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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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  • GIVE ME JUST RECOMPENSE - By Charles Payne 0 comments
    Feb 18, 2014 10:15 AM | about stocks: FRX, ACT

    Hosting Cavuto on Fox Business 6:00 PM

    Here comes the sun, here comes the sun
    And I say it's all right
    Little darling, it's been a long cold lonely winter
    Little darling, it feels like years since it's been here

    Here comes the sun, here comes the sun
    And I say it's all right
    -The Beatles

    Well, by the end of last week, it isn't surprising that the climate change debate would heat up and be a topic on Sunday's talk shows. Bill Nye "The Science Guy" took Congresswoman Marsha Blackburn to task on looking the other way as polar ice caps melt. The problem with that statement is ice has been accumulating in the arctic, and the insinuation is that the government can control weather cycles. It's really remarkable; the same crowd that saw an opening by predicating global warming would change tactics to use any weather condition as an excuse to blame man.

    The playbook is the same once we've had enough self-loathing, and feel demonized to the point of capitulation - we're supposed to tax ourselves into economic dire straits for redemption.

    Last week, there was talk of hitting fast-food businesses with a huge tax to cover obesity, even though its authors agreed people would still be free to eat at places that sell fatting foods. The tobacco industry coughed up (no pun intended) $250 billion and anyone can still run to the local gas station to buy a pack of cigarettes. But one day soon, if environmentalists get their way, those same gas stations along with every household in America will pay a heavy price for harming Mother Earth.

    Absurdity and Conventional Wisdom

    I still find it remarkable how much ground the fear-mongers cover and how they continue to chip away at things that we used to take for granted, like mild-to-tough winters. Now, these things have the feeling of an 'apocalyptic' event can only be avoided through sacrifice. It's not unlike the Maya's beheading of large groups of people in order to appease the gods. In this case, the suggestion is that looting wallets and making businesses less competitive, and making life more expensive, will stave off future winters.

    It's completely absurd, but the campaign is gaining traction.

    Much was made over the weekend of a survey from the National Science Foundation, which found more than a quarter of Americans didn't know that the Earth revolves around the sun, and not the other way around. It's one of those things where your initial reaction is what the heck...but then I began to think about this in a different way, that's important in the current climate change debate.

    What may seem absurd right now used to be scientific conventional wisdom believed by all!

    Irrefutable

    "When I think about the array of global climate - of global threats - think about this: terrorism, epidemics, poverty, the proliferation of weapons of mass destruction - all challenges that know no borders - the reality is that climate change ranks right up there with every single one of them."
    - John Kerry

    Between 150 AD and 1543 AD, I wondered if there was ever an emperor or a king who spoke at an event similar to the State of the Union, and said that scientific evidence is clear that the sun and planets revolve around the earth, with the whole scientific community in agreement. If they did, it wouldn't have seemed as far-fetched as the results from the recent NSF survey - it was indeed conventional wisdom. Using data going back 800 years Claudius Ptolemy, who wrote Mathematics Syntaxis, (Almagest) laid out many facts; a refined rendition of our solar system.

    His work stood for several centuries as the scientific gospel. With all due respect to the so-called "science guy" Bill Nye, mathematicians in the Pantheon; the greatest ever, including Georg von Purbach and Regiomontanus never disputed the work of Ptolemy. His work overcame scientific obstacles and scrutiny through a bunch of gimmicks, including the crank mechanism and the equant. But more than anything else, the discussion was closed for real debate until a math genius from Poland became irritated.

    Here Comes the Sun

    A major tool in Ptolemy's work is the use of Hipparchus' Model for calculating celestial movement. It is believed Hipparchus considered the sun to be the center of the universe, but couldn't get his models to prove it, and was swayed by Aristotle to stick with the notion that the universe revolved around the earth; a "fact" that lasted 2000 years. Enter Nicolaus Copernicus, and his problem with quant that was used to hold together Ptolemy's assumptions. It was this issue that eventually led to the development of a new solar model.

    Giving Light to New Scientific Fact

    "Father Zeus, and you other everlasting and blessed gods, punish the companions of Odysseus, son of Laertes; for they outrageously killed my cattle, in whom I always delighted, on my way up into the starry heaven, or when I turned back again from heaven toward earth. Unless these are made to give me just recompense for my cattle, I will go down to Hades and give my light to dead men." - Helios to Zeus

    The Heliocentric Model was named after Helios, the (Titan) god of the sun, who turned the scientific world upside down and in the process, less than 600 years later made 26% of Americans look real dumb. But for me, the greater story here is the idea that climate change is man-made, and the only way to stop it is through higher taxes and utility bills. President Obama is using executive fiat for climate hubs (don't ask), and is asking Congress for $1.0 billion to operate a Climate Resilience Fund.

    I know it's been a long cold lonely winter
    I know it feels like years since it's been here
    -The Beatles

    But the sun is around the corner and when it arrives, some of the fear-mongering will fade as we bask in the rehabilitating powers of spring, and the return of common sense. Conventional wisdom changes all the time, just as scientific facts displace former scientific facts. The most dangerous part of climate change is politicians trying to raid our wallets and dismantle our economic system, in the name of fear or resilience.

    Sun Going Down on Me

    Don't let the sun go down on me
    Although I search myself, it's always someone else I see
    I'd just allow a fragment of your life to wander free
    But losing everything is like the sun going down on me

    -Elton John

    Worker unions saw their chance to make inroads into the south; crushed like the Union army at the Battle of Chickamauga. Unlike that civil war battle, which marked a brief moment of celebration for Confederate Tennessee, the inability of the UAW to unionize the Volkswagen plant in Chattanooga is a decisive loss, which could be the final curtain call for worker unions in America.

    It was a tight contest, and many observers thought the UAW would win, particularly with VW management on board. The Numbers:
     

    • 89% voted
    • 712: "No"
    • 626: "Yes"


    Despite the free fall in worker union membership over the years, the United Auto Workers felt so confident that they cut a deal before the vote with Volkswagen, which included a "neutrality Agreement" that maintained wages and benefits, so that they wouldn't get too high versus the unionized workers at the Big Three in Detroit. General Braxton Bragg commanded Confederate forces at Chickamauga, but his victory was short-lived, as he would later be routed by Ulysses Grant in the battles of Chattanooga. Historians say Bragg was a worthy general with all the tools, except operational.

    Some of his men felt Bragg was too tepid and blamed the decision not to chase the Union army after his victory as a lost opportunity. Ironically worker unions have never been tepid, and that's cost them many opportunities.

    Today's Session

    Equity futures have vacillated in a narrow range and are hinting at wanting to move higher. The big news is the acquisition of Forest Labs (NYSE:FRX) by Activas (NYSE:ACT) and both stocks are significantly higher. (Note, one of the things I wanted to see this year were more deals and greater cap ex spending. The market continues to reward acquiring companies which I see as a bullish sign.)
    Futures were edging higher until the release of the Empire State manufacturing survey, which declined markedly and disappointed. However, there is a sense that weather artificially hurt the number. For me, the forward-looking sentiment was encouraging save for cap ex spending.

    The market has to shake off a bit of rust, but I like the cautious optimism.

    Stocks: FRX, ACT
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