As of 4:22 p.m.:

Closing Volume

- NYSE volume 2% above its one-month average;

- NASDAQ volume 5% below its one-month average;

- VIX index: down 3.13% to 15.48

Breadth

Sectors

% Movers

Nasdaq 100 Heat Map

Thanks for reading my Diary today.

I have a family event to go to after the close, so I won't be responding to the EPS releases after the close.

See you all back early Thursday morning.

Enjoy the evening.

Be safe.

From Peter Boockvar:

As of 3 p.m. Treasury yields are at the highs of the day across the curve in response to Powell’s comments and tone and I’ll include these Bloomberg News bullet points to highlight:

*POWELL: IT'S STILL EARLY DAYS ON INFLATION IMPACT OF TARIFFS

*POWELL: TARIFFS ARE STARTING TO SHOW IN CONSUMER PRICES

*POWELL: EXPECT TO SEE MORE TARIFF IMPACTS IN INFLATION DATA

*POWELL: COULD SAY FED LOOKING THROUGH INFLATION BY NOT HIKING

*POWELL: ECONOMY CALLS FOR MODESTLY RESTRICTIVE STANCE FOR NOW

*POWELL: CAN'T SEPARATE OUT TARIFF EFFECTS ON INFLATION

*POWELL: SERVICES INFLATION COMING DOWN NICELY, GOODS GOING UP

*POWELL: SOME COMPANIES WILL TAKE ADVANTAGE OF TARIFFS

*POWELL: WHAT WE SEE NOW IS VERY BEGINNINGS OF TARIFF INFLATION

Took a quick short-term gain in this morning's SPY/QQQ (common) short just now:

* SPY $632.35

* QQQ $565.62

Wolf Street howls about the Fed.

I have added to my index common shorts on the post Fed climb:

* SPY $637.48

* QQQ $570.42

From Peter Boockvar:

Sticking to their belief that rates should have been cut today while also politicking for Powell’s job, Governor’s Waller and Bowman both dissented, as they should have considering their vocality on wanting to cut now.

Acknowledging the average 1.25% GDP growth in the first half of 2025 seen this morning, the Fed tweaked their language on the pace of business saying “Although swings in net exports continue to affect the data, recent indicators suggest that growth of economic activity moderated in the first half of the year.” In June they referred to growth as expanding “at a solid pace.”

They repeated that “labor market conditions remain solid”, though we know the pace of hiring’s has slowed as seen again in the ADP report today. “Inflation remains somewhat elevated” is also a repeat comment.

A mystery of the June FOMC statement, in light of all the tariffs on and off, was when they said “Uncertainty about the economic outlook has diminished but remains elevated.” Today they took out the word ‘diminished’ and just left “Uncertainty about the economic outlook remains elevated.”

No changes otherwise and we of course await Mr. Powell at his presser to see whether he puts himself out there with regards to the September meeting in leaning towards a cut as opposed to basically saying today, ‘we’ll see.’

The 2 yr yield is slightly responding to the two dissents, with it down 1 bp from where it stood at 1:59pm and is at 3.87-.88%. The 10 yr too is down 1 bp at 4.34% since then while the 30 yr yield is unchanged at 4.89%.

Wolf Street howls about the GDP report.

A quick response to the Fed's statement: It was a tiny bit more hawkish than expected.

Under normal circumstances I would expect equities to sell off, but there is nothing normal about today's market.

Over the last two weeks I have been doing a deep dive on two (economic/profit and market) underperformers — Starbucks SBUX and Chipotle CMG.

I am passing on both — I would not bottom fish despite the material share-price weakness.

In summary, the two companies have morphed into overpriced purveyors of food/coffee — while the quality of their product offering has deteriorated and the selling cost of the product has risen.

Here is a $3.25 cheese danish at Starbucks. I couldn't create a danish as unappealing:

I suspect the turnarounds for both companies will take much more time than expected.

The shares of Costco COST continue to leak...

Two of my shorts: 

Sleep Number sees FY25 revenue $1.45B, consensus $1.52B The company said, "The company expects the full year 2025 net sales to be approximately $1.45 billion, representing an approximately 14% year-over-year decline. This percentage change is partly driven by softer year-over-year comparisons and the 53rd week in 2025. Gross profit margin is expected to be 61%, which is consistent with the first quarter of 2025, and full year operating expenses, excluding restructuring and other non-recurring costs, are expected to be approximately $830 million. The company expects break-even free cash flow in the second half of 2025."

