BAC, BLK, DAL and JPM all had 10% beats while BK, FRC and UNH were pretty much in-line and we’re waiting for C and, of course, WFC missed – but that’s only because they got caught and had to take a $3.3Bn charge for fines for a total of $5.3Bn against $140Bn in earnings since the scandal broke in 2016 and hundreds of Billions more from the illegal practices they engaged in – not to mention whatever their peers have gotten away with…
As President Trump says, “It’s not a crime if no one catches you.” I wonder if people still want their children to grow up and become Presidents? Did people want their children to grow up and become Al Capone or John Gotti?
And by highs, I mean highs for the year, of course (4,020 on the S&P yesterday) – you can forget about 4,800 on the S&P 500 the same way we had to forget about Nasdaq 5,000 for 16 years after the 2,000 high. Nasdaq 16,500 was our high last year and we’re not likely to see that again this decade either – especially as we struggle to hold 11,000 at the moment.
The real race on the Nasdaq Weekly Chart is that the 50-week moving average does not cross below the Strong Bounce Line at 12,000. It’s at 12,450 and it’s dropping 25 points per week if the Nasdaq is under the 200 wma so we have 18 weeks to improve – either these earnings or the next. Otherwise the bearish technicals will dominate the charts into the end of the year.
None of this matters to long-term, value investors. We are thrilled to once again be able to buy stocks for realistic prices (16,000 and 4,800 were NOT realistic) and the main reasons the Economy is having trouble are artificial:
- We have the Fed tinkering to keep Inflation down.
- Inflation is up over supply chain issues caused by Covid and the War.
- Inflation is also up due to a strong demand for workers – an indication of a healthy economy.
- Wages are finally rising, which will give our economy a stronger base to build on.
- A lot of the slowdown we see is due to the end of stimulus and the end of QE – don’t expect the economy to come off life support and run a marathon. Like Damar Hamlin, we’re going to need a little time to recover, please.
So let us pray for 2023 and what lies ahead – you never know when you are going to take a brutal hit, so it’s best to be prepared. Like Dmar’s medical support – our cash is on the sidelines, ready to come to our rescue if this earnings season is unkind and, if it turns out to be strong and healthy – we can always join the game!
Have a great weekend,
-
- Phil
Good morning!
Looks like the banks are all increasing their loss reserve. Not a good sign!!
No but they have formulas based on standard things like inflation and the yield curve, etc. and, for the same reasons the economy isn’t really that bad – the reasons for increasing loan loss reserves may be overstated as well and that will mean those could boomerang back as future earnings down the road.
Also, loan loss reserves are a good way to avoid taxes as they come out now as an expense and they become dry powder for the bank any time they need to boost earnings in the future.
Do people want their children to grow up and be Hunter Biden? Sweet jesus, you are insane.
For the climate fear mongers, ask yourself how the Sahara desert has swung between a lush forest to desert and back again. Every 20,000 years. For 6 million years. 300 round trips.
I’m done here. Peace out.
Speaking of doing the same thing over and over again…
https://www.nytimes.com/2020/09/23/us/politics/biden-inquiry-republicans-johnson.html
Republican Inquiry Finds No Evidence of Wrongdoing by Biden
And, of course, if you really want some hard evidence to rally around:
https://www.vanityfair.com/news/2022/12/trump-organization-donald-trump-allen-weisselberg-tax-fraud-guilty
And also:
https://www.voanews.com/a/trump-adult-children-sued-by-new-york-attorney-general-for-fraud-/6757056.html
And:
https://www.wnycstudios.org/podcasts/anxiety/episodes/how-ivanka-trump-and-donald-trump-jr-avoided-criminal-indictment
In the spring of 2012, Donald Trump’s two eldest children, Ivanka Trump and Donald Trump Jr., found themselves in a precarious legal position. For two years, prosecutors in the Manhattan District Attorney’s office had been building a criminal case against them for misleading prospective buyers of units in the Trump SoHo, a hotel and condo development that was failing to sell. Despite the best efforts of the siblings’ defense team, the case had not gone away. An indictment seemed like a real possibility. The evidence included emails from the Trumps making clear that they were aware they were using inflated figures about how well the condos were selling to lure buyers.
