• Enjoy your evening.

Thanks for reading my diary today. I hope it was helpful.

And enjoy your evening.

• How much to sell?

My mavens on the floor of the exchange see a very large $2.8 billion market on close sell. This could be impactful.

Financials have $600 million, industrials have $400 million and energy has $350 million to sell.

Procter & Gamble (PG) has $75 million, General Electric (GE) has $70 million and Wells Fargo (WFC) has $60 million to sell.

Buckle up.

• I envision a much more volatile market ahead.

Several wild swings today. Get used to it.

I envision a much more volatile market ahead.

Again, ideal for opportunistic traders, not so hot for the buy-and-hold crowd.

Watch for more trading rentals than you have ever seen in the time ahead from me.

• Ford and GM experience intraday breakdowns.

I am focused on the intraday breakdowns in Ford (F) and General Motors (GM) now.

Few are looking at this.

• Nothing in the FOMC statement justifies a new leg higher in the U.S. stock market.

While the markets appear to be taking the Fed statement as dovish (U.S. dollar is weakening, bond yields and the price of gold are dropping, and stocks are rising), there was nothing in the FOMC statement that justifies a new leg higher in the U.S. stock market.

The fact that Mr. Market is rising on precisely the same message (over and over again) makes me nervous, and so does the fact that the Fed Chairman is so focused on not causing market problems/issues.

In other words, the Bernanke put is looming ever larger at a time when the FOMC should be trying to reduce that put and let the markets find real price discovery.

Market participants are like drug addicts these days -- they need more fixes in the form of more cowbell. And Bernanke has lost the will to confront the markets.

This all ends badly. But who knows when?

From my perch, tapering is on schedule for September and the U.S. stock market is in the process of topping now.

• At $169.55.

I added more to my SPDR S&P 500 ETF Trust (SPY) short (which is growing appreciably in size) at $169.55 on the post-Fed statement lift just now.

I recognize the markups but feel they are no t justified.

• In today's tug of war, it looks like month-end markups are winning.

• Here is a chart.

Below is a chart on the 10-basis-point intraday move on the 10-year U.S. note yield.

• Here is his analysis.

And here is BTIG's Dan Greenhaus analysis of the Fed statement (now back to stocks and shorting!):

The first Fed paragraph dealing with the economy is largely unchanged although it does directly mention the rise in mortgage rates.  The economy had been growing at a "moderate" pace but now is characterized as having grown at a "modest" pace.

• The second paragraph dealing with inflation inserted an important addition.  Whereas the statement had said "...inflation over the medium term likely will run at or below its 2 percent objective" the statement now says "The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, but it anticipates that inflation will move back toward its objective over the medium term.."  As well, the Fed, recognizing the slow pace of growth of late, said that it expects a pickup in growth.  This reflects what Fed members have publicly said.
• The third paragraph, dealing with the size of purchases, is roughly if not entirely unchanged. 
• The same goes for the fourth paragraph, dealing with the outlook.
• The same goes for the fifth paragraph.
• Esther George dissented again for the same reason.

Coincident with expectations heading into the meeting, the Fed statement was largely unchanged from the prior month and other than some modest (relatively speaking) changes to the statement, nothing major was implemented.  The Fed did acknowlege the pickup in mortgage rates as a caveat to the strengh in housing and they did acknowlege recent growht weakness by saying they expect an acceleration of gorwth going forward.  But this was known and the Fed is merely reacting to recent developments. 

All told, the statement can be seen as two things.  One, it's a placeholder of sorts in front of the September FOMC meeting.  Second, it's a relative "win" for St. Louis Fed President Bullard who had expressed concerns about the low rate of inflation in the economy. 

For investors though, all that matters is whatever you thought before, holds after.  The Fed kept things relatively unchanged and that's probably for the best.And here is BTIG's Dan Greenhaus analysis of the Fed statement (Now back to stocks and shorting!):

The first Fed paragraph dealing with the economy is largely unchanged although it does directly mention the rise in mortgage rates.  The economy had been growing at a "moderate" pace but now is characterized as having grown at a "modest" pace.

• The second paragraph dealing with inflation inserted an important addition.  Whereas the statement had said "...inflation over the medium term likely will run at or below its 2 percent objective" the statement now says "The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, but it anticipates that inflation will move back toward its objective over the medium term.."  As well, the Fed, recognizing the slow pace of growth of late, said that it expects a pickup in growth.  This reflects what Fed members have publicly said. /em>
• The third paragraph, dealing with the size of purchases, is roughly if not entirely unchanged.
• The same goes for the fourth paragraph, dealing with the outlook.
• The same goes for the fifth paragraph.
• Esther George dissented again for the same reason.

