Why TrimTabs' CEO is 100pc bear­ish

The Pak Banker - - COMPANIES/BOSS -

De­spite Mario Draghi's re­as­sur­ance that the ECB will do ev­ery­thing in its power to save the euro zone, Europe is not go­ing to do any­thing mean­ing­ful and cen­tral bank ac­tion will not save the eq­uity mar­kets - on the con­trary, they'll "im­plode", Charles Bi­der­man, Chief Ex­ec­u­tive and Founder of TrimTabs In­vest­ment Re­search, told CNBC.

"We see no chance that Europe is go­ing to do any­thing mean­ing­ful. Mario Draghi and the other of­fi­cials have been talk­ing a good game for many years now but noth­ing has ac­tu­ally hap­pened," he said. Speak­ing to CNBC's "Euro­pean Clos­ing Bell", Bi­der­man, known for his bear­ish stance on stocks and port­fo­lio man­age­ment, said that the only op­tion he could see for Europe was money print­ing as­sum­ing that Ger­many agreed to such a stim­u­lus mea­sure, but that that alone was not enough to save Europe from its imme- di­ate crises.

"The fun­da­men­tal prob­lem in Europe is that the economies [there] are not gen­er­at­ing enough tax­able rev­enues to meet cur­rent bills, let alone grow­ing fu­ture en­ti­tle­ments and let alone the huge stack of al­ready mold­ing debt that ex­ists," he said. "In the face of that, I don't know what else they can do but talk."

Bi­der­man was not only pes­simistic about Europe, how­ever, adding that another rea­son to be bear­ish was the fal­ter­ing U.S. econ­omy, low gains in wages (barely above in­fla­tion, he said) the jobs mar­ket and the Fed­eral Re­serve's strat­egy. "The jobs mar­ket is bad, com­pa­nies are now selling more shares than they're buy­ing so even zero in­ter­est rates isn't enough to con­vince them their cap­i­tal bal­ance sheets to buy back shares." As the Fed­eral Re­serve hes­i­tates in­tro­duc­ing another round of stim­u­lus by re­duc­ing in­ter­est rates fur­ther, Bi­der­man cau­tioned against be­liev­ing that a more ex­treme strat­egy of quan­ti­ta­tive eas­ing could save the econ­omy.

"I know most peo­ple wish for good things and are pray­ing for a mir­a­cle but the only thing that print­ing money will do is give peo­ple a printed piece of pa­per. How is print­ing money go­ing to solve any­thing if there is a gap be­tween in­come and ex­pen­di­tures for the economies and the gov­ern­ments?."

"That's the is­sue that no­body wants to talk ad­dress," he said. Bi­der­man de­fended his 100 per­cent bear­ish­ness on eq­uity mar­kets, say­ing that cen­tral bank in­ter­fer­ence in the mar­kets would not last, and could do per­ma­nent dam­age.

"I'm not say­ing that the world is go­ing to zero, I'm say­ing that the com­pa­nies that have been prof­it­ing from the cen­tral bank rig­ging of the eq­uity and bond mar­kets, will suf­fer as those mar­kets im­plode." "You can't fix mar­kets for­ever with­out fix­ing the un­der­ly­ing prob­lem of in­come and spend­ing on a so­ci­etal and gov­ern­men­tal ba­sis."

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