Juggling Dynamite

Once more to the fore: the US stock market is near cycle highs (again). In a rare useful clip, Seabreeze Partners Management’s Doug Kass explains why he believes present prices are unjustified and unsustainable.Here is a direct video link.

The rest of the ‘trading’ banter in this clip is the usual financialtainment nonsense. No wonder the network’s viewer numbers have recently fallen to the lowest levels since 1994… I guess their audience has been burned enough times over the past 15 years to lose interest. I am reminded that the network asked me to do a regular spot on a new commodities trading show they were developing in 2011 (right at the peak of the commodities rebound). Thankfully I had the humble sense to decline.

With yesterday’s miss in US retail sales, notoriously optimistic investment analysts are reluctantly having to downsize their estimates for US Q2 GDP. The official first guesstimate will not be released until July 30, but as of today, the consensus just moved to expecting a .60 annualized growth rate for Q2. This compares with the 3% estimate the same group forecast for this quarter 2 years ago, and the 2.1% estimate they offered just last December. And although QEternity jawboning from the Fed helped to pump up stock prices (rather than investment value) by trillions over the past 9 months, the reality is that a .6% Q2 read would bring US economic growth over the last 3 quarters, to a barely beating .86% annualized rate. Surpise, surprise. Meanwhile, unable to see a downturn ’til it’s driving over their feet, the consensus estimate on S&P earnings per share has now moved from a 6.1% growth expectation at the start of March, to 2.6% today (and falling…).

But never to worry, the consensus is still calling for a moonshot recovery in growth in the second half…stay tuned.

Federal Reserve Bank of Philadelphia President Charles Plosser talks about the Fed’s quantitative easing and the time frame for trimming the central bank’s monthly bond purchases. Here is a direct video link.