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President Visits Broadway Stars By Charles Payne

President Obama visits Ground Zero and a midtown firehouse in New York today. I know it's a victory lap, but I'm happy for all the victims and their families as the death of bin Laden brings some closure and is worthy of celebration. The stop at Engine 54, Ladder 4 Battalion 9 firehouse will be very touching. On 9-11, that house saw 15 of their brothers die while saving lives. I spent some time with a bunch of the retired guys there that day and with the current team last year. Inside the firehouse itself is a great plaque and photos.

If you are in New York walk by the firehouse and give thanks, and ask if you can take a peak inside. You'll see real life heroes and stars bigger than any around the corner in those Broadway theaters.

What is the True State of Our Economy?

It was a bruising session, but also one with glimmers of hope as buyers emerged throughout the session to nibble here and there. These investors picked their spots, including tech names that really are oversold. Tomorrow is shaping up to potentially set the tone for many months to come. After that horrendous ISM report, it would seem impossible to write off a jobs report that sees less than 220,000 private sector jobs created in April.

You always wonder what sellers know when it seems like the smart guys are dumping in a mostly orderly process. But, it's not just stocks as assets across the board have been hit hard. Looking at commodities, it's really interesting because the decline there isn't associated with a rising dollar, demand couldn't have changed that much, but it was a heck of a rally. The focal point of the commodity world is on silver, which made a classic parabolic move aided by everyday investors who might feel duped as news emerged that George Soros, Carlos Slim, and others are selling.

I think it's all temporary, and stocks and commodities will rebound. That doesn't mean a greater correction isn't in the cards. Obviously, the stage is set for a major move in stocks tomorrow, but in which direction. On that note, one has to wonder about the status of the nation's economic recovery. First quarter GDP was anemic, and it's hard to imagine the second quarter growing much. At some point higher commodities prices will creep into the picture, whether transitory or not. Interestingly, these well-known headwinds could mitigate otherwise disappointing economic news, although not sure it could gloss over a big miss on jobs.

There were several articles published yesterday on just how much the U.S. government is spending on food for Americans. The food stamp program (SNAP) goes to one fifth of all households or a total of 44.2 million Americans. The program paid out $64.4 billion in FY10, up from $14.9 billion in 2000, or 430% in a decade. Toss in WIC's $7.0 billion and $12.8 billion for 18.4 million kids on the free lunch program and the numbers begin to add up. Of course, we are all proud to live in a caring country, but so much dependence on the government, especially at such an early age, leads to a culture of dependency.
With that aura of dependency, higher gas and food prices tossed in with homes completely lost to foreclosure or decreased in value there is a fault line beneath the surface. There are good signs, and anecdotally I see more signs looking to hire workers and fewer looking to sell homes, but it is a tenuous dance. Exports have made the difference, manufacturing is improving, but wages are stuck in neutral. Sure, we are at the part of the business cycle where steady job growth should be occurring. The natural built-in ability for our economy to rebound has been challenged by the depths of the recession and numskull schemes poorly designed and executed.

That brings me to the latest on the budget skirmish (I can't say battle since it doesn't feel too intense or urgent), where it seems a compromise that goes against the tone of the nation and last November's election result. Low hanging fruit, including limits or cuts on farm subsidies and welfare, will be tackled but it looks like the GOP is caving and will not push on Medicare, Medicaid, and Social Security. It also looks like the debt ceiling will be lifted by $2.0 trillion, which might buy us another year give or take.

Remember each time it's raised spending increases, it doesn't decrease.

So, with 24 hours to go we sit and gnaw on our fingernails wondering if commonsense and obvious problems will result in a disappointing jobs report. We know the economy is moving along slowly, but we also know this is a dynamic economy that rocks like no other when it's not penalized for rocking.

There is a Gasoline Shortage

Yes, there is a lot of crude oil; in fact U.S. inventories climbed to 366.5 million barrels from 333.1 million the first week in January. But, gasoline supplies decreased to 204.5 million barrels from 223.2 million, and are at the lowest level since June 2009. I keep saying look past the evil speculators to ridiculous polices that bar drilling. The lack of refineries, increased regulations for blends, and sulfur extraction are also a major problem.

It might be political, but Texas was denied disaster status by the Administration even as wildfires destroy thousands of acres, burn hundreds of homes, and threaten to take more lives.

Oh Boy...

Initial jobless claims are out and my goodness, it's an unmitigated disaster. What the hell is going on? Just as it was beginning to look like the economy was settling in with steady claims reports below 400,000, we are barreling back to half a million. This far into a Great Recession something isn't right. I've screamed at the top of my lungs that all those trillions in taxpayer dollars supposedly pumped into the economy was never destined to solve problems such as employment other than that of unions and government workers.

I suspect the administration figured accommodative Fed policies would help with employment. The Fed has pumped in money but it's blocked behind walls at financial institutions that have been able to heal while the broad economy languishes. At some point all that cash will break the dam and money will come gushing through but the other part of the dilemma is who will be able to get loans? Jobless people don't get loans, struggling small businesses don't get loans and with much tighter regulations on housing (you asked for it) fewer working people qualify for loans.

It's still possible we could have a solid jobs report tomorrow but it's clear this recovery is missing something.