I am calling it a day early as I have some paperwork to complete for my fund launch.

Thanks for reading my Diary and enjoy the evening.

* What a great call on Mad Money

Jim "El Capitan" Cramer made an amazing call on Amazon (AMZN) last night on Mad Money!

How will a 15% minimum global income tax impact S&P earnings, see here. 

Thomas C

"There are those thinking/hoping Bitcoin will stop going down and find support at the $30,000+/- level.

'When you're hoping, it's hopeless'... is the idiom that comes to mind.

We remain sellers of #Bitcoin here."

- Carter Braxton Worth / Cornerstone Macro

* CBW has spoken... time to take the other side of this trade.

You can see our original The Fault Is In The R* report here.

The factor & sector chop is brutal. 10yr yields are lower and Defensives are performing poorly today. Just like last Friday, when 10yr yields declined. 10yr yields were up yesterday and Utes/Staples/HC outperformed.

If the market doesn't break out with strong data and anchored 10yr, it will become increasingly obvious that dark matter (otherwise known as r*...the risk free neutral rate) is moving higher and that is impacting equities. R* is not something we can observe in real time, but just like dark matter, it has an influence. U.S. Unemployed workers per job opening is back to the 10th%tile historically. It took 8 years for that to happen post the GFC. Combined with fiscal stimulus, strong housing and the Fed new FAIT framework, why wouldn't r* move higher.

Bottom line...extremely dovish Fed and strong data pushes up R* and maybe that helps explain funky factor and sector trading relative to 10yr yields. For the above to be true, 10yr yields would be more influenced by other factors (hedging, money market nuances, negative rates around the world etc.,) than economic growth prospects. We lean toward that idea...but the influence would have to be much more than we even thought. Also, it is just not smart to say 10yr yields are wrong, so the bar must be higher for the r* theory to be true. The data will be the ultimate guide to which story is correct over time.The risk of course is an eventual sharp move higher in 10yr yields, relative to inflation expectations, if the outside influences 10yr yields fade (the influences exists, it's a matter of how much). Again, this is not a clear cut case. We are proposing a theory to think about market influence and that theory has implications for the market / internals if true.

In light of Bitcoin's precipitous drop (of -$4,300) I wanted to reposte a column on Bitcoin I wrote in mid-May: 

May 19, 2021 ' 08:18 AM EDT DOUG KASS

* Late last week bitcoin was trading at $50,000

* Five days ago I warned of a very large put buyer in bitcoin* After a steady week long drop, this morning, the price of bitcoin (-8%) breached $40,000 to the downside* Given bitcoin's volatility, how can one even consider the digital currency as a medium of exchange or trade?

Two weeks ago - in a strong statement of non endorsement - Warren Buffett said (at Berkshire Hathaway's Annual Meeting) that he has $145.6 billion in cash and nothing in bitcoin.

I share Warren's view.

As I have written:

"The problem with fiat currencies, like the U.S. dollar, is that monetary authorities can create an unlimited amount of new dollars or other currencies - making it look, to some, like a Ponzi scheme. The problem with crypto currencies, like bitcoin and ethereum, is that anyone can make an unlimited number of new crypto currencies - making it, too, look to some like a Ponzi scheme. Ponzi schemes and scams are only visible to those that have no sense of history or want to believe in magic."

I believe cryptocurrency is like Tinkerbell's light - its power source is based solidly on enough children believing in it.

To conclude, as I have previously opined, given bitcoin's price volatility - how can it be considered a medium of exchange or trade?

"After Tesla's (TSLA) purchase of $1.5 billion of bitcoin the story making the rounds was that many corporate treasurers will move sizeable amounts of their cash hoards into bitcoin. That development, in turn, would levitate the price of bitcoin further.

However, bitcoin remains a speculative, reserve asset class, and perhaps as a reaction to the Fed's insanely reckless policies, and one that is not yet a reliable currency for trade given its volatility.

An asset which is so volatile is not a prime candidate for trade currency nor is it a dependable cash equivalent.

Corporate Treasurers are unlikely to readily "invest" their cash in bitcoin owing to the volatility and its rapidly changing value and impact on a company's quarterly results and balance sheet. For companies, cash is typically used for short term liquidity. So, buying bitcoin becomes a different mandate and, for sure, is not a cash equivalent with respect to the purpose of a balance sheet or as seen as a "rainy day fund."

Bitcoin has tripled in the last few months and is up ten fold in the last year. So, if I paid $1 million in bitcoin for a piece of real estate 12 months ago, I have given up nearly $10 million based on the appreciation of bitcoin. The seller, if he didn't sell his bitcoin, is $10 million richer!

As I said before, extreme volatility doesn't equate to a suitable currency for trade.

Recently, the speculative cryptocurrency equities and their share prices (e.g. (MSTR) , (RIOT) , etc.) are moving disproportionately from the gains in the value of bitcoin and more from the "promise" of broader adoption of crypt currencies.

I do not see that happening on the scale the market expects given the asset class' volatility."

Here was what I wrote last Friday - which was a great indicator of the week's schmeissing:

May 14, 2021 ' 04:52 PM EDT DOUG KASS

A Bit of Bitcoin News

"Just one more thing."

-- Lt. Columbo

I just learned that there was a late-day and large-sized buyer of bitcoin puts (with strikes at $45k and $46k) with a 5/28 expiration.

Almost on cue and over the weekend, an Elon Musk tweet that suggested Tesla (TSLA) might have sold some or all of its bitcoin holdings took the price of bitcoin lower -- from $51,500 to its current price of $45,500!

I remain a non-consensus bitcoin bear and have recently written about Musk's decision not to accept bitcoin for Tesla payment.

As I watch the silliness magnify as well as the stock market "action" - we might have grown ever closer to an inevitable market slide.

Now on the Dow Jones Tape: IRS CHIEF ASKS CONGRESS FOR AUTHORITY TO REGULATE CRYPTO

The drop in the price of cryptocurrencies (particularly Bitcoin) that I have been forecasting is now accelerating to the downside.

Bitcoin is -$4,350 or -12.5%, to $31,100. 

What could possibly go wrong with Bitcoin? I have written about this often!

This week we may find out the answer.

* April's job openings surprise to the upside

* But hiring was weak

There was a time, up until now, that the job openings number was looked at as an afterthought because it was delayed in its release. Not anymore in the context of the growing mismatch between the demand for workers and the supply of them. The number of job openings in April jumped to 9.29mm from 8.29mm in March. We've never seen this much availability after the previous record in March. For perspective, in Friday's BLS payroll report there is a 15.9mm pool of available workers as of May of which 9.3mm workers that are considered 'unemployed.' Also, delayed by a week in its calculation, those still receiving continuing claims total 3.77mm, and delayed by two weeks, those continuing to receive both PUA and emergency benefits totaled 11.66mm for a total of 15.44mm. 

Notwithstanding a 1mm m/o/m increase in job openings, hiring only totaled 69k. That said, the number of quitters spiked by 384k causing the quit rate to jump to 2.7%, the highest since at least 2001 when records on this were first kept. Job needs not surprisingly were most pronounced in Leisure & Hospitality which saw a 391k increase in openings. Manufacturing, professional business services, financial activities and trade/transport also experienced the need for more workers as did construction. 

I'm not going to repeat the factors limiting the supply of workers as we know them all. We'll see to what extent people come back in those states that are ending the extended benefits by the end of this month and in July, and of course what happens after Labor Day when it fully expires and kids go back to school. Either way, economic growth is being stunted because many of these open jobs aren't being filled. It is to the point where teenagers are making some real money, relatively speaking, for those that are working. 

As for the Fed, their insistence on only looking at the number of employed in February 2020 vs. now is just not looking at the full labor market picture and monetary policy is getting badly skewed in response.

