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Irrespective of today's strong jobs numbers, Doug Kass is sticking to his bearish thesis that...

Irrespective of today's strong jobs numbers, Doug Kass is sticking to his bearish thesis that market is headed much lower from here. The problem, Kass says, is that "central bank liquidity blurs the line of demarcation between economic reality and stock market euphoria." The narrative now is whether the Fed is simply "pushing on a string," and Kass thinks many market participants are coming to this 'aha' moment." (Video).
Comments (21)
  • InvestoBullSG
    , contributor
    Comments (176) | Send Message
     
    Let's us watch on whether President Obama can convince President Xi to appreciate the Yuan at faster rate.
    7 Jun 2013, 07:47 PM Reply Like
  • Robert Duval
    , contributor
    Comments (2935) | Send Message
     
    The perfect contrary indicator.
    7 Jun 2013, 07:50 PM Reply Like
  • yliu54
    , contributor
    Comments (170) | Send Message
     
    That's very possible.
    7 Jun 2013, 07:57 PM Reply Like
  • Sammy Lee
    , contributor
    Comments (299) | Send Message
     
    This was expected. The question isn't what, but when and that's harder to predict.
    7 Jun 2013, 08:02 PM Reply Like
  • Tack
    , contributor
    Comments (12761) | Send Message
     
    The Fed's QE has been flowing into excess reserves for many, many months, so it's been rather obvious to anyone who has given the matter serious thought that it's neither elevating the market nor levitating the economy. We seem determined to have a panic attack over QE's reduction, or even elimination, without considering that stopping more flows into excess reseves will have little impact on anything.

     

    Apparently, this will have to be proven as a non-event, like Y2K, before the hysteria abates.
    7 Jun 2013, 08:19 PM Reply Like
  • wmateri
    , contributor
    Comments (518) | Send Message
     
    If that is true then you need to believe that the huge increase in the stock market over the past two or three years has been due to improving fundamentals, rather than to the cheap money made available by the Fed. SA's Colin Lokey has done some brilliant articles on how Fed money indirectly (but powerfully) feeds the equity markets (see "http://seekingalpha.co..." for the latest one). I think it is fairly clear that directly, indirectly, or only by inuendo the Fed has been feeding the market throughout the various QEs. The markets accordingly went up with little or no basis in the fundamentals. Similarly, when the Fed stimulus is removed the market will go down just as illogically, even though the fundamentals are improving.
    7 Jun 2013, 10:11 PM Reply Like
  • Whitehawk
    , contributor
    Comments (3129) | Send Message
     
    "JPMorgan's businesses take in more in deposits that they make in loans and, as a result, the Firm has excess cash that must be invested to meet future liquidity needs and provide a reasonable return. The primary reposnsibility of CIO, working with JPMorgan's Treasury, is to manage this excess cash. CIO invests the bulk of JPMorgan's excess cash in high credit quality, fixed income securities, such as municipal bonds, whole loans, and asset-backed securities, mortgage backed securities, corporate securities, sovereign securities, and collateralized loan obligations."

     

    This is fact (stated from JPM's own Task Force docs found here:http://bit.ly/17vUudY). Bloomberg also reported some broader stats among the top eight commercial banks here: http://bit.ly/17vUudY, to wit: "average loan-to-deposit ratio for the top eight commercial banks fell to 84 percent in the fourth quarter from 87 percent a year earlier and 101 percent in 2007."

     

    So yes, those excess deposits have found their way as hot money flows into assets, and have inflated them. However, as I have discussed elsewhere, going forward those banks will start to make loans and that loan-to-deposit ratio will improve, especially as the yield curve steepens. Long XLF calls.
    7 Jun 2013, 10:28 PM Reply Like
  • The Last Boomer
    , contributor
    Comments (881) | Send Message
     
    Tack,
    perception is reality. If stock market participants believe that the Fed's QE pushes prices higher and because of this they buy stocks and thus push the price higher, then the Fed QE really pushes prices higher. It achieves this by changing subjective expectations, not the money in circulation.
    7 Jun 2013, 11:43 PM Reply Like
  • Whitehawk
    , contributor
    Comments (3129) | Send Message
     
