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GDPhursday – Closing the Quarter at the Debt Ceiling

"It's hard to keep your feet on the ground

'Cause when we like to party

We only want to get down

Woo-oh, what a feeling


When we're dancing on the ceiling

The Democrats voted yesterday to suspend the Debt Ceiling but (evil music, please) the Republicans in the Senate are likely to vote it down and the US officially runs out of money at midnight.  We still have a few bucks in the checking account – enough to get us through the 18th, according to our Treasury Secretary but millions of jobs are in peril but they will be Biden job losses and that's actually considered a win for the Republicans, who are doing anything they can to damage the Democrats ahead of the 2022 elections.  

The House passed the debt ceiling suspension in a 219-212 vote. All Democrats except Reps. Jared Golden of Maine and Kurt Schrader of Oregon supported it. Every Republican but Rep. Adam Kinzinger of Illinois opposed it.  The Senate could vote on a short-term appropriations plan Thursday that would fund the government until early December. It would then move to the House for approval where it is expected to pass.

Republicans insist Democrats should raise the limit on their own, leading Senate Majority Leader Chuck Schumer, D-N.Y., to introduce a motion that would allow the Senate to hike the ceiling with a simple majority. It needed unanimous consent, and Minority Leader Mitch McConnell, R-Ky., blocked it on Tuesday.  A default could delay Social Security checks and veteran’s benefits, increase borrowing costs and trigger a market sell-off and economic downturn.  In 2011, when the Republicans last blocked a borrowing increase, the US lost their AAA credit rating.

Failing to act could spark an economic catastrophe, Yellen also said.  “Nearly 50 million seniors could stop receiving Social Security checks for a time. Troops could go unpaid. Millions of families who rely on the monthly child tax credit could see delays.  In a matter of days, millions of Americans could be strapped for cash.”

The Federal Debt is the amount of money the government currently owes for spending on payments such as Social Security, Medicare, Military Salaries and Tax Refunds.  “Raising the debt ceiling doesn’t authorize additional spending of taxpayer dollars. Instead, when we raise the debt ceiling, we’re effectively agreeing to raise the country’s credit card balance,” Yellen has said.

As total public debt outstanding has increased, the statutory debt, a.k.a. the debt ceiling, has also been stepped up. In 2013, the debt ceiling was suspended instead of being stepped up. Since then, there have been 5 periods of debt ceiling suspension leading to today's debt of $28.2 trillion as of May 2021.

The third estimate of the 2nd Quarter GDP came in at 6.7%, 0.1% higher than the last estimate but it's not telling us anything about what happened since June so we'll have to wait a month for the next report.  The Futures are drifting higher and we are still working on those bounce lines:

  • S&P 4,550 to 4,300 was a 250-point drop so 50-point bounce lines are 4,350 (weak) and 4,400 (strong)
  • Dow 35,500 to 33,600 was a 2,000-point drop so the bounce lines are 34,000 (weak) and 34,400 (strong)
  • Nasdaq 15,700 to 14,740 was a 960-point drop so call it 200-point bounces to 14,940 (weak) and 15,140 (strong)
  • Russell 2,580 to 2,150 was a 430-point drop so 90-point bounces to 2,240 (weak) and 2,330 (strong) 

So we're over the weak bounce lines on the S&P, Dow and Russell and at the strong bounce line for the Russell (with the Dow close as well) so we'll be watching those two this morning for signs of recovery but it's really all up to Congress today though we have 4 Fed Speakers (Williams, Harker, Evans and Bullard) during market hours – just in case the market needs more reassurance.  

China's Manufacturing PMI fell into contraction this morning at 49.6 for September, the first time since February of 2020 it's been below 50 (when Wuhan shut down).  This is much scarier as there's no virus to blame – just a slowing economy.  And, don't forget, they've only just begun experiencing power shortages – this data is mostly before that.  

Below the headline PMI figure, subindexes measuring production, total new orders, new export orders and hiring all slid further below the 50 line in September as both supply and demand in China’s manufacturing sector slowed, the statistics bureau said.  If sustained through the end of the year, the power crunch and resulting production cuts in China’s manufacturing hubs could drag down the country’s gross domestic product by around 1 percentage point in the fourth quarter, Morgan Stanley economists project.

We Americans have a long history of thinking things that happen in China aren't going to affect us – don't make that mistake.  

