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Morning Commentary

Can We Still Play to Win?

By Charles Payne, CEO & Principal Analyst
2/7/2017 6:39 AM
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Question of the Week

Today, America combined with the UK, France, and Germany, is only 27% of the global GDP and it's slipping fast. The alarms bells are going off, sparking actions that have resulted in Brexit and Trump. Is it going to be enough to chuck out the old flat-footed malaise?

The sense of urgency goes beyond the ballot box.

Are the citizens of the west ready to play to win again?

Post your answer below.

Cautious - Not Indifferent 
It was a lackluster session, and investors appear to be somewhat indifferent. I would argue, however, that markets grapple for outside impetus.

Individual Investor Sentiment

Survey Results for Week Ending 2/1/2017

BULLISH
32.8%
Historic Average 38.5%

NEUTRAL
33.0%
Historic Average 31.0%

BEARISH
34.2%
Historic Average 30.5%

American Association of Individual Investors AAII

Meanwhile, individual investors are retreating to a more cautious stance, resulting in 34% saying that they are bearish. This is the first time since the election that bearishness has been above 30%. 

This isn’t a death knell for the rally; on the contrary, I think sentiment could be a coiled spring- but it needs to be sprung.  This is getting harder with Washington, D.C.’s rhetoric and disarray commanding all the oxygen.

Missing in all of this is continued good news, with hard and soft data, underscoring the American public and businesses that have begun to react positively to the Trump presidency.

Yesterday,we got soft data from Gallup showing consumers spent an average of $88.00 a day, down $17.00 from December; the highest number since January 2008.

American Spending

Goldman Sachs (GS) and others have been jawboning the market lower, which could be the biggest buy signal of them all.  I understand those distractions out of Washington, D.C., including the non-stop in-fighting is hurting public confidence. However, economic success is infectious. 

We will get clarity on the Trump’s travel moratorium, although more experts are now predicting that it will work its way up to the Supreme Court.

As for the Trump rally - it’s only been two weeks,and it’s been hectic but determined.

Today’s Session

Corporate earnings have retaken center stage with 27 components of the S&P 500 reporting today.  The biggest news is from General Motors (GM), which saw revenues for fourth quarter climb to $43.9 billion against a forecast of $42.2 billion, and earnings beat consensus by $0.11.   While the company has taken share in America, it’s a story about the world as management sees global sales increase 38% in next four years versus 26% in previous four years.

US units increased across all segments:

Total 830,000 from 783,000

Europe retail volume was basically unchanged to 276,000 from 275,000.

Asia/Pacific, Middle East and Africa was mixed:

Total 1,408,000 from 1,359,000

Market Share

US Cars

US Trucks

US Crossovers

Europe

APMEA

S America

Dec 31, 2016

13.9%

26.2%

159%

5.6%

10.5%

16.8%

Dec 31, 2015

12.4%

25.0%

15.9%

5.7%

10.7%

15.9%

 

Question of the Week

Well, Sunday night’s Super Bowl was one for the ages as Tom Brady and Bill Belichick cemented their respective statuses as best player and coach in NFL history. 

And while much credit has to go the New England Patriots, something must be said for the way the Atlanta Falcons lost.

 What we saw was the best example of the difference between playing to win and playing not to lose.

In the first half of the game, after shaking off initial jitters, the Falcons found their stride playing carefree football.  In the second half after building what appeared to be an uncatchable lead, they played tentatively, waiting and hoping to run out the clock.

In many ways, this has happened with western nations in general, and with America in particular.

As far back as 1950, in the aftermath of World War II, the United States generated more than 27% of the world’s Gross Domestic Product (GDP).  That year the United Kingdom, France, and Germany were at 15.6%, while China and India were less than 5%, and Japan at 3%.

The west put it into neutral and still dominated the world for a long time.  In the 1970s, we made fun of those cheap Datsun cars and transistor radios from Japan.

Today, America combined with the UK, France, and Germany, is only 27% of the global GDP and it’s slipping fast.  The alarms bells are going off, sparking actions that have resulted in Brexit and Trump. Is it going to be enough to chuck out the old flat-footed malaise?

The sense of urgency goes beyond the ballot box.

Are the citizens of the west ready to play to win again?

 


Comments
Yes I do believe we are ready to Win and Win big. We are tired of being put down and given bottom rated products that are overpriced. I think now is the time for America to shine and I feel HOPE, the first time in over 8 yrs. I think Trump is going to be great for American bushiness and our freedoms that have been greatly diminished and quashed in recent years. I also think President Donald J Trump is good for the world especially in Europe where they need to all exit from the EU to take back their beliefs and ideals that made them the countries they are. I am looking forward to the next 4 years and truly believe that the markets will have great gains and dividends. I am scraping all I can to put in the market I feel very optimistic.

Elizabeth Medley on 2/7/2017 10:13:30 AM
The west is torn between the globalists of the collective nature against the capitalists of the individual nature. We free market capitalists have a leg up right now and success spells doom for the current socialist (globalist) movement. They are not going to go down easy. We are seeing just the beginning of the fight.

