Closing Breadth

S&P 500 Sectors

Nasdaq 100 Heat Map

Buying Occidental OXY calls (in and out of the money) for September and October.

Occidental Petroleum's OXY volume today is almost 2x the average daily trading volume.

I will bet anyone a Budweiser that Warren Buffett has added to his holdings today.

"Praise by individual, criticize by category."

- Warren Buffett

Given the market's possible return to reality, it is a good time to consider the past sources of your investment information.

There is nothing wrong about being wrong about stocks.

There is something wrong about possessing excessive confidence and lacking humility — particularly given the host of fundamental uncertainties that many have been ignored as stocks moved ever closer to the sun.

There is something wrong with not taking ownership of one's investment and trading boners when delving out investment recommendations. They are typically asset gatherers who throw a lot of ideas against the wall, do little research, memorize sound bytes and emphasize only their winners.

There is also something wrong when stocks recommended (for example, American Express AXP, Goldman Sachs GS and Amazon AMZN) are capable of declining by between -$15 and-$30 in ONE DAY as they are today!

It means to this observer that the upside rewards vs. downside risks are simply miscalculated — usually by the recommender worshipping at the altar of price, not conscious of intrinsic value and non-existent security analysis (and just chart gazing).

For me the dynamic of reward vs. risk is at the core of individual stock selection.

So is the concept of "margin of safety."

In a bull market reward vs. risk and safety are ignored until it is too late.

As a consequence it is a good time to consider one's sources of investment information going forward.

This has been a consistent refrain of mine in my Diary, after all, its only when the tide goes out do we know who is swimming naked.

I will take The Oracle's quote (above) to heart and not name names — but you all know who they are.

Keep them away from your stock portfolio.

There, I am done with the sermon.

From Peter Boockvar:

Succinct Summation of the Week's Events

Positives

While Powell and Co didn't cut rates, as no one expected, we're well priced for a few by year end.

Q2 productivity rose more than expected, by 2.3% q/o/q annualized. The estimate was 1.8% and follows a .4% increase in Q1. Versus last year, productivity was up 2.7% y/o/y and is the 4th quarter in a row with a 2 handle after a multi year stretch of subpar growth as we managed thru Covid. After a 3.8% jump in Q1, unit labor costs were up .9% and are up .5% y/o/y.

Pending home sales in June rose 4.8% m/o/m, better than the estimate of up 1.5%, though still down 7.8% y/o/y. All four regions saw increases vs May. The NAR attributed the bounce to a lift in supply, “The rise in housing inventory is beginning to lead to more contract signings. Multiple offers are less intense, and buyers are in a more favorable position.”

The Q2 Employment Cost Index rose .9% q/o/q, one tenth less than expected. Specifically with the private sector, wages/salaries rose .8% q/o/q, down from 1.1% in Q1. On a y/o/y basis, private sector wages and salaries grew by 4.1% vs 4.3% in the two prior quarters and vs 4.5% in the one before that.

The July Consumer Confidence index from the Conference Board was 100.3, about in line with the estimate of 99.7 and compares with 97.8 in June (revised up from 100.4 initially) and 101.3 in May. The Present Situation has fallen to the lowest level since April 2021 and go back to January 2017, not including Covid, the last time it was lower. On the flip side, while still pretty depressed, the Expectations component rose to the highest since January. The differential can be explained by the labor market answers. People are more worried now but hopeful in the coming 6 months things will improve, albeit slightly. Spending intentions continued to weaken.

An update on container shipping prices. The Shanghai to Rotterdam trip fell a touch, by $60 to $8,200 while the route to LA fell for a 3rd week by $194 to $6,740 and is off more from its recent high of $7,512.

The Apartment List National Rent Report on July activity rose for a 6th month m/o/m, measuring new leases, but still "over the course of 2024 as a whole remains modest, signaling ongoing sluggishness in the market." Prices rose .2% m/o/m. Y/o/Y rents fell by .8%. Because of growing supply, the vacancy rate was 6.7%, the most since August 2020 and compares with about 6% pre Covid. Most of that excess supply is in the sunbelt states where most of the overbuilding took place.

From Camden Property Trust: In July, new lease rates fell 1.6% y/o/y but signed renewal rates rose by 4% and their blended rate was up .9% y/o/y.

From Meta: "We estimate that there are now more than 3.2 billion people using at least one or our apps each day...Looking forward, we believe generative AI will play a growing role in how businesses market and engage with customers at scale. Within ad revenue, the online commerce vertical was the largest contributor to y/o/y growth, followed by gaming and entertainment and media. On a user geography basis, ad revenue growth was strongest in Rest of World and Europe at 33% and 26%, respectively. Asia Pacific grew 20% and North America grew 17%." Their cap ex outlook is $37b to $40b for the full year from their previous range of $35b to $40b.

