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October Friday Finish – 2 Months Left in 2021

Calendar Gif | Flipping Calendar Animation Gif2021 has flown by.

Life moves fast when you're not locked in your home all day like most of us were in 2020.  The Futures are down a bit this morning as both AAPL and AMZN disappointed but, on the whole, earnings season has been pretty good and missteps like those (and SBUX missed too) are being blamed on supply-chain or Covid issues that everything thinks are going away.  Only 1,381 people died of Covid yesterday and we'll be crossing 750,000 total deaths in the US (46M infected) early next week – something to be thankful for if we are not one of the 45,000 people who will be dead by Thanksgiving from this thing we're not at all worried about anymore.

The NYPD has 10,000 unvaccinated officers (about 1/3) and, in theory, they are supposed to be put on leave without pay as of this morning.  What will actually happen is interesting as it's in court at the moment with the union fighting against the mandate.  Covid was the leading cause of death for officers in 2020 and is in 2021 as well with 250 NYC policemen dying of the virus – 5 times more than were killed by gunfire yet 10,000 officers will wear a mandatory vest – but refuse to be vaccinated.

This is why Covid is never going away – people, even in NYC, would rather lose their jobs than get a shot.  Combine that with enablers like the Police Union, Conservative Judges (lots of those now) and the GOP Death Cult and we're never going to be able to eradicate the disease like we have done with others in the past.   Never before in human history have so many humans gone against the survival of the species – other than Global Warming, of course…

Greta Thunberg - How Dare You GIF by MikeyMo | GfycatSpeaking of Global Warming, World Leaders are meeting in Scotland this weekend to do whatever it takes to make it seem like they care without actually doing anything.  Last time they had a meeting like this – a little girl yelled at them but nothing changed and she's not been invited back.  In any case, what more can be said?  

"My message is that we'll be watching you. This is all wrong. I shouldn't be up here. I should be back in school on the other side of the ocean. Yet you all come to us young people for hope. How dare you!

"You have stolen my dreams and my childhood with your empty words. And yet I'm one of the lucky ones. People are suffering. People are dying. Entire ecosystems are collapsing. We are in the beginning of a mass extinction, and all you can talk about is money and fairy tales of eternal economic growth. How dare you!

"For more than 30 years, the science has been crystal clear. How dare you continue to look away and come here saying that you're doing enough, when the politics and solutions needed are still nowhere in sight.

"You say you hear us and that you understand the urgency. But no matter how sad and angry I am, I do not want to believe that. Because if you really understood the situation and still kept on failing to act, then you would be evil. And that I refuse to believe.

"The popular idea of cutting our emissions in half in 10 years only gives us a 50% chance of staying below 1.5°C, and the risk of setting off irreversible chain reactions beyond human control.

"Fifty percent may be acceptable to you. But those numbers do not include tipping points, most feedback loops, additional warming hidden by toxic air pollution or the aspects of equity and climate justice. They also rely on my generation sucking hundreds of billions of tons of your CO2 out of the air with technologies that barely exist.

"So a 50% risk is simply not acceptable to us — we who have to live with the consequences.

"How dare you pretend that this can be solved with just 'business as usual' and some technical solutions? With today's emissions levels, that remaining CO2 budget will be entirely gone within less than 8 1/2 years.

This Global Temperature Graph Shows Climate Trends (1851-2020)That was two years ago, just before Covid hit and we kind of lost the moment when, for a few months, people actually did care about Global Warming.  Now, because Global Warming is contributing to the release of new viruses and other plagues and weather disasters – we're too busy to do anything about it – even as the need to act become more and more urgent.  The chart on the right goes to 0.6 – we passed 1.0 this year and 1.5 is the breaking point for the environment..  

This meeting (and the rest of earnings) is the last big bit of market data we have, other than next week's Non-Farm Payrolls, for the next few weeks so we'll have to think very carefully about our positioning into the end of the year.  Christmas and New Year's are Friday/Saturday this year so they won't be interrupting the markets very much so the big wild cards are Biden's spending plans, the G20s climate spending plans (if any), war over Taiwan and how Covid does during flu season, which is just beginning.

Have a great weekend,

- Phil

 


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  1. G-20 Still Deadlocked as China Won’t Budge on Climate Goals





  2. Japan keeps tourism freeze despite plunge in virus cases


  3. ‘Everything is at stake’ as world gathers for climate talks



  4. Good Morning.



  5. Jeff – Thanks for finding that EWZ spread.  I was beginning to question my sanity.  I am staying with the puts.  Will either roll or kill the spread today.  I have the impression that the economy is recovering on the consumer side though.  And I feel like a little direct exposure to other markets was a positive (understanding that tech and CPG are typically hugely exposed to non-US markets – most people forget that)


  6. Good morning! 

    Indexes pretty much undeterred by Big Tech misses – nothing is stopping this market it seems.

