Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

Monday Climate Madness – Too Little, Too Late?

The climate talks are on.

For two weeks in Scotland, Global leaders will be disucssing climate change and what they intend to do about it but what's the point when even what they SAY they will do is nowhere near enough?  

We need to REDUCE carbon in the atmosphere, not keep it the same (which is the current path) or fix it a little (which is what they are discussing this week) but we need to reduce emissions by a lot, soon – or things WILL get worse.  Humans have so far warmed the planet 1.1 degrees Celsius (2 degrees Fahrenheit) since preindustrial times, mainly by burning coal, oil and gas for energy, and by cutting down forests, which help absorb the planet-warming emissions created by fossil fuel use. Humanity is already paying a high price: This year alone, blistering heat waves killed hundreds of people in the Pacific Northwest, floods devastated Germany and China, and wildfires raged out of control in Siberia, Turkey and California.  

Graphic: The Greenhouse Effect – Climate Change: Vital Signs of the PlanetIn 2015, 195 nations signed the Paris climate agreement, which for the first time required every country to submit a plan for curbing emissions. While the plans were voluntary, they helped spur new actions: The European Union tightened caps on industrial emissions. China and India ramped up renewable energy. Egypt scaled back subsidies for fossil fuels. Indonesia began cracking down on illegal deforestation.  Along the way, there has been some backsliding. The Trump administration rolled back some major climate policies and Bolsanaro allowed deforestation to continue in Brazil. 

On the plus side, clean energy advanced far more quickly than predicted. A decade ago, solar panels, wind turbines and electric vehicles were often seen as niche technologies, too expensive for widespread use. But costs have plummeted.  Today, wind and solar power are the cheapest new source of electricity in most markets.

The Best Visualizations on Climate Change FactsWhen the Paris agreement was signed, nations agreed that they should keep total global warming “well below” 2 degrees Celsius and make a good-faith effort to stay at 1.5 degrees. But in the years since, a slew of studies have found that 2 degrees of warming is vastly more harmful than 1.5 degrees.  1.5 degrees is a vastly harder target to hit than 2 degrees or 3 degrees. It’s not nearly enough for global emissions to peak in the next few years and then decline gradually. Instead, global fossil-fuel emissions would have to plunge roughly in half this decade and then reach net zero by around 2050.

The International Energy Agency estimates that current policies worldwide will deliver only one-fifth of the emission cuts needed this decade to stay on track for 1.5 degrees. Without an immediate and rapid acceleration of action, that climate goal could be out of reach within a few short years.  “The pathway is extremely narrow,” said Fatih Birol, the executive director of the International Energy Agency. “We really don’t have much time left to shift course.”

Stacked Bar Charts Explained, Vizzies 2017 Winners, Global Temperature  Graph, Map of Sea Level Rise | DataViz WeeklyBy 2030, electric vehicles have to make up more than half of new car sales globally, up from just 5% today. By 2035, wealthy countries would have to shut down virtually all fossil-fuel power plants in favor of cleaner technologies like wind, solar or nuclear power. By 2040, ALL of the world’s remaining coal plants would have to be retired or retrofitted with technology to capture their carbon emissions and bury them underground. New technologies will be needed to clean up sectors like air travel or we simply need to stop doing it – as it's destroying the planet.

See, we lost most of you already?  And what's it going to cost?  Estimates run as high as $131 TRILLION to clean up the mess we've made OR – we could just keep partying like it's 1999 and let our children pay the piper – that's what our parents did to us so it's only fair we pass the buck, right?  Of course the cost of NOT fixing the problem is a lot too – like the loss of South Florida over the next 100 years and the lost of New York and other coastal and river citiies.   Catastrophic crop failure, disease, starvation – those things cost money too.  You saw what a mess a pile of Covid bodies made last summer – that's nothing comparted to mass starvation!  

In 1959-1961, just before I was born, China had a famine and 30-40M people died, China's population was only 667M people then – less than half of what it is now.  You may think that couldn't happen in modern times but 5M people just died in North Korea in the 90's during a famine there – and we were trying to help.  At the moment, you can't even get a part to fix your car (or a new car) due to global shipping jams – do you really think we are able to send millions of tons of food quickly if a disaster strikes?  

“Humanity has long since run down the clock on climate change,” Boris Johnson will say, according to an advance copy of his remarks. “It’s one minute to midnight, and we need to act now.”

Unfortunately, this meeting is called COP26, which means it's the 26th time the nations have gotten together to address climate change.  They've been at it since 1992 and 20 years ago the G20 agreed to give $100Bn a year to developing nations to help fight climate change.  The total so far given is actually $0.  NO ONE actually did anything they agreed to do.

