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Big Tech Tuesday – MicroSoft (MSFT) and Google (GOOGL) gets the Ball Rolling Tonight

This Week's Top Earnings ReportsSo far, so good.  

ATVI missed by quite a bit yesterday and only fell from $79 to $78.  They are trading at about 20 times earnings and it's good to see that the market doesn't seem to consider that too much since that's on the low end of most stocks' valuations these days.  KO beat and went nowhere, WHR beat last night and has a pre-market bump this morning but MMM not getting love off their 15% beat while ADM is crushing it on their 25% beat.  

GLW is blasting higher, DHI is popping, GE is getting no love on their 20% beat, IVZ missed and is getting punished, JBLU beat but still losing 0.80 per $13.20 (now $12.80) share – so getting what they deserve.  NVS being punished for being inline, PEP down on a small beat, BPOP jumping (we just added them), RTX loving the war with a 10% beat but not getting loved back by traders, SHW flying higher on unexpected beat, UPS is humming along, VLO had a great Q – as expected and WBD (spun off from T) looks good in their first report.

It takes us a week or two to figure out how traders are likely to react and THEN we get to prognosticate over what we feel companies are likely to earn.  This early on it's just folly to bet on earnings as both the results and the subsequent reactions are total wildcards.  On top of that we have a fluid macro environment where, on any given day, Covid can be better or worse, the War can be more or less brutal, Inflation can be more or less brutal, etc…   

That makes it very difficult to make good calls, so we generally abstain.   Sometimes we catch over or under-reactions and those are fun to bet on but, so far, only the NFLX selling seems egregious and we're waiting for the dust to settle on that one still.   We shorted NFLX at $600 as that was silly but that doesn't mean $200 can't be silly as well – after all, $200 is $93Bn in market cap and NFLX makes $5Bn a year so we're talking 18.5x earnings and yes, they lost subscribers but it's down from EVERYONE signing up during the pandemic.  An optimist might even say they KEPT 90% of the new subscribers who signed up during the pandemic and they are miles ahead of the projections they had for subscriber growth in 2019.  

We can discount an entry into NFLX even further using options, promising to buy them for $150 by selling the 2024 $180 puts for $32, which would actually net us in for $148, which is another 29% below the current price.  That's a nice way to plant a flag in the stock if you like them as you either end up owning them for net $148 or, if they don't go lower – you keep the $32 for doing nothing more than promising to buy a stock you wanted to buy anyway.  Since your risk is $148 (and realistically we don't think NFLX is going bankrupt, do we?) $32 represents a 21% return in 20 months.  1% a month is better than money in the bank and you're not even taking the money out – just promising to….

Microsoft (MSFT) looks a bit too cheap at $280 ahead of earnings although that's $2.1 TRILLION in market cap. That does seem like a lot but the company made $60Bn last year and is on track to make $70Bn this year and expects to make $80Bn next year and you can see where this is heading as they race to catch up to AAPL's $100Bn in earnings – and AAPL has a $2,666,000,000,000 market cap that's also looking a bit too low – as crazy as that seems.

AAPL and MSTFs combined $5Tn market cap is what the entire S&P 500 were worth in 1996, just before the DotCom bubble.  We were only at $7.5Tn in March of 2009, but that was down from $13.5Tn at the highs.  Now, including our T-level players, the S&P is at the $27Tn mark in overall valuation – that's 500 companies "worth" 25% more than the GDP of the entire United States and its 330M people, whose average family incomes are 1/16,666,666th of just $1Tn.  

When you see numbers like that (as we did in 1999 and 2008), you have to wonder if that $27Tn is sustainable.  You see, no one actually put $27Tn into the market.  What happened is that last bunch of people who TRADED (like baseball cards) the stock certificates that represent the market caps of those 500 companies, TRADED them at a level that IMPLIES a valuation of $27Tn.  If in fact, those people were asked to ACTUALLY purchase those companies for $27,000,000,000,000 – you would quickly find out that they certainly don't have that kind of money.  

As you can see from this chart of Disposable Income – US Households don't even have enough money to pay their current bills – let alone buy Trillion-Dollar companies.  US Households are currently such a money pit that we are dragging the entire G7 average into negative territory but even Germany, our economic star (before the war), was only slightly on the plus side.  After 2 months of war and the ensuing inflation, we may all be in deeply the red!

The Money Cycle, Stock Market, And The Return Of The Inflation Premium -  This Chart Is Off The Scale | Seeking AlphaThat then brings us to valuation issue #2 – clearly we can't all be Elon Musk and buy companies the way normal people buy impulse items at the check-out counter but, according to the chart above and your own personal expericences – we also can't afford to buy the stuff these companies are selling.  Certainly not at these prices.  Inflation hits the economy in waves and the first wave is prices rise for whatever reason.  In our case, it's too much stimulus money sloshing around, Covid causing supply chain issues and then a war putting pressure on commodities – especially energy costs.  That's given us 8.5% inflation – probably over 9% now.  

When companies raise prices, at first people use their credit cards (negative disposable income) and then they find themselves forced to demand higher wages from their boss or they are forced to seek other jobs (the quitting cycle).   What we are getting so far from companies is the rising costs being passed on but it's still early in the labor cycle for them to be hit by those rising costs – so Corporate Profits are not terrible – yet.  

