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Federally Fueled Thursday – Don’t Get Excited!

"You try to reach a vital part of me

My attention span is dropping rapidly

It's all excuses baby, all a stall

We just don't get excited

Don't get excited" – Graham Parker 

What are we, children?

First we endure two weeks of Fed speakers saying they think they might want to hike rates by 0.75% and then we treat Powell like our savior because he says 0.75% rate hikes are off the table – BUT 0.5 rate hikes are likely for each of the next two meetings.  I'm pretty sure that 0.5% + 0.5% + 0.5% is more than 0.75% – twice as much, actually, yet the market reacted like the Fed just CUT rates.  Powell is certainly the master of managing expectations…

Meanwhile, in reality world, the the BoE is experiencing everything the Fed fears:  A divided policy decision (+0.25), Upside Inflation Risks, Downside Growth Risks, Inflation at 10.2%, GDP contracting in 2023.  That timid rate decision sent the Pound plunging 1.5% this morning – the World's worst-performing currency – including Rubles.

With $32.5Tn in debt and a $2.2Tn deficit, the Dollar is the World's best-performing currency this year and that doesn't mean the Dollar is great – it just means the rest of the World is an even bigger disaster than we are.  So yay US, I guess…

We were thrilled to see our Long-Term Portfolio (LTP) gain 10% on Powell's speech but then we gained another 5% into the close and that was just silly.  Not that we're complaining, thank you Mr. Powell, but we do know that this rally was based on BS and the volume (140M on SPY) was not at all impressive after 1.1M shares traded on the way down from 447 on the 20th to yesterday's 417 open (6.66%).  Now we're back to 429 – half recovered and, as we expected in yesterday morning's report, now we'll have to wait to see what sticks.

As you can see from the chart, that's half of our RECENT drop that we recovered, not half of the 20% retrace from 4,800 to 4,000.  And, I say retrace, not drop as a DROP would be 0.2 x 4,800, which is 960 points to 3,840 but, according to our 5% Rule™, 4,000 is the correct major support for the S&P and 4,800 was simply an overshoot by traders who did, in fact, get too exited.  That means the move back to 4,000 is a CORRECTION – meaing we are heading back to the correct level – it may be quite a while before we see 4,800 again.  

If 4,000 is our correct level then our correct trading range is likely to be 3,200 to 4,800 (20% either way) for years to come.  I don't think we'll see 3,200 unless Putin does something very naughty or Covid comes back hard because the Fed and our soon to be elected Government are very unlikely to let that happen and, since Biden has cut the Defict to $2.2Tn from $3.5Tn last year – we've got $1Tn left to play with for emergencies. 

Some might say that running even a 10% of your GDP deficit is probably unsustainable but those people understand finance and are not welcomed in our Government anymore.  

My favorite indicator, other then our LTP/STP, to see if we are feeling the market correctly, is our Money Talk Portfolio, which we don't touch unless we're appearing on the show (which I will be soon).  February 16th is the last time we made changes to that portfolio and we were up 140.9% at the time, when we adjusted BYD, INTC and SPWR and, unfortunately, added LABU, which is dragging down the portfolio at the moment.  

The S&P 500 was at 4,455 that morning and this morning we're at 4,255, down about 5% but the untouched portfolio is at $247,354, up 147.4% from our $100,000 start back on November 13th, 2019 – right before Covid hit.  Here's a quick look at where we stand on those positions:

LABU is, in fact, our only net loss out of 10 positions so we'll take 90% and I think Biotech is ridiculously oversold.  We played this quarter defensively (and it's now obvious why) but, if we can retake that strong bounce line at 4,320 – I'd be inclined to get a bit more aggressive with our $145,000 cash pile.  If we fail to hold 4,000 however – I'll be looking to cash out and switch to a pure short-put strategy until we see a market bottom.  

LABU, for example, has a net $10,330 loss but we can kill that position and flip to selling 20 of the 2024 $10 puts for $5 ($10,000) and then we get our money back if LABU just gets back over $10 in two years.  You can apply that strategy to winning positions as well, where your worst case is owning stock AFTER another 40% drop and that's how we set up the first leg of our next round of trades – if we are going to get defensive.  

We'll see what levels stick after tomorrow's Non-Farm Payroll Report.  Losing that weak bounce line (4,160) on the S&P will get us quickly back to hedging but, as long as we can hold it – hope springs eternal.

