Wednesday, July 15, 2009
I agree with publisher Mort Zuckerman who recently wrote in the Wall Street Journal that subprime jobs numbers in the U.S. foreshadow continued economic weakness. But the stock market seems to disagree with both of us. Stocks are roaring ahead again today — up over 150 points — after holding the high ground yesterday and following Monday’s huge rally. Even a sub-par retail sales report didn’t stop retail stocks from posting a 1.6 percent gain.
Blowout profit numbers from financier Goldman Sachs and chipmaker Intel — covering two key sectors — suggest that better times are coming.
I’m hearing a lot of ankle-biting about Goldman’s performance. But I’m not with the naysayers on this one. I say bravo to Goldman. Look, the firm made $3.5 billion in profits on $14 billion in revenues. Those are unbelievable numbers. And you know what else? Goldman paid down $10 billion of its TARP money. Plus, it paid taxpayers $426 million in dividends.
Of course, I’d like to see Goldman get out from underneath its $30 billion in government taxpayer-guaranteed debt. I’d also like to see some more transparency in its toxic asset reporting. But I continue to argue that the big banks are the best stock market investment right now. That remains my mantra. Near-zero borrowing rates and a steep Treasury yield curve will allow the banks to earn their way out of their problems.
And if the Intel profits blowout carries through to the other big tech companies, that tells me there’s something good going on in the economy.
As far as Washington is concerned, hopefully the Senate will bury cap-and-trade and health-care legislation — two extremely toxic, anti-growth bills that would clobber businesses and the U.S. economy.
The cap-and-trade-and-tax energy takeover will jack up costs for everybody and let the central planners run wild in the economy. And big-government healthcare nationalization will be funded with personal tax rates above 50 percent and yet another hike of the dividend and capital-gains tax rates.
You know what folks? If you want to create new jobs, you need to help businesses. But President Obama and congressional Democrats seem to think that “business” is a dirty world. It makes no sense. This is not good and it must be changed.
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