Interesting Videoclips of the Week (July 12 – July 18)

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. 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.

What a week it was in financial markets! In the USA, this was the best week since March and the Emerging Markets celebrated to even a greater extent. We have to credit the smart and famous financial analyst Meredith Whitney for the launch. On early Monday morning, the S&P 500 was sitting precariously on its support line near 870, the consensus was heavily bearish and most of the fast money was heavily short. The tinder had been gathered, the fire was ready. It needed a match and Meredith Whitney provided it 

Meredith Whitney upgraded her rating for Goldman Sachs and raised her estimates for Q2 earnings that were due the next morning. She also made very positive short term comments about Bank of America and other banks stating that it would be the mother of mortgage quarters. This lit the fuse and the market exploded. After all, the bear market of 2007-2008 was created by the massive problems in the financial sector. When Meredith Whitney, the most bearish and most accurate analyst on this sector, went bullish, market worries were dissolved and fireworks began.

The second big worry about the markets was the sustainability of growth in China. As we have said often, belief in secular long term growth in China is the religion of this faith-based market rally.  On Wednesday, China announced that its foreign exchange reserves had exceeded $2 trillion for the first time. All doubts were resolved, faith was restored and the second stage of the market rocket was launched. 

The other great bear on the economy has been Nouriel Roubini. On Thursday afternoon, a story crossed the tape quoting Roubini as stating that the recession was over. That was the third stage of the market rocket and the S&P 500 went to its orbit near the earlier high of 946. The fact that Roubini claimed later to have been sort of misquoted did not matter much. 

You have to expect our friends at CNBC to become giddy and they did on Wednesday. The Fast Money Editorial Producer, John Malloy, posted an article making China’s premier Wen Jiabao the MVP of this market rally. This time, we will not begrudge Fast Money, their mandatory worship of their religious icon. In the same article, John Malloy quoted Fast Money Trader Tim Seymour as saying that the FXI, Chinese ETF, was getting toppy and that a better way to play China was to buy Nokia. This shows that religious faith should be directed towards the original icon and not towards substitutes. FXI rallied the next 2 days but Nokia was crushed after posting disappointing earnings. 

We also expected our CNBC Anchor friends to sound trumpets for the march of inflation and shorting treasuries. Surprisingly, they did not as a group. Except of course, Sue Herrera and Erin Burnett, the leaders of the anti treasury jihad. On the China day of Wednesday July 15, Sue Herrera warned of “rampant inflation down the line” and suggested buying commodities and Erin Burnett said that many large investors had “the belief that uncontrollable inflation was on the way”. Guess these two anchors do not read CFTC position statistics which showed that large speculators had covered their shorts in Treasuries during the previous week’s rally. Naturally after large speculators covered their shorts, the Treasury market sold off. How do you become a small speculator? You begin as a large speculator first and then buy high, sell low. 

Finally this past week was notable for two anniversaries – the 50th anniversary of Rio Bravo, the John Wayne – Dean Martin classic and the 40th anniversary of Butch Cassidy and the Sundance Kid, the Paul Newman – Robert Redford classic. Rio Bravo was a very successful film and the success of Rio Bravo prompted them to make El Dorado, the greatest western of them all, in our opinion. The story is classic, the dialog is superbly witty and the roles of John Wayne, Robert Mitchum are great with that of young James Caan as “Alan Badelian Turhern” or simply as “Mississippi”.  As we said, this is the best western ever made.


