As suggested this morning, I am out of RIV Capital  (CNPOF)  (+42% today).

I will repeat for emphasis.

Market structure works both ways.

Machines, algos and "fear of missing out" have delivered a sharp climb in equities and in valuations.

The movie in reverse, with most being on the same "long" side of the boat, is potentially ominous.

I am fearful that, with valuations so high, that the bullish consensus is not only moderately incorrect in view.

With short-dated Treasuries providing equity like returns (of nearly 5.5%), above-average cash reserves seems an obvious alternative.

Thanks for reading my Diary.

I will be travelling on business Friday but you will be in the capable hands of Stephen "Sarge" Guilfoyle.

Be safe.

Enjoy the weekend.

Dell  (DELL)  reports EPS in-line, beats on revs (169.98 -9.38)

• Reports Q1 (Apr) earnings of $1.27 per share, excluding non-recurring items, in-line with the FactSet Consensus of $1.27; revenues rose 6.3% year/year to $22.24 bln vs the $21.69 bln FactSet Consensus.
  • Infrastructure Solutions Group (ISG) delivered first quarter revenue of $9.2 billion, up 22% year over year. Servers and networking revenue was a record $5.5 billion, up 42%, with demand strength across AI and traditional servers. Storage revenue was flat at $3.8 billion. Operating income was $736 million.
  • Client Solutions Group (CSG) delivered first quarter revenue of $12.0 billion, flat year over year. Commercial client revenue was $10.2 billion, up 3% year over year, and Consumer revenue was $1.8 billion, down 15%. Operating income was $732 million.
• "No company is better positioned than Dell to bring AI to the enterprise," said Jeff Clarke, vice chairman and chief operating officer, Dell Technologies. "Servers and networking hit record revenue in Q1, with our AI-optimized server orders increasing sequentially to $2.6 billion, shipments up more than 100% to $1.7 billion, and backlog growing more than 30% to $3.8 billion." Dell Technologies World

Costco  (COST)  delivers another solid earnings report, beating on top and bottom lines, but stock succumbing to a sell-the-news reaction, down about 2% in after hours trading (815.34 +8.82)

• Shares have rallied by 13% since the beginning of May, hitting record highs today, reflecting investors' high expectations. A strong report was priced in.
• The headline numbers look good, but the relatively modest EPS beat is providing enough of an excuse to take some profits off the table.

Nordstrom  (JWN)  misses by $0.17, beats on revs; guides FY25 EPS in-line(21.02 -0.49)

• Reports Q1 (Apr) loss of $0.24 per share, excluding non-recurring items, $0.17 worse than the FactSet Consensus of ($0.07); revenues rose 4.8% year/year to $3.34 bln vs the $3.19 bln FactSet Consensus.
  • Company comparable sales increased 3.8 percent compared with the same period in fiscal 2023.
  • Nordstrom banner net sales increased 0.6 percent and comparable sales increased 1.8 percent compared with the same period in fiscal 2023.
  • Nordstrom Rack banner net sales increased 13.8 percent and comparable sales increased 7.9 percent compared with the same period in fiscal 2023.
  • Digital sales decreased 0.2 percent compared with the same period in fiscal 2023. Digital sales represented 34 percent of total sales during the quarter.
• Co issues in-line guidance for FY25, sees EPS of $1.65-2.05 vs. $1.81 FactSet Consensus.

• Revenue range, including retail sales and credit card revenues, of 2.0 percent decline to 1.0 percent growth versus the 53-week fiscal 2023, which includes an approximately 135 basis point unfavorable impact from the 53rd week.
• Comparable sales range of 1.0 percent decline to 2.0 percent growth versus 52 weeks in fiscal 2023.

Ulta Beauty  (ULTA)  beats by $0.22, reports revs in-line; guides FY25 EPS below consensus, revs below consensus (385.58 +7.30)

• Reports Q1 (Apr) earnings of $6.47 per share, $0.22 better thanthe FactSet Consensus of $6.25; revenues rose 3.5% year/year to $2.73 bln vs the $2.72 bln FactSet Consensus.
  • Comparable sales growth of +1.6%.
• Co issues downside guidance for FY25 (Jan), sees EPS of $25.20-26.00 (down from $26.20-27.00) vs. $26.32 FactSet Consensus; sees FY25 revs of $11.5-11.6 bln (down from $11.7-11.8 bln) vs. $11.7 bln FactSet Consensus.
  • Co expects comps of +2-3%, down from +4-5%.