 


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  1. Good Morning.


  2. An Unnatural Disaster: How the Government Helped White Americans Steal Black Farmland



  3. Good morning! 

    Yikes, we're giving back yesterday's BS gains already.  

       

    Oil back over $110 reminding us WHY the Fed needs to aggressively tighten:

        

    UK's wimpy rate cut spiked the Dollar.

    What is it good for?

    Moscow is seeking to disrupt deliveries of Western weapons as its offensives in the east of Ukraine appear to have stalled.155 5 min read

    Investors seeking shelter from volatility are turning to a part of the markets that had largely been overlooked last year.48 4 min read

    If that's true then why is our Dividend Portfolio flat since last month?


  4. I don't think people have noticed that Musk is stacking his Twitter board with yes men.  This is going to get crazy.   Elon thinks he can be CEO of TWTR, TSLA and SPACE at the same time – sell all 3 if that's the case.  3 ships with a 1/3 captain who spends half his time on Social Media….

    • Highest since 2009 levels, 30-year fixed-rate mortgage averaged 5.27% with an average 0.9 point for the week ending May. 5, 2022, up from last week when it averaged 5.10%; higher than 2.96% a year ago, according to the Freddie Mac Primary Mortgage Survey.
    • 15-year fixed-rate mortgage averaged 4.52% with an average 0.8 point, up from last week when it averaged 4.40% and a year ago at this time, the 15-year FRM averaged 2.30%.
    • 5-year Treasury indexed hybrid adjustable-rate mortgage averaged 3.96% with an average 0.2 point, up from last week when it averaged 3.78% and a year ago at this time, the 5-year ARM averaged 2.70%.
    • Mortgage applications increased for the first time since early March, with a 4% gain in purchase activity offsetting another decline in refinances.
    • Last week, Redwood Trust CEO indicated that mortgage rates may soon eclipse 6% highest level in over a decade.

    That's key – the mortgage rates are a serious forward forecast – as we were discussing in yesterday's webinar.  They took in yesterday's Fed Meeting and Powell's comments and decided the path is still going higher – end of story. 

    ROFL – Check out the 30-year:

       
       

    The old Drinking Giraffe pattern.  

    Harsh:  

    EAT +2.16%May 05, 2022 10:10 AM ET

    IHOP and Applebee’s parent Brinker International (NYSE:EAT) is fielding tougher takes from analysts on Thursday.

    Shares of the Dallas-based restaurant operator traded in a volatile manner on Thursday morning after a double-digit dive after earnings on Wednesday. For the quarterly print, the market reacted poorly to squeezed margins as commodity and labor costs continue to grow.

    Reflecting this reaction, Evercore analyst David Palmer downgraded shares to “In-line” from the previous “Outperform” rating. Additionally, he cut his price target from $60 to $40 on the persistent headwinds pressuring earnings.

    “Even with a solid on-premise sales recovery and upcoming pricing, we now see restaurant margin for [fiscal year 2023] remaining below pre-COVID level and Brinker’s stock as likely “dead money” in the near-term,” he wrote. “While our new price target does suggest some upside, we believe the stock is likely range bound until input costs ease or the on-premise recovery accelerates.”

    While he added that demand remains strong and price increases do not appear to be dampening this trend, the weak margins relative to pre-COVID levels are likely to hang over shares.

    Outside of the specific path forward for Brinker International (EAT), Palmer pointed to important implications for other restaurant chain operators, including Texas Roadhouse (TXRH) and Darden Restaurants (DRI).

    He noted that Brinker is more sensitive than its peers to poultry prices, which have accelerated more quickly than beef costs. He added that beef inflation is expected to moderate more quickly as avian flu outbreaks impact poultry and stalls any expected return to normalcy in pricing.

    As a result, Palmer rated shares of both Darden (DRI) and Texas Roadhouse (TXRH) “Outperform” on the undue punishment they received in light of Brinker’s (EAT) struggles.

    Read more about the expected earnings results from Texas Roadhouse.

    May 05, 2022 10:06 AM ET

    After a banner year for M&A, debt issuance, and equity markets in 2021, bankers are likely to see bonuses decline this year as investment banking activity falls sharply, according to a report from compensation consulting firm Johnson Associates.