In one email, according to four people who have seen it, the Trumps discussed how to coordinate false information they had given to prospective buyers. In another, according to a person who read the emails, they worried that a reporter might be onto them. In yet another, Donald, Jr. spoke reassuringly to a broker who was concerned about the false statements, saying that nobody would ever find out, because only people on the email chain or in the Trump Organization knew about the deception, according to a person who saw the email.
Of course we could go on all day with the Trumps…
I don’t remember when anyone ever said the Sahara didn’t naturally swing back and forth from desert to forest but it’s due to it’s position on Earth and the tilt of the Earth’s axis – not at all to do with greenhouse gas or global warming although, yes, global warming may break the cycle and lead to a permanent desert as hot, dry land spreads over more and more of the earth, regardless of position.
WOW, not appropriate for a trading / investing site
my reply was to fkeithl, not Phil’s response.
I’m sick of politics. They are all just yapping away while the World burns. It’s sad and sickening.
It just never occurred to me there would be so many people ACTIVELY trying to stop us from saving the planet. Not just not helping but actually trying to stop others from doing something.
I would suggest the climate change debate is a means to distract governments from making business pay for the pollution they release into the environment from their manufacturing, consumers using their products and discarded single-use packaging.
But, what do I know, I stopped watching the national news back in 2003 during the cheer-leading run-up to the Iraq war when I used to yell at the TV. 😋
Bruce, my suggestion would be to watch a year in review program on dec 31 or jan 1. Most networks have a recap which would only “cost you” one hour of time, once per year. You get a whole years news condensed in to bite sized pieces. 😉
Thanks for the idea, Stockbern. Of course, I cheat a little with online articles and people asking me if I’m aware of something in the news 😊
I can read the news but I hate to watch it – feels like my life is being sucked out of me. I used to rely on the Daily Show but I can’t stand Trevor Noah (leaving now) but Seth Meyers and Colbert keep me informed of what the masses are paying attention to. Going out for a drink in Florida keeps me up on Maga World – my tongue is criss-crossed with bite marks…
They also seem to be looking at Leslie Jones, Sarah Silverman and Chelsea Handler. I think they should take both guys from Weekend Update or, of course, Randy Feltface!
Good morning!
Monday is a holiday – again. Don’t know why they bunch up 3 holidays in 4 weeks. Then we get President’s Day on Feb 20th, Good Friday April 7th, Memorial Day May 29th and Junteenth on the 19th. After that it’s just July 4, Sept 4, Nov 23 and Dec 25 – plan your vacations accordingly.
We’re off to a rocky start but not so terrible and maybe we go green if Consumer Sentiment doesn’t suck.
Dollar is staying low, that helps.
VIX below 20!
Gold still flying:
larry from blackrock is on cnbc with cramer he sounds almost evengelical says the main thing he sells is hope for a decent retirement that people have too much fear at the moment. he must be tired of withdrawls.
LOL, so true! He’s just a salesman.
With my portfolio almost back to where it was near the end of November/start of December, what would you think of buying back profitable short puts to sell them again when (if?) the market goes back down? Do I just need to be patient/long term or is there a better strategy?
That is what we did in November, isn’t it? There’s never anything wrong with taking a profit and removing the downside exposure of the short puts is as good as boosting your hedges. We only had 2 surviving short puts in the LTP after our purge – out of about 30. Most of those stocks are on our Watch List and we’ll happily short them again if they go lower.
We’re back to 9 short puts now.
Speaking of portfolios – the $700/month Portfolio is having a nice couple of weeks:
Phil,
Thanks for mentioning $700/month Portfolio that is dear to my heart 😍
Any thoughts on /CL? I’m short 1 contract at $77.50. I’m thinking about shorting another at $79.50. Though with only 6 days left in the Feb contract I’m thinking about rolling out to March
Into the weekend I don’t want to add risk unless we hit $80. We’re up because expectations of China demand are overwhelming the FACT that we just had a 19m barrel build. There’s no way the actual numbers out of China will support the speculation.
