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.
Declaration for the Fourth of July Weekend
Sometimes we tend to be critical or strongly critical of the TV shows and anchors we cover. We do so because our first and foremost priority is our readers. Investing is a noble and serious pursuit. Clarity and candor are critical to fair coverage of investing. However, in our own personal celebration of this Fourth of July weekend, we resolve to be gentle in our comments today. We are writing this article in the very early hours of the morning after a couple of drinks of Scotland’s gift to the world. So being pleasantly gentle should come easy.
The Week That Was
We confess to being blindsided by the carnage of this week. We had been away on a business visit. Having returned on last Sunday in a cheerful mood, we saw on Monday morning that pre-market equity futures were up and relaxed. What a mistake!
The equity averages in the USA were down 5% this week and we saw a mini-capitulation on Thursday morning. On Wednesday afternoon, it seemed like large investors were getting rid of what they owned for the Quarter end. The selling seemed machine driven-to us. On Thursday morning, especially after the awful data at 10:00 am, there was a sudden and very fast swoosh in stocks. At that time, the 10-Year Treasury yield touched an intra-day low of 2.879% and the 30-year yield touched 3.825%.
Clearly, the 3% level on the 10-Year Yield and the 4% level on the 30-Yield have been decisively broken. We think it is important that these breaks hold for more than a day.
The interesting action of the week was in currencies, the Euro in particular. On Thursday, after the horrific data at 10:00 am, the Euro actually rose. That day, the Euro rallied 2.4%, an astonishing one-day move. It seems that investors have suddenly woken up to the fact that the US economy is still very weak. So there seems to be a realization that Europe, while bad, may not be all that awful compared to the USA. From this angle, the Euro seems attractive relative to the US Dollar, at least for a trade.
Of course, it could be just be as Robert Prechter argued to Maria Bartiromo on June 10. Prechter said that he can see the Euro rallying to 1.30 (see clip #2 in our Videoclips article for week of June 6- June 10,).
Income Rules!
So said David Rosenberg on Friday, July 2. Kudos to him, Gary Shilling, Robert Kessler and other investors who remained steadfast in their bullish outlook for long maturity Treasuries. (Hear Gary Shilling in clip 1 below and hear Robert Kessler in clip 5 below).
We believe that the need for income is probably the least understood problem of the American middle class. What we wrote on May 30, 2009 in our article America’s Income Problem remains true today and the problem may actually have worsened. As a result, we believe that long maturity Treasuries are and remain in the secular bull market that began in 1981.
There have been many smart thinkers who have called for a bear market in Treasuries like Jim Grant did in 2004. Jeremy Grantham reportedly termed Treasuries are wildly overvalued in April. Of course, US Treasuries answered by an explosive rally in June. Thankfully, we are neither intelligent analysts nor smart thinkers. Our simple view is that until we see sustained income growth in America, long maturity Treasuries will remain in a secular bull market.
However, secular bull markets feature regular pullbacks. We sense that the action in Treasuries is getting fatigued and jaded. They seemed to rally when stocks collapse. But the rallies in Treasuries seem less and less capable of hedging the down move in S&P 500. We saw a similar lack of oomph in Gold a month or two ago. So, should we expect a sell-off in long maturity Treasuries in the relatively near future?
Frankly, that depends on whether we are in a period similar to July 2002 or September 2008.
Parallels to 2008
Awful or really awful seem to be the right adjectives to describe the recent US economic data. The data seems to suggest that the economy sort of halted in May 2010. The last time we saw this was in September 2008 after the shock of Lehman bankruptcy. Perhaps, the debacle in Europe had a chilling effect on the US Economy.
The action in Sovereign Government bonds also seems similar. Witness the yield of the 10-Year German Bund at 2.58%. So if May 2010 is indeed September 2008, then we have lower yields ahead both in Europe and in the USA. Even after Friday’s bad payroll report, it seemed as if the Bund was leading the Bond. So we watch the Bunds to get a clue about the near term direction of US Treasury yields. But Jordan Kotick seems to think that the main market to watch is the Japanese JGB market and especially the 10-Year JGB (see clip 3 below).
We believe that the next substantial downward move in 30-Year & 10-Year Treasury yields will come when investors realize the true condition of China’s Banks and the extent of the Chinese slowdown. Once that happens, we are convinced that the 30-Year Treasury yield will head lower, perhaps even lower than Gary Shilling target of 3%.