Marvell  (MRVL)  reports EPS in-line, revs in-line; guides Q2 EPS in-line, revs in-line (76.85 +1.07)

• Reports Q1 (Apr) earnings of $0.24 per share, excluding non-recurring items, in-line with the FactSet Consensus of $0.24; revenues fell 12.2% year/year to $1.16 bln vs the $1.15 bln FactSet Consensus.
• Co issues in-line guidance for Q2 (Jul), sees EPS of $0.24-0.34, excluding non-recurring items, vs. $0.28 FactSet Consensus; sees Q2 revs of $1.1875-1.3125 bln vs. $1.22 bln FactSet Consensus.
• "Marvell delivered first quarter fiscal 2025 revenue of $1.161 billion, above the mid-point of guidance, driven by stronger than forecasted demand from AI. Our data center revenue grew 87% year over year, with the start of a ramp in our custom AI programs complementing our substantial base of electro-optics revenue," said Matt Murphy, Marvell's Chairman and CEO.
• "For the second quarter of fiscal 2025, we are guiding an 8% sequential increase in revenue at the mid-point, fueled by ramping custom AI silicon. We see a favorable setup for the second half of this fiscal year, driven by continued growth in data center and the beginning of a recovery in enterprise networking and carrier infrastructure."

Guess?  (GES)  beats by $0.13, beats on revs; guides Q2 EPS below consensus; guides FY25 EPS in-line, revs above consensus (23.39 -0.02)

• Reports Q1 (Apr) loss of $0.27 per share, excluding non-recurring items, $0.13 better than the FactSet Consensus of ($0.40); revenues rose 3.9% year/year to $591.9 mln vs the $574.64 mln FactSet Consensus.
• Co issues downside guidance for Q2, sees EPS of $0.38-0.47, excluding non-recurring items, vs. $0.65 FactSet Consensus.
  • Expects consolidated net revenues to increase 9-11%.
• Co issues guidance for FY25, sees EPS of $2.62-3.00, excluding non-recurring items, vs. $2.81 FactSet Consensus; sees FY25 revs growth between 10.7% and 12.7%, which translates to ~$3.073-3.129 bln vs. $3.05 bln FactSet Consensus.
• The Company's Board of Directors approved a quarterly cash dividend of $0.30 per share on the Company's common stock. The dividend will be payable on June 28, 2024 to shareholders of record as of the close of business on June 12, 2024.

Gap  (GPS)  reports Q1 (Apr) results, beats on revs, comps up +3%; projects Q2 and FY24 net sales growth in-line with consensus (22.52 +0.87) 

• Reports Q1 (Apr) GAAP earnings of $0.41 per share, may not be comparable to the FactSet Consensus of $0.14; revenues rose 3.4% year/year to $3.39 bln vs the $3.29 bln FactSet Consensus.
  • Comps were up +3%.
• Co expects Q2 (Jul) low single digit net sales growth yr/yr compared to the +1% FactSet Consensus.
• Co expects FY24 net sales growth up slightly yr/yr, up from its previous flat forecast and versus the flat growth FactSet Consensus.

NetApp  (NTAP)  beats by $0.01, reports revs in-line; guides JulQ EPS and revs in-line; guides FY25 EPS above consensus, revs in-line; increases dividend, new $1 bln share repurchase authorization (116.50 -1.00)

• Reports Q4 (Apr) earnings of $1.80 per share, excluding non-recurring items, $0.01 better than the FactSet Consensus of $1.79; revenues rose 5.5% year/year to $1.67 bln vs the $1.65 bln FactSet Consensus.
• Co issues in-line guidance for Q1 (Jul), sees EPS of $1.40-1.50, excluding non-recurring items, vs. $1.44 FactSet Consensus; sees Q1 revs of $1.455-1.605 bln vs. $1.53 bln FactSet Consensus.
• Co issues guidance for FY25, sees EPS of $6.80-7.00, excluding non-recurring items, vs. $6.74 FactSet Consensus; sees FY25 revs of $6.45-6.65 bln vs. $6.53 bln FactSet Consensus.
• Co also announces an increase in its quarterly dividend to $0.52 cents per share and a new share repurchase authorization of an additional $1 billion.

