As of 4:15

For a larger view of this table click here.

Thanks for reading my diary today.

Enjoy the evening.

Be safe.

- NYSE volume 408M shares, 13% below its one-month average

- Nasdaq volume 3.78B shares, 13% below its one-month average

Breadth

Nasdaq 100 Heat Map

MSOS and cannabis stocks are getting jiggy based on rumors of some positive news in Florida.

I was born by the river

In a little tent

Oh, and just like the river, I've been running

Ever since

It's been a long

A long time coming, but I know

A change gon' come

Oh yes, it will

It's been too hard living

But I'm afraid to die

'Cause I don't know what's up there

Beyond the sky

It's been a long

A long time coming, but I know

A change gon' come

Oh yes, it will

- Sam Cooke, A Change Is Gonna Come

The year was 1964.

Recorded and written by Sam Cooke on the RCA Victor label, the song was inspired when Cooke was turned away from a whites-only motel in Louisiana.

Though only a modest hit at the time "A Change Is Gonna Come" is considered to be Cooke's greatest and most influential compositions.

In 2021 the song was ranked Number Three on Rolling Stone's 500 greatest songs of all time - behind Aretha Franklin's "Respect" and Public Enemy's "Fight The Power."

Back to the markets!

It is clear as day that the Nasdaq, led by league leading but the diminishing ranks of the Mag7 constituents, is beginning to lag (relatively speaking) to the equal weighted S&P (RSP) and Russell Indexes (IWM):

SPY +0.28%

QQQ -0.12%

RSP +1.02%

IWM +1.63%

That is my strong takeaway.

As noted earlier I have begun to short some of those mega tech market leaders.

Reflecting an opinion on duration, as part of a broad mosaic, the 7 yr note auction was pretty good. The yield of 4.185% was below the when issued of 4.193%. The bid to cover of 2.61 was above the one year average of 2.54. Also, direct and indirect bidders took down 87% of the auction which is the most since last October, leaving dealers with the least since then.

Ahead of PCE Friday (though with CPI and PPI already out, it rarely deviates much from expectations), jumpy commodity prices and inflation expectations (though down the past 2 days), US debts and deficit challenges only getting worse, an intensifying debate on the direction of the US economy, calmness in overseas bond markets, particularly Japan after the policy change, and hopes that central banks around the world will be cutting rates this year (outside of Japan), the 7 yr note auction was a good one.

Yields across the curve are at the lows of the day in response.

7 yr Note Yield

S&P downgrades Paramount Global PARA debt just now.

Heading out to a quick lunch.

Back at 1:30 pm.

At 11:30 am:

My late day musings from yesterday - which I am sticking to:

From the Boy Who Cried Wolf

All day long I have observed to my hedge fund's CEO, Scott, that the market "finally" looks like it was struggling a bit.

As Grandma Koufax used to say, "Dougie, last words are for fools who haven't said enough!"

Or was that Karl Marx?

_____

Apropos of this observation, I am short small positions in Nvidia NVDA and several other high beta equities.

- NYSE volume 132M shares, 20% below its one-month average

- Nasdaq volume 1.29B shares, 13% below its one-month average

- VIX up 0.76% to 13.34 

Breadth

Nasdaq 100 Heat Map

S&P 500 Index

No, Johnny, not that one (!):

STAFF

Nasdaq has a "different look" over the last few days... famous last words!

I am more aggressively shorting the Nasdaq (QQQ - $446.02) on the early ramp.

Some good info from Lori Ann LaRocco in a CNBC online article on the importance of the Baltimore port where of course shipments are now going to get diverted for a period of time. It's the 11th largest port in the country and 52 million tons of foreign cargo, "worth some $80 billion were transported out of the port last year, according to Maryland Gov. Wes Moore." 

Of note, "The Port of Baltimore is the top American port for the import and export of autos and light trucks, as well as wheeled farm vehicles and construction machinery...Other top imports include sugar and gypsum." 

