After-Hours % Advancers

After-Hours % Decliners

Closing Volume

- NYSE volume 11% above its one-month average

- NASDAQ volume 43% above its one-month average

- VIX index: up 6.86% to 18.37

Breadth

S&P 500 Sectors

% Movers 

Nasdaq 100 Heat Map

Closing S&P 500 Heat Map

Wolf Street howls about the heavy supply of single family homes for sale.

Position: None

I took a trading long rental in Pershing Square (PSUS) at $41.10.

Position: Long PSUS (S) 

The market's narrowing leadership is gaining momentum.

Position: None 

Select After-the-Close Earnings Reporters (sorted by market cap $)

I have a brief research call at 1:30 p.m. I should be done in 30 minutes or so.

Position: None 

* Whether right or wrong I timestamp all my trades and investments...

Here are today's things:

* Added to Index shorts:  (SPY)  at $738,98 and  (QQQ)  at $712.10.

* Initiated a very small short in  (SNDK)  at $1.569.28.

* Added to tech shorts:  (AMD)  at $464.15,  (MU)  at $790.14 and  (INTC)  at $129.46.

Position: Short SPY (S/M), QQQ (S/M), SNDK (VS), AMD (VS), MU (VS), INTC (VS) 

The non-tech components of the market are suffering again today.

Case in point: casinos (a new short sector) are down across the board, with  (WYNN)  leading the downturn.

Position: Short WYNN (S), CZR (S), MGM (S)

- NYSE volume 9% above its one-month average;

- Nasdaq volume 67% above its one-month average;

- VIX up 5.06T to 18.06

Positions: None.

More trouble in private equity land:

Another Real Crisis Hiding Behind Record Highs

Positions: None.

From the New York Times' editorial section: Opinion | Mark Zuckerberg Is Running Meta Into the Ground - The New York Times

Positions: None.

I have moved toward medium-sized short the indexes:

*  (SPY) $739.44
*  (QQQ)  $712.87

Positions: Short SPY S/M QQQ S/M 

Added to Index shorts:

*  (SPY)  $737.71

*  (QQQ)  $713.01

Positions: Short SPY S QQQ S

From Peter Boockvar:

Echoes of '99-'00 or this? Hope not/'other income'/Industrial metals/China/So excited and so terrified

Still quite the resilient stock market in the face of a continuation of the effective closure of the Strait after what we heard over the weekend but we know economically and with pockets of the market, the uneven and mixed situation for both continues on.

With respect to the tremendous gaps higher in semis it’s hard not to be reminded of 1999-2000 in terms of the behavior. Yes, earnings estimates for these stocks are getting raised sharply but forecasting a multi year earnings model for semiconductor companies is not like doing so for Coca Cola as there is a huge variance of outcomes. My favorite X post on Friday was from my friend Helene Meisler, a multi decade veteran technician who wrote, “If you weren’t trading in 1999-2000, then you’re in luck. This is what it was like. Now you can experience it.”

Now, this was not a bear call as we have no idea what part of that time frame we’re in but in terms of the gaping nature of these stocks, there are plenty of echoes.

Data mining is rampant too as everyone goes back in time to see what trends will repeat from here. I only tend to focus on those that produce very unique outcomes, not necessarily believing it happens again but just to be aware of history as human nature we know never changes and the stock market is the perfect example of that. The one data mine I read over the weekend scared me from Jason Goepfert who wrote, “Look, I know none of this stuff matters anymore. But my G*d.

This will be the 4th time the S&P 500 has hit a record high while 5% of its members fall to 52 week lows.

1. ‎July 1929

2. January 1973

3. December 1999

4. Today

One key thing to understand with the spike in earnings from the hyperscalers and the 27% y/o/y headline EPS Q1 increase. A major contribution was in the ‘other income’ line for all of them and which included “the ebb and (mostly) flow in the valuations of their sizeable private investments in companies like OpenAI and Anthropic.” Here is a chart from the article to highlight. https://www.ft.com/

With the obsession of markets so much on semi’s, I do want to mention again commodities, particularly industrial metals because none of this GenAI buildout gets done with copper, aluminum, nickel, zine, silver, platinum, etc...Copper today is rallying to a record high. The Bloomberg Industrial Metals Index closed Friday at the highest since June 2022. So owning commodities and commodity stocks is another way of playing the data center story.

Copper

Bloomberg Industrial Metals Index

With respect to oil and gas, we remain long there too, the Baker Hughes crude oil rig count was up 2 rigs to 410 vs 407 at the end of February. Still not much of a response to the sharp rise we’ve seen in crude prices.

Crude Oil Rig Count

I do want to talk Trump/Xi, US and China ahead of the meeting this week. I’ve been a very close follower of China over many years but defer to my friend Louis Gave on this, someone who lived in Hong Kong for many years. He best compares the current relationship from the one during Trump 1.0 and also the 2017 gathering in Beijing. In April 2018, soon after that late 2017 meeting, Trump’s administration threated to ban the access of China’s ZTE company from getting certain US technology, particularly semiconductors that brought ZTE to the brink of its existence. That threat was pulled back to an extent but it woke China up from the reality of its excessive dependence on the US.

What came next of course was the tariff battle of 2018/2019 and the early 2020 trade deal and China felt battered and weak. What they’ve done since then though is gone to the gym and today they are in tremendous fighting shape when it comes to producer so many things on their own, chips, EVs, solar, rare earth magnets, automation, robotics, low cost electricity, etc... and have stock piled crude. So, when 2025 tariff punch hit them again (All a Louis Gave analogy), China punched back and their threat alone of reducing access to rara earth magnets was enough to end the trade war between the two.

My bottom line to this is I expect a very cordial meeting this week and a calm between the two vital trading partners at least in the coming few years as the US leverage over China has been lost because China can now do so much on their own, at a high tech level and we still need their magnets.

Shifting gears. These comments of note were from Barry Sternlicht on the Friday call for Starwood Property Trust, a stock we own:

“I think we’d like to say that we’ve never been so excited and so terrified at the same time. And it’s not just the war, obviously. It’s what is the impact of AI long term on the markets, the office markets, the employment base. What will politicians do in the face of potential job losses? What will happen with Taiwan, which the market obviously think is a zero risk given the ascent to daily highs. And I tend to think the real estate sector in general is coming out of the frozen tundra of the last three years.”

“We’re still recovering from the 500 bps increase in rates that no one saw coming. And then the slow descent in inflation. If you think about the world, it’s sort of an odd concept. I was in a room with a lot of people out west recently, and I asked people to raise their hands, how many of you would have expected, with what’s going on in the world, the war, oil prices, deglobalization, trade wars, how many of you would expect the stock market to be at all time highs?” He didn’t mention how many hands went up, if any.

“And it’s sort of a strange thing, but in the middle of this, the real estate markets are curing themselves. Although it’s slow and it’s not quarter-to-quarter, supply is dropping dramatically in multifamily, supply is dropping in industrial, supply is stagnant, almost nonexistent in the office market, same in retail, senior housing. All these sectors are benefiting from capital being sucked into other things, including data centers.” I’ll add, this is the obvious set up from rental increases in the coming years in all these non-data center real estate sectors, particularly in multi family.

Back to China, and the inflation stats they reported overnight. For obvious commodity price reasons, April PPI rose 2.8% y/o/y, well above the estimate of up 1.8%. Consumer prices rose 1.2% y/o/y with the core rate up by the same amount. Obvious too with CPI is that is much more benign than seen around the world and why the Chinese 10 yr yield is at only 1.76%.

Positions: None.

Positions: none.

Upside:

-BZH +35% (Dream Finders Homes submits proposal to acquire Beazer Homes for $25.75/shr cash)

-MNDY +26% (earnings, guidance)

-BW +18% (earnings, guidance)

-TH +8.0% (earnings, guidance)

-MLTX +6.4% (aligns with FDA on submission plans and label strategy for Sonelokimab (SLK) in Hidradenitis Suppurativa (HS))

-MRNA +6.3% (conducting Hantavirus vaccine research)

-LITE +6.0% (to join Nasdaq-100 Index)

-ERAS +5.3% (announces Clinical Trial Collaboration and Supply Agreement with Merck to Evaluate ERAS-0015 in Combination with KEYTRUDA (Pembrolizumab) ERAS-0015, a potentially best-in-class pan-RAS molecular glue, is being evaluated in combination with pembrolizumab)

-LINC +5.3% (earnings, guidance)

-FOXA +4.9% (earnings, color)

-MU +4.4% (memory chip rally)

-INTC +4.2% (hearing of collaboration with SK Hynix)

-B +3.2% (earnings, guidance)

-PBI +2.6% (Tier1 firm Raised PBI to Neutral from Underperform, price target: $16.50 from $9.50)

-PRIM +2.6% (hearing Mizuho Securities Raised PRIM to Outperform from Neutral, price target: $135)

-CRCL +2.4% (earnings, guidance)

Downside:

-MOS -6.5% (earnings, guidance)

-BUR -4.7% (Deutsche Bank Cuts BUR to Hold from Buy, price target: $5)

-INOD -2.1% (profit taking)

Positions: None.

Positions: None.

Treasury Auctions:

11:30 a.m.: Treasury hosts an $89 billion 3 and a $26 billion 6-Month Bill Auction; 1 p.m.: Treasury hosts a $58 billion 3-Year Note Auction

Economic Calendar for the Week:

Positions: None.

White House Drug Czar Clarifies That Marijuana Is 'Still Illegal' Following Trump Administration's Rescheduling Move - Marijuana Moment

Position: None

The S&P trades at an all-time high while the consumer sentiment index is at an all-time low: 

Position: None

From Michael Burry:

The boy who cried wolf. So many times, no wolf.

In the end, what happened? There was a wolf. But nobody was listening.

I am now a meme for the number of times I have called a crash.

I have become the boy who cried wolf.

History is written not by the victors, but by those that control the pen, and social media has that pen right now, it seems.

Still, I got it right in 2000, got it right in 2007. Got it right in 2019, helped by COVID, and I called the meme stock crash in mid 2021. I called the bank stock run in 2023. In 2017, I had trouble finding good stocks, and I discussed the passive investing bubble for the first time. I did not say it meant that we would crash anytime soon. My case was that crashes would become more correlated and more acute, and 2020’s COVID crash was the most acute, correlated stock market crash in history.

Every other time I supposedly called a crash, I had said nothing at all. It was reported that I had billion dollar short positions several times over about a decade not because I said anything, but because reporters misread regulatory filings. Then all the news services would trot out the same picture of me, “Burry calling for a crash” in so many words. Words that I did not say.

For a number of years I marveled at the resiliency of the market, for sure, but I have been long common stocks as the majority of my portfolio for almost my whole investment career. The exception being that one big short in 2005-2008.

Today however, I am telling.

I am calling something. The market has jumped the shark. The end of…this…is nye...

- Michael Burry

Vinyl Lives Here

Position: None

The S&P Short Range Oscillator remains slightly overbought at 1.65% vs. 1.62%

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