I've been particularly silent in recent months due to a very busy schedule helping my paying customers survive the crash of this epic credit bubble. Also, the fact that, well, what else can I say? I don't want to be blamed for piling on---as easy as it would be. But I felt compelled to comment on a couple of occurrences today to help anyone a bit new at this game understand the kind of high stakes shenanigans that continues unabated even after nearly every shred of self-respect has been eviscerated by the parties involved.
Markets were headed for another total shellacking today when again, it was reported on CNBC USA that the consortium of banks meeting now for something like 45-days straight are again very close to hammering out a bailout of monoline insurer, Ambac Financial (ABK). I'll address that never ending Broadway presentation in a moment. But in addition to this was word that John Chamber, CEO of tech behemoth Cisco Systems (CSCO) declared that he has grown more confident in the company's long-term revenue growth target of 12 percent to 17 percent, despite prior worries about the U.S. economy. Of course, news of his euphoric utterances was deemed fabulous for the tech sector in general even if it failed to help shares of his own company finish in the green today. Chambers reportedly threw markets a bone at a Morgan Stanley (MS) conference when he said that his company will hit some "bumps" in the U.S. economy, but such bumps would likely be both short-lived and "shallow." Given Chambers' track record of being two-parts market cheerleader/bubble enabler and one-part, CEO, It never ceases to amaze me that his mindless drivel is given even an ounce of credence by grown men and women whose job it is to "manage" other people's money.
Let's take a trip down memory lane where the same Chambers made similar market-moving declarations:
On August 8th, 2007, John Chambers, following his company’s 4th quarter earnings report says: "It's the strongest global economy I've seen in my career." Chambers says, "I know there have been a number of mixed views about the strength of the U.S. IT spending, especially in large accounts. I am very pleased to share with you not only that our U.S. business was very strong, but the balance was good across all customer segments." Of course, since Cisco's August highs in the low $30's, shares have dropped by over 25% as the tech sector, especially semiconductors, have experienced a near free-fall. Anyone using Chambers' self-serving posturing on that day last August as a reason to buy shares of Cisco or even tech in general has now suffered a meaningful financial set-back.
But than, just six-months later on February 6th of this year, following his company’s 2nd quarter earnings report, Chambers described the current business environment this way: "It's the most cautious I've seen CEOs in the U.S. and Europe in many years." How can that be? From "best" to nearly worst in 180-days?!?! During that post-earnings conference call last month, Chambers warned that orders slowed rapidly from December to January in the United States and Europe.
Naturally, the enabling U.S. financial media (CNBC USA) clung onto those euphoric comments by Chambers last August as if it were gospel. But Chambers, merely a fallible human, whose comments are likely more self-serving than predictive of future business conditions or stock prices has hence helped lull countless numbers of CNBC viewers into a pretty vicious technology bear trap. So again, today's comments probably had more to do with the fact that fellow tech behemoth, Intel (INTC) warned on its prospects and that the tech-heavy Nasdaq was again flirting with breaking thru its' 52-week lows.
Lastly, I've concluded that the best plan for a bailout of moniline insurer Ambac (ABK) is to never actually reveal a plan--just always be close to hammering one out. Today seemed to be yet another page from this single page playbook--or pamphlet. Announce how close you are every Friday around 3:30 PM or if markets are on the verge of breaking some major support. That's the Ambac bailout plan as best as I can tell. The anticipation of a potential deal has to be worth more to markets than any half-baked concoction the world's premier financial engineers can possibly foist upon us.
Markets were headed for another total shellacking today when again, it was reported on CNBC USA that the consortium of banks meeting now for something like 45-days straight are again very close to hammering out a bailout of monoline insurer, Ambac Financial (ABK). I'll address that never ending Broadway presentation in a moment. But in addition to this was word that John Chamber, CEO of tech behemoth Cisco Systems (CSCO) declared that he has grown more confident in the company's long-term revenue growth target of 12 percent to 17 percent, despite prior worries about the U.S. economy. Of course, news of his euphoric utterances was deemed fabulous for the tech sector in general even if it failed to help shares of his own company finish in the green today. Chambers reportedly threw markets a bone at a Morgan Stanley (MS) conference when he said that his company will hit some "bumps" in the U.S. economy, but such bumps would likely be both short-lived and "shallow." Given Chambers' track record of being two-parts market cheerleader/bubble enabler and one-part, CEO, It never ceases to amaze me that his mindless drivel is given even an ounce of credence by grown men and women whose job it is to "manage" other people's money.
Let's take a trip down memory lane where the same Chambers made similar market-moving declarations:
On August 8th, 2007, John Chambers, following his company’s 4th quarter earnings report says: "It's the strongest global economy I've seen in my career." Chambers says, "I know there have been a number of mixed views about the strength of the U.S. IT spending, especially in large accounts. I am very pleased to share with you not only that our U.S. business was very strong, but the balance was good across all customer segments." Of course, since Cisco's August highs in the low $30's, shares have dropped by over 25% as the tech sector, especially semiconductors, have experienced a near free-fall. Anyone using Chambers' self-serving posturing on that day last August as a reason to buy shares of Cisco or even tech in general has now suffered a meaningful financial set-back.
But than, just six-months later on February 6th of this year, following his company’s 2nd quarter earnings report, Chambers described the current business environment this way: "It's the most cautious I've seen CEOs in the U.S. and Europe in many years." How can that be? From "best" to nearly worst in 180-days?!?! During that post-earnings conference call last month, Chambers warned that orders slowed rapidly from December to January in the United States and Europe.
Naturally, the enabling U.S. financial media (CNBC USA) clung onto those euphoric comments by Chambers last August as if it were gospel. But Chambers, merely a fallible human, whose comments are likely more self-serving than predictive of future business conditions or stock prices has hence helped lull countless numbers of CNBC viewers into a pretty vicious technology bear trap. So again, today's comments probably had more to do with the fact that fellow tech behemoth, Intel (INTC) warned on its prospects and that the tech-heavy Nasdaq was again flirting with breaking thru its' 52-week lows.
Lastly, I've concluded that the best plan for a bailout of moniline insurer Ambac (ABK) is to never actually reveal a plan--just always be close to hammering one out. Today seemed to be yet another page from this single page playbook--or pamphlet. Announce how close you are every Friday around 3:30 PM or if markets are on the verge of breaking some major support. That's the Ambac bailout plan as best as I can tell. The anticipation of a potential deal has to be worth more to markets than any half-baked concoction the world's premier financial engineers can possibly foist upon us.
