Media Appearance: Kudlow & Company (8/2/07)

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>Its the regular 5 pm appearance on Kudlow tonite on CNBC:  Jason Trennart of Strategas, and Roger McNamee of Integral Capital, and the irrationally exuberant Jerry Bower. Intrade CEO John DeLaney may also be dropping in.

The discussion will cover the market’s volatility, yesterday’s rebound, and the economy  Other things worth noting:

-More than two-thirds of Americans believe U.S. economy is in recession now or will be by next year (Wall Street Journal/NBC News)

-Financials continue to crater on the unknown potential liability of CDOs, amidst worries about credit; Meanwhile, Germany had to rescue subprime lenders   

GM, Ford, Toyota, Honda Say U.S. Sales Fell in July: Its one thing when GM or Ford stink up the joint — but when Toyota and Honda join them, you know something is not good in consumer-land.

More and more hedge funds are blowing up

-Yesterday’s bounce could have been caused by key technical lines being held, or perhaps  it was the correction of a trading error.

The Dow is off 4.6% from its recent high last week, while the S&P and the Nasdaq are off 5.6% — but the Russell 2000 is off ~9% – a huge differential.

To say the least, it should be interesting.

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  1. jimcos42 commented on Aug 2

    I respectfully disagree on the state of consumer confidence. The Conference Board reading is basically middling and inconclusive…not as high as late 90’s, but not as low as the 2003 bear market low. I don’t think there’s a whole lot to conclude about this unless one is looking for some kind of confirmation of a market top. If that’s the case, there’s no confirmation from this indicator. See http://www.market-harmonics.com/free-charts/sentiment/consumer_confidence.htm.
    The same can be said for the Univ of Michigan Consumer Sentiment readings. See http://www.market-harmonics.com/free-charts/sentiment/consumer_sentiment.htm.

    I’m just not buying in at all to crummy consumer sentiment and whatever that might mean.

  2. michael schumacher commented on Aug 2

    Towards the end of the show (I only caught this bit) two people were discussing China and I heard this “gem”:

    Paraphrasing this so keep that in mind:

    “without China there would be no Wal-Mart….and (this is the money shot) without Wal-Mart there would be no lower or middle-class prosperity”…..

    You just can’t make that sort of shit up…even if you tried.

    Caveat: I have no idea what the context was/is however I have a hard time getting behind any concept that has that as it’s basis.

    And of course there was much laughing and agreement amongst the “gathered”..

    Ciao
    MS

  3. Winston Munn commented on Aug 2

    “without China there would be no Wal-Mart….and (this is the money shot) without Wal-Mart there would be no lower or middle-class prosperity”…..

    I believe this is a direct quote from Henry Paulson’s new book, “Contained”.

  4. Neal commented on Aug 2

    -More than two-thirds of Americans believe U.S. economy is in recession now or will be by next year (Wall Street Journal/NBC News)

    Well, it seems that there is a disagreement on consumer sentiment between the WSJ and the Conference Board with their 6 year high consumer sentiment (unless people think that recession means fun times).

  5. Tom C., Stamford,Ct. commented on Aug 2

    Think about what you’re saying there boys vis a vis Wal Mart and China. Why do we have problems in manufacturing consumer goods? Ever hear of the Wagner Act? Every economic dislocation this nation has experienced since 1913 can be directly tied to the Fed or to the legislative branch. Case closed. Discuss.

  6. m3 commented on Aug 2

    jimcos42-

    check out this article from WSJ.

    most americans feel we are already in a recession, or on the brink. yet the consumer confidence statistics say everything is great.

    interesting dichotomy, no?

  7. VJ commented on Aug 2

    MS,

    ‘without China there would be no Wal-Mart….and (this is the money shot) without Wal-Mart there would be no lower or middle-class prosperity’…..

    You just can’t make that sort of shit up…even if you tried

    That’s for sure.

    It should be, ‘without China there would be no Wal-Mart, and without Wal-mart, there wouldn’t be millions of low-paid workers that Wal-Mart doesn’t provide with healthcare coverage, so they are foisted onto state Medicaid programs‘. Wal-Mart tops the list of companies whose employees have children on Medicaid.

    “Prosperity” my ASS.
    .

  8. VJ commented on Aug 2

    Neal,

    -More than two-thirds of Americans believe U.S. economy is in recession now or will be by next year (Wall Street Journal/NBC News)

    Well, it seems that there is a disagreement on consumer sentiment between the WSJ and the Conference Board with their 6 year high consumer sentiment

    Saying that Consumer Confidence is at a “six year high” isn’t saying much. Six years ago, the national economy was in a recession, and it hasn’t got much better in the intervening six years. Check out the over-the-cliff PLUMMET from where it was in 2000 and earlier.
    .

  9. Eclectic commented on Aug 3

    Okay, it’s time to play “Over or Under.”

    Hmmm?…. let’s take a look at something interesting. Put your eyeballs on this:

    http://www.adpemploymentreport.com/ner/charting.aspx

    Now, is it just me… or isn’t the ratio of rise to run in that last blue segment of the graph for June 2007 about the lowest one on the entire graph? Yep I reckon.

    You can also redo the dates (I can’t do it for you – no linked subroutine available) for the period all the way from back in 2003 (unequivocal employment upturn) to the present… and to my mind that June 2007 segment is still the lowest ratio of rise to run (slope) since whichever segment exceeded it after rising in 2003. Doing the chart from 2006 to present makes my observation unequivocally true, or I’ve lost all concept of a level world.

    So, let’s gain some understanding from this, if possible.

    It would seem to me that ADP has given the strongest signal yet that the economy is experiencing a downturn in employment. If ADP has any predictive capacity, then it must ultimately be validated by a similar signal given by BLS, one of either sufficient magnitude to prove it outright or one suggestive of upcoming monthly reports that would prove it in the aggregate.

    Then our question becomes: Is today the day that it happens?

    Time will tell, but everything logical about my soul screams at me that it must happen soon… or that ADP is screaming and crying Wolf!… for no reason.

  10. Michael M commented on Aug 3

    No visible means of support and you have not seen nuthin yet –
    Everythings stuck together (Talking Heads, Burning down the house)

    What needs to be remembered is that so far we have only seen the early effects of the malaise in US housing. But housing in continental Europe has also peaked as has UK with the exception of London.

    Clearly when housing malaise truly arrives in Europe the effect on the European economies will be less than in US (European consumption doesn’t make up 2/3 of the economy and European consumers have healthier balance sheets) but it will have severe impact nonetheless, and while subprime is not as significant a category in Europe as in the US, the housing boom has been almost as wild (perhaps with the exception of Germany) fueled by low interest rates, new somewhat aggressive mortgage products, looser lending, a believe that real estate only goes up in value and speculative buying (and in many cases buying now not to be priced out of the market tomorrow).

    This mania has been followed by a massive building boom in many countries. As I write this from Copenhagen I can see a skyline full of cranes despite a yoy 10% drop in apartment prices and a record number of houses and apartments for sale. Flippers are stuck with apartments in Copenhagen, summer houses in Denmark and condos in Turkey and Spain – and note that flippers did not exist in this country before 2003, ever.

    So while everyone is focused on the next shoes to drop in US housing/lending/hedge funds, remember that a global or at least European housing related drag could be another shoe soon to drop (or rather is in the process of dropping), and the effect to be dramatic, though it may not bring with it dayly headlines about company/fund blowups.

    Plus, expect European central bankers and other officials to be more frank than their US counter parts when the house of cards really starts burning down.

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