming months as work proceeds.
    • Work on the pipeline is allowed under an exemption to Montana Gov. Bullock's stay-at-home directive, which is intended to prevent the spread of the coronavirus, but the directive does not address worker camps, which the governor says is a concern.
    • The 1,200-mile pipeline has been tied up for years in legal battles and several court challenges are still pending, including one due before a judge next week.
    • Geico (BRK.ABRK.B) is the next insurer to give back premiums to drivers as motorized transport tumbles during national shelter-in-place orders.
    • The company will return 15% of premiums for auto and motorcycle insurance customers for renewals April 8 to Oct. 7, as well as new policies bought during that period.
    • It expects the benefit will be around $2.5B in aggregate.
    • The company has said it was pausing cancellations of coverage due to nonpayment/expiration through at least April 30.
    • That follows a similar "payback" from Allstate (NYSE:ALL), which is handing back 15% of monthly premiums in April and May to most customers (a $600M total).
    • The American Petroleum Institute reportedly shows a build of 11.9M barrels of oil for the week ended April 3, its second consecutive increase after two straight declines.
    • Gasoline inventories reportedly show a build of 9.45M barrels, distillate inventories show a draw of 177K barrels, and Cushing inventories show a build of 6.8M barrels.
    • Data from the Energy Information Administration to be released tomorrow are expected to show crude inventories rose by 8.4M barrels last week, according to analysts polled by S&P Global Platts.
    • May WTI crude recently traded electronically at $24.36/bbl after settling at $23.63 today on Nymex.
    • CFRA drops General Motors (NYSE:GM) to a Sell rating from Hold on its view that shares don't reflect the upcoming huge drop in U.S. auto sales and that a dividend cut is inevitable.
    • Analyst Garrett Nelson says the 12-month price target on GM of $15 is based on 4.7X the 2021 EPS estimate. "We cut our adjusted EPS estimates by $0.80 to $2.20 for '20 and by $1.05 to $3.20 for '21," he notes on the new GM math.
    • CFRA's price target is about 30% below where GM closed at today and less than half the average sell-side PT of $36.28 (reflects a lot of pre-pandemic PTs).
    • Levi Strauss (NYSE:LEVI) reports revenue was up 5% in FQ1.
    • The company notes revenue was negatively impacted by unrest in Hong Kong and COVID-19 by two percentage points of growth.
    • Levi's gross margin rate increased 110 basis points reflecting the benefit of price increases, direct-to-consumer and international sales growth and a reduction in sales to the off-price channel.
    • Operating income was down 11% to $179M as higher SG&A expenses played in.
    • Levi Strauss ended the quarter (February 23) with a liquidity position of $1.8B. Guidance was held back by the company due to the uncertainty around COVID-19, but management did update that all company-operated doors and all but six franchisee doors have reopened in mainland China, including Levi's beacon store in Wuhan.
    • Shares of LEVI are up 3.66% in AH trading to $12.45.
    • Previously: Levi Strauss EPS beats by $0.05, beats on revenue (April 7)
    • Annaly Capital Management (NYSE:NLYestimates preliminary book value per common share of $7.40-$7.60 at March 31, 2020 vs. $9.66 at Dec. 31, 2019.
    • Estimates March quarter preliminary core earnings (excluding PAA) per common share of 20 cents-21 cents vs. 26 cents in the previous quarter; compare with average analyst estimate of 27 cents.
    • Estimates, on a preliminary basis, economic leverage ratio was reduced to between 6.8:1 and 6.9:1 at March 31, 2020 vs. 7.2:1 at Dec. 31, 2019.
    • Has cash and unencumbered agency MBS of $4.6B and total unencumbered assets of $7.2B, as of March 31, 2020. Repo operations have been orderly with no collateral or margining issues.

  11. Bernie is OUT!  


  12. It was the right thing to do….


  13. Phil /LB

    Trying to search recent posts for an idea of what to with my 17.50/22.50 BCS on LB  (2022) bought for $2.20 if anything…

    Thanks


  14. Thanks for the thought Phil still alive and well. As Advill said we are here at the campground like on an island. Nice beach town but very expencive to visit can cost you more the 1000 € if they catch you driving or walking arround. Only alowed to go out for food and that at the tob nearest place one person in the car only.

    But I agree with the authorities. If every one would stay in for 14 days we would be over this case. We will stay here as long as we can. As long no one get seek, than there is a problem. Hospital could be a death sentence.

    I think actually Europe should be over the hump soon.


  15. Well, my ski condo in Hunter, NY shut down.  I guess people from NYC were coming up there to get away and Hunter was like: GTFO!  

