Unfortunately for bulls who see a chance to load up the boat on stocks, Mark Dow says the tape is overdue for a pullback.
Why is that important? Considering Dow cut his teeth as an economist and debt analyst for the Fed and the IMF and is now a fund manager for hedge fund biggie Pharo Macro, it's safe to say he's as smart as the money comes in navigating the tape.
Dow joined Aaron Task and me to talk markets, Standard & Poor's dour outlook on U.S. credit and the boom in precious metals. "We've come a long way from the tsunami lows," Dow points out, suggesting that the S&P 500 may be headed for a retest of those levels, right around 1,250, that occurred after the earthquake and tsunami in Japan March 11.
As for the comments on U.S. Treasuries, Dow sees S&P's outlook change as "overdue" -- and a function of the ratings agencies being seen as late to the party.
Speaking of late to the party, he's steering well clear of the gold and silver frenzy. Dow says there's still time to reduce risk in general -- not entirely different advice than a lot of what we've seen of late. What's unusual is his stance on the dollar, which he sees as a buy relative to European and BRIC currencies.
Echoing Winston Churchill, who famously said the U.S. always does the right thing but only after exhausting every other alternative, Dow thinks the Fed will move from quantitative easing to fighting domestic inflation. He gives more credence than most observers to measures such as CPI, which is often dismissed for not including food and energy in its core reading.
Bullish on America, yet negative on stocks? That seems counterintuitive, but the unquestionably sharp Dow somehow fits it together in a compelling way. Watch the video and tell us what you think in the space below or via email at firstname.lastname@example.org.