As noted on the chart above, we may be in the end game for Fiat Currency – hence the rise of Crypto and just this morning, Fidelity announced that you can now put your retirement money into BitCoins – isn't that insane???  Fidelity holds $2.4Tn in 401K accounts – about 1/3 of the total retirement market, which itself is terrifying because if you divide $7.5Tn by 165M workers that's only $45,000 each saved for retirement – but that's another gloomy article we can mull over later – when the Social Unrest begins.  

That should pop BitCoin back over $40,000 but we have better ways to make money like yesterday's trade ideas to go long on Gold (/GC) at $1,900, Silver (/SI) at $23.50 and Natural Gas (/NG) at $6.50.  This morning we are at $1,909 on /GC and that's up $900 per contract, $23.75 on /SI and that's up $1,250 per contract and /NG is at $7.03, which is up a lovely $5,300 PER CONTRACT - wasn't that easy?  

Congratulations to all who played along but remember – we only play the Futures when ALL the factors are lined up in our favor – which is hardly ever.  Futures trading is very dangerous so we look for turning points at strong support lines (like $6.50), which HOPEFULLY give us a chance to exit with small losses when they fail.  If our Risk is controlled then a nice Reward (like this one) tends to wash out quite a few mistakes on the way to a winning trade but the overriding key is only to trade when you are 80% certain – then you might be right half the time and the rest can be acheived with smart money management techniques.  

Oops, almost forgot to check Durable Goods, which were up 0.8% in March but that's below the 1% expected and very sad since February was -1.7% so net -0.9% for two month is NOT GOOD.  Home Prices continued to rise, however, up 2.4% from last month and 20.2% for the year with Miami, Phoenix and Tampa up around 30% and all accelerating so far this year but these are February numbers and it seems like rate hikes have put a damper on things in March – but that won't be confirmed until next month.

Consumer Confidence is out at 10:00 and we'll see how that looks.  Expectations are for a continuing downtrend to 105 from 107.2 last month but I think we're in for a bit of a steeper decline as you can see those Disposable Income numbers drying up – that's a glimpse into people's checkbooks, which is what they think about when answering these survey questions.  

 


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  1. Good Morning.


  2. Good morning!

    Looks like yesterday‘s gains are out the window already.  


  3. Phil / Earnings
    Any thoughts on earning plays for GOOGL or MSFT?
     



  4. Phil / SQQQ

    Should we look at rolling the SQQQ 2024 30C – 50 C spread to 2024 30C – 60C spread for 1.85 ?


  5. GOOGL/Jij – As noted above, it's too early in the cycle to have any idea how these guys are being affected by war, inflation, covid, supply chain – doesn't make sense to guess.  I imagine if NFLX saw pullback, YouTube might as well so GOOGL might take a hit but who wants to bet against them?

    SQQQ/Jij – I'm happy to spend $2 for $5 to go lower as we're buying intrinsic value so we're in the money but spending $1.85 for $10 is pretty speculative.  If we didn't have enough protection, I'd be for it but the $30/50 spread is $400,000 and currently showing net $108,000 so, if we do nothing, we have $292,000 of upside protection on that spread alone.  Spending $37,000 buys us another $200,000 of upside but I'm sure we can spend $60,000 to buy $200,000 AFTER we're sure things are getting worse – so no hurry.

    SQQQ Long Call 2023 20-JAN 25.00 CALL [SQQQ @ $46.53 $3.15] 100 3/24/2022 (269) $144,500 $14.45 $8.85 $21.15     $23.30 $2.05 $88,500 61.2% $233,000
    SQQQ Short Call 2023 20-JAN 60.00 CALL [SQQQ @ $46.53 $3.15] -100 1/25/2022 (269) $-131,600 $13.16 $-1.11     $12.05 $1.55 $11,100 8.4% $-120,500
    SQQQ Long Call 2024 19-JAN 30.00 CALL [SQQQ @ $46.53 $3.15] 200 4/7/2022 (633) $347,000 $17.35 $7.38     $24.73 $0.87 $147,500 42.5% $494,500
    SQQQ Short Call 2024 19-JAN 50.00 CALL [SQQQ @ $46.53 $3.15] -200 4/7/2022 (633) $-277,400 $13.87 $5.46     $19.33 $0.83 $-109,100 -39.3% $-386,500

    The $25/65 bull call spread is $350,000 at $60 and currently shows net $112,500 so that's got $237,500 to go but the $25s are $233,000 already so possibly at $250,000 we cash those up and THEN bump up the 2024 $50s to the $60s to cover the short Jan $60s and we try to work those off over time.  That would replenish our cash in the STP.

    The core of TZA is the 400 2024 $25/45 bull call spread so that's $800,000 at net $193,000 so we have $607,000 worth of protection there.  Then we have the 2024 $40/60 spread ($200,000) at net $30,500, which is just silly) and that's got $169,500 upside potential.  Then we have the 100 Jan $20s covering the 50 short July $40s and the 25 short 2024 $40s so that's another $200,000 spread at net $117,875 so net $82,125 upside potential there (though we'll work it to higher levels). 

