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Turnaround Tuesday – Russia Pulls Back, Market Pulls Up

Whatever the next rumor is.

Now the market is running based on troop maneuvers in the Ukraine.  Early this morning, Russia’s Defense Ministry said it had pulled back some troops from near Ukraine while noting that large-scale military maneuvers were continuing and Western officials warned that combat units were moving into forward positions.    

The announced pullback of around 10,000 (7.6%) troops, out of a force estimated to have numbered about 130,000, came amid a new round of shuttle diplomacy aimed at defusing the crisis. Moscow has warned of unspecified consequences if the U.S. and its allies reject its security demands.  While US markets are acting as if peace has broken out - In Ukraine (where they can do math), officials played down the importance of Russia’s troop announcement, saying forces could be quickly returned to Ukraine’s borders.

“We have to await confirmation from our intelligence community that this is in fact occurring,” Oleksii Danilov, the head of Ukraine’s National Security and Defense Council, said in an interview. “I cannot say that this is a turning point. The turning point will be when the Russian Federation realizes that we are a separate state, that we have the full right to be one, and stops trying to liquidate us.”

No one is liquidating the indexes as traders leap back in at the first sign of good news. 

   

It's only a blip in the grand scheme of things but it's enough to push us back into our bullish Bounce Chart – which measures the mild retracement from the top – as opposed to our bearsh chart which measures how close we are to a 20% correction:

  • 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)

As you can see – even with the morning rally we are still very much in the red on our bullish chart and what we need to see today is the more green and the Nasdaq (/NQ), which is currently at 14,540, needs to get back over the 14,700 line, which is the only red on our bearish chart.  Overall, the market is still going nowhere fast – down for the year and down for the month.  

Not down is Natural Gas (/NG) which popped over $4.40 this morning.  Sadly, we took our money and ran yesterday and now, if you are to believe Russia, it's a good short at that line with tight stops above.  Oil has already fallen $3.50 from yesterday's highs, now $92.35.

That will be good if it sticks beacuase, otherwise, we're in a huge inflationary crisis with 73% of the 200 items the Government uses to track prices saw annual price rises of 3% or higher in January, and some 55% of items saw inflation of 5% or higher.  That is the worst recorded inflation since 1980, when 80% of the items were inflating 5% or more but this is early stages in our Inflationary Spiral. 

5 shockingly funny cartoons about growing inflation fears | The WeekJim Bullard of the Fed is advocating for a "rapid" 1% rate hike, saying the Fed's credibility is on the line as they MUST reign in inflation before it gets out of control (as if it isn't already).  “I do think we need to front-load more of our planned removal of accommodation than we would have previously. We’ve been surprised to the upside on inflation. This is a lot of inflation.”  Bullard insisted that inflation has been running hot for months and the Fed needs to be forceful in using its tools to control price increases.

By "a lot," Bullard may be referring to the average annual cost of daycare in the United States now hitting $12,300, according to a new report from Child Care Aware.  That's why you keep hearing these stories about it not being worth having a job if you have to pay for daycare to take it – it's hard to believe if you aren't suffering through it.   For two children, that's $24,600 AFTER-TAX money you need to come up with so you can go to work for minimum wage which, even at $15/hr, would pay you $30,000 BEFORE taxes, SS, unemployment, etc are removed.  

Since 1990, child-care costs have risen 214%, according to the Bureau of Labor Statistics (BLS) Consumer Price Index analysis, while the average family income has increased by 143%,” the First Five Years Fund report said.  In all four regions, the annual price of child care is more than the annual cost of in-state tuition at a public four-year university. (Public in-state tuition ranges from $9,702 in the South to $13,878 in the Northeast.) 

These are not the kind of problems that will go away with a wave of the Fed's magic wand.  We have embedded, not transitory inflation and, like Covid, we are going to have to learn to live with it.  Speaking of which, infections are down to just over 5M people per month in the US but 2,454 people are still dying EACH DAY - no worries, right?

United States ›

That's as if every single person who was at the SuperBowl on Sunday was dead at the end of the month.  Don't worry folks – take those masks off – learn to "live" with it.  What's really tragic is the US death rate is 5x what it is in other countries – that's the real issue!  We COULD be saving 60,000 people a month – we're CHOOSING not to…

No wonder we like Squid Games.  Some countries think it's cruel and inhumane but only 456 players start out in Squd Games – we kill that may people before breakfast and, at least in Squid Games – there's a prize!  

