From Peter Boockvar:

Positives

1)The November US manufacturing and services PMI rose to 55.3 from 54.1 and again expansion solely led by the services side of the economy. Services rose to 57 from 55 while manufacturing remains in contraction at 48.8 vs 48.5 in the month before. Much of the increase in confidence was "attributed to the prospect of lower interest rates, improved economic growth, and more supportive business policies from the new administration in 2025."

2)Initial jobless claims fell to 213k from 219k and that was 7k less than expected. The 4 week average fell to 218k from 222k.

3)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.

4)The November NAHB home builder index rose 3 pts m/o/m to 46, better than the estimate of 42, though still below 50. The upside was mostly due to a jump in the Expectations component to 64 from 57. The Present Situation is still below 50, though barely at 49 vs 47 last month. Reflecting still the big challenge of affordability, Prospective Buyers Traffic was just 32 but up 3 pts from October. The NAHB is pointing to the election results as reason for the lift in builder confidence. “With the elections now in the rearview mirror, builders are expressing increasing confidence that Republicans gaining all the levers of power in Washington will result in significant regulatory relief for the industry that will lead to the construction of more homes and apartments.”

5)October existing home sales are still hovering around 30 yr lows but did rise to 3.96mm from 3.83mm. Months' supply was 4.2 from 4.3 in September and 4.2 in August. The median home price rose 4% y/o/y. First time buyers made up just 27% of transactions vs 26% in the two prior months and vs 28% in the same month last year.

6)In the September Treasury International Capital flow data, obviously pre-election, foreigners bought a net $77b of US notes and bonds BUT the breakdown of the buyers is key to differentiate. 'Official' central banks continue to sell and for a 5th straight month led by Japan, China and Hong Kong. The offset was from private foreign buyers but even here could very well be mostly hedge funds and other short term focused buyers, especially ahead of the election.

7)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."

8)From BJ's Wholesale: "Our business was once again fueled by robust traffic, unit volumes, and market share growth inside our clubs and at the gas pumps...Our perishables, grocery, and sundries division delivered over 4% of comp growth in the third quarter with broad based strength across all three divisions. Perishables led the growth, boosted by our strong showing in dairy, meat, and of course, produce. Our general merchandise and services division delivered approximately flat comps in the third quarter."

9)From The Gap: On their consumer, "We see and saw consistent results across our customer income cohorts in the third quarter. Our lowest income customers remain somewhat flat. And given that they're impacted by the warmer weather with less reason to update wardrobes based on seasonal changes. And on the flip side, we continue to see share gains from our middle and higher income cohorts. Those customers are responding to value, relevance of our assortments, certainly our style authority across our portfolio, but we do see strong responses to our value proposition from higher end consumers. When they're offered the right price and right style and right value equation, customers with income over $100k did grow in the quarter."

10)From TJX: They reported a 3% comp sales gain "which is at the high end of our plan and entirely driven by customer transactions. Once again, both our apparel and home categories saw comp sales increases this quarter."

11)From Williams-Sonoma: "Even in difficult environment, our initiatives continue to gain momentum and we are optimistic and confident about our business...From a cadence perspective, our trends across the quarter were choppy, reflecting the uncertain macroeconomic backdrop."

12)Nvidia, notwithstanding guidance and the supply/demand imbalance with new chip.

13)From Snowflake: "Bookings were strong in the quarter and we are seeing large deal volume increase."

14)From Palo Alto: "The market for cybersecurity continues to be robust and continues to grow faster than the overall technology market. Despite the acceleration of technology spend due to AI, cybersecurity continues to outpace technology spend."

15)From Viking Holdings: "We have already sold 70% of the capacity PCDs (Passenger Cruise Days) for our Core Products for 2025, with both volume and rates exceeding those for the 2024 season at the same point in time."

16)UK consumer confidence for November improved by 3 pts m/o/m according to GFK post release of the budget. They said, "There was evidence of nervousness in recent months. But we have moved past those events now."

17)The November CBI industrial orders number for the UK in November remained deeply negative at -19 but that is up 8 pts m/o/m and 6 pts better than expected. CBI said, "Output has underperformed expectations in recent months, with manufacturers pointing to uncertainty around the UK Budget, the US elections and recent political instability in Europe as among the factors leading customers to pause or cancel orders. Many firms still need to work through the implications of the Budget for their own plans for pay, hiring and investment, but it’s an encouraging sign that output volumes are expected to return to growth in the quarter ahead, with order books also showing some improvement this month."

