Friday, May 8, 2015

Soos Global Investor Update...Friday, May 8, 2015



(A Friendly and Important Disclaimer Note (in addition to legal language below):   If you’re reading this post and are not currently investing with Soos Global (which, of course, is something we should discuss!), please bear in mind that while we share details on changes made to our portfolios, it's important to consider that our portfolio decisions are taken in a much broader context of our overall portfolio strategies and our assessment of each of our investor's unique financial profiles.  As such, what we do, and when we do it, is specific to our investor portfolios and is NOT intended, in any way, as advice for use by others.  Readers are reminded that all comments posted here are for information and entertainment purposes only!  Any commentary, especially those that include specific mentions of 'buying' or 'selling' or 'positions', is made solely for those limited informational and entertainment purposes, and NOT as advice.  We're delighted to hear thoughts and comments.  Thx!)

TGIF…yes, because the weekend awaits with summertime weather in NY (finally)…but also TGIF because of today’s NFP data.  Stocks are really enjoying the NFP number, which, though it was in line and last month’s number was revised lower, had enough in it to happy about…the labor situation is improving just enough to keep the economy grinding forward, yet not fast enough that would cause the Fed to hike too much.  Wage growth remains below the level that the Fed wants to see, and there are still no inflation pressures.  So both stocks and bonds like this number!

I’m still not all that excited about buying too much more in the equity space up here (we’re still  @ 80%+ of AUM)….recall what I’ve said about earnings, guidance and valuations.  But selectively, yes, if I see good value.  Otherwise, I’m still on the lookout to trim some positions if the markets’ rally creates oversized weightings in our portfolio, and use that cash to add to and/or diversify into some of the things I’ve mentioned in recent missives….Europe (VGK), Australia (EWA), EM local currency debt (EMLC), cyber-security such as Symantec (SYMC), the rail sector such as Norfolk Southern (NSC) and Trinity (TRN) (Note:  TRN has recovered significantly from the pounding it took last week when the DOJ issued subpoenas in an investigation into possible misconduct in dealing w/government officials.  Once there’s more visibility on this situation, I’d consider re-entering, but as a ‘policy guideline’, I generally stay out of situations that are riddled w/litigious risk).
I have beefed up our so-called defensive positions (what I collectively call our ‘yieldy stuff’…things that ought to hold up well in equity selloffs, and in the meantime, pay a healthy dividend).  I expect to continue to do this, especially until my view on long-term rates changes….again, as I’ve written of late, I don’t see solid ground for long-term rates to rise, so on rate backups, for example, USTsy 10yrs over 2.2%, I’m inclined to buy that space.

Will keep you posted….and please email me w/any questions or thoughts.  I’d be delighted to engage more dialogue on any of these topics and/or on any other positions in the portfolios.

Best,
Ed

Please continue to visit Soos Global Market Musings for updates.

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(Please note: This article is solely meant to be thought provoking and is not in any way meant to be personal investment advice. Each investor is obligated to opine and decide for themselves as to the appropriateness of anything said in this article to their unique financial profile, risk tolerances and portfolio goals).
Disclaimer: Please read and consider important information related to all communication made by Soos Global on this site by clicking here.
Additional Disclaimer: currently long many stocks/ETFs including SYMC, NSC, EWA, EMLC, 10yr Tsy..  Positions may change at any time without notice.   

Monday, May 4, 2015

Soos Global Investor Update...(Monday, May 4, 2015)



(A Friendly and Important Disclaimer Note (in addition to legal language below):   If you’re reading this post and are not currently investing with Soos Global (which, of course, is something we should discuss!), please bear in mind that while we share details on changes made to our portfolios, it's important to consider that our portfolio decisions are taken in a much broader context of our overall portfolio strategies and our assessment of each of our investor's unique financial profiles.  As such, what we do, and when we do it, is specific to our investor portfolios and is NOT intended, in any way, as advice for use by others.  Readers are reminded that all comments posted here are for information and entertainment purposes only!  Any commentary, especially those that include specific mentions of 'buying' or 'selling' or 'positions', is made solely for those limited informational and entertainment purposes, and NOT as advice.  We're delighted to hear thoughts and comments.  Thx!)


