Starbucks, Amazon and Netflix: Doug Kass' Views

Doug Kass shares his thoughts on low bond yields and (T)FANG weakness.
By Doug Kass ,

Doug Kass shares his views every day on RealMoneyPro. Click here for a real-time look at his insights and musings.

My Takeaways and Observations

Originally published July 13 at 4:17 p.m. EDT

An inside day in which past correlations (e.g., the direction of currencies, bond prices and crude) have little bearing on equities as a liquidity-inspired rally based on There Is No Alternative, or T.I.N.A. (which is B.S.), is perceived to be the catalyst for the climb in stock prices.

Question of the Day: If central bankers are directing interest rates into negative territory to stave off recession, I ask, "Why is that a healthy foundation for stocks? "

Technically speaking, recommended readings and "Crazy"

I am still sour on Starbucks (SBUX) - Get Report , which was down a beaner Wednesday.

Two more signs of a possible generational low in bond yields.

Soros covering his shorts?

Double D on Elvis.

Quiet day trading for me, but I added to mySPDR S&P 500 ETF (SPY) - Get Report puts.

  • The U.S. dollar weakened.
  • The price of crude oil suffered, declining by $2 to $44.82.
  • Agricultural commodities: wheat flat, corn +10, soybeans +18, oats +2.
  • Gold up $9 to $1,344.
  • Lumber +2.
  • Bonds reverse yesterday's weakness. iShares 20+ Year Treasury Bond ETF (TLT) - Get Report was up $1.60.
  • The yield on the 10-year note dropped by nearly five basis points to 1.465%. The long bond's yield declined by six basis points to 2.17%.
  • The 2s/10s spread stood at 80 basis points, flattening a bit.
  • As I mentioned, while municipals rose small, closed-end muni bond funds got beaten down .
  • Junk bonds declined.
  • Banks suffered, but only modestly
  • Brokerages were mixed.
  • Insurance was lower on the lesser fixed-income yields.
  • Auto stocks were flat.
  • Energy stocks fell in line with the drop in commodity price.
  • Old tech was slightly higher, though no large price movement.
  • Biotech was disappointing for a second day in a row.
  • Staples were stronger, again led by PepsiCo (PEP) - Get Report . By contrast, my short Coca-Cola (KO) - Get Report is dramatically underperforming PEP.
  • Retail was weak, including my short Nordstrom (JWN) - Get Report .
  • Media lower, but small.
  • Ag equipment was up on the day, as were fertilizers. Potash (POT) was up 4.5%.
  • (T)FANG again was conspicuously weak. Tesla (TSLA) - Get Report , Facebook (FB) - Get Report , Amazon (AMZN) - Get Report and Alphabet (GOOGL) - Get Report all were lower in a flat tape. Netflix (NFLX) - Get Report , my short Trade of the Week, was up small.
  • In individual stocks, Oaktree Capital Group (OAK) - Get Report was down a beaner on no news, while DuPont (DD) - Get Report and Radian Group (RDN) - Get Report (last week's Trade of the Week) held recent gains well. Twitter (TWTR) - Get Report was down small on profit taking.

Here are some value-added contributions on our site:

    Trix are for everyone, from Jim "El Capitan" Cramer

    Jeremy LaKosh is in my camp, shorting Fastenal . JK sees a $36 to $38 price target. I am lower!

    RevShark on alternative approaches to trading -- he follows the "action."

    Mike Norman on inflation ahead.

    Position: Long SPY puts, DD, OAK, TWTR, RDN; short SPY, TLT, NFLX small, JWN, SBUX small, DIS small, KO, AAPL.

    Muni-Bond Funds See More Maximal Pain

    Originally published July 13 at 1:53 p.m. EDT

    Closed-end municipal-bond funds are getting annihilated for the second day in a row Wednesday despite a rise in taxable bond prices that's seen the iShares 20+ Year Treasury Bond ETF (TLT) - Get Report add about 1% as of last check.

    A drop in muni-bond-fund prices was one of the bullet points that I made Wednesday in declaring a generational low for bond yields. Several muni-bond funds dropped by 2% Tuesday, but the decline is even worse now because it's more broad-based.

    Funds that are declining Wednesday include:

    • Invesco California Value Municipal Income Trust (VCV) - Get Report
    • Invesco Pennsylvania Value Municipal Income Trust (VPV) - Get Report
    • Nuveen Premium Income Municipal Fund (NPI)

    All were down about 1% at last check, while the iShares S&P National AMT-Free Municipal Bond Fund (MUB) - Get Report is virtually flat.

    The junk-bond market is also lower, and -- like municipals -- isn't following Treasuries' climb higher.

    Position: Short.

    Tell Me Something I Don't Know

    Originally published July 13 at 11:10 a.m. EDT

    Regular readers of my diary know that I sometimes post something that replicates the theme of the Tell Me Something I Don't Know segment on MSNBC's Hardball with Chris Matthews.

    So ... "tell me something I don't know, Dougie."

    OK, here goes:

    Tuesday's market ramp was likely exacerbated by George Soros, who is believed to have covered several billions of dollars of shorts.

    Soros was also apparently joined by another aggressive and unnamed (but large) short-coverer.

    Position: None.

    Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long SBUX, PEP, FB, GOOGL and TWTR.

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