Editor’s Note: In this series of articles, we include important or interesting videoclips with brief 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.
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.
Wednesday June 23 was the eventful day of last week. The Federal Reserve released its statement after a two-day meeting. But this was eclipsed by a crass but critical political play. Representative Issa of California made a public allegation that Ben Bernanke, the Federal Reserve Chairman, had engaged in a “cover up”. This story hit the tape just before the scheduled release of the Fed statement.
We have to give credit to CNBC and its afternoon anchors, Erin Burnett and Maria Bartiromo, for rising to the challenge of covering these two breaking stories of significant importance. They got the facts out to the viewers, got real experts to opine on both Ben Bernanke’s integrity and the implications of the Fed statement. CNBC should be proud of the job these two anchors did that afternoon.
We feature the following clips in this article:
- Warren Buffet with Becky Quick on Wednesday, June 24
- Bob McTeer (ex-Fed President) and Jan Hatzius (of Goldman Sachs) with Maria Bartiromo on Wednesday, June 24
- Jim Cramer with Erin Burnett on Wednesday, June 24
- Ed Lazear (Bush Admin) and Martin Baily (Clinton Admin.) with Erin Burnett on Tuesday, June 23
- Paul Desmond (of Lowry’s) with Bob Pisani on Wednesday, June 24
- Bill Gross (of Pimco) and Ken Volpert (of Vanguard) with Erin Burnett on Wednesday, June 24
- Jordan Kotick (of Barclays) with Maria Bartiromo on Tuesday, June 23
- Jason Graybill (of Carrett(?)) on Fast Money on Monday, June 22
- Hillary Mann Leverett (of Stratega) and David Frum (of Axis of Evil fame) with Lou Dobbs on Tuesday, June 23
1. Buffett on America’s “Economic War” – With Becky Quick on CNBC – Wednesday, June 24, 11:50 am
Mr. Buffet is regarded as America’s greatest investor and his views are always a must listen. Becky Quick had the foresight to ask Mr. Buffet about Ben Bernanke a couple of hours before Rep. Issa made his allegation. (Begins at minute 04:51 of the clip).
- Quick – You mention that Ben Bernanke did a good job. Today is an FOMC meeting day, we are going to be hearing more about that at 2:15 today. Do you think Ben Bernanke should be re-appointed to a second term?
- Buffet – I don’t see how you could do better. yeah, he has taken decisive action at a time when really decisive action was needed and extraordinary action..things we have not done before.
2. Fed & the Markets – Bob McTeer and Jan Hatzius with Maria Bartiromo on CNBC – Wednesday, June 24, 3:05 pm
Bob McTeer is a former President of the Dallas Federal Reserve and Jan Hatzius is Chief US Economist with Goldman Sachs. This 08:48 minute clip opens with a recap of Rep. Darrell Issa of California making his allegations and comments by Warren Buffet about Ben Bernanke. Then Maria addresses Bob McTeer.
- Bartiromo – Mr. McTeer, let me kick this off with you. Obviously a lot of back and forth about the Chairman of the Fed. How do you see it? Did Bernanke do something wrong or inappropriate?
- McTeer – I sat beside Ben Bernanke for three years at the FOMC (Federal Open Market Committee) table and engaged in private conversations and even whispered conversations. He is a Boy Scout if not a Girl Scout. I can’t imagine him doing what they are accusing him of doing …
3. Stop Trading, Listen to Cramer – With Erin Burnett on CNBC – Wednesday, June 24, 2;36 pm
We remind readers that it was Jim Cramer who shocked the investing world by his “They know nothing” rant against the Bernanke Fed in 2007. So what does Cramer say now about Ben Bernanke?
- Burnett – There’s a lot of things going on in the past 20 minutes, sort of takes your breath away, first of all you have the Fed, the market which was up 130 is now down 30, you also had heard Darrell Issa who was on our air saying there was a cover up and it was frankly a direct attack on Ben Bernanke. Which story do you think is more important?
