Morning Poppers (I’m a Man of My Word Edition)

UPDATE:
Apple target raised to $194 from $182 at Morgan Stanley
Post acquires BOB for $77.

Hello mates, it looks like futures are higher again, alongside the winds of Hurricane Maria — who is making her way down to Puerto Rico to wreak havoc. While we get to enjoy the availability of being able to drive away from these storms, the poor people on these god forsaken islands are forced to endure the wrath of Mother Nature and all of her indecorous fury.

WATCH: The latest updates on #HurricaneMaria from @alroker on @TODAYshow https://t.co/dllD2cBoGv

— NBC News (@NBCNews) September 19, 2017

Before I get into the ins and outs of this morning’s tape, I just about finished up the first season (new show) of Ozark, starring Jason Bateman. Wow. It’s about a financial advisor who launders money for the Mexican cartel. It’s a really strong offering and highly entertaining.

WTI is higher by another 0.8% this morning. The WTI-Brent spread is nearly $5, so this isn’t merely WTI playing catch up post Harvey, thanks to supply disruptions. This new leg up for oil is real and has surprised many, myself included.

Gold is edging higher. The dollar is -0.28% v the euro and the NIKKEI ripped through the ceiling tiles, +1.96%.

Over in Europe, the Eurostoxx 50 is flat and S&P futs are +2.6 and ETH and BTC are lower by 2.6% and 1.7%, respectively.

As it pertains to my XIV position, I will be selling it at $95 or better today, because I’m a man of my word.

Here is my technical analysis on my most recent pick. $XIV. pic.twitter.com/4pyHyNjJYr

— The_Real_Fly (@The_Real_Fly) September 11, 2017

And here is more from my Twitter feed.

Are you surprised to learn that Mexican melons or Turkish grain, labeled as ‘organic’ are total and complete fabrications?

A USDA audit was published today found that the much of the incoming cargoes of food labeled ‘organic’ failed to meet the compliance standards set forth by the agency.

In a nutshell, they can’t prove whether or not the food was sprayed with insecticide. Ergo, the food cannot be proven to be organic.

Its review said that the department’s Agricultural Marketing Service, which oversees organic standards, couldn’t prove that incoming cargoes “were reviewed at U.S. ports of entry to verify that imported agricultural products labeled as organic were from certified organic foreign farms and business.” The audit also found the agency hasn’t figured out how to ensure that shipments sprayed for insects don’t get labeled organic before they reach grocery store shelves.

As consumer purchases of organic foods soar, U.S. imports have been on the rise and were valued at $1.72 billion last year, USDA data showed. Consumers typically pay a premium for organic products, which are supposed to be produced without synthetic fertilizer and genetic engineering.

“The lack of controls at U.S. ports of entry increases the risk that non-organic products may be imported as organic into the United States and could create an unfair economic environment for U.S. organic producers,” the report said.

Foreign purchases of organic corn and soybeans — used as feed for cows and chickens — have been skyrocketing in recent years, particularly from Turkey. Earlier this year, some organic certifiers said they were tightening standards on imports amid concerns of fraud.

The USDA in June revoked the organic certificate of a Turkish grain and oilseed handler that had sold organic soybeans that were fumigated with aluminum phosphide, a substance not allowed under organic rules.

The increase in imports is “a new phenomenon,” said Peter Golbitz, founder of Florida-based consulting firm Agromeris. “It certainly overwhelmed the system in place, and it’s now recognized that better communication needs to occur between the agencies involved in oversight and import regulations.”

This is especially vexing, since I’m paying an exorbitant amount of money for goods that are supposed to be chemical and GMO free. I am not surprised, however, that foreign savages are hoodwinking us American do-gooders and fleecing us of our money.

There are two major themes in tech that you need to be paying attention to now. The first being the adoption of OLED technology, which will replace LED/LCD and the upgrade cycle at data-centers from 40g to 100g. You could do a cursory google search to understand what this means, engineering wise and why it’s so important. I’m just here to give you some trading ideas. I do not provide this information selflessly, but expect YOU FUCKING RETARDS to do some due diligence, report back to me, in order to vet out the best ideas.

Let’s establish a few facts. Web services is quickly becoming the domain of Amazon’s AWS. Agreed?

If AWS is undergoing a major upgrade cycle, those who supply services to Amazon stand to benefit. Agreed?

Good.

Just like with my OLED thesis, there are ancillary plays, like COHR, that will reward shareholders will immense gains, even more than the actual producers of the product.

The same could be said about the AWS upgrade cycle.

I mentioned some ideas in Exodus today. Here is what I’ve come up with so far. Bear in mind, this sector is about to catch fire again, after today’s announcement that Amazon was reducing pricing for AWS.

AAOI, GIMO, AXTI, NPTN, ACIA, MTSI, OCLR, ANET, LITE, IPHI, FNSR.

Today’s gains in AAOI were a long time coming, ever since the stock collapsed after last quarter’s earning disappointment.

The risk with owning AAOI is customer concentration. Because Amazon is such a big customer of theirs, they’re exposed to the possibility that Amazon will pressure them on margins and/or choose a different supplier. To hedge this risk, providing you wanted to play this sector, buy a basket of stocks and quit trying to get rich off one name.

