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Fed Faltering Thursday – Markets “Surprised” by the Fed Minutes?

What is wrong with people?  

The market dropped 2.5% after yesterday's Fed Minutes were released and all they said was what they announced at the Dec 15th meeting, which is they are going to start tightening in 2022, probably with 3-4 0.25% hikes.  You would think they announced the end of the World the way the market started selling off and the day's volume only hit 104M on SPY – not even a major volume day.  

Still, as I had noted in our Live Trading Webinar BEFORE it happened, we simply don't have enough buyers to support any kind of selling so, as soon as there's any bad news and people try to sell – the bottom can fall out very quickly.  Having a 2.5% drop means we look for a 0.5% (weak) or 1% (strong) bounce and, if we don't get those – then it's likely we're in for another downturn.

That would be fine with us as we cashed out of our S&P (/ES) 500 shorts yesterday with a $10,000 gain (you're welcome) at 4,720 (we initiated those in last Wednesday's Morning Report and again on Thursday) and now we have switched to shorting the Dow (/YM) Futures at 36,400 but with tight stops above that line – it's what we call a "fresh horse" trade.

We're also excited to short more Oil (/CL) at $79.50 as that is just silly.  OPEC released a not yesterday that they are expecting the current round of Covid not to affect anything – even as thousands of airlines and cruise ships are being cancelled every day and schools are shutting down and companies are delaying return to work dates.  Even Spider Man was empty at the IMAX yesterday (I was waiting for it to get less crowded but wow!). 

Just because the indexes have done silly things it doesn't mean we have to pay attention to them and low volume BS for the past few weeks means we have no reason to change our original bounce chart from December's dip – as those zones are still in play.    

  • Dow  36,000 to 34,200 has bounce lines of 34,560 (weak) and 34,920 (strong) 
  • S&P 4,700 to 4,465 has bounce lines of 4,512 (weak) and 4,559 (strong) 
  • Nasdaq 16,500 to 15,675 has bounce lines of 15,840 (weak) and 16,005 (strong) 
  • Russell 2,400 to 2,080 has bounce lines of 2,144 (weak) and 2,208 (strong)

In fact, the colors we have today are the EXACT SAME colors we had on December 21st so the Nasdaq is still our weakest index (which is why we bumped those hedges in the Short-Term Portfolio) and Russell 2,200 is still our primary directional indicator – right where we are this morning!  As I said at the time:

Weakness in the Nasdaq directly relates to weakness in the S&P these days since just 5 stocks (MSFT, NVDA, AAPL, GOOGL and AAPL) are responsible for 50% of the S&P 500s gains since April and for 1/3 of the entire year's gains (300 of 900 points).  “If those companies, for whatever reason, stop performing, there’s nothing to support the market,” said Peter Cecchini, director of research at hedge fund Axonic Capital.  Expectations that stock prices will fall over the next six months jumped to 42% earlier this month, the most bearish reading in more than a year, according to a weekly sentiment survey conducted by the American Association of Individual Investors.  New York Stock Exchange stocks closing above their 200-day moving averages, dropped as low as 41% earlier in December, a 17-month low.  

There's little to be determined from this low-volume holiday trading so let's just sit back and relax and enjoy the show.

As I predicted, we could have gone on vacation and come back on January 4th (I wasn't even going to bother with Monday) and we would not have missed a thing.  Since we were here, however, we did adjust our Short-Term Portfolio (STP) to be a bit more bearish and, as of yesterday's close, we're at $173,874 – up $54,485 since our December 14th review.   Even better, our Long-Term Portfolio has actually gained just under $100,000 since our Dec 16th review – so our hedges are more than adequate at the moment.

The STP had $580,000 of hedging potential (against a 20% drop) last month and we're up $55,000 so $525,000 of protection remains.  Why are we doing so well?  Because the market has been essentially flat for a month – despite all the up and down action – and since we are BEING the House – NOT the Gambler, all that premium we sell pays off on both ends.  A flat market is perfect for us and, since we are pretty good at picking value stocks – the ones we expected to bounce back have done so – like our Trade of the Year and the Runner Ups from early December.  

We also picked the right indexes to hedge (Nasdaq and Russell) – as they have indeed proven to be the weakest from their tops.  We still have plenty of CASH!!! in the STP and we need to deploy some of it to lock in those gains from the LTP – usually we spend about 1/3 of our unrealized gains improving our hedges – so we lock in 2/3 of our winnings.  

We'll see how the day plays out.  Very simply, we watch the Bounce Box and, if more reds are added – that will be BAD.  I think we're on the way to test 15,000 on the Nasdaq (/NQ), so still a long way (4.3%) to go from here.  

 


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  1. NVAX/Jeff – like MRNA, and the hype runup is all due to the 'possibility', I am not sure where they go from here. Yes, their potential is actually good b'c of the differentiation from the other two (RT vs keeping cold/freezing), but how did the other two get the distribution channels?  They are bigger, and MRNA was in earlier and has lots of free money. NVAX selling to third world…where is the money in that?  Just don't see it, but I am probably wrong.




  2. Good morning!  

    Nice dip on the Dow to 36,200, going to take 1/2 and put a stop on the other half at 36,300 to lock in the gains on /YM.

    Oil hit $80, down $5,000 there on 4 shorts but I still don't see any news to justify it.

    NVAX/Pharm – Good point.  Like everything else in Health Care, the US market pays many multiples above the rest of the world so far less profitable in those markets.

    Nasdaq blasting higher at the open.

       

    Still, 16,500 to 15,600 is 900 points down so 180-point bounces to 15,680 (weak) and 15,860 (strong) and we blasted over weak already.


