DICK BOVE: WE ARE ON THE PRECIPICE OF A POLITICALLY DRIVEN EQUITY CRASH
Dick Bove, an analyst at Rochdale Research released an alarming report yesterday detailing the dangers of a politically driven market. In his opinion, we could be on the verge of a market crash driven by the President’s financial reform bill and growing anti-business sentiment:
“The United States financial system and its economy are at a critical juncture. Actions being suggested in Washington have placed it on a precipice. If the President and Congress continue down the path that each has indicated, in my judgment, the equity markets will crash. Moreover, the financial system will have to be rebuilt on a new base. Shareholders simply refuse to accept what is happening in Washington at the present time.”
Bove attributes the recent equity market volatility to two alarming political trends:
- Venezuelan style Democracy, i.e., socialist trends in government.
- A “party first, nation last” approach.
Bove is very concerned about the growing anti-business trends in the administration and attacks on the wealthy. Bove is even more concerned with the recent uprising against Bernanke:
“This party is now seeking to remove the Chairman of the Federal Reserve the only man in the country left in Washington who has any credibility in the financial markets. Press reports suggest that there is more than a 50% chance that the head of the Federal Reserve will not be renominated. By eliminating this man the opposition party presumably believes that his policies can be wiped away and the monetary ease of the past 15 months can be reversed.”
Bove is increasingly concerned about this trend in populism and against Wall Street. He thinks the blame for the financial crisis goes far beyond Wall Street and the Central Bank and the bankers are not the only ones to blame. He says the markets have spoken with their downturn last week and we now sit on the precipice of a politically driven stock market crash if the current political rhetoric continues:
“In sum, the market is appalled at the lack of understanding being demonstrated by the nation’s two political parties. It is appalled at the rabble rousing based on half truths and deceitful statements. It is appalled by the willingness of placing party above the nation. Therefore, investors are voting. The election today is not at the poll booths, it is in the stock market. The decision is one of no confidence. The fear being expressed is that these politicos in their drive for personal power will destroy the financial system and drive the economy back into recession.
We are on the edge of a politically driven stock market crash.”
As of late Monday it looks like Bove and the banks can breath a deep sigh of relief as a Bernanke reconfirmation appears to be a certainty.
Source: Rochdale Research
Cullen Roche
Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.
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27 Comments
Dick Bove should be just as concerned for the american consumer. Enough with the dooms day scenerio about the banks and the stock market. The banks were one of the main the causes of this finacial debacle and they deserve what they get. SCREW THE BANKS, SCREW THE MARKET AND SCREW DICK BOVE. Dick Bove is nothing but a schill for the banking industry. The Banks and the financial industry have reduced available credit at a pace not seen since the great depression, interest rates on credit cards are 30 %, the banks are borrowing from the fed at 0.25 % and instead of lending to businesses and consumers they are buying intermediate term treasuries and pocketing 3.60 % yeild. Maybe we need to flush the system so we can start fresh.
I keep saying: Most Americans have American financial assets, or depend for their job on someone who does, or depend for their welfare transfer payments on those who do. Class struggle may have been a winner for Chairman Mao but it isn’t going to make it with us, anyhow.
You sound like a surrender monkey!
You are basically saying “oh you lower class losers, you better not demand that justice be served to the bankster leaches be dealt with because if you do they will destroy your 401k.” This is just like the left-wing peace hippies who claim we shouldn’t fight Islamic terrorism because they will strike us back. Take your Vichy white flag back to France, Americans are not afraid to set the elite banking cabal straight.
We have faced down far more fearsome enemies in our history!
TPC, I have to vote this a 1. Not because I don’t appreciate you posting it, but because I think Bove is entirely wrong. He is the classic economist/analyst who saw none of this coming and continues to fail to see what is coming down the line. Why does anyone listen to him after 2008? Bove is what is wrong with Wall Street.
Personally, a 1 on this post is worth a 10 in my world. I think Bove represents all that is wrong with Wall Street and his track record leaves much to be desired.
He makes headlines though. I’ll give him credit for that.
