You Might Just As Well Be Blind By Charles Payne

Dec. 11, 2012 9:51 AM ET
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Long/Short Equity, Portfolio Strategy

Contributor Since 2008

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, and general opinions by several prestigious news organizations. Currently, Mr. Payne is a contributor to the Fox News Network and Fox Business Network. He also hosts his own radio show on KFIAM 640 every Saturday from 2-4pm PST. Mr. Payne recently released his first book entitled Be Smart Act Fast Get Rich. Our all-star analytical team is called first when the media needs to know. We are regularly featured on several well respected finance-oriented radio and television programs such as Fox, CNBC, BNN, WSJ to name a few and widely recognized in the media as a leaders in the analyst community. In addition, Wall Street Strategies is part of Factset, Jaywalk, and Thomson-Reuters Consensus Estimates. Meet our analysts: Brian Sozzi is an equity research analyst specializing in the softline/hardline goods sectors of the retail industry for Wall Street Strategies Inc. Mr. Sozzi graduated Summa Cum Laude from Dowling College, receiving his Bachelors of Business Administration with a concentration in Finance and Accounting. Routinely sought after as a trusted point of reference for opinions and insight on the global economy and retail sector stock evaluation, Mr. Sozzi is a frequent on air contributor to CNBC, Fox Business Network, and Bloomberg, and is cited regularly by online/print publications that include Forbes, Bloomberg, The Wall Street Journal,, CBS Marketwatch, Reuters, Seekingalpha, Associated Press, Crain’s NY Business, Fortune, Barron’s, AOL Finance, and the Financial Times. In 2009, Mr. Sozzi became recognized by Starmine as a top-ranked equity research analyst for stocks under coverage in such categories as EPS Estimate Accuracy and Industry Excess Return. David Silver is a Research Analyst for Wall Street Strategies. He is a graduate of Tulane University’s A.B. Freeman School of Business where he received his Bachelor of Science in Management with a dual degree in Finance and Accounting. David actively covers companies in the Transports, Autos, and Beverage sectors. He is routinely invited to appear on business oriented television and radio shows including CNBC, Fox News, Fox Business News, the Business News Network of Canada, WCBS Radio, and the Wall Street Journal Radio. In addition, David has been quoted in major business publications such as the Wall Street Journal, Forbes, Marketwatch, CNN Money, and Autoweek. David Urani is a research analyst with concentrations on the homebuilding, staffing, medical devices, and logistical services industries. Along with providing institutional clients with up-to-date reports of individual stocks within his industry coverage, David assists the rest of the Wall Street Strategies research desk with timely analysis of vital economic data. A graduate of the A.B. Freeman School of Business at Tulane University, David earned a Bachelor of Science in Management while majoring in finance. With prior training experience running small businesses, he has an eye for key fundamentals that keep Companies running efficiently. David’s insight has been featured in several outside sources, including the Fox Business Network, MarketWatch, and SeekingAlpha. Carlos Guillen is an Equity Research Analyst providing coverage of the technology sector for Wall Street Strategies, Inc. Mr. Guillen has had experience working in both the sell side and the buy side. Prior to working as an analyst, he was a Design Engineer for Lambda Electronics. Mr. Guillen holds an M.B.A. from NYU’s Stern School of Business, and he has a B.S. in Electrical Engineering from Manhattan College. Conley Tuner is a Research Analyst with Wall Street Strategies Inc. He is a frequent contributor to a number of media outlets including MarketWatch, Bloomberg, BBC news and Xinhua news. Conley holds a Masters in Business Administration and a Masters in International Affairs from the George Washington University. Jennifer N. Coombs is an Equity Research Analyst at Wall Street Strategies. She previously worked on the buy side as an Associate Equity Research Analyst covering the transportation subsector of the industrials sector at AIG SunAmerica Asset Management Corporation. Jennifer also covered Real Estate Investment Trusts (REITs) and has done broader research for the industrials, financials and consumer sectors. Prior to joining their research department, Jennifer worked as a Trading Assistant for SunAmerica’s index funds. She also worked briefly in the client portfolio management department at Dwight Asset Management Company – a fixed income subsidiary of Goldman Sachs. Jennifer graduated with distinction from Clarkson University where she earned a B.S. in Financial Information Analysis and Political Science, with minors in Economics and Law. Jennifer specialized in international markets, and briefly studied East Asian Economics at Sungkyunkwan University in Seoul, South Korea. Jennifer is currently a member of the New York Society of Security Analysts (NYSSA).

If you search for tenderness
It isn't hard to find
You can have the love you need to live
But if you look for truthfulness
You might just as well be blind
It always seems to be so hard to give

Billy Joel

Honesty is such a lonely word
Everyone is so untrue

It was a sluggish Monday, especially in New York, where it rained most of the day and the streets were oddly devoid of tourists, and traffic moved with ease even in front of Radio City Music Hall. I guess you could call it a blend of quiet calm with high anxiety. The Street thinks a deal is going to happen, although it's still a wildcard as to whether it happens before January 1, 2013. The worrisome part is what kind of deal we are going to get. Already the left is hailing Obama as "courageous," assuming a victory that really puts those rich bastards in their place.

I must say the Right seems to be bracing for the same thing.

More than likely we get a "balanced" framework that, in essence, sends this overtime game into extended play; however, unlike sports, the score will not be tied. Instead President Obama will have the edge, yet oddly some republicans think they'll have momentum - go figure. We are getting to the nitty-gritty part that soon will see big computer programs at the IRS and accounting firms readjusting assumptions. This means people will have to do likewise. Maybe the streets of Manhattan were virtually deserted because of Fiscal Cliff worries and not the inclement weather.

I'm not ready to draw that conclusion although those cheerleaders that feel the need to sugarcoat each disappointing economic data release are saying the "cliff" has already negatively impacted shopping. I don't think so. But, there will be a serious halt to commerce if people can't file taxes early and get those refund checks. A delay could change the entire tenure of the economy. We don't plunge off a cliff the first day, but the wheels will come off long enough to have an impact. But the big deal could come if we have to deal with a big lie.

We will have to deal with that big lie whose genesis is an earlier courageous victory in the war of envy. We will have to deal with the impact of the AMT tax on millions of people.

I've written about this numerous times, how the Alternative Minimum Tax (AMT) was designed to go after about 160 families that weren't paying their fair share. That was 43 years ago and that tax wasn't indexed for inflation. So what began as a jihad on people with great accountants and tax loopholes, now casts a dark shadow on moderately successful Americans trying to climb what's left of the ladder. In the end, most will be saved, but the AMT will always hang like the sword of Damocles over middle income Americans.

The problem is it hangs over more and more people each year. (The cautionary tale is one day tomorrow's taxes on the "rich" will impact mere middle class earners.)

The big lie is that the AMT is always patched instead of fixed. It is patched so budgets that are passed can reflect revenue from the tax in forward years, typically with the first year of a big tax deal missing such revenue. According to the CBO, the AMT would bring in $105.0 billion next year if it's not patched. It is estimated that 45% of families earning $74,450 to $100,000 would feel the pinch while 81% of those earnings between $100,000 and $200,000 would take a hit (for 2011, those snared were 0.40% and 3.5% respectively).

Politicians must keep the AMT in their budgets or find another $864.0 billion that it would raise over the next ten years. Here's the rub, since those assumptions never come true, those budgets begin with a gigantic lie and the financial hole has to be filled in a different manner. These days, too many voters are searching for tenderness as long as the next guy gets the shaft, yet the dangerous games being played just dig us into a deeper hole. In the meantime, if that AMT isn't patched up in time regular, decidedly not-wealthy, people will have to fork over as much as $5,000.

Talk about not shopping this holiday season - there would be a flood to the mall to get money back.

Everyone is so untrue.

More Lies

News this morning shows that the new healthcare law has a $63.00 per head fee designed to cushion the blow for insurance companies shouldn't come as a surprise. Apparently the administration says it is only for three years and is an effort to raise $25.0 billion.

My initial reaction to the news is it reminds me of the Three Great Lies - the Obamacare Version.

> Don't worry, its free
> It's only a temporary tax
> Once you get to know it you'll love it

This thing is like Pandora's Box - it just gets better and better and better. Of course this "fee," or as John Roberts like to call it "tax," will be passed onto workers and will also add more pressure - along with a shoddy economy, higher taxes, and more regulations - not to hire. In fact, this notion is already being echoed in the small business community.

NFIB Bombshell

The National Federation of Independent Business just released its optimism survey and it's nothing short of a disaster. The headline plunged to reading of 87.5 from 93.1 dragged lower by worries that the next six months will be horrendous for small businesses. Most of the respondents don't plan to hire as earnings tumble and economic conditions erode.

Sadly, just as we are digging through the horrific survey of small businesses, we got word that the deficit increased to $42.2 billion from $40.3 in September, while the gap with China increased to an all-time high. I hear we are supposed to be bringing jobs back from China and yet our exports are surging. In October, exports dipped to $180.5 billion from $187.3 billion the month before.

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