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 the posts this past week were entries about slowing growth, good news for Radian and the revised GDP. Please click here for information about subscribing to RealMoney Pro.
Originally published on Friday, Aug. 30 at 10:49 a.m. EDT. For several months I have maintained that expectations for domestic economic growth and corporate profits were too optimistic and that the landscape was growing more challenging. This view contrasted with the consensus that U.S. economic growth would accelerate markedly in the second half of the year, laying the framework for self-sustaining economic growth and profit prosperity into 2014 and beyond. The expectation of an acceleration in domestic growth is now fading and is likely the primary reason why stocks have corrected. Further complicating the situation is that most of the Fed members want to taper into what appears, increasingly, as slowing growth. So a policy mistake might be made in the weeks ahead.
More Good News for Radian
Originally published on Friday, Aug. 30 at 10:03 a.m. EDT. After the close on Thursday, Radian ( RDN) announced that it is effectively capping its liability on nearly 26,000 defaulted Freddie Mac-backed loans. (Radian can still benefit from recissions/denials on this book of well-collaterolized business.)
Good News, Bad News
Originally published on Thursday, Aug. 29 at 10:01 a.m. EDT. The good news was that the second-quarter 2013 real gross domestic product figure was revised higher. The bad news is that the revision will not likely be beneficial to the stock market. Indeed, it could have a negative influence. Here is why. Reflecting the narrowing trade deficit (which was reported after the preliminary second-quarter GDP was released), the second-quarter 2013 revised real GDP was in line with expectations. The core consumption deflator was +1.2% year over year (steadily dropping from +2% at the beginning of the year). The Fed's inflation target is 2%, so the below-target rate suggests that a September tapering ("lite") will occur, but it might be toward the lower end of reducing purchases by only $10 billion per month. And it might only involve the buying of Treasuries, not mortgage-backed securities.