Is being Negative on the US Market Unpatriotic?

Posted by Ray on September 1, 2009 under cnbc | Read the First Comment

Perhaps the most absurd statement anyone can make is that if you are not always bullish on US equities you are not patriotic. That type of talk is eerily similar to that of the Soviet Union or some other regime that discourages freedom of speech or thought. Unfortunately, that is what I get a lot from some readers and media personalities.

Tonight Dennis Kneale said, in his Blog You!, segment that because I am negative on US equities I am not a patriot. He seems to think that blind patriotism and belief that things will always get better because we are America is the way to go. He seems to think that things improved so much over the past 12 months that nothing can go wrong. That cannot be further from the truth and let us not forget that it was about 12 months ago that this guy had no idea what the VIX was and said Citi was a screaming buy at 25 a share or so.

Forgetting his past indiscretions let’s just take a look at the facts which determines why I am bearish on US equities. Real estate, both commercial and residential are in serious trouble and since most mortgages were securitized and sold to banks, later used as collateral, then it is safe to assume that banks have billions more in bad debt on their books. That fact alone should scare any normal person about the banking system by itself, not to mention that the Fed and the FDIC are both very concerned over commercial real estate as you read this post. A banking system that holds this much bad debt is not good and our actions will either postpone the inevitable or, in the best case scenario, create zombie banks.

Equities got way ahead of themselves and are currently trading about 130x their current earnings, 26x future earnings. The current pricing of the S&P 500 means that GDP has to have 4% growth in order to maintain these prices, I do not see that as a possibility no matter how they use hedonics to play with the numbers. I think a rational person would say 2% GDP growth is what we should expect which places the S&P 500’s fair valuation at about 850 or so. Earnings are down some 26% year-over-year and very few firms beat on revenue which means they are firing people to make their numbers, is that patriotic?

Monetary policy is a mess and I do not see how anyone could think differently. The Fed has monetized debt, propped up who knows how many banks, printed tons, literally, of money, have interest rates at zero, refuse to let us know exactly how bad the banking system really is and the list just goes on and on. While inflation is clearly not a problem, deflation is here for some time to come, it is highly unlikely that the Fed will be able to rein in this extremely accommodative monetary policy in a timely fashion and inflation will be a major problem in the future. Also, when foreign banks question the value of your currency and have voiced very public concerns over your currency that is a major problem, especially as we depend on them to fund our deficit spending.

Unemployment is a catastrophic problem because consumption is 70% of our GDP and anyone who thinks that the consumer is coming back, you might want to reevaluate that thought. Considering unemployment is going up it is highly unlikely that the consumer will spend on anything other than the basics. There is no sign of unemployment declining in the near future which will remain a problem for economic growth until we either get used to the new normal or change the structure of our GDP, guess which will happen.

Government subsidized growth is not growth as we must pay for it through our taxes sometime in the future. The programs that have been successful cash for clunkers and the first time homebuyer tax credit is the cause of all the demand that we have seen and will more than likely skew the GDP to positive for 3Q09. However, this artificial demand is not sustainable and eventually we will have to pay for it through taxes. Essentially the government is in the banking business, financial services business and the mortgage business all of which is bad for the free markets.

Based on that information how in the world can you be bullish? Long-term I am sure we will be fine, but if we look around the world I am sure we can find better investment opportunities than in the US at the moment. Until things get back to a new normal or until we are fully aware of the risks banks have n their books I think it is incredibly dangerous to just blindly invest on patriotism. After all America is about opportunity to better yourself and if that means you invest in China or India to make more money than that is as patriotic as you can get.

It is unbelievable that a media personality would go to the, if you don’t invest in America then you’re a traitor’ level. I think that is childish and it looks desperate, kind of like picking a fight with bloggers I might add, for ratings. I am in fine company with my bearish call with the likes of Doug Cass, at the moment at least, Paul Tudor Jones, the folks at Horseman Capital, Peter Schiff and a whole host of others. Of course there is the possibility that I am wrong, but based on the evidence I see I really don’t think that is the case, but in the event that I am wrong I will admit it.

