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Moderna Monday – Another Vaccine Lifts the Markets – Again

Dow 30,000!  

I told you this was coming last week (see: "Record High Wednesday – Dow 30,000 in Sight") and we touched it this morning in the Futures (/YM) as Moderna (MRNA) announced that they have a 95% effective Covid vaccine that, unlike Pfizer's, requires only normal refrigeration.  That's punching MRNA up 20% in pre-market action and sending the indexes flying higher as two vaccines are better than one so why not double down on our longs?  

Well, as I mentioned last week, 30,000 on the Dow is 40 TIMES the earnings of its components and that does seem a tad high, doesn't it?  Also this weekend, Biden's Covid Task Force said they don't think a Nationwide lockdown will be necessary while Trump's Covide Task Force said they haven't seen the President at a meeting in over 3 months.

We are hitting 11M cases in the US today and will have our 250,000th death this week as well.  Gosh, it seems like only last week that we hit 10M cases, doesn't it?  Well, actually, that was last Tuesday: "Ten Million Infections Tuesday – Just in Case You Forgot About the Pandemic…"  While the markets are singing "Don't worry, be happy" Washington and Michigan are imposing stricter restrictions and ending indoor dining in those states as infection rates have doubled in the past 30 days 

Is COVID-19 testing the key to a safe Thanksgiving? | MIT MedicalIn addition to stopping indoor service at restaurants and bars, and restricting outdoor dining to tables of five people, indoor operations were halted at gyms, bowling alleys, museums, zoos, aquariums and movie theaters, while religious services are limited to 25% of indoor capacity or 200 people, whichever is less. Weddings and funerals can take place, but indoor receptions of any size are prohibited.  Michigan stopped in-person classes for High Schools and Colleges but we're still sending our younger children off to infect each other for some reason.

I live in Florida, where we are partying like it's 1999 and, yesterday, we had dinner at Benny's on the Beach (love it!) so we could watch the Space X Dragon Rocket take off for the International Space Station and I've got to tell you that, between seeing this private enterprise space venture and hearing about another vaccine for a virus we never heard of less than a year ago – we are capable of doing some really amazing things.  It does give me hope for the future, frankly – we just need to survive the present!  

Anyway, the restaurant was packed, there are no empty tables and, since the restaurant is on a pier, there's really no social distancing going on there and, apparently, they were so busy all day long that most of the shellfish was sold out by the time we got there.  No one was wearing a mask at the beach, maybe 1/3 of the people walking around the restaurant were wearing masks and Florida (just Florida) had 9,928 infections on Saturday.  

What are we, lemmings?

The game of life is hard to play
I'm gonna lose it anyway
The losing card I'll someday lay
So this is all I have to say.
That suicide is painless
It brings on many changestheme from MASH

Gee, the two-week trend is +81.6% – not worth worrying about, right?  You do start to feel silly for worrying when no one else is, right?  This is not like our summer surge, this is going up – like a rocket and, for some reason, the idiots on TV this weekend mostly think it will just level off but that's not going to happen until they actually start distributing the vaccine (March) or impose proper lockdown restrictions (never) or the virus manages to infect over 50% of the population, at which point half the people develop (hopefully) herd immunity.

COVID-19 demonstrates why wealth mattersBut we can't get there if only 10% of the herd has had the virus so far.  That's 40-50% more people to be infected along the way and which Million of us is going to die while we wait for the virus to burn out?  Certainly not the wealthy – a $100,000 treatment fixed Donald Trump right up – he was back to work in 3 days!  Only poor people die from viruses – which is why the GOP doesn't take it seriously….

The Social Policy Institute (SPI) at Washington University in St. Louis found that liquid assets increased the likelihood that an individual could practice social distancing. However, Black individuals were least likely to afford social distancing.  "Social distancing is a privilege that comes with resources and wealth, but wealth is not distributed equally in America," said Michal Grinstein-Weiss, the Shanti K. Khinduka Distinguished Professor and director of the SPI. "Wealth gives individuals agency to make choices, like social distancing, that keep themselves and their families healthy."