The other major narrative in tech is semiconductor processing power — led by stocks like LRCX and NVDA. We see to be in a perfect case scenario where companies are innovating, yet not cutting each other’s throats over pricing. This cannot last forever. Eventually, they’ll try to grab share again by reducing prices, eroding margins and share prices.

For now, especially in the OLED rollout, we are in the early innings and there is a lot more room for upside.

Disclosure: Long OLED.

With the tech industry moving away from LCD displays to OLED, suppliers are in the crunch. The new Apple X boasts an OLED display, ‘cutting edge’ horseshit — but it widely rumored to be scrambling to find a sufficient amount of supply to reach their demand — which has resulted in a boom for OLED stocks.

This from USA Today, today:

Apple’s iPhone X boasts a cutting-edge screen bursting with crisp, bright images, the sort of eye-popping technology that gets consumers to line up to spend $1,000 or moreon the device.

But that line will be long and slow: Apple won’t start shipping the redesigned phone until Nov. 3, more than seven weeks after it was unfurled Tuesday.

The reason is as crystal clear as iPhone X’s new OLED screen. OLED manufacturers can’t build the screens fast enough as they increasingly pop up on smartphones, high-definition TVs, watches, virtual reality headsets and other gizmos. It’s an issue that not only is dogging Apple, costing it billions of dollars in short-term sales, but has tripped up Samsung, HTC and Google, too.

“It’s an industry issue,” says Ben Wood, an analyst at CCS Insight, a research firm headquartered in London. “There is a lack of manufacturing capacity for OLED and a lower yield of screens that meet (quality) standards.”

Apple declined comment on OLED delays.

Both Samsung and LG are investing up to $20 billion on OLED production to meet demand. It has gotten so bad, thanks to Apple, that smaller companies are being forced to switch back to LCD because Samsung is busy servicing Apple’s needs first.

Doing a cursory search inside Exodus, I found only a handful of OLED plays, one of which I am unfamiliar with.

This one is obvious, OLED, a major supplier to Samsung. I just bought some today. I realize I’m a little late to the party. But in reality, the party is just beginning.

Another play is LPL (LG) and the one I am least familiar with is EMAN. With zero revenue ramp, I am reticent about buying that one. Another small cap one is KOPN.

Another OLED play, one that isn’t obvious to those just chomping charts all day (because this requires reading) is UCTT. They attribute a large part of their recent success and margins ramp due to their contract manufacturing for OLED. Another OLED fab is ORBK and has been ramping daily. Get with the program.

As an aside, I bought Chinese wafer foundry SMI today — because I could.

Wait, there’s more.

These guys supply the lasers to the manufacturers who make OLEDs. What?! Stop the presses. COHR is a fucking maniacal beast.

Wait a second, Bove is a bank bear? When did that happen? Apparently, he was and is now taking a victory lap around the asshatted bulls who swore that bank stocks were heading higher.

Guess what, jackass? They’re not.

Source: CNBC, authored by Mr. Bove himself

Stock buybacks are done for financial engineering purposes. The reality for banks is that capital is the core source of bank earnings. It is the basis of leveraging the bank balance sheet and making loans. If a bank reduces capital it lowers its ability to earn money; weakens its secular growth prospects. Why would anyone want to buy a company which is lowering its growth potential to play “stock market?”

Also, even though there is likely to be some easing in bank regulations, this is not key to results. At the moment, living under draconian regulations, which have effectively nationalized the banking industry, banks keep reporting record earnings as noted above.

At the most basic level, it is clear when evaluating any company the first issue is “How are sales?” “Are you selling your products?” For some odd reason, no one want to ask banks that question. Yet banks are like every other company. They have specific products – most importantly loans and capital market offerings.

They have to sell these products to grow earnings. In the past year, this has not been a positive development. Virtually every product they sell is either not selling or selling at a much slower rate than a year ago. This includes commercial and industrial loans, residential real estate loans, consumer loans, and even non-residential real estate loans. Trading stocks has not been great, and investment banking is slowing. Why should I or anyone else buy into a slowing sales cycle?

Plus, it is very important that the products that banks sell be of the highest quality. They are no longer in that category; bad loans are creeping up.

Bottom line, all the financial gimmickry and false hypothesizing in the world is not going to offset the very real fact that banks need to sell more products to bolster their stock prices. One hopes that they will do this. If they do then it will be time to buy these stocks.

Did you hear that, shit heads? The gig is up. You can no longer hide behind financial gimmickry. Dick Move just pulled your card and now you’re feeling all stupid, and shit.

As an aside, banks are higher by 0.4% today, completely ignoring the missives of a Mr. Dick Bove. My FAZ is off by 1%, but my XIV is trucking forward. It’s actually a pretty shitty bull market day, with just 61% of stocks green for the session.

If XIV doesn’t hit a new record high, I’ll eat the contents of a trash can on a livestream,

Good morning lemmings,

Markets are set to take the fuck off again, faggots. I know it’s a little early to curse, and shit. But I was hoping to catch you off guard, leaning sideways, so that I could make you spit coffee through your bottle noses, unto the guy sitting next to you on the train, or at work.

SPY futs are +4, tapering off from last night’s hedonistic enthusiasm. Eurostoxx 50 are +0.36%. The only other notable happenings is BTC +8%, ETH +12% and gold -0.5%. I have to do some research into this, but it seems that gold is starting to correlate inversely to bitcoins.

The big M&A deal this morning two merchants of death, err defense, are merging, NOC for OA — you’ve got to be fucking kidding me. NOC specializes in our Navy and OA in our bullets. Combined, they’ll become one big giant asshole.

OA shareholders will receive $134.5 in cash.

The other deal of note is ITRI for SSNI at $16.25.

Here are the other happenings, courtesy of my damned Twitter feed.

I do realize that I have no idea where the price of Bitcoin and Ethereum are heading in the short term. I mostly trash talk it just to get a rise of out you cryptofags. I do see that ETH is higher by 12% now and seemingly nothing can stop it from going higher — not even a ban in China. Truth be told, I enjoy to watch the digital scams flip and flop. It reminds me of when I was a younger man trading bullshit dotcoms, which were worthless, but at the same time worth billions. The more I reflect on my career as a manager of other people’s money, the more I am defined by the dot coms. Again, it was truly something to behold. You just had to be there.

Over in Asia, the Hang Seng is ripping higher by 300, or 1.1%. The Korean KOSPI is up 1.15%, on news that life still exists there. S&P futures +6, NASDAQ +18. It’s gonna be a good day to be long stocks.

DAX futures are +0.6%. Hurricane Jose weakened and will not destroy NYC. Life as we know it marches on to the sweet melodies of unchecked success.

I copped a Duke Ellington at Newport 1956 vinyl and have it playing in the background now. The jazz fest was great, as always. I managed to eat some paella (skipped the evil sausages and chicken) and swig down a few cups of Sam Adams swill. The weather was ideal, high 70s, very little humidity. The crowd, genteel, as should be expected.

As soon as I sat down to peruse the news, all I could find was how dreadful Jennifer Lawrence’s new film was and how people now hate her for making it. I don’t get the anger people display for entertainers. Futures are mildly higher, commodities are flat and bitcoins aren’t crashing. This is a meaningless set of metrics, since you and I both know volatility will crash tomorrow, stocks will race to fresh record highs, and we’re all going to feel good about our prospects.

Bull markets make geniuses out of us all, the evergreen feeling of success that always has a unique feeling to it. I perused some investment properties today, and have been considering getting into the flipping business. My experiences during the housing crash keep these impulses at bay, more or less. Some of the homes in Trenton, NJ are selling for a song, less than $40 per sq ft, and could easily be fixed and rented out for a decent profit. The very best investments I’ve made have been in real estate, aside from the dot com and 2003, 2009 revival days.

How many of you invest in real estate? Just curious.

I’ll be checking the headlines and futures throughout the night and will be posting something later on. If you have any requests, tell me now. It’s a slow night so far.

As I said yesterday, I’ll be at a Festival today. In the meantime, I want you to check out the following stocks — perhaps you’ll find a few good trades with this list. I created this screen years ago, using moving averages, in an attempt to digitize a certain look in a chart.

The look is a long consolidation that is about to break out. In the past, I’ve fired off many successful trades using this screen, as long consolidations tend to have explosive upside events, once they break out.

We’re getting back to solely focusing on stocks again. I’m sure some of you need some time to detox from the filth, but quit arguing with each other in the comments section — you fucking faggots.

Instead of sauntering around the house and drinking all day, I like to head out to the local festivals, especially in the fall. I’m fortunate to live in an area rich with culture and things to do. My favorite festival is the Princeton Jazz Festival, which will be starting soon, later on today thru 6pm.

I stumbled upon this festival when I moved here about 5 years ago and have been going back ever since. It’s a delightful panorama of food and music — both very crowded and energetic with people dancing in the square to the tunes of yesterday.

I remember the first time I heard the melodic and haunting sounds of Duke Ellington’s Mood Indigo. It was there and I could not track down that song for years, until I heard it again while exploring the Duke’s catalog of genius. I actually had posted it on my Instgram account, a brief 5 second clip. I’m inactive on ‘the gram’, but if you’re curious you can find it in my archives there below.

Fun fact: this is the same band that plays for boardwalk empire. #princetonjazzfest

A post shared by the_real_fly (@the_real_fly) on Sep 14, 2014 at 4:20pm PDT

All of the other festivals are halloween based, typical fright fests, corn mazes, and harvest themed events. As it so happens, Halloween is my favorite holiday of the year. There’s something about fall in the northeast that is to be cherished. Christmas is great, but I’ve been trained to dread it thanks to wanton American consumerism. From mid-september through early November is pure atmospheric joy here, from the turning of the leaves, to the subtle bitterness of old man winter knocking, eventually to the foliage. What’s not to like?

I’d be interested to hear of your favorite festivals, especially if you live in the tri-state area.

Time to get some sleep.