As of 4:18 p.m.:

* At 2:15 pm:

Breadth

Nasdaq 100 Heat Map

From Peter:

Pending home sales in April fell a sharp 7.7% m/o/m, well more than the anticipated 1% decline. This takes the index to just .5 pt from the lowest level on record dating back to 2001.

The NAR stated the obvious reason, “The impact of escalating interest rates throughout April dampened home buying, even with more inventory in the market.” They should have added, and "escalating interest rates on top of record high home prices that keep on rising."

Bottom line, we have the pace of existing home sales around the slowest since 1995 and that also negatively impacts all the ancillary activity that takes place around the transfer of a home from one owner to another, and for the home the seller moves into, and so on and so on. On the other hand, we know the pace is doing better but even there, the pace is no different than what we saw in 2019.

Pending Home Sales

New Home Sales

From Charlie, here.

RIV Capital's  (CNPOF)  shares rose to $0.15 (a gain of more than +50%) on the announced transaction.

I liquidated a portion of my position on that advance and after listening to the conference call and reading the press release I plan to sell the balance of my holdings today.

In summary, after spending an ungodly amount to purchase the right to have a NY cannabis presence, buying back TerrAscend's  (TRSSF)  CNPOF position at a ridiculous premium (months ago), this transaction is another poor use of capital executed by what I view as a most incompetent management team.

* At 10:30 am

- NYSE volume 125M shares, 11% below its one-month average

- Nasdaq volume 2.48B shares, 26% above its one-month average

- VIX down 2.17% to 13.97

Breadth

Biggest Movers

Nasdaq 100 Heat Map

At 10:30 am:

Riv Capital  (CNPOF)  has agreed to be acquired in a merger of equals with Cansortium  (CNTMF) . 

There is an 11 am conference call and I will have more information later today.

Speaking of later today, I have to leave at 1 pm for a meeting outside of the office, and a bit far away.

So my posts this afternoon will be far less frequent than usual.

I am back buying  (OXY)  ($61.38) on a scale lower.

Added to DraftKings  (DKNG)  on the opening.

My objective to scale on lower prices to build up to large-sized.

An investment and not a trade.

From Peter:

Initial jobless claims rose to 219k from 216k and that was 2k above the estimate. The 4 week average shifts up to 223k from 220k and that is the highest since last September. Continuing claims totaled 1.791mm, still hanging around the 1.8mm level and about as forecasted.

Bottom line, we know the pace of hiring’s have slowed and the demand for labor has moderated but the curl up in the number of those filing claims, while still historically low, is worth keeping our eye on.

4 week avg Initial Claims

Continuing Claims

Expect a trim to the Q2 GDP estimates after the April trade deficit for goods (services not out yet) jumped to $99.4b, $7b above the estimate and the widest since May 2022. Exports grew by .5% m/o/m while imports were higher by 3.1%, helped by a 10.4% jump in the imports of autos after a similar drop in March.

Goods Trade Deficit

With regards to the revision to Q1 GDP, old news at this point, the 1.3% print, revised from 1.6% as expected, feels like it should based on what we’ve read in the Beige Book for multiple reports now and points to what I keep saying about how mixed and uneven the US economy seems to be based on the totality of hard, soft and anecdotal things I look at and analyze. Real final sales grew just 1.7% and to private domestic purchasers by 2.7%.

Upside

-ONMD +43% (entered into Master Service Agreement with medical technology company)
-BURL +15% (earnings, guidance)
-RRGB +15% (earnings, guidance)
-AI +12% (earnings, guidance)
-FL +12% (earnings, guidance)
-AMSC +10% (earnings, guidance)
-CADL +9.4% (FDA Grants Orphan Drug Designation for CAN-3110 for the Treatment of Recurrent High-Grade Glioma)
-SIDU +8.8% (announces its AI delivery platform, FeatherEdge, successfully transmitted data back down to Earth for the first time on May 24th)
-BIRK +8.5% (earnings, guidance)
-PSTG +7.9% (earnings, guidance)
-SSYS +6.2% (earnings, guidance)
-BBY +5.7% (earnings, guidance)
-CDXS +5.6% (Cantor Fitzgerald Initiates CDXS with Overweight, price target: $11)
-HPQ +4.3% (earnings, guidance)
-OKTA +4.2% (earnings, guidance)
-DG +3.2% (earnings, guidance)
-MRNA +3.1% (US said to be close to deal to fund Moderna bird flu vaccine trial)
-CRDO +2.8% (earnings, guidance)
-TELO +2.8% (announces two pivotal milestones for Telomir-1 in treatment of canine)
-PYPL +2.4% (Mizuho Securities Raised PYPL to Buy from Neutral, price target: $90)
-CAL +2.2% (earnings, guidance)

Downside

-MAXN -62% (earnings, guidance)
-PATH -30% (earnings, guidance; re-appoints Founder Daniel Dines as CEO)
-KSS -23% (earnings, guidance)
-CRM -16% (earnings, guidance)
-A -13% (earnings, guidance)
-NTNX -13% (earnings, guidance)
-AEO -9.7% (earnings, guidance)
-BRKR -9.1% (prices 6M shares of common stock)
-WAT -7.2% (lower in sympathy with Agilent)
-IMVT -7.0% (earnings)
-NCNO -7.0% (earnings, guidance)
-NOAH -6.7% (earnings)
-HESM -3.7% (files to sell 10M Class A common share secondary public offering via selling shareholder)
-DLTH -3.0% (earnings, guidance)
-DHR -2.6% (lower in sympathy with Agilent)
-GNRC -2.3% (Guggenheim Securities Cuts GNRC to Sell from Neutral, price target: $120)
-CPRI -2.0% (earnings) 

* I still see "The Mike Wilson Top?"

* Dudley's column on rates 'higher indefinitely' is a must read

* My continued view is that equities are not compensating investors for risks and are expensive against interest rates and rising inflation as well as other factors. (See "My 2 Core Market Concerns: High Valuation and Interest Rates Higher for Longer"

* The market advance finally stalled on Wednesday and futures continue to be under pressure after weak guidance at Salesforce

* Not broadening:

* Financials (especially private equity (see column), cyclicals and energy were weak yesterday

* Interest rates are climbing and the 10 year real rate is up to 2.23%:

* The S&P Short-Range Oscillator has moved into oversold

* Bond yields are -3 bps

* The U.S. dollar is very weak against the yen

* Brent is materially unchanged

* Gold is -$5.60 and silver is -$0.838.

* Bitcoin is +$600 to $67.9 (I remain short BITO (small sized)).

We used to meet every Thursday
Thursday
Thursday in the afternoon
For a couple a beers
And a game of pool...

- Morphine, Thursday

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 lower in overnight trading. S&P futures peaked at -11 and bottomed at -34. Nasdaq futures peaked at -36 and bottomed at -145. At 7:56 am ET, S&P futures were -21 and Nasdaq futures were -56:

* Commodities are broadly lower. Brent crude was -$0.18 to $83.42:

* The S&P Short-Range Oscillator just entered oversold at -3.05% v. -0.17%.

* The VIX is at 14.44 (+0.16). Vol is not high enough to reenter straddles, but I am eyeing it.

* The U.S. dollar is very weak against the yen and lower v. euro and pound.

* Interest rates are lower. The yield on the 2-year Treasury is 4.96% (-3 bps ). The yield on the 10-year Treasury is -3 basis point at 4.592%. The long bond yield is also -3 bps at 4.717%. Over there gilts (10 year) is -2 basis points:

* Overnight, the inversion of the 2s/10s Treasuries curve is at -37 basis points. The real yield on the ten year is up to +2.23.

* Gold is -$6.20 at $2,334. Silver is -$0.88:

* Bitcoin was +1% or +$600 and is $67.8k.

