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: Buy the Mystery, Sell the History

At What Cost?

The cost of the Washington fiasco is likely higher than many think. Our leaders and fiscal policy are growth-deflating. Using the debt ceiling as a negotiating tactic has run the risk of a more permanent and long-lasting damage to our country's reputation and hastens the day when the U.S. dollar is no longer the world's reserve currency. (Note this morning's U.S. dollar weakness after Chinese agency Dagong downgraded the U.S. credit rating.) If that damage occurs, the financing of our debt will grow more expensive, confidence will drop, and economic growth will be diminished.

Visibility Is Diminished

With more confusion ahead in a fiscal sense, the path of economic/profit growth is unclear as business and consumer confidence has been dented. Markets dislike uncertainty. To me, it is a leap of faith to expect the 0.6% shaved off from GDP (due to the government shutdown) to be made up in the period ahead.

The End of a Strong Profit Cycle

Last night, we saw two high-profile and likely not isolated profit disappointments -- eBay (EBAY) saw "a dramatic deceleration in U.S. e-commerce growth" and IBM (IBM) was also weak -- and more might lie ahead. Most notably, top-line misses have become commonplace -- even Goldman Sachs (GS) missed by $700 million this morning. Profit margins (which are 70% above the five-decade mean) are vulnerable to mean-reversion, and monetary policy has lost its effectiveness. I remain skeptical of the consensus view that the domestic economy will move into escape velocity and toward a self-sustaining cycle this year or next.

Quantitative Easing Has Lost Its Effectiveness

The role of stimulating growth has been squarely on the shoulders of monetary policy since 2009 as our leaders in Washington, D.C. have abrogated their fiscal responsibility. With the Fed's tools now clearly more blunt in their effectiveness, organic growth must take over. With retail (shopping center data has weakened) and housing activity already clearly eroding prior to the mess over the past few weeks, I don't see a catalyst to that organic growth. Moreover, the longer the Fed continues its current policy the more difficult it will be to extricate itself and the more likely that the market tightens (with higher bond yields ahead even if the economy remains lackluster).

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
DOW 17,083.80 -2.83 -0.02%
S&P 500 1,987.98 +0.97 0.05%
NASDAQ 4,472.1080 -1.5890 -0.04%

Our Tweets

Brokerage Partners

Top Rated Stocks Top Rated Funds Top Rated ETFs