As of 4:15 p.m.:

Closing Breadth

S&P 500 Sector ETFs

% Movers

Nasdaq 100 Heat Map

Thanks so much for reading my Diary today and all week.

Enjoy the weekend.

Be safe.

From Peter Boockvar:

Positives,

1)The election is over.

2)For those feeling the restrictive level of interest rates, and can borrow SOFR plus, the Fed gave us another rate cut.

3)Initial claims at 221k were about as expected though 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.

4)The October ISM services index rose to 56 from 54.9 and that was 2.2 pts above expectations. That’s also the highest level since July 2022. Internals though were mixed. The industry breadth improved with 14 of 18 industries surveyed seeing growth vs 12 in the month before. Just 2 saw a contraction in business vs 5 in September.

5)The November UoM consumer confidence figure rose to 73 from 70.5, 2 pts above expectations and that is the highest since April when it printed 77.2. It still though remains well below the February 2020 level of 101. The internals were mixed as Current Economic Conditions fell .5 pt m/o/m but was more than offset by a 4.4 pt rise in Expectations. One yr inflation expectations fell one tenth to 2.6% and that is the least since December 2020 helped by lower gasoline price expectations but the 5-10 yr guess rose to 3.1% which matches the highest since November 2023. Spending intentions were little changed. The UoM said that notwithstanding the dropping inflation expectations, “consumers remain frustrated about the persistence of high prices. About 44% of consumers spontaneously mentioned that high prices eroded their personal finances, little changed from last month. At the same time, consumers expressed fewer price concerns about major purchases relative to October.”

6)The Atlanta Fed’s October wage tracker rose 4.6% y/o/y and still running well above the pre Covid trend.

7)From last Friday, October auto sales totaled 16.04mm at a seasonally adjusted annualized rate and that was above the estimate of 15.8mm and compares with 15.5mm in October 2023 and 16.55mm in October 2019.

8)With another jump in mortgage rates to 6.81% according to Freddie Mac for the average 30 yr term, purchase applications fell 5.1% w/o/w and refi's were down by 18.5%.

9)From Sweetgreen: "September was the strongest month in the quarter, and the momentum of September carried on into October, where we're certainly comping within our revised upward guide of 6% to 7%."

10)From Ralph Lauren: "Our performance through the quarter and first half of the year underscores the strength of our diversified growth strategy, our growing brand desirability, and our powerful engagements with an expanding and increasingly elevated consumer base across genders, generations, and markets."

11)From Airbnb: "if you rewind to where we were back at the time of the last earnings call, we called out that there was a bit of softness globally related to lead times. Specifically, what we shared was that we were seeing continued strength of last minute bookings, but relative softness in terms of the longer lead times. And what we saw over the course of the quarter, specific to both the regions that you call out, but globally, was that lead times over the course of July, August and September normalized and came back almost in line to where we were in 2023."

12)From Marriott Group revenue continues to lead the growth "Given our industry leading distribution of convention hotels at nearly double the number of rooms of the next closest peer...Group revenues for 2025 were pacing up 7% at the end of the quarter, on a 3% increase in room nights and a 4% increase in average daily rate.” The business transient business "experienced another quarter of growth, with 3rd quarter RevPAR rising 2%. Leisure transient RevPAR was flat to the year ago quarter, while still well above 2019 levels."

13)From Elf Beauty: "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."

14)From Restaurant Brands: Overall comps were flat in the quarter but "We've been encouraged to see the business accelerate in October with consolidated comparable sales up low single digits, led by improvements in international, Burger King and Popeyes."

15)From Wynn Resorts: In Vegas, "Demand remained healthy...More recently, demand has remained healthy in the fourth quarter with strong growth in slot handle, table drop and solid non-gaming demand...demand from the high-end consumer remains stable." In Boston, "Demand was strong across the business...demand has remained healthy through October." In Macau, EBITDA rose 3% y/o/y with revenue up 6% but "the competitive environment in Macau is clearly intense."

16)From Yum China: "KFC system sales increased 6% y/o/y. Same store sales were at 98% of prior year levels with 1% same store transaction growth. Our strategy to widen the price range and capture lower ticket average delivery orders are yielding results. Entry price combos have driven incremental traffic and delivery sales continue to growth double digits." Also, "Smaller ticket items like coffee and breakfast continue to outperform."

17)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. Services inflation remains sticky there.

18)Reflecting patience on rates, the Norges Bank in Norway kept rates unchanged as forecasted at 4.5% and they don't expect to cut again this year.

19)The Reserve Bank of Australia held rates unchanged at 4.35% as expected. They have been and remain hawkish, particularly Governor Michele Bullock. The statement said "It will be some time yet before inflation is sustainably in the target range and approaching the midpoint. This reinforces the need to remain vigilant to upside risks to inflation and the board is not ruling anything in or out."

20)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.

21)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 quickest since 1993.

22)October PMI in Singapore was a still good 55.5, though down from 56.6 in the month before. Hong Kong's PMI improved to 52.2 from 50.

23)China's Caixin services PMI was up 1.7 pts m/o/m to 52. They said "Growth in new business partly reflected another solid rise in export orders. This led to a quicker rise in business activity while the level of backlogged work also increased."

24)German factory orders in September rose 4.2% m/o/m, above the estimate of up 1.5%.