It was a rough road but our oil shorts (which we discussed in yesterday's Live Trading Webinar) are finally paying off and we'll put a stop now back at $74 to lock in a $3,000 gain.  We still like Gold (/GC) long at $1,725 and we like Silver (/SI) long at $21.50 – with tight stops below, of course. 

 


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  1. New U.S. COVID cases are down 20%. See how your state is doing


  2. U.S. declares 23 species extinct


  3. Good Morning.


  4. I gave copies of the 'short book' in the above story, to my kids the summer before their first year of High School.

     

    It has served them well, not so much for Dad… ;)

    https://www.amazon.com/Illustrated-Book-Bad-Arguments/dp/1615192255?tag=wwwinccom-20


  5. Upcoming Christmas idea's for the kids, Dad could use a copy as well… :)

    https://www.amazon.com/gp/product/B08WK83VNR/ref=dbs_a_def_rwt_hsch_vapi_tkin_p1_i0

     

    Goes well with the first book…


  6. Phil/Rolling. For a spread such as AAPL '23 $130/160, would it be better to try to roll the $130s down to $120 or to roll them out to '24 $130s? If it is rolling out to '24s, how do you calculate a worthwhile 'time' roll?

    Thx! 


  7. GM Set to Reach 100 Percent Renewable Energy in the U.S. 5 Years Ahead of Schedule

    https://finance.yahoo.com/news/gm-set-reach-100-percent-143000135.html


  8. Good morning!  

    Expect sharp turns as the bill kicks around Congress.  535 people who can be quoted saying whatever until this is done.

    Woo-hoo on /GC and SI!  Done with /CL.

    Arguments/1020 – It is our job to train them to hold their own in society.   This is how I trained my kids from an early age:  

    Ouch, indexes decided up is not the answer.  See what I mean about sharp turns.

    Rolling/Wing – I generally prefer to invest in rolling out.  Especially when I'm long-term bullish.  It's worthwhile if you feel the time will allow you to widen the spread with higher short calls, of course.  

    With new IPhones, we should get to $160 easily enough next year and hopefully $180 in 2024 so if you roll the 2023 $130s ($26.20) to the 2024 $130s $32.30, you are buying another year for $6.10.  Either the 2023 $160s expire worthless and you sell more calls to pay for the roll or your roll the 2023 $160s (now $12.50) to the 2024 $180s (now $14) when the time comes and all will be well either way.  

    GM/Stock – Cool!  We need news like that.


  9. "Dancing on the ceiling"   Lionel Richie is not even pictured in the video.  ( at least I didnt see him )    I know his agent if anyone wants to have a party. 


  10. Wow!  

    The retailer lowered its sales and adjusted profit expectations for the year as it anticipates greater supply-chain challenges. The company’s shares dropped nearly 29% in early trading.

    This is why we are sitting out with CASH!!! into earnings!  

    The recent Federal Reserve meeting marked a turning point, as widely expected, with the 10-year Treasury yield climbing above 1.5% in subsequent sessions.

    A crucial piece of President Biden’s domestic agenda hung in the balance as Democratic leaders moved toward a planned House vote on a $1 trillion infrastructure bill that many progressive Democrats have threatened to oppose.381 5 min read

    The Delta variant is finding clusters of unvaccinated people even in some of the best-vaccinated parts of the country.396 6 min read



