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 Nov. 10 at 4:58 p.m. EDT
- The U.S. dollar strengthened.
- The price of oil continued to cave. Down by $0.72 to $44.55.
- Gold fell by another $19. Earlier in the day I reduced my size to small in the asset class.
- Ag commodities: wheat down $0.02, corn up $0.02, soybeans up $0.011, oats down $0.02.
- Lumber flat.
- Bonds got schmeissed, again. The yield on the 10-year U.S. note rose by 7 basis points to 2.14% and the long bond by 6 basis points to 2.94%.
- Municipals got whalopped. And junk was particularly junky -- let's watch this closely. The iShares iBoxx $ High Yid Corp Bond ETF (HYG) down by nearly a beaner to $84.45 (now down $4 in the last two weeks). SPDR Barclays Capital High Yield Bnd ETF (JNK) down $0.40.
- Blackstone/GSO Strategic Credit Fund (BGB) (I would still avoid!) down by another $0.09 to $14.42.
- Banks were the world's fair ... again.
- Brokerages erupted further and so did the insurance sector. I reduced my life shorts recently and raised my Hartford Financial (HIG) long to very large.
- Autos were strong. (I went down to legends in my shorts a few days ago).
- Energy stocks did well despite a lower commodity price.
- Tech and consumer staples (my long Campbell Soup (CPB) was disappointing) got hit by trade concerns.
- Big pharma materially underperformed after yesterday's standout day.
- But biotech continued to rip led by Allergan (AGN) , Merck (MCK) and Celgene (CELG) . Spec biotech flourished (Sage (SAGE) , Intrexon (XON) and others).
- Old tech led higher by IBM (IBM) .
- Ag equipment continued to surge. I moved to tagends on my Caterpillar (CAT) short near $81 only a week ago!
- I discussed the (T)FANG underperformance throughout the day.
- Longs Radian (RDN) and DuPont (DD) at or near year highs. Apple (AAPL) got hit amid slowing demand stories. JCPenney (JCP) got out of its funk on a retail rally.
- Nordstrom reported an EPS and sales beat and is trading up $8 on the day!
1. Jim "El Capitan" Cramer on the compulsion to sell everything.
2. Gary "The Sun Will Come Out To" Morrow likes Apple here. I will explain why I am negative in a separate column tomorrow.
3. Tim "not Judy or Phil" Collins on a Disney ( DIS) option strategy before earnings. (I went down to tagends in my short recently).
4. James Passeri on my enemy Valeant ( VRX) . I did not like the 10Q issued today.
5. The Donald, Melania and Rev Shark are on a honeymoon.
Long HIG large, DD, RDN bonds, SDS, JCP, JWN, M, TGT
Using Closed-End Muni Funds as a Market 'Tell'
JUL 15, 2016 ' 9:05 AM EDT
The carnage in closed-end municipal-bond funds continued yesterday, and the asset class is now close to a 5% decline so far for the week.
This supports of my view that we've seen a generational bottom for bond yields.
Given closed-end muni-bond funds relatively poor liquidity, these ETFs' customarily lead a general move in interest rates.
Muni-Bond Funds See More Maximal PainJUL 13, 2016 ' 1:53 PM EDT
Closed-end municipal-bond funds are getting annihilated for the second day in a row today despite a rise in taxable bond prices that's seen the iShares 20+ Year Treasury Bond ETF ( TLT) add about 1% as of last check.
A drop in muni-bond-fund prices was one of the bullet points that I made yesterday in declaring a generational low for bond yields. Several muni-bond funds dropped by 2% yesterday, but the decline is even worse today because it's more broad-based.
Funds that are declining today include:
- Blackrock Municipal 2030 Target Term Trust (BTT)
- BlackRock Municipal Income Trust II (BLE)
- Eaton Vance Municipal Income 2028 Term Trust (ETX)
- Invesco California Value Municipal Income Trust (VCV)
- Invesco Pennsylvania Value Municipal Income Trust (VPV)
- Nuveen Premium Income Municipal Fund (NPI)
All were down about 1% at last check, while the iShares S&P National AMT-Free Municipal Bond Fund (MUB) is virtually flat.
The junk-bond market is also lower, and -- like municipals -- isn't following Treasuries' climb higher.Position: Short TLT
As I have recently written, when this asset class turns it is violent.