$1 billion to sell market on close.

Thanks for reading my Diary today.

Next up, dinner at Mar-a-Lago in Palm Beach.

If possible I will try to take pictures and periscope.

Enjoy your evening.

Mine could be memorable!

It looks like I might have chosen the correct index (the Nasdaq) as my "Trade of the Week" (short PowerShares QQQ Trust ETF (QQQ) , long ProShares Trust UltraPro Short QQQ ETF (SQQQ) ).

There are rumors of a larger-than-average market on close sell program -- perhaps influencing a bit of a whoosh lower in the last 30 minutes.

Stay tuned.

"It's not a joke, it's a rope, Tuco. Now I want you to get up there and put your head in that noose."

-- Blondie, "The Good, the Bad and the Ugly"

I am frankly exhausted from the associated issues following my best friend's son's death earlier in the week. I am dragging and I am finding it hard to concentrate on the markets, so there will be no "Takeaways."  

It's been a relatively quiet day in the markets, so let's move to the abbreviated Monarch Notes form of "Takeaways," with "The Good, The Bad and The Ugly."

The Good

* The market bent yesterday but today it stabilized. (A good showing, all things being considered - but in no way decisive going forward).

* Gold +$5/oz.

* Crude oil +$0.50 and the rise is taking up some energy stocks.

* The Russell returned to the spotlight.

* Life insurance - particularly Lincoln National (LNC) (on an upgrade). Hartford Financial Services (HIG) gets a small lift.

* Retail returned from the depths. The standouts - L Brands (LB) , Kohl's (KSS) , Bed Bath (BBBY) , Nordstrom (JWN) and Gap (GPS) .

* Ag equipment - after an analyst upgrade yesterday.

* Brokerages.

* Homebuilders catch a bid.

* Day one of the Masters Golf Tournament.

The Bad

* Twitter (TWTR) on an insider sale and institution of a 10b-51 program by a co-founder.

* Though the yellow metal is higher, not so for junior gold miners. (Me no likey for SPDR Gold Trust (ETF) (GLD) going forward, if it continues).

The Ugly

* Wheat -8.

* Advanced Micro Devices (AMD) on a downgrade.

* The Masters weather and winds.

This week's Trade of the Week was to short the Nasdaq.

From my friends at Nautilus Research -- here is some amazing data on the Nasdaq - which has experienced its longest advance ever:

This morning, Twitter's (TWTR) co-founder Evan Williams announced that he will be selling a portion of his holdings in a new prearranged 10b5-1 plan over the next twelve months.

"After a year and a half of no selling, I have filed a new 10b5-1 plan to liquidate a minority of my TWTR over the next year," Williams wrote in a blog post. "This plan kicked in on Monday. It actually pains me to be selling at this point, but this sale is all about personal context, not company context."

The plan will reduce his 5% ownership to about 4%.

I see this as a modest but not significant negative and I would be a continued buyer on this news.

Mid morning musings from Sir Arhtur Cashin:

The stock market appears to be concentrating on the Xi/Trump meeting this afternoon.

On another day, this morning's Ryan presser and even the Nunes recusal might have brought a pullback of some sort.

On Trump/Xi, markets hope for pleasantries on both sides. Trump says Xi offers more active role on North Korea and that he and Xi made progress. Fingers Crossed.

Mid morning musings from Dougie Kass:

Mickelson eagles second hole at the Masters - goes three under after four holes. http://www.masters.com/en_US/scores/index.html

Now that would be terrific if Lefty made a run!

This week I sensed a possible turn higher in the retail space when looking at the technicals.

Though I didn't execute, today is the retail rally -- with JC Penney (JCP) Home Depot (HD) Nordstrom (JWN) Macy's (M) Target (TGT) Foot Locker (FL) and Kohl's (KSS) roaring ahead.

Mr. Market is putting up a good showing after yesterday's reversal.

Bonds now, well off highs and at day's lows (in price).

Over the next few days I will be changing the prime brokers I use in my partnerships.

I have determined that it will be a lot easier if I liquidate all of my holdings as opposed to transfering (ACAT) the positions.

