Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

Throwback Thursday – Delta Variant Sends Many Countries back to Lockdowns

85 countries, INCLUDING the US are infected.

Fortunately, the vaccines seem to be doing their job and preventing against large amounts of hospitalizations but people all over the World are catching Covid again and South America has yet another variant of the virus, which now has 8 times the death rate of the rest of the World.  South America has 5% of the World's population but now accounts for 25% of the World's daily Covid deaths - kind of like America was last summer.   

Almost a million people have died across 12 countries in the region. Amid another devastating surge, Brazil surpassed 500,000 this past weekend, with the virus killing seven times as many people per capita each day than in hard-hit India. Colombia and Argentina, which together have 95 million people, are tallying three times as many deaths each day as all of Africa.  Of the 10 countries around the world with the highest daily death rates per capita, seven are now in South America.

I know we don't want to start July off worrying about Covid when we should be going out and having fun but we need to remember not everyone is having such a good time and that kind of makes me wonder how all these projection of S&P 500 earnings, which rely 50% on the Global Economy, are going to be hitting their marks when the rest of the World is still facing serious issues?

As anger builds over governments’ handling of the crisis, signs of political upheaval are multiplying. Violent protests have already rocked Colombia. Brazil’s president, Jair Bolsonaro, is facing a congressional inquiry over his handling of the pandemic, with antigovernment street demonstrations gaining momentum over the weekend. In Peru, voters elected the head of a Marxist party as president, and leftist groups are drafting Chile’s new constitution.

Hello Neighbor Hi GIF - HelloNeighbor Hi HowAreYou - Discover & Share GIFsConfronted during the past year with the near-impossible task of keeping people at home in countries where half of workers toil in the informal economy, often living hand to mouth, some officials bet on herd immunity, either openly or behind closed doors. The result was deadly.  In Brazil, as infections surged in the Amazonian city of Manaus last year, President Bolsonaro also encouraged local officials to test out herd immunity, speaking out against lockdowns and face masks, and playing down the dangers of the virus, according to statements given during the congressional inquiry. 

The result, public-health experts said, was the collapse of the health system and the emergence in Manaus of the aggressive Gamma variant, previously called P.1, that is now wreaking havoc across Latin America.  The Gamma strain, responsible for most new infections in Brazil, was shown to be up to 2.2 times more contagious than previous versions of the virus. The country is logging about 2,000 deaths a day, reaching a total of 501,825 on Sunday.

In parts of Asia, Australia and Europe, governments are reintroducing travel restrictions and delaying the lifting of lockdowns as health authorities find that restrictive measures that kept earlier lineages of the virus in check aren’t curbing Delta, which is twice as contagious as the original Covid strain.  And don't forget Japan is going forward with the Olympics in 3 weeks – that should be interesting! 

In Europe, German authorities are trying to slow the spread of the virus by limiting travel. Passengers arriving from so-called “variant territories”—including the U.K., Portugal, Russia and India among others—must quarantine for 14 days, whether or not they are vaccinated or have tested negative for an infection.  So much for those summer travel plans.  

Yet, even today, OPEC is debating whether or not to increase production to meet surging demand for oil as travel heats up again.  In new estimates published Wednesday, the United Nations said the global economy could suffer a loss in output this year close to the $2.4 trillion hit recorded in 2020 as a result of the pandemic’s impact on tourism and related sectors.

Some 60% of that loss will be felt in developing economies, reflecting slower progress of vaccinations. The U.N. said it expects any recovery in tourism to be led by rich countries with higher vaccination rates, including France, Germany, Switzerland, the U.K. and the U.S.

So get out there and travel this weekend as it's up to US to save the Global Economy – also it may be our last chance if all this travel blows up in our face and puts us back on lockdown too.

Expedia (EXPE) is still losing money in 2021 after losing $2.6Bn last year yet, at $163, the stock is 20% higher than they were in 2019 – a year where they made $565M.  $163/share is $24Bn in market cap, so a bit steep, which means EXPE may be an interesting short assuming these trends we're seeing have an impact on enthusiastic summer travel projections.  

We can play them short in our Short-Term Portfolio as follows:

  • Buy 10 EXPE Jan $180 puts at $28.50 ($28,500)
  • Sell 10 EXPE Jan $155 puts at $14 ($14,000) 
  • Sell 5 Jan $160 calls for $22 ($11,000) 

That's net $3,500 on the $25,000 spread that's $17,000 in the money to start.  It's an aggressive short, since the $160 calls are currently in the money but that's because I read the above articles, did the math and I don't see why people would pay 100x current earnings when the virus will not likely be "under control" into the end of the year and estimates are likely to be taken down.

 


Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!



Comments (reverse order)


    You must be logged in to make a comment.
    You can sign up for a membership or log in

    Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

    Click here to see some testimonials from our members!


  1. Good Morning.


  2. WBA   they didnt like the earnings


  3. Good morning! 

    Holy crap, look at oil fly:

        

    Still pretty cheap to fly to Florida ($300 from NYC).

    DT pointed out in the previous chat that you can sell NAK 2023 $2 puts for $1.65 (current price) to net in at 0.35 but, if you have a PM account, it should be about $30,000 in margin on 1,000 short puts and it puts $165,000 in your pocket, which you can then play with for 18 months and make more than the $35,000 max it would cost you to own 100,000 shares.  That's fun!  

    You can also sell GOLD 2023 $23 puts for $5.25 to fund something.  Nets you in for $17.75 and you know I love that.

    Actually, what you could fun is the 2023 $18 ($4.50)/$25 ($2.05) bull call spread at $2.45 and then you are in for net $20.50 (not counting the short puts) and you get 100% of the upside from here while spending only 10% of the stock's price.  That's the smart way to utilize your capital!  

