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DAILY DIARY

Doug Kass

Getting Shorter

* But still taking baby steps...


I am going through the press releases and conference calls.

Generally speaking, the guidance was weak at most of the reporting companies.

I am selling some indexes ( (SPY) and (QQQ) ) -- basically flat from close.

Position: Long SPY (S) QQQ (S); Short SPY calls (S) and puts (S) QQQ calls (S) and puts (S)

After-Hours Movers

View Chart »View in New Window »

Position: None.

Papa, Get the Camera: The S&P Is Taking Baby Steps!

* Getting a bit shorter

* But still making "baby steps"

Bob Wiley: ...baby step onto the elevator... baby step into the elevator... I'm *in* the elevator.

[doors close]

Bob Wiley: AHHHHHHHHHHHH!

- What About Bob? 

S&P cash is +36 handles now (high of the day) -- and I am shorting some indexes.

I am going slow and incrementally.

Thanks for reading my Diary today - I hope it was value added.

Enjoy the evening.

Be safe.

Position: Long SPY (S) QQQ (S); Short SPY calls (S) and puts (S) QQQ calls (S) and puts (S)

Howling Prices

Wolf Street on inflationary pressures "over there."

Position: none.

Recommended Viewing

Hedgeye's Keith McCullough and Chris Whalen. Run, don't walk, to watch.

Position: None

Why Banks May Be Weak

There have been a bunch of useless conversations (without any information) about financial stock weakness in the business media today.

My two bits: I suspect it might be a combination of Blackstone (BX) /Commercial Real Estate headlines, fears going into next week's conferences and updates (funding beta concerns) and the Silvergate (SI) fiasco (which could make regulators get more aggressive).

Position: Long XLF (M); Short XLF (S)

More Net Short Exposure

Again, for emphasis, the poor bank action emboldens to begin shorting strength -- among other issues.

with S&P cash, I am making my second small and incremental move to expand my net short exposure.

Position: Long SPY (S) XLF (M); Short SPY calls (S) and puts (S) XLF (M)

Slight Net Short

With S&P cash up by over 20 handles I have moved to a slight net short exposure.

Position: Long SPY (S) QQQ (S); Short SPY calls (S) and puts (S) QQQ calls (S) and puts (S)

The Media Throws Soft Balls and Too Often Fails to Provide Critical Interviews

* To embark on anything else is value destructive for their viewers

* I and many others are sick and tired of this

For years I have been outspokenly critical about how weak the business media often is in interviewing company executives.

Invariably, it is only after the fact (as was the case with Silvergate's (SI) woes or FTX bankruptcy) that the business media delivers clarity.

Here are two vivid examples -- in which two CNBC moderators interview Silvergate's CEO back in November and interview Sam Bankman-Fried of FTX two months before declaring bankruptcy.

In the first interview with Silvergate there are nearly no questions to the company's CEO (who essentially gives a soliloquy) -- likely reflective that the interviewers had done little homework or preparation.

But there are so many, many more examples of a lax and lazy media (that ends up harming its own viewership). Of course this nonsensical interview with FTX's SBF is the most classic one -- a total "puff piece" done two months before FTX's bankruptcy, which I am sure CNBC would like to forget.

Position: None

Large Gross, Small Net (Exposure)

Tomorrow morning I will discuss further my tactical approach to the markets in my hedge fund, Seabreeze Capital Partners LP.

Stated simply, I am essentially (95%) fully invested now (in gross terms) but my net exposure is small (and on either side of market neutral).

More on this important stance on positioning in an uncertain market in my opener on Friday.

Position: None

Sir Arthur's Midday Musings

Midday musings from Sir Arthur Cashin:

Sharp rally in Salesforce continues to distort trading in the Dow by adding over 150 points to the Dow rally all on its own. The Dow strength, in turn, distorts trading in the other indices, which were weakening, but for trading arbitrage reasons were held up from any cascade selling by the strength in the Dow.

Those distortions, to some degree moderate the effect in the move up in the ten-year, which would have a more significant effect were it not for this distortion down the middle.

So, this afternoon's action will be key. If the Salesforce distortion were to dissipate or change, then we will see what the market really wants to do with its own internal technicals, but as long as that is going on we are not seeing the "real" picture.

Stay safe.

Arthur

Position: None

Blackstone Watch

On Blackstone (BX) :

Position: None

Subscriber Comment of the Day

TechNova

(TSLA) : Having watched the entire presentation last night I have a few thoughts.

1,. Elon really needs to go back and watch Steve Jobs's presentations during Apple Special Event Days.

Those who read my postings know that I don't often lavish praise on Elon, but I will say that I was rather impressed with the breath of ideas and concepts they are exploring, developing, considering, and moving forward with. I was also impressed with how tightly integrated the various development departments at the company are (not an easy feat). But all of this data, and interesting work, was absolutely buried in a muddied, low energy, mumbling presentation. I can totally understand why Elon loves Twitter now. Gets to use Memes and Emojis in a short sentence and be done. Jobs would stand on stage for 2 hours and get his biggest applauses close to the end of the 2 hours.

2. Elon is over worked.

From the presentation, it is clear that Elon has a very bright engineering mind. There is a holistic approach to the entire ecosystem that I think has no equal at other car companies. That said he was mumbling, forgetful, and paused sometimes from a lack of momentum and that is often a symptom of sleep depravity. Putting him on stage in that state was a terrible mis-step. Naturally, if he had not appeared, the stock would have tanked further. But he set this date a while ago, he should have prepared both physically and mentally for this event.

3. TWITTER

I mentioned this yesterday. Had he announced a successor at TWTR, the stock would be up today. I am doubly confident of that now. Folks would have excused the mess and would have been more willing to look past last night.

4. The Future

This will come as a surprise, but after last night I am not as Bearish of view on TSLA. From a tech perspective, this company is being run like no other I know of. The folks in charge of their various sub-divisions seem to have a solid command of their areas, and I found their ability and willingness to constantly interrupt and correct Elon to be a major positive. It shows that he is not driving the day-to-day operations at a Micro level. For a guy with such a busy plate, I took that as a major positive.

Conclusion

Is TSLA expensive? Yes. It sure is. That metric is not even close. Should it be valued by the metrics of Ford, GM, and the others? Not by a long shot. Quite literally Apples and Oranges. If Elon can dump the responsibility of TWTR to someone else and rest a bit, I may go long TSLA at some point. Unfortunately, he has an addictive personality, and TWTR is a drug from him, it is the only reason he overpaid by $20B for the company.

Good luck!

Position: Short TSLA (S)

Where I Stand With MP

MP Materials (MP) had a ridiculously strong move recently (from $24-$26 when I purchased the shares in early January 2023 to $36). I began to reduce my positiion earlier in the week and yesterday:

Mar 01, 2023 ' 12:03 PM EST DOUG KASS

Selling Some 'Materials'

Selling off some MP Materials (MP) on today's nice move higher.

After today's buy and calls sale I am market neutral (on a delta-adjusted basis) in the name.

Position: Long MP (M); Short MP (M)

As Financials Go, So Goes the Market?

As financials go, so goes the market?

Position: None

Adding to 6 Shorts

In the modest rally I am adding to the following shorts: (MS) , (KSS) , (LOW) (HD) , (WGO) , (TSLA) .

Position: Short MS (S) KSS (VS) LOW (S) HD (S) WGO (S) TSLA (S)

Yond Cassius Has a Lean and Hungry Look

Let me have men about me that are fat,Sleek-headed men and such as sleep a-nights.Yond Cassius has a lean and hungry look,He thinks too much; such men are dangerous.

-- William Shakespeare


Slimming down my longs as I am a bit fear of a potential cascade lower.

Out of FREYR Battery (FREY) .

