Skipping Destruction
Market Commentary
By Charles Payne, CEO & Principal Analyst
"One more such victory and we shall be undone."
-Pyrrhus

Pyrrhus of Epirus was a soldier of fortune who became king of his small city-state, but the world was his oyster and battlefield. He fought Rome for Greek cities in southern Italy using techniques from his eastern battles including the use of elephants. Initially, he bested the Romans, but in a later skirmish at Asculum, he faced stiff resistance. Both Rome and Greece had about 25,000 soldiers who fought for two days. When the dust settled, Rome suffered 8,000 casualties while Pyrrhus lost 3,000. Upon seeing the carnage, Pyrrhus uttered the phrase that would later give rise to the term Pyrrhic victory.

To win at such a large expense gives one pause after the fact and hesitation before engaging in battle.

Pyrrhus moved on to fight the Carthaginians for three years at Sicily where he declared himself king but could never defeat the enemy while local Greeks grew impatient with his dictatorial style. He fought the Romans again and eventually moved to Macedon where he became king. This warrior, whom Hannibal ranked second only to Alexander the Great, responded to street fighting with soldiers. Upon arrival, an old woman tossed a tile from a rooftop that knocked Pyrrhus unconscious and at that moment a solider cut his head off. And so we go into this weekend wondering if Greece will vote for a Pyrrhic victory that comes with ditching the Euro or will that nation succumb to the inability to deal with pain?

One thing is for sure, if Greece doesn't accept austerity, in the end they will be crushed by high interest, low productivity, and low sovereign ratings, and the end probably will not be a climatic bank meltdown or run of the banks, but something swift like the blade of a soldier cutting through the unconscious neck of a man knocked cold by an old woman. Pyrrhus was born in 319 BCE and died 272 BCE, and yet, here we are millenniums later dealing with the same moral issues. Greece is ahead of America but we share the same path.

You can say all those European bailouts and things like TARP have been victories and have worked so well, we need to do them over and over again. There is no doubt some kind of massive deal will be hammered out that involves a lot of money printing, gigantic loans, tears, fist pumps and trading souls instead of grinding it out. Every day I keep debating smart people that laud bailouts from TARP to Stimulus (and even that $13.0 trillion secret loan deal for big banks) and still don't buy it.

That being said, it is the medicine. Investors are hooked on this kind of stuff, and it's the only elixir that will help the market. As for helping these nations near and long term, it's gutless and ultimately backfires.

To coin a phrase: a couple more like those and we shall all be undone.

All Good Things come to an End

Nevermind, I'll find someone like you.
I wish nothing but the best, for you too.
Don't forget me, I beg, I remember you said:-
"Sometimes it lasts in love but sometimes it hurts instead"
Sometimes it lasts in love but sometimes it hurts instead, yeah.

-Adele

The story of Bibi and Poldi, giant tortoises that called it quits after 115 years together, is a reminder that all things come to an end. I'm not sure who's to blame although keepers at the Austrian Zoo say Bibi had been rather rough on her mate in the final days of their romance. They had a heck of run and who knows, either could find new love, or pine in quiet solitude. The record lifespan for a captive giant tortoise is 250 years old, so they both have time to figure it out and maybe even reconcile, or maybe it's a midlife crisis.

The same cannot be said in Europe where there must be action and urgency.

Who's Zooming whom?

Europe is in the throes of a day to day crisis as each tick of the second hand sounds like the thud of an asteroid hitting the earth. Will the Greeks call it quits with the Euro and in effect go for a pyrrhic victory? Are they nuts? Or, do they have the guts to tough it out with their own currency but with massive debt and minor credibility? The problem is so many different moving parts must be woven together with players carrying moxie and delusion. Yet, somehow there is a glimmer of hope that these disparate parties will bring it all together.

In the meantime, with the election in Greece on Sunday, the tug of war has seen Greece try to assure the world. Then yesterday, the world tried to nudge Greece. Depending on how you interpret the rumors, some key parties involved were saying we are going to help Greece if they stay the course, but some think all the scuttlebutt was a message that Greece can jump in a lake ... or a big sea.

Today's Session

Equity futures were strong early this morning, but as usual they have lost steam for a variety of reasons, including the Empire State economic report, which missed and had nary a silver lining other than it was still positive. General business conditions down for the fifth consecutive month, tumbling to a reading of 2.29 from 17.09 month to month and new orders slipped to 2.18 from 8.32.

But the forward-looking components had some positives:

Employment 16.49 from 12.065
Capital expenditures 21.65 from 19.26
Future cap ex spending increase 42.7 from 37.1 (longer term implications)
Future cap ex spending decrease 15.6 from 12.9 (longer term implications)

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