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Clear Your Calendar By: Charles Payne

I cordially invite you to join me and five other top investing experts for the Money Answers Investing Cruise, February 12-19, 2011 on board Holland America's luxurious ms Eurodam.

A Valentine's week Caribbean cruise offers not only lots of fun but also a full week of highly informative events. During seminars, panel discussions, Q&A's, cocktail parties, and at dinners, there will be experts to discuss current market conditions and the best places for your investment dollars in 2011. You'll trade and learn investment tips with fellow cruisers, bask in the amenities of the newest ship in Holland America's premier fleet, and visit some of the best ports for shopping, sightseeing, and sunning in the world!

I really enjoy meeting my subscribers, and what better place than in the Caribbean! For more information, go to or call 800-707-1634. And don't delay, because spaces are limited! It should be a lot of fun. I'm looking for a multi-year rally based in part on similarities to 1994, so I'm hoping this trip will be a celebration as well as a time to learn and prepare.

Much Anticipated Fed Meeting

Yesterday saw strength in all of the areas that should have exhibited any strength.

  • Homebuilders
  • Retail
  • Transportation
Okay, I get transportation to a certain degree, led by global demand, but after Friday's jobs report, logic would say retailers were poised to pullback. And, then, there are the homebuilders...enough said. But what I'm sensing more and more is the market becoming comfortable with a jobless recovery. Not to be confused with a job-loss recovery, this goes beyond the oxymoron category to the simply impossible column. But stocks like FedEx (NYSE:FDX) and UPS (NYSE:UPS) are rocking, and the rails act fantastic.

Note: there is an extensive piece on the rails written by David Silver on our website.

"Remember way back when (like two weeks ago), that a lot of economists were calling for a double-dip recession in the economy? One of the data points they used was the drop in rail traffic (and trucking tonnage); however, both have rebounded over the past few weeks, with the most recent week (ended July 31) marking a record for both carloads and intermodal shipments for 2010. Year over year, total shipments increased 9.4%, but were still down 10.6% from the same week of 2008. Shipments during 2008 were shaping up to rival traffic from the record years of 2006 and 2007, then the financial crisis hit and shipments fell through the floor. For comparison purposes, the Association of American Railroads (NYSE:AAR) reports weekly traffic compared to 2009 and 2008." For the rest please clink link

Also, there has been some pricing power in transportation. Ironically, with deflation, or the threat of deflation, galloping along with the speed and power of a thoroughbred racehorse I'm rooting for any kind of bump in downward prices. (I know that at some point the old floodgates will open and we will not be able to close them, but that isn't this year.) Certainly, the market is telling us something that's counterintuitive, but seems clear. Of course, the market could be making a hunch but even that seems odd given all of the news of late. But this is a unique characteristic of the market, to make hunches ahead of the crowd and at some point those hunches turn out to be right and we call the market an Oracle or harbinger when it could be a lucky guess (don't forget the all-time high on the Dow came a month before the start of the Great Recession).

Speaking of foretelling something big, the Baltic Dry Index has been a pretty good leader of the broad stock market. Last week, DryShips (NASDAQ:DRYS) beat the Street, and last night Genco (NYSE:GNK) beat, too.
Genco beat the Street by $0.07, posting earnings of $1.16 per share for the quarter. It should be noted as the company's Time Charter Equivalent (TCE) price increased so, too, did the share price. TCE peaked in the second quarter of 2008, so, too, the stock which tickled $84.00 from $17.30 two years earlier. TCE is forming a bottom, and once it ticks up we could see a big bounce.
The Baltic Dry Index had been largely driven by Chinese demand for raw materials but could also get a boost from other sources as well. Meanwhile, the latest trade data from China are mixed depending on what you were rooting for.

July exports from China were +38.1% year over year, down from +43.9% in June (but ahead of Dow Jones consensus of 36.6%), while imports rose only 22.7%, missing consensus of +30.2%. We need China to be a greater importer these days although it's still an export-driven economy. At some point we need pressure from the top to get this market opened up completely with fair trade policies.


Great article in USA Today on just how out of control federal government pay has gotten. The gap between federal workers and private is now $61,998, up from $30,415 in 2000. This is jaw-dropping stuff.

Of the annual benefits, only $10,567 comes from the federal government workers, which means taxpayers are pumping three times more into the benefits package of a so-called servant than they get themselves. Federal worker pay has grown 33% faster than inflation! Since 2000, total compensation for federal workers is up 36.9% adjusted for inflation versus 8.8% for private workers. President Obama wants a 1.4% pay hike across the board for federal employees in 2011, which the GOP opposes and say would cost $2.2 billion.

I've said for a long time that an economic civil war is brewing as there is no way private workers are going to continue to allow money snatched from their wallets fund the more grand life of their neighbors. If Nancy Pelosi wants to save government worker jobs, and President Obama wants to balance the playing field, they should begin with redistributing these amazing salaries and benefits to cover more workers.

Today's Session

Today the market is jittery going into the FOMC gathering in part because there is no clear consensus on what would be a good outcome.

Disclosure: None