Doug Kass shares his views every day on RealMoneyPro. Click here for a real-time look at his insights and musings.
Originally published at 2:31 PM EDT on May 6, 2016
This chart (Hat tip to "The Little Chief," Bloomberg) helps to explain why there is a bid under the market.
Skepticism -- as manifested in the sharp drop in the call/put ratio -- seems to climb as stocks decline.
Just look at the purple line, which shows the reduction in call buying and the increase in put buying.
Originally published at 3:53 PM EDT on May 5, 2016Mo' Apple ( AAPL) . Apple, are you Sirius ( SIRI) ?
Food for thought from a leading economic voice, Larry Lindsey. Makes me want to buy gold on weakness!
ProShares Short S&P 500 ETF (SH) , my Trade of the Week, was up three cents.
- The U.S. dollar weakened meaningfully in the trading day.
- The price of crude oil rose by 35 cents a barrel to $44.13.
- Nat gas dropped by six cents.
- Gold was essentially flat at $1,274.
- Agricultural commodities = schmeissburger. Wheat -9.75, corn -3.50 and soybean -21.75.
- Lumber +3.40.
- Bonds rose in price, and were lower in yield. The 10- and 30-year note and bond moved down by 2.5 basis points, yielding 1.75% and 2.61%, respectively.
- Municipals were well-bid, and closed-end municipal bond funds continue to float higher to new 2016 highs. I had premature termination in this space late last year!
- High-yield debt was flat, but Blackstone/GSO Strategic Credit Fund (BGB) was up three pennies to $14.
- Banks stocks were disappointing and continued a multiday selloff. I remain short Financial Select Sector SPDR ETF (XLF) at good prices.
- Brokerages were lower by about one-half percent. I covered my Goldman Sachs (GS) and Morgan Stanley (MS) shorts earlier in the week.
- Life insurance, my favored short sector because of reduced reinvestment opportunities in a low-rate setting got whacked. Lincoln National (LNC) was down $2 and MetLife (MET) a beaner. Hartford Financial Services Group (HIG) was conspicuously higher, up 15 cents. I like the pair trade long HIG/short MET-LNC.
- Energy stocks were unchanged.
- Old tech traded flat, save IBM (IBM) , up $2.
- Retail got hit on L Brands' (LB) bad comps and mall concerns. Nordstrom (JWN) , a short is my only holding in retail.
- Agricultural equipment, on the heels of a Caterpillar (CAT) diss from Greenlight's David Einhorn, were down measurably.
- Autos, despite a plug of General Motors (GM) by Einhorn at the Sohn Conference, were flat.
- Consumer nondurables fell as our currency strengthened.
- Disney (DIS) led media, up $1.10.
- Biotech is still drek. Speculative biotech rolling over.
- (T)FANG was weaker, led by Amazon (AMZN) , down $11, and TSLA, down $10. I added to the latter short Thursday.
- NOSH was yuck.
- In individual names, Mr. Market gave yesterday but took away today in Twitter (TWTR) and Potash (POT) -- I wouldn't bottom fish, as I have mentioned recently. The Mighty OAK -- Oaktree Capital Group -- was flat, and DuPont (DD) was down 55 cents.
- Apple continues to trade rottenly, down $1.15. Apple needs a visionary, a house hippie, in my view.
Here are some great posts on Real Money Pro today:
- Jim "El Capitan" Cramer on what's working now.
- Tim "Not Phil or Judy" Collins goes Texas on us in his discussion of a controversial Freeport-McMoRan (FCX) !
- Robert "Not Rita" Moreno on CAT's technicals. Another controversial one in which Jimmy and I hold to differing viewpoints.
- James Passeri on a great review of the Ira Sohn Conference -- a must read!
- Chris Laudani rains on Macy's (M) parade.
Deutsche Bank Isn't Uber Alles
Originally published at 12:30 PM EDT on May 3, 2016
I've continually warned that we should all monitor Deutsche Bank (DB) , which is down some 6% as I write this on Tuesday.
That's not a good signpost, and I remain short on the overbought banking sector via a short of the Financial Select Sector SPDR ETF (XLF) .
Our FXI Short Looks Good
Originally published at 10:14 AM EDT on May 3, 2016
I spend a lot of time filtering through my trading ideas to come out with a single Trade of the Week, which aims to identify which long or short can deliver a good jolt in the near term.
I expect last week's Short Trade of the Week -- a short of the iShares China Large-Cap ETF (FXI) -- to do well again this morning. After all, Peter Boockvar noted Tuesday that we got some weak Chinese data overnight:
"The private-sector-weighted Caixin China manufacturing PMI fell to 49.4 in April from 49.7 in March. The latest read is slightly below the 49.8 that analysts had expected, and the index has now been below 50 for 14 straight months.
Caixin said that according to survey respondents, "relatively weak market conditions and softer client demand led firms to be cautious towards their production schedules. Furthermore, new order books stagnated in April, following a slight expansion in the previous months. The latest data indicated that weaker foreign demand continued to weigh on overall new orders, with new export work falling for the fifth month running."
In other words, Chinese manufacturing continues to suffers from weak global trade, excess debt levels and excess capacity in many industries (although the Chinese are at least facing up to that last factor). The market's response to the report was mixed. The retail-driven Shanghai index rose 1.9%, but Hong Kong's institutionally influenced H share index fell 2.1%. The onshore and offshore yuan were both also lower."
I don't buy China's "recovery story," and that forms the basis of my FXI short. And I don't buy yesterday's S&P 500 rally, either -- as you can tell by this week's Long Trade of the Week, which is a long of the ProShares Short S&P 500 (SH) . That's a 1x inverse play on the S&P 500.
Frankly, I see Wall Street's recent rally as nothing more than part of a long, important market top that began to form in May 2015.