Given the market gyrations, today may have to substitute for the regular gig : Today’s Kudlow & Company, is on CNBC today at 5pm. I’m scheduled to be on from 5:00 to 6:00 pm.
Scheduled to be on is a brave (and delusional) strategist who will argue there is no inflation.
We will obviously discuss the big market whackage today — Cramer is out calling a bottom as I type this.
Once again, should DEFINITELY be fun.
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UPDATE: May 18, 2006 6:52am
Of course, I was the lightning rod. Kudlow was all over my ass. Did you expect any less? Would any of the perma-bulls remotely ever say, "Gee, you’ve been saying risk is increasing and we are due for a dislocation now — is this it?"
And what’s with Ben Stein’s 20 year Buy & Hold advice? How does that help investors to say wait 20 years for your returns? Let me remind you that if my 1966-82 parallel holds up, we could see negative real returns for the next 7 years (assuming we are in 1972/73 right about now).
Incidentally, add Mike Darda to the very short list of economic non-goats who are correct on inflation. I think he’s too bullish market wise for 2006, but at least his inflation forecasts are reality based.
i can’t wait…. HAVE FUN!!
Would that be the same Jim Cramer calling a bottom who capitulated at THE BOTTOM back in 1998 (not to Sam: that would be gloating)?
It could possibly be “a” bottom. But not THE bottom. They say sell the news… I covered my qqqq today.
In any case, with your 2006 prediction beginning to bear fruit, I bet they start showing you a little more respect.
I’d be thriled if I thought my account had bottomed, or was going back up.
LOL Dave
I must say not as many people looking cross ways at me for owning metals, bear funds, and 3% money markets this week
Whackage…. then there was SmAcKaGE!
gotta love scaling out of your positions before days like this. Only to have the cash availible to short left and right, only to cover them at the end of the day again.
:)
Larry sure is harsh with you, Barry. I wouldn’t let him get away with that. I think you are dead right with your projections for 2006.
I think everyone is overlooking what is happening in the housing market. I’m surprised there isn’t more discussion about it on episodes such as those.
I wouldn’t touch Countrywide with a 10 foot pole.
Observations on what little of K & C I saw:
1. 6% in ’06 is now in the MSM.
2. If you want to buy a mortgage bank, forget Countrywide, and take a look at Indymac.
3. Buying indexes here, even for a trade, seems kind of risky.
great show tonight…… until Mad Money came on at 6:00 and Cramer was running around with chef’s hat, skewers, bbq sauce and roasting bulls…. unfreaking believeable!
what a clown
emd
I’ll take today to reiterate that the inflation buzz is overblown. However, I am not a buyer of equities – I think housing is going to cream the consumer and drive us into recession. Today’s CPI report, while worse than the Perma-Bull media and the market was expecting, does not represent a consistent increase in non-energy consumer prices. Producer’s can’t push prices up when consumers run out of cash. They can only see their margins get squeezed.
It was very interesting to hear what Larry said about what his Fed contact had to say. If the Fed really is going to keep inflation in the 1-2% band, then rates are obviously going a lot higher. That is bad for gold and bad for housing.
I think today’s market reaction was more the realization that the housing market is going to suffer “whackage” than worry about the actual inflation that is going to occur. I also think that people are sensing a slow down in demand for commodities.
The Closing Bell brought this through loud and clear when they interviewed their guests.
Today was the first day that the market realized that the housing bubble is going to pop. I predict it will be the first of many, many days like today, unfortunately.
Did I hear Dennis say “It’s not a loss if you don’t sell”? Sheesh. You’ll all have to forgive me if I don’t make that little nugget the pillar of my retirement plan…
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I disagree. The housing mkt’s bubble-prick-decline has been prognosticated for years now. It’s unlikely that the overwhelming majority of institutional investors were unaware of this fait accompli until today or last weekend. The key difference is that only recently have we seen the tangible and credible evidence by way of actual price reductions, inventory gluts, etc. And, remember, if housing does fall as fast as some are predicting and if housing is the single largest driver of GDP growth contributor like some bears say it is, then it must follow that it will serve as the means to curb inflationary pressures. Once inflationary pressures moderate, rates will come in, which will likely help RE to stabilize to some extent. In other words, I don’t see the Goldilock’s version of the bear story happening either. Don’t get me wrong, I don’t see the soft-landing, but I don’t see the crash landing either. It’s really akin to oversold/overbought mkt conditions.
You are a strong man. I woulda whacked Kudlow if he called me “Brother.” Actually I would have replied; “Brother? No, cousins yes. We both have a last name of “Capitalist” but…. [insert your own superflous comment here.]”
