I will be out of the office for meetings, an annual meeting and board meeting starting at 1 p.m. for the balance of the day....

* Thus far, the clear change in market complexion from anytime since the November election continues.

* Financials rolling over hard as bond yields rise.

* Breadth is god awful — thought the averages are higher.

- NYSE volume 20% below its one-month average

- NASDAQ volume 22% below its one-month average.

At 10:40 AM. S&P cash was +5 handles.

Here are today's "Things:"

* Sold more  (SPY)  long $606.52 and  (QQQ)  $530.08

* Added to  (ELAN)  long at $12.18

* Added to  (AAPL)  short at $248.41

- NYSE volume 20% below its one-month average;

- Nasdaq volume 22% below its one-month average; 

Financials, the object of value investors love, continue to roll over.

As well, homebuilders (highly touted on Fin TV) are doing the same.

All tech, all the time... but that will likely end at some point!

Interest rates continue to firm (and equities continue to ignore):

* The yield on the two year Treasury bill is + 4 basis points to 4.22%.

* The yield on the ten year Treasury note is +4 basis points to 4.36%.

* The yield on the long bond is +4 basis points to 4.58%.

As interest rates and equities continue to rise, I am adding to my short exposure.

From Peter Boockvar:

Succinct Summation of the Week's Events:

Positives,

1)The November NFIB Small Business Optimism index jumped 8 pts m/o/m, a large one month move to 101.7. That's the highest since June 2021. Where the lift was most notable was in the outlook as the 'Expect Better Economy' component spiked to +36% from -5%. Also, Expect Higher Sales went from -4% to +14% and Good Time to Expand rose 8 pts m/o/m to 14%. Capital spending plans rose by 6 pts to 28%, the most since January 2022 and there was a 3 pt gain in Plan to Increase Inventory. The NFIB said "The election results signal a major shift in economic policy, leading to a surge in optimism among small business owners. Main Street also became more certain about future business conditions following the election, breaking a nearly three year streak of record high uncertainty. Owners are particularly hopeful for tax and regulation policies that favor strong economic growth as well as relief from inflationary pressures. In addition, small business owners are eager to expand their operations."

2)Mortgage apps for the week ended 12/6 rose 5.4% w/o/w but all driven by a 27% jump in refi's even though mortgage rates were little changed.

3)Likely due to the pull forward of goods ordering ahead of possible tariffs, the Cass Freight shipments index in November rose 2.8% m/o/m and the .7% y/o/y fall is the smallest in 21 months. Of note on pricing, the inferred freight rate was up .4% m/o/m. While still down 3.1% y/o/y, "Most of the pressure is now due to lower fuel prices. Underlying rates have started to inch higher more broadly." This is being reflected in the lift in the Dry Van per mile cost which is at the highest since July.

4)From RH: "The positive inflection of our business continued to gain momentum with 3rd quarter demand increasing 13% despite operating in the worst housing market in 30 years. Our vector is increasing in both magnitude and direction with November demand up 18% as the most prolific product transformation and platform expansion in the history of our industry continues to unfold."

5)From Costco: "Traffic or shopping frequency increased 5.1% worldwide and 4.9% in the US. Our average transaction or ticket was up .1% worldwide and .3% in the US. This includes the headwinds from gas deflation and FX. Adjusted for those items, ticket would have been up 2% worldwide and up 2.3% in the US...Gold and jewelry, gift cards, home furnishings, sporting goods, health and beauty aids, luggage, kiosk and hardware were all up double digits."

6)From Macy's: "Let me talk about the high end, first of all, in terms of the sales guide. When we think about what we've seen quarter to date, we're seeing sequential improvement across many dimensions of our business. We're seeing sequential improvement in digital, we're seeing sequential improvement in stores, we're seeing sequential improvement in Macy's nameplate, we're seeing sequential improvement in luxury, both Bloomingdale's and Bluemercury. We're seeing sequential improvement in F50. We're seeing sequential improvement in the other go-forward stores that have not received the investments yet."

7)From Casey's General Store: On the consumer, "directionally the consumers hanging in there about the same as what we would have talked about last quarter. We're still seeing a little bit of softness on that lower income consumer. But again, we don't have a disproportionate exposure to that consumer for the balance of the consumers, which are about three quarters of them. They're continuing to shop, they're continuing to visit the store at the same frequency, continuing to buy as normal."

