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GDPhursday – Does Anything Matter?

"Nothing really matters,
Anyone can see,
Nothing really matters,
Nothing really matters to me
." – Queen 

Does GDP even matter?

We'll see this morning as we're going to get the worst GDP reading since 2008 - and that's just for Quarter 1, Quarter 2 will be much worse – there's no stopping that now (another Queen song) and that number will show a double-digit decline in GDP so -5% for Q1 is actually tame by comparison.  

8:30 Update:  As I write this, the S&P Futures are up 0.25% at 3,040 and the Dow is up 0.7% at 25,700.  In addition to GDP we have the Durable Goods Report, which is showing a 17.2% drop in April and -7.4% ex-Transportation, which shows you how bad Transportation was in April.  We also had another 2.12M Americans file for Unemployment – also worse than expected but none of this seems to be affecting the markets – which are chugging along at their pre-market highs.

We can only assume that Liquidity Trumps all other things – as does the Oligarchy and that was on full display in this "Tax Fairness" Report which shows how $434Bn of the Government's $2.7Tn bailout (so far) has gone directly to America's 630 wealthiest people (Donald Trump is #248) a 15% increase in their $2.6Tn total wealth in the past two months!

16 new Billionaires were added to the Forbes List, including Trump's pal Kanye West – that's in the past 60 days!  During that same 60 days, 38M American's lost their jobs, 1.5M became infected with Coronavirus and 100,000 died but, as the President says – they are soldiers going to war for Capitalism, right?

“The surge in billionaire wealth during a global pandemic underscores the grotesque nature of unequal sacrifice,” said Chuck Collins, director of the IPS Program on Inequality and co-author of the Billionaire Bonanza 2020 report. “While millions risk their lives and livelihoods as first responders and front line workers, these billionaires benefit from an economy and tax system that is wired to funnel wealth to the top.”

That says it all, Carlin said it 10 years ago and and things have certainly not gotten better since, have they?  

So, politics aside, how do those of us in the Top 1% (poor us!) keep up with our pals in the Top 0.000001%?  That brings us back to the market rally?  What do these people do with an extra $434Bn?  They put it in the market, of course!  Banks are for suckers and Bonds pay you nothing and metals are expensive and even Mark Zuckerberg knows BitCoin is BS so that leaves good old US Equities as the only logical place for the wealthiest to store their money.

I think we should give all our money to Shelly Adelson's financial guy – somehow the owner of a shut-down casino empire still netted a $4.5Bn profit from this crisis – that's really amazing!  Of course, as I noted in our May Portfolio Review, our own Member Portfolios also flew up during the same period.  Take our Future is Now Portfolio for example – in our May 18th review, the portfolio we initiated on 12/12/19 (my Father's birthday!) with $100,000 was up to $124,515 (up 24.5%) since the March 20th reveiw, when it was at $89,235 (down 10.8%) and now, the same positions (we added ARNC on 5/22 in our Live Chat Room) are at $131,935, adding another 7.5% in 10 days.

In our detailed analysis of each position at the time (5/20), we noted that the current positions were on track to make $65,000 over the next 18 months and we sold the short TOT puts to put another $1,625 into our pockets and ARNC is an $8,000 spread currently at net $3,875 so $71,000 over 18 months is $3,944/month that we EXPECT to make from these positions (and of course we will be adding more as opportunities come up).  

That's a 4% MONTHLY gain on our investments and, as you can see from the growth of the wealth of the Top 630 – yes, you can make that kind of money at scale as well!  

Just keep in mind that, like Shelly Adelson's adviser, you have to know how to hedge those bets so, even when your main assets take a dive – some other portfion of your portfolio jumps in to save you.

 


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  1. Good Morning.


  2. 1 in 4…..LOL.  Up up up and away, the Fed is here to save the day!


  3. 1020….how's it going?  Biotech land in Boston is unreal.  The money flowith!


  4. Whoa….and markets are near their ATH.



  5. Pharm – Unemployed and dead people don't play the markets!


  6. 100,000 dead people, cases going up in Alabama, N. Carolina, Mississippi, Iowa, etc.. but as they say in the Trump family – Great day in the markets! The empathy gene is clearly missing in that family tree.


  7. LOL STJ.  Now that I am on the right coast, we are going to have to get together when this whole ordeal passes by.  That will be something like 2022…….

    Yep, I will probably be dead by then as well. ;)


  8. Now Twitter taking a 3% hit on threats of censorship – clearly a sign of a vibrant democracy. I also wonder how that squares with Citizen United. Either businesses are people and have a first amendment right or they don't. Can't be both at the same time. 

    And also, Facebook disagrees with Twitter on moderation but bans adds from the Lincoln Project. Zuck has picked his camp it seems. 


  9. LOL Pharm! I am guessing 2025 at the onset of the Don Jr. presidency!


  10. Good morning, All!

    Webinar replays are up!

