Month: August 2026

From Peter Boockvar:

If at first you (US Treasury) don’t succeed, try, try again

Long end Treasuries are rallying after the US Treasury is taking another step to stem the rise in long rates. “The U.S. Department of the Treasury is increasing, by at least double, the size of liquidity support buyback operations for longer-dated nominal coupon securities (the 10-year to 20-year sector and the 20-year to 30-year sector). The current maximum size of $2 billion per operation will be at least $4 billion per operation.”

“This increase in buyback operation sizes reflects Treasury’s desire to provide greater liquidity support in longer-dated nominal sectors where there is consistent strong sponsorship from market participants, as evidenced by the significant volume of high-quality offers Treasury routinely receives in longer-dated buyback operations.”

I’m assuming this supply will be replaced by more issuance on the shorter end, particularly bills. This is NOT a debt paydown, it is just a rearrangement of the maturity schedule of Treasuries.

https://home.treasury.gov/news/press-releases/sb0607

Intraday 10 yr Treasury yield move in response

Chart from 9:32 a.m. ET

Positions: None.

Pepsico (&PEP) is up by another $2 after yesterday’s strength. (I added late last week and Monday on weakness)

I am taking off some PEP long and moving from medium-sized to small-sized.

Trading around core.

I will add back on weakness.

Positions: Long PEP S.

BREAKING: OpenAI’s unraveling has begun – by Gary Marcus

Positions: None

The following is from Peter Boockvar:

Wow, that is some move/Tech credit/Housing

I keep talking about the intensifying tech competition from China and how fast they are climbing up the tech sophistication ladder. They want to play on the global tech stage too. Today Unitree Robotics priced its IPO on the Shanghai STAR market. The stock response was literally off the charts as it priced at 150.80 yuan and closed the day at 845 yuan.

Unitree Robotics

The credit market still has some growing worry with the broad capital financing reach taking place at Nvidia to help the ecosystem grow so more of their chips can be sold. The newest story yesterday being their partial backstop of an OpenAI 10 gigawatt Ohio data center, along with Softbank’s SB Energy. Their 5 yr CDS yesterday closed at a fresh high at 82 bps. This is still a cash flowing machine of a business but just wanted to highlight.

With OpenAI now releasing some of their financial info reflecting sequential revenue growth of 18% but even greater losses, I’ll argue again that it’s too big to fail in terms of its far reach. And with the competition from the Chinese models at the same time their financial obligations continue to grow massively, I just don’t see how they’ll ever make money.

Take note too that the Aussie bond offering that Alphabet just priced has them paying a 6.98% interest rate on. The global rise in interest rates, along with the deteriorating cash flows has even Alphabet paying about 7% for its borrowing costs.

Nvidia 5 yr CDS

Before I get to some housing related earnings stuff, I’ll point out that mortgage applications to purchase a home fell 2% w/o/w after rising by 2.5% last week. They are down by 3.2% y/o/y with the average 30 yr mortgage rate at 6.77%. Refi’s rose 1.5% w/o/w but remained down by 18% y/o/y.

This was from Home Depot’s earnings call yesterday:

“Our customers continued to engage in home improvement projects, and throughout the quarter, we saw broad based demand across the business…However, larger discretionary projects remain under pressure.”

“During the second quarter, Pro posted positive comps and outperformed DIY. We saw strength in DIY across many spring related categories, including live goods, mulch, soils, hardscapes, storage, patio, and grills. And for Pro, we saw strength across many Pro heavy categories like portable power, decking, dimensional lumber, pipe and fittings, fastener, hand tools and concrete.”

“Certainly, we’ve seen incremental cost pressure related to fuel, energy, and other product inputs. You can think of commodities with resin and metals. So, we didn’t have that in our plan as we came into the year, so those are incremental.” They are also dealing with Section 301 tariffs now.

Tariff refunds will be “fully offset by the incremental cost pressure” stated above.

“We’ve seen housing turnover at these low levels for four years now. So, I don’t think that we’ve seen much volatility from the recent increase in rates. We do know that when we see step downs, we begin to see a little bit of life come into housing, but there’s just no sign of an inflection point at this moment.”

Lowe’s in their earnings release pretty much said the same thing about their business:

“Sustained growth in Pro, Online and Home Services led to our 5th consecutive quarter of positive comp sales, despite pressure in discretionary DIY spending.”

From Toll Brothers press release (earnings call this morning):

They “delivered solid 3rd quarter results in a challenging market.” Their average price of a home sold was $996,400 so obviously focused on the upper end. “Our performance underscores the strength of our luxury brand, the resilience of our affluent customer base…”

Target beat estimates both top and bottom line as did comps but the stock is down pre-market. They said:

“Topline strength was broad-based across sales channels, demographics, merchandise categories, and across the quarter.”

This too of note, “Over the past year, we’ve reduced prices on more than 10,000 frequently purchased items as part of our commitment to delivering outstanding value every day, while continuing to invest in newness, convenience, and an elevated shopping experience.”