Should rates continue lower, value stocks (e.g. banks) will suffer and growth stocks ( (AMZN) , (GOOGL) ) will prosper.

This is sooo good:

badgolfer22

ok lastly before I get focused here, I provide jeff coooper's morning email here. I think it is extremely well written and I try to adhere to all of these. I too have been trading for 35 years and I learn something new everyday and I particularly adhere to rule number 1. When I think I've got mr. market figured out, he never fails to hand me my ass very soon. If you think you know everything, don't bother to read it is my advice. Enjoy...........

My Ten Commandments of Trading

By Jeff Cooper

1) Only the humble survive in this game. The best traders have been

humbled by the game at some point. All of them. Arrogance comes with a

price. That said, successful speculation is a curious cocktail of ego

and humility. A great trader balances arrogance and confidence with

humility and patience.

2) There are a lot of false adages on Wall Street. One is "price is

truth." Price is not truth. Persistency, momentum is truth. Any stock

can rally 1 to 3 days without meaning anything. Fast moves come from

false moves. Follow through is key.

3) Know yourself and your style. When you've had a string of wins, the

natural tendency is to want to be larger and take on more risk. For some

traders, this may be because they aren't getting as big a rush from

winning unless they are betting bigger or more often and taking on more

risk. It is natural to get complacent at the top of your personal cycle

and a market cycle. The art of the trade is to know when you are in your

up cycle and you can press within the context of staying true to your

style/process without self-destructing. In other words, don't confuse

brains with a bull market. unless they are betting bigger or more often and taking on more

risk. It is natural to get complacent at the top of your personal cycle

and a market cycle. The art of the trade is to know when you are in your

up cycle and you can press within the context of staying true to your

style/process without self-destructing. In other words, don't confuse

brains with a bull market.

4) When you place your protective stop, have an Uncle Point for when you don't adhere to your stop.

5) Pat yourself on the back for taking a loss and sticking to your

discipline. Don't get into a fight with the market. You will lose. It's

like getting into an argument with a crazy person. Onlookers will have

trouble distinguishing between you.

6) People love price targets. They want to know where a stock is going

before they put on a trade. While I have developed a few tools that

often give pinpoint price projections, such as the Square of 9 and my

Pocket Pivot Indicator, I am not trying to figure out where the market

is going before the price action. Let the market tell you where it's

going. Allow the market to speak.

The reason I use price projections is two-fold. First, having them allows

me to gauge a stock's behavior at an idealized objective. That way, a

stock's behavior doesn't just roll off you like water off a duck's back.

Second, having a price objective gives me the wherewithal to trim/exit a

position if the behavior becomes suspect once the stock achieves a

particular region.

Hit & Run, Trim & Trail.

7) This isn't a game where the smartest are necessarily the best. If IQ

were a ticket to riches in the market, there would be many more

successful traders. Why? Because highly intelligent people not only want

to be right, they want to be 100% right.

1. a) You have to decide if you want to make money or be right. You can be

wrong 50% of the time trading and still get rich if you have the

temperament and the discipline. Temperament means controlling your urges

and not getting too exuberant in either direction. It means keeping an

even keel, while at the same time being willing to go for the jugular

when you see the whites of Mr. Market's eyes.

1. b) As a trader, markets turn on a dime, most traders cannot. You have to

admit you are wrong and cut and run. Your first loss is usually your

best loss. As well, you have to be able to reload a trade once stopped

out if it revalidates, retriggers. Oftentimes these are the very best

winners I have had. But if I personalized getting stopped out and let my

ego get in the way, I'd never get back in. As I like to say, the first

mouse gets the squeeze; the second mouse gets the cheese.

In sum, your EQ, or Emotional Quotient, is more important than a superior

1. Street smarts trump book smarts when it comes to trading. Some

people are too smart for their own good and are their own worst enemies.

