This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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
EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stock Under $10 that he thinks could potentially double or triple in the next 6 to 12-months. See what he's trading today with a 14-day FREE pass.

Kass: Short-Term Market Outlook Improves

This includes the final August eurozone manufacturing index released yesterday morning. It came in at 51.4 compared with the flash estimate of 51.3 and July's reading of 50.3. This is the best print since June, 2011 and it was broadly based (with forward looking orders up 2,5 points and at the highest reading since May, 2011 and with orders/inventories widening). To be sure, the European economies are emerging from a lengthy recession, but at least growth has stabilized.

In China, the August Manufacturing Index climbed to 51.0 compared with expectations of 50.6 and with July's 50.3. This is the best print in nearly 18 months. Again, like the eurozone, the most forward-looking component, orders, was stronger than generally forecast ,with export orders finally above 50 (indicating expansion expected).  Orders and an increase in export orders to a level above 50 (indicating expansion for the first time since March, 2013) are consistent with 7-7.5% real GDP growth for China. 

Like many, I am skeptical of the Chinese data. But the non-government data reflected in August's HSBC/Market Manufacturing Index has risen to more than 50 from only 48 in July. This, coupled with an increase in commodity prices over the last two months, confirms China's stabilization of growth. Importantly, these data suggest that China's focus to rein in the excesses in the shadow banking system are not denting economic activity. This dulls the potential (big) risk that emerging markets economic weakness results in a further liquidation of EM positions (stocks and bonds) through the shorting of more liquid assets like the U.S. market. 

Most Headwinds Will Likely Cap This Rally Short of July Highs

I should emphasize that I don't see anticipated relief in the September-October market climb to carry it above the year's recent highs.

The most significant challenge to the market's highs includes continued weak domestic and global economic data (led by a stall in the U.S. housing market), this year's previous expansion in valuations, a challenging profit landscape and an imminent confrontation regarding the debt-ceiling issues.

Summary

Though it remains my view that the 2013 market top is likely in, over the near term I expect global equities to rally and for gold, oil and fixed income instruments to be under pressure. 

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

Markets

DOW 17,778.15 +421.28 2.43%
S&P 500 2,061.23 +48.34 2.40%
NASDAQ 4,748.3960 +104.0840 2.24%

Our Tweets

Brokerage Partners

Top Rated Stocks Top Rated Funds Top Rated ETFs