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 Today's Takeaways and Observations (Early Edition)

Originally published at 2:33 PM EST on April 4, 2016

I started the day today by dissing the banks.

Then, I unfriended Facebook (FB - Get Report) by making it my Short Trade of the Week.

Finally, I offered another critical post about auto stocks. Hey, at least I'm consistent! And at least I like Opening Day!

Here are my takeaways and observations for the session:

  • The U.S. dollar is unchanged. Now that the bulls have embraced a lower greenback and the currency has dropped materially, it's probably time for some dollar strengthening.
  • Crude oil dropped by 62 cents at last check to $36.17 a barrel, but natural gas rose by a nickel.
  • Gold fell $5.10 to $1,218 an ounce. The SPDR Gold Shares ETF (GLD - Get Report) is down 60 cents.
  • In agricultural commodities: wheat is -3.75, corn is unchanged and soybeans are -5.25, but but pats are +1.75.

  • Lumber is -5.20.
  • Bonds were lower in yield and higher in price. (The iShares 20+ Year Treasury Bond ETF (TLT - Get Report) is up 10 cents.)

  • The 10-year U.S. Treasury yield is down two basis points to 1.77%. The 30-year yield also declined two points to 2.60%.
  • Municipals are well bid, and closed-end municipal-bond funds have edged higher again.
  • The high-yield-bond market is flat, with the iShares iBoxx U.S. Dollar High Yield Corporate Bond ETF (HYG - Get Report) and the SPDR Barclays Capital High Yield Bond ETF (JNK - Get Report) down by about 5 cents each.
  • The Blackstone/GSO Strategic Credit closed-end fund (BGB - Get Report) is flat.
  • In terms of sectors, banks have managed modest gains.
  • But life insurers (the object of my disaffection), continue to roll over, led by MetLife (MET - Get Report) and Prudential (PRU - Get Report) . My long of Hartford Financial (HIG - Get Report) was down 20 cents a share at last check.
  • Old tech continues to be led by IBM (IBM - Get Report) , which is up another 75 cents. Big Blue is continuing a strong surge that it's seen since an analyst upgrade.
  • Retail was mixed, although my one short -- Nordstorm (JWN - Get Report) -- is conspiculously weak (down $1.50). My long of Macy's (M - Get Report) has faded by nearly half a dollar a share.
  • Biotech is climbing out of its rut. with the IBB +2%. Allergan (AGN - Get Report) is an upside star (+$8.50), but Valeant Pharmaceuticals (VRX) continues to fall.

  • Energy stocks are a bit stronger but well off of their day's highs, as crude has slipped in price.
  • Consumer staples have given back a bit today after several weeks of a currency-inspired rally. My long of Procter & Gamble (PG - Get Report) is down 40 cents, but my short of Coca-Cola (KO - Get Report) is down 15 cents.

  • Media has chilled after a good run. Comcast (CMCSA - Get Report) and Walt Disney (DIS - Get Report) were both down 20 cents at last check.
  • CRABBY is also unpleasant, with most components other than BGB trading lower.
  • My short of Facebook (my only trade of the day, and my Short Trade of the Week) is doing well. It was down $3.50 a share at last check, although it was even lower earlier in the session.
  • Twitter( (TWTR - Get Report) is back from the dead. It was trading +$1.50 recently on heavy volume.

Position: Long BGB, M, PG, HIG, Short SLB, XOM, GM, F, MET, LNC, NFLX (small), TSLA (small), FB (small), JWN, KO (small), SBUX (small)


Peak Autos (Redux)

Originally published at 11:10 AM EDT on April 4, 2016

Auto stocks continue to be conspicuously weaker today for the second session in a row, and the sector represents one of my largest short exposures.

I expanded my shorts of Ford (F - Get Report) and General Motors (GM - Get Report) over the past two weeks, and both stocks reside on my "Best Short Ideas" list.

As I noted last month, my key reasons for shorting autos include:

"-- J.D. Power figures recently quoted by The Wall Street Journal showed that leasing as a percentage of monthly auto sales hit an all-time peak of 32.3% in February. That's around four times a recent low in 2009, as well as some 50% higher than a recent peak in 2007.

-- An extended period of low interest rates has "pulled forward" auto sales, profits and stock prices. Who's left to buy cars?

-- Incentives on new cars are accelerating. That's typically a sign of a future sales drop and below-consensus industry profits.

-- Anecdotally, too-liberal financing programs have begun to lead to rising delinquencies.

-- The development of new mobility technologies and autonomous cars poses a potential intermediate-term threat to U.S. car manufacturers.

-- With so many leases coming off, a wave of residual writedowns could lie ahead."

-- Doug's Daily Diary, Buckle Up! Ford and GM Are Value Traps (March 9, 2016)

Position: Short F, GM

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.