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Monday Mayhem – Putin Goes Nuclear, Japan Slows Down, China Falters

Its Always Something GIFs - Get the best GIF on GIPHY

Well, well, well.  

Those scruffy little Ukrainians have been holding off Russia this weekend – even though they are outgunned and outmanned about 10:1.  That has caused Lord Vladimort to ready the nukes   Citing “aggressive statements” by NATO and tough financial sanctions, Putin issued a directive to increase the readiness of Russia’s nuclear weapons, raising fears that the invasion of Ukraine could lead to nuclear war, whether by design or mistake.

Like Trump, I thought Putin was a smart guy but he's not been playing this smart.  He could have easily taken over the diputed territiories in the Eastern Ukraine (Donetsk and Luhansk), where the separtatists already have control but instead they attacked the whole country, blowing his "I was just trying to help" narrative out the window and causing the collateral deaths of thousands of civilians, which is a war crime – but one the US commits all the time, so no one is making a big deal about that.  

(PA Graphics)What Putin is actually doing is undoing the damage Trump did by re-uniting Nato and re-establishing the US, UK and Germany as the go-to team in a crisis – even though Boris Johnson is still in office – that's quite an accomplishment!  When people start looking to Boris Johnson for steady leadership in a crisis – you know things are getting weird.  BoJo (as he is called by the cool kids) has dismissed Vladimir Putin’s announcement that he is putting Russia’s strategic nuclear deterrent on high alert as a “distraction” from struggle his troops are facing in Ukraine.

Not only has Putin perhaps overplayed a weak hand but now he's actually gotten the West to move on to strict banking sanctions.  Russian banks are being cut from the SWIFT System, which is how money is transferred internationally.  Roughly 1% of SWIFT traffic goes through Russia and that action alone dropped the Ruble 30% this weekend and the Russian markets are shut down today as their entire financial system is now in chaos.  

Putin might be able to get on the alternate Chinese system but his bombing of civilian targets may cause China to say no as well (even though they would love another customer for their "Cross Border Interbank Payments System") and there are people who think Russia will use BitCoin as an alternative but even Putin isn't dumb enough to pay $40,000 for one of those useless things.   

Of course we went long on Silver (/SI) again as it tested $24 on Friday – that's easy money and already at $24.40, which is up $2,000 per contract over the weekend.  We also took a long on Natural Gas (/NG) at $4.56 and that hasn't moved much yet, so still good for a new trade as it will skyrocket if Putin cuts Europe off. 

The Futures were down over 2%, but that was before it was time to manipulate them and now they are only down about 1% but none of that matters other than our Bonce Chart, which is still the same as it was on Friday afternoon, when we reviewed it in our Live Member Chat Room.  We also tilted a bit more bearish in our Short-Term Portfolio as we didn't see any upcoming data likely this week to improve conditions:

Bostic speaks twice and Powell testifies to Congress Wednesday and Thursday and the always doveish John Williams talks us into the weekend.  No one is speaking after the Non-Farm Payroll Report on Friday – so it's probably pretty good.  I'm more concerned about what's going on in the rest of the World as Industrial Production in Japan fell for the 2nd straight month (so the quarter is doomed) and it's far worse than expected – even by leading Japanes Economorons (or Keizaimorons, as they are known in Japan) and now the war at their doorstep – NOT GOOD!  

Japan's production suggests a continued struggle among manufacturers

Over in China – exactly as we predicted but shocking everyone else – the Construction Slump is getting worse and their stimulus is not helping because Evergrande and others still having even begun to book their true losses – much like US Financial Institutions in 2007.  The PMI was down ahead of New Year's (Feb 1st) and, obviously, New Year's killed February too but no sign of recovery since then either.  NOT GOOD!  

Now, gather the kids around and I'll tell you a very important economic lesson:  You can't build things if you don't have any money and no one is going to give money to builders who are already defaulting on hundreds of Billions in debt to build more empty cities.  The Government would like to give them money – as soon as they are done bailing out the Trillion Dollar debt they have already run up and the Politburo (or "Parrot-Donkey" in English) is almost as screwed up as our Congress so good luck getting a Trillion-Dollar aid bill passed to bail out rich assholes while people are still starving from the Covid crisis.  

Of course, many of the Politburo members are rich assholes themselves and a lot of them invested in real estate – so there's still hope for the Everland Gang – just not much of it.  ING Groep NV cut its prediction for China’s 2022 growth last week to 4.8% from 5.4%, saying investment growth isn’t picking up as strongly as it should be.    

There are, surprisingly, still quite a lot of earnings coming in – mostly from the small cap side but we have some huge retailers reporting this week – so let's pay particular attention to what they say as well.



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  1. Good Morning.

  2. I bet tdump has this song on his Ipod playlist…the bad actors have their hands full!

  3. World unites against Putin

  4. Ruble plummets as sanctions bite, sending Russians to banks

  5. Holy Smokes!  Saint Javelin and Sir Stinger may take down the entire Russian military!  :)

  6. I'm glad to see something helping Ukraine, but it's sad to see that we've reached that level of technical mastery with weapons when so many other important ares lag behind. 

  7. Honest opinion I feel like I've never seen the world so united on a single issue since 9/11.  Ukraine and Putin are bringing the world together and even though I hate war and I wish it would end, its strangely inspiring and reading social media these past few days has filled me with sadness and dread but also moments of hope and camaraderie.

  8. Good morning!

    Javelin/1020 – And about $200,000 per missile – KaChing for LMT – send in the tanks!

    Watch the Army's Javelin Anti-Tank Missile Blow Stuff Up

    Show us your animated GIFs... [Volume 3] - Page 448 - The Lounge -  PistonHeads UK

    That sums up war nicely, Kinki…  

    "Beat! beat! drums!—blow! bugles! blow!

    Through the windows—through doors—burst like a ruthless force,

    Into the solemn church, and scatter the congregation,

    Into the school where the scholar is studying,

    Leave not the bridegroom quiet—no happiness must he have now with his bride,

    Nor the peaceful farmer any peace, ploughing his field or gathering his grain,

    So fierce you whirr and pound you drums—so shrill you bugles blow.

    Beat! beat! drums!—blow! bugles! blow!

    Over the traffic of cities—over the rumble of wheels in the streets;

    Are beds prepared for sleepers at night in the houses? no sleepers must sleep in those beds,

    No bargainers’ bargains by day—no brokers or speculators—would they continue?

    Would the talkers be talking? would the singer attempt to sing?

    Would the lawyer rise in the court to state his case before the judge?

    Then rattle quicker, heavier drums—you bugles wilder blow.

    Beat! beat! drums!—blow! bugles! blow!

    Make no parley—stop for no expostulation,

    Mind not the timid—mind not the weeper or prayer,

    Mind not the old man beseeching the young man,

    Let not the child’s voice be heard, nor the mother’s entreaties,

    Make even the trestles to shake the dead where they lie awaiting the hearses,

    So strong you thump O terrible drums—so loud you bugles blow." – Walt Whitman

  9. Meanwhile, what war:


    Energy pretty calm – lots of people trying to stir prices up on any excuse but not working well.


    Dollar calming down:


    Here's a sign people think the Fed will back off on tightening:


  10. Things are popping now but last day of month – hard to take seriously.

  11. Check out this cool invention:

  12. You have to like the Javelin description ( slightly edited) 

    The FGM-148 Javelin (AAWS M) is an American-made portable fire-and-forget anti-tank missile . It uses automatic infrared guidance that allows the user to seek cover immediately after launch, as opposed to wire-guided systems, which require the user to guide the weapon throughout the engagement. The Javelin's HEAT warhead is capable of defeating modern tanks by hitting them from above where their armor is thinnest , and is also useful against fortifications in a direct attack flight. As of January 2019, the Javelin has been used in over 5,000 successful "engagements".

    I like the term fire and forget, kind of like investing, Invest and forget, and then run for cover. ;)

  13. i am impressed with the way the western world has stood up with quick actions also but

    im, not sure cornering a wolverine with a nuclear detonator in its teeth is a great approach.

    i think a cut the head off the snake principle may apply here.

  14. Thoughts on PFE .. I have leftover 20 short PFE 2023 55 calls.  Stock now trading at about $45.  There is still $2.20 in premium on these.  Would you buy back?  What are your thoughts on PFE?  

  15. Javelin/Randers – Scary stuff though.  We're not far from smart bullets that can kill people from miles away – just a question of miniaturization.  

    Snake/Tommy – That's where those guided bullets would come in handy.  I'd hate to be Putin's food taster right now…

    PFE/Nom – They are down as Covid is supposedly winding down and bye-bye windfall profits.  If 20 is more than a 50% cover, I'd at least put a stop on half – certainly if they go back over $50.

    Lots of Pharma/Bio on sale:

  16. Speaking of miniaturization:

    The World's Smallest Computer - CHM


    Life is so crazy…

  17. Steel prices have been up. Russia and Ukraine are insignificant producers (Russia is 71 MMT out of an annual production of 1874 MMT in 2020) – production is driven by China, which is 1000+ MMT. Demand is also driven by China – 974 MMT vs 80 MMT in the US.  Yet steel prices are up by almost 10% the past 5 days since the invasion. 

