Volume and VIX

- NYSE volume 32% below its one-month average

- NASDAQ volume 18% below its one-month average

- VIX index: down 5.82% to 24.93

Breadth

S&P 500 Sectors

Nasdaq 100 Heat Map

It's been a long week so I will be leaving early this afternoon.

As always, thanks for reading my Diary.

Enjoy the weekend.

Be safe.

From Peter Boockvar:

Positives

1) 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.

2) 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.

3) New home sales in March rose to 724k from 674k and that was about 40k more than forecasted. Likely helping was the drop in mortgage rates in March that was proved short lived as they’ve risen since. A jump in sales in the South drove the m/o/m regional gain. Months’ supply fell to 8.3 from 8.9 with the transaction jump but the absolute number of homes for sale rose to 503k, the highest since 2007. Due to mix, the y/o/y home price fell by 7.5% as there was a lift in sales in the number of homes priced below $500k.

4) From Alphabet/Google: "We continued to see healthy growth and momentum across the business, including AI powering new features. In Search, we saw continued double digit revenue growth." Waymo by the way "is now safely serving over 250,000 paid passenger trips each week. That's up 5x from a year ago." Google Cloud revenue rose 28% y/o/y. "YouTube saw a similar performance across verticals.”

5) From Texas Instruments: "So more and more evidence and signals that across all channels, all geographies, a recovery of the industrial market is here." But the company doesn’t know how much is pull-forward inventory building and I assume a lot is.

6) From Verizon: "When it comes to consumer behavior, I mean, in general, we haven't seen any major consumer shifts in behavior even though we read the same articles as everybody else that consumer sentiment is coming down. Of course, we have a product, the mobility and broadband are so essential for our consumers and for our business customers because it's just so relevant. So we haven't seen that."

7) From Capital One: In light of everything going on, the CEO was glass half full. "The US consumer remains a source of strength in the economy. That's true for almost any metric that we look at. The unemployment rate is low and stable, job creation remains healthy, real wages are growing. Consumer debt servicing burdens remain stable near pre-pandemic levels. In our card portfolio, we're seeing improving delinquency rates and lower delinquency entries, and payment rates are improving on a y/o/y basis."

8) From AmEx: "In T&E (travel and entertainment) , while we saw a sequential slowdown in airline billings growth, billings in restaurants and lodging remained strong in the quarter, and overall T&E growth was in line with the steady levels we saw through most of last year…While it's still very early in the 2nd quarter, through the first week and a half in April, overall spending levels have remained consistent with what we saw in the first quarter in both goods and services and T&E, and across all customer segments…our credit performance continues to be very strong. Both delinquency and write-off rates were below pre-pandemic levels and flat to the prior year. The profile of the portfolio has strengthened over the past few years."

9) UK retail sales in March surprised to the upside with a .5% m/o/m gain vs the estimate of down .5%, partially offset by a 3 tenths downward revision to February.

10) 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."

11) 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.

12) Japan's composite PMI index rose to 51.1 from 48.9 in April all due to a 2.2 rise in services to 52.2 while manufacturing remained below 50 at 48.5.

13) India's PMI held strong at 60, up .5 pts from strength in both manufacturing and services.

Negatives

1) Another week with no trade deals announced, but hopes remain for some soon, and further confusion with the trade war with China in terms of what the end goals are, when they can be achieved and where tariff rates end up to be. As said here for weeks, on the current path we are heading for empty shelves upon the collapse in trade between the two biggest economic behemoths.

2) From Fed’s Beige Book: "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.” On the labor market, “Employment was little changed to up slightly in most Districts, with one District reporting a modest increase, four reporting a slight increase, four reporting no change, and three reporting a slight decline.” With inflation, “Prices increased across Districts, with six characterizing price growth as modest and six characterizing it as moderate, similar to the previous report. Most Districts noted that firms expected elevated input cost growth resulting from tariffs. Many firms have already received notices from suppliers that costs would be increasing. Firms reported adding tariff surcharges or shortening pricing horizons to account for uncertain trade policy. Most businesses expected to pass through additional costs to customers. However, there were reports about margin compression amid increased costs, as demand remained tepid in some sectors, especially for consumer-facing firms.”

