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Doug Kass: Market Ends 2011 At Same Levels As 2010

Monday, 13 Dec 2010 | 6:30 PM ET

Is it us, or does it seem like Doug Kass has been full of surprises, lately?

We mean that literally!

All month long Kass, a widely followed strategist and president of Seabreeze Partners, is revealing new surprises from his annual list of Surprises for 2011 on CNBC’s Fast Money.

Two more follow.

SURPRISE #7

This one involves gridlock in DC and it will take more than a new stop light to get things moving again.

Although a divided Congress is typically good for Wall Street – this time around Kass thinks investors are in for a nasty surprise. ”2011 will be a year in which partisan politics adversely impacts the real economy and the capital markets,” he says.

The Kass Forecast
Two more shocking surprises for 2011, with Doug Kass, Seabreeze Partners Management.

Although he didn’t elaborate during his most recent interview – back in November Kass told us “a government divided is not a price earnings ratio expanding event nor is it a recipe for a new bull market leg.”

And Kass isn’t alone in his prediction.

As you might remember a few weeks back Andrew Busch of BMO Capital Markets said much the same. Busch was particularly concerned about negative catalysts that might be lurking unseen.

"The smallest hiccup, something that would seem innocuous right now, could present big problems for stocks," he said.

And in a note published in November, Dan Greenhaus of Miller Tabak echoed those sentiments. “Simply put, gridlock is good when the private sector is humming along and government action is more likely to disrupt activity than enhance it. This is not the case today.”

Fast Money executive producer John Melloy wrote about the forecast at length. Click here to go to his post titled "Gridlocked DC to Grind Economy to Halt?"

But we digress. Back to Kass' predictions...

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SURPRISE #8

Doug Kass thinks riding the market next year will be a little bit like riding a stationary bike. You get off right where you started.

”The market will end 2011 exactly where it ends up in 2010,” says Kass. ”We’re going to see a collision between monetary easing and the physical imbalances in both the US and Europe and it’s going to lead to a sideways market.”

And that’s a surprise because it doesn’t happen much.

“Since 1900 there’s been only six occasions where the S&P’s change was between +3 percent and –3 percent. 2011 will be the seventh,” he concludes.

If Doug is right, next year may not be such a good year for buy-and-hold investors. But on a positive note - 2011 could be quite a good year for trading.


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Douglas Kass
Douglas Kass

As we mentioned above Doug Kass will reveal more of his 'Surprises for 2011' on CNBC’s Fast Money over the next few weeks with appearances scheduled for the following dates:

Monday, Dec. 20
Monday, Dec. 27

Click below for past surprises already revealed on Fast Money

> Doug Kass: This Giant Tech Takeover, A 2011 Surprise
> Doug Kass: Shortage of 'This' Could Roil 2011 Markets
> Doug Kass: Jaw Dropping Prediction For 2011


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* In all fairness Kass divides his predictions into 2 categories possible and probable. Although some of his other surprises were a tad dramatic we have to say both of these definitely seem reasonable.

We know what you're thinking. Kass is known to lean toward the bearish side and both of these predictions reflect that pessimism.

It's true. but when Doug speaks, we listen -- largely because he’s had an uncanny track record for being right.

Less than a week before the S&P 500 hit a generational low of 676 on March 9, 2009, Kass went on CNBC and predicted the bottom. Also, on July 6, 2010, he said the market had made its lows for the year and so far, that has also proved to be true.






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Trader disclosure: On December 13, 2010, 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), (GS), (INTC), (MSFT), (NUE), (BTU); Adami's wife works at (MRK); Terranova Owns (UPL), (C), (PEP), (OXY), (GS), (NKE), (VRTS); Finerman's firm is short (IJR); Finerman's firm is short (MDY); Finerman's firm is short (SPY); Finerman's firm is short (IWM); Finerman's firm is long S&P puts; Finerman's firm is long Russell 2000 puts; Finerman Owns (AAPL); Finerman's firm owns (ARO); Finerman Owns (BAC); Finerman's firm owns (BBY); Finerman owns (GOOG); Finerman owns (JPM); Finerman's firm owns (JPM) and (JPM) leaps; Finerman's firm owns (THC) calls; Finerman's firm owns (GLNG); Finerman owns (GLNG); Finerman owns (GOLE); Finerman's firm owns (GOLE); Finerman's Firm Owns (OCR); Finerman's Firm Owns (GLW); Finerman owns (CVS); Finerman's firm owns (CVS); Weiss Owns (FNSR), (FRO), (FAS), (INFN), (OCLR), (SWC), (QCOM), (MXIM), (VZ), (DVN), (HK), (COP)

For Brian Kelly
Accounts Managed By Kanundrum Capital Own (AAPL)
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For Mike Khouw
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Cantor Fitzgerald & Khouw are market makers in (GE)
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Cantor Fitzgerald & Khouw are market makers in (MSFT)
Cantor Fitzgerald & Khouw are market makers in (MS)
Cantor Fitzgerald & Khouw are market makers in (NFLX)
Cantor Fitzgerald & Khouw are market makers in (OCLR)
Cantor Fitzgerald & Khouw are market makers in (ONXX)
Cantor Fitzgerald & Khouw are market makers in (QTM)
Cantor Fitzgerald & Khouw are market makers in (STT)
Cantor Fitzgerald & Khouw are market makers in (SLV)
Cantor Fitzgerald & Khouw are market makers in (T)
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Cantor Fitzgerald & Khouw are market makers in (VZ)

For Doug Kass
Doug Kass has no disclosures.

For David Riedel
David Riedel has no disclosures.

Other relevant disclosures
Karen Finerman (SOT)
Finerman Owned (GYMB) On 10/7/10
Finerman's Firm And Finerman Owned (JCG) On 11/23/10

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