    The firm sees moderating investment activity denting 2022 incentive compensation. Investment and commercial banking profits are down, asset management incentives are expected to slip on declining markets, private equity bonuses are seen flagging on slower fundraising and fewer realizations, and hedge funds bonuses are expected to stay flat.

    Add onto that the highest inflation in 40 years. "For the first time in decades, inflation has significant impact on real compensation outcomes," the report said.

    Investment Banking underwriting faces the biggest swoon in incentive compensation, with projected bonuses expected to fall 35%-40% from 2021. Investment Banking advisory is next worse, projected to slide 15%-20%.

    Sales & Trading bankers are the ones expected to get bonuses exceeding 2021. Fixed income bonuses are projected to climb 15%-20%; equities are seen rising 5%-10%.

    Traditional Asset Management & Alternatives:

    • Asset Management: -10% to -15%
    • Hedge Funds: flat
    • Private Equity: Mega flat; Mid/Large -5% to -10%
    • High Net Worth: -10%

    Investment & Commercial Banking:

    • Firm Management: -10% to -15%
    • Corporate Staff: -5% to -10%
    • Investment Banking: Advisory -15% to -20%; Underwriting -35% to -40%+
    • Sales & Trading: Equities +5% to +10%; Fixed Income +15% to +20%
    • Retail & Commercial Banking: -5%

    Johnson Associates also predicts that the "war for talent" will moderate and headcount will remain flat or decline as banks seek to control expenses. However, selective hiring in high-end technology is expected to continue.

    See which banks rank highest in SA's stock screener.

    From mid-2021 through early 2022, many banks boosted pay for their junior bankers in an effort to hold onto talent.

    Which then leads to a decline in luxury goods sales.

    USO +1.27%May 05, 2022 9:23 AM ET56 Comments

    • Biden is seeking offers to refill the strategic petroleum reserve "SPR", the administration told CNN Thursday.
    • The news hit Thursday, literally minutes after IEA chief Birol said "we can release more oil if needed."
    • The update from the White House is long dated, with 60mb to be refilled in "unspecified future years."
    • The White House has thus far announced plans to release 180mb from the SPR this year.
    • The refill is a logical step, and shouldn't come as surprise; however, the timing and mixed-messaging from the US and IEA are likely to support crude prices (NYSEARCA:USO), and in fact, oil prices (CL1:COM) jumped ~$1.00/b as news hit the wire (XLE).


  5. K +3.74%May 05, 2022 9:04 AM ET1 Comment

    The Kellogg Company’s (NYSE:K) ability to offset supply chain and inflation pressures is pushing shares higher on Thursday.

    The Battle Creek, Michigan-based food company reported non-GAAP EPS of $1.10, coming in $0.17 above estimates, while revenue of $3.67 billion beat expectations by $80 million. Moving forward, management raised its guidance for organic-basis net sales growth by 100 basis points and affirmed its outlook for operating profit growth.

    The strong results come in spite of a significant increase in the cost of goods, rising 3.9% in the quarter, and labor disputes that carried into the start of the quarter. CEO Steve Callihane commented that the company’s pricing power and operational efficiencies were critical to the positive quarterly print and raised forecast.

    "The strength of our portfolio is evident, as we more than offset the sales and cost impact of supply recovery in North America cereal with sustained momentum in snacks growth aroundthe world,” he said. “Our ability to execute with agility was also on display, as we navigated through a challenging supply environment and delivered productivity and price realization amidst decades-high cost inflation."

    Callihane added that the company expects to sustain strong momentum, even as the war in Ukraine adds an overhang to business. The main drivers of this guidance are strong continued sales, coupled with price increases that will counteract the inflationary impacts on inputs.

    Shares rose over 3% shortly before the market open on Thursday.

    Read more on the key points from the quarter.

    May 05, 2022 8:48 AM ET2 Comments

    After Fidelity Investments announced that it will allow customers to add bitcoin (BTC-USD) to their 401(k) plans, Senator Elizabeth Warren (D-MA) is questioning the investment giant on why it made that decision and how it will address risks to its customers.

    "We write to inquire about the appropriateness of your company's decision to add bitcoin (BTC-USD) to its 401(k) investment plan menu and the actions you will take to address 'the significant risks of fraud, theft, and loss' posed by these assets," Warren and Senator Tina Smith (D-MN) wrote in a letter to Fidelity CEO Abigail Johnson, the Wall Street Journal reported on Thursday.