Negatives,

1)Poring gasoline on the hot financial markets, and leaving us with higher long term interest rates, the Fed gave us another rate cut without pause and reflection, especially after the election results. Since the Fed’s 50 bps cut, the average 30 yr mortgage rate has gone from 6.15% to 6.80%.

2)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.

3)The Q3 productivity figure was a bit light relative to expectations and Q2 was revised down by we’re still seeing some good performance after a Covid induced string of softness. On a y/o/y basis, productivity rose 2% vs 2.4% in Q2 and 2.8% in Q1. For perspective, the 20 yr average is 1.6%. Unit labor costs grew 3.4% y/o/y which is the quickest since Q4 2022.

4)From ZipRecruiter: "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."

5)From Hershey: "year-to-date results have been affected by historically high cocoa prices and a challenging consumer environment."

6)From Papa John’s: "In line with our expectations, the challenging sales trends we saw in the first half of the year persisted into the third quarter, and we expect they will likely continue as we close out 2024 and enter 2025…"As we discussed last quarter, in this current economic cycle, consumers have become more deliberate in managing their overall ticket and are showing a preference for brands that are offering a compelling value."

7)From Expedia: "The travel environment in the third quarter was healthy but mixed, with demand softer in July and then improving into August and September. International demand was stronger than the US, and compared to last year, booked room nights grew in the low single digits in the US, low double digits in Europe, and high teens in the rest of the world. For air and car, we saw continued pricing pressure, though air ticket prices grew in September for the first time this year."

8)From Schneider National: "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."

9)From Vishay Technologies: "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."

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

11)From Avalon Bay Communities: In terms of the rental outlook possibly turning up in some markets, "during our mid year earnings call, I mentioned the possibility of a reacceleration in asking rent and rent change given softer comps from Q4 2023. We're now starting to see that trend come to fruition...asking rent growth during the year has followed traditional seasonal curves and outperformed our experience throughout 2023. Recently, the level of outperformance has widened, and as of November 1, the average asking rent for our same store portfolio was approximately 3% greater than the same date last year with the East Coast roughly 4% higher and the West Coast above 2%. The higher average asking rent will flow through to improved rent change, particularly for new move-ins as we look forward. Currently we're forecasting rent change in November to be stronger than October and increase further as we move through December."

12)From Wayfair: "The third quarter exhibited a continuation of choppy macro trends we've seen across 2024. Consumers remain trepidatious in their spending patterns and are demonstrating more price elasticity than we saw in the early months of the year. While we were pleased with the response we saw over Way Day at the start of the quarter, which we ran as an extended event for the first time this fall, it had become clear even as we exited September that we were seeing a broader pullback by shoppers in the lead up to the election. Attention is focused away from the home right now and when customers are in the market it is increasingly for lower investment, lower consideration purchases vs large ticket items that represent our traditional area of strength."

13)From Church & Dwight: On the consumer, "in July we noted a deceleration in consumption in our categories. This continued in Q3 as we expected. After seeing 4.5% growth in our categories for the first five months of the year, June, July and August were closer to 2.5%. Now in September, we saw consumption in our categories strengthen to about 3%, and then in October category consumption was up 5%. But, let's all remind ourselves that the hurricane and the port strike no doubt influenced those results. So, we remain cautious in Q4 regarding the US consumer, and category growth rates."

14)From Microchip Technologies: "we continue to navigate through an inventory correction that's occurring in the midst of significant macro weakness for many manufacturing businesses, especially those in the industrial end market…All regions of the world and most of our end markets exhibited varying degrees of weakness. The exceptions were aerospace and defense and the AI subset of data center. Our business in Europe, which is concentrated in the industrial and automotive markets, was particularly weak with revenue down almost 22% on a sequential basis. Our broad base of customers continue to manage their inventory tightly and adjust their purchasing plans in the face of a weak macro environment for manufacturing. High interest rates, inventory in their channels, very short lead times for our products and an uncertain business outlook."

15)From Sensata Technologies: "both automotive and heavy vehicle off-road markets decreased approximately 5% y/o/y with further erosion likely in the fourth quarter…Looking ahead to Q4, based on our fill rates, discussions with customers and current inventory levels on hand at OEMs and on dealer lots, we believe it to be highly likely that third party forecasters will make further in-quarter downward revisions to production forecasts."

16)From NXP Semi: "While we experienced some strength against our expectations in the Communication Infrastructure, Mobile and Automotive end markets, we were confronted with increasing macro related weakness in the Industrial & IoT market. Our guidance for the 4th quarter reflects broader macro weakness especially in Europe and the Americas."

17)From Lattice Semiconductor: "On an end market basis, communications and computing was up 12% sequentially, driven by both general purpose and AI servers. Industrial and Automotive was down 7% sequentially, primarily due to broader market demand and continued inventory normalization…Based on our discussions with customers and partners, we now expect more of a U shaped recovery than a V shaped one in 2025."

18)From Celanese: "During the 3rd quarter, Celanese continued to navigate persistent demand weakness across key end markets like paints, coatings, and construction, as well as rapid and acute downturns in Western Hemisphere automotive and industrial segments…"In the 3rd, we faced a severely constrained demand environment that, in some cases like auto, degraded swiftly."