Why? David Rosenberg did argue once that the 10-Year Treasury could trade at 1.5%. We notice that the spread between the 10-Year yield and the 30-Year yield can touch a historic low of about 50 basis points at major deflationary inflexion points. This is how we can measure to a 2% yield for the 30-year Treasury Bond. Of course, for this to occur, investors need to be fear that China or the US in this decade will be like Japan.
In that case, the US stock market will break the March 2009 lows decisively.
Parallels to 2002
The market action in 2010 resembles the action in 2002 in some ways. Recall that the stock market made a major bottom in July 2002 and then rallied into fall of 2002. October 2002 was the next significant bottom. Then the real rally began in March 2003 with a real but job-less recovery.
Is this possible in 2010? Well, we shall find out soon enough whether the stock market makes a bottom in July 2010.
A Media Signal about US Treasuries?
We have written extensively about how CNBC Anchors have been contemptuous of US Treasuries and people who invest in US Treasuries. Their usual refrain has been why would any one lend their money to the Government for 10 years for 5.5% or 4.5% or 4% or at 3.5%? We wrote our first article on this topic in August 2008 titled Are CNBC Anchors on a Mission Against US Treasuries? The CNBC Anti-Treasury mission has been the most steadfast of all missions we have seen in American Television. We even wondered in an article whether CNBC Fast Money, CNBC’s most aggressive show, had a censorship against speaking bullishly about US Treasuries.
Then came last week. It was as if CNBC had seen the light. We could not believe our eyes and ears. Every single CNBC show sang praises of US Treasuries and lauded investors who had invested in Treasuries. Yes, even CNBC Fast Money. Actually CNBC Fast Money went to the other extreme by inviting Dr. Gary Shilling, one of the most passionate bulls on Treasuries, and allowed him to state that his target was 3% for the 30-Year Treasury yield, a return of 20% from today.
If you landed on earth from another planet lasy sunday and watched CNBC USA all this week, you would think that CNBC considers US Treasuries as the elixir for all investment portfolios, a sort of earthly investment Amrut or Ambrosia.
Let us be clear. We love it. We welcome CNBC into our light from their self-imposed darkness. It is one of the things that makes us happy, pleasant and gentle this week. We consider this as CNBC’s Fourth of July present to American viewers.
But then we recall the contrarian nature of major media turns and we wonder whether CNBC’s new found love for US Treasuries might prove to be a contrarian signal. We sincerely hope not.
Strategy Session
In our last Videoclips article on June 12 , we were fairly blunt in our criticism of CNBC Strategy Session, the new show that was launched that week. We also offered our suggestions to make the show better.
When we returned this week, we were rather happy to see that the changes in the show match our suggestions. The show has gone to a two anchor format. Kate Kelly is now being used to deliver focused reports. The show does try to focus on strategy and tries to deliver an actionable idea that has the life span of a couple of months. We like the show now. We know this because we no longer wait for the Fast Money HalfTime report to begin as we did in the week of June 6.
The Faber-Kaminsky couple is odd but seems to work. Gary Kaminsky likes to talk, but he does talk strategy. Our suggestion to David Faber is to not compete with Gary Kaminsky in volume of words uttered. When Gary talks about strategy, he often leaves himself vulnerable to a zing. So, in our opinion, David should use the rapier than the broadsword. Wait for Gary to give you an opportunity and then zing him with a verbal taser or wound him with a verbal rapier thrust. Gary tends to get more animated and somewhat upset when zinged like this but then he gets even more decisive in his strategy.
David, you can’t be the new odd couple unless you can get to Gary Kaminsky. Trust us, it is easy. Finally about Kate Kelly, watch her short but succinct report about the Euro on Friday, July 2:
- David, speaking about the possibility of a double-dip in the US, I am told by a sell-side trader I know this morning that sentiment towards the US is getting so relatively bearish that people are actually beginning to feel good about Europe, imagine that! This is a guy that I talk to on a regular basis and for months he has been relatively bearish on the Euro and he says that the position that he has had for months is now flat, so they are no longer bearish on the Euro and I am hearing the same from the hedge fund community; sentiment is starting to shift and if you take a look at Euro’s performance Tuesday night; it hit a certain inflexion point, I believe it was like 1.2150, something like that and since then it has been moving slowly upward. People feel like FinReg, I am told, is really going to drag down bank earnings, we talked about this week about the taxes on the banks and the other costs of doing business in different way, the reorganization etc., so there are concerns globally about what this is going to do to bank earnings as well as the macro picture in the US and all told there are stress tests going on in Europe, there seems to be some feeling that stress tests will improve confidence, may be they will raise more capital, who knows those are underway right now, but in general you know there is a lot of uncertainty out there and Europe may actually be a better place to play, I am hearing that some people think the Euro will go to 1.30 by the end of the summer, if not sooner
Well done, Kate. We like such a clear, actionable report. But as we pointed out above, Robert Prechter made this forecast to Maria Bartiromo on June 10. A case of technicals leading the fundamentals?
A gentle message to Strategy Session Head Honchos and CNBC Management, please do not feel shy. Feel free to send us a gift for our contributions to Strategy Session. US Dollar cash works best (we are not like Gisele in any way). For alternatives to cash, read the next section.
Luxury Life
We saw promos on CNBC Europe for a show called CNBC Luxury Life. This particular show was about horse racing on ice in St. Moritz. Nice idea, but sort of passive we think!
In our experience, people who watch CNBC are investors. In other words, they are do-ers and not passive watchers. So we think Luxury Life segments should cover luxuries that viewers can try. This is where we can add real value to CNBC. We could offer various ideas for such segments and even offer to do some segments. Here is an example:
- The Dorchester is a nice hotel in London, an elegant place in a picturesque setting across from Hyde Park. The Piano Bar at the Dorchester was made famous by author Jack Higgins in his novels about Sean Dillon, “the man of thousand faces“, the feared enforcer of the IRA who turned and joined a covert section of British Intelligence. Sean Dillon loved to visit the Piano Bar at the Dorchester.
- When we did so a couple of weeks ago, we made an interesting discovery. We saw on the menu a vintage Macallan priced at 650 pounds per shot (approx. $1,000 per drink). We like such luxury but when paid for by some one else. So we stuck to our own preferred Macallan brand, a much more recent and affordable age.
CNBC Management, allow us to make an offer to you. We hereby offer to do a review of this rare and luxurious Macallan vintage for a very nominal fee, extremely nominal relative to our vast experience of drinking single malts, subject to receiving a bottle of this vintage as raw material provided by you for this review. We shall keep detailed notes about the novelty of first few tastes, the real taste when our pallet gets accustomed to this vintage and the longing sadness we would feel with the final tastes. Then we would write a review that would be factual and poetic.
Wait! For your double pleasure, let us make a double offer. The London Duty Free has a Glenfiddich Private Label single malt that is priced at 7,500 pounds for a bottle. We hereby offer to do a review similar to the above Macallan vintage review on similar terms as well as a comparison of the two. We could even review good cigars, to be selected by us and provided by you, that go nicely with these single malts.
For those who do not wish to fly to London for such luxurious pleasures, we could do a segment in the American heartland:
- A hour’s drive from Milwaukee airport brings you to the divine Whistling Straits . We set great store by inner peace. One way to achieve inner peace is to sit in the elegantly rustic Irish clubhouse with a nice single malt, a good cigar and gaze at the pristine solitude of Lake Michigan. You will see why Pete Dye said of his own masterpiece “I should say this with some degree of modesty. But in my lifetime, I’ve never seen anything like this. Anyplace. Period.”
Readers may have realized that we tend to view things differently from most folks, at least sometimes and in some cases. For example, most people visit the Louvre in Paris to see what is inside the gorgeous museum. But to us, the visual experience of a beautiful exterior is sometimes much more pleasing than any inner beauty or treasures.
- When we visited the Louvre last fall, we did not see the Mona Lisa or the other treasures within. As do-ers, we wanted to experience the setting where Ticket to Hollywood was filmed. Why view the painting of a woman when you can view a Miss Universe moving to the music of Shanker-Ehasan-Loi? Would you not choose to view a beautiful creation of God over a lovely creation of man?
