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 you should say no to closed-end municipal bond funds.
- How Cara Therapeutics is on a run.
Click here for information on RealMoney, where you can see all the blogs, including Doug Kass'--and reader comments--in real time.
It's not a joke. It's a rope, Tuco. Now I want you to get up there and put your head in that noose.
-- Blondie in " The Good, the Bad and the Ugly"
I did no trading today, and there will be no "Takeaways" today.
As expected, the markets have basically flat-lined with, for a change, little intra-day price movement.
And now it's time to run down "The Good, the Bad and the Ugly" ...
- The market is amazingly resistant.
- The Russell Index is killing the shorts--up, again.
- Brokerages (Goldman Sachs (GS) , Morgan Stanley (MS) ) don't quit.
- Agricultural commodities are ripping higher: wheat up $0.05, corn up $0.04, soybeans up $0.06.
- Biotech is down 2%. Allergan (AGN) and Gilead Pharmaceuticals (GILD) are leading downside stocks.
- Alphabet (GOOGL) is leading TFANG lower (down $8).
- Autos are stalling.
- The bond market, highlighted in my opening missive is a problem. The 10-year is 5 basis points higher, to 2.34% and the long bond is at 3.01%, up 3 basis points. The 2s/10s spread has steepened by 2 basis points to 128 basis points.
- Gold is testing $1,200, down another $8 in today's trading session.
- The continued uncertainty of the direction in interest rates.
- Rising rates not only demand higher municipal bond yields but closed-end funds face rising interest costs (which reduces distributions) from their borrowings--as most closed-end municipal bond funds are levered.
- Changing tax policy expected out of the Trump administration makes municipal bonds less attractive. Ergo, spreads between taxable and non-taxable yields will likely narrow.
- The recent weakness in closed-end bond funds has been pronounced over the last one to two months. This could lead, as it did in December 2013 (when I first went long the asset class), to even more forceful year-end tax selling.
Specifically, retail stocks gapped higher in a panicky buying session and closed well off their highs.
Here are three examples of stocks I sold near the day's highs in Monday's session:
Day's High 62.82
Day's Low 59.06
Day's High 43.94
Day's Low 41.10
Day's High 72.88
Day's Low 70.55
I bought some shares in biotech Trevena ( TRVN) as insiders have made some recent purchases and company has a Prescription Drug User Fee Act (PDUFA) date in the first quarter.
Those looking for a contrarian investment play might want to look at Mexico. The iShares MSCI Mexico Capped ETF ( EWW) is down some 15% since the election.
Personally, I don't think anything major will change between countries despite the campaign bluster. I think I will make a lowball bid and see if it hits today.