At 4:13 p.m.:

Closing Breadth

S&P 500 Sectors

% Movers

Nasdaq 100 Heat Map

* When the president pumps up equities ...

I am buying more TerrAscend (TSNDF) now.

The stock has trailed its cannabis peers recently.

I expect good EPS results shortly and for the company to resume its buyback program (the window is currently closed).

Investment short Pool Corp. POOL is -5% after weak guidance. 

I won't be posting very much this afternoon.

I will be out of the office beginning at 1 p.m. for a lunch, board meeting and routine doctor's appointment.

From the Fed's Waller: General tone is that many companies are frozen by tariff uncertainty; Wouldn't surprise me to see layoffs and higher unemployment if tariffs are big 

- Bloomberg TV

Firms are trying to see how to navigate tariffs; Smaller tariffs will have modest pass through - Easiest place to offset tariff costs is by cutting payrolls.

- We need better control of the budget deficit

- No obvious reason why tariffs should be off the table as part of the fiscal debate

- Not likely to see big impacts from tariffs by July 1st; (U.S. economy) could see prices going up as layoffs start to happen; H2 2025 will bring clarity on tariff impact

- It's less the level of unemployment but the speed of change that's the (Fed) focus; possible that tariffs could push up unemployment quickly

- Struggle over last 18 months has been uneven inflation progress

- Still strongly believe that tariffs will be one-time price-level effect

- Demand slowdown from tariffs would offset some inflation impacts

- It's going to take courage to stare down tariff price increases and see them as transitory; I'm willing to look through tariff price increases

- Rate cuts could come from rising unemployment

- Fed will look at data to determine policy moves; Data focus brings risk of being late on policy action; serious drop in job market could prompt more cuts, sooner

Adding to SPY $542.46 and QQQ $462.93 shorts.

From Peter Boockvar:

Claims data and CapEx orders

Initial jobless claims were as forecasted at 222k and up 6k w/o/w though remaining still very low. Continuing claims dropped to 1.841mm from 1.878mm, though still elevated.

Bottom line, companies are in wait and see mode when it comes to their labor force for both existing workers and potential new hires. They are holding on to their current workers until there is some bit of needed clarity on trade/tariffs but everything I’m hearing is that many are taking a pause on adding new ones.

Core durable goods orders in March were as expected when we include the tweak revision to February. The headline jump of 9.2% was all due to a 139% rise in ‘nondefense aircraft’ orders.

What is pull-forward ordering and what is not is uncertain here as this data comes before the April 2nd ‘Disruption Day’ and the pause that followed a week later ex China. What has been evident from a variety of different manufacturing indices over the past few months has been the drops in capital spending plans. To quantify in hard data, over the past 2 1/2 years core durable goods spending is up a TOTAL of 1.7% in NOMINAL terms.

Core Durable Goods Orders in Dollars

From Peter Boockvar:

The Fed's tough job highlighted in the Beige Book that they write/Earnings commentary

According to the Chinese Ministry of Commerce spokesman speaking in Beijing today, "any reports on development in talks are groundless." So, they are not really talking and what would any deal look like? A 2.0 of the 2018-2019 agreement encouraging China to buy more soybeans, LNG, etc...? Our side needs to express to us what they want out of this if the economy and markets are going to have any comfort. My feeling is we don't know what we really want outside of regaining back the manufacturing of key things, a legitimate need but which could have been more easily achieved if mostly focused on rather than the scattershot approach taken that is threatening millions of businesses on the delusion that we're going to make a bunch of low cost things in the US again.

The Fed's Beige Book came out with perfect timing as it captures the response of businesses and consumers to the tariff onslaught. "Economic activity was little changed since the previous report, but uncertainty around international trade policy was pervasive across reports. Just five Districts saw slight growth, three Districts noted activity was relatively unchanged, and the remaining four Districts reported slight to modest declines." Sounds like a no growth economy.

"Non-auto consumer spending was lower overall; however, most Districts saw moderate to robust sales of vehicles and of some nondurables, generally attributed to a rush to purchase ahead of tariff-related price increases. Both leisure and business travel were down, on balance, and several Districts noted a decline in international visitors."

