"We'll be fighting in the streets
With our children at our feet
And the morals that they worship will be gone
And the men who spurred us on
Sit in judgement of all wrong
They decide and the shotgun sings the song" – The Who
A month of fighting!
So far, Russia has attacked 50 health-care targets in Ukraine – to prevent civilians from receiving care after they bomb their homes, churches and schools. This isn't just a "war crime" – this is Terrorism but, because it's being carried out by a "Super-Power" – we're just letting it happen.
What is the point of NATO, what is the point of the UN if we don't step in and stop aggression like this? If your kid was being beaten up every day by a bully and you the Principle told you "Don't worry, it will affect the bully's PERMANENT Record" while your kid kept getting his daily beatings – would you consider that competent oversight? Well, that's what we're doing with Sanctions – in now way, shape or form does it stop Russia from murdering Ukrainians and stealing their land – but we can pretend we've done our part.
After all, as Joe Biden reminds us, we don't want to start World War III. Well, here's a secret for him that we should have learned in WWII – It's already been started and, once again, it's the lack of response by the Allied Forces that is allowing it to grow. "Tyranny shall not be tolerated" is not supposed to be just some phrase from a history textbook – what's happening now will BE history one day, you know.
“We are seeing an uneasy calm in markets right now — markets have bought Mr Powell’s messaging so far but they could easily have a second think about it this week, while Ukraine-Russia news remain volatile,” said Andrew Ticehurst, rates strategist at Nomura Holdings Inc. “Markets are completely subject to headline risk.”
Anyway, the war did not magically go away over the weekend and Oil is back to $107 after hitting $108 overnight. The Dow and the S&P are going to take a hit this morning, not because of the war no one seems to care about but because yet another Boeing 737 has crashed – this time in China just a few hours ago. It was a 737-800, not the MAX but the crash profile was similar, with the plane suddenly going into a dive. Regardless of the fault – BA stock will take a big hit this morning.
This is not a very exciting week, economically, as we're waiting for Q1 earnings reports to begin in a couple of weeks. While we wait, it's pretty much just the Richmond Fed and Home Sales this week with Consumer Sentiment on Friday and a Fed Speaker per day except Thursday (and Bostic is hawkish) – so I imagine PMI will be running hot and they want to talk it down.
And we still have plenty of Earnings Reports coming at us:
The indexes had a technically constructive week last week – we'll see if they hold it.
Good Morning.
BDX – Phil – you asked last week during the portfolio review to remind you about BDX and their impending embecta spin off (tomorrow). Revised options should be listed very soon, so if we are exiting, we should do so in the next few days. Embecta begins trading on Apr 1, and the distribution is based on shareholders of record tomorrow.
Also, regarding UL (also in the butterfly portfolio) – any reason we should not roll the long $50s down to $40?
Good morning!
Getting a sudden downturn. BA testing $180 is down 11 so that's about 100 Dow points (half).
BDX shareholders will get one share of Embecta for every 5 shares of stock. Embecta is their Diabetes Care Business so it will detract from their earnings potential going forward and we will have to be sure we like what's left of the company enough to re-invest. If you own the stock, I'd stand pat as Embecta should be a nice growth company going forward.
Phil BDX I just have the 240/290 leap and I noticed ther is quite a big difference in the spread between buying and selling at least 2$. Is it worth to get out?
Phil / Y —- Buffett found something he likes…
Berkshire Hathaway (NYSE:BRK.A) and Alleghany (NYSE:Y) have entered into a definitive agreement wherein the former will acquire all outstanding Alleghany shares for $848.02/share in cash.
The transaction, scheduled to close in 4Q22, represents a total equity value of ~$11.6B and a multiple of 1.26 times Alleghany’s book value as of Dec.31, 2021 and a 29% premium to Alleghany’s average stock price over the last 30 days.
Post closure, Alleghany will continue to operate as an independent subsidiary of Berkshire Hathaway.
Under agreement terms, Alleghany may actively solicit and consider alternative acquisition proposals during a 25-day go-shop period.
BDX/Yodi – Well, the spread is in good shape but it's hard to say how difficult the options will be to trade once they spin off. That can be very annoying if you do want to liquidate them later. I'd ask for $52 for the $240s and offer $26 for the $290s and that's net $26 and, if either side fills, then you can work on the other.
Y/Batman – Good solid Buffett-type company. What a pop!
BA recovering already. I was thinking now is a good time to add the bull call spread but we already have $200 short puts we sold for $15,000 so maybe just be happy if those go worthless.
Powell giveth and Powell taketh away:
Phil / AVGO – Just closed out both short term callers on my around my 120 X '24 500 / 660 BCS. looking to load up on some short term calls and puts….
What do you think about the following short sales 15X Jly $650 Calls for $18 ish and the 15XJan '23 puts for 520 puts for 43 ish.
or the point with the following pair
15 Juls 640 Call (22) and 15X 530 put (22)
Now Biden is warning businesses of impending Russian cyber-attack.
Avgo/Batman – They've been running a little hot for my taste. They are projecting $15Bn in earnings after $6.7Bn last year so I'd have to see it to believe it in Q1. I would not be too aggressive with puts and less aggressive on calls because if the earnings miss or the market tanks – it's not that likely they don't drop back to $500 or less.
And speaking of state of the art Defense companies:
Oops, the attacks are already happening?