 


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  1. Good Morning!


  2. hi phil, re post,

    we are at /es 4450  dont we need to see the weak bounce on upper range 4512 before the strong one. 


  3. https://www.cnn.com/2022/02/14/politics/trump-mazars/index.html

    Trump's accounting firm says financial statements are not reliable. 



  4. U.S. Accuses Zero Hedge of Spreading Russian Propaganda


  5. Russians scoff at Western fears of Ukraine invasion


  6. Good morning!

    Thanks Tommy, I read that wrong.

    Accounting/Seer – Rats leaving the ship.  I wonder if you can run a Presidential campaign from jail?  I doubt it would put off many of his supporters.  

    The stock market is higher, with focus staying on the prospect of de-escalation on the Ukraine border instead of higher wholesale prices.

    Right before the start of trading Vladimir Putin said a partial troop pullback decision has been made, Bloomberg reported.

    The Nasdaq (COMP.IND) +1.6%, S&P (SP500) +1.2% and Dow (DJI) +1.1% are all rebounding.

    The Treasury yield curve is still steepening. The 10-year yield is up 4 basis points to 2.04%, while the 2-year is flat at 1.59%.

    "The two equally powerful forces weighing on stocks right now that are exacerbating volatility include Russia/Ukraine tensions and Federal Reserve hawkishness," David Bahnsen, CIO of The Bahnsen Group, said. "In the short term, stocks are moving in lockstep with headlines from the Russia/Ukraine situation, and any indication of thawing tensions between Russia and Ukraine is enough to spark a small rally in stocks."
     
    "The short-term day-to-day stock market reaction from Russia/Ukraine tensions is less relevant than what this situation means for the energy markets over the next months, which is the most significant financial market impact from this."

    Crude prices are slumping, with WTI down more than 3%.

    Yesterday was the first time in at least a year that crude rose 2% but the Energy sector lost 2%, according to Bespoke Invest. That indicates worries that higher commodiites prices could trigger a recession.

    The January PPI rose 1% for January, double expectations, pushing the annual rate down just a little to 9.7%. But that had little impact on futures and rates.

    "Unlike the CPI, where base effects mean the YoY numbers will keep rising through April almost no matter what, the PPI has the opposite base effect issue," Janney's Guy LeBas tweeted. " High prints in winter 2021 mean that the YoY numbers likely flat/declining even if monthly stays elevated."

    The chip sector will be in focus today with Intel agreeing to acquire Tower Semi.

    See more of the stocks making the biggest moves this morning.

    XLE -2.15%Feb. 15, 2022 9:29 AM ET5 Comments

    With oil-price strategists recently calling for $100+ oil, prices up ~$10 in the past month, and an apparent cooling of tensions between Russia and Ukraine Tuesday, it's worth revisiting the conflict's potential impact on oil markets (NYSEARCA:USO).

    In late January SA speculated on the conflict's implication for energy markets. At that time, it appeared energy-related sanctions would be unlikely, particularly oil-linked sanctions. Goldman released a report shortly thereafter agreeing with the conclusion, as the bank saw little risk to Russian energy flows on the back of a conflict. Since, a series of higher oil price targets have focused on surplus / deficit forecasts, largely ignoring geopolitical risks from Russia.

    Goldman, Morgan Stanley and Wells Fargo now forecast summer 2022 prices in the $100+ range, citing increasingly tight balances and the need for prices to rise to blunt demand growth (NYSE:VLO) (NYSE:PSX). Although JPMorgan calls for up to a $30 geopolitical risk premium in their $125 Q2 price forecast, nobody on the Street is calling for reduced oil exports from Russia to drive fundamental balances. Additionally, BP (NYSE:BP) has managed to outperform the majority of integrated oil peers year to date, despite a large stake in Russian producer Rosneft, a somewhat market-based indicator pointing to sustained Russian exports.

    If physical balance forecasts are unchanged despite conflict risk, perhaps financial market positioning has been the driver of higher prices. However, weekly data posted by the Commodity Futures Trading Commission "CFTC" points to relatively muted speculative positioning in the oil market, as the below chart from Goldman indicates:

    This is not to say there's no reason for oil prices to fall. Chevron (NYSE:CVX) CEO Mike Wirth on the Company's Q4 earnings call said his company is planning for lower prices, as there's abundant resource to be profitably developed at today's prices. Conoco (NYSE:COP) CEO Lance indicated the market is fragile, and analysts should be worried about the pace of shale production growth (NYSE:XOM) (NYSEARCA:XLE). However, tensions in Ukraine have not been a primary focus for commodity strategists, speculators or producers. Suggesting conflict headlines are unlikely to be the primary driver of medium-term oil prices, even if tensions in the region subside.