    TZA Long Call 2023 20-JAN 20.00 CALL [TZA @ $37.40 $1.71] 100 2/1/2022 (269) $168,500 $16.85 $1.65 $7.89     $18.50 $0.60 $16,500 9.8% $185,000
    TZA Long Call 2024 19-JAN 40.00 CALL [TZA @ $37.40 $1.71] 100 3/10/2022 (633) $132,800 $13.28 $1.87     $15.15 - $18,700 14.1% $151,500
    TZA Short Call 2024 19-JAN 60.00 CALL [TZA @ $37.40 $1.71] -100 3/10/2022 (633) $-114,000 $11.40 $0.70     $12.10 - $-7,000 -6.1% $-121,000
    TZA Short Call 2024 19-JAN 40.00 CALL [TZA @ $37.40 $1.71] -25 11/16/2021 (633) $-21,000 $8.40 $6.75 $-15.99     $15.15 - $-16,875 -80.4% $-37,875
    TZA Short Call 2024 19-JAN 45.00 CALL [TZA @ $37.40 $1.71] -400 1/7/2022 (633) $-442,000 $11.05 $3.15     $14.20 - $-126,000 -28.5% $-568,000
    TZA Long Call 2024 19-JAN 25.00 CALL [TZA @ $37.40 $1.71] 200 3/23/2022 (633) $270,000 $13.50 $5.53     $19.03 $-1.00 $110,500 40.9% $380,500
    TZA Long Call 2024 19-JAN 25.00 CALL [TZA @ $37.40 $1.71] 200 3/31/2022 (633) $268,400 $13.42 $5.61     $19.03 $-1.00 $112,100 41.8% $380,500
    TZA Short Call 2022 15-JUL 40.00 CALL [TZA @ $37.40 $1.71] -50 3/31/2022 (80) $-15,000 $3.00 $2.85     $5.85 $0.07 $-14,250 -95.0% $-29,250

    So that's $1,388,125 in protection from just TZA and SQQQ and we bought back anything that can hurt us on those spreads.  Our $250,000 DIA spread is net $107,620 – another $150,000 can be picked up there and we already won on TSLA and CVX and TQQQ is just playing out so that's already in the STP total – though it's now $640,000 – up $100,000 since last week.  

    It doesn't do us any good to have these gains if we don't cash them so the Jan SQQQs and TZAs are both candidates for cashing out if we get a good price.  One of these days cashing them in will be a mistake and we'll have to put the cash right back into covers for the remaining short calls but, so far, it's been a great way to pump money into the STP.


  6. Actually it was $555,888 last Wednesday and now:

    Security Value:  $619,530
    Cash on Hand:  $20,621
    Total Value:  $640,151
    Portfolio Ret.:  220.1%

    We MUST raise cash so we can't let the market bounce back without taking advantage so the 100 SQQQ Jan $25s are my top choice – we should be able to get $25 ($250,000) for those and then we roll the 200 short 2024 $50s at $19.50 to 200 2024 $60s at $17.50 ($40,000) and also roll the 100 short 2023 $60s at $12 to the $70s at $10.50 for $15,000 more.  That would be net $195,000 back in our pocket and we'd still have the now $600,000 $30//60 spread 1/2 covered by short $70 calls which we'd work off in the usual fashion.  

    Keep in mind, since the net of the $600,000 spread is $108,000 + the $40,000 we're spending to roll it (and not counting the short calls), then it "only" costs us $72,000 to buy another $300,000 of coverage and we'll have that $72,000 easily in cash, ready to deploy.


  7. So a week ago, we spend $160,000 to get a bit more bearish on the STP as we were concerned.  It leaned us a bit more bearish and now we made a quick $85,000 so we lock it in by cashing in our deepest long call and that puts us back to $205,000 in CASH!!! (up from $180,000 last week) with a wider spread than we had before but back a bit more neutral with the short calls.  We can just snap our fingers and get more bearish again but, on the whole – this chart has gone NOWHERE – so why not take the money and run?

    • Dow 36,000 to 28,800 would be a 7,200-point drop with 1,440 bounces to 30,240 (weak) and 31,680 (strong).   
    • S&P 4,800 is 20% above 4,000 and that makes it an 800-point drop with 160-point bounces so 4,160 (weak) and 4,320 (strong).
    • Nasdaq is using 13,500 as the base.  14,100 is the weak bounce and 14,700 is strong.  
    • Russell 1,600, would be about an 800-point drop with 160-point bounces to 1,760 (weak) and 1,920 (strong)

    The RUT slipped below 1,920 so that's important to keep an eye on but I figure both 1,900 and 4,200 on /ES should be a bit bouncy – so it's a good time to grab cash on the Qs.  

    Good suggestion Jij!  


  8. Boeing Earnings: What to Look For


  9. And, if the Dollar ever stops going higher, maybe the indexes can bounce a bit:

     

        

     

           

    VIX 30!  That's giving us crazy numbers in our portfolios and also makes it a good time to sell puts and calls.


