But none of the fundamentals he is using here to buttress his Bearish call are new. None of these factors have changed since March when he went bullish.

Kass is no more than a market timer. This is OK. He sees that the market has moved too far, too fast and now he is taking his money off the table, hoping for a major correction. But the fundamental factors he cites are nothing more than rationale to back up a decision he has made based on technical factors, namely that the market is overbought and due for a correction.

I respect Kass so much I follow him on Stocktwits and he started posting bearishly back on July 22nd when the SPY closed at 95.50 – approximately 5% lower than here. I was quite surprised and it made me second guess my incipient bullishness but I went with my own instincts in the end. It’s been a really nice market since then on the long side.

Here is Doug’s post that day :
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* DougKass Jul. 22 at 2:27 PM #
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“My short book is larger than at any time since February now $$”

You can follow Doug Kass on Stocktwits here: http://stocktwits.com/u/DougKass

with positive ROI

agrees with Kass and

trading positions

Per my 1907 statement, if you overlay a chart of the 1907 financial crisis markets with markets today, they almost line up perfectly. 87% correlation to be exact. I compare this financial crisis to 1907 because the banks were bailed out in this crisis just as they were in 1907 when J.P. Morgan bailed out the banks, trust companies, and brokers. While there are huge differences in the economy today, in how things work, etc. , the one thing that isn’t different is psychology. The psychology is very similar – it was during the crash and it is coming out. Don’t take my word for it though – there is a book on it.

http://www.amazon.com/Panic-1907-Lessons-Learned-Markets/dp/0470452587/ref=sr_1_1?ie=UTF8&s=books&qid=1250122968&sr=8-1

” It says nowhere in the Wikipedia article or anywhere else that I have read that a “dollar credit or debt bubble bursting” offsets an increase in money supply therefore; inflation. ”

Well, if it’s not in Wikipedia and you haven’t read about it, then it must not be be true. Carry on…and good luck to you.

BR started an open thread on the FOMC statement.

According to the econoindicators website: Between 10-07 and 10-08, m1 climbed 7.6% and m2 climbed 7.4%. Now the FED stopped giving m3 numbers in 3-06 but you can bet based on the other numbers that it climbed as well. Economic growth in 2008 as measured by GDP was less than both of the money supply numbers. Hence; “The consensus view is that a long sustained period of inflation is caused by money supply growing faster than the rate of economic growth.” The money the banks are holding will eventually find a new home. It says nowhere in the Wikipedia article or anywhere else that I have read that a “dollar credit or debt bubble bursting” offsets an increase in money supply therefore; inflation. This fallacy is make believe.

@deadonarrival–”the situation likely will have to present itself before any action is taken on it.”

At that point, it’ll be too late and the damage will have been done. That’s the problem with the FED, they are reactive and always late. Look back over the past few years. Their record: they missed everything that’s come at them and been too slow to respond.