Quotable Quotes and Notable Notes From The Week That Was

You could not ask for a more market-moving, news-packed week. Greek debt negotiations, major earnings reports , the State of the Union address, the FOMC meeting and statement, Republican debates, Davos, GDP, and all sorts of economic data. So what did we get when all is said and done? A weekly move in the SPX from 1315.16 to 1316.33.

(Well, at least we got the Super Bowl match-up we were dreaming of, as we live smack on the boundary line of Giants and Patriots territory; our local bakery will be selling football-shaped cupcakes in both teams’ colors).

So what were they saying around some of the events above and a few others last week?

“America Is Back.” --Pres. Obama in the least-watched of his three State of the Union addresses, which lost 20% of viewers in the first five minutes. We thought the speech was marginally more interesting than reading the current issue of “Backyard Poultry.” But maybe that is a bit unfair, as the President did announce the creation of the Residential Mortgage-Backed Securities Working Group to join the Financial Fraud Enforcement Task Force and the Home Affordable Mortgage Program. (See? The administration is making some real headway on solving the housing problem here).

"De verst bunker in de verld." --Henry Blodgett’s blog, quoting an unnamed “Davos Mogul” who was commenting in a whisper as past ECB President Jean-Claude Trichet walked by. Mr. Trichet recently said, in effect, “We have as much risk now as we had 4-5 years ago.”

“Nobody I spoke to thinks that the underlying issues have been resolved; on the contrary, the speeches from Angela Merkel and David Cameron in Davos this week have highlighted the vast gulf in policy views.” --Gillian Tett, the FT’s US managing editor, in an opposing viewpoint to other media reports stressing overall “guarded optimism in Davos”. Controversial Harvard professor Niall Ferguson echoed this thought but with a different slant, in effect saying he thought the daily market gyrations over European headlines were silly, given that structural European Union problems were bad from the start, are bad now, and will remain bad for some time. "I think we have a situation where Greece is leading the pack and other countries will follow over time, but eventually Europe will find the right path.”

And then there was German finance minister Wolfgang Schäuble, who wouldn’t be drawn out on how big the ESM (successor to the EFSF) should be, saying, “It can be any size. It will not work if the fundamental problems have not been addressed.” Tim Geithner commented that, “Europe needs the support of the world; they have made progress but have a lot of work to do. ” An unnamed German finance minister, on America’s “advice and criticism”, said, “Every time they point a finger at us, we point three fingers back at them for creating the crisis in the first place.” Nouriel Roubini chimed in, as is his wont, “The G-20 is acting like the G-0.”

“All in all, it’s not bad, but there’s no oomph, ” --Credit Suisse economist on Friday’s GDP. Another major analyst said, “A closer look at the data shows it has gaping holes in it. American economic activity may not be as supportive of stocks as valuations had accounted for up to today. Our analysis of the GDP report and our global economic outlook certainly advise for investor restraint.” Morgan Stanley said, “Europe and the U.S. will slip into recession this year…there is increased risk to the downside and we are lowering clients’ equity exposure.” And HSBC said, “If you are trying to be sophisticated in the market this year, be very sophisticated or else consider lowering your exposure.”

On the other side of the fence, Birinyi Associates put out a bullish research note last week, saying, “The S&P has gained 20%-plus in the past 78 trading days, an event seen 15 times since 1945 and after which the market gained an average 6.96% in the following six months; the S&P is poised for the Golden Cross, after which stocks have moved higher 81% of the time in the following six months for an average gain of 6.6%.”

Barron’s on Saturday gave two opposing bull/bear arguments: “4th Qtr. beats are coming in at 1.8 to 1, versus the recent trend of 3:1, and with short interest at the lowest level in a year, technicals and fundamentals favor a pullback,” versus, “4% gains in the S&P over the first three weeks of January historically favor a continued up market for the year, as has happened in 8 of the last 9 cases.”

“What do the football gods have against the Harbaugh family? ” --sports blogger, commenting on the fluke plays defining the losses this weekend of the 49ers and Ravens, teams coached respectively by brothers Jim and John Harbaugh…this dashed the hopes for what some were calling “The SuperBaugh”.

“I am made of pretty tough stuff.” --Julia Gillard, the Australian Prime Minister, after being forcibly rescued by riot police and security guards after being trapped in a building in Canberra during a violent protest calling for Aboriginal rights. The widely shown video of the incident prompted a firestorm in the blogosphere, with one idiotic blogger shocked by the restraint of security forces in the very dangerous situation for the PM, saying, “The Australian police might need some insensitivity training here in the U.S.”

“We offer you a 30% discount on your next cruise,” statement by Carnival to survivors of the Costa Concordia wreck, in addition to a full refund for this cruise and reports of $11,000 Euros in immediate compensation. Lost revenues and salvage alone will cost Carnival around $80-100 million we have read, with environmental clean-up and lawsuits still on the horizon in the tragic event.

“I don't see anything really new in here and the market had already moved well beyond the mid-2013 language.” --Citi FX strategist on the FOMC statement this week, in contrast to many who were surprised by the dovish position and statement. The consensus view was, “The Fed release today drives home the point that policy will remain extremely accommodative for quite some time in this environment and there are additional prospects for further action." The big debate was obviously on what this means for precious metals, equities, commodities, and currencies moving forward, with opinions all over the lot, with the possible exception of a generally more bullish consensus outlook for gold. Barron’s said, “The FED’s plan to keep rates at zero is music to the gold bulls’ ears.”

Prof. Ferguson weighed in here also, saying, “The FED action was so extreme they have to be worried about a Japanese-style no-growth deflationary environment. ” Which was similar to the New York Times saying, “The FED evidently believes a true recovery is still years away.”

“The former Speaker of the House has pledged to build a moon base and lunar colony by the year 2020 if he’s elected