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Technical Tuesday – Indexes Stuck in a Danger Zone

Want to make a quick $10,000?

S&P 500 Futures (/ES) pay $50 per point and we're below the 50-day moving average at 4,416 – so that would be the stop line and 4,320 is the strong bounce line and, failing that, we have no support at all until the weak bounce line at 4,180 – 200 points below where we are this morning (4,385).  If we call 4,400 the stop line – then we risk losing $50 x 15 points = $750 against the potential gain of $10,000 if the S&P falls back to where we were a month ago.

We still have the war, we still have Covid, the Fed is still raising rates because we still have inflation – am I missing something?  In fact, speaking of the Fed, St Louis President, James Bullard just said this morning that his target rate for THIS YEAR is 3.5%, not 2.5%.  

taylorruleeqn_stlfedBullard cited the Taylor rule, a suggestion developed by Stanford College’s John Taylor that makes use of inflation, the unemployment fee and an estimate of the impartial rate of interest — a fee neither contractionary nor expansionary — to give his estimate.  “I believe it behooves us to get to that stage by the tip of the year,” Bullard mentioned.  This is clearly an indication that Bullard sees no chance that 0.25% rate hikes are going to put even a mild dent in inflation – as evidenced by Consumers putting inflation on their charge cards last month.

There was a brief, shiny moment, at the beginning of this month, when the Fed and the Leading Economorons all agreed that Q1 GDP was growing at 1% but there's no money in agreeing with the Fed so the Economorons have raised their guidance to 2.5% for Q1 and now they get to be interviewed by the Financial Media to explain what it is they see that the people who actually use the data to report the official number do not.  

We get the actual Q1 GDP next Thursday morning – so tune in for that market-mover and on Tuesday we get Durable Goods, Consumer Confidence and New Home Sales – key components in the GDP.  Tomorrow we get Existing Home Sales but they are likely to be down as Mortgage Rates skyrocketed in the past 45 days.  We'll also get Leading Economic Indicators along with the Philly Fed.  Next Wednesday we also get the Beige Book – which will also give us a good feel for the upcoming GDP Report.

Whatever the GDP is next week, it's down from 6.9% in Q4 and let's do some math here to see where we really are.  Let's say in Q1 of 2020, we were at $20Tn in GDP and then we dropped 9% in Q2 - that's $18.2Tn, right?  Q3 was down 3% so $17.65Tn, Q4 another 2.5% down to $17.2Tn – that was where we bottomed out.

Q1 was a 1% increase, back to $17.38Tn, Q2 12% took us all the way to $19.47Tn, Q3 5% to $20.44 and last Q 5.5% and that's $21.56Tn.  So, on the whole, we're up about 7.5% from where we started 2020 and that's not too bad for 2 years.  Of course, it cost our Government $11Tn to get us here and now we have Inflation raging out of control but we didn't lose the patient – so far.   Of course, my big issue with this is the S&P 500 was at 3,200 in Jan of 2020 and now it's 4,385 so up 37% on that 7.5% increase in GDP and that's just silly – especially when the boost was artificial and not likely to continue.

In fact, the Fed is ABSOLUTELY looking to reverse it – not only raising rates to AT LEAST 2.5% but WITHDRAWING $1Tn of QE PER YEAR for the next 5 years.  To think that's not going to have a massive effect on our economy is nothing less than willful ignorance – though that's pretty much all you hear in the mainstream media.  

CARTOON: Airlines' viral loadAnd, speaking of willful ignorance – a Trump judge has just invalidated the mask mandate on transportation – including Uber.  So welcome to the newest GOP-backed experiment, America – can you survive another summer of denial?  So far, 1M of you didn't but, as noted yesterday, that has slowed down to a rate of just 186,515/yr in Q1 and we can't have that so now the 10M people who fly in planes every day – along with trains, cabs, etc. - won't be wearing masks, despite being in close contact with poor air circulation for hours at a time.  Let's see how that goes!  

Isn't it amazing, by the way, that we can talk about 1,000,000 dead Americans, 1 in 300 of us, that have died of Covid in the past two years as if it's not a big deal?  58,000 Americans lost their lives in Vietnam and we put up a memorial.  405,000 in World War II, 116,000 in World War I and 655,000 in the Civil War.  The nice thing about Covid is you don't have to go overseas or put on a uniform to be killed – it's right in your neighborhood!  

So, once again this summer we are rolling out the red carpet – even as China is shutting down as they see a very dangerous threat from the new strains and would rather kill their economy than kill their citizens.  In the US – we are working to do both at the same time.

Good luck to us all….

 


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  1. Good Morning.


  2. Phil, does it make sense that the Fed talks up the rates for all of us, with the intent of keeping the interest our government pays on our debt, down?

    Thanks.


  3. I do question the long lasting quarantines in China – Me thinks this is just as much an economic move, veiled as a health crisis….


