Kass Turns More Bearish

Columnist and money manager Doug Kass, whose track record of market calls in recent years has been very strong, says a variety of factors have him turning more bearish.

“Within the context of an overbought and overloved equity market, the rapidity of the rise in interest rates is but one of the accumulating factors that will likely weigh on stocks in the weeks ahead,” Kass writes on TheStreet.com. He says that the Federal Reserve’s latest round of quantitative easing (QE2) has “bombed”, and that U.S. leaders have failed to address the country’s big deficit problems.

Kass says bulls are ignoring several warning signs, including “worsening payrolls growth, the temporary nature of the stimulus, a continued buildup in household savings, a banking system that is still in a healing mode and a worsening housing market.” He says that, just as many missed the problems that led to the financial crisis and accompanying recession, many are now failing to see the current problems. “I believe the prudent course shouldn’t be the adoption of too much risk at the current time,” he says.

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