  11. Video/Stock – That wasn't the official one but I liked it with all the movie clips.  

    • The U.S. Senate is expected to pass a stopgap funding bill on Thursday morning that will avert a government shutdown, Bloomberg reports.
    • The package will then go up for a vote at the House of Representatives then to the president's desk for his signature, hours before the government's funding was set to lapse. The measure will fund the government until Dec. 3.
    • The Senate bill strips out language that suspended the debt ceiling. It's now expected to pass both chambers with bipartisan support, Bloomberg said.
    • Congress still needs to tackle the debt limit issue.
    • "Mortgage rates rose across all loan types this week as the 10-year U.S. Treasury yield reached its highest point since June," Chief Economist Sam Khater commented.
    • 30-year fixed-rate mortgage averaged 3.01% for the week ending Sep 30, up from 2.88% in prior week and above from 2.88% averaged in same period a year ago, according to the Freddie Mac Primary Mortgage Survey.
    • Many factors led to this increase, including the Federal Reserve communicating that it will taper its support of the capital markets, the broadening of inflation and emerging energy supply shortages which compound other labor and materials shortages.
    • 15-year FRM averages 2.28% up from last week when it averaged 2.15% and down from 2.36% a year ago.
    • 5-year Treasury-indexed hybrid adjustable rate mortgage averaged 2.48%, up from 2.43% in prior week, and lower from 2.90% a year ago.
    • "We expect mortgage rates to continue to rise modestly which will likely have an impact on home prices, causing them to moderate slightly after increasing over the last year," Khater added.
    • A recent article indicates Baird citing that rate moves mean banks should look to deploy excess cash.
    • Sen. Chuck Schumer (D-N.Y.) said that he has reached an agreement with Senate colleagues that a banking reform bill impacting cannabis companies will not advance before marijuana legalization, Marijuana Moment reports.
    • Schumer made the comments on the podcast Psychoactive released today.
    • The Senate majority leader said that there is an understanding between him, Senate Finance Committee Chairman Ron Wyden (D-Ore.), and Sen. Cory Booker (D-N.J.) to block legislation that would just protect financial institutions that work with cannabis businesses until a legalization bill is advanced.
    • The banking reform legislation, the Secure and Fair Enforcement ("SAFE") Banking Act, has bipartisan support.
    • Asked why he doesn't support the SAFE Act moving forward while marijuana reform is being worked on, Schumer said he believes that scenario would make it harder and take longer to pass marijuana legalization.
    • Separately, the House Judiciary Committee today is expected to vote on advancing the Marijuana Opportunity, Reinvestment and Expungement ("MORE") Act, legislation that would federally legalize marijuana.
    • U.S. multi-state operators: MedMen Enterprises (OTCQB:MMNFF -1.2%); Curaleaf Holdings (OTCPK:CURLF -0.8%); Acreage Holdings (OTCQX:ACRHF +0.9%); Harvest Health & Recreation (OTCQX:HRVSF -1.3%); Cresco Labs (OTCQX:CRLBF -0.6%); Green Thumb Industries (OTCQX:GTBIF -0.9%).
    • September Chicago PMI: 64.7 vs. 65 consensus and 66.8 prior
    • Oppenheimer stays sidelined on Dollar Tree (NASDAQ:DLTR) even with higher price points on the way.
    • Analyst Rupesh Parikh and team look favorably on the pricing announcement, which they think represents a real solution to offset elevated labor and freight cost headwinds that are likely to extend beyond 2021.
    • "We have remained quite cautious on DLTR’s ability to manage profitability in light of severe cost headwinds and competitive pressures from other players. If successful, this could represent a more tangible sales driver and margin stabilizer over time. Near-term, we see risks to management guidance due to cost pressures and supply chain challenges."
    • Elsewhere on Wall Street, Telsey Advisory Group warned on the sensitivity of Dollar Tree (DLTR) customers to higher prices and Wells Fargo noted that the risk/reward on DLTR is not likely to improve.
    • Dollar Tree (DLTR) popped over $100 for the first time in a month off the pricing announcement and a buyback reload.
    • Shares of Virgin Galactic (NYSE:SPCE) are up 7.36% in premarket action after the space tourism company was cleared to fly once again. So far, bulls are staying bullish on Wall Street over SPCE and bears are staying bearish.
    • Jefferies was also out with positive comments on the FAA overhang being lifted. The firm reiterates a Buy rating on SPCE with the long-term growth story revved up again.
    • Meanwhile, Bank of America was not knocked off its Underperform rating on SPCE after the FAA inquiry was concluded.
    • "Virgin Galactic resolved the inquiry by expanding its protected airspace for greater flexibility during missions and instituting more real-time communication systems for future missions. While these modifications are a step in the right direction and should be priced into the stock, we stand by our valuation given that it is based on a long term DCF which is largely unaffected by this news."
    • SPCE is one of the ten most discussed stocks on Reddit's WallStreetBets over the last day, per Quiver Quantitative data.
    • Read more about the FAA decision.
    • Schnitzer Steel (NASDAQ:SCHN) +1.6% pre-market after providing above-consensusguidance for Q4, seeing adjusted EPS from continuing operations of $1.75-$1.83, well ahead of $1.57 analyst consensus estimate.
    • Schnitzer says market conditions for recycled metals are strong, with average ferrous selling prices reaching their highest level since 2008 and nonferrous market selling prices trading at or near multi-year highs.
    • Despite the impact of the fire at the company's steel mill in May, Schnitzer says it delivered its best FQ4 operating performance since 2011, with adjusted EBITDA expected at $78M-$81M.
    • Schnitzer expects Q4 ferrous and non-ferrous sales volumes to increase 9% and 3% respectively, even though volumes were hurt by the delayed arrival of a ship and tight container availability.
    • The company expects to generate $139M in operating cash flow in the quarter, reducing debt to $75M, its lowest level since 2005.

