- NYSE volume 353M shares, 26% below its one-month average

- Nasdaq volume 3.79B shares, 13% below its one-month average

- VIX up 1% to 13.20

Breadth

Nasdaq 100 Heat Map

Thanks for reading my Diary today.

Enjoy the evening.

Be safe.

Breadth 

Nasdaq 100 Heat Map

No Drama Shorts - MPW, WBA, CHGG, FRHC, RILY and SNBR - are, well, no drama.

* Oil vey...

Investment short McDonald's MCD is now -$22 since it was highlighted on FinTV.

I remain short - from early February, 2024:

I Am Not Loving It!

* McDonald's outlook, that is...

* Providing differentiated analysis, here

This morning McDonald's (MCD) missed consensus EPS expectations and delivered an uncertain outlook. Here and here.

Here is a summary of the results:

• MCD says it continues to operate in a challenging environment with varying levels of headwinds across its markets. Looking ahead to 2024, co expects these headwinds will continue as the current macro environment continues to weigh on both MCD's consumers and its business results along with the war in the Middle East.
• Co says the war in the Middle East meaningfully impacted its IDL segment performance resulting in Q4 comp sales of less than 1%. Despite this, MCD says its business model provides stability in its P&L from the negative sales impact in the region. Its size, scale, and geographic diversity, translates into resilience as a system.
• Co says that providing customers with affordable options has always been core to its brand and that's even more important as consumers feel pressure on their spending, particularly the lower income consumer.
• MCD says it continued to stay aggressive on chicken this quarter. In Germany, the McCrispy sandwich had strong results. The UK built on its market leadership in chicken by extending the McCrispy brand with a limited time offering, the McCrispy smoke house, combining new flavors and ingredients.
• Looking ahead to 2024, co says with elevated absolute prices and muted consumer confidence, co believes that consumers will continue to be more discriminating with their dollars. However, co says its resilience is rooted in in its ability to adapt in any environment.
• Co expects 2024 comp growth will continue to moderate as it returns to a more normalized level of growth with expectations closer to historical averages of between +3-4% in its US and IOM segments. And for IDL, co does not expect to see meaningful improvement until there is a resolution in the Middle East.
• With moderating sales growth and ongoing inflationary headwinds, MCD expects its company-operated margin percent will remain pressured in the near term and co expects full year company-operated margin will be relatively in line with 2023.

The shares initially fell by nearly -13/share and is now -$10.

Last week and over the last month, on numerous occasions, the sell-side and business media regaled in MCD's bright near term profit picture. Here and here.

I reshorted McDonalds on January 31 based on our primary research (concluding that the company's secular growth rate in EPS is at risk):

I am back short McDonald's.

I am steadily adding to Peapack-Gladstone Financial PGC.

House GOP committee urges opposition to marijuana banking bill.

New home sales in February totaled 662k, little changed from the 664k print seen for January. That was 15k less than expected. Smoothing out this volatile number puts the 3 month average at 660k vs the 6 month average of 659k and 12 month average of 671k. Of note, the average 30 yr mortgage rate averaged 7.3% in February according to Bankrate and which is up from 6.96% in January so that was a possible influence on sales.

There was another increase in the number of homes for sale (we have heard more spec building from the bigger builders) to just shy of the most since 2008 and months’ supply was 8.4. The median home price fell by 3.5% sequentially and by 7.6% y/o/y in part to mix as more lower priced homes were sold relative to those above $500k.

Bottom line, we know the home building business is a better one to be in relative to trying to sell existing homes. And within that, the bigger builders continue to take share from the smaller ones who don’t have the same balance sheet, a higher cost of capital and less of an ability to offer discounts/mortgage buydowns. Also, the supply side is something I’m now paying more attention to with regards to new builds and how quickly the spec side is getting absorbed.

New Home Sales

Number of Homes for Sale

* At day's high yields...

* As decoupling between fixed income and equities abounds

As noted in last month's "Equities Decouple From The Macro - But Will It Last?" TheStreet Pro bonds continue to not modify the strength in equities.

Just as has been the case over the last week to ten days - bond prices have fallen throughout the day, and bond yields have climbed:

* The yield on the 2- year US note is +4 bps to 4.36%.

* The yield on the 10- year US note is +3.5 bps to 4.251%.

* The yield on the long bond is +3 bps to 4.418%.

Higher yields are not typically market friendly.

Maybe I should toss out my Wharton (MBA) diploma, but most valuation models utilize the risk - free rate of return in its calculus.