18)In Japan, the November services PMI did tick back above 50 at 50.2 from 49.7 but manufacturing slipped to 49 from 49.2.

19)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%.

20)India's PMI remained strong, rising to 59.5 from 59.1 with services at 59.2 and manufacturing at 57.3.

Negatives

1)Continuing claims rose by 36k w/o/w to 1.908mm, the highest since November 2021.

2)The final read of the UoM November consumer confidence index was 71.8, down from the initial print of 73 but up modestly from the 70.5 seen in October pre-election. The first November survey took place before the election and today obviously after. One yr inflation expectations were 2.6%, holding steady with the preliminary figure but down one tenth from October. That's the least since December 2020. The 5-10 yr guess though ticked up to 3.2% from 3% in October and 3.1% initially early in November. That matches the highest level since June 2008. No surprise based on the outcome, the confidence of Democrats fell to 81.3 from 91.4 while they jumped for Republicans to 69.1 from 53.6.

3)Single family starts dropped by 72k m/o/m to 970k which is around where the 6 month average is of 976k vs the 1.023mm 12 month average. This is below the 2021 levels when starts were consistently above 1mm, averaging 1.13mm just as we need more supply right now. Permits for single family construction was little changed at 968k vs 963k last month and vs 967k in the month before. Multi family starts were 341k, up 30k m/o/m but after falling by 62k in September. This was between 500-600k in 2022. Permits fell to 448k from 462k and that is just a few thousand from the lowest since 2018 not including Covid.

4)Cass Freight's October transportation report said shipments m/o/m were about unchanged but down 2.4% y/o/y. They said, "In a sign that private fleet growth continues to affect for-hire demand, the ongoing softness in shipments comes as Class 8 tractor sales rebounded from supply constraints in Q2. Although goods demand growth is driving broad freight volume growth, as can be seen in intermodal, imports, and freight GDP, it is still not reaching the for-hire market."

5)In stark contrast to the big upside in the NY manufacturing survey, the November Philly index fell to -5.5 from +10.3. The KC region was -2 vs -4.

6)From Target: "we saw healthy growth in traffic throughout the quarter, even as we encountered some macro headwinds that caused our EPS to be lower than expected...This growth in traffic was mostly offset by a decline in average ticket as consumers continue to spend cautiously, most notably in discretionary categories." On the overall consumer, "we're seeing many of the same themes that have defined the environment for some time. Consumers tell us their budgets remain stretched and they're shopping carefully, as they work to overcome the cumulative impact of multiple years of price inflation. They're becoming increasingly resourceful in their shopping behaviors, waiting to buy until the last moment of need, focusing on deals, and then stocking up when they find them. As a result, we're seeing a stronger response to promotions than we've seen in some time. Yet, consumers are still willing to spend when they find the right combination of newness and value, and they're continuing to celebrate important seasonal moments throughout the year."

7)From Ross Stores: "we are disappointed with our third quarter sales results as business slowed from the solid gains we reported in the first half of 2024. Although our low to moderate income customers continue to face persistently high costs on necessities, pressuring the discretionary spending, we believe we should have better executed some of our merchandising initiative." They also blamed the hurricanes and "unseasonably warm temperatures" which impacted winter wear.

8)From Lowe's: "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."

9)From Jack in the Box: They mentioned that "We battled through a tough environment that brought top line headwinds to the industry." Comps fell 2.1% and "This result included a decrease in transactions and negative mix partially offset by a 4.8% increase in price."

10)From Valvoline: "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."

11)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...Furniture and home furnishings related spending continues to be soft, but we are outperforming the industry in a sustainable manner."

12)Old Dominion Freight announced a 4.9% "general rate increase" effective December 2nd. They said, "The general rate increase is based on the Company's economic forecast and expectations for the operating environment. We must continue enhancing our high quality service network and systems to meet and exceed our customers' expectations and deliver on our promises."