Overall cash levels in CORE and IRA Strategies had grown of late (as of today, CORE had cash  >4%, IRA >7%) especially on the heels of the liquidation of the TRN position after they were issued subpoenas by the DOJ.  (Btw, I’m monitoring the situation closely and if the legal issues get resolved, I will revisit.  I remain quite positive on the rail industry in general).

Overall, I think equities, while not in a bubble stage, are certainly getting pricey, especially after this past earnings season where though there were many ‘beats’, the reality was that expectations had already been driven down to very low levels, and furthermore, forward guidance, in many cases, was very bleak! 

Recent econ data in the US has erred on the weaker side, which only exacerbates the forward outlook on earnings.  One offset, however, might be that many multi-nationals that had been hurt by a strong USD in Q4 ’14 and Q1 ’15, could see the opposite in the form of relief as the USD has softened in the early weeks of Q2.  I expect the USD to weaken further as US growth remains very slow, and as Europe starts to pick up.  On that note, econ data in Europe has been picking up lately (which was anticipated by European equity markets for the past couple of months).  I think once Greece’s situation is resolved, the ECB’s QE program will continue to underpin a rally in European equities.  I’m considering buying VGK (a European ETF) at or around these levels ($56.93).

On the theme of a continuingly weakening USD, I remain positive on EM.  I think that local EM fixed income markets, still yielding much higher than US and Europe, will be the beneficiaries of foreign capital flows in search of higher yields.  I also think that China will respond to their recent spate of weak economic data and will do additional stimulus measures.  That should help EM countries in general, and should have a very positive impact on Australia, which, in any event, has had relatively good economic data of its own, with expectations that the RBA might still ease further.

In line with all of that, I did the following today:
PFF and PFXF…used cash in IRA Strat to add to preferred positions.  The intent is to earn higher income on this money for now,  and if equities should retreat, I would consider tapping these positions to buy equities at lower levels.  The price performance of these ETFs has been quite defensive, so I want to add at this time while equities are at increasingly ‘pricey’ levels.
EWA…started position based on expectations of China stimulus and RBA easing and further improvement in Australian economy.  Div yield has been good and is expected to be paid in June.
EMLC…the weaker USD story ought to help this local currency fixed income ETF.  Very high div.  Still trading not too far from 52-wk lows.  Again, China stimulus ought to help too.

Will keep you posted.  If you have any questions or comments, please email me.
Best,
Ed

Please continue to visit Soos Global Market Musings for updates.

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(Please note: This article is solely meant to be thought provoking and is not in any way meant to be personal investment advice. Each investor is obligated to opine and decide for themselves as to the appropriateness of anything said in this article to their unique financial profile, risk tolerances and portfolio goals).
Disclaimer: Please read and consider important information related to all communication made by Soos Global on this site by clicking here.
Additional Disclaimer: currently long many stocks/ETFs including PFF, PFXF, EWA, EMLC..  Positions may change at any time without notice.    

Tuesday, April 7, 2015

Soos Global Investor Update....(April 7, 2015)



(A Friendly and Important Disclaimer Note (in addition to legal language below):   If you’re reading this post and are not currently investing with Soos Global (which, of course, is something we should discuss!), please bear in mind that while we share details on changes made to our portfolios, it's important to consider that our portfolio decisions are taken in a much broader context of our overall portfolio strategies and our assessment of each of our investor's unique financial profiles.  As such, what we do, and when we do it, is specific to our investor portfolios and is NOT intended, in any way, as advice for use by others.  Readers are reminded that all comments posted here are for information and entertainment purposes only!  Any commentary, especially those that include specific mentions of 'buying' or 'selling' or 'positions', is made solely for those limited informational and entertainment purposes, and NOT as advice.  We're delighted to hear thoughts and comments.  Thx!)


Soos Global Investors:  below are a few of my thoughts on markets overall, and in some cases, on specific positions in our portfolios. 

Today's data in Europe, EuroZone (EZ) manufacturing PMI, beat estimates.  This raises expectations that EZ economic growth is picking up, expectations that have already been bolstered by ECB QE kicking in.  The Euro has bounced off recent lows and appears to be finding some floor from which to recover after having been sold-off aggressively in the past year (from levels of 1.4000 to 1.0500, and now 1.0850.  See chart below).


