Wall Street Strategies'  Instablog

"Deceive boys with toys but men with oaths."-Lysander

Hoax: something intended to deceive or defraud

The big word this week is hoax as and it comes to mind when one thinks of the following:

• Balloon Boy
• Chamber of Commerce/Reuters
• Ben Bernanke

Balloon Boy: As much as I'd like to say that this is just one sick family looking to prostitute themselves and children for fame, I think this episode speaks volumes about America in general. It's an indictment of a country where a Paris Hilton can become famous for being famous. The dumbass reality shows that parade one after another are nothing like reality, and everything like buffoonery. This is the stuff that we are not just forcing or allowing our children to watch but forcing them to lie about something so maybe the family can get a reality show. At some point we have to wake up out of this funk and idol worshiping. Just like the printing of more dollars makes them all less valuable, the printing of these new stars has made the entire notion of celebrity hollow. There used to be a time when one needed talent and skill to reach the top, but now it helps if you have a low IQ and criminal record. Of course, the "balloon boy" incident was a hoax...but it rated well and that's all that matters, right?

Yesterday, there was a false report saying that the U.S. Chamber of Commerce had changed its position on climate change and was not in support of the notion the earth is heating up rapidly and it's all because of mankind. I think that most of the opposition to the Waxman-Marley Climate Change Bill has to do with costs to business, and ultimately, consumers. Key points of the bill include cutting emissions beginning in 2012 and having cap and trade completely phased in by 2016. In addition, the bill calls for massive changes in electricity.

• 6.0% of electricity comes from renewable sources by 2012
• 20.0% of electricity comes from renewable sources by 2020
• 5.0% of electricity could come from efficiency improvements

The press release attributed a quote to Chamber of Commerce President Thomas j Donahue...the guy really in charge is Thomas J. Donohue. By the way, the Administration is trying to rip the Chamber of Commerce apart, but it's one of the only organizations that have the back of businesses.

Ben Bernanke said yesterday that the U.S. must save more. After saying that the U.S. must increase its national savings rate, he pointed out the most effective way to accomplish the goal would be by establishing a sustainable fiscal trajectory achieved by a clear commitment to substantially reducing the federal deficit over time. That was the real Federal Reserve Chairman making those comments; in this case the hoax is that the Fed really gives a hoot. I appreciate them tossing a shot across the bow of the White House but these are fiscal and monetary problems to be sure. How can the Fed be committed to keeping rates so low for so long, punishing savers and at some point everyone with inflation that will tax all Americans. The Fed has a lot of nerve when its goal is supposedly to jack up consumer credit, which has been freefalling instead. I'm not sure if I also read correctly but it seems like Bernanke would like to see foreigners buy fewer U.S. treasury securities. Sure, that would cure our deficit spending but let's not blame foreign investors for the government's insatiable appetite and unrelenting goal of changing capitalism as we know it.

Speaking of hoaxes, if the charges against Raj Rajaratnam are true then it's more than a story of unbridled greed. Talk about a flight risk, a guy charged in a $20.0 million insider trading scam has a $100.0 million bail! He is (was) a favorite son of Sri Lanka, which has been coming on strong, and felt immense pride after finally ending its 30-year civil war with the defeat of LTTE. It's not great news for hedge fund managers in general, and fat rich people, in particular. The good news is that the Street wasn't sidetracked by the news, and it may have even been encouraged with a rare (albeit late) victory for the SEC.

There is one thing I truly believe... 90.0% of all news and events are leaked.

By the way, by looking the other way with medical marijuana the Administration is setting up another scenario where poor people will do jail time and have criminal records for something rich people will get away with. It's like the crack cocaine versus powder cocaine situation where the sentences are much stiffer for the former. I'm surprised that the President hasn't taken this into consideration because it's going to be young black men that couldn't pay off a doctor that will have their lives stained while others will never face the heat. This middle of the road approach doesn't work in wars abroad or wars on drugs. It should all be illegal or legal (I opt for the former) not this in between stuff.

Consumers

Consumer staple stocks have been sizzling. The space has always been something of defensive play, a foxhole to hide out in when bombs are dropping and the market is in retreat. I think that the latter part of the move, however, reflects a pickup in domestic demand and also the weak dollar. It will be interesting to see if investors stay the course with these stocks or branch out to other names that could benefit from a more confident consumer.

With Apple's (AAPL) earnings results, and more optimistic comments in general from corporate America, there is a sense that people with jobs may actually go out and spend money.

"Now as I was young and easy under the apple boughs about the lilting house and happy as the grass was green"- Dylan Thomas

Once again, Apple stepped up to the plate and blew them away and for them, the grass is green...very green.

Texas Instruments (TXN) also posted solid earnings results, although its numbers were overshadowed by Apple. The company saw its analog business grow more than 20.0% for the second consecutive quarter, and cited strength in all three product categories. Orders were up 11.0% q/q. Guidance for the current quarter is $0.42 per share to $0.50 per share; the Street was at $0.40 per share.

During the conference call, management was confident enough to raise targets for the following:

• Capacity
• Dividend
• Share buyback
  

Note our retail sector analyst, Brian Sozzi, has published an initial review of the earnings results from Coach Inc. (COH) out this morning. Please head to wstreet.com to read the column.

His pre-earnings comments as of October 19:

"I expect accessible luxury goods maker Coach Inc. (COH) to beat on EPS tomorrow morning, fueled by uptake of the new lower-priced Poppy collection and reduced supply chain costs. Also, one should not discount the increasing importance of China to Coach's annual results, especially as China overtakes Japan as the sector growth story overseas. Coach China, which the company repurchased from its licensor in 2008, accounts for 2.0% of annual revenues. With increased focus on store openings this year and next, that total could easily move north of 5.0%, and help Coach capture a greater share of the China luxury goods pie (note prices in China for handbags can range anywhere from 2.0% to 6.0% higher relative to the U.S.)."

Economic Data

Producer Price Index (PPI)

Inflation was not on display in September's PPI data release this morning. Prices paid declined for the second time in three months, mostly as a result of lower fuel costs. Core prices were -0.1% (consensus: +0.1%), with the headline tallying -0.6% (consensus: 0.0%).

Housing Starts

This morning's read on housing starts and permits shouldn't be that much of a disappointment following the weak builder confidence report earlier in the week. Nevertheless, the data is an indication that builders are not going to dump supply on the market unless there is visibility into further government stimulus plans for the housing market. With the tax credit perhaps expiring for good in short order, putting construction workers back on the job has hit a snag. Housing starts totaled 590K (consensus: 610K) and permits 573K (consensus: 593K). The South was the lone region to demonstrate housing start increases (+7.1%).

There were four Dow components that reported earnings before the bell: the Coca-Cola Company (KO), Caterpillar (CAT), Pfizer (PFE), and United Technologies (UTX). All four companies were able to beat the Street's earnings per share estimates. Refer to our website at wstreet.com later this afternoon for a recap of the world's largest beverage company's third quarter earnings.

Written by Charles Payne, CEO and Principal Analyst of Wall Street Strategies (wstreet.com) 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 www.wstreet.com.