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GDPhursday – China Says “Buy the Dip”

Line chart of Hong Kong share price (indexed to 100) showing China tech stocks bounce after regulators hold callBig reversal.

Regulators in Beijing held a call with executives from global investors, Wall Street banks and Chinese financial groups last night, according to the Financial Times.  The call sought to reassure the groups after China issued an effective ban on the country’s $100Bn private tutoring industry at the weekend, which led to concerns of a broader regulatory crackdown on Chinese tech companies listed abroad.

During the call, CSRC vice-chair, Fang Xinghai, told the international groups China was committed to allowing companies to access capital markets and that the action on education technology businesses was an isolated situation.  The ChiNext Index bounced 5% overnight with the CSI up 2%.

While it's very dangerous to take China at it's word, I'm liking DIDI, who have fallen below their IPO price of $14 to $8.87, which is a $10.5Bn market cap for a company with $30Bn in quickly growing sales (no profits so far but manageable losses).  They are likely to be up 20% at the open, though.  Amazon owns a piece of them and I think they are worth a toss down here so let's add them to our Future Is Now Portfolio as such (I'm estimating the opening prices):

  • Sell 20 DIDI Feb $10 puts forr $2.50 ($5,000) 
  • Buy 50 DIDI Feb $10 calls for $3 ($15,000)
  • Sell 50 DIDI Feb $15 calls for $2 ($10,000)

That's a net $0 cost on the $25,000 spread and our only obligation is owning 2,000 shares of DIDI for $10 so, as long as we REALLY want to invest in DIDI over the long-haul, the risk of assignment should not bother us.  The upside potential is a clean $25,000 if they get back to $15 and, of course, we intend to roll the Feb $10 calls out to longer strikes when they are published.  

There's an incorrect rumor in the Wall Street Journal that says "Didi Weighs Going Private to Placate China, Investors," that is not true and makes no stratgic sense and shame on the WSJ for publishing fake news.  That may make DIDI very volatile but we have a value play, not a momentum play.  

Meanwhile, the US GDP for Q2 is expected to come in at 8.4% after getting $2.2Tn worth of stimulus in March.  One quarter of GDP is $5Tn so $2.2Tn is 44% of that so 8.4% growth means that, without stimulus, we'd have been down 32% – but let's not let the facts get in the way of good headline data, right?   The reality is we have worker shortages, material shortages, natural disasters (mostly heat-related), supply shortages and a rapidly spreading virus (Disney is going back to requiring masks tomorrow).  These GDP numbers could snap back fast if more places go on lock-down again.  

I really don’t expect anything like we saw in the spring of last year,” said Ben Herzon, executive director at forecasting firm IHS Markit. “Going forward we’ll just see how high the case count gets and how nervous some people get.

The challenges facing Hollywood are echoed throughout corporate America as a surge due in large part to the highly infectious Delta variant and current vaccination rates raise questions about the ideal timetable and practices for returns to workplaces.14 4 min read

Are investors taking these risks seriously enough?  Well the Dow is up 150 points today so I'd have to say, no.   Amazingly, last year taught us nothing but we'll be adjusting our Short-Term Portfolio to be a bit more bearish over the weekend. 

8:30 Update:  6.5%!  That's massive GDP growth but very disappointing as leading Economorons predicted a much bigger number.  We have finally gotten the economy back to where it was before the pandemic but, again, that's after $8Tn worth of stimulus has been put into it – so let's hold off on the party hats.  Nonetheless, we are paying 33% more for the average share of stock than we were pre-pandemic so hope does sping eternal – false or otherwise.

On the bright side, slower growth keeps the Fed on the table and Powell indicated no intention of slowing in yesterday's press conference anyway.  India, however, is nearing a Recession and Thailand is already in one or, more accurately, year two of their contraction.  According to the latest weighted average of 36 Economists surveyed by Bloomberg, GDP should grow 1.8% this year. That’s particularly weak considering it’s a comparison to last year, when Thailand’s economy contracted 6.1%, the most in more than two decades and that growth is now thretened by record numbers of infections and deaths this summer.  Bangkok and 12 other provinces, which account for more than half of the Thai economy, have been under lockdown and curfew since last week as the delta variant threatens to overwhelm the country’s public health system.