- Cramer – I think the cover up story, because Bernanke is a loved figure on Wall Street and no one wants to lose him. 1-2 punch – Obama didn’t say he is the greatest Fed chair yesterday and now we have this assault on his integrity which I think is absolutely ridiculous, I think it is outrageous, I think the man completely had an open book here; it is so wrong to attack Bernanke.
4. The State of the Economy – Lazear and Baily with Erin Burnett on CNBC – Tuesday, June 23, 2;04 pm
Martin Baily was the Chairman of the Council of Economic Advisors under President Clinton and Ed Lazear was the Chairman of the Council of Economic Advisors under President George W. Bush.
An hour or so before this show, President Obama had made positive but lukewarm comments about the Fed Chairman, Ben Bernanke in his press conference. Erin Burnett showed her guests the clip of President Obama’s comments about Bernanke and asked for their comments.
- Lazear – The situation is very different today and it is in large part attributable to Fed’s behavior and so President Obama would be wise to think carefully about replacing Ben; that would probably be not a good move at least to my mind
- Baily – I think there is a good case for keeping Ben Bernanke I think he has done an excellent job in managing the crisis…and that should be taken into account.
- Burnett – they were the chief economic advisors for Presidents Clinton and Bush and both of them in agreement on one thing, Ben Bernanke is doing a great job.
5. Fast Money Final Call – Paul Desmond of Lowry’s with Bob Pisani on CNBC – Wednesday, June 24, 3:37 pm
Paul Desmond is the President of Lowry’s Research, the oldest technical advisory in the USA. This was a rare treat for us. Lowry’s is probably the most widely followed technical advisory in America and we feel grateful to Mr. Pisani for bringing us their views. (We do wonder if Bob Pisani can invite such a great guest on his short segment, why can’t the main Fast Money show ever invite guests on this quality. But, that topic is for clip no. 8 below.)
Mr. Desmond expresses his concerns about the quality of the rally since the March low, such as loss of upside volume, the message of their proprietary buying power and selling power indices etc. He said that they the last two Mondays have been 90% downside days (days where 90% of the volume is to the downside) which suggests to him that the uptrend has been broken.
At minute 03:42 of this short clip, Bob Pisani asks the key question and gets a frank, non-consensus answer from Paul Desmond.
- Pisani – Paul, I am concerned about the 90% down days, we have had two of them. In a 90% downside day, there is a lot of selling pressure, doesn’t that exhaust the selling interest short term, shouldn’t we get a little bit of a bounce after a couple of 90% downside days or is this really a bad sign?
- Desmond – you do typically see signs of rallies lasting from 2-7 days after a 90% downside day, but those are better used to sell into rather than buy into – we think that the market is headed to new bear market lows before it is over
- Pisani – You think we will go back to the March lows?
- Desmond – Below the March lows. The issue is if we could not produce a strong healthy sustained market advance from the March lows, then we are going to have to go to even lower levels to attract stronger demand than what we have had in April.
This is a different view from what we hear on CNBC every day, that the March lows were the definitive bottom of this bear market. We thank Bob Pisani for bringing us a rare window into the thinking of the oldest and most respected technical advisory in America.
Bill Strazzullo of Bell Curve Trading was also a guest on this segment, Mr. Strazzullo is a more frequent guest on CNBC and his views tend to be more mainstream. We mean no disrespect to him when we focus on the rare opportunity to listen to Paul Desmond.
6. Fed Decision – Bill Gross and Ken Volpert with Erin Burnett on CNBC – Wednesday, June 24, 2:15 pm
Bill Gross of Pimco and Ken Volpert of Vanguard are managers of the two largest Bond funds in the World. Their views are always worth a listen and even more so immediately after the release of the Fed statement after the FOMC (Federal Open Market Committee) meeting. This is a long clip that analyzes the statement released on Wednesday June 23 around 2;15 pm.
