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.
Words of the Wise!
- …I am actually very bullish on the equity market;..we have done a lot of charts, looked over history where it is vs. the S&P, of yields of the S&P vs. 10 year Treasuries, it looks to us like stocks are cheap here – Robert Kapito – Friday, June 11 (see clip 1 below)
- The collapse of the financial system as we know it is real, and the crisis is far from over; Indeed, we have just entered Act II of the drama. – George Soros – Thursday, June 10 (see clip 3 below)
- . I think we have completed also a pretty clear 5-wave structure in our Elliot Wave Model..it (Euro) went from 1.50 down to 1.20, it could bounce to 1.30 without much trouble. Certainly it needs some kind of relief. There are too many people piled on the other side – Robert Prechter – Thursday, June 10 (see clip 2 below)
- …I am a little concerned about Gold this afternoon, the manner in which Gold traded yesterday was really quite disturbing; we got to 1250, one of those philosophically difficult points, magical number as it were,…I don’t preclude the fact that you could take Gold under 1200 without too much difficulty may be even 1175 – Dennis Gartman – Wednesday, June 9
- …We are huge bulls of bullion but we are concerned over the near-term outlook since this now looks like an overcrowded trade… – David Rosenberg – Tuesday, June 8
- …economic expansions don’t die of old age, they are killed, when you get volatility like we have seen now, that’s a red flag that could kill it, we haven’t done it yet, but unfortunately we are moving down that path – James Bianco – Thursday, June 10 (see clip 5 below).
Week that was
For the first time in many weeks, the US stock market closed up because of a big rally on Thursday. On Friday, the stock market opened down sharply thanks to an awful Retail Sales report, but stocks recovered quickly. A final hour rally drove the averages to the positive territory. We don’t know much but it sure seems that investors are either underweight stocks or positioned to the short side. The fact that 1040 on the S&P 500 held again this week might have contributed to the rally at the end of the week.
Treasuries behaved like they did last week, a selloff midweek and a rally on Friday after a surprisingly bad economic report. The May retail sales report was worse than the one in April and the April report was worse than the one in March. The deceleration in the US economy is becoming more obvious by the week. Yet, Treasuries seem unable to make new lows in yield or new highs in price. This Thursday’s 30-Year auction was very strong with a bid-to-cover ratio of 2.87, the second highest in recent memory. Yet, the bond sold off materially after the auction, falling by over 2 points. Does this mean that the buyers are increasingly ones with weak hands or does it suggest covering of short positions in the auction? We would love to know.
Just when CNBC Anchors had become believers in the continued fall in the Euro, Robert Prechter turned bullish on the Euro and called for the Euro to rally to 1.30 (See clip 2 below). Jim Rogers is reported to have said that now may be a time to buy the Euro. Coincidentally, both Dennis Gartman and David Rosenberg made cautionary comments on Gold in the short term. These people are doers. We have a high degree of respect for doers in general and very high respect for these particular doers.
In stark contrast to doers are the talkers, especially academic talkers like Niall Ferguson who wrote the Newsweek cover story titled End of the Euro . We recall that the same Prof. Ferguson had written the obituary of the US Dollar during the week of October 21, 2009. That was also the week CNBC devoted a full day to its Sense of the Dollar special (see our videoclips article for the week of October 18 – October 24 ). Frankly, the article by Niall Ferguson persuades us that Prechter, Rogers & company might be correct in their call to buy the Euro.
Is this a sign that risk asset classes may be ready for a rally after the carnage of May? The steep fall in Treasury yields has to be a short term positive. If patterns of previous years hold, then we could see a nice rally lasting a couple of months.
Think back to 2007. We had a snap-back rally after Bear Stearns was taken over by JP Morgan and we had an explosive rally in risk assets from late August to end of October 2007. Then reality intruded on the October euphoria and the downtrend resumed.
We do agree with George Soros (see clip 3 below) and Jim Bianco (see clip 5 below) that we have begun the second act of the Credit Crisis. But we wonder whether an intermission of a couple of months may be due after the emotionally exhausting selloff in late April and May.
When does the European crisis resume? Carl Weinberg of High Frequency Economics told CNBC on Friday that a Greek Debt Default could come as early as August 2010 . Veterans of 1997-1998 might recall that the month of August has featured the start of a new leg of currency related selloffs.