    The senators point out that the Department of Labor in March published a compliance assistance release that reminded fiduciaries of their responsibilities to act in plan participants' interests and expressed "serious concerns" about firms' decisions to expose 401(k) participants to direct investments in cryptocurrencies.

    Warren and Smith want to know why Fidelity ignored the Department of Labor's concerns and what the company is doing to address risks of volatility and fraud.

    They also ask what the company is doing to address its conflicts of interest since Fidelity is also a bitcoin (BTC-USD) miner.

    They also want to know how much Fidelity will be charging customers if they decide to invest in bitcoin (BTC-USD).

    Last month, Warren said it's time to create a U.S. CBDC

    This is definitely NOT GOOD:

    May 05, 2022 8:31 AM ET5 Comments

    • Q1 Productivity and Costs: -7.5% vs. -2.5% expected and +6.3% prior (revised from +6.6%). That marks the biggest drop in quarterly productivity since Q3 1947, when the gauge fell 11.7%.
    • Output fell 2.4% and hours worked increased 5.5%.
    • On a Y/Y basis, labor productivity fell 0.6%, the largest four-quarter decline since Q4 1993.
    • Unit labor costs: +11.6% vs. +6.8% expected and +1.0% prior (revised from +0.9%).
    • The measure reflects a 3.2% increase in hourly compensation combined with the drop in productivity. Unit labor costs rose 7.2% over the past four quarters, the largest four-quarter increase since Q3 1982, when the gauge rose 8.2%.
    • Last week, the Q1 Employment Cost Index rose 1.4% Q/Q, exceeding consensus, while wages and salaries rose 1.2%.

    That's a disaster or, as I said the other day: "ICEBERG!"  

    Technical Tuesday – To Bounce or Not to Bounce?

    He's certainly right about that as a new Gallup Poll says Economic Confidence is now lower (-39) than it was in May of 2020 (-33), when Covid first hit and the markets were in free fall.  Inflation is the top concern of 17% of the people polled in April – up 70% from 10% in February – that is NOT a thing that's improving….

    The overall Economy is the top concern of 12% and Oil Prices were mentioned by 6% but 7% of the people were more worried about Immigration vs only 5% who cite Russia as their top concern and only 4% listed Covid while a whopping 20% cited "Poor Leadership" – Fox Nation indeed!  Just 2% of the people surveyed said that Economic Conditions were "Excellent" after $11Tn was spent to improve them over the past 24 months.  There are many words for that but, on the Titanic, it was "ICEBERG!"  

    As you know, we have an acute labor shortage in this country and part of the reason is we killed 1M citizens with Covid and half the population has now had Covid and many of those people are suffering long-term symptoms that are still not properly understood.  Labor Participation had been in decline for two decades but fell very sharply from 63.5% in 2019 to just over 60% when the Pandemic struck.  To what extent did the Fed engineer this inflation to force people to go back to work?

    This is why I call them Economorons – how can they be looking at the same data we are and come to such inaccurate conclusions?  


  6. Oh no, not the drinking giraffe. God help us!


  7. Brian – You laugh, but the spitting cobra is now an established TA tool.


  8. TUP -9.30%May 05, 2022 8:28 AM ET1 Comment

    Citi dropped its rating on Tupperware Brands Corporation (NYSE:TUP) to Neutral from Buy in reaction to the pandemic growth unwind going on with the retailer.

    Analyst Wendy Nicholson: "Though TUP has continued to make progress on many of its operational initiatives since then, yesterday’s 1Q22 earnings underscore the difficulty that this company is having in really turning its business around. TUP is seeing the unwind of its pandemic-fueled growth, increasing macro pressures from the conflict in Ukraine/Russia and COVID driven lockdowns in China, and it is clearly still facing execution & operational challenges."

    Nicholson and team are also worried about elasticities with TUP planning to be more aggressive with raising prices in coming quarters.

    Citi slashed its price target on TUP in half to $13.

    Elsewhere on Wall Street, D.A. Davidson cut its rating to Neutral from Buy and Sidoti slashed its price target to $25 from $43.

    Shares of TUP fell another 6.05% in premarket action on Thursday after plunging 32.16% on Wednesday.

    Read more about Tupperware Brands' Q1 earnings report.

