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Wednesday Whiplash (as usual) – Is the War Over?

"And so this is Christmas

For weak and for strong,

(War is over if you want it)

For the rich and the poor ones,

The road is so long.

(War is over now)" – Lennon

No, it isn't Christmas and no, the war is not over.

Covid isn't over either and inflation isn't over and the World is still warming (remember that?) and Seditionists are still allowed to roam free despite breaking down the doors of our Capital and threatening the lives of our Lawmakers – including the Vice President of the United States (they didn't threaten the President only because he's the one who sent the mob in the first place!).  The supply chains have not unraveled, rates are still going to rise, our National Debt will still pass $32Tn this year and yes, the economy is slowing.

So why shouldn't stocks bounce right back to their all-time highs?  As long as there are people dumb enough to pay 30 times earnings for stocks – there are going to be traders that are happy to sell them to you, after all.  That's the auction process you engage in when buying a stock – how many years' worth of the company's earnings are you willing to pay for it now.  A rational reason for making this bet is you believe the company will grow and, at some point, your risky return on the equity will outpace the "risk-free" (that's a whole other article) return of Bonds or TBills, which is currently 1.86% for a 10-year note and 2.26% on a 30-year note.  

High Valuations and Low Interest Rates | 361 Capital

That is significantly below the historical averages of 4.29% for a 10-year and 5.21% for a 30-year.  4.29% is essentially 23.3 times "earnings" with the earnings being the interest paid on a TBill and 23.3 being how many years it will take to make your investment back.  Since bond returns are considered "risk free" – the stock market usually commands a lower multiple on earnings than a TBill.  At 2%, however, it takes 50 years to get back your money on a 10-year note and that means even the market's current 35-year multiple doesn't look terrible to investors BUT (and it's a big BUT) if the Fed is raising rates just 1% this year – then by the end of the year the "risk-free" return drops to 33 and Bond Multiples below Market Multiples are just not financially sustainable.  

Investors 'Flying Blind' as Clouds Envelop S&P Profit Outlook - BloombergRates ARE going to rise – the Fed could not have been more clear about that – it's just a question of pacing and, if the rates are going to rise, then the multiples are going to fall and what happens if, while this is going on, the actual Dollar value of the earnings falls as well?  That could be catastrophic and THAT is why we are certainly not rushing back into stocks at the moment.

Almost 300 of the S&P 500 companies had their earnings projections revised LOWER in February – and they hadn't all even reported yet!  THEN the war broke out and many S&P 500 companies have stopped doing business with Russia – perhaps 2% of the Global Economy – doesn't that lead to less earnings as well.  Also, the strong Dollar is good for some and bad for others.  The S&P 500 gets 60% of it's revenues from overseas and if they get Euros or Yen then those Dollar-converted earnings will be lower as well. 

Meanwhile, as long as there is red in our 20% Correction Zone Bounce Chart – we've got no reason to jump in and start buying.  As I noted for our Members yesterday, we haven't seen any kind of high-volume capitulation yet.  

  • Dow 36,000 to 28,800 would be a 7,200-point drop with 1,440 bounces to 30,240 (weak) and 31,680 (strong).   
  • S&P 4,800 is 20% above 4,000 and that makes it an 800-point drop with 160-point bounces so 4,160 (weak) and 4,320 (strong).
  • Nasdaq is using 13,500 as the base and we bottomed yesterday at 13,103.  14,100 is the weak bounce and 14,700 is strong.  
  • Russell 1,600, would be about an 800-point drop with 160-point bounces to 1,780 (weak) and 1,960 (strong).

All that we've accomplished since yesterday is the 13,500 BOTTOM on the Nasdaq went from red to black (still on the cusp) and the strong bounce line on the Russell went back to green but three reds on the 20% correction chart is NO BUENO – keep that in mind.  Biden is taking my advice on the SPR and oil prices are coming down sharply for the moment:


See, you can thank the Dollar pullback for a lot of today's positive stock action.


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  1. NATO Members Mount Huge Operation to Resupply Ukrainian Fighters

  2. Good Morning.

  3. Comment content omitted because it is too long.

  4. Good morning!

    API headline was a build on oil – that didn't help sustain the $120s:

    Api weekly oil and products inventory report. #Crude: +2.811M #Cushing: -0.367M #Gasoline: -1.988M #Distillates: -5.485M

    Big draw on Distillates for some reason – maybe we're sending to Ukraine?  

    That's just crazy!  

    USO -6.36%Mar. 09, 2022 9:17 AM ET36 Comments

    Citigroup's bearish oil strategist Ed Morse updated his oil price forecast Wednesday, bumping his Q4 Brent estimate from $66/b to $69/b. Meanwhile, Rystad wrote that a Russian oil embargo could send Brent prices to $240/b. With the Street calling for ever higher oil prices, it's worth taking a look at Ed's reasoning:

    • Iran – Citi sees Iran adding 500kb/d by May and another 800kb/d by year end, reaching 2018 levels of production in early 2023.
    • Shale – The note calls for higher shale production growth on the back of higher prices; Citi sees ~1mb/d of US production growth this year, and ~2mb/d of production growth from the US annually at $90 oil.
    • Demand – lack of seasonality in 2021 / spring of 2022 was an aberration, and come Q4 demand will fall seasonally.
    • Oil "intensity" – Citi notes that oil demand is driven by GDP growth; however, falling "intensity" of oil as a percent of GDP will soon hit EM demand growth.

