Editor’s Note: In this new 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. Please let us know whether such articles are useful to you.
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 that should only be taken after a detailed discussion with your investment advisor and should be subject to your objectives, suitability requirements and risk tolerances.
It is our axiom that a strong trend does not become a Bubble until CNBC gets giddy about it, We have news for you. CNBC got really giddy this week. We show you why we think so and let you judge for yourselves.
In this article, we feature 6 clips:
- A hilariously zany clip of Jim Rogers and Larry Kudlow about how Hyperinflation in America, the Collapse of the US Dollar and of course their belief system of “Chinese Leaders are so Smart and American Officials are so dumb” – An absolute must watch, in our opinion.
- CNBC’s Joe Kernan gets giddy about the stock market and berates perma-bull trader Jack Bouroudjian for being cautious – You will think you are seeing the ghost of the 1999 “Qualcomm, Qualcomm” Kernan – You got to see this clip to believe.
- A conversation between Bond King Bill Gross and Joe Kernan. Also a shorter conversation between Bill Gross and Erin Burnett.
- Maria Bartiromo restores balance and reason from St. Petersburg, Russia.
- A comment from Hedge Fund manager Doug Kass that rocks the CNBC belief system.
- An excellent interview by David Rosenberg, previously Chief Economist at Merrill Lynch – views of an economist with a stellar record of predicting the economy and bond markets – a must watch for any serious investor.
1. A three-clip interview by veteran investor Jim Rogers on CNBC Power Lunch – Thursday, June 4, 2009
The first clip titled Bear Market Rally is a serious clip.
- In this clip, Rogers says that he is “wildly bullish on commodities”; “wildly bullish on China”; he sees “crazy inflation coming” and “he will short bonds”; “he would rather short bonds than stocks”; “for the first time in a long time, he is not short any stocks.”
The second clip titled Talking Treasuries features a conversation between Jim Rogers, Larry Kudlow and the eminently sane Howard Lutnick, CEO of the bond firm Cantor Fitzgerald.
This is a zany clip with outlandish opinions delivered in a highly entertaining format by two wild & crazy guys named Rogers and Kudlow. Believe us, Dan Aykroyd and Steve Martin just cannot compare. Heroic Lutnick tries to knock some sense into these crazy guys but gives up. The main theme of course is that Chinese Leaders are so smart and American officials are so dumb. Two main excerpts:
- Kudlow – “why any one would want to buy treasury bonds right now is beyond me”
Rogers – “Bernanke is in over his head, he does not know what he is doing, poor man – he is out of his league”
In our opinion, this is a CNBC Hall of Memories clip. The key question is whether this giddy segment ends up signaling a bottom in the US Dollar? Time will tell!
In the past, Jim Rogers was not so welcome at CNBC because he used to be bearish on stocks. But, this week Rogers was bearish on long maturity US Treasuries and that got him a hero’s welcome at CNBC Power Lunch. First Larry Kudlow walked into the show to welcome Jim Rogers and later Bill Griffeth walked in to greet “old friend” Jim Rogers. Now do we sound credible when we ask Are CNBC Anchors on a Mission Against US Treasuries?
The third clip titled Trader Talk is a love fest between Jim Rogers and CNBC’s Rick Santelli. This is a serious clip.
2. May Nonfarm Payrolls Down 345K – Watch a giddy Joe Kernan berate perma-bull trader Jack Bouroudjian for being cautious on the stock market – Friday, June 5, 2009 – 8:30am
After the nonfarm payroll numbers were released, stock index futures shot up reflecting a 100 point increase in the Dow Jones Industrial Average. Joe Kernan got positively giddy about the wisdom of the stock market and then began berating perma-bull Jack Bouroudjian for being cautious.
- Bouroudjian – “…you can see it played out in the 2-10 spread – it is the highest we have seen in a generation, it is a clear warning signal”
Kernan dismissed this. Then:
- Bouroudjian – “..for those of us who have traded this market for 25 years…you can hear the sucking noise, you can hear the sucking noise..”
Kernan – “what sucking noise?”
Bouroudjian – “..the sucking noise is , it lures people back in, if it loses half of what we have just done which is 20%, it will scare people right of – that’s the biggest concern”
This conversation begins at minute 11;30 of this clip. You got to watch it to see the bullish giddiness of Joe Kernan. It is not quite the wild Kernan of 1999 tech bubble but it is pretty close.