  3. Nas harshly rejected on first try.  



  4. Good Morning!




  5. In photos: Looking back at the Jan. 6 Capitol riot


  6. WDC entered a new play yesterday Buy the Jan 24 50 call @ 25.02 and sell the July 22 60/80 strangle for 8.80. You obviously can make a BCS out of the poor man’s trade, but limiting the leap position with your spread


  7. MO one of the shining stars today


  8. Possible a bit late, sold 12/30/21 a Jan24 55 put on PSX for 7.10 just as a reminder. The stock has a yield of 4.65%


  9. BABA nice showing today aswell


  10. Done with /YM after it bounced 100 back over 36,200.  Indexes looking stronger. 

    Decision also driven by losing /CL position – no sense in doubling the risk.   That one I'm sticking out.

    WDC/Yodi – Not sure how affected they are by chip shortages. 

    BABA making a move:


  11. 2nd attempt by Nasdaq more likely to succeed but a failure at 15,860 again would be worse.  That makes /NQ my next short at 15,850 with stops over 15,875.


  12. Be careful as /NQs are $20 per point!


  13. GLD -1.10%Jan. 06, 2022 10:45 AM ET

    • Gold and silver prices turn sharply lower, a day after minutes of the Federal Reserve's December meeting flagged the potential for rate hikes to come sooner than previously expected, lifting the dollar and Treasury yields.
    • February gold (XAUUSD:CUR) has dipped below $1,800/oz, now -2% to $1,788.80/oz, while March silver (XAGUSD:CUR) -4.6% to $22.09/oz.
    • ETFs: GLDIAUNUGTPHYSGDXSLVSILSIVRPSLV
    • Precious metals miners trade broadly lower: NEM -3.3%GOLD -3%KGC -2.6%AUY -3.1%AEM -4%KL -4%AG -3.5%EXK -4.8%HL -3.7%CDE -3.5%WPM -3.4%.
    • The U.S. dollar has resumed its climb near a recent 14-month high while U.S. 10-year Treasury yields rise to their highest level since March at 1.74%.
    • Gold investors are left hoping for "a sharp drop in inflation to deter the Fed from tightening too fast. If that doesn't happen, then we may well see further struggles" for the yellow metal, TradingCandles.com's Fawad Razaqzada tells MarketWatch.
    • The market was interpreting that "there's very likely a March hike followed by quantitative tightening, which is very bad for stocks and gold," Jay Hatfield, CEO of Infrastructure Capital Management, tells Bloomberg.
    • With central banks starting to curb pandemic-related stimulus to fight inflation, gold fell last year in its biggest annual decline since 2015.

       

    I like $1,785 for Gold (/GC) as a long and $22 on /SI 


  14. MTH -1.89%Jan. 06, 2022 10:17 AM ET
    • "Mortgage rates increased during the first week of 2022 to the highest level since May 2020 and are more than half a percent higher than January 2021. With higher inflation, promising economic growth and a tight labor market, we expect rates will continue to rise. The impact of higher rates on purchase demand remains modest so far given the current first-time homebuyer growth," chief economist Sam Khater commented.
    • 30-year fixed-rate mortgage averaged 3.22% with an average 0.7 point for the week ending Jan. 6, 2022, up from last week's 3.11%; higher than year ago the 30-year FRM averaged 2.65%, according to the Freddie Mac Primary Mortgage Survey.
     

    • 15-year fixed-rate mortgage averaged 2.43% with an average 0.6 point, up from last week when it averaged 2.33% and a year ago at this time, the 15-year FRM averaged 2.16%.
    • 5-year Treasury indexed hybrid adjustable-rate mortgage averaged 2.41% with an average 0.5 point, unchanged from last week and a year ago at this time, the 5-year ARM averaged 2.75%.
    • Applications to refinance a home loan fell 2% last week compared with two weeks ago and were 40% lower Y/Y while applications for mortgages to purchase homes fell 4% from two weeks earlier and were 12% lower Y/Y/.
    • Mortgage Bankers Association indicates that mortgage demand fell 2.7% to end 2021, compared with two weeks before.
    • Despite supply and affordability challenges, 2021 was a record year for purchase originations. MBA expects 2022 to be even stronger, with total purchase activity reaching $1.74T," MBA economist Joel Kan commented.
    • Homebuilding stocks trading in red despite rising mortgage rates: (NYSE:LEN)(NYSE:TOL)(NYSE:DHI)(NYSE:PHM)(NYSE:NVR)(NYSE:MTH)
    • Related Reads: Inflation impacts homebuyers buying/selling plans, home prices growth softer

    IHG +0.88%Jan. 06, 2022 10:11 AM ET
    • November Factory Orders+1.6% to $531.8B vs. +1.3% consensus and +1.2% prior (revised from +1%).
    • Shipments +0.7% to $527B.
    • Unfilled Orders +0.7% to $1,260.1B.
    • Inventories +0.7% to $770B.
    • The inventories-to-shipments ratio is 1.46, unchanged from October.
    UCL -11.62%Jan. 06, 2022 10:03 AM ET

    • December ISM Services PMI Index62.0 vs. 67.0 consensus and 69.1 prior
    • Prices Index: 82.5 vs. 82.3 prior; represents its third-highest reading ever.
    • Business Activity Index: 67.6 vs. 74.6 prior.
    • New Orders Index: 61.5 vs. 69.7 prior.
    • Employment Index: 54.9 vs. 56.5 prior.
    • Suppliers Deliveries Index: 63.9 vs. 75.7 prior.
    • "Services businesses continue to struggle replenishing inventories," said Anthony Nieves, chair of the Institute for Supply Management Services Business Survey Committee. The Inventories Index fell to 46.7 from 48.2.
    • The Inventory Sentiment Index, at 38.3 vs. 36.4 prior, "stayed in contraction or 'too low' territory in December," he added.
    • Previously (Jan. 4), December ISM Manufacturing falls more than expected in December, but outlook is optimistic

    GRIL -3.95%Jan. 06, 2022 10:09 AM ET
    • Piper Sandler analyst David Kroger believes that more countries will launch a central bank digital currency in 2022, starting with wholesale CBDCs, he writes in a note to clients.
    • Note that wholesale CBDCs use the exiting tier of banking and financial institutions to conduct and settle transactions.
    • The prediction comes at a time when a handful of developing countries have already launched, or plans to introduce CBDCs. For example, Bank of Jamaica successfully completed its CBDC pilot last week, and expects to launch in Q1.
    • The Bank of Mexico recently said it plans to launch a CBDC by 2024, joining both Brazil and Peru as Latin American nations working on developing CBDCs.
    • Towards the end of October, Nigeria launched its CBDC, eNaira, to drive economic growth. Just three weeks after the launch, eNaira attracted 500K users.
    • With regards to China, one of the largest economies in the world, the digital yuan "will be forced upon the populace in China," Kroger highlights. "A result of a government that likes to control its people, a digital currency that watches every transaction made," he adds.
    • Recall in September of last year, the People's Bank of China said it will accelerate research and development of its digital yuan amid growing interest.

