I have a bunch of research calls to make now.
Thanks for reading my Diary today.
Enjoy the evening.
Be safe.

Here is what I wrote about (META) on Monday:

Oct 24, 2022 ' 04:13 PM EDT DOUG KASS

META Reality Check: Why Should We Listen to Gerstner?

Brad Gerstner's Altimeter Capital Management LP hedge fund owned 2.3 million shares of (META) at year-end 2021 (representing 7.5% of the fund).

At the end of the second quarter, Altimeter owned 2.4 million shares of META (representing 9.1% of the fund).

At year end 2021 META's shares traded at $337 a share -- and now only $129.

So, Altimeter has lost more than $550 million this year in the name.

No wonder he is upset and delivered a letter to the company!

But, I ask this respectfully, why -- with these results -- should we be listening to Gerstner on META?

After Hours Movers:

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I am not sure why Meta (META) rallied on the EPS miss and lower guidance, but I took advantage of the ramp and sold my incremental buy for a quick profit.

Core short, Sleep Number (SNBR) , -$8 or -20% on weak guidance.

Adding to Microsoft (MSFT) and Alphabet (GOOGL) near the close.

And I am also adding a very small position in meta Platforms (META) ($130) to my still small existing position, which hedged with short calls.

* FYI...

I probably traded more shares and options today than any day this year. 

And with the exception of some buys on the early dip, I would say over 90% of the trades were on the sell side.

From Wolf Street:
"No Easy Outs to Restoring Price Stability": Bank of Canada Hikes by 50 bpts to 3.75%, More Hikes to Come, QT to Continue, as "Unsustainable" Home Prices Plunge, GDP "Stalls"

I have sold most of my (QQQ) position at $282.64.

At 12:38 pm:

Breadth

View Chart »View in New Window »

Biggest Movers

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Heat Map 

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In a world dominated by passive products and strategies, price momentum dominates market action. 

Those buyers live higher - and those sellers live lower - and when coupled with active managers that behave like a herd of sheep who also worship at the altar of price momentum. 

It took me a bunch of years to figure this out!

Stocks are demonstrating a clear split personality today as the high cap techs and Nasdaq are being dragged by the earnings disappointment from Alphabet and Microsoft last night as projected by Katie Stockton, while the Dow is better, following the lead on the two year.

The interesting thing will be to see which side, if any, dominates the end of the day. The VIX continues to move lower and that suggests we may be getting ready for a bit of a pause in here. The technical cross signals are leading to a bit more looming confusion.

Obviously, the yields will continue to be a major case. So, therefore, we will watch them. It is interesting that the ten-year yield is important, but they are beginning to pay a good deal of attention to the two-year as it is seen as the markets trying to interpret the Fed's next move.

The key here will be - can the yields hold the Nasdaq back up to respectability or, as I suggested, are we ready to perhaps face a pause and even keep the split personality or maybe have slightly weaker technicals drag down on equities for a couple of days.

We will stick with the yields as the probably dominate indicator and see where they go from there.

Stay safe and have a great afternoon.

Arthur

I have substantially increased my cash position and reduced my net long exposure.

I have sold my entire (SPY) long position at $385.55.

From Peter: 

The Bank of Canada has shocked us with only a 50 bps rate hike to 3.75% instead of to 4% that as expected while continuing on with QT. There was no color in the statement as to why they unexpectedly downshifted to a 50 bps increase after going 75 bps in September and 100 bps in July. But, they did say that "Given elevated inflation and inflation expectations, as well as ongoing demand pressures in the economy, the Governing Council expects that the policy interest rate will need to rise further" and they said that they will be closely watching the impact of these interest rate hikes on inflation and "how supply challenges are resolving."

As for why they only went 50 bps, I'm going to guess that it is due to their worries about the housing market where many have adjustable rate mortgages (The Canada Mortgage and Housing Corp said that about 50% of home buyers went for ARM's in the last 6 months of 2021 vs 34% in the 1st half of 2021) but they did say in their statement, "The Bank expects CPI inflation to ease as higher interest rates help rebalance demand and supply, price pressures from global supply disruptions fade, and the past effects of higher commodity prices dissipate."

