"Just one more thing."
-- Lt. Columbo
Western Digital's (WDC) EPS was ugly and MKS Instruments (MKSI) (another semi-related name) also had bad numbers.

In the after-hours I have added to my index shorts.

* Miss on many metrics at Google

Unlike Facebook FB and Amazon AMZN, with the benefit of hindsight, Google's GOOGL shares were priced to perfection particularly after missing on many metrics:

* First-quarter revenues (excluding TAC) came in about $500 below expectations.

* Advertising revenues slipped from $32.6 billion (quarter over quarter) to $30.7 billion.

* EPS was $0.65 below consensus.

* Paid clicks were +39% vs. +66% (quarter over quarter).

* 1Q2019 cost per click was -19% compared to -29% (quarter over quarter).

* Operating margins were 18% vs. 21% (quarter over quarter).

* Capital spending fell dramatically (from $7.3 billion to $4.6 billion).

I will have a more complete analysis Tuesday morning.

Here are my key observations on the day:

* Another day of market strength (I would describe it as a "deliberate" rise) with good supporting breadth (1,825 advancers/1,100 decliners at 3 p.m.).
* With an hour to go in the trading session, stocks sit at their highs.
* The Russell Index was crowing for the second day in a row.
* As mentioned earlier, bonds yield rose by a bit more than three basis points. The 10-year U.S. note yield is at 2.535%.
* There wasn't a heck of alot of movement today in the markets or in individual stocks.
* Banks stocks were clear upside features.
* The downside was led by semiconductors.
* Retail and asset managers were mixed to lower (Home Depot (HD) lower).
* FANG had two up nicely (Alphabet (GOOGL) and Facebook FB ) and two down (Netflix (NFLX) , Amazon (AMZN) ).
* Trading sardine Lyft (LYFT) lyfted.
* Oil was unchanged.
* Gold -$7.40/oz.

I did no trades today, doing some catch-up research, which is more productive. (Look for a number of new ideas ahead in the next week or so!)

Long: GLD (large), GOOGL (large), FB (small), AMZN (large), LYFT, BAC (large), C (large), WFC (large)
Short: HD, TROW, BEN

I am going into the Alphabet/Google (GOOGL) report long large -- as I did with Amazon (AMZN) .
I have no "edge" on the report and plan to hold on to the shares with a very long-term time frame.
I thought, as you all know, that Amazon's shares might need some time to consolidate their large gains -- and I was wrong.
I feel the same with regard to Google and I hope I will be wrong again!

For maybe the fourth or fifth day in the last six months I have not made a trade.

Rosie confirms my prior post on the sharp hit in the savings rate.

Bond yields are back up today.

The 10-year U.S. note is +4 basis points to 2.54%.

For the third day in a row the asset managers, T. Rowe Price (TROW) and Franklin Resources (BEN) , are down.

TROW and BEN are my latest shorts and part of my newest sector short.

No trades yet today.

I found the chart below in the WSJ Daily Shot very interesting as it measures earnings conference calls and those companies that are expecting to hike prices. Notice the jump. I hope the Fed sees this because it means that no one should rest easy just because the recent inflation stats have slipped. (With respect to gasoline prices in particular, it was Feb. 11 the last time AAA said they fell.

Good discussion by Peter Boockvar on the difference between the Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE):

To highlight the discrepancy between CPI and PCE where the former over weights housing while the latter over weights price fixed healthcare, in March the spread between core CPI which rounded to about 2% y/o/y and core PCE which was 1.6%, was the widest since September 2016. Thus, the direction of monetary policy and the Fed's view on inflation is only based on which gauge they pick. If PCE didn't exist and CPI was what they had, the discussion and possibly the level of rates would be different. I'll argue again, the Fed needs to deepen their analysis and discussion on inflation.

Point difference between CPI and PCE (with the latter below the former)

In response to several emails I am not even considering selling any bank stocks here.

Argus downgrades Intel (INTC) this morning.

Personal consumption expenditures were quite strong.
The explanation? The savings rate collapsed from 7.3% to 6.5%, the lowest since last November and the sharpest monthly drop in nearly six years.

My pal Peter Boockvar, chief investment officer with Bleakley Advisory Group, is playing "Dr. Feelgood":

If you didn't see it over the weekend, the net speculative short position in the VIX futures hit a record high. The feeling that the Fed again has medicated and immunized the markets from any and all pain is likely the thought behind the bets. Playing Dr. Feelgood time and again only plants the seeds for future financial instability but that only matters for another day. This sort of stat only matters when an extreme is reached which it has but figuring out when a higher VIX follows as these shorts are covered is always tough to say.

