That was fun! I hope you all got something out of my posts, even the one about the race cars.

I don’t have as much time these days to watch the market, so I tend to have a longer time horizon. I won’t make you money on an intraday basis, but hopefully, I offer a perspective on the markets that helps with your own analysis.

Have a great weekend, and thank you for being members of TheStreet Pro.

JMesh

The answer is, you don’t have to go anywhere. Our new(ish) Markets tab has Gainers, Losers, and more.

If you’re not familiar with this tab yet, check it out and let me know what you think. More to come in the future!

Sorry! I meant to post this one all day, and got wrapped up in other things.

The question is, once you’ve finished reading this entry, where would be the quickest place for you to see most active stocks and ETF lists, as well as an earnings calendar?

What site would you do it on?

US Indices

S&P Constituent Performance Today

Sector Performers

OK, maybe not the most engaging question, but I’m getting excited to be back in a race car, so bear with me.

First of all, here’s a picture of the car:

It’s a 1977 Crossle Formula Ford, running a 1.5 liter motor out of a British Ford economy car. It’s light on power, but it’s light overall, too. With me in the car, it’s about 1100 pounds. That’s about one-ton lighter than the Porsche.

Now, the Porsche still wins on power-to-weight, with about 312 hp per ton. My little Crossle has about 210 hp per ton. The Porsche will also destroy me on top speed. I’ll top out around 115 mph, while the Porsche will probably get to 140 on the straight and can hit over 190 mph on the German autobahn.

But I’m nearly as fast. I can turn a 1:58 lap time for around a 77 mph average speed, nearly as fast as the Porsche.

The answer is C!

So, let’s bring it back to investing.

The Porsche’s strength is its acceleration. The Crossle’s strength is its cornering speed. Basically, I can brake later and maintain a higher speed through the turn.

If you were to compare the data traces of the two cars, you’d see the Porsche’s swing up and down more violently than the Crossle’s.

It’s kind of like the volatility of a portfolio. You want your portfolio to have fewer ups and downs and just get on with making money. The lesson is that risk matters. You can build a portfolio that is lower risk and offers similar returns to one that is higher risk; plus, you’re just more likely to meet your goals with the lower volatility one.

Tomorrow, I’m going to be participating in a vintage race at our local track. I won’t tell you the car (yet), but it’s got a 1.5 liter 4-cylinder engine. It will be on racing tires (slicks), however.

This is the prior generation of Porsche 911 GT3 RS. It’s got 4 times the horsepower of my little car and a big wing to create lots of downforce. It’s also got a price tag well into the 6 figures. Yes, I want one.

That car set a record time around High Plains Raceway of 1:56.88, which corresponds to an average speed of 78.54 mph.

About how fast can I expect my little 4-cylinder car to go around the same track tomorrow?

• A: 60 mph
• B: 70 mph
• C: 80 mph
• D: 90 mph

In my last job, I did some work with the CDS team at what was then called Markit (now S&P Global). They’re smarter than me, but I learned that when a CDS chart points upwards, that’s bad. Up bad. Down good.

Why? CDS (Credit Default Swaps) are insurance that bondholders take out against the risk of a bond’s default. They’re an excellent indicator, and I used CDS in a model that I built that did a really nice job of predicting future stock performance.

The lesson I learned was, don’t bet against bondholders. They’re smarter than stockholders.

So, when Gavin Nolan at S&P publishes a report, I try to read it. I can’t share the report here, but you can click the image to go to his original post, where it’s available.

Here’s my quick summary:

• CDS trading in AI-related names is expanding and prices are going up. (bad)
• Why? AI-related CAPEX spending is being funded by debt issuance. Hyperscalers’ free cash flow is being eaten up by debt payments. Leverage is good in the good times, really bad in the bad times.
• Spreads (aka risk) are widening in the AI-exposed basket relative to the non-exposed basket. (bad)
• Large tech used to be a cash generator. Now, it’s looked at as a risky asset with uncertain returns on investment. (bad?)
• Correlations are increasing, too, across tech. Less diversification. (bad)

Why is this important? Why listen to bondholders? Bond returns are asymmetric.  If AI succeeds, bondholders get their promised cash flows. If AI stumbles, the bonds default and bondholders get what’s left, if anything. When they’re worried, you should be, too.

