Option Millionaires

[uranium-pinto-beans]

Critical intelligence before the U.S. market opens
It's hard to not follow the crowd in this grind of a market.
We've flocked overseas -- specifically to Europe -- after a not-so-amazing U.S. performance this year. Of course, BTIG's Dan Greenhaus notes today that the U.S. has outperformed its European counterparts by a whole 2.2 percentage points since the end of the first quarter. But that's against a 13% underperformance since the beginning of the year.
And bonds? Like Omega Advisors's Leon Cooperman said at the Sohn conference (http://blogs.marketwatch.com/thetell/2015/05/04/sohn-conference-live-blog-top-investors-make-their-picks/) yesterday, (and lots of others these days): fuggeddaboutit. J.P. Morgan tells us in a note today that with the dollar starting to weaken and bond yields spiking, there really is nowhere else to go but equities. They also say it's a fine time to start looking at multinationals. See our Chart of the Day.
As for the inability of investors to forge their own path, that isn't their fault, really. It's all down to that central-bank global money spigot, says Citigroup . Analysts there have taken a long look at what's going on with liquidity in the markets, specially that "here-today-gone-tomorrow" mentality that's haunting lots of institutional investors.
It's all about "herding," says Citi. Central-bank intervention and asset purchases have been forcing investors into positions they would otherwise not hold. The more liquidity officials toss at markets, the more they upset the natural diversity of markets
"For the past few years, valuations in more markets seems to have stopped following traditional relationships and instead followed global QE. Likewise in meetings with investors, we have been struck by how little time anyone spends discussing fundamentals these days, and how much revolves around central banks," says Citi's global head of credit strategy Matt King .
King's "ominous" conclusion? "On the way in, it has mostly proved possible to accommodate this, as investors have moved gradually, and their purchases have been offset by new issuance. The way out may not prove so easy; indeed, we are not sure there is any way out at all."
Speaking of herd mentality. There are lots of naysayers on Tesla these days. At least two analysts are taking them to task. Check out our Call of the Day.
Key market gauges
Futures on the Dow (YMM5) and the S&P (ESM5) are spinning their wheels waiting on bigger events to come this week, such as the jobs data and a speech from Fed's Yellen. Aussie stocks finished flat despite news of a rate cut, (http://www.marketwatch.com/story/australia-cuts-policy-interest-rate-to-record-low-2015-05-05) but Chinese stocks (http://www.marketwatch.com/story/asia-shares-mixed-as-australia-awaits-rate-decision-2015-05-04-23103516) slumped 4%, the second-biggest fall this year, partly due to worries about a margin-trading clampdown. Europe is up. Gold (GCM5) is off slightly, and crude (CLM5) is up a little.
The quote
"No one can set the price of oil -- it's up to Allah." -- Saudi Oil Minister Ali al-Naimi talking to CNBC (http://www.cnbc.com/id/102647881) about the futility of predicting oil prices.
The economy
Trade deficit data at 8:30 a.m. Eastern, and ISM nonmanufacturing at 10 a.m. is all that's on tap today.
Earnings
Office Depot (ODP)
Archer Daniels (ADM), Kellogg (K), Office Depot (ODP) and Sprint (S) are some of the names coming at us early. Disney (DIS) moved up its earnings to 8 a.m. Eastern, so that executives could attend the funeral of Dave Goldberg , the husband of board member and Facebook operating chief Sheryl Sandberg , who is also a board member. Goldberg died last Friday in an apparent accident while exercising (http://www.marketwatch.com/story/dave-goldberg-died-while-exercising-on-vacation-2015-05-04).
After hours, it's Groupon (GRPN), Herbalife (HLF), News Corp. (NWS) and others.
The buzz
