Closing Volume

- NYSE volume 54% above its one-month average;

- NASDAQ volume 14% below its one-month average; 

Breadth

Sectors

% Movers

Nasdaq 100 Heat Map

* But, respectfully, gives little of substance other than 1Q2025 S&P EPS "were fine"...

I wish Scott Wapner and his guest, "The Dean of Valuation" (who is not concerned about a deceleration of S&P EPS growth) read this excerpt from yesterday's opener — and would then give me an argument of refutation:

S&P Earnings Will Not Likely Grow Into Inflated Valuations 

* And Bloomberg's U.S. Economic Surprise Index is at the year's lows.

Two additional fundamental concerns should be underscored.

I am stupefied that the bullish cabal is comfortably and confidentally extrapolating 1Q2025 S&P EPS and U.S. economic growth data.

First, most bulls respond to today's elevated valuations that earnings will grow rapidly (corporate profits are the lifeblood of our markets), making a P/E multiple of 23x not unreasonable.

This, too, I disagree with:

With prices paid moving up and the prices received component now moving down — corporate profit margin squeeze/pressure likely lies ahead.

Again, consensus S&P 2025-2026 EPS estimates are too high and at a starting point of 23x forward EPS — problematic for equities.

Second, Bloomberg's U.S. Economic Surprise Index has turned the most negative thus far in 2025:

On Wednesday the shares of payments processors Visa V and MasterCard MA got schmeissed based on concerns that stablecoins will disrupt their businesses.

V and MA are broadly held in institutional portfolios (and also prominent in Berkshire's BRK.A BRK.B book). There might be a shorting opportunity here...

I plan to do some research on this issue over the weekend.

Stay tuned.

Housekeeping item.

I have covered my Oracle ORCL short at $206.32.

From four days ago:

Oracle Short

I shorted a small amount of Oracle (ORCL) at $219.62 on last night's continued climb higher (around 8 p.m.).

I did it solely on the overbought and high RSI — home gamers should not try this and I plan to be out of the trading short rental shortly.

Position: Short ORCL (VS)

By Doug Kass Jun 16, 2025 6:15 AM EDT

Dougie Kass

dr jeremy siegel is bullish

my shocked face

Adding to SCHW, HOOD and NVDA shorts.

I am selling short in-the-money SPY and QQQ calls for september

With S&P cash -4 handles I am buying in-the-money index puts for August.

I plan to expand my put position on strength.

Scott Galloway's No Mercy/No Malice... "Pomp vs Protest"

I am back in my office — getting reoriented to the trading day!

As of 12:45 p.m.

- NYSE volume 175% above its one-month average;

- Nasdaq volume 12% below its one-month average;

- VIX index down 8.57% to 20.27

I am still out of the office, but I just covered spy and QQQ shorts with S&P cash -16 

Upside:

-GMS +27% (Home Depot 'privately' made bid for GMS, notes possible bidding war for GMS)

-OSCR +14% (momentum)

-CRCL +13% (Seaport Global Securities Initiates CRCL with Buy, price target: $235)

-KMX +10% (earnings, guidance)

-SYM +3.9% (momentum)

-DRI +3.3% (earnings, guidance; authorizes new buyback program and raises dividend)

-QXO +2.9% (HD challenges QXO bid for GMS)

Downside:

-SWBI -14% (earnings)

-CAPR -5.9% (Center for Biologics Evaluation and Research (CBER) director changes)

-ACN -5.2% (earnings, guidance)

Charts from 8:14 a.m. ET:

Chart from 8:25 a.m. ET:

From Peter Boockvar:

Why yields are rising

Treasury yields are at the highs of the day with the 2 yr yield at 3.95% (up 2 bps pre presser) and the 10 yr yield at 4.39-.40% (up 4 bps) in response to the message Powell is sending that he’s not ready to cut rates anytime soon. Here are some Bloomberg News generated bullet points that lay this out:

*POWELL: WANT TO SEE SOME TARIFF EFFECTS ON INF. BEFORE JUDGING

*POWELL: LABOR MARKET ISN'T CRYING OUT FOR A RATE CUT

*POWELL: GOING TO LEARN MORE ABOUT TARIFFS OVER SUMMER

*POWELL: PASS THROUGH OF TARIFFS TO CONSUMER INF. IS UNCERTAIN

*POWELL: CAN'T ASSUME TARIFF INFLATION HIT WILL JUST BE ONE-TIME

*POWELL: SIZE, AMOUNT, DURATION OF TARIFFS ARE HIGHLY UNCERTAIN

*POWELL: BEGINNING TO SEE SOME TARIFF EFFECTS, EXPECT MORE

*POWELL: MANY COMPANIES EXPECT TO PASS ON TARIFF COSTS

*POWELL: TAKES TIME FOR TARIFFS TO WORK THROUGH TO END CONSUMER

*POWELL: TARIFF EFFECTS ON INFLATION COULD BE MORE PERSISTENT

*POWELL: INCREASES IN TARIFFS LIKELY TO BOOST PRICES

* I shorted NVDA (at about $145) on Wednesday...

OpenAI has begun to discount enterprise subscriptions to ChatGPT.

In my experience, products are only discounted when they are not selling because customers do not perceive value at the higher price.

If someone loses copious amounts of money at the higher price, how will the economics work at a lower price?

My suspicion, although those guys might be good (in theory) at technology, they are not good at business. I think they will find much less in the way of elasticity than they hope, because the problem is the quality of the output more than it is the price.

As far as losing money is concerned, I also read that XAI is back to raising a lot of money again, after they just did, not so long ago, because it already has been spent.

From Bloomberg:

OpenAI has started discounting enterprise subscriptions to ChatGPT, frustrating salespeople at Microsoft which sells competing apps at higher prices. The FT reports that Microsoft is prepared to abandon its high-stakes negotiation with OpenAI over the future of its alliance if the two sides cannot agree to critical issues. Earlier in the week, the WSJ reported that OpenAI has considered accusing Microsoft of anticompetitive behaviour in their deal, adding that both sides are discussing revising the terms of Microsoft’s investment.

Bonus — Here are some great links:

How an Oil Spike May Impact Equities

Pay Attention to Natural Gas

It Took 25 Years to Get to This Chart

Manage Headlines and Get Bullish

I have to travel this morning to two meetings.

My posts this morning will be shorter and less frequent.

I should be back in the office by 1 p.m.

Wolf Street howls about the condo price bust across the U.S.

Back short the indices:

* SPY $594.78

* QQQ $528.10

The S&P Short Range Oscillator has moved from 1.07% to 1.15%. It is neutral to slightly overbought.