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Tuesday,
March 3, 2009
(Cont'd from
above)...
Jim (cont'd):
Now I know the
President’s Press
Secretary, this
fellow Robert Gibbs,
when asked about my
comments this
morning on The Today
Show with Matt and
Erin, saying this is
the greatest wealth
destruction that I
have seen by a
President… said “I
am not sure what he
is pointing to, to
make some of the
statements.”… um, I
guess I was pointing
to the Dow Jones
Average, the S&P
500, the NASDAQ, the
Russell Index… not
to mention the
transports and the
utilities… all of
which have been
clobbered
mercilessly since
Obama’s
inauguration… he
said that my show is
geared to a small
audience… my reply
is the only thing
small about my
audience is their
401K’s, and pension
plans, and annuities
after the
President’s assault…
the stock market
right now is more of
a barometer for most
Americans wealth
than Gibbs or Obama
seem to realize… the
President says that
he is looking after
Main Street, which
he points out is
much more important
than Wall Street… I
got out the map, I
got like Triple A
here, you know I got
the trip tick… I am
here to tell him
that the roads are
merging… and the
Main Streeter’s own
more stock and have
more exposure to the
plummeting stock
market than he might
understand.
It was also
indicated that I was
fevered and
caffeinated…
question came up…
for the record, I am
always fevered… but
I hadn’t even had my
morning coffee yet…
so in the interest
of optimism that may
or may not be
cockeyed…
▼ ▼
▼ ▼
▼
Let me give you
the rose-colored
reasons why I would
be hopeful here…
...why I think the
market can lift… and
even if you are a
skeptic… you can see
why hope can be kept
alive… or perhaps
investable… even if
it is on life
support...
Reason 1: Tim
Geithner, the
Treasury Secretary…
he came out of
hiding today… I saw
him, I saw him… and
spoke eloquently
about the issues
that we are facing…
and while he still
had no plan, at
least he was
coherent and made
the case for the
kind of extreme
government spending
that we need to get
the economy moving …
the traders kind of
liked it… they also
for a moment
remembered why they
wanted him in the
first place… I
didn’t so I wasn’t
so sang wan… when he
surfaces we feel
more confident now…
although he refused
to repudiate
President Pelosi's…
speaker Pelosi's
soak the rich class
warfare, raise taxes
yesterday mantra… or
to put it simply, he
didn’t pollax the
market for once when
he opened his darn
trap.
Reason 2: Why
I am wearing the
rose-colored
glasses… today Ben
Bernanke talked
about the
possibilities of one
of these eloquent
facilities he is so
fond of… this one is
called TALF… which I
will actually
believe will get
private money to buy
assets simply
because the
government is going
to give them money
to do so… and
possibly even stop
the amount of the
losses… I wish I was
back in the hedge
fund game… they are
throwing money at
me… I want a piece
of it… these hedge
fund giveaways could
really help asset
backed securities…
meaning more cars
sold, more kids
going to college,
more homes sold,
more credit for more
people… and we want
that, I like it…
unlike the other
facilities that we
have seen in the
past and the
Treasury… I think
this one has got so
mo-jo.
Reason 3:
Stocks…
Altera Corp. (ALTR)
and
Xilinx Inc. (XLNX)…
two semi-conductor
companies that used
to routinely blow
out numbers back in
the ‘90’s… they
issued statements
last night guiding
up… or saying that
things aren’t that
bad… it gave a
reason for the
NASDAQ to have a
temporary rally… it
doesn’t matter that
these are small time
bumps… the important
thing is that they
give us a sense that
things aren’t
falling off a cliff
at this moment… and
they allow people to
say the worst is
over in tech… how
much does that cost
you…. so it gives
hope for the
Intel’s, the EMC’s,
the Microsoft’s… you
get the picture.
Reason 4:
London’s copper
inventories are
going down… am I
ever stretching it,
but I am telling you
that I am trying to
keep hope alive…
more economic
activity… most
likely in China…
because you need
copper for
construction… I
don’t know what you
need for
destruction, but we
have got a lot of
that.
Reason 5: You
just can’t kill
China… despite the
carnage and the
regional banks, the
Chinese market only
fell 1.1%… Shanghai
is still up 13.8%
over the year… once
again, General Tso
is triumphant over
Colonel Sanders…
plus the Baltic
Freight Index is
going higher…
indicating that the
Chinese still have a
veracious appetite
for natural
resources… because
that index measures
shipping… something
that China still
does.
Reason 6: For
my peculiar
rose-colored
glasses… we have
been down so much,
it now looks up to
me… many stocks have
now experienced
declines to rival
what they had at the
beginning of the
Depression… and
during and after the
Great Crash of 1929
to 1932... let me
give you a good
example, do you know
that from top to
bottom that U.S.
Steel has now
dropped from $196 to
under $17... at
last, at last,
judging by my
handbook, my bible
of the Obama
administration, “The
Great Crash of
1929”… that now
exceeds U.S. Steel’s
decline in the early
years of the
Depression, from its
top in ’29 to its
bottom in ’32...
don’t get me started
about General
Motors… we are
seeing wealth
destruction that
actually rivals the
’30’s… without the
economic destruction
that should be
con-committed… but
is it.