  4. Not a fan of the Chi-Com gubment.  :(


  5. Conspiracy much, 1020?… ;)


  6. Uber and Amtrak scrap mask requirements after policy ruled ‘unlawful’



  7. Good morning!  

    Not happy that I'm liking the /ES short at 4,385 – haven't felt this negative in a while.

    Fed/1020 – Well they are doing a favor for the banks by scaring people into 5% mortgages while the FFunds Rate is still 0.5% – massive profits on the spread for the Banksters – which is who the Fed really work for.  I do not, however, see how that helps keep Government debt down since each month we have auctions which react to the same fear-mongering as other rates do – especially with the Fed no longer back-stopping the autions.

    SP500 +0.15%Apr. 19, 2022 9:34 AM ET2 Comments

    The stock market is mixed Tuesday and continues to lack real conviction. The bond market selloff continues unabated, though.

    The Nasdaq (COMP.IND-0.2% is down. The S&P (SP500+0.1% and Dow (DJI+0.3% are up a little.

    The 30-year Treasury yield touched 3% briefly for the first time since 2019 and is now up 4 basis points, just below that level. The 10-year yield is up 5 basis points to 2.91% and the 2-year is up 9 basis point to 2.55%.

    The short end of the curve got a boost when March housing starts and building permits rose unexpectedly, easing some worries about a cooling housing market.

    But starts "have historically been unresponsive to changes in mortgage rates in a supply-constrained environment, likely because homebuilders are able to continue building with little fear that homes will sit vacant after completion,” Goldman Sachs said.

    "More groundbreaking means more homes for a supply constrained market," Odeta Kushi, economist at First American, tweeted.

    Also putting pressure on bond prices, St. Louis Fed President James Bullard said after the bell yesterday a 75-basis-point rate hike wasn't out of the question but also said that it wasn't his base case.

    Among earnings, Lockheed Martin is down after missing on revenue, while J&J is off a little after also missing on the top line but also boosting its dividend.

    See the other stocks making the biggest moves this morning.

       
       
        
     


  8. /NG finally pulling back a bit.  

    LMT +0.53%Apr. 19, 2022 9:18 AM ET4 Comments

    Lockheed Martin (NYSE:LMT-2.3% pre-market after reporting Tuesday that Q1 adjusted earnings beat estimates but revenues came in more than $500M short of expectations, hurt by supply chain snags triggered by COVID-19.

    Q1 net income slipped to $1.73B, or $6.44/share, from $1.84B, or $6.56/share, in the year-earlier quarter, as sales fell 8% to $14.96B and operating profit slid 11% to $1.93B.

    Free cash flow was $1.1B in Q1 2022, compared to $1.5B in Q1 2021.

    Q1 sales by segment: Aeronautics +0.2% Y/Y to $6.4B, Rotary and Mission Systems -14% to $3.55B, Space -15% to $2.56B, Missiles and Fire Control -11% to $2.45B.

    Q1 operating profit by segment: Aeronautics -2% Y/Y to $679M, Rotary and Mission Systems -20% to $348M, Space +8% to $245M, Missiles and Fire Control -3% to $384M.

    The company reaffirmed FY 2022 guidance of EPS ~$26.70 vs. $26.78 analyst consensus on revenues of ~$66B vs. $66.1B consensus.

    Lockheed (LMT) shares have gained 31% YTD and 19% over the past year.

    PETS +0.28%Apr. 19, 2022 8:48 AM ET1 Comment

    • PetMed Express (NASDAQ:PETSannounced an exclusive partnership and investment with Vetster, veterinary telemedicine and pet-care marketplace which will position PetMeds as the premier source for pet health online.
    • The deal provides access to virtual, around-the-clock pet healthcare for PetMeds' 2M-plus pet parents as well as integrated fulfillment of pet medications for veterinarians and vet clinics.
    • Through the agreement, PetMeds becomes the exclusive e-commerce provider of pet medications for Vetster, and Vetster becomes the exclusive provider of telehealth and telemedicine services to PetMeds customers.
    • Separately, the agreement comes amid Vetster completing its Series B round of funding of $30M wherein PetMeds has committed a minority investment.
    • The round brings Vetster's total investment to $40M since November 2020 launch.
    • PetMeds has the opportunity to receive additional shares through the exercise of warrants for an increased equity stake in Vetster, with such warrants being tied to future performance milestones.
    • Shares trading 1.3% higher premarket.

    DAL +1.74%Apr. 19, 2022 8:25 AM ET16 Comments

    Airline stocks are finding some breathing room on Tuesday morning after the CDC’s mask mandate was struck down.

    On Monday, U.S. District Judge Kathryn Kimball Mizelle ruled the federal mask mandate on public transportation, trains, and planes unlawful, sparking a slew of policy updates from airline carriers.

    Delta Air Lines (NYSE:DAL) United Airlines (NASDAQ:UAL), American Airlines (AAL), Spirit Airlines (SAVE), Frontier Group Holdings (ULCC), and Southwest Airlines (LUV) JetBlue Airways (JBLU) and Alaska Air (ALK) all indicated on Monday that masks will now be optional on domestic flights and for most international travel.

    “We are relieved to see the U.S. mask mandate lifted to facilitate global travel as COVID-19 has transitioned to an ordinary seasonal virus,” Delta (DAL) said in a statement.

    The relief is palpable across the industry as trade groups representing the industry more broadly have long called for an end to the mandates. For example, Airlines for America, a lobbying group representing the industry, has lobbied for an end to both the mask mandates and testing requirements for months.

     

    However, while passengers might be pleased with the policy shift, the White House Press Secretary Jen Psaki was less enthusiastic.

    “This is obviously a disappointing decision,” she told reporters during Monday’s White House press briefing. “The CDC continues recommending wearing a mask in public transit…So, right now, the Department of Homeland Security, who would be implementing, and the CDC are reviewing the decision. And, of course, the Department of Justice would make any determinations about litigation.”

    Despite the looming legal battle suggested by Psaki and lingering testing requirements, airline stocks are broadly moving marginally higher in pre-market action on Tuesday.

    Still, airlines may have many more issues to deal with beyond health restrictions. Soaring fuel costs and staffing shortages have sparked a significant uptick in flight cancellations.

    Read more on what to expect from United Airlines (UAL), the first airline to report earnings following the new ruling.

    IBM +0.97%Apr. 19, 2022 8:04 AM ET1 Comment

    IBM (NYSE:IBM) may not get the rock star treatment as a tech sector darling it used to be, but the hardware, software and services giant will still be in investors' sights when it reports its first-quarter results after the close of trading on Tuesday.

    Wall Street analysts estimate IBM (IBM) will earn $1.39 a share on $13.84 billion for the first three months of 2022. If past history holds, IBM (IBM) will beat those estimates as it has done every quarter for the past two years.

    Even if IBM (IBM) tops analysts revenue estimates, its results won't match the $17.7 billion in sales it reported a year ago. However, IBM's (IBM) sales will no longer include revenue from its Kyndryl (KD) business services unit, which IBM (IBM) spun off in late 2021.

    Last week, Morgan Stanley analyst Erik Woodring raised his rating on IBM's (IBM) stock to overweight from equal-weight, and bumped up his price target to $150 a share from $147. Woodring said IBM (IBM) has improved its business under the "new leadership" of Chief Executive Arvind Krishna, who took on the company's top job two years ago, and that it "is likely to outperform in a scenario of IT hardware budget cuts."

    NFLX +0.46%Apr. 19, 2022 8:00 AM ET6 Comments

    Netflix (NASDAQ:NFLX) investors are no strangers to reacting strongly to the company's quarterly earnings results, and what the streaming TV giant has to say about its ability to add new subscribers.

    So, it will be no surprise that when Netflix (NFLX) gives its first-quarter results after the close of trading on Tuesday, investors will key in on not just how many subscribers it added during the first three months of this year, but how many it hopes it will add during its fiscal second quarter.

    Netflix (NFLX) has said it expects to add 2.5 million paid subscribers for its first quarter, which would boost its worldwide total to 224.3 million subscribers. Wall Street analysts have also forecast Netflix (NFLX) to earn $2.92 a share, on almost $8 billion in revenue for its first quarter, and said that Netflix's (NFLX) second-quarter outlook will matter to investors at least as much at the company's first-quarter numbers.

    Bank of America analyst Nat Schindler said Netflix's (NFLX) "all-important" second-quarter forecasts will be led by the return of popular shows like the upcoming fourth season of "Stranger Things" and any residual positive impact the first-quarter launch of the new season of "Bridgerton". However, Schindler said he was "somewhat concerned" that Wall Street is putting so much hope into what is typically Netflix's (NFLX) weakest quarter for new subscriber additions.

    Schindler said analysts' have a consensus forecast of Netflix (NFLX) adding 2.6 million subscribers in its second quarter, which in addition to being more than Netflix's (NFLX) first-quarter outlook, is more than the 1.54 million subscribers Netflix (NFLX) added in the second quarter of 2021.

    Last week, Morgan Stanley analyst Benjamin Swinburne cut his price target on Netflix's stock to $425 a share from $450 due to several factors, including risks to subscriber additions in the near term.

    FXY -1.31%Apr. 19, 2022 7:37 AM ET6 Comments

    The Japanese yen continues to sink against the dollar Tuesday, with Japan one of the few major economies avoiding rate hikes.

    The rate topped 128 yen/U.S. dollar (NYSEARCA:FXY), down for the 13th-straight day. That's the longest losing streak for the currency against the greenback, according to Bloomberg data that goes back to 1971.

    Japanese authorities have tried to jawbone the yen higher, but the dollar has seen strength after St. Louis Fed President James Bullard said he couldn't rule out a rate hike of 75 basis points.

    The yen is moving too fast, Societe Generale forex analyst Kit Juckes said in a note today, having risen from 114 in less than three months. That raises two questions.

    "The first is whether the Japanese authorities will remain committed to the move and the second is at what point those stretched RSI levels demand a significant correction," Juckes said.

    The 9-week USD/JPY relative strength index has only spent a dozen weeks in the 90s area since 1984, he noted.

    "In 2013, May/June saw a correction that took USD/JPY down from 103 to under 95," he added. "I wouldn’t be at all surprised to see a test of 130 followed by a slip back to 125, say, in the next 6 weeks or so."

    "The second question is whether the Japanese authorities will stay the course. This time, there was no grand policy change, just a reaction to rising US yields (something that also happened in 2013). The weaker yen can help restore competitiveness, but only after a lag. Before then, it will boost import prices and importers will struggle to pass those on."

    "I would favor sticking with weak yen policies and going the distance, but the Finance Minister may blink and if he does, positioning is getting stretched enough to trigger that correction," Juckes said.

    SA contributor Stuart Allsopp wrote recently about how to take advantage of the yen crash.



  9. Nice drop in oil, any ideas when we are back to sub-100?


  10. Crypto has weak spots. Hackers are pouncing.


  11. When the war ends or the Recession begins, I imagine.   Don't count on that soon as Putin is throwing more troops at the problem.

    Apr. 19, 2022 6:09 AM ET38 Comments

    Here are the latest updates from the war in Ukraine:

    'Battle of Donbas' starts on eastern front

    Ukraine President Volodymyr Zelenskyy says that Russian forces are trying to breach defenses across the entire eastern front in what he calls the "Battle of Donbas."

    A "very large part of the entire Russian army is now focused on this offensive," Zelenskyy said in a video address, according to Reuters. "No matter how many Russian troops they send there, we will fight.

    Yellen to avoid Russia, meet Ukraine PM at Washington meetings

    Treasury Secretary Janet Yellen plans to meet with Ukrainian Prime Minister Denys Shmyhal during this week's big meetings of global economic leaders in Washington – but she'll be trying to avoid most contact with Russian officials who plan to attend some portions of the event virtually.

    IMF, World Bank meetings to focus on war, food insecurity

    Global finance leaders are putting the growing crisis over food insecurity and skyrocketing food prices at center stage as members of the International Monetary Fund and the World Bank meet in Washington and grapple with the brutal effects of Russia's war against Ukraine.

    Market doesn't care – blasting higher this morning.

       

    Higher rates are a good thing now?

    XHB +2.96%Apr. 19, 2022 4:25 AM ET64 Comments

    Investors will get more data on the U.S. housing market today as analysts point to signs of cooling in the red-hot sector.

    Housing starts and building permits numbers for April are due. Economists expect groundbreaking on new homes to drop to an annual rate of 1.745M, while permits are seen edging down to 1.825M.

    Demand for homes is strong, with many properties for sale going for well above asking price. But with a hawkish Fed and the Treasury yields jumping, the 30-year fixed-rate mortgage just topped 5% for the first time in a decade.

    "Rising rates are starting to show up in housing data," Schwab's Kathy Jones tweeted.

    That could further dent demand, although "housing starts have historically been unresponsive to changes in mortgage rates in a supply-constrained environment, likely because homebuilders are able to continue building with little fear that homes will sit vacant after completion,” Goldman Sachs said.

    Yesterday, the NAHB Housing Market Index fell to a seven-month low of 77 for April.

    Quote: “The housing market faces an inflection point as an unexpectedly quick rise in interest rates, rising home prices and escalating material costs have significantly decreased housing affordability conditions, particularly in the crucial entry-level market,” NAHB Chief Economist Robert Dietz said.

    Redfin reported last week that home sales fell 4% in March as buying costs shot up.

    “We expect the combination of surging mortgage rates and record-high home prices to cause more homebuyers to drop out of the market," Redfin chief economist Daryl Fairweather said. "Unfortunately, homeowners are turning their back on the market too. Instead of being motivated to list before prices weaken, potential home sellers may be choosing to wait-out the impending market cooldown.”

    Stock impact: The "inexorable rise in back end rates is having a meaningful impact on interest rate sensitive areas of the economy and market, like housing," Morgan Stanley equity strategist Mike Wilson said.

    The SPDR Homebuilders ETF (NYSEARCA:XHB) is down nearly 30% year to date and off 15% from its near-term peak in mid-March. The S&P 500 (SP500) (SPY) is down about 8% year to date.

    The sector is also vulnerable to the risk of the Fed orchestrating a hard landing with its rate hike, possibly leading to recession. But Citi says that a replay of 2008 isn't in the cards.