Here's how other countries are faring – in case you are planning your holidays (or investments):

India and Pakistan have 1/4 of the World's population- we should be a LOT more concerned than we are about what's going on there as well as in the UK where, DESPITE 2/3 of the population having been vaccinated and more lockdowns than the US, they are still having very serious spreads of the virus.  

Needless to say – Be careful out there!


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  1. Good Morning.

  2. I'm back to wearing 'facial coverings'….. Thanks for nothing, losers….

  3. German inflation YoY … 3.8% vs 3.3% in June with expectations being 2.9% nope, nothing to see here. 

  4. Good morning!

    Yikes, I'm in Orlando and they are going back to masks indoors – tomorrow.  I guess today it's OK to walk around without one but not tomorrow?  That's such a strange thing these Governments do.   

    The worst thing about Disney, etc is they have probably 33% kids too young to be vaccinated or, as we affectionately call them – "Carriers".  An unvaccinated adult would have to be insane to go here.  I'm staying out of the parks for the most part but I am going to Epcot tomorrow (1/2 day for me then back to normal next week) as it's usually not so crowded.  

    You would think DIS is a no-brainer short but nothing short is safe in this market.

    CMG is still killing us and TSLA would be if we were still short.

    Inflation/Malsg – It's so strange to see all these governments deny things that are right in front of our faces.

    Oil Steadies Near Two-Week High After U.S. Stockpiles Decline

    Virus Surge Upends Plans for Companies Trickling Back to Office

    U.K. Carmakers Run Low on Staff in Second-Worst June Since 1953

    Not Even Jerome Powell Gets What’s Up With the Bond Market

    The Federal Reserve’s Big Inflation Miss

    Senate Moves Forward on $550 Billion Infrastructure Deal

    Yum China Posts Quarterly Sales That Fall Short of Expectations.

    SEC Weighs Making Companies Liable for Climate Disclosures

    Facebook beats earnings expectations, but warns of significant growth slowdown

    Uber shares drop as Softbank plans to sell shares to cover Didi and other losses

    Apple will require masks in many U.S. stores regardless of vaccination status

    Ford says reservations for F-150 Lightning electric pickup top 120,000

    Qualcomm shares rise as revenue pops 63% driven by chip sales

    PayPal comes in light on revenue, profit drops from last year

    AMD’s stock surges to record high while chip maker takes more market share from Intel.

    Robinhood's Retail Reckoning Awaits After IPO'ing At Low-End Of Range

    In 67-32 Vote, Bipartisan Infrastructure Deal Advances To Debate In The Senate

    Sydney Lockdown Extended For At Least A Month Stoking Fears Of "Double-Dip" Recession

    Not Just The Feds: Top Union Boss Says AFL-CIO Supports Mandatory Vaccines For Workers

    "Not Grounded In Reality": Many Republican Governors Make Clear They Will Not Be Mandating Masks Or Vaccines

    Remington Reaches Historic $33 Million Settlement With Families Of Sandy Hook Victims

    Taibbi: The Vaccine Aristocrats

    5 Takeaways From Powell's Conference

    Powell Pumps Stocks, Dumps Dollar In Dovish Doublespeak


  5. Phil that IGT play looks very much like a sick puppy.

  6. I see all guys are feeding their pets again PETS up from 27 to 31 again, hope you did not miss the dip.

  7. DIDI – Sold the Feb 10 Puts for $3.30 and Bought the Feb 10 Calls for $2.20.

    I'm thinking of waiting until I can sell The Feb 15 Calls for $1.50ish. Am I being greedy? Should I just try to get the $1.20 to make the spread a buck?

