They say “History doesn’t repeat, but it sure does rhyme.” Today, nowhere is there a singing chorus belting out remakes of the once tried and true classics from the forgotten “hits-ville” era of bull markets past than what I witnessed across what I refer to as the mainstream business/financial media.
I perused just three of the major outlets (e.g., CNBC™, Fox Business™, Bloomberg™) over this past week, not to gain any insight into the current market gyrations, but rather to see how it was being reported. I was not disappointed in entertainment value, however, the flip side of that insinuates that those that are actually looking for insight (actually, the few) are once again being told and sold the most vapid, vacant, if not deplorable analysis for what is currently taking place in the markets today. Then again – this is precisely the same styled tunes they were spinning in 2007/08 – 1999/2000 – and 1987.
The “markets” may have recovered since then, but the reputation for insight across these platforms has not, as I’ll explain.
Now to be fair, there are many people who work at these outlets which I have both admiration, as well as respect for their insights and analysis. But you rarely, if ever, see them on camera or mic. What I’m speaking to here is what I was watching across the television side which is where most, if not all, retail consumers of this type of information get their fix. And that fix is anything but.
These outlets seem to have morphed into some quasi rendition, or cross between “The Voice,” “Do You Think You Can Dance,” and the “Gong Show” with each next-in-rotation-fund-manager auditioning for the judges/hosts in hopes they’ll be called back and a ratings hit.
If there’s no contestant available (because, they may be fielding so many incoming calls from now frightened clients) fear not. The hosts of different shows will pull together in a programming crossover styled “panel of experts” and tell you what they think. Hint: Beats the Comedy Central® offerings every time.
Let me start with CNBC earlier during the week when none other than the buzzer-king, James Cramer gave his song and dance as to why he would not be selling during the nascent sell off. When the Dow Jones Industrial Average™ was at around the mid 400’s during the market rout Mr. Cramer gave his reasoning as to why he wouldn’t be a seller. Hint: The “markets” would go on to fall – another – 1000+ before recovering slightly.
I’m just going to mention two (although, in my opinion, is all one needs to know) of the most egregious examples given. As always, you should watch the clip and come to your own conclusions, but here’s mine.
First. A question was raised about whether or not this will impact housing and more, which was much of the catalyst for the last panic. The answer came back with some convoluted reasoning mixed in with a bit of whimsical expectations because, “FICO™ scores are much higher today…” As if this would be a reason why banks will still lend in an interest raising environment, coupled with an emerging pricing slump and increasing inventory as mortgage origination continues to fall and re-fi’s fell just this July to 20-year lows. (By the way, that was a report via CNBC, I guess they don’t read their own news, but I digress.)
The other “insight” Mr. Cramer gave was that he was pushing back against a circulating meme that this was ominously reminiscent of 1987. He then went on to give the reasons why his viewpoint was more valid than most proposing this, because, he was all “in cash” during that period so he understood what true scares were when they occurred and this was not that.
Fair point, but I was around in 2008 and actively trading in the markets and remember clearly his calls for calm and more including his now infamous “Bear Stearns” advice implying people’s money was safe to which Jon Stewart of “The Daily Show” mercilessly crucified him on his show. Mr. Cramer’s reputation (along with the networks) never recovered. That is, unless you watch CNBC. For they, much like many of their hosts, seem to have forgotten the financial crisis. Hint: Viewers have not. And that’s why they haven’t returned to these shows either. Just look at the ratings for clues.
In 2017 alone their viewership dropped to 22 year lows. And yet, if you listened to many a so-called “expert” such as this from 2009 you would have to conclude it was all about a “bull or bear market” nothing more. Hint: it wasn’t, and the-proof-is-in-the-pudding as they say.
Then there was a segment I watched on Bloomberg where the interviewed was none other than Brian Belski, the only investing strategist, in my opinion, that can make both Tom Lee and Tony Dwyer appear risk averse.
During his well crafted reasoning on why this time (as always seems to be the case) was the best time to own stocks for the long haul, he made a statement that falls directly into the reasoning for why this time is both different, as well as not, and it is this: He made the case that in his 30 years of being in the financial field he has never seen a market made up of more “renters” than he sees today. i.e., No one’s buying for the long haul, it’s more about momentum.
I have only one thing to say too that, in my best Gomer Pyle impersonation Well “Go-o-o-llee!” Ya think? And why does one think that might be, I’ll ask? Hint: Starts with Federal, ends with Reserve, equalling fast money, momentum chasing. Period. Yes Mr. Belski, this ain’t your mom and pop’s buying for the long haul market. Welcome to reality.
As vacant as most of the above was there was a complete knock down drag out of just who could out do the other as to keep at bay any assailing of the “BTFD” narrative and reasoning (buy the f’n dip), for that was what transpired on Fox’s “Varney & Co.” between the hosts and guests which included David Stockman. Here, in my humble opinion, was a rendition of “The Gong Show.”
I have been asked many times why I won’t go on any of these programs and this example exemplifies precisely why. (along with I have no inkling to travel to N.Y.C.)
Mr. Stockman was a guest along with Jonathan Golub to discuss the recent gyrations. Let’s just say there were more dance moves and gyrations trying to spin the “market” news (aka music) of the day that would make a game show contestant jealous.
The discussion (and that’s being kind) morphed into a sheer free-for-all when Mr. Stockman tried to give his reasonings to counterpoint much of what was being proclaimed. It was, again, in my humble opinion, sheer financial comic relief. However, my sympathies for trying goes out to Mr. Stockman.
