As usual getting Art Cashin's pragmatic take on something as important as the Fed's decision (which at this rate will need to be revised very soon), is quite a morning coffee, or for some, "fermentation", treat.
The chairman of the "Friends of the Fermentation" committee dives into the two topics preoccupying the world: Bernanke and Greece, and as usual, deconstructs both with his laser-focused pragmatic perspective. That both of these are closed loops that only get worse as they "get better" is becoming increasingly clear to everyone even remotely interested in events away from the top 20 items in Google Trends.
Some pure poetry from Art Cashin today which explains why future US generations may want to hold a referendum on being born...
As usual, UBS' Art Cashin, who may suffer the occasional pint but never outright idiocy, cuts right to the chase. His bottom line: "According to the Tax Foundation, after the 1929 crash, Congress proceeded to raise the top marginal tax rate from 25% to 63% by the end of Hoover’s term.... As you may recall, hiking those rates may have made folks feel that rates were more equitable but it sure didn’t help the economy."
Nothing actually new here, but listening to Art Cashin retall the latest end of the world episode in that wise, grizzled voice of his brings a soothing element to what is set to be another dramamine-friendly week."Over the weekend, the battle has shifted. German authorities talk openly of the likelihood of a Greek default. They are said to be developing a plan to backstop German banks in the event of a Greek default. That puts pressure on other banks, especially French banks, since there is no Gallic backstop plan. Collateral damage could be to bring no bids to the next Greek auction, or make them pay such high rates as to make the auction toxic. The Euro crisis is quickly evolving into a Gordian Knot....U.S. markets are at near-critical levels. The uptrend line that caused the last bounce (S&P 1140) is around 1145. Key support levels are 1140, 1132, 1120 and ultimately 1101. The new Battle of Thermopylae is on the way."
Yesterday we documented that the by now widely bashed Operation Twist has been a failure before it was even launched as confirmed by recent trends in mortgage refinancing, or more specifically, lack thereof. Today, none other than market (and alleged bar) veteran Art Cashin confirms precisely what we said: that the one goal of the Twist - to get mortgage rates lower and refinancing higher - is and will be a failure. Again, it is very unfortunate that what is by now glaringly obvious to all will never become clear to the Fed until after the economy has finally been pushed over the precipice.
An already ubercynical Art Cashin chimes in on Obama's much anticipated, and very controversial (recall the latest Boehner flap on the issue) speech tomorrow and comes out sounding even more jaded than usual. In a word: don't expect any imminent rise in Obama's already record low popularity rating as a result of this speech, which if recent history is an indication, will likely generate even further class animosity within US society, now well on its way to confirming some of the more violent teleological theories postulated by Karl Marx.
Art Cashin, the skeptical floor veteran, and always practical and easy-spoken observer of market moves and developments, shares his latest set of views on the happenings in Europe. Granted this is backward looking, as things in Europe change from one total mess to another in minutes, but still a good summary for new entrants into the utter chaos that is a EUR-driven market with 1.000 correlation to the European currency.
Yesterday's ominous selloff (today's very temporary EURUSD, and 100% cross-asset correlation, bounce notwithstanding: after all the data just got even worse courtesy of the Philly Fed, meaning much more pain for the S&P before QE 3 comes) got you a little jittery, with Flash Crashy overtones? You are not alone. Market veteran Art Cashin recounts that yesterday's market action was not so much reminiscent of 2010, or even the 2008 uber-volatile market, but really 1987.
Readers of Zero Hedge know that we put precisely zero weight and/or credibility in yesterday's ADP number: month after month it has proven to have no predictive ability when it comes to forecasting the Nonfarm Payroll Number. On the other hand, we have also been very skeptical of the BLS data, if for no other reason, than due to the traditional Birth/Death adjustment fudge factor. Yet Wall Street needs economic data to which it will respond in a kneejerk, or otherwise, format. Therefore both numbers are important from a trading, if not investing, perspective. This morning, Art Cashin picks up on these two key points and resolves the ADP conundrum, or rather, tells his readers to wait until tomorrow's data to discover if ADP may have finally redeemed itself from the compost heap of economic indicators.
Art Cashin Vomits All Over The FOMC Minutes, Offers Bernanke A Deal On Some Prime East River Real EstateSubmitted by Tyler Durden on 01/06/2011 18:25 -0400
Art Cashin, who lately looks like he is coping with the market's lunacy in a very liquid fashion, pulled a Rosie and basically went medieval on Ben Bernanke and the chairman's now infamous explanation that interest rates are up because they are really down courtesy of Richard Feynman and quantum chromodynamics, in some parallel universe in which QE2 is actually working. In a nutshell, the most famous face on the NYSE has offered to sell the Princetonian a piece of very valuable East River real estate in exchange for agreeing with the BS that the FOMC's committee is dishing out now on an almost daily basis.
Down on the Exchange the tape inches along
Brokers bargained and traded as they hummed an old song
The Fed struggled and struggled to make payrolls renew
They went back to their playbook and began QE2
The new airport pat downs put some folks in a funk
Prompting one fellow’s warning don’t dare “touch my junk”
A lady named Kagan has joined the Supremes
And Rahm left the White House with mayoral dreams
Some time in January, we presented an extended analysis by Mark Hart's Corriente Fund in which the successful hedge manager presented a comprehensive case for the Chinese bubble. Today, about a year later, and after China is finally on the verge of realy pulling in the liquidity avalanche, tired of importing Bernanke's rampant inflation, Art Cashin looks at the very same Mark Hart in his market commentary: "Several readers asked if I had more details on Mark Hart’s bearish call on China. I pulled up a couple of articles, most notably the U.K. Telegraph. Mr. Hart manages Corriente Advisors. He set up a bearish sub-prime fund in 2006 and a bearish European debt fund in 2007. The anomalies he sees in China are somewhat familiar: Excess floor space exceeds 3.3 billion square meters and there are still 200m being built this year; The price to rent ratio is 39.4 times versus 22.8 times in America before the housing crises; Banks are hiding their exposure in Local Investment Vehicles; On a Sovereign level, China’s debt to GDP comes out at 107%, five times published numbers; China has consumed just 65% of the cement it has produced in the last six years; There are 200m tons of excess steel capacity, more than the EU and Japan’s total production this year. According to the articles, Mr. Hart has been growing bearish on China for months. Several other successful hedge fund managers are also said to be making negative bets on China. It certainly bears watching." We would like to help Art, and provide with a redux of what we posted back in January that summarizes Corriente's outlook.
Following our last poll which saw the vast majority of Zero Hedge readers agreeing that the next iteration of monetization (not if but when) would focus on municipals, today Art Cashin agrees that in a world in which things are right out of Alice in Wonderland, with Bernanke in the role of the Mad Bearder, this is precisely what could happen.
A very troubling anecdote by Art Cashin today on the possible future developments in fraudclosure: "The guest said that, sensing that suspending foreclosures could lead to a tsunami of new defaults among “current” mortgagors, they simply announced resumption as a warning. He claimed that foreclosures were not resuming because the records remain murky and would promote challenges and, perhaps, legal penalties." Cashin also looks at how the next USD-strength precipitated flash crash could look like: "If there were to be one or more sovereign defaults, the resultant flight to safety into the dollar could pull the rug out from under stocks. Even more worrisome would be some geo-political surprise. An Israel/Iran dust up could send the dollar soaring in a nano-second. That could send stocks into a trapdoor selloff that could look a lot like the “flash crash”."