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Tuesday Turmoil – Trump Threatens More Violence

This is how we now treat Freedom of Speech and Assembly in America.

Day 7 of the protests and the President is ratcheting up the rhetoric, telling the Governors they have to "DOMINATE" the streets and, yesterday afternoon, in a scene you would think was from a movie where they want to establish that the Leader is an evil man who could not care less about his people, a PEACEFUL crowd was violently cleared from the President's path so he could walk to a church, hold up a prop Bible and make a speech threatening to use the US military to put an end to the protests.  

This is the point in the movie where you cut away to the heroes working from their basements with a plan to overthrow the monstrous tyrant, right?  Well, here's two such heroes who are willing to speak up – one from an attic and one from a garage:

And how are the markets reacting to the violence and the chaos all across America?  Well the Dow Futures are up 170 points (0.666%) this morning at 25,630 and if that's not a sign to short /YM, I don't know what is!  There is now a total disconnect between the markets and reality as many stocks are now making all-time highs on the premise that the pandemic is ending – which it clearly is not.

On Friday morning, we had 1,734,586 infections in the US and just over 100,000 deaths in Trumpland.  This morning we have 1,811,277 infections and 105,147 deaths so, in 4 days, we have 76,619 NEW infections – almost as many as China had TOTAL – and we've had 1,200 American's per day DIE of the virus.  1,200 per day is a rate of 438,000 per year and, of course, those people are disproportionately black so at what point would you take to the streets to fight for your people and your children's right to life, liberty and the pursuit of happiness – the principles this country were once founded upon?

Estate Planning And Your Pursuit Of Happiness

Aside from the US (1,811,277 infections), 3 other countries in the World which account for over half the World's virus cases (and are also growing the fastest) also have Conservative, Populist, Authoritarian Leaders:  Brazil (526,447 infections), UK (277,738 infections) and Russia (423,186 infections).  All 4 countries share the common theme of their leaders denying they had a problem for far too long – allowing the virus to become entrenched in the population and now very difficult to stamp out.

This pattern isn’t a coincidence, many political scientists believe. Illiberal populists tend to reject the opinions of scientists and promote conspiracy theories.  “Very often they rail against intellectuals and experts of nearly all types,” Steven Levitsky, who conducted the Harvard study said. The leaders “claim to have a kind of common-sense wisdom that the experts lack. This doesn’t work very well versus Covid-19.”

The Newcastle Herald's Opinion, Tuesday, May 19, 2020: Fierce ...In Brazil, Mr. Bolsonaro fired his health minister and has repeatedly called for states to end stay-at-home orders. In the United States, Mr. Trump rejected the views of experts for almost two months, predicting the virus would disappear “like a miracle.” In Britain, Mr. Johnson’s government initially encouraged people to continue socializing, even as other countries were locking down.

All four leaders also flouted guidance on personal protective measures early on, refusing to wear a mask or continuing to shake hands.  Often, leaders who responded more slowly have cited the need to prioritize economic growth. But the trade-offs between the economy and public health may not actually exist, scientists and economists say: The fastest route to economic normalcy involves controlling the spread of the virus.

This market is not rationally taking into account the ongoing crisis(es) and I strongly urge caution here.  These are the FACTS two weeks apart, note that Global Infections have grown from 4,718,215 to 6,299,759 in the past two weeks – that's 33% more people infected in just two weeks!!!

NOT A PRETTY PICTURE: Day by day, the global impact grows steadily.

You can see the spike that is being caused by re-opening yet we are barreling ahead with those plans anyway and now we are nicely distracted away from that danger while the protests are essentialy "super-spreader" events all over the nation.  

So please, be careful out there! 

 


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  1. Now I have seen everything, The yellow clown swinging the bible in his hand. Well they have to bring some jokes on European TV. Please lock him away.



  2. Good Morning.


  3. They used tear gas on the priests and other clergies that were helping peaceful protesters around that church so that Trump could hold up a book he never read! Where is the outrage from the good Christians in Congress! Hypocrites and phonies of course!

    Screw the markets, really!


  4. Good morning (such as it is)!

    I don't see the point to reading market news anymore – stocks go up – doesn't seem to matter what's actually happening.  Still, I have my Dow short – I caught the 25,600 line so that's my stop at the moment.