    "We believe the housing risk is much less severe than occurred during the Great Financial Crisis since credit quality is healthy, home equity levels are high, and there is higher structural demand for the home than pre-pandemic," analyst Steve Zaccone wrote in a note.

    SA contributor Hale Stewart says that investors interested in housing stocks shouldn't fight the Fed.


  12. Comment content omitted because it is too long.


  13. PDYPY -1.36%Apr. 18, 2022 8:12 PM ET22 Comments

    Recent statistics released by both New Jersey and Pennsylvania point to strong growth in sportsbook activity even outside of peak football season gambling.

    Per PlayNJ, the NCAA Tournament sparked over $1.1 billion in wagers at New Jersey’s online and retail sportsbooks, setting a state record for revenue. The gains come despite growing legalization efforts across the nation that stand to increase competition for the state.

    “Increased competition from New Jersey’s neighbors is inevitably going to affect the state’s sportsbooks, but it continues only to be at the margins,” PlayNJ analyst David Danzis said in a press release. “The state’s own bettors have proven a powerful force on their own.”

    One such neighbor was Pennsylvania, which saw record revenue in its own right stemming from the college basketball tournament.

    “March couldn’t have gone any better for Pennsylvania’s gaming industry,” Katie Kohler, lead analyst for PlayPennsylvania.com, said in a statement citing 27.6% growth in wagers from a year prior and a 19.7% bump from February.

    With online gambling leading the way for growth in each state, FanDuel/Flutter Entertainment (OTCPK:PDYPY) has been a big winner. DraftKings (DKNG), MGM Resorts International’s BetMGM (MGM), and Penn National Gaming’s (PENN) were also cited as key players amid the progressing popularity across locales.

    Many more states are yet to release data from March Madness betting.

    Other stocks that touch sports betting directly or indirectly include PlayAGS (AGS), Kindred Group (OTC:KNDGF), Wynn Resorts (WYNN), Gambling.com Group (GAMB), Inspired Entertainment (INSE), Bally's (BALY), Everi Holdings (EVRI), International Game Technology (IGT), Entain Plc (OTCPK:GMVHF), Boyd Gaming (BYD), Evolution Gaming (OTCPK:EVVTY), Churchill Downs (CHDN), Scientific Games (SGMS), 888 Holdings (OTCPK:EIHDF), Playtech (OTC:PYTCF), Caesars Entertainment (CZR), Genius Sports Limited (GENI), Esports Entertainment Group (GMBL), Golden Nugget Online Gaming (GNOG), PointsBet Holdings (OTCQX:PBTHF), Sportradar Group (SRAD), GAN Limited (GAN), fuboTV (FUBO), Rush Street Interactive (RSI), Esports Technologies (EBET), Elys Game Technology (ELYS), Full House Resorts (FLL), Skillz (SKLZ), Golden Matrix Group (GMGI), Bragg Gaming Group (BRAG) and Paysafe (PSFE).

    Read more about the competition from Canada as Ontario authorizes sports gambling.

    LVS +4.97%Apr. 19, 2022 10:36 AM ET

    Macau-related casino stocks gained on Tuesday on incrementally better news on the COVID front in China. Of note, Beijing has indicated that it will support supply chains in the nation and Tesla opened the Gigafactory Shanghai back up. In Shanghai, cases outside of the quarantine zones fell for the fourth consecutive day,

    Las Vegas Sands (NYSE:LVS +4.2%), Wynn Resorts (WYNN +5.0%), MGM Resorts International (MGM +3.4%) and Melco Resorts & Entertainment (MLCO +4.0%) have all cut into the recent drops with a push higher.

    Looking ahead, Macau casinos are still very likely to see another holiday period hit the calendar with COVID restrictions in place. The Labour Day holiday, which is under two weeks away, was being circled a few months ago as a potential catalyst for the sector.

    Jefferies analyst David Katz said any Macau gaming revenue recovery is likely to be delayed past the upcoming Labour holidays in China due to the border controls in place and with 25 Chinese provinces reporting local infections in past five days. That bad timing means a longer stretch before the long-awaited holiday tourism breakout.

    Chart watch: Las Vegas Sands (LVS) has outperformed peers MGM, WYNN and MLCO this year and is even running ahead of the S&P 500 Index.

    VLO -1.08%Apr. 18, 2022 6:53 PM ET8 Comments

    Valero Energy (NYSE:VLO) topped all energy-related stocks on the S&P 500 Monday, followed closely by Phillips 66 (PSX), both up 5.2%, as WTI crude oil climbed 1.2% to its best level since March 30.

    Other oil refiners also closed with big gains, including (PBF+9.1%, (CVI+7.9%, (DK+7.2%, (MPC+3.3%; ETF (CRAK+2.3%.

    Libya's National Oil Corp. shut down and declared force majeure at its largest oilfield, al-Sharara, which can pump 300K bbl/day, after protesters at the site demanding the ouster of Prime Minister Dbeibah.

    The shutdown of al-Sharara and some other Libyan field pulls more than 500K bbl/day of production from an already under-supplied oil market, overshadowing signals that China's drastic COVID-19 lockdowns are hurting on economic growth.

    Also, physical crack spreads on the U.S. Gulf Coast have increased to their best level in at least six years, supporting refinery run rates at their highest for this time of year in more than a decade, according to Bloomberg.

    U.S. crude oil prices jumped nearly 9% last week, helped by reports that the European Union was drafting a measure to ban Russian oil imports.

    FICO +0.47%Apr. 19, 2022 11:09 AM ET1 Comment

    The Federal Housing Finance Agency, the overseer of mortgage giants Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC), is expected to announce this week its decision on the type of credit score that the government-sponsored enterprises require when they purchase mortgages.

    For years, Fannie (OTCQB:FNMA) and Freddie (OTCQB:FMCC) have required a standard FICO score, which is issued by Fair Isaac Corp. (NYSE:FICO). Now the FHFA is looking at other ways to assess a borrowers' credit worthiness. The four options it's looking at are:

    • Option 1: maintaining the single score requirement for each borrower on every loan;
    • Option 2: requiring multiple scores;
    • Option 3: allowing lenders to deliver loans with any approved score; and
    • Option 4; the "waterfall" approach allowing a primary and secondary score.

    A report from the American Action Forum, a center-right nonprofit focusing on economic, domestic and fiscal policy issues, said "word on the street" has it that the FHA will announce this week that it's leaning toward Option 3.

    That could cost up to $600m and take two years to put in place, the American Action Forum said, citing FHFA estimates.

    RBC analyst Ashish Sabadra expects investors to view the decision as a negative for Fair Isaac (FICO), which the analyst rates as Sector Perform. "We remain on the sidelines," Sabadra said in a note.

    FICO's is up 0.6% in late morning trading on Tuesday.

    In 2019, the FHFA published a final rule that requires Freddie (OTCQB:FMCC) and Fannie (OTCQB:FNMA) to consider alternatives to Fair Isaac's (FICO) score when assessing a mortgage applicants creditworthiness.

    UBER +4.17%Apr. 19, 2022 11:03 AM ET8 Comments

    Uber Technologies (NYSE:UBER) and Lyft (NASDAQ:LYFT) both announced a change to their COVID safety policies on Tuesday, telling their users that masks were no longer required on rides, one day after a Florida judge overturned the mask mandate put forth by the Centers for Disease Control and Prevention.

    In an email, Uber (UBER) said that the CDC still recommends wearing masks if there are high transmission levels in the area and there are certain personal risk factors.

    In addition to no longer requiring masks, Uber (UBER) has asked riders to only use the front seat of the vehicle if there is a large group of riders, allowing the driver "some space."

    Lyft (LYFT) made the announcement on its blog, noting that both riders and drivers are no longer required to keep the front seat empty or the windows open.

    Uber (UBER) and Lyft (LYFT) shares rose in early Tuesday trading, with Uber up slightly more than 4% and Lyft tacking on 3.5%.

    Earlier this month, it was reported that Uber (UBER) will add a number of different travel options to its U.K. app later this year, including trains and flights.


  14. SEA +2.31%Apr. 19, 2022 10:48 AM ET2 Comments

    Shanghai’s shutdown is proving to be a supply chain and logistical nightmare as roughly 10,000 tankers, bulkers, and other vessels attempt to bypass the world’s busiest port. As constraints continue, exchange traded funds that capitalize from the global supply chain market have come into focus.

    Three funds that stick out are the Global Sea to Sky Cargo ETF (NYSEARCA:SEA), ProShares Supply Chain Logistics ETF (NYSEARCA:SUPL), and the SonicShares Global Shipping ETF (NYSEARCA:BOAT).

    Supporting SEA, SUPL, and BOAT are key shipping and container firms like ZIM Integrated Shipping Services (ZIM), Star Bulk Carriers Corp. (SBLK), Matson, Inc. (MATX), Hapag-Lloyd (OTCPK:HPGLY), and Kuehne + Nagel International AG (OTCPK:KHNGF).

    Exchange traded funds like SEA attempt to provide exposure to a diversified group of global shipping and freight businesses.

    SUPL, which just recently launched in earlier April intends to offer exposure to global logistics and technology companies. Michael L. Sapir, ProShares founder, and CEO recently stated: “The pandemic didn’t just highlight the crisis facing the global supply chain, it identified a ripe opportunity to invest in the companies striving to provide real solutions and embrace new technologies that may revolutionize global trade.”

    BOAT, on the other hand, aims to deliver investors access to an ETF that provides pure-play exposure to the global maritime shipping industry.

