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Monday Market Movement – Out of Afghanistan

Copyright CelebMagazine:  UPDATE: Taliban Sweeps Like Fire Across Afghanistan as US Troops WithdrawAnd we're out!

America doesn't lose wars – we "withdraw" from them.  It was Sept 11th, 2001 when George Bush started to blame Afghanistan for hijackings of 4 American planes by 19 (out of 21) Saudi nationals and it was Al-Queda that took credit for it, not the Taliban but we attacked Afghanistan anyway and found no chemical weapons but we did kill 71,000 civilians and injured over 500,000 more (and triple that including soldiers)in a country of 40M – so every single Afghani person pretty much has someone they know who's been killed or injured by Americans over the past 20 years  – and we wonder why they don't like us….

We invaded Afghanistan in December of 2001 and, by 2004, we had displaced the Taliban and installed a corrupt, puppet Government that lasted for 10 years while the war with the Taliban raged on.  But the Taliban found lots of recruits and we never got rid of them – no matter how many weddings we bombed – go figure…

Trump cancels meeting with Taliban leaders Video - ABC NewsTrump initiated peace talks last November and we were supposed to be out by May 1st but it's been a little delayed, Biden re-set the deadline to Sept 11th (20 year anniversary) but then changed it to August 31st – so less than 20 years.  The Taliban, however, stuck to the original timeline and started taking over Afghan provinces again in May, starting with Helmand, where all the good poppies are grown.  

As of yesterday, they took over the capital and now Biden is sending in 5,000 troops as 30,000 US civilians still need to be evacuated.  But don't count this as a loss – America doesn't lose wars…

This isn't Trump's loss, this isn't Biden's loss, this is America's loss as we went into this war for all the wrong reasons and we never had a real plan to fix anything.  This war was about oil and massive military contracts for Dick Cheney's Haliburton (HAL) and other military contractors who made a fortune on it and had no desire to see it end.  The left didn't want to end it badly enough and the right didn't want to win it badly enough so we half-assed a war for 20 years and now Afghanistan is run by the Taliban and our problems are just beginning.

Visualizing U.S. Military Spending vs. Other Top CountriesDoes this matter to the markets?  In a normal World it would matter a lot.  This war was all we had back in 2001 and the markets were tanking as America began spending roughly $500Bn per year bulking up the military.  Now we think our $1Tn annual military budget is "normal" – even though the US spends more (and $778Bn is only the hard costs) than the entire rest of the World COMBINED – including our "allies"!  

Also, keep in mind that the only reason China feels compelled to spend $252Bn (1/3 of our total) on their military is BECAUSE we spend $778Bn on ours.  Russia spends less than 1/10th what we spend and the Taliban do it for free – all volunteers or, as President Regan used to say "They are like our Founding Fathers!"  

Wars also consume a lot of oil (tanks get terrible mileage in the city) and that puts more money into the pockets of the people we're figthing – as does the heroin and then the morphine we use to get people off heroin is also made from poppies – and the beat goes on.  

Speaking of oil, as we expected, oil is taking its mid-August dive.  I said to our Members last Wednesday, after the API Inventory Report:

Oil was net 0 and we're drifting around $67.50 but I think we'll break below $65 in the near future.  Biden is asking OPEC to increase supply and, if they don't, he might us the SPR to dump oil on the market and reduce prices.  We have 621M barrels in the SPR and we import 3.8Mb/d of oil so it's enough to last us about 6 months and, of course, 70% of that oil comes from Canada and Mexico so the amount of supply OPEC can control would take a year to affect us.  We also have 1.2Bn barrels in commercial storage.

We have Fed Minutes this week and Powell is speaking tomorrow and Friday is options expiration day, so plenty to keep us busy.  Empire State Manufacturing already came in at 18.3, almost half of the 30.1 expected and such a steep drop from last month's 43.  Shipments fell from 43.8 to 4.4!   Tomorrow we get Retail Sales, Industrial Production, Business Inventories and the Housing Market Index.  Housing Starts and Mortgage Applications Wednesday along with the Fed Minutes at 2pm and Thursday is busy with the Philly Fed, E-Commerce Sales, Leading Indicators, and the Services Survey:

And look at all the earnings that are still coming in:

Image

We are doing our portfolio reviews this week and deciding if we want to keep playing in this market or go back to cash – I'm still leaning towards cashing out.

 


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  1. Good Morning.


  2. strong rally in NG


  3. Afghanistan – What an embarrassing day for all of US….. :(


  4. Good morning!

    Big Stick save for the Dow already.  Oil with a sharp turn off $65.75 too.  

