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Celebrating Failure by Charles Payne

Last night I served as the Master of Ceremonies for the ARC Awards for excellence in business annual reports. Winners came from 25 different countries around the world. The creativity was outstanding, and some of the biggest winners were from unlikely locations like the firm from Sri Lanka that won four awards. During the dinner period, I sat with a couple of seasoned business veterans from Germany and Austria. I remarked how when it’s all said and done, many people will look back on the global economic meltdown as a blessing in disguise. Then, they reminded me of just why America is such a great country.
 
In their countries, getting fired or filing for bankruptcy is such a scarlet letter that it can ruin a person’s career forever. Forget starting a business because the banks will shun you, but so will employers. The same holds true for Japan. I remember back in the mid-1980s when many Americans were ready to abandon American-style capitalism in favor of the stuff the Japanese were doing. And, just like that, Japan descended into its infamous “Lost Decade” (which is really more like two lost decades). It is a cautionary tale and a lesson we need to remember as we romanticize how great European socialism is, where everyone has healthcare insurance while people in France live on average a year and a half longer than the U.S. 
 
Nothing is free, and people in Europe pay a heavy (economic) price for their socialistic programs.   Former President Bill Clinton is making the rounds ahead of his annual initiative that will focus on poverty and other economic issues. The former President has been making the rounds and one of his messages is that America should get used to being just a little bit more ahead of the rest of the world. I see how we are heading in that direction but to get ready for it is to allow it to happen. It doesn’t have to be that way. If we would only unleash our natural instincts to not only persevere but move it into the next gear and extend our greatness. Let’s fight the notion of a new normal that liberal economists keep selling. There are unlimited opportunities in this country and we don’t need the government to direct them.
 
As long as we adhere to a free market mentality and understand that failure is just another step on the path to ultimate success we will be great. I enjoyed the new friends I made last night even if I botched damn near all the Austrian names (so embarrassing). It’s great to learn things without the filter of media and politicians who seem intent on telling us how awful we are and how we must turn the nation upside down to make things right. I hope that all the efforts to cull out the nation’s DNA to replace it with something akin to the stuff in the “Stepford Wives” fails because that’s how we will succeed and be the place where people can not only dream, but make those dreams come true even if they stumble along the way. 
 
Tech on the Up and Up
 
The NASDAQ composite continues to power ahead, and with good reason. Outside of the lackluster new software order results, and generally soft guidance, by Oracle (NYSE:ORCL) most companies in the sector have been upbeat. Intel (NASDAQ:INTC) raised its guidance a weeks back, Texas Instruments (NYSE:TXN) upwardly revised its dividend, and Palm (PALM) came out yesterday evening and showed that consumers are buying phones beside Apple’s (NASDAQ:AAPL) iPhone.
 
Talking it Up
Brian Sozzi, Research Analyst
 
The Flow of Funds report from the Federal Reserve released yesterday is receiving a fair amount of press, as it should. 2Q09 household wealth increased slightly q/q, and was the first rise since 3Q07. Obviously, the rise in equities values was the primary contributor. The report is being talked up as support for renewed consumer spending, and the absence of a new normal in retail, moving forward. I would be hesitant to adopt that thesis. In order for consumers to be more open to discretionary purchases, which are instrumental in growing overall consumption as food will only take the data so far, housing values will have to appreciate and the jobs market must turn. Many are still badly bruised psychologically from last year’s market rout and look at home values as something tangible, by and large. I remain of the opinion that the savings rate is an upward slope to 10.0% by the middle of 2010; in fact I hope it heads to 10.0% as it will set the foundation for a lasting economic recovery as those savings are wound down.
 
On the Energy Front
Conley Turner, Research Analyst
 
On the energy front, the price of a barrel of crude is tracking lower today as market participants consider the possibility that the economic recovery in the world’s largest consumer may be slower than expected.  A recent report by the Energy Information Administration indicated that the current supply of distillate fuels in the US is close to a 27 year.  This suggests that there is not yet sufficient economic activity to precipitate a drawdown in existing supplies.  Also, the supply of natural gas is currently at multiyear highs with no outlook for that changing anytime soon. However, natural gas prices have soared during the week. 
 
More importantly, the outlook for the oil sector has, at this moment, much less to do with actual fundamentals but instead what is happening with the value of the dollar.  Oil and other commodities bear an inverse relationship with the dollar.  As such, since the green back has been declining in value the price of oil and other energy related issues have been on the rise.  It is important to note that since the prevailing sentiment about the dollar among investors is negative, it may indeed spark a counter trade and actually start to rally. It is not unprecedented and in fact, the probability of such an occurrence is actually increasing.  Should this occur, look for a corresponding short term pull back in energy related issues.