Nick on 2/7/2017 10:27:17 AM
Collectivism (socialism) vs. Objectivism (capitalism)?
“The problem with socialism is that you eventually run out of other people's money.” - Margaret Thatcher.
A lesson yet to be learned by way too many.

SRB on 2/7/2017 10:58:47 AM
Its our own damn fault. Americans are no longer willing to get their hands dirty. We turn up our noses at manual labor, preferring to subsist on government welfare and other handouts. The public school system and teacher's union teach their students that they are little princes and princesses, and that the world owes them a living. They graduate from high school unable to do math, spell, or think for themselves. The only thing they know for certain is the location of the closest welfare and unemployment offices.

z on 2/7/2017 11:06:25 AM
We are not dead yet, but the Medley comments are correct. We free market capitalists have been beaten down badly over the past 8 years. Combine that with 50 years of insidious left-wing possessions of our education system dumbing-down our children with indoctrination instead of education, corruption in D.C., the paucity of qualified American STEM graduates from our universities and I think we are in for a tough fight. Do we have the will? Do conservative leaning politicians have the backbone to reverse it? This isn't about Trump any longer. It's about what we have become. On the positive side, I hope the president reconsiders the HB-1 visas as well as changing the policies of sending foreign students back to their countries of origin. They make up more than half of our STEM courses in college and if they choose to remain here they should be fast-tracked to citizenship. It is a new wave of hungry immigrants who might rebuild our nation and our economy, but it's an uphill battle.

Francine Paino on 2/7/2017 11:09:49 AM
To add to z's comments, the other thing they know for certain is the location of their cell phone!

TCAZ on 2/7/2017 11:24:17 AM
Once the west grasps that you get more traction from work than from pretty words, they'll be back in the game. It's about belief, followed by great effort.

Patricia Flynn on 2/7/2017 11:45:57 AM
I think what stands in the way are politicians who are more focused on themselves and not the country as a whole. We need leadership to have a vision of hope and deliver. We have too many lawyers in Washington who know nothing. Hard work never hurt anyone. Stop with the BS and level with the American people. We can do it.

Wayne Eichler on 2/7/2017 12:57:02 PM
NO. The citizens of the west have become lazy, especially in reading and critical thinking. We have become the products of our true leaders: the TV writers and entertainers who do poor imitations of newsmen.

These cast a perverted view of reality and morality which is political and incorrect for fear of being labeled politically incorrect. They use their pulpits irresponsibly to make money at the cost of the character of the society.

Further, they feed the frenzy of desire for quick riches with no regard for the reality that 99.9% of fortunes are made through years of hard work. With years of that mentality being poured into young minds, the majority of our society is unwilling to pay the price that is required to be successful in most situations.

if you doubt this, then take any of the modern shows and give it a good look at how many times little crimes are glorified or ignored rather than held in contempt. Speeding, shoplifting, lying, disobedience to parents, breaking your word, lying to your spouse, breaking marriage vows, sexual indiscretion, etc. are all glorified. Honesty, purity, reverence, and other hallmarks of character from 60 years ago all vilified more than honored.

Bob G on 2/7/2017 12:58:12 PM
I have spent nearly 40 years in the trucking industry in management. The barometer has made a major swing downward. The travesty I have seen is the loss of medium size to large business in manufacturing that has been sent outside of this country. Why, unionization and consumer demand for cheaper prices and stock earning results. Consolidation of similar businesses by the bigger you are to bigger yet. I have dealt with people losing their jobs and doing menial tasks to get to retirement for a lot less income. Many middle income people still making house payments after retirement. The system is broke. Hopefully there is a turn around in the future for the future of America!!

JackG on 2/7/2017 12:58:42 PM
Yes. We need to stop the globalization. We should no longer be bailing out the losers.

Joan Dearborn on 2/7/2017 1:29:29 PM
I would like to see an unmoderated debate on socialism vs. capitalism between Senator Bernie Sanders and Senator Ted Cruz. Perhaps, after the two senators debate tonight about ACA (Obamacare)on CNN, there will be more debates between them on varying topics.

Maureen on 2/7/2017 1:30:19 PM
Some are. There are still too many that expect the government to be the answer to all of their needs. When those who are still wholly dependent on government find their way to become self sufficient we'll really be on our way!!!!!

Gene Ulrich on 2/7/2017 1:51:41 PM
We definitely are in for the long haul.

Nedra Thomason on 2/7/2017 2:10:24 PM
We are at cliff's edge. This is a divided nation in every aspect. 62 million "fellow citizens" voted for that woman knowing full well how corrupt she was (is). Our Division is that way in every other facet of our society including the economy and our free market. And now, only a handful of men control the reins of power, and are being fought tooth and nail by the opposition. If he is able to overcome that opposition, we win.....if not, we lose, and probably permanently.

Lee Joseph on 2/23/2017 9:07:05 AM
 

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