I'm heading home early today to do some weeding and mulching in beautiful East Hampton, N.Y. I end the day plenty short.

Thanks for reading my diary today and enjoy your evening.

As predictable as Sawyer Fredericks' win (my early choice on Twitter!) was on "The Voice" last night, market participants reacted like Pavlov's Dog to any sign of dovish rhetoric by the Federal Reserve.

But what is not appreciated is what has happened to the 10-year U.S. Treasury note yield (+40 bps) and the 30-year note (+50 bps) in the last month -- and that the Fed is becoming less and less relevant.

From Zero Hedge:

The Lindsey Group's Peter Boockvar on the FOMC minutes:

On the prospect of a June hike, which most never thought was going to happen anyway as seen in the fed funds futures market, "many participants thought it unlikely that the data available in June would provide sufficient confirmation that the conditions for raising the target range for the fed funds rate had been satisfied, although they generally did not rule out this possibility." On the other smaller hand, "A few anticipated that the information that would accrue by the time of the June meeting would likely indicate sufficient improvement in the economic outlook to lead the Committee to judge" that its finally time to raise rates.

With respect to the Q1 soft GDP report, "much of this weakness was attributed to transitory factors or statistical noise, with little implication for the pace of expansion beyond the near term...The staff continued to project that real GDP would expand at a faster pace than potential output in 2015 and 2016, supported by increases in consumer and business confidence and a small pickup in foreign economic growth, even as the normalization of monetary policy was assumed to begin."

On inflation, the near term inflation forecast was revised up "a little, reflecting the slightly higher than expected recent monthly data on core consumer prices and a path for crude oil prices that was a bit higher than in the previous projection." Overall of course there view point on inflation remains very benign. On the wage pressure discussion, the minutes said "some information received from business contacts suggested a tightening in labor markets, with shortages of skilled labor reported in some areas and sectors; there had also been an increase in transitions of workers to better paying jobs. Larger wage gains were also reported in some regions, although in other parts of the country wage pressures reportedly remained muted." This said, there was differences of opinions on the relationship between wage growth and inflation.

Bottom line, the FOMC continues to day trade the economic data with the micro management of every data point. As this very short term view of things is clearly apparent, the decision of whether to raise or not in June (which of course is unlikely) will likely come down to the May jobs report in a few weeks where not just the headline figure will be a focus but just as much may be the unemployment rate and average hourly earnings. Either way and as I keep saying, the long end of the bond market at least has begun tightening policy. For whatever reason it's doing it, it's doing it. The 10 yr yield is up 40 bps over the past month and the 30 yr yield is higher by 50 bps.

The FOMC minutes were a non-event. The ramp after the release was silly -- at least to me -- as there was nothing incremental.

Now traders can go back to buying Shake Shack (SHAK) -- so carry on!

Bob Pisani is on CNBC has been discussing the risks facing exchange-traded funds. This is an important topic, so here is my complete view on the subject from a recent post: "The Next Potential Market Disaster: ETFs".

I am now back to a full position in Twitter (TWTR). It's a matter of reward vs. risk as I like the ratio of upside to downside at $36.70 per share (back to my initial purchase price in 2014).

Again, I don't see a short-term catalyst; this is an investment.

Watch predictions!

A lot of questions on Twitter (TWTR).

While there is no near-term catalyst, I continue to pick away at the stock, slowly.

Here are the headlines from the company's appearance today at the J.P. Morgan conference:

• Midday musings from Sir Arthur Cashin:

Airlines getting pounded, pushing Transports down to the 8500/8525 testing area mentioned earlier.  Transport weakness weighing on Industrials a bit but key focus remains on yields.

Run rate at noon projects a so-so final NYSE volume of 680/760 million shares.

• From Sir Arthur Cashin of UBS:

Dow Transports sell below superficial support at 8600 and now confronts the more critical 8500/8520 support.

Stocks a bit hypnotized by yield on the ten year. It has the outline of a head and shoulders. Left 2.31 (5/7); Head circa 2.37 (5/12); and right 2.30 (5/19). The neckline is circa 2.1%. It could be negated by a rise above 2.37% or triggered by a drop below 2%. Bonds at a critical juncture.

Here is a three-month chart of Citigroup (C) and JPMorgan (JPM) compared to the SPDR S&P 500 (SPY).