From Microsoft: On Copilot, "The number of people who use Copilot daily at work nearly doubled q/o/q as they use it to complete tasks faster, hold more effective meetings, and automate business workflows and processes." Cap ex in the quarter was $19b, "in line with expectations"

From Amazon: "AWS y/o/y revenue growth accelerated again, from 17.2% in Q1 to 18.8% in Q2...companies have completed the significant majority of their cost optimization efforts and are focused again on new efforts." On its cap ex spend, "For the first half of the year, cap ex was $30.5 billion. Looking ahead to the rest of 2024, we expect capital investments to be higher in the 2nd half of the year. The majority of this spend will be to support the growing need for AWS infrastructure as we continue to see strong demand in both generative AI and our non-generative AI workloads."

From Apple: On the outlook, "We expect our September quarter total company revenue to grow y/o/y at a rate similar to the June quarter."

From AMD: "second quarter revenue increased 9% y/o/y to $5.8b as significantly higher sales of our data center and client processors more than offset declines in gaming and embedded product sales."

From Block: "GPV (gross payment volume) growth in the quarter was up 8% y/o/y as strength from our markets outside the US was offset by a continued moderation in US same store sales growth, consistent with broader macro data points."

Cheesecake Factory saw 1.4% comps for Q2 "meaningfully outperforming the casual dining industry resulting in record high Cheesecake Factory restaurant average weekly sales as well as total consolidated revenues."

From Shake Shack: They had 4% comp growth and said this, "There has been much discussion about customers moving to a more value oriented mindset and that the industry has started to wage value wars in a fight for transactions. In this environment, many believe that Shake Shack's premium positioning is a liability. But, to the contrary, I believe that it is truly one of our strengths. Our team has been nimble and begun to employ strategic promotions to earn more than our fair share of transactions."

From Live Nation: "We continue to see strong demand globally, with a growing variety of shows attracting both casual and diehard fans who are buying tickets at all price points, which speaks to the unique experience only live concerts can provide."

From Autonation: "the CDK outage masked what was developing into a very positive quarter...April and May, new unit sales were up about 5%" but ended up down 3% because of the outage. Used vehicle sales were tracking flat thru May but ended lower by 8% y/o/y also due to the outage."

From Paypal: "we see the US environment being very consistent right now with what we've seen over the first half. International is a real strength for us."

From Ferrari: "One, very strong Q2 financial results and the continuous smooth execution of the year. Two, a solid order book, which has evolved as expected...Look, we don't see any sign of weakness. We see there is no trend at all in reduction of visit...so there is no weakness sign that is perceived either by us directly or by our dealers."

From Eaton: "Recently, we've seen data center and power generation/renewable projects take the lead in new project announcements. These two project types represent some 40% of announced projects in the last 12 months." They are also seeing strength in 'institutional infrastructure' such as "education, healthcare, government and includes waste and wastewater."

From Schneider National: "the quarter saw positive indicators, including seasonal demand, tightening supply during the annual road check event, increased spot pricing and modest contract price gains in our truckload network. While we are not calling a market inflection just yet, and the sustainability of these trends is not yet proven, there are signs of market improvement which we anticipate will present opportunities as we move forward."

The BoJ stepped up with a rate hike to .25% from 0-.10%, said they could hike again and will SLOWLY cut QT in half to 3 trillion yen by early 2026.

Thailand's July manufacturing PMI rose to 52.8 fro 51.7.

Australia saw Q2 CPI in line relative to expectations but the trimmed mean calculation rose two tenths less than forecasted q/o/q.

Hong Kong's economy grew more than estimated in Q2, by .4% q/o/q and 3.3% y/o/y vs the estimate of up .3% and 2.7% respectively, helped by exports which offset weakness in consumption.

Taiwan's economy grew by 5% y/o/y in Q2.

Vietnam, the growing manufacturing plant destination, saw its exports in July rise 19.1% y/o/y which was much better than the estimate of up 13.5%. Helping is Samsung in particular which makes up alone about 30% of Vietnam's exports with 4 factories and about 200,000 employees.

The Eurozone reported a better than expected Q2 economic performance with GDP up .3% q/o/q and .6% y/o/y, both one tenth above the forecast. Germany though continued with its weakness as its economy contracted by one tenth q/o/q vs the estimate of up one tenth. Spain has been the bright spot, helped by tourism, as its economy grew by .8% q/o/q, well above expectations of up .5%. The French economy grew by .3% q/o/q vs the estimate of .2%.

