At 4:19 p.m.:

Closing Volume

- NYSE volume 10% above its one-month average

- NASDAQ volume 3% above its one-month average

- VIX index: down 0.13% to 15.16

Breadth

Sectors

% Movers

Nasdaq 100 Heat Map

Of PepsiCo PEP:

From Randorama: 

Randy

SoFi launches new AI-themed ETF as skepticism grows

• SoFi Technologies (SOFI) jumped back into the exchange-traded fund business on Wednesday with its first launch in nearly two years, betting on artificial intelligence, the hottest theme in retail investing.
• The new fund, SoFi Agentic AI ETF, will target what SoFi calls "next-generation AI" companies, such as those developing self-driving vehicles, autonomous technology and cybersecurity networks, as well as AI stalwarts such as semiconductor and cloud computing firms. The debut comes as enthusiasm for all things AI faces a test, with investors asking tougher questions about sky-high valuations of AI leaders like Nvidia(NVDA) and Palantir Technologies(PLTR), as well as AI's ability to generate outsize productivity and profitability gains.
• SoFi's ETF will track the performance of a new tailor-made index from BITA, the BITA USA Agentic AI Select Index, and will levy a fee of 0.69%.
• Brian Walsh, head of advice and planning at SoFi, told Reuters that the index's current 30 components range from some of the most-owned AI investments, such as Nvidia(NVDA), to more unusual ways to play the theme, such as Intuitive Surgical(ISRG) and Deere & Co.(DE), firms which are integrating AI into robotic surgery products and farm equipment.
• Solactive screens potential holdings to identify companies that derive "a meaningful portion of their revenue" from deploying AI.
• "This goes above and beyond what first-generation AI exposure can provide," said Walsh, adding that he expects the composition of the underlying index to alter as the theme evolves.
• SoFi, a digital financial services platform, has backed five other ETFs, the most recent of which, the SoFi Enhanced Yield ETF, debuting in November 2023. Roxanna Islam, head of sector and industry research at VettaFi, noted the AI-themed ETF market is becoming "crowded", as asset managers rush to roll out more products. Some 190 single-stock leveraged and inverse ETFs now offer investors a way to bet on outsize moves in underlying stocks like Nvidia(NVDA), Tesla and Palantir(PLTR) that are linked to the AI theme.
• "It's going to be hard to stand out from the crowd and gather assets at this point," she said.
• The most recent AI-themed ETF to launch was the Janus Henderson Global Artificial Intelligence ETF on August 19. That fund has seen inflows of $1.9 million since its debut.
• Steve Sosnick, market strategist at IBKR, said that in spite of the profit-taking on big AI stocks like Nvidia(NVDA) in recent days, "the enthusiasm for this theme is still driving the bus."

As I think we are close to a favorable decision on rescheduling, I am adding to my MSOS long at $4.74.

Despite the move higher in equities, the majority of the sectors of the S&P Index are lower:

Sector ETFs at 3:22 p.m.:

I've moved to very large PepsiCo PEP — as I just bought a chunk around $141.

I spent most of today on this name.

More later in the week.

At the current price I am placing it on my Best Ideas (Watch) List (long).

* Consumers are resilient and doing well....

* Looking to deploy excess capital into loans- First Investor Day in 15 years to close the relative value gap and lay out multi-year growth plans business by business with greater transparency

* Consumer spending up roughly 4.5% y/y on Bank of America cards (vs. ~3.5% last year), with asset quality improving and net charge-offs forecast to decline again this quarter

* Commercial credit performance remains strong outside of office CRE, where the bank is actively reducing exposures and non-performing loans

* Loan balances grew 7% y/y in Q2 across all segments, driven by organic customer growth, redeployment of excess capital and liquidity into lending, and strength in global/private markets

* Sequential deposit growth extends into an eighth consecutive quarter, with balances returning to normal seasonal patterns across Global Banking, Consumer, and Wealth

* Deposit pricing is set to adjust immediately for any Fed rate cuts, with changes fully baked into upcoming net interest income forecasts- Consumer Banking initiatives focus on payment products to drive net new checking accounts and personalized digital marketing for targeted offers

* Wealth Management (Merrill) is driving net new relationships and asset flows, with cross-sell now over 60% and ongoing efforts to deepen banking relationships

* Global Banking & Markets growth fueled by increased share of wallet with existing corporate clients and leveraging the bank’s capital, liquidity, and structuring capabilities into private markets 

As promised:

Don't confuse stock prices with company fundamentals, says Niles Investment's Dan Niles

I have a research call at 2:30 PM

It shouldn't take more than 45 minutes.

