Kass: 'Kudlow & Company' Recap

I said that the root structure of the mustard seeds are growing, though a hard downfall of rain disturbed it yesterday in a market recovery that will have continued detours and potholes. When all is said and done, however, neither Cassandras nor Polyannas are money makers; they are merely attention getters.

So, on the issue of the market, though I continue to believe that a two-way approach (long and short) appears more appropriate while times are difficult and challenging -- very similar to Woody Allen, who said that the benefit of bisexuality is that it doubles your chances of a date on Saturday night -- my view remains that stocks are growing cheaper as bonds are growing rich in price. Negative sentiment -- Market Vane bulls on Treasuries are at 90%, and Investors Intelligence bulls are at a multidecade low of 23% -- reasonable valuations and engaged public policy are likely to trump the lack of recovery in credit and (lagging) earnings woes.

I opined, as I did last week on the show, that the housing market was moving closer to stabilization, reflecting improving affordability. I noted that the number of canceled units at a leading homebuilder is dropping, while the ASPs of those canceled units have moved dramatically higher, indicating to me a straw in the wind that the housing decline is not as a broad-based as it has been in the past but rather is presently being concentrated in higher-end communities/regions.

The shares of Ocwen Financial (OCN Quote), a large mortgage servicer with an expanding debt recovery subsidiary, and Vornado Realty Trust (VNO Quote), the largest office REIT extant, looked especially timely to me. Strategas Research's Jason submitted a view that the market had bottomed but a sustainable advance requires further thawing in credit infrastructure. He favored consumer staples and selected financials, including Greenhill (GHL Quote), Lazard (LAZ Quote) and the publicly traded exchanges. Denny, similar to many whom have grown tired of calling too many bottoms, held a positive market view.

I concluded by saying that business tax cuts and substantive tax incentives for home buyers, as suggested previously by Toll Brothers' (TOL Quote) Bob Toll, could be the tickets to market and economic recovery.

Last night was a good show.

Doug Kass writes daily for RealMoney Silver, a premium bundle service from TheStreet.com. For a free trial to RealMoney Silver and exclusive access to Mr. Kass' daily trading diary, please click here.