We remind readers on May 28, Erin Burnett had asked Bill Gross “whether there is any rate right now that would entice you into buying Treasuries” and Bill Gross had replied that “somewhere between 3.7% & 4% is an attractive entry point (for 10-year Treasuries)“. (see Clip 3 in our article Interesting Videoclips of the Week (May 23 – May 29))
We were happy to see Erin Burnett follow up with Bill Gross regarding this expression of buying interest in this clip.
- Burnett – You had said you were a buyer right around 4 right?
- Gross – Right around 4% for 10-year Treasuries – That is correct and we bought some long term treasuries at 4.71% as well.
7. Talking Technicals – Jordan Kotick & Ralph Acampora with Bob Pisani on CNBC-Tuesday, June 23, 3:45pm
For the past six years, the month of June has marked a turning point in the Treasury market. If Treasuries rallied into June as they did in 2003 and 2005, then they would begin a long sustained sell-off in June. Conversely, if Treasuries sold off into June as they did in 2004 and in 2006-2008, then they would begin a long sustained rally in June.
We wrote about this strange seasonality in our April 25, 2009 article US Treasuries – Will 2009 Be Like 2006-2008 or Like 2003 & 2005?
It was sort of flattering to see a noted technical analyst like Jordan Kotick describe the same phenomenon to CNBC viewers on June 23 that we had described to our readers on April 25. It feels even more rewarding to see the Treasury market concur with us. In case, you have not noticed, the Treasury market has been on a bull run since its bottom on June 10, 2009. Will the 2006-2008 history repeat in 2009? So far, it has.
8. Battle of the Bear – Jason Graybill with Melissa Lee on CNBC – Monday, June 22, 5:35 pm
We had not heard of Mr. Graybill or of his firm, Carrett Asset Management. In this clip, Mr. Graybill talks the language Fast Money likes – of coming inflation in America and how US Treasuries would sell off because of America’s issuance of treasury debt and the inflation that would arise from it. This is the trade mark Fast Money “Shaap” (the opposite of Mantra, which by definition is benevolent and auspicious).
Frankly, we are disappointed with Fast Money for a number of reasons. First the quality of their guests. Look at the clips featured above and look at the quality of the guests in those clips. Then compare these high quality guests to what Fast Money brings on their regular evening show. Pathetic, in our opinion.
Fast Money would rather bring in celebrity guests like Joe Theisman than an expert who can add real value to their viewers. Now, we are Bollywood Rasiks and we love entertainment. But there has to be a balance and Fast Money has none.
Then there is the issue of integrity. By the end of the week, the message of Jason Graybill was discredited by the bull run in the Treasury markets. But, did Fast Money point that out? Of course not. Why should that surprise us? To this day, Joe Terranova and Fast Money have not admitted the gross error made by Mr. Terranova on March 26, 2009 (see our article CNBC’s Fast Money – Playing Fast & Loose With Facts About FED & US Treasuries?).
Our next concern is more subtle and more important. On Wednesday, June 24, Melissa Lee highlighted the 2% gain in TBT, the Double-Short Treasury ETF, and asked Karen Finerman whether she still likes it. Karen Finerman she “likes TBT here”. No problem, that is her opinion. The next day, TBT fell 3% when the Treasury Market rallied. But, curiously, Melissa Lee ignored this drop and refused to question Karen Finerman. In fact, the Treasury market rallied big this last week but you would never had found that out by watching Fast Money.
The fact that experts such as Bill Gross, Ken Heebner, Jordan Kotick and other CNBC guests favor Treasuries does not matter in the least to Anchor Melissa Lee and the Fast Money Management. In fact, we do not recall a single episode in which Fast Money made a bullish call on US Treasuries.
Why this aversion? In our opinion, this is because Fast Money trader Karen Finerman is associated with the hate-Treasuries position. Karen Finerman, an elegant sophisticated lady, is popular with the viewers and her ratings are high. We know some female viewers who like the presence of a sedate, dignified woman on this predominantly male show. It follows that Fast Money Management and Anchor Melissa Lee would go out of their way to make sure that Karen Finerman does not look bad on the show.
