As of 4:20 p.m.:

Closing Breadth

S&P 500 Sectors

% Movers

Nasdaq 100 Heat Map

Platinum, silver and gold reverse higher as markets are beginning to embrace "slugflation."

* Markets advanced for the second consecutive day.

Breadth was flat:

At 3 p.m. the S&P Index is +46 handles — near the day's highs..

Here are today's "Things":

* More Index shorts:  (SPY)  at $593.26,  (QQQ)  at $508.78.

* Covered yesterday's  (JPM)  short (-$10 but prematurely) at $141.65.

* Shorted more  (TSLA)  at $299.02.

Wolf Street howls about the Fed's rate cut. 

From Peter Boockvar:

Quick FOMC statement rundown

Again we’re going to have to rely on the Powell presser for new information because today’s statement was as uneventful as can be. The only tweak was to the labor market line, and only slightly, as the Fed does have to give some rational for cutting rates again, now totaling 75 bps over two meetings.

Today it said, “Since earlier in the year, labor market conditions have generally eased, and the unemployment rate has moved up but remains low.”

In September, it read, “Job gains have slowed, and the unemployment rate has moved up but remains low.”

On inflation, they repeated that they’ve made “progress towards the Committee’s 2% objective but remains somewhat elevated.” In September, they said “further progress…”

It’s pretty much the same statement otherwise vs the prior one.

Yields are a touch above the lows in response even though there was not much here that was new.

Bottom line, while the statement was blah, I do think Powell tries to leave the December meeting more 50/50 and does not commit either way which compares with the current pricing of a 70% chance.

From the Times of Israel.

I added to  (TSLA)  short at $299.02.

JPMorgan  (JPM)  is trading -$10 in a rotation out of financials.

I am covering yesterday's JPM short for a profit at $236.90.

After the fall (of Amendment 3 in Florida) cannabis companies are plagued by disappointing industry trends (weakening demand and product price compression).

Balance sheets are now swollen with debt (much of which is owed in taxes to the U.S. government) and company liquidity is poor.

Here is an example — Curaleaf  (CURLF) , the industry's largest participant:

- New York Stock Exchange volume is 33% above its one-month average;

- NASDAQ volume is 53% above its one-month average;

- VIX: down 5.72% to 15.34

From Peter Boockvar:

Claims and productivity data/Atlanta Fed's wage tracker

Initial claims at 221k were about as expected and up a touch from 218k last week, reflecting, at least measured here, a muted pace of firing’s. Because the hurricane induced 260k print dropped out of the calculation, the 4 week average fell to 227k from 237k. On the other hand, continuing claims jumped to 1.892mm from 1.853mm and that is the highest since November 2021, highlighted the more subdued pace of hiring’s. If you haven’t already, read the quotes from ZipRecruiter that I included in my first note today...

I have a research call between 10 a.m. and 10:45 a.m.

Radio silence.

Jeffries on Palantir:

PLTR (Downgrade to Underperform / $28 PT / Thill) – We move to the sidelines on the risk of multiple compression from increasingly difficult comps and peaking valuation. The combo of easy comps and AIP’s launch momentum drove four Qs of accelerating growth that will be difficult to maintain starting in 4Q24 when comps become more difficult. Further, given the heavy mix of retail and ETF investors involved with shares, we think it’s likely that < a quarter of the float is relatively liquid and traded by an active investment strategy. This dynamic can reduce stability and drive swift, significant multiple expansion should the stock turn out of favor. Our $28 PT assumes 50% compression of PLTR’s EV/CY25E revenue multiple.

From Peter Boockvar

Where is the confidence?/ZipRecruiter on the labor market and other good stuff

To repeat what I've said the last few days, how can any central banker have enough confidence that today is the day to cut interest rates again in light of all the confusing data, spike in bond yields along with a new president and after surprising many with a 50 bps cut a few months ago? Regardless, the Fed will likely follow what has been priced in and cut 25 bps but I do believe we have a high possibility that Powell walks back expectations for another one in December as he'll be more non-committal than the 72% odds priced in for the December 18th gathering.

The market has already walked back a bunch of rate cuts post September meeting. The day before the September meeting, the December 2025 fed funds futures contract was yielding 2.83%. Today it stands at 3.75%, thus taking away almost 100 bps of future cuts.

Also for perspective, the 2 yr yield was at 4.36% the day before the July meeting where the minutes revealed some wanted to cut then and vs 3.55% the day before the 50 bps cut. Today it stands at 4.25-.26%. The move in the 10 yr yield, obviously dictated by the market instead, is even more stark. The yield was 4.14% on July 30th and 3.62% on September 16th vs 4.44% as of this writing and which is the highest since early July.

I'll note today too that European bonds are selling off, especially after the Chancellor just axed his Finance Minister. The German 10 yr bund yield is at the highest since July 22nd, up 8 bps. The French 10 yr yield is up by a similar amount to the highest since early July.

We remain I believe in a sovereign bond bear market after the 40 yr bull run. See below for the move in the JGB market.

The Bank of England cut rates by 25 bps to 4.75% as fully expected but it was somewhat of a hawkish cut when you read the statement. The vote was 8-1 with the one wanting to keep rates unchanged. "There has been continued progress in disinflation, particularly as previous external shocks have abated, although remaining domestic inflationary pressures are resolving more slowly."

Interestingly too, the BoE talked about the new Rachel Reeves budget and how it could influence their growth and inflation estimates. I doubt Jay Powell will talk about Trump today, though we don't have his budget yet of course.

Here was the go slow from here line, "Based on the evolving evidence, a gradual approach to removing policy restraint remains appropriate. Monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further."

The pound jumped in response to the hawkish tone of the cut and gilt yields are off their earlier lows.

Intraday pound move

The Swedish Riksbank cut by 50 bps to 2.75% as expected and they continue to follow the ECB. They said "To further support economic activity, the policy rate needs to be cut somewhat faster than was assessed in September. It is important in itself that economic activity strengthens, but it is also a necessary condition for inflation to stabilize close to the target." Inflation in Sweden is running at about 1.5% y/o/y headline and 2.1% ex energy.

The Norges Bank in Norway kept rates unchanged as forecasted at 4.5% and they don't expect to cut again this year.

The tone from earnings calls remains all over the place.

Let's start with ZipRecruiter, one of my quarterly go to calls on the labor market:

"ZipRecruiter continues to navigate a protracted labor market downturn." Their Q3 revenues fell 25% y/o/y "primarily due to reduced demand from SMBs (small and medium sized businesses) with continued uncertainty and volatility in the labor market." They said their bigger customers were a little better in terms of hiring demand.

"While each labor market cycle is distinct, by several measures, this is one of the more prolonged downturns in hiring activity. Seasonally adjusted hires have declined on a y/o/y basis every month since August of 2022, which is approaching the same duration in hiring declines as the recession of 2008. Further, the great stay continues with the currently employed leaving their jobs at the lowest rate since 2015, excluding the onset of the Covid pandemic. This persistent reduction in employee churn is further driving down hiring levels."

In terms of job sectors, "healthcare, despite softness we saw, remain fairly robust compared to other verticals and healthcare is a significant, obviously, chunk of the economy. So that was sort of the notable bright spot. I would say on the more negative side of things, we saw transportation, storage, travel and leisure being on the weaker side of the ledger, where we saw softer performance. And then in terms of those early verticals, you talked about finance and technology in particular, which is where we saw weakness at the very beginning of this particular downturn back in mid '22. They were sort of in the middle, in between the bookends of healthcare being a little big stronger and things like transportation and storage being on the weaker side."

And this is what we've seen in the jobs data from both ADP and the BLS where healthcare has been the pretty consistent job hire, along with government, with more of a mixed bag elsewhere. Do not discount what ZipRecruiter has to say as they are a major digital/online recruitment site.

Barry Sternlicht at Starwood Property Trust, a stock we own, talked about some positives he's seeing on the supply side:

"we can see the light at the end of the tunnel. Not sure how long the tunnel's going to go on for, but you can see supply dropping, particularly in the multi family market, from 600,000 plus units this year to 230,000 units in '26. You also see logistics starts drop nearly 70%. That both will restart at some point, but it does set the stage for a new recovery. There isn't much in the way of office construction, of course, as the US office markets continue to be injured, particularly on the coast, from a lack of, or the benefit of work from home. But we're encouraged by companies like Amazon, telling their employees that they have to be in the office five days a week, and as the economy softens, we'd expect the other tech giants to follow that lead. I think we are better in the office."

That supply crimp will eventually lead to higher rents, I'll add the obvious.

On the financing side, "The banks, particularly the regional banks, with $1.9 trillion of real estate debt, are really not looking to increase their exposure, and the changes in capital requirements for the commercial banks mean that they really only want to be CMBS lenders and not balance sheet lenders anymore."

"There's enormous opportunity for private credit to take the place of the banks and step up, and I think this is a secular change, not a cyclical change." And he is talking his book as that is what this company does and why we own it.

From Schneider National, the big trucking company:

"In the third quarter, the market continued its path toward recovery with seasonality becoming more prevalent, but on trend, not yet proven. When we updated our expectations for the 2nd half of 2024 on our last earnings call, we had experienced a solid quarter end in June from a traditional seasonality standpoint, and our visibility into July at that time suggested more of the same. However, the improved seasonality trend did not sustain mid August through quarter end and were further impacted by the hurricanes and East Coast port strike in the short term."

With regards to the excess trucking capacity nationally, "We are seeing capacity steadily exiting the industry as our channel checks into the truck lending community are indicating that defaults and repossessions are growing and in some cases rivaling the financial crisis levels from 2008 and 2009. Carriers are not being adequatly compensated for the value provided and the cost to deliver."

From Vishay Technologies whose electronic products go into so many end markets:

"For the third quarter this year, revenue has held fairly constant, reflecting a prolonged period of inventory destocking as the pace of consumption by industrial customers remains slow. Backlogs are pushed out and macroeconomic conditions in Europe worsen. Automotive customers continue to adjust their forecast to sluggish demand in Europe, while order rates appear to be under control in the Americas."

They are benefiting on the other hand from higher bookings in smart grid infrastructure, military, and high voltage DC applications, along with "increasing demand related to AI servers."

From Fortune Brands, the maker of everything from security locks, kitchen and bath cabinetry to plumbing supplies and decking products:

"we continue to operate in a choppy environment with continuous y/o/y US repair and remodel declines and unprecedented market disruption in China."

"Turning now to some thoughts on the current US housing market and the market for our products. The external macro environment continues to be uneven and challenging. While the Fed lowered interest rates earlier this quarter, mortgage rates remain elevated above 6% and many homebuyers and homeowners remain on the sidelines. Repair and remodel data has generally stabilized relative to larger declines over the prior 12 months, albeit at a lower than historical rate as consumers remain cautious."

"With regards to single family new construction market, large builders continue to remain resilient as they use their balance sheets to lower mortgage rates and to help get people into new homes. We expect that large homebuilders will continue to gain share and we have the added torque of the exposure to their growth."

Elf Beauty is up a lot pre market:

"Our net sales growth of 40% in Q2 came in above our outlook, with stronger than expected growth across international retailers and digital commerce helping to offset US tracked channel trends that were slightly below our expectations."

Why do they think they underperfomed in the US? "First, we've seen a larger than expected moderation in the overall color cosmetics category trends to minus 5% in Q2 as compared to minus 1% in Q1. We believe consumers are being more choiceful with their spending. It's evident in our significant outperformance in market share gains that those more choiceful consumers are choosing Elf."

Moving overseas, China reported a 12.7% jump in exports in October, well above the estimate of 5% but uncertain as to what was front loaded ahead of the elections and the port strikes. Either way, their export growth to Southeast Asia continues to grow substantially.

Base pay in Japan in September continues to rise, up by 2.6% y/o/y and gives the BoJ another reason to hike rates soon. That's the quicket since 1993. Yields did jump in Japan with the 10 yr JGB yield back above 1% at 1.01%, up by 3 bps. The yen is up too in response.

Base pay in Japan

10 yr JGB yield

*  (SPY)  at $593.26

*  (QQQ)  at $509.04

Upside:

-APP +35% (earnings, guidance)
-LYFT +25% (earnings, guidance)
-GH +19% (earnings, guidance)
-OPFI +15% (earnings, guidance)
-UA +15% (earnings, guidance)
-Z +14% (earnings, guidance)
-EPAM +12% (earnings, guidance)
-MRNA +11% (earnings, guidance)
-UPWK +11% (earnings, guidance)
-MCK +8.1% (earnings, guidance)
-PLNT +8.1% (earnings, guidance)
-RL +6.7% (earnings, guidance)
-WBD +6.7% (earnings)
-COHR +6.6% (earnings, guidance)
-AUPH +6.4% (earnings, guidance)
-QCOM +5.7% (earnings, guidance)
-TTWO +4.8% (earnings, guidance)
-HBI +4.7% (earnings, guidance)
-GOOS +4.0% (earnings, guidance)
-PIRS +4.0% (subsidiary Palvella Therapeutics announces first patient dosed in SELVA Phase 3 clinical trial of QTORIN 3.9% Rapamycin Anhydrous Gel (QTORIN rapamycin) for Treatment of Microcystic Lymphatic Malformations)
-VYX +3.2% (earnings, guidance)
-TPR +3.0% (earnings, guidance)
-SEE +2.4% (earnings, guidance)

Downside:

-APPS -37% (earnings, guidance)
-SEDG -17% (earnings, guidance)
-DNUT -12% (earnings, guidance)
-JMIA -12% (earnings)
-MELI -9.2% (earnings)
-CTVA -8.0% (earnings, guidance)
-DV -5.9% (earnings, guidance)
-BYND -5.8% (earnings, guidance)
-DUOL -5.6% (earnings, guidance)
-DDOG -5.0% (earnings, guidance)
-OLPX -5.0% (earnings, guidance)
-GEO -4.6% (earnings, guidance)
-ARHS -4.1% (earnings, guidance)
-TRIP -3.9% (earnings)
-GNW -3.4% (earnings)
-HSY -3.2% (earnings, guidance)
-ROK -2.9% (earnings, guidance)
-RDN -2.3% (earnings)

Charts from 8:19 a.m. ET:

Chart from 8:35 a.m. ET:

Elanco Animal Health  (ELAN)  beats by $0.01, reports revs in-line and guides Q4 EPS in-line, revenues in-line:

• Reports Q3 (September) earnings of $0.13 per share, excluding non-recurring items, $0.01 better than the FactSet Consensus of $0.12; revenues fell 3.6% year/year to $1.03 billion vs the $1.04 billion FactSet Consensus.
• Adjusted EBITDA of $163 million or 15.8% of Revenue.
• Company issues in-line guidance for Q4, sees EPS of $0.13-$0.18, excluding non-recurring items, vs. $0.16 FactSet Consensus; sees Q4 revs of $1.00-$1.03 billion vs. $1.01 billion FactSet Consensus.

Medical Properties Trust  (MPW)  misses by $0.03, misses on revenues:

• Reports Q3 (Sep) normalized funds from operations of $0.16 per share, excluding non-recurring items, $0.03 worse than the FactSet Consensus of $0.19; revenues fell 26.3% year/year to $225.83 million vs the $254.2 million FactSet Consensus.

What Donald Trump's Presidential Election Means For Marijuana Reform - Marijuana Moment

From Jim Bianco:

Another critical chart that is being ignored by uncritical equity market participants (machines have no knowledge of value but plenty understanding of momentum!):

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

From JPMorgan:

US: Futs are higher with both Tech and RTY outperforming. Pre-mkt, Mag7 names are mixed with Semis bid despite NVDA -21bps. Bond yields are 1-2bps lower as the curve steepens; USD is lower following its best 1-day performance since Sept 2022. The cmdty complex is mixed with Ags higher, Energy lower, and Base over Precious. Today’s macro data focus is on the Fed’s decision (2pm ET) and the BOE (7am ET); both CBs are expected to cut by 25bps.

and...

EQUITY AND MACRO NARRATIVE: Indices at all-time highs following a day where multiple sub-sectors made multi-standard deviation moves. What now? Trump 2.0 is expected to enhance the bull case, which in our view can be summarized as at/above-trend GDP growth plus positive earnings growth and a Fed tailwind equating to a bull market. The combination of recent macro data and the Trump victory puts Cyclicals/Value plays at the front of the queue. We still like owning the barbell of some Tech and some Cyclicals/Value but with a heavier weighting on the Cyclicals/Value side. At this stage, it feels like a race to year-end before we see policy-induced dispersion.

"A newspaper is a device for making the ignorant more ignorant and the crazy crazier."

- H. L. Mencken

Bonus — Here are some great links:

Market Poised for a Year-End Rally

The Day After... 2016 Redux 

The Most Important Chart After the Election

What the Latest Dow Jones Shakeup Means

Curious action (-$5.36 to $30.50!) in Trump Media  (DJT)  this morning... at 5:27 AM in premarket trading.

I am telling you — "slugflation lies ahead":

On bonds:

The answer to Jesse's question from Jungle Java:

With Druck...Stan Druckenmiller | Podcast | In Good Company | Norges Bank Investment Management

For the life of me, I don't understand why the rapid rise in interest rates (below the 2-Year Treasury yield) is being ignored by equity market participants:

From Hedgeye: