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 Dec. 15 at 4:51 p.m. EDT
Slow day, at meetings all Friday morning.
Despite the strength in our currency (and its adverse implications on multinational profitability), there was no follow-through to Thursday's schmeissing.
I reflected on my July call that we have hit a Generational Bottom in Bond Yields.
Kool-Aid tastes refreshing to the majority of traders and investors these days.
Some inside baseball--an example of dialogues I have with some smart pros. I hope this inside look is helpful.
A look back with some focus on credit (which we rarely discuss).
Today's small trades.
The market was up from the "get go" and then basically flat-lined.
- The U.S. dollar is smoking hot.
- The price of crude is flat and now under $51.
- Gold down by another $32. Free fall/panic time but I can't just make a solid case for the yellow metal.
- Ag commodities: wheat down $0.09, corn down $0.06 soybeans up $0.07 and oats down $0.05.
- Lumber flat.
- Bonds continue the flight higher in yield and lower in price. The 10-year is up 7.5 basis points to 2.6% and the long bond is up 2 basis points.
- The 2s/10s spread expands by another 4 bps to 133 basis points.
- Municipals off small, and closed-end muni bond funds getting hit again. Stay away! (We are in the tax-selling season for this asset class and just like December 2013 I could see some opportunities but only if duress is more substantial).
- The junk bond market has a small bid, but Blackstone/GSO Strategic Credit Fund (BGB) - Get Report is down by two pennies.
- Banks up solidly, as are brokerages and insurance.
- Auto stocks up small.
- Energy stocks are flattish.
- Retails continues to be pressured, led by losses in Nike (NKE) - Get Report and Nordstrom (JWN) - Get Report . I added to JCPenney (JCP) - Get Report . Again, my retail contacts and channel checks see a weak December, despite the cooler weather. I plan to add to my VanEck Vectors Retail ETF(RTH) - Get Report short (which is now small).
- Old tech is doing nothing. I shorted more International Business Machines(IBM) - Get Report Friday but still am small-sized.
- Consumer staples are up despite the strength of our currency. I picked at Campbell Soup (CPB) - Get Report on weakness Thursday.
- Big pharma is better, led by Eli Lilly (LLY) - Get Report .
- Biotech up 1% (Celegene (CELG) - Get Report and Allergan (AGN) - Get Report both up) though Valeant Pharmaceuticals (VRX) at another new low as Ackman takes a tax loss on 3.5 million shares. Speculative biotech is firmer, notably Acadia Pharmaceuticals(ACAD) - Get Report , Sage (SAGE) - Get Report .
- Fertilizers stronger, led by Monsanto (MON) .
- Ag equipment was stronger, Deere (DE) - Get Report and Caterpillar (CAT) - Get Report up by almost a beaner.
- (T)FANG mixed. Amazon (AMZN) - Get Report down after a good run.
- In individual stocks, two favs , DuPont (DD) - Get Report and Radian (RDN) - Get Report , hit new highs. IBM turns lower after being up all day (I added to my short on earlier strength). Apple(AAPL) - Get Report continues on its move higher.
Here are some value-added columns posted by our contributors.
1. Jim "El Capitan"Cramer is " chewing."
2. "Meet" Brett Jensen likes Celgene and Gilead.
3. Bruce Kamich teases us about where he would buy the 10-year U.S. note.
4. Ed Ponsi "Scheme" on how to play trading sardine, Freeport-McMoRan.
5. Tim "Not Judy or Phil" Collins on the same subject, fixed income.
Long: JCP large, CPB large, DD, RDN, SDS small
Short: SPY small, CAT small, AAPL large, IBM small
Position: See above.
Ringing the Cash Register
Originally published Dec. 14 at 3:20 p.m. EDT
With S&P futures now about 28 handles less than the post-Fed rally, I am taking off my trading short rentals made at that time (including some of my ProShares UltraShort S&P500 ETF (SDS) - Get Report , iShares Russell 2000 Index ETF(IWM) - Get Report and SPDR S&P 500 ETF Trust (SPY) - Get Report ).
Remember trades are trades--they are short-term rentals and not long-term leases.
This will move me back to between small-sized and medium-sized net short in my portfolio.
Position: Long SDS small, TZA small; short SPY small, IWM small.
Did I Mention Something About China ... and Life Insurers, Too?
Originally published Dec. 14 at 8:51 a.m. EDT
On cue, China says it plans to slap a penalty on an unidentified U.S. auto manufacturer for monopolistic behavior.
And Morgan Stanley downgrades the life insurance space.
Now that's timing!
By contrast, International Business Machines(IBM) - Get Report is trading higher (I am adding to my short in pre-market trading as this is small and will very slightly dent margins) on news that the company plans to add to its U.S. hires.
Position: Short LNC, MET, IBM (all small).
Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long AGN and AAPL.
Doug Kass is the president of Seabreeze Partners Management Inc. Under no circumstances does this information represent a recommendation to buy, sell or hold any security.