DAILY DIARY
After-Hours Movers
Closing Market Internals
- NYSE volume 542M shares, 31% above its one-month average
- Nasdaq volume 4.22B shares, 6% above its one-month average
- VIX: down 1.66% to 15.39
Breadth
Nasdaq 100 Heat Map
View larger here.
S&P 500 Sectors
My Tweet of the Day (Part Deux)
A New Regime of Volatility
* This is the only thing I am certain of!
* Let's be damn careful out there..
This is the sort of intraday action that occurs when machines dominate the markets.
Get used to it.
And, hey... let's be careful out there.
Subscriber Comment of the Day
skeptcl
Jeffrey Gundlach CNBC interview (504.57 +2.53)
Mr. Gundlach said:
- The key from the press conference was that a rate hike is unlikely.
- Fed Chair Jerome Powell is being "disingenuous" when he says that inflation is below 3%. Supercore CPI is up 4.8% but nobody wants to talk about that. Doesn't think core inflation will drop below 3%.
- Base case if for one Fed rate cut this year.
- He likes commercial real estate bonds, away from offices.
- He doesn't like the long end of the Treasury curve right now.
- The economy is not shrinking.
Insane in the Brain
Whoa!
With the S&P losing about 45 handles from the highs- and nearly all of the gains on the day - I just took in my short SPY and QQQ calls I put on for a profit!
Goldman Sachs on the Fed
FOMC Announces Start of Tapering; Notes “Lack of Further Progress” Toward 2% Inflation Target in Recent Months
BOTTOM LINE: The FOMC left the target range for the federal funds rate unchanged at its May meeting. The FOMC announced that it will start slowing the pace of balance sheet runoff in June. The monthly cap on Treasury runoff will be reduced from $60bn to $25bn while the MBS cap will remain at $35bn per month, in line with what the March meeting minutes suggested. The Committee again noted that “inflation has eased over the past year” but updated the statement to acknowledge that “in recent months, there has been a lack of further progress toward the Committee's 2 percent inflation objective”.
MAIN POINTS:
- The FOMC left the target range for the federal funds rate unchanged at 5.25-5.5% at its May meeting.
- The FOMC announced that it will start slowing the pace of balance sheet runoff on June 1. The monthly cap on Treasury runoff will be reduced from $60bn to $25bn while the MBS cap will be unchanged at $35bn per month, in line with what the March meeting minutes suggested.
- The Committee again noted that “inflation has eased over the past year” but updated the statement to acknowledge that “in recent months, there has been a lack of further progress toward the Committee's 2 percent inflation objective”. Minimal changes were made to the rest of the post-meeting statement’s characterization of the economy.
Computers Are Wagging the Market's Dog
Stocks are now moving in integers - which means that computers are wagging the market's dog.
This makes trading most difficult.
Sticking with straddles and not yet being tempted to make any meaningful directional statement.
Shorting SPY, QQQ Calls
With S&P cash +34 handles, I am back shorting SPY, QQQ calls.
Boockvar on the Fed, Interest Rates, and QT
From Peter:
There was not much of a change in the statement wording except the Fed added this, "In recent months, there has been a lack of further progress toward the Committee's 2% inflation objective." This is code for the Fed doesn't have more confidence relative to the March meeting to commit to when to start cutting rates.
The surprise was in the QT tapering plans where expectations were widely held that Treasury drawdowns would be $30b per month from $60b but instead the Fed went down to $25b. I'd like to hear what Powell gives as the reason.
As expected, there is no change to MBS QT. Either way, I do think he'll make it clear that their eventual end game for QT and where bank reserves settle out at won't change and slowing monthly QT will only stretch out the timeline on it further than otherwise.
On the bigger QT reduction, Treasury yields are slipping a hair, by about 1 bp for both the 2 yr and 10 yr.
The presser, as usually the case, will end up again possibly being the market moving news, or not.
I’ll add one more thing, on the topic of whether the Fed shifts to more rate hikes if they don’t get the further inflation moderation they want I see no chance as just by keeping rates at current levels for a longer period of time is itself a continued form of monetary tightening because of the daily debt coming due that was priced pre 2022.
And for those who don’t know, that subject line is a music quote from Rush and the song Freewill.