    At an Emergency Meeting of the Board of Managers of the Kaatskill Mountain Club (KMC) held at 10 A.M. on April 4, 2020, the key order of business was to address the impact of the global COVID-19 pandemic on the continued operation of the KMC and the threat posed by the COVID 19 virus to the health and safety of the Members, their guests, the public and the staff at the KMC.  The following MOTION was made by President Paul Slutzky and seconded by Board Member Ted Howes:

    WHEREAS THE BOARD OF MANAGERS HAS DETERMINED that due to: 1)  the impact of the global COVID 19 pandemic on the State of New York, Greene County, the Town of Hunter and the Village of Hunter; 2) the health and safety state of emergency that exists; 3) the Greene County Legislature’s strong advisory that lodging accommodations suspend or restrict operations in light of the COVID 19 emergency and that non-primary homeowners or renters be urged not to seek occupancy in second homes or rental properties in Greene County; 4) the objectives of social distancing and the closure of restaurants, bars, work out facilities/gyms, public pools, game rooms and other places of congregate activities; 5) the closing of Hunter Mountain buildings and facilities by Vail Resorts, to all public and staff; 6) the general threat of transmission of the COVID-19 virus to Members, their families, guests of Members, guests at the KMC, the public and the staff of the KMC; 7) the absence of a general hospital in Greene County and the nearest hospital being a community hospital located approximately 1 hour transport from the KMC; and 8) the obligation of the Board of Managers to act with the best interests of the Membership of the KMC ;

    THE BOARD OF MANAGERS THEREFORE RESOLVES that for the health, safety, and general welfare of the public, the Members, their families and guests, the Board of Managers would suspend operations and occupancy of the Kaatskill Mountain Club by all persons, except a minimum contingent of security and essential maintenance personnel, that this suspension of operations should last until April 30, 2020, and that on or before April 30, 2020, the Board of Managers will reconvene and evaluate whether a further extension of this suspension of operations should be made. 

    The MOTION was unanimously adopted by the members of the Board of Managers that were   present.  

    Not sure what happens to the people who live there full time though…  

    LB/Jeff – Sometimes you have to look really hard for a bottom, but we find one eventually.  As a general rule, you want to set a realistic expectation.  $22.50 by 2022 is not a big stretch but you know this year will suck so not likely to rocket back there.  They suspended dividends and laid off (sorry, "furloughed") staff so that's behind them now and earnings are late May, so we'll have more information by then.   The 2022 $17.50s are $6.20 and the $12.50s are $8 so, if you intend to stay in LB and you're not willing to pay $1.80 for $5 in position – why would you be in a stock you don't really believe in?   You can make the $1.80 back by selling 1/3 the Aug $22.50s for $1.80 so that's 0.60 of the $1.80 back on the first sale. 

    Hey Yodi!  Glad to see you are well.  I hope you are right, not sure Spain and Italy have things under control just yet but that is what it takes, widespread obedience to some very simple rules to give the virus nowhere to grow.  Not complicated – just requires strong leadership which, sadly, we do not have.  


  16. Good Afternoon

    Phil—what do you think of INSG—-thx


  17. Remind me later Savi because it's Webinar Time!  


  18. TOS question

     

    Is there a way to enter a "roll" trade — I get burned sometimes with these really wide spreads by trying to do one at a time.  I know you can enter a 'spread' price to buy or sell but I can't figure out a straight roll…  Like sell the LB 17.50 calls and buy the 12.50 simultaneously for a certain price … thanks


  19. Jeffl,

    TOS go to trade Open the option chain and click on spreads and than click on to vertical

    Now you can combined buy and sell a certain call or put.


  20. Huh – thanks Yodi  — i have used that to buy initial spreads but never realized it could work for rolling down


  21. Spreads – it's even easier to trade on the TOS mobil app. Open the option chain, click the Ask price of the long call and the Bid price of the short call and, if you want to do a PSW style trade you can click the Bid price of the short put, and then hit "Next", that takes you to the order editor and you adjust the quantities of each leg, confirm, send, and TOS will try to execute the whole position for whatever limit price you set.

    A roll is effectively a vertical where the shot end is your existing strike and the long end is your new strike.


  22. Hi Phil,

    What do you think our stocks will look like down the road with few dividends and no buybacks and zero interest rates negatively impacting growth. Do you think the Fed & Treasury bombs will overtake the economic downturn coming? Thanks


  23. I'll make a small bet on TVIX here. THere's wayyyyy too much optimism out there about where we stand. It's actually more sickening to me than the virus itself.


  24. Heard from Albo and he is OK!


  25. What spike oil did trump send another tweet


  26. oil demand is cratering yet oil stock are up. The new normal. It indeed IS different this time!

    https://finance.yahoo.com/news/u-crude-fuel-stocks-soar-162401061.html


  27. Don't read this if you're bullish. It'll rain on your bull parade:

    https://www.yahoo.com/news/coronavirus-economic-recovery-wont-only-144627780.html


  28. Phil—as a new hedge would you do sqqq or sds—-and what spreads—-thanks


  29. Thanks for the webinar Phil!


  30. Fed essentially said they'd do whatever it takes to prop up the markets so we're up 3.5%.

    That means the hedges we added yesterday are even cheaper so I strongly suggest making sure you are well-hedged as tomorrow is the last trading day of the week and then it's all about which side of 600,000 cases we're on on Monday.  600,000 is 1/500 citizens infected and it would mean about 800,000 next Weds, which would be up 100% from today so on a path to 1/250 and, as I said in my poke bowl example – once you get to 1/250 – pretty much every person in a metro area will get the virus without a total quarantine (no one goes outside without permission and testing).  

