Good morning!

Money Talk/Snow – Well I think I just broke the record for making their viewers money so they don’t mind having me on again and now we’ll start a new portfolio, which is good for new people who want to follow.

JWN/Jeff – Net sales were up 14.7% at the main stores and up 6.3% at the Racks. Rack demand fell hard in June, however. On-line sales were up 6.3% and now 38% of total sales. Gross Profit increased 0.65 but inventory was up 9.9% and, like many Retailers – they have to write it off. That’s taken 2022 EPS estimated down from $3.35 per $24 share (7.16x) to $2.40 per $18.74 share (7.8x).

JWN is aggressively right-sizing its inventory while investing in supply chain and merchandising capabilities that will it sees paying off in 2023 and beyond.

CEO update: “We are adjusting our plans and taking action to navigate this dynamic in the short term, including aligning inventory and expenses to recent trends, and we remain confident in our ability to deliver on our long-term strategic and financial goals.”

We have JWN in our Earnings Portfolio but it’s just a small entry position.

So we’re down $4,323 and 10x lower earnings is still $24 and next year should be much improved. It’s too early to buy back the short calls – because the internal volatility is keeping them higher than they should be but that’s true about our long calls too so let’s see what we can do:

• The JWN 2024 $15 calls are $6.75 and our $20s are $4.60 so $2.15 is good to roll $5 down. The $10s are $9.75 and that would be $3 for the next $5 so no to that. We have 15 currently and it will cost us $3,225 for the roll and we spent net $3,125 initially so now we’re in for $6,350 so let’s buy 5 more 2024 $15s for $6.75 ($3,375) and now we’re in for about $10,000 on 20 of the 2024 $15 calls which are $4 ($8,000) in the money – that’s not too bad for a stock that dropped 20% on us, right?

That’s the value of scaling in, it was a small, initial position and easy to adjust and, if we get back to $25 in 17 months – we’ll have a double anyway. Fortunately, we sold the $20 puts for $4.30 (net $15.70), so no worries there anyway.

See the Dollar doesn’t need to go down – it just needs to stop going up to relieve the pressure on the indexes (and commodities).

Euro still now quite back over $1. You can bet they are all going to work something out at Jackson Hole this weekend.

More auctions this week.

Pending home sales slide for second straight month in July, less than forecasted

Aug. 24, 2022 10:00 AM ET

July Pending Home Sales: -1.0% M/M to 89.8 vs. -4.0% consensus and -8.9% in June (revised from -8.6%).

Pending sales fell in three of the four major U.S. regions, with the West recording a modest increase.

Y/Y, contract signings declined by double digits in each region.

“In terms of the current housing cycle, we may be at or close to the bottom in contract signings,” said NAR Chief Economist Lawrence Yun. “This month’s very modest decline reflects the recent retreat in mortgage rates. Inventories are growing for homes in the upper price ranges, but limited supply at lower price points is hindering transaction activity.”

The Northeast Pending Home Sales Index slid 1.9% M/M to 79.3, the Midwest PHSI drifted down 2.7% to 91.2, the South PHSI slipped 1.1% to 106.6%. The West index, though, increased 2.2% to 70.0.

The 30-year fixed-rate mortgage bounced back to an average of 5.22% in the week ended August 11, compared with 4.99% from the prior week and 2.87% a year before.

Earlier this week, (August 23) new home sales fall more than expected in July, inventory rises.

Nasdaq, S&P, Dow Jones choppy trading continues as durable goods were unchanged

SP500 -0.06%

Aug. 24, 2022 10:02 AM ET

1 Comment

The major market averages look for direction on Wednesday as investors look to extend the sideways trading of the previous session.

The Nasdaq (COMP.IND) is +0.2%, the S&P 500 (SP500) is -0.1% and the Dow (DJI) is -0.1%.

After the S&P was rebuffed at the 200-day moving average resistance, the focus of the recent dip is on the the 100-day and 50-day MAs at 4090 and 3969, BofA says.

Rates are up with the start of Jackson Hole just a day away. The 10-year Treasury yield (US10Y) has gained 3 basis points to 3.09% and the 2-year yield (US2Y) is up 2 basis point at 3.35%.

“Within the world of DM rates, it is fair to say that no bond is in favor at the moment. The rise in yields has been broad-based, and accompanied by a toxic rise in both implied volatility, and of market-based inflation expectations,” ING said. “The former suggest an eroding of government bonds’ safe-haven status, the latter show the return to persistent inflation concerns.”

July durable goods numbers came in unchanged, which was softer than economists prediction of a 0.6% rise.

Pending home sales figures for July came in stronger than anticipated at -1% compared to the forecasted -4%.

Among active stocks, Bed, Bath & Beyond has surged higher following a report that the retailer has secured a loan deal.

13,000 being tested again on /NQ. 4,155 on /ES. 1,940 on /RTY is a nice recovery and /YM (who cares), 33,050.

Oil ($93) and Gasoline ($2.62) both quite a bit lower after the EIA Report.

Oil has been up because an OPEC Minister said they may have to reduce output but I think he sincerely meant so there would not be a glut on the market as demand is clearly still disappointing.

Don’t forget, we had to export 28M barrels last week to show a net draw of 4Mb.