We’re waiting on the Jobs Report this morning.
After losing 20M jobs in March of 2020, we’ve gained back about 18.5M, making “Sleepy Joe” Biden the greatest jobs-producing President of all time by a wide margin and poor Donald Trump will have the distinction of being the only President in the history of the United States to have presided over a net destruction of jobs during his administration.
The Republicans should want to give Joe 4 more years just to hopefully bring his average down because, unfortunately for them, this just keeps up the narrative that Democrats create twice as many jobs as Republicans (or 10 times as many in Biden’s case).
From a Market standpoint, however, we may be creating too many jobs as we don’t have enough labor to fill them (again, thanks to Trump cutting off our supply of immigrant labor that has driven the growth of this country since it was founded). That’s why the Fed has completely dropped “maximum employment” from their narrative and is now all about fighting inflation – which very much includes wage inflation.
The Fed does not like to see wages growing this fast although, in fact, they haven’t been keeping up with inflation. So the Fed has been raising rates hoping to slow job and wage growth as they eat into Corporate Profits and happy Corporations are much more important than happy Citizens to our Kleptocratic Government.
8:30 Update: Uh-oh! 528,000 jobs were added in July and that’s DOUBLE the 275,000 expected by our beloved Leading Economorons and much higher than last months 398,000, which has been revised up from 372,000. Hourly Earnings also way higher at 0.5% vs 0.3% expected and last month has been revised up from 0.3% to 0.4% – so a double whammy there too.
This is all DESPITE the Fed’s TWO recent 0.75% rate hikes and that indicates that it’s clearly not enough to cool the economy so any chance of the Fed going easy on us in September is now out the window and the markets don’t like that one bit and the Futures are taking a 1% plunge because, what’s good for the Working Man is not good for our Corporate Masters so – BOO!!! – lots of jobs and higher wages…
We started the week at 4,120 on the S&P 500 and now we’re going to struggle to hold it and, on the whole, we’re rejected at 4,160 in our first attempt to cross is and note what happened in June when we failed to get over the weak bounce line – we’d hate to see that again.
It’s not likely we will as Corporate Earnings have been generally strong – despite having to pay workers a decent wage. The biggest danger we have is we haven’t heard from the bulk of the small caps – which is why our hedging adjustment was made to TZA (the ultra-short Russell ETF) this time around. That’s our most likely point of failure at the moment.
We also have some lovely support at 3,937 from the now-rising 50-day moving average and MACD is still giving us a lift though it’s next week or never for 4,160 – as we’re about to exhaust the momentum fairy and the S&P’s big caps have mostly reported – so where will the catalyst come from?
On the calendar for next week is Productivity Tuesday, which was TERRIBLE in Q1 at -7.3% AND 12.6% higher Labor Costs – not at all what our Corporate Masters like to see. The market bottomed out after the last Productivity Report in early July.
If we survive that, then we’ll have CPI on Wednesday and that was hot, Hot, HOT in July at 1.3%, which is a trend of 15.6% for the year. That’s NOT going to happen again because Gasoline (/RB) was about $4 in June and July’s average was $3.25. Natural Gas is still very high at $8.
The Dollar was 104 in June and over 106 almost all of July – that should cool things down a bit. That’s one of the reason this morning’s dip doesn’t bother me too much – more money for workers means more demand for Dollars and the Dollar is at 106.7 this morning – up about 1% from yesterday’s close and causing much of the damage to the indexes.
That brings us to Thursday and we get PPI, which was up 1.1% in June and also shouldn’t be worse for the same reasons. Friday we have Import and Export Prices, which have been pacing with our 9% inflation and we also get the Consumer Sentiment Report, which should be improving with all these jobs and rising pay and not worse inflation (fingers crossed). Sentiment has been TERRIBLE but last month I said it was probably as low as it would get and we bought a lot of stock since then so hopefully I didn’t blow that prediction:
Either way, the week after that it will be time to adjust our portfolios again. Just yesterday, in our Live Member Chat Room, I declared us well-hedged for the weekend but now the Dow is down 250 points so we’ll see if that’s true, won’t we?
