After-Hours % Advancers

After-Hours % Decliners

Position: None

Closing Volume

– NYSE volume 3% above its one-month average  

– NASDAQ volume 5% above its one-month average;

– VIX index: down 4.43% to 15.11

Breadth

S&P 500 Sectors

% Movers

Nasdaq 100 Heat Map

Closing S&P 500 Heat Map

Position: None

I added to GRNY and JOET shorts today.

Position: Short GRNY (S), JOET (S)

Wolf Street howls about AI’s cash burn. 

One Thing Is Clear about the AI Boom: It’s Burning Huge Amounts of Cash, and Alphabet Needs More | Wolf Street

TLT at day’s low (bond yields at day’s high).

At some point the interest-rate rise will matter to equities — hopefully in my lifetime!

Position: None

Position: None

Two definitions of irony:

* Softbank needs to use their stock in OpenAI to fund their next investment into OpenAI:  

SoftBank Uses OpenAI Stake to Borrow $10 Billion

Google (GOOGL), who actually in theory has money needs to sell more debt to fund their investments into AI, and credit spreads blow out further.

* Microsoft (MSFT) is telling their employees to use less AI because it is too expensive, when they are trying to shove it down everyone’s throat and disclose that most of their growth is coming from OpenAI, whose big investor needs to use their stock to fund its next investment into OpenAI.  I cannot keep up: 

Microsoft tells engineers to curb their token-burning enthusiasm

Meanwhile Google shocks with another $25 billion bond offering — and hyperscaler credit spreads blow out.  

Hyperscaler Bond Spreads Blow Out After Google Shocks With Another $

Position: None

*  And thank you (Falettinme Be Mice Elf Agin)

*  Given the superior reward vs. risk that I see, I have substantially increased my cannabis holdings over the last month...

Beat is getting stronger

Music gettin’ longer, too

Music is a flashin’ me

I want to I want to I want to take you higher

-Sly and The Family Stone, I Want to Take You Higher

“Be greedy when others are fearful.”

– Warren Buffett

The legions of retail traders and investors in cannabis over the last half a decade (aka “the walking dead“) have gotten absolutely decimated in the space.   

Resultingly (and in the absence of institutional involvement in the sector), the demand/supply equation is problematic as the illiquid trading conditions are suboptimal — having left retail unable to sustain any price cannabis stability and appreciation.

Of course, in a market that is momentum-oriented (“buyers live higher, sellers live lower”), the continued selling in cannabis begets more selling.  

It is my view that this has created a unique longer-term investing opportunity for the reasons mentioned in the body of this post — with upside reward at roughly 4x downside risk.

Most importantly, it is likely that the rescheduling of adult recreational use of cannabis will be implemented in the relatively near term. 

Almost as important will be the possibility of some retroactive relief (probably back to 2023 when HHS granted relief for medical marijuana usage) from the accumulated and large tax obligations (UTP or Uncertain Tax Position) imposed by Section 280E in the IRS Code:

UTP stands for Uncertain Tax Position. It refers to tax deductions or credits—frequently related to Internal Revenue Code Section 280E, which historically barred cannabis businesses from claiming ordinary business expenses—that multi-state operators carry as financial balance-sheet liabilities while disputing or awaiting federal reform.

– AI Overview 

As noted previously, I am growing much more optimistic about the prospects for share-price appreciation in the cannabis complex. Here are some of the reasons for my enthusiasm:

* I am extremely confident that rescheduling of both medical and adult recreational use will pass in the next few months. The consensus view is much more skeptical (measured by Polymarket) providing investors with an “overlay.” (In betting terms it’s a selection where the offered odds are higher than the true probability. In the case of cannabis stocks they are discounting a too low probability of rescheduling than I expect) — ergo, I am getting a better payout! (As mentioned above, some retrospective relief of IRS Code 280E will likely follow, serving to reduce current UTP (tax debt obligations) and increase the intrinsic value of cannabis companies).

* Reverse splits for many companies have set up for uplistings on the senior U.S. exchanges — to be implemented in the near term. This improves the possibility of institutional involvement.

* More relaxed custodian rules will also likely set the stage for active institutional interest in the group. 

* Speaking of institutional ownership, I like getting ahead of it.

* The recent debt refinancings have eliminated the frightening debt maturity cliff that some feared. Both interest rates and maturities are favorable for the group.

