Notes From Underground: Laboring to Comprehend Gary Cohn’s CNBC Interview

CNBC promoted its interview with Gary Cohn for a couple of days so the head of the White House Economic Council could not have been caught off guard by any questions from the interviewers. Cohn was giving the recent unemployment data a positive spin, but that’s part of his job description. MY PROBLEM WITH COHN’S INTERVIEW WAS HIS PUSH TO CUT CORPORATE TAX RATES AS AN ANSWER TO FLAT WAGE GROWTH. His analysis that lower tax rates equals higher wages is preposterous and reflects the thought process of a Wall Street account executive. In response to David Faber’s query about the tax cut benefiting middle class workers COHN replied: “How does it not benefit the worker?” Cohn answers his own question by building the straw man argument: Any repatriation of foreign profits would boost equity prices as would any cut in domestic corporate taxes. For who owns most of the equity in the world today (another Straw Man by Cohn)? We know the biggest pool of owned equity are the pension funds, especially the public pension funds (fire, police, teachers municipal workers], “… thus we are helping Americans by delivering returns back to them.”

Really? If this argument held water THEN WHY ARE PUBLIC PENSIONS SO SEVERELY UNDERFUNDED WHEN U.S.EQUITY PRICES ARE AT ALL TIME HIGHS? Also, any gain in corporate profitability has a higher propensity of going to management then workers. During the last 50 years the gap between CEO and worker pay has exploded from 30 times to well over 300 times so it’s doubtful that tax cuts will make it to the worker in any direct way. It is a sham presented by Cohn in an effort to find a rationale for pushing the corporate tax cut. Invoking the public pensions when private sector workers bearing the brunt of stagnant wages strains COHN‘s credibility.

A question I would pose back to Cohn is this: Who greases the Wall Street Money machine? My thesis is that the Wall Street money management teams have fed on the corpses of pension funds charging, oversized fees for under-performance. Cohn’s thesis is PONZI in nature. Let equity value increases salve the wounds of the growing income inequality. Fed Chair, oh my.

***I want to return to the Santelli/Harris interview from February 1, 2016. It was a Monday morning and over the weekend the big guns of the global macro world had synchronized interviews above a coming 30 percent depreciation of the Chinese YUAN. Soros, Einhorn, Tepper and Kyle Bass posited that the debt situation in China was going to result in a large downward move in the Chinese currency. The YUAN closed at 6.5784/U.S. dollar on February 1, 2016, and did depreciate 5 percent during the next 12 months. On Friday, the YUAN closed stronger at 6.5691 for the first time since the Santelli /Harris interview. In that interview with Rick I opined that gold and bonds were better plays because if the YUAN actually devalued as much as the four horsemen of the global macro world posited, then DEFLATION would be foisted upon the world. I bring this up because BOND yields are 20 basis points higher (based on futures prices) as the YUAN has rallied and GOLD is 18% higher. The important point is that there is a shift in asset classes taking place and the YUAN is unchanged over the period.

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7 Responses to “Notes From Underground: Laboring to Comprehend Gary Cohn’s CNBC Interview”

  1. Gil Harris Says:

    If Wall St. is fleecing the pension funds (which no doubt they are), then shame on the pension fund morons—-why don’t they cut themselves better deals? Yea—you’re for a free market, aren’t you?

    • Yra Says:

      Gil–see what Steve Ratner and others in the play to pay game work and prevent the better deals.Pension board set ups are for novices and just are puppets as the sell side runs them around–see Orange County and Robert Citron and if you can read F.I.A.S. C.O by Frank Partnoy–the best expose on the abuse of the pension funds by wall street

  2. Chicken Says:

    Managing OPM is great work if you can get it. Meet the new boss.

    “it’s doubtful that tax cuts will make it to the worker in any direct way.”

    Such an optimist? Not even indirectly! 🙂

    According to 60 Minutes tonight, even FEMA is conspiring.

  3. David Richards (@djwrichards) Says:

    You mean the China, the currency manipulators? LOL
    Yuan advanced for a record 14 consecutive day today.
    Is that what Trump & Munchin are complaining about? haha

    The Trump admin’s threat of initiating trade sanctions against China, while perhaps popular among a key segment of his political base, is naive and counterproductive. Apart from China being the second largest trading partner, the risk is that China owns 90% of the world’s supply of rare earth metals, without which life in the US would technologically revert to the 19th century in fairly short order according to experts, who also say it would take up to twenty years to build an alternative domestic supply of rare earth metals. Previously, the Japanese decided to sanction trade with China over disputed islands in the South China Sea. The Chinese threatened to cut supplies of their Rare Earth Metals, which would have mortally wounded Japan Inc. Instead, normal trade resumed, Japan Inc continued on happily and China proceeded with its occupation in the South China Sea.

  4. David Richards (@djwrichards) Says:

    That unfortunate call by the global macro gurus has nothing on short-side bears Jim Chanos and Gordon Chang. Reference the book The Coming Collapse Of China, released in July 2001. Oops.

  5. mikegre2014 Says:

    Today T-bill auction for 28 day paper…

    Term: 4-Week
    High Rate: 1.300%

    • Yra Says:

      Mikegre–yes and immediately dropped to 1.25%—as Peter Boockvar wrote today–its a hissy fit driven by an irrational fear of not getting paid by the expected debt–but the U.S. Treasury will not default—at not in this way and at this time.Will it ever happen ?Well its got as high a probability as NOKO building a thermonuclear weapon

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