“It’s Too Soon to Tell” plus Steve Liesman & Foie Gras

“It’s Too Soon to Tell” plus Steve Liesman & Foie Gras
David R. Kotok
May 7, 2011
Cumber.com

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What a week.

Osama got what he deserved. Obama gets deserved applause. He has turned the leadership issue on its head. Detracting republic rats are on the defensive. Mr. Trump now looks like the buffoon of the year.

Initial unemployment claims surprised to the bleak side. Then the employment report on Friday countered the negative sentiment. Subsequent detailed analysis of that report calls the surprisingly strong initial reaction into question. We are reminded of two clichés: first, one data point does not make a trend, and second, the devil is in the details.

Meanwhile, ECB President Trichet signaled deferral of an ECB interest-rate hike. He then danced magnificently around the questions posed by Steve Liesman. Steve, you did well, after a long flight to Helsinki. Hope you got to taste some vodka at the Russian restaurant après La Marseillaise. Great interview and a feather in your cap.

The ECB faces enormous issues, ranging from the possible/impossible/improbable/likely/unlikely Greek Secession to the Greek debt-restructuring/behavioral-modification/muddle-through/political uncertainty on the other hand. Add to that the Finland-Germany resistance to more subsidies on the third hand. The ECB has a mess on all of its hands. Its member banks borrow cheaply and lend to Greece, Portugal and others. Jean-Claude Trichet needs to take a deep breath and enjoy a 2000 Château d’Yquem with some homemade foie gras obtained from Lilliane Khalil, restaurateur extraordinaire, at her small establishment on the Isle St. Louis in Paris: Aux Anysetiers du Roy, 61, rue St. Louis-en L’Ile. Find it on a corner, in a 300 year old room with about 40 seats. If you are not looking carefully, you will walk right by it.

The European Central Bank commenced business twelve years ago. Talk about growing pains! We are reminded of the famous words of the late French president Francois Mitterrand when asked what he thought of the French Revolution now. He said: “It is too soon to tell.” The ECB did not exist when he said it, but the reference is apt.

Markets gyrated wildly. Dollar down, dollar up. Oil up, oil down. We are still in the oil/energy positions but have cut back the weight. Silver was tarnished. Cumberland sold its position; half near the top and the other half in the freefall. Oh, well, half a profit is better than no profit. Friday’s whipsaw confirmed that the US industrial sector is still a winner. Glad we are overweight and haven’t sold a share of those ETFs.

In addition, the Muni bond rally has been wonderful. Earlier this week we commented on the latest outbreak of the evolving Whitney virus. (here for those who missed it).

We hope to cover some of these items in the few minutes we have with Mark Haines and Melissa Lee on Squawk on the Street at 9:35 New York time on Monday morning, May 9.

Enjoy the weekend.

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Error Correction
May 8, 2011

Many thanks to readers who caught our error.

In our weekend commentary (May 7) we attributed the quote “It is too soon to tell” wrongly to Mitterrand. He may have said it but he is not the source.

Wiki Quote attributes it Chinese Premier Zhou Enlai but says it is un-sourced. Others say Zhou originated the quote in answer to a question by Henry Kissinger during the thaw in US-China relations. Still others, including a Washington Post column, source the quote in a reply to Richard Nixon by Zhou.

Anyway, we trusted our memory and did not check the source this time. We apologize for the error. In addition, we apologize on behalf of our editor who is supposed to fact check all quotes I use. That is a “not so” private conversation that I will have with him. The responsibility for the error is mine and not his.

We also had a typo. We used the term “republic rat.” We original wanted to play on words and combine a reference to both political parties. The thought was to use republ-icrat. In the final spell check, our word processing software reworded the letters. We hit the accept key by mistake. This is not the editor’s error.

We had also considered the use of “democr-ican.” We offered that to a reader who suggested “Demoncrats.” Now that would be one-sided.

In response to other readers who accused me of political affiliations and for the record for anyone who wants trivia, if you check the voter rolls in Sarasota County Florida, you will not find me registered in either political party. So far, I have maintained my independence although I would elect a primary if I thought the vote could have meaning. I personally contribute funds to federal candidates of both parties and try to avoid contributing to the party directly. MSRB rules govern contributions to state and local officials.

In my view both parties have become hugely corrupted by political money and this issue helps explain why special interests and narrow agendas have achieved power in our frequent-election cycle modern America.

One reader wisely suggested that it is too early in the year to give Trump the Annual buffoon award. He pointed out correctly that there are still seven months to go and in American politics, any type of outrageous thing can happen. We agree. Nevertheless, we must argue that Trump did have a bad hair week.

Many thanks to readers who took the time to comment. As for the outlook about our American Revolution and political system, “It is too soon to tell.”
David R. Kotok, Chairman and Chief Investment Officer