Interesting Videoclips of the Week (August 22 – August 28)

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.

Bond, Stocks in Bernanke’s Hands

Is there any doubt that Chairman Ben Bernanke is the King of markets? On August 10, he created the sell off in risk assets that we have seen for the past 2 weeks. From August 9, the day before the Fed meeting, to August 26, the day before his Jackson Hole speech, the Dow fell from 10,698 to 9,986; the SPX fell from 1127 to 1047, EDV, the Zero-coupon ETF rallied from 90.71 to 104.16 and TLT, the 20-year Treasury ETF rallied from 99.74 to 108.50. Awesome moves.

The fear in the market about the revised GDP number and what Bernanke would say on August 27 was palpable. CNBC Fast Money acknowledged this by naming a Thursday afternoon clip as Bond, Stocks in Bernanke’s Hands .

The gloom lifted for a bit on Friday morning when the revised GDP came in at 1.60% rather than the sub-1% number some were expecting. The stock market opened up but quickly gave up the gains before the Bernanke speech. The best comment about this came from veteran trader Jack Bouroudjian on CNBC Power Lunch . He said “when you are expecting the diagnosis to be cancer and it turns out to be extreme case of pneumonia, it feels like good news, but it is still bad“.

This time, the speech was regarded as dovish with Bernanke saying somewhat decent things about 2011 and promising to take steps if the economy kept weakening (see clip 1 below).

But it did feel like good news and the stock market was oversold & the bond market was overbought. And it was Friday. So the markets did what markets do. They adjusted their positions and went home flatter. Of course, that meant a triple digit increase in the Dow, a large increase in commodity stocks and a big reversal in Treasuries.

The Dollar did not participate in this rout or rally. The Euro closed a bit up and the Pound closed a bit down vs the Dollar. Gold hardly went up. But the Yen fell hard and the Australian Dollar rallied hard, both by over 1%. Does this tell us that the move on Friday was not a macro move but a simple correction of overbought-oversold conditions with a lessening of fear? The VIX did fall by 10% on Friday.

Taken as a whole, this past week accomplished little though the ride was hard and rough. Look at the numbers. The Dow fell about 63 points, the SPX fell about 7 points, the yields on the 30-Year and 10-Year rose 3 & 4 basis points, resp. The key question is whether Friday represents a trend change for the short term or just a blip in the trend.

We will know the answer next week when important economic data rolls in. 

Treasuries

Why do people (like CNBC Anchors) think Bonds are more stable than stocks? People who say so have never traded 30-Year Treasury Bond Futures. Look what Treasuries did on Friday. The 30-Year Treasury Bond fell by almost 3.5% with its yield climbing 18 basis points to 3.69%. The yield on the 10-Year Treasury rose by 17 basis points to 2.64%. All of a sudden, 2% yield target on the 10-year seems far.

We do not know enough to opine but we wonder a lot. Today, we wonder whether this backup in yield on Friday would turn out to be a buying opportunity. In the past, we have been told endlessly by CNBC invited experts that a sharp, quick sell-off is symptomatic of bull markets. And this has been a market of snorting treasury bulls.

The upcoming August Non Farm Payroll number and the bond market’s reaction to it will tell the story.

Corporate Profits

The major micro story of Friday was the pre-announcement by Intel. Since Intel reported its best ever quarter in July, the stock has been in a steady downtrend. Friday told us why. According to Dan Niles, veteran Technology analyst and now hedge fund manager, this was a very well telegraphed pre-announcement. No wonder the stock rallied after the news. Hear Dan Niles talk about technology companies and the demand they see in clip 4 below.

The larger question is whether we will see many more pre-announcements in the five weeks left in the 3rd Quarter.

The Face of CNBC?

This past Tuesday, we heard David Kelly of JP Morgan Funds say to CNBC’s Mark Haines about the economy “it’s kind of like an Irish Summer, its a constant disappointment…we don’t think we will have a double dip…the most cyclical sectors of the economy are already in the basement. To get a double dip, you need the cyclical sectors to roll over and I don’t know where they are going to rollover to?..“.

Three things struck us about Mr. Kelly’s words. First the Irish comment reminded us of his interview with Mark Haines in which Mark commented on Mr. Kelly’s lilting Irish accent. We remembered that David Kelly argued with the Bond Vazir Ken Volpert of Vanguard. We also remembered that Kelly proved to be totally wrong and Volpert proved to be right. Finally, we were struck by Mr. Kelly’s utter nonchalance about his prior predictions, awful mistakes that ruined portfolios of viewers who listened to him. Specifically we recalled Kelly’s fervent exhortations to CNBC viewers to buy Cyclical stocks in April.

So we went to cnbc.com and checked his prior predictions. Below are the words of David Kelly earlier in segment Market Edge on Tuesday, April 20, 2010 again with Mark Haines:

  • You still have to play the trend, try to avoid the distractions, there is a lot going on European volcanoes…..the basic trend is the economy strengthening here,…..for the last year the play has been ignore the little corrections along the way…it looks like 3% GDP growth in the first quarter, about 4-6% growth in the second quarter.(emphasis ours)….the one thing I worry about here…a lot of individual investors are still in cash, still pouring money just into bond funds, they are staying away from the stock market, they have missed a lot of the runup (in the stock market) & they could miss some more of it; that’s a terrible shame for the small investor who is really left behind here…”

This week, the 2nd Quarter GDP printed at 1.6% and not 4-6% as predicted by David Kelly.

From Monday, April 19, the day before the April 20 interview with Mark Haines to Monday, August 23, the day before this week’s interview with Mark Haines, the Dow fell from 11,092 to 10,174; the SPX fell from 1197 to 1067, the 30-Year Treasury yield fell from 4.69% to 3.60%, the 10-Year Treasury Yield fell from 3.80% to 2.60%. How wrong can a strategist be?

We do hand it to David Kelly. He never shows the slightest discomfort about being wrong, even horribly wrong. Perhaps, he practices Coach Madden’s dictum that “to play cornerback, you got to have a very short term memory“. 

We have nothing against David Kelly. He, as CNBC tells us, is a mutual fund strategist. He wouldn’t last a day in his job if he predicted a sell off in stocks and JP Morgan fund investors sold their funds. Mr. Kelly is a perma-bull. He always recommends stocks and asks viewers to sell Treasuries. That’s his job, it seems, and he appears to do it with panache, gusto and without any visible pangs of conscience. Frankly, if we were to run a mutual fund company, David Kelly would be our first choice for a public speaking strategist.

But we do care about how CNBC treats us viewers. We do insist that CNBC screen its guests based on the accuracy of their past predictions. And we do care about the behavior of Mark Haines, the anchor of the show we watch, the same Mark Haines who kept prattling about the greatness of the stock market in 1999-2000, the same Mark Haines who is quick to preach stock investing to his viewers while seemingly staying away himself from the risks of investing.

This week, we realized something else about Mr. Haines. His memory seems to be worse than Mr. Kelly’s. Mark Haines did not recall what David Kelly had said to him earlier. What is worse is our realization that Mark Haines did not prepare for this interview by watching what Kelly had told him in April, 2010. We guess he thinks checking out cnbc.com is beneath a veteran anchor like him.

But we should not be too harsh on Mark Haines. He did what every other CNBC anchor does with David Kelly. They listen respectfully and let Mr. Kelly say what he likes. After all, why should CNBC Anchors care whether their viewers get hurt by his demonstrably wrong predictions? They are paid for ratings and not for any concern for their viewers.

We do wish to be unfair to Mr. David Kelly. Many guests on CNBC speak bullishly of the stock market and make mistakes in their predictions. Maria Bartiromo has her own favorite perma-bull strategist and so do Erin Burnett & Larry Kudlow. But these strategists are favorites of one anchor or one show. In contrast, David Kelly has been a guest on virtually every CNBC show. In our opinion, David Kelly stands alone in the frequency of his appearances and the diversity of CNBC shows on which he appears as guest.