13)The Eurozone November manufacturing and services PMI fell to 48.1 from 50 with the services component in particular falling to 49.2 from 51.6 and below the estimate of no change. Manufacturing remained weak at 45.2 vs 46 in October and also vs a forecast of no change. S&P Global was not kind with its words saying "Things could hardly have turned out much worse. The Eurozone's manufacturing sector is sinking deeper into recession and now the services sector is starting to struggle after two months of marginal growth. It is no surprise really, given the political mess in the biggest Eurozone economies lately - France's government is on shaky ground, and Germany's heading for early elections. Throw in the election of Donald Trump as US president, and it is no wonder the economy is facing challenges. Businesses are just navigating by sight."

14)The UK PMI was also below expectations with manufacturing falling to 48.6 from 49.9 and services down to exactly 50 from 52. S&P Global is blaming in part the "thumbs down" to the new government's budget which includes a bunch of tax increases. On the pricing side, "inflation pressures have moderated further, with selling prices rising at the slowest rate seen this side of the pandemic. However, still elevated rates of wage related price and cost growth are being recorded in the service sector, potentially limiting scope for rate cuts among the more hawkish policymakers."

15)UK October retail sales fell .9% m/o/m, about double the estimate of down .4%. The ONS said "The fall was driven by a notably poor month for clothing stores, but retailers across the board reported consumers held back on spending ahead of the Budget."

16)The UK headline CPI 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.

17)French business confidence in November fell 1 pt m/o/m to the lowest since July. After dropping by 6 pts last month, manufacturing confidence lifted back by 4 pts. That gain was offset by a 2 pt drop in services and a 1 pt fall in retail confidence and construction. Employment rose 2 pts after falling by a like amount in October.

18)Australia's composite PMI fell back below 50 at 49.4 from 50.2 with both components under 50.

19)In Japan's October CPI the headline rate fell to 2.3% y/o/y from 2.5% as expected due to energy subsidies, though remaining above 2%. The core/core rate was higher by 2.3% y/o/y too, up from 2.1% in September and one tenth above the estimate.

20)Someone paid $6.2mm, including a $1mm auction fee, to buy a banana with duct tape?

Volume

- NYSE volume 4% below its one-month average.

- NASDAQ volume 13% below its one-month average.

Closing Breadth

S&P 500 Sector ETFs

% Movers

Nasdaq 100 Heat Map

My 2 p.m. research meeting was rescheduled for 2:45 p.m..

I will try to get my "Things" column out but I might be leaving for the day right after the meeting.

If not, I will recap early Monday morning.

I am having dinner with my pal, Omega's Lee Cooperman, on Saturday night.

I will fill you all in on his market view.

From Josh Brown:

Scott Gallaway's No Mercy No Malice:

 "F1 Is At An Inflection Point"

TechNova

BTC : The $100K party may happen over the weekend, outside of US Equity hours, when trading is thinner.

There is currently a size-able Sell order at the $100K mark on the futures market. Over $300M.

Nothing MSTR could not blast through with a $1B Buy Order, but important to note nonetheless.

As I have mentioned all year, $100K is a magic number for many people. So most definitely a zone of resistance.

That said, my current instinct is that it is not simply Up, Up and Away. That is too easy, and does not take into account MAX PAIN.

What would make more sense to me is a breach of $100K to something like $120K, to convince people that the run to $1M has started. Watch levered longs pile up on the Perps, and then cascade blast the late comers out of the water with a sharp sell off to the mid $90's.

Right now the betting markets have doubled the chances of BTC being a US Strategic Reserve Asset in the first 100 days of 2025 from 22% to 40%. That seems way too high to me. I believe we will get there, but not that fast. Could take almost 2 years.

Options on IBIT, BITB, etc... will be an incredibly powerful way to play this Vol. Implied Vol on those options are very high.

I have been receiving Yield on my actual Coins for years, that have averaged 4%. The irony is that ETFs should now be able to provide you with double that yield given the implied Vol.

In some weird way (Custody and Fees aside), it may make sense to sell the Coins and move them into ETFs now, as long as the Yield differential remains this high. For me, this would result in a massive Tax bill that would not be advantageous. I am better off waiting for Trump to lower taxes on wealthy folks to Zero, before pulling that trigger.

We shall see.

Marijuana Could Stay In Limbo Under the Trump Administration in the WSJ.

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

Nasdaq volume is 25% below its one-month average

Boeing  (BA)  jiggy after the recent "pause."

