WASHINGTON, July 8, 2013 — We’re back from a long holiday weekend, just in time to see the stock market get back to what is more or less its usual trading patterns these days, although there are probably some hints buried deeply in current patterns that we’re not quite able to see. Trading last week was erratic, due to the midweek (Thursday) July 4 holiday, the July 3 half-day of trading, and a negligible Friday that continued the market’s tendency to melt-up even in the face of bad news.
That bad news last week happened to be the latest employment numbers. Algos and HFTs rejoiced in what they willfully interpreted as a big upside move. But this is all smoke and mirrors. Part time jobs did increase, but full time jobs continued their swan dive.
The reason for the PT increase was likely seasonal employment which will still look good this month before it begins to decline again in August as those students who can still afford their student loans at 6+ percent slowly return to campus, ready to commence two more semesters of liberal indoctrination by day and heavy drinking by night. No useful skills will be taught or learned, which is just fine, actually, since most companies don’t want to pay for them.
What folks have not generally recognized over the past nearly five years now is that for the most part, corporate profits have remained flat to swell even though the U.S. economy is a pale shadow of its former robust self—employment-wise. Employers, for at least some good reasons, remain pathologically averse to taking on full-time employees, preferring part timers or contractors on 1099s instead. So it’s not just students who are contending with and settling for part-time work. It’s heads of families as well.
Given the now perpetual uncertainty of Obamacare (conveniently delayed now except for the self-employed like the Maven until after the 2014 Congressional elections), employers have been content to overwork their existing workers, hire only contractors or temporary part-timers (less than 30 hours a week to evade the Obamacare coverage limits) to pick up the slack and essentially produce as many or more goods as ever with this permanently reduced labor force.
Those full time jobs of yore are never coming back, the dirty little secret behind this current, alleged recovery. Businesses have recovered their profits, more or less. But in the process, they’ve permanently shed lots of workers who will never work again and who will burden the social welfare system for decades to come.
The corporate trend these days is to dump real workers for disposable part time minions whom they regard about as seriously as those silly little fireplug-sized, animated Minions moviegoers laughed at this weekend while watching the latest installment of “Despicable Me.”
Ah, but not to worry. The Government will take care of us little minions.
In any event, this is the rotten game that’s being played out symbolically in the stock market. As the Democrats fiddle, putting off the inevitable Obamacare disaster again and again in order to position for the next election, permanent American unemployment and underemployment is becoming institutionalized. This in turn has a depressive effect on wage demands, even from most unions.
Add to this the threat of amnesty—for that’s what it is—that’s the real reason behind “immigration reform,” and we are about to institutionalize decades of wage repression due to Obamacare on one hand and the vast increase in documented unemployment once illegals are magically proclaimed legal. For decades, there will simply be far too many individuals applying for every single job than there will be jobs. And that’s actually the plan.
The result: Democrats get to achieve a permanent majority electorate with the support of the big businesses that own that party’s politicians and assure that this remains so in order to keep unemployment permanently high and wages permanently low. Best yet, it will all be blamed on Bush, the Koch Brothers, and the perpetually clueless Republicans who still can’t figure out why everyone thinks that this nefarious scheme is their fault.
Bottom line for the stock market: after the current decline has run its course, which it may already have, expect the market to continue inching higher. With permanently low wages, less workers to cover and compensate, and lower materials costs, it gets easier and easier for the big boys to make their numbers even as it gets harder and harder for the average American to sustain some semblance of a middle class life. Good for stocks, bad for us. Unless we own stocks. What a word we’re handing off to our kids.
Reluctantly, we will start slipping back into the market this week, mostly via ETFs, as individual stocks are still mostly too treacherous currently. We still don’t like the looks of the market. But with the macro-economic situation being as we’ve just described it, what’s not to like about corporate America these days, just so long as the government’s policies have left you with at least a few dollars to invest?
Disclaimer: The author of this column maintains several active trading and investment portfolios and owns residential and investment real estate.
Positions mentioned above describe this author’s own investment decisions and should not be construed as either buy or sell recommendations. The current market is highly treacherous and all investors travel at their own risk, so caution should be exercised at all times.
Illustrations, charts, commentary, and analysis are only the author’s view of current or historical market activity and don’t constitute a recommendation to buy or sell any security or contract. Views, indications, and analysis aren’t necessarily predictive of any future market or government action. Rather they indicate the author’s opinion as to a range of possibilities that may occur going forward.
References to other reporters, analysts, pundits, or commentators are illustrative only and do not necessarily represent an endorsement of such individuals’ points of view. If specific investment vehicles are mentioned in any article under this column heading, the author will always fully disclose any active or contemplated investments in said vehicles.
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