Despite China not reporting Covid, I look at Global Cases on the assumption there’s bound to be some leakage. So far, not so bad in cases but Deaths are getting a bit concerning:
Of course the decline in World cases may be caused by China not reporting – it’s the Circle of BS…
And, speaking of portfolios, the STP is hanging in there at $3,844,125 – not really losing ground because the lower VIX plays to our advantage as sellers of premium (more short calls than long calls):
So we’re making money in the STP and the LTP at the same time – no wonder I don’t want to touch anything!
Those short calls expire next week so we can sell another $200,000 to cover us if the market goes higher. That would also net the portfolio more bullish, of course.
Too many good ways to adjust to worry about it for now. Could buy back the short 2024 TZAs and roll the 2024 $40s into a 2025 spread that’s in the money. Could simply not replace the expiring 2023 $70s to get more bullish on SQQQ so there’s 2 adjustments that can turn us more bearish and turning more bullish means just selling more calls for $100s of thousands. Hard to lose, right?
You would think that the who with all the historical global data available to it could easily provide a fairly accurate estimate of the daily number of covid cases. i mean they know nobody has immunity and the day that the government said no more covid zero. It would likely produce a wave similar to what india experianced.
Yes, you would think.
Here’s some evidence things are not great:
Exports were down 9.9% from last December – when they were still on lockdown. Imports down 8.7%. NOT GOOD!!!
Yeah, but WHO’s data come from the member countries. That’s the first problem, although often they do have teams on the ground. Second, daily cases count is subject to a lot of problems with diagnosis, recording, reporting, sending the stats up the line to the appropriate agency. And that’s the US – China’s system probably functions better (not many worse than the US – Brazil, maybe), but it’s a huge place and the same biases apply.
I rely on the sewage stats to get a feel (eww) for what’s going on in my vicinity and to advise the people who ask me for advice (https://biobot.io/data/, http://publichealth.verily.com/).
Finally, back in late 2019-20 when this whole deal started, we epidemiologists understood what was happening (excluding Eric Feigl-Dingbat, who’s not an ID epidemiologist) – a novel virus in a naive population, easy enough to model. Where we stumbled was the argument with the virologists over transmission – is it contact, air-borne, or aerosol – so that screwed up the public message. I personally stumbled because the index cases in southern Korea and the US happened on the same date, and three months later Korea had a pretty good handle on the outbreak. I thought the US could perform that well, or close to. Nope.
So here we are in an entirely different situation, a theme and variations. Not a novel virus, and not an immunologically naive population. Most of us, if we’re honest, don’t have a solid idea of what happens next. More variants, more cases in vulnerable, i.e. non-immune sub groups, maybe more surges as we drop precautions like bringing lots of people back into poorly ventilated energy efficient office buildings, but it’s guesswork.
Too many variables.
Well not for my AI co-writer:
It is difficult to predict with certainty how the COVID-19 pandemic will spread around the world in 2023. The evolution of the virus and the effectiveness of public health measures will depend on several factors, including the development of new variants of the virus, the rate of vaccination, and how individual countries and communities respond to the ongoing threat of COVID-19.
It is possible that with the ongoing global vaccination campaigns, the number of new cases and deaths will decrease. However, it’s also possible that new variants of the virus may emerge and potentially cause new waves of infections. It’s important to note that the situation can change rapidly and the outcome is uncertain.
Also, it’s important to consider that the COVID-19 pandemic has highlighted the interconnectedness of the world and how a health crisis in one part of the world can have ripple effects globally. This means that even if certain countries or regions are able to bring their outbreaks under control, the pandemic may continue to spread in other parts of the world.
It’s also important to consider that the COVID-19 pandemic has also highlighted the importance of international cooperation and coordination in addressing global health crises. Governments, international organizations, and the scientific community will need to continue to work together to combat the pandemic and prevent future outbreaks.
Why think when you have AI?
Ha! Sounds just like many of my colleagues when talking to the media.
sorry i forgot to mention i was talking about china
HA Larry Fink From BlackRock must be talking up their book, like an Author on a book tour. Right when I was reading tommyt’s comment is received a invite for a Webinar.
Join CEO Larry Fink and BlackRock’s top thought leaders as they discuss the path forward in a historically challenged market – and where they see opportunity.
