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White House Swings Again, Stocks hit Homerun and Perry is safe at Home By Charles Payne

"Fraud!" cried the maddened thousands, and echo answered fraud;
But one scornful look from Casey and the audience was awed.
They saw his face grow stern and cold, they saw his muscles strain,
And they knew that Casey wouldn't let that ball go by again.
The sneer is gone from Casey's lip, his teeth are clenched in hate;
He pounds with cruel violence his bat upon the plate.
And now the pitcher holds the ball, and now he lets it go,
And now the air is shattered by the force of Casey's blow.
Oh, somewhere in this favored land the sun is shining bright;
The band is playing somewhere, and somewhere hearts are light,
And somewhere men are laughing, and somewhere children shout;
But there is no joy in Mudville - mighty Casey has struck out."

In "Casey at the Bat," Ernest Lawrence Thayer laid out a scene where a great baseball player, with full support of his home crowd, swung a mighty bat but struck out. There is a similar situation playing out at the White House and President Obama's attempt to hit a homerun with alternative energy. Granted, the crowd isn't behind this because that bat he's swinging is composed of their hard earned money, and it's surely a homerun in this case would mean a more expensive and less competitive lifestyle. But, make no mistake, there is a scornful look gazing from the White House and muscles are strained after two big-time strikes.

The hugely embarrassing and hugely expensive failures of Evergreen Solar and Solyndra exposed why this at bat is a no-win for the American people. But there is another swing coming from President Obama, and it's a big one indeed. With clinched teeth and a mighty sneer at commonsense, domestic energy and fiduciary responsibility to taxpayer funds the air is shattered with another $344.0 million. President Obama is at the bat, again. Yesterday it was unveiled that Solar City will get $344.0 million in taxpayer money via US Renewables Group to install 160,000 rooftop solar installations on top of privately run military housing.

Some of the funding is being facilitated through Bank of America (NYSE:BAC), which seems more like a de facto department of the Executive Branch. Everything about this deal stinks.

The Administration says it wants 25% of energy on military bases to come from renewable sources by 2025, and it will get it through massive subsidizes and not free market principles. That means it's going to be very expensive, with unproven benefits. Solar City will not only get to install solar panels, but will be paid to operate them, which seems odd since I thought energy from the sun was free once the panels were installed.

This deal is a great chance to see not only how ideology, as opposed to economic forces, dictates policy at the White House but also how much of a scam this whole thing is and how the different players are engaged in forms of duplicity. Take for instance early backer of Solar City and technology giant Google (NASDAQ:GOOG). Google uses so much information that it rivals large cities or even small states, although the exact amount few people know because it's a company secret. In fact, a recent report on "dirty data" from Greenpeace gives the company an "F" when it comes to transparency on how much energy it consumes.

In addition, there is the dirty secret about how much energy, most of it coal-driven, is needed for a simple Google search. A few years ago, a German research firm found a Google search that lasted less than a minute used as much electricity as an 11 watt light bulb that burns for an hour. It's amazing how much energy has gone into the removal of regular light bulbs in favor of expensive, dim-lighted, bulbs filled with harmful chemicals and yet ignores the fact billions of searches done each week are exponentially a greater drain on the nation's electricity supply. But, for the phony green fight it's deeper than just sucking up all the energy.

According to Gartner, the global IT industry generates as much greenhouse gas as all the world's airlines.

So Google is a player, Bank of America is a player, and the American taxpayer is the payer. Supposedly, this initiative will create 6,000 jobs over the next five years. I'm all for jobs, but let's be honest, these are not jobs that will require much intellectual firepower or last very long. This is an ideological program where they are attempting to dress as an economic campaign. Solar City was founded in 2006 and has only installed 16,000 solar panels since then. The company will only make money through subsides, which means it's not going to make money until it has a monopoly on providing solar energy (again, I thought the sun did that) at 124 military bases in 34 states.

There was no competitive bidding where local companies could be able to do a better and smarter job than another hand-picked White House winner given gobs of money and unfair advantages. Somewhere in this favored land the sun is shining bright, but not for the ideas of free markets, capitalism, and competition.

There will be no joy in Mudville because President Obama will strike out and the maddened crowd will cry "fraud."


Just how big is the Banking Crisis at Big Banks?

One thing that's going on with little fanfare is a mini stress test of big banks. Last week, it was revealed that Bank of America was asked about plans in case things got progressively worse. Now, apparently, more big banks have been asked about contingency plans. It's a very curious thing after TARP, a few years of ultra-low interest rates, more than a trillion bucks in low interest loans, the ability to mark assets to a hunch rather to market conditions, and current realities. While I appreciate the fact this is being done in a low key manner rather than the unnecessary pomp and circumstance of the February 2009 Stress Tests, it's still tough to grasp.