    The counterpoints are well understood. Iran hopes to present IAEA findings by June, suggesting May export growth is off the table. Furthermore, Russia is beginning to leverage its position on the UN Security Council to tie the Iran deal to further concessions from Washington. A long list of shale producers have said they won't grow in 2022, including Pioneer (NYSE:PXD), Diamondback (NASDAQ:FANG), Devon (NYSE:DVN) and Marathon (NYSE:MRO). And the producers that are growing in 2022, namely Exxon (NYSE:XOM), show slowing growth in 2023+. The demand seasonality point is a fair one; however, "trend" demand growth from 2019 to 2022 would put global demand above 103mb/d, so suggesting demand will plateau at current levels of ~100mb/d appears aggressive. And finally, oil intensity of GDP is falling in the West due to policy measure. Policies that are unlikely to impact EM demand for some time.

    Meanwhile, Goldman indicated Wednesday that Russian "self sanctioning" has created one of the largest disruptions to energy flows in history. Energy consultancy Rystad estimates that oil prices will rise to $240/b this summer, if Russian oil is fully embargoed. Forecasting near term prices in the face of supply disruptions is challenging (NYSEARCA:USO); however, Citi's year end 2022 call for $69 Brent also feels challenging.

    /NG, on the other hand, gave us another $4.50 entry.

    The reason $4.50 is good is because the line is very supportive so it's a good place to set stops.  If you can set up a play where you risk losing 0.05 vs making maybe 0.50 – it's worth doing.

    Boy, you can bet on anything:

    Procure ETF Trust intends to bring a new thematic ETF to market called the Procure Disaster Recovery ETF (FEMA).

    FEMA is designed to offer market participants exposure to companies engaged in the recovery from natural disasters, including businesses that service the aftermath of tropical storms, cyclones, hurricanes, wildfires, floods, earthquakes, and more.

    More specifically, the ETF is intended to be a passively managed fund that tracks the performance of the Alerian Natural Disaster Recovery Index. FEMA also invests in stocks that support natural disasters, such as engineering and construction firms and stocks involving specialty industrial machinery, building materials, building products, industrial products, and waste management.

    According to the U.S. Securities Exchange Commission prospectus, the ETF will be comprised of small-cap, medium-cap, and large-cap organizations. Additionally, the ETF has not listed a formal expense ratio at this time but intends to list on the Nasdaq Stock Market.

    While FEMA did not outline any direct holdings, investors can speculate the fund to include big box store names like Home Depot (NYSE:HD) and Walmart (NYSE:WMT). Also, generator, engineering, and water solution firms like Generac Holdings (NYSE:GNRC), AECOM (NYSE:ACM), Fluor (NYSE:FLR), and Xylem (NYSE:XYL) can be possibilities as well.

    As thematic ETF investing continues to grow among investors, JPMorgan has raised concerns.

    ERJ +8.60%Mar. 09, 2022 9:10 AM ET

    • Embraer (NYSE:ERJ) has issued a notice to the market about the impact of the Russia-Ukraine crisis on its business and operations.
    • The firm has suspended parts, maintenance, and technical support services for certain customers in compliance with sanctions imposed on Russia, Belarus, and certain parts of Ukraine.
    • Regarding the availability of titanium in its supply chain, Embraer said that there is no immediate concern given its strong current inventory and existing contracts for the material with companies in other countries. Embraer will continue to monitor its supply chain and to seek alternative sources.
    • Shares are trading +6.89% pre-market.

    AAPL +1.92%Mar. 09, 2022 8:56 AM ET5 Comments

    Apple (NASDAQ:AAPL) unveiled several new products yesterday, including the oft-rumored iPhone SE with 5G support, a new smartphone that investment firm Citi says should help "buoy consumer interest."

    Analyst Jim Suva, who has a buy rating and a $200 price target on Apple (AAPL), noted that the new iPhone SE, which uses the same A15 Bionic processor as the iPhone 13 is likely to spur sales, even if the starting price of $429 was slightly higher than expected.

    "We believe a renewed affordable iPhone SE lineup should buoy consumer interest in iPhones vs investor fears of sharp declines following an estimated ~25% growth in units in FY 2021," Suva wrote in a note to clients.

    Apple shares gained more than 2% to $161.04 in premarket trading on Wednesday.

    In addition to the iPhone SE, Apple (AAPL) also unveiled a new iPad Air, powered by the M1 chip, as well as the M1 Ultra chip, which can be used in the newly announced Mac Studio. Apple also showed off the new 5k Studio Display and some sports programming for Apple TV+, Friday Night Baseball and a live highlight and look-in show airing every night, known as "MLB Big Inning."

    "In a world of supply chain constraints and complexities created by COVID it is impressive that Apple has continued its development and new product launches without material delays," Suva added.

    On Monday, Apple (AAPL) and Comcast (NASDAQ:CMCSA) announced that Apple TV+ would be coming to Comcast's U.S. entertainment platforms.

  5. LLY +1.52%Mar. 09, 2022 8:47 AM ET

    Attempts to introduce legislation to control insulin costs for diabetics is making a comeback in the U.S. Senate, The Associated Press reported on Wednesday.

