Doug Kass shares his views every day on RealMoneyPro. Click here for a real-time look at his insights and musings.
Retail Apparel Stocks' Weakness Deepens
Originally published Jan. 3 at 11:52 a.m. EDT
I expect industry comps from real stores at 0-2%. Industry at 4%. Online at 20%.
Overall, apparel seems on the weak side. Still, huge free cash flow (as I recently wrote) and secularly low valuations.
One positive is terrific emerging consumer economics.
As well, in the fullness of time, apparel needs replacing.
I have added to JCP this morning.
Position: Long JCP large; short JCP puts.
My Takeaways and Observations (3:30 p.m. Edition)
Originally published Jan. 3 at 3:33 p.m. EDT
The day started with a Trump Twitter storm.
Good food for thought from my pal Peter Boockvar on possible positives and negatives for the new year.
Moved to large-sized in Allergan (AGN) - Get Report last week. Allergan is raising a number of drug prices by about 9%. (Management said it is consistent with its commitment to hold down drug prices expressed in 2016). Investors liked, and the shares rose by another $6.
Speaking of Usain Bolt, I continue to go for the gold.
The Mighty Oak might have been the subject of tax-loss selling--as I guessed last week.
Back to net (but small) short.
I was interviewed on Bloomberg's "Market Surveillance" this morning.
Today was Byron Wien's turn to give his Surprises.
I added incrementally to individual stock shorts on strength this morning.
At 3:30 p.m. the market was bending but not breaking.
- The U.S. dollar strengthened today, but closed well off the day's (spike) high.
- Oil vey! Crude down $1.46 after trading higher in the early going.
- Gold up $9. I like and added to my growing SPDR Gold Trust ETF (GLD) - Get Report long. I discussed my rationale in my Bloomberg interview.
- Ag commodities: wheat down $0.01, corn up $0.04, soybeans down $0.08 and oats up $0.07.
- Lumber down $2.
- Bonds got schmeissed early on with 9-basis-point rise in the 10-year but the gain declined to only 2 basis points by day's end.
- The yield on the 10-year closed at about 2.45% (up 2 basis points) and the long-bond yield rose by less than 1 basis point.
- Municipals were for sale, but closed-end muni-bond funds ripped. Not sure why ... maybe just a cessation of tax selling.
- Junk wasn't junky and Blackstone/GSO Strategic Credit Fund (BGB) - Get Report climbed by another $0.11.
- Banks were stronger, but off day's highs. If there was ever a consensus view of a sector, banks are it!
- Insurance was relatively quiet. I added to my Lincoln National (LNC) - Get Report and Metlife (MET) - Get Report shorts--liking the reward vs. risk now. And I recently added to my Hartford Financial (HIG) - Get Report long.
- Brokerages higher but well off highs, Goldman Sachs (GS) - Get Report dramatically so.
- Old tech was quiet.
- Retail was lower but has begun to creep up late in the day.
- Autos had a nice showing in light of Trump Twitter storm.
- Biotech strong led by Celgene (CELG) - Get Report , Gilead Sciences (GILD) - Get Report and my fav, Allergan. Merck (MCK) - Get Report shorts were squeezed (up $8), but speculative biotech did little.
- Fertilizers flatlined as ag commodities were mixed.
- Consumer staples were mixed as the currency got stronger. Another up day for Campbell Soup (CPB) - Get Report .
- Ag equipment up, with both Deere (DE) - Get Report and Caterpillar (CAT) - Get Report up a beaner. Shorted more Caterpillar as I favor upside/downside opportunity now.
- (T)FANG was very strong most of the day but is weakening as the day progresses. Alphabet (GOOGL) - Get Report up nicely.
- In individual stocks Oaktree Capital (OAK) - Get Report gained (maybe tax selling is over), DuPont (DD) - Get Report holding well, along with Radian (RDN) - Get Report . Apple (AAPL) - Get Report didn't participate in the market rise.
Here are some value-added contributions on our site today:
Welcome back Jimmy! Jim "El Capitan" Cramer on the hit and miss parade.
Tom Graff on navigating the bond market.
"Meet" Bret Jensen on biotech takeovers. (interesting stuff!)
A market assessment (midday) from Rev Shark.
Steve Blitz on the ISM data blitz!
Long: AGN large, CPB large, HIG large, JCP large, OAK, DD small, RDN, HIG large
Short: SPY, QQQ, IWM, CAT, MET, LNC, DIS, SBUX small, AAPL
Position: See above.
Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long AGN, GOOGL 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.