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Friday Already? We are Loving these Short Weeks!

Four-Day Work Week Statistics: Could It Ever Really Happen?Why do we ever have 5-day work-weeks?  

They did a huge 4-year test in Iceland, with 2,500 workers (1% of the labor force) where they paid the workers the same amount for about 36 hours of work (9 hours a day) just 4 days a week and, surprise!, productivity remained the same or even improved in the majority of workplaces.  The trials led unions to renegotiate working patterns, and now 86% of Iceland's workforce have either moved to shorter hours for the same pay, or will gain the right to, the researchers said.

Workers reported feeling less stressed and at risk of burnout, and said their health and work-life balance had improved. They also reported having more time to spend with their families, do hobbies and complete household chores.  Will Stronge, director of research at Autonomy, said: "This study shows that the world's largest ever trial of a shorter working week in the public sector was by all measures an overwhelming success.

Spain is piloting a four day working week for companies in part due to the challenges of coronavirus.  And consumer goods giant Unilever is giving staff in New Zealand a chance to cut their hours by 20% without hurting their pay in a trial.  While employees are hurting for Labor, now is the time to re-negotiate those hours.  I did that in one of my first jobs – telling my boss I'd work 4 10-hour days (selling computers) if I could take Monday's off, which were typically slow days.  I was the top salesman in the company.  Still, Corporations being what they are – they never experimented on anyone else – just the one guy who asked for it.

The average workweek for factory workers in the US in 1830 was 69 hours!  In 1900 it was still  60 hours but then we had automation and we were down to 50 hours by 1930 – though the economy did collapse – so take that with a grain of salt.  After World War II we got down to 40 hours and no actual improvement since then, though it is projected that, by 2040, we should have about 30% less work in our week as the next round of automation kicks in.  

That gives us 246,000 hours (28 years) of Leisure Time, up from 43,800 hours (5 years) back in 1880.  More importantly, it's up 40% from 1995 and that's a trend we can invest in.  More Leisure Time means more Leisure spending and there are Leisure stocks we can invest in like:

Onewater Marine (ONEW) – Purveyors of boats, new and used and, even more lucrative, caretakers of boats and financers of boats (and then repossessors of boats!).  Even last year, they grew 30% from 2019 in revenues though profits slipped but this year they are on track to make $80M yet, at $39, you can buy the whole company for less than $600M.  Unfortunately, they don't have options but it's a great little company to bet on.

YETI Holding (YETI) – Started out as a cooler company but have expanded into all sorts of things.  Very expensive at $90, which is close to $8Bn and they are only making $200M a year (40x earnings) but they made $50M in 2019 on about half as much revenue so we can split the baby on this one and promise to buy them if they drop 33% by selling the 2023 $65 puts for $7.50, which would net you in at $57.50, which would be down to a $5Bn market cap and that I'd love to own it at so let's sell 10 of those in our Long-Term Portfolio (LTP) for $7,500.

International Game Technology (IGT) – Has a solid base making casino machines (a growth industry) but also has their hand in lottery games, on-line poker (growth) and Sports Betting (GROWTH) so, despite their 7-year age, we're going to put them in our Future is Now Portfolio as such:  

  • Sell 10 IGT 2023 $17 puts for $3 ($6,000) 
  • Buy 20 IGT 2023 $20 calls for $8.30 ($16,600) 
  • Sell 20 IGT 2023 $27 calls for $4.20 ($8,400) 

That's net $2,200 on the $14,000 spread so we have $11,800 of upside potential if IGT is over $27 in Jan, 2023.  We're starting out $5,000 in the money on the position so it's a great way to play IGT and, even if it drops and we're assigned 1,000 shares, the net would be $19.20 – still a 14.6% discount to the current price.  That's our WORST case!  Aren't options fun?

Have a great weekend, 

- Phil

 


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  1. Good morning! 

    Don't miss our two picks from the Morning Report and, of course, VIAC goes without saying in the Leisure Category.  Still ridiculously cheap under $42.

    We have them in every portfolio – take your pick.

    I looked at Casino and Cruise stocks and they are all crazy overpriced to the point where I'd rather be shorting them.  

    We talked about Consumer Credit yesterday and, lo and behold, the June increase was a record $35Bn (double the estimates of leading Economorons).  At this pace, we'll add 10% to Consumer Debt this year – which we already noted is totally out of control.   Remove stimulus and this patient dies…

    So if Consumer Spending is 70% of the economy and 10% of consumer spending is debt-financed, then 7% of our GDP is being funded by Consumers plunging themselves into debt because they BELIEVE that the Fed and Joe Biden will save them and the next stimulus check is in the mail and the landlord will never foreclose and those unemployment checks will never run dry.   F-yeah!


  2. Good Morning.


  3. Five Things You Need to Know to Start Your Day

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    Aging China Relies on ‘Young Old’ to Take Care of Oldest Seniors

    Biden Defends Afghan Pullout, Sets Exit for Interpreters

    Biden to Target Railroads, Ocean Shipping in Executive Order

    ‘Financially Hobbled for Life’: The Elite Master’s Degrees That Don’t Pay Off

    U.S. Hotels Finally Surpass Pre-Covid Levels as Travel Surges

    Americans will need masks indoors as U.S. heads for ‘dangerous fall’ with surge in delta Covid cases. 

    Pfizer says it is developing a Covid booster shot to target the highly transmissible delta variant

    Online thrift store Poshmark CEO sees fashion shift as consumers ‘purge’ closets

    Levi earnings crush estimates, retailer raises 2021 forecast, citing strong denim sales

    As bitcoin breaks down, two traders share key levels to watch

    This key Tesla rival has a $36 billion plan to win the electric-vehicle race. Here’s what you need to know

    Why aren’t more Americans working? Do they plan to get a job soon?

    Inflation Bombshell: A Market-Based PCE House Rent Measure May Be Coming

    Ford Secures Chips To Finish "Thousands" Of Incomplete F-150

    "This Is About Misuse Of Government Power": Judge Quickly Denies CDC's Appeal To Keep COVID-19 Cruise Restrictions

    An executive order will encourage federal agencies to adopt policies that push back against corporate consolidation and practices that may stifle competition, lead to higher prices and lead to fewer product choices.8130 min ago 5 min read

    A mismatch between available workers and job openings is plaguing the labor market as potential employees leave cities or industries where businesses need them most.

    A new wave of regulatory scrutiny for China’s technology companies has helped send an index of U.S.-traded Chinese stocks to its lowest point in more than a year.3 3 min read

    Demand for debt from companies like Victoria’s Secret shows how far investors have reached for yield, passing a new milestone.


  4.  

     

    • After launching cheaper version of Model Y cars in China, Tesla (TSLA -0.5%) has increased the base price of its redesigned Model S and Model X vehicles by $5,000 in the U.S.
    • The Model S now listed with base price of $84,990 and Model X at $94,990.
    • The car maker delivered 1,890 Model S/X vehicles and 199,360 Model 3/Y vehicles in Q2 for a total tally of 201,250.
    • Yesterday, the company launched a cheaper version of the Model Y in China with a standard driving range at the starting price of ¥276,000 amid increased scrutiny from regulators.
    • Tesla had cut its car prices by up to $5,000 last year in May 2020 for its Model S and Model X, bringing their base prices to $74,990 and $79,990 to jump-start sales during the pandemic.
    • Source
    • Shanghai Disneyland (DIS +0.7%) will raise its ticket prices starting in January.
    • The resort indicated it would boost prices on Jan. 9, setting new rates for four tiers: Regular, Regular Plus, Peak (most days in summer season and other peak visitation days), and Peak Plus.
    • The Regular price at that time will be 435 yuan (about $67.13). Regular Plus will be 545 yuan (about $84.11). Meanwhile, Peak price is set at 659 yuan ($101.70) and Peak Plus at 769 yuan ($118.67).
    • That results in increases of 9-10% across the board.
    • The resort says a discount of about 25% will continue for children 3-11 (or height above 1.0 meters up to 1.4 meters), seniors and guests with disabilities. Infants (under 3 years old or below 1m) will continue to get free admission.
    • "As Shanghai Disney Resort continues to develop more innovative products and optimize ticketing offerings since its opening to better reflect local consumer visitation habits, the four-tiered pricing structure that was introduced in 2020 has supported the resort to more effectively spread visitation throughout the year based on attendance forecast and maximize guest experience," it says.
    • The White House has come out with an executive order of 72 actions that include reining in Big Tech, including increased scrutiny on acquisitions.
    • China's regulatory moves on DiDi Global (NYSE:DIDI) are also making waves this week.
    • But while the U.S. megacaps are still holding strong, China's top tech stocks are struggling.
    • China's BATs – Baidu (NASDAQ:BIDU), Alibaba (NYSE:BABA) and Tencent (OTCPK:TCEHY) - are now at 12-month lows, BofA Securities notes.
    • Yesterday, those names hit the Hang Seng China Enterprises Index, which fell 3.2%, putting it down nearly 20% from February highs, almost a bear market.
    • The stocks are mixed premarket, with Tencent lower and Baidu and Alibaba up.
    • That's in contrast to the rising U.S. FAAMGs of Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Google parent Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG) as showed in the chart below.