    Put it together and we have:

    • Sell 10 GOLD 2023 $23 puts for $5.25 ($5,250)
    • Buy 30 GOLD 2023 $18 calls for $4.50 ($13,500) 
    • Sell 30 GOLD 2023 $25 calls for $2.05 ($6,150) 

    That's net $2,100 on the $21,000 spread so there's $18,900 (900%) upside potential at $25+ and the worst case is you end up owning 1,000 shares for net $25.10.  It's an aggressive play but GOLD is down because Gold took a dive, not because they aren't going to make $2Bn this year against their $37Bn market cap – very reasonable and if Gold goes back towards $2,000 – that's all extra profit.

    WBA/Stock – That's why we got more bearish in the last review:

    https://www.philstockworld.com/2021/06/18/philstockworld-june-portfolio-review-2/

    WBA – Last year's other table-banger.  We have a $75,000 spread that's 120% in the money at $62,389 so the thrill is gone with $12,611 left to gain.  The short puts are not doing us much good so let's buy them back and wait for a dip (or the 2024s) to sell more.  Since we have 50 longs, we may as well sell 20 Aug $52.50 calls for $2.10 ($4,200) to generate a little more cash as well.

    • WBA – Let's sell 15 (3/5) of the Aug $52.50 calls for $1.95 ($2,925)

    We also have a new Butterfly play on them BECAUSE we think they'll be range-bound and we sold the $52.50 calls and the $45 puts.  $45 was our target so no surprise they can't justify $52.50.  Good example of how I keep saying you can't forget why you got into a trade – we had a target and the people who bought it over our target were just as wrong as the people who sold it under.  You can take advantage of that but only if you don't start drinking the Kool Aid.  

    Meanwhile, nothing wrong with earnings – just not good enough to justify over $45Bn market cap:

    • Walgreens Boots (NASDAQ:WBA): Q3 Non-GAAP EPS of $1.38 beats by $0.23; GAAP EPS of $1.27 beats by $0.36.
    • Revenue of $34.03B (+12.1% Y/Y) beats by $560M.
    • The company raised FY2021 guidance from mid-to-high single digit growth to around 10% growth in constant currency adjusted EPS from continuing operations.
    • The company is on track to deliver in excess of $2B in annual cost savings by FY2022.
    • Press Release

    Long-term, still a great value, just trading ahead of themselves a bit.


  4. WBA  Still going guns but down stock of the Year!!!!! should have got ride of that suckker month ago!


  5. WBA. Sold some 40 Jan 2023 puts for 3.55


  6. Wow Yodi, you are so fickle!  WBA has been very, very good to us.

    Walgreens reported adjusted earnings for the third quarter of its fiscal year of $1.51 per share, beating the FactSet consensus estimate of $1.16 per share. The company reported sales of $34 billion, above the FactSet consensus estimate of $33.5 billion.

    In a note out early Thursday, Guggenheim analyst Glen Santangelo wrote that the results are in line with the easing of pandemic-era restrictions. “The company’s operations seem to be benefiting consistent with the reopening,” Santangelo wrote. “We believe the results are strong enough to support the shares today, but we appreciate investors are still looking to better understand how the new CEO’s long-term strategy may differ from previous management.”

    I was there the other day and there were a lot of people waiting to get vaccinated, which was our original premise on them – more traffic as they become a vaccine center and that will continue as they give booster shots in years to come.  The Government centers that gave emergency shots won't keep doing it – it will become a normal thing like our flu vaccines are now.  

    Walgreens said that U.S. sales were $28.7 billion for the quarter, up 5.1% from the same quarter last year. It said that the company has administered more than 25 million Covid-19 vaccines so far, and that Walgreens had administered 8 million Covid-19 tests, while Boots had administered 3 million.

    The company attributed its improved earnings outlook in part to the Covid-19 vaccinations it is administering. “The revised guidance reflects strong results in the third quarter and greater clarity on the impact of COVID-19 vaccinations,” the company said.

    • The National Retail Federation now expects retail sales in 2021 to grow between 10.5% and 13.5% from the 2020 level to a range of between $4.44T and $4.56T.
    • The new forecast is a pretty significant increase from the prior NRF forecast released in February for retail sales to be up 6.5% to 8.2% for the year.
    • NRF notes that the initial forecast was made when there was still great uncertainty about consumer spending, vaccine distribution, virus infection rates and additional fiscal stimulus.
    • "Since then, we have seen spending grow, vaccines have become available to virtually anyone who wants one, infections have fallen and additional stimulus in the form of the American Rescue Plan has been signed into law," updates Chief Economist Jack Kleinhenz.
    • NRF now expects GDP for the full year to grow close to 7% to mark fastest growth since 1984.
    • Read: Retail sector generates big returns for the first half of the year on re-opening hopes and Reddit buzz.
    • PetroChina (PTR +3.4%) and Sinopec (SNP +1.9%) rise in early trading after the Chinese energy giants both forecast strong improvements in H1 2021 net income due to higher crude oil prices.
    • PetroChina says H1 earnings will increase by 75B-90B yuan, "turning losses into profit," and Sinopec expects H1 net income in the 36.5B-38.5B yuan range, rebounding from a 22.9B yuan loss in the year-ago period and above the 31.3B yuan reported in the opening half of 2019.
    • The companies say the improved conditions drove a significant increase in demand for oil, gas and petrochemical products and helped them improve efficiency.
    • Oil and gas stocks generally are off to a strong start in today's trading as WTI crude oil surges past $75/bbl.
    • WTI crude oil rockets past $75/bbl for the first time since October 2018 after media reports indicate that Saudi Arabia and Russia have reached a tentative deal to gradually raise production.
    • According to Reuters, the OPEC+ group is weighing a plan that would ease production curbs enough to add ~2M bbl/day to the market between August and December, with monthly increases amounting to less than 500K bbl/day.
    • A final decision is expected at a meeting of OPEC+ ministers later today, following meetings of OPEC ministers and the Joint Ministerial Monitoring Committee.
    • August WTI (CL1:COM) +3.4% to $75.99/bbl, after surging more than 50% during the first six months of the year, while September Brent (CO1:COM) +2.7% to $76.64/bbl.
    • ETFs: XLEUSOUCOXOPVDEGUSHOIHERXBGRBNO
    • Big oil names are indicated higher in pre-market action: XOM +1.9%CVX +2.2%COP +2.9%BP +2.6%RDS.A +2.2%.
    • "The consensus was looking for 500K bbl/day or slightly more, so 400K bbl/day additions would be below expectations for August and would keep the market tight this summer, with still rising demand over the coming weeks," UBS analyst Giovanni Staunovo says.
    • Energy topped the S&P sector leaderboard during H1, but there's cause for caution in H2.

     

     

    • The first half of the trading year has concluded, and investors can briefly look at what has happened and what is to be expected in the second half of the trading year.
    • In H1 the investment community can see from breaking the market down sector by sector, that the energy, financials, and real estate segments of the market led in the first half of 2021 while utilities and consumer staples sectors have lagged the most on the year. See below a complete analysis using the SPDR Select Sector ETFs of the eleven sectors of the S&P 500 and their year-to-date performance.
    • #1: Energy Sector: Energy Select Sector SPDR ETF (NYSEARCA:XLE) +42.41%.
    • #2: Financial Sector: Financial Select Sector SPDR ETF (NYSEARCA:XLF) +24.46%.
    • #3: Real Estate Sector: Real Estate Select Sector SPDR ETF (NYSEARCA:XLRE) +21.25%.
    • #4: Communication Services Sector: Communication Services Select Sector SPDR Fund (NYSEARCA:XLC) +19.99%.
    • #5: Industrial Sector: Industrial Select Sector SPDR ETF (NYSEARCA:XLI) +15.64%.
    • #6: Materials Sector: Materials Select Sector SPDR ETF (NYSEARCA:XLB) +13.70%.
    • #7: Information Technology Sector: Technology Select Sector SPDR ETF (NYSEARCA:XLK) +13.57%.
    • #8: Consumer Discretionary Sector: Consumer Discretionary Select Sector SPDR ETF (NYSEARCA:XLY) +11.05%.
    • #9: Health Care Sector: Health Care Select Sector SPDR ETF (NYSEARCA:XLV) +11.03%.
    • #10: Consumer Staples Sector: Consumer Staples Select Sector SPDR ETF (NYSEARCA:XLP) +3.74%.
    • #11: Utilities Sector: Utilities Select Sector SPDR ETF (NYSEARCA:XLU) +0.85%.
    • Also in H1, exchange traded funds brought in record inflows of roughly +$467B. The rate of inflows ETFs have seen so far in 2021 has trounced the previous record of +$160B, recorded in H2 of 2020. From an issuer standpoint, Vanguard, BlackRock, State Street, and Invesco attracted the most significant amount of inflows at +$172B, +$88B, +$37B, and +$21B, respectively.
    • Taking it one step further, the investment community will see that the top three ETFs that pulled in the greatest inflows were led by Vanguard S&P 500 ETF (NYSEARCA:VOO) at +$26.69B. VOO is also +14.50% YTD. Second place goes to Vanguard Total Stock Market ETF (NYSEARCA:VTI), bringing in +$20.17B, VTI is +14.48% YTD, and thirdly is Vanguard Total Bond Market ETF (NASDAQ:BND). BND has attracted +$12.12B and is -2.61% YTD.
    • What does H2 look like for investors?
    • Inflation, be it transitory or not, and the potential rise in future interest rates will be the focus that investors have their eyes on in H2.
    • The Wall Street consensus is that 10-year yield rises through H2 to 1.75%, with lots of banks around 2%. This bodes well for sectors that outperform with rising rates.
    • Simeon Hyman, Global Investment Strategist & Head of Investment Strategy Group at ProShares, recently spoke with Seeking Alpha on the Let's Talk ETFs Podcast and expressed his views on rising rates and inflationary pressures. Hyman stated: "We think that inflation and interest rates are going to rise enough to be detrimental to bonds but probably not to stocks."
    • In accordance with Russell Investments, they recently put out a Q3 global outlook report. They stated they believe inflation to be transitory in nature, and when discussing the future outlook for the economy, Andrew Pease, Global Head of Investment Strategy for Russell Investments, mentioned:
    • "The global reopening remains on track as vaccination rates climb around the world. Inflation is the new concern, but the spike so far looks transitory. We still like the pandemic recovery trade that favors equities over bonds, the value factor over the growth factor, and non-U.S. over U.S. stocks."
    • The S&P has hit Wall Street's 2021 target in six months, so the question now becomes, is this as good as it gets and what's next.

    • June PMI Manufacturing Index62.1, unchanged on May however lower from earlier released flash estimate of 62.6.
    • "June saw surging demand drive another sharp rise in manufacturing output, with both new orders and production growing at some of the fastest rates recorded since the survey began in 2007," IHS Markit chief business economist Chris Williamson commented.
    • New orders growth remained substantial in June, despite the rate of expansion easing from May's historic high.
    • Output growth, however, was weighed down by ongoing and severe supply-chain disruptions, and reports of labour shortages.
    • Suppliers' delivery times lengthened to the greatest extent on record in June, as component shortages and transportation issues exacerbated supply-chain woes.

    • June ISM Manufacturing Index60.6 vs 61.0 expected and 61.2 prior.
    • New Orders to 66.0 from 67.0; Production to 60.8 from 58.5; Employment to 49.9 from 50.9.
    • Supplier Deliveries index fell to 75.1, down from 78.8 in May.
    • Panelists reported that "their companies and suppliers continue to struggle to meet increasing levels of demand," said Timothy R. Fiore, chair of the Institute of Supply Management Manufacturing Business Survey Committee. "Record-long raw-material lead times, wide-scale shortages of critical basic materials, rising commodities prices and difficulties in transporting products are continuing to affect all segments of the manufacturing economy."
    • Worker absenteeism and difficulties filling open positions also limited the manufacturing growth potential, he said.
    • May Construction Spending-0.3% M/M to $1,545.3B vs. +0.4% consensus, +0.1% prior (revised from +0.2%)
    • Construction spending +4.6% Y/Y vs. +9.8% prior.
    • B. Riley launches coverage on Bed Bath & Beyond (NASDAQ:BBBY) with a Buy rating on a call based on fundamentals not Reddit buzz.
    • Analyst Susan Anderson: "We believe BBBY’s new management team has made significant improvements to reduce the cost structure and make necessary investments to elevate BBBY into a top omni-channel retailer in the bed, bath, and home space."
    • Anderson also points to the retailer's plans to boost profit through strategic store closings and favor e-commerce and proprietary brands. A strong back-to-school season is anticipated for BBBY.
    • B. Riley assigns a price target of $44 on Bed Bath & Beyond to rep 32% upside for shares.
    • Bed Bath & Beyond is up 3.15% in premarket action to follow on yesterday's double-digit rally after earnings.