8)From Ollie's Bargain Outlet's: "In the quarter, we saw strong demand for everyday consumables such as cleaning supplies, food and candy...Outside of consumables, we also saw strong demand for certain discretionary related categories such as furniture and outdoor living. We believe the warm weather in October along with the late timing of Thanksgiving, impacted our sales of seasonal goods in the third quarter. As the weather normalized and we approached Thanksgiving holiday, we saw accelerating trends in our seasonal categories. We were pleased with our Black Friday weekend sales and the current momentum in our business. Now more than ever, consumers want value and suppliers need bigger partners...Our value proposition is selling quality brand name products that people need and want for their everyday lives at prices typically 20% to 70% below the fancy stores."

9)Broadcom's upside was all about AI which now makes up 41% of its semiconductor revenue.

10)From Toll Brothers: On their discounting, "when the market softened a bit in September and October in response to the spike in mortgage rates and the uncertainty leading up to the election, we modesty lowered net price through incentive increases by an average of $12,000. As a result, our incentives in the 4th quarter were approximately 6.7% of the average sales price, slightly above our recent averages of between 5% and 6%. This small increase was primarily on finished spec homes, many of which are expected to be delivered in our first quarter. With the market improving, we have recently begun to decrease incentives, and we are optimistic that we will be able to further reduce incentives and also increase base prices with the start of the spring season in January."

11)From Vail Resorts: Early snow has allowed them to open up their western resorts "earlier than anticipated...including the opening of the legendary back bowls at Vail Mountain, opening the earliest since 2018."

12)Japan's Q4 Tankan report on both large and small companies in manufacturing and services was little changed q/o/q. Capital spending plans remained healthy though, up 11.3%.

13)The ECB and BoC each cut rates as expected in response to slowing growth and inflation but long rates remain sticky. The RBA held rates as expected.

14)The Brazilian central bank doesn't mess around when it comes to inflation and they raised rates by 100 bps to 12.25% which compares with inflation running at around 5%.

15)Inflation in Argentina is still running hot but continues to decelerate. Go Milei.

16)Australia reported a better than expected November jobs figure with a drop in its unemployment rate to 3.9% from 4.1% and where an expected rise to 4.2% was the consensus.

17)Price stability for consumer prices is what China continues to see with prices up .2% y/o/y. Taking out both energy and food saw prices up .3%. PPI, more reflecting commodity prices and industrial pricing, saw prices drop by 2.5% y/o/y but which is less negative than expectations of 2.8% and vs -2.9% in October.

18)Taiwanese November exports rose 9.7% y/o/y, above the estimate of 8.4% with tech again the main focus and driver. Exports to the US rose 10.6% y/o/y and to China by 9.5%. Semi exports in particular jumped by 16% y/o/y.

Negatives,

1)The initial jobless claims data was quite a surprise with a 242k print, well more than the estimate of 220k, up from 225k in the week before and a 2 month high. This brought the 4 week average to 224k from 219k, a 5 week high. Delayed by a week, continuing claims rose to 1.886mm from 1.871mm and still hovering around 3 yr highs.

2)November CPI was as expected, rising .3% both headline and core. Versus last year, they were up 2.7% and 3.3% respectively vs 2.6% and 3.3% in the month prior. Energy prices rose .2% m/o/m but down 3.2% y/o/y. Food prices were higher by .4% m/o/m and 2.4% y/o/y. Food prices at home jumped by .5% m/o/m and by a more modest 1.6% y/o/y. Food away from home is still pricier, higher by .3% m/o/m and 3.6% y/o/y. Services inflation ex energy, that is never transitory, rose .3% m/o/m and 4.5% y/o/y. Core goods prices rose .3% m/o/m but still flattish y/o/y, down .6%.

3)Headline PPI in November rose .4% m/o/m, twice the estimate but ex food and energy it was higher by .2% as forecasted. The y/o/y headline gain accelerated, up 3% vs 2.6% in the month before. The core rate was up by 3.4% y/o/y, unchanged with October. A spike in food prices accounted for the headline beat as they rose 3.1% m/o/m and up 5.1% y/o/y. There was a 55% rise in chicken eggs which accounted for 25% of the PPI increase. Also, according to the BLS, "Prices for fresh and dry vegetables, fresh fruits and melons, processed poultry, non-electronic cigarettes, and residential electric power also increased."