Negatives

Bad news is bad news now. July payrolls grew just 114k, well below the estimate of 175k and the two prior months were revised down by a combined 29k. The unemployment rate jumped to 4.3% from 4.1% as a rise of 67k was more than offset by a gain of 420k in the labor force. The all in rate rose to 7.8% from 7.4%. Also reflecting weakness was the decline in the workweek to just 34.2 hours from 34.3 and that is the least since 2010 not including the Covid drop. Average hourly earnings rose .2% vs the estimate of .3% m/o/m. The only positive was the one tenth gain in the participation rate to 62.7% and to 84% for 25-54.

While Powell made clear on Wednesday that a 50 bps cut was not on their minds for the first shift in policy, I’d think it might be now time to start thinking about. That said, we are not going to have a slash and burn rate cutting cycle ahead I believe.

That wasn’t the only negative this week…

Initial jobless claims rose to 249k from 235k, the highest one week print since August 2023 and that was 13k more than expected. This brings the 4 week average to 238k from 236k and that is just below the highest since last summer. Continuing claims rose to 1.877mm, the most since November 2021 and up from 1.844mm in the week before.

The July ISM manufacturing index continued its string of below 50 prints as it fell to 46.8 from 48.5. That’s the lowest since November. Breadth weakened as just 5 industries saw growth vs 8 last month while 11 said their business is contracting vs 9 in June. ISM said “US manufacturing activity entered deeper into contraction. Demand was weak again, output declined, and inputs stayed generally accommodative…Demand remains subdued, as companies show an unwillingness to invest in capital and inventory due to current federal monetary policy and other conditions. Production execution was down compared to June, likely adding to revenue declines, putting additional pressure on profitability.”

The weekly MBA mortgage application data saw a drop of 3.9% w/o/w with purchases lower by 1.5% and down for a 3rd straight week. Refi’s fell 7.2% w/o/w.

Job openings in June totaled 8.18mm, down slightly from the 8.23mm seen in May. That though is above the forecast of 8mm. A factor keeping the figure above 8mm is the growing demand for workers from state and local governments. As for the private sector, job openings fell to 7.09mm and that is the 2nd lowest since early 2021 and nearing its pre Covid pace when we didn’t have work from home as a thing.

From World ACD last Friday, "Air cargo spot rates from Asia Pacific continue to soar, despite a drop in demand from China to the USA in the last two full weeks, according to the latest weekly figures and analysis from WorldACD Market Data."

Vehicle sales were light in July relative to expectations. They totaled 15.82mm at a SAAR vs the estimate of 16.2mm and that compares with 15.74mm in July 2023 and 16.82mm in July 2019.

The July Dallas services index flat lined at -.1 vs -4.1 in June.

From Microsoft: On why Azure grew at the lower end of expectations at 30%, "distinguishing between being at the higher end or at the lower end really was some softness we saw in a few European geos (geographies) on non-AI consumption really made the difference in that number." Growth from here they estimate at 28-29%. With respect to Office 365, "Seat growth was again driven by our small and medium business and frontline worker offerings, although both segments continued to moderate."

From Amazon: On the stores business, "we're seeing lower average selling prices or ASPs right now because customers continue to trade down on price when they can. More discretionary higher ticket items, like computers and electronics or TVs, are growing faster for us than what we see elsewhere in the industry, but more slowly than we see in a more robust economy...Consumers being careful with their spend, trading down, looking for lower ASP products, looking for deals, that continued into Q2, and we expect it to continue into Q3, we're seeing signs of it continue in Q3."

From CDW: "2nd quarter market dynamics played out roughly as we expected. Cautious customer behavior once again elongated sales cycles and drove prioritization of needs over wants and cost savings over expansion. Capital investment in complex solutions, particularly those tied to data center and network modernization, continued to be downsized or put on hold and there was growing refresh activity in client devices. What was not expected were two end market specific dynamics, a worsening in the UK environment, and further federal funding challenges (in the US)."

From EBAY: "as we've said over the past few quarters, we've seen some shifts in consumer spend driven by the macro environment as cost-conscious consumers are increasingly searching for value...our luxury category is still positive and has been for six straight quarters, so I think there's more pressure on the less affluent customers in the consumer market."

From Marriott: "As we look ahead to the full year, we are narrowing our global RevPAR range to 3% to 4% growth, largely due to anticipated continued weakness in Greater China...We expect a continuation of current weak demand and pricing trends in the region, with a 3rd quarter anticipated to see the most meaningful RevPAR decline, as outbound travel accelerates during summer holidays." In addition, "we also expect marginally lower full year RevPAR in the US and Canada than we had previously anticipated, in part due to less Group business the first two weeks of November, given the intense focus on the US presidential election.

