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Terrific Tuesday – Testing S&P 3,000 – Again

No major incidents.

We had a lovely holiday weekend here in the US and nothing terrible happened as much of America re-opened for business so, without any obvious blood in the water – the markets are in celebration mode.   We won't know there's a problem with re-opening for another week as people don't tend to show Covid symptoms right away so, for now, we can act as if everything is fine – and maybe it is and, if it is, then $6.7Tn was certainly enough money to get us through a 2-month lockdown. 

If, on the other hand, these isolated spikes in new cases begins to spread, then the people getting all bullish now are idiots and betting into another disaster.  Of course, Corporate Profits have sucked so it's kind of hard to justify a trip back to the all-time, pre-virus highs but traders gotta trade and there's not really anyting else to put your money into in this zero-rate World other than good old US Equities.

That's fine with us as we have PLENTY of long positions.  In fact, we added more hedges to protect our Long-Term Positions, which already made a ridiculous amount of money on the re-rally and this morning the Futures are up another 2%, right at the 3,010 line on the S&P 500 (/ES), in fact.

In order to push the facts even further out into the Future, the Trump Administration released their testing strategy to Congress on Sunday and it was, of course, no strategy – instead pushing the responsibility of testing out to the individual states so they should have 50 different methods and 50 different ways of counting and 50 different panels wasting money on 50 redundant studies rather than have a Federally coordinated effort organized by the nation's top experts.  MAGA Baby!

The proposal also says existing testing capacity, if properly targeted, is sufficient to contain the outbreak. But epidemiologists say that amount is much lower than what many of them believe the country needs.  Acquiring tests involves reliance on national and international supply chains, which are challenging for many states to navigate.

EDITORIAL: CORONAVIRUS MEMES — Because laughter is contagious, too ...

“That’s our biggest question, that’s out biggest concern, is the robustness of the testing supply chain, which is critical,” Scott Becker of Public Health Laboraties said. “You can’t leave it up to the states to do it for themselves. This is not ‘The Hunger Games.’”

As it stands, US cases are increasing at a rate of 1.3% per day, which is 40% per month but actually worse as the number compounds daily so we'll see how it goes now that we've decided that's too low at 1.5M cases.  Deaths from Covid-19 are "only" increasing by 1% per day as we pass the 100,000 mark and that's "only" 30% per month so, at the moment, we'll be at 130,000 deaths by the end of June and 2M cases – assuming the numbers don't bump up from the re-openings.  

This is going to be a "watch and wait" week for us as we won't have any real facts until next week – which will culminate with next Friday's Non-Farm Payroll Report.  This week we have the 2nd Q1 GDP Report on Thursday – that will be BAD.  We have Fed speakers every day, including Powell on Friday (11) to give us some spin after we see Pesonal Income, Retail Inventories, Chicago PMI and Consumer Sentiment.   Until then – these are the headlines:

It is a LOT of money to throw at a temporary problem but it's nowhere near enough if the problem hasn't actually gone away so, please – be careful out there!

Image

 

 


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  1. May 26th, 2020 at 8:21 am | Permalink Ignore this user

    Nasdaq going back to all time highs because why not?


  2. May 26th, 2020 at 8:23 am | Permalink Ignore this user

    Good Twitter thread about cases around US states:

    https://twitter.com/TopherSpiro/status/1265007908707860487

    Look at the entire threar with some good charts. Some states are careening toward trouble it seems!


  3. May 26th, 2020 at 8:25 am | Permalink Ignore this user

    Human capital stock?


  4. May 26th, 2020 at 8:37 am | Permalink Ignore this user

    Good Morning.


  5. May 26th, 2020 at 9:13 am | Permalink Ignore this user

    Good Morning


  6. May 26th, 2020 at 9:19 am | Permalink Ignore this user

    "The proposal also says existing testing capacity, if properly targeted, is sufficient to contain the outbreak. But epidemiologists say that amount is much lower than what many of them believe the country needs."

    Arrrghhh, they're still not getting it. What we epidemiologists actually say is testing isn't worth diddly-squat without contact tracing. I've seen the proposals for that, and it apparently relies on direct conversations and questioning of the positive people – it's the same technique we used in the 50s, likely even earlier, for STD contact tracing. Compared with how Korea does it, well, there's no comparison.

    I admitted a few weeks ago to being shocked at the incompetence of the administration. Over the past week, though, I've found that the CDC also has become shockingly incompetent, conflating two totally different types of tests, and a number of other data problems that would not have happened years ago.


  7. May 26th, 2020 at 9:38 am | Permalink Ignore this user

    Good morning!

    Dollar is down 1% (as you can imagine from the Fed's balance sheet above) , that's giving everything a boost but likely to bottom at 99 which means 3,020 is a nice shorting line on /ES but with very tight stops above.  

    Big Chart – It's like a Monday now so doesn't count much but 2 days over the 200 dma for S&P and we'll have to take it seriously.  

    Songs too Funny to Take Seriously

    Twitter/StJ – Unless this whole virus was a hoax, I can't see how infection rates don't skyrocket after what I've seen in Florida this weekend.  Stores that say no masks are catering to maskless people – they are just overwhelmed by the vast majority no longer bothering with any of it.

    LOL on Hassett.  

    Tests/Snow – I agree the testing is worthless without tracing but it doesn't invalidate the need for more testing.


  8. May 26th, 2020 at 9:53 am | Permalink Ignore this user

    It's sad to see the talking heads on the boob tube (cnbs) start to question science….

     

    It's a bad idea for the non-scientists among us.  :(


  9. May 26th, 2020 at 10:09 am | Permalink Ignore this user

    Morning Phil. I sent an email to Greg several days ago regarding the income producing fund   and have not heard back. Can you verify you received it?  I resent it again this morning.  
    thx!