19)From Hugo Boss; "A quarter characterized by revenue improvements despite ongoing external challenges due to weak consumer sentiment." And they mentioned "persistent macroeconomic uncertainty." They also mentioned particular challenges in China, "where subdued consumer confidence had an even more adverse impact on domestic consumption as compared to Q2."

20)Taiwan said that its exports grew by 8.4% y/o/y, just below expectations of 9.1%. The mix was notable as exports to the US grew by 20.5% y/o/y but fell to China by 2.1% y/o/y.

21)Not waiting for the sustainability of lower inflation, 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."

22)In contrast to the better factory order number, September industrial production in Germany was softer than expected.

23)We lost one of the great entrepreneurs of our time in Bernie Marcus.

* And I call BS to the company's characterization of an upbeat future...

Investment short and healthcare apparel company FIGS has dropped by over -30% (-$2) to about $4.65/share this afternoon following a very weak earnings report and a lowering of forward guidance.

Sales dropped by nearly -2% and EBITDA margins dropped precipitously from 17.2% (a year ago) to only 3.4%.

Here is the company's quarterly release:

FIGS, Inc. - FIGS Releases Third Quarter 2024 Financial Results.

To show how disingenuous some managements can be (combined with meaningless and hyperbolic "color" on the EPS report), check out the company's "upbeat" conference call (FIGS Third Quarter Fiscal 2024 Earnings Conference Call - Q4) and the expressive adjectives which belie how badly this company is doing on an operational basis.

rf2150

TN --recently when TSLA reached $300, you implied that it had 200 more points to go. I am long TSLA and I'm bullish, I'm curious about your analyses on how you reached that target. I appreciate the education.

TechNova

Hey RF,

TSLA has been plagued by several things. Firstly its FSD program is under DOJ investigation. Keep in mind that they took $10K from consumers starting years ago for something that quite plainly did not exist.

Their sales have slowed, their margins are compressing (increasingly reliant on Carbon Offsets to meet their targets), competition is finally real. Especially in China, where competitors are cheaper and sometimes even better.

Regardless of what Elon says, they are way behind in Autonomous Taxis. His entire event in Hollywood was staged and remote controlled. His decision to abandon Lidar in favor of just cameras was a critical error. Waymo is miles ahead of where TSLA is on autonomous. There are over 200 Waymos driving the busy streets of LA daily, with no back up drivers in them.

To compensate for these challenges, they are resorting to more and more financial engineering. As Dougie rightly pointed out. Moving numbers around to create make belief to boost the stock.

Now you may be going, "hold on, I thought you said it was going to $500? This all sounds bearish??"

The reason TSLA is going to $500 is quite simple. Absolute Immunity.

Elon's gamble on Donnie, was that if Donnie wins, and Donnie simply carries out what he stated he would during his campaign, Elon will be able to jump to the top of the Oligarchy. Essential beyond the reach of any government agency. No IRS, SEC, EPA, etc.. etc... He can tweet "Funding secured" 5 times a day if he wants, release any kind of chemicals he wants (Think SpaceX and its current problem with the EPA) and perform any type of accounting he wants. None of that matters anymore as he is untouchable.

Elon can now put his feet up on the Resolute desk. He already had security clearance with SpaceX, but now we are talking no-bid government contracts, and early access to classified information with an ability to front run any competitor in the space.

Elon, while having grown up on the wrong side of Apartheid, is an exceptionally talented engineer. His ability to convert ideas into product is second to no other in America. If you let him start one step behind the finish line, how can he possibly lose?

Folks are now realizing this.

A large part of TSLA's move (and some would argue inexplicable valuation) has been on the back of 0DTE options in TSLA. So there is already a mechanism in place to squeeze the stock higher.

This is why I said when TSLA was at $250 ahead of the election, that if you believe Donnie wins, you get a double by buying TSLA.

Why $500?

Because if you look at the chart below, you have an inverted H&S pattern. The measured move on that break out is $500.

There will no be "Things" column today because I did nuttin.'

Scott Galloway's No Mercy/No Malice...: "The Podcast Election."

From the great TN:

TechNova

Geez louise...

Worked a late night last night with my team. Grabbed a hot Rooibus Tea this morning to see what I missed yesterday and ... Wow....

2 things...

1) Y'all are waaaaaaayyyy too kind.

2) After reading the 3rd reply to my Personal Note, I thought I was reading a Eulogy, and thought to myself "Dang... that TN fellow died way too soon. Wish I could have met that dude."

To clarify. I am not dead... not yet... unless some of you know something I don't, in which case please DM me.

My normal routine is to wake up around 4:30AM PST, do some research, check my holdings in the pre-market, draw some lines and trade the opening bell. My wife then wakes up. We sit for tea 1 hour after the opening bell, she then goes to work, while I exchange musings with you lot and do some Day and Swing Trading. I usually run that nonsense till the closing bell. Sometimes wait around for earnings and AH trades. Then from 1:30PM to 8:30PM I tend to my company business (Software). Then it is dinner with my wife and friends.

That is the routine that will be changing.

I excused that routine to my wife for years under the guise of "I will never be poor again. Not going to let that happen". So 16 hour days, for 30 years seemed reasonable enough to accomplish that objective.