    The move has received the support of President Joe Biden, and previously, the backing of former President Donald Trump.

    The efforts reemerged this week when Senate Majority Leader Chuck Schumer, D-N.Y. wrote to his colleagues: “Negotiations are underway with Senate Republicans on legislation to lower the cost of insulin.”

    Notably, Schumer is a co-sponsor of a recent bill introduced by Sen. Raphael Warnock, D-Ga. to require Medicare drug plans, as well as employer and individual policies to cover multiple insulin products for $35 a month.

    Previously, the Trump administration negotiated with drugmakers and insurers to offer Medicare enrollees the option to sign up for prescription plans covering insulin for $35 a month. However, the bill brought forward by Warnock aims to codify the program into federal law.

    While House Democrats indicated the insulin bill that garners 60 Senate votes would also pass their chamber, Warnock’s bill lacks Republicans as co-sponsors.

    Last year, in Mississippi, Eli Lilly (NYSE:LLY), Sanofi (NASDAQ:SNY), and Novo Nordisk (NYSE:NVO) were facing a lawsuit that alleged the companies colluded to keep insulin prices high.

    In September, Eli Lilly (LLY) announced a 40% reduction in the U.S. list price of its Insulin Lispro Injection, a low-cost version of the branded Humalog U-100.

    BKNG +9.46%Mar. 09, 2022 8:33 AM ET

    Oppenheimer upgraded Booking Holdings (NASDAQ:BKNG) to an Outperform rating after having it slotted with a Perform rating.

    Analyst Jed Kelly said it believes BKNG's investing aggressively into the recovery via payments, connected trip, brand and loyalty initiatives will yield higher share gains, which will help sustain a low 20's P/E multiple on the online travel stock.

    "We raise our '23E revenue/EPS 4%/10% on our view of looser int'l restrictions driving a faster recovery, offsetting pockets of geo-political volatility. Additionally, we see BKNG snapping back the most relative to OTA peers on any Ukraine resolution."

    The firm projects 65% 2021-2023 EPS growth. Oppenheimer's price target of $2,560 on BKNG is based on 20X the 2023 EPS estimate, below its current 21X 2022 multiple, representing a 9% premium to the S&P500 Index vs. the historic premium of 16%. The price target reps 35% upside for BKNG shares.

    Shares of Booking Holdings (BKNG) rose 4.28% in premarket action to $1,980.90 to follow on yesterday's 4.53% gain amid a broad rally in travel and leisure names.

    THO +6.65%Mar. 09, 2022 8:17 AM ET

    Thor Industries (NYSE:THO) rallied after the company posted a strong FQ2 earnings report headlined by 42% revenue growth.

    Consolidated RV wholesale shipments were up by 14.5% during the quarter and consolidated RV backlog increased by more than 60% compared to a year ago. Order backlog declined sequentially from FQ1 and dealer inventory levels were noted to be improving. The company said it is working hard to deliver enough units to continue to reduce order backlog.

    CEO update: "Our results show the strong appeal of our products, the continued strong demand in our industry and the outstanding performance by our team members. In addition to our second-quarter record top line, we reported consolidated gross profit margin of 17.4%. Our increased margins were driven by the increase in net sales, improved quality and operating efficiencies, a reduction in sales discounts compared to the prior-year period and certain selling price increases put in place since the prior-year period to offset known and anticipated material cost increases."

    Shares of Thor Industries (THO) rose 6.40% premarket to $90.10 vs. the 52-week trading range of $80.47 to $152.20.

    THO +6.65%Mar. 09, 2022 8:17 AM ET

    Thor Industries (NYSE:THO) shares have climbed 6.28% pre-market after the company reported record financial results for its second fiscal quarter ended Jan. 31, 2022.

    The recreational vehicle (RV) maker generated consolidated net sales of $3.88B (+42.1% Y/Y), exceeding estimates by $350M. The growth was driven by continued demand for RVs and contribution of recent acquisitions.

    Consolidated gross profit margin improved 220 basis point over the comparable prior-year period to 17.4%.

    As of Jan. 31, 2022, consolidated RV backlog was $17.73B, up over 60% Y/Y. At the same time, order backlog declined sequentially from fiscal first quarter and dealer inventory levels improved.

    Net income totaled $266.6M, or $4.79 per diluted share, compared with $132.5M, or $2.38 per diluted share, in the prior-year period.

    SVP and COO Todd Woelfer stated, "Calendar year 2022 started strong for THOR as we grew our market share position in every category in which we participate. Our products have and will continue to perform well at the retail level. While we will continue to seek to regain share, we will first remain focused on prudently producing high-quality product to meet demand and reduce our backlog without overproducing and overloading our independent dealer channel. As I noted, we are focused on achieving continued growth and increased profitability. We believe this is the best strategy and expect this effort to deliver strong shareholder returns in Fiscal 2022 and 2023."

    THO Long Call 2024 19-JAN 100.00 CALL [THO @ $91.07 $6.39] 10 12/8/2021 (681) $29,000 $29.00 $-10.25 $29.00     $18.75 $1.25 $-10,250 -35.3% $18,750
    THO Short Call 2024 19-JAN 130.00 CALL [THO @ $91.07 $6.39] -10 12/8/2021 (681) $-18,000 $18.00 $-7.75     $10.25 - $7,750 43.1% $-10,250
    THO Short Put 2024 19-JAN 100.00 PUT [THO @ $91.07 $6.39] -5 12/8/2021 (681) $-11,000 $22.00 $5.75     $27.75 - $-2,875 -26.1% $-13,875

  6. BAC +5.65%Mar. 09, 2022 8:08 AM ET

    U.S. consumer spending in February increased from January's pace, with retail spending (excluding auto) rising 8.7% Y/Y and 17% vs. the prepandemic level in 2019, according to the Mastercard SpendingPulse report.

    The numbers reflect the higher inflation rate and a wardrobe makeover as office workers return to the office.

    In-store sales rose 10% Y/Y in February and 8.0% vs prepandemic. Ecommerce sales climbed 4.4% Y/Y and 86% from 2019 as the shift to digital persists at a slowing pace.

    Apparel sales rose 38% Y/Y and 34% vs. prepandemic. Department store sales bounced up last month, rising 26% Y/Y and 3.4% from prepandemic levels.

    "Despite inflation, consumers are putting their record savings to work and expressing themselves through fashion again — much to the benefit of the apparel, department store, luxury and jewelry verticals, according to Mastercard SpendingPulse," said Steve Sadove, senior advisor for Mastercard and former CEO and chairman of Saks.

    On the expectation of strong consumer spending this spring and summer, Deutsche Bank upgraded Six Flags Entertainment (NYSE:SIX) to Buy last week.

    On Tuesday, Bank of America (NYSE:BAC) said strong consumer spending continued in February as its consumer clients made $294B in payments.

    FL +1.99%Mar. 09, 2022 8:08 AM ET1 Comment

    Argus dropped its rating on Foot Locker (NYSE:FL) to Hold from Buy due largely to the impact of Nike's decision to limit high-demand products in the company's stores.

    Analyst Kristina Ruggeri: "We are concerned about the reduction in Nike sales and the potential impact of Nike's decision on other FL vendors. Management has projected a sharp decline in FY23 non-GAAP EPS to $4.25-4.60, down 43% from FY22 at the midpoint of the range."

    Foot Locker (FL) is said to be fairly valued given the company's near-term challenges.

    Ruggeri and team said they would consider returning Foot Locker to its Buy list on signs that the company is overcoming the reduction in Nike sales and succeeding with the new business strategy.

    Wall Street ratings scorecard on Foot Locker (FL): 5 Buy-equivalent ratings, 11 Neutral-equivalent ratings and 5 Sell-equivalent ratings.

    Shares of Foot Locker (FL) rose 1.40% premarket to $30.37 vs. the 52-week trading range of $26.36 to $66.71.

    NFLX +3.84%Mar. 09, 2022 7:51 AM ET6 Comments

    Netflix (NASDAQ:NFLX) shares rose in premarket trading on Wednesday after Wedbush Securities shockingly upgraded the stock, a sign that "hell freezes over" as the stock has reached the firm's price target.

    Analyst Michael Pachter raised his rating to neutral from underperform, but kept the $342 price target, noting that the recent decline in Netflix's (NFLX) stock reflects the fact that investors have started to appreciated the long-term thesis that it is a "a low growth, extremely profitable enterprise."

    "While we do not anticipate significant share price appreciation in the near-term, Netflix’s first mover advantage and large subscriber base provides the company with a nearly insurmountable competitive advantage over its streaming peers," Pachter wrote in a note to clients.

    Netflix shares were up slightly more than 2% to $349 in premarket trading on Wednesday.

    Pachter noted that Netflix (NFLX) has likely hit a ceiling on subscribers in the U.S. and Canada and is trying to lower churn, including a new season of Russian Doll starting in the second-quarter and splitting the fourth season of Stranger Things into the second-quarter and third-quarter, splitting it into two volumes.

    "We continue to believe that content dumps, where all episodes of a new season are delivered at the same instant, will keep churn high, as price conscious consumers can swap out of Netflix and sign up for a competitor after viewing the content they desire," the analyst explained. "However, the experiment with Stranger Things suggests the company is aware of the cost of churn."

    Going forward, Netflix (NFLX) is likely to raise the price of its subscription in the U.S. and Canada to offset increasing content costs, essentially "soaking" its highest revenue subscribers to fund international growth, Pachter explained.

    The analyst added that the price could rise as high as $19.99 and not lose many subscribers. Even so, as the firm does raise prices, "the more likely new subscribers will be to churn in and out" and limit its ability to grow.

    Yesterday, Netflix (NFLX) Chief Financial Officer Spencer Neumann said the firm has a "never say never" mentality when it comes to introducing advertising on the platform.

    BTC-USD +8.64%Mar. 09, 2022 7:41 AM ET41 Comments

    President Joe Biden will sign today an executive order directing government agencies to examine the potential benefits and risks of cryptocurrencies as it seeks to position the U.S. at the forefront of technological crypto innovation, according to a White House fact sheet.

    "The United States must maintain technological leadership in this rapidly growing space, supporting innovation while mitigating the risks for consumers, businesses, the broader financial system, and the climate," the document said.

    Besides focusing on crypto's impact within the country, the U.S. "must play a leading role in international engagement and global governance of digital assets consistent with democratic values and U.S. global competitiveness," it said.

    The whole-government policy maps out six key priorities — consumer and investor protection; financial stability; illicit finance; U.S. leadership in the global financial system and economic competitiveness; financial inclusion; and responsible innovation.