European stocks have rallied YTD, reflecting renewed optimism about European economic prospects.   As you can see in the chart below, the ETF of European equities, VGK, has rallied YTD.  What's not as evident, however, is that part of the upside was lost due to the EUR currency weakness over that time period.  Looking ahead, if the EZ economy continues to improve and the EUR is able to continue its recent rebound, then VGK could have meaningful upside through 2015.  I'm still of the view that the EUR has fallen too much (USD rallied too much), and that EZ's economy should continue to slowly improve, therefore, I'm watching this situation closely as a new add to our positions.

When that time arrives, I would expect to consider using an ETF (such as VGK) that diversifies the risk across several countries and industry sectors.  I wouldn't hedge the EUR exposure inherent in that position since, as I've mentioned, I think over time the EUR will rally back. (fyi…there are ETFs that provide the same exposure to European stocks but embed a currency hedge to protect against a fall in the EUR, and if my currency view should change, I'd consider those alternatives). 

One final note regarding Europe:   our current exposure.   On a direct basis, it is quite limited.  Namely, we own Unilever (UN) and Telefonica (TEF)….but our 'indirect' exposure is more meaningful given that many of our large, multi-national holdings have significant business footprints in Europe (and, correspondingly, in most cases, in Emerging Markets, where our direct exposure is also very limited).  Until recently, I've felt that this 'indirect' exposure was the better risk/reward tradeoff, however with improving growth prospects and current valuations, that could change.


With Q1 over and earnings starting to be reported in coming days, I'm a bit concerned about earnings disappointment.  That said,  the concern isn't too high since many analysts have lowered earnings estimates throughout the first Quarter as more and more companies announced sober guidance.   With broader US stock indexes still at or close to historic highs, any meaningful disappointments in earnings could result in a market selloff, though any selloff would likely be mitigated by the market's reaction that weakness in the US economy would delay a Fed rate hike.  So this balancing act between strong/weak economic and corporate earnings growth vs expectations of Fed rate hikes, in my view, is likely to keep the equity markets somewhat volatile, but within reasonable ranges close to current levels.  Correction?  Certainly possible.  Debacle?  Some new catalyst would have to emerge for the outlook to migrate to this extreme. 

Clearly, individual stocks' volatility will vary and when I perceive an overreaction by the market, in either direction, I expect to adjust our positions accordingly.

In that light, our Walgreens (WBA) position has performed quite well, and is currently the highest percentage holding in the portfolio.  I expect to maintain a strong position in WBA, though I might consider trimming part of it at higher levels.

I'm still looking to exit Davita (DVA), having sold ½ of it earlier this year, as I continue to prefer valuations and potential in other sectors.  I'm concerned that the further we get into the Presidential race, the more talk there will be about cutting Federal funding for all kinds of Medicare, Medicaid, Obamacare issues.  It will be very challenging to anticipate which stocks will be the winners/losers in those debates, so with this kind of anticipated lack of visibility, I'm looking to exit healthcare for now, and at best maintain only small opportunistic positions over time as they become available.

I have been looking to add some biotech, though I still believe that the sector, after having been the outperformer of 2014, is still too pricey.  Many street analysts refer to it as being in a 'bubble'.  Whether that's true or not, I do think we'll see some sector rotation out of biotech into other sectors that have ytd underperformed, most notably, energy.  If that happens, and in turn, biotech cheapens to reasonable valuations, I'd be interested in adding an ETF of the sector (such as XBI…see below), in that way diversifying the individual company risk of FDA approvals, new-product testing, etc.


Finally, I continue to like the 'yieldy' assets in our portfolio such as fixed income ETFs, preferred stock/bond ETFs, a convertible closed end fund, a utility ETF and some REITs.  As I've been saying for some time, the Fed's need to raise short-term rates is likely to be minimal for quite a while, and while that's going on, in the face of world where the risk of 'Deflation' continues to outweigh 'Inflation', I remain a fan of longer-term fixed income and yieldy assets.

As always, if you have any questions, please email or call.
I look forward to keeping you posted.
Best,
Ed


Please continue to visit Soos Global Market Musings for updates.

