I recently sat down with legendary NYSE trader Art Cashin for a 3-part interview available exclusively on CNBC.com.
We covered a broad array of topics, and in a series of some classic "Cashin Comments," Art discussed the reasons why the market has remained strong this fall and why he is still very concerned of a forthcoming double-dip in the markets. We also reflected on the defining moment of last year's financial crisis and took a look back at how last year's crisis compared with other significantly challenging times he has experienced through his storied Wall Street career.
Here are a few snippets from my conversation with Art:
On inflation fears:
"If I fly over Bob Pisani's house and I drop a trillion dollars in green pictures of dead presidents down on his lawn and he's so nervous he picks it up and puts it in his garage, that's no inflation. Nothing's really happened. But when he starts to spend it or if he starts to lend it, then money's got, what they call, velocity. And inflation could explode suddenly."
On the weak dollar helping stocks:
"The declining dollar makes Proctor & Gamble , IBM , you pick whatever stock you want, cheaper if you're a European. If your business is done in euros, we see the market going up in terms of dollars. They see it still basically cheap. So I believe, I don't have any concrete evidence for it— but I believe some of what we're seeing is people from off-shore actually help support the market."
On the uncertainty of new cash entering the markets:
"The amount of cash in the mutual funds is going down. So they're driving the car and the gas gauge is going down. Nobody's adding gas to them. Nobody's coming up and saying, here— here's new cash. So you're absolutely right. And that raises the question, how much more gas do they have to give to this rally."
On China growth/fears of a China bubble:
"China opened up. They did a lot of construction. At the same time, they also opened up the banks and there is some fear that China, as strong as it looks, may be experiencing at least a minor bubble here in which we're seeing things like housing very reminiscent of what we had here, housing and other thing prices moving up."
On Greenspan missing inflation signs:
"The point that he missed was inflation was overseas. We had people working for lower wages, no demand for higher wages. We exported the problem. The dog never barked because everything occurred so far away. And that's why they never raised rates. And that's why it left things wide open to the kind of bubble that we had."
On the validity of China's numbers
"The feeling is in the regional districts, they don't want to look bad in front of the powers that be. So if they're supposed to come in with certain numbers, those numbers come in. This is only—it has the potential to be Enron-esque on a national level. Is it so? I hope not. But I will tell you there are enough people around looking and saying this number doesn't actually add up with that."
On the defining moment of last year's crisis:
"Suddenly, it looked like there was gonna be a rush on money market funds. Now I'm watching all this. And I realize that the fed and treasury are panicked. And Ben Bernanke runs out and says, whoa, whoa, whoa, don't take your money out of the money market fund, we guarantee all assets, okay. Now I'm watching one of the smartest economic minds in the United States guarantee every penny in money market funds when only $100,000 to $150,000 in each bank was guaranteed. Suddenly, money starts to run from the banks, the money market funds to get the guarantee."
My thanks to Robert Hum and Brian Clark for producing this interview.
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