    YouTube:

    https://youtu.be/kqAIy5PlQFM

     

    (I'll put up the BitChute link a little later once done processing.)


  11. Hi Pharm – Remember NWBO back in the day?  They are finally going to release top line data …


  12. NWBO/edro…..OMG. well, if you are in them, let's hope they rocket up and then you can get out!


  13. SPY is hugging (and has been) the upper bollinger bands for 5 days.  It needs to roll over and catch COVID.


  14. Webinar replay over at BitChute:

    https://www.bitchute.com/video/K4EzZmQxQyqK/


  15. Hi Pharm – Glad Beantown is treating you well!

     

    Fakebook – I was dum enough to start an account, but I've refused to participate in any way.

    While my future business prospects could suffer, I refuse to add to $$$ to what I consider a stain on the cultures of the world…..


  16. One to too many… ;)


  17. Pharmboy,  well at least you can get some good lobster before you're gone  



  18. 1020, I had the same attitude about FB, but beware, it sucks you in.  


  19. stockbern – this 'Boomer' thought the whole social media thing was whack at the outset – Imagine, personal human contact being replaced by smart phones and Ipads….

     

    I wish I still had a rotary phone and a landline!  ;)


  20. Good morning!

    ATH/Pharm – Doesn't bode well for workers in the future as it seems like the robot economy will go along just fine without them.

    Big Chart – This is day one over 3,000 but a strong move over this time.  Running out of red boxes too…

    Twitter/StJ – So you can wipe away free speech with an executive order – I never knew that…  Zuck is #3 on that list and Bezos and Gates are already against Trump so I bet he worked hard on getting Zuck on his team.

    Social Media/1020 – Well at least it makes the lockdown more bearable.  Of course, it also let's people accept 100,000 deaths as if it's a game score…

    Move along folks, nothing to see here – all under control…


  21. Interesting points in this article… all except the Airline part

    https://seekingalpha.com/article/4350478-what-you-prepared-for-bear-market-and-no-one-came?lift_email_rec=false&utm_medium=email&utm_source=seeking_alpha&mail_subject=what-if-you-prepared-for-a-bear-market-and-no-one-came&utm_campaign=nl-morning-briefing&utm_content=link-0

    What If You Prepared For A Bear Market And No One Came?

    Summary

    The imminent demise of the stock market remains popular, with new articles emerging weekly on why "long is wrong".

    The fundamentals of an emerging economy, receding claims for unemployment, and nascent transport trends validate the market's current optimism.

    The market's fundamental and technical indicators are not overextended and have room on the upside to run.

    Recent economic commentary is predicting an explosive recovery in Q3.


  22. Speaking of Bohemian Rhapsody:

    Explosive Recovery/Batman – Well, let's all hope so but let's also not use the word "explosive" to describe the economy as we're still sitting on a powder keg.  Of course John often tells you to buy and sometimes he's right but other times…

    Be careful out there!


  23. I found one for the Butterfly Portfolio:

    Coke (KO) has barely budged in earnings with $2.78Bn earnings in Q1 and forecast for the year is $9Bn vs $9Bn last year and next year maybe $10Bn but $47 is a $200Bn market cap so not cheap but not too expensive for a virus-proof stock.  

    Year End 31st Dec 2014 2015 2016 2017 2018 2019 TTM 2020E 2021E CAGR / Avg
    Total Revenue
    $m

    45,998 44,294 41,863 36,212 34,300 37,266 37,173 36,430 38,350 -4.12%
    Operating Profit
    $m

    8,505 7,722 7,400 7,417 7,483 9,204 10,502     1.59%
    Net Profit
    $m

    7,098 7,351 6,527 1,248 6,434 8,920 10,017 8,948 9,755 4.68%
    EPS Reported
    $

    1.60 1.67 1.49 1.12 1.50 2.07 2.32     5.33%
    EPS Normalised
    $

    1.95 2.11 1.92 1.53 2.00 2.18 2.17 2.06 2.25 2.31%
    EPS Growth
    %

    -2.62 +8.15 -8.70 -20.5 +31.0 +8.93 +5.87 -5.48 +9.12  
    PE Ratio
    x

              21.4 21.5 22.7 20.8  
    PEG
     

                  2.49 2.38  
     

    The incredible flatness of their trading range is why they are good for the Butterfly Portfolio and the chips don't get much bluer than KO, do they?  KO only makes 31.5% of their money in North America and the rest of the World is split pretty evenly with 20% of their revenues coming from their share of bottling operations (though independent, KO is often a lead investor in those businesses).

    • For the LTP, just to raise some cash, let's sell 10 of the KO 2022 $42.50 puts for $4.50 ($4,500).