Dougie Kass

Jeff:

You might consider listening to Dan Niles' interview with Melissa Lee on AI that just concluded. (If it is archived I will post it tomorrow!)

Let's assume my 111 issues of "More Tales From Nvidia" was a bunch of nonsense/pablum as I am not a technology specialist.

Forget about the hundreds of hours I put into the analysis of the series.

Well, Dan Niles is a superior tech analyst.

So, listen carefully to his fundamental comments and concerns (which are (short term) different than his market view on the sector that the problems will be swept under the rug until Thanksgiving because of the expectations of aggressive Fed rate cuts).

Some of those concerns include weakness at Marvell and Dell. OpenAI reduction in out years revenues. Nvidia's data center softness in the last quarter. AI's current technical problems that are not being resolved. Hyperscalers' rising burn rate and higher cap outlays (moving from capital light to capital intense.

Many of his observations are things I have cited repeatedly in my "More Tales" series.

As Dan says "we are three years into this" and user sets arent great, money is being burned, etc.

But take it from me, listen to him.

And if your response is that he still likes the AI space (until Thanksgiving when we will see weaker than expected returns/results) because of an aggressive Fed - an agressive Fed has not been the subject of my More Tales series.

From Peter Boockvar:

What stood out the most in the Consumer Expectations Survey

What stood out the most in the just released August Consumer Expectations Survey from the NY Fed was the big drop in expectations in the ability of finding a new job if one is lost.

“The mean perceived probability of finding a job if one’s current job was lost fell markedly by 5.8 percentage points to 44.9%, the lowest reading since the start of the series in June 2013. The decline was broad-based across age, education, and income groups, but it was most pronounced for those with at most a high school education.”

Mean Probability of Finding New job if One is Lost

With respect to inflation expectations, the one year guess rose to 3.2% from 3.1%, unable still to sustainably get closer to 2%.

One yr Inflation Expectations

Breadth

Sectors

% Movers

Nasdaq 100 Heat Map

Below is another interesting set of charts from Torsten Slok at Apollo.

From my perspective, the last one comparing Capex as a % of GDP from the hyperscalers today vs. the telcos in the dot-com bubble is the most interesting. The data is only five public hyperscalers, versus 10 telcos back then, which includes some of the equipment providers like Cisco CSCO. If the private hyperscalers like Open AI, and the AI infrastructure providers (Nvida NVDA, Super Micro SMCI, CoreWeave CRWV, etc.) were added into the hyperscaler data-set to make it more comparable, the disparity would be even greater.

As implied in my responses to JeffI's observations in The Comments Section, the objective in the "More Tales" series is not necessarily trying make a short-term sector call (I have a only a very small short in NVDA and small positions long in META and AMZN). Rather, I have been focused on the technology, business and knock-on effect issues that stem from Gen AI.

The last chart is relevant to those issues, although also relevant to the former issue to be fair.

At any rate, what the equities do and how they behave is an entirely different kettle of fish from the business and technology issues.

They can do the opposite. So far, the technology has been so bad, it has been very good for the infrastructure providers and the equities, as the hyperscalers have decided to double and triple down on what is not working.

Extreme Concentration in the S&P 500

Here are today's things:

* Added to index shorts (still small sized) — SPY at $648.75 and QQQ at $579.58.

* Initiated a trading short rental in HOOD (after S&P inclusion) at $114.20.

* Added to a tiny TSLA short at $354.15 and to a very small AAPL short at $239.59.