Coincident with expectations heading into the meeting, the Fed statement was largely unchanged from the prior month and other than some modest (relatively speaking) changes to the statement, nothing major was implemented.  The Fed did acknowlege the pickup in mortgage rates as a caveat to the strengh in housing and they did acknowlege recent growht weakness by saying they expect an acceleration of gorwth going forward.  But this was known and the Fed is merely reacting to recent developments. 

All told, the statement can be seen as two things.  One, it's a placeholder of sorts in front of the September FOMC meeting.  Second, it's a relative "win" for St. Louis Fed President Bullard who had expressed concerns about the low rate of inflation in the economy. 

For investors though, all that matters is whatever you thought before, holds after.  The Fed kept things relatively unchanged and that's probably for the best.

• Here's his view on the prospects for tapering.

As I wrote previously, I didn't expect the Fed to be market impactful. But I prefer picking stocks and sectors to buy or short.

So, here, parsing the Fed's comments, is Mr. Boockvar (I agree with his conclusion that tappering will begin in September):

Thankfully, particularly after all the communication from Bernanke and others since the June meeting, the FOMC statement was uneventful with just modest changes. In the commentary on the economy they acknowledged the rise in mortgage rates in addition to fiscal policy restraints in moderating their optimistic but similar view on housing, labor market conditions, household spending and business fixed investment that they had in June.

There was no change on their view on inflation but to placate Bullard, they included this: they recognize the "risks to economic performance" that inflation "persistently below its 2% objective" can bring.

All else was pretty much the same and therefore reinforced the data dependent, play it by ear focus. Bottom line, a private sector job gain of around 200k on Friday, which is what is estimated, would be the fourth straight month in a row of near 200k and we can assume that all else equal, we'll get a form of taper in September. The bond market is anticipating this while I repeat my belief that the stock market is not.

• Adding to the short ahead of the Fed announcement.

I am putting out more PowerShares QQQ (QQQ) at $75.92 on the Fed statement.

• Not likely to impact the market.

For what it is worth, I suspect the Fed decision will incorporate Bernanke's tapering timetable (discussed in the last press conference) in today's Fed statement.

Of course, the decision to taper is always subject to the data.

As well, the Fed statement will likely continue to explain that accommodation will be with us for as long as the eye can see  and that tightening is far different than the end of tapering.

I don't think any of this will impact the market.

• I recently shortedSchwab (SCHW).

Over the last six months, there have been NO insider buys while sales have totaled nearly 2 million shares.

Insider sales have accelerated in the month of July.

• McDonald's (MCD), a recent short, is starting to roll over.

I am a seller on any strength now in this name.

• The cheerleaders are in force.

As I mentioned yesterday, the cheerleaders rise in force and volume with higher stock prices, especially in the business media.

This observation applies to the S&P 500 Index, Facebook (FB), Google (GOOG), Herbalife (HLF) and many others that have levitated to higher ground recently.

As a friend on the floor once said to me, I would rather "yell and roar ... and sell some more."

Let's not forget Warren Buffett's great quote, "Price is what you pay, value is what you get."

The smartest man I know in the hedge fund business is selling down his longs now -- after playing the bull market all the way up. 

• Run, don't walk, to read 'The Dunkelberg Report.'

July was another slow month for jobs among NFIB's 350,000 owners, with the average increase in employment coming in at a negative 0.11 workers per firm, the third negative monthly reading in a row (although the numbers are close to zero). Nine percent of the owners (down 2 points) reported adding an average of 2.9 workers per firm over the past few months. Offsetting that, 12 percent reduced employment (unchanged) an average of 2.6 workers (seasonally adjusted), producing the seasonally adjusted gain of negative 0.11 workers per firm overall. The remaining 79 percent of owners made no net change in employment. Fifty percent of the owners hired or tried to hire in the last three months and 40 percent (80 percent of those trying to hire or hiring) reported few or no qualified applicants for open positions.

-- The Dunkelberg Employment Report

Run, don't walk, to read "The Dunkelberg Report," which outlines another slow month of small business hirings.

This is a must-read every month.

• Anyone know why? 

Huge downside reversal in Mastercard (MA) and Visa (V) and in last hour.

Anyone know why?

• His musings at midday.

Midday market musings from Sir Arthur Cashin:

Ten year yield hits 2.68 but it is not quite the tripwire traders feared.  (2.68 was the approximate level when Bernanke began the whole "tone down" campaign.  A return to 2.68 held anxiety, the markets had shrugged off the mellow move.)