"Home sales rose somewhat, and many Districts continued to note low inventory levels. CRE activity expanded slightly as multifamily propped up the industrial and office sectors. Loan demand was flat to modestly higher, on net. Several Districts saw a deterioration in demand for non-financial services."

"Transportation activity expanded modestly, on balance. Manufacturing was mixed, but two-thirds of Districts said activity was little changed or had declined."

Lastly on the broad summary of note, "Cuts to federal grants and subsidies along with declines in philanthropic donations caused gaps in services provided by many community organizations. The outlook in several Districts worsened considerably as economic uncertainty, particularly surrounding tariffs, rose."

Here is some regional commentary on the price impact. I want to make something clear here, the prices of many things are going up and the only question is who is going to eat it via the extent of which companies can pass it on. But just because it doesn't end up in higher consumer prices for some things, doesn't mean someone in the supply chain is not getting hurt via lost margins and profits. And whether a one-time step or not in price, we all have PTSD from the 40 yr high in inflation and it's still going to hurt.

While I know there are many legitimate economic recession worries and I have them too, reading the comments below on tariff induced inflation really tie the hands of the Federal Reserve.

Boston:

"Prices rose modestly on average, but contacts said that prices could start to rise more rapidly in the coming months."

"Looking ahead, retail and manufacturing contacts alike cautioned that cost increases linked to tariffs, although still to be determined, could result in significant passthrough to their output prices. Expected passthrough rates were substantial, with half of manufacturers projecting a complete passthrough, mostly without lags. One manufacturer shortened the duration of its price quotes to 30 days in anticipation of the need to adjust prices rapidly."

NY:

"Both selling price and input price increases picked up to the higher end of the moderate range. Food and insurance costs rose noticeably, and price increases for some wholesale and construction materials—such as steel, aluminum, and imported doors—accelerated. Some manufacturers and distributors have begun adding surcharges to account for tariffs on shipments already in route. Still, a regional coffee roaster noted some easing in the price of commodity coffee. Firms dependent on imports expressed concerns about compressed margins and their ability to pass on cost increases to consumers. Contacts anticipated strong increases in input prices in the coming months and expected selling price increases to remain moderate."

Philly:

"One contact reported canceling upcoming price increases, fearing a drop in customer demand. Meanwhile, another contact reported that a significant number of restaurants chose not to participate in an annual local restaurant week promotion because they couldn't afford to discount their menu items."

"Most contacts expected tariffs to increase costs and prices moving forward, and only a few reported an impact this period. The indexes for future prices paid and future prices received continued to suggest that manufacturing firms expect price increases over the next six months. Both indexes moved lower but remained above their historical nonrecession averages."

Cleveland:

"On balance, contacts indicated that nonlabor input costs rose at a moderate pace in recent weeks. Contacts from multiple sectors noted that some of their suppliers increased prices in anticipation of import tariffs, and many firms whose suppliers had yet to raise prices said that they expected increases in the near term. Manufacturers and construction contacts reported higher costs for steel and other materials, while multiple retailers reported higher costs to import both intermediate and finished goods. Contacts generally expected costs to grow at a strong pace in the coming months."

"Contacts suggested that selling prices again grew at a modest pace on balance, though most continued to report holding prices steady in recent weeks. Many firms that raised prices reported doing so to keep pace with rising employee compensation or materials costs, while a smaller share mentioned normal annual increases. Overall, retail contacts indicated that they were increasing prices moderately, and one retailer added that its firm was testing the effects of price increases to offset anticipated import tariffs."

Richmond:

"Price growth edged slightly higher in recent weeks but on a year-over-year basis growth remained moderate. Several firms said that they recently raised their prices because their costs had increased as a result of tariffs. Many firms said that they were receiving letters from suppliers and sending letters to their customers warning that prices could increase in the near future due to tariffs. Several businesses said that until they had a better idea of how tariffs might impact them, they were minimizing new investments and planning for various cost scenarios."

"Port contacts were particularly concerned about the proposed port call tax on Chinese vessels which, by their estimates, could quadruple cargo handling costs. Some ports received multi-million-dollar tariff bills on Chinese cranes that were already ordered and enroute as tariffs were enacted and are now subject to the tariff."

I'll add this for the region on the impact from DOGE, "Other retailers and restaurants in Virginia and Maryland said that sales were down and attributed some of the decline to consumer sentiment and the fact that their client base included federal workers and contractors who were pulling back on discretionary spending in case they lose their job."

Atlanta:

"Prices and nonlabor costs increased modestly. Price increases, both realized and expected, were largely attributed to the direct and indirect impacts of trade policy. Many firms raised prices amid higher costs resulting from tariffed inputs, and even some firms not directly impacted cited tariffs and less foreign competition as a trigger for price increases. Most contacts expect to pass through the cost of tariffs, even if it means a drop in sales; however, some consumer-facing firms noted increased price sensitivity among customers has led them to be strategic with targeted pricing. Inflationary trends prevailed across sectors, signaling that the effects of trade policy are spreading and are no longer limited to the goods space."

Chicago:

"Numerous manufacturing contacts said they were facing heightened uncertainty about both input costs and selling prices, and many attributed the uncertainty to changing tariff policies. One machinery manufacturer reported that vendors were changing prices on a daily basis. Consumer prices rose modestly overall. One retail industry analyst expected the price impacts of higher tariffs to largely be felt in the second half of the year and said retailers were expecting to pass about one-third of higher tariff costs on to consumers."

St. Louis:

"Prices have increased moderately since our previous report; however, businesses expect costs to increase due to tariffs and are looking for ways to reduce the impact on their profits. A retailer indicated that price growth accelerated from the previous quarter, particularly food prices, with general merchandise prices increasing slightly. A pharmacy reported they were starting to see price increases from manufacturers, but their costs had not been impacted yet as they had built up inventory. A retailer indicated their initial worst-case-scenario estimates of tariffs would result in a less than two percent cost increase; however, their updated estimates—prior to April 2—indicated they would face a five percent increase. A manufacturer reported that what initially looked to be a mild impact had worsened and was forcing them to evaluate sourcing options. Large retailers announced to their suppliers they would not accept price increases due to tariffs, and an HVAC supplier reported they would now price their equipment based on shipment dates rather than contract or purchase order dates."

Minneapolis:

"Prices increased moderately overall, with greater pressure on wholesale prices. More than a third of District firms increased the prices they charged to customers in March from a month earlier, according to a monthly survey, while more than half reported increased input prices. Contacts in manufacturing and construction reported that they saw raw materials prices increase in anticipation of tariffs, particularly for steel and aluminum products. "Steel prices are surging faster than they did during the 2019-2021 period when we experienced record-setting steel prices," commented a metal fabricator. Some contacts reported placing surcharges on products using metal inputs, while a few reported increasing prices of other outputs to compensate, and others saw declining margins."

KC:

"Prices increased moderately in recent weeks on average, but expectations of price growth over the next six months broadly rose at a robust rate. The majority of contacts indicated the most likely change to their business plans to adapt to changes in economic conditions this year would be "prices charged for finished products." Manufacturing and retail sectors (i.e., goods sectors) emphasized their current pricing does not yet fully incorporate the cost pressures associated with tariffs, implemented or expected. Contacts indicated passing rising costs to customers will occur over the next several months and anticipated goods prices will rise broadly as many suppliers are spreading cost increases across their entire product portfolios. The acceleration of price pressures in goods sectors (current and expected) stands in contrast to reported deceleration in consumer service price growth. Travel and lodging prices reportedly softened, and housing prices were stable or even declined in certain parts of the District."

Dallas:

"Firms broadly expressed trepidation about the effect of tariffs on demand and costs, with some contacts indicating they will not be able to pass on the increases to clients. Several manufacturers cited higher raw material prices. The impact of tariffs on steel and machinery prices was a drag on the energy sector, particularly for firms with ongoing construction projects for whom the materials were a sizable share of costs. A few construction and real estate contacts said that tariffs had given their suppliers an excuse to raise prices, and some retailers cited being notified by their vendors of forthcoming tariff surcharges. Manufacturers and retailers expect selling price increases to accelerate over the next 12 months, while service sector executives expect price growth to remain moderate."