- But what does this have to do with CNBC? Well, Insurance of global treasures is a business topic worthy of the network that advertises itself as First in Business Worldwide. Along the lines of our Louvre thoughts, we could do a segment about how physical treasures of beautiful actresses are insured and the costs of such insurance. After all, trophy assets do need trophy protection insurance! How many CNBC viewers can tell us which companies specialize in such insurance? Very few, we suspect. How many male CNBC viewers might be interested in such a segment? Most, we believe!
So, here we are CNBC. We have come up with 3 different segments about Luxury Life quickly, instinctively and without any effort. Can your on-air talent come up with such ideas? We doubt it.
CNBC Management, would you like to retain us for such Luxury Life segments? We could offer our services for a nominal fee if and especially if we get the standard 20% performance fee of ratings-based revenues.
So call us, CNBC. You would not regret it.
Editor’s PS: When we began writing this article, we had no idea we would veer towards the path of the last section above. Our articles are written in the time honored discipline of fire, aim and ready. We do not think and then write. We begin writing and the act of writing summons our own personal muse and ideas flow into our article. Sort of weirdly different. But that’s what we are. That is why we use the nom de plume Cinema Rasik.
Featured Videoclips
This week we feature the following videoclips:
1. Gary Shilling on CNBC Fast Money on Tuesday, June 29
2. Bill Gross on Bloomberg Radio & TV on Friday, July 2
3. Jordan Kotick on CNBC Closing Bell on Wednesday, June 30
4. Jing Ulrich on CNBC PowerLunch on Friday, July 2
5. Robert Kessler on CNBC StreetSigns on Tuesday, June 29
6. Alan Greenspan on CNBC Squawk Box on Thursday, July 1
1. Bull Market or BS? Gary Shilling on CNBC Fast Money – Tuesday, June 29
We are amazed that Fast Money invited Dr. A. Gary Shilling to talk bullishly about US Treasuries.
And they actually let him speak! They let him say that his target for the 30-Year yield is 3%. They let him say that a fall from 4% to 3% yield would generate a 20% return for the 30-Year Treasury Bond and 32% return for the 30-Year Zero Coupon Treasury strip.
Watch this clip and see for yourself. Dr. Shilling added that the odds of a double dip in the economy are 50% in his opinion. He was explicit about his positions – long 30-Year Treasuries, long US Dollar and Short stocks, China & Commodities.
This was the first time since the show’s inception that we heard an expert on US Treasuries be allowed to be bullish on CNBC Fast Money. Our faith in redemption is restored!
But, we shudder about this seminal media event becoming a contrary indicator.
2. Gross Says 10-Year Treasuries Are Decently Valued – Bill Gross on Bloomberg Radio & TV – Friday, July 2
Some time ago, we wrote an opinion suggesting that all Financial TV shows should use the ESPN format of a journalist anchor and a professional anchor-analyst. This has worked wonders for ESPN. After all, we would rather hear comments about quarterbacks from Phil Simms or Troy Aikman rather than from a journalist.
If you want to see how a professional can add value to a financial interview, listen to this interview of Bill Gross on Bloomberg. David Malpass, ex-economist in chief from Bear Stearns, acted as a guest host. Just as we expected, David Malpass asked the best and the most pointed question to Bill Gross.
David said “I will try to put Bill on the spot. Bill, would you still be buying US Treasuries at these low yields?” The Bloomberg Radio anchor gleefully said “that’s putting him on the spot; very good David. What are you doing this morning, Bill?” What did the Bond King say?
- “well, nothing yet, talking to you. But here is the conundrum, it is a new conundrum, I suppose in terms of interest rates as opposed to the old one. The new one is simply with the 10-Year Treasury at less than 3%, that represents something almost historically low, but certainly better than the 0.25% you can make with the money markets. If inflation continues down and if nominal gnp, this is the key, if the nominal gnp in the United States is around 3%, which is our new normal forecast, then the 10-year Treasury is decently valued, it is not cheap but it is decently valued, certainly a better alternative to money markets.”
Then followed a discussion of Stocks vs. Bonds similar to the one Bill Gross had with CNBC’s Erin Burnett on Thursday. We are determined to be gentle today and so we mildly wonder why the Squawk Box team did not ask the above direct question of Pimco’s Tony Crescenzi on Friday morning and why Erin Burnett did not ask the direct question of her friend Bill Gross .
May be, CNBC does need to listen to us and go to the journalist-professional duo format we put forth in our article Financial Networks or EMPNs?