  10. May 26th, 2020 at 10:15 am | Permalink Ignore this user

  11. May 26th, 2020 at 10:15 am | Permalink Ignore this user

  12. May 26th, 2020 at 10:15 am | Permalink Ignore this user

  13. May 26th, 2020 at 10:16 am | Permalink Ignore this user

  14. May 26th, 2020 at 10:16 am | Permalink Ignore this user

  15. May 26th, 2020 at 10:16 am | Permalink Ignore this user

  16. May 26th, 2020 at 10:16 am | Permalink Ignore this user

  17. May 26th, 2020 at 10:16 am | Permalink Ignore this user

  18. May 26th, 2020 at 10:17 am | Permalink Ignore this user

  19. May 26th, 2020 at 10:17 am | Permalink Ignore this user

  20. May 26th, 2020 at 10:17 am | Permalink Ignore this user

  21. May 26th, 2020 at 10:17 am | Permalink Ignore this user

  22. May 26th, 2020 at 10:17 am | Permalink Ignore this user

  23. May 26th, 2020 at 10:18 am | Permalink Ignore this user

  24. May 26th, 2020 at 10:18 am | Permalink Ignore this user

  25. May 26th, 2020 at 10:18 am | Permalink Ignore this user

  26. May 26th, 2020 at 10:19 am | Permalink Ignore this user

  27. May 26th, 2020 at 10:19 am | Permalink Ignore this user

  28. May 26th, 2020 at 10:19 am | Permalink Ignore this user
    California church going to Supreme Court on in-person restrictions
    By: Ariane de Vogue, CNN Supreme Court Reporter


  29. May 26th, 2020 at 10:20 am | Permalink Ignore this user

  30. May 26th, 2020 at 10:20 am | Permalink Ignore this user
    WHO warns that 1st wave of pandemic not over, dampens hopes
    By: MENELAOS HADJICOSTIS and ELAINE KURTENBACH, Associated Press


  31. May 26th, 2020 at 10:20 am | Permalink Ignore this user

  32. May 26th, 2020 at 10:20 am | Permalink Ignore this user

  33. May 26th, 2020 at 10:25 am | Permalink Ignore this user

    Jeddah62 – I'm reply right now…


  34. May 26th, 2020 at 10:42 am | Permalink Ignore this user

    Thanks Greg!  Got your reply. 


  35. May 26th, 2020 at 11:08 am | Permalink Ignore this user

    Income Fund/Jeddah, All – That's my bad, my daughters were here and I ended up having a very busy weekend and I wasn't going to be solidly available for callbacks so I decided to wait until today to reach out to everyone and we can hopefully wrap things up this week but it's a go!


  36. May 26th, 2020 at 11:11 am | Permalink Ignore this user

    no amount of death and suffering is going to stop the Donald from fully reopening and going after his election the virus doesn't really affect the rich and powerful the same as everyone else. Rich people can afford n95 masks and shields and gloves and more importantly they can afford to stay away from other people and why should they care if poor people and small business fail its better for big business and someone will fill the deadworkers shoes if they want to eat. The economy will recover by November no matter what. Its going to happen for the same reasons they don't care about global warming or bankrupting America or anything basically except filling their pockets. They can move on after the raping and pillaging is over.  