Have a great weekend,
-
- Phil
“And the men who hold high places
Must be the ones who start
To mold a new reality
Closer to the heart” – Rush
Morning! WTRH will be rebranding as ASAP and Luxor worked out some deal with equity stake. Phil is there anything there to bring this back from the dead? Especially in light of DASH earnings.
Phil / SQQQ hedge – any adjustments to this?
Good Morning.
Good morning!
WTRH/Pman – Well they are coming back, this is generally good news. They’ve been making a lot of good moves lately and they just need time. I want to hear what they have to say on next week’s earnings before doing anything, of course.
That’s just the past month. That’s pretty good for a $115M company – it doesn’t take much to move the needle. The big worry is they only have $60M in cash and they’ve been burning $25M/qtr so what I really care about is what the bridge to break-even looks like.
Let’s say though, that there are 16 Jet/Giant home games with 60,000 people (1M people) and 20% of them pay $5 to Waitr not to get up and stand on a food line for 30 minutes, that’s $1M right there. So other stadiums, concerts, etc. – these things add up very quickly. Not to mention CBD delivery – that’s a big-ticket item.
SQQQ/Batman – As noted above, this is a Dollar-driven dip this morning, the economy is super-strong – don’t be a pussy! I regret being a pussy and not cashing in those SQQQ $30s when they were $35 – that’s going to be a good $1M we left on the table.
I will put up the STP next but check this out – the untouched (not reflecting changes) Future is Once Again Now Portfolio has gone from $198,367 (down 4.8%) on July 14th to $365,887 this morning! That’s up $167,520 (84%) in less than a month… We only made 2 small adjustments and they were both correct – so it can only be better.
Just keep in mind how crazy volatile this portfolio can be. If you didn’t like the ride so far – this is a very good time to get off!
The STP we’ve reviewed a few times in the past month but July 12th was our normal review at $1,533,688. We had already flipped fairly bullish and we’ve gotten less so since but we ended up with the same amount of CASH!!! ($1.7M) and we’re up about 20% at $1,855,333.
As I’ve noted, we’re past earnings for Big Tech, which we did a whole thing on and it worked out pretty much as expected – so we’re not expecting big surprises from SQQQ but TZA is in the spotlight now as those companies begin to report for the rest of the month.
If all goes WELL, we will likely lose a sickening amount of money in this portfolio, perhaps half but the LTP is set up to make a good $2M at least.
Yeah, in the last review, the 600 SQQQ $30 calls were $29.98 ($1,798,000) – ouch!
Short covering on BYND? There was nothing good in yesterdays earnings.
Methinks they will be bought out in the next 2 years.
Speaking of small caps, Russell already fully recovered this morning.
And this quarter!
Imagine what the bump in Consumer Sentiment will be if Gas is under $3 again…
BYND/Rn – We got in when they fell back to $50 in 2020 but then took the money and ran. I was thinking of getting back in but they have failed to execute in many ways. They had built up massive short interest and the earnings were not worse than expected so a lot of covering I imagine. They do have $500M in cash and lost $68M so they have a good 18 months to go but they should be break-even by now or at least seeing the light – and it’s not there.
https://charts2.finviz.com/chart.ashx?t=bynd\&p=w&s=y
Phil/SPWR — I need some advice in cleaning up this position — it’s a collection of short sales and rolls lower over the past few years. SPWR has been this high before only to fall back near 15 and I am worried about the Jan 23 long calls specifically.
AUG 22 20 CALL -2 .88 4.725
JAN 23 15 CALL +20 5.675 10.600
JAN 23 25 CALL -5 4.25 4.325
JAN 23 30 CALL -10 3.3315 2.585
JAN 23 20 PUT -5 2.50 2.300
JAN 24 15 CALL +5 5.02 12.300
JAN 24 25 CALL -5 2.52 7.600
I’m thrilled its come back to life but don’t want to miss a roll/cash out opportunity
Thanks
SPWR/Jeff – One of the reasons the Future is Now Portfolio is doing so well.
https://charts2.finviz.com/chart.ashx?t=spwr\&p=w&s=y
Yes, it failed before because they keep promising the Infrastructure Bill and it keeps failing – $25 is nothing if the bill moves forward. It sounds like you want to make sure you will win no matter what the stock does – you know that’s silly, right? As it stands, your assets are 20 Jan $15 calls and 5 2024 $15 calls and against that you’ve sold 22 short calls at various strikes and 5 short puts.
