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PhilStockWorld Top Trade Review – Q2 2021

Not much going on so it's a good time to review our Top Trade Alerts. 

Generally we like to give them about a year before we do a review but it's also good to do our reviews right before earnings so we can see if there are still bargains to be had.  11 (64.7%) of our 17 trade ideas from Q1 2021 were winners as of our Jan 11th review and, of those "losers", we had:

  • GOLD – Went from $18 to $25 and our adjusted net $1,660 position is now net $44,775, which is up 2,597% in 3 months and THAT is why we like to do these reviews!  Aren't options fun?
GOLD Long Call 2024 19-JAN 15.00 CALL [GOLD @ $25.25 $0.24] 50 10/15/2021 (638) $27,500 $5.50 $5.18 $6.33     $10.68 $0.23 $25,875 94.1% $53,375
GOLD Short Put 2024 19-JAN 25.00 PUT [GOLD @ $25.25 $0.24] -20 10/29/2021 (638) $-17,000 $8.50 $-4.20     $4.30 - $8,400 49.4% $-8,600

  • WU – Still down but not as much.  At $22 we make $2,000 with $21 our break-even.
  • GOLD – We had picked 2 more GOLD plays that were counted as losses at the time – also now with massive turnarounds.
  • QSR – We had a $25 loss back in January but already flying high now as we got more aggressive:
QSR Short Put 2023 20-JAN 50.00 PUT [QSR @ $61.36 $1.14] -10 3/25/2021 (274) $-4,500 $4.50 $-2.80 $-7.17     $1.70 - $2,800 62.2% $-1,700
QSR Long Call 2024 19-JAN 55.00 CALL [QSR @ $61.36 $1.14] 25 11/18/2021 (638) $19,300 $7.72 $2.63     $10.35 - $6,575 34.1% $25,875
  • PARA (was VIAC) – Was down $11,300 (141%) at net -$3,300 and we spent $1,500 more to roll to 15 2024 $25 calls covered by 10 2024 $37.50 calls and now we're at $35 and back on track at net $11,950.
  • DISCA – Rolled into WBD, which mitigated our loss.

So nice improvements on our Q1 picks and, despite those losses, we were still up $132,248 for the quarter and, of course, these gains and losses are just a snap-shot of what are usually one and two-year trades.  The idea is just to see if we're on track and, of course, to see if there are still bargains left to be picked up.

Top Trades for Thu, 01 Apr 2021 11:03 – CIM and NLY

So, for the Dividend Portfolio, let's:

  • Buy 2,000 shares of NLY $8.63 ($17,260) 
  • Sell 10 NLY 2023 $10 puts for $2.75 ($2,750) 

That's net $14,510 and we're not selling calls yet because the 2023 $7 calls are only $1.75 so we'd get called away for sure and I think we'll be able to get $1 for the $10 calls if we are patient.  If NLY drops to $7, we sell the $7 calls for $1 ($2,000) and our net drops to $12,510 ($6.255/share) and then we wait to see how things go until we are able to roll the short puts to 2024.  

The REITs have traded lower in the face of higher rates but these are picks we hold long-term for the dividends – we don't really care if the stock goes up or down, as long as they keep paying.  In this case, we laid out $14,510 and, so far, we've collected 4 dividend payments of 0.22 so 0.88 x 2,000 shares is $1,760 in dividends.  NLY did drop to $7 and our sale triggered at $1 on the $7 calls before that so net $12,510 less $1,760 is net net $ 10,750 and our 2,000 shares are currently at $13,420 but the short $10 puts are $3.75 ($3,750) so net $9,670 if we liquidated now would be a loss of $3,750 and that's how we'll book it but the 2024 $7 puts are $1.75 so I'd roll the puts to 2x of those as we'd be thrilled to buy another 2,000 shares at $7.

We're not going to play them for growth and we're more likely to have to DD on a dip than NLY so this will be for the LTP, where we have tons of cash:  

  • Buy 3,000 shares of CIM for $12.65 ($37,950)
  • Sell 20 CIM 2023 $12 puts for $12.75 ($2,550) 
  • Sell 30 CIM 2023 $10 calls for $3 ($9,000) 

That's net $26,400 or $8.80 per share so if we're called away at $10 we don't care as $1.20 is a year's dividend.  We're in a small allocation block so we aggressively sold the $12 puts as we don't mind being assigned 2,000 more shares at net $9.25, do we?  This is another one of those times when we'd rather see the stock go lower and get to 5,000 at an average of $10.04 per share – that's our worst downside case – a 20% discount!   Meanwhile the dividends are $1.20 while we wait, $3,600 against $26,400 is 13.6% annually and another 13.6% if we're called away at $10.

Here we were more conservative, selling the $10 calls and, in this case, the stock is at $10.63 ($31,890) and the puts are at $2.50 ($5,000) and the short calls are at $1.10 ($3,300) is net $23,590, which would be a small loss but we've collected 0.33 4 times so far and that's $3,960 so we're squeeking out a gain of $1,150 so far.  

Top Trades for Mon, 12 Apr 2021 10:38 – VIAC

For the LTP, lets:

  • Sell 10 VIAC 2023 $40 puts for $9.30 ($9,300) 
  • Buy 30 VIAC 2023 $40 calls at $10.80 ($32,400) 
  • Sell 20 VIAC 2023 $55 calls for $6.20 ($12,400) 

That's net $10,700 on the $45,000 spread and if VIAC goes higher, we'll probably sell some short-term puts to begin working off that $10,700 (the June $45 calls are $2.90 so 10 fetches $2,900, for example) and, if it goes lower, the June $40 calls are $4.75 and $4,750 pays for most of the $6,000 roll to the June $35 calls ($12.75) and that's how we'll take advantage of further downside so we'd almost rather see it go lower first but, if not – $34,300 (320%) is all we'll get a a consolation over $55.

 

I kept picking them because the cheapness kept annoying me.  Now PARA, the $35 calls are down to $4.10 ($12,300) and the $55 calls are $0.65 ($1,300) and the short puts are, fortunately, still $9.30 ($9,300) so net $1,700 is a $9,000 loss and of course I still love them so I'd roll the Jan $35 calls to 30 2024 $30 ($9.40)/45 ($4) spreads at net $5.40 and leave the short Jan $55s to expire and the Jan $40 puts at $9.30 can be rolled to the 2024 $35 puts at $8.50 for $800 – that's worth it.

Top Trades for Wed, 14 Apr 2021 11:27 – BIG

I'm sorry we missed them when they were down but should be fun to play and we don't mind owning them for $40 so, in the LTP:

  • Sell 10 BIG 2023 $40 puts for $6 ($6,000) 
  • Buy 15 BIG 2023 $45 calls for $30 ($45,000) 
  • Sell 15 BIG 2023 $65 calls for $20 ($30,000) 
  • Sell 5 BIG July $75 calls for $4.75 ($2,375) 

That's net $6,625 on the $30,000 spread so $23,375 (352%) of upside potential at $65 is already in the money and, if we can sell 6 more out of the money calls for $2,000+, we'd be into a net credit on the trade without even trying.  Worst-case is we end up owning 1,000 shares at around $40 (depending on sales), which is 42% below the current price – that's a downside we can live with!  

The short $40 puts are now $7.90 ($7,900) and the $45/65 spread is $4.50/1.20 = $4,950 and, of course, the short calls went worthless but all the subsequent short call sales were winners, as planned and now the net $0 spread is net -$2,950 thanks to the put premium.  I would no longer sell covers and just wait for the stock to pop.

