"Just one more thing."

- Lt. Columbo

I have re-shorted Nvidia  (NVDA)  at $145.35.

After the Nvidia  (NVDA)  report I am adding my net short exposure.

As of 4:18 a.m.:

Volume

- NYSE volume 11% below its one-month average

- NASDAQ volume 2% below its one-month average

- VIX: up 5.14% to 17.19

Breadth

S&P Sectors

% Movers

I covered our Nvidia  (NVDA)  short under $140:

The comments below are reaction to this:

rajkaufman

After Charlie comments why would anybody hire a money manager? Just buy the indexes

Dougie Kass

When passive is fully accepted ("just buy the indices"), the setup for active stock picking (long/short) becomes clearer.

But it must just be me!

Seriously though, these sort of commennts (much like the "Cash on the Sidelines" argument) are late bull market phenomenon.

We just don't know... how late!

chrisk

sure wish i could go back and do that

Dougie Kass

Be wary of the "I told you sos" - when they get self confident there is danger at the door.

Or not...

With cash down by only -3 handles I am adding to my short Index calls.

* Markets steadily declined throughout the day.

* The market has rallied a bit off of the lows.

* Again a great market for trading but not eating sardines.

Breadth is weak (around 2-1 negative):

At 3:15 p.m. S&P cash was -30 handles (I shorted the indices around 4 a.m. when +15 Spoos)

Here are today's "Things":

* I shorted SPY/QQQ very early in premarket trading ( (SPY)  at $591.94 and  (QQQ)  at $504.89) — covered on the whoosh lower and purchased to go delta neutral (all trades were profitable)

* Shorted  (BITO)  (bitcoin) at $25.44  — overbought/exhausted?

* Covered most of my  (JPM)  short at $239.08 -$4 on the day and -$6/share from yesterday's rec as Trade of the Week.

* Tripled my short in  (XLF)  at $49.82.

* Added to  (VVV)  long at $48.48.

Wolf Street howls about European wage growth.

I am pressing by Bitcoin short.

Detecting some possible exhaustion after the huge and swift runup.

Every so often I revisit Mr. Softee.

Microsoft's  (MSFT) shares have been relatively poor for a while (flat since early Feb., underperforming Nazz by 12 pts and software by 15 pts).

The company is dumping too much money into AI and not getting a return.

And, even worse, they are not even showing the full amount of expense on their books, because a lot of it is off the books via ChatGPT.

Eventually, economic gravity takes over, regardless of all the accounting shenanigans, investing money into your own customers to fund them to buy parts, etc.

All the BS can extend the cycle, but it cannot make it work at the end of the day.

My research meeting has been cancelled so I will be here all day!

* With unfriendly comments relating to equities.

"Pleased that Nov policy statement provided optionality in deciding future policy adjustments; Progress in lowering inflation appears to have stalled"....

- Economy strong, labor market near full employment and inflation elevated

- Fed may be closer to neutral policy than policymakers currently think; Inflation remains a concern

- Estimate of neutral rate much higher than pre-pandemic; Prefers to "proceed cautiously" on rate cuts

- October payrolls likely rose at recent average pace after accounting for hurricanes, Boeing strike and a low response rate

- Unemployment rate is below Bowman's own estimate of full employment; Increase in 2024 reflects weaker hiring

- Move sideways in core personal consumption expenditures inflation since may reflects increased demand for affordable housing and inelastic housing supply

- Sees greater risks to price stability mandate, though deterioration in labor conditions is possible

- Agreed to support November Fed rate cut as it aligns with her preference to lower rates gradually 

Fed's Bowman joins my "slugflation" camp. 

douglas cassel

One thing missing from most market analysis is a point by point refutation of contrary opinions. The talking heads on CNBC may be the worst, but most market analysts, and those on this board(including me) speak. and invest, from our own point of view.