4)Import prices in November rose .1% m/o/m, above the estimate of a drop of .2% but mostly offset by a 2 tenths downward revision to October. They are up 1.3% y/o/y. Prices ex petro rose .2%, 2 tenths above expectations and after a .2% rise in the month before and up 2.1% y/o/y. Ex food/fuels saw no change in prices but after two month of .3% gains and are higher by 2% y/o/y.

5)In contrast to refi's, purchases instead fell by 4.1% w/o/w after the rise in the prior weeks.

6)On the consumer, the NY Fed's Expectations survey for November saw a one tenth rise in inflation expectations across the time spectrum with the one yr in particular at 3%. Price expectations fell for gasoline, food and rent but rose for medical care and the cost of college. On the labor market, unemployment expectations did rise but still remains muted. Of note, "The mean perceived probability of finding a job (if one's current job was lost) decreased by 1.9 percentage points to 54.1%. The decrease was broad based across age and education groups." On household spending and ahead of the holidays, "growth expectations declined by .2 percentage point to 4.7%, the lowest reading since April 2021, but above pre-pandemic levels."

7)From RH: "Do I think there's a pent-up demand and there are a few people having to buy homes? Yes, but the numbers wouldn't say it as macro is the issue. Otherwise, you'd see a more broad pickup. So, I think people are more optimistic, I think there might be a few more people stepping into the housing market, but for the most part, our industry is down 7% or 8%. I mean, there's not too many people that have positive growth right now."

8)From Costco: What are they seeing with their consumer? "I think we're seeing a lot of similar trends that we talked about on the last few quarters. What we're seeing with our members is that now probably more than any time in recent history, that combination of newness of items, quality, and value are really important to the member, and we're seeing the member being very choiceful about how they're spending the dollars...we are seeing, I think, a little bit even more of a trend that we've talked about in prior quarters of bifurcation with the member, where we have high quality premium cuts they're selling well, but we're also seeing a gravitation towards those lower price per pound items across categories like poultry, cuts of beef and pork as well."

9)From Oxford Industries: "We are excited to be in the midst of a holiday season where the consumer appears to be regaining confidence and is more willing to make discretionary purchases." That said, the stock is trading down pre market and they said "But before jumping into the results of the 3rd quarter, I want to acknowledge the multiple headwinds faced by our brands in the 3rd quarter, including the conclusion of the most intense election cycle in recent memory and the impact of the two major hurricanes that devasted parts of the Southeastern Unites States...We should also point out that we own a portfolio of premium brands that sell primarily at full price with very limited exposure to the off-price outlet channels. These value-oriented channels have been thriving as cautious consumers seek special offers and clearance pricing. We believe our full price premium strategy has been and will be a long-term competitive strength, but in the current environment, it is a headwind to our top-line while acting as a tailwind for others in our space."

10)From AutoZone: "Our discretionary merchandise categories continue to be a drag on our domestic DIY sales, similar to the last several quarters...Our belief is that sales will continue to be pressured until the customer gets some economic relief and consumer confidence improves."

11)From Dave & Buster's: "I'd say that macro environment just continues to be that headwind...particularly that low end consumer is really where we're feeling that decline to the extent that their spend is down twice as much as the other income quartiles. So, we're continuing to see that pressure on the consumer...So I think it's just a little bit more of the same from a macro perspective from Q2 heading into Q3."

12)From Academy Sports & Outdoors: "In the third quarter, we continued to see a broad based consumer backdrop that was characterized by episodic shopping demonstrated by consumers waiting until major events such as back-to-school or holiday while pulling back spending during the lulls in the calendar...Customers also continue to gravitate towards the value offerings in our assortment, which was reflected in the strength we saw during the promotional back-to-school season."

13)Somewhat dated but the UK economy contracted by .1% m/o/m in October driven by a drop in manufacturing production and construction.

14)The Swiss National Bank cut its overnight rate to just .50%, while still above zero and we know the SNB used to like NIRP, they aren't leaving themselves much wiggle room if economic times get tough.

15)The Sentix Investor Confidence index fell to -17.5 from -12.8 with both the current situation and expectation components lower. That is the lowest print in one year and, "There is also serious disappointment to report in the German data: Following the announcement of new elections to the German Bundestag, there is no mood of optimism."

16)Ahead of the BoJ meeting next week, November PPI for Japan rose .3% m/o/m and 3.7% y/o/y, above expectations.

17)China exports in November rose 6.7% y/o/y, following a lift of almost 13% in October as companies pull forward what they can get ahead of expected tariffs. That though was below the estimate of an 8.7% gain. Imports, many of which end up in exports, fell 3.9% y/o/y unexpectedly vs the estimated rise of .9% and also reflects punk Chinese consumer demand for stuff.

Upside:

-VCIG +32% (targets $200M revenue with 100MW of solar photovoltaic projects in Southeast Asia and Europe within next 5 years)
-AVGO +17% (earnings, guidance)
-RH +14% (earnings, guidance)
-LDTC +11% (announces receipt of the first installment of the TI Pre-Paid Royalty Fee)
-TASK +9.6% (Morgan Stanley Raised TASK to Overweight from Equal Weight, price target: $21)
-APVO +3.9% (enters warrant inducement agreement with certain holders of Series A Common Stock Purchase Warrants)
-ASRT +3.8% (announces results of Rolvedon (eflapegrastim-xnst) injection Same-Day Dosing Clinical Study)
-PTCT +2.8% (Morgan Stanley Raised PTCT to Overweight from Equal Weight, price target: $67)
-ORI +2.7% (announces $2.00/shr special cash dividend)
-VIR +2.3% (receives FDA Breakthrough Therapy Designation and EMA PRIME Designation for Tobevibart and Elebsiran in Chronic Hepatitis Delta)

Downside:

-RPTX -38% (announces results of the Lunresertib and Camonsertib Combination from the MYTHIC Phase 1 Gynecologic Expansion Clinical Trial)
-CADL -33% (prices 10M shares at $6.00/shr)
-INO -31% (prices $30M public offering at $3.00/shr)
-CLSK -3.7% (prices $550M convertible notes offering)
-NX -2.1% (earnings)
-CRBG -2.0% (announces updates to Board; Nippon Life Insurance Company discloses 21.6% stake)

Charts from 8:29 a.m.:

Chart from 8:46 a.m. ET:

From Peter Boockvar:

What if we keep getting rate cuts but no drop in long rates?/Gary Friedman speaks/The still 'choiceful' consumer

So, the ECB has now cut its deposit rate by 100 bps this year to 3% and similar to the US, long rates haven't fallen much even with the anemic growth the region is seeing. Since June 5th, the day before the first rate cut, the German 10 yr yield has fallen by just 27 bps, The 10 yr French oat yield, with its fiscal/political issues, is actually up 3 bps. Interestingly, and with the biggest bond market in the region in terms of its sizeable debt, the Italian 10 yr yield is down more than both its regional peers, down by 45 bps.

As for the UK and the BoE, their first rate cut was on August 1st and the day before the 10 yr gilt yield was at 3.97% and today stands at 4.38%. I still remain bearish on bond duration of anything more than 3-4 years.

To some earnings calls and from the always colorful Gary Friedman, the CEO of RH and whose stock is popping by 17% pre market. We know they cater to the higher end:

"The positive inflection of our business continued to gain momentum with 3rd quarter demand increasing 13% despite operating in the worst housing market in 30 years. Our vector is increasing in both magnitude and direction with November demand up 18% as the most prolific product transformation and platform expansion in the history of our industry continues to unfold."

They are also gaining market share as "We believe our collections reflect a level of design and quality inaccessible in our current market and a value proposition that is disruptive across multiple markets, positioning RH to gain significant market share for the foreseeable future."

"We believe the important investments we are making during this depressed housing cycle are creating a level of strategic separation in our industry that rivals the most important brands in the world."

As to the threat of tariffs, "we do not expect a negative impact to margins as a result of the most recent communications regarding the potential for increased tariffs in 2025. We have been proactively moving sourcing away from China over the past several years with the expectation of fully exiting the country by the end of the 2nd quarter. We are also transitioning products manufactured in Mexico and believe we can successfully reposition our sourcing with no disruption to the supply chain."

Finally, towards the end of the call Gary reiterated that it's more them taking share than seeing any real improvement in the macro. "Do I think there's a pent-up demand and there are a few people having to buy homes? Yes, but the numbers wouldn't say it as macro is the issue. Otherwise, you'd see a more broad pickup. So, I think people are more optimistic, I think there might be a few more people stepping into the housing market, but for the most part, our industry is down 7% or 8%. I mean, there's not too many people that have positive growth right now."

From Costco that is up a touch pre market:

"US comparable sales were up 5.2% or 7.2% excluding gas deflation."

"Traffic or shopping frequency increased 5.1% worldwide and 4.9% in the US. Our average transaction or ticket was up .1% worldwide and .3% in the US. This includes the headwinds from gas deflation and FX. Adjusted for those items, ticket would have been up 2% worldwide and up 2.3% in the US."

"we are seeing, I think, a little bit even more of a trend that we've talked about in prior quarters of bifurcation with the member, where we have high quality premium cuts they're selling well, but we're also seeing a gravitation towards those lower price per pound items across categories like poultry, cuts of beef and pork as well."

"Gold and jewelry, gift cards, home furnishings, sporting goods, health and beauty aids, luggage, kiosk and hardware were all up double digits."

"Food and sundries had mid single digit comps with our cooler and frozen departments leading the way."

And what are they seeing with their consumer? "I think we're seeing a lot of similar trends that we talked about on the last few quarters. What we're seeing with our members is that now probably more than any time in recent history, that combination of newness of items, quality, and value are really important to the member, and we're seeing the member being very choiceful about how they're spending the dollars."

That said, "our members are willing to spend as inflation comes down, as long as those sort of three key ingredients that I mentioned are there for the member as well."

Broadcom's upside was all about AI which now makes up 41% of its semiconductor revenue.

Moving overseas, Japan's Q4 Tankan report on both large and small companies in manufacturing and services was little changed q/o/q. Capital spending plans remained healthy though, up 11.3%. Nothing market moving here but the yen continues to weaken as doubts grow that the BoJ will raise rates next week after that Bloomberg story a few days ago.

Chinese stocks traded lower as there wasn't much new in the economic gathering yesterday and bond yields continue down. So many are still looking for a stimulative bazooka but I just don't think they are going to get it. While there will be some fiscal stimulus, the main focus remains in stabilizing its housing market and terming out and bringing on balance sheet the massive local government debt.

Somewhat dated but the UK economy contracted by .1% m/o/m in October driven by a drop in manufacturing production and construction. The UK economy has outperformed its big German and French peers however. Nothing market moving here though today.

* The inflation picture has changed, for the worst.

* Wally Deemer 101 — watch breadth (which is deteriorating).

Yesterday morning's opening missive, A Gravity Defying Market, addressed the hotter CPI and the likelihood of prickly inflation.

Thursday's rising PPI confirmed my concerns with PPI, Core PPI, Core Services PPI and even Goods prices stubbornly high—  and that is after substantial revisions higher going back several months.

Here Wolf Street howls about the data PPI, “Core” PPI, “Core Services” PPI Inflation Much Hotter after Whopper Up-Revisions Going Back Months | Wolf Street:

The prior months’ data of the Producer Price Index were revised substantially higher today, powered by whoppers of upward revisions in the PPI for services, something that has been happening month after month, and on top of that came the price increases in November.

The PPI tracks inflation in goods and services that companies buy and whose cost increases they ultimately try to pass on to their customers. And the entire year 2024 through November has been a big acceleration.

The revisions, and the additional price increases in November, caused the overall PPI for final demand to rise by 3.0% year-over-year, unrounded (+2.98%) the fastest increase since February 2023, and a substantial acceleration from October, which a month ago was reported as an increase of 2.4% year-over-year, and up from the original September increase of 1.8%. So the data went in two months from 1.8% to 3.0%: that’s a big fast acceleration.

Technical Warnings?

Meanwhile and separately, some technical warning signs (breadth and volume) have emerged:

* The DJIA is down six consecutive days (on lower volume): 

 * There has been nine days in a row of negative breadth:

Bottom Line

While stock futures (+15 handles on Spoos) are indicating a higher opening, I am growing ever more bearish on equities.

“Charts don’t give answers; they raise questions. Inferences are drawn when enough questions point in the same direction.”

- Mark Ungewitter

Bonus — Here are some great links:

Nasdaq Tops 20k

Today's Number Is 8

Material's Nine Day Losing Streak

The Amazon of South Korea

The S&P Short Range Oscillator has moved from -0.22% to -2.21%.

Ergo the market has grown more oversold.

* Of a 4:05 a.m.-kind...

Sold (long):

* SPY at $606.21.

* QQQ at $529.56.