• As I mentioned, I have a research assignment and will be out for several hours.

Small.

I am putting out a small short rental in IBM (IBM) at $181.19 now.

• Here are his musings at midday.

Midday musings from Sir Arthur Cashin:

Lazy levitation as FOMC convenes.  Other assets also show little change.  Nasdaq index problems not spilling over into other trading.

Run rate at 12:30 projects to NYSE final volume of 620/700 million.

• I take issue with the statement that one should not sell/short companies with high cash positions.

On CNBC, several panelists on "Fast Money" are making the statement that one should not sell/short companies with high cash positions.

They are using IBM (IBM) and Apple (AAPL) as examples. I couldn't disagree (respectfully) more!

Here is IBM vs. market over the last six months.

And here is Apple vs. market over the last 12 months.

• The Russell 2000 is lagging behind the S&P 500.

This is the first day in a while that the Russell 2000 has lagged the S&P 500.

Stay tuned.

• Here they are.

BlackRock's Larry Fink speaks his mind:

• "Fink says it's 'imperative' that the Fed begin to taper."
• "Fink says there are 'real bubble-like markets again.'"
• "Fink calls market 'over-zealous.'"

• At $523.80.

Housekeeping item: I have covered this morning's Apple (AAPL) short rental at $523.80.

• I will be out from 1:00 p.m. EDT to near the close.

A heads up: I will be out from 1:00 p.m. EDT to near the close as I try to complete the research on my next long idea.

As I have written repeatedly, thorough analysis is time consumptive.

Thanks for understanding!

• And adding to QQQ short.

I am staying with my Apple (AAPL) short and adding to my PowerShares QQQ (QQQ) short.

• Is a more difficult market backdrop around the corner?

Defensive consumer staples continue to be the World's Fair and are signaling slowing growth and possibly a more difficult market backdrop.

• QE trumps everything -- until it doesn't.

Economic data does not warrant the start of tapering, but most of the Fed's members want to vacate QE given the potential risks of a large Fed balance sheet, suppression and distortion of interest rates, artificiality of selected asset prices, etc.

Thus far, this dilemma in policy has not been upsetting to the U.S. stock market.

Nor has continuing weak domestic economic data recently stopped the relentless climb in stocks.

QE trumps everything -- until it doesn't.

We are moving ever closer to a tapering, and Mr. Market will sniff it out well in advance and discount the turn in policy.

• Even though the stock is down $20 in about a week, I would avoid it.

Tesla's (TSLA) shares are now down $20 since my Oct. 22 negative column.

I would still steer clear.

• It has further to fall before I would buy more shares.

Altisource Residential (RESI) is getting hit.

I would buy at $24-$25, so a ways lower.

• But I am sticking with it.

We now have disappointing action in ProShares UltraShort 20+ Year Treasury (TBT), with little follow-through.

But I am sticking with short bond trade.

• The Conference Board's October consumer confidence index was the the weakest reading since April.

The Conference Board's October consumer confidence index was 71.2, below the estimate of 75.0 and well down from 80.2 in September. It's the weakest since April and follows the soft University of Michigan figure on Friday.

Most of the weakness was in the expectations component, which dropped 13.2 points while present conditions were down by a more modest 2.8 points.

The important answers to the labor market questions were mixed as those who said jobs were plentiful was basically flat, but those who said they were hard to get rose 2.2 points to a four-month high. Those who plan to buy a home and a car within six months both fell from September.

Bottom line: The Conference Board is blaming the shutdown and debt ceiling drama for the "large toll" it took on consumers' expectations. It said, "[S]imilar declines in confidence were experienced during the payroll tax hike earlier this year, the fiscal cliff discussions in late 120'12 and the government shutdown in 1995/1996. However, given the temporary nature of the current resolution, confidence is likely to remain volatile for the next several months."

• Their continued weak price action is cause for concern.

The weak price action in Ford (F) and in financials continue to be of concern to me.

• Via TZA and TWM.