    Phil – Can you provide some more insight into what is going on here? I have 20 US Steel (X) 2023 BCS ($20-$30, and 10 short 2023 $17 calls for net $2,730. It is ~$7,800 now. Does it make sense to sell some April $28 calls. 

  18. Speaking of pennies – pre-1982 pennies are worth about 0.03 each in copper.  Good business model…  

    Maybe make a deal with one of those change-sorting companies.  

    Steel/Rn – Well war consumes steel and people may be just racing into old playbooks.  X is partway to goal and looking good but, since you only sold 10 calls against 20 longs – why not make some money along the way?  Although you need to clear up what you actually have as it looks like you are saying your short calls are at a lower strike than your longs????

  19. By the way, the above charts on Pharma are why I'm in no hurry to buy longs – clearly values are just laying around at the moment.

    And we still have our Dec 30th Watch List.

    Not to mention going back in Top Trades to see who got cheaper.

    Feb. 28, 2022 11:10 AM ET4 Comments

    • Ukraine plans to borrow money from international investors to fund its defense against Russia's invasion of the country, the Financial Times reported, citing a statement from the Ukraine government.
    • The bond auction is set to occur on Tuesday, with the country planning to borrow money for a period of one year. "The proceeds from the bonds will be used to meet the needs of the armed forces of Ukraine and to ensure the uninterrupted provision of the state's financial needs under the war," the finance ministry said.
    • The Ukrainian hryvnia slipped 0.3% against the U.S. dollar in recent trading and has declined 9.3% YTD. Meanwhile, the Russian ruble has dropped 12% against the greenback in Monday's trading and has lost 21% of its value YTD.
    • Ukraine plans to tap the global debt market, while Western nations tighten sanctions to restrict Russia's access to capital markets.

    Electric vehicle stocks soared on Monday as investors weighed the possibility of Russia's attack on Ukraine speeding up the timeline for EV adoption in major nations.

    Notable gainers in the sector included Fuelcell Energy (FCEL +14.8%), Ballard Power Systems (BLDP +14.5%), Volta Inc. (VLTA +12.4%), Li Auto (LI +10.2%), Nio (NIO +10.0%), Beam Global (BEEM +9.5%), Lucid Group (LCID +9.5%), Arrival (ARVL +10.6%), Aeva Tehcnologies (AEVA +8.2%), Tesla (TSLA +7.9%), ChargePoint Holdings (CHPT +6.8%), Hyliion Holdings (HYLN +6.4%), Aurora (AUR +6.7%), Rivian Automotive (RIVN +7.2%), QuantimScape (QS +7.2%), Sono Group (SEV +5.5%) and Blink Charging (BLNK +4.6%).

    Investors seem to be betting that government investments in U.S. and Europe could be accelerated as part of a broader push to reduce reliance on Russia energy.

    The biggest gainer of all in the EV sector was Mullen Automotive (MULN +89.0%), which announced an update on its next-generation solid-state polymer battery technology that the company called an significant advancement over today’s current lithium-Ion batteries.

    "Mullen’s testing of solid-state polymer cells reveals the potential for a 150-kilowatt-hour battery pack that delivers over 600-plus miles of range and highlights an 18-minute DC fast charge which can yield over 300 miles of range. Mullen is working towards utilizing solid-state polymer battery packs in its second generation Mullen FIVE EV Crossovers, with in-vehicle prototype testing set for 2025. Mullen’s first-generation FIVE EV Crossover, due in late 2024, is planned to launch with traditional lithium-ion cell chemistry."

    In other positive EV battery news, Panasonic (OTCPK:PCRFY) said it would build a new production facility at its Wakayama factory in western Japan to manufacture new 4680 battery cells for EVs.

    Broad market update: Dow Jones, S&P 500, Nasdaq fall as West piles more sanctions on Russia

    VTRS -21.91%Feb. 28, 2022 11:23 AM ET2 Comments

    Viatris (VTRS -23.0%) has lost more than a fifth to reach a 52-week low on Monday as Wall Street reacts to the generic drugmaker’s lower than expected guidance and its multi-billion-dollar deal to sell biosimilar assets. Despite ~21% YoY growth in Q4 revenue, both topline and bottom-line missed the Street forecasts.

    However, the highlight of the earnings was the deal with India-based Biocon Biologics under which Viatris (NASDAQ:VTRS) will sell the biosimilar assets before the second half of the year in return for ~13% equity stake in the acquirer apart from $2B in upfront cash and $335M of additional payments.

    Commenting on the transaction, Bank of America analysts led by Jason M. Gerberry argue that the valuation multiple implied in the deal looks attractive and stands “well above the levels” Viatris (VTRS) trades.

    However, the analysts note that the key to estimating the potential upside to the stock could be the post-deal EBITDA that management expects to guide for 2022.

    If they capture only half the estimated $200M EBITDA forecast for 2022, the team projects $6.2B in residual EBITDA for the company. Viatris (VTRS) projects $5.8 – $6.2B adj. EBITDA for 2022.

    Assuming an EV/EBITDA multiple as of Friday’s close, the analysts estimate a ~17% upside for the remaining company after the sale. In addition, Gerberry and the team highlight the potential of the deal to help Viatris (VTRS) reduce its debt, deploy capital and add new growth drivers. Bank of America has a Buy rating on Viatris (VTRS), and its per-share target of $21 implies a premium of ~44% to the last close.

    Meanwhile, Seeking Alpha contributor Deep Value Ideas argues that the sale looks “somewhat incomprehensible,” as the biosimilar segment formed the company’s main growth driver. However, according to the author, the proceeds from the sale will help Viatris (VTRS) simplify operations, deleverage its balance sheet, cut expenses and de-risk the portfolio.

    SHAK +2.69%Feb. 28, 2022 11:12 AM ET

    Select restaurant stocks moved higher on Monday after New York City Mayor Eric Adams indicated that the vaccine passports will no longer be required in New York City starting on March 7 barring "unforeseen spikes" in COVID cases.

    The rule change will cover restaurants, gyms and indoor venues in New York City.

    Cities like Boston and Seattle have also pulled back on indoor dining restrictions to boost hopes for restaurants sales in Q1. That has also increased optimism that the full recovery of the restaurant industry can get back on track following the Omicron setback in December and January.

    Gainers in the sector include Kura Sushi (NASDAQ:KRUS) +3.6%, Potbelly (NASDAQ:PBPB) +2.2% and Shake Shack (NYSE:SHAK) +2.1% on a down day for the S&P 500 Index.

    Other advancers in the restaurant sector include recent IPOed names like Dutch Bros (NYSE:BROS) +4.1%, Sweetgreen (NYSE:SG) +2.4% Portillo's (NASDAQ:PTLO) +2.0% and First Watch Restaurant Group (NASDAQ:FWRG) +2.0%.

    See Seeking Alpha Quant Ratings across the restaurant sectors.

    DM +11.47%Feb. 28, 2022 11:04 AM ET1 Comment

    • Desktop Metal (DM +10.2%) shipped its first Production System P-50 printer to Stanley Black & Decker, marking the commercialization of the company's flagship additive manufacturing technology for mass production of end-use, metal parts.
    • P-50 is the product of ~$100M in investment and a 4-year development program overseen by Desktop Metal engineers and materials scientists.

    Unfortunately, it's a SPAC with a $1.2Bn valuation but they might grow into it one day.  

  20. Sorry, I am obviously not reading what I am typing. I hold 20 long 2023 BCS ($20-$30), and 10 short 2023 $17 puts. 

  21. HBI +0.36%Feb. 28, 2022 11:00 AM ET1 Comment

    • Hanesbrands (NYSE:HBI) CEO Steve Bratspies has purchased about $500K worth shares of the company's common stock.
    • The transaction was executed in multiple trades at prices ranging from $14.6099 to $14.8600.
    • Form 4
    • Earlier this month, HBI declared $0.15 dividend and announced plans to buyback $600M shares
    • "Hanesbrands is too cheap to ignore and set to soar," says SA contributor Gen Alpha in a recent bullish analysis on the stock

    You know I love these guys.  $15.50 is $5.4Bn and they drop a very steady $600+M to the bottom line (but lost $75M last year).  We just got more bullish on them in our LTP Review: Submitted on 2022/02/16 at 1:22 pm

    MSCI -1.18%Feb. 28, 2022 10:58 AM ET1 Comment

    • Equity index provider MSCI (NYSE:MSCI) said removing Russia from its indexes is a "natural next step," as the country's stock market is "uninvestable" amid Western sanctions and central bank trading restrictions, MSCI told Reuters Monday.
    • Meanwhile, iShares MSCI Russia Capped ETF (ERUS -21.3%) is dropping to its lowest since Nov. 2016.
    • "It would be not make a lot of sense for us to continue to include Russian securities if our clients and investors cannot transact in the market," MSCI Head of Index Research Dimitris Melas told Reuters. "It is obvious to all of us that the market is very difficult to trade and, in fact, it is uninvestable today," he added.
    • Additionally, the company could launch a consultation with investors immediately, the result of which would be announced within days, Melas noted.
    • Russia has a 3.24% weight in MSCI's emerging market benchmark (NYSEARCA:EEM) and a weighting of around 30 basis points in its global benchmark, Reuters highlighted.
    • Earlier, Russian ETFs tumble as sanctions heat up.