    • China yields are falling but high-yield credit spreads have widened by 300 bps to more than 1100 bps in the past six weeks and that's pushed China large-cap tech down for the year, BofA says.
    • China staples, on the other hand, have outperformed in the first half of the year.
    • Note that "lower yields + tighter spreads = higher stocks, but lower yields + wider spreads = lower stocks," strategists led by Michael Hartnett write in a note today.
    • While many market watchers think a sharp downturn in FAAMG stocks, and the consequent hit on the broader market, would torpedo any plans the Fed might have for tighter conditions, China's central bank is on a different path, they add.
    • So far, "China government policy is to not allow tech billionaires to run their country, PBOC policy is to not allow speculative bubbles to worsen wealth inequality," Hartnett says.
    • But he adds that a surprise aggressive easing move from China and/or intervenes in domestic stock and credit markets could be a catalyst for stocks this quarter.
    • China cut its bank reserve requirement today.
    • Dig deeper into whether China is conducting a "direct assault on global capitalism."
    • Joey Levin, the CEO of media and internet holding company IAC (NASDAQ:IAC), said Friday that the firm is focusing on blockchain investment through its incubator program.
    • In an interview with CNBC, Levin also argued that state attorneys general "got it right" in their decision to sue Google (NASDAQ:GOOG)(NASDAQ:GOOGL) for antitrust violations.
    • He added that Apple (NASDAQ:AAPL) is an even worse culprit and predicted that the iPhone maker might be the next one to face antitrust action. IAC has a long-standing feud with Apple over the amount the company charges app producers on its App Store.
    • On its investments in blockchain, the IAC CEO suggested that the technology represented an excellent growth area. The company also has an incubator program aimed at healthcare, Levin said.
    • In addition, Levin identified gambling as another area of possible growth.
    • For a deeper dive into IAC's prospects, check out a detailed report from SA contributor Euphoric Investment.

    • The People's Bank of China will lower the amount of funds that banks are required to keep at the central bank, a move that injects $154B (~$24B) of liquidity into the banking systems in an effort to increase loans to the country's small businesses.
    • The PBOC said it will cut the reserve requirement ratio (RRR) by 0.5 percentage point on July 15, its first cut since April 2020 when Beijing took steps to stimulate the economy hit by the pandemic.
    • The move could help reduce funding costs for Chinese lenders by CNY 13B ($2B) each year, China's central bank said. It will bring the weighted average reserve ratio for China's banking system to 8.9%, it added.
    • The RRR cut will apply to almost all banks in China, except some small lenders that only operate in rural areas and whose RRR is 5%, the PBOC said.
    • The Chinese yuan rises 0.2% against the U.S. dollar.
    • ETFs to watch: YINNTDFGXCYANGCXSE
    • Relevant tickers include: Industrial & Commercial Bank of China (OTCPK:IDCBY), China Construction Bank (OTCPK:CICHY), Agricultural Bank of China (OTCPK:ACGBY).
    • Late last month, China's central bank pledged to make its monetary policy flexible, targeted, and appropriate, while keeping interbank liquidity reasonable.

