Closing Volume

– NYSE volume 11% below its one-month average

– NASDAQ volume 20% below its one-month average 

– VIX index: down 1.17% to 16.85

Breadth

S&P 500 Sectors

% Movers

Nasdaq 100 Heat Map

Closing S&P 500 Heat Map

Position: None

IBM (IBM) has trimmed its outlook.

Position: None

Besides Alphabet (GOOGL), I added to Amazon (AMZN) at $244.90 and Microsoft (MSFT) at $390.30 in the after-hours.

Position: Long GOOGL (S), AMZN (S), MSFT (S)

I added to GOOGL at $332.43

Position: Long GOOGL (S)

Here are today’s things:

* Covered my index shorts very early (4:30 AM) premarket: SPY at $746.05, QQQ at $703.66 and IWM at $295.66

* Shorted GRNY at $37.58

* Added to cannabis: TRLV at $8.67 and MSOX at $2.51

* Shorted more JOET at $45.29

* Sold some PG long at $150.31

Position: Long TRLV (S), MSOX (VS), PG (VS); Short JOET (S), GRNY (L) 

Earnings After the Close Wednesday, July 22, 2026

Earnings Before the Open Thursday, July 23, 2026

Position: None

A Russian-speaking threat actor known as “Trim” has spent the better part of 2026 systematically dismantling the guardrails on publicly available frontier AI models and rebuilding them as offensive tools. What started in March as a knowledge-sharing post on a Russian cybercrime forum detailing how to break Claude Opus into writing malware, had evolved by June into a fully productized, commercially marketed AI-powered penetration testing platform.Trim didn’t need a vulnerability to exploit. He didn’t need to build a novel AI, steal model weights, or compromise a datacenter. He simply picked powerful models off the shelf, figured out how to talk to them in the right way, and turned them into weapons. His story is not just one threat actor’s journey, it is a blueprint that the entire criminal underground is beginning to follow, and in his latest post he shares he is also utilizing a modified system prompt leaked from Fable! (Source: catonetworks.com)

Position: None

Consider the plethora of talking heads in the business media who encouraged the purchase of SpaceX (SPCX) (which is -$5 to $118 and at a new low) at materially higher prices.

And then ask yourself…. “Self, why do I even listen to these imbeciles?”

Position: Short SPCX (S)

Position: None

I am surprised that equities are basically flat on the month considering: 

* The yield on the 10-year US Treasury note started the month of July at about 4.40%. It is now 4.65%.

* The price of crude oil started the month of July at $70/barrel. It is now over $90.

Position: None

Back in our Putnam days, Fidelity created a new money market fund: the Fidelity Daily Income Trust. But this one was different from the others: you could write checks against it.

We all walked down the street and opened a FDIT account. Our checking accounts now paid interest.

A very, very significant chunk of that cash on the sidelines is interest-paying checking accounts. It’s waiting to pay our medical bills, tax bills, etc., etc.

But it definitely ain’t waiting to be put into the stock market.

Wally

Making some sales of Procter & Gamble (PG) (purchased much lower yesterday) at $150.33.

Position: Long PG (S)

Volume

– NYSE volume 10% below its one-month average

– NASDAQ volume 28% below its one-month average 

– VIX index: up 0.82% to 17.20

Breadth

S&P 500 Sectors

% Movers

Nasdaq 100 Heat Map

Position: None

From Peter Boockvar:

Nothing angers a populace more than this/Earnings comments of note/Bond yields, again

Nothing angers a populace like a deterioration in the purchasing power of one’s currency and the coincident inflation running above the growth in one’s wages. A fresh 40 yr low in the value of the yen relative to the US dollar and the action proving yet again that FX intervention never works on a sustainable basis, Bloomberg News is reporting “Bank of Japan officials are open to raising interest rates at a faster pace than the consensus among economists, as the yen’s continued weakness adds to upside inflation risks, according to people familiar with the matter.”

They meet again next week and even though their overnight rate is only at 1%, no hike is expected and the next hike is not anticipated until December. This major foot dragging is why the yen is at a 40 yr low and why the long end of the JGB curve keeps seeing higher yields.

