Teva!
It happens to the best of us. 
I wrote "Here's Why TEVA Is Not My Cup of Tea" in late 2017. 
Another lesson learned.
Do your own homework.

Crude oil jumps by +2.5% as Russia commits to production cuts.

This morning I wrote:

"I am pleased with my range trading over the last few weeks and I plan to give the market some wider berth before re-shorting given that this will be a low-volume week and easy susceptible to programs."

And, on cue, the market's volatility (in a low-volume backdrop) has been the feature of today's trading session.

Machines and algos are whipping Mr. Market around in a seasonally weak period when many are on vacation.

And, with some large programs geared up to buy stocks and sell bonds (later in the week), there is likely more volatility to come before the holiday weekend commences.

* BEN has reached my first price objective

Franklin Resources (BEN) was shorted and placed on my Best Ideas List (short) in mid-April 2019 at $35.14.

The shares are currently trading at $25.80 and I have moved from very large-sized to small-sized.

Here is my bearish thesis on the investment managers.

I remain large-sized in my TROW short.

This tweet is likely part of the reason for the market's selloff:

@realdonaldtrump

The availability and cost of capital is not a headwind to domestic economic growth. Stated simply!

This Bill Dudley editorial has gotten a lot of press today. But this is not the reason not to cut rates and, in my opinion, this is not an appropriate thing for Dudley to write, regardless of whether one agrees or not.

* Owing to asset allocators' response to the massive outperformance in August of bonds over stocks

This is important and helps to explain why I am a bit reluctant to short stocks now.

The month-to-date performance of fixed income (+9%) -- that's the strongest returns since August 2011.

With equities down by over 3%, August is only the 19th month in the last 32 years that bonds have outperformed equities by over +10%.

Historically, this has resulted in relatively smart gains in stocks over the last three trading sessions of the month. (The median gain is +2.46%, more than 10-times the average of the last three trading days of all months since 1987 and delivers a positive return over 80% of the time, as you can see in this chart from Bespoke.):


Source: Bespoke

From the legendary Neil the Real Deal. 

Neil S • an hour ago

Spread of SPX earnings yield over 10-year now at 3.5%, largest since mid-2016.

dougieNeil S • 5 minutes ago

Neil the Real Deal

From the post below from last week:

" With the precipitous drop in interest rates the risk premium -- the difference between the earnings yield (5.7%) and the risk-free rate of return (1.6% -- has gotten more attractive."

The widening in the risk premia (earnings yield less risk free rate of return) was the primary reason for this column and my conclusion that my real downside (and bearish price target for S&P) would be higher than previously thought:

Aug 15, 2019 ' 08:05 AM EDT DOUG KASS
Minding Mr. Market and Buying Some SPY and QQQ
* Lower stock prices are the ally to the rational buyer
* At long last an attractive buying opportunity seems to be developing
* I have taken a trading long rental in SPDR S&P 500 (SPY) at $282.05 and Invesco QQQ Trust (QQQ) at $181 in premarket trading

A 14-handle rise in S&P futures was aborted at about 4 a.m. and had turned into a -16 handle loss at this writing after China indicated it would retaliate against the imposition of U.S. tariffs announced recently.

Spyders are now trading at $282 as against my expectations of trading range over the balance of the year of $270-$275 to $290-$295.

This means that the S&P Index, if my calculus is correct (it's only as good as my input), has the same amount of upside reward to downside risk, thus explaining my current small net long position.

I am not a Cassandra or perma bear; when I see value I am not reluctant to take on its opportunity, as I did last December. I do not factor in price momentum or charts, which tell us where we have been and not where we are going, into my investing. I use a calculator and have a contrarian streak that takes into account current stock prices relative to intrinsic or fair market value.

If higher prices are the enemy of the rational buyer, then lower prices are our ally.

Going forward there is some good news and some bad news, perhaps evenly distributed in terms of market outcome (as suggested above).

The Good News

There are several rays of hope that I see:

* With the precipitous drop in interest rates the risk premium -- the difference between the earnings yield (5.7%) and the risk-free rate of return (1.6% -- has gotten more attractive.
* Though natural (and I am always concerned why), far lower-than-expected interest rates produce a higher intrinsic value for equities in our discount models.
* The Bull Market in Complacency, which was so apparent to me for months, has been broken by the toll of a lower stock market. Cassandra-like calls, rare in 2019, are becoming more commonplace, and that fear is a positive. The fear is taking several turns -- in eroding investor sentiment and in worsening and more realistic economic and profit expectations.
* The emergence of fear is an important reagent to a better stock market.
* Despite the inconsistency of policy and a number of other headwinds, the U.S. economy may still continue to grow at around a 2% real rate, thus avoiding recession for now. (An infrastructure deal could help)
* Weakness in global economic growth, unexpected a year ago, is now becoming consensus.
* The current poll leader in the coming presidential election, Democrat Joe Biden, is a moderate. A Democratic nominee of this ilk could be viewed as market-friendly.
* I have pondered for a year that we are in a new regime of market volatility. Volatility is now an accepted notion -- a positive and, again, anti-complacency. Wild daily (and even hourly) market swings of late are scaring investors but providing opportunities for emotionless investors who look for value.

