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.
Long Live King Dollar
The dollar continued to rally this week and gold continued to fall. No one knows whether this is a counter-trend snap back or a new bull market. No one knows how long this rally will last. Robert Prechter of Elliott Wave thinks that the dollar will continue its rally through to 2010 with negative consequences for financial markets (see clip 4). But he and virtually every one we heard on CNBC likes Gold for the long term. Part of the appeal is due to fears of a Sovereign debt crisis. Another dollar bull is Gary Shilling who is long the dollar and short the Euro & the British Pound. (we borrowed the term King Dollar from Larry Kudlow who also introduced us to Gary Shilling via his show).
This seems to be the biggest crisis on the horizon with implications for all financial markets. Greece was downgraded this week and PIIGS (Portugal, Ireland, Italy, Greece & Spain) seem to be on deck. Some debt investors think that Ukraine is next.
As an aside, a Ukraine debt crisis could be an interesting geostrategic issue as well. Russia is very active in reestablishing its clout (some might say stranglehold) in Ukraine with the pro-Russia party expected win the next election. So what does Russia do in case of a debt implosion in Ukraine? Support Ukraine with its own reserves or worry about its own attempts to open its markets, privatize companies and get western aid? Any thoughts from our readers?
The reality is that governments around the world have poured massive monies into their economies by raising debt. What if the economic recoveries in these countries fail to impress and these governments cannot pay back their debts. Shades of 1998 around the world?
Next year could see an escalation of economic tensions within core Europe and peripheral Europe including PIIGS. These PIIGS are totally different in their economic culture than Germany. But the European Monetary Union forces PIIGS to adhere to the German policy. This is unsustainable and perhaps suicidal. So will PIIGS break away from the EMU or will Germany re-embrace the Deutsche Mark? This confusion cannot be positive for the Euro. The Dollar could again be the best of all bad currencies.
UK is another looming crisis in the sovereign debt space. Usually, when the UK gets in trouble, people worry about the US. Recall what Bill Gross said to Erin Burnett on May 21. During that interview, Bill Gross explained that markets consider UK & USA to be relative twins and then said that the USA will eventually lose its AAA rating. That proved to be premature talk.
We would not be surprised to see stories reappear next year about the USA losing its AAA rating in the future. Such talk would again create a selloff in Treasuries in 2010 and this selloff could last awhile. Is the Burnett-Gross combo getting aboard this train again? Watch clip1 below and decide. Also watch clip 4 to hear Robert Prechter predict that 2010 will be a very bad year for credit defaults.
Perhaps a sovereign debt crisis in the USA could begin in a different area.
This week, Governor Paterson of New York held a conference titled Saving New York From Insolvency. New York is running out of money and could go the California way. Listen to his own comments in clip 5 below. Remember the State of Illinois was downgraded this week.
If you want to be scared about this upcoming crisis, listen to Meredith Whitney in clip 2 below. She says that the states are underfunded by as much as $200-$500 billion dollars and then she quotes a regulator as saying that underfunding could be as high as $2 trillion. She thinks that this crisis could come to fore by tax season or by June 2010, the beginning of the next fiscal year for states. TARP II anyone?
Is this why the Treasury Department is so willing to allow Bank of America & Citibank to repay their TARP obligations? Is this returned TARP money being set aside to bail out state governments next year? Meredith Whitney seems to think so.
But the Muni market remains sanguine in the face of all this. The reality is that muni bonds, especially high quality muni bonds, rarely default, if ever. Everyone believes that Uncle Sam will rescue any state that gets to the brink. So investors remain complacent.
So do we. But, then we think of Dubai. Everyone knew that Dubai was in trouble and a crisis could erupt. But, everyone remained sanguine that Dubai will bail out its semi-sovereigns like Dubai World and that Abu Dhabi will bail out Dubai. Sometimes, in our most depressed moments, we wonder whether the complacency in Munis could be shaken the way complacency in Dubai was. May be this is why Prechter says Avoid Munis (clip 4 below).
