Eminent Domain And Social Justice By Charles Payne

Jun. 19, 2015 9:55 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, Thestreet.com, 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).

Watch my show: Making Money With Charles Payne Fox Business 6PM

Yesterday, the market put in a great session after digesting the Fed's comments and feeling confident that the complete removal of the punch bowl will be very gradual, unless this economy takes off…and that's not going to happen. There was good news: the initial jobless claims were under 300,000 for the fifteenth consecutive week, down 12,000 to 267,000. In addition, the Philly Fed report headline was nearly double the consensus estimate at 15.2.

When manufacturers were asked specific questions, they painted a picture of modest increases in demand during the past three months.

(A) If you expect to increase production over the next six months, how will this be accomplished?

  • 33% Hire additional workers
  • 29.6% Increase work hours of current staff
  • 35.2% Increase productivity of current staff without hiring

While the Dow was up more than 200 points, the big moves were from the NASDAQ where all the stuff you hear in the news these days, including all those hacking stories.

NASDAQ

However, the big winner yesterday and all year has been biotechnology, the sector in which all the experts said was overvalued last year, is up 24% this year. The Food & Drug Administration (FDA) news as well as mergers continue to pace the sector and it is living up to the hype and then some. Let's talk specifically about biotechnology. The experts have been wrong for a year on this sector, which keeps going higher and higher…mostly on positive news and mergers.

iShares Nasdaq Biotechnology ETF (IBB)

When the market was drifting lower, there was a lot of noise and people began to brace for the worst. Once again, it looks as though buying the dip was the move- so far. We adjust to anxiety-filled periods and lulls that mask a series of lower lows, but we try to never panic. Moreover, the folly of calling tops is fine for people on TV who make seven-figure incomes, million-dollar book advances, or trying to sell you doomsday products.

Picking Unicorns

There's big news from the hot pool of start-ups that are changing our daily lives and creating new wealth and opportunities. First, the Fitbit Inc. (FIT) IPO was a huge hit with investors. The company started the day selling 36 million shares in order to raise $732 million and a valuation of $4.1 billion.

Fitbit finished the session worth more than $6.0 billion. On the other hand, Airbnb Inc. (AIRBNBP) began saying it would raise a billion dollars, giving it a private market cap of $24.0 billion.

When the company goes public, it will be a hot IPO, but I have concerns. Fitbit revenues have been near $1.0 billion dollars over the past twelve months and Airbnb is reportedly going to do more than $900 billion this year. Fitbit only did five rounds of funding for $66 million, while Airbnb did seven rounds after this next one for close to $2.0 billion.

Why didn't Airbnb go public yesterday? I fear it will go public at $40 billion and will hit $60 billion on the first day… perhaps, dooming eager investors as insiders and venture capitalists cash out.

Fit Bit

Funding History

2008

2 million

2010

9 million

2012

12 million

2013

43 million

Total

66 million

Air BNB

Funding History

2009

20,000

2009

600,000

2010

7.2 million

2011

112 million

2013

200 million

2014

475 million

2015

1 billion

Total

1,794,820,000

I think Fitbit management actually showed more respect for their users and potential investors than most of the bulked up unicorns as Airbnb. With that said, there are legitimate questions about how well the company will do a year or five to ten years from now.

However, it's a real company and it is not the sign of the apocalypse.

Pope Takes On For-Profit Business Model and Free Markets

The Pope takes on capitalism and calls for consumers to take action in his encyclical on climate change released yesterday. Pope Francis did not mince his words:

"Is it realistic to hope that those who are obsessed with maximizing profits will stop to reflect on the environmental damage which they will leave behind for future generations?"

"Saving banks at any cost, making the public pay the price, foregoing a firm commitment to reviewing and reforming the entire system, only reaffirms the absolute power of a financial system…"

"A change in lifestyle could bring healthy pressure to bear on those who wield political, economic, and social power."

"Purchasing is always a moral and not simply economic act."

These are the kind of populist grievances we'd expect from very progressive or even socialist politicians. It really scares me because I think the poor people of the world would be worse off under a scheme where profits were limited or confiscated for the greater good.

Burying a Founding Father

Yesterday, Treasury Secretary Jack Lew made it official. A woman will replace Alexander Hamilton on the $10 bill. Initially, I was confused as there had been a movement to remove Andrew Jackson off the $20 bill, with a recent poll of 600,000 that overwhelmingly chose Harriett Tubman, an escaped slave and conductor of the Underground Railroad.

What the heck???

When I was growing up in Harlem, Hamilton Grange was just a couple blocks away. He was tucked away in obscurity surrounded by a large decaying ghetto.

Go figure…we are talking about a founding father who was the architect of our economic system.

Through the Federalist Papers, Hamilton helped sell the proposed Constitution and championed it through the ratification phase. Hamilton was our first secretary of Treasury. His politics and personal life wasn't perfect. Why would he be the target of this non-stop effort of social justice boggles the mind.

A poor immigrant from the Caribbean island of Nevis, Hamilton helped erect foundations that catapulted the United Sates to the greatest nation in the world.

Changing the face of the ten-dollar bill will not change history. In fact, we shouldn't want to change history.

Let's put a woman on the $25 bill or on the $40 bill, but let's stop this farce of litigating the past and dismissing accomplishments by great, but flawed men.

Note: Martha Washington graced the 'One Silver Dollar' note up to 1890.

Today's Session

The markets opened the day slightly lower. Once again, Quadruple Witching is upon us. It is a time when various stock index futures, stock index options, stock options, and single stock futures expire on the third Friday of March, June, September, and December. Apart from the Atlanta Fed releasing its Business Inflation Expectations report later this morning, today will be a light day in terms of economic data releases.

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