After-Hours % Advancers

After-Hours % Decliners

Position: None

Closing Volume

– NYSE volume 9% above its one-month average

– NASDAQ volume 7% above its one-month average

– VIX index: down 0.61% to 17.88

Breadth

S&P 500 Sectors

% Movers

Nasdaq 100 Heat Map

Closing S&P 500 Heat Map

Position: None

I have re-shorted Tesla TSLA at $444.95.

Position: Short TSLA (VS)

Out here in the fields
I fight for my meals
I get my back into my living
I don’t need to fight
To prove I’m right
No I don’t need to be forgiven
No no no no no no no Don’t cry
Don’t raise your eye
It’s only teenage wasteland

– The Who, Baba O’Riley  Teenage Wasteland by The Who

I added to PepsiCo PEP at $149.47 and PG at $142.22 longs this afternoon.

Position: Long PEP (S), PG (S)

I took a small trading profit in PSUS at $42.25

Position: None

* Mama mia, mama mia!

* Carry on, carry on as if nothing really matters… 

Is this the real life? Is this just fantasy?
Caught in a landslide, no escape from reality
Open your eyes, look up to the skies and see
I’m just a poor boy, I need no sympathy
Because I’m easy come, easy go
Little high, little low
Any way the wind blows doesn’t really matter to me, to me

– Queen, Bohemian Rhapsody

Inflation rising and interest rates higher, breadth with a foul odor, equal-weighted S&P underperforming the S&P Index, etc etc:

Sometimes I wish I never shorted at all…

Note: I will be traveling tomorrow!  You will be in the capable hands of Chris Versace.

See you back on Friday morning!!!

I moved up to small sized short the indices:

* SPY $743.72

* QQQ $716.37

Position: Short SPY (S), QQQ (S)

At 1:54 PM:

Breadth

S&P 500 Sector ETFs

Nasdaq 100 Heat Map

S&P Index (SPY) +0.61%.

Equal Weighted S&P Index (RSP) -0.45%.

While the market’s breadth is stinking up the joint:  

Position: Short SPY (VS) 

This is Part 5 of a multi-part discussion of the markets (Read Part 1 here, Part 2 here, Part 3 here and Part 4 here) …

Now, let’s wrap it up…

Bottom Line 

“It is always well to accept your own shortcomings with candor but to regard those of your friends with polite incredulity.”

– Russell Lynes 

As noted in a previous post It’s a Mad, Mad, Mad, Mad Investment World.

Today’s commentary shares my views and tries to attach empirical evidence and observations that support a skeptical market outlook.

I continue to be reminded of Warren Buffett’s quote:

“What the wise do in the beginning, fools do in the end.”

With the same intended message, Barton Biggs was more colorful when he said:

“A bull market is like sex. It feels best just before it ends.”

Citigroup’s CEO Charles Prince — in July 2007, only months before The Great Financial Crisis (and historic market decline) — had a different view (as reported in an interview he had with The Financial Times):

“When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.”

That said, with the S&P 500 making an all-time record in May — and despite my protestations — it is abundantly clear that, for now, neither the markets nor most market participants (human and machine) share my outlier, non-consensus and ursine outlook.

Market participants are still at the bacchanal — while I remain celibate.

Position: None 

This is Part 3 of a multi-part discussion of the markets (Read Part 1 here, Part 2 here and Part 3 here) …

A K-Shaped Economy Has Produced Distortions in Consumer Sentiment and Stock Prices

We are mindful of the gap between Wall Street and Main Street:

As an illustration of the Main Street/Wall Street comparison, here is the stock price chart of Home Depot (HD):

With inflation high and the economy weakening, should equities decline, the weakness in the K-shaped economy could begin to impact the middle and upper-middle classes —adversely impacting aggregate economic growth.  

The Casino Is in Overdrive… And We Refuse to Gamble 

As mentioned, the stock market is now acting less like a church (which respects valuations) and more like a casino.

Last Thursday the market did something it has literally never done before. The S&P traded $2.6 trillion in call options — that is the highest single day call volume in market history:

When traders buy massive amounts of calls the market makers selling those calls are forced to hedge by buying the underlying stocks. That buying pushes prices higher. Higher prices force more hedging. More hedging pushes prices higher again. This is called a gamma squeeze. It works well on the way up. It’s brutal on the way down. 

The entire market is in an unprecedented gamma squeeze. Open interest at all-time high, outstanding delta above $4.2 trillion — an all-time high:

In the context of this speculation, I plan to continue to have some net short exposure. However, given the respect I have for the historical conditions of late speculative cycle markets (they go further than anyone expects!) and the forceful impact of passive strategies and products (driven by algorithms), I will, consistent with my risk appetite, keep my net short exposure low.  

Nonetheless, there will come a time that I will expand my short book.

Stay tuned for Part 5…

This is Part 2 of of a multi-part discussion of the market (read Part 1 here)…

The Equity Risk Premium Is Now at a Discount and the Shiller CAPE Ratio Is Near an All Time High 

The chart below, of the equity risk premium, is probably the most important reason for my ursine market view.  

The equity risk premium is the difference between the S&P earnings yield (the inverse of the P/E ratio) and the risk-free rate of return.

Surprisingly, the equity risk premium has morphed into an equity risk discount — standing at the deepest discount since 2003.  As of Tuesday, the S&P Index’s earnings yield was 90 basis points lower than the risk-free rate of return (using the 10-year yield) — meaning that market participants believe there is more risk in holding bonds than in holding equities!

Here is another chart that has concerned us — the P/E 10 ratio. This ratio measures stock prices against the average of 10 years of inflation-adjusted earnings to smooth out short-term business cycle distortions. Thursday’s reading of 37.9 is +114% above its long-run arithmetic mean, placing into a zone only visited once before in the last 150 years — during the dot-com bubble (when it stood at 44.2). Today’s P/E 10 reading is above the level hit in 1929:

The P/E 10 chart above is a derivative of the Shiller CAPE Ratio shown below (which I have presented to you often over the last 24 months). Shiller CAPE now stands at 42.05, a whisker away from the dot-com bubble high of 44.0.

It would take a 60% fall in stocks to reach the historical mean of 17:

Over the last century, every time the equity risk premium narrows considerably (as it currently has (in the extreme) transitioned into an equity risk discount) and the P/E 10 ratio moves as far as it is today from its arithmetic mean — a large decline and mean reversion in investment returns occur.  

Stay tuned for Part 3…

I have covered my index shorts from early this morning for a quick profit:

* SPY $735.68

* QQQ $705.01

Morning Index Shorts

Dougie Kass

Back shorting in the premarket 739AM

SPY $739.75 QQQ $711.85

Position: Short SPY (VS), QQQ (VS) 

BY Doug Kass · May 13, 2026, 8:38 AM EDT 

Position: None

From Peter Boockvar:

A source of funds/rents, shipping, and the consumer

Global sovereign bond yields are a definite focus but I do want to add another influence in addition to inflation worries, along with concerns with excessive country debts and deficits. That being, sovereign bonds in markets that foreigners own a big piece have been a source of funds as countries bring some money home to manage the energy price/volume shock some are experiencing.

Foreigners own about 30% of the US Treasury market. According to Gemini, foreigners own 77% of the German bund market and about 50% outside the Euro area. Foreigners own about 50% of the French oat’s market. Of the UK gilt market, overseas investors held about 30%. It’s really only the Japanese JGB market that foreigners hold little but bond yields are rising anyway as the long end of their yield curve has taken over monetary policy from the BoJ. The 10 yr JGB by the way closed overnight at a fresh 29 year high, up another 3 bps to 2.59%. And with the Japanese the largest owner of US Treasuries, there is a JGB yield level where that money is going to come back home to the JGB market.

10 yr JGB Yield

We know rents/housing is the biggest component of CPI and I’ve been arguing that any moderation in new rent growth we’re currently experiencing, mostly in overbuilt sunbelt states, is only temporary as there is a sharp reduction in the pace of new supply that will start to show up in higher rents by the end of 2026 and into 2027.

I was at the Sohn Conference yesterday in NYC and heard one presenter pitch Camden Property Trust, a stock we own. It was Leslie Sturgeon from Maynard Capital Management and a key part of her bull case was her 2027 new lease growth estimate of 7% vs the Street which is currently at 1%. Her renewal lease growth rate forecast of 4% is in line with the Street and the combination brings a blended rate of growth of 5% vs the Street at 2%. If she’s right, and I believe she will be, the inflation story will continue on next year.

After hearing from Maersk last week, Hapag Lloyd reported today and said this of note on their earnings call:

With respect to the Middle East, “I think the thing which is a little bit special about that is while the conflict itself is geographically quite isolated and as such does not impact global flows all that much, the effect it has on costs, of course, have a global effect because with the surge of energy prices, we have seen significantly higher costs hitting us. I think if we look at what we have today, then we definitely look at $50, $60 million extra costs every week.”

“Of course, we try to pass that on, similar to when you go to the petrol station and you also have to a higher fuel price, but clearly that puts pressure on our business. As far as the militia is concerned, we still have a number of ships stuck there and we cannot go in and out of the Strait at this moment in time.”

Under Armour got roughed up yesterday, a stock we still own but still like believing in the turnaround that’s happening under the surface. A few things of note from them:

“as we look ahead to fiscal ‘27, we do expect to stabilize with revenue down slightly. That outlook reflects both continued consumer uncertainty and the deliberate choices we’re making to reshape the business. We are prioritizing revenue quality over volume, strengthening the foundation and positioning the company to return to growth with stronger profitability and a more consistent brand expression.”

North America sales were down but “In EMEA, the business remains solid and continues to serve as a stable anchor for the brand.” Sales are rising too in APAC with a particular focus on China.

They got hit hard from tariffs but are expecting some refunds. “This is a brand that has been navigating tariffs, softer consumer demand and supply chain disruption” in the Middle East.

Positions: None.

Upside:

-EOSE +22% (earnings, guidance; forms Frontier Power USA with Cerberus and files mixed shelf of indeterminate amount)

-VNET +17% (signs share purchase agreement with PJ Millennium)

-TSEM +15% (earnings, guidance)

-WOLF +15% (hearing Citrini Research makes constructive comments)

-NBIS +14% (earnings, guidance; announces new second owned gigawatt-scale site in the US)

-ELAB +9.7% (acquires A&B Aerospace for $4.5M cash and debt-free basis)

-MU +5.4% (momentum)

-CMPS +5.1% (earnings, color)

-BOBS +4.1% (CEO buys shares)

-SATS +4.1% (FCC approves Echostar $40B sale of Wireless spectrum to SpaceX and AT&T)

-CRWV +3.8% (price targets raised at Citi; higher in sympathy with Nebius)

-INTC +3.0% (momentum)

-SNDK +2.7% (S&P raises rating one notch to BB+ from BB; Outlook Positive)

-UMAC +2.7% (ROTH Initiates UMAC with Buy, price target: $25)

-ST +2.6% (Truist Raised ST to Buy from Hold, price target: $58)

-NVDA +2.0% (momentum)

Downside:

-WIX -22% (earnings, guidance)

-RCAT -14% (prices upsized ~23.9M shares at $9.40/share for gross proceeds worth ~$225.0M)

-DT -13% (earnings, guidance)

-KRMN -9.6% (earnings, guidance)

-WRD -7.3% (earnings, color)

-BIRK -5.7% (earnings, guidance)

-GTM -2.2% (Mizuho Securities Cuts GTM to Underperform from Neutral, price target: $3)

-BABA -2.1% (earnings, color)

Position: None

Most Active Premarket ETFs as of 7:54 AM:

Position: None

Dougie Kass

Back shorting in the premarket 739AM

SPY $739.75 QQQ $711.85

Position: Short SPY (VS), QQQ (VS) 

% Movers at 8:19 AM:

Position: None

TREASURY AUCTIONS:

11:30AM: Treasury hosts a $69B 17-Week Bill Auction

1:00PM: Treasury hosts a $25B 30-Year Bond Auction

2:00PM: Treasury buyback (liq support)

FED SPEAKERS:

11:30AM: Fed Bank of Boston President Collins (Non-Voter) delivers remarks and participates in fireside chat before the Boston Economic Club, Boston, MA (No media Q&A. Livestream at bostonfed.org)

1:15PM: Fed Bank of Minneapolis President Kashkari (Voter) participates in moderated discussion hosted by the St. Paul Area Chamber, St. Paul, MN. (Audience Q&A expected. No media Q&A. No prepared/embargoed text. Livestream at minneapolisfed.org/live);

7:00PM: Fed Bank of Dallas President Logan (Voter) participates in moderated conversation on the energy sector before a “Global Perspectives” event hosted by the Federal Reserve Bank of Dallas and the Dallas Citizens Council, Dallas, TX (Livestream available)

ECONOMIC CALENDAR

Position: None

Most Active Premarket ETFs as of 7:54 AM:

Position: None

The S&P Short Range Oscillator is only slightly overbought at 0.74% vs. 1.101%.

Position: None