I cannot really defend that argument any more given where Crypto is today, and what it has meant for our net worth. This is why I plan on scaling back. Spending a bit less time on the Trading side (not dead, but not sprinting like I used to. Somewhere in between). Which means my posts will be more sporadic. With sometimes longer intervals between them. Especially as we welcome the mayhem that will be 2025.

I am around today, have several meetings but will post some stuff.

I will also most likely keep my RMP subscription moving forward, mainly to support Dougie, and perhaps to keep an eye on you lot.

Some incredible people walk these hallways.

As far as Dougie is concerned, he is the absolute best. Both in what he does professionally, and as a human being. Honored to get to read his musings.

He did miss Crypto entirely. But all great investors have a blind spot. When I first joined this site, the first thing I wrote here about Crypto was this :

"Buffet will buy BTC at $500K per Coin, and sell it at $1.5M per Coin and remind people why he is the best investor that ever lived. The journey to $500K? Why spoil a great story".

That said, Dougie still made the Call of the Century. I heard it LIVE on TV, and will never forget it. I also believe that with the absolute mayhem that lies ahead, Dougie's Long/Short style will be the only way to make money in equities over the next decade.

Long ONLY portfolios are going to be trickier than ever. (Unless you hold only Crypto. Then you can just stay in bed and play Angry Birds on your phone :).

Anyway.. thank you again for the incredibly kind words. Not many folks get to read their eulogies while still on earth.

It was a great privilege.

* On global bond yields...

No trades today as I marvel at the strength of the advance in equities.

* As a whale founders...

Chinese equities, heralded 1 1/2 months ago by Tepper: Billionaire investor David Tepper on China: Central bank comments 'exceeded expectations' continue to fizzle out.

At that time Tepper said buy everything in China (david tepper china cnbc - Google Search) and the media regaled in his decree.
It's funny - well maybe not so funny - how there is no follow up in the business media on the China trade.

From Peter Boockvar:

Surveyed right before the election, confidence rises

To start, the UoM consumer confidence survey concluded on Monday before the election. When asked, the sentiment was 50/50 on the outcome.

The November UoM consumer confidence figure rose to 73 from 70.5, 2 pts above expectations and that is the highest since April when it printed 77.2. It still though remains well below the February 2020 level of 101. The internals were mixed as Current Economic Conditions fell .5 pt m/o/m but was more than offset by a 4.4 pt rise in Expectations. One yr inflation expectations fell one tenth to 2.6% and that is the least since December 2020 helped by lower gasoline price expectations but the 5-10 yr guess rose to 3.1% which matches the highest since November 2023.

A drag on current conditions was the -1 print for a 2nd month with regards to the income component and to this, just 27.8% on average of families surveyed think that income will exceed inflation over the next 5 years, near the lost since 1997 when this was first calculated. Positively, expectations for lower unemployment in the coming 12 months rose 4 pts.

Also of note, spending intentions were little changed and the rise in interest rates again likely didn’t help in financing these big ticket categories. Those who think it is a good time to buy a vehicle rose 1 pt but fell 1 pt for a home and major appliance.

In light of the record high (dating back to 1987) number of respondents in the Conference Board survey seen last week that expect higher stock prices in the coming year, there was a slight downtick in today’s UoM survey at 59.8%.

Bottom line, while it was good to see a 7 month high in consumer confidence, the reason it still remains well below the early 2020 peak is because of the cumulative rise in the cost of living. The UoM said that notwithstanding the dropping inflation expectations, “consumers remain frustrated about the persistence of high prices. About 44% of consumers spontaneously mentioned that high prices eroded their personal finances, little changed from last month. At the same time, consumers expressed fewer price concerns about major purchases relative to October.”

UoM

One yr Inflation Expectations

5-10 yr Inflation Expectations

% of those who think stock prices will be higher in coming 12 months

Mean % who think income will exceed inflation in coming 5 years

- NYSE volume is 19% above its one-month average;

- NASDAQ volume is 20% above its one-month average

-VIX: down 2.37% to 14.84

Jefferies on Draft Kings:

DKNG reported 3Q results last night that were largely in line, but 4Q guidance came in below expectations. We note that this was largely due to unfavorable sports outcomes in Oct vs. execution. As a result, FY24 rev. guide was trimmed to $4.85-4.95B from $5.05-5.25B, and FY24 EBITDA guide was cut to $240-280M from $340-420M. Despite the reduction in NT guidance, DKNG reiterated its FY25 EBITDA target of $900M-$1B. We believe this demonstrates confidence in the growth trajectory and the benefits of the Jackpocket acquisition. We remain bullish on the growth & profitability prospects of the company.

From Peter Boockvar:

Post Fed/China debt swap/Another round of mixed earnings comments

Jay Powell in his press conference played it like I thought he would in trying to be non-committal on the December meeting but he clearly still has an easing bias. I was somewhat surprised though that he was so dismissive of the sharp rise in bond yields, particularly on the long end, after the September cut. He wasn't asked, and didn't mention the further dramatic easing of financial conditions with the stock market in particular at fresh highs, and gold wasn't not mentioned once in search of a message that it is sending. As gold is a currency that pays no yield, it is saying something. Also, he was dismissive of the rise in inflation expectations in the TIPS market post that September meeting.

Instead, we heard from him again that they remain restrictive (though certainly for some but not others), and they have a rate destination in mind with the pace to get there the only question. And with regards to the Trump win, until the Fed gets details about his economic plan, they have nothing to put into their econometric models he basically said. I get that, but shouldn't the Fed at least wait to see so they don't overdo the cuts until then?