The Fed Whisperer
The Straddle Life
I am back with my straddles on the Indexes:
* SPY June $500 Straddle
* QQQ June $420 Straddle
Starbucks Tweet of the Day
Boockvar on US Manufacturing
From Peter:
The ISM manufacturing index slipped back below 50 in April at 49.2 vs 50.3 in March and vs the estimate of exactly 50.
New orders dropped by 2.3 pts m/o/m to 49.1 while backlogs remain well below 50 at 45.4 vs 46.3 in the month before. No sign yet either of inventory build as this category held at 48.2 and customer inventories were 47.8, though up from 44 in the month before. In contrast to what ADP said, the employment component remained below 50 again at 48.6 with only 4 of 18 industries asked adding staff. Export orders fell back under 50 at 48.7 vs 51.6 in March.
Specifically with inventories, ISM said "Panelists’ companies continue to indicate a willingness to invest in manufacturing inventory to improve on-time deliveries, gain precision in revenue projections and improve customer service. However, they are proceeding judiciously on this objective, preferring to wait for additional demand.”
Of note, prices paid jumped 5.1 pts to 60.9 and that is the highest since June 2022. Supplier deliveries fell 1 pt to 48.9 so no supply chain issues and the prices paid jump is most likely due to the rise in commodity prices. ISM said, "Commodity prices continue to increase, especially crude oil, aluminum, steel and plastics. Thirty-one percent of companies reported higher prices in April, compared to 24 percent in March.”
With respect to breadth, it was similar to March with 9 industries seeing growth and 7 experiencing a contraction (vs 6 in March).
ISM Mfr'g
Prices Paid
Bottom line, it seems that after a manufacturing recession that started in late 2022, a bottom is trying to be found but no rebound yet seen. The inventory comment above sort of sums that up. And now we have the rise in commodity prices which likely is calling a bottom too in goods prices.
Job Openings in March shrunk by 325k jobs m/o/m to 8.488mm. That's the least since February 2021. The hiring rate fell to 3.5% from 3.7% and that matches the lowest since 2014 not including Covid. Also, the quit rate fell one tenth to 2.1%, the lowest since January 2018 not including Covid.
Bottom line, while ADP and the BLS continue to reflect good job growth, absorbing the influx in the labor force each month, other signs like JOLTS are pointing to a lessened demand for workers.
Job Openings
Hiring Rate
Quits Rate
Why I Sold All of My Cannabis Holdings on Yesterday's Sharp Climb Higher
- Schedule III does not necessarily resolve uplisting issues.
- Schedule III does not resolve institutional ownership and custody issues.
- So, a further rally in cannabis stocks will be dependent on follow thru of interest by retail investors (who have been consistently burned by purchasing strength over the last 3-5 years).
- An excise tax may be instituted to offset the loss of tax revenues from the elimination of 280e.
- The notice/review/lawsuits issues during the estimated six month comment period could get contentious.
- If Schedule III is not finalized before year end there could be renewed concerns that a new Administration will try to turn back the decision.
- Some portion of the benefit of elimination of 280e may inure to the benefit of consumer (in terms of lower weed prices).
- The total addressable market for cannabis is materially less than consensus expectations.
- State silos create diseconomies of scale.
- State dispensary limitations in popular/large states is a headwind to consumer branding and market penetration opportunities.
- Accounting standards for the cannabis sector are aggressive/weak.
- Managements are still not ready for prime time players.- arguably, their operating and forecasting skills are not yet keenly developed.
- Accumulated debt and non payment of taxes represent a heavy load for companies not delivering returns anywhere near their cost of capital.
Boockvar on Job Data
From Peter:
ADP said private sector job adds totaled 192k in April, just above the estimate of 183k and compares with 208k in March, revised up from 184k. Medium and large businesses drove most of the hiring.
Service sector job growth of 145k was again led by a 56k person increase in leisure/hospitality. This was followed by a 26k increase for both education/health services and trade/transportation/utilities. Net hiring was also seen for professional/business services and in the financial sector. Jobs were shed in 'information' by 4k which includes tech, telecom and media.
On the goods side, construction again led the way, growing its payroll by 35k. We know many of this is due to the government encouraged infrastructure and manufacturing facility construction. manufacturing hiring totaled 9k.