  12.  today Powell " we still expect inflation to abate"     meanwhile its a 6 month wait for everything.   Cars, appliances, my hot tub cover,  stainless bbq grills,

    outdoor furniture,   note its mostly things I'm interested in 

    Several restaurants here in Dallas will have 15-20 open tables , but they still make you wait 30 minutes to be seated due to lack of labor.  


  13. Florida/1020 – People are so insane down here.  

    So SCHN is doing well (this is why we read the news) so maybe a good time for X or MT?   We played both of them last year and cashed out winners and now they've pulled back.

    X is down to $6Bn at $22 and they expect to make $3.5Bn this year so I'd say that's a good one.  Last year they lost $1.2Bn but this makes up for it and infrastructure should be good for them. 

    We certainly don't mind owning them for net $16 (25% off) so, for the LTP, let's:

    • Sell 15 X 2024 $23 puts for $7.60 ($11,400) 
    • Buy 30 X 2024 $15 calls for $10 ($30,000) 
    • Sell 30 X 2024 $27 calls for $5.75 ($17,250)

    That's net $1,350 on the $36,000 spread that's $21,000 in the money to start.  The put sale is aggressive but it's still a great spread if you sell less puts  or lower puts as the upside potential on this is $34,650 (2,566%) – so plenty of room to play with.  

    Since we now have X again, let's just sell puts on MT for the LTP:

    Sell 10 MT 2024 $30 puts for $7.50 ($7,500)

    Our worst-case scenario here is owning 1,000 shares for net $22.50 (26% off) and MT is at $32Bn making $13Bn this year after losing $733M last year.  They should be consistently good for $3Bn+ so no worries owning them at $30, let alone $22.50.


  14. Powell/Stock – That's why Lizzy thinks he's so dangerous.  He spreads Economic disinformation – as bad as an anti-vaxxer 

    Tell your people in Dallas to come to Florida to eat – we're packing them in! 

    Superspreader event? The Wharf Fort Lauderdale reopens with crowds of young  people without facemask - South Florida Sun-Sentinel

    At least the person on TV is wearing a mask…

    The crowd sings along with Scott Munns inside the Elbo Room in Ft. Lauderdale Florida on Saturday, September 26, 2020 after the bar reopened as the state moves to Phase 3 of its recovery from COVID-19.

    Got out of oil just in time – $74.50 as Dollar pulls back:

    Got back in gold just in time too!

    Copper is the laggard:


  15. Good channel gold is trading in.  Stops on 1/2 at $1,760 and the other half at $1,749.


  16.   MT / just now someone bought 970 Jan24 $40 calls for about $4.70


  17. might as well throw CLF in there too.  Its not your dad's Cliffs anymore.  They are the largest flat rolled steel producer in North America now


  18. stock/lack of labor   These restaurants may want to go with a buffet…No problem.  ;)


  19. ….maybe a 'chuckwagon' Dim Sum format would work. 1 cart = 10 tables (?) ;)


  20. MT/Stock — Now there's a sucker paying a ton of premium!

    Dow is down the most so far:

       

