TRUST ME.
THE CALVARY IS COMING.
HERE TO WEIGH IN IS AN OLD AND
DEAR FRIEND.
KEN POLCARI.
I WANTED TO ASK YOU, YOU ARE IN
THIS MARKET.
TO ME THE MOST WORRISOME THING.
THESE INDIVIDUAL SECTORS, WHAT I
CALL LOOK UNDER THE HOOD.
ALL POINTING NEGATIVE,
INFLATIONARY.
>> THEY HAVE BEEN POINTING THAT
WAY AND I THINK IT RECESSION IS
COMING.
I THINK IT’S COMING THIS SUMMER
INTO THE EARLY FALL.
I THOUGHT IT WAS COMING LATE
WINTER INTO EARLY NEXT YEAR.
BUT I THINK IT WILL HAPPEN MUCH
SOONER.
LARRY: WHY IS THAT.
IT’S AN IMPORTANT CALL.
TELL ME --
>> WE HAVE A NEGATIVE GDP IN THE
FIRST QUARTER DOWN 1.4%.
I DON’T SEE HOW THEY CAN REVISE
THAT TWO OR THREE TIMES TO COME
UP WITH A POSITIVE NUMBER.
THERE ARE A LOT OF PEOPLE WHO
THINK WE ARE CURRENTLY IN A
RECESSION OR THEY FEEL LIKE
THEIR LIVES ARE CURRENTLY IN A RECESSION.
WE KISSED THE BEAR MARKET ON THE
S & P.
WE’LL CONTINUE TO GRIND LOWER.
I DON’T THINK WE’LL HAVE A
MASSIVE CRASH. BUT I THINK WE’LL CONTINUE TO
BUT I THINK WE’LL CONTINUE TO
GRIND LOWER.
LARRY: WE HAVE KEVIN HASSETT
COMING UP.
MANUFACTURING IS RISING, THE
JOBS MARKET IS STILL PRETTY
GOOD.
THERE ARE CRACKS.
THE HOUSING MARKET LOOKS LOUSY.
RETAILING LOOKED GOOD BUT NOT
AFTER INFLATION. I THINK THERE ARE DEBATING
I THINK THERE ARE DEBATING
POINTS ON BOTH SIDES.
THE STOCK MARKET COULD BE
FORECASTING 6 TO 9 MONTHS AHEAD.
>> I WOULD SAY 4 TO 6 MONTHS.
IT’S A MATH PROBLEM.
IT DON’T KNOW WHAT THE FED IS
GOING TO DO, WHETHER INFLATION
WILL COOL DOWN OR CONTINUE TO
REMAIN ELEVATED.
EVALUATIONS WILL DEPEND ON
INFLATION, WHAT THE FED DOES,
WHAT INTEREST THE RATES ARE.
A FULL PERCENTAGE POINT
INCREASE, IS THAT WHAT WE ARE
GOING TO NEED?
LARRY: INFLATION IS WORSE THAN
PEOPLE THINK.
WALL STREET ALWAYS WANTS TO
SUGAR COAT THIS.
I DON’T SEE ANY EVIDENCE IT’S
COMING DOWN.
KEN BULLARD SAID GETTING 3.5% BY
YEERND WOULD BE THE SHOCK AND
AWE I WANT.
IF THE FED WERE THAT MUCH MORE
AGGRESSIVE.
THAT WOULD BE 75 BASIS POINTS.
THE MARKET RATES, 5 TO 10 TO 30,
AND MORTGAGES AND FINALLY THE STOCK MARKET.
STOCK MARKET.
>> I THINK MORTGAGE RATES WILL
BE 6 TOO 7% BY THE END OF THE
YEAR.
THE ACTION IS TELLING YOU IT’S
EXPECTING THEM TO DO IT.
IF THEY SHOCK AND AWE YOU MAY
SEE THE MARKET BOUNCE.
WE HAVE TAKEN VALUATIONS DOWN.
YOU HAVE SEEN THE SECTORS YOU
JUST HIGHLIGHTED.
I THINK THEY ARE DOWN AND I
THINK THE MARKET WOULD WELCOME A
SHOCK AND AWE MOVEMENT.
LARRY: PROFITS DRIVE THE
ECONOMY.
WHAT’S YOUR -- WE HAVE BAD NUMBERS ON RETAILERS.
NUMBERS ON RETAILERS.
CAN PROFITS GET US THROUGH THIS?
IF NOT WE’LL HAVE FULL-FLEDGED
INFLATION.
>> THE QUESTION IS HOW DEEP IS
THAT RECESSION GOING TO BE.
I THINK WE’LL GET TO SEE.
I DON’T THINK NUMBERS HAVE
STARTED TO COME DOWN.
THE SECOND QUARTER JULY -- THEY
START MID-JULY.
IN JUNE YOU WILL HAVE ANALYSTS
REANALYSIS.
THEY WILL START CUTTING REVENUE
GROWTH, MARGIN PRESSURE.
YOU WILL SEE US GOING TO A
LITTLE BIT MORE TURBULENCE IN
THE MONTH AHEAD.
LARRY: I DON’T THINK YOU AGREE
WITH MY PHILOSOPHY ON THIS.
MY JEREMY SIEGEL.
BURT MATTHEWS.
IN A WAY, I’M AN OPTIMIST, I
CAN’T HELP MYSELF, YOU KNOW
THAT.
I WOULD BE GRADUALLY A BUYER AS
THE MARKET GOES DOWN THEN HOLD
THE THING FOR AS LONG AS I CAN
POSSIBLY HOLD IT UNTIL MY KNEES
DON’T WORK AND SOME OTHER THINGS
DON’T WORK.
>> I AM WITH YOU ON THAT.
IF YOU ARE IN IT FOR THE
LONGTERM, IT DEPENDS ON WHERE
YOU ARE ON THE AGE SCALE.
BUT IF YOU ARE 75 YEARS OLD --
>> I BEG YOUR PARDON.
>> IF YOU ARE 60 YEARS OR LESS,
YOU HAVE MORE TIME.
IF I WAS A 4 -- WAS A 40-YEAR-OL
I WOULD BE BUYING. BITE AND HOLD IT.
BITE AND HOLD IT.
I’M NOT 4 -- NOT 40 BUT I AM 60 AND THAT WHAT I’M DOING.
AND THAT WHAT I’M DOING.
>> 75 ISN’T SO BAD EITHER.