    CCHWF -5.73%Feb. 28, 2022 10:49 AM ET1 Comment

    • The legal sale of cannabis through dispensaries is set to begin in New Jersey "within weeks," Gov. Phil Murphy (Dem.) said, Marijuana Moment reported.
    • The Garden State has been waiting for marijuana sales since voters in 2020 approved a referendum on the matter. Cannabis has been legalized for adult use since 2021.
    • Speaking with NPR station WBGO on Feb. 24, Murphy said, "If I had to predict—I've said this before, but I mean this literally in this case—I think we’re within weeks. I would hope in March that you're going to see explicit movement on the medical dispensaries, some number of them being able to sell recreational."
    • Cannabis would be sold in the state initially in existing medical dispensaries.
    • Publicly traded multi-state operators in New Jersey are Curaleaf (OTCPK:CURLF -0.0%) and Columbia Care (OTCQX:CCHWF -2.5%).

    PALL +3.59%Feb. 28, 2022 10:45 AM ET

    Palladium pops as much as 8% as supplies from top producer Russia face increased risk of disruption as the Russia-Ukraine conflict escalates, while gold jumps en route to its best month since last May on strong safe-haven demand.

    Nymex June palladium (XPDUSD:CUR) +5.1% to $2,486/oz, after touching as high as $2,551.50, while Comex April gold (XAUUSD:CUR) +1.6% to $1,918.10/oz, after slipping 0.6% last week for the first weekly loss in about a month.


    Russia's Norilsk Nickel (OTCPK:NILSY -37.8%) is the world's largest supplier of palladium, used by automakers for catalytic converters; with most of Europe's airspace now closed to flights from Russia, Nornickel and other miners are examining alternative routes to supply customers, Bloomberg reports, also noting that key consumers of Russian palladium include BASF (OTCQX:BASFY -3.6%).

    Meanwhile, the Russian central bank said on Sunday it would resume its gold purchases on the domestic market after a two-year pause; Russia already holds more than 2K tons in bullion, making it the world's fifth biggest sovereign owner.

    Gold has climbed 6% so far in February in what would be its best monthly gain in nine months, and "as long as the Ukraine crisis persists, gold prices should have little trouble staying above $1,900, with a strong bias for further strides towards $2,000 if this geopolitical crisis further escalates," Exinity chief analyst Han Tan tells Reuters.

    After Russia launched its full-scale invasion of Ukraine last week, gold futures surged to their highest levels since early 2021.

    Feb. 28, 2022 10:31 AM ET

    • February Dallas Fed Manufacturing Survey+14.0 vs. +2 prior
    • Production: 14.5 (2 points down from January)
    • Capacity utilization: 11.5 (unchanged)
    • New Orders: 23.1 (3 points up M/M); growth rate of orders index held steady at 12.6.
    • Shipments index rebounded 15 points to 23.5 after its January drop
    • Expectations regarding future manufacturing activity pushed higher in February; future production index rose from 38.0 to 42.1, and the future general business activity index came in at 20.6, up four points from January.

    Feb. 28, 2022 10:26 AM ET2 Comments

    • Stock in Russia-focused search giant Yandex (NASDAQ:YNDX) has been halted since before today's Nasdaq open, down 21.3% premarket in the wake of harsher economic sanctions on Russia stemming from conflict in Ukraine.
    • The stock isn't trading in Russia as the Moscow Exchange remains closed.
    • When it resumes on Nasdaq, though, it's set for a tumble that would further a precipitous fall in the wake of Russia's invasion of Ukraine. In just the past four trading sessions, Yandex has slid 58% in U.S. trading.
    • That brings its six-month performance to a 73% fall in value.
    • In other affected communications stocks, Moscow-based telecom Mobile TeleSystems (NYSE:MBT) similarly isn't trading; that stock has slipped 23% in five days. And Veon (NASDAQ:VEON) - with heavy operations in Russia and Ukraine – has tumbled 27.4% today with the sanctions as well as a Q4 earnings report where EBITDA missed expectations.
    • Yandex crashed 40% on Thursday in its biggest slide after Russia invaded Ukraine.

    AAPL +0.04%Feb. 28, 2022 10:25 AM ET2 Comments

    GraniteShares has jumped into the growing trend of leveraged single stock ETFs, adding to a market that has gained steam lately from the announcement of similar products developed by Direxion Funds.

    As part of the plan, GraniteShares has submitted a prospectus with the U.S. Securities and Exchange Commission that covers 20 different ETFs. The planned investment vehicles will allow investors to take a +2X approach on 19 stocks, including mega-cap names and other popular household stocks. This includes names like Apple (NASDAQ:AAPL), Tesla (NASDAQ:TSLA), Amazon (NASDAQ:AMZN), Disney (NYSE:DIS) and Ford (NYSE:F).

    In addition, one of the ETFs is a -1X inverse fund that trades against Tesla (TSLA).

    See below a list of each ETF:

    GraniteShares 2x Long Tesla Daily ETF

    GraniteShares 1x Short Tesla Daily ETF

    GraniteShares 2x Long NVIDIA Daily ETF

    GraniteShares 2x Long NIO Daily ETF

    GraniteShares 2x Long Coinbase Daily ETF

    GraniteShares 2x Long Moderna Daily ETF

    GraniteShares 2x Long Alibaba Daily ETF

    GraniteShares 2x Long Meta Platforms Daily ETF

    GraniteShares 2x Long Alphabet Daily ETF

    GraniteShares 2x Long Amazon Daily ETF

    GraniteShares 2x Long Apple Daily ETF

    GraniteShares 2x Long Microsoft Daily ETF

    GraniteShares 2x Long AMD Daily ETF

    GraniteShares 2x Long Palantir Daily ETF

    GraniteShares 2x Long Twitter Daily ETF

    GraniteShares 2x Long Uber Daily ETF

    GraniteShares 2x Long Tilray Daily ETF

    GraniteShares 2x Long Peloton Daily ETF

    GraniteShares 2x Long Disney Daily ETF

    GraniteShares 2x Long Ford Daily ETF

    The 1X Short Tesla Fund plans to deliver market participants a -100% daily return on the underlying stock. In contrast, the other 2X Long ETFs will provide a +200% daily return on the specific underlying stock.

    Therefore, if Tesla falls by $1, the accompanying 1X Short Fund will rise by nearly $1 for a single day. Moreover, if the Long 2X Funds underlying stock rises by $1, the ETF in turn will increase by nearly $2 for a single day.

    In order for the exchange traded funds to achieve their investment objectives, the funds will invest primarily in financial instruments, such as swap agreements, that provide leveraged and inverse exposure to the specific stock it plans to cover.

    The move by GraniteShares comes shortly after Direxion Funds filed for similar ETFs that included mega-cap names.


  22. Even Switzerland!  

    UBS -2.73%Feb. 28, 2022 10:24 AM ET5 Comments

    • Switzerland breaks with its tradition of remaining neutral in geopolitical conflicts by adopting European Union sanctions against Russia, the country's government said in a statement.
    • "Russia's unprecedented military attack on a sovereign European country was the deciding factor in the Federal Council's decision to change its previous stance on sanctions," the Swiss government said.
    • The sanctions include immediately freezing assets of individuals and companies listed in the EU sanctions that were adopted on Feb. 23 and 25. Sanctions against Russian President Vladimir Putin, Prime Minister Mikhail Mishustin, and Foreign Minister Sergey Lavrov are also effective immediately. "In so doing, Switzerland is responding to the serious violations of international law for which these individuals are responsible," the government said.
    • Switzerland's ban on imports, exports and investments concerning Crimea and Sevastopol, which have been in place since 2014, was extended to the Ukrainian regions of Donetsk and Luhansk, which are no longer under the control of the Ukrainian government.
    • Stocks of global banks have been dropping as Western nations increase the pressure on Russia. For Swiss banks, UBS Group (NYSE:UBS) stock is dropping 3.4% in mid-morning trading in New York, and Credit Suisse (NYSE:CS) is down 1.7%.
    • Previously (Feb. 25), U.S. to place sanctions on Vladimir Putin, following EU, U.K.

    AA +0.86%Feb. 28, 2022 9:59 AM ET

    London aluminum prices jump to another all-time high, reaching as high as $3,525/metric ton before trimming gains to $3,416/ton, +1.7%, amid increased Western sanctions including blocking some Russian banks from the SWIFT international payments system.

    Century Aluminum (CENX +2.1%) pops to a new 52-week high in early trading; other potentially relevant names open mixed, including AA +1.3%ARNC -2.2%CSTM -1.9%KALU -2.6%ACH +0.3%, ETF: JJU.

    Aluminum (LMAHDS03:COM) is on track to gain 13% in February, the biggest monthly rise since 2010; Russia produces ~6% of the world's aluminum and 7% of global nickel mine supplies.

    United Co. Rusal (OTC:UNRIF) said it halted shipments at an alumina refinery in Ukraine, a key source of raw material for its smelters in Russia.

    "There's no clear sanction that will target metals flows, but increasing numbers of Russian companies are being impacted and that has put the market on tenterhooks," ING Bank commodities strategist Wenyu Yao tells Reuters, also noting impacts for aluminum and zinc due to high energy prices.