    @The Last Boomer: All too true. The evidence though leaves little doubt that excess reserves do have a direct link to asset price inflation through various schemas. Yes, those reserves have also shored up the bank balance sheets, but this has allowed such schemes to take place. Nevertheless, take advantage of the fact that financials are still a relative value in this market reinflation.
    8 Jun 2013, 11:22 AM Reply Like
  • Matt Hylland
    , contributor
    Comments (45) | Send Message
     
    I see it already in a few weeks there will be a headline on CNBC titled:

     

    Kass: "Why I was wrong about the market falling"

     

    and he will be bullish again, just in time for another down week, in which he will become bearish again...

     

    This guy can not actually trade like he talks, he would be broke 10x over.
    7 Jun 2013, 08:27 PM Reply Like
  • Whitehawk
    , contributor
    Comments (3129) | Send Message
     
    Last week Kass was bullish on gold on/after a spike up day. Sign of desperation. He should be making the safe bet that financials will surge, which is what they're doing, and with any luck, will continue to do through July.
    7 Jun 2013, 09:39 PM Reply Like
  • positivethoughts
    , contributor
    Comments (1812) | Send Message
     
    You cant have strong job growth when the growth is being supported by government debt spending and money printing. These factors lead to 'malinvestment', or in other words, investment that would not have taken place if not for the debt spending and disproportion money expansion.

     

    Eventually, there will be a correction.
    7 Jun 2013, 09:51 PM Reply Like
  • chopchop0
    , contributor
    Comments (3137) | Send Message
     
    He obviously missed this year's rally and needs to create an entry point to get on board :)
    7 Jun 2013, 11:09 PM Reply Like
  • blueflamered
    , contributor
    Comments (5) | Send Message
     
    Listen to men like John Bogle and not con men like Kass
    7 Jun 2013, 11:27 PM Reply Like
  • Tao Jaxx
    , contributor
    Comments (1274) | Send Message
     
    I couldn't have said it better.
    But most people listen to Kass and have no clue who John Bogle is. But most people lose money for Kass to make a living :)
    8 Jun 2013, 01:31 AM Reply Like
  • maverta
    , contributor
    Comments (329) | Send Message
     
    Kass sickens me more than anyone on TV. He changes his mind daily depending on the action in the market. Just looking at him, you see a man dripping with sleeze.
    8 Jun 2013, 04:20 AM Reply Like
  • Kyle Spencer
    , contributor
    Comments (998) | Send Message
     
    I have a simpler theory that fits the evidence better: Don't fight the Fed.
    8 Jun 2013, 05:24 AM Reply Like
  • HPBunker
    , contributor
    Comments (219) | Send Message
     
    Tulip bulbs! They're cheap, in season, and have never been worth zero. Let the chumps hold stocks or gold. When civilization finally collapses, it'll be those with tulip bulbs who come out on top.

     

    Disclosure: Long tulip bulbs. Short everything else.
    8 Jun 2013, 07:12 AM Reply Like
  • Bret Jensen
    , contributor
    Comments (9832) | Send Message
     
    Agree with Dougie....Fed will end this party soon.....It's looking like the June policy meeting when the Fed will officially signal it's set to begin tapering asset purchases, according to Jon Hilsenrath. Yesterday's lukewarm jobs reports removed pressure to act right away, but the prerequisite necessary to cut back QE - an improving economy - has been met
    8 Jun 2013, 08:38 AM Reply Like
  • Zeus2012
    , contributor
    Comments (697) | Send Message
     
    Wasn't he the same guy who floated the rumor about a AAPL stock split while he was actively dumping the shares into the rally that his rumor generated a few months back?

     

    Why would anyone listen to this guy is beyond me.
    8 Jun 2013, 12:20 PM Reply Like
  • dacama1
    , contributor
    Comments (211) | Send Message
     
    Strong job numbers? Who is SA kidding? 275k is strong. Yesterdays number won't even cover the increase labor force.
    8 Jun 2013, 03:47 PM Reply Like
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