Seabreeze Partners' Kass: A Rally Is Coming
Perma bear Doug Kass of Seabreeze Partners just put out a note saying he sees a rally coming, albeit a brief one: "This is a tough call for me to make because I believe the world's economy and capital markets face significant challenges. But, increasingly, many of those concerns have been recognized and some of my shorts have reached my targeted price objectives."
Here's more from Kass: "That said, in a roller coaster market that has no memory from day to day, succesfuly gaming 5% moves (or so) becomes a necessary ingredient to creating alpha (excess returns). This will be particularly true in the generally low-return setting for equities that I envision over the next year or two."
Kass' note reminds us of a year end call made last week by market guru Barton Biggs. And wouldn't you guess--Kass quotes Biggs and the prediction he made on "Fast Money" for a year end rally. Kass tells me the last time he made such a call was in February, after that particularly harsh market pounding. Among the things he sees:
*Bulls now acknowledge consumer led slowdown and that housing won't recover for several years.
*Bulls now noticing the subprime storm. looks for investor relief after Goldman , Merrill and Morgan quantified fourth quarter write-downs.
*Dramatic rise in last week of shorting/hedging by hedge funds
*Expects strategic takeovers and also helping stocks, the odds of year-end seasonality.
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