* At $23.65 shorted more GRNY (very large).

* Shorted more JOET at $41.95.

* Added to large PEP at $143.85.

- JeffI    

    1 hour ago

    Rolling over if your lifespan is similar to a fruit fly?

- JeffI

 1 hour ago

On the other hand… I have never seen such a disconnect between the Cassandra predictions of GEN AI, and the actual stock performance of the companies enabling it. This is happening while the money flowing into to the space expands rapidly- making the negativity look ever more desperate. :)

- JeffI            

12 minutes ago

Replying to Dougie Kass

Timing is everything. When managing money- Eventually being right is wrong.

Dougie Kass

STAFF

4 minutes ago

Replying to JeffI

                 I am conducting, in my way, research on AI and accumulating into a lengthy series, "More Tales From Nvidia".

               I believe I am providing a service to our subscribers by providing them with the contrary view to the broad consensus. (You disagree, which is fine).                

                It is up to our subscribers to process my input.

                I have a small and profitable short in NVDA - overall I have very little portfolio exposure into space (long or short).

                 We are long META and AMZN - small sized.               

                This completes my responses to you because we seem to be beating a dead horse.         

                Of course, you can have the final word.      

                But I done!

With S&P cash +24 handles, I have added to Index shorts - SPY $649.35 and QQQ $580.57 with the thought of moving back to medium sized on further strength.

From "Meet" Bret Jensen:

Bret Jensen

STAFF

32 seconds ago

Replying to jamescc66

2000 tech wreck. The S&P 500 currently trades at a 3.17x price to sales ratio. The only time it has ever trading higher was right at the tail end of Internet Boom (when the U.S. had a balanced budget, less than $6T in overall debt, and the Baby Boomers were in the prime earning years) when it traded very briefly at 3.4x. The price to sales ratio on the NASDAQ? Right at 6.7x. AKA, we have nothing to worry about.

Additional shorts:

* SPY $648.33

* QQQ $579.80

* GRNY $23.65

* HOOD $114.99

From Peter Boockvar:

A few global things of note

The initial belief of markets after Japanese Prime Minister Shigeru Ishiba announced his resignation, not surprisingly with timing the only real uncertainty, is that his replacement, whoever it might be (seems to be down to two candidates), will lean more on fiscal stimulus. That as the political pushback by the Japanese citizenry has been disgust with inflation that the Bank of Japan keeps dragging its feet in addressing with its overnight rate at just .50%. The short end of the JGB yield curve fell slightly but longer term rates were higher as was the Nikkei. The yen, after initially selling off to 148.5 ish, is trading just below 148 and down just modestly. Inflation breakevens were little changed overnight.

Intraday Yen move

With OPEC+ now on to unwinding the 1.66 million barrel per day production cut implemented post Covid, after completely reversing the 2.2 million cut, the initial step of 137,000 barrels was a small enough start that WTI is bouncing by 2%. And from what has been seen so far with the actual production increases seen so far from the group, the quota increases seem more a catch up to existing production than anything.

With regards to US production, the crude oil rig count did tick up by 2 rigs in the week ended 9/5 to 414, bouncing along the bottom, around 3 yr lows. And US oil production at 13.4 million barrels per day is not much different than it was a year ago and I expect it to actually fall next year if rig counts don't increase. In the low $60's I still believe crude oil is very cheap and we're long oil and gas stocks.

Crude Oil Rig Count

US Daily Oil Production

China's trade data continues to be interesting to look at as they notably shift around who they do business with. Exports in August rose 4.4% y/o/y, just below the estimate of a gain of 5.5% but the internals stand out. Exports to the US plunged by 33% y/o/y and imports from the US were down by 16% but exports to Southeast Asia jumped by 22.5%, led by a 31% increase to Vietnam and exports to the EU were higher by 10.4%.