On the pay side, after jumping in March, wages for 'job changers' were up a still robust 9.3% y/o/y vs 10% and 7.6% in the month before that. Wage growth for 'Job stayers' rose 5% vs 5.1% in the month before. These are still pretty good growth rates.
Bottom line, within the ADP data we don't get granular information on how much of the hiring was of newly incoming immigrants, whether legal or illegal as both get work permits, particularly in most likely leisure/hospitality and construction but these were the two areas that saw the best job growth. As I pointed out yesterday, the government now believes we need to hire about 200k people per month in order to keep the unemployment rate from rising because of the immigrant influx, double the previously estimated thought.
Also of note, today's private sector print of 192k, is almost exactly what the consensus estimate is for the private sector piece of Friday's payroll report.
Treasury yields did drop after the number release, maybe because it was near expectations and/or wage growth fell a touch.
Lastly, on first glance it looks like the Treasuries maturity cadence of selling longer term coupon debt will be similar to Q1.
Economic Calendar Today
Sprott Uranium Miners ETF Is Jiggy
(URNM) is jiggy this morning (+$2.50).
From yesterday:
I Added to URNM Late Last Week
Position: Long URNM (M)
BY DOUG KASS APR 30, 2024 7:45 AM EDT
Selected Premarket Movers
Upside
- (PALI) +57% (lead Product Candidate, PALI-2108 Demonstrates Potent Anti-Inflammatory Effects in Ex-Vivo Study of Whole Blood Samples Challenged with Pro-Inflammatory Lipopolysaccharide)
- (ROOT) +26% (earnings)
- (POWL) +24% (earnings)
- (TGTX) +21% (earnings, guidance)
- (PINS) +16% (earnings, guidance)
- (NYCB) +15% (earnings, guidance)
- (TMDX) +14% (earnings, guidance)
- (NARI) +11% (earnings, guidance)
- (SLS) +10% (positive phase 2 preliminary data of SLS009 in r/r AML achieving a 100% response rate in patients with ASXL1 mutation at the optimal dose level)
- (LMND) +8.0% (earnings, guidance)
- (AXTA) +6.5% (earnings, guidance)
- (ALRN) +4.4% (announces Positive Data from Cohort 1 of the Phase 1b Clinical Trial of LTI-03 in Idiopathic Pulmonary Fibrosis)
- (AX) +3.3% (earnings)
- (LC) +3.1% (earnings, guidance)
- (RWT) +2.7% (earnings)
- (JNJ) +2.5% (discloses it recorded an incremental charge of ~$2.7B related to ovarian cancer arising from cosmetic talc litigation in the United States, for a total reserve as of Q1 2024 at a present value of ~$11B; submits regulatory applications to European Medicines Agency for TREMFYA (guselkumab) for treatment of patients with ulcerative colitis and Crohn's disease)
- (GRMN) +2.2% (earnings, guidance)
- (SMG) +2.1% (earnings, guidance)
Downside
- (SWKS) -15% (earnings, guidance)
- (SBUX) -13% (earnings, guidance)
- (CVS) -12% (earnings, guidance)
- (TXGE) -11% (earnings, guidance)
- (SMCI) -10% (earnings, guidance)
- (BLBD) -9.0% (extends Exclusive Clean School Bus Collaboration with Ford Component Sales and ROUSH CleanTech to 2030)
- (FLEX) -8.0% (earnings, guidance)
- (PSNY) -7.9% (to delay annual results citing accounting errors)
- (OI) -6.8% (earnings, guidance)
- (CDW) -6.6% (earnings, guidance)
-undefined -5.8% (earnings, guidance)
- (EXEL) -5.7% (earnings, guidance)
- (EL) -5.3% (earnings, guidance)
- (YUM) -5.0% (earnings)
- (KHC) -4.5% (earnings, guidance)
- (NCLH) -3.8% (earnings, guidance)
- (MA) -3.6% (earnings, guidance)
- (AVT) -2.8% (earnings, guidance)
- (JCI) -2.8% (earnings, guidance)
- (CLX) -2.6% (earnings, guidance)
- (TTI) -2.1% (earnings)
More Night Moves: A Detailed Look at Overnight Futures and Why/What Markets Are Moving
* Schmeissburger yesterday for the markets, but we had a really good time!
* Equities are not compensating investors for risks and are expensive against interest rates and rising inflation:
* Look for the new regime of volatility to continue in the weeks ahead - in the market without memory from day to day
* Sell in May?:
* The S&P Short-Range Oscillator is still in overbought - at 1.82% v. 2.83%
* Bond yields are unchanged
* The U.S. dollar is much stronger against the yen
* Oil is getting hit (Brent is -$1.20)
* Gold is +$1.80 and silver is +$0.08
* Bitcoin is -$1,300 (-2%)
* Ummm... don't stop me:
I'm gonna have myself a real good time
I feel alive
And the world, I'll turn it inside out, yeah
I'm floating around in ecstasy, so
Don't stop me 'cause I'm having a good time, having a good time
- Queen, Don't Stop Me Now
This daily Futures feature is like inside baseball. I try to show you and write about what I believe thoughtful hedge fund managers are looking at when they awake -- let's call it our normal routine -- setting the stage for their strategy for the day. The market is a complicated mosaic and the more info you have, the better trader and investor you will be!
The market (and money) never sleeps -- and neither do I, it appears! I have previously described the importance that overnight futures trading hold for me here. It is a guidepost to my strategy in the regular trading session. Moreover, the overnight/early morning futures hold opportunities as they are (1) inefficient, though liquid and (2) it seems fear and greed are often exaggerated outside the regular trading session. I frequently try to capture those efficiencies by trading actively both in the pre- and after-market sessions.
Here are brief observations I wanted to highlight and provide a summary of overnight price movements in various asset classes:
* Stock futures were lower overnight. S&P futures peaked at -1 and bottomed at -31. Nasdaq futures peaked at -47 and bottomed at -161. At 8:04 a.m. ET, S&P futures were -21 and Nasdaq futures were -115.
* Commodities are broadly lower. Brent crude was -$1.34 to $84.99.
* The S&P Short-Range Oscillator remains in overbought last night at 1.82% v. 2.83%.
* The VIX is at 16.16(+0.51). I plan to put back straddles/strangles on any further increase in volatility.
* The US dollar is very strong against the yen but unchanged from the euro and pound.
* Interest rates are 1-2 bps lower. The yield on the two-year Treasury is 5.023% (-1 to -2 basis points). The yield on the 10-year Treasury is -1 basis point at 4.674%. The long bond yield is also -1 basis point at 4.78%.
* Overnight, the inversion of the 2s/10s Treasuries curve is up to -35 basis points.
* Gold is +$3.40 at $2,307. Silver is +13 cents.
* Bitcoin is -2% and is under $58k.
Here is a synopsis of some of my columns I believe were important, or in the event you were out for the day and/or did not read my Diary. The principal intent is to review the logic of my market moves and other factors:
The Lesson From The Game Changers
Here is Why... To Robbo With Love
The Gospel According to El-Erian
Here were yesterday's trades:
* Bought MSOS and SOLD OUT ALL CANNABIS
Covered Index Shorts in Premarket
* Just now...
I just covered my small sized Index shorts from a few days ago:
* SPY $500.20
* QQQ $422.12
From April 26:
Small-Sized SPY, QQQ
As mentioned, I reinitiated shorts in common of SPY and QQQ on today's ramp higher.
Now small-sized, here are my cost basis:
* SPY $508.82
* QQQ $430.81
Position: Short SPY common (S), QQQ common (S)
BY DOUG KASS APR 26, 2024 2:36 PM EDT
The Book of Boockvar
From Peter:
The FOMC statement will most likely be identical to the one given in March but with the tweak in wording about the QT tapering in terms of monthly Treasury drawdowns. I assume when Powell said "fairly soon" at the March meeting with respect to this announcement, meant today.
Powell at his presser though is where the potential verbal action takes place as we know but he's sort of trapped into a stand down approach with regards to shifting policy as whatever confidence he was hoping to see with the inflation stats, he hasn't really gotten more of it since the March meeting.
One of my 3 contrarian calls this year was to buy cannabis stocks, mentioned here in January, in anticipation of a rescheduling of cannabis which would basically eliminate the federal regulations inhibiting access to banking services and would allow normal expensing of all business expenses which will lead to a big bump in cash flow.
Well, in case you missed it, that is now going to happen according to the news seen yesterday, with a process to the finish line to begin from here. At yesterday's close, the MSOS etf is up 29% since when I mentioned it.
A slew of earnings calls to go thru and I hope you find the company commentary helpful. And I will say AGAIN, what I'm reading here is a really mixed economic situation.
From Amazon:
"We remain focused on making sure we're offering everyday low prices, which we know is even more important to our customers in this uncertain economic environment. As the results show, customers are shopping but remain cautious, trading down on price when they can, and seeking out deals."
"As part of our guidance considerations, we also continue to keep any eye on consumer spending and macro level trends, especially in Europe, where it appears to be a bit weaker relative to the US."
With AWS, "companies have largely completed the lion's share of their cost optimization, and turned their attention to newer initiatives." Of course they too are benefiting from massive AI spend.
From McDonald's:
"As I reflect on the first quarter of the year, it is clear that broad based consumer pressures persist around the world. Consumers continue to be even more discriminating with every dollar that they spend as they face elevated prices in their day-to-day spending, which is putting pressure on the QSR industry."
"It's worth noting that in Q1, industry traffic was flat to declining in the US, Australia, Canada, Germany, Japan, and the UK. And across almost all major markets, industry traffic is slowing. In the context of a difficult macro environment for the industry, we know our customers are looking for reliable, everyday value now more than ever."
From Brinker International, that has a higher income consumer (broadly speaking) than McDonald's had a better quarter than Mickey D's.
After the weather weak January, "We were pleased to see our business immediately bounce back and perform well in February and March and with Chili's beating the industry sales by more than 7% and traffic by nearly 4% for the entire quarter."
"We do know that we're growing in all income demographics right now. So, when you look at across all income profiles, they're all spending more at Chili's, so we feel really good about that."
"Our traffic driving initiatives combined with real operational improvements are creating tailwinds for the business."
With their Maggiano's concept, the 1.7% positive comp was all price and mix, "partially offset by negative traffic."
Starbucks numbers looked awful:
"Our performance this quarter was disappointing and did not meet our expectations."
Their global comp drop of 4% y/o/y was "driven by a negative 3% comp growth in North America, led by declining traffic and a negative 11% comp growth in China."
"Headwinds discussed last quarter have continued. In a number of key markets, we continue to feel the impact of a more cautious consumer, particularly with our more occasional customer. And a deteriorating economic outlook has weighed on customer traffic, an impact felt broadly across the industry."
"We still see economic volatility in the Middle East...In China, we still see the effects of a slower than expected recovery, and we see fierce competition among value players in the market."
"In this environment, many customers are being more exacting about where and how they choose to spend their money, particularly with stimulus savings mostly spent. We saw this materialize over the quarter as customers made the tradeoffs between food away from home and food at home."
Here is an around the globe macro view from Coca-Cola:
"In Asia-Pacific, momentum continued across a large portion of our business, including Japan and South Korea, Philippines, and Thailand. We gained traction in Indonesia with a return to volume growth. India's momentum was impacted by some temporary factors but recovered at the end of March. In China, retail sales growth continues to improve, but consumer confidence is still below 2019 levels."
"In EMEA, we're seeing gradual improvement in macro trends in Europe, leading to improved consumer confidence."
"Geopolitical and economic challenges in Eurasia and the Middle East continue to affect our business in the region."
"North America volume had a slow start to the quarter before posting sequential improvement in each of the last two months of the quarter and elasticities remained favorable, leading to ongoing share gains."
"In Latin America, volume momentum continued. Performance was driven by strength in Mexico, Brazil, and Columbia, while Argentina continued to experience highly inflationary conditions."
Gartner is always a good read on the tech industry as they sell research and analytics on the sector. The stock was down 8% after earnings yesterday.
"In Q1, our clients experienced more challenging macroeconomic conditions, which led to a tougher selling environment."
"Our tech vendor clients continued to be affected by sizable layoffs as well as reductions and shifts in venture capital investments."