So you can’t lose to the upside, you simply regret not being more aggressive but you can’t go back to $15 (last week) and make different decisions.
What is your 2024 target for SPWR? In the LTP, we have 100 2024 $10 calls and 50 short $25 calls but that was more of a hedge we expect to roll to 2x something much higher. We don’t need the $10s anymore and they are $15.50 so we’ll likely sell them and roll the short calls to something in 2025 and cover them with the cash ($155,000) we’ll have from the $10s.
I guess I’d do the same in your spread – wait for the 2025s to come out. You have 15 short Jan calls at $2.25 ($2,250) and $4 ($2,000) and the 2024 $40 calls are $3.50 so you can spend $1,000 to roll to 15 of those ($5,250) and then you could roll the 20 Jan $15 calls at $10 ($20,000) to the 2024 $25 calls at $7 ($14,000) and that’s net $5,000 in your pocket and you still have 20 $15 spread working or you can wait for 2025 and spend $10-15,000 on 2025 $30/50 spreads for maybe $3.50 so let’s say you did 40 for $14,000 and left the 15 short 2024 $40s as cover.
Something like that.
In general, a deep in-the-money call isn’t doing you any favors so it’s good to find a way to release some of the cash and still give yourself some good upside from here.
Let’s say you had the 2025 set-up and SPWR drops back to $15. The net delta of the 2025 spread is low so you’d lose a lot less money and the short 2024 calls would give you a bonus and THEN you could deploy that $6,000 again, rolling the 2024 $30s down to the $25s or $20s and then you have a much wider spread that’s much bigger than you started with.
This is, of course, assuming you WANT to be more bullish over more time – otherwise, just leave them alone and cash out when they mature.
Wow – thanks as always… my hesitation was buying back the short calls since there is so much premium left but I see now the idea of rolling higher at around the same price and leaving them in place.
When do the 2025’s usually come out?
Here’s why we started selling off again:
It’s not like they were cooperating anyway but now they will stop pretending to.
Certainly we can move up the Doomsday Clock another few seconds (not many left).
And, as we expected, people are freaking out about the yield curve:
Yield curve inversion hits mark not seen since dot-com bubble. Are Reagan-era levels next?
AGG -1.03%
Aug. 05, 2022 11:23 AM ET
1 Comment
Yield curve inversion reached its widest mark since the dot-com bubble early Friday, with a further steeping of this closely watched recession signal potentially conjuring ghosts of the stagnation days of the early 1980s.
During Friday’s early action, the inversion between the 2-year and 10-year Treasury notes reached a new multi-decade low of -41 basis points. This occurred soon after the release of a jobs report that came in substantially stronger than economists had predicted.
While robust job growth might argue against the likelihood of a recession, traders interpreted the results as opening the door to a more hawkish Federal Reserve. Aggressive interest rate hikes from the Fed are considered a potential threat to the economy, as they could trigger a pronounced economic downturn.
The employment report prompted a spike in Treasury yields, leading to a peak inversion level of -41 basis points shortly after the data came out. The 2-year yield spiked to around 3.25% and the 10-year advanced to near 2.85%. (Note: these numbers include some rounding.)
Inversion refers to a situation where longer-term bond yields are lower than short-duration yields for similar debt instruments.
Under normal circumstances, longer-term yields tend to be higher than shorter-term ones, everything else being equal. These increased rates compensate lenders for tying up their funds for a longer period of time.
When inversion occurs, it suggests that bond buyers have a dimmer view of longer-term economic prospects. As such, the situation is viewed as a strong recession signal. Looking historically, the red flag proved correct during recent extended inversions in 2000 and 2006-2007.
After spiking immediately after the jobs report, yields moderated their move somewhat, with the inversion between the 2-year and 10-year notes contracting slightly. By late morning, the U.S. 10-year Treasury yield (US10Y) was up 15 basis points to 2.83%. At the same time the U.S. 2-year Treasury yield (US2Y) had climbed by 18 basis points to 3.21%.