       

        

     


    • Electric vehicle stocks are lower to start the week as more regulatory grumblings from Beijing impact the sector. State media in China is reporting regulations on online games could be tightened to ensure they don't misrepresent history. That does not directly impact EV manufacturers, but is cooling sentiment on U.S.-listed Chinese tech and auto stocks in general.
    • Chinese EV stocks XPeng (XPEV -7.1%), Li Auto (LI -4.6%), Full Truck Alliance (YMM -5.0%) and Nio (NIO -6.4%) are all notably lower. There are big early drops for Faraday Future Intelligent (FFIE -8.8%), Romeo Power (RMO -9.4%), Hyzon Motors (HYZN -6.7%), HyreCar (HYRE -4.3%), Proterra (PRTA -1.5%) and Fisker (FSR -5.6%) as well.
    • Tesla (TSLA -4.9%) is also spinning down from its premarket drop as investors weigh the impact of the formal NHTSA probe into Autopilot. That news arrives just ahead of Tesla's big AI Day event on Thursday that is supposed to highlight how the company should be considered an AI robotics players as well an auto manufacturer.
    • Metals and mining shares are weak in pre-market actions after China's industrial production rose at a considerably slower rate in July than in June, sparking worries over a slowing recovery.
    • Industrial metal miners and steelmakers are broadly lower: FCX -3%STLD -2.7%RIO -2.4%CLF -2.3%NUE -2.3%BHP -2.1%X -1.8%CENX -1.7%AA -1.6%VALE -0.7%.
    • Lithium companies exposed to Chinese demand are also indicated lower: SLI -8.9%LTHM -4%LAC -2.3%ALB -1.8%SQM -1.8%.
    • "While growth will inevitably slow from the reopening surge seen in Q2-Q3… our economists still expect the world to have recovered significantly [from the delta variant of the coronavirus] by mid-2022," Goldman Sachs analysts say, according to Bloomberg.
    • "For commodities, the slowdown in growth is unlikely to derail the bull market, as the level of activity remains elevated and inventories continue to draw," Goldman says.
    • BHP also is in talks to exit its oil and gas assets by merging them with Woodside Petroleum.
    • Mohamed El-Erian, former PIMCO CEO and the current chief economic adviser at Allianz, said Monday that the biggest risk to the economy comes if the Federal Reserve does not taper its asset purchases soon enough.
    • Speaking to CNBC, El-Erian, who has long advocated tighter Fed policy, said delaying the process of cutting back on asset purchases could force the central bank to make more dramatic policy decisions later on.
    • "They should get going and they should've gotten going earlier," he said.
    • El-Erian contended that a delay in Fed action raises the chances of a policy mistake or a "market accident," with massive central bank liquidity creating conditions where market participants start to ignore fundamentals.
    • The former PIMCO CEO predicted that the market will start responding to the prospect of a Fed taper once Chairman Jerome Powell begins discussing the topic.
    • El-Erian didn't think that markets would collapse in the face of a potential taper, because Wall Street will understand the reasoning behind the move.
    • "I don't think this is a collapse situation. This is a 'let's get more sober' situation," he said.
    • El-Erian predicted that Powell would likely start talking about a taper in September at the end of the Fed's regularly scheduled meeting on Sept. 22.
    • The Allianz adviser said he did not expect the Fed chair to begin discussing a cutback in the central bank's asset purchases at a high-profile speech in Jackson Hole, Wyoming, scheduled for later this month.
    • For more on the Fed's timeline to scale back its asset purchases, check out comments from earlier this month from Federal Reserve Gov. Christopher Waller, who also thinks that the announcement of a Fed taper could come in September.

