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Wall Street Strategies has been providing independent stock market research since 1991 to individual, retail and institutional clients through a balanced approach to investing and trading. Charles Payne, our founder and chief analyst, is routinely sought after for his stock market, political,... More
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  • Santa Rally (Hate The Phrase, Love The Move) - By Charles Payne

    ANNOUNCEMENT: We are featuring a special OIL REPORT. This unprecedented selloff has created distinct winners and losers. Has oil hit a bottom and if so how much room is there to the upside? We look at the industry and specific names for opportunities and outline future risks. Please call (800-286-1145) or email us at info@wstreet.com or call your representative to request a free copy of the report.

    Well, how do you follow up the best day of the year? With another huge day, and I abhor the term, but I'm sure the media will call this the start of the Santa Claus Rally. Bears are calling it the Yellen Rally and while there's no doubt she has given certain investors the green light to stay long or jump on the bandwagon, the fact is, there's news out that that should drive stocks higher. Initial jobless claims continue to drift lower, forecasting more 300,000 plus job creation months.

    Last night, Oracle posted a huge earnings beat, Jabil Circuits did as well, and this morning, Rite Aid blew away consensus (I've been pounding the table on this name).

    Don't let down-in-the-mouth bears talk you out of owning great American companies. Stop wimping out on making money and changing your lives listening to people that sell books for a living.

    Wimping Out

    Just as we just started to have the most dangerous man on earth on the ropes, a determined communist dictator with one of the world's largest economies, America succumbs to two other communist dictators running dirt poor nations of suppressed dreams.

    The Sony hack was a big story because it was the latest behemoth violated by with the ultimate weapons of the 21st century- a mouse and the keyboard.

    The story got bigger with embarrassing revelations about how Sony executives feel about blacks, certain actors and their embarrassing executive staff.

    But the big story became a bombshell when Sony decided not to release the movie that sparked the hack in the first place- The Interview.

    The move has angered an interesting cross - section of America. When was the last time Donald Trump, Steve Carell, Michael Moore and Newt Gingrich were in agreement?

    The bottom line, Sony threw our Constitution under the bus in an attempt to look like a victim rather than arrogant jerks that don't practice what they preach.

    Then There's Cuba

    Saying we should "cut loose the shackles of the past" President Obama capped 18 months of secret negotiations spurred in part by Pope Francis with a three for one prison swap. Three Cuban spies for Rolando Trujillo, a Cuban jailed for working for American Intelligence.

    President Obama concluded that "These 50 years have shown that isolation has not worked," and "It's time for a new approach." (Some, including myself, would say we should apply this logic to toe war on poverty and welfare utopia.)

    Just as the Sony decision forged odd alliances, critics for the Cuba deal saw quick and emotional rebukes from Republican Senators Marco Rubio and Ted Cruz, along with Democrat Senator Robert Menendez whose statement echoed his collogues: "The president's actions have vindicated the actions of the Castro government, virtually guaranteeing profound human rights abuses on the island will continue."

    It seems to me with Russia on the ropes and with Venezuela running out of toilet paper, it was only matter of time before Cuba blinked or the people of Cuba made a stand, but Cubans are no longer a slam dunk for the GOP (see table)- so was it all really politics... Amnesty II?

    (click to enlarge)

    President Obama brags about his limited use of executive orders, but he's issued more executive memos than any president ever and they have the same legal affect as an executive order.

    • 195 Executive Orders
    • 198 Executive Memos

    Russia Stabilizing?

    Russia seems to have found a bottom with oil and Vladair Putin is playing nice(r) than noramal. But, the battle continues.

    Stay tuned for a report on oil stocks. The price of crude oil has been improving recently, allowing oil and gas stocks to finally begin showing signs of significant improvement. Nevertheless, they still have long ways to go before reaching their former glories.

    For your free copy of the OIL REPORT please call (800-286-1145) or email us at info@wstreet.com or call your representative to request.