    XLE +0.18%May 05, 2022 8:23 AM ET40 Comments

    • After almost a year of OPEC+ marching ahead with 400kb/d monthly supply increases, the group has finally changed course (USO) (XLE).
    • In June, OPEC+ plans to increase supply by 432kb/d, a signal to customers that the group is doing its best to manage prices.
    • Importantly, it is generally agreed that the excess capacity in OPEC lies in Saudi and the UAE, so any genuine attempt to increase production would over-allocate quota to those countries.
    • However, the ~8% quota increase was allocated pro-rata; Nigeria has not hit quota in months, and is ~400kb/d below recent targets, nevertheless Nigeria's quota for June was lifted just as much as Saudi's quota, on a percentage basis.
    • Russia's quota for June was increased just as much as the UAE's, on a percentage basis, and as much as Saudi's in absolute terms.
    • By changing course the group appears to acknowledge calls for more barrels; however, the unserious details of the plan suggest OPEC+ is either unable or unwilling to increase production.

    RCL -3.44%May 05, 2022 8:10 AM ET

    • Royal Caribbean Cruises press release (NYSE:RCL): Q1 Non-GAAP EPS of -$4.57 misses by $0.09.
    • Revenue of $1.06B (+2423.8% Y/Y) misses by $90M.
    • Shares -1% PM.
    • "It is gratifying to see our ships and crew returning to our mission of delivering the best vacation experiences in a safe and responsible way," said Jason Liberty, president and chief executive officer of the Royal Caribbean Group. "Despite the impact of Omicron earlier in the year and the horrific conflict in Ukraine, we are encouraged by the strong demand for cruising and the steady acceleration in booking volumes," Liberty added. "Since the beginning of March, booking volumes have exceeded the record levels achieved in 2019 and we are optimistic that 2022 will be a strong transitional year as we return to full operations and profitability in the second half of the year."

    • The Group expects a return to net profit for the second half of 2022.

    I'm pretty sure that's over $1Bn in losses for the Q – they have been getting a huge pass despite losing $5.2Bn last year and $5.8Bn the year before and another $1.25Bn this Q and, in a good year, they are lucky to make $2Bn so it will take them the rest of this decade just to cover the losses of the first 3 years.  

    Now, as a go-forward investment, if you assume they really do go back to making $500M/qtr in Q3 or at least next year, $75 is only $20Bn and cruises are very cheap compared to other vacations, which should play well as inflation-fighters.  Still, they are $18.5Bn in debt so +2% is $370M or 20% of their profits knocked off by a 4% interest rate (could get worse) and where will they get the next $10Bn from if Covid comes back and shuts them down for another year or two?  

    It's unfortunate because we really liked them back in 2018/19 but boy has that World changed in two years.  

    Passengers say 100 people test positive for COVID-19 on Carnival cruise

    Multiple people say they’re in quarantine at Seattle-area hotels after testing positive or being exposed to someone with COVID-19. Carnival Cruise Line would not confirm how many people tested positive, but said there were a number of positive cases, KING5 reported.

    Darren Sieferston, a passenger on the cruise from Miami to Seattle, is in quarantine after testing positive. He said the crew’s response was chaotic.

    “They didn’t have enough staff to handle the emergency that was happening, period,” said Sieferston. “They were overwhelmed and they didn’t have a backup course in how to handle about 200 people affected with COVID. We all suffered.”

    Passengers tell KING 5 they waited hours for meals, weren’t properly isolated and couldn’t get ahold of medical staff.

    “We couldn’t call anybody…Basically, we sat in the room, you call and it would ring, ring, ring and ring all day long” said Sieferston.

    Fun!  Won't take many stories like that to shut them down again.

    Giraffe Drinking Water on Make a GIF

    LOL Snow, these things have to start somewhere… 


  9. Dollar 103.5 – relentless.  Our inflation would be worse than UK's 10.2% if the Dollar wasn't so strong.  

    Notes on the Global Condition: Ramifications of a strong dollar – ADAM TOOZE


  10. Well, some things still work.  I ordered a N95 face mask for the plane from AMZN last night around midnight and it's already here.  Apparently we have a fulfillment center near us now and it's getting close to psychic delivery at this point – things arrive as soon as you need them…


  11. Phil, thanks for the laughs the last couple of days.   Olsen twins -are you nuts and Emperor & Darth Trump yesterday   


  12. We have to honor 5/4, of course.  


  13. i forget when do index breakers cut in ?


