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Public Option Out... For Now By: Charles Payne

|Includes:JBL, MU, Nike Inc. (NKE), TPX

There were two massive strikes against the so-called "public option" yesterday but this isn't baseball. In fact, this isn't boxing because that sport is governed by Marquis de Queensberry rules. There are no rules in Washington and Senators Shumer and Rockefeller, and the rest of the gang, aren't going to bow their heads in defeat. Despite two attempts to squeeze in government competition into the Max Baucus bill there is no doubt that additional attempts will be made, and a couple could be desperate and otherwise out of bounds. The Rockefeller bill was defeated in committee by a vote of 15-8. In addition to all ten Republicans there were five Democrats that actually crossed party lines and embraced the message of their constituents to vote against the measure. Noting again a bill with the public option would be doomed were Max Baucus (D-MT) who joined Kent Conrad (D- ND), Blanche Lincoln (D-AR), Bill Nelson (D- FL), and Tom Carper (D- DE).

It's still going to be an ugly battle, but the moral high ground can no longer be claimed by liberals. The fact is that people want the system reformed, but more and more are afraid of bills that seem to be disingenuous and dangerous.

Yesterday, the market stumbled about putting up periodic efforts to fight here and there but in the end, it didn't have anything to cling to and finished the session lower. It wasn't a big deal in the grand scheme of things, and actually pretty much the way Tuesday sessions go the week of the jobs report. There is the string of disappointing economic data from last week carrying over into this week, and that is something we can't brush off. One could argue that consensus estimates for these releases were too ambitious, but when one considers experts are looking for job losses of 180,000 in September that's an ambitious number, too. There is another trend from last week that is also defying expectations, but in a good way. Earnings season officially begins next week when Alcoa (NYSE:AA) reports but over the past week or so earnings have been impressive and encouraging.

While the healthcare debate isn't going away, and there will be additional tries to squeeze in the public option through obvious and clandestine attempts, additional big government plans are coming back to center stage. Yesterday's vote was huge.

Earnings After the Bell

There were two words heard often after the bell and they sounded like music to my ears: pricing and volume. Also as an analyst I'm always concerned with share gains and even effective tax rates. As earnings season comes around companies that can say pricing power, volume gains, market share gains, and lower taxes will reap handsome rewards. Don't be surprised to see hot stocks move even higher.

Economic Data
ADP Employment

Payroll services firm ADP brought good tidings this morning, if one considers almost 300,000 job losses a merry happening. According to ADP, private non-farm payrolls declined by 254,000, or the lowest print since July 2008. August data was revised to a lower rate of job decay than previously conveyed. It's tough to reconcile job trends in manufacturing and goods producing industries, however; in light of positive economic indicators and the weak U.S. dollar having a positive export implication job losses in manufacturing just don't seem to square with the V-shaped recovery thesis still being talked up.

Gross Domestic Product

Last week we had economic data that was tepid at best, but this morning, the Commerce Department released its updated reading for second quarter gross domestic product (GDP), which declined only 0.7% compared to the previous reading 1.0%. The small dip in gross domestic product for the April-June quarter follows the 6.4% annualized drop in the first three months of this year, the worst slide in nearly three decades. In the final quarter of last year, the economy sank at a rate of 5.4%. The increase could indicate a stronger rebound during the third quarter (especially with all the stimulus hitting the economy) but indications over the past week has been for a more muted recovery.

Written by Charles Payne, CEO and Principal Analyst of Wall Street Strategies ( providing independent stock market research to over 30,000 subscribers, in more than 60 countries. Mr. Payne is a regular contributor to the Fox Business and Fox News Networks. For more information about Mr. Payne, please refer to the company’s website

Stocks: NKE, JBL, MU, TPX