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Non-Farm Friday – Is America Working?

559,000 Jobs.

That's what we added in the merry month of May and it's a bit less than the 675,000 expected but still some pretty healthy growth so we can expect the market to react well since it's not a good enough number to get the Fed to tighten but it's not a bad enough number to indicate the economy is stalling, a very Goldilocks way to end the month.

Unfortunately, we still have 10M jobs to fill so filling them at a rate of 559,000/month (with a population growing at 150,000/month) means it will take us about 2 years to really get the economy back to normal.  Overall, we are -7.6M jobs since Jan, 2019 and we should have added 2.6M new jobs during that time.  Meanwhile, it should be noted that Hourly Earnings rose 0.5%, hotter than 0.2% expected by people who obviously aren't paying attention but nowhere near enough to keep up with inflation so real income is still woefully shy of where it was in 2019 – yet people continue to over-bet on the economic recovery.

Nearly half of small-business owners surveyed by the National Federation of Independent Business in May said they were struggling to fill slots. Many employers have blamed enhanced pandemic-related unemployment benefits for the shortage of workers, which has prompted 25 Republican-led states withdraw from some or all of the federal jobless assistance programs in the coming weeks, months ahead of their expiration.  Most economists have pushed back against this argument and say the reality is more complicated. A lack of child care, continuing health concerns, low wages and competing priorities all probably play a larger role, they say.

With all the heaving and hoing the market has done this week, we haven't actually gone anywhere – even with this morning's pop.  We're clearly consolidating at S&P 4,200 but whether it's for a move up or down remains to be seen.  Oil (/CL) is popping to $69.50 into the weekend and we are going to short into the weekend.  We started shorting (again) at $68.50, so another round here will give us an average of $69 and then we take 1/2 off when we get back to $69 and we're left with our original short at a higher strike over the weekend – so that's the plan.

Not much else going on into the weekend – I just read through the news and nothing noteworth and I kind of like AVGO but it's too expensive and I was looking at the airlines but still too scary (and no longer cheap) so not a lot of trade ideas at the moment either.  No sense in forcing anything -we'll just relax and see what turns up next week.

Have a great weekend, 

- Phil

 


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  1. Good Morning.


  2. OIH halted 



  3. look how over extended the RSI is on nas/qqq


  4. Good morning!

    Nasdaq blasting 1% higher but all that work to get back to where it started the week.

    Here's how it gets there:

    That's why I like the Oil short still – it's only the weak Dollar popping it (and the normal weekend BS).

    • The stock market is taking the glass-half-full view for lower-than-expected nonfarm payrolls.
    • The Nasdaq (COMP.IND) +0.8% leads the major averages, with the S&P 500 (SP500) +0.6% and Dow (DJI) +0.4% also higher.
    • The bond market had a similar reaction, with prices rising and yields sliding. The 10-year yield is down 2 basis points to 1.6%, while the 5-year saw the most movement, down 4 basis points to 0.8%.
    • Payrolls rose by 559K in May, shy of forecasts for 650K, although estimates ranged from up 300K to up 1M. The jobless rate dropped to 5.8%.
    • Wages saw a big jump, while a drop in the labor participation rate was a concern for recovery prospects.
    • But from the market's reaction the report seemed to show steady growth in the labor market that won't push the Fed to tighten conditions anytime soon.
    • "Look past the noise," economist George Pearkes tweets. "Slack in the labor market is being taken up, at a pretty steady pace, even if it's happening a bit slower than folks had hoped would be the case. Labor force matching takes time, that's why the Fed is rightly being so patient!"
    • The headline miss is understandable "when you have the disruption we've had," with "people living in different places, we're shifting supply and demand across the country," Michael Collins, PGIM fixed income senior portfolio manager says.
    • With payrolls growing at 500K per month it's going to take 16 months to recover the jobs lost and the Fed is going to pause, he said on Bloomberg.
    • Looking over to meme stocks, trading is mixed. AMC, Bed Bath & Beyond and BlackBerry are edging up. Clean Energy is gaining traction to the upside as mentions on WallStreetBets increase.
    • And crypto stocks are struggling after Elon Musk tweeted1 a Bitcoin broken heart
    • Bank of America calls it a wrap on covering GameStop (GME +1.8%) after its Underperform rating and prior $10 price target was overwhelmed by Reddit-fueled buying action this year.
    • In pulling its rating on the retailer, the firm relied on data that showed a direction relationship between Reddit mentions and share price rallies.
    • "Up until the last several weeks, GME’s trading daily trading volumes and Reddit mentions had declined materially. However over the past seven trading days there has been a resurgence in mentions and volumes which has corresponded with a 56% increase in GME’s share price," says analyst Curtis Nagle.
    • Over the last few years before the Reddit phenomenon, new GME breakdowns from Bank of America could swing shares up or down.
    • GameStop has been ground zero for the meme stock rally this year and the single most volatile stock in the basket of Reddit favorites.
    • GameStop is now thinly-covered on Wall Street and heads into next week's earnings report with even fewer analysts making projections on revenue and EPS. Even if fundamentals are out the window, it is worth noting that GameStop has a recent history of disappointing with its earnings report.
    • Reddit watch: Zillow joins AMC, GameStop and Bed Bath & Beyond on BofA's hot Reddit list.
    • DocuSign (NASDAQ:DOCU) reported first quarter beats with upside Q2 and full-year guidance after the bell yesterday.
    • William Blair calls the print a "massive beat out of the gate" that sets the stage for a strong year.
    • Oppenheimer says the results are a "salient proof point" that DOCU is viewed as "mission critical to keep business operations flowing during the pandemic and as employees return to work." But the company is also "a strategic technology for the new digital future of work." The firm maintains an Overweight rating but lowers DocuSign's price target from $300 to $260, citing compression in industry multiples.
    • Morgan Stanley says DOCU is "firing on all cylinders" and the report is "proof that Covid wasn’t a one-time benefit, resulting in a fundamental shift in DocuSign’s growth trajectory." The firm maintains an Overweight rating and adds $5 to its price target for $295.
    • DOCU shares are currently up 7% pre-market to $208.43.
    • Background: DocuSign stock pops after Q1 beats, upside guidance

     

     

    • JPMorgan lays out a number of reasons it is staying constructive on Ford (NYSE:F).
    • Analyst Ryan Brinkman and team call Ford shares attractive given valuation only roughly in line with historical norms despite a number of significant positives. Those positive factors include the substantially refreshed Ford vehicle lineup including hot new introductions such as the Mustang Mach-E battery electric crossover, new Ford Bronco, Bronco Sport, and upcoming F-150. It is also noted that a refreshed F-150 has historically led to a substantial improvement in North American profitability for the automaker. Meanwhile, the "bold moves" Ford is taking to right-size its international operations is seen freeing up capital for use in initiatives investors are likely to reward more, such as its electrification and autonomous efforts.
    • The greater chip availability tipped off by GM yesterday and soaring new vehicle prices are also seen as short-term catalysts.
    • JPMorgan lifts its 2021 EPS estimate on Ford to $1.30 from $1.07 and the 2022 EPS estimate to $1.75 from $1.70. The December 2021 price target is pushed to a Street-high $18 from $16. In general, analysts have been warming up to Ford.
    • Shares of Ford are up 2.88% premarket to $16.45.
    • Keep an eye on Ford next week with a new small truck reveal on the calendar.

     

     

    • AMC Entertainment (NYSE:AMC) is asking shareholders to OK the sale of another 25M shares to raise capital as its shares remain at lofty levels.
    • In a filing AMC is looking for shareholder approval at the July 29 annual meeting.
    • AMC stock is down 5% in premarket trading this morning after falling nearly 18% in the previous session.
    • It's still up more than 2,300% year to date.
    • The company says it won't issue any more shares this year.
    • "To successfully navigate the road ahead, we seek to assemble all of the financial tools that might help us," CEO Adam Aron says in the filing. " As of today, in our efforts to best position AMC for a successful recovery from the pandemic, we have issued or reserved substantially all but 46,124 of the shares that were previously authorized. We are requesting that shareholders authorize only an additional 25 million shares and note that these shares cannot be issued in calendar year 2021."
    • "This contrasts with a previous request that shareholders authorize 500 million new shares. We have been listening carefully to the sentiments being expressed by our shareholders, and this more measured proposal is important to give AMC the flexibility to respond to future value creation opportunities for the benefit of AMC and all of its shareholder owners."
    • AMC issued a stark warning in a filing yesterday that investors could lose their entire stake buying AMC at current levels.