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:

Trading and Investing Opportunistically in a Peculiar Market Dominated by Machines, Algos

My Tactical Strategy

Yesterday Commodities Experienced Their Biggest Daily Gain Since October 2023

More Tales of Nvidia

Let's Play Three! (Shorting more XLF)

Less Than Meets The Eye

I Am Getting Close To Going Into The Cannabis Pool (again!)

Not Broadening

Here were Wednesday's trades:

* Profitably day traded SPY and QQQ common from the short side

The market's advance — from the lower left to the upper right — since late last year has been momentum (FOMO), valuation and not materially EPS inspired:

Valuations, based on historical metrics, remain in excess of the 90% tile. Historically this is a valuation level that delivers substandard investment returns.

But even more extreme is the paper thin equity risk premium. As I have consistently observed, equities are overvalued (perhaps materially so) relative to interest rates:

On the same subject, former Federal Reserve President William Dudley thinks R* is much higher than consensus so interest rates will likely remain high for a far longer time than the consensus expects. 

Two weeks ago I put on a new short Affirm Holdings  (AFRM)  at $33.44.

The shares closed yesterday at $28.72.

In response to several emails from subscirbers I remain short this name.

Disney  (DIS)  has been one of the most admired companies over the last five decades.

Recognizing the company's unique consumer franchise, the shares have been featured in many modern growth portfolios.

However, over the last five years I have firmly held to a contrarian and negative view on Disney and on the "profitless prosperity" of streaming (Warner Brothers WBD and Paramount Global  (PARA) ). At Seabreeze, we have been short of the shares often (at least five times!) — especially after the shares gapped higher on several different catalysts (increased activists' involvement, announced cost cuts, the return of Bob Iger and after favorable sub additions).

Despite the steady stream of activists' involvement and management changes at Disney, I have been materially correct in view as the shares have been among the worst-performing large-cap companies in entertainment or in any other industry.

With news that Nelson Peltz has jettisoned his position the shares have traded down to $100/share.

In the general market correction I expect a decline in Disney's shares into the low $90s is a growing possibility.

At that price, the upside reward vs. downside risk is attractive and many of my secular business concerns will have been discounted.

My buy pad is prepared....

The columns below chronicle my negativity:

---------------------------------------------------------

NOV 13, 2023 9:15 AM EST

The Mouse No Longer Roars

* I continue to support the view that buying Disney on weakness will continue to be an unprofitable investment endeavor

* Threats to Paramount Global - with its overleveraged balance sheet - are even more formidable than Disney's headwinds

Under normal conditions I would be a buyer of Disney - after all, its consumer franchises (movies, theme parks, cruises, etc.) are among the most unique and iconic in the world. And, its share prices ($88) has more than halved from early 2021 when the shares traded above $200/share.

However, as I have documented, below, Disney faces multiple challenges throughout its entire suite of products. Those threats have no clear short term solutions and will take years to address.

These challenges, as I have warned, are not something that an activist can remedy - as Dan Loeb and Nelson Peltz have learned - in that they are sitting with large unrealized losses on their Disney stock positions.

The greatest challenge, of course, is transitioning from profitable legacy/linear television to unprofitable streaming with all its attendant costs and marketing dilemmas. But that metamorphosis is but one of the multiple headwinds.

As a vivid example, some of Disney's older and successful movie franchises have apparently not adapted to the times.

On Sunday it was announced that box office receipts for Disney's new "The Marvels" fell dramatically short of expectations.

"Disney's Marvel Cinematic Universe is no longer a bulletproof box office franchise. That much is clear after "The Marvels" misfired with $47 million in its opening weekend to land the worst debut in MCU history. Initial tracking was closer to $75 million to $80 million, but those projections shrank dramatically in recent weeks to $60 million to $65 million. With bad buzz and actors like Brie Larson unable to promote the film due to the SAG strike (which finally ended on Friday), "The Marvels" didn't even match those disappointing estimates.

Only two other films in the sprawling series ("The Marvels" is the 33rd installment in 15 years) have opened to lower than $60 million: 2008's "The Incredible Hulk" with $55.4 million and 2015's "Ant-Man" with $57.2 million, not adjusted for inflation. Although the MCU has been showing rare signs of wear and tear in its Spandex, the franchise's other two big-screen adventures to open this year, February's "Ant-Man and the Wasp: Quantumania" ($106 million) and May's "Guardians of the Galaxy Vol. 3" ($118 million), still managed to hit triple digits in their respective debuts. The third "Ant-Man" wasn't labeled a bust until the end of its box office run. "The Marvels" is the rare MCU movie to flop out of the gate."