    QS -3.53%Jan. 06, 2022 10:07 AM ET21 Comments
    • Electric vehicle stocks are lower again as investors continue to peel away from high-growth, high-PE stocks in favor of low valuation stocks and dividend payers. The usual concerns over the impact of higher interest rates are also in the mix.
    • EV decliners include REE Automotive (REE -9.1%), Rivian Automotive (RIVN -13.7%), Tesla (TSLA -5.1%), ChargePoint Holdings (CHPT -5.8%), Blink Charging (BLNK -6.5%), Lucid Group (LCID -7.6%), Nio (NIO -4.4%), Volta (VLTA -6.3%), Hyzon Motors (HYZN -5.6%) and QuantumScape (QS -6.3%). Of note, RIVN dropped to a post-IPO low of $80.20 earlier in the session.
    • Some analysts are suggesting that the big electrification pushes from legacy auto giants Ford (F -0.5%), General Motors (GM -0.7%) and Volkswagen (OTCPK:VLKAF) are factoring in as well as the competition variable becomes more real.
    • GM drove into the spotlight this week with its reveal at CES of the all-electric Chevy Silverado. The electric Silverado impressed some analysts with its 400-mile range and sharp trims. GM also landed an increased electric van order from Walmart and FedEx via its BrightDrop subsidiary.

    FANG +3.98%Jan. 06, 2022 9:40 AM ET16 Comments
    • West Texas oil prices (NYSEARCA:USO) (CL1:COM) topped $80 this morning, rallying almost 3% as a confluence of supply factors pull the commodity higher.
    • Top of mind is a survey released this morning pointing towards another production miss by OPEC, as the Member States delivered only 70kb/d of production growth in December, well below the budgeted 253kb/d, raising questions around the Cartel's ability to deliver on promises for production growth in January, February and beyond.
    • The more acute risk of a production outage in Kazakhstan has market commentators hanging on every update from the OPEC+ nation, particularly following news of workers at Chevron's (NYSE:CVX) TCO 600kb/d megaproject joining protests.
    • The usual suspects, CEOs from Diamondback (NASDAQ:FANG) Devon (NYSE:DVN) and Pioneer (NYSE:PXD) headed a panel at Goldman Sachs energy conference this week; all stuck to the script of capital discipline leading to slower production growth and higher shareholder returns; all three noted service cost inflation from high-single digits to mid-teens impacting 2022 plans.
    • Bitter temps in Alberta and North Dakota have caused issues in the oil patch closer to home, as the Keystone pipeline went down for minor maintenance but has struggled to get back online in the past 48 hours, while weather in North Dakota has sent oil crews home and led to in-basin pricing reaching the highest levels seen in two months.
    • Finally, the market is steamrolling through a bearish DOE report from yesterday, as many view the exceedingly large build in gasoline inventories to be more related to holidays and year-end accounting, than an indication of faltering demand.

    USO +2.91%Jan. 06, 2022 8:40 AM ET23 Comments
    • A survey of OPEC-only production figures was released this morning, showing oil production (NYSEARCA:USO) grew 70kb/d in December, well short of the 253kb/d increase permitted for the OPEC-only Nations (OPEC+, including Russia, Kazakhstan and others, was budgeted for a 400kb/d production increase).
    • The OPEC "group of 10" – excluding Libya, Iran and Venezuela, which are not bound by a quota – delivered 150kb/d of production growth in December, compared to the 253kb/d budget.
    • Angola and Nigeria (NYSE:XOM) (NYSE:E) (NYSE:TTE) (NYSE:RDS.A) continue to be the largest source of production misses, with Nigerian production actually falling in December (likely on the back of the Forcados outage); interestingly, Iraq narrowly under-produced the Country's production budget in December, after over-producing in November.
    • In Venezuela, where the Government claimed production increased to 1mb/d by Christmas, it appears that production in fact increased by ~20kb/d to 640kb/d for the month.
    • With the bullish thesis that OPEC+ will be unable to meet production targets becoming consensus, and many market participants questioning OPEC's forecast for a surplus crude market in Q1, Saudi actually cut its official selling price (OSP) to Asia this morning, indicating the Kingdom feels the need to offer discounts to benchmark pricing if it hopes to maintain market share in Asia.
    • With a reliable production survey now out for December, the market focus is likely to shift to Kazakhstan, where ongoing violence threatens the Nation's crude exports (NYSE:CVX).


  15. Phil / NQ

    What would be a good exit point for the NQ short at 15850?


  16. Biden never uttered Trump's name in his speech, but he referred repeatedly to the former president with forceful, and at times personal, denunciations of his actions. Trump, Biden said, "values power over principle." His "bruised ego matters more to him than our democracy," the president continued, adding, "He can't accept that he lost."

    "I did not seek this fight brought to this Capitol one year ago today, but I will not shrink from it either," he said. "I will stand in this breach. I will defend this nation. And I will allow no one to place a dagger at the throat of democracy."

    Speaking to reporters later, Biden said he wanted to "face the truth" in his speech in order to heal.

    "You can't pretend. This is serious stuff." Biden said "You've got to face it. That's what great nations do. They face the truth, deal with it and move on."

    /NQ/Jij – 15,600 was bouncy to I'd go 1/2 out there and set the stop for the other half at 15,680 which, as noted above, is the weak bounce line.  


  17. Phil / BABA

    I missed rolling the Jan 2023 200C calls to Jan 2024 140C . What would be your suggestion to salvage the trade? My current positions are :
     

    5 Jan 2023 200C

    2 short Jan 2023P

    Is it better to just take the loss and move away from BABA ?


  18. Of course it's huge money on /NQ so it's silly to turn your back on $1,000 per contract gains  – keep that in mind!

    BABA/Jij – As long as you are learning WHY we do the rolls for future reference.  2023 $200 calls are $6.70 and the 2024 $120 ($40)/145 ($30) bull call spread is $10 – that seems like it's worth $3.30 to roll over to.

    It never pays to sit in a position where it's not likely the stock can recover to.


  19. So Phil, why are companies with way more cash than debt (i.e. APPL) negatively affected by rising rates?   


  20. Phil / BABA

    Thanks for the rollout suggestion. It makes sense :-)
    What would be your strategy wrto the Jan 2023 200 short puts?
     







  21. Rates/Tangled – AAPL is a special case but most companies borrow money (even AAPL does) to fund projects because shareholders don't want them using all their cash so of course rates matter – they are going to impact profits and, when your multiple is very high – that matters a lot.

    FB +4.14%Jan. 06, 2022 12:23 PM ET6 Comments

    • Hedge fund manager Dan Niles contended that Wednesday's sharp sell-off in technology stocks doesn't signal the end of the downward pressure, as the market comes to terms with the end of stimulus and a more hawkish Federal Reserve.
    • Speaking to CNBC on Thursday, the founder and portfolio manager at Satori Fund said that given the likely further downside risk in the tech sector, investors should look to energy and financials as potential winning bets in 2022.
    • On the prospects for the tech space, Niles argued that the dramatic rise in the S&P 500 over the past two years was driven mainly by massive government stimulus packages and by an ultra-accommodative central bank.
    • With inflation still at its highest pace in decades and the Fed poised to begin raising interest rates, Niles thinks that valuations for the more speculative parts of the tech sector will contract, meaning that those names will see a further decline.
    • "Unless you think inflation is done and unless you think the Fed is done, it's hard to imagine that this [selling] is done," he said.
    • Even so, Niles sees some bright spots in the tech space. He cited Meta (NASDAQ:FB) and Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL) as stocks that could hold up better than most during a general market downturn.
    • On the other side of the spectrum, Niles reported that his fund has shorted electric vehicle startups that don't expect to deliver earnings for "a very long time." He did not name the specific companies that he has shorted.
    • "Last year, it was about 'show me the story' and buy that. This year, it's about 'show me the money,'" he said, describing his expectation that 2022 will be dominated by companies that have proven their earnings power.
    • Turning to sectors he thinks will outperform during the year, the hedge fund manager asserted that the same conditions that will weigh on other parts of the market will give a boost to energy and financial shares.
    • For energy, he pointed to the likelihood for higher oil prices as his source for optimism in the sector. Meanwhile, rising interest rates will give a boost to bank stocks, he predicted.
    • Niles was bearish going into 2022. See why he foresaw a dreary investment outlook for the year.

    BABA/Jij – I'd give them some time.  2025 puts will be out around July and then you can see what the rolls look like but $200 isn't a terrible 1-year target if this China nonsense blows over.  

    FB +4.14%Jan. 06, 2022 12:27 PM ET

    • Facebook/Instagram owner Meta Platforms (NASDAQ:FB) is making its biggest move up since July, now up 4.3%, as UBS boosts its price target with praise for some tech changes at Instagram.
    • The bank raised its target to $440 from $425, implying 30% upside – without changing estimates, but with boosted confidence on its near-term and long-term estimates.
    • A revamped newsfeed at Instagram has the "potential to provide a meaningful product cycle catalyst for shares," analyst Lloyd Walmsley and team write.
    • Two new settings in Instagram's feed has the company increasingly adding new tailored content drawn from beyond users' current follower graphs. And "We think drawing from a wider content base could unlock a meaningful lift in engagement, reminiscent to TikTok." It could improve the experience, unlock ad inventory and revenue, and draw younger users, UBS says.
    • Direct impact could be 7-12% of the bank's estimate for 2023 Meta ad revenues – Instagram makes up about 47% of that – and 40% upside to shares, if time spent per user at Instagram converages more toward TikTok-like numbers. And overall, UBS sees the move as a calayst for multiple expansion, similar to Instagram's 2019 checkout announcement that spurred an 8% stock-price boost in two weeks followed by 11% the month after.
    FB +4.04%Jan. 06, 2022 11:43 AM ET25 Comments

    • Legendary venture capitalist Roger McNamee said Thursday that Meta Platforms (NASDAQ:FB) has become "fundamental to the dark side of the economy," with the company exploiting data to drive profits whatever the social costs.
    • "Without any regulatory interference, that's just a great business and they're going to continue to grow by using data to exploit human weakness," the co-founder of Elevation Partners and an early investor in Facebook (FB) told CNBC.
    • McNamee framed Meta's challenge of balancing profits with social good as a general problem that has become more acute lately.
    • "We are so dependent on the market to make choices and allocate resources that we've finally run into examples of where the market is no good," the Elevation Partners co-founder argued.
    • "[The market] has not done a good job addressing climate change. It's not done a good job of allowing the United States to address a pandemic. And it's done a horrible job of defending democracy," he added.
    • On the current market situation, McNamee contended that a more hawkish stance by the Federal Reserve is unlikely to halt the upward momentum of markets. He acknowledged that higher interest rates would curb some speculation but he believes that the dynamics that have driven trading over the past couple of years will continue into the near future.
    • "My expectation is that we'll just continue going along like this until eventually all of the speculation that's going on in all of these different sectors runs out of new buyers and then it eventually comes tumbling down," he predicted.
    • FB rose 4% in Thursday's intraday action, reversing a sharp decline seen Wednesday amid a general sell-off in tech. At about 11:30 a.m. ET, FB was up $13.91 to $338.08.
    • Looking longer-term, FB reached a 52-week high of $384.33 in early September, but shares sold off in response to a whistleblower's revelations about how the company responds to toxic content on the platform. Shares have generally held to a trading range over the past three months.
    • Given its recent PR problems, FB has significantly underperformed the market since the beginning of September. The stock is down 15% over that time, compared to a 4% rise in the S&P 500, as you can see in this chart.

