At 4:13 p.m.:

Closing Breadth

S&P 500 Sectors

Nasdaq 100 Heat Map

I am planning to take a large short position in Bitcoin in the coming weeks for many of the reasons I have discussed in the past.

I started today by initiating a BITO short at $22.31.

I recognize that there are many subscribers who are fully committed to Bitcoin and other cryptocurrencies. I understand but don't agree with the logic behind Bitcoin as an investment.

I won't reiterate my view on the subject, but know I will be shorting the asset class.

I remain short Strategy MSTR.

Taking My Ball And... - Praetorian Capital

Very light now. Looking to short strength.

Pellman11

I need a ludicrous call from Douglas "D-Kizzle" Kass

It would be so unamerican to have the stock market go red on ANY day ending in Y

We had lost Internet service for a while (the entire village lost it this time!), back up.

Wolf Street howls about the surge in housing inventories and plunging sales.

Poor action.

From Peter Boockvar:

The 7 yr note auction was solid. The yield of 4.194% was about 2 bps below the when issued pricing. The bid to cover of 2.69 was above the previous 12 month average of 2.61 and the best in 5 months. Also, direct and indirect bidders took a combined 95% of the auction, the most since 2009 that I have data on, leaving dealers with just 5% of the supply.

Bottom line, Treasury yields are at the lows of the day in response. I wish I could ask the buyers what precipitated the strong demand. Worried about economic growth? Not worried about the US budget talks and its impact on debts and deficits? Inflation expected to further recede? Less tariff induced inflation concerns? Is today just a seasonal flow thing?

7 yr Note Yield

- NYSE volume is 6% below its one-month average;

- Nasdaq volume is 42% above its one-month average;

- VIX index: down 0.52% to 19.21

Coming up at 11 a.m. my favorite podcast of the day - MRKT CALL with Dan and Guy (and sometimes my pal Carter Worth!)... And its free!

Run don't walk to watch the boyz 'cause today's price action will likely lead to an interesting conversation.

Here is the link. Nvidia Earnings Lift S&P 500 Higher

From Peter Boockvar:

Transaction side of housing market still on volatile ground

Lower mortgage rates helped home sales in March and higher ones did the exact opposite in April. Also throw in all the volatility of the stock market impacting buyer psychology. Pending home sales fell 6.3% m/o/m in April after rising by 5.5% in March and well below the estimate of down 1%.

The NAR said, “Despite an increase in housing inventory, we are not seeing higher home sales. Lower mortgage rates are essential to bring home buyers back into the housing market.” I’ll add that price matters too as if lower mortgage rates bring ever higher home prices, the buyer is no better off. We thus need more housing supply more than we need lower mortgage rates I believe and it seems that we’re beginning to see that.

To this, the NAR also said “Home buyers have a better chance to purchase homes in affordable regions such as the Midwest, where the typical home price is $313,000 - 25% below the national median home price. Moreover, with housing inventory levels reaching five year highs, home buyers in nearly every region of the country are in a better position to negotiate more favorable terms.” Considering how frozen the transactional part of the existing housing market is, it needs all the help it can get.

Average 30 yr mortgage rate

Pending Home Sales index

From Peter Boockvar:

Claims data/GDP revision, though old news

Initial jobless claims jumped to 240k from 226k and that was 10k more than expected. The 4 week average though was unchanged at 231k because of a print of 241k fell out. Of particular note too, continuing claims rose to 1.919mm from 1.893mm which is the most since November 2021.

The bottom line remains that the pace of hiring’s has slowed and I hear more anecdotes each week on that while the rate of firing’s remains modest but we’ll see if today’s uptick in the data is followed up in the coming weeks, months.

Initial Claims 4 week avg

Continuing Claims

Q1 GDP is old news but was left little revised, down .2% vs the initial print of -.3%. Within though, personal spending was revised lower to 1.2% q/o/q annualized growth vs 1.8% in the first round. Inventories was revised up, government spending was less negative and capital spending was a bit better than initially reported.

I call B.S. to those who have lost their memories -- forgetting their investment boners and emphasizing their investment successes.

(By contrast) I have striven to be honest and transparent in my Diary over the last 28 years.