    Dec 18 10:55 AM | Link | 1 Comment
  • A Walking Shadow...Poor Player - By Charles Payne

    Watching the wild gyrations in the market I couldn't help but think of Shakespeare's "Macbeth."

    She should have died hereafter.
    There would have been a time for such a word.
    Tomorrow, and tomorrow, and tomorrow,
    Creeps in this petty pace from day to day

    To the last syllable of recorded time,
    And all our yesterdays have lighted fools
    The way to dusty death. Out, out, brief candle!
    Life's but a walking shadow, a poor player
    That struts and frets his hour upon the stage
    And then is heard no more. It is a tale
    Told by an idiot, full of sound and fury,
    Signifying nothing.

    -William Shakespeare

    The Dow was down 99 points, rallied up 249 points, and then it fell to earth, back into the abyss, finishing the session down 111 points.

    The only constant was volatility as techs were hammered; even airlines and retailers took it on the chin despite the fact they are supposed to be the perfect counter-investment to crumbling oil. More than likely, Wall Street is freaking out for nothing or using a smoke screen to take profits, but it is really odd and hard to dismiss that it is out of hand.

    Something is eating the market. There are obvious angles that make sense like infrastructure and financial issues. Could all this turmoil be something else hidden by the headlines? I am not sure. I think the pullback is full of sound and fury, but I am not sure who the idiots are at the moment- those panic selling or those holding as losses mount.

    My focus is on value, the preservation of assets, and the swiftness of declines in certain areas like energy and tech, which have been amazing and hard to catch.

    Putin Blinks...Now What?

    What is happening in Russia could be karma, after the way they have bullied themselves around; first in Georgia and most recently in Ukraine. That being said, a wounded Putin is probably more dangerous than one barking about old borders and the west.

    On that note, some are wondering if this is like the Russian Flu, the crisis in 1998 that saw a series of political issues and global economic woes push the country into a debt default- even after a financial package from the International Monetary Fund (NYSE:IMF).

    This time, Russia's debt is relatively low and they have large foreign assets, including $108 billion in US Treasuries. However, instead of an economic contagion, the question is should the west worry about military retaliation? It will not happen now, but Putin has begun an aggressive campaign to modernize Russia's military capabilities by focusing on combat readiness.

    The move has the approval of the Russians, (even 44% are okay with the buildup at the expense of a hit to the economy, versus 41% who oppose).

    By 2020:

    • 1,000,000 Active soldiers
    • 2,300 New tanks
    • 1,200 New helicopters and fighter jets
    • 50 New surface ships
    • 28 New submarines
    • 400 New intercontinental ballistic missiles

    I will say, however, Putin seemed to have blinked, allowing the central bank to go to a 17% benchmark rate; he has never been shy of overplaying his military cards.

    The 1998 Russia Debt Crisis was actually aided by a series of events that included massive changes in government, a bailout, and interest rate hikes; (try 150%). This was all in vain, as Russia plunged into a debt default.

    Good Old-Fashioned Common Sense

    When I think about the Federal Reserve, I often think about one of my favorite television series of all- time…The Beverly Hillbillies and the episode that still ranks as one of the highest rated ever.

    In this particular episode, the greedy banker rushes to his doctor's office only to hear the only cure for his common cold was to eat sensibly, get lots of rest, and to drink plenty of fluids, and a week to ten days later he would be cured.

    Later in, we learn that Granny had developed a cure for the common cold that set-off frenzy where the banker sees nothing but dollar signs. He set Granny up in a big office to practice medicine, even though she was not licensed. It was a good thing, too, because Granny and her family were offended that those fancy "city doctors" did not take her seriously; one even called her a witch doctor.

    Toward the end of the show, we learn Granny perfected the formula 45 years earlier with a bunch of ingredients that included her homemade moonshine.

    Once someone took the potion all they had to do was to eat sensibly, get lots of rest, and to drink plenty of fluids, and a week to ten days later they would be cured.

    The point is, all these intervention schemes from bailouts to printing phantom money, at best, gets the economy to where it was going anyway, except with more risk and a nasty hangover.

