This video gives you insight into the financial media’s endless attempts at obfuscating negative economic data (CNBC-TV 02.14.12). For the first 2 minutes, Rick Santelli fast-talks through a dozen numbers and tries to convince you that “all the numbers I just reported are positive.” Then economist Steve Liesman (what better name for a financial reporter than Lies-Man?) tells us that retail sales in January were BELOW consensus. He further tells us that auto sales declined in January, despite a recent report from their own journalist (Phil Lebow) telling us that auto sales SURGED in January. Lies-Man blames this on -- who else -- the GOVERNMENT! Wow.
Further notice how Lies-Man, just like Santelli, fast-talks around numerous indicators so that it’s hard to absorb the point regarding retail sales. The bottom line: The consensus forecast for retail sales was +0.8%, and the actual number was half that: +0.4%. We call that a “hard miss.” Stock futures declined about 0.25% on this “news.”
Jeremy Siegel made a name for himself publishing a “go-go” book called Stocks for the Long Run just as the market was entering the most serious phase of the tech bubble in 1997 (CNBC-TV 02.13.12). Almost everything in Siegel’s book regarding the infallible superiority of equities turned out to be dead wrong. This interview is painful for me to watch, as Siegel stumbles through yet another round of bold predictions for stocks. Siegel has made these predictions every several years for the past 15 years, and, like the proverbial broken clock, he’s bound to be right once or twice in his lifetime. Maybe 2012 is that year.
What pains me most is that Siegel does not understand relative valuation. He says the market will boom because stocks are cheap (low P/E ratios). Being cheap is not enough. Eastman Kodak’s stock is cheap. So is Hewlett-Packard’s. These stocks are cheap because the market believes their future prospects are dim. Stocks need to be cheap relative to their future prospects. Given the massive deleveraging that lies ahead for Europe, Japan and the US, it’s difficult to see the sustained 3.5-4.0% real GDP growth that must occur for Siegel’s prediction to be correct.
Rich Bernstein predicts that the “risk-on” trade (credit-related bets such as emerging market stocks, bank stocks, commodities, and real estate) will not remain viable for long, and the “risk-off” trade (US treasuries and safer US stocks) is the place to be because global deleveraging will remain the major secular force affecting markets in 2012 (CNBC-TV 02.13.12).
Art Hogan and Brian Gendreau explain why they are bullish on stocks in 2012 (CNBC-TV 02.09.12).
Bull vs. Bear: Katie Stockton and Abigail Doolittle explain their technical forecasts for the market (CNBC-TV 02.09.12).
Mish Shedlock writes about a disturbing collection of alternative economic indicators (02.09.12). The demand for petroleum has been plunging along with global shipping indexes.
CNBC-TV (02.02.12). David Malpass and Ken Heebner both see market strength continuing. Make note of how the analysts interpret a variety of economic indicators and synthesize their observations into a coherent thesis regarding which industries and sectors are likely to lead and lag the market.
CNBC-TV (02.02.12). Jeremy Siegel thinks investors should go all-in on equities.
CNBC-TV (02.01.12). Jim Walker, CEO of Asianomics, sees a 50/50 chance that Europe pulls the US into recession.
CNBC-TV (01.31.12). Brian Wesbury does his best to put a positive spin on poor Consumer Confidence and Chicago Purchasing Managers’ Index numbers. My favorite quote from this clip is Wesbury’s claim that “it’s a good thing we have gridlock in Washington.” Wesbury’s trying to set the Guinness Book record for violating as many of Statman’s 10 Behavioral Mistakes as possible in one interview. His forecasts have been consistently overoptimistic for years and he just can’t admit defeat. Perhaps Keynes said it best: “It is better for one’s reputation to fail conventionally that to succeed unconventionally.” Despite Rick Santelli’s patience, Wesbury cannot reconcile his own contradictory opinions. This is what happens to analysts who fail to maintain their objectivity.
CNBC-TV (01.27.12). US Stocks sell off after a disappointing Q4 GDP report. Analysts debate their respective bull and bear cases.
Jobs, Housing and Sovereign Risk. Global Market Intelligence, S&P Capital IQ, (January 2012). Identifies the 3 factors that are key for economic recovery. PNC’s turn-of-the-year Market OutlookPart 1 and Part 2 (December 2011 and January 2012). Insightful, well-written and humorous.
Bill Greiner’s 2012 Outlook. Bill’s analysis suggests that after another few years in the secular bear trend, another equity bull market opportunity awaits (January 2012).