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Jeffrey Saut Blasts Rosenberg, New Pundit Drama In The Making As Rogers-Roubini Love-Fest Tapering
Looking at the mudslinging campaign going among economic strategists, one would think the presidential elections are early (and for once we may just elect someone who understands something...anything... about the economy). First we had Rogers and Roubini, and now it appears that the Bull-Bear combo of Saut-Rosenberg is next to take center stage.
As a reminder, in his November 18, Lunch with Dave piece, Rosenberg took a stab at permabull Jeffrey Saut:
In terms of reading material, what I found was most fascinating was this Bloomberg News article titled U.S. Stocks Advance as Commodities Gain. In the article, a CIO from an investment house is quoted as saying “we feel like this market still has some room to move higher. We’re still at levels that are lower than we were before Lehman Brothers. We are vastly better off than we were then.”
This is a rather remarkable statement, but this is what many portfolio managers actually believe — that things are better than they were before Lehman collapsed and hence there should be no reason why the S&P 500 cannot gravitate back to the pre-crisis range of 1,200-1,300. To be sure, technicals can take us there, but as for the macroeconomic fundamentals, they are so far worse now than they were before Lehman collapsed that it’s not even funny. Look at what’s happened since then:
- We have lost 6.2 million jobs since then
- The unemployment rate is 10.2% now; it was 6.2% the day before Lehman failed
- Even with the nascent mid-year recovery, real GDP is still down 3% since the summer of 2008
- Housing starts are down 30%
- Auto sales are down 23%
- Bank credit has contracted $500 billion, or 8%, since then
- Household net worth is down $7 trillion
- Home prices are down an average of 10%
- Office vacancy rates are up 3.5 percentage points, to 17.2%
- Apartment vacancy rates are up a percentage point, to 11.1%
- Consumer confidence is down 11 points to 47.7 (Conference Board)
- The U.S. budget deficit has tripled (and the only reason the economy is growing again)!
If this is “vastly better off”, we would shudder to think what “worse off” would look like.
An indignant Saut takes offense today, and retaliates with the following:
Most recently, we have suggested, “that with credit spreads below their pre-Lehman bankruptcy levels there should be no reason why the equity markets can’t ‘fill up’ the downside vacuum created in the charts by said bankruptcy, as can be seen in the following charts. That gives the S&P 500 an upside target of 1200 – 1250” (we include those charts again this morning). One admittedly very bright Canada-based strategist, however, took exception to my statement in last week’s Barron’s magazine. The only problem was, he got my quote wrong. As reprised:
“Picking up on a pronouncement by a chief investment officer of an investment firm that ‘we’re still at levels that are lower than we were before Lehman Brothers [went belly-up]. We’re vastly better off than we were then.” After stating a bunch of economic statistics that are worse now than back then he concluded, “If this is ‘vastly better off,’ (I) shudder to think what ‘worst off’ would look like.”
Now, I don’t mind ANYONE disagreeing with me. That’s what makes a market. But, at least get the quote right! I said nothing about the economy and certainly didn’t suggest that the environment is “vastly better now than it was then.” The word “vastly” is particularly disturbing to me because it was never used, which caused one savvy seer to remark, “Why should you be upset by a strategist that completely missed the March lows and has hence been bearish all the way up?!”
Them's fighting words. This is what Bernanke's artificial market propping has reduced some of the smartest economists in the US - covered with fecal matters from mutual mudslinging campaigns. If nothing else, perhaps Jerry Springer can someday come up with a version of his show for people with an IQ over 45. We already know who the first 4 guests would be.
Full Saut report:
h/t hedgeyourmind
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Saut is brainless and has learned nothing. He's talking his book and has an ounce of economic sense or credibility.
Rosie lost his job at Merrill like Shilling by being
early and right...
Doesn't matter. The guy has rode up from the March lows and looks pretty smart on the P+L. Rosie is right, but wrong on the P+L. That's what happens in Bizzaro world.
