Thursday, August 27, 2015

High-Yield Bonds Spreads....A Canary in the Coal Mine????



(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!)



Interesting thought….I’ve always felt that the bond market is the ‘canary in the coal mine’ when it comes to warning about upcoming trouble in equities.

Take a look at the first chart below at where the CRB (commodity index) is now vs the past 10yrs……@ lows!!!  Lots of that is energy and industrial commodities falling off the cliff, very heavily influenced by China’s slowdown.  Lots of high yield bond debt is from companies in those spaces.   For obvious reasons, with all the tumult in the energy sector,  those bonds have been marked down, widening spreads.  Take a look in the second chart below at the yield spread widening in high yield bonds that started in earnest back in June.  While high-yield spread widening isn’t always a direct correlation to equities (inverse), it does, very often, precede equity market routs.  This time, it does seem to have sounded an alarm!!
Time to buy stocks and high-yield bonds?
Is the worst over?
Well, with expectations of dovish Fed comments likely to come out of Jackson Hole starting today, possibly….given that there’s enough carnage at the moment to start some cherry picking….but…..
After that?????
Stay tuned…..





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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).
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Additional Disclaimer: currently long many stocks/ETFs.  Positions may change at any time without notice.   


Wednesday, August 26, 2015

"Carnage"...Is It Time To Shop???



(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!)

Quick thoughts pre-bell:

Among the ‘carnage’ is the transportation sector.  Take a look at the Transport ETF below.  Some very quality companies in that basket….but totally out of favor all year….and more so now!  At some point, sector rotation will likely find its way into this space.
It’s on my ‘shopping list’….but patience prevails….
 
Same can be said for many of the Industrials.  I nibbled recently on UTX, and will look to buy more.   It too has been taken out at the knees.  (see chart below).
 
The market has traded up overnight off of yesterday’s closing lows.  (see chart below).


Will it hold?  Will it be time to start ‘shopping’?? 
Will keep you posted….
Ed



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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 UTX.  Positions may change at any time without notice.   

Tuesday, August 25, 2015

Definition of a 'Dead-Cat Bounce"!!!



(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!)



Just a quick update on markets….

Take a look at the chart below.  It shows the S&P-futures contract activity today, starting in the overnight session and continuing through the 4pm cash market close.
The overnight bounce took the market to the day’s highs just as the bell rang to open the NYSE at 9:30am.   It struggled to maintain the higher levels, and then at 3pm, almost as if a siren had been sounded, the market just tanked!
As I mentioned in my last missive, I’ve done quite a bit of selling and am currently sitting w/a much larger than usual cash position.  The sell-off of recent days has created, and is likely to continue to create, seeming opportunities to buy quality companies at lower valuations.  I have a “shopping list” targeting just such names, but today’s activity suggests that patience will pay off.

Will keep you posted….and again, I invite emails/calls to address any questions or thoughts.

Best,
Ed 



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Additional Disclaimer: currently long many stocks/ETFs.  Positions may change at any time without notice.   


Monday, August 24, 2015

Soos Global Investor Update...Friday, August 21, 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 Investor Update:

The negative sentiment in equity markets, most recently driven by last week’s surprise devaluation of the Yuan by China, intensified this week, with little sign of ‘bottom fishers’ and no ‘bounce off a floor’.   The market ended this week by falling today over 500 points (over 3%).  The search for a ‘floor’ from which to bounce and stabilize proved futile.   

Our cash holdings and some of our defensive plays have fared better than the broader market, but it’s been almost impossible to avoid getting hit by the bus of selling that has smashed markets in the past couple of days.  I too participated in selling some holdings as a way to raise cash and increase defensiveness.  We sold some of our UN, and exited from TSN, CHI, XLE, NUE and QCOM.  In preparation for just such an event as we experienced this week, these were the names from among our holdings that I targeted to go, and there are others, should the need arise in coming days/weeks.  Conversely, in most cases, I’ll be monitoring their price action, and would consider re-entry if market conditions improve.  Also, our remaining holdings include names that, at this time, I feel more comfortable holding onto and, for now, plan on riding out the storm with them.  Our defensive holdings, such as the preferred ETFs, also might be  possible adds with the cash that I’ve raised from the recent selling.