Traders assume stocks may flatten further going into the 2:00 statement.

Run rate same as yesterday - - circa 640/720 unless there is a surprise at 2:00.

• My average cost basis today was $159.19.

I shorted SPDR S&P 500 ETF Trust (SPY) all morning on a scale.

My average cost basis today was $159.19.

• Where's the beef?

Sorry but I dont understand the optimism surrounding growth in the U.S. expressed on CNBC this morning.

As I previously wrote, real GDP in first quarter 2013 was revised down from +1.8% to +1.1%, and second quarter 2013 came in at +1.7% (compared to consensus of about +1.0% growth).

In other words, first-half domestic growth, in real terms, is essentially in line with (lowered) forecasts.

Where is the beef?

• Woulda, shoulda, coulda -- didn't.

Altisource Portfolio Solutions (ASPS) and Altisource Asset Management (AAMC) reach all-time highs, again, this morning.

As I mentioned in my inaugural jerk award, I made a big mistake by not reentering Altisource Portfolio Solutions at $70 a share recently.

• I can only wish that I was Lee Copperman's clone.

In our comments section, subscriber "Laura" accuses me of being a clone of Omega's Lee Cooperman.

Though this is factually incorrect, in reality, it is a very nice and flattering thing to say about me!

Lee is a great human being.

I admire Lee's returns, candid nature and charitable endeavours.

So, thank you, Laura.

• Run, don't walk, to read Jim Cramer's latest column on China.

Run, don't walk, to read Jim "El Capitan" Cramer's "There Are Two Chinas."

If he is correct in view, the iShares China Large-Cap ETF (FXI) provides a lot of upside.

• He also sees growth slowing in the second half.

There is a lot of debate about the GDP revisions.

I am not an economist, so I am not equipped to talk intelligently about this subject.

But Boenning & Scattergood's Rich Farr is.

It is interesting to note that he sees growth slowing in the second half, as I do:

STATISTICAL CHANGES TO GDP ARE MOSTLY MEANINGLESS:

Nominal GDP has been revised higher by $550 billion (+3.3%) based on subjective and quantitative assessments of things like intellectual property, original artwork, and knowledge created by research & development dating back to 1929.  We don't want to get into the debate as to whether or not the Bureau of Economic Analysis has gotten this right.  For our purposes we will just assume that they did indeed get this right.  But let's face it; GDP is intended to be a measure of "production", not wealth creation.  If you knock down a home, and then replace it with an exact replica, GDP is created.  But that doesn't mean you are better off.  There is survivorship bias in GDP data, and now there is added subjectivity as to the true value of intellectual property and R&D.  If a company invests in R&D, produces nothing, and then goes bankrupt, was "product" created?  According to the BEA, the answer is "Yes".  But on the flip side, if a starving artist sells a painting for nothing, and then later becomes the next Picasso, the painting's value would be understated within GDP.  Should we go back and re-value these items for GDP purposes?  Let's not give the BEA any ideas for further revisions!

To truly assess the health of a society, GDP should be taken into context with other important indicators, most notably the indebtedness incurred in order to obtain such GDP.  This indebtedness can be measured in both government debt outstanding, as well as within Household Net Worth.  And let's not forget, "net worth" must be viewed on a real basis, otherwise our minds are cloudy by the feeling of fake wealth caused by monetary-induced inflation.  In summation, today's revisions to GDP are mostly meaningless and do not change our overall assessment of the U.S. economy.   The United States is still growing at a sub-potential rate, it still looks set to slow materially in 2H 2013, demographics will remain an overhang for many years to come, and the United States still has too much debt outstanding given these realities.

• This could be an important headwind to growth into 2014 and to stock prices over the near term. 

While most of the focus today has been on the GDP adjustments and the ADP report (both nonevents, IMHO), the markets have ignored the mortgage release, which I think is more meaningful than the economic data and will importantly result in slowing domestic growth through the balance of the year.

Specifically, purchase applications for mortgages were down for the seventh consecutive week (-3.4%) -- now standing at the lowest print since July 2011. Refinancings (an important source of household cash flow) are evaporating (-3.8%) and now are 60% lower (year over year).

With affordability reduced courtesy of higher mortgage rates and home prices, the housing recovery will likely shortly stall out.

Given the sector's importance in the overall direction of the U.S. economy, this could be an important headwind to growth into 2014 and to stock prices over the near term.

• If that means that we are down to only three bears, then I guess so.