  37. May 26th, 2020 at 11:15 am | Permalink Ignore this user
    Virus seen slashing South Africa's 2020 mining production 8%-10%
    • South Africa's mining production likely will decline by 8%-10% this year due to the COVID-19 pandemic, the CEO of the country's Minerals Council said during a virtual panel discussion between mining chiefs about the industry.
    • Harmony Gold (HMY -4.7%) CEO Peter Steenkamp said it would take a month for its mines to fully ramp up from June 1, when the country will allow all mines to operate again at full capacity.
    • Steenkamp said he expects Harmony's acquisition of AngloGold Ashanti's (AU -4.2%) Mponeng mine to be completed by the end of July, a month later than previously scheduled; nearly 200 workers at Mponeng have tested positive for COVID-19, caused the mine to shut down over the weekend.
    Studying COVID-19 behavior inside jetliners
    • Boeing (BA +4.5%) and Airbus (OTCPK:EADSY +16.4%) are researching the new coronavirus's behavior inside jetliners by tapping academics, engineers and medical experts who will examine new measures to prevent disease transmission on planes.
    • It's part of an industry push to curb risks that have brought air traffic to a near standstill as passengers seek more reliable protection from infection in flight.
    • Boeing has already expressed interest in a potential project at the University of Colorado, Boulder – that could determine the dosage of UV light needed to disinfect airplanes between flights – while Airbus is exploring self-cleaning materials, a disinfectant that can last for five days and touchless devices in lavatories.
    Brick-and-mortar retail starts to scrap back
    • Retail stocks are outperforming as more stores open and reports on traffic indicate at least some moderate activity with shoppers amid social distancing rules.
    • Notable gainers include specialty names like At Home Group (HOME +9.8%), Container Store (TCS +10.9%), Lands' End (LE +10.6%), Dick's Sporting Goods (DKS +6.4%), Michaels (MIK +7.5%), Williams-Sonoma (WSM +3.2%) and Bed Bath & Beyond (BBBY +6.0%) – as well as the mall dwellers like Gap (GPS +9.0%), Macy's (M +9.8%), Kohl's (KSS +8.8%), L Brands (LB +6.9%), Tilly's (TLYS +5.7%) and Chico's (CHS +7.3%).
    • Some internet retail stocks like Etsy (ETSY -2.2%), Chewy (CHWY -0.3%), Shopify (SHOP -5.2%), Amazon (AMZN +0.0%) and Overstock.com (OSTK -0.3%) are underperforming a bit with brick-and-mortar back in focus. Of course, those names have been in rally mode during most of the pandemic.
    Dallas Fed manufacturing tally improves notably from last month
    Luckin Coffee bounces off its low
    • Luckin Coffee (NASDAQ:LK) is up 66.55% to $2.35 on volume of over 90M shares.
    • There hasn't been anything new from the company and it is still heading for a hearing to determine if it will continue to trade on the Nasdaq.
    • Shares of Luckin traded as low as $1.33 last week.
    Casinos begin their slow roll to recovery
    • Casino stocks are higher on the day as the news out of Hong Kong looks incrementally better and U.S. casinos report the return of some traffic at opened locations despite social distancing rules in place and many poker rooms/slot machine areas closed.
    • Today's gains could be tied to the forward progress of opening more parts of the U.S. as much as the actual light revenue tallies so far in the early stages of casino openings. Most notably, Nevada's governor set June 4 as the target casino opening date in that state.
    • Gainers today in morning action include Melco Resorts & Entertainment (MLCO +7.2%), Red Rock Resorts (RRR +6.3%), Twin River Worldwide (TRWH +6.8%), Eldorado Resorts (ERI +4.8%), Golden Entertainment (GDEN +4.9%), Wynn Resorts (WYNN +8.5%), MGM Resorts (MGM +7.3%), Las Vegas Sands (LVS +6.2%), Boyd Gaming (BYD +5.6%), Caesars Entertainment (CZR +2.7%) and Century Casinos (CNTY +5.3%).
    • Gambling-associated stocks like Scientific Games (SGMS +5.5%), PlayAGS (AGS +3.8%), International Game Technology (IGT +5.1%) and Everi Holdings (EVRI +6.5%) are also higher on the day.
    Barrick settles Tanzania land claims disputes
    • Barrick Gold (GOLD -4.7%) says it has settled 90% of the land disputes associated with its Tanzania-based North Mara operation, and has paid the first tranche of the $300M settlement reached with the Tanzanian government to resolve the disputes it inherited from former subsidiary Acacia Mining.
    • Barrick says the moves mean it will finally be able to ship gold concentrate containers out of Tanzania, which have been sitting at Dar es Salaam Port for three years because of the disputes.
    • In its framework agreement with the government, Barrick says the shipping of ~1,600 containers of concentrate resumed in April and the first $100M received from the sale has gone to the government, to be followed by five yearly payments of $40M each.
    New home sales beat by a mile in April
    • April New Home Sales: +0.6% to 623K vs. 490K expected and 619K (revised from 741K).
    • The big revision downward in March means sales in April (on a seasonally-adjusted annualized rate) rose on a month-over-month basis.
    • The builder ETFs (ITB +4.4%), (XHB +4.0%) are outperforming the broader markets today.
    • Individual players: Toll Brothers (TOL +5.8%), Lennar (LEN +5.0%), Pulte (PHM +5.1%), NVR (NVR +3.9%), D.R. Horton (DHI +4.7%)
    Consumer confidence edges higher in May
    • May Consumer Confidence: 86.6 vs. 88.3 consensus; 85.7 prior (revised).
    • Present situation index: 71.1 vs. 73.0 prior.
    • The expectations index (six months ahead) actually rose: 96.9 vs. 94.3 prior.
    • The proportion expecting more jobs in the months ahead declined from 41.2% to 39.3%, however those anticipating fewer jobs in the months ahead also decreased, from 21.2% to 20.2%.

    Northern Dynasty says Pebble Project passes key milestone
    • Northern Dynasty Minerals (NAK +0.8%) says the U.S. Army Corp of Engineers confirmed a preferred development alternative for the company's proposed Pebble Project in Alaska.
    • The Army Corps selected an all land-based transport plan to connect the mine in Alaska's Bristol Bay to a port site on Cook Inlet via an ~85-mile road north of Lake Iliamna – avoiding the need for ferry transport across the lake – as the preferred development scenario for the project.
    • The Army Crops' Alaska District Regulatory Division Chief David Hobbie calls the plan the "least environmentally damaging practicable alternative" for the proposed mine.

    That's a big one!


  38. May 26th, 2020 at 11:15 am | Permalink Ignore this user

  39. May 26th, 2020 at 11:16 am | Permalink Ignore this user

  40. May 26th, 2020 at 11:16 am | Permalink Ignore this user

  41. May 26th, 2020 at 11:16 am | Permalink Ignore this user

  42. May 26th, 2020 at 11:16 am | Permalink Ignore this user

  43. May 26th, 2020 at 11:16 am | Permalink Ignore this user
    Reopening Is Not Business As Usual
    By: Danielle Park, CFA


  44. May 26th, 2020 at 11:17 am | Permalink Ignore this user

  45. May 26th, 2020 at 11:17 am | Permalink Ignore this user

  46. May 26th, 2020 at 11:20 am | Permalink Ignore this user

    Phil the original hedge fund has so far had insufficient capital to make much profit as of last report.  Is there a reason why the income fund will not have similar problems?


  47. May 26th, 2020 at 11:21 am | Permalink Ignore this user
    Southwest +9% as UBS points to strong balance sheet
    • UBS upgrades Southwest Airlines (NYSE:LUV) to a Buy rating from Neutral and hikes its 12-month price target to $41 from $37.
    • Analyst Myles Walton thinks Southwest's balance sheet restoration and fundamental valuation is the clearest among the major airlines.
    • "Unlike many other airlines, the balance sheet position of LUV is remarkably clean (near-net cash balance sheet), which provides protection from any step backward in demand under another wave of COVID-19… We believe that there is a risk that by getting specific federal assistance there will be a heightened regulatory risk on US airline business models into 2021 and beyond; however, assuming regulations are evenly applied, LUV could be a net beneficiary on any 'stress testing' of financials."
    • UBS notes that its price target on Southwest is based on a 7X earnings multiple and a 12X price-to-earnings multiple, which are both in-line to slightly ahead of historical multiples.
    • Shares of LUV are up 8.69% premarket to $31.38.

