Kass: Fair Market Value Update
This column originally appeared on Real Money Pro at 7:21 a.m. EDT on July 18.
NEW YORK (Real Money) -- In large measure, the worsening macroeconomic situation in Europe, China and the U.S. is leading me to reduce further my calculation of the S&P 500's fair market value from 1430 to 1415, which is still about 4% above the cash level at Tuesday's close of trading (1363).
- I am keeping the chances of the two tail events -- namely, a reacceleration of U.S. growth and a U.S. recession in 2013 -- at 5% each.
- I am increasing the probability of sub-1.5% 2013 real GDP growth from 35% to 40%.
- I am reducing the likelihood of my baseline, muddle-through scenario (defined as 2013 real GDP growth of between 1.5% and 2.5%) from 55% to 50%.
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