Market Talk

I studiously avoid watching Jim Cramer. It’s not that he’s a stupid man, he’s a very smart man. It’s not that he isn’t a successful man, he a very successful. It’s not that he makes bad calls. Well, it’s not solely that he makes bad calls.

It’s that he’s an insufferable jackass.

So last night he’s on his show, trying to convince his viewers not to panic and to stay with stocks, and he rips Kelly Evans over her Ahead of the Tape column yesterday about auto-parts stores. Now, whether or not Kelly’s right or wrong can’t be decided in one day. Whether or not anybody who writes a column or hosts a show for a living can ever be 100% right isn’t the point either.

It’s not the shot at Kelly that got me. It was the shot at his viewers’ intelligence.

So, here’s Cramer, a guy who as you’ll see momentarily has been massively wrong in the past. Not just wrong, but spectacularly, historically wrong, and he’s on cable TV last night telling people to keep buying stocks:

Despite all the worry, staying in stocks has been the right move every step of the way, and not panicking out on the big down days. No one ever made a dime panicking.

Now, he’s right about the panicking bit. He’s also right about the staying in stocks bit…if the world started turning on its axis two years ago. But it didn’t. Stocks have been a bad, bad bet over the past 12 years, and they are very likely to be a bad bet for the next four or five years.

Look, somewhere, there is some genius who got out in October 2007 and got back in in March 2009 and made a killing. But most people “in the market” are just getting jerked around, and Cramer’s one of the hacks pulling the chain.
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I think we're moving in a new direction, dear.

The recovery is over.

For the past year, the pundits, the cheerleaders, the bulls and partisans have all been pushing the recovery theme. It started last March, it started when the White House and Congress blew out the debt with a $787 billion stimulus plan, it started when the Fed pledged to buy more than a trillion worth of Treasurys and mortgage-backed securities. But the government juicebox is empty, it isn’t clear what they’ll unveil next, or how effective it’ll be. Or if they’ll do anything.

So you can say we’re in a new phase now. The slog, or the plod, or the galumph. It should be clear to everybody that the economy, which White House snake economic guru Lawrence Summers claimed back in April had reached “escape velocity,” has stalled.

What happens next is “unusually uncertain,” in the word of Fed shaman Ben Bernanke. But I’ll tell you what is certain: everybody’s thinking, from the White House to Congress to the Fed to the corporate boardroom to the family dinner table, is going to shift. You thought people were being tight-fisted before? If the Fed chairman doesn’t know what’s going on, why should anybody feel confident about spending money?

I’ll tell you, you can already see the change among the bulls. Don’t get me wrong. They’re not throwing in the towel. That’s not in their DNA.  But they’re not quite as excited as they were six months ago, or a year ago. It’s obvious to everybody, even Christina Romer apparently, that the recovery is turning into a big dud. This morning’s jobs report was just another dollop of sour cream on your recovery sundae.

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Have I got a rally for you.

Bulls love to chastise guys like Gluskin Sheff’s David Rosenberg and Hussman Funds’ John Hussman for missing the 2009 rally, as if they missed out on the chance of a lifetime. Of course, most of those catcalls come from people who got creamed in the sell-off in 2008. It’s no secret that if you’d stayed invested in the stock market from 2007 to today, you’re sitting on a loss (and we all know your mattress has given you about as good a return as stocks over the past 10 years.)

Rosenberg touches on this his daily missive.

I was asked yesterday in an interview how I respond to criticism for missing the surge in the equity market. Well, for one thing, those that were long in 2009 got their clients killed in 2008 and it’s still not even a wash. Second, I was recommending credit and commodities last year, not cash, and these strategies played out well. There are always ways to make money without having to go whole hog into the stock market.

He’s right; it’s not even a wash. It doesn’t take some kind of expert to figure that one out. The stock market, despite the constant crowing from the sell-side crowd, has been a loser for its investors (of course, caveat here, I’m quite sure there are somewhere some individual success stories.)

Through all the zigs and zags, this market has done diddly squat now for over eight months. You were better off clipping coupons, even at these low bond yield levels. And as for that 80% rally from March/09 to April/10, we wonder aloud how many are going to remember it once we retest the lows – the market rallied 50% in the opening months of 1930, as an example. Do you ever hear anyone today talking about the great rally of 1930? Does anyone today ever have much to say about 1930, or if they do, is it a fond memory? Well, the market rallied 50% at one point that year. There’s not much left to say on this one.

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If you watch CNBC enough, you’ll notice it. The persistent use of the word “we” when the reporters are describing the stock market. “We” are rallying, “we” are selling off, “we” are looking to climb here, “we” are concerned about a double-dip, or the price of tea in China, or whatever, you get the point.

Listen, “we” are not the market. We are reporters. “The market” is a place where buyers and sellers come together to, well, buy and sell. “We” report on the outcomes of that buying and selling. I’m certainly not the first person to suggest that CNBC is less than an objective observer, but this “we” thing is like nails on a chalkboard to me.

This is something you just don’t hear elsewhere. You don’t hear sports reporters referring to the teams they cover as “we.” You don’t hear political reporters referring to the politicians and parties they cover as “we.” You don’t hear reporters who cover the military refer to it as “we.” It’s The New York Football Giants, it’s the White House, it’s the military.

But on CNBC, the reporters on the network and the stock market are all one big “we.” It’s a subtle thing. But it points to an almost unconscious association in the speaker’s mind with the subject they’re covering.

It’s an easy thing to slip into it, and I’m sure somewhere along the line I’ve done it myself, but I consciously try to not do it. I was reminded of this yesterday, when talking about the rally on the New Hub. It would’ve been easy to say “we’ve got a rally on our hands.” But for me the only we is the Fourth Estate, and Simon, Bob and I don’t have anything going. The stock market has a rally going (and going nowhere today, incidentally.)

Just needed to get that off my chest. We appreciate your patience.

In case you were wondering: The headline quote, by the way, is from “Sudden Impact,” when Clint Eastwood, as Dirty Harry, standing solitary in a coffee shop that’s being held up, says to the gunmen, “well, we’re not just gonna let you walk out of here.” One robber laughs and says, “who’s we, sucka?”

Harry pulls out his big .357 and says “Smith, Wesson and me,” and proceeds to blow away the gunmen. It’s the last one standing, who grabs a hostage, to whom Harry says, “go ahead, make my day.”

That’s what I say to CNBC: Who’s we, sucka?

Hey Yahoo, you're getting old.

We’ve been on a Yahoo (YHOO) kick lately, so might as well acknowledge the company’s 15th anniversary.

Co-founders Jerry Yang and David Filo pen a lengthy missive on Yahoo’s corporate blog, acknowledging the anniversary and the potential Yahoo has over the next 15 years. Not surprisingly, the post is full of corporatespeak, as there’s no mention of Yang’s disastrous decision not to sell the company to Microsoft (MSFT) a few years ago.

Still, it’s hard to reflect on the company’s history without at least acknowledging that failed takeover attempt. Even current CEO Carol Bartz commented on it today in an interview with CNBC.

Bartz wasn’t there at the time, but when CNBC asked whether she’d have taken Microsoft’s hostile, $36-a-share-takeover offer in 2008, she yodeled – all right, shouted – “Sure!”

Bartz later dismissed that as a “fast answer” to an “inappropriate” query.

“Any company at the right price” is tempting, Bartz said, adding she thinks the market undervalues her Internet giant. “The point is, you never know unless you’re in the middle of a deal what’s really happening, so it isn’t fair to go back.”

Bottom line: “I’m not shopping Yahoo today, so there is no price Yahoo today.”

Even if Yahoo isn’t for sale, maybe it should go shopping for some acquisition targets, instead, to drum up some buzz for a company that is getting more efficient, but seems to be losing some of the excitement that surrounded it years ago.

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Is anybody else sick of all the Dow 10000 stories circulating through the media over the last 24 hours? CNBC can’t get enough of it. The milestone also earned a spot on the front page of WSJ as well as the lead story in the Money & Investing section. Even our Market Talk blog has covered it here, here, here and here.

Dow 10000 is everywhere, as if it’s some sort of monumental milestone — that the index first hit a decade ago.

Whoopty-do. Someone who invested in the Dow 10 and a half years ago will now have broken even. Break out the champagne!

Listen, we’re just as guilty as everyone else with all of our coverage of the Dow crossing the “psychologically-significant” level. But in case you haven’t noticed, there’s a common theme running through all of our stories. This is not 1999 all over again – the reaction to Dow 10000, believe it or not, has been much more muted than it was a decade ago, and for good reason.

Everyone was making money and living the good life in 1999. Now, stocks are bouncing off multi-year lows after the worst financial crisis since the Great Depression.

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Being in the business we are in, we’re forced daily – Clockwork Orange-style – to watch CNBC (although we much prefer our compatriots over at Fox Business.) And for as long as we’ve been watching, the network’s best commentator has been Rick Santelli.

Now, Santelli became a political football earlier this year with his now-infamous rant about homeowner bailouts, but in reality, that was nothing. Santelli had been railing against bailouts of all types since this rolling disaster started. That one became famous only because it was picked up by certain aligned interests (and not necessarily aligned with Santelli) and turned into a rallying cry.

But this morning Santelli went off on an extended rant that  gets to the heart of the problems with all this green-shoots talk and deserves far more attention than it’ll get (one, because it’s not easily translatable into some political party’s talking points, and two, because the issues he’s discussing will sail right over most people’s heads.) The entire eight-minute clip is absolutely a must-view if you have any interest whatsoever in what’s going on in the global economy.

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