    Novavax (NASDAQ:NVAX) +15% on starting clinical trial of COVID-19 vaccine.

    Spirit Airlines (NYSE:SAVE) +11%.

    Carnival Corporation & Plc (NYSE:CUK) +12% on enhancing 'Book With Confidence' cancellation policy for sailings through 2021, includes new best fare guarantee.

    Cree +6.3% as JMP sees 43% upside
    • Cree (NASDAQ:CREE) is up 6.3% premarket after an upgrade to Market Outperform by JMP Securities.
    • Analyst Joseph Osha is "increasingly confident" the June 2020 quarter marks the bottom for the company, though he's not looking to a quick recovery – with quarterly revenue run-rate for Wolfspeed returning to 2019 levels in early 2021.
    • Factors that caused Wolfspeed to peak in the March 2019 quarter are still in place, including the end of its Huawei relationship and decelerating China-centered EV demand.
    • But Cree has been saying it's trending above recent expectations that it can run between 45-65% of pre-pandemic capacity.
    • His price target is $74, implying 43% upside
    Alibaba seen outperforming as rapid COVID-19 recovery extends
    • Oppenheimer stays bullish on Alibaba (NYSE:BABA) as it sees the rapid COVID-19 recovery driving outperformance in the period ahead.
    • "BABA's China retail business has experienced strong recovery since March. Quarter-to-date China retail marketplace GMV growth already resumed to 24% y/y, similar to Dec. quarter. Moreover, May accelerated vs. April, with Tmall's FMCG GMV growing +40% vs. +25% in March quarter. In addition, merchant on-boarding also accelerated."
    • Oppenheimer boosts its FQ1 revenue estimate on Outperform-rated BABA by 3% due to the rapid recovery post-COVID and increases its EBITDA estimate by 2%. The 12-month to 18-month price target is $260.00 vs. the average sell-side PT of $258.80.
    • Shares of BABA are up 2.75% premarket to $205.16.

  48. May 26th, 2020 at 11:26 am | Permalink Ignore this user

    Hedge Fund/Tangled – Actually it's been doing great since the crash so there will be very nice profits and it's only May – still the rest of the year to play.  The Income Fund is following a much more conservative Butterfly Strategy so it's an apples and oranges comparison though.  

    Speaking of profits, /ES failing to hold 3,010 so I'm still in with 2 short and the Nas has lost half the gains already so, as long as it's below 9,500 – I feel good about the /ES shorts.  Dow (/YM) still up so that's the fresh horse to short below the 25,050 line (with tight stops above).


  49. May 26th, 2020 at 11:53 am | Permalink Ignore this user

    MRK chief says 12 to 18 month timeframe "very aggressive" for vac.

    WFC bottomed on the 14th along with the Dow, I think having the financials crash wasnt going to be allowed to happen.


  50. May 26th, 2020 at 12:06 pm | Permalink Ignore this user
    S&P Corelogic HPI beats consensus
    • March S&P Corelogic Case-Shiller HPI:
    • HPI Composite – 20 (S.A.): +0.5% M/M vs. +0.3% consensus, +0.5% prior (revised).
    • HPI Composite – 20 (N.S.A.): +1.1% M/M, +0.5% prior.
    • HPI Composite – 20 (N.S.A.): +3.9% Y/Y (N.S.A) vs. +3.4% consensus, +3.5% prior (unrevised).
    FHFA housing price barely increased in April
    Theme park stocks rally on reopening enthusiasm
    • Theme parks stocks break higher as a healthy portion of the U.S. appears to be ready to take up summertime activities.
    • Six Flags Entertainment (NYSE:SIX) says it will reopen its theme park in Oklahoma City on June 5 in preview mode and will gradually increase attendance using its new reservation system.
    • Wedbush analyst James Hardiman has a breakdown on the expected reopening pace for operators. "SEAS appears to be in the best position with regard to reopening given its disproportionate exposure to the states of Florida and Texas (which we estimate to be 63% of attendance combined), offset somewhat by its California mix (~17%). Six Flags has the second largest exposure to what we consider to be the 'first wave' states, but also the largest exposure to the 'third wave' states. Finally, we estimate that Cedar Fair has just 9% exposure to the 'first wave states' and is therefore less likely to see meaningful revenues return until later in the third quarter," he notes.
    • SeaWorld Entertainment (NYSE:SEAS) is up 7.05% in premarket action, while Six Flags is 7.77% higher and Cedar Fair (NYSE:FUN) is 4.55% higher.

    Fiat +8% after landing financing
    • Fiat Chrysler Automobiles (NYSE:FCAU) breaks higher after Bloomberg reports that Italian bank Intesa Sanpaolo is expected to give a preliminary approval at a board meeting for a state-backed $6.9B three-year loan.
    • Sources indicate that FCA's Italian unit will need to complete an approval process with Italy's export credit agency SACE and then obtain a final authorisation and conditions for the loan from the Treasury.
    • Shares of Fiat are up 7.65% premarket to $8.75.
    Macy's +4% after pulling off financing move
    • Macy's (NYSE:M) announces a new $1.1B senior note offering due in 2025.
    • The company says it intends to use the proceeds from the offering and cash on hand to repay all amounts outstanding under its revolving credit facility.
    • M +3.85% premarket to $5.41.
    • Source: Press Release