  8. Lost by assignment PBCT and made an offer to buy again!!!!

  9. daveo You can not go wrong to wait a while if you expect the stock will go up in the future. If a stock is down like this one, it is always good just to buy the call and sell the put in the first place.

  10. Phill / TTE – had a huge / monster quarter….. headlines are misleading since the analysts they have outlooked poorly….  in addition they will benefit from gas prices in second half…..  once people look at numbers this should move up more

    The Board of Directors of TotalEnergies SE, meeting on July 28, 2021, under the chairmanship of Chairman and Chief Executive Officer Patrick Pouyanne?, approved the Company's second quarter 2021 accounts. On this occasion, Patrick Pouyanne? said:

    "In the second quarter, thanks to the progressive recovery of global demand and OPEC+ discipline, TotalEnergies benefited from oil and gas markets that were 13% and 28% higher respectively quarter to quarter. In this context, TotalEnergies reported $3.5 billion of adjusted net income, a 15% increase compared to the first quarter 2021 and above the level of the pre-crisis second quarter 2019 which had a comparable oil price environment, notably thanks to the action plans implemented during the crisis.

    TotalEnergies generated cash flow (DACF) of $6.8 billion, an increase of more than $1 billion compared to the previous quarter, and, by maintaining investment discipline, generated net cash flow of $3.2 billion this quarter, which covered the interim dividend of $2.1 billion and allowed continued debt reduction, with gearing falling to 18.5%, below the announced objective of 20%. The organic cash breakeven was below $25/b for the quarter.

    Given the strong second quarter results, the Board of Directors decided to distribute a second interim dividend for 2021, stable at € 0.66/share.

    In addition, given the high hydrocarbon prices and gearing below 20%, in the respect of the strategy of TotalEnergies and consistent with the cash flow allocation scheme presented in February 2021, the Board of Directors decided to allocate up to 40% of the additional cash flow generated above $60/b to share buybacks.

    The iGRP segment confirmed its first quarter performance with adjusted net income and cash flow of around $900 million. Growth in Renewables and Electricity continued with more than 500 MW of gross renewable power generation capacity commissioned in the quarter and the acquisition of a stake in a 640 MW offshore wind project under construction in Taiwan.

    Exploration and Production fully leveraged the higher Brent price and, despite lower production in the second quarter, mainly due to planned maintenance, reported increases of about 10% over the previous quarter in adjusted net operating income and cash flow to $2.2 billion and $4.3 billion, respectively.

    Downstream delivered very good performance, thanks to the strength of its integrated model, which allowed it to benefit from very high margins in petrochemicals and the rebound of Marketing & Services results to pre-crisis results, despite depressed European refining margins. Downstream adjusted net operating income and cash flow increased by about 70% to $900 million and $1.5 billion, respectively.”

  11. IGT/Yodi – Two weeks old and you are ready to pull the plug?

    IGT Long Call 2023 20-JAN 20.00 CALL [IGT @ $20.01 $0.14] 20 7/9/2021 (540) $14,700 $7.35 $-2.40 $7.35     $4.95 - $-4,800 -32.7% $9,900
    IGT Short Call 2023 20-JAN 27.00 CALL [IGT @ $20.01 $0.14] -20 7/9/2021 (540) $-8,620 $4.31 $-1.49     $2.83 - $2,970 34.5% $-5,650
    IGT Short Put 2023 20-JAN 17.00 PUT [IGT @ $20.01 $0.14] -10 7/14/2021 (540) $-2,900 $2.90 $0.55     $3.45 - $-550 -19.0% $-3,450

    It's a $14,000 spread we bought for net $3,180 and now net $800 so $2,380 better deal than when we started but not even worth adjusting yet.  Earnings are Aug 3rd.  Hopefully they miss and then we can roll down to the $10s, now $9.37, for $4 and then we'd be $15,000 in the money (at $17.50) for $11,180 on a $34,000 spread. 

    PETS/Yodi – Great stock if you obey the channel.  

