Tuesday, September 29, 2009

Julian Robertson: CNBC interview



Legendary hedge fund (Tiger Management) manager, Julian Robertson sits down with CNBC for an interview on the economy, the US' financial situation, and his views on investment opportunities.

As most of you who regularly read this blog know, we rarely feature (or discuss) anything shown on CNBC, so if you notice a segment of their programming featured here, you can assume it is worth watching. That's certainly the case with discussions featuring Julian Robertson, whose past CNBC interviews can be found here.

You can also find more on Robertson in our related articles and posts footer below.

Hat tip to Paul Kedrosky for highlighting this clip.

Related articles and posts:

1. Seasoned investors search for value - Finance Trends.

2. Robertson shifts curve steepeners to curve caps - Marketfolly.

3.
Profile on Julian Robertson - Marketfolly.

4. Tiger's Julian Robertson roars again - Fortune.

Friday, September 25, 2009

FSN: The great inflation/deflation debate

Financial Sense Newshour is hosting a new interview series around the great inflation vs. deflation debate. Will we see significant inflation in the months and years ahead, or are we headed for deflation?

Last weekend, Jim Puplava brought on Daniel Amerman and Mike "Mish" Shedlock to debate the inflation vs. deflation question. Both made some interesting points on the timing and likelihood of either scenario, while Amerman stressed the importance of correctly anticipating the more likely outcome in order to defend one's savings and investments.

We also hear from Marc Faber, who makes the case for inflation in a separate interview segment. Enjoy this very worthwhile and thorough discussion, and check back in with FSN for upcoming interviews in this series.

Related articles and posts:

1. Inflation: Dying of Money - Financial Sense via Finance Trends.

2. Inflation or Deflation? - Merle Hazard at YouTube.

Wednesday, September 23, 2009

Fed talks up recovery, but is it real?

The Federal Reserve is highlighting signs of recovery as officials leave benchmark interest rates unchanged; The FOMC has voted 10-1 to keep the target fed-funds rates at 0% to 0.25%.

There's also talk that the Fed will wind down its enormous MBS and housing agency bond purchases, according to Bloomberg and the Wall Street Journal. The FOMC will extend their program out to 2010 while slowing the pace of purchases in order to provide a "smooth transition" to the markets.

So we started the week off with a debate over Jim Grant's call for a snappy recovery, and now we have some more economic happy talk from the Fed. Despite tent cities cropping up all over the United States, the stock market (and long participants) seems happy. And why not?

From Bloomberg, "Stocks Extend Gains...":

"Equities have surged since March as the Group of 20 nations committed about $12 trillion to revive economic growth and the Fed kept overnight borrowing costs near zero to unlock credit markets.

The 58 percent rally in the S&P 500 since March 9 has left the gauge trading at about 20 times its companies’ reported profits from continuing operations, the highest level since 2004, according to data compiled by Bloomberg."

$12 trillion. That's the amount of money that has been thrown at this crisis. For now, the unprecedented liquidity infusion seems to be doing its work, keeping asset prices aloft. We may even continue to see higher stock prices here in the US for a time, but have we really left this crisis behind?

Related articles and posts:

1. Marc Faber: "Nothing has been solved" - Tech Ticker.

2. The Pinocchio Recovery - Market Talk.

Tuesday, September 22, 2009

Lashing out at the Capitol

Photo: Richard A. Lipski - Washington Post

A picture is worth a thousand words: While at the library last night, I looked over at the periodical rack and saw this image on the front page of the Washington Post.

The photo accompanies a recent Post article entitled, "Lashing Out at the Capitol: Tens of Thousands Protest Obama Initiatives and Government Spending".

Sidenote: I was not aware of this story (the 9/12 DC rally) until I happened to see last week's WaPost print edition yesterday. Seems there is also a bit of a discrepancy between the Post's crowd estimates and those cited by the Daily Mail.

Have we finally seen a shift in the public's attitude towards DC politics and a change from the longstanding feelings of complacency and futility to one of active protest & (non-violent) revolt?

Monday, September 21, 2009

James Grant on the "V-shaped" recovery

One of the most talked about economic stories of the weekend was Jim Grant's piece in the Wall Street Journal, "From Bear to Bull".

