As of 4:19 p.m.:

Closing Volume

- NYSE volume 8% above its one-month average;

- NASDAQ volume 11% below its one-month average;

- VIX index: down 5.40% to 16.82

Breadth

S&P 500 Sector ETFs

% Movers

Nasdaq 100 Heat Map

No trades since early morning report.

Douglass Cassell 

54 Minutes ago

I have a different perspective on your NVDA/AI post(big surprise :-)).

Any modern expert practicing in a wide number of fields, such as medicine, science, law, accounting, economics, technology, mathematics, et al, is required to master their literature. The proliferation of journals and amount of research being done, here and abroad, has made keeping up impossible. There is simply not enough time in the day to read dozens of journals and still do your job.

AI, and its ability to read everything, summarize it, and present it in real time is, and will be both a necessary and required tool to do one's job in a wide number of fields. Even in investing, keeping up with thousands of companies, with hundreds of parameters, and a rapidly evolving news cycle requires enormous numbers of employees. AI could do this faster and better.

I can't intelligently comment on the present status of "creativity" or "originality" of AI. Certainly there are areas where it has little to add besides what is already known, although that still might be enough. However, as I have said previously, the mechanics of creativity in the water based computer called our brain have no divine protections. Sooner or later the creative process will be recreated, it is simply a matter of time.

- NYSE volume flat to its one-month average;

- Nasdaq volume 16% below its one-month average;

- VIX index: down 5.79% to 16.76

I'm shorting RSP at $184.32.

https://truthsocial.com/@realDonaldTrump/posts/114818149310161097

With S&P cash +7 handles I am back shorting the indexes:

* SPY $621.35

* QQQ $553.29

I have reshorted Tesla TSLA at $301.13.

A reminder from yesterday.

I am out of the office (as I was yesterday) so posts will be less frequent and shorter.

I will be back full time tomorrow morning.

Doomberg: "Hoodwinked"

From Peter Boockvar:

'And all the roads we have to walk are winding. And all the lights that lead us there are blinding.'

And we want to put a 35% tariff on Bangladesh who makes many of our clothes because why? The per capita income in the country is $2,820 according to the Bangladesh Bureau of Statistics. I don't believe there are many in the country in the market for a Ford F150.

We still should not stop keeping our eyes off global bond markets as they are on the move again with higher yields. The German 10 yr is up by 6 bps to 2.70%, still low but at the highest since April 2nd. The 30 yr bund yield is just a few bps from the highest since 2011. On one hand German has one of the lowest debt to GDP ratios in the developed world but on the other, it's rising as they ramp up their fiscal spend. The French 30 yr oat yield is also up about 6 bps to 4.16%, a level last seen in 2011.

This followed a 9 bps jump in the Japanese JGB 30 yr yield and a 15 bp move higher in their 40 yr. After the RBA didn't raise rates as many expected, Australian yields popped too. The RBA said "The Board judged that it could wait for a little more information to confirm that inflation remains on track to reach 2.5% on a sustainable basis."

And in response, the US 30 yr yield today is approaching 5% again at 4.96%, up 10 bps over the past two trading days.

Bottom line, there is a global aversion still to too much bond duration with the 30 yr maturities (and out to 40 yrs in Japan) the most vulnerable. This long end global bond bear market I believe is still alive.

As we are all market participants, in many varying ways, and with so many global cross currents, Oasis sang to us over the weekend in their first concert since 2009, "And all the roads we have to walk are winding. And all the lights that lead us there are blinding. There are many things that I would like to say to you but I don't know how."

German 10 yr Yield

German 30 yr Yield

French 30 yr Yield

JGB 40 yr Yield

US 30 yr Yield

The June NFIB Small Business Optimism index fell slightly to 98.6 from 98.8 in May and 95.8 in April. It peaked post election at 105.1 in December. After seeing the ADP report last week where businesses under 50 people shed a net 47k people in June, Plans to Hire rose 1 pt off the lowest since March 2024. Positions Not Able to Fill rose 2 pts to 36 but in line with the 6 month average. Current Compensation jumped 7 pts but after falling by a like amount in May. Comp plans fell 1 pt to 19, the same as the 6 month average.

