Doug Kass fills his blog on RealMoney every day with his up-to-the-minute reactions to what's happening in the market and his legendary ahead-of-the-crowd ideas. This week he blogged on:
- How the end of the week brings the same concerns as the beginning.
- How retail has improved.
Click here for information on RealMoney, where you can see all the blogs, including Doug Kass'--and reader comments--in real time.
- Consensus domestic and global economic growth expectations for 2017-18 are inflated.
- The consensus forecast of a "hockey stick" to U.S. corporate profits growth over the next 12-24 months will likely disappoint.
- Valuations are stretched relative to sales and earnings prospects.
- The message of the US bond market is that growth will not meet expectations.
- A highly partisan Washington, D.C.--both within the parties and between the parties--will stall tax and regulatory reforms and infrastructure endeavors.
- Geopolitical risks are multiplying--we as citizens and investors are not as safe as the markets presume.
- The new administration's policies and behavior will likely make volatility and uncertainty great again.
- Interest rates are likely to advance in a modest but steady manner over the next two years--but the yield curve may flatten further as the Federal Reserve raises rates. (This will not be friendly to industries like baking and insurance.)
- Over the past month Mr. Market may be in the process of forming a top for the full year (more on this in next Monday's opening missive)--consistent with my 2375 S&P high discussed in my "15 Surprises for 2017."
- The risk in the S&P index, by my measures, is roughly three times greater than the reward. That 3-1 downside/upside makes stocks most unattractive.
- For 2017, be more concerned with return of capital than return on capital.
"It's not a joke, it's a rope, Tuco. Now I want you to get up there and put your head in that noose."
-- Blondie, "The Good, the Bad and the Ugly"
It's been a relatively quiet day in the markets, so let's move to the abbreviated Monarch Notes form of "Takeaways," with "The Good, The Bad and The Ugly."
* The market bent yesterday but today it stabilized. (A good showing, all things being considered--but in no way decisive going forward).
* Gold +$5/oz.
* Crude oil +$0.50 and the rise is taking up some energy stocks.
* The Russell returned to the spotlight.
* Life insurance--particularly Lincoln National (LNC - Get Report) (on an upgrade). Hartford Financial Services (HIG - Get Report) gets a small lift.
* Retail returned from the depths. The standouts--L Brands (LB - Get Report) , Kohl's (KSS - Get Report) , Bed Bath (BBBY - Get Report) , Nordstrom (JWN - Get Report) and Gap (GPS - Get Report) .
* Ag equipment--after an analyst upgrade yesterday.
* Homebuilders catch a bid.
* Day one of the Masters Golf Tournament.