    DIDI/Dave- Not greedy if you scale into the spread – SMART!   We think it's going to go up so why not play it that way?

    And what Yodi said!

    TTE/Batman – Love those guys.  Idiot analysts not stopping people from buying.  

    • TotalEnergies (NYSE:TTE): Q2 GAAP EPS of $0.80 misses by $0.64.
    • Revenue of $41.63B (+93.1% Y/Ymisses by $570M.
    • Adjusted net income of $3.46B compared to $126M a year earlier, due to the increase in oil and gas prices
    • Hydrocarbon production of 2,747 kboe/d in 2Q21, a decrease of 3% compared to 2Q20
    • TotalEnergies anticipates its full-year 2021 hydrocarbon production to be around 2.85 Mboe/d.
    • TotalEnergies anticipates that the higher oil prices observed in the first half 2021 will have a positive impact on its average realized price of LNG for the coming six months, given the lag effect on price formulas. It is expected to be more than $7.5/Mbtu in the third quarter 2021.
    • TotalEnergies maintains discipline on expenses, with net investments expected to be between $12-13 billion in 2021, with half dedicated to future growth. For those growth investments, 50% will be dedicated to renewables and electricity.
    • Press Release

    $45 is just $118Bn and they just did $3.5Bn for the Q so very on track for a better than 10 p/e for the year.  

    Definitely investing here, not trading.  They are buying back more stock too – they think it's too cheap.  And notice the cash flow is much more than income – they write stuff down to avoid taxes but the money is still coming in. 

    TTE TotalEnergies SE 1000 2/9/2021 170 $42,250 $42.25 $2.47 $40.66     $44.72 $1.18 $2,470 5.8% $44,720
    TTE Short Call 2021 20-AUG 40.00 CALL [TTE @ $44.72 $1.18] -10 2/10/2021 (22) $-4,800 $4.80 $-0.80     $4.00 - $800 16.7% $-4,000
    TTE Short Put 2021 20-AUG 40.00 PUT [TTE @ $44.72 $1.18] -10 2/10/2021 (22) $-3,800 $3.80 $-3.70     $0.10 $-0.15 $3,700 97.4% $-100

    We're playing them for the dividends ($3.12 – 7.23%) in the LTP but might get more aggressive when it's time to roll in two weeks. 

  12. Phil IGT No I am not pulling the plug, I did obviouly as always enter this play in MODERATION! But in our new account with Tastyworks, all my plays are listed in a nice row there, so everytime I look most of them are green for the day but this one has worked it's way down already to 1,100.00. The worst performer of twenty five positions.

  13. Do you like Tastyworks, Yodi?   

    Yet another day of gains in the market:



    Seems about right.

  14. Phil / GOLD – you uncovered the BCS  a while back….. is it time to cover now?  Gold at 22,  Looking at cover as follows:

    120 X Jan '23 20 Calls ( 4.2)  - Cover 1/2 now at 60X Jan '23 $25 (2.3)?  Thoughts?

  15. Phil Tastyworks yes a usefull broker with little thrills. Obviously not to be compaired with TOS, but opened up with IB as well only for CHL but a very complicated platform, still have not found the place where they show your div payments. 

  16. Gold/Batman – I think we're just pausing at $22.  Mid-May Gold was at $1,850 and GOLD was at $25 – I think we can do better.  Nothing wrong with being safe and scaling into the cover.



