The Best of Kass

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 past week, Kass wrote about some encouraging economic data, the possibility of a last-minute fiscal deal and why shares of Ford likely will make a pit stop at current levels.

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Data Review
Originally published on Friday, Dec. 28 at 11:01 a.m. EST.

The December Chicago Manufacturing Index came in above expectations, at 51.6 vs. consensus of 51 and 50.3 in November.

This is the best reading since mid-2008 and represents the second consecutive reading above 50.

Notwithstanding the ubiquitous fiscal cliff debate (and its impact on growth), this print is encouraging and reverses the weakness of the September-October period. Importantly, the spread between orders and inventories widened, which means production should accelerate in the time ahead.

In terms of components, the orders lifted measurably by 9 points, to 54, and the employment component dropped considerably, so we have to watch this.

If we look at the manufacturing results from the Richmond, Chicago and Milwaukee surveys, we can expect December's national ISM (to be reported on Jan. 2) to climb above 50. (It was 49.5 in November.)

We are seeing a slow improvement in manufacturing and business fixed investment, but the latter still remains very low relative to balance sheet liquidity and profits. If we get some fiscal cliff resolution, a lot of catch-up should be expected.

Finally pending home sales, which foreshadow existing-home sales, rose by nearly 2% (or double expectations).

This is the third consecutive monthly increase, and the series is up 8% year-to-date. This index is now at the best level since 2007.

I continue to expect a durable and extended recovery in the U.S. residential real estate market in the years ahead.

At the time of publication, Kass had no positions in securities mentioned.


Common Sense and the Cliff
Originally published on Thursday, Dec. 27 at 5:10 p.m. EST.

It's always reasonable to expect a last-minute deal.

Today was but another reason to treat Mr. Market as a "trading sardine" market, not an "investing sardine" market.

It was also another reason to recognize why common sense is an important part of the process for an opportunistic trader.

While the media had all but given up on the chance of a fiscal cliff compromise, it has always been reasonable to expect (and the market responded to) a likely 24th-hour agreement on Sunday or Monday.

That said, the devil is in the details, and my best guess is that a patchwork deal that will result in a $300 billion fiscal drag seems the best guesstimate.

The Republicans will likely blink on taxes, and there will be some modest spending reform from the Democrats.

The rest will be kicked down the road during 2013..

The key issue is whether this is "enough" -- enough to engage the corporate sector in hiring, building inventory and expanding fixed investment plans.

I really appreciate you reading my Diary today, and I hope it was helpful in your navigation of the market.

I am "pooped," but I will see you bright and early tomorrow!

As an aside, the S&P 500 index closed at 1418 -- amazingly only 3 handles from my "Fair Market Value" calculation, which has been in place since September.

At the time of publication, Kass had no positions in stocks mentioned.


Ford Stalls
Originally published on Thursday, Dec. 27 at 10:05 p.m. EST.

For those who are technically inspired, we can see from this Yahoo! Finance chart that the price of Ford's ( F) shares face a lot of overhead supply at these levels.

I would expect the stock to pause in here and a build a more meaningful base before it makes a move higher in 2013.

At the time of publication, Kass was long Ford common stock and calls.

Doug Kass is the president of Seabreeze Partners Management Inc. Under no circumstances does this information represent a recommendation to buy, sell or hold any security.

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