  14. The 15-Minute Ultrafast Delivery Craze Slams Into Reality


  15. tommyt, look at a 3 day chart, the levels arent as bad as they seem. RIght now the S&P is only down 13 points from 5/3 levels. 



  16. Bill Gates Says Twitter ‘Could Be Worse’ After Elon Musk Purchase


  17. BTC 13,500 in Sept. QQQ 260, Spy 335. If we hit these levels then PSW can own the whole world. Let's try! ;)



  18. Dear Senator Warren, if folks you're "protecting" bought bitcoin in their 401k at $10 in 2012, when I first mentioned it on PSW, they'd all be retired, tax-deferred of course. Or maybe that's the real the problem?


  19. Breakers/Tommy – 10% – imagine if that happens!  As Kustomz notes, we are only retaking our lows and the VIX is not as bad as it was yet.

    You tell her, BDC!   That would be a good idea, for the next stimulus, send everyone in America $2,000 worth of some coin with no more than 1Bn units and then announce that that coin will be the official digital currency of the United States.   It would go up 100x in value at least and we will have funded everyone's retirement.

    Next – Global Warming…


  20. Phil, put A+B together = The Big Idea.

    Give everyone a free coin backed by decarbonization productivity. 


  21. MT -7.99%May 05, 2022 7:58 AM ET1 Comment

    ArcelorMittal (NYSE:MT) shares rise more than 2% in European trading Thursday after reporting higher Q1 earnings and revenues and launching a second $1B stock buyback.

    Q1 net profit jumped to $4.13B from $2.29B in the year-earlier quarter, and EBITDA climbed to $5.08B from $3.24B a year ago and well above $4.57B in a company-compiled poll of analysts.

    Q1 sales surged 35% to $21.84B from $16.19B a year earlier due to higher steel prices, but steel shipments fell 2.7% to 15.3M metric tons, which the steelmaker said reflected the impact of the war in Ukraine.

    ArcelorMittal (MT) said it now forecasts a contraction in global steel demand this year, falling as much as 1%, although "it is clear that the longer-term fundamental outlook for steel is positive," CEO Aditya Mittal said; before the war, the company expected consumption would remain steady or grow slightly in 2022.

    The company said it has slowly restarted operations in Ukraine and is now operating one of three blast furnaces at its Kryvyi Rih site.

    According to Bloomberg, Citi analyst Ephrem Ravi reacted positively to the Q1 results, citing the additional $1B buyback and EBITDA beat driven by stronger pricing.

    ArcelorMittal's (MT) price return shows a 6% YTD loss and a nearly 2% decline during the past year.

    CIM -5.66%May 05, 2022 7:53 AM ET2 Comments

    • Chimera Investment's (NYSE:CIM) actions last year to maintain low leverage and optimize its liability structure puts the mortgage REIT in position to take advantage of a higher interest-rate environment, its CEO said after Q1 earnings beat the consensus estimate.
    • "As rates began to rise this year, we have begun implementation of the next leg our strategy; to acquire higher yielding residential loans while continuing to obtain long-term financing through securitization," said CEO and Chief Investment Officer Mohit Marria.
    • During the quarter, Chimera (CIM) committed to acquire $807M of residential re-performing loans and sponsored its first securitization of 2022 with $328M CIM 2022-R1. "We expect these actions to be accretive to earnings immediately," Marria said.
    • Q1 earnings available for distribution of $0.39 per share, topping the $0.37 consensus, dropped from $0.46 in the previous quarter and increased from $0.36 in the year-ago quarter.
    • Q1 economic net interest income of $137.7M vs. $154.6M in Q4 and $136.1M in Q1 2021.
    • GAAP book value of $10.15 per common share at March 31, 2022 vs. $11.84 at Dec. 31, 2021.
    • Earnings available for distribution/average common equity was 14.38% vs. 15.45% in the previous quarter and 12.62% in the year-ago quarter.
    • Conference call at 8:30 AM ET.
    • Earlier, Chimera Investment (CIM) non-GAAP EPS of $0.39 beats by $0.02, net interest income of $137.7M misses by $3.33M


  22. W down another 20% on a big miss, active customers down 23.4%:

    Wayfair Non-GAAP EPS of -$1.96 misses by $0.43, revenue of $3B beats by $10M

    May 05, 2022 7:06 AM ETWayfair Inc. (W)By: Gaurav BataviaSA News Editor2 Comments

