The news of the day was the Supreme Court ruling affirming Presidential immunity for “official acts”. America Depends on Presidential Immunity-WSJ

The Supreme Court on Monday rendered the most important defense of separation of powers in its history. Trump v. U.S. concluded that the Constitution requires immunity from criminal prosecution for official presidential acts. The decision isn’t about Donald Trump so much as it is about protecting the presidency itself; future occupants of that office, including President Biden; and the ability of the government to function.

Understandably, there is a lot of partisan “debate” about this on social media and in the media. I am not a lawyer, but Reagan had Iran-Contra, Clinton had perjury, Bush II had torture and spying on Americans, Obama ordered a drone strike on a US citizen and also allowed the NSA to spy on Americans. All of these people could have theoretically gone to jail after their terms. Do we want that or not? Either way, that’s what the debate should be about, not Trump, and not Seal Team 6 taking out a political opponent.

I pointed this out to Eric Holder on X…..

Market

Rates dropped sharply yesterday and the main indices were all green, but beneath the surface there was still a lot of yuck. Awful day for advance/decline…

and the % of stocks above their 20 day moving average took a dump again.

Another Magnificent 7 day, with all 7 in the green. How long can these stocks go up and everything else isn’t doing much? Time will tell. Doubtful we get answers this week, but it all counts.

Software also continued to move up.

Johnathan Krinsky at BTIG had an interesting note yesterday, Breakdown in Restaurants an Ominous Sign for the Consumer…

• A few months ago in mid-March we highlighted the Restaurant sector as being vulnerable. The Russell 3k Restaurant Index is down ~6% from that point, while SPX is ~6% higher. The group is down nearly 2% today, one of its worst days of the year and breaking below its May lows to levels last seen in November. Gasoline futures are hitting multi-month highs today and not helping things.

• Like many consumer related parts of the market, we are reaching a point where these groups no longer look like opportunities for catch-up, and rather look like an ominous sign for a late cycle market. It has been nearly a year since the Fed last raised rates, long rates peaked eight-months ago, and yet areas like restaurants (outside of some idiosyncratic names) are continuing to move lower.

• If it were just restaurants, we could perhaps look past it. But we can add Homebuilders, Industrials, Materials, Equal-Weight Discretionary, Boats & RVs, Casinos, etc.

• For now money continues to stay in the market, and is providing fuel for the crowded mega-cap leaders, which in turn suppresses volatility and keeps indices grinding higher. That doesn't mean it's 'healthy'.

• To be clear, the RELATIVE trend of restaurants has been moving lower for over a year, so that's not a signal by itself. The recent breakdown in ABSOLUTE terms, however, seems to confirm there are clearly some issues with this group, and likely the consumer at large.

• We are also seeing cracks by some of the clear winners in the group including Chipotle (CMG, Buy, PT $67; Analyst - Peter Saleh) and Domino's Pizza (DPZ, Buy, PT $580; Analyst - Peter Saleh). Several names do seem to still be impervious, however, including Cava Group (Not Rated), and Wingstop (WING, Neutral).

• Finally on the sentiment side, the latest AAII Stock Allocation survey came out at 70.4, the highest reading since Dec. '21. To be fair it was above 70 from April '21 - Dec. '21, so it's not always imminent contrarian signal. With that said, prior to that cycle it exceeded 70 for the first time in Dec. '17, which was right before 'volmageddon'. Prior to 2017 it had not exceeded 70 since the summer of 2000.

ESG

The ESG proxy advisor game starts to crack-The Hill

In a major new development, BlackRock has announced that it is adding Egan Jones as a third proxy advisor option, expanding its voting choice initiative by adding two new Egan Jones proxy policies, one of which “does not prioritize environmental or social goals.”

Shareholders rejecting both ESG and anti-ESG proposals-Legal Drive

Of the 945 proposals, only 53 received majority support, and all but a handful of those were bread-and-butter governance related. The rest either didn’t reach majority support or they never made it to a vote, either because they were omitted after having been granted a no-action request by the Securities and Exchange Commission, were withdrawn by the shareholders making the proposal or otherwise not included on the proxy. Some are still pending a vote.

Biden

Everything Else

Steve Bannon Reports to Prison to Begin Four-Month Sentence: ‘I Am a Political Prisoner’-Breitbart

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