Others are trying to make the case that failure to come to agreement threatens another recession. One news anchor said that committee decisions will determine how retailers do this year during the holiday shopping season. Supposedly - at least according to the talking heads - the Super Committee is the biggest and most important issue facing the economy.
Moreover, as First Trust's Brian Wesbury writes, the Super Committee is much ado about little: We don't watch that much television, but every time we turn on cable news, someone is talking about the Super Committee - the 12 members of Congress tasked to cut the deficit over the next 10 years by $1.2 trillion. And as the escalation in Europe's crisis manifests itself in higher sovereign bond yields (and borrowing costs) and riots, it is unreasonable to think that this is being lost on our crew in Washington. Germans and the ECB are still opposed to the idea, but with no other viable alternatives, talks could start soon.Īs a result, S&P futures just spiked, and European sovereign debt yields have come in.Īs to the division between the Republicans and Democrats, it, too, will be resolved - it is mandated. 9 European Union summit, two people with direct knowledge of the matter said. Toward that end, Dow Jones just reported: A proposal that the IMF could call on the ECB to lend it money so it can finance bailouts for euro zone governments threatened with insolvency is gaining traction and if all parties agree, a deal could be announced at the Dec. Keeping Greece's and Italy's feet to the fire as long as possible has resulted in larger austerity cuts in Greece and will likely result, in the fullness of time, in the same for Italy.At that time, we can finally begin to call an end to the euro crisis. Specifically, and to be truthful, if I were Germany's Merkel, I would be behaving in the same manner as she. Secondarily, all our economic hopes over here have centered on the division in Washington, D.C.īut, for me, I continue to be willing to look over those valleys - for as the wise man, once said, "This too shall pass." the perception that Republicans and Democrats in the Super Committee will fail to make the needed compromises andĪbove all, the eurozone's debt contagion has weighed on the markets and has trumped improving economic data.a liquidity squeeze in which banking credit is cut off.
Investors are fearful of (in order of importance): Later in the day, I expressed that fear has entered the marketplace. economy will eventually trump Europe's woes (which, as mentioned previously, will be addressed). So, another reason why I disagree with the bears is that I am willing to look beyond the European mess, believing, as I do, that the strengthening in the U.S. So are multidecade undervaluations (relative to interest rates and inflation) being ignored with record-high risk premiums (earnings yield less the risk-free return). (regional ISMs, durable goods, leading indicators, etc.) are supportive of a much better domestic economic and corporate profit growth outlook than that on which the bears are feeding.įor now, the "gathering strength" in our country that Jim Cramer describes is being ignored, as the pessimists embrace the European headlines (and, in yesterday's case, a dated statement from Fitch on U.S. I went on to write: I am using the stock market weakness in days such as Wednesday to increase my overall net long position, as I believe that, in the fullness of time, not only will the ECB be pressured to do the right thing but the high-frequency economic data in the U.S. Shock-and-awe will come sooner than later the adverse economic ramifications and poisoning/collapse of the European banking industry are alternatives that will ultimately be unacceptable to Europe's leaders and populace. To date, the ECB has been tame and timid, so the speculators and bond vigilantes in Europe have continued to put pressure on sovereign debt prices until the ECB enters the shock-and-awe phase. In my opening missive yesterday on Real Money Pro, I expressed the following: One of the differences I have with the bears now is that I expect, before the problems in Europe get too worrisome and out of hand, that the ECB will ultimately step up by lifting its purchases of Italian and Spanish bonds, will further cut targeted interest rates and will introduce a large quantitative-easing program, so I am willing to look over the valley of eurozone uncertainty.
#Doug kass real money pro pro
This commentary originally appeared on Real Money Pro on Nov.
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