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Howard Ruff was back as a guest on CNBC’s Squawk Box this morning. For those unfamiliar with him, I called Ruff a “contrarian signal from the trading gods” right at the cyclical bottom in early 2009. This amazing contrarian signal came in mid-February 2009 but those that missed that got another chance as Ruff had anther CNBC appearance a few days later on March 4th 2009, just days before the S&P 500 launched a cyclical bull market.
In that interview, interestingly enough, when he was asked by TD Ameritrade’s Joe Moglia when he would consider the equity market attractive, Ruff was so bearish he couldn’t contemplate such a scenario. As a perma-bear, you can rely on Howard Ruff to say the same thing, over and over again, no matter how the facts or the market may change. In today’s interview he was, as usual, bearish on stocks and the dollar and bullish on gold and silver because of an imminent inflationary super-cycle:
Is it just me or is Ruff’s “Droopy” impression almost as good as Joe Lieberman’s?
As usual, Ruff is bullish on gold ($2300 target) and on silver ($100). I’m not sure what he means by China “telling people to buy gold”. But he also likes other energy commodities like uranium. He is bearish on bonds, which makes me uncomfortable since I agree with him on something. He also says that he is out of oil services stocks because of the Gulf of Mexico spill.
Political Tangent Ahead
Perhaps because he has just written a book, How to Prosper in the Age of Obamanomics, in this interview he is fixated on politics and the political changes underway in the US. Ruff is quoted as writing in a newsletter that “Socialism marches on”, pointing to the healthcare bill that was passed recently. As I wrote, tongue firmly in cheek, Say no to socialism America!. It is difficult to not juxtapose this with the recent report showing that the US came in dead last (again) in quality of healthcare compared to other countries.
He also predicts that in November Republicans taking back majority control in Congress and that Obama will be a one term president because he won’t stand for reelection. Regarding Obama’s approval rating, Ruff says:
He’s plummeting… probably, at the worst rate of any president that I’ve seen in my lifetime, and I’ve been around a long time.
Maybe Ruff wants Republicans to have control again - in Congress and the Oval Office - because he knows that Wall Street prefers Democrats over Republicans. At least that way he skews the political winds in favor of his uber-bearish posture towards equities.
Now, I really don’t want to go on a political tangent but since this is something that can be empirically quantified, it is important to point out that Howard Ruff is completely wrong in his assertion about Obama’s approval ratings. The US being the land of the free and the brave, Ruff is certainly entitled to his own opinions but he’s not entitled to make up his own facts.
Here is a comprehensive chart of Obama’s approval rating from multiple sources polls:
Since Obama has been in office for about 20 months we can look back at the equivalent approval ratings for George W. Bush during the same duration. Bush came into office with about the same initial approval rating as Obama but the September 11th 2001 World Trade Center attacks caused the nation to rally behind their president and his approval ratings shot up to 80-90%. This is an expected occurrence since we saw the same spike pattern with the Persian Gulf war during George H. Bush’s presidency.
But from that height, W. Bush’s numbers only went in one direction - with the exception of another, smaller spike related to the Iraq war. His ratings eventually fell below the initial approval levels and ending under 50% by the time of the next election.
That is basically where Obama is right now. But Obama didn’t have the spike high in approval as Bush did. So in fact Bush’s approval rating fell much more dramatically than Obama’s. And in his second term George W. Bush’s approval ratings went from bad to worse:
When Bush left office his abysmal approval rating was becoming competitive with that of Nixon, the most disgraceful US President in modern history. Based on these facts, it is wrong to say that Obama’s approval ratings have “plummeted” or are the “worst compared to other presidents”. Especially when the previous president’s experience, still fresh in our minds, was clearly much worse.
I’m not sure what sort of empirical evidence, if any, Ruff is using to make that assertion. Clearly, different polls provide results as you can see above. That’s why it is best to average them over time. But in his CNBC interview, Ruff doesn’t mention any polls which makes me suspect he is relying on anecdotal evidence and liberally sprinkled with his own biases. That certainly sounds like the Howard Ruff that I have come to love as a contrarian!
I would have much preferred if Ruff had stayed focused on the financial markets and specifically discussed a bit more clearly where he stands on equities. That would have provided us with a much better fade (potentially). In any case, those that monitor public sentiment should at least take note that CNBC did have him on as a guest.
The key isn’t listening to a guy like Ruff - since his message over time will not change. The key is paying attention to how much attention he is getting from the media and the general public. That will provide you with a gauge of market sentiment.
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