* Based on this week’s EPS releases, industry fundamentals (volumes and pricing) have stabilized.

* Given the above, expectations are extraordinarily low.

* Massive absolute and relative underperformance over the last five years has created a long runway for appreciation.

* The equity capitalization of the five largest cannabis players only totals about $5.5 billion!

* I expect industry consolidation over the balance of the year and it is not out of the realm of possibility that tobacco or consumer packaged goods companies try to get a toehold in the cannabis sector through the takeover of several of the top-five individual cannabis companies.

Again, for emphasis — this is a speculative space so comply with your risk disciplines and appetite.

As for me, I relish the weakness as an opportunity based on my previous comments. 

Hall of Fame baseball player “Wee” Willie Keeler (who weighed only 140 lbs and stood only 5’4″) famously explained his high batting average by saying he aimed for open spaces on the baseball field where fielders were not standing:

“Keep your eye clear and hit ’em where they ain’t.“

In cannabis, we are hitting ’em where they ain’t. 

Finally, thank you (Falettinme Be Mice Elf Agin)!

Position: Long MSOS (VVL), MSOX (S), VRNO (S), TSNDF (VS), GLASF (S), GTBIF (S), TRLV (S), CURLF (VS)

– NYSE volume 8% above its one-month average; 

– Nasdaq volume18% above its one-month average; 

– VIX index: down 2.53% to 15.41

Positions: None.

Chart from 9:41 a.m. ET

Positions: None.

Added to SPY (SPY) $771.26 and QQQ (QQQ) $718.65 short just now.

Positions: Short SPY M QQQ S

The following is from Peter Boockvar:

Labor market stats

Initial jobless claims remained subdued at 199k vs 198k last week and 6k under the estimate. The 4 week average falls further to just 199k vs 203k in the week before. Continuing claims though ticked up to 1.801mm from 1.777mm but also about 100k ish below what we saw consistently last year.

The story remains the same here with the muted pace of firing’s as measured here and a modest pick up in the pace of hiring relative to last year when mostly small business hiring froze up immediately after ‘Liberation Day’ and which lasted until January this year. We’ve seen a nice rebound since.

Challenger confirmed this with their July survey. “U.S.-based employers announced 33,429 job cuts in July,down 27% from the 45,849 cuts announced in June. It is down 46% from the 62,075 layoff plans announced in the same month last year, and marks the lowest monthly total in two years, according to a report released Thursday from global outplacement and executive coaching firm Challenger, Gray & Christmas.

July’s total is the lowest monthly total since July 2024, when 25,885 cuts were announced.”

Hiring improved too, “Employers announced plans to hire 16,095 workers in July, up 47% from the 10,933 plans announced in June and well above the 3,200 announced in July 2025. It is the highest July total since 2022, when employers announced 25,506 hiring plans.”

Treasury yields are at the highs of the morning as with a ‘stable’ labor market as ZipRecruiter described it, along with the above and ahead of the BLS data tomorrow, the Fed clearly has shifted their lens to the inflation picture.

Positions: None.

If you’re playing a poker game and you look around the table and can’t tell who the sucker is, it’s you.

– Paul Newman

First, look at the picture below: They are going on sale now!  Special offer, get it while it’s hot!

This, of course, is consistent with token prices cratering. Equity prices, seemingly do the opposite, which is contradictory, but does not make much sense. Such is life…

Amazon’s management tells investors how great things are, then Jeff Bezos turns around and files to sell $4 billion of stock. The sellers of stock (almost every insider at every tech company whose stock has ripped) are seemingly much more aware of the underlying fundamentals and valuations than the buyers of stock. 

The incentive structure for executives rewards them in huge form for behaviors that drive their stock prices up over the short term. Once the stock prices go up, they will do anything to keep the shell game going, as evidenced by all of the circular financing, so they can keep selling more stock at elevated prices. That is their incentive structure. If it all blows up, they still come out way ahead. The money from the stock sales stays in the bank, they keep their jobs, fire all the extra people they hired, and exempt themselves from all of the fallout. Quite the deal if you can get it. 

Regarding the sale offer below, is a very interesting analysis/chart which shows the incremental return on capital for the hyperscalers is cratering. In the June-ending quarter, the group increased its last 12 months earnings before interest and taxes 20% year over year.  It took almost a 2-times (38%) increase in deployed capital to achieve that growth. This reminds me of the U.S. economy overall and the amount of incremental dollars of government debt it takes to increase a unit or dollar of GDP!  

One would think that some very hard spending decisions will have to be made soon, because unlike the U.S. government, the spenders are not the world’s reserve currency. This is all prior to token prices cratering (in fact it included the benefit of token maxxing in the June quarter) and irrespective of the fact that an enormous amout of demand is coming from businesses like Open AI which are far from self-sustaining entities. 

If the spigot gets turned off for any of these players… look out below (!):  

Further on the issue of token growth (or lack thereof) and massive price cutting, I would not be surprised if the entire industry turns into something not much different from an electric utility. It seems there should be some sort of intelligent router that lets customers blindly procure tokens, on the basis of good enough to do the job at the best possible price.  All of it, including the models, is a pure commodity. Instead of making a choice and buying from a particular provider, it should just be the best deal available at the moment. Ex-government intervention (who knows I cannot call that), it seems this is the logical outcome for the entire industry. 

It may be one giant undifferentiated commodity — both the compute and the model layers. It should be purchased by the drink, based on the best available price.  It is not challenging for it to evolve this way from a tech perspective either, it is easy to do:

Positions: None.

I added to SPY (SPY) short at  $770.40

Positions: Short SPY M

Upside:

-SITM +28% (earnings, color)

-SOUN +28% (earnings, guidance)

-INSM +26% (earnings, guidance)

-IOVA +22% (earnings, guidance)

-HTZ +17% (earnings, color)

-CAI +16% (earnings, guidance)

-U +16% (earnings, guidance)

-PAYC +15% (earnings, guidance)

-SNOA +11% (earnings, color)

-PH +8.4% (earnings, guidance)

-GCT +5.6% (earnings, guidance)

-VSNT +5.5% (earnings, guidance)

-RXO +5.4% (earnings, guidance)

-ALB +4.6% (earnings, guidance)

-DEO +4.1% (earnings, guidance)

-DASH +3.7% (earnings, guidance)

-FOX +3.7% (earnings, color; raises dividend)

-HWM +3.6% (earnings, guidance)

-MRNA +3.6% (expects the supply of influenza vaccine MFLUSIVA to be available in select retailers in the coming weeks after receiving FDA approval for use in adults 50 years of age and older)

-USFD +3.5% (earnings, guidance)

-VAC +3.3% (earnings, guidance)

-LEU +3.1% (earnings, guidance)

-BDX +2.9% (earnings, guidance)

Downside:

-TDUP -30% (earnings, guidance)

-BLLN -26% (earnings, guidance)

-HUBS -23% (earnings, guidance)

-APP -19% (earnings, guidance)

-ONT -19% (earnings, guidance)

-DDOG -16% (earnings, guidance)

-EPAM -16% (earnings, guidance)

-HONA -16% (earnings, guidance)

-FIG -15% (earnings, guidance)

-CELH -14% (earnings, guidance)

-CLS -14% (prices 9.7M common shares at $310/shr for $3B gross proceeds)

-WDC -14% (earnings, guidance)

-BROS -13% (earnings, guidance)

-FISV -13% (earnings, guidance)

-FSLY -13% (earnings, guidance)

-PTON -13% (earnings, guidance)

-QBTS -12% (earnings, color)

-ROOT -12% (earnings, color)

-RUN -12% (earnings, guidance)

-SNDK -10% (earnings, guidance)

-FOUR -9.6% (color, guidance)

-WRBY -8.9% (earnings, guidance)

-VISN -8.3% (earnings, guidance)

-CF -5.7% (earnings, guidance)

-BMBL -4.9% (earnings, guidance)

-PZZA -4.4% (earnings, guidance)

-OSCR -3.8% (earnings, guidance)

Positions: None.

Positions: None.

Positions: None.

5:30 p.m.  St. Louis Fed’s Alberto Musalem (Non-Voter) speaks on the U.S. economy and monetary policy before the Center for Public Policy Debate (CDPP) (Virtual access available, moderated Q&A expected, text anticipated)

Positions: None.

Position: None

The S&P Short Range Oscillator moved into a greater overbought at 2.12% vs. 1.77%.

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

My 17-year-old dachshund had to go to the emergency room in the middle of the night.

Slow start this morning.

He seems better.

Position: None