The Larry Kudlow Variety Show is Getting Interesting

Posted on July 8th, 2008 in Daily Stock Market / Economic News - The Real Story, Mr Mortgage's Personal Opinions/Research

MUST SEE TV!

Now that perma-bull, glass 99.9% full, king pumper extraordinaire Larry Kudlow has finally realized he has sent countless millions to their financial ruin who actually listened to him and his regular cast of zombies over the past year pump everything but the microphone attached to their lapels, his show is getting interesting.

Kudlow is now hedging his career by putting on more and more economic realists like Joe Battipaglia of Stifel Nicolaus. Then, when everything turns out to be the exact opposite of what he and his goon squad have preached he can pull a ‘Cramer’ and say ‘see, I told you this all along’. 

The link below is the first 15 minutes of Larry show on Monday, July 7th when Joe lets everyone have it. It’s too bad Dennis Kneale wasn’t there or Joe could have probably had he and Donald Luskin holding hands and making out by the end of the show.  He was so right on the money, he brought tears to my eyes. Hat-tip to Joe. There is a picture of you on my desk now right next to Rick Santelli. -Best, Mr Mortgage

Link – http://www.cnbc.com/id/15840232?video=787937968&play=1

Source: Discussing markets, politics and the economy, with Donald Luskin, of Trend Macro; Stefan Abrams, of Bryden-Abrams Investment Management; Joe Battipaglia, of Stifel Nicolaus; and CNBC’s Larry Kudlow.

Other Mr Mortgage Related Stories

The Pay Option Implosion – Subprime’s Big Brother

Look Out! Here Comes the ALT-A Implosion!

Mr Mortgage on Mortgage Modifications – You May Qualify!

Mr Mortgage: Mortgage Modifications Part 2 – Being Forward Thinking

 

 

27 Responses to “The Larry Kudlow Variety Show is Getting Interesting”

  1. The truth is that those assets…I will call them assets for the sake of the marketplace…were securitized by a short term arm mortgage and those bad boys are due today. Today those folks choose to walk. This in turn collapses the systems ability to further perpetuate itself and leads to total collapse. Simple…no money no new loans. No new loans….no profits. No profits no more investors providing additional capital. Case closed. It is a fraudulent system and should never have been allowed to morph into the largest, and if I may say, ONLY driving force in this Nations economy. NO one wants to hear the truth and that is the crux of the situation. Even helicopter Ben and Henry “Print More” Paulson are finally coming to grips with this as a long term problem.

  2. Man what a cacophony.

    Joe was good, but he should have just come out and said the fundamentals are that people don’t have the incomes to service debt at even 2/3rds of peak home prices, and those incomes are deteriorating, on top of the fact that there is tons of surplus inventory.

    Those are the facts, and they mean that prices will have to gap down, and BIG writedowns will be permanent… there will be no “melt up”… at least not until from a MUCH lower level.

    Kudlow and Luskin are doing a huge disservice by ignoring these fundamentals and attempting to handle the market with “kid gloves” for those who don’t like what they see.

  3. Mr. Mortgage I agree with you on a lot of what you say. However, Joe B. was a purma bull all the way up in the tech bubble, so I don’t hold Joe in that high esteem. I would look to someone like Jeremy Grantham of GMO. He took the business risk in 1999 to opt out of stocks, and specifically tech stocks. His firm lost 60% of their assets under management because of the “sheeple”. He is a prime example of why a money manager can’t move out of the market. He was right, but early, and people do not do well when their friends are earning 20% damn the amount of risk that is being taken. There is definite business risk in not being invested if your a money manager. I don’t know how he feels now, however from a stock perspective, I think we are closer to the bottom than the top in the equity markets. We have $3.5 trillion sitting in money markets. At some point, those dollars are going to seek a higher rate of return. I talk to too many people who are bearish, and once again I view that as a contra indicator. I would say when Larry Kudlow turns negative, we’re close to bottom. The masses are horrible investors, tech in 2000, homes in 2002-2006, commodities in the last couple of years. It never fails! The more people I see posting depression type comments, the more bullish I get. We are nowhere close to a depression.

  4. IMO – Kudlow’s show should have a warning at the beginning and the end just like an infomercial. “Following this man’s advise can be hazardous to your financial health”. Not even Cramer is as obvious of a market cheerleader as Kudlow although it’s close.
    I just keep reminding myself that 90% of the active fund managers return less than their benchmark.

  5. You will be holding the bag. It’s called monetization of the debt. No other issue. Nobody wants the crap. So ? The taxpayer will eat a lot of crap for many years. Socialize the losses and privatize the profits. National-socialism or communism for banking. Hey! This is great news for the bankers, not you.

  6. Wow a “melt-up”. Nice. I smell a rotten japaneese sushi somewhere. A melt-up is coming. That’s the problem. If you unfreeze the stuff it starts to stink.