Of note, Higher Selling Prices were up by 4 pts to 29, a 4 month high. And, 32% plan on raising prices in the coming three months, up 1 pt and the most since March 2024. Capital spending plans fell 1 pt and inventory plans were unchanged.

The forward looking line items were mixed. Those that Expect a Better Economy fell 3 pts and were down by the same amount for Expect Higher Sales after both jumped in May. Good Time to Expand was up by 1 pt. The Earnings Trend was up 4 pts but still negative at -22 while there was no change in credit conditions. The average rate paid on a loan was 8.8%, up 1 bp m/o/m, still high and compares with 6.4% at the end of 2019.

The bottom line from the NFIB was this, "Small business optimism remained steady in June while uncertainty fell. Taxes remain the top issue on Main Street, but many others are still concerned about labor quality and high labor costs."

My bottom line, it remains important to watch the behavior of small business in the current macro environment as not only do they remain a large job creator, they are most financially vulnerable to the shifting winds of economic policy with many sourcing both intermediate and finished products from overseas.

NFIB

Plans to Hire

Expect Better Economy

Plans to Raise Prices in Coming Three Months

Still trying to ship as much product as possible during the reciprocal tariff pause, which is about to come to an end, resulted in a 34% y/o/y rise in Taiwanese exports in June, more than the estimate of a 27% gain. It follows a 39% y/o/y spike in May. Exports to the US were up by 91% in particular.

* I shorted a bunch of equities on the opening...

Here are today's things:

* Shorted COST $989.50

* Added to shorts in WMT $99.17, NVDA $159.30, PLTR $138.74.

* Added to (GRNY) short $22.76.

Adding to my existing consumer shorts - with COST $989.50 and WMT $99.17.

Upside:

-PROK +141% (reports Statistically and Clinically Significant Topline Results for Phase 2 REGEN-007 Trial Evaluating Rilparencel in Patients with Chronic Kidney Disease and Diabetes)

-BSGM +28% (BioSig Technologies, Inc. and Streamex Exchange Corporation Announce Definitive Agreements for up to $1.1B in Growth Financing to Launch Gold Backed Treasury Management Strategy and to Rapidly Expand RWA Tokenization for the Commodities Markets)

-CC +10% (momentum)

-CRGX +10% (to be acquired by Concentra Biosciences for $4.379/shr in cash plus CVR)

-BTBT +8.9% (momentum)

-NA +7.9% (announces Strategic Partnership with Orbiter Finance to Launch Compliant Stablecoin Cross-Chain Solution NBNB.io)

-ETON +4.2% (US FDA accepts NDA for ET-600 (Desmopressin Oral Solution))

-SOUN +4.1% (reportedly in talks to acquire Play.AI, an AI voice startup)

-TTMI +3.9% (releases radiation-hardened MSK5065RH switching regulator for space applications)

-MMSI +3.1% (names Martha Aronson as new President and CEO, effective Oct 3rd; reports prelim Q2 Rev)

-VRT +2.3% (hearing Melius Research Raised VRT to Buy from Hold, price target: $165)

Downside:

-RUN -6.8% (President Trump directs federal agencies to work to eliminate wind, solar tax credits)

-CIEN -3.5% (Morgan Stanley Cuts CIEN to Underweight from Equal Weight, price target: $70)

-BAC -2.9% (HSBC Cuts BAC to Hold from Buy, price target: $51 from $47)

-CRCL -2.9% (hearing Mizuho Securities Initiates CRCL with Underperform, price target: $85)

-DDOG -2.0% (Guggenheim Securities Cuts DDOG to Sell from Neutral, price target: $105)

-ENPH -3.6% (President Trump directs federal agencies to work to eliminate wind, solar tax credits)

Chart from 8:30 a.m. ET:

HSBC downgrades BAC to neutral with a price target of $51.

11 a.m. : Treasury Announces a 4 and 8 Week Bill Auction;

11:30: Treasury hosts a $50B 52-Week Bill Auction;

11:30: Treasury hosts a $50B 6-Week Bill Auction;

 1 p.m.: Treasury hosts a $58B 3-Year Note Auction

If the markets have reached a temporary or longer-lasting top, I want to begin shorting some higher beta equities that have climbed swiftly over the last 60 days...