Procter & Gamble  (PG) , an investment long, is ripping to the upside (+$4).

The shares were trading at $161 two weeks ago (we were buying as posted in my Diary) and are now over $176.

I am reducing to small sized from medium.

Among many other individual shorts today, I reshorted Goldman Sachs  (GS)  at $598.68.

I have two research meetings today: One at 10:30 a.m. and one at 2 p.m.

Both should take about 45 minutes.

From Peter Boockvar:

The two lane economy is not just a US thing/Retail earnings comments

This leg of the US dollar rally that took on more pace post election is now mostly vs the euro and it's a clear fundamental and rate differentiation between them and the US. The Eurozone November manufacturing and services PMI fell to 48.1 from 50 with the services component in particular falling to 49.2 from 51.6 and below the estimate of no change. Manufacturing remained weak at 45.2 vs 46 in October and also vs a forecast of no change.

S&P Global was not kind with its words saying "Things could hardly have turned out much worse. The Eurozone's manufacturing sector is sinking deeper into recession and now the services sector is starting to struggle after two months of marginal growth. It is no surprise really, given the political mess in the biggest Eurozone economies lately - France's government is on shaky ground, and Germany's heading for early elections. Throw in the election of Donald Trump as US president, and it is no wonder the economy is facing challenges. Businesses are just navigating by sight."

That said, the weakness is mostly with their two biggest economies as "the rest of the Eurozone continued to see business activity increase, albeit the rate of expansion was only slight and the slowest in the current 11 month sequence of growth."

And some more, "The environment in November is stagflationary. On one hand, activity is declining across the board, while on the other, input and output prices are rising more quickly. This surge is driven by services costs, which ties in with the sharp rise in wages in the Eurozone in the third quarter. Service sector selling price inflation is a major headache for the ECB."

On this point about the ECB, whose sole mandate is inflation and keeping its rate of change around 2%, they seem to now just be focused on the growth side as expectations grow for them to cut its deposit rate by 50 bps next month. The swaps market is pricing in a 100% chance that they cut 25 bps and a 50% chance they do so by 50 bps next month.

So, in response, the euro is now at a 2 yr low vs the US dollar for both growth and rate differential reasons. Bond yields are falling too after the data release while stocks are lower.

The UK PMI was also below expectations with manufacturing falling to 48.6 from 49.9 and services down to exactly 50 from 52. S&P Global is blaming in part the "thumbs down" to the new government's budget which includes a bunch of tax increases. On the pricing side, "inflation pressures have moderated further, with selling prices rising at the slowest rate seen this side of the pandemic. However, still elevated rates of wage related price and cost growth are being recorded in the service sector, potentially limiting scope for rate cuts among the more hawkish policymakers."

Also out of the UK was October retail sales that fell .9% m/o/m, about double the estimate of down .4%. The ONS said "The fall was driven by a notably poor month for clothing stores, but retailers across the board reported consumers held back on spending ahead of the Budget."

Out too, UK consumer confidence for November improved by 3 pts m/o/m according to GFK post release of the budget. They said, "There was evidence of nervousness in recent months. But we have moved past those events now."

The pound is also weaker, gilt yields are lower but stocks are trading up.

Australia's composite PMI fell back below 50 at 49.4 from 50.2 with both components under 50. In Japan, services did tick back above 50 at 50.2 from 49.7 but manufacturing slipped to 49 from 49.2. India's remained strong, rising to 59.5 from 59.1 with services at 59.2 and manufacturing at 57.3.

Bottom line, we not just have a two lane economic environment in the US, we have it both in Europe, with for example Spain way outperforming Germany and France but also in Asia with India the standout to the upside and China's growth obviously challenged.

By the way, even with the strong dollar, the price of gold continues to rebound after the post election pullback and yes, we are still bullish and long.

Also out was Japan's October CPI where the headline rate fell to 2.3% y/o/y from 2.5% as expected. The core/core rate was higher by 2.3% y/o/y too, up from 2.1% in September and one tenth above the estimate. The BoJ should be hiking rates again but continues to drag its feet.

From Ross Stores, whose stock is up sharply pre market:

"we are disappointed with our third quarter sales results as business slowed from the solid gains we reported in the first half of 2024. Although our low to moderate income customers continue to face persistently high costs on necessities, pressuring the discretionary spending, we believe we should have better executed some of our merchandising initiative." They also blamed the hurricanes and "unseasonably warm temperatures" which impacted winter wear.