I wish it could stand alone for its hilarity rather, than the truly scary nature it portends for many going forward. Halloween may have a more frightening foe if what may come to pass actually does, because it is clear: the horrors of financial panics past have been relegated to the Betamax® section for market analysis and B-roll footage. i.e., “Beta…what?”
Here’s just a few of the highlights, I would advise one to watch the clip for themselves, rather than just take my words:
During the segment the overall argument is that this is nothing more than another “BTFD” moment as argued via Mr. Golub. Mr. Stockman, of course, would have none of it and was trying to argue why. And there is the key word in that sentence: trying. Because with every counter point Mr. Stockman tried to make, it was a three against one free for all of vapid reasonings against. Here are a few, all are paraphrased:
Golub: “There was no catalyst for this sell off therefore it is a buying opportunity.”
Sorry, there was a catalyst, it’s called The Federal Reserve. And when Mr. Powell confirmed not only that they were going to continue raising rates, but in conjunction left for conclusion that the balance sheet roll-off was going to be allowed not just to continue, but to accelerate to the now assumed $50Billion per month level – the markets began selling off in unison.
Show hosts: “You know David you’ve been saying this for a long time and if people listened they would not of participated in this rally!”
Again, I’m sorry, but that same type of argument was said from about 2 years leading into then right after the top of the dot-com peak. Nearly a decade later all those that participated in that “great rally” found themselves right where it all began in what seemed like no time at all. Rhymes with dot-com crash aka “The Greenspan era.”
Then, it all happened again. Only this time it was with Bernanke (are you seeing a pattern here?) where trying to correct the prior policies with tightening into weakness brought on the next crisis where that old “buy and hold” saw allowed many a holders account to be sawn leaving the equivalent of only a stump of what was then a forest of burgeoning equities and profits.
Some weren’t so lucky as many a “stump” was removed as the markets plunged lower than the original dot-com crash the preceded it.
And here we are today in the midst of not just another Fed. blown bubble, but one where all central banks followed and are still following the Fed’s lead. And now, once again, the Fed. is tightening into weakness, along with shrinking its balance sheet that equivocates to about the same, in-kind, of additional hiking measures. i.e., a 1/4 point hike, along with the continuing reductions of balance sheet normalization equates to about the same as tightening by 1/2. So in-effect and in practice the rate cycle is the equivalent of double the stated raises.
Yet, the coup de grâce for any hopes of insight came when the questions began revolving around the answer to when Mr. Stockman had sold his holdings connected with the markets. It was at that point I knew that my decision years back to no longer watch these shows for any insight was well founded. The reasoning was simple: What is the point of knowing when Mr. Stockman sold out? Does that further the conversation for insightful dialogue or, does it just make for some seemingly vacuous “got-cha” type moment for television?
Let me make this point: One could easily have disgorged all of ones holdings of stocks during the initial downdraft of 2007, which in retrospect, we now appear to be mimicking the same gyrations – and you would have not needed to experience any losses or longing look at “missed gains” till some seven years later in early 2013 when the markets first eclipsed that initial panic stages. (Don’t take my word for it, just go look at any chart via a monthly perspective.)
Just two years later in 2015 the markets were rolling over and had dipped so much that the difference between initial sell off of 2007 and the bottoming in 2015 gains were considered “minimal” in comparison to the then risks in the markets. i.e., Then Chair Janet Yellen, in no uncertain terms, flipped on her stance of running a “hot monetary policy” to a tightening via any and all short-hairs with the election of Mr. Trump.
Only the front running of the residual “hot money” contained within the markets via the expansion of the balance sheet, along with the tax policies and repatriation laws passed to allow for buy backs and more, did the markets zoom higher. i.e. That fuel has now been expended.
To reiterate: the moment, repeat, the moment the market got its first glimpse that indeed under the new Fed. Chair Powell that the balance sheet would indeed begin (aka QT quantitative tightening) so too did the market react, and just like this recent sell off, caused the now moniker’d “February Scare” and now this possible expanding rout.
Just like myself, along with Mr. Stockman and a few others said it would.
There, just like today, was no reason or indicator seen for the sell off. That is: only if you don’t consider this as a market reaction to the only thing that has mattered for the last 10 years aka Federal Reserve. If you don’t – then of course you don’t see anything, which is precisely my underlying point.
Mr. Stockman is seen during the end of this interview basically throwing up his hands in disgust, for there truly was no discussion taking place. It was all just about some form of “See, we’re right and you’re wrong!” i.e., You’ve been wrong and we have this wonderful rally as to prove it too you and everyone else.”
Sounds pretty convincing until begins employing reasoned arguments to the contrary. That’s why Mr. Stockman, I assume, threw his hands in the air, i.e., There is no reasoning going on here, just narrative pushing.
Here’s just one thing to contemplate I’ll leave you with dear reader as you take what I’ve illustrated above:
If for whatever the reasoning this “market” suddenly sells off mimicking 2007-09 fashion as it seems to be giving clues of doing just that. Along with, if we sold off in what is purely an acceptable, and within reasoning, to the next purely text book example or conclusion or technical area of support, which is somewhere in the area from where the now moniker’d “Trump Bump” began, circa Nov. 2016. How do you believe not just the U.S., but in unison with all the other markets globally that have been propelled on central bank stimulus – will react?
That’s the question that is not being asked across all of these platforms. Which is why I (and what seems is most others) can no longer tune in.
Actually, what may be worse is that they think it can’t ever happen again, because: “It’s different this time.”
All I’ll say to that is: “Of course it is, that’s why the old saw uses the term ‘rhyme.'”
Think about it.
© 2018 Mark St.Cyr