The deep irony is that even if such deep analysis did exist, the final arbiter is not the truth, but our profits and losses. Furthermore, no matter the veracity of our insights, our results are often based on luck or some ancillary skill, like risk control, that is independent of a particular investing thesis. One can be wrong, and with a little bit of luck and talent do very well. One can be right in theory, but wrong on timing, which tends to be my main problem.

Part of the difficulty is that differing investment styles involve various degrees of rigor and experience that is simply not shared. I can't really evaluate or criticize Doug K's or Rev's techniques because I can't fully understand or replicate them.

So all predictions must be passed through the crucible of our own situation. For me Doug K's bearish analysis is deeply compelling, yet the market has been up nevertheless. He can prosper by his trading skill and attention to specific trades. I have done well by a "first order" following of the trends. One could argue that the best investment advice this year was to buy NVDA and go to the beach. I find the

multiple contradictions quite amusing.

From the Comments Section:

RevShark

My view is that there are ALWAYS great bullish and bearish arguments. The issue is timing when they will matter. I'm sure when the market does suffer a substantial correction it will be for many of the reasons cited by Doug but based on the current price action and seasonality, i don't expect a current trend to collapse right now. If it does I'll react but i see no reason right now to anticipate disaster.

Dougie Kass

to be clear i am not anticipating disaster - if i did and if i had a sense of timing i would be materially short (which I am not)

i just believe the market remains overvalued by most measures that have stood the test of time - and that using an intermediate term timeframe investment returns will be substandard to negative

that said, i have no idea when a correction will occur

in the meantime i have a long and short book - mostly consisting of pairs trade

i maintain a sliver of shorts on top of this

and i treat the indices and certain stocks as trading sardines (not eating sardines), trading opportunistically in a market i believe to be overvalued

I have a late research meeting this afternoon out of the office that will require travel.

So I will be leaving at about 2:30 p.m. (well before the  (NVDA)  earnings release!).

Back early tomorrow morning, as always.

- New York Stock Exchange volume is 9% below its one-month average;

- Nasdaq volume is 8% above its one-month average;

- VIX: up 8.50% to 17.74

From Comments Section:

Dougie Kass

STAFF

Just Now

On the whoosh I covered my SPY $585.55 and QQQ $497.40 common short and turned around and purchased the common (at the same price) against my short calls.

I am now delta equivalent neutral on the Indices.....

I received more emails -- around 30! -- about yesterday's opening missive, "Doug Kass: (Mike) Wilson, For Christ's Sake ... Sell!" than any other piece in recent memory.

Here are a few of those comments (three of these five comments are from great investors who should be well known to most in the investment community):

Dougie

Reading this email from you, this time, like no other before, feels like i'm on a runaway train passing a little kid on standing near the tracks screaming..."the bridge is out!! the F---ING BRIDGE IS OUT!!!!!" And you can post this if you like or just plain quote me. Personally, i find that i have by selling spike runs in my biggest holdings and anything not really performing much and anything actually fading to a very very very low equity exposure 

Been years since i had this little exposure to much of anything equity related and that was before some of the stuff in your email today For me, we are past just the valuation arguments....the 10 year going UP after two FED rate cuts was the killer - i Flushed a lot of risk when i realized the 10 year was up a lot after the 50bp "Kamala Harris gift cut" The market spoke loud and clear the bell is ringing

Time to go to high ground...

To my old friend, I am now 'fearful when all others are greedy'...

Dougie

I, like you, don't know the timing but I am highly confident that returns over the next number of years will likely be negative, in part, based on a number of your observations and analysis....

Doug

I agree fully, too many are short sighted and don't respect history. And, few understand reward and risk nor appreciate Barton Biggs and Warren Buffett's quote that " 'A bull market is like sex. It feels best just before it ends.'”"....