Emerging Markets
China export figures rose sharply providing a sigh of relief to bulls who are worried an immediate downturn in China. But there are worrying signs about labor unrest in China that could lead to higher inflation in China and loss of manufacturing to neighboring Vietnam. For more details on this topic, read the Bloomberg article China Reaches Lewis Turning Point as Labor Costs Rise or articles about labor unrest in the New York Times & Washington Post.
The drop in the Euro is creating serious problems for Asian countries both by making their exports expensive and from the fears of hot money pouring into strong Asian currencies. A good overview can be found in the Bloomberg article Currency Controls Mount in Asia as Euro Hurts Exports .
Will these issues lead to continued outperformance by US market over Emerging Markets? How we wish such issues were discussed in Strategy Session, the new CNBC show launched this week?
Strategy Session – CNBC’s new show
In these articles, we have asked CNBC to focus on Bonds, on Credit markets and their interplay with stock markets. For years, we have wished for more strategy segments on CNBC, segments which tell individual investors how to think about their future strategy and how to allocate their investment money into various assets for optimal returns balanced with safety.
Recently, CNBC began advertising their new show Strategy Session, a show with two smart investors Steve Cortez & Gary Kaminsky and two reporters David Faber, a CNBC veteran and Kate Kelly, a journalist from the Wall Street Journal. Each show was to have a guest host, a personality of stature. This would be a must watch show, we thought. We could hardly wait for the show to launch.
Then it did, with a thud. The first couple of days were so bad that we had to force ourselves to stay awake. The shows were utterly boring and useless. Below we lay out our thoughts about Strategy Session. We take pains to do so because we still believe in the premise of the show.
- The show is hopelessly cluttered, three anchors and a guest host – all standing around. Only two people add any value, Gary Kaminsky and Steve Cortez, even though Steve Cortez is shunted into a corner and allowed to speak only a couple of sentences in the half hour show. But in these couple of sentences, Cortez added value. Gary Kaminsky is a proven manager of other people’s money. He proves his value whenever he is allowed to.
- The two journalists, Faber & Kelly, have very little to contribute except banalities. With 3 main talking heads all tripping over each other, the show cannot breathe. Unlike Squawk Box, which this show tries to mimic, there is no camaraderie between the anchors. That removes the principal ingredient of the Squawk Box magic recipe.
- Strategy Session also tries to mimic CNBC Fast Money with its 4 talking traders format. But Strategy Session forgot that the 4 Fast Money traders are the show, the content. Fast Money adds investment value and Fast Money is great fun. Strategy Session is neither. Melissa Lee, anchor of Fast Money, understands her role and plays it perfectly. She does not have to opine or give her views. Her job is to elicit content from her team and keep the show moving fast with fun. This is what the earlier anchor Dylan Ratigan did well and Melissa Lee does it even better (smaller ego makes for a better anchor, perhaps?)
In our opinion, the design of Strategy Session is based on David Faber’s vision. This is its core problem. The show often becomes a lecture and sometimes a servile pandering of Wall Street Investment Bankers. David Faber is a deal junkie and he cannot stop talking about investment bankers. It got so obvious that guest Robert Kapito of BlackRock called Faber both a “deal jockey” and a “deal junkie” in one show. Faber was talking endlessly about which investment bank was going to get which deal. As Mr. Kapito said to him, “who cares?”
We were also turned off by Faber’s behavior on the show. He seemed obsessed with controlling the show. He talked too much and he shut off his colleagues, especially Kate Kelly, in an abrupt and sometimes insulting manner. We were also disappointed with Kate Kelly. Occasionally we saw flashes of a personality & a touch of mean but mainly Kelly was boring and obsequious to Faber.
Fast Money provides investment ideas and is fast paced. Strategy Session provides a lecture and is Boring. Squawk Box is fun and lets their hosts speak. Strategy Session is dull and competes with its own guest hosts for talking time. Squawk Box has Joe Kernen and Becky Quick while Strategy Session has David Faber and Kate Kelly. Enough said.
But we really like the concept of a strategy session. So below are our suggestions to improve the show:
- Stick to two anchors, investment pros who can actually add value. Gary Kaminsky and Steve Cortez could do it well. If the show needs a woman, get someone like Karen Finerman. Make David Faber and Kate Kelly segment reporters who come in for short stories when they have something to add.
- Get some fun into the show. The magic recipe of CNBC is making financial news fun to watch. This is the key to the longevity of Mark Haines and Joe Kernen. It is the key to the appeal of Fast Money.
