Daily Diary

Doug KassDoug Kass
DATE:

Tuesday’s After-Hours % Movers

Position: None

BY Doug Kass · Oct 6, 2026, 4:40 PM EDT

Tuesday’s Closing Market Stats

Closing Volume

– NYSE volume 5% below its one-month average 

– NASDAQ volume 7% above its one-month average 

– VIX index: down 3.29% to 15.01

Breadth

S&P 500 Sectors

% Movers

Heat Maps

Position: None

BY Doug Kass · Oct 6, 2026, 4:29 PM EDT

Nothing Here!

IWM -0.85%, SPY +0.65% today.

Position: Short SPY (M)

BY Doug Kass · Oct 6, 2026, 3:45 PM EDT

The S&P 2 Index

A little known fact…

Micron (MU) and Nvidia (NVDA) alone will deliver more than 30% of the Q3 S&P EPS growth as the median stock barely grows. 

Position: Short NVDA (VS), SPY (M)

BY Doug Kass · Oct 6, 2026, 3:39 PM EDT

Subscriber Comment of the Day (Part Deux)

henderson

Ed has a free newsletter today and it’s a cold look at the numbers. Glaringly, he talks about the AI labs’ coming debt raises is going to be tricky due to their lack of assets compared to the neoclouds that have valuable servers, racks and GPU’s even if they’re unable to finish the sites or fufill the massive power requirements (dark GPU’s anyone). 

Position: None

BY Doug Kass · Oct 6, 2026, 3:30 PM EDT

Market Structure Concerns

Keith and Jim share my fears about market structure:

Position: None

BY Doug Kass · Oct 6, 2026, 3:16 PM EDT

Is That All There Is to the Circus?

* Yes that is all there is — as diversification is dying

I know what you must be saying to yourselves
“If that’s the way she feels about it, why doesn’t she just end it all?”
Oh, no, not me
I’m not ready for that final disappointment

‘Cause I know, just as well as I’m standing here talking to you
And when that final moment comes, and I’m breathing my last breath
I’ll be saying to myself

“Is that all there is?
Is that all there is?
If that’s all there is, my friends, then let’s keep dancing
Let’s break out the booze and have a ball
If that’s all there is”

– Peggy Lee, Is That All There Is?   Peggy Lee — Is That All There Is? 1969

Why even mention any stock except hyperscalers, semis and memory companies?


Position: None

BY Doug Kass · Oct 6, 2026, 2:36 PM EDT

The Russell Is Not Crowing

* And the market is not broadening…

The Russell Index is a dog with fleas.

Low of the day on the IWM.

Position: None

BY Doug Kass · Oct 6, 2026, 1:26 PM EDT

Late Morning Market Stats and Charts

– NYSE volume 3% below its one-month average; 

– Nasdaq volume 13% above its one-month average; 

– VIX index: down 1.16% do 15.34

Breadth

SOURCE: Barchart

S&P500 Indexes

SOURCE: Barchart

% GAINERS, DECLINERS

SOURCE: TheStreet Pro

Nasdaq 100 and S&P 500 Heat Maps

SOURCE TheFly

BY Doug Kass · Oct 6, 2026, 11:35 AM EDT

Boockvar on Foreign Investors, Central Bank Bailouts

The following is from Peter Boockvar:

‘ECB, SOS!’

A main challenge that the bond markets of France, the US, the UK, Italy and German have is that foreigners are big participants and thus the pool of domestic savings in each country is not enough to absorb all the supply. For France in particular, about half the Oat market is owned by foreigners. For the US, UK German and Italian bond markets it’s about 1/3 of the tradeable market. And we are learning now the hard way that the kindness of foreign investors cannot be taken for granted. The Japanese JGB market in contrast, for those not familiar, is mostly owned by Japanese savers, Japanese institutions and the BoJ. And the trillion $/yen/euro/pound question is always when will Japanese institutions decide to bring more of their investing money home.

The WSJ has an article today titled “France’s appetite for ‘Magic Money’ has turned into a debt bomb…After years of overspending, the country has emerged as one of Europe’s weakest links. Investors are bracing for things to get worse.” That said by them, the contrarian in me tells me this likely marks a short-term top in French yields. I emphasize though, ‘short term.’

This was a quote in the piece from a portfolio advisor at a French asset manager, “France has been this free rider in Europe for years, if not decades. It has gotten away with fiscal murder. It worked as long as people were not noticing. Now people have started to notice.” A recent study from the French finance ministry estimates that “The cost of servicing France’s debt is expected to climb 59% by 2030.”

https://www.wsj.com/world/europe/france-debt-bonds-spending-c7981557?eafs_enabled=false

Another thing that France and others, including the US, got dependent on over the past few decades was getting bailed out by one’s central bank via QE (SOS, Morse code). This is what Marine Le Pen said today, “It’s essential to start a discussion with the ECB so that it intervenes and eases the burden of interest rates.” She not only said this, but stated her commitment to lower the country’s budget deficit to below 4% next year if elected.