    JNJ +0.75%Feb. 15, 2022 9:14 AM ET9 Comments

    A Johnson & Johnson (NYSE:JNJ) attorney on Monday told a New Jersey bankruptcy court judge that its plan to use a subsidiary to resolve talc claims against it is the best way to achieve an "equitable, efficient, and consensual resolution."

    J&J is facing more than 38K cases that allege the company's talc products caused cancer.

    The J&J subsidiary, LTL Management, is part of a legal strategy known as a "Texas two-step" that allows companies to separate liabilities from assets through a divisive merger, according to Reuters.

    Plaintiff's lawyers argued that the strategy is meant to delay lawsuits that would normally go to a jury trial.

    "At its core, this case is rotten," Jeffrey Jonas, a plaintiff's lawyer said during opening arguments, Reuters reported.

    LTL Management President Robert Wuesthoff testified that it's not possible to take all the talc cases the trials, adding that prior to LTL, J&J had conducted ~10 talc trials annually.

    U.S. Bankruptcy Judge Michael Kaplan said he plans to rule on the case by the end of February.

    Read why Seeking Alpha contributor The Value Pendulum considers J&J a buy.

    TGT -0.21%Feb. 15, 2022 9:06 AM ET1 Comment

    Evercore ISI issued a negative Tactical Trading Call on Target (NYSE:TGT) ahead of the retail giant's Q4 earnings report and analyst day event on March 1.

    Analyst Greg Melich and team believe that Target (TGT) is likely to top consensus Q4 EPS marks, but raised concerns that the EBIT margin guide is likely to be in the 7% to 8% vs. the Street's expectation for 7.9%.

    "Target has done a great job of driving traffic growth and the two-year comp sales stack is in the mid-30% range; however, comparisons are becoming tougher to cycle and we look for promotions and gross margin rate to normalize. With inventory availability improving, Apparel and Home (traditionally 35-40% of sales and 55-60% of profit) are likely to see increased markdown, as traditional clearance activities should resume in 2H22. Ocean freight and labor expense are two well-documented near-term headwinds for TGT and peers, and while we believe that Target is ahead on labor investments, (Amazon, Walmart) will ultimately limit pricing power."

    Evercore's latest Q4 shopping intention survey indicates that consumers’ intent to shop at Target (TGT) remains solid, but is not unusually positive.

    See all the consensus estimates on Target and the retailer's track record on earnings day.

    Feb. 15, 2022 8:32 AM ET47 Comments

    • January Producer Price Index: +1.0% vs. +0.5% consensus and +0.4% prior (revised from +0.2%).
    • +9.7% Y/Y vs. +9.2% consensus and +9.8% prior (revised from +9.7%).
    • Prices for final demand service increased 0.7% M/M in January, the same as in December. A major factor in the increase was hospital outpatient care prices, up 1.6%.
    • Prices for final demand good rose 1.3% M/M after declining 0.1% in December. Prices for final demand energy moved 2.5% higher and for final demand food increased 1.6%.
    • Core PPI: +0.8% vs. +0.5% consensus and +0.6% prior (revised from +0.5%).
    • +8.3% Y/Y vs. +8.0% consensus and +8.5% prior (revised from +8.3%).
    • Previously (Feb. 10) Consumer inflation climbs the most in 40 years, 10Y UST yield tops 2%

    Only double what was expected?  No worries…


  7. January wholesale inflation surged 9.7% from a year ago





  8. Inflation – The US may handle it with interest rates – how well is a good question – but Korea is handling it (again, how well) by not reproducing: https://koreaexpose.com/korea-birthrate-drop-caused-by-financial-burden/


  9. CMG +1.47%Feb. 15, 2022 8:28 AM ET

    • Chipotle Mexican Grill (NYSE:CMG) has announced its 3,000th restaurant opening.
    • The newest restaurant opened in Phoenix, Arizona and features the brand's digital order drive thru pick-up lane, called "Chipotlane."
    • Chipotle opened 215 new locations in Europe, Canada and the U.S. in 2021. It plans to launch another 235 to 250 new restaurants over the next year.
    • Commenting on the news, Chipotle CEO Brian Niccol said, "We are thrilled to celebrate our 3,000th restaurant opening, and the progress we've made towards our goal of having 7,000 restaurants or more in North America."
    • CMG shares climbed 10.16% on Feb. 09, a day after the restaurant firm's Q4 earnings release

    SPWR +7.71%Feb. 15, 2022 8:27 AM ET

    SunPower (NASDAQ:SPWR) +4.2% pre-market as UBS upgrades shares to Neutral from Sell with a $17 price target, raised from $14, seeing a more balanced risk/reward after falling 44% over the last three months and 68% from the January 2021 peak.

    While the outcome of any potential net metering policy changes in California remains highly uncertain, UBS analyst Jon Windham said he sees the risk as largely priced in, bumping his rating to Neutral while awaiting the details of a final decision and as residential demand in the state remains relatively strong.

    Windham sees the sale of the Commercial & Industrial Solutions business to TotalEnergies as the substantial completion of SunPower's pivot to focus on its more profitable and faster growing residential rooftop solar operations.

    Wood Mackenzie analysts have warned that California's residential solar market could be cut in half by 2024 if state regulators enact proposed changes to net energy metering tariffs.

    DIDI -1.05%Feb. 15, 2022 8:23 AM ET

    Didi (NYSE:DIDI) has run into a number of regulatory issues from the Chinese government since it went public on the New York Stock Exchange last June, but those appear to be "largely over," investment firm Bernstein said.

    In a note to investors, analyst Cherry Leung, who rates Didi outperform with a $6.20 price target, noted that along with the cyber and data security investigations, Didi is looking to increase its license compliance, with the market having already priced in a 10 billion Reminibi ($1.5 billion) penalty from the review.

    "Going forward, we believe having the government as a shareholder will help build the market's confidence, especially around its governance oversight," Leung wrote in a note to investors.

    Didi shares were higher in premarket trading on Tuesday, tacking on more than 2% to $4.37.

    In addition, Leung noted that Didi has maintained its leadership position in the Chinese ride-hailing market, with customer loyalty "better than expected," as order share only dropped 7% to 74%.

    "We expect DIDI to invest in marketing shortly after resuming new customer acquisition," Leung continued. "But in the long run we don’t expect deep customer incentives under the anti-trust scrutiny."

    The ride-hailing market in the country is "massive," according to Leung and one that is still growing, even if Didi is getting ready to lay off 20% of the company prior to listing shares on Hong Kong, according to Bloomberg.

    In December, Didi said it would delist its shares from the U.S. and move to Hong Kong.

    It's likely that Didi will continue to focus on growing its domestic business and not look to international opportunities as wide as it had before, making shares attractive for potential investors.

    "DIDI lost over 70% of its value since IPO, and is currently at a EV/FY23E Platform Sales of 1.1x, ~50% below Uber and Lyft," Leung continued. "We expect the stock to come out of the trough with its business back to normal."

    Earlier this month, Tencent (OTCPK:TCEHY) said it did not buy more shares in Didi, despite rumors to the contrary.

    MAR +5.61%Feb. 15, 2022 7:50 AM ET

    Marriott International (NASDAQ:MAR) pushed higher in early trading on Tuesday after the hotel operator sailed past consensus expectations with its Q4 earnings report. Marriott said demand continued to shine during the quarter, with slower, yet continued improvement in business transient and group demand. The impact of the Omicron COVID variant appears to be lighter than originally feared.

    Worldwide REVPAR change was up 124.5% in constant currency during the quarter against the soft pandemic comparable and North America REVPAR increased 143.6%.

    Adjusted EBITDA came in at $741M vs. $317M a year ago and the consensus estimate of $685M. Adjusted operating income was $578M vs. $529M consensus.

    The company added more than 86K rooms globally during 2021, including approximately 43K rooms in international markets and a total of over 18K conversion rooms. Net rooms were up 3.9% during the year. At the end of 2021, Marriott's (MAR) worldwide development pipeline totaled 2,831 properties and roughly 485K rooms, including approximately 19K rooms approved, but not yet subject to signed contracts

    Shares of Marriott International (MAR) gained 2.63% in premarket trading after the Q4 earnings topper.

    INTC +1.35%Feb. 15, 2022 7:25 AM ET9 Comments

    Intel (NASDAQ:INTC), which is still heavily reliant on the PC and notebook spaces to generate revenue, is seeing a "red flag" as January notebook shipments fell drastically, largely due to supply constraints, Citi said in a note to investors.

