OPINIONS

CNBC morning guest host, Dougie Kass, opined in a funny article the other day on thestreet.com that there were many reasons the markets should go lower. I have pasted in the ones I consider the most salient:








1. The price of gasoline rises to a new high, serving as the functional equivalent of a tax increase for the U.S. consumer.





2. Tech bellwether Cisco's (CSCO) U.S. business enterprise is weak, and guidance for aggregate sequential revenue growth (of +4%) is disappointing.





4. Multinationals offset end-market weakness in the U.S. by the effect of a weak U.S. dollar. More astonishingly, investors consider the foreign exchange gains as recurring.





5. The multiplier effect of the housing downturn hits many building materials companies like Mohawk Industries (MHK) , Home Depot (HD) and Graco (GGG) whiff, but rumors of private-equity deals bail investors out. Housing forecasts are consistently lowered (even by the National Association of Realtors!).





6. The U.S. dollar trends lower and lower, and the likelihood of rising interest rates in Europe and in Asia suggests interest rate differentials will widen further (putting further pressure on our currency).





7. Wal-Mart (WMT) , Target (TGT) , Talbots (TLB) , Sears (SHLD) and others lower comp guidance as evidence of consumer weakness grows. This morning's retail comps are uniformly poor. The automobile industry continues its death spiral.



8. The plethora of mortgage resets -- the single most important factor pressing the U.S. consumer -- is dismissed. Mortgage equity withdrawals, the straw that has stirred the drink of consumption, slow to a crawl. Mortgage lending standards are tightened, serving to decimate the first-time home buyer market.



9. The subslime mess is dismissed, despite growing evidence that the credit contagion is spreading to motorcycle securitizations, automobiles and elsewhere. Mortgage credit losses are expected to eclipse the early 1990s experience.



10. REITs trade above intrinsic value, and dividend yields are at all-time lows relative to another new paradigm. Development projects are beginning to raise supply and have started to hurt regional supply/demand.



11. Trucking and airline companies' results are worse than expected, and forward guidance is reduced.





14. The popularity of the Republican administration hits new lows as the probability of a Democratic 2008 win increases, raising the specter of the politics of trade protectionism, a more powerful view toward antitrust and higher dividend and corporate tax rates.



15. Over there, speculation continues apace in emerging markets (especially of an Asian-kind). China becomes the epicenter of the world's speculation in equities.





Bottom line, for everyone or anyone who can give X number of reasons why the markets should go down there is some one else just as well versed who can tell us why the markets should go up.





I am no Doug Kass but I can tell you this, most who watch the screens every day will tell you that their is demand for equities for what ever reason and for now IMVHO this trumps the reasons Doug lists. Anyhow, here are some more:





1) Savers/investors have to invest their funds somewhere and my guess is stocks are a better value than bonds or metals or real estate. So unless their is a more desirable place to invest, stocks are it.





2) I haven't seen any stats of late but I would sure like to know how much money flows into stocks from 401k's and retirement plans. Sure, big pension funds can buy buildings and shopping centers for investment but the majority of plans buy stocks and mutual funds- so maybe a little supply demand issue favoring equities.





3) Stocks are not inexpensive as per the last Value Line issue; according to the publication, the VL index trades at the high end of its range with a P/E of 19.5 (typical range between 17 and 20). The DJIA, according to VL, trades at a P/E of 16.1, also at the high end (between 14 and 16.5).





4) Finally, my guess is the economies of the BRIC countries will have many ups and downs but in general will grow quickly as more folks join the world's middle class. This will probably be the driver to keep our economy vibrant as those folks need to buy our goods and services.



As I have mentioned, I expect the SPX to reach the new all time closing high of 1,527 sometime soon and probably before the end of the month. After that I will reevaluate my positions but for now the market looks like a better buy than a sell.