Wednesday, October 10, 2012

Big Picture Conference Update: Jim Bianco and Michael Belkin

James Bianco:

Remember that analysts do not want to lose access to their insiders.

75% of earnings beat estimates. The estimates are given to the analysts so that firms do not have to answer why they did not beat earnings.


Fed seeking wealth effect. via portfolio balance channel: Ben Bernanke takes credit for stock market moving up.

Why wealth effect will fail: We are still 8% below market high. Plus, for people to spend, they must have expectation of permanence of wealth, and they do not have that right now. Ben Bernanke is  not creating wealth; he is still creating loss reduction. So wealth effect unlikely to be effective.

QE's are successfully making wealthy people wealthier. But it does nothing for the poor.

At the same time, people feel the stock market is an unfair game. The Fed is a regulator and could have some say in making the game feel less rigged. Ben Bernanke has been doing little in this regard.

What ends this game? Inflation. There is no exit strategy. As long as we don't have inflation problem, they do not have to worry about an exit strategy. If inflation gets to 3%, watch out.

Jon Hilsenrath is now the unofficial Fed spokesperson.

Fed balance sheets around the world have been growing enormously. Aggregated to $13Tn. Total world stock market cap $42Tn.


Michael Belkin:

Now predicting a 40% decline in S&P over the next 4 quarters.

Belkin discounts Fed's influence on the real economy and on the stock market.

Conference is available for viewing via ForaTV: http://fora.tv/conference/the_big_picture_conference_2012?icn=live-alert&ici=the-big-picture-2012

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