- Get real strategy content. Rather than focus on getting guests hosts and then fitting the show to that guest, select a strategy theme for some shows – Asset Allocation or how to break up investment capital between stocks, bonds and commodities; US stocks vs. International stocks, Investing in Bond funds vs Bonds – real topics that can add value to both individual investors and professionals. Remember every professional investor is also an individual investor for herself, himself and their families. We find most stock traders have little idea how to buy bonds for their family portfolios.
- Use Strategy Session to focus on such basic strategy disciplines and get real investing pros in each area to discuss these tactics.
Above all, lose the journalist egos. Fast Money works because egos are kept in check by the traders themselves and by funny takedowns of a trader by others on the team. Today, the best part of Strategy Session is the anticipation of the Fast Money Halftime Report that follows it.
We do not mean to be unduly tough on David Faber. We are told daily that he is an intelligent man. But intelligence is of different kinds. We tend to distinguish between Analytical Intelligence vs. Instinctive Intelligence . David Faber seems analytically intelligent to us. Most reporters are. Faber is very good at looking back and explaining why events happened. This is why he does a good job with documentaries and writing books. These require look back analytical thinking.
Strategy is about looking forward often with little data or facts. It requires instinctive intelligence based on experience and pattern recognition. This is the intelligence that divides great investors from ordinary investors. Successful TV Anchors have this intelligence. It is what separates anchors from reporters.
This is why Strategy Session should use David Faber where he can be most effective, in doing special reporting segments.
We have always liked David Faber but as we say to Maria Bartiromo at the end of this article, our comments are not personal, just business.
Featured Videoclips
This week we feature the following videoclips:
- Robert Kapito on CNBC Strategy Session on Friday, June 11
- Robert Prechter on CNBC Closing Bell on Thursday, June 10
- George Soros Speech telecast by Bloomberg on Thursday, June 10
- Matt Simmons & Whitney Tilson on CNBC Fast Money on Tuesday, June 8 and on Wednesday, June 9
- James Bianco & Larry Kantor on CNBC Closing Bell on Thursday, June 10
1. Are Buybacks New M&A? Japan Next Debt Crisis? GM IPO Underwriters Revealed – Robert Kapito, President of BlackRock with CNBC’s Steve Cortez, David Faber, Gary Kaminsky and Kate Kelly (lnac* order) – Friday, June 11
We have very high respect for BlackRock as we do for Pimco. We have said before that the 2007 interviews of Larry Fink with Maria Bartiromo were almost prophetic and would have saved a good deal of capital for investors had they heeded Mr. Fink’s warnings. BlackRock’s Peter Fisher had impressed us a great deal by his interviews with Maria Bartiromo as had Curtis Arledge in his interview with Fast Money.
So we were very interested in listening to Robert Kapito, who we were told built BlackRock with Larry Fink. This is one case when the reality outperformed the hype. Mr. Kapito was frank to the point of being blunt at times but he was always insightful. We think his clips should be viewed by readers. Simply ignore the blarney from David Faber & Kate Kelly of CNBC and just listen to Robert Kapito.
We feature some of his quotes below:
- This (cash on corporate balance sheets) is one of the reasons I am actually very bullish on the equity market; companies have been the beneficiary of very low rates, so they have refinanced all their issues, and now they are sitting there with lots of capital; they are not investing in capital equipment, they are not sure where the economy is going, they are worried about liquidity, they want to know what the maturity of their debt is, they have learned now in the last couple of years that when you need it you may not be able to get it, so they are keeping their cash, when you think about that, two things come to mind – 1)when you have that cash, you are either going to invest it, you are going to buy back your stock or you are going to pay it out as a dividend and so we see a lot of power behind the dividends, we see a lot of buybacks, one other point about cash that I want to make which is not only for corporations but it is also for individuals is that very low short term rates are really a tax on all of us, so think about that, where is all that cash being attracted right now, it is attracted to bank deposits, and banks are taking that money and putting on the largest spread trade in the history of mankind, so we are in essence by very low short term rates, we are bailing out the banks…so a corporation today has all of its cash and of course they are gonna look at transactions but I am afraid about those who are just looking at transactions just for earnings…what they should be doing here is really streamlining themselves, getting their production in place; their inventories are low; if there is any bounce in the economy, these companies are going to do very very well and also they are trading at the lowest PEs they have traded too, keep in mind..