The market was in freefall mode after the 2009 Stress Test rumors made the rounds, and the Dow dropped another 10% after the scuttlebutt became official on February 25. Part of the problem was the parameters that banks were told to test against. That environment included dire assumptions:

As it turned out, 10 of the 19 banks that got taxpayer funded bailouts needed to raise cash before they could be allowed to payback the cash. The combined amount of $74.6 billion was a lot less than experts expected, and it helped bank stocks rally along with the overall market. Coupled with a change of heart on accounting at FASB and maybe banks were able to sweep stuff under the rug that simply can't be ignored forever. On that note, the Stress Test didn't take into account toxic assets. We can only hope the cascade of cash has cooled off those toxic assets enough not to trigger another meltdown, but something is wrong.

That's the smaller regional banks may have finally hit terra firma. There are still a lot of bank failures, but it looks like they've peaked in the past year. That leaves a vacuum that maybe some of the super regional banks have been able to take advantage of. Without a doubt, many have less baggage than their larger brethren, but they don't get the breaks.

2007: 3 failures
2008: 25 failures (cost $19.8 billion)
2009: 140 failures (cost $36.0 billion)
2010: 157 failures (cost $21.0 billion)
2011: 70 failures thus far versus 118 a year earlier.

The one name that really stands out is Sun Trust (NYSE:STI), which climbed more than 7% in yesterday's trading on 8.5 million share volume, two million more than normal. The stock is changing hands at 50% of its book value. The KBW Regional Bank Index (NYSEARCA:KRE) made a sharp move higher, and if it can close above 22 it might signal a breakout.

Fed Beige Book

I guess the Federal Reserve's so-called Beige Book could have been worse, but in this environment of microscopic expectations the results actually helped yesterday's rally pick up steam. America didn't fall off a cliff, but it's only because we are moving in the wrong direction at a pace described as slow, slowly, slower, and slowed.

Other Signs

Again, I don't want to make a lot about one good session in the market, but I like the action in regional banks, infrastructure, and agricultural sectors. It feels like there might be some gaming of the jobs speech even though the last time stocks in the construction space surged only to come down hard after. But there is no doubt a lot of money will end up sloshing around even if it's for a little while, leaving a huge debt and greater unemployment rates in the future. While we look at central panning here, I think many international names were up on renewed faith in international growth.

Last night it was reported Boeing (NYSE:BA) has upped its estimates for airplane demand out of China by 25%. Last year Boeing saw 4,330 planes over twenty years for a total of $480.0 billion. Now, the number is 5,000 airplanes. Worldwide it's estimated there will be demand for 33,500 planes totaling $4.0 trillion. I continue to marvel at how China has unleashed an entrepreneurial spirit which has always been there (in many Asian nations the richest people are of Chinese descent) pent up behind the high, barbwire walls of communism while our government continues to force itself into the equation. We are going to hear more of that tonight. How the only way America can be great is through public-private partnerships. Right.

Has a smokescreen been designed to let government pick the industries and operators it likes most rather than let the game play out and chips fall where they may? In tonight's speech we will hear more of this kind of stuff and feel the wedge driven deeper between the so-called rich (upwardly mobile people that used the greatness of free markets to change their lives and the lives of those around them) versus the so-called middle class and poor. According to reports, the newest plan of attack looks like the old plan of attack.

> $120.0 billion payroll tax cut where employees pay 4.2% into Social Security instead of 6.2%
> $50.0 billion jobless benefits extension
> $100.0 billion infrastructure projects fronted by building of new schools
> $100.0 billion small business tax cut

We'll wait for the details tonight, but right now I'm not feeling great about the plan and the kind of rhetoric I expect. The market doesn't feel so hot, either, right now. Again, there is a battle between value and potential and lack of confidence in our leaders.

By the way, I think Rick Perry won big last night by taking bold chances. Yes, the Social Security program is a Ponzi scheme that was never designed to work in the sense it didn't plan to payout as much money it owes to people that are significantly older now than when the plan was drawn up.

Today's Session

Initial jobless claims climbed to 414,000 from an upwardly revised 412,000, and that seemed to take any air left from yesterday's rally out of the market. We aren't going to force the action this morning, but will be interested to see if the market can find a way to rally into the close. It doesn't have to close in the plus column, but this is the kind of test to see if buyers are willing to step in on weakness.