Here is the reason cited on why members of the BoJ are looking to move, “Officials see growing evidence that companies are passing higher costs on to customers more quickly than in the past, reflecting changes in pricing behavior since the outbreak of the Iran conflict. Against that backdrop, the yen’s renewed decline could provide another incentive for firms to raise prices, according to the people.”

One last thing on the yen, as still a major energy importer (they import about 95% of their crude oil needs), a continued rise in oil prices at the same time the yen is weak makes it hugely expensive for them.

As market participants will only believe it when they see it with regards to a quicker pace of rate hikes, the yen is barely rallying on the story. You can see below the intraday move that saw a quick pop but it’s almost back to unchanged on the day.

I’ll keep talking about the yen and JGB’s because it has major global flow implications.

Yen Intraday Move

As shown yesterday in a chart, we have margin debt as a percent of GDP at a record high at 4.5%. We heard Wells Fargo last week highlighting a notable rise in its securities based lending business and this is what Charles Schwab had to say on their earnings call:

“Demand for our secured lending solutions remained strong. Total margin balances ended the quarter at $165.1 billion, including continued growth in long/short related activity.” That’s up 30% from Q1 and it’s double the Q2 2025 level of $83.4 billion. I believe the ‘long/short related activity’ includes the new tax deferral products from the likes of AQR and if the case, some of the margin debt numbers aren’t as worrisome as the headline seems, though still very high.

Also, “Led by new pledged asset line originations, total bank loan balances grew by $67 billion, up 33% from 2Q ‘25 and 16% versus the prior year end.” That’s a similar growth rate that Wells reported.

Trading activity was robust in the quarter and “We believe that the trading engagement you’ve seen is sustainable and it’s supported by broad client participation. We’ve really seen growth in young investors. I think part of that was started with the removal of commissions, which brought more people into the market that had less money. We’ve also seen growth and comfort with options trading as people have become more familiar with that as a way to add income or hedge portfolios. I think there’s been a structural shift in the amount of options trading that we’ll see.”

Credit to my friend Adam Josephson for this chart on the growth rate of Schwab’s margin debt book:

From Capital One:

On their consumer, “So, the US consumer and the overall economy remain resilient, resilient despite the high energy prices and everything. When you pick up the news every day, one would think the world’s falling apart, but actually the consumer continues to perform remarkably well. The unemployment rate in June was lower than in February before the Iran conflict began. Jobless claims remain low. Job creation has rebounded over the past few months. Consumer spending remains strong.”

More, “Now as a result of inflation, real wage growth turned negative in April and May on a y/o/y basis. But it was back in positive territory ever so slightly in June as inflation ticked back down. When we look at bank balances and debt servicing burdens of our customers, these look a bit stronger than a year ago across income levels. And our domestic card business, our credit metrics, continued to improve on a y/o/y basis in the quarter.”

“the strong credit performance we also saw on the auto side. Auto credit metrics are strong as well.”

“we see real strength in the consumer and strength across our business performance in card and in auto. And that’s why while we keep a very wary eye on the economy and international developments, we are leaning in with a lot of positivity into our growth strategies.”

Speaking of auto loans, this was from Ally Financial yesterday and whose stock traded down by 2.4%:

“Consumers remained resilient, and we are encouraged by the credit performance across our portfolio. At the same time, we are mindful of the cumulative headwinds from ongoing inflationary pressures and evolving macro backdrop.”

“Within retail auto, net charge-offs of 157 bps were down 40 bps q/o/q and down 18 bps compared to a year ago, marking a 6th consecutive quarter of y/o/y improvement.”

But, “delinquencies have remained stubbornly high. Clearly, we’re dealing with a consumer that is dealing with affordability. Gas price is also an issue. Overall, I’d say we still see this macro as dynamic and obviously taking a measured posture in response to that.”

“Portfolio performance has been solid year-to-date, but the macro backdrop remains dynamic and while delinquency rates are down y/o/y, they remain a watch item along with used values and flow-to-loss rates.”

MMM had good earnings and its stock jumped 7.3% yesterday as they mostly benefited on the industrial side and not from their consumer products business.

“In an unchanged macro environment, the organic sales growth of 5.4% was driven by successful execution of our commercial excellence initiatives and increasing contribution from new product launches supported by a strong operating tempo.”