In the clip Japan Next debt Crisis , Mr. Kapito said about his opinion of the US equity market:
- two reasons, you look at earnings, most of them have been earnings surprises; when you look at that and you look at where the PEs are today, I think there is an opportunity; we have done a lot of charts, looked over history where it is vs. the S&P, of yields of the S&P vs. 10 year Treasuries, it looks to us like stocks are cheap here..
- the other side you haven’t talked about today is interest rates, if I ask you today, where interest rates are gonna be 5 years from now, higher or lower, (answer higher), OK we all agree that rates are going to be higher..In the bond market, it is really important, asset allocation is really important to all people that are watching today, you got to get it right, I mentioned that you should be invested in the equity market, but the bond market is really interesting, people are not looking at Municipals, what people don’t know that 46 states have to have a balanced budget, taxes are going to go up and interest rates are going to go up, and the second area is to look at credit, I want to make one point, you have to do the analysis, because you said rates are going to go up in the next 5 years, so you are going to buy companies that you are going to get back PAR because during that period of time you are not going to able to sell it at a profit.
Now James Chanos might disagree with Robert Kapito about Municipals and David Rosenberg might disagree with him about rates going up (remember rates remained low in Japan for last 20 years). But we like an asset manager who speaks plainly.
In the clip about titled GM Underwriters Revealed , Mr. Kapito interrupted the discussion about who the underwriters are and asked:
- Why is that the story here? Who cares who is underwriting this deal? Some one has to buy the deal, we are a fiduciary; we are going to make the determination of whether we are going to own a company, that we are going to own for the future that it is going to return a good yield or a good upside for our investors;everybody is a deal junkie here; I don’t care who is underwriting this deal.
How we wish all CNBC guests are this blunt with CNBC Anchors?
Gary Kaminsky introduced Robert Kapito as the true Bond King and said “he doesn’t flip flop”. What a dig at the man known as the Bond King in the Bond world, Bill Gross? Were you listening, Erin Burnett? Aren’t you going to defend your favorite guest?
* lnac = last name alphabetically correct
2. Market Pro: Long Bear Market Looming – Robert Prechter with CNBC’s Maria Bartiromo – Thursday, June 10
Maria Bartiromo introduced the topic by stating that the US Dollar has risen nearly 20% since last December. Then she welcomed Bob Prechter. Mr. Prechter’s comments are below:
- Prechter – The dollar move was just fantastic and we were bullish for the whole thing back when people thought inflation was going to rage. The Euro has been killed, Now you remember the story back late last year when everyone said inflation was going to take over, the Dollar was going to collapse, the Euro was the thing to own. Well, now everybody knows that why the Euro is not the thing to own. These market turns always have a terrific story, fundamental story behind them and they fool people into doing the wrong thing. But the reason that we think the Dollar is ready for a correction and Euro is ready for a bounce is that not only do we have quite a few bullish people among traders for the first time through out this whole period but I think we have completed also a pretty clear 5-wave structure in our Elliot Wave Model; those two things tell us that it is time for a respite in the Dollar, possibly a recovery in the Euro, but if I were going to pick a currency to speculate on, I would rather be in the Swiss Franc rather than the Euro.
- Bartiromo – Swiss Franc rather than the Euro; let me ask you this, will the Euro’s rally perhaps or this bounce you are looking for, will that get diverted if we see a leg down in the European Debt Crisis?
- Prechter – Well, I think what this is suggesting is that there is going to be a respite or at least Europe wouldn’t look as bad as somewhere else for awhile; so it went from 1.50 down to 1.20, it could bounce to 1.30 without much trouble. Certainly it needs some kind of relief. There are too many people piled on the other side
Then Maria Bartiromo moved to stocks.
- Bartiromo – Let me move on here, Bob. A 20% loss in the major indexes is also the number that signifies a bear market. Is a bear market inevitable at this point? We are 10% down from the peak in the S&P 500. Are you looking for equities to continue lower or higher?
- Prechter – I think the bear market that began in or resumed, I should say, in April is still in force. I spent quite a bit of time between December & April doing media, I think you and I talked in New York back then, I spent time saying look it is a great opportunity to get out of the stock market, if you are still in it; Since then, only in the month of May the S&P retraced all of that action from last December; the market can certainly bounce for awhile. I don’t think it is really prudent right now to get into short term stuff, as long as people got out of the market and are in cash; I think my job is to look for the next bottom; I certainly don’t see any indication of a major low yet and so we are waiting for that one
- Bartiromo – Real quick, what would be the indication of a low and a bottom?