Sleep Number reports Q2 EPS ($1.09), consensus (14c) Reports Q2 revenue $327.93M, consensus $357.42M. Linda Findley, President and CEO, commented, "Sleep Number is in a turnaround. I joined because it is fundamentally a great company and I continue to believe that. In my first 100 days, the new leadership team has been focused on digging into our product and consumer proposition. It is clear Sleep Number has a strong brand and differentiated products. We are building on these core strengths with plans to return to profitable growth by starting to implement initiatives focused on enhancing our product assortment, value proposition, and consumer engagement. At the start of the second quarter, we aggressively reduced expenses to reset our cost structure, and ensure ongoing compliance with our debt covenants. We cut marketing spend dramatically in Q2 because the old marketing strategy was inefficient, and we needed to implement a major reset. We expected the sharp drop in second quarter sales based on these changes. We are rebuilding this program and are already seeing signs that our new, more efficient approach is working. In parallel, we are also working to optimize our product portfolio, value and distribution, with the goal of focusing on the products, price points and benefits that matter most to our customers."

Blackstone Mortgage reports Q2 distributable EPS 19c, consensus 26c 07:52 BXMT Katie Keenan, CEO said, "We are devastated by the horrific events at 345 Park Avenue and the loss of our brilliant colleague and friend, Wesley LePatner, who was a beloved member of the Blackstone family, as well as the brave security personnel, NYPD officer, and other innocent victim. Our prayers are with their families, and everyone impacted by this senseless tragedy."

No trades since premarket today.

From Peter Boockvar:

A succinct rundown of jobs and GDP data

ADP said the private sector in July added a net 104k jobs, 28k more than anticipated while June was revised up by 10k but to a loss still of 23k jobs. Smoothing this out puts the 3 month job growth average at just 37k vs the 6 month average of 67k and the 12 month average of 130k. A clear deceleration in the pace of job growth.

Small business continues to be the drag on job growth. After shedding almost 50k jobs in June, they added back 12k but all came from those with 1-19 employees. Those between 20-49 lost another 10k. And for a second month, businesses with an employee size of 250-499 shed workers. Those between 50-249 added 55k and those with more than 500 added 46k.

The service sector added 74k jobs but interestingly the typically resilient education/health services lost 38k jobs. Maybe some private colleges reduced employment counts in light of the growing pressure on some of them. Leisure/hospitality job growth remained good, up 46k. Financial services added 28k while trade/transportation/utilities added 18k. Information and professional/business services each hired a net 9k.

On the goods side, hiring improved in manufacturing with a gain of 7k while construction added 15k and natural resources/mining up by 9k.

With wages, for ‘job stayers’ pay rose 4.4%, the same pace seen in June. For ‘job changers’ wages were up 7% vs 6.8% in June. Still overall pretty good wage growth.

Bottom line, job growth as stated in the first paragraph has clearly slowed and today’s figure is actually about where Friday’s private sector BLS estimate stands at about 100k.

Q2 GDP was up 3% q/o/q annualized after the contraction of .5% in Q1. Averaging the two together, which should be done because of the front running with tariffs, puts first half 2025 growth at 1.25% annualized. Helping the 3% print was a two tenths less than expected deflator which if it was as expected, REAL GDP would have been 2.8%, though still above the 2.6% estimate. Core PCE though was two tenths above expectations.

Highlighting why we need to merge Q1 and Q2 is seen in the trade components. Q1 saw a GDP drag of 460 bps due to trade while Q2 rebounded by 499 bps. Also, inventories boosted Q1 GDP by 259 bps while Q2 reduced it by 317 bps. Elsewhere and with the biggest component, personal consumption up 1.4% was about as forecasted and added 100 bps to GDP after a contribution of 31 bps in Q1. There was no contribution to growth from fixed investment. Spending picked up in software and equipment but dropped very slightly on R&D. Residential construction fell as spending did on other structures. Government had a slight contribution after the detraction in Q1 with help from state and local spending.