The Canadian dollar reversed lower immediately following the news but is only down slightly. The 2 yr yield is lower by 24 bps to 3.91%, a 3 week low.

The ECB is expected to hike by 75 bps tomorrow and off a base deposit rate of .75%, I don't expect them to flinch like the BoC just did.

Intraday CAD move

New home sales in September totaled 603k, 23k more than anticipated and vs 677k in August which was revised lower by 8k. Smoothing out this volatile data point has the 3 month average at 608k vs the 6 month average of the same 608k, the one yr average of 687k and the 2021 average of 769k. For perspective, it averaged 683k in 2019. Months' supply (where not all of these homes are done) was 9.2, remaining very elevated. The median home price rose 14% y/o/y but also very volatile as mix skews it month to month.

The think the visual below of the number of new home sales is a good bottom line since we are clear on the macro picture for housing and the affordability challenges.

New Home Sales

Lastly, ahead of tomorrow's GDP print, expect a cut to Q3 GDP estimates after the higher than expected September goods trade balance and slightly smaller than expected rise in wholesale inventories.

(At the request of several subscribers, this will be a regular feature.) 

There was clearly no shootout on the NYSE floor between the bulls and the bears on Tuesday. Heck, there was hardly even a standoff. The geopolitical scene with stirrings in China and London and elsewhere that had roiled markets for days quieted down and that allowed the bulls to make an early overture that was successful. We pointed to some of that in this late morning update:

Late Morning Update 10.25.22: The relative quiet on the geopolitical front and a couple of minor down ticks in yields have given the bulls enough energy to push further on this "tradeable bounce". The earnings that we have seen so far are more than tolerable and have also contributed to the bounce. They were entitled to slow down and have a consolidation day and maybe slip a little bit toward the overbought side, but we will see how they progress through the afternoon. As usual, yields will be the key factor and the ten-year getting up to 4.30% will catch everybody's attention and potentially put pressure on equities. Overall, the bulls seem to be on automatic pilot. Let's see if they can maintain enough ammunition to keep going through the afternoon. Stay safe and alert.

In the update, we also alluded to a minor downtick in yields. As the morning wore on, it went from minor to significant with the yield on the ten-year dropping a nearly astonishing 14 basis points. So, having been up around the 4.30% area late Monday and overnight, a tick down to the area of about 4.09% assisted the bulls and they clearly maintained the game all the way through. They managed to close them not far from the days highs and that gave strong support to that tradeable bounce that we have been talking about.

The market breadth, however, is beginning to deteriorate a little bit and we are beginning to see some signs of other weakening in the technicals, although the tradeable bounce could have a few more days to go, but we are going to start checking its life support systems and see where we go, but as long as yields are softer, it should be okay.

In the early afternoon, the estimable, Katie Stockton, the current Queen of Technicians, tweeted to some friends and clients that she will be carefully watching not only the earnings Tuesday night in the high techs, but also how the stocks reacted overnight and wondered, if the reaction was significant to the downside, would it take each of these important technology stocks back down near the summer lows.

Once again she was insightful because, shortly after the close, as the earnings came out, there was some early signs of disappointment, although I am not sure the weakness was enough to meet those summer lows, but we will get out the compass and protractor and take a look at the charts and the overnight futures trading in those stocks.

Overnight, yesterday's softness in the dollar along with relatively quiet geopolitical headlines have allowed foreign markets to be relatively stable. In Asia, the dollar softness is probably showing the best benefit. Markets in Japan, Hong Kong and Mainland China are stable with even a couple of mild plus upticks. Of course, the fact that there is no new political moves or surprises in China is helping.

In Europe, markets are a bit more nervous, although not moving in any great amount. They are seeing some minor downticks as they are trying to assess what is going to happen with the new Prime Minister and will they, in fact, stick with the program of a new budget before month end or will that change. So, trading there remains relatively quiet.

U.S. equity futures are showing deference to the wisdom of the canny Ms. Stockton with earnings surprises in the high cap techs weighing on the Nasdaq. The Dow looks slightly lower. The S&P had a greater influence, but the Nasdaq is, so far, the leader on the downside. The U.S. calendar is moderate. Pre-opening, we are going to get the mortgage data and then international trade, retail and wholesale inventories.

At midmorning, we will get new home sales and oil inventories. At 11:30, the results of a two-year floating rate note auction and then at 1:00, there is a five-year treasury note being auctioned off, which will probably garner a lot of attention. So, the third day of the continuation of the tradeable bounce has left us somewhat overbought - not screamingly so.

Again, we are seeing some signs in the technicals causing the check engine light to go on and we will pay careful attention to how they trade from here. We also will be looking out for any pearls of wisdom from the insightful Katie Stockton. You know the standard drill. Since geopolitics is still center stage, stay close to the newsticker.

Keep your seatbelt fastened. Stay nimble, alert and please stay safe.

* I would argue that Warren Buffett has been the greatest investor in modern investment history

* However, as I cautioned when I appeared nine years ago at the company's Annual Meeting, Berkshire Hathaway's shares have underperformed the S&P Index over the last two decades

"Reflections of

The way life used to be
Reflections of
The love you took from me

Oh, I'm all alone now
No love to shield me
Trapped in a world
That's a distorted reality"

- The Supremes, Reflections

One of the most exciting parts of my investing career took place nine years ago:

Nerves and Steaks in Omaha

As the hand- picked credentialed bear selected by Warren Buffett (here and here) at Berkshire Hathaway's  (BRK.A) (BRK.B) 2013 Annual Meeting , I sat on the dais in front of 40k of his adoring fans - peppering Charlie and Warren with some hard hitting questions.  

The very first question I asked The Oracle of Omaha proved prescient: 

Question No. 1 -- Size Matters

Q: As it is said, Warren, "Size matters!"

In the past, Berkshire bought cheap or wholesale -- for instance, Geico, MidAmerican Energy, the initial Coca-Cola purchase and Benjamin Moore. Arguably, your company has shifted to becoming a buyer of pricier and more mature businesses -- for instance, IBM, Burlington Northern Santa Fe, Heinz and Lubrizol, which were done at prices to sales, earnings and book value multiples well above the prior acquisitions and after the stock prices rose.

Many of the recent buys might be great additions to Berkshire's portfolio of companies, however, the relatively high prices paid for these investments could potentially result in a lower return on invested capital. In the past you hunted gazelles, but now you are hunting elephants.

To me, the recent buys look like preparation for your legacy, creating a more mature, slower-growing enterprise. Is Berkshire morphing into a stock that has begun to resemble an index fund that is more appropriate for widows and orphans rather than past investors who sought out differentiated and superior compounded growth?

In the past, you have quoted Benjamin Graham, saying "price is what you pay -- value is what you get." Are your recent deals and large investments bringing Berkshire less value than the deals done previously?

A: Warren admitted that Berkshire won't grow as rapidly in the future as it has in the past but it will still generate a lot of incremental value. "We think we will do better than the giants of the past," he said. Charlie chimed in and said much of the same. Warren then exclaimed, "Doug, you haven't convinced me to sell the stock, but keep trying!"
__________

It can and should be argued that Warren Buffett has been the greatest investment manager over the last six decades. 

But, my question and comment nine years ago has run true. 

Nearly a decade after my appearance in Omaha, Berkshire Hathaway's shares have underperformed the S&P Index over the last 20 years:

"As I peer through the windows
Of lost time
Keeping looking over my yesterdays
And all the love I gave all in vain
(All the love) All the love
That I've wasted
(All the tears) All the tears
That I've tasted
All in vain..."

Hilton (HLT) beats by $0.07, misses on revs; guides Q4 EPS in-line: 

Reports Q3 (Sep) earnings of $1.31 per share, excluding non-recurring items, $0.07 better than the S&P Capital IQ Consensus of $1.24; revenues rose 35.4% year/year to $2.37 bln vs the $2.41 bln S&P Capital IQ Consensus.

• Co issues in-line guidance for Q4, sees EPS of $1.15-1.23, excluding non-recurring items, vs. $1.18 S&P Capital IQ Consensus.
• Full year 2022 system-wide comparable RevPAR is expected to increase between 40 percent and 43 percent, on a currency neutral basis, compared to 2021.