As a result, my disclosures will shortly read "none" for a few days until the dollar transfers are completed.

Bond yields have moved to unchanged; they were down two basis points earlier.

iShares 20+ Year Treasury Bond ETF (TLT) comes in by about $0.70.

Today's marginal shorting in bonds has been profitable.

I am out of ProShares UltraShort 20+ Year Treasury Bond ETF (TBT) now (which I use as a trading vehicle and not a long-term lease!)

Regular readers of my diary know I sometimes post things that replicate the theme of the "Tell Me Something I Don't Know" segment on MSNBC's "Hardball With Chris Matthews."

So ... "Tell me something I don't know, Dougie."

OK, here goes:

The 2s/10s spread is at 109 basis points this morning. That's the flattest level since November 2016.

As you all know by now, there is a message in the lowly 10-year U.S. note yield, which sits atf 2.33%, down by 3 basis points on the day.

"Do not dismiss the slower-growth message -- in the economy and corporate profits -- of the 2.33% 10-year U.S. note yield and remain skeptical of the bullish and optimistic investors/strategists who see a "hockey stick" to economic and profit growth ahead."
--Kass Diary, "Don't Dismiss the Message of the 10-Year's Low Yield"

For purely tactical purposes I have moved back to market neutral on today's minor weakness. I had covered my trading tranche/layer of leveraged inverse ETFs late yesterday.

I plan to short strength in the weeks ahead.

I am pressing my iShares 20+ Year Treasury Bond ETF (TLT) short at $121.30.

Otherwise, very quiet today.

Thus far, that is!

This week there are two terrific comments I wanted to highlight:

Johnny427 • 2 minutes ago

Dougie, thank you for posting the George Soros fallibility and reflexivity quote. Recently I read the the biography of Dwight Eisenhower, 'Eisenhower' by Jean Edward Smith. Interestingly Ike's early battle strategies in North Africa, Italy and even his initial battle plans for Europe were fallible and resulted in a protracted war, his plans, that called for a dispersement of forces across a wide area, are analogous to the Soros' market quote and were based on reflexivity. Said differently his battle plans reflected actions based on a fallible premise (WWII was not WWI). By every measure he was successful in the long run. Interestingly Jim Cramer is the master of synthesizing and discussing the actions (reflexivity) of the market based on his historical market analysis and his ability to mesh his instincts into a rational explanation of what is happening now and how markets will act in the near term. Your strength is very much in a skeptical view of this 'reflexivity of the masses', you understand this can't last forever and that like in the Ike narrative above the actions of the masses will prove optimist and eventually revert to the mean. Of course your longer term view that markets will eventually revert to the mean will prove correct at some point and maybe we are getting closer to that time. A few additional thoughts. The markets are reflecting a combination of an improving economy (baked in now) and an expectation that President Trump's 'America First' plans will catapult GDP growth in the near future. But improving GDP requires action Congress and that action seems every more unlikely. Observing the Healthcare debate and the crash and burn of Paul Ryan's plan you have to wonder how anything can get done. The obstacle is the deficit and any comprehensive plan to reduce taxes without raising the deficit is next to impossible without very, very deep cuts in social services which seems unlikely to occur. Even Infrastructure which everyone seems to want except maybe the Freedom Caucus looks doomed as it may raise the deficit. Despite Republican control of everything the possibility of getting anything done now seems remote. The prospects of President Trump big ideas becoming law seems ever more remote. As Cramer said just now, ..."when Paul Ryan speaks that means buy puts".

Andrew Andrews MissD_Dallas • 7 hours ago

As I have said before, I HATE sayings like "trend is your friend", "price is truth" and "dont fight the tape" because they are of zero value to me. I also hate when people lament on missing out (in either direction) when they've sold early or not bought something or didnt sell fast enough, blah blah. Making money is the only measuring stick, unless your career depends upon making X% a year.

