Fundamentally Speaking . . .

On Wednesday morn, Doug Kass opined:

Fundamentally Speaking

The fundamental
problems
with the market run deep.

  • We live in a world in which the consumer is spent-up, not pent-up. If you
    don’t believe me, the Federal
    Reserve
    expanded on this subject last week. It is inevitable that the
    American consumer will cease its consumption binge of the last decade and begin
    to retrench and save as the one-time benefit of refinancing cash-outs slows to a
    trickle.

  • A parabolic boom in housing prices in certain "hot" regions of the U.S. –
    and abroad — has stretched the relationship between household incomes to
    housing prices to levels never, ever seen in the last century.

  • Spring 2006 will mark a substantive resetting of rates on adjustable-rate
    and teaser mortgage loans, pressing the consumer ever more.

  • Our economy’s foundation is based on an asset-appreciation dependency,
    compared to past cycles which relied on income and wage growth.

  • I continue to reject the government’s notion that inflation is in retreat.
    Inflation statistics delivered by the BLS are works of fiction, as stubbornly
    high energy prices, tuition, food, housing, commodities, insurance and other
    costs are serving to pressure the consumers’ real disposable incomes.

  • The 28-year high in corporate profit margins is unsustainable
    and likely to revert closer to the mean as (1) the benefits of four years of
    cost cutting subside, and (2) cost pressures overcome pricing power.

  • A more hawkish Federal Reserve will raise federal funds to higher levels
    than the consensus expected.

  • (Notwithstanding the results from various investor surveys) the body of
    investors to be overly complacent (with a high measure of bullish conceit) as
    fear and doubt had been driven from Wall Street.
  • >

    Source:
    A Second Shot Across the Bow?
    Doug Kass
    Street Insight,3/1/2006 8:39 AM EST
    http://www.thestreet.com/i/dps/te/theedge1.html#entryId10271033

    Category: Earnings, Economy, Federal Reserve, Inflation, Psychology, Real Estate

    Tenner!

    Category: Federal Reserve, Taxes and Policy

    A Healthy Dose of Skepticism

    Category: Apprenticed Investor, Data Analysis, Psychology

    Non-energy Prices Lift Wholesale Prices

    Category: Inflation

    Media Appearance: Kudlow & Company (3/2/06)

    Category: Media

    Read it here first: NILFs, Women, and the declining Labor Force

    Category: Economy, Employment, Taxes and Policy

    The “Merely rich” versus the “Super-rich”

    Category: Economy, Federal Reserve, Psychology, Taxes and Policy

    Supply Up, New Homes Sales Down

    Category: Real Estate

    The Backward Business of Short Selling

    If you haven’t already, I strongly admonish you to go read Jesse Eisinger’s column today:

    It’s a Tough Job, So Why Do They Do It?  The Backward Business of Short Selling

    Here’s the money quote:

    Short_interest
    "The shorting life is nasty and brutish. It’s a wonder anyone does
    it at all.

    Shorts make a bet that a stock will sink, and nobody else wants
    that: Not company executives, employees, investment banks nor most investors.
    That’s why most manipulation is on the other side; fewer people object when
    share prices are being pumped up. For most on Wall Street, the debate is whether
    shorts are anti-American or merely un-American.

    Yet in all the paranoia about evil short-sellers badmouthing
    companies, what is lost is how agonizingly difficult their business is. They
    borrow stock and sell it, hoping to replace the borrowed shares with cheaper
    ones bought later so they can pocket the price difference as profit. It’s a
    chronologically backward version of the typical long trade: sell high and then
    buy low."

    Go forth and read . . .

    >

     

    Source:
    It’s a Tough Job, So Why Do They Do It?
    The Backward Business of Short
    Selling

    Jesse Eisinger
    WSJ, March 1, 2006; Page C1
    http://online.wsj.com/article/SB114118313441386192.html

    >

    UPDATE March 2, 2006 10:32am: 

    See below for more text

    >

    Read More

    Category: Data Analysis, Financial Press, Trading

    Google, or something else?

    Category: Earnings, Economy, Psychology