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| 2010-02-24 09:29 |
SEEKING INNER CONFIDENCE (FINAL EDITION)
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"Confidence is contagious... So is lack of confidence." -Vince Lombardi
I understand that many on Wall Street
dismiss surveys like consumer confidence; there is no doubt a person will say one thing and their actions will say something completely different. But
what we are seeing in economic numbers, the massive exodus from the jobs market, and resistance to incentives (save for Cash for Clunkers which was
too good a deal to pass up) is that the free fall in confidence is real. Moreover, confidence is the key to a sustained recovery. People are not going
to open their wallets in a meaningful way, banks aren't going to lend in a meaningful way, and corporations aren't going to invest in capital goods in
a meaningful way until there is a wave of confidence. This equation becomes something akin to the old chicken and egg thing where determining what has
to happen first is a riddle.
One thing is for sure though, confidence has to come from within, it can't be manufactured. People can be
encouraged, nudged, and even seduced from time to time but that's not the same as confidence because that doesn't evaporate at the first dark cloud in
the sky. Confidence can coexist with fear or logic, but when the rubber meets the road coming out on top has to be the only thing that matters. We
aren't there yet. We aren't there yet because we are being told the way we became the greatest nation in the world can't work anymore. The same people
that built a nation on raw enthusiasm and rugged individualism are being told we must become a collective and take our marching orders from
Washington.
Through all the schemes, the trillions of taxpayer dollars and government commitments, people don't have confidence. Ironically,
the day after another jobs bill gets the green light in the Senate, we find confidence in the jobs market is all but completely gone. Check out these
trends from yesterday's consumer confidence report from the Conference Board on the state of confidence in February. It all points in the wrong
direction. Although the notion that jobs are plentiful is infinitesimal, I have got to believe those that responded in the affirmative must have great
throwing arms or families that own businesses.
The Flickering Light at the End of the
Tunnel
"Democracy and socialism have nothing in common but one word, equality." "But notice the difference; while democracy seeks
equality in liberty, socialism seeks equality in restraint and servitude." -Alexis de Tocqueville
I was also blown away by the present
conditions component. Normally this part of the survey is depressed as people can feel awful or uneasy about the moment but have a ton of hope about
the future. We have always been hopeful about the future; it is one thing that has been uniquely American. The spread between present conditions and
expectations has narrowed but both are moving in the wrong direction, with the former landing at its lowest point since 1983. The White House must
convince Americans that we are not going to tinker with socialism in words and in deeds because while words matter, action speaks (and spooks) louder.
While I understand that the banks were driven by unbridled greed, I also comprehend that our leaders bailed them out, thereby enabling the very
behavior we are allegedly to abhor.
The present condition component is lower now than it was when the $862.0 billion stimulus plan kicked in,
to me it's the best evidence yet that the program was ill-conceived and horribly inefficient...unless of course you are a government or union worker.
The masses have seen many special interest groups paid off for one reason or another and each time with Main Street's money. Yikes! It's so
frustrating, so confusing, and feeling more and more helpless.
The great news is that you don't carve out embedded beliefs and values overnight. I
do think that every time all the problems of the country are heaped on Wall Street's door it gives so many others that did stupid things an out and
creates animosity. It also creates a lack of confidence in the system. It might buy votes, but those votes come at a price. The price has been high
for all as this recovery is dragging, perhaps even slumping. Banks will lend when rates increase and accommodation is off the table. Banks will lend
when they know the rules and the penalties. Businesses will spend when they feel that the coast is clear and demand will grow. And that brings us to
the consumer who feels confusion, anger, and contempt; this is not a recipe for confidence.
Tidbits
Stock of the day
yesterday was Expeditors (EXPD) the logistics company that plans, implements, and controls the efficient, effective flow and storage of goods and
services shipped from point of origin to point of consumption. The company saw its airfreight business pick up, and though its ocean freight business
was down year over year, it was up in December. The company has the smallest sales force in the industry but is known for scrambling, and didn't lay
one person off even in the throes of the economic meltdown. Hopefully this isn't a singular story and it points to greater international
trade.
Was it famous last words or the kind of mea culpa that was needed yesterday? "Not totally" was the response from Jim Lentz yesterday
when asked if the floor mat and sticky pedal fixes solved the problem. By the way, after the hearing Lentz asked if called before Congress in the
future could he opt for water boarding rather than questioning from Representative John Dingell. This Toyota (TM) story is fascinating. I wonder if
the way we are grilling the company leads to protectionism measures from Japan. Interestingly enough, most of the Toyota's on the road in America were
in fact produced in America. |   
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Disclaimer: Securities Operations Forum is providing this research to assist investors in determining when to buy and when to sell. All investment decisions are yours and as a result you could make or lose money. Securities Operations Forum, its employees and/or its affiliates and family members may from time to time take positions in the open market or otherwise with respect to the securities discussed, but not have stock ownership equal to or greater than 1% of the outstanding stock of the covered company nor does any employee of Securities Operations Forum sit on the Board of Directors of any covered company. The statements made herein include information obtained from sources believed to be reliable, but no independent verification has been made and we do not guarantee its accuracy or completeness. The statements made herein contain general information and do not constitute an offer to buy or sell any security. |
