• Nothing today.

There is no market on close imbalance today in either direction.

Thanks for reading my diary tomorrow and enjoy your evening.

• I am holding on to my Potash long rental.

Here is the story regarding Uralkaliy rejoining of the Russian cartel. (it is in Russian.)

I am also told that this is an old story, but I don't know, as I can't read it!

I would be skeptical that this would occur so close to the exodus from the cartel

That said, I am holding on to my Potash (POT) long rental.

• It seems to me that a September tapering is better than a 50/50 proposition.

Chicago Fed head Charles Evans, among the most dovish of Fed presidents, was uncustomarily hawkish today.

Though he did say that the federal funds rate could stay at zero even if the unemployment rate went below 6.5%, he also said that tapering could begin as early as September.

This is consistent with the consensus of most of the Fed folks -- they want out of QE and would prefer to start the tapering process sooner than later.

It seems to me that a September tapering is better than a 50/50 proposition.

That said tapering, though growing to be more expected by market participants, may introduce volatility, two-way action, higher interest rates and even a consolidation in the stock market -- things we have not seen in a while.

• There is a story going around that Uralkali is considering rejioning the Russian potash cartel.

Break in: There is a story going around that Uralkali is considering rejioning the Russian potash cartel.

The sector is now ripping higher, albeit from depressed levels.

Potash (POT) is getting better.

• Here are a long and short pick from someone who should know.

Bull mastiff George, Seabreeze's large-cap analyst and Milo's BFF, just jogged into my office to offer up his best long and best short large-cap Ideas.

Best large-cap long Idea =  Citigroup (C).

Best large-cap short Idea = IBM (IBM).

George

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• Run, don't walk, to read Howard Marks' commentary on confidence.

Run, don't walk, to readOaktree's (OAK) Howard Marks' latest masterpiece of commentary on confidence.

• If Sears has deeper problems, so will the labor and commercial real estate markets.

One of my surprises in my surprise list over the past few years has been the potential for a Sears (SHLD) bankruptcy.

Over the past few months, there have been persistent stories and rumors about vendor funding issues at Sears.

If Sears has deeper problems, so will the labor and commercial real estate markets.

• Doing it wrong.

As discussed yesterday, here are 16 reasons why I would continue to avoid J.C. Penney's (JCP) shares.

• Bezos will likely transform The Washington Post into a template for social news.

The $200 million-plus purchase price for Washington Post (WPO) is chump change for Bezos, as it represents about 1% of his net worth.

Bezos, who already was a part of the group that invested $5 million in Blodgett's Business Insider, had gotten, by virtue of that participation, his feet wet with media. And now he appears to want to move further into the field.

To me, this is a natural. With Bezos and his social media contacts, he will likely transform The Washington Post into the template for social news. I suspect it will happen swiftly.

To the Grahams, so aligned with Washington Post over the years, the choice (read: quality) of the buyer was probably almost as important as the purchase price. So, I suspect Bezos has already shared his vision with the Graham family and they are on board with it.

It is interesting to me considering the history between Buffett and the Grahams/Washington Post that The Oracle didn't buy the newspaper because there is probably little doubt that he had first dibs on the sale. My guess, at 83 years old (this month), Warren didn't want to undertake such a project and that he recognized that someone like Bezos is uniquely qualified to engage in it.

Another reason Warren might have taken a pass is the potential conflict of interest given Berkshire's position as the largest individual owner of Washington Post's shares. Given this, a lengthy shop period might have had to be conducted, a period in which someone less desirable to the Grahams (e.g., Murdoch) might have wanted to buy the newspaper.

• Small at $28.85.

I just added small to Potash (POT) at $28.85.

My conviction level still remains low on this one until I finish my work.

• He is discussing his outlook.

My friend/buddy/pal Byron Wien was just on CNBC discussing his market outlook and recent commentary.

On Friday, I posted his concerns.

• Stated simply, the U.S. is growing faster than most of the rest of the world.

The June trade deficits dropped to $34.2 billion ($43 billion was consensus expectations).

Exports (consumer goods ++) rose better, and imports declined more.

Stated simply, the U.S. is growing faster than most of the rest of the world.

The sharp narrowing in the trade deficit will likely result in a +0.4% increase in second-quarter 2013 real GDP (to over 2%).

I don't expect this release to be market-impactful, as the markets are justifiably skeptical of the magnitude of the improvement in the trade deficit.

• Caveat emptor.

I recently wrote about private equity firms selling anything that isn't nailed down in IPOs and in secondary offerings!

Last month private equity firm Apollo Global Management (APO), following blowout earnings, sold the balance (25 million shares) for over $1 billion in a secondary offering.

Here is the one-month chart of Realogy Holdings (RLGY), a favorite of the bullish housing cabal.

If you are getting anxious to "pay up for stocks" during a sleepy August, consider this move by Apollo.

Caveat emptor.

• A major brokerage has downgraded the name.

For years, IBM's (IBM) shares have prospered despite sluggish top-line growth, principally through cost cuts and share buybacks.

Today a major brokerage downgrades the name with a clear message that the jig might be up.

I have been back and forth shorting this name over the years as organic growth has been invisible.

And I have questioned The Oracle's purchase of the shares. (Note: This is one of Berkshire Hathaway's (BRK.B) largest holdings).

• A clarification of the timing of the Evans speech release.

Bob "Burn Baby" Byrne pointed out that the Fed's Evans actually has a breakfast this morning.