    • Warner Music Group (WMG -0.1%) announces that the company will now represent Madonna's entire body of work across recorded music and publishing.
    • The partnership revitalizes Warner's almost 40-year relationship with Madonna, the best-selling female artist of all time with over 300 million records sold, and Warner will reissue her entire catalog over the next few years.
    • The new agreement includes 17 studio albums, along with singles, recordings, live albums, and more.
    • “For the first time, Madonna will personally curate expansive deluxe editions for many of her landmark albums, as well as introduce unique releases for special events, and much more,” Warner said.
    • Find out why Read Seeking Alpha contributor Gary Alexander thinks Warner Music Group is a good investment here.
    • Moderna (MRNA -7.2%announces a revised supply agreement with the Government of Canada for up to 105M doses of the company's COVID-19 vaccine and its booster vaccine candidate, if authorized, for delivery through 2024.
    • The agreement provides for 20M doses each year in 2022 and 2023, with an option for an additional 15M doses each year.
    • For 2024, the agreement provides an option for up to 35 million doses.
    • The U.S. FDA had amended the emergency use authorizations granted for Pfizer/BioNTech and Moderna's COVID-19 vaccines on Thursday, allowing their use as booster shots.
    • Goodyear Tire & Rubber (GT -2.8%) says its venture capital arm added electric vehicle charging player AmpUp to its investment portfolio.
    • AmpUp described itself as an electric vehicle software company and network provider that enables drivers, hosts, and fleets to charge stress-free.
    • "Our technology gives businesses and property owners the ability to efficiently manage multiple charge stations and locations in one platform. Advanced features, such as smart scheduling, dynamic access control and energy optimization provide site hosts more flexibility and affordability for their charger investment. With headquarters in Cupertino, CA, AmpUp operates in all 50 states as well as Canada, Mexico, and Puerto Rico."
    • Goodyear says it is interested in enabling the future of mobility, including within the EV sector.
    • See the growth grades on Goodyear Tire & Rubber.
    • Intel (NASDAQ:INTC) Chief Executive Pat Gelsinger recently went up about as high as he could go in the U.S. government in what might be called a modern day version of the whistle stop tour as part of his effort to pursue a massive federal investment in the semiconductor industry.
    • According to the Wall Street JournalGelsinger and other Intel board members held a rooftop reception with Biden Administration officials near the White House last month where the company leaders pushed for what was called a "multibillion-dollar investment plan for the chip sector. The meeting was described as one of many that Gelsinger has recently held with national leaders in order to boost support for large-scale investments in chip-manufacturing facilities as demand for the critical computing products grow amid an ongoing chip shortage.
    • Gelsinger has been promoting Intel's (INTC) to build more chip factories in the U.S. and other countries as part of an attempt to reduce over-reliance on suppliers in Asia, and especially China. Citing "people familiar with the event" in Washington, the Journal said Gelsinger is seeking "a few billion dollars" in subsidies to help with the chip infrastructure proposal.
    • The chip sector as been dealing with a shortage of components for much of this year, and recent research reports suggest that the situation may not ease up for some time.
    • Intel (INTC) shares edged slightly downward, to $53.2, as trading began Monday. Among other notable chip companies, AMD (NASDAQ:AMD) fell almost 3% in early trading, Nvidia (NASDAQ:NVDA) was down by 2% while Taiwan Semiconductor (NYSE:TSM) and Micron Technology (NASDAQ:MU) showed mild losses.
    • Intel recently delivered its second-quarter results, and outlined a roadmap for the next few years that met with skepticism from some chip-industry analysts.
    • The stock market is seeing modest, but broad weakness with an upward bias to defensive sectors.
    • The S&P (SP500) -0.3%, Dow (DJI) -0.4% and Nasdaq (COMP.IND) -0.3% are all down.
    • The S&P has gone 9 months without a 5% correction, and while a bull correction is still possible, Oppenheimer doesn't see a market top nearing.
    • "U.S. equity markets continue to grind higher amid a low volatility and low volume backdrop," Craig W. Johnson, technical market strategist at Piper Sandler writes. "While some of the narrow price action can be explained by summer seasonality, we suspect investor conviction is being challenged by the potential for upcoming monetary policy changes, shifting growth vs. value rotations, and an alarming trajectory of new coronavirus cases."
    • "Strong fundamentals should provide stability and support if/when volatility returns to the market. The technical setup also remains bullish and supportive of a buy the dip playbook."
    • Rates remain under pressure with concerns about global growth after disappointing economic data from China.
    • "Chinese economic data for July was weaker than expected," UBS Chief Economist Paul Donovan writes. "Retail sales were below the lowest estimate in the forecast range, and industrial production was also weaker."
    • "China’s narrative after the pandemic is different from advanced economies. Consumers in advanced economies rushed to spend savings as restrictions eased. In China there has been an increased desire to save in the wake of COVID."
    • The 10-year Treasury yield is down another 4 basis points to 1.25% following a sharp decline on Friday's disappointing consumer sentiment data.
    • Cyclical sectors are the weakest in the S&P, with Energy (NYSEARCA:XLE) the biggest decliner Utilities (NYSEARCA:XLU) and Consumer Staples (NYSEARCA:XLP) doing the best.
    • See the single stocks making the biggest moves this morning.

  5. USDA to permanently boost food stamp benefits by 25 percent


  6. Afghanistan Is Your Fault



  7. The Apocalypse Will Not Be Slow



  8. Everything coming back to life. 

    So hard to leave this market – just goes up and up.






  9. This is us spiking the DOW options Thursday and Friday:

    You have to be aware of that – especially for Top Trades – sometimes the volume is just us and it pays to wait a bit for things to calm down.