    Citing fears that sanctions on Russia could curb the country's aluminum exports and rising energy prices which have idled some smelters, Goldman Sachs recently raised its forecast price for aluminum to $4,000/ton.

    COIN +7.63%Feb. 28, 2022 9:46 AM ET3 Comments

    • Compass Point analyst Chris Allen on Monday lowered his price target on cryptocurrency exchange Coinbase (NASDAQ:COIN) to discount its expense outlook for 2022.
    • Cut price target to $200 per share, implying 13% upside from Friday's close. The analyst also cut 2022 EPS to -$0.96 from $7.27 and 2023 EPS to -$0.80 from $7.59.
    • "We have been cautious on COIN in recent periods in large part due to regulatory uncertainty and concerns on the potential for pricing compression convergence between Coinbase/Coin Pro, increased institutional incentives, and competition over the longer-term," Allen wrote in a note to clients.
    • Wall Street analysts rate COIN with a Buy rating (10 Strong Buy, 6 Buy, 5 Hold). SA contributors are bullish as well (4 Strong Buy, 3 Buy, 2 Hold).
    • Meanwhile, COIN stock is off by 1.6% out of the gate, while bitcoin (BTC-USD +1.4%) manages to turn back into net positive territory.
    • Previously, (Feb. 23) J.P. Morgan also lowered Coinbase's 2022 estimates.

    Feb. 28, 2022 9:45 AM ET

    GPRO +1.87%Feb. 28, 2022 9:30 AM ET3 Comments

    • Citing what she called "an impressive strategic alignment" over the last one-and-half years, Jefferies analyst Anna Glaessgen initiated her coverage on GoPro (NASDAQ:GPRO) on Monday with a buy rating and $12-a-share price target.
    • Glaessgen GoPro's (GPRO) shifting toward products with higher average selling prices, improving its subscriber model and putting more priority on its retail site, "has borne fruit in a much healthier businesses. Glaessgen said such moves should help GoPro (GPRO) exceed consensus estimates for its 2022 fiscal year.
    • "The rise of is a game changer," Glaessgen said. "It boasts much higher margins than retail channels," and also gives the company "greater control of its distribution".
    • Glaessgen also said that GoPro's (GPRO) subscription, at $49.99 a year "provides a series of member benefits" such as even bigger discounts on cameras, and access to cloud-based backups via its Quik app.
    • Earlier this month, GoPro (GPRO) reported fourth-quarter earnings and sales that surpassed analysts' expectations.

  23. WEAT +7.27%Feb. 28, 2022 9:20 AM ET

    Chicago wheat futures are adding to 13 1/2-year highs in trading Monday, lifted by concerns that Russia's invasion of Ukraine and Western sanctions will continue to disrupt grain exports out of the Black Sea region.

    The CBOT's most-active wheat contract (W_1:COM) +5.3% to $9.05-3/4 per bushel after surging as much as 8% to $9.34-3/4 after touching $9.60-3/4 on Friday, its highest since summer 2008.

    Also, corn (C_1:COM) +3.5% to $6.78-1/2 per bushel and soybeana (S_1:COM) +2.3% to $16.20-3/4 per bushel.


    According to Reuters, traders say most Ukrainian and Russian Black Sea and Azov Sea ports remain closed, although Russia's large grain export port Novorossiysk is operational.

    Russia and Ukraine account for ~29% of global wheat exports, 19% of world corn supplies and 80% of world sunflower oil exports.

    Commerzbank analysts have said that "as much as 15M tons of wheat exports from the Black Sea region could be at risk" from the Russia-Ukraine conflict.

    ERIC -8.15%Feb. 28, 2022 9:19 AM ET1 Comment

    Ericsson (NASDAQ:ERIC) fell 8.8% in premarket trading after a new report over the weekend revealed more details about alleged payments the telecommunications company made to ISIS. The company was also cut to neutral from buy at Citi with the firm calling the company "uninvestable."

    The report revealed that the Swedish-based firm allegedly made "tens of millions of dollars in suspicious payments " over nearly a decade to keep its business in Iraq, according to a International Consortium of Investigative Journalists report, which cited a leaked internal investigation.

    "If the reports are confirmed true, then management’s credibility and judgement will be called into question; even if they are ultimately untrue, we think it will take some time before innocence can be proven," Citi analyst Andrew Gardiner wrote in a note with the ERIC downgrade. "Either way, we expect Ericsson stock to be uninvestable for most investors for the foreseeable future."

    The investigative journalist report comes after at Ericsson (ERIC) disclosed earlier this month that it may have paid bribes to the Islamic State terrorist group.

    Shares of Vonage Holdings (NASDAQ:VG), which is being sold to Ericsson for $6.2B, fell 1.5% in premarket trading on investors concern about the deal, specifically that a national security or CFIUS review of the $21/share deal could be delayed due to the report on ISIS.

    Also see from earlier this month, Vonage (VG) stock pares losses on report that Ericsson told DOJ about Iraq probe in 2019.

    TOL +0.65%Feb. 28, 2022 9:12 AM ET1 Comment

    • Toll Brothers (NYSE:TOL) +2.6% and PulteGroup (NYSE:PHM) +2.1% rise in premarket trading Monday after Bank of America analyst Rafe Jadrosich upgraded the homebuilders to Buy from Underperform.
    • Rising interest rates are weighing on the space, "but valuations are now trading at the low-end of the historical range and spike in mortgage rates is now already well known to investors," Jadrosich wrote in a note to clients.
    • Despite bad home buying conditions, Jadrosich believes demand will outpace supply and pricing through 2022 due to favorable demographic and migration trends, historically low existing home inventory and growing institutional demand for single family rentals. In mid-February, mortgage rates jumped toward 4%, the highest since May 2019.
    • On a technical basis, homebuilder risk/reward appears favorable, with the SPDR Homebuilders exchange traded fund (NYSEARCA:XHB) -18.3% falling substantially when compared with the S&P 500 (SP500) -7.8% on a year-to-date basis.
    • See how Toll Brothers fared with the first quarter of 2022.

    TUP +10.33%Feb. 28, 2022 8:46 AM ET2 Comments

    • Tupperware Brands (NYSE:TUP) trades 2.1% higher premarket after it entered into an agreement to repurchase $75M of its stock in an accelerated share repurchase program which is equivalent to ~4.6M shares and represents ~8.7% of Tupperware's fully diluted outstanding stock.
    • The program is expected to be funded with available cash on hand and revolver borrowings.
    • Under program terms, Tupperware will make an initial payment of $75M to Wells Fargo and receive an initial delivery of ~3.4M shares of Tupperware's common stock.
    • The company will repurchase shares under the ASR program as part of its existing $250M share repurchase authorization, which was approved by its board in June 2021.
    • The final settlement of the ASR program is expected to be completed before the end of Q2.

    That's a winner!  

    $18.18 is $800M and that's half of their $1.6Bn in sales and profits were just $18.6M last year but they expect to normalize back to $120M this year and project $163M next year (10% of sales).  Not only have they gotten stupidly cheap but buying back 10% of their own stock should put a solid floor in around $17.50 so, for the LTP:

    • Sell 20 TUP 2024 $13 puts for $3 ($6,000) 
    • Buy 30 TUP 2024 $15 calls for $7.50 ($22,500) 
    • Sell 30 TUP 2024 $25 calls for $4 ($12,000) 

    That's net $4,500 on the $30,000 spread that's $9,600 in the money to start.  Even if we get completely burned and assigned, we'll be in 2,000 shares for $30,500, which is $15.25, which is 16% lower than it is now.  So that's the worst case and the best case is clearing $25,500 (566%) at $25 – good money.

  24. TM -0.66%Feb. 28, 2022 8:39 AM ET1 Comment

    • Toyota (NYSE:TM) announced that it is suspending production at all 28 lines of its 14 plants in Japan beginning on Tuesday due to what the Japanese automaker called a "system malfunction."
    • A key domestic supplier suspect the Toyota issue may be a cyberattack because its own system could not communicate properly with Toyota or monitor production. There are separate reports of issues with other suppliers.
    • It is unclear when the Toyota problem will be fixed and the timeline for production to resume.
    • Toyota (TM) and other automakers are already struggling with shortages of computer chips and other parts due to disruptions from the coronavirus pandemic.
    • Shares of Toyota fell 1.55% in premarket action in the U.S.

    Not much of a fall for selling no cars. 

