As of 4:20 p.m. ET:

Closing Volume

- NYSE volume 21% below its one-month average;

- NASDAQ volume 30% below its one-month average;

- VIX index: up 6.50% to 16.71

Breadth

Sectors

% Movers

Nasdaq 100 Heat Map

This afternoon (at 4 p.m.) I will be on Rosie's podcast.

I would appreciate if subs can give me an idea what subjects you would like me to discuss!

Please post in Comment Section.

Thanks in advance.

I have a lunch with an investor starting at 12:30 — back at 1:30.

Radio silence.

PSKY is +11% today ( again of $1.60/share).

We reestablished a Paramount long position two days ago at $13.16.

Paramount Trade

By Doug Kass Aug 19, 2025 3:15 PM EDT

Bought back small Paramount Skydance (PSKY) at $13.16.

- NYSE volume 24% below its one-month average;

- NASDAQ volume 38% below its one-month average;

- VIX index: up 3.63% to 16.26

Breadth

Sectors

% Movers

Nasdaq 100 Heat Map

From Peter Boockvar:

The US manufacturing and services PMI/Noteworthy comments on tariffs, cost pressures and the pass thru

The August US manufacturing PMI jumped to 53.3 from 49.8 and the improvement seems related to the desire to lift inventories. S&P Global said “Stock building of finished goods has also risen at a survey record pace, linked in part to worries over future supply conditions.”

The services sector PMI, which DOES NOT include retail/wholesale trade and construction for some reason and a notable chunk of the service sector, fell a touch m/o/m to 55.4 from 55.7.

What was noteworthy was the rising cost and inflationary pressures. S&P Global said, “Tariffs were reported as the key driver of further cost increases in August. Companies across both manufacturing and service sectors collectively reported the steepest rise in input prices since May and the second-largest increase since January 2023. Rates of increase accelerated in both sectors. While the manufacturing cost rise was especially large, being the second-steepest since August 2022, the service sector increase was the second-highest since June 2023. Average prices charged for goods and services rose at the sharpest rate since August 2022 as firms passed higher costs on to customers. Although goods price inflation cooled slightly for a second month in a row, it remained among the highest seen over the past three years. Service sector price inflation meanwhile was the sharpest since August 2022.” I bolded to highlight.

There was a lift in employment to the highest since January as “Companies largely took on additional staff in response to rising backlogs of work.”

As for the business outlook, “Having dipped in July, companies’ expectations about output in the year ahead rose to a two-month high in August, though remained below the level seen at the start of 2025 and also the survey’s long-run average. Service sector sentiment revived partly from a drop in July but continued to run weaker than seen in May and June, and far below levels recorded at the turn of the year. This was closely linked to ongoing concerns regarding government policy. While support from policies such as tariffs helped lift manufacturing optimism in August to a level well-above the post-pandemic average, the degree of optimism in the goods-producing sector remained below January’s recent high, reflecting concerns over higher costs and the impact of geopolitical uncertainty, especially in relation to international trade and supply chains.”

Out of SPY/QQQ short calls.

I have no Index positions.

To follow up with Kuppy's great post yesterday in the TheStreet Pro - here are some more observations and constructive responses to his astute comments:

* Although he may derive some utility from the AI products he uses, he would not if he had to pay enough for them such that the entire system feeding him the product (infrastructure and service) was generating a return

* When real economic gross margins are negative, it is hard to scale to profitability. That is one of the big differences between this, and the dot-com boom. At least they had gross margins from the start. He gives a big benefit of the doubt here.

As far as generative AI is concerned, he gives too much benefit of the doubt to its ability to progress. It is not scaling, and we already seem to have hit a wall. GPT 5 is massively more expensive on every level (hardware and energy) than the prior model and is no better. In some respects it is worse. It is a parlor trick, glorified autocomplete. There is only so much it can do, and we are pretty much there. Said another way, it might not even really work. At least the dot-com stuff worked. So far, we seem to have the world’s most expensive experiment, that keeps failing, but for whatever reason people keep throwing more money at the same thing. For the time being, so bad it is good.

* He does not seem to fully account for obsolescence, and the fact that every few years the guts of the DCs will have to be turned over. Depreciation curves do not seem to be anywhere close to practical reality. But that may not even happen, as far as Gen AI is concerned, because again, per the prior dash point, nothing seems to be scaling. At some point, people will stop throwing good money after bad.

* Kuppy does not seem to account for the fact that this is a commodity product. The reason MSFT, META, and GOOGL became successful, for example, is they were all monopolies. Because too much money rushed in, there are too many viable competitors in the space. They are all doing and selling the same thing. Google, Chat GPT, Perplexity, Grok, Anthropic, all the Chinese, etc. Hard to charge much in the way of price in this situation. As sexy as AI sounds, it has already been turned into steel making. That said, Kuppy does touch on this issue toward the end.

* There is not the power to do all of this stuff, it is already a massive problem, and the average consumer seems to be being stuck with the electricity bill, which is also a big problem

Back to Kuppy:

https://pracap.com/global-crossing-reborn/

Here are Wednesday's "things":

* Shorted more GRNY $23.12 and JOET at $41.12.

* Added to consumer non durable longs KO $70.82 PEP $152.01 and PG $159.73.

* Shorted WMT at $102.43.

* I reestablished MSOS long at $4.40 and purchased September calls.

This morning's trades:

* Shorted more NVDA $176.73 and reshorted PLTR $158.01.

* Covered WMT $99.05 - now flat.

Long MSOS common M and calls VS KO S PEP S PG S

Upside:

-AEMD +55% (files debt shelf of an indeterminate size)

-THAR +33% (reports encouraging pharmacokinetic simulation results for lead clinical candidate TH104)

-GRO +28% (executes Definitive Offtake Agreement with Keytrade Fertilizantes Brasil for 900K tons of fertilizer)

-LYTS +12% (earnings)

-SLQT +8.8% (earnings, guidance)

-DVAX +7.9% (announces positive topline results from Part 1 of randomized, observer-blinded, and active-controlled Phase 1/2 clinical trial of Z-1018, novel shingles vaccine candidate, head-to-head versus Shingrix in participants aged 50 to 69 years)

-IMRX +7.9% (files to sell $25M Private Placement of 6.3M shares at $3.95/shr)

-MNSO +6.9% (earnings, cuts dividend)

-SCSC +6.8% (earnings, guidance)

-PMEC +6.5% (Unveils next-gen AI-powered autonomous bathroom cleaning robot HYTRON)

-FLUX +5.1% (secures >$1.2M additional order from major North American airline)

-NMM +3.9% (earnings)

-HPE +2.3% (hearing Morgan Stanley Raised HPE to Overweight from Equal Weight, price target: $28)

Downside:

-MODV -50% (files for Chapter 11 voluntary bankruptcy in Texas)

-COTY -19% (earnings, guidance)

-CSIQ -15% (earnings, guidance)

-WMT -3.6% (earnings, guidance; cites continuing rising tariff costs)

-TWO -3.5% (cuts dividend)

-GILD -2.9% (reportedly CVS will not add Gilead Sciences' new HIV prevention drug to its commercial plans for now; unit Kite to acquire Interius BioTherapeutics for $350M to advance In Vivo Platform)

FED SPEAKERS:

7:30 a.m.: Fed Bank of Atlanta President Bostic (Non-Voter) speaks on the economic outlook before the Metro Atlanta Cham-ber executive committee meeting, Virtual (No Q&A. No embargoed text. Livestream at https://youtube.com/live/qyh1FUEDyqs?feature=share);5:45PM: Fed Bank of Chicago President Goolsbee (Voter) Television Appearance -- Bloomberg TV;

6:15 p.m.: Fed Bank of Chicago PresidentGoolsbee (Voter) Television Appearance -- FOX Business

TREASURY AUCTIONS

11:30 a.m.; Treasury hosts a $100B 4 and a $85B 8 Week Bill Auction;

1:00 p.m.: Treasury hosts an $8B 30 Year TIPS Auction

From Peter Boockvar:

A few things of note this morning

Before I get to some PMI's and other stuff, ahead of the US one at 9:45am est, we'll start with some notable quotables from earnings calls and releases.

From the Walmart earnings report where they slightly exceeded comp and revenue expectations but missed EPS forecasts:

"Walmart US comp sales up 4.6% with strong growth in grocery and health & wellness."

Also in Walmart US, "Strong sales growth reflects share gains across key categories; customers are responding to the increased convenience of eCommerce/omnichannel offerings as well as more rollbacks in pricing."

Sam's Club US saw a sales lift "led by grocery and health & wellness" too.

