“We’re already seeing risk sharing on existing debt, tougher fiscal rules, further economic reforms, and ultimately in time I think we’ll see more QE resembling 2008/2009 in the US,”
But what Doug Kass thinks really drives the US stock market is something a little more controversial.
He predicts a sort of uprising among the so-called 99% in which the population demands change. “Americans are angry at the inertia – and our populace is going to force politicians to make moves on pro-growth fiscal policies,” he says. In fact, he predicts former Presidents Clinton and Bush will engage lawmakers and arrive at what he calls ‘a great compromise’ - a deal that will really jump-start the economy.
And the controversy doesn’t end there. Doug Kass is also bullish on banks. He thinks financials will lead the market higher in 2012. (Yes, you read that right - Kass predicts bank stocks will go from laggards to leaders.)
“I’m expecting loan demand to recover, I’m expecting multiple takeovers – a bidding war for E*Trade between Bank of Montreal and another bank,” Kass says. “Also profit expectations are low,” he says.
All told, he sees great potential in the domestic economy and by proxy the US stock market – and by summer 2012, he thinks the Street will too.
What do you think? We want to know!
* The preceding post was written in conjunction with Kass' live interview on CNBC's Halftime Report. To see all the predictions made by Kass go to Kass: 15 Surprises for 2012
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Trader disclosure: On Dec 27, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Weiss owns EUO; Weiss owns AAPL; Weiss owns KO; Cortes is long K; Cortes is short EUR; Cortes is short XRT; Cortes is short CSX; Cortes is short UNP; Cortes is short IYT; Najarian has long call spreads in APPLE (AAPL); Najarian has long call spreads in AK STEEL (AKS); Najarian has long call spreads in US STEEL (X); Najarian has long call spreads in PNC FINANCIAL (PNC); Najarian has long call spreads in MICROSOFT (MSFT); Najarian has long call spreads in RIMM; Najarian has long call spreads in CNI; Najarian has long call spreads in CP; Najarian has long call spreads in NSC; Najarian is long CIGX; Najarian is long CBOE; Najarian is long CM; Dicker is long oil
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