Position: None

Boockvar on Jobless Claims and Sentiment

From my friend Peter:Initial claims fell by 2k w/o/w to 190k and that was 5k less than expected. The 4 week average is now 193k vs 191k last week. Continuing claims were down by 5k w/o/w to 1.655mm and that is a 4 week low. Bottom line, notwithstanding all the signs of an imminent labor market slowdown, we keep being reminded that at least on the firing side, companies outside of tech are still hanging on to their employee base. With respect to those continuing to receive claims, while they are near the highest in a year, they are still below where they were in February 2020 when they stood at around 1.8mm. Yields went straight up right after the data release with the 2 yr yield now knocking on the door of 5% at 4.93% and the 10 yr yield rising to 4.07%. With respect to stock market sentiment, Investors Intelligence yesterday said the number of Bulls fell to 38.4, down 6 its w/o/w and that is getting near the 2022 yr end low of 36.6. Bears rose 2.2 its to 28.8 but is well below where it was back then as more are just expecting a correction. Today, AAII said Bulls rose 1.8 pt 23.4 but only after falling by 12.5 pts last week. Bears were higher for a 3rd month, by 6.2 its to 44.8 and that is the most since late December 2022. The CNN Fear/Greed index is just about dead on at Neutral with yesterday's close at 49. That though is down from 60 last week and a closing high of 77 last month.Bottom line, the pullback in stocks has definitely shaken out a good amount of the bullish giddiness we saw thru January but has been jarred by the recent spike in interest rates post January payroll report as we know. I wrote a few weeks ago that yeah, rates matter and we're certainly getting reminded of that again.

Position: None

More Trades -- Including Tesla

I sold some more MP Materials (MP) calls against the common on the rally from the day's lows.

Added to Tesla (TSLA) short at $192 -- still small.

Position: Long MP (M); Short MP (M) TSLA (S)

Adding and Selling

Added to MP Materials (MP) at $30.88.
Sold the balance of my PureCycle Technologies (PCT) .

Position: Long MP (M); Short MP calls (S)

From the Street of Dreams (Part Trois)

Goldman Sachs maintains sell in Kohl's (KSS) (lowers price target to $24).

Position: Short KSS (S)

More on Tesla

Position: Short TSLA (S)

The Book of Boockvar

In another sign that moderating business activity is metastasizing, the economic slowdown is now trickling down to law firms. In today's FT, there is an article titled "Law firms squeezed as clients retrench." The first sentence said "Companies are seeking to cut their legal bills as they struggle with rising input costs and interest payments, some of the largest law firms have warned." They quoted a few different lawyers covering different regions of the world. A European and Middle Eastern managing partner of Reed Smith said "We had a number of clients who said 'I'm not going to pay you all that now, I'll do it over a different timeframe.'"

The head of a large US law firm "told the FT that a client had asked for a discount for the 'first time in years' and that the firm was 'not getting paid by some clients', particularly in the technology sector." A trial lawyer said "clients 'under pressure' were asking 'can you help us out?' He added that some clients were requesting fixed fee deals, for example, where they pay a set amount rather than paying by the hour."

An area of the economy that is still doing well though is the live entertainment business, like concerts and sporting events. Live Nation last week in their earnings release/call talked about still robust demand for concerts and yesterday Endeavor (a stock we own and like) did the same with respect to their UFC and PBR (Professional Bull Riding) businesses along with their Events and On Location subsidiaries. In a question to what they are seeing from the consumer, CEO Ari Emanuel said in their call, "to-date we see limited impact of what we're seeing in the - we're all reading about inflation, etc...And we see solid performance across the board, whether that would be 300,000 people attending the Madrid Open. Hyde Park Winter Wonderland did exceedingly well...So going into the beginning of the year, our events, there was no indication that there was any slowdown in the consumer demand for experiences and to be out there." Similar to Live Nation, on their representation side, "we've booked over 40,000 music engagements. So there is 29 sellouts from the UFC in a row and some of the high end experiences with On Location were at $50,000."

