Another appearance on Kudlow & Co. tonite, from 7:00 to 7:40pm.
Also on the show tonight are Vince Farrell of Scotsman Capital, and Dave Sowerby of Loomis, and Michael Pento of Global Advisors. Dropping in will be Dick Bove, who has had a number of excellent calls on the Financial sector. He is bullish on the big banks, but bearish on brokers.
Topics for discussion:
– Today’s big bear market rally;
– The "bottom" in real estate and financials;
– The ongoing trashing of the Paulson plan
UPDATE: April 1, 2008 9:01pm
Click thru for video
BR, I think your post from last Friday on the SEC changing the accounting rules [opening up the possibility of fudging] explained the key to a number of things of late (Lehman’s oversubscribed $4 billion offering, the surge in financials today & the surge in the market.)
I don’t think Lehman’s offering would have been successful had the SEC’s changes not provided confidence as to Lehman’s books. Once that approval was validated (maybe Lehman and the buyers went to the SEC together to get their approval) there was a stampede into the deal. And a stampede of stocks going higher is now on.
Ironic, allon the same day as The Independent newspaper of London proclaimed the U.S. was in “The Great Depression”
http://www.independent.co.uk/
I wonder what tomorrow’s headline will be after the DOW rose 400?
Have fun with that group. Here are the questions that I have. Where is the consumer? Where are the bank profits?
Retail and banks exploded today. Lets get beyond the idea that if it is all bad news it must mean that it will be all good news down the road so buy, buy, buy. Lets get beyond the contrarian gobblydyguk, you know buy when things look the worst. Lets just get back to fundamentals-you know, profits, Larry’s “mother’s milk.”
Where are the profits? Consumers are not spending-i.e. auto sales sucked. Banks are not making loans like they used to either so no help to consumers there.
And, as far as banks, does anybody recognize that all this “new” capital is just “replacement” capital. Are banks really in a position to make new loans or are they simply going to fix their own balance sheets and mail a thank you card to Ben and Hank?
Profits matter, don’t they?
I certainly hope Dick Bove will educate the panel and viewers tonight on the difference between bank profits and cash flow. It is unbelievable that people don’t know the difference and, therefore make stupid investment decisions. I certainly hope Mr. Bove will patiently explain that Citi’s CDOs and so forth are cash flowing quite nicely and that there was no reason to cut the dividend. I suspect Meredith Whitney spooked the Board, especially Dick Parsons, and they made this disastrous decision in haste. Further, I hope Mr. Bove will explain that the write-downs are being caused by SarBox-fear of jail, so to speak, and will eventually become write-ups and Citi will then have so much excess capital they will aggressively buy back stock.
I can’t believe the kind of movement today with BBY and RIMM tomorrow. It’s as if no one is worried about the guidence they might give. With JCP just out of Friday saying 2008 is not going to be easy.
The market is off ignoring things again. JCP is a one of because everyone else is clearly fine.
I’m going to enjoy BR on Kudlow tonight with Dennis. This should make for entertaining TV.
The market is not ignoring things. Clearly Uncle Sam will bail out the banks, and continue to bail them out, and this is just the green light they needed.
I am being cynical but it is the sad truth.
it was a bear market rally after the successful raising of capital at LEH and MGIC, and hope that end is near with writedowns.
bear market rallies are sharp. It doesnt change the credit crisis still ongoing, the tighter underwriting, the housing issues, rising defaults, etc..You cant read much into 1 day rally TO 12,650 on the DOW!
Go back 6 months, when the DOW closed at 14,100 or so! If I told you back then that in 6 months time we will rise 3% in 1 trading day and close at 12,650, you will say Im nuts!
Thats like me telling you right now, that in 6 months time, we will rally 3% in 1 trading day, and close at 11,100! Can you imagine?
Shorty covering rallies are very sharp!
BlackSwan, clearly you don’t know the difference either. Cutting the dividend has nothing to do with their CDOs cashflowing nicely. It just makes more sense to not pay out 5B in dividends than to have to pay 11% on Abu Dhabi’s 5B.
“write-downs are being caused by SarBox-fear of jail”
Hm? If Alan Schwartz doesn’t fear jail after lying on TV, I doubt any CEO would have a problem with conservative writedowns… Thain himself has said that the writedowns are definitive, he does not except to revert any losses. They’ve been the most aggressive so your prediction that Citigroup will soon have excess capital will most likely be proven incorrect because it is simply not based on facts.
Someone should tell Vince to look at a chart. If I use SPX or SPY Jan bottom was wiped out in Mar.
Banks: commercial loans growing? Yep, drawdowns on existing credit lines, right? Not “new loans”? Anyone?
That was the lamest defense of SFAS 157 I’ve ever heard. You say “don’t like the outcome, then lie.” The guy you were debating claims no, it only gives them the option of lying.
The quote of the night would have to be (I’m paraphrasing) “1.2 Trillion in financial write-offs is an insignificant number.”
I am go glad it wasn’t Barry who said that or I would have begun to weep.
Oh Fuck,
Dennis Kneale is the moderator? An hour of this guy… CNBS must be really desperate for talent.
Glad to see you disagree with Bove. That was the first Kudlow I watched all year. Barry, why do you waste your time?
I like Dick Bove a lot, as a bank and IB analyst BUT he obviously doesn’t understand the hedge fund business or the ramifications of credit default swaps.
Only $1.2 trillion. A mere flesh wound???
What about the $45 trillion in CDS’s.
Good panel. Vince was/is the retail investors lifeline to insobriaty. “The lows are in. Open the bar.”
Ross, I’m surprised Barry didn’t call them on the Jan lows are still in. Vince has been saying this for months but it’s wrong.
S&P500 index is lower in Mar than Jan even during the spike down during the one day in Jan.
Today’s market shouldn’t be a huge surprise – there was $13 billion in treasury pay downs that were not rolled over so those denaros had to go somewhere.
Barry, when will anyone point out that the bear stearns bailout was blatantly unconstitutional?
Not all of us are sitting down like sheeple.
Don’t fight the waves or fibonacci retracement levels. This market looks like it completed a five wave move down and has been rallying since. The 38.2 retrace comes in at 1378….short term pivot traders should consider this level some near term resistance next few days. It very much looks like an ABC pattern up off the lows so far…which targets 1417, coincidentally enough aligns with the 50% retacement of the entire move down.
Give the smashing of vol on the options….the best trick now is to be long volatility…we’ll get a dip….afterall Bernanke is speaking tomorrow…but I like owning the S&P call options overall…freaking cheap.
winston, you are smart; but the correct spelling is dineros :)
Thank God that CNBS videos in WMP format do not play on this Wintel box anymore. If I had an Apple they would work but who wants to watch ’em anyway?
The Kudlow show is so much better without … well you know what I mean.
Excellent comments Barry! I also like Pento a lot. Vince Farell should stop playing Second Life because it is affecting his judgement in the real world. It’s funny how so called experts can have such distinct views on the economy.
Dennis Kneale is well connected at CNBC to be hosting Kudlow.