SF:

"Overall price levels rose modestly in recent weeks, at a slightly faster pace than in the previous report. Contacts reported higher price pressures for a wide range of imported goods and raw materials, including aluminum, steel, lumber, electrical components, apparel, footwear, as well as various wholesale and retail food items. Cost of some services remained elevated, particularly for insurance, health care, and utilities. Some leisure and hospitality businesses facing softening demand lowered their prices to retain and attract customers. Several contacts received price increase notices from suppliers, citing recently implemented and anticipated increases in tariff rates. Contacts generally expected inflationary pressures to intensify over the coming months. Most contacts reported that they plan to pass increased input costs on to customers, but some expected to absorb cost increases to preserve market share."

A lot of earnings calls to go through.

From Robert Half, the staffing company and whose stock is down materially pre-market:

"Business confidence levels moderated during the quarter in response to heightened economic uncertainty over US trade and other policy developments. Clients and job seeker caution continues to elongate decision cycles and subdue hiring activity and new project starts."

From Texas Instruments:

To a question on whether their lift in orders was a pull-forward ahead of the tariffs, "based on what we've seen in Q1, I think this is a real recovery rather than the way I see it now related to tariffs...And the cycle has hit the bottom because we are seeing more and more evidence from customers that they are really, really short on inventory. They have sometimes a few days of inventory."

"So more and more evidence and signals that across all channels, all geographies, a recovery of the industrial market is here."

Certainly glass half full thoughts but here was the caveat now that we are in Q2, "I think we have to stay very cautious...So we are seeing that many things are still changing. It's a very, very dynamic environment and I say sometimes by the day. And there is a potential impact on our customers and our suppliers and also on our revenues."

And then this, "Of course, the customers wouldn't tell us why we see the orders coming in. But I would guess that at a time like this when there is a little bit of anxiety and do you want to have a little bit more inventory on your shelves or less. So, my guess is more and that's maybe why we are seeing kind of, I would call it a seasonal, maybe a little bit stereotypical seasonal 2nd quarter and forecast."

From Chipotle:

They mentioned that their quarter was "impacted by several headwinds, including weather and a slowdown in consumer spending."

"In February, we began to see that the elevated levels of uncertainty felt by consumers starting to impact their spending habits. We could see this in our visitation study, where saving money because of concerns around the economy was the overwhelming reason consumers were reducing the frequency of restaurant visits. This drove a slowdown in our underlying transaction trends, this trend has continued into April."

From Kering, the owner of Gucci and trading lower in Paris today:

"As anticipated, the start of the year was challenging. No need to remind you that we are navigating in an uncertain macro environment with low visibility, and this does not support consumer confidence. Traffic was weak across most regions. Against this tough backdrop, our retail performance showed a limited sequential deceleration compared to Q4. Softer trends were observed in Western Europe, North America, and Japan, while they were consistent in Asia Pacific."

From Old Dominion Freight:

"Old Dominion's first quarter financial results reflect continued softness in the domestic economy and our revenue and earnings per diluted share both declines as a result."

From Ryder:

"The extended freight downturn and economic uncertainty continue to cause some customers and prospects in lease, dedicated and supply chain to delay decisions or downsize their fleets. These near-term contractual sales headwinds are consistent with current market conditions."

From ServiceNow whose stock is popping pre-market:

"Yes, CEOs are mindful that the global economy is in a fluid state. No, they are not standing still. In all industries, we see a renewed focus on cost takeout by rooting out inefficiencies, modernizing outdated tech stacks, and restoring an integrated enterprise."

"On the topic of tariffs and trade negotiations, the voice of the customer is the only guide that matters. I met with the CEO of a US auto manufacturer who is laser focused on increasing competitiveness in the face of tariffs. If they don't adapt their global supplier network fast enough, their costs will increase by up to $10,000 a vehicle. Unlike past disruptions in the global markets, supply chain AI agents now reconfigure business rules in real time. Businesses reduced dependency on high tariff regions by re prioritizing Tier-2 and Tier-3 suppliers while activating the certification of new vendors. This same conversation is happening across all industries as CEOs navigate this terrain."