That said, the market does what it does, combining all the inputs and outputs and emotions of all actors. Trying to decide what all those tidbits are is impossible. We all have those spots where we think certain things are expensive or cheap, that other's are wrong, or however you want to phrase it. We all know what methods work better for us or what we have the mental tolerance to take in terms of "pain" on trades. Value is in the eye of the beholder, as I believe you mentioned. However, just because you may think a stock or market is over valued and it keeps rising, doesn't mean that stock or market is manipulated. Someone is buying (or not selling). That is actual money being exchanged. So, while there may be "manipulation" in the sense that participants may be trying to suck people in or shake them out in some instances, or push things too far one way or the other, there is nothing me or you can do. This also could just be people who literally think that we are just going higher and higher (collective emotion is a strange thing. And probably the most interesting thing about trading and markets that I like, and try to "read" more and more). Just like getting pissed about the media and politics is useless. You may be right, but almost nobody really cares if you are.

Our individual responsibility is to stick to your strengths and ban emotions from sucking you in or out at wrong times. Sure there's things that fire me up and I don't think are right, but we can complain about the playing field or we can play. I am not that old yet (relatively), but the one thing I have started to figure out (in many areas of life, not just markets) is that I personally won't change much, but if I adapt to what's going on, I have a far better chance of succeeding. If I focus on what's wrong, it makes me emotional and takes focus away from the adaption process and gums up things. And for me, that means not participating as much for lack of "trust" or thinking we are too lofty. I still make trades but keep it smaller and don't look for many longer term buys. And I am ok with that until I feel the market has offered better setups.

My pal Peter Boockvar, chief market analyst with The Lindsey Group, gets philosophical in his morning commentary: 

At 2 pm est yesterday the two biggest risks to the market were highlighted in their different forms. Firstly, nothing new was revealed in the minutes, especially after hearing from a slew of Fed members over the past few weeks but maybe market participants need to get slapped a few times before they pay attention. I'll say again, I have a bridge to sell you if you think a rate hike cycle combined with a shrinking balance sheet will go smoothly. Also, I can't get over the irony of Fed members acknowledging high equity valuations, that artificially set interest rates spawned, at this stage of the bull market where valuations have only been exceeded twice in history. Where were they years ago on this outside of Yellen talking about biotech stocks. I raise an important question generally on monetary policy, if the exit process ends up turning messy (defined as a recession and bear market in stocks) was all this easing worth it?

"Like a river that don't know where it's flowing, I took a wrong turn and I just kept going" wrote Bruce.

Secondly, after being reminded how complicated our healthcare system has become, Paul Ryan woke all up to the fact that fixing our tax code is so damn difficult too. And, the market and corporate America doesn't want to wait until 2018 to see its benefits because it will freeze behavior in 2017. In a market that is priced for perfection, there is no room for policy mistakes.

Be bullish if you think both news stories will turn out just fine. Be very worried if they don't. I'm going to be hopeful that some tax reform takes place but I believe any benefits to the stock market will be overwhelmed by monetary tightening when valuations are as extreme as they are at the same time we are late cycle in the economy. Just ask the auto makers on the latter. Also, remember 2013. We entered that year with a ton of tax increases on income, capital gains, medicare, payrolls, estates, medical devices... and the elimination of a bunch of deductions. GDP growth still managed to rise by 2.2% and S&P 500 corporate earnings were up about 10% even though sales were higher by just 3%. Why was the S&P 500 up 29.6% before dividends? Thank you QE infinity along with QE elsewhere. Monetary policy certainly Trumped fiscal policy that year and throughout this bull market.

The private sector weighted Chinese Caixin services PMI in March fell .4 pts to 52.2 and which is a 6 month low. Caixin describes this level as "only a modest rate of increase." New orders fell to the weakest since September while employment was up slightly. Backlogs were little changed. The inflation input cost component rose the highest since February 2013 mostly due to higher salary costs. Prices charged was the most since August 2015. The services index follows a weaker manufacturing one and Caixin summed up the report by saying "Weaker increases in new business have clouded the economic outlook, and investors should watch closely for signs of a turning point in the second quarter." Oh man do the Chinese authorities have a balancing act on their hands with their unrealistic desire to grow 6.5% while trying to contain and slowly deflate a debt bubble. Let's hope the Trump/Xi coffee talk goes smoothly as the two largest economies should be fully embracing each other. The Shanghai index traded higher by a 1/3 of a percent but the H share index was down by .9% and the Hang Seng was lower by .5%. Those in Hong Kong because of the FX peg have the pleasure of reading the FOMC minutes.