We'll hear more about the consumer, tariffs, margins and price changes on the call.

From Estee Lauder, a stock we own:

"While there are early signs of stabilization in mainland China, travel retail conversion continues to be weak and challenges persist in the West, including subdued consumer sentiment in the US and Western Europe."

From Target:

"As one of the largest importers in the country, the prospect of higher tariffs meant we were facing some major financial and operational hurdles as we entered the year. This was further complicated by the multiple changes in tariff policy that have been announced and implemented as the year has progressed."

"While the tariff environment remains challenging and highly uncertain, the team has made significant progress in mitigating their impact on the P&L while maintaining our focus on value by limiting the impact on our pricing."

On the possibility of the consumer eating the tariffs instead of them or their suppliers, "we'll take price as a last resort, but our commitment is to offer every day good value and to have competitive pricing. As we think about going forward, what I would just say is value is very top of mind for consumers right now. They're looking to stretch their budget. They're looking to navigate inflation and uncertainty around tariffs, so value is very top of mind, and we will continue to offer great value in the form of deals and promos and price, but also consumers are thinking about value much more broadly than that. They're thinking about it as quality and style, and trend, and so we'll very much be leaning into our own brands, which deliver outstanding value, great pricing, great quality, great trend, great taste as a way to help consumers navigate the challenging macro environment."

"we saw clear indications of progress in our business in the second quarter as traffic and comp trends improved meaningfully from Q1, particularly in our stores...And to be clear, while we were happy to see improvement in Q2, we are far from satisfied with where our business is performing today."

"Sales trends were strongest in the digital channel."

"While a lot of the season is still ahead of us, both back-to-school and back-to-college are off to encouraging starts. Guests are responding to our value offerings."

They also saw their shrink rate back to pre-pandemic levels.

From TJX, a value based retailer that continues to crush it with its brands TJ Max, Marshalls and HomeGoods:

"Overall, comp sales for the second quarter exceeded our expectations, increasing 4% and were strong across all of our divisions. Customer transactions were up at every division and drove our overall comp sales increase."

"As we have seen through so many retail and economic environments, consumers were drawn to our excellent values and brands. And going forward, we continue to see market share opportunities across each of our US and international divisions."

"I am convinced that the consumers will continue to seek our value and that we remain a very attractive option for consumers seeking great brands, fashions and quality merchandise at compelling prices. Our customer surveys tell us that our value perception remains strong and we are laser focused on keeping it that way."

"we are very pleased with our mitigation strategies, which allowed us to offset the tariff pressure we saw in the second quarter." Was some of this due to price? The CEO said "goes hand in hand with that" but he didn't specify because of the unique buying activities (they source a lot thru third parties rather than via direct imports) TJX has for a variety of the things they sell.

From Coty, the cosmetics company and whose stock is down about 20% pre-market:

"The US, our largest individual market at nearly a quarter of sales, was a major headwind in fiscal year '25 and the top driver for our underperformance. While we've consistently gained share in prestige across most regions, we lost share in the US in both prestige and mass."

"The challenges of fiscal year '25 coincided with moderating growth in the broader beauty market. Prestige fragrance growth has moderated gradually from exceptional growth in prior years, though market trends are incrementally stronger in Q4 compared to Q3."

"The mass cosmetics category saw a sharper category slowdown from high single digit percentage growth in fiscal year '24 to mid single digit percentage decline in Q3 and low single digit percentage decline in Q4."

"Our analysis of cosmetics category weakness points to value seeking behavior, some fatigue with innovation as consumers circle back to basics and less frequent usage, particularly with Gen Z migrating to fragrances. US specific factors, like in-store and anti-theft measures, and immigration policy changes, have also contributed to the slowdown."

I forgot to mention this yesterday but the July Architecture Billings Index fell to 46.2 from 46.8 with 50 being the breakeven. While there was improvement in the 'commercial/industrial' sector, likely helped by data centers and healthcare, declines were seen in 'institutional', 'mixed practice' and 'multi family' residential. The AIA chief economist said, "Business conditions remain challenging for architecture firms nationwide, with billings declining across all regions in July. Client inquiries into new projects continue to build. Still, while commercial and industrial sectors show some signs of stability, the multifamily residential sector still is facing significant headwinds."

Again, that reduced pace of multi family projects getting off the ground is sowing the seeds for an eventual rise in rents in 2026, especially if buying a home is still an affordable challenge for younger people.

