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 speculative biotechs have underlying risks.
- How Donald Trump makes bonds slide.
Click here for information on RealMoney, where you can see all the blogs, including Doug Kass'--and reader comments--in real time.
Underlying Risks in Speculative Biotechs Can't Be Overstated
Originally published Sept. 16 at 9:06 a.m. EDT
After Thursday's market close, the company announced the results of their Phase Three trial for a respiratory-virus drug. NVAX missed its goal, and the shares are trading down by about 80% ($8.40 to $1) in premarket action.
The company had worked on approximately 1,600 patients in its Phase Two Trial (split 50% of subjects on drug, 50% not). Unlike Portola Pharmaceuticals(PTLA) - Get Report , which could stilll potentially file its drug later this year, the NVAX drug showed no difference from the placebo.
So, essentially, the drug didn't work.
This huge percentage decline underscores the risks associated with speculative biotech stocks.
That is why, if you are interested in speculating, a basket should be employed.
Trump Speaks, Bonds Slide
Originally published Sept. 15 at 1:25 p.m. EDT
Bonds have taken a tumble, coincident with Donald Trump's midday speech at the New York Economic Club.
The yield on the 10-year U.S. note is up by over three basis ponts to 1.72%, and the long bond is up five basis points to almost 2.50%.
The 2s/10s spread has widened rather sharply -- by nearly five basis points to 98 basis points (a recent high).
Position: Short TLT.
Take Notice: Sentiment Is Shifting
Originally published Sept. 15 at 9:32 a.m. EDT
I don't live or die on investor sentiment changes, but I do pay attention to large shifts.
As I mentioned earlier this week in "Was Friday the Correction's End ... or Just the Beginning? and as The Divine Ms M mentions today, The Bull Market in Complacency has moderated.
Here is CNN's Fear and Greed Index, which has come way down in recent weeks from green (greed) to red (fear).
Again, changing sentiment is not my sine quo non, but it plays a part in my analysis of the investment mosaic, which is importantly skewed toward fundamentals and, to a lesser degree, valuation.
I start the day in market-neutral position.
Position: Short SPY small.
Slicing the Size of My Apple Short
Originally published Sept. 15 at 10:54 a.m. EDT
This move represents risk control and doesn't reflect a fundamental change in my view of Apple's profit outlook.
As it is said, discipline often trumps conviction in this game.
I will mostly likely add back to my short position in Apple when I have a sense that the current move is exhausted. So this move should be viewed as tactical rather than fundamental.
Position: Short AAPL small.
Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long AAPL.
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.