    • Sotheby's (NYSE:BID) announced that 101.38-carat diamond was sold for HK$95.1M ($12.3M) to an unknown buyer for Cash - Bloomberg.
    • The auction house was ready to take Bitcoin or Ether as a payment for the pear-shaped flawless diamond, estimated to fetch as much as $15M.
    • Citing the rising popularity of cryptocurrencies for payment, Auction houses are increasingly accepting them.
    • Last month, Phillips offered a piece from street artist Banksy for Ether or Bitcoin.
    • Christie’s accepted payment in Ether in March for the record $69.3M sale of Beeple’s “Everydays: the First 5,000 Days."

     

     

    • The next leg of the billionaire space race commences this weekend, with Sir Richard Branson journeying to the edge of space in Virgin Galactic's (NYSE:SPCE) VSS Unity spaceplane. The flight on Sunday will come just nine days before Jeff Bezos is scheduled to blast into the thermosphere and the rivalry is quickly turning into a cold war. Branson has denied the scheduling was a contest to see who would go up first, while Blue Origin (BORGN) has said the two companies aren't after the same prize. "We wish him a great and safe flight, but they're not flying above the Karman line and it's a very different experience," CEO Bob Smith told the NYT.
    • Note: The Karman line is the unofficial altitude at which space begins, and starts at 100 kilometers, or 62 miles, above Earth's mean sea level. The measure is named after Theodore von Kármán (1881–1963), a Hungarian American engineer and physicist who was active in aeronautics and astronautics. While the exact marking it subject to debate, he was the first person to determine the altitude at which the atmosphere becomes too thin to support aeronautical flight.
    • What will the flight look like? The VSS Unity spaceplane will be carried aboard a so-called mothership aircraft, known as WhiteNightTwo, which will release the plane at an altitude of 49,000 feet (Blue Origin uses a rocket-launched capsule). At that point, VSS Unity reaches supersonic speed within 8 seconds and climbs vertically until 55 miles above Earth. The plane will then hover at the top of its flight path, giving passengers a few minutes of weightlessness, before re-entering Earth's atmosphere and landing on a runway at Spaceport America, New Mexico. The entire show is expected to take about 90 minutes from takeoff to landing.
    • Sunday's flight will not only be a make-or-break moment for Virgin Galactic, but for the company's shares as well. If all goes well, expect a rocket ride on Monday morning, though there's plenty that can go wrong. The rocket motor could fail, the cabin could lose pressure or Earth's atmosphere could hamper the space vehicle. Back in 2014, the same Virgin Galactic model suffered a crash that killed a test pilot, when a descent mechanism was triggered at the same time the rocket climbing. There's also the threat that the flight gets called off or weather-related issues postpone the takeoff.
    • The stock: Options bets on the outcome of the flight could be risky as shares continue their wild ride. SPCE soared 17% to the $52-level on Thursday after a volatile last few weeks. Wall Street is mixed on the stock, with four out of 10 analysts rating Galactic at Buy, five Neutral and one Bearish on the company. "In general, every mission that goes up, every rocket that's launched, every bit of progress we make does drive down costs, makes space more affordable [and] accessible to everybody," added Shift4 Payments' Jared Isaacman, who is partnering with SpaceX (SPACE) to lead the first all-civilian mission into orbit later this year.
    • Outlook: Galactic's journey will be the the fourth test flight for the company and the first with a crew of four on board. It has about 600 customer reservations on its books, most of which were sold at a price of $200K to $250K per ticket several years ago, but another 400 have expressed an interest in booking when sales fully reopen in 2021. While space tourism is expensive for now, it is seen as a means of getting more people interested in the industry for the long-term, as well as investing in satellite infrastructure that could change the way we operate on Earth.

  5. Branson zoom – The average X-15 flight was 12 minutes, and I think the longest was when Neil Armstrong skipped along the upper atmosphere and started descending over Pasadena, looking at a possible landing at LAX, which would be bad because the X-15 had steel skids instead of wheels and there wouldn't be time to foam the runway. Fortunately he got the plan turned around and brought it down in a dry lake bed not too far from Edwards. This movie clip gives a good feel for what the flight was like. Branson's ride will be a lot more comfortable.  https://www.youtube.com/watch?v=lcLJj6i1LTs




  6. Branson's going up after only four test flights. Obviously the man must have a death wish. I would say insane is more like it. I think I will short this just out of principle.