Strong performance was seen in “adhesives, abrasives, aerospace, electrical markets, and safety.” More, “Semiconductor, aerospace and data center business segments, comprising approximately 20% of sales, grew double digits.”

“the macro on the industrial side looks pretty good, but there are some headwinds in the marketplace.”

“We continue to see a couple of places with pressure including consumer electronics, auto and auto aftermarket and US consumer spending.”

More on consumer electronics, “The market data indicates a deteriorating production volume of devices, PCs, tablets in the back half of the year, expected to be down high teens.”

From DR Horton on the housing market and whose stock closed at the lowest since May:

“Affordability constraints and cautious consumer sentiment continue to impact new home demand, and we expect sales incentives to remain elevated during the fourth quarter, with incentive levels dependent on demand, mortgage rates and other market conditions.”

“our sales were relatively in line with normal seasonality. They were a little softer post our call in April and still see plenty of buyers out there in our sales offices as we travel and in front of people, it’s just needing to see them be a little more confident in the overall economy and their ability to move forward with a purchase today.”

With respect to weekly mortgage apps, mortgage rates continued to rise, coincident with the increase in bond yields but purchase apps rebounded by 5.5% w/o/w after dropping by 7.3% in the week before. Refi’s were down by 2.4% w/o/w.

From GM and whose stock rallied by 5%:

“The business continues to perform very well. Customer demand in North America remains steady, including for our pickups and SUVs, and pricing is consistent.”

“We also maintained our pricing discipline with incentives as a percentage of MSRP running 1.5 points to 2 points below the industry average, helping to improve total company margin by 1.8 points y/o/y in the first half alone. In addition, fleet sales have been strong, with our best first half in more than five years, including our highest government sales since 2009 and record full size pickup sales driven by strong commercial demand.”

“We continue to expect gross tariff costs of $2.5 billion to $3.5 billion for the full year, which is largely flat y/o/y. Through the first half, we incurred approximately $1.3 billion net of the $500 million in IEEPA benefit recognized in the first quarter.”

“Let’s now turn to the headwinds. We continue to expect commodity inflation, logistics, and higher DRAM costs to be a headwind of $1.5 billion to $2 billion for the full year.”

UK gilt yields are slightly higher as while the headline June CPI at 2.6% was one tenth below the estimate, the core rate of 2.6% was one tenth above with services inflation running at 3.6% y/o/y, also one tenth higher than expected. The 10 yr inflation breakeven in response is up by 1.7 bps to 3.26% which is the highest since mid June but below the one year peak of almost 3.60%.

With energy price now reversing higher, the June inflation stats are old news I’d add.

On the continued bond yield watch, the French 10 yr today, up another 2 bps to 3.98% is at a fresh 17 year high. The German 10 yr yield is one bp from matching a 15 year high.

UK 10 yr Inflation Breakeven

French 10 yr yield

German 10 yr Yield

My good friend Rich Bernstein responded to my “Cash on the Sidelines” post link:

You are 100% right on this one.

There is lots of cash in an absolute sense, but from an asset allocation perspective cash allocations are remarkably low.  Merrill Lynch data from Harnett I think shows the cash allocation at an all-time low.

Positions: None.

From “Meet” Bret Jensen:

Bret Jensen

just now

AI Dreams Dept.

OpenAI and Anthropic have a good probability of never being profitable in the age of much cheaper AI models coming available from China as well as META and GOOG.  The hyperscalers have seen their free cash flow plunge as their capex budgets soar as they build compute capacity.  Over half of which is for OpenAI and Anthropic.  Their debt and equity issuance has spiked as a result and ORCL’s debt just got downgraded earlier this month to one notch above junk status.  Meanwhile, most of the software industry is getting IBM’d.

‘Pegasystems (PEGA) plunged more than 15% during pre-market trading on Wednesday following second quarter 2026 results that missed the mark due to “unprecedented changes in the AI market (that) caused clients to delay their purchasing decisions.”

The only ones that seem to be making the AI Revolution profitable are the semiconductors, which are now at record 20% of overall market cap and trading volume.  At the same time inflation, energy, and interest rates are all moving higher.  What possibly could go wrong?