Survey respondents also revealed other significant loss and hardships as a result of the pandemic. The survey found that:

  • Low- and moderate-income households delayed major housing payments and health care;
  • Hispanic/Latinx homeowners were more than twice as likely (14.1%) to be evicted than Non-Hispanic White (6.4%) and five times as likely as Non-Hispanic Black (2.6%) homeowners, despite moratoriums on some evictions;
  • Hispanic/Latinx (27%) and low-income individuals (29%) were most affected by job loss;
  • One in three gig workers reported working less as a result of the pandemic, and 86% of those individuals said gig income was essential or important to their household budget; and
  • 34% of people who lost their job reported food insecurity.

3 Principles for an Antiracist, Equitable State Response to COVID-19 — and  a Stronger Recovery | Center on Budget and Policy PrioritiesOf course the good thing is that non-white Americans only own about 13% of the total wealth of this nation so, if that part of the economy is suffering – it won't have much effect on the overall economy and, therefore, why would we want to do anything about it – especially if it inconveniences us, right?

It's going to be a great Thanksgiving this year, isn't it?  

Thanksgiving is a week from Thursday and this week is wall-to-wall Fed Speak with 21 Fed Speeches scheduled – a new record!  Why are the speaking EVERY SINGLE DAY this week?  Probably because we're goijng to get some very bad economic news and they feel the need to keep us distracted.  We have Empire State Manufacturing today, Retail Sales and Industrial Production on Tuesday, Housing Startes Wednesday and a 20-year bond auction – that might be it.  Thursday is the Philly and KC Fed Reports and Leading Economic Indicators and nothing on Friday – it's got to be the bond auction…

Maybe the Fed is just trying to convince us that all is well and we should embrace and love Dow 30,000 and the 40x valuation that goes with it.  What a week it's going to be…

 


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  1. This is what happened in France after they started to impose new lockdown rules – cases cut in half!

    • Schools are still open
    • Bars and restaurants are closed
    • White collar workers encouraged to work from home
    • Travel restrictions but looser than in the spring
    • Mask mandate

    Image


  2. Some people are suggesting and probably correctly that one of the reasons that the GSA has not started sharing documents with the Biden team is because it would show that the Trump admin has not plans whatsoever to deal with the pandemic! 

    We have 180k cases and Trump spends his days tweeting conspiracies theories and golfing. In the meantime, the Dakotas are experimenting with herd immunity and it's not going well. It looks like 3% of the population there has been infected and the healthcare system is cratering. What happens at 70%? An ER nurse there sent a tweet thread this weekend about people dying in the ER not believing that they have COVID because their local officials are denying science!


  3. good morning


  4. phil/wba

    im long 15 2023 30 calls at 9.1 and profit is 7388.

    short 15 jan 2021 40 calls at 1.29 and loss is 3578. net profit of spread is 3.6k.

     

    im thinking of paying 3.6k to close the short calls and then selling 15 of the 2023 40 calls and 10 of the 40 puts to create a better trade. what do you think?


  5. Good Morning.


  6. Phil/lemmings  - Why not find a safer spot on a beach to view the takeoff?

     

    Be careful.


  7. Before Biden’s inauguration, up to 150K more people could die of COVID





  8. Opinion: Trump goes Frankenstein over Fox




  9. Thousands of cars form lines to collect food in Texas


  10. Restaurants One of the best ways to catch corona.


  11. Even driving on the left side of the autobahn, you can sometimes be lucky.


  12. Phil / SOLAR – thank you for the analysis on this. love the insight and analysis.  really appreciate you taking time on this.

     

      … I'll use this to look at these closer.  will get back to this this week…. I was traveling to NAPA this weekend and heading back today…..  In terms of profit potential… do you see any as better run companies that others?   Also, I assume the installers / leasers will be the big Rev growth ?