The reason why, in light of this, earnings came in above their expectations was due to "lower incentive, freight and distribution costs" which "more than offset the planned decline in merchandise margins."

From BJ's Wholesale, who like Costco and Sam's Club, is benefiting from the value seeking consumer:

"Our business was once again fueled by robust traffic, unit volumes, and market share growth inside our clubs and at the gas pumps."

"Our perishables, grocery, and sundries division delivered over 4% of comp growth in the third quarter with broad based strength across all three divisions. Perishables led the growth, boosted by our strong showing in dairy, meat, and of course, produce. Our general merchandise and services division delivered approximately flat comps in the third quarter."

"We are still seeing members being thoughtful in their purchasing behavior, especially around larger ticket discretionary categories, which we're accommodating with high quality items at compelling price points."

As also seen with Walmart, value and convenience is what is working in retail right now. "True to our DNA, we will also be offering exceptional value on all the holiday essentials, including seasonal decor, updated home furnishings, and items for hosting holiday gatherings. And of course, the convenience of a one-stop holiday shop alongside our grocery offering makes the treasure hunt even more valuable."

From Gap who saw a 1% comp gain but good margin improvement which is why the stock is jumping pre market:

"We had unseasonably warm weather, which slowed sales as the quarter progressed, even though we started very strong with a back-to-school season. But not only is the kids and baby category more weather sensitive, but value consumers also tend to buy closer to need. So it is also important that we mentioned at the Gap level, we quantified the weather impact to sales at about 1 point, and as soon as the weather cooled, we saw a rebound in sales and feel confident in the go forward."

On their consumer, "We see and saw consistent results across our customer income cohorts in the third quarter. Our lowest income customers remain somewhat flat. And given that they're impacted by the warmer weather with less reason to update wardrobes based on seasonal changes. And on the flip side, we continue to see share gains from our middle and higher income cohorts. Those customers are responding to value, relevance of our assortments, certainly our style authority across our portfolio, but we do see strong responses to our value proposition from higher end consumers. When they're offered the right price and right style and right value equation, customers with income over $100k did grow in the quarter." Old Navy in particular is their value store.

From Shoe Carnival:

"we delivered a strong back-to-school season with comparable store sales growth led by mid to high single digit growth in children's and athletics. In September and October, sales slowed as the two hurricanes disrupted our business and impacted our customers. The weather also remained persistently warm in October, resulting in a boot season that was delayed out of the third quarter."

Today I am getting more aggressive on the short side.

With the S&P cash index +20 handles, its time for a... Ludacris Forecast!

Next short tranche with cash +16 handles.

* Scaling into a larger short as futures rally from early morning lows...

With S&P cash I am reselling  (SPY) / (QQQ)  calls short.

Remember I covered up early this morning when SPoos were -22 handles.

Upside:

-VRPX +73% (announces agreement with US Department of Health and Human Services (HHS) for developmental extension for NES100 towards IND for Acute and Chronic Non-Cancer Pain Alternative)

-MMA +33% (files for Request for Withdrawal of Registration Statement on Form F-1)

-ESTC +25% (earnings, guidance)

-REPL +18% (receives Breakthrough Therapy Designation for RP1 and Submits RP1 Biologics License Application to the FDA under the Accelerated Approval Pathway)

-GAP +17% (earnings, guidance)

-AESI +11% (to replace MLI in S&P SmallCap 600 Index, effective Nov 26th)

-MATW +8.5% (earnings, guidance)

-NTAP +7.2% (earnings, guidance)

-ROST +6.8% (earnings, guidance)

-ORN +3.4% (announces contract awards valued at ~ $111M)

-TPR +3.3% (enters $2.0B accelerated share repurchase program)

-HUMA +2.3% (to present Efficacy and Safety Results from V007 Phase3 AV Access Clinical Trial at the 51st Annual Symposium on Vascular and Endovascular Issues, Techniques and Horizons)

Downside:

-KSCP -35% (prices 1.21M shares at $10/share)

-DXLG -22% (earnings, guidance)

-LGTY -13% (earnings, guidance)

-BTDR -8.9% (files to sell private placement of $360.0M of Convertible Senior Notes due 2029)