We're in a bit of a murky period with inflation; Doesn't feel like story fundamentally changed" - Fed's Goolsbee

* Fed has to strike balance with its dual mandate

* Cutting rates too soon could be more disruptive

* Need to see progress in inflation coming down

* The main puzzle with inflation is in housing

* 3 cuts in 2024 was in line with my thinking 

Another mentor, "The Chief", had an old investment maxim that leadership by energy-related equities is nearly always witnessed in the late stage of a market advance.

If so, and based on XOM, CVX, Et al.... look out below.

Amen:

Tattoo522

I posted my farewell thoughts to BillyBob on Friday. It was a low volume day for reader comments, so while I won't repost those thoughts again today -- easy enough to go back to read them -- but I do want to repeat that I did screenshot and send along the reader comments regarding BillyBob to the family. If you're like me, it's somewhat of a relief to be able to express to them how much he meant to us.

They gave me permission to post a somewhat redacted version of his obit. While they're happy to share his story, they're understandably hesitant to share full name and location details with people they don't know personally. I'd feel the same! It's an endearing obit that I think will make you smile.

_____

Displaying his work ethic and business acumen from a young age, his early ventures included a daily paper route, caddying at the golf course and reselling wiffle bats to local cattle drivers at a premium. Bill attended majored in math at [college], where he was not known for his punctuality nor his lengthy exam preparation. 

Despite this, he advanced his studies by earning an MBA at the Amos Tuck School of Business Administration at Dartmouth College. He was also a member of the CFA Institute. While a student at Tuck, Bill met [his wife] on a blind date to the Winter Carnival. They married in 1973, what Bill would later call, “the best decision [he] ever made.”

Bill’s career took him to New England Life and Invesco, where he worked as a portfolio manager and Senior Vice President up until his retirement in 2001. Additional ventures included investments in bar ownership, real estate and wine cellars, serving as a commissioner of the [local] Water District, and sitting on the [college] High Board of Trustees.

After retiring, Bill continued to pursue his passion for investment, researching and trading tirelessly from his somewhat cluttered home office. He became active in an online finance community, where he was known as “Billy Bob,” an adept trader who displayed his sense of humor, strength of character and generosity.

Bill gave his all to his daughters and supported them equally in academic, athletic, career and personal endeavors. In the early years he worked with his children tirelessly, encouraging self-confidence and consistent hard work as foundations for success. Bill served as coach, catcher and batting practice pitcher, and made it to games near and far, with an unmatched memory in which he filed away scores and statistics from every single softball game.

As the girls entered adult life, Bill became a trusted advisor and mentor, lending his analytical mind and thorough research skills to tackling any problem that might arise, from where to live or how to buy a car to career moves or which wine might best compliment a meal.

Bill and [wife] loved traveling together, most recently embarking on a tour of Portugal and Spain in spring 2023 with their children to celebrate their 75th birthdays and 50th wedding anniversary. A lover of fine wine, [wife’s] cooking, soul music, steel drums and sunsets, at home Bill could be found enjoying walks with [wife], hitting golf balls in the backyard, taking summertime dips in the pool, reading the newspaper, watching sports with the cats, and spending time with his children and grandsons.

Bill was a devoted and loyal friend, with some friendships spanning more than 60 years. He always showed up for others, and made every person in the room feel included. Sometimes known as “Wild Bill,” he loved a good party, and was known to break out his signature dance moves on occasion. Bill is remembered as a constant seeker of knowledge, generous friend and mentor and, most of all, a loving family man. 

Last night and very early this morning I initiated conversations with my investment Rabbi - someone I depend on when I am off base in view.

His name would be quite familiar with readers of my Diary.

Without revealing his identity and the body of his ursine view, as it turns out, he is as confused about the market strength as I am.

My investment Rabbi feels the last six months' stellar market performance has borrowed from future gains.

In fact, he would not be surprised if several years from now the markets would be at or lower than current levels.

More tomorrow on his views - but that about encapsulates it!

No trades since preopening - 4:15 am!

Back from an excellent meeting with a management in town.

Professor Galloway's No Mercy/No Malice: Mammal.ai

Upside

-SLRX +24% (earnings)

-ESPR +21% (receives US FDA NDA Supplemental 12, 13, 16, 17 approval for Nexletol)

-TH +15% (TDR Capital LLP discloses amended 64.3% stake; Arrow Holdings pursues take private transaction at $10.80/shr)

-ATXS +12% (announces positive initial Proof-of-Concept results from ALPHA-STAR Phase 1b/2 Trial of STAR-0215 for HAE)

-MASI +12% (Board authorized management to evaluate a proposed separation of its consumer business; Activist Politan Capital Management LP said to plan second proxy battle at company)

-NKTX +12% (prices 21.0M shares and 3.0M pre-funded warrants at $10.00/shr in $240M underwritten offering; sees cash runway into 2026 from $251M of cash and cash equivalents)

-CMMB +8.7% (awarded new European patent for CM-101, first-in class monoclonal antibody in phase 2 clinical development for primary sclerosing cholangitis)

-VSTO +7.3% (MNC Capital increases proposal to acquire Vista Outdoor to $37.5/shr)

-MBRX +6.8% (announces positive Interim Data in Annamycin MB-106 Phase 1B/2 AML Trial)

-LCID +6.5% (announces investment of $1.0B by an affiliate of PIF)

-AXSM +3.0% (announces AXS-12 achieves Primary Endpoint in the SYMPHONY Phase 3 Trial in Narcolepsy)

-IONS +2.8% (positive Olezarsen Phase 3 data in familial chylomicronemia syndrome to be presented at 2024 American College of Cardiology (ACC) Annual Meeting)

-CENX +2.6% (selected by U.S. Department of Energy to receive $500M investment to build new green aluminum smelter to accelerate industrial decarbonization)

-BA +2.2% (CEO Dave Calhoun to step down at end of 2024)

-UTHR +2.1% (announces $1B accelerated share repurchase program)

Downside

-AEHR -15% (prelim earnings, guidance)

-DYN -6.3% (appoints John Cox as CEO, effective immediately)

-INTC -4.0% (China reportedly blocks use of INTC, AMD chips in government computers and servers)

-AMD -3.3% (China reportedly blocks use of INTC, AMD chips in government computers and servers)

-UAL -3.2% (FAA to increase oversight of United in order to ensure compliance with safety regulations)

In last week's Fed dots, there were two people that wanted just one rate cut this year (also two that wanted none and I'm guessing Michelle Bowman was one of them) and notably one of them is a voting member it seems, the Atlanta president Raphael Bostic. He was also the one who warned us a few weeks ago about the pent up animal spirits that would be unleashed upon rate cuts. That has certainly been seen in financial markets to state the obvious.

When speaking Friday, in getting to a 2% rate of inflation sustainably, he said "I'm definitely less confident than I was in December." He went on to say, "If we have an economy that is growing above potential, and we have an economy where unemployment is at levels that were deemed to be unimaginable without pricing pressures, and if we have an economy where inflation is moderating...those are good things. That give us space for patience." How patient? He said "later in the year" will he support the one cut. He does though support the tapering of QT "relatively soon."

As it didn't sound like Powell was the other dot in wanting just one cut, and definitely not one of the two that wanted none, as his dovishness sounded more like 3 and consensus group think is his mantra, we'll see how Bostic and Powell come together in coming months/quarters.

The 2 yr note yield is up 3 bps in response to 4.62%. It was at 4.67-.68% at 1:59pm est last Wednesday.

With the yen just off the weakest level vs the US dollar in 34 years, the verbal intervention is back from the finance ministry. Masato Kanda, the vice finance minister said today the recent moves "has not reflected fundamentals and I feel something strange about it...is clearly driven by speculation" and "We will take appropriate action excessive fluctuations...We are always prepared." 

With history with intervention as its guide and the fruitless attempts in the past of Japanese FX intervention, the market yawned on the comments. While negative rates don't exist in Japan anymore thankfully, zero to .10% is only slightly better.

The yuan by the way had a stronger FX fixing today and likely means that last week's weakness was about all the PBOC will tolerate for now.

Yen

A combination of strict lending standards and a lack of demand at current rates, C&I loans outstanding fell another $8.7b in the week ended 3/13 to $2.747 Trillion and that is the lowest amount since September 2022. As seen in the chart, the amount peaked right as the bank failures took place one year ago. A credit crunch? Credit scarcity? Slack credit demand? I'd say a bit of all of the above for those small and medium businesses that are solely reliant on bank credit rather than the capital markets.

Also of note, for the week ended 3/13, auto loans outstanding fell to the least amount since July 2021. The only deal one can find of note today in the auto space is a full EV as supply of them piles up due to a lack of demand.

C&I Loans Outstanding

Auto Loans Outstanding

In response to the lowest natural gas price in about 4 years, drillers continue to lay down their rigs. The natural gas rig count as of Friday fell by 4 to 112 and that is the smallest amount since January 2022. Low prices are about to cure low prices.

Natural Gas Rig Count

With Cocoa going parabolic (now looks like the Nvidia stock chart), wheat at 3 week highs and corn and soybeans getting off the mat (those being one of my contrarian picks this year and we own fertilizer stocks), the CRB Food Stuff index closed Friday at the highest point since November 2023. Jay Powell has no easy job from here.

CRB Food Stuff index

Cocoa

* "Happy Dogwood Sunday"



Here's a funny childhood story - that I produce annually to take us all into yesterday's Palm Sunday and next weekend's Easter holiday:

I'm reminded at this time every year (by my famous artist sister Debbie) of a true story that occurred in the late 1950s when I was about 10 years old.

When I was in fourth grade at my Long Island, N.Y., elementary school, the students were notified of a 'special assembly' to be held that afternoon.

When we all arrived in the auditorium, there was a woman on the stage in a chair who explained that she was an NBC representative for a TV quiz show called Tic-Tac-Dough, which aired at that time in New York on Channel 4.

She went on to explain that Tic-Tac-Dough, the predecessor show to Hollywood Squares (which used the same concept), was looking for two students to represent Long Island on the show during Christmas vacation week. (Adults participated on the show the rest of the year.)

She began to ask the students questions, but I was shy and never raised my hand. But in response to a question, my buddy Jo Anne Zerillo raised her hand and said she didn't know the answer but "The Professor" (my nickname then!) might. She pointed at me.

I answered the question and then another, and was notified that I had been selected along with my friend and classmate Carrie Spivak to represent our area on Tic-Tac-Dough.

Jack Barry, a fellow Long Islander and a Wharton graduate (as I would later be), was the host and (along with Dan Enright) the show's producer.

If you remember Jack Barry, it's probably because his production company was responsible for the scandal-ridden game show Twenty One. It turns out that Charles Van Doren and champion Herb Stempel were provided with answers to Twenty One's question in advance after principal advertiser Geritol complained that the unrigged production was dull and boring.

Barry's production company later created other game shows like Dough Re Mi, Winky Dink and You (reputedly the world's first-ever interactive TV program), the fabulously successful Concentration and the long-running Joker's Wild.

I went on Tic-Tac-Dough several weeks later and won my first six games, breaking a record for the show.

But in the seventh game, I selected the box "Holidays" and was asked by Jack Barry to name the Sunday before the Easter holiday. He went on to say that the holiday was the name of a tree.

The music played in the background and after waiting about 10 or 15 seconds, Mr. Barry asked if I knew the answer.

I thought long and hard, but had no idea of the answer. So I figured I should take a shot and guess the answer, as I already knew the holiday had the name of a tree in it.

Under pressure from Mr. Barry, I said: "Dogwood Sunday."

As the words came out of my mouth, I could hear my mother and Grandma Koufax (who were in the audience) gasp. My mom, clear as day, said, "Oh, no!" (I can still hear her words as if it were yesterday.)

I instantly knew it was the wrong answer and said -- I swear I did! -- "No, Mr. Barry. It's Redwood Sunday!"

Jack Barry, was in front of a pyramid of empty Crest toothpaste boxes that were stacked up in preparation for a commercial later on in the show. (The "Look Ma, No Cavities!" commercial was initially aired on Tic-Tac-Dough.)

Barry then said, "Doug, I am sorry. That is the wrong answer. The correct answer is Palm Sunday. Haven't you ever heard of Palm Sunday, the Sunday before Easter?"

I immediately said -- remember, this was live television -- "No, Mr. Barry. I never heard of Palm Sunday. I am Jewish."

Barry, who was also Jewish, fell over laughing right into the boxes of Crest toothpaste, which all fell down into a mess.

I hope you enjoyed the story about Dogwood -- er, I mean, Redwood -- Sunday.

I will never forget the experience, and I have the tape of the week's appearances to prove it. (My office has been listening to them all day).

_____

In this holiday spirit, I want to be the first to wish a Happy Dogwood Sunday, Holy Week and Happy Easter to my family, all of my friends, subscribers, contributors, editors, and the entire TheStreet PRO management team!

* Markets had an excellent week

* But there was no broadening, again

* Stock futures are slightly lower overnight in a narrow trading range.

* The overbought remains in place as the S&P Short-Range Oscillator stands at 2.55% v. 3.45%

* Yields are higher by about a basis point this morning and crude oil prices are also climbing (+$0.61) -- gold is rising (+$5.80) and bitcoin is +1.200 to nearly $67k.

* The U.S. dollar is modestly weaker against the yen

* I remain negative in view - the Fed is feckless and clueless as inflation is about to rear its ugly head again!:

Headin' out to San Francisco

For the Labor Day weekend show

I got my Hush Puppies on

I guess I never was meant for glitter rock 'n' roll

And honey, I didn't know that I'd be missin' you so

Come Monday, it'll be alright

Come Monday, I'll be holdin' you tight

I spent four lonely days in a brown L.A haze

And I just want you back by my side

- Jimmy Buffett, Come Monday 

"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 hold 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 brief observations I wanted to highlight and provide a summary of overnight price movements in various asset classes:

* Stock futures are slightly lower overnight. S&P futures peaked at +3 and bottomed at -11 in another extraordinarily narrow range. Nasdaq futures peaked at +36 and bottomed at -42. At 5:52 a.m. ET, S&P futures were -7 and Nasdaq futures were -38.

* Commodities are generally lower with Brent crude down $0.61 at $86.73.

* The S&P Short-Range Oscillator is still overbought at 2.55% v. 3.45%.

* The VIX is slightly hotter at 13.54 (+0.53).

* The U.S. dollar is lower against the yen, pound and euro.

* Treasury yields are slightly higher. The 2-Year Treasury yield is +2 basis points at 4.617% and the 10-Year is +1 basis point to 4.23%. Over there, the yield on the 10-Year U.K. Gilt bond is +3 basis points.

* Overnight, the inversion of the 2s/10s Treasuries curve is down to -39 basis points. Real rates remain quite elevated; the 10-year is still about 1.85, again in real terms.

* Gold is +$9.70 and sits at $2,169.

* Bitcoin is +$1,100 to $66,950.

Here is a synopsis of some of my columns I believe were important, or in the event you were out for the day and/or did not read my Diary. The principal intent is to review the logic of my market moves and other factors: None 

Here are Friday's trades (I believe in my Diary's full disclosure and transparency of trades/investments -- this is not CNBC! How else can you evaluate the value of my actions without memorializing them?): None

This table is a valuable resource for momentum-based short term traders:

From JP Morgan:

US: Futs are lower following the SPX’s best weekly performance of the year, +2.3%. Pre-mkt, MegaCap Tech names are mostly lower with AMD/INTC down more than 2% on headlines of being banned from Chinese gov’t though NVDA is +80bps pre-mkt. Keep an eye on NFLX on bullish headlines; stock is +29% YTD which would be third among Mag7 names. Bond yields are higher in the belly of the curve as USD begins the week off a touch. The next 2 weeks have a lighter macro data calendar so keep an eye on Fedspeak (3x this week) and bond auctions for bond yield catalysts which could Equity sector performance. Month-end/Quarter-end rebalancing could also pressure stocks.

and...

EQUITY AND MACRO NARRATIVE: The SPX added 2.3% last week, its strongest weekly performance of the year. Tech led and 10 of 11 sectors were higher with 4 outperforming the index. For reference, from 1/1/2012 to 12/31/2019, 10 of 11 sectors were higher with 4 outperforming the index. The biggest drivers of the price action are (i) AI – a theme that continues to translate into billions of dollar of profits and (ii) the Fed – who seemingly greenlit a risk-on narrative which is likely to gain support as major central banks cut rates. Though there is a credible argument for why the Fed will not cut at all this year, I do not think that derails the bull case which is predicated on strong economic growth and subsequently robust earnings environment. 

Any rate cuts would only fuel the bull case; when considering the last 5 cutting cycles ex-COVID, these cuts, on average, boosted stocks on a 1-month, 3-month, 6-month, and 9-month basis (see the table below). Those gains see both Tech, small-caps, and commodities outperform. The balance of the note contains our tactical view, thoughts on near-term catalysts and risks, an update from Positioning Intel, a look at tax refunds and impact on the consumer, and then summaries of this week’s economic and fixed-income research.

Mizuho downgrades Tesla TSLA to neutral with a price target of $195.

* In the wee early hours!

Shorted SPY and QQQ common at $521.31 and $446.01, respectively.