This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Kass: Bearish Arguments Are Roaring

But stimulation is by definition bringing sales forward, and Policy (with a capital "P"!) has its consequences. Some programs (like "Cash for Clunkers") have the potential for borrowing from 2010-11. Others, like mortgage credits and even monetary policy, have a finite life to them. They end and the artificiality of the stimulative initiatives is lost -- and the economy becomes "real" demand-dependent. Given the past shock, it's hard to see a solid view of that demand.

Consumer Remains the Achilles' Heel

Then there is the consumer, who remains particularly exposed in the period ahead. Private wages and salaries fell by a record 5.2% annualized rate in July. While some improvement from depressed levels can be expected, the labor market remains weak and jobless claims are still elevated. The possibility exists that the consumer will retreat from the decades-long aspirational spirit and turn back toward the legacy of the post-Depression mentality of maintaining the status quo. With this reset could come disappointing personal consumption expenditures and a higher level of savings that will likely match the post-World War II average savings rate of 7.5% and could even begin trending back toward the direction of double-digit savings rates that existed in the recession of the early 1980s.


In summary, the market has discounted favorable expectations (certainly against forecasts four months ago!) and seems more "certain" of a self-sustaining recovery cycle outcome. Reflecting the gravity and weight of so many inhibiting factors, I see a much broader range of possible outcomes and less certainty than some of the newly printed bullish market participants.

The credit expansion of the last several decades has reversed, it will take time to reverse the damage to net worth and confidence, the consumer remains in a fragile state, corporations will make do with more productive but fewer personnel (job growth could continue to disappoint), there are no apparent drivers to replace the role of housing (2002-06) and numerous nontraditional headwinds (most importantly higher marginal tax rates) will have an uncertain impact on aggregate growth.

Doug Kass is founder and president of Seabreeze Partners Management, Inc., and the general partner and investment manager of Seabreeze Partners Short LP and Seabreeze Partners Long/Short LP.
5 of 5

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
FB $80.27 0.84%
GOOG $575.25 0.28%
TSLA $200.17 0.31%
YHOO $43.72 2.60%
AAPL $128.91 -0.35%


DOW 18,084.60 -118.77 -0.65%
S&P 500 2,098.02 -9.76 -0.46%
NASDAQ 4,968.7830 -11.1180 -0.22%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs