Media Appearance: Kudlow & Company (5/24/07)


Its the regular appearance on Kudlow tonite: We will be discussing unlikely potential Fed Cuts (a Bullish mantra for some time now); today’s Market Reversal, Home Builders and Inflation, from 5:00 til about 5:30 or so.

Its a pretty stellar line up:  In addition to your humble narrator, the guests include David Malpass, Gary Shilling and Jim Awad.

What can we discuss?

• The Technical Reversal on pretty big Volume — Dow up 70 to down 90 (as of this writing);

NYSE 3.1 Billion shares
Nasdaq 2.3 Billion shares
Qs did 200 million — the most since Feb 28th (300m)

Prices plummet, New Home Sales Surge (but double digit monthly gains are usuaally reversed);

Overstated Job Market Strength;

• Tech Weakness and the ongoing rotation into Defensive names (Utilities, Consumer Staples, Insurance, Pharma, Telco);

Cult of personality: Why does anyone still pay attention to former Fed Chair Greenspan?  His influence of Fed policy is now zero; he was a particularly awful forecastor. So why do people STILL hang on his every word?

UPDATE March 24, 2007 10:31pm

I meet Jim Awad in the green room (nice guy), but I am unable to strike up a conversation — because Kenry Kissinger is in the room.

While Henry the K is on air, I hang around shmoozing with his entouarage, chatting about music. Turns out Henry is okay with photos, so one of his bodyguards uses my phone camera to grab a snap.


Turns out that, yes, you can get around the secret service muscle — if you were just on the CNBC . . . 


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What's been said:

Discussions found on the web:
  1. Larry Nusbaum commented on May 24

    “Why does anyone still pay attention to former Fed Chair Greenspan? His influence of Fed policy is now zero; he was a particularly awful forecastor. So why do people STILL hang on his every word?”

    Because, it seems like half the people think he was awful and half think he was wondeful. Please recall, back in May of 2000 when he Raised by 1/2 point in light of a market bubble and a post Y2K dead economy. He was no visonary IMHO. Always late in either direction.

    In my household we called him Alan Greenspic’n’span because he wiped our economy clean…..

  2. ECONOMISTA NON GRATA commented on May 24

    I was up late last night watching “The Perfect Storm”….

    Could this be an Omen…?

    Today’s Key Reversal along with all the other incidentals….?

    Say goodnight to the Bad Guy….!

    Best regards,


  3. Isaac commented on May 24

    Kudlow made a truly mystifying statement in his interview with Kissinger, where he said that Iran was funding al-Qaeda. That would truly be a momentous piece of news if a Shia government was funding their mortal enemies. I think the more likely scenario is that the man just has no idea what he’s talking about.

  4. Larry Nusbaum commented on May 24

    Isaac: you have a good point about al-Qaeda being Sunni Fundamentalists. Did they offer one ounce of evidence?

  5. Artorios commented on May 24

    “In my household we called him Alan Greenspic’n’span because he wiped our economy clean…..

    Posted by: Larry Nusbaum”


  6. s0mebody commented on May 24

    So we have gone up the past 6 months in the face of deteriorating economic fundies, and now with this “better” home sales report we pop up 100 points, bonds sell off hard, and then the stock market does a 180 due to “rising interest rate worries”. Then the 10 yr rallies back to UNCH and the Dow finishes down 85 and at the lows. What next? Is the trade over the next 3 months going to be sell (wall street’s 4 letter word) regardless of the data? This market seems so bass-ackwards. One last thing. I’m bearish, but this sell-off just seems all of a sudden arbitrary.

  7. Barry Ritholtz commented on May 24

    We are up 10% in a month, and overdue for a mild correction at the very least . . .

  8. Winston Munn commented on May 24

    “We are up 10% in a month, and overdue for a mild correction at the very least . . . ”

    A major reason April turned in such a good showing was the spike in one-time tax receipts from non-withheld taxes. This allowed a huge amount of cash to flood into the markets as the Treasury did not have to borrow.

    Now, however, not only is that short-lived party over and the Treasury is once again back to borrowing, but the FCBs are reeling in their purchases of treasuries – to the tune of almost $4B less this past week – that is a shortfall the Fed has to monetize.

    Although it is now only a single cup trying to drain the ocean, money supply is slowly tightening – U.S. home loans, the PBoC increases in reserve requirements, Brittain’s rate increases, Spain’s near desperation in their housing bubble – if the yen seriously rises, look out below, because all that liquidity will evaporate.

  9. ECONOMISTA NON GRATA commented on May 24

    It appears to me and correct me if I’m wrong, that this is more than just what may be a draw back from April’s rally.