    TD -1.31%Feb. 28, 2022 8:32 AM ET12 Comments

    • The Toronto-Dominion Bank (NYSE:TD) and First Horizon (NYSE:FHN) signed a definitive agreement wherein the former will acquire the latter in an all-cash transaction worth $13.4B or $25/share of First Horizon.
    • TD accelerates its long-term growth strategy through the acquisition by acquiring a premier regional bank with an aligned culture and risk-management framework.
    • On pro forma basis excluding merger adjustments, TD's U.S. franchise will be a top 6 U.S. bank, with ~$614B in assets; globally, TD Bank Group will have ~C$1,841B in assets.
    • The transaction is expected to be immediately accretive at closing to TD's adjusted EPS and over 10% accretive to 2023E adjusted EPS on a fully-synergized basis; transaction is expected to result in a fully-synergized return on invested capital of 10% in 2023.
    • The purchase price represents a 9.8 times multiple of First Horizon's 2023E fully-synergized earnings and a 2.1 times multiple to First Horizon's estimated tangible book value at close.
    • TD expects to achieve ~$610M in pre-tax cost synergies equal to 33% of First Horizon's 2023E non-interest expense through a combination of technology and systems consolidation, and other operational efficiencies.
    • Total merger and integration costs are seen at $1.3B mainly in the first two years post closure which is expected in Q1 of FY23.
    • If the transaction does not close prior to Nov.27, 2022, First Horizon shareholders will receive, on closure, an additional $0.65/share on an annualized basis for the period from Nov. 27, 2022 through the day immediately prior to the closing.
    • Separately, The Toronto-Dominion Bank announced that the automatic share purchase plan established under TD's normal course issuer bid is automatically terminated post its terms.
    • During the quarter ended Jan.31, 2022, 7.5M shares were repurchased for cancellation under the NCIB and, during the period from Feb. 1 until Feb. 28, 2022, 13.5M shares were repurchased for cancellation under the NCIB.
    • FHN rallies 32.5% higher premarket.

    Feb. 28, 2022 8:31 AM ET

    • Retail Inventories (Advance): +1.9% in January to $658.1B vs. +4.7% prior (revised from +4.2%)

    Feb. 28, 2022 8:30 AM ET

    JACK -0.29%Feb. 28, 2022 8:15 AM ET

    Gordon Haskett dropped its rating on Jack in the Box (NASDAQ:JACK) to Hold from Buy after it warned on more modest market share gains in 2022, as well as reduced margin/EPS visibility and higher commodity inflation exposure for the restaurant operator through the Del Taco acquisition.

    Analyst Jeff Farmer's breakdown: "With JACK trading at a small premium to pre-COVID levels and poised to see a significant increase in company-owned restaurant and revenue mix exposure – we view JACK shares as having shifted to a balanced risk/reward profile."

    The firm assigned a price target of $96 to JACK vs. the average Wall Street PT of $105.75. The price target is equal to 10X the 2023 EBITDA estimate of $317M. The 10X multiple represents an approximate 10% discount to JACK’s average two-year forward multiple from 2017 to 2019.

    Shares of Jack in the Box (JACK) fell 1.27% premarket to $86.01 vs. the 52-week trading range of $77.13 to $124.53.

    FL +6.36%Feb. 28, 2022 7:20 AM ET7 Comments

    Morgan Stanley lowered its rating on Foot Locker (NYSE:FL) to Underweight from Equal-weight following the long-term strategy update from the retailer, which the firm thinks impairs the long-term cash generation potential.

    Analyst Kimberly Greenberge noted that Foot Locker (FL) announced a long-term strategy shift to diversify its merchandise and vendor mix, such that no single vendor will comprise more than 55% of total supplier spending compared to 65% as of Q4.

    "More specifically, this shift is mostly the result of NKE’s accelerated to direct-to consumer strategy, & means NKE product as a % of total FL inventory will fall 15-20 points over time, from 75% in 2020 & 70% in 2021 to 50-55% as soon as 2023."

    Elsewhere on Foot Locker, Credit Suisse dropped its rating on Foot Locker to Neutral from Buy and Citi moved to a Sell rating. Deutsche Bank slashed its price target on FL to $32 and Guggenheim set a lowered PT of $36.

    Shares of Foot Locker (FL) fell 2.92% in premarket trading to $28.22 after shedding $29.80 on Friday.

    Dig into Foot Locker's Q4 earnings call transcript.

    AAPL -0.30%Feb. 28, 2022 7:19 AM ET5 Comments

    Apple (NASDAQ:AAPL) is poised to see "upside" if it is able to execute and show the growth that it saw in its fiscal first quarter, according to a new investment note from J.P. Morgan.

    Analyst Samik Chatterjee, who has an overweight rating and a $210 price target, took a look at the bull and bear case after surveying 15 buy-side firms and found that the "sustaining double-digit growth" is the bull case for shares.

    "Sustaining double-digit growth through the year would require execution-led upside to implied guidance for [second-quarter] growth in the mid-single digit percentage, as well as higher-than-consensus growth rates in the following quarters of [third-quarter] and [third-quarter] (comps do get easier over second-quarter)," Chatterjee wrote in a note to clients.

    Apple shares were lower in premarket trading on Monday, falling slightly more than 1% to $162.75.

    The base case for fiscal 2022 calls for Apple revenue to grow between 5% and 10% year-over-year, the bear case calls for less than 5% growth, while the bull case is between 10% and 15% year-over-year.

    Much of the growth will come from the iPhone, which the majority of the survey respondents said could see "mid-single digit growth."

    "We see the combination of stronger than expected mix as well as volume upside from better iPhone 13 as well as iPhone SE demand to drive upside to our current estimates for modest revenue growth (+4% y/y)," Chatterjee added.

    Apple was selected by Bank of America as one of the stocks that could benefit from "scarcity risk," as its devices and services continue to be a primary solution for entertainment and productivity tasks.

    LMT +4.17%Feb. 28, 2022 7:08 AM ET34 Comments

    Shares of Lockheed Martin (NYSE:LMT) and other U.S. defense contractors rocket higher Monday after Germany announced plans to increase its military spending, including an immediate €100B ($112B), in the wake of Russia's invasion of Ukraine.

    Pre-market movers include KTOS +7.6%NOC +5.7%RTX +5.4%GD +5.4%LHX +4.9%LMT +4.4%; European defense contractors including Rheinmetall (OTCPK:RNMBY) and Leonardo (OTCPK:FINMY) are rising in the 15-25% range in Europe.


    German Chancellor Olaf Scholz's speech to Parliament on Sunday marked the country's most radical overhaul of its security and defense policy since 1945, stepping back from its entente with Moscow, siding with NATO, vowing to nearly double its military spending, and offering an immediate €100B defense spending package for weapons such as F-35 fighter planes and Israeli drones.

    Lockheed Martin's "consistently increasing dividend distributions are an attractive part of the returns offered by the stock," Yiannis Zourmpanos writes in an analysis posted on Seeking Alpha.

    Go war!!!

  25. PFE -1.62%Feb. 28, 2022 6:37 AM ET5 Comments

    The uptake of booster COVID-19 shots has dropped in the U.S. as Omicron-fueled surge in case numbers plummet along with deaths and hospitalizations, The Wall Street Journal reported citing data from the U.S. Centers for Disease Control and Prevention.

    Currently, only about 65% of Americans are fully vaccinated, meaning they have received either both doses of mRNA vaccines from Pfizer (NYSE:PFE)/BioNTech (NASDAQ:BNTX) and Moderna (NASDAQ:MRNA) or a single dose of Johnson & Johnson (NYSE:JNJ) vaccine.

    The CDC recommends booster shots for those aged 12 years and older at least after five months from their second mRNA shot or at least two months from the single J&J (JNJ) shot.

    While the fully vaccinated population is a prime target for booster campaigns, only about 44% of them have received an additional dose, according to the latest CDC data.

    The seven-day average of booster shots administered in the U.S. has dropped to about 149,000 as of Feb. 19, from slightly over a million in Early December, when the federal agency had recommended them for all adults with the emergence of the Omicron variant.

    “As people become more complacent, they don’t really see the need to get boosted,” The Journal reported quoting Meg Fisher, special adviser to New Jersey’s health commissioner.

    Likely reasons for the decline include the vaccinated people delaying the boosters after breakthrough cases, concerns about potential disruptions to work due to side effects such as fevers and tiredness, and the lack of urgency amid falling case numbers, according to Dr. Fisher.

    Data from Johns Hopkins University indicate that the seven-day average of case numbers in the U.S. has plummeted below 75,000 from a peak of 800,000 last month. The COVID-related hospitalizations and deaths are also on the decline.

    The lack of demand has affected both boosters as well as first vaccine doses. According to The Guardian, the seven-day average of new vaccinations in the U.S. has now reached the level in Dec. 2020 when the vaccines were not readily available with the launch of the COVID-19 immunization drive.

    Meanwhile, the vaccine maker, Moderna (MRNA), projects that COVID-19 could reach the endemic status in 2022 with a larger sales impact for the company in the second half of the year.

    Pfizer (PFE) has plans to introduce an Omicron-specific vaccine early this year with its partner BioNTech (BNTX). Pfizer (PFE) CEO Albert Bourla said last month that annual COVID-19 vaccines could be preferable to frequent boosters.

    USO +2.86%Feb. 27, 2022 8:39 PM ET48 Comments

    Russia/Ukraine news dominated weekend headlines, as diplomacy moved forward, financial sanctions accelerated and violence continued in Ukraine. Many of the geopolitical updates will move commodity markets, and come in concert with energy-related policy statements. OPEC+ rumors swirled, as France's Macron spoke with Saudi, and Iran returned to Vienna to discuss a draft nuclear accord. BP's (NYSE:BP) plan to divest the Company's Rosneft (OTCPK:RNFTF) holdings, announced Sunday, could impact a number of peers with direct exposure to Russian hydrocarbon production.

