They say records were meant to be broken and this week we saw several
new marks established in the stock market but one record that seemed in jeopardy
a few weeks ago remains intact. The Dow was joined by the S&P 500 to close
at a new all-time high (NASDAQ needs America to lose its mind again before
getting back to its old high). In the meantime Mehran Karimi Nasseri can rest
easy as his record still stands. He landed at the Charles de Gaulle airport
back on August 26, 1988 and lived in Terminal One until July 2006.
Edward Snowden was given temporary asylum in Russia so he no longer has to cool
his heels in the airport. Nasseri made it day to day with food and goodies from
airport employees all the while reading, writing and studying economics.
Snowden's stay was more adventurous with interviews, round table discussions
and high-level negotiations. Of course, dealing with bureaucracy and confusion
is the only way someone could get stuck living in an airport for 17 years. On
the other hand dealing with a dictator means things get done a little quicker
and in this case decisions designed to embarrass the United States are always
rubberstamped.
The market didn't care, Main Street doesn't care and the rest of the world
outside the diplomatic core didn't even blink. But, this is a big deal for so
many reasons. The drama fades for now but the disdain for President Obama by
Putin needs a reply sooner rather than later.
Message from Earnings Season
There are several narratives developing from the current earnings period which
began with continued top line growth struggles that gave many pause but have
taken center stage. In fact the Street forgot about the Fed and this morning's
jobs report and that is probably the best news for reluctant investors and
fence-sitters. The market moving higher on better-than-expected economic data
(not to be confused with great or even good economic data) means the Fed can
taper without tantrums.
Truth Alert:
I actually like the tantrums and was hoping for a bigger pullback when stocks
dipped with the shift in conventional wisdom that money printing, even in the
digital age, can't go on forever. I happen to like pullbacks and order more
than stocks and markets going parabolic. Not exactly there yet, as volume is a
long ways from frothy and most stocks that are soaring are soaring on solid
news. Hence this update on earnings and what investors can learn... not to
mention non-believers still wearing flak jackets and combat helmets.
Established Investments
You don't get old being no foolRichard Pryor
I get where people are afraid of investing in certain stocks where it's hard to
understand what a company does and how it makes money (read Amazon) but what
about companies 100 years old... they must have some kind of street cred. Hess
(HES), RR Donnelley (RRD) and Goodyear Tire (GT) are just a few old companies
that have survived the test of time and posted great earnings results. Their
stories are also reminders that Big Business always begins as small business
with no pretense of ever conquering the world.
Yet all of these companies became world beaters... then got beaten down
themselves and then found a way back on top and of course through it all
survived world wars, changing demographics, globalization and intense
competition. Their story is the backdrop of the American story. These companies
should be admired, not shaken down for overseas profits that have already been
taxed in local jurisdictions.
> Leon Hess started his company in 1933 by buying a seven year old truck
capable of hauling 615 gallons of oil for home deliveries in Asbury Park New
Jersey. Bruce Springsteen eat your heart out.
> Robert Richard Donnelley started a small print shop in 1864 Chicago but the
big stroke of genius came ten years later when he developed the first citywide
directory.
> Frank Seiberling borrowed $3,500 from his brother-in-law in 1898 to put a
down payment on an abandoned strawboard factory. There he produced tires for
bicycles and carriages.
There are more of these lessons in the August
Newsletter that will be out Monday before the open, for a free copy contact
your rep or send me an email.
The Street was prepared to embrace a
better-than-expected jobs report. The Street was prepared to live with the
notion that the Fed is going to let up off the pedal creating a best-case
scenario of gobs of money printing side by side with an economy picking up
steam. Labor force participation declined so the unemployment rate declined and
that's not good news, although I'm sure mainstream media will say this was a
great report because unemployment rate dipped to 7.4% from 7.6%. The Fed will
not be fooled for those of you looking for maximum pumping.
162,000 jobs in any month during any economic
period are disappointing. It doesn't keep up with changes in population and
doesn't scratch the surface of bringing back jobs lost during the Great
Recession.
Composition of jobs is really poorRetail trade 46,800
Leisure and hospitality 23,000
Trends are worrisomeTemporary help 7, 700 from 16,200 in
June- supposed to be a harbinger of future full-time hiring
Health care 8,300 from 18,400 in June and 25,500
year earlier
ParticipationI think this is the lowest
participation rate among white men ever, certainly since 1970 where it's
hovered around 80.0 just hit 73.0. Men in general remain on the retreat.
Women more enthusiastic about labor coming back
to work force and gaining jobs-
White women
* Rate 58.4 from 58.2 year ago
* Jobs 51,339 from 51,222 June and 50,653 a year
ago
Black women
* Rate 62.0 from 61.3 year ago
* Jobs 8,510 from 8,413 June and 8,226 year ago.
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