  13. Good morning!

    Holding up well so far.  Oil back up at $41.50ish.   Of course they like that into the holiday though I doubt much driving.  Most people I know have given up on Thanksgiving.  I'd short Turkeys.  

    France/StJ – Well that's encouraging how fast they got it under control.  Now we just have to wait for Jan 20th.  Unless of course Trump stage an all-out coup.

    WBA/Stuart – Having another nice day.  You are thinking of ROLLING your Jan $40 calls at $5.25 to the 2023 $40 calls at $9.25?  That means you will have effectively collected $1.29 + $4 = $5.29/2 (half cover) per long and you'll be in the $10 spread for net $6.455 which isn't that great, is it?   I would just roll the 15 Jan $40s at $5.25 ($7,875) to 20 April $42.50 calls at $4.65 ($9,300) so you put a bit in your pocket and you've widened your spread.   Then you are still free to sell short-term puts and calls to generate some income if you desire. 

    Safer/1020 – We ate outside but the place was too crowded for my taste and that's nothing compared to my town (Delray Beach), which is just as packed on the weekends as it ever has been.  

    Solar/Batman – You're welcome.  As I noted, we're at such a small penetration now that anyone has great growth potential but I'd rather have the guy with the moat so I like SPWR with their performance and I like RUN with their market share (hard to ramp up training, etc) - but not at these prices, so I'd be in no hurry to jump in.  

    • American Express (AXP +3.2%) U.S. consumer card delinquency rate holds steady at 1.1% in October vs. September and compares with 1.2% in August.
    • Net charge-off rate of 2.2% increases frim 2.0% in September but is down from 2.5% in August.
    • As for U.S. small business cards, delinquency rate is 1.0% in October vs. 1.1% in September and 1.2% in August.
    • Net charge-off rate of 2.1% vs. 1.8% in September and 2.4% in August.
    And now we hear from the poor people:  Bank of America October credit card delinquency rate climbs
    • Bank of America (BAC +2.2%) October credit card delinquency rate of 1.36% increases from 1.20% in September and 1.08% in August.
    • Net charge-off rate of 2.00% increases from 1.94% in September, but is better than 2.11% in August.
    • BofA notes that because accounts in its payment deferral program related to COVID-19 hardships do not become delinquent or advance to the next delinquency cycle, including ultimately to charge-off, in the same timeframe that would have normally occurred without the deferral program, the levels and severities of delinquencies and charge-off amounts through the deferment period are likely lower than they would have otherwise been.
    • As these accounts exit payment the payment deferral program, the levels and severities of delinquencies and charge-off amounts will likely be higher than they otherwise would have been.
    • Previously: Bank of America credit card delinquency rate rises in September (Oct. 15)

    • Saying the firm's checks now indicate higher server and PC market share in 2021, Cleveland Research upgrades Advanced Micro Devices (NASDAQ:AMD) from Neutral to Buy.
    • Analyst Chandler Converse expects Q4 results to beat top and bottom line estimates because the checks showed healthy PC, server, and console demand.
    • Earlier this month, AMD bagged upgrades from Goldman Sachs and Wells Fargo in the same week, citing valuation and PC and HPC gains.
    • AMD shares are up 1.8% to $82.86.
    • Previously: Pure tech is a good barometer for rotation: At the Open (Nov. 16 2020)
    • Bank of America weighs in on the timeline for vaccine distribution after both Moderna (MRNA +8.0%) and Pfizer (PFE -3.8%) reported strong efficacy rates with safety levels anticipated by physicians to be acceptable when the final readouts come through.
    • The firm says emergency use authorization designations are expected in the coming weeks with approval potentially coming before the end of the year.
    • "Full BLA approval will likely require substantially longer follow up, including 6 months of safety follow up, although this could be shortened depending on perceived benefit/risk. This would put BLA filing on track for 2Q21, with full approval potentially coming shortly thereafter, in-line with our current view of broad access in mid-2021. On distribution, mRNA-1273 should prove easier to transport and administer than BNT162b2, requiring only 4 to -20C storage versus -70C storage in case of Pfizer/BioNTech's vaccine."
    • The firm notes that Moderna's mRNA-1273 should prove easier to transport and administer than BNT162b2 due to the differences in storage temperatures.
    • Early vaccine distribution to high-risk groups and frontline workers is anticipated well before broad distribution.

    Yay, only 6 more months of captivity!  

    • JPMorgan now expects the Fed to "extend the maturity of its $8B monthly purchases of U.S. Treasuries at the December FOMC meeting."
    • The reason? The recent surge in COVID-19 cases in the U.S. increases the near-term risks for the economy. Extending the maturity of the Treasury purchases will "put more downward pressure on longer-term interest rates and encourage more interest-sensitive spending," the JPMorgan strategists said.
    • 10-year Treasury yield, at ~0.90%, is retreating from the 0.93% level it touched earlier in the session.
    • Last Thursday, Fed Chair Jerome Powell indicated that the increasing spread of the virus means the central bank will likely need "to do more."
    • iShares 20+ Year Treasury Bond ETF (TLT), ProShares UltraShort 20+ Year Treasury ETF (TBT +0.2%).
    • Macau casino stocks are tracking higher after the Moderna vaccine news from today build on optimism that traffic can return to the gambling mecca in 2021.
    • Wynn Resorts (WYNN +3.9%), Melco Resorts & Entertainment (MLCO +2.7%), Galaxy Entertainment (OTCPK:GXYEF +2.1%), Studio City International (MSC +5.0%) and Las Vegas Sands (LVS +2.1%) are all notably higher.
    • Macau government officials have been taking a slow approach to lifting restrictions, with one of the latest being the Government Information Bureau reportedly ready to begin accepting applications on December 1 from "eligible foreigners" who wish to visit the city.
    • Compare Macau stocks side by side.
    • Regional banks are rising after Treasury yields climbed after news that a second COVID-19 vaccine will be submitted for emergency use authorization in coming weeks.
    • 10-year Treasury yield rises to ~0.91%, up from 0.87% in earlier trading.
    • The S&P 1500 Composite Regional Banks Index rises 3.8% after Moderna announced its COVID-19 vaccine candidate showed 94.5% efficacy; a week ago the index jumped 14% on the news of Pfizer/BioNTech's positive COVID-19 vaccine news.
    • In addition, interest may have perked up in the sector after PNC Financial (NYSE:PNC) agreed to acquire the U.S. operations of Spain's BBVA for $11.6B, a potential harbinger for more bank mergers.
    • Truist analyst Jennifer Demba had expected that Regions Financial (RF +4.5%), Synovus (SNV +4.2%), and Comerica (CMA +4.4%) might slip after the PNC/BBVA news as those names had been considered potential targets for PNC.
    • The deal, though, may offer "some merger disruption opportunities for more established banks in the BBVA markets", namely Prosperity Bancshares (PB +4.0%) and Cullen/Frost (CFR +4.1%).
    • More bank mergers may be coming as the "revenue and interest rate environment remain challenging and technology investment needs continue to be outsized," Demba wrote.
    • Perhaps that prospect outweighed any disappointment that SNV, RF, or Comerica won't be acquired by PNC.
    • Other regional banks also climbing: KeyCorp (KEY +4.9%), M&T Bank (MTB +5.5%), New York Community Bancorporation (NYCB +4.4%), Huntington Bancshares (HBAN +3.9%).
    • Needham likes the setup on DraftKings (DKNG -2.5%) with more U.S. states poised to unlock online gambling.
    • "We think new states opening up online sports betting and iGaming represent a rising tide for the industry, and that DKNG has clear first-mover, brand and capital advantages. CAC and OSB profitability will remain persistent debate points – we are confident that the company is acquiring customers with a stringent view of ROI & LTV while maintaining, if not increasing, its share in the early markets. Retention remains an open question, but we take DKNG's performance to-date in states like NJ (with 14 other competitors) as the best indicator for success," previews analyst Brad Erickson on the path ahead.
    • Importantly, he also notes that the company saw share gains in PA even after certain noteworthy competitors (Barstool) entered the market.
    • Needham has a Buy rating on DraftKings and price target of $70.
    • Read the DraftKings earnings call transcript.
    • Natural gas futures (NG1:COM) -8% to $2.757/MMBtu, by far the worst performer among major commodities, as milder autumn forecasts cause concern that a warm winter will crush heating demand.
    • The U.S. likely will experience mild conditions with only a few cool shots through the end of the month, Commodity Weather Group says, which forecasts the number of heating degree days at 275 compared to a 10-year average of 316.
    • Gas-focused equities trade with broad losses: COG -4.2%RRC -7.3%AR -6%SWN -4.4%EQT -7.1%CNX -5.2%.
    • Natural gas surged to the highest in nearly two years just last month, helped by speculation that supplies would be tight this winter after falling oil prices caused drillers to rein in gas output from crude-rich basins.

  14. Hi Phil:  The last Portfolio Review available under the "Virtual Portfolios" tab is September.  Where can I find subsequent Portfolio Reviews?  Thank you.


  15. Phil:  Given the increasing good news regarding marijuana legalization and its increasing acceptance by Americans of all political affiliations, what are your thoughts about MJ these days?   Right now a 2023 7/12 spread can be purchased for about $2.50.  I am not interested in selling more puts since I am trying to roll down my 16, 17 and 18 puts sold a few years ago.  By the way, is decay a big issue for this ETF?  Thanks for your input.


  16. MJ/John – As I've said from the beginning, the whole ETF is $565M at the moment and they hold stakes in Canopy, Cronos, Tilray, GWPH, ARNA, ACB…  If just one of them becomes a 10-bagger, the ETF doubles and we played it like this in the LTP:

    MJ Short Put 2022 21-JAN 20.00 PUT [MJ @ $13.11 $0.04] -10 10/15/2019 (431) $-5,400 $5.40 $3.40 $5.35     $8.80 - $-3,400 -63.0% $-8,800
    MJ Long Call 2022 21-JAN 5.00 CALL [MJ @ $13.11 $0.04] 50 3/23/2020 (431) $26,000 $5.20 $2.95     $8.15 $0.15 $14,750 56.7% $40,750
    MJ Short Call 2022 21-JAN 10.00 CALL [MJ @ $13.11 $0.04] -30 3/23/2020 (431) $-7,800 $2.60 $1.55     $4.15 $0.10 $-4,650 -59.6% $-12,450

    Seemed likke a simple way to go, haven't touched it since March, when we added the bull call spread.  

    The problem with MJ though is they are mostly Canadian companies, not really as good.  Some of you may remember me saying the best US play was TCNNF, back when they were down well under $10.  That's a pure US play.

    Since that has now gotten away from the table I used to bang, then MJ is still the best way to play with a nice conservative spread that still pays well.  I don't think this ETF decays too much.


  17. MJ – On IB, it shows the ETF with a 5.5% dividend.  Is this correct or something wonky on IB?  When I drill down, I can't find anything in detail for the dividend.


  18. TSLA added to the SnP.,,, It's move looks like a SpaceX launch!


  19. TSLA added to the S&P; stock up $55 after market. 

    um, i, um, it's… um… 


  20. batman/solar

    Keep in mind that continuing progress on the manufacturing side is going to push down labor costs as well.

    5 or 10 years ago, a solar panel was going to put out 220W and now a solar panel will put out 330W+ pretty easily so labor cost per watt is also decreasing.  Installers are also predominately small companies (like my family's business) that aren't publicly traded.  I think installers are definitely going to benefit from further improvements in cost but, if the tax credits ever REALLY go away, there's going to be no profit left there either.