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3 Market Concerns Doug Kass Just Can't Shake

Stocks seemed to defy gravity this week with the S&P closing out its best week in over 2 months, while the Nasdaq soared to new 3-year highs.

So, it may come as little surprise that in a live interview on CNBC’s Fast Money, widely followed and bearish investor Doug Kass of Seabreeze tells us he’s at a crossroads.

For the past few months he's been growing more negative even as the market marched higher and concedes his outlook hasn't played out. “I’ve been much more negative that the Fast traders,” he says. And as a result he’s missed the last leg of gains.

But when push comes to shove, Kass can’t put that bear suit away in the closet. At least not yet. He just can’t shake 3 big concerns. They follow:

- Declining Profits. ”I think we have begun to see the specter of compression in profit margins,” he says. “Profit margins are at a 55-year high. If you listen to companies such as Whirlpool , GM, Colgate , Pepsi , and Starbucks they are all expecting compression.”

- Under-Employment. Although the economy added jobs last month, Kass says “the number of Americans who are not in the labor force but want a job rose by over 400,000 in January. The total stands at 6.7 million.” That places the unemployment rate closer to 13%

- Uncontrollable Inflation. Kass feels that Ben Bernanke’s press conference held earlier in the week revealed a rather inflexible view. “He’s potentially paving the way for a classic policy mistake of easing too hard and easing for too long,” says Kass.

A few weeks back Kass told us the market would end 2011 about where it ended 2010. Sounds like he's sticking to his guns.

What do you think? We want to know!

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* As you may know Doug Kass is known for his market timing - he correctly called a bottom last summer and also predicted the crisis lows in March 2009.




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Trader disclosure: On Feb 4, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Terranova owns (VRTS); Terranova owns (C); Terranova owns (UPL); Terranova owns (GM); Terranova owns (PEP); Terranova owns (LTD); Terranova owns (CVI); Terranova owns (SU); Terranova owns (CNQ); Adami Owns (AGU); Adami Owns (C); Adami Owns (GS); Adami Owns (INTC); Adami Owns (MSFT); Adami Owns (NUE); Adami Owns (BTU); Adami's wife works for (MRK); Finerman's firm is short (MDY); Finerman's firm is short (SPY); Finerman's firm is short (IWM); Finerman's firm is short (IJR); Finerman's firm is long S&P puts; Finerman's firm is long Russell 2000 puts; Finerman owns (AAPL); Finerman's firm owns (AAPL); Finerman owns (BAC); Finerman's firm owns (BAC) leaps; Finerman owns (BP); Finerman's firm owns (BP); Finerman owns (CVS); Finerman's firm owns (CVS); Finerman owns (GOOG); Finerman owns (HPQ); Finerman's firm owns (HPQ); Finerman's firm owns (IBM); Finerman owns (JPM); Finerman's firm owns (JPM) and (JPM) leaps; Finerman owns (MSFT); Finerman's firm owns (MSFT); Finerman's firm owns (TGT); Finerman's firm owns (WMT); Pete Najarian owns (AXP); Pete Najarian owns (BAC) call spreads; Pete Najarian owns (C); Pete Najarian owns (F) bonds and calls; Pete Najarian owns (GE); Pete Najarian owns (GM); Pete Najarian owns (JPM); Pete Najarian owns (MS); Pete Najarian owns (PEP); Pete Najarian owns (PFE); Pete Najarian owns (YHOO); Weiss owns (TBT); Weiss owns (INFN); Weiss owns (JPM); Weiss owns (VZ); Weiss owns (AGU); Weiss owns (FAS); Weiss owns (UUP); Weiss owns (IPI); Weiss owns (NIHD); Weiss owns (BTU); Weiss owns (MEE); Weiss owns (DVN); Weiss owns (COP); Weiss is short (XLE)

For Joe Terranova:
Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
Virtus Investment Partners Owns More Than 1% Of (ABAX)
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For David Bank
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For Doug Kass
Kass's Fund Owns (GM), (PG), (PEP)

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