I would include the link but I do not want to dox myself. It is for ” Financial Professionals” only. 😎
That’s right, they are very strict so ONLY if you are a Wealth Manager should you enter the Webinar by clicking the button that says you are qualified:
https://www.blackrock.com/uk/professionals/solutions/events-and-webcasts
This is the same complaint people now have over porn sites and the button that says “Yes, I am over 18”.
Yes, inflation is all fixed – move along folks – nothing to see here….
Consider:
In all of the above key sectors of the economy, the third is either having a de minimus impact on prices or actually having an inflationary impact (Apartment Rentals).
The Fed simply lacks the tools for dealing with the sorts of inflation confronting the economy today.
• F@*$#*! 2022 was a record year for earnings call swearing: The “polycrisis” of runaway inflation, pandemics, interest rate increases, supply chain snafus and wars helped lift swearing on earnings calls and investor days to a new record high in 2022. Good job everyone. (Financial Times Alphaville)
• Elon Musk Might Never Be the World’s Richest Person Again: It’s not just that he became the first person in history to have $200 billion erased from their personal fortune. At this point, the bedrock of Musk’s fortune is his 42% ownership of Space Exploration Technologies Corp., the rocket launch company he founded in 2002, before he got involved at Tesla. (Bloomberg) see also Buffett Profile from 1979: “The investor’s investor” “I cannot promise results, but I do promise this: a. Our investments will be chosen on the basis of value, not popularity. b. We will attempt to reduce permanent capital loss to a minimum.” (Neckar’s Minds and Markets)
• What banning noncompetes could mean for the US workforce: Lina Khan’s FTC wants to change how we think about anti-competitive behavior. (Vox)
• Social Quitting: As I type these words, a mass exodus is underway from Twitter and Facebook. After decades of eye-popping growth, these social media sites are contracting at an alarming rate. (Locus) see also Is Substack the future of media? Elon Musk’s ruin of Twitter has been a boon for the newsletter platform, which is reshaping the market for the written word. (New Statesman)
• Widening Highways Doesn’t Fix Traffic. So Why Do We Keep Doing It? With billions of dollars available to improve transportation infrastructure, states have a chance to try new strategies for addressing congestion. But some habits are hard to break. (New York Times)
• Life Lessons from 1,000 Years: I asked a number of 90-year-olds a simple question: “If you could speak to your 32-year-old self, what advice would you give?” In total, there was over 1,000 years of lived experience captured. The responses were…incredible. They range from fun, playful, and witty to deeply moving. I’d encourage you to read through them with your loved ones and reflect on those that hit you the hardest. (Curiosity Chronicle)
• Neutrinos from a Nearby Galaxy Reveal Black Hole Secrets: The IceCube observatory has detected neutrinos from an active galaxy for the first time, revealing clues about how supermassive black holes gobble matter (Scientific American)
• RIP meme stocks. You were terrible investments: Unlike other bubbles, meme-stock mania didn’t really help anyone, including companies like Bed Bath & Beyond and GameStop. (Fast Company)
I asked OpenAi to look back at MLK on his “I have a Dream” speech, 60 years later:
“As I look back on my ‘I Have a Dream’ speech, delivered 60 years ago, I am filled with a mix of emotions. On one hand, I am proud of the progress that has been made in the fight for civil rights and equality for all. On the other hand, I am disheartened by the ongoing struggle and the work that still needs to be done.
As I spoke of the red hills of Georgia and the state of Mississippi, I could not have imagined that today, laws would exist to ensure that all people have equal access to voting and other basic rights. The Civil Rights Act of 1964 and the Voting Rights Act of 1965 were historic victories that have paved the way for greater equality and justice in our society.
However, it is clear that the dream of true equality has not yet been fully realized. Racism and discrimination still exist in our society, and we must continue to work to eradicate them. The fight for racial justice must continue, and I urge all citizens to speak out against hate and bigotry in all its forms.
I also want to point out that the fight for equality is not just about race, but also about gender, sexual orientation, religion, and all other forms of discrimination. We must continue to work towards equality for all, regardless of their background.
That’s pretty damned good for a computer!
