April 22, 2013

Doug Kass on cheap oil and benefits to US stocks

I am not an oil economist nor am I even a decent investor in oil-related equities. As a sometime consumer specialist, however, I have had to observe oil prices and understand their impact on consumer behavior.

Nothing impacts consumer spending faster than change in price at the gas pump.
The law of supply and demand may start to apply to oil. At least in the intermediate term, would be bullish for the U.S. economy -- the consumer sector will be delivered with a tax cut and corporations' profit margins could be buoyed. It could also be seen as a negative for the bond markets as lower commodities revive economic growth.

Via theStreet.com

April 18, 2013

Short the markets

Up to now there is little question that investors are feeling the pressure of under performance chasing price strength and ignoring the warning signs of slowing global economic growth, a worsening profit outlook and expanding technical divergences (and low NYSE volume). Hedge funds are now at their highest net long exposure in some time, sentiment studies are uniformly bullish, and retail investors are warming up to stocks. As a result of these factors (and others), stocks are overbought -- maybe even dramatically so.

But I see it as only a matter of time until reality adversely impacts stocks. In fact, it is my view that this could happen momentarily.

April 15, 2013

Monetary easing has lost its effect and will see a market correction

Continued massive monetary easing in the U.S. has lost much of its overall marginal impact- there is still little credit growth. With "QE Infinity" no longer producing a tangible influence on the real economy, more easing is much like a flute without holes that cannot be played or a doughnut without holes.

While many are certain that continued liquidity will feed a steady market climb into 2014, sooner than later, there will likely be an "aha moment," a moment in time when the aggressive monetary policies are recognized as not only impotent and ineffective but as likely having adverse unintended consequences (such as producing currency wars).

At that point in time, natural price discovery will be reintroduced into the capital markets, and stocks and bonds will retreat back closer to intrinsic or fair market values, which I view as well below current levels.

US Stock should not be rising

The gap between the rising U.S. stock market and the visible deceleration in the rate of global economic growth has been widening in a more dramatic and conspicuous fashion over the past several weeks, and my cautious market view is growing more bearish.