3. Rising Risk, Big Concern – Jordan Kotick with CNBC’s Maria Bartiromo – Wednesday, June 30
We tend to feature clips of Jordan Kotick because he tends to be more right than wrong, though we hope he proves to be dead wrong about his concerns in this clip.
Jordan said that he sees clear signs that the market is moving from stability to vulnerability and added we are seeing some pretty dangerous signs heading into the month of July. He discussed a couple of charts:
- Italian 10 Year Breakevens – “The inflation expectations were lofty but now these are going down hard”. Kotick pointed out that “these have moved with the stock market and so a breakdown here suggests that the market is pricing in a lot less optimism on the European side.”
- Japan 10 year yields – This is the most important chart as far as Kotick is concerned. “Japanese 10 years have been in a range for 7 years; Japanese investors are among the most risk-averse in the world. Yet, Japanese 10yr JGBs have broken the range. When you have broken a 7 year range, the market is now bulled up and the Japanese bonds are getting a bid. The fact that they have not gone anywhere in 7 years, the market is saying something is wrong. The bigger the range, the bigger the break” Kotick explained.
- Euro-Swiss Franc – “Last time, there was an aggressive outperformance by the Swiss Franc was in the 1970s; For 25 years you have done nothing in Euro-Swiss until just a few weeks ago; now Euro-Swiss is starting to go to the downside very very aggressively. That is a huge move into the Swiss Franc…”
- Palladium/Gold – “This is not about direction; this is about sector rotation. What we are seeing is Gold is outperforming Platinum, Palladium and Silver”. Then Kotick showed the chart that clearly showed a major topping formation.
Then he added “all of these are clear signs that the market is rotating to a more negative sector. This is not the end of the world. All we are saying is that the correction of the rally from 2009 is not over. Once you get past the fourth of July, just be careful in July. There is still some vulnerability here.”
Kotick’s conclusion – Timing is everything and it will be everything this summer.
4. China Growing or Slowing? – Jing Ulrich of J.P. Morgan on CNBC PowerLunch – Friday, July 2
Jing Ulrich, China Equities & Commodities Chairman at J.P.Morgan, has been a frequent guest on CNBC. Until now, she has always been bullish on China, its economy and its markets. She remained bullish even as other well-known investors like Donald Straszeim were turning cautious. But in this interview, Ms. Ulrich was more cautious and in fact bearish. She said:
- …at this point there is further downside to some of the China stocks because momentum is slowing, we are seeing across the board demand for commodities, for housing, for cars coming off a very high level from 2009
To her credit, Sue Herera did ask her to comment on views of Mark Chandler of Brown Brothers and Don Straszeim who see value in China right now. Ms. Ulrich basically said there is no catalyst yet.
So it seems that Ms. Ulrich, like her colleague David Kelly of J.P.Morgan Funds, is essentially a momentum investor. As long as Chinese stocks are going up, she articulates the bullish case on China (as she did on April 1 in the clip China’s Global Growth ) and when Chinese stocks are down in bear market territory, she talks bearishly.
This is very similar to the on-air behavior of David Kelly, the man with 500* Billion Dollars Worth of Advice as CNBC PowerLunch called him once. When the stock market was strong, Mr. Kelly was a committed bull on stocks and contemptuous of people who were investing in Treasuries. In fact, Mr. Kelly repeatedly asked CNBC viewers to sell US Treasuries and invest in stocks. In particular, on March 16, the day of the Fed meeting, David Kelly got into an argument with Ken Volpert, the bond pro at Vanguard. Given what the Treasury market has done, the investor Volpert won and the strategist Kelly lost (see clip #3 from our Videoclips article for March 14-March20 ).
In our resolve of gentleness, we can only sigh about the pressures on Wall Street Strategists to be perennially bullish. That is why we have such respect for people like Charles Clough, David Rosenberg, Richard Bernstein who wrote with candor in spite of such pressure and protected investors through the past two bubbles.