CNBC's Lori Ann LaRocco interviewed the CEO of MSC, the world's largest container line and he was "moderately optimistic that the world will resume again (in the 2nd half of 2023). I think when we come to the middle of this year, we'll probably start seeing trade move. I would suspect when we get through the 2nd quarter and into the middle of the year, we'll start to see some positive signs." As for the China reopening, "The return post-Chinese New Year has been positive. We're seeing good healthy volumes now out of China to North Europe. So we believe and hope that's a trend for the coming months." He did though say that inventories were still too high in North America and Europe.

After giving all the big picture secular trends in housing, like high equity levels in ones home, the aging housing stock, rising millennial household formation, baby boomers desire to age in place, the work from home trend and with slowing housing turnover the trend to upgrade ones home, the CEO of Lowe's in their earnings call yesterday said "we also know that consumers are wary of a potential recession, which is reflected in some fo the discretionary pullback we experienced during the holiday season."

In today's Best Buy's earnings release, "As we enter FY24, the consumer electronics industry continues to feel the effects of the broader macro environment and its impact on consumers. As a result, our outlook assumes comparable sales decline 3% to 6% for the year, with the most sales pressure in the first quarter, as y/o/y comparisons ease through the year." In terms of product lines, "the largest drivers of the comp sales decline on a weighted basis were computing, home theater, appliances and mobile phones. These drivers were partially offset by growth in the gaming and tablet categories."

South Korea's February manufacturing PMI held below 50 at 48.5. The positive though was "cost pressures continued to show signs of easing as the rate of input price inflation was at its softest since November 2020." And, when looking towards the coming year, "confidence across South Korea's manufacturing sector strengthened in February amid hopes of a domestic and global economic recovery which would trigger new product launches and encourage new client acquisitions." South Korea in particular will be a definite beneficiary of China's reopening.
Also out today was the February inflation stats from the Eurozone and CPI was hotter than expected with an 8.5% y/o/y increase, 2 tenths more than expected but down on tenth from January. The core rate saw a rise of 5.6% vs 5.3% in the month prior where no change was anticipated. Services inflation accelerated to 4.8% from 4.4% in the two months prior y/o/y and non-energy industrial goods prices were up 6.8% y/o/y vs 6.7% in January and 6.4% in December.

Bottom line, not only is this data point clinching another 50 bps rate increase in March, which we knew was coming anyway, the 'data dependent' ECB could easily hike another 50 bps in May which would take their deposit rate to 3.5% with a likely end point thereafter at around 4%. The 5 yr 5 yr euro inflation swap is up by 2.5 bps today in response to 2.53%, the highest in 11 years. After days of weakness, European bonds are slightly softer again today but the euro is lower.

One day it would be nice to hear from former ECB president Mario Draghi and ask him that outside of his steps to do 'whatever it takes' early last decade when periphery bond yields spiked, was all that QE and negative rate policy thereafter all to just increase the rate of inflation really worth it? It obviously will go down as a policy disaster if you ask me but I'd love to hear his current thoughts.

Position: None

Here's J.P.

J.P. Morgan speaks:

EQUITY AND MACRO NARRATIVE
: With the 10Y yield sitting above 4%, will may see additional selling in the Equity space but, after speaking with my colleagues in Rates, it does appear that many bond investors are sitting on the sidelines into next week's NFP print so this move in bonds may not fully reflect the bond market's fundamental view. Keep an eye on terminal rate and bond vol as NFP may trigger a shift in both which would ripple across Equity and Credit. Any divergence in inflation outcomes will also impact the USD, especially considering Europe just printed a record high core inflation reading. Does the US follow?

