“Over at The Street, Doug Kass writes that “meaningful market downside” risk has been removed and that the risk/reward profile has improved.
Kass sees the S&P 500 ending the year as high as 1450-1470.
He writes that “the global economic cliff is disappearing” in light of numerous indicators:
- An improving labor market: the economy added 171,000 jobs in October;
- PMIs for both manufacturing and service sectors are above 50 (considered average);
- Housing has bottomed;
- Inflation is under control;
- Interest rates low and expected to remain at low levels;
- Increased consumer confidence is spurring retail sales;
- Strength in the revitalized automobile market; and
- Hurricane Sandy, while tragic, will add to GDP in the first half of next year.
Kass believes we are on track to resolve three (economic, fiscal, and geopolitical) cliffs, while a fourth cliff (earnings) remains an impediment to market performance. Here’s how he sizes up the ‘cliffs’ facing investors:”
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