We did sign the Paris accords in 2015 and that looked serious but then Trump got elected and refused to ratify them so 6 years lost now but the clock is still ticking.  Now Joe Biden has to convince World leaders that if America says they will do something, they mean it… this time….

$131Tn is 1.5 times the Global GDP so every country on Earth needs to spend 7.5% of their output fighting climate change for the next 20 years in order to save the planet.  For the US, that would be $1.5Tn – about what we spend on the military, less than what we spent on stimulus this year and 1/3 of what we spent last year so it's not that we CAN'T do it – it's just a matter of priorities.  Maybe we shouldn't be leaving these decisions up to a Congress where 312 out of 434 Members have less than 20 years to live:

Millennials Can't Crack Congress

It's our children's future – we're just sticking them with the costs of our living – either way…

We have a Fed Meeting this week and Powell speaks Wednesday afternoon at 2:30 but not a peep out of the Fed otherwise.  Some pullback on QE is expected but probably very little if any at this meeting on the heels of a disappointing GDP Report last week.   We're starting this week at record highs so we'll see if we can hold them.  PMI, ISM and Construction Spending get us started today, Motor Vehicle Sales tomorrow (we're running out of cars so not good), PMI, Factory Orders and ISM Services ahead of the Fed on Wednesday.  Thursday is Productivity and Friday is Non-Farm Payrolls and Consumer Credit:

And, of course, we have lots and lots of earnings:

Image

 


Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!



Comments (reverse order)


    You must be logged in to make a comment.
    You can sign up for a membership or log in

    Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

    Click here to see some testimonials from our members!


  1. Good Morning.


  2. good morning

    here is a trade someone placed this morning. 

    3000 PFE 2024 $45/$30 bull put spreads and bought 3000 of the $30 calls    cost him about $8.00 


  3. Climate change – Time to figure out how to mitigate the problems we're faced with. Change is here. :(



  4. Good morning!

    A little dip at the open but RUT up 1% so rotation maybe?  

       

    Oil back around $85:

        

    No good reason for it (OPEC noise) so it's a short at $85 or close to it with tight stops above.

    Contrary to the way miners are behaving, metals have not collapsed.  Not staying at your highs is not the same as collapsing.

       

  5. Welcome to the stonk market


  6. Glasgow COP26: Climate finance pledges from rich nations inadequate




  7. VIAC train is leaving the station with earnings on Thursday.

    Glad we waited on IBM:

    U

    INTC only bouncing until it holds $50

    CAKE we got in just under the wire with our adjustments:


  8. Pentagon rattled by Chinese military push on multiple fronts


  9. STP is still at $110,127 but LTP is up about $50,000 at $2,184,005 and we're swimming in CASH!!! ($1,770,548) so yes, let's add IBM and INTC to the LTP (and I'm open to other suggestions):

    IBM – We wanted to sell the 2024 $125 puts for $25 but they are only $22.50 so far.  Still, the target is right – I was just wrong about the price of the options as the VIX has improved so much.  No harm in moving up to the $130s as I'd rather have my $2,500 than worry about paying $5 more for IBM and net $105 is still very nice, so:

    • Sell 10 IBM 2024 $130 puts for $25 ($25,000) 
    • Buy 30 IBM 2024 $125 calls for $13.30 ($39,900)
    • Sell 30 IBM 2024 $150 calls for $6.50 ($19,500) 

    That's a net $4,600 credit on the $75,000 spread that's at the money to start so, at $126, we make $3,000 on the calls and lose $4,000 on the puts, so that's about the break even and worst case is we end up owning 1,000 shares of IBM for about net $123.50.  Upside potential at $150 is a lovely $79,600 (1,730%) and plenty of room to adjust or even sell short calls along the way.

    INTC has also made a good bottom so, also for the LTP, let's:

    • Sell 20 2024 $45 puts for $6.25 ($12,500)
    • Buy 40 2024 $40 calls for $13.($52,000) 
    • Sell 40 2024 $55 calls for $6 ($24,000) 

    That's net $15,500 on the $60,000 spread so only $44,500 (287%) upside but it's 2/3 in the money to start so I'm very comfortable with this "risk".  




  10. Phil as mentioned the other day still looking at MO was below 44 today but a bit up again. Obviously still holding a bunch of shares at 40, still paying a good div.


  11. Hi Phil,

    Would love your opinion on BITO, bitcoin futures etf. Can this be used as a hedge against inflation?

    Thanks


  12. PFE declaring tomorrow, possible wait and see what gives. again good div.


  13. SPH for those who did not enter a trade. Declared today


  14. MO/Yodi – We still havee it in the Dividend Portfolio so I'm not looking to add a redundant position BUT, in the dividend portfolio, let's buy back the short Jan $47.50 calls for $270 and sell 10 of the 2024 $40 puts for $7.20 ($7,200) as we're happy to buy for net $32.80 and we'll hold off on selling more calls until the short Jan puts expire and we know we're in good shape.