    • Robinhood Markets (HOOD -2.9%) shares, already off their August peak, face more pressure as trading activity declines and a large number of shares are set to unlock in coming months, wrote JPMorgan's Kenneth Worthington and Samantha Trent in a note on Wednesday.
    • On a M/M basis, HOOD is off nearly 5%, and down ~50% from its all-time high at $85 per share touched on Aug. 4.
    • Still, the stock is elevated by about 14% from the company's debut in late-July.
    • It appears that the company's popularity is fading especially after Q3, when its metrics of active users and app downloads dropped.
    • The analysts expect HOOD to tumble 20% by the end of 2021 as "we do not see growth as sustainable and we question the ability of the company to generate competitive margins," they wrote.
    • Daily active users plunged 40% in Q3 vs. 23% for crypto peers and 30% for Schwab.
    • "Robinhood is particularly dependent on transactions for revenue, the decline in DAUs may have a more pronounced negative impact," the analysts wrote.
    • In addition, the SEC has been increasing its focus on what it calls the "gamification" of trading, which some analysts see as a risk to Robinhood (NASDAQ:HOOD).
    • Jake DuBois, managing member of Blue Hawk Investment Group, argued in a letter to investors that meme stocks were ripe for shorting, as the "bubble" in this section of the market deflates.
    • "If there is ever a time to short sell, now is the time with 'meme' stocks being the target," he said in a fund letter released last month.
    • To back his argument, DuBois pointed to parallels between the trading in meme stocks early in 2021 and the action that took place during the dot-com bubble of the late 1990s and early 2000s.
    • DuBois acknowledged the difficulty of timing the bursting of a bubble. As such, he argued that traders should structure their short position such that they can "maintain the position for when the bubble begins to deflate, an event whose occurrence is highly likely but timing unknowable."
    • "Patience and risk management are vital ingredients in successful short selling," he noted.
    • The Blue Hawk manager admitted that he got hurt betting against meme stocks in Q1 and Q2, saying he was "early" in taking his short positions.
    • But even with fund volatility "on the higher end of where I am comfortable," DuBois maintained his stance, arguing that conditions remained strong for a pullback in this segment of the market.
    • "If there was ever a reason to short sell, this is it," he said.
    • DuBois did not specify which meme stocks he targeted for his short positions. He also did not describe the structure these bets took.
    • Looking at meme stocks as a category is difficult because the companies included under the umbrella can change over time. Names like BlackBerry (NYSE:BB), Bed Bath & Beyond (NASDAQ:BBBY), Nokia (NYSE:NOK) and Virgin Galactic (NYSE:SPCE) have all moved in and out of the meme world.
    • As such, it's difficult to track what a short of "meme stocks" would mean, because the impact likely depends on the individual names involved.
    • As an example, look at a basket of stocks that have been high-profile meme targets at various times in 2021: AMC (NYSE:AMC), GameStop (NYSE:GME), Clover Health (NASDAQ:CLOV), Vinco Ventures (NASDAQ:BBIG) and Palantir Technologies (NYSE:PLTR).
    • The performances for these five stocks over the past six months vary dramatically. AMC leads the group, posting a gain of more than 240%. GME provides the other extreme, losing about 3% during the six month period:


  21. Phil / ABBN – is this worth taking a look at for the Future portfolio –  


  22. What's the deal with IEP (Icahn Enterprises L.P.)? 16% dividend yield, but P/E is >100. Is it a case where if we trust Icahn, we buy this for income and not capital gains?


  23. I wonder when the big turn around will begin to window dress the quarter.


  24. tommy -  tomorrow 

    QCOM   seeing 2800 Jan23  $130 puts roll down to Jan24 $110 puts.   this was probably a losing trade for someone 


  25. probably a good day to sell some MO puts 


    • There seems to be just the slightest bit of panic emanating from Beijing ahead of the winter, where no less than that country's Vice Premier Han Zheng has ordered state-owned energy players to secure energy supplies at all costs.
    • That's helped send oil higher and stock's lower, and rebounding from yesterday's losses, December gold (XAUUSD:CUR) +2.2% to $1,760.50/oz. and December silver (XAGUSD:CUR) +2.7% to $22.07/oz.
    • ETFs: GLDGDXGDXJNUGTSLVSIL
    • Gold mining shares trade broadly higher: NEM +1.3%GOLD +2.8%KGC +1.9%AEM +2.3%AU +6%GFI +5.1%AUY +2.7%HMY +4.8%.
    • In other news, jobless claims continued to unexpectedly turn higher here in the States, which is causing "uncertainty about Fed tapering because they want a strong job market to announce a tapering," consultant Robin Bhar tells Reuters, adding that any delay could be positive for gold.
    • But prospects for Fed tapering, widely expected to start in November, and the potential for still higher U.S. Treasury yields likely would add to pressure on zero-yielding gold, Exinity chief analyst Han Tan tells Reuters.
    • "Gold has lost a lot of friends this month," Metals Daily's Ross Norman tells MarketWatch, citing the U.S. dollar, which has gained 5% YTD, and real Treasury yields, which have become significantly less negative.
    • Most-active gold futures are more than 4% lower for the month, which would be its sharpest monthly decline since June, and ~1.5% lower for the quarter.
    • Gold futures tumbled earlier in the week to their lowest settlement in seven weeks.
    • Honda Motor Co. (HMC -2.7%) is expanding its business beyond cars, motorcycles, and lawn mowers. The auto maker hopes to use its expertise in electrification, artificial intelligence, and robotics to launch projects involving e-taxis, avatar robots, and space rockets.
    • A future Honda eVTOL (electric vertical take-off and landing) aircraft will be the core of Honda's new "mobility ecosystem" and could compete with Blade Air Mobility (BLDE -0.6%) and Joby Aviation (JOBY +3.5%). Honda says its eVTOL will feature both a lithium ion battery and gas-turbine generator. Flight tests are on track to begin in 2023 and Honda aspires to have the craft certified by 2030.
    • Next up is a Honda avatar robot equipped with a multi-fingered hand. Advancing the features and decreasing the size of its bi-pedal ASIMO robot produced in 2000, Honda has realized a multi-fingered hand capable of both delicately picking up objects and forcefully opening tight jar lids. The company hopes to conduct demonstration testing by 2024 and put the robot into practical use in the 2030s.
    • Honda hopes to use the avatar robot in another future area of focus: Space. Honda is currently conducting a joint research with the Japan Aerospace Exploration Agency with a goal to build a circulative renewable energy system on the moon by leveraging fuel cell technologies and high differential pressure water electrolysis technologies. The system would decompose water found on the moon to create oxygen and electricity for human visitors. Further, Honda robots would minimize risks for astronauts and allow people on Earth to virtually experience being on the moon. The company has also begun work on production of reusable small rockets to launch small low-earth orbit satellites.
    • Oppenheimer currently estimates the eVOTL market at $1.8B. Honda forecasts a market worth $269B in the 2040s when eVOTLs should be able to fly with no pilot on board.

