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What A Wonderful Scene

|Includes: CSX Corporation (CSX), INTC, JPM
Before we can begin discussing the stock market, how beautiful is the scene this morning of the Chilean miners coming out of the mine after being trapped for 69 days? You can't help but to juxtapose that with the BP oil disaster and the West Virginia mining incident. It speaks to a unified goal and determination. Somehow some blogs are already using it to attack things like capitalism and corporate greed. I hope we use it as a different lesson. Bold leadership, a common goal, and belief in the can-do spirit should be the narrative.

The rescue was engineered by Center Rock Inc of Berlin, Pennsylvania whose mantra on its website says: Drill Faster, Run Harder and Work Smarter. The company's CEO says the operation was more akin to surgery than drilling. It was a high risk gambit and it paid off with scenes we will never forget. God Bless the miners and their families.

The Market

Once again you have to be impressed with the resolve and last minute climb in equities but equally concerned with the lack of volume. Stocks got a boost from Fed comments about exploring other ways to be even more accommodative. Stocks like this type of action even if it means a trap that we may not be able to escape from down the road. For now it's all about making it rain and playing the disco music until we can't keep up the façade anymore. It is interesting that we always think the Fed wants to contain inflation but they are shoveling the cash out as fast as possible to create inflation.

Earnings Baton

Earnings are picking up and maybe cumulatively could spark the next leg higher for stocks.

CSX saw its combination of fewer cars pay off as demand rose on a 10% increase in shipments and a 44% increase in automotive shipments. The company beat on the top and bottom lines with earnings of $1.08 on revenue of $2.67 billion. The Street was looking for $1.04 and $2.60 billion respectively. The company says it will begin re-hiring workers.

JPM posted earnings of $1.01 beating the street consensus of $0.88 but actually missing on the top line. The tone, however, is positive as loss provision of $1.55 billion is well off the $3.99 billion set aside a year earlier. I found it peculiar auto loan originations decreased to $6.1 billion from $6.9 billion year over year but mortgage revenue climbed to $13.6 billion from $8.9 billion. A WSJ article this morning said that Main Street operations propelled the results, not the Wall Street operations.

INTC also beat on top and bottom lines with earnings of $0.52 on revenue of $11.32 billion. The company saw its average selling price increase mostly as a result of better mix not pricing power. Still, guidance suggests a possible beat in the current quarter.

Short Squeeze

One reason this rally could breakout and become parabolic is persistently high short interest. Not only have so many people missed the current rally but many have bet big time against it as well. A couple of breakouts from now and the shorts could be carried out on their shields.

Social Security Is No Welfare Program

Comments from an American

On Varney & Company and on yesterday's morning report, the focus has been on social security recipients not receiving cost of living adjustments (COLA) increases for the second year in a row. Here's one man's view.

Think of Social Security COLA's as interest paid on 50 years of weekly OASDI investments (withholdings, taxes, contributions). Average 2010 CPI inflation is 2%, not 0%. Social Security (OASDI) benefits are not entitlements, not welfare.

Spouse, our employers, and I have paid in $420,000 (CPI adjusted) since 1960. Had government not spent that as general revenue, and had invested it into low interest bonds (lock-box), that fund would be $539,000 at a minimum. If that were a private fund, the monthly annuity for 13 year life expectancy far exceeds OASDI benefits, with wealth left over to pass on.

Our 2010 senior purchasing power has eroded us back to 1965! Know that Social Security OASDI benefits are now means tested and subject to taxation. Taxed going in! Taxed coming out! Every dollar of pensions, IRA withdrawals, any income, subjects $1 of OASDI benefits to taxes. This senior household is middle class, and every 3rd - 4th benefits checks we now receive are returned to the IRS. Further, with OASDI held constant, senior purchasing power continues dropping because Medicare Part B & D withholding from OASDI checks continues to increase.

Larry G. Rowe, age 78
White Bear Lake Mn