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TGIF – Market Ends Another Disappointing Week

We're on the road to nowhere – still.

That's OK, it's better than the alternative, which is failing the 50-day moving average at 4,423 on the S&P 500 and re-visiting our March lows – we're saving that for mid-April…  For now, we're content to drift along as if the War doesn't matter and Resurging Covid doesn't matter and Inflation doesn't matter and Fed Tightening doesn't matter and the Slowing Economy doesn't matter either – it just doesn't matter!

That link is from March 22nd, which was the day the S&P crossed back over 4,500 and I was skeptical then and I'm skeptical now as we struggle to hold it after testing 4,650 and coming back down.  The down part I understand – it's the ups that are baffling me. The Fed raising rates 1.75% instead of 2% in the next 9 months is NOT rally fuel – it's "not as horrific as we feared" and nothing more.

And we don't even know that what the Fed is doing is going to work, do we?  If the Fed tightens 2% and there is still 7.5% inflation – then they HAVE to tighen another 2% but that would be AFTER we suffer through a full year of 7.5% Inflation – again.  We already see signs that the consumer is breaking down – I really don't think they can take another 7.5% added to their monthly expenses this year.

In fact, Consumers went $41.82Bn MORE in debt in February AND January was revised up from $6.8Bn to $8.9Bn and that was $25.17 (151%) MORE than expected by the Leading Economorons who are paid to expect such things.  So the Fed is MUCH more behind the curve than they think and Consumers are in MUCH more pain than Economists think with what is now $4.48 TRILLION of outstanding debt.  

Half of that debt was Credit Card Debt, now at $1.06Tn and that's costing consumers about $180Bn a year in interest and, as the Fed raises rates – those revolving credit charges rise as well.  The other $3.4Tn of debt includes Student Loans ($1Tn currently on hold), Auto Loans, Home Loans and other fixed-rate loans to Consumers and, in 2008 when Consumers were extended and the markets collapsed, we were at $2.8Tn, not $4.5Tn and rising rates will put a lot of pressure on that number very soon.

12 month old hit head twice in a month — The BumpBiden didn't extend Student Loan forgiveness for 6 months to be nice – he did it to avoid a market collapse as that's 1/3 of the fixed debt people owe and ONLY because that's on pause has everything else not fallen apart – yet.  The average investor now is very much like a person watching an economic ice sculpure that fallen into a lava lake of rising rates and says "I'm sure it will be fine."  On what basis will it be fine???  

We just bumped up our hedges by $225,000  (20%) yesterday, taking advantage of all the fine-ness to buy more insurance while it is cheap.  The next Fed meeting is May and February CPI hit 7.9% with oil PEAKING at $90 that month.  Oil hit $130 early in March and has not been below $95 all month and I haven't noticed rents going down or Food going lower or lower menu prices at Restaurants, etc.  Have you?  

Well, those are the components of the CPI and how do you think the market will react to an +8% reading on the next report?  The report that comes out Tuesday at 8:30, by the way…  So please, don't be an Economoron – these numbers are right here in front of us and we KNOW they are going to be terrible so PLEASE make sure you are well-hedged going into the weekend – the weekend when Putin might make a harder push into Eastern Ukraine and ratchet up tensions even further.  

Have a great weekend, 

- Phil

 


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  1. Good Morning.


  2. NOAA: Potent heat-trapping methane increases at record pace


  3. U.K. Airport Warns Covid-Related Delays Could Last Months




  4. Good Morning,  I'm traveling today and Monday, so wont be on much. 

    Jeddah, there is a pretty good article just up about debt at Seeking Alpha by Investment Pancake.  


  5. Good morning!  

    After having up Futures, I guess people are seeing a bit of what I'm seeing and selling into the weekend.

    Head melt - Imgflip

    Yes, good article, Stock:

    3 Ways To Go Debt-Free

    SOFI is getting a huge amount of attention over there as well.

    Nasdaq below yesterday's lows already:

       

    Dollar finally popping 100!

    Euro is on it's way to $1 at this rate.  The good news (for us) is that's keeping inflation in check (somewhat) but that's terrible news for everyone else, who have to buy their commodities in Dollars.  Suddenly Russian Oil and Gas priced in Rubles is seeming pretty attractive…

      

    DESPITE the Dollar gains, gold and silver are picking up again:

     

    Northern Dynasty Comments on Recent Statements by President Biden Regarding 'Made in America' and Mining in the U.S.



