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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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  • Soul Survivors By: Charles Payne 0 comments
    Sep 13, 2010 9:36 AM

    I hope everyone took a moment to remember the victims of 9-11 and our brave soldiers that have died defending our nation over the weekend. We can never forget, and never stop, defending the nation.

    I was at Fox News Channel on Saturday as the network aired "The Real Cost of Freedom" during the usual business block. One of the guests was Dick Grasso, former New York Stock Exchange CEO, whose role in the aftermath of the attacks was the stuff of legends. I knew the guy that rang the opening and closing bells every day before that fateful day. He is a nice guy, but nobody knew his name and he wasn't recognized on the Street. The role of ringing the bell just wasn't considered a big deal outside the circle of real stock market junkies.

    Dick Grasso changed all of that, and more. He turned the New York Stock Exchange, just a few blocks from the WTC, into a symbol of American resolve and determination. There was the race to get the exchange open, and then to bring it to life and not allow it to become a sad mausoleum. The first day the market opened for business the Dow tumbled 684 points, or 7.1%, to 8,921. That was inevitable, but it wasn't allowed to become the aura of the NYSE. In fact, the NYSE became the place to be, the place to be seen, the place to show your support for America.

    How about that, it might be hard for some to understand that the NYSE became the symbol of the courage and willpower of the entire nation, where everyone wanted to come to show their support for the country and its fight. Fast forward nine years, and the NYSE is anything but a positive symbol for the country. Wall Street greed and political rhetoric have turned the NYSE into a symbol of unbridled lust for money. But, it has always been more than that; even now the stocks that trade on the exchange reflect our hopes, dreams, and aspirations. Those stocks represent companies that achieved success in the past, and tell us such success is possible in the future.

    The NYSE itself has become something of a mausoleum, with a handful of traders making the rounds. Gone are the large crowds, all that paper flying around, the shouting, and the energy. You get the sense tumbleweeds are blowing nearby. There are cool people ringing the opening bell, including children's organizations and recently Sly Stallone, and there are un-cool people too, like the cast from "The Jersey Shore." The NYSE will never regain its former stature in part because there is only one Dick Grasso, but also because the computers are doing more of the work. Those machines are efficient, though susceptible to the occasional flash crash.

    But, they lack one thing that seems to be fading in the nation today. The NYSE not having a soul is sad, but the nation not having a soul is a tragedy that must change in order for the economy to grow and the stock market to take off again.

    Fine China

    It was only a month ago when the market took it on the chin a day after Ben Bernanke more or less admitted that the Federal Reserve more or less had no bullets left. The next day, China posted economic data that many considered disappointing. (I thought the data was great for a country that supposedly couldn't control inflation.) Our stock market was hammered, and we blamed China. This has been a strange relationship with China and its juggernaut economic growth.

    > First - the data coming out of China is not trustworthy
    > Second - the data coming out of China is too hot
    > Now - now the data coming out of China better be hot to save our bacon

    You know one of the sadder urban myths is that America doesn't make anything. Actually, no country in the world makes more stuff than we do, but that will change next year. So, how ironic is it that we now root for China's economy even as it will knock us off the perch we have resided for 110 years. The table below shows the percent of global manufacturing and the dollar figure for 2009. China is expected to have a dollar figure of $1.87 trillion during 2010. It's inevitable that China will become the number one economy in the world in a decade or so, but we take solace in knowing it will take more than a century before they have higher per capita GDP. But, we make stuff, and should build on that proud tradition.

    So, the good news over the weekend, China's engine is shifting back into high gear again. Consumer prices climbed to a 22-month high, but inflation isn't the story. China is rocking, and the locomotive isn't jumping off the tracks yet. Lending edged up to 545.2 billion Yuan ($80.5 billion) from 532.8 billion in July.

     

    In addition to the good news, China also cut a major trade deal with Taiwan. The mainland will cut duties on 539 items worth $13.8 billion, while the breakaway island is cutting duties on 267 items worth $2.86 billion, or 10.5% of all imports. It's a smart move for both nations technically at war, and makes one wonder why it's taking so long for the U.S. to do the same with friendly allies.

    Tidbits

    On Thursday, it is expected the 2009 census will reveal the poverty rate in the US has reached a record high - 45 million people. 15% of US population was poor up from 13.2% in 2008 and the uptick is the largest y/y increase in the history of this data (1959). The previous high spike came in 1980 during the national energy crisis which pushed the tally up 1.3%.

    The poverty level is $22,025 for a family of four.



    Disclosure: None
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