As we await the results of today's French confidence vote (results likely out in the afternoon US est time) where Prime Minister Francois Bayrou will most likely lose his job, the French 10 yr Oat yield is down slightly by 1 bp at 3.43%. For perspective, that is only 6 bps below the Italian 10 yr yield and clear evidence of the change in fiscal focus of investors in European sovereign bonds. The euro is slightly higher vs the US dollar and with all the economic and French political challenges the EU is dealing with, the euro at just above $1.17 is at the highest level since late July and not far from the best level in 3 years.

Combine this with the tanking of the US dollar vs the price of gold (at a record high) and it highlights the issues the US dollar has currently.

Spread between French and Italian 10 yr yields

Euro

After the soft factory order figure for July seen late last week, the German industrial production number was better with a June upward revision too. The Economy Ministry is hopeful that German manufacturing is trying to stabilize by saying "The latest data paint a slightly more favorable picture of the current industrial economy and point to a slow stabilization of industrial production. Despite the overall cautious mood, the upward trend in business expectations points to the industrial economy bottoming out in the further course of the year."

TREASURY AUCTION FOR MONDAY SEPT. 8

11:30 a.m.: Treasury hosts an $82B 3 and a $73B 6-Month Bill Auction

ECONOMIC CALENDAR FOR THE WEEK

* Aggressive rotation and abrupt price movement (contrary to the prior day) seems to be the byproduct of passive investing dominance and the fickled nature of a market importantly influenced by players that worship at the price of momentum

* The possibility of a "flash crash" may be increasing... despite a 15 VIX

Above is the picture of my stock monitor screen on the close as of Friday, Sept. 5.

There was a lot of weird stuff going on -- from the standpoint of volatility (market and sectors) and just some unexplicable price action:

* When was the last time the Nasdaq was unchanged with Microsoft MSFT -$13, AMD -$12, NVDA -$6 and PLTR -$4?

* JPM was -$9 after an opposite move on Thursday (likely due to the weak jobs report and lower interest rates) - yet the S&P was down by less than 20 handles (or -0.30%).

I am fearful that the machines and algos are about to be disruptive market influencers - even though the VIX (at 15) is not indicative of a market trauma.

Stay tuned.

Upside:

-OCTO +983% (completes $250M private placement and $20M strategic investment from BitMine to implement Worldcoin (WLD) treasury strategy)

-RAPP +205% (Phase 2a Clinical Trial of RAP-219 in Patients with Focal Onset Seizures met primary long episode endpoints with high statistical significance)

-FORD +105% (announces $1.65B private placement in cash and Stablecoin commitments led by Galaxy Digital, Jump Crypto, and Multicoin Capital to initiate Solana Treasury Strategy)

-QS +29% (showcases solid-state batteries in Ducati EV; 844 Wh/L energy density, 12-min fast charge)

-SATS +21% (confirms to sell AWS-4 and H-block spectrum to SpaceX for ~$17B)

-PL +17% (earnings, guidance)

-PLCE +12% (earnings)

-APP +9.7% (earnings, guidance)

-HOOD +8.2% (set to join S&P 500 Index)

-PINC +8.2% (reportedly Patient Square Capital is in early stage considerations for a takeover approach for Premier)

-BIDU +6.8% (strength in US listed China stocks)

-GOOS +4.4% (TD Cowen Raised GOOS to Buy from Hold, price target: $18)

-BABA +3.5% (introduced Qwen3-Max-Preview)

-ACGL +3.0% (boosts share buyback program by $2B)

-AVAV +2.7% (secures $240M Space Long-Haul Laser Communication Order)

-CHWY +2.5% (Mizuho Securities Raised CHWY to Outperform from Neutral, price target: $50)

-UNH +2.5% (affirms FY25 guidance)

Downside:

-NFE -28% (earnings)

-SMMT -18% (discloses Ivonescimab data from Phase 3 HARMONi trial at WCLC)

-ASTS -14% (weakness off SATS)

-DNTH -13% (reports data for Claseprubart from Phase 2 Magic Trial)

-ARGT -9.2% (Argentina President suffered setback in the Buenos Aires provincial elections which are viewed as a barometer for the congressional midterm elections)

-TMUS -6.3% (weakness off SATS)

-T -5.5% (weakness off SATS)

-OMDA -5.0% (weakness following GLP-1 drug data)

-CMCSA -4.0% (RBC Initiates CMCSA with Sector Perform, price target: $38)

-KGS -3.5% (Frontier TopCo Partnership files to sell 10M shares)

-NCLH -2.5% (files to sell registered direct offering of ordinary shares of indeterminate amount)

-WIX -2.0% (files to sell $750M in convertible senior notes due 2030; Proceeds for share repurchases and corporate purposes)

From Gary Marcus:

OpenAI’s future, foretold?