  6. Shanghai Residents Run Low on Fresh Food as Covid Lockdown Creates Logistics Chaos


  7. Apr. 08, 2022 10:02 AM ET1 Comment

    • February Wholesale Inventories+2.5% to $818.2B vs. +1.5% consensus and +1.2% in January (revised from +0.8%).
    • Total inventories rose 19.9% from the revised February 2021 level.
    • February inventories/sales ratio for merchant wholesalers was 1.21 vs. 1.20 in January and 1.27 a year ago.
    • Earlier this week (April 4), Factory orders slipped in February, as expected
    UPS -3.27%Apr. 08, 2022 9:32 AM ET12 Comments

    Bank of America downgraded several transportation stocks ahead of the open Friday, citing deteriorating demand and falling prices. A series of proprietary market surveys and indicators flagged rising capacity availability, but not due to rising supply. According to the bank, "A large number of respondents commented that pricing is declining rapidly, capacity is available, and these shifts could signal a downturn in the economy and lower demand."

    The bank downgraded nine transportation stocks, including UPS (UPS), Union Pacific (UNP), Canadian Pacific (CP), Schneider (SNDR), Werner (WERN), Saia (SAIA), TFI International (TFII), ArcBest (ARCB), and Triton (TRTN). No transportation stocks were upgraded along with Friday's note; Bank of America now carries more sell and neutral ratings, than buy recommendations in the sector.

    March saw rail volumes fall 3% year on year, with the Association of American Railroads saying, "These conflicting trends reflect an economy with a good deal of directional uncertainty; uncertainty that needs resolution before its full potential can be realized."

    BA -1.97%Apr. 08, 2022 9:57 AM ET5 Comments

    Boeing (NYSE:BA) is the biggest decliner on the Dow Jones Industrial Average in early trading Friday, down nearly 2%, after a 757 freighter operated by package delivery company DHL (OTCPK:DPSGYcrash-landed in San Jose, Costa Rica.

    The plane had taken off from the San Jose airport but decided to return after detecting a failure in the hydraulic system; upon landing, the aircraft skidded, turned and broke in two; both pilots reportedly were unharmed.

    The crash follows a Wall Street Journal report that Boeing factory problems had disrupted production of new Air Force One planes earlier this year, and the crash of a Boeing 737-800 plane in China last month.

    DHL Boeing 757 Cargo Plane Breaks in Two After Emergency Landing in Costa  Rica - Bloomberg

    Now we know where not to sit! 

    Apr. 08, 2022 9:49 AM ET

    • AB Volvo (OTCPK:VOLAF-3.8% stated Friday that its first quarter operating income is expected to take a hit from uncertainty caused by the Russia-Ukraine war for which the Swedish truck maker will set aside $423.2M (SEK 4B) in provisions.
    • "Volvo Group has total assets of about SEK 9B related to Russia, of which about SEK 6B in cash items that could be materialised over the coming years," the company stated according to Reuters report.
    • "In the first quarter 2022, assets amounting to ~SEK 4B will be provided for and have a negative impact on operating income, primarily in the financial services segment," it added.
    • Earlier in the week, the automaker reported 22% decline in March sales due to the ongoing shortage of semiconductors.

    We're going to get a lot of these.  BP said $5Bn yesterday – that's going to be a big hit on some companies' earnings.

    BNTX +0.99%Apr. 08, 2022 9:43 AM ET

    • BioNTech (NASDAQ:BNTXsaid it is one of the companies in Germany to be granted a pandemic preparedness contract by the Germany Federal Ministry of Health.
    • The company said the framework agreement is aimed at pandemic preparedness including manufacturing and supply of mRNA vaccines in emergency situations in Germany.
    • Under the agreement, BioNTech will reserve and maintain manufacturing capabilities to produce at least 80M mRNA-based vaccine doses per year.
    • The contract has an initial term of five years.
    • "There is growing evidence that viral pandemics will continue to pose a public health challenge for years. This contract with the German government will ensure significant supply of vaccine doses to address potential public health threats by 2027,” said BioNTech's Chief Business and Chief Commercial Officer.

    KR +2.89%Apr. 08, 2022 9:28 AM ET

    Kroger (NYSE:KR+3.2% pre-market after Bank of America upgraded shares to Buy from Neutral with a $75 price target, up from $61, expecting elevated levels of grocery inflation to continue at least through H1 2023.

    BofA analyst Robert Ohmes expects broad-based inflation to increasingly drive consumers to retailers with more variety as individuals shift part of their consumption towards value.

    Ohmes sees "support from Kroger's scale and price leadership, strong execution, digital outlook, and developing ecosystem that unlocks monetization/higher margin alternative profit stream opportunities," Ohmes writes, adding that elevated food-at-home inflation likely will support continued sales/EPS upside in FY 2023 and beyond.

    Carl Icahn is targeting Kroger and recently nominated two directors to the supermarket chain's board.

