Wall Street Strategies
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Morning Commentary

Idling Optimism

By Charles Payne, CEO & Principal Analyst
2/6/2019 9:29 AM

Well, it’s not just the Federal Reserve that’s moved to neutral. According to the American Association of Individual Investors (AAll), there has been a sharp move to neutral, taking the sentiment rating to its highest level since late July 2018. The report asks investors about their feelings on the stock market six months out, so it’s clear individual investors probably think we’ve come too far, too fast this year.

Perhaps, it’s not too ironic. Essentially, that’s the sentiment of professional investors as well, although most missed this move higher and would be loathed to turn around now and voice their optimism. Be that as it may, individuals have had pretty good timing, having seen an uptick in bullishness a week before the December low. If this market rally continues, expect to see individuals quickly change their minds, which is a lot more than I can say for the experts.

Fighting Victory

 America is on the cusp of the biggest trade deal in the history of the world. There is still mind-boggling anger among those whose limited approaches to “fighting” against unfair trade or benefits from the status quo are being upended. The economic purists have always looked at individual Americans as consumers, ignoring whether they need jobs or higher wages.

I’m not sure this is going to change because for them, it’s not only settled science, but it also would mean admitting there are other ways to view economics. They have too much pride and have come too far to have a Eureka moment now. 

Plus, they have been on pedestals for a long time, and it’s hard getting off those pedestals. It’s unfortunate because the media, economic purists, and others have been rooting against the American worker, who is also the American consumer, although the former must be true before the latter.

It’s important to keep all of this in mind when reading about the economy and listening to expert voices share opinions on things like the stock market that are rooted in political animus, not financial theories, they might have employed otherwise. These folks have been wrong. The tools they said would work haven’t worked. The problem has festered and grown exponentially.

2019, Strong Retail Year

This week, the National Retail Federation (NRF) released its 2019 forecast for the industry and the economy. The report was optimistic when it came to the facts. However, it was not so much when it came to the warnings – the same threats that were the backdrop for a 3.0% annual Gross Domestic Product (GDP) last year.

More people are working, they’re making more money, their taxes are lower, and their confidence remains high. The biggest priority is to ensure that our economy continues to grow and to avoid self-inflicted wounds. It’s time for artificial problems like trade wars and shutdowns to end, and to focus on prosperity not politics.

-NRF President and CEO Matthew Shay

Additional Comments and Bullet Points

I get the NRF represents companies that import a lot of stuff from China, and they are fearful of their profit margins. Nonetheless, this group got the biggest tax cuts and will soon wipe out hundreds of thousands of American jobs in the name of progress, so there is a touch of hypocrisy.

Of course, no one wants “self-inflicted” wounds; however, fixing trade with China would heal the biggest wound that has been bleeding the country and draining our greatness.

The Same Tide

I read so many disingenuous articles, and it hit the jobs report positively ahead of last night’s State of the Union address. I wanted to show that the same tide is lifting all ships. There are folks working now in America that had given up on ever working again. 

And the folks that deliberately point to discrepancies among the races and the sexes find themselves complaining that things are back to pre-Great Recession levels while ignoring how far the country has come in the last two years. 

There are so many great things happening with the economy, but that side should be told as well. In the end, it’s about jobs and providing for your family that generates real hope.

The spread between Black and White Americans in unemployment and employment-to-population ratio is the best, giving a glimmer of hope that one day, it will be closed.

Unemployment Rate

Black

White

Spread

2000

7.6%

3.1%

4.5

2007

8.3%

3.9%

4.4

2009

14.8%

7.8%

7.0

2017

7.6%

3.5%

4.1

2018

6.6%

3.2%

3.4

 

Employment to Population

Black

White

Spread

1999

77.3%

83.5%

6.2

2007

75.0%

81.8%

6.0

2009

68.8%

78.3%

10.2

2017

74.5%

80.8%

6.3

2018

75.8%

81.4%

5.6

Today’s Session

I thought that was a great State of the Union address last night. I only wish President Trump had gone into greater detail on economic gains for all Americans.  The market is still grappling for a catalyst, but equity futures have improved throughout the morning as more earnings reports released.

The quiet sessions we’ve seen of late are when the market makes the kind of stealth rallies that a lot of investors, especially professionals, must play catch up to as some point. 

Walt Disney (DIS) reported first quarter 2019 earnings yesterday after the bell.  

Revenue (in millions)

Operating Income (in millions)

The company looks to be ready to make acquisitions.

In a press release, Chief Executive Robert Iger said, "Building a robust direct-to-consumer business is our top priority, and we continue to invest in exceptional content and innovative technology to drive our success in this space."


Comments
You always have a meaningful commentary

Dale Dufault on 2/6/2019 9:46:06 AM
Thank you so much Dale. I put in a ton of work and thought into them I appreciate you taking the time. CP

Charles Payne on 2/6/2019 9:49:36 AM
"...there are other ways to view economics."... LOL... Vanity...

Andrew B Newallo on 2/6/2019 10:02:13 AM
 

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