From McDonald's: "Beginning last year, we warned of a more discriminating consumer, particularly among lower-income households and as this year progressed, those pressures have deepened and broadened. The QSR sector has meaningfully slowed in the majority of our markets and industry traffic has declined in major markets like the US, Australia, Canada and Germany. In several markets, we also continue to be negatively impacted by the war in the Middle East. These external pressures certainly weighed on our performance for the quarter, with declines in comparable sales globally and across each of our segments."

From Cheesecake Factory: "We view the environment as being relatively tough and transitory, notwithstanding the outperformance in some of our concepts. I think we've seen a little bit of alcohol trade down...We currently estimate total inflation across our commodity baskets, labor, and other operating expenses to be in the low to mid single digit range, and fairly consistent across the quarters."

From Autonation: To a question on the consumer and the affordability challenges many have, "I think there's no doubt that affordability is top of mind for many of the consumers that come into this marketplace, whether it's on new or used vehicles. I mentioned the fact that if you look at our CFS (consumer financial services) performance, it's moderated very slightly. That was about product detachment rates, and that is all about not desire for the product per se, but it's all about managing to a monthly budget."

From Starbucks: "we are operating in a challenging consumer environment. You see the impact of that in away from home consumption. If you look at our business at home, for grocery stores with our brands, you're seeing volume increase, you're seeing share increase in a category that's in decline, but we're seeing volume increase at home...Looking outside the US, we continue to see weakness in parts of our international business and strength in others. Headwinds persist in the Middle East, Southeast Asia, parts of Europe, driven by widely discussed misperceptions about our brand. In some European markets, consumers are stretched. At the same time, we see significant strength in markets like Japan and parts of Latin America. China is one of our most notable international challenges...The competitive market dynamics in China are reflected in our recent results. We continue to face more cautious consumer spending and intensified competition."

From Hershey: "Q2 was a bit lighter than we anticipated, both from a category perspective in terms of where consumers were shopping and what they were buying, and certainly also from a share perspective. If I look at the areas of pressure in share that we saw in the quarter, sweets is an area that continued to be strong, and certainly we under-indexed on sweets...We saw particular pressure that hit us in C-store, given some of the weakening of those C-store channel trends, as well as an uptick in take home in club where we're less developed."

From Proctor & Gamble: "As we enter fiscal '25, we continue to expect the environment around us to remain volatile and challenging from input costs, currencies, to consumer, competitors, retailers, and geopolitical dynamics."

From ON Semi: The sales "decline was driven by an ongoing inventory correction in the automotive and industrial end markets, which together contributed 79% of our revenue."

From Lattice Semi: "In Q2, we continue to undership to end customer demand as inventory normalization continues. On an end market basis, demand remained soft across industrial and automotive in Q2, with revenue down 23% sequentially as customers continue to reduce their inventory levels...Within communications and computing, Q2 revenue was flat sequentially. Strengths in data center networking and servers helped offset incremental weakness in wireless communications."

From Microchip: "Our June results were consistent with our guidance with net sales down 6.4% sequentially as we continue to navigate through a major inventory correction...Our business in Europe and America, which are dominated by industrial and automotive markets, were particularly weak on the heels of a very weak March quarter. Our broad base of customers continue to manage their inventory tightly and adjust their business plans in the midst of a weak macro-environment for manufacturing."

From Eastman Chemical: "The issue we face that I think everyone in the industry faces right now is that it's a really tough economic environment. We have some version of stagflation, right? You have inflation still impacting consumers and demand being quite weak in many sort of discretionary markets...And it's duration, it's not just demand is weak, it's been weak for over two years now. And so, that weighs on companies and their economics...They're all so focused on managing their cost structure like everyone is right now. And so, the rate at which they're ramping up volume on some of the programs that we've won with these customers is going a bit slower than we thought."

From MGM Resorts: They had a good 2nd quarter, "However, in the fourth quarter, and I think many of you see this through our room rates, Formula One is showing some softness. We are hoping and believing that this race will continue to pace up, but I think you can see that. And so we're a little focused on trying to make that the best event that it can be, but that presents a potential headwind in the 4th quarter."

From Booking Holdings: "In line with our expectations, we saw that the booking window expanded less in the 2nd quarter relative to the first quarter, which negatively impacted room night growth compared to Q1. From a regional perspective, we observed mild moderation of travel market growth in Europe...Looking at our other regions, we continue to see high growth levels in Asia and a slight improvement in growth in the US."