Less than two hours after Bouroudjian expressed his concern about the 2year-10year Treasury yield spread, guess what happened. This spread corrected violently with the 2 year Treasury yield rising 34 basis points on Friday. The early morning stock market rally also reversed at that time. This reminds us of the last week of June 2008 when the 2year-10year spread reversed violently and the 2 year treasury yield rose by 61 basis points in that one week, the highest such rise since 1982. Also that week, a large hedge fund allegedly lost about $3 billion on this spread reversal.
3. Bond King Parses Jobs Data – A conversation between Bill Gross of Pimco and CNBC’s Joe Kernan – Friday, June 5, 2009 – 8:43am
This is a good conversation and should be watched in full. Mr. Gross says he expects the 10-Year Treasury Note to trade to a 4% yield by early next week.
It might have appeared to some that we have been critical of the Bill Gross interviews on CNBC. Not at all. Mr. Gross is one of the greatest bond investors of our day and we are always eager to listen to every word he says.
But, we are just as aware that Mr. Gross is the manager of a huge Bond Mutual Fund as well as the Co-Chairman of Pimco. So we realize that it is his first and foremost responsibility to support the bets made in his fund at each and every occasion. Mr. Gross has no obligations whatsoever to worry about the suitability of his recommendations for the individual bond buyer viewers of CNBC.
That, in our opinion, is solely and absolutely the responsibility of the CNBC Anchor interviewing Mr. Gross. Unfortunately, we find that CNBC Anchors are fascinated by Mr. Gross’s celebrity status and get caught up in an attempt to show off their own knowledge by debating with Mr. Gross. In doing so, they end up ignoring their responsibility to individual bond buyer viewers of CNBC.
This is, of course, our opinion and we ask Mr. Kernan whether we are being unfair. If you do not concur, Mr. Kernan, please tell us why.
Mr. Gross also spoke with CNBC’s Erin Burnett on Wednesday, June 3, in her segment Pimco’s June Investment Outlook. He said that investors should stick to short maturity treasuries for safety and avoid long maturity treasuries. Two days later, short term maturity treasury prices took a big hit as the 2year-10year Treasury spread reversed violently on Friday, June 5. This shows that even the Bond King is fallible.
4. Preventing Another Global Crisis – A report by Maria Bartiromo from the International Economics Forum in St. Petersburg, Russia – Friday, June 5, 2009 – 10:34 am
Maria’s collection of quotes from major figures at the Forum:
- Former Japanese Prime Minister Koizumi – “He is more worried about deflation in Japan than inflation over the near term”
- Former German Chancellor Schroder – “anybody who thinks the recession is going to end this year is flat out wrong”; He is expecting a tough year-two years in Europe led by weakness in Germany – “Europe is so dependent on exports and export market as we know it is weak given the US consumer’s ability & desire to spend right now”.
- Robert Mundell – Nobel Laureate and Professor at Columbia – ” The US is going to emerge from this recession sooner than any body else”
5. Running With The Bulls – Hedge Fund Investor Doug Kass with Larry Kudlow – Tuesday, June 2, 2009 – 7:15pm
It is a deep and abiding belief at CNBC that the stock market is a leading indicator of the economy. As Carl Quintanilla said on Friday, June 5 “clairvoyance of the market continues to astound you”.
Watch veteran Doug Kass commit the heresy of debunking this CNBC belief system:
- Kudlow – “You think it is ahead, but that is almost by definition tautologically not possible, stocks are a leading indicator of the economy”
- Kass – “I don’t believe that at all; I heard that for the last 3 weeks; and I think there is very little causality between stock prices and the economy”
- Kass – “60% of the companies missed sales forecasts for the first quarter but 2/3rds of the companies beat earnings and what that means to me is there is a down side to the cost-cutting process and the Achilles heal of the recovery is going to be that the consumer still cooked”
You can either watch this exchange on the clip or read Mr. Kass’s summary at Kass: ‘The Kudlow Report’ Recap The clip is more entertaining in our opinion.
6. ADP & The Economy – David Rosenberg, Rick Santelli & Two Other Guests – Wednesday June 3, 2009 – 8:30am.
In virtually any other week, this would be the leading clip we discuss. David Rosenberg has had a stellar record of predicting the economy and the bond market . Any one who followed Mr. Rosenberg’s advise made positive returns in 2008. Need we say more except watch this clip.
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