Actually, we are racing towards the Star Trek concept of a Holo Deck, that recreates historical figures that you can talk to and go on adventures with, etc. You combine that kind of response ability with an avatar and you can see how this will actually work in the future.
And keep in mind, that’s what the Metaverse is all about.
You might think it’s creepy but I bet Japanese and other Asian people would love to have a place to store all their ancestors – so they can go and visit. I’d be thrilled to be able to chat with my Dad and my Grandpa – I’d love to know what my Dad thinks about Social Media, etc. He was a systems analyst and a philosopher.
Of course, it will depend on how much information you have on the person. Kids today have every thought they ever had recorded on-line. I’ve got loads of stuff from my writings. In fact…
Have Phil Davis analyze ibm
Phil Davis of Philstockworld would likely analyze IBM by looking at a variety of financial and company performance metrics. Some key areas he may focus on include:
Holy crap that’s scary! I kind of misses the point of actually analyzing it but I can’t say that’s a bad impression of me….
Yikes!
Phil Davis of Philstockworld would likely approach the analysis of cryptocurrencies with a healthy dose of skepticism. He would likely consider the following factors when evaluating the potential of crypto currencies:
The problem is it’s data cuts off in 2021 and it’s programmed not to offer stock advice, unfortunately. We’ll have to wait for MSFT to commercialize it before I can retire.
It’s weird, right? I am probably already past the point where this machine can figure out what I would likely say about things pretty accurately.
The same is true for actors who have enough screen time and any authors who have spoken enough pages or even influencers on Snap Chat or What’s App who have made enough posts – we can all be replicated.
Wow, there’s a fun business – we can have these things design custom influencers for us and then we can shamelessly sell their endorsements!
Then we can take over the world with our virtual politicians. After all – how many of them have you actually seen in person?
Could have already happened…
Maddie paid actual money to see this show:
https://youtu.be/FoTd918zhZc
AI-generated abstracts fool scientistsThe artificial-intelligence (AI) chatbot ChatGPT can write fake abstracts that scientists have trouble distinguishing from those written by humans. The chatbot was asked to create 50 abstracts on the basis of the titles of articles in five high-impact medical journals. Reviewers spotted only 68% of the ChatGPT abstracts — performing roughly the same as AI-detector software. Researchers are divided over the implications: some find it worrying, but others think that serious scientists are unlikely to use AI-generated abstracts.
It’s the not-serious scientists we have to worry about.
Although it does seem to be somewhat sensible. Check this out – I wanted to make an example of how it can be used to push bad science but it is having none of it:
But it was happy to write my obituary:
It is with great sadness that we announce the passing of Phil Davis, the founder and chief investment strategist of Philstockworld.com, a popular financial blog and investment advisory service. Phil passed away on January 14, 2023, at the age of 62, after a long battle with illness.
Phil was a gifted financial analyst, known for his sharp wit, his ability to see through market noise and his unique perspective on the markets. He began his career as a Wall Street analyst, but quickly realized that he could reach a wider audience through his own website. In 2006, he founded Philstockworld.com, which quickly became a go-to source for investors looking for independent, actionable investment advice.
Through Philstockworld.com, Phil shared his insights on the markets and the economy, providing readers with a unique and valuable perspective on the financial world. He was known for his ability to make complex financial concepts easy to understand, and his dedication to helping individual investors make better investment decisions.
Phil was not only a respected commentator on the financial markets, but also a mentor and a friend to many of his readers. He was passionate about helping others and always willing to share his knowledge and experience.
Phil is survived by his wife, children and grandchildren. He will be greatly missed by his family, friends, and the countless readers of Philstockworld.com who were touched by his wisdom and his kindness.
See, it’s already planning to clone me and rip off my strategies! 🙄
MSFT will probably charge extra for more recent, current research.
Oh for sure. Here, see what ChatGDP has to say about it:
There are several potential benefits to paying for access to ChatGPT, a powerful language model developed by OpenAI.
I’d say we should be investing in server storage. You can see how this kind of automated content generation will massively increase the amount of data on the web.
To be fair, it also does the case against itself:
It is possible that some individuals or organizations may view ChatGPT as a waste of time and money for several reasons, including:
EQIX too expensive
DLR, not bad
DBRG ?