The phrase "Goldilocks Economy" was just used on CNBC.

I can't see it as Goldilocks, despite massive policy measures, given that we are at subpar-2% real GDP growth four years after the Greeat Recession.

Nor has our structural unemployment problem been addressed.

Nor has our fiscal state been addressed by an inert Washington, D.C.

• I have not added to my short.

I haven't added to Berkshire Hathaway (BRK.B) short today in light of IBM's (IBM) stubborn strength.

• As interest rates climb, gold could lose its luster.

As I wrote recently, the climb in real interest rates could pressure the price of gold, particularly after the $100-per-ounce rally over the past few weeks.

• CNBC reports that the legendary investor is now long a meaningful stake.

Break in: According to CNBC, Soros is now long a meaningful stake in Herbalife (HLF).

• We still need better comsumer spending and less drag from net exports to reach the Fed's (and consensus) second-half expectations.

The July Chicago Manufacturing Index came in at 52.3 (versus expectations of 54). As to the components, they were weaker than the headline, with orders dropping in July compared to June. The employment component was good at 56.6.

Tomorrow, the aggregate ISM manufacturing index comes out -- expectations are for 52-53. Nevertheless, to reach the Fed's second-half expectations and the consensus forecasts -- that is, in order to move from +1.4% first-half real GDP to over 2% -- will require an improvement in consumer spending and less drag from net exports.

My problem with this is that the savings rate is at a five-year low, refinancings are evaporating and the U.S. dollar is strengthening.

If my concerns are manifested in sub-2% real GDP growth over the next six moths and the domestic economy can't reach escape velocity, there will be cries of a liquidity trap (a notion I have endorsed for several months).

The failure of growth acceleration will likely be problematic for the U.S. stock market as there are few policy levers that are left in order to stimulate the economy.

• Namely, Morgan Stanley, Yahoo!, Home Depot and Lowe's.

I am adding to Morgan Stanley (MS), Yahoo! (YHOO) Home Depot (HD) and Lowe's (LOW) shorts now.

• Be sure to check out the comments section below my diary.

I tried to expand on my market thesis (topping out) in the comments section in response to subscriber Laura.

Please check it out.

• Shorted more SPY at $168.97.

I just added to my SPDR S&P 500 ETF Trust (SPY) short at $168.97.

• The SEC has raised additional accounting issues with the company.

My concerns regarding the trajectory of the housing recovery, an extended (and overbought) financial sector, my expectations for slowing domestic economic growth and Travelers' (TRV) decision to cut auto insurance rates all suggest to me that Berkshire Hathaway (BRK.B) is a better rental short now.

-- Doug Kass, "Weighing My Options on Berkshire Short" (July 30, 2013, 1:15 p.m. EDT)

This morning, IBM (IBM) reports that the SEC has raised additional accounting issues with the company.

This is not the first time that IBM has faced accounting charges.  

I expect IBM's shares to be under pressure today.

This is yet another reason to consider a trading rental short Berkshire Hathaway (BRK.B), as IBM is one of The Oracle's largest stock holdings.

I plan to press my short today if Berkshire's shares are not down.

• Leave it to a pro.

I will leave an interpretation of the Fed to a pro (a pro I strongly agree with!), The Lindsey Group's Peter Boockvar:

With another FOMC statement now upon us, all eyes are of course on whether any further hints will be dropped as to whether the Fed will still drive the policy car at the current 85 mph or slow down to maybe 65 mph in coming months (I think speed limit on this road should be zero). Assuming the Fed sticks to their 'play it by ear' playbook, we may get very little new today but every market participant must ask what is priced in.

I believe the Treasury market has already priced in a modest change in policy with the 100 bp increase in the 10 yr yield and doubling in the 5 yr yield over the past 2 months as clear evidence. But, have stocks? Some argue yes, I say no. Earnings growth slowing to near zero, after the amazing gains in the past 4 years, with flat revenue growth and profit margins around 2/3 above average is not a reason to continue to pay a higher P/E multiple on but a full speed ahead Fed has seemed to be. Therefore, a slower Fed should mean lower stocks.

In October 2007, at the previous stock market all-time high, stocks were pricing in its full faith in the Fed. The credit markets were crumbling around it but because the Fed cut rates a combined 75 bps in the Sept/Oct '07 meetings, bulls went blind to the extraordinary risks. Today is certainly not 2007, not even close, but bulls should not ignore the obvious change in tone in the US Treasury market.

• The 10-year yield inches closer to my line in the sand.