    I always look for milestones in my tech analysis, one being that the S&P posted a “new all time high” with great fanfare and thick volume and that it closed below yesterday’s low. This is a “key reversal”. Even though I’m a sceptic about the Mumbo Jumbo, Hocus Pocus, Voodo Tech Analysis, there are many true believers out there and this may just be enough to tip the balnace in sentiment, which im my opinion is the only thing that equities have going for them.

    We’ll see if my patience pays off. I’m downgrading the stock market from a Strong Buy to Goodbye.

    Best regards,


  10. Si commented on May 25

    I love how every wiggle in the market gets analysed these days….riveting TV, between cnbc and and all the reality c**p I don’t know how I manage to find time for anything else.
    The market has been on a none stop thrill ride up and the first small squiggle down is considered news worthy, no doubt Cramer will calling for a rate cut……can’t be long..anytime now.
    Kudlow, explaining how iran is funding al quaeda is investigative journalism at its best…kind of reminds me of when Dick C was on the news explaining about the town size underground caverns al quaeda had built with all kind of electronic dudads, tanks, wmd, etc.
    Note to self…… find doc brown and get him to explain how the hell I ended up in this reality, instead of a cool one.

  11. Barry Ritholtz commented on May 25

    You can spell out the word “crap” — I believe we have a sophisticated readership who won’t be offended, understand and appreciate language.

    I suspect the prior readers who might have been offended by words such as “Shit,” “Porn” and “Bitch-slap” are no longer regulars . . .

  12. Greg0658 commented on May 25

    Si – I wonder if we have a new mob in town. Flying what one of my camp hangouts calls False Flag Operations. Codenamed AlQuaeda. The shakedown is … do this action or else you’ll be sorry.

  13. Josh commented on May 25

    Great shot with Kissinger.

  14. Scot commented on May 25

    Separated at Birth ?

  15. David Graves commented on May 25

    There is a certain “separated at birth-and one was cryogenically preserved” aspect to that photo…..Have a great week-end, thin Friday trading and all.

  16. Eclectic commented on May 25

    “His [Greenspan’s] influence of Fed policy is now zero; he was a particularly awful forecastor. So why do people STILL hang on his every word?”

    I have a friend who is into ice sculptures and we’ve chatted lately about one particularly long-lived one he carved back in March.

    But, let’s talk about that ice sculpture down to the molecular level. Let’s toss some salt on it and see what we might learn about markets and about psychology.

    So, what does happen and why?… Why the salt?… What does it do?

  17. Brendon commented on May 25

    Whats it like to have your photo taken with a war criminal?

  18. Garuda commented on May 25

    “On Memorial Day 2001, Kissinger was visited by the police in the Ritz Hotel in Paris and handed a warrant, issued by Judge Roger LeLoire, requesting his testimony in the matter of disappeared French citizens in Pinochet’s Chile. Kissinger chose to leave town rather than appear at the Palais de Justice as requested. He has since been summoned as a witness by senior magistrates in Chile and Argentina who are investigating the international terrorist network that went under the name “Operation Condor” and that conducted assassinations, kidnappings, and bombings in several countries. The most spectacular such incident occurred in rush-hour traffic in downtown Washington, D.C., in September 1976, killing a senior Chilean dissident and his American companion. Until recently, this was the worst incident of externally sponsored criminal violence conducted on American soil. The order for the attack was given by Gen. Augusto Pinochet, who has been vigorously defended from prosecution by Henry Kissinger.

    Moreover, on Sept. 10, 2001, a civil suit was filed in a Washington, D.C., federal court, charging Kissinger with murder. The suit, brought by the survivors of Gen. Rene Schneider of Chile, asserts that Kissinger gave the order for the elimination of this constitutional officer of a democratic country because he refused to endorse plans for a military coup. Every single document in the prosecution case is a U.S.-government declassified paper. And the target of this devastating lawsuit is being invited to review the shortcomings of the “intelligence community”?”

    You might want to wash your hands, Barry.

  19. Eclectic commented on May 25

    I lost my train of thought.

  20. Eclectic commented on May 25

    You know, Barringo?… Come to think of it… regarding the photo comments of David Graves… I took a real close look at that photo.

    It actually looks like one of those “long lost Daddy, found” story photos.

    Like from a feature piece in Reader’s Digest titled: “How I found my long lost daddy… and finally learned why I’m a think tank junkie.”

    You suppose this quote of his has market psychology overtones?:

    “To be absolutely certain about something, one must know everything or nothing about it.”
    –Henry Kissinger

  21. Eclectic commented on May 26

    All I can say is that my head won’t stop spinning… There are so many conflicting opinions now about the market and the economy, and so much history that tells us that opinions are like… well, you know the old saying.

    Here are a couple of my observations recently:

    A few days ago Jack Bouroudjian was on CNBC being a bit bearish and today we learned what price he paid for it. While it was my personal opinion that his bearishness was reasonable and tempered at the time he delivered it, he still must’ve disappointed a lot of people that need Jack to stay bullish for their own emotional bullish reinforcement. According to him (this AM back on CNBC) he got covered up with email about it, and it seems to me at least that his tone this morning was quite a bit more bullish than bearish.

