After-Hours % Advancers

After-Hours % Decliners

Closing Volume

- NYSE volume 7% below its one-month average

- NASDAQ volume 20% below its one-month average

- VIX index: down 1.17% to 17.81

Breadth

S&P 500 Sectors

% Movers

Nasdaq 100 Heat Map

Closing S&P 500 Heat Map

Here are today's things:

* I took in my index shorts:

(SPY)  $711.02 

(QQQ)  $656.68

*I re-established -ndex shorts:

SPY $711.60

QQQ $658.15

* I covered my tech trading short rentals:  (MU)  $507.88,  (AMD)  $317.97 and  (INTC)  $81.84

* I covered my  (TSLA)  short at $375.78.

Position: Short SPY (VS), QQQ (VS) 

Earnings Calendar After-Hours Tuesday

Earnings Calendar Pre-Open Wednesday

With S&P cash -34 handles, I am back shorting the indices:

*  (SPY)  $711.60

*  (QQQ)  $658.15

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

I'm back in the saddle.

At 1:49 PM:

From Peter Boockvar:

Quick review of home prices, consumer confidence and regional manufacturing

The pace of home price gains in February continued to slow, rising just .7% y/o/y, something that I continue to say should be welcomed in terms of inviting more first time buyers into the market from an affordability perspective which would increase the pace of transactions and mobility.

The softest markets are where they were the hottest in the past few years as more supply has come online. Examples include Denver, Tampa, Dallas, Phoenix and Las Vegas. The best markets are still supply constrained such as New York, Chicago, Cleveland and Minneapolis. S&P Global said “Leadership remains concentrated in Midwest and Northeast markets.”

S&P Global said “More than half of major US metropolitan markets posted y/o/y price declines in February, signaling that the housing slowdown has broadened well beyond its Sun Belt origins.”

Home Price Change y/o/y

The April Consumer Confidence index from the Conference Board was little changed m/o/m at 92.8 vs 92.2 in March and the best of the year, though still well below the February 2020 print of 132.6 and more just bouncing along a multi year bottom. One yr inflation expectations were 6.1% vs 6.2% in March and 5.5% in February.

The answers to the labor market questions were mixed. Those that said jobs were Plentiful were little changed but there was a 1.5 pt drop in those saying jobs were Hard to Get. Also, there was a .7 pt rise in those expecting ‘more jobs’ over the coming six months after dropping by .6 pts last month. Income expectations slipped but after rising in March.

Spending intentions improved for both vehicles and homes and were mixed for major appliances. With respect to other big ticket items though, the Conference Board said “Consumers’ plans to buy big-ticket items over the next six months continued to shift from “yes” and “maybe” in February, to “no” in April. Nonetheless, the proportion saying “yes” remained well above the other responses. Used cars, furniture, TVs, and smartphones remained the most popular items within their respective categories for future purchases. Among pricy items, furniture remains the top expected purchase.”

With respect to the purchase of travel within the services sector, “Overall expected spending on airfare/trains for personal travel fell again in April.”

A few other noted things from the Conference Board commentary, “Consumers’ write-in responses on factors affecting the economy continued to skew towards pessimism in April. Comments about prices, oil and gas, and war increased in frequency compared to March—a likely signal of consumers’ underlying worries about how the war in the Middle East will impact their pockets.”

“A two-week ceasefire and a rebound in stock market indices within the survey-sample period (April 1–22) likely helped ease concerns about financial indicators somewhat in April after spiking in March. Still, consumers remained warry.”

Nothing market moving in response to the data but we know the very uneven financial situation and mood of the US consumer, especially after the jump in energy prices and it’s always better to see how they actually spend rather than how they feel.

Consumer Confidence

One yr Inflation Expectations

Lastly today, the April Richmond manufacturing index rose to +3 from zero. As seen with other manufacturing surveys, new orders continued to improve and I’ll argue again that it seems to be the front loading of ordering post war ahead of any price increases/supply issues.

Capital spending plans remained negative. With respect to cost inflation and pass through, prices paid rose after slipping in March while those received dipped after rising last month. Of note, six month expectations for prices paid rose to the highest since last September and went to a 3 month high for prices received.

Bottom line, global manufacturing is recovering but seems to be more due to inventory restocking rather than due to a natural improvement in end demand.

Richmond Mfr’g index

* Pre eye surgery chatter..

