The Best of Kass
Among his posts this week, Kass discussed the implications of the latest inflation data, revealed a change in his strategy on bank stocks and wrote that the bull market in gold is over, at least for a while.
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Payrolls Fall Short
Originally published on Friday, April 6 at 9:18 a.m. EDT.
The jobs weakness last month was centered in business services (law/accounting/temp firms) and education/health services.
The report will rekindle memories of 2011 when employment faded after a strong start in the year.
It also is supportive of the cautious views that I have expressed in my Diary for weeks:
- The early 2012 macroeconomic strength was a result of a pull forward because of mild weather and because of the pull forward in capital expenditures from the 100% tax credit for business spending.
- Structural issues in the labor market remain an important headwind (and are not likely impacted by more easing).
As an aside, I am constantly amazed by how the pundits -- though concentrating on a narrow set of variables or companies' outlooks -- can miss so badly.
The miss to consensus this morning reminds me, in reverse, of the miss to consensus in Apple's(AAPL) last earnings report when profits and sales were more than 30% above forecasts.
There is no silver lining in the jobs report, which is supportive of the view that the economic recovery is not self-sustaining without the benefit of still massive government easing.
Shorts in U.S. stocks will likely be rewarded on Monday.
Even Apple and Priceline(PCLN) might face tough going when trading resumes after the weekend.
At the time of publication, Kass was short PowerShares QQQ Trust 1 (QQQ) .
Invest Like Barton Biggs
Originally published on Thursday, April 5 at 11:37 a.m. EDT.
I am staying very liquid in my portfolio and limiting my gross exposure during this period of uncertainty.
I don't give advice in my diary -- I do tell you what I am doing and why I am doing it -- but, in this case, I would strongly suggest erring on the side of conservatism in your trading and investing over the near term. Risk/reward in U.S. stocks appears to have flipped negative, and I am still looking for a correction back toward the 1350 area in the S&P 500 .
It might be too late to short and too early to buy at this point in time.