From Masco:

"The extent of the tariffs currently imposed on imports from China is substantial and will increase our overall costs considerably, particularly in our plumbing segment...Our mitigation efforts are extensive and include pricing actions, additional cost savings initiatives, and ongoing changes to our sourcing footprint."

"As we have done in the past, we are rapidly responding to this shifting economic landscape. However, a high level of uncertainty remains around how these changes and associated higher prices will ultimately impact demand trends across our industry moving forward. Therefore, we will not be providing full year financial guidance this quarter."

Shifting overseas. Germany's April IFO business confidence index rose a hair to 86.9 from 86.7 but that was above the estimate of a drop to 85.2. All of the slight improvement was in the Current Assessment as the Expectations component fell a touch. The IFO said, "Uncertainty among the companies has increased. The German economy is preparing for turbulence." Manufacturing weakened as did trade but services and construction saw some gains. Nothing specifically market moving here but the euro is higher again as we're seeing broad dollar weakness again after yesterday's rally. Bund yields are lower as is the DAX but the DAX sure has had a good year so far.

The April UK CBI industrial orders index rose 3 pts but still negative at -26. They said "The recent downturn in manufacturing output appears to have eased, but manufacturers still seem gloomy about their prospects amid rising costs, an unexpected decline in new orders and heightened uncertainty around global economic conditions. The combination of financial pressures, market instability and falling confidence is leading manufacturers to cut back employment and investment, with plans for spending on buildings, equipment, innovation and training all taking a hit."

Added to SPY $536.54 and QQQ $456.22 shorts.

Upside:

-CYH +15% (earnings, guidance)

-MTLS +9.9% (earnings, guidance)

-OII +9.4% (earnings, guidance)

-TXN +9.2% (earnings, guidance)

-NOW +9.1% (earnings, guidance)

-HAS +7.7% (earnings, guidance; extends its long-running relationship with Disney Consumer Products)

-MBLY +7.4% (earnings, guidance)

-TRU +6.8% (earnings, guidance)

-LRCX +4.2% (earnings, guidance)

-EW +3.8% (earnings, guidance)

-UTZ +2.9% (DA Davidson Raised UTZ to Buy from Neutral, price target: $16)

-WHR +2.6% (earnings, guidance)

-LKQ +2.5% (earnings, guidance)

-RPRX +2.5% (U.S. FDA Approves Second Drug Product Manufacturing Facility for ADSTILADRIN)

-KDP +2.2% (earnings, guidance)

-URI +2.2% (earnings, guidance)

Downside:

-JYD -16% (annual report)

-RHI -15% (earnings, color)

-FI -9.3% (earnings, guidance)

-JACK -7.3% (considering sale of Del Taco chain)

-ALK -7.2% (earnings, guidance)

-IBM -6.0% (earnings, guidance)

-TSCO -5.8% (earnings, guidance)

-DAR -4.3% (earnings, guidance)

-DOV -3.7% (earnings, guidance)

-UNP -3.3% (earnings, guidance)

-LUV -3.1% (earnings, guidance)

-CMG -3.0% (earnings, guidance)

-TXT -2.6% (earnings, guidance)

-WU -2.6% (earnings, guidance)

Most active premarket ETFs as of 8:29 a.m.:

Premarket percentage movers at 8:48 a.m. ET:

I posted this late in the day -- wanted to be sure you all saw it:

Movement on Cannabis Legislation?

After numerous false starts it is not surprising that cannabis investors/traders are in disbelief of any possible legislative initiatives.However, I am hearing at several levels that there is movement and progress.Here is one example that just came out:

I plan to buy even more aggressively in the morning...Position: Long MSOS (L)

By Doug Kass

Apr 23, 2025 4:30 PM EDT

From JP Morgan:

US: Futs are lower after a two-day rally. Overnight, China responded to the recent headlines regarding “US-China talk”: Beijing pointed out that “there are absolutely no negotiation on the economy and trade between China and the US and called to cancel all the unilateral measures on China. Trump downplayed the idea of millionaire tax rate, one that some Republican sees as a way to pay for the economic package (BBG). MegaCap Tech seeing notable declines. NVDA (-1.5%), TSLA (-1.6%), and AAPL (-1.2%) are leading the losses. Bond yields are lower and USD is weaker; 2-, 5-, 10-yr yields are 4.5bp, 4.8bp, 3.3bp lower. Commodities are mixed with Oil and Base Metals higher; gold +1.4%.

and...