    Actually, I thought the words in his opinion this AM were generally identical to what he said before that evidently caused the email to flow. I’m not being critical of Mr. Bouroudjian. I thought he fairly and reasonably stated his opinion and I don’t doubt his veracity at all. It’s just that, in my personal opinion, any rational observer would conclude that his two appearances represented the same opinion, but they were likely viewed very differently by his following. It’s all about perception. His fans will not allow him to be bearish. If he truly became bearish and unequivocally demonstrated it… he’d lose his following faster than CNBC drop-kicked Michael Metz this morning.

    Boy, was that a spectacle!… I have to tell you. Again, it’s all about perception. I’m not going to argue the point with research and quotes, because I don’t have the time to look everything up, but Metz HAD become quite bullish in the last number of weeks or even a few months. In fact, I’d thought his bullishness was unique for him lately, although not as startling to me as was Bouroudjian’s foray into the dark universe that loaded up his electronic mailbox. Yes, they pulled the tape and it made Metz appear to contradict himself, but sometimes context in the core of what somebody is saying is lost in editing.

    I think that what Metz was trying to convey, in my opinion from his several appearances in media, was that he was concerned about the economy and yet at least temporarily bullish about what the market might do. Nothing illogical about that opinion either… it’s not dramatically different from the mirror image of what Bouroudjian’s atypical bearish opinion has seemed to be over the last week or so.

    My perception of Metz lately was that he’d generally been right about the market, whether he ends of being right about his statements on the economy or not. But those two things are likely to be viewed dramatically differently based on the relative perceptions of observers. Just like CNBC can’t deal with Bouroudjian being bearish, they can’t really deal with Metz ever being bullish and they’re not disposed to discern the difference between what he says about the economy and what he says about markets. Bouroudjian and Metz are both typecast, and by now both of them probably should understand that they are selected by CNBC to represent the opinion they are typecast to represent. Sorry gentlemen if you want to change your minds… we’d don’t allow it, and we don’t take prisoners.

    Right now market opinion is like a big block of ice floating in ice water. The ice is sure it’s ice and the water is sure it’s water. But, they’re both the same thing and yet very different too.

    But where is the battle fought?… Is it deep in the ice block, or is it played out in the water instead?

    The answer is — neither place. The struggle is only at the boundary where ice and ice water are so nearly to being the same thing.

    It’s always been my philosophical opinion that at the exact instant that a stock is sold – at that hair trigger instant – the seller is indifferent (so is the buyer indifferent) about owning the stock versus selling it. If you say “no,” because the seller is obviously selling it… then the philosophical question becomes: why did they not sell it one hair trigger instant before they did?… and, isn’t the market a place where stock in transition should be viewed this way?… Isn’t a seller or buyer interested in that hair trigger place where he actually wants to be indifferent?… Think about that deeply and you may begin to see my point. The whole point of a market is to arrive at equilibrium, where the two components of the decision – stock versus cash – are perceived to be precisely equal in value.

    If you disagree, it would be sort of like thinking that all the ice of my illustration could melt or all the water freeze without there first having been a pretty dramatic change in the environment. The water and the ice are both so firmly entrenched in their identities that they couldn’t be swayed unless there’s some very big change. The whole decision is being made only by the molecules at the boundary, like the shares of stock involved in the market float at any precise moment. Every other share of every other company not involved in the decision is just like the ice and the water. They have their Bouroudjian or their Metz and they don’t need to think.

    Tossing a bit of salt on the ice would change things, because then you’d be changing the environment. Then the ice molecules, were they to melt, would no longer be so indifferent about being either ice or water, because they’d join with the salt to become salty water with a lower freezing temperature. If they make that decision, they can’t go back without an even more substantial change in the environment, and that’s lower and l-o-w-e-r still.

    It’s possible that Mr. Greenspan may have tossed some salt on the ice. Time will tell, but a little melting would bring him into a rather timely equilibrium of opinion with his newest and I suppose biggest client. Read the latest Gross piece at Pimco and tell me if I’m wrong.

    And, you, my readers, now know why we put salt in ice cream makers and on icy roads and bridges… except where I live (about roads, not ice cream makers). My state has exactly two snowplows and a nasty guard dog, and one of the snowplows is jacked up on blocks only for providing used parts for the other one that works. The guard dog is there to make sure nobody ever uses the one that works.

    Happy Memorial Day!

  22. Yash commented on May 26

    I note the obvious similarities in appearance.

  23. JB commented on May 29

    War Criminal!

  24. Barry Ritholtz commented on May 29

    Yeah, and that Kissinger was no angel either!

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