- Prechter – We need to see some pessimism, we need to see market wave further oversold, and may be we need to get the point where there are only 20% of incumbents left in office
- Bartiromo – All right, real capitulation. Bob, thanks so much.
During the clip, you will see a slide of takeaways from Bob Prechter. CNBC titled the bullets below as Prechter’s Insight:
- Dollar run may be over in the short term
- Stocks are still overpriced; long bear market ahead
- Still bullish on the dollar long term; Best place to be is cash and cash equivalents
Our sincere thanks to Maria Bartiromo for this interview. We gave Maria the Macro Viewpoints Most Useful CNBC Anchor of 2009 Award because of value added interviews like this one.
3. George Soros speech at the International Institute of Finance spring meeting in Vienna – Bloomberg Videoclip – Thursday June 10
We consider George Soros to be among the greatest investors of this time. His words are always to be listened to. A short summary of his speech can be found on Bloomberg.com at Soros Says ‘We Have Just Entered Act II’ of Crisis . A couple of excerpts are below:
- “The collapse of the financial system as we know it is real, and the crisis is far from over,” Soros said today at a conference in Vienna. “Indeed, we have just entered Act II of the drama.”
- the current situation in the world economy is “eerily” reminiscent of the 1930s with governments under pressure to narrow their budget deficits at a time when the economic recovery is weak
- When the financial markets started losing confidence in the credibility of sovereign debt, Greece and the euro have taken center stage, but the effects are liable to be felt worldwide
Frankly, the excerpts above and the Bloomberg summary almost trivialize the speech by Soros. In our opinion, the entire speech is a must read by all investors. The full text of the speech can be found in the Dealbook section of the New York Times at The Full Soros Speech on Act II of the Crisis .
4. Two Opposing Views about BP – Matt Simmons and Whitney Tilson on CNBC Fast Money – Tuesday June 8 & Wednesday June 9
Matt Simmons is a widely regarded authority in energy markets. He appeared on CNBC Fast Money on June 8 in the videoclip titled What’s Next for Energy Infrastructure? Mr. Simmons made an emphatic and extreme prediction in his appearance:
- I don’t think BP is going to last – at least not for more than a matter of months
- President Obama got in writing from Tony Hayward that he would clean up the Gulf of Mexico. And right now the spread is larger than the State of Washington
Mr. Simmons said that the cost of clean-up would just be too massive for BP to bear. But he thinks that the service companies will be exonerated because “this was all BP’s fault“.
Whitney Tilson, Managing Partner of Hedge Fund T2 Partners, first appeared on the Halftime edition of CNBC Fast Money to state that his fund was buying BP as a value stock. This clip is worth a serious listen. The next day, BP stock fell over 15%. Mr. Tilson appeared again on CNBC Fast Money on Wednesday, June 9 to state that his fund had taken advantage of the stock decline to buy additional shares of BP and that the position had been increased from a 4% position to a 5% position. Mr Tilson did a good job of explaining his investment rationale. This clip is a must watch in our opinion. Mr. Tilson begins speaking at minute 14:00 of the clip.
5. Market Breakdown – James Bianco & Larry Kantor with CNBC’s Maria Bartiromo – Thursday, June 10
Mr. James Bianco is the President of Bianco Research and a recognized authority on markets. Maria began with Jim Bianco:
- Bartiromo – Why does Europe matter so much to US investors?
- Bianco – It is the second half of the credit crisis; we borrowed, we printed, we guaranteed a lot of money to stop the deleveraging in late 2008, it worked; now that borrowed, printed and guaranteed money is the problem and it is showing up at its weakest point; the weakest point is 16 countries using the same currency; some of the weaker currencies like Greece and Portugal are having a hard time repaying that debt; and the solutions we have had so far don’t seem to really calm investors; and that’s why over the last few months the markets have been struggling;
- Bartiromo – Jim let me ask you this; do you think anybody drops out of the Euro?
- Bianco – Don’t think anybody will drop out of the Euro; there is no reason for Greece to or Portugal, that’s what we really need, because they get a better deal in the Euro, the Euro has no mechanism to kick anybody out any more than we have a mechanism to kick any state out of the United States; you can’t go that way;
- Bartiromo – what about if Greece can’t keep up the austerity promises, what if they can’t actually deliver on some of this;
- Bianco – Then they are going to wind up defaulting if that was to be the case; I am not so sure that they can be booted out; that’s very murky area I will admit because this was not really contemplated; if they don’t keep up with the austerity if they don’t do what they say they will do, they are not going to get the loans, then they wind up defaulting; that’s how the mechanism I think would work;
Then Bartiromo turned to her favorite guest, Larry Kantor, Head of Research at Barclays Capital:
- Bartiromo – Larry, we got a market that was up more than 273 points on the Dow Jones Industrial Average; not a lot has changed on the economic developments, so why are you so bullish?
- Kantor – You remember Maria, I was on the show Friday and I said to you this was a buying opportunity (emphasis ours)
- Bartiromo interrupts – yes you did; nice call Larry thanks (emphasis ours)
- Kantor – A couple of months ago, we weren’t so sure there was a lot of value in the US stock market, now its down about 11%; it looks more value; a couple of months ago when things were calmer people seemed to be accepting that the US economy was rebounding, now there is a doubt; we have raised our forecast of our US GDP growth to about 4% for the next 2 quarters, that would now be a positive surprise; and US corporate profits look great; margins are fantastic; ….this is the kind of thing that will reaffirm confidence in the US economy; we don’t think this problem in Europe really hits the US in a very big way; in fact, if anything interest rates have gotten down and gasoline prices are coming down as a result of this, this is a Europe problem, not a US problem.
- Bartiromo – It is a Europe problem, not a US problem. So how do I make money on this situation? How come the markets trade down any development coming out of Europe?
- Kantor – I think we are due for a correction; the market was up from the bottom almost 80%; we have now had a correction; at worst it was down about 13%; this is giving you a buying opportunity; Maria, when the market goes up that much, after what we have been through the last few years, you are going to take some money of the table; everybody took some money off the table; we think the US economy is still going to be healthy ; this is a good buying opportunity;
Bartiromo – Very quickly, Jim Bianco, what do I sell in your view?
- Bianco – well, I think what has happened is correlations of a lot of markets have moved closer together, I don’t want to say 1, they are not right that way but stocks go down, treasuries go up, gold goes up; so its kind of what you have been calling here “Risk on Risk off”, I would say bigger picture Risk is Off. When you get financial market volatility that tends to kill economic expansions; economic expansions don’t die of old age, they are killed, when you get volatility like we have seen now, that’s a red flag that could kill it, we haven’t done it yet, but unfortunately we are moving down that path;
We noticed Larry Kantor take credit for his bullish call on the stock market one week ago on Friday. To us, this seemed like a low-class or a tacky thing to do. It was even tackier for Maria Bartiromo to congratulate Larry Kantor for this one week call. Why? Read on.
In our experience, really good investors or managers rarely praise themselves. In the old West, amateur gunfighters often put notches on their guns, but the real pros never did. This is true of today’s managers as well. We were particularly troubled by Kantor’s self-praise because we have heard Larry Kantor a few times before. We recall that Mr. Kantor told Maria in early May that he was Short Treasuries. Now that was a disastrous investment position because Treasuries had a ferocious rally in May. Did Mr. Kantor mention that? No. Did Maria Bartiromo remind him of that mistake? No.
We are willing to overlook this because Maria has never cared about US Treasuries. Her first and last investment love is the stock market. So how accurate has Mr. Kantor been in the past on the stock market? Read his comments above and see how Larry Kantor glibly says that “when market goes up so much, you are going to take some money off the table“. We wondered did Mr. Kantor take any money off the table at the stock market highs in April, or more importantly did Mr. Kantor tell CNBC Viewers to take some money off the table?
We went to cnbc.com and looked for Mr. Kantor’s videoclips. Below is an an excerpt from a conversation between Larry Kantor and Maria Bartiromo on Tuesday, April 20 at 4:09 pm.
That day the Dow Jones industrial Average closed at 11,117.06. In response to Maria’s question whether he would buy into this market given the uncertainties out there, Mr. Kantor replied on April 20:
- Kantor – yeah, I mean it has got a lot of momentum; you know this is a very nice sweet spot, accelerating economic growth, we are revising our forecasts everywhere for the first quarter and inflation is moving down, that means that even as the labor market starts to improve, its going to be awhile before the Fed stands in your way; so you have got the very low short term interest rates, strong economic growth, its a great combination…..the macro environment is great for the stock market overall…
Watch this Bartiromo-Kantor clip at Checking Market Pulse at cnbc.com or read a summary of Kantor’s comments on April 20 at Economic Growth Has Market in Sweet Spot: Kantor on cnbc.com. In the videoclip, you will see a CNBC slide titled LARRY’s VIEW which has two bullets:
- Concerns about a double dip in the US are unwarranted
- Biggest risk to our strong global recovery scenario in inflation but we fail to see global inflationary pressures yet
So here is Larry Kantor on April 20 saying he would buy the stock market at Dow 11,117.06 and that the macro environment is great for the stock market overall. After that day of Kantor’s great macro environment, the Dow fell 1,217 points to close at 9899.25 on June 9, the day before the Bartiromo-Kantor conversation on June 10.
Mr. Kantor did not apologize to CNBC viewers for his wrong bullish call on the stock market on April 20. He expressed no regrets. And Maria Bartiromo did not question him or chide him about his awful judgement on April 20.
Instead, Kantor praised himself on June 10 for his week ago call to buy stocks and Maria Bartiromo congratulated him on his one week bullish call. Talk about adding insult to viewers’ injuries. What a combination of Wall Street Strategy and CNBC Journalism? Caveat Viewer just about covers it.
With another anchor, we would have assumed that the anchor simply forgot what Mr. Kantor had said before. But this is Maria Bartiromo, CNBC’s franchise interviewer. Maria is an exceedingly sharp lady. She takes her anchor role very seriously and, in our opinion, does not forget much. And then, Larry Kantor is her favorite guest. When we searched for Larry Kantor on cnbc.com, we found that Mr. Kantor was Maria’s guest on April 6, April 20, April 29, May 4, May 25, June 4 and on June 10. Heck, Mr. Kantor would probably win Maria’s most favored guest award.
Let us be clear. Mr. Larry Kantor is free to express any opinions he wishes. His investment record is for him and for his employer. We are not clients of Barclays. We are merely viewers of CNBC and so, Mr. Kantor owes us nothing. But Maria Bartiromo does, we think. At least we think she should because we are her loyal viewers. So we have a right, in our opinion, to ask questions about Maria’s on-air anchor practices.
So we ask – Why does Maria Bartiromo like Mr. Kantor so much? Perhaps, we might get a clue from Maria’s closing comment on April 20 – “good news all around, Larry; good to have you on the program“. Is it as simple as this?
Maria Bartiromo likes to hear good news from her expert guests. May be this is why great strategists like David Rosenberg, who have saved the investment bacon of many CNBC Viewers, are rarely invited by Maria. And when they are, they are always accompanied by Larry Kantor or other perma-bull favorites of Maria.
We have watched Maria Bartiromo for years. We have seen that Maria just loves to be bullish. In fact, we called her Global Liquidity Global Growth Champion in 2007 because of her giddily bullish opinion of global growth (we don’t like to use the more commonly used term cheerleader – also Maria champions from the front in our experience rather than cheerleading from the back).
The horrific bear market of 2008 taught Maria Bartiromo a lesson about being overly bullish. So she changed her demeanor and her on-air declarations. But we guess Maria still loves to talk bullishly and spread the good cheer around. So we think Maria now prefers to have her guests talk perma-bull langauge and spread the “good news all around” message on her show. If we are right, this is a tactic worthy of Maria’s smarts – she can ask bearish sounding questions to keep up her journalistic credentials but still have her chosen guests spread the good cheer around. At least, that is what we think.
With other anchors, we would publicly urge them to mend their ways. But over the years, we have developed our own Maria indicators based on levels of her bullish or giddy behavior on air. These indicators have proved quite reliable and we would be loath to lose their predictive value. However, in the interests of CNBC viewers and their financial health, we do publicly urge Maria to consider the needs of investment safety of her viewers rather than remain selfish about her own ratings.
We do not wish to be unfair to either Maria Bartiromo or Larry Kantor. All our opinions are based on what we observe on CNBC and what we find on the CNBC website. We would be happy to discuss this with Maria Bartiromo. We would even be willing to go into the lioness’ den and appear on Maria’s show to discuss this topic, if she invites us. We would also be happy to discuss this in person with her or over the phone and off the record, if she so wishes.
We gave Maria Bartiromo the Macro Viewpoints Most Useful CNBC Anchor of 2009 Award . We feel we have the right to keep up our journalistic vigil to ensure that Maria’s on-air practices remain consistent with the standards of The Macro Viewpoints Award.
So Maria, don’t be offended by our comments. It is not personal, just business!
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