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OPINION

Rallied Jolted

The opinions expressed by columnists are their own and do not necessarily represent the views of Townhall.com.
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On Wednesday, the market came out the gate with a fair amount of gusto only to watch the early rally fizzle in short order. The blame was laid squarely on the Federal Reserve and a potential rate hike. Yes, a hike next week rather than later this year or later this millennium. What was the reason for the sudden shift in sentiment?

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Apparently, a knee-jerk reaction to the “strong” JOB OPENINGS AND LABOR TURNOVER – JULY 2015 (JOLTs) report was enough to turn the tide and spark an (orderly) rush for the exits.

Here’s the rub. The report was a tale of strength and a reality check all at the same time.

The headline was a record 5.8 million (series began in 2000) total job openings up 430,000 in a single month. Wow, that means the United States economy is on fire! Not really, as there’s the issue of the quality of the jobs and the pace at which they are getting filled. In addition, there’s the issue of people quitting their jobs because they’re so confident a new job will be easier to find and will probably pay them more money.

On that note, it’s curious that 122,000 good-paying professional services jobs opened in the last month but 57,000 fewer people in those industries quit their jobs. In some ways, it’s totally illogical. These are the in-demand high-paying jobs where people should be wooed and quitting in droves.

On the other hand, restaurant workers are feeling embolden with all the openings they are quitting more, although retail workers seem reluctant to make a move even as opportunities mount.

Jobs and Skills Disconnect

Then there’s the hiring component of the report- it dropped month over month and year over year. In July, 4,983,000 hires were down from 5,182,000 in June and 5,003,000 a year earlier. Once again, that strong professional services segment was down while food services enjoyed the biggest increase.

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The other issue is the so-called “skills gap,” which confounds the employment picture throughout a variety of industries. There is a dearth of wielders, truck drivers, plumbers and computer coders. It points to a terrible primary education system and a misguided higher education process.

Janet Yellen has mentioned she watches the JOLTS report closely but her focus is on how many people are quitting as a sign of confidence that typically underpins a strong economy. People aren’t quitting their jobs even in the hot employment niches.

With that in mind, maybe the knee-jerk reaction should have been the Fed to be on hold even longer than anticipated. Honestly, I’m tired of the game, but in a strange way, appreciate the shakeout of weaker hands and the price discovery process even if it’s skewed.

Apple

Apple’s big event was as expected, so the stock which rallied into the event, sold off into the close. That’s not surprising and not necessarily an indictment against company. I’m struck by two things.

  • The effort to crack into corporate America
  • Its pricing power

The iPad Pro is 12.9 inches, very light and thin with optional smart keyboards and pencils. The device can be used like old school clipboards in a variety of businesses.

  • 32 GB $799.00
  • 128GB $949.00
  • Mart Keyboard $169
  • Pencil $99

Apple TV sports a new smart remote that connects to SIRI along with other neat features. Has the company finally lived up to TV hype? I’m not sure, but the pricing speaks volumes (read: it ain’t cheap) when you consider the last version cost $99.00 now:

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  • 32GB $149
  • 64 GB $199

The iPhones have a ton of bells and whistles as well and should sate the need for the Apple cult to buy the latest. I think the news was great and the market simply reacted on cue. I think the company will continue its dominance and ride out overall dips in demand by craving out greater market share.

Tax Policy- We Should all Pay

They say that at the end of the day, elections are about pocketbook issues which should mean we all root for plans that will generate a wave of prosperity that everyone can ride. Instead, over the years, not only have voters become fixated on how they will be rewarded specifically but more recently many have settled on the idea of simply punishing others as if somehow it will make things better.

Sure, it’s schadenfreude, but it does nothing to make your paycheck go farther, help little Johnny learn to read or stops the post man from ringing twice.

It’s early, and details are still to come, but what I’m hearing so far on tax policy is more of the same. Punish certain people and reward others in ways that deter success. The latest comes from Jeb Bush whose tax plan promises 15 million fewer payers and increases the earned income tax credit. President Obama pushes the notion the federal government should make work pay with tax credits.

This intrusion provides cover for the bigger ruse of higher taxes and encroaching deeper into corporate coffers.

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While the same tide would lift all ships during economic good times, there should also be a policy of all hands on deck. Every adult American should have skin in the game and pay taxes. Right now, that’s not the case. The bottom fifth income range earn 13.8% of the income but have a negative 3.2% share of income tax.

For this reason, I think it’s time Americans consider a flat or fair tax system that removes all the gifts and freebies and get us all into the game. I understand it makes buying votes harder, but it’s patriotic, fair and smart.

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