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Monday Market Movement – All-Time Highs Ahead of GDP Report

What Me Worry? - MinterMarketsEverything is up.

Oil is at $85 this morning but no one considers anything a crisis.  Solar Wind is back, hacking more tech companies, Evergrande is still a problem in China, the Fed is likely to begin tapering at the next meeting, there's still no stimulus package and still 1,509 people died of Covid yesterday with 72,644 infected – essentially ever single person at a football stadium.   What, us worry?  

That's as many people infected in the US in a single day as China has had TOTAL (109,203) and they shut down their whole country over it.  The US is banking on herd immunity to keep us relatively protected and that means everyone gets the disease eventually and we see who survives.  

The vaccines keep your infection mild or give you an immune response without getting infected at all and, at this point, almost 200M of us are fully vaccinated and 220M of us have had at least 1 shot and 110M of us are not vaccinated at all and pretty much have no intention of getting vaccinated so, for God's sake, take your booster shots because 1 out of 3 people you come in contact with have ingored their saftey and you own and 2M of them (2%) have gotten Covid this month so, at any given time – 1 in 50 of them are actively infected.  

This disease is never going to go away if 1 in 50 people at any given time are actively infected.  Covid isn't a "one and done" disease – people get re-infected so, while you may personally be doing whatever you can not to get infected – 1/3 of the people living in this country are incubating the disease and future mutations to keep challenging us down the road.  

Bruce Plante cartoon: Is the coronavirus winning? | Columnists |  tulsaworld.comThis seems like an insane plot to an outrageous science-fiction movie but this is our real lives in America 2020.  We are tied with El Salvadore and Turkey in the vaccination rate of our people.  Sri Lanka, Fiji, Ecuador, Mongolia, Turkmenistan – even Brazil is doing better than we are – along with 100 other countries who are ouperforming our efforts.  

This SHOULD matter to investors because getting rid of the virus is critical to future growth prospects but it's really not even facored in to the thinking of the average investor – there's just this assumption it will go away – even if we do nothing about it.

China Expects New Covid Outbreak to Worsen in Coming Days.

Endemic Covid-19 Has Arrived in Portugal. This Is What It Looks Like.

Millions of Workers Stay Home to Watch Young Children as Daycares Stay Dark

How Full Are Hospital I.C.U.s Near You?

ImageAnyway, we're not going to dwell on that as it lowers our ratings and that's much more important than public health, right.  Regular cold and flu season is just around the corner but hey – look how many hospitals still have an ICU bed that's not being used – why worry?  

On the calendar front, we're ending October with a bang as we have our GDP Report on Thursday but, before that, we have this morning's Chicago Fed and Dallas Fed Reports.  The Richmond Fed reports tomorrow along wityh Housing Data and Consumer Confidence.  Wednesday we have Durable Goods, which lost a lot of momentum in August and we also get Investor Confidence and Business Uncertainty.  Thursday is all about GDP but there's alos the KC Fed and Friday is Chicage PMI, Personal Income/Outlays and Consumer Sentiment – a very heavy data week:  

There are many signs the Global Economy is slowing down and we still have a shipping crisis in the US that is getting worse each day.  "The ports shutting down is worse than Lehman Brothers failing. Both can lead to catastrophic failures of all counterparties depending on them. But with Lehman, the government could just print tons of money to flood the banks with liquidity," Ryan Petersen, chief executive officer of logistics company Flexport, warned Friday after touring logjammed U.S. West Coast ports. 

He said the twin ports have hundreds of cranes but only "seven were even operating and those that were seemed to be going pretty slow." He said the bottleneck that everyone now agrees on is "yard space" and that "terminals are simply overflowing with containers, which means they no longer have space to take in new containers either from ships or land. It's a true traffic jam."

Roughly 20% into earnings season, 2/3 of the forward forecasts have missed previous guidance.  The pace picks up this week with about 1/3 of the S&P 500 reporting but that trend will have to break for this maket to hit new highs – along with better than 3% GDP growth that's not looking likely at the moment:

Image

 


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  1. Good Morning      here is some news:

    HPQ  Barron's sees the light, just caught up on their PSW reading. 

