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Political Cracks in SEC Case and Rationale By: Charles Payne

|Includes: Coach, Inc. (COH), G, KO, QQQ, SKS, TIF
Sitting on pins and needles is the best way to describe the action, although the word defiant would make a good headline for any piece trying to explain how stocks reacted yesterday. There was some profit taking in technology, and commodities really took it on the chin, but blue chips came roaring back, led by Goldman Sachs (NYSE:GS). As the session moved on, and more and more tidbits dripped out on the fraud case, it felt like the Wall Street powerhouse would come out on top when the dust finally settled. Moreover, word that the SEC took this action along political party lines is unsettling. From what I understand, a 3 to 2 vote to take action is unusual, particularly in a high profile case like the one that rocked the investment world last Friday. But the votes of the two Republicans on the panel were discarded.

Man, a year ago I hoped that the nation would come closer together. However, Republicans have no voice as their opinions are dismissed as out of hand and Tea Party members are just stupid, toothless, racists, or rich spoiled racists depending on the objective media source of the moment. I think that it's dangerous to kick a large block of Americans to the curb and then vilify them even as they are being marginalized. The stock market saw through the political smokescreen, and I can only hope that the rest of the nation does because it doesn't make us stronger. I hope that the SEC is more willing to take on the big boys, but if this case proves to be as flimsy as I think then this is just cowardly. First off, the agency should catch the crooks while the crime is ongoing, not three years later. On Friday, the SEC was being described as a lion but by the close yesterday it looked more like a laughing hyena.

Of course the battle is joined, and President Obama will be right outside Wall Street on Thursday as the White House closes in much like when the North closed in on Vicksburg before prevailing in 1863. In his book "Vicksburg 1863", Winston Groom wrote about the impact of eight successive sieges on Vicksburg that forced people there to live in caves and resort to eating mule meat while they endured hundreds of artillery shells a day. While it's unlikely that the folks at Goldman are going to eat mule meat unless it becomes the hip food for the Manhattan elite, the intensity of the fight could elevate to something akin of take no prisoners. It's not about feeling sorry for the guys in the slick new ivory tower across from Ground Zero (which is already slowing my commute to the office) but making sure our anger at bad actors isn't manipulated into such hate that we allow unchecked power in the Executive Branch.

"Remember, people tend to shout when they have no voice." -Charles Payne

Technical View

At the open yesterday it seemed like investors fleeing banks would find comfort in technology stocks but it turned out to be the exact opposite. The action left the NASDAQ composite looking vulnerable, albeit just a tiny bit vulnerable. The index is still well above all of the key moving averages and could drift more without breaching the 20-day. I do think that there is a need for fresh leadership. It's unlikely that will happen today as a member of the NYSE will prove to be something of an anchor. Big Blue, also known as IBM, saw its service business decrease to $12.3 billion, sending the stock lower in aftermarket trading. Led lower by a 23% plunge in the Application Management segment, most analysts feel that it's the company's service contracts that serve as the best harbinger of future tidings for technology in particular, and the economy in general.

That Icelandic volcano Eyjafjallajokull once erupted on and off for two years from 1821 to 1823 so rumors of additional eruptions aren't farfetched.

This week's poll struck a nerve with many people; the responses were creative and thoughtful. Last week's poll asked if the 47% of Americans not paying federal income tax should be allowed to vote. Here are the results:

* 7.5% yes
* 91.0% no
* 1.5% not sure

Coach Takes the Luxury Lead

It almost goes without saying that the luxury sector has rounded the corner from the disasters that was the fourth quarter of 2008 and most of 2009. Firms such as Burberry, Louis Vuitton, Tiffany (NYSE:TIF), Saks (NYSE:SKS), and Richemont have all released strengthening earnings results as of late and the management teams have returned to a sense of optimism that is the sector's hallmark.

Please visit to read earnings review on Coach (NYSE:COH).

Coke Stumbles But Doesn't Fall

This morning, the largest beverage maker in the world, the Coca-Cola Company (NYSE:KO) released operational results for its first quarter of fiscal year 2010 and the results were less than awe-inspiring. The Company continues to be about overseas growth (part of the reason we like it), but we were hoping for a stronger showing from the struggling North American market, especially considering the quarter included the 2010 Winter Olympic Games in Vancouver. Worldwide, volumes increased 3% compared to the first quarter of 2009, with strength coming from overseas markets including India (+29%), Turkey (+18%), and Brazil (+12%). Taking the weakness from North America out of the picture, it was a great quarter for the Company.

Disclosure: None