    Analyst Christopher Danely, who has a neutral rating and a $55 price target, pointed out that January notebook shipments fell 24% month-over-month, larger than the 16% decline the firm was expecting.

    As such, the firm's Taiwan notebook analyst lowered their notebook shipment forecast for the first quarter to down 16% quarter-over-quarter, but still above the 20% decline it has experienced previously, largely due to component supply tightness.

    "We see this as another red flag after Intel stated it sees an inventory correction in the notebook end market during its last earnings call," Danely wrote in the note. "We believe PC sales will cool off in C22 due to a reversion to the mean after two straight years of double digit growth and as such we reiterate our Neutral rating on INTC."

    Intel shares were higher in premarket trading, gaining slightly more than 1.5% to $48.34.

    On Tuesday, Intel said it was acquiring Tower Semiconductor (NASDAQ:TSEM) for $53 per share in cash, valuing the Israeli-based semiconductor company at $5.4 billion.

    It will integrate the company into its Intel Foundry Services unit to become a fully integrated foundry business.


  10. Birthrate/Snow – I see that with my kids and their friends – they are not too optimistic about the future and not as into dreaming about a family with a couple of kids and a dog like we used to.  Doesn't take a lot of non-participants to tip the population downward – that's why most religions encourage their flock to have children – gotta fill those collection plates!   

    Unfortunately, Social Security is a Ponzi scheme that needs younger workers to pay for older workers' retirements.  That can go south if we have less younger workers.   Will robots pay SS?  


  11. We lost ground in our portfolios since 2/10 and I think the factor is more the higher VIX than anything else – we did not make major changes:

     

     

    We're very well-balanced overall.  Yesterday morning it was:

    LTP is up $75,387 this morning – that's nice!

    Security Value:  $483,519
    Cash on Hand:  $1,813,903
    Total Value:  $2,297,421
    Portfolio Ret.:  359.5%

    More than makes up for the STP dropping $31,620 since we reviewed it yesterday (and decided nothing needed changing):

    Security Value:  $102,755
    Cash on Hand:  $272,943
    Total Value:  $375,698
    Portfolio Ret.:  87.8%

    That's pretty much just how we want our balance to be on the way up, giving up about 1/3 of our gains for the "insurance" of the hedges. 

    And now we have: 

    LTP:

    Security Value:  $501,958
    Cash on Hand:  $1,813,903
    Total Value:  $2,315,860
    Portfolio Ret.:  363.2%

    STP:

    Security Value:  $148,175
    Cash on Hand:  $272,943
    Total Value:  $421,118
    Portfolio Ret.:  110.6%

    So we're actually gaining in the insanity so not much for us to adjust but not enough of a clear signal to get us off the sidelines to add new positions.  

    Today we have:

    LTP:

    Security Value:  $452,690
    Cash on Hand:  $1,813,903
    Total Value:  $2,266,593
    Portfolio Ret.:  353.3%

    STP:

    Security Value: $121,875

    Cash on Hand: $262,943

    Total Value: $384,818

    Portfolio Ret.: 92.4%

    We sure don't want to be under-hedged but our primary hedge is the 2024 TZA spread – so that's not going to show us good gains in the short-term.   May as well do our review and see how everything looks.


  12. Phil/Credit Card – haven't heard anything from Andy regarding the inability to change my credit card.


  13. Phil – also opioids – kills 100k US Americans. More than traffic and guns combined.


  14. Phil,

    I had the same issue with changing credit card. That specific site page is not working. 

    Separately, what is the email id that I can reach you? phil@philstockworld.com does not get a response.


  15. Short-Term Portfolio Review (STP):  $384,818 is up $230,345 since our 1/18 review so hard to quibble about dropping $37,000 from last week but it's important to know how your hedges are performing.  The really big change we made since then was cashing in our 200 TZA 2023 $20 calls as they were over $300,000 and we were low on cash and we moved to the much cheaper 2024 $30/45 spreads, doubling what we had.  What we sacrificed, however, is that short-term payoff on a dip that makes you feel good when you look at your balance – perhaps we can fix that?  

    On the whole, we adjusted expecting the bounce but, so far, the bounce has been fairly weak.  I'd feel better being a bit more bearish but, on the other hand – I think we had about $900,000 worth of protection – so perhaps we're in the overkill zone?  

    • CMG – Short $1,800 calls with a year to go?  It's a long time to wait for $24,850 and we may endure some pain along the way but it's over 70x earnings at that price – I just can't bring myself to buy them back for this price – even with a 52% profit.  Still, wait another year for 48% – more sensible to kill it and look for something else to short.  

    • COIN – Not worried.
    • LABU – Just picked them for Money Talk.
    • W – This sucks as we're bullish but it's a leftover leg from when we were short.  I have no faith in them but I'm not paying 160% of what we sold it for when it's only $7.50 in the money out of $38.40 so screw it – we're long!  

    • TZA – Comically flat in the big picture.  We're 50% in the money and if the RUT even twitches lower we should be over $40 and we're only 75% covered on the $400,000 spread that's currently net $173,000 so a good $227,000 of protection here.

    • DIA – We paid net $50,000 for this $150,000 spread but the key to our success should be selling short-term puts to cover our $50,000 so it ends up a free spread.  We sold one set already and now let's sell 20 March $335 puts for $4.20 ($8,400), using 31 out of 213 days we have to sell.  If 34,560 (weak bounce) fails on the Dow, we'll buy 1/2 of them back.    Overall, we'll call this $100,000 of downside protection.

    • TQQQ – Deep in the money but only net $34,150 out of the $75,000 spread and it's uneven because we cashed in 10 of the long puts for $43,000.  Since the most we could have made on the whole spread was $100,000 – it seemed sensible.  So far, there hasn't been much of a bounce and we may have to re-cover for a bit of a loss if the Nasdaq can't get back over 14,700 and hold it.   Call it $20,850 of protection as this one could go wrong if TQQQ drops sharply (again) though the damage shouldn't be more than $20,000 – so I'm deducting that from our potential.

    • SQQQ – It's a $200,000 spread currently at the money for net $21,240.  We are a little limited by the short June calls but, again, we thought the Nasdaq would be more bouncy and we'll have to rectify that mistake if 14,700 doesn't hold.  Otherwise, I'm comfortable calling it $78,760 worth of protection as we'll deal with the short calls – one way or the other.  

    • TZA – Our main spread is $600,000 but 2024 will be very slow to pay out, currently net $112,000 and $3 ($120,000) in the money.  We have 50 additional 2024 short $40 calls and we've rolled the rest to 50 short Jan $50 calls and 50 short April $40 calls – neither one of which seems like a threat at $33 but we'll keep a close eye on them.  Then we have 100 short Jan $50 calls and again, no thread and we're up 20% so I think these we'd have to stop out even with the other 150 still in play.  Keep in mind we took a $300,000 short off the table and that's why we're too bullish but, again, we thought there would be more of a bounce.  With the Russell, they're down 20% and I think they've had a good correction – the other indexes just need to catch up.  I guess if 2,000 fails we need to buy back half the short calls for about $100,000 and then we could count on let's say $300,000 of downside protection (including that $100,000 planned cost).  

    • UNG – The bull call spread is net $9,450 out of $10,000 so time to cash that out and we can leave the short puts.  

    So, with our discounting of TZA, I'm calling it $726,610 of protection but we'll have to be nimble about pulling the plug on those covers if things get worse.  


  16. Sorry Seer (and Harip), I know Andy was away for the weekend but I'll yell at him about this.

    Email/Harip – That is correct, I must have missed it.  What did you send it from?

    Opiods/BDC – That's another terrible thing.  Lost in the shuffle, unfortunately.  John Oliver has done some good stuff covering them.


  17. Hi Phil,

    Sent you email from haripr @ yahoo.

    Wanted to get your thoughts on trades on FB and PYPL at these levels. I might have missed your comments from past two weeks since I was busy.

    Thanks


  18. Hi Phil, I have the same problem. Keep getting time out while trying to change my credit card info

    thanks



  19. The Trouble with Andrew





  20. FB/Harip – I don't see that mail.  Why not just ask in chat?  That's what it's here for.

    As to CC issues, Andy is checking into it.



  21. Wall Street Fears Market Jolt as Inflation Pinches Low-Income Americans


  22. Sorry, two completely different issues. Email was about membership

    Separately, wanted to get your thoughts about FB and PYPL at these beaten down levels. Your response here is good for the question about FB and PYPL

    Sorry about the confusion. 