• System-wide comparable RevPAR increased 29.9 percent, on a currency neutral basis, for the third quarter compared to the same period in 2021.
• System-wide comparable RevPAR increased 5.0 percent, on a currency neutral basis, for the third quarter compared to the same period in 2019.

• System-wide comparable RevPAR, on a currency neutral basis, is expected to increase between 19 percent and 23 percent compared to the fourth quarter of 2021, and to increase between 2 percent and 6 percent from the fourth quarter of 2019.

At 8:00 am:
New Feature

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I agree with Peter, after the December rate hike The Fed will be done:

On August 5th, 2021, a week after an FOMC meeting, Senator Joe Manchin penned a letter to 'The Honorable Jerome Powell' and wrote the following:

"With the recession over and our strong economic recovery well underway, I am increasingly alarmed that the Fed continues to inject record amounts of stimulus into our economy by continuing an emergency level of QE...despite increasing vaccination rates to combat the virus and additional fiscal stimulus from Congress in the ARP. The record amount of stimulus in the economy has led to the most inflation momentum in 30 years, and our economy has not even fully recovered yet.

"I am deeply concerned that the continuing stimulus put forth by the Fed, and proposal for additional fiscal stimulus, will lead to our economy overheating and to unavoidable inflation taxes that hard working Americans cannot afford...But, now it's time to ensure we don't over prescribe the patient by further stimulating an already strong recovery and therefore risk our ability to respond to future crisis we are sure to face. I urge you and the other members of the FOMC to immediately reassess our nation's stance of monetary policy and begin to taper your emergency stimulus response."

How right he was and when trying to figure out when the Fed would end its monetary tightening I always thought it would be possibly timed soon after the letters from Congress would be sent to Powell instead focused on the employment conditions of their constituents.

This brings us to yesterday's letter, one week before the next FOMC meeting, from Senator Sherrod Brown to 'The Honorable Jerome Powell' who wrote the following:

"It is your job to combat inflation, but at the same time, you must not lose sight of your responsibility to ensure that we have full employment...Monetary policy tools take time to reduce inflation by constraining demand until supply catches up - time that working-class families don't have...We must avoid having our short-term advances and strong labor market overwhelmed by the consequences of aggressive monetary actions to decrease inflation, especially when the Fed's actions do not address its main drivers. For working Americans who already feel the crush of inflation, job losses will make it much worse. We can't risk the livelihoods of millions of Americans who can't afford it. I ask that you don't forget your responsibility to promote maximum employment and that the decisions you make at the next FOMC meeting reflect your commitment to the dual mandate."

How right he might be but both Senators did their best to neuter the Fed's independence with the political pressure and I will now argue that after the November meeting rate hike of 75 bps and another one of likely 50 bps in December it will mark the end of the Fed's rate hikes. And, we'll see how far past that they get with QT.

The Bank of Canada by the way is expected to hike interest rates by 75 bps today to 4% and as other central banks continue to tighten as we debate when the Fed will be done, just maybe the dollar rally has ended if you believe as I do that the only reason for its rally has been interest rate and central bank differentials. The DXY is now down for the 5th straight day and just maybe my gold and silver trade can start working again. With respect to the dollar being down again but stocks too (a change in trend if sustained), it's possible that we've fully entered phase 2 of the bear market where it becomes all about the trajectory of economic growth and earnings.

With another jump in the average 30 yr mortgage rate to 7.16% from 6.94% in the week before, purchase apps fell 2.3% w/o/w to the lowest since 2015 and are now down 42% y/o/y. Refi's were flat w/o/w but lower by 86% y/o/y.

Purchase Apps



Here are some notable comments from company conference calls and/or press releases yesterday:

MSFT

Firstly, FX took off 500 bps in revenue growth. "In our consumer business, PC market demand further deteriorated in September, which impacted our Windows OEM and Surface businesses. And reductions in customer advertising spend, which also weakened later in the quarter, impacted search and news advertising and LinkedIn Marketing Solutions...Microsoft cloud gross margin percentage decreased roughly one point driven by sales mix shift to Azure and lower Azure margin, primarily due to higher energy costs...Azure and other cloud services revenue grew 35% and 42% in constant currency, about one point lower than expected, driven by the continued moderation in Azure consumption growth."

GOOGL

"On the second quarter earnings call, we noted a pullback in spend by some advertisers in YouTube and Network, and these pullbacks in spend increased in the third quarter. In Search and Other, the largest factor in the deceleration in Q3 was lapping the outsized performance in 2021. In the third quarter, we did see a pullback in spend by some advertisers in certain areas and search ads. For example, in financial services, we saw a pullback in the insurance, loan, mortgage and crypto subcategories."

On hiring, "As we noted on our second quarter call, our actions to slow the pace of hiring will become more apparent in 2023...In the fourth quarter, we expect headcount additions will slow to less than half the number added in Q3 (which was 12,765 people)...Within this slower headcount growth, next year, we will continue hiring for critical roles, particularly focused on top engineering and technical talent."

GM

"As we move into 2023, we continue to see the dynamics between commodities and pricing as a natural hedge that should trend in similar directions, helping to maintain the earnings power of the company. We also continue to see strong demand for our products, and we'll remain thoughtful in our approach to pricing...And as we said last quarter, we're already taking proactive steps to manage costs and cash flows, including reducing some discretionary spending and limiting hiring to critical needs and positions that support growth."

On credit quality, "our credit metrics are really still quite strong. Pre-pandemic, our net losses ran in the 1.5% range. So they're less than half of that now at 70 bps. For several years running now, our portfolio is skewed more and more to prime consumers, and that's defined as 680+ FICOs." In contrast, "Our used car nonprime book is showing more normalization. And as always, we always look for targeted ways to improve our underwriting, and now is no exception. So that would be the area of most focus, the used car nonprime book."

TXN

"During the quarter we experienced weakness in personal electronics and expanding weakness across industrial."

V

"Payment volumes and processed transaction indexed to 2019 have been very stable in the US and globally for the past three quarters...Travel related cross border volumes were 18% above 2019...As we've said before, we are not economic forecasters. Clearly, there's a high risk of a global recession, but we do not have a specific point of view on if, when, or the kind of recession we might have. For internal planning purposes, we are assuming no recession. Of course, we will stay very vigilant, closely monitoring our trends day by day."

Likely helped by the drop in energy prices, consumer confidence in France in October rose 3 pts to 82 and that was 5 pts better than expected. As the ECB will most likely hike by 75 bps next week, along with the factors I mentioned above, the euro is rising for the 7th day in the past 8. Bond yields are higher and stocks in the region are mixed. 

This chart is a valuable tool and resource for short term traders:

View Chart »View in New Window »

From perma bull JPMorgan's Dubravko - who for the entirety of 2022 has never said that he was woefully wrong in his market forecast:


Source: JPMorgan

* The market moved into an overbought yesterday

* Despite lower bond yields - I consistently am adding to Treasuries - I continued to reduce my net long exposure

This daily feature is like inside baseball. I try to show you and write about what I believe thoughtful hedge fund managers are looking at when they awake, setting the stage for their strategy in the day. The market is a complicated mosaic and the more info you have the better trader and investor you will be!

* "All investment roads lead to interest rates" continues to be the market's mantra and the watchword of my investing faith. Sure, there will be days of delinkage but in the main as bonds go, so do stocks. Before the disappointing tech EPS were released after the market's close, the proximate cause for Tuesday's sizeable rally in equities was the rally in fixed income with bond yields gapping lower yesterday.

Goodbye TINA (There Is No Alternative), hello TATA (Treasuries Are the Alternative) - with bonds now providing a bonafide alternative to stocks, for the first time in years higher bond intermediate term opportunity for income and even some price appreciation - after the biggest bond rout in history this year.

The negative is that with the market voting in the near term but weighing over the longer term - the absolute level of domestic and non US interest rates will continue to be a headwind to equities and provide a cap to the current stock market advance as it raises the cost of capital and the risk-free rate of return used in discounted dividend models.

I continue to believe that we are at the terminal stage of the rate advance - indeed results, business weakness, at (MSFT) and (GOOGL) reinforce my view. Fixed income products remain especially compelling on a return basis for those that have low risk tolerance and don't want to be involved in the growing chaos, uncertainty and volatility in the equity markets.

