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| 2010-02-25 09:31 |
SHOWDOWN (FINAL EDITION)
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I'm not sure how much drama I can take on television; it seems each day there is a mea culpa and finger-pointing. Well, today, there will
be none of the former but plenty of the latter. I think that the President will come out swinging, looking to land early points by putting the
Republicans in a position to defend insurance companies jacking up rates and making billions of dollars while millions of Americans are dying or going
bankrupt because they have no coverage. On that score, the GOP will be unable to borrow the act of those Toyota (TM) bigwigs who at times used the
language barrier to avoid answering some questions. Ironically, an opening to tout the fact many Toyota cars are built in America went from a plus to
a negative when the chairwoman thought American workers were being bashed. Make no mistake, there will be bashing today, and it will not be over
language barriers.
I have to say that the more I think about it, the more it seems to me that making healthcare the most important item coming
into office makes it easier to portray President Obama as a socialist. If there was confidence in capitalism the top priority would have been jobs or
an atmosphere where there could be job creation. Here's the rub, instead of getting the shrinking pool of workers to pay for their own healthcare and
that of others more, jobs would mean more people could buy their own. Instead of making the shrinking pool of taxpayers pay their own mortgage on a
house that is likely underwater (24% of American homes are underwater) an atmosphere that made businesses feel good, respected, and proud to make
money would generate job growth and those workers could meet their mortgage obligations.
If taxes weren't on the cusp of moving higher for so
many small businesses that file taxes as individual more people would have jobs. In addressing the Business Roundtable, President Obama said that he
wanted business to make money and shareholders to do well but can't in this environment. When code words like "reasonable rewards" are used it seems
like there should be caps on how much a person could make. Be that as it may, it's back to healthcare today. I don't think that Republicans are going
to articulate a program, and the fact is the party in power produces bills and in most cases, incorporates ideas from the minority party. But the lost
art of compromise will not magically reappear today. That doesn't mean it can't be good television, however.
In the meantime, the economy
languishes. There was an article in the WSJ yesterday pointing out the ragged state of banks and lending in this country. Banks wrote off $53.0
billion in loans in the fourth quarter and 5% of all loans are three months past due; both of these factoids are records (records kept for past 26
years). I wrote about the FDIC "Trouble Bank" list on Monday, which has soared to 702. We can't continue to try and let the government take the place
of banks or implement economic programs. It's not working. Interestingly, I asked small business owners listening to my radio show "The Charles Payne
Show" on KFI 640 AM on Saturday to call and tell me how many people they could hire with $150,000?
I picked that number because it's about the
average cost of each job saved or created with stimulus money. In the WSJ yesterday the owner of Home Watch Caregivers in Cincinnati answered 20 to 30
aid workers and one or two office assistants. Well, somehow that dark cloud hanging over banks needs to drift away, bring on the regulations and put
away the heated rhetoric. This deficit spending is going to be a spectacular failure. Let's get the economy moving, people working so they can buy
their own healthcare insurance. Let's also get the deficit down, and start by cutting spending and cutting waste.
Economic Data
Initial Jobless Claims
The
market received a one-two month punch this morning, with initial claims data and durable goods both suggesting a bumpy economic recovery is unfolding.
Regarding initial claims, which tallied 496,000, the result was 36,000 higher than the consensus estimate. Continuing claims numbered 4.62 million, up
6,000 week to week. It's being said that increased processing of backlog following poor weather led to the result being ever so close to the 500,000
mark. We are unsure if the market is buying that explanation in light of recent economic data.
Durable Goods Orders
This was a mixed report, in our view. Headline
durable goods order rose 3% last month, ahead of the 1.9% consensus increase. However, excluding transportation, durable goods orders fell 0.6%
against an expectation for a 1.0% increase. The miss could be attributed to a big drop in machinery new orders, while other categories of the report
looked reasonable.
The State of the
Retail Sector at this Moment in Time
By: Brian Sozzi, Research Analyst
In this day and age of constant financial news flow
it's very easy to overlook a piece of data that may be instrumental in formulating a long-term thesis on one's market of choice (derivatives, debt,
equities, etc.). For perspective, if only the investing class put stock in the news of a Bear Stearns hedge fund failing in the summer of 2007.
Traveling further back in time to the 1920s, what if exuberant investors at least questioned the model underlying investment trusts, which gobbled up
corporations to collect the dividends (among other uses) despite the holders of these companies lacking sufficient capital to fund the businesses in
the event of a sharp downturn in economic activity. More recently, the market has bore witness to countless, well founded calls that Greece's debt
position would put it over the edge and that even though no longer technically in recession, the wheels of the U.S. economy may be starting to slow
from the peak of the high octane induced QE easing program from the Fed, their cheap money policy, and government stimulus. Economic data abroad,
erring on the side of weaker than expected, is serving as a prime example of what may happen here in the U.S. as the Fed pulls back the punch bowl and
deficit spending by the Administration runs its course.
Please visit www.wstreet.com to read remainder of piece. |   
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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. |