    Shanghai’s lockdown has now logjammed the Yangtze River backing up traffic from Changzhou, Zhenjiang, Nanjing, to Wuhan. Shanghai with its 24.9M residents is three times the size of New York City and has set up a wave of potential supply chain shortages as goods are not able to flow freely.

    Megan Liu, a Wuhu resident who works for a foreign trade company, told the New York Times: “I don’t think many people have supply shortages now, because it’s just started.”

    See below a map of Shanghai and the traffic jam of tankers, freighters, bulkers, and other vessels trying to navigate through the Yangtze River and into the Yellow Sea.

    While global shipping, container, and supply chain funds may be affected due to the ongoing bottleneck, the ripple effect of China shutting down Shanghai can be felt and will be felt across broader markets as countless goods and materials are needed by companies across the S&P 500.

    Therefore, even benchmark ETFs that track the performance of the major index like the SPDR S&P 500 Trust ETF (NYSEARCA:SPY), iShares Core S&P 500 ETF (IVV), and the Vanguard S&P 500 ETF (VOO) may be affected at some level by what’s going on in China.

    GAB +0.94%Apr. 19, 2022 10:28 AM ET

    • International Monetary Fund (IMF) indicates that while the Ukraine war has not only led to a humanitarian crisis but it has led to a significant slowdown in global growth in 2022 and add to inflation.
    • Leading the pack are the fuel and food prices which have increased dramatically denting low-income countries hardest.
    • Global growth is projected to slow from an estimated 6.1% in 2021 to 3.6% in 2022 and 2023; this is 0.8 and 0.2 percentage points lower for 2022 and 2023 than projected in January.
    • Growth projections region-wise:

    • Beyond 2023, global growth is forecast to decline to about 3.3% over the medium term.
    • For 2022, inflation is seen at 5.7% in advanced economies and 8.7% in emerging market and developing economies—1.8 and 2.8 percentage points higher than projected last January.
    • Global activity indicators:

    • IMF estimates the inflation rate will reach 7.7% in U.S. this year and 5.3% in the euro zone.
    • IMF sees Russian economy to fall by 8.5% this year and by 2.3% in 2023; Ukrainian economy is expected to contract by 35%.
    • The U.S. Federal Reserve expects to hike interest rates six more times in 2022, while the European Central Bank confirmed last week it is ending its asset purchase program in Q3.


  15. Phil/UL: What was the roll for the 50's on Unilever? 


  16. SPY +1.20%Apr. 19, 2022 10:25 AM ET12 Comments

    Individual investor bulls are thin on the ground and that is flashing a contrarian signal for the broader market, BofA Securities says.

    Last week the AAII reported that bullish sentiment, those who expect stock prices to rise over the next six months, fell to 15.8%, the lowest level since 1992.

    "This 3-decade low suggests that individual investor bulls have become an endangered species," technical strategist Stephen Suttmeier wrote in a note Tuesday.

    "From a contrarian perspective, skeptical individual investor sentiment tells us not to give up on the equity secular bull market even in the face of continuing cyclical risks from high inflation, yield curve inversions and a Fed hiking cycle in 2022," Suttmeier said. "AAII Bulls moved below 20% for the first time since May 2016 on 2/18. After a brief move higher, AAII Bulls dropped below 20% once again as of 4/15."

    "With the exception of the January 2008 signal, the SPX (SP500) (NYSEARCA:SPY) has generally had strong returns from one month to two years after this signal," he added.

    The S&P ETF touched an intraday monthly low yesterday.

    AAPL +1.35%Apr. 19, 2022 10:22 AM ET2 Comments

    With apologies to Billy Joel, Rosenblatt Securities analyst Barton Crockett must have woken up on Tuesday in a neutral state of mind.

    That's because Crockett initiated coverage on a raft of big-name tech companies, including Apple (NASDAQ:AAPL), Twitter (NYSE:TWTR) and Amazon (NASDAQ:AMZN) with neutral ratings based on a handful of industry and company-specific reasons.

    Crockett set a price target of $184 a share on Apple's (AAPL) stock in addition to setting his neutral rating on the company's shares. Crockett said that while Apple (AAPL) saw its Mac and iPad businesses get a boost due to the COVID-19 pandemic, and the company had a strong new iPhone release last year, it is facing new obstacles coming from China, where many of its products are made.

    Crockett said recent COVID-related lockdown in China "appear unlikely to fully abate any time soon," and that the situation has an impact on both Apple's (AAPL) supply lines and product demand.

    "This, to me, looks like loose threads on Superman's cape," Crockett said.

    For Twitter (TWTR), Crockett set a $48-a-share target price on the company's stock as the social-media giant battles with Tesla (TSLA) Chief Executive Elon Musk, who has made an unsolicited bid to acquire Twitter (TWTR) for the equivalent of about $43 billion. Crockett said Twitter (TWTR) will likely view Musk's offer "with horror," and that Musk will probably have to boost his offer if he wants it to succeed.

