WStreet Market Commentary

12/2/2009 10:02:25 AM Eastern Time

Please Vote: It has been a while since we’ve taken a survey but this is a topic that I’m sure everyone has an opinion on, and I’d love to hear them. Over the past week there have been some very embarrassing moments around the world that will result in less credibility for those involved. Let me know what you think at charles.payne@wstreet.com. So the big question…

Who has lost the most credibility?

1. CBO and Douglas Elmendorf
2. Dubai
3. Tiger Woods

You can also cast a vote on our website: www.wstreet.com

It’s no secret that this administration dislikes business, and I mean all business. Initially, I thought it was a deep resentment towards big business, but actions taken thus far actually suggest there is more animosity toward small businesses. One thing is clear; many big business tycoons are welcomed at the White House but when was the last time a self-employed plumber got an invite? I think that it has more to do with elitism than money. You can be a hip do-gooder at Google (GOOG) or sell wind turbines at General Electric (GE) and get the ear of the White House, but greedy bond investors need not apply. Where the heck does the administration think capital comes from? I’ve watched over the years overzealous agencies crush small brokerage firms on Wall Street, the kind of places where a company could raise $5.0 million to build a better mousetrap and hire people along the way. These were easy and convenient targets even as houses of cards like WorldCom and Enron were allowed to operate with impunity.

Today, small businesses have no access to capital, face higher healthcare obligations, will get socked from cap and trade, and are browbeaten for having the audacity to want to be extraordinary. I initially reacted cynically to the President’s job summit and subsequent road trip, but maybe he is that far removed from the pain and agony of businesses that he needs to gather some of his elitist buddies. No presidential cabinet since 1900 has had fewer people with real world private sector experience. This was by design, by the way, and maybe the results as well. For sure if shame, regulations, and threats aren’t enough to bring the business community to its knees then maybe creating a dust bowl full of angst will do the trick. I have to say that we have been played all along. Taxpayer money was used to pay off banks here and abroad, and the stimulus plan was an in your face money grab. I’m not sure what the next scam will be but there will be more.

As for this summit, I’ll care when I see the heart and soul of American commerce with a voice rather than the usual suspects of hip CEOs, academics, and representatives from non-profit organizations. What on earth are they going to add to the mix?

Technical View

Once again, the major equity indices are on the cusp of breaking away from established bases, the only thing missing is a catalyst. That could come on Friday with the jobs report, and in fact it’s hard to imagine tons of money pouring into the market before then. However, any money manager sitting on a lot of dry powder may feel that this is the last chance to look smart. The S&P 500 has been trading in a narrow range for three weeks and will probably break one way or the other very soon. I would say that a break through 1,110.0 on solid volume will be the move that could put the final dagger in the shorts as the action finally seduces fence-sitters into the mix.

Fritz Flees

It was abrupt, and out of left field, but last night word came that Fredrick “Fritz” Henderson is flying the coop. After eight tough months on the job the General Motors lifer bailed out as it has become clear the board is looking to go in a different direction. For now, Chairman Ed Whitacre Jr. will step in as interim CEO. Well, it saves him the headache of dancing around the latest U.S. vehicle sales report. November wasn’t a good month…let’s just leave it at that.

Speaking of auto sales, I asked our auto analyst David Silver to weigh in on what he took from the release. Here is a portion of his article, with the rest being on our website, www.wstreet.com

Auto Sales Less Bad
David Silver, Research Analyst

Another month is now behind us, and it seems that the hangover from cash for clunkers took a few months to finally hit the market. Sales were relatively muted and after reading the releases it felt like something was missing. Cash for Clunkers is now a distant memory, and if the previous months were any indication, it would have been a good memory with few negative ramifications. However, for the first time, despite easy comparisons, auto sales showed signs of that dreaded hangover. There is no question that sales have stabilized, but sequentially, every automaker we monitor saw a decline, which is in stark contrast to July, August, and October. We hate the term less bad, but we again have to use it as sales have been slowly building off the bottom of earlier this year.

Ford’s (F) U.S. sales manager estimated that the nation’s industry seasonally adjusted annual rate of sales (SAAR) equated to approximately 10.4 to 10.5 million units. We had been modeling for SAAR to break through the 11 million mark, however, it seems that it fell just short, coming in at 10.9 million units. The biggest winner for the month of November was Hyundai (again), which saw sales surge almost 46%. The following table outlines each company’s year over year change as well as year to date differences.

Economic Data

Challenger, Gray, & Christmas

The outplacement firm reported that 50,349 jobs were cut during the month, 9.6% less than in Ocotber and was the lowest total since December 2007. November marks the fourth consecutive month of slowing job cuts, but the data released for 2009 has already surpassed that of 2008 and it has represented the worst job market in more than 60 years. Altogether, employers have announced 1,242,936 job cuts so far this year — 17.5 % more than at this point a year ago. The current tally exceeds the total number of job cuts in all of 2008, which was 1,223,993. There has been a divergence of late, as data from Challenger and even the ADP have not paralleled data released from the Bureau of Labor Statistics.

ADP

The ADP employment report out this morning is weighing on the market, and could signal a less than stellar employment report on Friday. The ADP report, which seeks to forecast the results of the government’s data, showed 169,000 job losses in November, which is worse than the 100,000 job losses economists expect to see in the government data on Friday. So naturally, there may be some worry going into Friday that the employment picture is not improving as quickly as anticipated. Nevertheless, the trend does still appear to still be getting “less bad”, as if we haven’t heard that term enough already.

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