3) The April US composite PMI fell to 51.2 from 53.5 all due to a 3 pt fall in the services component to 51.4. Manufacturing lifted by .5 pt to 50.7 and is now the 4th straight month above 50, though barely above 50. Keep in mind, the services side does not include wholesale and retail trade, nor construction. S&P Global summed up it like this, “Manufacturing is broadly stagnating as any beneficial effect of tariffs are offset by heightened economic uncertainty, supply chain concerns and falling exports, while the services economy is slowing amid weakened demand growth, notably in terms of exports such as travel and tourism.” Also of note, “Confidence about business conditions in the year ahead has meanwhile deteriorated sharply, worsening among manufacturers and service providers alike, largely thanks to growing concerns about the impact of recent government policy announcements.”

4) While better than the preliminary read, the final April UoM consumer confidence index fell to 52.2 from 57 in March, 64.7 in February, 71.7 in January and 74 in December. Most of the decline was in the expectations component. One year inflation expectations at 6.5% is up from 5% in March. The 5-10 yr view is at 4.4% vs 4.1% last month. UoM said “While this month’s deterioration was particularly strong for middle income families, expectations worsened for vast swaths of the population across age, education, income and political affiliation. Consumers perceived risks to multiple aspects of the economy, in large part due to ongoing uncertainty around trade policy and the potential for a resurgence of inflation looming ahead. Labor market expectations remained bleak. Even more concerning for the path of the economy, consumers anticipated weaker income growth for themselves in the year ahead.”

5) Another rise in the average 30 yr mortgage rate to 6.90% drove a 6.6% w/o/w drop in purchase applications and a 20% fall in refi's.

6) Existing home sales in March, covering contract signings in the months before, totaled 4.02mm, about 100k less than expected and down from 4.27mm in February. This figure continues to hover around 30 yr lows. The positive for 1st time buyers is that months’ supply rose to 4.0 and that is a 5 month high with home price gains slowing to 2.7% y/o/y.

7) The Philly non manufacturing index for April plunge further to -42.7 from -32.5. In December it was at -3.4 and in October +1.5.

8) The April Richmond manufacturing index dropped 9 pts to -13 with negative signs throughout the internals but big spikes in prices paid and received. Capital spending plans fell too.

9) ACT Research released its final March Class 8 truck order data, totaling 16,500 units, lower from February. That figure is down 5.9% y/o/y and "Cancellations rose to their highest point since mid-2023, with a notable uptick in post-Covid pullbacks." They also said "Order activity remains measured, with for-hire carriers maintaining a cautious approach to capital investment. Fleets are responding to ongoing freight market softness, high interest rates, and shifting regulatory signals, including emissions rule reviews and new tariff pressures." As for smaller trucks, the Class 5-7, orders fell 33% y/o/y to 18.6k units. These medium duty trucks "have slowed through the past four months, as current bloated inventories and a weaker economic outlook weigh on new orders."

10) From Proctor & Gamble: "Third quarter results on both the top and bottom lines were heavily impacted by consumer and retailer volatility during the quarter, primarily in the US and Europe…"the consumer has been hit with a lot of volatility, market volatility that impacts their portfolios, their 401k's, volatility in the economic outlook, uncertainty on the job market, volatility in terms of mortgage rate expectations, all the divisiveness and nationalistic rhetoric that we saw around the world, uncertainty on tariffs and the impact on prices and availability of goods. So, the consumer has been hit with a lot and that's a lot to process…So what we're seeing I think is a logical response from the consumer to pause. And that pause is reflected in retail traffic being down. It's also reflected in somewhat of channel shifting in the search for the best value and shifting into online, shifting into big-box retailers, and shifting into the club channel in the US specifically. All of that put together means consumption levels are down in both Europe and the US."

11) From Kimberly Clark: "We currently expect changes in the global tariff environment to result in approximately $300 million of additional costs this year. We also think it's reasonable to expect economic pressure, especially on value-conscious consumers to escalate as we progress throughout the year…At a segment level, we experienced a slowdown in overall consumption in North America as a result of the choppy environment," in addition to some divestitures.

