Trading Insights
Tuesday Morning Rebel Brief: Pelosi Makes a New Trade
All major indices are trading moderately lower this morning, with consumer discretionary leading the market to the downside. This comes after Target issues a short-term warning about lower profit margins, and BofA raises the flag on increased credit card usage — especially at the pump. We’ll get into that, but first, let’s talk about a […]
All major indices are trading moderately lower this morning, with consumer discretionary leading the market to the downside. This comes after Target issues a short-term warning about lower profit margins, and BofA raises the flag on increased credit card usage — especially at the pump.
We’ll get into that, but first, let’s talk about a different type of unusual option activity…
Nancy Pelosi Buys Apple and Microsoft Calls
https://twitter.com/jonnajarian/status/1532388094783143937?s=20&t=k5FUvmx2yXbWBwCDrdvjHw
Nancy Pelosi (and her husband Paul Pelosi) disclosed new option purchases in Apple ($AAPL) and Microsoft ($MSFT). That activity is as follows:
100X $AAPL $80 STRIKE CALL OPTIONS EXPIRING 03/17/23
50X $AAPL $80 STRIKE CALL OPTIONS EXPIRING 06/16/23
50X $MSFT $180 STRIKE CALL OPTIONS EXPIRING 06/16/23
These three trades (valued at over a million dollars) were made between May 13th and May 24th and follow Pelosi’s typical investment style: long-dated call options (usually tech stocks) bought deep in-the-money.
Target Places Inventory On Discount, Share Price Goes Along With It
It’s been a few weeks since Target ($TGT) fell more than 25% on lower than expected profit margins. And it looks like the pain isn’t over yet.
Target has announced plans to cut excess inventory by placing big discounts on items that have fallen out of favor with consumers, particularly in their sports & leisure, and clothing departments.
The retailer is adamant that Q2 will remain a “strong sales environment” with continued “top line growth”. But the pain isn’t coming from the top line. Today, it’s all about the bottom line — profit. Target has lowered profit margin expectations for Q2, from 5% down to 2%. However, they expect to pick up the slack in the second half, forecasting margins of 6%.
Gene Munster Weighs In On Elon Musk’s Twitter Buyout
Outspoken Tesla bull Gene Munster said Monday that he believes investors have lost some faith in Elon’s will to purchase the social media giant, Twitter.
On an episode of CNBC’s Fast Money, Munster said his expectations of seeing the deal completed have dropped from 70% to 50%. This follows Musk’s June 6th 13-D filing against Twitter for allegedly breaching their obligations of the merger agreement.
Twitter ($TWTR) is trading lower by more than 1% in the premarket. Tesla ($TSLA) is trading lower by more than 2%.
Bank of America: More Americans Using Their Credit Card at the Pump
Bank of America says more consumers used credit cards to pay for gas in May — particularly those who make less than $50,000 per year. Average credit card allocation for gas increased 6.4% from February. Credit card spending as a whole is up 16% year-over-year.
Still, Bank of America’s senior economist David Tinsley remains “cautiously optimistic” on the US consumer. Tinsley cites strong demand for entertainment and travel spending, as well as higher consumer savings compared to pre-pandemic levels.
For more brief takes on this morning’s market-moving news, check out Jon Najarian’s 60 Seconds!
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