Bove thinks the market is the real economy. The market is run by the banks now. Plain and simple. And that is the entire problem. We need to downsize our dependence on the financial sector and the Fed to produce economic growth. You want real growth? You want to make real investments in this country? Quit with bank bailouts and begin promoting entreprenurialism and innovation. Can you imagine what 2 trillion dollar in stimulus could have done for innovation?
Instead, we wasted all that money on a few banks.
Sadly the ability to make headlines, and spin a yarn, is what passes for important analysis…
Though I’m sure that’s never really changed over the years.
However, on a brighter note, the only headlines that matter tomorrow will come from the Carrier Dome tonight
A tough place to win so I am keeping my expectations muted, but man would it be a big one if we can pull it off. We’ll need Wright and Freeman to show up big tonight.
Certainly do, especially with their mean 2-3 zone!
Now, if only AAPL could oblige with some results some time soon…a pregame pint is calling me!
Dick Bove’s entire business is centered around being quoted in the press. The buyside considers this guy a total joke. Media whore cut from the Jim Cramer cloth. Nothing more.
forget about the messenger and think about the message. i think he is precisely right, which is why i am waiting for unemployment to start going down before i get back into the market.
With that attitude, you’ll never make money in the market, sorry to say.
TPC, any update on Paul Tudor Jones? He called it a bear market rally then switched bullish several months back. Curious to know about his current thoughts.
Good, let the markets crash and burn then if that is what it will take. Sorry, you don’t get to be bailed out by normal people, then you get free money to gamble with at .25% while getting paid 10%+on credit cards by those same normal people that bailed you out, then you pay record bonuses and then happy days come back. Nope, doesn’t work that way. It shouldn’t.
This is yet another attempt at financial extortion! “HAND OVER YOUR RIGHTS AS CITIZENS OR I’LL BLOW UP THE FINANCIAL SYSTEM!”
Oh no…run for the hills the citizens are demanding that Washington reign in wall street and that can only mean financial armageddon and a new social order. Dick….pull the crap out of your pants and take some responsibility. I suppose you think that as long as stock prices and dividends are going up then our public and private institutions are running efficiently.
I was having a discussion with my mother over ethical behavior in business. I gave the opinion that the first demonstration in my adult lifetime of unethical behavior on an aggregate scale was the S&L crisis and I asked her if she had experienced anything prior to it in degree and she said she had not. We did agree that since the S&L crisis corruption and this idea of “me first then the country” has only become more pervasive. I’m sure you would disagree.
Adam Smith stated…where there is no moral framework, no ethical sensibility, the market ends up devouring all the other sectors and then devours itself. Paul Volcker understands this and it is evident that you do not.
I recall reading Bove’s comments about the stress tests. They were hyperbolic nonsense that explicitly described the exercise as likely to cause a serious market crash. Obviously the government wouldn’t have conducted the tests unless they planned to conclude the banks were “fine.” Only an idiot would have bet against that. Bove likes to threaten a lot when he sees the banks under attack. In addition, Obama’s crew is entirely beholden to Wall Street. Just because he made some noise last week doesn’t mean anything will change. Read the Naked Capitalist blog and you’ll see in more detail that the proposal has no teeth in it. I keep saying the same thing over and over but everyone is obsessed with stocks. Stocks will go down if there’s a policy change by the Fed. So far, I see that change as occurring years from now. Yes, stocks will go up and down based on news (and external events like a terrorist attack) but there is simply no place to put money besides the market if you want any kind of return.
Hilarious. This makes me want to get very long the market in a hurry. Bove’s had some bad bad timing and yes, I remember his 2008.
The way that sell off last week seemed to me was the banks run the markets now thanks to money from the Fed. Last week was a message to Congress from the people that have been supporting this market for the past 10 months…keep our man in or else. I wouldn’t be surprised to hear that Bernanke had a hand in it at some level. When Congress passed TARP that gave the power to the Fed and in turn the banks via Bernanke (and implicitly probably the administration). There’s no taking it back. Congress unleashed a monster. Effin rediculous what the bogus markets in this country have become thanks to Bernanke. Did you see the Dow ripped right through support? It should continue down now given that but knowing this bogus market it will probably turn around and head higher after Wed. Though if you’re Mom and Pop with your 401K invested who is going to argue with a higher market?