  7. Luskin’s open hedge fund experiment, Metamarkets folded when the dot.com bubble deflated. It opened with about 40 mill, hit around 80 at its peak & folded around 8 mill. The fact that hes found a home with Kudlow, says enough.

    Lets not forget asswipe Dennis Kneale.

    Enuf said.

  8. Whirly Ben and ‘Hank’ (and Sir Alan) have been ‘aware of the problem’ since they first planned the Grand Depression many years ago. The current ‘running around like chickens with their heads cut off’ is simply to make it ‘look good’. They knew what come and they know what is yet to come – and they made sure that there’s NOTHING anybody can do about it!

    Get it?

    PS Pretty soon, the (Zionist) perpetrators will be ‘running around like chickens with their heads cut off’! 😉

  9. Close to the bottom? I don’t get that feeling at all. There are GMAC bonds with 8 months to go being bid at $70.00 right this very moment – trust me.. No matter what the FED did yesterday, the reality is the bond market isn’t buying the hype.

  10. I’ve been following Larry Kudlow and Jim Cramer for a number of years. What it comes down to with those two guys is that they have an agenda. They are very smart guys and know what they’re talking about, but their agenda comes first. Larry Kudlow is a Republican first and an economist second. When Clinton was in office, he said what he really felt about the economy and gave a lot of great info to his viewers. He even interviewed Jim Rogers back in the late 90’s when oil was at $10/barrel (where Jim called the bottom of the commdities market). Once Bush got into office, he became the eternal optimist and his opinions soon became corrupt. If Obama gets elected, you can expect him to start becoming more honest about his public opinions on the economy.

  11. Hey, Housing Realist, go ask a few foreclosed-on ex-homeowner ex-friends how close they think the Depression is! Then ask a few suburbia commuters who are spending 50% of their income on gas. Then ask all those jobless (and counting) who have mxed out their CC and don’t know where their next meal is coming from and who have to fight for it around some trash bin. One more thing – YOU are next in line!

  12. I’ve read that book, I can say without a doubt, that the Zionists are responsible for all the worlds ills.

  13. Hey EO….I’d tell them to get into programming / software development. I’m holding down 2 full time jobs and offers are still STREAMING in…they can’t find anyone to replace those (no longer profitable due to falling dollar) offshore zombies.

    We graduate 7 lawyers for every engineer here in the USA. I say thanks for the great job market you 7 idiots!

  14. While I agree that we are heading for a “Grand Depression”, consumers in my area are only lightly changing habits or feeling the pain despite up to 47% housing price drops/2001 price levels in a few neighborhoods nearby. The parking lots and streets are still full of cars. The Honda car dealership (two weeks ago) had each salesman busy negotiating in the office with clients. The “express” line at Walmart was 20 people deep near closing time (2 days ago). (I hate to admit that I check out Walmart from time to time.) There is still a wait time at the semi-fancy restaurants.

    The only compromise I’ve heard from someone is that they canceled their road trip due to gas prices.

    The masses haven’t responded appropriately with their vanishing wealth yet. We haven’t reached the bottom in several ways.

    The Alt-A crisis will bring forth real consumer change. Just because some perma-bulls (like my dad) have noticed the economy is gloomy (from the news), it doesn’t necessarily indicate the bottom yet. The cycle (in image) is indicating we are at the fear stage. We are not half way to the bottom yet.
    http://www.mymoneyblog.com/images/0708/inflect2.jpg

  15. From the newswire:

    NEW YORK — Up to 40% of all U.S. regional banks could need capital raises and dividend cuts, an analyst for Credit Suisse said Wednesday. “With credit quality expected to deteriorate further in the coming months, we estimate that about 30-40% of the top 50 banks are likely to cut dividends and/or raise more expensive and dilutive forms of capital over the next few quarters,” Credit Suisse wrote in a note to investors. “While bank management teams may hold out some optimism for a 2H08 peak in problem assets, our sense is that investors will remain skeptical, particularly with a steady inflow of problem assets and thinning capital levels on display in the quarter.” Credit Suisse added that it now expects the 2008 median earnings per share estimate for regional banks to decline by 28%.

  16. Meltdown.

  17. you gotta love the mark to market opposition… I wish I could use my stamp collection and 20 year old baseball cards to go out and obtain a loan just because I happen to think that although there is no market for them now, there will be 5 years from now… that’s basically what these banks are trying to do…

  18. I didn’t bother with the link, but if ‘Batman’ Joe B. is now an economic realist, the world must me really be coming to an end. Back in the day (dot.com bubble that is), Cramer and company @CNBC use to bring on perma bull Batman whenever the market was taking a swoon.

  19. Batman was a horrible perma-bull for years when the market was tanking. I’m not sure what changed his tune, but he’s been singing this song for at least a year. Kudos to him.