CD & GDS – Chinese, no way
Data storage:
PSTG good performance in 2022 but looks expensive
MU short term memory cycle problems
NTAP ?
STX value play
PSTD Where do these companies come from? $8Bn market cap? $2.7Bn in sales and $400M in profits makes $8Bn palatable since they were at $1.3Bn in 2019 so 4 years to double and profits only just starting. $881M in CASH!!! net of debt is also nice so WINNER!!!
MU will be losing $2Bn this year and, judging by how harshly INTC has been treated (and they MADE $8Bn), I don’t think there’s any hurry.
NTAP $64.73 is $13.8Bn and they make $1.2Bn so 11x. What I don’t like is they had $6Bn in sales in 2019 and they have $6.5Bn in sales now so they grew to the point where they started annoying the big boys and now they don’t have the nuts to crack into larger clients. Still, with $646M in CASH!!! net of debt, they are a reasonable value play but I wouldn’t expect them to grow much unless they get a new CEO – as this one is coasting and has clearly tried many things that haven’t worked. Not a bad one to hold as they will still grow with the market and eventually someone will buy them.
STX – I think they are too HDD heavy and, while I did like them years ago as a play in the “Internet of Things” needing cheap storage – I think we’ve progressed to the point where SSD is simply too cheap to keep people using hard drives. That theory is held up by STX’s $11.6Bn in sales last year, which were the same as 2018 ($11.2Bn) and they project 2023 to be just $7.8Bn and $9.2Bn next year as they try to re-balance. Clearly there are better places to invest in this space.
EQIX insane price (75x) also $12Bn in debt.
DLR is idea on a side play but also insane valuation.
DBRG is a baby version of DLR. They don’t make any money yet and I’d like them more if they had cash but they used it all and have $5Bn in debt with $1.2Bn in revenues and $400M in losses so I’d wait for them to dilute before getting in – if at all.
CD is the best one so far but China.
GDS also loaded with debt and no profits in site – CD looking even better now.
nice little run up in CAKE to start the year
VIX down to 18
nothing to worry about
Phil, I have 95 of the Jan 20 -$5 calls on Rig now at 0.6 ( avg purchase price of 0.89), would it make sense to roll them to the Aug $7 calls for 0.7$, net spend of 950$ or would it be better to just take a loss and close out and wait for a pull back?
The problem is really you had no faith when they were $2.50 in September and now, in January, at $5.61 – you finally like them again.
That makes it hard to say what’s a good strategy since I’m not sure you like them enough to bother with and buying naked, short long calls is the worst possible way to play options – so it’s only more and more money down the drain pursuing this “strategy”.
We teach our members to make money selling calls to suckers who pay outrageous premiums and think they are smarter than the market. RIG is at $5.61 and you want to take the 0.60 you have in the money and place your break-even up to $7.70 – 37% higher than it is now. And that’s AFTER it’s already had a 100% run to get to where it is now!
What is the actual strategy? At what point will you ever be satisfied?
If I were going to play RIG I’d wait for it to pull back since I think Oil is too expensive, testing $80 or after earnings (late Feb) and I’d play something like the 2025 $4 ($3)/$7 ($1.85) bull call spread at $1.15 so I’d be over 100% in the money to start with $1.85 (160%) upside potential at $7, rather than breaking even at $7.
Meanwhile the 2025 $2 calls are $4 so if the $2/5 ($2.50) spread got closer to $1.15, then that’s a way better spread for the money as I’d make more than 100% over $5 so RIG would have to FALL 10% for me NOT to make 100%.
Totally agree with you, the calls were a left over of my previous fallacy of buying naked calls until I picked up selling calls/ puts. I added some stock at lower prices instead of the calls and took my avg stock prices to 4.88/share!!
https://seekingalpha.com/news/3924582-why-are-defense-stocks-falling-goldman-downgrades-lockheed-northrop-raytheon
Goldman just downgraded LMT to a target price of $322? I hope it gets there, I didn’t think I would ever get another chance to buy LMT in the 300s, let alone below 350…
I wonder why but yes, nothing but an opportunity if it gets there.