    • Shimao Group Holdings (OTCPK:SHMAY) ADRs fall 4.2% after the Chinese property developer defaults on a loan after missing a 645M yuan ($101M) payment, the latest in the saga of real estate firms struggling under heavy debt loads after China moved to reduce leverage and risk in the sector.
    • China Credit Trust Co. said in a letter that 755M yuan of a trust loan had been repaid, but the remaining amount owed now means the loan is in default, Reuters reports.
    • Last October, Shimao Group (OTCPK:SHMAY(OTCPK:SIOPF) stock was downgraded by J.P. Morgan because an agreement to sell some of its assets to Shimao Services (OTCPK:SHMSY) implied tight liquidity conditions for Shimao Group and raised a "corporate governance red flag."
    • Another smaller Chinese real estate firm, Guangzhou R&F Properties (OTCPK:GZUHY), said it didn't have enough money to buy back $725M of notes that it had offered to repurchase. "The Group is continuing to take active measures to shore up its liquidity positions," the company said in a statement.
    • The default follows China Evergrande's recent (OTCPK:EGRNF) (OTCPK:EGRNY) defaults on offshore debt payments and Kaisa Group (OTCPK:KKPFF), which has failed to make some dollar bond payments.

    MU +1.99%Jan. 06, 2022 11:43 AM ET2 Comments

    • Memory chipmaking leader Micron Technology (NASDAQ:MU) is set up in a good position this year due to a combination of market factors such as growing product demand and signs of supplies stabilizing across the industry.
    • That's the opinion of analyst Mizuho Securities analysts who spoke this week with Micron (MU) Chief Financial Officer David Zinsner and the chipmaker's investor relations director Farhan Ahmad as part of Mizuho's Virtual CES conference series. Mizuho analyst Vijay Rakesh said that after speaking with the Micron (MU) officials, he believes the company is likely to see more strength this year from prices going up for its key DRAM memory chips and gains in the data center market.
    • "DRAM spot pricing [was] up 10% month over month," Rakesh said, in a research note. "We believe lower memory inventories will remain a tailwind, [and] memory is one of the few markets where suppliers are not adding supply."
    • Rakesh, who left his buy rating and $98-a-share price target on Micron's (MU) stock unchanged, also said that Micron (MU) noted that "the broad data center market is strong, with inventory in a good position and good order visibility."
    • Rakesh added that Micron (MU) admitted that its DRAM plant in Xian, China has trimmed some of its production due to recent Covid-related shutdowns in the area. However, Rakesh said that plant production is expected to pick up by February and he estimated that there will "overall be no impact" from Xian plant issues on Micron's (MU) next quarterly report.
    • Rakesh's take on the Micron's (MU) Xian plant was in line with similar comments from Wells Fargo analyst Aaron Rakers in late December.


  22. A completely believable movie after the last 5 years…. 

    laugh or cry, it's worth a watch.

    https://www.philstockworld.com/2022/01/06/dont-look-up-hollywoods-primer-on-climate-denial-illustrates-5-myths-that-fuel-rejection-of-science/



  23. 1020…Wife and I watched that movie over the weekend.  We had the Covid on the brain and were thinking how similiar it is to denial/head in the sand about about that and didn't even think about the climate change aspect.  Loved how they depicted characters in the movie to be very simliar to the real life….ie:  the President was very Trumpian.  Great movie……..makes you laugh……but also worry about where humanity is headed……….:(


  24. Phil/APPL & Rates – APPL has the coveted AAA rating now so at some point money will rush into the bonds given the credit quality. I don't doubt that the stock will overeact though. I still see solid operating results over at least the next couple of years even if that doesn't get recognized in the stock price.


  25. Don't look up/1020 – Meaning to get around to it.

    AAPL/Seer – Well I'm certainly not worried about AAPL or their finances but I worry about humanity when we all look like this:

    Apple's AR Headset Could Come With 3 Immersive Displays | Digital Trends

    By the way:  Report: 87% of teens own an iPhone, Apple Watch is their favorite wearable - That's exactly what I predicted would happen many years ago when my kids were little and I saw what they and their friends were gravitating to (as well as the previous example of how IPods replaced every other device over time).  That's why there's really no price too outrageous to pay for AAPL at the moment as car and home systems are still to come and, if EVERYONE has an IPhone, they'll want ICars and IHomes too and, when they travel, they'll want to stay in IHotels, etc.  

    We went to IMAX yesterday and there's a QR on your armrest and you scan it and it goes to the food menu and you order what you want (Coke Slurpee with 2 shots of rum!) and they bring it to your seat and, since the default payment is Apple Pay – I didn't have to do anything but click OK.


  26. Paragon Theaters | Lux Box

    RCL is probably a good short – they just shut down cruises again:

    I don't know if this industry can survive another long shut-down.

    This is where all the Bitcoin speculation money is going:

    HMBL -0.63%Jan. 06, 2022 2:14 PM ET

    • The increased interest in non-fungible tokens are driving the flow of cryptos to two types of ethereum (ETH-USD) smart contracts linked to NFT marketplaces from the onset of 2021 through mid-December, according a report from Chainalysis.
    • Users sent $40.9B worth of crypto to ERC-721 and ERC-1155 contracts – revised from just $26.9B in a December report that was based on data through mid-October.
    • Recall NFT marketplace OpenSea recently raised $300M in a Series C funding round, valuing the company at $13.3B - making it a big player in the space.
    • NFT-related stocks are mixed so far on Thursday, including: Vinco Ventures (BBIG +1.1%), Liquid Media Group (YVR), WISeKey International (WKEY -0.2%), Dolphin Entertainment (DLPN +0.6%), Color Star Technology (CSCW +0.8%) and Humbl (OTCPK:HMBL -1.5%).
    • Earlier, Polygon's network activity surges amid record high NFT sales.

