Kass: Near-Term Pros and Cons

This blog post originally appeared on RealMoney Silver on Feb. 1 at 7:51 a.m. EST.

January was a poor month for equities as the dual impact of a continued erosion in credit conditions -- spreads blew out and credit writedowns continued apace -- coupled with a marked deceleration in the rate of economic growth weighed on investors (especially of a Nasdaq-kind). While the Fed responded on Wednesday to the above issues by aggressively shaving the fed funds rate by 125 basis points, market participants have, thus far, generally greeted the move with a Bronx cheer.

Positives:

• Speculation and market excesses, typically associated with important market tops, are nonexistent in almost any asset class -- perhaps apart from the 2006 to 2007 price action in Google (GOOG Quote), Research In Motion (RIMM Quote), Apple (AAPL Quote), Baidu (BIDU Quote) and the Chinese market.
• P/E multiples are low relative to interest rates.
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