As of 4:19 p.m.:

NASD Advance Decline Ratio Intraday (blue) vs SPY (green)

Closing Volume

- NYSE volume 3% above its one-month average

- NASDAQ volume 43% above its one-month average

- VIX: up 2.31% to 18.64

Breadth

S&P 500 Sectors

% Movers

Nasdaq 100 Heat Map

Daily lows in TLT (and highs in bond yields) may finally be getting to equities.... as the S&P briefly moves into negative territory.

* The junior averages are underperforming the senior averages...

This morning I touched on my view (and The Divine Ms M's (see below) that the underperformance of RSP (equal weighted S&P) and IWM (Russell index) could presage broader market weakness.

So far it hasn't but the underperformance of the later two indices is conspicuous, again, today:

* SPY +0.07%

* QQQ +0.45%

* IWM -0.71%

* RSP -0.64%

From this morning:

The Gospel According to The Divine Ms M

I thought Helene's comments this morning were spot on (and we saw this in a lagging (RSP) and (IWM) yesterday):

Tuesday was the first day in quite some time that the market felt very index-driven. By that, I mean breadth lagged. Now, before you get hysterical, breadth is still fine, it’s just that on Tuesday, it did not lead as we had only about 65 percent of the volume on the upside. That number has been chiming in well over 70 percent most days.

With breadth lagging, the number of stocks making new highs on the NYSE did not increase. Nasdaq did see a minor increase, but I continue to monitor the Nasdaq Hi-Lo Indicator, and you can see it did not budge on Tuesday. The math says it should try again to push upward, but Tuesday was not it. As a reminder, if it is at a lower high (than last week) when we get intermediate term overbought (late next week), it will be a negative for the market.

Let's see if the dichotomous performance continues today...

Position: Short RSP (S), IWM (S)

By Doug Kass May 14, 2025 6:55 AM EDT

My pal Jazzy Jeff with a good question:

jeffl

Why isn’t this a big deal?

“The Trump administration’s global tariffs face their first major legal test this week when a little-known Manhattan court considers one of the president’s most sweeping assertions of executive power.

A three-judge panel at the Court of International Trade will hear arguments Tuesday on whether to halt the levies, which have unleashed a trade war with the world and threaten to upend the global economy.

The federal court, which has nationwide jurisdiction over tariff and trade disputes, operates for the most part in obscurity, rarely garnering a mention in major publications and staying off the radar of most attorneys.

…The Liberty Justice Center, a libertarian public-interest litigation firm, is representing V.O.S. Its lawyers say IEEPA doesn’t give the president the power to impose tariffs, which is a responsibility for Congress. “IEEPA does not even mention tariffs,” they wrote in a court brief. Also no emergency exists, they say, as U.S. trade deficits have persisted for decades without causing economic harm.

If the panel finds the emergency economic powers law does allow the president to impose tariffs, that conclusion would force the court to face far-reaching constitutional issues that could further embolden Trump if he wins.

The plaintiffs argue that Congress can’t just delegate its legislative authority to the president. “If there are any constitutional limits to delegation at all, they apply here, in a case where the executive claims virtually limitless authority to impose massive tax increases and start a worldwide trade war,” they said in their lawsuit.

The Justice Department argues the president has historically conducted foreign affairs and ensured national security through the regulation of trade. In approving IEEPA, Congress validly delegated authority to the president to regulate imports during emergencies, the department says..

This Obscure New York Court Is Set to Decide Fate of Trump’s Tariffs

Trump's DEA Pick Refuses To Detail Marijuana Rescheduling Stance In Response To Senator's Questions - Marijuana Moment

I'm adding to my ARKK short at $57.26.

 As of 1:06 p.m.:

Advancers

Decliners

Moved to large GRNY short.

Investment short PepsiCo PEP just hit a 52-week low, so I'm covering some at $128 (-$2.30) now.

I have been off Twitter for over a month and have stopped watching CNBC.

But today, for a change, I tuned into "Halftime."

Three weeks ago the panelists were scared xxxx xxxs — with large and growing cash positions.

