"Just one more thing."

- Lt. Columbo

Thanks for reading my Diary today and all week.

Enjoy the evening and long weekend.

Be safe.

Smails said I can leave early because I have been working hard!

So I am outta here.

I am lowering my buy entry level to $7-$8 based on the increased uncertainties and timing of rescheduling of cannabis.

From Peter:

Positives

1) The US S&P Global composite PMI for May was better than expected mostly driven by a jump in services to 54.8 from 51.3. Manufacturing helped too as it rose to 50.9 from 50. Price pressures though rebounded. While confidence grew overall for both sectors, “companies remain cautious with respect to the economic outlook amid uncertainty over the future path of inflation and interest rates, and continue to cite worries over geopolitical instabilities and the presidential election.”

2) Initial jobless claims fell to 215k from 223k last week and that was 5k below expectations. The 4 week average, and thus smoothing out that supposed NY reporting issue a few weeks ago, rose to 220k from 218k and that is the highest since September 2023.

3) Core durable goods orders in April were as expected when we include the downward revision to March. So, the .3% m/o/m gain follows a one tenth decline in March. The same is the case for shipments, which plugs into GDP as the 3 tenths beat in April was offset by a 3 tenths downward revision to March. In dollars though, core durable goods orders haven't grown much over the past 2 years.

4) Mortgage apps were mixed as refi's rose 7.4% w/o/w as rates fell again to about 7% and assume many of these are cash outs.

5) The April Architecture Billings Index saw a rise to 48.3 from 43.6 though the components were mixed. The gain was led by commercial/industrial and the AIA chief economist said, "These findings indicate that while there is still caution among clients, there are also positive signs with increasing inquiries into new projects. Continued high interest rates make it difficult for some projects to move forward, but there is ongoing interest in pursuing these projects once conditions improve. In the meantime, design activity is expected to remain sluggish."

6) Target plans to lower prices for up to 5,000 products, it seems that it is focused on food, drink and other non-discretionary household items.

7) From Ross Stores: "though we had hoped to do better, first quarter sales were still in line with our guidance despite macroeconomic headwinds that continued to pressure our customers' discretionary spending."

8) From Elf Beauty: "As we look out to the remainder of the year, we remain bullish on the cosmetics category and our ability to gain share. At the same time, we are mindful of macroeconomic uncertainty and believe it's prudent to take it a quarter at a time."

9) From TJX: "Overall, comp store sales were up 3%, which was at the high end of our plan. Again, this quarter, the comp increase was entirely driven by customer transactions."

10) From Decker's Outdoor: HOKA and UGG are both doing great. "HOKA and UGG have become two of the strongest and most in demand brands in the footwear space."

11) From Toll Brothers: "Demand for new homes continues to be driven by a resilient economy, favorable demographics and a lack of supply that reflects both the chronic underproduction of housing in the US and the historically low levels of resale inventory caused by the lock-in effect of higher rates. Our strategy of widening our price points to include more affordable luxury homes and increasing our supply of spec homes has helped us grow market share."

12) From Analog Devices: they "believe we've passed the low point of this cycle. Notably, global manufacturing PMIs, which are highly correlated with our core business are improving, customer inventories are stabilizing and our bookings have improved for a 3rd consecutive quarter. Our growing optimism remains guarded, however, as short term economic and geopolitical uncertainty persists."

13) From Palo Alto Networks: "First and foremost, cyberattacks continued unabated. We're seeing a consistent stream of nation-state activity that is systematically looking for software supply chain and hardware zero day vulnerabilities and attempting to exploit them at scale. Additionally, there continues to be a robust stream of attack activity targeted at large enterprises and pieces of critical infrastructure."

14) From Trip.com: From China, "outbound hotel and air ticket bookings on our platform fully recovered to 2019 levels during the major holiday periods, indicating a strong rebound in demand. In addition to outbound travel, the China domestic travel market continued to exhibit strong performance in the first quarter in response to growing interest of Chinese travelers in exploring their homeland." And travel is growing all throughout the Asia Pacific region "with revenue growing at an impressive rate of around 80% y/o/y."

15) In the Eurozone, the composite PMI index rose to 52.3 from 51.7 with manufacturing remaining in contraction but less so at 47.4 from 45.7 and above the estimate of 46.1. The services component was unchanged m/o/m at 53.3 and a touch light relative to the forecast of 53.6. Germany outperformed France with the former seeing a composite print of 52.2 vs 49.1 for the latter. S&P Global said the headline print equates to about .3% q/o/q GDP growth, thus a bit above 1% annualized.

16) In the UK, manufacturing jumped above 50 at 51.3 from 49.1 and better than the estimate of 49.5 but services slipped to 52.8 from 54.1. S&P Global said this reading also equates to also .3% q/o/q growth.

17) May consumer confidence in the UK did lift by 2 pts to -17 which is the best since December 2021. GFK said "With the latest drop in headline inflation and the prospect of interest rate cuts in due course, the trend is certainly positive after a long period of stasis which has seen the overall index score stuck in the doldrums. All in all, consumers are clearly sensing that conditions are improving. This good result anticipates further growth in confidence in the months to come." That said, the desire to spend on high ticket things is still limited based on this component "reinforcing the fact that the cost of living crisis is still a day to day reality for all of us" said GFK.

18) Japan's composite May PMI was little changed at 52.4 with manufacturing getting back above 50 at 50.5 from 49.6 while services moderated to 53.6 from 54.3.

19) India's PMI remained strong at 61.7, up .2 pts with services at 61.4 and manufacturing at 58.4.

20) South Korea said its exports rose 17.7% y/o/y adjusted for working days in the first 20 days of May and semi shipments continue to lead the way as they were up 45.5% y/o/y. Car exports though were down by 4.2%.

21) Taiwan April export orders rose 10.8% y/o/y, about twice the estimate and helped by electronics. The economy ministry said "high performance computing and accelerating expansion of new applications such as AI, boost solid demand for our semiconductor and servers supply chain...That is expected to boost growth momentum of export orders."

22) The Reserve Bank of New Zealand, the Bank of Korea and Bank Indonesia all left rates unchanged as expected.

Negatives

1) Continuing claims, delayed by a week, were as expected at 1.794mm vs 1.786mm in the week before, staying near the highest since November 2021.

2) While better than the preliminary print, the final May UoM consumer confidence still fell 8.1 pts m/o/m to 69.1, the weakest since November. One year inflation expectations rose to 3.3% from 3.2% in April, though down from the first print of 3.5%. The 5-10 yr guess was unchanged at 3%. The employment component fell 10 pts m/o/m but the income read ended slightly higher m/o/m after the preliminary print that saw a sharp drop. Spending intentions fell notably m/o/m across the board. 

The UoM said "Consumers expressed particular concern over labor markets...The prospect of continued high interest rates also weighed down consumer views...While consumers recognize that realized inflation has eased substantially since 2022, a considerable share of consumers still express the burden that high prices exert on their lives. About 41% of consumers blamed high prices for eroding their living standards, little changed from a year ago."

3) New home sales in April totaled 634k, 44k less than expected and March was revised down by 28k to 665k. New home sales are below where they stood in late 2019 into February 2020. Months’ supply picked up to 9.1 from 8.5 and that is the most since November 2022. Home prices rose 3.9% y/o/y but jumps around because of big mix impacts.

4) Existing home sales in April totaled 4.14mm, 90k below expectations, partly offset by an upward revision of 30k to March to 4.22mm. Months’ supply rose to 3.5 and that is the most since November but it does usually tick up in the spring. Home prices continue to power on, higher by 5.7% y/o/y at the median level, further stretching budgets when tied with a 7%+ mortgage rate. First time buyers made up 33% of the purchases vs 32% in March and vs 29% one year ago. The National Association of Realtors did say that more supply came on to the market at the ‘upper end’ and where more sales took place in response. They said, “For homes priced $1 million or more, inventory and sales increased by 34% and 40%, respectively, from a year ago.”

