Update 106: Stock Market-Buffett’s Portfolio Speaks Volumes


Greetings!…..Taking a look at the many 13F filings that came out as of June 30th…..we focused on Berkshire Hathaway to get a flavor of what legendary investors are positioning for now that we made All Time Highs in the (NDX) Nasdaq & within earshot on the S&P (the Dow still 1600+pts below a Record) It looks like he reduced much of his banking shares (WFC -27%, JPM -62% BK -11% GS -100%) but in reality he has cumulatively $32 Billion+ in WFC USB and BAC without counting the buying binge in BAC in July which we read as very constructive on financials as we come out of the Covid lock down. With retail sales up 2.7% YOY and the Fed flooding the market with liquidity; one could argue that the banks may have Overcompensated for loan losses & cut costs so their operating leverage thus earnings could shock the street. Everything else for BRK.B appears to be holding on to their core holdings and most noticeable is their HOLDING CASH Equivalents to the tune of way OVER $100 Billion or about 25%-30% of their market cap. They got involved in gas storage this year & made moves in their OXY volatile holdings as well. There was a NEW addition that the press & dodgy coin salesman will seize upon and that is an $563 Million dollar position in Barrick (GOLD). Whether that done by Warren & Charlie or a subordinate is not known to us. GOLD traded between 18-28 during the period. HOWEVER the size of the position by our math is about 1/10 of the BRK.B market cap so we think AAPL is not being threatened ass their top holding nor we would read into it that Buffett’s long held view that Gold pays NO dividend and has NO internal rate of return thus is NOT a place that he would OVERWEIGHT. Other filings we found interesting was David Tepper’s positions in the payment processors PYPL SQ V MA although we favor the ETF IPAY as a one stop shop & Tiger increased positions in ZM & PTON..two darlings of the Covid crisis…Julian Robertson was once quoted that badmouthing NFLX was like badmouthing Santa Claus…on a side note ….we had the chance to play golf at his resort in New Zealand called Cap Kidnapper’s & if the the opportunity presents itself to you…..just go…breathtaking & remarkable. It feels like the markets have climbed to the top of the mountain and maybe lost some momentum….needs another jolt or maybe in Sept/Oct we could be hearing the old BB King song “The Thrill is Gone” as we head into the election……no evidence this week of that….put/calls ratios extreme as well as VIX since the March drop-Don’t fight the Tape…Don’t Go Asleep @ the Wheel …Wilshire 5000 to GDP Ratios is absurd & Buffett’s holding Cash NO Chasing Splits coming out of the woodwork…Time for Prince? Party like It’s 1999.. .Our view remains a barbell approach including Tech Growth Value stocks and the epicenter all based on a continued recovery…Will we test SP 3000-3200 areas or 10,000-9,000 Nasdaq BEFORE the election?…We’ll quote Bernard Baruch…..Buy Straw Hats in the Wintertime….suspicions/no proof.

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Stock Market

Many big stories out there this week including 2500 trucks ordered by Republic Services from Nikola which adds legitimacy to a pre-revenue company to some degree…still NOT our game. Also DKNG got whacked a bit even as gambling on sports is jumping albeit with insufficient events to bet on. BABA got added to the Hong Kong exchange which may get a boost from pension plan interests…they got earnings coming out next week a do many retailers like KSS HD WMT TGT and ones that we really feel have longer term runways like TJX ROST & ULTA as these guys sell DISCOUNT stuff and we believe consumers will have less money to spend and will frequent these companies…you saw what happened to Wayfair & Overstock right? AMC theatres & others are opening theatres Aug 20 with tickets at 50 cents..last time that was the price Mickey Rooney was starring as Andy Hardy….but with Disney going direct to consumers,,they got to move fast. BIDU got hit hard as their investment in QI looks shady as investigators seeing if QI overstated subscribers and other irregularities…Kodak may not get the loan unless they can explain some weird trading…ask P Michelson. We’re still watching 5G players nad infrastructure beneficiaries..stay tuned. Unusual option activity in SPCE LYFT PYPL while some say XRT is tapped.

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Bond Market

Big News here is that yields rose and the negative spread tightened EXACTLY what we told you was happening last week…the .60% spread moving to 1.65% spread that gave Gold a jolt and the Dollar a hit has abated…shorting bonds in the 181+ area was a moneymaker ass yields rose from about .50% to 75% a 50% leap. The Long Bond jumped well above 1.40% a the Fed auction did not go great and the supplies (deficits) are coming non stop like white river rafting. Cut corporate taxes 40%…cut payroll taxes..cut capital gains taxes..you got 10-14 facilities the Fed & LBO Mnuchin set up….money supply is exploding. Junk Bonds had the lowest yields ever this week on an offering and so the question is will the DEBT be deflationary….so far Corporates & Munis stable (GS locked out of NYC deal). Remember the FED is a lender so they help with liquidity not solvency so before long we will see how many they granted liquidity will be solvent.

US Dollar & International Markets

As we told you our belief is that the DXY at 90-92 and the EURO at 119-120 areas could be turning points IF the relative real yield would tighten and it has. Now longer term we remain bearish but over the next 1-3 months it would not surprise us to have a upward adjustment in the Dollar as the Yen Aus$ Can$ all seem to be faltering or stable at best and Covid problems seem to be resurfacing overseas. The ETF’s we follow for China-Asia/South Pacific/Europe/Emerging Markets such ass VEU VPL VGK VWO are all losing some altitude and like VALUE stocks are just UNDER 1-2-3 yr MA”s…with a BOOST they could break out and big winners BUT if they fade off these numbers…it may be a TELL that a more nasty selloff broadly could be ahead after Labor Day. Watch this carefully…it could be a key factor.

Crude Oil & Natural Gas

The market has gone flat trading about 43 to 41.50 so unless we break 40-38 you have to respect the DEMAND & SUPPLY constraints put on by Rig Counts/Fracking/OPEC something we told you about since March Madness. Some oils stocks & ETF’s like VDE have faded a bit but just like the stocks of INTERNATIONAL & VALUE….if they get a BOOST they can be right back on the horse but a fade after August could be a warning so we remain focused. We remain constructive on natural gas as the market in the last 10 days have been a solid winner for the bulls and Friday spiked up. Keep an eye on LNG & others which has doubled off the March lows….momentum strong.

Gold Silver Copper

We saw short term tops in the mining shares (GDX 46) and that led us to be suggesting pricing out covered calls & collars at 2100 Gold & 30 dollar Silver Premiums were rich and hedging made sense…a huge powerful selloff ensued…now we snapped back….next week every salesman for the metals will be touting Buffett’s purchase of Barrick but we quantified that for you above …so don’t go chasing waterfalls. The yields rising this week took an ace out of the metals hand so a wide trading range of 2100-1800 Gold and 30-24 Silver may be in the cards sans a Dollar or Interest Rate big move. Copper prices have faded of $3.00 area as China’s economic numbers are shaky..as we said FCX has to maintain ABOVE 14..this week it failed to do it.

Soybeans Sugar Coffee

WAKE UP!..Things are moving in Ags & Softs this weeks so maybe patience & persistence may pay off as we have been constructive on all three since March. These products are used globally and who knows how supply chains may be affected by Covid. What we do know is Soybeans had a 35 cent move to 9.00 and Sugar broke the 13 resistance and Coffee pulled back to the breakout point at 110 then rallied to 121 & closed around 117–textbook NOW..we need follow through and if we either get it or consolidate…we will be very pleased so that MAYBE we will get the the bang for our buck finally.

REMEMBER —There is a substantial risk of loss in short term trading and option trading and it is not right for everyone. Consult your brokerage firm, broker, advisor to determine your own suitability. Past performance is not necessarily indicative of future results. Use Risk Capital Only.

Jim Kenney

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