Going Shorter; Takeaways and Observations: Best of Kass

Top thoughts on stocks and the markets from TheStreet's Doug Kass.

Going Shorter Financials
 
Originally published Oct. 12 at 3:18 p.m. EDT
 
Please note that iShares Barclays 20+ Year Treasury Bond ETF ( TLT) is now at the high of the day (+$0.52).
The reversal in money center banks shares has been conspicuous. (Citigroup ( C) is -$4 from its premarket high).

The 10-year US note yield, as expected, is weakening (by three basis points) -- and now stands below the support line of 2.32%.
I have further expanded my financial shorts - - by adding to short positions in Metropolitan Life ( MET) , Lincoln National ( LNC) , Bank of America ( BAC) , Morgan Stanley ( MS) and Goldman Sachs ( GS) .

These are all medium sized.
 
After selling the balance of Radian Group ( RDN) and with a very large long Wells Fargo ( WFC) -- to be clear, I have moved into a reasonably large net short exposure in financials today.
 
Position: long WFC large; Short MS GS BAC LNC MET TLT
My Takeaways and Observations
 
Originally published Oct. 12 at 2:36 p.m. EDT

"Gotta love those economists."

 
Why I shorted JPMorgan ( JPM) and Citigroup ( C) post EPS releases. And why I believe the stocks reversed lower -- think loan losses.
 
 
 
I eliminated Radian Group ( RDN) and Twitter ( TWTR) today. And I added to my SPDR S&P 500 ETF ( SPY) short.
 
Charts of the Day and Up In Smoke with another chart.
 
With two hours of trading left the market remains in a narrow range.
 
* The US Dollar strengthened again this afternoon.
* The price of crude oil retreated by -$0.62 to $50.68.
* Gold rose by $8.
* Ag commodities: wheat -2, corn +3, soybeans +24 (!!) and oats +11. Good for the fertilizers.
* Lumber +7.
* Bonds -2 basis points. The 10-year yield, as I suggested in my bank note, looks like it will pierce back down the 2.32% resistance.
* Municipals bid for but high yield for sale (smallish).
* Banks failed to hold the early morning ramp and are trading near the day's lows. WFC outperforming its peers today.
* Insurance stocks slightly lower.
* Brokerages also weaker.
* Autos profit taking.
* Energy stocks lower on the commodity hit.
* Gambling stocks profit taking.
* Consumer staples quite strong - I am not sure why.
* Ag equipment quite strong again after flattening out in recent days.
* Biotech looks toppy. CELG, GILD and AGN stinking up the joint.
* Retail is on sale, again.
* Media schmeissed - led by CMCSA and DIS.
* Rails better.
* Old tech mixed but Microsoft ( MSFT) strong.
* FANG all higher but modestly so.

Here are some value added contributions on our site today:
1. Jim "El Capitan" Cramer had a few good ones including this on Micron ( MU) .
3. Divine is back! (I hope her husband feels better after his surgery!)
4. Rev Shark on flipping a coin.
Position: LONG AGN small WFC large Short DIS C JPM SPY large TLT FB small.
 
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 banks are already seeing rises in loan losses
  • How low-probability events really do happen

Click here for information on RealMoney, where you can see all the blogs, including Doug Kass'--and reader comments--in real time.

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