Today they are unanimously bullish. There was not one mention of anything negative (the 10-year yield over 5%, TLT at day's low (fuhgettaboutit!), lagging RSP and IWM, etc.). No mention whatsover.

Then there was a discussion of individual stocks.

The group discussed Apollo APO — which I am down to tagends long — it was the subject of their adoration.

The group was universally positive citing glittering generalities about capital booming or inevitable improvement in market activity (something the group has cited incorrectly for nine months), etc. with no mention that the shares have risen from $110 to $145 in three weeks. (No mention, obviously of reward vs. risk).

Today they have FOMO, they are chasing (and buying) strength after chasing weakness (and selling) in late April.

It was a fool's paradise of little value-added.

* As the 10-year yield moves north of 4.5%...

Here is a bond market update (TLT fresh daily lows just now):

* The yield on the 2-year Treasury note is + 2 basis points to yield 4.04%.

* The yield on the 10-year Treasury note is +2 basis points to yield 4.52%.

* The yield on the 30-year Treasury bond is +2 basis points to yield 4.96%.

From Charlie:

The Week in Charts (5/14/25) - Charlie Bilello's Blog

Adding to SPY at $588.25 and QQQ at $518.46 common shorts.

Volume and VIX

- NYSE volume 9% above its one-month average;

- NASDAQ volume 43% above its one-month average;

- VIX index: up 0.93% to 18.39

Breadth

SP 500 Sectors

% Movers

Nasdaq 100 Heat Map

Here are some things:

All shorts...

* ARKK $57.61 (new short)

* (GRNY) $20.93

*IWM $208.21

* QQQ $516.83

* SPY $587.40

Added to ARKK short over $58 as reported in Comments Section.

There was a glitch in our publishing system yesterday, so this post was uploaded late in the day.

For those that missed it:

Is the economy recession proof?

Well per below, I think we have our answer. The U.S. economy, as things are measured now (including government spend), is in fact recession proof.

We technically didn’t have a recession in the middle years under the prior administration, when nearly everyone thought there was a going to be a recession, including financial minds that thought we were in one or would have one, and the population that felt like we were in one (and voted thusly).

We seemingly are not going to have a recession now either, even with everything that has gone on, on top of the residue of what had gone on and an overspent and overborrowed consumer.

Therefore, by hook or by crook, we have a recession-proof economy.

That, however, does not mean we do not have a crisis-proof economy.

As the economy has shifted from manufacturing based to service based, it has also become increasingly financialized. We really have not had recessions for a long time, what we really had was financial crisis-induced slowings in the economy, plus Covid (where we left with an inflation problem due to the circular relationship between government excess and monetary policy that was too loose too long).

Ex Covid, all the economic problems in recent history were really the result of monetary policy that was too loose, and government excess, as opposed to a natural business cycle. Far from traditional recessions. Instead of moving from expansion to contraction at a business level, we move from financial crisis to crisis that are functions of monetary policy and the government.

What, Me, Worry?

At any rate, for the time being, all of this is good for the equity markets, which they correctly sniffed out (especially those who got to have dinner and drinks with the right guys in the government). Chaos seemingly smoothed over, and looking at the budget, the government continues to spend like drunken sailors. The one caveat to all of this is the bond market, which for good reason, for the time being is not cooperating like it used to (bonds and equities are decoupling for the third day in a row):

Bond prices continued to decline throughout the day:

* The yield on the 2-year U.S. Treasury note rose by 2 basis points to 4.02%.

* The yield on the 10-year U.S. Treasury note rose by over 4 basis points to 4.50%.

* The yield on the 30-year U.S. Treasury note is 6 basis points higher to 4.95%.

What this all means for the neutral rate, is anyone’s guess, but my view is it is higher than previously thought. We shall see. And the next crisis, we shall see too...

From APR 28, 2025 9:30 AM EDT:

In other news, TLT hits day's low - now down after opening higher.

Upside:

-SEPN +63% (Septerna and Novo Nordisk to collaborate on oral small molecule medicines for obesity and other cardiometabolic diseases; Septerna is eligible to receive $2.2B from Novo Nordisk across an upfront payment and research, development and commercial milestone payments)

-BLUE +48% (Go-Private deal price amended with Carlyle, SK Capital Partners)

-NUTX +25% (earnings)

-ECG +18% (earnings, guidance)

-IZEA +18% (earnings; intends to commence a Modified Dutch Auction Tender Offer to repurchase up to $8.7M of its common stock)

-SMCI +18% (Saudi-based DataVolt announces $20B deal with Supermicro to accelerate adoption of Rack-Scale Total Liquid Cooling IT solutions for future-ready AI data centers)

-ALUR +15% (earnings, guidance)

-ABSI +13% (earnings)

-RCAT +8.8% (expands its multi-domain Family of Systems with a new line of Unmanned Surface Vessels)

-ZVRA +7.4% (earnings)

-ATXS +6.7% (earnings)

-WRD +6.7% (launches 24-hour Robotaxi network in Guangzhou)

-LYEL +6.3% (earnings)

-SEER +6.3% (earnings, guidance)

-SLS +6.1% (earnings)

-SONY +5.7% (earnings, guidance)

-EXEL +5.4% (Invenra Highlights Exelixis’ Initiation of Phase 1 Clinical Study Evaluating XB628, a First-in-Class Bispecific Antibody in Participants with Recurrent Advanced or Metastatic Solid Tumors)

-TME +5.4% (earnings)

-MP +5.0% (signs MoU on rare earth supply chain with Maaden)

-PVH +4.6% (Jefferies Raised PVH to Buy from Hold, price target: $105 from $70)

-ENSC +3.9% (earnings, guidance)

-ESTA +3.7% (Needham Raised ESTA to Buy from Hold, price target: $48)

-UNH +3.3% (small bounce from sell-off following CEO change, suspension of guidance)

-NVDA +3.0% (momentum)

-CAPR +2.9% (earnings)

-DT +2.9% (earnings, guidance)

-RZLT +2.2% (earnings)

Downside:

-AUR -19% (Uber prices $1.0B Exchangeable Senior Notes offering due 2028)

-SILO -14% (entered into agreement with Frontage Laboratories for a FDA requested 7-day safety and toxicology large animal study of lead asset SPC-15, an intranasal prophylactic treatment for post-traumatic stress disorder)

-TXO -14% (prices 11.7M IPO shares at $15.00/shr)

-AEO -13% (reports prelim Q1 Rev, withdraws FY25 guidance)

-GRAL -13% (earnings)

-SURG -13% (earnings, guidance)

-GENK -8.7% (earnings, guidance)

-GNSS -8.2% (earnings)

-ARCO -8.1% (earnings)

-BDSX -8.1% (earnings, guidance)

-TNON -7.3% (earnings)

-QUIK -6.9% (earnings, guidance)

-WBTN -6.9% (earnings, guidance)

-LOAR -6.1% (announces secondary public offering of 9M shares)

-ANTX -5.9% (earnings)

-ALC -5.7% (earnings, guidance)

-LXRX -4.7% (earnings)

-VANI -4.7% (earnings)

-NU -4.5% (earnings)

-KVYO -4.4% (CEO said to be planning to sell $372M in stock today)

-HYLN -4.2% (earnings, guidance)

-AUID -3.1% (earnings)

-ANF -2.8% (lower in sympathy with AEO)

-MGNX -2.6% (earnings)

Premarket percentage movers as of 8:44 a.m. ET:

Most active premarket ETFs as of 8:24 a.m. ET:

Fed Speakers

5:15 a.m.: Fed Board Governor Waller (Voter) speaks on "Central Bank Research" before the Award Ceremony for the Winners of the 2nd Edition of the Bank Al-Maghrib Prize for Economic and Financial Research (Text available. Q&A from moderator. Webcast at https://www.youtube.com/@BankAlMaghribBKAM/streams); Morning: Timing is based on local NPR schedule: Fed Bank of Chicago President Goolsbee (Voter) Radio Appearance -- NPR's Morning Edition;

9:10 a.m.: Fed Vice Chair Jefferson (Voter) speaks on the economic outlook before virtual Annual Conference of Second District Directors and Advisor (Text available. No Q&A. RSVP for livestream: Brian Manning,Brian Manning@ny.frb.org);

5:40 p.m.: Fed Bank of San Francisco President Daly (Non-Voter) participates in fireside chat before the California Bankers Association 25th Annual Conference and Directors Forum, La Quinta, CA (Audience Q&A expected. Livestream. No prepared remarks. No group media interview)

Econ Calendar

TREASURY AUCTIONS

11 a.m.: Treasury Buyback Announcement (liquidity support)

11:30 a.m.: Treasury hosts a $60B 17-Week Bill Auction

From Peter Boockvar:

SPX technical check/Big news if this FX story is true/AEO on retail, LSTR on trucking

Just a technical heads up on the S&P 500, and it's only one gauge so don't look at it in isolation. The 7 day Relative Strength Index closed yesterday at the highest level since July 2024. It's been a pretty powerful rebound for sure. The CNN Fear/Greed index which bottomed at 3 in April and which can't go below zero and thus uber 'Extreme Fear', closed at 69 yesterday, nearing 'Extreme Greed.' 

SPX 7 day RSI

This story is important to follow if there is more to it. Bloomberg News has a note this morning that "US-Korea Currency Talks Fuel Bets Trump is Open to Weaker Dollar." In the piece it said, "The dollar fell after a person familiar with the matter said the US and South Korean governments discussed currency policies this month, fanning speculation President Donald Trump's administration is open to a weaker greenback and will make exchange rates a feature of upcoming trade talks."

Wow, if true. The Korean won is rallying by 1.5% in response to the story and is just below the highest level vs the US dollar since last November. The dollar is lower against other Asian currencies too today and vs others elsewhere as well.

I cannot again emphasize enough how much the world has piled into US assets over the past 5 years plus, particularly in US tech stocks. There is a major rethink now of those allocations and the US portion will shrink in the coming years from historic highs. Understand too that most of the foreign ownership of US assets is not FX hedged. Taiwanese insurance companies who were loaded up in US Treasuries lost multiple years of interest income in just a few days when the Taiwan dollar ripped higher vs the US dollar.

Korean Won (lower it goes, the higher its value vs USD)

This is what American Eagle said in a release after the close yesterday and why the stock is trading down:

"At this time, the company is withdrawing its previously provided fiscal year 2025 guidance due to macro uncertainty and as management reviews forward plans in the context of first quarter results."

"We are clearly disappointed with our execution in the first quarter. Merchandising strategies did not drive the results we anticipated, leading to higher promotions and excess inventory. As a result, we have taken an inventory write down on spring and summer goods."

From Landstar, a trucking company that reported yesterday and good timing with all the tariff news:

"The freight environment in the 2025 first quarter was characterized by relatively soft demand, weather impacts, and readily available truck capacity. The impact of accumulated inflation remains a drag on the amount of truckload freight generated in relation to consumer spending. Truck capacity continues to be readily available with small pockets of supply demand equilibrium, and market conditions continue to favor the shipper amidst choppy conditions in the industrial economy."

"Given the highly fluid freight transportation backdrop amid the uncertain political and macro environment, together with the recent industry trends in insurance and claims cost, the company will be providing 2nd quarter revenue commentary rather than formal guidance." They are seeing much higher insurance claims and costs and freight fraud is a big reason.

Also, "fiscal April truck volumes trended slightly below normal seasonality. When combined with the potential negative impact of truck transportation activity resulting from tariff and trade uncertainty, we believe it is unlikely that we would achieve normal seasonality with respect to the number of loads hauled via truck in the 2025 2nd quarter."

On the pull forward behavior of customer ordering and what happens now with the 90 day China pause, "academically in the 1st quarter, it's hard to believe that we didn't see something associated with pull forwards. And my guess is if the 90 days continues to progress and people become more and more worried that maybe there won't be a deal, my guess is there will be some people who try to get things across the finish line before the 90 days expires." But right now, "it's just hard in this early going to actually put some numbers behind that."

This was from the CEO of Hapag-Lloyd, the container ocean freight company, on Bloomberg TV today, and I guess not surprising, "The last couple of days we see a huge surge of volume and now we need to see how long that lasts." Define huge? He thinks volumes are up about 50% vs the last few weeks.

