Doug Kass shares his views every day on RealMoneyPro. Click here for a real-time look at his insights and musings.
Adding to REIT ETF Short
Originally published Sept. 2 at 3:06 p.m. EDT
My largest short add-on Friday is in the REIT sector in the form of the iShares Dow Jones U.S. Real Estate ETF (IYR) - Get iShares U.S. Real Estate ETF Report . Here was the short thesis I presented recently.
Today the iShares 20+ Year Treasury Bond ETF (TLT) - Get iShares 20+ Year Treasury Bond ETF Report reversed rather dramatically even after the weaker-than-expected jobs report. Now down by $1.20 and with yields on the long end up five basis points, I expect the speculative bubble in fixed income to lose air even though I hold to a more pessimistic domestic economic view.
I would repeat that I believe we hit a generational bottom in bond yields in the early summer. I expect interest rates to slowly but steadily advance in the next two to three years.
Investor sentiment towards REITs is at a bullish extreme owing to the new REIT designation grouping put in effective this week. With the group trading near 10x earnings at an historically high relationship relative to net asset values and with yield under 4%, REITs represent one of my largest short commitments now.
I am now placing IYR short ($83.05) on my Best Ideas List!
Position: Short IYR, TLT .
My Takeaways and Observations
Originally published Sept. 1 at 2:47 p.m. EDT
Somebody shake me, wake me ... when it's over! Do you see the Four Tops?
Speaking of Levi Stubbs (and his Four Tops), Leo Fuchs and I see trouble ahead. Oy!
And oil vey! It's helping my U.S. Oil Fund (USO) - Get United States Oil Fund LP Report , Schlumberger (SLB) - Get Schlumberger NV Report and Exxon Mobil (XOM) - Get Exxon Mobil Corporation Report shorts. I am seeing a breakdown, specifically in USO, which is now up 80 cents to the good from my cost basis. SLB and XOM are at day's lows.
My Chart of the Day.
Fresh signs of a slowing consumer.
And mo' Peak Autos.
Come up and see me some time when all I have on is the radio!
How Tweet it still is.
I still see a big opportunity on the short side in bonds. That said, bonds were quite weak early in the day and rallied big time as the day progressed.
Down, up, down, up, flat and now down ... thus far. Don't put too much into the action with volume light and so few playas around.
Trading aggressively in ProShares UltraShort S&P 500ETF (SDS) - Get ProShares UltraShort S&P500 Report et al. This is becoming a great environment for opportunistic traders, and I will take what Mr. Market gives me.
- The U.S. dollar weakened for the second day in a row.
- The price of crude oil dropped again, by $1.31 to $43.39.
- Gold up $4 after days of weakness. Unimpressed. Right above $1,300 to $1,315 support, which I feel could be breached to the downside by the machines. Bobby Lang has a different view in Comments Section -- he is bullish.
- Agricultural commodities rallying: wheat +4, soybean flat, corn +6, oats +5.
- Lumber -4.
- Bonds had more moves than a shortstop batting .110 today. Initially down big in price, up in yield -- reversed all the way to be slightly higher on the day. Now flat.
- Yields unchanged. Ten year at 1.57% after being 1.62% earlier.
- The 2s/10s spread also no change.
- Municipals are lower but oddly closed-end muni funds are better bid.
- High yield is junky for the second day in a row, but Blackstone/GSO Strategic Credit Fund (BGB) - Get Blackstone / GSO Strategic Credit Fund Report is up two cents. I would be a seller of high yield and BGB.
- Banks are fading today on profit taking on weak economic data that suggest a September rate increase is lower in probability. I initiated a Financial Select Sector SPDR ETF (XLF) - Get Financial Select Sector SPDR Fund Report short and added to my Goldman Sachs (GS) - Get Goldman Sachs Group, Inc. Report and Morgan Stanley (MS) - Get Morgan Stanley Report shorts (see my comments on passive versus active funds activity from yesterday that could lead to disappointing capital markets volume ahead).
- Insurance is weaker. Bidding for more Hartford Financial Services Group (HIG) - Get Hartford Financial Services Group, Inc. Report.
- Auto stocks, up early, are trading lower. Bad action. Peak autos. Staying short General Motors (GM) - Get General Motors Company Report and Ford (F) - Get Ford Motor Company Report.
- Energy stocks fell with crude's slide. As mentioned earlier, I am seeing some price breakdowns.
- Media is slightly lower -- Disney (DIS) - Get Walt Disney Company Report continues to appear to be rolling over.
- Staples are stable, though my Coca-Cola (KO) - Get Coca-Cola Company Report short is lower.
- (T)FANG inconsequential moves, save a $10 decline in Tesla (TSLA) - Get Tesla Inc Report (on my Best Ideas List, short)
Here are some great value-added contributions on our site today:
Jim "El Capitan" Cramer on 15 years later (can it be that long already?). R.I. P. Brown Bear
Robert "Not Rita" Moreno on selling junk bonds (for what it is worth, I agree).
Tesla talk from Ed Ponsi "Scheme." For what it is worth, part deux, I agree and TSLA is on my Best Ideas List as a short.
Tin "Not Judy or Phil " Collins sees two attractive ETFs.
Rev Shark on rough market waters.
Position: Long HIG, TWTR, SDS, JCP; short SPY, TLT, XLF small, GS small, MS small, NFLX small, GM, F, CAT small .
Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long AAPL and SLB.
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.