Frankly, I consider myself more patriotic than most as I voice my dissent to the status quo and calling out things in the media that I see as blatantly false or spinning. Anyone voicing their opposition to what they see as wrong is a patriot no matter if it is on healthcare or the way our politicians blatantly vote against their constituents. In the days of old it was the media who was inquisitive about the government and tried to get the real facts, but somewhere along the way the media thought that the latest Britney Spears news was more important than reporting on what our government is up to. I guess they forgot why the Constitution gave them such wide power.

A recap of Dennis’s Data

Posted by Ray on August 4, 2009 under cnbc | Be the First to Comment

If you notice, the only piece of Dennis’s data that is still remotely still correct is the ISM data. However, the ISM data also showed a recovery in the recession in 2002, but we all know how that turned out. Besides the ISM data and, I guess, pending home sles there is nothing that Dennis presented that still makes his case for a recovery. If we look at stock prices then I guess we are all recovered and better, but we know that stock prices are not indicitive of a recovery.

Here is Dennis showing his data points again as a refresher:

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I just can’t resist

Posted by Ray on July 30, 2009 under cnbc, Main | Be the First to Comment

I ran across a a few articles of interest when I got thinking about my good friend Dennis. There were 2 articles I found interesting, one from Gawker and another from The New York Observer. The Gawker article dishes out the dirt on Kneale while the observer actually, apparently, paid for a lunch to interview him.

First, it is no secret that Mr. Kneale was simply looking to pick a fight and boost his ratings, I have made that point before, but this was quasi verified by Gawker. They supposedly had several stories on Mr. Kneale, but the one thing they wanted to share was that apparently Mr. Kneale has a hard time keeping his hands to himself around fellow employees and their wives. Whether its true or not, I don’t know. I do know that having a huge ego, not being Brad Pitt and alcohol are a bad combination which leads me to believe their may be some truth to this rumor. Mr. Kneale declined to comment on it saing he would not comment without knowing the name of the source, who is the dickweed?

Here is what Gawker had to say, and I believe this to be 100% true:

After Kneale’s repeated on-air outbursts against bloggers, in which he has called them “dickweeds” (see June 30 video above) and “digital imbeciles,” Kneale told our source who spoke privately with him that the crusade was dreamed up with his producer, former Fox News man Jerry Burke. The idea was to draw attention and drum up buzz.

Which is kind of pathetic, if you think about it, that a major cable news channel is trying to scare up viewers in the puny financial and media blogosphere. Still, there’s an outside chance the strategy could eventually produce PR gold; Kneale scored yesterday with a friendly article in the Observer.

Seems about right, don’t you think?

Second, Mr. Kneales hatred of bloggers is because they hit a nerve with him, not because some called him Beaker or whatever else, but because some bloggers posted pictures of a girl who died in a car crash in 2007 which many went on to attack or make fun of, I don’t get it, but some people are just deranged. This caused him to remember his father who was hit by a car walking home from a bar when he was 14, it was his birthday to according to Mr. Kneale.

Here is what The Observer wrote based on the Kneale interview:

Perhaps that’s because on an emotional level, Mr. Kneale can identify with the family members in the story who had suddenly lost a loved one in a car accident and were struggling to cope. To wit: One night, decades earlier, when Mr. Kneale was 14 years old, his father had been walking home from a bar in their small suburb outside Miami when he was struck and killed by a car.

Mr. Kneale said the sudden loss of his father changed his personality drastically. Beforehand, he had been a shy kid. Afterward, he became more outgoing and pugnacious. “When that happens, you’re like, well, fuck,” said Mr. Kneale. “There’s nothing you can do anymore that’s going to even come close to that. It’s like, ‘Bring it on. What have you got?’”

This may explain his obnoxious behavior, but it does not excuse it. He went on to say:

“My mom taught me, ‘Don’t say something if you can’t say it to somebody’s face,’” said Mr. Kneale. “Now, unfortunately, sometimes I misinterpreted that and I would say bad things to people’s faces. But that was better than, like, stabbing in the back.”

Now, I take offense to this because I did attempt to confront him, but I guess he knew he was an idiot and would look foolish. Regardless, this quote is clearly a lie because I would gladly call him what I called him to his face, but he could not to me. The irony is he constantly slams others behind their back, by his tirades on his floundering show, and then blames people like me for calling him what I know to be true of being a coward.

