Quotable Quotes and Notable Notes From the Week That WasMay 13, 2012 @ 2:43 PM EST
The Greek and French elections were so last Sunday ago, but certainly set the tone for a week of high market anxiety, This was further compounded by the Spanish banking situation and some weaker than forecast data out of China, although economic reports out of Europe and the U.S. showed a few bright spots thrown into the mix.
JPMorgan’s stunning trading losses put a cap on an interesting trading week, with the market rebounding off sharp “news” premarket lows both on Monday and Friday. However, with the fade into the close on Friday afternoon the SPX ended the week with a -1.1% decline, the Dow down -1.7% and the Nasdaq COMP off -0.8%.
Interspersed with the global political and economic stories were a few other items of interest so let’s get to it and see what they were saying, including a healthy dose of Europe and JPM.
“The Merkozy [Merkel-Sarkozy] tandem stubbornly held on to one-sided austerity policies and failed to put the eurozone on a path to sustainable recovery…many voters have lost confidence in the euro and chose anti-European parties. The Greek election results are the most dramatic proof of this. Hollande's call for a growth pact could be a turning point.” --Bas Eickhout, GreenLeft Dutch politician and member of the European Parliament.
“A majority of voters decided to throw out the incompetent incumbents and instead go for the even crazier opposition…the European economic crisis is about to become a lot worse.” --Swedish economist and blogger Stefan Karlsson in the Christian Science Monitor.
“Recent measures mark Spain's fourth attempt in three years to overhaul a banking industry struggling under the collapse of a decade-long housing boom.” --the WSJ, further commenting, “The new measures come just a few days after the government was forced to step in and rescue Bankia …amid concerns over the Spanish banking system, the country’s towering budget deficit, soaring bond yields and an unemployment rate of over 24%.”
“Austerity versus growth is very much the debate of the hour. I would argue it is not ‘either/or.’ We can design a strategy that is good for today and good for tomorrow.” –International Monetary Fund Managing Director Christine Lagarde, now calling on developed nations to push through “gradual” fiscal cuts.
"We are still in an uncertain environment economically. We will muddle through this with a little bit of bumps on the road.” --Cisco CEO John Chambers, in a much followed conference call, with CSCO’s “sobering forecast overshadowing earnings, raised the specter late Wednesday of a jarring slowdown in technology spending, alarming investors already fretting about the economy's fragile condition,” according to an AP report. CSCO closed Friday down over -20% from March highs.
“This is a buying opportunity, a brief 5% dip, the U.S. recovery is broadening, good news on housing, jobs and retail…but I am as nervous as anyone else.” --Jim Paulsen, Wells Capital Management on his current market view.
“Facebook’s IPO is Muppet Bait.” --Henry Blodget, controversial former tech analyst and now BusinessInsider CEO, citing the hype surrounding the IPO and “Facebook's decelerating growth, peaking profit margins, and lower future revenues from mobile users.” Despite this, Blodget said he does understand the attractiveness for big institutions who can afford to ride out volatility, based on long-term growths prospects for Facebook.
“This is a tempest in a teapot.” --JPMorgan Chase CEO Jamie Dimon weeks before the reported $2 billion loss, who is now saying “the loss could grow bigger” and “It plays right into the hands of a bunch of pundits out there,” referring to his own outspoken criticism of financial regulatory burdens.
“JP Morgan’s loss on this single trade is five times the amount they claim financial regulations will cost the bank.” -- Rep. Barney Frank, co-author of Dodd-Frank legislation. Sen. Jeff Merkley, D.-Ore., added, “This is a textbook illustration of why we need a strong Volcker Rule firewall”.
Amidst new speculation on QE3 this week, CNBC’s Rick Santelli was his usual vociferous self, tying the JPM story to the ZIRP policy, “Look at the Fed. Give the big players easy money and low returns on fixed income yields and banks will try and enhance it and this is what happens.”
(What is perhaps the most puzzling aspect of the story, The New York Times was reporting Saturday that the JPMorgan loss came under the noses of dozens of New York Fed regulators housed at JPMorgan Chase, who were supposedly told by senior JPM execs in April that “things were fine” with this specific trade. We will say what is probably on a lot of people’s minds: we think we could easily manage to lose $2.3 billion and not even charge a seven-figure salary to do so).
“This is a RumorMonger’s Olympics” --CNBC interview with Art Cashin of UBS, commenting on the up and down action this past week, with the stories flying about Spain, Greece, the Fed, JPM and several earnings related developments. Others frequently cited the indices waffling in recent weeks, “as the markets are searching for the next big theme or driver”.
“Mark in his signature hoodie — I mean he’s actually showing investors he doesn’t care that much, he’s gonna be him and he’s gonna do what he’s always done, and I think that’s a mark of immaturity. I mean he’s got to show them the respect that they deserve because he’s asking them for their money.” --Michael Pachter of Wedbush Securities, in a much-publicized interview with Bloomberg. Others defended Zuckerberg’s “dorm-room”attire on the IPO roadshow, comparing it to Steve Jobs’ iconic look. (We think we heard the best compromise, that everything would be fine if Zuckerberg would only wear a pin-striped hoodie when meeting with investors.)
“Individual investors shouldn’t be playing the stock market any more than you should take out your own appendix … The basic point is individuals should be in index funds.” -- President Obama’s former Auto Czar and current dealmaker and investment advisor Steve Rattner in a CNBC interview. (Jim Cramer took great offense later in the day.)
“I don’ think I owe Texas a hometown discount.” --paraphrase of comments by Texas Rangers slugger Josh Hamilton who is having an unbelievable year and will be the most sought after free agent after the 2012 season. (Many will recall Hamilton’s checkered past with substance abuse and the overwhelmingly supportive attitude of the Rangers, hiring a personal road “babysitter” and banning alcohol in clubhouse celebrations…why do we keep thinking “what goes around comes around” on this story?).
“Disney blowout earnings and ‘The Avengers’ mega-hit make ‘John Carter’ flop a distant memory.” --wire reports, a storyline turning out quite ironic after the “world is ending for
Disney” headlines after the ‘John Carter’ costly movie bomb and the release of Disney’s studio chief very recently.
“I would put European banks and American banks in two very different categories. The American banking system is in fine shape. The European system was gasping for air a few