    Which one has the cure to our economic ills?

    Today's Session

    Lower gas prices and dips in certain core subcomponents resulted in consumer price index (NYSEARCA:CPI) declining during the month of November. Month over month, CPI declined by -0.3% following a 0.0% change in October. Year-over-year CPI saw a deceleration at 1.3% compared to 1.7% in the previous month.

    Indexes for medical care, airline fares, and alcoholic beverages rose within the core while those for apparel, used cars and trucks, recreation, household furnishings and operations, personal care, and new vehicles declined, resulting in the shelter index rising 0.3%. As much as we love when things become less expensive, the prices for staple goods may be dropping too fast.

    All in all, the CPI report demonstrates that the Fed still has wiggle room, but it is still a mystery as to when they will move rates.

    The Russian ruble is showing signs of improvement, having declined from lows yesterday. Still, this is a flashing red flag. Many companies are trying to hedge against the ruble crisis. Apple has stopped online-sales in Russia completely. Other companies with large exposure to the country are attempting to raise prices in the region.

    Dec 17 10:12 AM | Link | Comment!
  • Bullish, Despite Rough (Oil) Patch - By Charles Payne

    Despite a rough two-week patch, Wall Street is feeling bullish, too. In fact, according to Barron's, there is not a single Wall Street strategist that is not bullish. Talk about the herd mentality; look at the estimates for the S&P 500, S&P Earnings, and the Gross Domestic Product (NYSE:GDP) Growth. The eyes of most needles have wider spaces... these guys and women are on the same page.

    Wall Street Forecast 2015

    S&P 500

    S&P Earnings

    GDP Growth

    Federated Investors

    2350

    $130

    3.5%

    JP Morgan

    2250

    $127

    3.0%

    Barclays

    2100

    $125

    2.9%

    Citi

    2200

    $128

    2.95%

    Columbia Management

    2200

    $127

    3.0%

    Morgan Stanley

    2275

    $126

    2.9%

    Blackrock

    2160

    $132

    3.0%

    Prudential

    2250

    $127

    3.0%

    Goldman Sachs

    2100

    $122

    3.0%

    Bank of America

    2200

    $124

    3.3%

    For the record, I think the Federated strategist is probably going to be the closest -I'm at 2380- after a year that sees an increased capex spending, higher wages, and the benefits of stable fuel prices.

    Oil Impact & Contagion

    With oil down 50% in a flash, it is easy to say in hindsight that it was in a bubble all that time; how can any bubble burst and not have any implications throughout the investing world? What if there are "Good" and "Bad" bubbles?

    Banks with the greatest exposure to energy loans as a percentage of total assets have taken it on the chin big time since November 10th.

    However, it looks like the bank stocks that were hit the hardest are those where energy loans are 3% of total assets or greater. Many of these are regional hot spots and until a few weeks ago, they were riding a heck of a wave... now they are drowning.

    Banks Hit By Energy

    Nov 10

    Dec 15

    HBHC

    $35.23

    -16.5

    BOKF

    $68.64

    -18.5

    CFR

    $81.44

    -14.6

    CMA

    $48.41

    -7.2

    ZION

    $29.67

    -10.6

    PB

    $60.68

    -12.3

    We are working on a breakdown of the energy patch for those names that should be bought first when crude hits a bottom -or appears to be hitting a bottom. In fact, it may drift for some time and it could be acceptable, but the wild gyrations are adding excessive pressure on producers and on all names in the food chain.

    Today's Session

    Obviously, we aren't going to force the issue here this morning. With the ruble crashing, many are now wondering about a possible contagion effect. There's also concern about what a desperate Vladimir Putin might do with his world collapsing. (The huge interest rate increase in Russia was a rare sign of Putin Panic and made things worse.) In the meantime, crude keeps crashing- now on auto-pilot, so while overdone, it's not done at all.

    Dec 16 10:15 AM | Link | Comment!
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