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Foxhole Nation By Charles Payne

The theme for June in the economy, stock market, and our monthly newsletter is leadership. It is certainly time for a general to step up to the plate. I can think of nobody better than General Patton whose 1944 speech on World War II could have easily been retrofitted to a speech on the American Dream today. He implored soldiers to fight and abhorred the notion of waiting for defeat in foxholes. Right now, our Commander in Chief is encouraging half the population to hang out in foxholes (until Election Day when he wants them to kick off their slippers) and spooking the other half into foxholes, too.

General Patton
East Anglia 1944

Men, this stuff that some sources sling around about America wanting out of this war, not wanting to fight, is a crock of bullshit. Americans love to fight, traditionally. All real Americans love the sting and clash of battle.

You are here today for three reasons.

First [you are here] because you are here to defend your homes and your loved ones.

Second, you are here for your own self-respect, because you would not want to be anywhere else.

Third, you are here because you are real men and all real men like to fight.

When you, here, every one of you, were kids, you all admired the champion marble player, the fastest runner, the toughest boxer, the big league ball players and the All-American football players. Americans love a winner. Americans will not tolerate a loser. Americans despise cowards. Americans play to win all of the time. I wouldn't give a hoot in hell for a man who lost and laughed.

That's why Americans have never lost nor will ever lose a war; for the very idea of losing is hateful to an American.

A lot has changed since General Patton gave that speech, and much of it he would disapprove of including our track record in wars and hatred of winners while promoting and encouraging mediocrity and even losing. The stock market is only a reflection of this phenomenon. Stocks, as a rule, should reflect the health of individual companies with a nod to macro conditions.
Instead it reflects a defeatism that would have made Patton pull out one of his ivory- handled Colt 45s. (In his first firefight while part of a contingent to hunt down Pancho Villa back in 1914, he ran out of bullets and felt helpless as volleys continued in his direction.)

Ok, so we aren't as enamored with winners like we once were, and these days "losers" can become stars faster than people with talent. But where does that leave our economy and its ability to rebound. We all are more sensitive in this political correct era. In this era, moving the economy means shoring up emotions as much as fundamentals.

Fat Joe & the U.S. Economy

We have three Yorkshire terriers at home, and all three have distinct different personalities. Milo is the oldest, has great pedigree, and is a natural leader. Sonny is the oddball loner that might be a little inbred (we got him over the Internet and I fear from a puppy mill). His brother, Fat Joe, is colorful and emotional. In fact, I think about Fat Joe when I think about this economy. Of the three dogs, he has the most natural athletic ability. He runs the fastest and jumps the highest. More than anything he is fiercely independent.

This is a dog that hates to be caged or ordered around (think Steve McQueen in The Great Escape). The problem is Fat Joe has health issues.

When he's on and having fun and healthy, Fat Joe is a wonder to watch racing through the grass to chase children walking along our fence or enticing the other dogs to tussle with him; it's so much fun to watch. When America is on and racing to make life better for all of mankind and forcing other nations to up their game or lose its most productive citizens, it's so much fun to watch. But, like Fat Joe, it's not just the health issues that have me worried lately, it's the spirit.

He typically has a warrior spirit, and that's fading. Sure, it's easy to say health problems sap determination, but it also has to play a role in the healing process.

To report suspected puppy mills contact the Humane Society at 1-877-MLL-TIP

Yesterday's Session

I was very impressed with yesterday's session because this market could have fallen off a cliff. Instead, stocks found buyers in each wave of selling pressure, even toward the close where it appeared the bottom could fall out completely. Most investors are in foxholes, but there is a pocket of money out looking to be in this market when the coiled springs are released. I'm talking about a tradable bounce that could come with news of a plan to save the day on both sides of the Atlantic.

It was good to see some resolve in the market, even if it's a pocket seeking a bounce to trade. That's how a long term bounce begins. But it's too early to discuss that while there is a giant question mark hanging over the planet.

Today's Session

The market is marking time while the emergency G7 call goes on with the main topic on how to help Spain. After the close, equity futures surged in the aftermath of the market holding firm, but this morning reality continues to penetrate potential optimism. We are beyond valuations, even thought models and assumptions have to be ratcheted lower; from a macro point of view this continues to be a crisis of confidence. Today voters in Wisconsin have a chance to tell the world it's okay for a leader to do the right thing and take on sacred cows and established giants that are part of the problem.

For Scott Walker it was about the idea of a bargaining system where the person making fiscal decisions about the person across the table was beholding to that person in the first place. The biggest problem these days is losing is hateful to politicians even if it's a glorious defeat in the defense of the nation's future. The consequence has been a bunker mentality and problems don't go away but actually fester and become larger. I don't have a lot of faith in this morning's conference call other than promises to have more calls. Maybe that will be good enough for the market. But these meetings to have more meetings have become more of problem than a solution.

Investors should be hopeful with respect to the fact that this is a full scale firestorm, and even the most reluctant decision-makers have to do something sooner rather than later.