Yesterday a child came out to wonder
Caught a dragonfly inside a jar
Fearful when the sky was full of thunder
And tearful at the falling of a star
And the seasons they go round and round
And the painted ponies go up and down
We're captive on the carousel of time
We can't return we can only look behind
From where we came
And go round and round and round
In the circle game

- Joni Mitchell, The Circle Game 

I have been thinking about all the circular deals in AI and "Ponzi- like" characteristic where everything continuing depends first on pump priming cash flows or funding (all the private deals funding the AI data centers and the core AI creator companies — the promised payoff lure being the 10x plus multiples private unicorns can payout if successful) being the pump priming, followed by the sort of fake returns — lend me the money and I'll buy your chips/I'll buy your computing power — that allow and support a next round of incoming $$ financing... "I'll buy more of those chips and computing power and btw...the next round of buying into MY unicorn will be at a higher price, and so on..."

"Ponzis" breakdown when there is suddenly no further incoming money.

OpenAI's admission that their customer count/usage and revenues are falling short of projections — which if not met are going to make it harder to keep raising the funding round valuations — looks to me a lot like the money may be about to stop coming in.

To my knowledge, there have been no slow, orderly unwinds of any major "Ponzi-like" schemes.

Position: None

Breadth

S&P 500 Sectors

% Movers

Nasdaq 100 Heat Map

From Peter Boockvar:

Watch Dec crude/Tech dependency/Tariffs still here/BoJ split/Pizza

I know most of us wake up and look at the front month crude oil contract and today see it’s back to about $100 due to the unhappiness with the latest Iranian proposal. But, I encourage you to also look further out on the curve because the December contract in particular at around $80 is at a new high post war.

December WTI Crude Oil Contract

FactSet always has great stats on the earnings picture and I post three of their charts below to highlight the dependency the strong earnings story in the aggregate is dependent on the AI buildout, particularly from Nvidia, Micron and other semis.

Last year I referred to OpenAI as too big to fail. Not from the perspective of a government backstop but because their tentacles have reached so wide in the data center ecosystem buildout. So, it will be real interesting on how this plays out from here, wsj.com/

The April Dallas manufacturing index seen yesterday was -2.3 vs -.2 in March so call it around the flat line. Lost in the news with the focus now on the Strait closure and war but the issue with tariffs hasn’t gone away and talk about them was littered throughout the industry comments seen below. I bolded the word each time it was mentioned.

Chemical manufacturing

• It is a very dynamic time. I agree with the approach and need to bring manufacturing back to the U.S. so that we have the internal capability for national security interests. The ability to forecast and to understand consumer confidence drivers to the basic materials, construction, automotive markets, etc., are the most difficult we have seen since the COVID era.
• Tariff uncertainty and actual impact is likely to be significant for the business and ongoing projects.

Computer and electronic product manufacturing

• This has been a crazy few weeks in the news. We export about 20 percent of our production. Our largest customers are in the United Kingdom and France, but we also export to China and many other countries. We import a few raw materials, but this isn’t directly significant. The current tariff negotiations are having an effect in several ways. We accelerated one order to China to beat the reciprocal tariffs, and we expect our China sales to go to zero until the tariff situation changes. We are seeing some European customers stock up on inventory in anticipation of future tariffs. Most of our U.S. customers continue to buy, but we have seen a 25 percent drop in incoming RFQs [requests for quotations] in April compared with the average of previous months. Assuming this continues, we expect to see roughly a 10–15 percent decline in sales in May. We believe that this is largely due to uncertainty in our customer base driven by the tariff situation and potential knock-on effects to the general economy.
• There is really no way to predict anything accurately six months out or even six weeks out now for our industry due to the tariff and trade uncertainty. Carve-outs for large electronics businesses (cellphones and laptops) leaves small business burdened to deal with tariffs on our own, which are likely to cause delays, cancellations and early product obsolescence on existing products and orders. We have already had to turn around and refuse shipments because customers cannot afford the tariffs, delaying our ability to build, which will eventually lead to job losses. If this continues for any length of time, many small companies are likely to be significantly hurt or even gone. If we want to bring manufacturing back to the U.S., can we try not to kill the companies that can actually help do that before we get the chance? Maybe we can think about using a scalpel rather than a sledgehammer? The risk we face now is far greater and less understood than what we saw during the COVID shutdown. Consumers and businesses will limit investment and orders until there is some sense of stability, and we have already experienced this with smaller orders and delayed orders. It’s chaos right now.
• Please lower interest rates. We need it in order to boost the economy due to the uncertainty and tariffs.
• President Trump, tariffs and maximum business uncertainty [are issues affecting our business]. [We see a] probable recession soon.