     

     

    • Robinhood (RBNHD) will make more than a third of its new shares available for individual investors, The Wall Street Journal reports, a larger-than-normal retail allocation as the platform focuses on its mission to try and level the stock market playing field.
    • Robinhood will also hope that new users will create accounts to get access to its IPO and others before they start trading.
    • The ability to get in early on IPOs has long been the territory of big institutions, with the retail crowd often missing out on a first-day pop.
    • Robinhood will allocate 35% for retail, the paper says, citing people familiar with the matter.
    • Competitors SoFi (NASDAQ:SOFI) and Public Holdings are also launching platforms that provide access to IPOs.
    • Issuers that ignore retail have “zero visibility” into what happens to their stock after they go public, SoFi Chief Executive Anthony Noto says, according to the Journal. “To ignore retail, I think, is a huge risk."
    • Yesterday, the top FINRA enforcement official said Robinhood had engaged in "egregious" behavior during January's meme stock frenzy.

    • Credit Suisse is out with its July edition of top picks, with 45 names split between 39 outperform and 6 underperform.
    • And there are some changes in its six "Top of the Crop" names.
    • Credit Suisse Product Manager Andrew St. Pierre says those stocks are the "highest conviction combined with the least demanding market expectations."
    • Three names stay in top list from June: IBM (NYSE:IBM), Aptiv (NYSE:APTV) and Edwards Lifesciences (NYSE:EW).
    • The new entrants: Caterpillar (NYSE:CAT), Acuity Brands (NYSE:AYI) and Equitable Holdings (NYSE:EQH).
    • Dropping off the highest conviction list, but remaining top ideas: Amazon (NASDAQ:AMZN), Devon Energy (NYSE:DVN) and Advance  Auto Parts (NYSE:AAP).
    • The "Top of the Crop" criteria are:

      1. High conviction calls. "Highest conviction Outperform ideas where CS analysts' estimates and target prices are above consensus and consensus is not overly bullish."
      2. View through HOLT. Credit Suisse's HOLT is a model aiming for objectivity in converting income and balance sheet information into cash flow return on investment. "Outperform ideas with least demanding market expectations. Market-implied CFROI is below forecast CFROI and historical median."
    • Five new outperform ideas arrive in July: Intel (NASDAQ:INTC), Wells Fargo (NYSE:WFC), Cheniere Energy (NYSE:LNG), Quanta Services (NYSE:PWR) and the aforementioned Acuity.
    • The six top underperform ideas remain the same: Williams-Sonoma (NYSE:WSM), NGL Energy (NYSE:NGL), Western Union (NYSE:WU), American Express (NYSE:AXP), C.H. Robinson (NASDAQ:CHRW) and Iron Mountain (NYSE:IRM).
    • Seeking Alpha contributor Geoff Considine wrote yesterday that Caterpillar's outlook is improving and noted its shares are down 11% year to date.
    • "With reports that a major government push on infrastructure is gaining traction, the fundamentals on CAT look pretty good," he says. "The consensus outlook from Wall Street is for 10.4% to 16.1% in price appreciation over the next 12 months (12.46% to 18.16% including dividends). The market-implied outlook is neutral for the next 6-to-12 months or so, with a reasonable 30% annualized implied volatility."