I have added to my Direxion Daily Small Cap Bear 3x Shares (TZA) and ProShares UltraShort Russell2000 (TWM) longs.

• Yahoo! gets a raise from Bernstein.

Bernstein raises Yahoo!'s (YHOO) price target to $40 a share (based on a generous Alibaba valuation).

• At $537.

As you can read in my opener, I have a more cautious view of Apple (AAPL) than Jim "El Capitan" Cramer expressed this morning on CNBC.

Come to think of it, I have a more cautious outlook on the market than most.

I have shorted Apple (AAPL) at $537 this morning, and I have added to my PowerShares QQQ (QQQ) short, raising my overall net short exposure to over 30% now.

• The real estate maven follows up on yesterday pending home sales data.

More from real estate maven Mark Hanson on the housing release yesterday:

This morning's Pendings were particularly ugly.  My note didn't do it justice. Therefore, I constructed two quick charts putting the data in better perspective.

NAR "Pendings Sales" lead "closed sales" -- the NAR "Existing Home Sales" report -- by one to three months. They also are a coincident indicator to the Census Bureau's "New Home Sales" report, as they are counted at "contract", which is the same as a existing home "pending sale".

The chart below show the "seasonal" drop from each years' "peak" pending sales to Sept for the past 12 years.

Bottom line:  The three years with the closest comps to Sept 2013 were:

1) the 2010 Homebuyer Tax Credit sunset "hangover" (this comp keeps coming up in every dataset exactly as I predicted in June when rates surged;

2) the 2007 great crash when housing demand first fell off a cliff

3) the 9-11 trajedy

All of these were important inflection points for housing.

Moreover, Sept should have been a strong month, as there was still rate-chasers jumping in the market and demand being pulled forward from those worried about the Oct Gov't debacle.

Next month when "Oct Pendings" are released -- that fuel Nov and Dec year-end sales -- I suspect we see some of the sharpest "peak to Oct" seasonal drops on record. Obviously, this means YoY declines in final sales well into Q1 at least.

Item 1)  Sept Pending Sales seasonal percentage drop from each years' peak

The closest comp years -- 2001, 2007, 2010 -- to the plunge last month were important inflection point years for the sector.

**note, the "West" outperformed in this chart because peak Pendings were particularly weak this year. In fact, Sept Western region pendings were at a 6 year low.

Item 2) Oct MoM Pendings are generally "Seasonally" strong.  But early indications suggest this month was slower than September

Next month..."Oct" Pending Sales are generally strong MoM as buyers jump in to close escrow before the Holidays.

But due to the Gov't debacle I suspect they were down slightly.

If so, this will produce sharply lower YoY final sales into year-end and beyond.

• So far.

Bond yields are rising a bit.

Thus far, ProShares UltraShort 20+ Year Treasury (TBT) was a good add yesterday.

• Here is his take.

The Lindsey Group's Peter Boockvar reviews the Case-Shiller release:

Home prices in August rose 12.8% y/o/y, a touch better than the forecast of up 12.5% and is the 6th month in a row of double digit increases. This is wonderful if you own a home but certainly not if you want to buy one at the same time mortgage rates are higher. The y/o/y gain was led by the bombed out Las Vegas home market that saw a 29.2% increase. New York continues to lag at the bottom with just a 3.6% rise. Bottom line, this August data reflects closings that happened in June and July when rates just started moving higher. Thus, price increases should start to show moderation in the months ahead. The higher prices are likely impacting the investor class and its pace of purchases and certainly the 1st time home buyer whose incomes are growing only modestly and now face mortgage rates well above the early part of the year. So far, the recent drop in mortgage rates has done little to spur buying but we'll get a fresh update on that tomorrow.

• The company's earnings came in below expectations, and it lowered guidance.

Cummins (CMI) misses EPS estimates and lowers expectations.

• Namely, retail sales and PPI.

Retail sales in September were about in line with expectations but were down ex-gasoline by 0.1% month over month due to a 2.2% fall in auto sales/parts. The core rate of sales, which takes out gasoline, autos and building materials, was up 0.5% month over month and 3.6% year over year. The 3.6% gain is little changed with the past few months but compares with the 5%-5.5% average range in the 1990s and mid 2000s. Sales gains were seen in furniture, electronics (new Apple (AAPL) phones?), building materials (just 0.1%), food/beverages, health/personal care, sporting goods, online retailers and restaurants. Department stores and clothing were the two areas that fell.

Bottom line: Sales were essentially flat month over month ex-gasoline stations, and we have to assume will fall in October with everything that went on. Gasoline prices last night fell to the lowest of the year and are down 7% year over year, a hoped-for support to spending on other things but with the still headwind of modest income and job growth providing an offset.

Headline PPI fell 0.1% in September but was up 0.1% at the core. The 0.5% increase in energy prices was more than offset by a 1% drop in food. Helping to lift the core rate was a rise in car and truck prices. Inflation in the pipeline as measured by intermediate and crude goods prices was modest. More relevant for the market and the Fed will be tomorrow's release of the CPI, in which both headline and core prices are supposed to be up 0.2% month over month.

• Illustrated.

Steve "Hernán" Cortés "de Monroy y Pizarro," First Marquis of the Valley of "Fast Money," takes a differing view (from mine) of Treasuries in the chart below.

He is bullish; I am bearish.

• Props from The New York Times' Andrew Ross Sorkin.

I had a nice shout-out this morning in Andrew Ross Sorkin's New York Times column, "Frenzy of Deals, Once Expected, Seems to Fizzle."

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

The rundown:

• S&P futures are up 1;
• Nasdaq futures are up 2;
• Nikkei is down 0.41% (Komatsu plunged 8% after posting disappointing earnings);
• China Shanghai is down 0.25% (despite the People's Bank of China resuming open market liquidity injections);
• European Markets are up;
• euro is up;
• crude is down $0.25;
• gold is down $5; and
• the 10-year U.S. note yields 2.51% (down 1 basis point day over day).

Worth mentioning:

• Stocks bent for a while but didn't break and closed modestly higher on Monday. Markets continued to respond positively (on weak volume) to disappointing economic data and the hope of QE forever. Pending home sales dropped by 5.6% (unchanged was expected), for the biggest month-over-month drop since September 2001. Industrial production increased 0.6% (0.4% was expected), as utilitiesjumped to 101.6 from 97.3. Manufacturing Production increased 0.1% (0.3% was expected). Dallas Fed manufacturing activity declined to 3.6 from 12.8 (10 was expected). U.S. manufacturing production barely rose in September, edging up 0.1% last month after advancing 0.5% in August. A Yale professor admits to staying up at night, fretting about the U.S. economy.
• I day added to ProShares UltraShort 20+ Year Treasury (TBT) yesterday and did little else.
• Markets are slightly higher around the globe. I have added to my PowerShares QQQ (QQQ) short in premarket trading at $83.06.
• Arguably, the global stock markets continue to be materially sourced in central bank policy rather than economic fundamentals. All traders and investors should be cognizant that the a market that has disconnected from economic fundamentals is vulnerable to a change in sentiment and/or an exogenous shock.
• Bond yields (10-year) have hit the bottom of my projected range (2.5% to 2.85%). As mentioned previously, I took a long TBT position about a week ago and I added yesterday.
• Mixed readings and volatile after-hours trading in Apple (AAPL) reflect concerns about the company's deferred revenue disclosure. Apple's quarter was largely in line, although tthe iPhone sellout was less than expected. I expect a modest lowering in the next-quarter and full-year 2014 results from the more aggressive analysts due to the higher deferred revenue (impacting first-quarter 2014 sales by $500 million and gross margins by about 75 basis points). If we adjust for the accounting change, gross-margin guidance is up 80 basis points sequentially despite a 265-basis-point increase from iPhone mix and volume. This highlights the more competitive landscape that to many remains the key issue for the shares. I continue to view March-quarter and full-year consensus estimates as too high. The upside in the shares remains centered around China Mobile (CHL) and new products. Bottom line -- at $530 a share, the reward vs. risk seems neutral, so the stock might be a trading sardine subject to the broader market whims and direction.
• Is Tom Keen ("The Blacklist") telling the truth? I don't think so.
• Yesterday's quote of the day -- "Janet Yellen at the Fed is equivalent to having a biology schoolteacher who has never seen blood perform brain surgery" (Nassim N Taleb).
• The World According to Peter Boockvar --
  
  Two days after the NY Times pens a piece titled "In Fed and Out, Many Now Think Inflation Helps" saying "there is growing concern inside and outside the Fed that inflation is not rising fast enough" and that higher inflation is what the US economy needs "to escape from a half decade of sluggish growth and high unemployment," the Reserve Bank of India raised rates for a 2nd straight month. The RBI said "it is important to break the spiral of rising price pressures in order to curb the erosion of financial saving and strengthen the foundations of growth." The RBI seems to understand that low inflation is the genesis of healthy growth while many here are talking about inflating our way out of our economic malaise seemingly forgetting about the experience of the 1970's and not understanding that the higher interest rates that would coincide with higher inflation would kill the US economy that has been spoon fed artificially cheap money. While the CPI seems to be a focus of those interviewed by the NY Times, they apparently are missing the massive asset price inflation that is currently going on. This discussion comes as the FOMC meets for a two day meeting where the only possible change I see is a lowered unemployment threshold to maybe a range of 6.5-7% that would trigger some baby taper rather than the now unrealistic level of 7% with the unemployment rate currently at 7.2%.
  
  Continuing to play catch up with the government back open, we'll get more September data today with PPI and Retail Sales in addition to the S&P/CS home price index and Business Inventories for August. The only October # will be Consumer Confidence.
  
  In China, the PBOC finally announced a reverse repo that would inject about $2b into their money markets but it wasn't enough as 7 day repo rates were up slightly and the Shanghai index, after jumping on the news, fell .2% on the day. Japanese stocks continue their multi month consolidation, falling .5% even though retail sales in September were better than expected.
  
  The only thing to note in Europe is that while the indices are higher across the board, the bank stocks are trading at two week lows after some mixed earnings especially from DB.

In the news:

• Foreign Affairs -- "The Incredible Shrinking Buffer." 
• The New York Times -- "Why Arabs Fear a U.S.-Iran Détente."
• The Wall Street Journal -- "Economic Failure Causes Political Polarization."

Some possible economic and earnings catalysts:

• U.S. PPI for September (8:30 a.m. EDT, PPI +0.2% estimate, core +0.6% estimate).
• U.S. retail sales for September (8:30 a.m. EDT, unchanged estimate, ex-autos +0.4% estimate).
• Case-Shiller home price index for August (9:00 a.m. EDT, +12.5% estimate).
• U.S. Consumer Confidence for October (10:00 a.m. EDT).
• RBI rate decision.
• Earnings before the open -- ACI, ACT, ADM, AET, AGCO, AGN, AMTD, APD, BP, CMI, CRS, CVLT, DAN, DDD, Deutsche Bank, ETR, FIS, GT, HUN, JBLU, JCI, LLL, Linde, Lloyds Banking Group, Luxottica, LYB, MDC, Nokia, OXY, PBI, PFE, SCHN, Standard Chartered, Tokyo Electron, TRW, UBS, VLO, VRTX, VSH, X.
• Earnings after the close -- AFL, AJG, AMP, AZPN, BIDU, BXMT, BXP, CACI, CBG, CRUS, DWA, EA, FISV, FLEX, GILD, GNW, IACI, KIM, LNKD, PLT, SFLY, SWI, TRLA, TTWO, WBMD, WNC, WSH, WU, YELP.