    SPY -0.52%Apr. 08, 2022 9:13 AM ET62 Comments

    In its chronicling of shocks to the U.S. economy and market, BofA says the inflation shock is worsening, the rates shock is just beginning and the recession shock is on its way.

    "Inflation causes recessions" and inflation is out of control, strategist Michael Hartnett and team wrote Friday in their weekly "Flow Show" note.

    The S&P 500 (SP500) (NYSEARCA:SPY) will drop below 4,000 this year, while the 30-year Treasury yield (NYSEARCA:TBT) (TLT) will rise above 4% in 2023, Hartnett said.

    They also predict the ISM manufacturing index to fall below 50, while EPS growth turns negative by the end of the year and crypto outperforms bonds.

    Price action is "very recessionary," Hartnett added, noting the homebuilders (XHB) (NAIL) are down 30%, chips (SOXX) (SMH) are down 23%, small caps (IWM) are down 20%, retail (XRT) (ONLN) is down 20% and private equity (PSP) (PEX) is down 19%.

    Client feedback: "recession now soooo consensus," "no-one wants to get cocky ahead of 50bps & QT" and "oil says war shock over."

    WTI (CL1:COM) (USO) and Brent (CO1:COM) (BNO) are now at prices seen before the invasion of Ukraine.

    Disconnects you can expect to see in a recession are yields up and banks (KBE) down, yields up and reopening stocks down, utilities (XLU) up and transports (XTN) (IYT) down and steepening yield curve before the recession begins, he said.

    Deutsche Bank said this week its base case is now for a recession in late 2023.


  8. Good morning


  9. Comment content omitted because it is too long.


  10. MSFT -1.19%Apr. 08, 2022 8:57 AM ET8 Comments

    Microsoft (NASDAQ:MSFT) said late on Thursday that it had thwarted an attempt by Russian hackers to go after different entities in Ukraine, including media organizations.

    In a blog post, Microsoft Corporate Vice President, Customer Security & Trust Tom Burt said the group, known as Strontium that it has "tracked for years," was trying to take control of seven internet domains to coordinate the attacks.

    Microsoft obtained a court order to take control of the domains "to mitigate Strontium’s current use of these domains and enable victim notifications," Burt wrote in the post.

    In addition to going after organizations in Ukraine, Strontium, which Microsoft called a "Russian GRU-connected actor," was also targeting government institutions and think tanks in the U.S. and European Union.

    Strontium is also known as Fancy Bear or APT28 and is often linked to Russian intelligence.

    Microsoft added that prior to this week's action, it has seized control of more than 100 Strontium controlled domains, getting court orders 15 different times.

    On Wednesday, Boeing (BA) tapped Microsoft (MSFT), as well as Amazon (AMZN) and Google (GOOG) (GOOGLfor a cloud computing deal that some believe may be worth more than $1 billion.

    TSM -0.62%Apr. 08, 2022 8:42 AM ET1 Comment

    Taiwan Semiconductor (NYSE:TSM) shares rose after the chip manufacturing giant said it generated record revenue in the first quarter, despite the challenges it dealt with.

    Net revenue for March 2022 rose 35% year-over-year to $5.94 billion or NT$171.97 billion, up 17% from February and 33.2% year-over-year. Revenue for the January to March period came in at $16.97 billion or NT$491.08 billion, an increase of 35.5% year-over-year.

    Taiwan Semi (TSM) shares rose slightly more than 0.5% to $101.10 in premarket trading on Friday.

    Taiwan Semiconductor (TSM) has faced a number of issues that have hampered production, including Covid-related shutdowns in China, but it has worked around them by pushing production to different plants.

    The company is also starting construction on a new fab in Kumamoto, Japan.

    Last month, Taiwan Semiconductor (TSM) Chairman Mark Liu said global demand for consumer electronics, such as smartphones, PCs and TV, has started to slow, due to factors such as the Russian invasion of Ukraine and Covid-related lockdowns in China.

    In January, Taiwan Semiconductor (TSM) Chief Executive C.C. Wei said the company would spend between $40 billion and $44 billion on capital expenditures in 2022, due to increased demand for semiconductors.

    INTC -0.88%Apr. 08, 2022 7:20 AM ET27 Comments

    Intel (NASDAQ:INTC) Chief Executive Pat Gelsinger made a trip to Asia earlier this week and asked Taiwan Semiconductor (NYSE:TSM), which now makes chips for the U.S. tech giant, for additional capacity, according to Digitimes.

    Gelsinger, who also visited Japan and India on his trip, according to Bloomberg, is in search for high-tech 7 nanometer capacity, as well as more mature 28 nanometer capacity in an effort to help with tight supply.

    The 61-year-old Gelsinger joined Intel as its Chief Executive in February 2021 after having previously served as VMware's (VMW) CEO.