Maybe the ECB does at some point and European bonds are rallying today, with French and Italian 10 yr yield each down about 10 bps. But we know that would only be addressing the symptoms, not the budgetary disease.

With respect to the rise in US yields and the AI trade continuing to power on notwithstanding, it seems we’ve entered into this game of chicken between bonds and AI stocks. Who will blink first. By the way, I’m only referring to AI stocks because everything else in the stock market has fallen sharply already. To quantify, just 41% of NYSE stocks closed above its 200 day moving average yesterday vs 64% about two months ago. That’s just off its lowest read since May 2025.

% of NYSE Closing Above its 200 day Moving Avg

For those utilizing the loan markets and where every basis point change in the cost of capital matters a lot (doesn’t matter now for the AI data center buildout), the move in rates is a really big deal, as it should be. Noting another WSJ article today, this one titled “The surge in rates is blowing up commercial real estate deals…Property buyers are demanding sellers renegotiate terms because of higher mortgage rates, signaling broader market distress” is worth the read.

It further said “Investors who agreed to a purchase price earlier this year when financing was cheaper are now demanding price cuts or other concessions before closing.”

https://www.wsj.com/real-estate/commercial-real-estate-interest-rates-22d04b1b?eafs_enabled=false

Moving on.

Similar to the very mixed Chinese economy, the September Hong Kong PMI remained under 50 at 49.2 vs 49.5 in the month before. S&P Global said, “Hong Kong SAR firms continued to face a challenging environment as the third quarter of the year drew to a close, although there were signs of demand stabilization amid success in securing new business overseas.”

BY Doug Kass · Oct 6, 2026, 10:50 AM EDT

Subscriber Comment of the Day

cjsolus

just now

  • Billionaire Ray Dalio warned that the Treasury market is vulnerable to a pullback of demand from China and Japan, two of the US’s largest foreign creditors.
  • Dalio said the US relies on foreign capital for about a third of its debt, and that Japan and China have already been paring their holdings.
  • He also warned that the US faces a potential debt crisis within a certain timeframe, and that some borrowers are already starting to feel the squeeze.

Positions: None.

BY Doug Kass · Oct 6, 2026, 10:34 AM EDT

Shorting Indexes

With S&P cash +57 handles I have moved to medium sized short the indexes:

* SPY $780.29

* QQQ  $761.35

Positions: Short SPY M QQQ M

BY Doug Kass · Oct 6, 2026, 10:25 AM EDT

Fed Speakers, Economics Calendar for Today

 9:05 a.m.: Fed Bank of New York President Williams (Voter) moderates a discussion before the 2026 Governance & Culture Reform Conference organized by the Federal Reserve Bank of New York, NYC (No text); 

10:45 a.m.: Fed Vice Chair for Supervision Bowman (Voter) speaks on “Modernizing Regulation and Supervision” before the 2026 Community Banking Research Conference at the Federal Reserve Bank of St. Louis, MO (Text available. Q&A from moderator. Livestream at https://www.communitybanking.org/);

1:15 p.m.: Fed Bank of Kansas City President Schmid (Non-Voter) speaks on “The Federal Reserve, Monetary Policy, and Rural and Agricultural Development” in fireside chat before the Enid Regional Development Alliance Luncheon, Enid OK (No text. Audience Q&A and livestream expected); 7:00PM: Fed Bank of Dallas President Logan (Voter) moderates a “Global Perspectives” question-and-answer session, Sanantonio, TX (No text. Livestream at dallasfed.org. Audience Q&A expected)

Economic Calendar:

Source: TipRanks

Positions: None.

BY Doug Kass · Oct 6, 2026, 9:19 AM EDT

ETF Action in the A.M.

Source: TheStreet Pro

BY Doug Kass · Oct 6, 2026, 9:13 AM EDT

Premarket Percent Movers

Source: TheStreet Pro

Chart from 8:44 a.m. ET

BY Doug Kass · Oct 6, 2026, 9:05 AM EDT

Upside, Downside Moves in the Morning

Upside

– JAGX +35% (announces a special stock dividend)

– OPCH +21% (reported takeover talks value the transaction at more than $5B including debt)

– APOG +20% (Q2 beat sharply and the FY adjusted EPS and sales outlooks were raised above expectations)

– CEG +9.3% (reports of a potential $1B-plus hyperscaler nuclear-power agreement)

– PENN +6.0%, BYD +2.7% (Deutsche Bank upgrades both to Buy, arguing recent regional-gaming weakness largely reflected calendar effects)

– FRSH +5.2% (set to join the S&P SmallCap 600 before the October 8 open)

– CLF +4.8% (Wells Fargo upgrades to Overweight on underappreciated 2027 earnings upside)

– VST +4.8% (nuclear and data-center power sympathy following reports of another major hyperscaler supply agreement)

– ZS +2.5% (reaffirms FY27 and Q1 revenue and adjusted EPS guidance)

– AMD +1.9% (Citi raises its price target to $800)

Downside

– SAIQ -15%, AMOD -15%, VEEA -13% (give back portions of Monday’s outsized speculative rallies)

– WDC -2.9%, STX -2.6% (storage leaders retreat after sharp recent gains; no clear fresh company-specific catalyst identified)

– PCVX -2.0% ($1B financing combines a $500M equity and pre-funded-warrant offering with $500M of convertible notes following the Phase 3 rally)

BY Doug Kass · Oct 6, 2026, 8:51 AM EDT

It Feels Like Déjà Vu All Over Again

The U.S. stock market has become almost entirely AI-centric.

It has become so much so that traditional factors are being ignored by investors who operate in a casino-like setting of momentum-based trading/investing and speculation. These ignored factors include sticky inflation; interest rates “higher for longer;” foul and narrowing market breadth; inflated traditional valuation metrics (like CAPE Shiller, the Buffett Ratio and multiples to sales, and earnings before interest, taxes, depreciation, and amortization); a paper-thin equity risk premium; signs of a spent up (not pent up) consumer; and wayward foreign (improvisational), fiscal and monetary policies. Meanwhile momentum-based trading/investing and speculation (zero-days to expiration date options with a half life of less than 24 hours) account for nearly 70% of all options trading and a growing body of leveraged exchange-traded funds while worshiping at the alter of AI:

As noted in our “More Tales From Nvidia” series (now with over 250 issues!) we remain skeptical of AI’s circular financing, suspect of AI accounting  and argue against the notion that an adequate return on capital will be realized from the swelling AI capital spending spree:

What follows are some of our more meaningful concerns: 

Foul and Narrowing Market Breadth

But history has shown that  market leadership, despite the conspicuous strength (yesterday, last month,  last year and over the last five years) can be fleeting:

TINA Is Dead

Importantly, stocks now have ample alternatives available in the fixed income market – in both absolute terms (5.3% 10 year Treasury yield) and relative to the meager and three decade low in the S&P dividend yield (of 1.07%):

The rise in interest rates is global and not restricted to our domestic market:

Meanwhile, real interest rates are moving higher:

And credit spreads are rising:

The Consumer Is Spent Up Not Pent Up

Real wages have been declining since the Spring and the savings rate is rapidly moving lower:

Were it not for the rapid growth in AI capital spending the U.S. economy would be barely growing and the expansion of corporate profits would be more subdued:

Bottom Line

In ignoring an abundance of of fundamental and technical headwinds, the U.S. Stock Market, as Warren Buffett wrote in November, 1999, seems to be following “God’s Plan”:

“Once a bull market gets underway and once you reach the point where everybody has made money no matter what system he or she followed, a crowd is attracted into the game that is responding not to interest rates and profits but simply to the fact that it seems a mistake to be out of stocks. In effect, these people superimpose an I-can’t-miss-the-party factor on top of the fundamental factors that drive the market. like Pavlov’s dog, these “investors” learn that when the bell rings — in this case, the one that opens the New York Stock Exchange at 9:30 a.m. — they get fed. Through this daily reinforcement, they become convinced that there is a God and He wants them to get rich.”   

As noted in the Societe Generale reference (in the beginning of this morning’s missive), this was also the condition in 1999 and in 2007… and its happening again.

As most are aware, the header of today’s opening missive is taken from a famous Yogi Berra quote..  Let’s try another Yogism: 

“It gets late early out there.” 

We may be facing something close to peak nonsense.

Positions; Short SPY S NVDA VS

BY Doug Kass · Oct 6, 2026, 7:34 AM EDT

On This Day Sixty Years Ago!

* Not investment related…

Positions: None.

BY Doug Kass · Oct 6, 2026, 7:16 AM EDT

Tweet of the Day

Position: None

BY Doug Kass · Oct 6, 2026, 6:05 AM EDT

Things I Did Yesterday

Here are Monday’s “things:”

* I reshorted the indices: SPY at $771.82 and QQQ at $752.71.

* I added to cannabis longs — MSOS at $4.41, GTBIF at $6.29 and GLAS at $5.28.

* I reshorted NVDA at $237.12. I took a small trading loss on much of this short at $237.49. 

* I reshorted GRNY at $28.46.

Position: Long MSOS common (VL) and calls (S), GTBIF (S), and GLAS (S); Short GRNY (S), NVDA (VS)

BY Doug Kass · Oct 6, 2026, 5:55 AM EDT

Oscillator Update/Premarket Trading

The S&P Short Range Oscillator remains oversold at -4.56% vs. -4.26%.

In early trading (5:05 AM) I added to my index shorts:

* SPY $776.30

* QQQ $757.58

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

BY Doug Kass · Oct 6, 2026, 5:45 AM EDT