    Some parts of the plan are already in action. For example the order includes exploring a U.S. central bank digital currency, a project the Federal Reserve has already started with the release of a discussion paper in January. And in November, the President's Working Group on Financial Markets, along with the FDIC and the Office of the Comptroller of the Currency, issued a report asking Congress to enact legislation regarding stablecoins.

    Congress will also play a role. "The administration will continue work across agencies and with Congress to establish policies that guard against risks and guide responsible innovation, with our allies and partners to develop aligned international capabilities that respond to national security risks, and with the private sector to study and support technological advances in digital assets."

  7. Mar. 09, 2022 7:35 AM ET1 Comment

    • MBA Mortgage Applications
    • Composite Index: 8.5% vs. -0.7%
    • The jump was amid mortgage rates dropping for the first time in three months as a result of Russia's war in Ukraine.
    • Purchase Index: +9% vs. -2%
    • Refinance Index: +9% vs. 1%
    • 30-year mortgage rate at 4.09% vs. 4.15%
    • The average loan size remained close to record highs, with higher-balance loan applications continuing to dominate growth.
    • "Looking ahead, the potential for higher inflation amidst disruptions in oil and other commodity flows will likely lead to a period of volatility in rates as these effects work against each other," MBA economist Joel Kan commented.

    AAPL +1.85%Mar. 09, 2022 7:29 AM ET5 Comments

    Apple (NASDAQ:AAPL) held its first product event of the year yesterday, virtually unveiling a new iPhone SE, iPad Air and the Mac Studio, along with the new M1 Ultra chip, which Bank of America said addressed the tech giant's "high end processing needs."

    Analyst Wamsi Mohan, who maintained his buy rating and $215 price target, noted that the event showcased "the power of Apple Silicon and seamless integration of hardware and software." The M1 Ultra offers UltraFusion, which has a new packaging architecture that interconnects two M1 Max chips and creates a different system-on-a-chip, offering higher performance and better power efficiency.

    The Mac Studio, which can be configured with the M1 Ultra, along with Studio Display, is seen as "a powerful tool for musicians, 3D artists, App developers, photographers and videographers," Mohan explained.

    Apple (AAPL) shares were up nearly 2% to $160.47 in premarket trading on Wednesday.

    In addition, the iPhone SE with 5G support could allow Apple (AAPL) to gain share in lower price points for the smartphone market, especially as the company previously noted it added "more new users to the iPhone 13 lineup than in each of the previous five launches."

    In addition, Apple (AAPL) unveiled a new iPad Air that uses the 8-core M1 Chip and Friday Night Baseball for Apple TV+, as well as a live highlight and look-in show airing every night, known as "MLB Big Inning."

    Last week, it was reported that Apple (AAPL) set April 11 as the date for its corporate staff to return to the office one day per week as the world looks to move past the COVID-19 pandemic.

    PFE +2.47%Mar. 09, 2022 7:02 AM ET1 Comment

    Pfizer (NYSE:PFE) announced on Wednesday that it has started a Phase 2/3 study called EPIC-PEDS to evaluate its COVID-19 pill Paxlovid in non-hospitalized and symptomatic COVID-19 patients who are less than 18 years of age.

    Paxlovid, a combination of the protease inhibitor, nirmatrelvir, and the older antiviral ritonavir, is already authorized in the U.S. for those aged 12 years and above.

    The new 140-subject study targeting the pediatric population will consist of two cohorts. Those in the Cohort 1 will receive the currently authorized dosage of nirmatrelvir/ritonavir 300 mg/100 mg twice daily for five days. Cohort 2 will receive nirmatrelvir/ritonavir 150 mg/100 mg for a similar duration.

    After obtaining data from the two initial cohorts, Pfizer (PFE) plans to enroll participants for three additional cohorts that will include kids younger than 6 years old.

    Arguing that children younger than 18 years made up nearly 18% of COVID-19 cases in the U.S., Mikael Dolsten, Chief Scientific Officer of Pfizer (PFE) said: “There is a significant unmet need for outpatient treatments that can be taken by children and adolescents.”

    If taken within three days of onset of symptoms, Paxlovid has indicated 89% efficacy in reducing the risk of hospitalization or death in late-stage trials involving non-hospitalized, high-risk adults with mild-to-moderate COVID-19.

    With its Q4 2021 results last month, Pfizer (PFE) issued an initial revenue forecast of ~$22B for Paxlovid.

    We should invest in Storage REITs as PFE will need to find places to put all that money!

    USO -6.71%Mar. 09, 2022 6:16 AM ET70 Comments

    Calling the sanction "another powerful blow to Putin's war machine," President Biden has announced a U.S. ban on Russian oil imports, as well as natural gas and other energy sources. About 8% of American imports of oil and refined products, or about 672K barrels a day, came from Russia last year, according to the Energy Information Administration. Crude continues to soar on the news, while the national average for a gallon of gas has hit $4.25 per gallon, up from $3.65 only a week ago.