As we finish the week, the other big news was the China plan announced today that they will lift the debt ceiling that local governments have. With that extra room, they will issue up to 10 trillion yuan (about $1.4 trillion) to refinance all the off balance sheet, so called hidden debt, that they have. Yes, they are just swapping one form of debt for another but the yields will likely be lower than on the debt they will pay off, freeing up some extra money and will have the debt exposure more transparent and above board.

Stocks though are trading lower because many have been still hoping for another form of fiscal stimulus, particularly for the consumer but forgetting that a massive pool of savings the Chinese consumer already has. The two biggest economic challenges of China's economy has been its residential real estate market and that excessive local government debt load and government officials continue to address both.

To the number of earnings calls to go through, which reflect still a mixed economy.

From Sweetgreen, who missed both top and bottom line estimates:

Comps grew 6% and "This consisted of a 4% benefit from menu price and 2% positive traffic and mix." That 4% matches about what CPI has been telling us for out of home food price gains. They saw outperformance across the Midwest, Texas and the Southeast.

They said "September was the strongest month in the quarter, and the momentum of September carried on into October, where we're certainly comping within our revised upward guide of 6% to 7%."

On food and labor inflation, "It ran approximately 2%, and we see it, as others have reported, pretty tame, actually, at this point in time."

Sweetgreen is benefting in the fast casual space like Chipotle and Cava in terms of providing great food, generous portions and value but when you're still losing money and trade at a high multiple, you can't afford to miss estimates.

From Hershey, who doesn't have low commodity costs and instead is paying up for cocoa whose price has doubled over the past year:

"year-to-date results have been affected by historically high cocoa prices and a challenging consumer environment."

On a question as to whether the GLP-1 drugs are impacting their business, "all the analysis that we have done has continued to show that the y/o/y impact is not significant and that the pressure in the snacking categories are really driven by the consumers feeling pressured financially. So every piece of data that we've seen has really indicated that."

From Papa John's:

"In line with our expectations, the challenging sales trends we saw in the first half of the year persisted into the third quarter, and we expect they will likely continue as we close out 2024 and enter 2025." North American comps in particular fell 6% y/o/y.

"As we discussed last quarter, in this current economic cycle, consumers have become more deliberate in managing their overall ticket and are showing a preference for brands that are offering a compelling value."

From Ralph Lauren who reported a good quarter:

"Our performance through the quarter and first half of the year underscores the strength of our diversified growth strategy, our growing brand desirability, and our powerful engagements with an expanding and increasingly elevated consumer base across genders, generations, and markets." They did though mention "a choppy global operating environment."

Also of note, "China also grew low teens consistent with our outlook for the quarter and full year, driven by comp growth, high quality new customer recruitment and expanded distribution."

From Under Armour, a stock we own and whose stock rallied 30% yesterday on strong execution and gross margins:

Revenue though was still down 11% as they cut SKUs and distribution channels purposely but also "due to softer full price wholesale demand and lower sales for the off-price channel." They mentioned too "a soft macro environment that continues to impact consumer traffic" in Asia Pacific.

Also, "Relative to the inventory question, I think what we're seeing is the industry inventory levels are definitely a little better positioned today, though I think there's still some retailer conservatism out there that's kind of leaning towards a little softer demand and it's also still a very intense competitive environment. So we're still seeing a little bit of retailer conservatism remaining and therefore kind of reluctance to kind of go after big increases in orders, etc..."

From AirBNB:

"if you rewind to where we were back at the time of the last earnings call, we called out that there was a bit of softness globally related to lead times. Specifically, what we shared was that we were seeing continued strength of last minute bookings, but relative softness in terms of the longer lead times. And what we saw over the course of the quarter, specific to both the regions that you call out, but globally, was that lead times over the course of July, August and September normalized and came back almost in line to where we were in 2023."

And where was that most pronounced? "I think you saw that most notably in EMEA, and I think probably some of the long lead time softness that we were seeing in EMEA was certainly related to some distraction around the Olympics."

Also on travel, from Expedia:

"The travel environment in the third quarter was healthy but mixed, with demand softer in July and then improving into August and September. International demand was stronger than the US, and compared to last year, booked room nights grew in the low single digits in the US, low double digits in Europe, and high teens in the rest of the world. For air and car, we saw continued pricing pressure, though air ticket prices grew in September for the first time this year."

Taiwan said that its exports grew by 8.4% y/o/y, just below expectations of 9.1%. The mix was notable as exports to the US grew by 20.5% y/o/y but fell to China by 2.1% y/o/y.

Upside:

-LICY +41% (earnings, guidance)

-DOCS +34% (earnings, guidance)

-FTRE +33% (earnings, guidance)

-INOD +31% (earnings, guidance)

-INDI +22% (earnings, guidance)

-LITE +22% (earnings, guidance)

-FIVN +21% (earnings, guidance)

-UPST +19% (earnings, guidance)

-BILL +16% (earnings, guidance)

-PRCH +16% (earnings, guidance)

-WBTN +16% (earnings, guidance)

-AXON +14% (earnings, guidance)

-PBYI +13% (earnings, guidance)

-CARG +12% (earnings, guidance)

-CTMX +12% (earnings)

-TOST +12% (earnings, guidance)

-ALRM +11% (earnings, guidance)

-AXL +10% (earnings, guidance)

-FLYW +9.3% (earnings, guidance)

-PBI +8.7% (earnings, guidance)

-GCT +8.5% (earnings, guidance)

-PRA +7.3% (earnings)

-UI +7.2% (earnings)

-AMPX +6.5% (earnings)

-AAOI +5.0% (earnings, guidance)

-GDOT +4.6% (earnings, guidance)

-GRND +4.3% (earnings, guidance)

-NRG +3.9% (earnings, guidance)

-ADMA +3.7% (earnings, guidance)

-LCID +3.6% (earnings, guidance)

-ACVA +2.6% (earnings, guidance)

-DIBS +2.3% (earnings, guidance)

Downside:

-AGL -35% (earnings, guidance)

-MRVI -35% (earnings, guidance)

-EVH -32% (earnings, guidance)

-ARLO -21% (earnings, guidance)

-RVNC -21% (earnings)

-FIGS -16% (earnings, guidance)

-SG -14% (earnings, guidance)

-ESTA -13% (earnings, guidance; files to sell $50M shares)

-PACB -13% (earnings; announces a Private Convertible Exchange Transaction of $459M Principal Amount of 1.50% Convertible Senior Notes due 2028)

-STKS -13% (earnings, guidance)

-FLR -12% (earnings, guidance)

-PINS -12% (earnings, guidance)

-IOVA -11% (earnings, guidance)

-PHUN -11% (earnings)

-TDW -11% (earnings, guidance)

-BLMN -10% (earnings, guidance)

-TTD -10% (earnings, guidance)

-RDFN -9.3% (earnings, guidance; files mixed shelf of an indeterminate amount)

-CPRI -8.1% (earnings)

-RXST -8.0% (earnings, guidance)

-NET -7.7% (earnings, guidance)

-BLNK -7.5% (earnings, guidance)

-GEVO -6.8% (earnings)

-PDFS -6.6% (earnings, guidance)

-SERV -5.8% (earnings; files $75M debt shelf)

-CGC -5.7% (earnings)

-AKAM -5.5% (earnings, guidance)

-ANET -5.5% (earnings, guidance)

-DKNG -5.5% (earnings, guidance)

-ADEA -4.2% (earnings, guidance)

-FNKO -3.4% (earnings, guidance)

-ARRY -3.2% (earnings, guidance)

-DKNG -3.2% (earnings, guidance)

-SPT -3.2% (earnings, guidance)

-OLO -3.0% (earnings, guidance)

-FTNT -2.6% (earnings, guidance)

From the sell-side:

Occidental Petro resumed with a Neutral at JP Morgan JPMorgan reinstated coverage of Occidental Petroleum with a Neutral rating and $56 price target. The firm says the macro picture for oil levered equities is a "mixed bag" given uncertainty associated with post U.S. election policies, the Iran-Israel conflict, and a potentially contentious OPEC+ meeting in early December. The firm is "relatively cautious" on near-term crude oil fundamentals given the potential return of OPEC+ barrels into a market. It feels a Neutral rating is warranted on Occidental given its above-average leverage and lower return of capital yields versus peers at strip pricing.
Medical Properties Trust announces prospect’s binding agreement to sell managed care business to Astrana Health

Astrana Health, a leading provider-centric healthcare company based in California, entered into a binding agreement on November 8 to purchase the majority of Prospect's managed care platform for approximately $745 mln and the assumption of certain liabilities. After satisfaction of obligations to the managed care platform's senior creditor and other liabilities, MPT expects to receive approximately $200 mln in total proceeds. The majority of this cash is expected to be received in the first half of 2025, while a $50 mln payment is expected by 2027. The transaction remains subject to regulatory approval and other closing conditions.

Charts from 8:14 a.m. ET:

Chart from 8:34 a.m.:

From The Stock Trader's Almanac, "Jazzy" Jeff Hirsch:

For those who were unable to attend the member’s only webinar on Wednesday, the slides and video recording are available here (or copy and paste in a new browser window: Member's Webinar Archive). Jeff reiterated that our most bullish Best Case forecast for 15-25% full-year gain is in play. The quick, clear election decision is bullish and assuages any concerns of an undecided election-year 2000 repeat. Presidential election day through yearend has historically been bullish with just a few exceptions. The combination of a Republican Congress and a Republican President also has a solid, bullish market history with S&P 500 averaging 12.9% and NASDAQ 15.6%.

In addition to bullish election year and political alignment forces, broader market seasonality is also bullish. The “Best Months” begin with November and it is the #1 DJIA and S&P 500 month in election years. The best six-month consecutive span, November to April, has seen S&P 500 advance 77.0% of the time with an average gain of 7.1% in all years since 1950.

Despite numerous bullish factors, some market volatility and choppy trading are still possible. The Fed did cut interest rates by 0.25% today and will likely do so again at their December meeting, but the 10-year Treasury yield and mortgage rates have been steadily trending higher since mid-September. Softening economic growth and labor metrics appear to be the primary drivers for the Fed’s interest rate cuts. Inflation has retreated from its peak yet remains stubbornly above 2%. Geopolitical concerns remain numerous as well and now that the election has passed, the market could shift its focus back there.

In the near-term we anticipate the market will continue to work its way higher with more new all-time highs through yearend and most likely into early 2025. Post-election years have improved since 1985 with DJIA up 8 of the last 10 with an average gain of 17.2%. Three straight years of double-digit gains is impressive and not as farfetched as it may sound. S&P 500 did this as recently as 2019 to 2021. Prior to that from 2012 to 2014.

Sector Rotation ETF Portfolio Updates

Based upon data on page 94 of the Almanac, there are no sector seasonalities beginning or ending in November.

Per our October 11 email Issue when the Seasonal MACD Buy Signal for DJIA, S&P 500 and NASDAQ triggered, all open sector ETF positions have been added to the Sector Rotation portfolio using their respective average daily prices on October 14. Existing positions in iShares Biotech (IBB) and iShares US Technology (IYW) were also added to on October 14 and their respective purchase prices have been updated to reflect the additional purchases. Late October market weakness offered more patient traders even better prices to establish positions in these ETFs.

Of the 11 new ETFs presented on October 3, six were higher and five were lower as of the market’s close on November 6. iShares Semiconductors (SOXX) is the weakest position, down 4.3%. SOXX gained slightly more than 2% today. The top performing position is SPDR Consumer Discretionary (XLY), up 6.3%. XLY extended that gain further today as well. Second best, SPDR Financial (XLF), up 6.2% also deserves a mention however, it did retreat modestly today. All ETFs presented on October 3 can still be considered at current levels or on dips. Suggested stop loss and auto sell prices have been updated to reflect the price the corresponding ETF position was added to the portfolio.

Gold and gold-mining stocks have had a solid 2024 as the precious metal climbed to numerous all-time highs. After suffering some sizable losses yesterday, VanEck Gold Miners (GDX) and SPDR Gold (GLD) did rebound today, but gold’s record setting run could be under pressure. Election uncertainty has been resolved, the 10-year Treasury bond yield is trending higher, and the U.S. dollar is also strengthening. Seasonal strength in gold and silver stocks has historically ended in December. As a result, GDX and GLD are on Hold and their stop losses have been increased.

Over the last two months we have attempted to add iShares Bitcoin Trust (IBIT) to the portfolio. Finding a buy limit proved more challenging than usual as Bitcoin trades 24/7 while IBIT does not. Bitcoin has demonstrated a reasonably solid Q4 rally during its lifetime and a strong tendency for outsized gains following presidential elections. Rather than fuss and nitpick over a buy limit, we are going to add IBIT to the portfolio on November 8 using its average daily price. IBIT can be purchased at or near its current price up to a limit of $43.75.

Tactical Seasonal Switching Strategy ETF Portfolio Updates

Per our October 11 email Issue when the Seasonal MACD Buy Signal for DJIA, S&P 500 and NASDAQ triggered, Invesco QQQ (QQQ), iShares Russell 2000 (IWM), SPDR DJIA (DIA) and SPDR S&P 500 (SPY) have been added to the portfolio using their respective average daily prices on October 14. QQQ, IWM, DIA, and SPY can still be considered on dips below their respective buy limits, if not already purchased. Based upon November’s recent 21-year history and its election-year pattern since 1950, the next opportunity could be ahead of Thanksgiving as the market has tended to consolidate gains from around Election Day through mid-month.

All bond ETFs, TLT, AGG, BND, SHV, and SGOV were also closed out of the Tactical Seasonal Switching portfolio on October 14. Excluding dividends and any trading fees, all five positions were closed for modest gains. TLT, AGG, and BND have all traded lower as long-dated yields continue to trend higher.

Disclosure note: Officers of Hirsch Holdings Inc hold positions in IBB, IBIT, QQQ, SPY & IWM in personal accounts.

Stock Portfolio Updates

Over the past four weeks through yesterday’s close (November 6), S&P 500 advanced 2.4% while Russell 2000 climbed 8.7% higher. Over the same period the entire stock portfolio gained 3.4% excluding dividends, interest on cash, and any trading fees. With the addition of the 17 new stocks presented on October 17, the cash position in the portfolio has been nearly cut in half. With earnings season wrapping up, we are currently considering a second basket of stocks, potentially in a week or two. We will also retain some cash to trade the Free Lunch basket (page 116 of Almanac).

On average, Large caps were the best, advancing 8.4%. Mid caps were second best climbing 5.3% while Small caps retreated a modest 0.6%. Emcor Group Inc (EME) and Leonardo DRS (DRS) continued to shine with solid gains for the large cap portion of the portfolio. Mid caps benefited from InterDigital (IDCC) surging higher on a massive 375% upside earnings surprise announced on October 31. Per standard trading policy, half of the original position in IDCC was sold when it traded above $173.20 (double its original price) for the first time on November 6. EME, DRS and IDCC are on Hold.

Super Micro Computer (SMCI) appeared to be on the road to recovery, but when an outside auditor walked away, fears of delisting fiercely returned, and its price was quickly cut in half. SMCI could get delisted, but the degree of certainty is likely far less than the recent price move suggests. We have taken profits on SMCI twice already. The remaining position is small and could quickly rebound if and/or when SMCI regains full listing compliance. SMCI is on Hold. At this time, given the extreme volatility SMCI is exhibiting, we would not consider additional purchases.

Shifting attention to the seventeen new positions in the stock portfolio, only three were modestly lower as of the market’s November 6 close and fourteen were higher. POWL, CUK, IESC, and GRMN were all up double digits or more. These four all gapped higher sometime in the last two weeks. These gaps in daily bar charts often end up getting filled or partially filled. Buy limits for POWL, CUK, IESC and GRMN have been adjusted and appear in the table below.

Sell Universal Stainless (USAP) at breakeven or better. For tracking purposes, we will close this position out if it trades above $44. USAP is being acquired for $45 per share, but the transaction is not expected to settle until sometime in Q1 of next year. The capital can likely be better utilized elsewhere.

Previously mentioned seasonal weakness ahead of and after mid-November could provide the next opportunity to add new stock ideas should they dip below their respective buy limits.

Please see the table below for updated advice, stop losses and buy limits where applicable.

Disclosure note: Officers of Hirsch Holdings Inc hold positions in AMAL, CUK, CXDO, FIX, GRMN, IBN, IESC, MCY, NECB, OSIS, POWL, SPXC, STRL, SVM, TRN, USAP, and WLDN in personal accounts.

Lee Cooperman on the markets Leon Cooperman: The market is reflecting a degree of optimism that may be uncalled for

“I always laugh at people who say "I've never met a rich technician." I love that! It's such an arrogant, nonsensical response. I used fundamentals for 9 years and got rich as a technician.”

- Marty Schwartz

Bonus — Here are some great links:

The Post Election Rally Is Here

Most New Highs in Three Years

Treasuries - Break Out or Break Down?

Small-Caps on Fire 

Election Crypto Live Event

Last evening Capri Holdings  (CPRI)  spit the bit and reported poor results.

I previously cautioned about bottom fishing in Capri Holdings:

Capri Is Not for Me

Late last week on the sharp break in the share price (after FTC objections to the company's proposed takeover), I took a small long position in Capri (CPRI) .

I did work over the weekend and I can't support owning it based on a deeper dive into the fundamentals.

Gone.

Position: None

By Doug Kass Oct 28, 2024 12:21 PM EDT

This podcast from The Dales Report (Shadd Dales and Anthony Varrell) is rich in information and in a forward-looking view of the cannabis industry after the fall (and failure of Florida's Amendment 3 to be passed).

Curaleaf & TerrAscend Executives Talk Cannabis Earnings, Future Trends | Trade to Black - YouTube

If you own cannabis equities or are contemplating to in the future... run, don't walk to watch it (and keep it in your archives)!

From my friends at Miller Tabak: 

Thursday, November 7, 2024

Worry Less About Inflation. Worry About Growth Instead.

Markets are too concerned about the inflationary impact of President Trump’s re-election and not worried enough about the risks to growth. We agree that Trump’s proposals are generally inflationary, and that with Republicans likely winning both houses of Congress, many of these may be implemented. With the labor market near full employment, any major boost to demand will pass onto higher inflation, not better growth.

So why are we sanguine about inflation? As we wrote last week, 10% tariffs would boost inflation by about 1% soon after implementation. This would, however, be a one-time effect as tariffs are passed on to consumer prices. Afterwards, tariffs would act as a disinflationary tax hike. In other words, if the Fed did nothing in response, inflation would spike, but then decline below its pre-tariff level. The FOMC would likely respond by pausing any rate changes until the data confirmed our view.

The bigger risk is that Trump could enact other tax cuts or spending increases that more than offset the budgetary and disinflationary effects of tariffs. The Wharton School’s model estimates that Trump’s most likely plan would cost $446-$554 billion in 2026, the first year of full implementation, about three times the magnitude of tariffs.[1] The bulk of this, however, comes from extending the 2017 tax cuts. Because this will not change existing tax rates, the inflationary impact will be small. In contrast, were they to expire, there would be a major reduction in inflation and growth. Two remaining likely tax cuts; eliminating taxes on social security and lowering the corporate rate to 15% would then roughly offset the revenue impact of tariffs. There is a risk that Trump could go further with large net spending increases or additional tax cuts (e.g. no taxes on tips), which would be inflationary.

There are bigger risks down the road. A major erosion of FOMC independence would be inflationary, although it would be because outside influence pressures the Fed to keep rates too low. Longer-term, the Fed would eventually have to go much higher to restore credibility and reassert its independence. More stringent immigration restrictions would also act like the adverse supply shocks from the pandemic. If it occurs, then we may be wrong.

Chairman Powell opined that higher yields may be more about expectations of stronger growth than concerns over inflation. If so, markets have it backwards. The risks of a downturn are now higher. We reiterate that 10% tariffs would reduce GDP by about 0.8% in the year after implementation. This estimate includes the tax impact of tariffs as well as the cost to exporters assuming equal sized, retaliatory tariffs. It would be very hard for other tax cuts to offset tariffs because many of the households most impacted by tariffs already pay little or no Federal tax. The U.S. economy avoided recession in 2023 because strong household balance sheets meant the economy was not ripe for one. Tariffs would change this and another, unrelated, hit to demand would then lead to recession. If 10% tariffs are implemented, the risk of a recession within the following 2 years jumps to 40% and tariffs well above 10% will make a downturn probable. A downturn would also come with much lower inflation which roughly cancels out the inflationary risk of immigration and fiscal policies.