From Wayfair: "Q2 was a continuation of the macro trends we've been seeing for the last few years. Customers remain cautious in their spending on the home and our credit card data suggests that the category was down by nearly 25% from the peak we saw in the fourth quarter of 2021. This mirrors the magnitude of the peak to trough correction the home furnishing space experienced during the GFC, according to US Census Bureau data. Importantly, this calculation is in nominal dollars. Adjusting for inflation suggests we're now in the midst of a correction in excess of 35%, an unprecedented level of pullback in our sector."

This could have gone in either side but I'll put it here as it seems that it was more peer pressure that got the BoE to cut rates rather than the inflation/wage data.

July manufacturing PMI's: China's Caixin 49.8 vs 51.8, Japan 49.1 vs 50, South Korea 51.4 vs 52, Taiwan 52.9 vs 53.2, Vietnam 54.7 vs 54.7, Malaysia 49.7 vs 49.9, Philippines 51.2 vs 51.3, Indonesia 49.3 vs 50.7, India 58.1 vs 58.3 and Australia 47.5 vs 47.2.

China's state sector focused July PMI was little changed m/o/m. The manufacturing index remained below 50 at 49.4 vs 49.5 in June as expected. Non-manufacturing slipped to 50.2 from 50.5. The estimate was 50.3. Combining the two has the composite index at 50.2.

The July Eurozone CPI exceeded expectations by a tenth for both the headline and core. The headline rose 2.6% y/o/y and the core rate was up by 2.9%. Service inflation remains persistent, up by 4% y/o/y. Non-energy industrial goods prices grew by .8% y/o/y and has been slightly below 1% for a 4th straight month.

Germany's unemployed rose by 18k in July, above the estimate of 15k. Though their unemployment rate held at 6% as expected.

Wolf Street howls about the jobs market.

Professor Galloway's No Mercy/No Malice on "Smaller."

I have written about 30 skeptical columns about Nvidia NVDA and AI.

Here is one from Elliott Management in The Financial Times:

Elliott says Nvidia is in a ‘bubble’ and AI is ‘overhyped’

I have a two-hour conference call beginning at noon today.

Radio silence.

Adding to Viking Therapeutics VKTX at $51.

* At 10:50 a.m.:

Volume and VIX

- NYSE volume 215M shares, 68% above its one-month average;

- NASDAQ volume 1.97B shares, 19% above its one-month average;

- VIX: up a whopping 51.96% to 28.25

Breadth

S&P 500 Sector ETFs

Nasdaq 100 Heat Map

Finally buying OXY at $56.52.

* Long SPY $529.75 and QQQ $446.04.

* Adding to DIS at $89.78

* Purchased MSFT $405.77

* Purchased AMZN $163.45

* Purchased ARM $111.05

"Many receive advice, only the wise profit from it.”

- Harper Lee

I sent caution to the wind earlier this week and late last week in my daily "Charting The Technicals" column — as there was a self confidence (bordering on hubris) expressed by the technicians in a likely explosive bull market leg.

From my July 29th column TheStreet Pro:

Charting the Technicals

* Confident technicians embrace small-cap...

* Ten cuidado!

From my July 26th column TheStreet Pro :

Charting the Technicals

* Some editorial comments about hubris and full dependency on charts this morning.

* I previously warned that the plethora of technical analysts quoted in 'Charting the Technicals' have been confidentally bullish into the recent market decline.

* To me, though, the only certainty is the lack of certainty — as Grandma Koufax often reminded me ("to be aware of the Cossacks").

* A contrarian, independent and fundamental view is often important to consider and sometimes to implement.

* That is why, to me, a sense of fundamental value is so important (vs. a blind eye towards price momentum — which is the foreplay of machines and algos).

* In looking at the charts I find extreme readings in RSI and in the S&P Short Range Oscillator as guiding technical stars to be superimposed with a fundamental understanding of value in the Indices, sectors and individual stocks.

“The best plan is to profit by the folly of others.”

- Pliney The Elder

Ummm... that failed to develop.

* As the movie is now running in reverse...

I have long been worried about market structure risk — something the business media never addresses and always dismisses.

With everyone on the same side of the boat and worshipping at the altar of price momentum — an inflection point in that momentum (seen vividly this week) has the potential of producing an October 1987 selling climax.

Be forewarned.

jpiper

I think I'm kinda used to negative AAPL posts during all the years I've been a subscriber, but this latest one strikes me as way off base. No where was there any comment regarding their AI rollout or the equipment upgrades that will take place when the phone is ready to price and later ship in the fall through next year. Not just phone upgrades but ipad, etc to take advantage of the AI. Maybe you should take a hard look at your AAPL analysis over the years to see where you've got it wrong.