    • Wayfair press release (NYSE:W): Q1 Non-GAAP EPS of -$1.96 misses by $0.43.
    • Revenue of $3B (-13.8% Y/Y) beats by $10M.
    • 25.4 million Active Customers
    • Active customers reached 25.4 million as of March 31, 2022, a decrease of 23.4% year over year
    • LTM net revenue per active customer was $520 as of March 31, 2022, an increase of 12.8% year over year
    • Orders per customer, measured as LTM orders divided by active customers, was 1.87 for the first quarter of 2022, compared to 1.98 for the first quarter of 2021.
    • Orders delivered in the first quarter of 2022 were 10.4 million, a decrease of 29.0% year over year
    • Repeat customers placed 77.7% of total orders in the first quarter of 2022, compared to 74.5% in the first quarter of 2021
    • Repeat customers placed 8.1 million orders in the first quarter of 2022, a decrease of 26.0% year over year
    • Average order value was $287 for the first quarter of 2022, compared to $237 for the first quarter of 2021
    • In the first quarter of 2022, 59.4% of total orders delivered were placed via a mobile device, compared to 60.0% in the first quarter of 2021.

    Now they've wiped out all our profits from the shorts.


  23. I sold 2 SWKS 2024 $60 puts for $5.   Is the lowest strike they have.  for a reminder 


  24. Ouch, lame attempt at a bounce completely failed.  

    STP:  

    Security Value:  $370,263
    Cash on Hand:  $334,021
    Total Value:  $704,283
    Portfolio Ret.:  252.1%

    LTP:

    Security Value:  $143,983
    Cash on Hand:  $1,770,488
    Total Value:  $1,914,470
    Portfolio Ret.:  282.9%

    Nasty!  We could have cashed out yesterday almost back at our combined $3M high, now $2.6 again – those are wild swings.  It's because the STP doesn't show quick gains on most of the hedges but we do have $2M in hedges and, for example, the SQQQs are $18 x 400 in the money so $720,000 but the net on them is $84,500 so, unless the Nasdaq improves – we have $635,500 coming to us there and we're back over $3M again.

    SQQQ Long Call 2024 19-JAN 30.00 CALL [SQQQ @ $48.37 $6.58] 400 4/7/2022 (624) $847,000 $21.18 $4.95 $23.28     $26.13 $5.22 $198,000 23.4% $1,045,000
    SQQQ Short Call 2024 19-JAN 60.00 CALL [SQQQ @ $48.37 $6.58] -400 4/26/2022 (624) $-718,000 $17.95 $0.40     $18.35 $4.24 $-16,000 -2.2% $-734,000
    SQQQ Short Call 2023 20-JAN 70.00 CALL [SQQQ @ $48.37 $6.58] -200 4/26/2022 (260) $-211,400 $10.57 $0.75     $11.33 $2.95 $-15,100 -7.1% $-226,500

    In total, it's a $1.2M spread as long as we're over $60 and under $70.  

    Same deal with TZA, which is the 2024 $25/45 (400) for $800,000 but currently net $132,912 with another $200,000 upside at $45.

    TZA Short Call 2024 19-JAN 40.00 CALL [TZA @ $40.02 $4.81] -25 11/16/2021 (624) $-21,000 $8.40 $7.58 $-15.99     $15.98 $0.77 $-18,938 -90.2% $-39,938
    TZA Short Call 2024 19-JAN 45.00 CALL [TZA @ $40.02 $4.81] -400 1/7/2022 (624) $-442,000 $11.05 $3.80     $14.85 - $-152,000 -34.4% $-594,000
    TZA Long Call 2024 19-JAN 25.00 CALL [TZA @ $40.02 $4.81] 200 3/23/2022 (624) $270,000 $13.50 $6.50     $20.00 - $130,000 48.1% $400,000
    TZA Long Call 2024 19-JAN 25.00 CALL [TZA @ $40.02 $4.81] 200 3/31/2022 (624) $268,400 $13.42 $6.58     $20.00 - $131,600 49.0% $400,000
    TZA Short Call 2022 15-JUL 40.00 CALL [TZA @ $40.02 $4.81] -50 3/31/2022 (71) $-15,000 $3.00 $3.65     $6.65 $1.95 $-18,250 -121.7% $-33,250

    Frankly, if we were getting $30, I'd sell 100 of the SQQQ 2024 $30s to play for a bounce but $26.13 is an insulting offer.  Generally, when the calls are at the max value of the spread ($30 in this case) – it's a good time to consider taking an early out.  