    I had stopped watching Kudlow because his spew was intolerable. But, I happened to catch it last week and started watching again. Dennis Kneale, Mark Haynes, and the daytime crew of CNBC (except Rick Santelli) are an embarrassment to “reporting”. Watch Bloomberg for a day and the difference will slap you in the face. The guy with the beard on Kudlow’s show is perhaps the biggest moron to ever grace a television screen. I’ve never seen anyone more inept in my entire career in this industry and that’s about 20 years from my intern days.

    Mr Mortgage – a quick pat on the back to you. What you do here needs more attention nationally. You’ve been ahead of the curve for sure and that needs to be pointed out. Thanks.

  20. Thanks Maj. I appreciate the kudos. That Donald Luskin is a despicable creature, so arrogant. He will lose everything within a years time for his year of relentless pumping. Hey, I got 300 million americans who think things are tough vs 10k in Manhattan who think all is great. It is an absolute insult for Luskin and Kudlow to tell 300 million Americans every day they are full of shit.

  21. Eternal Op. – I know of very few people who as you say “don’t know where their next meal is coming from”. Believe it or not, there is a huge part of our country who is not walking away from their homes. Try Nevada east, ex. Florida, NY, parts of NE. Do you even know what had to happen to force this country into a depression in the 30s? 1.) Both Fiscal and monetary policy were implemented poorly. 2.) The service based economy that we have now is much cyclical than our old manufacturing economy. 3.) A much more global economy. I’m curious for all you depression barking folks, where does the dow or s&p bottom? The top on the s&p was 1562, currently sitting at 1240. Bottom set in 2002 of 776. Prior top in March 2000 or 1527. Are we going to eclipse the 10 year period after 1929 as the worst 10 year period in history? By the way E.O., I’m fine, and frankly doing better than I even have!

  22. I know of very few people who as you say “don’t know where their next meal is coming from”.

    just wait until their last working credit card stops.

  23. Are we going to eclipse the 10 year period after 1929 as the worst 10 year period in history?

    Think Japan of the 1990s, but a bit worse since we’ve got much more wealth disparity and middle-class over-stretch.

    Total household debt has risen from $8T in 2001 to approaching $15T for 1H08. Wages have been flat since then.

    As for the S&P bottom, I call 1050 in December as the gathering place. What it does from there, dunno.

  24. The bubble in Japan exceeded that of the US. Buildings leveraged at 500million in japan were written down to 50 million. At the height of the market in Tokyo, the estimated aggregate value of RE exceeded that of all the real estate in the US. The Nikkei went from 10,000 in 1985 to 40,000 in 1989. The Japaneese went through a boom in RE and equity markets at the same time. Furthermore, their banks did not write down assets like our banks have been doing. Don’t get me wrong we are having a tough go, and we may very well hit your 1050 s&p. Which would roughly be the average decline of a bear market since wwII. We are not entering a depression however.The comparison’s to 1929 or Japan I believed are flawed. The P/E ratio of the Nikkei in 1989 was 60. The S&p 500 in the year 2000 was 31. Today the s&p (depending on using operating or reported earnings) is somewhere in the neighborhood of 15-18. The NASDAQ of year 2000 at 5000+ is a better comparison to the Nikkei. Commercial RE in Tokyo’s financial district at the height was $139,000 per sqft. That’s no typo. So please, if you are going to make comparisons of the US and Japan, please provide some data to back up your hypothesis.

  25. All you “armchair analysts” take a breather. Common sense tells even the dumbest of people that the economy is in shambles, jobs are being lost by the thousands and we won’t even talk about housing. I laugh when I see these posts about this person perma-bull and this bear blah blah. Their agenda is simple: keep the sheep thinking everything is hunky dory and they will keep the pipeline full. Scare the bejesus out of people and they clamp down on everything especially their purse strings! Wall Street is to blame for ALL of what is bad in the markets. sure they are blaming the ALT-A or Subprime guy/gal for not paying their mortgage but really who securitized and sold those toxic loans and who failed to police the loans that were being sold to make sure they were what they said they were? NOBODY they were too busy making money!!!!

  26. Gresham’s law in full effect,when the rating agencies gave top ratings to the bundles including sub-prime and other garbage they debased the value of all mortgage backed securities.The “perfected” problem proving ownership further depresses their value.

    By dumping foreclosed homes, the banks are producing a downward price spiral that leads to more foreclosures and forced sales – especially in the formerly hot markets. “Jingle mail” with homeowners electing to walk away from underwater homes is a wildcard that could make things much, much worse.

    So you have the underlying assets in a death spiral and then you have to apply the “lack of quality” deflator to the value of the paper – and thats the mess the banks have on their hands. Then you apply a little fear (of failure)factor to the banks stock – and thats what they have to offer investors when they look to raise capital to cover their asset writedowns. All bad things come to an end but it’s hard to imagine a happy ending to this.

  27. JC nails it.

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