In it, Grant discusses the rationale for a rather zippy (or "V-shaped") recovery following this steep recession that began (officially) in late 2007. Here are some excerpts from that piece:

"The Great Recession destroyed confidence as much as it did jobs and wealth. Here was a slump out of central casting. From the peak, inflation-adjusted gross domestic product has fallen by 3.9%. The meek and mild downturns of 1990-91 and 2001 (each, coincidentally, just eight months long, hardly worth the bother), brought losses to the real GDP of just 1.4% and 0.3%, respectively...

...Americans are blessedly out of practice at bearing up under economic adversity. Individuals take their knocks, always, as do companies and communities. But it has been a generation since a business cycle downturn exacted the collective pain that this one has done.

Knocked for a loop, we forget a truism. With regard to the recession that precedes the recovery, worse is subsequently better. The deeper the slump, the zippier the recovery. To quote a dissenter from the forecasting consensus, Michael T. Darda, chief economist of MKM Partners, Greenwich, Conn.: "[T]he most important determinant of the strength of an economy recovery is the depth of the downturn that preceded it. There are no exceptions to this rule, including the 1929-1939 period."

If you'd like to read more, see the full piece at the link above.

Related articles and posts:

1. Jim Grant on CNBC: get set for inflation - Finance Trends

2. James Grant on Bloomberg TV - Finance Trends

3. "Jim Grant: Ringing the Bell at the Top?" - Financial Armageddon.

4. The Aftermath of Financial Crises - NBER.

Sunday, September 20, 2009

Gary North: find your calling

Lew Rockwell entreats writer & businessman Gary North to give a presentation to the Mises University on the importance of finding your calling and making a difference in the world.

I really got something out of this talk (MP3 linked above) when I gave it a careful listen earlier this week, and I hope you'll enjoy it too. Lots of insights on the great, unsung supporters of liberty and the Austrian School of Economics and their dedication to causes that were vital to them.

Hat tip to John at Controlled Greed for highlighting this speech.

Thursday, September 17, 2009

Banks are bigger problem now: Niall Ferguson

Niall Ferguson joined Bloomberg TV this week to discuss everyone's favorite "too big to fail" firms, the major US banks.

Key takeaways from this interview? The government bailouts and rescue interventions have resulted in an even greater concentration of assets in the banking sector, while leaving us with the larger problem of moral hazard, as the large banking firms are even more "too big to fail" now.

Lots more to hear from Niall in this interview; see especially his comments on the taxpayer guaranteed backstop provided to the "too big to fails" ("TBTFs") and the problems this will present down the road.

Related articles and posts:

1. Why a Lehman deal would not have saved us - Niall Ferguson.

2. Jim Rogers: more banks should have failed - Finance Trends.

Wednesday, September 16, 2009

Jim Rogers: more banks should have failed




As the one-year anniversary of Lehman Brothers' collapse arrives, some in the mainstream press (who neither anticipated the financial bust or understood its true causes when it actually transpired) have taken it upon themselves to educate their audience on the "lessons of the Lehman Brothers collapse".

The problem, of course, is that these "lessons" tend to (predictably) advance all sorts of blatantly wrong ideas through their misreading of history (eg, Andrew Mellon and his cohorts triggered the collapse of the 1930s), faulty conclusions drawn in advance (the bailouts worked, saving us from a second Great Depression!), and plain ignorance of sound economic principles.

So what are the real lessons to have learned from last year's financial crisis and the collapse of Lehman Brothers? Jim Rogers joins CNBC to offer his consistently-held view: not only should Lehman have failed, more banks should have failed with it. Watch the clip for more.

Monday, September 14, 2009

Which stories remain untold?

I was catching up with David Merkel's Aleph Blog last weekend when I noticed a rather intriguing post entitled, "What Stories Aren't Being Told?".

As most of us are now aware, the mainstream media (particularly US) tends to overlook or leave aside many news items or stories of great value and importance. Most major media outlets prefer to skew their "news" coverage towards easily digestible soundbites on topics which normally require more depth and understanding, or human interest stories and (increasingly) celebrity gossip.

As a result, many important news items and themes go unreported or are largely overlooked by the mainstream. This holds true for the areas of business and finance as well, which is unfortunate considering the impact that financial and economic events have on our lives.

