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Monday Market Movement – Wasted Spring

Nowhere for 3 months

That's where we've gone with Q2 all but completed and that's a shame when we were just kissing all-time highs a couple of weeks ago but it's all evaporated since then though it has not been bad for our portfolios (See Friday's Reviews) – as we were pretty skeptical of the rally.  We didn't get more bearish as we think 33,000 should hold up on the Dow for at least a bounce and, falling from 35,000 is a 2,000-point drop so we expect 400-point bounces to 33,400 (weak) and 33,800 (strong).  If we fail to take back and hold 33,800, THEN we may have a serious problem but the Futures are already giving us a weak bounce on pretty much zero volume (so meaningless).

The S&P 500 is still up 4% from March's close and that's more meaningful than the Dow.   The Nasdaq was at 13,300 and now 14,100 so 800 points is 6% higher than we were on April Fools Day while the Russell is actually a bit lower than it was.  So mixed signals from the majors and mixed signals in other Global Markets are not what you expect from a record-high market yet, so far, no sell-off has gone unrebounded – we'll just have to keep our eye on the data to figure out what's coming next.

While most people are expecting a strong 2nd half rebound in the economy (Q1 was 6.4% better than last year), 5% of that is inflation and strains are already showing on the other 1.4%.  Case in point: American Airlines (AAL) cancelled about 120 flights on Saturday and 176 on Sunday (about 6% of its mainline operation that day). While some were called off a few days in advance, about half of those were because of "unavailable flight crews."   

"The bad weather, combined with the labor shortages some of our vendors are contending with and the incredibly quick ramp up of customer demand, has led us to build in additional resilience and certainty to our operation by adjusting a fraction of our scheduled flying through mid-July," American Airlines spokeswoman Sarah Jantz said in a statement. 

There are parts shortages (chips and other items) as well as the supply chains are still nowhere near back to normal but labor is a huge issue for Airlines, who have been racing to train the aviators they furloughed as the two federal coronavirus aid packages that prohibited layoffs.  They are also trying to catch up with their pilots, who are due for periodic training.  There are limits on growth, no matter how much demand improves – this is how we end up getting inflation – as people are forced to bid up the price of scarce resources.  

Likewise this morning's Chicago Fed National Activity Index, which tracks 85 monthly indicators, was a big miss at 0.29 (0.58 expected) and that's up from a big miss of -0.09 last month – where is the growth?  Oh that's right – INFLATION!  Thank goodness for that or we'd have no growth at all.  Well, thank goodness for that and $6Tn worth of stimulus in the past 6 months.  Well, thank goodness for those thing plus the $120Bn worth of assets the Fed is buying each month.  Oh, and the bonus unemployment money – that too.   Otherwise – this wouldn't look so hot….

Forexlive Image View

You would think Earnings would be over but they are never over and now we have the final reports of Q2 straggling in.  Still some significant companies like FDX, KMX, KBH, NKE and CCL reporting and we'll be very interested in PLUG and WGO.  

Image

On the calendar, Thursday's GDP is just a revision and there's no Fed speek but there are note auctions (we need to borrow A LOT of money), so hopefully they go well and we have Existing Home Sales and the Richmond Fed tomorrow, PMI and New Home Sales Wednesday, Durable Goods Thursday is likely to disappoint and we'll get that with Wholesale and Retail Inventories along with the Kansas City Fed Report.  Friday is Personal Income and Outlays along with the last Consumer Sentiment Report before they pull the plug on Unemployment Bonuses and Mortgage Forbearance – so things will be hot in July if the Administration doesn't push through some extensions.  

It's all about the bounces this week – we'd better get strong ones!  

 


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  1. Good Morning.


  2. Just dawned on me that WGO would have to get chips too for their campers. Hmmm. Bynd and ABNB are both down big time. Our last purchase of the BYND burgers was up another dollar to over 7 bucks for two patties. The crumbles were over 5. Big price increases just recently..


  3. Good morning!

    Things are popping this morning so typical Monday.  

    • The U.S. dollar index witnessed its best trading week in over a year, fourteen months to be exact. The dollar index finished last week +1.89%, the last time it closed higher on the weekly charts was back on the week of April 3rd, 2020 where it closed +2.33%.
    • Last week the U.S. dollar index advanced against the basket of major currencies, rising from the 90.51 level to the 92.22 handle. So far in Monday's trading session the dollar index has slid from 92.32 to 92 the figure.
    • The recent topside move for the dollar came as the Federal Reserve indicated more of a hawkish sentiment towards future rate hikes. Before last week's FOMC statement, more than half of the Federal Reserve officials estimated that rates would remain near zero into 2024. However, now officials envision rates rising to 0.6% by the end of 2023. The Fed has also now suggested that they expect two interest rate increases by the end of 2023.
    • Furthermore, there appears to be a difference in opinions among Fed officials as regional Fed presidents Bullard and Kaplan favor earlier rate hikes. In contrast, others maintain the view that a rate hike may not be necessary until 2024. The investment community must decipher which viewpoint they believe will stick as it has a significant impact on the dollar's direction.
    • Future rate decisions will impact the U.S. dollar index and USD currency pairs, but they also will ripple their effects to the bond market and commodities space impacting oil and gold as both have strong ties to the dollar.
    • From a technical analysis viewpoint, the investment community can see the recent break in resistance due to last weeks announcement. The dollar index should be watched close to see if it retouches the recent level or continues to break higher.

    German antitrust watchdog probing Apple's iOS, App Store for violations

    • Germany's Bundeskartellamt initiates a proceeding against Apple (NASDAQ:AAPL) based on the new competition law rules for large digital companies, which follows similar investigations into Facebook, Amazon, and Google.
    • In January, a new amendment to the German Competition Act went into effect that includes a provision allowing the watchdog to intervene earlier with companies suspected of anticompetitive behavior.
    • Bundeskartellamt is initiating the first of a two-step process with Apple where the regulator will determine if the iPhone maker "is of paramount significance across markets." The watchdog would then move on to assessing specific competition violations.
    • “We will now examine whether with its proprietary operating system iOS, Apple has created a digital ecosystem around its iPhone that extends across several markets. Apple produces tablets, computers and wearables and provides a host of device-related services. In addition to manufacturing various hardware products, the tech company also offers the App Store, iCloud, AppleCare, Apple Music, Apple Arcade, Apple TV+ as well as other services as part of its services business. Besides assessing the company’s position in these areas, we will, among other aspects, examine its extensive integration across several market levels, the magnitude of its technological and financial resources and its access to data. A main focus of the investigations will be on the operation of the App Store as it enables Apple in many ways to influence the business activities of third parties," says Andreas Mundt, President of the Bundeskartellamt.
    • Related: Google's News Showcase service targeted in German antitrust probe
    • Macau authorities continue to tighten rules and supervision around the casinos in the area with the number of inspectors more than doubling to 459. The increase in supervision arrives with traffic trends still sluggish amid pandemic concerns.
    • Jefferies says Macau daily gross gaming revenue continues to decline to the lowest level since September 2020. Looking ahead, the firm thinks the sector will be driven by timing of the potential relaxation of Guangdong and Hong Kong travel and quarantine restrictions.
    • Analyst David Katz: "With zero local infection cases in Hong Kong since 7 June 2021, we believe Macau and Hong Kong are set to discuss border reopening. We expect this to be a phased opening focusing on extending pre-arrival negative nucleic acid test (currently 24 hrs to 7 days) and shortening the centralized isolation medical observation (currently 14 days to a possible 7 days and then removed). We expect the border would also only reopen to fully vaccinated travelers as well."
    • Macau casino stocks: Wynn Macau (OTCPK:WYNMFOTCPK:WYNMY), Wynn Resorts (NASDAQ:WYNN), Sands China (OTCPK:SCHYYOTCPK:SCHYF), Las Vegas Sands (NYSE:LVS), MGM China (OTCPK:MCHVFOTCPK:MCHVY). MGM Resorts (NYSE:MGM), Galaxy Entertainment (OTCPK:GXYEF), SJM Holdings (OTCPK:SJMHFOTCPK:SJMHY), Melco Resorts & Entertainment (NASDAQ:MLCO), Studio City International (NYSE:MSC).
    • Macau gross gaming revenue rose 492% in May against the soft pandemic comparable. The GGR tally was still far short of the 2019 level.

     

     

    • Wingstop (WING +0.7%) says it will hack its own brand by launching a new concept called Thighstop in the middle of a national chicken wing shortage.
    • The company describes Thighstop as a virtual restaurant that will serve up crispy chicken thighs. The new brand will be available for delivery or carryout in 1.4K locations nationwide via DoorDash or on Thighstop.com
    • Thighstop notes that thighs are one of the juiciest and most flavorful parts of the chicken. The thighs can be ordered naked or sauced and tossed in 11 different flavors. Thighstop is also introducing breaded boneless thighs, which is called a more juicy, flavorful take on Wingstop's popular boneless wings.
    • Chicken wings are seeing shortages due to high demand. labor shortages and a winter storm in Texas that disrupted areas with high production.
    • Read more about the Wingstop innovation

     

     

    • J.P. Morgan digs deep into the retail sector as it factors in a changing consumer landscape that includes the U.S. economy reopening fully and stimulus fading.
    • J.P. Morgan says its favorite names in the sector are Advance Auto Parts (NYSE:AAP), Academy Sports and Outdoors (NASDAQ:ASO), BJ's Wholesale (NYSE:BJ), Driven Brands (NASDAQ:DRVN), Genuine Parts (NYSE:GPC), Target (NYSE:TGT) and Ulta Beauty (NASDAQ:ULTA) as it takes a favorable sub-sector view of auto parts and discounters broadly. The firm keeps Williams-Sonoma (NYSE:WSM) and Wayfair (NYSE:W) slotted a Underweight due to concerns over wallet normalization that could accelerate over the summer when costs start to creep up. J.P. also keeps an "own the pro" theme going with Home Depot (NYSE:HD) favored over Lowe's (NYSE:LOW).
    • Costco (NASDAQ:COST) and Walmart (NYSE:WMT) are also viewed favorably as hybrid re-opening plays with sales comparisons that ease earlier than other retailers and seen as names that could grow EPS in 2022.
    • See Seeking Alpha Quant Ratings across the consumer discretionary sector.
    • Ocean Power Technologies (NYSE:OPTT) has appointed Philipp Stratmann as its new President and CEO, and a director to succeed Mr. George H. Kirby, who is departing OPTT to pursue other endeavors, for his service as President and CEO since 2015.
    • Additionally, Mr.Matthew Shafer has been promoted to SVP, CFO and Treasurer.
    • Mr. Stratmann previously served as OPT's Vice President of Global Business Development since 2019 and will be relocating from OPTT's Houston office to the New Jersey headquarters.
    • Shares are up 2.11% PM
    • Northern Dynasty Minerals (NYSE:NAK) -1.3% pre-market after entering into an at-the-market offering agreement for up to $14.5M of common shares on the NYSE American stock exchange.
    • Northern Dynasty says it plans to use the proceeds for the appeal of the decision by the U.S. Army Corps of Engineers and continued engineering, environmental, permitting and evaluation work on the Pebble mine.
    • The Pebble project now appears to be a longshot, Elephant Analytics writes in a bearish analysis published on Seeking Alpha.
    • Gilead Sciences (NASDAQ:GILD) announces positive data from three retrospective studies of the real-world treatment of patients hospitalized with COVID-19 treated with Veklury (remdesivir).
    • A reduction in mortality was observed across a spectrum of baseline oxygen requirements, the company said.
    • Two of the studies also observed that patients who received Veklury had a "significantly increased likelihood" of discharge from the hospital by Day 28, the company said.
    • In the double-blind, placebo-controlled ACTT-1 trial, there was a trend toward reduced mortality at Day 29 (11% vs. 15%, HR:0.73, 95% CI:0.52 to 1.03) in Veklury-treated patients (n=541) compared with placebo (n=521) in the overall study population; this result was not statistically significant.
    • The company, however, highlighted that in a post-hoc analysis with no adjustment for multiple testing, patients requiring low-flow oxygen at baseline who received Veklury achieved a statistically significant 70% reduction in mortality at Day 29 (4% vs. 13%; HR:0.30, 95% CI:0.14 to 0.64).
    • In the United States, Veklury is indicated for adults and pediatric patients (12 years of age and older and weighing at least 40 kg) for the treatment of COVID-19 requiring hospitalization.
    • Shares up marginally during premarket trading.

  4. BYND/Pirate – So you seem like you check into these things – you don't worry about what's in the Beyond Burgers being bad for you?   I stay away due to the sodium content.  Also a lot of oil is iffy to me as well.  BYND is certainly growing nicely – almost 50% this year and projecting better than that next year but still a long way to profitability.  


  5. BYND – I think some are raising prices simply because they can…. :(


  6. Remember the "WoW" potato chip?

    https://www.portablepress.com/blog/2015/06/olestra-leaky-history/

     

    More like "Wow", time to buy more toilet paper….hopefully…. :)


  7. PTON- thx for your comments. Tempting but dicey. Would be nice to have an "idiot" metric to include in fundamentals :)


  8. BYND- FWIW, and honestly I have no idea if this is something or nothing :) , but NJ Costco had Beyond Burgers on sale last month and were still fully stocked.


  9. Re BYND-The fat in them is not the saturated animal fat and when grilled most of that fat is lost anyways along with the sodium. I used to try to avoid salt too, but found it causes more problems when you don't get enough then when you overdose,. It is variable on how much you perspire etc, but I found out that sodium relaxes blood vessels so the heart pumps easier. Did not know that. Anyways, my Doc just shakes his head when I go in for my annual physical. He says the charts don't even go low enough for for my HDL/LDL profile and the fact I take NO meds at all. He talks to me for an hour trying to glean how I manage walking/hiking, biking, canoeing with the arthritis I have from past injuries including having my 5th cervical vertabra removed because of a fall. So, yes I try to make intelligent choices BUT each person has their own physical makeup and have to find & tread their own path. Being highly allergic and gluten intolerant is another whole challenge.


  10. Prices/1020 – There's certainly some of that going around. 

    Olestra/1020 – I think that's one of the reasons I'm slow to jump into new food crazes.  Let them experiment on others for a decade or so….  I was just saying last night though, if I wasn't worried about mercury – I'd be perfectly happy eating sushi pretty much every meal.  

    Idiot metric/Pstas – I consider any stock loved by rich people (TSLA, LULU, PTON, BYND) to be a danger because you have millions of people (Top 1%) who put "a few" shares in their portfolio regardless of the Fundamentals.  That lowers the float and makes it easier to manipulate, etc.  

    Holy crap my house just shook from thunder!

    BYND/EMike – On Prime I'm getting $4.31 for 2 burgers.  Not too bad.  6 Bubba burgers are $12 so about the same.

    Gluten/Pirate – Yes, my niece has that and loves BYND.


  11. Phil-The fresh fish up here is AMAZING but they say not to eat it more than once a week because of mercury. Gives one pause of what we have done to our planet. I think the prices are higher here because they always run out of it-shelfs empty. Makes sense..


  12. Prices on BYND not fish I meant.


  13. Phil/Thunder

    Weather has been terrible down here all week – had to drain my pool 3 times.

    What do you think about the food delivery business( doordash, grubhub, ubereats, etc) ? Have you ever seen an industry that is seemingly bad for all the parties involved?  

    They lose $$$ – restaurants hate paying commissions on the orders, drivers complain about conditions/pay – I'm scared to short them because of the MOMO factor.  Just don't see where this industry winds up?


  14. BYND/Phil/Pirate-Doesn't that have coconut oil in it?   A vegetarian diet will help lower you inflammation and manage arthritis better.  The omega 3 in fish helps also.  The grain fed meats have a lot of Omega 6 so are worse for inflammation.  I stick with the fish which tested low in toxins (wild salmon, flounder, sole, pollock, calamari etc.).  Those are also high on DHA which a nootropic.  A recent small study also concluded that DHA prevents some cancers.  


  15. Delivery- yes, my wife's clients are all small restaurants and they almost all use 3rd party delivery services and they are a pain. Many of the stores have a delivery menu reflecting higher prices than in store or internal deliveries. Now a lot of accounting issues as the 3rd parties are , in some states ,  required to collect and pay the sales taxes. Bookkeeping FUBAR. And it is not just food- we order from Walmart for many basics like paper towels, tp. personal care items etc. Very convenient but often with multi-item orders there is shipping from multiple sources. An example- the other day we got an UBER driver delivery of part of a larger order. It was for just two small item – value less than $15. That is just nuts, It reminds me of how the airlines ran their business based on market share- that was the holy grail- self destructive price competition to maintain route share.The 3rd party folks sell on that same basis- you have to use us or lose the business to competitor. It delivery order are in fact plus volume then fine but no way for a small outfit to track that. How will it shake out? My guess is more raising item prices and delivery fees- just like what the airlines did- fees for everything. Only the strong will survive.


  16. Mercury/Pirate – Yeah, it's crazy how we're just destroying all our primary food sources.   We're going to need things like BYND to feed people in the future, eating animals is too inefficient so I support them just out of principle.  

    Food delivery/Jeff – Well, if you think about it, delivery guys are generally a loss leader for restaurants – the whole concept is not profitable.  It's even cheaper to wash dishes than pay for disposable everything to put the food in.  It will make sense when they have robots delivering food in electric cars or drones but that's a while from now.  Meanwhile, they are spending investor money to build a base (while crushing restaurant margins).  The sushi place I was at last night had more take-out than eat in while I was there.  

    Frankly, if I were going to open a restaurant now, I'd just do a kitchen that delivers.  Put it in a cheap spot with good road access and just set up shop with all the deliver services – why pay for space and staff for customers?  THEN you could profitably work with the delivery companies.  I think you'll see a lot of that in the future.  

    Thanks Seer but I LIKE tuna!  I like salmon and eel too but also tuna's my favorite.

    Strong/Pstas – I think those little delivery bots that can go on sidewalks are the best idea – as long as they are road safe.  

    Domino's Pizza partners with Nuro to launch R-2 robot to deliver your pizza  in Houston - ABC13 Houston

    If they cost maybe $20,000 and last 3 years so let's call it $7,000 year plus electricity is less than $10K and if you can do 10 deliveries a day with it that's $3/meal cost.  I don't think people will tip them though and there's still a cost of loading them, cleaning them etc so, for now, exploiting humans is still cheaper.  

    Around here delivery adds about 30% to the cost of the meal – including a 10% tip.  It's florida though so I guess the taxes are there either way.  My issue is that there's no scaling – if I order $50 worth of Chinese food – why do I pay so much more than when I order $15?  That seems a little silly.

    Meanwhile, oil flew up to $73 – getting ready for the holiday weekend.

    /RB joining it this time.

    Dollar finally stopped going up:

         1108 ET – US benchmark oil prices begin to surge after some early-morning
    choppiness, with WTI crude briefly rising 2% to $73.06 a barrel, putting
    them on course to close at their highest price since 2018. The jump in oil
    prices comes as several Fed officials cite more intense US inflation than
    expected, commentary that is helping to fuel a weaker dollar, which in turn
    is giving a boost to crude prices since they are bought and sold with US
    currency.The global benchmark Brent rises 1% to $74.26.

    What nonsense.  Just say whatever to justify the move?


  17. Let's say you have 20 tables that seat 80 people and you do 2 turns a night (tables not always 4) that's 160 people a day and you are paying maybe $3,000/month just for that space so $1.50 just for the space for people (and that's per person, not per delivery/table) and then wait staff, etc and you are miles more than $3 – that's why I like my delivery only idea.  


  18. Seer- yes I believe you are right about the inflammation being helped by the vegie diet. I used to take Clinoril for my arthritis but I got 5 holes in my stomach! Thought I was going to die. So I stopped the medication route and had to find alternatives. I do take many vitamins and supplements ie Vit D, Multi etc. I truly feel eating organic for most my life has been the key to staying healthy. I have always been a keen of observer of peoples habits and sugar is a very unhealthy food. All of our friends that were smokers are all gone most never making it past 70 and those that quit now have COPD even years after not touching ciggies. Construction workers have the healthiest hearts it seems. I have a brother in law who is 93 and was a teacher but worked summers in construction and is amazingly healthy. Figures, loads of exercise too.


  19. PHIL/WBA Noticed your WBA comment  "Let's sell 15 (3/5) of the Aug $52.50 calls for $1.95 ($2,925)"

    I have 25 WBA '23 $50c ($7.26)

    -25 WBA '23 $60c ($4.78)

    -10 WBA '23 $45p ($4.68) ?

    Would you still suggest to sell some short term calls?

    THX!


  20. pirate, when it comes it weight, diet is king.  When it comes to health as a whole, I think exercise is the primary driver.  Humans evolved to be the highest endurance land species on the planet.  We were not meant to stand around all day; much less sit.  I am a very active and healthy 33-year old that runs, walks, and lifts most days of the week and I don't do nearly enough physical activity despite doing more than >95% of the population.

    I believe that a lot of the "unhealthy" diet stuff matters a LOT more when those calories go to stored fat instead of fueling your body's activity.  It is really unfortunate that food has become less healthy at the same time as exercise has plummeted.  It is literally a killer combination.


  21. Pirate & JPH, exercise that you love is king. I lift weights, not because I love it, but because I have a collagen 1 disorder (EDS – type 3 for you clinicians). I study martial arts because I love it and my gym is a real mixed community where we teach and learn from each other and get a great workout along with the fun – and I've been doing the martial arts for 50 years now.


  22. WBA/Wing – No because we cashed in that spread (the $50/60 portion).  I forgot we did that so no sense in selling naked short calls – too risky.  

    • Positive economic indicator surprises will likely lead to curve flattening given the hawkish tilt by the Federal Reserve last week, Goldman Sachs strategists say.
    • A "read-through of the Fed meeting is that good news no longer implies steepening, but rather will likely drive flattening, particularly for intermediate/long end yield curves," Goldman Chief Interest Rates Strategist Praveen Korapaty writes in a note. "Markets were clearly unprepared for such news – even as investors’ duration positioning turned more neutral over the past few weeks, they appear to have held on to steepeners."
    • That led to a large unwinding and the stopping out of long-end short positions, including Goldman's own 30-year Treasury short, Korapaty says.
    • "We think this positioning squeeze, to a greater degree than anticipation of a 'policy mistake,' is what is driving the sharp price action," he adds. "Along with the pronounced decline in long end yields, there was also an accompanying decline in intermediate yields – both 5y5y nominal and real yields are about 50bp off their recent highs, even as front/belly yields have been buoyed by the hawkish turn."
    • "As we noted in our post-Fed analysis, while we do not think there are clear near term catalysts, we continue believe that these yields are too low – we do not see a compelling reason why markets should price a very rapid and simultaneously shallow rate hike cycle for this recovery."

    • Microsoft (NASDAQ:MSFT) shares touched an all-time high after rising as much as 1.3% to $263.52 dancing close to the $2T market cap club.
    • The company will unveil its "next generation of Windows" during an event on June 24.
    • Last week, a Windows 11 leak reportedly shows the new user interface and Start menu, which resemble what Microsoft had planned for the scrapped Windows 10X operating system.
    • Microsoft CEO Satya Nadella teased that the new Windows version was coming soon when he spoke at the Build developer conference in late May. 
    • China the first country to be hit by the pandemic has completed the administration of 1 billion COVID-19 vaccine doses in the country.
    • As of Saturday, 1,010,489,000 doses have been given to people in the country, CNBC reported citing the data from the National Health Commission (NHC) of China.
    • The data on the proportion of people who received the full dosing regimen was not available. However, the government aimed to fully vaccinate 40% of the population by June, Zhong Nanshan, one of China’s top health experts at NHC said in March.
    • The World Health Organization (WHO) has granted the emergency use authorization for two Chinese COVID-19 vaccines: CoronaVac from Sinovac Biotech (SVA) and another inactivated vaccine from Sinopharm Group (OTCPK:SHTDF).
    • Meanwhile, Shanghai Fosun Pharmaceutical (OTCPK:SFOSF +1.3%) has formed a joint venture with BioNTech (BNTX +6.2%) targeting the manufacture of 1B doses of COVID-19 vaccine developed by the company in partnership with Pfizer (PFE +1.6%).
    • Other frontrunners in COVID-19 vaccine race: Johnson & Johnson (JNJ +1.0%), AstraZeneca (AZN -0.1%), Moderna (MRNA +5.0%) and Novavax (NVAX +1.5%)
    • Hyundai Motor Group, the parent company of South Korean automaker Hyundai Motor Company (OTCPK:HYMTF +0.6%), has completed its acquisition of a controlling stake in Boston Dynamics, a US engineering and robotics design company.
    • The group purchased the stake from SoftBank in a deal that valued Boston Dynamics at $1.1B.
    • Additional financial details regarding the deal remain undisclosed. Hyundai Motor Group now holds an 80% stake in Boston Dynamics, while SoftBank retains a 20% stake through an affiliate.
    • Hyundai Motor Group will use the acquisition to develop a robotics value chain encompassing robot component manufacturing to smart logistics solutions.
    • It will also help expand Boston Dynamics' product line and sales and services footprint. Boston Dynamics offers robots spanning multiple industries, including oil and gas, mining and power utilities.
    • Press Release

    • Wedbush analyst Daniel Ives thinks there's a $20 per share over Apple's (AAPL +1.3%) stock due to regulatory concerns that surround Big Tech.
    • Ives sees antitrust probes as a "containable headline risk for Apple and Big Tech for now." He sees the App Store, at the center of the recent Epic Games antitrust suit that's still awaiting a verdict, has a "very defendable moat both in the courts and in the Beltway."
    • The firm believes that Apple "remains more on the edge rather than the center of the anti-trust spider web" with Facebook and Alphabet more in the spotlight.
    • Ives, citing channel checks, also says the iPhone 13 lineup should launch on time in late September, which will keep the first week of sales in FQ4 and FY21 results.
    • Ives maintains his Outperform rating and Street-high $185 price target on Apple.
    • Recent news: German antitrust watchdog probing Apple's iOS, App Store for violations
    • Baird says it continues to like Airbnb (ABNB -2.1%) despite a few overhangs like host growth and lock-up expirations hanging over shares. The firm points to mobility and booking trends in core markets that suggest an ongoing healthy recovery ahead of the summer peak season.
    • Analyst Colin Sebastian also takes into account Google trends and third-party tracking in forecasting that ABNB should finish Q2 at least in line with Street expectations, while "significant platform improvements and host-focused marketing campaigns" are seen positioning the online travel company to capitalize on positive momentum through the balance of the year.
    • Baird keeps an Outperform rating on Airbnb and price target of $200 into the hot part of the summer season.
    • Wall Street analyst scorecard on Airnb: 14 Buy-equivalent ratings or better, 17 Neutral-equivalent ratings and 3 Sell-equivalent ratings.
    • Nearly 74M Americans have been covered by Medicaid during the COVID-19 pandemic, an all-time high, according to new data released today by the Centers for Medicare & Medicaid Services.
    • Between February 2020 and January 2021, Medicaid enrollment grew by 9.7M.

    • Although some people became eligible because of economic circumstances created by the pandemic, The Washington Post, citing federal officials and Medicaid experts, said most of the increase was because a change created in the first coronavirus relief package.
    • The law gave states additional federal dollars due to anticipated higher Medicaid costs, and in exchange, states wouldn't remove people from Medicaid rolls until the coronavirus public health emergency was declared over.
    • Medicaid insurance providers in afternoon trading: Centene (NYSE:CNC) +0.6%; Humana (NYSE:HUM) +2.2%; and Molina (NYSE:MOH) +3%.