    In the Butterfly Portfolio, lets:

    • Sell 5 KO 2022 $42.50 puts for $4.50 ($2,250)
    • Buy 15 KO 2022 $45 calls for $6.20 ($9,300) 
    • Sell 15 KO 2022 $55 calls for $2.40 ($3,600) 
    • Sell 5 KO July $47.50 calls for $1.35 ($675) 
    • Sell 5 KO July $47.50 puts for $2 ($1,000)

    That's net $1,175 on the $15,000 spread and we have 603 days to sell and have used 50 of them for our first sale.  It's unlikely we hit $47.50 on the nose so we'll just roll the losing side along.  Earnings are after expirations so we should get very good premium to roll to.  5 short puts is just net $1,543 in margin and $1,175 is not much and 9 more sales can generate up to $15,000 while we wait to see if we get our $15,000 pay-off.  

    Remember, these things rarely go as expected and it's very unlikely we clear $30,000 in 18 months on a $1,175 investment but, even if it only goes 33% right – that's still going to be a great return!


  24. JO headed back to multi-year lows….


  25. I wrote a twitter-like site a while back (code learning exercise). You can post there all you want. No ads, no censorship, etc, etc, but of course, no one uses it….

    pharm – can I send you an email?


  26. GNUS – yeah, I hit a penny stock for a bunt single! Now let's get to 5?


  27. Suggestions on how to improve/simplify my GOLD position. I have following BCS spreads: 10 June 19 $24/25; 4 July 19 $22/27; 4 Aug 19 $24/28. I have following long calls:  20 jan 21 $12; 11jan 21 $15; 1 jan 21 $19. I am short calls 6 jun 19 $20; 1 Sept 19 $25; 12 jan 21 $20; 2 jan 21 $27.  I am also Short jan 22 Puts, 20 of $15 and 12 of $17. Any suggestions appreciated


  28. Dow calls are starting to pick up. I have a slew of June 19th 290's. Being at 9 cents versus 6 cents is still a massive 50% gain 



  29. Explosive recovery / Phil – As I read through this, it was interesting to note how others may be looking at it.  I'm glad you pointed out the previous posts for reference.  I do believe the market in general is high, and most of the stocks I hold have come up to a level I think is very fairly valued.  I've been takin some profits early and freeing up cash.   as I said before.  I think the case numbers and now deaths are not being reported accurately, or timely.  As I looked at a more math based death count.   We may be anywhere from 115 to 130 thousands deaths.    And the initial numbers going out this week although high still paint a not so terrible situation.  With trump not flagrantly attacking the truth ( Twitter threats) the real numbers could be more hard to come by.  


  30. TWTR and trump is like a mutual parasitic relationship. They both need each other. 


  31. GOLD/Millard – Short-term $1 spreads?  Those are very tough to protect.  More of a dice roll.  What a friggin' mess of positions – how did you end up with them?  Ignoring the short-term BS, looks like 32 Jan longs around $13.50 against a crazy combination of 21 $23ish shorts.  The 2021 $13s are $11.50 with the stock at $24.50 so no premium there and the 2021 $24s are $3.85 and those are all premium.  

    I would cash the longs for $35,650 and roll the short calls ($9,420) to 20 short 2022 $27calls at $4.85 ($9,700) and buy 20 of the 2022 $20 calls for $7.70 ($15,400) so that's net $20,530 off the table and you're left with the $14,000 2022 $20/27 bull call spread and a lot less headaches.

    Numbers/Batman – Once people stop believing Trump's low-ball death numbers, real panic can set in – especially as we get closer to 300,000 deaths and pretty much everyone will know someone who died.  Still, 1.5M heart attacks each year don't stop people from eating Big Macs while 100 people getting stomach aches in 3 locations causes millions to flee Taco Bell nationally - hard to say where the line will be with the herd – excuse me – "Human Capital Stock".

    Twitter/BDC – Team Trump has been itching to attack Twitter's new policies to police BS as that BS is critical to his Russia-Powered re-election bid.  This gave him the opening he needed to challenge them and hopefully remove the safeties so Putin can let the dogs run wild again.

    Cartoons: Donald Trump, Vladimir Putin and hacking

    I know this will sound like Liberal BS to some of you, but it's not:

    Dirty Tricks: Eight Falsehoods that Could Undermine the 2020 Election

    BERLIN (AP) — Germany said Thursday it is seeking EU sanctions against a Russian man over his alleged role in the hacking of the German parliament at a time when evidence shows he was working for Russian intelligence.

    On Thursday, the NSA issued an advisory that the Russian hacker group known as Sandworm, a unit of the GRU military intelligence agency, has been actively exploiting a known vulnerability in Exim, a commonly used mail transfer agent—an alternative to bigger players like Exchange and Sendmail—running on email servers around the world. The agency warns that Sandworm has been exploiting vulnerable Exim mail servers since at least August of 2019, using the hacked servers as an initial infection point on target systems and likely pivoting to other parts of the victim's network. And while the NSA hasn't said who those targets have been—or how many there are—Sandworm's history as one of the most aggressive and destructive hacking organizations in the world makes any new activity from the group worth noting.

    "We still consider this to be one of the most, if not the most aggressive and potentially dangerous actor that we track," says John Hultquist, the director of intelligence at FireEye, who also led a team at iSight Partners when that company first discovered and named Sandworm in 2014

    Events in the United States have unfolded more favorably than any operative in Moscow could have ever dreamed: Not only did Russia’s preferred candidate win, but he has spent his first term fulfilling the potential it saw in him, discrediting American institutions, rending the seams of American culture, and isolating a nation that had styled itself as indispensable to the free world. But instead of complacently enjoying its triumph, Russia almost immediately set about replicating it. Boosting the Trump campaign was a tactic; #DemocracyRIP remains the larger objective.

    This is all happening now, while we're distracted…

    That's why McConnell doesn't believe he can lose – even with a 30% approval rating.  How hack-proof do you think Kentucky's election system is?  

    As President Trump’s own FBI director warns that Russians are planning to try to undermine American democracy in the next presidential election, Republican lawmakers led by Senate Majority Leader Mitch McConnell (Ky.) are blocking bills aimed at blocking foreign hackers from states’ voting systems.


  32. You know it's going to get harder, and harder, and harder as you get older

    And in the end you'll pack up and fly down south

    Hide your head in the sand,

    Just another sad old man

    All alone and dying of cancer – Pink Floyd 


  33. The Dems need to throw out the 'ol playbook and do some hacking of their own!

     

    Now, if we could only convince George Soros to buy TWTR and shut it down…..

    https://www.youtube.com/watch?v=Gev_Phjl764


  34. BDC….any time….love to hear from ya!


  35. 1020, just as Icahn to do it.  His picks have been spot on lately!


  36. The GOLD mess was the result of adding a bunch of little diagonal long call short just  OTM calls positions.


  37. Thanks for the advice, cleaning it up


  38. Which is why Trump is also vehemently fighting mail ballots….can't 'hack' those.  :)


  39. speaking of travel companies today.

     EXPE  bought over 8000 Jan22 $110 calls for about $14

    HGV  bought  Jan21 $30 calls for about $1.10


  40. Talk about a V shape recovery…AAPL daily is certainly happy….


  41. pharmboy – can you post an email in here?


  42. pharmboy123 at gmail


  43. Trump said: "Mail voting leads to fraud."

    Trump means: "Mail voting is unhackable."

    Trump said: "Millions of illegals voted."

    Trump means: "Millions of US citizens with brown skin voted."


  44. Quesiton: If Voter ID-less elections = fraudulent, were all of the US elections leading up to the invention of the camera fake? Huh.


  45. BBRW a 10-bagger over the last 5 days. You know the market is irrationally frothy when this is happening. Could be a bad sign.


  46. Phil,

    Any thoughts on the casino space? MGM has the least exposure to problematical Macau and Wynn the most. Just speculating on the pent-up demand here the US which is scheduled to be released 6/4.

    TIA


  47. Market just keeps going up and up.  GDP didn't bother it at all.

    Travel/Stock – I don't see it zooming back that fast – not from people I'm talking to. 

    AAPL is very V, Pharm:

    LOL BDC.  Sadly those are accurate translations.

    Fraudulent/BDC – I knew it was fishy that Johnson gave $7M to Russia for "Alaska" – as if that's even really a place!  Too bad they didn't have TV back then:

    BRW/BDC – I don't think we need signs to confirm this will end in tears.

    Casino/8800 – Wouldn't touch them. If we open and then close again, will get slammed. 

    Don't forget casinos depend on the whales, not the hoi polloi – I'd love to go to a casino to play some poker but I'm not going to sit at a table with 10 randos (and they change the dealer every 30 mins and people come and go and drink girls come by) AND touch all the chips that 1,000 other people have touched.  Even if they open, they will open with restrictions and there will be barriers and distancing and people WILL get sick anyway and there will be lawsuits. 

    I would certainly give them time to see what happens.

    MAR is more interesting.  People need to travel and they are more likely to go with a well-known brand. 

    Still, the damage done in Q2 is going to be severe but $1.5Bn a year in earnings isn't too bad against a $32Bn valuation at $95

    Year End 31st Dec 2014 2015 2016 2017 2018 2019 TTM 2020E 2021E CAGR / Avg
    Total Revenue
    $m

    13,796 14,486 15,407 20,452 20,758 20,972 20,641 16,523 19,657 8.74%
    Operating Profit
    $m

    1,159 1,350 1,424 2,504 2,366 1,800 1,404     9.20%
    Net Profit
    $m

    753 859 808 1,459 1,907 1,273 929 1,454 1,859 11.1%
    EPS Reported
    $

    2.54 3.15 2.73 5.40 5.27 3.80 2.80     8.42%
    EPS Normalised
    $

    2.53 3.15 3.58 5.69 5.62 4.13 3.05 3.46 5.38 10.3%
    EPS Growth
    %

    +28.0 +24.6 +13.8 +58.7 -1.23 -26.5 -46.5 -16.2 +55.7  
    PE Ratio
    x

              23.7 32.1 28.3 18.2  
    PEG
     

                  0.509 1.48  
     

    We went with VAC on 3/23, which is their time-share unit.  That went up so fast we already cashed them in.  I figured just because people aren't using their time-shares doesn't mean they aren't paying for them.


