Doug Kass of Realmoney.com reporting a pre Fed meeting rate cut is highly possible

Doug Kass is a well respected trader who writes for Real Money (Silver) and appears in many other places, both in print, on the net, and on TV. Today he says his contact in the Fed is giving an about face from earlier rosy views on the economy. This has him speculating that a pre Fed meeting (Sept 18) cut is in the offering.

While I think the a rate cut is already 'baked' into the market, my assumption is it would happen at the meeting and thus not have as large of an effect. However, a surprise cut could boost the morale (if even short term) of the market; even though it doesn't really solve any of the serious credit issues. But sentiment is sentiment.

While I remain in the 25% cash position, I have pared back the hedge ETF positions quite a bit. While none of the thesis laid out changes, sentiment could be affected near term with a 'surprise' (earlier than meeting) cut. Now normally rumors are just that, but considering the source, his relatively level of 'connectedness' (if that is a word), and the fact it came from a source inside the Fed, makes you take note.

A rate cut, to me, still remains window dressing for the issues facing the market. I still will be on the look out for lower levels to add to long positions. The charts across the board, still leave much to be desired.

Edit: With the sales of the ETFs to smaller positions, cash is now up to 30%.

Long SKF, SRS, TWM in fund; no personal positions