The only thing of note in Europe was the German factory orders figure for February which rose 3.4% m/o/m after a 6.8% decline in January. Combining the revision with the new number has it around in line with expectations. Most of the rebound came from domestic demand as foreign orders were flat. The Economic Ministry said "Manufacturing orders recovered after a sharp decline at the start of the year. Order intake was lower than in the very strong Q4, which was characterized by bulk orders. However, the volume of orders as well as the business climate in the manufacturing sector rose and a slight upturn in manufacturing is to be expected."

With ECB monetary policy completely incompatible with the health of the German economy, Bundesbank President Jens Weidmann today said "The discussion is not whether monetary policy should be fully hitting the brakes, but it's about whether we should continue to fully step on the accelerator. I could have absolutely envisaged a less expansionary monetary policy, especially since many economic indicators are developing positively." He then went on and spoke about the growing risks of keeping policy too easy for too long, "The central bank must be careful that its policies don't ultimately do more harm than good." I say it's too late. The bubble mold has been cast when you have a German 2 yr note yielding -.79%.

Mario Draghi just so happened to be speaking in Frankfurt today whose turf he has to most vociferously defend himself on. His obsession with higher inflation remains persistent, "We have not yet seen sufficient evidence to materially alter our assessment of the inflation outlook, which remains conditional on a very substantial degree of monetary accommodation." He's out of his mind and he still believes in the efficacy of negative interest rates, the single worst economic idea ever. See again the question I posed in paragraph 1. The euro initially sold off on dovish Draghi but is now back to unchanged. European sovereign yields are a touch higher.

And Peter reports on the morning data: 

Initial jobless claims totaled 234k, 16k less than expected and down from 259k last week and 261k in the week before. The 4 week average was 250k vs 255k last week and 247k in the week before. Continuing claims, delayed by a week, fell 24k after last week's rise of 65k. Bottom line, for the past 3 weeks claims have come in much different than expectations, both up and down but the smoothed out 4 week average is still very low. See chart:

Until proven otherwise, I think the landscape remains the same in that employers are hopeful for faster growth and are thus keeping their employees at the same time its getting tougher to add more qualified workers. The estimate for private sector payrolls tomorrow is 170k vs 227k in February.

General Motors (GM) announced an unscheduled business update this morning.

I would describe the output as neutral to slightly positive relative to consensus expectations.

The CFO said the company's guidance remains firmly in place despite a challenging operating environment

• States inventory to increase through to about 90 DSO (days sales outstanding) at June 2017, then falling to about 70 DSO by December 2017
• Guides fiscal 2017 used-car prices to decline 7% year over year
• First-quarter residual performance has been weaker than anticipated, especially in CUV (crossover utility vehicle) segment
• March has been favorable to January and February, but still weaker year over year

"I can state the core idea in two relatively simple propositions. One is that in situations that have thinking participants, the participants' view of the world is always partial and distorted. That is the principle of fallibility. The other is that these distorted views can influence the situation to which they relate because false views lead to inappropriate actions. That is the principle of reflexivity. For instance, treating drug addicts as criminals creates criminal behavior. It misconstrues the problem and interferes with the proper treatment of addicts. As another example, declaring that government is bad tends to make for bad government.

Both fallibility and reflexivity are sheer common sense. So when my critics say that I am merely stating the obvious, they are right-but only up to a point. What makes my propositions interesting is that their significance has not been generally appreciated. The concept of reflexivity, in particular, has been studiously avoided and even denied by economic theory. So my conceptual framework deserves to be taken seriously-not because it constitutes a new discovery but because something as commonsensical as reflexivity has been so studiously ignored.

Recognizing reflexivity has been sacrificed to the vain pursuit of certainty in human affairs, most notably in economics, and yet, uncertainty is the key feature of human affairs. Economic theory is built on the concept of equilibrium, and that concept is in direct contradiction with the concept of reflexivity. As I shall show in the next lecture, the two concepts yield two entirely different interpretations of financial markets.

