This blog post originally appeared on RealMoney Silver on Sept. 29 at 7:16 a.m. EDT.

Market participants have become increasingly complacent, both with regard to recent signs of more tentative economic growth (in last week's durable goods and housing sales reports) and with regard to increased geopolitical risk (of an Iranian kind). On the latter, a policy of engagement by the administration (and others) against madman at the gates President Ahmadinejad of Iran appears to be coalescing as Iran fires short-term missiles over the weekend, either by pursuing sanctions or worse. With this confrontation will come some difficult choices by the President and, likely, will come increased stock market risks.

Despite my protestations, the market vaulted higher yesterday. While the $6.4 billion Xerox ( XRX - Get Report) acquisition of Affiliated Computer Services ( ACS) was the media's reason for the strength, I doubt it as only a quarter of the deal was cash and the rest was in the form of Xerox's common stock (which faded by about 20% in response). Rather, it was likely good, old-fashioned window dressing and some renewed price momentum after last week's selloff.

Arguably, at the current time, the market's technicals are exponentially better than the fundamentals as the bullish crowd has overwhelmed the bearish remnants. Skepticism is going unrewarded as the optimism over current earnings has dominated investment sentiment. And confidence in a smooth recovery (and $73-plus in 2010 S&P 500 profits) has provided fuel for an extraordinarily positive reaction in price momentum across the world's equity markets.

Due bills be damned! The consensus for growth has moved toward business as usual for the balance of 2009 and 2010-2011, a bit shallower in slope compared to historic recovery cycles but still one that is self-sustaining. While I can accept that the baseline consensus expectation of S&P 2010 EPS of $73 a share is a possible and logical outcome, a double-dip would not be illogical considering the economic, credit and equity markets' heart attack. I would argue that there exists a wider range of economic and profit outcomes than is customary during a recovery phase and that the certainty associated with today's consensus of a positive outcome could be tested.

Wall Street analysts are accommodating investors by taking their out-year estimates higher (especially in technology yesterday) as the hockey stick of forecasts gets bigger. And, as a smart tech observer mentioned to me yesterday, he has literally never seen the sell side push so hard. As he posits, the more bold the analysts' calls become as we get to bonus time, the harder they push. Just get one more year in the books. Who cares what happens next? Sound familiar, Merrill Lynch and Citigroup ( C - Get Report)?

And so are Wall Street underwriters accommodating investors by supplying a burgeoning calendar of available syndicate product. But, as night follows day and with the volume of syndicate issues expanding, the quality of these issues has deteriorated. Just look at two of last week's large initial public offerings of Chinese companies that closed well below their offering prices by week's end.

Despite the strong share price momentum and the aforementioned emerging optimistic economic/profit consensus, I continue to hold on to the variant view that the markets have likely peaked for the year based on the existence of nontraditional headwinds, an end to decades of aggressive credit expansion and financial inventiveness, a still-vulnerable housing recovery (in the form of outsized phantom inventory challenges) and a still-fragile consumer -- among other factors.

Finally, we have accomplished our market mission detailed back in March when I called for a generational low in stock prices. More on that later.

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 had no positions in the stocks mentioned, although holdings can change at any time.

Doug Kass is the general partner Seabreeze Partners Long/Short LP and Seabreeze Partners Long/Short Offshore LP. Under no circumstances does this information represent a recommendation to buy, sell or hold any security.