A good read on St. Joe Company.

Knowledge@Wharton: "Crypto Creep"

As I suggested in an earlier post, the Pennsylvania cannabis bill (state-sponsored stores) has been rejected:

Pennsylvania Senate Committee Rejects Marijuana Legalization Bill That Was Approved By House - Marijuana Moment

Bonus - Here are some great links:

While the Market Is Like a Beach Ball Underwater

Breadth Thrust - How To Play It?

Opening Look, Explained

Seven Trading Secrets

I thought Helene's comments this morning were spot on (and we saw this in a lagging RSP and IWM yesterday):

Tuesday was the first day in quite some time that the market felt very index-driven. By that, I mean breadth lagged. Now, before you get hysterical, breadth is still fine, it’s just that on Tuesday, it did not lead as we had only about 65 percent of the volume on the upside. That number has been chiming in well over 70 percent most days.

With breadth lagging, the number of stocks making new highs on the NYSE did not increase. Nasdaq did see a minor increase, but I continue to monitor the Nasdaq Hi-Lo Indicator, and you can see it did not budge on Tuesday. The math says it should try again to push upward, but Tuesday was not it. As a reminder, if it is at a lower high (than last week) when we get intermediate term overbought (late next week), it will be a negative for the market.

Let's see if the dichotomous performance continues today...

I have a small short in the indices, but I want to increase it into this ramp. (I have yet to short index calls but probably will on further strength.)

More shorts in premarket:

* SPY $587.06

* QQQ $516.43

In addition I have initiated a short in ARKK at $57.47. 

From JPMorgan:

US: Futs are flat with small caps lagging as Equities may see some profit-taking given the strength of the rally. Stocks has now erased their YTD losses, the recovery pace of ~6 weeks is the fastest since the lates 1980s. Chips are higher on new deals being made by Trump in the Middle East regarding chips/AI infra build. Pre-mkt, NVDA/TSLA are higher with the rest of Mag7 flat/down, but Semis are higher though other Cyclicals are slightly weaker. AI theme is higher, too. The yield curve is twisting steeper as USD strength abates. Cmdtys are lower as Energy sells off. The macro data focus is on mtge applications and XHB is +5% over the last two days.

and...

EQUITY & MACRO NARRATIVE

Given no market-moving macro data, and ahead of tomorrow’s Retail Sales print, we thought we would share our view that the risk/reward of the Retail Sales print is skewed to the upside. Good news is good news and bad news will be ignored given (i) thawing of the trade war and (ii) potential for global stimulus to further improve the economic outlook. That said, SPX’s first test of 5,900 and it failed to hold that level but bullish macro data may be enough to push through.

USD THOUGHTS POST CHINA/US REPRIEVE – Meera’s full note is here

• US equities alone are an incomplete barometer for US exceptionalism and thus the dollar; our dollar view is instead informed by the holistic combination of relative FX/monetary/fiscal/trade policies, positioning, and various measures of US exceptionalism.
• The case for the USD lagging the retracement in US equities is strong; the temporary tariff reprieve reduces US recession odds, but is growth positive for rest of the world as well and, on some measures, puts us in the middle of the dollar smile…
• ...Moreover, the world is still long the dollar. Changing EUR/equity correlations are making the case for FX hedges to be increased in the Eurozone, and a rise in USD/Asia would be a distraction in tariff negotiations with the US, particularly ahead of the Treasury’s Currency Manipulator report.
• The bearish case for USD remains intact, all else equal, but admittedly with lower intensity as the US moderation should no longer be as extreme. Over the medium term, signals on the extent to which US exceptionalism lingers will be more relevant for the dollar.
• Our recommended strategy has been a barbelled approach, between cheap recession hedges (JPY longs) and recovery candidates (Scandis, AUD longs). Developments this week increase risks for the former with further JPY weakness possible, but improve the backdrop for the latter/cyclical FX with a recovery likely. The view on EUR/USD still remains bullish.

The S&P Short Range Oscillator is at 5.61% vs. 5.60%.

It's still well in overbought ground.

Wolf Street howls about the "drunken sailors."