December 16, 2010
Columnist and money manager Doug Kass, whose track record of market calls in recent years has been very strong, says a variety of factors have him turning more bearish.
“Within the context of an overbought and overloved equity market, the rapidity of the rise in interest rates is but one of the accumulating factors that will likely weigh on stocks in the weeks ahead,” Kass writes on TheStreet.com. He says that the Federal Reserve’s latest round of quantitative easing (QE2) has “bombed”, and that U.S. leaders have failed to address the country’s big deficit problems.
Kass says bulls are ignoring several warning signs, including “worsening payrolls growth, the temporary nature of the stimulus, a continued buildup in household savings, a banking system that is still in a healing mode and a worsening housing market.” He says that, just as many missed the problems that led to the financial crisis and accompanying recession, many are now failing to see the current problems. “I believe the prudent course shouldn’t be the adoption of too much risk at the current time,” he says.
He already called for a top recently and also stated -wrongly- that we have seen the highs for the year back in April. He obviously went short and is now underwater. While many problems are very real and many timebombs may be hidden, he conveniently ignores the fact that jobless claims has been downtrending for several weeks and soon may fall below the 400k mark which will indicate job growth. A revised GDP growth rate for 3Q and a higher projected one for 4Q will only add to the fuel. We are now at a similar point when the bull re-started in 2003.
Nothing trumps jobs.
On which facts do you base your statement that Kass’ track record has been “very strong in recent years”?
There is anecdotal evidence that his track record has not been so strong. As far as I can see, he made one great calls in the last year, which was his bottom call in March 2009.
Bad calls:
- Jan 2008 (!): “Buy Financials”
- Sep 2009: calls market top
- March 2010: calls market top