Kass: How a Year-End Rally Could Materialize

Lower middle-class tax rates. Again, immediately!

Announce a $25 billion aid package to domestic automobile manufacturers. This might be distasteful to the President-elect, but it is necessary to the markets. (Note: Europe has already announced a $55 billion-plus automobile rescue package.)

Introduce large tax incentives for home ownership. On Friday, FDIC Chairwoman Sheila Bair unveiled the details for a plan to give government support to delinquent homeowners by artificially lowering rates and promising to share in the losses of borrowers who receive government help and still go into default. Obama should go further and announce a large ($10,000-plus) tax incentive for the purchase of new and existing homes in order to eradicate the glut of unsold homes.

Immediately announce Cabinet appointees with the broadest experience and the highest credibility, from both within the two political parties (a team of rivals) and from industry. More than ever today (and especially under the weight of debt and a contracting economy), a house divided against itself cannot stand. As soon as possible, Obama should announce his intention to embark on a magnanimous transpartisan approach to his appointments of 14 Secretaries of Departments and of the Attorney General in his Cabinet as well as the five other non-Secretary positions of Cabinet-level status. As well, he should announce appointments of specialists in some of these positions who are outside of the political realm. For example:

• An experienced homebuilding executive such as Bob Toll, chairman of Toll Brothers (TOL Quote) and a Democrat, could be asked to be Secretary of HUD.
• Penny Pritzker, CEO of Classic Residence by Hyatt, could be asked to be Secretary of Commerce.
• And Boone Pickens (Republican) could be asked to be Secretary of Energy.

Other appointments that would be greeted positively by the markets would be an inclusive list of some of the best and brightest -- that is, those with a sense of gravitas and with associated experience at the highest levels -- that could include former Senator Chuck Hagel (Republican, Nebraska) as Secretary of State, Caroline Kennedy as Secretary of Education, Lawrence Summers as Secretary of Treasury, Bob Gates could be asked to stay on as Secretary of Defense, Arizona Governor Janet Napolitano as Attorney General, Virginia Governor Tim Kaine as Secretary of Transportation, former Oregon Governor John Kitzhaber as Secretary of Interior, former New Jersey Governor Tom Kean as Secretary of Homeland Security, Jason Furman for Office of Management and Budget, etc. These sorts of bold bipartisan appointments would wow the markets as a sense of engagement is underscored.