* S&P futures were lower overnight, but not terribly so, after Tuesday's robust rally - with disappointing tech earnings the immediate cause.

* A still elevated VIX (implying daily moves of greater than 1 1/2%) is providing a lot of intra day volatility! To me, this requires attention and action as VAR (value of the portfolio at risk) rises along with a higher VIX - in other words your portfolio's change in daily value is growing more extreme. One should adjust exposures in this market based on your risk appetite and risk profile. However, last night's futures action was an exemption to the last few days as the action was tight and range bound.

* I continue to watch for continuing signs of dollar funding stress with the three month FRA/OIS spread widening.

* The U.K. and the European Union's economic and financial uncertainties, punching above their weight - of taming inflation on one hand and resuscitating economic growth on the other - remain the concern du jour. As I wrote Monday, who would have thought several months ago, that U.K. policy would be the tail that wags the U.S. market's dog? The unprecedented instability of currencies and interest rates continues to underscore the likely end of the salad days of easy financial conditions and likely holds the key to the prospective course of global equity markets during the near term.

Elevated global short-term interest rates remain a market hurdle and could be a restriction for meaningful gains from here - that has been my view for a while. Anyway, this results in me looking at U.K. gilt yields and the pound's value when I arise at 4 am, even before reading about the baseball playoffs (crap!). This morning sterling was little changed and gilt bond yields are lower (see below).

* The bond market continues to catch a bid. The yield on the U.S. 2-Year Note was -3 to -4 basis points lower this morning after advancing dramatically over the last few months. The yield on the 10-Year was down by seven basis points, to yield 4.046% after experiencing a large runup in the last week as well. The 10-year U.K. gilt yield is tame for a change and -2 basis points. It appears I sold out my (TLT) a bit too early!

* Yesterday, the Chinese stock and currency markets came into focus - with the yen at 7.3 to the US Dollar - lowest since The Great Decession in 2008-9 and Chinese equities have since stabilized. 

* Into the teeth of this week's rally I placed my foot off the accelerator and back on the brake. While I remain relatively optimistic - I dispassionately bought the weakness when many were fearful - I am less bullish now, reflecting the size and slope of the market's advance in a brief period of time, the sudden delinkage between stocks and bonds, still high bond yields as a competitive alternative, and now that everyone seems to be getting on board with the momentum - several commentators magically and wrong footed declared their optimism yesterday - price has a way of changing sentiment! (see my post on momentum from yesterday, below in my summary of Diary columns). As well, as noted in my Diary, market breadth. though positive yesterday, has been waning and has not been up to snuff.

*The U.S. dollar is weaker this morning. Overnight, non-U.S. currencies, especially the pound and the Eurodollar, are somewhat improved. The Yen the same, yesterday it was quite weak. The recent climb in overseas interest rates is the byproduct of ill-timed (2021-2022) and now hawkish monetary policy, and what appear to be related reverse currency wars are non-trivial reasons why the market has declined, the VIX is over 30 (rear view?) and many are fearful. Yuan strengthened against the US dollar after coming off of real weakness.

* Investor sentiment remains sour but, along with higher stock prices has begun to improve. Specifically I would note that the S&P Oscillator turned positive at Friday's close, gapped higher and got more more overbought last night. That's a caution sign for me.

* Market inflation data have noticeably moderated, softening labor and commodities in recent months. In the last few days I have highlighted the imminent weakness in rental and home prices, which work with a lag in the data. Mortgage rates of 7% will hand homeowners a bum deal and I now believe that home price drops will accelerate relative to consensus expectations (see this morning's tweet of the day). This morning soft commodities are broadly higher after falling on Tuesday. Brent oil was +$0.23 per barrel to $93.74 - as noted I have been shorting (OIH)  - I put on more yesterday.

"Workin' on our night moves
Trying to lose the awkward teenage blues
Workin' on our night moves
In the summertime
And oh the wonder
Felt the lightning
And we waited on the thunder
Waited on the thunder."

- Bob Seger, "Night Moves"

The market (and money) never sleeps -- and neither do I, it appears!

I described the importance that overnight futures trading holds for me here. It is a guidepost to my strategy in the regular trading session.

