Cloud Storms on the Horizon and We Are Thunderstruck
Market Commentary
By Charles Payne, CEO & Principal Analyst
Hosting Varney & Co on Fox Business 9:20 - 11:00 this morning- tune it!

As an apprentice seaman, Kendall had served aboard a brutal vessel with a charming name, Iolanthe, where he witnessed the murder of a shipmate by an unstable crew member, who then began stalking Kendall to silence him. Kendall fled the ship and tried his hand at mining gold in Australia, a pursuit that left him penniless and hungry. He stowed away on another ship, but the captain caught him and marooned him on Thursday Island, in the Torres Strait off Queensland. After a brief stint harvesting pearls, Kendall joined a small Norwegian barkentine- a three-masted sailing ship- carrying seagull excrement bound for farms in Europe, but storms tore away portions of its masts and turned the voyage into an epic of starvation and stench that lasted 195 days.
Thunderstruck
Erik Larson

I'm a huge Erik Larson fan but only got around to reading Thunderstruck last week- but thus far it's been worth the wait. An early sentence in the beginning of the book hit me for many different reasons, all of which are at the heat of the battle for the White House in November. Or, as Joe Biden told the NAACP, the fight for the heart and soul of America. It is one of the rare times I agree with the Joe Biden. This battle however seems to be less about values than how to spin and sell values and on that note the democrats are doing a great job. Job creation is significantly below the potential in America and the media spent the entire week discussing outsourcing.

Yesterday I was horsing around with Tracy Byrnes and Ashley Webster about the gear our Olympians will be sporting in London. Much has been made about the stuff being made outside the United States. It's the kind of thing where the knee-jerk reaction would be outrage. The thing is this shouldn't be the poster child for outsourcing, which it has become, probably deliberately. Companies produce things outside the United States to save money and for better logistics. It's not unpatriotic but instead a smart move in an aggressively competitive global economy. Just as the rest of the world has begun nipping at our heels we are making all the moves that would actually slow the economy and weaken American companies on the global stage.

There is a real dumb trade war brewing with the United States focused on cheap glass solar panels. We don't have the guts to call China a currency manipulator or attack the billions lost in knock-off computers and other intellectual properties. But this is only a peak of what's really in store if the administration gets a second go of things. There is talk of punishing American companies operating outside America.
Conversely, President Obama has slyly begun pounding the table on so-called in-sourcing. There is no doubt this crescendo was timed with news late yesterday that General Motors would return its IT operations back to the United States.

It will sound admirable to many that think a global company shouldn't have any global operations by GM which has 90% of its IT outside America is going to have its cake and eat it too if there is a re-election of their de facto CEO. Remember, we will give tax breaks to companies that in-source. Essentially taxpayers will be pumping even more money into the company. I welcome the jobs but wonder if closing all 23 data centers around the world will help in efforts to sell cars to the 95% of the world that doesn't live in America? This is not unlike those sweet union contracts back in the day that coupled with poor management ultimately sank the company.

Global trade has been around from the inception of civilized societies and built the world for better despite a few ugly marks along the way. It's only becoming more important and the reason why we need strong players not companies cowering in fear of succeeding by selling products around the world. Moreover, cheap labor for everyday items is smart and has been a savings grace for a population that has endured depreciating purchasing power. That's what makes this such a stupid issue to debate and yet it dominated the news much to the relief of the administration.

As for that passage in Thunderstruck it underscores not only how long outsourcing has been around but also how hard it has always been to become successful. There are ups and downs and it takes special people to not give up. Those are the type of people that built America. But it took an America to make all its citizens believe they could be that person. That is being taken away as doubt and weakness are being sold to us as the reason as individuals we don't have the right stuff. I hate this narrative. I despise the war on success and achievement. I've seen first-hand what watered- down test and expectations can lead to. I've seen people sink further into the abyss of government dependency.

This year we are battling for the soul of America. I hope Americans understand they have the stuff to ride out the storm and stake their claim. The American Dream has been an epic voyage that's included starvation, stench, and determination, and it's lasted a couple hundred years, and I pray hundreds of additional years, too.

The Market

Once again you can't measure the market session as a single event but rather a tale of two dynamics. There was the early sell-off reflecting a loss of faith and a reality that an anchor is holding back the economy/stock market. On the other hand, there is a ton of money on the sidelines and some wants to go to work. The Dow at 12,500 continues to look like an enticing entry point for the more eager yet idle sideline funds.

Comments

Amen! Charles you capture the sentiment of many business and industrial people in this country. My industry has been depleted by a full 50% in my tenure (40yrs) much in part by overregulation and un-necessary governemnt intervention in business affairs. This administration has been on a full court press to eliminate the very vehicle that allowed the middle class to become reality-manufacturing. I applaud you! You understand and have the pulpit-keep driving it home. Hopefully more will listen. Thanks,C. Rice Charles Rice on 7/13/2012 11:36:49 AM

 

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