    Over the weekend, the US and other Western governments announced that select Russian banks would be removed from the SWIFT payments system. It was further announced that sanctions targeting Russia's central bank would be imposed. In a press call, the White House indicated that energy-related payments would not be impacted by the new sanctions. However, commodity traders said flows of Russian commodities to the West will be severely disrupted or totally halted for days or weeks, until clarity is established on exemptions, according the Reuters.

    As it relates to energy directly, Germany's U-turn over the weekend was notable. After lobbying for months to exclude nuclear and gas from the European energy taxonomy, Germany announced that it will build two new LNG terminals, raise the country's natural gas reserves, and consider extending the life-span for coal and nuclear power plants. Just last week, Shell's (NYSE:SHEL) LNG outlook pointed towards tighter LNG markets through the middle of the decade, and before the prospect of increased European demand or stockpiling. Coal markets are similarly tight, with Newcastle thermal coal prices at record levels.

    In an op-ed over the weekend, Citadel's Ken Griffin said "the U.S. should frack more, so it has the gas needed to wean Europe off Russian pipelines" (NYSE:LNG) (NYSE:TELL). While White House Press Secretary Jen Psaki referred to calls for increased drilling as a "misdiagnosis." Rather, she said that this actually indicates, in President Biden's view, that the US needs to reduce reliance on oil.

    Adding to commodity headlines over the weekend, France's Macron spoke with Saudi's crown prince, and Iran appeared to drag their feet on sanction negotiations. In a call with Macron, Saudi reportedly stated that the Kingdom is both committed to the OPEC+ agreement, as well as stability and balance in oil markets. Giving few policy hints ahead of this week's OPEC+ meeting. While Iran's chief negotiator said, "Iran accepts no deadlines" in reaction to media reports that the United States had set a deadline for nuclear negotiations.

    BP (BP) announced Sunday that the Company will divest of it's ~20% holding in Rosneft (OTCPK:RNFTF). While it was reported that Austria-based OMV (OTCPK:OMVKY) would hold a crisis meeting on Monday, to discuss its financing of the Nord Stream 2 pipeline. These announcements are sure to catch energy investor attention, as peers Shell (SHEL), Exxon (NYSE:XOM), and most notably Total (NYSE:TTE) operate assets in Russia and may face divestiture pressure.

    On the back of the weekends news, Goldman raised their one-month Brent oil price forecast to $115, as WTI traded up ~5% in futures trading Sunday night (NYSEARCA:USO). In coming days, energy markets are likely to remain focused on the impact of financial sanctions on physical commodity markets, if any. At the same time, investors will be keeping an eye on policy statements that could change the outlook for fossil fuel demand in Europe in coming years.

    INTC -0.68%Feb. 27, 2022 4:02 PM ET106 Comments

    After Intel (NASDAQ:INTC) shares declined precipitously following its February 17 investor day, a couple of notable insiders have purchased the chipmaker's stock for the first time in months.


    Chief Executive Pat Gelsinger, along with Intel's (INTC) Chairman Ishrak Omar, both purchased shares this week, with Gelsinger adding 5,600 shares and Omar buying an additional 11,025 shares, according to SEC filings.

    Both purchases are notable, given their positions in the company. They also warrant attention after Gelsinger said at the event that Intel's (INTC) famously high gross margins would decline this year and not rise again until 2025, following several years of heavy investments.

    Intel's gross margins are expected to fall to 52% in 2022 on an adjusted basis, and come in between 51% and 53% in 2023 and 2024, respectively. In the following years, gross margins are expected to climb back to a range of 54% to 58%.

    Gelsinger also explained at the event that Intel's (INTC) adjusted free cash flow is expected to be negative $1 billion to $2 billion as the company ramps its investments to accelerate long-term growth.

    The stock buy is Gelsinger's first purchase since October 26, 2021, according to OpenInsider, which tracks company insider stock trades. Omar's share purchase was his first since November 1, 2021.

    Intel (INTC) shares have fallen nearly 12% since the start of the year, and touched a 52-week low on Thursday amid Russia's invasion of Ukraine.

    Gelsinger, who spoke for a considerable amount of time at the investor day, also explained that it was necessary for Intel (INTC) to invest, citing the "continued proliferation of technology" which "is driving sustained, long-term demand for semiconductors."

    The 60-year-old Gelsinger added the market opportunity in front of Intel (INTC) could reach $1 trillion by 2030 as it moves into foundry services, introduces chips designed for blockchain applications and bolsters its graphics offerings to compete with the likes of Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD).

    Though Gelsinger and Omar's purchases are notable, they came just one day after Raymond James upgraded the stock, citing a favorable risk reward at current levels.

    Analyst Christopher Caso raised his rating to market perform from underperform, noting that even though Intel management has guided to no free cash flow for the next few years as it attempts to compete with AMD, Nvidia and others, even if the semiconductor industry were to experience a downturn, the firm did not think shares "would meaningfully underperform further."

    "The path to [process superiority] is very long and expensive, and the outcome remains uncertain at best," Caso wrote in the note to clients.

    In addition, Caso noted that even if there was an industry downturn between now and 2025, it could be difficult for Intel to get back to positive free cash flow, but if investors are confident in that time frame, any downturn in the industry "would present a better opportunity to own the stock."

    BP -5.30%Feb. 27, 2022 2:34 PM ET190 Comments

    BP says it will exit its 19.75% shareholding in Rosneft (OTCPK:RNFTF), and CEO Bernard Looney and former CEO Bob Dudley will resign from the Russian oil company's board.

    "Like so many, I have been deeply shocked and saddened by the situation unfolding in Ukraine," Looney said. "It has caused us to fundamentally rethink BP's position with Rosneft."

    BP says the moves will result in a charge on Q1 results, representing the difference between the fair value of its Rosneft shareholding at the end of Q1 and the carrying value of the asset; the company says the carrying value at the end of 2021 was ~$14B.

    The company also expects the changes will cause a charge related to foreign exchange losses accumulated since 2013 that previously were recorded directly in equity rather than the income statement; this total was ~$11B at the end of 2021.

    BP has been viewed as the oil and gas major most exposed to the Russia-Ukraine crisis, and the U.K. government reportedly was pressuring the company to unload its Rosneft holdings following Russia's invasion.

  26. Comment content omitted because it is too long.

  27. Feb. 27, 2022 11:08 AM ET184 Comments

    Tesla and SpaceX (SPACE) CEO Elon Musk said the Starlink (STRLK) internet satellite service is active is up and running in Ukraine.

    Musk tweeted that that Starkink satellite service is active in the Ukraine after a Ukrainian government official asked if Musk could provide more Starlink stations to the country.

    Ukraine is dealing with outages of its Internet in the country after the Russian invasion and missiles have hit some major infrastructure and made communications more difficult.

    "While you try to colonize Mars — Russia try to occupy Ukraine! While your rockets successfully land from space — Russian rockets attack Ukrainian civil people! We ask you to provide Ukraine with Starlink stations and to address sane Russians to stand," Mykhailo Fedorov, the vice prime minister of Ukraine and minister of digital transformation, tweeted.

    Starlink (STRLK) is a SpaceX unit that’s setting up a $10B+ network of low Earth orbit satellites to provide broadband Internet access around the world.

    The company aims to provide Web access in rural and other underserved areas, while also offering competitively priced broadband in urban locales. Musk hopes to use Starlink’s proceeds to fund SpaceX’s plans to stage missions to Mars.

    Musk said in June that Starlink won't go public for a few years, but that he’ll aim to give shareholders of Tesla (NASDAQ:TSLA) access to the IPO when it does.

    See from Saturday, West to boot ‘select’ Russian banks from SWIFT as part of new Ukraine sanctions.

    AAPL -0.39%Feb. 27, 2022 10:12 AM ET26 Comments

    Bank of America screened for stocks that could benefit from 10 scarcity themes, ranging from freshwater to increasing healthcare demands from an aging population.

    All the stocks have Buy ratings from their respective analysts.

    "We believe the current global resource supply vs. demand imbalance is underpinned by structural scarcity and will only get worse," BofA Research wrote in a note to clients last week. "We believe that 'scarcity tech,' the circular economy and natural capital are some of the solutions at their tipping points that can help solve the problem."

    Starting with picks for time:

    Apple (NASDAQ:AAPL). Its devices and services continue to be a primary solution for entertainment and productivity tasks. BofA expects this trend to grow as more products/services launch.

    Microsoft (NASDAQ:MSFT). 8-10% of its revenues come from video gaming directly, with Xbox being one of the largest brands. Strong secular tailwinds for the gaming space. The potential merger with Activision Blizzard (NASDAQ:ATVI) would add ~$9B of gaming revenue for Microsoft.

    Walt Disney (NYSE:DIS). Asset base is built on consumer's willingness to put time toward the company's content. Without it, there would be no one to pay for their streaming service, for example.

    Meta Platforms (NASDAQ:FB). The owner of Facebook and Instagram is poised for increasing mobile usage, as time spent on mobile devices accelerates. More than 98% of Meta's revenues account for digital advertising.

    For the water theme:

    Essential Utilities (NYSE:WTRG). Second largest publicly traded water utility and offers exposure to Environmental, Social, and Governance space.