We point out again that while the Muni Bond market seems fine, the Muni closed end funds market is on its back. When you have a spare moment, check out the charts of NY closed end funds like NNP, MYN, MHN. You will notice that these funds have not recovered from their October swoon. They should trade better into year-end as they usually do. If they don’t, we would worry.
We have come to realize that closed end funds usually provide early signals. Recall that the Muni closed end funds sold off in November 2008 and the Muni crisis hit in February 2009.
But where do the investors go if Sovereign debt in Europe and Munis in America go down?
Everyone got negative on Treasuries this week. The week began with the news that Commercials as well as the Large Speculators have reduced their positions in 10-Year & 30-Year Treasuries to virtually zero. That could not be good for the Treasury auctions and it was not.
On Monday afternoon, Bill Gross, the best well known bond trader in America, essentially put a Sell on long maturity Treasuries (see clip 1 below). As you would expect, Treasuries sold off. The 10-Year Treasury auction was rated “C” and the 30-Year Treasury auction was rated “F” according to Rick Santelli, CNBC’s bond reporter.
However, can you make money in a “F” rated auction? As of Friday’s close, you did. Next week will really tell the tale of the tape. It will be the last real week of 2009 and it features the last Fed meeting of 2009.
We must point out that dismissing December’s action as insignificant because of lack of big players does not work. More often than not, poor December trading action in Treasuries tends to create a real selloff in January. So let us see how Treasuries trade during the next two weeks.
What do other CNBC expert guests say? CarterWorth, chief technician at Oppenheimer, put a sell on long maturity Treasuries this week but added the fundamental caveat “as long as the economy continues to recover”. What happened to the technician dogma that price action reflects all fundamentals and that too before the fundamentals become clear to ordinary mortals?
Then Larry Kudlow came to the rescue of bond bulls when he invited Gary Shilling on The Kudlow Report. Dr. Shilling was unshaken despite Larry’s attempts to roast him. Shilling said he thinks the 30-year Treasury yield is going to 3%. Larry asked in wonderment “3%?”. Yes, replied Gary Shilling. He is bullish on the US Dollar and short the Euro as well as the Pound Sterling. Thank you Larry for inviting Dr. Shilling on your show. Hopefully, you will invite him more often.
With all these depressing thoughts about bonds, surely the equity markets would provide good cheer.
Not really. Because we came across an interesting technical study by Mary Ann Bartels of BAC-Merrill Lynch. She discusses what she calls the “Decennial Pattern“:
- For years ending in 9, a February low and an upward bias into yearend
- For years ending in 10, a downward bias into May and an upward bias into yearend, but years ending in 10 tend to have only a slight upward bias.
Further she observes that the declines are magnified for the 2001-2010 decennial pattern. Her verdict – a late 2009 to mid 2010 correction.
If you think this prediction is bad, see what Prechter says in clip 4. He predicts that 2010 would be at least as bad a year for stocks as 2008 was.
We must stop right here before we get into a severe depression. We need our favorite anti-depressant treatment, escapist Bollywood song and dance videos. These videos allow us to go to the Copacabana in Brazil, South Beach in Miami, Cape Town in South Africa, Malaysia, Mauritius, the ethereal Himalaya from our den. This is our version of “beam me up Scotty!”.
This week, we feature the following clips:
- Bill Gross on Monday, December 7
- Meredith Whitney on Tuesday, December 8
- Jim Rogers on Thursday, December 10
- Robert Prechter of Elliott Wave on Thursday, December 10
- Governor Paterson of New York on Wednesday, December 9
- Twitter Founder on Monday, December 7
- Meredith Whitney on Tuesday, December 8
1. Pimco’s Economic Outlook – Bill Gross with CNBC’s Erin Burnett – Monday, December 7
This 4:44 minute clip was the most astounding and most confusing clip of the week in our opinion. It may have been the most market moving clip of the week as well. That is why this clip wins the pole position for this week.
Let us set the stage first:
- On September 2 , Bill Gross told Erin Burnett that he found 30-year Treasuries at 4.12%-4.15% yield to be attractive.
- On September 21, Bill Gross confirmed this to Joe Kernen on Squawk Box.
- On September 23, a FOMC day, Bill Gross again said he liked 10-year & 30-year Treasuries. He went further and predicted a bull flattener in the Treasury yield curve.
- Bill Gross apparently acted per his public statements. Bloomberg News reported on November 24 that “Bill Gross had increased his holdings of government-related debt to 63%, the highest proportion since July 2004. Gross boosted his $192.6 billion Total Return Fund’s investment in Treasuries, so-called agency debt and other U.S. Government linked bonds from 48% of assets in September…”
- On November 30, Joe Kernen congratulated Mohamed El-Erian on this greater bond position calling it smart. Mr. El-Erian smiling accepted the compliment presumably signaling that the bond position was still intact.
- On December 4, Tony Crescenzi of Pimco pointed out to Bloomberg’s Betty Liu that fed funds rate and inflation are the two guiding principles for investing in Treasuries. His interview suggested that he likes long maturity treasuries and he explicitly told Betty Liu that Treasuries are preferable to TIPS.
Then, a day later on December 7, Bill Gross seemed to be publicly correct his subordinate Tony Crescenzi in his comments to Erin Burnett.
- Gross – Fed determines the short term rate and the long term rate is determined by a multitude of factors one of which is inflation which we expect to go lower (so far he agrees with Crescenzi) but two, which is determined by supply & demand.
Bill Gross goes on to explain that he is bearish on the supply-demand picture for Treasuries. Then after a couple of sentences, Gross made a stunning statement:
- “(deficits) can add as much as 100 basis points or 1% to the 10-30 year portion of the yield curve. So while the trek may be gradual, it does suggest that long term rates have seen their lows & certainly headed higher”.
Bill Gross is the best trader of bonds in our opinion. So when Bill Gross issues a sell on bonds, we feel every bond investor should take note. But we should also point out that selling bonds on an intermediate term basis upon negative comments by Bill Gross does not always work out. For example:
- On May 21, 2009, Bill Gross made negative comments about Treasuries after a story about how USA would lose its AAA rating. Treasuries sold off rapidly. But on June 10, two weeks or so after the Gross comments, the Treasury market bottomed and began a multi-month bull run.
- In June 2007(7th June as we recall), Bill Gross turned publicly bearish on Bonds. The Treasury market sold off viciously for about two weeks and then made a bottom on June 21, 2007. Then, as we all know it, the Treasury market went on a 18 month bull run that ended in December 2008.
However, and despite these two examples, we can only emphasize that when Bill Gross makes a call on bonds, investors should take it seriously but make their own decisions.
We think the statement from Bill Gross could have major implications for the bond market depending on how he chooses to act on his own call unless he acted on his call before making the call publicly on CNBC.
As we see it, Bill Gross essentially put a sale recommendation on $121.3 billion of his fund’s assets (63% of $192.6 billion). We do not recall any other Fund Manager making such a statement of profound significance to his own fund.
As a journalist, this should have been a very juicy statement indeed. We do not have the experience of Erin Burnett or her august position of anchoring 2 shows on CNBC. But we can think of a couple of questions we would have asked:
- Bill, two months ago, you liked Treasuries at 4.12% and today you don’t like them at 4.41%. You now say rates could rise by 1%. When did you change your mind and why? In September, you were worried about a possible double-dip in the economy. Are you no longer worried about a double dip and why?
- Have you already sold the massive amounts of Treasuries you have in your fund? Is that a reason why Treasuries have been selling off for the past couple of weeks?
- If you have, when did you start selling your positions?
- If not, when and how do you plan to sell or reduce such a massive position?
- What would you buy when you sell your long term Treasuries?
- Bill, you think rates are going higher by 100 basis points; does that mean your fund would not participate in the 10-year & 30-year auctions on Wednesday & Thursday of this week.
To our utter dismay, Erin Burnett did not ask any of these basic questions. If you watch the clip, you will see no evidence that she even recognized the importance of what Bill Gross said.
Our inquiring mind would like to know whether Bill Gross participated in the 10-year & 30-year Treasury auctions this week. If you watch Treasury prices, you will notice that longer term treasuries sold off in the days after Mr. Gross’ comments on Monday. We wonder whether his comments also discouraged participation by other investors in the auction or perhaps made them ask for a greater discount. Mr. Gross is called The Bond King and generally less celebrated investors follow the lead of the King.
So, if Bill Gross did indeed participate in the auctions on Wednesday & Thursday, he got the benefit of the sell-off that he helped create on Monday. If true, it could only be described as a great tactical move by Mr. Gross. Were we shareholders of the Pimco Total Return Fund, we would be thrilled and ask no questions. But we are not and so we are left to wonder.
We have said it before and we shall say it again. Bill Gross is the manager of his fund. His duty is to his fund and his fund’s shareholders. He can use the forum provided by CNBC’s Erin Burnett for his fund’s benefit. Bill Gross owes nothing to the viewers of CNBC.
But Erin Burnett does. Her show is run for the benefit of the show’s viewers and not for the benefit of Pimco shareholders. It is her obligation as an anchor to see that her guests do not take undue advantage of her show and perhaps injure the financial interests of the show’s viewers. It is also the responsibility of CNBC to monitor their anchors and ensure a journalistic standard.
But, as we write this, we wonder whether we are correct in our view. Does Erin Burnett really have any obligation to the viewers? Or for that matter, does CNBC? It could be that Erin Burnett’s first, foremost & perhaps the only responsibility is to increase the ratings of the show. It is probably undeniable that the appearance of a celebrity investor like Bill Gross increases the show’s ratings substantially. In this vein, it could be that CNBC’s first, foremost & perhaps the only responsibility is to maximize revenue. We are not aware of any fiduciary obligation on a TV Anchor or a TV network to take into account the interests of the viewers.
If this is true, then Erin Burnett should be congratulated for ensuring that her most celebrated guest had all the freedom of expression he needed to say what he had to say without any interruption on her part. As far as viewers are concerned, Caveat Viewer would seem to cover it.
We did contact both Pimco & CNBC on Monday afternoon for clarification. Unfortunately, we have not heard from either.
To be fair, Erin Burnett asked a very direct question to which Bill Gross gave an interesting and direct answer:
- Burnett – Which is more overvalued right now? Stocks or Bonds?
Gross – I think Bonds on a Sovereign basis, not investment grade bonds or even high yield bonds in the risk asset category; certainly Treasuries & other Sovereign assets are overvalued relative to the potential rate of inflation & relative to their value compared to other assets.
Then Erin Burnett shifted the conversation to the new hires of Pimco including Neel Kashkari of the TARP fame.
- Bill Gross said that “Neel is gonna run our product area in terms of the equity expansion…Neel will be the business manager, the product manager….He is going to engineer this expansion of Pimco in to the equity world in which we no longer are the necessary authority on bonds but the global investment authority which includes all asset categories.”
- Erin Burnett – “I don’t know, that sounds like a George Orwellian thing”
We found this interesting. We do not at all mean to suggest that Bill Gross says stocks are more undervalued than sovereign bonds because Pimco now has a new strategic direction in which stocks would be very important to Pimco. We have too much respect for Mr. Gross to think that. But, would that have been a valid question for a sharp journalist to ask? We think so. Would CNBC’s Joe Kernen have asked this question of Bill Gross? Probably, in our opinion. Did Erin Burnett fail in her journalistic role by not asking this difficult and potentially insulting question? Probably yes, in our opinion.
We wonder in what capacity did Bill Gross made his statements. Did he speak as the Co-CEO of Pimco or as the Fund Manager of Pimco’s Total Return Fund, presumably a bond fund. It seems to us that these could be conflicting roles, especially in view of his statement that bonds are more overvalued than stocks.
We may be curious but this is more of a topic for Pimco shareholders and we are content to leave it at that.
2. Meredith Whitney as CNBC Squawk Box Guest Host – Tuesday, December 8
This interview is what makes CNBC special, in our opinion. You have a superb analyst like Meredith Whitney who has been so right for the past 2 years or more and a talented journalistic crew that can grill the guest as well as each other.
