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Troubling Tuesday – Another Shot Bites the Dust

Now the FDA and CDC are halting the JNJ vaccine.

Like the AZN vaccine, blood clots seem to be the issue and, though they are rare side-effects, better safe than sorry – as long as we have two shots left (PFE and MRNA).  The World, on the other hand, doesn't have two shots left – as the US and Europe have already scooped up all the PFE and MRNA vaccines that are out there for their people and that's why India had 161,736 new cases of Covid yesterday and 879 deaths.  

Don't worry, they still have a long way to go before they beat the US as India has had just 13.7M cases to date and only 171,000 deaths while the US has 31.3M total cases and 562,000 deaths – number one in the World by miles thanks to the leadership of President Trump, who came so close to getting 4 more years to finish the job.

See, this could have been us!  Imagine how great America could have been if we had continued to build on our virus cases and death count, rather than tackling the problem and reversing it the way the cowardly Biden Administration has done.  And that's what I mean about the rest of the World – there is nowhere near enough vaccines to go around and the rest of the World is now having 500,000 people PER DAY coming down with a deadly, contageous, mutating disease and we like to pretend everything is better because we got a shot?  Doesn't the S&P 500 derive almost 50% of their earnings from "the rest of the World"?

You can't fix Covid by vaccinating one country – that's like putting out a forest fire by putting water on one tree.  It's up to the G20 to put together a "moon shot" program to stop this virus and that will require a massive effort to get EVERYONE in the World vaccinated in the same 6 month period – only then do we close the window of opportunity for the virus to pull back and mutate in a vulnerable population until it can beat the vaccines and start spreading again – until we invent a new one and the cycle goes on and on and on – like the flu.  That's what we do with the flu – we're constantly changing the vaccines and it constantly keeps coming back.   Are we content to have Covid Season from now on?  

About a month ago, I mentioned that I was concerned about the recovery issues I was seeing then and I thought Booking Holdings (BKNG) the old Priceline and Expedia (EXPE) were good shorts - since so much of their business depends on International Travel, which I think will continue to suffer this summer.  Our EXPE trade for our Short-Term Portfolio was:

  • Buy 10 EXPE July $190 puts at $28.50 ($28,500)
  • Sell 10 EXPE July $165 puts at $14.50 ($14,500) 
  • Sell 5 EXPE July $190 calls for $10 ($5,000) 

That's net $9,000 on the $25,000 spread that's $20,000 in the money to start so we only lose money if EXPE can get back over $180 into the summer.  In a Portfolio Margin account (and you shouldn't be doing naked short calls in an ordinary account), it only requires $6,663.40, so it's actually an efficient way to make $16,000 – hopefully.  

The July $190 puts are now $26 and the $165 puts are $11 and the short $190 calls are $7.20 so net $11,400 is up $2,400 (up 26%) but still $13,600 (119%) to go in 3 months – so it's still a nice little hedge if you are looking to play for things perhaps not being as much better as everyone thinks they are.  

I'm sorry to be a downer but someone has to be realistic.  I'm as bad as anyone as I went to play poker last night, even though my second second shot isn't until May 1st.  It's been a year since I've been able to play and my friends were having a game – so I went and we had a great time and no one wore a mask (it's Florida – do they still make masks?) and 4 out of 10 people hadn't even had a shot yet, which is really stupid because the vaccinated people can still be carriers.  

We all touched the chips and touched the cards and ate from the same snack bowls and after the game we sat outside and smoked cigars and I watched the smoke drift around from one mouth to another and pondered what idiots people are.  This is why you need Government to take control of these things but the Government is run by the idiots, for the idiots as well and we used to advance society because the Government would at least take the word of the Scientists when setting policy because we came from a country that valued Education and Science but we lost that country and so, apparently has most of the World – and we're all in big trouble if we don't rediscover it soon.

Be careful out there!

 


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  1. For those who are interested re JNJ vaccine. 6 confirmed cases of blood clots (in 6.8 million doses). Similar to Astrazeneca, these appear to be cerebral venous sinus thromobosis (CVST) – blood clots in the large draining veins that surround the brain. All occur in female patients age 18-48. Unclear if these patients had any other related co-morbidities (although people are looking into a number of theories). The big issue here is that occlusive CVST can cause strokes (venous infarctions), which can be made worse with certain blood thinners (Heparin), so treatment is different from other clots. I do believe the FDA will re-approve this vaccine rather quickly (within 2 weeks) as will other countries, likely with a caveat: these viral vaccines will be used in older patients and men, and younger women will preferentially receive Pfizer, Moderna, and Novavax (which probably dont cause clotting due to their different vaccine mechanisms). So hopefully just a small hiccup in vaccine distribution efforts. 


