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 he is refreshing his near-term strategy.
- How Twitter will continue to fly solo.
Click here for information on RealMoney, where you can see all the blogs, including Doug Kass'--and reader comments--in real time.
"I've never seen so many men wasted so badly."
-- Blondie in The Good, the Bad and the Ugly.
- The S&P Index.
- Banks, insurance companies (I reduced "Trade of the Week" Hartford Financial Services Group (HIG - Get Report) after a nearly 5% gain) and brokerages.
- Ag -- Monsanto (MON) and DuPont (DD - Get Report) (though agricultural commodities were mixed). DuPont remains my favorite large-cap long.
- Two members of (T)FANG - Amazon (AMZN - Get Report) and Netflix (NFLX - Get Report) .
- Crude oil (+$1.05) and energy stocks. (I covered United States Oil Fund LP ETF USO about 10% lower two weeks ago) Phew!
- Twitter (TWTR - Get Report) (but I had a negative take this morning on a transaction).
- Caterpillar (CAT - Get Report) is the "world's fair" -- I am small short.
- Biotech better after some recent weakness.
- Bonds (though off their day's low) land bond surrogates in the equity market. Good for me, though, as I remain with a large short position in iShares Barclays 20+ Yr Treas.Bond ETF (TLT - Get Report) . The 10-year yield is closing at 1.72%. The 2s/10s spread is back up to 87 basis points.
- Dollar Stores (FDO) weak for the second day in a row. (I would continue to avoid; here is my thesis).
Of that I can almost guarantee.
Bank and insurance company shares have had a spirited advance this week based on better-than-expected U.S. economic data and talk of the ECB tapering its QE.
I put Twitter on my Best Ideas List at $14.60 and took it off about $8 higher a week or so ago because I applied exactly the same rationale that Jim did today in his well-crafted analysis.
I sold the stock because I felt the reward versus risk was about even for Twitter's shares, consequently not justifying continued ownership of the shares at $23.60 (the price at which I took Twitter off of my Best Ideas List).
My view is that given the weak near-term profit/monthly average usage outlook when combined with the dilutive impact of a deal, Twitter may not attract a reasonable price that justifies agreeing to an acquisition and that it likely will remain independent over the next few years despite the numerous indications of interest of late.
With very heavy operational and financial lifting ahead, investors would sell the stock on this outcome immediately, and an opportunity to purchase the stock in the mid-teens might reappear in the very near future.
I don't think there is anything to do with the stock at this time, but we will find out soon enough if I am correct in view.
S&P futures are trading up six after a slightly weaker-than-expected ADP payroll report.
On weakness I covered all my index shorts earlier in the week and I am currently at my lowest gross and net exposure of the year. I am now at market neutral.
I did initiate a small starter position in gold toward the end of yesterday into the 3 1/2 standard deviation move and the second-largest daily price change in three years.
Overall, given political, monetary policy and other uncertainties, I prefer over the balance of the year to be balanced and not tilting in either direction. Rather, an opportunistic trading style is my near-term desired course.
On Monday I likely will expand upon the artificiality of stock prices, which not only is the provenance of loose central banks' policy but also is delivered by risk parity and volatility trending Quant strategies.
That said, over a three- to six-month time frame I remain unequivocally bearish on both stocks and bonds.
I will also address more peaks (including increased evidence of Peak Autos and Peak Housing) in the days ahead that are illustrative of slowing aggregate domestic economic activity.