I cut my teeth on the sector and have some street cred in the group, having been Putnam's bank, thrift and GSE analyst in the 1970s. I also coauthored the book Citibank with Ralph Nader when I was a "Nader Raider" at business school in Philadelphia.

While this is my most-favored market sector, I would now give the bank stocks some time to back and fill. Optimism on the group has moved directly proportional to the share price rises, with many non-believers two months ago now converted devotees. 

But, as Granmda Koufax used to say, "Dougie, investment trees don't grow to the sky."

I am not selling any of my stocks, though those with a short-term time frame might consider harvesting some profits. I am a buyer on weakness, as I believe the banks will be the No. 1 market sector over the next two or three years.

Editor's Note: This post updates a previous version, titled "Don't Chase Bank Stocks Any More."

• Airlines' wings are getting clipped.

The airline sector is seeing large price drops after Buckingham Research downgraded Southwest Airlines (LUV) to Neutral from Buy.

The brokerage's analyst has a more-cautious revenue outlook for Southwest, due to a worsening competitive backdrop and lean competitors vowing to compete aggressively.

Buckingham trimmed its 2016 outlook on capacity trends and revised Southwest's operating margins downward to 17% in 2016 from 19.7% in 2015.

I am paying $2.72 for more SPY June $212 puts now.

I remain short on Caterpillar (CAT) -- it's still on my Best Ideas list (short).

The company has released its three-month-rolling sales numbers as of April 30. World machine sales are off 11% vs. a 12% drop as of March, while Energy and Transportation retail sales are down 8% compared to a 1% decline as of a month earlier.

Retail Sales of Machines by geographic region for the latest three-month-rolling period vs. the same period last year are:

• Asia Pacific -- down 16%
• EAME -- off 9%
• Latin America -- 44% lower
• North America -- up 5%
• World (as previously noted) -- down 11%

Energy & Transportation Retail Sales by industry for the latest three-month rolling period vs. the same period of 2014 are:

• Power Generation -- off 5%
• Industrial -- down 11%
• Transportation -- 24% decline
• Oil and gas -- off 3%
• Total -- down 8%

I have two "Trades of the Week" on this week:

• I am long SPY June $212 puts at about $3.
• I am long Yahoo! (YHOO) under $42.

I am once again buying Yahoo! (YHOO) shares (under $42 in premarket trading) based on the opportunity presented in the stock's decline on Tuesday.

With shares of YHOO and China's Alibaba Group (BABA) trading lower and given the ambiguous nature of the IRS statement on Yahoo!'s proposed spinoff of its BABA stake, the upside/downside ratio is finally compelling. 

It's important to note that even if the IRS spinout ruling is agreed to (only 33% chance, from my perch) the value of the residual Yahoo! is now slightly negative. 

First, a bit of history.

I know Yahoo! well from an analytical understanding. Last year, Yahoo was made a Kass Katch in late September at about $40.

My principal focus was a "sum-of-the-parts" analysis. My main catalyst at the time was an expected a tax-free exchange of Yahoo!'s BABA holdings -- which was indeed announced shortly after my buy. Within four or five weeks, I sold out the stock for a near a $6-a-share gain.

Yahoo!'s shares continued rising towards $52 after I sold -- until Alibaba recorded an earnings and sales miss, then the stock came back to earth. At that time (when the shares were in the high $40s to low $50s), I debated several bulls like our Eric Jackson and suggested Yahoo! should be avoided because of a lack of transparency and opaqueness at BABA.

Eventually, BABA shares tanked from over $120 in November to briefly flirt with $80. But the company recently came in with a much-better quarter and the shares have risen by about 10% from that low point of around $80.

Still, as mentioned, the IRS yesterday made a statement that questioned Yahoo!'s ability to spin off its BABA holdings on a tax-free basis.

To me, it's unclear if the IRS statement will impact Yahoo!'s BABA spinoff. (Again, I would arbitrarily give it a 33% possibility.) Moreover, as BABA's share price has declined from $120 to $88, this reduces the downside risk to Yahoo! stock. And so does YHOO's drop from $44 to $41!

The bottom line: I believe the BABA spinout will occur, and that Yahoo! shares can return to the high $40s over the next three to six months. But even if the IRS statement becomes a ruling, I see some margin of safety for Yahoo! stock based on my belief that the market is putting zero value on the company's non-Asian investment assets.