The -41-basis-point level marked the largest inversion since 2000, in the midst of the popping of the dot-com bubble and anticipating the recession of 2001. The figure also came within sight of an April 2000 low of -52 basis points — the widest inversion of the dot-com cycle.
If inversion pushes past the -52 mark, the next stop would be a low 40 years ago. In February of 1982, the inversion hit a point of more than -70 basis points. The widest inversion since 1976 (the furthest back the Fed offers data) came in March of 1980, when the measure reached an astounding -240 basis points — a gap of more than two full percentage points.
Treasury ETFs in focus as curve inverts: (NYSEARCA:AGG), (NASDAQ:BND), (NASDAQ:TLT), (NASDAQ:IEI), (IEF), (SHY), (GOVT), (SHV), (BIL), (VGSH), (VGIT), (SCHO), (SCHR), (SPTL), (TLH), and (VGLT).
See a longer-term chart showing the history of the 2- and 10-year Treasury spread. Additionally, in broader market news all three major market averages have declined during Friday’s trading session.
Ouch for CNK:
Cinemark Holdings slumps after second quarter’s earnings miss
CNK -14.27%
Aug. 05, 2022 11:25 AM ET
https://www.philstockworld.com/2022/06/08/wrong-way-wednesday-world-bank-and-fed-lower-their-economic-expectations-again/comment-page-2/#comment-8124656
LYFT/Jeff – There’s lots of things I’d LIKE to have but the portfolios are crowded and also we don’t fully trust that things aren’t going to collapse. We’re making new highs with our LTP/STP but it’s a delicate balance and I’d hate to upset it.
https://charts2.finviz.com/chart.ashx?t=lyft\&p=w&s=y
I am really pussled with this new site. Going from the top to the bottom say on the SPWR question you first get the answe than you get the question. On the old site you first had the question than the answer. Or must I hold my PC upside down.??????
Yes, for Phil scroll down, for comments scroll up … not so easy to find things.
yodi- trying to navigate, but ? first than answer seems “logical?”
hi phil, i dont know if anyone has ever asked but is there any chance you could somehow incorporate a live wire service into your blog to notify us all in real time of actionable news like that china news at 1010am.
Live Wire/Tommy – Dude, we are still trying to get the basics working! Livewire is a paid service so, if we wanted to get a site license, it would cost a fortune and then imagine the overload of news. That’s what I do, I read 100 things and then one seems important and I put it in chat. Seeking Alpha’s news does a good job of picking up the important stuff during the day for our Members – that’s one of the things I check regularly – I use about 1 in 10 of the things they put up.
Comments/Yodi, Pirate & Wing – It’s like the weather – everyone complains but nobody does anything about it. If any of you are super-duper programmers who know how to modify WordPress to do all these things – have at it! Meanwhile, we’re still working out the basic bugs.
The old comment system was customized over many years and many, many, MANY Dollars – little did we know WordPress would change their back end and render all of our customizations useless. While it’s fun to cheer on Anonymous as they hack Russia – in reality these hacking groups have necessitated security that makes customizing WordPress next to impossible in the new version.
The finest minds in the World are working on it but, frankly, it’s been 30 days and it took them a year to come up with a Covid vaccine – so perhaps set your expectations somewhat realistically.
Even if you are not technical, if you can find a WordPress site that is doing something better – let us know that and hopefully we can talk to their development team and find out what they did. Also, you can certainly complain to WordPress and let them know what changes you think would be beneficial.
Thanks,
I can’t do – Phil anymore – how stupid is that? It auto changes my – to a dot and I don’t even know how to make a dot!
By the way, we HAD to make the switch because WordPress stopped supporting the old system and our site was “vulnerable” to hacking and, since almost all other WP sites have upgraded – it made us a particular target for hackers since we still had all the old vulnerabilities so we started getting crap from our hosting service that they couldn’t keep protecting us if we didn’t switch versions.
Read a couple of Gibson books like Burning Chrome or Neuromancer. The World he describes, with everyone on the Internet and Corporations being valued by how secure their servers are at constant wars with armies of hackers… that’s pretty much where we’re heading.
