Charisma, Country and Crying Uncle
Market Commentary
By Charles Payne, CEO & Principal Analyst

Desk sergeant: You mean to say you got no identification at all?
Jack Burns: That's right.
Desk sergeant: No draft card, no social security, no discharge? No insurance, no driver's license, no nothing?
Jack Burns: No nothing.
Desk sergeant: Look, cowboy, you can't go around with no identification. It's against the law. How are people going to know who you are?
Jack Burns: I don't need a card to figure out who I am. I already know.

Lonely Are the Brave

I was flipping channels the other night, looking for something to fall asleep to when I stumble on a Kirk Douglas movie from 1962. It was the typical Douglas ... a regular, tough guy that doesn't want to be bothered, yet has an endearing quality. I eventually did knockout in the middle of the film (but wanted to see the whole thing), but not before one scene made me sit up. After getting beaten up by a one-armed man (he was a tough dude), Douglas was arrested. The desk sergeant began asking questions, including a request for forms of identification.

As it turned out, the Douglas's character, Jack Burns, didn't have any ID (see dialogue above) because he lived by the code that he already knew who he was. There wasn't any mention of the need for identification being biased or unfair. Indeed, I thought it was the law to this day. Yet, it's just another thing that has been commonplace-for at least fifty years according to the movie-that is now creating victims. Getting good grades creates victims of those that don't get good grades. People that shoot others are victims of guns. It's all nuts.

"Money can't buy you happiness, but it helps you look for it in a lot more places."
Milton Berle

Looks like the only person getting a free pass is President Obama, as Mitt Romney must explain his economic plan, and Ben Bernanke felt compelled to defend his policies calling on Uncle Milton. I'm not talking about "Mr. Television" Milton Berle, whose humor once made him the most famous entertainer alive.  Instead, Bernanke brought up a different Uncle Milton.  In a speech on Monday to the Economic Club of Indiana, Ben Bernanke defended his work as Fed Chairman and at the same time tried to create a sense of calm. 

Of course, the drastic actions of the Fed belie any notion the economy is well. Still, Ben Bernanke said among other things:

"We expect the economy to continue to grow."
"Our concern is not really a recession."
"Our concern is that growth will continue but at a pace insufficient to put people back to work."

While not causing panic on the economy was a focus of his comments, it was mostly about defending policy.  To that end, Bernanke said the Fed has taken "very much to heart" the conclusions of Friedman and Anna Schwartz (in the world of economics, Friedman only needs one name like Madonna or Adele)  whose 1963 book, "A Monetary History of the United States, 1867-1960," said the Depression was triggered by monetary tightening and the collapse of the banking system.

In other words, if there is a double dip recession, history will not blame the Bernanke Fed.

Bernanke added "we were aggressive early in, we didn't allow the fact that interest rates were very low to fool us into thinking that monetary policy was as accommodative as it needed to be, and we were aggressive, as you know, in trying to prevent the collapse of the banking system."  While it's true the Fed became aggressive, including a secret $13.0 trillion lending program, the Fed didn't act early, and that is something Bernanke cannot change.
 
The Street wasn't sure what to make of Bernanke's comments, which were contradictory at times.  The house is not on fire, but I'm still going to unleash Niagara Falls to douse the smoldering embers. 

The rally ran out of steam, money moved into blue chip names, and the Street began to wonder about events later in the week.  This economy isn't far from a double dip recession, and that's the bottom line.  I'm not a fan of the Fed's opaqueness (Bernanke made another plea for no increases in transparency or a greater role for Congress) and crazy money-printing, but I understand the frustration of a pro-growth Fed versus an anti-growth administration. 

Their fortunes are tied together, but one has to campaign while the other can just coast along without having to explain why so many people aren't working, so many homes have been foreclosed, incomes are lower, and malaise is part of the permanent fabric of the economy.

Speaking of Charisma

Earlier in the week, I mentioned charisma and the role it plays in our election process. Throughout history, people have gone against common sense and common morality to follow charismatic leaders. I can't think of any other areas where it's as important. When picking a surgeon, we don't ask them to perform a song and dance routine and regal us with charm.

It's kind of a shame that the most important trait the President of the United States must possess was the key strength of old school Vaudevillian performers.

Tonight is the first of several debates, and according to many, this debate is a do or die moment for Mitt Romney. While the media has been unfair and poisonous toward the GOP candidate, it does feel like he has to find a way to communicate to the common man. He has to be folksy, humorous, and tough at the same time. But can he be charismatic? One thing is for sure, it's a lot less about resumes or game plans than sizzle and sparkle. It should be exciting.

Come See Me in Vegas

On the topic of charisma and the White House, I'm headlining a major luncheon tomorrow in Las Vegas with Herman Cain. If you're in town, or in the area, please come to the Ravella at Lake Las Vegas.
http://ceo-cfogroup.com/charles-payne-herman-cain-guest-speakers/

Today's Session

The market will open with measured cautiousness as this is the point of the week where we begin to think about the next jobs report. This morning, ADP released its report on employment for last month coming up with an initial reading of 162,000. In the world of lowered standards and expectations, that would be a monster number if matched by BLS on Friday. Once again, small businesses lead the way with 81,000 jobs gained while medium (which I still consider small) sized businesses created 64,000. Those large companies once again dragged along, this time posting only 17,000 jobs, of which only 1,000 were goods producing.

ADP has been overzealous compared to recent government numbers: hence, the muted reaction on the street but this number will hasten hearts and whet anticipation for a better-than- expected 118,000 on Friday.

Let's hold off this morning and watch the ebbs and flows of first half trading.

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