    • The consumer sector was dominated by the rise of Reddit traders and the re-opening of the retail stores in the first half of the year.
    • Top performing stocks through June 30 included AMC Entertainment (NYSE:AMC) +2572%, GameStop (NYSE:GME) +1037%, Takung Art (NYSE:TKAT) +1024%, Express (NYSE:EXPR) +613%, J. Jill (NYSE:JILL) +428% and Build-A-Bear Workshop (NYSE:BBW) +313%, BBQ Holdings (NASDAQ:BBQ) +289% and Dillard's (NYSE:DDS) +188%.
    • Overall, retail stocks easily outperformed the S&P 500 Index as parts of the U.S. economy reopened faster than anticipated.
    • One of the bigger stories for the first half was the outperformance by legacy automakers in comparison to some of the electric vehicle upstarts. Toyota (NYSE:TM) +81%, Ford (NYSE:F) +69% and General Motors (NYSE:GM) +42% outperformed Tesla (NASDAQ:TSLA) -4%, Workhorse Group (NASDAQ:WKHS) -16%, Canoo (NASDAQ:GOEV) -28% and Lordstown Motors (NASDAQ:RIDE) -45% by a comfortable margin. The anticipated Green Tidal Wave hit Detroit just as hard as Silicon Valley with huge EV commitments out of the auto majors.
    • Another notable development was the smash-and-grab return for Target (NYSE:TGT) +39% in comparison to the soft Walmart (NYSE:WMT) -2.2% performance.
    • In the travel and leisure sector, big gainers amid the vaccination ramp in the U.S. included TripAdvisor (NASDAQ:TRIP), Mesa Airlines (NASDAQ:MESA) +39%, Caesars Entertainment (NASDAQ:CZR) +38%, American Airlines (NASDAQ:AAL) +35%, MGM Resorts (NYSE:MGM) +35%, Spirit Airlines (NYSE:SAVE) +25% and Wyndham Hotels & Resorts (NYSE:WH) +22%.
    • See Seeking Alpha Quant Ratings across the consumer discretionary sector.
    • J.P. Morgan expects Q2 results for the P&C insurance sector to be healthy, although the firm warns on mixed pricing, rising inflation and valuation concerns as notable headwinds.
    • Analyst Jimmy Bhullar: "The lag effect of improved pricing, benign losses, and easy comps should boost top-line growth and margins for underwriters and brokers in the near term. However, mixed pricing trends, rising inflation, and the recovery in valuation multiples keep us from being overly bullish. Given these factors, we see better opportunity in stocks with company-specific catalysts than broad industry themes."
    • The firm singles out Allstate Corporation (NYSE:ALL) as its top pick and says it is cautious on RenaissanceRe (NYSE:RNR).
    • Overall, Q2 projections are raised above consensus for most insurers. In particular, street projections for American International Group (NYSE:AIG), and Travelers Companies (NYSE:TRV) are seen as too low.
    • J.P. Morgan says a compelling 6-to-12-month pair trade for investors is to go long Arch Capital Group (NASDAQ:ACGL) and short RenaissanceRe. The firm believes that continued strong results in the mortgage insurance business, helped by the favorable housing and labor market backdrop will insulate ACGL's results and valuation multiple in comparison to RNR, which sits with elevated earnings estimates.
    • See Seeking Alpha Quant Ratings across the insurance sector.
    • PG&E (NYSE:PCG) asks California regulators for a rate hike totaling $3.6B to help it pay for wildfire safety, part of a general rate request filed yesterday for its electric and gas operations during the 2023-26 period.
    • The utility wants to spend an additional $7.4B on prevention work including hardening power lines, placing them underground, and removing trees and vegetation near wires, passing along roughly half of the costs to its customers.
    • If approved in its entirety by the California Public Utilities Commission, PG&E says the average monthly bill for a typical residential electric and gas customer would increase in 2023 by ~$1/day.
    • The rate request comes as California is suffering through a major drought, likely the start of another difficult wildfire season; PG&E said recently that dry conditions have accelerated the start of the fire season.
    • Walgreens Boots Alliance (NASDAQ:WBA) has added ~1.9% in the pre-market after the company’s third-quarter financials for fiscal 2021 came ahead of expectations.
    • The pharmacy retail chain has also lifted its 2021 guidance to reflect the strong quarterly data and the impact of COVID-19 vaccinations.
    • “This quarter’s results demonstrate continued momentum, and while challenges lie ahead, we are in a strong position to grow and innovate our core retail and pharmacy businesses for the future,” noted Rosalind Brewer who will shortly lead the WBA conference call for the second time as its CEO.
    • WBA sales from continuing operations have risen ~12.1% YoY to $34.0B driven by the solid growth in international and U.S. segments aided by the joint venture formed in Germany.
    • The U.S. and international segments saw sales rise ~5.1% and ~75.8% YoY to $28.7B and $5.3B, respectively. Comparable sales in the U.S. have increased ~6.4% YoY driven by ~8.4% YoY and ~1.7% YoY in comparable pharmacy sales and comparable retail sales, respectively.
    • Including a ~600 basis point benefit from COVID-19 immunizations, the prescriptions filled in the quarter have jumped ~9.8% YoY.
    • Earnings from continuing operations have stood at $1.27 per share compared with a loss of $2.05 in the prior-year quarter.
    • Net cash during the first nine months has increased by $912M to $4.3B while the free cash flow jumped by $873M to $3.3B.
    • WBA has completed the divestiture of the Alliance Healthcare businesses to AmerisourceBergen for $6.5B, and a portion of proceeds has been used to eliminate $3.3B of debt. The remainder will be used “to accelerate growth of its core retail pharmacy and healthcare businesses,” the company said.
    • WBA has lifted the 2021 adjusted earnings guidance to ~10% growth from mid-to-high single-digit growth on a constant currency basis. The consensus earnings guidance for FY21 indicates $4.75 EPS with a ~0.2% YoY growth.
    • The company has administered 25M COVID-19 vaccinations to date and has conducted over 8M COVID-19 tests.
    • The conference call is scheduled for today at 8:30 a.m. EST.
    • Previously the rival Rite Aid, which had administered over 6M COVID-19 vaccine doses during its immunization drive, fell after revealing a mixed performance with Q1 FY22 results.


  7. FICKLY???? my fingers hurt with row hide rolling and I am still 1.5K down.


  8. Well, they are still only 10x earnings so give them time.  


  9. Volume is crawling:

    Date Open High Low Close* Adj Close** Volume
    Jul 01, 2021 428.87 429.74 428.80 429.50 429.50 20,121,355
    Jun 30, 2021 427.21 428.78 427.18 428.06 428.06 64,768,600
    Jun 29, 2021 427.88 428.56 427.13 427.70 427.70 35,970,500

     

    Officials from 130 countries agreed to the broad outlines of a wider overhaul of the rules for taxing international companies, a step toward securing a final agreement on a key element of the Biden administration’s plans for revenue raising and spending.

     

    Auto makers are likely to report a slowing U.S. sales pace for recent months, as dealers have ready buyers but a lack of inventory.

    U.S. crude prices rose above $75 a barrel for the first time since 2018, as OPEC and a Russia-led group of producers met to weigh surging demand from the industrialized world.26 6 min read

    Xi Warns China Won’t Be Bullied as Communist Party Marks 100 Years


    • Google (GOOG +0.6%GOOGL) has a deal with AT&T (T +1.3%) to establish Messages by Google as the default messaging application for AT&T's Android phones in the United States.
    • It's a move toward greater adoption of RCS – Rich Communications Services, the planned successor to SMS that has been adopted in several platforms (with the notable exception of Apple and its iMessages).
    • Google's messaging app supports chat features based on the open RCS standard, including sharing full-resolution pictures, higher-quality video, knowing when someone is replying to a text, taking part in easier group chats and using Wi-Fi or mobile data for messaging.
    • Notably it also supports end-to-end encryption, an exception to most carrier-based messaging systems.
    • The AT&T deal follows a similar deal Google struck for its Messages with T-Mobile.