  10. Consumer Confidence was a beat at 107.3 – down just a bit from March.  Expectations are still dangerously low.    


  11. Does time really exist?





  12. Waiting for the stick save…




  13. /NQ wants 13,040. Maybe stick save afterwards. 



  14. case shiller Seattle had houses up 4.4% in a single month. Looks like a blow-off top for real estate. Mortgage rates didn't start to move over 4% until March (and case shiller is thru Feb).


  15. The I-bond rate is maybe going to 9.6% starting May 1. If you didn't buy these yet they are a no-brainer. If you can get in now you get the previous rate (7.12% rate) for six months and the next 6-month rate starting next week as well, so (7.12+9.6)/2 = 8.36% for the year. And they back-date to the 1st of the month, so if you buy it by 4/30 you get all of April of free. That's like $50 on $10k.

    treasurydirect.gov


  16. A Billionaires’ World


  17. New Lows – The Irrelevant Investor



  18. Stick failing so far, Pman, Kustomz.  

    You can always run a quick 5% check using the current move but keep in mind it's less accurate when we have fewer data points:

    Still, it lets you know whether a bounce means anything.  And we do know that 13,500 is our base and 14,100 is the bounce and that means that 300 and 600-point lines are going to be significant on /NQ so really this zone should be 13,500 to 13,200 and 12,900 so we're failing 13,200 on the way to 12,900.  Assuming 13,500 to 12,900, the weak bounce would be 120 (13,020) and the strong would be 13,140 – that's what's actually in play in the bigger picture.

    Case-Schiller/BDC – Hard to say what I hope for.  Housing prices out of control but this is what gave my parents their retirement in the 80s – bought a $60,000 house in 1976 and sold it for $350,000 in 1985 and then the next house also went up a ton.  That saved that whole generations' retirements and pumped a ton of money into the economy - so it wouldn't be a terrible thing if it happened again.  

    Bonds are starting to be fun.

    Dollar so crazy

    Biden!  

    Do you know how F'd we'd be on inflation if the Dollar wasn't up 13.5% in 2 years?

    We'd be as screwed as these guys:

    Or the Swiss – the algo can't draw a chart low enough to cover them:

    Failed state:

    Brexit working so well so far:

    And China just announced some easing measures.  They still have that looming property meltdown.


  19. Phil $DXY there can only be one!


  20. TWTR -2.59%Apr. 26, 2022 2:25 PM ET5 Comments

    Trump SPAC Digital World Acquisition (NASDAQ:DWAC), which is taking Trump's social media platform public, rebounded after Monday's drop and gained 12% amid reports that Trump plans to say off of Twitter (NYSE:TWTR) even with an Elon Musk takeover.

    Trump also told Fox and CNBC on Monday that he planned to post on his Truth Social media platform in the coming days after he has largely been absent since its launch.

    Truth Social was also listed as the No. 1 app in Apple's App store after it originally held the same spot when Truth Social launched in late February. Trump, who has been banned from Twitter (TWTR), Facebook (FB) and Google (GOOGL), is marketing Truth Social as an alternative outlet to those social-media giants.

    “No, I won’t be going back on Twitter,” Trump told CNBC’s Joe Kernen on Monday.

    “I will be on Truth Social within the week," Trump told CNBC. "It's on schedule. We have a lot of people signed up. I like Elon Musk. I like him a lot. He’s an excellent individual. We did a lot for Twitter when I was in the White House. I was disappointed by the way I was treated by Twitter. I won’t be going back on Twitter."

    Although Trump said he plans to be on Truth Social soon, Trump has privately "fumed" about the rollout of Truth Social and has "mused" about joining a competitor such as Gettr, according to a Washington Post report earlier this month. Trump was said to be reluctant to post to Truth Social because "it is not ready for prime time".

    DIS -2.55%Apr. 26, 2022 1:58 PM ET10 Comments

    • Disney stock (NYSE:DIS) is down 3.2% amid today's market downdraft – and it's shed 11% of value since the Good Friday market holiday, a period during which Florida moved quickly in putting an end to the special tax district under Disney World.
    • That district, the Reedy Creek Improvement District, had been created decades ago and granted Disney autonomy in providing essential services to Disney World without burdening local residents with the cost (or burdening Disney with extra regulation).
    • While there are different ways for the event to play out, Deutsche Bank answers a number of client calls by saying it doesn't see Disney suffering harm.
    • The deal has marked a symbiotic relationship between Disney World and Florida's Orange County (and to a smaller extent Osceola County), analyst Bryan Kraft says: Disney's won full control of construction, maintenance and operation of its park, and the county has spared its residents the cost and benefited from the Disney economic boom.
    • But now what? If Orange County absorbs the district, "it would mean … a 15-20% average property tax increase for residents. That is an enormous tax burden to suddenly put on residents when the system in place today has Disney bearing all of the costs," Kraft writes.
    • The County would also need to assume the district's financial obligations, including a $1 billion bond (marking a 167% increase in the county's indebtedness).
    • "Contrary to media reports that Disney enjoys 'special tax benefits' from the Reedy Creek Improvement District, Disney does not," he says, noting repealing the district doesn't trigger new taxes. The detriment for the company is the lack of autonomy in managing Disney World. But Disney doesn't have similar arrangements at other theme parks, and "those locations seem to be doing just fine."
    • A lot has yet to play out before the law takes effect in June 2023, and Kraft argues both Disney and the County are "highly motivated" to maintain the status quo somehow – perhaps through a new agreement.
    • Ultimately, it means no material negative outcome and perhaps a positive development for Disney, Kraft says.
    • Recently, operations have ramped back up at Hong Kong Disneyland after a three-month shutdown.