    Intel (INTC) shares were fractionally higher in premarket trading on Friday, changing hands at $47.65.

    Taiwan Semiconductor (TSM) shares edged up slightly more than 0.5% to $101.30.

    Neither Intel nor Taiwan Semi immediately responded to a request for comment from Seeking Alpha.

    Intel has made a number of commitments in recent weeks to expand production capacity on its own, including a $20 billion plant in Ohio and additional investments in Europe that could total $88 billion over the next decade.

    On Wednesday, Intel (INTC) said it had suspended all operations in Russia amid that country's invasion of Ukraine and called for a "swift return to peace."

    BTC-USD -0.16%Apr. 08, 2022 8:38 AM ET33 Comments

    ARK Invest CEO Cathie Wood reiterated her $1M price target for Bitcoin (BTC-USD), citing the cryptocurrency as a "great hedge against inflation," she said at the Miami Bitcoin 2022 Conference Thursday.

    Meanwhile, bitcoin (BTC-USD -0.5%) is edging lower to $43.3K in early morning trading, up nearly 3% M/M but off 9% YTD and -25% Y/Y.

    "If inflation is an issue, Bitcoin is a great hedge against inflation…it is a hedge against counter-party risk," said Wood. Note that headline consumer price inflation is surging to its highest in 40 years, driven by ongoing supply chain disruptions and geopolitical tensions.

    While the price of Bitcoin (BTC-USD) tends to be volatile, Wood pointed to research indicating that 70% of BTC investors hold their position for more than six months, adding that its liquidity has jumped tenfold. "That's just a taste of what's to come," she said.

    With regards to institutional adoption of the world's largest digital token by market cap, "it has improved, but it's still a long way from being fully accepted," Wood emphasized. "What we're seeing with bitcoin and traditional institutional investors…is that (bitcoin) is very volatile, and that's scary for investors. This would be very risky to get involved in, it's a new asset class," she added.

    Speaking to U.S. Treasury Secretary Janet Yellen's first major speech on digital assets Thursday, she "has changed her tune," Wood said, adding that "it's a positive thing. A year ago, her first comments on Bitcoin were about money laundering and environmental damage, and now it's different."

    Furthermore, MicroStrategy (MSTR) CEO Michael Saylor, speaking alongside Wood, also highlighted that he's more bullish than ever on Bitcoin (BTC-USD), saying "the momentum is clearly behind" it. Seeking Alpha Authors screened BTC with a Buy (2 Strong Buy, 6 Buy, 1 Hold, 1 Sell, 1 Strong Sell).

    Take a look at SA contributor Bitfreedom Research's three bullish signals for Bitcoin.

    In mid-Sept. 2021, Cathie Wood repeated her $500K Bitcoin price target.

    BIIB +0.13%Apr. 08, 2022 8:37 AM ET6 Comments

    Biogen (NASDAQ:BIIB) shares are trading lower in the pre-market Friday on the Medicare decision to restrict the coverage for FDA-approved Alzheimer’s therapies that target Amyloid proteins in the brain. The decision affects Aduhelm, a controversially approved Alzheimer’s therapy developed by Biogen (BIIB) and Eisai (OTCPK:ESALY).

    Following the news, Needham has slashed the price target for Biogen (BIIB) by ~10% to $262 per share to imply a premium of ~27% to the last close.

    The analyst Ami Fadia argues that the decision would limit Aduhelm coverage to 1,000s range, indicating a significant restriction on its potential.

    Medicare first announced the proposal in January, and the analyst does not expect “a significant downside” to Biogen (BIIB) shares on the final decision as she notes that the stock already reflects the negative decision.

    Commenting on the news, BTIG analysts led by Thomas Shrader, highlight its impact on Biogen (BIIB) which obtained FDA approval for Aduhelm under FDA’s accelerated pathway last year.

    "The decision is highly negative for aducanumab and no better than neutral for Biogen (BIIB)," the team added as they reiterated the Neutral rating on the stock.

    The final decision is a small improvement for the Aβ field with antibodies that receive traditional FDA approval still being reimbursed under "coverage with evidence development," they wrote, seeing positives for drugs that could enter the market with full FDA approval.

    The prospects are cloudy for Lecanemab, the second antibody therapy developed by Biogen (BIIB) and Eisai (ESALY), for Alzheimer’s as its Phase 3 data, expected in 2H 2022 “are currently slated to support accelerated approval,” the analysts wrote.

    While the next data readout for Donanemab, a similar Alzheimer’s therapy being developed by Eli Lilly (NYSE:LLY), would support an accelerated approval, the team note that the pharma giant anticipates “very low sales” for the Amyloid targeting antibody prior to its full approval.