    This still has legs:

    BABA +4.86%Jan. 06, 2022 2:00 PM ET6 Comments

    • Alibaba (NYSE:BABA) got a lift Thursday, with its shares climbing more than 5% as enthusiasm over an endorsement by noted investor Charlie Munger continued, and outweighed any concerns that came from a middling assessment from J.P. Morgan.
    • In a research report, J.P. Morgan analyst Alex Yao said he was taking a more cautious view of Alibaba (BABA) due to signs that the company's customer management revenue [CMR] will fail to meet expectation when Alibaba gives its next quarterly earnings report. Yao said he believes Alibaba's CMR will decline by 2% from the same period in 2020, as opposed to a prior forecast for 5% year-over-year growth.
    • Yao said Alibaba's (BABA) sales are showing the effects of several factors on the Chinese economy, including downsizing that's been taking place at several Internet companies, and declining property values that have combined to put pressure on consumer spending."
    • "[China's] online physical goods sales grew only 5% year-over-year in November," Yao said. "We don't see signs of improvement in the near future."
    • Yao said such a revenue situation "will make the stock vulnerable until the market identifies an inflection point in earnings revisions, in our view." Yao said that Alibaba (BABA) cutting its earnings "is, to some extent, anticipated by investors," and that belief will likely keep the company's shares under pressure in the near future.
    • However, there were few signs of negativity towards Alibaba (BABA) on Thursday, as Munger's recent stock purchase appeared to work as a sign of support for the company's prospects.
    • On Tuesday, Munger, who serves as vice chairman of Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) disclosed that his Daily Journal investment firm bought another 300,000 shares of Alibaba stock, to give Daily Journal a $72 million stake in the Chinese Internet giant. Munger's Alibaba (BABA) purchase came on the heels of a rough 2021 for the company, as its shares fell almost 50% during the year.

    BTTX +1.43%Jan. 06, 2022 1:59 PM ET1 Comment

    • The Federal Reserve's policymaking committee could start increasing its rate as early as its March meeting "in order to be in a better position to control inflation," St. Louis Fed President James Bullard in a speech at the CFA Society on Thursday.
    • Separately, San Francisco Fed President Mary C. Daly said via Twitter that shrinking the balance sheet would come after liftoff. The post was clarifying a comment she made at a virtual event sponsored by Ireland's central bank.
    • "Right now, it feels very appropriate to begin to taper asset purchases at a faster pace," Daly also commented at the event.
    • The comments come as the minutes from the Federal Open Market Committee's December meeting, released on Wednesday, reflected a decidedly more hawkish tone and described discussions about reducing the size of its almost $9T balance sheet.
    • Bullard said U.S. inflation "surprised substantially to the upside" against a backdrop of robust real economic activity and labor market performance. "There has been an initial U.S. monetary policy response to the inflation shock, and this response is already reflected in financial market pricing," he said.
    • Peeking in on the bond market, the 10-year Treasury yield rises over 2 basis points to 1.73%, after rising 3 bps on Wednesday.
    • The CME FedWatch tool now sees a 69.8% probability that the Fed will boost the federal funds rate by 25-50 basis points at the March 16 meeting, up from a 30.5% probability a month ago.
    • Previously (Jan. 5), Fed policymakers prefer rate changes vs. balance sheet actions to achieve goals

    RRD +0.13%Jan. 06, 2022 1:56 PM ET

    • A recent hack of at R.R. Donnelley (NYSE:RRD) may have led to service disruptions at Fidelity and Vanguard's six-day website outage last week.
    • Around the time of the RRD hack in late December, Vanguard customers were having issue downloading monthly trade statements and trade confirmations through the brokerage's website, according to an Ignites report.
    • RRD disclosed in an 8-K filing on Dec. 27 an intrusion in its technical environment. The firm promptly implemented containment measures, including activating its incident response protocols, shutting down its servers and systems, and starting a forensic probe.
    • The Vanguard website issues were resolved before the New Year and the company told Ignites that the website issues involved a “third-party mailing-and-check processing vendor.” Vanguard declined to say which service provide it was describing.
    • The RRD hack also impacted Fidelity’s printed communications service, according to Ignites, which cited a service alert posted to Fidelity's website.
    • Last week, R.R. Donnelley receives unsolicited $11/share offer from strategic buyer.

    We used to love RRD but they split into 3 parts and we forget to get back into them (I wanted to wait until it was clear what each company actually did).


  27. Submitted on 2016/01/27 at 4:57 am

    The IPhone came out 8 years ago (mid 2007).  The IPod came out in 2002 and slowly but surely wiped out all of the competition in the downturn (2008) but then were replaced by IPhones.  Smart Phones haven't really had a bad economy yet to shake out the weak players – AAPL certainly isn't one of them but, eventually, their rivals will pack it in and AAPL's share will go up and up.  

    The press on AAPL is still very negative – "THEY" are working very hard to keep them down, probably to keep the Fed in easing mode.  

    Sounds pretty dire, right?  This is what global investors are being told this morning and that is what's pushing AAPL lower.  Meanwhile:

    1. Apple returned over $9 billion to investors through share repurchases and dividends in Q1.
    2. Apple now has an installed base of 1 billion active devices, up 25%, year over year.
    3. The company's balance sheet now boasts $216 billion in cash, cash equivalents, and marketable securities, or $39 per share.
    4. The average selling price for Apple's iPhone in the quarter was $691 — up from $687 in the year-ago quarter. In constant currency, this figure would have been $740.
    5. India revenue in Q1 was up 38% from the year-ago quarter, or 48% in constant currency.
    6. iPhone unit sales for Q1 in China and India were up 19% and 76%, respectively, year over year.
    7. The company's gross profit margin for the quarter was 40.1% — up from 37.9% in the year-ago quarter.
    8. Revenue for the company's services segment, which includes sales from iTunes, Apple Music, the App Store, Licensing, Service Parts, iCloud, and Apple Pay, increased 26% compared to the year-ago quarter. This segment now represents about 8% of Apple's total revenue — up from 6.4% of revenue in the year-ago quarter.
    9. Revenue from Apple's other products segment, which includes sales of the Apple TV, Apple Watch, Beats products, iPod, and other Apple-branded and third-party accessories, jumped 62% compared to the year-ago quarter. This segment now represents 5.7% of Apple's revenue — up from 3.6% of revenue in the year-ago quarter.
    10. Apple saw a greater rate of switchers from Android to iPhone in Q1 than ever before.

    Frankly, that's all I want to say on the matter.  It's so tedious having to hold people's hands every single time AAPL has earnings and the bears come out to bash them.  If I had to own just one stock for the next 20 years - it would certainly be AAPL, followed by GE, then IBM.

    Submitted on 2016/01/28 at 3:58 pm

     

    AAPL/StJ – "Admitting" expensive phones are hard to sell is Cook's way of paving the way for the IPhone nano – or whatever they are going to call their low-cost device.  I don't know why people can't understand this but IPhones are following the same track as IPods as they wiped out all the other MP3 players on the planet until there was nothing else left.  Look at Samsung's earnings today – TERRIBLE on the phone side because AAPL is kicking their asses.  PALM is gone, RIMM is gone, MOT consumed….

    It was AFTER the low-cost Nanos were released in 2005 that IPods exploded in sales and the only thing that stopped them was changing them to IPhones.  That's why AAPL is pushing their App Store and ITunes and Apple Pay etc recently, they are setting up to go from 1Bn to 2Bn users and they will no longer care about phone revenues but the constant revenue stream off their users.

    Submitted on 2016/09/13 at 10:21 am

    Speaking of opinions – what were all the analysts saying about the IPhone 7 last week?  Apple has lost it, disappointment, won't lead to better sales….  What have I been saying since the IPhone 1?  They are doing the same thing they did with the IPod, rolling out better, faster, cheaper models every cycle until, one by one, their competitors fall by the wayside.  Samsung's battery problem is a lot like Hillary's pneumonia – AAPL forced Samsung to push the limits and it blew up in their faces – literally.  Trump goaded Hillary into overdoing it to prove she was healthy and it made her sick

    Submitted on 2016/10/11 at 8:01 am

    Image result for ipod market share history

    Submitted on 2017/11/01 at 12:18 pm

    Android/StJ – Yes, I think the IWatch will sneak up and take a lot of share and then AAPL will keep adding features and lowering prices until they squeeze out the competition – like they did with IPod 

    Image result for ipod market share history mp3

    Submitted on 2017/11/01 at 12:28 pm

    Phones/Pharm – That's what BBRY and MOT and ERIC and a bunch of others were saying 5 years ago.  Because of the contract business, it's a slower cycle for AAPL to wipe out the competition but they are following the same plan Cook had when he ran the IPod division – keep putting out top-line models to make money but drop the price on older stuff to squeeze out competitors.  People don't realize that the stand-alone watch is now a very low-cost phone for poorer countries.  The watch and the IPhone SE are both $349 now, probably $199 in 2019 – that's essentially free with any Telco plan.  

    Submitted on 2018/09/11 at 2:10 pm

    And, while we tend to focus on the expensive IPhones, keep in mind the other IPhones get cheaper and more available to the masses.  This is the same thing they did with the IPod and we know how many IPod competitors remain after 20 years!  

    Submitted on 2018/12/20 at 10:13 am

    Android/StJ – As I said, someone is buying it as iOS is barely 50% but, like cheap iPods, you can expect cheap iPhones to eat into Android's market share now that AAPL has iPhone 6s for $99 on AMZN (stores only sell 7s and up).  Tim Cook was the guy who ran the iPod division and he's using the same strategy to wipe out phone competition as well, relentlessly driving down the prices of low-end models so there's no room for competitors to get in.  

    There used to be 20-30 different music players but one by one they gave up, no matter how big the backer, as AAPL has a fantastic strategy of getting manufacturers to gear up to make 200M phones a year and then, 3 years later, AAPL has a new phone but the manufacturers still have the production lines and employees that they don't want to shut down so they continue to make the phones at lower and lower price points.  

    The difference has been, so far, that the games and software have advanced fast enough to make the old phones obsolete (wasn't as much of an issue with MP3s) but once that curve begins to flatten – then there's no reason a person wouldn't want an older model IPhone if it's cheap enough.  

    And don't forget, the watches are also, effectively, cheap iPhones and AAPL already has them down to $229 for the 3 and $400 for the 4 so that's another place they can crowd out the competition (like iPod minis).  

    Damn, I'm convincing myself to buy more AAPL!  

    Submitted on 2018/12/20 at 11:51 am

    India/Pstas – Time Cook was the perfect pick to run AAPL for the iPhone decade – he methodically destroyed iPod competition globally, paving the way for the iPhone and now he's running the same playbook for the iPhone.  THERE CAN BE ONLY ONE!  

    Image result for ipod market share history

    Remember – I can only tell you what is probably going to happen and how to make money investing on it – that is the limit of my powers…  cool


  28. " If I had to own just one stock for the next 20 years - it would certainly be AAPL, followed by GE, then IBM.

    Submitted on 2016/01/28 at 3:58 pm

    I agree on AAPL but curious about your enthusiasm for GE way back in 2016? 