Reason 7: Why
it might pay to be
optimistic… I think
that oil is done
going down… even
though the oil
stocks are
indicating that
crude is going to go
lower… I don’t think
oil… now usually
this is bearish… but
right now any
stabilization of any
commodity signals
that we are only
having a garden
variety recession
not the real
super-dee duper
depression… okay,
that would be like
Sesame Street
depression.
Reason 8:
Housing
affordability is now
the greatest on
record… even though
it is hard to get
financing to buy a
home in this
environment… the
declines in home
prices couple with
the fact that we are
building far fewer
new homes… makes my
thinking that the
housing bottom call
I am making isn’t so
crazy.
Reason 9:
Many companies that
can and have raised
their dividends are
not trading at
levels where they
yield between 4% and
5%… if you raised it
this week, you are
not cutting it next
week… real value,
money in your
pocket… even if you
can’t trust earnings
estimates right now,
you can trust these
new found higher
dividends and
yields.
Reason 10:
You wouldn’t be nuts
to be optimistic
right now… I have
never seen people
more negative… hope
has been squelched
entirely… it really
is no longer part of
the equation for
many people… the
oscillator that
measures that how
over sold or over
bought stocks are,
are so off the
charts… saying that
we are so oversold…
meaning that we have
fallen too far too
fast… when that
happens we almost
always have a snap
back rally like
clock work… when
everyone is
hopeless, maybe that
is the one time that
being optimistic
really pays… broken
clock… right two
times a day.
Look, we cannot lose
hope… not after the
Dow has come down to
6,726... the time to
lose hope was much
higher… let it lift…
let’s hope the hope
agenda plays out for
a few days… until
there are a few more
bulls and fewer
bears… and we
recognize that as
awful as things are,
this is not as bad
as the Great
Depression…
production would
have to fall 60%
from here…
unemployment would
need to triple… we
would have to repel
FDIC… we would have
to stop having
Social Security…
and, well frankly,
we would have to get
rid of every single
safety net program
that we have ever
come up… now, I
don’t need hope to
see that those
things won’t happen.
Here is the bottom
line…
▼ ▼
▼ ▼
▼
 The Bottom Line!:
As grim as things
might seem… there
are real reasons to
put on the
rose-colored glasses
now and then… I
think we can trend
higher in the short
term, as people
rediscover the very
idea of hope…
something that has
been lost for too
long… so stop
selling for now… a
better time to dump
awaits.
There are reasons to
be positive,
consider holding off
on selling...
Now, it might be
grim… I might have
had that cup of
coffee… I might have
a small audience,
but only when it
comes to view of a
wallet… but there
are real reasons to
be positive… and I
have got to tell
you, maybe I am
caving under White
House pressure… and
finding some
positive things to
say.
[verbatim recap]
▼ ▼
▼ ▼
▼
Jim went on after
this segment to take
questions from
callers, and
responded with his
comments...
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Q:
I know that we broke
the November lows
which concerns all
of us, trying to, as
you say, stay in the
game. But looking
back at the 1997
levels, which is
where we are in the
Dow, don’t you feel
that blue chip
stocks with safe
dividends look
under-valued
compared to 1990’s
levels? Some of
these companies have
grown 4 or 5 times
the size they were
back then, not to
mention their global
presence today,
didn’t exist back
then, mainly in
China.
Jim:
Look, we had the… I
am not going to
disagree that there
aren’t some things
that are better… but
remember, the market
doesn’t look at what
happened in the
past, it looks about
the future… in 1997,
we just discovered
the internet… we had
just realized the
cell phones would be
something that
everybody would own…
our PC’s were way
stronger than the
main-frames… we
recognize without a
doubt that there was
prosperity blooming
everywhere all over
the globe… and even
we could recover
from the East Asian
contagion… now, it
may be true that
dividends are high…
but how do I know
that the dividends
won’t be cut… it may
seem true that the
S&P 500 seem cheap
on next year
earnings… but those
estimates are too
high… I guess what I
am saying that we
have got to have a
dose of realism with
a dose of optimism…
and right now, they
conflict with each
other.
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Q:
I am retired from
probably the last
integrated steel
mill that was built
in the country, the
old Bethlehem Plant
in Burns Harbor, IN.
In the ‘60’s and
‘70’s when I was
there, there was an
saying that as
General Motors goes,
so goes the country.
Does that hold
today? It sure looks
like it does.
Jim:
No, because you know
from your mill… we
used to be able to
make, that was hot
rolled steel you
made… and we used to
be able to predict
this economy by how
many cars GM put
out, and how many
people they
employed… but GM is
not a large company
anymore… it doesn’t
mean that the auto
industry doesn’t
have great ripple
effects… but I think
that the idea of
monitoring GM, not
that I am monitoring
Toyota to see how
America is… but
monitoring GM just
doesn’t… we have to
diffuse an economy…
so I would rather
monitor Wal-Mart
than GM… I think
that makes more
sense.
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[verbatim recap]
[end of segment]
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