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Monday Marching Madness

George Floyd Death - NBC News | NBC NewsThe First Amendment is getting a workout this weekend! 

Usually the Second Amendment gets all the attention as it's backed by the gun lobby but the First Amendment needs a lobbyist it seems as the President is attacking the Freedom of the Press and Speech – which used to be a big one in this country that we cared deeply about – and now "the right of the people peaceably to assemble, and to petition the government for a redress of grievances" is under attack as well

And what is the grievance?  Well, the sign below says it all.  While killing black people is a daily event in the US with 7,666 of "them" killed by the police in the past 6 years for an average of actually 3.5 each and every day in America.  It's one of those things we know is happening but we accept.  We were upset about it for a while (body cams) but then WE forgot (and WE is, of course, white people because I don't think it's the kind of thing you forget if you are black) but then George Floyd was tortured and murdered right on camera for using a counterfeit $20 bill that he may have had no idea was counterfeit.  

Floyd was a bouncer in a club, he ended up with a fake $20 bill and spent it.  He was also a truck driver (because everyone needs 2 jobs in Trumpland) to support his wife (widow) and daugter (now fatherless).  Living in Minnesota is always risky for black men, who are 4 times more likely to be killed by the police than white men – despite making up just 5% of the population.

Data dive: Racial disparities in Minnesota traffic stops

I want to be able to go in a White neighborhood and feel safe.  I want to be able, when the cops are driving behind me, not to clench and be tense.  I want to be able just to be free and not have to think about every step I take. – Protester

People are mad as hell and they are not going to take it anymore – I don't see this as being a short-term thing.  The NY Times has a great bunch of photos from around the country including this one of a truck driver who decided to take matters into his own hands and make America even greater by plowing his tanker truck into a crowd in Minneapolis this weekend.  

I'd say the people in this country are pretty darned divided and the upcoming election is not going to be a big help in that regard.   Like everything else, the markets seem to be ignoring this news and we can once again short the S&P 500 (/ES) at 3,050 this morning as well as the Nasdaq (/NQ) when and if it crosses below 9,500 but with very tight stops above on both.  Oil (/CL) is also a short at $35 since OPEC is meeting but they will either keep the same output cuts or reduce them – there's no way they will cut further so why would oil go higher when we're still swimming in it?  

Remember, we have the Non-Farm Payroll Report on Friday, which will bring us close to 30M jobs lost since March (2 reports) and it's not like things are picking back up very fast.  The Fed has a meeting next Wednesday so no Fed speak ahead of the meeting – another reason I am favoring shorts as it's all up to Donald Trump, Larry Kudlow and Steve Mnuchin to keep our economy on track this week – so place your bets accordingly!  

"You don't know me but I'm your brother

I was raised here in this living hell

You don't know my kind in your world

Fairly soon the time will tell

Take this message to my brother

You will find him everywhere

Wherever people live together

Tied in poverty's despair" – Doobie Brothers


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  1. Good Morning.

  2. Like I said last week, I am too exhausted mentally to worry much about the markets now! And it's getting worse. Some of us here were worried when Trump was elected and others were more pragmatic and told us that we would be fine. 100,000 people are not fine now and there are battles in our street.

    We got lucky when Trump started because he inherited basically a country that was healing from the worse recession in memories, a country that seemed to be making stride as far as racism and xenophobia was concerned. And for 3 years, we had no major catastrophes, just small crisis of Trump's making. But we now see his incompetence, his selfishness, his corruption and that of his team and enablers and it's killing our country. So no, we are not fine and 4 more years would be an utter disaster. We need to heal again and that cannot come from people who have no empathy. 

  3. 3 years/StJean – no problems depends on where you're sitting. I was sitting in Korea in spring 2017, and having B-1 bombers and V-22s flying overhead was pretty dang worrisome.

  4. True, snow! I guess Trump has been a danger for the entire world! And we can't forget Puerto Rico. But again, mostly his own making.

  5. I am at home, but I barely recognize this place.

    I hope that this link will work that a friend/artist made.

    It gives you an idea of what it looks like on some nearby streets.

    That is my post office. It is getting harder to procure needed things like groceries, my wife and sone drove out to the suburbs on Friday in search of a market that was open. Stores and roads are closing earlier in the evening to get people home before the curfew. 


    Here is quite a clip from our local news from Mad” Mike Max, normally a sports reporter at WCCO who is one of my new heroes!

    I do think he may have been little positive towards the end, but it’s understandable to look for the good. This reporter and his photographer were chased into a garage with dumpsters at the same location hours before. There should be a better way of distinguishing the press. There are too many reports of them being fired at and arrested. That should not happen in the U.S. (or anywhere).

    When I say fired at that means rubber bullets, for now. I do know that the National Guard does have some members with “live-lethal” rounds if things really get out of hand. I hope that it never comes to that. We do not need another Kent State. I think some of the police tactics are the result of less lethal force though. If they “accidently” use to much CS gas or rubber bullets, they just hurt people and there is not a detailed investigation.

  6. Now a little investment focus. I have owned AAXN since Phil recommended it and my cost basis is $6 and it was TASR. I like selling calls for at least a 20% annual return. You can see their stamp on most police body cam videos now, instead of the guns.