OK, Mr. Kneale we all have our sob stories, but you have zero practical experience in life or in finance. You were an editor, not a writer unlike myself who was a broker and never a writer. Therefore, you have no idea of the damage you can do by making claims that are not true. You will continue on this recession is over kick right up until the market starts to have a major correction. This means you probably talked a few people of investing near the top and will loose them a ton of money. Worst of all you will never be held responsible for your actions. However, I am sure you will not have your show by then, perhaps not even a job as even you know this gig is temporary, as you stated here:

During his first year and a half at CNBC, Mr. Kneale worked alongside several anchors on the tag-team news show Power Lunch. In late April, CNBC executives decided to give him a five night tryout anchoring the 8 p.m. hour. Some 14 weeks later, Mr. Kneale is still in the anchor chair.

“Now they’ve kind of forgotten that it’s just a tryout,” said Mr. Kneale. “Don’t tell them. … It may not last.”

On to your health care talk and to reduce costs outpatient care should be embraced and other utterly moronic statements I could quote. It is clear that you have never had anything seriously wrong with you and your minuscule intellect reflects that. Because unlike you I had/have cancer and know how screwed up our medical system is and can speak first hand about all the problems like the “standard level of care,” which means doctors get paid a lot of money to do the minimum amount of work, kind of like Mr. Kneale.

My point is this, we knew from the minute we got your producers email it was a set up and we knew you would pull a BS move like you did. Also, I, again, unlike you have had experience in finance and have my own sad story to tell. The difference is I am not afraid to say what I mean, to yours or Charlie’s face, and know the markets better than you could ever dream of. Keep reading that script and stumble through your presentation and maybe your technician can get those monitors to work.

I promise this is my last Kneale article, unless he does something really stupid, I know, I know, but I do have hope he is not a total tool. On that note, Mr. Kneale you are the original digital dickweed.

Goodbye Dennis

Posted by Ray on July 27, 2009 under cnbc | Be the First to Comment

It was fun while it lasted, but we must part ways. I haven’t watched you in weeks and frankly do not miss you at all. I enjoy the insults and the BS comments about no balls, but you are the one that hung up on me, remember? Regardless, it is over and I shall cherish out time together, but you now bore me and I must go on.

Good luck in your fantasy land.

They are making me sick

Posted by Ray on July 23, 2009 under cnbc, Markets | Be the First to Comment

I am watching CNBC Reports, I know, I know why would I do that to myself, but these guys are ferocious! There is Dennis Kneale and Michelle Caruso-Cabrera just beating up on their bearish guest, who include Harry Dent and Euro Pacific’s Chief Market Strategist.

It is the ugliest thing I have seen in a long time, they keep saying, don’t you feel bad for missing a 40-50% return in equities since March? All I have to say is they were even more bearish in March than most. Hell, even Cramer is saying the market is overbought and these idiots, Michelle and Dennis are just shaking their heads saying he is crazy. They want predictions on where the market is going, give me a break because no one is ever right on those predictions.

I just don’t get it, why are they pumping the market when they have no idea what they are talking about. Neither of the hosts have any real market experience, at all, and they are just don’t have a clue. They are saying this is not different this time? Are you freaking kidding me? They did not even research their guests.
Let’s recap, Michelle and Dennis, Lehman, Bear, Sterns, AIG, Freddie and Fannie along with countless other firms are gone, done bankrupt. The Fed dumped $2 trillion on their balance sheets and the government has spent more in 6 months than almost any other time in history. How is that the same as the last recession? It is not, credit was frozen the overnight rate on the LIBOR went sky-high, I don’t recall the high but it was a few percentage points versus the .23% or do right now.

This is different, you idiots and the simple fact that you do not recognize that fact is pathetic. When you con everyone into buying, just like 1999, will you apologize? What new disclosures will you introduce when this thing comes back down again?

You have no clue on what you are saying or recommending and a large part of that is the fact that you never ran money before and never had to look a person in the eye to explain a loss. Because of your lack of experience and lack of knowledge on the markets you are making a huge mistake of cheer leading when you should present the facts. Like Microsoft missing its numbers and they had their first decline in revenue EVER. If that does not tell you anything then you’re hopeless.