  48. I just read the May 4 earnings transcript for STWD and its not bad. In the past, Phil has said that he like their management and you can see that reflected in this report.  Cutting the dividend was not ruled out though. 

    https://finance.yahoo.com/news/edited-transcript-stwd-earnings-conference-124629290.html

    options only go out till December but I've been watching them buy the July calls all day – in most all the strikes – thats what made me read the transcript in the first place


  49. Thanks for the rational casino thoughts. Just wondering how rational folks are who habitually flock to Vegas, bent on defying known odds.


  50. STWD / Stock – Been one of my favorites for years and I have shares and short puts (soon to be shares it seems). I think that they are better than they average REIT but clearly, not one of these guys is perfectly safe now. Div at 13% is good but could be cut for sure.


  51. Twitter / Phil – As said by many smarter people than me, Trump and others want to have the freedom to push all their voter fraud conspiracies to prepare to contest the results of the election if it turns out the way it's looking now. The evening of November 3 will tell us how much of our democracy is left!


  52. Not suspicious at all that not long before the announcement of Trump press conf someone bought 24K put contracts expiring tomorrow ATM on IWM, currently up ver 100%


  53. Comment content omitted because it is too long.


  54. Sellbots are waking up.   Don't see any particular news. 

    STWD/Stock – That's a good one too.  

    Vegas/8800 – Like I said, it's the high rollers that need to come back and people like us take more prudent risks.  

    STWD/StJ – As we've discussed before, very solid REIT group.  Certainly worth a look down here.  

    Year End 31st Dec 2014 2015 2016 2017 2018 2019 TTM 2020E 2021E CAGR / Avg
    Total Revenue
    $m

    703 736 785 880 1,109 1,196 1,198 1,216 1,293 11.2%
    Operating Profit
    $m

    217 194 125 139 126 148 104     -7.43%
    Net Profit
    $m

    495 451 365 401 386 510 373 621 646 0.585%
    EPS Reported
    $

    2.24 1.91 1.50 1.56 1.42 1.79 1.29     -4.44%
    EPS Normalised
    $

    2.27 1.99 1.59 1.60 1.47 1.86 1.35 2.04 2.10 -3.89%
    EPS Growth
    %

    +9.35 -12.3 -20.0 +0.193 -7.92 +26.7 -0.498 +9.66 +2.94  
    PE Ratio
    x

              7.72 10.6 7.04 6.84  
    PEG
     

              0.799 1.10 2.40    
     

    Very nice for $4Bn at $14.  Options only go out to Dec but good premium so we should add it to the Dividend Portfolio tomorrow.

    Not a good finish at all! 

    It worked too – they scared me out of shorting today.  

    • Stocks lose most of their gains after President Trump said he'll hold a press conference tomorrow to talk about China.
    • The S&P 500 clings to a 0.1% gain, slipping from a 1.1% increase earlier in the session; the Nasdaq is roughly flat vs. +1.2% earlier; and the Dow falls 0.2% after climbing as high as 0.8% in afternoon trading.

    U.S. economy has likely bottomed out, says Dallas Fed's Kaplan

    • Still, a massive increase in testing for COVID-19 will be needed for a healthy rebound so that people will feel comfortable traveling, dining out and resuming other pre-pandemic activities, Dallas Fed President Robert Kaplan told Reuters in an interview.
    • “We need to dramatically increase testing and contact tracing…so that we can grow the economy faster and work down this unemployment rate,” he said.
    • The cost for such an effort would be much less than the almost $3T the U.S. Congress has already committed to economic relief efforts, Kaplan said.
    • With increased testing, extensions of fiscal support for workers, and new relief funds for cities and states, the U.S. economy could grow at ~17% annual pace in Q3 and Q4, he said.
    • That would still leave the U.S. economy at ~4.5% smaller by 2020-end than it as at the beginning of the year, and he would still expect unemployment to be at 10%-11% at year-end.
    • The federal government isn't "anywhere near the limit" in taking on more debt, said New York Fed President John Williams during a webinar presented by Stony Brook University in Long Island.
    • The higher levels of government debt needed to combat the COVID-19 pandemic aren't yet creating a threat, he said.
    • “I don’t see any problems right now in terms of deficits,” Williams said. “Obviously, in the long run we have to make sure that the fiscal policy in the federal government is on a sustainable path.”
    • The more important issue is making sure the money gets the the right places, especially to state and local governments that had to cut staff during the financial crisis.
    • Total government debt has increased $2.2T since just before the pandemic hit, up 9.4%, mostly due to the CARES Act that provides over $2T in relief funds.

    • Moody's switches its outlook on Delta Air Lines (DAL -2.6%) to Negative from Watch Negative, while affirming the carrier's long-term rating at Baa3.
    • "The negative outlook reflects the potential for greater than already anticipated adverse impact from the coronavirus pandemic, which would consume more of the company's liquidity and delay the pace and scope of the recovery in demand, the retirement of debt and the strengthening of credit metrics relative to Moody's current expectations. Nonetheless, strong liquidity currently mitigates downwards pressure on Delta's ratings."
    • "Today's rating actions reflect that the coronavirus will continue to significantly curtail US domestic and global demand for air travel for an extended period. Moody's assumes that Delta's Q4 2020 capacity would be down about 50% versus Q4 2019 in its faster recovery model and about 70% in its slower recovery model. These scenarios also assume that passenger demand substantially increases towards 2019 levels in 2023 and that refined cost management and efficiencies learned while operating through the pandemic will support a meaningful recovery in profit margins by 2023. In all potential scenarios, Moody's believes that the reduction in passenger demand will be greater than the reduction in airline capacity, leading to meaningfully lower load factors. The risk of more challenging downside scenarios remains high, and the severity and duration of the pandemic and travel restrictions remain highly uncertain, particularly given the threat of an increase in the number of infections as social distancing practices across the US and other countries become less stringent in upcoming weeks and beyond."
    • Even with the threat of a crackdown executive order looming, Twitter (TWTR -3.4%) has doubled down on its tweet-labeling, adding new labels from its fact-checking initiative to hundreds of tweets.
    • President Trump has accused Twitter of stifling speech after it added explanatory links to a couple of his tweets about mail-in balloting, and is reportedly preparing an order to cut back on legal protections from liability for social media companies.
    • But Twitter has amped up its labeling initiative in the meantime, adding links to tweets covering Chinese allegations of coronavirus origins and issues related to the death of George Floyd in police custody in Minnesota.
    • Twitter says the modified tweets contained "potentially misleading content" and that its actions are consistent with policy. And CEO Jack Dorsey has been steadfast that "We'll continue to point out incorrect or disputed information."
    • That's in some contrast to Facebook (FB -1.7%), whose CEO Mark Zuckerberg told Fox News in an interview running this morning "I just believe strongly that Facebook shouldn't be the arbiter of truth of everything that people say online."
    • A German government official has made a light-hearted offer for Twitter (NYSE:TWTR) to move its operation to Germany where it could run its business as it desired.
    • "This is an invitation to move to Germany!," tweeted Bundestag member and Berlin startup economy specialist Thomas Jarzombek.
    • It doesn't like the move to Berlin will be necessary if you take a look at the consensus on Wall Street. Despite the sound and fury on both sides of the issue of a social media crackdown, analysts expect very little actual action. "More bark than bite," says Height Capital Markets in a reaction that is similar to takes from JPMorgan and others. The FCC is seen taking a long time to enforce a policy, even if there was a way around the tricky issue of First Amendment rights.