    In the LTP, we have 5 short DIS 2024 $130 puts we sold for $16 and are now $26.  $116.50 is $218Bn and DIS drops about $10Bn to the bottom line, maybe $8Bn this year as they recover.  I was comfortable with a net $114 entry and still am so let's sell 5 more of the 2024 $130 puts and let's buy 20 of the DIS 2024 $120 calls for $21.50 and, if DIS goes lower, we're happy to roll the puts to 2025 and we're very happy to roll the long calls down to the $100s (now $35) for $10 or less and DD on those but, for now, let's go aggressive.

    In the Butterfly Portfolio, it's going to take longer than we hoped to recoup on the short June puts so let's roll those ($100,800) to 30 of the 2024 $140 puts at $32.20 ($96,600) 

    DIS Long Call 2024 19-JAN 130.00 CALL [DIS @ $116.66 $-3.29] 50 3/21/2022 (633) $135,250 $27.05 $-10.10 $20.86     $16.95 $-1.31 $-50,500 -37.3% $84,750
    DIS Short Put 2022 17-JUN 150.00 PUT [DIS @ $116.66 $-3.29] -30 4/14/2022 (52) $-63,900 $21.30 $12.30     $33.60 $2.75 $-36,900 -57.7% $-100,800

    That leaves us with the long $130s and the $120s are $21.50 so $4.55 is a yes for a roll and the $110s are $26, another yes at $4.50 more and the $100s are $32 and that's a no at $6 so we roll the $130s to the $110s for now and cover later.  Should we be wrong, then we sell the $110s to another sucker for let's say $22.50 and we roll our $22.50 calls to the $75s, which are now $50 but should be more like $45 and that puts us in a $75/100 bull call spread for the same +$45,000 we're paying now.  That would be a $175,000 spread that pays us at $110 and, we put $135,250 in initially but we already made money on short calls and we'll make more along the way.

    Only one/Kustomz – Apparently so.  Apparently a lot of people are trying to make BTC that one still.  


  21. Very expensive day for Musk.

    And right after all those idiots were talking $4,000/share…

    CMG not getting a lot of faith into earnings:

    WBD -5.91%Apr. 26, 2022 1:06 PM ET55 Comments

    WBD logo

    Warner Bros. Discovery (NASDAQ:WBD) is turning the page with today's first-quarter earnings, covering a quarter that ended just before Discovery merged with WarnerMedia to launch a new media powerhouse. So the financials were only going to be so valuable compared with commentary about what's next.

    The company's earnings call Tuesday provided that in spades, including some pointed criticism from the new Discovery overlords about what they have found looking behind the curtain.

    WBD says it's cutting profit expectations for 2022, which will "undoubtedly be a messy year," Chief Financial Officer Gunnar Wiedenfels said.

    The stock is off its session lows (on a day when the market is sinking as a group), but is still lower by 4.3% on Tuesday.

    Wiedenfels largely got to play bad cop in the call, as new CEO David Zaslav said he was "impressed by the strong sense of motivation and excitement" and that the merged entities have now emerged as a "far more balanced and competitive company." And while Wiedenfels intended to focus on Discovery's Q1 results, he spent ample time setting analysts up for the road ahead.

    "Starting with the bad news, Q1 operating profit and cash flow for WarnerMedia were clearly below my expectations," he said. "And given that Q1 performance and previously unplanned projects in sight, I currently estimate the WarnerMedia part of our profit baseline for 2022 will be around $500 million lower than what I had anticipated – however, with the positive offsets of a couple of hundred million dollars on the Discovery side of the combined company."

    He also sees opportunity, though: "There are certain investment initiatives underway in plain sight that I don't think have attractive enough return profiles. As such, and with our new combined leadership team in place out of the gate, I feel very confident in our ability to rectify some of the drivers behind the business case deviations and some very quickly, with the CNN+ decision last week being Exhibit A."

    Zooming in on cash flow trends in response to a question, Widenfels was more critical, noting if you carve out WarnerMedia over the past 15 months, "we're looking at more than $40 billion of revenue and really virtually no free cash flow."

    "And right or wrong, management has made a decision to invest a lot of the incoming funds into a number of investment initiatives. And as I'm looking under the hood here again, CNN+ is just one example, and I don't want to go through sort of a list of specific examples, but there's a lot of chunky investments that are lacking what I would view as a solid analytical, financial foundation and meeting the ROI hurdles that I would like to see for major investments," he continues.

