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 the quants make buyers and sellers live.
- How the administration appears to be using the market as a performance gauge.
Click here for information on RealMoney, where you can see all the blogs, including Doug Kass'--and reader comments--in real time.
Originally published Feb. 24 at 7:10 a.m. EST
Yesterday all my troubles seemed so far away.
Now itlooks as though they're here to stay.
Oh, I believe in yesterday."
--The Beatles, "Yesterday"
Above all, please remember that in a quant-dominated world, which worships at the altar of price, buyers live higher and sellers live lower.
As such, the irrationality of market valuations is too often rationalized by commentators and strategists as the market rise moves parabolically.
As I will discuss shortly in my opener, possibly for the first time in the rally there have been some concerning signposts.
I have recently suggested that we may be in the blow-off phase. I still believe so and I have observed too many talking heads in the business media rationalizing the irrational. Many of them are convinced they will know "when" to get out, but for now they are dancing while the music is playing.
It is my strong view that the market risks dramatically eclipse the market rewards.
As a consequence, I have added materially to my SPDR S&P 500 ETF(SPY) - Get Report and PowerShares QQQ Trust(QQQ) - Get Report shorts and to financial shorts such as Goldman Sachs GS and Lincoln National(LNC) - Get Report in light of the conflicting action in bonds (higher in price, lower in yield).
I am shortly off to the airport and to the West Coast, but I will be posting on the airplane.
Position: Short QQQ, LNC, GS, SPY.
Trump and Corporate Execs: Friends to the End?
Originally published Feb. 23 at 2:11 p.m. EDT
"...Because for years I thought what was good for our country was good for General Motors, and vice versa."--Charles Wilson, president of General Motors (1953)
Treasury Secretary Steven Mnuchin and a number of corporate CEOs were paraded Thursday on CNBC and in Washington, D.C.
"This is a mark to market business and we will see what the market thinks."--Treasury SecretarySteven Mnuchin, CNBC
In Becky Quick's interview with Mnuchin, the Treasury secretary had little or no discussion of infrastructure. (Look at the 10% in U.S. Steel's(X) - Get Report share price today--that's what happens when hope is unfulfilled or delayed.) The economic impact of policy was realistically moved into next year.
Not surprisingly, there was generally very little discussed in specifics during the CNBC interview.
If anything, Mnuchin realistically told CNBC viewers that all of the policy moves will "take time." (See Axios comments.)
Finally, as seen in the quote above, the administration appears to be using the stock market as a gauge of its performance.
This is a slippery slope.
It was another "lovefest" between the newly elected president and the executives of some of the largest U.S. companies.
But the meeting was no different than if my granddaughter went to see the movie Frozen with 400 other 3-year-olds. We know what the outcome would have been!
If anyone is buying stocks because of the general perception that the meeting between the president and company executives went well, I think (stated simply) you need your head examined.
Not only may the possible news have been discounted, but there is a long way between cup and lip of fiscal reform and policy becoming signed into law that has an effective and optimal outcome.
I remain skeptical to the notion of "trickle down" in fiscal policy, just as I was with the failure of monetary policy (2009-16), which instead had "trickle up" consequences for those with large balance sheets (of stocks, homes, art, etc.).
As we move forward late in the year, never forget that the job of a corporate executive is to maximize profits (read: plants populated by robots rather than humans). At some point there will be tension--defined as requests for companies to do things that they don't want to do.
At that time, the happy faces may have disappeared--for what is good for General Motors(GM) - Get Report may not ultimately be good for the country, as we cannot turn the clock back 20 to 30 years in the pursuit of job-intensive physical plant expansion in the U.S.
Finally, as I have consistently written, the executive branch must work with Congress and not with companies whose smiling executives nod in agreement with President Trump.
"Let it go, let it go
Can't hold it back anymore
Let it go, let it go
Turn away and slam the door!"
Action Alerts PLUS, which Cramer manages as a charitable trust, has no positions in the stocks mentioned.