Seabreeze Partners' Doug Kass says markets have hit their low for this year.
After travelling a "path of fear," markets have begun to dramatically disconnect from fundamentals, Kass told CNBC, adding that he doesn’t think the economy is nearly as bad as the S&P suggests.
"This business is going to be fun again and it's going to happen sooner than most people think."
The June ISM non-manufacturing index shows "the employment component dropped only marginally and is consistent with respectable payroll growth,’ Kass notes. Plus which, the employment trend index was up for the 11th straight month in a row and it always leads payroll growth.
“The index is up 5 points above it's long term average," Kass says. Moreover, high yield bond rates were down, 2-year swap spreads were down, 3-month LIBOR was down and the euro was up.
The Institute for Supply Management's June non-manufacturing sector index slipped to 53.8, from 55.4 in May. But despite the drop, equities hit early session highs on the report, with the Dow Jones Industrial Average recently up 142 points, or 1.5 percent, to 9,830.
"The market last week was so pessimistic that any news that isn't horrible is viewed as good news," Phil Flynn, an energy analyst with PFG Best, told The Wall Street Journal.
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