It was a great session Tuesday; especially as it followed a couple days of anxiety which is like the end of the world these days. The Dow at all-time highs is very misleading, however, lots of stocks are down big from blue chips to small caps, and trillions of dollars continue to sit on the sidelines. Still, the upward bias and upward moves on good news is the right combination for stocks.
A Wall Street Journal (WSJ) article hit home for a lot of people and dashed all hope that it would take cheaper oil to change the fortunes of America’s middle-class. It was not ‘man bites man stuff’ for most people, but it does reiterate something we discuss on my show a lot- how people can change their lives. The dynamics of what we spend our money on has changed, so while we have cutback big time on everything from home phones to entertainment, costs on new luxury items like home internet and cellular phones are soaring.
The WSJ looks at cost increases from 2007 to 2013, but the big cost increase occurred over the past dozen years and hit what was a moot point, protecting the middle-class.
- Housing (now rent) +27%
- College Savings & Tuition +39%
- Healthcare +90%
- Child Care +36%
This has caused a decrease in retirement savings and that money must be put to work. Yes, it might be asking a lot in an era where everyone expects to have everything, but those that cutback and invest are the ones who will have better lives down the road. It might mean ditching the iPhone and buying Apple stock instead, but at least you are taking control of your own destiny.
Big Business Ready for War... Against the Administration
Members from the Business Roundtable met with President Obama to air a number of grievances, including frustration and confusion over the administrations lawsuit against Honeywell for enforcing a key plank of the healthcare law.
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One of the rare bipartisan parts of Obamacare is workplace wellness to reduce smoking, obesity, and hypertension. Honeywell asked employees to take a biometric test to measure areas of health that need improvement and those who refused lost the following:
- $1,500 From Health Savings Account
- $500 Medical Plan Surcharge
- $1,000 Tobacco Surcharge
- $1,000 Tobacco Surcharge for Spouse
The Honeywell lawsuit broke the dam and now businesses are saying they may not go along quietly with the failed healthcare law. Moreover, businesses are also saying that they foresee a dramatic decline in capital expenditures over the next six-months.
| Expectations Over Next Six Months | Change Q/Q Sub-Index |
| Sales | -1.3% |
| Cap Ex | -5.8% |
| Hiring | +3.6% |
The sad irony is that many business owners say US investment spending could be substantially stronger by fixing two things the federal government controls.
US Tax policy and regulatory issues are the twin killers of prosperity and why big business is sitting on its cash.
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