Stocks broke to new closing lows today with the S&P 500 down 1.2%. CNBC mentioned five reasons for the decline:
1.Central banks out of bullets.
2. Continued drop in oil prices.
3.China worries.
4. Global recession fears.
5. An emerging European banking crisis.
Amidst the decline in share prices treasury bonds rallied strongly, but gold soared with a $56 advance and the dollar actually declined against the Euro. If the five reasons mentioned were the only causes then we would not have expected gold to rally and the dollar to decline. There is something else going on.
Simply put CNBC left out the big elephant in the room, the forthcoming presidential election whose primary contenders are Donald Trump and Bernie Sanders. If market participants didn't believe this was so, this week's New Hampshire Primary certainly disabused them of that notion. Both of these candidates have one thing in common; they want to blow-up the global trading system. They may or may not realize it, but they are playing with the fire that the stuff global depressions are made of. Thus the market is beginning to price in the very real political risk facing the U.S. stock market.
For my prior comment on Trump and the stock market see:
http://shulmaven.blogspot.com/2016/01/trump-and-stock-market-connect-dots.html
Showing posts with label cnbc. Show all posts
Showing posts with label cnbc. Show all posts
Thursday, February 11, 2016
Wednesday, October 12, 2011
Shulmaven on CNBC
I appeared on CNBC today discussing the Occupy Wall Street demonstrations and the unemployment crisis facing our nation. The interview was carried by a MSNBC blog.
The full URL: http://bottomline.msnbc.msn.com/_news/2011/10/12/8288425-cnbc-is-all-the-bashing-of-wall-street-warranted
The full URL: http://bottomline.msnbc.msn.com/_news/2011/10/12/8288425-cnbc-is-all-the-bashing-of-wall-street-warranted
Thursday, October 29, 2009
Stock Analysts Blow it Again
As a former analyst it never ceases to amaze me to see all of the hype associated with companies beating their typically low-balled earnings estimates. For example, according to one of my buddies at Goldman Sachs, 80% of the first 260 S&P 500 companies reporting earning this quarter exceeded consensus estimates, well above the more typical 65%. Indeed only 13% of the companies missed their consensus estimate, compared to a more normal 20-25%.
What gives? They blow it every quarter! The current quarter more so. It reminds me of what the late Howard Cosell would say when the Dallas Cowboys were having a particularly bad night, "never have I seen such continuing ineptitude." It seems to me that there is absolutely no adaptive learning in the Wall Street analytical community. The reason for this piss-poor behaviour is that most analysts suck up to company management and strive to keep their estimates in line with what they know is low-balled company guidance. In order to be in the flow of information and have access to company management they have to play ball.
The managements of Wall Street firms understand this and they do NOT compensate analysts on the basis of the accuracy of their earnings estimates. If they did, analyst salaries would be alot closer to the minimum wage than seven figures a year. Everybody in the institutional community knows the game. Unfortunately the public doesn't and it is a disgrace of the business press and especially CNBC for not informing the public the fraud that is being perpetrated on them.
As a final point a 12 year old could beat Wall Street analysts every time by taking the midpoint of a given company's earnings guidance and add 5% to it!
What gives? They blow it every quarter! The current quarter more so. It reminds me of what the late Howard Cosell would say when the Dallas Cowboys were having a particularly bad night, "never have I seen such continuing ineptitude." It seems to me that there is absolutely no adaptive learning in the Wall Street analytical community. The reason for this piss-poor behaviour is that most analysts suck up to company management and strive to keep their estimates in line with what they know is low-balled company guidance. In order to be in the flow of information and have access to company management they have to play ball.
The managements of Wall Street firms understand this and they do NOT compensate analysts on the basis of the accuracy of their earnings estimates. If they did, analyst salaries would be alot closer to the minimum wage than seven figures a year. Everybody in the institutional community knows the game. Unfortunately the public doesn't and it is a disgrace of the business press and especially CNBC for not informing the public the fraud that is being perpetrated on them.
As a final point a 12 year old could beat Wall Street analysts every time by taking the midpoint of a given company's earnings guidance and add 5% to it!
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