    Since the FDA approval of Aduhelm in June, Biogen (BIIB) has struggled to improve Aduhelm uptake, and its share price has lost more than 40% to underperform the broader market, as shown in this graph.


  11. HPQ -0.37%Apr. 08, 2022 7:53 AM ET7 Comments

    HP Inc. (NYSE:HPQ) shares fell in premarket trading on Friday as investment firm UBS downgraded the PC and printer maker on concerns over slowing consumer spending, one day after Berkshire Hathaway (BRK.A) (BRK.Bdisclosed an 11.4% stake in the company.

    Analyst John Roy lowered his rating to neutral from buy and put a $40 price target on the stock, noting that a number of factors, including "incremental signs of softness in low-end Consumer PCs" could hurt the stock.

    "Following two strong years of PC demand, an aggressive cost take-out that drove ~200 [basis points] of operating margin expansion since [fiscal 2019] and ~$1.5 [billion] in buybacks/[quarter] over the trailing 6 [quarters], we believe HP shares reflect the strong execution as the P/E multiple has expanded ~33% since late 2021," Roy wrote in a note to clients.

    HP (HPQ) shares fell nearly 2% to $39.33 in premarket trading on Friday.

    Roy noted that the total addressable market for PCs has expanded, as use cases have expanded, it's likely that PC unit sales will decline as soon as the October quarter, citing supply chain headwinds and global macro issues.

    The analyst also noted that HP (HPQ) is likely to slow stock buybacks next year, "following the expected close of the Plantronics deal in late CY22."

    HP (HPQ) recently said it was buying Plantronics (POLY) for $3.3 billion to expand its peripherals and video conferencing businesses.

    Last month, Morgan Stanley downgraded HP (HPQ) and Dell Technologies (DELL), in addition to cutting their price targets, citing a cut to the firm's forecast for PC sales.

    HOOD -5.68%Apr. 08, 2022 7:42 AM ET19 Comments

    • Robinhood Markets (NASDAQ:HOOD) shares are sliding 3.7% in Friday premarket trading after Goldman Sachs analyst William Nance downgraded the stock to Sell from Neutral.
    • "We believe softening retail engagement levels (particularly among the low-end consumer), continued weakness in account growth, and a limited path to near term profitability are likely to limit outperformance over the next twelve months," Nance wrote in a note to clients.
    • Download data during the quarter suggests that user growth has remained low, "and we see an acceleration in user growth as a key requirement for shares to re-rate higher," he added.
    • In addition, while Robinhood (HOOD) has been achieving better economics on crypto, broader industry crypto volume declines will likely offset that tailwind, Nance said.
    • He set a $13 price target, implying 7.7% upside potential.
    • The Sell rating comes in more bearish than the average Wall Street rating of Hold. The average SA Author rating also stands at Hold.
    • On Thursday, Robinhood (HOOD) said at the Bitcoin 2022 conference that the Lightning Network is coming to its app.

    As we were talking about, the race is on to refinance debt while it's still cheap:

    KDP -0.36%Apr. 08, 2022 5:42 AM ET

    • Keurig Dr Pepper (NASDAQ:KDP) has priced its previously announced $3B public offering of senior unsecured notes in three tranches.
    • The offering consists of $1B of 3.950% senior notes due 2029, $850M of 4.050% senior notes due 2032 and $1.15B of 4.500% senior notes due 2052.
    • The offering is expected to close on April 22, 2022.
    • The company estimates net proceeds of $2.961B.
    • Concurrently with this offering, the company commenced a series of tender offers to purchase for cash certain of its outstanding series of senior unsecured notes.
    • The company intends to use the net proceeds from this offering, together with cash on hand to fund the purchase price and accrued and unpaid interest for the notes purchased in the Tender Offers and to redeem an outstanding series of senior unsecured notes or for general corporate purposes, including working capital, acquisitions, retirement of debt and other business opportunities.

    TTWO -1.04%Apr. 08, 2022 5:37 AM ET1 Comment

    • Take-Two Interactive Software (NASDAQ:TTWO) has priced $2.7 B of its Senior Notes in three tranches.
    • Offering comprises of $1B of 3.300% Senior Notes due 2024, $600M of 3.550% Senior Notes due 2025, $600M of 3.700% Senior Notes due 2027 and $500M of 4.000% Senior Notes due 2032.
    • The company intends to use a portion of the net proceeds together with cash on hand to fund the cash portion of the consideration for its pending acquisition of Zynga Inc. and the expected settlement of the outstanding convertible notes issued by Zynga, and related costs and expenses.
    • Any remaining net proceeds will be used for general corporate purposes.
    • Offering is expected to close on April 14, 2022.
    • Shares up 0.7% premarket.


