Bears Prepare for Fox Business News
Normally at "A Dash" we check sources carefully before publishing. On this occasion, a document from a source we cannot reveal is so timely and interesting that we offer it for what it is worth. Each reader must judge the significance and value.
The document purports to be a transcript of a secret meeting of Bearish market pundits, preparing for the launch of the new Fox Business Network on October 15th. The participants include "Bear Leader," a widely-publicized market commentator, and a group of trainees–cubs, if you will. One of the trainees thought he was signing up to be a turtle, not a cub, and he turned over his recording of the meeting. Since the recording was made without the consent of other participants, it lacks any legal status.
Bear Leader: We all know why we are here today. TV wants a bear on every show. Now it is not just Bloomberg and Bubblevision. We also have to cover Fox. Meanwhile, our ranks are thin. It has been tough to be a bear. Some team members have even cut back on appearances. Your job is to change all that! Now let me hear it!
Cubs: Sub-slime! Sub-slime! Housing Led Recession!
Bear Leader: That’s the spirit. Now you have all read the Bear’s Guidebook, so this session should just be a review. Let’s start with the economy. When you get a GDP report that looks good, find something wrong! Say that it will be revised. Find something wrong with the timing. If a quarter is lower than the past quarter, then the economy is "decelerating." This is beautiful because it is a big word that sounds terrible even if the rate of growth is OK. You can milk a bad quarter for months this way.
Cub: What if the next quarter is better?
Bear Leader: Easy. That’s backward looking data. We look forward to the next quarter! The same with economic indicators. What is the best indicator?
Cub: Baltic Dry Freight? Dr. Copper?
Bear Leader: NO!! Those are the old indicators. Get the new playbook or you are off the team. We are going with industrial production and housing starts. Those are the only bad numbers recently, so use them.
Cub: What about sentiment, ISM, and jobless claims?
Bear Leader: These are all off their highs. It does not matter if the numbers are OK, just say it is off of the high of eight months ago or whatever. The chartman will keep us all up to date.
Cub: Chartman is great!
Bear Leader: He sure is. He can take any of 283 economic indicators and show that a collapse is coming. Since they all move together, you just find one that looks bad, adjust the scales to the squiggle, chop off the part that doesn’t fit, and there you go!
Cub: Those charts would scare anyone. And he even calculates the correlation for the part you give us. I’m not sure what that is, but it gives it that scientific pizazz.
Another Cub: What did you say about jobless claims?
Bear Leader: Let’s see. You can either blame it on immigrant labor — that was the first try — or you can say that companies are not firing, they are just not hiring.
Cub: Do we know about hiring?
Bear Leader: We don’t need to know. Employment numbers are great. We can blame everything on the government and their crazy birth/death model. The "phantom jobs" line works great. Everyone is quoting us. And don’t forget unemployment. The stupid bureaucrats have about ten different measures of unemployment, so one of them is sure to look bad. I think we are using U6 now, but don’t let anyone compare it with past years.
But enough about employment. What is the biggest topic right now?
Cubs (in unison): The Fed.
Bear Leader: Right. And where is the Fed?
Cubs: In a box! In a box. The Fed is in a box.
Bear Leader: Good. What do we say if the Fed leaves rates unchanged?
Cubs: They know nothing!
Bear Leader: And if the Fed cuts rates…..?
Cubs: They are behind the curve. It is too late. Lower rates will not help housing.
Bear Leader: And…..?
Cubs: They are rekindling inflation. Commodities are going up. The dollar is going down.
Bear Leader: Right. Remember, commodities going up show inflation. Commodities going down show economic weakness. You are always right.
Cub: That’s beautiful. It is sort of like the yield curve.
Bear Leader: By Jove, you’ve got it! Just remember the yield curve. Flat or inverted means that recession odds go above our standard 55%. If the ten-year note goes up, that hurts the consumer and stock valuations. If it goes back down, it shows economic weakness.
Cub: What if some economist challenges us?
Bear Leader: Don’t worry! None of the shows check to make sure you know anything before going on. It’s not like you had to take a test or something.
Cub: But what if someone quotes economists?
Bear Leader: You just say that all economists are biased because they work for business or government. (laughing) Besides, everyone knows they can’t predict recessions. That proves they wasted all that money on grad school!
Now one more thing — history! Chartman’s database can come up with a historical comparison for any subject. We were just working on the Panic of ’07. Chartman had to go back even before Taft for that one!
History sells! It makes us seem smart. Even wise, since we know about these old times. We can always find a disaster or two for any occasion. Always start by saying, "This reminds me of…."
Cub: What about earnings? I heard some Bull say that earnings have been very strong.
Bear Leader: Standard treatment. Earnings must come down. If they seem good, we say they beat reduced guidance. Also, we show that the quality was poor.
Cub: What does that mean?
Bear Leader: It means we found something to criticize in the report. We can always do that. We can also find a few companies with problems. That is plenty good for talking points. Just say there must be more of them. It’s called the cockroach theory. You can also say that the companies and analysts are lying, just like they did in 2000.
Cub: It seems like a lot to remember.
Bear Leader: It gets easy with practice. Remember, you are always looking forward and the other guy is looking backward. That way you do not have to explain any real data. Your predictions are as good as his — or better if he is an economist.
But don’t forget the Prime Law of Forecasting: Never give a time frame. Never!
Cubs (in unison): Never give a time frame!
Bear Leader: OK, let me hear it!
Cubs: SUB-SLIME! SUB-SLIME!
Bear Leader: What about the consumer?
Cubs: Spent-up, not pent-up!
Bear Leader: What about the Fed?
Cubs: In a box! Behind the curve!
Bear Leader: I think we are ready. Now I want every cub to look to his left, and then to his right. If we don’t talk this market down soon, one of your fellow bears will soon be gone. I want to see those public recession polls up to 90%.