    CERAWeek: Down at the energy conference in Houston, Texas, Amos Hochstein, the state department's advisor for energy security, said claims that White House policies are holding back drilling are "nonsense," blaming those on Wall Street who are "insisting on dividends and fiscal discipline in the face of a war in Europe." The administration is now telling U.S. shale producers they should do "whatever it takes" to increase supply as the risk of recession rises amid a surge in inflationary pressures. "If there's a bottleneck it is on Wall Street and that's not a U.S. government problem," added Hochstein. "They should call their financiers and tell them there’s a war going on. The American public is paying the price."

    On the other side of the discussion, shale executives have pointed to the administration's freeze on leases for drilling on new federal lands, the rejection of the Keystone XL and Biden's promise to "transition" away from the oil industry. "The only thing missing here is that stable regulatory environment… a policy environment that actually encourages American energy leadership rather than discourages it," said Mike Sommers, head of the American Petroleum Institute. Investors are also urging operators to pay back capital burned during debt-fueled production sprees in the leadup to the pandemic oil crash instead of spending the big bucks on new drilling campaigns.

    Greener future? Some say the recent rush for energy supply supports the push for renewable energy source in the long term and even underscores the risks of reliance on hydrocarbons. "I think this is the last gasp for fossil-fuel production," said Cheryl Smith, a portfolio manager for the Green Century Balanced Fund. "I don't think consumers have forgotten the last hurricane season. I don't think they’ve forgotten the last flood season. And I think that they kind of see that vulnerability." However, the ability to source key metals used for alternative energy purposes, such as nickel for batteries, has also been on a rip as of late, and it can take years to develop mines or create enough renewable infrastructure.

  8. WEAT -5.49%Mar. 08, 2022 7:10 PM ET12 Comments

    Global grain prices are set to rise further in the "sharpest shock" since the 1970s, Goldman Sachs predicts, hit by shipping disruptions, surging input costs and concerns about new plantings in Ukraine.

    Goldman raised its forecast grain prices, seeing corn climbing to $7.75 per bushel by summer, while soybeans could trade at $17.50 and wheat at $12.50 per bushel, according to a Bloomberg report.

    "We see clear upside pressure across global grains curves, with the new-crop grains contracts lagging the front as the market waits to see the extent of the disruption in Ukrainian planting," the Goldman team writes.

    Traders should reduce bets that the U.S. will step in and feed the global grains demand, Goldman says, since U.S. farmers have little spare capacity to increase acreages, which are already near records, and crop nutrients are too expensive to provide an easy solution to increase yields.


    In Tuesday's trading, Chicago wheat for July delivery (W_1:COM) settled -4.6% to $11.95 1/4 per bushel in a volatile session, following last week's record 40% surge, while May corn (C_1:COM) +0.3% to $7.53 per bushel and May soybeans (S_1:COM) +1.1% to $16.89 3/4 per bushel.

    Global food prices hit an all-time high last month – before the full effects of Russia's invasion of Ukraine - up 3.9% from January and 24.1% from a year ago.

    COP -2.07%Mar. 08, 2022 6:41 PM ET107 Comments

    Oil prices are so high that "we are encroaching upon the area of demand destruction," ConocoPhillips (NYSE:COP) CEO Ryan Lance told Bloomberg in an interview at the CERAWeek by S&P Global energy conference in Houston.

    Crude oil futures racked up their highest settlements since 2008 on Tuesday, with April WTI (CL1:COM) closing +3.6% at $123.70/bbl and May Brent (CO1:COM) ending +3.9% at $127.98/bbl, while U.S. retail gasoline prices continued to climb, as the national average price hit $4.173/gal early Tuesday, topping the previous record of $4.114/gal from July 2008.

    "This the level where consumers start to push back. People start conserving energy and changing their behavior," Lance said.

    The new U.S. ban on importing Russian oil, gas and products "makes sense," at least for now, Lance told the CERAWeek by S&P Global conference, but if the war in Ukraine drags on for many months, a different plan would be needed to ensure sufficient oil supplies at affordable prices.

    In an interview with CNBC, Lance said it would take 8-12 months to see "the first drop of new oil" if the company decided to pump more oil, which is "why we have to be thinking about the medium and longer term."

    ConocoPhillips expects to spend 20% more capital this year than in 2021 and will increase production, and could decide to put even more capital to work, the CEO said, but the company "needs to make sure the returns are there."

    "We're dealing with the same inflation and supply chain every other manufacturer is dealing with in the U.S.," Lance said, echoing comments made by Occidental Petroleum CEO Vicki Hollub.

    SLB -4.03%Mar. 08, 2022 5:54 PM ET6 Comments

    Schlumberger (NYSE:SLB) says it is launching Schlumberger End-to-end Emissions Solutions, a business dedicated to eliminating the oil and gas industry's methane and routine flare emissions.

    Schlumberger says the business will provide services and technologies "designed to give operators a robust and scalable solution for measuring, monitoring, reporting and ultimately eliminating methane and routine flare emissions from their operations."

    The company notes the business is launched as Oil and Gas Climate Initiative members announced a commitment for zero methane gas emissions in oil and gas operations by 2030.

    Schlumberger CEO Olivier Le Peuch said earlier that Q1 results likely will be affected by the Russia-Ukraine conflict, largely from the impact of the depreciation of the ruble.