    • Golar LNG (GLNG +1.7%) says a contango structure developing in liquefied natural gas prices and increased fuel switching potential should support charter rates for LNG carriers into the winter months.
    • But the shipping market remains highly volatile, Golar said on today's earnings conference call, with an "increasingly unpredictable" inter-basin trade making tonnage demand per mile difficult to model.
    • Golar expects demand uncertainty related to the coronavirus outbreak to weigh further on LNG prices, raising the prospect of additional U.S. cargo cancellations on top of the 60-plus U.S. LNG cargoes that already have been canceled this summer.
    • Golar reiterated its strategy to reduce its exposure to the spot shipping market by seeking more term deals, although this may prove to be trickier in a low-price environment, CEO Iain Ross said.
    • Finally, Golar said floating liquefied natural gas units may retain a cost competitiveness with more complex onshore projects, although no FLNG projects are expected to be ready for a final investment decision in the near future.
    • Participating in Bernstein's virtual conference today (webcast here), Bank of America (NYSE:BAC) CEO Brian Moynihan says consumer payments (credit, debit, Zelle, …) are down just 5% Y/Y in May after large plunges in March and April. He takes note of particular strength around last week's holiday.
    • Requests for loan deferrals – which flooded in early in the shutdown – have essentially stopped at this point, he says, crediting economic improvement, the PPP loans, and checks that went straight out to taxpayers.
    • As for the dividend, Moynihan reminds the bank's capital ratio dipped only 30 basis points to 10.8% in Q1 even after taking a large loan loss provision. "We earned double our dividend despite one of the toughest quarters in many years … We have a lot of room to absorb losses and still earn."
    • With the fresh catalyst of plans to reopen Disney World July 11, J.P. Morgan has reiterated its Overweight rating on Walt Disney (DIS -2.8%).
    • The resort might conservatively target a lower capacity than the 50% it's permitted to admit in phase 1, it says.
    • The firm is making some modest reduction to its estimates, taking into account the reopening schedules. But it's set a $135 price target, currently implying 14% upside.
    • Disney's release of Mulan appears to be on track for a July 24 release as well, the firm notes.
    • Tyson Foods (TSN +0.4%) trades slightly higher despite a downgrade from Argus and another COVID-19 outbreak at a plant.
    • Argus moves to a Hold rating from Buy, although it keeps a favorable long-term view.
    • "We expect Tyson's FY20 results to be hurt by COVID-19. In response to the virus, TSN will incur costs to reduce volumes, shutdown plants and protect its employees' health and safety. Meanwhile foodservice sales (about 40% of revenue), which include restaurants, plant and school cafeterias have been hurt by closures. On a more positive note, retail sales (i.e., grocers, convenience stores) are benefiting from the spike in demand that has accompanied shelter-in-place guidelines in the United States."
    • Meanwhile, a Tyson pork processing plant in Storm Lake, Iowa is reported to have had 558 employees test positive for COVID-19. While many of the company's plants have reopened after outbreaks, production levels continue to be impacted.
    • Shares of Tyson are down 8.9% over the last 90 days.
    • Albemarle (ALB +3.9%) says it wants to take control of Australia's Greenbushes lithium mine, signaling it intends to exercise its right of first refusal in blocking any rival from buying Tianqi Lithium's controlling stake.
    • Tianqi, which owns 51% of Greenbushes vs. Albemarle's 49%, is selling some assets including Greenbushes to pay down debt.
    • "We would be interested in taking a controlling stake in that venture," Eric Norris, head of Albemarle's lithium division, told a webcast of Benchmark Mineral Intelligence's EV Supply Chain Festival.
    • HBO Max (T -1.2%) is off to a soft start when it comes to drawing in the fresh customers it needs, Sensor Tower suggests.
    • The new streaming service saw 90,000 mobile downloads on yesterday's launch day, according to the firm. That's well below not only Disney Plus (NYSE:DIS), which saw 4M mobile downloads on its first day – but also even short-firm video service Quibi, which drew 300,000 downloads on its first day in April.
    • That's not a perfect measure of interest for several reasons, including Quibi's 90-day free trials and Disney's offer to Verizon subscribers to get a free year. Mobile downloads also exclude other ways people can view services (including through a cable provider, or those who freely upgraded from HBO Now, or took advantage of a $12/month promo offer).
    • But AT&T's big bet on HBO Max depends on not just conversions but new interest. And it's still working on distribution: After a late deal with Comcast yesterday, HBO Max still isn't available on Amazon Fire TV and Roku.
    • An expose in The Wall Street Journal details how revenue at Luckin Coffee (LK -19.3%) was inflated by large sales of coffee vouchers to some corporate customers tied to the company's chairman and controlling shareholder.
    • In addition, some of the voucher payments are alleged to have been processed by a fictitious Luckin employee.
    • Luckin raised $865M in a follow-on sale of shares and convertible notes after some of the fake sales were booked.
    • Nasdaq is moving forward on delisting Luckin.
    • Some of the world's largest institutional investors and sovereign funds bolstered their stakes in BlackRock (BLK +1.9%) when PNC Financial sold its $14B holding in the world's largest asset manager earlier this month, Bloomberg reports, citing people familiar with the situation.
    • The transactions also illustrated CEO Larry Fink's ties with the Middle East, with Abu Dhabi's Mubadala Investment, the Kuwait Investment Authority, Saudi Arabia's Public Investment Fund, and Qatar Investment Authority buying BLK shares.
    • Existing shareholders Wellington Management, Capital Group Companies, and Fidelity Investments also picked up some of the shares sold by PNC.
    • In addition, Singapore's Temasek Holdings and Norway's $1T wealth fund added to their holdings in the company
    • UPS (UPS +0.5%) is adding a peak surcharge for high-usage companies as it looks to control costs. An added $0.30 surcharge kicks in when large retailers like Best Buy (BBY -1.1%), Target (TGT +2.1%) or Amazon (AMZN +0.9%) exceed their average weekly volume from February by more than 25K packages. A separate surcharge applies for high volumes of big items like desks and outdoor equipment.
    • It will be the first time that UPS has added surcharges outside of the busy holiday season.
    • In a bid to help small suppliers, General Motors (GM -2.8%) and Ford (F -1.5%) are using fast-payment programs set up with financial lenders to pay supplier bills up front that typically take 40 to 60 days to settle.
    • The program does have high costs for suppliers and could backfire if the financial lenders back off from making the advances later in the year.
    • Hospitals in California, many previously unprofitable or barely profitable, are struggling financially after investing in personnel and equipment ahead of the expected surge in COVID-19 cases that never materialized.
    • Hospitals incurred the double whammy of using scarce resources to set up field units, increase ICU capacity and buy personal protective gear while banning non-emergency procedures, the latter of which cut revenues in half. Administrators mull whether they over-prepared ahead of an expected second surge in cases this fall, a prospect that many believe they are still unprepared for.
    • COVID-19 pandemic-related actions have cost hospitals in the state as much as $14B forcing them to lay off thousands of workers.
    • The industry is asking Sacramento for $1B in aid to defray current costs and plan to request another $3B at the start of fiscal 2021 on July 1.
    • Statewide, hospitals have received $3.4B from the CARES Act, about 4% of the total.
    • Before the pandemic, 38% of California hospitals, public and private, were losing money and another 11% had near-zero operating margins.
    • Selected tickers: Humana (HUM +2.2%), HCA (HCA -1.1%), Universal Health Services (UHS -1.5%), Surgery Partners (SGRY +0.8%), Tenet Healthcare (THC +0.8%), Community Healthcare Systems (CYH +0.3%)
    • Oil majors including Royal Dutch Shell (RDS.A -0.1%) and Chevron (CVX -1.7%) are struggling to cope with coronavirus outbreaks among their workers that could threaten the profitability of some of their largest projects.
    • Shell yesterday evacuated nine workers from platform in the Gulf of Mexico for testing and treatment of COVID-19, with at least five testing positive.
    • Chevron says more than 900 workers at the 600K bbl/day Tengiz oil field in Kazakhstan have been infected with coronavirus, and staff at the site has been reduced by two-thirds to ~10K workers over the last two months.
    • Exxon's (XOM -1.3%) Imperial Oil subsidiary has cut staff at its Kearl Lake Canadian oil sands project in Alberta to 1,500 essential workers from ~4K as it battles an outbreak.
    • BP was forced to delay the expansion of its Tangguh liquefied natural gas project in Indonesia and the startup of its export facility offshore Mauritania and Senegal due to COVID-19.
    • Outbreaks at large oil projects could lead to production cuts, and "if this escalates, it's a big risk," says S&P Global Platts' Chris Midgley.
    • General Electric (GE -2.7%) tumbles after warning of negative free cash flow this year, in a presentation at a Bernstein conference.
    • The company expects Q2 free cash outflow of $3.5B-$4.5B, considerably wider than analysts' average estimate of negative $2.5B.