     


  29. GE/Pstas – I felt that they would reorgainze and recover but instead they sold off their divisions one by one and we lost interest in them during that process.  It's just not the same GE it used to be.   In June of 2016 they dumped the Appliance Division and that was the beginning of the end for our interest.  

    LMT spun out of GE in 1993 and that's our Stock of the Century – so GE is still alive for us in some small way.  


  30. Don't Look Up- A good movie, IMO especially compared to most of the cartoonish drivel so popular these days. I respect the comments here and elsewhere about the movie's message but my take is different. I see it as a rather effective satirical send-up of today's  culture in the face of our eventual universal passing. Think about it- the comet/asteroid is inevitably aiming for the end of earths civilization yet the tribal nabobs arrogance fuels the frantic and feckless efforts to stop it. All the bases are covered- mindless mobs; cynical self absorbed politicos; science corrupted by celebrity; hubristic tech titans plunging towards the unknown. In the end, we are all dust to dust and all we have is friends and family with a bit of prayer. Rather spiritual. 


  31. Of course in 2016, GE was still on a good path, recovering from the flash crash in 2015 but selling the appliance division that June was the beginning of the end for them.  

    John Maynard Keynes quote: When the facts change, I change my mind.

    Very important quote! 


  32. Oil seems indecisive

    Too soon for AAPL Puts?


  33. Oil/Eca – I'm just holding on until sanity returns (can take a long time).  AAPL I hate to short.  We have short puts on AAPL in the LTP but it never pulled back to give us a full position but AAPL dominates the Butterfly Portfolio and the short calls we did sell there were a $58,000 loss before we rolled them and now another $3,000 loss already (but it's protecting a massive position – so we don't mind the insurance).  

    AAPL Long Call 2023 20-JAN 120.00 CALL [AAPL @ $173.12 $-1.80] 160 1/20/2021 (379) $448,000 $28.00 $29.38 $10.94     $57.38 $-3.03 $470,000 104.9% $918,000
    AAPL Short Call 2023 20-JAN 150.00 CALL [AAPL @ $173.12 $-1.80] -160 1/21/2021 (379) $-360,000 $22.50 $11.78     $34.28 $-2.33 $-188,400 -52.3% $-548,400
    AAPL Short Put 2023 20-JAN 125.00 PUT [AAPL @ $173.12 $-1.80] -40 9/20/2021 (379) $-42,000 $10.50 $-5.88     $4.63 $-0.38 $23,500 56.0% $-18,500
    AAPL Short Put 2024 19-JAN 120.00 PUT [AAPL @ $173.12 $-1.80] -20 10/15/2021 (743) $-25,500 $12.75 $-5.40     $7.35 $-0.05 $10,800 42.4% $-14,700
    AAPL Short Call 2022 14-APR 155.00 CALL [AAPL @ $173.12 $-1.80] -40 12/22/2021 (98) $-86,000 $21.50 $0.75     $22.25 $-3.18 $-3,000 -3.5% $-89,000

    Still, $3Tn is a little silly, isn't it?  

    Actually, now that I'm looking at it, it is time to roll out the AAPL 2023 spread in the Butterfly Portfolio as it's $369,600 out of a possible $480,000 so $111,000 left to gain but we can roll to 150 of the 2024 $160 ($36.50)/200 ($20) bull call spreads at net $16.50 and that's only $247,500 on the $600,000 spread so we pocket $122,100 and we have tons of cover to sell more calls if AAPL fails to hold $170 and, since we could sell 40 more April $155s for $90,000 – that seems like it could be fun!   Moving to the 2024 position with a net 0.20 delta (vs 0.25 on 2023) also reduces our need for hedge covers by 20%, which is a lot on $480,000.  The cash is also nice to have.  

    Over time, whenever we successfully sell calls (they expire with nice profits), it would be because AAPL is flat or down for the Q and then we can invest $5 to roll the long calls down $10 in strike (the 2024 $150 calls are $41.70 at the moment) and that's how we end up with these huge in-the-money spreads – they are paid for by the short calls we sell.


  34. Whoa- I get very TIRED of the AAPL "taking over the world." mantra. There is always new and better earth shattering concepts moving along. Appl is non functional in rural America and probably the world. And every one I knew who owned the MAC had one to use and a back-up to" send in" to get fixed." They were always down consistently. When someone said they couldn't get their I-Phone to work up here I asked them "who told you it would work." Same with APPL pay. Does not work in the boonies. My MSFT and Samsung work beautifully and I don't have to replace every year. I'm Scotch-I love that!! In fact both work all over the world.


  35. RCL, hindenburg research has a short pos. via ZH. 


  36. AAPL/Pirate – That's why AAPL only has an 87% market share with the teens – there's always room for you rugged individualists who choose to be different.  Wasn't that AAPL's original marketing campaign against IBM?  

    Apple – Think Different | This is not ADVERTISING

    RCL/Kustomz – I like them as a company but they do seem like a no-brainer of a short.  It's going to hit them for about $1Bn per Q being shut down and, since they register in the Bahamas or wherever – there's no Government bailout coming their way.  


  37. Phil-I guess we stick with what works. I have made $ on AAPL since people seem so rabid about them. Don't know myself but I take your word for it. And yes I don't short AAPL or Tsla for that matter.


  38. Phil - I am a long term holder of apple stock shares.  Currently I have deep ITM Jan 2023 100 strike short calls as a hedge, covering my entire position.  Any recommendations?  Thank you.  Dan




  39. Recent Israeli study uncovers the cause of ADHD


  40. Bitcoin's last three crashes (personally witnessed all 3):

    2011: 30 to 2 (-93%)

    2013-2015: 1100 to 215 (-90%)

    2018: 19000 to 3500 (calculate the percent drop yourself)

    Average length of crash: 10.1 months, -85%

    Currently we're 2 months into a -35% crash. Look for $13,500 in September. Anything under $20k is big time buy signal.


  41. Here is the replay of this week's webinar

    https://youtu.be/at7ngDQVXPk


  42. Good morning, Dan.  Need to know details about the whole position.