I follow Bill Gates on Linked In and he has these “Gates Notes” newsletters and I think they’re great:
https://www.linkedin.com/newsletters/6651495472181637121/?midToken=AQFkgBNE-45mxg&midSig=038pdu6cXg5Go1&trk=eml-email_series_follow_newsletter_01-hero-6-null&trkEmail=eml-email_series_follow_newsletter_01-hero-6-null-null-kcwba%7El6grlnt4%7E88-null-neptune%2Fnewsletters
I know some people don’t like him but he’s a brilliant guy and he does a lot of interesting things – you just don’t hear about them as much as Musk because he doesn’t have an army of publicists pushing every thought he utters out to the media.
And the RUT recovers yet again. Very interesting.
Is Barrick Gold on track for another earnings beat in Q2 on higher production?
GOLD -1.96%
Aug. 05, 2022 12:57 PM ET
1 Comment
Barrick Gold (NYSE:GOLD) is scheduled to announce Q2 results on Monday, Aug. 8, before market open.
Consensus EPS estimate is $0.22 (-24.1% Y/Y) and consensus revenue estimate is $2.85B (-1.4% Y/Y).
Over the last 2 years, GOLD has beaten EPS estimates 88% of the time and revenue estimates 50% of the time.
Over the last 3 months, EPS estimates have seen 11 downward revisions. Revenue estimates have seen 2 upward revisions and 2 downward.
GOLD reported prelim. Q2 production of 1.04M oz of gold and 120M lbs of copper, which it said was good enough to maintain FY output guidance.
Q2 gold production was higher sequentially due to stronger performance across its portfolio. Q2 copper output was higher than Q1, driven by Lumwana as planned.
GOLD shares inched higher after the miner reported Q1 results that were slightly above Street estimates. Q1 gold production fell 10.1% to 990K oz, hurt by lower output at its Carlin and Cortez mines in Nevada.
At the time, GOLD said it expected stronger performance in H2 2022.
GOLD also doubled its quarterly dividend to $0.20/share, including a $0.10/share performance dividend.
SA contributor Fun Trading in an analysis said decent production should help GOLD’s Q2 results, but rated the stock Hold.
Shares of GOLD have fallen 16.4% YTD.
Recent news:
Earnings week ahead: Disney, Palantir, Plug Power, Roblox, Six Flags and more
DIS -1.76%
Aug. 05, 2022 12:38 PM ET
2 Comments
Although the heart of earnings season has passed, a number of closely watched companies are prepared to release their quarterly results in the second week of August. Disney (NYSE:DIS) represents the highest-profile firm set to report.
The list also includes gold miner Barrick Gold (GOLD), video game developers Take-Two Interactive (TTWO) and Roblox (RBLX), vaccine manufacturers Novavax (NVX) and BioNTech (BNTX), and travel and leisure companies Norwegian Cruise Line (NYSE:NCLH), Wynn Resorts (WYNN), and Hyatt Hotels Corporation (H).
Below is a curated list of earnings reports due in the week of August 8 to August 12:
Monday, August 8
Barrick Gold (GOLD)
The world’s second-largest gold mining company is set to report its second quarter earnings prior to Monday’s market open. Shares of the Canadian-based miner have underperformed the S&P slightly in 2022, despite a spate of geopolitical issues and inflation pressures that have historically buoyed gold prices.
Shortly before the earnings release, the company indicated it is close to reaching a deal with the Pakistani government to develop the $7B Reko Diq copper-gold deposit, one of the world’s largest undeveloped open pit copper-gold deposits.
Take-Two Interactive (TTWO)
Take-Two Interactive (TTWO) will report its results on Monday, following a previously announced report from key competitor Activision Blizzard (ATVI) that outdid analyst expectations. While shares have declined sharply in 2022 thus far, the stock has seen a more than 20% rebound from its May nadir despite recessionary concerns.
Nonetheless, Wall Street remains divided on the prospects for video game developers into an economic slowdown. For example, Truist Securities anticipates the industry to hold up well even if consumers tighten belts. However Wedbush analyst Michael Pachter told clients in July that inflation is likely to curb consumer appetites for gaming spend.
