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: The Emperor's New Clothes?

"But he hasn't got anything on," a little child said.

"Did you ever hear such innocent prattle?" said its father. And one person whispered to another what the child had said, "He hasn't anything on. A child says he hasn't anything on."

"But he hasn't got anything on!" the whole town cried out at last.

The Emperor shivered, for he suspected they were right. But he thought, "This procession has got to go on." So he walked more proudly than ever, as his noblemen held high the train that wasn't there at all.

-- Hans Christian Andersen, "The Emperor's New Clothes"

Over the weekend the Bank for International Settlements warned that global stock markets and financial conditions might be irrationally detached from underlying economic conditions and called on central banks to abandon policies that have stoked asset price excesses. The BIS argued that markets might be unprepared for a rate rise and implied that investors might be too optimistic in their faith in global central bank policy.

I didn't need the BIS's two bits, as I have argued, and will continue to argue, that this is one of the most forgiving stock markets in history, as equity prices have arguably disconnected from the real economies.

The bullish meme has now morphed from the notion that the domestic economy will reach escape velocity and reaccelerate dramatically into the quarters ahead to the idea that the prospects for the expansion's length has improved.

After an outsized 2.9% drop in first-quarter 2014 real GDP, the promise of robust domestic economic growth has been quickly muted. Last week's economic data has resulted in Wall Street's strategists and economists lowering their growth projections, and the near-10-basis-point weekly drop in the 10-year U.S. note yield seems to confirm the muted economic expectations.

No worries, argue the bulls, because the expansion cycle, though subpar and substantially less robust than previous forecasts and cycles, will make up for a lack of strength with the prospects for durability and sustainability. And not only does the Fed have your back but so do corporations (in the form of aggressive share buybacks and heightened M&A activity).

It is this thesis of modest growth, reasonable dividends, continued share buybacks and eventually productivity enhancing capital expenditures that has been embraced by market participants. So, according to the bullish cabal, barring a black swan or adverse geopolitical event, a recession or any meaningful swoon in stock prices are years away.

The miserable economic and stock market experiences of 2007-2009 are distant and nearly indistinguishable shapes in the rearview mirror today.

As evidence of this, many money managers (e.g., Legg Mason's Bill Miller) who had fallen (badly) have now risen like a phoenix from the ashes and have regained their reputations.

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 17,031.14 +43.63 0.26%
S&P 500 1,984.13 -1.41 -0.07%
NASDAQ 4,518.9020 -48.6960 -1.07%

Our Tweets

Brokerage Partners

Top Rated Stocks Top Rated Funds Top Rated ETFs