Comin' Up Roses; Subdued Confidence: 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 the posts this past week were entries about criticizing those bears and the domestic growth.

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Everything's Coming Up Roses!
Originally published on Wednesday, Nov. 27 at 8:21 a.m. EDT.

"I had a dream, a dream about you, baby.It's gonna come true, baby. They think that we're through, but baby,

You'll be swell! You'll be great! Gonna have the whole world on the plate! Starting here, starting now, honey, everything's coming up roses!

Clear the decks! Clear the tracks! You've got nothing to do but relax. Blow a kiss. Take a bow. Honey, everything's coming up roses!"

-- Gypsy (Ethel Merman), Everything is Coming Up Roses

Criticism of the bearish cabal is reaching new heights, coincident with the all-time highs in the averages, as the crowd continues to outsmart the remnants.

So is the unquestioned belief (and unquestioning of the believers) of a continued bull market. Here's what Peter Boockvar has to say:

"As measured by the weekly Investors Intelligence survey of newsletter writers, the bullish boat is standing room only while the bear boat has the least amount of passengers dating back to the 1980's. In today's numbers, Bulls rose to 55.7 from 53.6 while the Bears fell to 14.4 from 15.5, an historic low in the history of this survey according to II. Combined with another record high in margin debt in October that puts its ratio to GDP at about 2.4%, near the high of 2.6% in July '07 and 2.8% in March '00 and it's worth noting the historical limits in these two figures that we are pushing up against. That said, this says nothing about where markets go in the short term from here. This Fed hosted party can still have life left but I feel it's always important to have perspective and these two data points should provide reason for an investing gut check in early 2014 in terms of how to be positioned."

After all, who but a few bearish souls doesn't like a bull market?

Yet overvaluation and bubbles are rarely spotted in advance by the "experts."

But let me remind you of something before you believe the bullish mantra, and the musings of the parade of "talking heads" in the business media, and before you borrow and steal everything you can to get fully invested in the market (and then some!). Of those who are singing, "Everything Is Coming Up Roses," few of those souls in the chorus will likely give you a signal when the music stops.

Here is the legendary Louis Rukeyser from Wall Street Week, who interviewed a couple of "winners" and bulls at the end of the dot-com stock-market boom in late 1999.

Sic transit gloria.


Subdued Confidence
Originally published on Tuesday, Nov. 26 at 12:04 p.m. EDT.

The current consumer readings are not signaling robust domestic growth.

The November Conference Board Index dropped to 70.4. consensus expectations were at 72.6 and October came in at 72.4.

The current reading is the lowest in eight months.

Within the Index, the assessment of current conditions dropped by only 0.6 point, but assessment of future conditions declined by a relatively large 3 points (year over year). This bodes poorly for an acceleration in consumer spending.

The labor component of the Index was slightly better. Those saying jobs were plentiful rose to 11.8% from 11.6% in October, while those saying jobs were hard to get dropped to 34% from 34.9%. But just 13% of respondents think that more jobs will be available six months from now.

Consistent with the stall in housing, the percentage of respondents planning to buy a house dropped to its lowest since February.

Bottom line, the current consumer readings are not signaling robust domestic growth, but neither is it signaling recession readings (the Index needs to drop to between 30-50 to qualify for that).

For now market participants see +2% real GDP as not too hot and not too cold, a level of activity that will keep the Fed market friendly.

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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