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This Is What We've Waited For ... This Is War By Charles Payne

|Includes: CAL, DSW, Movado Group, Inc. (MOV), TIF

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Shot Across the Bow

A few years ago I wrote about a cornerstone of my investment thesis and that was peace in the world. Even with Iraq and Afghanistan, the world was about as peaceful as it's ever been. Moreover, there are fewer and fewer deaths during these wars.

More than 1,000,000 Gaul citizens died during its conquest by Julius Caesar and almost 8,000 died in three days of fighting at the battle at Gettysburg. These days the magic number is 1,000, maybe 2,000 when there is a clear bad guy and good reason for American involvement in war.

So, with the administration finally taking a stronger tone on Syria, the markets swayed knowing our peaceful planet also sits on a not-so-peaceful fault line. In addition, we could be embarrassed by actions that come up too little, too late.

Nonetheless, I sense the market would like to find a place to rest its weary head, so stocks sold off on an otherwise uneventful summer day. The market has a lot to grapple with as we turn the page on summer.

Sadly, Syria will turn out to only be a sideshow and killing field despite our promise to stop murderous dictators.

Ninety-nine red balloons
Floating in the summer sky
Panic lads, it's a red alert
There's something here from somewhere else


The war machine springs to life
Opens up one eager eye
Focusing it on the sky
Ninety-nine red balloons go by

While the market recoiled a bit on heightened tensions with Syria, there was a real trial balloon floated yesterday. Treasury informed Republicans their gimmicks can't continue to hold back the debt needle, and the nation will hit its debt ceiling limit by mid-October. It was a shot across the bow to Republicans to give the White House a blank check. Even though nobody expects the first round of gamesmanship to resolve the issue, we can now say the war machine springs to life. The continuing resolution and debt ceiling debate has the potential to upend the stock market rally.

Of course the fight over extraordinary debt and the punishing impact of the new health care law would dent the market even more and leave a fundamental scar.

Today's Session

On the verge of another war abroad with four US destroyers, and at home on two key battlegrounds that will capture public attention-and not in a good way, the market is reflecting American worries and frustrations this morning.

Equity futures are tumbling on anxiety overshadowing a bunch of good earnings reports from second tier retailers:


Sales $138.3m +17.2%
Profits $412.7m +55%
GM 54.1 v 55.7
OM 12.3 v 9.1 (despite spike in effective tax rate 26.7% v 21.7%)
Higher guidance

Sales $562m +9.7%
Profits $0.97/share
Comparable store sales 4.4% v 4.2%
GM 32.6 v 31.3
OM 9.6 v 9.2
Higher guidance


Sales $621m +10.1%
GM 41.0 v 40.2
OM 3.7 v 1.5
Strong running, sandals and canvass despite declining retail traffic
Guidance cautious FY13 $1.32 (high end) v Street $1.33


Sales $926m +4.0%
Profits $107m +16%
Comparable sales Asia +13%
Comparable sales US unchanged
GM 57.5 v 56.3
Higher guidance

We aren't going to force the issue as I suspect the market has been looking for an excuse to pull back more although a close under 15,000 on Dow could trigger additional psychological angst.