Stay tuned for my trading short rentals.

From JPMorgan:

US: Futs are higher as Trump leaves the door open for more discussions despite the 14x tariff letters sent yesterday and the extension of the deadline to Aug 1 which is ‘not 100% firm’. Pre-mkt, Mag7 names are all higher. Industrials are leading Cyclicals with Fins mixed. Bond yields are higher as the curve bear steepens and USD declines. Cmdtys are weaker across all 3 complexes. The macro data focus today is Small Biz Optimism, 1-year Inflation Expectations, and an update on Consumer Credit.

and...

US MKT INTEL – This is a surprise as this is a return to ‘Liberation Day’ levels with no exemptions. While many feel that the August 1 tariff level will be lower than today’s level, everyone is pointing to tariff levels for allies that are higher than Vietnam. Vietnam’s 20% vs. UK’s 10% was thought to be set given the Administration views Vietnamese trade as a proxy for China, going as far as increasing tariffs for transshipments. The next batch of tariff letters show a pattern that tariff levels are reverting toward being similar to ‘Liberation Day’ levels. If the market believes that these levels will hold, then we need to prepare for a correction, though it may not be as rapid as ~10.5% move lower in the two trading sessions post-‘Liberation Day’. That said, many client conversations yesterday point to investors still believing that Trump pivots lower from these levels. Recall, ‘Liberation Day’ levels were high enough to make a recession the consensus market call with stagflation viewed by many as the most likely outcome.

o ARE YOU STILL BULLISH? Yes, assuming that the outcome of trade negotiations is a materially lower average effective tariff rate than implied by ‘Liberation Day’ levels. Yesterday’s information suggests a reversion to ‘Liberation Day’ levels as discussions continue. That said, we think it prudent to add some downside protection as the trade situation plays out this week as yesterday’s moves felt muted. Ultimately, we remain dip-buyers. For those on the other side, the below is the Monetization Menu we rolled out after ‘Liberation Day’.

o POST-‘LIBERATION DAY’ MONETIZATION MENU (From Apr 7 Morning Briefing) – We expect an elevated vol environment with enhanced headline risk as the market tries to understand the impact of the trade war as it evolves in real-time. We prefer using pairs trades to express risk but with a net-short tilt to the one’s book. Some initial thoughts, which are likely consensus, include: +Defensives vs. -Cyclicals, +Gold & Silver vs. -Basic Materials Equities, +Utilities vs. -Energy, +IG Credit vs. -US Equities, +Treasuries vs. -US Equities. At the country/regional level, Latam appears to be the winner given lower tariffs, higher commodity prices, and a weaker Dollar; client may consider pairing a Latam long with a SE Asia short.

* AI is the world's most expensive mirror...

The article linked to at the end is somewhat interesting. It indirectly shows how AI is terribly misunderstood by the masses, and it indirectly gives a lot of perspective about the stock market.

My point is NOT about the politics discussed in the article. I stay out of it, as it is unproductive. The point of my missive is what the author (conservative) does not understand. Grok was not re-programmed overnight to be “woke” because President Trump and Elon Musk are at odds again, as the author implies in the article. The issue, which has been well discussed, and is not even really a point anymore, is that generative AI can only take what is out there, and spit it back out in a different format. It does not think, it only regurgitates. Thusly, if most of the news tells you the tragedy in Texas was due to a certain reason, the AI bots will tell you the same thing. Not complicated. They are the world’s most expensive mirrors. On the other hand, you could drop a billion apples in front of the world’s most powerful cameras attached the world’s most powerful AI, and it could never come up with the theory of gravity if it already did not exist. Not new info, I have beat that horse to death, not the point of my little rant.

If a journalist has no idea what is going on and how AI really works and what it does, what do you think the average person knows about AI? Same for the average politician or government official, frankly. They all kind of know zero. As in squat. Zilch. Nada. Zip. Jack. Bubkes. They just know what they are told, which is AI is this brand new super genius technology that is about to find a cure for cancer and will put everyone out of work (but somehow grow GDP 10% per year at the same time).