In a trend we've been seeing with food companies lately Panera (PNRA) says it's going to shift towards a healthier menu. The sandwich-and-salad chain plans to axe 150 artificial sweeteners, colors, flavors and preservatives from its menu by next year (http://www.marketwatch.com/story/panera-to-drop-at-least-150-artificial-ingredients-from-its-food-2015-05-05).
The call of the day
It's not just Pacific Crest. Jefferies has also come out swinging on Tesla. Its analyst Dan Dolev has initiated the electric-car maker with a buy rating and a $350 price target (upside $450 /downside $150 ). Firstly, he says worries about Chinese sales are overblown, citing a detailed consumer survey that reveals Tesla could sell at least 500,000 cars by 2020 in North America / Western Europe alone. That survey also shows little consumer enthusiasm for Apple / Google cars.
Stacking Tesla models up against its peers, the seeds are sown for the company to deliver a 60% adjusted-earnings compound annual-growth rate through 2020. One big plus for Tesla, notes Dolev, is the key competitive advantage it has with its battery.
Pacific Crest is also taking on Tesla (TSLA) "naysayers of demand", says its analyst Brad Erickson , who's sticking to his overweight rating and $293 price target. "We believe misperceptions of both falling lead times on Tesla's website and bigger discounts for show-room models are driving some to believe that Model S demand is wavering. We'd disagree, based on feedback from Tesla sales centers," Erickson says. Tesla reports Wednesday after the bell.
The chart
Going long S&P 500 (SPX) domestic companies and short S&P 500 multinationals, based on a stronger U.S. growth profile and rising dollar, has been the call from J.P. Morgan since late last year. But its strategist Dubravko Lakos-Bujas has now changed his mind.
"After a sharp 17% outperformance of this pair trade over the last 6 months (32% over the last 9 months), we recommend investors take profit on this trade and go long multinationals as they have become more attractive on a relative-value basis, U.S. dollar valuation is rich and growth is improving abroad," he says. Here are a couple of charts to back up his case:
It helps that multinationals are out of favor, compared with domestic stocks. Plus, slowdowns have historically favored high-quality, stronger balance sheets and healthier margins, all qualities of multis.
Which companies getting the bulk of revenues from abroad does J.P. Morgan like? Coca-Cola Enterprises (CCE), ConocoPhillips (COP), Transocean (RIG), Wynn Resorts (WYNN) (which continued to move up yesterday after that 17% plunge last week), Priceline (PCLN), Google (GOOG) and Caterpillar (CAT), to name a few.
Random reads
Want to explain the stock market to your favorite millennial? This should do it. (h/t Learnbonds (http://learnbonds.com/warren-buffett-cant-explain-it-better-1952-stock-market-cartoon/118072/?google_editors_picks=true))
(http://www.youtube.com/embed/XN6hMTXLYSA)
Swap stories, play dominoes. Obama on hanging out with Letterman after retirement (http://time.com/3846483/barack-obama-david-letterman/).
"The Wire's" Chad L. Coleman loses it on the NYC subway (http://www.thedailybeast.com/articles/2015/05/02/walking-dead-star-loses-it-on-nyc-subway.html?via=twitter_page).
The FBI had been watching one of the Garland, Texas shooters for nearly a decade (http://www.foxnews.com/us/2015/05/05/it-time-to-roll-suspected-texas-shooter-had-been-monitored-by-fbi-since-2006/).
If you can make a forex joke out of a baby, you must be Jimmy Fallon :
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"I want to say congrats to Prince William and Kate Middleton, who welcomed a baby girl on Saturday..." #FallonTonight pic.twitter.com/594qe6uK5B

— The Tonight Show (@FallonTonight) May 5, 2015

)
Clearly some hat envy going on. Haters. (http://www.washingtonpost.com/news/morning-mix/wp/2015/05/05/investigating-sarah-jessica-parkers-mysterious-met-gala-headdress/)
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Sara Jessica Parker looks like she is wearing a Pinterest Chinese New Year project on her head. #MetGala pic.twitter.com/dh65Efrb3s

— Ryan McCann (@fakefbnerd) May 5, 2015

)
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