    • One of Marvel's Avengers is looking to get some revenge against the Walt Disney Co. (NYSE:DIS)
    • According to a report in the Wall Street Journal, actress Scarlett Johansson filed suit against Disney on Thursday, charging the entertainment giant with breach of contract. At issue is Disney's releasing of the "Avengers" movie "Black Widow" on the Disney+ streaming TV service at the same time the movie debuted in theaters. The suit was filed in Los Angeles Superior Court.
    • Disney's Marvel Entertainment released "Black Widow" on July 9, and the movie earned an estimated $80 million in the U.S., and another $78 million in overseas markets during its opening weekend. However, the movie took in another $60 million in opening-weekend sales from Disney+ subscribers who paid $30 to watch "Black Widow" via the streaming service's Premier Access option.
    • It's that revenue from Disney+ that is at the core of Johansson's suit. According to the Journal, the suit alleges that the practice of simultaneously releasing "Black Widow" in theaters and on Disney+ impacted Johansson's earnings, as her salary was based on an exclusive theatrical release of "Black Widow".
    • Johansson has been a central part of Marvel's "Avengers" for more than a decade, having first portrayed the Black Widow character in the movie "Iron Man 2" in 2010. She has played Black Widow in a total of nine "Avengers" movies, and said the current "Black Widow" film will be her last as the character.
    • Disney didn't immediately respond to a request for comment.
    • The practice of releasing movies in theaters and on streaming services at the same time gained traction during the Covid-19 pandemic in 2020, and took off when AT&T's (NYSE:T) WarnerMedia released "Wonder Woman '84" in theaters, and on its HBO Max streaming service on Christmas Day last year. Disney has embraced the strategy, with titles such as "Raya and the Last Dragon", and "Mulan" coming out in theaters and on Disney+ at the same time, where the movies were made available for an additional fee for several weeks before they become part of the services regular streaming content.
    • Johansson's suit also comes as Disney's latest tentpole movie, "Jungle Cruise", starring Dwayne Johnson and Emily Blunt, is set to come out in theaters, and on Disney+ Premier Access, on Friday.
    • Disney shares traded just above their breakeven point for the day at $179.21 in late market action Thursday.

  17. I don't see how that's even a thing – she's totally right and DIS should have just paid her.  All this will do is force agents to put more clauses into contracts in the future.

    • The hotels sector is off and racing after strong earnings reports from Wyndham Hotels & Resorts (WH +5.2%) and Hilton Worldwide Holdings (HLT +4.6%).
    • Hyatt Hotels (H +2.9%), Marriott International (MAR +3.0%) and Choice Hotels International (CHH +2.2%) are also notably higher on the day.
    • Jefferies analyst David Katz says the Hilton earnings beat was broad-based, with the largest portion of the upside in franchising fees, which is said to bear a key strength within the HLT model and the cash generative characteristics. He also thinks the unit growth target from Hilton of 5% to 5.5% suggests that the growth in fees remains on track through the uncertain and inconsistent recovery. Meanwhile, the Wyndham quarter reflects the "continued progression" toward the "stable, cash generative" platform that is expected from pure-play franchising, per Katz.
    • Hilton is the lodging stock with the highest Seeking Alpha Quant Rating.
    • Restaurant stocks are having a strong day after earnings from Yum Brands (YUM +6.0%) and Wingstop (WING +6.3%) impressed.
    • Despite all the noise about commodity and labor inflation, Yum Brands saw improved margins across Taco Bell, Pizza Hut and KFC on sales leverage and higher pricing.
    • Notable gainers in the sector include Noodles (NDLS +4.3%), Red Robin Gourmet Burgers (RRGB +3.5%), Kura Sushi (KRUS +8.0%), Brinker International (EAT +3.6%) and Cracker Barrel Old Country Store (CBRL +2.6%).
    • A development to watch for higher-end, dine-in chains is the decision by Union Square Hospitality Group to require indoor diners and employees at the company's full-service restaurants to show proof of COVID-19 vaccination. Union Square Hospitality is owned by Danny Meyer, who also founded Shake Shack (SHAK +2.2%).
    • Check out what Yum Brands said on its earnings call about post-vaccination traffic trends.