Dougie

I have been on and off twitter several times over the last couple of years. One specific kind of twitter personalities i have been intrigued by are some of "the great stock pickers" - some at bargain prices for their services and some not so bargain...I even took an inside look at a couple for a few months subscription charges. Without exception, NONE discuss value or valuation ....it is all about the growth story that is going to force the past hot stock run to continue indefinitely...it is favorite 50 on steroids 

They and their clients are going to be road kill

'Tell Me When the Market Will Care About Your Arguments'

By contrast, here is what James "Rev Shark" DePorre tweeted:

Rev's approach to trading differs from mine -- he invests principally based on price action/charts. That doesn't mean that my approach is superior, as both have yielded good long-term results.

My reaction to Rev's comment, clearly aimed at my opener, is that my analysis and column were not meant to direct anyone into adopting a defensive or cautious market position:

* I am, quite simply, voicing my concerns. If one value's my analysis (and invests/trades not simply based on charts and price momentum) one might give consideration and weight toward incorporating it into one's investment decisions and process. (Or not!)

* Some of my concerns are not dissimilar to the Fall of 2007 and at other important market tops.

* Again, I don't invest based on charts or price momentum -- I invest based on reward vs. risk and "margin of safety."

* I have no idea when the headwinds I outline will be reflected in market prices -- it might be this morning, in two weeks, in a few months or years. This is more of a warning than a timing call.

* I recognize that today's market structure favors a continuation of price momentum until it doesn't.

* Unlike many, I am always in doubt and often wrong. But my experience and the message of the multiple observations of overvaluation (vis-à-vis historical metrics) and non trivial economic/profit/interest rate concerns mean to me that the outlook for equities over the next several years is poor and that the upside reward is dwarfed by downside risk.

* Given my risk appetite and profile my analysis of current conditions influences my investing NOW because the reward/risk proposition is unattractive. Moreover, there is, to me, no "margin of safety."

(JPM)  is -$4 from the close and -$6 from entry price yesterday - I am taking off half of my short trading rental at $239.08.

(JPM) , yesterday's Trade of the Week (short), is down by over $2 today.

From Peter Boockvar:

Value and convenience winning but not everywhere

We'll start with the earnings calls.

From Walmart:

"Transaction counts and unit volumes were positive across each segment, and we continue to gain market share in the US, both in grocery and general merchandise. Households earning more than $100,000 made up 75% of our share gains. In the US, in-store volumes grew, curbside pickup grew faster and delivery sales grew even faster than that."

"We had almost no like-for-like inflation in the US this quarter. It was nice to see general merchandise grow low single digits in the US even as prices are deflated by over 4%. We currently have about 6,000 rollbacks in Walmart US across all categories. We're feeling some margin pressure from growth in GLP-1 drugs, so we're pleased to see general merchandise sales be positive."

"Food categories were especially strong this quarter with unit volumes growing by the highest level in four years. We also generated mid-teens growth in health and wellness due largely to branded pharmacy scripts, including GLP-1. GLP-1 sales contributed about one point to the segment comp, while continuing to create mix pressures in gross profit." The general merchandise strength came mostly from home, hardline and toys.

They also got help in the hurricane impacted areas of people stocking up beforehand but also higher expenses.

"Across the company, inventory is in very good shape."

The secret to the Walmart success, "with customers and members continuing to respond to our value proposition as we provide lower prices and greater levels of convenience."

Target missed expectations across the board and said they had to navigate "a volatile operating environment during the third quarter" according to their press release today. They saw a 2.4% rise in traffic, "nearly 11% growth in the digital channel, and continued growth in beauty and frequency categories. At the same time, we encountered some unique challenges and cost pressures that impacted our bottom-line performance."

We'll hear more about those 'unique challenges' from their earnings call.

From TJX:

“Our comp store sales increase of 3% was at the high-end of our plan…Across the Company, customer transactions drove our comp sales increases, which tells us that our values and treasure hunt shopping experience are appealing to a wide range of customers.”

From Lowe's:

They saw "strong Pro and online sales and smaller ticket outdoor DIY projects" and "demand for DIY discretionary bigger ticket projects remains soft."

"When it comes to the macro environment, this remains a challenging home improvement market. While interest rates are beginning to drop, consumers continue to face affordability challenges as both inflation and interest rates are putting pressures on their wallet. Mortgage rates also remain stubbornly high and there's still a meaningful gap between current mortgage rates to purchase a home and the homeowner's existing rates, with over half of current rates below 4%. Combined with the lack of available homes for sale, housing turnover remains near 30 year lows. Looking ahead, it's unclear when lower rates and improved consumer sentiment will translate into improved home improvement demand."

From Valvoline, with almost 2,000 owned and franchised auto maintenance and repair shops, and whose stock fell 8.7% yesterday on lighter comps:

"We're assuming with a more challenging overall environment and some continuing challenges in the consumer environment that we'll likely not be as required to be able to take pricing at the same level that we have in the past, especially given the historical inflation that we've seen in pricing."

From La-Z-Boy:

"We were pleased to deliver a 2nd consecutive quarter of sales growth across our business despite the continued challenging macroeconomic trends. The combination of our iconic brand, strong product portfolio particularly in reclining and motion furniture, and our talented team again produced steady results against persistently weak consumer demand...Furniture and home furnishings related spending continues to be soft, but we are outperforming the industry in a sustainable manner."

Speaking of housing, even with another uptick in mortgage rates, albeit slightly w/o/w to 6.90% from 6.86%, purchase apps rose 2% w/o/w and refi's were higher by 1.8% w/o/w after 7 weeks of declines. Bottom line, as said by Lowe's and as read here many times, the turnover of existing homes remains near 30 yr lows.

In Japan, they reported a 3.1% rise y/o/y in October exports which was above the estimate of up 1%. It was a rise in exports to Asia that drove the gain as they rose almost 8%. Exports to the US fell 6.2% and to Europe fell by 11.3%. Nothing market moving here but the yen is softer again and JGB yields are holding their recent highs. To those higher exports to the rest of Asia, I will repeat my belief that the growing middle class in Asia is the most exciting global economic growth story over the next decade or two.

Also in Asia, Indonesia's central bank held its benchmark interest rate at 6% as expected. And they don't seem inclined to cut anytime soon. The Governor said "The room for rate cuts that we previously saw as wide does seem narrower now." Part of this is their desire to strengthen the rupiah after the recent weakness but it is down again today.

Yields are rising again in the UK after we saw CPI rise more than anticipated for October. The headline gain was 2.3% y/o/y vs 1.7% in the month before and one tenth above the estimate. The core rate was higher by 3.3% y/o/y, two tenths more than estimated and up one tenth m/o/m. Services inflation continues to be the issue, rising by 5% y/o/y. PPI, both for input and output charges, were as expected including the revisions. The 2 yr gilt yield is up 3 bps while the 10 yr yield is higher by 6 bps in response. That 10 yr yield is hovering around one yr highs. The pound and the FTSE 100 are both little changed though.

10 yr Gilt Yield

Took an initial and small short in overbought  (BITO)  ($25.47) and tripled my XLF short ($49.82).

And, as noted earlier  (SPY)  and  (QQQ)  shorts near 4 a.m. (!):

* (SPY) at $591.94.* (QQQ) at $504.89.

Charts from 8:24 a.m. ET:

Upside:

-TVGN +25% (earnings)

-KC +22% (earnings, guidance)

-WSM +22% (earnings, guidance; announces $1B stock repurchase program)

-DUOT +14% (earnings; signs $42M asset management agreement with Fortress for 850MW of Power Generation Assets)

-DLB +11% (earnings, guidance)

-GLBE +10% (earnings, guidance)

-WIX +10% (earnings, guidance)

-ZIM +10% (earnings, guidance)

-EVGO +9.3% (to install up to 480 new fast charging stalls at Meijer locations across Midwest)

-KEYS +9.3% (earnings, guidance)

-KORE +9.3% (earnings, guidance)

-LMND +7.8% (Morgan Stanley Raised LMND to Equal Weight from Underweight, price target: $42 from $23)

-SGMO +7.1% (U.S. FDA clears IND application for ST-503 for treatment of Idiopathic Small Fiber Neuropathy, a Type of Chronic Neuropathic Pain)

-MSTR +7.0% (announces pricing of upsized $2.6B offering of convertible senior notes)

-EPRX +5.6% (DiffuSphere Technology demonstrates targeted drug release while minimizing systemic exposure for a period of more than six months)

-HOOD +5.4% (to buy RIA platform Tradepmr for $300M cash and stock; hearing Bernstein raises price target)

-CHWY +4.7% (Tier1 firm Raised CHWY to Buy from Underperform, price target: $40 from $24)

-LZB +4.6% (earnings, guidance)

-INSP +3.5% (Tier1 firm Raised INSP to Buy from Neutral, price target: $255 from $220)

-APP +2.6% (Piper/Sandler Initiates APP with Overweight, price target: $400)

-VKTX +2.6% (presents Results from Phase 2b VOYAGE Study of VK2809 in Biopsy-Confirmed NASH/MASH at the 75th Liver Meeting 2024)

-CMCSA +2.5% (confirms intention to create leading Independent Media Business through spin-off of select cable television networks; tax-free transaction expected to be completed in approximately one year; SpinCo to enter into a transition services agreement with NBC Universal to allow SpinCo to operate seamlessly from day one)

Downside:

-LCTX -23% (prices 39.5M shares and warrants at $0.76 per share plus warrant)

-NAMS -21% (Pivotal Phase 3 TANDEM Clinical Trial Evaluating the Fixed-Dose Combination of Obicetrapib 10 mg and Ezetimibe 10 mg in Patients with ASCVD or ASCVD Risk Factors and/or HeFH Achieved al lco-primary endpoints of LS mean)

-TGT -17% (earnings, guidance)

-POWL -14% (earnings, guidance)

-APTO -8.3% (initiates TUSCANY Phase 1/2 Study for Newly Diagnosed AML Patients to Receive Tuspetinib-based Triplet Therapy)

-QDEL -7.0% (prices ~8.26M shares for selling holder Carlyle Group)

-EXK -6.7% (announces $73M bought deal financing for 15.8M shares at $4.60/shr)

-FN -6.4% (B. Riley FBR, Inc. Cuts FN to Sell from Neutral, price target: $178)

-XP -4.7% (earnings; cuts dividend)

-JFIN -4.4% (earnings, guidance)

-SAGE -4.3% (Phase 2 DIMENSION study of Dalzanemdor (SAGE-718) in treatment of Cognitive Impairment Associated with Huntington’s Disease did Not meet primary endpoint)

-NIO -3.7% (earnings, guidance)

-TJX -3.5% (earnings, guidance)

-LWAY -2.8% (Board of Directors has rejected the revised unsolicited $27.00/shr proposal made on Nov 15, 2024 by Danone North America PBC)

-VERI -2.1% (disclosed agreement to sell $35M in stock through Needham)

From 8:39 a.m.:

Sell-side on Valvoline:

Valvoline price target lowered to $42 from $46 at Morgan Stanley Morgan Stanley analyst Simeon Gutman lowered the firm's price target on Valvoline to $42 from $46 and keeps an Overweight rating on the shares. The firm's Overweight thesis, based on steady and scarce growth with valuation upside, doesn't change, but the magnitude of EPS growth "took a step backwards" with FY25 sales and adjusted EBITDA guidance that were about 7% below the Street at the midpoint, the analyst tells investors.

Valvoline price target lowered to $46 from $48 at Baird Baird analyst Justin Kleber lowered the firm's price target on Valvoline to $46 from $48 and keeps an Outperform rating on the shares. The firm said its solid finish to FY24 was overshadowed by a softer profit outlook due to cost uncertainties and a step-up in IT spend; and commentary around increased "pockets" of promotional activity from tire/repair shops.

Valvoline price target lowered to $44 from $46 at Wells Fargo Wells Fargo analyst David Lantz lowered the firm's price target on Valvoline to $44 from $46 and keeps an Overweight rating on the shares. The firm says that while Q4 generally met expectations, the stock underperformance makes sense with FY25 numbers heading lower and the long-term outlook on watch. Wells sees a choppy near-term but remains long-term constructive.

Valvoline price target lowered to $46 from $52 at RBC Capital RBC Capital lowered the firm's price target on Valvoline to $46 from $52 and keeps an Outperform rating on the shares after its Q4 earnings beat and below-consensus guidance. The company's underlying business is healthy, but with comps directionally slowing and the long-term algo at risk, Valvoline shares are likely to remain rangebound near term, the analyst tells investors in a research note. RBC maintains that shares are undervalued, but also does not see "many near-term catalysts" to be realized, the firm adds.

More later in the week.

I added small to the name a bit higher than $39 yesterday.

10:00AM: Fed Vice Chair for Supervision Barr (Voter) testifies on oversight of prudential regulators before the House Financial Services Committee, Washington, DC.

11:00AM: Fed Board Governor Cook (Voter) speaks on the economic outlook and monetary policy before the University of Virginia "UVA Economics Presents" event, Charlottesville, VA.

12:15PM: Fed Board Governor Bowman (Voter) speaks on "Approach to Agency Policymaking" before the Forum Club of the Palm Beaches, West Palm Beach, FL.

4:00PM: Fed Bank of Boston President Susan Collins (Non-Voter) gives remarks and participates in a conversation about monetary policy, the breadth.

of the Federal Reserve's work, and her career path at an event hosted by the University of Michigan Gerald R. Ford School of Public Policy, Ann Arbor, MI.

Now, how your daddy don't mind
And your mommy don't mind
If we have another dance
Yeah, just one more
One more time

Oh, won't you stay
Just a little bit longer
Please let me hear
You say that you will
Say you will

- "Stay"

I was eleven years old when the song "Stay" got a bullet and was #1 (for a week) on the Billboard 100 (only to be dislodged by Elvis Presley's "Are You Lonesome Tonight.")

Written by a fifteen year old Maurice Williams who was trying to convince his date to stay on the date longer, "Stay" was the shortest single ever to reach the top of the charts (at 1 minute 36 seconds)!

The song is a combination of English language and Caribbean heat so powerfully off-center that it practically constitutes the first reggae record, an impression that's abetted by the rather primitive recording of the song. "Stay" is sheer thrills: with Maurice Williams bumping his yearning against the percussion (drum and wood blocks), the Zodiacs chanted backing and the slithering piano chords. The break was crucial in establishing that durable rock and roll convention and gospel bootleg: the falsetto.

Whether it Maurice Williams and The Zodiacs or the three famous covers of the song done by The Hollies, The Four Seasons or Jackson Browne it seems like investors "want to stay a little bit longer."

As for me, I wonder this morning (and as expressed in yesterday's opening missive, (Mike) Wilson, For Christ's Sake ... Sell!) are investors over staying their welcome?

“The tape tells all, and our job is to learn how to listen properly.”

- Stan Weinstein

Bonus — Here are some great links:

Feast on Small-Caps 

Healthcare Weight Loss

BTC Is Back on Top

The History and Evolution of Technical Analysis

Doomberg chimes in on whether the power needs of AI are incompatible with existing grids.

Keith and Hedgeye look at the markets like no other sources of research.

It pays to read their output including this gem this morning: 

* Of a 4:25 a.m.-kind...

Back shorting SPY/QQQ common:

*  (SPY)  at $591.94.

*  (QQQ)  at $504.89.