  2. Good Morning.


  3. Phil!! No more poker!! You gotta hold the line until you get your 2nd shot!

    #PhilShotWorld


  4. Adding some more stock of T to my port!!!!


  5. Good morning!

    Good info Rick, thanks.

    Poker/Pman – But then I wouldn't be up $162.  God I missed playing poker!  I was able to resist the casinos but it seemed innocent enough playing with friends but you know how my brain works – once I was there I was calculating contagion vectors more so than my hand.  Not even a proper poker table, one of those ones that goes on top of a dining room table – we were all right next to each other.  

    These are all friends of mine and all careful people but, as Donald Trump's White House gatherings have taught us – one is all it takes….

    LA County's card rooms deal final hands before shutting down again amid  coronavirus restrictions – Daily News


  6. Poker/Phil – you've had one shot, you're pretty well covered, and the fomite transmission hypothesis (which came by analogy from SARS-COV-1 (and wasn't very well proven even then)) is not something that happens, mostly – it's airborne – So play your poker with the windows open, or outdoors.


  7. Phil – Just consider how many people like you, that know the science, but close an eye when 'life' gets in the way….


  8. When asked, I tell people that I'm a 'super spreader' and that's why I keep a mask on… and I have had my second Pfizer shot.

     

    Let's help others stay safe and beautify America at the same time. Wear your dam masks!  :)


  9. I know, that's what makes it so hard.  It's one thing to say that 1/100 people in my county have gotten covid (and 1/4,000 are still being infected each day) but it's the 1/4,000 number I hang my hat on and it makes it a lot harder to plan to spend another 100 days in quarantine on a 1/400 chance (giving me a 1/400 chance of being infected) – especially when, in reality, I will likely not engage in any more risky behavior between now and May 1st.

    So, was it worth 1/4,000 (slightly mitigated by my vaccination) to enjoy life like a human being after a year in captivity?  I'm sure most convicts would agree that it is…

    Masks/1020 – Seriously, I live in Florida, do people still wear masks?  I think they are banned or something here…  blush

    Oh, and my daughters are getting their shots this week!   That makes me very happy.


  10. :)


  11. $ATVI – Diablo 2 resurrected is coming out. Is nostalgia a good enough reason to buy a stock? 


  12. ATVI/Rn – Not exactly cheap, unfortunately.

    Oops, I guess the kids are not getting vaccines this week – I just realized.






  13. Has anyone noticed any news on IBM?  It is down over $4 on a relatively good day for tech.


  14. JohnC1 IBM I need it got the Apr 16 130 short call!!!!!! Lucky for those waiting patiently.


  15. /yodi  Out of MRNA now… $$$$$ 


  16. Yodi:   OK then, I'll hope that it keeps going down, at least until Friday!  Please wish the same for me with KO, I need it at or below 52.5 on Friday and right now it is not clear that I'll be so lucky.


  17. IBM/John – The Dow is down overall, maybe caught up in the selling but a big hit.

    Here's one reason, what a terrible name:

    *IBM's Independent Managed Infrastructure Services Business To Be Named Kyndryl, Which Expected To Occur By End Of 2021
    (Realtimetraders.com 04/12 08:05:40)

    They are spinning out that unit – people may not like that either.

    Partnering with Blackberry sounds desperate:

    WATERLOO, ON, April 13, 2021 /PRNewswire/ -- Announced today, BlackBerry Limited (NYSE:BB, TSX:BB) and IBM (NYSE:IBM) have established a new partnership to bring BlackBerry's industry leading BlackBerry Spark® platform to organizations across Canada. IBM will resell BlackBerry's endpoint management, endpoint security and critical event management software, to enterprises and governments nationwide. 

    That's it though, nothing major that I see.

    IBM (IBM) is expected to deliver a year-over-year decline in earnings on lower revenues when it reports results for the quarter ended March 2021. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price.

    The stock might move higher if these key numbers top expectations in the upcoming earnings report. On the other hand, if they miss, the stock may move lower.

    While management's discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price change and future earnings expectations, it's worth having a handicapping insight into the odds of a positive EPS surprise.

     

    Zacks Consensus Estimate

    This technology and consulting company is expected to post quarterly earnings of $1.67 per share in its upcoming report, which represents a year-over-year change of -9.2%.

    Revenues are expected to be $17.44 billion, down 0.7% from the year-ago quarter.

    Estimate Revisions Trend

    The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period.

    Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts.

