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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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  • It's The Same Old Thing As Yesterday By Charles Payne 0 comments
    Oct 7, 2013 9:46 AM

    There's a little black spot on the Sun today
    It's the same old thing as yesterday
    There's a black hat caught in a high tree top
    There's a flag pole rag and the wind won't stop

    Police

    I have stood here before inside the pouring rain
    With the world turning circles running 'round my brain
    I guess I'm always hoping that you'll end this reign
    But it's my destiny to be the king of pain

    I guess I speak for all Americans when I say the games in Washington DC have gotten so petty it's an embarrassment. Having said that the key to changing what's happening there is for these guys to stop playing to the crowd and to get back to the notion of governing. There are no babes in the woods or players that haven't misplayed their hands in the latest round if nonsense but the notion of inflicting maximum pain is really out of bounds in a game where there are no boundaries.

    President Obama says he will not piecemeal together a deal over the continuing resolution or the debt ceiling, instead demanding a blank check with a promise to negotiate later. In all fairness there isn't a proper backdrop for Republicans to fight and any compromise would be so minuscule as to be insulting. So, this month has created the battlefield that has the stock market slowing to rubberneck the action while the public watches from the stands, slumped with anger and frustration.

    Piecemeal vs. Grand Bargain

    Knowing there will not be a so-called Grand Bargain President Obama continues to use the best weapon at his disposal. Sadly for him it's not the Bully Pulpit which has been reduced to canned radio and Internet addresses on weekends and road trips where the audience is 90% non-voters (too young). The best weapon for the White House has been the press, but even this weapon is beginning to fade in part from overuse but largely from abusing its nomenclature that's supposed to begin with honesty with the public. Last week America was told Obamacare was a success based on the millions that flooded health exchange websites.

    The problem was poorly constructed websites and numbers of visits were inflated by the same people trying over and over again to get online. In California it was reported 5.6 million tried to get on that state's website but it turns out the number was closer to 650,000 of which only 7,700 took the plunge. Even digs by uber-liberal Bill Maher and Saturday Night Live suggested there was huge demand when in fact after three years of hype and promotion demand seemed unimpressive.

    Meanwhile CR drama continued to play out...

    What wasn't reported properly is the GOP passed bills to keep funding for:

    > Cancer patient research
    > Veterans
    > National Parks
    > Coast Guard

    All were shot down in a gambit that should have triggered harsh public reaction except the public was told the exact opposite. Instead the nation continued to get maximum pain, and President Obama avoided being labeled King of Pain. Since losing its filibuster-proof Congress the White House has implied that it is the weakest branch of government at the mercy of even small "factions" in the House. Maybe that's why they've avoided good old fashioned negotiations in favor of inflicting the public with maximum pain knowing the blame will be heaped on their rivals.

    Pain is a deterrent to be sure but it is caring and it's not a solution.

    Piecing Together Solutions

    "In memory of the countless men and women of all creeds or nations or races who fell victim to the fascist and communist belief in Inexorable Laws of Historical Destiny."
    -Karl Popper

    In The Poverty of Historicism Karl Popper explains why "piecemeal social engineering" using small and reversible changes is the best way for society to evolve rather than humongous changes like the healthcare law where it's impossible to predict effect because of outsized randomness. Grand visions of society from socialism to fascism to communism have all made certain promises of the future. On the other hand capitalism at its core invites unpredictable change and creative destruction that along the way improves and enriches lives.

    It's a piecemeal approach to economics and should be the foundation of any government looking to generate, not destroy, prosperity.

    When we think about it isn't everything piecemealed anyway?

    The idea that everything is a work in progress underscores the notion that such work gets better with piecemealed solutions that are tried, evaluated and tweaked until they work well enough to be a platform to do it all over again. Last week we should have seen compromise when it came to alleviating unnecessary pain by funding parts of government. It didn't happen and it wasn't news. Despite media coverage it looks like President Obama isn't involved enough in the process.

    I get how lame duck presidents endure a lonely existence as all eyes focus on the next leader and they gradually lose power. This doesn't have to be a lame duck White House, yet its current posture is limiting action and more and more I'm hearing our Commander in Chief say: I guess I'm always hoping that you'll end this reign ... But it's my destiny to be the king of pain.

    Today's Session

    The market will open under considerable pressure as Speaker Boehner shifted gears from the guy talking compromise to making it clear there will be no blank check. In the meantime, President Obama will try to stir Republicans and pry moderates by painting them as reasonable and nice. This is turning out to be a real donnybrook.

    In the meantime, charts are pointing to serious near term challenges. The Dow has made a series of higher lows, which makes 14,776 important then 14,711 a must-hold support point. If that doesn't hold then the index becomes vulnerable to 13,784 a 12.3% pullback. Right now don't see it happening, but there are dark forces working hard to scare daylights out of America public.

    (click to enlarge)

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