Fabricated metal product manufacturing

• There is no stability in business, so it is difficult to plan. Thus, we are not making commitments for future growth, not knowing if or when future growth will exist.
• Our backlog is not building. Bid activity is moderate, but projects are not being released/started.
• There was a temporary supply hiccup in April on a key component; we expect it to resolve in the next month or two.

Food manufacturing

• The current economic environment is confusing. President Trump keeps things in turmoil, and we do not know what he will do next. So far, import prices for raw materials have not increased. Food service and retail sales have maintained their growth projections.
• Chaos at the federal level, tariffs and resulting raw ingredient costs, decimation of partner relationships due to canceled contracts “for convenience” along with stagflation concerns [are issues affecting our business]. DOGE [Department of Government Efficiency] is needed. The DOGE without a follow-up plan does nothing for the domestic tranquility needed (stable arena for business to function within).
• Tariffs and tariff uncertainty are wreaking havoc on our supply lines and capital spending plans.
• It is unknown what effect the tariffs are going to have on the general economy. Luckily, we do not import or export many items (except for spices), so we are not directly impacted by the contemplated tariffs.
• We are still worried about labor price increases due to the trade war and immigration.

Machinery manufacturing

• Nothing is easy. Forecasting is extremely challenging in this time of uncertainty. Committing to growth initiatives is anxiety-riddled. Helping our employees keep beans on their table and a roof over their heads is harder. We believe the direction the current administration is leading our country is on target, but the pain to get there may be longer and more intense than originally anticipated.
• We are experiencing a strong month and, hopefully, this trend will continue.
• Due to tariffs, we do not know what to expect.

Miscellaneous manufacturing

• There is too much uncertainty all over for any increases [in business] soon.
• Tariffs and the general market have made decisions challenging. Items we are only able to source internationally are making our daily business decisions difficult. Raw materials have increased, and there is not an easy way to pass those increases to our customers.
• Tariffs are causing uncertainty and a reduction in demand for our products. We buy all raw materials domestically but are still experiencing adverse business climate due to reduction in demand.
• Tariffs may drive us out of business.
• Tariffs [are an issue affecting our business].

Nonmetallic mineral product manufacturing

• Tariffs. Tariffs. Tariffs. There was a better way to do this.

Paper manufacturing

• We have seen continued slow order entry now for four months.

Plastics and rubber products manufacturing

• Tariffs are impacting factory input costs significantly.

Primary metal manufacturing

• Capital expenditures are focused on adding new product offerings.
• The aluminum industry is currently in a holding pattern, awaiting final decisions on tariffs. If the Section 232 tariffs on Mexico and Canada remain in place, it would help level the playing field and remove their pricing advantage when selling into the U.S. However, if Mexico and Canada continue to receive exemptions—as they have since the initial implementation of Section 232 during the first Trump administration—it will likely lead to further job losses in our segment of the aluminum industry. Our company, for example, has put a multimillion-dollar project on hold until we receive clear direction on this issue. China is now building aluminum plants in Mexico to avoid tariffs if they ship from China. Our company is a proponent of tariffs to combat dumping and subsidies other countries are doing for shipments into the U.S.

Printing and related support activities

• The tariff issue is a mess, and we are now starting to see vendors passing along increases, which we will have to in turn pass along to our customers. Because of this, we are very concerned about general business activity for the next six to nine months or until these trade agreements get worked out.
• The administration’s tariff policy is insanity. It is creating havoc in the manufacturing business. (My underline)

Textile product mills

• Sales are down, and uncertainty is very high. We import raw materials and finished goods and are very nervous about tariff impacts (especially China). We will likely need to increase prices, which will likely hurt demand/sales. We are expecting to get hit on both the supply and demand side. There is a lot of uncertainty.

Transportation equipment manufacturing

• We are unsure of the tariff impact.
• There is too much uncertainty, including a possible recession. Interest rates are too high. The Federal Reserve always seems to be late for their own party.

The Bank of Japan left rates unchanged overnight as expected but interestingly three members wanted to raise rates. Here were some of things Governor Ueda said of note:

“If I were to sum up the main reason for stand-pat in one sentence, it’s that the certainty of meeting our baseline outlook has declined quite significantly this time.”

“If inflationary risks could materialize or if they heighten significantly, we could raise interest rates on condition that downside economic risks or the risk of a sharp economic worsening are limited.”

“Our decision today is based on the view that central banks should look through temporary supply shock driven inflation. But if such shock brings about second round effects on underlying inflation, we must raise interest rates.”

“Prices may rise mainly for energy and energy related goods, but it’s not clear whether that could affect underlying inflation. As for supply chain disruptions, that will likely affect the economy in a fairly short period of time.”

“We don’t see a strong chance of Japan experiencing a repeat of the 1970’s style oil shock. But one thing in common is that our policy interest rate is below levels deemed neutral to the economy. We will take that into account in guiding policy.”

The policy split now puts the June meeting in focus for a possible hike. The 2 yr JGB yield was up by 1.3 bps to 1.38% but just back to where it was a few weeks ago. The 10 yr yield was unchanged at its 29 yr high of 2.48%. With the oil price rise, European yields are higher again as are US Treasury yields. The UK 10 yr gilt yield in particular is back to 5%, the highest since 2008. The yen is slightly weaker, just under 160 as the committee continues to drag their feet when it comes to normalizing rates. Of course though it’s been about 30 yrs since rates were normal in Japan.

10 yr Gilt Yield

To some earnings calls.

From Domino’s Pizza and whose stock fell about 9% yesterday:

“While I was pleased with our start to the year, performance for the rest of the quarter did not meet our expectations, resulting in same store sales of .9%.”

“Looking back at Q1, pressure intensified throughout the quarter, in particular in March, because of growing consumer uncertainty. Consumer sentiment hit Covid level lows, and ongoing inflation continued to impact purchase decisions. Weather also affected our business in the quarter, including the beginning of our carryout special boost week. Competition within the QSR pizza space also increased in Q1, as the national pizza players offered deals comparable, if not identical to the renowned value Domino’s has made famous.”

Rambus (semi company) and Celestica (contract manufacturer), two tech stocks are down sharply pre market and I await their earnings calls.

Nucor is up pre-market after better than expected top and bottom line numbers. From their earnings release:

“All three of our operating segments reported sequential earnings growth, driven by strong demand across key end markets, growing contributions from recent capital investments, and federal trade policies that continue to reduce the flood of unfairly traded imports into the United States.”

Positions: None.

I have retina surgery between 1:15 and 3 p.m. today.

Radio and vision silence during that time frame!

Positions: None 

Following covers (for good profits):

*  (MU)  $507.88
*  (AMD)  $317.97
*  (INTC)  $81.84

I plan to reshort on strength.

Upside:

-BBBY +28% (earnings, guidance)

-OMCL +22% (earnings, guidance)

-AXGN +12% (earnings, guidance)

-RVMD +8.7% (momentum following allegations that Erasca ERAS-0015 infringes on RVMD patent; TD Cowen reiterates RVMD with Buy)

-LC +8.6% (earnings, guidance)

-LGIH +8.6% (earnings, guidance)

-SANM +8.1% (earnings, guidance)

-SEI +7.3% (earnings, guidance)

-DT +5.1% (Activist Starboard Value takes stake in Dynatrace)

-CRDL +5.0% (expands U.S. MAVERIC Phase 3 Trial Network; Target recruitment anticipated by end of 2Q26, with potential to extend into Q3 to accommodate patient enrollment from the additional clinical sites)

-UHS +4.3% (earnings, guidance)

-KO +3.1% (earnings, guidance)

-SHW +2.0% (earnings, guidance)

Downside:

-VISN -50% (downside momentum)

-ERAS -42% (Revolution Medicines alleges Erasca ERAS-0015 infringes patent, misuses trade secrets)

-GLND -38% (files to sell $70M public offering with warrants)

-RMBS -19% (earnings, guidance)

-CLS -15% (earnings, guidance)

-GLW -12% (earnings, guidance)

-SPOT -10% (earnings, guidance)

-ARM -7.7% (downside momentum)

-ORCL -7.3% (broad AI weakness following report of OpenAI missing targets)

-CRWV -7.1% (broad AI weakness following report of OpenAI missing targets)

-LITE -5.4% (lower in sympathy with GLW)

-AAOI -5.3% (lower in sympathy with GLW)

-UPS -5.0% (earnings, guidance)

-GLXY -4.4% (earnings)

Positions: None.

Positions: None

With S&P futures -40 handles and Nasdaq futures -302 handles, I have taken in my index shorts:

*  (SPY)  $711.02

*  (QQQ)  $656.88

I plan to re-short strength.

Position: None

Wolf Street howls about the implosion of real estate brokerage equities.

The S&P Short Range Oscillator remains (less) overbought at 3.85% vs. 4.89%.

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