    Also, of course, we're breaking scary levels on the indexes…

    • 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)

    If the Nasdaq has 600-point bounce lines then 12,900 would be the next level down and we just failed that as well.  That's TERRIBLE!  RUT is 1,851 and Dow is 32,747 after dropping 1,200 points in a day so the Dow could turn red for the first time if we have another day like this or simply follow-through with this momentum into next week.

    Don't forget, we are failing WITH a very bullish technical set-up on the MACD AND right after the Fed tried to spin things with confidence.  Jokers!

    SWKS/Stock – And they actually make $2Bn a year on an $18Bn valuation (more like $9Bn for you!).   $1.4Bn in debt is no big deal.  

    • "There has been some disruption around COVID, and specifically in China," Skyworks Solutions (NASDAQ:SWKS) CEO Liam Griffin said during FQ2 earnings call.
    • Skyworks' Chinese customers form about 11% of the total customer base, with the figure slightly higher in broad markets and less than 10% in mobile.
    • Cowen, WFC, Riley, Craig, Benchmark, Susq, Mizuho, UBS lowered SWKS price target.
    • Shares are trading -11.89%
    • ResultsRevenue of $1.34B (+14.5% Y/Y) beats by $10M. Non-GAAP EPS of $2.63 in-line.
    • FQ2 results driven by a vast expansion of use cases, according to the CEO.
    • Capital allocation: The company paid $91M in dividends and repurchased 3M shares for $418M.
    • During H1 of the fiscal year, Skyworks returned $871M to shareholders through dividends and share repurchases.
    • For FQ3: Consensus revenue estimate stands at $1.30B, while consensus EPS estimate is $2.55.
    • Notable FQ2 business highlights: The company debuted the industry's first Wi-Fi 6E gaming router, featuring ultra-fast quad band performance.

    Of course, that's the thing when the market crashes – doesn't matter what the merits are any more.  


  25. I never got a fill on the JPM  2024 $100 puts we talked about the other day.. I think you said $10.50.  Ive had an order for $9.90 since then.  Just being patient here, no rush 


  26. waiting like Arnold Rothstein     betting by doing nothing 

    https://www.youtube.com/watch?v=mD1ziKVvfIw


  27. UGLY


  28. we don't know how long this meltdown will last but it's almost worth getting into W at this level


  29. lots of crap earnings tonight pricing 10% + moves 


  30. JPM/Stock – $10 would be fine but, if we don't get it, then the next one is fine too.  Rothstein – best trading advice ever.

    Meltdown/BDC – Zig zaggy since late April – looking for a move with meaning – up or down.

    I was just looking at LYV, thinking "They should be picking up" and they are but they still have an insane $22.6Bn valuation when they haven't cracked $100M yet.  So many stocks are still way overpriced and you think they don't matter but then you realize stocks like this trade like dot com stocks – at 200x earning.  With this many ridiculous stocks still out there – we could still fall a lot further as the bigger stocks aren't exactly irresistibly cheap either.

    For a few years, Cramer and Co were hammering this "Unicorn" thing into our heads and getting us used to the idea that early-stage stocks with NO profits can have Billion-Dollar valuations.  That allowed their hedge fund and VC buddies to pour $100M+ into early stage companies (more money is more fees) as there became almost no limit to people's appetites for IPOs – even when most of them crashed and burned.  

    That's what this bubble is – a valuation bubble and it's going to pop – just like they all do.


  31. BND yields 2% per year and it drops 1% per day

    Something's gotta give here.


  32. Phil / SWKS – On the conference call CEO indicated that they would have margins back up to the 55 % ish from the current 50 ish in Q4 —-  They also have increased the apple sockets —-  the concern is around  china customers – but they tend to cater to the high end in that space in addition to Samsung which sell into china…  At100 I'm buying…  


  33. Phil / LABU – what is happening with this ETF –   there hidings still have nothing but bond…..   any chance this will be terminated or liquidated


  34. UAA hammered hard. I dont own them but maybe worth a gamble.