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Kass: In Cash, Waiting to Make the Big Short Trade

Thursday, 6 Jan 2011 | 6:20 PM ET

With a flurry of economic signs suggesting the recovery has taken hold, why on earth is Doug Kass in cash?

After all, hasn’t the Fast Money desk largely been saying that more investors want to participate in the equities market as they position themselves for "a recovery that is quickly expanding."

And the Fast desk isn’t alone. That’s been a theme we’ve heard up and down the Street.

Street Fight: Why Kass is in Cash
Revealing the risks to U.S. economic growth, with Doug Kass, Seabreeze Partners Management.

But we’re hearing something quite different from Kass. The president of Seabreeze and widely followed investor tells us “a large amount (of his portfolio) is in cash and I’m waiting to make the big short trade, now.”

Kass argues that there are four catalysts that are being overlooked by the bulls.

1. ‘Wimpy Syndrome” in Congress - As we move closer to the 2012 election, neither Republicans or Democrats may not have the political will to confront the deficit. “And I full expect partisanship to replace the move toward the center by both parties,” he says.

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2. Structural Job Loss - While the jobs picture has brightened somewhat, the large roster of unemployed will remain with us in the new year owing to a structural disequilibrium in the labor market and the secular rise in hiring temporary workers.

3. Rising rates - Interest rates are rising and are likely to continue to rise - providing competition to equities.

4. ‘Screwflation’ – The middle class is being screwed, they’re facing wage deflation, higher costs, 10 years of flat stocks and 3 years of lower housing prices.

Kass believes that these market influences will weigh on corporate earnings and ultimately cause the average P/E to contract.

What do you think? We want to know!

We know that Kass tends to have a bearish slant, but when Doug Kass talks 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 predicted the bottom. Also, on July 6, 2010, he said the market had made its lows for the year and that also proved to be true.

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Douglas Kass
Douglas Kass

Want more Doug Kass? The bearded blogger revealed some of his 'Surprises for 2011' on CNBC’s Fast Money.

Click below to check out what else he told us:

> 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
> Doug Kass: Market Ends 2011 At Same Levels As 2010
> Doug Kass: Gold Among Worst Asset Classes of New Year


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Trader disclosure: On January 6, 2010, following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Scaramucci and Skybridge Capital Own (AAPL); Scaramucci and Skybridge Capital Own (BAC); Scaramucci and Skybridge Capital Own (C); Scaramucci and Skybridge Capital Own (DELL); Scaramucci and Skybridge Capital Own (GS); Scaramucci and Skybridge Capital Own (JPM); Scaramucci and Skybridge Capital Own (MON); Scaramucci and Skybridge Capital Own (ARO); Weiss owns (UUP); Weiss owns (TBT); Weiss owns (VZ); Weiss owns (QCOM); Weiss owns (HPQ); Weiss owns (MEE); Weiss is short (GDX); Weiss is short (TCK); Terranova owns (GM); Terranova owns (C); Terranova owns (VRTS); Terranova owns (UPL); Terranova owns (PEP); Terranova owns (OXY); Terranova owns (GS); Terranova owns (LTD); Terranova owns (GLD) puts; Terranova owns (SLV) puts; Terranova owns (FCX) puts; 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 short (XRT); Finerman's firm is long S&P puts; Finerman's firm is long Russell 2000 puts; Finerman owns (AAPL); Finerman owns (BAC); Finerman's firm owns (BBY); Finerman owns (BP); Finerman's firm owns (BP); Finerman's firm owns (GLW); Finerman's owns (GOOG); Finerman owns (HPQ); Finerman's firm owns (HPQ); Finerman's firm owns (IBM); Finerman owns (JPM) and (JPM) leaps; Finerman's firm owns (JPM) and (JPM) leaps; Finerman owns (MSFT); Finerman's firm owns (MSFT); Finerman's firm owns (WMT); Finerman's firm owns (PLCE)

For Brian Kelly
Accounts Managed by Kanundrum Capital Own (DRYS)
Accounts Managed by Kanundrum Capital Own (FCX)
Accounts Managed by Kanundrum Capital Own (GLD)
Accounts Managed by Kanundrum Capital Own (JPM)
Accounts Managed by Kanundrum Capital Own (MCP)
Accounts Managed by Kanundrum Capital Own (MON)
Accounts Managed by Kanundrum Capital Own (MS)
Accounts Managed by Kanundrum Capital Own (QCOM)
Accounts Managed by Kanundrum Capital Own (WFC)
Accounts Managed by Kanundrum Capital Are Long USD
Accounts Managed by Kanundrum Capital Own (TBT)
Accounts Managed by Kanundrum Capital Are Short The Euro
Accounts Managed by Kanundrum Capital Are Short The Yen

For Joe Terranova
Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
Virtus Investment Partners Owns More Than 1% Of (ABAX)
Virtus Investment Partners Owns More Than 1% Of (AMKR)
Virtus Investment Partners Owns More Than 1% Of (CCG)
Virtus Investment Partners Owns More Than 1% Of (CASS)
Virtus Investment Partners Owns More Than 1% Of (CSVI)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (FCFS)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (KRC)
Virtus Investment Partners Owns More Than 1% Of (LDR)
Virtus Investment Partners Owns More Than 1% Of (LPHI)
Virtus Investment Partners Owns More Than 1% Of (NCRI)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (XLE)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (XLK)
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (SUBK)
Virtus Investment Partners Owns More Than 1% Of (WDFC)
Virtus Investment Partners Owns More Than 1% Of (YDNT)
Virtus Investment Partners Owns More Than 1% Of (CLB)

For Craig Berger
FBR Capital Markets is a market maker in (NVDA)
FBR Capital Markets is a market maker in (INTC)

For Dennis Gartman
Gartman has no disclosures

For Doug Kass
Kass has no disclosures

For Jon Najarian SOT
Jon Najarian has no disclosures on (INTC)

For Stephen Weiss SOT
Weiss owned (QCOM) on 12/31/2010

For Joe Lavorgna
LaVorgna has no disclosures

For Brian Stutland
Stutland has no disclosures

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