Doug Kass fills his blog on RealMoney every day with his up-to-the-minute reactions to what's happening in the market and his legendary ahead-of-the-crowd ideas. This week he blogged on:
- How you should say no to closed-end municipal bond funds.
- How Cara Therapeutics is on a run.
Click here for information on RealMoney, where you can see all the blogs, including Doug Kass'--and reader comments--in real time.
The Good, the Bad and the Ugly
Originally published Nov. 18 at 3:25 p.m. EDT
It's not a joke. It's a rope, Tuco. Now I want you to get up there and put your head in that noose.
-- Blondie in " The Good, the Bad and the Ugly"
I did no trading today, and there will be no "Takeaways" today.
As expected, the markets have basically flat-lined with, for a change, little intra-day price movement.
And now it's time to run down "The Good, the Bad and the Ugly" ...
- The market is amazingly resistant.
- The Russell Index is killing the shorts--up, again.
- Brokerages (Goldman Sachs (GS) - Get Report , Morgan Stanley (MS) - Get Report ) don't quit.
- Agricultural commodities are ripping higher: wheat up $0.05, corn up $0.04, soybeans up $0.06.
- Biotech is down 2%. Allergan (AGN) - Get Report and Gilead Pharmaceuticals (GILD) - Get Report are leading downside stocks.
- Alphabet (GOOGL) - Get Report is leading TFANG lower (down $8).
- Autos are stalling.
- The bond market, highlighted in my opening missive is a problem. The 10-year is 5 basis points higher, to 2.34% and the long bond is at 3.01%, up 3 basis points. The 2s/10s spread has steepened by 2 basis points to 128 basis points.
- Gold is testing $1,200, down another $8 in today's trading session.
Position: Long GLD small; short TLT small, NFLX small, GM small, F small.
Say No to Closed-End Municipal Bond Funds
Originally published Nov. 17 at 1:31 p.m. EDT
Despite their drubbing, after some consideration, (for now) I am passing on re-establishing a long in closed-end municipal bond funds:
- The continued uncertainty of the direction in interest rates.
- Rising rates not only demand higher municipal bond yields but closed-end funds face rising interest costs (which reduces distributions) from their borrowings--as most closed-end municipal bond funds are levered.
- Changing tax policy expected out of the Trump administration makes municipal bonds less attractive. Ergo, spreads between taxable and non-taxable yields will likely narrow.
- The recent weakness in closed-end bond funds has been pronounced over the last one to two months. This could lead, as it did in December 2013 (when I first went long the asset class), to even more forceful year-end tax selling.
Here's Why I Exited Retail
Originally published Nov. 15 at 10:24 a.m. EDT
I wanted to make one observation that suggests, at least based on price action, the "yuge" upward move in the retail sector will pause.
Specifically, retail stocks gapped higher in a panicky buying session and closed well off their highs.
Here are three examples of stocks I sold near the day's highs in Monday's session:
Day's High 62.82
Day's High 43.94
Day's High 72.88
Position: Long SDS large.
Cara Therapeutics on a Run
Originally published Nov. 16 at 2:16 p.m. EDT
Not much change in the market since our last update. The S&P 500 and Dow are down, and the Nasdaq is having a nice day. Longtime favorite
Cara Therapeutics (CARA) - Get Report continues its huge run, up another 20% plus today. But I can't find any new news to support this rise ... not even a vague buyout rumor. Exact Sciences down over 10% today on just disclosed sales by insiders.
Personally, I don't think anything major will change between countries despite the campaign bluster. I think I will make a lowball bid and see if it hits today.
Position: Long CARA, TRVN.
Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long AGN, GOOGL and WBA.
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