Good morning!
That's right, we were going to remain cautious into Chinese New Year because China may be forestalling a lot of bad economic news ahead of their most vital holiday. Not going to help with anything.
Behold the awesome rally!
VIX is calming down, that's more important.
Told you so on /NG:
And that's the old contract, Feb hit $4.39 from $3.90 yesterday.
Dollar is back from vacation:
Oh no, don't list my company in China! <end sarcastic font>
- With shares down ~30% from recent highs late last year, JinkoSolar (NYSE:JKS) is up 8% this morning after the company listed its principal operating subsidiary, Jiangxi Jinko, on the Shanghai Stock Exchange.
- Shares of the subsidiary traded up 111% on the day to close at 10.55 RMB; post IPO Jinko retains 58% of the shares of its subsidiary.
- With 10.0b shares outstanding, and with shares trading at 10.55 RMB, the market cap of the subsidiary is ~105b RMB or ~16b USD — JinkoSolar retaining 58% of the subsidiary owns ~$9.3b of stock in Jiangxi Jinko.
- Jinko's own market cap is ~2.0b, indicating that the Company owns stock in Jiangxi Jinko worth ~4x more than JinkoSolar's current market cap.
This is interesting. North America is down but Europe blasted higher:
PTON -9.16%Jan. 26, 2022 10:03 AM ET
- State Street Investor Confidence Index: 89.3 in January vs. 84.8 in December (revised from 85.6).
- North America ICI to 93.6, down 1.4 points.
- Asian ICI to 97.1, up 1.7 points.
- European ICI to 85.3, up 18.2 points.
- “Investors continued to shy away from risk assets in January as the global ICI continued to hover close to its weakest reading in over a year,” says Rajeev Bhargava, head of Investor Behavior Research, State Street Associates. “Sentiment within the US remained subdued as an increasingly hawkish stance from the Fed, rising Covid infection rates locally due to the Omicron variant, and a disappointing start to earning season likely led to a continued reassessment of allocations away from higher beta assets."
Hard to imagine what would cause Europe to go from 67.1 to 85.3 other than some sort of error.
Still, here's more good data:
SEB +0.25%Jan. 26, 2022 10:01 AM ET
- December New Home Sales: +11.9% M/M to 811K vs. 760K expected and 725K prior (revised from 744K).
- Last week, existing home sales in December fell 4.6% M/M, more than expected
Another I told you so (yawn):
YETI +3.42%Jan. 26, 2022 9:55 AM ET
- Credit Suisse singles out Yeti Holdings (NYSE:YETI) as its new top pick in the consumer products sector. Analyst Kaumil Gajrawala says top-line momentum continues for YETI on further U.S. brand penetration, high repeat rates, a growing international business, consumer mobility and interest in the outdoors and new products. "We think these factors can keep near-term growth at or above company’s algorithm (+15%). Despite inflation, margins are cushioned by a strong direct-to-consumer business," he notes. The firm keeps an Outperform rating on YETI and price target of $100. Following the recent market selling pressure, YETI is trading below its 50-day, 100-day and 200-day moving averages.
We only have the short puts though. My comment last week was:
- YETI – I absolutely want a big position in them but there's no emergency – I'd rather hear earnings first.
So, for the LTP, let's build on our 10 short 2023 $65 puts we sold for $7 (now $10.75) and:
- Sell 10 YETI 2024 $70 puts for $16.50 ($16,500)
- Buy 20 YETI 2024 $60 calls for $22.50 ($45,000)
- Sell 20 YETI 2024 $80 calls for $14 ($28,000)
That's net $500 on the $40,000 spread so we have $39,500 worth of upside potential (7,900%) if YETI can get back to $80 in two years. Our intention is to take the 2023 puts off the table however, since the 2024 puts are aggressive, so, if YETI fails $60 we will stop those out – probably at $12.50.
As it stands at $70, YETI has a $6Bn market cap and they are making about $250M so 24x for a rapidly growing company is a bet we'd be happy to press if they go lower. My thesis on them is they'll do fantastic when people do go back to the office and get jealous of other people's Yeti cups.
