Mississippi Fred McDowell
Posted by Eddy Elfenbein on March 13th, 2009 at 6:48 pm

My Last Post on Cramer Versus Stewart
Posted by Eddy Elfenbein on March 13th, 2009 at 3:18 pm

Jim Cramer went on Jon Stewart’s show last night. Frankly, I have no interest in watching it. I’ve grown sick and tired of Jon Stewart and his act. His reputation is a bubble and I hope someone takes it down. As usual, Megan sums up the issue nicely.
I’ll add in a few points. Jim Cramer isn’t a reporter, he’s a stock-picker and he has an after-hours show on stock-picking. The beginning of the show clearly states what it is. I do the same thing, just for a much, much smaller audience.
I don’t think there are many people who have criticized Cramer as long as I have, but he’s not responsible for predicting the house of cards that we built up. I don’t see why how Jon Stewart blames Cramer for this.
The news isn’t the agency that’s supposed to prevent crime. Sometimes they do, but that’s not their role. In the Madoff case, the SEC failed us, not CNBC. It’s the job of CNBC to ask the SEC what went wrong and hold their bosses accountable. I don’t blame local muggings on the local news either.
Finally, and most importantly, the credit crisis was by its nature extremely difficult to predict by anyone person, let alone a news organization. Let me state this carefully because this is a nice little lie that needs to end. Some people got parts of it right, like Roubini and housing. But no one could have gotten the whole thing right. If you think they could have, then you don’t understand what happened. For example, you would have had to have known that the government would come to the aid of Bear Stearns, but not to Lehman Brothers.
CNBC does have very good reporters (Faber, Griffith, Herera, and many others). I didn’t even see what was wrong with some of the clips Stewart played in his original piece. Faber merely had an executive go on record. That’s exactly what he should have done. Of all the people to make fun of at CNBC, Stewart went after David Faber?
Later on that same show, Stewart interviewed Joe Nocera, a very good report at the NYT. Ironically, Stewart could have used his exact same tactics against the Times to make it appear that they caused the mess we’re in. Andrew Ross Sorkin (a great reporter) said that the Feds wouldn’t let Lehman fail. Ben Stein says something absurd nearly every week. And Gretchen Morgenson…well, I’ll stop here.
If you want a cheap laugh, fine, watch Jon Stewart. But don’t think he’s offering a serious critique of financial journalism.

Madoff: A Real Criminal
Posted by Eddy Elfenbein on March 13th, 2009 at 9:25 am

I want to amplify Larry Ribstein’s point that Bernie Madoff is a real criminal.
Over the last few years, we’re seen trumped-up criminals, like people who didn’t properly account for their pay, get treated as if they were crooks. Well, Bernie’s the real deal. He knew that what he was doing was wrong, and he lied about it for years. He’s a thief pure and simple. I hope our government learns to understand the difference.

Bloomberg Gets the A for the Day
Posted by Eddy Elfenbein on March 12th, 2009 at 10:43 pm

Glad to see that someone in the media still knows how to moralize:

Madoff, in a dark blue suit and minus the baseball cap he’d favored when roaming the streets of his Upper East Side neighborhood, began speaking about his guilt. He started bilking his clients during the recession of the early 1990s, he said. Once he had a taste of it — by neglecting to buy securities his clients paid him for, for example — he just couldn’t stop himself.
“I cannot adequately express how sorry I am for what I have done,” he said. “I am deeply sorry and ashamed.”
His voice uninflected, his tone flat, he sounded about as ashamed and sorry as Hannibal Lecter.

The person who wrote that works for Mike Bloomberg. Irony!!

It Could Be Worse
Posted by Eddy Elfenbein on March 12th, 2009 at 10:39 pm

November 24, 2008
Russian analyst predicts decline and breakup of U.S.
March 12, 2009
Chuck Norris: “I May Run For President of Texas”

Bernie Goes Down, Market Goes Up
Posted by Eddy Elfenbein on March 12th, 2009 at 11:47 am

So we’re rallying on Bernie’s plea? Or maybe it’s one of those correlation/causation things I’ve read about.
I guess Bernie should have pleaded guilty several thousand points ago. If only someone had informed the Feds.
Esquire gives us a preview of Bernie’s new digs.

So Long Risk Premium
Posted by Eddy Elfenbein on March 12th, 2009 at 11:33 am

Bloomberg reports that long-term government bonds have outperformed the stock market over the last 30 years. The article quotes Douglas Cliggott, “Over the last 30 years there’s been no risk premium.”
Technically, the most common reference to the risk premium is stocks versus short-term T-bills. The problem is that the market isn’t that cheap when looking at long-term corporate yields (it’s not expensive either). What’s happened is that the spread between government and corporate debt has widened pretty dramatically.

The graph above shows the 10-year yield versus BAA debt. Clearly, folks have moved strongly away from risky assets. It’s not so much that the risk premium is gone, it’s that we’re in a T-bond bubble.

Good Retail News
Posted by Eddy Elfenbein on March 12th, 2009 at 10:58 am

There was actually good news in retail sales. Good, not great. Retail sales for February dropped by 0.1% last month which was slightly better than what analysts were expecting. The best news came from the revisions for January. That number was revised higher to 1.8% from the original 1.0%. It’s not great but let’s hope this trend lasts.
Interestingly, if you exclude car sales from the February numbers, then retail sales rose by 0.7%

Bernie Goes Down
Posted by Eddy Elfenbein on March 12th, 2009 at 9:49 am

Madoff pleas guilty:

Disgraced financier Bernard Madoff entered federal court in lower Manhattan this morning and pleaded guilty to all 11 felony charges lodged against him in involving one of the largest Wall Street Ponzi schemes ever.
He will now face the wrath of many of the investors who say he ripped them off to the tune of $50 billion dollars, as they will speak in court. The 70-year-old Madoff now faces a maximum prison term of 150 years.
Victims of the one-time Nasdaq chairman and one of Wall Street’s elite had been gathering at the courthouse as early as 8 a.m. Those alleged to be cheated by Madoff lost their life’s fortunes, charities lost their investments, school trusts were blown and at least two investors took their own lives.
The question now is whether Madoff will go right to jail or will he remain out on bail under house arrest in his $7 million Manhattan penthouse to await sentencing. Most victims, as expected, prefer the former.

See ya in 2159, Bernie.

Past Marchs and the Market
Posted by Eddy Elfenbein on March 10th, 2009 at 12:44 pm

It was six years ago tomorrow that the S&P 500 closed at its then low point of 800.73. Five months earlier there was an even lower low on October 9. The market’s high in 2007 also came on October 9.
It was on March 10, 2000 that the NASDAQ reached its highest close of 5,048.62.