    Turning to streaming optimism, Zaslav said the 18 days as a new company so far hasn't changed the streaming thesis with which Discovery entered the deal: "If anything, maybe more enthusiasm around sort of the ability to control one of the most important metrics, which is churn by the combination of these two phenomenal content portfolios and the great work that the teams are doing here." He's alluding to a combined major Discovery/HBO streaming app likely to come in 2023 – and the company began winding down marketing its Discovery+ offering already in Q1.

    In AT&T's earnings report (covering WarnerMedia's Q1), it noted HBO and HBO Max had 76.8 million subscribers at quarter's end.

    Wiedenfels says there is "meaningful churn on HBO Max, much higher than the churn that we have seen," adding that because Discovery has been at it in Europe for eight years, "as we begin to manage churn in a meaningful way, that provides a real meaningful growth."

    WBD will look to shake up streaming with its combined efforts – and Nielsen's latest look at share of television time shows streaming has bumped up to a new high in terms of how much time viewers are spending on the services.

    GE -10.48%Apr. 26, 2022 12:42 PM ET15 Comments

    General Electric (NYSE:GE-11%, slightly off lows that sent shares to their lowest since February 2020 on Tuesday, after executives said they expect the supply chain disruptions that weighed on Q1 results will continue into Q2.

    On its earnings conference call, GE (GE) said it expects adjusted free cash flow will remain negative in Q2 but improved from the negative $880M reported in Q1.

    Discussing the "challenging market environment," CEO Larry Culp said "supply chain issues, the Russia-Ukraine war and China COVID impacts adversely affected revenue in the quarter by about six percentage points."

    CFO Carolina Happe credited the Y/Y improvement in free cash flow to lower interest expenses, derivatives on reduced debt and improvement at the company's Aviation and Power units, offset by "significant headwinds" including supply chain disruptions.

    The effect of supply chain disruptions on the continued recovery in commercial markets with be a "key watch item" this year for the Aviation unit, which will be GE's focus after the company separates into three independent companies, CFO Carolina Happe said.

    Aviation's Q1 revenues jumped 12% to $5.6B while segment profit rose to $908M, and GE said it expects demand in the division will remain strong despite uncertainty from China's COVID-19 shutdowns and supply chain problems but it forecasts revenue growth of at least 20% for the year.

    Q1 revenues at GE Healthcare edged 1% higher to $4.4B but segment profit fell 23% to $538M, as parts shortages slowed delivery of medical scanners, while Power unit sales slid 11% to $3.5B.

    Sales in the renewables division slumped 12% with a $434M operating loss, as GE (GE) said its U.S. onshore wind business was hurt by policy uncertainty around tax credits and deferred customer investments, and the unit was hurt by rising prices for materials and logistics.

    Today's dismal showing by GE shares comes as Q1 earnings topped estimates, but the company sees full-year earnings at the low of its previous forecast of $2.80-$3.50/share.

    Corning (GLW) showed midday strength following the release of its quarterly report. The company breezed past expectations with its Q1 profit, with revenue climbing 12% from last year.

    GLW also raised its forecast for 2022, saying it now projects a top-line figure above $15B. Based on the financial figures, shares rose more than 4% in intraday trading.

    SAN -8.86%Apr. 26, 2022 12:31 PM ET

    Banco Santander (NYSE:SAN) stock is dropping 9.7% in midday trading even after the bank posted Q1 a 9.4% Y/Y increase in underlying profit before tax.

    "Looking ahead, while inflation will affect the pace of global economic growth, with specific impacts varying across our regions and businesses, we are reiterating our 2022 targets, illustrating the benefits of our business model," Executive Chair Ana Botin said in a statement.

    2022 financial targets: Revenue growth in mid-single digits, efficiency ratio at 45%, return on tangible equity of more than 13%, and fully loaded common equity tier 1 ratio of 12%.

    It also reaffirmed its capital return policy to pay out 40% of it its underlying to shareholders, evenly split between cash dividends and stock buybacks.

    Q1 net interest income of €8.86B ($9.45B) rose 1.6% Q/Q and 11.3% Y/Y. Q1 net fee income of €2.81B rose 4.5% Q/Q and 10.4% Y/Y.

    Total revenue of €12.3B rose 4.5% Q/Q and 8.0% Y/Y.

    Inflationary effects, particularly in South America, drove an overall increase in costs (+4% in constant euros). But in real terms costs fell by 3% as the bank "continued to improve productivity and connectivity across markets," the company said.

    Q1 net loan loss provision of €2.10B jumped 44% Q/Q and 6.6% Y/Y.

    Underlying profit before tax of €4.17B climbed 9.0% Q/Q and 9.4% Y/Y.

    Earlier, Banco Santander (SAN) GAAP EPS of €0.141

    ADM -0.57%Apr. 26, 2022 12:29 PM ET

    Archer-Daniels-Midland (ADM +3.5%) company is going against the grain on a down day for markets, gaining ground after a beat on earnings and bullish commentary on supply chain shocks.

    The Chicago-based food processing and commodities trading corporation reported Non-GAAP EPS of $1.90 for the first quarter, far surpassing expectations set at $1.41. Revenue also dwarfed estimates, as the reported figure of $23.65 billion was $3.04 billion above the bar set by Wall Street. The big beat was only bolstered by management commentary that noted that supply disruptions and poor crop yields globally will remain conducive to the company’s bottom line for the foreseeable future.

    “Looking forward, we expect reduced crop supplies — caused by the weak Canadian canola crop, the short South American crops, and now the disruptions in the Black Sea region — to drive continued tightness in global grain markets for the next few years,” CEO Juan Luciano said. “Longer term, markets continue to reflect the importance of the enduring global trends that are fueling performance across our portfolio by driving demand for our products.”

    The Ag Services & Oilseeds segment was cited specifically for its outperformance, with operating profits from business increasing over $200 million from 2021. The Human and Animal Nutrition subsegments were also noted for strength, offsetting some cost increases and supply chain disruptions that impacted the overall business.

    With weather impacts still taking their toll on South American crop yields and raising prices for numerous food products, including corn and soybeans, and two of the world’s top five wheat exporters effectively cut off from western markets, the geopolitical setup for Archer-Daniels-Midland (NYSE:ADM) appears incredibly encouraging. In short, adverse impacts on supply chains and security across the globe are conversely positive for ADM.

    Shares gained nearly 4% in mid-day trading. The stock has soared nearly 40% since the start of the year, far outpacing the S&P's double-digit negative returns.

    For a contrarian take, read why Bank of America is more bearish on ADM moving forward.


  22. KSS -1.72%Apr. 26, 2022 12:24 PM ET1 Comment

    Kohl's (NYSE:KSS) 1Q estimates and price target were cut at Morgan Stanley, which noted weak Q1TD traffic with KSS "notably" underperforming its peers. Kohl's fell 1.4%.

    KSS looks to be "significantly" lagging department store peers with Q1TD traffic down 1% y/y while peers have shown "meaningful" gains, including Nordstrom (JWN) +32%, Macy's (M) +25% and Nordstrom Rack +14%, Morgan Stanley analyst Kimberly Greenberger wrote in a note earlier.

    Greenberger, who has underweight rating on KSS, cut her PT to $42 from $50. She trimmed KSS Q1 revenue estimate to 0.5% from 1.5% and lowered EPS to 70c, below consensus of 72c.

    Kohl's shares are currently around $59.60, buoyed by reports about KSS's sales process and the stock gained 5.3% on Monday after a NYPost report that Simon Property (SPG) and Brookfield Asset Management (BAMmade a $68/share offer for the department store chain.

    Greenberger, who has a KSS bull case of $72/share, sees potential for downward pressure in the shares to her price target of $42 if Kohl's decides against a potential sale or absent a "notable" change in trends or strategy.

    The report on Simon Property (SPG) and Brookfield (BAM) came after Kohl's (KSS) on Thursday disclosed that its adviser Goldman Sachs has engaged with over 25 parties as part of the company's evaluation of strategic alternatives.

    PYPL -2.59%Apr. 26, 2022 12:10 PM ET11 Comments

    PayPal (NASDAQ:PYPL) is scheduled to announce Q1 earnings results on Wednesday, April 27th, after market close.

    The consensus EPS Estimate is $0.88 (-27.9% Y/Y) and the consensus Revenue Estimate is $6.41B (+6.3% Y/Y).

    Over the last 2 years, PYPL has beaten EPS estimates 75% of the time and has beaten revenue estimates 63% of the time.

    Over the last 3 months, EPS estimates have seen 1 upward revision and 29 downward. Revenue estimates have seen 1 upward revision and 25 downward.

    Baird noted a consensus earnings estimate of $0.89 per share on revenue of $6.40B. The firm said investor sentiment going into the company's earnings release has 54% expecting an earnings beat.

    Baird added that it has been cautious on the near-term set-up for shares and have highlighted that the 2022 guidance likely does not factor in a worsening macro backdrop.

    The firm still sees potential for a more favorable set-up into 2H-22 as comps ease and if the macro-outlook clears up a bit.

    On Feb. 1 the company reported its Q4 results and provided Q1 guidance, expecting Q1 adjusted EPS of ~$0.87 and revenue to increase ~6% on a spot basis, with revenue, excluding eBay, to rise ~14%.

    Baird noted that the short interest has increased by 15.5% since the company's last earnings release while the stock has drifted lower by 38.5% from its open following the earnings release to be 57.2% below its 200 day moving average of $201.08.

    PayPal's stock had declined -24.59% on Feb. 2, the day after it reported its Q4 results on Feb. 1 post-market. The company beat revenue estimates but missed on Non-GAAP EPS.

    The chart below shows 6-month price return performance of PYPL and peers Block, Fiserv and Global Payments:

    Earlier in April, Oppenheimer noted that Amazon's move to roll out a "Buy with Prime" button on third-party websites is likely to directly compete with PayPal (NASDAQ:PYPL) for smaller merchants.

    Truist had echoed similar concerns. Truist analyst Andrew Jeffrey cut the price target for PayPal (PYPL) to $115 from $130 as he thought the fintech payment company is losing market share from new "buy buttons."

    The company has been amid an internal restructuring for cutting spending. PayPal laid off its research team specializing in emerging technologies widely considered as fast-growing areas. Meanwhile, CFO John Rainey is also leaving the company at the end of May to join Walmart as CFO.