-BTAI -8.3% (prices $7M public offering)

-MODD -8.2% (files to sell public offering of common stock of indeterminate amount)

-RDDT -7.7% (reportedly Reddit shareholder Advance Magazine Publishers Inc. is seeking to establish a credit facility using an equity stake in the company)

-ABL -7.0% (prices 12.5M shares at $8.00.shr for gross proceeds ~$100M)

-SATS -3.2% (DIRECTV confirms Termination of Agreement to Acquire EchoStar's Video Distribution Business)

-INTU -2.2% (earnings, guidance)

Larry has more on Treasury issuance:

From Charlie:

The Week in Charts (11/21/24) - Charlie Bilello's Blog

phogan

Morning Dougie! I'm just curious how much business media you consume in a day? For instance, do you have CNBC and Bloomberg on all day? And could you hazard a guess at what percentage you find useful/helpful? Happy Friday

Dougie Kass

bloomberg is on 80% of the time.

i watch cnbc halftime and fast money for giggles - often looking to fade panelists' superficial and consensus recommendations (!).

i do alot of podcasts/interviews that stream on twitter (cannabis/jesse redmond and dales report very valuable)

MRKT call at 1 PM a must for me with adami nathan worth and young (honest and accountable, not normal CNBC BS)

run dont walk to watch hedgeye/keith mccullough at 9-930 for a broader global perspective

* Slugflation (slowing economic growth and prickly inflation) is market unfriendly...

From the lynx-eyed Keith McCullough at Hedgeye:

* Since David Tepper recommended Chinese stocks two months ago on CNBC, the region's share prices have fallen.

* But, more importantly, the business media has a responsibility to follow up.

"You can look at the charts of BABA or whatever Chinese stock you like. The stocks have flatlined, single multiple PEs vs twenty plus on the S&P... I listen carefully what government officials say... they said they will do more and more... last night they blew away expectations for fiscal stimulus...the CHinese are aggressively lowering rates and creating swap facilities to buy stocks... encouraging stock buybacks (not only that they are lending you money to do it... and you can't lose money... China will run and the animal spirits will be ignited." 

- David Tepper, CNBC Interview

What bothers me the most about Fin TV is the lack of accountability and the failure to follow up on investment boners.

Winners are emphasized and losers are too often forgotten.

Case in point, David Tepper's strong plea regarding Chinese stocks two months ago.

Let me start by stating that Tepper (along with Stan Druckenmiller) is probably the best money manager in the modern financial era.

But even those icons don't bat 1,000.

Tepper, the whale and, arguably THE GOAT, made an impassioned case for Chinese equities in late September, 2024 — while the commentators nodded in sympathy.

Let's go to the videotapes:

* I would buy anything Chinese 

* The Bull Case

With much fanfare this "easy trade" was featured on CNBC.

Alibaba  (BABA)  was specifically mentioned by Tepper.

The shares of BABA (the only specific stock mentioned in the interview) have gone from about $110 to $83 (in a virtual straight line!) — while global equities have flourished.

And Chinese stocks, as a whole, have done poorly in the interim interval — with  (FXI)  drifting from about $33 to $29.

Where is the accountability?

And how about the retail investors that blindly followed Tepper's advice?

* We remain short...

A bonafide parabolic mania:

"Don’t debate people in the media when you can debate them in the marketplace."

- Naval Ravikant

Bonus — Here are some great links:

Bitcoin Approaches $100K

Energy Stocks Hit Six Month Highs

Stock Trends Unlocked

Double Top in the Nikkei?

A Textbook Reset in Healthcare?

* Saylor's tricks...

and...

From My Friends at Miller Tabak:

Thursday, November 21, 2024

The Risk of a Recession in 2026 Is Rising

Markets have become far too optimistic about upcoming U.S. economic growth while remaining too concerned about the renewed inflation that it could bring. This week, we detail why we differ from this consensus and instead see growing downside for upcoming GDP growth, especially the rising risk of an economic downturn 1-2 years from now.

We begin by reiterating why there is little risk of the post-covid inflation surge coming back. Last week, we noted that core-PCE inflation, ex-shelter, has averaged just 1.2% over the past six months, showing that housing alone is responsible for inflation measures that remain above 2%. Another reason for optimism is the latest data on inflationary expectations, with the Atlanta Fed’s survey of businesses showing that one year ahead expected inflation is at just 2.2%. We prefer this measure because it directly surveys firms that set prices and because of its recent track record. Figure 1 shows that it started rising months before inflation took off in 2021 and that it peaked five months before y/y core-PCE started its decline in late 2022.

Figure 1: Atlanta Fed Inflation Survey vs. y/y Core-PCE Inflation

With rates still quite restrictive and inflationary expectations low, there remains no basis for a sustained return of recent inflation. We understand, however, that this issue is separate from whether upcoming policy changes could lead to a new and distinct inflation. While trade, immigration, and fiscal policies do pose inflationary risks, these are overstated. Tariffs would lead to an initial inflation spike but would be disinflationary afterwards. Potential tax cuts are partly offset by the risk of disinflationary spending cuts. Furthermore, we are increasingly concerned that, while GDP growth in the next few quarters should be fine, the risk of a slowdown in late 2025 or 2026, independent of policy changes, is rising (more on this below).

Other Developments in Macroeconomics:

1. The yield curve is still not a useful indicator for whether the U.S. will enter a recession, as we have maintained since April 2022. Housing is instead a useful leading economic indicator for where the economy will be in 6-18 months. We are thus growing increasingly concerned about yet another poor housing report with October starts at 1.31 (versus 1.34 million expected) million and permits at 1.42 million (versus 1.44 million expected). These declines are too widespread to be explained by weather and are a continuation of a three year downward trend. The silver lining is that the most recent weakness is easily explicable due to the resurgence in mortgage rates. For now, we are not raising our recession risk from 10% over the next year. This is mostly because the rising risk is still more than a year out. Looking two years ahead, we now put the risk of a recession at 45% if President Trump does enact large tariffs and 25% if he does not.

Figure 2: Housing Starts and Permits Continue to Decline

2. Although we expect the FOMC to lower rates to around 3% in 2026, increasing policy uncertainty and strong recent growth may slow the Fed down. If President Trump enacts large tariffs, we expect rates will not reach neutral until late 2026 absent a downturn (in which case they will fall below 3%). In the meantime, high rates will constrain upcoming growth, especially in housing. We disagree with a recent comment from Fed Governor Michelle Bowman, who has been one of the FOMC most hawkish members: “my estimate of the neutral policy rate is much higher than it was before the pandemic, and therefore we may be closer to a neutral policy stance than we currently think.”

Bowman is basing her view of a higher neutral rate on how well the economy has withstood high interest rates. This is a mistake. The economy held up well not because the neutral rate has risen, but because household balance sheets emerged from the pandemic in excellent shape and because the labor market had a record number of unfilled jobs. Both factors have, however, weakened over the past year and high rates will now be a bigger drag on growth over the next two years. Fortunately, Bowman’s views are, however, not typical on the FOMC. Chicago fed President Austan Goolsbee, a dove, noted that “rates will be a lot lower” in 12-18 months and the latest Summary of Economic Projections puts neutral at 290, matching our view.

3. Escalating tensions surrounding the war in Ukraine are another moderate headwind against growth. We never agreed with the Fed’s claims that the outbreak of war in 2022 was a major contributor to higher core-inflation, although it obviously led to much higher energy prices. We do worry, however, that heightened geopolitical risk can cause a general reduction in the taste for risk, which remains very high. The excess bond premium is our favorite measure of risk aversion, measuring the part of corporate bond spreads that is unrelated to default risk. It shows that risk aversion is at its lowest level since 2021 but is vulnerable to an increase.

From last night:

Good Intuit-ion on Our Part

Intuit (INTU) , our newest investment short from earlier this week, falls another -$40/share after weak sales and profit guidance.

Position: Short INTU (S)

By Doug Kass Nov 21, 2024 4:17 PM EST

Not surprisingly, two days ago INTU shares were recommended on FIN TV.

Shorting more  (TSLA)  at $339.23

I am covering up my short Index position by purchasing  (SPY) / (QQQ)  common (against my short Index calls):

* SPY at $591.14

* QQQ at $502.18

I am now delta adjusted neutral.

I would attribute the early futures weakness to flash PMIs for the Eurozone which indicate that both manufacturing and services in Europe are in contraction.

Euro zone business activity falls sharply in November, survey shows | Reuters