From Klarna, the buy now, pay later company and whose stock plunged by 23% yesterday after a 6% drop on Monday:

“we have adjusted our annual volume outlook to reflect a softer than expected German consumer and changes in FX.”

Positively, “Delinquencies improved again this quarter, and provisions have declined as share of volume every quarter since our first report as a public company.”

US GMV rose 27% y/o/y, “and was our fastest growing large region.”

The one thing of note overseas data wise was the July UK inflation stats which were all in line with expectations. Headline CPI rose 2.9% and the core rate was higher by 2.6% with services inflation in particular higher by 3.4% y/o/y.

On the wholesale side, lower energy prices drove PPI input prices down by 1.7% m/o/m vs the estimate of flat but still up 4.9% y/o/y but we know this is about to reverse higher. As for output charges, they rose by 3.1% y/o/y and a margin squeeze being the difference.

As it was mostly in line, the UK 10 yr inflation breakeven is about unchanged at 3.32% while the 10 yr gilt yield is lower by 2 bps to 5.06%.

I think the BoE is in the same ‘sit and wait’ situation that the Fed is in, particularly with the upward move in energy prices and without a clear visual yet as to what the secondary inflationary impacts are from this.

Positions: None.

Upside

• TNON +122.0% (USPTO notice of allowance for SI-joint stabilization patent; >11M premarket shares)
• MRNA +106.0%, MRK +8.5% (Phase 3 personalized mRNA melanoma vaccine + Keytruda met the primary recurrence-free-survival endpoint and key metastasis endpoint; first positive late-stage result for an individualized mRNA cancer vaccine)
• YJ +57.5% (very high-volume speculative move ahead of H1 results due tomorrow; no fresh company-specific catalyst identified)
• BIVI +39.0% (sharp high-volume rebound after Tuesday’s –18% selloff; no new fundamental catalyst identified)
• RCON +24.5% (rebound after prior-session weakness despite the recently announced $100M ATM; no new positive catalyst identified)
• EHGO +24.0% (12M+ share momentum move; no material fresh company-specific catalyst identified)
• GOVX +18.5%, BNTX +15.0% (vaccine/oncology sympathy after the MRNA/MRK Phase 3 breakthrough materially improves sentiment toward vaccine-platform oncology)
• CAST +17.5% (continuation of the high-volume streaming/media re-rating after recent platform/distribution expansion news)
• TGL +10.5% ($2M software-enhancement agreement disclosed in an 8-K)
• MSS +9.5% (high-volume continuation around the recent SEC ownership filing; no additional fundamental catalyst identified)
• EL +9.0% (Q4 EPS $0.39 vs $0.32 expected and revenue $3.63B vs $3.55B; FY profit outlook came in above Street expectations)
• KC +8.5% (Q2 beat as revenue grew 30.8% YoY and AI-cloud billings surged 82%, strengthening the AI-cloud growth read-through)
• TEM +6.5% (Q2 revenue beat, loss narrowed and 2026 sales guidance raised as diagnostics/data growth ran ahead of expectations)
• ODFL +5.0% (large-cap transport mover with no material fresh company-specific catalyst identified)
• DUOL +4.0% (rally after an inadvertent disclosure of the latest DAU growth rate gave investors an early read on user momentum)

Downside

• PFSA –43.5% (violent reversal after Tuesday’s +507% squeeze; >200K premarket shares and no new fundamental catalyst supporting the prior spike)
• WYFI –24.0% ($250M convertible-senior-notes offering, with an additional purchaser option, raises dilution/financing-overhang concerns)
• UCL –21.5% (high-volume selloff with no material fresh company-specific catalyst identified)
• SGLY –20.0% ($1.8M registered direct offering plus broader disclosed share/warrant dilution)
• TPET –18.5% (1-for-9 reverse stock split announced to maintain exchange compliance)
• RIME –18.0% (nearly 10M premarket shares in a momentum unwind; no fresh fundamental catalyst identified)
• WETO –17.0% (heavy speculative selling on meaningful premarket turnover; no clear fresh catalyst identified)
• LZB –16.5% (Q1 adjusted EPS $0.43 vs $0.49 expected, revenue ~$476M well below Street, and Q2 sales guidance $500–520M vs ~$537M consensus)
• MRCY –9.5% (Q4 revenue beat but adjusted EPS $0.37 missed ~$0.39 expectations, disappointing after the stock’s strong YTD run)
• ESS –9.0% (abnormally large isolated REIT move; no new material company filing or fundamental catalyst identified this morning)
• TJX –3.5% (Q2 headline beat and FY EPS raised, but Marmaxx comps were below management expectations and the FY comp outlook was not raised; tariff refunds also boosted reported profitability)
• LOW –3.0% (EPS $4.40 beat $4.23, but revenue $26.0B missed ~$26.16B and FY comparable-sales expectations were cut to roughly flat as discretionary demand remains cautious)
• HPE –3.5%, ORCL –2.5%, SMCI –2.0%, GLW –2.0%, MRVL –2.0% (continued AI/technology de-risking after Tuesday’s hardware/chip rout as elevated long yields keep pressure on long-duration growth valuations)