    Mizuho Securities had said, "PayPal's CFO departure is not surprising following a period of overpromising and under-delivering, and given the stock's 65% decline from the peak."

    PayPal (PYPL) President and CEO Dan Schulman had received $32.07M in total compensation in 2021, up from the $23.36M he received in 2020.

    In March, Bank of America Securities analyst Jason Kupferberg downgraded PayPal (PYPL) to Neutral from Buy on the back of the company embarking on a strategic pivot and working on newer growth initiatives while facing macro headwinds related to Russia/Ukraine.

    PayPal (PYPL) stopped accepting new users in Russia, while at the same time enabled users to send money to residents in Ukraine, as well as those now refugees across Europe amid Russia's invasion of the country.

    In February, PayPal (PYPL) formed an advisory council to support digital asset-related products and create a digital financial system. In March, PayPal (PYPL) and Venmo raised fees on cryptocurrency trades of up to $200.

    LYV -1.13%Apr. 26, 2022 12:05 PM ET1 Comment

    Rosenblatt has initiated coverage of Live Nation Entertainment (NYSE:LYV), pointing to a "post-COVID" boom in live events that will last "years."

    The coming year looks very strong for the company, analyst Barton Crockett says, pointing to event-related deferred revenue that's nearly doubled the fourth quarter of 2019, at $2.3 billion; confirmed show bookings that are up 30%; and presales of 45 million tickets through mid-February (about 45% above the comparable time period in Q4 2019).

    The boom means "the debate over whether this demand is temporary will not be had for a long time," Crockett says. "When this debate does happen, it will be answered favorably, we assume, based on a solid trajectory entering the pandemic."

    Seasonality for the first quarter will be different, considering some arena shows normally in Q1 are pushed to the second and third quarters for a "more favorable COVID backdrop, a wager that seems to be working." But 2022 looks very strong, and the early 2023 read is "robust" – with some 40 shows confirmed or in the pipeline vs. a more typical 4-5 at this point in the schedule.

    Crockett is expecting double-digit growth long-term; Live Nation sees the industrywide business trending up by high single digits, and sees itself taking share by leveraging its scale (including working with artists to more efficiently price primary sales to grab share from secondary sales).

    The firm expects compound annual growth in revenues over 12 years (2019-2031) at 13%, with a 15% CAGR in adjusted operating income and 17% CAGR in free cash flow per share.

    A 10-year view that assumes Live Nation can retain a premium value is discounted to a price target today of $138, implying 27% upside.

    IN recent wins, last month Live Nation won a four-year extension of its ticket deal with the National Football League.

    WM +5.58%Apr. 26, 2022 11:57 AM ET4 Comments

    Waste Management (NYSE:WM+5.5% on Tuesday after easily beating expectations for Q1 adjusted earnings and revenues, which rose 13% Y/Y to $4.66B.

    Q1 net income rose to $513M, or $1.23/share, from $421M, or $0.99/share, in the year-earlier quarter, and adjusted operating EBITDA jumped 11% Y/Y to $1.29B.

    Q1 sales by segment: Collection +11% Y/Y to $3.08B, landfill +15% to $1.05B, transfer +4.5% to $486M, recycling +32% to $453M.

    Q1 collection and disposal yield rose to 5.5% from 2.8% a year ago, while total company volumes increased 3.6%, compared to a 3.3% decline in the year-earlier quarter.

    Q1 free cash flow was $845M compared to $865M in the prior-year period.

    "The key leading performance indicators within our business, such as special waste volumes, construction and demolition volumes, and new business formation, point to continued strong economic activity and business performance for the balance of the year," President and CEO Jim Fish said.

    Waste Management's (WM) price return fell ~1% YTD but rose 21% during the past year.

    LIT -4.52%Apr. 26, 2022 10:41 AM ET22 Comments

    The Global X Lithium & Battery Tech ETF (NYSEARCA:LIT) has stumbled to an eleven-month trading low, with the exchange traded fund plunging 13.3% since Apr. 20.

    Additionally, the ETF has concluded lower in all four of its last sessions and appears to be on pace for a fifth straight down day, showing a performance of -3.7% early Tuesday.

    Lithium battery technology is critical to the operation of electric vehicles, renewable energy storage and mobile devices. LIT aims to invest in stocks that are a part of the lithium cycle, including mining, refinement and battery production.

    LIT has not only dropped of late, but the ETF is also down 26.6% in 2022 and off 35.4% from its record trading high in late Nov. 2021.

    From a fund flow stance, the ETF has also watched $114.2M exit the door, leaving LIT with $4.17B assets under management.

    The ETF has a 0.75% expense ratio and is built of 41 holdings led by Albemarle Corporation (ALB), Tesla (TSLA) and TDK Corporation (OTCPK:TTDKY). These stocks are weighted at 11.88%, 7.32% and 5.73%, respectively.

    LIT's early decline Tuesday came alongside the Nasdaq Composite, which fell 2.1% in early trading.


  23. Should get a stick here otherwise its doom


  24. Doom it is.  


  25. So it is….


  26. major risk off! 


  27. Good morning!

    Doom held off I guess….