In trading, I have found the best principle is to believe what you see

until proven otherwise.

In sum, speculation is an emotional battle, not an intelligent battle.

8) All trading is contextual. Learn to read charts. Mark them up yourself.

There is something indelible in printing out a chart and plotting the

pivots and trendlines versus looking at a depiction of price action on

your computer. When you look at charts always use multiple time frame

analysis to pinpoint precise buy points. What may not look good on the

daily chart often sets up nicely on the weeklies. Learn my 3 Week Chart

Method, which is how I define the Line of Least Resistance.

Keep a journal of not just your big winners but also your big losers and,

just as important, the big missed opportunities. We learn more from our

mistakes than from the winners. We take those in stride.

9) Everyone needs a coach. Good judgment comes from experience. The best athletes

and performers have coaches. My coach was my dad. He was the best

instinctive tape-reader I ever met. Some of the words of wisdom he

imparted to me:

1. a) The more you try to see, the more stocks you look at, the less you'll see. It's impossible to herd cats.
2. b) Stocks don't move; they are moved.
3. c) The market doesn't know where you got into a position. What's important in

trading is whether the stock is in a bullish or bearish position at the

moment.

1. d) Relative strength begets relative strength. The biggest tell of a stock

under accumulation is a stock that stays green in a red tape. It's

yelling "Damn the torpedoes, full steam ahead."

10) Speculation is observation, pure and experiential. Thinking isn't necessary and often just gets us in trouble.

After reading these, like The Dude, you might say, "Yeah, but that's just your opinion man."

True.

But I've been trading for over 35 years on my own since leaving the
famous Drexel Burnham office in Beverly Hills and I've traded through a
lot of cycles. My Hit & Run Nightly Report has been providing
traders with both long and short day trade and swing ideas every day
since 1996 while navigating market volatility and timing in the morning
report.

So my opinion counts a little.

With interest rates continuing to move lower ( (TLT) +$1.15/share) and the rate of domestic economic growth slowing, I would be shorting Goldman Sachs (GS) and I would be out of all bank stocks.

Don't call it a taper but the Bank of Japan did not buy one share of ETF's in May. Not one of a market that they already own 70% of. Don't worry though because I'm sure they will be back on any sharp decline in stocks. That said, there has been an enormous amount of pressure on them to stop because of the distortive impact of what they are doing in return for little gain. I'm still a bull on Japanese stocks whose companies have some of the best balance sheets in the world, will be direct beneficiaries of the growth in Asia in the coming decade, the area of the world that will see the quickest pace of activity all with attractive valuations.

We've heard from former NY Fed president Bill Dudley this year after he drank his truth serum again after leaving the Fed. Now former Governor Kevin Warsh is doing a few shots of the same in today's WSJ and I'm a fan. "The Fed might be right. The surge in prices and wages might be transitory. The widespread anecdotes of worker shortages and significant wage increases might not constitute a sustainable trend. Inflation expectations might be stable. Count me skeptical of the Fed's convictions. The risks the Fed is taking with its winsome forecast are significant, and the consequences of policy error are severe...No other major central bank has adopted anything like the Fed's new framework...The Fed says it's still too early to slow its purchases of Treasurys and agency backed housing debt. If the Fed doesn't begin action imminently, it may be too late."

He even compared the current state of group think at the Fed to the behavior of the Soviet Union, not from a Gosplan standpoint (which is clearly applicable) but where "Maintaining a veneer of infallibility was more important to Moscow than accommodating changing circumstances. Dissent was strongly discouraged." What to do now? "Talking about tapering is a sideshow, however well publicized. What matters most now is what the Fed does, not what it says. The Fed should change its policy regime. It should stop buying mortgage securities immediately. Soon after, it should slow its purchases of Treasury debt. It should not tolerate Fed financed fiscal expansion. It should unlock the handcuffs imposed by its novel doctrine and render an informed and humble judgment on the state of the economy and the attendant risks to the outlook." Again, QE's direct impact is only in monetizing the exploding US debts and its psychological help to asset prices. There is no economic read thru and benefit. The Japanese and Europeans can also attest to that.

