Tags: Kass | stocks | Fed | growth

Doug Kass: Stock Markets 'Probably Going Much Lower'

By    |   Friday, 07 June 2013 11:18 AM

The Standard & Poor's 500 Index has slipped 3 percent from its record high last month, and there's more pain to come, says hedge fund heavyweight Doug Kass, president of Seabreeze Partners.

"Many market participants are coming to this 'aha' moment," Kass told CNBC. "I think we're probably going much lower in the fullness of time."

Fundamentals argue against stocks, he noted.

Editor's Note:
See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation

"I have a variant view on both corporate profits and the outlook for economic growth versus the consensus," Kass explained.

"My concerns have been ignored by the markets, but they have been supported by the cautious guidance by corporations during the first-quarter earnings calls as well as by the recent economic data."

The government reported Friday that the unemployment rate rose to 7.6 percent in May from 7.5 percent in April.

The Federal Reserve's massive easing program is what has boosted stocks, Kass and others say.
"Central bank liquidity blurs the line of demarcation between economic reality and stock market euphoria," he said.

"[But] the narrative now is whether the Fed is simply pushing on a string. ... I think global economic growth is slowing."

Many investors obviously disagree with Kass, as the stock market soared early Friday on news of a gain in payrolls of 175,000 in May.

"This report's in the sweet spot," Brian Jacobsen, chief portfolio strategist at Wells Fargo Advantage Funds, told Bloomberg.

"It shows investors that the economy is growing but not fast enough for them to be concerned that the Fed is going to start tapering its asset purchase program."

Editor's Note: See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation

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The Standard & Poor's 500 Index has slipped 3 percent from its record high last month, and there's more pain to come, says hedge fund heavyweight Doug Kass, president of Seabreeze Partners.
Kass,stocks,Fed,growth
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2013-18-07
Friday, 07 June 2013 11:18 AM
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