Is Euphoric Market Ignoring Warning Signs?

As the Street grows more optimistic, one bear is growing more confident that a sharp correction is all but inevitable.

We’re talking about perma-bear Doug Kass. If you watch Fast Money regularly or you read The Street, you’re familiar with Kass. He’s a widely respected strategist who called the stock market bottom back in March.

Now we’re well aware that Kass is anything but an optimist but we can’t ignore his bearish outlook considering how accurate he's been in the past.

And he's telling Fast Money things are about to take a sharp turn for the worse. “I think there’s some whistling past the graveyard," going on in the market right now. "Warning signs are being ignored or are being rationalized away in a tide of rising world stock prices.”

Here's what's got Kass concerned:
1. Unsustainable housing demand
2. U.S. rail traffic rolling over
3. Weak consumer sentiment
4. Higher inflation

"I think what happens in the maturing stages of a bull market is that the demarcation line between fantasy and progress gets blurred a bit," he says.

In other words, investors are growing more comfortable with forecasts of a smooth recovery. "Many have even adopted the view that we’re in a normal multi-year recovery, which typically lasts 45 months."

But Kass doesn't see events playing out that way. He thinks once stimulus is removed from the equation the recovery will unravel.

"There’s no message in the market that leads me to change my thesis," he says.

What do you think? We want to know!

Bull Market or BS?
Bull Market or BS?   

Check out our entire interview with Doug Kass. Watch the video now!


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Trader disclosure: On November 12th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (BTU), (GS), (INTC), (MSFT), (NUE); Finerman's Firm Owns (CSCO), (MCD), (MSFT), (WMT), (TGT), (M); Finerman's Firm Owns (BAC) Preferred, (BAC), (BAC) Call Spreads; Finerman Owns (BAC) Preferred, (BAC); Finerman's Firm Is Short (USO); Finerman's Firm And Finerman Own (WFC) Preferred; Finerman's Firm Is Short (XRT), (IJR), (IWM), (MDY), (SPY), (UNG); Najarian Owns (GE) Calls; Najarian Owns (INTC), Is Short (INTC) Calls; Najarian Owns (JWN) Calls; Najarian Owns (MCD), Is Short (MCD) Calls; Najarian Owns (QLGC) Calls; Najarian Owns (RIMM) Call Spread; Najarian Owns (UUP) Calls; Najarian Owns (YHOO), (YHOO) Puts; Symour Owns (AAPL), (BAC), (EEM), (FXI), (POT); Seygem Asset Management Owns (BUD); Najarian owns (TXN), is short (TXN) calls

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