Also, "Top exports out of Baltimore include coal, natural gas, aerospace, parts, construction machinery, agricultural components and soybeans. It is the 2nd busiest port for coal exports after Hampton Roads, Virginia, according to Wolfe Research."

This all said, there is nothing long lasting here in terms of shipment diversion and delays to other ports but certainly uncertain as to when ships can start passing through Baltimore again after the debris has been cleared and when the bridge construction/rebuild begins.

The tough talk on yen intervention took another amp up today. A few days ago we heard some verbal intervention from the deputy finance minister and the market yawned. Today the finance minister himself Shunichi Suzuki said "We are watching market moves with a high sense of urgency. We will take bold measures against excessive moves without ruling out any options" and the yen is moving somewhat.

Also, a more hawkish member of the BoJ Naoki Tamura wants more rate hikes. He said in a speech, "The handling of monetary policy is extremely important from here on for slow but steady progress in normalization to fold back the extraordinarily large scale monetary easing." 

He followed this up later by saying "The continuation of an easy financial environment doesn't mean there won't be any more rate hikes at all." This was the most interesting comment he made, coming from an institution that has had its foot on the neck of interest rates for decades, "important to let market decide bond yields."

While still above 151, the yen is at a one week high vs the dollar in response on a closing basis. The 2 yr JGB yield was unchanged though in response to the comments from both Japanese officials and 10 yr and 40 yr yields fell. The Nikkei rose another .9%.

2 day chart in the Yen and FM comment came near 152

Remember when we heard last fall from Federal Reserve members that there was no need to hike anymore because the bond market was doing it for them? Of course now that financial conditions have eased we don't hear the symmetry on the other side. 

We are though out of the UK as BoE member Catherine Mann said yesterday referring to the gilt market, "They're pricing in too many cuts, that would be my personal view, and so in some sense, I don't have to cut because the market already is...There has been a substantial easing, even since the vote last week. I think that perhaps markets are a bit too complacent about how long they think the BoE overall - the MPC - will hold rates." 

She talked about strong wage dynamics and "underlying services dynamics are also stickier and more persistent than either the US or the euro area. So on that basis, it's hard to argue that the BoE would be ahead of the other two regions, particularly the US" in terms of cutting rates.

We've heard the word 'choiceful' used the last few quarters by the CFO of Walmart when referring to the US consumer and I heard the word again yesterday by the CEO of spice maker McCormick. "Consumers remain challenged. Two years of steep inflation has had an impact and many are exhibiting value seeking behavior. While food inflation is slowing, its compounded impact is still being felt by consumers. Budgets are stretched, resulting in choiceful spending decisions, a trend that is continuing from the fourth quarter."

Also, "In the first quarter, with higher inflation in the foodservice channel and slowing retail food prices, we broadly saw a shift from food away from home to food at home consumption in our major markets. We are also seeing improvement in center store categories and some softness in restaurant traffic across all regions."

The CFO of Ford had an interesting comment on affordability at the BoA Auto Summit yesterday. In terms of pricing, "So we tent to start out looking at the customer and affordability, the percent of disposable income monthly that it takes to purchase a new vehicle. And that spike during Covid was enormous, right? It's now come down to about 14%, whereas pre Covid it was 13% to 13.5%. So, we believe that that's going to start to normalize more this year. So we said about a 2% pullback in pricing for the industry, and that would be OEM pricing. Through incentives or with new vehicle models, maybe they'll take some top line down...

I believe the dealers will start to revert back more to the mean they had previously as well, to get back to the type of run rate we had pre Covid from the standpoint of the dealer margin. So we've got to get the consumers back to where that affordability level was before pre Covid."

Me here, one issue however is financing costs that are no where near pre Covid. According to Bankrate, the average 60 month new car auto loan cost was about 4.65% vs 7.96% as of last night.

On the EV side, not surprisingly now, "demand is much lower than the industry expected when it comes to EVs. And when we look at that, prices came down dramatically. Growth is much less than we thought." Overall with their business, "we're on track to what we had guided. And so far, from a market standpoint, things are looking pretty good."