Two new charts paint two very different scenarios

As OpenAI would have it, interest in Generative AI is going to to continue to go up and up until they make so much revenue their annual revenue exceeds the annual revenues of companies like Ford, BMW, and Bank of America. On a path to make $13 billion last year, they are projecting $200 billion in revenue in 2030, according to a September 5 story at The Information.

Which they would need, because as the same story reports, training costs are immense. On computing costs alone, they are expecting to burn $150 billion between 2025 and 2030. They are burning money, billions a month; per the Information’s headline, “OpenAI Says Its Business Will Burn $115 Billion Through 2029”. And schoolchildren using ChatGPT to do their homework aren’t enough to cover that.

Needless to say, OpenAI can’t make its ambitious revenue numbers — 13x-ing current revenue in five years — unless revenue from paying big business customers keeps going up and up and up and up and up.

The Information was nice enough to capture that all optimism in a chart:

For the rest, please click here.

Interesting data.

Look, its finally inflecting….downward!

I have never seen such a disconnect between the investment rate into something, and the actual usage and use case in my entire life. This is happening while the technology keeps failing badly with regard to its purported endpoints.

It's so bad it is good, and note the reflexive circular hypothesis creep of the capital investor base and equity market investor base. I wonder if there is a single U.S. politician that realizes that Gen AI is just a tool for kids to cheat on their homework, and badly at that (looks like ~70% of GPT4 tokens processed are during school), as opposed to a national security priority? Sadly, they are all so clueless I tend to doubt it. The only input they get is what the technocrats tell them, which is exploiting the government and general population for their own pocketbooks. It is the same thing with bitcoin. I do not think there is much in the way at all of an offsetting voice.

I wonder when it will dawn on the American people that they are being forced to fund technocrats and an AI race they never chose through higher power bills?

At any rate, per chart below, looks like the corporations that have to pay for it, and whose businesses are evaluated on the basis of their earnings and economic returns, have figured out what Gen AI really is. A waste of money! When will it dawn on the U.S. government?

Chart from Torsten Slok at Apollo:

AI Adoption Rate Trending Down for Large Companies

The US Census Bureau conducts a biweekly survey of 1.2 million firms, and one question is whether a business has used AI tools such as machine learning, natural language processing, virtual agents or voice recognition to help produce goods or services in the past two weeks. Recent data by firm size shows that AI adoption has been declining among companies with more than 250 employees, see chart below.

The bottom line is that the biweekly Census data is starting to show a slowdown in AI adoption for large companies.

Note: Data is six-survey moving average. The survey is conducted biweekly. Sources: US Census Bureau, Macrobond, Apollo Chief Economist

Yup. Gen AI does not work. At best can regurgitate what is out there already, at worst makes things up and fails. It does not work. No path to AGI. Even the NY Times is onto it. 

https://www.nytimes.com/2025/09/03/opinion/ai-gpt5-rethinking.html? 

I remain short Nvidia NVDA, which appears to be rolling over in share price.

The quote below is from a former co-worker, analyst and long-time friend of mine when I worked at Boston's Putnam Management — who successfully scaled the heights of the investment profession over the last five decades and who was seeking out a CNBC moderator with whom he grew close with over the years:

From JPMorgan:

US: Futs are higher into major inflation updates this week. Pre-mkt, Mag7 are all higher ex-AAPL which is flat into its product event tmrw. US considering annual export approvals to chip facilities in China. Large caps are higher across virtually all sectors. The yield curve is twisting steeper and the DXY is flat as USD / JPY appreciates. Cmdtys are stronger, led by Energy, despite OPEC+ confirming an add’l production increase of 137k bpd in Oct. Gold / silver continue to run higher and Ags are weaker. Today’s macro data focus is on NY Fed’s 1-Yr inflation expectations and Consumer Credit.

and...