12) From Pepsi: "As we look ahead, we expect a more volatile and uncertain macroeconomic environment, particularly related to global trade developments, which we expect will increase our supply chain costs. At the same time, consumer conditions in many markets remain subdued and similarly have an uncertain outlook."

13) From American Airlines: “We don’t know what is going to happen. What does that mean? It means that we don’t hire as much. It means that we don’t bring on as many planes, potentially. It means a reduction in overall economic activity.”

14) From Southwest Airlines: “As we shared last month, the year started out very strong, however, that changed and we saw demand weakened as the quarter progressed, especially in leisure demand. Since that time, we have seen softer booking trends continue into the second quarter.”

15) From Hasbro: "Looking ahead, while we remain hopeful for a more predictable and favorable US trade policy environment, we must acknowledge the costs imposed by current tariffs. Even with Hasbro's relative strength and flexibility, logistics are becoming more complex and changes in receivables and shipping dynamics present a challenge. Ultimately, tariffs translate into higher consumer prices, potential job losses as we adjust to absorb increased costs and reduced profits for our shareholders."

16) From Robert Half: "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."

17) From Manpower: "We began the year with a sense of optimism for economic growth in the US particularly and a greater acknowledgement among EU policymakers that Europe needed to do more to remain competitive. The last several weeks have impacted this sense of confidence and the mood is significantly more uncertain and cautious as a result of recent trade policy announcements in the US with ripple effects far beyond. At this stage, most of our clients are adopting a wait-and-see approach and it is difficult to provide any concrete assessment of how significantly this might affect demand from our customers in our major markets around the world."

18) From Chipotle: "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."

19) From Kering: "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."

20) 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."

21) 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."

22) 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."

23) From Pulte: "In sum, buyer interest and activity in the first quarter were directionally in line with our planning expectations heading into the period. As we've moved from March to April however, we have seen consumers at all price points impacted by changing macro conditions and any resulting decline in overall consumer confidence. Whether it's the volatility in the stock market, concerns about tariff induced inflation, the fluctuation in interest rates, or the growing talk of recession, demand in April has been more volatile and less predictable day-to-day."

24) From Capital One As for the possibility of a pull forward of purchases, "In recent weeks, we've started to see an uptick in spend - spend growth per customer relative to this time last year across our consumer segments...We've also seen a recent increase in retail spending, particularly electronics in the past few weeks. Maybe that's a pulling forward of purchases in light of the tariffs. We'll have to see over time. At the same time, we've seen some easing in the T&E growth and airfare in particular. Also, "When we look at industry data, there appears to be a bit of pull-forward in auto purchases, likely as consumers are trying to get ahead of tariff impacts. And we continue to monitor our application and origination volumes. I think also, there is some early indication that auction prices are increasing more than seasonal norms."

25) From Ally Financial: They are seeing some pull-forward of auto purchases ahead of the tariffs. "There may be a pull forward in demand. I will say the recent volume numbers that we've been seeing have been quite strong and there's a thesis floating around that some pull forward. There's probably some truth to that. It's hard to be really precise. But that's what we see in the near term."

26) From Comerica: "I would say that what you're hearing from customers is that they're not putting the brakes on, but they're taking their foot off the accelerator and you're seeing that around the country and around our businesses, maybe different speeds, if you will, to that approach. I think in markets like Michigan, we've probably seen more concern there than we have per se in Texas, just quite candidly when you talk about middle market."

27) From Zions Bancorp: The CEO "asked ChatGPT for help in explaining the world we're now living in. I got this. 'Trump's tariffs have caused quite a fuss, with markets unsure who to trust. Will prices ascend? Will trade wars extend? Or will growth just stall in the dust?' That actually seemed to explain the time we're in pretty well, I thought." I bolded for emphasis. He went on to say, "While the outlook guidance always comes with disclaimers about the limitations of forward looking statements, it's worth emphasizing the particular difficulty right now for us and everybody else in this industry in forecasting results a year from now."

28) From MMM: On guidance, "Starting with the macro environment, we see a softer outlook than the start of the year. Market forecasts have been lowered reflecting weaker consumer spending and lower demand in industries such as auto and electronics."

29) From L’Oreal: "The US were more challenging than anticipated, and China was slightly less bad than expected. Europe was once again our single best growth contributor. Emerging markets remain dynamic."

30) French business confidence in April fell a hair, by .2 pts as expected. Lower retail confidence and construction offset gains in manufacturing, services and employment.

31) The April Eurozone PMI dropped to 50.1 from 50.9 as services fell back under 50 at 49.7 from 51. Manufacturing remained under pressure at 48.7 vs 48.6 in March. S&P Global said, "Manufacturing seems to be holding up better than expected. Despite the US introducing general tariffs of 10% and car tariffs of 25% at the start of April, most manufacturers in the Eurozone are not too fazed. Instead of falling off a cliff, they've actually increased production for the 2nd month in a row, and even more robustly than in March." This could very well be getting stuff done ahead of any trade deal, or not. "The service sector has turned into a bit of a party pooper. Activity has shrunk instead of growing, which it had been doing almost continuously since February 2024. This has pushed the whole economy into stagnation territory."

32) The UK PMI declined to 48.2 from 51.5 with manufacturing at just 44 while services fell to 48.9 from 52.5. S&P Global said "The disappointing survey reflects the impact of headwinds from both home and abroad. The biggest concern lies in a slump in exports amid weakened global demand and rising global trade worries, but higher staffing costs have also piled pressure on companies - linked to the National Insurance and minimum wage changes that came into effect at the start of the month. Just as export orders are falling at the sharpest rate since May 2020, during the pandemic lockdowns, firms' costs spiked higher to a degree not seen for over two years."

33) Tokyo CPI for April rose 3.1% ex food and energy, up from 2.2% in March and 2 tenths above expectations.

34) Australia's manufacturing and services PMI in April fell a touch to 51.4 from 51.6 with both components lower but still above 50.

Added to Index shorts:

* SPY $550.47

* QQQ $472.47.

My friend Charlie wrote up cannabis this afternoon in the New York Post. 

Pot Inc. tells Trump it’s high time to loosen federal laws

Scott Galloway's "No Mercy/No Malice".... Breaking the Silence. 

Currently there is a very solid discussion of the state of the cannabis industry and why the sector's stocks moved higher yesterday with my friends Shadd and Anthony on The Dales Report.

Let's go to the tape! 

Cannabis Stocks Surge Amid Marijuana Rescheduling Rumors

- NYSE volume 28% below its one-month average;

- NASDAQ volume 18% below its one-month average;

- VIX index: down 0.34% to 26.38

RSP and IWM are down between 2-times and 3-times as badly as SPY and QQQ.

Might be a bearish signpost.

New short GRNY ($18.62): GRNY – Fundstrat Granny Shots US Large Cap ETF – ETF Stock Quote | Morningstar

With S&P cash +12 handles I have added to my short SPY and QQQ calls.

A couple of my longs and shorts:

DraftKings DKNG price target lowered to $55 from $65 at Citi Citi lowered the firm's price target on DraftKings to $55 from $65 and keeps a Buy rating on the shares ahead of the Q1 earnings report on May 8. Given state data trends and strong performance from favorites during the NCAA basketball tournaments, Citi expects the company will call out customer-friendly headwinds during the quarter. Citi expects DraftKings will maintain its 2025 outlook, but is now forecasting Q1 revenue and adjusted EBITDA below the Street. It cites recent market multiple compression for the target cut.Boot 

Barn BARN price target lowered to $162 from $181 at Piper Sandler Piper Sandler lowered the firm's price target on Boot Barn to $162 from $181 and keeps an Overweight rating on the shares. The firm notes shares are -33% year-to-date and appear oversold on tariff concerns. Its read is that sales trends remain steady and within guidance based on supplier conversations, its Q1 Farm & Ranch survey, and Placer traffic data. Piper notes Boot Barn has about 30% of its exclusive brands imported from China placing China tariff exposure on about 12% of sales. All in, ahead of Boot Barn's mid-May earnings report, the firm thinks shares have a solid risk/reward. 

Alphabet GOOGL price target raised to $200 from $195 at Citi Citi analyst Ronald Josey raised the firm's price target on Alphabet to $200 from $195 and keeps a Buy rating on the shares post the earnings report. While the company's macro visibility remains limited, Q1's growth in Search revenue highlights Alphabet's Search ads resiliency, the analyst tells investors in a research note. The firm believes YouTube's mix-shift to direct response underscores its monetization evolution, and expanding margins make Citi incrementally positive on the shares, the analyst tells investors in a research note. 

Alphabet price target raised to $186 from $173 at UBS UBS analyst Stephen Ju raised the firm's price target on Alphabet to $186 from $173 and keeps a Neutral rating on the shares. While Google maintaining its $75B capital expenditures guidance is likely to be viewed as a positive revenue environment signal, the firm's checks into the quarter flagged deteriorating consumer sentiment April versus 1Q25, and Google acknowledged that it will not be immune to macro changes, the analyst tells investors in a research note. The firm continues to believe that Google's multiple will remain under pressure due to unresolved regulatory issues and prospects for market share loss in its most important franchise.

Alphabet price target raised to $175 from $167 at Wells Fargo Wells Fargo raised the firm's price target on Alphabet to $175 from $167 and keeps an Equal Weight rating on the shares following quarterly results. The firm notes Search growth again was more resilient than expected, only decelerating modestly in Q1. Lack of macro commentary suggests April likely off to a solid start, but Wells believes the majority of impacts yet to be seen. The firm still sees search disruption as base case. 

Alphabet price target raised to $200 from $185 at BofA 06:20 GOOGL BofA raised the firm's price target on Alphabet to $200 from $185 and keeps a Buy rating on the shares after the company reported "solid" Q1 results, driven by Search and Subscription upside. Search revenues grew 10% year-over-year, which was important given click growth and competitive concerns, and Cloud grew an in line 28%, the analyst tells investors. For 2025, the firm raised its net revenue view by 5% to $333B and EPS forecast by 16% to $9.72 following last night's report

Alphabet price target raised to $185 from $165 at Bernstein Bernstein analyst Mark Shmulik raised the firm's price target on Alphabet to $185 from $165 and keeps a Market Perform rating on the shares. The company delivered against lowered expectations for Q1 but Offred almost no color on how the tariff and macro effects could impact Google's business through the year, the analyst tells investors in a research note. Bernstein found management's tone around "winning AI" incremental with the company sharing 1.5B monthly AI Overviews users against 2B daily search users, and no share loss to ChatGPT on commercial search.

Upside:

-IRWD +9.4% (reiterates FY25 LINZESS U.S. Net Sales $800-850M, Rev $260-290M; raises Adj EBITDA Guidance to >$105M)

-GOOGL +3.6% (earnings, color)

-ABBV +3.3% (earnings, guidance)

-COUR +3.3% (earnings, guidance)

-META +2.7% (momentum following GOOGL earnings)

Downside:

-VYNE -34% (US FDA verbally informed VYNE that it placed a clinical hold on Phase 1b study evaluating VYN202 for treatment of moderate-to-severe plaque psoriasis)

-LEXX -23% (announces $2M Registered Direct Offering of Common Stock at $1.00/shr)

-SAIA -21% (earnings, guidance)

-APPF -10% (earnings, guidance)

-INTC -7.4% (earnings, guidance)

-SKX -6.5% (earnings, guidance)

-TMUS -5.5% (earnings, guidance)

-PSX -4.4% (earnings)

-GILD -3.5% (earnings, guidance)

-PHIN -3.3% (earnings, guidance)

-AON -3.0% (earnings, guidance)

-SLB -2.6% (earnings, guidance)

-LYB -2.5% (earnings, guidance)

-EMN -2.3% (earnings, guidance)

From JPMorgan:

US: Futs are mixed with Tech leading, highlighted by GOOG (+5.6% amid strong earnings results last night), META (+3.5%), and TSLA (+1.6%). One Bloomberg article reported that China may exempt some US goods from tariffs, including plan leases. Bond yields are lower and USD is higher; 2-, 5-, 10-yr yields are 0.8bp, -0.2bp, -1.6bp lower. Commodities are mixed with Base Metals higher and Precious Metals lower.

and..

