I am not optimistic that this is the start of a bull market leg.
At the core of my concern is that interest rates will be “higher for longer.”
Interest fates are at the core of every market valuation equation.
When rates rise, the present value of stocks declines.
The yield on the long bond is now at 5.21% — that’s the highest yield in 19 years.
The risk free rate is also at the core of the equity risk premium (which is shrinking further).
The implosion of the $45 billion hedge fund (Situational Awareness) may be the tip of the iceberg — as I noted in today’s opening missive that discusses leverage in our markets and other market structure risks.
I am not yet short but if the advance continues I will be.
Doug Kass is a world-renowned hedge fund manager with decades of experience and success navigating through some of the most turbulent periods in market history. He is known for his time-tested analytical skills and ability to look past the current noise and herd mentality.
On TheStreet Pro, Kass provides frequent market commentary and investing ideas for active investors throughout each trading day in Doug’s Daily Diary. He also serves as president of Seabreeze Partners Management Inc. Previously, he served as a senior manager at Omega Advisors, a $6 billion investment partnership. He co-authored a book with Ralph Nader and the Center for the Study of Responsive Law called “Citibank: The Ralph Nader Report” and can be found as a guest host on CNBC's "Squawk Box."
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