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
TheStreet Open House

Kass: The Scale Tips to the Bullish Side

As I have previously written, we are in this vortex of tax and regulatory traps. The uncertainty of policy has resulted in what can be viewed as a fiscal tightening and a paralysis of corporate indecision. Arguably the continued weak series of economic releases over the past week increases the possibility that, by year-end, we will see a renewed sense of urgency from our politicians for policy relief from the tax and regulatory logjam.

A catalyst to a tipping point of changing fiscal policy could also occur as an outgrowth of a Republican win in November's elections, leading to a decision to continue the Bush tax cuts or even institute a payroll tax cut (or other "outside the box" initiative) in early 2011. (The market, as it usually does, will likely react positively in advance of these possibilities.)

In determining market levels -- as I did in calling for a generational low in March 2009 -- the principal factors I use in establishing a "fair market value" and range for equities are economic fundamentals, interest rates, valuations, expectations and sentiment.

Moderating Economic Growth Has Historically Provided a Healthy Backdrop to the U.S. Stock Market

In direct contrast to Wired magazine's Peter Schwartz and Peter Leydens's 1997 " The Long Boom: A History of the Future, 1980-2020" -- "We're facing 25 years of prosperity, freedom and a better environment for the whole world. You got a problem with that?" -- investors see us in a new paradigm of slow or no growth. But just like Schwartz and Leyden's bogus paradigm, which set the state for the tech bubble and its collapse, the newest paradigm of Roubini-like gloom, "The Short Boom" -- like the "Long Boom" it follows -- seems likely to be also dead on arrival.

An easy Federal Reserve that is content to maintain a zero-interest-rate policy indefinitely, coupled with a cycle low in inventories, residential investment, automobile unit and capital spending sales relative to their long-term relationship to GDP and relative to their longer-term trends, argue strongly against a domestic double dip. Moreover, an expected mean regression of these four series could provide important support for a moderate expansion in GDP growth in the years ahead.

In other words, the current soft patch indicates a moderating expansion but not a double dip.

2 of 6

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
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!
DOW 17,113.34 -18.63 -0.11%
S&P 500 1,999.17 +0.19 0.01%
NASDAQ 4,554.0250 +1.2660 0.03%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

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