5) Within the weekly mortgage app data, purchases were lower by 1.2% w/o/w and down in the 8th week in the past 10 and stands a hair above the lowest level since the mid 1990's.

6) The World Container Index Shanghai to Rotterdam route jumped another $827 w/o/w and at $4,999 have now exceeded the mid January jump and are up 200% year to date. The price is still well below the 2021 skyrocket but well above where it stood in February 2020 at around $2,000. The Shanghai to LA trip is now above $5,000, higher by $801 w/o/w to $5,277 vs $2,100 at year end 2023.

7) The monthly truck tonnage index from the American Trucking Association showed a 1.2% drop in April after falling by 2.2% in March and is lower by 1.5% y/o/y. The chief economist at the ATA said "The truck freight market remained soft in April as seasonally adjusted volumes fell for the 2nd straight month. With a rebound in freight remaining elusive, it is likely that additional capacity will leave the industry in the face of continued softness in the market."

8) From Lowe's: "Uncertainty around interest rate cuts, stubborn inflationary pressures, and a consumer still showing a preference towards spending on discretionary services and experiences continue to weigh on the DIY home improvement demand, and the outlook for lower mortgage rates and improved housing turnover remains uncertain. Real wage growth and home price appreciation are solid, but the home improvement customer is still on the sideline, expressing concerns about the higher cost of living and the state of the overall economy."

9) From Target: "consumer confidence took a meaningful dip in April despite a strong job market and normalizing inflation. And beyond the psychological toll of the current environment, the sustained level of elevated prices has had a meaningful impact on budgets and savings for many families. Currently, one in three Americans have maxed out, or is nearing the limit on at least one of their credit cards. For these reasons and more, we remain cautious in our near term growth outlook. Notably, we expect discretionary trends will continue to remain pressured in the short term, but to normalize over time."

10) From Monro: "Strained low to middle income consumers are deferring tire purchases in higher margin tiers and disproportionately trading down to tires at lower price points. This is being supported by an oversupply of lower margin tires in the US."

11) From Ross Stores: "Now, let's discuss our outlook for the remainder of 2024. Ongoing uncertainty in today's macroeconomic and geopolitical environments, including prolonged inflation continue to squeeze our low to moderate income customers' purchasing power. As a result, we will remain especially focused on delivering a wide assortment of branded values throughout our stores."

12) From Macy's: "Our customers across all three nameplates continue to benefit from strong wage and job growth. However, inflationary pressures persist, and they're feeling that pinch. The outlook provided on our 4th quarter earnings call, as well as today's update, assumes our customers will continue to carefully scrutinize their discretionary purchases...The health of the consumer, I never claimed to be an economist, I would say, as we've described, are under pressure, discerning, very choiceful. There are certainly categories that are stronger than others...I expect the consumer to remain under pressure."

13) From Workday: "When purchase decisions are being made, our win rates remain strong. But within the quarter, we experienced increased deal scrutiny as compared to prior quarters. And we are seeing customers committing to lower headcount levels on renewals compared to what we had expected. We expect these dynamics to persist in the near term, which is reflected in our revised FY '25 subscription revenue guidance."

14) From Snowflake: To the benefit of Nvidia (its own asset class right now), and to the cost of their customers, Snowflake said this in their earnings call, "Turning to margins, we are lowering our full year margin guidance in light of increased GPU related costs related to our AI initiatives."

15) From JB Hunt: "the broader feedback from our customer is, in many cases, the customer's volume was down. And so some of that negativity is more around the customer just doesn't have the business. But the broader feedback from our customers has been just truckload capacity is loose. And costs have surprised customers."

16) Japan said its April CPI rose 2.4% y/o/y ex food and energy as expected vs 2.9% in March but the 19th month in a row above 2% and off the tough comp of 4.1% in April 2023.