    Companies are still cutting jobs and we have NFP on Friday – I just don't see how we can sustain these levels in the face of economic reality.  Well, I guess I can —- MORE FREE MONEY!!!  But no Fed speak this week and no Congress to pass more spending you just have more empty promises from Trump to sustain us though I'm sure he's been using his $500Bn slush fund to pop the markets when he does something like tear gas the path in front of him – because he thinks if the market "reacts" positively after he does something horrible, it excuses his behavior.  So now he manipulates the markets to justify his actions.  $500Bn buys a whole lot of manipulation!

    • At the open: (6/2/2020)
    • Dow +0.55% to 25,616.03. S&P +0.3% to 3,064.90. Nasdaq +0.13% to 9,564.26.
    • Treasurys: 30-year -0.09%. 10-yr -0.06%. 5-yr -0.02%.
    • Commodities: Crude +1.33% to $35.91. Gold +0.27% to $1,754.95.
    • Currencies: Euro +0.39% vs. dollar. Yen +0.79%. Pound -0.56%.
    • Seagate Technology (NASDAQ:STX) says it is committed to a restructuring plan, with plans to consolidate its Minnesota facilities into one location and reduce headcount worldwide by ~500 employees across 12 countries.
    • The company believes the Minnesota consolidation will provide greater collaboration opportunities and drive economies of scale.
    • Seagate expects the plan will be substantially completed by the end of Q1 2021 and result in $74M in pre-tax charges.
    • Though much of the rally in broader averages in the past few weeks has been attributed to "reopening" and a move toward normalization, Wells Fargo is less sanguine, specifically when it comes to risks for media stocks in live sports.
    • The rally far from excluded media names, with some not far from their March levels.

    • But "fall football is an overlooked risk," analysts led by Steven Cahall wrote.
    • Even with 50% capacity at stadiums, it is a "sizable" drop to league revenues, with full capacity not an option until a vaccine is developed.
    • TV rights will likely be where teams turn to offset stadium revenue decline as players (who revenue share with teams) will likely balk at taking substantially less pay for elevated health risk. The NFL has a wide spread in salary, according to the analysts, meaning the supermajority of players earn substantially less than the Tom Bradys of the league.
    • The ensuing pressure from the players could lead the league to be "aggressive" in how it negotiates on TV rights, pressuring the media networks.
    • There's the actual value of the season to be considered, should a team not be able to play, or a plane not fly due to an infected team member, which, for a league where teams have multiples more staff than other pro sports (2x the next largest sport), complexity is greatly boosted in virus testing and logistics.
    • College sports see a "further compounded" issue with student safety at risk, and state-by-state reopening restrictions varying widely. The season may get cancelled, Wells Fargo adds. Disney's (NYSE:DIS) ABC, Fox (NASDAQ:FOXA) and CBS (NASDAQ:VIAC) have a college football as a "key part" of ad sales, and given the hurdles, it is an "underappreciated risk."
    • Football is already a "major sticking" point in the upfront sales, and ultimately, the analysts expect the media networks will accommodate concerns and requests for flexibility, given it is a buyer's market for TV advertising.
    • Downside impacts to 2020 OIBDA are seen for Disney at 6%, Fox at 11% and Viacom at 4%.
    • Given risks of "paying up" for rights in an ad recession, Wells prefers media names with less sports risk, like Discovery Inc. (NASDAQ:DISCA), Nexstar Media (NASDAQ:NXST) and Sirius XM (NASDAQ:SIRI).
    • On the travel and leisure front, adding to the NFL costs, Wells Fargo anticipates Delta (NYSE:DAL) reserving 7% of its 900 planes just for NFL teams to better ensure health --  a "costly endeavor" for the NFL. Marriott (NASDAQ:MAR) may also dedicate some hotels to NFL teams during the season.
    • Southwest Airlines (NYSE:LUV) is offering workers buyout packages and temporary paid leaves in an effort to avoid layoffs or furloughs in the fall.
    • Most Southwest employees with more than 10 years at the company would get a year's pay and four years of flight privileges if they take the early retirement package. Meanwhile, pilots would get paid about two-thirds of their average salary for five years or until they hit the age of 65. Employees that take the early retirement would also get a year of company-paid health insurance.
    • Airlines like Southwest that took federal grant money can't furlough any employees until October 1.
    • Shares of LUV are up 2.17% premarket to $34.34.
    • Copper prices climb to 11-week highs as more signs emerged that the economy in China is extending its recovery from the coronavirus outbreak.
    • Among the data, May vehicle sales in China are estimated to have increased 11.7% Y/Y.
    • Three-month copper on the London Metal Exchange was up 0.2% at $5,492.50/metric ton, the highest since March 13 and gaining 26% since hitting a 45-month low of $4,371/mt on March 19.
    • Strong physical demand for copper in China and tight scrap supplies are causing bearish speculators to close out positions and supporting its rebound in recent weeks, Deutsche Bank analyst Nicholas Snowdon tells Reuters.
    • The China Association of Automobile Manufacturers discloses in a post on its official WeChat account that vehicle sales in China were estimated to have increased 11.7% to 2.14M in May.
    • The monthly sales increase is the second in a row, although year-to-date China auto sales are still estimated to be down 23.1% Y/Y to 9.7M. Auto sales are forecast to drop 15% to 25% for the full year, depending in part on the severity of the pandemic.
    • Signaling the pick up in consumer spending, Visa (NYSE:V) total U.S. payments volume fell 5% in May from 18 % in April, while QTD payment volume was down by 11%.
    • May cross-border volume excluding intra-Europe transactions tumbles 45%, while global processed transactions fell 12%.
    • Travel related cross-border volumes declined 78% in May while cross-border eCommerce (excluding travel) continued to grow strongly, up 18%.
    • In aggregate, recovery in international markets in which the company processes the majority of transactions lagged the U.S. in May.
    • Volkswagen (OTCPK:VWAGYmust face potential financial penalties from two counties in Florida and Utah that may amount to a "staggering" additional liability arising from the company's diesel emissions scandal, a three-judge panel of the 9th U.S. Circuit Court of Appeal ruled today.
    • The ruling was a victory for Utah's Salt Lake County and Florida's Hillsborough County, which had sued VW for causing excess diesel emissions harmful to the environment and could in theory seek billions of dollars in damages.
    • Volkswagen settled U.S. criminal and civil actions prompted by the cheating scandal for more than $20B, but the court said that did not shield it from liability from local and state governments.