- Variety

"This is an unprecedented Marvel box office collapse"

- David A. Gross, Franchise Entertainment Research.

It should be noted that the overall cost of the movie "The Marvels" has exceeded $300 million - with production costs of $220 million and marketing expenses of approximately $100 million!

Here is more from past columns:

Paramount Global and Disney Remain Value Traps

* I continue not to be tempted by lower share prices of these two popular entertainment companies

My contribution to your investment performance is not only aimed at providing the analysis and demonstrating the investment rationale why I am buying, selling and/or shorting - but, importantly, to explain why certain individual equities and sectors that I am avoiding.

Paramount and Disney have been viewed widely as value plays over the last several years. I have demurred and have raised serious doubt of their value, even as several activists initiated and expanded their ownership.

In actuality the shares of (PARA) and (DIS) have served as hedges against profits - as both stocks are now making or are near multi-year lows today.

My analysis to avoid these stocks has been contrary to the near universal optimism that we have seen from the sell-side and from cheerleaders in the business media towards these very popular stocks.

Over the last decade, every bull on Disney has relied on the hackneyed phrase that the company "is a unique franchise consisting of irreplaceable content" without thinking about the burden of its debt nor the diminished prospects for both legacy broadcasting and the difficulties associated with the transformation towards a streaming business model.

My negative thesis on the prospects for profitless prosperity for streaming and other factors, was expressed in my Diary over the last two years. I repost a recent summary of my continued ursine outlook:

Jul 06, 2023 ' 09:18 AM EDT DOUG KASS

Why Disney and Paramount May No Longer Be Wonderful Companies or Investments

* Disney and Paramount may be instructive examples of high profile investing and activist mistakes from several market legends

* Rapid secular shifts in consumption, operating challenges and large debt loads have likely taken DIS and PARA out of the ranks of the "wonderful" class of American corporations

* The near to intermediate term outlooks for the share prices of Disney and Paramount look, for now, problematic... despite the large share price declines both may still represent value traps

"It's far better to buy a wonderful company at a fair price, than a fair company at a wonderful price."

- Warren Buffett

There is less than meets the eyes with regard to the futures of Disney (DIS) and Paramount Global (PARA) - two companies with a lot of debt and declining fundamental fortunes, as the media landscape undergoes a difficult, unprofitable and painful shift from linear to (content expensive) streaming.

Investment in these two companies appear to be examples how even some of the greatest money managers (Warren Buffett/Berkshire Hathaway (BRK.A) (BRK.B) , Michael Dell (DELL) ) and activists (Nelson Peltz and Dan Loeb) might have made meaningful mistakes by failing to recognize that the wonderful financial and operating profiles of the past are becoming a distant memory.

DISNEY

Despite an extensive list of well-recognized and popular product offerings - movies, theme parks, merchandise etc. - Disney's fortunes have deteriorated under the weight of legacy debt (from the Fox (FOX) deal), an historically bloated cost structure and other operational challenges - mainly the transition from previously profitable linear media to now unprofitable and capital/content intensive streaming:

Jun 22, 2023 ' 01:08 PM EDT DOUG KASS

The Mouse Isn't Roaring

* I continue to avoid Disney despite its sharp share price drop and serial underperformance

Under $90 I would normally be buying Disney (DIS) - especially with several activists as vocal and significant stakeholders.

But there is nothing normal about the accumulating threats to the company's near and intermediate term prospects:

* The legacy broadcasting business is deteriorating much faster than expected - for Disney and its competitors.

* The transition from formerly high margined linear broadcasting to streaming has become unexpectedly more difficult with, among other issues, content expenses out of control.

* A series of theatrical disappointments are raising red flags - particularly with the threat of AI oriented peers.

* Even the company recently admitted that the ridiculously high price of admission prices to Disney's theme parks has likely approached or is at the limit.

* Disney's future leadership is uncertain.

