This morning on CNBC there was a very entertaining and spirited exchange that I thought you might enjoy.
First some background. Rick Santelli began trading at the Chicago Mercantile Exchange in 1979, and is probably the most competent, markets oriented, reporter at CNBC. He is often regarded as the founder of America's most recent tea-party movement due to his famous rant on February 19, 2009 (Rick Santelli and the "Rant of the Year").
His opponent, Steve Liesman, is a liberal journalist who is the senior economics correspondent for CNBC.
The two of them have had numerous verbal tussles over the years, usually centered around very opposing ideals. Liesman believes wholeheartedly in the governments (specifically the Fed's) ability to manage the economy through fiscal manipulation. Santelli, on the other hand, believes that the markets are the best mechanism for allocating capital and setting prices, interest rates, etc.
CNBC loves putting these guys on the air together because the sparks almost always fly, and that builds ratings. A quick note on CNBC. This is a 24 hour entertainment news channel. Occasionally they have some actual breaking news and a good interview or two, but most of the time it is just painful. There is nothing wrong with CNBC you just have to understand that very, very, little of it has anything to do with actual investing, its entertainment.
Today Liesman reports what Washington is telling him, namely that the economy is recovering nicely. Santelli believes what the markets are telling him, namely that the economy may be showing near-term signs of strength but nothing has been done to fix the longer-term structural problems. These gentlemen are both right, and they are a good microcosm of the tug-of-war going on in the markets today.
On one side of the tug-of-war rope you have the economy showing signs of recovering, on the backs of massive fiscal stimulus and inventory restocking. On the surface this looks like a classic fiscal recovery. On the other side of the rope you have a market wrestling with the effects of a secular debt deflation, built on decades of currency devaluation and leverage. These structural secular problems are what Santelli continues to warn about.
Well, here's todays entertainment, enjoy:
Be careful out there,
Chris Wiles
This article contains the current opinions of the author but not necessarily those of the Rockhaven Capital Management. The author’s opinions are subject to change without notice. This article is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.
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