@TSTRMPro Oct 14, 2021 | 03:10 PM EDT DOUG KASS
Uh, Oh, FIFO!
Here is one of the important reasons I do not own any retail stocks (and I am short a bunch of 'em!).
Almost every retailer has abandoned LIFO -- last in, first out -- accounting.
So, there is no shield to inflation
for retailers now.
Retailers will now have to pay taxes on inventory profits, which are mythical. For example, goods bought for $4, now cost $5 per unit to replenish -- and $1 more working capital is now needed.
This must be financed in the short-term credit market.
This was not pretty, as was learned by food analysts in 1973-1974.
I have never forgotten that period.
Eventually, as prices rise beyond incomes (as they are now doing) consumers will buy fewer units.
Inventories pile up and you get a recession ... and likely a bear market.

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More from @DougKass

12 Oct
@TSTRMPro
Oct 12, 2021 | 08:30 AM EDT DOUG KASS
Why I Shorted Disney Last Week
* The ever popular and heavily institutionally owned $DIS is seen by many as the perfect reopening trade
* We are less certain
* Following strong 3Q results (in August), most analysts raised their
EPS forecasts and price targets - that may have been premature
* Since then, Disney reported weakness in Disney + (analysts rationalized the disappointment)
* Going forward, the company faces unusual execution challenges in streaming, legacy television, movies , cruises and in
theme parks - in an unsteady and uncertain macroeconomic backdrop
* Consequently, sell side consensus expectations - for Disney's EPS to rise from $2.10 this year to over $6/share in 2023 - may be too ambitious
* Disney's high valuation incorporates successful execution in a
Read 4 tweets
12 Oct
Next up bank earnings, don't get sucked into trading them on the long side:

Oct 11, 2021 | 01:10 PM EDT DOUG KASS
Why I Would Be Cautious on Banks Going Into Reporting Season
Bank stocks are among the most favored value plays of many money managers and strategists based on the
fact that the industry is a direct beneficiary of higher interest rates.
This is indeed true - as banks are balance sheet and income statement sensitive to a steepening yield curve and higher interest rates.
But for banks to profit after a great run since March, 2020, rising
rates I believe have to be accompanied by an improving economy - not just higher inflation.
And, unfortunately, as expressed in yesterday's opener, that is not the case:
* Citigroup's Global Economic Surprise Index has turned negative and has fallen to levels historically
Read 6 tweets
11 Oct
Oct 11, 2021 | 01:10 PM EDT DOUG KASS
Why I Would Be Cautious on Banks Going Into Reporting Season
Bank stocks are among the most favored value plays of many money managers and strategists based on the fact that the industry is a direct beneficiary of higher interest rates.
This is indeed true - as banks are balance sheet and income statement sensitive to a steepening yield curve and higher interest rates
But for banks to profit after a great run since March, 2020, rising rates I believe - and it is the case historically - have to be accompanied
by an improving economy.
And, unfortunately, as expressed in our opener, that is not the case:
"Citigroup's Global Economic Surprise Index has turned negative and has fallen to levels historically associated with an economic slowdown/recession" @tomkeene @jimcramer
Read 4 tweets
6 Oct
@cnbcfastmoney @MelissaLeeCNBC @TSTRMPro
Oct 06, 2021 | 01:40 PM EDT DOUG KASS
Why I'm Not Buying General Motors
*When it seems everyone else is!
General Motors ($GM) has declared that its move into electric vehicles will serve to double revenues by 2030.
On the face of it that's a very powerful statement. Moreover, I appreciate the EV transformation and the relative inexpensive valuation - but unlike many who have embraced ownership of $GM I am not anxious to buy the stock.
Here is my explanation and, hopefully, "second level thinking", for why I am avoiding the shares - and that of Ford ($F) , with apologies to Gary "US Bonds":
* The transformation into EV vehicles is simply replacing a legacy business with a new one -
Read 5 tweets
4 Oct
At the funeral on Sunday the Rabbi recalled Tobias Levkovich's uniqueness in an anecdote about his last appearance on CNBC (you can watch it here ) - which was the day before his car accident. In that CNBC interview Tobias appeared in his home office and
behind him was a shofar. A shofar is made out of a ram's horn and is used in Jewish religious festivities and services.
I was brought to tears because I spoke to Tobias right after that interview and I had noticed the shofar. In that phone call he told me, and the Rabbi passed
on his similar discussion with him, that the placement was intentional. The shofar's placement was a subliminal message - Tobias wanted it to inspire all the young Jewish professionals who had recently entered Wall Street. @tomkeene @ferrotv @lisaabramowicz1 @jimcramer
Read 4 tweets
2 Oct
I received this email from Tobias Levkovich several months ago:

-----Original Message-----
From: Levkovich, Tobias <tobias.levkovich@citi.com>
To: Levkovich, Tobias <tobias.levkovich@citi.com>
Sent: Sun, Mar 21, 2021 12:05 pm
Subject: Passover

I wanted to take this opportunity
to wish you and your family a Happy and Healthy Passover! May the spirit of liberation from slavery be a reminder of G-d’s mercy and recognition of our ancestors’ suffering. Let Freedom reign amidst a world that needs recovery from the Covid pandemic as we begin to see some
vaccine lights at the end of the tunnel. This holiday provides us the great opportunity to appreciate our families and the good things we have versus the often less important stuff that we don’t.
Best,
T
Tobias Levkovich | Chief US Equity Strategist Managing Director
Read 4 tweets

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