Dougie Kass

Maybe, Maybe, Maybe! The Chantels - Maybe (1958) (youtube.com)

If I raise your emotions this way I have done my job.

The post was not meant to be a comprehensive analysis of Apple, simply to point out several things you wont see from Wall Street sell side or the clowns on The Death Star.

I see my objective of the Diary to deliver, at times, contrary points of view.

If you want consensus listen to Drawdown, Slink, Dan Ives and the others.

Recently Tom Lee made this call. Russell 2000 will see a 40% rally by the end of the summer, says Fundstrat's Tom Lee (youtube.com)

It is your job to evaluate the merit of my analysis.

I am often wrong and always in doubt... unlike many others.

I have been wrong on Apple over the years.

In the main, and over market cycles I have done reasonably well, JP.

The decision not to reload on the long side in CVX, OXY and XOM into an economic downturn has been a good decision.

At $169.42, I moved to very small long Procter & Gamble PG (which has benefited mightily from the sector rotation this week).

I have moved to very small in the following shorts:

* BX (-$4) $133.10

* KKR (-$5.50) $114.25

* APO (-$9) $107

* DHI (-$5) $174

* TOL (-$6.20) $132

TerrAscend Completes $140 Million Debt Financing :: TerrAscend Corp. (TSND)

From Peter Boockvar:

Focus shifts to economy & away from rate cuts/Some notable data points/A lot of good earnings comments

On Monday I wrote, "With expectations already priced in for further cuts in 2025, what would upset that paradise (Best of Both Worlds) would be if the economy slows further coincident with a continued rise in the unemployment rate as rate cuts may not be enough to stave that off. That's when bad news is bad news for stock and credit markets." It seems like we got a taste of that yesterday and tells me that a weaker than expected jobs number today will not be treated well either rather than cheering the greater likelihood of rate cuts.

An update on container shipping prices. The Shanghai to Rotterdam trip fell a touch, by $60 to $8,200 while the route to LA fell for a 3rd week by $194 to $6,740 and is off more from its recent high of $7,512.

Shanghai to Rotterdam

Vehicle sales were light in July relative to expectations. They totaled 15.82mm at a SAAR vs the estimate of 16.2mm and that compares with 15.74mm in July 2023 and 16.82mm in July 2019. It's hard to parse out what was Hurricane Beryl related in Texas but there should have been a bounce back post June with the cyber attack. Affordability and the high cost of funding have to be influences too.

The Apartment List National Rent Report on July activity was out yesterday and it rose for a 6th month m/o/m, measuring new leases, but still "over the course of 2024 as a whole remains modest, signaling ongoing sluggishness in the market." Prices rose .2% m/o/m. Y/o/Y rents fell by .8%. Because of growing supply, the vacancy rate was 6.7%, the most since August 2020 and compares with about 6% pre Covid. Most of that excess supply is in the sunbelt states where most of the overbuilding took place.

So many earnings calls so I'll try to be as brief as possible with them. The tone in my eyes/ears point to a clear economic slowdown underway.

And I'll continue with the rental conversation and start with Camden Property Trust, a major multi family sunbelt owner and a stock we own. Their call is this morning.

In July, new lease rates fell 1.6% y/o/y but signed renewal rates rose by 4% and their blended rate was up .9% y/o/y.

From MGM Resorts:

They had a good 2nd quarter but what caused the stock to go much lower were these comments, "However, in the fourth quarter, and I think many of you see this through our room rates, Formula One is showing some softness. We are hoping and believing that this race will continue to pace up, but I think you can see that. And so we're a little focused on trying to make that the best event that it can be, but that presents a potential headwind in the 4th quarter."

Broadly on business, "the core gaming customer is still pretty solid. Probably the change in the revenue on the flat side in particular is midweek and tied to the shift in the convention mix. But we continue to see our high end perform extremely well."

Sticking with travel, from Booking Holdings whose stock was hit hard yesterday and again pre market and also follows Marriott:

"In line with our expectations, we saw that the booking window expanded less in the 2nd quarter relative to the first quarter, which negatively impacted room night growth compared to Q1. From a regional perspective, we observed mild moderation of travel market growth in Europe."

"Looking at our other regions, we continue to see high growth levels in Asia and a slight improvement in growth in the US."

On the outlook on Q3, "we believe room night growth will be impacted by the booking window, that expands less than it did in Q2 as well as by the more moderate market growth we have seen in Europe where our growth has remained stable from May through July. We expect that this will result in some deceleration in-room night growth compared to Q2."