     

     

    • Cloud infrastructure spending increased 12.5% year-over-year to $15.1B in the first quarter, according to new IDC data. The growth was fueled by the widespread economic reopening and the pandemic-driven increase in cloud dependence.
    • Spending on compute and storage infrastructure products for non-cloud infrastructure grew over 6% to $13.5B.
    • Shared cloud infrastructure spend was up 11.6% to $10.3B. IDC expects shared cloud infrastructure spending to surpass the non-cloud spending in the "near future."
    • Dell (NYSE:DELL) was the top worldwide cloud infrastructure vendor in Q1 with $2.5B in revenue and a 17% market share. HPE (NYSE:HPE) followed with $1.6B in sales and 11.2% share. Inspur was in third and Lenovo (OTCPK:LNVGY) came next with $994M and 6.8%, respectively.
    • Remainder of the U.S.-traded names on the list: Cisco (NASDAQ:CSCO), $393M in sales and 3% share; IBM (NYSE:IBM), $321M and 2.2%; NetApp (NASDAQ:NTAP), $305M and 2.1%.
    • IDC forecasts cloud infrastructure spending will increase 12.9% to $74.6B for 2021, while non-cloud grows nearly 3% to $58.5B after two years of decline. Shared cloud is estimated at 12% growth to $51.8B and dedicated cloud with 15% growth to $22.7B.
    • Related: Dish recently selected Dell as its 5G infrastructure partner.

    • Kyle Little, COO of Sherwood Lumber Corp., said Thursday that he expects a bounce in lumber prices in the next two or three weeks, as the market responds to normal seasonal pressures.
    • Little told CNBC that even with the extreme volatility of the last several months, lumber remains a seasonal commodity.
    • The recent decline in prices has come during a time of seasonal weakness, he explained.
    • If typical patterns hold, lumber prices should see "measured" buying interest in the near term, Little said, as buyers need to rebuild inventories.
    • For ETFs that could see action in response to changes in lumber prices, check out the SPDR Homebuilders ETF (NYSEARCA:XHB), iShares U.S. Home Construction ETF (BATS:ITB), iShares S&P Global Timber & Forestry Index ETF (NASDAQ:WOOD), Invesco Exchange-Traded Fund Trust II – Invesco MSCI Global Timber ETF (NYSEARCA:CUT) and Direxion Daily Homebuilders & Supplies Bull 3x Shares ETF (NYSEARCA:NAIL).
    • For relevant individual stocks, look at Weyerhaeuser (NYSE:WY), Resolute Forest Products Inc. (NYSE:RFP), PotlatchDeltic (NASDAQ:PCH), West Fraser Timber (NYSE:WFG), Canfor (OTCPK:CFPZF) and Interfor (OTCPK:IFSPF).
    • A renewed rise in lumber could be perceived as a concern for the homebuilding sector. For more details on this bearish point of view, check out a report from Jacob Kilby, who says higher costs and a drop in demand could provide headwinds for homebuilders.

    • Sanjay Mehrotra, president and chief executive officer of Micron Technology (NASDAQ:MU), predicted that the global computer chip shortage will continue at least into 2022, contributing to a "robust business environment" for the memory chip maker.
    • In an interview with CNBC, Mehrotra said that the company will also benefit from multiple technological rollouts, like 5G.
    • Mehrotra's comments followed the release of quarterly results the previous evening. Micron beat expectations on both earnings and revenue.
    • Micron's CEO detailed several secular trends that will underpin its results over the near term. Along with 5G, these included AI, intelligent edge and smart user devices.
    • As part of this, he pointed out that both 5G devices and electric vehicles required more memory than competing products.
    • Despite the better-than-expected quarterly results, MU fell nearly 6% in Thursday's midday trading.
    • Reacting to the earnings report, Summit Insights downgraded its rating on the stock from Buy to Hold, saying that it expects the favorable demand-supply dynamics in the industry to reach its high-water mark in the second half of the year.
    • As to MU's longer-term action, the stock reached a 52-week high of $96.96 in April. After coming off those levels, shares have bounced around in a range since about mid-May.
    • MU challenged the high end of that recent band earlier this week in anticipation of the earnings release.

    • In a policy update last month, Apple (AAPL -0.6%) has allowed the marijuana delivery services to operate on its App Store.
    • The pot delivery services will no longer be barred from being hosted on the App Store as long as the app is geo-restricted to areas where cannabis is legal, Marijuana Moment reported.
    • Additionally, the program should be submitted by a legal entity that provides the service, not an individual developer, according to the update.
    • However, on its Android app hub, Google (GOOGL -0.3%)(GOOG +0.2%) has a blanket ban on programs that link users with cannabis.
    • In April, Bank of America issued buy ratings for Canadian cannabis players Tilray and Canopy Growth, citing their ability to make entry to the U.S. markets in the event of federal legalization of marijuana.
    • Related tickers: OrganiGram Holdings (OGI -3.8%), Cronos Group (CRON -1.2%), HEXO Corp. (HEXO -2.8%), WeedMD (OTCPK:WDDMF -3.6%), Aurora Cannabis (ACB -1.6%), Canopy Growth (CGC -1.4%), TerrAscend Corp. (OTCQX:TRSSF -0.1%), Tilray (TLRY -2.1%) Sundial Growers (SNDL -4.0%), OrganiGram Holdings (OGI -3.8%), GrowGeneration (GRWG +1.8%)
    • Data by TrueCar estimates total new vehicle sales to reach 1.29M units in June (+16% Y/Y, -16% M/M), when adjusted for the same number of selling days.