Top Trades for Tue, 20 Apr 2021 16:05 – TD

As you can see, TD is in the high end of the range and it pays a $2.52 (3.84%) dividend so I think, for the LTP, we can just promise to own the stock for net $50 by selling the 2023 $55 puts for $3.50 so, if we sell 10 of those for $3,500 it's almost as good as the dividend if the stock stays above $55 and, if not, we know we'll be happy to add a bull call spread and roll the short puts lower

We hoped they would go lower and give us a chance to make a full trade but we never did and the short Jan puts are now $1.15 ($1,150) for a very boring net $2,350 gain.  

Top Trades for Thu, 22 Apr 2021 10:17 – WTRH

And they have options so a fun play for our Future Is Now Portfolio:  

  • Buy 50 WTRH 2023 $2 calls for $1.50 ($7,500) 
  • Sell 50 WTRH 2023 $4 calls for $1 ($5,000) 
  • Sell 20 WTRH 2023 $3.50 puts for $2 ($4,000) 

That's a net $1,500 credit on the $10,000 spread so $11,500 (766%) upside potential at $4 and worst case is we own 2,000 shares of the stock at $2.75 ($5,500) so great potential reward vs risk.

Wow, April was a disaster!  We're living in the worst case as WTRH broke way lower and the Jan $2 calls are now 0.10 ($500), the $4 calls are 0.03 ($150) and the $3.50 puts are $3.30 ($6,600) so net -$6,250 is $4,700 worse than our original $1,500 credit so, effectively, we're in 2,000 shares at net $2.35 with a $2.05 ($4,100) loss.  I don't think I'd put more money in at this point – they either come back or they don't.

Top Trades for Thu, 20 May 2021 11:18 – WBA

WBA/Wing – At this point, with WBA at $55 and the spread at net $13.50 out of $15, there's not much to squeeze out of it over 18 months (10%).  You can leave the $35 puts to die and close the $30/45 spread.  As a new trade on WBA, now that we're realized more value, let's add this one to the Butterfly Portfolio:

  • Sell 10 WBA 2023 $45 puts for $4 ($4,000) 
  • Buy 25 WBA 2023 $50 calls for $8.60 ($21,500)
  • Sell 25 WBA $60 calls for $4.40 ($11,000) 
  • Sell 10 WBA July $52.50 calls for $3.50 ($3,500) 

That's net $3,000 on the $25,000 spread that's half in the money and, since we're selling $3,000 worth of calls (but only $1,500 in premium) in the first 57 days out of 610 we have to sell, you can see how this can end up being very profitable over time.  

This is another one I keep buying but they keep going nowhere.  Selling the July calls worked and hopefully you sold more after that but, for the purposes of the trade we'll call it net $3,000 and the Jan $45 puts are still $4 and the $50/60 spread is $3.70/2.10 = $1.60 ($4,000) so net $0 is down $3,000 at the moment but I love them as a new trade though now I'd go with the 2024 strikes and, keep in mind, selling more short calls would have turned this into a nice profit – that is your advantage in this game – but only if you use it!  

Top Trades for Thu, 20 May 2021 15:01 – SPWR

SPWR – So deep in the money it's silly but now they are underpriced again so we're going to cash out both of our spreads for $44,755 out of a potential $48,000 and we're going to move to the following:

  • Sell 20 SPWR 2023 $20 puts for $5.20 ($10,400) 
  • Buy 50 SPWR 2023 $20 calls for $8.75 ($43,750) 
  • Sell 50 SPWR 2023 $35 calls for $4.10 ($20,500) 

That's net $12,850 on the $75,000 spread and we're $16,000 in the money to start and we're taking $31,905 off the table from our original $5,070 entry AND we've reduced our obligation to own SPWR from 3,000 shares to 2,000 – but at a much higher price (was $8).  Still, worst case is owning 2,000 shares at $20 but net of the $26,000 profit we have in our pocket, that would be net $14,000 or $7/share – back where we were when we started only now we've doubled our upside potential.

Another one people are tired of hearing me talk about.  Disappointing but I love them and of course we've moved to 2024 but the originial spread is now $8,200 for the puts and $4.85/1.30 ($17,750) so net $9,550 is down $3,300 at the moment and I like this as a new trade or the 2024s would work too.

Top Trades for Tue, 25 May 2021 10:47 – X and RIO

In our Earnings Portfolio, which has too much cash, let's make the following trade:  

  • Sell 10 X 2023 $17 puts for $3.50 ($3,500) 
  • Buy 20 2023 $20 calls for $9.50 ($19,000)
  • Sell 20 2023 $30 calls for $6.20 ($12,400) 

That's net $3,100 on the $20,000 spread that's $8,000 in the money to start and the upside potential is $16.900 (545%) if X is over $30 for us and that's the top of their rising channel so we'll also probably make a bit of income selling short calls at some point along the way

Wow, it is possible to make money on these things!  What a terrible streak that was and finally broken with X, which has zoomed higher after all that waiting.    The $17 puts are 0.65 ($650) and the $20/30 spread is $18.15/11.10 ($14,100) for net $13,450 and a PROFIT (what's that?) of $10,350 (333%) with another $9,650 to go, which seems silly as we're miles in the money now.  

In the Long-Term Portfolio (LTP), let's

  • Sell 5 more RIO 2023 $69.07 puts for $7.50 to average 10 short at $7,250.
  • Buy 15 RIO 2023 $69.07 calls for $18 ($27,000)
  • Sell 15 RIO 2023 $89.07 calls for $9 ($13,500) 

That's net $6,250 on the $30,000 spread so we have $23,750 (380%) upside potential over $89.07 and we're at $85.69 now – so we're not asking for a lot of gains.  Worst case is owning 1,000 shares of RIO at $69.07 and again, since we're net $6,250 in on the spread, if we stop out our $13,500 spread before it falls below $6,250, then our worst-case is simply owning 1,000 shares of RIO at $16.63 (20%) below the current price.  Notice how great the support looks at the $75 line – I'm not worried.  

RIO paid 2 special dividends totaling $10.40 so we're in the $59.10/79.10 spread, which is $21/7.50 ($20,250) and the short $59.10 puts are $2.60 ($2,600) and thaat's net $17,650 and up $11,400 (182%) and almost a double from here still ahead of us.  

Top Trades for Tue, 01 Jun 2021 14:33 – MO

  • Sell 20 MO 2023 $45 puts for $5.15 ($10,300)
  • Buy 30 MO 2023 $45 calls for $6.20 ($18,600) 
  • Sell 30 MO 2023 $55 calls for $2.60 ($7,800)

That's net $500 on the $30,000 spread that's $12,000 in the money to start.  Worst case is owning 2,000 shares of MO at $45(ish) and, when we think MO is toppy, we'll be able to sell some short calls like 10 July $50s which are now 0.75 ($750) and that can generate some nice income while we wait.  Will it keep up with the dividend of $10,320 we'd get for holding the stock for 598 days?  Well July is 45 days so we'd have 13 x $750 = $9,750, which is close and $29,500 (5,900%) profit potential very much makes up for our missing dividend potential, right?  

Selling the short calls in a PM account would cost about $7,200 in margin so very worthwhile to do that vs. buying the stocks as you don't have to tie up $90,000 or $45,000 in ordinary buying power to make it work.  Either way though, it's a very solid trade.