       

        
       


  7. Phil

     What position do we have on Vale  ?

     

    Do you think they will cut the dividend  ?

     

    Thank You


  8. VALE/QC – We only sold the 2023 $15 puts for $3, so net $12 in the LTP (20) and now they are $12.75.  Earnings for the Q were $3.9Bn and below the $6.2Bn forecast but Iron Ore prices were down for the Q and they took a $2Bn impairment charge on their coal business (a one-time thing).  They announced this while also announcing they will buy back 200M shares (4%), so they have plenty of cash and not likely to cut the dividend.  Even if they "only" make $4Bn every quarter, that's still $16Bn and the market cap of the company is $64.5Bn at $12.75 – looks like we'll be adding a bull call spread on this dip!

    Oct. 29, 2021 9:45 AM ET

    TM -0.14%Oct. 29, 2021 9:28 AM ET1 Comment

    • Toyota Motor Corporation (NYSE:TM) vehicle sales were 16.9% below their 2020 levels in September, while worldwide production fell 38.0% Y/Y due to the parts shortages caused by factory closures in Southeast Asia.
    • The decline was driven by fewer sales in Japan, which were down 37.1% and caused Toyota to lose 3.3% market share in the country. Sales outside of Japan fell 10.7% in September.
    • When including all of Japan's first half (April to September) of FY2022, however, sales grew 20.6% and production grew 18.7% against a comparable period that was heavily impacted by the COVID-19 pandemic. Market share in Japan was up 1.7% during the entire period.
    • "The situation remains unclear with respect to both COVID-19 trends and parts supplies, but we will continue to make every effort to minimize the impact," wrote the auto manufacturer in a press release.
    • The falling sales are a trend seen across most of the major automakers, with Tesla being a notable exception.

    Oct. 29, 2021 8:33 AM ET12 Comments

    • September Personal Income and Outlays: Income -1.0% M/M vs. -0.1% consensus and +0.2% prior.
    • Disposable personal income fell 1.3% during the month and real disposable income fell by even more, -1.6%, as government pandemic support decreased.
    • Consumer spending: +0.6% M/M vs. +0.5% consensus and +1.0% prior (revised from +0.8%).
    • Consumers increased their spending on services (think health care and restaurants), up 0.4%, more than they did on goods, up 0.1%. Increased spending on nondurable goods, chiefly food, beverages and pharmaceuticals, offset a decrease in spending on durable goods, led by vehicles and parts.
    • PCE Price Index: +0.3% M/M vs. +0.4% consensus and +0.3% prior (revised from +0.4%).
    • On Y/Y basis, PCE Price Index rises 4.4% vs. 4.5% consensus and 4.2% in August.
    • Core PCE Price Index:+0.2% M/M vs. +0.2% consensus and +0.3% prior.
    • Rises 3.6% Y/Y vs. 3.7% consensus, unchanged August.
    • In the Q3 GDP report, PCE price index rose 5.3%

    MO -0.68%Oct. 29, 2021 8:17 AM ET24 Comments

    • Altria Group (NYSE:MO) trades slightly lower after Morgan Stanley turns cautious with a downgrade to an Equal-weight rating from Overweight.
    • The firm expects meaningful share price appreciation for MO to be constrained by softening category fundamentals, limited reduced risk product upside potential and a lack of near-term catalysts.
    • Analyst Pamela Kaufman thinks cigarette volume declines should continue at a normalized mid single-digit rate in 2022 as smokers face greater macro pressures from rising gas prices/inflation as well as increased mobility post pandemic as a headwind.
    • Morgan Stanley assigns a base case price target of $47.
    • MO is down 0.65% premarket to $44.29 vs the 52-week trading range of $35.83 to $52.59. The relative strength index on Altria has dipped back below 50.


  9. Phil / CAKE – Thanks for the breakdown..will digest it this weekend. 
     

    GOLD – what's your take going forward?  The dollar is climbing  I'm sitting on 30 naked 2024 15C, short 10 2023 20P.  Any adjustments?


  10. Phil// What is your take on Apple's earnings?  Is this a time to add apple to the portfolio and if so any suggested trade?  Thanks.


  11. AAPL – More from analysts.  

    The main issue affecting Apple (AAPL) was the company saying that supply constraints impacted its sales by $6 billion during the quarter that ended in September. Apple Chief Financial Officer Luca Maestri said supply chain issues would have an even larger effect on its current, fiscal first-quarter sales.

    However, Chief Executive Tim Cook stressed that while the supply chain shortages were impacting all of the company's products "demand remains very strong."

    Analyst Rod Hall, of Goldman Sachs, said that after assessing Apple's (AAPL) report an outlook, "It is too early to gauge how much of this weakness is demand related and how much is supply." Hall, who holds a neutral rating and $142-a-share price target, added that since Apple (AAPL) is anticipating more sales to improve later in its current quarter, "Consumers could easily be walking away from purchases owing to longer lead times."

    At Oppenheimer, analyst Martin Yang said that despite Apple's (AAPL) $6 billion supply impact, it remains impossible to not be impressed by the company's sales, and what appears to be growing demand for its product. Among its main business areas, Apple's Macs and services each posted sales records during its fourth quarter, and iPhone sales rose 47% from a year ago, to $38.9 billion.

    "While supply crunch remains a headwind for the next couple of quarters, we expect Apple will accelerate its share gains, primarily in handsets and notebooks, due to its superior supply chain management and scale advantage," said Yang, who has an outperform rating and $180-a-share price target on Apple's stock.

    As Apple (AAPL) detailed the effects of component shortages on its business, several of the company's suppliers also saw their shares dip into the red.


  12. INTC/Phil Thinking I should sell some puts to add to this position, (recently bought back 20 '22 $50p at $1.65, sold at $8).
     50 '23 $35c ($13..5)

    -50 '23 $55c ($6.7)

    Suggestions?

    Thx.


  13. What would you sell for puts to initiate a position in VALE?


  14. pstas…and their cheesecake is like crack…..so addicting.

    Happy Halloween all!


  15. Neither IBM or INTC giving good indications that they are coming back so I'm going to wait for next week to add official trades.

    GOLD/Jeddah – The Dollar has been going up the 2nd half of the year so downward pressure on gold  but you have 2024 calls so patience is the best play.  

    GOLD is a company, not a commodity so are they making money is the question you should be asking, not what is the price of gold.  Earnings are Nov 4th, we'll see if they are making any money but $18.42 is $33Bn and they made $1.2Bn in each of the last two quartes with gold averaging $1,780 in Q1 and about $1,800 in Q2 and this last Q was maybe $1,760 so no reason to think they won't make another $1Bn.  Seems like a reasonable rate of return to me….

    AAPL/Rookie – Do I have to have a trade on it?   They barely fell and we already sold puts in the LTP – when they go on sale, then I'll want more.  They are at $2.5Tn at $250 and on pace to make $90Bn – they don't need my help…

    INTC/Wing – As I noted above, not looking strong so far, so I'm choosing patience.  You have a nice spread that's mostly in the money, the puts are just for decorations but nothing wrong with selling some if you are so inclined.

    VALE/Millard – I'm very comfortable with $10 so the 2024 $13 puts at $4.70 put you in for net $8.30 – that's a reasonable entry to me.

    CAKE/Pstas – But you do get a lot of calorie bang for your buck.  It's funny about that because, much as I love Oreo or Godiva – I do always get a slice of Strawberry when I'm bringing some home – something pure and simple about it – childhood memories of NY delis, I guess.  

    The Cheesecake Factory At Home - Grand Cheesecake Selection - Walmart.com

    In college I had an electric wok and I used to make cheesecake in that.  Just add the ingredients one at a time and keep stirring – then pour into pre-make crust…  

    I made everything in that wok!  


  16. Phil/Cheesecake .. Had a transforming experience with the cheescake at Juniors in NY eons ago (SO good) .. began a quest of trying/rating cheesecake everywhere to see if there existed a better one than Juniors .. never found it but fun searching. Now just a good memory from a sugar free diet :(


  17. WoW, it sure is reassuring to see CAKE's cheesecake is made in the good ól USA…. :/


  18. Zillow has listed a staggering 93% of the hundreds of Phoenix homes it owns at a loss




  19. FB +1.94%Oct. 29, 2021 1:54 PM ET4 Comments

    • Facebook's (FB +2.4%) presentation yesterday, singing its "Meta" verse, caught a few investors by surprise – including analysts who have covered the company's digital-world ambitions for months – mainly due to the newly revealed scope of the project for the world's leading social-media presence.
    • Facebook the company - now Meta Platforms, though invariably to be called just "Meta" - expects to put $10 billion toward the goal this year alone at Facebook Reality Labs (and breaking out financial reporting for the division from here), and it expects "to increase our investments for the next several years."
    • So now it likely comes down to execution on that all-in vision, Wall Street analysts are saying.
    • In his report "Meta New Friend Today," Evercore ISI's Mark Mahaney (bullish on the company) says Meta is "quintupling down" on a bet that the metaverse will succeed the mobile phone as the dominant computing platform.
    • "Now, more than ever as a public company, FB’s future is dependent on (i) whether the metaverse really is the next computing platform and (ii) how well Zuckerberg can execute. And we think these two things are highly correlated," Mahaney says.
    • The name change drew comparisons to Google's corporate-entity renaming to Alphabet in 2015, but this is "much more meaningful," Mahaney says, noting that Google was setting up mainly for risky VC side bets rather than an all-in change. "We don’t believe that Zuckerberg views his new Facebook Reality Labs division as a risky VC-type bet but rather as the future of this company and that 'Facebook' is no longer representative of his primary focus. … Call us early adopters but we truly believe the company has a shot at building the next computing platform (helps to start with 3B+ users) and that it can be an economically viable business despite knowing very little about what its ultimate form may look like."
    • He has a $430 price target, implying 33% upside. (And for the record, Mahaney's vote to replace FAANG is MAGNA.)
    • KeyBanc is similarly bullish, noting the metaverse is still a "polarizing concept" for investors and pointing to the elephant in the room: some skepticism about the rebranding intent as Facebook faces a devastating public/press backlash over the past several weeks. But it says the focus on content and creators is solid and "investors may find some comfort in a strategy grounded upon arming the creators."
    • "If Street was questioning Facebook’s commitment to the Metaverse, there are no questions now with $10 billion annual investment and new name," BofA says, maintaining a Buy rating and $400 price target. The rebranding of its virtual-space efforts to Horizon "could potentially be a step toward opening the metaverse to non-FB devices," it says, adding "Possible catalysts over the next three years to aid sentiment could be Quest unit sales disclosures showing traction (5million-plus est. and counting), corporate development partnerships, or disclosures on content adoption."
    • MKM says the name change was a "long time coming" and not a reaction to recent negativity: "We don't believe that a brand name change of one of the most recognized global brands would be contemplated in short order due to recent negative press." Also, unlike with Google/Alphabet, the firm thinks Zuckerberg "isn't going away any time soon" and will "stay hyper-focused and involved in building the Metaverse over the next decade or so."
    • A more Neutral Piper Sandler appreciates a "bold" vision but is more mixed on the company's product plans, noting "some use cases looking more and less likely." It also acknowledges the regulatory scrutiny, saying that departing from Facebook as an identity may make it easier to "cleave the businesses in two" if regulators press that way.
    • Meta's ticker is expected to change from FB to MVRS on Dec. 1. The ETF with the symbol META – Roundhill Ball Metaverse ETF (META +0.5%) - already holds a lot of Facebook/Meta and now may have even more reason to love the company.

    RKT +1.93%Oct. 29, 2021 1:43 PM ET3 Comments

    • Salesforce (CRM +0.1%) will make Rocket Mortgage's (RKT +3.0%) mortgage origination technology available to banks, credit unions and other financial institutions through Salesforce Financial Services Cloud.
    • The move is intended to increase Rocket's (NYSE:RKT) market share in the U.S. Of the 5,000 FDIC-insured banks and more than 5,000 credit unions in the U.S., "most have disparate partners and technology vendors that handle home loans for them," the company said.
    • "This will be the first time a home lender will provide an end-to-end 'mortgage-as-a-service' solution through Salesforce Financial Services Cloud – a platform that thousands of financial institutions already heavily rely on," said Rocket Companies (RKT) Vice Chairman and CEO Jay Farner.
    • The partnership builds on Rocket's (RKT) existing relationship as a Salesforce customer.
    • In August, Rocket (RKT) stock surged after Q3 guidance, CFRA upgrade.

    That's a pretty good model for RKT and they are reasonably priced, I think (hard to tell as they are pretty new to profits).  

    That's a good statistic to build on.  

    What's keeping them down is a class action lawsuit from the shareholders who bought in the spike:

    These are usually BS but you do have to be careful with them.

    Still, that's a great catalyst and it's a $16.13 stock so how about we promise to buy 1,000 shares in the Future is Now Portfolio and build this spread:

    • Sell 10 RKT 2024 $15 puts for $4 ($4,000) 
    • Buy 25 RKT 2024 $13 calls for $6.25 ($15,625)
    • Sell 25 RKT 2024 $20 calls for $3.50 ($8,750) 

    That's net $2,875 on the $17,500 spread so that's a nice $14,625 (508%) upside potential at $20 or more and anything over $15 is in profits.  Worst case is owning 1,000 shares at $15 + $2.875 if it all goes to hell.



  20. Have a great weekend,

    - Phil



  21. TMW2021-10-27color.png


  22. May be an image of 1 person and text that says 'When your costume is on point but your mom makes you wear a jacket'


  23. May be a cartoon of text


  24. Amid the Great Resignation, there are now more jobs open than unemployed people


  25. What to Expect From G-20




  26. Virginia malls and shopping centers increase security amid ISIS threat


  27. Robots- took me a few but…very clever :)


  28. Those are my favorite kind of jokes.