SPX has been up +6.3% since Tuesday, taking the WoW gain to +3.8% despite Monday’s -2.3% selloff. Overall, this week has been charactered by better-than-expected earnings (GOOG/L’s Search beat), de-escalation on US-China trade war (overnight, there was one Bloomberg article saying that there may be some exemption from China’s 125% tariff), further progress on India/South Korea trade talk, and a few positive comments from the Fed (Waller yesterday was quite dovish). Overall, keep an eye on more upcoming MegaCap Tech earnings and NFP next week to assess the impacts on the real economy so far

Most active premarket ETFs as of 8:04 a.m. ET:

Premarket percentage movers at 8:23 a.m. ET:

I sold some more MSFT at $286.01.

8:00 a.m.: Fed Treasury Repo Reference Rate;

10:00: U of Michigan Sentiment; U of Michigan Current Conditions; U of Michigan Expectations; U of Michigan 1-Year Inflation; U of Michigan 5-10 Year Inflation (April-Final);

10:00: Annual Retail Sales Revisions;

10:30: ECRI Weekly Index of Economic Activity (w/e 4/18);

11:00: Kansas City Fed Services Activity (April)

From Peter Boockvar:

The state of global trade continues to rest on this belief/What consumer touching companies are saying

The S&P futures went straight down again this morning after details of Tuesday's Time interview with DJT came out. "Trump tells TIME that he's still convinced tariffs are necessary. 'The bond market was getting the yips, but I wasn't,' he says, adding that he would consider it a 'total victory' if the US still has tariffs as high as 50% on foreign imports a year from now." What his vision of 'total victory' looks like is of course completely unclear and the economic damage of even 50% tariffs on China will be stark instead. While the Chinese side said they are not talking with us, "Trump says China's President Xi Jinping has called him, and that his Administration is in active talks with the Chinese to strike a deal." Either way, he's still working off the false economic premise that a trade deficit is bad and that somehow the trading partner that has the surplus with us is 'ripping us off.' So, the state of global trade rests on flawed economic thinking.

As for the negotiations with other countries, "I would say, over the next three to four weeks, and we're finished, by the way." Hopefully.

So it seems the main difference between Jay Powell and his colleague Chris Waller is the former wants to be comfortable first with lower prices sustainably after the supposed one time increase in tariff induced inflation while the latter has his attention on any rise in the unemployment rate in response to the economic slowdown currently taking place. Regardless, for decades pre-2022 where Fed rate cuts did its magic, I just don't see the same impact this time around as long rates may continue to go higher and the US dollar might go much lower on any rate cutting cycle if it's not because inflation is sustainably lower. And the $7 trillion of money market funds, plus money parked in short term bills, are going to lose interest income, something the boomers in particular have thrived off the past few years. No free lunch to rate cuts this time around I believe.

From Alphabet/Google:

"We continued to see healthy growth and momentum across the business, including AI powering new features. In Search, we saw continued double digit revenue growth." Waymo by the way "is now safely serving over 250,000 paid passenger trips each week. That's up 5x from a year ago." Google Cloud revenue rose 28% y/o/y.

With search, the 10% revenue gain was "led by financial services, primarily due to strength in insurance, followed by retail."

"YouTube saw a similar performance across verticals. Its 10% growth in advertising revenues was driven by direct response, followed by brand."

"With respect to CapEx, our reported CapEx in the first quarter was $17.2 billion, primarily reflecting investment in our technical infrastructure, with the largest component being investment in servers, followed by data centers, to support the growth of our business across Google Services, Google Cloud, and Google DeepMind."

And they still expect to spend about $75 billion this year in total. And something I've talked about for quarters now, because a lot of this spend is being capitalized, they are embedding a higher depreciation expense into their income statement for years to come. They said, "the significant increase in our investments in CapEx over the past few years will continue to put pressure on the P&L, primarily in the form of higher depreciation. In the first quarter, we saw 31% y/o/y growth in depreciation from the increase in technical infrastructure assets placed in service. Given the increase in CapEx investments over the past few years, we expect the growth rate and depreciation to accelerate throughout 2025."

The same is the case for the other hyperscalers that we'll hear from next week.

On what Q2 is looking like so far and post 'Disruption Day', "we're only a few weeks in, so it's really too early to comment. I mean, we're obviously not immune to the macro environment, but we wouldn't want to speculate about potential impacts beyond noting that the changes to the de minimis exemption will obviously cause a slight headwind to our ads business in 2025, primarily from APAC-based retailers."