I try not to pat myself on the back when winning and I don't sugar coat my errors:

Kdog88

27 minutes ago

Dougie…..you are a trading machine!

DK

Dougie Kass

5 ,minutes ago

I have been on the wrong side of the market so I try to ring the cash register as often as possible with my trades.

Post Script: If I ever fail to be honest or conduct myself with hubris - please call me out in The Comments Section!

Upside:

-SVT +21% (amends merger plan to with TransDigm for increased tender offer to $47.00/shr in cash at total value ~$134.3M)

-BBW +19% (earnings, guidance)

-AI +16% (earnings, guidance)

-ELF +15% (earnings)

-VEEV +15% (earnings, guidance)

-TALK +9.8% (becomes First Behavioral Health Provider to Integrate with Amazon Pharmacy, Offering Psychiatry Services)

-BURL +7.8% (earnings, guidance)

-KSS +6.4% (earnings, guidance)

-EXPI +6.2% (DA Davidson Raised EXPI to Buy from Neutral, price target: $10.75)

-NVDA +5.6% (earnings, guidance)

-A +5.5% (earnings, guidance)

-VRT +5.2% (higher in sympathy with NVDA earnings, guidance)

-JD +4.5% (expands retailing collaboration with China’s Instagram rival app Xiaohongshu)

-CRWV +3.9% (higher in sympathy with NVDA earnings, guidance)

-SMCI +3.7% (higher in sympathy with NVDA earnings, guidance)

-HLNE +2.9% (earnings; raises dividend)

-SNPS +2.5% (earnings, guidance)

-BBWI +2.3% (earnings, guidance)

-NTNX +2.1% (earnings, guidance)

Downside:

-NTLA -21% (discloses case of severe liver toxicity in patient treated with CRISPR-based experimental therapy for ATTR-CM)

-EOSE -18% (files to sell $75M in stock and announces proposed $175M convertible senior notes offering)

-MOV -12% (earnings)

-HPQ -7.9% (earnings, guidance)

-BBY -2.3% (earnings, guidance)

-LI -2.0% (earnings, guidance)

Most active premarket exchange-traded funds as of 8:14 a.m. ET:

Premarket percentage movers at 8:35 a.m. ET:

Treasury Auctions:

11:00 a.m.: Treasury announces a 3 and 6 month bill auction;

11:30; Treasury hosts a $75B 4 and $65B 8 Week Bill Auction;

1 p.m.: Treasury hosts a $44B 7-Year Note Auction

Fed Speakers:

8:30 a.m.: Fed Bank of Richmond President Barkin (Non-Voter) participates in a fireside chat before the Housing Partnership Network, Richmond, VA (No text. No livestream. No media Q&A);

10:40: Fed Bank of Chicago President Goolsbee (Voter) participates in a moderated question-and-answer session before the 2025 Mackinac Policy Conference hosted by the Detroit Regional Chamber, Mackinac Island, MI;

11:30: Fed Bank of Chicago President Goolsbee (Voter) Radio Appearance -- WJR-AM;

2 p.m.: Fed Board Governor Kugler (Voter) gives opening remarks before virtual 5th Annual Federal Reserve Board Macro-Finance Workshop (Text available. No Q&A. Livestream at https://www.federalreserve.gov/);

4:00: Fed Bank of San Francisco President Daly (Non-Voter) participates in fireside chat before the Oakland Rotary Club Oakland, CA (No prepared remarks. Audience Q&A expected. No group media interview. Livestream);

8:25: FedBank of Dallas President Logan (Non-Voter) gives opening remarks and participates in moderated conversation before the Greater Waco Member Appreciation event, Waco, TX (Embargoed text available one hour prior to speaking time. No Q&A. No livestream)

From Peter Boockvar:

Interesting times

With about $3.3 trillion of goods exports, the US Court of International Trade just relieved American businesses of $330 billion of import taxes but of course where this ends up on appeal remains to be seen and the White House can use other tariff tools such as Section 232, Section 122 and Section 301 to replace some of what was struck down.

It will certainly be interesting what comes of the current trade negotiations going on without the threat of tariffs for now. Hopefully we can get some easing of trade barriers without that tariff stick anyway.

Informationally, according to their website the US Court of International Trade was "established under Article III of the Constitution, has nationwide jurisdiction over civil actions arising out of the customs and international trade laws of the United States."

