Best Santelli Rant in a while..

Covertibility · Jul 15, 2013

Quote from Tsing Tao:

Do you have a link to this clip? As for Hilsenrath, please...don't make me laugh!

Tsing Tao · Jul 15, 2013

Quote from Martinghoul:

I don't think Hilsenrath really gets to talk a lot in this one, tbh.

http://video.cnbc.com/gallery/?video=3000176036

They have a handy transcript, too.

Ok, I'm going to comment as I go so I don't forget or miss anything. Up to this point (2:25 into it) Santelli accuses Hislenrath of not asking any tough questions, posing softballs to the Ben, and supporting QE. Hilsenrath responds by saying that he does, indeed, ask tough questions. For example, he says, he asked Ben how long he was going to stick around.

LOL

For the next minute, they discuss whether Hilsenrath is sourced or not, and he says he is (of course he is) and Rick says that's why his stories move markets. He also indirectly accuses John of being a Fed apologist (like I accuse you of being) and John is quick to point out an article on Monday he wrote where he said the Fed has been wrong on all it's forecasts. Rick says that's not a story, it's truth (lame comeback).

At 4:10, begins the argument you refer to regarding Inflation. Rick attempts to nail John down on "why is QE still necessary" and John backs off on answering that directly, gives a canned response of "The Fed is using it's tools to help a severely hampered recovery, etc". John then turns the table and says that Rick has been calling for inflation, but Rick states (correctly) that the reason there isn't inflation yet is because the money simply hasn't entered the system (yet) and is sitting in reserves. So what? That's not correct, according to you?

Rick then goes off on a rant saying he never railed against inflation, but volatility. I think this is only half correct. He's certainly called out volatility a lot, but he also brought out inflation many times as well - but only in the context that banks suddenly allowed that money to enter the broader economy.

At 6:10, John asks Rick about "the dollar", indicating Rick's commentary in the past regarding it. I think that's a fair point, Rick has focused on the dollar a lot, and weakness is not showing up like he had insinuated it would. But Rick correctly mentions that's because we're in a world of competitive devaluation right now...the currency war, if you will.

At 7:05, Rick asks if John were to pose tough questions to the Fed, would his access be limited in the future. John responds by pointing out a story of a Fed member that traded GS when it was being bailed out, and the resignation that followed. He said the Fed was not pleased with his story. My take is that he has to do this every once in a while to appear unbiased. I'm sure this story was approved with the Fed because of this, prior to being run. But that's a conspiracy theory with no proof.

At 8:00, Rick asks John again why the questions aren't tougher in the press conferences. John yields that he believes the press conferences are "too polite" and then talks about the logistics and says it's hard to get the info you want when you ask questions. Again. LOL

The end the interview with Rick again saying the John needs to start asking tough questions, and stop giving excuses as to why he can't. John sends back a fair return shot about how people need to ask Rick questions about how Rick says all the bad things that QE does that still haven't materialized. A fair point.

Regardless, the most important fact of the interview is the balance sheet of the Fed at 3.25 Trillion in an economy of 16 trillion. Scary.

Tsing Tao · Jul 15, 2013

Quote from Covertibility:

<iframe width="420" height="315" src="//www.youtube.com/embed/hnPQJ-5Akiw" frameborder="0" allowfullscreen></iframe>

Inflation will be "stunning."

Again, all he's saying is that once that money sitting in reserves hits the economy (when Fred Flintstone's feet hit the road), the launch will commence. Pretty consistent message from back then to now.

Martinghoul · Jul 15, 2013

Quote from Tsing Tao:
Ok, I'm going to comment as I go so I don't forget or miss anything. Up to this point (2:25 into it) Santelli accuses Hislenrath of not asking any tough questions, posing softballs to the Ben, and supporting QE. Hilsenrath responds by saying that he does, indeed, ask tough questions. For example, he says, he asked Ben how long he was going to stick around.

LOL

For the next minute, they discuss whether Hilsenrath is sourced or not, and he says he is (of course he is) and Rick says that's why his stories move markets. He also indirectly accuses John of being a Fed apologist (like I accuse you of being) and John is quick to point out an article on Monday he wrote where he said the Fed has been wrong on all it's forecasts. Rick says that's not a story, it's truth (lame comeback).

At 4:10, begins the argument you refer to regarding Inflation. Rick attempts to nail John down on "why is QE still necessary" and John backs off on answering that directly, gives a canned response of "The Fed is using it's tools to help a severely hampered recovery, etc". John then turns the table and says that Rick has been calling for inflation, but Rick states (correctly) that the reason there isn't inflation yet is because the money simply hasn't entered the system (yet) and is sitting in reserves. So what? That's not correct, according to you?

Rick then goes off on a rant saying he never railed against inflation, but volatility. I think this is only half correct. He's certainly called out volatility a lot, but he also brought out inflation many times as well - but only in the context that banks suddenly allowed that money to enter the broader economy.

At 6:10, John asks Rick about "the dollar", indicating Rick's commentary in the past regarding it. I think that's a fair point, Rick has focused on the dollar a lot, and weakness is not showing up like he had insinuated it would. But Rick correctly mentions that's because we're in a world of competitive devaluation right now...the currency war, if you will.

At 7:05, Rick asks if John were to pose tough questions to the Fed, would his access be limited in the future. John responds by pointing out a story of a Fed member that traded GS when it was being bailed out, and the resignation that followed. He said the Fed was not pleased with his story. My take is that he has to do this every once in a while to appear unbiased. I'm sure this story was approved with the Fed because of this, prior to being run. But that's a conspiracy theory with no proof.