    • Credit Suisse analyst Adam Baumgarten starts coverage of KB Home (KBH +1.5%) with an Outperform rating and Lennar (LEN -1.9%) with a Neutral rating.
    • With its emphasis on entry-level homebuyers, KB Home's order growth and stock performance should outpace move-up/active adult and luxury peers PulteGroup (PHM -0.3%) (rated Neutral) and Toll Brothers (TOL +3.1%) (rated Neutral), Baumgarten wrote.
    • Sees Lennar in line with sector average and long-term trends due to its in-line margins, high leverage/land position, and relatively lower entry level exposure vs. peers like D.R. Horton (DHI -1.7%) (rated Outperform) and Meritage Homes (MTH -0.2%) (rated Outperform).
    • Compare KBH key stats with those of its peers:

    • There is a lot of talk about the unwinding of the stay-at-home trade, but investors are still placing a premium on the food delivery, packaged food and mealkit sectors.
    • HelloFresh SE (OTC:HLFFF) is up another 1.81% in Frankfurt today and is 102% higher over the last 75 days as the meal-kit company stays popular in the social distancing reality.
    • Blue Apron (NYSE:APRN) is up 2.39% today and is showing a 224% rise over the last 90 days.
    • Meanwhile, food delivery specialist Waitr Holdings (NASDAQ:WTRH) racked up a nifty 623% gain over 90 days, while GrubHub (NYSE:GRUB) tracked 20% higher.
    • As for packaged food stocks, YTD standout gainers include SunOpta (NASDAQ:STKL) +77%, Beyond Meat (NASDAQ:BYND) +63%, B&G Foods (NYSE:BGS) +32%, Hain Celestial (NASDAQ:HAIN) +19% and General Mills (NYSE:GIS) +14%.
    • Micron Technology (MU -3.5%) gives back a chunk of the gains it enjoyed late yesterday when it raised its revenue forecast for the current quarter, citing strong chip demand from cloud providers.
    • Analysts heaped praise on the company, with BofA's Simon Woo noting Micron was seeing stronger chip demand and better average selling prices, helped by the work-from-home economy.
    • Micron's margin improvement should continue into H2 and even 2021-22, Woo says in raising his stock price target to $70 from $60.
    • The future remains bright for Micron after raising guidance, Evercore ISI's C.J. Muse says in reiterating his Outperform rating and $75 target.
    • "The update is a clear positive for Micron, with memory trends holding up amidst COVID-19 pressure and exceeding investor expectation on growing concerns over falling spot memory prices," Muse writes.
    • But Citi's Christopher Danely reiterates his Sell rating, saying his firm's recent market survey "indicates DRAM pricing will weaken in H2 due to elevated inventory at both cloud and mobile customers."