In other words, now that Artificial Intelligence is Super Intelligence, we should be super cautious.

Actually, Super Intelligence is a dumb name for something coming out of a computer. I’ll bet on human intelligence over the computer stuff any day. Humans are super. Computers are subservient (I hope). Rant over.

Like Dougie, I’m a fan of Scott Galloway’s work. Today, he writes about a topic that probably includes many of you: Everywhere Millionaires.

My takeaway from this piece is that if you believe in capitalism, support small businesses.

And TheStreet Pro just happens to be a small business! Thank you for your support.

https://www.profgmedia.com/p/the-1-next-door

It’s been a while since I provided an update on CNN’s (mine) Fear & Greed Index. So, let’s do it!

The headline number of 38 is 11 points off the low of 27 set on 9/16. The stock market is up a bit in that time, too, but are we feeling less fearful? The stocks that drove those gains are the same ones we’ve all been focused on this year, the mega-cap techs. Specifically, NVDA, META, & AAPL. Not all of the big names have been participating, though. In fact, NVDA, while it did rally off the 9/16 low, is still stuck, having set its yearly high in May.

Stocks:

Overall, breadth remains narrow, with net new 52-week lows dominating new highs by a big margin on the NYSE. Downside volume has swamped upside volume, too. As a result, even though the S&P 500 is near all-time highs, it’s gone sideways for the last 6 weeks.

Options

The options indicators have gone sideways and show no fear. They seem to reflect only the performance of the mega-caps and not the performance of the other 490ish stocks. RSP is down about 6% since August, and small caps (RUT) are off 7%. Helene Meisler says that investors are getting complacent, and I don’t disagree.

Bonds

So, how are bonds doing? The Safe Haven Demand indicator includes treasuries, while the Junk Bond Demand indicator is corporate-focused, high-yield corporates (HYG) vs. investment-grade (LQD), so the treasury decline isn’t reflected there. What we see is that stocks are beating bonds. No surprise. Small surprise, however, is that Junk is beating Investment Grade. Not by much, and both are down, but Junk has the edge.

Final Thoughts

So, like Helene said, investors are complacent in the face of a market that is not holding up as well as the big-cap weighted indexes would have us believe.

Fear & Greed hasn’t been over 60 since last spring, and that’s my line in the sand. Until we can get above that level, stocks may rally, but it will likely be narrow and not be a healthy rally.

Bringing this back to the Diary, as Crazy1 said this morning, there could be some good tax loss harvesting opportunities this fall.

All charts are from CNN Business: https://www.cnn.com/markets/fear-and-greed

From TheFly (I’ve bolded the key arguments):

DIESEL EXPORT BAN: A number of big business groups in the U.S. sent a letter to U.S. President Donald Trump arguing against the president’s proposed diesel export ban. “On behalf of U.S. businesses, manufacturers, refiners, and oil & gas producers, thank you for your continuing commitment to an unsurpassed U.S. energy industry,” the letter reads. “More American energy means a stronger economy, greater energy security, and less leverage for our adversaries. Your policies have helped the U.S. lead the world in the production of oil and refined products. In service of this shared goal, we urge you to reject calls to ban or otherwise limit the exports of diesel and other products that have made the U.S. energy industry so strong.

“Export bans would lead to less fuel production, tighter supplies, and rising costs for American families, farmers, and truckers. With 10 percent of global refining capacity offline, U.S. refiners are running at full capacity to supply the U.S. and to help stabilize global fuel markets. The U.S. produces more diesel than it consumes, allowing us to meet domestic demand and to supply our allies in Latin America and Europe. U.S. crude oil exports have likewise helped keep refineries running in other parts of the world as disruptions occurred through the Strait of Hormuz. You have been asked by some to ban or limit the export of diesel to help lower prices, when in fact the opposite would occur.

“We, and indeed virtually every expert in the fuels market, fully agree with Secretaries Wright and Burgum that an export ban would force reductions in refining utilization, increase prices for gasoline and jet fuel, and lead to retaliatory actions from other countries. Exports allow U.S. refineries to balance their systems and maximize production. An export ban would require refineries to throttle utilization to reduce diesel production to equal domestic demand. Falling utilization would result in less gasoline and jet fuel production and higher prices for those products as well.

“Meanwhile, areas of the U.S. that import fuel (primarily the Northeast) would face higher prices for all fuels that would now be in even shorter supply globally. This could not come at a worse time for consumers as home heating oil season is about to begin. Beyond price impacts, restricting exports would be a gift to our competitors. American energy dominance comes from being a reliable supplier to the world. If we pull back, other countries will step in, our influence will shrink, and our adversaries will gain ground. America’s energy exports are a source of economic and geopolitical strength. While we understand the urge for a silver bullet, there are no easy answers.

“We encourage you to continue the positive steps this Administration has taken to tamp down energy prices. For instance, targeted Jones Act waivers have helped keep more than 50 million gallons of fuel in the U.S. and helped to back out imports. Longer term, continuing to work with global partners on bringing more fuel supply back to the market and reducing barriers to producing and moving energy is critical, and will help attract more investment in refining capacity. The U.S. energy industry is the largest and most efficient in the world, and an indispensable economic and national security asset. We urge you to help maintain this advantage and to reject calls to ban the export of our products.” The U.S. Chamber of Commerce, Business Roundtable, National Association of Manufacturers, and American Petroleum Institute are among signatories of the letter. Publicly-traded companies in the refining space include Delek US (DK), HF Sinclair (DINO), Marathon Petroleum (MPC), Phillips 66 (PSX) and Valero (VLO).

From our friends at TheFly.

Upgrades

Downgrades

From our friends at TheFly:

New orders for U.S. made durable goods were largely flat month-over-month at $338.6B in August, following two consecutive monthly increases and compared to market forecasts for a 0.4% decrease. Excluding transportation, durable goods orders went up by 0.3%, below the expected 0.6% gain. Meanwhile, orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, grew by 1.6%, topping market forecasts for a 0.5% advance.

Stock futures were already off their highs of the morning before the report and have continued lower. The initial reaction, however, was a short-lived drop, then pop, in the SPX futures.

Nearly all of the Megas have had a banner year, especially the semis. Tesla is the only one in the red.

In the comments, Crazy1 wonders if Helene will be right about buying the dogs this year. Well, 16% (82 stocks) of the S&P 500 are down at least 20%.

Here are the worst performing 10 this year, and most are pretty close to YTD lows.

Stock index futures continue the move higher from midday yesterday on news that the US and Iran are in talks to get the Strait of Hormuz open.

My pal Sarge has more to say on the topic in his daily Market Recon (required reading here on Pro).

https://pro.thestreet.com/market-commentary/iran-breakthrough

S&P 500 Futures are up around 0.33% and around 0.8% since noon yesterday.

Gold is up 1%

The Dollar Index is off 0.31%.

The 10 Yr is off its (price) lows:

And Crude futures are off their highs and down around 2% so far today.

Here’s what’s brewing for today. We’ll be watching for Durable Goods and UMich Cons Sentiment. If I can find it, I’ll dig up some old research I did on the UMich report. It was included in an early version of the Fear & Greed Index, but I removed it because it didn’t update frequently enough.

It’s your old friend JMesh filling in for Dougie today.

One of my goals for the day will be to share content that I find on our sister sites, TheFly and TipRanks, to see what we can think about bringing over. Make requests if you’ve got ’em.