    I also own WRTC, Wrap Technologies, Inc., They are a security technology company, providing solutions to  primarily law enforcement and security personnel. They make a product that is a hand-held remote restraint device that discharges an eight-foot bola style Kevlar tether to entangle an individual at a range of 10-25 feet. It could be another way to safely and effectively control encounters.  It can temporarily control an individual or impede flight by targeting and wrapping an individual’s legs. I have fashioned my own weapon; it is a bocce ball in a big sock. I hope that I never need to use it.

    Another bizarre thing that happened on our street is that we realized that there was a parked tow truck. It did not have license plates. Someone called on it and found out that it was stolen from another part of the city. This seems to be happening more lately.

    I don’t think very many are paying attention to Covid-19. There was a huge food drive near my house yesterday. I wonder if anyone considered the ramifications of thousands of people picking over goods and the same paper bags.  Getting food to people now is probably more important now. When they arrest hundreds of people, they get carted off in relatively tight quarters in vans and buses, that could be an issue too.

    I am not sure how the market figures social unrest into projections.

  7. Good morning!

    You have to give up on the bear side if we hold 3,000 this week.  Nice little dip at the open though but not on the Nas (sorry) – that seems bullet-proof.

    4 more years/StJ – I don't even understand how that's a possibility we need to consider, yet here we are. 

    Sorry you have to go through this Randers, stay safe.  I like that reporter, hope he moves up.  And you are right, there is good to be found and I wish they would report more of it.

    Police are doing their jobs and the protesters are doing theirs.  It would be nice if they could distinguish that from the rowdies and the looters but it serves Trump's interest to lump all protest in with criminal behavior as he doesn't want any of it.

  8. AAXN/Randers – Our Stock of Last Decade!  I miss them.  I'm baffled by the way the market is ignoring the riots but, once again, Liquidity seems to be overriding everything else.


  9. sold a few PFE 2022 $30 puts 

  10. It’s No Optical Illusion—U.S. Stocks Really Are Expensive 

    The headline price/earnings ratio can be misleading, but a plunge in earnings and a recovery that will take time really does make American stocks



  11. Phil/TSLA

    Good morning!

    is TSLA up 5% today because of the success of the rocket launch or is there some other reason?

    or, for no reason? Or Elon exercising his options that he just got?

  12. Expensive/Batman – Yeah, that's what I keep saying.

    TSLA/Maya – Well they just got huge publicity from that launch – even though Space X is a totally different company.  

    Did we ever talk about BNS – I remember someone asking me that and the research is still on my screen?

  13. There's going to be another COVID wave. If your BMI is over 25 you want to get under that number immediately. There is absolutely no way a person cannot safely lose at least 2 pounds a week.

  14. More healing:

    President Trump said on Monday that state governors who do not order protesters arrested and jailed “for long periods of time” will look like “jerks.”


    Speaking on a private conference call, audio of which was obtained by The New York Times, Mr. Trump began the conversation with an extended, angry diatribe.

    “You have to dominate,” he told governors on the call. “If you don’t dominate, you’re wasting your time — they’re going to run over you, you’re going to look like a bunch of jerks.”

    Mr. Trump, who has not addressed the nation since the unrest began, said he was putting Gen. Mark A. Milley, the chairman of the Joint Chiefs of Staff, “in charge,” but did not immediately specify what that meant or if he would deploy the military to quell the violence in the nation’s cities.

    ?Alluding to television footage of violence and looting, Mr. Trump called the people committing those acts “scum” and demanded of the governors: “Why aren’t you prosecuting them?” Taking over a call that was supposed to feature Vice President Mike Pence, the president said Minnesota had become “a laughingstock all over the world.”

    In Louisville, Ky., one man was killed when shots broke out as the authorities cleared a large crowd. The Louisville police chief said that law enforcement was fired upon, and both the police and the National Guard returned fire. Gov. Andy Beshear instructed the Kentucky State Police to investigate.

    In Chicago, the police superintendent, David Brown, excoriated looters on Sunday. Gov. J.B. Pritzker said he had called up the National Guard after a request from Mayor Lori Lightfoot.

    In Iowa, the police said riots had broken out in Davenport, and at least two people were killed and one police officer injured in a series of shootings.

    In California, all state buildings “with offices in downtown city areas” were ordered to close on Monday. There were widespread reports of looting in Santa Monica and Long Beach. One police officer suffered a gunshot wound while on duty in Venice. A news helicopter in Los Angeles recorded a police S.U.V. driving into a group of protesters, knocking two people to the ground.

    In Philadelphiapolice officers in riot gear and an armored vehicle used pepper spray to repel rioters and looters. A wall of officers blocked an entrance ramp to Interstate 676 in the city, where public transit was suspended starting at 6 p.m. as part of a curfew. In the morning, many business owners were sifting through ransacked stores.

    "Unemployment is gasoline, and then abuse of power is the match,” one protester said after looters smashed the windows of a Duane Reade drugstore in Lower Manhattan.

    “In the right circumstances, ka-boom. People don’t have anything to lose,” he said. “‘If a guy can get away with murdering a guy, I’m pretty sure I can get away with stealing an iPhone’ is the attitude."

