Doug Kass shares his views every day on RealMoneyPro. Click here for a real-time look at his insights and musings.
The Four Tops?
Originally published Sept. 1 at 2:16 p.m. EDT
"Somebody shake me
Wake me somebody when it's over, when it's over
And tell me that I'm dreamin'
And wake me when it's over, when it's over."
-- The Four Tops, Shake Me, Wake Me
The one and only Levi Stubbs!
Question to our technically oriented contributors -- are we seeing the dreaded "Four Tops" in the S&P 500?
Position: Long SDS, Short SPY .
Time to Short REITs
Originally published Sept. 1 at 11:16 a.m. EDT
I recently told Bloomberg's Market Surveillance that I believe bond yields have likely hit a generational bottom, and that REITs are one place to short amid the slow-but-consistent rate rise that I expect.
Now, REITs have been a market favorite because of bond yields' greater-than-expected drop over the past several years. In fact, the iShares Dow Jones U.S. Real Estate ETF (IYR) - Get iShares U.S. Real Estate ETF Report has risen to around $82.09 a share as of I write this from just $66.27 on Feb. 11.
But it seems almost as clear as day that the bell has rung to short REITs. Not only do I believe that interest rates have likely begun a slow rise, but REITs are also about to get their own S&P 500 sector.
Anticipation of this move (the first addition of a new S&P 500 sector since 1999) has likely buoyed IYR over the past few months. But to this grizzly old bear, Standard & Poor's move could mark peak sentiment for REITs. IYR also has an historically elevated price-to-earnings ratio of about 9.0, as well as an historically low roughly 3.8% dividend yield.
Based on the above factors, I've recently begun accumulating an IYR short.
Position: Short IYR .
Fresh Signs of a Struggling U.S. Consumer
Originally published Sept. 1 at 10:42 a.m. EDT
I continue to contend that the U.S. economic outlook is deteriorating rather than improving relative to expectations, and that the much-heralded consumer "recovery" might soon fade.
The evidence out just this morning includes:
- More signs of "Peak Autos."
- Weakness in both the Purchasing Managers Index and the ISM Manufacturing Index.
- Falling oil prices, coupled with a number of other declining commodities.
Add it all up and I continue to expect no Federal Reserve rate hikes over the balance of 2016.
Position: None .
Twitter Looks Tweet This Morning
Originally published Sept. 1 at 8:02 a.m. EDT
Twitter (TWTR) - Get Twitter, Inc. Report rallied by nearly 5% yesterday on vague takeover rumors, and the shares are up another 1.8% in premarket trading this morning as I write this. I have no idea whether these rumors are true, but I put TWTR on my "Best Long Ideas" list a few months ago at about $14.60.
I did this partly on the possibility of a takeover deal, while we've subsequently gotten news that Twitter is finally moving more aggressively into live streaming and sports. The company's large subscriber base should provide a valuable launching pad for growth once this strategy kicks in.
Click here to read my recent investment thesis for going long on the stock.
Position: Long TWTR .
Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long COST.
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.