Shake Shack had a good quarter with 4% comp growth and said this, "There has been much discussion about customers moving to a more value oriented mindset and that the industry has started to wage value wars in a fight for transactions. In this environment, many believe that Shake Shack's premium positioning is a liability. But, to the contrary, I believe that it is truly one of our strengths. Our team has been nimble and begun to employ strategic promotions to earn more than our fair share of transactions."

But, "traffic was down 80 bps and check rose mid-single digits as pricing was partially offset by planned marketing strategies that resulted in a negative low single digit mix."

Speaking of premium, from Ferrari:

"One, very strong Q2 financial results and the continuous smooth execution of the year. Two, a solid order book, which has evolved as expected."

"Look, we don't see any sign of weakness. We see there is no trend at all in reduction of visit...so there is no weakness sign that is perceived either by us directly or by our dealers."

On the other hand, from Hershey:

"Q2 was a bit lighter than we anticipated, both from a category perspective in terms of where consumers were shopping and what they were buying, and certainly also from a share perspective. If I look at the areas of pressure in share that we saw in the quarter, sweets is an area that continued to be strong, and certainly we under-indexed on sweets...We saw particular pressure that hit us in C-store, given some of the weakening of those C-store channel trends, as well as an uptick in take home in club where we're less developed."

"In the 2nd quarter, consumers continued to seek value options and reduce trips."

From Amazon:

"AWS y/o/y revenue growth accelerated again, from 17.2% in Q1 to 18.8% in Q2." The estimate though was 19%.

They said "companies have completed the significant majority of their cost optimization efforts and are focused again on new efforts."

On the stores business, "we're seeing lower average selling prices or ASPs right now because customers continue to trade down on price when they can. More discretionary higher ticket items, like computers and electronics or TVs, are growing faster for us than what we see elsewhere in the industry, but more slowly than we see in a more robust economy."

More, "Consumers being careful with their spend, trading down, looking for lower ASP products, looking for deals, that continued into Q2, and we expect it to continue into Q3, we're seeing signs of it continue in Q3."

On its cap ex spend, "For the first half of the year, cap ex was $30.5 billion. Looking ahead to the rest of 2024, we expect capital investments to be higher in the 2nd half of the year. The majority of this spend will be to support the growing need for AWS infrastructure as we continue to see strong demand in both generative AI and our non-generative AI workloads."

From Wayfair:

"Q2 was a continuation of the macro trends we've been seeing for the last few years. Customers remain cautious in their spending on the home and our credit card data suggests that the category was down by nearly 25% from the peak we saw in the fourth quarter of 2021. This mirrors the magnitude of the peak to trough correction the home furnishing space experienced during the GFC, according to US Census Bureau data. Importantly, this calculation is in nominal dollars. Adjusting for inflation suggests we're now in the midst of a correction in excess of 35%, an unprecedented level of pullback in our sector."

And for two reasons that are obvious and a growing realization on #3, "one, the malaise in the housing market; two, overspending in 2020 and 2021 that has warped the historic replacement cycle; and three, a slowing US economy."

From Apple:

Overall revenue was up 5% y/o/y but iPhone revenue was down 1% y/o/y. China was down 6.5% y/o/y but in constant currency, by 3%. Services growth was solid at 14% y/o/y.

On the outlook, "We expect our September quarter total company revenue to grow y/o/y at a rate similar to the June quarter."

On a question about the upgrade cycle, "it's very difficult mid-cycle to call upgrade rates. I would just say that with Apple Intelligence, we are very excited about the level of value that we're going to provide users. And we believe that presents another reason for a compelling upgrade."

On China, "certainly the competitive environment there is the most competitive in the world."

From Block:

"GPV (gross payment volume) growth in the quarter was up 8% y/o/y as strength from our markets outside the US was offset by a continued moderation in US same store sales growth, consistent with broader macro data points."

"And we've seen many other companies note similar softness from a discretionary consumer spend perspective as we look at external data points, showing a dynamic macro backdrop, whether it's slower new business formations, or industry specific data across the verticals that we serve."

They did though raise their full year guidance. "This reflects our strong top line momentum as we head into the back half of the year...In the back half of the year, we expect GPV growth to be relatively stable, although we are mindful of the backdrop for consumer discretionary spending continues to be dynamic."

From Microchip Technologies:

"Our June results were consistent with our guidance with net sales down 6.4% sequentially as we continue to navigate through a major inventory correction."

"Our business in Europe and America, which are dominated by industrial and automotive markets, were particularly weak on the heels of a very weak March quarter. Our broad base of customers continue to manage their inventory tightly and adjust their business plans in the midst of a weak macro-environment for manufacturing."