  15. The European PMIs look troubling

  16. Survey: US factories sink in May for third straight month

  17. Arizona now has a statewide curfew thanks to the peaceful protestors doing millions of dollars worth of damage.

  18. Phil / TSLA

    This could be another reason why TSLA is up. 

    Tesla drastically accelerates Model Y delivery time.

    I did your TSLA trade some time after you had done.

    After today's price increase, 

    I rolled over the TSLA trades as below.

        3   Long 800 2021 Puts    to   Long 900 2021 Puts

        3   Short 800 Jun Puts     to   Short 850 Jun Puts

        2   Short 850 Jun Calls    to   Short 900 Jun Calls

    And added 

        1   Short 950 Jun Call. 

    This reduced my cost basis from NET $24,000 to $18,000 and increased the strike price. 

    Did I do the right thing? Should I have waited until Jun expiration before rolling?

  19. Checking in on irrational idiocy. Yep. 483% premium. This is an issue backed by a cash instrument. It cannot generate future returns. It's a pyramid scheme operaitng on top of another pyramid scheme. How can this be trading for $130???? I mean, how? Anyone?

    How can anyone say that CMG or TSLA is overpriced if the market can value cash at 5x?

  20. A correction to TSLA trades

    Rolled over Jun Calls to Puts to Jul Calls and Puts.

  21. Statewide/Dawg – That seems like a bit of overkill.   Interesting that places with much larger protests had less damage.  Seems to be places where the police are notoriously hard on people that are getting the most blowback.  I head the big damage was in Scottsdale of all places – at a mall!

    TSLA/SK – Well good timing, I was just going to call for an adjustment.  Yes, you jumped the gun.  We closed the short puts and now we have to roll on this pop, what we're doing is:

    TSLA Short Call 2020 19-JUN 800.00 CALL [TSLA @ $879.00 $44.00] -2 4/17/2020 (18) $-21,000 $105.00 $-8.97 $-293.18     $96.03 $33.58 $1,795 8.5% $-19,205
    TSLA Long Put 2021 15-JAN 800.00 PUT [TSLA @ $879.00 $44.00] 3 4/17/2020 (228) $67,434 $224.78 $-89.71     $135.08 $-13.55 $-26,912 -39.9% $40,523

    In the STP, we need to adjust TSLA.  The short June $800 calls are $96.03 ($19,206) but we sold them for $21,000 so not a tragedy at all – we simply didn't get paid on this cycle though we did close the short puts with a $30,000 profit that covers the loss on the long puts.  

    Fortunately, the July $900 calls are $70 so let's sell 3 of those for $21,000 and put a stop on the short June $800 at $105, which would be $21,000 but hopefully TSLA comes back down a bit and we make money on both.  The 3 long Jan $800 puts are $135 and we can roll those up to the short Jan $850 puts at $160 for $25 ($7,500) and we'll wait for a pullback to sell more short puts.  

    Back to you, SK – I really don't see the Model Y as having a real impact on earnings but it does sound good, right?  Your re-targeting seems fine – essentially you did what we did officially.

    Good point BDC.  

  22. Someone else not familiar with our legal system:


  23. Isn’t this what the foxies and second amendment lovers have been having wet dreams about since they were in high school?  To resist a tyrannical government abusing power?   Oh wait……apologies.  The foxies aren’t being oppressed by the tyrannical government…it’s other people, who happen to have a bit of a darker complexion, not doing what they’re told and disturbing the peace.  Move along….nothing to see here.  And buy that dip.

  24. Resist/Marz – Yes but the tyrannical Government was brown or Liberal, not orange and Conservative.   I see plenty of white rioters but you'd think that doesn't exist from Trump/Fox.  

    Thousands take to Salt Lake streets in protest of George Floyd ...

    Four California Men Accused of Inciting Riots in Charlottesville ...

    Friggin' white people! 

    White People Rioting for No Reason

    Right and Left on the Violence in Charlottesville - The New York Times

    That last one is of the "Fine People" marching in Charlottesville.  Forgot about that one already…

    The Psychology of Rioting: The Language of the Unheard


    "Let me say as I've always said, and I will always continue to say, that riots are socially destructive and self-defeating. I'm still convinced that nonviolence is the most potent weapon available to oppressed people in their struggle for freedom and justice. I feel that violence will only create more social problems than they will solve. That in a real sense it is impracticable for the Negro to even think of mounting a violent revolution in the United States. So I will continue to condemn riots, and continue to say to my brothers and sisters that this is not the way. And continue to affirm that there is another way.

    But at the same time, it is as necessary for me to be as vigorous in condemning the conditions which cause persons to feel that they must engage in riotous activities as it is for me to condemn riots. I think America must see that riots do not develop out of thin air. Certain conditions continue to exist in our society which must be condemned as vigorously as we condemn riots. But in the final analysis, a riot is the language of the unheard. And what is it that America has failed to hear? It has failed to hear that the plight of the Negro poor has worsened over the last few years. It has failed to hear that the promises of freedom and justice have not been met. And it has failed to hear that large segments of white society are more concerned about tranquility and the status quo than about justice, equality, and humanity. And so in a real sense our nation's summers of riots are caused by our nation's winters of delay. And as long as America postpones justice, we stand in the position of having these recurrences of violence and riots over and over again. Social justice and progress are the absolute guarantors of riot prevention." – ML King

  25. Not sure what I find more disturbing, a US Senator calling for US military action against US Citizens, or 8,600+ people liking the idea.

  26. Randers-So disheartening and sad to see those pictures of my stomping grounds as a child and adult. My family history goes back generations when my grandfather started building homes in uptown in the late 1890's. We lived in homes he built right off Lake St and Hennepin ave. Most of the family is at Lakewood Cemetery and both my father, uncles, brother and myself graduated from West High. Such a total waste of so many fine attributes a city can manifest. The lakes, the cultural aspects, the green ways make it special. It is horrible to have it special for these reasons that are happening now. Thanks for sharing.

  27. BTW this market is going to take a deep dive-feel it coming!

  28. Isn't it more likely that Model Y's are being delivered faster because there is a lack of demand?  If they had a huge backlog, there would be a big delay between order date and delivery date.  

  29. Resist/Phil – Agree 100%—it’s great to see the solidarity that many white people (and other races) are showing with the protesters (I am white and i agree with the protesters).  The sad part is that the majority of the protests are peaceful and grievances are being aired/discussed with police officers, but there are a few agitators that are grabbing all the attention by starting riots and looting, which doesn’t help the cause.  I understand why, without agreeing with the rioting.  It also doesn’t help when police officers are tasing innocent people, shooting journalists with rubber bullets or driving their cars into crowds of protesters.  There is a lot of pent up discontent (not just decades worth, but centuries worth) that needs to be addressed, and it’s even more sad that we don’t have the leadership in place to unify and calm things down.  

  30. It's all disturbing, EMike.

    Dive/Palotay – You wouldn't know it from today's action.   I agree on Model Y re. demand but the fact that they are delivering any is a positive of sorts.   Doesn't take much to get TSLA traders excited. 

    Leadership/Marz – Well that's the looming issue.   Usually, in a crisis, the President is the voice of reason – not one of the agitators.  People are so into absolutes these days.  There are bad citizens and there are bad policemen and those groups need to help weed out their own bad seeds – this ride or die mentality (GOP included) that groups have now is becoming a big problem.  

  31. TSLA $890!

    This says it all:

    • In her latest market commentary, Charles Schwab Chief Investment Strategist Liz Ann Sonders opines on the disconnect between Wall Street and Main Street and how markets have shrugged off "overwhelming" and "devasting" news flow.
    • There is "no shortage" of potential negative catalysts, she writes, but notes that Covid-19 solutions and liquidity have been key forces behind the rally.
    • Getting "easier" to understand the skepticism of that disconnect as joblessness surges, and there's some truth to the idea that the market is "rigged," but it comes in the form of Fed and Congressional support that could have made "whole" about 60% of laid off workers, she writes.
    • She reminds market watchers that bear markets typically start ahead of recession start dates, and end in advance of recessions' end — while economic data is still poor.
    • Complacency is among her concerns after a "parabolic" move in stocks above their 50-DMAs after the move from the lows.
    • Other concerns include second virus waves, second-order effects of shutdowns, U.S.-China tensions, election uncertainty, and civil unrest.
    • She, as neither an "ardent" bull or bear, calls on investors to diversify and rebalance.

    • Valero's (VLO +0.4%) Port Arthur, Tex., refinery is running its two crude units at ~58% of their maximum rate of 424K bbl/day on low demand and storage fills up, Bloomberg reports.
    • The bigger AVU-146 crude unit and smaller AVU-147 CDU reportedly are operating at 245K bbl/day after running at ~300K bbl/day, or just below 70% of maximum rates in May.
    • The refinery's fluid catalytic converter is running at minimum rates, rates on the coker are reduced and all the hydrotreaters except the distillate hydrotreater are at minimum rates, according to the report.
    • Piper Sandler upgrades Ulta Beauty (ULTA -2.3%) to an Overweight rating after having it slotted at Neutral.
    • Amid the new retail backdrop, the firm sees Ulta as a primary beneficiary from department stores and other channels losing market share.
    • The Piper boost arrives after Ulta fell short with Q1 earnings.
    • "While the results were worse vs. lowered expectations (particularly on the gross margin line), we see green shoots for the industry (skincare, haircare) on the other side of CV-19 and see ULTA's digital ecosystem as fueling higher average spend per customer."
    • Marriott International (MAR +7.0%) rallies after CEO Arne Sorenson says the hotel operator has reopened all its hotels in China and is seeing a rush of activity.
    • "It's not just leisure travel growing, but it is business travel. Chinese are flying again," Sorenson told an online during a presentation today.
    • Sorenson also pointed to steady improvement for Marriott in the U.S.
    • Goldman Sachs Travel and Leisure presentation webcast 
    • JPMorgan starts off coverage on CarMax (KMX +2.2%) with an Overweight rating and December 2020 price target of $105.
    • Analyst Rajat Gupta: "While the COVID-19 pandemic is set to weigh on earnings near-term, ultimately it should accelerate the company’s omni-channel roll-out, resulting in higher throughput in the attractive used vehicle retail market."
    • "Revenue growth post-pandemic is likely to convert at a higher incremental margin, given both a move toward more on-line sales and leaner cost structure. As these initiatives begin to bear fruit and the benefit to earnings trajectory beyond FY21 becomes more clear, we expect KMX’s P/E multiple to gravitate higher over time, similar to other retailers that have successfully embraced on-line sales."
    • The 52-week high on CarMax is $103.18.
    • Tesla (NASDAQ:TSLA) is up 5.88% on the day to $884.08 even with COVID-19, macroeconomic headwinds and various other challenges far from cleared.
    • Wedbush analyst is attributing some of today's gain to the Musk brand that got a rocket boost over the weekend.
    • "While SpaceX and Tesla are separate companies despite some R&D cross pollination in some key areas, from a consumer perspective the Musk DNA remains the linchpin to both of these next generation technology stalwarts and we would characterize the historic success of SpaceX as another major shot in the arm to the Tesla brand," reasons Ives.
    • Morgan Stanley's Adam Jonas doesn't disagree. "We believe the success of SpaceX in achieving some of the most sophisticated challenges in science has a direct bearing on public, investor and government perception of his ability to lead and execute," he writes.
    • So does Elon Musk's success or lack thereof at SpaceX have any bearing on the market's perception of Tesla? Jonas thinks it does. "While we cannot ascribe a dollar amount to this factor, the credibility of Musk's leadership even outside of the automotive business, matters to Tesla," he reasons.
    • Tesla's all-time high is $968.99.
    • Some merger-arbitrage investors are shifting their strategies away from long positions and either reducing holdings in target companies or shorting them as the coronavirus raises the risk that deals will either be repriced lower or fall apart.
    • The probability of deals failing to close jumped to 33% in mid-March from 4% in January, according to Northstar Risk, which provides software to hedge funds; since then the probability has receded to a still-high 20%.
    • They're not abandoning long positions in merger arbitrage bets but are looking at or increasing short positions, according to Andy Baker, who runs special-situations trading at Barclays.
    • Raj Vazirani, for one, bet on Independent Bank Group's (IBTX -1.4%) acquisition of Texas Capital Bancshares (TCBI +6.5%) in January, after the two banks agreed to the deal in December 2019. But after IBTX's CEO refused to comment on the deal during an April earnings update, Vazirani exited his long position and started selling the stock short. The two banks called off the deal last week.
    • Kite Lake Capital Management's Jamie Sherman started shorting transactions when he thinks the market hasn't properly priced in the risk of deal failure.
    • Roy Behren, of Westchester Capital Management, bought Taubman Centers (TCO +3.7%) stock after Simon Property Group (SPG +6.0%) agreed to buy the shopping center REIT for $3.6B; though he still expects the deal to close, he said the risk of a renegotiated price or collapsing altogether have increased.
    • The market apparently agrees. Simon agreed to pay $52.50 per share for an 80% stake in Taubman; TCO, though, is recently trading at $42.85.
    • Nestle SA (OTCPK:NSRGYlost a case in Dutch court over the use of the Incredible Burger brand name due to its similarity to Impossible Foods' (IMPF) name.
    • Due to the setback, the company is renaming its plant-based patties sold in Europe the Sensational Burger and all other products that used the Incredible name.
    • "We are disappointed by this provisional ruling as it is our belief that anyone should be able to use descriptive terms such as ‘incredible’ that explain the qualities of a product," reads a company statement.
    • Impossible Foods is trying to land approval to sell its products in Europe.
    • UBS says recovering U.S. sales across Yum Brands' (YUM +1.7%) chains is supportive of further upside, particularly as more international units reopen.
    • Analyst Dennis Geiger sees the Taco Bell brands as well positioned in particular.
    • "Our franchisee checks suggest improved comp trends to recently ~flat, w/ several franchisees noting positive recently. We’re encouraged by the sales recovery despite no breakfast in many locations (+MSD-HSD sales mix historically) and lagging late night industry trends. Other positive takeaways: delivery sales have increased meaningfully; the innovation pipeline remains robust even as menu simplification will likely result in net fewer items; and franchisee profitability appears to be closer to pre-COVID-19 levels," notes Geiger.
    • UBS has a Buy rating on Yum and price target of $105 (20X the near-term EBITDA estimate). The average sell-side PT on Yum is $90.04
    • Pfizer (PFE -7.2%) investors heading for the exits after disappointing results from an Ibrance (palbociclib) study should reconsider says the Wall Street Journal.
    • Shares have been under water today since the company announced that the study, testing the effect of the kinase inhibitor over and above endocrine therapy in early-stage HR+/HER2- breast cancer patients, is unlikely to achieve the primary endpoint of extending survival.
    • The paper says the setback, potentially dimming hopes of billions in extra revenue, is not catastrophic considering the company's size, adding that Ibrance currently generates ~$5B in sales in the HR+/HER2- breast cancer population and some oncologists are already prescribing it off-label as adjuvant therapy. Sales jumped 10% in the past quarter from a year ago and key patents remain in effect until at least 2023.
    • The company's shares are well-supported at 12x 2020 non-GAAP EPS guidance with a healthy 4% dividend yield.