    Picks for biodiversity and air themes:

    Weyerhaeuser (NYSE:WY). Second largest producer of lumber in North America, benefiting from demand/supply imbalance. ESG could come into play over time, including carbon-credit markets.

    Carrier Global (NYSE:CARR). Offers a range of products that drive carbon footprint reduction, such as heat pumps and variable refrigerant flow systems. Improving leverage, margins, and free cash flow conversion post Chubb divestiture.

    Rare earths/metals picks are:

    MP Materials (NYSE:MP). Produces an estimated 16% of global rare earth concentrate supply, with plans to ramp up separation capability this year. Certain rare earth metals are scarce as supply struggles to keep up with surging demand.

    Sigma Lithium (NASDAQ:SGML). "Lithium material pure-play" in the face of a tight supply backdrop in the global lithium battery space.

    Farming picks include:

    Mosaic (NYSE:MOS). Pure-play phosphate and potash producer. Demand growth for both nutrients is expected to remain near 2% per year, driven by population growth and increased protein consumption in developing countries. Sees 2022 profitability at record levels.

    Zoetis (NYSE:ZTS). 40% of revenues are exposed to livestock, holding top industry positions in cattle, pigs and fish. Similarly, half of Elanco Animal Health's (NYSE:ELAN) revenues are exposed to livestock.

    Waste disposal picks:

    Origin Materials (NASDAQ:ORGN). Pure-play carbon negative company. The company converts carbon found in biomass into useful materials. Demand for plastics is growing rapidly, anticipating production to double by 2027 vs. 2017 levels and nearly quadruple by 2050.

    Waste Connections (NYSE:WCN). May benefit from landfill scarcity. Landfill gas to renewable sales is 1-2% of total revenue. Recycling contributes 5-10% of sales and is a rising tailwind following its recycling infrastructure investments.

    Processing power theme picks are:

    ASML (NASDAQ:ASML). The only global supplier of extreme ultraviolet equipment. As chip features become smaller, more complex lithography equipment is required.

    KLA (NASDAQ:KLAC). 90% of sales are exposed to scarcity across its semiconductor process control equipment.

    GlobalFoundries (NASDAQ:GFS). Poised to benefit from trailing edge semiconductor shortages and global semi manufacturing re-shoring efforts. 90% of sales are tied to wafer related revenue.

    Health and wellness picks consist of:

    AMN Healthcare (NYSE:AMN). Pure play on temporary health care staffing. Labor shortages in the industry is a long-term tailwind.

    Teladoc (NYSE:TDOC). Promotes "virtual first" access to primary care which can help reduce costs. Operating in three segments: Virtual medical care, mental health care and chronic care. Over 500M paid members.

    Xponential Fitness (NYSE:XPOF). "Fitness clubs could be solution providers for the wellness scarcity issue by enabling healthier and more active lifestyles," BofA analyst Alexander Perry noted.

    Picks for skills and education include:

    Udemy (NASDAQ:UDMY). Global community of more than 46M learners and 9.5K business customers. Market opportunity of $220B for online education. According to BofA's proprietary survey, 77% of respondents have taken an online course or plan to take one in the future.

    Duolingo (NASDAQ:DUOL). Accelerating shift to digital. Online language learning share of the total market is expected to more than double from ~20% in 2019 to ~41% in 2025. Total addressable market of over $160B.

    Chegg (NYSE:CHGG). Strong international momentum. Consecutive subscriber growth since 2015. 94% of BofA's survey respondents said Chegg helped them get better grades.

    Youth picks are composed of:

    Progyny (NASDAQ:PGNY). 100% of revenues come from providing access to a care advocate, a high quality network and related prescriptions. U.S. birth rate since 2007 is down more than 1%.

    Check out Seeking Alpha's screen for top rated stocks here.

    Looking at sentiment, investor confidence rebounded in February as COVID-19 cases fall.

  28. BRK.A +0.12%Feb. 26, 2022 9:27 AM ET134 Comments

    Long associated with Warren Buffett's investment acumen, Berkshire Hathaway's (NYSE:BRK.B) (NYSE:BRK.A) collection of equity investments are run by the company's long-time investment managers Todd Combs and Ted Weschler, Buffett said in his 2021 letter to shareholders.

    Notably, he said, "At year end, this valued pair had total authority in respect to $34B of investments." In addition, a significant portion of investments that the two manage are from various pension plans of Berkshire-owned businesses, which aren't included in the table of its top equity holding.

    Buffett's calling attention to Combs and Weschler as the investment managers means that one can no longer solely attribute the company's investment decisions to Buffett. He has in recent years emphasized the company's plans for a post-Buffett future. Last year, he named Greg Abel to eventually succeed him as CEO.

    The company's biggest equity stake is in Apple (NASDAQ:AAPL) stake, with a market value of $161.2B at 2021's end. That's followed by Bank of America (NYSE:BAC), with $46.0B value, American Express (NYSE:AXP), at $24.8B, and Coca-Cola (NYSE:KO) at $23.7B.

    Buffett highlighted the company's contribution to the U.S. Treasury, saying that when Berkshire (BRK.B) prospers, the U.S. also shares in that success. In 2021, the company paid $3.3B in federal income taxes. That's ~0.8% of the $402B total corporate income tax receipts the U.S. Treasury reported for the year.

    He attributes the company's prosperity to the fact that Berkshire (BRK.B) operates in the U.S. "Our shareholders should acknowledge — indeed trumpet — the fact that Berkshire’s prosperity has been fostered mightily because the company has operated in America," he wrote.

    While Berkshire Hathaway (BRK.B) (BRK.A) is mostly viewed as a "somewhat strange collection of financial assets," the company owns and operates more U.S.-based infrastructure assets "than any other American corporation," Buffett said.

    In the letter, he featured the company's "four giants" that account for a large chunk of Berkshire's value — its insurance business, Apple (AAPL), railroad BNSF, and its BHE energy unit.

    Insurance: Buffett is a big fan on insurance float — the amount of money collected from premiums that he has on hand to invest. "The insurance business is made to order for Berkshire. The product will never be obsolete, and sales volume will generatlly increase along with both economic growth and inflation."

    On Apple (AAPL): Berkshire's (BRK.B) stake in the tech giant grows as Apple buys back its own shares. Its ownership of 5.55% increased from 5.39% a year ago. "That sounds like small potatoes. But consider that each 0.1% of Apple's 2021 earnings amounted to $100M. We spent no Berkshire funds to gain our accretion. Apple's repurchases did the job." And last year the tech company paid Berkshire $785M in dividends, which are included in Berkshire's (BRK.B) GAAP earnings.

    BNSF: "Your railroad had record earnings of $6B in 2021…the old-fashioned sort of earnings that we favor: a figure calculated after interest, taxes, depreciation, amortization, and all forms compensation." He also pointed out that the railroad's trains traveled 143M miles and carried 535M tons of cargo last year — both "far exceed those of any other American carrier."

    BHE: The unit earned a record $4B in 2021, up more than 30-fold from the $122M it earned in 2000, when Berkshire (BRK.B) first purchased a BHE stake; now owns 91.1% of the company. He pointed out that the unit now details plans and performance in renewables and transmissions every year since 2007. BHE has reduced its greenhouse gas emissions to 63.5M metric tons in 2021 from 79.9M metric tons in 2005; it targets 39.9M metric tons in 2030.

    BRK.A +0.25%Feb. 26, 2022 9:34 AM ET198 Comments

    Berkshire Hathaway (NYSE:BRK.B) (NYSE:BRK.A) bought back $6.9B of its shares in Q4 2021. All told, Berkshire (BRK.B) bought back $27B of its own shares in 2021, up from the $24.7B it repurchased in 2020.

    Since the end of 2021, Berkshire (BRK.B) bought $1.2B more of its shares, CEO Warren Buffett said in his latest annual letter to shareholders. (Added at 8:48 AM ET)

    The diversified insurance and investment company built by Warren Buffett saw its cash and short-term securities holdings creep up in the quarter. It held ~$146.7B of cash and short-term securities at Dec. 31, 2021 vs. $149.2B at Sept. 30.

    Q4 operating earnings of $7.29B vs. $6.47B in Q3 and $5.02B in Q4, a 45% Y/Y jump as insurance underwriting reversed from a year-ago loss. Railroad, energy, and utilities earnings also contributed to the gain as well as a healthy increase in "other businesses."

    Insurance float was ~$147B at Dec. 31, 2021 vs. ~$145B at Sept. 30.

    Operating earnings by segment:

    • Insurance underwriting — $372M vs. -$299M a year ago.
    • Insurance – investment income — $1.22B vs. $1.27B
    • Railroad, utilities, and energy —$2.24B vs. $2.00B.
    • Other businesses — $2.79B vs. $2.47B
    • Other — $662M vs. -$412M

    Q4 net earnings, which includes investment and derivatives gains or losses (most of which is unrealized), were $39.6B, or $17.79 per class B share. That compares with $10.3B or $4.59 per class B share, in Q3 and $35.8B, or $15.34 per share, in Q4 2020.

