In an brief interview on Thursday with Aaron Task at Barry Ritholtz’s ‘The Big Picture Conference‘, money manager Doug Kass, founder of Seabreeze Partners, said that the March lows will hold and that he isn’t expecting any major contraction for the Dow Jones and S&P. Mr. Kass also said he believes the S&P is now likely to settle into an 890-950 trading range and cited a number of “potholes on the road to higher prices” to support this outlook, including:
» A debt-laden consumer dealing with lower housing and stock market wealth, as well as unemployment levels he believes will remain “elevated” for some time.
» A synchronized global recession and the risk of “double-dip” in late 2009/early 2010. Rising government deficits.
» Too much optimism after the big rally off the March lows.
» Increased regulation, rising protectionism and more government intervention in the private sector.
» The demise of the so-called shadow banking system, which helped propel the “velocity” of money during the boom.
» Uncertain business confidence, which is going to curtail rehiring and expansion.