    • Excluding fleet sales, U.S. retail deliveries of new cars and light trucks is seen at 1.13M units (+11% Y/Y, -17% M/M); fleet sales are seen 73% higher Y/Y and down 1% M/M.
    • Used vehicle sales expected to reach 4M (+9% Y/Y, unchanged M/M).
    • Seasonally adjusted annualized rate (SAAR) for total light vehicle sales is an estimated 15.2M, higher from 13M SAAR in June 2020.
    • "We have been closely watching declining levels of new car inventory since the beginning of the year…In addition to lower inventory, we continue to see a sharp downward trend in incentives (-33% Y/Y) and a corresponding increase in transaction prices (+5% Y/Y, +2% Y/Y) which could sway some shoppers to remain on the fence this month," Lead Industry Analyst Nick Woolard commented.
    • With chip shortage, OEM operations have become complicated in terms of shifting priorities around what vehicles to build and where to send them.
    • For Q2, large shifts in market share are expected with the biggest benefactors being Honda (NYSE:HMC), Hyundai (OTCPK:HYMLF) and Kia (OTCPK:KIMTF).
    • Except for Daimler (OTCPK:DDAIF), Ford (NYSE:F), Subaru (OTCPK:FUJHY), all other manufactures are likely to see Y/Y growth in total unit sales.
    • For Q2 total market share, Ford market share is seen narrowing to 10.7% from 14.7 in year ago quarter while Toyota (NYSE:TM) market share is seen rising to 15.5% from 13.6%, BMW (OTCPK:BMWYY) market share expanded 60 basis points Q/Q; while Tesla share is seen dropping Q/Q to 1.6% from 1.8%, on Y/Y basis it is seen expanding from 0.9%.
    • Hyundai reported sales in the U.S rose 45% in June, General Motors (NYSE:GM) indicated Q2 sales growth of 40% and Mazda (OTCPK:MZDAY) reports U.S. unit sales growth of 29%.
    • Tata Motors (NYSE:TTM) reports 78% surge in local sales in May
    • Needham is updating its Disney (DIS +0.8%) model and trimming some estimates for the current quarter to account for new information.
    • It's now seeing revenues of $16.7B – up 42% year-over-year, but 1% below its previous estimate. And it sees segment operating income of $2B (up 83% but 15% below previous estimate) and EPS of $0.52 (up 546%, but 17% below previous estimate).
    • That's due to a number of factors, analyst Laura Martin writes, including: better-than-previous estimates at its linear networks; higher costs tied to reopening its parks – especially labor – combined with a slower ramp-up; limited theatrical releases and fewer home video titles in the June quarter; and "below the line revisions to reflect FY1H21 trends continuing into FY2H21."
    • She's maintaining a Hold rating on the stock.
    • Overall the Street is still Bullish, however. Seeking Alpha authors are Neutral on the stock, and it has a Quant Rating of Neutral.
    • Lawrence Kurzius, chairman, president and CEO of spice and sauce maker McCormick Corp. (NYSE:MKC), attributed the company's "incredible growth" in its latest quarterly results to sustained demand for cooking at home and the ongoing recovery in the restaurant industry.
    • Speaking to CNBC, McCormick also presented a positive outlook for the future, as a hybrid working model creates more cook-at-home opportunities for the company's products.
    • "Things are going back to normal, but normal isn't what it used to be," he said.
    • The McCormick chief argued that a switch to more remote working created a "built-in sustained demand" for cooking at home, which will bolster its ingredient-based business.
    • Before the opening bell, McCormick reported quarterly results that beat expectations. The figures included revenue that rose 11% from 2020 to $1.56B, "lapping an incredible surge from last year," as Kurzius described it.
    • MKC was down fractionally in Thursday's midday trading.
    • "I'm at a loss to explain the market," he said, referring to Wall Street's tepid reaction to the results. "I do believe in the long run that the market follows results."
    • Looking at the longer-term action in MKC, the stock came off a 52-week low of $81.72 in early March and rallied into the second half of April. Since then, shares have bounced around in a range.