The May NFIB small business optimism index was little changed at 99.6 vs 99.8 in April. I listed the labor market components yesterday where 'labor quality' was the top business concern and here are the other relevant ones. I'll start with inflation as those planning Higher Selling Prices rose another 4 pts to 40%, the most since April 1981. It was 25% in February and 17% in January. Much of this right now is offsetting higher prices of products sourced, higher transportation costs, and higher commodity prices. With respect to the tight labor market and what that will mean? "Owners are offering higher wages to try to remedy the labor shortage problem. Ultimately, higher labor costs are being passed on to customers in higher selling prices." Yes, hopefully the supply of workers will increase in July and again in September when enhanced unemployment benefits expire and we'll see what that does to labor costs, but the bar is being raised and I just don't see how a 40 yr high in the desire to raise prices will be so transitory.

The stagflationary situation we are seeing where higher costs and labor shortages are slowing growth was reflected in the number of those that Expect a Better Economy. It fell a sharp 11 pts to -26%, the weakest print since January 2013. So yes, well below where it was a year ago. Those that Expect Higher Sales rose 1 pt to 2% but those that said it's a Good Time to Expand fell 1 pt. Inventory plans rose 1 pt while there was no change in capital spending plans after last month's 7 pt increase. The end result from a profitability standpoint, Earnings Trends fell 4 pts after rising by 8 pts last month. At -11%, it is in line with the 6 month average.

Bottom line, small business optimism peaked at 108.8 in August 2018 just as the tariff battle with China ramped up. It was 104.5 in February 2020. The NFIB said that notwithstanding what will be another good quarter in Q2 in part due to massive government spending, "There is much uncertainty, about Covid, about economy policy (taxes, regulations, etc...) and politics, globally and domestically."

HIGHER SELLING PRICES

I've said before but will again that Taiwan and its tech industry is now a crucial link in the global supply chain. They said exports rose 38.6% y/o/y in May, above the estimate of 30.5% and imports were higher by 41% vs the forecast of 30.5%. The world has a voracious appetite for its chips in particular.

There was some slippage in the economic expectations of German investors in the German economy in June as the ZEW index fell to 79.8 from 84.4. BUT, there was a sharp increase in the current conditions component which rose to -9.1 from -40.1. The estimate was -28. The ZEW said "The economic recovery is progressing. Although the ZEW Indicator of Economic Sentiment has experienced a drop in June, it remains at a very high level. The decline in expectations is probably largely due to the considerably better assessment of the economic situation, which is now back at pre-crisis levels." The euro didn't move much in response as it's about flat while bond yields are down slightly. Everything this week is about the ECB meeting on Thursday because how much longer can they rationalize the use full on of its emergency QE. That said, I'm sure they'll find a way.

It's old news but German IP in April was softer than expected. Blame the supply side.

* "What is your return policy, by the way?"

* The price of bitcoin is down another -$2,600 (or -7% ) this morning after the Department of Justice recovered the Colonial Pipeline ransom

* The recovery pricks the anonymity and safety arguments of bitcoin devotees

* I remain manifestly bearish on Bitcoin 

"Dead Dove, Do Not Eat. I don't know what I expected... You didn't eat that did you? Cause I have only a couple of days to return it."
- Arrested Development

My ursine view of Bitcoin is well known by subscribers: 

As I have written:

"The problem with fiat currencies, like the U.S. dollar, is that monetary authorities can create an unlimited amount of new dollars or other currencies - making it look, to some, like a Ponzi scheme.

The problem with cryptocurrencies, like Bitcoin and Ethereum, is that anyone can make an unlimited number of new cryptocurrencies- making it, too, look to some like a Ponzi scheme. Ponzi schemes and scams are only visible to those that have no sense of history or want to believe in magic.