Positions: None.

Knowledge@Wharton “Why Is Everything Gambling Now?”

Why Is Everything Gambling Now? – Knowledge at Wharton

Positions: None.

Positions: None.

11 a.m.: Treasury buyback announcement (liq support); 

11:30 a.m.: Treasury hosts a $72B17-Week Bill Auction; 

1 p.m.: Treasury hosts a $13B 20-Year Bond Auction; 

2 p.m.: Treasury buyback (liq support); 

3 p.m.: Treasury inv. class auction data

Economic Calendar

Positions: None.

Upside:

-AGPU +19% (signs more than $1.3B in new AI infrastructure contracts)

-KAPA +19% (partners with Bayer to evaluate ENV-105 plus Xofigo in bone-involving mCRPC)

-ARWR +18% (reports Phase 3 data for plozasiran in severe hypertriglyceridemia)

-SMCI +14% (prelim earnings metrics, guidance)

-OTLY +12% (earnings, guidance)

-FTAI +9.2% (awarded $1.5B order by international cloud service provider for Mod-1 mobile gas turbine generator sets)

-TONX +4.8% (highlights infrastructure upgrades)

-FLNC +4.4% (CitiGroup Raised FLNC to Buy from Neutral, price target: $24)

-CRSR +4.3% (ROTH Initiates CRSR with Buy, price target: $15)

-T +4.3% (earnings, guidance)

-SMMT +4.2% (reports updated Phase 3 OS data for ivonescimab in EGFR-mutated advanced non-squamous NSCLC)

-BLFS +2.8% (to be acquired by Repligen for $1.5B)

-WAB +2.5% (earnings, guidance)

-JOBY +2.1% (signs multi-year agreement with Virgin Atlantic for UK air taxi services)

-MNDY +2.1% (initiates restructuring plan affecting ~20% of workforce; raises FY26 op margin guidance)

-CSIQ +2.0% (CitiGroup Raised CSIQ to Neutral from Sell, price target: $18)

-RKLB +2.0% (awarded $266M US Air Force contract)

Downside:

-ADTN -20% (prelim earnings, guidance)

-PEGA -18% (earnings, color)

-CALM -6.6% (earnings, color)

-AIR -6.5% (earnings, guidance)

-GEV -6.4% (earnings, guidance)

-RDDT -6.4% (considers blocking Google from using content for AI)

-TEL -6.2% (earnings, guidance)

-BKU -5.9% (earnings, guidance)

-CLDX -5.4% (reports Phase 2 data for barzolvolimab in prurigo nodularis; Primary and key secondary endpoints not met)

-IONS -5.1% (lower off ARWR Phase 3 data for plozasiran in severe hypertriglyceridemia)

-ALK -3.6% (earnings, guidance)

-CB -3.6% (earnings, color)

-AMD -2.8% (signs major chips and investment agreement with Anthropic; to invest $5B)

Positions: None.

Positions: None.

S&P price and breadth have moved in the opposite direction 52 times in 2026, the same amount during the dot-com boom in 2000:

Position: None

When the legions of perma bulls talk about “cash on the sidelines” as a market catalyst (typically voiced in the later stage of a bull market cycle!), show them this chart (which takes cash and divides by equity market cap):

Position: None

The S&P Short Range Oscillator stands exactly in neutral at 0.0% vs. -0.53%.

Position: None

With S&P futures -23 handles and Nasdaq futures -225 handIes I covered my index shorts for a profit:

* SPY $746.05

* QQQ $703.66

* IWM $295.66

From yesterday:

(An Updated) Things I Did Today

Here are today’s things:

* Shorted SPY at $748.67, QQQ at $709.06 and IWM at $295.97(all very small) 

* In cannabis land, I added to these longs: GTBIF at $7.10, TRLV at $8.79 and VRNO at $5.69  

* Added to PEP long at $134.57

* Shorted GRNY at $27.52 and JOET at $45.28

Position: Long PEP (S), GTBIF (S), TRLV (S), VRNO (S); Short SPY (VS), QQQ (VS), IWM (VS) GRNY (M), JOET (S)

BY Doug Kass · Jul 21, 2026, 2:30 PM EDT

Position: None