Thanks for reading my Diary today and this week.

Have the best weekend!

I previewed my expectations for Tesla's (TSLA) first-quarter earnings earlier this week. I have since had a chance to review the numbers and these are my observations:

• It is disgraceful that Wall Street blindly accepts Tesla's unconventional accounting as if it is a real reflection of what the company is earning.
• GAAP (generally accepted accounting principles) is just that -- generally acceptable.
• Tesla chooses what puts it in the best light and the mindless analysts go along with it-- not just for this year but for the projections five years from now, which serve as a basis for valuations.
• As Tesla is a bona fide company now with billions in revenue and expenses, why is it being treated differently then the rest?

Therefore, I have a new proposal for defining Tesla's earnings: CRAP (completely ridiculous accounting principles).

Many companies lease and use GAAP, but Tesla's reports are CRAP. There is no question that Tesla would have to pay its people more without offering options, so excluding them is absurd.

Jim "El Capitan" Cramer has the ticket: Buy Tesla's car, not Tesla's shares.

I'm adding to Potash (POT) and Oaktree (OAK) on their recent pullbacks.

Also, I'm bidding for my closed-end municipal bond funds to take the position to close to 20%.

As I mentioned yesterday and earlier today, the bank stocks are telling a very bullish story, which is supported, in my view, by the favorable emerging fundamentals.

The sector is a buy on any dip -- several reside on my Best Ideas List.

As I mentioned, our electrical system was compromised by the utility company that shorted the main line near my office.

The market appears to be near its peak but, interestingly, the bond market's gains have nearly evaporated.

Without stock prices it's tough to make more of a comment than that.

The utility company blew up my main electrical line, so I have lost power. Radio silence!

• Midday musings from Sir Arthur Cashin:

S&P plowing into resistance at 2116/2120. Record closing high was 2117 and intra-day was 2126. Dow has already surpassed its former highs. Yield on ten year softens again, keeping bid under equities.

Doing little, but watching in awe.

• Peter Boockvar reflects upon April's jobs data: 

April job gains of 223k headline and 213k within the private sector were about in line with expectations but the prior two months were revised down by a net 39k with almost all of that in March where the job gain totaled just 85k vs the already weak print of 126k. Smoothing out the past 4 months has average private sector payroll growth of 193k, about in line with what ADP told us on Wednesday with their average of 191k. The household survey saw 192k jobs added which combined with a 166k person increase in the labor force resulted in a one tenth downtick in the unemployment rate to 5.4% and is just two tenths from the upper end of the year end 2015 Fed forecast which they consider full employment (unless they move the posts again). The U6 also fell one tenth to 10.8% and both are the lowest since 2008. The participation rate was up one tenth but still at a very low level of 62.8%. The disappointment within the data and what the S&P futures are celebrating is the .1% m/o/m increase in the average hourly earnings which was one tenth less than expected. The y/o/y gain of 2.2% was also below the 2.3% that was forecasted. Hours worked was unchanged.

Bottom line, the downward revision to March (even though BLS and ADP are now in line) and the soft earnings component are what markets are cheering as the Fed will use it as an excuse to maybe wait even longer to raise rates. But, the unemployment rate keeps dropping which inevitably lead to more sustained wage gains. There are plenty of anecdotal signs of wage gains but it has yet to show up in the BLS payroll data just yet. Part of this could be the mix shift, as many of the new jobs being created are for younger and less skilled workers which by nature are paid much less than the existing labor force. As an example, those with less than a high school degree saw its ranks of employed go up by 233k. Those with a college degree or higher saw the number of employed fall by 249k.

My analysis of the jobs report is that it was weak -- and bad news is good news these days:

•  A sharp revision in prior months'.
•  Average hourly earnings were poorer than expected -- both sequentially and year over year.

Bottom line, the growing chasm between the real economy and asset prices continues to widen (with the ramp in futures this morning).

I would be shorting more aggressively if I was around this morning.

The futures market has exploded off the perception that the April jobs market is "Goldilocks" and that the Fed will wait to boost rates.

I just put out a medium-sized SPY short at $211.02, but I will be out until early afternoon so I'm reluctant to do much else.

• From The Lindsey Group's Peter Boockvar:

David Cameron, the newly reelected PM of the UK said it very simply last night, "this is clearly a very strong night for the conservative party." The pound is having its best day on a percentage basis vs the US$ since March and the FTSE 100 is up by 2%. Gilt's are also rallying. Visibility in policy and a more business friendly administration who won much more seats than expected is what is being celebrated.

In Germany the economic data was mixed pointing to further evidence that it's still not smooth sailing for the economic power of Europe in light of economic softness with many of its trading partners. Industrial production in March fell by .5% m/o/m, well less than expectations of up .4% and February was revised down by two tenths. The index level is at the lowest since November. On the flip side and helped by the weaker value of the euro, exports were up by 1.2% m/o/m vs the estimate of up .4%. IP in Italy was an upside surprise with a .4% gain m/o/m in March, twice expectations.

These are some quotes from Mario Draghi that the ECB just published that he penned to an EU lawmaker. "Volumes of purchases of public sector securities, covered bonds and ABS are in line with the announced figure of 60b euros per month...The implementation of the expanded asset purchases program is proceeding smoothly... Concerns about the scarcity of bonds are therefore not warranted at this juncture...While there is no reason to change the composition of the purchases at the moment, the program is sufficiently flexible to be adjusted should circumstances change." I say, his buying may be going smoothly but the distortions and market reactions are anything but. He seems perfectly fine with the concept of trillions of euros of sovereign bonds with negative yields that the ECB is buying a chunk of and a move in the German 10 yr bund yield from 5 bps to 75 bps in 14 trading days is anything but smooth. It should be very disturbing that the abnormal is now considered the acceptable norm in the world of interest rates and monetary policy.

After markets closed in China the PBOC released its Q1 monetary policy report and here are some headlines I grabbed off BN: 'PBOC reiterates prudent monetary policy, PBOC to further focus on policy fine tuning, PBOC says China's rising debt to weigh on economy, PBOC to keep yuan exchange rate basically stable, PBOC to further promote interest rate liberalization, economic growth still relies on government led investments, economic downward pressure is occurring amid process of economic restructuring and curbs to overcapacity.' Also of note in China, the China Banking Regulatory Commission said nonperforming loans for the Chinese banking system saw its biggest quarterly increase in Q1 since data became available in 2004. The bad loan ratio of just 1.39% is the highest in 5 years. This came after disappointing trade data where exports fell 6.4% y/o/y instead of the expected 1.6% gain. Exports to the US rose but fell to the EU (strong yuan vs euro) and to Japan. Imports fell by 16.2% y/o/y vs the estimate of down 12.2%. The Shanghai index rallied 2% in response on the belief of even more stimulus to come but the PBOC comments don't point to any upcoming monetary aggressiveness, maybe just more 'fine tuning' as they said.

With respect to US payroll growth in April, if the expected private sector gain comes in line with the consensus of 225k, the average of 177k over the past two months would be similar to what ADP said with its two month average of 172k. I do this to smooth out the soft March payroll number which was 50k less than the ADP report. Key of course will also be the average hourly earnings figure where a .2% m/o/m and 2.3% y/o/y gain is foreseen. The unemployment rate is expected to tick down another tenth to 5.4% and would be within spitting distance of what the Fed considers full employment even though they still have the fed funds rate at zero.

Like the New York Yankees' Alex Rodriguez, the bond and the equity markets continue to fool the most people possible.

• While the market is still trendless and has no memory from day to day, it seems to me that the process of making a major top in the S&P 500 represents the highest probability.
• Numerous economic and market outcomes remain -- being certain and self-confident is not a tact to take. In other words, be flexible in opinion (market view) and strategy, there are so many moving parts to today's investment mosaic.
• I strongly believe that there is no margin of safety left in the U.S. stock market. This means that the reward vs. risk is asymmetric.
• I recognize, however, that the market is statistically down but not out ... yet. (The S&P is less than 2% from all-time highs). It might be bent but it is still not broken, so reacting (not anticipating) is (still) the best strategy for now and explains why I am modestly net short.
• Nevertheless, in theory (and based on my continued interpretation of price action), I have moved from "shorting the rips and buying the dips" to "shorting the rips and not buying the dips" in a steady but judicious manner. 
• I expect the market's correction to occur in an irregular fashion, providing continued opportunities both on the long and short sides.
• For me, trading trumps investing over the next few months.
• I have moved into a slightly short position via defined SPDR S&P 500 (SPY) June puts and I plan to expand my short exposure on strength.
• The fixed-income market also feels like it is at an inflection point. Bonds appear to be transitioning from bull to bear, and the end of a three-decade bull market in bonds may be just about over as the bond vigilantes come out of a 25-year hibernation.
• Volatility in the stock and bond markets will probably be with us for some time. Bonds, in particular, exhibit, extreme volatility Thursday when the 10-year yield rose to 2.31% from 2.23% and went back to 2.15% this morning. Position accordingly (and reduce "VAR").
• Techncials are shaky; new highs vs. new lows are deteriorating while the percentage of stocks above their 200-day moving averages is stinking up the joint.
• Speaking of shaky, individual stock blow-ups are accelerating. Yesterday it was Shake Shack (SHAK), which fell by more than $9 ... Cheeseburger, Cheeseburger! Cheeseburger!
• Janet Yellen warned us, again, and this time her warnings might be heeded. Fool me once shame on you; fool me twice, shame on me.
• Happy Mother's Day to all the moms.

Finally: 

"Imagine" (DJ Dougie Remix)

Imagine there's no more Fed easing

It's easy if you try

Only sovereign debt rates below us

Above us only sky

Imagine all the investors

Trading only for today

Imagine there's no more liquidity

It isn't hard to do

Nothing to buoy stocks and bonds for

And no Tesla (TSLA) too

Imagine all the investors

Trading only for today

You may say I'm a Perma-Bear

But I won't be the only one

I hope someday you'll short like me

And the world will be as one

Imagine no Netflix (NFLX)

Wonder if you can

No need for greed or streaming

A brotherhood of man

Imagine all the investors

Trading only for today

You may say I'm a skeptic

But (trust me) I'm not the only one

I hope someday you'll short like me

And the world will live as one

I'll be out between 10 a.m. and 2 p.m. traveling and attending research meetings. TGIF!

• If you are involved in Tesla (TSLA) -- either long or short -- you should read this.
• China's economic downturn seems to be accelerating -- based on the April trade data.
• In Europe, Germany's industrial production print fell well short of expectations.