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(Please note: This article is solely meant to be thought provoking and is not in any way meant to be personal investment advice. Each investor is obligated to opine and decide for themselves as to the appropriateness of anything said in this article to their unique financial profile, risk tolerances and portfolio goals).
Disclaimer: Please read and consider important information related to all communication made by Soos Global on this site by clicking here.
Additional Disclaimer: currently long many stocks/ETFs including UN, DVA, WBA, TEF.  Positions may change at any time without notice.   

Friday, February 6, 2015

Soos Global Investor Update (Friday, Feb. 6, 2015)



(A Friendly and Important Disclaimer Note (in addition to legal language below):   If you’re reading this post and are not currently investing with Soos Global (which, of course, is something we should discuss!), please bear in mind that while we share details on changes made to our portfolios, it's important to consider that our portfolio decisions are taken in a much broader context of our overall portfolio strategies and our assessment of each of our investor's unique financial profiles.  As such, what we do, and when we do it, is specific to our investor portfolios and is NOT intended, in any way, as advice for use by others.  Readers are reminded that all comments posted here are for information and entertainment purposes only!  Any commentary, especially those that include specific mentions of 'buying' or 'selling' or 'positions', is made solely for those limited informational and entertainment purposes, and NOT as advice.  We're delighted to hear thoughts and comments.  Thx!)
                                                                       
With today’s stronger than expected NFP report, I sold out of our positions in short-term bond ETFs.  I had been holding them for a while in a ‘holding pattern’ with the goal of earning some yield above cash, with the idea that as soon as there would be a catalyst to add to the Fed’s reasons to hike sooner rather than later, I’d exit.  Today’s NFP report, I believe, qualifies as one such catalyst.  Despite a mix of data in recent weeks, this number, both stronger than expected for Jan, and revised up in Dec and Nov, is certainly going to be a major talking point at the Fed’s next meeting.  The wage growth in particular.
To be clear, I do not expect the Fed to hike aggressively.  I still think that the ‘hiking assignment’ that the Fed will have will be limited to a relatively small, very deliberate, measured increase in short term rates.  But in that environment, I’d expect money to move out of short-term ETFs into longer term fixed income where the risks of inflation still seem pretty remote and where global growth is moderate at best.
With equities at or near all time highs, and with earnings outlooks less than euphoric, I’m still allocating a portion of the portfolio to ‘high dividend/fixed income’, seemingly defensive plays.  In that context, I’m holding longer term bond ETFs, preferred ETFs, REITs and utilities.
Will look to reinvest the cash into other ‘holding pattern’ fixed income or preferreds, or directly into stocks when opportunities appear.
Separately, in recent days, I took profits on Pfizer (PFE) and bought an initial position in Symantec (SYMC) which I’d like to build on in addition to other cyber-security plays.
Will keep you posted.
Ed

Please continue to visit Soos Global Market Musings for updates.

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(Please note: This article is solely meant to be thought provoking and is not in any way meant to be personal investment advice. Each investor is obligated to opine and decide for themselves as to the appropriateness of anything said in this article to their unique financial profile, risk tolerances and portfolio goals).
Disclaimer: Please read and consider important information related to all communication made by Soos Global on this site by clicking here.
Additional Disclaimer: currently long many stocks/ETFs incl LQD, CHI, PFF, PFXF, SYMC.  Positions may change at any time without notice.  

Tuesday, January 20, 2015

Soos Global Investor Update (Tues, Jan 20, 2015)



(A Friendly and Important Disclaimer Note (in addition to legal language below):   If you’re reading this post and are not currently investing with Soos Global (which, of course, is something we should discuss!), please bear in mind that while we share details on changes made to our portfolios, it's important to consider that our portfolio decisions are taken in a much broader context of our overall portfolio strategies and our assessment of each of our investor's unique financial profiles.  As such, what we do, and when we do it, is specific to our investor portfolios and is NOT intended, in any way, as advice for use by others.  Readers are reminded that all comments posted here are for information and entertainment purposes only!  Any commentary, especially those that include specific mentions of 'buying' or 'selling' or 'positions', is made solely for those limited informational and entertainment purposes, and NOT as advice.  We're delighted to hear thoughts and comments.  Thx!)

Soos Global Investors: 

Just a quick update on markets and some portfolio moves….