At 8:00, Rick asks John again why the questions aren't tougher in the press conferences. John yields that he believes the press conferences are "too polite" and then talks about the logistics and says it's hard to get the info you want when you ask questions. Again. LOL

The end the interview with Rick again saying the John needs to start asking tough questions, and stop giving excuses as to why he can't. John sends back a fair return shot about how people need to ask Rick questions about how Rick says all the bad things that QE does that still haven't materialized. A fair point.

Regardless, the most important fact of the interview is the balance sheet of the Fed at 3.25 Trillion in an economy of 16 trillion. Scary.

Yep, all sounds reasonably accurate... However, my point still stands.

Here's Rick being consistent with what he's been saying previously. Wrong or right, respect to him for that:
"You can't show the inflation because the $3.4 trillion on the balance sheet, that's future inflation. But it's in a jurassic park-like electric fence. But it's not going to sit there forever, or on the balance sheets of banks in the form of excess reserves. It's quarantined but it's not going to be quarantined forever."

But why on Earth does he then have to say this:
"No, no, no, no, no. That's not the issue. The issue is you're not going to have a lot of inflation showing up when you have no velocity. I have talked about commodity price volatility in the past. Go back to the tapes. Whether it's with Steve Liesman or all the others that like to go after me. I never said it was about inflation. I said it was about gyrations based on these programs in the foreign exchange markets that show up in volatility. The average guy doesn't care about a definition. He cares about volatility. When he goes to the grocery store, to the gas station, he cares about volatility. And just because an index like cpi is at all-time highs and the next month it comes down a bit, to me that doesn't mean inflation is down 0.2. it means it's still somewhat at the highs."

It's just a really bizarre thing to say, let alone inconsistent with what he said previously.

Covertibility · Jul 15, 2013

Quote from Tsing Tao:

Again, all he's saying is that once that money sitting in reserves hits the economy (when Fred Flintstone's feet hit the road), the launch will commence. Pretty consistent message from back then to now.

But that money was never going to find the economy as the Fed started paying interest on excess reserves in '08. It sounds as if Santelli was really expecting it to happen and thus the inflation run.
I don't expect Santelli to figure it out, but Kudlow, an economist, come on!

Tsing Tao · Jul 15, 2013

Quote from Martinghoul:

Yep, all sounds reasonably accurate... However, my point still stands.

Here's Rick being consistent with what he's been saying previously. Wrong or right, respect to him for that:
"You can't show the inflation because the $3.4 trillion on the balance sheet, that's future inflation. But it's in a jurassic park-like electric fence. But it's not going to sit there forever, or on the balance sheets of banks in the form of excess reserves. It's quarantined but it's not going to be quarantined forever."

But why on Earth does he then have to say this:
"No, no, no, no, no. That's not the issue. The issue is you're not going to have a lot of inflation showing up when you have no velocity. I have talked about commodity price volatility in the past. Go back to the tapes. Whether it's with Steve Liesman or all the others that like to go after me. I never said it was about inflation. I said it was about gyrations based on these programs in the foreign exchange markets that show up in volatility. The average guy doesn't care about a definition. He cares about volatility. When he goes to the grocery store, to the gas station, he cares about volatility. And just because an index like cpi is at all-time highs and the next month it comes down a bit, to me that doesn't mean inflation is down 0.2. it means it's still somewhat at the highs."

It's just a really bizarre thing to say, let alone inconsistent with what he said previously.

It is a bit bizarre, but let's see you go on live TV and manage impromptu verse without the ability to think about what you post, before you post it.

Tsing Tao · Jul 15, 2013

Quote from Covertibility:

But that money was never going to find the economy as the Fed started paying interest on excess reserves in '08. It sounds as if Santelli was really expecting it to happen and thus the inflation run.
I don't expect Santelli to figure it out, but Kudlow, an economist, come on!

Kudlow is a goat.

Martinghoul · Jul 15, 2013

Quote from Tsing Tao:
It is a bit bizarre, but let's see you go on live TV and manage impromptu verse without the ability to think about what you post, before you post it.

Precisely... That's why I don't (go on live TV, that is). I have no doubt that I would be certainly boring and probably incoherent.

It's a skill to be able to "create" entertaining, interesting TV. It's an entirely different skill to take and manage risk, especially macro, especially now. That's why if you watch people like Dalio or Tepper (just as examples), they don't really make very interesting TV and, occasionally, it's even cringeworthy. However, I would prefer to listen to them, rather than Rick Santelli, any day.

And now we've gone full-circle, as that's been my point all along.

Tsing Tao · Jul 15, 2013

Quote from Martinghoul:

Precisely... That's why I don't (go on live TV, that is). I have no doubt that I would be certainly boring and probably incoherent.

It's a skill to be able to "create" entertaining, interesting TV. It's an entirely different skill to take and manage risk, especially macro, especially now. That's why if you watch people like Dalio or Tepper (just as examples), they don't really make very interesting TV and, occasionally, it's even cringeworthy. However, I would prefer to listen to them, rather than Rick Santelli, any day.

And now we've gone full-circle, as that's been my point all along.

To each his own whom they prefer to view. My point was simply that there really aren't all that many inaccuracies in Rick's commentary.

The rest of CNBC, however, now that's a laugh-riot.

Ricter · Jul 15, 2013

So at the end of the day, Santelli was predicting runaway inflation, but now claims he never meant inflation, but volatility... ?