I believe cryptocurrency is like Tinkerbell's light - its power source is based solidly on enough children believing in it."

Over the weekend, uber smart Jack Dorsey said (at the Bitcoin 2021 Conference in Miami): 

"Bitcoin changes absolutely everything. I don't think there is anything more important in my lifetime to work on... if I were not at Square or Twitter, I would be working on Bitcoin."

Who am I to argue with Jack (who founded both Square and Twitter)? 

Nevertheless, though some real smart people (like @Jack) are committed to Bitcoin - as you all know, I have expressed that I can't think of a bigger game of hot potato than digital currencies (h/t Smails). 

A few hours ago it was learned that the U.S. government recovered most of the ransom ($2.3 billion) stolen from Colonial Pipeline by the Russian hacker ring DarkSide ("ransom ware as a service") apparently by taking over the rented server that housed the virtual currency wallet holding the ransom.  

The response, below, from the Department of Justice is important as it relates to the view of Bitcoin's "safety": 

"The sophisticated use of technology to hold businesses and even whole cities hostage for profit is decidedly a 21st century challenge... But the old adage, follow the money still applies."

- Deputy Attorney General Lisa Monaco

This raises the question (first brought up by Mikey in our Comments Section) as to what makes Bitcoin safer than fiat money? Where is the secrecy that forms one of the arguments in favor of Bitcoin? 

So, if as reported, the U.S. Government took over a rented server housing the Bitcoin wallet of the monies paid by Colonial Pipeline - why does this make Bitcoin different than fiat money? 

The answer might be that the safety factor, previously thought to exist, is simply not there as Bitcoins were confiscated in a designated wallet. 

Most had thought that Bitcoin was impenetrable - that holding crypto in your own wallet was fail safe. 

Does this prove that if a human creates something, another can break it? 

Bitcoin's Price Is Under Pressure

The price of Bitcoin has been rolling over for months. 

The Bitcoin/gold ratio has been under very real pressure since early February. It was near 40 to1 nearly four months ago and it's under 20 to 1 now (to 17.4:1). 

I would not be surprised if the ration goes to 10 to 1 shortly and, ultimately, maybe even lower. 

Whither Coinbase's Shares?

One could argue that the stealing back of the Colonial ransom favors Coinbase's (COIN) shares, which will may be seen as a safe depository for digital currencies. Remember, Coinbase has materially expanded its prime brokerage capabilities. 

On the other hand, if the price of Bitcoin and other digital currencies erode further, it would seem that COIN's shares could move lower in sympathy. 

As previously written, I viewed the holding of a position in COIN as, importantly, a hedge against my negative view of Bitcoin and some other digital currencies. 

It now appears that my ursine view of Bitcoin is being realized. 

Based on the ransom recovery and the further decline, and clear rollover, in the price of Bitcoin - if I held a large position in COIN, I would likely sell some now and reduce the position's size. 

Bottom Line

Like wrestling icon "Rowdy" Roddy Piper, "I have come here to chew bubble gum and kick ass... and I am all out of bubble gum."

Despite protestations from some very intelligent digital currency observers, I remain a Bitcoin bear.

I think I should reassess getting back long gold and silver... 

What a non consensus call - buy precious metals/short Bitcoin?!?!?!?!?! 

Stated simply:

* The likely cause was the broad news outage

Futures took an abrupt decline in the last few minutes -- from +5 to -12 (on the S&P futures).

There was no macroeconomic news so I believe the broad news outage might be a factor. Here and here .

Perhaps it is some general fear of a hacking.

But, I am not sure.

What's the difference if you don't steal a bitcoin wallet but steal a rental cloud server -- it is still not protected?

MicroStrategy (MSTR) has been one of my favorite shorts. It's a company that parades as a software enterprise that is really a levered bitcoin play.
And, as you will see shortly, I am manifestly bearish on bitcoin:

Danielle DiMartino Booth: