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Art Cashin Market Thoughts Redux - Follow Up King World News Interview

Tyler Durden's picture





 

Two weeks ago we posted the most recent interview by King World News of long-time market veteran Art Cashin, in which the UBS market strategist prophetically pointed out that the "Fed is walking a tightrope in a Hurricane." As the data has confirmed since then, the winds are picking up, and the market is starting to finally realize the gargantuan task the Fed is faced with, in its attempts to flood the market with a second tidal wave of free money. Today, Cashin is once again on KWN, discussing this week's disappointing data, primary the negative Philly Fed reading and the first half a million print in initial jobless claims in a year. Cashin summarizes the failed spin of the recoveryless recovery as: "the two main points of pain are employment and real estate, and both of them are showing no signs of getting any better." Another topic touched upon are technicals, which in addition to the much discussed Hindenburg Omen, investors also have to worry about the 50 DMA, and the market would have a second back to back close below the indicator if stocks do not pick up in the coming week. Cashin is also very skeptical on earnings, whose quality continues to deteriorate as it comes mostly due to SG&A cuts, resulting in wage deflation: "the pressure on wages continues and that is not inspiring a lot of hope." As for further Fed QE episodes, Cashin does not believe additional monetization would have any incremental impact: "what's happened is - Bernanke dropped the money, but when it came on the ground people raked it up, put in the garage and went back to sleep, so things are not happening." Lastly, Cashin says that "the bond market is discounting some very troublesome times ahead - people want the return of their money, rather than a return on their money. There is ongoing concern about the state of the financial system itself." Cashin's conclusion: "there appears to be a bull market in pessimism - the bond market has a slightly better record in calling things than the stock market." Looking forward, "you may get a small bounce if nothing geopolitcally happens over the weekend, there are concerns over Iran, so if nothing happens there you may get a small bounce, but I would be cautious until the market can prove to me its got it balance again."

Full interview with Art Cashin.

 


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Sat, 08/21/2010 - 16:04 | Link to Comment Mitchman
Mitchman's picture

Thanks, TD.  Great as always.  One take away that I have is that the FED at least tries to retain some credibility by publishing "real" numbers.  In an era where the .gov agencies always come out with a number that is later revised to the worse, at least the FED, like in the Philly survey seems to be telling it like it is.

Sat, 08/21/2010 - 17:53 | Link to Comment Reese Bobby
Reese Bobby's picture

Yes. FED deflators are so "real world."

FED = honesty...everybody knows that...

Sat, 08/21/2010 - 17:58 | Link to Comment Mitchman
Mitchman's picture

True.  After I wrote it I can see that they just may want to publish what supports their inflationist agenda.

Sat, 08/21/2010 - 16:28 | Link to Comment septicshock
septicshock's picture

Iran nuclear plants should be up and running by now. Guess we bought some time on the geopolitical front.

Sat, 08/21/2010 - 16:33 | Link to Comment Noah Vail
Noah Vail's picture

Cashin is correct. There are approximately $50 trillion dollars in the world. If the Fed tosses out $1T in new money, that is an increase of only 0.02%; $5 trillion would only be one percent. Take it from there, folks. The Fed is bailing out the TITANIC with a tea cup.

Sat, 08/21/2010 - 16:40 | Link to Comment Hunch Trader
Hunch Trader's picture

Your figures nor your percentages make any sense.

Sat, 08/21/2010 - 22:45 | Link to Comment taraxias
taraxias's picture

Apparently he lives close to the GoM, that may explain why he lost his ability to do basic math. But then again, may be he had none to begin with.

Sun, 08/22/2010 - 05:26 | Link to Comment Noah Vail
Noah Vail's picture

So what does your picture say about you?

Sat, 08/21/2010 - 16:44 | Link to Comment nope-1004
nope-1004's picture

No kidding.  The inflationistas are just hoping for a devalued currency so they can pay back their debt obligations with less money.  Not going to happen.  The amount of currency printed or even "talked about" being printed vis a vis QE2 dwarfs the amount of outstanding debt obligations.  Many years of hardship ahead, as no one wants to pay for all these over priced assets.

Sat, 08/21/2010 - 23:27 | Link to Comment jeff montanye
jeff montanye's picture

is dwarfed by?

Sun, 08/22/2010 - 05:25 | Link to Comment Noah Vail
Noah Vail's picture

He just got it backwards. he means to say the amount of printing is dwarfed by the amount of debt.

Sat, 08/21/2010 - 16:45 | Link to Comment SilverIsKing
SilverIsKing's picture

How did you get past this post past the CAPTCHA?  I'm calling security!

Sat, 08/21/2010 - 18:19 | Link to Comment Translational Lift
Translational Lift's picture

Try 2 & 10........

Sat, 08/21/2010 - 18:32 | Link to Comment DavidC
DavidC's picture

Noah Vail,
You're being ironic, right?

Please, tell me you are!

DavidC

Sun, 08/22/2010 - 09:29 | Link to Comment equity_momo
equity_momo's picture

Dude , how the F did you manage the captcha with math like that?

Sat, 08/21/2010 - 16:46 | Link to Comment Calculated_Risk
Calculated_Risk's picture

the bond market has a slightly better record in calling things than the stock market.

 

 

And krugman implies the bond crowd are savage cults...

 

"The skeptics countered that Greece is a special case, trapped by its use of the euro, which condemns it to years of deflation and stagnation whatever it does. The interest rates paid by major nations with their own currencies — not just the United States, but also Britain and Japan — showed no sign that the bond vigilantes were about to attack, or even that they existed.

Just you wait, said the austerians: the bond vigilantes may be invisible, but they must be feared all the same.

This was a strange argument even a few months ago, when the U.S. government could borrow for 10 years at less than 4 percent interest. We were being told that it was necessary to give up on job creation, to inflict suffering on millions of workers, in order to satisfy demands that investors were not, in fact, actually making, but which austerians claimed they would make in the future.

But the argument has become even stranger recently, as it has become clear that investors aren’t worried about deficits; they’re worried about stagnation and deflation. And they’ve been signaling that concern by driving interest rates on the debt of major economies lower, not higher. On Thursday, the rate on 10-year U.S. bonds was only 2.58 percent.

So how do austerians deal with the reality of interest rates that are plunging, not soaring? The latest fashion is to declare that there’s a bubble in the bond market: investors aren’t really concerned about economic weakness; they’re just getting carried away. It’s hard to convey the sheer audacity of this argument: first we were told that we must ignore economic fundamentals and instead obey the dictates of financial markets; now we’re being told to ignore what those markets are actually saying because they’re confused.

You see, then, why I find myself thinking in terms of strange and savage cults, demanding human sacrifices to appease unseen forces."

 

http://www.nytimes.com/2010/08/20/opinion/20krugman.html?_r=1

 

What would that make the stock market???

Sat, 08/21/2010 - 17:24 | Link to Comment MsCreant
MsCreant's picture

If the Fed buys the bonds (buying is a funny word here) the interest rates will be anything they say it is. Ignore the man behind the curtain at your peril. The whole thing is rigged, stem to stern. When you get it that everything is being held together with lies, you will have the truth and be able to proceed from there.

Bonds=Paper=Lies

Fractional reserve "everythinging," naked shorting time and space itself, fictional accounting (mark to model), and the ability to inject pixels everywhere through offshore accounts, and you can lie a really, really, long time. 

Sun, 08/22/2010 - 09:06 | Link to Comment Hephasteus
Hephasteus's picture

I'll buy 10 percent of a securitized debt obligation relating to a credit default swap marking that asset to model.

This reminds me of when I used to adminster over a server for an oil and gas accounting place. They kept running out of disk space. I was like how many freaking people get transactions off each well. They were like thousands.

Sun, 08/22/2010 - 09:36 | Link to Comment MsCreant
MsCreant's picture

I'll take my cut of that abstraction of an abstraction, sir.

Thank you.

And before too many figure out it is all contrived, I think I'll go spend it on something real.

Sat, 08/21/2010 - 17:27 | Link to Comment Mitchman
Mitchman's picture

Krugman is so full of crap his eyes are brown from it.

Sat, 08/21/2010 - 17:45 | Link to Comment tony bonn
tony bonn's picture

it's not just his eyes...

Sat, 08/21/2010 - 18:30 | Link to Comment knukles
knukles's picture

Hey, easy on there folks.  Krugman is another Nobel Prize winner along with Al Gore and President Obama.  Let's not get too marmie smarmie hoittie toittie uppitie about folks of such stature now, ya'll hear? 

Sat, 08/21/2010 - 16:56 | Link to Comment trav7777
trav7777's picture

the debts are unpayable.  Either they will default or they will be liquified.

In the face of this, it seems wise to go heavily into debt and wait for jubilee.  This course is not without risk but seems to have paid off.  That fuckin Real Housewife bitch just filed BK and then went on a $60k shopping spree.  It seems like nobody is gonna repay

Sat, 08/21/2010 - 17:28 | Link to Comment Mitchman
Mitchman's picture

Curious to get your thoughts sometime on how that would devolve.

Sat, 08/21/2010 - 17:01 | Link to Comment traderjoe
traderjoe's picture

Ice Cubes Don't Stand a Chance Bitchez!

Sat, 08/21/2010 - 17:21 | Link to Comment RobotTrader
RobotTrader's picture

Just like at the March 2009 lows....

Retail, consumer discretionary, and emerging markets were showing relative strength.

Then:

Now:

Just sayin'.....in case the market bottoms within the next few weeks.

Asian markets have been particularly strong....

Sat, 08/21/2010 - 17:24 | Link to Comment Mitchman
Mitchman's picture

RT, you should have shown us the bottom!

Sat, 08/21/2010 - 20:13 | Link to Comment wilburpup
wilburpup's picture

Double Bottom.  Top not bad, either.

Sun, 08/22/2010 - 00:14 | Link to Comment MountainMan
MountainMan's picture

Ahhh...just what I needed!

Sat, 08/21/2010 - 18:06 | Link to Comment Reese Bobby
Reese Bobby's picture

Reality check.  It is late-August.  And there are two groups of fixed income investors:

#1) those who maintained "high quality" duration, and,

#2) those who bet on higher rates.

Currently Group #1 is feeling flush and smart.

Many Group #2's have panicked and are reversing course like trapped rats, (e.g. hapless investors who listened to Morgan Stanley).

Going forward:

Group #1 will be more and more inclined to protect profits as the year wears on; they will be easily spooked.

Group #2 is even worse because they are susceptible to the worst kind of panic; the, “I could be wrong twice in once year” panic!

So for the rest of the year I think time decay actually increases the odds of massive profit taking in fixed income.

Human Nature…

 

 

Sat, 08/21/2010 - 23:15 | Link to Comment HedgeOn
HedgeOn's picture

"turning Japanese- I really think so" - long rates are heading much lower.  Even if massive profit taking does take place it won't slow this train down for too long.

Sun, 08/22/2010 - 09:33 | Link to Comment equity_momo
equity_momo's picture

Exactly.  Bernanke is banking on a Japanese outcome - 20 "lost years" but no social breakdown.  He is simply trying to slow the rate the ship is sinking at.

Within 20 yrs these jokers in Govn and Fed will be long gone to their island or South american hideouts and wont care what happens.  I dont think they have the luxury of 20 years though.

Sun, 08/22/2010 - 13:07 | Link to Comment Reese Bobby
Reese Bobby's picture

Japan was a different situation because it ran large trade surpluses and was able to finance funding needs internally because of a very high personal savings rate.

The U.S. has large trade deficits, and while the savings rate has turned slightly positive it is being used to reduce debt.

Not comparable situations in my opinion.  We’ll see…

 

Sat, 08/21/2010 - 18:23 | Link to Comment Sudden Debt
Sudden Debt's picture

Bernanke dropped the money, but when it came on the ground people raked it up, put in the garage and went back to sleep

The people raked it up?

By "the people" you mean the banksters?

Are they now "the people"?

And who's the rest of us? The rats?

Sat, 08/21/2010 - 18:32 | Link to Comment knukles
knukles's picture

Rat droppings.

Sat, 08/21/2010 - 18:48 | Link to Comment Something Wicke...
Something Wicked This Way Comes's picture

When the game is rigged and the dealer is a mechanic, the only way to avoid losing is to avoid playing. Although I gotta tell ya, long term index puts/shorts look mighty appealing plastered virtually everywhere on every market.

Sat, 08/21/2010 - 20:02 | Link to Comment MsCreant
MsCreant's picture

Every last one of us is being played.

Sun, 08/22/2010 - 00:16 | Link to Comment MountainMan
MountainMan's picture

Tyler Durden, will you ever reveal yourself?

Sun, 08/22/2010 - 14:56 | Link to Comment sourgrapesson
sourgrapesson's picture

I hope not..........personally, I am intrigued by not knowing.

Sun, 08/22/2010 - 22:50 | Link to Comment wareco
wareco's picture

Tyler was outted long ago.

Sun, 08/22/2010 - 04:14 | Link to Comment Tic tock
Tic tock's picture

One has to admire the trader mindset - didn't China come out last week with a policy of going soft on UStreasuries? That's the engine of growth whose speaking, right? Europe just attempted to match printing expectations to those of the US, where monetization is progressing faster. ..front-running the hyper-printing is a great idea- until the bonds are suddenly worth cents. It might not happen, but you better hope it will. 

Sun, 08/22/2010 - 09:49 | Link to Comment bigking12345
bigking12345's picture

Cashen is the minister of dis-information, he could have worked for Saddam.

Sun, 08/22/2010 - 20:45 | Link to Comment Moneygrove
Moneygrove's picture

ex russian trader from nyc ????

Fri, 10/01/2010 - 07:34 | Link to Comment Herry12
Herry12's picture

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