Interesting Videoclips of the Week (November 8 – November 14)


Editor’s Note:
In this series of articles, we include important or interesting videoclips with our comments. Our Web Software does not permit embedding of the clips into our articles. So we shall have to be content to include the links to the actual videoclips. We are very happy with the tremendous response from readers to this series of articles. We thank them sincerely and profusely. 

This is an article that expresses our personal opinions about comments made on Television and in Print. It is NOT intended to provide any investment advice of any type whatsoever.  No one should base any investing decisions or conclusions based on anything written in or inferred from this article. Investing is a serious matter and all investment decisions should only be taken after a detailed discussion with your investment advisor and should be subject to your objectives, suitability requirements and risk tolerances.



We come back to New York after a two week business trip and we find that nothing has changed. Bernanke & the Fed signal continuation of their dovish policy regardless of its impact on the dollar and the damage it is causing in Asia.  The November employment report was awful and the stock market celebrated it just as it did in October after that terrible employment report.

Leon Cooperman of Omega Advisors summed it up when he said that the Fed has created an extraordinary environment for speculation (see clip 2 below). We saw evidence of a bubble emerging in India during our visit there. Even bulls like Tim Seymour of CNBC Fast Money routinely speak of bubble like conditions in China.

Every day, we see Asian Central Banks protesting loudly about the excesses resulting from the Fed policy. But, their own governments do not seem to care. Indeed, the G20 was mum about the weak dollar and reiterated the need for continued stimulus. The S&P 500 rose 2.3% this week.

The most interesting action took place in the Treasury market, in our opinion. The 30-Year Treasury Bond auction went off poorly on Thursday. The auction was priced about 6 basis points cheaper than the level where the when-issued piece traded just before the auction. The bond sold off immediately after the auction. Then, buyers stepped in and the 30-year Treasury rallied smartly on Thursday afternoon and on Friday. 

This is sort of the “dog that did not bark” point from the Sherlock Holmes tale. Given the melt-up in the stock market, gold market and commodities, you would expect to see a selloff in long Treasuries. 

May be that is the story of today’s markets and the Fed’s dilemma. The stimulus by the authorities is showing up in corporate profits and global growth led by emerging markets while the US unemployment keeps rising and incomes keeps falling. You can see this the relative performance of Freeport McMoran, the quintessential global growth stock vs.Walmart, the domestic spending bellweather. 

If all the stimulus by the Fed & the Obama Administration can barely create a recovery, what happens next year when the effects of the stimulus run out by mid-2010? Are we likely to get a deflation panic next year like the one we had in mid 2003? Is this really what the Treasury market is telling us? 

Ours is an inquiring mind and it wants to know. Will our friendly CNBC Anchors get some guests who can tell us?

We have been critical of many CNBC Anchors in this series of articles. That is not out of anger or malice. We benefit a lot from CNBC and we express our views simply to help CNBC Anchors improve their coverage to become even more beneficial to individual investors. During our business trips, we had the opportunity to watch CNBC in England & India. We are glad to note that, in our opinion, the level of expertise, content and savvy of CNBC USA anchors is much much higher than that of their counterparts in England & India. Congratulations CNBC USA!

On a negative tone, we continue to be appalled at the state of bloomberg.com. In our opinion, this is probably the most arrogant website for individual investors. Bloomberg tends to have good interviews and good articles. But you have to read the articles and watch the videos the day they are featured. The bloomberg.com website does not archive videos or articles and it does not provide a search function to search interviews by name. For example, we tried to search for the interview of Bill Gross and for the article about Donald Tsang on bloomberg.com. No luck. In our opinion, this behavior is utterly arrogant. We would rather Bloomberg shut off their website and focus their attention on users of the Bloomberg terminals.


This week, we feature the following clips:



  1. Jeffrey Lacker, President Richmond Fed, on Tuesday, November 10
  2. Leon Cooperman of Omega Advisors on Wednesday, November 11
  3. Jim Chanos of Kynikos Associates & Robert Sloan of S3 Partners on Thursday, November 12
  4. Richard Bernstein of Bernstein Capital on Tuesday, November 10
  5. Doug Kass of Seebreeze Partners on Thursday, November 12
  6. Jordan Kotick of Barclays on Wednesday, November 11
  7. Greg Troccoli of Opalesque on Thursday. November 12
  8. Tony Crescenzi of Pimco on Friday, November 6 
  9. Larry Kudlow on Friday, November 13

 

1. Jeffrey Lacker of the Richmond Fed with Maria Bartiromo – Tuesday, November 10

Mr. Lacker is probably the most hawkish members of the Federal Reserve. Listen to Mr. Lacker speak in the 2 clips below:



We were surprised to hear Mr. Lacker say that the Fed is unlikely to tighten monetary policy until 2011. And this is the most hawkish member of the Fed! 


2. Leon Cooperman on Squawk Box
– Wednesday, November 11 – 8:55 am

Leon Cooper is the Chairman & Founder of Omega Advisors and a former CEO of Goldman Sachs Asset Management. His fund is over 43% so far in 2009. Listen to his views in the following 2 clips:



We think Mr. Cooperman’s views are a must listen. He thinks that the first phase of the market recovery, from 675 to 1050 on the S&P, is over. The next phase is the traditional economic recovery with rising earnings and dividends with a lot of potholes & risks along the way.

Mr. Cooperman says on a couple of occasions that the Fed has created an extraordinary environment for speculation.


3. Lessons From the Crisis – Jim Chanos & Robert Sloan of S3 Partners with Becky Quick – Thursday, November 12

We have a great deal of respect for successful short-sellers. In the days of the American West, longevity was what made a gunfighter truly great. There were rash gunfighters and old gunfighters but there were no rash old gunfighters.

Jim Chanos, by his own record, is an veteran shortseller with many many successful years to his credit. We always listen when he speaks. As Becky Quick reminded viewers, Chanos spotted Enron before any body else. Robert Sloan has written a book about short sellers that was introduced in this segment. This book sounds interesting and a worth read.

In our opinion, this clip is a must watch. Some excerpts are below:



  • Chanos – It is absolutely insane public policy to have taxpayer supporting the deposit base for capital market transactions – meaning specifically in the stock, bond & currency markets – there is no reason that your money, my money, Bob’s money should be backing the activity. It should be done with risk capital and not on basically on the rate at which we insure deposits for institutions that are too big to fail – so for some of the institutions that are paying large bonuses, whatever you might think of executive compensation, these bonuses would not be as large if your guarantee, my guarantee & his guarantee weren’t backing the liabilities at no cost.

CNBC’s Becky Quick then asked about Chanos’ short position on China. After a little levity on this topic, Chanos got serious:



  • Chanos – I am concerned that, & people have misquoted me saying I am calling for a crash & I am not, but what I am saying is that the biggest asset bubble we now see, if you want to analyze things, is China, it is the fixed asset bubble in China (emphasis ours). If you thought Dubai was bad a couple of years ago, & we did, it has got nothing on China. China’s gdp growth is coming on the back of the most massive fixed investment program any one has ever seen. It is getting declining returns on that investment, putting on more & more projects that probably won’t have an economic return and they are stuffing their banking system with this stuff.

Becky asked Chanos about China’s reported numbers.



  • Chanos – We really believe that if you applied real depreciation principles to the fixed asset investment, China’s gdp would be a lot lower than  9% & in fact, I keep pointing out that all great communist countries before they collapsed showed very consistent 6-7% gdp growth every year.

 


4. Bull Market or BS? – Richard Bernstein on Fast Money – Tuesday November 10 – 5:20 pm


 Richard Bernstein, ex-Strategist of Merrill Lynch, has proved himself to be a fairly astute investor. He points out in this segment that people are confusing the secular backdrop which remains miserable with the cyclical upturn. In his opinion, we have had a huge fiscal and monetary stimulus and that the market is behaving as it should.

Consumer Cyclicals are his favorite sector. He says that the leading indicators of corporate profits are very very positive and they are getting more positive. He feels that people are underestimating corporate profit growth for 2010 – in his words, we are now booming & busting in profits as we have never done before; you can trace the profit cycle to 1930s and you do not see volatility in profits as you are seeing right now and we are just starting to swing in that direction.

Before Bernstein spoke, Anchor Melissa Lee put up a quote from Albert Edwards, strategist at Societe Generale that said “If we get an economic downturn next year, when you have got core inflation at half a percent, I think there will be a real deflation panic, a bit like Japan…People should question the happy clappy nonsense from sellside analysts”.

Could Bernstein & Edwards be both right? Bernstein is focused on corporate profits which could be on an upward trajectory based on corporate cost cutting and global growth while the deflation scare in the USA could result from rising unemployment, tepid economic recovery and severely constrained incomes in America. The chart that might explain this could be a chart of Freeport McMoran vs. Walmart, a quintessential global recovery play vs. an American consumer spending play.

We recall that Jan Hatzius of Goldman Sachs did worry on CNBC about the economic growth when the stimulus runs out in mid 2010.

May be, this is why the 30-year Treasury Bond refuses to go down in price even as the S&P 500 keeps melting up.


5.  Bull Market or BS? – Doug Kass, noted “market whisperer”, on Fast Money – Thursday, November 12 – 5:20 pm


Doug Kass received kudos for his market bottom call in March 2009.  He has been unsuccessfully calling for a market top for a few weeks now. He expresses his concerns in this segment:



  • Housing  demand is not sustainable
  • U.S. Rail traffic is rolling over
  • Consumer & small business sentiment is weakening
  • We are seeing some bearish technical divergences.

Watch this clip.


 
6. Tick-By-Tick – Jordan Kotick with Maria Bartiromo – Wednesday, November 11 – 3:19 pm

Jordan Kotick of Barclays is a regular guest on Maria Bartiromo’s show. He has been more right than wrong this year. Unlike Doug Kass above, Kotick sees a strong market in November 2009.


7. Chartology – Greg Troccoli of Opalesque on Fast Money – Thursday, November 12 – 5:32 pm

Mr. Troccoli is not as sanguine as Mr. Kotick above. He sees a potential head & shoulders pattern even though his perceived right shoulder looks more like a higher head. When Tim Seymour points this out, Greg Troccoli essentially argues that the head-shoulder difference is in the eye of the beholder and then wonders about a double top. In his view, the next 2-3 days would be critical.

Troccoli sees Gold as overextended but sees it getting to $1,300 within the next 8 weeks.  Then he said that he is shorting Goldman Sachs with a stop of $185 close. You can hear the astounded shout from Pete Najarian in the clip. Hear Troccoli explain his reasons in the clip and the discussion between Najarian & Troccoli about shorting stock vs. buying puts.


8. Bond Reaction to the Jobs Report – Tony Crescenzi of Pimco on Squawk Box – Friday, November 6 – 8:41 am

Rightly speaking, this clip should not belong in this article because it is more than a week old. We include it because of an important point Crescenzi makes in this clip. He says “for the yield curve, the steepness of the yield curve tends to peak around the time the peak of the unemployment rate”.

This may be why the long duration Treasuries tend to have a terrific rally just as the labor market bottoms. That is what happened in 2003 when the Treasury prices peaked and the yields bottomed in June 2003.

This sort of a gem of a point is why we tend to listen to Mr. Crescenzi when he speaks.


9. Larry’s Last Word Larry’s Last Word – Friday, November 13 – 7:57 am

This is what Mr. Kudlow said:



  • I am no lawyer but I am a citizen and I am a New Yorker and I think all these terrorist war criminals should be tried in military courts. I agree with Senator Jim Webb, former Navy Secretary, I agree with Senator John McCain, five years Prisoner of war, he knows what he is  talking about. 
  • Second point, I am still annoyed at President Obama for his declinism in his speech in Japan and let me make this message. It is optimism that is the quintessential great American virtue. We can succeed and move through whatever hardships occur, war be it recession be it financial meltdown. Mr. Obama should completely retool his message in Asia. He should extol the virtues of American capitalism and how we will lead and work with the rest of the world. Optimism wins.

We have criticized Larry Kudlow in the past about expressing his opinions in his morning show rather than being objective on markets. But his 7:00 pm show is the ideal forum for opinions. We commend Larry Kudlow for speaking his mind clearly and unequivocally. Well done, Larry!

This may signal an opportunity for CNBC to create opinion shows for the evening hours. MSNBC is so skewed that many viewers like us leave NBC-Universal space for other shows and networks. Perhaps, CNBC can create more centrist opinion shows to balance the ultra-left MSNBC and keep regular CNBC viewers on its network during evening hours.


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