    MO Altria Group Inc. 500 11/8/2019 724 $23,100 $46.20 $-1.71 $39.34     $44.49 $0.38 $-855 -3.7% $22,245
    MO Short Call 2022 21-JAN 47.50 CALL [MO @ $44.49 $0.38] -5 11/8/2019 (81) $-2,850 $5.70 $-5.16     $0.54 $0.00 $2,580 90.5% $-270
    MO Short Put 2022 21-JAN 40.00 PUT [MO @ $44.49 $0.38] -5 11/8/2019 (81) $-3,000 $6.00 $-5.38     $0.63 $-0.10 $2,688 89.6% $-313

    BITO/Harip – I prefer BEANO, the beanie-babies futures.  Very solid because everyone is buying them.  I still can't get behind the Bitcoin thing – it's just too silly.  Gold is a much better bargain at the moment as Bitcoin is about 3,000% ahead of inflation this year and gold is not.

    PFE/Yodi – They should be minting money.


  15. Russell up 2.5% today – that's crazy.  You hardly ever see that after a correction – let alone the top of a rally.

    Oil calming down a bit.

    Those $1 swings in /NG are good for $10,000 per contract. 



  16. Phil – any thoughts about Cinemark? Jan 2024 $20 Puts are ~ $7ish


  17. WDC an other candidate


  18. AEP try to sell the Jan24 80 put for 10$


  19. CNK/Ted – While $2.25Bn at $20.45 seems like a good price, they just lost $1Bn and that means they have a mountain of debt to get out of so they are not getting back to making $200M/yr (previous average) for the rest of this decade – even if movies do get back to normal (not likely this year or even next as production of movies is limited).  To me, it's a little too much betting on past glory in a sector that likely had its best days behind it anyway.  

    I do like IMAX though, they are down to $1.12Bn at $19.54 and they lost $144M last year and likely to lose $26M this year but then back to making $50M/yr and they have a growth story ahead of them.   They are actually in our Butterfly Portfolio:

    IMAX Short Put 2023 20-JAN 20.00 PUT [IMAX @ $19.54 $0.69] -10 6/2/2021 (445) $-4,000 $4.00 $0.50 $-7.71     $4.50 $-0.50 $-500 -12.5% $-4,500
    IMAX Short Put 2023 20-JAN 20.00 PUT [IMAX @ $19.54 $0.69] -10 9/29/2021 (445) $-5,100 $5.10 $-0.60     $4.50 $-0.50 $600 11.8% $-4,500
    IMAX Short Call 2024 19-JAN 25.00 CALL [IMAX @ $19.54 $0.69] -20 10/19/2021 (809) $-9,500 $4.75 $-0.40     $4.35 - $800 8.4% $-8,700
    IMAX Long Call 2024 19-JAN 17.00 CALL [IMAX @ $19.54 $0.69] 30 10/19/2021 (809) $22,950 $7.65 $-0.30     $7.35 - $-900 -3.9% $22,050
    IMAX Short Call 2022 21-JAN 20.00 CALL [IMAX @ $19.54 $0.69] -15 10/15/2021 (81) $-3,600 $2.40 $-0.83     $1.58 $0.43 $1,238 34.4% $-2,363

    Here we have a $24,000 spread with 10 short puts I'm not worried about and 5 extra short calls for income in Jan.  The current net of the spread is $1,987 and we have 720 days after Jan to sell $3,600 blocks of calls like that, maybe 8 more sales.  

    WDC/Yodi – Too worried about the chip shortage and unknown effects.  Since they make storage devices, lots of parts and any one missing part can shut their production.  They just guided down for Q4 and no indication yet that they see light at the end of the supply tunnel.   At $16.29Bn ($54.34) they do project big profits in the future but I'm not sure how they are getting there.  They cut dividends May of last year and have not restored them – it will hit their cash flow if they do restore them.  If all goes well, they could be a good deal but I'd want to see a turnaround quarter first.  I think they are about 50% cloud services now – if that expands, they could do very well but it seems to me MSFT is kicking everyone else's asses at the moment.


  20. VIAC what do we expect with earnings? Sorry I think you covered it recently but couldn't find it.


  21. speaking of WDC, someone just sold 3500 April $45 puts for $1.99   


  22. now it changed to 1805 puts 


  23. VIAC/Pman – I don't expect anything special, they are simply way undervalued and, eventually, they will move higher (unless earnings are terrible).  

    Finished in the green – all is well.

    ISM was in-line and Construction spending missed at -0.5% but not surprising with the shortages.