The past week has seen a number of previously stalwart bears adopt a more bullish posture, including Doug Kass, Marc Faber, Steve Leuthold, Barry Ritholtz and Richard Suttmeier.
Gary Shilling, president of A. Gary Shilling & Co., is another member of the bearish all-stars, but he's not adopting a bullish stance, even as the market extends its two-day winning streak. Not by a long shot.
Shilling is sticking with his target of 600 for the S&P 500 and believes three key events must occur before any talk of recovery can be taken seriously:
A reduction in the huge inventory of excess homes: The official stats say there's 3.6 million inventory of unsold homes on the market but the "shadow supply" - homes likely to come on the market if demand improves or because of rising unemployment - is widely viewed to be much larger.
Stabilization in the financial sector: The crisis has now morphed from subprime to consumer credit and commercial real estate, the insurance industry and beyond.
"Real" fiscal stimulus: Shilling estimates only about $200 billion of the $787 billion stimulus package is "rock hard infrastructure" spending that might actually aid the economy in the short term. He believes a second fiscal stimulus package is coming later this year that's less of a "social agenda."
Shilling, who's predictions for 2008 proved notably prescient, also notes the fact "bottom picking" has become the national pastime suggests sentiment isn't really as negative and fearful as typically occurs at important market/economic turning points.
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