In sum, overall, the market has been in a ‘rollover’ mode and is approaching formal ‘correction’ and possibly ‘bear market’ territory.  (see charts below).   US growth data has been mixed at best, China has shown economic weakness along w/its equity market debacle, panic-driven attempts to resuscitate it, and finally, its devaluation of the Yuan, all of which sent EM currencies into tailspins, along w/a selloff in global equity markets.  The US market sentiment turned from having thought a Fed rate hike was bad news for equities and any talk of delaying rates hikes was good for equities, to now realizing that no rate hike is a sign that economic growth, and in turn, earnings, are likely to be weak! 

Technically, the markets are focusing on significant negative chart facts:  there’s the ‘death cross’ and the DowTheory, both indicating very negative trend! (see charts below).

I will continue to keep you posted and invite emails or calls to discuss any questions or thoughts.

Best,
Ed






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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.  Positions may change at any time without notice.   




Sunday, June 28, 2015

Soos Global Investor Update...Weekend Alert...Greece and China



Thought I’d share some informal comments that I expressed in an email chat w/an investor this afternoon focusing on the weekend events in Greece and on China’s easing in rates on Saturday.   (But first, a word from our friendly Compliance folks:  (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!)

Now, back to Greece and China….
With Greece and the EZ, It’s brinksmanship at its best.  Both sides playing chicken.  In the end, I think that Tsipras has played the EZ countries for fools….making them believe that he’d really push through reforms in exchange for more bailout money.  His call for a referendum for July 7 was obnoxious b/c it’s well after the date that he’d already be in default on an IMF loan, and beyond the end-date of the EZ bailout program.  What could the goal of a referendum be?  To show proof positive that the people of Greece want to continue living beyond their means and on the backs of hard working countries in the EZ who would be supporting them?! 
Bottom line, the Grexit has been so well advertised, that it would seem unlikely that a global financial meltdown would ensue. The shuttering of Greek banks on Monday will help the ‘run’ issue (at least for a day).  That said, one would expect lots more volatility in all markets, especially the in the FX market.  There could be some ‘blowups’ of hedge funds or other investors who took sizable bets on Greece one way or the other.  Some FX firms have already announced this afternoon that trading starting tonight in the EUR will be curbed through either higher margin req’ts and/or only allowing liquidation of existing positions but no new positions.  So the ‘circuit-breakers’ that are meant to prevent a cataclysmic global meltdown appear to be already underway.
We might see a bullish move in the USD and USTsys as a ‘flight to quality’.  We might also see a selloff in other PIIGS such as Spain and Italy, though I think they’re not an immediate credit threat like Greece has been.
Now, there’s always the possibility that the EZ countries cave and actually play into the hands of the Greeks and extend the bailout as a way to allow time for a more orderly, calm Grexit. But we’ve been down that road lots of times before and that’s what’s brought us to today.
Another thing to note, away from Europe, is China’s easing over the weekend….good news!  The fact that it took a nearly 25% meltdown in the Shanghai equity market in approx one week to motivate the move does show some sign that the PBOC does want the equity market to stabilize as a way for people to feel good (and more wealthy) and for companies to access the capital markets for funding rather than just from banks.  But even there, the cut in rates and in reserve req’ts are clearly easing measures meant to kick their economy in the you-know-where!!  That should be good for EM stocks and good for Australia.  Realistically, the mess in Europe may obscure the Asian events.  If so, I may see that as a window to add to those type of positions.
Going to be interesting, especially in a holiday shortened week with the NFP on Thursday!
Rock ‘n roll!!!
Seat belts and helmets!!

Please email or call w/any comments or questions.
Best,
Ed


If you have any questions, or comments, please keep them coming in!!

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.  Positions may change at any time without notice.