    • YTD, the Bloomberg Barclays U.S. MBS Index excess return vs. Treasurys was -0.31% as of Friday, the worst showing over a similar period in seven years, also when the Fed was buying mortgage securities.
    • The Fed has provided $688B to the sector since market disruption in March.
    • The central bank's $295B of support in April helped push the excess return to +0.48%; but in May the Fed reduced purchases to only $101M, and excess return shrank to +0.03%.
    • One factor keeping investors on the sidelines is the robust prepayment speed over the past two months. With interest rates down, Americans moved to refinance. Conventional Fannie Mae 30-year prepayment rose to 26% after March's 42% rise.
    • Increasing forbearance also makes investors wary. As of May 17, ~8.36% of servicers' loans have fallen into forbearance, according to the Mortgage Bankers Association.
    • And of course, with the Fed now considered the "overriding driver of value and risk", according to a BofA survey, the question will be what happens when the Fed steps away.
    • Graph compares DMO vs. TLT

    • Channel checks by Wedbush Securities indicate same-store sales at Chipotle (CMG +4.3%) are running ahead of expectations.
    • Analyst Nick Setyan notes stores operating at 50% capacity during the week of May 25 were up high single-digits or low double-digits. Setyan also thinks Chipotle may be taking a conservative approach to opening stores due to the thriving off-premise sales trends.
    • Setyan raises his estimate for Q2 same-store sales to -9% from -20% and predicts a positive for Q3 is realistic, while keeping the estimate for the quarter at -4%.
    • Wedbush keeps an Outperform rating on Chipotle and hikes its price-target to $1,200 (47X the firm's 2022 EPS estimate net of cash). "We believe a premium is justifiable given our expectation of accelerated growth post-COVID as CMG's market share gains accelerate," updates Setyan.
    • Interactive Brokers Group (IBKR +0.4%May daily average revenue trades fall 4% from April and jump 84% from May 2019.
    • Ending client margin loan balances of $23.3B, up 13% M/M and 10% lower Y/Y.
    • Ending client credit balances of $70.0B, including $3.0B in insured bank deposit sweeps, up 1% M/M and 32% Y/Y.
    • 839K client accounts, up 4% M/M and 31% Y/Y.
    • Average commission cleared per commissionable order of $2.83, including exchange, clearing and regulatory fees.
    • Novagold (NG -3.7%) says it will provide a formal response to "numerous inaccuracies" made last week by short-seller J Capital Research, whose report says the Donlin Gold project will never be mined.
    • "If the information from the company's feasibility studies were presented in a more honest light, investors would understand that the Donlin deposit, of which they own 50%, is not feasible to put into production at any gold price," the report says.
    • The company says it is exploring its legal options in various jurisdictions against the firm.

  32. Pirate

    I have lived in a few parts of the country. I grew up in the suburbs and then lived in Uptown, then near Lake Harriet. I loved my 3 lake (Harriet, Bde Maka Ska, Cedar) bike commute. Now I live near the nice which was nice too. Hopefully better times are ahead. At least the choppers are not dropping barrel bombs! but I have seen them carrying water.

    • ReWalk Robotics (RWLK +24.4%) has been granted 510(k) clearance to ReWalk P6.0 by FDA on May 26, 2020.
    • Source

    I like these guys but no options.

    • Morgan Stanley hikes its price target on Amazon (AMZN +1.1%) to $2,800 from $2,600 on an online buying thesis that continues to gain strength.
    • "2020 is setting up to be an e-commerce inflection year as the combination of shelter-in place, lower spend on experiences (dining out, bars, travel, etc) and gov’t stimulus have driven dollars online. Trends have accelerated monthly as shoppers have moved from stocking up (March), to buying more essentials and home items (March/April), to broad based larger, more frequent buying (April to now) as our bottom-up e-commerce model leads us to estimated 58% Y/Y e-commerce growth in April."
    • MS has an Overweight rating on Amazon.
    • Shares of Amazon have been in an accelerated upward trend since the lockdowns began in the U.S.
    • With bank deposits surging at U.S. banks, they're not turning to the Fed to fund the government-backed loans they made to small businesses.
    • As of May 27, banks only borrowed $49B from the Paycheck Protection Program Liquidity Facility, while they loaned $511B to small businesses under the Small Business Administration's PPP.
    • Lenders pulled in $1.8T of new deposits since Mary 11, a 13% increase and the biggest two-month increase since at least 1973, when comparable data is available, Bloomberg reports.
    • Though the Fed loans are fairly cheap at 0.35%, deposit costs have declined. Bank of America's (BAC +2.2%) interest-bearing deposits cost was 0.47% and JPMorgan Chase's (JPM +1.5%) was 0.5% in Q1; with non-interest-bearing accounts making up 30% of all deposits at the four biggest banks, that gives them cheaper funding than the Fed's rates.
    • Among the big U.S. banks, Citigroup (C +2.1%) borrowed $1.3B from the Fed to fund some of the $3.3B of loans it made by May 1; it had the highest deposit cost among the four biggest banks in Q1 and the smallest deposit base.
    • Banks can still access the PPPLF in the next two years, if more loans than expected are still outstanding and if liquidity tightens.
    • Another bank near the top of the list is ConnectOne Bancorp (CNOB +0.8%), a regional lender in New Jersey; it's using $344M of funds to cover ~75% of the PPP loans it made. It has a loan-to-deposit ratio of 109%.
    • Small banks that lend more than they hold in deposits need to turn to other sources of funding, such as the Fed.
    • That banks aren't using the Fed facilities is "actually good news," BofA CEO Brian Moynihan told Bloomberg Television on May 19. "That means you're seeing stability in the funding structures."
    • Bed Bath & Beyond (BBBY +3.8%) discloses that Chairman Patrick Gaston has stepped down as chairman of the board.
    • The retailer says Harriet Edelman is the new independent chair of the board, effective immediately. Edelman is described as an accomplished senior exec with over thirty years of global operating experience in consumer goods and financial services. She has served on large public company boards for nearly 20 years in the U.S. and Europe.