JPM MARKET INTEL EQUITY & MACRO NARRATIVE

We maintain our lower conviction Tactical Bullish call. This current bull market feels unstoppable with new support forming as former tent poles weaken, e.g. AVGO vs. NVDA. The AI theme appears to have returned, offering significant support to the market if Mag7 (or rather Mag7 + AVGO) can experience a net increase. Economic growth appears to be strengthening, earnings are robust, and the trade war has seen incremental improvement. However, inflation, employment, and trade have key risk factors. Thursday’s CPI print, even with a hawkish surprise, is unlikely to stop the Fed from cutting on the 17^th; but, the combination of public and private company comments on inflation reflect that more tariff-induced cost passthrough is coming though the speed and magnitude remain unknown. Further, labor supply is declining, and rate cuts may spur labor demand triggering wage inflation which tends to be sticky. Next, we may see a re-escalation of the trade war between US / China and US / EU, among others. Further, we continue to see countries forming regional agreements while also solidifying relations with China. If this persists it may embolden countries to renegotiation / retaliate to the status quo. Finally, we have concerns that the September 17 Fed meeting which delivers a 25bp cut could turn into a ‘Sell the News’ event as investors pullback to consider macro data, Fed’s reaction function, potentially stretched positioning, a weaker corporate buyback bid, and waning participation from the Retail investor.

· MONETIZATION MENU – Our views are unchanged WoW, but Equity investors may consider adding / increasing gold exposure as the rate cut expectations drive the USD lower.

· PREVIOUS MENU (Sep 2) – We like bullish Cyclical plays (esp. Consumer and Financials) to outperform alongside Small-Caps as we see further short covering so our High Short Interest basket (JPTASHTE Index) could be added, too. Healthcare could be another profitable long given its earnings prowess, overly negative pricing of news from OBBBA, low positioning, and a potential boost from M&A. Regarding TMT, we think it makes sense to reduce exposure in favor of a broader rally. The USD weakness makes EM an attractive long, where we have preference for China (esp. China Tech) and Latam. Given the heighted risks we like VIX call spreads or VXX longs as a hedge, as well as parts of Defensives. 

Dougie Kass

Thanks to Sarge for his Ron Perranoski-like precision (who sometimes was the effective relief pitcher for the Dodgers' Cousin Sandy Koufax and Don Drysdale) in subbing for me in my Diary on Friday.

And so does a consumer-led economic slowdown...

I reshorted Robinhood HOOD (on S&P inclusion announced after Friday's close) at $108.90.

I recently (August 27) shorted competitor Charles Schwab SCHW (which dropped by -$5.55 to $92.07 on Friday):

Shorting Another Financial

I am adding to my lengthy list of financial shorts with Schwab (SCHW) ($96.95) now.

Position: Short SCHW S

By Doug Kass Aug 27, 2025 1:25 PM EDT

Bonus — Here are some great links:

Are the Expectations of Fed Cuts Pushing Forward September Returns (From Jazzy Jeff Hirsch)

Financials Focus

When Everybody’s Wrong, the Market’s Right

Bears Keep Outnumbering Bulls

All Over The Place

 I added to my very small-sized Tesla TSLA short in the premarket ($354.99):

I also added to my very small-sized Apple AAPL short in the premarket ($239.59).

Wolf Street howls about the possibility of higher Treasury yields.

Dougie Kass

Sunday Night Index Shorts 8:15PM

• SPY $648.51
• QQQ $578.36

P.S.: In Friday morning's whoosh and reversal lower I reduced my index shorts from medium sized to small sized.

I plan to add to my index shorts on any strength...

The S&P Short Range Oscillator has increased to 3.00% vs. 2.76% — moving into a greater overbought position.