We're at goal already and the $45 puts are down to $1.70 ($3,400) and the $45/55 spread is $11/3.80 ($21,600) for net $18,200 so $11,800 left to go and up $17,700 (3,540%) is not bad at the halfway mark.  

Top Trades for Wed, 09 Jun 2021 11:42 – AIV

This is the same good management they had before – they are just splitting the business, which I think we're getting for free against the asset value ($8/share) of the company.  It's a long-term growth thing but they don't have long-term options though the ones they do have are actively traded so, in the Dividend (which they don't pay yet) Portfolio, let's:

  • Buy 2,000 shares of AIV for $7.61 ($15,220) 
  • Sell 20 AIV Dec $7.50 puts for $1 ($2,000) 
  • Sell 20 AIV Dec $7.50 calls for $1.10 ($2,200) 

That gives us a net entry of $11,020 or $5.51 per share and, if assigned 2,000 more at $7.50, we're average $6.50, which is a nice discount to the current price (and then we'd sell more calls to drop to $5.50).  AIV does not yet pay a dividend (no profits) but, if we get called away at $7.50, that's a $3,980 (36% profit in 6 months) or, if we end up owning $22,000 worth (4,000 shares) at $5.50, just selling 10 calls for $1,000 is the same as getting a 5% dividend – and that's what we'd be getting every 6 months. 

This REIT held up well as apartments skyrocketed over the past year.  We collected the full $7.50 in December ($15,000) as our call was on the button ($7.51 on the 17th)  assuming we didn't roll and still no dividends but a $3,980 (36%) profit in 8 months.  

Top Trades for Fri, 11 Jun 2021 13:03 – TWO

  • Buy 2,000 shares of TWO for $7.53 ($15,060) 
  • Sell 20 TWO 2023 $7 puts for $1.50 ($3,000) 
  • Sell 20 TWO 2023 $7 calls for $1 ($2,000) 

That's net $10,060 for 2,000 shares ($5.03) and, if we are assigned 2,000 more at $7, our average would be $6.015 – 20% off the current price.  That's our WORST case!  Best case is we collect 0.17 (3.37%) in quarterly dividends while we wait to get called away at $7 for a $1.97 (39%) profit.  

Not conservative enough on this REIT.  Now $5.10 ($10,200) and the Jan $7 calls are 0.10 ($200) and the $7 puts are $2.30 ($4,600) so net $5,600 and we collected 0.17 4 times = $1,360 for a net net loss of $5,900 but all these REIT losses are Fed-driven and make them good for new trades if you are truly interested in long-term dividend plays.  

Top Trades for Tue, 15 Jun 2021 13:39 – FRO

In the Dividend Portfolio, let's:

  • Buy 2,000 shares of FRO for $8.65 ($17,300) 
  • Sell 20 FRO 2023 $10 calls for $1.50 ($3,000) 
  • Sell 20 FRO 2023 $7 puts for $1.40 ($2,800)

That's net $11,500 or $5.75/share and, if assigned 2,000 more at $7, our average would be $6.375, which is where we wish we'd caught them.  So that's our worst case and best case is we get called away at $10 with $20,000 plus maybe $1 in dividends is $2,000 more for a net profit of $10,500 (91%) in 18 months.  Not bad for a conservative play!  

This one is on track with the shares at $8.89 ($17,780) and the Jan calls at $1 ($2,000) and the puts at 0.75 ($1,500) for net $14,280 and still no dividends so a net net gain of $2,780 (24%) the hard way so far.  

Top Trades for Tue, 29 Jun 2021 16:06 – WU and NAK

WU options go out to 2023 and they are not likely to fail $20 so, the trade I'd make there it:  

  • Sell 10 WU 2023 $25 puts for $4.75 ($4,750) 
  • Buy 40 WU 2023 $22 calls for $3 ($12,000)
  • Sell 40 WU 2023 $25 calls for $1.70 ($6,800) 

That's net $450 on the $12,000 spread with $11,550 (2,566%) upside protection and we're a bit aggressive about owning 1,000 shares at $25.11 if things go wrong but then we Rawhide and turn it into a long-term trade if we have to.  

Well, they did fail $20.  The $22s are now 0.89 and the $25s are 0.31 so $2,320 and the short puts are $6 ($6,000) so net -$3,680 is a loss of $4,130 and I'd give them more time but not something I'm dying to put more money into.  

NAK we planned to buy at 0.30 and it's now 0.38 but we didn't specify an amount.  I still like this as a gamble play.

Top Trades for Wed, 30 Jun 2021 12:22 – MU

So, for the LTP, let's:

  • Sell 10 MU 2023 $60 puts for $5.10 ($5,100) 
  • Buy 15 MU 2023 $75 calls for $21 ($31,500) 
  • Sell 15 MU 2023 $90 calls for $14.20 ($21,300) 

That's net $5,100 on the $22,500 spread so $17,400 (341%) upside potential at $90 but we'd hate it if that happens.  Ideally, MU drops 20% to $70 and we sell 10 $50 puts for more than $5 and then we're in a net $0 spread where our worst case is owning 2,000 shares at an average of $55 and THEN we sell more calls and stuff. 

Wild swings and we're right about where we started with the puts at $4.80 ($4,800) and the $75/90 spread is now $10.60/5.30 ($7,950) so net $3,150 and a loss of $1,950 so far.  I would roll the 15 $75s at $15,900 to 20 of the 2024 $60 ($25)/80 ($15) bull call spreads ($20,000) spending a few bucks (net $4,100) to move to a much lower $40,000 spread for a grand total of $9,200.

Well, I have to say this is, by far, the worst Top Trade Quarter we've ever reviewed with 7 winning and 9 losing trades (43%), that brings us down to 18 wins (53%) and 16 losses for the first half of 2021 so better than a coin flip – but hardly.  FORTUNATELY we do use smart cash-management strategies to make up for poor picks and taking a positive reward/risk profile consistently let us squeek out a $13,580 gain on our 16 trade ideas (so far).

That brings our total gains for the first half of 2021 (not counting Q1 trades that improved) to $145,828 on 33 trade ideas.  The key is that we don't tend to have huge losers but we often have big winners so, even being right just half the time can be nicely profitable but 4 REIT losses put us way too far behind for the Q.  We were playing conservatively and it still bit us in the ass – sorry.

 


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  1. Good Morning.


  2. Good morning! TSLA accounting tricks?


  3. Hi everyone…here is the link to the replay of this week's webinar

    https://youtu.be/I2_D3hf71JI


  4. PHIL – AT&T ( T) earnings – thoughts?


  5. Good morning!

    Up and up we go so I should have waited to do that Top Trade Review, I guess.

    LRCX/Batman – Supply chain is too much of a wildcard for me in that sector.  I'm also not sure if the new angstrom chips are still using the same old machines from LCRX (and others).  It's a whole new era of chip design and, in the very least, LRCX and others have massive spends ahead of them to bring us to the Quantum Realm of processors.  

    Beware the buggy whip!  

    TSLA/Pman – Always accounting tricks but good luck figuring them out.  TSLA seems to have had $679M in regulatory credits but that's not "cheating" – I don't see those programs going away any time soon and they've been very successful in getting their customers to re-pay for "software upgrades" to get the self-driving they were promised.  To some extent, TSLA is a million-member cult that is willing to turn over their money to Elon with no questions asked.  