Bloomberg had the release at 1:00 p.m. EDT, which I posted. In actuality, Evans has a breakfast at 9:30 a.m. EDT, but the embargoed interview is not being lifted until 1:00 p.m. EDT!

• I would continue to avoid housing and housing-related equities.

A Zillow (Z) representative is on CNBC is talking about a July home price slowdown.

He is talking my book.

I would continue to avoid housing and housing-related equities.

• Run, don't walk to read Andy Borowitz's hilarious take on Bezos's Washington Post purchase.

Hilarious stuff from the New Yorker's Andy Borowitz: "Amazon founder says he clicked on Washington Post by mistake."

• At 1:00 p.m. EDT, Chicago Fed President Charlie Evans, a well-known dove, speaks.

Chicago Fed President Charlie Evans speaks at around 1:00 p.m. EDT.

Evans is a well-known dove, so his tapering thoughts could be consequential and market-impactful.

• Let's take a peek at the overnight and early-morning price action in the major asset classes.

The rundown:

• S&P futures down 2.50;
• Nasdaq futures down 1.50;
• Nikkei up 1% (more talk of pension reallocation out of bonds and into stocks, steel stocks strong and Sony (SNE) down 4%);
• China Shanghai up small (but sixth consecutive daily rise);
• European markets mixed (Germany factory orders up and UK industrial production up);
• euro up;
• crude oil flat;
• gold down $10.20; and
• the 10-year U.S. note yields 2.66%.

Worth mentioning:

• Markets were narrowly traded and volume was listless on Monday, Monday. (Note: S&P futures volume was the lowest non holiday of year.  NYSE volume was the second most sluggish and SPY volume was the lowest since 2007).
• There was a kind of hush all over the market. With the exception of a taking a small rental long in Potash I was inactive yesterday.
• I remain net short -- same old, same old.
• The ISM services composite index jumped by nearly 4 points, to 56, the biggest gain in over four years. A month ago, the metric was at a three-year low! (Weird, but remember these are opinions/views and not measures of activity.)
• Japan's July non-manufacturing ISM dropped to 50.6 from 51.1. The composite of manufacturing and services slipped from 52.3 to 51.1.
• Kohn says that tapering is on track,  and Fisher says tapering is close.
• On the heels of Friday's weak jobs report, IBM (IBM) is cutting jobs.
• In light of his recent newspaper purchases and his closeness to the Graham family, the biggest surprise to me was that Warren Buffett passed on the Washington Post (WPO) deal.Politico asks, "What Is Jeff Bezos Thinking?" 

Quote of the Day from Dallas Fed President Richard Fisher: 

Horseshift! (With Reference to Gordian Knots) August 5, 2013

For six of my eight years at the Fed, we have been working to bring the nation's economy out of recession. The fiscal authorities have for the most part been AWOL during this time, having left the parking brake on during their absence....

The result is that our balance sheet has ballooned to more than $3.5 trillion....

The efficacy of this effort is the subject of significant debate, even internally within the FOMC....

Any CEO or CFO worth their salt, running a company that is large, medium or small, whether publicly or privately owned, has by now taken advantage of this to restructure the liability side of their balance sheet....

As equity prices break new ground daily, the S&P 500 has soared 153% from its March 2009 trough. And yet job creation has been slow in coming. On this crucial front, the second leg of our dual mandate, we do not seem to have achieved much with the trillions of dollars we have poured into the economy through our three QE programs....

First, savers and others who rely on retirement monies invested in short-maturity fixed-income investments ... have seen their income evaporate while the rich and the quick, the big money players of Wall Street, have become richer still....

A corollary of reining in this massive monetary stimulus in a timely manner is that financial markets may have become too accustomed to what some have depicted as a Fed "put." Some have come to expect the Fed to keep the markets levitating indefinitely. This distorts the pricing of financial assets, encourages lazy analysis and can set the groundwork for serious misallocation of capital....

The Fed has created a monetary Gordian Knot....

[T]he U.S. is the best-looking horse in the glue factory. Weak as we have been, we are the best compared to all the rest ... Whatever success we have achieved in clawing our way out of the "Great Recession" has been despite the fiscal and regulatory authorities. Ask any businessman or woman what holds him or her back and they will tell you it's not monetary policy; it is that they can't operate in a fog of total uncertainty concerning how they will be taxed or how government spending will impact them or their customers directly....

In the press:

• CNBC -- "The Rich Are Saving at a Record Pace"; more pension woes. 
• Guggenheim Partners -- Fed's paper losses. 
• Reuters and Financial Times -- Today's housing proposal by the Obama administration.
• Project Syndicate -- "Europe's Fake Normal." 

Important earnings and economic catalysts that could impact trading:

• RBA rate decision
• U.S. trade balance for June (8:30 a.m. EDT).
• U.S. JOLTs job openings for June (10:00 a.m. EDT).
• Obama will deliver speech on housing in Phoenix.
• Fed's Evans speaks (1:00 p.m. EDT).
• Needham Software & Services Conference.
• Earnings before the open -- ADM, ARCC, CHTR, Credit Agricole, CTSH, CVS, D, DBD, DISH, EMR, ENDP, FOSL, ICE, InterContinental Hotels, KORS, LINTA, LMCA, MGM, NSM, PH, RDC, SE, TAP, TDW, THC, TREX, Unicredit, ZBRA, ZTS.
• Earnings after the close -- AMTG, CF, CHRW, DIS, DVA, FSLR, G, GCA, IL, MRO, NUAN, PLT, PRI, Z.