    Q4 investment gains of $32.2B increased from $30.4B a year earlier, derivatives gains of $147M fell from $380M; that brings total investments and derivatives gains to $32.4B in Q4 2021 vs. gains of $30.8B in 2020. (Added at 9:42 AM ET)

    In the letter to shareholders, Buffett said the company annual meeting will return to its traditional three-day format, April 29-May 1 at Omaha and will offer shareholders a 10% discount on the Jimmy Buffett-designed "party" boat that's manufactured by Berkshire's Forest River subsidiary. (Added at 9:33 AM ET)

    SA contributor Jim Sloan explains why Warren Buffett's Berkshire (BRK.Bmustn't be broken up

    BRK.B -0.11%Feb. 26, 2022 10:23 AM ET6 Comments

    Berkshire Hathaway's (NYSE:BRK.B) (NYSE:BRK.A) businesses represent a wide swath of American industry, spanning insurance, transportation, housing and real estate, consumer products, industrial manufacturing, and energy, to name a few.

    And as many companies have already reported, supply chain disruptions and other factors have pushed up its cost of doing business. "Many of our businesses were negatively affected by ongoing global supply chain disruptions, including those attributable to major winter storms and a hurricane in North America, which contributed to higher input costs," the company said Saturday in its 10-K for 2021.

    2021 total costs and expenses rose 5.5% to $243.9B from $231.3B. By contrast, costs and expenses rose 2.5% in 2020.

    Breaking down some of those costs and expenses, insurance losses and loss adjustment expenses accounted for $50.0B of the 2021 total and rose almost 14% Y/Y. Cost of sales and services at $114.1B increased 13%.

    Utilities and energy cost of sales and other expenses (not included in the "cost of sales and services" number above) rose 20% to $14.0B; freight rail transportation expenses of $14.5B increased 10% Y/Y.

    Notably, Berkshire's (BRK.B) selling, general and administrative expenses fell to $18.8B in 2021, down 4.9% from $19.8B in 2020.

    Some highlights for the company's businesses in 2021:

    • Its insurance underwriting business earned $728M, including $2.3B of after-tax losses from significant catastrophe events, in 2021 vs. $657M, and $750M of catastrophe losses, in 2020. Underwriting results in 2021 were helped by reductions in incurred losses for prior accident years under P&C contracts and hurt by lower earned premium from the GEICO giveback program, higher private passenger auto claim frequencies and severities estimates, and higher losses in the life reinsurance business.
    • After-tax earnings from its insurance investment income in the year fell 4.6% from 2020 and were negatively affected by declines in interest rates on its substantial holdings of cash and U.S. Treasury bills.
    • Its railroad business after-tax earnings increased 16% in 2021, reflecting overall higher freight volumes, higher average revenue per car/unit, and improved productivity, partly offset by higher average fuel prices and volume-related costs.
    • After-tax earnings from its utilities and energy business rose 13% Y/Y helped by higher earnings from its utilities and natural gas pipelines businesses, which included the effects of a business acquisition and from its real estate brokerage business.
    • Manufacturing, service, and retailing businesses' earnings jumped 34% in 2020. "While customer demand for products was relatively high during the year, several of our businesses experienced higher materials, freight and other input costs attributable to ongoing disruptions in global supply chains," the company said.

    Earlier, Berkshire Hathaway buys back $6.9B of stock in Q4; operating earnings rise 45%

    RSI +2.21%Feb. 26, 2022 10:07 AM ET6 Comments

    The race for online gambling market share in the U.S. could ratchet up even further if online casinos are legalized in New York.

    Online casinos in New York could be legalized if a bill sponsored by State Senator Joe Addabbo is approved. A vote is anticipated within weeks.

    The bill would allow both commercial casinos and tribal nations to operate online casino games in New York for a licensing fee of $2M per operator for ten years. Operators could then choose two mobile casino platforms as partners with each brand required to pay $10M for a ten-year license.

    Online casinos generate more revenue than sports betting in many states. For instance, Pennsylvania's online casino and poker rooms generated $466.4M in taxes on $1.3B in gross gaming revenue last year vs. retail and online sportsbooks with a tally of $122.5M in taxes on $505.5M in revenue. Network lead analyst Dustin Gouker: "Sports betting gets significantly more attention, but the tax revenue that online casinos generate in states where it is legal dwarfs what sportsbooks produce. Where sports betting ebbs and flows with the seasons, online casino gaming is consistent month after month. And in New York, which would almost instantly become the nation’s largest online casino market, online casino gaming has the potential to become a significant and reliable boost to the state budget for years to come."

    Sports betting operators in New York include FanDuel Sportsbook (OTCPK:PDYPY), DraftKings Sportsbook (NASDAQ:DKNG), Caesars Sportsbook (NASDAQ:CZR), BetRivers (NYSE:RSI), BetMGM (NYSE:MGM) and PointsBet (OTCQX:PBTHF).

    Is the chase for online gambling customers too much of a hit on short-term profitability? One company going in a different direction is Churchill Downs (NASDAQ:CHDN), which announced a plan to exit the online casino and sports betting business to focus on the more profitable online TwinSpires horse betting business.

    "The online sports betting and online casino space is highly competitive with an ever-increasing number of participants that the states have licensed," noted CEO William Carstanjen. "Many are pursuing maximum market share in every state with limited regard for short-term or potentially even long-term profitability," he added.

    Caesars Entertainment (CZR) also highlighted during its conference call this week (transcript) that profitability will be a focus as cuts back on sports betting ad spending.

    There is also a case to be made that Penn National Gaming (NASDAQ:PENN) is on a quicker track toward profitability due to its average lower customer acquisition costs for Barstool customers.

  29. X/RN – Oh, I get it, you have 20 2023 $20/30 spreads and the short puts and no short calls.   Nothing wrong with that.  You are right on track but you can easily sell 7 (1/3) April $28 calls for $2 ($1,400).  That's 45 days out of 326 you have to sell so 6 sales like that would be $8,400 – why not?  As long as you don't mind doing a 2x roll if they pop (the July $35s are $1.50), which then may force you to DD on your longs if it keeps going but $35 seems doubtful.  

  30. Morning. Had big post typed and lost it .. grrr.

    Phil, get you thoughts on the following

    PARA, TWO, VTRS (-25% today)


  31. Biocon (whose biosimilars unit bought VTRS' biosimilars unit) fell 11% in India today. Biocon itself has a market cap of ~5.5B, so I expect they are taking up a ton of debt for this. Has VTRS said anything of what they will do with the 3.3B they get from Biocon? I thought biosimilars was pretty much what was making VTRS good money?

  32. rn273 – Agreed .. very confused by the whole thing.

  33. Viatris Inc (NASDAQ:VTRS), previously known as Mylan, has agreed to pay $264 million to resolve a class-action lawsuit alleging it engaged in a scheme to delay generic competition to its EpiPen allergy treatment.

  34. Things are heading south again – Dow, /ES down 1.5%, Nas down 1%, RUT down 0.5%

    Not the Dollar's fault:

    And the VIX hasn't even woken up yet. 

    Post/Jeddah – I always copy the text before I hit submit, just in case.  Well, not always…  

    PARA/Jeddah – It's just VIAC with a new ticker.  Still $19.2Bn at $30.50 and still making $1.8Bn so still a stock I like.  

    Nothing in there I'd walk away from.

    TWO/Jeddah – That's a REIT I like but rising rates spook RIET investors.  Good for the long-term.  $5 is $1.75Bn and they usually drop $350M to the bottom line but projecting $250M this year and $300M next – still not bad.  

    VTRS/Jeddah – They got crushed.  Certainly Biosimilars has been driving growth but only $875M total revenue last year and their real money came from PFE legacy products like Viagra, Lipitor, Lyrica ($11Bn)… not Biosimilars.  VTRS spun out of PFE as what used to be Upjohn, their generic brand and that combined with Mylan and all that sorted out in late 2020.  PFE shareholders got 1 VTRS for each 8 PFE they owned.   VTRS gets the cash and still owns some of Biocon and gets another 12.9% as part of the spin-off.  Even with all this, VTRS still has $20Bn of debt to pay down.  That's why PFE is doing so well – they dropped all their debt into VTRS.  People look at VTRS as a wind-down but they are developing small molecule drugs that can end up being very big and the wind downs will pay off that debt while they do their R&D.

    However, the highlight of the earnings was the deal with India-based Biocon Biologics under which Viatris (NASDAQ:VTRS) will sell the biosimilar assets before the second half of the year in return for ~13% equity stake in the acquirer apart from $2B in upfront cash and $335M of additional payments.

    Commenting on the transaction, Bank of America analysts led by Jason M. Gerberry argue that the valuation multiple implied in the deal looks attractive and stands “well above the levels” Viatris (VTRS) trades.

    However, the analysts note that the key to estimating the potential upside to the stock could be the post-deal EBITDA that management expects to guide for 2022.

    If they capture only half the estimated $200M EBITDA forecast for 2022, the team projects $6.2B in residual EBITDA for the company. Viatris (VTRS) projects $5.8B-6.2B adj. EBITDA for 2022.

    Assuming an EV/EBITDA multiple as of Friday’s close, the analysts estimate a ~17% upside for the remaining company after the sale. In addition, Gerberry and the team highlight the potential of the deal to help Viatris (VTRS) reduce its debt, deploy capital and add new growth drivers. Bank of America has a Buy rating on Viatris (VTRS), and its per-share target of $21 implies a premium of ~44% to the last close.