  5. Phil/TSLA

    Any short term crap roll on the puts? if the markets tank this could also come down now that Musk had achieved his target….

    regards


  6. Bad news is the STP is down to $530,022 but the good news is the LTP is up to $798,047 – total madness!  I think my stop on the pair is now $1.2M (up 100% since October) as $1,328,069 is ridiculous in this kind of market and, if we are unable to protect it – I'd rather have $1.2M in cash and we can build a new Watch List and start again.  

    I THINK we are well-hedged to the downside.  We had just under $494,850 downside protection as of Friday morning's review but it's untested so far – we don't know what we'll really gain on a short-term dip.

    TSLA/Pat – We just did them yesterday.  Got more bearish.


  7. Why Protests Rarely Rattle Markets

    What does the reaction to these events show? Historically, the market looks past most civil unrest. Stocks aren’t significantly more volatile in the months following any of the events listed. What’s more, the S&P rose in each year under study. Annual gains, excluding dividends, ranged from about 4% to 20


  8. both ETHE (bot yesterday at 135… couldn't stand it!), and GNUS up big today. 


  9. I have seen( and lived)  the Policecorps in the U.S  and also in Mexico, in Spain and France, in Europe any police force could NEVER think in putting someone in the floor (unless is a violent one) and NEVER ANYONE is allowed to put a knee in the throat of anyone!.

    Police forces in the U.S have a bad, bad problem of selection, instruction, performing and responsibility, American policemen usually are someone that is not integrated into the city they work.

    The concept of your "neighbor is a  policemen" is something inexistent in U.S. police forces, and the procedures and approach must change.

    Saying that …Afroamerican delinquency and actual looting chaos …seeing people in BMW´s in the looting is incomprehensible… here.


  10. Protests/Pstas – While you can use the past to guide you, you have to look at this situation in it's own light.  This is an issue that's been ignored by the markets since Trump took office and, frankly since 2013, when "Black Lives Matter" became a thing but that was during Obama's last term and the Zimmerman thing in 2012 and Michael Brown and Ferguson in 2014.  Trump being elected was a real slap in the face and things have simply gone straight downhill from there so the people who feel they are unrepresented, oppressed and have no voice are set off by a spark and take to the streets – what a shocker!