Merkel was recently pressed to examine some of these overlooked stories with the help of his blog readers. I hope you'll find his post a worthwhile jumping off point for further rumination and discussion of overlooked stories and themes. Maybe you've picked up on some under-reported stories as well?

Thursday, September 10, 2009

Interview w/ Bruce Lafont, Lafarge CEO

How's the global economy really doing? Just ask a cement manufacturer.

FT.com interviews Lafarge CEO, Bruce Lafont, about the economic strength in the developed world vs. emerging economies and the effect of government stimulus efforts on the cement maker's business.

Worthwhile insights into from a globally focused industrialist. Click the image or text link to get the interview rolling.

Wednesday, September 09, 2009

Unconventional wisdom on "higher education"

John Carney has some unconventional advice for students who are looking to follow the conventional college-career path: don't do it.

Here's an excerpt from Carney's reimagined version of President Obama's speech to American students:

"
For most of you, college is an expensive waste of time. At some of our elite schools, you would form connections that are invaluable. It’s one of the things our elite colleges do best—putting the highly intelligent in the same place as the well-off and well-connected. Going to these schools serves as heuristic for employers—your admission to the school is short hand for intelligence and diligence.

But this kind of education—the standard college education—is really only suitable for somewhere around 15% of the population. Unfortunately, we now send a much higher proportion of our students to college, which amounts to a terrific economic waste.

Much of this waste—let’s call it the college education bubble—is due to distorted economics, bad government policy and misplaced social pressures. Government subsidized loans have made college attainable for many—but the ultimate debt burden can be untenable for many.

The economic rewards of attending college can make it attractive—but most of those are concentrated in the extremely smart and capable. Perhaps most damaging of all, we have a create a culture of collegiate achievement that discourages you from pursuing your education and careers in ways best suited to your abilities.


There’s a serious danger that the college education bubble may burst. As more and more people get college degrees, which inevitably have to become easier to get in order to increase the amount of graduates beyond its realistic levels, the market will eventually figure out that the degree doesn’t mean what it used to. It will become less useful as a heuristic for intelligence and achievement. And college graduates will find themselves with an asset—a degree—whose value is dropping while their debt remains high..."

Check out the full piece (and ensuing comment thread debate) at the link above. You'll find more on this theme in our related posts section.

Related articles and posts:

1. Avoid college for as long as you can - John Carney.

2. Are too many people going to college? - The American.

3. College a waste of time & money? - Controlled Greed.

4. "Corporate slave auctions" or, "How Joel got into Princeton" - Finance Trends.

Thursday, September 03, 2009

Marc Faber on Lateline Business



Marc Faber speaks with the Australian Broadcasting Corporation's Lateline Business program (8/26/09).

In this interview, Marc questions the sustainability of the recent economic rebound, which has been fueled by monetary easing and US' stimulus packages.

Tune in to hear why Faber thinks the recent recovery may actually continue for another 12-18 months, and why another set of problems may arise from future government actions.

Related articles and posts:

1. Marc Faber on McAlvany podcast - Finance Trends.

2. Marc Faber on US & emerging markets - Finance Trends

Tuesday, September 01, 2009

Bogus bailout profits?

Market Talk blogger Steven Russolillo points out that a few noted finance bloggers are incensed over claims that the government is profiting from the legion of bank bailouts.

More details from, "TARP Profits?! Pfft!":

"A few bloggers were rather incensed today after
The New York Times and Financial Times each published stories detailing how the government is supposedly profiting off of the hundreds of billions of dollars spent on bank bailouts.

Even if the Treasury is making money off the eight biggest banks that have repaid their TARP obligations, losses from AIG, Fannie Mae (FNM), Freddie Mac (FRE), GM and Chrysler can’t be ignored, bloggers say.

And other costs associated with TARP, such as lost tax revenues and stimulus plans, must be accounted for before discussing TARP profitability.

Nevertheless, NYT presents the case that taxpayers will benefit from the bailouts because Treasury is making money off the TARP, with Goldman Sachs (GS) and Morgan Stanley (MS) providing highest return on investment."

Steven goes on to quote the New York Times article's on the government's supposed bailout profits, while countering those claims with some swift responses from Yves at Naked Capitalism and Barry Ritholtz at Big Picture.

I suggest you read all three blog posts to get a full understanding of why counting up these early TARP repayments as profits ignores the much bigger picture of the full bailout costs. Good reading!