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Kass: Easing Money

This column originally appeared on Real Money Pro on March 8.

NEW YORK (Real Money) - There's the view this morning, expressed by several strategists on CNBC's "Squawk Box," that the current global stock market advance is based on more than just quantitative easing and excessively liberal monetary policy.

It is less clear to me, and here is some evidence.

Countries' stock markets that are undergoing quantitative easing are materially outperforming those that are not delivering quantitative easing.

Let's examine two stock markets and look at the major differences in performance:

  • China -- via iShares FTSE/Xinhua China 25 Index Fund (FXI) -- is the only major region not doing quantitative easing.
  • Japan -- via iShares MSCI Japan Index Fund (EWJ) -- is undergoing substantial easing. And if one looks at the WisdomTree Japan Hedged Equity Fund (DXJ) for Japan, which takes out the currency exposure and is not depressed by the yen weakness as EWJ is, it makes my point even more.

Now, let's compare the stock market performance of China (again, via FXI) with the U.S. stock market -- via SPDR S&P 500 ETF Trust (SPY) -- which is also engaged in quantitative easing. The same relationship of underperformance exists.

At the time of publication, Kass and/or his funds were short SPY, although holdings can change at any time.

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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