The bottom line of the Court on this, "The Worldwide and Retaliatory Tariff Orders exceed any authority granted to the President by IEEPA (International Emergency Economic Powers Act) to regulate importation by means of tariffs. The Trafficking Tariffs fail because they do not deal with the threats set forth in those orders."

Some other tidbits from the decision, "Because of the Constitution's express allocation of the tariff power to Congress, we do not read IEEPA to delegate an unbounded tariff authority to the President. We instead read IEEPA's provisions to impose meaningful limits on any such authority it confers."

"IEEPA require more than just the fact of a presidential finding or declaration: The authorities granted to the President by section 1702 of this title may only be exercised to deal with an unusual and extraordinary threat with respect to which a national emergency has been declared for purposes of this chapter and may not be exercised for any other purpose. This language, importantly, does not commit the question of whether IEEPA authority 'deal's with an unusual and extraordinary threat' to the President's judgment. It does not grant IEEPA authority to the President simply when he 'finds' or 'determines' that an unusual and extraordinary threat exists."

Finally from me on this, "Section 1701 is not a symbolic festoon; it is a meaningful constraint on the President's discretion. It sets out 'the happening of the contingency on which IEEPA powers depend,' and the court will give it its due effect." 

With this legalese behind us, what does it mean for markets? Equities deservingly are rallying but have been since the April 9th tariff cool down. Bonds are selling off and the US dollar can't seem to get out of its own way, basically flat this morning. I think the thought on bonds is that the court has taken the foot off international commerce and maybe why yields are higher with the 10 yr yield back above 4.50% and the 30 yr yield above 5%. Also, yields are up again in Asia and Europe. I remain bearish on duration of anything past 3 years.

With the US dollar, this court decision will not alter at all I believe the desire of foreign holders of US assets to lighten up after they got so heavily allocated over the past few years.

With respect to the Fed, if the court decision holds, they will hopefully have much more visibility on trade (though of course depending on other new avenues of tariff use) and can make some clearer decisions. Interestingly though, the initial reaction in bonds is higher yields as stated and thru year end, the fed funds futures are pricing in now a 66% of a 2nd cut vs 72% priced in yesterday. The first one this year is still fully priced in.

With the uncertain nature of the court appeals process and whether the tariffs stay on until the next legal decision is made, we'll see what happens with global trade and the rush to transport stuff ahead of the holidays.

Obviously ahead of last night's decision, today the World Container Index said the price of a 40 foot container from Shanghai to LA rose another 17% w/o/w to $3,738, up $541. That's a 3 month high. The price of a trip from Shanghai to NY was up by 14% w/o/w to $5,172, up by $645.

Shanghai to LA

Apartment List released its National Rent Report covering May and it reflected a .4% m/o/m rise in new rent prices, up for a 4th straight month in a seasonal time of increases. They are down though .5% y/o/y. Supply is still coming online from many projects green lit before interest rates spiked. This drove the vacancy rate up to 7%, a new high dating back to 2017 when they started calculating this. Most are coming from the sunbelt states. Apartment List said, "2024 saw the most new apartment completions since the mid-1980s, and although we're past the peak of new multi family construction, this year is still bringing a robust level of new supply."

From what I heard from a bunch of multi family REITS in their earnings calls, the renewal rate, not captured here, is up about 2-4% depending on the market.

There are a bunch of earnings calls to go through.

From Dick's Sporting Goods:

"In Q1, we saw growth in both average ticket and transactions. In fact, compared to the same period last year, more athletes purchased from us, they purchased more frequently and they spent more each trip."

They acknowledge the "increasingly complex macroeconomic environment, one shaped by shifting trade policies and a more cautious consumer mindset" but "We hold a unique and compelling position in the industry and we've seen that people continue to prioritize healthy lifestyles, sports and fitness and are increasingly looking to Dick's Sporting Goods to meet these needs."

From Capri Holdings, the owner of Michael Kors and Jimmy Choo:

"Overall, our business remained challenged and we were disappointed with our performance. Revenue decreased 15% during the quarter as we were impacted by the continued softening demand for fashion luxury goods globally."