The Bad News

But there is a lot of negatives that could lie ahead:

* Though expectations for global economic growth and U.S. profits are deteriorating, it could be worse than even I expect. (For nine months I had an out-of-consensus 2019 S&P 500 EPS estimate of under $160 a share compared to the current consensus of $168, which is down from $173 a few months ago).
* The stimulus of tax reform has worn off and we have little to show for its supply-side impetus. We have returned to subpar (less than 2%) real GDP growth.
* The chances of a policy mistake have intensified. As I have argued, the behavior of the president has begun to weigh on the markets. Hastily crafted policy written on the back of a napkin and delivered by tweet is not the way to run a country in an interconnected and flatter world. Indeed, Trump exposed himself by pulling ridiculous and irrelevant levers "to save Christmas" in the last 24 hours as a poor negotiator of policy with China.
* I suspect that the odds of a Trump 2020 election have been reduced in recent months, particularly with his hardline views on immigration, gun control et al. Without the prop of a growing U.S. economy it is hard to see the president assembling a successful coalition. A Democratic victory could be less friendly to the markets.
* Aggregate debt loads (especially U.S. dollar-denominated debt "over there") are worrisome.
* Market structure change increases the chances of a repeat of the October 1987 portfolio insurance schmeissing.
* Valuations based on standard and historic metrics (e.g., capitalization to GDP) remain elevated.

Speaking of Twitter (TWTR) (and why the Comments Section is "value added"):

badgolfer22 • 9 minutes ago

for twitta heads......

09:41TWTR Twitter: Hearing Cleveland Research out earlier raising 2019 rev ests; stock up 2.4% this morning (42.45 +1.01)

Though today's interest rate drop and inversion are troublesome I have added to some laggards and I am now small net long of exposure.

Last week's Trade of the Week (long Twitter (TWTR) ) is today's stock of the day -- it's up by over a beaner in the early going.

Does that count?

I had been adding at $41 1/2 and under over the last few weeks.

Here is my thesis.

I start the day in a market-neutral exposure.
I am pleased with my range trading over the last few weeks and I plan to give the market some wider berth before re-shorting given that this will be a low-volume week and easy susceptible to programs.

J.P. Morgan: "We have repeatedly argued that tariffs are highly #deflationary."
This chart backs up the point:

* I'm looking through the market
* And it's not the same
* Here are 13 reasons why it's different this time!

"I'm looking through you, where did you go
I thought I knew you, what did I know
You don't look different, but you have changed
I'm looking through you, you're not the same"
-- The Beatles, "I'm Looking Through You"

Written by Paul McCartney about his girlfriend, English actress Jane Asher, who refused to drop her stage career and focus on his needs, this song was one of the best on The Beatles' album Rubber Soul.

The complexion of Mr. Market, like this Beatles 1965 classic, has changed:

* We have entered a new regime of heightened volatility and unpredictability in a market without memory from day to day.
* Machines and algorithms appear to have taken on a greater voice in our markets, whipping stocks around with abandon. The chances of a significant "Flash Crash" have increased exponentially.
* As algos only have the input of info already out, markets are no longer a discounting mechanism. Our market is now purely reactive.
* Stocks have begun to ignore company fundamentals and only react to monetary policy and trade news. Mr. Market is now totally macro-driven and not earnings-driven. (All of 2019's year- to-date investment performance has been valuation-based.)
* Unlike most of the 2009-2017 period, not all dips have been bought.
* Risk is happening faster than in the past. And, with rising risk comes many more "Markets in Turmoil" specials. 

* Bad economic news, previously seen as a market positive, is no longer good news for the markets.
* Risks to the global economy are now being recognized and articulated by a perennially bullish Wall Street.
* The U.S. bond market, and particularly the non-U.S. bond market (with over $17 trillion of negative-yielding paper), are signaling economic and deflationary shocks.
* Unlike the 2016-2018 period, the stunning incoherence and inconsistency of policy delivered by President Trump has begun to hurt the markets. (Trump is Making Economic Uncertainty and Market Volatility Great Again!) #MUVGA
* The chorus of TINA -- "there is no alternative" to stocks -- has dimmed despite the rapid drop in the risk-free rate of return.
* We are seeing greater recognition of a more effete Federal Reserve that may be "pushing on a string" at a time in which the threat of an "earnings recession" has increased.
* Consensus 2019-2020 S&P EPS estimates are being lowered.