But we ask whether protecting the reputation or ratings of Karen Finerman is more important to Fast Money than making money for viewers or protecting viewers from losses by sticking with a losing trade. Is this why Fast Money has NEVER invited any big name expert to recommend long maturity Treasuries and thereby refute Karen Finerman’s trading convictions?
Louis L’Amour, the famous western writer, had a favorite phrase “Riding for the Brand”, a code of the West. In his novel “North By The Rails”, Louis L’Amour describes the dilemma of a cowboy on a rough trail drive who is asked to choose between two warring bosses. Finally, he is asked by the good guy “who is the brand here?”. The cowboy thinks for a minute and answers “The Herd”.
In the spirit of the American West, we remind Fast Money Management and Anchor Melissa Lee that their Herd of Viewers is the real Brand of Fast Money and not any individual trader or the trading team. Their show has to be in the best interests of their viewers. Unfortunately, there is no sign yet that Fast Money understands this fact or the lack of journalistic integrity implicit in their behavior. One day, they will. But by then, the TV Brand of Fast Money will have been damaged beyond repair.
9. Situation in Iran – Hillary Mann Leverett and David Frum with Lou Dobbs on CNN – Tuesday, June 23
Hillary Mann Leverett is the CEO of STRATEGA, a political risk consultancy. She worked on Iran and Middle East issues in the George Bush and Clinton administrations. David Frum, resident fellow at the American Enterprise Institute, was a former special assistant to President George W. Bush. If we recall correctly, it was David Frum who came up with the “Axis of Evil” line.
We found the views of Ms. Leverett to be fresh and unconventional. We encourage readers to read the entire transcript of this segment. Below we include some excerpts:
- LEVERETT – I think we really need to first assess this idea that the elections were stolen or somehow rigged. There’s no evidence for that whatsoever. I think that’s why you’ve seen a dramatic dwindling fading away of the demonstrators, they initially came out because there were questions, there were irregularities reported in the election.
- LEVERETT – Today you’re left with just a hardcore of those who are looking for regime change. That is clearly not something that is supported by the broad populous inside Iran. They do now want to see an implosion of the system, they do not want to see it come down, they want to see gradual opening over time. They want to see more accountability. They do want to see more prosperity. But Iranians are not in a bad state.
- LEVERETT – Well, because there’s no evidence that the election was stolen and the president is acting that way, he is for all intensive purposes given up on the idea of the strategy of engagement. He has essentially bought into this policy, which is badly reminiscent of the lead-up to the war in Iraq back in 2002, 2003.
- LEVERETT – He bought into this idea that the regime in Iran, the government in Iran has been delegitimized. It would have been hard enough to deal with them to begin with, and today they are so delegitimized and so depraved that we couldn’t possibly deal with that. I think for all intensive purposes he took the engagement strategy off the table today. I think that we are looking at a situation that’s going to be very dangerous for U.S. interests in the Middle East.
- DOBBS – To be clear, so I understand, until today, then you believe that the Obama administration was pursuing the correct policy toward Iran?
- LEVERETT – I think there was division within the Obama administration. I think that Obama had, what I believe, was a correct impulse toward strategic engagement to resolve the problems between the U.S. and the Islamic Republic. But I think there was tremendous opposition to that from within the administration, so I do think the policy was already on the ropes and I think that Obama, today, delivered a death knell to that policy.
- FRUM – Hillary and I have been debating these issues for a long time. I think on this point she and her husband, who are true Iran experts, are very much alone. I don’t think there are many very many other people in the world who believe that this election was honest. We don’t know whether it was completely stolen or that they just padded the Ahmadinejad votes. We will never know the answer to that. But we know that the opposition can get people in the streets and the government can’t.
As we said, read the entire transcript of this segment.
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