The concept of fallibility is far less controversial. It is generally recognized that the complexity of the world in which we live exceeds our capacity to comprehend it. I have no great new insights to offer. The main source of difficulties is that participants are part of the situation they have to deal with. Confronted by a reality of extreme complexity we are obliged to resort to various methods of simplification-generalizations, dichotomies, metaphors, decision-rules, moral precepts, to mention just a few. These mental constructs take on an existence of their own, further complicating the situation.

The structure of the brain is another source of distortions. Recent advances in brain science have begun to provide some insight into how the brain functions, and they have substantiated Hume's contention that reason is the slave of passion. The idea of a disembodied intellect or reason is a figment of our imagination. The brain is bombarded by millions of sensory impulses but consciousness can process only seven or eight subjects concurrently. The impulses need to be condensed, ordered and interpreted under immense time pressure, and mistakes and distortions can't be avoided.

Brain science adds many new details to my original contention that our understanding of the world in which we live is inherently imperfect."

--George Soros, "General Theory of Reflexivity," Financial Times

"Group stink" is multiplying -- in the canyons of Wall Street where so many investors and traders worship at the altar of price momentum; in the coding of machines and their algorithms; in the leveraged and unleveraged market ETFs that have garnered so much popularity; and in the herd-like opinions of commentators and the legions of talking heads who parade their views daily in our business media platforms.

Group stink has gotten so pervasive that it now can be seen as the ultimate form of George Soros' reflexivity theory, which attempts to link the nature of relationship between the mode of thinking with actual events.

It was through the study of Viennese-born Karl Popper's "The Open Society and Its Enemies" that enabled Soros to explain and predict events better than most. And it was that theory and framework that allowed Soros to anticipate the 2008-2009 crisis and deal with it when it finally struck.

In "The Alchemy of Finance," Soros' seminal book, he observes that the view of the world by market participants is always partial and distorted. This group stink is incorporated in his principle of fallibility and the distorted views (e.g., bullishness) that can influence our decisions and lead to inappropriate actions; it is the core principle of reflexivity:

"It is generally recognized that the complexity of the world in which we live exceeds our capacity to comprehend it. I have no great new insights to offer. The main source of difficulties is that participants are part of the situation they have to deal with. Confronted by a reality of extreme complexity we are obliged to resort to various methods of simplification-generalizations, dichotomies, metaphors, decision-rules, moral precepts, to mention just a few. These mental constructs take on an existence of their own, further complicating the situation."

Closed society and group stink tends to be dogmatic; open society has a more critical tone.

Group stink is a reflexive feedback loop. It is a vain pursuit of certainty, often falsified by testing or the idea of a new paradigm in valuation. In our markets it has led to a state of uber and almost perma-bullishness over the last few years as the irrational may have been rationalized in a world of fake news. To use Soros' terms, they might claim to be in possession of the truth, but they may be making a false claim.

The bullish feedback loop has become self-reinforcing, but it cannot go on forever because eventually the participants' views will become so far removed from objective reality that the participants ultimately will need to recognize them as unrealistic.

Today's machine- and algo-aided dynamic disequilibrium or fertile fallacies, whereby the interpretation of reality is distorted, have had what Soros calls a manipulative function and a positive feedback loop that has produced market results that have reinforced those distortions.

Market participants' perceptions and reality progressively may have produced a far-from-equilibrium condition, leading to a climax early yesterday afternoon and a move that shortly will be going in the opposite direction in a self-correcting negative feedback process that brings the market back down and closer to a reflection of the reality I see in the real economy.

As George Soros wrote in "The Alchemy of Finance":

"The alchemists made a mistake in trying to change the nature of base metals by incantation. Instead, they should have focused their attention on the financial markets where they could have succeeded."

As I mentioned late yesterday afternoon, I used the bond strength to aggressively short more iShares 20+ Year Treasury Bond ETF (TLT) on the flight to quality following the equity market's reversal.

I moved to large in size in this position.