    KMB   misses due to inflation and increased costs, lowers estimates.  My question is how many LESS tissues can they put in a box? I remember it used to be 100 in a botique size, now its about 60 

    FB admits less teens are using the app.   Phil told us that years ago, per his kids 


  2. Good morning! 

    Once again the indexes turn down as soon as the volume turns on:

       

    Should have kept that /NG long:

        

    HPQ/Stock – It is truly amazing how long it takes people to see these things.  


  3. Of course, the short story on /ES is "rejected at 4,550 again" yawn…


  4. The car-rental company, recently emerged from bankruptcy under new ownership, has ordered the vehicles by the end of 2022 as part of plan to electrify fleet. 2 min read

    TSLA is up 5% on the news that a bankrupt company will buy 100,000 cars and let's pretend they make $10,000 per car – that's $1Bn in profit potential over the next year but it's not likely to be ADDITIONAL profits since they aren't likely to ramp up production much faster – it's just that now a certain percent of production will go to one customer.  


  5. Good Morning.




  6. Stock – never mind tissue, my favorite imported beer is 11.2 oz. and my M&M peanut bag has weighed a lot less in recent years…

     

    That's how you feel inflation!  ;)


  7. INTC- considering l/t position- either B/W stock @ 49.46; 2024 strangle 52.5 C/47.5 P @14.10; vs. BCS 2024 45/55 @ 4.13 plus 2024 40 putter @ 4.50 (2:1 ratio on the putters).

    Comment?









  8. M&Ms/1020 – Those regular packs are ridiculous.  Get more from those gumball machines.  Of course I'm excited as it's Halloween and i have an excuse to buy a big bag of M&Ms "for the kids".  

    INTC/Pstas – Still waiting but happy down here. Keep in mind they are spending about $90Bn to build a new factory so don't expect much out of the stock for a few years so I'd just sell 10 2024 $45 puts for $6.30 ($6,300) and buy 20 of the 2024 $40 ($13.50)/50 ($8.25) bull call spreads at $5.25 ($10,500) to be net $4,200 on the $20,000 spread that's in the money to start.  

     IBM too:

    • Tesla is up more than 6%, helping the Nasdaq (COMP.IND) +0.5% overcome weakness in the other megacaps.
    • Meanwhile, cyclical sectors are the best performers in the S&P (SP500) +0.3%. The Dow (DJI) +0.1% is bringing up the rear.
    • Energy is the best performing sector among the seven that are higher, followed by Materials and Consumer Disrectionary.
    • Defensive sectors Utilities and Consumer Staples are at the bottom.
    • Tesla is rallying after Morgan Stanley analyst Adam Jonas boosted his price target to $1,200, with the bull case at $1,600 after the company's results.
    • It also landed the largest EV deal ever with Hertz.
    • Facebook, the other megacap in positive territory, reports after the bell and investors will be looking to see if it faced the same issues that hit Snap: a change in Apple's iOS and supply chain issues cutting ad spending.
    • Inflation is still top of mind as the Fed enters its blackout period, with no speakers leading up to the decision on Nov. 3, with economist expecting an asset tapering announcement.
    • The 10-year Treasury yield is down 2 basis points to 1.63%. Inflation expectataions are hitting multiyear highs.
    • "US Treasury Secretary Yellen was out stressing (again) the temporary nature of inflation," UBS chief economist Paul Donovan writes. "The fact that inflation has been transitory can be seen in a chart of the monthly core inflation change – a spike in the second quarter, followed by normalization."
    • "While the yearly change gets attention, most consumers cannot remember what they paid a year ago, and the normal nature of the monthly changes may account for the public’s lack of inflation concern."
    • Trump SPAC DWAC is up 5%, with buyers failing to generate the enthusiasm of last week.
    • Phunware, which also surged on the Trump effect last week, is only up slightly, but the sister SPACs are rallying.
    • United Airlines Holdings (UAL +0.1%told a judge Friday that it is spending about $1.4M every two weeks to unvaccinated pilots put on paid leave.
    • U.S. District Judge Mark Pittman implemented a temporary restraining order on the airline's announced vaccine mandate, meaning that United is unable to put unvaccinated workers with a religious or medical exception on unpaid leave. United is asking Pittman not to extend the order.
    • The union for United employees wants the mandate blocked until the court case is decided, while United says that it will be unable to recover the money it is paying pilots even if it wins.
    • The expenses are a relatively small amount when compared to the $7.75B the company brought in last quarter. United Airlines (NASDAQ:UAL) was able to post a GAAP profit, although it still expects revenues 25-30% below pre-pandemic 2019 levels.
    • Dear readers: We recognize that politics often intersects with the financial news of the day, so we invite you to click here to join the separate political discussion.
    • China Evergrande (OTCPK:EGRNF -2.8%) (OTCPK:EGRNY +2.0%), the property developer struggling with massive debt and dwindling cash, says it resumed work at more than 10 projects in and around Shenzhen, the Wall Street Journal reports, citing a pair of social media posts over the weekend.
    • In addition to investors fears over the company defaulting on debt, people who have already paid for apartments were worried that the company will collapse before their properties were built.
    • "This is in line with the government's priority to protect home buyers' rights and deliver properties on time," Chuanyi Zhou, a credit analyst at Lucror Analytics, told the WSJ.
    • Evergrande (OTCPK:EGRNF) didn't say how it was able to finance the resumption of work.
    • Late last week, the real estate developer averted default by making an $83.5M bond coupon payment before the 30-day grace period ended on the missed payment. But Evergrande (OTCPK:EGRNF) still faces $573M on another four dollar notes this year.
    • Kimberly-Clark (KMB -3.7%reports Q3 net sales of $5B increased 7% compared to the year-ago period, beats consensus by $50M.
    • Segment wise sales: Personal Care  $2.7B (+14%); Consumer Tissue $1.5B (-5%); K-C Professional (KCP) $0.8B (+13%).
    • Organic sales increased 4% as net selling prices rose 3% and product mix increased sales 1%.
    • Operating profit was $657M vs. $666M last year.
    • Cash provided by operations was $782M and $559M prior.
    • Non-GAAP EPS of $1.62 misses consensus by $0.03; GAAP EPS of $1.39 misses consensus by $0.16.
    • YTD performance of the stock against its peers on a YTD basis.
    • Micron Technology (NASDAQ:MU) is up 3%, extending a gain in premarket that came after e company acknowledged it saw production impact from yesterday's earthquake in Taiwan.
    • A quake of magnitude 6.2 hit near Yilan, Taiwan, and Micron says that had an effect on its facilities in the city of Taoyuan.
    • It's still evaluating the impact of the quake, and "determining the appropriate steps to return to full production," the company says.
    • What are the implications? Evercore ISI says that while the immediate effect may not be clear, "any meaningful production hit would most certainly lead to a much more tight supply environment and could pull in a DRAM pricing inflection" from the expected impact in the first half of 2022.
    • And Wells Fargo says that if it takes some time for production to be restarted, that could mean a fairly quick increase in prices. Wells Fargo is bullish, with a $115 price target implying 66% upside.
    • Last week, talks were said to stall over a $20 billion merger between Western Digital and Kioxia – a NAND memory maker that Micron was also circling.
    • The electric vehicle sector is off to a strong start with an announcement by Hertz Global this morning on an order of 100K Tesla Models 3s stoking enthusiasm once again. Hertz commercials featuring Tom Brady talking about EVs begin today.
    • Other positive developments include the Tesla Model 3 being the top-selling vehicle in Europe last month and Tesla lifting prices across its model portfolio in the U.S.
    • In China, XPeng (XPEV +7.1%) outlined details of its advanced driver assistance system, supercharger network and even a flying car at a technology event over the weekend.
    • Notably, XPeng expects to complete the major layout of the X-Power supercharger system by 2023. The system will consist of supercharging network, commuter charging network and highway supercharging network. The Chinese automaker also plans to roll out the next generation of its ADAS to drivers in select cities during the first half of 2022.
    • XPeng plans to launch 480kW high-voltage supercharging piles, which supports "12min charging to power 10%-80% of the battery." Bank of America sees the development as a step toward relieving consumers’ range anxiety. The firm has a Buy rating on XPEV and price objective of $63.
    • Tesla (TSLA +4.1%) carved out an all-time high of $970.84 earlier in the session. EV gainers include Lucid Motors (LCID +3.8%), Lion Electric (LEV +4.7%), Arrival (ARVL +3.4%), Nio (NIO +2.9%), Canoo (GOEV +5.1%), Electric Last Mile Solutions (ELMS +2.1%), HyreCar (HYRE +0.9%), Fisker (FSR +2.0%), QuantumScape (QS +2.3%) and ChargePoint Holdings (CHPT +1.9%).
    • Catch up on all the Tesla developments.

  9. Live updates: Internal Facebook documents revealed


  10. KMB looking to sell the Jan24 120 put for 14.70 better than the div,!!!!



  11. Well, everything blasted back up now – except oil, which pulled back to $83.50.  No volume but making new highs on no volume means you don't have a lot of upside resistance any more.  

       

     

        
    • Wells Fargo says the Federal Reserve has unlocked its achievement on inflation, but it still sees an employment gap through all of 2022.
    • Fed speakers will be conspicuously absent this week as the blackout period limiting comments running up to a rate decision begins.
    • The announcement comes Nov. 3, with Wall Street expecting Fed chief Jay Powell to announce tapering of asset purchases that will continue until the middle of next year.
    • But the debate on inflation, while it hasn't stopped the S&P (NYSEARCA:SPY) hitting a new record, is bound to continue.
    • Last week "there was a marked increase in inflation expectations, which manifested itself in global breakevens hitting multi-year, if not all-time, highs," Deutsche Bank's Jim Reid writes. "Starting with the all-time highs, US 5-year breakevens increased +14.9bps (-1.0bps Friday) to 2.90%, the highest level since 5-year TIPS have started trading, while 10-year breakevens increased +7.5bps (-0.7bps Friday) to 2.64%, their highest readings since 2005."
    • Rates are little slightly lower today, with the 10-year Treasury yield (NYSEARCA:TBT) (NASDAQ:TLT) around 1.63%.
    • Wells Fargo says the Fed will start tapering, cutting $10B per month in Treasury security purchases and $5B per month in mortgage-backed securities.
    • "If the FOMC takes a pass on a taper announcement on November 3, a December 15 announcement seems all-but-assured unless the economy completely comes off the rails between now and then," economists Jay Bryson, Sarah House and Michael Pugliese write in a note.
    • The bigger question for the market is when rate liftoff occurs.
    • Currently the market is pricing in a 100% chance of a quarter-point hike by October 2022, but that's too aggressive, Wells Fargo's economists say.
    • "Numerous FOMC policymakers have made clear that the bar for rates hikes is much higher than the bar for the tapering of asset purchases," they say.
    • "It is likely Chair Powell will pair the tapering announcement with another firm reminder that the bar for increasing short-term interest rates is much higher," they add.
    • "Even with our faster projected pace of job growth, we still expect the labor market to face a meaningful employment gap for the entirety of 2022. In our view, this employment gap, paired with our projected slowdown in inflation, will keep the Fed from raising rates until 2023."
    • Powell said last week he expects inflation to abate, but supply bottlenecks need to be worked out.
    • Disneyland (DIS +1.4%) and its California Adventure Park have raised most of their daily ticket prices today, and are also boosting prices even higher for peak visit days.
    • That's the park's first move higher since a hike in February 2020, just before an extended closure forced by the COVID-19 pandemic.
    • Daily prices are rising from 3-8%, and standard daily parking costs are going up by 20%.
    • The lowest tier in the resort's five-tiered structure is unchanged at $104; that's set for the lowest demand days, such as Tuesday and Wednesdays in late January.
    • But the other four tiers are going up – and now there's a new sixth tier on the top end, charging $164/day for a single-park visit on the most in-demand days (including certain weekends, holidays like Christmas and New Year's Eve, and spring break).
    • The price increases are the same for both Disneyland and California Adventure Park, while the combination two-park Park Hopper tickets are rising by up to 7%.
    • Those hikes are expected to raise revenue for Disney – but they're also raising hackles with some fans, as they come with fewer attractions open, as some have not come back along with the park's reopening earlier this year.
    • The revamping of the Magic Key annual-pass program has generally brought lower prices for that system than the old annual pass (ranging from $399-$1,399/year).
    • Trump meme stock Digital World Acquisition (NASDAQ:DWAC) +9% is seeing choppy trading, with shares now in the middle of an intraday low of $89 and a high of $120.
    • Sharess are up about 900% after the SPAC became the home of Donald Trump's future media business.
    • The stock had hallmarks of previous meme moves last week, minus the short interest and the options action, hitting an intraday high of $175 per share, a gain of more than 1,600% from before the deal with Trump Media & Technology Group was announced.
    • But the bulls are finding a tougher road today.
    • Retail interest in DWAC continued over the weekend, as it topped the list with more than 300 mentions on the WallStreetBets subreddit, according to data from Quiver Quantitative.
    • Other stocks moving on the Trump deal are also seeing less enthusiasm, with Phunware (NASDAQ:PHUN) +1.3% just slightly higher.
    • Phunware, also among the top-mentioned stocks on WallStreetBets, soared last week as traders zeroed in on how it had created an app for the Trump re-election campaign.
    • SPAC Benessere Capital (NASDAQ:BENE) +26% is up sharply, but Yunhong International (NASDAQ:ZGYH) -1% is down. Both jumped last week on hopes they could follow the DWAC path.
    • Dear readers: We recognize that politics often intersects with the financial news of the day, so we invite you to click here to join the separate political discussion.

  12. Phil// You had recommended INTC as the stock of the year for 2021.  The trade was to buy bcs Jan 23 45/55 with selling 45 puts.  Did we close that trade?  If not what is your recommendation?  Also, have you announced the 2022 stock of the year yet?

    Thanks.


  13. Wow, TSLA over $1,000.

    INTC/Rookie – Yes and we already made our money and then INTC decided it was time to build a new Fab, which changes our targets considerably.  As noted above, this would be a new trade:

    INTC/Pstas – Still waiting but happy down here. Keep in mind they are spending about $90Bn to build a new factory so don't expect much out of the stock for a few years so I'd just sell 10 2024 $45 puts for $6.30 ($6,300) and buy 20 of the 2024 $40 ($13.50)/50 ($8.25) bull call spreads at $5.25 ($10,500) to be net $4,200 on the $20,000 spread that's in the money to start.  

    I think we closed all the others, I have to go back and check.  Anyway, this trade is pretty much the same concept, just a more conservative target.  The 2022 Trade of the Year will be decided around Thanksgiving but we talked about candidates in our last set of reviews.  If INTC wasn't spending all their profits building a new factory, they'd be a good candidate again.  Now they are more like a Stock of the Future trade.  

    Intel Breaks Ground on Two New Leading-Edge Chip

    Why It’s Important: Advanced domestic chipmaking capacity and capabilities are critical for the sake of both economic and national security. The United States has lost ground in semiconductor manufacturing and is at risk of falling farther behind. With its new IDM 2.0 strategy, Intel is doing its part to help rebuild U.S. leadership and bring more balance to the global supply chain. Intel is the only semiconductor manufacturer with leading-edge process and packaging research capabilities in the United States, and the company is investing in domestic capacity to support the surging worldwide demand for chips across multiple segments, from PCs to automobiles to the data center and more.

    The two new fabs in Arizona will not only support growing demand for Intel’s products, but will also provide committed capacity for the recently announced Intel Foundry Services (IFS). “With Intel Foundry Services, Intel is opening its fab doors wide to serve the needs of foundry customers around the globe – many of whom are looking for more geographical balance in the semiconductor supply chain,” said IFS President Randhir Thakur in a new editorial. “Customers are enthusiastic about these capabilities. And we have plans for continued investments in the United States, but we can’t do it without government partnership to level the playing field. As Congress returns from recess, we urge both chambers to send a bipartisan bill to President Biden aimed at bolstering American competitiveness and investing in advanced semiconductor manufacturing and R&D.”