    • LendingClub (NYSE:LC) stock soars 55% after the lender issued strong Q3 revenue guidance and boosted its full-year revenue outlook significantly.
    • In addition, the company is expecting to maintain positive GAAP net income over the second half of the year, LendingClub  Chief Financial Officer Tom Casey said during the earnings call.
    • Boosts year revenue guidance by more than 45% to a range of $750M-780M and origination guidance by more than 40% to $9.8B-10.2B.
    • "Our guidance assumes the economy will continue to grow for the remainder of the year, albeit at a slower rate," Casey said during the call.
    • The company also incorporates the seasonal pressure on Q4 originations and its increased investments in marketing, for loan and deposit growth, infrastructure, and technology investments, he added.
    • See LC's stock activity compared with LendingTree and Rocket Companies over the past five days in chart below.
    • SA contributor IP Banking Research sifts through LendingClub's blowout results



    • AstraZeneca (AZN +1.5%) and Johnson & Johnson (JNJ -0.2%), two of the frontrunners in the global immunization drive with a similar approach in their COVID-19 vaccine technology, are yet to see the evidence to support the need for booster shots.
    • Speaking to CNBC’s “Squawk Box Europe,” AstraZeneca CEO Pascal Soriot said that the company did not have a “precise answer” on the need for COVID-19 boosters.
    • “There are two dimensions to this immunity — antibodies [which] decline over time, but the second, very important dimension of vaccination is the so-called T-cells. They tend to protect people against severe disease, but they also provide durability.”
    • Antibodies and T cells are two components of the human immune system. While how long COVID-19 antibodies last remains unclear, T cells can outlive the antibodies, according to studies.
    • “With the technology we use, we have very high production of T-cells. We’re hoping we can have a durable vaccine that protects for a long period of time. So whether we will need a third booster or not is not clear yet, only time will tell,” Soriot added.
    • Rival vaccine maker J&J has echoed similar views. The U.S. pharma giant says there is no evidence yet to indicate the requirement of a booster dose following the administration of the company’s single-dose COVID-19 shot, German news magazine WirtschaftsWoche reports.
    • The company plans to reassess the need for a booster as soon as more data become available.
    • Both companies have pledged to sell their COVID-19 vaccines on a not-for-profit basis during the pandemic.
    • The views of AstraZeneca and J&J on booster shots contrast with those from Moderna (MRNA -1.7%) and Pfizer (PFE -0.6%)/BioNTech(BNTX -0.5%). The companies used the breakthrough messenger-RNA technology in their two-dose COVID-19 vaccines.
    • Moderna is advancing a Phase 2 study for its booster COVID-19 vaccine candidates and has already signed an agreement with Switzerland to supply 7M doses of booster shots in 2022.
    • Speaking to CNBC, Pfizer CEO Albert Bourla said on Wednesday that he was "very, very confident" a third dose of the company’s vaccine could offer protection against the highly transmissible Delta variant of coronavirus.





    • Qualcomm (NASDAQ:QCOM) CEO Cristiano Amon said Thursday that the company's recent earnings figures reflected an environment where "demand is still outpacing supply" across all the firm's business lines.
    • Amon told CNBC that it has more than one vector of growth outside of its traditional line of chips for smartphone handsets.
    • Qualcomm released better-than-expected financial figures earlier on Thursday. Revenue advanced 65% from last year, reaching $8.06B. The company also provided a strong forecast for the current quarter.
    • Looking to its push to diversify away from handsets, the Qualcomm CEO specified that the firm was on track for $10B in non-handset revenue.
    • He noted that non-handset revenue growth outpaced its handset division by 1.6 times. Non-handset sales now account for 40% of the firm's business, Amon said.
    • Within handsets, Amon said the adoption of 5G had driven sales, calling the process "resilient" despite the choppy post-COVID recovery in some parts of the world.
    • Speaking to the supply constraints that have plagued the chip industry in general, Amon expressed confidence that the firm was performing "better than many" in maximizing production.
    • He said Qualcomm could lean on its scale and its strategy of multi-sourcing products to weather supply constraints.
    • The earnings news sparked a rally in QCOM on Thursday. The stock rose nearly 6% to $150.64 in intraday action.
    • Shares had traded in a range for the past several months. With Thursday's jump, QCOM is on track for its highest close since February.

  18. Just a little selling into the close.