Tonight’s appearance will be Kudlow & Company, and I am scheduled to be on from 5:00 to 5:30 pm, plus or minus a few minutes. Also appearing: My old pal Noah Blackstein, John Rutledge, and Charlie Gasparino.
I have to emphasize again:
• I don’t believe in forecasting
• I
don’t know what’s going to happen next year;
• Neither do you, nor does
anyone else, for that matter.
• Bull or Bear are irrelevant labels.
That said, I will attempt to be humble given the debacle of today’s markets . . .
UPDATE: January 20, 2006 6:05am
About that sweater . . .
As soon as the Dow crossed negative 150, I just knew I was going to get the call from Kudlow’s producers. I made a half-hearted attempt to beg off, but it went nowhere. They needed someone who had made a bear call, and my new office is at 46th & Park Avenue, 3 blocks from the remote studio at 49th and Madison.
I always wear a suit and tie to appearances — I even keep a backup outfit in the office — suit, shirt, tie, shoes, the full monty. But since I just moved into the new digs just 2 weeks, ago, I haven’t brought in the emergency regalia yet. Hence, the casual Friday, unshaven, buy-side sweater.
At least I wasn’t in jeans!
Well said…..
The whole wisdom is knowing that you don’t know
I like the shirt!
I agree with you about inflation. Is there anyone in the US (who doesn’t work for Wall St or the Gov’t) who seriously thinks inflation is at 2%? Based upon everyday medical bills and insurance, taxes, tuition, energy costs, housing etc. I would think the average person is looking at 10 or 15% inflation at least. I know I am. So what if computer prices are down if your self-employed health insurance premiums are up 25%?
Congrats, you made some good points. The market has been too calm over the past three years. John
Rutledge is making too much of the Chinese inventory overhang. Oil prices are heading skyward and even the Chinese manufacturers are dependent on oil prices.
Doing some work and saw you show up on Kudlow so I came to the site and saw this post.
I don’t think Noah took statistics or any mathematics in college. Likely an MBA. Not that all MBAs are empty suites. Just most. LOL. Kidding.
When Noah says there are 6% of all months with negative growth, he clearly demonstrates a lack of understanding of how trading markets work. That is scary because he is a fund manager. Actually, Noah, and I suppose you secretely read this board, the statistical probability of a correction of 10% or more this year is extremely high going back to 1896.
Where’d you get that sweater? Loved what you said.
Barry-
You remained calm while Mr. “It’s Morning in America” & Mr. “I’m Buying Everything Here” were VERY defensive. But I gotta say….. WHAT WAS UP WITH THAT SHIRT OF YOURS? It’s okay to wear presents from your wife once a year to show her that you like them but putting them on national TV is above and beyond the call of duty! :)
Everyone is still VERY bullish (but looking a bit nervous). Amazing… It feels like Wall St. wants to fight the market. kind of strange.
Barry,
I agree with your 25% correction potential, but secular bear market selloffs are not corrections, and I disagree with you inflation fear…..this bear mkt is not because of inflation and overtightening by the fed as a result. This, imho, is what will awaken the secular bear:
1. Peak earnings/peak margins and peak p/e’s taken together with low volatility (complacency) and very low risk premia are untenable in a very levereraged economy. Reversal to the mean will happen when risk aversion appears. One can’t buy peak anything, when the economy is slowing down.
2. A consumer being very tapped out (housing atm disappears/heating and gas price increases slow wage growth etc etc) and with a poor balance sheet will get the ball moving, holding companies back from investing in growth ( spending instead on dividends/buybacks and consolidation).
3. A disaster of an external balance. When the crowd things the external balance can go on forever because it has lasted for a long time, you know it is almost over.
It is not a coincidence that smaller central banks are making noise about diversification ahead of the fed handover. It is the scared smaller players (central banks), followed by hedge fund speculative trades, that moves the Nash equilibrium not the biggers ones (japan/china who would be shooting themselves in the foot). The big central banks will be forced when the equilibrium has changed and it is too late. This is what created a crisis/panic. What starts it rolling, we don’t know at the moment. Could be oil crisis,global politics, fed handover,hedge fund problem or general risk aversion. A dollar crisis will tighthen the long end of the curve exactly when we don’t need it.
4. With billions of chinese and indians coming into the global workforce, we are facing overcapacity in productive and service assets, if the US consumer cuts back as the Housing ATM runs out of money. This points towards deflation rather than inflation at the time when the fed is shrinking the money supply growth. Deflation in asset prices follow.
This is what Bear Mkts are made of!!!
Here’s yet another reason to question the “shiny happy” perspective: http://www.windsofchange.net/archives/007986.php
I don’t normally watch Kudlow but couldn’t resist when I saw you were on. You certainly held your own. I was surprised at how respectful of you Kudlow was, I normally can’t stand the guy. But he seemed to at least understand what you were saying which is more than I can say for the two idoit permbulls.
Barry, I think you show alot of guts in your opinions.
It certainly is refreshing to see someone who has a opinion diferent than Kudlow & Kramer .
Barry-
As further evidence of your qualifications, why don’t you point them to your early November column where you opined the market was making a tradable base BUT THE RALLY WOULD END MID-DECEMBER. No Perma-Bear attitude there and a gret effing call.