    With his neutral rating and $3,000-a-share price target on Amazon (AMZN), Crockett took a critical view of the company's online retail business. Crockett said that Amazon Web Services remains strong, but he is "unconvinced" that the retail side of Amazon's (AMZN) business will pick up soon after stalling at the end of 2001.

    "Amazon's rivals have upped their retail game considerably with click [and] brick features consumers like, and Amazon can't match with its small store footprint," Crockett said.

    The other companies that Crockett gave neutral ratings include Pinterest (PINS), with a $21-a-share price target; Spotify (SPOT), which got a target price of $150 a share; Comcast (CMCSA), and its $51-a-share price target; Paramount Global (PARA), with a $29-a-share price target, and Netflix (NASDAQ:NFLX), to which he assigned a price target of $354 a share.

    Netflix (NFLX) will be in the spotlight after Tuesday's market close, as the streaming TV kingpin is set to deliver its first-quarter results. And as is often the case with Netflix (NFLX), new subscriber numbers will drive investor sentiment about the company's prospects.


  17. UL/Tully –

    • UL – Our newest spread.  So far, no good.  We'll see how earnings look.  It only costs $2 to roll down to the 2024 $45s, so we have to do that and I guess we should buy back the short 2024 $60 calls since they are already up 56% and THEN we'll see how earnings go.


  18. Japan finance minister makes most explicit warning yet against yen slump, economic fallout reut.rs/37ZF2hs

    Executives are pushing their workers to return to the office. But only 19% of bosses are fully in-office themselves, according to a new survey from Future Forum

    Blackstone is increasing its investment in student housing, agreeing to buy American Campus Communities in a cash deal valued at about $12.8 billion

    Gee, you think they are doing it to help make it cheaper for college kids or did they find the last, unexploited place in real estate?

    Image


  19. "The evil of aristocracy is not that it necessarily leads to the infliction of bad things or the suffering of sad ones; the evil of aristocracy is that it places everything in the hands of a class of people who can always inflict what they can never suffer." – Chesterton

    What's Lily White, Filthy Rich, and Has 14 Penises? – Mother Jones

    Biden's Wealthiest Cabinet Officials: Zients, Lander, Rice Top the List -  WSJ


  20. This should help our steel positions, I think? I didn't enter MT earlier – and realized I am also out of my position in X…

    https://seekingalpha.com/news/3824375-china-tells-steel-industry-to-cut-production-adding-to-industrial-export-restrictions


  21. Also Biden wants to prioritize US-made steel so X and CLF very good.  People already got the message though:


  22. Big blast up in the first hour and then flat – very strange action.  

       

    We'll see if we hold up as the earnings reports come out.


  23. Looks like we have a Loch Ness monster pattern forming on the charts!  ;)


  24. Something like that – possibly also fictional.

    Anyone who's been booking travel knows how crazy it is this summer.  TRVG is small at $790M at $2.22 but they were doing well until Covid and took a big hit, losing $245M in 2020 and making $10M last year but 2019 they made $17M and this year they project $32M with good growth going forward so I think they are a fun gamble into early May earnings.  In the Earnings Portfolio, let's:

    • Sell 10 TRVG Jan $3 puts for $! ($3,000) 
    • Buy 40 TRVG Jan $2 calls for 0.90 ($3,600) 

    So it's net $600 and a move back over $3 returns $4,000 and failing $2 simply means we own 1,000 shares at $3.60 and then we DD to have 2,000 at $2.80 or less – that's the worst case – not a big deal.  There's potential to do better and turn it into a proper play over time if things go really well.  


  25. TRVG – I believe that selling 10 puts for $1 nets us $1000, not $3000. Unless you meant to sell 30 puts?


  26. TRVG – Wow, bad math, you are right, just $1,000 selling the TRVG Jan $3 puts for $1 so net $2,600 is too much so let's sell 25 for $2,500 and net $1,100 and, if assigned 2,500 at $7,500 + $1,100 we're in for net $3.44.  But, of course, we'll roll to 2024.


  27. Phil/Portfolio- We used to be able to upload the portfolios to an excel. Is there anywhere I can upload the portfolios? Thank you!


  28. I'm not familiar with that ever being the case.  Was that something Greg did for you?


  29. I thought I remembered it being available in the tab "virtual portfolios" in the past. I guess that is not the case?


  30. Well that was a crazy bullish day for no reason.  We'll see what sticks but good example of why we can't bring ourselves to cash out yet.

    Excel/Tully – I cannot even imagine how that could have worked given what I do know about them.  Did you ever actually do this?


  31. Excel/Phil-I think that I did download the LTP at one point.


  32. NFLX hammered!


  33. Anybody buying NFLX here? Much cheaper than Ackmans recent purchase.