  7. Branson is taking along a few others with the same death wish. I'm sure they'll be fine….

    …although, it could be a 'sell the news' event… :)


  8. China vs. capitalism





  9. Branson/Pirate – He's always been a risk-taker.  Did solo balloon flights etc when he was younger.   He's 70 now and has been waiting 10 years for this to be ready and he's either going to make history for ushering in space travel or not – it's what's important to him.  I can understand that.  Don't think I'd do it myself but I understand the motivation.

    I would not play the stock either way.  If it goes well, it could be like one of those Reddit things.  If it goes badly, -40% easily.  

    $50 is $12Bn valuation.  They have 400 deposits for $250,000 and the price is now $500,000 (inflation) and supposedly there's another 400 people on wait list.  800 x $250,000 is $200M ($300M with the new pricing) and it certainly costs money to fly them up there.  Even at 30% profits (doubtful), that's just $60M and 100x those earnings would be "just" $6Bn, not $12Bn and, given let's say 6 passengers – it will take them 130 flights to clear the passengers through.  Can they fly this thing over and over, every other day?   Who knows, a regular plane can go 2 hours 4 times a day – suddenly it starts to work – especially at $500,000 but I'm sure you run out of people that rich at some point. 

    The real key is space mining.  Being able to reliably move people and material into space quickly and cheaply (relatively) is how we're going to build platforms in orbit with crews and, ultimately, we'll be able to steer asteroids into orbit and mine them for materials.  Of course, making a mistake there can wipe out a city! 

    The Effect of Asteroid Mining On Mining Activities in Africa - Space in  Africa

    image-center

    Of course the numbers are wrong because if you brought that much platinum or whatever back to earth, you'd crash the value of it but still worth plenty of money.  Scientist don't have a clue about economics…

     Virgin Galactic launched its first flight to the edge of space, reaching more than 80km above the Earth's surface


  10. And, by the way, don't forget Howard Hughes used to test-pilot his own planes. 


  11. Actually, there's 80M people in the top 1% and bring that down to the top 0.01% and that's still 800,000 people and the top 0.01% can easily afford tickets.  

    Never mind the 1 percent. Let's talk about the 0.01 percent. | Chicago  Booth Review

    Keep in mind that's INCOME, not wealth.

    Never mind the 1 percent. Let's talk about the 0.01 percent. | Chicago  Booth Review


  12. batman – i would advise to never ever short reddit stocks. I sold $100 short calls on GME one afternoon.  The price had gone from 15-30 that day and i was able to get $6 for my calls. I stopped out at a respectable 5k loss before the stock rocketed to $500 within 48hours.  


  13. Lucky escape, Monk.

    Dow up 500, RUT up 1.5%, no sell-off goes unrallied, apparently.

    This is why we can't cash out – would be tragic to miss this.

    STP Value Change Today: $-13,149
    LTP Value Change Today: $22,735
       

    So silly! 


  14. See, the thing is, up or down (within reason), even if we are pretty neutral with the LTP/STP positions, we still make money on the Theta Decay of all the short options we sell.  In the last review, we counted $676,193 of upside potential over 18 months and most of that potential is simply Theta Decay – we don't need things to go higher – we just need the premiums to expire.  With 35% upside on tap in the LTP and only $200K in the STP, it's not likely we'll lose more than we gain on the way up, so we can just sit back and be patient. 

    I'd like to get another $500,000 lined up and we just sold a bunch of short puts and ONEW today for over $20K so, if we just do things like that once a month for 18 months – we'll push that $676,000 over $1M – and I'm sure we'll find some new bargains along the way as well.

    So the hard part is PATIENCE – don't let boredom force you into making mistakes.  This plan is working – it's just kind of boring but it's a boring way to make 2-3% a month!


  15. Have a great weekend, folks!

    - Phil


  16. Phil  Have a great weekend…..