"Dougie likens the 'stupefying' market action of late, and its utter divorce from economic fundamentals, to the popularity of the Kardashians show on the E! Channel. There's no rhyme of reason for the popularity of the show, he says, because it's simply uninteresting. Doug fails to consider that people just like to look at pretty girls sometimes and to get a taste of vicarious glamour -- especially when there's nothing much happening in their own lives worth clinking a champagne glass over. As to the public's attraction to the stock market, that one's even more easily explainable: It does nothing but ... go up.For now."

-- Josh Brown, The Reformed Broker

I remarked in yesterday's opener that the Kardashians stupefy me, and so does the market. I also cited 12 headwinds that keep me up at night -- and that most investors are disregarding.

This morning, I go "Back to the Future" and chronicle how stretched the rubber band of valuation is -- a point thus far neglected. Thanks to the Fed's Zero Interest Rate Policy and the excess liquidity/cowbell provided by the world's central bankers -- those wonderful folks who brought us past bubbles and a bear market -- global equities have continued ever higher.

Taken to the extreme (and not meant to be a forecast), if we use six-decade mean profit margins coupled with the average price-to-earnings multiple of large-cap stocks (excluding financials and utilities) over the last 60 years, that produces a near 50% decline in the S&P 500 index.

Valuation is not a timing tool -- but I would be mindful of the following chart (which updates my pal Steve Leuthold's Leuthold Group table entitled "Back to the Medians"):

From The Lindsey Group's Pete Boockvar: 

According to the MBA, the average 30 yr mortgage rate ticked up another 4 bps to 4.04%, the 4th week in a row of gains. This is the highest level since late December, but is still historically low of course. In response, refi applications were basically flat, rising by .3% w/o/w after a 17% cumulative drop over the prior 3 weeks. On a y/o/y basis, refi's are up by 11.2% but this is a much slower trend than seen just a few months ago. Purchase applications fell 3.7% w/o/w to a 5 week low but remains 11.3% higher y/o/y. After seeing yesterday's housing start figure which reflected a bounce back after construction slowed during the winter, the data on the sales of existing homes in April will be released tomorrow. The focus will remain on the housing decisions of the first time household. To rent or buy, that is the question. It's always a question of course but it's clear which the way decision has been going over the past few years.

The FOMC minutes from the April meeting at 2pm will be the key focus this afternoon but I'll repeat what I said 3 weeks ago, with so much data to see between that meeting and the June one, why should the FOMC have leaned heavily in any one direction. Thus, I expect a directionless set of minutes where double D will be repeated many times, data dependent, whatever that means. Either way, the 10 yr note has already tightened about 25 bps for them as its yield was exactly 2% on April 28 vs 2.27% today. The 2 yr note then was .56% vs .60% today and the 30 yr bond has tightened by 35 bps.

After the new record high in the S&P 500, II said Bulls rose by almost 3 pts to 50.6 from 47.5 last week. Bears remained depressed at 15.8 with a 3.1 pt drop in those expecting a Correction. Bulls have certainly been right on calling the action in the S&P 500 and DJIA but the NYSE Composite Index that includes all NYSE listed stocks, also including ADR's, REITS, and tracking stocks, is up a TOTAL of 1% (not included dividends) since early July 2014. This index has been essentially churning for the past 10 months but I want to be clear, this NYSE index is about 68% US with foreign ADR's making up most of the balance with a total of 1867 stocks. The Russell 2000 is up by 3.9% over the past 10 1/2 months.

The only data point of note overseas was the Q1 GDP report from Japan. It rose 2.4% annualized vs expectations of up 1.6%. Helping the beat was a downward revision to Q4 and a two tenths less than expected deflator. Internally, private consumption and inventories rose a touch more than expected while trade and business spending were a bit light. On a real basis, GDP is about back to where it was in Q2 2013 due to the damage from the consumption tax. On a nominal basis, Japanese GDP is back to where it was in 1994. On the better than expected figure, the Nikkei rallied .9% to close at its highest level since April 2000. Improving corporate earnings, higher ROE's and a much better focus on shareholder value have been the main drivers on top of massive QE of course and I expect all of this to continue.