With the 10-year US note at 2.63% (my line in the sand is 2.65%), I am moving to a higher net short exposure by shorting more PowerShares QQQ (QQQ) at $75.73 now.

The better-than-expected ADP data could lift the yields above my line in the sand now.

I say good economic news is now bad news.

We should not lose sight that market tops are presaged by good news, and market bottoms (think the generational low in March 2009) are heralded by bad news.

My view is that July 2013 will represent a top for the year in the S&P 500.

• Let's start the day by looking at the overnight and early-morning price action in the major asset classes.

The rundown:

• S&P futures up 1;
• Nasdaq futures up 1;
• Nikkei down 1.5% (though it recovered from a large opening drop, it gave back the prior day's gain);
• China Shanghai up small on vague statement that government will aid property markets;
• European markets mixed, trending lower and off highs now as bank stocks bleed a bit;
• euro up;
• crude up $0.20;
• gold up $6; and
• the 10-year U.S. note yields 2.62% (getting close to my "line in the sand").

Worth mentioning:

• Stocks meandered on Tuesday.
• I remain modestly net short, and I continue to subscribe to the notion that a market top for the year will be reached in July 2013.
• I was generally inactive yesterday, reentering a Schwab (SCHW) short and pressing my PowerShares QQQ (QQQ) short (on a day when N's were over S's). I passed on the falling knife of fertilizer stocks, feeling that it was more gambling than opportunistic. I spent most of the day researching some new names.
• The rumor on Air Products (APD) and hedgehogger Ackman proved accurate, as Pershing has amassed a near-10% position in the company.
• They are back! Blackstone (BX) is set to bundle homes purchased to rent in a fixed-income instrument sold by Deutsche Bank (DB).
• Speaking of housing, the Case-Shiller Index was in the news, but I still feel strongly that the housing recovery is about to press the pause button.
• Research boutique Compass Point lowered price targets of homebuilder shares this morning.
• Riddle me this Inflation Man (BLS)? Home rental prices have hit a new all-time high. As rental prices account for 31.5% of CPI and 41.0% of core CPI, why is inflation, as reported, still low?
• July U.S. consumer confidence dropped from 82.1 to 80.3 (consensus was 81.3).
• Real median household incomes are up 0.1% year over year.
• The President's "Grand Bargain" was announced. Some argue (especially of a Republican kind) that it's not so grand and not such a bargain!
• Amazing stat -- foreign-born workers represent 16.1% of the U.S. workforce compared to only 10.8% in 1996.
• JPMorgan'shands were found in the cookie jar -- again.
• Talking my book -- second-quarter 2013 profit and sales growth (ex-financials) is anemic.
• This week the ECB is likely to stay on hold and stick with it's "extended period" guidance and its explicit easing bias.

In the press:

• The Wall Street Journal -- Dog nation! (Ollie, Bella, Milo and Sebastian like this one!); the stock market is a better indicator of growth than preliminary GDP data (I vehemently disagree with Ed Lazear!); Summers not as hawkish as some suggest.
• The New York Times -- America's inequality.
• Business Insider -- Why QE failed to cause inflation.
• The Washington Post -- The Street's revolving door.
• Politico -- Summers remains Obama's choice.
• National Journal -- "What's All the Yellen About?"

Today's important earnings and economic catalysts that could impact markets:

• Eurozone CPI for July (5:00 a.m. EDT).
• U.S. ADP jobs report for July (8:15 a.m. EDT, 180,000 estimate).
• U.S. GDP for second quarter (first report, 8:30 a.m. EDT, +1% estimate, consumption +1.6% estimate, GDP Price Index +1% estimate, Core PCE +1% estimate.
• Chicago PMI (54 estimate)
• Treasury will publish details of quarterly debt refunding (8:30 a.m. EDT).
• Fed meeting; decision at 2:00 p.m. EDT.
• Obama to meet with Congressional Democrats on Capitol Hill.
• China NBS and HSBC manufacturing PMI for July (out Wednesday night).
• Earnings before the open: AB, ADT, AGCO, AGN, AMT, AUO, BAH, BBVA, BNP, CEVA, CMCSA, DLPH, ENR, EXC, GRMN, H, HCBK, HES, HSP, HUN, IACI, IVZ, JNY, LVLT, MA, SODA, SPW, TX, WFT.
• Earnings after the close: ALL, ATML, CBS, CNQR, CNW, DOX, DWA, EQY, LNC, LRCX, MCHP, MET, NXPI, PL, ROVI, SPWR, TRLA, TRN, WFM, WRI, YELP.