When you watch the clips, you will see that Joe Kernen and his Squawk Box colleagues were on their A-game that morning. Joe Kernen grilled Meredith Whitney as every anchor at CNBC should grill their guests. Then Carl Quintanilla took on Joe Kernen essentially asking why Kernen is only hostile to bearish guests.
The substance was great, the give & take was frank and the interaction was friendly feisty. This was what we would like to see every day on Squawk Box and indeed on CNBC. Lively exchanges between co-anchors is necessary to keep them on their toes and it makes for good TV. Dylan Ratigan, for example, always tried to get Maria Bartiromo riled up a bit and Maria often went after him when Dylan went on one his rants.
Perhaps, Joe Kernen forgot that Meredith used to argue down Jim Rogers on Neil Cavuto’s Saturday show before she became so famous. In any case, Meredith Whitney was pleasant, articulate and firm in her conviction. Watch the clips at:
But a note of caution. Take an anti-depressant before you watch the clips. Whitney is as bearish as she has been all year because she feels “the government is out of bullets“. A few excerpts are below:
- 70% of the economy is driven by the consumer. I have a 100% conviction that the consumer is not getting any better…If everything that touches the consumer is represented in the S&P 500, then the S&P 500 is going to be under pressure
- States are under such duress,..States are underfunded to the tune of $200-500 billion, but last week state regulator said it could be 2 trillion dollars.
- I was trading bullish until before the October numbers…but the loan books have been declining, the credit card books, consumer credit came out yesterday down 9% from the peak, so what’s left? They are going to have to have rocking capital markets divisions to get them to the numbers that the street has.
- Joe, you can say whatever you want but stocks do not go up when estimates are coming down & they will come down
- States are under such duress,..States are underfunded to the tune of $200-500 billion, but last week state regulator said it could be 2 trillion dollars.
Watch these clips.
3. Jim Rogers on Bloomberg & CNBC – Thursday, December 10
These are two excellent interviews that offer a good overview of the investment thinking of veteran investor Jim Rogers. We will begin with the CNBC interview with Maria Bartiromo because we can provide a link to the video on cnbc.com and because the discussion will naturally gravitate to the Bloomberg interview with Betty Liu and then to clip 4 below.
The CNBC interview and two summaries (thank you CNBC) can be found via the links below:
- One on One with Jim Rogers – Clip
- Gov’t Spending Is Like Tiger’s Dating– first summary; a cheap shot we think.
- Gold Not a Bubble; Silver a Better Buy – second summary
The first summary is a rehash of his views that the Government is spending too much and that the Fed as well as the Treasury should be abolished. He expresses his views about the sovereign credit crisis that is coming.
The second summary is more actionable. Rogers says that Gold will bounce back after a correction but he would not buy now; he does not own any commodity producers or US stocks; that the US Dollar will rally in the short term and then investors should diversify into other currencies; that he sold all his Emerging Markets two years ago, except China; that there is no bubble in Emerging Markets. He also says water is a very big problem but one that individuals cannot really play and he recommends agricultural commodities in either ETN form or indices. Then Maria asked him:
- Bartiromo – Where do you think is the most important place to avoid right now?
Rogers – It is the bond market, long term government bond market that is the next bubble
Bartiromo – Why?
Rogers – Why would you lend money to the US Government for 30 years at 4%-5% in US Dollars?
Bartiromo – That is such a simple way to put it, Jim (at this point, we fondly wished that Maria had her colleague Joe Kernen with her – Joe Kernen would have told Maria and perhaps reminded Jim Rogers about the past Rogers fatwa that the yield of the US long bond will NEVER go below 6%).
We also wondered why Maria did not ask Rogers whether he was shorting Treasuries. Well, no harm done. What Maria did not ask, Betty Liu of Bloomberg TV did in her interview:
- Liu – On a final note, I always like to ask you what you are shorting these days. I know before you have shorted banks, shorted Treasuries..