Position: None

New Shorts This Week

* Tesla (TSLA) (last night)

* Lowe's (LOW)

* Home Depot (HD)

* ARK Innovation ETF (ARKK)

Position: Short TSLA (S) LOW (S) HD (S) ARKK (VS)

Premarket Movers

Premarket Movers

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Position: None

Select Market Moves

Upside:
- (ATXI) +22% (enters into a transformational license agreement with AnnJi Pharmaceutical to develop and commercialize AJ201, a first-in-class clinical asset for the treatment of spinal and bulbar muscular atrophy)
- (OKTA) +16% (earnings, guidance)
- (CRM) +15% (earnings, guidance)
- (NTLA) +10% (FDA clears IND application for NTLA-2002, an In Vivo CRISPR-Based Investigational Therapy for treatment of Hereditary Angioedema (HAE))
- (SIX) +8.4% (earnings)
- (CMRX) +8.2% (earnings)
- (M) +7.4% (earnings, guidance)
- (AMRX) +7.2% (earnings, guidance; announces U.S. FDA filing acceptance of abbreviated New Drug Application for Naloxone Hydrochloride Nasal Spray, USP, 4mg)
- (VEEV) +6.5% (earnings, guidance)
- (RADI) +4.8% (confirms to be acquired by EQT Active Core Infrastructure and PSP Investments for $15.00/shr cash in $3.0B deal; reports prelim Q4 revenue)
- (PSNY) +4.4% (earnings, guidance)
- (PTLO) +4.4% (earnings)
- (AEO) +4.0% (earnings, guidance)
- (REPX) +3.6% (Conduit Power and Riley Permian form JV to build new power infrastructure)
- (JAZZ) +3.3% (earnings, guidance)
- (SSYS) +2.4% (earnings, guidance)
- (ARRY) +2.2% (earnings, guidance) 

Downside:
- (SI) -38% (delays annual report to evaluate effectiveness of internal control over financial reporting)
- (FNKO) -24% (earnings, guidance)
- (CANO) -17% (earnings, guidance; delays annual report filing)
- (WOLF) -12% (weakness following TSLA Investor Day comments that next-gen drive unit to use 75% less silicon carbide and accept any battery chemistry)
- (PSTG) -10% (earnings, guidance; announces additional share buyback)
- (BOX) -9.8% (earnings, guidance)
- (HAYW) -7.6% (files to sell 16M shares by holders)
- (SNOW) -7.0% (earnings, guidance)
- (TSLA) -6.5% (weakness following Investor Day)
- (BILI) -6.1% (earnings, guidance)
- (BIVI) -4.7% (completes patient enrollment in Phase 3 trial assessing NE3107 in Alzheimer's Disease)
- (VRME) -4.6% (acquires assets of Digital Identity Brand Protection Company, Trust Codes Limited)
- (SPLK) -4.2% (earnings, guidance)
- (NVEE) -3.4% (acquires Gaudet Associates, a provider of owner representation services in South Florida; terms undisclosed)
- (PLUG) -3.4% (reports Q4 revenue)
- (NIO) -3.1% (multiple broker downgrades following earnings)

- (HRL) -3.0% (earnings, guidance; taking immediate action to combat inventory levels and warehousing costs)
- (BBY) -2.5% (earnings, guidance; raises dividend)
- (PZZA) -2.3% (announces Board Chair transition and share repurchase transaction)

Position: Short TSLA (S)

Tweet of the Day (Part Four)

And the retail outflows begin...

Position: None

Tweet of the Day (Part Trois)

EY from SOFI:

Position: None

Tweet of the Day (Part Deux)

Position: None

(It's) All About the Rates

For empahsis!

* Yeah it's pretty clear...

"Because you know I'm all about that bass
'Bout that bass, no treble
I'm all about that bass, 'bout that bass, no treble
I'm all about that bass, 'bout that bass, no treble
I'm all about that bass, 'bout that bass (bass, bass, bass, bass)

Yeah, it's pretty clear, I ain't no size two
But I can shake it, shake it, like I'm supposed to do
'Cause I got that boom boom that all the boys chase
And all the right junk in all the right places
I see the magazines (ah-ha) workin' that Photoshop (ah-ha)
We know that shit ain't real
Come on now, make it stop
If you got beauty beauty (ah-ha), just raise 'em up
'Cause every inch of you is perfect
From the bottom to the top"

- Meghan Trainor, "All About ThatBass

Image placeholder title

Continuing the recent rise in the term structure of interest rates ("from the bottom to the top!"), yields are higher again here on Thursday morning with most maturities up by 2-3 basis points, contributing to early morning weakness in equity futures. 