    Investors warm back up to airline stocks
    • Airline stocks are outperforming after the three-day weekend as U.S. booking trends continue to improve off their historic lows.
    • Also in the mix, several European nations have set plans to lift travels bans in June on a nation-by-nation basis.
    • On Wall Street, UBS came in strong this morning with an upgrade on Southwest Airlines to a Buy rating and fresh price target of $41 to rep +40% upside potential.
    • Premarket gainers include American Airlines Group (NASDAQ:AAL) +5.88%, Delta Air Lines (NYSE:DAL) +6.24%, United Airlines (NASDAQ:UAL) +7.44%, Southwest Airlines (NYSE:LUV) +7.55% and JetBlue (NASDAQ:JBLU) +7.79%.
    Take-Two upgraded at BMO as video games thrive in stay-at-home times
    • Take-Two Interactive (NASDAQ:TTWO) +1.4% pre-market after BMO upgrades shares to Outperform from Market Perform with a $170 price target, up from $120, as analyst Gerrick Johnson foresees continued benefits from the stay-at-home environment for the video game industry, which he says is defensive in times of economic uncertainty.
    • Johnson is encouraged by the Q4 strength of Take-Two's core franchises and the company's "strategy to seize opportunities" in new platforms, distribution models and game genres, which he believes should provide more "stable, growing earnings and cash flow over time."
    • TTWO's average Wall Street analyst rating and Seeking Alpha Authors' Rating are both Bullish, while its Quant Rating is Neutral.
    IRobot +4% after JPMorgan leaves bear camp
    • JPMorgan raises iRobot (NASDAQ:IRBT) to a Neutral rating from Underweight after identifying several mild positive developments.
    • "The company has recently entered into a technology licensing deal with Ecovacs that we believe could help fill some holes in the product lineup in certain geographies. Recent data from Google Trends suggests positive activity around Mother’s Day and data from Apptopia suggests continued growth in downloads and daily average use of the iRobot Home app," notes analyst Mark Strouse and team.
    • JP leaves near-term estimates unchanged on IRBT and establishes a 2021 year-end price target of $65.
    • Shares of IRBT are up 4.33% premarket to $76.25.

    May 13th, 2020 at 4:00 pm | (Unlocked) | Permalink 

    IRBT – Howard Stern says he has 3 – that's good advertising.  $70,000 spread that's at the money at net $34,150 means we can expect to make $35,850 (105%) from here.  Still, I think it's gotten ahead of itself and we have so much to make that we can afford to sell some calls.  The July $65 calls are $4 so selling 4 of those for $1,600 is a nice way to pull in some income while we wait.  

    IRBT Short Call 2022 21-JAN 65.00 CALL [IRBT @ $76.55 $3.45] -20 10/22/2019 (605) $-20,400 $10.20 $15.35 $-6.20     $25.55 - $-30,700 -150.5% $-51,100
    IRBT Short Put 2022 21-JAN 40.00 PUT [IRBT @ $76.55 $3.45] -10 10/23/2019 (605) $-13,000 $13.00 $-7.35     $5.65 - $7,350 56.5% $-5,650
    IRBT Long Call 2022 21-JAN 30.00 CALL [IRBT @ $76.55 $3.45] 20 3/23/2020 (605) $34,000 $17.00 $30.95     $47.95 - $61,900 182.1% $95,900

    Fortunately, we only sold 4/20 so easy to roll.  Since we know we're going to do a 2x roll, we can look at selling 4 of the ones we are going to roll to before we buy back the other 4.  That way we might get lucky and catch a pullback.  

    In the Earnings Portfolio, the July $65s are now $13 so $5,200 and so we look for 8 of what is $5,200?  Turns out the Sept $80s are $8 so those will do the trick and we can sell 4 of those for $3,200 and put a stop on the July $65s at $15 ($6,000) so, if we stop out of those we sell 4 more of the Sept $80s for more than $3,200 (or the Julys wouldn't have stopped out) and that's how the roll will play out in two parts.

    Keep in mind we collected $1,600 so the loss at $5,200 is only $3,600 so, even if IRBT keeps going up and we only have this one $3,200 sale – it's enough to knock off the loss and we still keep the profit on the spread.   Meanwhile, it's good insurance while we wait (and keep rolling).


  51. May 26th, 2020 at 12:12 pm | Permalink Ignore this user

    Turns out my niece, her husband and both her children (4 and 6) all had the virus about two months ago. She is a guidance counselor in North Jersey so she is exposed to tons of kids.   At the time, they just thought they all had a really bad flu. They just got tested this weekend.   Fortunately, they don’t seem to be any lasting issues.   


  52. May 26th, 2020 at 12:16 pm | Permalink Ignore this user

    So there are antibody tests available by request now?


  53. May 26th, 2020 at 12:38 pm | Permalink Ignore this user

    As long as the tests were accurate.


  54. May 26th, 2020 at 1:24 pm | Permalink Ignore this user

    I am suspicious I had the virus back in January.  I'm located in San Diego.  My boss, my wife, me, and a friend of mine were all knocked on our asses for over a week.  It is unheard of for me to be down for more than a couple days.  I had a fever, really bad congestion, no appetite, food tasted poor, and just generally felt miserable.   If anybody else ends up with symptoms like those, try out "Bronkaid".  It's illegal in some places (because it is used to make meth) but you can generally purchase it OTC at the pharmacy at CVS.  Also, I'm an engineer, not a doctor so apply the normal warnings to people talking outside of their expertise.  Anybody with heart conditions--be careful as it contains ephedrine so if you are sensitive to stimulants, it can cause issues.  It helped me feel a lot better when I was sick and I stayed clear of a secondary infection whereas my wife (who is pregnant since September) ended up getting a bacterial infection as well.  I have no lasting issues, nor have I been tested for antibodies or otherwise, but the timeline and symptoms make sense


  55. May 26th, 2020 at 1:42 pm | Permalink Ignore this user

    I don't know the circumstances, Tangled, only know they got tested.  My Sister-In-Law is a nurse, so I'm sure it wasn't done half-assed.

