Kass: 'The Kudlow Report' Recap

Here are some bullet points from my appearance on Monday night's 'The Kudlow Report.'

Author:: Doug Kass
Publish date:: Sep 1, 2009 12:00 PM EDT

This blog post originally appeared on RealMoney Silver on Sept. 1 at 7:53 a.m. EDT.

By my record, I have been on

CNBC's

"The Kudlow Report" (or the old "Kudlow and Company") on approximately 45 occasions. While Larry and I typically don't agree on the political issues or even on economic forecasts, I admire him greatly. He is a dear friend, and our volleys are always fun and stimulating. Last night was no exception!

This time around, we were with the lynx-eyed Alison Deans, former chief investment officer for Neuberger Berman's private asset management group and who is now running her own firm (Deans Wealth Management). I have admired Alison for years, ever since she followed brokerage stocks and frequently appeared on "Wall Street Week" with Louis Rukeyser. She is rigorous, practical and an excellent communicator.

My points were:

The economic recovery in the U.S. seems unlikely to be self-sustained. I see more of a square-root recovery or an uneven and lumpy caterpillar-like economic setting that fizzles out and succumbs to nontraditional threats such as higher interest rates, higher inflation and higher marginal tax rates.
The consumer remains the core of my investment concern. As one who is anti Say's Law of Production, it is my view that the consumer is the driver of business activity, not the other way around.
With meaningful erosion in household net worths, weak demographic trends, poor disposable income and other headwinds, the aspirational character of the consumer, which has been in place for decades, seems to be reverting back to the legacy of the post-Depression -- that is, many simply want to maintain their financial status quo.
Policy decisions and higher marginal tax rates are a huge threat and undermine growth and reduce output.
Avoid retail and consumer-related stocks, own basic industrial and energy-related stocks. And while I am committed to banks, particularly Bank of America (BAC) - Get Report, I have pared back my financial exposure.

Alison Deans, similar to many, sees a shallow but self-sustaining economy (the consensus view), abetted by a revived consumer (improving equities), and she is of the view that the earnings cycle will continue to dominate my secular fears. She does fear a correction over the short term, however, after that short period of weakness, Alison contemplates a 1,100

S&P 500

target. Emerging markets remain attractive, according to her. In terms of specific stock ideas, she favors

JPMorgan Chase

(JPM) - Get Report

and would avoid

Citigroup

Here is the tape

of last night's "The Kudlow Report."

Doug Kass writes daily for

RealMoney Silver

, a premium bundle service from TheStreet.com. For a free trial to

RealMoney Silver

and exclusive access to Mr. Kass's daily trading diary, please click here.At the time of publication, Kass and/or his funds were long Bank of America, although holdings can change at any time.

Know what you own: Other money center bank stocks include Wells Fargo (WFC) - Get Report, Toronto-Dominion (TD) - Get Report, Bank of New York Mellon (BK) - Get Report and Royal Bank of Canada (RY) - Get Report.

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.