    HMC is a great company and great value but options only going out until Jan – so we don't play them.

    ABBN/Batman – No options, no interest.  They are a good company though.

    IEP/RN – Well they have been steadily paying the dividend since they jacked it up to $4 in 2013.  It's a general investment vehicle and they return all the cash to shareholders and it looks like they have $3.4Bn, which is a bit low but not a huge worry as the dividends are $500M/qtr so, as long as he keeps making good picks – all is well.

    MO/Stock – That's not done going down.


  26. OK Phil, Ill wait .   today you can sell the MO  2024 $40 puts for $6.40 .  That puts it back to 2014's pricing  


  27. now its showing $5.40      To anyone trading 2024 options, I've noticed there are a lot of fake bid -ask quotes .    test the waters first and be patient 


  28. FL- Foot Locker- s/t income play – covered call- buy stock; sell Oct 46 call. Dividend record date 10/14. 4.3% return in 3 weeks.


  29. MO/Stock – If we didn't already have it, I'd like that one.

    The 2024 quotes aren't fake, they have a very wide bid/ask spread due to low volume of transactions.  Definitely ask at a limit and be patient.  

    FL/Pstas – Also likely to have shipping issues. 


  30. Phil/anyone

    Anyone see any news on the pending Senate resolution to extend debt ceiling through December – thought it was to be voted on today?


  31. Heard on NPR that it passed.


  32. Spending bill,

    Asked and answered. Per NYT, Congress just passed extension (3:48) Would think that the markets would rally dramatically.


  33. Ouch, yet another ugly finish.  

    This is becoming a dangerous trend! 

       

     

    Senate/8800 – They only passed a gap through Dec 3rd so we go right back to it being an issue in a month.  Still, without raising the debt ceiling, there's no point to anything and that's still up in the air.  

    • The House of Representatives has enough votes to pass the stopgap funding bill that will keep the government running until Dec. 3.
    • The Senate already passed the measure, so the bill then heads to President Biden's desk for his signature.
    • Still to be addressed is the debt ceiling. As of Tuesday, Treasury Secretary Janet Yellen estimated that the Treasury will exhaust its extraordinary measures at about Oct. 18 if Congress doesn't raise or suspend the debt limit.
    • The House is on track to vote on President Biden's bipartisan infrastructure bill even though members of the Democratic caucus said it doesn't yet have the support of enough progressives to pass the bill, CNBC reports.
    • Progressives want the Senate to pass the $3.5T social safety net bill before they pass the smaller bipartisan infrastructure bill. Democratic Senator Joe Manchin, though, wants that package to be trimmed down to $1.5T before he'll support it, according to CNBC.
    • Bitcoin (BTC-USD +6.5%) climbs to $43.9K on Thursday after Federal Reserve Chairman Jerome Powell said he has no intention of banning cryptocurrencies, but stablecoins need more regulatory oversight, CoinDesk reports, citing his testimony before the House Financial Services Committee meeting.
    • The world's biggest token by market cap has been bouncing off $40K-41K support level almost every day since Sept. 21.
    • BTC may be off by 7.3% on a M/M basis, but it's still up over 300% Y/Y.
    • When Powell was asked about stablecoins, he compared them to money market funds or bank deposits, while Securities and Exchange Commission Chair Gary Gensler likens stablecoins to poker chips at Wild West casinos.
    • Senator Cynthia Lummis also recently said stablecoins must be 100% backed by cash and cash equivalents.
    • Crypto-related stocks are mostly up, including: Riot Blockchain (RIOT +5.1%), Marathon Digital (MARA +5.2%), Hut 8 Mining (HUT +8.0%), Bitfarms (BITF +4.1%), Silvergate (SI +1.7%), Humbl (OTCPK:HMBL +2.7%), Argo Blockchain (ARBK +4.1%), Cannan (CAN +10.9%) and Sphere 3D (ANY +1.5%).
    • In mid-July, Janet Yellen held a regulators' meeting to discuss stablecoins' benefits and risks.