As I have noted for several months, rising interest rates (absolute and relative to the low S&P dividend yield of 1.69%) represent the greatest current threat to stock valuations. 

So, it's all about that rates!

Position: Long SPY (S) QQQ (S) Treasuries; Short SPY calls (S) and puts (S) QQQ calls (S) and puts (S)

More Night Moves: A Detailed Look at Overnight Futures and Why/What Markets Are Moving

"Because you know I'm all about that bass
'Bout that bass, no treble
I'm all about that bass, 'bout that bass, no treble
I'm all about that bass, 'bout that bass, no treble
I'm all about that bass, 'bout that bass, hey

I'm bringing booty back
Go ahead and tell them skinny bitches that
No, I'm just playing I know y'all think you're fat
But I'm here to tell you

Every inch of you is perfect from the bottom to the top"

- Meghan Trainor, "All About That Bass"

* From trouble ahead, trouble behind to a market that just won't like be much fun (since I quit drinkin') to You Can't Roller Skate With a Buffalo Herd (meaning it's a tough market to navigate these days). And now? The market is down 4-6% from the early February highs - and The Law Won! Wednesday I moved to Long Island's Billy Joel so I can finally find what I am looking for. Today, it's all about that (interest) rates.

* My base expectation is that we may have seen the top in the S&P 500 Index for all of 2023. We seem securely in this range.

* Adjusting for this morning's modest drop in stock futures (at 6:21 a.m.), the S&P sits at 3930, which is almost at the middle of our projected range. My forecast, which did well to identify the third-quarter 2022 low, may be on tap to have judged the recent top.

* According to my "fair market value" and trading range calculus, there is a better reward vs risk as the Oscillator has grown more oversold -- +165 handles to the upside and -235 handles to the downside.

* In this trading market I am trading more actively these days. Emphasizing pairs trades, straddles and strangles. But as we move lower in my range, I will be buying...

"You are never as smart as u think you are when you are making money or as dumb as u think when losing."

-- Unknown

"The stock market will do whatever it has to do to embarrass the greatest people to the greatest extent possible."

-- Wally Deemer

"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"

This daily Futures 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 -- let's call it our normal routine -- setting the stage for their strategy for the day. The market is a complicated mosaic and the more info you have, the better trader and investor you will be!

The market (and money) never sleeps -- and neither do I, it appears! I have previously 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 are often exaggerated outside the regular trading session. I frequently try to capture those efficiencies by trading actively both in the pre- and after-market sessions.

Here are some brief observations I wanted to highlight and a summary of overnight price movements in various asset classes:

* Wednesday's close (S&P 3951) is approaching "fair value" of 3900 and compares to The Chop Bucket of 3700-4100 for the S&P 500. S&P cash adjusted for the decline in futures is now about 3935. Ergo, almost even upside reward against downside risk.

* Stock futures were lower most of the evening but have rallied in the last hour or so.

Image placeholder title

S&P futures had peaked at +8 and bottomed at -31. Nasdaq futures peaked at +25 and bottomed at -122. At 6:26 a.m. ET, S&P futures were -15 and Nasdaq futures were -67.

* The S&P Short-Range Oscillator recently moved back further into the negative (oversold). The Short-Range Oscillator closed at -4.21% compared to -3.90% vs  -2.43%, the prior day,  Friday's -2.54% and -2.43% last Thursday.  For perspective, when the rally started on Dec. 28, 2022, the Oscillator was deeply negative (oversold).

* I have also kept a bead on volatility. In recent days the VIX has exhibited interesting -- some might say flawed -- behavior, falling in both up and down days. This morning, the VIX was at 20.98 (+0.40). As volatility declined recently, I took off a lot of my straddles and strangles for a profit. (I covered all my index short puts on last Thursday -- that's a bearish move) Over the last two trading days I have repositioned and put back on some of my straddles.

* The U.S. dollar is again stronger against the yen, euro and sterling. The consensus seems to be that the US dollar has peaked, but this chart suggests it is only consolidating its recent gains:

Image placeholder title

* I have been continually writing that bonds should be at center stage to equity weightings. So it has been in the recent market selloff. Futures are ignoring higher rates and more inversion (to cycle wides).

* The Two-Year Treasury yield is flat at 4.89% and the 10-Year is up 2-3 basis points to 4.02%. Over there, the yield on the 10-Year U.K. Gilt bond is flat after moving much higher all week. See my Barron'sinterview two weekends ago that describes rising rates as the single most important headwind against further stock gains.

Here is a picture on six-month and one-year T bills:

Image placeholder title

* As I have written, above any other independent variables the absolute level of rates keeps me from expanding my net long exposure to much higher levels as there is an alternative. And that alternative -- intermediate bonds -- provides generous and equity-like returns. This helps to explain my recent Treasury note buys over the last month.

* The 10s/2s Treasuries curve is back up to -90 basis points -- a near cycle high:

Image placeholder title

Source: Hedgeye

* Bitcoin is unchanged at $23,400.

* Commodities (where there are no zero days to expiration options!) are mixed to higher this morning. Brent crude is moving higher to $84.76 (+$0.48).

* Gold is -$2.70.

Here is a synopsis of some of my columns I believe were important, or in the event you were out for the day and did not read my Diary. The principal intent is to review the logic of my market moves and other factors. I think I have had alot of content this week:

Minding Mr. Market 

Hubris... Meet Pitiful Performance (written with love!)

Praise by Individual, Criticize by Category

Money Never Sleeps

And here are Wednesday's trades:

* Mar 01, 2023 ' 07:29 AM EST DOUG KASS

Trading Actively and Taking What Mr. Market Gives Me

* In a range-bound market

I went long (after the close) some (SPY) and (QQQ) on the reallocation whoosh lower (out of stocks and into bonds) at month's end.

S&P futures are now +27 handles from last night's lows when I was buying.

This morning (in early trading) I sold what I had purchased for a nice gain (sales at $397.88 and $294.84).

A reminder, my Diary exhibits transparently many of my trades and investments. I am not making recommendations but I am communicating what, when and how I transact.

* Mar 01, 2023 ' 09:22 AM EST DOUG KASS

My Comment of the Day

dougie kass19 minutes ago

Short (HD) and (LOW) small.
*
Mar 01, 2023 ' 09:52 AM EST DOUG KASS

Pressed Shorts

I have pressed my Lowe's (LOW) and Home Depot (HD) shorts 

* Mar 01, 2023 ' 12:03 PM EST DOUG KASS

Selling Some 'Materials'

Selling off some MP Materials (MP) on today's nice move higher.

* Added to ELAN

Position: Long SPY (S) QQQ (S) ELAN common (M) and calls (S) MP (M); Short LOW (S) HD (S) MP (S)

Miller Tabak's Macro View

From my friends at Miller Tabak:

Macro View

Thursday, March 2, 2023

Recent Inflation Data Are Bad, but Not a Gamechanger

The past week has seen a sharp reversal in the inflation data with January core-PPI at 5.9% (m/m annualized) and January core-PCE at 6.8%. These data will make the Fed more hawkish at upcoming meetings (more on this later). We caution, however, that recent data are not a sign that inflation is worsening. Rather, they show that the excellent inflation data from October through December were exaggerated by temporary factors. They are a reminder that the Fed will have to hold rates near 5% deep into 2024.

Figure 1 uses the San Francisco's Fed breakdown of PCE inflation data to estimate the part of core-inflation resulting from demand factors (black) and supply factors (red). The most surprising part of the January data is that higher inflation was driven by demand factors. Between October and December 2022, demand-driven inflation averaged 1.5%, not too far above its historic average (since 1998) of 1.2%. It jumped to 4.4% in January. The bad news is that this suggests that rate hikes, which work entirely through demand, are not working as well as we previously believed and the FOMC will have to go a little higher (525-550 bps) and stay near 5% for most or all of 2024. The good news is that there is no reason to believe that demand-side inflation is accelerating. The best approach is to take an average of recent months which still shows a decline, albeit not as steep as previously believed.

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Recent data change our estimate of underlying inflation from 3.5% to 3.75%. Our previous view was that the Fed would hike by 25 bps in both March and May and that it would also raise the December 2023 forecast for the Federal Funds rate by 25 bps to 525-550 bps. The Fed will still very likely enact a 25 bps hike in March, but the new Summary of Economic Projections is now likely to show a 550-575 bps endpoint. We now expect the Fed to pause at 525-550 bps, 25 bps higher than our previous estimate. As a reminder, we were the first on the Street to predict a Federal Funds Rate above 5%.

Because higher inflation is coming from demand it, like the good January retail sales data, suggest that an imminent downturn (i.e. by 2Q2023) is extremely unlikely. It does, however, push the risk of a late 2023 recession back up from our previous 25% to 30%, where it stood a month ago.

Position: None

From the Street of Dreams (Part Deux)

Two on Tesla TSLA:Bernstein says Tesla's Investor meeting long-term focused, short on specifics Bernstein says Tesla's Investor meeting was long-term focused, somewhat disjointed and fairly technical. Musk's Master Plan 3 was more a message of hope for widespread electrification than a roadmap for Tesla, and executive updates - while informative - didn't necessarily follow linearly. As part of the larger vision, there was no mention of Boring Company and SpaceX - and limited reference to Tesla's own Solar business. Most importantly, Tesla provided no incremental information on its forthcoming low-cost vehicle/platform, Bernstein points out. The firm has an Underperform rating on the shares with a price target of $150.Lack of details at Tesla event likely a letdown, says Citi Citi keeps a Neutral rating on Tesla with a $146 price target following the investor day. The company confirmed a 50% targeted cost reduction for its next-generation electric vehicle platform, though the lack of detail around this platform will likely be viewed as a letdown versus elevated expectations heading in, the analyst tells investors in a research note. The firm says Tesla didn't unveil specific financial targets but reiterated the prior goal of reaching 20M units and provided incremental color on the expected number of vehicle models and total investment plans. The event provided greater clarity on Tesla's long-term growth objectives while highlighting leading positions in several areas, says Citi. But with the stock having run up in recent weeks, the initial selloff in the shares "is understandable given few surprises and more limited roadmap details than some might've hoped," it adds.

Position: Short TSLA (S)

Chart of the Day

The improvement in Citi's U.S. Economic Surprise Index could signal a higher terminal interest rate level:

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Position: None

From the Street of Dreams

Bank of America maintains sell recommendation on 3M (MMM) .

I have been adding to this short recently.

Position: Short MMM (S)

Themes and Sectors

This table is potentially valuable for short-term traders:

View Chart »View in New Window »

Position: None

Not Transitory

Position: None

Recommended Reading

Our own Peter Tchir presents an excellent explanation of 0DTE options.

Position: None

Cannabis Tweet of the Day

In additional weed news, (the research axe in cannabis) Cowen has dropped coverage of cannabis stocks (as it is being acquired by a Canadian financial institution. TD Bank).

I would continue to avoid the sector like the plague.

Position: None

Wolf Street on Silvergate

Wolf Street on the Silvergate bank fiasco.

Position: None

Tweet of the Day

Position: None
Doug Kass - Watchlist (Longs)
ContributorSymbolInitial DateReturn
Doug KassVKTX4/2/24-35.66%
Doug KassOXY12/6/23-16.42%
Doug KassCVX12/6/23+8.55%
Doug KassXOM12/6/23+10.96%
Doug KassMSOS11/1/23-29.53%
Doug KassJOE9/19/23-18.03%
Doug KassOXY9/19/23-27.61%
Doug KassELAN3/22/23+28.72%
Doug KassVTV10/20/20+62.60%
Doug KassVBR10/20/20+74.40%