    • The energy sector is leading the markets higher today with a 3.2% gain roughly doubling the advance of the S&P 500. Helping naturally are rising oil prices, up another 3% today to $73.28 per barrel – the highest in more than 30 months.
    • Bank of America thinks oil can see $100 next year. Per a Reuters report: "We believe that the robust global oil demand recovery will outpace supply growth over the next 18 months, further draining inventories and setting the stage for higher oil prices."
    • See a handful of oil and gas exchange traded funds and their daily performance.
    • ETFs: (NYSEARCA:XLE) +3.30%(NYSEARCA:USO) +1.80%(NYSEARCA:UCO) +3.47%(NYSEARCA:XOP) +3.19%, and (NYSEARCA:GUSH) +6.26%.
    • In other financial market news, see how the U.S. Dollar Index has had its best performing week in over a year, dating back to April of 2020.
    • Crude oil futures extend their recent gains, as oil's underlying physical demand outlook remains positive and talks toward restoring the Iran nuclear deal look to drag on following the country's presidential election last week.
    • "Despite [last week's] noise in financial markets, the real world is on the right track and will require increasing amounts of energy as it reopens," OANDA analyst Jeffrey Halley says.
    • The Iranian election of Ebrahim Raisi, considered a hard-liner, "makes it almost impossible to get a deal done" anytime soon, Price Futures analyst Phil Flynn tells MarketWatch.
    • July WTI crude oil (CL1:COM) +2.4% to $73.37/bbl; August Brent crude (CO1:COM) +1.5% to $74.62/bbl.
    • The S&P energy sector (XLE +2.0%) sprints ahead with strong gains after the group slid ~6% last week; the sector is up 41% YTD.
    • Four of today's top five S&P 500 gainers are oil and gas names: APA +5.9%EOG +5.2%HAL +5.2%HES +5.1%.
    • Other noteworthy gainers include MRO +5%SLB +4.9%FANG +4.7%DVN +4.5%OXY +4.5%BKR +4.1%.
    • ETFs: XLEUSOUCOXOPVDEGUSHOIHERXBGRBNO
    • Brent crude likely will average $68/bbl this year but has the potential to surge to $100/bbl next year as travel demand rebounds, with "plenty of pent-up oil demand ready to be unleashed," Bank of America analysts say.
    • Crude oil closed with gains last week even as other commodities sold off.
    • Netflix (NFLX -1.3%) and legendary director Steven Spielberg have a surprising partnership that will add juice to a heavily amped up moviemaking schedule for the streaming leader.
    • The deal between Netflix and Spielberg's Amblin Partners will result in multiple near feature films for the service each year. Netflix had already increased production to the "movie per week" level for 2021.
    • And it's notable as Spielberg had previously been perceived as a Netflix skeptic, as Variety notes: He had reportedly urged the Academy of Motion Picture Arts and Sciences to disallow day-and-date streaming releases from Best Picture consideration.
    • Amblin will make at least two films a year for Netflix and Spielberg might even direct some of them, while Netflix will provide financing for some productions.
    • And the movies in the deal may or may not receive theatrical releases (as The Irishman and Marriage Story did); that will be decided on a case-by-case basis.
    • “At Amblin, storytelling will forever be at the center of everything we do, and from the minute Ted (Netflix creative chief and co-CEO Ted Sarandos) and I started discussing a partnership, it was abundantly clear that we had an amazing opportunity to tell new stories together and reach audiences in new ways,” Spielberg says.

     

     

    • Tony Xu, co-founder and CEO of DoorDash (NYSE:DASH), said Monday that grocery delivery is only in its infancy, as consumers continue to drive a secular trend towards convenience. The comments followed news that the food delivery company announced a new partnership with grocery store chain Alberson's (NYSE:ACI).
    • Speaking to CNBC, Xu noted that the company wants to continue to push its offerings beyond its core restaurant delivery business until it can provide consumers with "everything in the neighborhood."
    • The DoorDash CEO highlighted the company's ability to help partners like Albertson's grow their own digital channel at the same time it boosts sales through the DoorDash app. He said the density caused by this two-pronged approach "makes the economics flow for everybody."
    • Xu also argued that some of DoorDash's push into other services could lead to more efficient use of real estate over the long term. He specifically cited its DashMart product and its experiments with ghost kitchens.
    • Shares of DoorDash were up more than 4.5% in midday trading on Monday, bolstered by the Albertson's deal. Under the agreement, the company will offer on-demand grocery delivery for almost 2K stores across the country. This includes deliveries for such brands as Safeway and Jewel-Osco

    • The Supreme Court has declined to hear appeals brought by several private insurers who are seeking further reimbursement from the federal government to offset losses from insuring additional individuals.
    • The insurers that brought the cases are Maine Community Health Options, Community Health Choice, and Common Ground Healthcare Cooperative.
    • The 2010 Affordable Care Act's requirement that all individuals are eligible for health coverage led many insurers to incur steep losses in the early years of the law. Insurers have claimed that they are entitled  reimbursement to deal with these losses.
    • In August 2020, the US Court of Appeals for the Federal Circuit ruled that that the insurers' reimbursement could be provided by other income they received such as federal government premium tax credits.
    • Major health insurers in afternoon trading: Anthem (NYSE:ANTM) +1.6%; UnitedHealth Group (NYSE:UNH) +2.1%; Cigna (NYSE:CI) +1.3%; and CVS Health (NYSE:CVS) +1.8%.

     

     

    • ARK Invest has shared with the investment community its latest innovation newsletter and outlined some key theme areas. One of the topic matters brought to light lends itself to how big the market is for satellite broadband.
    • ARK Invest believes that the new space race is in progress and it's around the satellite broadband market. According to ARK, SpaceX's Starlink satellites represent nearly 50% of the approximately 3,000 active satellites orbiting our planet.
    • In looking to model the opportunity, ARK takes into consideration the following three assumptions.
    • "1. Bandwidth is the key constraint on the number of users a satellite system can support."
    • "2. The system will oversubscribe by a factor of 20 because not everyone is online at the same time."
    • "3. Individuals are willing to pay 2% of GDP per capita for broadband internet."
    • Per the research that Cathie Wood and ARK suggest, the satellite broadband market can evolve into two separate market segments that can generate global revenues of approximately $17B and have a constellation of 12,000 satellites.
    • Per Space.com, SpaceX looks to launch 42,000 satellites which can grow the existing marketplace to over $40B as bandwidth would increase with additional satellites.
    • According to ARK: "We believe one customer segment will pay roughly $75-$100 per month, and another $10-$20 per month. Early adopters will be at the high end of the market, giving SpaceX the opportunity to drive costs down the satellite broadband learning curve and setting it up to tap into the low end of the market."
    • Investors interested in learning more about ARK Invest and the space industry see below two exchange-traded funds and their daily price action.
    • ARK Innovation ETF (NYSEARCA:ARKK)+0.36%.
    • ARK Space Exploration ETF (BATS:ARKX)+1.30%.
    • In other financial market news, see how the U.S. Dollar Index has had its best performing week in over a year, dating back to April of 2020.
    • As the U.S. market is emerging from COVID-19 pandemic, FTI Consulting, (FCN +0.7%) expects U.S. online retail sales to grow by 13.5% Y/Y to $865B in 2021, vs. 32% growth last year above the projected +25%.
    • As per the survey, nearly two-thirds of Amazon Prime Day shoppers intend to spend more this year to reach $12B sales worldwide, smashing last year's sales record of $10B.
    • The online channel’s share of U.S. retail sales (excluding auto and gas) is expected to reach 20.5% in 2021, vs to 19% in 2020 and 15.4% in 2019.
    • U.S. online market share is expected to reach 33% by the end of the decade.
    • “There will be no return to pre-pandemic shopping habits for a large majority of consumers, and this will tend to benefit large online and omnichannel sellers, most of whom are general merchandise retailers,” said J.D. Wichser, Leader of the Retail & Consumer Products practice at FTI Consulting.
    • eMarketer forecasts ecommerce sales will grow 13.7% this year, reaching $908.73B:
    • U.S. online sales in Q1 grew 7.7% Q/Q and a 16.8% Y/Y to ~$215B.

    • DoorDash (DASH +2.9%) is higher after announcing a new partnership with Albersons Companies (ACI +1.4%) to offer on-demand grocery delivery from nearly 2K stores in the U.S. across Safeway, Vons, Jewel-Osco and other brands.
    • Albertsons will offer more than 40K grocery items from stores for delivery via DoorDash, including fresh and prepared food, core grocery, floral and convenience items at select stores.
    • The new partnership is expected to include both immediate and long-term initiatives, including supporting the expansion of Albertsons' first-party grocery delivery business with DoorDash Drive, launching a custom loyalty program, expanding delivery hours and offering specialty items, prepared meals, meal kits and new concepts to customers.
    • In addition, DoorDash and Albertsons are offering a first-ever digital gaming experience to customer as they make their grocery orders.
    • Online grocery deliveries soared during the pandemic and the habit is anticipated to be sticky with consumers.
    • Read more about the DoorDash-Albersons partnership.
    • UBS says a key takeaway from meetings with shipping industry experts is that supply chain pressures will remain in place for the near term as it pertains to the retail sector.
    • The bottlenecks are linked in part to port disruptions, labor shortages and a lack of available warehouse space to store products.
    • Analyst Michael Lasser: "Even if these issues are solved, the tightness in the market will likely remain elevated due to backlogs from demand outpacing supply for a prolonged period. Plus, peak season is right around the corner (August/September) which will add another wrinkle. This is likely to lead to a continuation of the heightened shipping costs for retailers, for at least in the near term."
    • Container rates will likely continue to be a headwind for retailers into 2022. Looking even further ahead, shipping experts also believe that rates will not see much of a correction until 12 to 18 months from now. And even then, an elevated "new normal" for container prices could be part of the market.
    • While that is a potential profit drag for the retail sector (NYSEARCA:XRT) broadly if costs cannot be passed on to consumers, shipping companies and lessors could both benefit from that "new normal" including names like Atlas Corp (ATCO +2.1%), Maersk (OTCPK:AMKBY +2.5%), Matson (MATX +2.1%), Euroseas (ESEA +0.8%), Costamare (CMRE +2.1%), Global Ship Lease (GSL +1.8%), Danaos (DAC +1.2%), Capital Product Partners (CPLP +2.7%), Golden Ocean (GOGL +3.7%), Scorpio Tankers (STNG +0.8%), Diana Shipping (DSX +3.0%) and Star Bulk Carriers (SBLK +1.7%) and Navios Partners (NMM +1.0%) to name a few.
    • The shipping sector, in general, is on watch this week with Marine Money Week taking place in a virtual format.
    • Robert Kaplan, president of Federal Reserve Bank of Dallas, suggested Monday that the central bank should consider pulling back its accommodative policy "sooner rather than later," arguing that conditions in the labor market and with raw material pricing pointed to the Fed taking its "foot gently off the accelerator."
    • Kaplan also questioned the value of using quantitative easing to bolster an economy that is suffering from supply issues rather than demand ones, like the current situation he sees in the the U.S.
    • In a panel discussion hosted by the Official Monetary and Financial Institutions Forum, the Dallas Fed president also noted that he favored a "risk management approach" to policy action as the U.S. economy emerges from the COVID pandemic.
    • Kaplan noted that accelerated vaccinations and aggressive government spending has spurred faster economic growth in the first half of 2021 than policymakers had projected in late 2020. As a result, the Fed has been forced to increase its growth and inflation targets for the year.
    • "I've been a fan of maybe doing some things to take our foot gently off the accelerator sooner rather than later," he said.
    • On the topic of quantitative easing, Kaplan noted that the current economy differs significantly from the one faced in the wake of the financial crisis of 2008, when the Fed used QE to pull the country out of a deep recession.
    • The Dallas Fed president noted that that economic crisis involved a significant lack of demand, which was helped by the purchases of treasuries and mortgage-backed securities.
    • However, he argued that the current economy is seeing very strong demand, in part spurred by aggressive government spending. As a result, the current economic situation might not represent the ideal environment for further QE, Kaplan suggested.
    • "Purchases of treasuries and mortgage-backed securities are probably not well designed to deal with supply issues," he said. "They are much better designed to deal with demand issues."
    • Citing a hot housing market, Kaplan also questioned whether the sector needed Fed support in the form of continued MBS purchases.
    • Kaplan repeated his desire to act "sooner rather than later," saying an early change in policy could sidestep the necessity of more aggressive action in the future.
    • "If you wait too long to taper … it may make it more likely that you need to take additional actions down the road," he said.
    • Last week, the Federal Reserve held its regularly scheduled policy meeting. While it didn't alter its official stance, forecasts released by the Fed showed that policymakers had increased their projections for economic growth and inflation.
    • Data released following the meeting also showed that a majority of Fed members now projected a rate hike before the end of 2023 – sooner than had been included in previous predictions issued by the central bank.
    • Markets perceived this information as moving up the timeline for a more hawkish policy stance, a move that spurred the best weekly performance for the dollar index in more than a year.

    • Moderna (MRNA +4.1%) is said to be adding two new production lines at one of its manufacturing plants as COVID-19 vaccine manufacturer targets 3B shots by 2022 up from 1B this year.
    • The addition will enable the company to raise overall production capacity by 50% at its manufacturing site in Norwood, Massachusetts, the WSJ reported citing the company officials.
    • “Our plan and our hope is that, as soon as the U.S. has enough doses, we’re allowed to export so we can help as many countries as we can around the world,” the company CEO Stéphane Bancel said.
    • While Moderna bets on booster shots and exports to more countries as the pandemic impact wanes in the U.S., the analysts expect its future COVID-19 vaccine sales to slide gradually.
    • The COVID-19 vaccine sales could exceed $17.1B in 2021 before sliding to $16.8B and $7.4B in 2022 and 2023, respectively, according to mean estimates of analysts surveyed by FactSet.
    • Meanwhile, some scientists remain skeptical over the need for COVID-19 booster shots.

    I guess they are planning for Covid to be around for a long time….


  23. A lot of unscheduled Fed speak today:

    • St. Louis Fed President James Bullard cited the "upside risk" of potential inflation in a speech Monday in which he said the central bank will have to stay "nimble" as the U.S. economy reopens after the COVID pandemic.
    • He also said that the Fed's eventual taper strategy would have to involve constant monitoring of incoming data, rather than going on "automatic pilot."
    • Bullard's remarks came in the wake of last week's Fed meeting, which showed policymakers ratcheting up their estimates for both economic growth and inflation.
    • Speaking on a panel discussion sponsored by the Official Monetary and Financial Institutions Forum, Bullard pointed to a tight labor market, suggesting that the economic conditions coming out of the pandemic recession are much better than the ones faced after the last major economic dislocation, which took place in the wake of the 2008 financial crisis.
    • Given this economic strength, Bullard warned that the Fed needs to be ready for a potential "upside risk" to price increases, meaning that policymakers would have to remain reactive to incoming data in order to counteract the danger of inflation.
    • "We have to be ready on both sides, I think, to be able to react to that, to stay contingent, to be nimble," he said. "Just as nimble coming out of the pandemic as I think we had to be going into the pandemic."
    • As part of this, Bullard said that once the Federal Reserve begins tapering its quantitative easing, it should keep a close eye on the process and react to incoming signals.
    • "I don't think this is an environment where you can just go on automatic pilot," he said.
    • "We're probably going to have to be a little more ready than we were in 2014 to possibly make adjustments to our paper strategy," Bullard added, referring to the last time the Fed underwent a tapering process.


  24. PHIL/AAPL (Mostly) following your suggestions I have:

    80 AAPL Jun'22 $105c ($24.3)

    -40 Jun'22 $160c ($21.1)

    -40 Jun'21 $135c ($12.1) just expired

    40  Jan '23 $100c ($36.15)

    -40 '23 $160c ($20)

    -5 '23 $140p  ($24.6)

    -20 Jun'22 $50p ($5.2)

    Also (apologies) I still have

    20 '22 $75c ($16.8)

    5 '23 $110c ($34.5)

    Would you suggest some short calls to replace the 40 Jun $135s on the way to '22 $160s?

    As well as selling my deep ITM calls of course .. ;)

    Thx!


  25. All/health There are 3 names you need to follow. David Sinclair, Nir Barzilai and Valter Longo. i do what David and Nir do. but Valter is much harder to follow. I dont need to take any maintenance drugs, but do take what they themselves take.


  26. AAPL/Wing – So the longs are:

    • 80 June 22 $105s, 
    • 40 2023 $100s
    • 20 Jan $75s 
    • 5 2023 $110s 

    And shorts are:

    • 40 June 22 $160s 
    • 40 2023 $160s 
    • 5 2023 $140s  

    20 June 22 $50 puts

    145 longs and 85 short and you sold 40 of the June $135s and that worked out well for you for about $50,000, right?  So what's the concern?  I don't see the point in the 20 Jan $75s ($115,000) or the 5 2023 $110s ($15,600) as they are too deep in the money to bother with.  Take $130,600 off the table and then you have 120 longs and you can still sell quarterly premium.  

    $140 is a reasonable target for AAPL and you are over that with the short calls and selling 40 of the Sept $135s for $5 brings in $20,000 while you wait.  Even with $250,000 worth of June 22 $105s, it's nice to make $20,000 per quarter, right?  Obviously, you don't need to be so deep in the money but I'd wait for 2024s to come out and then take some serious consideration for new spreads.