I can’t believe how ingracious he was in the face of a setback considering how he acts when he is right for the moment.
the housing slowdown story is bigger than simple GDP slowdown. GDP only affected by NEW HOMES BUILT. that’s only 15% of the housing story. the real crushing blow comes from the 85% of housing that is EXISTING HOMES and that owners are now seeing REVERSE in price. their debt structures are built on CONTINUAL APPRECIATION and that story is dead dead dead. so we’re not talking about simple economic activity, we’re talking about plunging consumer confidence when their major asset is no longer an ATM spitting out real or projected cash flow
Kudlow opens with calling you a “pig in mud” and then onto brother and what not. Don’t take his lip. You should blast him for the hot air that he is. Worse than that, blast him for his smug impoliteness. Yeah, you wouldn’t get invited back, but it would make great TV and I bet a decent career move.
When the bill collectors call, would you please tell them that Arthur Laffer said I should get a tax cut, so I can grow my way out of this debt? And also, please tell them to be patient, very, very patient with the payments because Tom Friedman said the world is now flat.
The reason I think the housing burst won’t be soft is because a) there is so much debt involved, b) so many jobs are RE related c) the ARMs allowed people to get financing for stuff they had no right to, ie they are way over extended d) most of the financing is very short term e) interest rates are rising and may be much, much higher than what their ARM was for and f) we have so, so much excess inventory due to all the speculation.
I think it is going to be really ugly.
Another thing: I think 2008 is the year that the baby boomers start turning 62. Will the housing market get cleared before the baby boomers start downsizing their housing ?
Tim, yes a crashing housing market will probably mean lower rates, eventually, but cut rates to 2% and homes are still overpriced if you consider fundamentals. Housing can’t be saved at this point.
The DJs on the radio in San Diego are already talking like we’re in a recession. Today I heard “Times are tough, money is tight, so we’re selling tickets without a service charge at…”
kirkH: are you serious ? Is it that bad in SD ? I hear stories about this stuff and I never know if they are completely true or not.
I keep noticing that Larry asks long-winded questions, and when someone starts to answer, he interrupts him and starts asking someone else another long-winded question. Drives me nuts, and I think it’s rude. I want to hear a complete answer to a question for once!
I like Larry more than most (does not mean I agree with him) but I agree with Becky – his questions take 5 minutes to ask and then the guest gets 30 seconds to answer.
Ben Stein is an actor, not a market guru. Goes to show you there is more money in the US than brains!
Barry, Stein’s advice isn’t so bad. The sad truth is that all but the best managers aren’t going to make much in a sideways market because perfectly timing the ins and outs to take advantage of price movements alone over a long period is very difficult. The number of people who think they’ll do it is probably much higher than the people who actually will.
Yes, Royce, but buying stocks to sit in for 16 years flat (big negaitve inflation adjusted) is potentially the risk he is ignoring.
Think how valuable that advice would have been in 1966 . . .
Barry:
I know, and since Stein is a market timer it’s odd to hear him say that.
But for the average retail investor, that risk could well be better than the alternatives. Don’t get me wrong- I’d like to think someone like me could be nimble in a sideways market and hop from stocks to bonds to real estate just at the right times so that I ride the ups, jump off before the downs, and don’t rack up too much drag in transaction costs- but chances are it isn’t going to happen. Sometimes you have to look out into the future and understand that you’re going to be lucky just to keep your capital intact, let alone post big gains.
Well if Ben Stein sits in the market while it goes down and Barry outsmarts him then technically Barry wins Ben Stein’s money…
I agree, Becky. I hate these interviews when they are always short of time. Let the guys speak ! I don’t want to hear what the host has to say. We know Larry is a perma Bull.
The real danger in housing is if the MBS market decides the risks are too high. The natural price of a home is what it will sell for with no mortgages available to anyone (which will be somewhat higher than what people pay for downpayments). Any premium over that is entirely created by the mortgage industry.
For the past few years, the mortgage industry has given a mortgage to anyone that asks for it. There was a news story about some guy in Florida that hadn’t had a job since the early 90’s that bought 6 houses. This was only discovered when he was found dead (from natural causes) in one of them after he was many months behind in payments for all the mortgages. The number of no-doc loans out there is very disturbing.
It’s not low interest rates that drove house prices up. It was easy credit available to ANYONE. I’ve read reports that banks were encouraging people to lie on their application forms so that they would get approved. When the subprime lenders start to go under, nobody is going to take over their business. It won’t matter how low interest rates go, credit will still be tighter than it has been. When house prices are falling, banks are going to stop giving out 100% LTV mortgages because they don’t want to lose money instantly if the person doesn’t make payments. If people can only get 80% financing, prices would drop even if interest rates dropped to 0%.
Real house prices are going to drop back to their mid-90s level throughout the country. They might overshoot and drop further than that. The options for the economy as a whole are high inflation (allowing nominal house prices to only drop slightly) or deflation (if nominal house prices fall, nobody will have money to spend). The choice will be made by next summer. Past that, it will be too late to switch easily.
Bueller……Bueller……
Um, he’s sick. My best friend’s sister’s boyfriend’s brother’s girlfriend heard from this guy who knows this kid who’s going with a girl who saw Ferris pass out at 31 Flavors last night. I guess it’s pretty serious.
LMAO
You guys are too funny . . .