  5. stockbern / OIH – yes, long halt to trading here. Rumor is they will announce a 4-1 stock split, but nothing on the internet appears confirmed. Very odd. I'm long the $200 2022 calls…. so waiting to see what happens here. 


  6. OIH/Stock, Rick – Split makes sense at this level.  I think we've had 2 years of underinvestment and there's bound to be an up-cycle for OIH.

    Might be better off going with HAL though.  At $24.31 they are at $22Bn and they can make $2Bn in a good year, though a good year for them generally involves war profiteering.  Still there's always something to do and they haven't done it lately but they'll still make $1Bn this year so I think, for the LTP, we may as well offer to buy it for $17 (29% off) by selling 20 of the 2023 $20 puts for $3 ($6,000),


  7. HAL really bad memories on that stock. Stands in my books with an overall loss of 28K 

    Apr. 11 bought the stock at 50.00 Jan 16 bought the stock at 31.00 Jul 20 closed my books on them for 13.00

    To me is a jojo stock, with no stability. Was once a shiner with good div payments.


  8. OIH – didnt they just reverse split (1:20) it last year? 


  9. When I think of HAL , I remember the military industrial complex & Darth Varder-= Dick Cheney. 

    Cheney was chairman and CEO of Halliburton Company from 1995 to 2000 and has received stock options from Halliburton. In the run-up to the Iraq War, Halliburton was awarded a $7 billion contract for which only Halliburton was allowed to bid. Halliburton was one of the top profiteers from the Iraq War was oil field services corporation, . Halliburton gained $39.5 billion in "federal contracts related to the Iraq war". Many individuals have asserted that there were profit motives for the Bush-Cheney administration to invade Iraq in 2003.

    In other news, I sold some LMT options today at a nice profit. Maybe I will donate some of the gains to a charity that helps people and the earth. :)


  10. Rnaders-that whole era was so sickening. All the patriotic fervor and the young men coming back in caskets or limbs blown off,.Complete manipulation all based on fallacy. And GW holding the SAudi Princes hand after 9/11. I wondered how everyone could be so blind.


  11. oil services /  perhaps BKR    Baker Hughes

    on June 2 , someone bought 4500 October $29/$34 bull call spreads for.78   Also there has been put selling in the January 25's and the Jan23 $27's

     next year they are supposed to earn $1.15


  12. Phil – is there a link on your website to a current version of each of your portfolios (dividend, earnings, long-term, short-term, etc.)?  


  13. HAL/Yodi – Timing is everything with those guys.  Not making a huge commitment but I don't mind getting paid $6,000 to have $34,000 worth of HAL in a $2M portfolio.  $17 is the very low end of a range they don't spend much time in – even when the market collapses and, of course, there's been severe under-investment by oil companies (US Rigs are 50% of their revenue) but HAL can build solar and wind projects too and any war we get into is just a bonus.  

    Evil Empire/Randers – Yes, they are never going to make anyone's list for sainthood.  Generally I kind of hate them and that's why we haven't played them since the last time they were too cheap to resist – 12 years ago.

    Home

    "I wondered how everyone could be so blind"/Pirate – Yeah, and then we elected Donald Trump and Bush started looking like the good old days of rational politics.  

    BKR/Stock – I hate it when people change tickers.  They are too rig-centric for me and they lost $10Bn last year and only make $1Bn in a great year so I don't see that as a healthy combination.

    Portfolios/Dan – Well if you remind me over the weekend I'll consolidate the recent ones but, generally, we review them all during expiration week, which was May 17-21 in either the morning Reports or the chat rooms.


  14. /CL hit goal at $69 by the way – that's where we reduce back to the original bet but now we have a higher average basis.


  15. It is amazing how these evil empires can do a few good deeds, let the PR team put some spin on it and you are a green company in the eyes of some blind people. Here is a refinery for the Koch Bros. 

    https://news.kochind.com/news/2019/buzzing-about-a-rare-pollinator-rusty-patched-bumb


  16. I know what I was doing 40 years ago this weekend:

    NYC was amazing back then, we had concerts like this 3-4 times a week and there was a pier with concerts and then there was Madison Square Garden and the Stadiums, the Garden State Arts Center, Jones Beach, the Palladium, CBGBs, Bottom Line….  That was my summer before college, saw at least a couple of bands a week and that isn't counting that there was a band playing in pretty much every bar we hung out in too. 


  17. Phil – is there a reason there is no link in the Virtual Portfolio to real time excel spreadsheets for each portfolio? At least for me, it would be useful it there was a link that allowed individuals to either study the different portfolios at their leisure or download an excel version to their own computers.  


  18. Thoughts on IDXX?  Looking at 2022 (longest timeframe) 500/600BCS for approx $52 and selling half 500 ps for $25.  Currently trading at 560.  



  19. Real-Time/Dan – Yes, it's because PowerOptions doesn't work that way and also, these spreadsheets are for educational purposes and I don't want people all piling into the same positions.  Other people could manipulate our group easily if we did that.  Also, people have taken my portfolios and published them on other sites.  Frankly, I'm considering going back to the time we didn't do portfolios at all and just reviewed trades (like our Top Trade Reviews).  There's a portfolio tab at the top of the page and you can access many years worth of past reviews to see how we build our portfolios over time.  

    IDXX/Nom – I like the diagnostic sector but $557 is $47Bn and these guys are still far from making $1Bn/yr on a 10% growth path so it's not the kind of thing I'd want to get into.

    A year ago, they were reasonably priced, now they are crazy.  

    NYC/Randers – Best place/time to grow up other than maybe LA or London in the 60s.  NY was pretty cool in the 60s too – especially '69 with Woodstock and the Mets.  '64 World's Fair (and then Montreal had one in '67 – we went to that too, not far).  

    Draft Card Burners Sign

    Ticker tape parades!  Remember ticker tape? 

    Wall St Ticker Tape

    Broadway and 8th, 1862:

    Broadway And Eighth New York


  20. Sorry I do not want to labor the point, but coming back to HAL yes I can follow the reason why selling the Jan 23 put, and receive 3$ but what is actually the point, to even expecting the have the stock assigned, as the yield is only .73%. Looking at stocks as MO, T, or PM, here you at least could be looking at a nice div. if assigned or better buying the stock at a say 20% discount.


  21. So I guess you are saying you don’t like HAL?  ????


  22. It just has nothing attractive to even get assigned. 


  23. Just bought more stock in MRK, BSM, BGS, here it is at least worth of selling put, if desired. An armchair trade is much more comfortable.


  24. Phil – OK, now I understand your concerns about publishing your portfolios and the potential for abuse of your intellectual property.  Thanks for clarifying. 


  25. Have a great weekend everyone,

    - Phil


  26. Phil-Don't forget Concerts in the Parks. We had bands playing on the Hudson River in the parks too right across the street from where we lived  In Rockland County. Not to mention Broadway. Fiddler on the Roof with Zero Mostel etc, etc. Fabulous times.


  27. Pharm – still like RMED? Very recent chart looks OK. It briefly went over my average-down price today.



  28. 5-Chart Friday (5/28/21)




  29. Broadway/Pirate – Yes, we used to see everything on Broadway – I love shows.  Off-broadway too.  Shakespeare in the park…  Once, on the way to the the Knickerbocker for desert, we ran into a roving production of Taming of the Shrew just randomly taking place in one of those little parks (no stage, just running around and doing the play brilliantly with the audience following) and I remember when Eddie Murphy used to do street comedy in Washington Square Park (and 1,000 other people whose names we didn't know).  Going to a tiny little club and seeing Eric Clapton jamming with some random blues band – when is that ever going to be re-created?  Not to mention all the times we used to get trashed at bars with celebrities – they used to be able to have semi-normal lives….

    And the funny thing about those times was how ethereal it all was.  There are no pictures or recordings – just memories and we cherish those because we lived in those moments and those moments were what life was all about.  Hard to imagine how we can recapture that in this digital age.