  12. Phil/TZA I added sqqq yesterday now I need another 50k of TZA Hedge, I'm never sure what strikes to use. Could you advise TIA



  13. Nothing to see here – keep buying stocks….

    Move Along, Nothing to See Here - TV Tropes

    FXI +0.74%Apr. 08, 2022 5:23 AM ET20 Comments

    What was supposed to be a staggered nine-day lockdown in Shanghai is morphing into something bigger, with a record of 20K daily new coronavirus cases reported in China's largest city on Thursday. The restrictions have since grown in severity and have been extended to the entire city. There are even reports of food and healthcare shortages, price gouging and parents being forced to separate from their children.

    Quote: "Basically everything else is not moving but is being diverted away from Shanghai to other parts of China," said Mads Ravn, global head of air freight procurement at transport and logistics giant DSV. "It's affecting every commodity you can think of and will have a global effect on almost every trade."

    Mainland bottlenecks can eventually result in ocean shipping delays due to the buildup in orders and goods. As the virus spreads to more cities and provinces, alternate shipping channels may also be disrupted by lockdown measures, further weighing on the global supply chain. While China has conducted zero-COVID lockdowns before, they have never been on this scale, hitting important manufacturing, financial and logistical regions all at once. Note that 88% of the country's 1.4B population have been fully vaccinated with jabs from providers like Sinovac (NASDAQ:SVA) and Sinopharm (OTCPK:SHTDY), according to the National Health Commission of the PRC.

    Analyst commentary: "The COVID situation in China has deteriorated at an alarming pace, but abandoning zero-COVID now could be perceived as conceding that the strategy did not work in the first place," Ting Lu, chief China economist at Nomura, said before the Shanghai lockdown began last month. "With the much worsening pandemic and Beijing's resolution in maintaining its [zero-COVID strategy], we believe China's 'around 5.5%' GDP growth target this year is becoming increasingly unrealistic." Nomura now estimates that 23 cities and nearly 200M people are under full or partial lockdown across China.

    NSANY -0.97%Apr. 08, 2022 5:18 AM ET

    Apr. 08, 2022 2:38 AM ET10 Comments

    Here are the latest headlines in the Russia-Ukraine crisis:

    Russian energy

    Targeting Moscow's key energy revenue for the first time, the European Union has approved sanctions to ban coal imports from Russia. Japan, one of the world's biggest energy importers, is also considering similar legislation. The EU package includes a separate ban on most Russian trucks and ships entering the bloc, and was coordinated with the United Kingdom and the United States. On Thursday, Congress voted to ban American imports of Russian coal, oil and gas, with the bill moving to President Biden's desk for his signature.

    Long haul?

    "What we see is a Russian regrouping and repositioning of their forces, moving out of northern Ukraine, but at the same time moving those forces to the east," NATO Secretary General Jens Stoltenberg told reporters in Brussels. "We expect a big battle in Donbas, a big Russian offensive. Be prepared for the long haul. This war may last for weeks, but also months and possibly also for years, and therefore we need to prepare for a lot more."

    BTC-USD +0.34%Apr. 07, 2022 10:43 PM ET288 Comments

    PayPal co-founder and billionaire venture capitalist Peter Thiel listed an enemies list for bitcoin (BTC-USD), individuals he believes are holding the cryptocurrency from reaching its highest levels.

    Thiel, speaking in front of attendees at the Bitcoin 2022 conference in Miami Beach earlier Thursday, called fellow billionaire Warren Buffett of Berkshire Hathaway (BRK.A) enemy No. 1 and described him as a "sociopathic grandpa from Omaha."

    JPMorgan (NYSE:JPM) chief executive Jamie Dimon was also on Thiel's enemies list as was BlackRock (NYSE:BLK) CEO Larry Fink.

    "If you have some of these large institutional investors, they need to be allocating some of their money to bitcoin," Thiel said at the conference. "When they manage state pension funds in the U.S. or they get trillions of dollars in assets. When they chose not to allocate to bitcoin that is a deeply political choice and we need to be pushing back on them. We need to say, you have to get onboard on this."

    Thiel also said he believes ESG, or Environmental, Social, and Governance, is an enemy of bitcoin.

    "I think ESG is just a hate factory," Thiel, who founded tech company Palantir (PLTR), said. "It's a factory for naming enemies."

    In February investor Charlie Munger, best-known as the No. 2 man at Buffett's Berkshire Hathaway, called Bitcoin (BTC-USD) "rat poison".

    UNG -1.05%Apr. 07, 2022 6:36 PM ET45 Comments

    U.S. natural gas futures (NG1:COM) soared Thursday to their highest settlement since December 2008+5.5% to $6.359/MMBtu, lifted by a widening storage deficit and rising expectations that the Russia-Ukraine war will result in a stronger global appetite for U.S. liquefied natural gas.

    ETFs: (NYSEARCA:UNG), (UGAZF), (DGAZ), (BOIL), (FCG), (KOLD), (UNL)

    Weekly EIA data showed U.S. inventories fell by 33B cf, compared to forecasts in a Wall Street Journal survey for a 28B cf decline and the five-year-average increase of 8B cf, which hiked the total storage deficit to 17% below the five-year average and 22% below year-ago levels.

    Analysts predict this week's decline, due largely to a cold front that swept across the U.S. east coast, likely was the final withdrawal of the season, and weekly data will show injections from next week until about October.

    The rally in natural gas also has come as average weekly Central Appalachia coal prices also hit 13-year highs at $106.15/short ton on April 1.

    "As coal-fired power plants become more expensive, electric grids will look to natural gas-fired plants, thereby raising domestic natural gas prices," Manish Raj at Velandera Energy Partners said.

    A European ban on Russian coal likely would reduce coal inventories even more, further pushing up the price, and nat gas prices would rise correspondingly with the higher coal prices, Tortoise portfolio manager Rob Thummel told MarketWatch.

    The European Union agreed Thursday to ban coal imports from Russia.


  14. Phil, would appreciate your thoughts on Goodyear Tire (GT) and way to play it.  Stock has been hammered the past couple of months for no particular reason.  Don't see the need for tires going away anytime soon.


  15. TZA/Stuart – TZA is at $34 and $34 x 1.6 is $54 so that's the range for a 20% drop.  Depending on what you are trying to do, you then go with the time-frame you think you need.  With earnings and such coming – I'd go with the Jans so the Jan $30s are $11 and the $35s are $9.50 so I'd say worth $1.50 to be in the $30s, which are $4 in the money, right?  The $50s are $7 so net $4 on the $20 spread means you can make $16 (400%) on a 20% drop in the Russell so that's the spot I'd go for.  For $50,000 you need 25 to make $40,000 and that would cost you $10,000 but you can sell 10 TZA 2024 $30 puts for $11 ($11,000) and then it's a net $1,000 credit on the $50,000 spread and let's say TZA falls to $10 in two years – then your longs should be doing very well and you're forced to pay $30,000 for TZA that's worth $10,000 but you would have spent $10,000 for the spread anyway so all you really lose is $10,000 by taking that chance (and you can roll it and sell calls against it, etc).  

    GT/Ult – Sorry, I missed it and then forgot to go back.  Note the steep declines in auto sales – that's not good for GT.  Also, airless tires are becoming a thing and we don't know how that will impact GT.

    WORLD FIRST - Airless Car Tire! Michelin Reinvents The Wheel - YouTube

    GT recently guided lower but the 50% drop is certainly an over-reaction if you are a patient, long-term investor.  Still, the stock was about $5 in March 2020 and could be again if we have a recession so i wouldn't buy anything you wouldn't be TRILLED to DD or TD on and then wait patiently for a couple of years.  $13 is $3.6Bn and they make about $750M so silly-low P/E but understandable since they lost $1.2Bn in 2020 and $300M in 2019 so that wipes out 3 years of earnings.  $6.3Bn in debt x 2% is $315M – that's half their profits – also a problem.

    The 2024 $13 puts are $3.10 and that nets you in for $10 so it's a good way to play for an entry but I wouldn't get more aggressive than that until they prove they have a bottom.  At the moment, the 2024 $10s are $5 and the $15s are $3 and the $20s are $1.50 so it's net $2 for the $10/15 and net $1.50 for the $15/20 so it's not likely the $10/15 spread will change much while you wait to see if it's a smart play or not.



  16. Thanks Phil……….some good points there.  I got a little too excited by the low P/E and was lot more gung-ho on it.  But was looking at it as a long term hold and like your idea of selling the 2024 $13 puts.  Thanks. 


  17. I like GT; they have also developed airless tires to take on Michelin, and were testing it on Tesla Model 3s last year. My spread (i think we had discussed it on the chat a month or so ago) is: (all 2024 options) 20 long $13 Calls, 15 short $20 Calls, 10 short $13 Puts. There are an extra 5 longs, and the hope is to sell 10 shorter term $18 or $20 calls when GT recovers; if not, I will roll the $13s down and fully cover. 


  18. Big pops in /YM and /ES so just looking for Nas to turn green but doubtful.  

       

    I can't believe it's expirations again next Friday…





  19. Phil Thoughts?

    Nvidia, AMD lead chip decline as Truist finds 'hard evidence of order cuts'

    12:06 PM | (AVGO) | By: Chris Ciaccia, SA News Editor

     

     

     

    Nvidia (NASDAQ:NVDA), Advanced Micro Devices (AMD) and Broadcom (AVGO) led declines across the semiconductor industry, as investment firm Truist slashed price targets across the board, telling investors it has found "hard evidence of order cuts."

    Analyst William Stein said that he learned of a "sudden negative shift" in demand for a number of manufacturers, including those for computing, consumer and communications to "some" of their semiconductor suppliers.

    While first-quarter results are likely to remain strong for the semiconductor industry, and perhaps even second-quarter guidance, cracks are starting to form for the second-half of the year and 2023.

    Stein added that two of his industry contacts are seeing order cuts, with both saying that the cuts are related to second-quarter production, but second-half demand is still "robust."

    "While a one-off quarter adjustment is possible, we stick to the adage we developed while selling components during the tech bubble: 'today's push-out is tomorrow's cancel,'" Stein wrote in a note to clients.

    Stein lowered his price targets across the board, including cutting Nvidia to $298 from $347, lowering AMD to $111 from $144 and dropping Intel to $49 from $53, citing lower earnings multiples.

    Nvidia (NVDA) shares fell more than 3.5% to $233.52, while AMD (AMD), Broadcom (AVGO) fell more than 2%. Other chip companies, such as Intel (INTC) and Texas Instruments (TXN) declined less than 1%.

    Stein noted that it's not yet clear what the reasoning is for the cuts, but it's important nonetheless. It could be the cuts are due to incomplete kits and a simple desire to balance inventory, while another view is that although demand is still strong, a temporary delay is starting to cause the cuts.

    The most bearish view would be that there is demand destruction taking place and when coupled with additional supply is leading to a chip glut and traditional downturn.

    "We remain constructive on the structural growers Nvidia and Monolithic Power Systems (MPWR), but recognize that near-term stock price effects may become more volatile given the elevated P/Es ascribed to these growth models," Stein explained.



  20. Phil/TZA executed at good prices. Salamat.


  21. MP- just started to look at this for rare earth minerals. Mountain Pass mine in CA so domestic base of operations. Any thoughts?


  22. Chips/Batman – Well I'm not going by one analyst so we'll see what they say in earnings.  TSM is booked solid and INTC is begging them to make more.  We'll have to see how it plays out.

    TZA/Stuart – Well I sure feel better that you have them…

    MP/Pstas – $9.5Bn for them?  I don't think so.  They made $135M last year, expect to be over $300M next year but that's based on skyrocketing prices more than anything else and that still puts them at 30x.  They have a Chinese partner that does their processing so they export the pollution but the Chinese have them by the balls as they are dead without a processor.  These guys bought Molycorp's old mine – Molycorp went BK….


  23. Thanks Stock, will check it out


  24. MP-ok, fair enough. Any better choice(s) in this space?


  25. MP/Pstas = Well, you know I like VALE and RIO.  There's TECK, who make real money and are generally ignored.  The others are very much like Molycorp – sounds great until they have to show actual results.  The economics of sifting through an entire mountain to come up with a gram of rare Earth just doesn't work in the states.   For VALE, RIO and TECK – rare earths are a by-product of mining they are doing anyway – that's why I like them.  

    TECK has taken off lately so someone has noticed them.  

    All these guys will collapse back in a recession so make sure you REALLY want to be starting an early leg here.  We have X, MT, VALE and RIO in our portfolios – TECK is nice but I'd rather ride out a downturn with what we have.


  26. OK-thx


  27. Nasdaq with a terrible finish, RUT not much better.

       

    Doesn't inspire a lot of confidence into the weekend.  

    Have a good one, everybody, 

    - Phil


  28. Just looking at technologies here, but I'm skeptical of quite a bit of mining.  A huge chunk of this is being driven by EV and stationary battery storage and those fields are changing extremely rapidly.  Solid state batteries are looking to reduce material inputs while extending lifetime and doubling energy density.  Lithium-sulfur batteries are looking to triple energy density.  Sodium-Ion batteries are going to drive costs down by a huge % because, while not energy dense, they are EXTREMELY safe (except for supporting functionally infinite currents which is a benefit and a cost) and extremely cheap.

    Long story short, I think EVs are going to be reducing battery materials by 50-60% while lasting longer and going further.  Stationary storage is going to be all Na-Ion for short term. Medium duration is going to go to flow batteries or Fe-Air/Zn-Air.  Long duration storage I think is going to end up going thermal or pumped hydro.

    https://www.reuters.com/business/energy/catls-new-sodium-ion-battery-help-ease-lithium-shortages-2021-08-03/

    https://formenergy.com/technology/battery-technology/

    https://en.wikipedia.org/wiki/Flow_battery