    SPWR waking up finally:

  9. Submitted on 2022/02/14 at 11:28 am

    • SPWR – Finally, something we can adjust!  SPWR is selling their commercial division to TTE for $310M and SPWR's total income for 2022 was projected to be $35M so another $310M will certainly help!  Their market cap at $16 is $2.7Bn.  TTE is the majority owner of SPWR as well (50.83%).  The cash improves SPWR financially and allows them to finance their transition to Consumer, which we already expected.  It's a long-term play and we need to be patient but that doesn't mean we can't make adjustments:  The 25 short 2024 $35 calls are down 81.5% to $1.41 ($3,513) so of course we want to lock it in and buy those back as well as the 15 short Jan $25 calls at $1.68 ($2,513).  Our 35 long 2024 $25 calls at $3.23 can be rolled down to the 2024 $15 calls at $6 for net $2.77 ($9,695) and we know, if we'd like, we can sell 35 of the $25s for $3.23 to someone else and get $11,305 back but, for now, we're spending net $15,721 to get more aggressive without the cover.  Should SPWR get back to $25 now, this would be a $35,000 spread but we're not going to project any gains until we see this thing find a bottom.

  10. Phil Where can I see this bounce chart?

    Meanwhile, as long as there is red in our 20% Correction Zone Bounce Chart – we've got no reason to jump in and start buying.  As I noted for our Members yesterday, we haven't seen any kind of high-volume capitulation yet.

  11. Phil – Why isn't ATVI trading closer to the buyout price of 95? What would be an options spread to consider? The deal is expected to close in FY 2023.  

  12. RRGB +7.24%Mar. 09, 2022 10:41 AM ET6 Comments

    Travel and leisure stocks broke sharply higher on Wednesday as a potential meeting between the foreign ministers of Russia and Ukraine lifted sentiment that a settlement could eventually be worked out. Despite inflation and interest rate risks in the market, some analysts are pointing to the strength of the U.S. consumer and noting that even higher gas prices are likely to not be as much of a negative factor as feared on household spending trends.

    Advancers in the global airline sector include Gol Linhas (GOL +13.3%), Azul S.A (AZUL +12.7%), United Airlines (UAL +12.7%), Hawaiian Holdings (HA +7.1%) and JetBlue Airways (JBLU +6.9%).

    Travel service stocks Booking Holdings (BKNG +9.1%), Expedia (EXPE +7.9%), MakeMyTrip Limited (MMYT +8.9%) and (TCOM +7.8%) made big jumps.

    Gainers in the hotel sector include InterContinental Hotels Group (IHG +6.3%), Marriott International (MAR +5.3%) and Hyatt Hotels Corporation (H +6.4%).

    Cruise line stocks Carnival (CCL +11.8%), Norwegian Cruise Line Holdings (NCLH +10.5%), Royal Caribbean (RCL +6.9%) and Lindblad Expeditions (LIND +6.7%) were big movers.

    The casino sector also saw jumps for Full House Resorts (FLL +15.3%) after earnings and Caesars Entertainment (CZR +12.2%) after a Jefferies callout. Century Casinos (CNTY +11.3%), Wynn Resorts (WYNN +9.7%), MGM Resorts (MGM +8.2%), Bally's (BALY +6.2%), Boyd Gaming (BYD +6.9%) and Golden Entertainment (GDEN +6.0%) were some of the other big movers.

    Restaurant stocks were not left behind with Dine Brands Global (DIN +12.1%), Brinker International (EAT +9.0%), Carrols Restaurant Group (TAST +7.4%), Ruth's Hospitality (RUTH +7.3%) and Red Robin Gourmet (RRGB +8.0%) breaking higher.

    Broad market rundown: Nasdaq, Dow Jones, S&P 500 rally, crude oil sells off.

    CVX -1.77%Mar. 09, 2022 11:01 AM ET4 Comments

    According to Reuters sources, the US administration has offered to ease sanctions on Venezuela in return for directing a portion of oil exports to the United States (NYSEARCA:USO). The report follows a US import ban on Russian oil, which is likely to impact heavy-oil balances for refiners in the Gulf Coast, like Valero (NYSE:VLO) and Phillips (NYSE:PSX).

    Chevron (NYSE:CVX) was the last US producer in Venezuela, and helped the country extract a heavy grade of crude oil, similar to Russian and Canadian grades. However, sanctions have led to a decrease in Venezuelan production of ~2.0mb/d since 2016. The OPEC member has been able to sustain some export volumes, though results have been volatile of late, given infrastructure and supply chain bottlenecks.

    The move from the White House comes after OPEC members Saudi and the UAE refused to speak with President Biden, while the Administration scours the world for additional energy supplies. Efforts to raise domestic production have also been muted, as Washington and industry point fingers, rather than implementing policy measures or supplementing production growth plans.

    Though success in replacing Russian volumes has been limited to date, oil prices traded lower following an interview with President Zelenskyy on ABC. The Ukraine leader said, "regarding NATO, I have cooled down regarding this question" and followed by referring to "unrecognized republics" in saying, "we can discuss and find a compromise on how these territories will live on." Although comments from the Kremlin Monday, paired with Zelenskyy's interview point to some framework for a diplomatic solution, few analysts are anticipating a peace deal anytime soon.

    XOM -2.87%Mar. 09, 2022 10:57 AM ET1 Comment

    Department of Energy officials including Secretary Jennifer Granholm will meet with representatives from Exxon Mobil (XOM -3.1%), Shell (SHEL -1%) and some shale producers on the sidelines of the CERAWeek by S&P Global conference in Houston, Bloomberg reports.

    The meeting could be the result of steady oil and gas industry complaints about little or no dialogue with the Biden administration and requests for a more supportive energy policy and rhetoric from the administration before it can commit the large sums of money needed to raise production.

    The U.S. could double its rate of oil production over the next 18 months but "it's going to take cooperation with Biden, it's going to take cooperation with our shareholders," says Pioneer Natural Resources (PXD -2.2%) CEO Scott Sheffield, without saying if his company was involved in talks with government officials.

    Biden said Tuesday his administration is not holding back production, pointing to 9K approved but unused drilling permits on federal land held by oil companies.

    While executives say that more accommodative federal policy needs to start now, any significant acceleration of U.S. production growth likely would take as long as a year.

    HMY -4.30%Mar. 09, 2022 10:38 AM ET10 Comments

    Shares of precious metals miners and fertilizer producers, which have surged to multiyear highs following Russia's invasion of Ukraine, fall sharply in early trading while other sectors rise in a broad market rally.

    As April Comex gold (XAUUSD:CUR) slides 2.3% at $1,996.30/oz, following Tuesday's push to as high as $2,060/oz before settling at a 19-month high, precious metals shares post broad declines: HMY -5.6%AU -5.3%GOLD -5.1%GORO -4.9%NEM -4%GFI -3.4%AG -3.2%FSM -3.2%AUY -3%EXK -3%.

    Two of the biggest losers in early trading on the S&P 500 are fertilizer names CF Industries (CF -8.3%) and Mosaic (MOS -6.2%), while Nutrien (NTR -3.0%) and Intrepid Potash (IPI -3.5%) also sink into the red.

    CF Industries CEO Tony Will recently warned that global fertilizer inventories will be "as low as we've ever seen" heading into the Northern Hemisphere summer season.

    EIA more bullish than API was: 

    CL1:COM -4.28%Mar. 09, 2022 10:30 AM ET6 Comments

    Not helping though:

    And that's sad with the Dollar diving 1% on the day:

    Also makes anything less than a 2% gain on the indexes very unimpressive.

  13. Bounce Chart/Yodi – Here:

    • Dow 36,000 to 28,800 would be a 7,200-point drop with 1,440 bounces to 30,240 (weak) and 31,680 (strong).   
    • S&P 4,800 is 20% above 4,000 and that makes it an 800-point drop with 160-point bounces so 4,160 (weak) and 4,320 (strong).
    • Nasdaq is using 13,500 as the base and we bottomed yesterday at 13,103.  14,100 is the weak bounce and 14,700 is strong.  
    • Russell 1,600, would be about an 800-point drop with 160-point bounces to 1,780 (weak) and 1,960 (strong).

    ATVI/Rn – It could be held up by regulators and ATVI has "Me Too" issues that may be worse than MSFT thinks and that may give them an out on discovery.  Otherwise, it's an all cash deal so yes, it's a nice discount to the buyout if it goes through.  They bottomed out at $55 and let's say below $65 is just silly so selling 2024 $70 puts for $4.50 is the way I'd go if you want to play it.  There's not enough premium on the call side to make for a good spread – so I'd just go with the short puts.  

  14. Still, it's better to call the actual bottom:

    Our 12/30 Watch List:

    • Activision (ATVI) is a huge gaming company that is down 36%, mostly because they are involved in a sexual discrimination case in California because, who would have guessed, gamers and coders apparently don't know how to behave properly around women.  Does this affect their gamer audience?  My oldest daughter is a radical feminist and she hasn't closed her Warcraft account so I think they'll be OK.  ATVI makes $3.90 per $52 share you buy, which is a p/e of 13.33 and they haven't even had a big release recently but the Metaverse will open up a whole new frontier for gaming companies and who has all the top coders?  

    Who has all the top coders???  Microsoft!  

  15. Thanks Phil, I actually was looking for a real chart to compliment the numbers. 

  16. 5G Has Been a $100 Billion Whiff So Far

  17. European Industry Starts Shutting Down as Energy Prices Soar

  18. Credit Suisse Strategists Warn Still Too Early to Buy Equities

  19. this oil price volitility is insane.

  20. Why California Gas Prices Are Especially High

  21. All is going well so far.  

    Volume is low, of course – 57M so far on SPY.

    AAPL is up 3% ($162), so of course everything is up.  

    Webinar time

  22. Chart/Yodi – "noun - a sheet of information in the form of a table, graph, or diagram."

    That was StJ's fault, he spoiled you with pretty pictures.  I never used to have image charts – just my color-coded tables.  

    Oil/Tommy – Madness.  /BZ was below /CL for a bit – that's never supposed to happen and makes no sense since the war is over there:


    As I said yesterday:

    Oil/Harip – Russia's oil will go to China and the oil china buys from other countries will go to the ones who refuse to buy Russian oil – these prices won't last because it's $100 for a tank of gas and people can't afford that so either the prices come down or you have a recession in 3 months or less.  RSX benefits from high oil prices, don't they?  Canada would be my top choice.  

    VIX is still way high so be careful!

  23. Videos Show Devastating Strike at Mariupol Hospital Maternity Ward

  24. How Western Firms Quietly Enabled Russian Oligarchs

  25. Tech-heavy Nasdaq climbs 3% on bargain hunting, easing oil prices

  26. I just found this site