As far as investment bank strategists go, I actually enjoy listening to Tobias Levkovich. I had written about him more than a year back here, where he argued for a W-shaped downturn, a collapse in commodity prices, emerging market declines, higher taxes and other interesting stuff.
Perfect for a hopefully slow Friday, here are some of his interviews on CNBC these past 2 months. I've posted my notes as well. Enjoy!
Interview 1.
Notes:
- Production will climb in H2 and into 2010.
- Increase in production rates drive earnings growth. Could provide bump to GDP data. Cost control merely provides operating leverage to the upside.
- In last 30 years, all growth in consumer expenditure as a percentage of GDP has come from health care expenditures.
- Our debts went up, but so did our wealth. When the debt went up by 6 trillion dollars, consumer assets went up by 24 trillion. They’re still up about 14 trillion.
- Strength of Q2 earnings and probability of H2 earnings power supportive of further gains.
- Possibility of a correction later in the year. Issues:
-2010 earnings estimates are too high.
-Some companies like mortgage insurers are in trouble, hitting the European banks. - Overshoot to 1100 on the S&P 500 possible.
Interview 2.
- We’re still going somewhat higher. Still an environment where people doubt that stocks will be moving higher, and earnings will be going up.
- The big discussion is this whole cost cutting, not revenues driving earnings thing.
- We’re also at a stage where production has to tick up as we have been destocking at a severe rate. Inventories will not build up. Only destock at a more moderate level.
- CEO confidence is a great inverse indicator.
- Mutual funds and pension funds have performed better than hedge funds in this environment.
Click here for Interview 3.
- This is a cyclical bull not a secular bull. Next secular bull will launch around 2012-2013. Secular bull markets have to break above the previous highs.
- Production of cars in North America is 4 million units, with sales of 7 million units. Under producing very severely to reduce inventories. Car makers can increase production by 75% and not build a stitch of inventories.
- Historically production rates drives earnings. Every cyclical recovery has started that way. Not generated by end market sales but by production increases.
- Bullish but realizes that there will be setbacks along the way.
- Labor costs are a major part of inflation, and with unemployment at 10% and global labor losses, unless we put in major protectionist measures, hard to see inflation.
Dated but still good fourth interview presented without comment.