BTW the author of the article, Bove was it, comes across as a complete alarmist, extremist and opportunist. Unless he some credible track record probably best just to move along.
I think you have to look beyond the guy’s credibility and instead at what he says, which rings somewhat true. This pissing match between Wall Street and the Administration is not good for stocks. When has it ever been good for stocks to have an Administration almost daily vilifying the market and its major players?
Saw him trotted out on the tube today as part of the Bloomberg/CNBC full-court press against regulating their heroes.
…incoherent thoughts that confused banking with investing, myth with history, and pain with catastrophe.
Bove’s the messenger delivering a ransom note. The banks are the extortionists controlling the equity markets. The downturn over the past few days is a warning to the democrats to not ruin a good thing. Don’t even think of financial reform or else we’ll crash the markets. Wall Street is organized crime.
SCREW THEM. Let them crash the markets, then throw every one of them in jail. We need to wrest this country back from the control of these organized criminals.
this is great, now that big money’s short, we’re gonna hear about all the reasons to sell this MKT in order for there MKT-MKR shorts to work out at the expense of all the “minibulls”, sad, but that’s the game. as for mr president, I feel for him, he is so trying, so hard, in his place i’d be saying “its been fun but gotta run”. as for copter ben lol, sounds like toy or some bazooka joke, “men of the year”, hope you get the psychology behind that…the men of the year is none but old treasury sec’ H.P, will never forget him ripping into all them poor congressmen, he, got his job done, go GS b e a utiful, as for regulating banks, absolutely, do want some 24yr old picking his nose in the bathroom, working the correlation desk betting a trillion on some siv with your money ? GLS&STGL, how meny times you think they’ve tossed in their graves for the past 15 years ? a men saying he’s doing G-Ds work ? you know that end should be interesting, as for earnings driven MKT, today I heard the new one- beating earnings with a new accounting rule, ha ? sounds like them “legacy assets”, want some ? trading for 11 yrs now, this show’s just getting better, too bad its just a show and reality bites, hope all that read, heard that fat lady sing the week of AA and INTC and did what hed to be done, hope none fell for them upgrades in the first week of this year and got short, stock and calls and bought some puts…
G-D SPEED
In criticism of Dick Bove, there seems to be a lack of understanding. Was Bove wrong when he “recommended” banks through the worse market contraction in 2008?
Follow the money:
Bove is paid to promote the interests of the same banks he “reviews.” As a pawn for the international organizations of bankers, he did exactly what he is paid to do and recommended the bank stock while they tanked … this is all about confidence. A game of tricks.
Bove’s own words in reference to Bernanke:
He’s the only one left with “any credibility in the financial markets.”
The crash scenario is the same threat that the banks tried in September and October 2008 … and it worked to some degree. Only, now that chicken little has been screaming till his throat is soar … that “angry populist movement” is no longer listening to the garbage Bove and his bankig buddies promote.
Stop peeing on my leg, stop telling me it’s only rain water. Stop the systemic stupidity!
If the Rule of Law is enforced, Bove knows as well as I do that the entire banking system is bankrupt. The “confidence” and “credability” he seeks is the expectation from those who agreed to fleece the government to conceal the trillion dollar thefts.
2+2 = 4 … there’s no “confidence” or a question of “credability”, it simply equals four!
How do you know that the banking system is bankrupt?
I assume Dick Bove is a rich Republican, because all I read are Republican talking points which have nothing to do with reality.
The headline makes it seem the blame lies entirely on our government, although buried in the article is an admission that Wall Street and the Central Bank are to blame. He also throws around the word “socialist”–the latest epithet conservatives like to use to confuse the public. If he’s against socialism, then he should get Wall Street to not accept any bailout money.
Wall Street and the non-Wall Street banks had no choice. The TARP dollars were forced on them. A number of the large banks didn’t want the dollars…but were persuaded they had to take them. Much speculation as what was behind Sec’y Paulsen’s strong armed demands.