From Proctor & Gamble:

"Third quarter results on both the top and bottom lines were heavily impacted by consumer and retailer volatility during the quarter, primarily in the US and Europe."

"the consumer has been hit with a lot of volatility, market volatility that impacts their portfolios, their 401k's, volatility in the economic outlook, uncertainty on the job market, volatility in terms of mortgage rate expectations, all the divisiveness and nationalistic rhetoric that we saw around the world, uncertainty on tariffs and the impact on prices and availability of goods. So, the consumer has been hit with a lot and that's a lot to process."

"So what we're seeing I think is a logical response from the consumer to pause. And that pause is reflected in retail traffic being down. It's also reflected in somewhat of channel shifting in the search for the best value and shifting into online, shifting into big-box retailers, and shifting into the club channel in the US specifically. All of that put together means consumption levels are down in both Europe and the US."

From Pepsi:

"As we look ahead, we expect a more volatile and uncertain macroeconomic environment, particularly related to global trade developments, which we expect will increase our supply chain costs. At the same time, consumer conditions in many markets remain subdued and similarly have an uncertain outlook."

From Tractor Supply:

"Since we shared our initial outlook for 2025, the macro environment has clearly become more uncertain. Drawing on some of the scenario planning we used during the early days of Covid, today, in addition to an updated fiscal year outlook, we're providing 2nd quarter guidance. The updated fiscal year outlook is reflective of three primary considerations. One, it flows through the seasonal spring softness we've experienced to date. Two, it assumes that pressure on big ticket categories will persist for the remainder of the first half. And three, it reflects a range of scenarios related to tariff cost that our vendor base and we are incurring in the 2nd quarter. In other words, we've considered the implications of tariffs through the 90 day pause that began on April 9th."

From Hasbro:

"Looking ahead, while we remain hopeful for a more predictable and favorable US trade policy environment, we must acknowledge the costs imposed by current tariffs. Even with Hasbro's relative strength and flexibility, logistics are becoming more complex and changes in receivables and shipping dynamics present a challenge. Ultimately, tariffs translate into higher consumer prices, potential job losses as we adjust to absorb increased costs and reduced profits for our shareholders." I bolded for emphasis.

"Our guidance is unchanged, supported by our robust games and licensing businesses and our strategic flexibility, but prolonged tariff conditions create structural costs and heighten market unpredictability."

* I don't get it... but maybe its me!

Focus on value-added research and run don't walk to watch this brief video from Hedgeye's Keith McCullough's "Macro Show":

From Divine:

Let's take a look at the last two Breadth Thrusts.

My first observation is I’d bet most think this means up, up, and away, yet if that’s the case, why did we have not one, but two in the year 2023? Yes, that’s right. We got one in the spring, and the market corrected eleven percent over several months that summer/fall.

The blue arrow shows the first Thrust in the spring. We then went sideways for nearly two months. How many of the folks who are so excited now do you think would sit through two months of chop and still be all bulled up? Not many is my guess.

In the fall, we had another one (green arrow), and we spent the week thereafter in a chop.

Most folks hope we are at green. I am not smart enough to pick which one would resemble this market, but I do know we are going to be short-term overbought by the end of Friday’s trading. 

Bonus — Here are some great links:

All Eyes on the Pinch

Decoding the Bear Market

Most Stocks Are in Downtrends

What to Know Two Months Later

Peak Uncertainty and Market Lows 

In yesterday's strong rally in the cannabis sector I sold my very small-sized position in Ayr Wellness AYRWF for a modest loss.

My analysis now leads me to believe that the company will be forced to materially dilute out the common shareholders in restructuring its current liabilities.

In addition, I have management reservations.

I added to my very small index shorts late last evening on the extension of the futures gains:

* SPY $548.06

* QQQ $469.05

I am small net short in exposure now.

With Thursday's brisk rally continuing overnight in futures (SPoos +25ish), S&P cash will lift slightly over 5500.

As noted below from Wednesday, my upside target was 5500-5600.

Mission accomplished.

I am moving back into a net short exposure.

From Wednesday:

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 into this target.

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

The S&P Short Range Oscillator is at 2.73% vs. 3.02%.