Taking out the impact of trade and inventories we can look at final sales to domestic purchasers and that rose just 1.2% after a 1.9% print in Q2. It grew by 2.9% in Q4 ’24 and by 3.4% in Q3 ’24.

Bottom line, as said, first half 2025 GDP growth is 1.3% rounded and annualized. That’s your baseline for the 2nd half of the year as we absorb further the impact of tariffs and we can then all debate the outcome to see whether this was all a good idea or not.

I just returned. 

Getting my sea legs back.

- NYSE volume 15% below its one-month average;

- Nasdaq volume 9% below its one-month average

- VIX down 0.94% to 15.83

Upside:

-LC +24% (earnings, guidance)

-WING +21% (earnings, guidance; raises dividend)

-VFC +19% (earnings, guidance)

-HOG +14% (earnings)

-CGON +9.7% (Delaware Superior Court Jury Issues Unanimous Verdict that CG Oncology Owes No Future Royalties or Other Payments to ANI Pharmaceuticals)

-MRVL +8.9% (potential significant revenue opportunity from MSFT AI chips)

-DPRO +8.3% (completes drone sale to major telecom company)

-HUM +8.3% (earnings, guidance)

-PTON +7.5% (UBS Raised PTON to Buy from Neutral, price target: $11 from $7.50)

-BLKB +7.0% (earnings, guidance)

-EXLS +6.6% (earnings, guidance; announces $125M accelerated share repurchase program)

-ETSY +6.5% (earnings, guidance)

-SBUX +6.0% (earnings, guidance)

-VRT +5.9% (earnings, guidance)

-FDP +5.8% (earnings)

-GNRC +4.4% (earnings, guidance)

-HSY +3.6% (earnings, guidance)

-TDOC +3.1% (earnings, guidance)

-GRMN +2.3% (earnings, guidance)

Downside:

-CRDF -21% (earnings)

-SOFI -7.4% (prices 71.9M shares at $20.85/shr for gross proceeds ~$1.5B)

-TT -7.0% (earnings, guidance)

-STX -6.4% (earnings, guidance)

-CAR -5.8% (earnings)

-ENTG -5.7% (earnings, guidance)

-PANW -5.5% (Palo Alto Networks announces to acquire identity security company CyberArk for mostly stock-funded $25B deal)

-CHKP -5.2% (earnings)

-UTHR -4.9% (earnings)

-TKR -4.5% (earnings, guidance)

-NVO -4.4% (multiple broker downgrades)

-ODFL -4.4% (earnings, guidance)

-WSO -4.4% (earnings)

-UNM -3.5% (earnings, guidance)

-V -2.6% (earnings, guidance)

-ADP -2.5% (earnings, guidance)

-CYBR -2.0% (Palo Alto Networks announces to acquire identity security company CyberArk for mostly stock-funded $25B deal)

I have to travel about one hour (each way) for a DR appointment to check up on my broken ribs.

So my posts will be less frequent and shorter this morning.

Back at around noon.

I am back shorting index shorts in the common (of SPY/QQQ):

* SPY $636.16

* QQQ $568.58

From JPMorgan:

US: Futs are higher into Fed Day and the restart of Mag7 earnings with META and MSFT to report after the bell. Expectations are for the Fed to hold rates steady, perhaps with 1-2 dissents, with a focus on the Powell press conference for any hints of what the Fed will do in Sept. The Treasury’s refunding announcement is today which may add some bond vol. Pre-mkt, Mag7 names are all higher ex-GOOG with Semis also bid up. The yield curve is seeing bear steeping with USD flat. Cmdtys are mixed with profit-taking in Energy, Ags/Base higher, and gold up but silver down. Aside from the Fed decision and META/MSFT earnings, ADP, 25Q2 GDP metric, Mtge Apps, and Pending Home Sales also print today.

Doomberg: "Five Dams In Tibet" 

Bonus — Here are some great links:

Highs Keep Coming - And That's Bullish

Busting Three Myths

Beta Might Be Vulnerable

Don't Sleep on Biotechs

The S&P Short Range Oscillator climbed to a more overbought at 2.49% vs. 1.08%.

Wolf Street howls about ballooning government debt.