    • Today's update from Southwest Airlines (LUV +4.6%) is about what was expected. CEO Gary Kelly said revenue is down 80% to 85% from a year ago, but trending upward slowly.
    • As was largely expected, Kelly continues to warn on a brutal fare environment as the carrier uses lower pricing to draw back in travelers.
    • Southwest is higher on the day after TSA checkpoint data came in fairly strong for Sunday (352.9K travel throughput vs. 267.5K a week ago).
    • Apple (AAPL +0.5%) is set to reopen its remaining stores in Japan on Wednesday.
    • That follows the end of the government's emergency order.
    • It will bring back stores in Tokyo, Osaka, Kanagawa and Kyoto prefectures as of midday Wednesday.
    • Another 100 U.S. stores had resumed some operations last week, with more than half of them offering curbside service only.
    • Gun-related stocks are soaring after a weekend of civil unrest in the U.S.
    • American Outdoor Brands (NASDAQ:AOBC) is up 22.67% and Sturm Ruger (NYSE:RGR) is 8.68% higher. Retailer Sportsman's Warehouse Holdings (NASDAQ:SPWH) is 4.57% higher, Vista Outdoor (NYSE:VSTO) is showing a 12.15% gain and ammunition maker Olin OLN is 3.91% higher. Taser maker Axon Enterprises (NASDAQ:AAXN) is rallying 8.98% and Big Five Sporting Goods (NASDAQ:BGFV) is up 8.60%.
    • Also on the move are gunshot detecting firm ShotSpotter (NASDAQ:SSTI+3.40% and remote handcuff player Wrap technologies (NASDAQ:WRTC+8.77%. On the homefront, ADT (NYSE:ADT) is 14.41% higher on the expectation for more home security business.
    • Previously: Body-camera, surveillance stocks surge pre-market after protests (June 1)
    • Gilead Sciences (NASDAQ:GILD) is under modest pressure premarket, down 2% on light volume, on the heels of results from an open-label Phase 3 clinical trial evaluating antiviral remdesivir in hospitalized patients with moderate COVID-19 pneumonia.
    • Patients receiving the five-day regimen were 65% more likely to experience clinical improvement at day 11 compared to standard-of-care (SOC) treatment, a statistically significant outcome (p=0.017).
    • Patients receiving the 10-day course showed a trend of clinical improvement but the separation from SOC was not statistically significant (p=0.18).
    • Clinical improvement was assessed via a seven-point scale including hospital discharge, increased levels of oxygen, ventilatory support and death.
    • No new safety signals were observed.
    • Hexo (NYSE:HEXO) rose more than 30% pre-market after receiving its Health Canada licence amendment for the sale of dried and fresh cannabis, cannabis extracts, cannabis topicals and edible cannabis products.
    • The amendment applies to its Belleville, Ontario facility and includes an expansion to include beverage production.
    • CEO and co-founder Sebastien St-Louis said, the license "allows us to increase our processing capability significantly, achieve greater economies of scale, and continue to roll out more innovative 2.0 products across all of our brands Powered by HEXOTM, including hash, vapes, cannabis beverages, and other edible cannabis products.”
    • The FDA has signed off on a 166-subject Phase 2 clinical trial, REsCue, evaluating OPKO Health's (NASDAQ:OPK) Rayaldee (calcifediol) in patients with mild-to-moderate COVID-19.
    • Participants will receive either Rayaldee or placebo for four weeks. The primary objective is to raise and maintain serum total 25-hydroxyvitamin D within a range of 50-100 ng/mL in order to mitigate COVID-19 severity.
    • Shares up 9% premarket on robust volume.
    • The Semiconductor Industry Association, a trade group, is lobbying for $37B in federal funding that would include subsidies for the construction of a new chip factory, aid for states trying to attract semiconductor investment, and an increase in research funding, the Wall Street Journal reports, citing a draft of the proposals that it viewed.
    • The global COVID-19 pandemic has deepened concerns over the U.S.'s dependence on Asia for tech products and competing with China and renewed debate about government's role in nurturing innovation.
    • The SIA recommendations include $5B in federal funding for a new semiconductor factory that would be financed and operated in cooperation with the private sector. Intel (NASDAQ:INTC) CEO Bob Swan had proposed in April that the company work with the Pentagon to build and operate such a facility.
    • $15B would go to states as block grants to provide incentives for new chip manufacturing facilities and $17B would go to federal research funds.
    • A different trade group, SEMI, has also been lobbying for investment tax credit for purchases of machinery.
    • Under the SIA proposals, the funding would go to build facilities in the U.S., but would be available to U.S. and non-U.S.-based companies.
    • Although the SIA said its plan doesn't choose favorites, the $5B for foundry development was seen by some in the government and industry as an incentive for Intel to build a plant, rather than a non-U.S.-based firm, WSJ said.
    • Nonbank lenders, specifically business development companies ("BDCs"), may have a tough time surviving a slow economic recovery if the businesses that they lend to struggle to reopen or shut down as a result of pandemic lockdowns.
    • Several BDCs, including Oaktree Specialty Lending (NASDAQ:OCSL) , FS KKR Capital (NYSE:FSK), and New Mountain Finance (NYSE:NMFC) reported quarterly losses recently, mostly from markdowns on their loan portfolios.
    • BDCs will be focusing on maintaining enough cash to fund loan commitments, reduce debt, and keep their financing options open in coming weeks and months, analysts told the Wall Street Journal. That could become challenging as their borrowers seek to draw down credit lines to deal with the slow pace of the recovery.
    • Golub Capital BDC (NASDAQ:GBDC) has raised $300M and FS KKR has raised $300M of capital in recent weeks.
    • The pandemic will test sector's underwriting standards as many BDCs were formed after the 2008 financial crisis. “We haven’t seen underwriting through a full cycle,” Chelsea Richardson, an analyst at Fitch Ratings who covers the sector, told WSJ.
    • Keep an eye on their debt-to-equity ratios. Maintaining that gauge below two-to-one will be critical for those that want to keep financing options open, said to Lisa Kwasnowski, an analyst who covers the industry for DBRS Morningstar.
    • If loan values continue to fall as the businesses they lend to struggle to reopen, leverage ratios could push higher as a result of lower equity values.
    • That, in turn, could force BDC's to turn to the equity markets for more capital.
    • Barrick Gold (GOLD +0.6%) has offered an extra 15% stake in its Porgera gold mine in Papua New Guinea to local landowners, Reuters reports, citing a letter from CEO Mark Bristow attempting to break an impasse with the government.
    • Barrick was refused an extension of its expired lease over the mine last month, which Bristow said had "stunned" the company, forced it to halt production and "created significant liabilities and potentially material damages."
    • Any deal would be the first struck by a resources company under prime minister Marape, who came to power a year ago promising to retain a bigger share of the country's resource riches.