And, "High interest rates, very short lead times and an uncertain business outlook, this combination of factors we believe is driving inventory destocking as well as reductions in target inventory levels in multiple areas."

Further, "Given the severity of the downcycle, our factories around the world are continuing to run at lower utilization rates in order to help control inventory levels. Our internal capacity expansion actions remain paused. We expect our capital investments in fiscal '25 and likely in fiscal '26 as well will be low as we will use the inventory we have invested in as well as our underutilized capacity to support the next up-cycle."

Eaton Corp is benefiting from what they call 'mega trends' and what they define as "announced value of $1 billion or more" in terms of size of a project.

"Recently, we've seen data center and power generation/renewable projects take the lead in new project announcements. These two project types represent some 40% of announced projects in the last 12 months."

They are also seeing strength in 'institutional infrastructure' such as "education, healthcare, government and includes waste and wastewater."

Schneider National is sniffing out a bottoming in the trucking sector:

"the quarter saw positive indicators, including seasonal demand, tightening supply during the annual road check event, increased spot pricing and modest contract price gains in our truckload network. While we are not calling a market inflection just yet, and the sustainability of these trends is not yet proven, there are signs of market improvement which we anticipate will present opportunities as we move forward."

* For a quick profit

I sold out SPY at $536.63 and QQQ at $451.

I now have no position in the Indices

As of 8:34 a.m.:

As of 8:45 a.m:

Upside:

-TNDM +21% (earnings, guidance)

-IAS +13% (earnings, guidance)

-MELI +12% (earnings, guidance)

-DASH +11% (earnings, guidance)

-NET +7.5% (earnings, guidance)

-MPWR +6.4% (earnings, guidance)

-TWLO +5.5% (earnings, guidance)

-ARDX +5.3% (earnings, guidance)

-CLX +4.2% (earnings, guidance)

-RLJ +4.1% (earnings, guidance)

-GDDY +4.0% (earnings, guidance)

-SGHT+3.8% (earnings, guidance)

-RGNX +3.7% (earnings)

-ROKU +3.0% (earnings, guidance)

-CERS +2.9% (earnings, guidance)

Downside:

-INTC -23% (earnings, guidance; announces workforce reduction)

-PCOR -22% (earnings, guidance)

-XPOF -19% (earnings, guidance)

-SNAP -18% (earnings, guidance)

-CTOS -14% (earnings, guidance)

-TPC -14% (earnings, guidance)

-TEAM -12% (earnings, guidance)

-LXRX -11% (earnings)

-OPEN -11% (earnings, guidance)

-AMZN -8.2% (earnings, guidance)

-MCHP -6.5% (earnings, guidance)

-BKNG -5.6% (earnings, guidance)

-DHC -5.5% (earnings)

-CHD -4.9% (earnings, guidance)

-VREX -4.7% (earnings, guidance)

-DJT -4.2% (commenced the phased rollout of its TV streaming platform, Truth+)

-NXT -3.7% (earnings, guidance)

-CC -3.4% (earnings, guidance)

I took a trading long rental in the Indices (small sized) on the reaction to the weaker-than-expected jobs number:

* Purchased SPY at $533.56.

* Purchased QQQ at $447.58.

From Briefing.com:

8:30PM: Fed Bank of Richmond President Barkin (Voter) is scheduled to appear on PBS's "Carolina Business Review." Online access: https://www.pbs.org/show/carolina-business-review/;

12:00PM: Fed Bank of Chicago President Goolsbee (Non-Voter) Television Appearance - Bloomberg Markets

Wolf Street is howling about the value of old office towers.

Apple AAPL, like many other companies, consistently sets guidance low enough so they can beat the quarter.

But now they don’t even give guidance on the call.

They just do it offline to the analysts. Then management talks down numbers during the quarter.

Then the company barely beats — and the bulls rejoice.

But beyond the optics of the fake beats, you step back and look at the mosaic. There has been no innovation. Product sales have not grown for the last decade, in fact they are down. Earnings barely grow. And all the hoopla and the multiple it carries? One more dumb stock.

Commenting on the quarter, Bloomberg's Mark Gurman had a scathing, and accurate, assessment:

"My big picture takeaway is that, financially, everything is *fine* at Apple. But this is a company that has dramatically lost its pace of innovation and has probably missed on its latest major new product, while canceling future sources of growth like in-house screen technology and cars. I am seeing nothing in the Apple product roadmap in the next 2-3 years that is a game-changer. Anything new and meaningful is not coming until around 2027 in my view."

We've experienced a power outage at Seabreeze! 

Hope to be up and running as soon as possible.