    Price, Consensus and EPS Surprise


  18. MRNA still holding for the last penny. KO John you can always roll, possible will need to roll IBM aswell.


    • Economic data have come in stronger than expected in the past couple of months, said Patrick Harker, president of the Federal Reserve Bank of Philadelphia, in an online speech hosted by the Delaware State Chamber of Commerce.
    • "While I’m concerned about the downside risks from COVID-19 variants and the alarming virus spikes in states like Michigan, I still think that a combination of increased vaccinations, falling COVID-19 case rates, and a huge dose of fiscal stimulus should buoy the national economy," he said.
    • But while the situation is improving it's "still in its early stages, and there's no reason to withdraw support yet."
    • Specifically, he said the Fed will keep interest rates very low and will continue its more than $100B in monthly Treasury bond and mortgage-backed securities purchases.
    • Until enough people have been vaccinated to reach herd immunity, "our recovery is a little fragile," he said during the Q&A period, noting that the pause for Johnson & Johnson vaccine may result in more vaccine hesitancy.
    • At this point, Harker doesn't expect runaway inflation. Like his Fed colleagues, he expects any spikes to be transitory.
    • "I think we let it run and we keep accommodation," he said.
    • Harker isn't a voting member of the Federal Open Market Committee this year.

    • Cathie Wood, CIO, and CEO of ARK Invest in a market outlook webinar put out Tuesday, mentioned how she believes the bull market is broadening out and that it's a good sign for innovation. 
    • In reference to the fact that growth strategies have recently been hurting, Cathie Wood mentioned: "We do not believe what is going on now is unhealthy, in fact, quite the opposite, the bull market is broadening out. It is becoming stronger, this is good news."
    • There has been a clear rotation into value and away from growth with the recent rising of yields. The question now becomes will inflation rise and for how long? In the webinar, Cathie Wood stated she believes May and June are when we should see the peak inflation levels.
    • With that being said, ARK understands that there is an apparent rush into value-related areas such as financials, cyclicals, and energy. However, financials and energy are the two areas that are set to be most affected by innovation according to ARK.
    • Cathie Wood said: "I think there's a minefield out there in many of the value spaces because of innovation, and we believe financials and energy are likely to be two of the most disruptive spaces or sectors in the market thanks to innovation."
    • ARK Innovation ETF (NYSEARCA:ARKK) is currently trading today +0.19%.
    • Cathie Wood's newly launched ARK Space Exploration & Innovation ETF witnessed over +$500M in inflows into the ETF in the first week of trading.
    • Exxon Mobil (XOM +0.4%) reaches an agreement with the U.S. Department of Justice, the Environmental Protection Agency and Illinois state regulators to reduce air pollution at its refinery in Joliet, Ill.
    • Under the settlement, Exxon agrees to pay more than $1.5M in penalties, with slightly more than $1M to the federal government and the rest to Illinois.
    • The consent decree also requires Exxon to make ~$10M in physical improvements and operational changes to its sulfur recovery plant to reduce emissions, and make changes to the emission controls for its fluidized catalytic cracking unit.
    • Exxon Mobil was valued at more than $100/share during the last oil boom but trades at just $56 today, The Asian Investor writes in a bullish analysis posted on Seeking Alpha.
    • In a preview of earnings for Netflix (NASDAQ:NFLX), J.P. Morgan notes estimates a bit above company guidance and points to some muted sentiment around the stock in recent quarters.
    • Amid some general uncertainty coming into the expected tail end of the COVID-19 pandemic, investors seem to share concerns about pulled-forward demand, the firm notes.
    • It doesn't expect "substantial" upside to management guidance for 6M net subscriber additions. But it does highlight the fact that third-party data has underestimated actual net adds in four out of five recent quarters.
    • For its part J.P. Morgan expects subscriber growth to resume in the second half, alongside growth in revenues and margins.
    • It has an Overweight rating and a $685 price target, now implying 24% upside.
    • Netflix is set to report its Q1 earnings next Tuesday, April 20, after the closing bell; consensus expectations are for EPS of $2.99 on revenues of $7.13B.
    • Baird checks in on the auto technology and mobility sector ahead of the Q1 earnings season.
    • Analyst Luke Junk says transitory headwinds will be a major factor during earnings period, spanning well-known issues around chip supplies, ongoing global supply chain tightness and new Texas-related disruptions.
    • "Hence, we are revisiting 2021 guidance assumptions to help better understand near-term risk/reward, but are also keeping an eye out for potential company-specific catalysts. Net, we are inclined to view potential earnings-related weakness as opportunity, as we position for normalizing chip dynamics, cyclical tailwinds, and accelerating secular tailwinds in 2H21 and beyond," he previews.
    • Cummins (CMI -1.1%), Littelfuse (LFUS -0.8%) and Snap-on (SNA -1.5%) are singled out as companies that could surprise on the upside, despite the chip shortage overhang. Other auto tech/mobility stocks that Baird rides into the earnings rush with Outperform ratings on include Aptiv (APTV -2.0%), Visteon (VC -2.9%), Gentex (GNTX -1.4%), Amphenol (APH +0.0%), BorgWarner (BWA -1.6%) and TE Connectivity (TEL -1.0%).
    • Strattec Security Corporation (STRT -1.6%) is the auto supplier stock with the highest Seeking Alpha Quant Rating.
    • Playboy Group (NASDAQ:PLBY) is extending its two-month-long rally, rising some 21% intraday Tuesday as investors continue to snap up the stock.
    • PLBY, which went public via a SPAC deal in February and initially fell to close at $13.22 on its first trading day, rose to as high as $37.41 Tuesday. It later settled back some, but was still changing hands at $37.21 shortly after 12:30 p.m. ET, up 20.1% on the session.
    • All told, the stock has soared some 180% since its Feb. 11 close, including about 123% in gains since just March 29.
    • Playboy, whose legendary founder Hugh Hefner died in 2017, went public two months ago after 10 years as a private company.
    • The firm no longer publishes the printed Playboy magazine, but still runs the Playboy.com adult-entertainment website. However, CEO Ben Kohn has refocused the company to focus on some $3B of Playboy-branded clothes and other goods that the company sells each year either directly or through licensees.
    • Investors have mostly embraced the stock following its weak first day, especially after Kohn disclosed plans last month to make Playboy’s archival and future content available via non-fungible tokens (NFTs).
    • The company then announced a deal with NFT firm Nifty Gateway Inc. earlier this month, sending the stock even higher.
    • PLBY rallied further on Monday when Hedgeye named the stock a new best idea, with a 900% possible upside.
    • Kohn told Seeking Alpha in an interview in February that the brand’s potential “is really endless.”
    • Boeing (BA +0.7%) beats Airbus (OTCPK:EADSY) in quarterly jet sales for the first time since early 2019, netting 76 new orders including cancellations and an accounting adjustment for at-risk deals in Q1, while Airbus' tally shrank by 61 jets after February's cancellations by Norwegian Air Shuttle.
    • Boeing booked 196 gross orders in March, all of them for the 737 family of aircraft, running its Q1 total gross orders to 282 airplanes.
    • But Boeing also recorded 156 cancellations, as carriers such as United scrapped old contracts for the 737 MAX and reached new, discounted terms that gave them earlier delivery slots.
    • The company delivered a total of 77 airplanes in Q1, up from 50 aircraft a year earlier, but Airbus maintained its winning streak in deliveries dating back to mid-2018, shipping 125 jetliners.
    • Boeing resumed 787 jet deliveries late last month after halting them for four months due to manufacturing defects.


  19. IBM Options.  Man, checkout the difference between 2023 $130 P/C prices.  Calls @ 13.9, Puts @ 19.75.  



  20. BA at $253 is $145Bn.  Nothing has fallen out of the sky lately so that's good and the backed-up demand for delivery is intense but at what point do we get back into BA, who's best year was $10Bn – and that was once?

    Year End 31st Dec 2015 2016 2017 2018 2019 2020 2021E 2022E CAGR / Avg
    Total Revenue
    $m

    96,114 93,496 94,005 101,127 84,818 58,656 80,575 88,023 -9.40%
    Operating Profit
    $m

    7,443 6,527 10,344 11,987 -1,975 -12,767      
    Net Profit
    $m

    5,176 5,034 8,458 10,460 -636 -11,873 -549 3,093  
    EPS Reported
    $

    7.44 7.83 11.8 17.9 -1.12 -20.9      
    EPS Normalised
    $

    7.44 7.84 11.7 17.7 8.32 -13.7 -0.377 5.48  
    EPS Growth
    %

    +0.651 +5.29 +49.9 +51.0 -53.1        
    PE Ratio
    x

                  45.5  
    PEG
     

                  1.25  
     

    If you've been holding BA for the last 5 years, they made net $11.5Bn so $2.5Bn(ish)/year on your $145Bn investment kind of sucks, doesn't it?  Before the double tragedies, BA should have been doing better than $10Bn, which makes this valuation fair going forward – as long as nothing else bad happens.

    No reason to be cowards in the LTP though.  We would love to own BA long-term at $150 so let's sell 5 BA 2023 $200 puts for $23 ($11,500) to throw some unneeded (but not unwanted) cash in the LTP and our worst case is owning 500 shares at net $177 but we'll roll it to 2025 whatevers anyway so well below $150 by the time we take an assignment (at least that's the plan).


  21. I've been seeing this disparity on a number of stocks.  I wonder if folks who bought the 2020 covid drop want to hold for long-term capital gains by buying put protection thus driving up prices?


  22. Good morning everyone. Here is the link to today's webinar. 

    https://attendee.gotowebinar.com/register/8819918753981234703