After a two-day rally, futures are lower this morning given that China responded to the recent headlines regarding “US-China talk”: Beijing pointed out that “there are absolutely no negotiation on the economy and trade between China and the US and called to cancel all the unilateral measures on China. While there was still no material changes in the macro narrative (no trade deal being announced or progress on US-China trade deal), swinging headlines have created volatile price actions and uncertainties among investors. Aside from tariff/White House headlines, today’s main focus will be GOOG/L’s earnings after market-close.

* At Hedgeye...

“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.”

- Warren Buffett

Back shorting indices:

* SPY $536.16

* QQQ $454.17

Today I have a charity lunch at 1 p.m., a board meeting at 2 p.m. and a Dr appointment at 4 p.m.

Ugh and enough said!

* On breadth thrusts and more technical mumbo jumbo...

Bonus — Here are some great links:

New Lows... New Highs, Still

Stocks to Target on a Pullback

Bullish Brazil

Gold Has the Makings of a Blow-Off

The Bitcoin Revival

* The downturn in housing is on the horizon.

* I think what our young friend is saying is that "we welcome the inevitable seasons of nature but we are upset by the seasons of our economy"...

"As long as the roots are not severed, all is well. And all will be well in the garden."

- Chance the Gardener, Being There

"There are spring and summer, but there are also fall and winter. And then spring and summer again. As long as the roots are not severed, all is well and all be well."

Not.

Break in.

Investment short PepsiCo PEP reports slight miss on the bottom line (slightly better top line) and expresses concerns about supply and costs going forward this year.

PEP lowers full-year guidance - now seeing a drop in reported EPS vs a gain:

Guidance and Outlook

The Company provides guidance on a non-GAAP basis as we cannot predict certain elements which are included in reported GAAP results, including the impact of foreign exchange translation and commodity mark-to-market net impacts. For 2025, the Company continues to expect:

• A low-single-digit increase in organic revenue; 

• A core annual effective tax rate of approximately 20 percent; and 

• Total cash returns to shareholders of approximately $8.6 billion, comprised of dividends of $7.6 billion and share repurchases of $1.0 billion.

Given expected higher supply chain costs related to tariffs, elevated macroeconomic volatility, and a subdued consumer backdrop, we now expect our core constant currency EPS to be approximately even with the prior year (previously mid-single-digit growth).

The Company also continues to expect a foreign exchange translation headwind of approximately 3 percentage-points to negatively impact reported net revenue and core EPS growth, based on current market consensus rates.

This assumption and the guidance above implies a 3 percent decline in core EPS in 2025 (previously a low-single-digit core EPS increase) compared to 2024 core EPS of $8.16.

The entire release. Q1 2025 8-K - Exhibit 99.1

* Based on lower futures (SPoos -40) probably not...

The S&P Short Range Oscillator has risen to overbought at 3.02% vs. 0.67%, from substantially oversold a week or so ago.

Many bulls were emboldened by the two-day rally (see Charting The Technicals) — especially within the context of their interpretation and perception that the Administration was relaxing their tariff policy (something I disagree with and call B.S. to — see previous post)

I am of the view that chasing strength is likely ill advised.

As I wrote into the market ramp yesterday:

My Tactical Strategy

* I see limited upside from here...

My view is that the S&P has upside to 5500-5600.

That is all.

I plan to short aggressively into this target.

Position: Short SPY common (VS) calls/puts (S), QQQ common (VS) calls/puts (S)

By Doug Kass Apr 23, 2025 10:20 AM EDT

As I have written, the Administration is improvisational and disorganized.

Its "public announcements" and tweets about communications with China are nonsense and likely will hurt or delay the tariff negotiations with that country:

Bulls are relying on the Hail Mary of these announcements when stocks sink.

It is a slippery slope.

I remain of the view that the markets are vulnerable to a possible retest of the lows.