Doug Kass of Seabreeze Partners is known for his accurate stock market calls and keen insights into the economy, which he shares with RealMoney Pro readers in his daily trading diary.
This past week, Kass said even junk is rising, and also washes his hands of Procter & Gamble.
My Takeaways and Observations
Originally published April 20 at 3:03 p.m. ET
Bulls 10-Bears 0.
At 3:00 p.m. ET we were at the highs of the day. Nary a downtick from the market lows. Short covering, programs and long buyers. Even junk is rising -- e.g., Sears Holdings ( (SHLD) ) was up nearly 9%.
Keep an eye on temporary job hirings.
Hanson hates housing.
- The U.S. dollar strengthened a bit today. Consumer nondurables felt the pain of the currency rise and the KO miss. I sold my long Procter & Gamble ( (PG - Get Report) ) and took it off my Best Ideas List today. PepsiCo ( (PEP - Get Report) ), Kimberly-Clark ( (KMB - Get Report) ) and KO all were weak.
- Crude oil rallied despite fundamental news that could have taken it lower. It was $1.43 to $42.51 in what looks like a massive short squeeze.
- Nat gas was flat.
- Gold was unchanged at $1,253.
- Agricultural commodities were through the roof following days of strengthening prices: wheat +12.50, corn +6.25, soybean +22.00 and oats +10.50. Food inflation lays ahead, Janet Yellen.
- Bonds were lower in price and higher in yield. iShares 20+ Year Treasury Bond ETF ( (TLT - Get Report) ) was down $1.05.
- The 10-year U.S. note yield rose by four basis points to 1.82% and the long bond by the same amount to 2.63%.
- Municipals flat-lined, but the sprint for yield resulted in more gains for closed-end municipal bond funds.
- High yield improved. iShares iBoxx High Yield Corporate Bond ETF ( (HYG - Get Report) ) was up 27 cents and SPDR Barclays High Yield Bond ETF ( (JNK - Get Report) ) was up 11 cents.
- Blackstone/GSO Strategic Credit Fund ( (BGB - Get Report) ) was three pennies to the good.
- Banks were tentative midday but are at their highs for the day now.
- Brokerages are up, with Morgan Stanley ( (MS - Get Report) ) up 50 cents and Goldman Sachs ( (GS - Get Report) ) up $2.90.
- Life insurance responded to the drop in bond prices as reinvestment opportunities are seen expanding, though rates remain very low.
- Energy stocks were higher with the commodity advance. Schlumberger ( (SLB - Get Report) ) was up $1.80 and Exxon Mobil ( (XOM - Get Report) ) up $1.13.
- Retail was mixed, with short Nordstrom ( (JWN - Get Report) ) the strongest to the upside (up $1.45). Wal-Mart ( (WMT - Get Report) ) faltered a bit. Prior long Macy's ( (M - Get Report) ) was up 40 cents.
- Media was mixed. Disney ( (DIS - Get Report) ) was up 70 cents but Comcast ( (CMCSA - Get Report) ) was down 85 cents.
- Ag equipment, led by Deere ( (DE - Get Report) ), which was up $2.25, was again strong. However, Caterpillar ( (CAT - Get Report) ) slowed down after recent gains.
- Old tech was led to the upside by IBM ( (IBM - Get Report) ), rising $2.65 from pressure earlier in the week.
- Biotech was unchanged as Allergan ( (AGN - Get Report) ) rallied and so did spec Intrexon ( (XON - Get Report) ). Nothing much in my former Biotech Basket to record.
- Autos continued ahead for the third day in a row after a Barron's cover story. Ford ( (F - Get Report) ) was up a quarter and General Motors ( (GM - Get Report) ) up 40 cents.
- (T)FANG was led by Tesla ( (TSLA - Get Report) ) and Amazon ( (AMZN - Get Report) ). Netflix ( (NFLX - Get Report) ) had a dead-cat bounce.
- NOSH was uneventful, as was CRABBY.
- In individual stocks, Twitter ( (TWTR - Get Report) ) warmed up by 55 cents and Potash ( (POT) ) poked above $18 after yesterday's strong gain. DuPont ( (DD - Get Report) ) was hit by profit taking and was down 75 cents.
Very little trading today as I marvel at the unrelenting advance.
Here are some great columns from RealMoneyPro:
Washing My Hands of Procter & Gamble
Originally published April 20 at 10:34 a.m. ET
Another one bites the dust!
I'm making these moves based on the following:
- My overall negative market outlook.
- My expectation that the U.S. dollar won't fall much further over 2016's balance.
- Channel checks that indicate recent organic growth trends might disappoint.
I don't think there's much risk in holding P&G, but I no longer see any catalysts for upside outperformance.
For now, I plan to maintain these three positions -- even in the more-turbulent market that could lie ahead.