Essentially he tells us that there's so much pessimism in the market that you should feel hopeful. Kass says, “as we move into the midway point of the second month of 2009, market participants generally now have the opposite point of view of 14 months ago.”
In other words bearish sentiment is widespread.
“It's so bad out there that some are questioning whether the world's economies will ever recover from the current mess. In doing so, they seem to be ignoring not only an emerging valuation opportunity but a number of events that should conspire to bring us out of the abyss.”
He thinks investors aren’t giving proper weight to the stimulus, the TARP, the foreclosure plan and whatever else the government may do to assuage the crisis. Typically we spend our way out of a recession and these spending initiatives are unprecedented. If the fundamentals of finance hold true, these programs should work.
“My sense is that we don't have to wait (too much longer) for a resumption of a new bull market as policy is going to be aggressive and immediate."
In a nutshell Kass thinks the economy could turn around as early as next year. “I expect (the recession), which began in November/December 2007, to end in early 2010, or about 12 months from now.”
Considering he’s a celebrated bear – and considering some of the dire predictions that are out there – that's not so bad. In fact, that's not so bad at all!
What’s the trade?
“I think you still have to tread carefully,” he tells us. But he also says he’s optimistic about growth in China. As a result he tells the traders to take a hard look at materials and oil services stocks such as Transocean and Freeport McMoran .
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Trader disclosure: On Feb. 19th, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour Owns (AAPL), (BAC), (EEM), (FXI), (PBR), (TM); Seymour's Firm Owns (VIP); Terranova Owns (KCE), (XBI), (AMGN), (FXC), (DIS); Terranova Owns (AMGN) Puts; Terranova Owns (IBM) & (IBM) Call Spread; Finerman's Firm Owns (RIG), (MSFT), (NKE), (FL); Finerman's Firm Owns (DNA) & (DNA) Call Spreads; Finerman's Firm Is Short (IYR), (IJR), (IWM), (MDY), (SPY), (USO), (BBT), (VNO); Najarian Owns (CELG); Najarian Owns (EEM) Call Spread, (GDX) Call Spread, (GLD) Call Spread, (MOS) Call Spread, (STI) Call Spread; Najarian Owns (AMAT) Put Spread, (CHK) Put Spread; Najarian Owns (FCX) & (FCX) Calls; Najarian Owns (GS) Calls; Najarian Owns (GE) Puts; Najarian Owns (HPQ) Spread; Najarian Owns (MSFT) & (MSFT) Short Calls; Najarian Owns (MS) & (MS) Short Calls; Najarian Owns (WFC) & (WFC) Calls
Kass Owns (RIG), (FCX)
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