"You know that we highlighted in February that we had a larger-than-normal amount of contracts coming up for renewal on the tech vendor side. Those were typically 2 yr or 3 yr deals and so they hadn't been touched in a few years. And obviously the tech market is very different today than it was a few years ago and generally what we're seeing, particularly with our medium to larger sized tech clients is they are staying with us, but there is still some recalibration. And what that means is there's less new business than normal on those renewals...we're still in a pretty challenging tech vendor end-market."
From MLM:
"Geographically, y/o/y strength in China and EMEA was driven by our strength in electronics and automotive. Sales in the US were flat y/o/y, with industrial and healthcare end markets showing relative strength offset by consumer retail softness."
Martin Marietta Materials as a maker of aggregates for the construction industry is benefiting from public infrastructure spend along with manufacturing facility build outs but getting hurt by the slowdown in construction in many parts of commercial real estate.
"We expect robust multi-year demand in public infrastructure, US based manufacturing, energy projects, and data center construction will partially offset near-term softness in warehouse, light non-residential, and residential end markets."
Want insight on the rental market for single family homes?
From Invitation Homes:
"Same store renewal rent growth of 5.8% and same store new lease rent growth of .8% drove same store blended rent growth of 4.4%."
Moving on. With another rise in the average 30 yr mortgage rate, the MBA said that purchase applications fell 1.7% w/o/w and are down 14.5% y/o/y. Refi's declined for a 2nd week (cash outs mostly) by 3.3% w/o/w and are little changed y/o/y. No further color here as we know unless a buyer gets help with a mortgage buy down or is paying in cash, the affordability challenges are obvious.
While we expect the ECB to cut rates in June, hawkish Governing Council member Robert Holzmann does not expect to follow up another one in July. "I don't see any reason why we should take two steps in a row."
The Bank of England reminded us all that QE was not free. Their latest expectation for losses for the UK taxpayer is now 85 billion pounds, up from 80 billion expected last quarter.
South Korea said its exports grew by 13.8% y/o/y, just below the estimate of up 15%. With companies such as Samsung and SK Hynix, along with a big auto business, this is important to watch. Exports to China rose 10% y/o/y and to the US by 24% y/o/y. Product wise, semi exports were up by 56% y/o/y and by 10.3% in autos. The KOSPI was up .2% overnight and higher by just 1.4% ytd.
Another One Bites the Dust!
* YUM remains a yummy short...
YUM spit the bit last night.
From late February:
Two Adds
Adding to (YUM) and (MCD) shorts at $134.40 and $294.92, respectively.
Short YUM (S), MCD (S)
Position: Short YUM (S), MCD (S)
BY DOUG KASS FEB 21, 2024 11:35 AM EST
A Seminal Day in the Market
* We remain negative on the outlook for equities
We started the day with an ursine view and ended the day with a similar outlook.
Nonetheless - to state the obvious - there were fireworks during the trading day, and some important emerging developments which underscore my market opinion.
Early in the day I observed that league leading Mr. Softee's shares appeared to be rolling over - possibly foreshadowing more general market weakness:
Mr. Softee
My vague knowledge of technicals suggests that Microsoft's (MSFT) shares may have begun to breakdown and rollover.
Not a market friendly development, if accurate.
Position: None
APR 30, 2024 11:55 AM EDT
Indeed, MSFT shares closed the day down by nearly -$13/share! And equities closed the day on the lows.
The markets broadened - but to the downside (as I have been warning):
Energy (CVX -$5, OIH-$14, OXY and XOM-$2 and technology (semis, etc.) were downside leaders.
(We are seeing following thru to the downside in stock futures overnight and this morning - S&P futures down another -21 handles).
So far, so good (at least from this bear's point of view!).
Of course, the big news during the trading session was the surprise announcement of rescheduling of cannabis.
We were well positioned for this as at 8:33 AM I tweeted:
Then, early in the day, with cananbis stocks lower, I made MSOS my Trade of the Week:
Trade of the Week: Buy MSOS $8.84
With a rescheduling of cannabis increasingly likely, long (MSOS) - and Index constituents (GTBIF) , (TCNNF) , (TSNDF) and (CURLF) - is my Trade of the Week:
Position: Long MSOS (VL), GTBIF (S), TCNNF (S), TSNDF (S), CURLF (S), Short MSOS calls (M)
BY DOUG KASSAPR 30, 2024 11:45 AM EDT
The rest, as they say, was history! Cannabis went on a wild move to the upside, with individual stock gains, in certain instances, of close to +40% on the day!!
(Unrelatedly, did I mention, fave VKTX was +$4/share in a sea of market red!)???
From The Ridiculous To The Sublime...
After the close, SBUX spit the bit - exhibiting a deeply disappointing EPS print and providing weak forward guidance. The shares of this investment short dropped by -$11/share in the aftermarket.
As I look forward, as mentioned in my Revised Market Outlook recently, I anticipate the emergence of long opportunities.
But, for now, ten cuidado as investors are still not being compensated for risks. TheStreet Pro
I remain risk averse.
My Tweet of the Day
Tweet of the Day
Charting the Technicals
“The big money is not in the buying and selling, but in the waiting.”
- Charlie Munger
Bonus - Here are some great links:
A Critical Juncture for Equities
A Bond Bear Market
Dr. Copper
Starbucks Short
* More arrows at "groupstink"...
Wow!
RIP Joe Rosenberg
I wrote this email to Joe Rosenberg's daughter last night:
Judy
The last time I saw Joe he bought me breakfast at Greene's Drug Store in Palm Beach - must have been a year ago or so.
He gave me the book he wrote that morning, signed it and said he was going to quiz me on it in a few weeks.
He had a big appetite that morning, as I recall.
He also had a big appetite for knowledge and his body of investment wisdom was encyclopedic.
He was my pal (Barron's) Alan Abelson's favorite subject to interview.
Alan adored Joe and he might have been the only person he revered.
And if anyone knows Alan, that says alot!
May his memory be a blessing.
Dougie Kass
From my Diary six years ago:
My Dinner with Wall Street Legends
Last night I had the privilege of attending a small dinner party with several Wall Street legends and their wives in Palm Beach.
Here is a brief synopsis of their views:
* Joe Rosenberg (managed the Loews/Tisch investments for 43 years) Joe is of the view that the bond market (and its vigilantes) will upset the equity market in the fullness of time. A 4% (or higher) ten year US note yield is not out of the question.
* Lee Cooperman (Omega Advisors): Lee believes stocks are about fairly priced today (possess little downside risk from here) but may move into the euphoria phase sometime in 2018, taking the S&P Index to about 15% above current levels. This week's decline was a liquidity event and not a reflection of eroding fundamentals. Fundamentals remain healthy.
* Jeff Greene (real estate investor and former Democratic candidate for Senate in Florida): Jeff sees wage inflation of +4% this year -- bringing down the stock and fixed income markets this year. An active real estate investor, he is quite fearful of too low cap rates for commercial real estate properties and sees speculative conditions in place for equities and other financial assets. Stocks are over valued. Mei was bullish on crypto currencies.
* Ira Harris (Salomon Brothers/Lazard investment banker): Ira is cautious based on high valuations, political and geopolitical risks.
* Byron Wien (Head Strategist, Blackstone): The S&P will be higher by year end reflecting better than expected profit growth. (He believes S&P profits could be as high as $160) But rising interest rates may be something of a headwind later in the year and could put a damper on the magnitude of the rise. Anita expressed political concerns as a possible destabilizing impact on the capital markets.
* Gerry "The Chief" Jordan (my investment mentor at Putnam and the best pure trader I have ever met): We are in a bull market -- have been for years. The sentiment of professional investors is bearish (just listen to the dinner group, he said, which is bullish. Darlene Jordan, active in the national Republican politics scene, asked the group whether the mid-term elections pose a risk to the implementation of policy and to the markets. In response, many felt this was an active market risk.
I expressed my bearish view on elevated valuations, possible adverse outcomes, too ebullient investor sentiment and went into the surfacing structural issues that could be a headwind for equities in 2018.
Suffice to say, it was a lively and value added evening and I hope this brief review provides you with a sense for the differing views.
FEB 7, 2018 8:02 AM EST
It is so sad to me that Ira Harris and Byron Wien and now Joe - all members of that dinner group - have now left us.
It is a very sad day.