From Macy's:

"Given uncertainty regarding the tariff impact on consumer health and demand, we believe it's prudent to incorporate a more choiceful consumer into our outlook for the quarter and for the remainder of the year. Our second quarter and full year guidance ranges assume that the promotional landscape intensifies as the year progresses, international tourism does not rebound and we continue to reinvest savings from closed stores and distribution centers in the initiatives that support our long-term growth."

From Elf Beauty, whose stock is bouncing by 3% pre market:

This comment was of course before the court decision, "To partially mitigate the impact from tariffs, we plan to take $1 increase on our entire product assortment globally, effective August 1. We are intentional in not going beyond that $1 to preserve our value proposition...This is only the third price increase we've taken in our 21 year history, unlike many of our competitors who regularly take price increases. Historically, consumers have been able to accept a dollar increase."

"Looking at Q1 to date, we are seeing our consumption trends better than what we saw in Q4 and continuing to trend well ahead of the category. In the month of April, we were the only top five cosmetics brand to post growth with Elf gaining an additional 130 bps of market share in the US."

Best Buy gave guidance which included the impact of tariffs which now will likely change but also said an assumption is "there is no material change in consumer behavior from the trends we have seen in recent quarters." Domestically, sales fell for "home theater, appliances and drones. These drivers were partially offset by growth in the computing, mobile phone and tablet categories." I'm sure they saw some pull forward consumer behavior.

I'll leave Nvidia to others as it's in such a unique dominant position right now.

From HP and whose stock is down sharply pre market:

"Against the backdrop of a highly dynamic landscape, we delivered another quarter of solid top line growth driven by continued momentum in the Personal Systems commercial business. However, due to additional tariff costs that could not be fully mitigated in the quarter, our non-GAAP operating profit fell short of expectations."

"We continue to expect the PC market will grow in 2025, but softer than originally planned, driven by increased macro uncertainty...In Print, we continue to expect the market to decline, low single digits for calendar year 2025."

From Salesforce:

They saw 8% revenue growth y/o/y. "We saw very strong growth in our small and medium market business. It really surprised us."

They talked a lot about Agentforce.

The Bank of Korea cut interest rates by 25 bps as expected to 2.50% and said this about the outlook, "Since growth momentum has weakened more significantly than initially expected, we believe there's a possibility rates will be cut more than we thought going forward." The Kospi rallied by 1.9% overnight in combination of the rate cut and guidance and the tariff court news. The Korean won is little changed, though near the highest level since last October vs the US dollar.

With S&P futures now +49 (down from +96 when I shorted my last lot of SPY) - I am taking in my SPY, IWM and QQQ shorts (I plan to reshort strength):

* SPY $592.87

* QQQ $525.94

* IWM $207.63

I have long written that there has never been so many possible social, policy, political, geopolitical, economic and market outcomes that have existed in the last twelve months (many of them adverse).

Last night's surprise court decision against the Trump administration's tariff levies is but another example of a long list of uncertainties.

The market has, in the last three weeks, taken the plethora of outcomes constructively — resulting in growing investor optimism marked by a valuation expansion in equities.

Before investors declare Hi or Low in the Investing Card Game, there is a downside to the latest tariff ruling:

Will interest rates rise more swiftly, will the Fed pause in 2025, will proposed tax cuts be reduced and/or what will the administration's reaction be (as Trump goes through other channels to produce his intended policy (e.g. Section 122))?

As expressed in "Rethinking American Exceptionalism" I strongly disagree with the market's price-earnngs multiple expansion and I am raising my short exposure... and declaring "Low." 

Bonus — Here are some links:

Why Mom and Pop Are the Smart Money

Buying the Dip

How I Am Buying the Platinum Bull

Skeptical ETF Inflows

Long-Term Indicators Suggest We Can Go Back to New Lows

The S&P Short Range Oscillator has moved from 1.24% (overbought) to -0.75% (oversold).

* The court's tariff announcement results in a gap higher in stock futures and higher bond yields...

I reestablished my index shorts (SPY, QQQ and IWM) as noted in The Comments Section (between 8 p.m. and midnight) with S&P futures +80 handles to +98 handles.

I am adding now (+89 handles):

* SPY $596.74

* QQQ $529.26

* IWM $209.49