17) Japan said its April exports grew by 8.3% y/o/y which was below expectations of a gain of 11%. A rise in autos and electronic products including semis helped. So, the weaker yen helped some but didn't help enough. That weaker yen did see imports rise a bit less than expected, up by 8.3% too as things get more expensive.

18) French business confidence in May was unchanged with April at 99. That still remains well below the February 2020 level of 105.7 as manufacturing continues to drag, partly offset by services. Employment continues to hang in too but retail trade confidence fell to a 6 month low.

19) UK April retail sales ex auto fuel fell 2% m/o/m, worse than the estimate of down .8% and follows a .6% fall in March. Weather was blamed but so was a slowdown on big ticket things.

20) The UK headline CPI print of 2.3% vs 3.2% in the month before was mostly due to the energy subsidies handed out that reset lower but it was above expectations. Taking this out and looking at core saw a 3.9% y/o/y rise, 3 tenths above expectations, though down from 4.2% in March. Input wholesale prices also rose more than expected, though output charges were a bit less.

21) The UK CBI industrial orders index fell to -33 vs the estimate of -20. That compares with -23 in April. CBI said, "Manufacturers expect to increase output through the summer months, but any recovery looks set to be fairly gradual, with order books soft and inventory levels relatively high."

22) Australia's May PMI fell a touch to 52.6 from 53 with manufacturing holding at 49.6 while services fell .5 pt to 53.1.

Thirteen years ago today CNBC's Mark Haines passed away.

Here is a column I wrote about Mark:

In Memory of Mark

I wanted to end today's posts by paying homage to someone we lost this week, nine years ago: CNBC's Mark Haines.

CNBC's Mark Hainespassed away on May 24, 2011.

I still miss him. His death was a great loss to his family, friends and CNBC.

I probably guest hosted Squawk Box with Mark on over 35 to 45 occasions from 2003 to the time of his death (in those days guest hosts were allotted a full three hours).

Here is a column I wrote on the fifth anniversary of Mark's death -- check out the great video of the match race I had with him at The Meadowlands Racetrack(!): https://www.cnbc.com/video/2011/05/25/fast-money-tribute-mark-haines.html

But it's just a box of rain,It's just a box of rain,
I don't know who put it there.
Believe it if you need it,
Or leave it if you dare.

Or a ribbon for your hair.
Such a long long time to be gone,
And a short time to be there.

-- The Grateful Dead, Box of Rain

My friend Mark Haines of CNBC passed away five years ago today, and it still stings.

I appeared via telephone on CNBC's Fast Money with Mel and the gang shortly after Mark's death and offered my teary-eyed thoughts , which I wanted to share with everyone again this morning.

Below is what I wrote about Mark upon his death five years ago:

"I have known Mark for about eight years, starting when I began to guest-host Squawk Box with him, Joe and David in 2003.

A lot has been said this morning on CNBC about Mark -- his broadcasting techniques and strengths, as well has his personal idiosyncrasies.

What I most remembered about Mark was his strength of broadcasting during a crisis -- whether it was a financial, geopolitical or social crisis.

But today, I will write about something this morning that most don't know -- his hobby was betting on thoroughbred horses. And for many years, he was proud to tell me that he had computerized the entire Hialeah Racetrack's meet.

His favorite page in the newspaper wasn't the business section. His favorite page was the racetrack entries at Aqueduct, Belmont, Saratoga, Gulfstream and Hialeah in the New York Post and Daily News. And, again, what few know, is that during commercial breaks he could be seen handicapping the horse races.

My fondest memory and funniest story about Mark Haines was about six years ago during a guest-host gig I had on Squawk Box. It was the week of the Hambletonian race at the Meadowlands racetrack (the harness-racing equivalent of the Kentucky Derby).

Two days before I was on Squawk, CNBC taped a match race between Mark and myself at The Meadowlands. https://www.cnbc.com/video/2011/05/25/fast-money-tribute-mark-haines.html Mark had never driven a standardbred, but he loved the racetrack and said to me, 'What the heck, I will take a shot.'

I had so much fun in that race. (I beat him by a nose!) And after we went over the finish line, I asked him did he have fun, too?

Mark's reply: 'Dougie, I would rather put a needle in my eye than do this again.'"

That was Mark -- ever so honest and truthful.

Here's a 2011 clip R.I.P. my friend. of Carl Quintanilla announcing Mark's death on CNBC.

BY DOUG KASS

MAY 24, 2021 8:30 AM EDT

Professor Scott Galloway's No Mercy/No Malice... Bubble.ai

From Kuppy:

I am not sure what gives in the Florida broadcast of CNBC - but increasingly the network's advertisements are touting micro-cap stocks.

The coup de gras - a few minutes ago - was an advertisement for publicly traded  (OGEN) , a $9.8 million market cap.

In its own advertisements the network prides itself on being in support of the retail investor.

One would think that these series of microcap pushes is supervised by CNBC's compliance department - but apparently not.

How long can they go?

"Factors that lowered neutral rate may reverse in the future - Need to be humble in citing numerical value of neutral rate." - Fed's Waller

- Real return on capital not appropriate interest rate to use to gauge longer-run neutral rate.

- Recent events point more to increase influence for dollar than to any significant decline.

- Demand for US safe, liquid assets are outpacing supply over past 40 years has pushed down treasury yields and neutral rate.

- Changes in banking regulations, role of central banks, and soverign wealth funds and liberalization of capital markets is not likely to have a significant impact on the neutral rate.

- US dollar remains by very large margin the world's reserve currency.

- Only time will tell how large a factor US fiscal position will be in affecting neutral rate.

- Demographics will continue to put downward pressure on neutral rate.

- US financing pressures may contribute to a rise in longer-run neutral rate in coming years.

With S&P cash rebounding by +21 handles and, importantly, with the VIX at a lowly 12.52, I am replacing the SPY/QQQ calls that I covered into the whoosh lower yesterday with slightly out of the money SPY/QQQ puts for June (monthlies).

I don't remember the last time I was long Index puts - but with vol so low seems an appropriate strategy compared to selling Index calls.

From Peter:

My worries about CRE and BREIT, which began in 2022, is being lived real time by SREIT, the Starwood product as I'm sure you saw in the WSJ a few days ago and with them announcing new gating rules yesterday.

We'll start right with the US consumer with more retail facing companies reporting earnings and you'll read a continued batch of mixed things.

From Monro, a stock we own, the 1,300 store auto service shop where half its business is selling and changing tires:

"Strained low to middle income consumers are deferring tire purchases in higher margin tiers and disproportionately trading down to tires at lower price points. This is being supported by an oversupply of lower margin tires in the US." Fyi, a Michelin tire would for example be a tier 1 tire where a tier 3 or 4 would be a brand you haven't likely heard of.

"Additionally, milder weather has contributed to the general tire deferral cycle. The overall impact of this is fewer US tire replacement units being sold at a lower overall average selling price. This has led to pressured store traffic for us, which is not supportive to attachment of our higher margin service categories."

From Ross Stores, similar to TJX, benefiting from the value conscious, choiceful consumer:

"Though we had hoped to do better, first quarter sales were still in line with our guidance despite macroeconomic headwinds that continued to pressure our customers' discretionary spending." They said accessories and children's "were the strongest merchandise areas during the quarter."

Also, the 3% comp gain was mostly traffic driven and average basket was up slightly but saw lower units per transaction. "I would say that performance during the quarter was choppy throughout the quarter with weather, the Easter calendar shift and tax refund timing."

"Now, let's discuss our outlook for the remainder of 2024. Ongoing uncertainty in today's macroeconomic and geopolitical environments, including prolonged inflation continue to squeeze our low to moderate income customers' purchasing power. As a result, we will remain especially focused on delivering a wide assortment of branded values throughout our stores."

From Ralph Lauren:

They saw 3% top line growth for fiscal year '24 which they said was at the high end of the target they gave a year ago, "even with unexpected macro headwinds across several of our key markets throughout the year."

"By region, growth was led by Asia, consistent with our long term plan, followed by a better than expected performance in Europe and North America. China was once again a standout with sales up low double digits this quarter over a more normalized post Covid compare, and up 30% for the year."

VF Corp, the owner of Timberland, Dickies, North Face and Vans brands among others, also saw better performance in Asia relative to Europe and the US:

"Relative to the Americas, our international business remained more resilient, down 4% for the quarter. As the APAC region continued to grow, and as anticipated, the run rate in Europe improved relative to Q3. The Americas region was down 23% in the quarter as anticipated, a similar trend to Q3 as a continued cautious posture from our wholesale partners and our actions to further reduce inventories in the channel, particularly in the US weighed heavily on results."

Deckers Outdoor is doing great with its HOKA brand, and also owning UGG and Teva. They saw revenue growth up 18% y/o/y for the full year as "HOKA and UGG have become two of the strongest and most in demand brands in the footwear space." Global HOKA sales by the way were up 28% y/o/y for fiscal '24.

Shifting to enterprise software and Workday and why the stock was down premarket:

"When purchase decisions are being made, our win rates remain strong. But within the quarter, we experienced increased deal scrutiny as compared to prior quarters. And we are seeing customers committing to lower headcount levels on renewals compared to what we had expected. We expect these dynamics to persist in the near term, which is reflected in our revised FY '25 subscription revenue guidance."

More on this, "I think for the last year, a year and a half, we've talked about we haven't seen any material change to the macro, meaning we haven't seen any additional scrutiny one way or the other. In fact, it's been rather consistent. But this quarter, we did. We did see a bit more scrutiny specifically on large deals in net new deals and that wasn't just something in the US, it was truly around the world we saw that."

And specifically, to mention what they said again as they did repeat it in their call, "So, definitely some more scrutiny than we've seen in the past, and on the headcount trends, that was something that was global. We saw less headcount expansion at time of renewals across the world. That wasn't just something in one region vs the other."

On to the economic data of importance. Japan said its April CPI rose 2.4% y/o/y ex food and energy as expected vs 2.9% in March but the 19th month in a row above 2% and off the tough comp of 4.1% in April 2023. I'd say the BoJ has gotten what they wanted but now need wage growth to catch up or it would be all for naught. The key now from here is thus to see what movement, if any, we see prices lift in reaction to the recently announced wage increases negotiated during the shunto period.

The 10 yr inflation breakeven in Japan fell a few bps but only after recently jumping and the 10 yr JGB yield closed spot on 1.00%. From what I'm hearing/reading, the Ministry of Finance is pressuring the BoJ to hike rates again because they don't want to continue to fight the market with FX intervention. The yen is little changed today at 157.

French business confidence in May was unchanged with April at 99. That still remains well below the February 2020 level of 105.7 as manufacturing continues to drag, partly offset by services. Employment continues to hang in too but retail trade confidence fell to a 6 month low.

Finally in the UK. May consumer confidence did lift by 2 pts to -17 which is the best since December 2021. GFK said "With the latest drop in headline inflation and the prospect of interest rate cuts in due course, the trend is certainly positive after a long period of stasis which has seen the overall index score stuck in the doldrums.

 All in all, consumers are clearly sensing that conditions are improving. This good result anticipates further growth in confidence in the months to come." That said, the desire to spend on high ticket things is still limited based on this component "reinforcing the fact that the cost of living crisis is still a day to day reality for all of us" said GFK.

To this, April retail sales ex auto fuel fell 2% m/o/m, worse than the estimate of down .8% and follows a .6% fall in March. Weather was blamed but so was a slowdown on big ticket things, as highlighted above.

UK Consumer Confidence

From 2.99% to -0.01% overnight.

We identified - and had conviction - of the clear deterioration in some leading groups (financials, utilities) and even in some lagging groups (retail, oils) early Thursday morning - Will AI/Nvidia's Fireworks Offset Looming Macroeconomic Concerns and Risks?

During Thursday's session we consistently warned that Equities Ignore the Macro (Parts One and Deux) .

As noted, into the teeth of the decline I took in my Index shorts and a few others:

Some Short Covers

* I have closed out my Index short position on the whoosh lower - at a loss. I plan to return on a rally.

* McDonald's (MCD) is -$6.60/share - covered more at $259.19, and that's $40 lower than the price touted in the business media I referenced. Down to tagends.

* Home Depot (HD) is -$3.50 to $327.10. Covered more and also down to tagends.

* Winnebago (WGO) down another beaner, covered more.

MAY 23, 2024 3:10 PM EDT

Without the short sliver, my portfolio mainly consists of pairs trades now.

So far, so good.

Today I am unclear and have no strong view.

That said, I want to short strength.

TGIF!

Upside

-MRUS +22% (announces publication of abstracts for presentation at the 2024 ASCO Annual Meeting)
-RCUS +16% (abstract providing data from an interim analysis from Cohort B of Phase 1b/2 clinical trial ARC-9 was published on the American Society of Clinical Oncology website)
-DECK +9.1% (earnings, guidance)
-PAGS +8.5% (earnings, guidance)
-ME +7.5% (earnings)
-IOVA +7.2% (announces clinical data in Frontline Advanced Melanoma at ASCO 2024 Annual Meeting)
-RCUS +6.8% (abstract providing data from an interim analysis from Cohort B of Phase 1b/2 clinical trial ARC-9 was published on the American Society of Clinical Oncology website)
-ROST +6.4% (earnings, guidance)
-BAH +5.7% (earnings, guidance)
-STXS +3.5% (receives CE Mark Recertification under EU’s MDR regulatory framework)
-PLCE +2.9% (seeks to eliminate debt over time and will look to raise equity capital, per Chairman)

Downside

-VSTM -56% (announces initial interim safety and efficacy results from RAMP 205 Trial Evaluating Avutometinib Plus Defactinib in Combination with Gemcitabine and Nab-paclitaxel in First-Line Metastatic Pancreatic Cancer; initiates Rolling Submission of NDA to FDA Seeking Accelerated Approval of Avutometinib and Defactinib Combination for the Treatment of Adult Patients with Recurrent KRAS Mutant Low-Grade Serous Ovarian Cancer)
-SNSE -38% (presents clinical cata from Phase 1 Dose Escalation Study of SNS-101)
-BNED -24% (reports prelim FY24 results)
-GNLX -22% (prices ~$27.5M underwritten offering of common stock and accompanying warrants; selling 6.88M shares at $4.00/shr)
-WDAY -11% (earnings, guidance)
-DOMO -7.2% (earnings, guidance)
-HOWL -6.8% (plans to present additional details from monotherapy and combination therapy dose escalation arms of the trial at ASCO in early June)
-INTU -5.6% (earnings, guidance)
-EXAS -4.7% (weakness following GH blood-based colorectal cancer test gets FDA vote in favor of a positive recommendation for Shield blood test for colorectal cancer (CRC) screening in adults age 45 and older who are at average risk for the disease) 

* This is how a generalist thinks about THE MOST IMPORTANT tech company extant... 

I understand my investing weaknesses.

One of those deficiencies is in analyzing technology.

I could "lie" like other fugazzis who parade in the business media and seem to be an authority about everything - and, regardless, of body of knowledge, can answer any question lobbed at them! - when, in reality, they memorize sound bytes and have a knowledge base miles long but only inches deep.

So, take my following comments with a grain of salt - recognizing I know "sh-t from shinola." But it will give you a sense how, as a generalist, I think about Nvidia's prospects and share price.

I would love to see the following analysis of Nvidia undefined...

Turn NVDA's quarterly data center revenue into AI chip/board unit sales (H100, etc).

How many data centers worth of parts is this? If it is a half a data center worth of parts, you feel good about NVDA having a pretty long run.

But, if it is 100 data centers worth of parts, where is everything going?

The lead time on these data centers is years. They take a long time to build. It is really hard to even find power and water which they consume a ton of. These are new DCs that need to be architected very differently from existing capacity.

Then on top of NVDA, include the parts AMD undefined and Intel  (INTC)  are selling, in addition to the parts some DC owners have built/architected on their own ( (TSLA) , GOOGL,  (MSFT) ). How many total data centers per quarter have parts been procured for?

Then the other way of looking at this is if the parts sold are consistent with vendors closer to the end of the food chain whose stuff does not end up in inventory or triple ordered or being hoarded. Are server sales and networking sales and power sales (data center air conditioners, etc.) consistent with the chip sales in terms of the amount of final capacity they represent.

I am totally curious, this is neither a plus or minus point on NVDA, I am just curious if the parts they are consistent with data center capacity that is actually being put in place right now? I am under the impression that people are having a really hard time adding incremental DC capacity. It is complicated, and it takes a long time to get these things up and running…

But I have ZERO idea what this analysis would show… not that I expect anyone to do it especially when the only thing that matters is figuring out their wafer starts and how the next quarter looks.

In thinking about my question above, someone sent me the below article. It does not directly answer the question, and frankly leaves me more confused.

I know lead times for NVDA parts started coming in last quarter too. Normally with a semi, when lead times come in, you run for the hills. It could simply be that lead times were so stretched, that they have awhile to come in until supply and demand is balanced. 

But as this happens, it is a somewhat artificial boost to sequential trajectory that provides a fair bit of the upside. Eventually it normalizes. Lead times were 8-11 months, now they are 3-4 months, and if they continue coming in at the same rate,  they should be in balance by the end of this quarter.

Other aspects of the article are interesting including the fact that some are now sitting on excess parts and trying to offload them, as well as the underlying points about demand shifting to different use cases and delivery methodologies:

Buyers of Nvidia's highest-end H100 AI GPU are reportedly reselling them as supply issues ease.

At the same time, Coreweave just raised another $7.5 billion, so the money keeps flowing. The structure of these deals, however, continues to blow my mind. It feels like a combination of Enron and the CDO craze during the housing bubble in 2008. Same guys (e.g. Magnetar) are involved too, amongst others. At least mortgages were collateralized by homes, which appreciate in value as opposed to depreciate, and you also know exactly what their use case is and that there is real end demand for them. 

This thread is interesting:

Then something that didn’t seem to get much attention, the FTC seems to be poking around into how all this is structured from a competitive perspective. But the tweet following the FTC press release I think is wrong. The FTC could care less about financial reporting. That is for other government agencies that also are poor at doing their jobs.

Bottom Line

At the end of the day and on a purely short term basis, NVDA's shares got cheaper on a multiple basis after earnings and guidance. The question longer term remains: Is the use case there or not, and to what degree?

That is another thing I do not have the answer to and I am on the sidelines on.

I recently read Professor Grant's (Wharton) book Hidden Potential. 

* More higher for longer...

* Algos know everything about price but little about value...

* From The Divine Ms M...

That said, I covered more  (MCD)  short yesterday and moved to tagends.

I remain short bitcoin (after all these days!):

First Time Long Time

I shorted a small, starter position in bitcoin on the opening (BITO $28.84).

Position: Short BITO (VS)

BY DOUG KASSMAY 21, 2024 9:35 AM EDT

This is a low conviction trade as I have no sense of the intrinsic value of this investment class/vehicle!

“The best investors I’ve seen all have an above-average ability to change their mind.”

- Joel Tillinghast

A lot about bearish engulfing candles (take note!) and Nvidia  (NVDA)  (The Tattooed Lady):

Bonus - Here are some great links:

Profit Taking Arrives 

Front Running NVDA 

The Centrality of NVDA

The Post Memorial Day Market Fade (Jazzy Jeff) 

Gold Miners Hit Resistance