It was good to sit in here at the Daily Dairy as always. Also nice to do so when stocks rose nicely across the board. 

Equities were buoyed after White House spokesperson Karoline Leavitt played down the July tariff deal deadlines, providing investors additional hope they will be suspended again while new trade deals are negotiated. The S&P 500 is back right at all-time highs after at one point being down 25% at its intraday low during the Tariff Tantrum in April. I do hope investors’ hopes on the trade front are realized in this case.

It appears homes were not the only thing that had a very poor spring selling season. Boat sales were weak during the last two months, according to preliminary data from Statistical Surveys. Based on the latest data read, there was a 15.7% year-over-year decline in registrations in May and an 11.2% drop in April. Like the housing sector, these high-ticket items are also being negatively impacted by higher interest rates.

While the market continued its rally, the US Dollar Index (DXY) slipped just under one half of one percent on the day to end at a three-year low. This is obviously a headwind on the inflation front. Speaking of which, the Fed’s preferred inflation gauge, the core personal consumption expenditure, or PCE index, will hit tomorrow. The month-over-month headline and core readings are expected to be in line with April. The year-over-year measures are expected to tick up slightly.

Until next time.

The major indexes continue to grind a bit higher since my last post. It will be interesting to see if we get any significant movement in the last 90 minutes of the trading day. 

Investors should just get used to the Fed being on hold through most of the summer. Fed Governor Michael Barr stated today that he is expecting that tariffs will put upward pressure on inflation. This echoes other commentary from Fed members this week. POTUS can continue to state Chairman Powell is behind the curve, and that might turn out to be the case in retrospect. However, until more clarity on what impacts tariffs will have on input prices is provided, the central bank is likely to continue to be content to sit on its collective hands barring an unforeseen event. Despite this, the market just continues to relentlessly move higher.

Novo Nordisk NVO announced today it has partnered with WeightWatchers (WGHTQ) to sell its obesity drug Wegovy. The comes several days after the drug giant exiting a similar deal with Hims & Hers Health HIMS. The stock of HIMS is ignoring the news and is up better than 10% in trading today after a big drop following being dropped by Novo on Monday.

It is that time of the year again. Electricity generator manufacturer Generac Holdings Inc. GNRC is up 2% today as it heads to its best weekly performance since November on the heat wave across much of the country and the beginning of hurricane season. This will be the sixth straight week of gains it should be noted. The equity is now up some 40% from its lows in April.

Stocks have traded largely flat since my last post but are still nicely in the green. 

The second revision to first-quarter GDP was lowered to a 0.5% contraction by the Bureau of Economic Analysis. This is down from a negative 0.3% in its first print, and a negative 0.2% on its first revision. This reflected downward revisions to consumer spending and exports. These were partly offset by a downward revision to imports. Personal consumption has been reduced from an initial 1.7% in the first read to a current 0.5%, the weakest since Covid. Core PCE was revised up a tad to 3.5%, a fractional increase from the 3.4% previously reported.

It should be noted that the current Atlanta Fed’s GDPNow projection has growth rebounding to 3.4% in the second quarter. Still, that is down from a high point of 4.6% a few weeks ago. The next update will be posted tomorrow.

I am not doing much trading today. I did take a position in ConocoPhillips COP via covered call orders today. Oil seems to have bottomed a bit over the past couple of days after a big selloff following the ceasefire between Israel and Iran. The shares in this well-run E&P concern have fallen some 15% since early April. The stock also has a 3.7% dividend yield. I picked a strike price just below the current trading levels of the stock as I am just trying to hit singles in this overbought market.

Equities have moved slightly higher since my last post. 

Viking Therapeutics VKTX is moving some 5% higher in the first two hours of trading. Clinical stage competitor AltImmune ALT posted mixed data from a mid-stage trial for its primary candidate pemvidutide, its experimental therapy for a liver condition known as metabolic dysfunction-associated steatohepatitis or MASH. This could make Viking a somewhat more compelling buyout candidate based on its own MASH efforts as well as its primary focus on the GLP-1 development space. I rolled my covered calls on my very small covered call holdings in AltImmune it should be noted as the stock has been cut in half on the news.

Meta Platforms, Inc. META is up nearly 2% on the day after UBS bumped its price target to $812 a share from $683 previously, mostly due to the company’s ability to extract incremental revenue on a longer-term basis from various AI products, notably Business Messaging and Meta AI.

In economic news, May U.S. pending home sales rose 1.8% on a month-over-month basis to 72.6 in May. This was above the .2% consensus, after a decline of 6.3% in April as the Spring Selling Season has been a bust for the housing sector. This follows weakness in 2023 and 2024, when existing home sales came in at the lowest annual levels since 1995. All four U.S. regions had minor gains in May, led by activity in the West.

Well, the trading day has commenced, and equities in early trading are up modestly. Oil is up roughly 1% on the day and the yield on the 10-Year Treasury has dropped slightly. JP Morgan reduces its price target on Apple AAPL by ten bucks a share to $230. The analyst at the investment citing moderating demand and some pull forward effects from tariffs as reasons for the downward price target revisions. The stock is down some 20% so far in 2025. However, the shares still trade just north of 7.5-times revenues where historically the stock has traded between four to five times sales on average over the prior 15 years.

U.S. first-quarter corporate profits were revised up slightly but still declined 3.3% quarter-over-quarter, compared to its initial estimate of -3.6%. It should be noted that profit margins were falling before tariffs went into effect. It will be quite interesting to see what impact tariffs play in second-quarter profit margins. And if reciprocal tariffs go back into effect early in July, things could get really interesting in the third quarter to say the least.

According to a recent 2025 CNBC CFO Council Survey, 86% of CFOs believe the Federal budget for 2026 will pass, albeit with some changes. That appears to be a sound take. But given the thin margins in Congress, this piece of sausage making is going to get quite unsightly before enough pols are pushed, cajoled and bought into voting yes. My take is the president’s July 4th deadline for passage is likely to be missed given the significant disagreements on issues such as the SALT cap and Medicare changes. This could cause some market volatility in the weeks ahead.

One of the main topics of conversation in New York City and the financial press is the surprising results in the NYC Democratic mayoral contest on Tuesday where an avowed socialist beat three-time governor in the form of Andrew Cuomo, and handily so. The initial reaction was that this outcome would be good for real estate. Unfortunately for New Yorkers, it seemed to boost the prospects of real estate in South Florida, particularly in Palm Beach and Miami, not the Big Apple. Victory in the general election is speculated to spark another exodus out of the five boroughs ala what happened during the Covid pandemic.

Given the now-official Democratic candidate’s desire to freeze rent for the approximately two million people who live in rent-stabilized apartments in the city, it is not surprising NYC-centered office and apartment Real Estate Investment Trusts sold off Wednesday. This included names like SL Green Realty Corp. SLG that was off 5.7% and Vornado Realty Trust VNO which fell 6.7%.

The betting/prediction markets have Zohran Mamdani with an approximate 75% chance of prevailing in the general election. I have a contrarian take on that outcome. I believe the donor class, Wall Street and the media will come together to push Cuomo out of the race entirely and from running under a different party and unite under the current mayor Eric Adams. The past scandals of his administration will be whitewashed, and he will garner much praise for recent accomplishments. Mamdani will be given the Donald Trump treatment by the NYC-based media. The DNC might also get involved in this effort given the election of Mamdani might become an albatross around the party’s neck that is still trying to recover from the November election.

And to be fair, there has been some good recent progress in the Big Apple. Crime and murders are down, and Broadway just had its best 12 months in its history. The city feels like it recovering some of its vitality which was missing for the most part from 2020 to 2023. Given this is the largest city in the U.S. and its financial hub, expect this topic to continue to generate considerable headlines in the weeks and months ahead.

It is good to be sitting in for Doug Kass this Thursday on the Daily Diary. Let's get ready for today's trading.

We begin the day with the Nasdaq at all-time highs and the S&P 500 within shouting distance of its highest levels ever. Given where we were early in April, that is quite the feat. 

Despite continued uncertainty about tariff and trade policies, a slight economic contraction in the first quarter and the near outbreak of a regional war in the Middle East, equities have proven to be remarkedly resilient in 2025. Especially considering the S&P 500 posted back-to-back 20% plus gains in 2023 and 2024, the first time that has happened since the late 1990s.

The market seems to be pricing in a lot of optimism as, based on many metrics (price-to-sales ratio, Shiller P/E, market cap-to-GDP ratio) equities are trading at historically extreme valuations. Investors also seem to be ignoring a lot of "gray swans." 

These gray swans include a rapidly deteriorating housing market, which I highlighted in my column on Wednesday. Another unlikely, yet potential event is the reignition of tensions in the Middle East, including the closing of the Strait of Hormuz. Investors also appear content to ignore the fact that little concrete has been accomplished on the trade and tariff front. If reciprocal tariffs get reestablished in a couple of weeks, equities are not priced for that scenario.

A few "black swan" events I can think of are a major breakthrough by the Russian army in Ukraine, a conflict that has dropped off the radar due to recent tensions in between Israel and Iran; the adoption of AI resulting in a much faster rate of job loss than currently envisioned; and a significant terrorist attack on U.S. soil. Please feel free to add your own to the list in the comments.

However, right now the markets are more than content to see everything with rose-colored glasses and the premarket futures are currently pointing to an up open. So, the trend is our friend, until it isn’t.