    How It Works: With the addition of the two new factories – to be named Fab 52 and Fab 62 – Intel’s Ocotillo campus will house a total of six fabs. The new investment will create more than 3,000 high-tech, high-wage Intel jobs, 3,000 construction jobs, and support an estimated 15,000 additional indirect jobs in the local community. When fully operational in 2024, the new fabs will manufacture Intel’s most advanced process technologies, including Intel 20A featuring the new RibbonFET and PowerVia innovations.

    Intel 20A Process Node & Beyond (A True Next-Gen Node)

    Intel has gone ahead to talk about its post-nanometer era with a new product it is referring to as Intel 20A. The Intel 20A starts the Angstrom era (A for Angstrom) which is equal to 10?¹? m or 1A = 0.1nm. This is just a cool way of saying 2nm but given how small nodes have gotten and the fact that we are heading down to decimal spaces within this decade, Intel decided a new measuring unit was needed.

    So Intel 20A (2nm) is going to offer breakthrough innovations when it enters the early production phase by 1H 2024. The 20A node is expected to feature brand new RibbonFET transistors that will replace the existing FinFET architecture and also deliver new interconnect innovations, one of which is known as PowerVia. Intel is also expanding upon its Forveros technologies with Omni and Direct. Forveors Omni will be featured in products that package high-performance compute tiles while Forveors Direct will allow multi-tier interconnector resistance through a copper to copper bond. Forveros as a whole will be updated to deliver increased bandwidth through next-gen inter-connect solutions.

    Intel's Process and Manufacturing Roadmap for the next 10 years shows 10nm, 7nm, 5nm, 3nm, 2nm and 1.4nm. (Image Credits: Anandtech)

    So this is the start of the next era of processors – this is cool stuff! 


  14. INTC     perhaps the first step to this:

    After many long years of work, Dyson eventually hit upon a prototype model that not only worked and was bug free, but was superconductive at room temperature, making it extremely powerful. It marked the beginning of the end.

    The CPU was modeled and designed primarily on computers in advanced 3-Dimensional programming packages, where simulated testing could be done in real time, or at increased rates.

    The lattice of cubes in the construction of the prototype CPU suggests a "hypercube", a cube of more than three dimensions. In computer design, hypercubes are used as a physical connection scheme that minimizes the effective communication distance (and therefore the time delay) between processors, when the logical connection scheme needed by the software that will be run on those processors cannot be known in advance. This then supports the Neural Net's ability to learn, adapt, and built new logical connection schemes.

    The Neural Net CPU is ground-breaking, using the very latest in Quantum Effects chips. Until Dyson designed the CPU, computers were powered by chips composed of millions of transistors. Computing in the old way was done in the binary system – 1's and 0's, on's and off's. With the QE brain in which many more computations can be done each second, quadrillions of switching positions are possible, many of them simultaneous at each quantum level. All this happens down around the Planck length (theoretically, the smallest measurement possible) – so infinitesimally small that superstrings are the major league players. Superstrings are strange, 10-dimensional building blocks that are more than one-thousand to one-billion times smaller than a single proton in the nucleus of a hydrogen atom.


  15. which eventually let to Skynet 


  16. WTF?  Sounds like the opening of a science fiction novel…  We are living in interesting times, that's for sure.  And what's really crazy is it's hard to imagine that there's anything after this – Planck-level measurements and 10-dimensional processing with QBits but that's just the tool we end up building that let's us discover the next level, most likely….

    And totally SkyNet – How far can we be from creating a self-aware computer?  Hopefully it will be nice to us….

    That's 2016 

    And, 5 years later:

    I do want one…


  17. INTC-the more I read about them the more the story grows, I am liking this more and more long term. 


  18. Phil / INTC —-  Do you think there willl be big hedge fund exiting this still working on selling shares?….  I had a smallish position that I was able to lighten up considerably while taking a small profit ( in addition to the larger profit based on the earlier exit in the 60s)…   I'm looking for this to approach 47.5 to 45 before stepping back in,   Meanwhile hold small position  which would be fine as long as this stays in the 45 to 52 range….    

    What range do you t think this may trade in in the next year or two….   do you think may fall further?