Kass: Where Have the Fundamentals Gone?

This blog post originally appeared on RealMoney Silver on Nov. 1 at 7:44 a.m. EDT.

"We are set up for a big surge here. Everybody going into year-end has been cautious, set up for protection with out-of-the-money puts. The prime brokers say that the hedge fund universe has the lowest net long it's had in four years. As we go into year-end, we are going to get a stampede."
--Barton Biggs, Traxis Partners

As someone who has admired Barton Biggs over the years, I was frankly flabbergasted by his interview on "Fast Money" last evening. Stated simply, Biggs is looking for a dramatic melt-up in the market into year-end based on his belief that hedge funds are poorly positioned for such an advance -- this, despite a contrary picture painted by ISI's hedge fund surveys.

From my perch, Biggs painted the picture of a negativity bubble that is not supported by any real concrete data. A five-year advance in the market does not suggest a negativity bubble. A drop in short interest, an increase in margin debt, near total unanimity regarding a favorable outlook for the tech sector, record low mutual fund cash positions, etc., etc., do not suggest a negativity bubble.

Instead, the facts, to me, seem to support a positivity bubble....