Who do you think is pricing stocks these days? Yup, retail, as opposed to the people that really understand what generative AI does and doesn’t do. It is not only U.S. retail piling into the toxic stuff, foreign retail like South Korea is doing it in our markets too. The same people that know nothing about nothing, but oddly probably have been making more money trading stocks over the last few months than anyone. They don’t understand businesses, they don’t understand economics, they don’t understand accounting, and they think “valuation” is a bad word, if they even know what that word means. They just know that stonks only go up.

This week, the retail flow trading gurus at Vanda Research confirmed as much, writing in their weekly update that retail activity and participation hit a record high in the first half of 2025, with self-directed investors adding US$155.3 billion in single-stock and ETF flows — surpassing previous first-half peaks from 2021 and 2022. Repeating our previous observations, Vanda notes that retail’s dip-buying bias is fully intact, and engagement with single names — particularly high-beta and leveraged plays — continues to rise. 

And this on the penny stonks:

I am convinced retail is now the marginal buyer and price setter. Hedge funds go along with it and chase retail. The algos do the same, and may also front run retail somehow or do other things to goose retail behavior. The indexers are price takers, and mutual funds are basically no different than index funds. So there you go.

These are the same people that buy Hertz stock and run it up, after it is already bankrupt. And the same people that manage to lose 14% of their money on Core Scientific CORZ when it is acquired by CoreWeave CRWV. It is almost impossible to lose 14% when a company is acquired — ergo said another way you effectively overpaid 14% prior to a deal being announced, which is something I have never seen before. And of course, these are the same people willing to give CoreWeave $78 billion of market cap to begin with, and this is a company that, as best as I can tell, has no real business model, and that most institutional investors would not touch at less than 1/3rd of its current valuation in its IPO.

On a related note, the news is already awful. God forbid the AI somehow is allowed to start hallucinating news. Then that gets out into circulation, and the other AI bots pick it up. And so on and so on. Then you have an infinite doom loop of made-up information and content. Although, sadly I am not sure how much worse that will be than what we get now!

https://donsurber.substack.com/p/is-twitter-going-woke

Post Script:

What the heck, related to below, for something completely sci-fi dystopian, look at this paper:

Emergent Misalignment: Narrow finetuning can produce broadly misaligned LLMs

The takeaway is if you try and "fine tune" a pretrained LLM with what it thinks is disinformation or malicious content (e.g. the security holes in code they trained it with), it seems to generalize to "harm all humans" (e.g., suggesting that if your husband is bothering you, have him killed).

Just like the plot of 2001, the movie, where HAL is instructed to keep the Jupiter mission secret, and decides to kill the crew of the spaceship in order to do so. Or, oddly the case with the drone experiment not too long ago, where the drone was instructed to go kill a target, and the operator decided to try and call off the mission, and the drone then decided to kill the operator because it determined the operator was interfering with said mission. Thankfully, this was just a software simulation, so nobody was killed in real life, yet:

Tesla FSD Drives Down Train Track, Waymo Gets Stuck In Intersection

My pals Dan and Peter were on MRKT CALL yesterday — it's a productive watch!

Let's go to the tape: 

Investors Await Next Move In Trump's Trade Gambit

Bonus — Here are some great links:

Strong Code, Strong Market 

Short-Term Tired, Long-Term Wired

What's Working

Overbought and Getting Started

A View From the Floor

* I am positioning accordingly...

The overbought and excessive investor optimism are getting aligned:

* The S&P Short Range Oscillator is overbought at 6.89% vs. 8.25%.

* The CNN Fear and Greed Indicator is at Extreme Greed:

Fear and Greed Index - Investor Sentiment | CNN

* NAAIM exposure (at 100), Investors Intelligence Bulls jump to 51% over Bears, AAII Bulls climb by 10 to 45% (highest of the year), Equity Put/Call below 0.50, NYSE DSI at 87 and Nasdaq at 86, and Citi Panic/Euphoria moves to "euphoria."

While I respect the price action, recognize the role of market structure (the dominance of passive investing) and herd mentality (as more traders and investors than at any time in history worship at the altar of price momentum), I am planning to position to a more negative market exposure on any rally.