The Eurozone: Tangible progress in drafting a credible plan for the European debt crisis has started, and though this is not a permanent solution, a flawed plan is better than no plan at all.But that imperfection and vulnerability are now universally recognized (contrasted with the optimism that existed a year, six months and three months ago) and are arguably reflected and more than discounted in reasonable/current valuations. economy exhibiting only moderate growth, there is little margin of safety for exogenous shocks. The world's economic recovery is imperfect, and with the U.S. Yet the Dow rose from 66 to 11,497."īefore I discuss the slow improvement in the three other factors, I want to emphasize that I am keenly aware of the worldwide risks associated with the impact of the current balance sheet retrenchment and the challenges associated with numerous secular headwinds. And, even as I reflect about the tortuous volatility, do not the fear of uncertainty and the wild daily price moves represent precisely the time when one should be invested? In the twentieth century, the United States endured two World Wars and other traumatic and expensive military conflicts, the Depression, a dozen or so recessions and financial panics, oil shocks, a flu epidemic, and the resignation of a disgraced President. While volatility remains heightened, the other three conditions are slowly turning more positive.
I wanted to see a stability/improvement in the hard domestic economic data (which would negate the possibility of an economic downturn or double-dip).forceful policy in the eurozone was necessary to stem the debt crisis and.the sharp division in Washington, D.C., must turn toward compromise.the market's volatility would need to subside.Over the past few months, I have written on Real Money Pro that there were four conditions necessary for us to become more optimistic regarding the outlook for stocks: Slowly, most economists (and even the Fed) have finally accepted my long-term view that forward economic growth will be subpar and that the trajectory will be uneven. And, while there was a great deal of volatility thus far in 2011, the S&P 500 has made little progress and stands today basically unchanged from year-end 2010. Structural disequilibrium in the labor market, which would lead to an elevated unemployment rate.ĭomestic economic growth in the first half came in far less than consensus forecasts and basically supported the above concerns that I had previously expressed, with real GDP rising by less than 1%.Divided and divisive political leadership unable to agree to and enact hard-hitting, pro-growth fiscal policy.housing market as a large shadow inventory of unsold homes would weigh on home prices (and on consumer balance sheets). An imbalance between demand and supply in the U.S.
I have generally been cautious (and underinvested) throughout most of 2011 as I have expressed a view that it was different this time, citing a troika of concerns that would serve as a headwind to domestic economic growth and would limit the upside potential for share price appreciation: But I will be disciplined, wait for the right pitch and not chase stocks higher. If share prices remain weak and assuming that my economic and profit expectations are unchanged, I expect to expand my long positions in the weeks ahead.
#Real money pro subscription cost update
EST.Īs I will discuss in the body of today's opening missive (and in the Kass Model Portfolio update that will follow this post),I am growing more optimistic toward the U.S. This commentary originally appeared on Real Money Pro on Nov.
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