- * PS: We noticed that CNBC PowerLunch called the advice of David Kelly worth $500 Billion on July 8, 2009 and worth $450 Billion worth on May 13, 2010. How did Mr. Kelly’s group lose $50 billion, literally 10% of their assets from July 8, 2009 to May 13, 2010? Did their clients take their money away or did Mr. Kelly’s group lose money for their clients? Ours is an inquiring mind and it would gently like to know. It would also like to ask gently why Michelle, Sue & Tyler of Powerlunch did not ask this question of Mr. Kelly. Finally did they wonder about the true value of Mr. Kelly’s advice when his group can lose $50 billion or 10% of their capital in less than a year? Is it because J.P. Morgan is an advertiser? We could have asked so many hard questions but the constraints of gentleness restrain us today.
5. Is the Treasury Bull Market Over? – Robert Kessler with CNBC’s Erin Burnett – Tuesday, June 29
Talk about a strange week at CNBC. You know a heading like this would almost always feature a stock manager telling viewers why US Treasuries are about to go into a horrible bear market and how yields are going to skyrocket.
But not this week. Erin Burnett invited a long standing Bull on Treasuries who told viewers that the average bull market in Treasuries lasts 37-40 years and so this current 30 year old Treasury Bull market has another 8 years to go.
Read the summary of this conversation in Bonds Bull Market Has Another 8 Years on cnbc.com.
The Burnett-Kessler pair likes to delve into strange concepts. For example, a couple of years ago, Robert Kessler told Erin Burnett his idea that individual investors should put on a matched volatility trade of going long 2-Year Treasuries with volatility = that of S&P 500 and short the S&P 500 against it. Erin Burnett liked the novelty or the strangeness of this idea and we recall that Burnett-Kessler duo had a good time with it.
They did not disappoint us this time either. First Kessler told Erin Burnett that Treasuries should be made tax-free (Mr. Kessler, have you heard of Pre-Refunded Munis?). His argument is that foreign central banks like China and Japan don’t pay tax on their US Treasury holdings and so why should US investors? He says USA should follow the example of Taiwan where consumers pay 1% interest on their mortgages. Ever hear about the Housing Bubble, Mr. Kessler?
Then Mr. Kessler said government should enlist celebrities to sell bonds to build a nationwide bullet-train system. “I think you need a big spending project,” he said, “We should have the greatest bullet train….in the world.”
We have a better idea, we think! How about selling bonds to make college education far less expensive than it is now. One of the reasons India has become a center for technology jobs is that college education is very inexpensive in India. In our own case, we estimate that our education from kindergarten to college cost less than $500 in total. If we could educate more young people via inexpensive education, perhaps we could fill more technology job needs from within America.
But the final point of Robert Kessler is a little more sensible. He pointed out that if Americans used 5% of their $45 trillion in household balance sheets to buy Treasuries, then that would raise $2 trillion “which would cover the whole deficit of the United States and we wouldn’t need China or Japan to do it“.
We concur because we think Treasuries are a far better investments vehicle than CDs. But, we wonder if Americans take $2 trillion out of their CDs to buy Treasuries, what would happen to Banks? If their assets walk out of the door, what would Banks lend or perhaps how would Banks buy 10-year Treasuries at 3% while paying us virtually nothing? So would a good idea for US Treasuries end up being an awful idea for Banks and the economy?
We wonder! Ms. Burnett, could you ask Robert Kessler to help us with our quandary?
6. Alan Greenspan with CNBC’s Steve Liesman & Squawk Box – Thursday, July 1
Read the unedited transcript of the interview Alan Greenspan, Former Federal Reserve Chairman, on CNBC’s Squawk Box on cnbc.com. The various videoclips can be found by searching for Alan Greenspan on cnbc.com or simply go to http://search.cnbc.com/main.do?keywords=alan%20Greenspan&sort=date&minimumrelevance=0.2&type=video&pubtime=0&pubfreq=h
We said before that we intend to be gentle and pleasant in our comments in celebration of the Fourth of July. So we will withhold our comments.
Dr. Greenspan did make an interesting point, though. He said at one point that essentially stock market is a cause of economic activity. He probably would have added, if asked, that he watched the stock market to the point of targeting his monetary policy to the message of the stock market. Of course, Dr. Greenspan never admitted this when he ran the Fed and Dr. Bernanke would not admit it now.
We recall that James Bianco made this point in 2006 & in 2007. In fact, we recall an article by Mr. Bianco in which he showed case by case how Chairman Bernanke’s monetary actions in 2007 matched the inflexion points of the stock market. This is why we generally refer to him as the astute James Bianco.
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