    • Hyundai (OTCPK:HYMLF) reports sales in the U.S rose 45% to 72,465 units in June, highest June sales in Hyundai history and the fourth consecutive month setting a new monthly record.
    • Retail sales up 36% to 66,765 units.
    • For Q2, total sales and retail sales expanded 69% vs. Edmunds consensus of +87.8%.
    • YTD sales increased 49% to 407,135 units.
    • Retail sales rose for the entire lineup with SUVs +24%, cars +64% and eco-friendly vehicles +639% for the month. Eco-friendly vehicles accounted for 11% of the retail volume.
    • "The dedication of our retail partners in delivering Hyundai vehicles with an outstanding consumer experience is paying off with even more sales records," said Randy Parker, senior vice president, National Sales, Hyundai Motor America. "We continue to successfully manage the extraordinary consumer demand in close collaboration with our manufacturing and supply chain partners."
    • Toyota (TM -0.1%) reports sales rose 39.8% Y/Y to 207,311 units in June.
    • Toyota division sales advanced 41.6% Y/Y to 180,623 units and Lexus division sales grew 29.1% to 26,708 units.
    • APV sales increased +46% to 41,727 units.
    • SUV sales +18.7%, Sienna +1240.3% and Pickup sales +58.2% for the month.
    • Truck sales up 32.7% Y/Y to 138,560 and car sales +56.8% to 68,771 units
    • Despite an initial rise in the pre-market on the news of Q3 earnings beat and a guidance raise for FY21, the shares of Walgreens Boots Alliance (WBA -5.7%) is trading sharply lower in morning hours as several analysts point to disappointing Q4 FY21 estimates.
    • The increase of adjusted earnings guidance to ~10% growth on a constant currency basis should not be compared against the consensus, Evercore analyst Elizabeth Anderson says.
    • Anderson has an in-line rating and a $58.00 per share target on the stock indicates a premium of ~10.2% to the last close.
    • Meanwhile, Jefferies analyst Brian Tanquilut with a hold rating and a per-share target of $59.00 sees a conservative Q4 guidance despite a decline in COVID-19 vaccinations nationally.
    • However, Baird analyst Eric W. Coldwell attributes the lower-than-expected Q4 guidance to the Street mismodeling and the current trajectory of the pandemic in the U.S.
    • “We like what we see here and believe shares should gain on the day,” Coldwell wrote with an outperform rating and a $72.00 per share target implying a premium of ~36.9%.
    • The consensus estimate for Q4 FY21 earnings at $1.19 per share implies a ~17.1% YoY growth. Seeking Alpha Quant Ratings remained neutral on Walgreens since the end of March.
    • Nickel Digital Asset Management's flagship arbitrage-strategy fund shifts largely to cash after a reliable trade that had been producing double-digit annual gains stopped working after the crypto selloff earlier this year, Bloomberg reports.
    • Still, Anatoly Crachilov, the co-founder and CEO of Europe's largest regulated crypto fund, isn't fazed by the bearish crypto sentiment as he considers new opportunities to redeploy capital from its Digital Asset Arbitrage Fund.
    • He expects the lull to end soon as institutional investors become increasingly interested in crypto assets.
    • Until May, the fund relied on the basis trade, which takes advantage of discrepancies between spot and future prices. That profit generator turned off during the dramatic crypto selloff, which flushed out leveraged positions mostly held by retail investors, Crachilov said.
    • He estimates that the amount of auto liquidations of speculative positions on May 19 along could be ~$9B. "June will be remembered as a cash-rich, wait-and-see month," he told Bloomberg.
    • Even with the drop in crypto prices, Digital Asset Arbitrage Fund remained "mildly positive" in June, he said, thanks to other strategies such as triangular arbitrages and volatility.
    • Its YTD gain stands at 12.9%, vs. 3.4 for its closest benchmark, the HFRX EH Equity Market Neutral Index.
    • And the fund doesn't depend on crypto prices rising. "We don’t take directional bets, so whether bitcoin goes up 300% or down 70%, we will seek to capture arbitrage opportunities from market dislocations," Crachilov said.
    • Turning to today's crypto action, bitcoin (BTC-USD) falls 2.4% over the past 24 hours to ~$33.5K, ethereum (ETH-USDrises 0.5% to ~$2,118, litecoin (LTC-USDslips 0.7% to $136.36, Binance Coin (BNB-USD+1.6% to $288.16, and dogecoin (DOGE-USD+2.7% to 25 cents.
    • Early in June, Victory Capital said it will launch a private crypto-focused fund with Hashdex.
    • With Netflix (NFLX +1.1%) set to report its second-quarter results in a few weeks, Cowen is reiterating its Outperform rating, pointing to results from its proprietary survey.
    • The survey results suggest Netflix continues to lead in the country's living rooms, with 28% of respondents saying that the streaming leader has the best video content, well ahead of other streaming services and linear TV services as well.
    • It's looking for paid subscriber net additions of 1.2M, slightly above Netflix's own 1M guidance, as the company works through the pull-forward driven by the COVID-19 pandemic.
    • It has a $650 price target, implying 22% upside.
    • General Motors (GM +0.7%) reports Q2 sales +40% Y/Y to 688,236 vehicles vs. +40.5% forecast by Edmunds.
    • Buick sales rose 86% on strong demand for new Encore GX, redesigned Envision, and Enclave.
    • Cadillac sales increased 55%, GMC up 50% and Chevrolet up 31%.
    • Fleet deliveries grew 69% Y/Y led by 73% rise in sales to commercial customers. Fleet sales accounted for 14% of total sales.
    • The company says it will return full-size pickup production to Oshawa Assembly in Canada at the end of 2021 and is well positioned in 2021 to lead the industry in full-size and mid-size pickup sales for the seventh consecutive year.
    • The company ended the quarter with 211,974 units in inventory, down from 334,628 at the end of the first quarter.
    • “The U.S. economy is accelerating, consumer spending is robust and jobs are plentiful,” said Elaine Buckberg, GM chief economist. “Consumer demand for vehicles is also strong, but constrained by very tight inventories. We expect continued high demand in the second half of this year and into 2022.”
    • Source

  10. Phil

     Did you answer the question on WTRH from  yesterday ?

     

    Thanks


  11. WTRH/QC – I'm pretty sure I answered it in great detail.  Is it easier to ask me the question than look?  

    Speaking of looking – Non-Farm Payrolls tomorrow morning but employment looks strong so the only real danger to the market is likely to come from a rising Dollar.  


  12. Phil, have you looked at VTRS, the merged Upjohn/Mylan generics business? Little to no growth is visible, but it looks pretty cheap. TIA


  13. VTRS/Hwtdr – Never looked at them but very interesting:

    Viatris is newly formed pharmaceutical company that came from the merger of Mylan and Pfizer's (NYSE:PFE) Upjohn business. Its portfolio of drugs includes off patent drugs from Pfizer, including Lipitor, Norvasc, Lyrica, and Viagra, along with Mylan's portfolio of more than 7,500 marketed products around the world, including the epinephrine auto-injector, EpiPen, and antiretroviral therapies on which 40% of people living with HIV/AIDS globally depend.

    PFE and MYL dumped a lot of debt into these guys and I'm pretty sure all these drugs are in down cycles so it's kind of like a REIT that's winding down over time  – they tend to get pretty low valuations.  Still, that doesn't mean you can't make money off it.  Something like:

    • Sell 20 VTRS 2023 $15 puts for $3 ($6,000)
    • Buy 30 VTRS 2023 $12.50 calls for $3.75 ($11,250)
    • Sell 30 VTRS 2023 $17.50 calls for $1.75 ($5,250) 
    • Sell 10 VTRS Aug $15 calls for 0.60 ($600) 

    So it's net $0 for the main trade and we're selling $600 worth of premium in the first 50 days (out of 568).  Even if we were assigned at $15 ($30,000), collecting $6,000 against it over 18 months is a 20% return.  If they pop well over $15, then you need to do a 2x roll and buy more long spreads but the Jan $19s are 0.50 – so I think it would be fine.


  14. VTRS / Phil – if you are first generics co to file, I believe you get a 6 month exclusivity in the US, but you are right that the existing portfolio is in a continuous down cycle. By 2x roll do you mean that 10 short calls would become 20 shorts if the stock pops? Does it make sense to wait to cover long callers and just sell puts to help paying for them? Thanks again for your input


  15. Phil

    WTRH

    My bad

    Thanks