60 month New Auto Loan Rate

GM speaking at the same conference also assumed a 2% price decline y/o/y going into this year as their planning assumption but "as we're two and three months into the year, we actually haven't seen that. So prices have been pretty consistent with where we were a year ago...So far, and it's a long way to go for the year, but the way it's getting started, demand is actually hanging in pretty strong."

Weekly mortgage applications were little changed with the average 30 yr mortgage rate hovering just under 7%. Purchases were flat w/o/w though still down 15.5% y/o/y. Refi's fell for a 2nd week by 1.6% and lower by 8.6% y/o/y. Nothing to add here as I believe we know what we know with the upside down US housing market.

The March Eurozone Economic Confidence index is out and it rose to 96.3 from 95.5 about as forecasted but still well below where it was pre Covid at 105. Manufacturing was slightly less negative as was retail and consumer confidence while services was the bright spot. Construction remained weak with the high cost of capital. 

Nothing market moving here and bond yields are lower, stocks slightly higher and the euro is little changed. The ECB seems right on track, from hearing them speak, to cut rates in June as they just can't bear the current 4% deposit rate for long it seems.

This, just as Spain said March CPI rose 3.2% y/o/y, up from 2.9% in February, though one tenth under the estimate. The core rate was higher by 3.3% y/o/y, down 2 tenths from last month and also one tenth below expectations.

Eurozone Economic Sentiment

Upside

-MRDB +87% (PRGS announces potential offer for $0.60/shr)

-NVCR +32% (METIS Phase 3 clinical trial met primary endpoint, demonstrating statistically significant extension in time to Intracranial Progression for patients with Brain Metastases from Non-Small Cell Lung Cancer)

-PAYS +22% (earnings, guidance)

-STKS +15% (to acquire Benihana owner Safflower Holdings Corp for $365M in preferred equity and cash)

-DJT +14% (momentum)

-NCNO +14% (earnings, guidance)

-NTRB +7.9% (provides overview of the clinical development and regulatory pathway for its lead product, AVERSA Fentanyl, an abuse-deterrent fentanyl transdermal patch)

-HOOD +6.7% (unveils new credit card Gold Card)

-OUST +5.2% (earnings, guidance)

-NABL +5.0% (introduces N-able Cloud Commander as a multi-tenant solution for the Microsoft Cloud)

-MRK +4.8% (receives US FDA BLA Type 1 approval for Winrevair (Sotatercept-Csrk) for pulmonary arterial hypertension)

-LE +4.5% (earnings, guidance)

-MRNA +4.3% (receives $750M funding from Blackstone Life Sciences to develop flu shots; announces next-gen COVID-19 vaccine candidate as fourth respiratory vaccine to successfully meet its Phase 3 endpoints)

-BTBT +3.5% (announces customer proposal to expand existing agreement by an additional 2,048 GPUs)

-STOK +2.5% (to offer up to $75M in common stock)

-CCL +2.3% (momentum)

-RENT +2.3% (announces 1-for-20 reverse stock split)

-IRIX+2.0% (earnings)

Downside

-DRCT -45% (earnings, guidance)

-VLD -33% (earnings, guidance)

-ALT -21% (discontinues development of its Hepatitis B therapy)

-LIDR -20% (earnings)

-GME -18% (earnings; revises investment policy to a committee structure)

-FRGE -9.8% (earnings)

-BIOR -9.0% (earnings)

-MDXG -7.5% (AXIOFILL does not qualify for FDA classification as an human cell, tissue or cellular or tissue-based product (“HCT/P”) under Section 361)

-CNXC -4.2% (earnings, guidance)

-NIO -3.6% (cuts Q1 delivery guidance)

Close behind the FinTV scoundrels are some corporate managements:

* Markets weakened late yesterday but stock futures were firmer overnight

* The overbought remains in place as the S&P Short-Range Oscillator stands at 1.73% v. 2.23%

* Yields are unchanged this morning and crude oil prices are slightly lower (-$0.64) and bitcoin is +$600 to $70 k

* The U.S. dollar is lower against most major currencies

You suggest a ghost, perhaps a phantom, I agree with this in part

Something is with us

I can't put my finger on, is Thumbelina size ten on a Wednesday

- Tori Amos, Wednesday

"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 were higher overnight. S&P futures peaked at +23 and bottomed at +6. Nasdaq futures peaked at +92 and bottomed at +16 -- very similar to the strength at this time on Tuesday morning! At 7:12 a.m. ET, S&P futures were +22 and Nasdaq futures were +80.

* Commodities are mixed with Brent crude down by -$0.60.

* The S&P Short-Range Oscillator is still overbought at 1.73% v. 2.23%

* The VIX is at 13.03 (-0.21).

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

* Treasury yields are unchanged. The 2-Year Treasury yield is flat at 4.587% and the 10-Year is -1 basis point to 4.23%. Over there, the yield on the 10-Year U.K. Gilt bond is unchanged.

* Overnight, the inversion of the 2s/10s Treasuries curve is down to -35 basis points. Real rates remain quite elevated; the 10-year is still about 1.85, again in real terms.

* Gold is ripping higher +$15.50 and sits at $2,215.

* Bitcoin is +$700 to $70.1k.

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:

Curtain Up, Light the Lights! 

Interesting Cannabis Post

From The Boy Who Cried Wolf

Biden and Marijuana

Here are Tuesday'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?:

* Covered some more SNBR and WBA - reached downside price targets.

* Added to MSOS.

JP Morgan delivers cautionary comments about Apple this morning:

China iPhone shipments decline in February as market undergoes digestion.

Concerns around iPhone units in the China market increased with data from CAICT for the month of February showing that iPhone shipments declined sharply at -33% y/y and -56% m/m (vs. typical seasonality of -20% m/m) to track at 2.4 mn units in the month. 

The decline in February puts the YTD decline for iPhone units at -37% y/y. However, when comparing to the domestic mobile phone shipments which declined -33% y/y and -55% m/m, the data points to a digestion in the broader market in relation to sell-in volumes more likely on account of higher inventory in the channel, and market share dynamics are less of a driver in the February data.

Even though closer analysis of the data limits concerns around iPhone share relative to domestic players like Huawei, at the same time it does raise concerns about the sustainability of the sequential recovery for the market evidenced through 2023.

_____

From El Capitan:

I am short a very, very small position which may grow in time subject to a number of factors in (DJT), common and calls.

As I have mentioned, most investors and traders should not short stocks - as it requires strict money management disciplines that many don't possess.

Navigating a DJT short is in another planet!

In the case of DJT, the borrow rate - if you can borrow the stock at all! - is approximately 150%, so one can not mathematically make money in an investment short (held for some time) unless the shares are being traded over very short timeframes)!

The best way to have a representative short in DJT is through options - however, put premiums are prohibitively large (e.g., when the shares were trading at $40/share earlier in the week, the June $40 puts were $19/share!). Call premiums are large as well, a positive for shorting calls, but since most can't get borrows the call options' expiration must be weeks or months away - representing more "issues" for the short seller.

Bottom line is that no one should short DJT.

That said, here is a summary of the short case by my pal Whitney Tilson:

A look at Trump Media & Technology Group (DJT) // A new 'villain' in the chess world

1) Today is the first day of trading for former President Donald Trump's digital-media company, and it's off to a great start... for now.

Trump Media & Technology Group (DJT), which owns social media site Truth Social, was up as much as 59% earlier this morning to $79.38 per share and was just recently around $70 per share.

Trump Media & Technology didn't hold a typical initial public offering ("IPO"). Instead, it went public by merging with a special purpose acquisition company ("SPAC"), Digital World Acquisition, which until yesterday traded under the ticker "DWAC."

This deal has been a long time coming. I have been writing about DWAC since the beginning of the saga, more than two and a half years ago. And we've played it nearly perfectly, as I outlined last month in my February 20 e-mail. Excerpt:

Longtime readers may recall that I first warned about Digital World Acquisition – the SPAC that hopes to merge with former U.S. President Donald Trump's media company that owns Truth Social – more than two years ago on October 22, 2021, when it hit a high of $175 per share.

On that day, I wrote: "This is one of the stupidest things I've ever seen," and "this stock is going to implode, likely within days."

Sure enough, the stock peaked that very day, was cut in half within two days, and continued sinking toward DWAC's cash value of $10 per share through last April.

But then, with the stock at $13.14 per share nearly a year ago, I suggested in my April 14, 2023 e-mail that any readers who were short the stock should cover their position.

As I said at the time, anyone who was short at the time could make only $3 per share if the merger with DJT fell through (as I expected)... but the stock could soar if the deal was consummated (which is what happened). As I said then:

[It] doesn't make sense to risk losing tens of dollars (and possibly more than $100) per share to make $3.

Before I share my view of the stock today, let me be clear that I am approaching this purely from an investment perspective – putting all political opinions aside.

(Failing to put your political opinions aside when it comes to investing – for example, interpreting economic news more negatively if you don't like the president – is a big mistake many folks make, as I've discussed in prior e-mails.)

So... what are my views on DJT today?

Well, to quote my October 22, 2021 e-mail again: "This is one of the stupidest things I've ever seen" and "this stock is going to implode, likely within days."

At around $70 per share with more than 135 million shares outstanding (the actual number won't be known for a while, based on, among other things, how many SPAC shareholders redeemed), DJT would be worth $9.7 billion.

What do investors get for this?

A microscopically small social media site that (I am not making this up – it's from the Digital World Acquisition prospectus) "does not currently, and may never, collect, monitor or report certain key operating metrics used by companies in similar industries."

So investors are supposed to guess at Truth Social's daily or monthly average users – a critical metric.

This website, Search Logistics, says Truth Social has 2 million active users (for comparison, Twitter – now X – had about 250 million daily active users at the time of Elon Musk's takeover). And this CNN article notes that:

[The] social media site is struggling to find a wider audience. It is hemorrhaging users, and its traffic has plummeted. There were roughly 860,000 accounts active on the site as of November – a tiny blip compared with more mainstream platforms...

The site's monthly active users on iOS and Android devices are down 39% year-over-year, according to Similarweb data shared with CNN earlier this month. Visits to the site on mobile and desktop have plummeted as well by nearly 29% during that stretch.

Of course, what really matters is whether a company can monetize its users.

And in this area, DJT's numbers are also grim. This is a portion of the exact income statement DWAC reported in its prospectus:

So in the first three quarters of last year, the company had revenue of $3.4 million (not billion, which is what you would expect for a company worth $9.7 billion) and expenses of about $14 million, resulting in an operating loss of $10.6 million.

Let's be generous and assume that DJT had a blowout fourth quarter and generated $5 million of revenue last year. That means the stock is trading at nearly 2,000 times revenue!

The valuation is only one of many major warning flags. Here's a Barron's article with five of them, straight from the warnings in the prospectus: Trump's New Media Company Has Risks. 5 Reasons You Shouldn't Invest, in Its Own Words. Excerpt:

1. The company is losing money...
2. The new company is playing for conservative attention. Musk's X may already have eaten its lunch...
3. Trump is the big draw. But he can post elsewhere...
4. Trump's legal problems could become investor problems...
5. The new company will be a public listing, but Trump will be in control.

To this list, I'll add another...

Trump owns nearly 60% of DJT, worth more than $5 billion today. He has just over a week to post a $175 million bond against the $454 million judgment against him in his New York civil fraud case, and his legal bills are running at least $5 million per month.

To repeat, I am not expressing any opinion of whether he's the victim of a politically motivated "witch hunt" or getting his just deserts.

I'm simply pointing out that Trump has extremely strong incentives to sell as much of his DJT holdings as he can, as quickly as possible – which would undoubtedly crash the stock.

Today, of course, he's unable to do so because he's subject to a six-month lockup. But the board can waive this – and there's a good chance it would do so.

And here's a final warning flag...

This isn't the first time Trump has had a public company with the ticker DJT. Here's more from CNN: The last time Trump took a 'DJT' business public, it ended up in bankruptcy. Excerpt:

While Trump Media may be new, its stock ticker is a throwback to Trump's only other publicly traded company. Trump bestowed the same initials on his Atlantic City casino business, Trump Hotels and Casino Resorts, back when that company went public in 1995...

Trump Hotels and Casino Resorts never turned a profit and ended up in bankruptcy in 2004, wiping out shareholders.

Trump's company lost money every single year of its existence, putting it more than $600 million in the red – despite owning premier Atlantic City casinos, including the Trump Taj Mahal, a place so opulent Trump called it “the eighth wonder of the world.”

His second public company didn't fare any better:

Trump's stock holdings were wiped out in the bankruptcy. But he continued to make millions of dollars from the company after it came out of bankruptcy, pocketing $6.1 million from the re-named Trump Entertainment Resorts company, which traded under a new ticker – you guessed it! – TRMP.

The new name and ticker didn't help the company, though. It lost $2 billion over five years and filed for bankruptcy a second time in 2009.

All this said, as bearish as I am on this stock, I would never short it.

I've learned the hard way more times than I care to remember that once a stock becomes completely disconnected from any fundamentals, it can trade anywhere.

And in this particular case, if Trump wins the election in November, there's no reason DJT shares couldn't trade for $100... $200... or even $1,000!

In summary, DJT looks like a meme stock and reminds me of GameStop (GME) in its heyday in 2021. And like with GameStop, the ending seems certain: huge losses for retail investors sucked in by the hype and action.

Don't be one of them.

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

From JP Morgan:

US: Futs are higher with small-caps leading; SPX on a 3-day losing streak which appears to be mostly month-end/quarter-end related given the trading patterns. SPX -73bps over those three days. Bond yields are up 1bps across the curve, but USD is flat; cmdtys for sale across all 3 complexes with the notable exceptions gold and natgas. Keep an eye on oil prices which could push past near-term expectations as Russia looks to cut production. Pre-mkt, all Mag7 names are higher as are Semis and Large-cap Healthcare. The major macro events are Waller’s speech (6pm ET) and the 7Y bond auction; yesterday’s 5Y was digested well.

and...

EQUITY AND MACRO NARRATIVE: Positive fundamentals, negative rebalance flows, and light volume are the story of this week. Friday’s PCE and next week’s NFP have been de-risked given Powell’s speech saying Jan/Feb data can be overlooked as one-off’s and that a strong/strengthening labor market will not delay cuts. Overall, there remains a bullish market narrative and would anticipate that trend resuming no later than next week.

* Not since the Dot.Com bust...

Boris Jordan on cannabis and Germany:

Curaleaf CURLF was placed on my Best Ideas List (long) on March 13, 2024 at $4.07.

As I mentioned in yesterday's opening missive, our debt load and deficits are being ignored by the markets' inflated valuations:

“Sometimes common sense tells us what statistics cannot.” - Jack Bogle

Bonus - Here are some great links:

* Everything is Bullish Why a Strong Start to 2024 Is Bullish for the Rest of the Year - Carson Group

* The Outlook for Consumer Staples (25) Consumer Staples: Sector Outlook - by Austin Harrison (grindstoneintel.com)

* Good Friday and Market Seasonality Almanac Trader - Market Historically Strong Ahead of Good Friday (tumblr.com)

* Russell is Crowing Russell 1000 MoMo

* Again... I Fault the Networks and the Guests

* Of a 4:12 am-kind...

Shorted SPY $520.77 and QQQ $445.21.