Doug Kass shares his views every day on RealMoneyPro. Click here for a real-time look at his insights and musings.
Reviewing My Investment Troops
Originally published Jan. 9 at 1:40 p.m. EDT
* Allergan (AGN) - Get Report (my fav large-cap long for 2017) remains the "world's fair" and market leader. Now up $25 a share above my initial purchase price.
* Caterpillar (CAT) - Get Report (my fav large-cap short for 2017) looks like it could be rolling over. In part, competitor Deere's (DE) - Get Report weakness makes me have that observation.
* DuPont (DD) - Get Report (last year's fav large-cap long) looks like it is making another leg higher. I halved my long a few weeks ago at about the current price),
* Coca-Cola (KO) - Get Report (last year's fav large-cap short) lower on a research downgrade. I am small here after covering half at about current prices after a nice gain.
* Some normal profit taking in Radian (RDN) - Get Report . Not surprising after a near up 90% run higher since July.
* Oaktree Capital (OAK) - Get Report continues its four-day streak higher--after what seems to have been tax-loss selling in late December.
* Financials hold in well despite the rise in bond prices and despite my protestations.
* Campbell Soup (CPB) - Get Report down with its consumer non durable brethren. I am using the weakness to add. ("Throwing out the baby with the bath water?")
* J.C. Penney (JCP) - Get Report continues to act like a dog in a decimated retail space.
* "Trade of the Week" Home Depot (short) near the day's lows now.
* Gold (up $10) continues to climb and I have added to SPDR Gold Trust ETF (GLD) - Get Report . GLD is now near the session high.
* Crude is off $1.60 (to $52.40)--a feature of today's assets. Energy shares schmeissed. (Remember when oil prices correlated with equities? Those were the old days!)
* QQQs over Ss.
General Observation: The animal spirits remain strong. But there is a reason why they are called animal spirits and not human spirits--as animals are dumber than humans.
Relatedly, CNBC guests/panelists are generally breathless about the market advance--with little discussion of negatives or headwinds. (For now they are materially correct, but I have heard this chorus before--and it wasn't just Ethel Merman's "Everything is Coming up Roses").
Color me more bearish but patient on my short positioning.
Long: AGN, SDS large, CPB large, JCP large, GLD large, SQQQ, DD small, RDN, OAK
Short: SPY, CAT, XLF small, QQQ, KO small, GS small, HD small
Position: See above.
My Takeaways and Observations
Originally published Jan. 10 at 5:14 p.m. EDT
"I don't feel Tuesday...Tuesday has no feel."
I started Tuesday with some food for thought--on the changing channels of retail distribution. In this opener please pay some attention to not only the ramifications for retail stocks but also the caveat as it relates to FANG.
I am frankly astonished how many embrace the rising optimism in small businesses and by the consumer as a "buy signal." Actually, I am shocked. Buy at the sound of cannons and sell at the sounds of trumpets is a strategy that has stood the test of time. Moreover, confidence is usually a reflection of stock market action--when the market rises we grow more confident and vice versa. So, beware of narratives that are rear view and lagging--which are too often (in my humble view) used to rationalize an investment position.
I may very well be wrong to expand my short exposure, but the extreme readings in sentiment surveys and confidence coupled with my fundamental, political (policy implementation and timing) and valuation concerns weigh on my decision.
I am hoarding more gold. (I spoke to "The Chief," and its his largest portfolio holding).
Weird fact of the rally--the Tuesday phenomenon. (See Seinfeld quote above).
I have no life.
My old pal Mario Gabelli was terrific, as always, on Fast Money Halftime. Here is the tape!
Mr. Market, program-driven, looked like it was making a "run for the roses" in the early afternoon, but the rally petered out.
Rs way over Ss and Qs.
*The U.S. dollar strengthened.
* Crude continues to fade. Down by $1.17 to under $51/barrel.
* Gold +$3 to $1187. I added and I am large in this asset class.
* Ag commodities: wheat -1, corn -2.5, soybeans +8 and oats +1.
* Lumber +2.
* Bonds flatlined--same for the yield curve.
* Municipals and high yield were also unchanged. BGB +two cents.
* Banks continued their run.
* Brokerages were mixed. GS, as I mentioned, a new short.
* Insurance strengthened--I shorted into it. Radian (RDN) - Get Report rebounded despite an expected FHA premium cut.
* In the alternative manager space, Oaktree Capital (OAK) - Get Report up for fourth day in a row as it continues to overcome late 2016 tax selling. Mighty.
* Autos higher on General Motors (GM) - Get Report buyback and strong guidance. Ford (F) - Get Report had some good news after the close. (More on this sector tomorrow).
* Old tech was flat but short IBM (IBM) - Get Report was a downside feature (-$1.50).
* Retail was mixed. JCPenney (JCP) - Get Report continues to stink up the joint. See opening missive.
* Biotech was +1% on some good Valeant (VRX) news But spec biotech failed to continue to rally (after big M&A news). Be careful here.
* Ferts were mixed. Beside the price action, I still don't care for the fundies.
* Consumer staples, save my long CPB, were quite weak led by Procter & Gamble (PG) - Get Report and Coca-Cola (KO) - Get Report .
* Big pharma was lower. Merck (MRK) - Get Report to the downside.
* Ag equipment up (Caterpillar (CAT) - Get Report ) and down Deere (DE) - Get Report ).
* Media hit--led by CBS (CBS) - Get Report .
* Energy stocks lower for fifth day in a row led by Schlumberger (SLB) - Get Report and Exxon Mobil (XOM) - Get Report .
* (T)FANG was lower--all five components. See opening missive.
Here are some value-added contributions on our site:
1. Jim "El Capitan" Cramer has a different view of the small business survey than I have.
2. Carley Garner on the Nasdaq.
3. Tom Graff on government-sponsored agencies.
4. A little somethin' for everyone from the holy one (and my pal), Rev Shark.
5. Stephen Blitz with a blitz of data.
Positions -- Long HIG large, JCP large, CPB large, SDS large, SQQQ large, OAK, RDN, GLD large
Short JCP calls, SPY, QQQ, CAT small, KO small, MET, LNC, IBM small
Position: See above.
Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long AGN and SLB.
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.