This week, we feature the following videoclips:

  1. Meredith Whitney on Squawk Box on Monday, July 13
  2. Robert Shiller, Yale Professor and Housing Guru, on Squawk Box on Wednesday, July 15
  3. Gary Shilling and Bob Doll on The Kudlow Report on Thursday, July 16
  4. Art Cashin and Peter Costa on Closing Bell on Thursday, July 16 
  5. Jing Ulrich of JP Morgan China on Power Lunch
  6. Jordan Kotick of Barclays Capital on Closing Bell on Wednesday, July 15
  7. Denise Shull of Trader Psyches on Squawk on The Street on Wednesday, July 15
  8. Chiefs of 3 US Ports on Street Signs 
  9. Walmart in India on Street Signs 

1.  Three-part Interview with Meredith Whitney on Squawk Box – Monday July 13

The pole position of the week clearly goes to the Meredith Whitney interviews. You can see the three clips at:

Meredith Whitney explains why is raising her earnings numbers on Goldman Sachs to a level much higher than the street consensus. She also explains why she is short term bullish on banks including Bank of America. The market responded as soon as she made her comments. You had plenty of time after the market opened on Monday to buy Goldman Stock in mid-140s and sell it in mid-150s merely a couple of days later. What a call!

While Meredith Whitney and Squawk Box made people money, the Fast Money Trader crowd lost people profits. As a bloc, these Fast Money Traders advised viewers to sell Goldman stock immediately after the release of earnings on Tuesday. Bad call. This call is not merely worthy of Fast Fire but Fast Purgatory.

 Housing Troubles and Bubbles – Robert Shiller with Becky Quick – Wednesday, July 15 – 7:32 am

Robert Shiller, Yale Professor and the co-creator of the Case-Shiller Home Price Index, has been prescient on the US Housing market. If you believe as we do, the key to the US economy is housing, you must watch this clip. Some excerpts are below:

  • We had a depression scare and it seems to be over – that’s a good sign
  • I am not raising the alarm of another housing bubble, but sooner or later we will have one because we have had them before..we have developed a much more speculative attitude towards housing and we tend to view it as a speculative asset 
  • I have talked to some investors who give me the sense, believe it or not, that this is a wonderful time to buy (houses) because it is over and they are going to go back up..still the market is really in the doldrums right now..
  • We need a second stimulus package..wish we had gotten the first one out faster..we still have fundamental are not being made aggressively enough..Fed has to continue what it has been doing..we are still in a problematic economy…our measures are indicating a 8% decline in house prices over the next 5 years… I am still not bullish at this point..
  • the Bush stimulus came out quickly because it was done through rebate checks
  • I think these worries about the debt are still premature…because our debt to gdp ratio is well under one.. it is not like the Japanese, the Japanese have it closer to two…I don’t think we are in a position where we are going to be unable to borrow..
  • the bigger concern is we get clearly out of this recession..which could continue for some years.. that is my big concern..
  • We start talking about bubbles, nut my bigger concern is languishing for some years…may be a recovery at the end of the recession but a disappointing end..that is the more likely scenario unfortunately
Are you listening Sue Herrera and Erin Burnett with your rampant, uncontrollable inflation talk? But, we forget, CNBC Anchors do not watch CNBC. They should. It is not a bad network and they get bright minds like Robert Shiller. 

Mr. Shiller also talks about his deep concerns about income inequality in America. As we said, watch this clip.

3. Is the Rally for Real? Gary Shilling & Bob Doll with Larry Kudlow – Thursday, July 16 – 7:45 pm

These are two market stalwarts. Bob Doll worked at Merrill Lynch for many years and came over to BlackRock in  the BlackRock-Merrill transaction. Gary Shilling of A. Gary Shilling & Co. is a proven investor. He has been prescient on the US Economy and US Bond market for the past few years. These two experts offer different outlooks and prescriptions.

  • Doll – We will see 1000 before long on the S&P 500 – he said his favorite investment in Information Technology
  • Shilling – Short Stocks, Long Dollar, Short Commodities and I am back on my 30 year Treasuries, we will see 3% by the end of the year
  • Kudlow – 3% on 30 year Treasuries?
  • Shilling – You bet
  • Doll – Reflation will beat Deflation…it will be a big tug of war but reflation will win
Watch this clip.

We learned about Gary Shilling by watching Larry Kudlow’s show. For that Larry, we owe you.

