This blog post originally appeared on RealMoney Silver on March 18 at 7:36 a.m. EDT.
From my perch, the
American International Group
bonus outcry and today's House Capital Markets Subcommittee
are simply a sideshow to the main event -- namely that we have likely seen a significant and maybe even a generational
How to seek alpha in a bull market was the message I tried to communicate on
"The Kudlow Report" last night.
I continue to view the March 5 low as the "Nouriel Roubini stock market bottom," the day the grizzly NYU Professor pronounced a 600 or lower
price objective during his worldwide lecture tour.
A confluence of negative sentiment, historically low equity valuations, a noticeable deceleration in the rate of decline of industrial production and a strongly positive-leaning set of market internals have conspired to produce a combustion in the world's stock markets that is likely to be
is the tape of last night's show.
Tactically, I wouldn't expect the market to continue its straight up move as it has done over the past week. Nor would I anticipate a correction to anything near the Nouriel Roubini stock market bottom low of March 5, 2009. As I displayed earlier this week, below is a chart of my specific expectations for the S&P 500, using the
, through the middle of the summer 2009.
Most have been caught flatfooted in the face of the market's rip, and it is hard to find anyone who believes that the rally is a prelude to a sustainable advance.
and so are hedge funds, with their net long positions near record low levels for fear of continued investment losses and investor redemptions. The individual investor, also burned by the bear market, has redeemed out of mutual funds by record amounts, and based on my conversations with high net worth stock brokers, many retail accounts have similarly raised cash, or even have closed their brokerage accounts.
Meanwhile, a new marginal buyer -- namely, pension plans -- might have already begun to levitate stock prices recently as their portfolio has been skewed by the marked outperformance of fixed income vis-à-vis equities. And with the yield on the 10-year U.S. note climbing over 3% yesterday, that asset allocation might continue to have a salutary impact on stocks.
Doug Kass writes daily for
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At the time of publication, Kass and/or his funds were long SPY and short SPY puts, although holdings can change at any time.
Doug Kass is founder and president of Seabreeze Partners Management, Inc., and the general partner and investment manager of Seabreeze Partners Short LP and Seabreeze Partners Long/Short LP.