* To offset some of the above, the company has embarked on a cost cutting effort - but the low hanging fruit of cuts have likely been picked.

* The shares are "over owned" and given the erosion in fundamentals (2023-24 EPS estimates are too high) I don't know where the marginal buyer comes from.

PARAMOUNT GLOBAL

Paramount also faces the dual challenge of a large debt load and the formidable challenge of transition from linear to streaming:

Apr 25, 2023 ' 03:08 PM EDT DOUG KASS

My PARA Exposure

I have shifted down in my exposure to Paramount Global (PARA) - from medium to small sized.

I did this based primarily on the likely weakening profit and cash flow picture at the company and at other streamers. As mentioned previously, despite cutting content expenditures, PARA will have to go into its cash account to cover the quarterly dividend.

I am also importantly influenced by the weakness in the share prices of PARA's streaming peers.

Not only is Disney's (DIS) share price lower but I am especially concerned about the weak price performance of Warner Discovery's (WBD) common shares - despite the strong buy issued at Goldman Sachs over the last few trading sessions.

May 04, 2023 ' 07:51 AM EDT DOUG KASS

Not Unexpectedly... Paramount Global Spits the Bit

* Good sale back in April

Back in late April I reduced my (PARA) long position dramatically - from medium sized down to tag ends:

Apr 25, 2023 ' 03:08 PM EDT DOUG KASS

My PARA Exposure

I have shifted down in my exposure to Paramount Global (PARA) - from medium to small sized.

I did this based primarily on the likely weakening profit and cash flow picture at the company and at other streamers. As mentioned previously, despite cutting content expenditures, PARA will have to go into its cash account to cover the quarterly dividend.

I am also importantly influenced by the weakness in the share prices of PARA's streaming peers.

Not only is Disney's (DIS) share price lower but I am especially concerned about the weak price performance of Warner Discovery's (WBD) common shares - despite the strong buy issued at Goldman Sachs over the last few trading sessions.

My concerns were fulfilled this morning as the company reported an operating loss and reduced its dividend.

Paramount Global misses by $0.09, misses on revs (22.89)

· Reports Q1 (Mar) earnings of $0.09 per share, excluding non-recurring items, $0.09 worse than the S&P Capital IQ Consensus of $0.18; revenues fell 0.9% year/year to $7.26 bln vs the $7.42 bln S&P Capital IQ Consensus.

· Pluto TV Hit 80M Monthly Active Users (MAUs) and is the #1 Free Ad-Supported Streaming Television Service Globally. Total Direct-to-Consumer (DTC) Revenue Grew 39% Year-Over-Year to An Annual Run Rate of More Than $6B. Total Global Viewing Hours Across Paramount+ and Pluto TV Increased Over 50% Year-Over.

· Paramount+ reached 60M total subscribers with the addition of 4.1M subscribers in the quarter. Global subscriber growth was driven by a strong content slate including top originals like 1923, Tulsa King and the returns of Mayor of Kingstown and Star Trek: Picard, hit film franchises in Top Gun: Maverick and Teen Wolf: The Movie, as well as the NFL Playoffs.

· Quarterly Cash Dividend Reduced to $0.05 Per Share (prior dividend $0.24/share).

Bottom Line

For the reasons mentioned in this morning's opening missive, I am still materially avoiding the shares of Disney and Paramount.

Position: Long DIS (VS)

Hedge funds are crowded into the same names:

"A group of people who think differently is a market.
A group of people who think alike is a mob."

- Naval

Bonus - Here are some great links:

June Almanac ("Jazzy" Jeff Hirsch)

A Tale of Two Markets

Understanding Dow Theory

Bonds are Still Crashing

I remain short the primary private equity players — Blackstone  (BX) , KKR & Co.  (KKR)  and Apollo Global Management  (APO) .

In Wednesday's trading session BX fell by $5.50, KKR and APO by over two beaners a share.

On Wednesday, JPMorgan's Jamie Dimon expressed concerns about private credit. 

I continue to hold on to a negative market view.

I view private equity as a leveraged proxy on the capital markets.

My short in financials  (XLF)  is also a reflection of these credit concerns...

The S&P Short Range Oscillator has moved from neutral to -3.05% (oversold).