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The Best of Kass

The Fed's preferable inflation gauge, core personal consumption deflator, is rising (+1.6% vs. target of +2%), and owners' equivalent rent was troublesome at +2.1%, the most in three years.

The TIPS market smells out higher inflation, with the difference between nominal 10-year Treasury yields and the TIPS yield at 2.5% compared to 2.1% during the first 10 months of 2012.

If these numbers continue to rise, the Fed will likely be less friendly than many think.

Finally, industrial production for September was +0.4%, twice as good as expectations, but the August figure was revised down by -0.2%.

Production of motor vehicles and parts fell by -1.5% for the second month in a row.

Production of machinery, electronics, computers and mining all rose.

The year-over-year increase in the capacity utilization rate matches the slowest pace in two and three-quarters years and follows weakening business capital spending, sluggish durable goods orders and the global manufacturing slowdown -- all of which are adversely influenced by fiscal inertia and tax and regulatory uncertainty.

At the time of publication, Kass held no positions in securities mentioned.

Profit-Taking in AIG
Originally published on Friday, Oct. 19 at 10:24 a.m. EDT.

  • After AIG's big run, I would expect some profit-taking on the news.
  • AIG (AIG) is weaker based on the CEO's statement that the government will likely sell its stake by year-end.

    This should be no surprise.

    After AIG's big run, I would expect some profit-taking on the news.

    But I plan to buy a helluva lot of AIG stock on the secondary offering in November-December period.

    Indeed, I plan to make it my largest long.

    At the time of publication, Kass was long AIG.

    Stock quotes in this article: FIO, FIRE, AIG 

    Doug Kass is the president of Seabreeze Partners Management Inc. Under no circumstances does this information represent a recommendation to buy, sell or hold any security.

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