It's moving day. People moving in, people moving out. And, either in anticipation of the new family living in that big old neoclassic home, or suffering the aftereffects of an extended hangover from a rally that seems to have ended ages ago, equities have been edging lower since the year began, mothballing the Dow 20,000 countdown clock. The 10-year , on the other hand, is on its way to round-tripping its record-breaking sell-off with yields again climbing as the economic data continues to showcase a strengthening economy and a more hawkish Fed . In concert with the January rally in U.S. Treasurys has been the profit-taking in financials despite strong earnings reports and forward guidance. While this may have been the trigger, jettisoning some bank positions that rose 20 percent over two months after lagging the market for a decade should be no more of a surprise than Angelina Jolie letting go half her position in Brangelina. To me, though, that's shortsighted. Why pay the taxes on the trade when you are only going to reposition the stocks as rates climb and the curve steepens. I get it — they won't ever have the earnings power that they did but they don't need it to trade higher from current levels. So the week has been — well, kind of boring. One of those weeks when you don't bother to look at your screen all that often; when you spend your time putting together the decision tree based upon varying scenarios, each dependent upon how the new administration moves forward. Sure there were some things to do but nothing had moved all that much — aside from the 10-year — that would motivate me to drastically reposition or add exposure. Well, not entirely true. Against my better judgment, I initiated a small trading position in Macy 's and traded steel on the short side. Why to both? Likely because it has been a while since I have done something really dumb and wanted to get back in touch with my inner self. It's a pair trade, I guess: M is over-hated (with a 5 percent yield) while X is over-loved with a valuation that is unjustified, a domestic infrastructure plan that won't happen so quickly, a strong dollar, Wilbur Ross speaking of tariffs that already exist and China's inability to fund more infrastructure. I may be out of the trades by the time you read this. In terms of positioning, hedge funds had a modest decrease in net exposure coming into 2017 and an increase in overall gross. The industrial, energy and tech trade was alive and on the other side, health care and retail continued to look for friends in a hostile environment. (Addendum: I covered X and remain long M. It has been a day and a half so chill.) OK, I fess up. I can't avoid it anymore. Should have addressed it upfront. I've been hiding. Took a break from writing the weekly over the last month or so. Been maniacally focused and incredibly busy as we launch a new fund — most attractive profile I've seen (only for accredited investors). Plus, I didn't have all that much additive to say because — well, how could I? There weren't any substantive new inputs; just the election-era ones being recycled. But now is when the rubber begins to hit the proverbial road. And there should be no doubt that President Trump — he has been sworn in as of this writing — is going to hit the road in fifth gear. Investors will too. While most outwardly reflect cautiously upon the market's valuation, perhaps equally uncertain of the ability of a Washington newcomer to execute on truly bold plans, they also understand that another year of ceding performance to passive investing brings them one step closer to forsaking stock trading for trading down from the Tesla to the Chevy Volt. As a result, professionals have to play whether they want to or not so the question is where? Lately, they have found it in the tech-heavy Nasdaq, which has been the star this year, arguably as much a momentum trade as anything else since earnings reports have yet to catalyze the move. In terms of positioning, hedge funds had a modest decrease in net exposure coming into 2017 and an increase in overall gross. The industrial, energy and tech trade were the favored long plays and on the other side, health care and retail continued to look for friends in a hostile environment. In other words, it is a momentum-driven market on both sides with the question being, are algos leading, following or just going along? Gauging investor sentiment in the market, not the outdated AAII poll that is a reflection of mostly retired folks who move their retirement accounts around as often as Bill Belichick wins a best-dressed award, but real conversations with institutional investors, would lead you to believe that they would rather be in cash or a seller. The point is that what people say and what they do are two different things. My view is that, because missing out on the market is not an option, investors will be investing and are generally bullish. It will be rocky and will start slow. In fact, I'm sitting in a reasonable amount of cash. Valuations are at best, "fair," and perhaps stretched, but what if? What if tax reform does happen or at least moves forward? What if NAFTA is renegotiated without rhetoric in a way that is fairer to the U.S. rather than building on our $60 billion deficit to Mexico? That isn't very meaningful but it is a message. What if President Trump continues to be able to tweet about saving jobs? And what if the protesters, who are, frankly, being ignored and fade away like the OWS crowd (in case you forgot — Occupy Wall Street). And what if President Trump gets too busy to tweet about every slight. ... You get the picture — could be a helluva ride. Remember, the market is a discounting mechanism so just need to see some progress and I think we will. First up is the repeal of a number of executive orders; the number mentioned has been 200 but not sure anyone understands the impact of that on the markets. Repeal of Obamacare will go forward which will again pressure the pharma companies and biotech. These stocks have been mixed but I wouldn't be involved. Too many other areas to focus on. And this won't be a Boeing situation where the CEOs of Merck and Eli Lilly can show up at the White House, vow to hold prices and case closed. Nope, those days are gone — in fact they never were. Trump isn't like one of the top people who I worked with at Lehman where the last person he spoke with who had the catchiest sound bite was the one he listened to. He will see this to the finish line. The big one is what matters to us all, tax reform. That's what I am waiting for. As soon as I am convinced that the timing is this year and the plan is crystallized (will the interest deduction be in the final proposal, state and local tax deductions, etc.), I may get a bit more excited about things. And what if infrastructure ... (Mr. Weiss is the managing partner of Short Hills Capital Partners, a hedge fund advisory firm and asset manager primarily established to invest on behalf of one of the industry's most successful hedge fund managers. He has held senior management positions at SAC Capital, Salomon Brothers, Lehman Brothers and MSW Asset Management. He is the author of two investment books and a novel, is a visiting teaching fellow at UNC's graduate business school, Kenan-Flagler, and a CNBC contributor appearing regularly on "The Halftime Report.")