    I think we're at the beginning of a new rights movement and it's likely to get worse before it gets better since the economic conditions are not likely to improve enough to make the people who are protesting feel better about their Government and our "leadership" isn't very good at the healing thing so I wouldn't go comparing this to times when we had JFK and MLK and Obama (Rodney King) to pull our country back from the brink.  Trump is certainly more likely to push us over the brink!


    • Cruising along back above $10K, Bitcoin (BTC-USD) in the last few minutes has plunged about $600 for no apparent reason. It's currently changing hands at just below $9.6K.
    • Developing .
    • "One of the reasons why we modeled SpaceX's (SPACE) launch and satellite deployment was to find out when they might need access to outside capital," Morgan Stanley's Adam Jonas told CNBC in response to a question about a SpaceX IPO.
    • "It doesn't guarantee a timing, but in our minds, we're thinking to do the ambitious plans they have and the capital intensity of tens of billions of dollars to put people into orbit – and even on earth to work with those systems – we're thinking a couple of years."
    • Shares of Virgin Galactic (NYSE:SPCE) opened more than 7% higher on Monday after SpaceX's Crew Dragon docked with the ISS, heralding a new era of space travel.
    • The stock, however, cut its gains in half during the first few hours of trading and opened down 7% this morning.
    • Virgin Galactic remains tight-lipped on when the first paying passengers might take trips to space, but in February, the company insisted that its top priority was to fly Richard Branson in 2020.

    • Odeon Capital's Dick Bove upgrades Citigroup (C +2.6%) to Buy from Hold, noting that the lender could exit the pandemic crisis in better shape than it's currently in.
    • Citi gains 2.7%, outpacing it U.S. megabank peers.
    • The company has transformed since the 2008-'09 financial, exiting its problem businesses, "except for perhaps its Mexican subsidiary," Bove writes.
    • On the plus side: Citi has bolstered capabilities in capital markets and as a result its underwriting of investment-grade securities, European bond offerings, and equity offerings have increased.
    • "Fixed income trading could at least have advanced by 25% Y/Y," writes Bove.
    • In traditional banking, the corporate segment is gaining, offsetting declines in its consumer businesses.
    • "This stock is selling at 59.0% of book value in a company where cash and securities are 391.3% of common equity. This does not compute for me. Loan losses may rise for a period, but there is much, much more to this company than its loan losses," Bove sums up.
    • Bove's Buy rating contrasts with Neutral Quant rating and agrees with the average Wall Street analysts' rating of Bullish (10 Very Bullish, 9 Bullish, 6 Neutral).
    • Citi (orange) lags SPY and XLF in the past year:

    • Online retail names are having another good day after Piper Sandler calls Wayfair (W +12.9%) cheap even after its sizzling rally.
    • Movers include MOGU (MOGU +16.3%), Baozun (BZUN +12.1%), Blue Apron (APRN +5.4%), Carvana (CVNA +10.3%), Overstock.com (OSTK +5.1%), Chewy (CHWY +5.3%), Etsy (ETSY +2.4%), Farfetch (FTCH +2.0%), Revolve Group (RVLV +3.9%) and eBay (EBAY +2.1%). Closely-related Peloton Interactive (PTON +6.7%) is also having a strong day, while e-commerce giant Amazon (AMZN -0.5%) is underperforming on the day but still up 33% YTD.
    • Magnifying the recent trend is the chart below, which shows the Amplify Online Retail ETF (NASDAQ:IBUY) smashing the return of the S&P 500 Index over the last 90 days. That's even with online travel stocks holding back the ETF's return a bit.
    • Seadrill (SDRL -17.4%) sinks to all-time lows after announcing a $1.2B writedown on the value of its drilling rigs and warning it may have to convert part of its $7.4B debt into equity to survive.
    • The impairment charge assumes that as many as 10 of its drilling rigs may not return to the market and would need to be scrapped; at the end of March, the company had 35 drilling rigs, of which 18 were idle.
    • Seadrill paints a bleak picture for the drilling sector, which it says is characterized by "too many rigs carrying too much debt."
    • The company says the severity of capex cuts by upstream firms will lead to a reduction in exploration and delays in the sanctioning of development programs, and thus causing a decline in rates and utilization for drill rigs.
    • The Atlanta Fed tracker now sees a 52.8% decline in GDP in Q2, vs. -51.2% a expected a few days back. Yesterday's ISM and construction spending data caused the change.
    • Real personal consumption expenditures are now seen as contracting 58.1% vs. 56.5% previously; real gross private domestic investment growth is now seen contracting 62.6% vs. 61.5% previously.

    'No shortage' of possible negative catalysts — Schwab's Liz Ann Sonders »

    Move along folks, nothing to see here….

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  11. I think ever body slept better here in Minneapolis last night. I’m almost getting used to the sound of choppers flying by and there seemed to be fewer flights needed last night.

    I’m wondering about the effect on looting and store shutdowns on the economy. I know that very few people have dined at sidewalk cafes here lately. When I see that Macys Herald Square is breached, maybe investors should hire security to protect their investment. (Kind of the inverse of Oil’s rent a rebel). Just pondering, not too serious. I have begun to realize that I have many items to purchase on a regular basis from stores that have burned and will not be opened to the end of the year, or later. Basic things like Garbage collection, mail and libraries are not really functioning. The post office burned, and they also need to replace their fleet of vehicles. I guess that is the reality of living in a targeted war zone and an unequal economy.  


  12. The security forces would probably have more respect than the Police. It seems like the presence of military types incites violence.


  13. Well no telling what Trump will do now.  Tucker Carlson chastising him for not being strong enough protecting citizens from protesters.


  14. War Zone/Randers – That's what I was saying last month about people getting used to anything.  Maddie is in Philly and had to leave the neighborhood to find an open supermarket and, while she was out, the riots were shutting down the subway so she barely made it home before things got totally crazy.  She was going to go out and join the protesters today but I talked her out of it.  That's just her reality now – she's young, she'll adapt…

    This would be a good time for Guardian Angeles – Citizens that work with the police to help the crowds self-police.  They were a big help in NYC when we were falling apart in the 80s, though there were some rough incidents – the people got to like them pretty quickly.  

    What now/Tangled – What's left after all the fiery rhetoric?

    Trump Rambo Wall 2020 Vinyl Decal Sticker MAGA Republican Gun ...



  15. NG / Novagold got hit with a negative report from a short seller, anyone here know if this makes a good dip-buying opportunity or the report has merit?


  16. I know they are suing him and saying it's all BS but I don't know what the actual facts are.


  17. Phil,

    In casting a wider net, I was looking at some of the more stable REITs, specifically WPC, O and STAG. Would like your thoughts.

    Thanks


  18. I don't follow those and I can't give you an off the cuff answer but I'll take a look.


  19. 8800,

    for information about REITs, sign up for "the REIT Forum" on Seekingalpha.


  20. 8800 & Phil   real estate   I'm waiting for more information on the percentage of rents collected for June, and will know better by Monday.  I have pretty good intel for Denver, California and Texas. I'm leery about anything in the  retail ( O ) REIT sector for the time being.  Stag is industrial and the best RE sector right now, but I would defer to Phil on valuation.  

    8800 if its income you want , I think there are better plays for now, STAG only has options out to Dec. WPC is worldwide. At least you can hedge them a little.


  21. MU  today a trader sold 7,000+ Jan22 $43 puts for about $9.35 


  22. Valuing REITs is crazy hard.  You have to get a handle on their cash flow, debt obligations (including timing) and what kind of exposure they have in their assets – it's a ridiculous amount of work, which is why I generally stick to the same half-dozen.  Not that I don't check out others but, as soon as I see something I don't like – I move on.

    Realty Income (O) is a net lease REIT that owns over 6,500 properties across the United States as well as Puerto Rico and recently also the United Kingdom. Its portfolio has 9.2 average years remaining on its lease terms, derives 48% of rent from investment-grade tenants, and enjoys a phenomenally high 94.2% EBITDA margin.

    While Realty Income has come under pressure during the COVID-19 pandemic due to exposure to movie theaters, fitness centers, and restaurants, I believe most of these properties should continue to perform well over the long term. And to get through this temporary downturn, the company has over $4 billion in liquidity and a stable A-rating from multiple credit agencies (a trait shared by only seven other REITs), along with a relatively low debt load. In Q1, the net debt to EBITDA ratio sat at 5.0x.

    This means that the dividend payout, which consumed 82% of AFFO in 2019, is more than likely safe. "The dividend is sacrosanct to who we are," Realty Income CEO Sumit Roy said in an April interview with Brad Thomas.

    Of course, the same could be said of SKT or many others.  This guy is blowing off exposure to movie theaters, fitness and restaurants but I'd say 1/4 of the restaurants in my town (out of 200 so a good sample) are not coming back and others are struggling to stay open.  I doubt movie theaters will fare better so this is going to be a pretty big hit to O, with $1.65Bn in revenues and $500M in profit that they distribute (and only 5% distribution as they are spread thin).  So let's say it goes down to 3.5% on $350M in profit.  Why would I buy them and not T, who trade at 16x earnings, were barely touched by the virus, have a virtuous 5G upgrade cycle coming and pay a 6% dividend with easy option sales?  

    See – and I'm no longer interested in O…

    MU/Stock – I like that play.


  23. VFC  big trades today, selling Jan21 $50 puts and buying $65 calls.  VFC got rid of jeans and is focused on more outdoor brands.  Outside activity, where you can socially distance, should have some nice tailwinds.

    You could buy the stock for $59.30 and sell the 2021 $60 calls and $50 puts for some income.  Only problem is where are all the people going to get income to buy their stuff. 


  24. Hi Phil,

    RH has run up a lot. Do you suggest any adjustments to the RH Jan 2022 85/125 spread?


  25. VFC/Stock – Not very cheap at $23Bn.

    RH/Jij – Let's see, we spent net $10,000 on the $80,000 spread in early April and our timing was so perfect that we're now about 200% in the money at net $46,775 (up 368%) and there is virtually no risk at all in waiting 18 months to make another $33,225, which is 71% of $46,775 or about 4% PER MONTH if we leave it alone?  What is it about this trade that bothers you?  

    All kidding aside, I like to have some sure things like this backing up the portfolio and anything new that you do now is making a bet that RH, now at 27x earnings at $4.7Bn, is going to go higher and higher and never stop.  I don't think that's the case.  

    I love RH but not enough to have bought them over $180 after we closed down our last portfolio cycle so I waited PATIENTLY for a pullback and PATIENTLY to make sure they formed a bottom and THEN bought them at 14x earnings and THAT is how we make money.  Of course, you can't make the money if you aren't patient enough to let the options run their course.  

    RH Long Call 2022 21-JAN 85.00 CALL [RH @ $247.57 $35.00] 20 4/7/2020 (598) $100,000 $50.00 $125.00 $50.00     $175.00 - $250,000 250.0% $350,000
    RH Short Call 2022 21-JAN 125.00 CALL [RH @ $247.57 $35.00] -20 4/8/2020 (598) $-72,000 $36.00 $111.00     $147.00 $31.20 $-222,000 -308.3% $-294,000
    RH Short Put 2022 21-JAN 110.00 PUT [RH @ $247.57 $35.00] -5 4/7/2020 (598) $-21,500 $43.00 $-24.55     $18.45 - $12,275 57.1% $-9,225

    April 7th, 2020 at 10:30 am | (Unlocked) | Permalink

    RH is still $104, which is $2Bn which is a joke as they make $200M a year with strong growth and they cater to rich people so this bad Q will be a blip overall.  In the LTP, let's sell 5 RH 2022 $110 puts for $40 ($20,000) simply because we can and let's buy 20 $85 ($50)/125 ($35) bull call spreads for $15 ($30,000) and that's net $10,000 on the $80,000 spread with $70,000 (700%) upside at $125.  That will be enough for today – take care all!  cool


  26. Speaking of things to buy, I have to clean up the Watch List but here's where we left off:

    Now, I'm going to reprint our last Watch List discussion and we'll see what we can still play against that hedge:

    $670!

    Bounce/Kustomz – Well you know I love the Blue Chips when they are down.  

    We can check on our Watch list from Nov 11th and see how they are doing in the crisis:

    Keep in mind that last set is all from our last LTP Review – not current picks – this is our new watch list which I will hopefully formalize once we see who's still worth watching.

    HBI still a solid buy:

    From Top Trades:

    Top Trades for Fri, 08 Nov 2019 15:12 – MO

    Top Trades for Tue, 29 Oct 2019 10:22 – NLY

    Top Trades for Fri, 25 Oct 2019 11:46 – Dividend Portfolio

    Top Trades for Tue, 22 Oct 2019 14:37 – IRBT

    Top Trades for Tue, 15 Oct 2019 11:04 – MJ

    /KC) and SPWR

    Top Trades for Thu, 03 Oct 2019 11:39 – LABU

    Top Trades for Fri, 27 Sep 2019 13:22 – TXN (short) and TCNNF

    As a short on TXN, I'd go for:

    That's net $2,375 on the $7,500 spread so $5,125 (215%) upside potential if TXN is below $125 into Jan.   Ordinary margin is $7,179 but hopefully short-term and a nice return either way.

    Also, we talked about Truelieve (TCNNF) who are still cheap at $8 (I liked them at $9.15 two weeks ago!).  They failed the falling 50 dma but Kim is speaking at a conference on the 2nd in NYC so this might be a good time.

    $8/share is $883M – I'd buy the whole thing for that price!

    TCNNF hit $13.73 in early Dec and now back to $8.90 this morning so another chance to get into that Pot Stock (my favorite one and I just had lunch with Kim, the CEO, in Miami).  No options, unfortunately. 

    My other watch stocks are/were: 

    MT, TEVA, FCAU, DELL, VIA, AAL, VALE, F, SFBTY, ING, SAN, MFUG, LNC, PUK, BCS, MU, FCX, PRU, SNP, LEN, KHC, UBS, CBS, GS, COF, MET, MFC, LYG

    On the smaller cap side, by the way, there's also:  X, M, F, MYL, ECA, ADS, TECK, BHF, STLD, SVC, XEC, NRZ, GPS, LB, NWL, HUN, GT, UTHR, AUO, TWO, AGNC, PK, MTG, BSM, SLM and HFC.  

    So, since it's quiet, let's see what looks good.

    • MT – Love them down here ($14.30) but too risky with the virus spreading in Europe – 6 
    • TEVA – Hasn't come down so 4 

    • FCAU – $12.68 is cheap enough and turmoil priced in – 10!
    • DELL – $50 didn't hold so why should $45?  I like them in a bull market but this might not be one anymore.  7 
    • VIA(C) – $23.75, we're going to end up owning a lot of this as we started buying at $35 - 9
    • AAL – See, you put something on a watch list and say "I'd like to buy that airline if they get cheap" and then they get so cheap ($20.68) that you're not sure you want them anymore.  Well, that's a problem for TRADERS but we're investors and this is a 10 at this price!  

    • VALE we picked up, back to $10 and a great price but will take a long time to recover – 8 
    • MYL – Erratic income, changing environment, I don't love them anymore – 4 
    • ECA – Now OVV.  Glad we stayed out – dropped 60%.
    • SFBTF - Again, this is why watch lists are good.  By waiting we saw earnings that told us they were falling apart.  Still too expensive.  3 
    • ING – One we don't usually bother with but, at $9.70, it's a great entry – 8

    • SAN – Another bank too cheap to pass up (8% dividend too) – 8 
    • MUFG – $4.80 too cheap to pass on – 8 
    • LNC – Bigger banks are cheaper so – 6 
    • PUK – Virus could be an insurance nightmare (business interruptions, life, health) and, oh yeah, we're still way behind on our ark-building - 2

    More quick summaries from the watch list:

    • BCS – Not in love with them, can't get a clear line on financials  - 4 
    • MU – Didn't come down much – 5 
    • FCX – Love them below $10 and they have gold – 8 

    • PRU – Too worried about business interruption claims and weather claims.   Very good price though and 6% dividend  – 6
    • SNP – Not China Petroleum – 3
    • LEN – Didn't come down enough – 4 
    • KHC – My old favorite back where we started at $25 – 8

     

    • UBS – I'd rather take a chance on them than BCS. – 8 

    • CBC – VIAC now and we own them. – 9

    GS – A good price for them but not super-cheap – 5 

    • COF – Not excited by them – 5 
    • MET – A bit worried about life insurance and low returns on their reserves (bonds) so pass – 4
    • MFC – More life insurance, same problems – 4 
    • LYG – Too risky.

    $260 did not last long for AAPL.

    More Watch List:

    • X – Assuming we survive, very cheap – 8 

    • M – Crazy cheap – 9 

    • F – Big China trouble that may spread – 6 
    • MYL – Tricky as they are merging with PFE's Upjohn Division but a good price for MYL at $17 – 8

    • ECA – Not in this environment – 4
    • ADS – Too much turmoil – 4 
    • TECK – Good time for basic resources on sale – 7

    More Watch List:

    • STLD – Too cheap to ignore down around $25 – 8 

    • NRZ – $2 dividend makes them a 9!  

    • GPS – Only because they are so cheap do I like them – 8

    • LB – Love them but no longer cheap – 6
    • HUN – I love it when boring companies go on sale – 8 

    • GT – At this price ($9.50), I like them as you can make them much cheaper with options – 8

    • UTHR – Not on sale enough but a well-priced Biotech – 7 

    • TWO – Nice sale on a 12% REIT – 8 

    • AGNC – Ditto – 7 

    • PK – Tempting but too many issues with travel at the moment – 5 
    • BSM – Interesting as they just manage the reserves.  Great entry price for the long haul – 8

    • HFC – Low-cost, small refiner – 8 

    Unlike Trump, we were very concerned about the virus on 2/27!


  27. Phil, Stockbern,

    Thanks for the feedback and analysis. Brad T is a perma-bull on Realty (O) and tends to have his enthusiasm discounted. Supposedly they did collect 92% of rents last quarter but that was then. Collections for June itself will be more telling as you suggest.

    Thanks


  28. Phil,
    Thanks for the guidance and re-assurance on RH. I am willing to wait patiently for the next 18 months.


  29. So, what is a Watch List for?  It's a list of stocks we'd love to own if they get cheap, right?  We did a ton of buying in March and April so a lot of these are now in our portfolios but the main idea here – in a rally – is to look for the laggards and see who can still be played (and should be played – given the changing circumstances).

    HBI still cheap. 

    MO still cheap.

    NLY still cheap.  

    /KC cheap again.

    SPWR still my favorite down here.  

    MT still cheap.

    FCAU still cheap – especially at $18.7Bn (p/e 4) vs $164Bn for TSLA (p/e infinity and beyond!)

    VIAC still my favorite down here (I'm torn)

    AAL I don't trust airlines anymore and ALK is better.  

    OVV good if you WANT a gas play.  

    ING still cheap. 

    SAN may be too cheap to resist.  

    MUFG – I can't believe is still $4

    MU – Still cheap

    KHC – Told you so!

    UBS – Good if you want a bank.

    LYG – The made a nice bottom, I like the risk/reward now.

    X – Still not sure we're really through this all yet.

    M – Still a favorite

    MYL – Still cheap.

    ADS – Q1 earnings were $0 but lack of damage is encouraging.

    TECK still cheap.

    NRZ – Still cheap

    GPS – About to get away

    GT still cheap

    TWO – Another cheap REIT we like.

    AGNC -  Another cheap REIT we like.

    BSM – Still cheap

    HFC – Good side play on oil coming back.

    So there are still PLENTY of good values out there which is why I would rather sit back and be very picky for now.  The kind of stocks that are "getting away" are not generally ones I want to chase (as we already bought all the good ones).  

    You're welcome 8800 and Jij.


  30. If you're going to invest in airlines, LUV is by far the strongest in the sector…..


  31. Stick Save Tuesday?  Looks like the MAGA stocks have stalled but the next round of MoMo stocks have carried the torch… ZM, CVNA, DOCU, even W…  complete disconnect with the physical world.  I recognize the stock market is not the economy, but is this a combination of short squeeze, Fed printed money, and just a new group of FOMO "investors"?  


  32. FYI: ZM announced a beat and raise. Still - FY21 guidance is $1.8B revenue with the stock trading at $52B valuation… meanwhile there are so many competitors and Microsoft Teams can do much more and is free or included with O365 subscription.


  33. That seems like the right combination.  Total insanity but where else is all that money going to go.  Not into housing, not into purchasing, not into autos, not into banks….  There's nowhere else for all this money to flow at the moment.


  34. Fed+ZIRP+FOMO = melt up

    The amazing thing is how many people that ought to know better are calling this the recovery. 


  35. In reviewing my portfolio, I think I'm hedging my shorts with some longs instead of the other way around. I've got 400 10/25 SQQQ spreads that I'm into for net -$2400. Going to let the 25s decay some more and then cash that out for a big win. It's like the opposite of Tesla's PE, can't even calculate the profit percentage because my cost basis is negative. I've got 200 20/30 SDS spreads. Those probably need to be adjusted. Or switched to a bear put spread on the ultra long ETF. And I've got 1000 45/50 VIX spreads. If the market tanks those should be good for at least a quarter mil. Guess I can afford to look at the watch list now and go shopping.