Palantir (NYSE:PLTR)
Palantir Technologies (PLTR) will present its second quarter report in premarket hours on Monday, offering insight into the business since its first quarter report and guidance sent shares sliding. Shortly before the report, The U.S. Army Research Laboratory expanded its existing contract with Palantir (PLTR) by two years, adding to a contract award from US Space Command in June.
Also reporting: Canoo (GOEV), Tyson Foods (TSN), AllBirds (BIRD), American International Group (AIG), Blink Charging (BLNK), Novavax (NVAX), Upstart Holdings (UPST), EVGo Inc. (EVGO), and BioNTech SE (BNTX)
Tuesday, August 9
Norwegian Cruise Line Holdings (NCLH)
Norwegian Cruise Line (NCLH) will start off Tuesday’s busy earnings day, providing an update on its second quarter results amid unsteady seas for cruise line operators. Shares of the Miami-based cruise line operator remain well-below their pre-pandemic levels, tumbling over 40% in 2022 alone despite loosened restrictions on passengers. The report follows shortly after sizable stock and debt offerings from both Royal Caribbean (RCL) and Carnival Corporation (CCL).
Plug Power (PLUG)
Plug Power Inc. (PLUG) is set to post its second quarter results on Tuesday after the market close. The New York-based fuel cell solutions company’s stock has surged this summer, jumping nearly 40% in the month of July as climate spending looks likely to increase rapidly.
The company also announced the construction of a 120 MW industrial-scale green hydrogen plant in Texas just one week prior to its earnings report. The project is expected to be one of the largest of its kind in North America.
Wynn Resorts (WYNN)
Coming shortly after surprisingly strong reports from key competitors MGM Resorts (MGM), Caesars Entertainment (CZR) and Penn National Gaming (PENN), the casino operator is set to post its second quarter results after Tuesday’s close.
Shares of Wynn (WYNN) have roared nearly 20% higher in the month ahead of its earnings report, as gambling demand appears resilient to recession risks and regulations on the industry relax, offering inroads to markets like New York for the gaming giant. Still, record low revenues in Macau have been a consistent concern given the company’s operations in that key area of China.
Also reporting: Roblox (RBLX), Hyatt (H), GlobalFoundries (GFS), Celsius Holdings (CELH), ChargePoint Holdings (CHPT), Planet Fitness (PLNT), The RealReal (REAL), Red Rock Resorts (RRR), Ralph lauren (RL), The Trade Desk (TTD), Sysco (SYY), and Workhorse (WKHS).
Wednesday, August 10
Bumble (BMBL)
Bumble (BMBL) has significantly outperformed the market thus far in 2022, marking a modest gain year to date against double-digit declines in the major indices. According to Jefferies, foreign exchange headwinds could be a major problem in the coming earnings release. Meanwhile, analyst Donovan Jones argued that growth risks are rising for the company, even as it reaches operating breakeven.
Additionally, key competitor and Tinder parent Match (MTCH) fell more than 20% after posting a disappointing earnings result about a week prior to Bumble’s anticipated print.
The Walt Disney Corporation (DIS)
In perhaps the most-closely watched earnings report of the week, The Walt Disney Company (DIS) will post its fiscal third quarter earnings results after the close on Wednesday. The entertainment giant’s stock has fallen sharply in 2022 amid spending concerns on streaming efforts. As part of this trend, the company said streaming growth could slow into the back half of 2022 during the company’s second quarter earnings call. Meanwhile, Netflix (NFLX) reported the loss of nearly 1M subscribers.
Looking at some other competitors, both Roku (ROKU) and Warner Brothers Discovery (WBD) saw double-digit declines after their respective earnings releases disappointed the market.
Elsewhere, the company updated park and experience operations post-pandemic in the weeks leading up to the release. The possibility for an upside surprise from the parks division encouraged analyst firm BOOX Research to predict an earnings beat that could “kickstart a new rally” in the stock.
Spirit Airlines (SAVE)
About a week after its prospective acquirer JetBlue Airways (JBLU) came in below expectations, Spirit Airlines (SAVE) will update investors for the first time since choosing JBLU over a competing merger deal with Frontier Air Group (ULCC). Shortly before the release, S&P Ratings revised its outlook on the airline from Positive to Stable. Amid the merger discussions throughout 2022, the low-cost carrier’s stock has outperformed the broader market.
Also Reporting: Wendy’s (WEN), Jack in the Box (JACK), Wolverine World Wide Holdings (WWW), Honda Motors (HMC) Wix.com (WIX), CyberArk Software (CYBR), and Jumia Technologies (JMIA).
Thursday, August 11
Illumina, Inc. (ILMN)
Genomic analysis company Illumina (ILMN) is set to report earnings after the market close on Thursday. The former Cathie Wood favorite has severely underperformed major indices in 2022, falling more than 40% in the first seven months of the year. Shares touched a 52-week low of $173.45 in mid-July, down drastically from its 2021 high of $526. Amid the slide, EU antitrust regulators have voiced opposition to its proposed acquisition of cancer test developer Grail.
Six Flags Entertainment (SIX)
Following about a week after a miss on earnings from rival Cedar Fair (FUN), amusement park operator Six Flags (SIX) will post its second quarter earnings results on Thursday before the market open. In the first quarter, the company notched an earnings beat, driven by higher prices and park attendance. However, the stock was downgraded by Citi in the month prior to earnings as the bank expects a disappointing print.
Also reporting: Brookfield Asset Management (BAM), Utz Brands (UTZ), Canada Goose (GOOS), Phunware (PHUN), and Poshmark (POSH)
Friday, August 12
Spectrum Brands (SPB)
Spectrum Brands (SPB), the Wisconsin-based consumer products manufacturer, will offer its earnings report in Friday’s pre-market trading. Amid concerns on the strength of the US consumer, shares of the parent of Black & Decker, Remington and George Foreman grills have slid more than 35% in 2022. Trading volume has been particularly elevated ahead of the earnings release, with daily volume spiking to as high as 5 times the average in the weeks ahead of the release.
Broadridge Financial (BR)
Rounding out earnings week, Broadridge Financial (BR) will post its fiscal first quarter earnings results on Friday. Shares of the financial services and financial technology company have rocketed higher from a 52-week low reached in mid-June, gaining over 25% from that point. Ahead of the result, the company appointed a new Chief Technology Officer.
That is a super-useful thing they started doing.
I was hoping for $250 but it never got these on BRK-B. Should have at least sold some puts.
If you read the comments using an RSS feed then they are presented in the order they are posted making it easy to follow. Can’t post comments that way though.
As feedback, site loaded real fast Thursday afternoon and Friday morning in case somebody was doing something.
They are still tweaking things.
By the way everyone, there’s a button in the comment box that says “Subscribe” and, if you click that, you get an Email each time a comment is made on this post. Those come in order too.
Our original Stock of the Century is getting snapped up by AMZN. We got out of IRBT in 2017 because they had already gained 1,000% and they were selling off their military robot division – which was my favorite part. That’s when we switched to LMT, who were around $250 at the time, now $423 but still under 20x and that X will be growing for many years to come. Aside from Fusion, which would be a multi-Trillion Dollar industry, they also have a thing called Onyx Exoskeletons in development for the army – that’s a thing you can sell 3M of for $2,000 each with replacement parts – and that’s just the US.
https://charts2.finviz.com/chart.ashx?t=lmt\&p=w&s=y
Amazon’s deal for iRobot looks strategic if it can make it to the finish line
AMZN -1.65%
Aug. 05, 2022 12:11 PM ET
10 Comments
Amazon (NASDAQ:AMZN) snapped up iRobot (IRBT) on Friday for $1.7B in the tech giant’s fourth largest acquisition ever following deals for Whole Foods, MGM, and One Medical.
Of note, Massachusetts-based iRobot (IRBT) has sold millions of its popular Roomba vacuums and launched an AI-powered platform for its robot vacuums and mops earlier in the year.
Shares of iRobot (IRBT) traded about 2.5% below the deal price of $61 per share in late Friday morning action with some regulatory concerns in the mix. Antitrust expert Ethan Glass observed the U.S. Federal Trade Commission is already investigating Amazon (AMZN) and is likely to review the new acquisition. “I would say there is a three out of four chance of a deep investigation and a one out of four chance of a challenge,” he predicted.
