As of 4:23 p.m.:

Closing Volume

- NYSE volume 7% above its one-month average

- NASDAQ volume 5% above its one-month average

- VIX index: down 2.76% to 16.18

Breadth

Sectors

Nasdaq 100 Heat Map

Coincidentally, on the lack of natural underlying business investment case into this stuff, here you go.

The world’s most expensive homework-cheating and slop-generating machines:

Why is the ROI on Generative AI so poor?

From my pal, (the lynx-eyed) Liz:

Further to the point on how the AI industry is now buying its own revenue in circular fashion — I missed this article from a few weeks ago, and it is stunning.

OpenAI's cash burn forecast goes up a stunning $80 billion, from $35 billion to $115 billion, and this change might have happened in a period of months.

Imagine trying to raise money from natural investors?

* They miss every technology endpoint. (Nothing they have told people seems to be happening.)

* GPT 5 is a disaster.

* They do not come close to their financial metrics.

* The amount of capital they consume keeps skyrocketing.

* The thing is a black hole.

It seems we are at the point where even Softbank is not stupid enough to give them more money. The only ones dumber than Softbank might be the government, who is the biggest do-the-opposite investor in the entire world.

Imagine doing due diligence, realizing they have not come close on any financial metric and finding out there is no real profitable business use case that seems to be being borne out and it is just the world’s largest cheating on homework machine — with 75% of tokens processed being for exactly that, which is terribly unprofitable, by definition. And who knows if their active user numbers are even legit, they all seem somewhat sketchy to me when you think about what they add up to relative to the total population of computer-aged users.

All the astronomers looking for black holes, don’t even need telescopes, the biggest one in all of space is right here!

And there are a lot of other black holes right next to it as well. A giant boom of commodified, undifferentiated black holes.

The AI boom is really a black hole cheating on homework boom. Wonder if the black holes ultimately consume each other as well as our economy and power grid in the process? The financial industry in 2008 and dot-com industry in 2000 has nothing on these guys!

Then you see the line about developing their own chips. Well, did Nvidia NVDA just buy them off not to do that as well?

OpenAI has sharply raised its projected cash burn through 2029 to $115 billion as it ramps up spending to power the artificial intelligence behind its popular ChatGPT chatbot, The Information reported on Friday. The new forecast is $80 billion higher than the company previously expected…to control its soaring costs, OpenAI will seek to develop its own data center server chips and facilities to power its technology….

I am covering half (moved from small to very small) of my private equity stock shorts:

* BX at $178.46 (-$6.45)

* KKR at $139.35 (-$7.90)

Good News: The reversal higher in consumer staples (e.g. PEP) — from down to up. I observed this chart earlier in the day:

Bad News: Amazon AMZN, which was +$4 and is now down on the day. Much of large-cap tech has traded similarly today.

I just covered today's index shorts and some of the last few days shorts, taking me to very small sized on the indices:

* SPY $660.02

* QQQ $593.83

I plan to reshort any strength.

From earlier today:

Things I Did Today

Here are today's things:

* I added to my index shorts — (SPY) at $664.36 and (QQQ) at $599.91.

By Doug Kass Sep 24, 2025 12:05 PM EDT

* Despite the narrative of monstrous cash on Fin TV...

Here are today's things:

* I added to my index shorts — SPY at $664.36 and QQQ at $599.91.

* Shorted more GRNY at $25.04.

* Added to MSOS long at $4.40.

* Added to PEP long at $141.32.

* Added to KVUE long at $17.05.

Volume

- NYSE volume 2% above its one-month average

- NASDAQ volume 15% above its one-month average

- VIX index: up 0.36% to 16.70

Breadth

Sector ETFs

% Movers

Nasdaq 100 Heat Map

From "Meet" Bret Jensen:

Bret Jensen

The downside of AI dept.

Can't wait for all the AI scams planned for the poor seniors in the years ahead. From a NextDoor post in my community.

I had an interesting phone call yesterday at 10:42 AM. Someone spoofed my son's phone so it showed his name. Caller said he was my son injured in car wreck, arrested for talking on phone, reckless driving. Didn’t sound like him but claimed broken nose, shoulder. (In retrospect, i think they copied his voice). So maybe. Said a lawyer would call. I immediately called him back. No answer. Two min later, attorney. Gave details, miami jail address, case number. Said if I post bail he could get out today. Otherwise, they will issue him jail clothing and hold him for 90 days. Said a bail bondsman would call. At 10:49, they said bail was $50k but only 10% needed. I told him it will take time and I'd call him back in 5 min. Turned my phone off and back on. Don't know why, but it seemed right. Re-called my son. "What's up dad?" Are you ok? "Getting ready to get lunch, what's up? " Reality set in. They spoofed his phone. Report to ftc, with no expectations. Decided to play. Told them I have $3k. They said to go to Winn-Dixie on Hypoloxo Road and call from there for instructions on how to wire cash but bitcoin is better. They called back and I said this is the most realistic scam I've ever been involved with. They haven't called back.

