NEW YORK ( TheStreet) -- Doug Kass of Seabreeze Partners is known for his accurate stock market calls and keen insights into the economy, which he shares with RealMoney Pro readers in his daily trading diary.
Among his posts this past week, Kass wrote about continued uncertainty on the fiscal front, his disappointment with corporate earnings and the details of his position in bonds.
Originally published on Friday, Jan. 18 at 9:23 a.m. EST. Republicans will likely kick the can down the road for another six months. It is increasingly clear that the Republicans will likely offer a deal to kick the debt ceiling extension (of $575 billion-plus) down the road for another six months. In turn, it could now be expected that the Republican Party will use the leverage of sequestration and continuing resolutions, which have March 1 and March 27 deadlines, to get their spending cuts. My view is that this will produce continued uncertainty in business/consumer confidence, earnings and spending, exposing the market to some more risk -- consistent with my notion of a January S&P 500 high. As it relates to my short bond position, if this is the outcome, it could delay the widely anticipated interest rate rise over the next few months. At the time of publication, Kass was short SPY.
Earnings So Far
Originally published on Friday, Jan. 18 at 8:44 a.m. EST. It is always good to review the facts. Brian Sozzi comments in Columnist Conversation that earnings are disappointing. I agree. It is always good to review the facts. It is very early in the earnings season, with only about 10% of the S&P 500 reporting fourth-quarter 2012 results. Thus far, 62% of the earnings reports exceeded expectations and 22% were worse than consensus. Operating earnings are up 4% year over year for those that have already reported profit results, which is in line with expectations but below forecasts of a week or more ago. Sales are beating consensus by about 52% while 45% have missed. But if you take out the financials, less than 45% are ahead of expectations. This compares favorably to third quarter 2012, when 32% beat consensus on the top line (25% excluding financials). As we enter 2013, the tug of war between the fiscal drag of austerity/spending cuts and higher tax rates on the consumer are competing against a better housing and jobs market and a modest turn in the manufacturing sector.