First some thoughts on the markets in general….Some time ago I said that I was leaning very heavily into the camp that the Fed would not raise rates nearly as much as the market had been pricing in.  In line with that view, I started putting cash to work in fixed income, especially higher quality, longer dated fixed income, that I believed would trade well once the market recognized that the Fed was not going to tighten aggressively, if at all, and that even if the Fed were to hike rates by 25 or even 50bps, the net result would be a flatter curve, as long rates didn't (and still don't) have much cause to move higher (IMHO).  I still don't see any wages pressures nor any tightness in other means of production, so to argue that long rates have to rise, seems inconsistent with the facts on the ground, certainly here in the US, but even more so around the world.  Some of our holdings in this space include BSV, CSJ, LQD, PFF, PFXF, CHI, and in general, I expect to 'clip coupons' on these ETFs until either the rate view changes or until additional equity opportunities of appropriate risk/reward arise.

In stocks, I've pretty much stayed the course….lots of tech, a reasonable amount of high-dividend paying stocks in telecom, reits, utilites, and trying to cherry pick stocks when the market bashes them on earnings disappointments that appear to me to be not that disappointing!  Of course, despite having very little oil related positions (XLE and KYN), it was hard to avoid some pain in that space, but I'm light and mainly focused on finding companies that I think will survive the mayhem in oil's rout.  On that note, I do think that lower oil prices will persist for some time, partly due to supply/demand issues, but more because of geopolitical issues.  I think the real force behind crushing oil prices was Saudi Arabia's desire to put Iran's back against the wall, and the US's desire the do the same to Putin.  So my overall thinking on oil is that it manifests a much more dangerous world, with the now larger possibility that either Iran or Russia react in some way that could be catastrophic.  I'm not yet moving the family into the bunker, but I do think that volatility runs the risk of episodic spikes, so I'm on alert for that.  I also think that equities, while still not over-inflated in terms of valuation, could have a tougher time rising than falling in the face of market volatility and geopolitical events.  So I'm staying quite long but defensive, and poised to move cash or low-yielding fixed income money into equities on pullbacks.

In terms of some specific portfolio moves in recent weeks/months….The surging USD through 2014 and collapse in yields put significant downward pressure on commodities in general, and in particular, gold and copper.  As a result, our Yamana (AUY) holding suffered.  I bought more in Q4 at lower levels, and after the 30-day wash-sale period, sold the higher cost lots in order to book the loss for 2014.  We're now holding a smaller overall position at lower cost basis as we start 2015.

In addition, I took some profits on Davita (DVA)…still think the co will benefit from the theme of 'US obesity and consequent kidney disease' but the stock has been relatively quiet recently after moving higher earlier in '14, and with no dividend, there's a cost of capital to owning it unless there's a nearterm catalyst for upside.  Still holding DVA, but will be on the lookout for earnings and for how upcoming US election rhetoric impacts health related stocks as Obamacare becomes front and center in the campaigns.

Used some proceeds to add to Unilever (UN).  It's a better fit in the theme of 'global EM emerging middle class'.  Today they announced earnings that were slightly below street consensus, yet the stock held reasonably well (considering past quarterly earnings misses which were greeted more severely!).  The company is really a play on the EM space given its global footprint.  They've adjusted product line offerings and cut costs as global growth has slowed.  I still believe UN will be a major beneficiary of emerging economies.  Their dividend too is compelling.

I also added from cash to our convertible bond closed end fund, CHI.  It's yield is over 8%, and I think that though equities could correct from current levels, I don't expect a meltdown.  In fact, with central banks likely to be on the move again (esp ECB) in terms of stimulus, I think equities can hold their ground especially since in general they're not at overly inflated PEs. Also, with US Treasury yields having come down, yield-hunters are back in action looking for yieldy plays.

Will keep you posted….
If you have any questions or thoughts, please let me know.

Best,
Ed

Please continue to visit Soos Global Market Musings for updates.

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(Please note: This article is solely meant to be thought provoking and is not in any way meant to be personal investment advice. Each investor is obligated to opine and decide for themselves as to the appropriateness of anything said in this article to their unique financial profile, risk tolerances and portfolio goals).
Disclaimer: Please read and consider important information related to all communication made by Soos Global on this site by clicking here.
Additional Disclaimer: currently long many stocks/ETFs incl BSV, CSJ, LQD, CHI, PFF, PFXF, DVA, UN, AUY, XLE, KYN.  Positions may change at any time without notice.