4. Trader Talk – Art Cashin and Peter Costa with Maria Bartiromo

Art Cashin is a respected and loved figure on the NYSE. He always comes up with a memorable quote as well as a unique way of looking at the market. He exceeded himself in this clip.

  • Cashin – You are going to think I am putting on an aluminum foil hat, but we also have an (solar) eclipse coming up next, that sometimes springs up around geological days, we have seen earthquakes, so I want to be cautious going through it, it also changes the ionization in the atmosphere and this is a market of people
  • Costa – How am I going to follow that one?
  • Bartiromo – You Can’t
When we were much younger and much more sure of ourselves, we had disdain for the ancient Indian science of “Jyoti-Shastra” or a study of astronomical phenomena. Our Patrika (predictive horoscope) was written when we were 2 years old. When we read it today, we are amazed at how many predictions in our Patrika have come true. The Pandit never met us and he wrote what he thought based on his science decades ago.  We have read and heard famous Wall Street Strategists but their batting average pales in comparison to the track record of our Patrika.

So, we are more amenable to listen to Art Cashin. 

5. Jing Ulrich,chairman of China Equities at JP Morgan on Power Lunch – Tuesday, July 14 – 1:14 pm

This clip is a clear enunciation of the China faith from an bullish expert. The clip is informative and covers the growth in China and the potential trade problems between USA and China. What caught our attention is the difference in reaction of the 3 CNBC people – Sue Herrera, Michelle Caruso Cabrera and Ron Insana.

Nice and gentle Sue Herrera listened in rapt adoration as she does whenever her guests talk bullishly about equities while Michelle Caruso Cabrera waited like a cougar to pounce with a sharp question:

  • Michelle – Is the good news you talk about priced in?
  • Ulrich – well, the Chinese stock market is the single best performing market in the world so far this year, up some 85%
  • Michelle – right, that makes me nervous
  • Ulrich – well you know the valuations are actually quite high but the Hong Kong market actually represents very good value..the Hong Kong market trades at around 14 times PE while the mainland market trades at around 25 times PE… so Hong Kong represents better value. 
  • Ron Insana – the Bond market vigilantes in China are beginning to drive rates uo because they are concerned that the stimulus is far too is dominating the economy and creating an asset you worry about something like that..
  • Ulrich – well you know we have had a rebound in Asset Prices lately, property prices are up at record levels, stock market prices are also up strongly. there is great deal of expectation in the economy for inflation in the second half of this year… we also see that the Chinese Government is trying to contain speculation. in the property market and in the stock market, in the mean time our lending growth has been 30% so far this the first half of this year, we had bank lending equivalent to a quarter of China’s full year GDP..absolutely remarkable
Remarkable in an understatement. Also remarkable is that Sue Herrera could not think of a single real question like her colleagues. But of course, she worries about “rampant inflation” in America down the line.  

6. Jordan Kotick of Barclays Capital with Maria Bartiromo – Wednesday July 15 – 3:50 pm

It seems every week we feature a clip by Jordan Kotick. But then, he has had a hot hand and Chuck Daily taught us to keep running the play until they learn to stop it. 

This interview was near the close of the second huge up day in the markets this week. His comments in brief:

  • What we want to watch is not just the stock market but to us the bond market is one of the best leading indicators, because rates never ever lie. 
  • Treasury rates after an aggressive move are starting to go higher, that is what we saw when stocks were bid before. But is this enough to suggest that this move we saw here (rates going up in bond markets) is back in play? This isn’t enough yet. It does not mean that we are going to the highs (in rates). It does mean this is the most important market to watch. 
  • Watch interest rates the next week or two. That will give us a really clear sign.
We concur. 

A Psychological Approach to Trading – Denise Shull, Founder & President of Trading Psyches with Erin Burnett & Mark Haines Wednesday July 15 – 10:50 am 

This is a very important clip and is a must watch for every investor, especially for every individual investor. Ms. Shull describes her work which is based on psychology and her understanding of Neuroscience. Her three key points are:

  • Realize trading is a human game
  • You cannot make a decision without emotion
  • Use your emotions as data.