Be careful guys. Their AI skill set is getting perfected.

From Peter Boockvar:

Big upside with August new home sales

There was big upside to the August new home sales figure where contract signings totaled 800k, well more than the estimate of 650k and compares with 664k in July. Keep in mind that mortgage rates fell about 15 bps in August as most of the decline that took place was seen in September.

Accounting for 105k of the upside m/o/m were sales in the South and the overall sales increase drove months’ supply down to 7.4 from 9.0. Highly influenced by mix and really bounces around month to month, the median home price rose 4.7% sequentially and by 1.9% y/o/y.

Bottom line, while a volatile figure each month and always best to smooth out, I have to believe that the elevated level of home builder incentives was the main catalyst for the large upside surprise to new home sales. And we’ll of course see the impact of lower mortgage rates when the September figure comes out but keep in mind, if mortgage rates continue down (which for now they have stopped going down as the 10 yr Treasury yield is up 10 bps since the Fed cut), builders will then reduce the pace at which they are implementing incentives and thus possibly offsetting the benefit of lower mortgage rates for new homes.

The 3 month average is now 713k vs the 6 month average of 689k and the 12 month average of 681k.

New Home Sales

Interesting exchange between Tom Farley and myself on Twitter just now:

Private equity stocks taken to the woodshed this morning.

This has been the object of recent short sales.

From "Meet" Bret Jensen:

Stagflation: A Rose By Any Other Name | Seeking Alpha

Fed Speakers:

4:10 p.m.: Fed Bank of San Francisco President Daly (Non-Voter) speaks on the economic outlook before the annual Spencer Fox Eccles Convocation presented by the National Association of Corporate Directors, Utah Chapter, Salt Lake City, UT (Moderated conversation and audience Q&A follow. Embargoed text expected. No group media interview.

Livestream here.

Treasury Auctions:

11:30 a.m.: Treasury hosts a $28B 2-Year FRN Auction;

11:30 a.m.: Treasury hosts a $65B 17-Week Bill Auction;

1:00 p.m.: Treasury hosts a $70B 5-Year Note Auction

Economic Calendar:

From Peter Bookvar:

More evidence on who is eating the tariffs that still are flowing thru the supply chain/China's competition is real/Other

At least this Japanese company is mostly done eating the tariffs. Nikkei News today is reporting that "Japan's Komatsu aims to absorb part of the increased costs it faces from US tariffs by hiking prices in North America, the construction machinery maker's financial chief said...The company raised prices in North America by an average of 4% starting with orders placed in August. While US competitors such as Caterpillar lifted prices significantly between 2022 and 2023, Komatsu's increases over the same period were more gradual, giving it more room to raise prices now."

Broadly, it remains a mixed bag on who on the US side is eating the tariffs, the consumer and/or the importer. The September US PMI out yesterday chimed in but remember this survey does not include retailers and construction which are obviously impacted. The composite index fell to 53.6 from 54.6 with both components lower m/o/m and after saying that "the monthly profile is one of growth having slowed from its recent peak back in July, and September saw companies also pull back on their hiring" they said "Softening demand conditions are also becoming more widely reported, curbing pricing power. Although tariffs were again cited as a driver of higher input costs across both manufacturing and services, the number of companies able to hike selling prices to pass these costs on to customers has fallen, hinting at squeezed margins but boding well for inflation to moderate."

I push back on S&P Global saying 'boding well for inflation to moderate' because the cost pressure is still there and 'consumer price inflation' is not the only form of inflation. Either way, this creates a delicate balance for the Fed too as if they respond just to 'consumer price inflation' and not appreciate the costs being eaten by the importer, by cutting rates it would give the importer more confidence to then raise prices to the consumer. I will argue also that yes, theoretically a tax hike is one time in terms of its price impact but because the tariffs now are so widespread, the supply chain flow through with respect to shifting around global production will be a multi year process of higher costs and disruptions.

This also was of note. We assume there was a lot of inventory stocking by importers ahead of tariffs and now "there are also signs that disappointing sales growth has caused inventories to accumulate at an unprecedented rate, which could also further help soften inflation in the coming months. The inventory build-up of course also hints at some downside risks to future production."

The August US Architecture Billings Index ticked up 1 pt to 47.2, though remaining below 50 still. With lower rates and with hopes for more, there was a glass half full commentary from them. "While business conditions remained soft at architecture firms nationally, there are signs that the downturn may be bottoming out. Inquiries for new projects have increased four straight months, and billings both at firms with a multifamily or commercial/industrial specialization are beginning to stabilize."

After a nearly 60% spike in refi applications last week, they were flattish this week, up by .8% as the average 30 yr mortgage rate fell by another 5 bps to 6.34%. Purchases were little changed too, up .3% w/o/w after a 2.9% rise in the week before.

To my continued point that US technology companies have met their match in terms of global competition and supremacy, Alibaba is trading up by 10% as they further expand their spend on building out its GenAI models. And with the growing presence of China tech companies, they can buy more and more from homegrown suppliers and much less from US companies. Also, eventually these models will compete with US ones on the global stage. South China Morning Post this morning is reporting "The AI and cloud computing unit of Alibaba Group Holdings has officially unveiled its largest ever AI model, with performance benchmarks that rival those of leading American models, in the latest sign of the Chinese tech giant's push to narrow the gap with US peers in the field."

And this, Alibaba "cited self reported benchmark tests to show that Qwen3-Max matched or surpassed the best models from domestic and global competitors such as Anthropic's Claude Opus 4, DeepSeek V3.1, xAI's Grok 4 and GPT-5 Pro from OpenAI...A preview version of Qwen3-Max released this month was ranked third overall by LMArena, an AI evaluation platform started by researchers at the University of California, Berkeley, placing it above OpenAI's GPT-5-Chat."

Back to the US and away from AI, this was from the AutoZone call yesterday:

They saw 4.8% domestic comp growth with domestic DIY same store sales growth of 2.2% "while our domestic commercial sales grew up 12.5% versus last year on a 16 week basis."

"With regard to inflation's impact on DIY sales, we saw higher average DIY ticket growth at 3.9% versus like-for-like same SKU inflation up approximately 2.8% for the quarter. We attribute the higher average ticket versus SKU inflation growth to an improved product mix this quarter."

"We continue to expect ticket inflation to be up at least 3% for the remainder of the calendar year. We also saw DIY traffic count down 1.9%, which was relatively consistent across the quarter...We continue to see data that confirms we are gaining share."

More on that 3%, it "probably goes up from here. I mean, at the end of the day, we've talked for years about this industry being pretty disciplined and rational in pricing, and we're going to use the pricing lever as we need to, to cover the cost of goods and make sure we stay competitive in the marketplace."

On the consumer with their discretionary spend, "So I'd say it's probably bottomed out and slowly started to gain some traction. Maybe there's a little bit of green shoots, but I would say it's a little early to say. And I still think that the lower end consumer is still under quite a bit of pressure, and this is mostly on the DIY sales floor side of the business."

Moving back overseas, Japan's September PMI composite index fell to 51.1 from 52 with manufacturing softening to 48.4 from 49.7 while services were little changed at 53. With manufacturing specifically, S&P Global said the weakness "was linked by some firms to cautious inventory policies among clients amid challenging market conditions."

Also of note, "Cost pressures remain a key concern, and while the rate of input cost inflation has eased since the start of the year, the respective index remains consistent with a sharp rate of inflation overall. This translated into a further solid increase in selling prices as firms looked to ease pressure on their margins."

In Germany, the September IFO business confidence index slipped to 87.7 from 88.9 and that was under the estimate of 89.4 with m/o/m declines in both the Current Assessment and Expectation components. IFO said succinctly, "Prospects for an economic recovery have suffered a setback." Both manufacturing and services weakened with the latter having "deteriorated noticeably" said IFO. They said with services the weakness was particularly in "the transport and logistics sector" which of course is tied to manufacturing. Trade was down but construction improved.

The euro is lower on the news by .5% percent vs the dollar but the DAX and bund yields are little changed.

“Irrational Exuberance” hinted by Powell between the lines:

We are living through another classic asset price bubble. Jay Powell carefully weighed into the valuation debate in his comments yesterday, but fell short of serving up a Greenspanian “irrational exuberance” refrain. Keep in mind that the former maestro stated that back in 1996. The tech bubble at the time had a few more years to run before the inevitable collapse. Nobody can time the peak, and to paraphrase Bob Farrell, bubbles last longer than anyone at the time thinks, but they never do correct by going sideways.

Knowledge@Wharton: Operationalize AI Accountability: A Leadership Playbook

Kamala Harris Says Joe Rogan 'Lied' About Her Willingness To Discuss Marijuana On His Podcast - Marijuana Moment

Bonus — Here are some great links:

Hovering

DeGraaf on Tech

Small-Caps Join the Party

Speculative Stocks Rise

From Toothpaste to Teslas

* A little discussed thin reed indicator...

From Charlie! 

The Week in Charts (9/23/25) - Charlie Bilello's Blog

The S&P Short Range Oscillator ended Tuesday at 1.58% vs. 1.16%.

 I added to index shorts:

* SPY $664.11

* QQQ $599.65