The drop in business fixed investment is intensifying, as chronicled by my friend Danielle DiMartino Booth:

• Contracting business investment has flagged recessions in 75% of postwar incidences of phenomena, twice as reliable as consumption's 37% hit rate; July's 0.3% decline in core capex orders was the first in three years and should be monitored closely
• Continued trade war rhetoric will intensify the global slowdown pressuring U.S. capex outlook throughout the remainder of 2019; real business equipment spending in GDP slowed through the second quarter and will continue to dampen economic growth prospects
• High yield (HY) spreads are very sensitive to the economic cycle and widened substantially in the prior cycle as capex began to contract; if capex weakens further, the HY spread will react swiftly, gapping out following on the flight to higher quality bonds already in motion

Chart

"The Moon is made of cheese" is how the old saying goes. A family of myths across scores of countries depicting simpletons of sorts who see a reflection of the Moon in water and mistakenly take it for a round wheel of cheese. The earliest record of this bizarre notion comes from a medieval Serbian yarn in which a ravenous wolf chases a seemingly hapless fox, hoping to score an easy meal. Thinking fast, the fox persuades his pursuer that the Moon's reflection on a nearby pond is a round wheel of cheese floating on its surface and that the wolf must drink all of its water to feast fully on the tasty treat. Gullibly chugging furiously, the wolf eventually drinks too much and bursts at the seams. Score '1' for the Fox.

We cycle chasers seek out truer reflections of the business cycle by way of the bedrocks of private demand - consumer spending and business equipment investment. Neither of them is a ruse, nor are they meant to deceive a la moon cheese. Over postwar economic history, year-over-year trends in real consumer spending and real business equipment investment have correlations to annual real GDP growth of 0.78 and 0.74, respectively. (Only imports come in as a close third at 0.71.)

The broad contours of the business cycle are drawn by the consumer and by business spending. If you're in the business of handicapping recession probability, it's best to focus on the latter and not the former. In the 51 postwar recession quarters, business equipment investment contracted 38 times, or in 75% of the instances. By sharp contrast, consumer spending fell in 19 of the recession quarters, for a 37% hit rate. It's half as reliable an indicator.

What's the short-run backdrop for capex? Yesterday's durable goods report revealed nondefense capital goods orders excluding aircraft - core capex orders - declined 0.3% in July on a twelve-month basis, the first contraction in three years. Core capex orders are the short-run leader for the heartbeat of business investment, core capex shipments; they downshifted to a 0.9% year-over-year rate, a two-year low.

With core capex demand slowing markedly, where is core capex supply? Expanding at a much quicker 4.9% year-over-year pace. The key is the durables report has a reference month of July, before the recent tariff lobs shot across the Pacific and heightened financial market volatility.Increased trade war uncertainty has yet to manifest in the summer-quarter's core capex data. Not only does this pose serious August downside risk, it suggests a large inventory correction, the kind that undercuts top-line gross domestic product (GDP).

It's not all bad. Observe in the chart du jour the dichotomy between weakness in exported U.S. business equipment and domestic strength indicative of solid capex at home. This gap could widen. Germany's IFO business confidence hit a near-seven year low and expectations have yet to bottom signaling recession in Europe's biggest economy. Echoing the advancing trend in the U.S., the survey cited the plight in autos spreading to the services sector where hiring intentions plunged to the lowest level since 2015.

The drag on export-oriented U.S. durable goods will no doubt reflect this pain. Still, core domestic data conflict - the capex outlook in the Mid-Atlantic and Industrial Heartland is still positive though off its peak readings clocked at the start of 2018 flattered by the corporate tax cuts.

Where does this leave us? Global pressures threaten to reduce further the U.S. capex outlook as year-end approaches. Cuts to the U.S. growth plans are the next logical step by businesses operating against a backdrop of worsening uncertainty and volatility. Real business equipment investment in GDP had already cooled to a 2.7% year-over-year rate in this year's second quarter. The tipping point into contraction likely will feature a 2019 timestamp.

Credit spreads won't cotton to this development. We know high yield (HY) spreads are more sensitive to the economic environment compared to investment grade. In the last cycle, HY spreads blew out as the capex signals illustrated above started to flash red. While we're off the tight spread levels of the current economic expansion, there's been little widening in HY spreads, which currently hover around 400 basis points.

The mirror image of HY should be its sister, the stock market. The drama surrounding the daily tweet-driven gyrations of equities may make it seem as if we've moved a lot more. But, as wolves can attest, looks deceive. Ultimately, stocks have been the calmer of the two. Yesterday's close puts the S&P 500 where it was a year ago. Over that same period, HY spreads have gapped out by 21%. Yes, that is troublesome.

Without evidence of a sharper contraction, HY spreads should remain well behaved. We would nonetheless caution that the HY credit curve has already begun to steepen concomitant with a migration up in quality. If you've a mind to capitalize on your HY profits, channel your best inner fox and sell a wolf on moon cheese.