We totally concur. We have learned that when we feel really happy about our profits in a position, we just have to sell. Whenever we don’t listen to this emotion of ours, we have ALWAYS lost our profits. As Denise Shull said. this is very hard to do. Heck, we did not listen to this emotion this Tuesday afternoon and paid very dearly for it on Wednesday. So we completely concur with the concept of using your emotions as data for your investing. In fact, we think your emotions are your best and most reliable indicator. Read what Shull said:

  • The irony is you learn to analyze your own emotions. Every one tells you to ignore your emotions. If you learn to listen to them and understand them, that is actually your clue.
  • The big one is regret. The research actually shows that regret or the potential for regret is much more motivating than greed….they are afraid to be left behind..Am I afraid that I am going to be left behind and so I better jump on this rally right now
Again, we totally concur. The fear and the shame being left behind as markets fly upwards leads individual investors to never sell near the highs but actually buy the markets near the top. They do not sell because they are convinced that as soon as they do, the markets will go up. They buy at the top because they feel if they do not, they will miss a wonderful opportunity. 

  • Our soapbox – Our big problem with CNBC Anchors is that they stimulate these feelings and frankly prey on these emotions for ratings. This is why CNBC usually hypes momentum markets and asks titillatingly “Should you play the bubble (China/Commodities/Tech or the flavor du jour) trades?” This is also why CNBC anchors invariably put down safe investments like Treasuries. After all , no one thinks they are missing a great or once-in- lifetime opportunity in Treasuries. This is why investors missed great opportunities to buy Treasuries in June 2007. June 2006, October 2000, October 1994, October 1990 etc.   
Enough of serious talk. After the above serious discussion with Denise Shull, the lovely chemistry between Erin and Mark took over. The conversation went towards whether men are less in touch with their emotions than women and accusations of sexist crap flew between Mark and Erin. It was good entertainment.

In that vein, we shall revisit the topic of the Haines bottom that we discussed seriously last week*.

  • Denise – We will test the March bottom again. 
  • Mark – what’s wrong with all you people who think you are going to violate my bottom, it is not gonna happen?
  •  Denise –  I didn’t say violate, I said test
  • Burnett – it’s just going to be painful
This was fun banter and in this spirit, let us share a comment of Erin Burnett that made us wonder. During this show, CNBC ran promos of their new documentary Porn; Business Of Pleasure. One promo showed a woman gyrating her bottom on stage like she was in one of those videos on Erin Burnett looked at that clip and remarked “That woman’s got nothing on the Haines bottom”.
Hmmm! Is that jealousy? Or is that loyalty to her partner? We tried to locate this promo on the CNBC website to show you but could not find it. If you saw this promo, you would wonder about Burnett’s comment as we did. 

8. U.S. Biz Betting On India – Erin Burnett – Monday July 13 – 2:28 pm

Erin Burnett talks about the article in the Washington Post about the new Walmart store in Amritsar, India. She also discusses the potential for US business in India. We encourage all readers to view this clip. 

9. Not Just Any Port in the States – Chiefs of Long Beach, Houston and Boston Ports with Erin Burnett – Tuesday July 14 – 2:00 pm

This was a novel attempt to get a read on the US economy by examining the traffic at America’s three leading ports. We encourage readers to watch this clip. What caught our ear is the following comment by Jim Edmonds, Port of Houston chairman.

  • There are 23 million people in Texas – they will double in 20 years.
This is the unsung story about America’s economy. In addition to being the most developed economy on earth, America is one of the youngest societies in the world, a world in which China, Japan, Europe, Russia are all aging rapidly. We believe that demography shapes economy and so this augurs well for the American economy. 

* See clip 5 in our article Intersting Videoclips of the Week (July 5 – July 11)

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