    • Total (TOT -0.7%) faces a revenue shortfall of at least $12B due to the oil price collapse, a third higher than its previous forecast made two months ago, CEO Patrick Pouyanne says.
    • Total had expected an oil price at ~$60/bbl for the year, but with the price is now closer to $30, the company must cope with a much bigger shortfall, Pouyanne told today's annual general meeting.
    • But the CEO said the company will continue to expand in the low carbon energy sector after recent acquisitions which will raise its electricity customers in France, Spain and Belgium to 8.5M from next year.
    • In a news conference addressing U.S.-China policies, President Trump announced first that the U.S. will terminate its relationship with the World Health Organization.
    • He also said the U.S. will suspend the entry of some foreign nationals from China determined to be security risks
    • Breaking story …
    • Research firm Cairn Energy Research Advisors predicts global sales of EVs in 2021 will jump 36% to top 3M vehicles for the first time ever.
    • "There's pent-up demand for electric vehicles," says Cairn managing director Sam Jaffe. Consumer surveys from other firms have confirmed that the price of gas is no longer one of the biggest incentives to make the switch into EVs.
    • The strong commitments of some governments in Europe and Asia are seen making 2021 an inflection point for the EV industry – just as Volkswagen (OTCPK:VWAGY), Ford (NYSE:F), General Motors (NYSE:GM), BMW (OTCPK:BMWYY), Nissan (OTCPK:NSANY) and other automakers make a stronger electrification push to challenge Tesla (TSLA +2.1%) for EV market share in certain markets.
    • The Federal Reserve, as part of its monthly update on the Funding, credit, liquidity and loan facilities programs, detailed the purchases that include ETFs.
    • iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSEARCA:LQD) among the top purchases and amounted to $326M as of May 19. 
    • Vanguard Intermediate-Term Corporate Bond ETF
    •  Vanguard intermediate-term corporate bond ETF (NASDAQ:VCIT) at $228M, followed by Vanguard short term corporate (NASDAQ:VCSH) at $226M and iShares high yield corporate (NYSEARCA:HYG) at $100.6M

    • SPDR Bloomberg Barclays high yield (NYSEARCA:JNK) and VaneEck fallen angel high yield (NASDAQ:ANGL) amounted to $89M and $11.1M respectively

    Fed buying Junk Bonds – Amazing!  No wonder the market can only go up…

  33. So will treasuries become the new junk bond?

  34. Good evening.

    Live footage of Trump in his bunker.

  35. looks like trump is picking a fight to me being mean to well behaved protesters

  36. he just showed live on tv how hes going to protect the peaceful demonstraters he ffffffffd