  23. Wow, LABU up 10% today.  That's my new trade for Money Talk – I hope it doesn't get away.

    FB/Harip – I'm no fan of the company but now that they are under $600Bn at $220 against $35Bn in earnings – I think it's a reasonable bet but I would not go crazy.  In the LTP, we're playing it more like a butterfly play, selling short-term calls and puts against the long position.

    FB Long Call 2023 20-JAN 260.00 CALL [FB @ $219.53 $1.83] 5 3/17/2021 (339) $32,500 $65.00 $-47.40 $40.20     $17.60 $0.19 $-23,700 -72.9% $8,800
    FB Short Call 2023 20-JAN 300.00 CALL [FB @ $219.53 $1.83] -5 3/17/2021 (339) $-23,500 $47.00 $-38.08     $8.93 $-0.32 $19,038 81.0% $-4,463
    FB Short Put 2023 20-JAN 230.00 PUT [FB @ $219.53 $1.83] -3 3/17/2021 (339) $-8,310 $27.70 $8.05     $35.75 $-2.00 $-2,415 -29.1% $-10,725
    FB Short Call 2022 14-APR 340.00 CALL [FB @ $219.53 $1.83] -3 1/19/2022 (58) $-3,900 $13.00 $-12.75     $0.26 $-0.07 $3,824 98.0% $-77

    As a new spread, I'd go lower, of course but it was only net $9,000 less $8,310 on the short puts (which I think are a good target) so net $690 cash cost on the spread and we sold the April $340s for $3,900 so, if they expire worthless (done already), we have a net $3,210 profit already.  So it's not about me liking FB – I'm just taking advantage of the suckers who do and are paying too much premium expecting a fast recovery.  

    Now we can sell April $240 calls for $6 and pick up $1,800.  The cost of rolling our 5 2023 $260s at $17.60 to the $240s at $24 is $7 ($3,500) so we should take advantage of that as well but maybe out to 2024 and roll the short calls – have to figure it out tomorrow.

    As to PYPL, very much not a fan.  Even after falling from $300 to $115, it's still a $134Bn market cap and they should make a bit over $5Bn so call it 25x so, as before, I am still not interested.  I spend a lot of time telling people not to buy them but maybe when they are below $120Bn at about $100 - I will think they are worth a put sale that nets us in around $80.  

    Submitted on 2022/02/02 at 12:55 pm

    PYPL/Kgab – Same thing I've been saying since last earnings:

    Submitted on 2021/10/21 at 3:48 pm

    PYPL/Stock – Apples and oranges I think.  $300Bn+ for Paypal is not for me.  You know that… V only make $15Bn and MA makes twice as much money ($10Bn) with a $350Bn valuation so this is like betting Dr Pepper beats KO and PEP over time.  It's been 100 years – it's not going to happen…

    Submitted on 2021/11/05 at 1:36 pm

    PYPL/Kustomz – Haven't seen you in a while!   $268Bn for PYPL is 50x current earnings and 40x fantasy forward earnings so yeah, if they are not firing on all cylinders, the sell-off is justified (and overdue).  As I was saying above – stocks bought by idiots who don't grasp simple math.

    And I wasn't saying I liked MA or V, just that PYPL is not going to be an actual threat to them and doesn't compare.

    I don't know why people are so fascinated with them.  It's an over-priced payment-processing service.  Different is not necessarily better.  


  24. Yes that was me asking about PYPL in October 2021.   


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  26. Good morning. Here is the link to today's webinar

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  27. maybe the decarbonization investment should be a hedge fund?


  28. Munger is a such a total gasbag. Get rich quick and doing nothing for civilization explains exactly the last 50 years of his money-making life, from a certain point of view. Completely discredited is the unique efficiency brought about by digital currencies, there ability to create new money to service economic expansion that fiat currencies are beginning to become too inefficient to do. Completely discredits this new ability to value social movements outright, like climate change, via peer-economics. We're going to solve climate change how? Through municipal bonds? Governments??? Fiat currency controlled by whom, the UN? A new central-UN-government controlled globalization fiat currency? Yeah, I see that happening. On opposite day.

    Imagine sitting there being so close-minded and wanting nothing to ever change. He must be facing his own mortality. "End of life is scary! I don't want anything to change (like, y'know, being alive), protect me government, protect me! Ban cryptocurrency outright!" What a total deuchebag. He doesn't have to worry about climate change. He should keep his wrinkly mouth shut. These kinds of articles really grind my gear.