  10. Long-Term Portfolio Review:  $2,027,896 is $68,608 since our June 15th review.  Keep in mind we only started this portfolio with $500,000 on 10/1/19 so $68,000 is 13% of our original base in a month!  That's the value of compounding your gains but, unfortunately, we're also compounding our risks and that is making the hedging more and more expensive to protect ourselves.  The STP is, in fact, back down to $90,000 as it took a huge hit from CMG and, of course, the index hedges so, on the whole – we're at the same $2.1M we've been at for the whole summer.  

    Still, the question here is whether or not to cash out the LTP and today is one of those days when you do feel like it's silly not to participate in this market as it does seem to bounce back from anything.  Also, I don't have a great alternative to put the money – that's another issue.  What would we do with $1.5M if we cashed in and started from scratch.  I guess I'd buy a lot of T and VZ and GOLD and SPWR – but those are positions in the LTP already and the LTP is already over 50% in CASH – so perhaps what we need to do is just cut back our downside risk?   Let's see…

    • AFL – Downside is owning 1,000 shares of AFL at $50.  So far, we made 20% in two months but we have to consider the risk of being forced to buy $50,000 worth of shares and how it limits our ability to adjust the portfolio.  In a risky market, unless we're dying to own the stock – it's too much risk for too little reward so we'll kill it.
    • AKAM – Already up 65% so why risk anything?  Kill it.

    By the way, the trades we kill in the LTP pretty much automatically go onto our next Watch List.  

    • BA – $100,000 – Kill it.
    • BCS – Only risking owning $20,000 worth at net $7.90 and we can make $3,000 more so KEEPER! 
    • CIM – If we are forced to buy 2,000 shares for net $12, the $1.32 dividend would be 11% before we even sell more puts and calls.  KEEPER!
    • DISCA – Bad consumer sentiment means kill it.

    • ENVA – Too cheap to kill.  KEEPER!  
    • F – $60,000 is too much bulk.  Kill it.  
    • FRO – Net $3.70 would be a shame if we don't get assigned.  KEEPER!  
    • GS – Up 86%, kill it.
    • HAL – 2,000 shares at net $17 is actually appealing.  KEEPER!
    • HMY – Up 75%, kill it.  
    • ING – Up 52%, kill it.  
    • KBH – 1,000 shares at net $30.10 is a KEEPER. 

    • LABU – Interesting pullback.  If we didn't already have them, I'd be selling puts now.  Might actually make a full play out of these.  KEEPER!
    • M – Those are done, kill it.
    • MFGP – Not much risk here so KEEPER!  
    • OIH – Good enough, kill it.  
    • PETS – Brand new, KEEPER! 
    • RRD – Up 50% already, kill it.
    • TD – About halfway, kill it.  
    • YETI – Up 22.9% in a month, very nice.  KEEPER!  

    So we got rid of 12 of 22 short puts and especially our expensive ones.  That means we'll have more buying power if there is a downturn so we've increased our margin of safety considerably without spending any money.  

    • CIM – As noted above, we love them and we love the dividends and we get called away 33% below the current price so, no worries.
    • SKT – Pulled back off $20 but we love them.  Just paid us an 0.178 dividend too!  
    • TTE – Love them too but we'll be called away at $40 and done with it.

    • APO – So undervalued, have to keep them.  
    • BABA – Big pain recently.  This company is at about 1/2 their proper value. Last Q showed great growth but everyone is freaking out about China but I don't think they are out to destroy tech companies (not all of them).  Going to let it ride.  

    • BIG – Not very exciting.  Kill it.  
    • BRK.B – Miles in the money.  Kill it.
    • CHL – Stuck with these.  
    • CSCO – $56,000 out of $60,000.  Kill it.
    • DOW – Brand new.  KEEPER!  


  11. Phil / Labu

    i've had my on it for a while.   I have a 10k allocation kinda standing by.  Thoughts on a play?

     

    thx


  12. Good morning!

    LABU/Monk – Well, if you have a $10K allocation you hopefully have at least $200,000 in buying power so you can afford to own 500 shares at $40 ($20,000) which means there's no harm in selling 5 of the 2023 $40 puts for $12.85 ($6,425).  Then that's kind of free money (as long as you REALLY want to own LABU) and then you can pick up 20 of the 2023 $40 ($23.25)/50 ($19.50) bull call spreads at $3.75 ($7,500) so your net entry is $1,075 on the $20,000 spread that's 100% in the money to start with an upside potential of $18,925 (1,760%).  Worst case is owning 500 shares for $42.15 ($21,255), which is still 20% below the current price and, of course, you can roll lower to 2024.  


  13. Good morning 


  14. Phil/Labu 2023  I am short 15 of 34P at 7.25. down by 3.4k but at Labu 51 and break even 26.75 im included to add the BCS  you suggested and then just be patient.  Would you agree? Tia