Macroeconomic Events; Buy Levels: Best of Kass

TheStreet.com

NEW YORK (TheStreet) -- Doug Kass of Seabreeze Partners is known for his accurate stock market calls and keen insights into the economy, which he shares with RealMoney Pro readers in his daily trading diary.

Among the posts this past week were entries about the week's macroeconomic events and buy levels on selected stocks.

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Boockvar's View
Originally published on Friday, June 28 at 3:37 p.m. EDT.

"One last thing."

-- Lt. Columbo

Here is a succinct summary of this week's macroeconomic events from Morgan Stanley's Peter Boockvar:

Positives

1) A slew of Federal Reserve members do their best to calm markets after last week's taper hissy fit, trying to make clear that the printing presses are still running hot and will continue to well into 2014 with only the degree of heat being the question. This said, the Fed is not just dealing with unemployment and inflation, it is dealing with asset bubbles and the methodical cornering of the U.S. Treasury market (more subtle than the Hunt Brothers). Also, markets only like full speed ahead (irrespective of economic impotence and damage) and views any slowdown in speed as a form of tightening.

2) Durable goods orders in May rise more than expected led by aircraft but core rate gain is also better than estimated.

3) Richmond, Dallas and Milwaukee manufacturing surveys in June bounce from May.


4) Conference Board consumer confidence rises to 81.4 from 74.3, best level since January '08, with those saying jobs are plentiful rising to the highest since Sept '08. Those that plan to buy a home or car within six months are up a touch.

5) June UoM confidence final reading at 84.1, down slightly from May but up from the preliminary June print of 82.7. Coincident with recent drop in gasoline prices, one-year inflation expectations moderate to 3%, matching lowest since Dec '10.

6) Pending home sales and new home sales in May both total more than expected as 50 bps increase in mortgage rates to 3.90% in May pushes many off their arse. Mortgage rates now are at 4.38% as of Thursday night.

7) Initial jobless claims fall to 346k from 355k last week but about in line with expectations.

8) Personal Income in May rises .5%, .3pp above the estimate, and the savings rate ticks up to 3.2% from 3.0%. Savings and investment are the key to healthy growth, not borrow and spend.

9) Shanghai index rallies for first day in eight as PBOC tries to calm the turbulence in interbank and money markets.

10) Japan reports better than expected gains in IP, retail sales and housing starts but still has long ways to go in their desire to raise the cost of living of their citizenry (hopefully for them will be offset by wage gains if inflation gains are achieved).

11) German IFO hangs in, rising a touch from May. Retail sales and jobs data also better than expected.


12) In Letta we trust: Italian business confidence rises to highest since April '12.

13) French retail sales in May rise more than expected.

14)EU economic confidence rises to 91.3 from 89.5, the best since May '12 in sign of bottom, but actual growth still ways away and risks remain on downside.

15) For QE lovers, Draghi and BoE member say no taper here.

Negatives

1) June Chicago PMI falls to 51.6 from 58.7 as backlogs fall to lowest since Sept '09.

2) The average 30-year mortgage rate rises almost 30 bps on the week to near two-year high, and refi applications fall 5.2% to the lowest since Nov '11.

3) Q1 GDP rises just 1.8%, down from previous print of 2.4%, as spending in particular gets revised lower. While old news, it provides a smaller base from which Q2 growth began.

4) French consumer confidence falls to lowest on record dating to 1972.

5) With all the attempts on the part of Fed members with their speeches and comments, the 10-year note yield falls just 4 bps on the week after jumping 40 bps in the week prior.


Levels
Originally published on Thursday, June 27 at 8:36 a.m. EDT.

Currently, only five out of 84 stocks I have mentioned in my diary are eligible to buy vs. five out of 82 in early April.

Jerry (Jerry Seinfeld): (To Kramer and Morty) What is this about?
Kramer (Michael Richards): I'm completely changing the configuration of the apartment. You're not gonna believe it when you see it. A whole new lifestyle.
Jerry: What are you doing?
Kramer: Levels.
Jerry: Levels?
Kramer: Yeah, I'm getting rid of all my furniture. All of it. And I'm going to build these different levels, with steps, and it'll all be carpeted with a lot of pillows. You know, like ancient Egypt.
Jerry: You drew up plans for this?
Kramer: No, no. It's all in my head.
Morty (Barney Martin): I don't know how you're going to be comfortable like that.
Kramer: Oh, I'll be comfortable.

