Doug Kass shares his views every day on RealMoneyPro. Click here for a real-time look at his insights and musings.
My Takeaways and Observations
Originally published at 3:50 PM EDT on April 27, 2016All Apple ( AAPL) on Wednesday. Here, here and here.
Peak Hedge Funds -- more evidence.
The man, the legend: Tattoo!
Tell Me Something I Don't Know.
Dan Benton's (Hat Tip Dan Nathan) lessons on technology investing should be taped to your refrigerator.
- Inside day in the markets, at least as of 3 p.m. ET (in the time that it took to write "Takeaways," the S&P rose by seven handles). Ss (S&P) over Ns (Nasdaq).
- The U.S. dollar weakened after the Fed's comments.
- Crude oil advanced by $1.13, to $45.17.
- Gold rose by $4.60, to $1,248.
- Agricultural commodities gave back on price. Wheat -3.25, corn -3.25, soybean -3.00 and oats +2.50.
- Lumber +9.20.
- Bonds erupted higher in price, lower in yield after above. That is why I re-shorted Financial Select Sector SPDR ETF (XLF) at $23.73.
- The yield on the 10-year U.S. note dropped by an outsize seven basis points, to 1.86%, and the long bond by five basis points, to 2.70%.
- Municipals were well-bid and closed-end municipal bond funds advanced ... again. Big mistake selling them earlier in the year on my part!
- The high-yield bond market moved higher. Blackstone/GSO Strategic Credit Fund (BGB) paused and was flat.
- Banks experienced some early strength, sold off on the Fed's comments and are beginning to rally from the lows.
- Brokerages were stronger.
- Life insurance was unchanged despite the rise in bond prices.
- Retail was stronger across the board. Former long Macy's (M) was up 45 cents and short Nordstrom (JWN) was up 55 cents.
- Energy stocks rallied with crude oil. Schlumberger (SLB) rose $1.63 and Exxon Mobil (XOM) was up $1.00. Some positive dividend moves within the space.
- Old tech was quiet, though IBM (IBM) was up $1.60.
- Biotech was down most of the day, but experiencing a late-day rally. iShares Nasdaq Biotechnology ETF (IBB) was down $1.70.
- My biotech basket of speculative stocks still appears to be rolling over.
- Consumer non-durables thrived, as Kimberly-Clark (KMB) bounced from recent weakness and Procter & Gamble (PG) was up 55 cents. Short Coca-Cola (KO) was fractionally higher.
- Autos were dead flat.
- Ag equipment was higher, with Caterpillar (CAT) up $1.15 and Deere (DE) up $1.50.
- (T)FANG continues weak, led by AMZN, down $9, and Tesla (TSLA) , down $2.60.
- Trade of the Week short iShares China Large-Cap ETF (FXI) continues to rally, up 30 cents.
- NOSH was mixed; Starbucks (SBUX) , a favorite short, continues to decline, down 72 cents. It appears to be breaking down from the earnings report last week. Mine is a minority view.
- CRABBY was helped by Radian Group (RDN) , which had an earnings beat and some good credit data (more to come later in the week).
- In miscellaneous names, Twitter (TWTR) was a twit and Potash (POT) rallied by 40 cents after Monsanto (MON) was upgraded yesterday.
- Apple was down between $6 and $7 most of the day.
Here are some good columns from RealMoneyPro today:
- Jim "El Capitan" Cramer on the market, which is impervious to Apple.
- Apple mea culpa (I respect his candidness) from Mark Sebastian.
- Shad Gad "And the Pharoahs" on how to beat the pros.
- James Passeri on Mr. Ackman Goes to Washington.
- Jack and Jim on Twitter.
Position: Long SDS large; short SPY, IWM small, QQQ, AAPL, JWN small, NFLX small, TSLA small, CAT small, AMZN small, SBUX, XOM small, SLB small, FXI small
Beware of Changing Narratives and 'No Brainers'
Originally published at 2:36 PM EDT on April 28, 2016"I am cuckoo for Cocoa Puffs."
--Sonny the Cuckoo Bird, 1980s commercial for General Mills' Cocoa Puffs
It is disturbing how so many who readily are given a media platform so quickly forget and discard discussions in the stocks or in the arguments that no longer conform to their point of view or outlook.
They just seem to move on with a changing narrative.
In the iconic Cocoa Puffs commercial, Sonny the Cuckoo Bird attempts to concentrate on a normal task and ends up coming across some reference to Cocoa Puffs (usually described by the adjectives "munchy, crunchy, chocolatey") and bursts with enthusiasm, exclaiming, "I'm cuckoo for Cocoa Puffs!"
Today, talking heads are cuckoo for Facebook (FB) , but they conveniently ignore or reference their "yesterday's Facebooks."
Facebook's shares have risen by nearly tenfold from a few years ago, and the sound of today's enthusiasm (as if you almost can't lose) is eerily reminiscent of the chorus that we heard regarding Apple (AAPL) in September 2012 and again 15 months ago in early 2015.
In "You Cant Be Serious, Man," I wrote:
And for every great earnings report from the likes of Facebook (FB), we're seeing multiple negative releases -- from Apple (AAPL), Coca-Cola ( (KO) ), Netflix ( (NFLX) ), Procter & Gamble ( (PG) ), Starbucks ( (SBUX) ), etc.
Are they serious, man? And who do they think they are kidding?
Lesson? Beware of changing narratives and the loss of memory.
George Soros once told me that all stocks are like soap -- you take a shower with them and they ultimately dissolve.
Kansas' "Dust In The Wind" comes to mind:
"I close my eyes only for a moment, and the moment's gone
All my dreams pass before my eyes, a curiosity
Dust in the wind, all they are is dust in the wind
Same old song, just a drop of water in an endless sea
All we do crumbles to the ground, though we refuse to see
Dust in the wind, all we are is dust in the wind
Now, don't hang on, nothing lasts forever but the earth and sky
It slips away, and all your money won't another minute buy..."
I do know one thing for certain -- the reward versus risk for Facebook is far worse than it was back in 2013, and investors should not forget The Law of Large Numbers and that success creates the largest headwind, and Schumpeter's gale of Creative Destruction as it relates to the last Facebook, Apple.
Post script: As I write this column, Carl Icahn has just announced that he has sold his entire Apple position. Which seems to prove my point. Sic transit Gloria ... and caveat emptor.
Position: Short AAPL, NFLX small, SBUX small