Rogers – I have shorted Fannie Mae – yeah. This is one of the few times in my life I have no shorts of anything… I have always have had lots of shorts balancing my longs. Betty, I cannot find anything that is a great excess that I would like to short..I feel nervous not having shorts because I like to be protected…I suspect the next thing to short is the US Government Bond market, that is a bubble in the making; somewhere along the line, I hope I am smart enough to short it again – I don’t see any other excesses in the world…
Liu – some say that China is a bubble
- Rogers – I suggest they sell it short!.
Then Rogers went on to explain why China, as a whole, is not a bubble today. But, in his comments, he said Hong Kong real estate is a bubble. He also said there are some bubbles developing in China & in some parts of the world, but China, as a whole, is not a bubble and he challenged people to sell it short!
- Liu – You cannot find anywhere in the world where you think you can make money by shorting?
- Rogers – I have not been able to find anything to go short.
This interview by Betty Liu of Bloomberg is really good. Go to Bloomberg.com and click on Editor’s picks to see the Rogers video. You have to hurry because by Monday morning, it will be gone from bloomberg.com.
4. Robert Prechter on Bloomberg – Thursday, December 11
Robert Prechter is the founder of Elliott Wave International. This is a very good interview with Bloomberg’s Betty Liu. We recommend readers watch it on bloomberg.com (editor’s picks section) before Monday. Apparently, this followed the Rogers interview described in clip 3 above.
- Liu begins by asking “Bob, Jim Rogers saying there is nothing, absolutely nothing attractive to short right now, really?”.
- Prechter responds – He did say there were no bubbles.
Then Prechter goes into a discussion of how bubbles are created. In this discussion, Prechter says he is very bullish on the US Dollar and that the US Dollar could rally all next year. He says that the US Dollar is behaving perfectly contracyclically with financial markets and so most financial markets will go down in 2010.
Then Liu asks him about Dubai. Here is where Prechter’s answers get scary:
- We are about to roll into the 3rd Elliott wave down – this is the place where the news & the markets are really in sync…Problems in Dubai, Greece, Spain, London – they are all coming out in the fringe area of debt markets and we are going to see the debt problems migrate into the United States & Europe as the year (2010) progresses
- We are in a deflationary environment in which debt is repaid or defaulted & we will see more and more of this as the year progresses..2010 will be a very very big year of credit defaults and people need to be careful where they invest the money – they are putting their money in dangerous places like junk bonds, munis & corporates. I think you want the safest possible debt you can find..
Liu asks “how far down is down (in the stock market)?” Prechter answers:
- We are going to break the March lows for sure; Next year is going to be at least as large as 2008. Again all I am doing is recommending caution. If I am right, you have really saved your financial health, if I am wrong, you are pretty much trading water.
- Liu – Bob, you are saying put your money in the safest debt you can, what are you talking about, Treasuries?or putting in safe havens like Gold?
- Prechter – Treasury Bills are number one, because I am bullish on the US Dollar as well…gold has gone farther than I thought it would, it will pull back down and become attractive again…
So there you have it. Bill Gross likes Junk bonds, Corporate bonds. Robert Prechter says avoid them to protect your financial health. Jim Rogers says he does not like Treasuries because he does not like the US Dollar. Robert Prechter says he likes Treasury Bills because he likes the US Dollar.
Nobody said investing was easy.
5. New York’s Economic Future – Governor David Paterson of New York with CNBC – Wednesday, December 9
This is the first time we have heard directly from Governor Paterson. We found him clear, succinct, sensible and worried about the state of affairs in New York State. Governor Paterson had summoned a conference to discuss “Saving New York From Insolvency”, we are told. CNBC’s Scott Cohn did a good job of interviewing Gov. Paterson. We thank the Power Lunch show for bringing this interview to us.
We sincerely hope that Power Lunch follows up and does a detailed segment about the safety of New York Municipal Bonds and of Municipal Bonds in general.
This is an area of great concern for individual investors. These simple folk have seen their IRAs take a huge hit in the 2000-2002 tech bust. Remember that stocks of great companies like Cisco, Oracle are still less than 25% of where they traded in 2000. Then these working folks saw their equity portfolios get hurt very badly in the 2008 bear market. They have seen their house prices go down hard and stay down.
Most of these individual investors have their “safe” money in Municipal Bonds or Bond funds. If Munis get into trouble, what would happen to individual investors?
Power Lunch Anchors, we have noted before, dislike the low yields currently offered by longer maturity Treasuries. These Anchors react with undisguised glee and a “serves then right” reaction when yields rise.
Do they pause to think what could happen to Municipal Bonds if Treasury yields spike up and credit quality of states goes down. This will be a double whammy which might create a selloff in Muni bonds. All states are severely underfunded (see Meredith Whitney’s remarks in clip 2 above) and they have to raise substantial amounts of debt funding next year just to pay bills. If the Muni market blows up, what would happen to States and their spending which is 12% of US GDP.
We realize that Power Lunch Anchors ( like all CNBC Anchors) are extremely well paid and they probably do not have a clue about the difficulties facing honest working Americans. That is why they can celebrate a potential spike in Treasury Yields with unrestrained joy without any thought to the misery the spike might inflict on the majority of the American people.
It behooves CNBC Management to make sure that their shows take the lead and do a series of segments with real experts in credit (& not just Muni Mutual Fund managers who make a living on Muni bonds) to discuss the Muni issue in great detail. Already some experts are talking about Munis being the “sovereign debt” problem of the USA. We heard Robert Prechter of Elliott Wave recommend in clip 4 above that people avoid Munis.
We feel in our bones and we have written before that, in our opinion, CNBC tends to look down on individual investors and takes them for granted even though it is individual investors who really give CNBC their ratings and revenue. Whether CNBC covers this potential problem in Municipals will tell all of us how much CNBC cares about individual investors.
As far as we know, neither Fox Business nor Bloomberg have covered this topic. Fox Business did a segment on New York on the Brink of Disaster on Thursday, December 10. In this segment, Stuart Varney of Fox Business interviewed Steven Malanga of The Manhattan Institute, but the interview did not address the Muni problem.
We note that CNBC calls itself the “First in Business Worldwide” network and it is the largest financial network. So we call upon CNBC to look to its home base and addresses a serious issue before it crashes & burns individual investors?
If not, then in a few years we could possibly see another CNBC special documentary from David Faber about the 2010-2011 crash in Munis.
6. Twitter Founder Discusses New Venture – Jack Dorsey, Founder of Twitter on CNBC – Monday, December 7
This is a must watch clip. The new invention by Jack Dorsey, called Square, seems simple and so brilliant. With this little box, any iPhone can accept credit card payments.
We loved the clip. This shows the innovative side of America at its best. Look at the terrific innovative ideas and great companies that Silicon Valley has produced – Google, Ebay, Yahoo, Cisco, Oracle, Intel, Applied Materials, the list of great companies just goes on and on.
We are fans of Silicon Valley. There is something unique in the ecosystem of Silicon Valley. No other place in America has been able to do what this little area does.
A decade ago, venture capital stars and executives from Boston used to tell us that the Boston area was just as good as Silicon Valley. And why not? Boston has even larger academic resources and great universities than Silicon Valley. MIT & Harvard together easily beat Stanford, right? Boston has smart venture capital firms. Unfortunately, look at the track record. Boston has not produced great technology firms like Silicon Valley. May be it is because most of Boston’s good start up firms get bought out by Silicon Valley giants like Cisco.
If Boston cannot reproduce a Silicon Valley, then we doubt any other place can.
As we watched the clip, we noticed Julia Boorstin of CNBC use a Platinum Amex card. Sue Herrera of CNBC said to her “I see that you are using your corporate card“. Most companies, even wall street firms, give their employees standard green corporate cards. But, not CNBC it seems. We congratulate CNBC on its money making prowess and for giving all its reporters Platinum Amex cards. After all, a $450 annual fee for each reporter is peanuts to CNBC.
But, a friendly suggestion from a viewer who has embraced cheapness as a virtue, such public display of platinum extravagance may not be appropriate for a network that relies on simple individual investors for its ratings and revenues.
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