     

     

    • The August Prices Received Index 2011 Base, at 109.4, +2.3% from July 2021, but +26.0% from August 2020.
    • The crop production index +2.9% M/M to 109.8; the livestock index was +1.7% at 109.0.
    • Food grains +13.0% M/M and +44.0% Y/Y.
    • Feed grains +2.9% M/M and +94.0% Y/Y.
    • Oilseeds -2.6% M/M and +53.0% Y/Y.
    • Fruits and nuts +2.0% M/M and -5.4% Y/Y.
    • Vegetable and melon -4.3% M/M and -2.3% Y/Y.
    • Other crop -0.3% M/M and +17.0% Y/Y.
    • Dairy -1.1% M/M and -4.8% Y/Y.

     

     

    • Lee Cooperman, chairman and CEO of Omega Advisors, argued Thursday that the equity market can continue to push higher as long as interest rates remain at their current levels, despite nominally high stock valuations.
    • Still, Cooperman told CNBC that a correction of 10%-12% was possible at some point.
    • The billionaire investor also announced that he has made a $100M donation to a New Jersey hospital.
    • On the medium-term outlook for equities, Cooperman contended that stock valuations may seem high in historic terms, but not when compared to extremely low bond yields.
    • "There's no level of the [stock] market that is too high, if interest rates are going to stay where they are," he said.
    • "The bubble is in the bond market," he added.
    • The billionaire investor, who describes himself as a fully invested bear, doesn't think conditions are present for a substantial stock crash in the foreseeable future.
    • He asserted that a massive sell-off was only likely in response to a recession, a big turn in Federal Reserve policy, the dollar "cratering" or a major geopolitical event.
    • For a more alarmist view of today's stock market, see why SA contributor Ross Hendricks calls this "the most dangerous stock market ever."


    • Two of the three major stock averages drop into negative territory soon after news emerged that China was ordering its state-owned energy companies to secure oil supplies at all costs to prepare for the winter.
    • The Dow drops 1.3%, the S&P 500 falls 0.7% and the Nasdaq is just below break-even in midafternoon trading New York time.
    • The world's second-largest economy is dealing with a severe energy crisis and several regions have already forced power cuts to the industrial sector, Bloomberg reported. Crude oil (CL1:COM) rises 0.2% to $75 per barrel.
    • In addition to the news out of China, supply chain disruptions fuel concerns for retailers. Bed Bath & Beyond stock drops after COVID, inflation, and supply chain headwinds dent its fiscal Q2 results. Department-store chain Kohl's also dips after Bank of America cut its rating to Underperform on supply chain issues.
    • "Worries about China, the pandemic, the debt ceiling and tax legislation are weighing on investors right now," Tom Mantione, managing director of UBS Private Wealth Management, told Bloomberg.
    • In Washington, the debt ceiling continues to loom and politicians are still wrangling over the larger social safety net package, with Democrat Senator Joe Manchin seeking to trim it to $1.5T from $3.5T, Bloomberg reports.
    • But some progress is made with the Senate and House expected to pass a stopgap government funding bill today.
    • The Nevada Gaming Control Board reported August monthly gaming win of $1.17B. The mark was 57% higher than last year's level, but perhaps even more impressive, was 22% above the 2019 level. Las Vegas Strip gaming win was up 97% Y/Y to $626M and was 20% higher than the 2019 level. Downtown Vegas casinos saw a 80% jump from last year's tally while Reno casinos lagged with 19% growth. All those numbers were generated with an increase in COVID rules during the month.
    • Gaming win from table games and slots were both up 57% during the month in a rare match. Baccaret gaming win doubled to $93M, while revenue from sportsbooks
    • Sector watch: Caesars Entertainment (CZR -1.3%), MGM Resorts (MGM -0.9%), Boyd Gaming (BYD -2.4%), Wynn Resorts (WYNN +1.0%), Las Vegas Sands (LVS +0.8%), Full House Resorts (FLL +0.4%), Bally's (BALY -0.8%) and Red Rock Resorts (RRR -0.5%).
    • What to watch: Investors bet on more M&A intrigue in the casino sector
    • Federal authorities are taking a look at Morgan Stanley (MS -2.2%), Interactive Brokers (IBKR -2.6%) and several other financial firms that handled the accounts of a businessman who is being investigated for allegedly helping a former Venezuelan oil minister launder billions of dollars, the Wall Street Journal said, citing people familiar with the matter.
    • Businessman Louis Mariano Rodriguez Cabello is under investigation for his alleged role in helping to hide some $2B within the U.S. financial system for his cousin Rafael Ramirez, a former Venezuelan oil minister, people told the WSJ.
    • The Securities and Exchange Commission and the FBI are questioning why the companies managed more than $100M in securities and other assets for Rodriguez when authorities saw signs for potential money laundering, the people said.
    • Rodriguez and Ramirez haven't been charged in the U.S. with any violation, and Morgan Stanley (NYSE:MS), Interactive Brokers (NASDAQ:IBKR), and Rodriguez's advisers haven't been accused of wrongdoing by the government, the WSJ said.
    • Morgan Stanley declined to comment to the WSJ. Interactive Brokers told the WSJ it can't comment on specific accounts or customers, but says it's "committed to compliance with all applicable laws and regulations."
    • In July, Robinhood said it expected to pay $30M to New York to settle allegations that it violated certain anti-money laundering laws.