    Bronkaid/JPH – Well don't tell Trump until we have a chance to load up on the stock!  cheeky

    Merck jumps into COVID-19 arena with three initiatives
    • Merck (NYSE:MRK), heretofore surprisingly quiet with its COVID-19 development plans during the pandemic, announces three major initiatives aimed at developing potential vaccines and a novel antiviral against SARS-CoV-2.
    • It will acquire Vienna, Austria-based Themis Bioscience, a developer of a range of vaccines and immunomodulation therapies for infectious diseases, including COVID-19.
    • A collaboration with nonprofit scientific research organization IAVI (International AIDS Vaccine Initiative) to develop a COVID-19 vaccine.
    • A collaboration with Ridgeback Biotherapeutics LP to develop an antiviral candidate against SARS-CoV-2 called EIDD-2801. Under the terms of the agreement, Merck will secure exclusive global rights in exchange for an undisclosed upfront payment, milestones and a share of net proceeds of EIDD-2801 and related molecules, if approved. Merck will be responsible for clinical development, regulatory filings and manufacturing.
    • Shares up 4% premarket on light volume.
    News roundup in the auto/airline industry
    • Renault (OTCPK:RNLSY) and Nissan (OTCPK:NSANY) reportedly shelved plans to push towards the full merger envisioned by former leader Carlos Ghosn, voting to fix their troubled alliance amid the coronavirus pandemic.
    • France disclosed support for the auto industry before other European governments, which will likely include incentives for the purchase of electric and low-emission vehicles.
    • Germany's Economic Stabilization Fund approved a €9B stabilization package for Lufthansa (OTCQX:DLAKF), while over in Mexico, Toyota (NYSE:TM), Nissan (OTCPK:NSANY) and Honda (NYSE:HMC) said they are gradually restarting production.
    • Latin America's largest airline LATAM also filed for U.S. bankruptcy protection.
    Latam Airlines files for bankruptcy
    • Latam Airlines (NYSE:LTM), the biggest air carrier in Latin America, has filed for bankruptcy.
    • The airline group initiated a voluntary restructuring under Chapter 11 protection in New York, with the support of the Cueto and Amaro families and Qatar Airways, two of its largest shareholders.
    • Latam and affiliates will continue flying as conditions permit throughout the process, it says.
    • It entered the pandemic healthy and profitable, says CEO Robert Alvo, "yet exceptional circumstances have led to a collapse in global demand and has not only brought aviation to a virtual standstill, but it has also changed the industry for the foreseeable future."
    • The Cuero/Amaro families and Qatar Airways will provide up to $900M in debtor-in-possession financing; the company had approximately $1.3B in cash on hand at the time of the filing.
    Molson Coors Beverage suspends dividend, cuts capex
    • In a bid to protect and bolster the liquidity position caused by the Coronavirus pandemic, Molson Coors (NYSE:TAP) suspends 2020 regular quarterly dividends on its Class A and Class B common shares.
    • Cuts FY20 capex by ~$200M;
    • Reducing discretionary spending, limits new hiring.
    • Furloughs certain employees in the Europe business and North America hospitality businesses
    Japan lifts state of emergency
    • Japanese Prime Minister Shinzo Abe lifts state of emergency for the entire nation, saying that the country has been able to control the spread of the coronavirus.
    • New infections have fallen below 50 for the country, he said.
    • "I believe we have shown the strength of the Japanese model," he said during a press briefing
    Volkswagen loses landmark Dieselgate case in Germany
    • Germany's highest civil court has ruled that Volkswagen (OTCPK:VWAGY) must pay compensation to motorists who purchased vehicles with manipulated diesel engines.
    • The ruling, which will allow owners to return their vehicles for partial reimbursement of the purchase price, sets a benchmark for about 60K lawsuits that are still pending with lower German courts.
    • VW has already paid out more than €30B in damages, fines and buyback schemes worldwide since its Dieselgate scandal first broke in 2015.
    Time to look at undervalued Dropbox – Barron's
    • This weekend's issue of Barron's is positive on Dropbox (NASDAQ:DBX), whose shares remain well below all-time highs even as investors have been piling into other work-from-home names.
    • The company, at ~$22/share, trades at just 4x enterprise value to estimated 2021 sales, while Zoom (NASDAQ:ZM) trades at 46x EV to sales, Slack (NYSE:WORK) goes for 18x and Atlassian (NASDAQ:TEAM) trades at 20x.
    • Dropbox, seeing an opening as workspace platforms battle for dominance, is striving to be a neutral player where anyone can converse, exchange content and collaborate, regardless of corporate origin or allegiance.
    • Dropbox is becoming an increasingly profitable business: Adjusted operating margins last year were 12%, while net income is forecast to rise 48% this year to $306M and 20% next year.
    • "They've shifted from a high-growth company to one that's growing efficiently at scale, and more profitably than a lot of other companies," says RBC analyst Alex Zukin, who rates Dropbox at Outperform and notes if the stock traded at just 6x EV to next year's sales, it would be valued at $30, good for ~30% upside from current levels.
    China has room to borrow more, chief economic planner says
    • It's "viable, safe, and necessary" for China to increase borrowing to deal with the economic downturn caused by the coronavirus, Cong Liang, secretary-general of China's National Development and Reform Commission said at a press conference.
    • On Friday, China Premier Li Keqiang said Beijing would issue bonds and raise the fiscal deficit by RMB 5.8T ($813B) to bolster the flagging economy.
    • Cong, who is China's chief economic planner, said the country's fiscal deficit ratio of at least 3.6% this year remains "very low" when compared with the international average of just under 10%.
    • Some have raised concerns about China's rising debt. "Beijing is exchanging short-term gains for long-term pain," Bo Zhuang, an economist at TS Lombard, told the Financial Times.
    • China's government debt-to-GDP ratio was just under 40% in 2019, according to official data, vs. over 106% in the U.S. and almost 70% in India.
    • But the official debt data excludes borrowing by local government financing vehicles. The IMF estimate that China's public debt-to-GDP ration for last year would be more than 80% with LGFV debt included.
    China warns of 'new Cold War'
    • "Some U.S. political forces are taking hostage of China-U.S. relations, attempting to push ties to the brink of a so-called 'new Cold War,'" China's Foreign Minister Wang Yi said Sunday during his annual news briefing on the sidelines of the National People's Congress.
    • "This is dangerous and will endanger global peace. China has no intention to change the U.S., not to mention replace the U.S. It is also wishful thinking for the U.S. to change China."
    Will mass protests return to Hong Kong?
    • Police fired tear gas, pepper spray and water cannons to disperse thousands of Hong Kong protestors on Sunday, who gathered to demonstrate against Beijing's plan to directly impose national security laws on the city.
    • It was the biggest flare-up since COVID-19 lockdowns began and posed a fresh challenge to Xi Jinping as China tightens its grip over the global financial hub.
    • Concerns remain over the fate of the "one country, two systems" formula that has governed Hong Kong since the former British colony returned to Chinese rule in 1997.
    NBA season to resume in Florida? – AP
    • The NBA is in talks with Disney (NYSE:DIS) on a single-site scenario to resume games in central Florida in late July, the AP reports, signaling that the league believes the season can continue amid the COVID-19 pandemic.
    • Th National Basketball Players Association is also part of talks with the media company. Games would be held at the ESPN Wide World of Sports Complex on the Disney property near Orlando.
    • The conversations are still "exploratory,"  NBA spokesman Mike Bass told the AP. The 255-acre campus with multiple arenas would be used not only for games but for practice and housing as well.
    • The league has been working on a number of return-to-play scenarios for several weeks, all with testing as a key part of the plans.
    • Teams have allowed players to return to their training facilities for voluntary sessions since May 8, but no more than four players are allowed inside a facility at a time; the next steps would likely ease restrictions for those voluntary workouts.
    Jaguar Land Rover looks for state support
    • Jaguar Land Rover is in talks with Whitehall for a major support package, reports Sky News reported.
    • The U.K.'s largest automaker is said to be looking for temporary state funding of well over £1B.
    • JLR employs ~38K people in the U.K.
    • In the U.S., ADR shares of JLR parent Tata Motors (NYSE:TTM) are down 50% over the last 90 days.
    Virgin Group lowers stake in Virgin Galactic stake
    • With pressure from the pandemic building, Virgin Group confirms it sold 25M shares of Virgin Galactic (NYSE:SPCE) to lower its stake to ~40%.
    • The company says it intends to use the $445M in proceeds to support its portfolio of global leisure, holiday and travel businesses that includes the Virgin Atlantic airline.
    • Shares of Virgin Galactic are down 53% over the last 90 days, but are still up 36% YTD.
    Nevada casinos prep for June 4 reopening date
    • Nevada Governor Steve Sisolak set June 4 as the target date to reopen the gaming industry in the state. The Nevada Gaming Control Board is expected to approve the date, but will first meet with health officials on Tuesday to review safety and sanitation protocols that resorts plan to implement.
    • The timeline gives operators Caesars Entertainment (NASDAQ:CZR), MGM Resorts (NYSE:MGM), Boyd Gaming (NYSE:BYD), Wynn Resorts (NASDAQ:WYNN), Las Vegas Sands (NYSE:LVS), Full House Resorts (NASDAQ:FLL) and Red Rock Resorts (NASDAQ:RRR) next week to prepare. Casinos have been closed in the state since March 17.
    Airlines given tentative OKs to suspend service to 75 airports
    • The U.S. Transportation Department gave tentative approval to 15 airlines to temporarily halt service to 75 U.S. airports, albeit all airports would continue to be served by at least one air carrier, reports Reuters.
    • United Airlines (NASDAQ:UAL) and Delta Air Lines (NYSE:DAL) won tentative approval to halt flights to 11 airports, while JetBlue Airways (NASDAQ:JBLU), Alaska Airlines (NYSE:ALK) and Frontier Airlines (FRNT) were approved to stop flights to five airports each.
    • American Airlines (NASDAQ:AAL) would be allowed to stop flying to an airport in Worcester, Mass, Aspen and Eagle, Colo.
    • U.S. air carriers are collectively burning through more than $10 billion in cash a month.
    • Demands have bounced off from historic low, but it may take several years for demand to return to pre-pandemic levels.
    • The Transportation Department said objections to the order can be filed until May 28.
    U.S. adds dozens of Chinese firms, institutions to economic blacklist
    • The U.S. Commerce Department will add 33 Chinese firms and governmental institutions to an economic blacklist for helping Beijing spy on its minority Uighur population or for their ties to China's military and weapons of mass destruction.
    • The move comes a week after the U.S. changed an export rule to block semiconductor shipments to Huawei, and ramps up its ongoing tensions with China.
    • Nine of the entities were added for being for their part in human rights violations and abuses committed in "China's campaign of repression" against Uighurs, ethnic Kakakhs, and other members of Muslim minority groups in the Xinjiang Uighur Autonomous Region; they included CloudWalk Technology, FiberHome Technologies Group, NetPosa, Intellifusion; and IS'Vision.
    • 24 governmental commercial organizations were added to the list for their ties to weapons of mass destruction and Chinese military activities; the include Cloudminds (CMDS), Qihoo 360, China Jiuyuan Trading Corp., JCN (HK) Technology, and Skyeye Laser Technology.
    • The action restricts export of U.S. items to the organizations named on the list, imposes additional license requirements, and limits availability of license exceptions for exports, re-exports, and transfers to listed entities.

