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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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  • America's Chart Should Look LIke Dollar Thrifty By Charles Payne 0 comments
    Aug 29, 2012 9:34 AM

    Out of the ashes of panic, many stocks have not only regained losses but also gone on to new heights. This week Dollar Thrifty (NYSE:DTG) finally agreed to be acquired by rival Hertz for $2.3 billion, or $87.50 a share. This deal could have been done during the throes of the panic in early 2009 when stocks were dirt cheap. So, instead of picking up the company for $0.73 a share, which was the price where the stock was trading back on February 23, 2009, Hertz picked it up at a price 118 times greater. I point this out to say early 2009 was a strange period when the nation was upside down and the jobs market and stock market were not true reflections of the nation's economic value.

    With that in mind, by this point in the recovery, our jobs market should resemble the stock market, and if the right policies were in place, the jobs market would mirror the share rebound in Dollar Thrifty. Instead the early bounce in jobs that saw just a single great month (516,000 jobs May 2010) fades quickly to the point where any number above 100,000 is considered a blessing. Since that May 2010 number, there hasn't been a month where job creation cracked 300,000. In the Reagan first term bounce there was one 300,000 month and seven months above 400,000 (George Bush had two above 300,000).

    (click to enlarge)

    For a while our jobs market had the same trajectory as the stock market and many individual stocks like Dollar Thrifty. Then jobs hit a bump in the road and the economy has struggled to the point of dodging double-dip bullets. Of course the stock market also gets a boost from other economies around the world where American companies make things people desire and respect. Moreover, now that America has the highest corporate tax rate in the entire world, we are nearing two trillion dollars of profits sitting in banks offshore. Just as households have cut back on debt and state and local governments choke on massive pension problems, other possible valves of economic growth have been chocked off by new rules, regulations and mean-spirited rhetoric.

    In May 2010 when the US economy posted its best jobs report during the Obama era, shares of Dollar Thrifty were changing hands around $45.00 a share, or about half its true value revealed by a key rival.

    When we hear how the economy was hemorrhaging 800,000 jobs a month (a phenomenon that began with election results in November 2008), remember it was a sign of panic not value.

    (click to enlarge)

    In the past, when such panic faded, America came roaring back much faster, stronger and to new heights. These days, we are being asked to accept an oversold bounce for true economic recovery. Housing looks better but still suspect considering how cheap homes are and how low rates are. Auto sales are better but suspect considering how easy it is to get a loan and how old cars are (12 years and counting). We are not where we are suppose to be, and in fact if China could buy America based on its intrinsic value it would offer a 100% premium.

    Yesterday, consumer confidence tumbled to a nine month low, GDP has been hellish and unemployment is an anchor. The value of the nation is still immense but unlocking it under current circumstances is impossible. The good news is the economy is already built to last and has proven that by weathering a relentless war against its foundations.
    I know this market can go much higher, and the economy can soar and create a tide that lifts all ships. Until then, certain stocks will still stick out from the crowd because so many are still very much undervalued just like America.

    GOP Convention

    Last night all the players gave impressive speeches, but Ann Romney hit it out of the park. Her passion, her realness and her story should touch every person in the country. I can't say the same for others including the barnburner from Christy, which laid out the argument of making tough and unpopular decisions, but spent a little bit too much time on Chris Christy. I was hoping Arthur Davis would explain why he left the Democratic Party instead of a string of mea culpa jokes asking for forgiveness. Voting is a privilege and choices are made for reasons that people need not apologize for but rather learn from.

    I was hoping to hear more about how badly blacks and Hispanics have fared with blind devotion to a single party that says it's okay not to be accountable. The reason that's important is because the entire nation is being told its okay not to be accountable while going a step further to say confiscation of hard-earned wealth, even from those families earning $250,000 a year, is the answer.

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