"Just one last thing."

- Lt. Columbo

I am calling a conclusion to the week's Diary — it's been an emotional one.

As always, thanks for reading my Diary — I hope I provided value to your decision-making process.

Enjoy your evening.

Be safe.

Wolf Street howls about the impact of OER on the CPI.

Housekeeping items.

I have closed out long standing shorts in ABR at $11.79,  (BXMT)  at $18.35 and  (DNUT)  at $3.86 for a profit.

In all three cases, the share-price decline has altered the risk vs. reward ratio. 

Professor Scott Galloway's No Mercy No Malice: "America's Best Bet" 

I'm picking at Kenvue  (KVUE)  ($15.18).

From an industry friend.

They are cutting price and desperate to sell. Yet, up they go...

"We provide top GPUs at low rates—B200 $2.5/hr (64+ Cluster), H100 $2.9/hr, H200 $3.49/hr, plus L4, L40S, A30, A40. 30-day commitments get extra discounts. Do you have GPU needs? Happy to connect and discuss how we can cut your costs."

From Jim Chanos:

Bret Jensen

It gets worse from here dept.

Great new interview with Melody Wright. Few see how bad the residential real estate market will likely get from here. Among the tidbits in this interview.

1. The previous administration was giving $30,000 for home down payments to various immigrants. Many bought homes they couldn't afford and/or face deportation now.
2. Extraordinary taxpayer mitigation efforts were used to keep FHA mortgage holders in their homes. They largely ended when the federal government's fiscal year ended September 30th. These low money down mortgages also have grown from 7% of the market before the GFC to 13% to 15% now. Even with these efforts, over 10.5% of these mortgages were delinquent as of the end of Q2. Expect a massive spike in foreclosures in Q2.
3. Migration covered up native outmigration in many city cores like LA
4. Overcounting the temporary population that came to Sunbelt, many for construction purposes during the pandemic boom. One reason the number of apartments brought online in 2024 was at its highest level since the early 1970s.

I think 2026 is going to be an inflection year both for residential and commercial real estate. And now in a good way. JMTC

Melody Wright & Boyd Institute

And the data is not exactly good.

This has become a bit of an expectations game now -- like earnings, where analysts and companies set an artificially low number that can be beat. So, even bad earnings can look good in that context.

Inflation is still at 3% and ticked up a bit.

Wall Street economists are no different than analysts. They always take the numbers down to the point where they can be beat.

So, a bad number can actually look good.

Since when is 3% inflation, that increased from the prior month, good?

...rising 0.3% MoM (vs +0.4% exp), with the YoY print at 3.0% (below expectations of +3.1% but higher than the 2.9% YoY print in August).

Not my father's market

With S&P cash +57 handles I have moved to medium-sized short the indexes.

Dougie Kass

STAFF

3 hours ago

Painful interview of Kernen with PG CEO. Its a classic example of kow towing and asking nonsensical questions. And also being Ill prepared.

• PG beat by nine cents but kept guidance unchanged - a rather fundamental question to ask and discuss

Talked about his hair instead.

P&G Announces Fiscal Year 2026 First Quarter Results | Procter & Gamble Investor Relations



This is a very good example of why I am so critical of some of The Death Star's "journalism" style of throwing softballs and providing little of value.

Dougie Kass

STAFF

2 minutes ago

PG was +$5 now close to flat traded it from the short side in premarket

I will be in a research call from 10 a.m. to 11 a.m.

And another meeting between 3 p.m. and 3:30 p.m.

I added to my Index shorts on the lift following the inflation report:

*  (SPY)  $677.09

*  (QQQ)  $616.96

* Among other issues, the never-ending government shutdown likely delays cannabis rescheduling...

Vladimir: “He didn’t say for sure he’d come.”

Estragon: “And if he doesn’t come?”

Vladimir: “We’ll come back tomorrow.”

Estragon: “And then the day after tomorrow.”

Vladimir: “Possibly.”

Estragon: “And so on.”

Vladimir: “The point is—”

Estragon: “Until he comes.”

Vladimir: “You’re merciless.”

Estragon: “We came here yesterday.”

Vladimir: “Ah no, there you’re mistaken.”

- Samuel Beckett, Waiting For Godot

Given the continued government shutdown and in light of the limited visibility as to when the dispute between the Democratic and Republican parties will be resolved (both seem to be hunkering down), I am moving out my expectation for a cannabis rescheduling announcement from mid-November 2025 to mid-December 2025 to sometime between December 2025 and January 2026.

As well, given the priority of ongoing geopolitical issues (Russia, China, Israel/Gaza) and domestic policy uncertainties (tariffs et al) — cannabis is not likely on the front burner of the Trump administration's agenda.

Per my Monday post I have eliminated all of my  (MSOS)  common this week and I am replacing the common with defined risk (out-of-the-money) calls:

Cannabis Composition

I have been changing the composition of my cannabis position.

Given my expectation of a mid-November to mid-December rescheduling announcement, I have been exchanging my common position with out-of-the-money call options.

I expect to be entirely out of (MSOS) common and entirely into MSOS calls sometime soon.

Position: Long MSOS common (M) and calls (VS)

By Doug Kass Oct 20, 2025 11:35 AM EDT

Cannabis Industry Profit Concerns Continue

In terms of upcoming 3Q2025 cannabis company EPS releases — I see continued product price compression and forward-looking profit and legislative uncertainties weighing on the individual company results and balance sheet liabilities (in regard to substantial and continuing 280E What is 280E?).

As a consequence, it is my view that the entirety of the promise for higher cannabis equity prices lies primarily with a rescheduling announcement, which, under the above Washington D.C. circumstances, is likely to be delayed further (into late 2025/early 2026).

Given the calendar (and as we move towards year-end) it would not be unreasonable to see tax selling pressure in the next few weeks — creating an even better entry point (on a reward vs. risk basis).

From JPMorgan:

US: Futs are higher on CPI Day. Pre-market, Mag 7 are mostly higher led by GOOG/L and NVDA. Bond yields are unchanged; USD is higher. Commodities are mixed: base metals are outperforming, while precious metals are lagging. Incremental macro news since Thursday’s close were mostly muted, but earnings announcements were mostly positive. Pre-market, INTC and F added 8.4% and 3.2% post earnings. Today, the key focus will be CPI release at 8:30am ET and PMIs at 9:45am ET

and...

JPM MARKET INTEL EQUITY & MACRO NARRATIVE

Yesterday, we saw a recovery from Wednesday’s selloff, particularly in Quantum Computing, AI, Crypto Exposure and Momentum. Especially, the rally in Quantum Computing was triggered by the headlines “*US WEIGHS QUANTUM COMPUTING BOOST IN EFFORT TO COUNTER CHINA” despite the White House later clarified that they are not negotiating equity stakes with quantum firms. Part of this rally was also driven by the anticipation of macro data releases today (CPI and Global PMIs) after three weeks of quietness on macro data, as well as confirmed dates on Trump-Xi (next Thu) and Trump-Takaichi (next Tue) meeting next week. You may find our scenario analysis and CPI day breakevens below in this note.

US MKT INTEL: CPI SCENARIO ANALYSIS

Feroli’s CPI preview is here. For CPI he sees Headline MoM printing +0.39% and Core MoM printing +0.30%. This equates to 3.1% YoY for Headline (up from 2.9% last month) , the fastest pace since May 2024, and 3.1% YoY for Core (same as previous month).

The following scenario analysis is NOT A PRODUCT OF JPM RESEARCH, this is a trading desk view from JPM US Market Intelligence. This month we focus on Core MoM outcomes and 1-days SPX moves.

· [5.0%] Core MoM prints above 0.40%. SPX loses 1.5% - 2.25%

· [30.0%] Core MoM prints between 0.35% - 0.40%. SPX loses 0.5% - 1.25%

· [35.0%] Core MoM prints between 0.30% - 0.35%. SPX flat to gains 50bps

· [25.0%] Core MoM prints between 0.25% - 0.30%. SPX gains 0.75% - 1.25%

· [5.0%] Core MoM prints below 0.25%. SPX gains 1.% - 1.5%

· WHAT ARE OPTIONS PRICING? Options that expire on Tuesday are pricing ~105bp move based on Tuesday’s (Oct 21) closing prices.

· US MARKET INTEL – The market is pricing a nearly 100% chance that the Fed cuts by 25bp next week. We agree with the market’s view and think it would take the largest of tail-risks to push the Fed to the sideline. For that reason, the scenarios above are less volatile, than usual. Investors will also need to consider whether we have seen the peak of inflation pass-through. If yes, then a cooler print will be considered a tailwind for the consumer as well as not adding stress to lower income consumer. However, if we see a hawkish print for Core Goods, then it may be worthwhile to consider that another inflation peak has yet to form. We think an inline to slightly hawkish print is most likely given the references to inflationary pressure across recent macro data, e.g., ISM / Flash PMIs. This may lead to yield curve steepening, which would be a positive for Cyclicals given strong GDP growth.

Bonus — Here are some great links:

Today Is the Best Day to Buy Stocks

Does the 50-DMA Really Matter? 

The Psychology Behind Market Structure

Got Water?

Can the Dow Reach 50,000? 

A lot of technical voices in my daily "Charting the Technicals" column have recently endorsed the idea of moving from the gold ETF (GLD)  to individual gold equities.

This morning, shares of Newmont Mining  (NEM)  will likely get crushed on weak 4Q2025 cash flow guidance: 

Newmont Corporation - Newmont Reports Third Quarter 2025 Results and Improves 2025 Cost & Capital Guidance

"Compared to the previous quarter, fourth quarter free cash flow is expected to be adversely impacted by the continued increase in spending on construction of the Yanacocha water treatment facilities as well as planned severance payments that were accrued for in the third quarter."

My advice is to be very careful of investing in individual gold equities — particularly second and third-tier gold miners. As the old saying goes (something like this!):

"It is a crook at the top of a gold mine and a fool that works in the gold mine."

I don't have a dog in the gold hunt — I clearly missed the move. While I understand the precious metal's appeal — principally as a hedge against fiat currency debasement — I can't evaluate its "fair market value." (This is my issue!)

This morning gold is -$80/share (or -1.95%).

Caveat emptor.

I am going along with this indicator now (as we get some space from 0.00%) — and I am planning to more aggressively short the indices as they hit record highs.

The S&P Short Range Oscillator is at 2.33% vs. 0.33%.

Added to index shorts:

*  (SPY)  $673.49

*  (QQQ)  $613.13