     

     

    • Uber (UBER +0.8%) told CNBC that "there has been no direct impact on the service" due to a fuel shortage in the U.K, while drivers have voiced concerns of the crisis' effect on their incomes.
    • A shortage of about 100,000 truck drivers in the U.K. has led to fuel shortages and other supply chain disruptions. Panic buying in the country worsened the problem so much that the U.K. government now plans to use military trucks to deliver gasoline.
    • One Uber driver, Nadar Awad, told CNBC that driving during the shortage has been challenging. "Given we are self-employed, when you waste time trying to get diesel or petrol, you’re losing money,” he said, adding that he had to wait 45 minutes at a gas station Wednesday in order to fill up.
    • Uber drivers have said that they have to decline rides if they don't have enough gas or are too far away. The lack of ride-hailing services has led to higher waiting times and exorbitant surge pricing for U.K. customers. Uber says demand has risen 20-40% from last year in some parts of the country.
    • The U.K.'s fuel and truck driver shortage has also affected grocery retailers. Tesco, the world's third-largest retailer, has begun increasing its reliance on trains to move products into the country.

     

     

    • Crude oil reverses higher following a Bloomberg report that China's government has ordered state-owned energy companies to secure supplies for winter at all costs.
    • WTI November crude (CL1:COM) +1.2% at $75.72/bbl after trading lower by as much as 2.3% earlier in the session, which would put the benchmark in position to close at a new three-year high and a sixth straight weekly increase; November Brent (CO1:COM) roughly flat at $78.59/bbl.
    • ETFs: USOXOPVDEOIH
    • The Chinese government order came directly from Vice Premier Han Zheng, who supervises the country's energy sector and industrial production, following an emergency meeting, according to the Bloomberg report.
    • China is in the grips of a severe energy crisis, and several regions have been forced to cut  power to the industrial sector.
    • U.S. crude is poised to gain nearly 10% this month, helped by strong demand and constrained supply in the U.S. Gulf of Mexico.


  34. Phil/Pirate,

    Yep, just a temp fix but some hope – one would assume – is better than nothing. Not even a hiccup in the averages; WTF? Does this portend a more severe drop tomorrow?


  35. Portens/8800 – It's doing just what we expected in the context of making a major move down.  3,750 is only 550 (12.7%) points away now and we were at 4,550 when I predicted it – so we were  800 points (17.5%) away at the time, so here is the first 5% of the 17.5% expected correction and, if all goes well, 4,300 fails and we drop 2 more 5% segments and then slow down with a 2.5% segment and THEN we have CORRECTED.  


  36. Phil,

    From your mouth – nowadays, computer - to Keynes' ear (assuming he's in charge). We shall see. Thanks for the market roadmap review. 


  37. S&P 500 fell 4.8% in September, worst month since March 2020