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Doug Kass: Why I’m Net Short

Thursday, 20 Jun 2013 | 5:58 PM ET
Doug Kass: Why I'm Net Short
The corporate earnings outlook is overly optimistic, Doug Kass of Seabreeze Partners says.

Forecasts for an improvement in economic conditions are overly optimistic, Doug Kass of Seabreeze Partners said Thursday.

"I think the only thing certain is the lack of certainty," he said, adding that he believed between 65 and 70 percent of daily trading "has nothing to do with fundamental investing. It's high-frequency trading, slicing and dicing ETFs."

On CNBC's "Fast Money," Kass likened the market's reliance on quantitative easing to a drug addict's focus.

"I think the markets have been like a heroin addict with this QE," he said. "Now, with this tapering ahead of the market, it's soon to become a methadone addict. The problem is, too frequently, methadone addicts fall back into addiction."

Kass said that QE was the "wrong antidote" to what ails the economy.

"I don't believe that the economy is strong enough to sustain itself unless we have this heroin, or easy money, for some time to come," he said. "And what concerns me about the market fundamentally is that if the stock market continues to drop, it's almost self-fulfilling, trickle-down, no longer works."

Kass noted stock valuations.

(Read More: 'Immaculate Rotation' for the Market?)

"What should investors pay for disappointing earnings, structural headwinds to growth and a global economy which is so dependent on easy money?"

Kass added that nothing he saw promised economic strength.

"If you only have 2 percent or less real GDP, that means nominal growth is only about 3, 3¼, and that doesn't give corporations pricing power," he said. "And I'm concerned that the earnings outlook, or consensus earnings expectations are too optimistic."

Trader disclosure: On June 20, 2013, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Fast Money" were owned by the "Fast Money" traders: Jon Najarian is long UVXY; Jon Najarian is long BOT; Jon Najarian is short TOL; Jon Najarian is long SPF; Jon Najarian is long RYL; Jon Najarian is long EEM 25% left; Jon Najarian is long MGM; Dan Nathan is short XLU June 38/36 put spread; Dan Nathan is long XLF short July 19 puts; Dan Nathan is long MU July 13 puts; Dan Nathan is long TLT July 110/115/120 call fly; Dan Nathan is long FB June/July 25 call spread; Dan Nathan is long QCOM July/Oct. 65 call spread; Dan Nathan is long XLE June 80/77 put spread; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long MSFT; Guy Adami is long AGU; Guy Adami is long NUE; Guy Adami is long BTU; Guy Adami's wife, Linda Snow, works at Merck; Karen Finerman is long AAPL; Karen Finerman is long BAC; Karen Finerman is long C; Karen Finerman is long TGT; Karen Finerman is long GOOG; Karen Finerman is long M; Karen Finerman is long dis; Karen Finerman is long MDY, SPY, IWM, KFS puts.

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