NEW YORK (Real Money) -- 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.
This past week, Kass wrote about why he thought the Bank of Japan's surprise stimulus looked desperate and what his analysis is of the future of Ocwen and Altisource.
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The BOJ's Act of Desperation
Originally published on Friday, Oct. 31, at 11:42 a.m. EDT.
Forgive me, if you must, for offering a variant view.
To me, Bank of Japan's (BOJ) surprise announcement of more stimulus Friday smacks of desperation.
There are several reasons to believe the market's "risk on" mentality is being exaggerated today.
1. The BOJ move may fail in the face of failing Abenomics and flailing economic-growth prospects.
2. The BOJ move may fail in the face of a deepening and entrenched deflationary psychology.
It is my view that, were it not for the BOJ announcement and allocation shift, the markets would have lost ground today. After all:
1. September retail sales in Germany disappointed.
2. September U.S. income and spending numbers were weaker than expectations.
3. Most important, employment costs (announced Friday) accelerated to a rise of 2.2%, as compared with only 2% growth in the previous quarter and under 2% in the first. Moreover, the month-over-month change in employment costs came to a rise of 0.7%, the swiftest climb in over six years.
We are experiencing another global liquidity high but, arguably, on fundamentals the market is overpriced now.
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