The fact that all of the below are making money:
my dog
my blind grandmother
and my friend whose been losing money trading all his life till the March 2009 lows
DOES not mean that they are smart, more like they got lucky. Saut is lucky and riding the wave of fools who are being assisted in bloating their accounts courtesy of the Feds.
Rosie is right, time will tell.
I know he's right, and I know time will tell. But right now, I'd prefer making money to being right.
Someone said that The Squid called for Rosenberg's head. They blacklisted him and he cannot work in the US anymore.
Is this true?
Does The Department of Squid-land Security have their border patrol agents on high alert?
I think like Rosie and I got denied at the border renewing my visa...not sure if its a rumor but I definitely understand how he feels. Luckily Canada isnt that bad a place to come back to.
Rosie is wrong on the P&L for now. Nobody is going to ring a bell when its time for price and value to once again correlate. Remember, the "Rally" off the March lows has been on anemic volume and it won't take much to reverse course. If PM's don't lock-in profits, they too, will be on the wrong side of the ledger.
Rosie is sticking to his guns, and I believe he will be proven right in the end. Also, he has been dead right on corporate bonds, and while the returns don't equal the stock market's returns, they're still pretty solid.
It's not like he's been short the whole way up. Remember, Rosie is a market strategist and an economist, and as such, he has a big leg up.
In the end, proper analyis will trump short-term market moves every time.
The "P" is only good if and when you get out the "P" is still there.......a paper "P" is no better than a paper $$.
Course if you count returns on the market prior to the decline.. Rosie (and the rest of us bears) are still ahead.. Funny how some people forget that part.
Of course, that's assuming (dangerous word there) that you picked the top.
Look, I'm not doubting the bear arguments. But the market is calling the shots, and regardless of how bearish one is, and how many ZH articles point out the truth of the joke that is the Fed, the US administration, American Fiscal Policy, the DGDF theory, or gold quotes, at the end of the day the market just keeps on chuggin'. So while I get sick of the bulls and silly analysts claiming it has more room to go, they're right - it does. And it probably will.
So is it better to make money even if you don't agree with the fundamentals? I think it is.
For me - I don't believe the returns (as nice as they are) compensate me for the risks that are still out there. Fundamentals need to be there, as a market can't run on fluff alone. Also, if the Fed/Treasury is propping this thing up.. I'm clearly not in the loop, which means I run the risk of getting bombed if/when the playbook changes.. because I know damn well I won't get the memo. Course that's just me.. to each their own.
Nothing says you can't keep positions small, and stops tight. That's what I've been doing with FX and gold.
remember, rosie was not bearish on all markets. Most seem to think only about US equities, but he was bullish on commodities and commodity currencies....
First, how many people outside of the Wall St bubble understand, or even know what the heck "credit spreads" are? Not very many. For them to say that because "Credit spreads" do this or that their 401(k) shoudl be 10-15% higher would be the same as saying that the market will be up because Mars and Jupiter aligned with 6th Saturn ring!
The real people feel if it's better or not than last year. Eventually they will either earn money (if they have jobs) or they won't, they'll spend or not, they'll pay taxes to pay interst to Chinese or they won't.
'Well I don't care about history
'Cause that's not where I wanna be
Don't wanna be taught to be no fool'
-Ramones
'Just a spoonful of sugar helps the medicine go down
In a most delightful way
The job's a game'
-Mary Poppins
'Plenty of sunshine headin' my way
Zip-a-dee-doo-dah, zip-a-dee-ay
Mister Bluebird's on my shoulder'
-Uncle Remus
Do you remember the first of December?
S&P down 8.93% on 12/01/08. The worst one day performance in December for the S&P 500 was -5.41% in 1929. The worst first day of the month ever for the S&P 500 was -4.76% in June 1931.
In 2008, Black Friday sales measured by ShopperTrak rose 3 percent compared to the prior year's Black Friday.
TNS Retail Forward senior economist(December 5, 2008): "The good news is that shoppers are not further tightening their spending plans."
(December 7, 2008) :More than 172 million shoppers throughout the United States visited stores or Web sites during Black Friday weekend, according to the National Retail Federation in Washington, D.C. That represented a 17.7 percent increase compared with 2007. "There was a lot of demand out there, and there were discounts that people couldn't pass up," said Federation spokesman Scott Krugman.
(December 7, 2008) :Richard Giss, a retail analyst with the Los Angeles office of Deloitte LLP,said most retailers probably will be satisfied to match their 2007 sales figures or maybe record a slight year-to-year increase.
Sound familiar? Vuja de non!
Last year's entire holiday season marked the worst performance in nearly 40 years.
Here's a thought experiment:
Door #1: More Shoppers, average spending up; Bubblevision Headline: Thanksgiving Sales Rise signalling recovery
Door #2: Less Shoppers, average spending up; Bubblevision Headline: Thanksgiving sales signal pent-up demand
Door #3: More shoppers, average spending down; Bubblevision Headline: Thanksgiving Sales rise as expected
Door #4: Less shoppers, average spending down; Bubblevision Headline: Thanksgiving sales suggest shoppers waiting for bargains, forecast of increasing traffic
If quantum theory is correct there exists a reality where Bubblevision focuses on the fact that this year's reporting is eerily similar to 2008 Black Friday's commentary and that since there is one more shopping day this holiday season, if we're flat year over year we are actually down.
Or in other words, after the locusts comes the famine.
:....Bernanke's artificial market propping...."
Herein lies the problem.
How about all of these economists and analysts start looking at the role of the Fed.
Oh, that's right, they cannot because we don't know what the Fed is doing because unlike any business or governmental entity in the U.S.A., they are not subject to an audit.
And Mr. Change and Transparency himself, the current President of the USA, renominates Bernake for the Fed again. what a phucking joke that will end with the USA becoming an even bigger pile of financial shit than it now is.
I can still see the future when the MSM pundits and newscasters start off their programs with:
"How come NOBODY saw this coming?"
"How could this have happened?"
"Where were the checks and balances?"
"How could we have ever thought it sane that a private banking organization could be allowed to do anything it wanted with our currency with no oversight?"
I cannot wait to watch these broadcasts. It'll be a repeat of the same shit that we saw after Bear, Lehman, AIG, etc.
The USA simply refuses to learn from history and its past errors and I have all the confidence in the world we are doing the same thing today. When everything goes to hell again and it will, I am extremely confident that we once again will not learn shit from the mistakes and will rinse and repeat once again.
it's gonna be a long, long, slow grind to the bottom so enjoy the ride America.
Economists have become the new shock jocks.
Starting fights with each other to gain
their 15 minutes of media time. Apparently
the dismal science doesn't sell very well
so you have to be ULTRA DISMAL or MEGA
EXUBERANT.
This is ridiculous. Rosy DID NOT miss the bottom. While he said to avoid stocks AFTER the initial bounce, he argued vehemently to go long corporates as well as commodities. In addition, he urged investors to go long the Canadian $ vs the USD. Including this call, his track record since the 2007 highs has been stellar.
Saut is just another shill that thinks "stocks" are the only investment vehicle.
Saut supports him view with quotes from permabulls John Chambers of Cisco, head cheerleader of the tech bubble, and GaveKal Research. I stupidly bought a book called "Our Brave New World" by GaveKal 2 or 3 years ago based on somebody's recommendation and thought it was such a load of crap, another "Dow 36,000", that I didn't get through more than a few very short chapters. I just pulled out the book to see if it was as bad as I remembered. It was worse. The premise of the book is on the back cover: "The first thing that has changed is what companies in the Western World do for a living. Instead of producing goods, they now merely design and sell them while the production has been outsourced elsewhere. The birth of this new business model, the "platform company" model, has already had very important macro-economic, political and financial implications."
Following are some quotes from the book which was written in 2005:
After discussing Modligiani's Nobel Prize for his work on how companies can optimize the leverage on the balance sheet, GaveKal said: "Given the joint collapse in the volatility of the US economy and of US employment highlighted above, why shouldn't the US consumer borrow more and consume today instead of tomorrow?"
"Today, when US economic activity turns south, the US consumer, despite his 'over-leveraged' status, of concern to so many, continues to power ahead. In recent years, the US consumer has remained the bedrock of the world economy because he did not lose his job; nor did he worry about the possibility that he might lose his job.'
This confidence in his employment outlook allows the US consumer to leverage up, even in lean economic times. With the fall in the volatility of the US economic cycle, the propensity of American consumers to leverage up in order to buy consumer goods, automobiles or real estate has risen markedly. This makes perfect sense. As Modigliani showed, less volatility equals more debt."
Hyman Minsky also argued that less volatility equals more debt, but he was smart enough to warn that it would end badly.
It is remarkable that GaveKal Research is still in business and even more remarkable that Saut or anybody else would use them to support an argument.
Has anyone else noticed how Rosie looks a little bit like Hume?
'Hi my name is Rosie'
'Hi Rosie!'
' I am a skeptical empiricist'
..a 12 step plan to fight bullishtness...
If you read the actual article on Bloomberg, it was not even Saut that made that statement, it was Burt White from LPL Financial. Saut is quoted later on in the article about the dollar/equity correlation. It is humerous that he assumed Rosie was talking about him.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aJz5MmTkfilA
That's funny. Saut must have figured he'd manufacture a dispute with the more widely known Rosenberg to get into the news.
Got it. Saut's a meglomanic (listened to him a few times and he sounds full of himself). Check. TD et al, could you clear this up with an edit to the post? I mean, Rosie didn't call anyone out by name.
Anyone notice the CNBC piece regarding the press and the running joke on the propaganda that it publishes? Priceless.
This is bound to be a good war of the analysts, poor Meredith Whitney now needs her arch-nemesis and we'll have good center stage bouts to watch :)
i broker at RJF, they sure as heck did not get me out at the top or in at the bottom..........i legged out myself at the top, was only 20-30% long maybe 20% of the time in 08, and have been in that mode since, in full disclosure was out of pocket at the low and the first two months, my broker sure didn't help me, and his clients rode it all the way down, only one of his 300 clients is close to even, a bond client
also, fwiw, sauts individual equity calls are pretty sucky
ditto. The working man's investment has been hammered, meanwhile these idiots keep releasing news articles and forecasts so they can simply see their name in print.
Forecasting is witchcraft. I love how nobody got protected on the way down but now they beat their chests about being right on this gov't sponsored PPT plan since March, but I'm still down from 2007. Without the gov't massaging the accounting rules and injecting trillions, this would have been over long ago.
Idiot shill game. Staut should join CNBS if he believes this market.
"completely missed the march lows".....
ummm How many people were all in during the march lows?
how many people/strategists were calling a market bottom in march ?
yes, a few out there were picking a bottom, but not for the right reasons.
Here is the March buy signal event (see link). Just the audacity of the FED should have warranted a 20% play in equities just on the indices alone. But, on the way up, for a buy into the trend, a clear signal would have been from the banks (GS, JPM), or for the more adventurous, Ford Motor Company (F).
http://www.bloomberg.com/apps/news?pid=20601068&sid=aPlq8GB5FWSc
All for now,
Mark Beck
For purposes of introduction, my name is Todd Harrison and I'm the founder and CEO of Minyanville Media, Inc. I would like to begin by applauding many of the efforts and articles I've stumbled across on ZH. Critical thought is a central tenet of democracy and an ethos we've long embraced in the 'Ville.
I wanted to weigh in on this subject, as I believe I have a unique perspective. I've known Jeff Saut for many years (in the interest of full disclosure, he is a close friend) and I've found his insights, acumen and integrity to be of the highest quality. Additionally, he's been right as rain for a very long time, in good times and bad, through various secular and cyclical cycles. In short, he's a damn smart cookie and a helluva good man.
There aren't many strategists I consider to be in 'that' class (of intelligence and integrity) but David Rosenberg is most certainly among them. I've read him for years and agree with most everything he posits--he's been early on many of his vibes but then again, so have I (always honest). Where he and I are in violent agreement is that the imbalances are CUMULATIVE; they won't simply be wished away.
It's quite possible--and perhaps probable--that both gentlemen will be proven right. Time is the arbiter of financial fate, a lesson proved true time and time again over the last decade. There is little (if any) doubt that the cumulative imbalances will again "boil over"--the cancer is bigger than the economic patient, tied together with $500 trillion in derivatives--the only question is when.
If true education resides in the friction between opinions, I, for one, would like to see as many sides as possible to formulate MY view and MY risk profile. That type of healthy debate, sans acrimony, should be industry standard for folks long ago led awry by wayward mainstream financial media agendas.
Just one man's humble opinion. Happy and healthy holidays.
Toddo
Thanks for sharing Todd, I liked the line that true education resides in the friction between opinions. The most difficult item for economists to forecast is government intervention and exchange rates that currently depend not on fundamentals but on central bank actions. A large part of forecasting then becomes dependent on what will Bernanke do (WWBD) - the timing of his actions and coordination with other owned central banks becomes one of the most difficult for market timing to the advantage of insiders. Sans QE and PPT support, we would have had GDII in the markets (reality on main street).
If Audit the Fed proceeds, we will see Rosenberg's vision of the future play out.
'If Audit the Fed proceeds, we will see Rosenberg's vision of the future play out.'
The fiscal version of 'Stockholm's syndrome'
For purposes of introduction, my name is Todd Harrison and I'm the founder and CEO of Minyanville Media, Inc. I would like to begin by applauding many of the efforts and articles I've stumbled across on ZH. Critical thought is a central tenet of democracy and an ethos we've long embraced in the 'Ville.
I wanted to weigh in on this subject, as I believe I have a unique perspective. I've known Jeff Saut for many years (in the interest of full disclosure, he is a close friend) and I've found his insights, acumen and integrity to be of the highest quality. Additionally, he's been right as rain for a very long time, in good times and bad, through various secular and cyclical cycles. In short, he's a damn smart cookie and a helluva good man.
There aren't many strategists I consider to be in 'that' class (of intelligence and integrity) but David Rosenberg is most certainly among them. I've read him for years and agree with most everything he posits--he's been early on many of his vibes but then again, so have I (always honest). Where he and I are in violent agreement is that the imbalances are CUMULATIVE; they won't simply be wished away.
It's quite possible--and perhaps probable--that both gentlemen will be proven right. Time is the arbiter of financial fate, a lesson proved true time and time again over the last decade. There is little (if any) doubt that the cumulative imbalances will again "boil over"--the cancer is bigger than the economic patient, tied together with $500 trillion in derivatives--the only question is when.
If true education resides in the friction between opinions, I, for one, would like to see as many sides as possible to formulate MY view and MY risk profile. That type of healthy debate, sans acrimony, should be industry standard for folks long ago led awry by wayward mainstream financial media agendas.
Just one man's humble opinion. Happy and healthy holidays.
-toddo
Here's another man's opinion.
Todd Harrison is one of the most genuine and smartest fellas in the commentary biz.
When the student is ready the teacher will arrive.
Wonderful quote; thank you! By the by, your commentaries are wonderful, too.
Thanks for the serotonin boost.
Agreed...Todd is a great contributor of well-informed and carefully balanced opinions, given with candor and humility. I've learned much from reading him these past years, and share his view about reading widely to inform one's thought process.
I put Jeff Saut in the same category as Jim Cramer: he's always on the right side of the market.
welcome, todd. it's great to see some renowned and respected financial types in this neck of the woods. take care and happy holidays to you as well.
Great to see you here at ZH, Mr. Harrison. Welcome aboard! 'tis just wonderful to see the best and brightest start gathering around the oasis of knowledge that is ZH. Just imagine the possibilities.
Someone tell the Minyanville guy that Rosenberg's comment was directed at Burt White and not Saut. Saut erroneously assumed it was directed at himself (one can only hope that his economic research is based on better assumptions).
Rosenberg:
"...I found was most fascinating was this Bloomberg News article titled U.S. Stocks Advance as Commodities Gain. In the article, a CIO from an investment house is quoted as saying 'We feel like this market still has some room to move higher. We’re still at levels...'"
From the Bloomberg article (http://www.bloomberg.com/apps/news?pid=20601087&sid=aJz5MmTkfilA):
"'We feel like this market still has some room to move higher,' said Burt White, chief investment officer at LPL Financial in Boston..."
(Saut's quote references an article in Barron's:
"...Canada-based strategist, however, took exception to my statement in last week’s Barron’s magazine."
Maybe they're fighting over something else.)
Someone said that The Squid called for Rosenberg's head. They blacklisted him and he cannot work in the US anymore.
Is this true?
As true as it gets. Don't be deluded in the BAC/ML "all-in-the-family" propaganda about his relocating back to the Maple Leaf state to be with family nor should you believe the Bernstein/Rosie "dynamic-duo" were not completely and singularly shit-canned for going too far 'off' the Goldman/Rothschild stagescript. Next to the creation of the central bank, the Wall Street capital markets have been the most lucrative and profitable invention of the Idumean hegemony. Entice the apathetic my-synapses-don't -connect goyim into [falling for] believing the ancient mysteries of buy-and-hold. Wall Street exists so that they will have someone on the other side of the trade and to wage their economic wars with other people's money. Bernstein's prescient consolidation rhetoric and Rosie's all-too-familiar perma-bear oratories bespoke blasphemies among the Family. This didn't leave the Vampire Squid any choice. Either serve and worship at the altar or depart from among us!
The gated community of exclusion all too quickly becomes the leper colony of pariah.
Silliness. If you bought equities in March at the lows, you were right. If you decided to stay out and do other things as Rosie recommended, you were right.
Deflationary forces are on the move and the Fed has no ability to stop it, only slow it down. There will be blood.
Excellent point Ned... I feel just as right to have essentially stayed out in March... as those who went all in... what strange circumstances we find ourselves in when just about everyone can feel right in this market.
http://www.youtube.com/watch?v=D2jEM5aHHJc
I can't be the first to post the rat staring contest, but it seems apropos.
I'm sure Saut is great at customer lunches with his worldliness and $3,000.00 suits, but I have coin in my pocket that is at right as he is on markets over the long haul.
Same with all of these 'strategist' types. They all say three things at once and just try to generate transactions for their firm.
Egomaniacs!
Right or wrong is almost irrelevant for this particular point he is making. If someone is going to a quote as the target for an attack, the quote must be precisely accurate. If he did not use the word "vastly", then it's improper to attack it. It's worse than improper. It's one of the worst offenses one can commit in the world of internet postings -- where one quotes someone in order to respond.
This guy does have a very powerful point about that matter. If Rosenburg did it, he has to stand down and apologize.
If you look further up this thread, you'll see that the quote Rosenberg referenced from a Bloomberg article was from a different strategist, not Jeff Saut. There was an unrelated quote from Saut further down the article. Rosenberg quoted the other strategist accurately, was not referring to what Saut said. Saut got it wrong.
Saut was bullish all the way down. He was telling clients to buy all kinds of stuff, some of which was cut in half at the lows.
No credibility. I guess you are not wrong if you do not realize the loss.
There are a lot of good things on this site but too many people are caught up in what should be. The system is smoke and mirrors????? Market insiders and the Gov't look to protect their power and wealth??? Thanks for the hot freaking tip. It doesn't matter what it should be only what it is and winning is only measured in profits and losses. The fact is Rosenberg missed a 65% jump...
missing a 65% jump = wrong...period
saut is a cheerleading disingenuous d-bag just like everyone else on wall street
he can eat shit and die
Can this guy at Raymond write 1 sentence without using "quotes" for effect....sheesh. No one knows how to write anymore.