NEW YORK (Real Money) -- Doug Kass of Seabreeze Partners is known for his accurate stock market calls and keen insights into the economy, which he shares with RealMoney Pro readers in his daily trading diary.
This past week, Kass said bulls have taken over the market for now, and it's time to increase exposure to banks as gold and oil recover.
Fifty Shades of Green
Originally published on Feb. 13, 2015 at 9:00 a.m. EST
Men aren't really complicated... They are very simple, literal creatures. They usually mean what they say. And we spend hours trying to analyze what they've said - when really it's obvious. If I were you, I'd take him literally. That might help."
The unrelenting stock market climb continued on Thursday and, based on the strength of S&P futures (+4), appears destined for new highs.
Interest rates are backing a bit lower, gold is up $4, the price of crude oil continues to recover (+$0.90).
Optimism, expressed in investor sentiment, is buoyant -- the residual of the strong price momentum recently experienced.
No doubt it is a truism these days that the bullish crowd has outsmarted the ursine remnants.
Fear and doubt have left Wall Street as investors party on.
Short sellers' concerns, while seemingly on reasonable grounds -- increased profit guide-downs, weakening domestic economic data points relative to expectations, slowing global economic growth, currency debasement, elevated P/E ratios (against a more normalized profit margin forecast) and a world dependent upon more "cow bell" -- are ever more endangered and are scoffed at as fugazis and Cassandra's predictions.
I also added to my GLD long.
I am slightly longer - and, as mentioned yesterday... uncomfortably so.
Elon Musk Reminds Me of the Wright Brothers
Originally published on Feb. 13, 2015 at 7:28 a.m. EST
Brilliant innovators. Poor businessmen.
As mentioned yesterday by myself and Jim "El Capitan" Cramer, it seems that many investors still are drinking the Tesla "Kool Aid."
There is a near total absence of fact-based research, and total confidence in Elon Musk's increasingly unsupportable claims.
Time to Lower First-Quarter Growth Forecasts?
Originally published on Feb. 12, 2015 at 12:34 p.m. EST
Within the 0.1% month-over-month gain in business inventories, compared with the estimate of +0.2%, the most noteworthy aspect of the data was the inventory-to-sales ratio, which rose to 1.33 from 1.31 as sales fell by 0.9%.
Sales haven't grown since July. The inventory-to-sales ratio is at the highest level since July 2009 and putting aside the recession, it's the most since July 2003. This inventory overhang will be a drag on first-quarter GDP just as it was a boost to the fourth quarter.
The unknown factor, however, to current inventory levels and how much companies want to hold relative to sales, is what impact the West Coast port strikes are having on this data and we won't know, of course, until they end.
The miss relative to expectations of both retail sales and the business inventory figure, as Peter Boockvar chronicled, has taken the U.S. Citi Economic Surprise index today down another 7 points to -36.90. This is the lowest level since April 2014. It's also just 9 points away from the weakest read since July 2012. This data point, though, only tells us what the actual figures were relative to expectations, not the degree of economic change. But it's clear that going into 2015, economists have been way too optimistic on the domestic economy relative to the results seen thus far.
Many still expect 3.0% growth this year but under 2.5% seems more likely.
At the time of publication, Kass and/or his funds were long Citigroup, MB Financial, Sterling Bancorp, MidSouth Bancorp, Sonabank, and Enterprise Financial Services, although holdings can change at any time.
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.