  56. May 26th, 2020 at 1:55 pm | Permalink Ignore this user

    Virus / Phil – I think that we still don't know enough about this virus to know what issues might pop up later for people that got really sick or were exposed to the virus. I think that there might be a high price to pay later in additional healthcare need or reduce life expectancy that is not factored in yet. 


  57. May 26th, 2020 at 2:03 pm | Permalink Ignore this user

    JPH/virus

    Only way to know with any certainty would be to get an antibody test. Abbot has a highly sensitive and specific test. 

    I too though I had it in January, but tested negative. 


  58. May 26th, 2020 at 2:04 pm | Permalink Ignore this user

    I would like to participate in the income fund too. is 500k sufficient?


  59. May 26th, 2020 at 2:07 pm | Permalink Ignore this user

    Image may contain: 2 people, text that says '"Alright, does everyone have sound?"'

    Virus/StJ – I have to say that, so far, it's looking a lot milder than advertised as we re-open.  I've been reading from many countries and it does seem to be dying down a bit but hard to tell as pretty much the whole world has been in lockdown for 2 months.   As I said, if it's a recurring seasonal virus now, then just take a few years off average human life expectancy and quality of life.  In the end, just another factor:

    Average Lifetime Cost per Case of Spina Bifida ($), United States ...

    Fund/Millard – Please contact Greg at philstockworld dot com and he will get you the appropriate paperwork.


  60. May 26th, 2020 at 2:14 pm | Permalink Ignore this user

    Good NYT interview with top virologist who got hit with corona:

    “I underestimated this one — how fast it would spread. My mistake was to think it was like SARS, which was pretty limited in scope. Or that it was like influenza. But it’s neither.”

    He got intravenous antibiotics and high-flow oxygen, and was roused every two hours for checks on his a blood pressure and other vital signs.

    “I was particularly anxious that I not be put on a ventilator,” he said. “Ventilators can save lives, but they can also do a lot of harm. Once you’re on one, your chances of surviving are the same as of surviving Ebola — about one third.”


  61. May 26th, 2020 at 3:01 pm | Permalink Ignore this user

    Phil / Virus – I'm still on a holding pattern on this one into next week.  My view is that we will see an uptick in hospitalizations / visits – and  this will be anecdotal.  The numbers i believe will be inaccurate due to suppression by certain states and Trump specifically.   Additionally  i do believe the heat will have an impact on lowering infections as it will weaken virus and limit the amount of time it is active on surfaces.  This will reduce numbers and may indicate that the virus will be "dormant" over the summer ( much like the Spanish Flu),  Trump will be taking credit for this, and we may have a melt up.  at least into October.   So get more bullish over the summer.  Which is unusual for me in that summer is usually flat / down.  

     

    However if we have a significant spike in next 7 to 14 days, – and this will mean this is really going to get painful, and some states will reinstate restrictions… if this happens we should test those lows…  The only good news on this is it would seal trumps fate….  


  62. May 26th, 2020 at 3:21 pm | Permalink Ignore this user

    Virus/Batman – Well, either way, a wise man waits for more information before investing in uncertain times.  As to getting "more bullish" – a lot of these stocks are just way overvalued re. earnings for the next two years and we still have Q2 earnings to get through – which will be terrible beyond words for many businesses.  Will we get through it?  Probably – but to be at an all-time high going into it is madness.  

    I agree the worst thing that could possibly happen is the virus goes dormant, Trump gets re-elected for "defeating it" and then he's still President when it comes back in the Winter.  That's the perfect Hollywood ending for a dark doomsday film that ends badly for all…  


  63. May 26th, 2020 at 3:30 pm | Permalink Ignore this user

    Looks like we're closing near the highs.  No profit on /YM but /ES paid nicely on the dip.

    Not too exciting today so I'm going to take advantage of the lack of rain (first time in 3 days) for the moment to get some swimming in.  


  64. May 26th, 2020 at 3:42 pm | Permalink Ignore this user

    Closing near the highs?


  65. May 26th, 2020 at 4:21 pm | Permalink Ignore this user

    Success is now defined by the WH as less than 2M dead people! Unreal…

    Next week – we did great as we prevented the loss of 100M jobs.


  66. May 26th, 2020 at 6:52 pm | Permalink Ignore this user

    A Coronavirus second wave will crash the market   Interesting scenarios here 

     

    https://flip.it/hPCLcD


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  71. May 26th, 2020 at 7:16 pm | Permalink Ignore this user
    The White House is getting *very* worried about the Senate majority
    By: Analysis by Chris Cillizza, CNN Editor-at-large


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  76. May 26th, 2020 at 7:17 pm | Permalink Ignore this user
    Rubio, now intelligence chair, warns of virus misinformation
    By: MARY CLARE JALONICK and LISA MASCARO, Associated Press


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  90. May 27th, 2020 at 12:29 am | Permalink Ignore this user

    Phil / WBA -

    I have  50X of the '22 $35 calls uncovered , the '22 $50 Calls are now at 4.2 – should this be covered now ?   This was rolled last week.

    50X '22 $35 Calls ( 8.2) 

    20X '22 $40 Puts (8.8)

    Partial cover 25X '20 $42.5 Calls ( 1) 

    Thanks for your help.