Turning to the August PMI's. Japan's composite index was up a touch at 51.9 vs 51.6 but the components were mixed with manufacturing up 1 pt to 49.9 while services slipped to 52.7 from 53.6, though still above 50 and resulting in growth. S&P Global said "that growth momentum picked up across the private sector in August, with output rising at the fastest rate in six months. Encouragingly, the upturn was broad based, with a fresh rise in factory production accompanying a further strong increase in services activity."

Australia saw a rise in both its manufacturing and services indices with both holding above 50. S&P Global said, "While domestic factors, including the easing of interest rates, supported better conditions in August, the renewed rise in export business suggested that external conditions have also started to pick up."

India continues to see broad strength with manufacturing rising to 59.8 from 59.1 and services at 65.6, up from 60.5 in July.

The August Eurozone composite index saw a gain to 51.1 from 50.9 with manufacturing getting back above 50 at 50.5 from 49.8 while services slipped a touch to 50.7 from 51. S&P Global said, "Overall, we've seen a slight acceleration in growth over the past three months. Despite headwinds like US tariffs and general uncertainty, businesses across the Eurozone seem to be coping reasonably well. The EU Single Market is likely playing a helpful role here, especially since most export and tourism revenues are generated within the EU."

With prices, "Inflationary pressures picked up in August, with both input costs and output prices increasing at faster rates than in July. Input prices rose sharply, and at the steepest pace in five months...The pass through of higher input costs to customers meant that output prices increased again in August. The pace of inflation quickened fractionally and was the fastest in four months."

And with regards to the region's trade with the US, "US trade policy is leaving its mark. Foreign orders in the eurozone manufacturing sector have declined for the second month in a row. Germany had been holding up well, possibly due to pre-emptive purchases from the U.S., but now it's also seeing a drop in orders. France has climbed out of the deep hole of falling foreign demand over the last months, but incoming orders are still on the decline.”

The UK PMI was mixed with manufacturing falling to 47.3 from 48, offset by an almost 2 pt rise in services to 53.6. S&P Global said "It's evident from survey measures of order books, however, that the demand environment remains both uneven and fragile. Companies report concerns over the impact of recent government policy changes, as well as unease emanating from broader geopolitical uncertainty. Goods exports are still falling especially sharply."

On cost inflation, "August data also indicated a sharp and accelerated rise in average cost burdens across the private sector economy. The rate of input price inflation was the highest since May, reflecting stronger cost pressures in both the manufacturing and service sectors. Survey respondents once again noted that suppliers had sought to pass on rising National Insurance payments. Some firms also commented on higher food prices and transportation bills. Higher freight costs were partly linked to longer shipping times for items sourced from Asia."

On the price pass through, "Prices charged by UK private sector companies increased at a robust pace in August. Service providers signaled the fastest pace of output charge inflation for three months. However, manufacturers indicated the slowest rise in factory gate prices since January, which was attributed to subdued demand and intense competition."

After yesterday's rally, European sovereign bonds are in the red again with yields up.

Walmart WMT just reported and guidance is below consensus.

I just took off my WMT short at $99.25 - for a quick gain.

We initatied a trading short rental in WMT yesterday and Tuesday:

Walmart Play

Reshorted (WMT) at $102.21.

Position: Short WMT S

By Doug KassAug 19, 2025 10:12 AM EDT

Adding to Walmart Short

I'm adding to (WMT) short at $102.36.

Position: Short WMT (S)

By Doug KassAug 20, 2025 1:17 PM EDT

"One of the things you learn in this business is humility because you see your mistakes the next day."

- Walter Schloss

Bonus - here are some great links:

Volatility Low In? Almanac Trader — Volatility Low In? VIX Historically Rises to an...

Will Fed Cut Rates With S and P At High? Will The Fed Really Cut Rates With Stocks Near New Highs? - Carson Group

Consumer Hits High Consumer Hits Record Highs

Financials and Industrials Are The Key To The Rally S&P 500: RSI Divergence Flags September Correction Risk

Index Red, Market Green Index Red, Market Green🚦

Doomberg on the "Blooming Flower."

Short:

* NVDA $176.63

* PLTR $158.01

The S&P Short Range Oscillator remains unchanged at 2.27% vs. 2.30% — still in overbought.

Wolf Street howls about the condo bust.