Kass: My 'Fast Money' Recap

I concluded by saying that it is different this time as numerous nontraditional headwinds will weigh on the economy and on the markets and thwart the self-sustaining thesis:

• The consumer remains the Achilles' heel to growth. Consumers entered the downcycle exposed and leveraged to the hilt, and net worths have been damaged and will need to be repaired through higher savings and lower consumption.
• Cost-cuts are a corporate lifeline and so is fiscal stimulus, but both have a defined and limited lifespan.
• The credit aftershock will continue to haunt the economy. The securitized lending market is still malfunctioning, and the shadow banking industry remains adrift.
• Municipalities have historically provided economic stability -- no more. They are in disarray. I mentioned New York Governor David Paterson's appearance on "Squawk Box," during which he cited that the state's finances are so bad that it's considering letting prisoners out of jail before their time is up in order to save money, as an example! Melissa, as a New York City resident, was scared!
• Federal, state and local taxes will be rising as the deficit must eventually be funded and high-tax health and energy bills also loom.

Joe made the case that the next two months could provide a good market backdrop as investors chase performance. I disagreed as I saw some emerging technical signs of market weakness that could override seasonal strength, including three failed rallies in the past week, a contracting number of new highs on the New York Stock Exchange, a breakdown in the Dow Jones Transportation Average and, generally, stocks have begun to sell off on good and bad news.

Karen asked me how vulnerable the market was over the short to intermediate term if I used the quantitative models that I derived to make my generational bottom call. I said that the market appears to be 5% to 12% overvalued.

And, yes, I watch "Fast Money" every night!

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's daily trading diary, please click here.

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