Search for David Kelly on cnbc.com. You will also be astounded by the number of his appearances on CNBC. For example, recently he has been a CNBC guest on August 27 (The Call), August 24 (Squawk on the Street), August 19 (The Kudlow Report), August 17 (The Call) , August 11 (Street Signs), August 5 (Closing Bell), August 4 (The Call), July 30 (The Call), July 23 (Squawk Box), July 15 (Squawk on the Street), July 6 (Power Lunch), July 2 (Squawk on the Street)a total of 13 times in the past 2 months or about 1.5 times a week*. 

This is why we think it is journalistically important to discuss Mr. Kelly’s relationship with CNBC. This is why we went back and checked the views he expressed earlier in the year.

As another example, check out the segment on May 13 titled $450 Billion Worth of Advice (doesn’t the title tell you it was on CNBC PowerLunch?). You will hear David Kelly acknowledge the 1,000 point drop in the Dow the week before. You will also notice that Mr. Kelly seemed unfazed by that drop. You will hear him say “I would expect to see higher stock prices and I do think we will see higher Treasury yields…”. Guess what happened since Mr. Kelly’s prediction? Stocks fell and Treasury Prices went on an explosive rally.

So why does CNBC like David Kelly so much? Is it because he does CNBC’s job for them? And what job might it be? CNBC lives on commercials from Brokers and Mutual Fund Companies. These sponsors make money from selling stocks and stock mutual funds. So we wonder whether there is a tacit informal quid pro quo in which CNBC invites salesy strategists from the major ad sponsors and lets them pitch stocks & stock mutual funds without any restraints or even minor league tough questioning?  If true, it would be like inviting a Beer executive to speak about effects of drinking on health as a quid pro quo for Beer ads on a TV Network.

Or does CNBC like David Kelly because he is a personable, clean-cut, articulate gentleman with a “lilting Irish accent” to quote Mark Haines. We recall Dylan Ratigan admitting CNBC’s preference for Irish-Americans on air as Fast Money Anchor and of course, we see the preponderance of Irish-American anchors (and producers?) on CNBC. This could well be an NBC trait rather than a CNBC one.

For example, we have seen Chris Mathews invite Trish Regan, Erin Burnett and Margaret Brennan (when she was at CNBC) on his show. But we do not recall ever seeing Michelle Caruso Cabrera on a Chris Mathews show. As we have said before, CNBC loves to bring in Anglo Anchors from overseas but it cannot seem to find another Italian-American anchor or a single African-American Anchor. And CNBC refuses to invite any Asian, Latin, Eastern European or a Middle Eastern anchor to CNBC USA despite claiming to be the “First in Business Worldwide” network.

Regardless of the reasons and based on evidence from CNBC’s own website, it seems that David Kelly, the Mutual Fund Strategist at JP Morgan, is CNBC’s most favorite guest. In fact, at the current rate of his appearances, he might qualify to become the Face of CNBC.

In the tradition of this Blog, we invite both CNBC and Mr. David Kelly to respond to our comments. We shall print their response verbatim. As far as Mr. Kelly is concerned, our comments are based entirely on what we heard him say on CNBC. We do not get his written opinions which we assume are for JP Morgan Mutual Fund clients and perhaps for CNBC anchors.

Finally, allow us to state that we have not seen an Irish summer and so we cannot comment on Mr. Kelly’s comparison with the US economy. But we have seen spring in Dublin. In another career, we were invited to give a guest lecture at Trinity College, Dublin and we spent a couple of days in that lovely city. But, frankly, our favorite season is Fall in America.The fall colors in New England are probably the best in the world and so are the colors of College Football flags. Within a week, we will able to engage in our favorite passion, watching College Football.

* The two shows that did not invite David Kelly in the past two months are Fast Money & Strategy Session. Is it a coincidence that these are the only two CNBC Shows staffed by investment professionals?


Featured Videoclips:

  1. Ben Bernanke at Jackson Hole on Friday, August 27
  2. Axel Weber on CNBC on Friday, August 27
  3. David Rosenberg on CNBC Fast Money on Tuesday, August 24
  4. Dan Niles on CNBC Closing Bell on Friday, August 27
  5. Charles Nenner on CNBC Closing Bell & CNBC Worldwide Exchange on Tuesday, August 24
  6. Walter Zimmermann on CNBC Closing Bell on Wednesday, August 25
  7. Pimco on CNBC during this week


1. Chairman Ben Bernanke at Jackson Hole, Wyoming – Friday, August 27

This was the most important event of the week. So we have to give this our pole position even though we cannot find a clip. But we give you something better – a link to the entire speech . You can download the speech from this Fed page if you wish.

The Economic Outlook

  • Overall, the incoming data suggest that the recovery of output and employment in the United States has slowed in recent months, to a pace somewhat weaker than most FOMC participants projected earlier this year. Much of the unexpected slowing is attributable to the household sector, where consumer spending and the demand for housing have both grown less quickly than was anticipated. Consumer spending may continue to grow relatively slowly in the near term as households focus on repairing their balance sheets. I expect the economy to continue to expand in the second half of this year, albeit at a relatively modest pace.
  • Despite the weaker data seen recently, the preconditions for a pickup in growth in 2011 appear to remain in place. Monetary policy remains very accommodative, and financial conditions have become more supportive of growth, in part because a concerted effort by policymakers in Europe has reduced fears related to sovereign debts and the banking system there.
  • Maintaining price stability is also a central concern of policy. Recently, inflation has declined to a level that is slightly below that which FOMC participants view as most conducive to a healthy economy in the long run.At this juncture, the risk of either an undesirable rise in inflation or of significant further disinflation seems low.

Federal Reserve Policy

  • The issue at this stage is not whether we have the tools to help support economic activity and guard against disinflation. We do. As I will discuss next, the issue is instead whether, at any given juncture, the benefits of each tool, in terms of additional stimulus, outweigh the associated costs or risks of using the tool.

Policy Options for Further Easing

  • I will focus here on three (tools & strategies) that have been part of recent staff analyses and discussion at FOMC meetings: (1) conducting additional purchases of longer-term securities, (2) modifying the Committee’s communication, and (3) reducing the interest paid on excess reserves. I will also comment on a fourth strategy, proposed by several economists–namely, that the FOMC increase its inflation goals.
  • One risk of further balance sheet expansion arises from the fact that, lacking much experience with this option, we do not have very precise knowledge of the quantitative effect of changes in our holdings on financial conditions.
  • Another concern associated with additional securities purchases is that substantial further expansions of the balance sheet could reduce public confidence in the Fed’s ability to execute a smooth exit from its accommodative policies at the appropriate time.
  • A step the Committee could consider, if conditions called for it, would be to modify the language in the statement to communicate to investors that it anticipates keeping the target for the federal funds rate low for a longer period than is currently priced in markets.
  • A third option for further monetary policy easing is to lower the rate of interest that the Fed pays banks on the reserves they hold with the Federal Reserve System. Inside the Fed this rate is known as the IOER rate, the “interest on excess reserves” rate.
  • Importantly for the Fed’s purposes, a further reduction in very short-term interest rates could lead short-term money markets such as the federal funds market to become much less liquid, as near-zero returns might induce many participants and market-makers to exit. In normal times the Fed relies heavily on a well-functioning federal funds market to implement monetary policy, so we would want to be careful not to do permanent damage to that market.
  • A rather different type of policy option, which has been proposed by a number of economists, would have the Committee increase its medium-term inflation goals above levels consistent with price stability. I see no support for this option on the FOMC.       
  • Each of the tools that the FOMC has available to provide further policy accommodation–including longer-term securities asset purchases, changes in communication, and reducing the IOER rate–has benefits and drawbacks, which must be appropriately balanced. Under what conditions would the FOMC make further use of these or related policy tools? At this juncture, the Committee has not agreed on specific criteria or triggers for further action,but I can make two general observations.
  • First, the FOMC will strongly resist deviations from price stability in the downward direction.
  • Second, regardless of the risks of deflation, the FOMC will do all that it can to ensure continuation of the economic recovery.


2. Bundesbank’s Perspective – Axel Weber with CNBC’s Steve Liesman on The Call (06:44 minute clip) – Friday, August 27

Axel Weber is the President of Deutsche Bundesbank, probably the most respected Central Bank in the world. This is an excellent clip and we urge readers to watch it. You will see an assured Central Bank President who is confident about the recovery in his country. He states that German unemployment has decreased to a level below that of the USA, a new circumstance as he points out. He also reiterates his conviction that this is time for fiscal restraint and not for excess spending. We quote him below:

  • I think fiscal consolidation, if you are in a very overstretched situation, can actually be confidence inspiring (you can hear Liesman go ah! in the background), the long run implications in my view in crisis management always have to be kept in mind when you talk about short term measures; yes, in the short term you can increase somewhat output by fiscal spending but the long term implications of that may be very detrimental so you have to really keep a balance of long run implications and short term gains.


When we listen to Herr Weber, we feel like putting our meager liquid money in the DeutscheMark, but wait, there is no such thing today. What a pity!

Read a summary of Herr Weber’s statements at Sovereign Debt Crisis Still a Challenge on cnbc.com. We include a few excerpts below:

  • “Seeing that the economies have stabilized and are now growing again, it’s time to put fiscal consolidation on top of the political agendas in most of our economies,”
  • “Relying on each other as a crisis measure can be detrimental to the long-term sustainability of fiscal positions,”
  • “But it (Germany’s recent GDP report) just didn’t come from exports—it came more strongly from domestic economy and consumption was kicking in; So we are bordering on a self-sustaining recovery in Europe and there’s not much concern for renewed recession.”
  • “When the economy fell by 4.7 percent last year, unemployment only moved up marginally and it’s falling again already; We expect unemployment in Germany to be around 7 percent going forward and falling continuously further.”


When we heard Herr Weber, we were reminded of The Parent Model , the excellent article by David Brooks of the New York Times. We include a few excerpts below:

  • During the first half of this year, German and American political leaders engaged in an epic debate. American leaders argued that the economic crisis was so bad, governments should borrow billions to stimulate growth. German leaders argued that a little short-term stimulus was sensible, but anything more was near-sighted. What was needed was not more debt, but measures to balance budgets and restore confidence.  

  • The crucial issue is getting the fundamentals right. The Germans are doing better because during the past decade, they took care of their fundamentals and the Americans didn’t.

  • Over the past few years, the Germans have built on their advantages. They effectively support basic research and worker training. They have also taken brave measures to minimize their disadvantages… the Germans have recently reduced labor market regulation, increased wage flexibility and taken strong measures to balance budgets.

  • In the past decade, American policy makers have done little to maximize their model’s natural advantages or address its problems. Indeed, they’ve only made the short-term thinking problem worse, with monetary, fiscal and home-ownership policies encouraging even more borrowing and consumption.

 

 

3. Recession or Depression? – David Rosenberg on CNBC Fast Money (from minute 06:41 of 12:33 minute clip)– Tuesday, August 24

Watch this clip. Fortunately for us, David Rosenberg expanded on this theme on Friday, August 27 in his daily comment. We quote from those comments:

  • What is a depression anyway? A depression is a very long recession.- like the one that lasted from Q4 1929 to Q1 1933 that contained no fewer than six positive GDP quarters and even a 50% rally in the equity market in 1930!
  • You know you’re in a depression when interest rates go down to zero and there is no revival in credit-sensitive spending, or when home sales go down to record lows despite record-low mortgage rates.
  • The economy is in a depression when the banks are sitting on $1.3 trillion of cash and yet there is no lending to the private sector. It’s called a liquidity trap.
  • They are usually caused by a bursting of an asset bubble and a contraction of credit, whereas plain-vanilla recessions are typically caused by inflation and excessive manufacturing inventories.
  • When almost half of the ranks of the unemployed have been looking for a job fruitlessly for at least six months, you know you are in something much deeper than a garden-variety recession.
  • Basically, in a depression, secular changes take place. Attitudes towards debt, discretionary spending and homeownership are altered for many years, or at least until the scars from the traumatic experience with defaults and delinquencies fade away.
  • More fundamentally, in a recession, the economy is revived by government stimulus; in depressions, the economy is sustained by government stimulus. There is a very big difference between these two states.

Every time, we read or listen to Mr. Rosenberg, we learn something. And, David Rosenberg has protected so many viewers from huge losses in their investment portfolio. We do have one question, though! How did Mr. Rosenberg earn the nickname “Rosie“?

But one rosy statement from this clip – David Rosenberg states that the American depression will not be as long as Japan’s which he describes as an extreme case.

4. Intel: Buy or Sell? – Daniel Niles with CNBC’s Maria Bartiromo (04:26 minute clip) – Friday, August 27

Dan Niles was a highly respected technology analyst. He is now a Hedge Fund Manager and Co-CIO of Alpha One Capital Partners. Two weeks ago, we featured his comments on technology stocks (see clip 2 of our August 8 – August 14 Videoclips article). In those appearances, Dan made the profound observation that something changed very dramatically at the end of June into July across the globe in the technology sector. He also said that he would stay away from Intel.

This clip is after Intel’s pre-announcement of a revenue shortfall in the 3rd Quarter. His comments are insightful and useful.

  • NilesI think most people expected this (Intel’s announcement); I expected them to not make their Q3 guidance the time they gave it; obviously you see the entire market sort of doing the same thing, over time. That’s why the stock is really up today, this was probably the most well-telegraphed preannouncement, it happened earlier than I would have guessed, I am modestly surprised it didn’t happen in September, after labor day, thats when Intel preannounces negative results if they are going to do it., so the speed with which business must have rolled over is kind of interesting to me (emphasis ours)
  • BartiromoLets talk about that, they are blaming consumer markets and PCs, but you say this is not just about Intel? What does that tell you?
  • Niles….Our view has been that you are going to see a pretty dramatic slowdown in US GDP growth.

At this point, Dan Niles makes the same points he made on August 9 about IBM, Hewlett and Cisco (see clip 2 of our August 8 – August 14 Videoclips article).

  • NilesYou saw the GDP number today, being cut to 1.6% from 2.4%. Its gonna get worse not better.
  • BartiromoSo, you are calling for a double dip, aren’t you Dan?
  • Nilesyeah, I guess it depends on how you define double-dip..it means sub-1% GDP growth coming up in one of next couple of quarters, yeah, to me that’s a double dip.
  • BartiromoWhat’s it going to take to get the consumer buying again?
  • NilesTwo things. When the first crisis started back in 2008, it was really about housing and it was about jobs, and you look at things today, obviously you saw new home sales hitting 15-year lows as the homebuyer tax credit went away, on the jobs front those figures haven’t been encouraging either and I don’t see those two things improving and until they do, the consumer is gonna look at this and say, you know what, we had a really bad accident to use an analogy, the Fed came in and pumped me with a lot of morphine to make me feel better but now the morphine is being pulled away, the stimulus is being pulled away across the globe, I am still in pretty bad shape. I think thats what is going on.
  • BartiromoSo what would you do then with technology stocks right now? Do you sell Intel at these levels?
  • Nileswell, I think you are going to bet a bounce for a few days because you know this is one of those things where …you will have people covering shorts and resquaring their positions but after that, yeah, i would definitely sell because the thing investors should have learned in 2008 and all the way down in the bounce that when big companies like IBM or Cisco or Intel, when things are getting better they can get better for many quarters in a row and likewise when things start to get a little bit worse, they can get worse for many quarters in a row and trying to guess the bottom after the really we have had from the March 09 lows, is a really bad idea, especially when you have these many large companies all saying the same thing. 

We like to listen to Dan Niles because he looks at the picture one company at a time, or from a bottoms-up view rather than the top-down view we hear from macro gurus. When the view from the bottom matches the view from the top, we think we have got something. And then Dan speaks to technology companies, the early cycle stocks from a consumer and business perspective.

5.  Dow Could Tumble to 5,000 (08:58 minutes) & Dow 5K on Horizon (06:58 minutes)Charles Nenner on CNBC Worldwide Exchange and Closing Bell resp.- Tuesday, August 24

Charles Nenner is well known in investment circles for his cycle work in forecasting. He does not worry about “why” but his models focus on “what will happen and when”. He has a good track record as Maria describes in her intro. We heard Mr. Nenner on Maria’s Closing Bell show. When we went to cnbc.com, we discovered a longer interview of Charles Nenner on CNBC Worldwide Exchange.

Frankly, we recommend the Worldwide Exchange clip. It is a longer and more detailed interview. The Maria clip is a joint clip between Nenner and Ron Insana. Without any insult to Mr. Insana, we would rather listen to Charles Nenner when time is short. And we have heard Mr. Insana for many years.

Below are some of Mr. Nenner’s predictions & comments:

  • If you look at the American stock market for the last 100 years…the markets appreciate in the average of 8-9 percent in the long term. The problem started in the 80s and 90s when the markets appreciated more than 8-9 percent.
  • Going back to 7,000 would just go the median. If I project from the last bottom in February 09, I get down to 5,000 for the next down move.
  • My cycles show that there is going to be some pressure we will see for a couple of months, but then yields should go lower for the next 3-4 years again.
  • By the end of the year, we expect to start a new bull leg. We are bullish on Gold and Silver.
  • We are long on the Japanese Yen and my target is 80. I don’t believe any more in interventions because the markets are so huge, I don’t see Central Banks having enough money to do interventions the way they did 20 years ago.
  • Exxon Mobile is one of the stocks that hasn’t done anything this year….(Nenner shows his chart of XOM)..The cycle low is only by the end of the year..But then you see there is a very nice run and up move for a couple of years..
  • We see the high in unemployment in April 2011. Then it should look a little bit better.

The other stocks Nenner said (in the Closing Bell clip) he likes are Amazon, Best Buy, Mosaic and Monsanto.

6. Dollar’s Next Move – Walter Zimmermann with CNBC’s Maria Bartiromo (04:25 minute clip) – Wednesday, August 25

This is a continuation of last week’s interview with Walter Zimmermann about a potential Head & Shoulders formation in the Stock Market and Commodities. As Maria says in her opening comments, such a H&S top in commodities should imply a Head & Shoulders Bottom in the U.S. Dollar because “they trade inversely“.

We first heard Walter Zimmermann in September 2009 in his interview with Maria Bartiromo. At that time, he was early in his predictions which began proving themselves in December 2009. Unlike many other technicians, Mr. Zimmermann likes to discuss long term formations that give the individual investor the time to get prepared and invest when these formations are  triggered. 

At minute 01:46, Zimmermann showed a potential head & shoulder bottom in the U.S. Dollar, a demonstration of one forming since 2003-2004. Then he said:

  • ZimmermannThis is not some minor or little diversion, it is a major reversal and confirmation would be if the Dollar breaks above the June 2010 highs, that 88 level (on the DXY).
  • BartiromoIs it off to the races from here?
  • Zimmermann Yes, we think so. Our must hold for the most bullish case was the 79.70 – 79.50. It  (the $) fell to 80 and then it ricocheted higher. It still has a ways to ago to get back up to 88. But, at the rate at which the Dollar has rallied before; these are longer term patterns. They give long term advance warning signals. And there is that old proverb, Fortune favors the prepared. Patterns are giving us time to prepare. When the Dollar breaks up above those summer highs, we see pretty much clear sailing to parity with the Euro. This suggests that …Euro-centric problems are due to rear their ugly head later this year.

Zimmermann clarified that the target for the head & shoulders pattern in the Dollar is parity with the Euro but pointed out that these patterns tend to go way beyond the minimum targets. Currencies tend to get overdone once they start trading, he added.

7. Pimco on CNBC this week – Bill Gross, Mohamed El-Erian and Tony Crescenzi – Wednesday, Thursday & Friday

It is a rare week when all three of Pimco’s stalwarts are on one network during the same week. Below are the clips of their appearances:

Tony Crescenzi as Guest Host on CNBC Squawk Box – Friday

Markets Battle Back Mohamed El-Erian on CNBC Squawk Box – Thursday

Bill Gross on Bonds, Stocks & Housing – Wednesday

This last clip shows a guest anchor trying to debate bonds with Bill Gross just for the sake of arguing. In the process, she wastes precious minutes in which Bill Gross could have added more insight. Some anchors like to show off their knowledge (or lack thereof in this case) rather than letting their expert guests speak. What a waster of Gross’ time and ours!

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