NET SPEC SHORT POSITION IN VIX FUTURES

I'll talk more about the Fed meeting tomorrow but on the debate with inflation, the implied inflation rate in the 10 yr TIPS is at 1.97%, only a few bps from the one year average of 2.01%, above the two year average of 1.96% and slightly above where it was on March 20th at 1.96% when the Fed last met, Jay Powell had his press conference and patience was reiterated and the plan to end QT was laid out.

Trade activity in Hong Kong in March was again weak but not as bad as estimated. Exports fell 1.2% y/o/y vs the forecast of a decline of 2.6%. Exports to Germany helped, rising by 16% while they were flat to the US and fell by 10% to Mainland China. Imports were basically unchanged, down by .1% vs the forecast of a drop of 4.3%. Hong Kong stocks did rally as did the Chinese H share index but the Shanghai comp fell by .8% after last week's 6% drop and the Shenzhen index was lower by 2.4%.

April has provided no respite to the downbeat attitude with the eurozone economies. The Economic Confidence index in the month fell to 104 from 105.6 and that was 1 pt less than expected. That's the weakest since September 2016 with manufacturing confidence a particular soft spot, still. Consumer confidence, construction and retail also fell. Services confidence was unchanged m/o/m.

European markets have rallied of late on hope that the stimulus and stabilization in some of the economic stats in China will spill over (China is Germany's largest trading partner). That really is the $64k question. Will it or will it be somewhat landlocked in China in only helping to lift consumer spending on local things and provide some credit to small and medium sized businesses that won't be felt outside of China. I'm not sure yet. European markets are down across the board as at least in April, there has been no spillover as per today's data. Also, the reelection of a socialist in Spain has the IBEX stock index down by .8% as of this writing but Spanish bond yields are little changed as is the euro.

Lending growth in the Eurozone slowed in March according to ECB data. Loans to businesses rose 3.5%, a step down from 3.8% growth in February. The peak this cycle was 4.3% in September. Household loans grew by 3.2% vs 3.3% in March. Money supply growth though did pick up to a 4.5% y/o/y growth rate so we'll see if that leads a pick up in lending growth in coming months. Either way, the cost of money is a binding constraint on NOTHING with it so cheap so lending data is really only going to go by the way of where demand goes. That said, without robust profits, banks still have to be real careful with who they lend money to. The Euro STOXX bank stock index is up .3% after last week's almost 4% decline.

If there are two market regions that everyone hates, it's European and Japanese stocks according to the Barron's Big Money Poll. Only 3% like Japan and 6% want to buy Europe. Of course US stocks are the top pick with 39% saying it will do the best in the coming 12 months. Emerging markets are the #2 pick. With US stocks specifically, 83% are net buyers (thus only 17% are net sellers). Thus, from a contrarian standpoint, let's look at Japanese and European stocks.

Here is a deeper dive into Tesla's (TSLA) first quarter.

Surprise #11: Tesla's Problems Shift From Production to Demand to Financial:

Tesla (TSLA) loses its tax subsidy in the U.S. and in the Netherlands (a large market for them).

European competition grows.

Europe doesn't allow the Tesla Model 3 due to safety reasons. The Chinese won't let an American company have video data over millions of miles of roads and bans Tesla. Lenders balk and access to the public debt market evaporates. The company's financial position deteriorates and its credit default swaps widen dramatically.

An accounting "issue" surfaces - and it morphs into an accounting fraud. Elon Musk, who has leveraged his TSLA equity holdings, faces margin calls and is forced to sell Tesla shares.

After being rushed to the hospital after an overdose, Musk leaves his CEO post to enter drug rehab
--Kass Diary, "My 15 Surprises for 2019"

"I've covered a lot of companies and seen a lot of ups and downs. I think last night was really out of a sci-fi movie in terms of that quarter... and the guidance."
--Dan Ives, Wedbush director of equity research

"To be perfectly frank with you, Tesla's balance sheet right now, by basic financial ratios like the quick and the current ratio, which any first-year finance or accounting student learns, they're in worse shape than General Motors was six months before bankruptcy...I believe Tesla needs to file bankruptcy to even have a chance of continuing their business.. There's simply,, I believe, no light at the end of the tunnel for these guys and I believe the stock will collapse and may collapse very soon,"
--Gabe Hoffman, Accipiter Capital Management

Tesla's problems are mounting.

Last week Tesla reported a loss in excess of $700 million in the first quarter, which was more than twice the loss expected by the consensus. The company guided to another loss for the second quarter. Cash burn totaled nearly $1 billion. (Note: Tesla previously had forecast a profitable first quarter).

Some of the auto manufacturer's difficulties are self-inflicted (by CEO Elon Musk), but most are financial and demand-related.

No surprise here. (See Surprise #11 in my "15 Surprises for 2019," above)

Here is Tesla's first-quarter 10-Q.

Eurozone economic sentiment is weakening: