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 Sept. 28 at 5:29 9.m. EDT
It was a nostalgic Wednesday morning.
My first TST column in 1997.
There was no rest for the weary as the crude and oil markets turned on a dime after OPEC announced a production cut. I, Jim Cramer and others are skeptical about this -- stay tuned.
Lessons from Nike's fall from grace. A good one, me thinkest.
Stocks closed at the high of the day, rallying by nearly 20 handles from the morning's lows.
In talking to institutional desks, there was a lot of algo and machine buying all afternoon following the OPEC statement.
In the main, I looked on today's strength as an opportunity to raise my small net short exposure as downside/upside seems very attractive from the dark side.
SSSs (S&P) conspicuously strong against QQQs (Nasdaq).
- The U.S. dollar flat-lined.
- The price of crude oil increased by $2 a barrel to $46.67 on the OPEC chatter, previously mentioned.
- Gold fell by $4.60, to $1,325 ... not trading well.
- Agricultural commodities mostly lower: wheat was down $0.02, corn down $0.02, soybeans down $0.07 and oats down $0.01.
- Lumber up $1.
- Bonds were unchanged, with little movement in yields. The 10-year yield was up 1, and the long bond was flat.
- 2s/10s (yield curve) flat at 81 basis points.
- Municipals flat, but junk bond prices ripped after OPEC and closed much higher on the day.
- Blackstone/GSO Strategic Credit Fund(BGB) - Get Report rose $0.13, to nearly $15. I would sell this strength.
- Banks rallied despite the lousy publicity: Congressional uproar and California state's temporary cancellation of its business relationship with Wells Fargo. More in my opening missive.
- The canary in the coal mine, DB, rallied after weeks of weakness. My view? Neidermeyer, dead. Deutsche Bank(DB) - Get Report dead.
- REITs fell small, after broad gains in the past few days. I added to my iShares Dow Jones US Real Estate ETF(IYR) - Get Report short.
- Insurance and brokerages rallied -- albeit modestly. Staying long HIG and short Morgan Stanley(MS) - Get Report , Goldman Sachs(GS) - Get Report , Metlife(MET) - Get Report and Lincoln National (LNC) - Get Report .
- Biotech underperformed. Allergan(AGN) - Get Report , Gilead Sciences(GILD) - Get Report and Celgene(CELG) - Get Report down and spec biotech (e.g. Aerie Pharmaceuticals(AERI) - Get ReportAcadia Pharmaceuticals(ACAD) - Get Report ) down big.
- Auto stocks mildly higher, but underperformed.
- Retail was conspicuously weak. I added to JCP. Home Depot(HD) - Get Report , a new and small short, rallied for the second day in a row. I will be adding tomorrow.
- Energy stocks ripped higher on the commodity gain midday. (Fortunately I covered my USO SLB and XOM shorts early last week).
- Old tech had marginal gains, underperformed, save IBM(IBM) - Get Report .
- Media slightly in the black.
- Staples mixed: Procter & Gamble (PG) - Get Report was up, while Coca-Cola (KO) - Get Report declined.
- Ag equipment soared, led by Caterpillar CAT, but I am not sure why. This might be an answer from the "Big O."
- (T)FANG under-performed despite strength in Amazon(AMZN) - Get Report , though Tesla(TSLA) - Get Report and Netflix(NFLX) - Get Report were down. Alphabet(GOOGL) - Get Report shares were downgraded.
Here are some value-added contributions from our great contributors:
Jim "El Capitan" Cramer with a twofer. On the phony OPEC statement and on the uncertain markets -- I really enjoyed reading this one!
James Passeri, oil vey!
Rev Shark sees a yuge market move. Clear the decks!
Oh no, GoPro! from Ed Ponsi "Scheme."
"Burn" Bob Byrne answers some sub questions.
Position: Long SDS,HIG (large),JCP (large);Short TLT, F,GM,KO,SPY, QQQ small, CAT small, DIS small, SBUX small.
Some Final Thoughts
Originally published Sept. 29 at 4:49 p.m. EDT
I generally agree with Jim "El Capitan" Cramer that the banks are the likely cause for Thursday's market decline
Jim's article is thoughtful and should be read as he outlines the problems associated with Wells Fargo(WFC) - Get Report but more importantly, what I have described months ago as the "canary in the coal mine" -- Deutsche Bank(DB) - Get Report . (I will have more Monday on why I am continuing to avoid banks).
Remember one of my three questions that I start the day asking myself: "With the G-8's political coordination at an all-time low, how slow and inept will the reaction be if the wheels do come off?"
- If it hits the fan, will the central banks be there for each other?
- Lehman will look like a walk in the park compared to Deutsche Bank (whose derivatves are a multiple to Lehman's) if they are not very proactive with solutions.
- My guess is any cohesiveness is at a all-time low
Do we, as investors, want to take much risk at 25x GAAP and 19x non-GAAP earnings at a time in which the spread between GAAP and non-GAAP has never been wider?
And when political and geopolitical risks and uncertainties have never been as pronounced?
I don't, and I raised my net short exposure to medium-sized.
Position: Long SDS, Short SPY.
Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long AGN, GOOGL and WFC.
At the time of publication, Kass and/or his funds were long/short XXX, 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.