NEW YORK ( TheStreet) -- Doug Kass of Seabreeze Partners is known for his accurate stock market calls and keen insights into the economy, which he shares with RealMoney Pro readers in his daily trading diary.Among his posts this week, Kass wrote that economic indicators are not pointing to a recession, disclosed his favorite long and short stock picks, and explained that Yahoo! is attractive at current levels. Please
Originally published on Friday, Sept. 30 at 1:01 p.m. EDT. There is a lot of recession talk on Columnist Conversation today. I am less certain than most, who seem to be convinced. The continuing economic releases are not signaling a recession; they are indicating slightly firmer production and a stabilization in consumer confidence. The September Chicago manufacturing index came in at 60.4 this morning (expectations were for 55.0 and 56.5 actual in August), for the best print in five months that was modestly above its six-month average and well above the long-term average of 54.5. At recession points, a 35 or less reading occurs. > > Bull or Bear? Vote in Our Poll Moreover, the orders component rallied month over month (the most since October 2009), meaning that capital spending is staying relatively firm. So, too, did the employment and production components rise materially month over month, well above the six-month and long-term averages. And, another boost to growth was the big drop in prices paid, which will buoy profit margins and consumer real incomes. This means that the national ISM (Monday release), which had been whispered at 45 at the beginning of this week, will likely be in the high 40s. Meanwhile University of Michigan September consumer confidence came in at 59.4 compared to 55.7 in August and against expectations of 57.7. The 59.4 is substantially below the long-term average of around 85, but it is improving. Importantly, current and future assessments of activity rose as inflationary expectations dropped. These are the facts, and I am somewhat encouraged that the hard economic data has not been hit by the plunge in sentiment in August. I am by no means an economic bull; I am an economic realist, and the signs I look at do not indicate what Dr. Bobby Marcin and ECRI see.
Favorite Long and Short
Originally published on Friday, Sept. 30 at 10:11 a.m. EDT. Favorite long: E*Trade ( ETFC). I expect the company to be sold to either Schwab ( SCHW) or Ameritrade ( AMTD) in the $15 to $16 a share range by year-end; book goes out to prospective buyers in October. Favorite short: Fastenal ( FAST). I expect the company to miss and guide lower. At the time of publication, Kass was long ETFC and short FAST.
Call Me a Yahoo!
Originally published on Friday, Sept. 30 at 1:20 p.m. EDT. I have re-established my Yahoo! ( YHOO) long into the weakness over the last week. While I am long the common and October 11 calls, an interesting, low-priced speculation is the October 15 calls. Never say never. Stated simply, the name is just too compelling now at $13, especially in light of a possible sale of the company (or some part of the company). Long YHOO common and calls.