-- "Seinfeld," The Pony Remark

Below is an updated list of buy levels on selected stocks that I have mentioned on Real Money Pro.

I would now rate only five out of 84 stocks (compared to five out of 82 stocks in early April) as attractive to buy at current levels. They are Apple , Chimera , Monitise , iShares Barclays 20+ Year Treasury Bond Fund and Northwest Bancshares .


Let me explain the distinction in the two different approaches I use in addressing a portfolio and to the portfolio's individual stock construction. I would describe this morning's levels exercise as more of a bottoms-up approach toward selecting individual securities, as compared to my calculation of the S&P 500's fair market value (I am still grappling with this calculation!), which is a top-down approach toward the broader market. The two approaches will often yield different results. In the case of levels, 6% of the monitored stocks are eligible to buy (flat with April's "Levels").

  1. AIG , under $40
  2. Altisource Asset Management , under $225
  3. Altisource Portfolio Solutions , under $85
  4. Altisource Residential , under $16.50
  5. American Express , avoid
  6. Apple , under $400*
  7. Avon Products , under $20
  8. Bank of America , under $12.50
  9. Berkshire Hathaway , avoid
  10. Bridgepoint Education , avoid
  11. Bristol Myers Squibb , under $44
  12. Broadcom , under $31.50
  13. Caterpillar , avoid
  14. Charming Shoppes , acquired
  15. Chimera Investment , under $3.00*
  16. Chubb , under $80.50
  17. Citigroup , under $46.50
  18. Cohen & Steers , under $32.50
  19. Colgate-Palmolive , under $52
  20. Clorox , under $80.50
  21. ConocoPhillips , under $56.50
  22. CSX Corporation , under $22
  23. Danaher , avoid
  24. Dell , under $12.00
  25. Disney , under $60
  26. eBay , under $50.50
  27. E*Trade , under $10.00
  28. ExxonMobil , under $85
  29. Facebook , under $22
  30. Ford , under $14
  31. Fortinet , under $15
  32. Freeport-McMoRan Copper & Gold , under $24.50
  33. Fusion-io , avoid
  34. General Motors , under $29.50
  35. Goldman Sachs , avoid
  36. Grand Canyon Education , avoid
  37. Green Mountain Coffee Roasters , avoid
  38. Groupon , avoid
  39. Henry Schein , avoid
  40. Hewlett-Packard , under $21.50
  41. Home Depot , under $72.50
  42. Home Loan Servicing Solutions , under $21.50
  43. IBM , under $192
  44. Infoblox , under $27
  45. Intel , under $22.50
  46. International Flavors & Fragrances , under $73.50
  47. iShares FTSE/Xinhua China 25 Index Fund , avoid
  48. J.C. Penney , avoid
  49. JPMorgan Chase , under $49.50
  50. Kellogg , under $60.50
  51. KKR Financial , under $10
  52. Legg Mason , under $28
  53. Lincoln National , under $30.50
  54. Loews , under $41.50
  55. Lowe's , under $38.50
  56. MetLife , under $39.50
  57. MGIC Investment , under $5.35
  58. Microsoft , under $32
  59. Monitise, under 35*
  60. Morgan Stanley , avoid
  61. Nationstar Mortgage , avoid
  62. Northwest Bancshares , under $12.80
  63. Oaktree , under $49.50
  64. Och-Ziff , under $9.50
  65. Ocwen Financial , under $39
  66. Peabody Energy , avoid
  67. PepsiCo , under $78.50
  68. Pitney Bowes , avoid
  69. PNC Financial , under $69.50
  70. Procter & Gamble , under $75.50
  71. ProShares UltraShort 20+ Year Treasury , under $68
  72. iShares Barclays 20+ Year Treasury Bond Fund, under 110*
  73. Prudential , under $67.50
  74. Qlik Technologies , under $26.50
  75. Schwab , under $18
  76. Sourcefire , under $52.50
  77. SunTrust , under $29
  78. Target , under $65
  79. T. Rowe Price , under $70
  80. Waddell & Reed , under $39.50
  81. Walter Energy , avoid
  82. Wells Fargo , under $38.50
  83. XL Group , under $28.50
  84. Yahoo! , avoid

*Eligible to buy at current levels

(Note: "Avoids" are eligible to short/sell at certain levels.)

At the time of original publication, Kass was long TLT, MONI.L, NWBI and CIM; and short BRK.B, SPY, IWM and QQQ.

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