    Fauci and Trump were just doing a show saying we're turning a corner but it's all about the numbers now and they need to be slowing for us to believe them.  

    I find it hard to believe people won't sell into the weekend, 2,750 is a good short on /ES with tight stops above.

    INSG/Savi – They don't make money.  I can't understand why you'd want to play INSG at $800M with $200M in sales and a $40M loss when there are hundreds of blue chips you can play that make actual money for 10x earnings.  If you wanted a sale – you missed it by a mile.

    Roll/Jeff – TOS has a roll function but it doesn't execute well.  Try doing partial rolls each time until you  are all filled.  Just make good limit offers on each leg one at a time and, when one fills, work on the other and, when that fills, make offers on 2 more legs until one fills – then work on the other.  Wash, rinse, repeat. 

    Down the road/Scout – I think we'll go back to more realistic pricing where 15-20x earnings is normal for stocks and companies will have to focus on actually building their business instead of engineering profits.  I'm kind of looking forward to it.  I think the amount of money they are tossing into the market will lead to a lot of inflation down the road but that's like saying using all that water to put out a fire will make things wet.  You kind of have to.

    Trump/Bert – Had a whole special press conference filled with happy talk.

    Oil/BDC – OMG, the raw number on oil was shocking – about a 30Mb build from last week!  7Mb hidden in "Other Oils" and we're still exporting 3.3Mb/d (23Mb) – that's crazy!  Yet oil is up $2 today at $25.70.

    Hedge/Savi – I like SQQQ better as I think if the market legs further down, there's still a lot of hopium in the big tech plays that can crush out – like AMZN still trading almost 100x earnings.  

    You're welcome 1020.


  31. My TDam screen just changed to all chinese character headings for the columns

    then back again???? WTF?


  32. Phil I notice the short calls on the M dividend position are at 81% gain with 653 days to go.  At what level do you decide to close with hope of opening again at better price?  Or maybe would not get a better price because vix would be lower but then again it could get back over 50 too?


  33. Phil / Oil-

    Given the build are you still thinking $30 by summer?  I have a BCS on USO, would you keep it open for now?  Thx!


  34. Also my USO BCS is the July 4c/6c


  35. Phil / numbers – I'll listen to St/ Anthony but keep in mind he has to speak to us encoded as to not enrage The Indignant Child routine from the well, Indignant Child. Speaking of which, we can't listen to him at all given that he said we were "At 15 cases and going to zero" ON FEBRUARY 26TH. That's not that long ago. Funny how his koolaid guzzling supporters can't be bothered to actually evaluate a person based on what he says,, you know, out loud directly to them. Then he said the "Stock market looks like a buy to me" 5000 points ago. If you listened to Dump you would be broke, if you survived in the first place that is.


  36. coulter531 - 5G strikes again!


  37. Just a glitch in the spyware, Coulter, nothing to be alarmed about.  The party has already been notified and will fix it as soon as you are asleep.  devil

    M/Tangled – Not sure which portfolio you mean but usually we would take that off the table.

    USO/EMike – I think they'll come to a production agreement.  That's going to get things back on track.  $6 is a very good target for USO.  

    Fauci/BDC – He's the best we've got so hopefully he dances well enough to keep his job or this thing would be completely out of control.  




  38. too bad they forgot to write up this WH briefing using crayons. Or maybe they could've said Hitler and/or Kim Jong Un and/or Putin would want you to stop this from spreading.





  39. Trump Hates Having Too Many Voters


  40. Ifo Institute Germany Forecast For 2020



  41. European shares jump on hopes of coronavirus progress


  42. US-Russian crew blasts off for International Space Station


  43. UK shares rise on hopes of coronavirus crisis easing


  44. Phil, new member here. Thanks for all the guidance. Any chance you could summarize your top hedging ideas? Are you buying any long-term broader puts? Buying any calls in the inverse etfs? 
     


  45. Welcome Jby!  FYI, usually I don't get back to reading the previous day's chat once it's the morning so best to ask in the new post but I was just about to change this page and I caught your question – so it worked out this time (I'm like a shark – I keep moving forward).  

    Top hedging ideas are SDS and SQQQ, both were adjusted in yesterday's chat in our STP, which now looks like this:

    Keep in mind, the idea of hedges is to MITIGATE the damage in a sell-off – not to completely absolve it.  You also need to be very aware of how much money your longs will make vs how much your hedges will lose – that's why we have the STP (started at $100,000), which protects the LTP (started at $500,000).  As you can see, the STP is doing great and the LTP was down to $250,000 at one point but now recovered and we were wise enough to take profits in the STP – so winner/winner so far.  

    Also note that we hedge our hedges with long plays so we don't get completely killed in a rally – even within the STP.  

    BALANCE – that's what it's all about.  Check out our Portfolio tab at the top and you can go back to October, when we started our New Portfolios, and get an idea of how we managed them during this volatile period.  


  46. Thanks Phil! And thanks for the catch on my comment to yesterday's post.