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.
Last week, Kass wrote on a possible shift in market conditions and on Citigroup.
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(Rag doll, ooh)
When she was just a kid, her clothes were hand-me-down
They always laughed at her when she came into town
Called her rag doll
- We have a bull market in stocks but also in complacency (a self-satisfied view that fails to take into account adverse outcomes).
- There are technical divergences aplenty (the beneficiaries of the market melt-up are narrowing).
- Bears have become an endangered species, and some measures of investor sentiment are at a bullish extreme.
- The fuel of corporate buybacks (junk bonds) is starting to retreat from bubble-like conditions.
- Geopolitical risks are multiplying geometrically.
[Read: IMF Sees U.S. Growth at Weakest Since Recession]
- The domestic economic recovery has been an exclusive one.
- Stock valuations (adjusted for normalized profit margins) are well above the historic averages, and financial engineering may not steer us to higher P/E multiples forever.
[Read: Where the Housing Bubble May Be About to Burst]
- again, rising geopolitical issues
- a Fed that is ending its bond purchases and is considering an interest rate rise
- a potentially divisive midterm election that will set the stage for legislation in the years ahead.
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