Moreover, the overnight/early morning futures hold opportunities as they are (1) inefficient, though liquid, and (2) it seems fear and greed is often exaggerated outside the regular trading session.

After the "tech wreck" S&P and Nasdaq futures trended lower all night.

In recent weeks, during these volatile markets, I have kept a bead on volatility as well as currency rates. In Thursday's decline, VIX dropped by nearly one handle and, on Friday dropped again. VIX continued lower Monday and Tuesday - proving to be a good tip off to the rally in equities. This morning VIX was up by -0.09 to 28.37. If the VIX continues to fall, my S&P straddle should pay off.

Gold has recently shown some life after being weak for months. This morning it was up by almost $20/oz.

This morning Brent oil was +$0.21 o $93.73/barrel. Late last week I started a small short in VanEck Oil Services ETF (OIH) and I added on Friday, Monday and Tuesday. More on this later in the week.

Bond yields continue to represent the greatest risk to equities - the price action is stronger in price, weaker in yield this morning both in the US and UK. However, the tech wreck should mitigate against those price gains. Generally, with rates spiraling ahead equities grow harder to value. Bond yields, the equity market's nemesis, are likely responsible for a large portion of the market's drubbing this year.

The S&P Oscillator finally moved positive on Friday - at 0.16% - after being in the range of -3% to -4% for about 10 days. It closed on Monday at 1.79% and gapped to 4.16% at yesterday's close. With the tech issue (post close) I suspect it comes down today. With the emerging overbought I have stepped off the accelerator of adding to equities, as a result and have put on the brake a bit as the oscillator has been a good short-term trading tool over the last few months. Remember, when the oversold is extreme I tend to be more of an aggressive buyer and vice versa.

Cryptocurrencies were finally higher after lackluster trading for a few weeks. Bitcoin is +$4 - to nearly $20.5k. I continue to have zero interest in it.

S&P futures peaked at -17 and bottomed at -46. At 5:27 a.m. ET futures were -25 handles.

Nasdaq futures peaked at -145 and bottomed at -265. At 5:28 a.m. ET futures were -183 handles.

Here is a synopsis (link) of some of my columns I believe were important, or in the event you were out yesterday. The principal intent is to review the logic of my market moves and other factors:

My key column was...Minding Mr. Market where I cautioned:

"Price has a way of changing sentiment."

- The Divine Ms M

While I have been more bullish - and I have documented why in my Diary - than many in the last month, I am increasingly concerned about the rising tide of optimism - in some cases coming from previously self confident bears.

As far as I can see, the prevailing view seems to be based on two factors:

* The current price momentum

* Expectations of seasonal strength over the next two months

While there are numerous reasons to be constructive, to this observer, these two factors are not rigorous reasons to become bullish.

In fact they are poor reasons and a dangerous/slippery slope to become bullish.

Home Price Gains Slow, Confidence Slips, US Manufacturing Is in Recession

More Lessons Learned

This next section provides transparency and a further record in memorializing my good and bad investments - frankly, there are a lot of disingenuous actors who smile and get away in the business media with disastrous recommendations of individual stocks and in piss poor market projections: 

* Oct 25, 2022 ' 12:50 PM EDT DOUG KASS

Long Positions

I have accelerated my paring of long positions into strength.

* I sold my TLT for a profit.

* I shorted calls against a portion of my (PNC) and (C) longs. 

* New bank long - (USB) . That makes seven bank holdings. 

* Added to (PARA) , (WBD) and (PINS) longs. 

* Shorted more OIH. 

* Shorted MSFT (covered and went long early this morning)
__________ 

Long SPY, QQQ, PARA common and calls, WBD, PINS common and calls, PNC, C, USB.

Short SPY puts and calls, QQQ calls, PNC calls, C calls, OIH. 

Jim El Capitan Cramer on cannabis.

Break in!

UK gilt bond yields just took a sudden reversal - were down, now up - as UK medium term fiscal plan is being delayed.

I covered the balance of my (MSFT) at about $236 and went back long. 

dougie kass

I covered the balance of my MSFT short at $236 and went long. (4:08AM Wed morning)
Dougie