    Tesla Results

    The real trick is valuing the company at $1,100,000,000,000 when they will be lucky to make $11Bn this year so that's 100x earnings for a company that is beset by competitors from all sides.  Projecting that they can keep these margins and grow their revenues 5x to fit into their valuation is just stupid.

    T/Batman – Well they spun of debt, raised cash and showed good growth (691,000 subscribers) right after NFLX showed shrinkage.  5G is right around the corner for them so sit back and enjoy is my opinion.

    Buried in the AT&T earnings release is this statement showing the strength of HBO Max in the same time period that Netflix lost 200,000 subscribers: "Total global HBO Max and HBO subscribers6 of 76.8 million, up 12.8 million year over year; domestic subscribers7 of 48.6 million, up 4.4 million year over year."

    90% fixed is very key and $40Bn in cash just dropped into their laps.  




  6. Many say Biden not tough enough on Russia: AP-NORC poll


  7. Oops, rejected at 4,500, Nas right at 14,1000 as well..

       
    • Dow  36,000 to 34,200 has bounce lines of 34,560 (weak) and 34,920 (strong) 
    • S&P 4,700 to 4,465 has bounce lines of 4,512 (weak) and 4,559 (strong) 
    • Nasdaq 16,500 to 15,675 has bounce lines of 15,840 (weak) and 16,005 (strong) 
    • Russell 2,400 to 2,080 has bounce lines of 2,144 (weak) and 2,208 (strong)

    The Dow turned green – that's the only change since yesterday.  


  8. Norway Sovereign Wealth Fund Lost $74 Billion in First Quarter


  9. Opinion: Higher rates will cost Canadians billions in government debt interest



  10. Phil / at&t.  The HBO thing is of course not part of go forward for them.  Other than the ownership stake.  But good for wbd 


  11. Phil. WBD down today. thought they would be up with HBO data


  12. This is how we can double food production by 2050



  13. WBD/Batman – I think it's just selling off with NFLX for now.  People have no idea how to value it as a stand-alone.  

    Indexes all red now but not too much damage yet.  

    Apr. 21, 2022 1:30 PM ET3 Comments

    As the Federal Reserve sets out an aggressive path to hike the policy rate in an already high inflation environment, the central banking is behind the curve, "though we're not as far behind as you think," St. Louis Fed President James Bullard presented in a virtual session Thursday hosted by Princeton Univeristy Bendheim Center for Finance.

    Bullard explained his "minimal" definition of "behind the curve," based on the Dallas Fed trimmed mean of 3.6%, which measures the "degree to which the current level of the policy rate is less than some minimally reasonable level." Note that this definition excludes some inflation segments, but still shows that inflation is trending above the Fed's 2% average inflation target.

    Also, the "generous" Taylor-type rule recommended a policy rate of 3.5%, implying "substantial increases" in the Fed's interbank lending rate off historically low levels, Bullard reiterated. By comparison, the 2-year U.S. Treasury note, a proxy for the Fed's monetary policy actions, recently changed hands at 2.707% in midday trading, up from 2.13% just a month ago.

    With U.S. consumer price inflation at 40-year highs, Bullard said that "exceptionally high" inflation compares with that in 1974 and 1983 – two periods when core personal consumption expenditures, the central bank's favorite inflation gauge, was trending close to current levels. Since the Great Inflation era, the Fed's credibility has improved on its commitment to inflation targeting, Bullard added. Core PCE most recently stood at 5.6% Y/Y.

    Earlier in April, Goldman Sachs' Jan Hatzius said the Fed needs to raise rates to more than 4% if the economy overheats.

    Apr. 21, 2022 1:28 PM ET

    • "It is appropriate to move more quickly" than in the last tightening cycle to remove monetary accommodation, Federal Reserve Chair Jerome Powell said during an IMF debate on the global economy.
    • 50 basis-point hikes are "on the table," particularly for the May meeting, he added.
    • "Many on the (FOMC) committee" at the March meeting were considering one or more 50-bps hikes this year, he added. Powell declined to say where he weighed in in that discussion.
    • Update at 1:40 PM ET: "We’re going to be raising rates and expeditiously getting to neutral," Powell said. The Fed will then tighten policy if required to get inflation under control, he added.
    • European Central Bank President Christine Lagarde gave no indication of when she expects the ECB will raise rates. "To be fixated on a time or day doesn't make any sense to me," she said. Rather, the ECB seeks to be data dependent in making those decisions.
    • Breaking… check back for updates.
    • Previously (April 18), St. Louis Fed President James Bullard, perhaps the Fed's biggest hawk, said the fed funds rate should be pushed up to at least 3.5% by the end of the year.

    They keep saying higher than 2.5% but no one seems to believe them.


  14. SP500 -0.58%Apr. 21, 2022 1:13 PM ET24 Comments

    All three major U.S. equity indices slipped into negative territory during early afternoon trading on Thursday, giving gains posted earlier in the day. The midday selling took place as Treasury yields rose.

    The initial upswing followed strong earnings from Tesla, which gave an early lift to tech and the broader market. However, stocks retraced these gains through the morning as focus shifted from earnings to concerns about the Federal Reserve.

    The Nasdaq (COMP.IND), which had shown an advance of more than 1% early in the session, was -0.9% by early afternoon. The Dow (DJI) was -0.2% and the S&P 500 was -0.6%.

    Tesla remained up sharply with margins impressing in spite of supply chain pressures. AT&T is also up on encouraging postpaid net additions.

    Netflix, which lost more than a third of its value yesterday, is showing another modest decline in Thursday's trading. Bill Ackman said late yesterday he sold out of his large position, taking a loss of about $400M.

    On the macro front, investors will be watching what Fed Chairman Jerome Powell has to say, especially with regard to a possible peak in inflation.

    In economic news, the Philly Fed index fell more than expected in April to 17.6 with the prices paid component coming in at 84.6, the highest level since June 1979.

    The 10-year Treasury yield is up 10 basis points to 2.94% and the 2-year is up 12 basis points to 2.70%.

    Powell will give brief introductory remarks at an inflation discussion at The Volcker Institute at 11 a.m. ET, but the main event is his appearance on a panel for a debate on the global economy at the IMF at 1 p.m. ET.

    Also in economic data, initial jobless claims ticked down slightly to 184K.

    See the stocks making the biggest individual moves this morning.

    AA -17.07%Apr. 21, 2022 12:58 PM ET

    Alcoa (AA-16% in Thursday's trading, giving up a month's worth of gains, after reporting a surprise miss on Q1 revenues and forecasting aluminum demand this year will grow by ~2%, compared to a prior forecast of 2%-3%.

    In reaction to the disappointing results, Citi downgraded Alcoa (AA) shares to Neutral from Buy with an unchanged $84 price target, as the bank's global commodity team said it is "stepping off the aluminum bull train."

    "Aluminum – and by extension AA – remain one of our best long-term ideas in metals but the near-term risk reward is more balanced" following a two-year rally, Citi's Alexander Hacking wrote, adding Chinese smelter restarts and softer demand could put a near-term cap on the price.

    BMO Capital's David Gagliano trimmed his price target to $95 from $99 to reflect incremental cost pressures and lower expected bauxite results.

    Wolfe Research analyst Timna Tanners remained bullish on Alcoa (AA) sees a buying opportunity amid the current selloff, reiterating an Outperform rating but lowered the price target to $102 from $105 after "light Q1 volumes," as aluminum production fell 9% Y/Y to 498K metric tons, below estimates of 526K tons.

    B. Riley keeps its Neutral rating while cutting its PT to $84 from $91 on "greater working capital use and a revised long-term sustaining capital assumption."

    Earlier this month, Credit Suisse downgraded the stock, saying aluminum prices have neared peak levels and likely will gradually rebalance in this year's H2.

    XLK -0.42%Apr. 21, 2022 12:45 PM ET

    Netflix (NFLX) was the first of the FAANG names to report their financial results during this earnings cycle. Now, the Core Four are on deck, putting a handful of exchange traded funds on the radar for potential price swings.

    Earnings are due out next week from Alphabet (GOOG) (GOOGL), Meta Platforms (FB), Apple (AAPL) and Amazon (AMZN). Listed below are the top three ETFs that have the largest weightings towards each of those stocks:

    Alphabet: GOOG’s three largest portfolio holding are the Fidelity MSCI Communication Services Index ETF (FCOM) at 23.65%, iShares Global Comm Services ETF (IXP) at 23.60%, and the Vanguard Communication Services ETF (VOX) weighted at 22.98%.

    YTD price action: GOOG -12.2%, FCOM -18.8%, IXP -15.7%, and VOX -18.6%.

    Meta Platforms: Mark Zuckerberg’s FB finds itself most heavily weighted within the Communication Services Select Sector SPDR Fund (NYSEARCA:XLC) at 19.22%, followed by the Fidelity MSCI Communication Services Index ETF (FCOM) at 13.53%. The third place on the list of FB weightings goes to the Vanguard Communication Services ETF (VOX) at 13.33%.

    YTD price action: FB -43.5%, XLC -18.8%, FCOM -18.8%, and VOX -18.6%.

    Apple: AAPL, the best performing stock of the four in 2022, has the Technology Select Sector SPDR Fund (NYSEARCA:XLK) as its top ETF supporter. XLK has a 23.28% position in Apple. At the same time, Fidelity MSCI Information Technology Index ETF (FTEC) and Vanguard Information Technology ETF (NYSEARCA:VGT) have 23.18% and 22.77% weightings in AAPL.

    YTD price action: AAPL -6.4%, XLK -14.3%, FTEC -15.1%, and VGT -15%.

    Amazon: The last of the four to report is AMZN. The online retailer is most heavily weighted inside of the ProShares Online Retail ETF (ONLN), Consumer Discretionary Select Sector SPDR Fund (NYSEARCA:XLY) and Vanguard Consumer Discretionary ETF (VCR). The AMZN weightings for the funds sit at 24.85%, 22.39%, and 22.28%, respectively.

    YTD price action: AMZN -11%, ONLN -27.8%, XLY -12.8%, and VCR -13.4%.

    Of all the ETFs, FCOM and VOX are two funds that may be particularly interesting to watch, as they have heavy weightings for both Alphabet and Meta Platforms. Between the two companies, FCOM has a 37.18% combined weighting and VOX has a combined 36.31% weighting for those two stocks.

    Below is a breakdown of Alphabet, Meta Platforms, Apple, and Amazon's filing information:

    Another group of fund’s investors may want to keep an eye on are MicroSectors’ (FNGS), (FNGO) and (FNGU), which are single, double, and triple leveraged ETNs that are each constructed of the same portfolio of a condensed equally weighted ten stock make-up.

    Alphabet, Meta Platforms, Apple, and Amazon, all hold an equal 10% weighting in the three funds, equating to a 40% block that’s tied not only to a traditional fund but also to a double and triple leveraged fund.

    The recent post-earnings plunge in Netflix sent FNGS, FNGO, and FNGU down sharply lower this week.


  15. T +3.94%Apr. 21, 2022 12:30 PM ET15 Comments

    AT&T stock (NYSE:T) has joined the top gainers in the S&P 500 Thursday, up 4% after it beat expectations for profits and surprised to the upside on mobile subscribers in the last earnings report where media played a major role.

    The company added a net 965,000 postpaid subscribers, and 691,000 postpaid phone net adds, beating expectations. On the wireline side, AT&T Fiber added a net 289,000 subscribers, with penetration up about 2 percentage points to 37%.

    It also added 12.8 million HBO/HBO Max subs year-over-year, bringing that total to 76.8 million – but eyes were definitely on the mobility/broadband side of the business that will dominate current-quarter reports after the April 8 closing of its WarnerMedia spin-off into Warner Bros. Discovery.

    Bullish New Street Research typified that stance, noting that the communications results were "fine," and noting that "WarnerMedia was a mess" – revenue missed expectations on lower studio revenue – but that's not the company's problem anymore. The firm has a Buy rating and a $26 price target that implies another 29% upside beyond Thursday's gains so far.

    Citi also tried to look past the lingering media results, saying it's "encouraged by the better balance of RemainCo revenue and EBITDA performance."

    Given competition in wireless, the bank does note the market would like some more visibility on margin expansion for the second half of the year. It has a Buy rating and $22 target.

    Evercore also has a $22 price target, and analyst Vijay Jayant noted "solid performance" in the retained businesses – especially in postpaid phones, where the 691,000 net adds topped the firm's expectations for 400,000. Jayant does note free cash flow was much lower than forecast (and it fell to $700 million from the DirecTV-affected $4.2 billion a year prior), which it attributes largely to working capital paydown at WarnerMedia ahead of the spin-off.

    On AT&T's earnings call, CEO John Stankey took on how the company is managing sharply increased inflation – and suggested it would boost wage spending by at least $1 billion: "We were pretty deliberate when we did planning for 2022, acknowledging that we expected we'd see some wage inflation … And we did several revisions late in the planning cycle that I would say those amounts added something with a B into overall cost structure … I'm not happy about the fact that wages are rising as fast as they are."

    He didn't say much about price increases, but did acknowledge "I think every business in the United States is going to be dealing with the cost of inputs. And I don't see the wireless industry being immune from that nor any other industry being immune from that."

    The company's not selling on promotional pricing now, he notes: "We are selling the customer on a stable price to the duration of the relationship with us. In many cases, we're in the market at a minimum of $10 higher to the promotional price that cable or the other broadband competitors have in the market. And our volumes were still stellar and they're continuing to grow, and we're doing incredibly well in that market."

    Check out AT&T's earnings call presentation.

    Seek out more details in AT&T's earnings call transcript.

    SCHW -2.97%Apr. 21, 2022 12:25 PM ET1 Comment

    Charles Schwab (NYSE:SCHW) stock has erased Thursday morning gains and dropped as much as 5.5% in midday trading, as investors weigh the CFO's comments on client cash sorting at the 2022 Business Spring Update.

    Moreover, as the Federal Reserve hikes short-term interest rates, Schwab (SCHW) clients move some funds to certificates of deposits, purchase money funds or other alternative investment solutions from investment cash "off our balance sheet into higher yielding alternatives," otherwise known as client cash sorting, Rick Wurster noted. "In 2015 to 2019, the client cash sorting produced a roughly 20% reduction in sweep cash balances over a three-year period once the Fed started tightening," he added.

    At the beginning of this week, Schwab's (SCHW) stock dipped double digit percentage points after first-quarter net interest income came in worse than expected amid a challenging investing environment. And while trading volumes remained elevated in Q1 vs. the prior quarter, a number of trends weighed on revenue per trade, including a decline in the average options trade, Wurster said.

    Amid tighter central bank monetary policy, economic uncertainty and Russia's war in Ukraine, "it's a tough environment for investors," said CEO Walt Bettinger.

    Meanwhile, the Federal Reserve is expected to hike rates aggressively throughout this year and next, which should bode well for Schwab (SCHW). "The path of our net interest margin will always depend on how rates ultimately trend," Wurster said. Specifically, if the Fed increases the policy rate to an expected range of 2.25% to 2.50% by year-end, Schwab's (SCHW) net interest margin could climb to mid-1.80% in Q4, Wuster explained.

    Previously, (April 21) TD Bank Group said Schwab's earnings will translate to C$202M in Q2 net income.

    UAL +11.56%Apr. 21, 2022 12:09 PM ET2 Comments

    The airline sector is gliding higher on Thursday after strong earnings guidance from United Airlines (NASDAQ:UAL +11.4%), American Airlines (AAL +5.1%), and Alaska Air Group (ALK) added to optimism stoked by a prior release from Delta Air Lines (DAL) and the lifting of mask mandates on aircraft.

    Shares of United Airlines (UAL) are leading the way, gaining over 12% in Thursday’s trading, after forecasting a return to profitability in the second quarter. Indicating the elevated optimism, CEO Scott Kirby declared the industry is currently seeing the strongest demand environment in three decades.

    Raymond James analyst Savanthi Syth noted that the commentary and revenue forecasts blew away even the most bullish estimates. He maintained his Outperform rating on shares into the summer travel season.

    Syth’s bullishness was joined by Deutsche Bank analyst Michael Linenberg, who noted the insulation from inflationary pressures that many major airlines like United enjoy.

    “United’s strong revenue follows on the heels of Delta’s similarly strong view and corroborates our view that major airlines will be successful in offsetting higher fuel prices given their greater exposure to less price-sensitive revenue segments such as corporate travel, premium leisure, long haul, cargo, and credit card,” he wrote in a reaction note to earnings. “Given United’s June quarter guidance on operating margin…we believe United is doing just that.”

    He maintained a Buy rating on shares as the industry appears capable of overcoming a rapid rise in fuel costs and driving higher on booming demand for air travel.

    Similarly, American Airlines (AAL +5.2%) lifted off on Thursday after it noted record sales in March, returning to 2019 levels for monthly revenue for the first time since the onset of the COVID-19 pandemic. In its own Thursday morning release, Alaska Air (ALK +1.8%) reported the same normalization to 2019 levels, encouraging bullishness on the industry’s long-awaited recovery.

    “We’re optimistic about the continued recovery in the second quarter and beyond,” American CEO Robert Isom said. “The demand environment is very strong and, as a result, we expect to be profitable in the second quarter based on our current fuel price assumptions.”

    The U.S. Global Jets ETF (JETS) that tracks passenger airlines gained 5% at midday on the back of bullish sentiment across the sector.

    Still, it is worth noting that issues in staffing that add to concerns on fuel costs. These labor shortages in particular have caused much of the industry, including JetBlue Airways (JBLU), Spirit Airlines (SAVE), Frontier Group (ULCC), Southwest Airlines (LUV), United Airlines (UAL), Allegiant Travel Company (ALGT), Sun Country Holdings (SNCY), and more to slash schedules.

    While analysts have noted that this is a prudent strategy in many cases, it may curtail their ability to capitalize on soaring demand cited by so many CEOs.

    Earnings are expected from Allegiant (ALGT) on Friday, while Southwest Airlines (LUV), Frontier Group (ULCC), and JetBlue (JBLU) are set to report next week. Spirit Airlines (SAVE) will round-out major airline earnings on May 4 after market close.

    Apr. 21, 2022 12:03 PM ET4 Comments

    As the U.S. found out during the pandemic then with Russia's invasion of Ukraine, "Our supply chains are not secure and they’re not resilient," U.S. Treasury Secretary Janet Yellen said during a press briefing in Washington, D.C. on Thursday.

    One solution involves a plan to build "a large group of trusted trade partners," she said. "There would be some cost that we would bear" but it shouldn't be a permanent part of inflation, Yellen added.

    Speaking about the U.S. government freezing Russian assets held in the U.S., Yellen said "it's clear that the rebuilding costs are going to be enormous." But it's "unclear whether it would be possible, without legislation," to use those assets frozen in the U.S. to help fund the rebuilding of Ukrainian cities, she said.

    The U.S. Treasury will be discussing with the G-7 and international financial institutions the financing needs for Ukraine and how to raise that money. "We've given $1B that will immediately be available to Ukraine," and will ask Congress for more funds, she said, adding that she's not able to provide more details yet on the upcoming request.

    The efforts to support Ukraine will be an international effort. Yellen said, "we'll do everything we can to pool our resources to address their needs."

    Last week (April 13), Yellen warned China not to assist Russia on circumventing sanctions

    Dear readers: We recognize that politics often intersects with the financial news of the day, so we invite you to click here to join the separate political discussion.

    WBD -7.78%Apr. 21, 2022 11:48 AM ET190 Comments

    CNN+, we hardly knew ye: Warner Bros. Discovery (NASDAQ:WBD) is shutting down the streaming news service with details to come to staffers Thursday, Variety reports.

    New CNN boss Chris Licht sent a staff memo about an "important meeting" set for noon, at which time he's expected to confirm the news. Licht already told CNN+ head Andrew Morse about the decision, according to the report.

    CNN's Reliable Sources team is confirming that news, saying the service will shut its doors April 30.

    The service isn't even a month old. But its launch seemed cursed with turmoil, pushed out just days before its parent, WarnerMedia, spun off from AT&T and merged with Discovery under an entirely new leadership team.

    Just a few days after the AT&T/Discovery transaction closed, WBD was reportedly set to slash hundreds of millions of dollars from its investment in CNN+, amid reports that only about 10,000 people had become daily users of the service.

    Just a couple of days ago, WBD suspended external marketing spending and reportedly laid off CNN's Chief Financial Officer, replacing him with the former Discovery's CFO for streaming and international.

    It now seems likely that any creations of merit coming out of the CNN+ effort will move to a widely expected combination service of HBO Max/Discovery expected to launch in 2023.

    Updated 12:07 p.m.: Morse is now going to leave the company, Variety says. WBD has moved to a session low, down 7%.

    Updated 12:10 p.m.: "This decision is in line with WBD's broader direct-to-consumer strategy. In a complex streaming market, consumers want simplicity and an all-in service, which provides a better experience and more value than stand-alone offerings," Licht says, according to CNN's Brian Stelter.

    Updated 12:17 p.m.: Warner Bros. Discovery has announced the April 30 shutdown, and its staff meeting is under way. "As we become Warner Bros. Discovery, CNN will be strongest as part of WBD’s streaming strategy which envisions news as an important part of a compelling broader offering along with sports, entertainment, and nonfiction content," Licht says.

    Customers will receive prorated refunds, the company says. And it's confirmed that CNN+ head and CNN Chief Digital Officer Andrew Morse will exit after a transition period. Alex MacCallum will take over at CNN Digital.

    Updated 12:35 p.m.: Seeking Alpha has learned that employees in the CNN+ staff meeting are being offered pay and benefits for the next 90 days to "explore opportunities" at CNN, CNN Digital and at Warner Bros. Discovery. After that, any exiting employees will receive at least six months severance, which will vary by tenure.

    Oh, THAT is what's spooking WBD traders.  


  16. Look how ugly things got.  

    Not good when 2000 on the RUT isn't even bounce or 35,000 on /YM – we couldn't figure out why the rally and now it's all being erased. 

       

    That's why we took advantage of the move up to press our STP hedges – just in case…


  17. Dollar bounced off 100 from above – getting stronger.


  18. PFE -1.02%Apr. 21, 2022 11:17 AM ET27 Comments

    An expert panel of the U.S. Centers for Disease Control and Prevention (CDC) indicated their reluctance to recommend a fourth COVID-19 shot for the broader population until the agency formulates a clear strategy.

    At a meeting on Wednesday, the CDC’s Advisory Committee on Immunization Practices (ACIP) largely agreed that repeated use of boosters to prevent infection was not a realistic target with the current crop of COVID-19 shots.

    Dr. Beth Bell, director of the National Center for Emerging and Zoonotic Infectious Diseases, argued that asking people to receive boosters every four to six months is not sustainable and could undermine the trust in the immunization drive.

    “I’m just very concerned about us meeting and considering additional doses for a smaller and smaller return and creating an impression that we don’t have a very effective vaccination program,” CNBC quoted Dr. Bell as saying.

    The primary vaccine regimen and one booster could offer adequate protection for individuals with healthy immune systems right now, according to Dr. Bell, who also functions as a clinical professor at the University of Washington’s School of Public Health.

    Meanwhile, Dr. David Kimberlin of the American Academy of Pediatrics said that CDC should implement a more long-term-oriented vaccination strategy to avoid being reactive to the next crisis.

    According to Kimberlin, the agency should inform the public that most Americans will need three doses initially and then an annual booster to retain protection against severe disease.

    However, committee member, Dr. Sarah Long, highlighted the shortcoming of the current generation of COVID-19 shots.

    “With the vaccines currently available, we should not chase the rainbows of hoping that those vaccines could prevent infection, transmission and even mild disease because we’ve learned that is just not possible,” she said.

    “We just need to give that up with these vaccines and focus on preventing severe disease and preventing death,” added Dr. Long, who is a professor of pediatrics at Drexel University College of Medicine.

    The ACIP meeting comes after the CDC recommended a fourth COVID shot of Pfizer (NYSE:PFE)/BioNTech (NASDAQ:BNTX) and Moderna (NASDAQ:MRNA) vaccines for older Americans last month.

    At a meeting convened to discuss the additional booster shots for the general population, Dr. Peter Marks, who heads the Food and Drug Administration’s vaccine unit, noted early this month that the decision was a “stopgap” measure.

    This is very scary as I get the general impression that, 2 years into this – they really don't have much of a clue as to what to do about this thing.

    United States ›

    Going up every day again.   

    I guess we can blame that for today's sell-off but it wasn't anything different than they've been saying since last week.

    DIDI -9.31%Apr. 21, 2022 11:02 AM ET21 Comments

    Alibaba (NYSE:BABA), Baidu (BIDU) and Weibo (WB) slipped into the red, Thursday, as many notable Chinese tech stocks lost ground following the latest round of uncertainty involving ride-sharing leader Didi Global (NYSE:DIDI).

    At issue are potential punishments that were reportedly set to be levied against DiDi (DIDI) by China's regulator of cybersecurity. The Cyberspace Administration of China was prepared to impose fines and other penalties upon Didi (DIDI) due to how it went about holding an initial public stock offering in New York last year. However, some high-level officials in the Beijing government have reportedly come out against the proposed penalties on the grounds that they aren't strong enough.

    DiDi (DIDI) is in the process of delisting its shares from the New York Stock Exchange, but has also put a halt on plans to re-list its shares in Hong Kong.

    As trading progressed, DiDi's (DIDI) shares fell more than 6%. Adding to the company's woes was a report that DiDi (DIDI) is closing down its food delivery business in Japan.

    With DiDi (DIDI) in the lead, other Chinese tech stocks also retreated. Alibaba (BABA) shares pulled back by 2%, Baidu (BIDU) was down by 3%, Weibo (WB) fell more than 5%, Tencent Holdings (OTCPK:TCEHY) gave up 2.5%, and the KraneShares CSI China Internet ETF (KWEB) fell more than 3%.

    Thursday's losses follow declines earlier in the week that resulted from concerns that China may impose more regulations over the country's livestreaming video industry.

    Apr. 21, 2022 10:03 AM ET

    • March Leading Indicators+0.3% to 119.8 vs +0.3% expected and +0.6% prior (revised from +0.3%).
    • Conference Board Coincident Economic Index for the U.S.: +0.4% to 108.7 vs. +0.4% in February.
    • Lagging Economic Index: +0.6% to 110.9 compared with +0.2% in prior month.
    • "The US LEI rose again in March despite headwinds from the war in Ukraine," said Altaman Ozyildirim, senior director of Economic Research at the Conference Board. "This broad-based improvement signals economic growth is likely to continue through 2022 despite volatile stock prices and weakening business and consumer expectations."
    • The Conference Board projects 3.0% Y/Y U.S. GDP growth in 2022, slower than the 5.6% pace in 2021, but still well above the pre-COVID trend.
    • Earlier, Jobless claims down 2K to 184K


  19. XOM -1.09%Apr. 21, 2022 9:23 AM ET13 Comments

    RBC upgraded Exxon (NYSE:XOM) to buy Thursday; the bank's $100 price target assumes Exxon (XOM) trades at ~10x RBC's 2022 EPS forecast of $10.74. The earnings forecast is predicated on a $102 Brent oil price forecast. RBC downgraded Chevron (NYSE:CVX) Thursday, with a $165 price target, which assumes the shares trade at ~10x RBC's 2022 EPS forecast of $16.93. RBC sees geographic and commodity end-market exposure driving relative performance between the two companies this year.

    RBC thinks Exxon (XOM) will be a beneficiary of the improving refining environment. With the largest refining footprint amongst the majors, and growing, RBC shows Exxon's (XOM) downstream segment driving earnings 18% / 30% above street estimates in 2022 / 2023. Separately, Exxon (XOM) invested heavily in resource development and production growth throughout the downturn, while under investing in the energy transition relative to peers. RBC notes that underinvestment in energy transition has been considered a liability by Wall Street; however, in a world short energy, Exxon's (XOM) deep upstream portfolio will quickly be recognized as a competitive advantage.

    Thursday's Chevron (CVX) downgrade was largely valuation related, as the shares have outperformed peers in recent months. Interestingly, RBC hosted a roadshow with CEO Mike Wirth, where he repeatedly spoke with investors about a desire to increase international gas exposure. RBC believes this will be effectuated through the acquisition of Gulf Coast LNG assets; any acquisition of LNG assets in the Gulf could provide a positive read-through for Tellurian (TELL). Separately, RBC noted Chevron's (CVX) significant "indirect" Russia exposure, as 10% of the Company's upstream production comes from Kazakhstan and runs through Russia's recently troubled CPC pipeline.

    Chevron (CVX) has been hit with several downgrades of late, all largely valuation related. However, despite significant outperformance in the pure-play refining sector, few majors have been upgraded on the expectation of improved downstream results. Exxon (XOM) is by far the most exposed to improving refining economics, and the shares remain largely "hold" rated across Wall Street. Suggesting sustained, elevated refining margins could lead to more upgrades in coming months.

    YETI -4.84%Apr. 21, 2022 8:58 AM ET

    Morgan Stanley started off coverage on Yeti Holdings (NYSE:YETI) with an Equal Weight rating, although the firm made it clear that it likes the longer-term value for investors.

    Analyst Brian Harbour said Yeti is a prime example of a niche consumer product that navigated the jump to recognized lifestyle brand. "We have a favorable view of its brand strength, innovation capability, management, and top line momentum, which was accelerated by the Covid period with a shift to DTC beyond IPO-era expectations," he advised.

    In the near term, a confluence of macro headwinds are seen setting up as potential negative catalysts, which keeps Morgan Stanley on the ratings sidelines. "These include potential consumer softness into late '22/'23, which could impact more discretionary, higher ticket purchases of outdoor goods, and margin uncertainty, which we think is understood but could be compounded by further input cost inflation and international supply chain risks," warns Harbour.

    The Seeking Alpha Quant Rating on Yeti Holdings (YETI) flipped to Sell in February.

    IBM +1.23%Apr. 21, 2022 8:57 AM ET2 Comments

    • IBM (NYSE:IBM) and Red Hat announced that they are part of a five-year collaboration to modernize the U.S. Department of Education's G5 grants management system with open hybrid cloud technologies.
    • The joint effort, led by Innosoft and including technology from Red Hat and Amazon Web Services with industry expertise from IBM, will replace the current G5 system with an open and flexible cloud-based system.
    • The goal of modernizing the G5 system is to allow the department to further refine its grants management process.
    • Working with Innosoft, IBM Consulting will serve as the technology strategist and architect of the project for migrating data and critical grants management processes from the existing G5 system to AWS.
    • The new system will be built on Red Hat OpenShift.

    Apr. 21, 2022 8:34 AM ET

    • April Philly Fed Business Outlook17.6 vs. +21 consensus, +27.4 prior (unrevised).
    • The prices paid index rose 4 points to 84.6, its highest reading since June 1979
    • The employment index rose to 38.9, its highest reading ever.
    • The index for new orders declined 8 points to 17.8, and the current shipments index fell 11 points to 19.1.

    ALK +0.50%Apr. 21, 2022 7:35 AM ET

    In line with many of its peers, Alaska Air Group (NYSE:ALK) is flying higher on optimistic commentary from management on a recovery in travel demand.

    In its Thursday morning earnings print, the Seattle-based air carrier reported a smaller than expected loss of -$1.33 per share alongside better than expected revenue, $20 million above forecasts.

    While the quarter’s numbers are not astounding, the close to the quarter was noted as particularly strong. Given this dynamic, CEO Ben Minicucci was eager to offer an optimistic outlook from that dovetails with prior forecasts from American Airlines (AAL), Delta Air Lines (DAL), and United Airlines (UAL).

    "March results were particularly strong, marked by our highest cash sales month in history and revenues that exceeded 2019 levels for the first time since the pandemic began” he said. “Our people are working hard to get our airline back to its pre-COVID size and to return to growth from there, all while delivering the operational excellence that we're known for.”

    To be sure, the company cited a shortage of pilots and high fuel costs as a catalyst for schedule cuts that will curtail ability to keep up with robust demand. These cuts have reduced full year capacity expectations to flat to down 3% versus 2019. The company had previously expected up to 3% growth.

    Nonetheless, the maintenance of margins and a broad based recovery for the travel industry is taking the stock higher. Shares gained about 5% in Thursday’s pre-market session.

    Read more on the report from American Airlines, which also reported early Thursday morning.

    DIS -1.60%Apr. 21, 2022 6:18 AM ET5 Comments

    • HongKong Disneyland, owned by The Walt Disney (NYSE:DIS), will now be open for guests after three months, effective today, as the city's pandemic restrictions were relaxed with museums reopening and nighttime restaurant dining resuming as the worst COVID-19 outbreak appears to be fading.
    • Popular theme parks were ordered to close in January amid the new coronavirus wave.
    • The park has released guidelines for the park visitors which are expected to be followed as the city has not reached zero Covid-19 cases; 50% capacity has been permitted with vaccination proofs.
    • The easing of restrictions comes amid the people's frustration with the measures and that there must be balance between fighting the epidemic and resumption of normal activities.
    • Hong Kong reported 603 locally spread infections Thursday, down more than 99% from the peak of more than 30K in March.
    • SA Contributor JR Research recently wrote that returning to Pre-COVID days profitability will be challenging.

    PAA -0.52%Apr. 21, 2022 3:27 PM ET

    Plains All American (NASDAQ:PAA) (PAGP) and Atura Power signed a memorandum of understanding on Thursday to conduct a low-carbon hydrogen and subsurface storage feasibility study and front-end engineering design study related to the companies' operations in Windsor, Ontario.

    The companies said the prospective studies will analyze the technical and commercial feasibility for Atura to design, construct and operate a 20 MW electrolyzer adjacent to its Brighton Beach Generating Station and for Plains to provide subsurface hydrogen storage service at its nearby Windsor salt-cavern product storage facility.

    The start of the feasibility and FEED studies is contingent on receipt of Canadian federal grant funding, which is anticipated in Q2 2022.

    Plains All American (PAA) and Energy Transfer rank as "the strongest of the MLP Strong Buys," Samuel Smith writes in a bullish analysis published recently on Seeking Alpha.


  20. Apr. 21, 2022 2:25 PM ET70 Comments

    Here are the latest developments from the war in Ukraine:

    Russian oil production falls

    New data released by OilX and Bloomberg showed that oil production in Russia dropped by 1mb/d in early April. The evidence also pointed to an accelerated impact likely to take place from the war in Ukraine, as sanctions come into full effect.

    U.S. treasury secretary worries about supply chain

    U.S. Treasury Secretary Janet Yellen expressed concern about the global supply chain, which has shown strains amid the pandemic and pressure brought on by Russia's attack on Ukraine. Speaking at a press conference, Yellen said: "Our supply chains are not secure and they’re not resilient."

    Shell in talks to sell share in Russian project to Chinese firms

    Shell is in discussions to sell its stake in Russian gas export projects to China's state-run energy companies. According to Bloomberg, a potential deal would have Shell divest its 27.5% stake in the Sakhalin-2 LNG venture to CNOOC, PetroChina and Sinopec.

    Russia tests missile to send message to West

    The Russian military said Wednesday it successfully performed the first test of a new intercontinental ballistic missile, a weapon President Vladimir Putin said would make the West “think twice” before harboring any aggressive intentions against Russia.

    Russia's Defense Ministry said the Sarmat ICBM was launched from the Plesetsk launch facility in northern Russia and its practice warheads have successfully reached mock targets on the Kura firing range on the far eastern Kamchatka Peninsula. It said the launch was fully successful, proving the missile’s characteristics “in all phases of its flight.”

    Putin orders troops not to storm Mariupol

    Vladimir Putin ordered Russian forces not to storm the last remaining stronghold in the Ukrainian city of Mariupol, saying the city was "securely blocked."

    "Taking control of such an important center in the south of Mariupol is a success," Putin said Thursday in a televised meeting with his defense minister.

    “There is no need to climb into these catacombs and crawl underground through these industrial facilities,” he said. “Block off this industrial area so that a fly cannot pass through.”



  21. As shootings mount, anger that it’s ‘happening over and over’