On Wall Street, the early reaction to the deal is favorable. “We haven’t heard much lately about Amazon’s smart home devices strategy and this acquisition puts it back on the agenda,” weighed in Atlantic Equities analyst James Cordwell. Baird thinks the M&A play reinforces Amazon’s interest and market position in robotics and home automation, as well as highlighting strategic value of AI. D.A. Davidson said the deal shows that Amazon CEO Andy Jassy is more willing to do M&A than former CEO Jeff Bezos. All three firms have Buy-equivalent ratings on AMZN.
Phil/LMT: You had mentioned that deep in the money calls are not good to hold when talking about Jeff’s SPWR trade. I am in with you on the LMT trade 300/370. This spread is deep in the money, and was wondering if you recommend adjusting this spread at all based upon your comment? Thank you!
That’s too in the money and we’re probably just going to take our $70 and be happy in the end. The problem is the stock is too expensive to mess around with so we don’t do a lot of adjustment tricks.
On 9/14/21 we bought 10 2024 $300/370 bull call spreads for net $32.80 and sold 5 of the $300 puts for $36.72 so net net $14,440 on the $70,000 spread and it’s now net $42,125 so still a healthy $27,875 (66%) left to gain.
We had taken advantage of the dip and it never really got any lower so we never got a chance to adjust it or do anything more exciting than make our expected $55,560 (384%), sometimes the stocks just go up and you have to settle with what you make off the initial entry. But of course, people complain if it doesn’t go straight up too…
https://charts2.finviz.com/chart.ashx?t=lmt\&p=w&s=y
We’ll see hat happens when 2025s come out but we sold our last LMTs in November of 2019 (when we closed our portfolios) a bit under $400 and when the market crashed – it went up sharply before we got around to them at $300 so then we waited almost 2 years to be sure we had a good bottom before pulling the trigger again. PATIENCE is what we need to practice. Just like BA – you have to wait and wait and wait but eventually a plane crashes and the stock drops 20% and THEN there’s a buying opportunity.
https://charts2.finviz.com/chart.ashx?t=ba\&p=w&s=y
As stock can always be good to own but that doesn’t mean it’s always a good time to buy it.
Like my Levi’s example (the jeans, not the stock) – You KNOW you always wear Levis, you KNOW they are $50 but often on sale for $40 and you have 3 pair in various stages of death in your closet so there’s no urgency to the purchase so you don’t buy them at $40 unless your wife throws out your oldest, favorite pair because “she’s embarrassed to be seen with you in them” or whatever. Then $40 becomes a good time to buy. Otherwise, unless it’s $35 – we’re not going to pull the trigger.
That’s what buying stocks should be like. Sometime you need a Tech stock, Energy or Defense stock to round out your portfolio and then you look at your watch list and see who’s low in their range (but still desireable) but, otherwise, unless there’s an exceptional bargain – stick to cash and wait PATIENTLY for a good sale.
Oddly enough (and this will shock many people), you have a MUCH better chance of success if you wait to buy stocks when they are undervalued.
That’s how we use our watch lists – like the one from my Money Talk show recently – we make a list of things we’d LIKE to buy at the current price and then, once in a while, we look to see if any of them got even CHEAPER – then we triple-check our premise and the valuation and THEN we have a real gem to buy.
Still cheap.
Still cheap
Got away a bit
Still very cheap.
Still cheap
Still cheap
Still cheap
Got away
Still cheap
Still cheap
Still cheap but about to break up.
Still cheap
Still cheap – earnings next week. SEA did well so I think they break up.
Still cheap
Kind of got away but still a great buy overall.
So there, the Watch List is still very usable and these are, of course, the best in their sectors already. When I make these lists, I look to diversify so whatever balance we require in the portfolios, we have something to focus on (though lots of Consumer stuff as they had the best deals).
We already have about half of these in our portfolios and, if any of the others either get cheaper or present more compelling fundamentals – we’ll add those too.
That’s my process.
4,140 – Not a bad finish but, as expected – not quite 4,160.
Next week is a big deal.