An Investment Opinion
Next: The Opening Bell
By its own admission, CNBC thinks of Squawk Box as a "pre-game" show. The main reason that anyone would tune in the 7:00 a.m. to 9:30 a.m. portion of the programming, other than to have on some pleasant background repartee while brushing your teeth or tying your tie, is to get the information that will help explain today's likely market action. Information, and at times lack of information, will be packaged throughout with an eye to serving those who conceive of one day in the life of the market as a self-contained "game."
This world view colors nearly all of what goes on during Squawk Box. "Will today's game be as good a game as yesterday's?" is a constant theme. What are the odds on today's game? What is the "smart money" betting on the outcome of today's game? Who do the Bulls have in their lineup today? Do they have any players that got analyst upgrades overnight? Were there any injuries (earnings warnings) to any of the star players? These are the questions that dominate the show.
At 7:00, as Squawk Box starts, we're quickly clued in to the fact that today might be a tough one for the home team (Da Bulls), as Mark Haines is concerned about the S&P futures. The S&P futures are trading at a discount to the S&P 500 Index, and that means that there's a pretty good chance that at the opening -- two and a half hours from now -- the market could start in the red. That is, the market could open in the red compared to yesterday's closing figure, which is the only figure that apparently matters to viewers.
I have the local editorial biases about these things, and because of those biases I find it disappointing that CNBC chooses to use Squawk Box in the manner that it does. I've no doubt that, if the network were so inclined, Squawk Box could be the best show on television for long-term investors instead of being the best program on television devoted to serving short-term traders. The people working in front of the cameras clearly are all excellent at their jobs, and are capable of tossing both humor and educational tidbits off the top of their heads about as well as anyone else I've seen on the tube.
On this particular day, Kathleen Hays treats us to a useful lesson in what makes up that Gross Domestic Product (GDP) figure we hear so often without a second thought. GDP = C + I + G + (X - M), for those who remember their intro econ classes. For those who don't, GDP = Consumption + Investment + Government Spending + (Exports - Imports). Further, stock splits are explained well by David Faber and Joe Kernan, and Mark Haines, as always, is a tough interviewer and engaging host.
There are some problems, though. There is a report, updated more than once, on which online brokerages have the fastest download time for their home page right now. The difference between the fastest and the slowest is four seconds, and I'm left wondering who in the world would use this information? Is this for people that already have accounts at five or six discount brokerages and need that extra three seconds that could make all the difference if they only knew which site was running just a little bit faster -- today! Is there any other way to think of this particular spot than as being aimed at day traders?
Quite a bit of time is given to various stocks that have been "upgraded" by various brokerage houses. Now the brokerage upgrades -- when combined with the reporting of the upgrades by CNBC and other media outlets -- do more or less guarantee that these stocks will move up at the opening bell. So if you're concerned just about today, these might be "stocks to watch"-- but the upgrades have got absolutely nothing to do with the longer-term potential of the stocks. Take this morning's examples: Providian Financial Corp. (NYSE: PVN), Delta Airlines (NYSE: DAL), Circuit City (NYSE: CC), Fluor (NYSE: FLR), Connectiv (NYSE: CIV), and LSI Logic (NYSE: LSI). Ten months later, in a market that is up as a whole, only two of these six upgraded companies are higher than where they were on May 27, 1999.
On this day a couple of events are particularly noteworthy. The first comes when Tom Costello is doing his report right next to the big video screen that is meant to represent the trading floor of the Nasdaq. He's been talking to some people at the Nasdaq, and they want to know whether this tech stuff is over. "The question we're hearing is was yesterday a one-day wonder?" There's an urgency to Costello's voice, because by now we're only a half an hour away from the opening bell, and clearly no one has an answer. What will happen today! At the open! These are the questions!
Whether these are the kinds of questions that one should ever pay any attention to is uncertain. Joe Kernan, perhaps unknowingly, immediately reveals what kind of weight should be given to Costello's report. Kernan states, "I saw a couple of people yesterday, and they're all worried about this rally. When you see the consensus builders saying these things in unison -- they're always wrong -- so when you see that, that's a good sign." He's right in my opinion, but, well, why the heck does CNBC spend so much time talking to the consensus builders in that case?
A viewer is left to wonder, should any weight at all be given to Costello's report or to Kernan's dismissal of the Wall Street worrywarts? They seem mutually exclusive and they're juxtaposed with less than 60 seconds in between.
There's simply no time to devote to figuring that out, however, because it's 9:15 by now, and the star attraction is coming on. Roger McNamee is the technology expert that has been promised to viewers literally since 7:00. As it turns out, he is in fact an expert, and he's worth the wait.
It's hard to convey just how "on" McNamee is. Virtually every question he hits out of the ballpark. He talks in terms of companies that he likes with a four or five year time horizon. He explains why Amazon.com (Nasdaq: AMZN) is a much more attractive holding than BarnesandNoble.com (Nasdaq: BNBN), and in doing so he's not talking about price at all, but about the business model. He tosses off America Online (NYSE: AOL), Yahoo! (Nasdaq: YHOO), and Inktomi (Nasdaq: INKT) as some of his other favorites, and why you want to concentrate on the market leaders. Just for good measure, he tosses in some ideas of companies that aren't even public yet -- Agile Software (Nasdaq: AGIL) and Calico Commerce (Nasdaq: CLIC). I check the results, and both are up HUGE since going public in October.
This guy is good. This guy is really good.
Actually, it takes more than simply watching CNBC that day to get any true feel for just how good he might be. I need to get on the Internet and run some searches on McNamee to see if he's got a constant message -- something that I can learn from. The first thing I find, by searching Google is a 1996 Forbes article that is about as good a 1000-word primer on investing in tech companies as I've seen anywhere, and exactly as relevant today as the day it was written. (Stunningly, on the pull-down menu that shows the contributors to that issue of Forbes, Bill McKibben's name is listed right next to McNamee's. I'm a little spooked by how good Google is sometimes.) I also learn that McNamee's Grateful Dead-esque rock band is playing at Slim's in San Francisco this Friday night. I want to meet this guy someday.
To understand whether McNamee is truly knowledgeable, you need to go beyond what CNBC has time to put onto its show. After all, McNamee was introduced with no greater fanfare than the two other designated expert stock-pickers so far this day, and I found their analyses to be virtually worthless, or perhaps a little bit harmful. This lack of differentiation between guests is a problem -- truly useful guests are mixed in with those actually willing to address the question of whether "we're in for a summer rally in small caps." Nevertheless, CNBC and Squawk Box get snaps for having McNamee as a guest, and I'm glad that he's now firmly entrenched on my radar screen. When McNamee talks, I for one, will be listening.
Unfortunately, just as I'm settling in to listen to yet another useful answer, McNamee's interview is abruptly terminated by an event of such immense importance, such gravity if you will, that like a black hole it will warp the very notion of time, and prevent nearly all intelligent discussion from escaping.
Next: The Opening Bell